SMITH & DAVIES LIMITED v AUCKLAND COUNCIL [2017] NZHC 999

SMITH & DAVIES LIMITED v AUCKLAND COUNCIL [2017] NZHC 999

Repossession of SDL's plant rendered SDL incapable of performing and constituted an insolvency event under the contract permitting termination; although the Council breached its mutual good faith obligation by rushing to terminate and effectively foreclosing consideration of an assignment, SDL failed to prove that breach caused loss of the contract's value (loss of a chance) and was itself in breach leading to additional costs by Council, so Council was entitled to set off and recovery on its counterclaim.

Citation
[2017] NZHC 999
Parties
Plaintiff and Counterclaim Defendant: Smith & Davies Limited; Defendant and Counterclaim Plaintiff: Auckland Council
Court
High Court
Jurisdiction
New Zealand
Judgment Date
16 May 2017
Procedural Posture
Commercial Contract Dispute / Final Judgment (high Court)
Outcome
Plaintiff's claim dismissed; judgment entered for defendant on counterclaim
Legal Topics
Repudiation, Insolvency Event, Good Faith, Assignment, Termination, Set Off, Remedies, Counterclaim
Contract Law Insolvency Law Administrative/public Procurement Law Civil Remedies Repudiation Insolvency Event Good Faith Assignment +4 more

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Parties

Smith & Davies Limited

Plaintiff and Counterclaim Defendant

Auckland Council

Defendant and Counterclaim Plaintiff

Procedural Posture

Commercial Contract Dispute / Final Judgment (high Court)

Legal Issues

  1. 1 Whether an insolvency event occurred under the contract allowing immediate termination
  2. 2 Whether the supplier repudiated the contract
  3. 3 Whether the Council breached an express good faith obligation in terminating and in refusing/declining to consider an assignment

Ratio Decidendi

Repossession of SDL's plant rendered SDL incapable of performing and constituted an insolvency event under the contract permitting termination; although the Council breached its mutual good faith obligation by rushing to terminate and effectively foreclosing consideration of an assignment, SDL failed to prove that breach caused loss of the contract's value (loss of a chance) and was itself in breach leading to additional costs by Council, so Council was entitled to set off and recovery on its counterclaim.

Court Disposition

Plaintiff's claim dismissed; judgment entered for defendant on counterclaim

Orders

  • SDL's claim for unpaid services and general damages dismissed
  • Judgment for Auckland Council on counterclaim in the sum of 36750.51 NZD