THE PARTY BUS COMPANY LIMITED v NEW ZEALAND TRANSPORT AGENCY [2017] NZHC 413 [10 March 2017]

THE PARTY BUS COMPANY LIMITED v NEW ZEALAND TRANSPORT AGENCY [2017] NZHC 413 [10 March 2017]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2016-404-000133[2017] NZHC 413BETWEEN THE PARTY BUS COMPANY LIMITEDPlaintiffAND NEW ZEALAND TRANSPORTAGENCYDefendantHearing: 28 July 2016Appearances: S Carey for the PlaintiffK Francis and K Howard for the DefendantJudgment: 10 March 2017JUDGMENT OF HINTON J[re strike out application]This judgment was delivered by me on 10 March 2017 at 3.30 pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarCounsel/Solicitors:S Carey, Barrister, AucklandMeredith Connell, Wellington[1] This case involves a strike-out application, made on the basis there is no duty of care and that the claimed loss was not caused by the defendant.Background[2] In October 2008, Party Bus Company Ltd entered into a contract with the Ministry of Education (Ministry) which provided for school bus transport services for a six-year period from January 2009 to December 2014.[3] The contract states in schedule 2, that "safety is of paramount importance inthe transportation of students to and from school each day".[4] Clause 126 provides that:The Contractor will ensure that they meet the minimum safety and quality standards specified in clause 115 at all times during the Term of this Contract.[5] Under clause 87, the Ministry was entitled to: terminate this Contract immediately where:87.1 The Contractor defaults in the observance or performance of any material duty or material obligation under this Contract;87.2 The Contractor is the subject of repeated and continuing complaints relating to the performance of the Services;87.3 A Vehicle is ordered off the road by a Vehicle Safety Officer of the New Zealand Police Commercial Vehicle Inspection Unit, or Vehicle Standards Advisor/Investigator of the New Zealand Transport Agency for any of the four key safety features of brakes, tyres, suspension or steering.The Contractor has 3 Working Days to make representation to the Ministry as to why this clause should not be invoked.[6] Under clause 29, Party Bus agreed to sharing of information between the Ministry and New Zealand Transport Agency (NZTA). NZTA is a regulator, charged with regulating commercial transport operations, such as Party Bus. The information to be shared was in relation to services covered by the contract, in particular the motor vehicle register (to confirm ownership); the lead automotive transport inspection system (to retrieve details of certificate of fitness inspections); other NZTA information systems (to obtain details of roadside inspections and traffic offences); and advice from NZTA standards advisers and regulatory advisers. The contract required (clause 30) that Party Bus provide a signed NZTA information consent form for all drivers and sub-contractors.[7] Party Bus also agreed (clause 31) to passenger information access between the Ministry and Regional Local Authorities.[8] On 30 November/1 December 2009, the New Zealand Police Commercial Vehicle Inspection Unit (the Police Inspection Unit) conducted an audit of the Party Bus fleet, observed by NZTA. A large number of the buses were issued with non-operational orders. Four of these buses were used to provide services under the contract.[9] On 18 December 2009, the Ministry wrote to Party Bus, advising:(a) four of the buses that had been ordered off the road were used to provide school bus services under the contract, and(b) the Ministry was entitled to cancel the contract, and would cancel the contract on 24 December 2009, if an adequate explanation and assurance from Party Bus was not received within three working days.[10] On 22 December 2009, Party Bus responded to the Ministry, concluding by saying that all issues raised in the Police Inspection Unit audit would be rectified by 1 February 2010.[11] The Ministry did not cancel the contract on 24 December 2009.[12] NZTA conducted a separate audit of a cross-section of the Party Bus fleet, the first three stages of which were carried out on 27/28 January 2010.[13] According to the subsequent arbitral award, Ms Scannell, the Ministry employee directly concerned with the school bus contracts, had prepared a memorandum recommending cancellation, but Mr Clark of the Ministry wanted to hear from NZTA first.[14] On 28 January 2010, Mr Clark told Mr Gordon of NZTA that he had to decide whether to cancel the contract in advance of the imminent start of the schoolyear. Mr Gordon said he was working on the audit and he expected to respond the next morning.[15] The crucial events, for the present proceeding, occurred on 29 January 2010.[16] At some stage on 29 January 2010, NZTA provided a copy of its written interim report to the Ministry. (NZTA alleges this was at around 1.17 pm.)[17] At an uncertain time that same day, according to the statement of claim which I have to assume to be correct, Mr Thackwray of NZTA told Mr Clark by telephone that the NZTA audit had shown that two of the plaintiff's four buses that hadbeen ordered off the road following the 2009 [Police Inspection Unit] audit, still had defects in one or more of the key areas of brakes, tyres, suspension or steering.[18] It is pleaded, and I therefore assume for present purposes, that this advice was incorrect, and that the defects in the key safety areas identified in the Police Inspection Unit audit had in fact been remedied.[19] Still on 29 January 2010, at approximately 3.28 pm, the Ministry sent an email to Party Bus giving notice of cancellation of the contract.[20] The cancellation was contested at an arbitration.[21] Mr Clark said, in the course of the arbitration hearing (recorded at paragraph 37 of the arbitrator's decision dated 7 February 2011), that if he had known that the advice he received from NZTA was incorrect, he would not have cancelled the contract.[22] The arbitrator, Hon P Salmon QC, held that:(a) Party Bus was in breach of clause 87.3 of the contract, as a result of one or more of its vehicles being ordered off the road by the Police Inspection Unit for any of the four key safety features of brakes, tyres, suspension or steering.(b) The Ministry was entitled to and validly did cancel the contract with Party Bus on 29 January 2010.(c) "Party Bus may consider clause 87.3 to have harsh results. However, it forms part of the contract which Party Bus signed."[23] The arbitral award covered the issue of Mr Clark's acknowledgement that hewould not have cancelled but for the Ministry's wrongful advice, as follows:37. There is one further issue which arose during the course of the proceedings in respect of which I sought further submissions from the parties. That related to Mr Clark's acknowledgement that if he had knownthat the advice he received from the Ministry of Transport at the end of January 2010 was incorrect, he would not have cancelled the contract. Theplaintiff's submission on this point was that Mr Clark had admitted that he terminated the contract labouring under a material mistake as to fact and that this mistake rendered the purported termination void and ineffective. No authority was provided for this proposition. Clearly the Contractual Mistakes Act 1977 does not apply because its application is limited to the time when parties enter into a contract rather than when they terminate it. I have been unable to find any common law principle that would apply the mistake principles to the termination of a contract.38. The plaintiff also argues that Mr Clark's concession amounts to anacknowledgement that the Ministry was not relying on the December defects as grounds to terminate and instead was making the decision based on the results of the NZTA January audit. I do not accept that that was so. It was the December findings that were relied upon as is clear both from Mr Clark'sletter and from the evidence given at the hearing. As I have held, at least some of the defects identified in the December inspection justified the termination of the contract pursuant to clause 87.3. The Ministry was notsatisfied with the representations made in the plaintiff's letter as to why theclause should not be invoked. Party Bus may consider clause 87.3 to have harsh results. However it forms part of the contract which Party Bus signed.39. The question of Mr Clark's misunderstanding did not becomeapparent until almost a year after the contract had been cancelled. Given that it was cancelled for good contractual grounds, there is no basis upon which the law could enable it to be reinstated. That would not prevent the Ministry if they thought it appropriate, given Mr Clark's misunderstanding,from giving consideration to entering into a fresh school bus contract with the plaintiff company. Given Mr Clark's misunderstanding and what he saidwould have been his action had that misunderstanding not arisen, it would seem reasonable for the Ministry to adopt such an approach. However, that is a matter entirely for the Ministry.(emphasis added)[24] The arbitrator's decision was unsuccessfully contested on appeal.[25] Now, in this proceeding filed on 28 January 2016 (five years after the arbitrator's decision), Party Bus claims against NZTA in a single cause of action in negligence/negligent misstatement.[26] Specifically, Party Bus alleges that NZTA gave negligent advice to the Ministry (by telephone on 29 January 2010) which caused the Ministry to then cancel the contract.[27] Party Bus claims $11,042,025, being the sum it would have received under the contract with the Ministry, less any expenses it would have incurred in carrying out the contract.Basis of application for strike out[28] NZTA applies to strike out the claim.[29] NZTA says the statement of claim discloses no reasonably arguable cause of action for two reasons:(a) It did not owe Party Bus a duty of care "to protect it against the consequences of its own breach of contract", because the parties were not in a proximate relationship, and there are public policy factors pointing strongly against recognition of such a duty.(b) NZTA did not cause Party Bus's loss.Principles for strike out[30] I adopt the principles in relation to strike out applications that were summarised by the Court of Appeal in Attorney-General v Prince,1 and approved by the Supreme Court in Couch v Attorney-General:21 Attorney-General v Prince [1998] 1 NZLR 262 (CA) at [267].2 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].(a) Pleaded facts, whether or not admitted, are assumed to be true. This does not extend to pleaded allegations which are entirely speculative and without foundation.(b) The cause of action must be clearly untenable.(c) The jurisdiction to strike out is to be exercised sparingly, and only inclear cases. This reflects the Court's reluctance to terminate a claimor defence short of trial.(d) The jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument.(e) The Court should be particularly slow to strike out a claim in any developing area of the law, particularly where a duty of care is alleged in a new situation.When is a duty of care owed?[31] There is broad agreement as to the principles which apply to determine whether there is a duty of care. The Supreme Court in North Shore City Council v Attorney-General [The Grange]3 said it remained helpful to divide the question into the two stages of inquiry recognised in South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd: first, foreseeability and proximity; and second, policy factors.4 The two-stage enquiry is not determinative. As Cooke P explained in South Pacific Manufacturing:5 the exercise can only be a balancing one and the important object is that all relevant factors be weighed. There is no escape from the truth that, whatever formula be used, the outcome in a grey area case has to be determined by judicial judgment. Formulae can help to organise thinking, but they cannot provide answers.3 North Shore City Council v Attorney-General [2012] NZSC 49, [2012] 3 NZLR 341 at [26] [The Grange].4 South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd[1992] 2 NZLR 282 (CA).5 At 294.[32] The first stage of the inquiry is whether the defendant should reasonably haveforeseen injury to his or her "neighbour", in the sense of a person who is closely andproximately affected by the defendant's conduct. As Blanchard J said for themajority in The Grange, when the Court is considering the first stage of the inquiry, it is concerned with everything bearing upon the relationship between the parties.6[33] Foreseeability is at best a "screening mechanism", to exclude claims which must obviously fail because no reasonable person in the shoes of the defendant would have foreseen the loss.7[34] The second stage of the inquiry (policy factors), is to weigh up any broader implications for the community in recognising or denying a duty. In The Grange, Blanchard J observed that at this stage, the court is concerned with externalities – the effect on non-parties and on the structure of the law and on society generally.8[35] The boundary between the two stages of proximity and policy can merge. The contractual and statutory background may, for example, be relevant to both.The first stage of inquiry - foreseeability and proximity[36] I turn to the first stage of the inquiry.[37] NZTA says it was not in a proximate relationship with Party Bus. Its only relationship with Party Bus was as a public regulator, auditing Party Bus in accordance with its statutory responsibilities, and as authorised by a contract under which NZTA assumed no responsibility towards Party Bus. Further, Party Bus is a sophisticated commercial entity, and not a vulnerable party whose interests NZTA was obliged to protect.[38] NZTA submits further that, even assuming as I must, that the Ministry did rely on the telephone discussion, I can safely conclude it was not reasonably foreseeable that the Ministry would do so. This is said to be particularly so where no6 The Grange, above n 3, at [156].7 At [157].8 At [156]. As Cooke P put it in South Pacific Manufacturing, above n 4, at 295: "it would benaïve, and I believe absurd and dangerous, to assert that a duty of care prima facie ariseswhenever harm is reasonably foreseeable".issue is taken with the accuracy of NZTA's interim written report, which NZTA contends was provided to Mr Clark before the Ministry reached its decision, and where there were various other consulted stakeholders who would have a role to play in the decision to cancel the contract.[39] NZTA says a similar conclusion was reached by the majority of the High Court of Australia in Tepko v Water Board, where it was held that it was not foreseeable that a developer would rely on a "ball park" estimate reluctantlyprovided by the statutory Water Board, regarding a potential development.9[40] This case seems somewhat different from a case like Tepko, where the connection between the developer and the Water Board was far more tenuous.[41] Further, some of the points relied on by NZTA, for example, as to the significance of the (correct) written audit report; the timing of that report; and its clarification of any oral NZTA advice, are clearly matters that would have to await a trial.[42] In my view, it can at least be argued that NZTA and Party Bus were sufficiently proximate for a duty of care to arise. Both Party Bus and NZTA would have known that NZTA could provide information about an audit to the Ministry, and that this information could be something that the Ministry would rely on under the contract, including when contemplating cancellation. To adopt the language of Richardson J in South Pacific Manufacturing, Party Bus was "directly within the contemplation" of NZTA when it carried out the audit and reported to the Ministry, meaning the risk of loss to Party Bus from carelessness is clear.10[43] I come back to the contract-based arguments shortly, when considering the broader public policy considerations.9 Tepko Pty Ltd v Water Board (2001) HCA 19, (2001) 206 CLR 1.10 South Pacific Manufacturing, above n 4, at 307.The second stage of inquiry - public policy factors[44] At the second stage of the "Grange" inquiry, I have to weigh up broader implications of recognising or denying a duty, still remembering that NZTA has to satisfy me that the claim against it is untenable.Statutory role to protect public safety[45] In terms of policy considerations against the finding of a duty of care, NZTA relies first on its status as a public regulator with a statutory responsibility to promote public safety.[46] NZTA emphasises that there is a legitimate public interest, in bodies such as NZTA itself, being free to perform their role without the "chilling effect" of being exposed to actions in negligence.[47] NZTA acknowledges that its advice may have significant commercial implications for regulated parties, but says that its statutory functions are directed, not to protecting the economic interests of regulated commercial entities, but to protecting public safety. The imposition of a duty of care would cut across its performance of its statutory responsibilities. NZTA says the courts have consistently struck out comparable claims against public bodies on public policy grounds.11[48] NZTA relies on a statement by Tipping J, speaking for the majority in Couch,that "the law has traditionally been cautious about imposing a duty of care in caseswhere a public authority is performing a role for the benefit of the community as a whole".12 As Professor Todd observes, any duty imposed by the courts on public bodies -should not interfere with a public body's autonomy in deciding whether orhow to act, should impose only a suitably proportionate burden of liability, should more readily protect those in vulnerable positions, and should operate coherently in relation to the statutory context, other common law principles and the legal system as a whole.1311 Citing Attorney-General v Carter [2003] 2 NZLR 160 (CA) at [35]. At least one of the cases referred to in Attorney-General v Carter was not comparable. In Fleming v Securities Commission [1995] 2 NZLR 514, there was no proximity between the parties.12 Couch v Attorney-General, above n 2, at [80].13 Stephen Todd The Law of Torts in New Zealand (7th ed, Thomson Reuters, Wellington, 2016) at [6.6.02].[49] I accept there is some substance in NZTA's argument. However, in this case, NZTA's role arguably went beyond its usual regulatory function, in that it was also performing a role for the benefit of the Ministry under the contract.[50] Also, as Mr Carey submitted and Mr Francis acknowledged, the fact that NZTA is a public body does not give it immunity from owing a duty of care. Public bodies are regularly found liable in negligence where the claim is in respect of a routine administrative or operational act, as opposed to a "policy" or high-level act.14The claim in this case can fairly be described as being in respect of an operational act.Cutting across contract and established principles of contract law[51] Of greater concern in this case is the effect that the duty of care, pleaded as owing to Party Bus by NZTA, would have on the contract between the Ministry and Party Bus, and on contract law.[52] In his oral submissions, Mr Carey said the pleaded duty of care did not cut across the contract or other fields of law, as compared to a case like South Pacific Manufacturing, where he said the pleaded duty cut across the law of defamation. He said it was material that NZTA was not a party to the contract and therefore could not be contractually bound to take care. The fact NZTA was outside the contract, he said, supported the argument that there was, or could be, a duty of care.[53] I found the latter part of Mr Carey's argument difficult to follow. I agree with NZTA that the contract is of particular significance in this case.[54] The alleged duty relates to provision of information by NZTA for purposes of the contract. The information is provided to the Ministry, not to Party Bus. The contract carefully defines the rights and obligations of the parties to it, those parties not including NZTA. The contract imposes strict obligations on Party Bus and, in particular, includes a stringent term under which the contract can be cancelled: if only one bus is ordered off the road, the Ministry has the right to cancel. As the14 See Couch, above n 2, at [59]; and Todd, above n 13, at [6.6.01].arbitrator said, such a clause could have harsh results, but it was part of the contract Party Bus signed.[55] It is clear on the face of the contract that the Ministry and NZTA can share information. The contract imposes no obligation on the Ministry or NZTA to take care in any information sharing.[56] The contract contains limitation of liability provisions in favour of the Ministry. NZTA, not being a party to the contract, had no opportunity to negotiate such a provision. If there were a duty of care owed, NZTA would potentially face greater liability than the Ministry would as a contracting party.[57] If NZTA owed a duty to anyone in the present case, it would owe a duty to the Ministry, being the contractual party to whom it is providing information. As I have said, the contract does not provide for any such duty.[58] While it is possible that NZTA could owe a duty to both the Ministry and Party Bus, that would put NZTA in the position of serving two masters. Such an outcome was one of the factors relied on by the Court of Appeal in South Pacific Manufacturing,15 to find there was no duty owed in that case. Duties owed to the Ministry and Party Bus would not always be the same or, worse still, could be in conflict. This might have the effect of inhibiting NZTA from properly discharging its primary responsibilities to the Ministry under the contract. The bounds or reasonable limits of a duty of care would not always be clear cut when the nature ofNZTA's instructions from the Ministry might vary on a case-by-case basis. Some ofthe Ministry's instructions would call for a highly detailed, thorough investigation; others would not. It would be very difficult to define the extent of the duty of care allegedly owed to Party Bus in such circumstances.[59] The concept of a duty owed by NZTA to both the Ministry and Party Bus in connection with advice under a contract where safety is of paramount importance, creates a particularly significant risk of cutting across the very purpose of the15 South Pacific Manufacturing, above n 4, at 314.contract. Party Bus could for example have sought an injunction halting an inquiry on the basis that steps were not being taken with due care.[60] In this case, it is a given that the Ministry has validly cancelled the contract. If NZTA arguably owes Party Bus a duty of care, NZTA would be entitled to join the Ministry, on the basis, by way of example only, that the Ministry should have relied only on the written report, not the telephone conversations. The Ministry would almost inevitably become embroiled in the Party Bus/NZTA tort claim, despite having acted within its rights under the contract and despite a contract that gives no indication of the pleaded duty, in fact to the contrary.[61] There is a particularly glaring conflict between the negligence claim in this case and the contract. Under the law of contract, even if the Ministry had relied in its cancellation of the contract on an incorrect ground (wrongful advice from NZTA as pleaded here), and would not have cancelled otherwise (as pleaded here), the cancellation would still be valid because the Ministry had a valid ground for cancelling.16 The rationale for that principle is that a person's motive for cancellingis immaterial, and their reason for doing so is likewise.17 The position under the contract and the law of contract would be significantly undermined if a third party involved in the provision of wrongful advice could be sued in tort, in effect for the consequences of a nonetheless valid cancellation.[62] In my view, the net effect is that a duty of care would cut across the contract and the law of contract. Such an effect militates strongly against the existence of a duty of care. As was repeatedly stated in a similar context in South Pacific Manufacturing, "tort theory should remain consistent with contract policies".18[63] There are wider factors that go against the finding of a duty of care.[64] Importantly, this is not a situation where Party Bus had no remedy. Had there been a wrongful cancellation, Party Bus had a remedy in contract against the16 Kumar v Station Properties Ltd (in receivership and in liquidation) [2015] NZSC 34, [2016] 1 NZLR 99 at [65]-[66].17 British and Beningtons Ltd v Northwestern Cachar Tea Co Ltd [1922] All ER 224.18 Above n 4, at 308.Ministry. Had the breach by Party Bus been waived, or had there been some obligation on the Ministry to act fairly, Party Bus would have had a remedy. All of these issues were raised in the arbitration, and findings made against Party Bus.[65] Had NZTA's information provision to the Ministry been defamatory, Party Bus would have had a claim against NZTA in defamation, subject to the defence of qualified privilege which protects statements made where the maker had a duty or interest in making the statement and the receiver in receiving the information. The defence of qualified privilege can only be defeated by proof of malice, not mere negligence. Such a defence would not be available to NZTA in a negligence action. If NZTA had committed the tort of misfeasance in public office, Party Bus would have had a right to sue, but would have had to prove that NZTA acted with malice towards Party Bus, or with knowledge or reckless indifference. This is a significantly higher standard than would apply in negligence. Also, Party Bus would have had a claim against NZTA, where appropriate, for interference with contractual relations. However, there was no breach of contract by the Ministry that could have been induced (much less deliberately induced) by NZTA. The protections and safeguards in these well-established fields of law would be undermined if NZTA were placed under the duty now alleged by Party Bus.[66] I note also that a finding that there is no duty of care owed by NZTA in providing information under the Ministry/Party Bus contract does not mean NZTA might have no obligations to Party Bus, independent of the provision of information under the contract.[67] For all of these reasons, the proceeding is struck out on the basis of no duty of care.Did NZTA cause the claimed loss?[68] NZTA also submits that there is no tenable basis on which I can conclude that the loss claimed by Party Bus in any real or substantial sense flowed from the alleged actions of NZTA.[69] NZTA says the loss arose from a proven breach of the contract by Party Bus,and the Ministry's subsequent decision to (validly) terminate. It submits that Party Bus's losses fall into the category identified by Professor Todd, of situations where"the plaintiff's (in this situation Party Bus) conduct may sometimes be of suchimportance as to be regarded as the 'real cause' of the damage".19[70] Mr Carey reminds me that causation, as the Supreme Court put it in Couch, is a matter for investigation. It is quintessentially a matter of fact.20 He says the Court cannot order a strike out on what is essentially a factual inquiry. To similar effect, when referring to the key factual disputes in the proceeding, NZTA itself acknowledges that there were "various issues beyond the scope of the strike out application in relation to causation, loss and remoteness".[71] I accept for present purposes, as a matter of fact, that the wrongful advicefrom NZTA "caused" the giving of notice of cancellation.[72] However, I can still consider whether, as a matter of law, conduct which constitutes a factual cause is, or could be, a substantial and material cause of the loss.Only if the defendant's conduct was a substantial and material cause, can legalcausation be established. The distinction between a factual cause and legal causation is explained in Price Waterhouse v Kwan.21 It is not enough, for example, that the conduct merely creates the opportunity or preserves the circumstances for the loss to occur.22[73] I agree with NZTA that this is one of those rare cases where it can be said, even on the basis of Party Bus's pleading, that the breach by Party Bus itself was an independent cause. It was the breach by Party Bus that caused the cancellation. The cancellation was valid, (and would have been even if Mr Clark had formally relied on the wrongful NZTA advice).23 It was the cancellation that caused Party Bus to not receive the claimed ongoing profits under the contract.19 Todd, above n 13, at [20.3.4].20 Couch, above n 2, at [39].21 Price Waterhouse v Kwan [2000] 3 NZLR 39 (CA) at [28].22 See also Bank of New Zealand v NZ Guardian Trust Co Ltd 1 NZLR 664 (CA) at 683.23 See [61] above.[74] The cancellation was not caused in any real or substantial sense by all or any of the influences (good or bad) that went into the decision to act on the breach by exercising the right to cancel; whether it might be what Mr Clark thought or said on any particular day, or in hindsight, or on what other staff members or consultees involved in the decision-making thought or said. NZTA's alleged conduct at most preserved the circumstances in which the loss ultimately occurred. It is not the cause of Party Bus' "loss" as a matter of law.[75] I conclude that Party Bus cannot succeed in its causation argument.[76] For completeness, I note Mr Francis submitted in the course of argument on causation, that the arbitrator rejected the suggestion that the Ministry cancelled thecontract because of NZTA's comments. He said that I could rely on the arbitrator'srejection to find against causation here. I agree that the arbitrator came close to the position asserted by Mr Francis, but there was no clear or specific finding that would entitle me to ignore the pleading to the contrary. I have proceeded on the basis of thepleading that the Ministry did rely on NZTA's wrongful advice.Conclusion[77] As the arbitrator indicated, the course of events around cancellation of the contract seems most unfortunate for Party Bus. But viewed in another way, what may have been a lucky break for Party Bus, did not eventuate. Party Bus was in breach. The breach rendered it liable to cancellation. Mr Clark at the Ministry was (assumed for present purposes), going to be lenient. He then was not lenient. There nonetheless remained a breach of the contract, entitling the Ministry to cancel.[78] As I said earlier, it is not a situation where Party Bus had no remedy. If the cancellation had not been justified, Party Bus would have had a remedy against the Ministry. It failed in all of its arguments against the Ministry, and the present action would cut across both the contract and the law of contract.[79] NZTA does not owe a duty of care to Party Bus.[80] I also find that NZTA did not cause Party Bus's loss.[81] The statement of claim discloses no reasonably arguable cause of action and is struck out.---------------------------------------Hinton J