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i-Health Ltd v iSoft NZ Ltd [2011] NZCA 575; [2012] 1 NZLR 379 (14 November 2011)

Last Updated: 25 January 2018

JUDGMENT OF THE COURT

A The appeal is dismissed.

2. The appellant is to pay to the respondents costs as for a standard appeal on a band A basis plus usual disbursements.

___________________________________________________________________

REASONS OF THE COURT

(Given by Randerson J)

Table of Contents

Introduction

[1] The appellant (i-Health) was involved in the development of software products for use in the health sector. It agreed to sell its business to the first respondent (iSoft) on 17 December 2003 (the Agreement).
[2] A minimum purchase price was agreed but this could be increased depending on the extent of revenue derived by iSoft from the sale of the software products over a five year period after the settlement of the sale. Under the Agreement, iSoft undertook to use reasonable endeavours to promote sales of the software products it purchased from i-Health. In proceedings issued in the High Court, i-Health alleges that iSoft breached those obligations and seeks damages of $14.25 million against iSoft and the second respondent as guarantor of iSoft’s obligations under the Agreement.
[3] Soon after the Agreement was signed, variations were agreed and included in a Variation Agreement. This contained a clause limiting iSoft’s liability as purchaser. Subject to two identified exceptions, liability was to be limited to $5 million. In the High Court, Asher J was asked to determine as a preliminary question whether the limitation of liability included any award of interest in favour of i-Health which iHealth might subsequently obtain under s 87 of the Judicature Act 1908, in addition to damages.
[4] Asher J held that, on its true construction, any award of interest under the Judicature Act was included within the $5 million cap.^[1] i-Health now appeals against that decision contending that any award of statutory interest is a discrete matter not included within the $5 million cap.
[5] During the hearing of the appeal, we raised with counsel whether it was open for the parties to agree to oust or limit the jurisdiction of the Court to order statutory interest. The Court also raised questions about the application of the cap to any post-judgment interest under r 11.27 of the High Court Rules. Further submissions on these issues have now been received from the parties.

The issues

[6] Against that background, the issues are:

• (a) Can the parties agree to oust or limit the jurisdiction of the Court to exercise the discretion conferred by s 87 of the Judicature Act to award interest on damages?
• (b) Was the Judge correct to rule that the $5 million cap included any interest awarded under s 87 of the Judicature Act?
• (c) Does the limitation clause in the agreement apply to any post-judgment interest to which i-Health would otherwise by entitled under r 11.27 of the High Court Rules?

Background

[7] Although the issue for the Judge was essentially one of interpretation of the Agreement, both parties called evidence as to the factual matrix. The essential facts are not in dispute. The summary which follows is drawn from the High Court judgment.
[8] i-Health was incorporated in 2003 as a subsidiary of Galen Group Ltd. Galen Group was a health information technology company and had established i-Health’s predecessor in 1999 to develop new software products to meet domestic and international demand for web-based electronic health records. By 2003, Galen Group had invested several million dollars in developing a suite of software products that enabled health care providers and patients to access clinical information and patient records online. A significant customer base had been developed with annual revenues in excess of $3 million.
[9] In mid-2003, iSoft expressed an interest in acquiring i-Health and Galen Group. iSoft was a major health information software company based in the United Kingdom with extensive operations there and in Australia. iSoft offered to purchase both Galen Group and i-Health. Galen Group would be purchased by a fixed purchase price payable in cash while the purchase of i-Health would be based on software revenue which iSoft would earn from selling i-Health’s products over a five year period.
[10] Two separate agreements were entered into on 17 December 2003. We are concerned only with the Agreement under which iSoft purchased the business and assets of i-Health.
[11] Before settlement of the purchase, the Variation Agreement was signed in circumstances we later describe.

The terms of the Agreement

[12] The purchase price was to be not less than $1.475 million plus GST (if any). However, that minimum figure was subject to adjustment and was to be paid under clause 3A. Under that clause, an initial sum was to be paid upon the completion date (23 December 2003) equivalent to an amount payable under the contemporaneous agreement for the sale of the Galen Group business. That sum was to be treated as an advance to i-Health of the additional and bonus payments payable under clause 3A.
[13] The additional payments were calculated according to software revenues earned by the group of companies comprising iSoft. The additional payments were to be fixed by reference to the levels of software revenue in each of the five years after settlement, commencing at $4 million in the first year and increasing in specified steps to $24 million in the fifth year. If the software revenue earned by iSoft was less than the stipulated figure in any year, iSoft was to pay 15 per cent of the actual software revenue in the year in question. On the other hand, if the revenue figures were exceeded, then iSoft was to pay a fixed sum ranging from $600,000 in the first year to $3.6 million in the fifth year.
[14] Clause 3A also required iSoft to pay to i-Health bonus payments if stipulated revenue figures were exceeded in any year. These sums were payable on top of the fixed sums described as “additional payments”. Clause 3A(g) required payment of the amounts due under the clause within 45 days after the expiry of each quarter over the five year period. If the payments were not paid when due, iSoft was obliged to pay default interest on the unpaid amount at 12 per cent, such interest to be capitalised and compounded monthly.
[15] The Agreement contained three clauses which the Judge described collectively as “the best endeavours” obligations. Clause 3.6 obliged iSoft to procure the Group to make all reasonable investment in product development, sales and marketing that a prudent organisation would make; clause 3A(i) required iSoft to use all reasonable endeavours to promote, market, distribute and sell the products; and clause 3A(j) obliged iSoft to procure the Group to market and license the products at a market price comparable to similar products in the market. i-Health’s third amended statement of claim alleged a breach of all three of these clauses.
[16] The final provision of relevance to the current issue is the guarantee and indemnity provided by the second respondent under clause 21.1 of the Agreement. This provided:

In consideration of the Vendor entering into this Agreement, iSOFT hereby unconditionally and irrevocably guarantees to the Vendor the due and punctual undertakings, warranties and indemnities under or pursuant to this Agreement (the “Guaranteed Purchaser Obligations”) and agrees to indemnify the Vendor against all losses, liabilities, costs (including without limitation legal costs), charges, expenses, actions, proceedings, claims and demands which the Vendor may suffer through or arising from any breach by the Purchaser of the Guaranteed Purchaser Obligations to the extent of any limit on the liability of the Purchaser in this Agreement.

The Variation Agreement

[17] The iSoft and Galen Group agreements for sale and purchase were conditional upon the approval of the board of iSoft’s parent company in the United Kingdom. The settlement date provided for in the Agreement was 23 December 2003, six days after the date of the agreement. However, settlement was not achieved on that date. From 19 December 2003 onwards, iSoft expressed concerns about various matters. As a result of exchanges between the parties, the Variation Agreement was signed on 9 January 2004. The transaction was settled the same day. Relevantly, the Variation Agreement provided:

3. Variation to the original agreement

The original agreement is varied as follows:

3.1 Clause 3A is varied by adding the following additional paragraph:

“(k) The maximum aggregate liability of the Purchaser and/or Group (including legal costs and expenses incurred in defending a Claim from a third party) under or in relation to this Agreement (including without limitation for negligence and other torts) is limited to $5,000,000. This limitation of liability does not apply to the Purchaser’s liability to pay the Purchase Price or to make payments due to the Vendor for Software Revenue received by the Group. Nor does the limitation of liability apply to court-awarded legal costs or expenses awarded to the Vendor.

[18] The Judge found that, construed objectively, the exchanges between the parties in negotiations tended to establish background facts known to both parties or which cast light on meaning.^[2] In contrast, material created by one party relating to negotiations and not communicated to the other was irrelevant since it related to the subjective understandings and beliefs of that party. Material of the first kind could include draft contracts exchanged, subject to the touchstone of relevance, firmly applied.^[3]
[19] With those principles in mind, the Judge found that as a consequence of earlier disputes with unrelated parties, iSoft had every reason to be sensitive to exposure to a claim for breach of a best endeavours clause.^[4] Email exchanges between the parties in early January 2004 showed that Mr Richard Craven of iSoft had raised the issue of a minimum pay-out for any claim against iSoft in relation to the best endeavours clauses.
[20] The Judge then found:

[47] Although there is no direct evidence of this, it can be inferred that there were discussions between the parties which led to an exclusion of the limitation of liability clause so that it did not apply to the obligation to pay the purchase price. It can also be inferred that the cap was extended in the course of negotiations from being limited to the minimum payout, to a rounded sum of $5 million. Mr Pate of iSoft then drafted a variation which was sent to Mr Allan and Mr Craven. He asked Mr Allan to review the variation and to provide his comments to Mr Craven at first instance. The variation, which is different from the ultimate variation clause, read:

(k) The maximum aggregate liability of the Purchaser and/or the Group (including legal costs and expenses incurred in defending a Claim from a third party) under or in relation to this Agreement (including without limitation for negligence and other torts) is limited to $5,000,000. This limitation of liability does not apply to payments due to the Vendor for Software Revenue received by the Group.

[48] Following further discussions involving both sides the clause was revised to its present form. I set that clause out again, showing the additions in italics:

(k) The maximum aggregate liability of the Purchaser and/or the Group (including legal costs and expenses incurred in defending a Claim from a third party) under or in relation to this Agreement (including without limitation for negligence and other torts) is limited to $5,000,000. This limitation of liability does not apply to the Purchaser’s liability to pay the Purchase Price or to make payments due to the Vendor for Software Revenue received by the Group. Nor does the limitation of liability apply to court-awarded legal costs or expenses awarded to the Vendor.^[5]

The approach to interpretation in the High Court

[21] Citing DHL International (NZ) Ltd v Richmond Ltd^[6] and Dairy Containers Ltd v Tasman Orient Line,^[7] Asher J said:

[20] Thus in interpreting a limitation clause the interpretation exercise is like any other. However, because a limitation clause involves a party abrogating his rights at common law it is to be assumed that the parties will not have intended to limit liability unless clear and unambiguous language is used. I do not see this as involving an application of the contra proferentem rule. Rather, it results from the expectation that any reasonable person would have in interpreting the contract objectively, that no party will lightly limit its common law right to sue for damages.

[22] The Judge considered it settled in New Zealand that the principles set out in the judgment of Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society^[8] accurately reflected the law in New Zealand. In that decision, Lord Hoffmann stated that the object in construing a contract was:

The ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

[23] Asher J then adopted the general approach articulated by Tipping J in Vector Gas Ltd v Bay of Plenty Energy:^[9]

The ultimate objective in a contract interpretation dispute is to establish the meaning the parties intended their words to bear. In order to be admissible, extrinsic evidence must be relevant to that question. The language used by the parties, appropriately interpreted, is the only source of their intended meaning. As a matter of policy, our law has always required interpretation issues to be addressed on an objective basis. The necessary inquiry therefore concerns what a reasonable and properly informed third party would consider the parties intended the words of their contract to mean. The court embodies that person. To be properly informed the court must be aware of the commercial or other context in which the contract was made and of all the facts and circumstances known to and likely to be operating on the parties’ minds.

[24] Applying these principles, the Judge first considered the plain meaning of the words used in their context. He considered that the exclusion in the limitation clause of iSoft’s “liability to pay the Purchase Price, or to make payments due to [i-Health] for Software Revenue received by the Group” was not engaged. Rather, i-Health’s claim was for damages for breach of the best endeavours clauses. Mr Harris for iHealth did not challenge the Judge’s conclusion in that respect and we are satisfied the Judge was correct to so conclude.
[25] The Judge was satisfied that the $5 million cap was intended to apply to any breach by iSoft of the best endeavours obligations.^[10] Even if there were any ambiguity, the email correspondence between the parties, construed objectively, supported that conclusion.^[11]
[26] Turning to the critical question of whether interest awarded under s 87(1) of the Judicature Act was included within the cap, the Judge rejected the submission made on behalf of i-Health that statutory interest under that provision did not fall within the words in the first sentence of the limitation clause “under or in relation to the Agreement”. The essence of the Judge’s reasoning on this point was:

[61] Here, the relevant cause of action is a breach of the agreement, and any debt will arise from an award of damages for such breach. If the plaintiff succeeds it will be because there has been a breach of the agreement. Therefore any award of interest will arise only as a consequence of the causes of action based on the agreement being proven. It may be that such a discretionary award of interest does not arise “under” the agreement, in the sense that it would not arise directly from any term or breach of term of the agreement. However, it indirectly arises from such a breach. But for the breach of the agreement there would be no liability for interest. Undoubtedly such liability relates to the agreement and falls within the phrase “in relation to” the agreement. Such an interpretation is supported by the use of the phrase “the maximum aggregate liability ...”. The reference to “aggregate” indicates an intention to catch more than one type of liability and is consistent with the limitation extending to interest.

[27] The Judge also noted that the parties had specifically turned their minds to the possibility of an award of legal costs or expenses being ordered by the Court in favour of i-Health.^[12] This was expressly provided for in the last sentence of the limitation clause which excludes any such costs or expenses from the cap. The Judge considered that, if the parties had intended to exclude statutory interest from the cap, then it would have been explicitly excluded.
[28] The Judge went on to discuss authorities^[13] cited to him where the courts have specifically addressed whether limitation provisions in contracts or in legislation excluded the power of the court to order statutory interest on awards of damages. We discuss these further below.

First issue: Can the parties agree to oust or limit the jurisdiction of the Court to exercise the discretion conferred by s 87 of the Judicature Act to award interest on damages?

[29] Section 87 of the Judicature Act provides:

87 Power of Courts to award interest on debts and damages

(1) In any proceedings in the High Court, the Court of Appeal, or the Supreme Court for the recovery of any debt or damages, the Court may, if it thinks fit, order that there shall be included in the sum for which judgment is given interest at such rate, not exceeding the prescribed rate, as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment:

Provided that nothing in this subsection shall—

(a) Authorise the giving of interest upon interest; or

(b) Apply in relation to any debt upon which interest is payable as of right, whether by virtue of any agreement, enactment, or rule of law, or otherwise; or

(c) Affect the damages recoverable for the dishonour of a bill of exchange.

(2) In any proceedings in the High Court, the Court of Appeal, or the Supreme Court for the recovery of any debt upon which interest is payable as of right, and in respect of which the rate of interest is not agreed upon, prescribed, or ascertained under any agreement, enactment, or rule of law or otherwise, there shall be included in the sum for which judgment is given interest at such rate, not exceeding the prescribed rate, as the Court thinks fit for the period between the date as from which the interest became payable and the date of the judgment.

(3) In this section the term the prescribed rate means the rate of 7½ percent per annum, or such other rate as may from time to time be prescribed for the purposes of this section by the Governor-General by Order in Council.

[30] Section 87 was introduced to the Judicature Act in substantially its present form by the Judicature Amendment Act 1952. It was based upon s 3 of the Law Reform (Miscellaneous Revisions) Act 1934 (UK). This followed the recommendations of the Law Revision Committee (UK) in its March 1934 report on this subject. The Committee noted that, at common law, a plaintiff making a claim for a debt or damages could only recover interest from the date on which the cause of action accrued if the claim was on a contract which contained an express or implied term for interest or if there was a specific statutory provision allowing for interest. The Committee recommended that the courts, including all appellate tribunals, should have the power to award interest in every case in their discretion where interest was not already provided for by statute, contract, or otherwise.^[14] In making this recommendation, the Committee agreed with the following observations by Lord Herschell in London, Chatham and Dover Railway Co v South Eastern Railway Co that:^[15]

... when money is owing from one party to another and that other is driven to have recourse to legal proceedings in order to recover the amount due to him, the party who is wrongfully withholding the money from the other, ought not in justice to benefit by having that money in his possession and enjoying the use of it, when the money ought to be in the possession of the other party who is entitled to its use. Therefore, if I could see my way to do so, I should certainly be disposed to give the appellants, or anybody in a similar position, interest upon the amount withheld from the time of action brought at all events.

[31] A similar view as to the rationale for s 87 was expressed by Somers J in the decision of this Court in Day v Mead.^[16] In simple terms, the Court may award interest under the statutory provision to enable proper compensation to a plaintiff who recovers judgment for a debt or damages. In such circumstances, the plaintiff has been deprived of the opportunity to use or invest the money to which he or she is entitled while the defendant has had the benefit of the money which he or she ought not to have had.
[32] Plainly, the section was intended to be remedial by giving a discretionary power to the Court to grant interest at a rate not exceeding the prescribed rate in all cases other than those in which interest is payable as of right under s 87(1)(b).
[33] It is common ground that the proviso in s 87(1)(b) does not apply to iHealth’s claim for damages for breach of the best endeavours clauses. It is agreed that i-Health’s claim is for damages and not for a debt. The proviso applies only to claims in relation to any debt.^[17]
[34] Mr Harris accepted that rights conferred by statute can be waived in certain circumstances. He cited the following statement of general principle by the learned editors of Statute Law in New Zealand:^[18]

Everyone has the right to waive and to agree to waive the advantage of a law made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with or without infringing any public right or public policy.

[35] Burrows and Carter go on to note that the question is ultimately one of statutory interpretation. That involves discovering the purpose of the legislation and deciding whether that purpose would be infringed by the waiver or contracting out.^[19]
[36] Similar views are expressed in Bennion:^[20]

The question whether it is legally possible to contract out, or waive performance, of a statutory duty depends as always on the wording of the legislation. A well-drafted modern Act makes the matter clear. Where the Act is not clear, careful scrutiny of the wording may be necessary to glean Parliament’s implied intention ... The starting point must always be what the Act actually says, but the important contrast is between cases where the policy of the Act allows contracting out in cases where it does not ...

[37] Bennion discusses examples of statutory provisions which may be waived.^[21] These include a statutory defence (such as a relevant statute of limitation) and a procedural rule (such as a rule governing service of documents). Waiver may occur by conduct or by express agreement.
[38] Mr Harris accepted that the policy considerations underlying s 87 did not justify a prohibition on parties agreeing to waive or limit the right to seek relief under that provision.
[39] We agree with the view expressed by the learned authors of Statute Law in New Zealand that the ability to waive or contract out of a statutory right is essentially a matter of statutory interpretation. Regard must be had both to the purpose and text of the relevant statutory provisions. Matters which are purely procedural may more readily be waived or limited but the courts will be less ready to accept that substantive rights may be waived or that parties may agree that significant statutory duties need not be performed.
[40] In considering s 87 specifically, there are factors both supporting and pointing against the ability of contracting parties to agree to waive or limit the right to seek relief under the section. There are two principal factors tending to suggest that Parliament did not intend to allow parties to waive or limit the rights available under the section. The first, based on the historical reasons for the introduction of this power, is that it was intended to remedy an obvious injustice in cases where no contractual or statutory interest rate applied. The second is that, by specifying particular exclusions or restrictions in the application of the section, the legislature was, by implication, intending that it was not open to parties to agree upon any other exclusions or restrictions.
[41] However, the decisive argument in favour of the proposition that parties may agree to exclude or limit the right to apply for statutory interest is that advanced by Ms Bryant on behalf of iSoft. It would be odd if the parties are at liberty to agree upon specific interest rates (which may be higher or lower than the prescribed rate under the section),^[22] yet are not permitted to agree to exclude or limit the right to apply for statutory interest. It would plainly be open for parties to agree that interest was payable only at a nominal rate. If parties could agree that the interest rate applicable was, say, one per cent or even lower, there would be no logic in preventing parties from agreeing that the interest rate should be nil or that, as occurred in the present case, there should be a cap on the amount which could be recovered for interest. We are also influenced by the fact that the section does not confer any right to interest, only the right to seek such an award in the Court’s discretion. The authorities show there may be a wide range of factors relevant to the exercise of this discretion.^[23] If there were an absolute right to interest conferred by statute, it might be more difficult to conclude that the parties could waive or limit the right.
[42] We conclude that the parties to contracts may agree to waive or limit the amount of interest which may be recovered by application under s 87 of the Judicature Act.

Second issue: Was the Judge correct to rule that the $5 million cap included any interest awarded under s 87 of the Judicature Act?

[43] We commence by referring to the approach to be adopted in interpreting a limitation clause of this kind. We agree with the Judge that the general approach to the interpretation of such a clause should be the same as that applying to the interpretation of contracts generally as discussed in Investors Compensation Scheme Ltd v West Bromwich Building Society and by the Supreme Court in Vector.^[24] The interpretation of a contract involves an inquiry as to what a reasonable and properly informed third party would consider the parties intended to mean. The overall commercial context is relevant and the contract is to be construed as a whole.
[44] In principle, the position should be no different in relation to limitation clauses as Richardson J observed in DHL International (NZ) Ltd v Richmond.^[25] This general approach was confirmed in the Dairy Containers case^[26] but with the following additional observations by Lord Bingham (delivering the advice of the Privy Council) as to the approach to limitation or exemption clauses:

[12] ...This clause must be construed in the context of the contract as a whole. The general rule should be applied that if a party, otherwise liable, is to exclude or limit his liability or to reply on an exemption, he must do so in clear words; unclear words do not suffice; any ambiguity or lack of clarity must be resolved against that party: Homburg Houtimport BV v Agrosin Private Ltd (The “Starsin”) [2003] 2 WLR 711, para [144], per Lord Hobhouse of Woodborough. There may reasonably be attributed to the parties to a contract such as this such general commercial knowledge as a party to such a transaction would ordinarily be expected to have, but with a printed form of contract, negotiable by one holder to another, no inference may be drawn as to the meaning it would convey to a reasonable person having all the background knowledge which is reasonably available to the person or class of persons to whom the document is addressed (Homburg, at para [73] per Lord Hoffmann), which would certainly include a holder such as Dairy Containers.

[45] While we are in general agreement with Lord Bingham’s remarks, we have reservations about his comment that, in the case of ambiguity, a clause such as this is to be construed against the party seeking to rely on it. Rather, general principles of contractual interpretation should apply to establish what the parties intended. However, we do agree that where one party seeks to argue that the other has agreed to waive or limit a right of significance to that party, the Court would ordinarily look for clear language or necessary implication before reaching that conclusion. In particular, the Court should not lightly attribute to the parties an intention to waive a statutory right such as the right to seek statutory interest.^[27] That is because it may be inherently improbable that the affected party would agree to such a waiver or limitation given the remedial nature of this discretionary power, the object of which was to relieve against injustice through delay in the plaintiff receiving the damages to which it may be entitled. However, sight must not be lost of the ultimate objective of ascertaining the meaning the parties intended their words to bear in the factual context in which the contract was made.
[46] Here, Mr Harris submitted it was inherently improbable that the parties would have intended that the value of the damages payable for breach of the best endeavours covenants could effectively be eroded over time, with any delays in resolving the dispute operating to the advantage of the contract breaker. He submitted that the Court should assume that the parties did not intend to limit iSoft’s liability to such a significant extent in the absence of clear and unambiguous wording.
[47] Notwithstanding Mr Harris’s careful submissions, we agree with the interpretation adopted by the Judge. It is plain from the clause itself and from the admissible background circumstances that iSoft was concerned to limit its liability for damages for breach of the best endeavours obligations. The history of the negotiations and the drafts of the limitation clause contained in the Variation Agreement show that careful attention was given by the parties to the precise wording of the limitation clause. In particular, it was recognised that the cap should not apply to iSoft’s liability to pay the purchase price or to make the additional and bonus payments to i-Health which depended upon the extent of software revenue received by the Group.
[48] Most importantly, the parties clearly turned their mind to the possibility that the Court could award legal costs or expenses on any judgment obtained by i-Health. The parties recognised that by the last sentence in the limitation clause which provided that any such court-awarded legal costs or expenses would not be constrained by the $5 million cap. We agree with the Judge that if the parties had intended to exclude interest under the Judicature Act, this was the opportunity for them to do so but they did not.
[49] We also agree with Ms Bryant that a flaw in i-Health’s contentions is demonstrated by its acceptance that the contractual rate of default interest under clause 3A(g) of the Agreement would fall within the limitation clause as a liability under the Agreement and that, if i-Health were to obtain judgment for interest as special damages, any such interest would also amount to a liability in relation to the Agreement for the purposes of the first sentence in the limitation clause. If contractual interest or interest as special damages fall within the cap, then it is difficult to see how the same conclusion should not be reached in relation to statutory interest.
[50] Ms Bryant emphasised the reference in the limitation clause to “the maximum aggregate liability of the Purchaser...”. She submitted this demonstrated the intended breadth and comprehensive coverage of the clause. Mr Harris submitted that the reference to “aggregate” liability merely reflected that the clause covered the aggregate liability of the iSoft Group. That may be so, but the broadly expressed language nevertheless supports the Judge’s conclusion.
[51] It remains to consider the authorities discussed by the Judge which specifically address contractual or statutory limitation provisions and whether they excluded the right to a successful plaintiff to seek statutory interest on top of damages.
[52] The Judge was referred to two Australian cases in which opposite conclusions were reached as to whether limitation provisions were effective to exclude the power of the Court to award statutory interest. In Saunders v Ansett Industries,^[28] Wells J found that the provisions of the Civil Aviation (Carriers’ Liability) Act 1959 – 1970 (Cwth) limited the liability of a carrier for damage caused by the carrier to a maximum of $30,000 but did not limit the power of the Court to make an award of interest in addition to the maximum sum awarded for damages. The relevant interest provision entitled the successful party to interest on damages unless good cause was shown to the contrary. The Court found that the right to interest was not an incident of the plaintiff’s cause of action or of the Court’s finding that the cause of action was well-founded. Rather it was a recognition that an award of interest was required to achieve practical justice. This case clearly turned on the construction of the relevant legislation and we do not view it as having any direct bearing on the interpretation of the contract at issue in this appeal.
[53] The Judge was also referred to the decision of Giles J^[29] in Bulk Materials (Coal Handling) Pty Ltd v Compressed Air and Packaging Systems.^[30] The case was concerned with limitation provisions in a supply contract. The supplier’s liability for claims under the contract depended on the nature of the claim. The claim at issue was limited to the contract sum. The limitation of liability was very broadly expressed as applying to “all liability whatsoever arising under or out of or in the course of the Contract or the performance thereof or in any way related thereto”. It was said to include, but was not limited to, “negligence, fraud, misrepresentation or other tort”. Although there was no express exclusion from the limitation of the right to apply for statutory interest, any liability by either party to pay contractual interest on overdue payments was expressly excluded from the limitation.
[54] Giles J distinguished Saunders v Ansett by reason of the particular statutory provisions there in question. After reviewing a number of other authorities, he concluded that there was no universal solution and each case depended on its own circumstances. In deciding that the limitation clause excluded the right to apply for statutory interest, the Judge emphasised that the contract clearly considered the supplier’s liability was to be viewed widely and then stated:^[31]

... Unless, therefore something in the purpose in cl 27.3 [the limitation provision] calls for a different conclusion, the s 94 interest is within “liability” in cl 27.3. The evident purpose is that each of the parties will know his entitlement and the exposure, no doubt with prices being struck and insurance arranged accordingly. While it would not greatly damage that purpose to allow compensation for the loss of use of money, in commercial contracts where the parties can agree upon their entitlements and exposure there is not the same significance for possible injustice and hardship as seems to have been perceived in Saunders v Ansett Industries, but rather certainty has major significance.

[55] We agree with Asher J that the reasoning of Giles J in the Bulk Materials case is to be preferred. The importance of certainty is not to be under-estimated in the commercial context.
[56] The Judge also referred to National Coal Board v Neill (St Helens) Ltd^[32] and SGS (NZ) Ltd v Quirke Export Ltd.^[33] Both cases involved limitation clauses and awards of interest were added. However, in neither case was there any discussion of the point at issue in the present appeal. They do not assist in determining this appeal.
[57] Mr Harris referred us to Markerstudy Insurance Co Ltd v Endsleigh Insurance Services Ltd,^[34] a decision of Steel J sitting in the Commercial Court, Queen’s Bench Division. This decision was not before Asher J. The case was concerned with a dispute in relation to claims handling agreements in the insurance industry. The relevant limitation clause provided:

Endsleigh’s total liability in contract, tort (including negligence or breach of statutory duty), misrepresentation, restitution or otherwise, arising in connection with the performance or contemplated performance of the Agreement shall be limited to the aggregate amount of fees received pursuant to clause 6.1 above.

[58] The Judge found that contractual interest was included within the limitation but statutory interest was of a different character. In a very brief comment, the Judge said:^[35]

It [statutory interest] is not a “liability in contract” but a discrete statutory liability arising from the exercise of the Court’s discretion.

[59] Steel J’s conclusion is similar to that of Wells J in Saunders v Ansett. But, like Giles J in Bulk Materials, we consider that the resolution of the issue in question is fact-dependent. Whether a contract will be interpreted as excluding or limiting the right to apply for statutory interest will turn on the language used by the parties, the factual matrix and the commercial or other context.
[60] While we recognise that the appellant may well be disadvantaged if it is precluded from seeking the right to statutory interest on top of the $5 million contractual cap, we conclude, for the reasons already given, that this is the necessary outcome of the bargain the parties struck. It is not for the courts to re-write a contract entered into by substantial commercial parties, particularly where the attention given to the detailed drafting of the relevant clause was obviously considerable.

Third issue: Does the limitation clause apply to any post-judgment interest to which i-Health would otherwise be entitled under r 11.27 of the High Court Rules?

[61] As Ms Bryant has pointed out, any question of the availability of post-judgment interest was not within the question the High Court was asked to answer. While submitting that different legal and policy considerations arise with respect to interest under r 11.27 of the High Court Rules to those applying to interest under s 87, Ms Bryant submitted that the issue of post-judgment interest did not fall to be determined in this appeal.
[62] For his part, Mr Harris submitted that there was no difference in principle between interest under s 87 up to the date of judgment and interest post-judgment. It would be rare for commercial parties to agree that interest, otherwise payable by a defendant, should be captured by a limitation clause such as that in issue. This, he submitted, demonstrated the flaw in the conclusion reached by the High Court as to Judicature Act interest. There was no justification in the language adopted by the parties in the agreement or in the factual matrix to distinguish between interest ordered under the Judicature Act and post-judgment interest.
[63] We agree with Ms Bryant that any issue about post-judgment interest lies outside the jurisdiction of the Court in this appeal. We also agree that different legal and policy issues may arise in relation to post-judgment interest. The most obvious difference is that post-judgment interest applies to a judgment as a matter of right rather than discretion. However, we decline to reach any conclusion on this issue.

Result

[64] The appeal is dismissed.
[65] The appellant is to pay to the respondents costs as for a standard appeal on a band A basis plus usual disbursements.

Solicitors:
Gilbert Walker, Auckland for Appellant
Hesketh Henry, Auckland for Respondents

^[1] i-Health Ltd v iSoft NZ Ltd HC Auckland CIV-2006-404-7881, 8 September 2010.
^[2] At [41].
^[3] At [42].
^[4] At [44].
^[5] We have modified this quotation from the judgment to correct an inaccuracy in the quotation.
^[6] DHL International (NZ) Ltd v Richmond Ltd [1993] 3 NZLR 10 (CA) at 17.
^[7] Dairy Containers Ltd v Tasman Orient Line [2004] UKPC 22, [2005] 1 NZLR 433 at 443.

^[8] Investors Compensation Scheme Ltd v West Bromwich Building Society [1997] UKHL 28; [1998] 1 WLR 896 (HL) at 912.
^[9] Vector Gas Ltd v Bay of Plenty Energy [2010] NZSC 5, [2010] 2 NZLR 444 at [19].
^[10] At [30].
^[11] At [51].
^[12] At [62].

^[13] Saunders v Ansett Industries Ltd [1975] 10 SASR 579 (SC) and Bulk Materials (Coal Handling) Pty Ltd v Compressed Air and Packaging Systems NSWSC BC9703095, 17 July 1997; (1997) NSW Lexis 940; National Coal Board v Neill (St Helens) Ltd [1985] 1 QB 300; and SGS (NZ) Ltd v Quirke Export Ltd [1988] 1 NZLR 52 (CA).
^[14] Law Revision Committee (UK) Second Interim Report Cmd 4546 (1934) at [8].
^[15] London, Chatham and Dover Railway Co v South Eastern Railway Co [1893] AC 429 at 437.
^[16] Day v Mead [1987] NZCA 74; [1987] 2 NZLR 443 (CA) at 463.
^[17] See Degmam Pty Ltd v Wright [1983] 2 NSWLR 348 (SC).

^[18] J F Burrows and R I Carter (eds) Statute Law in New Zealand (4th ed, LexisNexis, Wellington, 2009) at 35–36, citing P Langan and P B Maxwell (eds) Maxwell on the Interpretation of Statute (12th ed, Sweet & Maxwell, London, 1969) at 328.
^[19] At 38–39.

^[20] Francis Bennion (ed) Bennion on Statutory Interpretation (5th ed, LexisNexis, London, 2008) at 57.
^[21] At 58.
^[22] Alington Group Architects v Attorney-General [1998] 2 NZLR 183 (CA) at 188–189.

^[23] These may include delay; the conduct of the parties; the nature of the claim; and the interests of justice generally: Day v Mead [1987] NZCA 74; [1987] 2 NZLR 443 (CA) at 464–465; and Wilson & Horton Ltd v Attorney-General [1997] 2 NZLR 513 (CA) at 530.
^[24] See the discussion at [22]–[23] above.
^[25] DHL International (NZ) Ltd v Richmond Ltd [1993] 3 NZLR 10 (CA) at 17.
^[26] Dairy Containers Ltd v Tasman Orient Line [2004] UKPC 22, [2005] 1 NZLR 433 at 443.

^[27] In this respect we agree with Asher J’s approach cited at [21] above.
^[28] Saunders v Ansett Industries Ltd [1975] 10 SASR 579 (SC).
^[29] Chief Judge of the Commercial Division of the Supreme Court of New South Wales.

^[30] Bulk Materials (Coal Handling) Pty Ltd v Compressed Air and Packaging Systems NSWSC BC9703095, 17 July 1997, (1997) NSW Lexis 940.

^[31] Bulk Materials (Coal Handling) Pty Ltd v Compressed Air and Packaging Systems (1997) NSW Lexis 940 at [104].
^[32] National Coal Board v Neill (St Helens) Ltd [1985] 1 QB 300.
^[33] SGS (NZ) Ltd v Quirke Export Ltd [1988] 1 NZLR 52 (CA).
^[34] Markerstudy Insurance Co Ltd v Endsleigh Insurance Services Ltd [2010] EWHC 281 (Comm).
^[35] At [21].