Parties frequently agree under contract to settle any disputes about that contract by arbitration, save for any "urgent interlocutory relief".  In Clark Road Developments Ltd v Grande Meadow Developments Ltd [2017] NZHC 2589, the High Court confirmed, unsurprisingly, that an injunction ordering payment of the $3m at issue between the parties was not "urgent interlocutory relief" for the purposes of such a dispute resolution clause.

The case concerned a development cooperation contract (DCA), under the terms of which Clark Road Developments Ltd (CRD), and the first to third defendants (Development Companies), contracted for the purpose of subdividing and developing land. 

A dispute arose between CRD and the Development Companies when CRD instructed a construction company in a manner the Development Companies alleged to breach the DCA.  Following mediation, CRD alleged that the Development Companies agreed to pay CRD a sum of almost $3m.  The defendants refuted that.  In any event, engineers engaged separately by both CRD and the Development Companies both certified the sum of $3m as a "fair and reasonable" sum for the purposes of the costs incurred by CRD under the DCA.

The High Court rejected that an interim mandatory injunction for payment of that sum was appropriate for the following reasons:

  • The relief sought by CRD was inconsistent with the Arbitration Act 1996.  The Court was not satisfied that the harm "is not adequately reparable by an award of damages", since the sum sought was in fact damages under the DCA
  • CRD made its application on the basis that the Development Companies had no arguable defence, which in substance was akin to a summary judgment claim.  However, in Zurich Australian Insurance Ltd v Cognition Education Ltd [2014] NZSC 188, [2015] 1 NZLR 383 the Supreme Court made clear that a party cannot use summary judgment to thwart a dispute otherwise governed by arbitration under contractual agreement
  • It was clear that there was a dispute governed by arbitration under the DCA
  • Interim mandatory injunctions for payment of money "are at best rare".

See the Court's decision here.