Asphalt Supply Company Limited v Cole John Limited
[2021] NZHC 1257
•31 May 2021
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV 2020-419-346
[2021] NZHC 1257
UNDER THE District Courts Act 2016 BETWEEN
ASPHALT SUPPLY COMPANY LIMITED
Appellant
AND
COLE JOHN LIMITED
Respondent
Hearing: 20 April 2021 Appearances:
A M Swan and I Ko for the Appellant
E Learmonth and E Anderson for the Respondent
Judgment:
31 May 2021
JUDGMENT OF CAMPBELL J
This judgment was delivered by me on 31 May 2021 at 4:00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
ASPHALT SUPPLY COMPANY LIMITED v COLE JOHN LIMITED [2021] NZHC 1257 [31 May 2021]
Introduction
[1] The respondent, Cole John Limited (CJL), owns a commercial property in Manukau. CJL engaged Complete Limited (Complete) to undertake construction work on the property. This included laying asphalt on a car park and driveway.
[2] Complete subcontracted the asphalt work to the appellant, Asphalt Supply Company Limited (Asco). The agreed price for the work was $149,500.
[3] There was no contract between Asco and CJL. However, after carrying out the asphalt work, Asco provided Complete with a written warranty, in favour of CJL, for the asphalt work.
[4] CJL and Complete said Asco’s asphalt work was defective. Complete did not pay Asco in full. A balance of $80,040 remained. Asco sued CJL for that balance (Complete having gone into insolvent liquidation). CJL counterclaimed for breach of the warranty or in negligence, claiming damages for the cost of remedying the allegedly defective asphalt work.
[5] Asco, acknowledging it had no contract with CJL, discontinued its claim. CJL’s counterclaim went to trial. Judge D M Wilson QC found Asco liable both for breach of the warranty and in negligence. He awarded CJL damages of $130,129.65, being the cost of remedying the defective work. The Judge held Asco was not entitled to set off against that sum the balance of the price Complete had not paid.1
[6]Asco appeals.
Factual background
[7] On 24 November 2016, CJL engaged Complete to undertake construction work on the property. The parties entered into a detailed written contract. I will refer to this as the head contract.
1 Asphalt Supply Co Ltd v Cole John Ltd [2020] NZDC 22608.
[8] Mr Yiakop was the director of Complete. He was also the director of Hub Civil & Construction Limited (Hub Civil). Hub Civil carried out some of the construction work, and entered into some subcontracts, on behalf of Complete. At times Mr Yiakop did not make it clear whether he was acting for Complete or for Hub Civil. But, for the purposes of this appeal, the parties agreed that actions by Hub Civil could be treated as being on behalf of Complete. For that reason, in this judgment I will refer to Complete, even where Hub Civil may have been involved.
[9] In July 2017, Mr Yiakop asked Asco to quote for the supply of asphalt for the work on the car park and driveway at CJL’s property. He met representatives of Asco, Mr Everett and Mr Kumar, at the property on 11 July 2017.
[10] By this time Complete had carried out some work on the basecourse for the car park and driveway. Mr Everett and Mr Kumar were critical of the standard of the work on the basecourse. This led to a change. Rather than quoting merely for the supply of asphalt, it was arranged Asco would quote to supply and prepare the basecourse and to supply and lay asphalt.
[11] Asco provided several quotes to Complete. The first two were in emails dated 13 and 20 July 2017. These emails attached Asco’s standard “Conditions of Quotation and Terms of Payment”. The emails invited Complete to return the email “as confirmation of the above [quote] and acceptance of the Conditions of Quotation and Terms of Payment”.
[12] The final quote, which was accepted by Complete, was in an email dated 14 August 2017. This email did not attach Asco’s standard conditions. However, the email was part of a chain that started with the emailed quote of 20 July 2017, which did attach and refer to Asco’s standard conditions.
[13] That final quote described the work that Asco proposed to do. This included not only the supply and laying of asphalt, but also:
Basecourse Preparation
Supply and place basecourse to prepare existing grades to ensure water flow to existing drainage structures.
Allow to undercut four soft spots …
Allow for proof-roll testing for whole car park to ensure pavement structure is suitable to lay asphalt on.
[14]Asco’s standard conditions included, at cl 3:
Where design falls or grades are less than 1% or 1:100, ASCO cannot accept responsibility for surface water ponding.
[15] Asco’s final quote was accompanied by an invoice dated 14 August 2017, in the sum of $149,500. At Complete’s request, Asco addressed the invoice to CJL. The invoice described Asco’s work. This included:
Supply and place basecourse to prepare existing grades to ensure water flow to drainage structures.
[16] The invoice stipulated that a 50 percent deposit ($74,750) was required prior to commencing work, with the balance payable upon completion. On 16 August 2017, CJL paid $74,750 to Complete, and Complete paid the same sum to Asco.
[17] Between 17 and 31 August 2017, Asco carried out the basecourse and asphalt work. In the course of doing so, an additional “soft spot” was discovered. Asco says it was entitled to additional payment for the work on that soft spot. On 18 August 2017, Asco invoiced Complete an additional $5,290 for that work. For this reason, Asco says the unpaid balance for its work is $80,040.
[18] Asco says it completed the work on 31 August 2017. CJL disputes that. CJL says Asco’s work was defective, and therefore not completed.
[19] On 1 September 2017, Mr Yiakop raised issues about Asco’s workmanship with Mr Kumar. On 5 September 2017, at a meeting at the property, Mr Yiakop and CJL’s director Mr Lucas raised workmanship issues with Asco’s Mr Kumar and Mr Everett.
[20] On 6 September 2017, Asco sent an email to Complete saying “Please find our standard warranty attached.” Attached was a three-month warranty in favour of Complete. Complete then asked for a six-month warranty in favour of CJL. On 7
September 2017, Asco sent an email to Complete saying “Please find attached updated 6 months warranty as discussed.” The email attached a six-month warranty in favour of CJL.
[21] In the warranty Asco warranted to CJL the asphalt as supplied and laid, and promised it would (at its option) repair or replace any Asco product if it was defective as a result of manufacture, material or workmanship by Asco. The warranty was subject to various conditions and limitations. I will consider the terms of the warranty later in this judgment.
[22] Around the same time as emailing these warranties to Complete, Asco was disputing there were any issues with the quality of its work, and asking Complete to pay the balance of the contract price. On 15 September 2017, Complete sent a letter to Asco disputing liability to pay the balance, on the grounds of alleged quality issues. On 13 October 2017, Complete was placed in liquidation. Complete did not pay to Asco any part of the $80,040 balance that Asco says is owing.
CJL’s claim against Asco
[23] In a third amended statement of counterclaim dated 22 September 2020, CJL claimed Asco’s work was defective in various respects. The key claim was that the work was defective because of:
Incorrectly prepared and/or placed and compacted basecourse and/or asphalt on incorrect grades preventing rainwater from running to the drains and causing ponding of rainwater.
[24] CJL claimed it had suffered loss from Asco’s defective work, being the cost of remediating the defects. CJL alleged that cost was $130,129.65.
[25] CJL pleaded three causes of action, but pursued only two at trial. One was for breach of the warranty that Asco had provided in favour of CJL. CJL claimed it was entitled to enforce that warranty under s 12 of the Contract and Commercial Law Act 2017 (CCLA). CJL’s other cause of action was in negligence. CJL claimed Asco assumed and owed a duty of care to CJL for the proper completion of its work.
[26] In its defence to the counterclaim, Asco denied its work was defective, and denied CJL suffered any loss. Asco admitted it had provided a warranty to Complete for the benefit of CJL, but pleaded (i) the warranty was provided in consideration of Complete agreeing to pay the balance of the price; (ii) Complete failed to pay the balance; (iii) as a result there was a total failure of consideration for the provision of the warranty; and (iv) the warranty was therefore invalid and unenforceable. Asco denied it owed a duty of care.
[27] Asco also relied on cl 3 of its standard conditions: “Where design falls or grades are less than 1% or 1:100, ASCO cannot accept responsibility for surface water ponding.” Asco also pleaded, as affirmative defences, that it was entitled to set off the unpaid balance of the price – $80,040 – against any sum awarded to CJL. Asco pleaded the set off arose either under s 18 of the CCLA, or in equity.
Judgment below
[28] I summarise those parts of Judge Wilson’s judgment that are relevant to Asco’s appeal.
[29] Judge Wilson held the warranty was enforceable by CJL against Asco under s 12 of the CCLA. He rejected Asco’s arguments that the warranty was unenforceable for lack of consideration, or that it was conditional on prompt payment of the balance of the price.2
[30] The Judge rejected Asco’s reliance on cl 3 of its standard conditions. Asco had undertaken to supply and place basecourse to prepare existing grades “to ensure water flow to drainage structures”. Clause 3 was inconsistent with the warranty it gave to CJL.3
[31] Having found CJL could enforce the warranty, the Judge also dealt, for completeness, with the claim in negligence. He held Asco owed a duty of care to CJL.4
2 At [20]-[23].
3 At [30]-[32].
4 At [43]-[48].
[32] The Judge found that Asco’s work was defective and that it had therefore breached both the warranty and its duty of care. Asco was obliged to ensure water flow to drainage structures. A joint experts’ report established that its work did not do that.5
[33] As to the cost of remediating the defective work, the Judge was concerned about the credibility, independence and reliability of three quotes (in a range of
$81,000 to $87,000) on which Asco relied. The Judge found two other quotes more credible. He awarded CJL $130,129.65, which was the lesser of those two quotes.6
[34] Finally, Judge Wilson found Asco was not entitled to set off against that sum the $80,040 unpaid balance of the contract price. This was because that balance was due on completion, and Asco never completed the contracted work.7
Asco’s challenges to the Judge’s decision
[35] Asco’s notice of appeal set out ten grounds of appeal. Asco did not pursue all those grounds at the hearing. Based on the written and oral submissions made by Mr Swan, for Asco, Asco challenged the Judge’s decision on the following grounds (which I set out in what appears to me to be their logical order).
[36] Asco said the Judge was wrong to find CJL could enforce the warranty. Asco said the Judge was wrong because no consideration had been provided for the warranty, or because Asco had given the warranty on the basis that Complete would pay the balance of the contract price (which it had not done).
[37] If CJL could enforce the warranty, Asco said the Judge was wrong to find the effect of the warranty was that Asco was obliged to ensure water flowed to existing drainage structures. As part of this challenge, Mr Swan said the Judge was wrong to find cl 3 of Asco’s standard conditions did not apply to the warranty.
[38]Next, Asco said the Judge was wrong to find Asco owed a duty of care to CJL.
5 At [47] and [49]-[50].
6 At [60].
7 At [25], [45] and [61].
[39] As to breach, Asco said there was no evidential foundation for the finding that Asco’s work was defective. In part, this challenge depended on the outcome of the second and third challenges (because whether Asco’s workmanship was defective depended on what Asco was obliged to achieve).
[40] As to quantum, Asco said the Judge was wrong to reject the lower quotes for remediation work, and thereby to quantify CJL’s loss at $130,129.65.
[41] Finally, Asco said the Judge was wrong to find it did not have a set off (either under s 18 of the CCLA or in equity) for the unpaid balance of the contract price. As part of this challenge, Asco said the Judge was wrong to find Asco had not completed the works.
[42] At the hearing Mr Swan also submitted the Judge was wrong to find there was an oral agreement between Asco and Complete that Asco would provide CJL a six- month warranty. The Judge made no such finding. There is a passage in the judgment indicating the Judge was of the view there was such an oral agreement. But any such view was not a material part of his decision. The case below, and in this appeal, is primarily concerned with the effect of the written warranty that Asco indisputably did provide to CJL.
Issues on appeal
[43]In my view the issues that arise on the appeal, in their logical order, are:
(a)Was the Judge wrong to find CJL could enforce the warranty?
(b)Was the Judge wrong to find the effect of the warranty was that Asco was obliged to ensure water flowed to existing drainage structures?
(c)Was the Judge wrong to find Asco owed a duty of care to CJL?
(d)Was the Judge wrong to find Asco’s work was defective?
(e)Was the Judge wrong to quantify CJL’s loss at $130,129.65?
(f)Was the Judge wrong to find Asco did not have a set off?
Was the Judge wrong to find CJL could enforce the warranty?
[44] CJL sought to enforce the warranty under s 12 of the CCLA. That section applies, relevantly, to a promise contained in a contract that confers a benefit on a person, designated by name, who is not a party to the contract. Under s 12(2), the promisor is under an obligation, enforceable by the beneficiary, to perform the promise.
[45] The warranty confers a benefit on CJL, designated by name. Mr Swan submitted the warranty was nonetheless not enforceable by CJL because no consideration had been provided for it. Although he did not put it in these terms, I understood his submission to be that the absence of consideration meant the warranty was not, as s 12 requires, contained “in a contract”.
[46] I accept his point that s 12 applies only where the promise is contained in a contract (or a deed). But I do not accept his submission that there was no consideration. Asco’s own position (as pleaded, as recorded in the evidence of Mr Kumar and as put to me by Mr Swan) was that Complete said to Asco that if it provided the warranty, Complete would pay the balance of the contract price. Complete’s promise to pay, made after Complete and CJL had raised issues with the quality of Asco’s work, was consideration for the warranty.
[47] Mr Swan made an alternative argument in his reply submissions. He said that, if Complete’s promise to pay the balance was consideration for the warranty, there had been a total failure of that consideration, since Complete had not paid the balance. He did not elaborate.
[48] A total failure of consideration can be a ground for restitution. Asco is not seeking restitution. Complete’s failure to pay the balance of the contract price is not relevant to whether CJL can enforce the warranty.
[49] This is not to say that Complete’s failure to pay is irrelevant to the dispute as a whole. It may be a reason for allowing Asco a set off. I consider that below.
Was the Judge wrong to find the effect of the warranty was that Asco was obliged to ensure water flowed to existing drainage structures?
[50] In the warranty Asco promised to repair or replace (at its option) any Asco product without charge if it was “defective directly as a result of manufacture, material or workmanship by Asco” during the first six months after 31 August 2017. Determining whether Asco’s product was “defective” first requires a standard against which to measure the product. The Judge found Asco was obliged to carry out its work so that the finished product ensured water flowed to existing drainage structures at CJL’s property. While the Judge did not put it as such, he was holding that was a relevant standard against which to determine whether the work was defective.8
[51] Mr Swan made two submissions challenging the Judge’s finding. The first was that Asco took CJL’s property as it found it, and it was not Asco’s job to change existing falls.
[52] I do not accept that submission. The events and documents speak plainly. Asco initially quoted merely for the supply and laying of asphalt. That may have been on the basis that, to paraphrase Mr Swan, Asco was laying the asphalt on the basecourse as it found it. But that was not the basis of the quote that Complete accepted. The quote stated Asco would supply and place basecourse “to prepare existing grades to ensure water flow to existing drainage structures”. Almost the same description of what Asco would do appeared in the invoice, addressed to CJL, that accompanied the quote.
[53] Mr Swan’s other submission was that Asco’s obligations were limited by cl 3 of its standard conditions, and the Judge was wrong to find that limitation inapplicable by reason of its inconsistency with the warranty. For convenience, I repeat cl 3:
Where design falls or grades are less than 1% or 1:100, ASCO cannot accept responsibility for surface water ponding.
[54] In my view the Judge was right to find cl 3 inapplicable. Clause 3 applies where there are “design falls or grades”. The evident purpose of the clause is that
8 I say “a relevant standard” because there will, of course, have been other standards that Asco’s work had to meet. Ensuring water flow was the only standard relevant to this appeal.
Asco did not want to be responsible for water ponding if it was asked to carry out work to an exacting design standard. But Asco was not asked to carry out its work to any design falls or grades. There was no design. Asco was simply presented with a site. It agreed to prepare existing grades to ensure water flow to drainage. In those circumstances cl 3 was not engaged.
Was the Judge wrong to find Asco owed a duty of care to CJL?
[55] I have concluded the Judge was correct to determine the effect of the warranty was that Asco was obliged to ensure water flowed to existing drainage structures. Given that conclusion, it is not necessary to consider whether Asco might have owed a duty of care in tort to the same effect.
Was the Judge wrong to find that Asco’s work was defective?
[56] Mr Swan submitted the onus was on CJL to prove Asco’s work was defective. That is correct.
[57] He then submitted there was no evidence to support the Judge’s finding that the work was defective. He said this was the main ground of Asco’s appeal.
[58] As noted earlier, determining whether Asco’s work was defective requires a standard against which to measure the work. Mr Swan’s submission was predicated on Asco succeeding on its arguments about that standard – that is, its submission that Asco was not obliged to ensure water flowed to existing drainage structures, and its submission that its obligations were limited by cl 3. This is reflected in Mr Swan’s written submissions, which summarised Asco’s position in these terms:
[T]here has been no evidence led to support a finding that the work carried out by Asco was defective. The work to be carried out by Asco was to the existing grades when it commenced the work and excluded any ponding in flat areas of less than 1% fall. … Asco was not in any way responsible for the grades. Further the evidence given noted … that ponding only occurred on the flat surface. Perhaps more importantly, no evidence was lead [sic] that the flow of water from grades greater than 1% did not flow to the drainage structures.
[59] I have already rejected the foundation on which Mr Swan’s submission was based. I agree with Judge Wilson that Asco was obliged to ensure water flowed to
existing drainage structures, and that its obligation was not limited by cl 3. That is the standard against which to consider whether Asco’s work was defective. The question is whether CJL discharged the onus of proving Asco’s work was defective, when measured against that standard.
[60] The Judge dealt with this very briefly. He said “Asco’s work did not ensure water flow to existing structures as the expert’s [sic] report established.”9 He said the purpose of that report was to agree on the remediation of the car park to ensure water would flow to drainage structures. It was “implicit in this arrangement by the parties that remedial work was necessary because there were workmanship issues rendering that work unacceptable”.10
[61] The Judge’s brevity was understandable. The joint experts’ report noted several points of agreement. The first was that a survey reported “low points where no stormwater sumps exist, and also flat surface gradients across the site that create the current site surface water ponding”. Mr Lucas’s evidence included that “the water did not run into the drains”. He referred to photographs showing water ponding. Mr Yiakop’s evidence included reference to a letter he sent to Asco on 15 September 2017 complaining about excessive ponding. CJL’s witnesses were not challenged about flat surfaces or ponding. They were merely challenged about whether Asco was responsible for those issues. Asco’s only witness was Mr Kumar. He acknowledged there was ponding. His evidence was that Asco was not responsible for the ponding, saying it had occurred only where the site had a one per cent or less fall, and that “we were not responsible for changing any grading”.
[62]I conclude the Judge was right to find that Asco’s work was defective.
Was the Judge wrong to quantify CJL’s loss at $130,129.65?
[63] Under the warranty Asco said it would replace or repair, without charge, any defective work. Asco did not do so. On the Judge’s findings, which I have upheld, CJL was entitled to damages for loss caused by Asco’s breach of warranty.
9 At [49].
10 At [50].
[64] The Judge assessed CJL’s loss by reference to the cost of remediating Asco’s defective work. Asco does not dispute that the cost of remediation was the correct measure. Asco merely disputes the Judge’s finding that the cost of remediation was
$130,129.65.
[65] At trial the remediation work had not been carried out. The Court was therefore faced, as is common in these cases, with having to estimate the cost of remediation. Such a task involves at least two steps. First, there needs to be a determination of the scope of work necessary to remediate the defects. Secondly, there needs to be a determination of the reasonable cost of that work.
[66] There was agreement on the first step. The parties’ experts conferred and reached agreement on a remedial work methodology. This allowed them to prepare a schedule of work to enable quotes to be sought from contractors. But there was no agreement on the second step. A range of quotes were received, and the parties disagreed as to the reasonable cost of the work.
[67] Only CJL’s expert, Mr Brittliff, gave evidence. In a supplementary brief dated 1 September 2020, he stated three quotes had been obtained for the remedial work (based on the scope he had agreed with Asco’s expert). These were:11
Traffica: $130,129.65 Basecivil: $145,306.07 Asco: $81,430.65
[68] Mr Brittliff expressed the opinion that the remedial work was achievable in the range of the Traffica and Basecivil quotes. He said it would be up to the Court to determine whether the remedial cost should be determined on the basis of Asco’s lower quote, Asco being a party to the proceeding.
11 Mr Brittliff made some adjustments to the quotes to arrive at an overall estimated cost. I have used Mr Brittliff’s adjusted figures (as did the Judge).
[69] After Mr Brittliff signed his supplementary brief, but before trial, two further quotes came in. Mr Brittliff said he received the quotes from Asco and Asco’s expert. The two other quotes were:
Dacan Civil: $87,474.98 Sureway Civil: $83,163.15
[70] The Judge observed a “remarkable similarity” between the Asco quote and those of Dacan Civil and Sureway Civil. He also noted that the Dacan Civil and Sureway Civil quotes were subject to the same cautionary condition “all work to be agreed onsite prior to starting works”.12 The Judge expressed disquiet about the credibility, independence and reliability of those quotes. He noted Asco’s only witness, Mr Kumar, said he knew nothing about how the quotes had been obtained.
[71] The Judge recorded that Mr Brittliff’s opinion (that the remedial work was achievable within the cost range of the Traffica and Basecivil quotes) had not been challenged. He observed that the instructions for any remedial work would need to include the recommendations and approach adopted in the joint experts’ report.13
[72] The Judge concluded by observing the credibility of the two quotes from Traffica and Basecivil was not in issue. He awarded CJL damages based on the lower of those two quotes.14
[73] Mr Swan submitted the Judge was wrong in his conclusion. He made two points. First, while he did not dispute Mr Brittliff’s opinion was unchallenged, he said Mr Brittliff’s opinion was “surpassed” by the lower quotes that were obtained after he signed his supplementary brief. With respect, that did not relieve Asco from its obligation to challenge Mr Brittliff’s evidence based on the new quotes.
[74] Mr Swan’s other point was that the Judge overlooked Mr Brittliff’s evidence, under cross-examination, that all the contractors were competent and there was
12 At [55].
13 At [57]-[58].
14 At [60].
nothing to suggest they could not do the work. But that was not relevant to the Judge’s decision. The Judge put the lower quotes to one side not because of concerns about the contractors’ competence, but because of concerns about the credibility, independence and reliability of their quotes.
[75] I have read the relevant evidence. Even without having the Judge’s advantage of hearing the evidence and seeing the witnesses, I agree with his decision. After receiving the late quotes, Mr Brittliff said he spoke to Dacan Civil and Sureway Civil. They told him Asco would be carrying out a significant portion of the work for which they had quoted. Asco therefore had some communication with those two contractors before they submitted quotes. There was therefore an issue about the credibility, independence and reliability of those contractors’ quotes. Asco’s witness, Mr Kumar, attempted to address that by stating in his brief that “The experts have agreed that all contractors quoting are competent to carry out the work”. In cross examination Mr Kumar retracted this statement, saying it was “a typing error”. The Judge was, understandably, concerned by this. It was fairly put to Mr Kumar that the quotes by Dacan Civil and Sureway Civil were essentially Asco’s quotes. He said he could not say anything in response. As the Judge noted, Mr Kumar said he knew nothing about how the quotes had been obtained. Asco did not call anyone who did.
Was the Judge wrong to find Asco did not have a set off?
[76] The effect of s 18(2) of the CCLA is that Asco has available, by way of defence, set-off, or otherwise, any matter that would have been available to it:
(a)If CJL had been a party to the contract in which the warranty was contained; or
(b)If CJL were the promisee (that is, Complete), the warranty had been made for the benefit of the promisee, and the promisee had brought the proceeding against Asco.
[77] Asco argued below that this meant it was entitled to raise, as a defence or set- off to CJL’s claim, its claim against Complete for the $80,040 unpaid balance of the contract price. The Judge acknowledged that s 18(2) applied, but rejected Asco’s
argument. He reasoned the $80,040 was due only on completion, and Asco had not completed the contract work.15
[78] Mr Swan says the Judge erred. He says the work was completed. Alternatively, if the presence of the defects meant the work was not complete, he submitted Asco should still able to raise the unpaid $80,040 as a defence or set-off.
[79] I accept Mr Swan’s submission. One has to consider what the position would have been had Complete sued Asco for the defective construction work. The normal measure of damages for incomplete or defective work under a construction contract is the cost of completing the work or remedying the defects (as the case may be), less any sum that would have been payable to the contractor had the work been properly carried out.16 Were it otherwise, the plaintiff would be overcompensated.
[80] So, had Complete sued Asco for the defective work, the measure of damages would have had to make allowance for the balance of $80,040. The effect of s 18(2) is that the same allowance must be made when CJL sues under s 12 as the beneficiary of a promise.
[81] Mr Swan submitted that Asco was also entitled to raise a set-off for interest on the unpaid balance of the price. Asco’s standard conditions provided that interest would be charged at the modest sum of 7.5 per cent per month. I reject the submission. Leaving aside any possible statutory intervention into that monthly rate, interest could only have been charged on any unpaid balance that exceeded the damages payable by Asco. There was no excess.
Result
[82] I allow the appeal. I quash the Judge’s award of damages. I substitute the lower award of $50,089.65.
15 At [25] and [61].
16 Mertens v Home Freeholds Co [1921] 2 KB 526 (CA) at 535 (per Lord Sterndale MR); Nicholas Dennys and Robert Clay, Hudson’s Building and Engineering Contracts (14th ed, Sweet & Maxwell, London, 2020) at [7.007]; James Edelman McGregor on Damages (21st ed, Sweet & Maxwell, London, 2021) at [31.005]; Byrne v Rose [2019] NZHC 273 at [208].
[83] My provisional view is that costs on the appeal should lie where they fall. If either party nonetheless seeks costs, memoranda are to be filed and served by 11 June 2021 (Asco) and 18 June 2021 (CJL). Memoranda are not to exceed three pages (excluding relevant schedules or annexures).
[84] My provisional view on costs is not intended to indicate anything about costs in the District Court. Different considerations may apply there.
Campbell J