Bruce William Adkin v Keith Brown
[2002] NZCA 59
•11 March 2002
| IN THE COURT OF APPEAL OF NEW ZEALAND | CA2/02 |
| BETWEEN | BRUCE WILLIAM ADKIN |
| Applicant |
| AND | KEITH BROWN |
| Respondent |
| Hearing: | 11 March 2002 |
| Coram: | Gault J Blanchard J McGrath J |
| Appearances: | S P Bryers for Applicant R E Lawn for Respondent |
| Judgment: | 11 March 2002 |
| JUDGMENT OF THE COURT DELIVERED BY BLANCHARD J |
The applicant, Mr Adkin, seeks leave under s67 of the Judicature Act 1908 to appeal from a judgment of O’Regan J in the High Court at Auckland on 18 May 2001, the Judge having subsequently refused leave.
This is an almost unbelievably protracted saga involving a residential building contract. The dispute began as long ago as 1981. The contract had been signed in July 1980. The construction price for the house was $50,062 which was to be paid by progress payments. The contract was supposed to have been completed by Mr Brown by Christmas 1980 but was not. The fifth progress payment, bringing the total paid to $40,000, due when the interior of the home was lined ready for the interior woodwork, was paid on 2 February 1981. In March 1981 an engineer engaged by Mr Adkin reported a number of faults, some of which were described as of major structural consequence if the building were ever subject to seismic loadings. The engineer said that the cost of remedying these was likely to be considerable. We pause to comment that this view does not seem to have been born out by subsequent events.
No remedial work had been carried out when on 23 March 1981 the solicitors for the owners wrote to Mr Brown purporting to cancel the contract on the basis that “you have failed to perform an essential stipulation of the contract, namely that the building comply with the building by-laws, the contract, the specification and that the building be structurally safe”.
Mr Adkin then arranged for the contract works to be completed by someone else and took possession on 20 June 1981.
Mr Brown commenced proceedings seeking recovery of the balance of the contract price in July 1981. Mr Adkin counterclaimed for damages for the defects in construction and the costs he had incurred in completing the building. For reasons which, fortunately, do not presently concern us, the matter did not come to a substantive hearing until November 2000. Judge Hole gave judgment in the District Court at Auckland on 10 November 2000 in favour of Mr Brown. The net sum found to be owing by Mr Adkin (his former wife having settled with Mr Brown many years previously) was $8,490.17 after allowing Mr Adkin credits totalling $5,739. The judgment was for $43,634.89, the amount found to be owed in respect of the contract price having been dwarfed by interest of $15,894.72 covering the long period of the litigation and by costs and disbursements awarded to Mr Brown of $19,250. The Judge dismissed Mr Adkin’s counterclaim.
Both sides then appealed to the High Court where O’Regan J allowed Mr Adkin’s appeal to the extent only of reducing the award by $420 to give credit to him for certain rental incurred as a result of late completion of the house. Mr Brown’s cross-appeal was unsuccessful.
Hole DCJ had held that Mr Adkin had not in the circumstances been entitled to cancel the contract on 23 March 1981; that there had been no breach of an essential stipulation by Mr Brown in terms of s7(4)(a) of the Contractual Remedies Act 1979 because a report of a referee had found only ten allegations of defective workmanship made out and the cost of remedying them had been assessed at only $4,600. The District Court Judge also found that the effect of the breaches was minimal and capable of rectification so that s7(4)(b) also did not apply.
O’Regan J agreed that it was not open to Mr Adkin to terminate for breach of an essential stipulation as structural safety because it was still possible that Mr Brown would perform the remedial work identified by the expert so as to produce a structurally safe building. Nor could cancellation be justified on a basis of repudiation in the absence of non-compliance with a prior notice requiring compliance, thereby making it clear that Mr Brown did not intend to complete performance of his obligations (s7(2)).
O’Regan J also confirmed that the breaches by Mr Brown had not in terms of s7(4)(b)(i) substantially reduced the benefit of the contract. Cancellation based on an alleged implied term that the building would be structurally safe or on alleged breach of the obligation of the builder properly to complete the works was premature. The defects could still have been remedied. Nor had there been, the Judge found, any essential term that the building be finished by Christmas 1980.
Accordingly O’Regan J concluded, like Judge Hole, that the purported cancellation on which Mr Adkin relied had been invalid. The High Court Judge also rejected Mr Adkin’s claim for $2,689.89 for the cost of completing the house, i.e. that Mr Brown must give credit for that sum. O’Regan J said that Mr Brown had been prevented from completing the works by Mr and Mrs Adkin’s breach of contract in taking possession, not by any breach which he himself had committed.
On this leave application it is said that the case raises questions of law involving the requisite importance, namely:
Whether under a building contract an owner is entitled to cancel under s7(4)(a) or (b) prior to completion where the builder is in breach of an essential term and/or where the builder is in breach of a non-essential term;
Whether a builder can be in breach of contract for defective workmanship and/or delay prior to completion so as to give rise to the possibility of cancellation under s7(4)(a) or (b); and
Whether the builder had been entitled to claim the whole contract price when he had not completed the works even if the reason for that failure was a wrongful cancellation of the contract by the owner.
We take the same view as O’Regan J did in refusing leave to appeal. The case involves no question of general principle. All the Courts below did was to apply the statutory provision to the particular facts of this case. We do not interpret the High Court decision as saying more than that in the circumstances of this case Mr Brown was not shown to have been in breach of any essential term concerning structural safety; in other words, that such a breach in this case was not an essential breach at the stage at which the contract was cancelled by Mr and Mrs Adkin. It does not seem to us that the High Court Judge was denying the possibility that it might have been an essential breach to leave the building in an unsafe condition at the end of construction. The fact that the building’s defects in that regard could be remedied and that it could be completed for such a relatively small sum (even by the values of 1981) rather speaks for itself. It may be that in another case it could be shown that a failure to meet such a structural safety requirement during construction could give rise to a right of cancellation on the part of the owner. It was held not to be so in this case, and, we think, understandably so. Nor was the decision in relation to this point in disharmony with the so-called temporary disconformity theory by which a builder can be in breach if the works are not during construction in conformity with what is required by the contract. The issue here was whether any breach was of a character giving rise to a right of cancellation. It is noteworthy that Hudson’s Building and Engineering Contracts (11ed, Vol 1 at para 5-027) mentions that damages may be nominal only where it is shown that the builder intends to rectify the situation before completion without affecting the value of the remaining work.
Nor does the question of whether the benefit of the contract was substantially reduced for Mr Adkin give rise to a question of any great legal moment. It seems to us to have required merely an application of the statutory provision to the individual facts of the case. Mr Bryers realistically conceded as much during oral argument.
The third proposed issue involves only $2,689. It is not appropriate to grant leave where such a small amount is in dispute. It cannot on an objective view be said to be a matter of such great importance either generally or even to the parties as to justify the further expense of a second appeal, especially where the litigation has already been so abnormally protracted.
Leave to appeal is accordingly refused. The applicant must pay the respondent’s costs in the sum of $3,000 together with his reasonable expenses, including travel and accommodation costs of counsel, to be fixed if necessary by the Registrar.
Solicitors:
Smith & Partners, Waitakere City for Applicant
Dail Jones & Russell Lawn, Kumeu for Respondent
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