Byrne v Rose - [2019] NZHC 273

No judgment structure available for this case.

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2015-442-59

[2019] NZHC 273

BETWEEN FRANK BYRNE AND CHERIE BYRNE TRADING AS FRANK BYRNE
BUILDERS
First Plaintiffs

AND

FRANCISCUS PETRUS MARIA VAN GRUNSVEN AND OTHERS

Second Plaintiffs

AND

MARK HUME TRADING AS MANA THE PLUMBER

Third Plaintiff

AND

WAITAPU ENGINEERING LIMITED

Fourth Plaintiff

AND

DAVID ROSS JACOBSEN AND OTHERS

Fifth Plaintiff

AND

ANTHONY PAGE AND OTHERS

Sixth Plaintiff

AND

CAROLYN ROSE

Defendant

Hearing: 7 – 18, 22 May 2018

Appearances:

G M Downing for First and Third Plaintiffs S R Carey and A H H Choi for Defendant

Judgment:

27 February 2019

JUDGMENT OF GRICE J

BYRNE V ROSE [2019] NZHC 273 [27 February 2019]

Contents

Para No
Background [1]

The Byrne and Hume claims [20]

Did Mrs Rose and the Byrnes have a contract?  [25] Did Mrs Rose have an intention to contract with Mr Byrne?  [27] Were the terms of the contract sufficiently certain?  [43] Other terms      [55]
Express Terms  [55]
Three-metre not three and a half metre stud  [62]
Flameproof fridge panel  [67]
Bondor panelling to the gable ends of the shed  [72]
No block work  [77]
Laying PVC pipes outside  [80]

Deadlines  [84]
Implied terms  [102]
Fit for the purpose of a dairy shed  [107]
Reasonable care and skill  [113]

Cancellation of the contract? [116]

Breaches of contract  [118]
Deadline breaches  [120]
Fit for purpose: the concrete floor and drainage  [122]
Minor construction defects  [161]

Mr Hume: the sumps and drainage [163]

Claim by Mr Byrne  [184]
Windsor Roller Door  [190]
Bosch Premium Rotary Hammer Drill  [193]
Christchurch Trip  [196]
Conclusion  [203]

Damages sought by Mrs Rose [206]

Losses arising from defects in the dairy shed [210]

Scope of the works [210]
Quantity Surveyors’ evidence on remedying the defects [215]

Loss of profits [223]
Loss of profit claims for the 2015/16 season [226] Loss of profits claim for the 2016/17 and 2017/18 milking seasons [245] Death and injuries to cows [283]

Losses due to failure to meet deadlines [292]

Dumped milk  [292]
Cost of cleaning effluent pond due to dumped milk  [302]
Cost of storing robots offsite  [304]
Tasman District Council Penalties  [305] Loss of profit claims – calculations  [307] Loss of production from shortened season and 12 cows  [314] General Damages  [330]

Construction Contracts Act 2002: the invoices [334]

Concurrent liability in tort  [339]
Interest rates  [343]
Mr and Mrs Byrnes  [343]
Mr Hume  [349]

Conclusion [350]

Leave to apply [354]

Costs [355]

Background

[1] The first plaintiffs, Mr and Mrs Byrne trading as Frank Byrne Builders, built a dairy shed for the defendant, Carolyn Rose. The third plaintiff, Mr Hume trading as Mana the Plumber, did the plumbing and drainage work in and around the dairy shed. The plaintiffs are each claiming the balance they say is owing to them by Mrs Rose. Mrs Rose counterclaims against them, alleging the work was not carried out properly, the dairy shed was not completed and it was not fit for the purpose of milking cows due to the defects.

[2] The dairy shed was built on land that Mrs Rose and her husband had bought at Puramahoi near Takaka in Golden Bay in 1978. They had cleared part of the land for their dairy operation.

[3] Mr Rose died in 2008. From then until April 2016, Mrs Rose ran the dairy operation alone, supplying milk to Fonterra from 100 – 150 cows. It was hard work; she wanted to continue but as she got older she found it more difficult to do the milking.

[4] Some years ago, Mrs Rose had seen a documentary in which the farmer had been sitting in the warmth of the farm house while the cows were milked by robots in the dairy shed. Then she saw a robotic milking system at a farm show. Mrs Rose contacted the Canterbury based Lely Robotic Dealership (Lely), one of the New Zealand dealerships of the international companies, Winslow Limited and Lely industries. These companies have expertise in automated milking also known as robotic milking systems.

[5] Robotic milking attracted Mrs Rose as it took over some of the work of milking and was also said to lessen stress on the cows. In a normal milking operation, cows are herded into the dairy shed at regular intervals and milked by the farmer. However, in a robotic system the cows wander into the milking shed of their own volition at any time. The information is fed back through a computer to Lely. Lely can control the

robots, feed and other processes remotely. Lely gathers considerable information on the milk production of the herd and of individual cows. The automatic milking machines (or robots) then milk the cows when they move into position. They are drawn into position by the lure of feed and to relieve the weight of milk in their udders.

[6] Some cows may wander in to be milked as often as three times a day. The general experience is that the cows provide more milk more often than with manual systems. Some cows adapt to the system better than others.

[7] Mrs Rose ended up in discussions with Paul Tocker, the Canterbury based Lely General Manager responsible for sales in the South Island. Mr Tocker had sold seven robotic milking systems before Mrs Rose’s purchase. Arrangements were made by him for Mrs Rose to visit a dairy farm in Southland to view a working automated robot milking operation. She liked what she saw.

[8] Mr Tocker and Mrs Rose signed the contract for supply of the automated system in early February 2015. This included the supply, installation and technical service support for a Lely system incorporating three milking robots (also called Lely astronauts). Mr Tocker had travelled to Mrs Rose’s farm to have the Lely installation contract signed. He had sent her a copy electronically earlier and she had made some changes. Mr Tocker urged Mrs Rose to sign the contract quickly so the robots could be ordered and she could start milking using the new system for the 2015/16 milking season due to start in July/August of 2015. Mrs Rose signed the contract. She said that she had understood that the new robots would need to be built and shipped to New Zealand.1

[9] Mrs Rose’s old dairy shed was not suitable so a new one had to be built. She discussed this with Mr Tocker and he agreed to help her find tradespeople to build the new shed and attend to the associated work such as the installation of the plant required to store and chill the milk before it was uplifted by Fonterra.

1 Full implementation of the Lely project would have added a fourth robot. Full implementation was never achieved. A dispute subsequently arose between Lely and Mrs Rose over payment for the robotic equipment. She claimed it was not new equipment but had been previously used for demonstration purposes in New Zealand.

[10] The Lely contract recorded that Lely was responsible for the installation and support of the robotic milkers and related equipment only. Lely would liaise with the tradespeople and suppliers needed to set up the operation, but Mrs Rose was to be responsible for the building of the new dairy shed to house the robotic milking system and the surrounds (including gates and races).

[11] Mr Tocker contacted local tradespeople who had been recommended to him for constructing the dairy shed and surrounds. He provided them with information and diagrammatic representations of the proposed Lely installation. He emphasised that the dairy shed and surrounds needed to provide the cows with an appropriate environment which would encourage them to enter the shed, be milked and cleaned by the robots and exit the shed. The orderly passage of the cows through the shed and robotic milking system was crucial to the success of the operation.

[12] Mr Tocker organised some meetings in early February 2015 with the relevant tradespeople. Amongst these was Mr Byrne. Mr Byrne ultimately built the dairy shed.2 He described himself as the “project manager” of the dairy shed. Mr Hume (the third plaintiff), was later selected by Mrs Rose as the plumbing and drainage contractor. He was not at the February meetings.

[13] Construction got underway in about April 2015. Mr Byrne said Mrs Rose had failed to pay his invoices from about 21 July 2015. Mr Hume and other contractors involved in the project issued invoices which were not paid also.3

[14] Frustrated by the lack of payment, Mr Byrne walked off the site on 21 August 2015.4 The shed was not fully completed. To this day it does not have a building code compliance certificate.5 Mr Hume also left before finishing the drainage on the site.

2      Mrs Byrne undertook the administrative work for their construction business. Mr Byrne’s involvement was on behalf of the plaintiff business throughout.
3      All other contractors apart from Mr Byrne and Mr Hume settled before the hearing of these proceedings.
4      By then Mrs Rose had paid approximately $69,002 toward the Byrnes’ invoices. By the date of hearing Mrs Rose had paid the sum of $245,850 toward the total invoices (amended) of $514,300. The balance owing based on amended invoices is now: $268,479. (These figures are rounded to the nearest dollar.)
5 A building code compliance certificate is a formal statement issued under s 95 of the Building Act 2004, that building work carried out under a building consent complies with that building consent.

[15] Mrs Rose did not start supplying milk from her new dairy shed until well after the start of her 2015/16 milking season. This she says was due to Mr Byrne’s failure to complete the shed to a useable standard by 7 August 2015.

[16] Once Mrs Rose was able to use the new dairy shed and Lely system, her herd achieved a higher milk production level than it had the previous year. However, she said she struggled through the season due to her cows regularly slipping on the new concrete shed floor.

[17] Mrs Rose became very upset about the injuries to and deaths of some of her cows. She said she had to put in substantial time and effort to keep the milking operation going and monitor the cows. Due to these strains Mrs Rose stopped milking for the season earlier than usual on, about 21 April 2016. She blames defects in the dairy shed, and in particular the slippery concrete floor, for the injuries and deaths.

[18] After the end of the season Mrs Rose sold some of her cows and stopped the milking operation for good. She says it is Mr Byrne’s breaches that forced her to take that action. She also says Mr Hume’s defective drain laying work contributed.

[19] Mrs Rose has not been able to afford to rectify the defects in the dairy shed. She counterclaims for damages for the cost of remedying the defects as well as costs and losses including loss of profit for the 2015/16 year and the following two years.

The Byrne and Hume claims

[20] Mrs Rose settled the claims of the other tradesmen, including Lely. The only outstanding claims remaining are those of the Byrnes and Mr Hume.

[21] Mrs Rose counterclaims against the Byrnes and Mr Hume. She alleges that they were negligent, or that they breached their contracts with her. In addition, she says various instructions were not followed by Mr Byrne and he did not meet the agreed deadlines.

[22] I have concluded that there was a contract for construction of the shed between the Byrnes and Mrs Rose. I also have found that each party is in breach of contract in

various respects. I have found Mr Byrne largely succeeds in his claims for payment. I have also found that Mrs Rose succeeds in part in her claims based on defects in the construction of the dairy shed against the Byrnes.

[23] I find Mr Hume had a contract with Mrs Rose and he is entitled to payment for the balance of the amount invoiced by him for work done. I am not satisfied he breached his contract with Mrs Rose or is otherwise liable to her under her counterclaim against him. Mrs Rose’s claims against Mr Hume fails.

[24]I first consider the claim and counterclaims in relation to the Byrnes.

Did Mrs Rose and the Byrnes have a contract?

[25] As with many such arrangements there was no neat written offer and acceptance setting out the terms of the contract between Mr Byrne and Mrs Rose. Nevertheless, offer and acceptance can be inferred from the parties conduct and in this case I am satisfied that a contract has been established.6

[26]To reach that conclusion I consider:

(a)Whether Mrs Rose intended to enter a contract with Mr Byrne; and

(b)Whether the terms of the contract were sufficiently certain.

Did Mrs Rose have an intention to contract with Mr Byrne?

[27] Mrs Rose initially thought she had a “turnkey” contract with Lely for everything that was required including the construction of the dairy shed and surrounding work as well as the installation and commissioning of the robotic milking equipment. Mrs Rose believed that Lely would organise everything for her, and hand over the completed project (robots, shed and surrounds), ready to “turn the key” and start to milk the cows.7

6 As to ascertaining an intention to contract from the actions of the parties see: Reading Entertainment Australia Pty Ltd v AMP Capital Shopping Centres Pty Ltd [2017] NZHC 2337 at [76].
7 My references to the construction or building of the dairy shed includes the surrounding works in the adjoining yard areas. It includes the laying of the concrete floor.

[28] On the other hand, Mr Byrne has always been of the view that he had the contract, not Lely, for both the project management and the construction of the dairy shed for Mrs Rose.

[29] The written contract between Lely and Mrs Rose was completed in early February 2015.8 It was for the supply, installation and commissioning of the robotic equipment for the automated milking system. It excluded the building of the shed.

[30] Lely never agreed to provide a “turnkey” project.9 However, Paul Tocker did contact a number of tradespeople, including Mr Byrne, and organised meetings with them for Mrs Rose.

[31] The meetings were at Mrs Rose’s farmhouse on around 4 and 5 February 2015.10 Mr Byrne was introduced to Mrs Rose at the meeting on 4 February.

[32] Mr Byrne was an established and well-known builder in Golden Bay. His website advertised his experience and expertise in building cowsheds. He was introduced to the project by Mr Tocker, but was never under the impression that Lely was contracting him.

[33] Following the meetings, Mr Byrne considered he had a contract with Mrs Rose for the building of her dairy shed and related work.

[34] Mrs Rose’s initial view that Lely was responsible for the construction of the cowshed is not supported by the evidence. The contract with Lely specifically excludes the construction of the shed. There is no evidence that Lely or its representatives assumed responsibility for the construction at any stage. The discussions on site and the emails and texts during the construction were between Mrs Rose (or her son, Phil Rose, who was authorised to act on her behalf) and

8      At least two versions of the contract exist. It was emailed to Mrs Rose and subsequently amended, completed and signed about 3 February 2015.
9      There is now no dispute on this issue. The Lely contract expressly excludes the construction of the dairy shed.
10     There was some confusion about the exact dates of the meetings. However, the weight of evidence suggests these dates. Nothing turns on the exact dates.

Mr Byrne. Mr Byrne coordinated the other tradesmen and subcontracted various work.

[35] Nothing that Mrs Rose said or did at either of the meetings in February 2015, or later, contradicted Mr Byrne’s understanding.

[36] Mr Byrne made notes at the first of the February meetings on his copy of a milking robot layout diagram that had been supplied to the meeting participants by a Lely representative. Mr Byrne noted down those present as Paul (Tocker from Lely); Andrew (from Lely); Nick (Nick Riley Electrical), and Dave (Dave McKay Engineering).11 He also recorded the start, commissioning and installation dates as follows:

Start date on consent mid April. Commission date
Aug 7^th
Robots arrive mid June

[37] Mrs Rose says she was at both of the February meetings but did not have much to contribute to the discussions as the issues were largely technical and beyond her. Nevertheless, she says she did lay down some requirements at the meetings. These were:

(a)That the cowshed stud was to be three metres;

(b)The shed was to be made of flameproof fridge panel for insurance reasons;

(c)Contract time frames had to be kept to;

(d)There was to be no blockwork as it was difficult to keep clean;

11 The surnames and business names were not noted but were subsequently identified by Mr Byrne.

(e)Her cows would be in a safe and happy environment and free from abuse.

[38] The contract time frames had been noted by Mr Byrne at the outset. He noted the “commission date” as 7 August (2015). “Commission date” is generally the date on which the construction job is completed and the building is able to be used. In the context used here, the “commission date” was, for all intents and purposes, the same as the completion date. The shed needed to be completed and be ready for milking to take place in it by the beginning of the milking season on 7 August 2015.

[39] The discussions at the meetings on 4 and 5 February 2015 support my conclusion that an intention to contract was formed between Mr Byrne and Mrs Rose. Both parties agree that the price was not discussed but that there was agreement that the dairy shed was to be built by Mr Byrne and it would be suitable for Mrs Rose’s herd to be milked by the Lely robotic milking system.

[40] The existence of a contract between Mrs Rose and Mr Byrne is also supported by the terms of contract with Lely, which expressly exclude the construction of the shed. By the time this matter came to trial, Mrs Rose had adopted the legal position that the construction contract was between her and the Byrnes.

[41] I am satisfied that the parties had an intention to enter into a contract for the construction of the dairy shed.12

[42] The terms of the contract were not reduced to writing. This leads to the next issue of whether the terms of the contract were sufficiently certain.

Were the terms of the contract sufficiently certain?

[43] Any agreement which is to have contractual force must be on terms which define, with a sufficient degree of certainty, the obligations which the parties agree to undertake. Once the intention to contract is established the Court will try to give effect

12 I refer to the dairy shed as the shed where the milking took place and ancillary surrounds, including the races which guided the cows into the shed and their entry and exit areas.

to it and will step in to determine the terms where it is able to do so.13 In TA Dellaca v PDL Industries Ltd Tipping J noted:14

In determining whether there was an enforceable oral agreement two broad aspects must be considered. The first relates to what exactly was said … The second relates to whether such oral agreement as may have been reached was of sufficient certainty as to essential terms to be enforceable.

[44] In this case, the identity of the contacting parties and the subject matter (the construction of the dairy shed) are certain. The detailed plans and specifications had not been prepared when Mr Byrne and Mrs Rose met at the February 2015 meetings and there was no discussion about price.

[45] Insofar as price is concerned, the Court will do its best to give effect to the parties’ intention where the parties show an intention to contract. The editors of Hudson’s Building and Engineering Contracts suggest that the “… mere absence of an agreement as to price will not be an obstacle if the remaining terms or circumstances show an intention to pay and be paid”.15 The Court will imply a term to give effect to the parties’ intention.16

[46] Mrs Rose had in her mind a final figure to complete the construction of the dairy shed in the vicinity of $250,000. She accepted this was not communicated to Mr Byrne. Mr Byrne thought price was no object and he would charge in his usual manner by invoicing for work done on a charge up basis. Mrs Rose paid the Byrnes initially.

[47] Building jobs are often done on a “charge up” basis, as happened here. It is not difficult to establish a precise range of hourly charge out rates and terms which are reasonable for building a dairy shed in the Golden Bay locality. Each party called a quantity surveyor expert. Both experts agreed that Mr Byrne’s average hourly rate was within that range of reasonable charges for the job. They also agreed that the

13     Electricity Corporation of New Zealand Ltd v Fletcher Challenge Energy Ltd [2002] 2 NZLR 433 (CA).
14     TA Dellaca v PDL Industries Ltd [1992] 3 NZLR 88 (HC) at 95.
15     Nicholas Dennys and Robert Clay (eds) Hudson’s Building and Engineering Contracts (13th ed, Sweet & Maxwell, London, 2015) at 12 citing Foley v Classique Coaches [1934] 2 K.B. 1.
16     BDM Grange Ltd v Trimex Pty Ltd [2017] NZCA 12, [2017] NZCCLR 11 at [62].

margin charged by him on subcontractor charges included in the invoices was reasonable.17

[48] Turning to the date of payment, Mr Byrne says that some of the terms of the contract were set out on the back of the invoice to Mrs Rose. He claims some of them were incorporated into the contract. The terms set out on his invoices read as follows:

· Payment for goods & services provided is required by 20^th of month (no statement issued) by direct credit or cheque, welcomed to: Nelson Building Society, Takaka

Account name: Frank Byrne – Builder Account Number: …
· All goods/services supplied by Frank Byrne – Builders, remain the property of Frank Byrne – Builders, until paid in full.

· Late payment penalty of 2% may be added to overdue balances, at the discretion of Frank Byrne – Builders.

· This is a payment claim under the Construction Contracts Act 2002.

[49] Most of these terms are no longer relevant. Mr Byrne now seeks an award of interest of the money owing to him from the date of the filing of the claim (24 August 2015) based on Judicature Act 1908 interest rates but no longer pursues the two per cent penalty stipulated on his invoices. The reservation of title clause is not relevant. The only term on the invoice which remains relevant is that payment of the invoices was to be on the twentieth of each month. This is a usual commercial term which I find was implied into the contract.

[50] Mrs Rose paid the amount of the first invoices to Mr Byrne’s bank account in a timely manner as directed on the invoices. She said she could not open the relevant emails or attachments and that she only paid those first invoices because Mr Byrne told her the amounts to pay. Nevertheless, Mrs Rose had received and responded to emails before the construction began. She was also receiving and responding to emails at the outset of the building work. I am satisfied that she did receive the invoices.

17 Mr Byrne’s average charge out rate was $50.00 an hour. His margin on charged out items was 15 per cent.

[51] I conclude that Mrs Rose agreed to the terms set out in Mr Byrne’s invoices, including the method and level of charging which was apparent on the invoices, by making payment on the invoices. This acceptance would not have stopped her from disputing an invoice if it were not reasonable. However, at the close of the hearing, Mrs Rose indicated she no longer disputed the quantum of the unpaid invoices, except for some specific items which I deal with below.

[52] In the alternative, in the circumstances a term can be implied into the contract between Mr Byrne and Mrs Rose that the charges for the work would be reasonable and within the range of “charge out” rates made by builders of dairy sheds in the Golden Bay region. This includes a reasonable margin on the charges of subcontractors and cost of materials. The charges would be paid on the twentieth of the month as is usual in commercial contracts of this type.

[53] I conclude that the terms of the contract as to price and payment are able to be ascertained and are sufficiently certain to establish the contract.

[54]I now turn to the other terms of the contract.

Other terms

Express Terms

[55] Mrs Rose says she gave Mr Byrne some specific instructions which were express terms of the contract. These related to deadlines and technical construction details.

[56] Mrs Rose says most of these instructions were given at the February 2015 meetings. She said she stipulated at the two February meetings that:

(a)The shed was to have a three-metre stud;

(b)The shed was to be made of flameproof fridge panel;

(c)There was to be no block work because it was too hard to keep clean;

(d)Contract timelines had to be met; and

(e)The dairy shed was to be a safe and happy environment for her cows.

[57] Furthermore, Mrs Rose says she gave other instructions to Mr Byrne in the course of the construction as follows:

(a)The PVC pipes outside were to be laid under the concrete slab; and

(b)The Bondor panelling was to go up to the roof at the gable ends of the shed.

[58] I deal with the alleged term of the contract that the shed should provide a “safe and happy environment” for Mrs Rose’s cows when I deal with the issue of fitness for purpose of the shed.

[59] In general, I prefer the evidence of Mr Byrne over that of Mrs Rose on the construction issues for the following reasons:

(a)Mrs Rose in her evidence made much of her lack of experience and knowledge in construction matters. She said she had relied on her late husband to attend to these matters and had just turned the project over to the “experts” to complete.

(b)Mrs Rose was initially of the view that Lely was to be the head contactor for a “turnkey” project including construction of the shed. She changed her mind however in the face of clear evidence that this was not the case. Mr Tocker said that Lely would only be providing, installing and supporting the robot milking devices. This was supported by the terms of the signed contract with Lely.

(c)Mrs Rose took some time to consider the contract that Mr Tocker had provided to her. She noted amendments and altered terms. At that stage, she appears to have been under the impression that Lely would undertake the construction of the shed and deliver a finished product.

Despite that, there is nothing in the Lely contract that covers the technical construction matters that she now claims were express terms of the contract with Mr Byrne nor is there evidence that she discussed these issues with Mr Tocker with a view to putting them in the contract.

(d)Mrs Rose said she took little part in the discussions with the tradespeople at the February 2015 meetings because the construction matters were beyond her.

(e)Mr Byrne noted down the deadline dates on his Lely diagram. He did not note the matters that Mrs Rose now says she specified at that meeting. As he was diligent in noting the deadlines it would have been likely Mr Byrne would have also noted any construction instructions that were given by Mrs Rose.

(f)Mrs Rose’s recollection of some matters of detail in relation to the construction appeared vague. For instance, she said she instructed Mr Hume to give Mr Byrne a note telling Mr Byrne to lay some PVC pipes under the outside concrete. Mr Hume denied this. Mr Byrne said he did not receive a note. In the course of her evidence Mrs Rose changed her mind. She said she gave the note to another of the tradesmen (from Dairy Solutions) to give to Mr Byrne.

(g)I observed Mrs Rose in the witness box. She had difficulty in recollecting many details and her evidence was inconsistent. For instance, in cross-examination she said she had not known that block work was to be used until it was “well installed” but subsequently said that she saw the blocker on site before the block work was laid and told Mr Byrne she did not want block work.

[60] I am of the view that Mrs Rose was content to leave the construction to Mr Byrne. She may or may not have expressed views or made suggestions in the course of the construction. I am not, however, satisfied that the instructions she claimed she gave him at that February meeting were, in fact, given at that time or

subsequently. In any event I am not satisfied that they were express terms of the contract and that even if she did mention them, I find it is likely she would have accepted Mr Byrne’s advice.

[61] In addition to that general finding, for completeness, I consider each of the construction “instructions” in detail below.

Three-metre not three and a half metre stud

[62] Mr Byrne says Mrs Rose knew the shed was to have a stud that was three and a half metres. He denied that Mrs Rose had mentioned a three-metre stud preference at the February meetings. He accepted that she referred to a three-metre stud in an email/text exchange at the time she saw the plans. He said in cross-examination that they had discussed it on site but there was no firm instruction. This exchange was before the steel frame for the shed had been built by Rakaia Engineering.

[63] The text message which Mrs Rose relies upon as confirming her instruction on the stud height was sent on 5 May 2015 just after she received the engineer’s plans. It reads:

He has balls [sic] it up again the wall height only needs to be 3 metres not 3.5
.we [sic] don't need more for the wind to hit.the [sic] robot beam goes through at 3 metres so there isn't any reason to have it any higher is there?????? [sic]

[64] This text seeks a response from Mr Byrne as to the reason for the higher stud. Mr Byrne was the expert and in charge of the construction. He says he advised her that the lower stud height would not provide adequate headroom in the plant room for personnel, large items of plant, and a step at the plant room/milk area transition point.18 I accept Mr Byrne’s explanation that there were further discussions on this issue and that Mrs Rose accepted Mr Byrne’s advice on this matter.

[65] In addition, it would have been obvious as soon as the steel frame was erected during June 2015 that the height of the stud was three and a half metres. Mrs Rose’s

18 Mr Nelligan, the expert engineer called for Mrs Rose, was of the view that the plant would fit within a three-metre stud. However, the issue is whether Mrs Rose agreed to the three and a half stud, not whether he was too conservative in his advice.

texts and email exchanges with Mr Byrne after the date the frame was erected do not mention any failure to follow her instructions on the height of the stud.

[66] For the above reasons, I am not satisfied that there was an express term that the stud was to be three metres rather than three and a half metres as designed.

Flameproof fridge panel

[67] Mr Byrne said that there was a discussion with Mrs Rose about the colour of the Bondor panels to be used in the dairy shed, but not that flameproof fridge panels were to be used. Mr Byrne says Mrs Rose had asked for all Bondor panels to be “New Denim Blue”. Mr Byrne says that, subsequently, the supplier of the panel, Coldstore Construction, advised this was not a good option because the “New Denim Blue” colour carries a lesser guarantee and was more expensive.

[68] Mr Byrne says he did discuss with Coldstore Construction the fire grade of the panelling later following a query by Mrs Rose about its fire rating. Coldstore Construction advised that the standard Bondor panel was fire retardant and acceptable to insurance companies. Coldstore Construction also mentioned the availability of another Bondor grade called X-Flam. It advised that a farm shed would not require this and it was much more expensive.

[69] Mr Byrne had been in email correspondence with Mr Curl, the designer he had engaged to prepare and lodge the building consent, concerning the discussions and recommendations from Coldstore Construction. Mr Byrne said he made also Mrs Rose aware of the discussions and recommendations and she had accepted the Bondor recommendations given by Coldstore Construction. Mrs Rose denies this.

[70] Mrs Rose and Mr Byrne discussed a number of issues as they arose on site. For instance, Mrs Rose wanted to incorporate “new denim blue” and Mr Byrne put it into part of the gable end using “new denim blue” colour steel. On another occasion Mrs Rose asked for several sections of clear light and vents to be placed at the apex of the gable end to let out heat on hot days. Again, Mr Byrne arranged for those requests to be met. I am satisfied that the panelling would have been discussed in a similar way and the result was that the advice of the supplier and Mr Byrne was followed. As

I have said earlier I prefer the evidence of Mr Byrne in relation to the instructions that Mrs Rose says she gave on these matters and the discussions that surrounded them.

[71] Therefore, I find that it was not an express term of the contract that the shed was to be made of Bondor flame proof fridge panel.

Bondor panelling to the gable ends of the shed

[72] Mrs Rose says she gave an instruction to Mr Byrne to use Bondor panelling running to the roof at the gable ends. Mr Byrne says there was no agreement that the Bondor panel would run to the roof at the gable ends

[73] Bondor fridge panel to the gable ends was not shown on the plans. The architectural drawing details shows clear corrugate to the end walls. Mr Byrne substituted this for colour steel.

[74] I again prefer the evidence of Mr Byrne on this point for similar reasons to those supporting my findings on the other instructions that Mrs Rose says she issued.

[75] I find that there was not an express term of the contract that Bondor panelling was to be used to the gable ends.

[76] However, on a related matter, the Bondor panelling stopped at the gable. Flashings should have been installed at the joinder of materials in the gable ends to deter birds nesting on the ledge. The failure to install the flashings is a construction defect. I deal with that below.

No block work

[77] Mrs Rose says that she gave clear instructions at the meetings in February 2015 that there was to be no block work. Mr Byrne denies this. Mrs Rose said that because of previous experience trying to clean block work in dairy sheds she did not want it in her new shed.

[78] I am of the view that Mrs Rose may well have mentioned that she did not like the block work, but I am not satisfied that Mrs Rose instructed Mr Byrne not to use

concrete block. This is another area related to construction matters on which I prefer the evidence of Mr Byrne. It also appears that concrete block is the accepted material for the use to which it was put in the cowshed.19

[79] In any event Mrs Rose does not, as part of her formal claim, say the block work should not have been installed. Rather she claims it should have been treated. The main issue raised by the experts is that the nib block work was not sealed as it should have been to enable easier maintenance and cleaning. They recommend the application of a product to seal the block work. They also recommend some minor remedial work to the block work. These are minor construction defects for which Mr Byrne is responsible. I will deal with the remedial work required to the block work below.

Laying PVC pipes outside

[80] Mrs Rose initially maintained that she had given a direction to Mr Hume to tell Mr Byrne to lay some outside PVC pipes under the concrete slab. This was because PVC pipes were susceptible to freezing if left on the ground. Mrs Rose corrected herself in her evidence and said she gave a note to that effect to the refrigeration technician to give to Mr Byrne.

[81] Mr Byrne was cross-examined about whether Mr Hume had given him this note. He could not recall. He was not asked whether he received a note from the refrigeration technician.

[82] Mrs Rose’s memory on this point is unreliable. She changed her evidence at trial, which was some years after the incident and over 12 months since she had prepared her original brief of evidence. In any event there is no evidence that even if she gave someone a note it ever got to Mr Byrne.

[83] I do not accept Mrs Rose’s evidence on this point. I find that it was not an express term of the contract that the PVC piping be laid under the concrete.

19 The building experts agreed on this.

Deadlines

[84] Mrs Rose says she made it clear at the February meetings that the dairy shed needed to be ready for the installation of the robots in mid-June as the delivery date in the Lely contract was 15 June 2015. Mr Byrne made a note at the February meetings which recorded that installation would occur in mid-June. This was timed so that the equipment was installed well before the milking season began.20 Mr Byrne also recorded the commissioning date of 7 August 2015 at the February 2015 meetings.

[85] The shed was to be built using a prefabricated steel frame. Mr Byrne contacted Rakaia Engineering to supply the steel frame. In March 2015 it confirmed it would be able to do so. In the same month, the supplier of the Bondor cladding, Coldstore Construction, confirmed its ability to supply the cladding.

[86] Mr Falloon was the professional engineer Mr Byrne used to undertake the engineering design that was required for the steel frame. Mr Falloon sent his design drawings to Mr Byrne on 18 April 2015. They were copied to Mrs Rose. She approved them on the same date and Mr Falloon sent them on to Mr Curl. Mr Curl, a designer, was preparing the shed plans and specifications and obtaining the building consent.

[87] Mr Byrne then went on holiday for two weeks. On his return, he sent a text to Mrs Rose dated 5 May 2015 noting his concern about not hearing from Rakaia Engineering as to delivery date for the steel framing. Mrs Rose responded expressing concern that Mr Curl had not yet done his work. Mr Byrne responded that he would start without the building consent.

[88] Mr Byrne said he started working on the site on 13 May 2015. By 18 May Mr Byrne had still not obtained a delivery date for the steel frame from Rakaia Engineering and he told Mrs Rose he intended to speak to someone from another engineering firm to do the job.

20 In closing submissions Mrs Rose indicated that it was conceded that the installation date had been extended to 13 July 2015 from mid-June 2015. in the circumstances this is of little relevance as the Lely robots were not actually installed until well after that date.

[89] On 19 May Mr Byrne told Mrs Rose that Rakaia Engineering would deliver in four weeks and that it would take the other engineering firm five weeks. Mrs Rose responded that evening emphasising that the shed had to be ready to take the robots on 15 June 2015. She added that otherwise:

… training time and outside infrastructure gets hard to fit in ie vats chillers colosturm set up fencing unless we can somehow do the outside stuff now and hope to god it all meshes in and works [sic]

[90]Mr Byrne responded on the same date by text saying:

I will have the guys there next week and we will attack anything possible and as the job grows I can increase the labour as I will have guys coming off another job soon. We will do the portal pads ASAP and if Waitupu do steels [sic] then we can do more with their input on critical measurements. I REALLY REALLY wish John could have supplied the Engineering aspect back in Feb, but as you say it will come together eventually. I really Appreciate your support with this breakdown on supply. (emphasis added)

[91] On 20 May Mr Byrne confirmed that Rakaia Engineering would deliver the steel framing on or before 15 June 2015.

[92] When Mrs Rose realised that Mr Byrne would not have the site ready for the installation of the robots on 15 June 2015 she asked Mr Tocker to delay delivery of the robots. The robots were on their way from Lely and had to be stored elsewhere in Golden Bay until 13 July 2015. They were then stored on the dairy shed site until they were put in place in their cradles in the shed on 21 August 2015.21

[93] There was no agreement between Mr Byrne and Mrs Rose about extending the deadline for the robot installation. Mr Byrne had assured Mrs Rose he would put more labour on the job. There was no suggestion that the commissioning date of 7 August 2015 would be delayed.

[94] The evidence does not support Mr Byrne’s contention that the deadline dates were flexible, unachievable or conditional upon third parties meeting a timetable. He wrote down the deadline dates in his notes made at the February meetings. He confirmed the completion date to Mr Curl in his email to him of 25 February. He also

21 Due to the failure to have the shed ready for installation Mrs Rose was required to pay for storage of the robots. The cost of this storage forms part of her claim.

suggested to Mrs Rose that he would add workers to speed the construction and so complete by the deadline.

[95] These dates were important as Mrs Rose says she ceased to milk her cows before the end of the 2014/15 season to partially demolish her old dairy shed. The old shed was to be joined to the new shed. Once the partial demolition had taken place the old shed could not be used for milking.

[96] I conclude that the robot installation date of 13 July 2015 and the commissioning date of 7 August 2015 were deadline terms of the contract.22 On this point, I prefer the evidence of Mrs Rose who throughout maintained that those dates were specific terms of the contract. Her evidence is supported by the following:

(a)Mr Byrne wrote down the deadline dates on his copy of the Lely plan in February 2015 at the first meeting at which Mr Tocker and Mrs Rose and other tradesmen were present;

(b)There was no indication in Mr Byrne’s notes taken at that meeting that the dates were not achievable or unrealistic;

(c)Mr Tocker had inserted the installation and commissioning date in the Lely proposal and contract. He was present for at least one of the meetings in February 2015 with Mr Byrne. His evidence did not indicate that anyone at the meeting including Mr Byrne had concerns about meeting those dates or that the dates were unrealistic;

(d)In an email from Mr Byrne to Mr Curl dated of 25 February 2015 Mr Byrne says Mrs Rose intended the shed be “ready to roll on August 5th”. He added that it seemed like a long time away but “we all know how it can run away”;

(e)Mrs Rose arranged for the partial demolition of her old dairy shed in April 2015 to make way for the new shed. She dried off her cows early

22 This was extended from mid June 2015.

to do this. This shows her cooperation with the builder to ensure the site was ready for a start on construction of the new shed;

(f)The emails and texts between Mr Byrne and Mrs Rose indicate that Mrs Rose continued to rely on the dates being achieved and she stressed their importance. There is no indication that Mr Byrne ever suggested to her the completion date of 7 August 2015 was not achievable;

(g)If the new shed was not ready for milking by 20 August 2015 she would not be able to commence the supply to Fonterra from her herd;23

(h)Mr Byrne assured Mrs Rose, when she expressed concern about the delays, in a text dated 19 May 2015 that he would get more labour and he had his “guys coming off another job soon”;

(i)If Mr Byrne had expressed doubt about the installation or completion dates it is likely Mrs Rose would have deferred drying off the herd and may have, at an early stage, put in place contingency plans for milking or sought a builder who could finish by the stipulated date.

[97] Mr Byrne says that he knew Mrs Rose was aiming for the installation of the robots on 15 June 2015, subsequently 13 July 2015, and for commissioning by 7 August 2015. He says, nevertheless, she was aware that he was reliant on shed design, engineering design, council consents, the availability of the steel frame and the supply of the Bondor panelling. He could not point to anything in writing to support his contention that he told Mrs Rose that achieving her deadline dates for installation and commissioning was conditional on third parties completing their part within specific time frames.

[98] In cross-examination Mr Byrne said he had made it known to Mrs Rose that her deadlines were unrealistic or unachievable. He could not recall telling Mrs Rose that the deadlines would not be achievable although he “imagined” he did so. He is not sure when he did this nor how he communicated this to her.

23 Fonterra is the company which took the milk supplied by Mrs Rose’s herd.

[99] Mr Byrne was in charge of the construction. He had assumed control of the process and assured Mrs Rose that further labour was forthcoming. It is unlikely that he told her the dates were unachievable. It is even less likely that she agreed to an extension of the completion date.

[100] If Mr Byrne had undertaken the construction on the basis that the installation and commissioning dates were flexible, he should have specified this at the outset. He did not. Mrs Rose relied upon the deadlines to arrange for the installation of the robots. She embarked on the project based on the shed being ready to commence milking for the 2015/16 season on 7 August 2015.

[101] I find that completion or commissioning date of 7 August 2015 and the installation date of 13 July 2015 were terms of the contract. These dates could have only been extended by agreement. They were not.

Implied terms

[102] Mrs Rose claims that the contract contained implied terms that the plaintiffs would use reasonable care and skill in construction of the shed and that the dairy shed would be fit for its purpose to be used for milking cows.

[103] The classic test for establishing an implied term is that in BP Refinery (Westernport) Pty Ltd v Shire of Hastings.24 The five-point test is:25

[F]or a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that ‘it goes without saying’; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.

[104] Counsel for Mrs Rose noted that the BP Refinery test was refined in Attorney- General of Belize v Belize Telecom Ltd.26 In that decision, Lord Hoffmann said that

24     BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 52 ALJR 20 (PC) at 26.
25     At 26.
26     Attorney-General of Belize v Belize Telecom Ltd [2009] UKPC 10, [2009] 1 WLR 1988.

the BP Refinery criteria were better regarded as five different ways of expressing the same idea, rather than a series of tests that each had to be met.27

[105] The New Zealand courts have endorsed the Belize refinement of the BP Refinery test.28 In McNeill v Gould, Hammond J for the Court of Appeal said that a stringent approach to implied terms was appropriate in the BP Refinery case, as it concerned a carefully drafted written contract. However, he said a “good deal of caution” was required where there was a less well-defined contractual document.29 His Honour went on to say that a term could be implied where it was necessary to give business efficacy to the contract, or secondly, where the term represents the obvious but unexpressed intention of the parties.30

[106]I now discuss the terms Mrs Rose says were incorporated into the contract.

Fit for the purpose of a dairy shed

[107] Mrs Rose argued it was an implied term of the contract that Mr Byrne’s work be “fit for purpose”. She argued the purpose for the dairy shed had been made known to Mr Byrne from the outset. It was to be a dairy shed which would provide a safe environment for milking Mrs Rose’s cows. The fact that it was to house robotic milking equipment did not affect this general purpose. In any event the fact that the shed was to house an automated milking operation was made known to Mr Byrne at the time the contract was made.

[108] Mr Byrne did not concede the building should be fit for purpose nor fit for any purpose made known to him. This is despite the fact that description of the work on most of Mr Byrne’s invoices, including the first, was “construction of new cowshed” or “construction of cowshed”.31

27     At [27]
28     See Timbers Ltd v Nielsen [2009] 3 NZLR 160 at [25] and Hickman v Turn and Wave Ltd [2011] 3 NZLR 318 at [247] – [248].
29     McNeill v Gould CA75/01, 10 December 2001 at [25].
30 At [26].
31     For the purposes of these proceedings the terms “cowshed” and “dairy shed” are identical.

[109] I am satisfied that an implied term as to fitness for purpose as a dairy shed in this case satisfies the BP Refinery test, with the Belize clarification. I find this because:

(a)The term is reasonable.

(b)All parties knew that it was a cowshed to be used for milking cows which was to be built.

(c)Mr Byrne held himself out as having expertise and experience in building, with a particular focus on rural buildings and dairy sheds. He was selected by Mr Tocker for the job on the basis of that reputation.

(d)Mr Byrne said he was the “project manager” for the construction of the shed. The project was the building of a cowshed. He specifically took on the responsibility of managing the project to produce a cowshed.

(e)The first invoice was headed “Construction of new cowshed”.

(f)The term is necessary for business efficacy. In the circumstances, an objective bystander would say that a cowshed should be built so it is able to be used for milking cows. Mr Byrne was briefed on the robotic milking system and given diagrams. He had the high-level diagram supplied by Lely from the outset. He was aware of the purpose of the shed for the milking of cows.

(g)The term is capable of clear expression. The outcome was to be a functioning cowshed fit for milking cows.

(h)The term does not contradict an express term in the contract. All parties were contemplating the building of a cowshed for use with Lely robotic milking equipment.

(i)Mr Byrne agreed under cross-examination that he was under an obligation to provide a dairy shed that was fit for purpose. He knew that this was what he was agreeing to construct.

[110] An analogy can be drawn from the implied term in the sale of a house under construction that it will be reasonably fit for human habitation.32 Similarly, an agreement to construct this cowshed includes an implied term that it will be fit for the purpose of milking cows.

[111] I find that it was an implied term of the contract that Mr Byrne was to build a cowshed that was fit for the purpose of milking cows.

[112] This finding makes it unnecessary to further consider Mrs Rose’s alleged instruction that the shed would provide a safe and happy environment for the cows. In my view, this is covered by the implied term that the shed would be fit for the purpose of milking cows. This brings with it the requirement that the cows will be safe in the shed during normal milking operations and that the floor will not be slippery for the cows. The reference to a happy environment does not add anything further.

Reasonable care and skill

[113] Mr Byrne accepts that there was an implied term in the contract that the construction of the dairy shed would be carried out with reasonable care and skill.

[114] An implied term that a builder must exercise reasonable care and skill in their construction work is not novel.33 In the High Court decision of Tucker v Musson Building Services Ltd, Toogood J held that Musson Building Services breached owing a duty of care to achieve the practical completion of the building works within a reasonable period from the commencement and that there should be no unreasonable delays in completion of the works.34

[115]I find that such a term is implied in the contract.

32     Hancock v Brazier (Anerley) Ltd (1966) 1 WLR 1317.
33     For example, see Libra Collaroy Pty Ltd v Bhide [2017] NSWCA 196 at [137].
34     Tucker v Musson Building Services Ltd [2018] NZHC 1089 at [15(b)] and [15(d)].

Cancellation of the contract?

[116] Although initially there was some disagreement, counsel now agree the contract was not cancelled. It remained on foot and continued after Mr Byrne left the site.

[117] I agree with them. The contract was not cancelled in terms required by the Contractual Remedies Act 1979.35 No notice of cancellation was given.36

Breaches of contract

[118] I have found that the deadline dates were express terms of the contract. I have also found the terms that reasonable care and skill would be used in the construction of the shed and that it would be fit for the purpose of a cowshed were implied into the contract.

[119] I now consider whether those terms have been breached as claimed by Mrs Rose.

Deadline breaches

[120] I have found that the installation date of 13 July 2015 and commission date of 7 August 2015 were express terms of the contract. The shed should have been ready to take the robots by 13 July and for milking to begin on 7 August 2015.

[121] There was a clear failure to meet either of these dates; the delivery of the robots was delayed until 21 July 2015 and they were not installed until after that date. The shed was partially commissioned on 9 September 2015. I have found that these deadline dates were express terms of the contract and were not extended. Therefore, Mr Byrne was in breach of contract by failing to meet these deadlines.

35 This action commenced before the Contract and Commercial Law Act 2017 came into force.
36 Contractual Remedies Act 1979, s 8.

Fit for purpose: the concrete floor and drainage

[122] Mrs Rose relied on Mr Byrne to construct a dairy shed that was fit for purpose. This meant the dairy shed had to be safe for the cows. In particular, a dairy shed requires a floor that will not become slippery for cows during milking.

[123] Mrs Rose says the surface of the concrete floor failed to provide sufficient traction for the cows and the ponding within the shed contributed to the slipperiness. The ponding also made the dairy shed difficult to keep clean.

[124] Mr Byrne had subcontracted an experienced concrete layer, Mr Holland, to pour the concrete floors in the shed and the outer areas. The floor needed to be durable enough to take the wear from cows’ hooves but at the same time needed to provide a surface for the cows to walk on without slipping over. The floors had to incorporate appropriate levels and falls when laid to ensure that the water did not pond and, instead, ran into the drains.

[125] Mr Holland had laid floors for other dairy sheds before he undertook this job. He understood the need for the surface to be rough enough to provide traction for cows as well as the importance of the levels and falls for drainage. These matters could only be achieved at the time the concrete was laid. He agreed the floor should not be slippery for the cows.

[126] The appropriate floor surface might be created by using a grooved float on the concrete while it was still malleable or by stamping a pattern of grooves in the concrete. The important thing was that the surface was rough enough for the cows to gain traction but durable enough for it not to wear out too quickly with use.

[127] Mrs Rose says she went over to the shed one evening when Mr Holland was in the early stages of pouring the concrete floor. She says she pointed out the old dairy shed floor (which had been partially demolished and adjoined the new dairy shed) and told Mr Holland that she did not want the new shed floor as rough as the old one. It is common ground that the old shed floor was very pitted and worn.

[128] Mr Holland had a different recollection of that discussion. He says he cannot recall her referring to the old shed floor. He says he asked Mrs Rose if she wanted him to use the groove float that he had used on other dairy sheds and she said “no”. Mr Holland said she said she wanted a “show room” floor. He took this to mean smoother than he would usually provide for a dairy shed.

[129] Mrs Rose said she knew nothing about laying concrete. She did not even know there was a problem with the shed floor until she commenced milking in the shed and the cows started slipping. When this occurred, she asked Mr Holland to come and look at the shed floor and suggest ways of making it less slippery. Mr Holland called in to look at it. His advice to her was to drag her grader blade over it. The blade was attached to a 20-tonne digger which would not fit into the shed. In his evidence, he said he made the suggestion rather “tongue in cheek” in the circumstances. He knew the digger would not fit into the shed. He did not give Mrs Rose any other assistance at that time. Mr Holland said he would not assist her because neither he nor Mr Byrne had been paid.

[130] Mrs Rose said she observed a number of her cows slipping and falling on the shed floor. Their hooves went from under them. They were difficult to get back on their feet.

[131] Mr Marer a builder, was asked by Mrs Rose to look at the problems in the milking shed in around October 2015. He observed standing water around the base of the robotic milking machines and also could see a sump off to one side where water should have been, but was not, draining away. He watched 10 to 15 cows moving through the robotic milkers and estimated that at least 60 per cent of the cows were slipping on the floor surface. While he was there he saw at least two cows fall over completely. He could see the lack of traction was causing stress and strain on the animals.

[132] Mr Egan of the Rural Service Centre (the Golden Bay Veterinary Club) observed that the concrete floor was covered in waste from cows and that the finish on the concrete provided no grip for the animals’ hooves, or his gumboots. He said at least on one occasion when they were walking around the cowshed he slipped over.

He saw Mrs Rose’s son Daniel, who was assisting, slip on the concrete and fall onto the floor.

[133] I accept the evidence of the witnesses who observed cows slipping on the shed floor. It was not contradicted. I now consider the evidence given by the experts called by Mrs Rose (Mr Nelligan) and Mr Byrne (Mr Hunt).

[134] Mr Nelligan gave expert evidence concerning cowshed floors. He is a chartered professional engineer and has had over 30 years’ experience as a consulting engineer in large firms and his own practice. He also spent some years as the General Manager (Engineering) in an export freezing company. He said he had regularly observed and dealt with large numbers of cattle who were being herded into the freezing works. He noted that in general the animals were very sure footed on open ground. While they had no problems with traction on hills and rough territory, on smooth surfaces they did have problems. This is because the front curve of the hoof acts like a “snow shoe”. He said that it was recognised in animal handling that the best way to produce the required rough surface on concrete floors was by providing grooves in the floor.

[135] Mr Nelligan had not had experience with robotic milking sheds but he had reviewed the Lely promotional material on robotic milking sheds on the website. He noted from that review that where the floor surface used in a Lely shed was a concrete slab it was grooved. This supported his view that the concrete surface of a Lely dairy shed, was no different to any other dairy shed and it needed to provide appropriate traction for cows.

[136] Mr Nelligan referred to the IPENZ practice note relating to the preparation of surfaces for dairy shed floors. It provides:

7.7.2 Slippery floors

Slippery floors such as from new or smooth-surfaced concrete may also cause sideways pressure on hooves or cow sole injury. There are many industry options available for improving traction and reducing slippage on concrete floors including grooving and rubber matting. Grooving is more durable than a raised texture.

One successfully used approach is to level and smooth the fresh concrete surface, apply a broom finish, and after curing, grind off the sharp edges by dragging a concrete post or similar over the surface. A few weeks after placement for new surfaces, or for existing slippery surfaces, arrange for a diamond wheel concrete grooving contractor to cut sharp-square groove patterns into all cow flow areas. Grooving needs to take place where the facility is not being used by stock because of the significant noise, dirt and waste water created during the work.

Acid etching, a process in which an acid solution is applied over a concrete surface exposing sand and fine aggregate and giving a sandy grainy texture, is not recommended as it does not provide an effective means to reduce floor slipperiness for cows.

[137] Mr Nelligan said this was a reasonably new practice note but it reflected the approach that he had always taken.

[138] The practice note went on to suggest that the floor be grooved either by way of cutting the grooves into the concrete at an early stage or the use of a pattern template which is removed as the concrete cures.

[139] Mr Nelligan produced the New Zealand Standards Specifications for Concrete Surface Finishes.37 This provides for the various finishes for concrete floors in a range from U1 to U11 depending on the use of the floor.

[140] The specification for a floor of a cowshed is specified as U7 or U8. Mr Nelligan said this was the type of surface required for livestock animals to be able to walk safely on concrete floors. The plans and specifications prepared by Mr Curl had provided for a U3 finish. In Mr Nelligan’s view that was not the appropriate specification as it provided a floor which was too smooth for a cowshed.

[141] U7 and U8 surfaces require grooves to be made in the concrete floor by saw cutting or other mechanical means. The U9 surface is scabbled. Scabbling involves the mechanical hammering of hardened concrete. Mrs Rose’s old dairy shed had a scabbled concrete floor.

37 Standards New Zealand New Zealand Standards Specification for Concrete Surface Finishes
(Ministry of Business, Innovation and Employment, NZS311:1987, June 1980).

[142] Mr Nelligan’s evidence was that the floor laid in the shed was too slippery for the cows. This was because the surface was not finished to the required specification and was too smooth. The slipperiness was exacerbated by ponding of water due to lack of appropriate falls in the floor surface and defective drainage.

[143] I now turn to the evidence of Mr Hunt, the expert called by Mr Byrne. Mr Hunt is a well-qualified and experienced quantity surveyor and building consultant. He is not a professional engineer, nor did he profess to have particular experience in the construction of dairy sheds. He readily acknowledged he did not have expertise in surface requirements to enable dairy cows to maintain traction on concrete floor. He made a proposal in relation to the roughening of the shed floor. However, he withdrew his original proposal of acid washing in the face of the IPENZ practice note produced by Mr Nelligan. Mr Hunt accepted his original proposal was not an appropriate method to remedy the shed floor in this case.

[144] I accept Mr Nelligan’s evidence on the requirements for the surface of concrete floors for use in a cowshed. Not only did he have extensive direct experience in relation to the traction of hoofed animals such as cows, but he was familiar with the industry requirements and specifications. I prefer his evidence over that of Mr Hunt in relation to both the requirements for a cowshed floor and also as to the appropriate remedy for the dairy shed floor in this case.

[145]In light of the experts’ evidence, I turn back to Mr Holland.

[146] In cross-examination Mr Holland agreed that Mrs Rose did not tell him to make the floor slippery. He also said she wanted a “textured” floor and a “nice” floor.

[147] I do not accept that Mrs Rose directed Mr Holland not to use the grooved float nor did she direct him on the appropriate surface for the shed floor. In any event, even if she had done so, Mr Holland had other options for achieving the U8 or U9 surface. Mr Nelligan referred to those in his evidence. His preferred method is by stamping the laid concrete.

[148] Mrs Rose’s requests for a “nice”, “textured” or “showroom” floor do not indicate that she wanted a floor that did not provide sufficient traction for the cows. Mr Holland says Mrs Rose did not tell him the surface was too smooth. However, she did tell him as soon as the cows started slipping on the floor. He did nothing useful about the problem.

[149] I prefer the evidence of Mrs Rose on this matter. Mrs Rose was relying on the expertise of Mr Holland as the expert in laying the concrete floor for the shed. Mrs Rose did not direct him to make the floor smooth. Also, I consider it unlikely Mr Holland would have taken directions from Mrs Rose as he was subcontracting to Mr Byrne.

[150] Mr Holland was the subcontractor responsible, under Mr Byrnes’ oversight, for incorporating the levels and falls in the floor for drainage.

[151] Mr Byrne and Mr Holland both accepted that the falls in the floor should direct water to the drains. All that Mr Curl’s plans provided was that the concrete falls should be shaped “to fall to drains”. Mr Holland says he did not calculate the falls but laid the floor to a layout provided by Mr Byrne and his team. Mr Byrne was also involved in the laying of the concrete floor in the shed.

[152] I am satisfied Mr Byrne and his subcontractor were responsible for the laying of the floors and incorporating the falls and levels for drainage.

[153] Finally, I deal with Mr Byrne’s responses to the allegations that the cowshed floor was not fit for purpose because the surface was to slippery for use by cows in a milking shed.

[154] First, he says that the floor was not slippery and so not dangerous for the cows. This is contrary to the evidence of not only Mrs Rose, but Mr Egan, Mr Phil Rose and Mr Marer. All of those witnesses said they saw cows slipping on the floor regularly. That evidence is supported by Mr Nelligan’s views and evidence on the appropriate surfacing required for concrete floors in dairy sheds.

[155] Mr Byrne says Mrs Rose specified a smoother surface. I have dealt with that issue above. Mr Byrne and Mr Holland were the experts on the concrete floor surfaces for the shed. It was up to them to ensure that Mrs Rose was properly advised as to what roughness was required for the shed floor to provide traction for the cows.

[156] Mr Byrne also says that he was advised by Darryn Gray of Concrete Metals, the supplier of the concrete. Mr Gray told Mr Byrne by email that he had spoken to Mrs Rose who had asked that the concrete have “abrasion resistance” and repel hydrogen peroxide, the acid used in the robot’s cleaning process. Mrs Rose was also concerned to ensure that the concrete was resistant to any lactic acids from milk spills. Mr Gray’s email to Mr Byrne was not copied to Mrs Rose. Mr Gray was not acting as “Mrs Rose’s expert”; he was advising Mr Byrne. In any event the email did not deal with the smoothness or roughness of the concrete. The email was concerned with the durability of the concrete. It was up to Mr Holland and Mr Byrne to ensure the concrete floor surface provided traction for the cows.

[157] Mr Byrne held himself out as an expert in the construction of dairy sheds. He bore responsibility to ensure that the shed, including the floor, was fit for the purpose of milking cows. This included constructing a concrete floor which provided sufficient traction for the cows. This was a fundamental requirement for a cowshed. Mr Byrne was responsible for Mr Holland’s work. His contractual obligations to Mrs Rose could not be delegated to Mr Holland.38

[158] I find that the failure to provide a concrete floor with a surface finish appropriate for use by cows in a cowshed was a breach of the implied term of the contract that the building was fit for the purpose of use as a cowshed for milking cows.

[159] That failure also supports a breach of the implied terms to use reasonable skill and care in the construction of the shed in that:

38 T Kennedy-Grant Kennedy-Grant on Construction Law (2nd ed, LexisNexis, Wellington, 2012) at 546.

(a)The surface of the floor should have been specified at an appropriate roughness for cowshed floors in the design and specifications provided by Mr Curl.

(b)Mr Byrne was overseeing the laying of the floor and he should have ensured that the surface was of sufficient roughness for use in dairy sheds.

(c)The specialist concrete layer, Mr Holland, should have laid and roughened the concrete to the recommended specifications for cowsheds.

(d)Levels and falls provided to ensure the water flowed to drains were inadequate. I deal with this below.39

[160] The building experts, Mr Hunt and Mr Nelligan, agreed that a remedy for the smooth floor and the falls could be achieved at the same time. I deal with their respective proposals on this below.

Minor construction defects

[161] A number of minor construction defects were found by the experts. Remedies and costs were agreed between the quantity surveyors called by each party. These defects amount to minor breaches of contract which in the usual course would have been remedied by the builder at their cost. As Mr Byrne refused to remedy any defects he is liable for the cost to remedy them.

[162] I deal with this below when I consider the cost estimates to remedy the breaches by Mr Byrne.

Mr Hume: the sumps and drainage

[163] Mr Hume, the third plaintiff, was the drain layer for the dairy shed and surrounds. Mr Hume claims the sum of $33,691.55, being the balance owing for work

39 At [178] and [179].

done on the shed and surrounds. The work related to drains and channels associated with the shed as well as drains and sumps on the yard adjoining the shed.

[164] Mrs Rose says Mr Hume was a subcontractor to Mr Byrne. She says she received and paid his invoices direct as she thought Mr Hume would pass them on to Mr Byrne. Mr Hume and Mr Byrne both say he was not a subcontractor. They say Mrs Rose knew Mr Hume and wanted him to do the work directly for her.

[165] There was no evidence that Mrs Rose made any arrangement with Mr Byrne that he subcontract Mr Hume. Mr Byrne did not receive or pay Mr Hume’s invoices. Nor did Mr Byrne charge or secure a subcontractor’s margin on Mr Hume’s invoices. I am satisfied that Mr Hume’s contract was with Mrs Rose. Mrs Rose appears to have particularly wanted Mr Hume to do the work and she dealt directly with him, received his invoices and paid him direct.

[166] Nevertheless, I note that Mr Hume’s work was overseen by Mr Byrne in his role as project manager. Mr Hume was working to the plans and specifications as directed by Mr Byrne. Mr Byrne had oversight and was responsible for the construction as a whole.

[167] Turning to quantum, Mrs Rose paid Mr Hume for work totalling approximately $23,000 invoiced on 4 June 2015 and 18 June 2015. She paid nothing further despite invoices rendered to her in July and August 2015 totalling $33,691.55.

[168] Mrs Rose no longer disputes the quantum for the work done by Mr Hume nor what is owing for that work. However, she denies liability because she says Mr Hume failed to perform the plumbing services in a proper and workmanlike manner. Additionally, she counterclaims against Mr Hume and says he breached his duty to Mrs Rose to carry out the service in a professional manner.

[169] Mrs Rose’s counterclaim against Mr Hume is for $1,199,013 together with interest and general damages. The counterclaim damages sought include various items which are clearly not attributable to Mr Hume’s services, including the cost of a roller door, the concrete crib walls and the removal of hitching posts on the roof.

[170] By the time of the hearing, the experts had isolated only one issue for which Mr Hume was responsible. This was the size and placements of some outside sumps. Mrs Rose also claimed that he had failed to ensure the PVC pipes outside were laid under the concrete. This allegation was withdrawn at the hearing.

[171] Mrs Rose claimed that two of the sumps (specifically those outside at the north yard) were too small. She said they were not sufficient to receive and quickly drain the usual debris deposited on the floors of dairy sheds and surrounds. The debris includes urine, excrement and other material regularly dropped by the cows.

[172] The debris left in a dairy shed by cows is usually hosed into the sumps. If the sumps are too small they will not be able to deal with the debris and will drain only slowly. This can lead to ponding on the floor of the dairy shed.

[173] In his submissions Mr Downing said that there was evidence that Mr Philip Rose (Mrs Rose’s son) on Mrs Rose’s behalf had told Mr Hume where to put the drains and how large the drains would be. While Mr Philip Rose had been onsite, there is no evidence that supports the submission that he took responsibility for Mr Hume’s work in the sizing and placement of the sumps. Mr Philip Rose in his evidence said that while he finished off some drainage work, that work related to storm water drainage. I find that Mr Philip Rose did not install the sumps.

[174] At the request of Mrs Rose’s lawyers for the purposes of litigation, Mr Hume prepared an ‘as built’ drainage plan which showed the sumps. He agreed that the plan was not entirely accurate as he had done it from memory sometime after he had left the site. However, the plan does confirm the fact that the sumps were constructed by him.

[175]On the issue, the joint expert report says:

Drainage Channels and Sumps on Humps Having Effect on Water Flow

57.Mr Nelligan pointed out to Mr Hunt that the drainage issue relates to the size of the external yard sumps, in that two of the yard sumps are smaller than the rest and have a tendency to fill with cow dung and

block. Mr Nelligan asserts that there is also an issue with inadequate falls.

58.Mr Hunt’s view is that the sumps are adequate for water collection and there is no evidence to the contrary. Mr Hunt also pointed out that the drains are filled with silt and weeds and are not being maintained.

59.Mr Hunt suggested that the steel grate to the two sumps could be replaced with a chequer plate with holes in the lid.

60.There was not agreement and this alleged defect is in dispute.

[176] Mr Hunt, the plaintiff’s expert, said that the sumps were adequate. He produced pictures of the sumps spouting weeds and other plant material. He said that rather than the size of the sump creating the problem, the weeds were stopping the sumps from draining correctly. However, he confirmed these pictures were taken months after the dairy operation had ceased. In addition, Mr Hunt had only tested the sumps drainage with water rather than debris.

[177] Mr Marer, a builder that Mrs Rose asked to report on the problems with the floor in October 2015, noticed that the water was not freely flowing into the main yard sump. However, the cause of the impeded flow was not identified. He provided Mrs Rose with a report with some options to remedy the shed floor problems. While he said in his view the sumps next to the loading ramps were too small he also noted that there was no slope in the concrete to the sump. He did not comment on the main yard sump as despite rain no water was flowing into the sump. Mr Marer did not provide a cost to remedy the drainage problems. He said it likely required the relaying of the concrete floor which would cost “many thousands …” he went on to say, “… and I think this is cost prohibitive.”

[178] I am not satisfied that the sumps were too small in the circumstances. The drainage problems were caused by the lack of appropriate levels and falls on the floor.

[179] This conclusion is supported by a Tasman District Council inspection report which noted the lack of falls into some sumps. This was one of a number of reasons referred to in a Council report prepared a year after construction stopped in August 2016.

[180] Mr Nelligan also considered the inadequate falls contributed to the problems with drainage into the sumps. The remedying of the problems with the falls and other drainage issues were included in proposals for the concrete floor issue by the experts. Mr Nelligan’s view was that the falls in the floor were inadequate and in some instances, fell the wrong way. Mr Hunt disagreed and there was some dispute about the severity of the ponding. I accept Mr Nelligan’s evidence in relation to the concrete floor including the inadequacy of the falls in the floor. Mr Nelligan had considerable experience in concrete flooring for hooved animals. In addition he hosed the floor and observed the lack of drainage over a period of time. Mr Hunt only saw a previously dampened floor and concluded evaporation would dry the water. However, he did not measure the time taken for the floor to dry. He said the water evaporated over time. However, the water should drain not evaporate. Mr Marer confirmed he observed ponding and noted the water was not draining or flowing to sumps.

[181] I have accepted that the concrete floor was defective and have adopted Mr Nelligan’s proposal to remedy the floor. Any defective falls and consequential drainage issues will be dealt with through that solution. As the falls form part of the concrete floor which was laid by Mr Holland under Mr Byrne’s direction, Mr Hume is not responsible for the defects in the falls.40

[309] Dr Bell analysed Mrs Rose’s financial accounts to produce baseline information for the years ending 2016 and earlier. He removed income and expenses of unrelated business activities to provide figures as closely as possible reflecting the dairy operation alone. The baseline information for the year ending 2016 indicated a net trading loss of $98,753.76 This did not take into account the amounts claimed by Lely and other creditors which remained unpaid. Dr Bell then adjusted the baseline information for the year end 2016 and following years. He increased the cost of borrowings to reflect the amounts that Mrs Rose had advised him would be required to finance the Lely equipment, cost of plant and the shed construction which was outstanding.77

[310]Dr Bell projected the loss of income by Ms Rose based on three options:

(a)First, the “Status quo”: this model projected losses scenario is based on a model where Mrs Rose continued to use the original herringbone shed, without the robots, through the 2015/16 season, the 2016/17 season, and the 2017/18 season.

(b)Secondly, the “Robotics”: this model projected losses based on the use of Lely robots and full implementation by Lely through the 2015/16 season, the 2016/17 season, and the 2017/18 season.

(c)Thirdly, the “Actual”: this model projected loss based on Mrs Rose’s actual milk production and income for the 2015/16 season, and the 2017/18 season.

76 This was based on a Fonterra pay-out of $4.30kg/MS (per kilogram of milk solids). The adjusted pay-out was lower than that at $3.90kg/MS.
77 This was based on information and figures supplied to Dr Bell by Mrs Rose. The exact figures provided by Mrs Rose to Dr Bell were not in evidence.

[311] On Dr Bell’s projections if Mrs Rose had continued to milk in her old shed under (the “Status quo” model) she would have incurred losses of $79,398 in the year ending 2016 and small trading surpluses of $5,022 in the year ending 2017 and $2,677 in the year ending 2018. In the Robotics scenario Mrs Rose would have made a loss of $120,636 in the year ending 2016 but surpluses of $150,962 and $145,712 in 2017 and 2018 respectively. In the Actual scenario in the year ending 2016 the losses projected were $273,499 for 2016, $324,356 in 2017 and $339,356 in 2018.

[312] Dr Bell then compared the scenarios to determine the position Mrs Rose would have been in if she had been able to fully implement the Robotics model. He compared this to her Actual position and her Status Quo position. Thirdly he compared the Status Quo against her Actual position.

[313] Because I have found that the Byrnes’ breaches were not causative of Mrs Rose’s failure to fully implement the Robotic project, the comparisons between Actual and Robotic scenarios are not relevant. Nor could Mrs Rose revert to the Status Quo as she had installed the Lely equipment in 2015. For the following seasons she not only had no milking equipment but she did not have a herd. I have found this outcome was not caused by Mr Byrne’s breaches. Therefore the comparison between Actual and Status Quo is not relevant.

Loss of production from shortened season and 12 cows

[314] I now turn to the claims for loss of production from the 12 cows which were injured or euthanised and for the loss of production at the start and at the end of the season. Dr Bell produced separate calculations for those losses, however they were based on information provided by Mrs Rose some of which is not supported by the evidence.

[315] Dr Bell’s calculation for the loss of production for the 12 cows was based on information from Mrs Rose that the cows would have produced 379kg/MS per cow for the full season. The milk solid figure is well in excess of the actual production of 278kg/MS per cow. It is also above the figure Mrs Rose gave to the valuer for a

valuation carried out in October 2015.78 This high estimate reflected the full implementation of the robotics project. I have found that full implementation was unlikely.

[316]The cows were not out of production for the full season as I have found earlier.

[317] In his calculations for the loss due to the dumped milk. Dr Bell based his assumptions on information that Mrs Rose had given him. This was incorrect in a number of respects. First, the dumped milk was at the start of the season, not at the end of the season before the cows were dried off as Dr Bell has recorded. In addition, the supply to Fonterra commenced on 10 October and as Mrs Rose’s cows started milking on 20 August, there was a period of only 51 days when the milk was not supplied to Fonterra and was dumped. The other figure that Dr Bell relied on was that the dumped milk quantity was approximately 194,000 litres. This was not supported by any evidence but was an estimate by Mrs Rose. This is a high amount for 51 days of milking, even if it was in the early part of the season rather than as Dr Bell had assumed it was at the end of the season. The highest milk production occurred in early November.

[318] The information that Dr Bell was given by Mrs Rose and on which he based the calculations of the loss of production for the 12 cows and the loss of production due to the dumped milk was in material respects incorrect. In addition, Dr Bell did not take into account the expenditure which would be required to produce the additional income. I do not rely on his calculations as to these losses.

[319] The baseline information provided by Dr Bell indicates production of 278kg/MS per cow. This is supported by the Fonterra Payment Summary received by Mrs Rose for the 2015/16 season.79 During the season Fonterra recorded that the peak number of cows that Mrs Rose was milking was 111. This was the number used by Dr Bell in his calculation for the loss of milk which had to be dumped at the beginning of the season. On the other hand, Dr Bell’s analysis shows 109 cows at the end of the

78 The valuation estimated 366kg/MS per cow.
79 These numbers come from the Fonterra Payment Summary 2015/16 season dated 19 October 2016.

2014/15 season and 108 cows at the end of the 2015/16 season. I accept that cow numbers will fluctuate during the season but for the purposes of my calculations I use a figure of 108 cows.80 Mrs Rose supplied Fonterra with milk for 194 days (10 October 2015 to 21 April 2016). I have accepted she could have milked for a further 90 days. That includes 51 days at the start of the season (21 August to 10 October 2015) and 39 at the end of the season (22 April to 30 May 2016).

[320] Therefore 108 cows producing 278kg/MS at $3.90kg/MS81 will result in a pay out from Fonterra of approximately $117,000. This is in line with the Fonterra record of the total payments made to Mrs Rose for that season and in the vicinity of the amount recorded as milk production income in Dr Bell’s baseline analysis. This is equivalent to approximately $604 per day for each of the 194 days of milking. Ninety additional days of milking would have brought in a further $54,278 milk supply income. This method of calculation recognises that there will be fluctuations in milk production over the period with higher levels usually at the beginning of the season and lower levels during other parts of the season. With the information I have available this is the most reliable basis on which to make an estimate as to production.

[321] Each of the 12 cows out of production for half of the season were producing an average of 278kg/MS at $3.90kg/MS82 or $1,084 per cow for the full season. For the half season the 12 cows were out of production the loss of income would be a total of $6,505. To that I would add an amount to account for the extra production I have found that Mrs Rose’s herd would have produced if she had been able to supply milk for the full season. This is an increase of 46 per cent83 and adds a further approximately $3,000 to make the total sum of $9,500 under the head of claim for loss of production of the 12 cows.

[322]Therefore, I assess the loss of milk production and consequential income:

(a)at the start (the dumped milk) and end of the season at a total of
$54,278.

80     This also recognises that Mrs Rose did not milk 12 cows for half of the season.
81     Fonterra Payment Summary 2015/16 season, above n 79.
82     Fonterra Payment Summary 2015/16 season, above n 79.
83 As set out in [320].

(b)for the loss of production from the 12 cows injured or euthanised at
$9,500.

[323]Therefore, I estimate a total of $63,778 for lost milk supply income.

[324] The milk supply would come at a cost. The additional income amounts to 46 per cent of the actual milk supply income recorded in Dr Bell’s base line analysis. If 30 per cent of the actual expenditure recorded in the analysis was taken as the expenditure required to produce the additional milk,84 the expenditure for that income would amount to $75,619.50. Therefore, it would have cost Mrs Rose more to produce the milk than she would earn from the supply.85

[325] I recognise my estimates are only approximations. There are a number of factors which would influence the final figures: for instance, the fixed and variable expenditure and the fluctuations in milk production over the season. It of course does not take into account the cost of borrowing to pay for the Lely equipment and other creditors. I have approached this estimate using the best information I have and consider it indicates that even with milk production at higher levels than I have used Mrs Rose would have continued to lose money on the extra production.

[326] The Lely robot operation as it was implemented by Mrs Rose was always going to be unprofitable. The cost to produce the milk exceeded the price she was paid for it. The losses flowed, not from the Byrnes’ breaches, but rather the contracts that Mrs Rose had entered to build and implement the Lely milking operation. The full robotic project was not likely to eventuate.

[327] The comments of Berger J sited in Ti Leaf Productions Limited v Blaikie apply equally to the damages claim in this case:86

… However, it demonstrated by reference to actual figures that Bowlay’s operation was unprofitable. The cost to supply logs exceeded the contract price payable by the defendant. Berger J was satisfied that the losses incurred

84     Expenditure in the analysis is $252,065.
85     Allowance must be made for the cost of producing the milk in calculating damages for losses of profit. For instance, see: McCollum & Ors v Thompson & Anor [2017] NZCA 269 at [40].
86     Ti Leaf Productions Limited v Blaikie HC Christchurch CP9/97, 30 October 2000 at [40].

flowed from entering into the contract, not from the defendant’s breach, and at p 335 continued:

“If the law of contract were to move from compensating for the consequences of breach to compensating for the consequences of entering into contracts, the law would run contrary to the normal expectations of the world of commerce. The burden of risk would be shifted form the plaintiff to the defendant. The defendant would become the insurer of the plaintiff ’s enterprise. Moreover, the amount of the damages would increase not in relation to the gravity or consequences of the breach but in relation to the inefficiency with which the plaintiff carried out the contract. The greater his expenses owing to inefficiency, the greater the damages.”

Bowlay was awarded nominal damages on account of the breach itself.

[328] To summarise, the loss of production for 2015/16 season was a foreseeable risk in the event of a breach. However, it did not, in fact, result in any losses to Mrs Rose. The inevitability of the dairy operation running at a loss is evident on the face of the baseline analysis and other information produced by Dr Bell for Mrs Rose. The only conclusion I can reach is that the cost of production was higher than the income.87

[329] Mrs Rose is not entitled to damages for loss of profits. Nevertheless, proof of the breaches justify an award of nominal damages of $1,500.

General Damages

[330] Mrs Rose seeks general damages of $50,000. This is for intangible harm such as pain and suffering and anxiety. She points to her passion for her cows and the effect of the deaths and injuries on her. She had to sleep in the shed for seven months to keep a watch on the cows. She says that the milking operation was more than a business to her. Mrs Rose had been farming for 40 years and her spirit was broken by the problems with the shed and she finally gave up when her pet Cow 187 died.

[331] Mr Egan gave evidence that he had called into the shed to check up on her as part of the pastoral care provided by the Rural Service Centre. Both he and Mr Marer observed Mrs Rose’s distress at seeing her cows slipping and falling over. She says

87 Any onus on the Byrnes to establish the losses were not attributable to their breach has been met in the circumstances.

that her distress was exacerbated by Mr Byrne’s failure to remedy the problems and continued denial that the shed was defective.

[332] However, the construction contract was a commercial arrangement. The shed was for the purpose of milking cows as part of a business operation. The courts do not generally award damages for breach of contract in relation to distress, vexation and disappointment in commercial contracts.88 Awards have been made, but these are generally in cases where the object of the contract itself was to provide “peace of mind”, “freedom from distress”89 or where the plaintiff’s house was involved.90

[333] This is not a case where damages under this head are appropriate. The claim for general damages fails.

Construction Contracts Act 2002: the invoices

[334] Mrs Rose initially argued that the Byrne invoices were not valid ‘payment claims’ under the Construction Contracts Act 2002. Mr Carey, for Mrs Rose, admitted from the outset that this was unlikely to be a material issue in the trial as the defendant’s claims were for breach of contract, or alternatively quantum meruit, rather than a breach of the Construction Contracts Act 2002. However, he did not abandon it, so I will briefly address the issue.

[335] Section 20 of the Construction Contracts Act 2002 defines what a payment claim is, when a payee can serve such a claim on a payer, and the valid construction of such a notice. That section provides:
20 Payment claims
(1)A payee may serve a payment claim on the payer for a payment,—
(a)if the contract provides for the matter, at the end of the relevant period that is specified in, or is determined in accordance with the terms of, the contract; or
(b)if the contract does not provide for the matter in the case of a progress payment, at the end of the relevant period referred to in section 17(2); or

88 Edelman, above n 44, at [31.020].
89 At [31.021].
90 At [31.021].

(c)if the contract does not provide for the matter in the case of a single payment expressly agreed under section 14(1)(a), following the completion of all of the construction work to which the contract relates.

(2)A payment claim must—
(a)be in writing; and
(b)contain sufficient details to identify the construction contract to which the payment relates; and
(c)identify the construction work and the relevant period to which the payment relates; and
(d)state a claimed amount and the due date for payment; and
(e)indicate the manner in which the payee calculated the claimed amount; and
(f)state that it is made under this Act.

(3)A payment claim must be accompanied by—
(a)an outline of the process for responding to that claim; and
(b)an explanation of the consequences of—
(i)not responding to a payment claim; and
(ii)not paying the claimed amount, or the scheduled amount, in full (whichever is applicable).

(4)The matters referred to in subsection (3)(a) and (b) must—
(a)be in writing; and
(b)be in the prescribed form (if any).

[336] Mrs Rose argues that the invoices issued by the Byrnes do not comply with the prescribed form of ‘payment claims’ contained in s 20(2) above in the following ways:

(a)There is insufficient detail to identify the construction contract to which the progress payment relates;

(b)The invoice does not identify the construction work and relevant period to which the progress payment relates; and

(c)They do not contain a due date for payment.

[337] Some of Mr Byrne’s invoices do not comply with the Act.91 However, I accept the submission of Mr Downing, for the Byrnes, that payment is not sought under the Construction Contracts Act regime so whether or not the invoices complied with this Act is not relevant. Compliance with this Act does not bar the plaintiffs from their claim for payment in these proceedings.

[338] I therefore find that for the purposes of these proceedings any non-compliance with the Construction Contracts Act in the invoicing is not relevant.

Concurrent liability in tort

[339] A tortious claim in negligence can raise concurrent liability issues in cases like the present where both contract and negligence are pleaded. Negligence can capture fact patterns where no contractual relationship exists.92 Further, the law of negligence is capable of conferring rights and duties to a third party who is not privy to the original contract.

[340] The duty of care owed by the defendant exists concurrently with any contractual duty unless the true construction of the contract negatives tortious liability.
As Tipping J put it in Frost & Sutcliffe v Tuiara:93

[22] The view which now prevails is that in conventional circumstances the two causes of action will usually be concurrent and co-extensive. That will be so unless the relevant factual context involves matters which are not relevant to the contract cause of action but do have relevance to the relationship of the parties in tort. If the relevant facts are not co-extensive, there may be a wider duty in tort because of the greater width of the circumstances relevant to that cause of action. But if the relevant facts are the same for the purposes of both contract and tort, the situation would have to be most unusual before it would be appropriate to hold that greater duties were owed in tort than in contract. We have suggested a possible example in para
[12] above. We also observe that, in general, parties should be able to limit the scope of their potential liability by the terms of their contract. It would not normally be appropriate for that express or implied limitation to be outflanked by an unlimited application of general tortious.

91 For example, the invoice dated 31 July 2018 initially for a total of $167,635.24. This was amended at the time the plaintiffs sought summary judgment due to a miscalculation related to GST. For this purpose, the recalculation is immaterial.
92 See Meates v Attorney-General [1983] NZLR 308 (CA) where the defendant was liable to the plaintiff in respect of negligent statements made to them on which they subsequently relied, even though there was no concluded contract between the parties.
93 Frost & Sutcliffe v Tuiara [2004] 1 NZLR 782.

[341] In the present case, in view of my findings on the claim in contract, I am of the view that no greater duties were allowed by the Byrnes to Mrs Rose than arose under the contract. The relevant facts for the claims in contract and tort are the same. There is no need to consider the claims in negligence further.

[342]For that reason, I do not consider the Byrne’s liability in negligence any further.

Interest rates

Mr and Mrs Byrnes

[343] I have found that, apart from minor deductions, the Byrnes are entitled to judgment on the claim for payment of the balance owing on the amended invoices for the construction of the cowshed.

[344] The Byrnes have made a claim for interest on the amount owing to them under the Judicature Act 1908.94 Interest is awarded to compensate the successful claimant for loss of the use of the money owing.95 It also operates to deprive the defendant from the use of the claimant’s money. The usual position is that if the claimant has been deprived of the money and the defendant benefited from it for a period of time, interest is awarded to the successful claimant. However, the court has a wide discretion to determine whether interest should be awarded.

[345] This is not a case where Mrs Rose has had the use of the Byrnes’ money or the use of the shed she was paying for with that money. While I have found that Mrs Rose does not succeed in her claim for the losses of profit for the reasons I have outlined above, it does not follow that the Byrnes should succeed on an interest claim to compensate them for the loss of use of money when that money should have provided Mrs Rose with a usable shed.

94 Judicature Act 1908, s 87. This was repealed on 1 January 2018 by the Interest on Money Claims Act 2016, but this claim remains to be dealt with under the old Act. By way of example only, a calculation of interest on the amount for which the Byrnes have succeeded ($266,430.44) from 1 August 2015 to 1 February 2019 amounts to approximately $34,000. See: v Mead [1987] 2 NZLR 443 (CA) per Cooke P at 452 – 453.

[346] In my view the Byrnes should not receive interest on the balance owing to them as the shed could not be used.

[347] Mr Byrne had taken on the responsibility of building a cowshed that was able to be used for milking cows. He did not provide that. Nor did not attempt to assist Mrs Rose to put the shed in a usable condition. The evidence that the cows were slipping on the concrete floor was not contradicted. The slippery floor was a significant defect in the shed. Nevertheless, Mr Byrne and Mr Holland refused to assist Mrs Rose to put in place even an interim solution which might have provided more traction for the cows.

[348]Accordingly, the Byrnes fail in their claim for interest.

Mr Hume

[349] Mr Hume is entitled to judgment on his claim together with interest at the Judicature Act rate from the twentieth of the month following the issue of the relevant invoices.

Conclusion

[350] I have largely found in favour the Byrnes and Mr Hume for their payment claims. I have found in favour of Mrs Rose on a number of her counterclaims against the Byrnes.

[351]In summary, I have found in favour of:

(a) Mr and Mrs Byrne: $266,430.44

(b) Mr Hume: $ 33,969.55
(together with interest at the Judicature Act rate from the date the respective invoices were due for payment to the date of judgment).96

96 See [74] above.

(c) Mrs Rose:

Cost to remedy shed [221]: $74,571.18 (including GST)

Loss of cows [287]: $ 6,750.00 (excluding GST)

Vet bills [287]: $ 214.50 (including GST)

Effluent cleaning [303]: $ 2,656.50 (including GST)

Storage of robots [304]: $ 345.00 (including GST)

Penalty fees to Tasman District
Council [306]: $ 725.00 (including GST)

[352] I also award nominal damages of $1,500 to Mrs Rose in respect of the breaches resulting in loss of production for the 2015/16 year.97

[353] If the roller door is not delivered to Mrs Rose within four weeks of the date of this judgment Mrs Rose will be entitled to a further payment $2,359.79 from the Byrnes.

Leave to apply

[354] There may be matters that require my further consideration as a result of the judgment. If counsel are unable to agree on the required calculations, arithmetical errors are apparent or other issues arise in the course of that exercise, I grant leave for the filing of memoranda on those issues on or before two weeks from the date of delivery of this judgment. If counsel cannot agree on a joint memorandum the plaintiffs should file memorandum following the timetable set out below for costs.

Costs

[355] Counsel indicated they wished to be heard on costs. Counsel should file submissions on costs as follows:

97 See above, [329].

(a)The plaintiffs on or before two weeks from the date of this judgment;

(b)The defendants to respond on or before a further one week;

(c)The plaintiffs to reply on or before a further three days.

Grice J
Solicitors:
McFadden McMeeken Phillips, Nelson

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BETWEEN	FRANK BYRNE AND CHERIE BYRNE TRADING AS FRANK BYRNE BUILDERS First Plaintiffs
AND	FRANCISCUS PETRUS MARIA VAN GRUNSVEN AND OTHERS Second Plaintiffs
AND	MARK HUME TRADING AS MANA THE PLUMBER Third Plaintiff
AND	WAITAPU ENGINEERING LIMITED Fourth Plaintiff
AND	DAVID ROSS JACOBSEN AND OTHERS Fifth Plaintiff
AND	ANTHONY PAGE AND OTHERS Sixth Plaintiff
AND	CAROLYN ROSE Defendant

Hearing:	7 – 18, 22 May 2018
Appearances:	G M Downing for First and Third Plaintiffs S R Carey and A H H Choi for Defendant
Judgment:	27 February 2019