Carters Building Supplies Limited v Gill
[2023] NZHC 3788
•20 December 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-1045
[2023] NZHC 3788
BETWEEN CARTERS BUILDING SUPPLIES LIMITED
PlaintiffAND
VIKRAMJIT SINGH GILL
Defendant
Hearing: 23 November 2023 Appearances:
P J Morris and Ms McManus for the Plaintiff S Raju for the Defendant
Judgment:
20 December 2023
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
[Application for summary judgment]
This judgment was delivered by me on 20 December 2023 at 3:00pm
pursuant to r 11.5 of the High Court Rules
……………………………………… Registrar/Deputy Registrar
Solicitors:
Stace Hammond (P J Morris/A McManus), Auckland, for the Plaintiff Aaron Kashyap Law (Shiva Raju), Mt Roskill, Auckland, for the Defendant
CARTERS BUILDING SUPPLIES LIMITED v VIKRAMJIT SINGH GILL [2023] NZHC 3788 [20 December 2023]
Introduction
[1] Carters Building Supplies Limited (Carters) seeks summary judgment against Mr Vikramjit Singh Gill (Mr Gill) as guarantor of EKG Construction Limited’s (EKG) financial obligations to Carters.
Background
[2] On 11 June 2019, Carters signed a credit account application and terms of agreement for supply with EKG (the Agreement), and a deed of guarantee and indemnity with Mr Gill (the Guarantee).
[3] Carters provided various products to EKG under the Agreement, but EKG eventually stopped paying. This left an outstanding amount of $621,558.19, which Carters now seeks to recover under the Guarantee, and Mr Gill accepts remains unpaid.
[4] While Carters seeks summary judgment under the Guarantee in this proceeding, it has also issued a statutory demand, which EKG has a related proceeding to set aside.1
[5] Mr Gill opposes summary judgment arguing it is grossly unfair to hold EKG or himself accountable for this amount when Carters delayed in providing the products to EKG. Carters denies it is responsible for any delays and notes that under the Agreement Carters disclaims liability for any delivery delays.
Carters’ application for summary judgment
[6]Carters seeks orders:2
(a) For orders by way of summary judgment against the respondent in the sum of $621,558.19 (being the amount owing as at 28 February 2023);
1 EKG Construction Ltd v Carters Building Supplies Ltd HC Auckland CIV-2023-404-1052.
2 Notice of interlocutory application by plaintiff for summary judgment against defendant dated 22 May 2023 at [1].
(b) Interest;
(c) Costs.
[7]The grounds on which the orders are sought are:3
(a) On, or about, 11 June 2019 the applicant entered into a credit account application and terms of agreement for supply (“Agreement”) with EKG Construction Limited (“EKG”);
(b) On, or about, 11 June 2019 the applicant and the respondent entered a Deed of Guarantee and Indemnity (“Guarantee”) in which the respondent guaranteed the due and punctual payment of all monies owing at that time or in the future to the applicant by EKG.
(c) The applicant provided EKG with building supplies between 1 September 2022 and 14 March 2023;
(d) EKG has failed to make payment to the applicant for those building supplies.
(e) Despite the applicant making demand the respondent has not paid the amount due to the applicant;
(f) The respondent has no defence to the allegations in the statement of claim.
Affidavit of Malia Lisi Grantley dated 18 May 2023
[8] Ms Malia Grantley (Ms Grantley), a risk analysis team leader at Carters, has made an affidavit in support of Carters’ application.4 She outlines the entry into the Agreement and Guarantee.
[9] Between 1 September 2022 and 14 March 2023, Ms Grantley says Carters provided EKG with supplies, for which it provided invoices and issued credit notes. She attaches copies of invoices, credit notes, monthly statements, and a spreadsheet of unpaid invoices.
[10] Upon EKG’s non-payment for the products supplied, on 15 February 2023 Ms Grantley says Carters sent a letter of demand to EKG seeking the amount owing of $621,558.19.
3 At [2].
4 Affidavit of Malia Lisi Grantley supporting plaintiff’s interlocutory application on notice for summary judgment against defendant dated 18 May 2023.
[11] That amount remaining unpaid, Ms Grantley says Carters now seeks judgment against Mr Gill for the amount owning plus interests and costs. Carters and Ms Grantley believe Mr Gill has no defence to the claim.
Mr Gill’s opposition
[12]Mr Gill opposes the application on the following grounds:5
a. The plaintiff breached an obligation to EKG implied or imposed by law or in equity to supply materials to EKG within a reasonable time of orders being placed;
b. The plaintiff’s delays have caused loss to EKG Construction Limited that has, in turn, caused or contributed to the plaintiff’s loss;
c. It would inequitable of the plaintiff to enforce liability on the defendant under the Guarantee in all the circumstances, and the plaintiff should be estopped from the same;
d. And upon further grounds appearing in the affidavit of Vikramjit Singh Gill to be filed in support of this application.
Unsworn affidavit of Vikramjit Singh Gill filed 9 August 2023
[13] Mr Gill, as EKG’s sole director and shareholder, has made an affidavit in support of his notice of opposition.6 This affidavit is unsworn, but I have allowed it to be read after hearing the explanation for it remaining unsworn from Mr Gill’s counsel, Mr Raju.
[14] Mr Gill accepts entry into the Agreement and Guarantee, that invoices and monthly statements were issued for materials supplied, and that despite demand for
$621,558.19 on 15 February 2023 that amount remains unpaid.
[15]Mr Gill says on 11 May 2023, Carters served EKG with a statutory demand for
$621,558.19. On 25 May 2023, EKG applied to set that demand aside (hearing pending) and he claims his opposition to summary judgment here is for the same reasons as EKG applies to set aside that demand. This position is further outlined in an affidavit he annexes filed by him in support of EKG’s set-aside application.
5 Notice of opposition to application for summary judgment of plaintiff’s claim dated 9 August 2023 at [3].
6 Affidavit of Vikramjit Singh Gill filed 9 August 2023 (unsworn).
[16] On the initial relationship, Mr Gill notes that EKG became a top three customer of Carters’ East Tamaki Branch. He says from June 2019 to 31 August 2021, EKG maintained an excellent trading record with Carters, including months where EKG’s credit line was in the millions and EKG had no problem with on-time payment. He says this is because when EKG placed orders Carters would fulfil them within agreed and reasonable timeframes, so EKG could arrange its construction programmes accordingly, which kept EKG’s clients happy.
[17] Mr Gill then notes Carters begun to run behind schedule in supplying products from mid-2021 to mid-2022. He says EKG specifically addressed timeframes with Carters when placing orders, given they were taking longer to process, as EKG (and its clients) could not afford delays in their projects. He acknowledges the supply chain issues of COVID-19, but says they worked through those challenges by acknowledging shortages and delays on certain projects.
[18] By way of illustrating the delays, he alleges the following occurrences on EKG’s project at 14 Ennismore Road:
(a)On 29 August 2021, EKG placed its order for trusses with Carters noting a timeframe of 2–3 months delivery at the latest. He says Carters delayed processing the order and Mr Gill suspects prioritised other customers.
(b)In April 2022 EKG’s client’s mortgagee took action and Carters said delivery could be expected in late July 2022. The mortgagee’s connections rushed Carters, so it delivered the trusses within a few weeks.
(c)The delivered trusses were not fit for purpose or in line with EKG’s manufacturing specifications, so they were sent back. This occurred with two further deliveries before Carters simply left the materials on site for EKG to make the trusses themselves.
(d)The owner of the Ennismore Road property was unhappy and terminated EKG’s building contract.
Mr Gill says similar issues occurred with projects at four other addresses.
[19] Mr Gill says Carters’ delays led to EKG’s clients withholding payments and terminating their building contracts. Despite spending tens of thousands on lawyers to recover payments from clients, Mr Gill says it has gone nowhere. He says it is not EKG’s fault Carters managed its capacity so poorly and that it would be grossly unfair to hold EKG or himself accountable.
[20] Mr Gill considers this claim is totally unjust and claims EKG has lost far more than $621,558.19 through Carters’ delays. He asks the Court to consider these circumstances when deciding whether it is fair and just to award judgment against him under the Guarantee.
Reply affidavit of Seerwan Jafar dated 29 August 2023
[21] Mr Seerwan Jafar (Mr Jafar), account manager at Carters until August 2023, has made an affidavit in response to Mr Gill’s.7 He accepts that EKG became one of their top three customers and that they had a good initial relationship in which EKG paid on time. He admits it was in Carters best interest to attempt to assist EKG wherever possible, given its size as a client.
[22] When EKG stopped paying, Mr Jafar says Carters provided EKG an extension and engaged it in multiple meetings with senior managers, even providing opportunities for a payment plan. He says legal action only began after EKG had been offered multiple alternatives.
[23] Mr Jafar denies Mr Gill’s characterisation of 14 Ennismore Road and states that the contemporaneous record demonstrates the following:
7 Affidavit of Seerwan Jafar on behalf of plaintiff in reply to affidavit of Vikramjit Singh Gill dated 29 August 2023.
(a)On 9 March 2022, Mr Jafar emailed Mr Gill advising that the level one frames for this project would be supplied in late July.
(b)On 29 March 2022, Mr Gill emailed Mr Jafar’s colleague, Rowena Ioane, to ask if there was an ETA for pre-nail for this project and stated that the order was placed in December 2021. Mr Jafar responded to Mr Gill on 30 March 2022 and advised him, in line with the 9 March email, the frames would be supplied in late July.
(c)On 10 May 2022, another colleague of Mr Jafar, Sheryl Beck, emailed Mr Gill, seeking confirmation that he was happy with the detailing before the job was sent to manufacturing.
(d)On 13 May 2022, Ms Beck sent a follow up email seeking confirmation of the truss layouts sent on 10 May. Mr Gill responded that he would get back to Ms Beck on Monday as EKG was still in the process of looking over the third level frame layouts.
(e)On 16 May 2022, a further follow up email was sent to Mr Gill to which he responded that he was aware of the request to confirm the layout to enable manufacturing to begin, but that he was still working on the layout of the third level frames.
(f)Following Mr Gill’s response, Ms Beck replied to Mr Gill to notify him that any delay in the review may result in the job delivery date being pushed out a further two weeks.
(g)On 19 May 2022, following no response from Mr Gill, Sarah Hadley (a detailing scheduler at Carters), emailed Ms Beck and Mr Jafar to organise the job to be rescheduled out by two weeks.
(h)On 20 June 2022 Karanmeet Singh of EKG emailed Mr Jafar seeking delivery of the trusses for the project be rescheduled to 4 July 2022.
(i)On 1 July 2022, Anisha Hussein (a despatch administrator for Carters), sent Mr Jafar an email advising that EKG had postponed delivery for two weeks, which moved the delivery date from 4 July 2022 to 15 July 2022.
(j)On 14 July 2022, Ms Hussein emailed Mr Jafar that EKG had again rescheduled the delivery now to 21 July 2022.
(k)On 20 July 2022, EKG further delayed delivery of the trusses to 28 July 2022. EKG was made aware that Carters would be applying storage fees for the trusses. During this email exchange, Mr Gill indicated that EKG had been delayed because of bad weather and asked if it was possible to try to remove the storage fee.
(l)On 27 July 2022, Mr Singh emailed Mr Jafar following a phone call in which he indicated that the project was not going to be ready for the trusses for at least another two weeks and therefore asked if Carters could deliver the trusses to another project at 60 Wyllie Road, Papatoetoe.
(m)In an email to Anisha Hussein and Rod McColl of the despatch team, Mr Jafar advised them of the customer’s situation and requested that the trusses be delivered to the Wyllie Road project for storage and later redelivered to 14 Ennismore Road when the site was ready for them.
(n)Regarding the email exhibited by Mr Gill and sent to EKG on 11 April 2022, Mr Jafar says this email was sent as Mr Gill had called him saying EKG’s financier was about to cancel the project and pleaded with him to send an email advising the pre-nail delays were mostly due to Carters and that the pre-nail would be supplied soon. Mr Jafar notes in reality the emails demonstrate the delays were requested by EKG.
[24] Finally, Mr Jafar says he explains the other delays in an affidavit in response to the set-aside of the statutory demand proceeding, but summarises that many delays
are again attributable to EKG. Carters does not accept it is responsible for EKG or Mr Gill’s financial position.
Affidavits for proceeding CIV-2023-404-1052 (the 1052 Proceeding)
[25] I have reviewed and considered the affidavit of Mr Gill dated 25 May 2023 sworn in support of EKG’s application to set aside Carters’ statutory demand issued against EKG in the 1052 proceeding.
[26] I have also reviewed and considered the affidavit of Mr Jafar dated 29 August 2023 sworn in support of Carters’ opposition to EKG’s application to set aside Carters’ statutory demand in the 1052 proceeding.
Legal principles
[27]Rule 12.2(1) of the High Court Rules 2016 provides:
12.2 Judgment when there is no defence or when no cause of action can succeed
(1)The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
[28] The relevant principles governing a summary judgment application are well established:8
The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell. The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart. The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable: Eng Mee Yong v Letchumanan. In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel.
8 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26] (citations omitted).
[29]The wording of r 12.2 “may give judgment” indicates a residual discretion.
Having regard to the various authorities, the position appears to be as follows:9
(a) The discretion implied by the use of the word “may” is to be restrictively applied. In a great majority of cases, once the court is satisfied the defendant has no defence, there is no room for the exercise of discretion.
(b) The residual discretion may be invoked to avoid oppression or injustice to the defendant where:
(i)The proceeding involves the actions or possible liability of a third party which is not before the court;
(ii)The proceedings are such that the opportunity should be given to allow discovery or other interlocutory applications to be concluded;
(iii)The circumstances of the case disclose very unusual features, the presence of which leads the court to conclude that the entry of summary judgment would be oppressive or unjust; or
(iv)The combination of complex issues of fact and law justify the dismissal of the application for summary judgment, either as a matter of discretion or because the court cannot be satisfied that the defendant has no defence.
(c) Even where the court is not satisfied that a defence has been made out, in exceptional circumstances the application may be adjourned to allow for other processes to be followed.
Analysis
[30] The issue to be determined in this judgment is whether any of the defences to Carters’ application put forward by Mr Gill are reasonably arguable, indicating that the Court should decline to give summary judgment. The defences put forward by Mr Gill are:
(a)Carters has breached an obligation to EKG, implied or imposed by law or in equity, to supply materials to EKG within a reasonable time of orders being placed;
(b)Carters’ delays have caused loss to EKG that has, in turn, caused or contributed to Carters’ loss;
9 Andrew Beck and others (eds) McGechan on Procedure (online ed, Thomson Reuters) at [HR12.2.11].
(c)it would be inequitable of Carters to enforce liability on Mr Gill under the Guarantee in all the circumstances, and Carters should be estopped from doing so; and
(d)upon further grounds appearing in the affidavit of Mr Gill in support of the notice of opposition.
[31]I deal with each of these defences in turn.
Reasonable delivery time implied term
[32] Mr Morris, for Carters, submits that Carters refutes being responsible for delays in supplying products to EKG. He points to s 4 of the Agreement which incorporates Carters standard terms and conditions of sale (terms and conditions) as part of that contract. He highlights cl 3.3 of the terms and conditions, which states “[a]ny time stated for delivery is an estimate only. Other than liability that cannot be excluded by law, CARTERS is not liable for any delay in delivery.”
[33] Mr Morris submits that the Court will only embark on the task of implying a term where the contract is silent on a relevant matter. He submits that in this case the contract explicitly incorporates cl 3.3, so it is not open to the Court to imply a term contrary to its express terms.
[34] Mr Morris submits that Mr Gill’s claim that Carters failed to provide materials ordered within an agreed or reasonable timeframe is also inconsistent with Mr Jafar’s evidence. He submits this provides contemporaneous documentation proving EKG caused many of the delays in the supply of materials because it did not provide updated documentation requested by Carters in a timely manner, thereby causing the factory process to be delayed which, in turn, delayed delivery of the materials.
[35] Mr Morris submits that Mr Jafar’s evidence also identifies several occasions on which EKG delayed delivery of the materials by actively rescheduling them because the project was not ready for the ordered materials.
[36] Mr Raju, for Mr Gill, in response submits that the exclusion in cl 3.3 of Carters’ terms and conditions does not exclude an implied term where the delay arises from Carters’ own actions.
[37] Mr Raju refers to Bathurst Resources Ltd v L & M Coal Holdings Ltd.10 He submits that while cl 3.3 of Carters’ terms and conditions purport to exclude liability from any delay in delivery, other than liability that cannot be excluded by law, as the terms and conditions do not provide for the eventuality of any delivery, it is necessary to imply that Carters was obliged to supply the material within a reasonable time of orders being placed.
[38] In my view, the term which Mr Gill seeks to imply into Carters’ terms and conditions is contrary to the express terms of cl 3.3 of such terms and conditions. As noted in Bathurst Resources, the task of the Court implying a term only begins when the Court finds that the text of the contract does not provide for the eventuality.11 In this instance, the contract specifically provides that any time stated for delivery is an estimate only and Carters is not liable for any delay in delivery, except such liability as cannot be excluded by law. There is, therefore, no justification for implying a term that delivery would be within a reasonable time of orders being placed.
Carters’ delays caused losses
[39] Mr Morris submits that Carters reject Mr Gill’s evidence that Carters’ delay in supplying materials has caused loss to EKG, and that, in turn, caused or contributed to Carters’ loss. He submits that Mr Gill’s evidence relies on his bald assertions of circumstances that are unsupported by contemporaneous evidence, and that those assertions are inconsistent with the contemporaneous evidence provided by Mr Jafar.
[40] On this issue, Mr Raju submits that any limitation under cl 3.3 of Carters’ terms and conditions must be confined to claims EKG may raise in relation to any loss it suffers in connection with any delay by Carters. He submits that the situation is different when EKG is not claiming against Carters, but rather defending a claim by
10 Bathurst Resources Ltd v L & M Coal Holdings Ltd [2021] NZSC 85, [2021] 1 NZLR 696.
11 At [116].
Carters in relation to Carters’ own delay, and in these circumstances it would be inequitable for Carters to make a claim connected with their own breach.
[41] In my view, this argument cannot succeed. As I have reached the conclusion that no term is to be implied imposing liability on Carters for failure to deliver supplies within a reasonable time of orders being placed, there can be no breach of such a term by Carters. Accordingly, the argument that it would be inequitable for Carters to take advantage of their own breach does not succeed as there is no breach of any term by Carters.
Estoppel
[42] Mr Raju submits that Mr Gill had a reasonable belief or expectation that Carters would provide materials within a reasonable time of orders being placed, and any suggestion otherwise would not meet the business efficacy test. Mr Raju submits that Mr Gill has suffered loss as a result of Carters failing to provide materials within a reasonable time of orders being placed. He invites the Court to draw an inference that EKG placed and maintained its manufacturing orders with Carters against representations that deliveries would be made within a reasonable time. He submits Mr Jafar’s evidence in relation to the projects complained of was after months had elapsed, and was in response to EKG raising concerns about the delays.
[43] Mr Morris submits that in order to establish estoppel, four elements are necessary:12
(a) The party against whom the estoppel is alleged has acted in a clear and unequivocal manner that has caused the claimant to have a certain belief or expectation.
(b) The claimant has reasonably relied upon that belief or expectation.
(c) The claimant has suffered detriment by relying on the belief or expectation.
(d) It would be unconscionable for the party against whom the estoppel is alleged to depart from the belief or expectation.
12 Hansard v Hansard [2014] NZCA 562, [2015] 2 NZLR 158 at [5].
[44] Mr Morris submits that Mr Gill has not provided any evidence to support the assertion that Carters made a representation in respect of a timeframe in which it would supply the ordered materials. Therefore, he submits Mr Gill has failed to establish an argument for estoppel as there was no encouragement of a belief or expectation. He also points to evidence of Mr Jafar in his affidavit in relation to the application brought by EKG against Carters to set aside the statutory demand, and submits that evidence demonstrates that Carters were open with EKG about delays caused primarily by COVID-19 and provided estimated supply times. He submits that the comments made on behalf of Carters would not satisfy the establishment of an estoppel argument under law.
[45] My view on this is that Mr Gill’s evidence does not establish a representation was made by Carters as to the time of delivery of materials sufficient to support estoppel. It is clear from Mr Jafar’s evidence that timeframes were being managed due to the disruption of COVID-19, but that there were no specific representations which Mr Gill could have relied on to the extent that estoppel would be justified.
Further grounds in Mr Gill’s affidavit
[46] Mr Morris submits that Mr Gill’s affidavit only makes general assertions (unsupported by evidence) about delay caused to a number of EKG’s construction projects. He submits that the affidavit does not provide any further grounds to support a defence to the summary judgment application.
[47] Mr Morris submits that Mr Jafar, in his affidavit, provides substantial evidence to contradict Mr Gill’s unsubstantiated assertions about the delays caused, and this evidence demonstrates that Carters has not breached any obligation under the Guarantee which would justify Mr Gill being relieved of his obligations.
[48] Having reviewed the affidavits of Mr Gill and Mr Jafar provided in respect of this proceeding and the 1052 proceeding, I am of the view that Mr Gill’s assertions regarding the causes of the delays are inconsistent with the contemporaneous evidence of Mr Jafar set out in the email trails attached to Mr Jafar’s affidavit.
[49] As I have determined that there is no implied term that Carters would deliver the building supplies within a reasonable time after orders were placed, that the exclusion in cl 3.3 of Carters’ terms and conditions excludes Carters’ liability, and having regard to my views on the evidence of Mr Gill, the issues raised by Mr Gill as to the causes of delays are not sufficient to form a defence to the summary judgment application.
Result
[50] In my view, because of the conclusions I have reached at [38], [41], [45], [48] and [49], Carters is entitled to summary judgment for the sum of $621,558.19.
Orders
[51]I make the following orders:
(a)Summary judgment is granted in favour of Carters against Mr Gill in the sum of $621,558.19, together with interest on that amount at the rate of 1.5 per cent per month from 28 February 2023 until payment is received in full in accordance with clause 8.1(a) of the Agreement and s 22 of the Interest on Money Claims Act 2016.
(b)My preliminary view is that costs should follow the event, and accordingly Carters is entitled to indemnity costs in accordance with cl 8.2(c) of the Agreement and r 14.6(4)(e), plus disbursements. Counsel are directed to endeavour to agree costs within 20 working days of the date of this judgment. If no agreement is reached counsel for Carters will file a memorandum as to costs (not exceeding five pages) within 5 working days of the expiry of the 20 working day period, and counsel for Mr Gill will file a memorandum in reply (not to exceed five pages), within 5 working days of receipt of counsel for Carters’ memorandum. A decision as to costs will then be made on the papers.
……………………………….
Associate Judge Taylor
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