Chatha v Wanganui Gas Limited HC Palmerston North CIV 2004 454 408
[2005] NZHC 1675
•14 April 2005
IN THE HIGH COURT OF NEW ZEALAND CIV 2004 454 000408 PALMERSTON NORTH REGISTRY
BETWEEN ARSHAD MAHMOOD CHATHA
Appellant
AND WANGANUI GAS LIMITED
Respondent
Hearing: 6 April 2005
Counsel: Appellant in person
S J Burlace for Respondent
Judgment: In accordance with r 540(4) I direct the Registrar to endorse this judgment with the delivery time of 11.00 a.m. on Thursday the 14th day of April 2005.
RESERVED JUDGMENT OF RONALD YOUNG J
[1] This appeal is concerned with the contractual arrangements between Mr Chatha and the Wanganui Gas Company. The District Court found that there was no contract to supply gas between Mr Chatha and Wanganui Gas thus the disconnection by Wanganui Gas of Mr Chatha’s gas supply was not in breach of its contractual obligations and no issue of damages arose. It is from that conclusion that Mr Chatha appeals, representing himself.
Background facts
[2] Mr Chatha, sometime in late 2000, resided in a rental property at 336A College Street, Palmerston North, with his parents. His father had arranged for the
supply of, and paid for, gas to the premises from Contact Energy. In January 2001 Contact Energy disconnected the gas supply because Mr Chatha (Senior) had not paid his account. In February 2001, Mr A Chatha (plaintiff) sought to have the gas reconnected through Mr McIvor an agent of Wanganui Gas. On 8 February 2001 Mr McIvor and Mr Chatha met. Mr Chatha was presented with a domestic customer agreement. He read it, made some hand-written changes and he and Mr McIvor signed it. I reproduce the agreement in full below:
DOMESTIC CUSTOMER AGREEMENT
1.0 PARTIES
Wanganui Gas Limited (WGL), 179 St Hill Street, Wanganui.
Customer Name [Arsad Chatha] Postal Address [336A College Street] Telephone [025-893788]
2.0THE OFFER
The term of this Agreement is from the Customer’s next normal meter reading date after the date of this Agreement and for a minimum period of 12 months from that date.
2.1The Customer agrees to purchase all of its Gas requirements for their home during the above period.
2.2WGL agrees that the Energy Component of the Gas supplied to the Customer is based on its _ Pricing Option in its Pricing Schedule as at .
3.0PAYMENT
3.1The Customer shall pay for all charges by the due date stipulated in WGL’s invoices.
3.2Gas supplied will be charged to the Customer based on the above Pricing Schedule published by WGL on 1 May 2000. WGL has the right to pass any increases it may incur in fixed distribution and meeting charges by altering its Daily Service Charge as described in its Pricing Schedule of 1 May 2000 from time to time. However, WGL agrees not to alter the Energy Component within the above Domestic Pricing Schedule until 1 October 2001.
3.3This Agreement includes as part of the contract, the definitions, terms and conditions as set out in WGL’s Standard Agreement for the Supply of Gas that WGL may amend from time to time.
4.0AUTHORISATION
4.1The Customer by signing this Agreement authorises WGL to act on their behalf with regards to transfer of their gas supply from their existing retailer to WGL. The Customer also authorises their existing gas supplier to disclose and supply to WGL, all details related to the Customer’s gas accounts.
5.0 SIGNATURES
Signed for and on behalf of the ) Signed [Signature]
CUSTOMER ) Name: [Arshad Chatha]
) Date: [Date]
Signed for and on behalf of ) Signed [Signature] WANGANUI GAS LIMITED ) Name: [Gordon McIvor]
) Date: [Date]
NOTICE TO CUSTOMER: RIGHT OF CANCELLATION
You have for a short time a legal right to cancel this Agreement.
You can do this by signing the bottom section of this Agreement form and returning it to WGL, before the end of the period of 7 days beginning with the day after the day on which you signed the agreement. You can give the notice by posting the Agreement form, or by delivering it, to WGL, or to their Agents; More Energy Limited at the addresses shown below.
If you cancel this agreement any money you have already paid must be refunded to you. If you have given any goods in part exchange (trade-in) these goods or their value, must also be returned to you. If you received the goods purchased by you, you need to take no action to return them but can wait for them to be collected. You need not hand them over unless you have received a request to do so and have had your money and goods (trade-in) returned to you.
Wanganui Gas Ltd. 179 ST Hill Street, PO Box 32, Wanganui, Phone 0800 567 777 More Energy Ltd, Unit 3, Northcore Office Park, 80 Grey Street, PO Box 4580 Palmerston North. Phone 0800 5r63 563
I wish to exercise my right to cancel as described above and cancel this Agreement with Wanganui Gas.
Signature Date
[3] I note paragraph 3.3 of the agreement where reference is made to the standard agreement for the supply of gas. A copy of the standard agreement was not given to Mr Chatha and nor did he ask for it at the time. The next day Mr Chatha’s gas began flowing. Wanganui Gas for their internal purposes had to identify whether Mr Chatha was a new or existing customer and decide whether new gas was to be supplied or whether it involved a switch from an existing gas supplier. As a result of information provided by Mr McIvor to Wanganui Gas they assumed Mr Chatha was a new customer in the sense that he had never been supplied with gas by Wanganui. The other category of customer is a switch customer who is changing supplier. In one sense Mr Chatha was also in this category. There was a dispute in the evidence as to whether Mr Chatha told Mr McIvor about the history of the gas account for these premises. The District Court Judge concluded he did not. However there is no evidence that Mr Chatha was ever asked or required to provide the past history of the gas supply to the premises to Mr McIvor.
[4] Wanganui Gas in the meantime found out through the Gas Network (a network of gas suppliers) that Contact Energy had been a previous supplier at the premises and had discontinued supply when the account holder known to Contact Energy as “Mr Chatha” had failed to pay. Wanganui took the view that this “Mr Chatha” was probably the same “Mr Chatha” as they had signed to the customer service agreement. Thus on 16 February off his gas supply.
[5] It seems common ground that the company relied upon cl 8 of the standard terms to cut off the supply. Clause 8 of the standard terms provides as follows:
8. We may decline to supply a customer where we believe that a past customer with an overdue account remains resident or where, in our opinion, the supply would be impractical, uneconomic, unsafe or may adversely affect the existing gas supply to any other customer.
[6] Initially Wanganui said they were cutting off the gas based on the proposition that Mr Chatha was either the errant purchaser of gas from Contact Energy or his father, the accountholder with Contact Energy, still lived with him at the property. Mr Chatha however convinced Wanganui that neither of those situations applied here. Thus Wanganui said they cut off the gas because in their opinion in the words of cl 8 “supply would be ... uneconomic”.
[7] Wanganui say that this provision entitled them to cut off the gas where they doubted the reliability of the customer in meeting future accounts.
[8] Some time after the disconnection Mr Chatha rang another gas retailer who immediately supplied the gas to the premises. I will return therefore to mitigation of loss at the end of this judgment.
District Court judgment
[9] The District Court Judge concluded that this was only ever a conditional contract for the supply of gas between Mr Chatha and Wanganui. He found these conditions were not fulfilled and therefore the respondent’s obligations to supply gas never commenced or crystallised. Thus he concluded that no breach occurred and the gas was turned off. The pre-contractual condition that was said to arise, did so,
the Judge said from paragraph two of the customer agreement. The Judge concluded because “the commencement date is deferred until the happening of the specified event” that there was no binding agreement to supply gas until the happening of that specified event. Thus the refusal to continue to supply was justified because there was no contract to supply because the “specified date” had not been triggered before supply was cut off.
This appeal
(i) Judicial bias
[10] The appellant submitted that Judge Ross was biased against him. He said this bias arose from initially four, and then three reasons.
a)Previous dealings in Court. Mr Chatha said that Judge Ross had heard a number of cases involving him as a litigant over the years and he said it was inevitable that Judge Ross had formed a negative opinion of him. I reject that proposition. It is not based on anything concrete but essentially based on the proposition that Judge Ross cannot function as a Judge as far as Mr Chatha is concerned. Particularly in a provincial centre District Court Judges will see litigants in Court time and again. It is the Judge’s duty to put aside anything that they may know about a litigant and decide the cases before them on the facts as found and the law. It is the essence of the judicial function that they set aside any feelings, prejudice or sympathy and decide the case objectively. There is no reason to believe anything other than that happened in this case. Previous knowledge of a litigant is not sufficient reason by itself to disqualify a Judge.
b)Previous dealings in a criminal case. The appellant complains at a sentencing hearing in April 2002 two years before the Judge released his reserve decision in this case, the Judge sentenced Mr Chatha to community work on a criminal charge. During the sentencing remarks the Judge was both critical and complimentary of Mr Chatha.
I have seen the sentencing notes. The remarks are unobjectionable in context and appropriate in sentencing function. I reject the suggestion that any bias arises from these remarks.
c)The appellant claimed that the Judge did not personally like him. This allegation does not demonstrate bias. The view was no more than Mr Chatha’s “opinion” about the matter. It is due no more weight than that. In any event it is hardly bias for a Judge not to “like” a litigant.
d)Fourthly, the appellant claimed the Judge was biased because of Mr Chatha’s nationality. Mr Chatha wisely withdrew this allegation which was made without any evidence to support it whatsoever.
[11] There is no evidence therefore here upon which this Court could even consider judicial bias let alone any need to identify the relevant legal principals. The appellant has no grounds for alleging bias; the Judge went to considerable lengths to accommodate Mr Chatha in my view and gave all of his submissions due consideration.
(ii) New evidence
[12] In Mr Chatha’s index of documents he included at page three, five documents that he identified as new which he wished to present as part of the appeal. The first one was a page of his father’s passport. Secondly a fax from Contact Energy to him dated 13 August 2004, thirdly a fax from Genesis Energy to Mr Chatha dated 10 December 2004, fourthly an oral judgment of Judge Ross relating to sentencing Mr Chatha and fifthly an oral judgment of Judge Ross.
[13] Counsel for the respondent objected to the “new” evidence on the basis that no grounds had been established for the admission of such evidence.
[14] The last two items of “evidence” are simply copies of judgments or sentencing decisions of Judge Ross. I do not see them as “new” evidence in the
sense that they are simply public documents and part of a submission that Mr Chatha wished to make on this appeal that Judge Ross was biased against him. I have already dealt with that issue assuming that the sentencing remarks formed part of that submission on appeal. As to the first three documents, the passport page and the two facsimiles, these are in the category of “new” evidence. No grounds were made out for their admission and I repeat now my refusal previously communicated to Mr Chatha to consider those documents.
(iii) Was there a contract?
[15] The first issue of substance raised by the appellant was that as a result of him signing the domestic customer agreement he became a customer of Wanganui Gas Limited. He submits therefore that the Judge was wrong in concluding that this was a conditional contract.
[16] This submission requires a consideration of the documents signed and the reasons for the District Court Judge’s conclusion. One additional fact also needs to be mentioned. It is clear that the “normal” (from Wanganui’s perspective) process for signing up a customer for gas supply was not followed in this case. Ordinarily the potential customer is asked to complete an application for supply. This application gives Wanganui the chance to check out the potential customer before offering to supply gas by virtue of its domestic customer agreement and standard terms and conditions. No such application was given to Mr Chatha to complete. On the face of it the domestic customer agreement seems to be a contract by Wanganui agreeing to supply gas to Mr Chatha at his residence.
[17] I do not agree with the District Court Judge that the domestic customer agreement was in some way a conditional contract. Clause 2.1 simply provides the start date for the term of the agreement is to be triggered by a meter reading. It is in essence no different than a contract to supply goods in one month’s time. The fact the goods are not due for delivery does not make it any less a binding contract. And, so in this case, Wanganui agreed to supply gas to Mr Chatha. The fact that the minimum term of the agreement ran from a certain event does not make it a conditional contract nor affect the obligation taken on by Wanganui. Wanganui’s
position was throughout that their justification for cutting off the gas supply arose because the provisions of cl 8 of the standard conditions entitle them to do so. The standard conditions only govern the party’s actions if the domestic customer agreement was a completed contract between the parties. To assert cancellation rights under cl 8 Wanganui must accept a binding contract through the domestic customer agreement. It is only through that agreement that the standard terms and conditions apply to the parties. I therefore find that the domestic customer agreement was a contract between Wanganui and Mr Chatha for the supply of gas to Mr Chatha’s house. It was not conditional on anything.
[18] Clause 2.3 of the domestic customer agreement said that the agreement incorporated the terms of the standard agreement for supply of gas. Mr Chatha submitted that no such agreement was ever given to him or drawn to his attention before signing the agreement. Of course Mr Chatha would have been aware of the proposed incorporation when he read paragraph 3.3 of the domestic customer agreement. Mr Chatha submits that the standard terms and conditions did not form part of the contract for the supply of gas between himself and Wanganui. The District Court Judge observed that Mr Chatha could have asked to see the standard terms and conditions. The question of the incorporation of other terms and conditions into a contract is a difficult question which has not been extensively argued before me in this case. I prefer, because of the view I take of the standard terms and conditions, to leave that aspect of this case to one side and assume for the moment the standard terms are incorporated in the domestic customer agreement between the parties. I however observe that if Wanganui want to avoid a repetition of such a challenge attacking the incorporation of standard terms and conditions into the domestic customer agreement, they would be wise to attach the standard terms and conditions to the domestic customer agreement at the time the customer signs the agreement.
[19] Turning therefore to the standard terms and conditions two clauses are of particular relevance. I set them out in full:
6. If you are not already a customer, you can become one by:
making a verbal agreement with us at our office or by telephone;
continuing to receive and use natural gas at premises where the previous contracted customer has left;
arranging for us to turn on a supply which had been previously turned off.
Regardless of how you become a customer you will be required to sign an Application for Supply.
. . .
8. We may decline to supply a customer where we believe that a past customer with an overdue account remains resident or where, in our opinion, the supply would be impractical, uneconomic, unsafe or may adversely affect the existing gas supply to any other customer.
[20] As to cl 6, given the domestic customer agreement, Mr Chatha was entitled to view himself as a customer of Wanganui. Considerable evidence was given and the District Court Judge spent some time in his judgment discussing various suppliers, switching of suppliers and the various gas companies internal processes’ to supply individual customers. These were matters for Wanganui. Mr Chatha did not need to be concerned about them. The domestic customer agreement was not subject to switching arrangements or other arrangements between gas companies. How his supply was connected and how Wanganui charged for gas supplies were matters for Wanganui to sort out.
[21] The final paragraph of cl 6 anticipates an application for supply by a customer. None was presented to Mr Chatha for completion and if given to him after he signed the domestic customer agreement it would have made little sense. Wanganui had, by its domestic customer agreement, already agreed to supply gas to Mr Chatha. Mr Chatha had become a customer of Wanganui. As Wanganui say in there standard terms (cl 2) their “commitment is to provide customers with ... gas”.
[22] Nor in my view did cl 8 entitle Wanganui to decline to supply gas to Mr Chatha. Wanganui accepted the first part of cl 8 did not apply here. They accept no past customer with an overdue account resided at the premises. Of course they faced two difficulties. Firstly, no one at the household had previously been a customer of “Wanganui” and in any event the previous customer of “Contact Energy”, Mr Chatha Senior, was no longer living in the house.
[23] Wanganui submit however that they were entitled to refuse to supply gas to Mr Chatha where they believe the supply would be “uneconomic” (see cl 8). Wanganui submit that “uneconomic” in context means they may refuse to supply gas if they think the customer is unreliable and may not pay their account. I do not consider cl 8 entitles them to refuse supply on this basis. Firstly, I consider “uneconomic” given the context in which the word occurs means that gas cannot be supplied to the household at a cost to which a customer would be prepared to pay and for which Wanganui would wish to charge. “Uneconomic” is prefaced by the word “impractical” and is followed by “unsafe” or “adverse” effect on another customer’s gas supply. These words give the word “uneconomic” flavour. They are all concerned with difficulty of supplying the gas not with the financial reliability of the customer. The first part of cl 8 is concerned with customer reliability. No doubt part of the reason to require an application for supply be completed by a customer is for Wanganui to satisfy itself it has a reliable paying customer. However, the latter part of cl 8 is in my view not concerned with customer reliability. Therefore, once Wanganui’s agent signed the customer service agreement and Mr Chatha signed the agreement, Wanganui were obliged to provide gas to Mr Chatha as they agreed. Therefore in cutting off supply on 16 February 1991 they breached their contract with Mr Chatha. I thus therefore differ from the District Court for reasons I have given. Given that conclusion I now then turn to the question of damages.
(iv) Damages
[24] Mr Chatha claims general damages for distress and humiliation of $10,000 and exemplary damages of $20,000. Some additional further facts must now be considered. Mr Chatha says that at the time that his gas was turned off he had guests from overseas who did not have hot water. Mr Chatha says that after 55 days he found another gas supplier and on the basis of a phone call from Mr Chatha and no further inquiries, they reinstated his gas supply. In discussion with Mr Chatha it became clear to me that within the industry he could have found this alternative retailer the day after his loss of supply and had a gas supply almost immediately after it had been turned off – certainly within 24 hours. This fact is obviously relevant to Mr Chatha’s claim for damages.
[25] Firstly, as to Mr Chatha’s claim for general damages for humiliation arising from the breach of contract. Such claims for general damages for non-pecuniary loss in contract cases are not normally available in New Zealand (see Bloxham v Robinson [1996] 2 NZLR 664; Anderson v Davies [1997] 1 NZLR 616. No such award is appropriate in this case. Even if available the loss of hot water for one day could not justify an award.
[26] As to the claim for exemplary damages its main purpose is to punish a wrong doer. The test in this breach of contract case is whether Wanganui has acted in flagrant disregard of the plaintiff’s rights. The situation that arose in this case only occurred because Wanganui failed to follow its own process which would have ensured that potential customers that Wanganui did not want, because of unreliability, were eliminated at the application stage. This failure by Wanganui to run its “typical” process is no fault of Mr Chatha. He had gas supplied which was from his perspective suddenly cut off without any objectionable conduct by him. However, he should only have lost supply for a day for with reasonably diligent effort he could have found the gas supplier (identified 55 days later) who was obviously prepared to supply him gas. Mr Chatha also was a household member and he accepts benefited from the unpaid gas consumed in the household in late 2002 and not paid for. Mr Chatha knew when he applied for gas to be connected to his residence that there was an unpaid account relating to the same premises. Taking the above factors into account and the fact that the loss of gas supply was, or should have been, only for one day, then I conclude that this is not an occasion for exemplary damages. The conduct of Wanganui, while unwise, was hardly outrageous and flagrant in disregarding the plaintiff’s rights. Even if I had concluded it was outrageous given the gas supply could have been reinstated within a day I would only have awarded nominal damages of one dollar.
[27] Mr Chatha’s appeal therefore has in part succeeded although because of the view I take of damages it is a hollow victory in the circumstances. The proper course I think therefore is as follows. Firstly, I allow the appeal in the limited way that I have identified; secondly any costs ordered to be paid by Mr Chatha as a result of the District Court proceedings should be set aside. I would not be prepared to make any award of costs in this case. Mr Chatha represented himself and while he
succeeded on the breach of contract issue he obtained no award of damages. The victory therefore as I have said was rather hollow. I therefore make no order for costs.
“Ronald Young J”
Solicitors:
Treadwell Gordon, Wanganui, for Respondent
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