Confident Trustee Limited v Garden and Trees Limited

[2017] NZHC 470

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

CIV2016-404-003118

[2017] NZHC 470

BETWEEN

CONFIDENT TRUSTEE LIMITED

Applicant

AND

GARDEN AND TREES LIMITED

Respondent

Hearing:	16 March 2017
Appearances:	W McCartney for the Applicant D A Jaques for the Respondent
Judgment:	16 March 2017

ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

CONFIDENT TRUSTEE LIMITED v GARDEN AND TREES LIMITED [2017] NZHC 470 [16 March 2017]

The application

[1]                 The applicant (CTL) has applied to set aside a statutory demand served on it by the respondent (Garden and Trees). Garden and Trees statutory demand claims payment of $21,753.36 as the balance due for services provided.

The applicant’s case

[2]                 CTL claims on 29 January 2016 Garden and Trees were contracted to clear a section at Massey at a contract price and that it was a term of the contract that work be completed within three weeks of the date of the contract. CTL says time was of the essence because it had contracted with Cameron Civil Ltd for civil engineering earthworks to commence on the site in mid-February 2016.

[3]                 CTL says Garden and Trees had inadequate machinery and insufficient labour to complete the works within three weeks and says by 24 February 2016 no more than 40 per cent of the work had been done.

[4]                 On 24 February 2016 CTL engaged the services of another contractor, Tree Safe Ltd (Tree Safe) to assist with the works contracted to be undertaken by Garden and Trees.

[5]                 CTL says two days later Garden and Trees refused to carry out any further work and left the site. The cost of Tree Safe’s services amounted to $66,684.02. Garden and Trees were paid $35,000 and CTL does not accept that it is liable for the statutory demand claimed as the balance due.

The applicant’s evidence

[6]                 Evidence in support of the application was provided by Jeff Yuan (Mr Yuan) a director of CTL. That evidence is supported in part by Mr Wilson of Cameron Civil Limited (Cameron Civil) which had been contracted to carry out earthworks at the property beginning 17 February 2016, earthworks that could not be completed until Garden and Trees section clearing work had been completed.

[7]                 Mr Yuan recalls meeting Mr Welch of Garden and Trees at his home on 25 or 26 January 2016. He says he stressed the work must be finished within three weeks because the earthworks would be starting. He says on 29 January Mr Welch gave him a firm price of $58,000 plus GST. There was no written contract. A deposit of $20,000 was paid on 3 February and a further sum of $5,000 was paid on 11 February. He thinks the work began on 4 or 5 February. He was concerned Garden and Trees’ small digger was not suitable for the amount of work to be done. He said it broke down often and he was worried the job would not be finished in time. He talked to Mr Welch and it was agreed a larger digger would be obtained.

[8]                 After two weeks Mr Yuan said he informed Mr Welch the work had to be finished within a week. He said Mr Welch responded that there was too much work, the site was too steep and the trees were too big. CTL then decided to engage the services of another contractor who arrived on 24 February 2016 with more men and bigger machinery. Tree Safe agreed to do the bigger and more difficult parts of the job. Garden and Trees left within two or three days thereafter. A final payment of

$10,000 was paid, Mr Yuan said, as a goodwill gesture.

[9]                 Mr Yuan calculates Garden and Trees only did 40 per cent of the work that was required and therefore that the $35,000 paid was more than deserved.

[10]             Mr Yuan deposes having contracted Cameron Civil to do earthworks commencing mid-February 2016. Beforehand all vegetation, trees including stumps “and various structures” needed to be cleared before the earthworks could start.

[11]             Mr Wilson of Cameron Civil who carried out the earthworks on the property has sworn an affidavit in support of the application. He noted Cameron Civil were due to start on 16 February 2016. When he visited the previous day he could see the site clearing work “was nowhere near finished”. He said Cameron Civil was unable to start on 16 February because the site was not cleared and “obviously it wouldn’t be for some time”.

[12]             Having contacted Mr Yuan he arranged for Tree Safe to be engaged to accelerate the clearing works. Tree Safe was to begin on 23 February 2016.

[13]             Mr Wilson spoke to Mr Welch and advised him that Tree Safe had bigger equipment and more men and would deal with the bigger parts of Garden and Trees’ job, leaving it to continue with the work it was capable of doing. He said Mr Welch’s response was something like “That’s it. I’m out”. He said Garden and Trees left the site and did not return.

[14]             Mr Wilson commented that Garden and Trees’ diggers were not big enough for the job. He said Garden and Trees did not have the grinding machinery to deal with tree stumps. By contrast he said Tree Safe brought larger diggers onto the site and a mulching unit and had five men working and even then it took them another two weeks to finish clearing the site.

The respondent’s evidence

[15]             Mr Welch deposes having sent his estimate of charges to Mr Yuan on 1 February 2016. He informed Mr Yuan the earliest Garden and Trees could start was 3 February. He said he was originally asked to clear all the trees within three weeks which he agreed to do.

[16]             When he turned up on the morning of 3 February with his workers to begin tree felling he was met by Mr Yuan who advised him that work could not begin until council consent had been obtained. He asked instead whether Garden and Trees could begin by removing the shed and he asked how much that would cost.

[17]             Mr Welch advised consent was still not available by 4 February and so they continued to strip the shed. As well all lower limbs of small pines were cut. However he was still not permitted to cut any trees down. He said as no consent had been received by 5 February he informed Mr Yuan he would return on 9 February as 8 February was a public holiday. He said on 9 February there was still no consent. His subcontractor was ready to start grinding stumps but because there was no consent the subcontractor went off to do another job for a week.

[18]             He said at 4:00pm on 15 February Mr Yuan telephoned him to say consent had been obtained and he could begin cutting trees down. He said Mr Yuan asked him to

contact Mr Wilson of Cameron Civil to confirm with them where cutting work should begin. Mr Wilson agreed to meet with Mr Welch the following day but did not show up until 3:00pm four days later on 19 February.

[19]             Mr Welch rejects claims that his machinery was of insufficient size to do the job. He had staff on standby but because the starting date was continually changing issues arose regarding the availability of his staff.

[20]             Mr Welch denies ever being told that time was of the essence. He denies ever saying that the site was too steep or that clearance issues might occur because of that. He supports that claim by reference to his previous experience in clearing steeper terrain elsewhere.

[21]             When he and his crew turned up on 24 February he found a 20 tonne-logging machine had been moved onsite overnight. He was unaware that Tree Safe had been engaged. He tried to telephone Mr Yuan often but had no response to his calls. Because Garden and Trees were effectively dismissed, they left the property.

[22]             Mr Pope is a team leader employed by Auckland Council. He deposes having visited the property on 15 February and noted that vegetation clearing had already commenced and that technically this was in breach of the resource conditions as the consent required managed documents to be approved prior to work starting.

[23]             Mr Gibbon was CTL’s project manager at the time. He deposes that on 15 February resource consent was obtained to clear the vegetation on the site. He said when Tree Safe arrived on 24 February 2016 he was approached by Mr Welch regarding his concern that there were two contractors engaged to do the same job. He spoke to Mr Yuan who agreed that Garden and Trees would complete work up to an agreed point and then be released from the site and that Tree Safe would then complete the vegetation removal. Mr Gibbon reports that Mr Welch’s position was that he was willing and able to have completed the work within three weeks of consent being obtained.

[24]             He confirms having sent an email to Mr Welch on 19 September 2016 noting that he had recommended to Mr Yuan that Garden and Trees’ final account be paid in full.

Evidence in reply

[25]             This is provided by Mr Yuan. Mr Yuan says it was agreed Garden and Trees’ work would be completed within three weeks and before Cameron Civil could be engaged.

[26]             He said resource consent issued on 26 January 2016 and not 15 February 2016. He had no reason to tell Garden and Trees he did not have resource consent for the work or to delay the commencement of clearing the site. When Mr Pope told him on 15 February that he needed approval to remove some of the trees that surprised him. He was not aware of that requirement before then and thought everything was covered by the resource consent. He said later that approval was granted however and it only applied to 14 trees that were over the boundary, trees he said Garden and Trees did not even get to while they were on the site.

[27]             Mr Yuan says his original agreement was that Garden and Trees were to clear the whole site including structures which included the shed, and that it was not removed just because resource consent was still awaited. Mr Yuan described some of the issues that Garden and Trees had in removing that shed.

[28]             Garden and Trees sent a new invoice via their solicitor’s letter dated 18 January 2017 for work related to the shed demolition. Mr Yuan said that invoice arrived 11 months after the work was done and one month after CTL had filed its setting aside application. That new invoice is the subject of a second statutory demand, which itself is separately the subject of CTL’s other setting aside application filed under CIV 2017- 404-266.

[29]             Mr Yuan suggests Mr Pope’s evidence supports the view that most of the clearing work had already been done by 15 February, which is the date Mr Welch claims work was to have begun.

[30]             Regarding the evidence of Mr Gibbon, Mr Yuan states Mr Gibbon was sacked because he did not think Mr Gibbon was doing a good job; and that Mr Gibbon was wrong about the date the resource consent issued.

Considerations

Duration of contract

[31]             There are some elements of fact which are in dispute. Primarily they concern the engagement of Garden and Trees to do work when relevant consent or approval considerations clearly affected the ability of that work to be undertaken.

[32]             CTL’s Mr Yuan was clearly unaware of these factors otherwise he would not have planned for the earthworks to begin on a certain date three weeks after Garden and Trees contracting services were to have begun.

[33]             Mr Yuan does not appear to embrace any responsibility for the fact that Garden and Trees were unable to complete their contract works before Cameron Civil began theirs. Nor does he challenge Mr Welch’s account of having been told by Mr Yuan that there was no available authority for Garden and Trees work to begin.

[34]             The evidence strongly suggests that 15 February 2016 was the starting date of Garden and Trees’ services. Mr Yuan asserts he required the work to be done by 19 February. However the consent or approval even for the preliminary vegetation clearance work had not been authorised.

[35]             Mr Yuan refers to consent being available on 26 January 2016 but he does not say what that consent was for. Nor does he directly reject Mr Welch’s claims of events he details regarding what actually occurred on the 3, 4, 5 and 9 February. He does not directly reject claims that it was he who informed Mr Welch that the work could not proceed on 3 February 2016 and that it was not until 4:00pm on 15 February that Mr Yuan telephoned Mr Welch to say consent had been obtained and that re-cutting of trees could begin.

[36]             Garden and Trees says that by letter dated 15 February 2016 Auckland Council confirmed that consent to commence work had not been issued until 15 February 2016.

Fixed price or estimate

[37]             Issues remain regarding Garden and Trees claims of a contractual obligation to pay its invoices.

[38]             CLT’s position is that the parties’ contract was of a fixed price and therefore by its payment in total of $35,000 Garden and Trees was sufficiently compensated for the work undertaken.

[39]             A review of Garden and Trees’ original Quote/Estimate may suggest otherwise. In that document reference is made to hourly charge out rates and estimates of time involved. The price given was only an estimate as the document clearly demonstrates. Garden and Trees invoiced $56,753.36 (inclusive of GST) and noted that $700 per day for eight days had been charged for tree removal/chipping. The original estimate indicated an estimated price of $2,000 per day for tree removal.

[40]Also, that invoice referred to charges which were not identified in the estimate.

[41]             In the Court’s view it is clear Garden and Trees’ invoice is a calculation of actual costs and that its earlier estimate did not prevent invoicing for actual costs that were incurred.

Garden and Trees’ contract withdrawal

[42]             CTL says Garden and Trees was never dismissed. Also it raises issues regarding the adequacy of machinery and sufficiency of labour available when required. CTL also says that the parties’ contract originally included clearance of structures, which reference meant the removal of the shed and associated concrete.

[43]In the Court’s view the evidence strongly supports alternative conclusions.

[44]             Garden and Trees had no knowledge of Tree Safe’s engagement until they appeared onsite on 23 February 2016. Garden and Trees were then informed that much of the work they were contracted to do was then to be done by Tree Safe. Mr Welch says Garden and Trees was effectively dismissed. That conclusion is a proper one in the circumstances.

[45]             It seems that adequate machinery and sufficient staff would have been available, and for whatever purpose required, just as soon as the contract works could begin. In the Court’s view that is not an unreasonable assessment of what occurred at the time.

[46]             The original estimate did not include reference to clearing of structures or within that description, the removal of a shed and its concrete base.

Garden and Trees second statutory demand

[47]             On 18 January 2017 Garden and Trees sent another invoice (the new invoice) to CTL for payment of $22,996.15. On 13 February 2017 a statutory demand for that amount was served on CTL. On 24 February 2017 CTL filed an application to set aside that statutory demand. As earlier noted herein that application is being dealt with under CIV 2017-404-266.

[48]             Garden and Trees says the statutory demand concerns an invoice for works not previously invoiced – in particular in relation to the clearance of a shed and certain contract. The contract also refers to excavation and steel cutting work and machinery hire. It includes a claim of $14,450 for labour.

Summary

[49]             CTL’s case is not supported by evidence disputing claims that the work invoiced for was done. There was no suggestion of that work not having been done adequately. Courts will usually grant a setting aside application where facts and assessment suggests there are serious questions to be tried. In this case CTL’s focus is about claims that there was a fixed price contract; that Garden and Trees has been

adequately paid; and that Garden and Trees brought that arrangement to an end when they withdrew their services.

[50]             While it is not this Court’s function at this time to resolve questions of conflict in evidence, nor is it required to accept without question whatever statements may be made.

[51]             The Court has already detailed reasons why the evidence of Mr Welch is to be preferred. The estimate did not include reference to shed clearance or concrete slab removal. Nor is it likely that work would have been requested initially if the vegetation clearance work was required to be done within a tight timeframe – as CTL claims was required.

[52]             The evidence of Mr Welch is supported in part at least by the evidence of Mr Gibbons and Mr Pope. On the other hand, and as Mr Jaques submits CTL has no paperwork, no emails, no records of phone calls to support Mr Yuan’s contentions. Claims of there being no obligation to pay, were not raised until the statutory demands were served, despite frequent requests for payment having earlier been made.

[53]             The invoice, which supported the statutory demand was for a GST inclusive sum of $56,753.36. That invoice included ‘Tree removal/chipping’ at $700 per day for eight days. The original estimate indicated an estimated price of $2,000 per day for tree removal.

[54]Also, the invoice referred to charges which were not identified in the estimate.

[55]             These factors notwithstanding, it is clear that Garden and Trees’ invoice is a calculation of costs which clearly did not prevent invoicing for actual costs incurred.

[56]             Finally, it is clear for reasons already detailed that CTL effectively cancelled its contract with Garden and Trees thereby justifying them leaving the site.

The second statutory demand

[57]             This judgment does not deal with the second setting aside application. It is not clear that the costs invoiced by Garden and Trees about 11 months after the contract concluded, are not unchallengeable.

Result

[58]The application to set aside the statutory demand is dismissed.

[59]             The Court directs the time for compliance with the statutory demand shall be extended to 9:45am, 23 March 2017 when this matter will be called again before me. An order for liquidation will then be made unless the statutory demand of $21,753.36 has been paid in cleared funds to Garden and Trees.

[60]             Garden and Trees costs and disbursements are payable on a 2B basis. Those costs are strictly limited to attendances in connection with the first statutory demand. It is expected those costs will also be paid by 23 March 2017.

[61]             The second statutory demand  will also be recalled before  me at 9:45am,    23 March 2017. If a fixture upon that application is still required then it will be scheduled.

Associate Judge Christiansen