Davies v K M Smith Builder Limited - [2022] NZCA 380

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA694/2021
[2022] NZCA 380

BETWEEN	SIMON BERNARD DAVIES AND JUDITH GAY DAVIES Appellants
AND	K M SMITH BUILDER LIMITED First Respondent KERRY MICHAEL SMITH Second Respondent

Hearing:	11 July 2022
Court:	Clifford, Peters and Downs JJ
Counsel:	L A Andersen QC and S Gaskell for Appellants A D G Hitchcock for Respondents
Judgment:	15 August 2022 at 10.30 am

JUDGMENT OF THE COURT

A The appeal is dismissed.
BThe appellants must pay the respondent one set of costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Clifford J)

Introduction

The appellants, Dr Simon and Mrs Judith Davies (the Davies), entered into a labour and materials contract with the respondent K M Smith Builder Ltd (the Firm) for the building of a new home (the House). The second respondent, Kerry Smith, is the half‑owner, sole director and an employee of the Firm.
The contractual relationship broke down and the Firm abandoned the site before the House was completed.
The Davies then sued the Firm and Mr Smith for damages of $1,031,690.54, representing overcharging for building work and additional fees incurred by the Davies.
The Davies based that claim on nine causes of action. In the High Court Doogue J found in favour of the Firm and Mr Smith as regards each of those causes of action.[1] At the same time, the Judge upheld the Firm’s counterclaim for unpaid invoices totalling $99,299.24. The Davies now challenge the Judge’s finding as regards one of those causes of action only, that is for misleading and deceptive conduct under the Fair Trading Act 1986.
[1]Davies v K M Smith Builder Ltd [2021] NZHC 2865 [Judgment under appeal].
In their amended statement of claim the Davies formulated the Fair Trading Act 1986 causes of action against the Firm by reference to an estimate of costs to completion, and by reference to an initial estimate of overall costs. In the judgment of the High Court, those two factually separate causes of action would appear to have been treated as one, and as involving both the Firm and Mr Smith on the same basis. That was the approach taken in this appeal, as regards the completion estimates. We proceed on that basis.
In their notice of appeal, the Davies say the Judge failed to specifically address their eighth cause of action which alleged that Mr Smith and the Firm had misrepresented that the costs of completing construction of the House would not exceed $700,000. That misrepresentation, which occurred at a certain point in the building process when difficulties had already arisen between the parties, constituted a breach of the Fair Trading Act.

Background

The facts are not now in dispute. The following summary is based on the narrative set out in the comprehensive judgment of Doogue J in the High Court.
In 2001 the Davies, through their family trust, purchased a property…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] NZCA 380
Decision Date: 15 August 2022 at 10.30 am

CaseChat Overview and Summary

Davies v K M Smith Builder Limited involved an appeal by the Davies against a judgment of Doogue J in the High Court of New Zealand. The appeal related to a claim for misleading and deceptive conduct under the Fair Trading Act 1986, which arose from a building contract dispute. The Davies argued that the High Court judge failed to address their eighth cause of action, which alleged that Mr Smith and the Firm had misrepresented the costs of completing the House. The Firm and Mr Smith denied the allegation and the High Court found in their favour.

The Court of Appeal considered the Davies' argument that the Judge had erred in finding that Mr Smith had not incurred liability when he gave the estimate. The Court found that the estimate of $700,000 provided by Mr Smith was incomplete and did not include all the necessary costs. The Court also found that it was disingenuous of the Davies to assert that Mr Smith represented the actual costs of completion to be $700,000 and to rely on it to allege he acted in bad faith and misled them. The Court held that the sending of the requested letter was not constituting misleading and deceptive conduct in trade as between Mr Smith and the Davies.

The appeal was dismissed and the appellants were ordered to pay the respondents' costs. The Court held that the High Court judge's findings were sufficient to determine the Fair Trading Act claim and that the appellants' argument had no merit. The Court also noted that the appellants had created the circumstances that led to the sending of the incomplete estimate and it would be unfair to hold Mr Smith and the Firm liable for misleading and deceptive conduct.

Orders