Davies v K M Smith Builder Ltd - [2021] NZHC 2865

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2019-425-000087

[2021] NZHC 2865

BETWEEN
JUDITH GAY DAVIES and SIMON BERNARD DAVIES

Plaintiffs

AND

K M SMITH BUILDER LTD

First Defendant

AND

KERRY MICHAEL SMITH

Second Defendant

Hearing: 12, 13, 14 April, 28 May and 28 October 2021

Appearances:

L A Andersen QC for Plaintiffs

A D G Hitchcock and K L Rusher for Defendants

Judgment:

2 November 2021

JUDGMENT OF DOOGUE J

This judgment was delivered by me on 2 November 2021 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

DAVIES v K M SMITH BUILDER LTD [2021] NZHC 2865 [2 November 2021]

TABLE OF CONTENTS

Introduction [1]

Preliminary interlocutory issue [15]

The substantive issues for determination [17]

The background
Early days  [18]
Initial engagement with Mr Smith and the company  [23]
The contract  [26]
November 2014 to December 2015  [28]
Changes made by the Davies  [36]
Hard landscaping  [43]
Late 2015 to August 2016  [46]
Request for some costs of completion  [47]
Letter to the BNZ  [49]
Deterioration in the relationship between the Davies and Mr Smith                  [51]

Did Mr Smith make the representations alleged by the Davies? [56]

Mr Smith’s credibility in the broader context [58]

The letter Mr Smith wrote to the BNZ [67]

When and in what context were the representations alleged to have been made?
[86]

Did Mr Smith represent he had the time and ability to project manage the construction? [90]
Did Mr Smith represent the construction of the house (including landscaping) would cost between $2.5 and $2.8 million (inclusive of GST)? Did Mr Smith represent that the cost of construction would not exceed $3 million?  [95]
Did Mr Smith represent to the Davies that construction would be completed by March 2016?  [119]
Summary of findings on the alleged representations  [126]

Was there an implied term in the contract that the cost of construction of the house would be reasonable? [138]

Did the company and/or Mr Smith fail to properly project manage the construction of the house?  [153]
The law  [155]
Discussion  [156]
Alleged acts or omissions  [158]

Failure to account for the ongoing costs of construction  [159]
Unauthorised variations  [163]
CS Roofing variation  [165]
Balustrade variation  [167]
Failure to ensure competitive quotes from subcontractors  [176]
Delivery of material in excess of requirements and failure to obtain refunds for excess materials  [178]
Defective work  [183]
Roofing defects  [185]
Defective tiling  [193]
Defective plumbing  [197]
Joinery defect and excessive efflorescence  [199]
Defects in the installation of the mudroom and front doors  [216]
Powder room and master bedroom  [222]
Atrium beams and leakage  [226]
Balcony master bedroom/paver staining  [228]

Summary of findings on project management [230]

Summary of overall findings [236]

The counterclaim [242]

Result [243]

Introduction

[1] In 2001 the Plaintiffs, Dr and Mrs Davies (the Davies), purchased a property at Closeburn Station, a high-country station in the Queenstown Lakes area (the area). Soon thereafter they commissioned a well-known architect,…

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.

Continue reading Davies v K M Smith Builder Ltd

Details

AGLC: Davies v K M Smith Builder Ltd [2021] NZHC 2865
Case: [2021] NZHC 2865
Decision Date: 2 November 2021

CaseChat Overview and Summary

The plaintiffs, Judith and Simon Davies, brought claims against the defendants, KM Smith Builder Ltd and Kerry Smith, the director of the company. The plaintiffs alleged that Kerry Smith made representations to the plaintiffs that induced them to enter into the contract, including that he had the time and ability to project manage the construction, the construction would cost between $2.5 million and $2.8 million, and it would be completed by March 2016. The plaintiffs also alleged that there were implied terms in the contract that the cost of construction would be reasonable and the company would project manage the construction to ensure this. The plaintiffs further alleged that the company and/or Kerry Smith failed to properly project manage the construction, resulting in an unreasonable cost of completion. The plaintiffs also claimed against the company and Kerry Smith for misleading or deceptive conduct under the Fair Trading Act 1986. The company counterclaimed for unpaid invoices and interest.

The court found that Kerry Smith did not make the alleged representations and there were no implied terms in the contract regarding the cost of construction or completion date. The court found that there was an implied term in the contract that the cost of construction would be reasonable, and the plaintiffs had failed to prove it was not. The court found that the company breached the contract by failing to properly project manage the construction and Kerry Smith breached his duty of care in failing to adequately project manage the construction. The court found the company and/or Kerry Smith were liable to the plaintiffs for some defective work, but the plaintiffs had failed to prove any loss associated with other alleged failures to adequately project manage the construction. The court granted leave to the plaintiffs to amend the pleadings to include a fourth alleged representation and ordered the plaintiffs to pay the company $94,934.74 plus interest. The court reserved the question of costs.

Orders