Dodds v Southern Response Earthquake Services Limited

[2019] NZHC 2741

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-009-000417

[2019] NZHC 2741

BETWEEN

KARL GREGORY DODDS AND

ALISON ROMA JACQUELINE DODDS AND ST MARTINS TRUSTEE SERVICES LIMITED AS TRUSTEES OF THE
MATTSON TRUST
Plaintiffs

AND

SOUTHERN RESPONE EARTHQUAKE SERVICES LIMITED

Defendant

Hearing:	(Determined on the papers)
Counsel:	P J Woods and T D Grimwood for Plaintiffs D J Friar and NFD Moffatt for Defendant
Judgment:	25 October 2019

JUDGMENT OF GENDALL J

This judgment was delivered by me on 25 October 2019 at 3:30 p.m. pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date: 25 October 2019

DODDS v SOUTHERN RESPONE EARTHQUAKE SERVICES LIMITED [2019] NZHC 2741 [25 October 2019]

[1]On 16 August 2019, I issued my substantive judgment in this proceeding,

Dodds & Ors v Southern Response Earthquake Services Ltd (the judgment).1

[2]    On 28 August 2019, counsel for the plaintiffs in this matter filed a memorandum seeking that the judgment be “corrected” to amend what he says is an error in the calculation of the damages awarded. That request was made under r 11.10 High Court Rules, which provides:

11.10   Correction of accidental slip or omission

(1)A judgment or order may be corrected by the court or the Registrar who made it, if it—

(a)contains a clerical mistake or an error arising from an accidental slip or omission, whether or not made by an officer of the court; or

(b)is drawn up so that it does not express what was decided and intended.

(2)The correction may be made by the court or the Registrar, as the case may be,—

(a)on its or his or her own initiative; or

(b)on an interlocutory application.

[3]    The plaintiff submits that there was an error in the final damages awarded as the judgment indicated this amount was to be GST exclusive, when what the plaintiffs claimed and were entitled to was the GST inclusive amount.

1. Counsel quotes from the judgment at para [123]:

[123]I am satisfied that the Dodds have established that they have suffered a loss in that they have not received the full value of their promised benefit under the contractual settlement. A shortfall on this full entitlement occurred, representing the difference between:

(a)The $894,937 upon which the Settlement Agreement was premised, and

(b)Southern Response’s actual estimate of “the amount it would have cost us to rebuild your house on its present site.”

1      Dodds & Ors v Southern Response Earthquake Services Ltd [2019] NZHC 2016.

[5]    Precise calculation of the quantum of damages was addressed later in this judgment at [204] to [207] as follows:

(a)I have found that Southern Response wrongly represented the total cost of rebuilding the Dodds’ house initially at $895,937.78 (and then revised to $894,937.00) and wrongly represented that it was settling at this total rebuilding estimate figure of $894,937.00. Accordingly, the Dodds are entitled to what was the true reasonable estimate at the time of the amount Southern Response would have paid to rebuild (known by Southern Response as $1,186,920.75 in accordance with the complete DRA it was holding from Arrow), with certain adjustment that I note below.

(b)The figure needs to be adjusted as it would not have included demolition costs of $64,634.50 (already paid by Southern Response) and Arrow PMO costs of $6,000 and Arrow DRA costs of $3,500 for which the Dodds would have suffered no loss as they are items that they would never have received compensation for.

(c)It includes however the contingency amount estimated at

$114,678.00, architects’ and design fees of $50,716.30, Arrow Contract costs of $6,000 and Arrow construction costs of $7,500. The shortfall difference totals $178,894.30, and represents the Dodds’ loss here, being the difference between the true value of the Dodds’ claim under their policy (which would have triggered their rights to negotiate further and to properly reconsider their election decision options) and the $772,948 settlement payment they actually received (taking into account the EQC payment they had already obtained).

(d)An order is to follow that Southern Response pay to the Dodds the

$178,894.30.

[6]And, I concluded at [212] and [225]:

[212] The Dodds, therefore, are entitled to interest at the statutory rate on  the $178,894.30 specified at para [207] above from the date they became entitled to receive the initial settlement payment from Southern Response (which the Dodds say, and I agree, is 23 December 2013, being the date of the Settlement Agreement) up to the final date for payment.

…

[225] The Dodds have largely succeeded in their claim against Southern Response in this proceeding and orders are now made as follows:

(a)Southern Response is to pay to the Dodds damages of

$178,894.30 as outlined at para [207] above.

(b)Southern Response is to pay to the Dodds interest at the statutory rate on this $178,894.30 from 23 December 2013 until the final date of payment of this sum.

[7]    The Plaintiffs explain that the breakdown was (exclusive of GST): internal administration costs ($23,000.00), demolition costs ($64,634.50), design fees ($50,716.30), project contingency ($114,678.00). That totalled $253,028.80.

[8]    They consider that GST has been overlooked here, due to an accidental error or omission. It is requested that “plus GST” is added to the following references to the judgment sum of $178,894.30 at paras [207], [212], [225](a) and (b) in the judgment.

[9]    Southern Response says in response  that  the  judgment  should  remain  GST exclusive. It says that there were no submissions made as to GST at trial and the slip rule is not an appropriate way to introduce these issues here.

[10]   The question of GST was not addressed at trial. It was however, included as a component in the plaintiffs’ claim. Southern Response says the appropriate treatment is for the judgment to remain GST neutral. It says that damages for misrepresentation are intended to compensate for losses and are not the supply of goods and services under s 8(1) of the Goods and Services Tax Act 1985.

[11]   The damages awarded for misrepresentation in the judgment were to represent the difference between the $894,937 upon which the Settlement Agreement was premised, and Southern Response’s actual estimate of “the amount it would have cost us to rebuild your house on its present site.” Southern Response’s actual estimate of its costs included GST. Accordingly, it is appropriate that the Dodds be awarded GST.

[12]   Southern Response says that if GST is awardable that would constitute a windfall for the plaintiffs here as no evidence was led as to the GST status of the plaintiffs as trustees for their trust. In such circumstances Southern Response says there is a rebuttable presumption that any award is to be GST exclusive. In support of its position, Southern Response cites New Zealand Venue and Event Management Limited v Worldwide NZ LLC.2 I note this decision is in relation to costs, and not for an award of damages.  In any event, as I see it, the loss suffered in the present case

2      New Zealand Venue and Event Management Limited v Worldwide NZ LLC [2016] NZCA 282 at [16].

stems from the Dodds settling for a figure they thought was based entirely on a proper building assessment report plus GST. It is difficult to see how they are gaining a windfall in the circumstance where they receive the actual estimate plus GST.

[13]   Southern Response also says the plaintiff purchased another house. It says the purchase of another house ordinarily will not attract GST as vendors are not generally GST registered. Where the vendor is GST registered, GST would only apply where the sale was made in the course of that person’s taxable income. I do not accept this argument. Damages here were not based on the Dodds suffering loss when purchasing another house. Rather they were awarded for Southern Response misrepresenting the Abridged DRA. That DRA was made up of costs to build a house, which included GST.

[14]   And it is clear, as I see it, that determination of this GST question in the circumstances here would not require the calling of further evidence.3

Orders

[15]   GST ought to have been included in the damages awarded. This was an error arising from an accidental slip in terms of r 11.10 and arose in my judgment such that the decision did not truly express what was decided and intended. I order that “plus GST” is added to the following references to the judgment sum of $178,894.30 (at [207], [212], [225](a) and (b)).

...................................................

Gendall J

Solicitors:

Anthony Harper, Christchurch Bell Gully, Auckland

3      See Brickell v Attorney-General [2002] 16 PRNZ 557 (HC).