Dundee Lumber Limited v Leslie
[2012] NZHC 2756
•19 October 2012
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV 2012-488-50 [2012] NZHC 2756
BETWEEN DUNDEE LUMBER LIMITED First Appellant
ANDMURRAY FERRIS Second Appellant
ANDMARCUS LESLIE Respondent
Hearing: 25 July 2012
Counsel: R C Mark for Appellants
B D Quarrie for Respondent
Judgment: 19 October 2012
JUDGMENT OF KEANE J
This judgment was delivered by on 19 October 2012 at 4pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
Date:
Solicitors:
S Punshon, Kaitaia
Counsel:
B D Quarrie, Kaitaia
DUNDEE LUMBER LIMITED V MARCUS LESLIE HC WHA CIV 2012-488-50 [19 October 2012]
[1] Between 14 July - 20 September 2010, under an oral agreement, Marcus Leslie, or his company M W and J C Leslie Limited, leased to Dundee Lumber Limited, the company of Murray Ferris, a forestry harvesting machine called a Timber Jack 950 Log Processor.
[2] The processor, a two track vehicle, carrying a large boom with a holding and cutting head, a Waratah, capable of felling trees and delimbing them and trimming their trunks to a uniform diameter, then of cutting them to predetermined lengths, offered Dundee the ability, as it anticipated, to increase production at a reduced cost.
[3] The hire ended by agreement on 20 September 2010 when Mr Ferris complained to Mr Leslie that the processor was not capable of doing the job for which it had been hired. Mr Leslie did not accept that to be so but agreed to take it back. He looked to Dundee to pay the hire charge then outstanding. Mr Ferris denied any such liability.
[4] Mr Leslie brought a claim in the District Court for $50,457.43, principally for the hire charge then outstanding. There was no issue that the processor had been used for 286 hours, nor that during the first month the hire rate was $140 for each hour of use or that it then became $180 an hour. Dundee had paid $13,300.24. In issue was the balance, $38,564.76. Mr Leslie also claimed $11,892.67 for damage to the processor and loss of equipment.
[5] Dundee and Mr Ferris denied these claims and counterclaimed for $114,046 under the contract and the Fair Trading Act 1986. Mr Leslie, they said, had held out that the processor could 'harvest' to cut lengths of timber 300 tonnes of logs each day. It could not do so. Nor, they contended, was it fit for purpose or ever in good working order. They claimed for loss of profit principally. They also claimed for overpaid wages and repair and related costs.
[6] In his decision, dated 15 December 2011, Judge McElrea held that Mr Leslie's hire claim, standing alone, had an indisputable basis in the essential terms of hire and in the hours the processor had been used. He held also that Mr Leslie was entitled to $3,000 for the damage the processor had suffered and equipment loss. He
gave judgment against Dundee, but not against Mr Ferris, for $41,564.76. He dismissed the counterclaim in its entirety.
[7] In the contest relating to the counterclaim, the Judge accepted Mr Leslie's evidence that, at most, he had held out to Mr Ferris that the processor was capable in his experience of 'felling' 300 tonnes of logs each day; and that Mr Leslie had only ever used the processor in that way.
[8] The Judge held, furthermore, that under the 'dry hire' agreement they entered into Mr Leslie had only to supply the processor in working order and had done so. It was for Dundee to find an operator able to use it to capacity and to maintain it day to day. Any issues as to its fitness for purpose could only have arisen, because Dundee's operator was inexperienced. It was also damaged in his care. He found Dundee's counterclaim overstated.
[9] On this appeal Dundee and Mr Ferris do not challenge as such the Judge's conclusions as to the calculation of the hire charge due. They contend that, in rejecting their counterclaim, the Judge made credibility findings that are irreconcilable with the evidence. They contend that the Judge was wrong to reject their counterclaim outright. The Judge ought at least to have found that they had suffered losses that nullify any liability to Mr Leslie.
[10] On this appeal they also take a new point. They contend that the hire contract was not with Mr Leslie. It was with his company, M W & J C Leslie Limited. As I understand them, they contend that it ought to be set aside on that basis alone. I will resolve that issue first.
Identity of owner
[11] The hire contract, Dundee and Mr Ferris contend, must have been with Mr Leslie's company as owner, not with him, because the company issued the invoices and any payments they made had to be into the company's bank account. On this appeal Mr Leslie maintains, nevertheless, that he, as owner of the processor, was the contracting party.
[12] In the District Court the first issue that the Judge had to resolve was, as it happens, who the contracting parties were. But there the issue was whether Mr Leslie had contracted with Mr Ferris or, as the Judge held, with Dundee. There was no issue that Dundee contracted with Mr Leslie. If there was any issue as to that, it ought to have been taken then.
[13] Had the point been taken then, moreover, the Judge could easily have resolved it. Mr Leslie's company might not, as Dundee was, have been a party to the case. The Judge still had the ability to strike out Mr Leslie as a plaintiff and substitute his company if he was satisfied that Mr Leslie had been improperly or
mistakenly joined and that his company ought to have been joined.[1]
[1] District Courts Rules 2009, rr 1.3, 1.13; High Court Rules 2008, r 4.56.
[14] On the evidence, I am unconvinced that this point has substance. But if it did have any, I could, like the Judge at first instance, substitute Mr Leslie's company for him and allow it the benefit of the judgment subject to the challenge to the counterclaim. I see no reason to go that far. I will resolve the appeal on its more substantive grounds.
Jurisdiction on appeal
[15] Dundee and Mr Ferris have exercised their general right of appeal under s 72 of the District Courts Act 1947. It is by way of rehearing.[2] This Court may, if it considers that the appeal has merit and if it does not remit the case for rehearing in whole or part, make any decision it thinks should have been made.[3]
[2] District Courts Act 1947, s 75.
[3] Section 76.
[16] On a general appeal the Supreme Court held in Austin, Nichols & Co Inv v Stichting Lodestar,[4] as on any appeal, this Court may set aside the judgment under appeal only if it finds that decision to be wrong. But equally, as the Chief Justice said also, speaking for the Court, this Court must 'come to its own view on the merits'. If
it differs from the Court under appeal it must act on its own view.[5]
[4] Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141, at [4].
[5] At [3].
[17] That does not mean that the judgment under appeal is of no moment. Quite the contrary. It is the indispensable starting point, if not finally the end point. Where, moreover, the Judge at first instance has a 'particular advantage (such as ... the opportunity to assess the credibility of witnesses, where such assessment is important)', this Court 'may rightly hesitate to conclude that (those) findings of fact
and degree are wrong'.[6] That is very much the issue in this case.
‘Dry hire’ agreement
[6] At [5].
[18] At first instance there was no issue that the agreement entered into was for the 'dry hire' of the processor. Nor that, in the broadest sense, Mr Leslie was to supply the processor and Mr Ferris, or as the Judge held Dundee, was to supply the operator. They differed as to what that entailed in two ways, the first of which arises only obliquely on this appeal.
[19] Mr Leslie, Dundee and Mr Ferris contended, was obliged, before the hire began, to set the processor's computer to process logs into cut timber. Mr Leslie disagreed. Under the 'dry hire' agreement entered into, he said, the responsibility to set the computer lay with Dundee and its operators. He did not, he said further, even know how to do so. He had never done so.
[20] This issue as to the scope of the 'dry hire' agreement arose obliquely as an aspect of the wider issue whether Mr Leslie held out to Mr Ferris, before the contract was entered into, that the processor could 'harvest' to cut lengths 300 tonnes of logs each day or merely that it had that 'felling' capacity, and whether he held out that the processor was in a fit state for use. I will come to those aspects of the appeal shortly.
[21] The issue that does arise directly is whether the Judge was entitled to accept Mr Leslie's evidence that while he was responsible during the hire for 'all major repairs', Dundee was responsible for 'day to day costs such as fuel, oil, hoses and general maintenance and breakages and all operator damage'.
[22] The Judge wrongly, Dundee and Mr Ferris contend, declined to accept as evidence of the generally accepted terms of a 'dry hire' agreement a letter they had from Eagle Equipment Limited, dated 21 January 2011, as to the terms on which they would hire out 'logging machines'. In that letter Eagle defined its terms of hire in this way:
Dry hire only – you supply the operator.
It is our responsibility to maintain the machine in operating condition and carry out servicing and repairs on any part of the machine etc at our cost.
It is your responsibility to check the machine daily, grease and top up oils if required at your cost.
[23] The Judge did not admit this letter in evidence. He held it was hearsay. Absent notice under the Evidence Act 2006, he said, it could only be admitted by consent and Mr Leslie opposed it being accepted in evidence.
[24] The Judge should have accepted, Dundee and Mr Ferris contend, that, though notice was not expressly given, the letter was in its information capsule list. He ought then to have held it to be admissible on the basis that it would be unduly expensive, and cause delay, to require the maker of the statement to give evidence.[7]
Or he ought to have been admitted it as a 'business record' for much the same
reasons.[8]
[7] Evidence Act 2006, s 18(1)(b).
[8] Section 19.
[25] The Judge was right, I consider, to decide this issue as he did. The letter was written after the hire in issue. It might state Eagle's terms but they cannot be treated as generally definitive in the absence of persuasive direct evident. Nor do those terms differ so very radically from those Mr Leslie contends for, at least as they are expressed. Nor do they say anything about who should carry the cost of operator
damage.
Capacity of processor
[26] The issue that the Judge had first to resolve was whether, before the contract was entered into, Mr Leslie did hold out that the processor was fit for Dundee's declared purpose in hiring the processor, whether he held out that it was capable of
'harvesting' 300 tonnes of logs each day. Mr Leslie conceded only that he said that in his experience it was capable of 'felling' 300 tonnes of logs each day, even 450 tonnes, but could not and did not say more.
[27] In accepting Mr Leslie's evidence, Dundee and Mr Ferris contend, the Judge failed to take into account that Mr Ferris had made it plain to Mr Leslie that Dundee was intent on using the full harvesting capacity of the processor and critical to the decision to hire was what that daily capacity was.
[28] Mr Leslie did accept that Mr Ferris made this plain to him. But he said, and the Judge accepted, he had only ever used the processor to fell trees, he could not speak about its harvesting capacity. He spoke only of its felling capacity.
[29] Moreover, Mr Leslie said, he had no reason to exaggerate. Mr Ferris came to him and asked to hire the processor. He did not go to Mr Ferris. He was also then, to some extent at least, concerned that if he did make the hire, the processor might become damaged. He had hired it to Mr Mold without hesitation, because he is a logging contractor well used to using processors. Mr Ferris would be using a processor for the first time.
[30] Mr Ferris did accept that, certainly after the contract was entered into, Mr Leslie did say that he was unable to set the processor's computer to process logs fully. Ian Love, Dundee's operator, with whom Mr Leslie spent time in the first week of the hire, to demonstrate to him how to use the processor, confirmed that a technician had to be brought in.
[31] Also telling is that early in the life of the hire Mr Ferris did not complain that he had been fundamentally misled and he had not cancelled the contract. He negotiated instead a reduced hourly hire rate for the first month. He contends that he
did so because by then he was committed to process contracts that left him with no choice. But he did not, as I shall say again later, establish that to have been his actual predicament contractually.
[32] The Judge, I consider, was entitled on this point to accept the evidence of Mr Leslie in the face of that of Mr Ferris. The issue remains whether Mr Leslie held out that the processor was in good repair for the purpose of the hire, as Mr Ferris had explained it, whether indeed it was in good repair, and how responsibility for maintenance and repairs was divided.
Fitness and state of repair
[33] This was the largest of the issues that the Judge had to resolve and, once again, he found in favour of Mr Leslie. He held that the processor was in a fit state for use throughout the hire and that any problem with it, and any repairs called for, were attributable largely, if not wholly, to Dundee's operator, Mr Love, who had never operated a processor before.
[34] In accepting Mr Leslie's evidence that at the point of hire the processor was in good repair, and that it remained so later, the Judge relied on Peter Mold, the logging contractor who had just had it on a three month hire, on Keepa Abraham, an operator Dundee engaged during the hire, and most especially on Karl Christenson, who had serviced the processor throughout its life.
[35] Any difficulties with the processor identified early in the hire, the Judge held, were answered when Mr Leslie reduced the hourly hire rate for the first month. Moreover, he noted, when on 24 August 2010 Dundee wrote complaining about breakages and oil leaks, it complained that the processor had been less than optimum before 22 July 2010, not afterwards. He also accepted Mr Leslie's evidence that after the hire was complete he used it for four or five more jobs before selling it.
[36] In this the Judge did not accept Mr Love's evidence that any oil leaks and breakages were untoward. Nor did he accept that the processor functioned less than optimally. Mr Love's complaint that the hydraulic arms lacked grip, he held, might be explained by the size of logs. Mr Love's further complaint that one track locked could well have been explained by the steepness of the terrain. The damage the
processor suffered, when during the hire it tipped over, and then when the boom swung back into the cab window, was most likely attributable, the Judge found, to Mr Love's inexperience.
[37] The one respect in which the Judge considered Mr Leslie fell short was in not having the processor serviced before the hire. But Mr Leslie had, he noted, met an invoice for repair, dated 1 September 2010, for $7,860.77, after the processor overturned, and this included day to day maintenance for which Dundee was responsible. That was a sufficient offset.
[38] On this appeal Dundee and Mr Ferris contend that Mr Leslie, and Mr Christenson especially, gave highly general evidence, which the Judge accepted uncritically. Neither produced the processor's servicing and repair history. Mr Christenson was unable to say precisely when he saw the processor during the hire. Mr Leslie was unable to say what the four or five jobs were that he used the processor for after the hire was complete and before he sold it, and he then had to meet the cost of a large repair.
[39] I accept that in these respects the evidence of Mr Leslie and Mr Christenson was general and that the Judge could well have been assisted by more detailed evidence. But both were specific about the state of the processor during the hire, when it mattered, and the evidence of Mr Mold, especially, but also Mr Abraham, was consistent. The Judge was entitled to accept the convergent evidence of all four.
[40] By contrast, the Judge did not accept the evidence of Mr Ferris, especially as it related to Dundee's calculation of loss, and here too, I consider, that conclusion was open to him. There is also an aspect of the evidence of Mr Ferris to which I have already referred, which does not assist his credibility.
[41] Mr Ferris was emphatic that, before the hire, when he saw the processor at Mr Mold's property, it looked to him in a questionable state of repair. Then, when he saw Mr Leslie cut down a tree, it again proved less than capable. Why then did he proceed with the hire? The Judge was entitled to find the explanation that Mr Ferris gave unconvincing and no answer to the evidence given by and for Mr Leslie.
[42] The Judge may well have accepted Mr Leslie's very general evidence that
after the hire was complete he used the processor without difficulty four or five times before he sold it, despite the costly repair before sale. But what counted was the state of the processor during the hire itself and as to that the Judge had a solid body of evidence.
Conclusion
[43] The Judge's decision to give judgment to Mr Leslie for the outstanding hire charge, $38,564.76, and $3,000 on account of damage, $41,564.76, and his decision to dismiss the counterclaim entirely, rested securely on the evidence. It involved no error of principle, or of fact or inference. I dismiss the appeal.
[44] Mr Leslie is entitled to costs on the appeal at scale 2B. Any issue as to the calculation called for is to be resolved by the Registrar. I will, however, resolve any
underlying issue of principle, should one arise.
P.J. Keane J
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