Foggo v R J Merrifield Limited HC CHCH CIV 2009-409-00605

[2010] NZHC 69

IN THE HIGH COURT OF NEW ZEALAND

CHRISTCHURCH REGISTRY

CIV-2009-409-000605

BETWEEN  COLIN FRANCIS FOGGO

MARJORIE JEAN FOGGO MARJORIE JEAN FOGGO Appellants

AND  R J MERRIFIELD LIMITED Respondent

Hearing:         3 February 2010 (by telephone) Appearances:  G M Brodie for Appellants

J H Hunter for Respondent

Judgment:      8 February 2010

RESERVED JUDGMENT OF HON. JUSTICE FRENCH

Introduction

[1]      R J Merrifield Limited seeks leave to appeal my judgment of 21 September

2009,  which  was  itself  an  appeal  from  the  District  Court  involving  a  contested summary judgment application.

[2]      The   decision   concerned   the   mandatory   payment   procedure   under   the Construction Contracts Act 2002.  In the District Court, the Judge granted Merrifield summary  judgment  in  the  sum  of  $107,382.62,  being  the  outstanding  balance allegedly owing under four payment claims.

[3]      It  was  common  ground  the  payment  claims  issued  by Merrifield  contained errors  (notably,  the  erroneous  insertion  of  the  word  “not”  in  two  sections)  and therefore  did  not  comply  with  the  mandatory  form  of  payment  claim  prescribed under the Act.

FOGGO AND ORS V R J MERRIFIELD LIMITED HC CHCH CIV-2009-409-000605  8 February 2010

[4]      The issues before me on appeal were:

i)Did the errors in the payment claims render them invalid for the  purposes  of  the  Act,  thereby  preventing  Merrifield  from invoking the special statutory procedure?

ii)Did  an  email  sent  by  Mr  Foggo  to  Merrifield  amount  to  a sufficient payment schedule in response to one of the payment claims?

iii)Was Merrifield estopped from relying on the special statutory procedure?

[5]      I  held,  applying  the  Court  of  Appeal  decision  in  George  Developments Limited  v  Canam  Constructions  Limited  [2006] 1 NZLR 177, that the defects in Merrifield’s payment claims were more than technical quibbles and rendered the document potentially confusing and misleading. Accordingly, in my view, that rendered the payment claims invalid for the purposes of the Act, and so provided the Foggos with a defence to the summary judgment application.

[6]      In reaching that conclusion, I stated at [28]:

I have not overlooked the absence of any evidence the Foggos were in fact misled by the errors.   However, following the decision of Welsh & Anor v Gunac   South   Auckland   Ltd   HC   Auckland   CIV-2006-404-007877,   11 February 2008, Allan J, that is not conclusive.

[7]      My  decision  that  the  four  payment  claims  were  invalid  meant  the  special payments  procedure  could  not  apply.                 My  decision  was  therefore  sufficient  to dispose of the appeal.   However, in deference to counsels’ argument,  I considered the other two issues.

[8]      I held the email did not constitute a valid payment schedule, on the grounds it did not indicate a scheduled amount as required by the legislation.   As regards the estoppel argument, I held that in law a promise not to insist on strict compliance with the  statutory time  limits  was  capable  of  giving rise  to  an  estoppel,  but that  on  the

facts there was no clear and unequivocal representation or promise.   In the absence

of such evidence, I considered estoppel was not a tenable defence.

[9]      For  their  part,  the  Foggos  oppose  the  application  for  leave  to  appeal. However,  in  the  event  that  leave  is  granted,  they  themselves  seek  leave  to  cross- appeal on the estoppel point.  Merrifield does not oppose the Foggos’ application.

The grounds of Merrifield’s application for leave

[10]     The principles applicable to  the  granting  of  leave  are  well  established:  see

Cuff v Broadlands Finance Limited [1987] 2 NZLR 343; Waller v Hider [1998] 1

NZLR 412; and Snee v Snee (1999) 13 PRNZ 609.

[11]     As  stated  in  those  authorities, the intention of the legislature is that  one appeal is normally to be sufficient. In order to justify a second appeal, the appeal must raise some question of law or fact capable of bona fide and serious argument in

a case involving some interest, public or private, or sufficient importance to outweigh the cost and delay of the further appeal. Ultimately, the guiding principle must be the requirements of justice.

[12]     The proposed appeal raises what is said to be an important question of law, namely whether or not a defect in a payment claim is capable of constituting substantial non compliance with the Act if the evidence shows the  recipient understood the requirement to make a payment schedule.  Or, to put it another way

as formulated by Ms Hunter, the question for the Court of Appeal would be: ‘to what extent must there be evidence of confusion, as to the requirements of the statutory regime in determining if an error in the required notice is a technical error?’

[13]     In  support  of  the  contention  that  this  issue  is  a  matter  of  both  public  and substantial private importance, Ms Hunter submitted:

i)The form in question is  a  standard  form  published  by  the certified Builders Association of New Zealand Inc.  The form is available  for   purchase   by   the   Association’s   2000-plus

members,  and  there  may  be  many  such  forms  currently  in circulation.

ii)       There are conflicting High Court authorities.

iii)The effect of my decision will be to undermine the purpose of the Act by allowing recipients to avoid the statutory procedure,

even when they themselves claim to have applied it.

Discussion

[14]     I  have  carefully  considered  the  submissions  made  on  behalf  of  Merrifield. They were made well. However, in my view, the application fails to satisfy the test postulated in Cuff and Snee.

[15]     I have reached that conclusion for the following reasons.

[16]     First,  the  legal  principles  I purported  to  apply are  in  my view  well  settled. There are no conflicting High Court authorities on issues about the significance of actual confusion, while the decision cited to me by Ms Hunter (namely Spark It Up Limited  v  Dimac  Contractors  Limited  &  Anor  HC  Wellington  CIV-2008-485-001706,  12  June  2009,  Dobson  J)  does  not  in  my  view  point  to  any  conflict  of relevance to this case.

[17]     The  Court  of  Appeal  in  George  Developments  Limited  drew  a  distinction between an error which is only a technical quibble and an error which is more than technical and which renders the document substantively non compliant.  The view I took was that the errors in this case were in the latter category.

[18]     Correctly   analysed,   my   decision   was   thus   merely   the   application   of established legal principles to the particular facts. As Mr Brodie submitted, whether my application of the Court of Appeal’s “technical quibble/substantive compliance” distinction  was  correct  or  not,  is  not  of  wider  significance  because  it  is  of  no precedent value in any other situation other than a notice which is framed in exactly the same terms as this particular notice.

[19]     Secondly, the notice in question has now been withdrawn from circulation. It will have been used in the past by other builders.  However the practical effect of my decision will of necessity be very limited.  There was no evidence of any other case involving the same notice while any builder affected by my decision is always able to issue an amended payment claim.

[20]     I also agree with Mr Brodie that as a matter of principle, it cannot be correct that the absence of confusion could save a substantively non complying document given the mandatory nature of the form.

[21]     Finally, I have been influenced by the fact that the proposed appeal will not

be   determinative   of   the   building  dispute   between   these   parties. There   are substantive  issues  which  have  been  brought  by way of  a  counter  claim  and  which still  require  to  be  resolved.   Discovery  has  now  been  completed.   In  my  view,  it would be unjust in all the circumstances to put the Foggos to the further expense and delay of a second appeal.

Conclusion

[22]     The   respective   applications   for   leave   to   appeal   and   cross-appeal   are dismissed.

[23]     Costs are awarded to the Foggos on a 2B basis.

Solicitors:
MDS Law, Christchurch

(Counsel: G M Brodie, Christchurch) Madison Hardy Solicitors, Auckland (Counsel: J H Hunter, Auckland)