Gatehouse v Middleton HC Hamilton CIV 2006-419-808

[2007] NZHC 2019

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV 2006-419-808

BETWEEN  CHRISTOPHER CHARLES GATEHOUSE

Appellant

AND  PETER JOHN MIDDLETON First Respondent

AND  KAREN MARGARET MIDDLETON Second Respondent

Hearing:         22 August 2007 (Heard at Hamilton)

Appearances: D Hayes for Appellant

AJ Nolan for Respondent

Judgment:      22 August 2007

ORAL JUDGMENT OF ASHER J

Solicitors:

Ryan Law, Solicitor, PO Box 7144 Hamilton (M Hunwick) AJ Nolan, Solicitor, PO Box 1268 Hamilton

Copy:

D Hayes, Barrister, PO Box 9323 Hamilton

GATEHOUSE V MIDDLETON AND ANOR HC HAM CIV 2006-419-808  22 August 2007

[1]      This  is  an  application  for  leave  to  appeal  to  the  Court  of  Appeal  by

Christopher Charles Gatehouse.

[2]      The decision that is the subject of the application is a judgment of Stevens J of 29 May 2007, where he dismissed an appeal from the District Court at Hamilton. The  District  Court  decision  had  given  judgment  against  Mr Gatehouse  for  the respondents,   Peter   John   Middleton   and   Karen   Margaret   Middleton   (“the Middletons”) on a claim for damages.   A claim by Mr Gatehouse for damages for wrongful repudiation of a franchise agreement failed.  The Middletons were found to have   been  entitled   to   cancel  the   franchise   agreement   due   to   breaches   by Mr Gatehouse.  The Middletons succeeded on a counterclaim for loss of income and were awarded the sum of $1,000 together with interest and costs.

[3]      Leave is required for a second appeal.  Section 67 of the Judicature Act 1908 applies.  The test to be applied is settled and not in contention between the parties. In Waller v Hider [1998] 1 NZLR 412 (CA) it was stated at 413:

Upon a second appeal this Court is not engaged in the general correction of error. Its primary function is then to clarify the law and to determine whether it has been properly construed and applied by the Court below. It is not every alleged error of law that is of such importance, either generally or to the parties, as to justify further pursuit of litigation which has already been twice considered and ruled upon by a Court.

This approach was further confirmed by the Court of Appeal in Snee v Snee (1999)

13 PRNZ 609 at [19].

[4]      Mr Hayes for the appellant  particularly relies on the statement  in Cuff  v Broadlands Finance Ltd [1987] 2 NZLR 343 (CA) at 346-347, that leave may be given:

… where the appeal would raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the further appeal.

[5]      The appellant raises two points of law, which he submits are capable of bona fide and serious argument and which he submits involves some point of interest,

public or private, of sufficient importance to outweigh the cost and delay of a further appeal.

[6]      The first point of law arises from the District Court Judge’s conclusion that there was an implied term in the contract that any requests for quotes received by the appellant franchisor were to be passed on to the operator within the territory within which the request related, here the respondents, the Middletons.  It was the breach of this term which led to the decision that the appellant was in breach and the respondents were entitled to cancel the franchise agreement.

[7]      The District Court decision was based on business efficacy.   In the High Court Stevens J considered that the decision was correct, and relied on the principle that  terms  may  be  implied  where  they  represent  the  obvious  and  unexpressed intention of the parties.   He expressly referred to the Court of Appeal decision in McNeill  v  Gould  (2002)  4  NZ  ConvC  193,557,  where  Hammond J  giving  the judgment of the Court noted at [25]-[27] that a Court would be prepared to imply a term where it arises from the language of the contract itself.  Indeed, this approach can be seen in Vickery v Waitaki International Ltd [1992] 2 NZLR 58 at 64, where Cooke P noted the varieties of implications in contracts. The second class he identified was those terms deduced by implication or interpretation from the express terms of the contract.

[8]      The  approach  adopted  by  Stevens J  to  the  implication  of  terms  is  the application of orthodox legal principle, and the exercise that was carried out commonly  arises  in  contract  cases.    There  were  clauses  in  the  Sub-Franchise Contract that was the primary contract document, at paras 17 and 21, from which it could be implied that it was an obvious intention of the parties that quotes would be passed on.  It can be easily seen why the term was implied in those circumstances. Therefore, no point of sufficient public or private importance arises as to the implication of the term, which warrants the granting of leave.

[9]      The second point of appeal relates to clause 88 of the contract.  The appellant asserts that by its wording this clause precludes the existence of an implied term. Mr Hayes’ focus was primarily on the last sentence.   It is a statement common in

contracts of this type, excluding reliance on statements, warranties or representations not  in  the  contract.     Stevens J  considered  that  this  related  to  pre-contractual statements, warranties or representations rather than implied terms.  It is difficult to see how any contrary interpretation of the sentence could be reached.  In any event, the point does not raise an issue of such importance that leave is required.

[10]     Mr Hayes submitted that Judge Burnett put clause 88 to one side on the basis of what was said in the first sentence.  She concluded that the first sentence, which was again in a wording which is common in contracts of this type, did not refer to the exclusion of any implied terms.  This was a decision that was perfectly open on the words of the clause and again no significant point of law arises.

[11]     Mr Hayes has submitted that the appeal involves a substantial amount  of money, which is important to his client.   I accept that this is so, but this factor in itself does not make the granting of leave appropriate.

[12]     The points are not of sufficient importance to outweigh the cost and delay of a further appeal.  Leave is declined.

Costs

[13]     I order costs and reasonable disbursements in favour of the respondents on a

2B basis.  The hearing has taken a little less than one hour including judgment time, so the shortest time allocation of time for calculating costs for today’s hearing is appropriate.

……………………….

Asher J