Jackson v Green
[2016] NZHC 3041
•13 December 2016
IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY
CIV 2014-406-46 [2016] NZHC 3041
UNDER the Judicature Amendment Act 1972 IN THE MATTER
of an Adjudicator's Determination dated
30 March 2010 under the Construction
Contracts Act 2002BETWEEN
PETER KEVIN JACKSON Plaintiff
AND
ROBERT JOHN GREEN First Defendant
AND
FORESHORE CONSTRUCTION (MARLBOROUGH) LIMITED Second Defendant
CIV 2014-406-47
BETWEEN PETER KEVIN JACKSON Plaintiff
ANDFORESHORE CONTRUCTION (MARLBOROUGH) LIMITED First Defendant
ANDNEVILLE BRUCE MCCALLUM Second Defendant
Hearing: 22 August 2016 Counsel:
J A Dean and D Calder for Plaintiff
Q A M Davies and D Nield for DefendantsJudgment:
13 December 2016
JUDGMENT OF SIMON FRANCE J
JACKSON v GREEN [2016] NZHC 3041 [13 December 2016]
Table of Contents
Paragraph No.
Introduction [1] General factual background [8] The evidence and credibility findings [22] Issue one – the contract price [32] Issue two – contract formation and its terms [39]
When the contract was formed [40] Issue three – breaches [65] Introduction [65]
Specific defects [69] CHANGE IN POSITON OF BOAT SHEDS [69] OTHER BOAT SHED ISSUES – STRUCTURAL [80] OTHER ERRORS WITH THE BOAT SHEDS [87] JETTY/PONTOON [94] LINK-SPAN [105] RETAINING WALL [108] CONCLUSION ON DEFECTS [111]
Judicial review proceedings [116] Costs [117]
Introduction
[1] These two proceedings (for breach of contract and judicial review) concern the building of boat sheds and a floating pontoon in the Marlborough Sounds. The second defendant in the contract proceedings, Mr McCallum, is the principal of the first defendant, Foreshore Construction Marlborough Ltd. It contracted with the plaintiff, Mr Jackson, to build the structure.
[2] The structure has two parts, side by side. On the left as you look at the beach are two boat sheds with a slipway in front of them. On the right, abutting the boat sheds is a fixed jetty. At the end of the jetty is a floating pontoon. The jetty and pontoon are linked by an aluminium walkway (a link-span).
[3] There are three main issues:
(a) What was the contract price?
(b)Is the construction so deficient, and contrary to the approved plans, as to mean the contract has not been fulfilled?
(c) Did an adjudicator under the Construction Contracts Act 2002 (the first defendant in the judicial review proceedings) err in concluding that a New Zealand Standard, NZS 3915–2005, was a term of the contract?
[4] Mr Jackson contends that a contract for $100,000 (with a small tolerance) was agreed when the parties first met on site. Mr McCallum contends the contract was based on two quotations he sent around the time when work commenced almost two years later.
[5] Mr Jackson, shortly after the construction, purchased a 40 foot catamaran launch. Passengers get on and off the boat at the back. His plan was always that the completed structure would be large enough for a boat like this to be moored, bow in, on either side of the pontoon depending on weather conditions. However, on the boat shed side of the structure there is insufficient room for such a boat because of
the slipway. On that side the back of the boat extends beyond the pontoon so passengers cannot get off. As designed there would have been enough room on both sides but at the start of the build, the boat sheds were moved forward away from the shoreline towards the water by 1.5 metres. The slipway in front of the sheds moved forward an equal amount. This has caused the berthing issue. The plaintiff says everyone knew he wanted to berth the 40 foot catamaran on either side. This inability to use the boat shed side is the primary complaint although a series of other defects are also alleged.
[6] When the parties fell into dispute, Mr Jackson contested Mr McCallum’s final bill. In accordance with the Construction Contracts Act 2002, Mr Jackson countered with his own payment schedule. The payment schedule was in time if the default timing provisions of the Act applied. However, it was out of time if the shortened timeframe set out in New Zealand Standard, NZS 3915, applied. It went to adjudication and the adjudicator held it was out of time. The consequence was that Mr Jackson had to pay Mr McCallum’s final payment claim, plus costs of the adjudication. This decision does not prevent Mr Jackson contesting the final bill. It is just a case of pay first and argue later.
[7] Mr Jackson now seeks to judicially review the adjudicator’s decision, which was made some four years and five months prior to review proceedings being filed. It is said the adjudicator erred in concluding NZS 3915 was part of the contract.
General factual background
[8] Mr Jackson owns a property in the Marlborough Sounds. It can be accessed only by water. There was an existing jetty but Mr Jackson and his neighbour agreed to have an enlarged facility built which would include two boat sheds. Subsequently a new retaining wall along the sea front was added to the project.
[9] It seems common ground that from the outset there was mention of a
13 metre boat berthing there. Mr Jackson contends, and this is disputed, that he specifically referred to a 40 foot catamaran. The structure agreed upon was the building of two new boat sheds with a slipway. They would sit alongside the existing jetty. It was then proposed to shorten the existing jetty and construct a
floating pontoon to sit in front of the altered jetty. The jetty and pontoon would be joined by an aluminium walkway, called a link-span. The pontoon and link-span rise and fall with the tide.
[10] The parties first met on site around mid-July 2007. At that time there was a discussion about what was needed, and Mr Jackson says he gave Mr McCallum a sketch. Mr Jackson was keen to know the price. He believed it could be done for around $100,000.1 Mr McCallum agreed with that price, although he says it was under considerable pressure from Mr Jackson to do so. The parties are at odds as to whether this figure included the cost of the boat sheds, and whether it was indicative, or represented a binding agreement as Mr Jackson alleges.
[11] The next stage in the process is the preparation of sketch plans, and then the filing of an application for a resource consent. Once the resource consent is issued, the sketch plans are then given to an engineering firm for detailed drawings which are then submitted in order to obtain a building consent. Once the building consent is to hand, the project can commence.
[12] Mr McCallum prepared the sketch plans for the resource consent and obtained Mr Jackson’s approval. This application was not submitted to the Council until July 2008, about a year after the meeting. There was then delay because of an objection by a neighbour but eventually resource consent was obtained on
29 January 2009. Detailed building plans were then done by an engineering firm, which made the application for a building consent. The plans were approved and a building consent issued on 24 March 2009.
[13] There is some uncertainty as to the exact day when work commenced at the site but the first piles were drilled between 7–14 May 2009.2 At this time, right at the outset of the work when the first piles were drilled, the critical decision was taken to amend the design. It seems Mr McCallum was concerned about the proximity of the boat sheds to the overhanging bank or cliff behind them. He
discussed the issue with the engineer responsible for the plans, and the engineer
1 Figures are GST exclusive unless otherwise stated.
2 It seems construction of the first part of the floating pontoon may have started before this at a construction yard. It was then barged to the site.
directed that the boat sheds and slipway be moved forward approximately
1.5 metres. This was done3 but no consequent adjustments to the structure were made. In other words, the adjacent wharf structure was not moved forward. This caused the difficulty for the new launch on the boat shed/slipway side of the structure (it is fine on the other side).
[14] In April, shortly before the work commenced Mr McCallum sent a quote for the work. There were two iterations. On 8 April a figure less the boat sheds was sent. Then on 30 April the same quote but now containing an additional price for the boat sheds was resent. The reason for this was that Mr McCallum had contracted out the building of the sheds and was awaiting the costings from the builder. The quotes are identical other than for the addition of this figure.
[15] Both quotes include a figure for the retaining wall. It is common ground that the wall was never part of the $100,000 figure discussed at the first meeting, and that extra sum will be excluded from the analysis from here on.
[16] The quotes contain a reference to a New Zealand Standard. It is expressed in the quote in these terms – “General conditions of contract – NZS 3915–1200”.
[17] The first quote was for approximately $110,000. The second quote on
30 April 2009, which included the sheds, was for $182,000. The quotations set out an indicative payment plan:
(a) first invoice on ordering of materials. This was estimated to be
$54,000 for Mr McCallum’s materials, plus whatever the materials for
the shed would cost;
(b) second invoice after pile driving and concreting (approximately
$32,000);
(c) third invoice for labour ($30,000 including boat sheds);
3 It is a decision that needs to be made before the first piles are drilled.
(d) a final account.
[18] The first of these four invoices was sent on 4 May 2009, so about four days after the second quote, and before the work started. As foreshadowed it was for materials, and the sum (including GST) was $55,462.40. Mrs Jackson paid the invoice on 14 May 2009. The second invoice, covering shed materials, piling and concreting, was sent on 5 June 2009 and paid on 11 June 2009. It was $21,850 (including GST) for the pile driving, and $32,500 (not including GST) for boat shed materials). The two amounts even excluding GST were $103,500, so already in excess of the $100,000 figure Mr Jackson had in mind.
[19] A third invoice was sent on 10 July 2009. By then there were disputes and a request was made for an itemised account. It was in November 2009 that Mr Jackson served his final payment claim. Prior to that, on 22 October 2009, Mr Jackson served Mr McCallum with a trespass notice. At that point the retaining wall was not complete, and there were some final matters to be done on the structure
– for example, evening up pile heights. But Mr McCallum left as directed.
[20] In December 2009 Mr McCallum issued a Notice of Adjudication concerning his final bill payment, and on 30 March 2010 the Adjudicator made his decision rejecting Mr Jackson’s reply as being out of time.
[21] Due to the on-going dispute, a code of compliance certificate has not been issued. It seems the necessary inspections had not been requested, and the engineer had not provided the Council with the necessary certificate. When this was finally done, the Council was not satisfied. However, by the time of trial, amended versions of these documents had been filed. The relevant Council officer testified that he could now see no obstacle to the issuing of a Code of Compliance Certificate.
The evidence and credibility findings
[22] For the plaintiff evidence was given by Mr Jackson who was the key figure in organising for the structure to be built. His neighbour, who was jointly paying for the structure but who is not a party, also gave evidence, as did Mr Jackson’s wife. Together, they testified as to events around the engagement of Mr McCallum, the
receipt of quotes and invoices, the making of payments, and the issues they saw with the work.
[23] The plaintiff also called Dylan McCallum who is Mr McCallum’s grandson. He worked on the project for his grandfather and was originally to be called by the defendant. However, he had very little recollection of the events some seven years earlier.
[24] The other plaintiff witnesses were experts or those involved in the trade. One gave evidence as to the cost now to dismantle the structure and rebuild it in accordance with the plans. This witness considered the price Mr McCallum charged to be fair. The new much higher cost of a rebuild reflects the increased costs of the materials. The other two witnesses commented on either the contract or the alleged defects. These two experts met prior to trial with the relevant defence witness, and a large measure of common ground was identified.
[25] The plaintiff also called evidence from a registered valuer as to his assessment of the value of the new structure. The utility of this evidence is low. The valuer based his assessment on a price per square metre. Whilst that may be a fair way of calculating “value” it is irrelevant to the trial issues. Whether the money expended by Mr Jackson will be reflected in an increased value, or recovered in a sale, is not a trial issue. Nor do I accept a valuer is qualified to give evidence over the fairness of Mr McCallum’s pricing.
[26] For the defendant, evidence was called from Mr McCallum, two Council employees, the shed builder, the pile driver, and the engineer responsible for the plans. Despite the competence of the engineer’s work and decision making being a considerable focus, it is important to recall he or his then employer are not defendants.
[27] The biggest conflicts in the evidence were between Mr Jackson and Mr McCallum. Some of the disputes are quite important since they involve, for example, whether Mr Jackson was told of the change to the location of the boat shed, and agreed to it. Where possible I will in the normal way resolve issues by reference
to contemporaneous documents and actions, and the relevant background context. However, I did form a clear reliability assessment which was that generally I much preferred the evidence of Mr McCallum.
[28] I am not here saying Mr Jackson was wilfully untruthful, but I do consider he has lost all objectivity, and now cannot see or recall matters other than as he wants them to be or has convinced himself they were. His attitude over the alleged contract price is a telling example. He remains convinced $100,000 was a realistic price for both the sheds and the slipway, the jetty adjustments and the floating pontoon and link-span. The actual price was around $180,000 and is today a lot more again. His own witness considers $180,000 to be a fair price for the time but Mr Jackson cannot see that, or acknowledge his expectations were wrong.
[29] Another example is the question of why the sheds were moved forward. There is no realistic doubt that it was because the engineer, Mr Sulieman, directed it to happen because of concerns over the bank. Yet Mr Jackson speculated it was because Mr McCallum had bought the wrong piles, and moving the sheds forward
somehow alleviated the problem.4
[30] There were other aspects of his evidence as to what happened and whether matters were discussed that in my view could not be correct. The evidence is that he was on site for quite a lot of the work (more than he recalls). I accept Mr McCallum’s evidence that he raised matters with Mr Jackson. But I also cannot accept Mr Jackson would in any way have been a silent observer. Again, I attribute the errors in Mr Jackson’s recall to a blindness to the realities rather than to wilful untruth.
[31] Concerning the experts I generally accept their evidence. Where there is dispute (very little) I will resolve it by reference to other conclusions. I do observe, however, that I give less weight to the engineer called by the plaintiff. His
unpreparedness reflected poorly on him, and left his evidence less convincing.
4 Mr Jackson’s theory, as I understand it, was that the seabed forward of the original position would be softer and so could accommodate the wooden piles Mr Jackson had barged over. The plans called for iron piles to be used.
Issue one – the contract price
[32] The plaintiff pleads that an oral contract was made at the time of the first meeting on the pier. The terms are said to be:
(a) $100,000 plus GST for the sheds, slipway, floating jetty and link-span,
all to be built in accordance with engineer’s plans and specifications; (b) Mr McCallum (or his firm) to be project manager;
(c) works and materials to be fit for purpose (implied term); and
(d) work to be carried out in a proper and workmanlike manner (implied). [33] That this argument was maintained by the plaintiff is an example of
Mr Jackson’s lack of insight. It is a completely untenable proposition that a binding contract for $100,000 was formed at the first meeting of the parties on the existing jetty before any measurements were done, proper plans drawn, and consents sought. The neighbour who was the other person paying, although believing the $100,000 was a reasonably firm indication, accepted in a question from the Court he did not consider there was a binding contract.
[34] I accept Mr McCallum’s evidence that the $100,000 was Mr Jackson’s figure, and that to his regret Mr McCallum yielded to pressure and wrongly accepted it was a realistic estimate. I have commented how Mr Jackson, all evidence to the contrary, still considers it to be so.
[35] The evidence telling against this figure being an agreed contract price is overwhelming. First, it would be “extraordinary”, to note the term used by one of the plaintiff’s experts, for Mr McCallum to agree such a figure at that time. The reality is that it is only after the structural design has been finalised that a quote can be given. The cost of the materials cannot be known until the engineer decides what specifications are required for the particular build. Mr McCallum notes, for example, that here the engineer decided on larger than expected piles for the pontoon. Not only are the larger piles more expensive in themselves, but there are
flow-on adjustments needed, all of which add costs. There are many similar matters that can be identified to illustrate how inherently untenable it is that an experienced builder would agree to a binding price on a first visit to a jetty and floating pontoon site. The lack of any agreed terms and conditions at that time is another pointer away from a binding contract.
[36] One aspect that potentially speaks in favour of the plaintiff’s position is the building consent application. The application has provision for the applicant to identify the likely cost of the project. This was completed on the form as $100,000, which provides support for Mr Jackson’s proposition. However, it is to be noted that it was the engineer who filled out the building consent application. Further, the balance of the evidence favours the view that the figure owes more to the increase in application fees that occurs when the estimate is over $100,000, than it does to any discussion between Mr Jackson and Mr McCallum, or Mr McCallum and the engineer. Further, the context of a building consent application means the figure provided is equally consistent with it being an estimate of the cost of the work than it being a representation of a fixed contract price that had been agreed between the parties.
[37] Another aspect relied on by the plaintiff is that Mr McCallum ordered materials prior to sending the quotes. This is said to support the inference that a contract was already formed. However, I consider it more reflects the reality of these loose arrangements. There had been sufficient work done in terms of planning and consents to mean the parties were comfortable that it was all going to proceed. There is a waiting time to acquire materials so ordering must be done in advance. The reality is that Mr McCallum could and should have been quicker with his quote, but I do not accept that pre-ordering is indicative of an existing fixed contract.
[38] It makes no sense to suggest Mr McCallum would fix a price at such an early stage without knowing what requirements the Council, and then the engineer, would impose. He is an experienced builder, and I consider the most he would do at that initial meeting is provide an estimate. As he acknowledges, even that was unwise. I reject the plaintiff ’s claim that an oral contract was formed with a settled price of
$100,000.
Issue two – contract formation and its terms
[39] It is convenient to next address the issue of when the contract was formed and what were its terms. Mr McCallum contends the contract consisted of the quotes he sent in April 2009 just prior to starting the work, together with incorporated documents. The plaintiff’s alternative position to the proposition the contract was formed at the first meeting is that there was some form of cost-plus or cost reimbursement contract meaning materials, labour and a profit margin to Mr McCallum.
When the contract was formed
[40] I have no doubt that the quotes sent in April 2009 form the basis of the contract. They represent an offer setting out the terms on which Mr McCallum would build the foundations for the sheds, adjust the existing jetty and build a link- span and floating pontoon (and wall). Specific prices are given:
(a) $56,970 plus GST for the shed foundations and ramp; (b) $53,030 plus GST for the pontoon and link-span;
(c) $19,015 plus GST for the sea wall.
[41] Matters not included are noted, and a payment schedule is set out. There is reference to how and when a Code of Compliance Certificate will be obtained, and then it is stated that NZS 3915 will represent the general conditions of the contract.
[42] The quote was first sent on 8 April 2009 and was noted by Mr Jackson’s
office as received on 9 April 2009 at 7.18 am. The second quote was sent on
30 April 2009, and was noted as received at 1.36 pm on that day.
[43] Mr Jackson says he did not see the first quote prior to seeing the second, and only saw the second some time in June. His lack of awareness of the quotes is attributed to arrangements within his office which meant the quotes were put in an in-tray but not drawn to his attention. He knew of them only after they had been
forwarded by his wife to his neighbour who was then living in Australia, and the neighbour had responded on 24 June 2009 noting the final figure (GST inclusive) was twice the original amount of $100,000. This exchange was then drawn to Mr Jackson’s attention.
[44] Mr McCallum is unsure of when it occurred, but recalls there was a discussion of the quotes between he and Mr Jackson around the time of the building.
[45] The contemporaneous records show Mrs Jackson forwarded Mr McCallum’s second quote to the neighbour on 7 May 2009. This is around the time the work was commencing on the site. Then on 28 May 2009 Mrs Jackson forwarded the first two invoices, noting there she had paid both in full and seeking the neighbour’s half contribution. The neighbour replied, on 11 June, that the first two invoices (including GST) tip the cost over the $50,000 he had budgeted (for his half) but that the photos of the build look great. Then on 24 June 2009, seemingly having received the third invoice, the neighbour observes that the cost is nearly double. It seems that it is at this point Mr Jackson finally appreciates the full cost. However, that does not mean he has not seen the quotes earlier, and it is not contested that Mrs Jackson paid the invoices on his behalf. He may not have known this, or may have but not cared because he was unaware that the price was so much more than he thought.
[46] In his evidence Mr Jackson accepted he had glanced at the first quote some time after it came in but before the second.5 On that first quote there is a handwritten notation in Mr Jackson’s handwriting. Beside the entry on the quote which says “Sheds – to come”, there is written by Mr Jackson:
Say $50,000.
[47] The figures in the quote, with the addition of this $50,000 estimate, are then added up by Mr Jackson to reach a total of $122,045.00. This would be a total figure roughly in line with Mr Jackson’s expectation. Although Mr Jackson thinks he added this later, I conclude he wrote it on the 27th of April when he looked at this
quote. There would be no reason for him at a later stage to estimate the boat shed
5 In his formal brief he says Monday, 27 April 2009.
cost, because the actual sum would by then be known. It was provided in the
April 30 quote.
[48] Mr Jackson’s belated awareness of the cost is because his addition on the first quote is incorrect. In reaching a total of $122,045 (which included his boat shed estimate of $50,000) Mr Jackson forgot to bring forward from the previous page the cost of the shed foundation and the boat ramp, namely $56,970 plus GST. Had he added correctly, then the true cost would have been apparent right from this early stage. This error explains his delayed hostile reaction to the increased cost as he saw it. I am guessing, and cannot be sure, that the second quote raised no alarms at the time because the actual boat shed cost was nearly the same as he had estimated and so no repeated analysis was required. It was only when the neighbour pointed out the final total was double that Mr Jackson realised the true cost.
[49] My assessment then is that I accept Mr Jackson’s evidence to an extent. It was after the neighbour’s “nearly double” email that he realised the full cost and “went crook” at Mr McCallum, an event Mr McCallum remembers. But it was not the first time he saw or focused on the quotes because:
(a) it is clear he has written on the first quote before receiving the actual boat shed cost;
(b) Mrs Jackson forwarded the second quote to the neighbour on 8 May.
The first two invoices was paid on 14 May 2009, so around when the work was done;
(c) generally I prefer Mr McCallum’s recollection. I accept there was probably some discussion earlier, but suspect it occurred under a misapprehension on Mr Jackson’s part as to the true cost.
[50] I have no doubt the quotes seen by Mr Jackson before the work started were the basis on which the building work was done. Mr Jackson had seen the quotes and was present when the work commenced, and allowed the work to begin. Other factors similarly point to the parties operating on the basis of the quotes. The first
two invoices, which reflect the payment schedule contained in the quotes, were paid without dispute upon receipt. Further, on 24 July, Mrs Jackson wrote to the neighbour saying if it was easier, why didn’t he just pay half of the 30 April quote? This ties back to her 7 May email when the 30 April quote was sent by her to the neighbour. All this points to the parties operating on the basis that the 30 April quote formed the basis of the contract between them.
[51] The quotation has all the essential features required for a contract, particularly when read in the context of the resource and building consent processes. Those documents include the plans which were drafted by the engineer, agreed between Mr Jackson and Mr McCallum, and approved by the Council. There are no key terms missing. There is a measure of informality but Mr Orchiston, one of the plaintiff’s experts, confirms this is a common feature of this type of project.
[52] The addition mistake made by Mr Jackson is irrelevant to the issue of whether there was a contract and on what terms. Objectively he agreed to the quote as the contract. No contractual mistake is pleaded. In terms of what documents form the contract I conclude they are the quote, and by incorporation through that the New Zealand Standard 3915, the resource consent, the building consent and the approved plans.
[53] Some comment is needed on the Standard, NZS 3915. As noted, the quotation document referred to “General conditions of contract – NZS 3915– 1200”. The figure “3915” identifies the particular Standard; the figure “1200” identifies the version. “1200” is an error: no such version exists. The proper figure should have been 2005, namely the year of the latest version. Nothing turns on this. The key aspect is that the correct standard – NZS 3915 – is incorporated into the contract.
[54] The plaintiff points to the fact that he was never given a copy of the Standard. It is suggested this is a necessary requirement before the Standard can be incorporated. I accept the defendants’ position that it was for Mr Jackson to obtain one or ask for one if he was interested in it. The term is plainly stated in the quote which I have found Mr Jackson accepted. This constitutes adequate notice, and there
is no evidence Mr Jackson was misled by the error in version number. Rather, he chose not to look into the Standard but simply accept it was included.
[55] The plaintiff next focuses on whether the parties needed to sign a version of the Standard. The Standard covers most areas of a construction project and is intended to be adopted as the contract document. Concerning signing, the Standard as represents the contract, cl 2.7, “Evidence of Contract”, provides:
2.7.1Unless and until the Contract Agreement [the Standard] is executed by the parties, the tender or other offer and its acceptance between the Contractor and Principal shall, together with the other documents intended to form part of the contract, constitute the contract between them.
[56] The plaintiff contends that because of cl 2.7, the Standard cannot be regarded as being part of the contract until both parties have signed. However, that is not what cl 2.7 says. Rather, it provides that in the absence of signing, the contract will consist of the offer (here the quote) and incorporated documents. There is no reason that Standard cannot be one of those incorporated documents as was intended here. I conclude the Standard was an incorporated document.
[57] I turn next to identifying some other relevant specific terms that are part of the contract by virtue of these documents. First, the building consent. It is the document that approves the proposed building work, and it appends to the consent a series of plans prepared by Mr Jackson’s engineer. These plans are required to be on site at all times. Relevant to this case, is the first paragraph of the consent covering letter. These plans (and thereby part of the consent) provides:
1. No changes to the consent can be made without prior approval.
What has been approved must be built. Should you wish to change something talk to a Building Control Officer first. A new consent
may be needed.
[58] The only other document that contains relevant terms is NZS 3915. It contains an obligation on Mr McCallum to do the work in a “tradesman-like
manner”.6 By contrast, other industry standard form contracts describe this
6 NZS 3915: 2005, cl 5.9.2.
obligation as being to use “reasonable care and skill”.7 I do not consider there is any material difference between these two Standards which represent the quality requirement.
[59] Another relevant provision in NZS 3915 is cl 9.2.1 which provides:
The Contractor shall not vary the Contract Works without an order in writing from the Principal.
[60] Obviously the parties can vary this requirement as they choose but it is at least indicative that the agreement of the principal, Mr Jackson, should be obtained before changes are made.
[61] A further topic to address in relation to the relevant terms is the question of whether Mr Jackson added any specific terms. There was recognition in the evidence that Mr Jackson wanted the structure to look first class. That is, that in addition to functionality and soundness, appearance was also very important to him.8
A question arises of whether he made this enhanced quality requirement a term of
the contract. This issue assumes some importance because the conclusion of the experts in relation to many alleged defects was that the work under challenge was functional and soundly completed, but that the aesthetics were lacking and could have been done better.
[62] The evidence does not satisfy me that Mr Jackson made an enhanced standard a term of the contract. There is no direct evidence suggesting Mr Jackson did so, nor is a higher standard pleaded.9 Further, it is difficult to see where in the contract-making process such a term might have been added. Accordingly, I conclude that the applicable standard remained that normally applying to building contracts. In relation to that Standard, it must be the case that “tradesman-like”
embraces a range of work concerning which the quality or appearance of the final
7 For example, NZS 3902: 2004, cl 1.4.1(b); and various New Zealand Institute of Architects standard form options as discussed in Tόmas Kennedy-Grant Kennedy-Grant on Construction Law (2nd ed, LexisNexis, Wellington, 2012) at [12.06].
8 Relevant generally to this topic, I also accept Mr McCallum’s evidence that Mr Jackson was very concerned about cost.
9 The pleading is “proper and workmanlike manner” which is not materially different from the
standards I have identified.
product may be more or less pleasing but all of which within that range satisfies the contractual obligation of “tradesman-like”.
[63] Finally in relation to terms, it is convenient to here address the term pleaded against Mr McCallum and his firm that the work would be fit for purpose. I do not accept such a term existed. It is contrary to the normal analysis when specific plans and specifications are prepared by an engineer, it was not part of the contract quote, and is not something provided for by NZS 3915.
[64] Factually here Mr McCallum has not designed the work; the engineer has, albeit to a general plan put together by initially Mr Jackson and developed by Mr McCallum for resource consent purposes. Mr McCallum’s responsibility is to build the works in accordance with the plans and in a tradesman-like manner. This arrangement corresponds with the normal legal position attaching to such contracts. The engineer works for Mr Jackson. Mr McCallum arranges for the engineer to do the work, but the work is done by the engineer for Mr Jackson who pays for that work. A contractor such as Mr McCallum does not warrant that the structure as built
is fit for purpose, and Mr McCallum did not otherwise so warrant here.10
Issue three – breaches
Introduction
[65] It is convenient to first address two general matters before turning to each of the individual defects.
[66] The first issue is the failure to obtain prior Council consent to any change to the plans prior to implementing the change. On its face the terms of the Council condition (above at [57]) are clear. Notwithstanding this, the evidence establishes changes can be accepted by the Council after the event by way of approving amended plans known as “as built” plans. The Council officer explained that there are three grades of variation – minor, intermediate, and major – and the Council can
approve as built plans which reflect minor or intermediate changes. Major changes
10 See the discussion in Kennedy-Grant on Construction Law, above n 7 at [12.02] n 11, and authorities discussed there.
would require a fresh building consent to be approved, before the new structure would be certificated. In the present case the shifting of the boat shed position was assessed by the witness as a minor-intermediate change.
[67] Consistent with this approach, the evidence is that a Certificate of Code Compliance will issue for the completed work. I accordingly conclude that the failure to obtain prior Council consent, if there is a breach of contract (induced by the fact that the wording of the building consent conditions does not reflect actual practice), has not caused any loss. It is unnecessary to address the issue further when discussing individual defects.
[68] The second general matter is the impact on trial of the joint report of the experts. As noted, in relation to many of the alleged defects, the experts agreed they were only matters of aesthetics. This expressly meant that they concluded no remedial work was required. I conclude that the effect of this joint evidence is that where the defect is aesthetic only, no breach has been established. The work has been done to a tradesman-like standard but comes at the lower end of the quality spectrum.
Specific defects
CHANGE IN POSITION OF BOAT SHEDS
[69] Mr McCallum moved the boat sheds forward because the engineer told him to. In order to give effect to this decision, the first row of piles – those closest to the shore – were moved forward because the back of the boat shed needs to sit above them.
[70] Mr Jackson was present when those piles were put in place. Mr McCallum says he discussed the change with Mr Jackson at the time, and I accept that evidence. I do not consider Mr McCallum would make that change, albeit under direction, without discussing it with Mr Jackson. Nor do I believe it would happen in Mr Jackson’s presence without him being aware. I have no doubt it was a variation to the plans directed by the engineer, and confirmed with Mr Jackson before it happened.
[71] An issue explored in evidence was whether the move was actually needed in terms of the stability of the bank. I consider this to be an after the event analysis which has been undertaken once the consequences of moving the sheds forward have become apparent. The reality is that needed or not, it was a variation directed by the engineer (not a defendant) and agreed to. I also observe there is no expert evidence about the bank and its stability – just opinions from various people.
[72] This conclusion that Mr Jackson agreed to the boat sheds being moved resolves the issue for the purposes of the case because it was a variation done with Mr Jackson’s agreement and there can be no breach by Mr McCallum.
[73] Notwithstanding this conclusion, because the moving of the boat sheds is the key aspect of Mr Jackson’s dissatisfaction, it is appropriate to address some of the issues further.
[74] Mr Sulieman, the engineer, does not accept that moving the boat sheds altered the overall structure. He accepts it was a variation to the plans because the boat sheds are 1.5 metres forward than that shown on the plans. And, the slipway moved forward an equivalent amount. However, the right hand side of the structure, namely the jetty, link-span, and floating pontoon were unchanged, and comply with the resource consent. This is correct and the plaintiff’s pleading that the structure is too short is not accepted by me. It depends where you measure from. Plainly the distance from the back of the boat sheds to the end of the pontoon is 1.5 metres less than planned, but the length of the right hand side is as planned: 30 metres.
[75] Mr Sulieman explained that moving the righthand side forward by the same
1.5 metres would have significant consequences. The part of the Bay where the sea end of the pontoon sits has a steep sea-bed profile. Moving a further 1.5 metres into the Bay would require significant reconfiguration of the piles and loading. Different piles would be needed, and the resource consent would need changing because the structure would intrude further into the bay.
[76] Although I accept the validity of these concerns about moving the pontoon further into the Bay, I am unsure as to the extent to which they were in
Mr Sulieman’s mind at the time he directed the boat sheds to be moved forward. This is because from his viewpoint the boat shed side could come forward without affecting anything. He knew of the need to accommodate a 13 metre boat, but the right hand side of the pontoon was to be unchanged. It could accommodate a boat that size, as indeed it does. Mr Sulieman did not consider shortening the boat shed side (by moving the slipway forward) was an issue as either the right-hand side was available, or the boat could be backed into the berth on the boat shed side. It also appears to be the case that he was unaware Mr Jackson was contemplating a boat where the passengers could only get off at the very back.
[77] There is some merit in the position of both parties. From Mr Jackson’s viewpoint, he always had in mind the type of boat he eventually purchased, and I accept his evidence that the best method of berthing is bow in. He has lived there for many years and will know what works best. However, on balance I do not accept he made clear to anyone the specific requirements the type of boat he wanted to buy would bring. In other words it was not made clear that he wanted to berth either side, bow in, and that egress was only off the very back of the boat.
[78] I also accept Mr Sulieman’s point that, but for this specific limitation created by the type of boat, the structure works as intended. Indeed, it still accommodates the specific requirements of Mr Jackson’s boat at least on the right-hand side. So moving the boat sheds forward, apart from this unknown to him gloss, did not alter anything. I further accept that it is questionable, at least, that the Council would consent to any further intrusion into the Bay. There were already concerns within the Council about the structure’s size at the time of the consent. The Council witness indicated his view that there would have been issues if any further intrusion was sought.
[79] To summarise on the boat shed issue, I conclude:
(a) the engineer directed the sheds to be moved forward, and did not consider it affected the overall utility of the project;
(b)Mr Jackson was informed by Mr McCallum of the proposed change and agreed;
(c) any change to the pontoon side would have required the work to stop, plans to be redrawn, and a variation to the resource consent sought. The evidence does not satisfy me that consent to move further into the Bay would have been given.
OTHER BOAT SHED ISSUES - STRUCTURAL
[80] The plans provide for iron piles to be used in the boat shed construction. Mr Jackson says that is what he wanted. This would amount to 16 such piles. Mr McCallum took about four iron piles to the site, and used only one. Otherwise he used timber piles which plainly he always intended to do if possible.
[81] The evidence establishes that from a design perspective, the stipulation for iron piles is a worst case scenario approach. Iron piles are needed if it is difficult to drill wooden ones into the seabed. I accept the engineer’s evidence the stipulation for iron piles did not reflect a specific request from Mr Jackson about using iron piles but was just how the engineer designed it. The panel of experts agree that wooden piles are preferable, and should be used where possible.
[82] I accept Mr Jackson wanted iron piles. Why he did is not clear to me, but he seems to have had a preference for them. The evidence does not disclose if and when he specifically communicated this to anyone, and I am satisfied the engineer did not know. His use of iron piles was a fortuitous coincidence. As I noted in relation to the boat shed, I am satisfied Mr Jackson was present when wooden piles were used. He would have seen what piles arrived, and what were being driven in. He did not stop the work and insist on iron piles, and I consider he has agreed to the change.
[83] It is convenient to anyway address at this point the question of loss. It is common ground that Mr McCallum gave Mr Jackson the appropriate credits for the lesser cost of wooden piles and the return to the supplier of the iron piles he did not need to use. The experts confirm that the wooden piles that are used are the
preferable option, and there is no consequent deficit in the integrity of the structure. Were there a breach, Mr Jackson has not suffered any loss.
[84] The next structural issue is that the joists are only bolted to one side of the support poles. The plans require them being bolted to both sides. The panel of experts concluded this is a matter of style. Modern practice is to do both sides but many, including Mr McCallum, prefer to do one side. Mr McCallum contends it leads to a stronger structure. The experts accept the way Mr McCallum has done it is acceptable.
[85] A further complaint is that at some low tides the end of the slipway is out of the water making it impossible to launch a dinghy. It appears that this issue is a common one, with the preferred target height being just above the average low water. This prevents things attaching to the bottom of the slipway, but means at lower than the average low tides for a short period either side it is unusable. The allegation is that the slipway as built is higher than the plans contemplated. The experts disagree and consider the structure conforms to the plans. I accept that evidence.
[86] Again, as with the boat sheds, I conclude no breach is established in relation to the slipway.
OTHER ERRORS WITH THE BOAT SHEDS
[87] In addition to the location of the boat sheds, several matters concerning their construction are also put in issue. It is convenient to address these by moving from the outside of the shed in.
[88] There is an agreed problem with a spouting downpipe. It ends at the floor of the walkway surrounding the sheds. This means the water goes straight onto the floor and eventually the joists. It is also agreed it is a simple fix, requiring a small addition jointed by an elbow pipe.
[89] Next, it is noted the plans (inexplicably) required the windows to be double glazed. The engineer accepts this was an error in the plans. Plainly that is so. It is
an outdoor shed for storing boats. There is no reason for double glazing. Single glazed windows were ordered and that is what Mr Jackson was charged for. The experts agree single glazing is appropriate.
[90] It is then claimed that the cedar doors had grease marks on them. Mr Jackson did not address this in his evidence-in-chief and the experts did not see such marks. It may be they have been sanded off.
[91] Mr Jackson further says it was agreed the roller doors should be powder coated. This is not included in the plans or specifications and I do not accept it was a requirement. It would be unusual to have that feature of exposed boat shed doors.
[92] Finally, it is said the planking on the floor of the boat sheds is uneven and a trip hazard. The floor consists of rough sawn timber. Because the timber is not dressed, the evidence is that thickness may vary to 6 mm. I am not satisfied on the evidence that a trip hazard exists. It is a simple fix if there were one, and if such a hazard exists it is hard to imagine it has not been corrected in the seven years since the shed was built. Yet there is no evidence of such work being done, nor its costs.
[93] In conclusion on the boat sheds I am not satisfied that these matters, individually or collectively, mean the boat shed has not been constructed in a tradesman-like manner. The downpipes are an issue but genuinely merit the label trivial. It is surprising that it has not been fixed, as appears to be the case.
JETTY/PONTOON
[94] A number of issues are raised concerning the piles that were installed from the end of the existing jetty to the end of the pontoon. The essential complaint is that they move too much, thereby making the pontoon at times too unstable for safe use. In so far as liability is directed at Mr McCallum and his company rather than the design, the focus must be on the quality of the build. Two aspects are highlighted – the depth to which the pile was driven, and the bracing around each pile.
[95] Concerning depth, Mr Jackson claims the piles were not driven to the appropriate depth. There is no evidence to support this. The driller says it is untrue
and nothing says otherwise. Second, around each pile there is built a wooden square; its primary purpose seems to be to assist with the drilling but it also thereafter operates as a barrier on movement since the pile bangs against the inside of the square. The squares as built are larger than the plans contemplated (750 mm rather than the prescribed 650 mm). The evidence was rather unclear as to why this occurred. The experts agreed it is an easy fix – small pieces of timber (called rubbing strips) are affixed on each side on the inside of the frame to reduce the gap between the pile and frame.
[96] Concerning the extent to which the piles move, the experts agreed that the amount of cantilever from the seabed meant that large movement in certain conditions can be expected. (This reflects Mr Sulieman’s point about the difficulties of the pontoon further into the Bay.)
[97] In relation to the piles I conclude the square frames do not reflect the plans and the evidence provides no good reason for that occurring. The experts suggest remediation is required and I accept that evidence. However I note that it is again a very minor matter, and an easy fix. It is not the source of Mr Jackson’s concerns about the pontoon moving. That is a consequence of the necessary design and the depth of water underlying the seaward end of the pontoon. Otherwise the claim is rejected as regards piles.
[98] The next dispute concerns the length of the pontoon. This is raised in the content of the wider issue of the mooring of the boat and whether the whole structure was compliant. The pontoon is meant to be 10 metres. Whether it is or not depends on whether one includes the fenders affixed to the end of the pontoon. Mr McCallum’s position, supported by the Council Officer, is that the fenders form part of the 10 metre calculation. I accept that evidence and conclude the pontoon is the correct length.
[99] Next, the construction documents provided for three central joists to underlie the pontoon framework. It is built with two. The engineer accepts it was an oversight to require three, and two are sufficient. The plaintiff’s expert agrees that two suffice for the load the pontoon was designed for. He queries, however, whether
the design loading assumption is correct, and suggests a heavier loading may have been more suitable. This aspect of the disagreement does not relate to a pleaded error, and there is no evidence to say Mr Sulieman’s loading has proved inadequate. Mr Jackson was only charged for two joists, and the structure is unaffected by not using a third, which would have served only to unnecessarily increase the costs. Mr Jackson has suffered no loss.
[100] Another issue concerns the fact that some of the pontoon’s floats have come loose and drifted away. Everyone agreed they should be replaced. The allegation is that Mr McCallum’s work is responsible for the floats coming loose. The plaintiff’s case focused on the adequacy of the ties he used to connect the floats to the pontoon. As it transpires this claim was based on a misunderstanding of the purpose of the ties. It seems the plaintiff thought they were a permanent device used to secure the floats in position. Mr McCallum had used twine and this was suggested to be inadequate. However, that is not the purpose of the ties. The floats should simply remain in place as a consequence of the weight of the pontoon. The ties are only used to enable transportation of the pontoon from where it is first constructed to the site, and then keep the floats in the correct place while the pontoon is being put in the water.
[101] The evidence did not satisfy me as to a cause why the floats have escaped. There was some suggestion by the defendant it was due to inadequate maintenance in two respects – tightening the rods that keeps the pontoon tight, and cleaning the floats of encrustation that inevitably attaches. It may be that the location of the particular pontoon means a strapping arrangement is needed. Whatever be the answer, the evidence did not satisfy me there was a breach of contract. This conclusion differs in part from the experts’ report that strapping should be used. The evidence did not satisfy me that was a requirement of the contract or something for
which Mr McCallum should be responsible.11
11 There was also an issue as to the number of floats. I am satisfied Mr McCallum met or exceeded the number required by the contract.
[102] A final further issue is raised concerning the piles. When cross-beams are attached to the piles, this is done by cutting out an equivalent size wedge from the side of the pile and fitting the beam into it so it sits flush with the exterior of the pile. When the cross-beams were first attached, it was concluded they were at the wrong height, and needed moving.12 This was done but the original wedge cut out of the pile remained. It is common ground something should have been done. Essentially an equivalent size wedge of wood fastened back in, and the repair then treated. This was not done.
[103] It is surprising that this is laid at Mr McCallum’s door. Before the job was completed, Mr Jackson terminated the contract by trespassing Mr McCallum and his firm from the site. Mr McCallum says it was one of the tasks left to do. I accept that and conclude he was prevented from finishing that aspect of the work.13 He is not responsible for the deficit.
[104] As with the other matters there is no defect in relation to the pontoon that I
consider constitutes a breach of contract.
LINK-SPAN
[105] There appears to be an oversight with the link-span. The wheels of the link-span which sit on the floating end are meant to be set in channels. This helps prevent that end of the walkway moving sideways left and right across the pontoon. Wear and tear is therefore minimised. The channels were not installed.
[106] Mr McCallum does not accept the need for these and suggests there is no wear of any significance visible. Mr Jackson was not charged for the work not done, or materials not supplied. However, it is accepted that the plans called for a channel, and any variation should have been put to Mr Jackson. I accept in this regard the
work is non-compliant.
12 There was a considerable dispute as to why this happened. It traces back to the calculation about the seabed profile and the tide. Mr Jackson and Mr McCallum disagreed. Mr McCallum allowed Mr Jackson his way. Mr McCallum considers Mr Jackson was wrong all along and one of the consequences was this error as to the height of the cross-beams.
13 I reach a similar conclusion as regards not cutting the tops of the piles to a uniform height.
[107] An issue was also raised as to whether the fixed end of the link-span (the end permanently affixed to the existing jetty) is at the correct height. There is no agreement on this from the experts, and Mr McCallum submits it is correct as done.14 In the absence of any expert asserting a problem, I do not consider the plaintiff has established any breach.
RETAINING WALL
[108] Two complaints are made here – the wall was not finished, and the quality of the work appears poor. Both are correct. However, concerning the issue of the wall not being finished, I repeat my earlier observation about Mr McCallum being ordered off the property. He could not complete it and is not responsible for failure to complete the contract. Mr Jackson was not charged for the uncompleted work, and Mr McCallum states the materials were left there and that Mr Jackson has subsequently used them.
[109] The issue with the quality of the work primarily concerns the bolts. There are three aspects – the bolts go in from the water-side so can be seen; where two bolts have been used side by side, they are not in an even line; and on some occasions there are holes drilled but not used and not plugged. The last complaint is another consequence of the termination of the contract. Mr McCallum had been in the process of having plugs made. He had taken sawdust from the site to a saw miller to enable as good a colour match as possible to be achieved with the plugs. He was unable to finish the task because the contract was terminated. Had he been able to do as intended, no problem would arise.
[110] As for the holes not being aligned, Mr McCallum agreed it looked poor but did not affect the strength of the wall. The experts agreed these were matters of aesthetics. Finally, there is the issue of what side the bolts are on. As I understand it, the normal practice is to drill from behind the wall so that the bolts cannot be seen. Mr McCallum said it was too difficult to do here, because there was inadequate room. I assume an answer would be to excavate some more of the bank to allow
better access. However, there was no evidence on the feasibility of this and whether
14 He says this issue flows from the same debate noted above in fn 11 – the dispute over the seabed profile and the tides.
Mr Jackson would have agreed to the extra cost. I agree with the experts it is a matter of aesthetics, but do accept Mr Jackson’s complaint that the wall is not particularly appealing to the eye.
CONCLUSION ON DEFECTS
[111] The key issue was the location of the boat sheds. I am satisfied Mr Jackson agreed to the plan deviations. The change did not alter the integrity of the structure.
[112] There is no doubt bringing the boat sheds forward has affected the utility of the structure as Mr Jackson wishes to use it. It seems as if the engineer was not advised of the need to go bow in on the boat shed side, nor the type of boat intending to be used. If this had been appreciated, more analysis of the need to shift the boat sheds could have been done. It does seem to have been a rather ad hoc decision, but I have no doubt it was a decision directed by the engineer and agreed to by Mr Jackson. Mr McCallum raised it with Mr Jackson and had the go-ahead. If Mr Jackson had not agreed, work would have needed to stop until a more considered analysis was done. If after that analysis the sheds did indeed have to come forward, there would not have been an easy fix to address Mr Jackson’s concerns. Moving the pontoon deeper into the Bay would have required a further recourse consent, and that was not likely to be forthcoming. I conclude there was no breach of contract as regards the location of the boat sheds and further that the overall construction of the structure was to plan. The structure as built is the structure Mr McCallum contracted to build.
[113] There are two matters which on a strict application of the contract do not represent fulfilment on the contract to a tradesman-like standard. They are the downpipe elbow (Mr McCallum estimates the cost at $12.50 for each of two) and the channel/wearing strip for the wheels of the link-span ($75.00 incl labour). These are matters a tradesman would correct if pointed out, and Mr McCallum agrees. They are, however, in the context of this claim de minimis.
[114] There are a number of other matters which do not constitute a breach but which are matters one would expect a good tradesman to correct to the extent possible. However, Mr McCallum was denied the opportunity to correct them
because he was trespassed from the site. There is nothing that he should be required to remediate at this point.
[115] Accordingly, the claim for breach of contract is dismissed.
Judicial review proceedings
[116] I have reached the view that the terms of NZS 3915 were part of the contract. This was the conclusion reached by the adjudicator, and accordingly the application for review is dismissed. It is not necessary therefore to consider factors that would have been relevant to the exercise of my discretion such as delay and the purposes of the Construction Contracts Act 2002.
Costs
[117] The defendant is entitled to costs and reasonable disbursements, the latter to be fixed by the Registrar if necessary. (The disbursements include the full reasonable costs of expert witnesses.) Concerning costs I am unaware of any matter that would support other than the standard award, but memoranda may be filed if
necessary.
Simon France J
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