Kelly v Lasque Construction Limited

[2015] NZHC 785

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-007500 [2015] NZHC 785

BETWEEN

ROBIN JOHN LEARY KELLY,

PATRICIA ANN KELLY AND LINDA GLASSWELL

Plaintiffs

AND

LASQUE CONSTRUCTION LIMITED formerly trading as SIGNATURE HOMES First Defendant

SIGNATURE RESIDENTIAL LIMITED

trading as SIGNATURE HOMES Second Defendant

SIGNATURE HOMES LIMITED Third Defendant

STEWART CRAIG WILSON Fourth Defendant

Hearing:	(on the papers)
Judgment:	21 April 2015

JUDGMENT OF VENNING J

on defendants' application for further and better particulars

This judgment was delivered by me on 21 April 2015 at 4.30 pm, pursuant to Rule 11.5 of the High

Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Blackwells, Auckland

Wiltshire Stone, Auckland

Copy to:            A Gilchrist, Auckland

C Meechan QC, Auckland

KELLY v LASQUE CONSTRUCTION LIMITED formerly trading as SIGNATURE HOMES [2015] NZHC 785 [21 April 2015]

Introduction

[1]      This case has a substantive fixture commencing 25 May 2015 (five days).

The defendants seek further particulars of the plaintiffs’ claim.

[2]      The plaintiffs plead inter alia, that at material times, the fourth defendant, Mr Wilson, was a director of the second and third defendants under the extended definition of “director” in s 126 of the Companies Act 1993 (and was an actual appointed director of the second defendant from 1 December 2011).

[3]     The defendants consider that the plaintiffs have not provided sufficient particulars to support that pleading and other, related, claims as to the role the fourth defendant played.

[4]      The case was initially allocated a fixture in March 2014, which was vacated. Then on 9 October 2014 Associate Judge Christiansen allocated the fixture for 25

May 2015.  The Registry confirmed that date to counsel on 15 October 2014.  The close of pleadings date was 26 February 2015.

[5] The plaintiffs filed a third amended statement of claim on 13 February 2015. Counsel for the defendants, Ms Meechan QC, raised a number of concerns regarding the amended claim. On 26 February 2015 the Court directed that the defendants were to have leave to serve a notice requesting particulars by 4 March 2015 and directions were made for response and, if necessary, for the application to be heard in advance of trial to ensure the trial date was maintained. In granting leave to the defendants to issue the notice, the Court noted that the pleading at [2] above had been pleaded earlier (in October 2013) and was not new. However, the particulars provided were new. Subsequently, as Ms Meechan was unavailable on ? the matter has proceeded by way of an exchange of submissions with this decision issuing on the papers.

The principles

[6]      The application is made under r 5.21.  As the Court of Appeal confirmed in

Price Waterhouse v Fortex Group Ltd, particulars and pleadings are intended to:1

[s]upply an outline of the case advanced, sufficient to enable a reasonable degree of pre-trial briefing and preparation. Discovery and interrogatories are only an adjunct, not a substitute for pleading.

[7]      Pleading is not an area for mechanical approaches or pedantry.2   The essential point is that the pleadings, including particulars, must inform the defendant as to the case it has to meet:  Platt v Porirua City Council.3

Decision

[8]      Against those principles I address the pleading in the particulars sought as follows.

[9]      Paragraph18 of the now, fourth, amended statement of claim pleads:

18.THAT, at the time that the Fourth Defendant advised that “Signature Homes” would undertake, at their cost, such work as was required to obtain a Code Compliance Certificate, the Fourth Defendant was a director of the Second and Third Defendants under the extended definition of director in Section 126 of the Companies Act 1993 (and was an actual appointed director of the Second Defendant company from 1 December 2011).  Further particulars of which are referred to at “Particulars of holding out” at paragraph 19(a)-(n) below.

[10]     The defendants require the following particulars:

1.(a)      The  governance  functions  the  plaintiffs  allege  the  fourth defendant undertook:

(i)  within/on  behalf  of  Signature  Residential  Limited  [the second defendant] on or before Friday, 21 October 2011; and

(ii) within/on  behalf  of  Signature  Homes  Limited  [the  third defendant] on or before Friday, 21 October 2011;

(b)      The pattern of the behaviour that the plaintiffs allege establish that the Board of Directors of:

1      Price Waterhouse v Fortex Group Ltd CA179/98, 30 November 1998, at 19.

2      At 19.

3      Platt v Porirua City Council [2012] NZHC 2445, at [19].

(i) [the second defendant];  and

(ii) [the third defendant]

acted in accordance with the directions of the fourth defendant during a period on or before Friday 21 October 2011 or any other period on which the plaintiffs rely.

(c)       In  the  event  that  the  reference  to  “all  material  times”  at paragraph 17 of the statement of claim (which is by inference referred to in paragraph 18) is a reference to a date other than Friday 21 October 2011, particulars of the dates on which the advice was allegedly given and whether such advice was oral or written and if written, the discovery reference.

[11]     The defendants submit, inter alia, that the particulars are required to disclose the basis upon which the plaintiffs allege Mr Wilson was held out as a director of the second and third defendants.  The defendants do not consider the particulars in paras

19(a) to (n) fully and fairly inform them of the basis.

[12]     Ms Meechan referred to Arcadia Homes Ltd (in liq) v More to this Life Ltd.4

She submitted the plaintiffs could only possibly rely on s 126(1)(a).

[13]     Plaintiffs’ counsel, Mr Gilchrist, has confirmed that the plaintiffs rely on s 126(1)(a) of the Companies Act  1993.   The requirements  for such a de facto directorship have recently been discussed by this Court in Delegat v Norman:5

·a de facto director is one who is held out by the company and purports to act as a director;6

·the concept is confined to those who willingly or voluntarily take upon themselves the role.  It does not extend to a person who does not willingly adopt the role;7

·it is necessary to plead and prove that he undertook direct functions in relation to the company that could properly be discharged only by a

director.  There needs to be clear evidence that the person was either

4      Arcadia Homes Ltd (in liq) v More to this Life Ltd [2013] NZCA 286.

5      Delegat v Norman [2012] NZHC 2358.

6 At [26].

the sole person directing the affairs of the company or if there were others (as is the case in the present case) who were true directors that he was acting on an equal footing with the others in directing the affairs of the company.8

[14]     In response to the request for the particulars sought, the plaintiffs take the point they do not make the allegations as to governance functions that the particulars seek. A similar response is made in relation to the particulars sought at (1)(b).

[15]     I agree with Mr Gilchrist’s submission that, having confirmed s 126(1)(a) is relied on, the pleading at paragraph 18 otherwise relies on the particulars set out at paragraph 19(a)–(n) so that the plaintiffs are not required to provide further particulars.  It may well be, as Ms Meechan submits, that the particulars provided are inadequate to make out the plaintiffs’ case, but that is a case for trial, not a matter to be dealt with at the pleadings stage.

[16]     While I accept there could be some ambiguity in the reference at para 18 to “at the time” that the Fourth Defendant advised that “Signature Homes” would undertake, at their cost, such work as was required to obtain a Code Compliance Certificate” it seems clear from submissions that is a reference to the meeting on 21

October 2011 pleaded in paragraph 16.   Further, the “advices and assurances” referred to in para 17 are those contained in the particulars provided in para 19. Subject to that clarification, no further particulars are required.  Either the particulars set out at para 19 are adequate on this aspect of the plaintiffs’ case or they are not. That will however be a matter for trial.  The defendants know the case they must meet on this issue.

Paragraph 19

[17]     Paragraph 19 alleges:

19.      THAT in the alternative to paragraph 18 above, at all material times the Fourth Defendant gave promises and advices to the First and Second named Plaintiffs that one or more of the Second and/or Third Defendants would  do,  at  their  expense,  such  work  necessary  to  obtain  a  Code

Compliance Certificate for the property.  The Fourth Defendant did so when he:

(a)       was held out as having actual or apparent authority to give such promises and advices as the relevant agent and/or employee of the Second or Third Defendants in the circumstances where the holding out was made by the principal owner and director of the Third Defendant, Gavin Hunt, and the Plaintiffs reasonably relied upon it; and/or

(b)       when he was held out by the Second or Third Defendants as having authority to exercise a power which a director, employee, or agent of a company carrying on business of the kind carried on by the company customarily has authority to exercise (the Plaintiffs rely on section 18 of the Companies Act 1993 which operates as a statutory estoppel preventing the Second or Third Defendants from asserting a lack  of  authority  of  the  Fourth  Defendant  as  the  relevant  agent and/or employee and/or director of the Second or Third Defendants to give such promises and advices).

[18]     The defendants request particulars of which of the particulars in subparas (a) to (n) are referable to subpara 19(a) and which are referable to para 19(b).   In response the plaintiffs say that to the extent necessary they rely on all the particulars collectively and individually as set out in the fourth amended statement of claim under para 19(a) to (n) inclusive.  Again, I do not consider further particulars are required. The defendants know the case they have to meet.

[19]     The defendants then seek further particulars of each of the existing particulars pleaded in the subparagraphs.

(a)      The Plaintiffs’ attendance of the First or Second or Third Defendants’ place of business … as well as street front signage appearing outside the Signature Homes offices

[20]     I accept the force of the defendants’ point  that the plaintiffs’ attendance at the defendants’ place of business does not of itself suggest or provide any basis for the apparent authority or holding out alleged.   While there may be signage that does support the pleading, the detail, i.e. how is Mr Wilson referred to, or what other aspect of the signage is relied on is required.  Particulars are to be provided.

(b)      A series of discussions and meetings between the Plaintiffs and the Fourth Defendant where the Fourth Defendant appeared to act on behalf of the First or Second or Third Defendants, which were consistent with and/or supported the plaintiffs’ belief and understanding of the Fourth Defendant’s role and authority as

the  relevant  agent  and/or  employee  and/or  director  of  the  Second  or  Third

Defendants

[21]     The defendants are entitled to know the discussions or meetings the plaintiffs rely on.  It is not sufficient to refer to a general course of conduct.  The particulars of the meetings (i.e. dates on which they were held, and attendees) are to be provided.

(c)      Email dated 3 December 2010 from the Plaintiffs to Gavin Hunt sent at

12.40pm

(d)      Email dated 3 December 2010 from Gavin Hunt to the Plaintiffs in response

(e)      Email dated 3 December 2010 from the Plaintiffs to Gavin Hunt sent at

2:04pm

(f)       Email dated 3 December 2010 from Gavin Hunt to the Plaintiffs in response

[22]     With  reference  to  the  3  December  2010  email  exchange  referred  to  in subparas (c), (d), (e) and (f), the defendants seek the identification of the specific portion of the email exchange on which the plaintiffs rely to support the assertion Mr Hunt held out the fourth defendant as being an agent and/or employee of the second and/or third defendants.

[23]     The email exchange is relatively confined.  It is unnecessary for the particular passages to be further identified separately.

(g)      General  publicity  via  media  exposure  of  Gavin  Hunt’s  role  in  the  Third

Defendant as managing director and owner of the Third Defendant

[24]     The defendants seek particulars of “what is the “general publicity” … in the plaintiffs’ possession as at 21 October 2011 and/or 20 February 2012 on which the plaintiffs rely”.

[25]     This existing pleading does not, of itself, advance the plaintiffs’ case against Mr Wilson.  It is essentially a pleading that it was common knowledge Mr Hunt was managing director and owner of the third defendant.  It should not be difficult for the plaintiffs to provide examples of the basis of their general knowledge of Mr Hunt’s role.  Particulars are to be provided.

(h)      “Written guarantee” dated 11 November 2010

[26]     Particulars are sought of what specific portion of the written guarantee is relied on as establishing a holding out by Gavin Hunt and/or the second or third defendants to the effect that the fourth defendant was acting as the agent and/or employee of the second or third defendant.

[27]     Mr Gilchrist has confirmed the written guarantee relied on is a guarantee letter from the fourth defendant, “albeit between the first defendant and the original contracting party”.  No further response is required. While it may well be inadequate of itself to support the pleading at paras 18 and 19, that is a matter for trial.

[28]     However, I take from counsel’s submissions in response to the request for particulars that the plaintiffs also intend to rely on the letter of 6 December 2010 from Mr Wilson to the plaintiffs and also emails of 6, 7 and 8 March 2011 and 25

October 2011 between Mr Wilson, the plaintiffs and Mr Hunt.  The plaintiffs should replead by including particulars of those emails and letter.

(i)       Verbal representations made by the Fourth Defendant to the Plaintiffs at the meetings pleaded herein

[29]     The defendants seek particulars of the verbal representations made by the fourth  defendant  to  the  plaintiffs  at  the  meetings  (of  21  October  2011  and  20

February 2012).  That is a reasonable request.  The verbal representations made by the fourth defendant are to be identified and confirmed.

(j)       Email  dated 23  January 2011  from the  Plaintiffs  to  Gavin  Hunt  sent  at

6:41pm;

(k)      Email dated 24 January 2011 from Gavin Hunt to the Plaintiffs in response;

(l)       Email  dated 24  January 2011  from the  Plaintiffs  to  Gavin  Hunt  sent  at

10:32am;

(m)      Email dated 24 January 2011 from Gavin Hunt to the Plaintiffs in response; (n)      Email  dated 24  January 2011  from Gavin Hunt  to  the Plaintiffs  sent  at

3:53pm

[30]     The defendants seek particulars of the basis upon which the plaintiffs assert the email exchange:

(i)        constitutes a holding out by Gavin Hunt that the fourth defendant …

was an agent and/or employee of the second or third defendant;  and

(ii)       constitutes a holding out by the second or third defendant that the fourth defendant … had authority to exercise a power as a director, employee, or agent of [the second] or [third defendants].

[31]     It is unnecessary for the plaintiffs to respond to that request.  The plaintiffs have identified they rely on the emails set out.   If the emails do not support their claim, that is for trial.

[32]     Paragraph 22 pleads:

THAT, at all times from at least 21 October 2011, the Plaintiffs dealings with the Fourth Defendant was in his capacity as a director (either formally appointed or under the definition of director appearing as Sections 18 or 126 of  the  Companies Act  1993)  and/or  employee  of  the  Second  and Third defendants.

[33]     To the extent the plaintiffs rely on particulars in addition to those provided in response to the request in paras 1 and 2 hereof, the defendants seek particulars of the basis upon which they assert the fourth defendant was a director and/or employee of the second and third defendant.

[34]     This paragraph was pleaded as para 21 in the second amended statement of claim dated 17 October 2013.

[35]     The plaintiffs can address this request by formally confirming they rely on them matters earlier pleaded.

[36]     Paragraph 23 pleads:

AND THAT by committing the Second and Third Defendants the First to Fourth Defendants were likely to gain apparent benefit including, but not limited to:

(a)       Avoidance of the need to go through litigation and the savings on the associated legal costs and expenses;

(b)       Avoidance of adverse publicity; and

(c)       Avoidance of damage and loss to the goodwill and reputation of

“Signature Homes” brand.

And that such conduct was consistent with the existing policy and building and weathertightness guarantee commitments of the “Signature Homes” at all material times.

[37]     The defendants require particulars of:

1.        The “conduct”…;  and

2.        the   “building   and   weathertightness   guarantee   commitments”

referred to.

[38]     The plaintiffs note that the request was raised for the first time in the notice of 4 March 2015.  However, the pleading was new in the third amended claim filed on 13 February.  All that is required is clarification.  I apprehend that the plaintiffs rely on the overall conduct.  They should specify that conduct by reference to the particular preceding paragraphs of the statement of claim, which identify the conduct relied on.

[39]  I also apprehend that the “building and weathertightness guarantee commitments” referred to are based on the earlier representations pleaded.  It should be a simple matter for the plaintiffs to confirm that and to identify the paragraphs which they rely on as evidencing those commitments.

[40]     Paragraph 26 pleads:

THAT, in their dealings with the Plaintiffs throughout 2011 and 2012, the

Second to Fourth Defendants were acting in trade.

[41]     The  fourth  defendant  requires  particulars  of  the  basis  upon  which  the plaintiffs assert that he personally was acting “in trade”.

[42]     Counsel for the plaintiffs submits that whether the fourth defendant’s conduct in giving the representations and commitments was sufficient for him to have acted “in trade” is a mixed matter of fact and law.  I agree.  There is no need to provide “the basis” sought. The basis is contained in the preceding allegations.

[43]     Paragraph 27 pleads:

THAT the conduct of the Second to Fourth Defendants was misleading and deceptive, in that:

…

(e)       The Fourth Defendant as the relevant agent, employee or director of the First or Second or Third Defendant having the actual or apparent authority to bind the First or Second or Third Defendant advised the Plaintiffs that they would undertake the work.

(f)       They led the Plaintiffs to believe that the proposed targeted repairs would lead to the completion of the project and issuance of a Code Compliance Certificate when the First or Second or Third or Fourth Defendants knew or ought to have known that the proposed targeted repairs would not be acceptable to the Auckland Council and would not enable it to issue the Code Compliance Certificate.

(g)       THAT  they  gave  the  Plaintiffs  when  they  sought  it  repeated reassurances from the First to Fourth Defendants as to their willingness to carry out all the necessary work required to obtain a Code Compliance Certificate.

[44]     The defendants seek particulars of 27(e), (f) and (g).

[45]     The particulars sought of 27(e) are the basis upon which the [plaintiffs] assert that the fourth defendant was the agent, employee or director of the first, second or third defendant if the particulars are different from those provided.  That can readily be clarified.

[46]     The defendants seek particulars in relation to 27(f) of the basis upon which the plaintiffs allege each defendant was aware that the proposed targeted repairs would  not  be  acceptable  to  the Auckland  Council  and  when  it  is  alleged  each defendant became aware of that position.  It is a reasonable request.  Particulars are to be provided.

[47]     Finally, in relation to 27(g) the defendants seek the basis upon which the plaintiffs allege each defendant gave repeated assurances as to the willingness to carry out all the necessary work required to obtain a Code Compliance Certificate.  If what  is  relied  on  are the allegations  pleaded  in  the previous  paragraphs  of the statement of claim, the particular can  be answered by identifying the particular paragraphs.  If there is anything further it should be referred to.

Result/orders

[48]     The particulars to be provided are to be provided by 28 April 2015.   The remaining existing timetable directions remain.

Costs

[49]     Costs  are  to  lie  where  they  fall  on  this  application.    A number  of  the particulars sought relate to pleadings that were included in the earlier statement of claim in October 2013.   The request should have been made at that time.   To the extent they are fresh a number of them were not raised at the conference when the leave was granted to file the application for further particulars.   Further, while the plaintiff is required to answer a number of particulars, a number of them involve

simple matters of clarification that should have been resolved between counsel.

Venning J