Kesty Manning Contracting Limited v Haworth
[2015] NZHC 1909
•12 August 2015
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2014-454-000145 [2015] NZHC 1909
BETWEEN KESTY MANNING CONTRACTING
LIMITED Plaintiff
AND
WARREN RICHARD HAWORTH AND JANICE MARY HAWORTH
Defendants
Hearing: 10 August 2015 Counsel:
P J Reardon for Plaintiff
L H Pratley for DefendantstJudgment:
12 August 2015
JUDGMENT OF COLLINS J
Summary of judgment
[1] I am allowing in part an appeal brought by Kesty Manning Contracting Ltd (Kesty Manning) from a decision of the District Court in Palmerston North. In that decision, Judge Ross set aside a judgment which Kesty Manning had obtained by default against Mr and Mrs Haworth for $18,657.86 plus court costs and interest. That sum related to an unpaid portion of an invoice rendered to the Haworths by Kesty Manning for the supply and purchase of maize silage (silage).
[2] An error occurred when the default judgment documents were served on Mr and Mrs Haworth. Some of the court documents that should have been served were not served on the Haworths.
[3] I am allowing the appeal in part because I am satisfied that there is no miscarriage of justice if Kesty Manning has judgment at this stage for part of the
amount which they claimed and which I am satisfied is not capable of being
KESTY MANNING CONTRACTING LIMITED v HAWORTH [2015] NZHC 1909 [12 August 2015]
challenged. That sum is $8,030.43 plus the costs and interest that would be payable in the District Court for a default judgment in relation to that sum. The balance of the claim will have to be determined in the District Court.
[4] I have reached this conclusion because I am satisfied:
(1)The Haworths have no defence at all to that part of the claim against them that amounts to $8,030.43.
(2)The Haworths may have a defence to the claim against them for the balance of the judgment sum. It is in the interests of justice that they be given the opportunity to argue their defence.
Background
[5] Mr and Mrs Haworth own a dairy farm near Feilding (the Feilding Farm). They live at another property in Havelock North. The Feilding Farm was at all relevant times occupied by Mr and Mrs Gregory, who were share milkers. The Haworths and the Gregorys apportioned the profits and losses from the share milking business on a 55 per cent (Haworth), 45 per cent (Gregory) basis.
[6] Mr Redmond, a farm consultant, was employed by the Haworths and Gregorys. Mr Redmond provided Mr Gregory with advice concerning pasture cover and herd nutrition. Mr Redmond would meet with Mr Gregory every five weeks. After these meetings Mr Redmond would telephone Mr Haworth to tell him what advice Mr Redmond had given Mr Gregory.
[7] In November 2011, the Haworths and the Gregorys entered into a contract with Kesty Manning to supply 350,000 kg of silage. The Haworths paid 55 per cent of the cost of that silage. The Gregorys paid the balance.
[8] On 5 December 2012, the parties signed another contract for the sale and purchase of silage. The essential terms of that contract provided:
(1) The Haworths and the Gregorys agreed to purchase 29 ha of silage.
(2)The volume of the silage was to be 500,000 kg with a 10 per cent margin either side of this figure.
(3) The purchase price was to be 21 cents per kilogram plus GST.
(4)Payment was to be made in three equal instalments on the 20th day of each month following delivery.
[9] Mr Haworth signed this contract which was similar to the contract that had been agreed to in November 2011.
[10] During the summer of 2012/2013, Mr Redmond and Mr Gregory became concerned about the effect of drought conditions in the Manawatu on the dairy herd grazing on the Feilding Farm.
[11] Mr Gregory arranged for Kesty Manning to deliver an additional 14 loads of silage to the Feilding Farm. This was done to ensure the dairy herd had adequate feed and to conserve pasture growth on the Feilding Farm. This silage was delivered between 29 February 2013 and 7 March 2013.
[12] Late in March 2013, Kesty Manning delivered a total of 547,032 kg of silage to the Feilding Farm. These deliveries were made pursuant to the 5 December 2012 contract.
[13] On 31 March 2013, Kesty Manning sent an invoice to Mr and Mrs Haworth. That invoice was for 55 per cent of the price of the 547,032 kg of silage delivered pursuant to the 5 December 2012 contract and 55 per cent of the price of the 14 loads of silage delivered between 29 February 2013 and 7 March 2013. The invoice stated Mr and Mrs Haworth were required to pay Kesty Manning $81,234.23 in relation to the silage delivered pursuant to the 5 December 2012 contract and $9,240 in relation to the 14 loads of silage that had been delivered. These sums did not include GST.
[14] An invoice was also sent to Mr and Mrs Gregory for their 45 per cent share of the silage delivered pursuant to the 5 December 2012 contract and the 14 additional loads of silage. The Gregorys paid the sums invoiced to them.
[15] Mr Haworth paid for 55 per cent of 500,000 kg of the silage delivered pursuant to the 5 December 2012 contract. This part of the 31 March 2013 invoice was paid by Mr and Mrs Haworth making payments to Kesty Manning on 22 May
2013, 20 June 2013 and 24 July 2013.
[16] On 31 July 2013, Kesty Manning sought payment of $18,657.81 being the balance of the money it claimed was owed by Mr and Mrs Haworth for their share of the silage supplied pursuant to the 5 December 2012 contract and the 14 loads of additional silage. The sum claimed included GST. Mr Haworth took the view he had agreed to pay for only 55 per cent of 500,000 kg of silage and that he did not authorise the delivery of the 14 loads of silage. He also said he did not know what amount of silage had in fact been delivered.
[17] Kesty Manning applied for a judgment by default. On 11 June 2014, it obtained judgment for the sum of $18,657.86 plus costs and interest. The total judgment sum was $22,984.24.
[18] Unfortunately, an error had occurred with the default judgment documents that were served on Mr and Mrs Haworth. Pages of the notice of claim were omitted from the documents served on the Haworths. The omitted documents contained an explanation that the Haworths had 20 working days to take steps to defend the application for judgment by default.
[19] When Mr and Mrs Haworth appreciated they had a judgment against them they applied under r 15.10 of the District Court Rules 2014 to have the judgment set aside. That rule provides:
15.10 Judgment may be set aside or varied
Any judgment obtained by default under rule 15.7, 15.8, or 15.9 may be set aside or varied by the court on such terms as it thinks just, if it appears to the court that there has been, or may have been, a miscarriage of justice.
[20] On 21 November 2014, Judge Ross granted an application by the Haworths to set aside the judgment. Judge Ross accepted:
(1)There had been an irregularity in the way judgment had been obtained by default.
(2) There was or may have been a miscarriage of justice.
(3) It was just in the circumstances to set aside the judgment. (4) There was a substantive defence to the claim.
[21] Judge Ross was satisfied the Haworths should be provided an opportunity to argue they were not liable to pay 55 per cent of the 14 loads of silage on the grounds that neither the Gregorys or Mr Redmond were authorised to purchase that silage on behalf of Mr and Mrs Haworth.
[22] Kesty Manning has now appealed Judge Ross’s decision. The appeal to this
Court is conducted as a general appeal pursuant to s 72 of the District Courts Act
1947. I have jurisdiction to allow the appeal and substitute the District Court judgment with the orders which I believe should have been made.1
Law
Setting aside/varying default judgments
[23] There is no dispute that the process by which default judgment was obtained in this case was flawed.
[24] The fact there was a procedural error is, however, not determinative of the application to set aside the judgment obtained against the Haworths. This is because a judgment should only be set aside if upholding the judgment may give rise to a miscarriage of justice.2 If judgment has been obtained in circumstances where there is no defence, then there is no possibility of a miscarriage of justice, notwithstanding
the fact judgment was obtained by a flawed process.3
1 High Court Rules, r 20.19(1).
2 Russell v Cox [1983] NZLR 654 (CA) at 659.
3 Baker v State Insurance Office General Manager HC Wellington CP282/88, 31 August 1988; Pulman v Orix New Zealand Ltd (2008) 18 PRNZ 955 (HC); Fetherston v Bank of New Zealand (BNZ) HC Auckland CIV-2007-404-4780, 1 April 2008; Singapore Airlines Ltd v Mistry [2014]
[25] Caution is required before determining a judgment debtor has no defence to a judgment that has been obtained through a flawed process, particularly where untested questions of fact are raised. A decision not to set aside a default judgment may be appropriate where the case revolves on questions of law and where the judgment debtor’s liability is beyond question.
Delivery of unwanted goods
[26] The Haworths’ case hinges upon their claim that:
(1)they agreed to pay for 55 per cent of 500,000 kg of silage and nothing more;
(2)they did not know if the additional silage was delivered and, in the absence of proof that it was delivered, they deny liability; and
(3)in any event, neither Mr Redmond or Mr Gregory was authorised to order the additional 14 loads of silage.
[27] The second limb of the Haworths’ case engages ss 32, 36 and 37 of the Sale
of Goods Act 1908 (Sale of Goods Act).
[28] Under s 32 of the Sale of Goods Act, where a seller delivers to a buyer a greater quantity of goods than contracted for, then the buyer must pay for all of the goods if he or she accepts them.
[29] Section 36 of the Sale of Goods Act is relied upon by Mr Pratley, counsel for the Haworths. Section 36 of the Sale of Goods Act provides:
36 Buyer’s right of examining the goods
(1) Where goods are delivered to the buyer, which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract.
NZHC 1055, (2014) 22 PRNZ 123.
(2) Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract.
[30] Under s 37 of the Sale of Goods Act, goods are deemed to be accepted if they have been delivered and the buyer does any act in relation to those goods, which is inconsistent with the seller retaining ownership of the goods, or when, after the lapse of a reasonable period of time, he or she retains the goods without intimating to the seller that he or she has rejected them.
Analysis
[31] In my assessment, the Haworths have no possible defence to the claim they are liable to pay 55 per cent of the total silage delivered pursuant to the 5 December
2012 contract.
[32] I appreciate the Haworths say they do not know if 547,032 kg of silage was delivered pursuant to the 5 December 2012 contract. There are, however, two insurmountable problems with this aspect of the Haworths’ case.
[33] First, Mr Gregory, Mr Redmond and Mr Manning have all sworn affidavits saying 547,032 kg of silage was delivered pursuant to the 5 December 2012 contract. A clear and unequivocal invoice to this effect was sent to the Haworths on 31 March
2013.
[34] Second, the Haworths’ argument that they do not know if 547,032 kg of silage was delivered is based on the proposition that they live some distance from the Feilding Farm and they simply do not know what quantity of silage was delivered by Kesty Manning. The flaw with this approach is that if the Haworths cannot be certain what quantity of silage has been delivered, why have they paid for 500,000 kg of silage? The answer to that question lies in the Haworths’ misunderstanding about the terms of the 5 December 2012 contract. Mr and Mrs Haworth paid for 55 per cent of 500,000 kg of silage because that is what they mistakenly believed the contract of 5 December 2012 required of them.
[35] As a matter of law, however, the Haworths did not contract to pay 55 per cent of 500,000 kg of silage in the 5 December 2012 contract. They agreed to pay for a quantity of silage that might be 10 per cent more or less than 500,000 kg of silage.
[36] The amount of silage actually delivered was 547,032 kg of silage that was harvested from the 29 ha of maize that was planted on behalf of the Haworths by Kesty Manning. That volume of silage was within the terms of the 5 December 2012 contract.
[37] Mr and Mrs Haworth’s contractual liability is to be assessed objectively.4
The terms of the 5 December 2012 contract are clear and unambiguous. Mr Haworth signed that contract on behalf of himself and his wife. In that contract they agreed to pay for up to 550,000 kg of silage. They undoubtedly received 547,032 kg of silage. They must pay for it. By my calculations the Haworths’ 55 per cent share of
47,032 kg of silage which has not been paid is $8,030.43. That sum includes GST.
[38] The issues relating to the 14 loads of additional silage are not so straight forward because they depend in part upon a factual analysis.
[39] While it may ultimately be established Mr Gregory and Mr Redmond had the authority to purchase the 14 additional loads of silage, it is possible they exceeded their authority.
[40] If Mr Gregory and Mr Redmond did not have the authority to bind the Haworths to purchasing 55 per cent of the 14 additional loads of silage, then careful consideration will need to be given to whether or not the Haworths are deemed by law to have accepted the additional loads of silage under s 37 of the Sale of Goods Act.
[41] This issue in turn will require a determination of two questions:
(1) Whether the Haworths did any act that was inconsistent with Kesty
Manning retaining ownership of the 14 additional loads of silage; and
4 Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 at [20].
(2)Whether, after a reasonable time, the Haworths continued to retain the silage without intimating to Kesty Manning that they rejected the 14 additional loads of silage.
[42] In my assessment, Judge Ross was correct when he regarded this aspect of the dispute as one that could only be resolved after evidence is given in the usual way.
Conclusion
[43] For the reasons explained in this judgment, I am allowing the appeal in part. Kesty Manning is entitled to judgment at this stage in the sum of $8,030.43 plus costs and interest payable on the basis prescribed for default judgments in the District Court for that sum.
[44] The balance of the case is remitted back to the District Court for that Court to resolve.
[45] Both parties have succeeded in part on this appeal. I accordingly order no costs in relation to the appeal in the High Court.
D B Collins J
Solicitors:
Lawler & Co, Auckland for Plaintiff
Lance Pratley Law, Wellington for Defendants
0
0
0