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Kumar v Sarsfield Engineering Limited

Kumar v Sarsfield Engineering Limited

Case [2021] NZHC 3408 13 December 2021

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Breach of Contract

Unconscionable Conduct

Specific Performance

Judicial Review

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2021-404-001681

[2021] NZHC 3408

BETWEEN
VINOD KUMAR

Appellant

AND

SARSFIELD ENGINEERING LIMITED

Respondent

Hearing: 18 November 2021

Appearances:

P L Rice for the Appellant

J A McMillan and N M Thompson for the Respondent

Judgment:

13 December 2021

Reissued:

15 December 2021

JUDGMENT OF VAN BOHEMEN J

This judgment was delivered by me on 13 December 2021 at 12 noon and
re-delivered by me on 15 December 2021 in accordance with High Court Rules 2016, r 11.10

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel:
P L Rice, Barrister, Auckland
Dentons Kensington Swan, Auckland Parshotam Lawyers, Auckland

KUMAR v SARSFIELD ENGINEERING LIMITED [2021] NZHC 3408 [13 December 2021]

Introduction

[1] Vinod Kumar appeals the decision of Judge Nicola Mathers given in the Auckland District Court on 26 July 2021 in which the Judge entered summary judgment against Mr Kumar in favour of the respondent, Sarsfield Engineering Ltd (Sarsfield), for payment of the sum of $80,043.42 plus interest. That was the sum sought by Sarsfield for non-payment of invoices rendered under an agreement for the lease of equipment to Mr Kumar’s company, Vijay Holdings Ltd (the Agreement).1 Judge Mathers also ordered that Mr Kumar pay costs on a solicitor-client basis.

[2] Mr Kumar contends that he has no liability to Sarsfield because Sarsfield varied the terms of the Agreement without Mr Kumar’s consent as guarantor of Vijay Holdings’ obligations under the Agreement. Accordingly, Mr Kumar says he is relieved of his obligations under the Agreement. Mr Kumar also says that the anti- discharge provision in the Agreement, on which Sarsfield relies to preserve their rights against Mr Kumar, does not apply to him because the clause refers to the liability of the Customer and not the Guarantor under the Agreement.

[3] Sarsfield does not dispute that Mr Kumar was not notified personally of the variation of the Agreement but says the anti-discharge clause in the Agreement provides that Mr Kumar’s liability as guarantor is not affected by any amendment to the Agreement with or without the consent of the parties. Sarsfield further says that the word “Customer” in the anti-discharge clause is clearly an error and should be interpreted to read “Guarantor”. Sarsfield says no external evidence is required to show the intention of the parties and that no alternative interpretation is plausible.

[4] Mr Kumar contends that there is no error in the anti-discharge clause and that the clause makes sense construing “Customer” to mean customer and not guarantor and that this is not an obvious and extreme case that warrants the Court amending the Agreement without Sarsfield seeking rectification of the Agreement.

1 Sarsfield Engineering Ltd v Kumar [2021] NZDC 15119.

The background facts

[5] On 3 September 2019, Vijay Holdings, of which Mr Kumar is the sole director, entered into the Agreement with Sarsfield, trading as EquipmentShare, to rent construction equipment. Mr Kumar signed the Agreement on behalf of Vijay Holdings as “Customer”.…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Kumar v Sarsfield Engineering Limited

Details

AGLC: Kumar v Sarsfield Engineering Limited [2021] NZHC 3408
Case: [2021] NZHC 3408
Decision Date: 13 December 2021

CaseChat Overview and Summary

Vinod Kumar appeals a decision of Judge Nicola Mathers given in the Auckland District Court on 26 July 2021 in which the Judge entered summary judgment against Mr Kumar in favour of Sarsfield Engineering Ltd for payment of $80,043.42 plus interest for non-payment of invoices rendered under an agreement for the lease of equipment to Mr Kumar’s company, Vijay Holdings Ltd. Mr Kumar contends that he has no liability to Sarsfield because Sarsfield varied the terms of the Agreement without his consent as guarantor of Vijay Holdings’ obligations under the Agreement. Accordingly, Mr Kumar says he is relieved of his obligations under the Agreement. Mr Kumar also says that the anti-discharge provision in the Agreement, on which Sarsfield relies to preserve their rights against Mr Kumar, does not apply to him because the clause refers to the liability of the Customer and not the Guarantor under the Agreement. Sarsfield does not dispute that Mr Kumar was not notified personally of the variation of the Agreement but says the anti-discharge clause in the Agreement provides that Mr Kumar’s liability as guarantor is not affected by any amendment to the Agreement with or without the consent of the parties. Sarsfield further says that the word “Customer” in the anti-discharge clause is clearly an error and should be interpreted to read “Guarantor.” The High Court held that the anti-discharge clause in the Agreement is an obvious mistake. The Court found that the clause does not make sense when read as a whole and the only way to give effect to the parties’ intention was to interpret the word “Customer” to mean “Guarantor.” The Court found that there was a clear and obvious mistake on the face of the Agreement. The Court found that the opening words of cl 17.2(a) do not fit with the aim of the Agreement or correspond with commercial good sense. The Court held that the term “Customer” in the opening lines of cl 17.2(a) of that Agreement is to be interpreted as meaning Guarantor. The Court found that Mr Kumar has no arguable defence to Sarsfield’s claim and that Judge Mathers was correct to give summary judgment in favour of Sarsfield. Mr Kumar’s appeal was dismissed. Mr Kumar is to pay Sarsfield’s costs on a solicitor client basis.

Orders