LSK Builders 2011 Limited v Chamberlain - [2021] NZHC 3186

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2021-442-0030

[2021] NZHC 3186

UNDER Section 124 of the District Court Act 2016

IN THE MATTER

of an appeal against an interlocutory decision

BETWEEN

LSK BUILDERS 2011 LIMITED

Appellant

AND

MARK ELWYN DAVID CHAMBERLAIN AND SUZANNE CATHERINE

CHAMBERLAIN

Respondents

Hearing: 15 November 2021

Appearances:

G D Pearson for the Appellant

L S B Ackland for the Respondents

Judgment:

25 November 2021

JUDGMENT OF GRICE J

Introduction

[1] LSK Builders 2011 Ltd (LSK) appeals against a decision of the District Court in relation to timetable directions and an order for standard discovery.

[2] On 24 May 2021, Judge Zohrab issued a judgment making timetabling directions, including standard discovery following a rehearing of the applications.1

1 LSK Builders v Chamberlain [2021] NZDC 9711.

LSK BUILDERS 2011 LIMITED v CHAMBERLAIN [2021] NZHC 3186 [25 November 2021]

LSK made submissions seeking tailored discovery. That was rejected in favour of standard discovery.

[3] In relation to the timetable directions, LSK was seeking the matter be set down for hearing and timetabled to a hearing. Since the filing of the appeal the District Court has made those directions and therefore this part of the appeal is not pursued.

Background

[4] LSK is the Nelson franchisee for GJ Gardner Homes. It entered into a contract to build the Chamberlains’ home at Atawhai, Nelson on 27 July 2017.

[5] The resource consent was obtained on 18 January 2018 and the building started on 1 May 2018. Building stopped in December 2018. There were problems in the building process which led to increased costs. These appear largely to relate to the geotechnical issues encountered and the added difficulty of obtaining the required consents and permits. This led to the delay in commencing the build. The added costs and time delays are part of the Chamberlains’ counterclaim. In addition, defects claimed in the building are part of their counterclaim.

[6] Following the obtaining of the certificate of code compliance on 14 December 2018, LSK triggered the practical completion provisions of the contract. This meant that payment was due on the outstanding payment balance under the contract, including variations.

[7] Under cl 5.2 of the contract, the handover of the premises was conditional upon full payment being made. On 14 December 2018, the Chamberlains paid $363,787.34 toward the balance then owing, leaving an unpaid amount of $144,188.46. The Chamberlains then entered and have continued to live in the property, which LSK says is unlawful.

[8] LSK now sues for the balance owing of $144,188.46, together with indemnity costs and default interest. The total claim amounts to approximately $165,000 (which includes approximately $20,000 for indemnity costs, including legal expenses incurred), together with interest of $33,224.86. Default interest up to the date the

proceedings were issued (4 September 2019) is sought, together with ongoing default interest of $63.21 per day from the date of the statement of claim until payment.

[9] The Chamberlains counterclaimed. They said…

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.

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Details

Case: [2021] NZHC 3186
Decision Date: 25 November 2021

CaseChat Overview and Summary

LSK Builders 2011 Limited (LSK) appealed against a District Court decision concerning discovery and timetable directions in its proceedings against the Chamberlains. LSK, the Nelson franchisee of GJ Gardner Homes, had entered into a contract with the Chamberlains to build their home. Issues arose during the construction, resulting in delays and increased costs. After the certificate of code compliance was obtained, LSK triggered the practical completion provisions of the contract, demanding full payment. The Chamberlains paid part of the outstanding balance, leading LSK to claim the remaining amount plus costs and interest. The Chamberlains counterclaimed for substantial defects and misleading and deceptive conduct related to cost estimates and completion date promises.

The legal issues before the Court were whether the District Court Judge was in error in refusing the application for tailored discovery and instead ordering standard discovery. The Court also considered whether other case management orders, including a five-day hearing, should have been made. The issue concerning the timetable directions became moot as the District Court had already made those directions. LSK argued that the District Court failed to properly address the proportionality principle and did not consider the relevant High Court Rules when ordering standard discovery. The Chamberlains contended that the scope of discovery should be informed by the pleadings.

The Court found that the District Court did not adequately consider the proportionality principle when ordering standard discovery. It noted that the proceedings involved allegations of fraud or dishonesty and that the costs of standard discovery would be disproportionately high. The Court allowed the appeal as to discovery and ordered tailored discovery in terms of the categories of documents agreed upon by the parties. The Court dismissed the timetable appeal as it was no longer relevant. It quashed the District Court costs award, which was made in relation to the rehearing of the discovery and timetable applications due to LSK's non-appearance, and remitted the costs issue back to the District Court for reconsideration as part of its final costs determination.

In conclusion, the appeal was allowed concerning the discovery order, and tailored discovery was ordered. The timetable appeal was dismissed. Costs of the appeal fell where they lay. The District Court costs award was quashed and remitted back for determination in the District Court.

Orders