M Van Der Wal Builders & Contractors Limited v Hanham - [2013] NZHC 2284

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-2158 [2013] NZHC 2284

BETWEEN M VAN DER WAL BUILDERS & CONTRACTORS LIMITED Appellant

ANDGEOFFREY HANHAM AND ELIZABETH HANHAM Respondents

Hearing: 29 August 2013

Appearances: S E McCabe for Appellant
C F Foote for Respondents

Judgment: 3 September 2013

JUDGMENT OF COOPER J

This judgment was delivered by Justice Cooper on
3 September 2013 at 3.00 p.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Solicitors:
Martelli McKegg Wells & Cormack, Auckland
Kendall Sturm & Foote, Auckland

VAN DER WAL BUILDERS & CONTRACTORS LIMITED v HANHAM [2013] NZHC 2284 [3 September
2013]

Introduction

[1] The appellant, M Van Der Wal Builders & Contractors Ltd, appeals against a decision of Judge Gittos, given in the North Shore District Court on 28 March 2013.

[2] In the judgment the Judge held that the respondents, Mr and Mrs Hanham, who were the defendants in the District Court, were not liable to the appellant on a claim for damages in the sum of $188,297 for alleged breach of contract.

[3] The appellant is a builder and contracted with the respondents to carry out building work on their house at Kingfisher Grove, Greenhithe. The works consisted of renovations and improvements.

[4] Once the works were commenced, the Council required various works to be carried out on the basis that they were necessary to bring the existing house structure into compliance with the Building Code as altered following enactment of the Building Act 2004. The parties had not been aware that those requirements would be made, or the extent of them, when entering into the building contract. The result of the Council’s requirements was a very significant increase in the amount of work needing to be done, and its cost. Eventually, the respondents decided that they could not afford to continue with the works and purported to give the appellant notice terminating the contract on expiry of a two week period after the notice was given.

[5] The appellant’s claim in the District Court asserted that the purported cancellation was in breach of contract. Damages were sought on the basis of a calculation of the profit that would have been derived from completing the balance of the works outstanding as at the date of the wrongful cancellation.

[6] By agreement there were to be separate trials of liability and quantum. In the event, Judge Gittos held that the purported cancellation was valid. That meant that a trial on quantum would be unnecessary. The decision that the respondents were entitled to terminate the contract was based on a finding that the contract had an implied term entitling the respondents to terminate the contract in the circumstances that had arisen. The appellant says that that finding is incorrect.

[7] Before addressing the principal issues, it is appropriate to set out the relevant provisions of the contract and to summarise the reasons that the Judge gave for the decision he reached.

The contract

[8] The contract…

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: [2013] NZHC 2284
Decision Date: 3 September 2013

CaseChat Overview and Summary

M Van Der Wal Builders & Contractors Limited (appellant) appeals against the decision of Judge Gittos of the North Shore District Court (respondent) who held that the Hanhams (respondents) were not liable to the appellant on a claim for damages in the sum of $188,297 for alleged breach of contract. The appellant is a builder and had contracted with the respondents to carry out building work on their house at Kingfisher Grove, Greenhithe. The works consisted of renovations and improvements. Once the works were commenced, the Council required various works to be carried out on the basis that they were necessary to bring the existing house structure into compliance with the Building Code as altered following enactment of the Building Act 2004. The parties had not been aware that those requirements would be made, or the extent of them, when entering into the building contract. The result of the Council’s requirements was a very significant increase in the amount of work needing to be done, and its cost. Eventually, the respondents decided that they could not afford to continue with the works and purported to give the appellant notice terminating the contract on expiry of a two week period after the notice was given. The appellant’s claim in the District Court asserted that the purported cancellation was in breach of contract. Damages were sought on the basis of a calculation of the profit that would have been derived from completing the balance of the works outstanding as at the date of the wrongful cancellation. The Judge held that the purported cancellation was valid and that a trial on quantum would be unnecessary. The decision that the respondents were entitled to terminate the contract was based on a finding that the contract had an implied term entitling the respondents to terminate the contract in the circumstances that had arisen. The appellant says that that finding is incorrect. The appellant submitted that the facts did not justify the Judge’s conclusion that a term should be implied. The implied term was not reasonable and equitable. The implied term was not necessary to give business efficacy to the contract. Rather than being obviously required, the reverse was the case. The implied term was contrary to express terms of the contract. The respondents submitted that the Judge was correct to find that there was an implied term allowing the respondents to terminate the contract in the circumstances that had arisen. The implied term was reasonable and equitable. The implied term was necessary to give business efficacy to the contract. The implied term was capable of clear expression. The implied term did not contradict any express term of the contract. The court found that there was no implied term as found by the District Court Judge. The appeal is allowed and the matter is remitted to the District Court for further proceedings in accordance with this judgment.

Orders