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Malkhasian v Wood

Malkhasian v Wood

Case [2024] NZHC 1252 20 May 2024

Jurisdiction

Breach of Contract

Unconscionable Conduct

Restitution

Compensatory Damages

Limitation Periods

Civil Litigation & Procedure

Contract Law

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IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2023-470-000027

[2024] NZHC 1252

UNDER District Court Act 2016

IN THE MATTER OF

An appeal against a decision of the District Court at Hamilton

BETWEEN

ANDREW SHAUNT MALKHASIAN and JEAN ANN MALKHASIAN

Appellants / Cross-respondents

AND

STUART JOHN WOOD

Respondent / Cross-appellant

Hearing: 13 February 2024

Appearances:

V A Whitfield and M J Meier for Appellants R L Scott and D S Howell for Respondent

Judgment:

20 May 2024

JUDGMENT OF ANDREW J

This judgment was delivered by Justice Andrew on 20 May 2024 at 3.30 pm
pursuant to r 11.5 of the High Court Rules 2016 Registrar / Deputy Registrar
Date …………………………..

MALKHASIAN v WOOD [2024] NZHC 1252 [20 May 2024]

Introduction

[1] This is an appeal from a decision of the District Court.1 It involves a residential construction dispute. In the District Court, the appellant homeowners, the Malkhasians, sued the respondent project manager, Mr Wood, in deceit. They alleged that he had overcharged them for building materials, labour, and associated sub-contractor services. While the Malkhasians were successful with their other claims against Mr Wood, namely negligence and breach of the Fair Trading Act 1986 (FTA), all but one of the causes of action in deceit for overcharging, were dismissed.

[2] A central issue in this appeal is whether the District Court Judge was correct in finding that the Malkhasians had not established the necessary mental element of the tort of deceit, which requires proof of a lack of honest belief in the truth of the statements at issue, or, where there is a conscious indifference to the truth, recklessness.2 The learned District Court Judge concluded that Mr Wood’s management of invoices generally was careless and potentially reckless. However, he held that the evidence did not establish a conscious indifference to the truth on the part of Mr Wood.

[3] The appellants say that all their tort of deceit claims should have been upheld and resulted in a substantial award of exemplary damages to them. They do not seek any additional compensatory damages.

[4] There is a cross-appeal by Mr Wood against findings by the District Court Judge that he is personally liable in negligence and for breaching the FTA (misleading and/or deceptive conduct) for the total sum of $35,273.51. Mr Wood denies that the invoices, said to be the basis of the overcharging, were actionable representations and says that they were not misleading.

Factual background3

[5] In 2014, the Malkhasians purchased a property in Whakamārama, near Tauranga. They contracted with a building company, Stonewood Homes Ltd, to build a residential dwelling on the property. Plans were drawn up and consented, but before

1      Malkhasian v Home Builders BOP Ltd (in liq) [2023] NZDC 2999.
2      Amaltal Corporation Ltd v Maruha Corporation [2007] 1 NZLR 608 (CA) at [50].
3      Malkhasian v Home Builders BOP Ltd (in liq) at [14]–[20].

construction could commence, the Stonewood group of companies went into liquidation.

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 Malkhasian v Wood

Details

AGLC: Malkhasian v Wood [2024] NZHC 1252
Case: [2024] NZHC 1252
Decision Date: 20 May 2024

CaseChat Overview and Summary

This appeal and cross-appeal arose from a District Court decision in a residential construction dispute between the Malkhasians, the homeowners, and Mr Wood, the project manager. The central issue in this appeal is whether the District Court Judge was correct in finding that the Malkhasians had not established the necessary mental element of the tort of deceit, which requires proof of a lack of honest belief in the truth of the statements at issue, or, where there is a conscious indifference to the truth, recklessness. The Malkhasians argued that the District Court Judge was incorrect in concluding that Mr Wood did not have the necessary intent to deceive in relation to the dismissed deceit claims. They submitted that the Judge erroneously focused on an absence of direct evidence of an intention to deceive and failed to properly recognise the need to approach circumstantial evidence as a rope composed of several cords. The Malkhasians argued that the intention of Mr Wood needed to be determined by inferences based on circumstantial evidence. Mr Wood submitted that there was no error in the approach of the Judge. He argued that the evidence did not establish to the standard of balance of probabilities that the inherently less likely explanation for the overcharging, namely deceit, was the more probable explanation. The Judge was entitled to conclude, Mr Wood submitted, that if any overcharging occurred, it was the result of negligence. The High Court found that the District Court Judge had the advantage of seeing and hearing the witnesses, including the cross-examination of Mr Wood over three days. The Judge had the benefit of assessing Mr Wood's credibility and the advantages that a trial Judge has in assessing oral evidence. The High Court found that the Judge correctly applied the test of conscious indifference to the truth, as set out by the Court of Appeal. The Judge was best placed to assess Mr Wood's credibility and I consider that his assessment was thorough, measured, and reasonable. The High Court found no basis for disturbing his finding. The cross-appeal by Mr Wood was extensive. The High Court found that, in the main, these cross-appeal contentions were makeweight arguments and a distraction. The High Court found that there is clear evidence to support the findings of the District Court Judge and it was open to him to accept and prefer the evidence of Mr Moyle on the issue of whether the requirements of the Building Code were met. The High Court found that there is no merit to these grounds of the cross-appeal. The appeal is dismissed. The cross-appeal is dismissed. Mr Wood, the unsuccessful party on the cross-appeal, should pay costs to the Malkhasians (the successful party on the cross-appeal) on a 1A basis plus disbursements.

Orders