Masonry Design Solutions Limited v Murakami

[2012] NZHC 331

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-5284 [2012] NZHC 331

BETWEEN  MASONRY DESIGN SOLUTIONS LIMITED

Plaintiff

ANDHIROTO MURAKAMI AND FM TRUSTEES 405 LIMITED Defendants

Hearing:         2 March 2012

Appearances: Mr G Jenkin for Plaintiff

S Khan and J Riddle for Defendants

Judgment:      2 March 2012

JUDGMENT OF ASSOCIATE JUDGE DOOGUE

This judgment was delivered by me on

02.03.12 at  5 pm, pursuant to

Rule 11.5  of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Counsel:

G C Jenkin, 3 Princess Street, Auckland – [email protected]

Fortune Manning, P O Box 4138, Auckland – [email protected]

MASONRY DESIGN SOLUTIONS LIMITED V MURAKAMI AND Anor HC AK CIV-2011-404-5284 [2

March 2012]

[1]      The plaintiff claims that it has not been paid for amounts which it ought to have been paid for concept design services which are provided to the defendants. The defendants are the trustees of the Kiwi Queen NZ Trust.

[2]      Mr M Wilson, who is the principal of the plaintiff company, said that he attended a meeting in Tokyo in July 2009.   That meeting was concerned with the plaintiff providing design concepts services for the construction of a very large residential property to be constructed in Coatesville, Auckland for the Trust.   The meeting  was  attended  by  one  of  the  trustees,  the  first  named  defendant,  Mr Murakami, and a person who seems to have been the settlor of the trust, Mr Seki. Mr Seki provided a design brief at this meeting

[3]      Mr Wilson says that at the Tokyo meeting it was agreed that the plaintiff would prepare three separate design concepts for the residence.  The plaintiff would be paid the equivalent of 2% of the construction cost of whatever design was ultimately adopted.  No written agreement was signed to this effect.  The defendants deny that an agreement of the kind alleged by the plaintiff was actually entered into.

[4]      The plaintiff seeks to have this conflict of who is telling the truth resolved by a consideration of the fact that Mr Wilson says he presented a draft Client Services Agreement at the meeting in Tokyo.  While that agreement was not actually signed, it contained reference to a 2% fee payable, broadly, in the circumstances which Mr Wilson  said  the  parties  discussed  at  the  Tokyo  meeting.    That  is  Mr  Wilson’s position  is  that  the fact  that  he produced  this  agreement  at  the Tokyo  meeting reinforces his account of matters because it is consistent with what he says occurred.

[5]      Mr Wilson says that the basis upon which matters were left following the Tokyo meeting was that he left a copy of the client services agreement with Mr Murikami and Mr Seki so that it could be translated into Japanese.  Thereafter Mr Murikami would bring it back to New Zealand where it would be signed by Mr Murikami and New Zealand trustee, Mr Fortune.

[6]      A further meeting was held with Mr Seki at Whangaparaoa in October 2009 at which Mr Wilson presented his estimate of the total construction costs of $10.9

million which would result in the fee payable to his company of $210,000.  He said that Mr Murikami and Mr Seki did not object to what they were told but appeared to be happy.

[7]      What appears to have happened thereafter is that Mr Seki was unsure about whether he would proceed with a house on the scale shown in the concept design. One possibility that apparently was being considered was whether a smaller property might be constructed.

[8]      Eventually  communications  between  the  parties  dried  up.    The  plaintiff invoiced the defendants for the “outwork” elements of the amount that it says it was entitled to be paid.  Subsequently, it issued these proceedings in which it claims the sum of $173,237.50 including GST.

[9]      The defendants say that it was never agreed that they would pay 2% of the completed cost of the contract works.   They say that it was agreed between the parties that the plaintiff would prepare three design concepts for a new house and build a scale model for one of them for a cost of approximately $35,000.

[10]     They point  to  the fact  that  a  written agreement  was  never signed.    The defendants say that at a meeting in 2009 Mr Seki asked the plaintiff to prepare three design concepts and to build a scale model for one of them and that Mr Wilson advised this would cost approximately $35,000.

[11]     Mr Jenkin wanted me to take into account that there was some documentary evidence which supported his client.  He particularly pressed me with the fact that Mr Wilson had stated that the draft agreement had been produced at the meeting in Tokyo.  That fact, in his view, provided corroboration to the account that Mr Wilson gave that the basis of the charging which was set out in the draft client services agreement was actually discussed and orally agreed to at that meeting.

[12]     Mr Murikami says that at the Tokyo meeting Mr Seki said he was happy for the plaintiff to go ahead and prepare three design concepts for a new house and to build a scale model for one of them.   Mr Wilson told Mr Seki that it would cost approximately  $35,000  for  the  three  plans  and  for  the  model  to  be  built.    Mr

Murikami noted that Mr Wilson stated that at the meeting he went through the standard contract which he uses with his customers.  On this matter he said:

I remember Mr Wilson presenting a contract to Mr Seki.  It is possible that it was that the first meeting in July 2009 as Mr Wilson says, although I thought the contract was presented at a later date at a different meeting.

.. Whatever meeting it was, I recall the contract being handed over, I remember Mr Seki taking a very quick look at it and handing it back to Mr Wilson without reading it.  Mr Seki had me translate his response to Mr Wilson which was that any contract would have to be in the name of Kiwi Queen NZ Trust.  Mr Seki had the contract in his hand for no more than five seconds.  Mr Wilson did not go through the terms of the contract with us.   Mr Seki took one look at the front page and said that any contract would have to be in the name of the trust, and handed it back

[13]     Mr Murikami denied that there was any discussion at the meeting about a 2%

fee which he is certain he would have remembered.

[14]     Counsel for the plaintiff Mr Jenkin was of the view that if one could reach a stage of certainty that the draft client services agreement was actually produced at the Tokyo meeting, then this was formidable evidence consistent with the account that Mr Wilson gave of what was discussed at the meeting.

[15]     While this case is not one of contractual interpretation, one of the leading authorities on that field, Prenn v Simmonds[1] provided an explanation as to why pre- contractual negotiations do not provide assistance when the Court is attempting to construe contracts:

But beyond that it may be difficult to go; it may be a matter of degree, or of judgment, how far one interpretation, or another, gives effect to a common intention; the parties, indeed, may be pursuing that intention with differing emphasis, and hoping to achieve it to an extent which may differ, and in different ways.

[1] Prenn v Simmonds [1971] 3 All ER 237 at 240-241

[16]     One can readily accept that Mr Wilson may have brought to the July 2009 meeting a draft client services agreement which he hoped to have the parties sign, or if they did not, to at least agree to the understanding set out in the draft.  But the evidence of the defendants puts a different slant on the part that that document had to

play  at  the  meeting.    Such  differences  of  understanding  cannot  be  resolved  at

summary judgement level.   Further, if the contract did represent the clients’ true

accord, why did they not simply sign it at the meeting?

[17]     Mr Jenkin submitted to me that this was a case in which the Court was entitled to take a robust approach to the summary judgment application. He submitted:

The principles relevant to [the] assessment [of whether there is a defence] were summarised by the Court of Appeal in Krukziener v Hanover Finance Ltd: [2008] NZCA 187, [2010] NZAR 207 at [26]; adopted more recently by the Court of Appeal in Cockburn v C S Development No 2 Ltd [2010] NZCA

373, (2010) 24 NZTC 24,431 at [26] and Mitchell v Trustees Executors Ltd

[2011] NZCA 519 at [35]:

The  principles  are  well  settled.    The  question  on  a  summary judgment  application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried:  Pemberton v Chappell [1987] 1 NZLR 1; (1986) 1 PRNZ 183 (CA), at p3; p 185. The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ

66 (CA).  The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents.   But it need not

accept uncritically evidence that is inherently lacking in credibility,

as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent,

or is inherently improbable: Eng Mee Yong v Letchumanan [1980]

AC 331; [1979] 3 WLR 373 (PC), at p 341; p 381. In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).

[18]     Having referred me to the above authority, Mr Jenkin submitted that I should take a bold approach to judgment in this case.

[19]     The above passage from Krukzeiner is capable of being misunderstood.   It remains the case that it will only be exceptionally that where there is a dispute of fact the Court will be able to conclude that the defendant does not have a defence.  For that to happen, the overall state of the evidence must be such as to convince the Judge that because of defects in the evidence of the kind described in the passage above, it is almost certain that the evidence would be rejected at trial. In other words, Krukzeiner does not change the traditional approach to summary judgement cases.  It does not mandate an approach whereby the Court dealing at summary judgment resolves questions of fact that have traditionally been resolved at trial.   It is only

following a trial that, other than in exceptional cases, the Judge presiding can determine disputed questions of fact with the necessary level of confidence to come up with a right decision and therefore maintain confidence in the law.

[20]     It is a question of degree in all cases where the quality of the evidence is such that the Court can have so little confidence in its credibility that sending the matter to trial would be a misuse of the Court’s processes and an unnecessary burden on litigants faced with meritless defences.  This is not such a case.

[21]     For those reasons the application for summary judgement is dismissed. Having heard from counsel on the question, I reserve costs.

Directions from this point

[22]     Directions are required to bring this matter to a trial promptly.

[23]     The defendant is to file and serve a statement of defence within 14 days.  By way of explanation I note that while a statement of defence in circumstances such as the present, where there has been an unsuccessful summary judgment application, will largely repeat the grounds of opposition set out in the notice of opposition, such a document is still required by the rules and must be filed.

[24]     The issues to be determined at the trial are to be those which were raised at the summary judgment hearing before me and which are noted in my judgment. That is to say, the question will be whether the defendants entered into the client services agreement with the plaintiff as the plaintiff alleges.

[25]     I next order that the evidence in chief at the trial in this matter is to be in the form of, and limited to, the affidavits which have been filed and served, with one exception.  That exception is that the defendant is granted leave to file one additional affidavit from the personal assistant of Mr Seki.  The further affidavit is to be filed and served within 21 days.

By agreement of the parties, I direct that they are each to provide discovery listing draft contracts that they have in their possession within 21 days of the date of this judgment with inspection to take place by 14 days thereafter.

[26]     A two day trial is allocated for 14 and 15 May 2012.  Any notices requiring deponents to be produced for cross-examination are to be served 10 working days prior to the trial commencing.

[27]     Counsel should confer, please, on two remaining matters:

a)        Date for filing synopses; and b) Bundle.

[28]     I suggest the synopses should be staged and could be filed ten and five working days prior to trial.  As to the bundle, the bundles of documents which have already been produced should be adequate together with a supplementary bundle containing only the copy of the affidavit of the additional witness should (with the pagination continuing on from that in the existing bundle).  Would counsel please make further submissions to me on this point.   If there are any other matters on which  counsel  think  directions  are  needed  they  can  include  them  in  their

memorandum/a.

J.P. Doogue

Associate Judge