Paul v Jade Residential Limited - [2019] NZHC 304

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2018-441-29

[2019] NZHC 304

BETWEEN
MURRAY PAUL AND MARIE PAUL

Appellants

AND

JADE RESIDENTIAL LIMITED

Respondent

Hearing: 13 August 2018

Appearances:

K A Lomas for Appellants M B Lawson for Respondent

Judgment:

1 March 2019

JUDGMENT OF GRICE J

(Appeal from District Court)

Contents

Para No

Background [1]

The decision [5]

Grounds of appeal  [10]
Scope of appeal  [12]
Questions on appeal  [15]
Substantive findings  [17]

Were the milestone payments due and payable? [17]

“Closed-in” milestone [17]
“Lined” milestone [25]

What was the effect of the dispute resolution clause on the cancellation

of the contract by the Pauls?  [40]
Was the contract otherwise validly cancelled?  [58]
Were the Paul’s in breach of cl 14 of the contract?  [69]
Was the Judge entitled to allow further evidence to be adduced on
quantum?  [73]
Conclusion  [86]
Good faith  [89]
Costs  [91]

PAUL v JADE RESIDENTIAL LIMITED [2018] NZHC 304 [1 March 2019]

Background

[1] In the District Court, Jade Residential Limited (the original plaintiff and the respondent here) obtained judgment against Mr and Mrs Paul (the original defendants and the appellants in this court) for a sum to be fixed at a subsequent hearing.1

[2] The judgment concerned work Jade had done in the construction of the Pauls’ house in Havelock North. The house was finally completed after the Pauls purported to cancel the construction contract with Jade. The cancellation was precipitated by Jade ceasing to work on the job before the house was completed. Jade did so because the Pauls had not paid two milestone payments which Jade said were due.

[3] Jade made a claim for payment of the two milestone payments. The Pauls lodged a counterclaim for damages for the cost they had incurred to complete the house.

[4]Both parties now appeal against the District Court decision.

The decision

[5]The District Court Judge found that:

(a)The Pauls could not lawfully cancel the contract because they had refused to go to dispute resolution and the contract contained a clause requiring the parties to go to mediation in the event of a dispute.2

(b)Jade had not completed the contractual milestones. These were called the “closed-in” milestone and “lined” milestone. The milestones required completion before specified payments were due for each milestone.3

1 Jade Residential Limited v Paul [2018] NZDC 5673.
2 At [56].
3 At [27], [38] and [57].

(c)Failure to complete the milestones meant that there was no obligation on the Pauls to meet any progress payment at the time the accounts were rendered by align="left">(d)The Judge found that while the Pauls unlawfully cancelled the contract,
Jade was not “without fault”.5

[6]Jade could not rely on the contractual milestone payments of $134,513 and

$57,576—the amounts contained in the statement of claim—as the milestones had not been completed.6 The Judge concluded the most appropriate outcome would be for the Pauls to pay Jade for the actual work done, rather than the milestones. The Judge…

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: [2019] NZHC 304
Decision Date: 1 March 2019

CaseChat Overview and Summary

In the High Court of New Zealand, the appeal heard by Grice J concerned the construction of a house by Jade Residential Limited for Mr and Mrs Paul. The original decision in the District Court found the Pauls liable to pay for the work done by Jade. The Pauls appealed against this decision, arguing that the Judge had erred in several respects. Jade cross-appealed, arguing that the Judge had erred in finding that certain milestones had not been achieved and that Jade had not completed the contractual requirements. The Court found that the Judge had erred in concluding that the Pauls could not lawfully cancel the contract because they had refused to go to dispute resolution and the contract contained a clause requiring the parties to go to mediation in the event of a dispute. The Court found that the dispute resolution clause in the contract did not prevent the Pauls from validly cancelling the contract. The appeal was allowed on this ground. The Court also found that the contract was validly cancelled by the Pauls on the basis of Jade’s repudiation of the contract. The Court remitted the matter to the District Court for a hearing on relief to be granted pursuant to s 43 of the Contract Law Reform Act 2017.

Orders