Peryer Construction WGTN Ltd v Cathie
[2018] NZHC 2226
•28 August 2018
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2018-485-000301
[2018] NZHC 2226
BETWEEN PERYER CONSTRUCTION WGTN LIMITED
PlaintiffAND
E M CATHIE
Defendant
Hearing: 22 August 2018 Appearances:
D C Calder for Plaintiff
E M Cathie (Defendant) in person
Judgment:
28 August 2018
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
Plaintiff’s summary judgment application
Introduction
[1] The defendant, Elizabeth Cathie, owns a residential property in Khandallah, Wellington (the “site”). The house needed to be recladded.
[2] In October 2016, Ms Cathie entered into a contract with the plaintiff, Peryer Construction WGTN Ltd (“Peryer”), for the recladding.
[3] In October 2017, a dispute between the parties was referred to an expert (“the Expert”) pursuant to the terms of the contract, for determination. The dispute was as to whether or not Peryer was in default under the contract. The Expert found that it was.
PERYER CONSTRUCTION WGTN LIMITED v CATHIE [2018] NZHC 2226 [28 August 2018]
[4] Subsequently, issues have arisen between the parties and between Ms Cathie and the Expert as to whether the Expert should proceed to determine other issues and whether Ms Cathie should make available the site for inspection.
[5] By this proceeding, Peryer seeks orders enabling the Expert to conduct a site visit and a declaration that the Expert has jurisdiction to determine the remaining issues of dispute. In addition, Peryer seeks judgment for interim costs awarded by the Expert in the determination he made.
[6]Peryer applies for summary judgment, which is opposed by Ms Cathie.
The history
[7] The building contract between the parties is in the form of contract published by Standards New Zealand for Building and Civil Engineering Construction (where no person is appointed to act as engineer to the contract) (NZS3915:2005), with special conditions of contract, specifications and drawings incorporated.
[8] The contract stated that cedar weatherboards were to be replaced with new cedar weatherboards after Peryer had installed a rigid air barrier and cavity system.
[9] In April 2017, a dispute arose between the parties as to whether Peryer had achieved practical completion. “Practical completion” is defined under General Condition (GC) 10.4 of the contract by reference to when works are complete except for minor omissions and minor defects, subject to some qualifications.
[10]The contract contains in GC 13 provisions for the resolution of disputes.
[11] On 5 October 2017, Peryer gave notice in writing to Ms Cathie (pursuant to GC 13.2), requiring any dispute or difference between the parties in respect of any alleged defects which were preventing practical completion to be referred to an expert. The President of the Arbitrators’ and Mediators’ Institute of New Zealand (AMINZ) subsequently appointed Rob Ashcroft as the Expert to assist in the dispute pursuant to GC 13.2.
[12] Mr Ashcroft accepted his appointment on 2 November 2017 and initially identified the scope of his appointment as encompassing determination of the following disputes:
Those disputes particularised in documents forwarded by AMINZ, namely:
·What works remain defective or uncompleted under the contract.
·Whether the contractor is in default under the contract.
·What monies, if any, are owed under the contract.
Such further disputes that are submitted by either or both parties in accordance with the relevant provisions of the contract.
[13] Mr Ashcroft convened a telephone conference with Ms Cathie and Mr and Mrs Peryer (of Peryer). Ms Cathie was insistent that the first issue to be dealt with, on its own, should be whether Peryer was in default under the contract. What the parties had agreed with him:
MATTERS IN DISPUTE
Issues to be Determined
The issues are to be determined progressively. Issue 1 has been agreed. Subsequent issues need to be agreed – those listed below are preliminary.
ISSUE 1: Whether or not the contractor is in default under the contract. ISSUE 2: Is the cladding stain a defect and if so what is the remedy.
ISSUE 3: What other items require to be completed or remedied by the contractor in order to achieve practical completion.
ISSUE 4: Agreement on a programme to complete outstanding items and defects.
ISSUE 5: What monies are due under the contract.
[14] Mr Ashcroft attached to his record of agreement the Rules which would apply to his determination.
[15]Mr Ashcroft examined the site and considered submissions.
[16]On 20 December 2017, Mr Ashcroft issued his expert determination on Issue
1. He certified that, in his opinion, Peryer persistently, flagrantly and/or wilfully
neglected to carry out its obligations under the contract. He apportioned the costs of the determination to be paid by Peryer as to $5,000 plus GST and by Ms Cathie as to
$2,500 plus GST.
General Condition 14.2.1
[17] The contract contained provisions as to remedies for breach. Where the Expert certified that in his opinion the contractor was persistently, flagrantly and/or wilfully neglecting to carry out its obligations under the contract, Ms Cathie was entitled to give notice to Peryer that she was resuming possession of the site. Ms Cathie gave notice to Peryer on 22 December 2017 of her intention to resume possession on 11 January 2018 unless Peryer remedied all the defaults identified in the Experts’ report on or before that date.
[18] On 24 January 2018, Ms Cathie gave notice that she had resumed possession of the site.
[19] Although Peryer has pleaded in its statement of claim that Ms Cathie gave notice that she intended to terminate the building contract and subsequently did so, those allegations are unsupported by the evidence. Ms Cathie had the option of either giving notice of termination of the contract or resuming possession of the site, and she elected the latter. The contract accordingly remains on foot. Responsibly, Mr Calder, for Peryer, conceded that that is so.
[20] Once Ms Cathie resumed possession of the property, GC 14.2.3 entitled her to take a number of actions. Under GC 14.2.3(b), she became entitled to complete and remedy defects in any part of the Contracts Work remaining to be completed. In that event, GC 14.2.4 provided:
14.2.4 On completion of the Contract Works, any Plant, Temporary Works and surplus Materials of which the Principal has taken possession shall be handed back to the Contractor. The Expert shall enquire into the Cost to the Principal of completing the Contract Works. Should the amount determined by the Expert exceed the Cost to the Principal had the Contract Works been completed by the Contractor, the difference between the two amounts shall be determined by the Expert and paid by the Contractor to the Principal. Should the amount determined by the Expert be less than the Cost to the Principal had the Contract Works been completed by the Contractor, the difference between the two amounts shall be paid by the Principal to the Contractor.
[21] On 26 January 2018, Ms Cathie notified Mr Ashcroft that she intended to complete the project and to deal with the costs issues when the information was available to accurately do so. She identified GC 14.2.3(b) as entitling her to complete and remedy the defects without any requirement to identify the defects and costs first. Mr Ashcroft replied the same day recording that he did not disagree with Ms Cathie’s interpretation of the contract.
[22] On 9 February 2018, Peryer’s lawyers, Gibson Sheat, wrote to Mr Ashcroft to seek further determinations. In particular, Gibson Sheat’s letter invited Mr Ashcroft, in relation to what were identified as Issues 2, 3, 4 and 5 in the 29 November 2017 list of issues to be determined to:
(a)Issue 2 – determine what is the appropriate remedy for the cladding stain defect;
(b)Issues 2, 3 and 5 – outline a suggested process for determining these matters;
(c)Generally confirm that Mr Ashcroft could still proceed as appointed expert whether or not Ms Cathie agreed (provided Peryer was prepared to pay any security for Mr Ashcroft’s costs).
(I note that Issue 4 – relating to a programme for completion – fell away once Ms Cathie resumed possession of the site and decided to complete the works herself).
[23] Mr Ashcroft responded on 12 February 2018 confirming that the determination of Issues 2 (part) and 3 would proceed on an outlined basis subject to Mr Ashcroft’s receiving any objection of Ms Cathie to that process. The process Mr Ashcroft set out involved:
(a)Parties by 20 February 2018 seeking agreement on the working of the issues to be submitted for determination;
(b)Following a site visit by Mr Ashcroft, Peryer to have five working days to make its submission;
(c)Ms Cathie to have five working days thereafter to respond;
(d)Parties to make no further submissions except upon a specific request by Mr Ashcroft.
[24] On 13 February 2018, Ms Cathie replied to Mr Ashcroft. She objected to the process outlined by Mr Ashcroft. She gave detailed reasons for her objection.
[25] Ms Cathie then apparently took advice from Colin Orchiston (a registered architect, arbitrator, adjudicator and mediator). On 20 February 2018, Mr Orchiston wrote to Mr Ashcroft and to Gibson Sheat. As the letter sets out much that is relevant to Ms Cathie’s opposition to the summary judgment application, I reproduce it in full:
Ms Cathie has sought my opinion on whether she is required to respond to the contractor submissions that the defects and remediation works need to be determined now, and to the Expert’s suggestions in relation to those matters. I set out my views - and understanding of the present position - below:
1.It is my considered view that the resolution of this dispute is likely to have a less adverse outcome for all if the Principal is given the opportunity to deal with completion, and after that, the “loose ends” are dealt with all in one hit.
2.The Expert Determination is now binding, the time for objection to it having passed.
3.The Expert Determination confirmed:
3.1. The exterior stain is a defect
3.2. The right of the Principal to take control of the site
4.The Principal, having given the required Notice, has taken control of the site, and is addressing the several issues required to bring the project to completion.
5: The Principal has noted the defects items addressed to date by the Contractor, and has, on an ongoing basis, been compiling a further list of defects and outstanding work, in the same manner as - but for the dispute - would have been the case under the normal provisions of the contract.
6.The Principal has the right to complete the contract and remediate the defects in whatever manner it deems appropriate.
7.But there will come a “day of reckoning” when the costs and advisability of the Principal’s work will need to be resolved,
8.At that “day of reckoning” the outstanding questions can be addressed by the Expert (refer NZS3915, 14.2.4).
9.Except to the extent that the Expert is required (by 14.2.4) to enquire into additional costs incurred - or savings made - by reason of the work not having been done by the Contractor, the Contractor has no part to play in how that work is carried out, when, why, nor the costs of doing so; nor to make further submissions to the Expert on those matters.
10.Following the Expert’s determination the right to review it arises under 13.2.7, 13.3 or 13.4.
11.The Principal has informed me that they will not participate in either a teleconference or site visit as now suggested, but will instead retain such records as they consider necessary to resolve the outstanding matters when they can be crystallised.
12.Sections 13.2 and 14.2 if read together entitle the Principal to take that position.
13.As a result of the Expert Determination (as given) 14.2.3(d) required the Contractor to hand over information and/or assign matters to the Principal. That has not been done. Given that the Principal may be reliant on that documentation to complete the project, or to complete it expeditiously, there would seem to be every reason for the Contractor to fulfil the requirement.
Yours faithfully
Colin R Orchiston
[26] Ms Cathie sent a detailed (four page) email to Mr Ashcroft on 21 February 2018 setting out her objection to the process suggested by Mr Ashcroft. In her email, she stated that she would not be attending a site meeting and would not be participating in a telephone conference. She insisted on a right to complete and remedy defects in the contract work before having to address Issues 2 (part) and 3.
[27] Mr Ashcroft emailed Ms Cathie later on 21 February 2018. He stated that he did not disagree with the observations of Mr Orchiston. He noted that the approach (which he recommended) would have addressed the “loose ends” and been to the benefit of all.
[28] On 2 March 2018, Mr Ashcroft wrote to the parties. He noted that the parties had not particularised and raised for determination a dispute. He referred to GC 13.1.2 which defined “dispute or difference” for the purposes of the disputes provisions under
the contract. It includes “every question which by these conditions is to be agreed between the Principal and the Contractor, and on which they have been unable to agree”. Mr Ashcroft concluded that establishing that there was no agreement on a specific question was itself sufficient to initiate GC 13.2.
[29] On 20 March 2018, Gibson Sheat referred three matters to Mr Ashcroft as being in dispute:
(a)Issue 2R: what is the remedy for the cladding stain defect?
(b)Issue 3: what other items required to be completed or remedied in order to achieve Practical Completion?
(c)Issue 5: what monies are due under the contract [the time for addressing this issue is to be determined]?
[30] On 21 March 2018, Mr Ashcroft recorded to the parties that he accepted that a dispute had arisen in relation to each of those matters. He observed that in relation to Issue 2R, the substance of the matter for determination was more accurately what damages Ms Cathie was entitled to as a consequence of the defective staining of the cedar cladding. Mr Ashcroft then stated that pursuant to his powers under his Rules, he made the following directions:
(a)A site visit not more than three hours duration shall be undertaken prior to 29 March 2018, at a time suitable to the parties and himself. He proposed that this be initiated by Ms Cathie.
(b)Peryer to serve any submission on Issues 2R and 3 before 5.00 pm, 9 April 2018.
(c)Ms Cathie to submit a response by 5.00 pm, 16 April 2018.
(d)A determination in relation to Issues 2R and 3 to then follow.
(e)A process and timing in relation to resolution of Issue 5 to then follow.
[31] By emails sent on 27 and 29 March 2018, Ms Cathie challenged the procedure directed by Mr Ashcroft and his jurisdiction to make such directions.
[32] On 10 April 2018, Mr Ashcroft wrote to the parties. He noted the failure of Ms Cathie to cooperate or comply with his directions in relation to a site inspection. He observed that he was unable to see any practical basis upon which the items currently submitted for an expert opinion could properly be determined. On that basis, he stated that it appeared appropriate for him to withdraw from the reference. He awaited comments.
[33] On 13 April 2018, Gibson Sheat advised Mr Ashcroft that they were instructed to apply to the High Court for summary judgment in relation to the directed site inspection and Mr Ashcroft’s jurisdiction. Mr Ashcroft agreed to await the outcome of Peryer’s application for summary judgment before withdrawing or proceeding further.
[34] On 17 April 2018, Mr Ashcroft issued a determination as to interim fees arising from his attendances after his determination of Issue 1. He determined that Ms Cathie was liable for interim fees of $3,900 plus GST and that Peryer was liable for interim fees of $1,350 plus GST. As Peryer was to pay Mr Ashcroft the full amount, Mr Ashcroft directed Ms Cathie to reimburse Peryer the sum of $3,900 plus GST.
The summary judgment application
[35] Peryer commenced this proceeding to establish the jurisdiction of the Expert to proceed to determine further issues and to conduct/or make directions for site visits. Peryer also pursues judgment for the $3,900 which Mr Ashcroft directed Ms Cathie to pay to Peryer.
[36] The need for site access for Peryer’s experts and advisers is obvious – Ms Cathie, in resuming possession of the site, will at some point embark on significant work which will alter the state of the property as Peryer left it. Ms Cathie indicates that she has been making her own record of the state of the property. But if Peryer is to be exposed to a significant damages or set-off claim (as Ms Cathie anticipates), any responsible Tribunal would be amenable to directing or making provision for such site
inspection as allows Peryer and its experts/advisers to form their own conclusions on current evidence and to make their own record.
[37] In the course of the hearing Ms Cathie agreed that there could be prompt inspection by Peryer and its experts and advisers. As that was a step which should appropriately occur without delay, the parties have to co-operated in relation to that step in the meantime. Consent directions have now been made for such inspection.
[38] Resolution of access for Peryer leaves to be determined the declaration sought as to the Expert’s jurisdiction, including his power to direct that Ms Cathie submit to his site inspection.
[39] The focus of Mr Calder’s submissions on jurisdiction (for Peryer) was on the contractual right of the parties to refer issues for expert determination. Mr Calder identified terms of the contract which, unsurprisingly, allow one party to so refer an issue even if the other party denies that the issue represents a “dispute” as such. On this basis, Mr Calder submitted, it mattered not that the parties and Mr Ashcroft had failed to agree that any issue other than Issue 1 was for his determination. In Mr Calder’s submission, either party could later refer additional issues to Mr Ashcroft.
[40] Peryer, to succeed on this summary judgment jurisdiction, must satisfy the Court that Ms Cathie has no arguable defence for the proposition that Mr Ashcroft has jurisdiction to proceed as he intends (and as he has done in relation to his costs direction).
[41] The evidence does not so satisfy me. Peryer’s case rests on contractual entitlements. It bases its claim to a declaration on the provisions of the contract. But it was open to the parties at any point to vary the written contract’s terms. An argument available to Ms Cathie is that at the initial conference between the parties and Mr Ashcroft, and in the record of that conference which followed, the parties agreed upon a process specifically designed for the resolution of their issues. As quoted at [13] above, the parties and Mr Ashcroft reached an agreement that had two parts:
(1)the parties agreed that Mr Ashcroft would determine Issue 1 as defined;
(2)any further issues (to be determined by Mr Ashcroft) had to be agreed.
[42] On this basis it is at least arguable that Ms Cathie is not required to submit to Mr Ashcroft’s determination of remaining issues as raised or defined by others. It is arguable that the parties’ agreement, reached at the conference, meant that, absent Ms Cathie’s agreement to a continuation of proceedings before Mr Ashcroft, Peryer would (if pursuing issues without Ms Cathie’s approval as to the Expert’s identity) have to initiate afresh the appointment process under the written contract.
[43] Although Ms Cathie has been self-represented in this proceeding, she was careful in the presentation of her case to seek to avoid falling into the pitfalls which can beset lay-litigants, including the giving of evidence from “the bar”. But in relation to what was discussed and orally agreed at the conference it was clear from her submissions that she believes that there is evidence which could be given. She suggests it would reinforce the conclusion that the parties reached an agreement which cuts across the proposition that Mr Ashcroft has jurisdiction to proceed in the absence of the parties’ agreement that he should consider further issues. Such indication from Ms Cathie takes matters no further in terms of the evidence adduced on this application. The parties, however, have not had discovery of any notes taken at the conference and have not given any detailed evidence of the discussions which led Mr Ashcroft to record the “agreement” which was reached at the conference as to what he and the parties would proceed to deal with. Those matters reinforce the danger of the Court’s rejecting what I find to be the arguable proposition that Mr Ashcroft lacked jurisdiction to proceed by reason of the agreement he and the parties came to when they decided that he would determine Issue 1.
[44] In these circumstances, it is unnecessary that I consider the alternative argument developed by Ms Cathie. I record the argument briefly. Ms Cathie submits that the issues which Mr Ashcroft directed to be determined (reframed as Issues 2R and 3) are not issues which are permitted to be determined at this point. She has taken possession of the site and has responsibility for the completion of works. Issues 2 and 3 as originally pursued by Peryer understandably had their focus on what Peryer would need to do to remedy defects. Peryer needed to know what to do. Now that Ms Cathie has assumed responsibility for the works, unless she chooses to seek an Expert’s view
she is entitled to proceed with the completion as she sees fit (with the assistance of her own professionals, tradespersons and advisers). If she undertakes unnecessary repairs or unnecessary expense, she will do so knowing that recovery of compensation for the excess will be denied. GC 14.2.4 (as quoted at [20] above), which deals with the Expert’s determination of the costs of completion of the Contract Works, expressly commences at the point “[o]n completion of the contract works”.
[45] It is unnecessary for one to determine whether, on this alternative argument, Mr Ashcroft is purporting to engage with the requirements of completion at an incorrect or unnecessarily early point.
[46]The third set of relief sought by Peryer is judgment against Ms Cathie for the
$3,700 costs contribution directed by Mr Ashcroft. The conclusion in relation to the declaratory relief sought applies equally to the $3,700. As it is arguable that the Expert does not have jurisdiction to determine issues 2R and 3, then it is similarly arguable that he lacked jurisdiction to make an order in relation to his costs in starting to deal with those issues. This is of course not a finding that it is established that the Expert’s costs determination was outside its jurisdiction. Rather, Peryer has not established to the required standard that he had the entitlement to make such a direction in relation to attendances on issues 2R and 3.
[47] It is therefore unnecessary that I determine whether, as Peryer additionally claimed, it would have been contractually entitled to interest on the $3,700 at bank rates. In claiming such interest, Peryer relied on a clause in the contract which deals with progress and final payments due under the contract. There is force in Ms Cathie’s submission that an order for costs by an expert during a dispute-resolution process does not fall within the scope of the provision for interest at bank rates.
Outcome
[48]Peryer is not entitled to summary judgment in relation to the relief it seeks.
[49] In accordance with the practice outlined by the Court of Appeal in NZI v Philpott,1 costs will be reserved.
Orders
[50]I order:
(1)the plaintiff’s summary judgment application dated 30 April 2018 is dismissed;
(2)the costs and disbursements of the application are reserved;
(3)the defendant is to file and serve her statement of defence within 10 working days.
Associate Judge Osborne
Solicitors:
Gibson Sheat, Wellington Copy to: E M Cathie
1 NZI v Philpott [1990] 2 NZLR 403, (1990) 3 PRNZ 695.
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