Price v Munro HC Auckland CIV 2008-404-8596
[2010] NZHC 552
•27 April 2010
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CIV-2008-404-008596
BETWEEN GORDON JAMES ARTHUR PRICE
GEOFFREY DENIS CLEWS
Plaintiffs
AND ROSS FRANCIS MUNRO
MARILYN ANNE HORNE First Defendants
AND KEVIN PATRICK MCDONALD
Second Defendant
AND SHANE DARRYL HUBERT
First Third Party
AND MARK RICKARD BOWER
Second Third Party
AND AUCKLAND CITY COUNCIL
Third Third Party
Hearing: 24 February 2010
Appearances: S C Price and J K Stewart for first defendants DJG Cox first and second third parties
Judgment: 27 April 2010
RESERVED JUDGMENT OF PRIESTLEY J
This judgment was delivered by me on 27 April 2010 at 11.00 am
pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:...............................
PRICE AND ANOR V MUNRO AND ANOR HC AK CIV-2008-404-008596 27 April 2010
Introduction
[ 1 ] In 2003 the plaintiffs purchased a property from the first defendants in
Marine Parade, Herne Bay.
The plaintiffs allege that the residential property they bought has certain construction and design defects. The origin of these alleged defects is various alterations and improvements (including the construction of a swimming pool) carried out between 1993 and 1999.
The plaintiffs commenced this proceeding against the first defendants (and the second defendant who was involved as a solicitor in relevant transactions) in December 2008. The current pleaded causes of action against the first defendant are misrepresentation under the Contractual Remedies Act 1979 and breach of contract.
The first defendants joined the first and second third parties. The nature of the first defendants’ claims against the third parties will be detailed in a later portion of this judgment.
The third parties applied for the first defendants’ claim against them to be struck out, or in the alternative for summary judgment. In the event the strike out application was not pursued. This hearing thus focuses on the third parties’ claim for summary judgment against the first defendant.
In that contest neither the plaintiffs, nor the second defendant, nor the third third party played any part.
Leave
The third parties’ application for summary judgment was brought out of time. The third parties’ statements of defence were filed and served on 17 July 2009. Summary judgment applications were filed on 25 August 2009.
The delay is short and has been satisfactorily explained by the need to digest and assess, through inspection, a large number of the parties’ documents. Rule 12.4(3) of the High Court Rules permits this Court to give leave if a summary judgment application is not filed with a statement of defence. There is no prejudice to the first defendants and in any event they did not oppose the application for leave. Leave is accordingly granted.
First defendants’ allegations
The first defendants’ statement of claim against the third parties makes specific reference to the “works” which form the basis of the plaintiffs’ statement of claim against the first defendants. It was common ground for the purposes of the summary judgment application that the relevant works were:
a)Extension of a bedroom and the creation of a new en suite bathroom, bay window, and pergola in respect of which Auckland City Council approval was given in January 1999.
b)The construction of a swimming pool in respect of which Auckland City Council approval was given in September 1999.
Although the plaintiffs’ statement of claim refers to other additions and alterations which were carried out in 1993, those are of no relevance so far as claims against the first and second third parties are concerned.
[ 10] The first defendants’ statement of claim pleads negligence against the first and second third parties. The statement of claim is limited to four paragraphs. There is no pleading of negligent misstatement. It alleges that the first third party (Mr Hubert) was the builder in respect of the works, and the second third party (Mr Bower) was a project manager in respect of the works. Both Mr Hubert and Mr Bower, it is alleged, personally carried out and/or supervised the works.
[ 11 ] The statement of claim alleges that in carrying out and/or supervising the
works both third parties owed the first defendants “a duty of care to exercise
reasonable care and skill” to ensure the works were carried out in a good and workman-like manner, using reasonable care and skill and in accordance with good building practice, and in accordance with the building consents, the Building Act 1991, and the Building Code.
[ 12] It is alleged that both Mr Hubert and Mr Bower breached their respective duties of care, the first defendants relying in that regard on the allegations and particulars contained in the plaintiffs’ statement of claim.
It is finally alleged that as a result of those breaches the first defendants will suffer loss if they are required to pay any damages, costs, or interest to the plaintiffs.
Summary judgment evidence
Messers Hubert and Bower both filed detailed affidavits. The central thrust of Mr Hubert’s affidavit was that he was never the builder in relation to the 1999 renovation work at the Marine Parade property. Rather the building contractor was Marstan Developments Ltd (“Marstan”), a company of which he was sole director at the relevant time and for which he acted as project manager.
Mr Bower’s affidavit is to the effect that at no stage was he engaged as a project manager for the first defendants; that at the relevant time he was both a director and an employee of Dominion Constructors Limited (“Dominion”), which company contracted to construct the Marine Parade swimming pool in 1999; that his major responsibilities with Dominion was as a quantity surveyor and a director; and that his Dominion responsibilities did not extend to on-site project management. His Dominion involvement was corroborated in an affidavit of Mr B A Russell who is the current proprietor of Dominion.
[ 16] Evidence in reply was limited to a short and somewhat economical affidavit by the first defendant Mr R F Munro. With regard to Mr Hubert’s affidavit Mr Munro deposes:
• Although Mr Hubert may not have personally undertaken any construction work at the Marine Parade property during 1999 “he was certainly responsible for the oversight of the construction work”.
Mr Hubert was regularly at the property and attended numerous site meetings;
Mr Munro “engaged Mr Hubert personally (not Marstan) upon the recommendation of Mr Bower”.
To the best of Mr Munro’s knowledge there was no written contract between himself and either Mr Hubert or Marstan.
The first awareness Mr Munro ever had of Marstan was when he received invoices and payment claims from Marstan which he “did not consider ... to be unusual”.
[17] As to Mr Bower’s affidavit, Mr Munro says:
Mr Bower offered to undertake the role of project manager for the 1999 construction works and Mr Munro was happy to accept that offer.
Mr Bower made this offer with a view to securing future work for Dominion.
Mr Munro was in regular contact with Mr Bower in respect of the 1999 works, and Mr Bower for his part regularly attended fortnightly site meetings.
Issues and evidence relating to Mr Hubert
[ 18] Mr Cox accepted that if the first defendants had an arguable case Mr Hubert
had personally carried out and/or supervised 1999 works as a builder, then on the
basis of Bowen v Paramount Builders (Hamilton) Limited[1] he would arguably have owed the first defendants a duty of care. But in Mr Cox’s submission the evidence fell far short of that.
[1] Bowen v Paramount Builders (Hamilton) Limited [1977] 1 NZLR 394 (CA).
[ 19] It is unnecessary for me to detail fully the contents of Mr Hubert’s affidavit. Relevantly Mr Hubert had worked in the construction industry for 32 years and been the project manager for two small construction companies for which he was a developer. Marstan, which had operated from 1989 until being put into liquidation in August 2003, was one of these. Mr Hubert was Marstan’s only full time employee. But as a result of a back injury which he sustained in 1986 Mr Hubert never carried out manual carpentry work. He instead, on Marstan’s behalf, engaged all the workmen required, including carpentry contractors and subcontractors. He describes his role as “hands off”.
[20] Mr Hubert had known Mr Bower for approximately 18 years through a local squash club, at which club he had met Mr Munro in the early 1990s.
[21 ] It is Mr Hubert’s evidence that Mr Munro engaged Marstan, not him personally, to carry out the 1999 renovations. Mr Hubert became aware, through Mr Bower, that Mr Munro was looking for a builder to undertake renovation works at Marine Parade. He deposed:
That Marstan’s price was accepted by the first defendants (in that regard contract documents and quotations have not been discovered).
Between March and October 1999 progress claims were regularly issued on Marstan’s letterhead.
Progress claims were paid by the first defendants into Marstan’s bank account.
Other correspondence produced, including correspondence from the architect, could be linked to Marstan.
Mr Cox submitted that Mr Munro’s “bare assertion” that he had engaged Mr Hubert personally was not sufficiently cogent evidence. Counsel submitted that Mr Hubert’s evidence demonstrated on the balance of probabilities that Marstan, not Mr Hubert personally, was the builder. Mr Munro’s mere assertion to the contrary failed to meet the threshold of credibility. Mr Munro’s evidence was totally silent on the circumstances as to when and how Mr Hubert had been engaged as the builder. Given that discovery had been completed it was unlikely that the first defendants would be able to augment Mr Munro’s assertion with cogent evidence.
Issues and evidence relating to Mr Bower
Mr Bower’s affidavit discloses a more complex relationship between him and the first defendants than the Hubert relationship.
Mr Bower has had 24 years experience in Auckland’s construction industry. At the relevant time he was a director and employee of Dominion, which he left in 2001. Dominion was a large commercial construction company. Mr Bower’s role was mainly as a quantity surveyor and estimator preparing tenders, budget estimates, progress claims and final accounts.
Although Mr Bower had known Mr Hubert (through the local squash club) for 18 years, he had no involvement with Marstan. Mr Bower and Mr Munro, however, had played squash together for a number of years.
In early 1999 Mr Munro asked Mr Bower whether the Dominion would be interested in carrying out renovation work at the Marine Parade property. He indicated that the proposed work would include construction of a swimming pool later that year. Mr Bower says he told Mr Munro that Dominion was well qualified to construct the swimming pool but was not involved in house renovations. For that latter work he recommended Mr Hubert.
Significantly, Mr Bower deposes:
[23] As a consequence of my acquaintance with Mr Munro my desire to
build a relationship with him with a view to Dominion obtaining the work
relating to the construction of the swimming pool, I let Mr Munro come to me with general questions he had about the 1999 house renovations on several occasions while the renovations were being undertaken.
These contacts included giving Mr Munro “a rough idea” about the cost of the 1999 renovations and swimming pool; producing a rough pricing summary; looking at plans and taking measurements of the property. Mr Munro also sought Mr Bower’s assistance “to understand aspects of the building process and progress claims issued by Marston on a couple of occasions”. Marston’s progress claims were apparently sent to Mr Bower “so Mr Munro could call me to ask for my thoughts about the progress claims”. His advice and assistance were sought in respect of variations and related matters.
Mr Bower further deposes that Mr Munro wanted to save costs with his architect and thus used Mr Bower as intermediary between him and the architect in respect of various design changes.
Additionally Mr Bower attended a number of site meetings which were usually convened and minuted by Mr Munro’s architect. Mr Bower deposes that the reason why he attended these site meetings was to “give the first defendants an independent explanation of aspects of the building process they felt they did not understand”. No charge was ever made for this work.
Mr Bower disputes that he was engaged as a project manager. In particular he stresses he did not undertake any design work; was not involved in obtaining the building consent; had no employment relationship with Marston; and did not carry out any construction work or supervise any such work. In lieu of any charge Mr Bower received from Mr Munro a suit from one of Mr Munro’s clothing companies which was apparently a sponsor of Team New Zealand America’s Cup challenge. Mr Munro refused an offer to pay for the suit.
For the swimming pool construction Dominion was engaged as the builder. Mr Bower says his personal involvement with the pool construction was limited to pricing the job, assisting the preparation of Dominion’s tender, attending a few site meetings, and preparing progress claims. Mr Bower confirms Mr Hubert’s evidence
that neither Mr Hubert nor Marston had any involvement with the swimming pool construction.
Mr Cox submitted that Mr Munro had made no attempt in his affidavit to contest Mr Bower’s evidence. All he stated was that he was in regular contact with Mr Bower over the 1999 renovations and that Mr Bower had regularly attended fortnightly site meetings. At best, submitted counsel, Mr Bower had been a sounding board. There was no contract with the first defendants to undertake a project management role. There had never been any payment. Mr Bower’s attendances on the site were far fewer than one might expect of a project manager. There was no documented evidence or diary notes to suggest he was carrying out a project manager role. Mr Munro’s bare assertions were insufficient to rebut Mr Bower’s evidence. The first defendants had failed to set out a credible narrative on which to establish an arguable case Mr Bower had personally carried out or supervised the 1990 renovations as project manager.
Approach to summary judgment applications
Rule 12.2(2) of the High Court Rules provides:
(2) The court may give judgment against a plaintiff if the defendant
satisfies the court that none of the causes of action in the plaintiff’s statement of claim can succeed.
It is common ground that this threshold applies in the situation. Rule 12.16 provides that rules 12.1 to 12.15 inclusive apply, with all necessary modifications, to counterclaims and claims against third parties.
The summary judgment power is informed by dicta of the Court of Appeal in Westpac Banking Corporation Limited v M M Kembla (New Zealand) Limited:[2]
[2] Westpac Banking Corporation Limited v M M Kembla (New Zealand) Limited [2001] 2
NZLR 298
[58] The applications for summary judgment were made under R 136(2) of the High Court Rules which permits the Court to give judgment against the plaintiff "if the defendant satisfies the Court that none of the causes of action in the plaintiff’s statement of claim can succeed".
.
Since R 136(2) permits summary judgment only where a defendant satisfies the Court that the plaintiff cannot succeed on any of its causes of action, the procedure is not directly equivalent to the plaintiff’s summary judgment provided by R 136(1).
Where a claim is untenable on the pleadings as a matter of law, it will not usually be necessary to have recourse to the summary judgment procedure because a defendant can apply to strike out the claim under R 186. Rather R 136(2) permits a defendant who has a clear answer to the plaintiff which cannot be contradicted to put up the evidence which constitutes the answer so that the proceedings can be summarily dismissed. The difference between an application to strike out the claim and summary judgment is that strike out is usually determined on the pleadings alone whereas summary judgment requires evidence. Summary judgment is a judgment between the parties on the dispute which operates as issue estoppel, whereas if a pleading is struck out as untenable as a matter of law the plaintiff is not precluded from bringing a further properly constituted claim.
The defendant has the onus of proving on the balance of probabilities that the plaintiff cannot succeed. Usually summary judgment for a defendant will arise where the defendant can offer evidence which is a complete defence to the plaintiff’s claim. Examples, cited in McGechan on Procedure at HR 136.09A, are where the wrong party has proceeded or where the claim is clearly met by qualified privilege.
Application for summary judgment will be inappropriate where there are disputed issues of material fact or where material facts need to be ascertained by the Court and cannot confidently be concluded from affidavits. It may also be inappropriate where ultimate determination turns on a judgment only able to be properly arrived at after a full hearing of the evidence. Summary judgment is suitable for cases where abbreviated procedure and affidavit evidence will sufficiently expose the facts and the legal issues. Although a legal point may be as well decided on summary judgment application as at trial if sufficiently clear (Pemberton v Chappell [1987] 1 NZLR 1), novel or developing points of law may require the context provided by trial to provide the Court with sufficient perspective.
Except in clear cases, such as a claim upon a simple debt where it is reasonable to expect proof to be immediately available, it will not be appropriate to decide by summary procedure the sufficiency of the proof of the plaintiff’s claim. That would permit a defendant, perhaps more in possession of the facts than the plaintiff (as is not uncommon where a plaintiff is the victim of deceit), to force on the plaintiff’s case prematurely before completion of discovery or other interlocutory steps and before the plaintiff’s evidence can reasonably be assembled.
The defendant bears the onus of satisfying the Court that none of the claims can succeed. It is not necessary for the plaintiff to put up evidence at all although, if the defendant supplies evidence which would satisfy the Court that the claim cannot succeed, a plaintiff will usually have to respond with credible evidence of its own. Even then it is perhaps unhelpful to describe the effect as one where an onus is transferred. At the end of the day, the Court must be satisfied that none of the claims can succeed. It is not enough that they are shown to have weaknesses. The assessment made by
the Court on interlocutory application is not one to be arrived at on a fine balance of the available evidence, such as is appropriate at trial.
These principles receive the imprimatur of the Privy Council in Jones v Attorney General.[3]
[3] Jones v Attorney General [2004] 1 NZLR 433 at [5].
[37] In general terms, the following observations and principles need to be applied to resolve the third parties’ summary judgment application;
The procedure, so far as the third parties are concerned, is subtly different from a strike out application.
Although not identical to the summary judgment principles which would
apply to an application by a plaintiff, the principles are roughly comparable.The third parties carry the civil onus that the first defendants cannot succeed.
The onus may be discharged if the third parties (here) offer evidence which is a complete defence.
Summary judgment is not an appropriate mechanism where there are disputed factual issues or where material facts need to be ascertained by the Court and the affidavits are not decisive.
It is not necessary for the first defendants to offer evidence in the summary
judgment context although it would be prudent to do so in the situation where
the third parties file evidence which would otherwise satisfy the Court the
claim cannot succeed.
[38] There is clear authority, the most respectable of which is the dictum of Lord Diplock in the Privy Council case of Eng Mee Yong v Letchumanan,[4] to the effect that in a summary judgment context, a Court is not obliged to accept uncritically as a basis for raising a disputed fact -
... every statement on an affidavit, however equivocal, lacking in precision,
inconsistent with undisputed contemporary documents or other statements
by the same deponent, or inherently improbable in itself it may be. Discussion
[4] Eng Mee Yong v Letchumanan [1980] AC 331 at 341.
In earlier sections of this judgment dealing specifically with the evidence of Messrs Hubert and Bower, I have set out some of Mr Cox’s submissions.
At a substantive level Mr Cox submits the assertions of Mr Hubert and Mr Bower rule out the negligence claims against them. The first defendants, for their part, have failed to respond in a compelling way to the third parties’ evidence with credible evidence of their own. Thus, in the absence of such credible evidence, there is unlikely to be sufficient evidence to establish an arguable case against the third party. Mr Cox further submits that both third parties have established, on the balance of probabilities, that “there is not, or there is unlikely to be sufficient evidence” to establish the arguable case for which the first defendants contend.
[41 ] Mr Cox further submitted, particularly with regard to Mr Bower, that there had been no assumption of responsibility by the third parties. Nor was this a case where, in terms of the policy articulated by the Court of Appeal in Rolls Royce New Zealand Limited v Carter Holt Harvey Limited ,[5] the Court was likely to impose a duty for care.
[5] Rolls Royce New Zealand Limited v Carter Holt Harvey Limited [2005] 1 NZLR 324.
Counsel cited cases where courts made it clear the liability in negligence which might be imposed on a company involved in the building construction area did not necessarily pass across to that company’s director (Body Corporate 188273 v Leuschke Group Architects Limited;[6] Drillien v Tubberty[7]).
[6] Body Corporate 188273 v Leuschke Group Architects Limited (2007) NZCPR 914.
[7] Drillien v Tubberty (2005) 6 NZCPR 470.
Critical to whether or not, as a matter of policy, a court will impose an assumption of responsibility or duty of care are the relevant facts. Articulating the policy in Rolls Royce [99] the Court of Appeal observed that such a deemed assumption of responsibility will arise when it is fair, just, and reasonable to impose
it. Relevant factors to be considered would include the vulnerability of a plaintiff, any special skill of a defendant, deterrence and promotion in the area of professional standards, and the lack of alternative means of protection.
So too in the area of a director’s liability for negligence are the relevant facts critical. This is exemplified by the differing results in Leuschke and Body Corporate 199348 v Nielson.[8] In the latter case the day to day activities and personal involvement on the relevant building site and the supervisory and co-ordinating roles of the director exposed him to liability in negligence. Aliter with the relevant defendants in Leuschke.
[8] Body Corporate 199348 v Nielson HC AK CIV 2004-404-3989, 3 December 2008,
Heath J,
Whatever jurisprudential difficulties may have been caused by the Court of Appeal’s judgment in Trevor Ivory Limited v Anderson[9] the Court of Appeal observed (per Cooke P at 523 and Hardie-Boyes J at 527) that each case turned on its own particular facts.
[9] Trevor Ivory Limited v Anderson [1992] 2 NZLR 517.
The difficulty here is that, despite the brevity of Mr Munro’s affidavit and the minimalist nature of the first defendants’ pleadings against the third parties, conflict still remains. Mr Hubert contends that he was neither a builder nor a project manager. Mr Munro states that his overall supervision and control was constant. Mr Munro deposes that he contracted with Mr Hubert. Mr Hubert deposes that the building contract was with Marstan. The robust approach mandated by Lord Diplock in Eng Mee Yong does not resolve this conflict given that neither party has produced the relevant building contract.
Mr Bower for his part disputes that he was ever a project manager. He states his role never moved beyond being a director of Dominion. Yet on his own evidence Mr Bower was frequently available to the first defendants for general advice and quantity survey functions during the construction phase. Indeed it was Mr Bower, on the evidence, who suggested Mr Hubert (or Marstan) as a suitable builder for the Marine Parade renovations.
There is force in Mr Price’s submission that, for summary judgment purposes, the third parties are unable to deliver a “king hit”. In referring to the claim against Mr Hubert, Mr Price points to the third party’s admission that he was involved in the works; that he attended the site almost every week day for one or two hours; that his role was to manage the works on behalf of Marstan; and that he was at the time Marstan’s sole director, shareholder, and employee. This, submits Mr Price, is sufficient to create a genuinely arguable case that a duty of care should be imposed on Mr Hubert. Additionally, there is conflicting evidence over whether the first defendants contracted with Mr Hubert or Marstan. It was, submitted Mr Price, a classic case of conflict, with the parties giving conflicting evidence. Such conflict cannot, in terms of summary judgment principles, be resolved in a summary way or confidently concluded from the affidavits.
Similar considerations applied to Mr Bower but, in his case, his involvement in the building work, which preceded the construction of the swimming pool, was extensive. Mr Munro’s assertion was that Mr Bower had offered to undertake the role of project manager. Much of his activity, including advice on contract variations and costings, was consistent with that role. It was a role which Mr Bower was prepared to perform to secure future work for Dominion. Mr Bower attended site meetings and acted as an intermediary between the first defendant and their architect, such activity having nothing to do with Dominion’s subsequent construction of the swimming pool.
Given the conflicting evidence which related to the negligence claims against both third parties, submitted Mr Price, the third parties could not discharge the onus. Summary judgment was quite simply inappropriate. Although accepting that Mr Munro’s affidavit was economical, Mr Price submitted this was deliberate given first Mr Hubert’s assumption that the company Marstan was engaged and secondly the problematic nature of the terms and scope of Mr Bower’s engagement.
Result
[51] On the pleadings and affidavit evidence currently before the Court I have
formed the distinct impression that the first defendants’ claims against the third
parties in negligence are weak. There is little in the way of particulars. There is no alternative pleading (arguably relevant in the claim against Mr Bower) of negligent misstatement. There is a vagueness about the specifics of the alleged contracts to which Mr Munro refers.
If the first defendants intend to pursue their claim against the third parties one would hope that the pleading would be sharpened and relevant particulars given. Indeed, if the first and second third parties are forced to go to trial and the first defendants fail in the claim (which is a claim contingent on the plaintiffs being able to sheet home liability) then a claim by the third parties against the first defendants for indemnity costs might well be considered by the presiding Judge.
But my perception of the current strength of the first defendants’ claim against the third parties is not decisive in determining whether the third parties are entitled to summary judgment. Given the core conflicts relating to who the contracting parties were, whether there were indeed oral contracts, whether a duty of care should be imposed, and the nature and scope of the relevant responsibilities of Mr Hubert and Mr Bower, I have reached the conclusion that those conflicts cannot be resolved in the context of a summary judgment application. The conflicts and the liability issues all require a careful assessment of the facts and findings which cannot be done summarily.
The principles are clear. Material facts cannot be found, nor can conflict be resolved in a summary judgment context.
Nor can I reach the position of concluding that Mr Munro’s affidavit on the central issues, is equivocal, lacking in precision, or inconsistent with undisputed contemporary documents or independent statements.
For these reasons therefore the third parties’ summary judgment application is dismissed.
Costs
[57] Counsel were agreed that costs should be reserved.
Priestley J
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