Rural Builders Limited v Sinclair
[2025] NZHC 233
•20 February 2025
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE
CIV-2024-454-22 CIV-2024-454-23
[2025] NZHC 233
UNDER the District Courts Act 2016 BETWEEN
RURAL BUILDERS LIMITED
Appellant
AND
LUMBERLAND 2006 LIMITED
Second Appellant
AND
JEREMY SINCLAIR AND
LIA SYLVIA NGAHUIA SINCLAIR
Respondent
Hearing: 18 February 2025 Counsel:
A M Swan for Appellant
G Paine for Second Appellant
S J Iorns and J C Sylvester for RespondentJudgment:
20 February 2025
JUDGMENT OF ISAC J
[Reasons for dismissing fresh evidence application]
Introduction
[1] Rural Builders Ltd and Lumberland 2006 Ltd appeal decisions of the District Court finding them liable for breach of contract, and costs.1 As part of their cross appeal, Mr and Mrs Sinclair seek leave to adduce fresh evidence.
1 Sinclair v Rural Builders Ltd & Ors [2024] NZDC 4150 (liability judgment); Sinclair v Rural Builders Ltd & Ors [2024] NZDC 19918 (costs judgment).
RURAL BUILDERS LTD v LUMBERLAND 2006 LTD & ORS [2025] NZHC 233 [20 February 2025]
[2] The appeals came before me on 18 February 2025. I expressed concern to counsel that liability judgments comfortably within the statutory jurisdiction of the Disputes Tribunal had occupied five days of hearing in the District Court and were about to occupy a day of argument in the High Court. Following discussion between the parties, I was advised that if I determined Mr and Mrs Sinclair’s fresh evidence application, that would determine whether the appeals would be pursued.
[3] Having been assisted by Mr Iorns in relation to relevant the circumstances leading to Mr and Mrs Sinclair’s fresh evidence application, I declined it in open court. My reasons now follow.
The background in brief
[4] In April 2018, Mr and Mrs Sinclair engaged Rural Builders and Lumberland to supply and install a kitset pole shed. The total quoted cost for construction was
$28,652.25. The shed was to be used by Mr and Mrs Sinclair as part of their business.2
[5] The Sinclairs were dissatisfied with the quality of the building work. Proceedings between the parties began in the Disputes Tribunal in late 2018 and mushroomed from there. They eventually ended in a civil trial before Judge Hinton in the District Court in May and June 2023.
[6] On 29 February 2024, in a careful judgment running to 98 paragraphs, Judge Hinton entered judgment against each of the appellants in the sum of $22,500 for breach of contract.3 He also awarded general damages against each of the builders in the sum of $5,000. A separate claim in negligence by the Sinclairs appears not to have been pursued at trial, and was dismissed.4 A separate head of damages claimed by the Sinclairs for loss of income was also dismissed.5 It is to this aspect of the respondents’ claim in the District Court that the fresh evidence application is directed.
2 The Sinclairs paid a separate sum for the kitset of $47,332.80.
3 Sinclair v Rural Builders Ltd & Anor [2024] NZDC 4150 (liability judgment) at [74]. The damages judgments are separate rather than joint and several.
4 At [51] and [98(b)].
5 At [97].
[7] In the District Court, the evidence supporting the claim for loss of income took the form of a short brief of evidence by the Sinclairs’ accountant, Mr Foss. His evidence was:6
Based on the accounts that I have prepared for Jeremy [Sinclair] and the Company from previous years, I informed Jeremy that the estimated loss is around $6,000 per month. I will explain in the subsequent paragraphs how I have arrived at this estimate.
Jeremy has indicated that he budgeted on the potential minimum revenue from the pole shed as being approximately $25,980 on average, per month. The supporting calculations are set out in Schedule 1.
Actual workshop revenue from 1st August 2018 to 31 March 2023 achieved by NZ Vehicle Plant & Asset Sales Limited based on information provided by Jeremy is as follows:
Sales ACTUAL
GST excl.
For the Period 1 August 2018 – 31 March 2019
$ 20,199.00
For the Financial Year 1 April 2019 – 31 March 2020 $ 24,214.14 For the Financial Year 1 April 2020 – 31 March 2021 $ 77,386.21 For the Financial Year 1 April 2021 – 31 March 2022 $ 45,326.23 For the Financial Year 1 April 2022 – 31 March 2023 $ 63,019.73 Total $230,145.31
Jeremy has advised me that he budgeted on a gross profit margin of between 25-30% of sales. The calculation of the estimated loss of gross profit based on the actual versus budgeted revenue is set out in Schedule 2.
[8] However, counsel advised me that during cross-examination, it was revealed that Mr Foss’ calculations were based on Mr Sinclair’s reports of his income and profit rather than an independent evaluation of the underlying figures. As a consequence, Judge Hinton concluded that there was no or insufficient evidence before the Court to enter judgment for business losses:7
[93] Turning then to what the loss of income was. On one view this was said to be new business altogether. On another view it was that new business plus an increase in business from existing customers.
[94] In relation to both “propositions” the starting “premise”, or as it was sometimes put, “the budget”, was from Mr Sinclair. He determined the “baseline” so to speak, from which Mr Foss proceeded. Mr Sinclair, as I saw it, unquestionably determined the figures, and the criticism of Mr Swan and Mr Paine was well founded I thought.
6 Brief of evidence of Tim Foss at [6]–[9].
7 Sinclair v Rural Builders Ltd & Ors, above n 1.
[95] Mr Burley referred to a critical part of the business and/or a future new part of the business that was not operating. Put simply, if that were so more should have been heard about that critical part (including existing clients who could not be accommodated, new opportunities lost), income lost, and over what period.
[96]There was no or insufficient evidence before the Court:
(a)on the precise nature of (component parts of) the Sinclairs’ business and their attendant earnings and related accounts/GST returns;
(b)on the breakdown/source of the earnings to type of business (e.g. heavy vehicle servicing and others) to describe the type of business, customers (old and new), revenue and business growth;
(c)on the work, including specifically targeted work, whether previously done and repeat work or future (and how likely) prospects, which was lost and could not be done in the Shed;
(d)on precisely what actually informed the assumptions/budget of Mr Sinclair, and why;
(e)on the proposed new customer base and the likelihood this was realistic over the relevant period, including the costs of retaining/attracting new business;
(f)on what (type of) work was in fact done, could not be done, and new business that was done or could not be done, during the relevant period.
[97]I could not find that any damages for loss of income were proven.
The application to adduce fresh evidence
[9] A party to an appeal may adduce further evidence only with leave of the Court.8 The Court may grant leave only if there are “special reasons” for hearing the evidence.9 An example of a special reason is that the evidence relates to matters that have arisen after the date of the decision appealed against and that may be relevant to the determination of the appeal.10
8 High Court Rules 2016, r 20.16(2).
9 Rule 20.16(3).
10 Rule 20.16(3).
[10] The relevant principles governing the receipt of further evidence are straight-forward:11
(a)the Court can receive further evidence if it thinks that the interests of justice require it to do so;
(b)it is wrong to allow an appellant to bolster his or her case with additional evidence that was available at the lower Court hearing, but not adduced because of the particular view of the case being taken at the time;
(c)admitting further evidence on appeal is exceptional rather than routine. A change of heart about how a case should have been run will not suffice. The prospect of further evidence triggering a substantial re- litigation before the appellate Court of the substantive case will count against admitting the further evidence;
(d)generally, the further evidence must be fresh, credible and cogent;
(e)evidence will not be regarded as fresh if it could, with reasonable diligence, have been produced at the trial;
(f)the absence of freshness is not an absolute disqualification. When the further evidence is not fresh, it will not generally be admitted unless the circumstances are exceptional and the grounds compelling. In addition, the further evidence needs to pass the tests of credibility and cogency;
(g)the interests of justice require the parties to put their best case forward at trial, in order to avoid wasting the Court's limited time and resources. A high value is placed on finality when the parties have been afforded the opportunity and failed to take it; and
11 B v A [2020] NZHC 580 at [25], citing Hodgson v Hodgson [2015] NZCA 4045, [2015] NZFLR 979 at [39]–[44]; and see Nation v Nation [2005] 3 NZLR 46 (CA); Telecom Corp NZ Ltd v Commerce Commission [1991] 2 NZLR 557 (CA); Comalco NZ Ltd v TVNZ Ltd (1996) 10 PRNZ 573; Complaints Committee No. 1 of Auckland District Law Society v P (2007) 18 PRNZ 760.
(h)the standard to be met is “rightly high”.
[11] Affidavits in support of the application were provided by Mr Sinclair, and a forensic accountant, Mr Michael Lowe. Mr Sinclair sets out his concerns about the way his claim was briefed by trial counsel and presented to the Court.12 He suggests that he was reliant on his solicitors to advise him on the evidence needed to establish financial loss, and to prepare that evidence for trial.
[12] Mr Lowe is a chartered accountant and is a former partner of KPMG New Zealand. He has over 25 years’ financial advisory experience, and over the course of his career has often been called on to provide expert opinion in court. Having reviewed the relevant financial papers, Mr Lowe estimated the Sinclairs incurred pre-tax losses of $287,000 over a six year period between 1 August 2018 to 30 September 2024. It is this quantification of financial loss that the respondents seek leave to adduce on appeal.
Consideration
[13] Having heard from Mr Iorns, I formed the clear view that it was not in the interests of justice to grant leave to the Sinclairs to adduce Mr Lowe’s evidence in support of their appeal.
[14] First, the proposed evidence is not fresh as it could, with reasonable diligence, have been produced at the trial. The respondents and their counsel appreciated the need to adduce evidence before the District Court to support the claim for financial loss. Evidence intended to establish that loss was led. That the evidence was inadequate to discharge the evidential burden on the respondents suggests responsibility for the deficiency rests with the Sinclairs, their counsel, or both. It would be wrong to allow the respondents to bolster their case on appeal with additional evidence that was available at the lower court hearing, but not adduced either because it was thought unnecessary, or due to oversight.
12 Mr Iorns, who appeared for Mr and Mrs Sinclair at the appeal, was not trial counsel.
[15] Second, if leave were granted to admit the evidence on appeal, the appellants would be obliged to brief and provide expert forensic accounting evidence of their own. Admission of the evidence would, in reality, trigger a substantial relitigation before this court on appeal of the substantive case determined in the District Court.
[16] Third, the grant of leave would compound the disproportionate allocation of private and public resources to the proceedings. A five day trial before the District Court resulted in judgments against the appellants of $27,500 each. The jurisdiction of the Disputes Tribunal is $30,000.13 Before this Court the proceeding has resulted in two separate appeals, a cross appeal and an application for leave to admit expert forensic accounting evidence. The grant of leave, necessitating an adjournment of the appeal for further evidence and submissions, would be contrary to the just, speedy, and inexpensive determination of the proceeding.14
[17] Finally, while the absence of freshness is not an absolute bar to the admission of evidence on appeal, evidence that is not fresh will not generally be admitted unless the circumstances are exceptional and the grounds compelling. Given the Sinclairs could have briefed and led Mr Lowe’s evidence before the District Court, they are well short of reaching the threshold for admission of the evidence on appeal.
Conclusion and result
[18] Mr and Mrs Sinclair’s application to adduce fresh evidence in support of their appeal is dismissed.
[19] In light of the parties’ subsequent resolution of all issues in the appeals, including costs, there is no order for costs.
Isac J
13 Disputes Tribunal Act 1988, s 10(1A).
14 See High Court Rules, r 1.2, “the objective of these Rules is to secure the just, speedy, and inexpensive determination of any proceeding”.
Solicitors:
Webster Law, Auckland for Appellant
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