Sipka Holdings Limited v Merj Holdings Limited
[2016] NZHC 279
•26 February 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-000199 [2016] NZHC 279
BETWEEN SIPKA HOLDINGS LIMITED
First Appellant
ANG PROPERTY INVESTMENT LIMITED
Second Appellant
AND
MERJ HOLDINGS LIMITED Respondent
Hearing: On the papers Appearances:
T J Rainey for Appellants
S R G Judd for RespondentJudgment:
26 February 2016
JUDGMENT OF WYLIE J
This judgment was delivered by Justice Wylie on 26 February 2016 at 3.00pm
pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:……………………………….
SIPKA HOLDINGS LTD & ANOR v MERJ HOLDINGS LTD [2016] NZHC 279 [26 February 2016]
Introduction
[1] I refer to my reserved judgment of 20 August 20151 and to my oral judgment of 4 December 2015.2 In the latter judgment, I held that:
(a) there was a very special reason, in terms of Horowhenua County v Nash (No 2),3 requiring that paragraphs [83] and [84] of my reserved judgment be recalled; and
(b)it was appropriate to afford the parties the opportunity to present submissions in relation to whether or not the issue of damages should be remitted back to the District Court for re-hearing.
[2] I have now received counsels’ submissions in writing. The parties did not seek a formal hearing in relation to the issue and were content for me to deal with it on the papers.
Factual Background
[3] To assist in understanding this judgment, I substantially repeat part of my oral judgment dated 4 December 2015.
[4] This litigation arises out of the sale of a commercial property in Matamata by the respondent to the appellants. In the course of negotiations leading up to the sale, the respondent represented that the property was not earthquake prone because its structure was rated at 43 per cent of the then current building standard. The respondent made that representation notwithstanding that it had an engineering report which concluded that the building was rated at or below 33 per cent of the then current building standard, that it required strengthening and that it was accordingly earthquake prone.
[5] The District Court found that the respondent had misrepresented the condition of the building and/or engaged in misleading and deceptive conduct in
trade, thereby breaching the Fair Trading Act 1986.4 The District Court Judge
1 Sipka Holdings Ltd v Merj Holdings Ltd [2015] NZHC 1980.
2 Sipka Holdings Ltd v Merj Holdings Ltd [2015] NZHC 3073.
3 Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC).
4 Sipka Holdings Ltd v Merj Holdings Ltd DC Papakura CIV-2003-055-000557, 19 December
2014.
awarded $37,000 to the appellants. He considered that that sum represented the cost of increasing the building from below 33 per cent of the building standard to 43 per cent of the building standard.
[6] The appellants appealed against the damages award, arguing that the minimum work required to get over the 33 per cent threshold took the building to
100 per cent of the relevant building code standards. The respondent cross-appealed against the Judge’s findings as to liability. In the alternative the respondent sought that the award of damages should be vacated.
[7] On appeal I upheld the District Court Judge’s findings as to liability. In relation to damages, I concluded that the Judge had erred in his approach to damages. I found that the appellants had to upgrade the building to 100 per cent of the building code requirements because they elected to change its use. As a result s
115 of the Building Act 2004 was engaged. The District Court did not refer to this section. I considered that it was determinative and that the actual costs incurred by the appellants in strengthening the building would have been incurred regardless of the misrepresentation/deceptive conduct. I noted that the appellants had not called evidence before the District Court to the effect that they paid too much for the building. I also noted that there was no evidence that the cost of upgrading the building to 100 per cent of the new building standard was increased as a result of the misrepresentation/deceptive conduct. I noted that there was no material available on which the District Court Judge could properly assess damages flowing from the breach, and recorded that I was not prepared to “pluck a figure out of the air”.
[8] In paragraphs [83] and [84] of my reserved judgment, I remitted the issue of damages back to the District Court and directed it to re-hear the matter insofar as it needed to do so, so that it could consider and determine what damages should properly flow from the respondent’s breach of the Contractual Remedies Act 1979 and of the Fair Trading Act 1986.
[9] As I noted in [1] above, I subsequently recalled paragraphs [83] and [84].
Submissions filed
[10] Mr Rainey for the appellants argued as follows:
(a) the Court has the power pursuant to s 76 of the District Courts Act
1947 to direct the District Court to consider any matter the High Court directs. That power is not constrained. There is no requirement that there be a miscarriage of justice such as to justify the District Court ordering a re-trial under r 11.24 of the District Court Rules 2014;
(b)section 76 of the District Courts Act permits the Court to determine what relief should be granted when it hears an appeal from the District Court. The essential question for a Court should be what relief will do justice to the parties having regard to the error or errors (if any) made by the District Court; and
(c) here the interests of justice support the issue of damages being remitted back to the District Court for re-hearing.
[11] Mr Judd for the respondent argued as follows:
(a) the appellants made the decision at the outset to plead their case and call evidence on the basis that the damages that they were seeking were the total cost of the work that they carried out after they had purchased the building;
(b)the appellants have not sought to amend their claim or to call further evidence as to the value of the building at the time of purchase;
(c) that pursuant to r 11.24 of the District Court Rules the appellants could not have obtained a re-trial in the District Court because there has been no miscarriage of justice;
(d)the jurisdiction in the High Court to remit a matter to the District Court for re-hearing must be exercised in accordance with the legal principles established by the rules and by the authorities, and that if the Court below could not have granted a re-trial, then similarly an appellate Court should not grant a re-trial by remitting the matter to the District Court;
(e) that a party is not entitled to have a second attempt when it turns out that it has failed on the basis of the case that it pleaded, ran at trial and argued on appeal.
Analysis
[12] The appeal and cross-appeal against the District Court’s decision were bought pursuant to s 72 of the District Courts Act. Relevantly, s 76 of that Act provides as follows:
76 Powers of High Court on appeal
(1) Having heard an appeal under section 72, the High Court may—
(a) make any decision or decisions it thinks should have been made:
(b) direct the District Court in which the decision appealed against was made—
(i) to rehear the proceedings concerned; or
(ii) to consider or determine (whether for the first time or again) any matters the High Court directs; or
(iii) to enter judgment for any party to the proceedings concerned the High Court directs:
(c) make any further or other orders it thinks fit (including any orders as to costs).
…
(3) The High Court may give the District Court any direction it thinks fit relating to—
(a) rehearing any proceedings directed to be reheard; or
(b) considering or determining any matter directed to be considered or determined.
(4) The High Court may act under subsection (1) in respect of a whole decision, even if the appeal is against only part of it.
…
(6) The powers given by this section may be exercised in favour of any respondent or party to the proceedings concerned, even if the respondent or party did not appeal against the decision concerned.
[13] As can be seen, the section confers a wide discretion on this Court. It can bring the dispute which has resulted in the appeal to an end if it considers that to be appropriate. It can direct the District Court in which the decision appealed against was made, to re-hear the proceedings, or to consider or determine any matter which this Court directs. The Court can exercise the powers conferred by s 76(1), even though the appeal before it relates only to a part of the decision. It can take this course even if a party affected by the order did not appeal against the decision
concerned. It has been noted, in regard to this latter provision, as follows: 5
This newly expressed power would appear to mark a further shift away from party autonomy whereby the litigants are free to plead and argue their cases as they wish but must live with the consequences, to a regime whereby the appellate Court is the final arbiter of what is fair and just and what ought to have been the outcome of the dispute.
[14] Mr Judd for the respondent argued that the discretion is limited by reference to the circumstances in which a District Court can order a re-hearing under r 11.24 of the District Court Rules. That rule provides that a re-trial may be ordered by the District Court only if, in the opinion of that Court, there has been a miscarriage of justice that justifies a re-trial.
[15] I do not accept that argument. There is nothing in s 76 limiting the power of the High Court to order a re-hearing either in full or in part in the District Court. Indeed it would be a surprising result if a discretion conferred on the High Court by statute was found to be fettered by a rule governing procedure in the District Court. The text of s 76 does not support the existence of any such fetter. The purposes of the section and the rule are also different. Rule 11.24 provides a mechanism whereby the District Court can correct its own errors. It operates as a limited exception to the general principle that a judgment, once delivered, must stand for
better or for worse.6 The powers conferred on the High Court under s 76 are much
broader. Appeals are a mechanism whereby aggrieved parties can seek to correct errors they say have been made by the lower Court, and the appellate Court can
consider and deal with the consequences of any errors it finds have been made.
5 Frederick McElrea and others (eds) District Courts Practice (Civil) (looseleaf ed, LexisNexis)
vol 1 at [DCA 76.3].
6 Horowhenua County v Nash (No 2), above n 3.
[16] In my judgment, s 76 is remedial. It enables an appellate Court to dispose of a successful appeal in a variety of ways. Which way is appropriate to any given case depends on the circumstances of that case and the interests of justice as they apply to it.
[17] Mr Judd referred to numerous authorities which confirm the importance of finality in litigation.7
[18] The public interest of course requires that a litigant should bring all matters arising out of the same circumstances before the Court at the same time, and that if the choice is made not to do so, he or she must accept that they cannot be brought up again in subsequent proceedings. A litigant will generally be estopped from bringing another action when his claim could have been correctly founded in the first place.
[19] I do not however consider that the authorities cited by Mr Judd preclude or limit the powers available to this Court on an appeal from the District Court under s
76. Invocation of the powers available under s 76 does not necessitate subsequent or fresh proceedings or the bringing of another action. Rather the Court, when it makes an order under s 76, is disposing of extant proceedings which are still before the Court and which were the foundation for the successful appeal. This is recognised by s 76(1)(b)(ii). The Court can direct the District Court in which the decision appealed was made to consider and determine any matters the High Court directs, whether for the first time, or again.
[20] Mr Judd argued that the plaintiff had elected to plead its case in a certain way, and that this precluded it from re-opening its case on a different basis.
[21] With respect to Mr Judd, his submission overstated the matter. Reference has to be made to the pleadings. The pleadings utilised the notice of claim procedure contained in the now repealed District Court Rules 2009. The appellants asserted in their notice of claim that the loss they suffered arising from the defendant’s misrepresentation and deceptive conduct was the cost of obtaining a building consent
for structural repairs to raise the building from below 33 per cent to the minimum
7 Foley v Bank of New Zealand [1953] NZLR 303 (SC); Waller v Davies [2007] NZCA 51, [2007]
2 NZLR 508 (CA); Paper Reclaim Ltd v Aotearoa International Ltd (Further Evidence) (No 2) [2007] NZSC 1, [2007] 2 NZLR 124; Ashe v Tauranga Marine Society (1991) 4 PRNZ 89 (HC); Green v Broadcasting Corporation of New Zealand [1988] 2 NZLR 490 (CA).
mandatory requirements, to finish the work and for loss of rental incurred while the work was undertaken. The total amount claimed was $191,300. The plaintiff sought damages in that sum, or in the alternative, an order that the plaintiff pay that sum “being the difference between the value of the property as it is now and the value it would have been had the representation been true”. The appellants’ principle – Mr Sipka – stated in his “will say” statement that “the building is less valuable with the second seismic report than the purchase price of $600,000”. In essence the appellants were claiming for the alleged loss in value, and they sought to quantify the loss in value by reference to the cost of bringing the building up to the required standard.
[22] I observed in my reserved judgment that in a case such as this, one would expect a plaintiff to call evidence that he or she paid too much for the building, and that, but for the misrepresentation, the price would have been lower. I noted that there was no evidence quantifying this loss of value. I did not rule out a “cost of cure” approach to the quantum of damages.
[23] I am not persuaded that the appellants need to re-plead their case
[24] Here I upheld the District Court Judge’s decision that the respondent misrepresented the position to the appellants and that that misrepresentation induced the appellants to enter into the agreement for sale and purchase. I went so far as to observe that it was a blatant misrepresentation and deceptive conduct.8 I agree with Mr Rainey that the interests of justice in this particular case support the issue of damages being remitted back to the District Court for re-hearing on the question of
damages. It would be unjust in the circumstances of this case to leave a finding of liability, but not allow damages to the victim of the misrepresentation/deceptive conduct. If the respondent is correct and its misrepresentation/deceptive conduct had no impact on the value of the building, then the appellants will receive no damages. If the appellants can prove loss, they will recover no more and no less than the loss they can prove resulted from the respondent’s misrepresentation/deceptive conduct.
I do not consider that there is any injustice in that.
8 Sipka Holdings v Merj Holdings Ltd, above n 1, at [82].
[25] Accordingly, I determine that the issue of damages following on from the respondent’s misrepresentation and deceptive conduct should be remitted to the District Court. I direct it to re-hear the matter insofar as it needs to do so, so that it can consider and determine what damages should properly flow from the respondent’s breach of the Contractual Remedies Act and of the Fair Trading Act.
Costs
[26] The appellants are entitled to costs in relation to the application for recall, and the filing of the further submissions required as a consequence.
[27] I invite counsel to endeavour to agree on those costs. If they are unable to agree, then I direct as follows:
(a) Any memorandum as to costs by the appellants is to be filed and served within 10 working days of the date of this judgment;
(b)Any memorandum in reply from the respondent is to be filed and served within a further 10 working days;
(c) Memoranda are not to exceed 10 pages;
I will then deal with the issue of costs on the papers unless I require the assistance of counsel.
Wylie J
Solicitors:
Rainey Law, Auckland
S R G Judd, Auckland
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