Stevenson Brown Limited v Montecillo Trust - [2017] NZSC 95

IN THE SUPREME COURT OF NEW ZEALAND

SC 34/2017
[2017] NZSC 95

BETWEEN	STEVENSON BROWN LIMITED Applicant
AND	MONTECILLO TRUST Respondent

Court:	William Young, Glazebrook and Ellen France JJ
Counsel:	R W Raymond QC for Applicant D R Tobin for Respondent
Judgment:	22 June 2017

JUDGMENT OF THE COURT

A The application for leave to appeal is dismissed.
B Costs of $2,500 are awarded to the respondent.

____________________________________________________________________

REASONS

Background[1]

[1]The factual background is taken from Stevenson Brown Limited v Montecillo Trust [2017] NZCA 57 (Harrison, Cooper and Brown JJ) at [1]–[2] and [7]–[18].

Montecillo Trust (Montecillo) constructed a rest home and hospital in Dunedin. This has suffered damage from physical settlement with an estimated cost of remedial work of over $5 million.
Mr Rutter, an architectural designer, was engaged by Montecillo to design the building. As agent of Montecillo, Mr Rutter engaged Stevenson Brown Limited (Stevensons), an engineering firm, to design and supervise construction of the foundations. Montecillo alleges negligence on the part of Stevensons.
The contract between Montecillo and Stevensons was formed at a brief meeting between Mr Rutter and Mr Brown, the principal of Stevensons, in February 2005. Mr Rutter gave Mr Brown a set of preliminary drawings and asked Stevensons to undertake the structural design and fire engineering work. Mr Brown hand wrote on the file that the fee for the fire work would be $1,350 plus GST. No other contractual terms were discussed.
On 22 April Mr Brown sent a 12 page facsimile to Mr Rutter which included a model IPENZ/ACENZ short form agreement and a Structural Design Features Report. This agreement in turn provided that, once it was signed, it would “replace all or any oral agreement previously reached between the parties”.
The facsimile, but not including the short form agreement, was sent to Montecillo. Mr Rutter did not send the short form agreement because he expected that it would be forwarded with the invoices in the usual way (see below). This is what occurred. There were three invoices between 31 May and 30 November 2005. These (and the accompanying short form agreement) were forwarded to Montecillo and paid by it.
Mr Brown and Mr Rutter had worked together since the mid 1990’s, first on residential developments and on at least three occasions on commercial developments. Mr Brown, either before or after entering into contracts of engagement on these projects, would send Mr Rutter, together with his first invoice, the short form agreement between himself (or Stevensons after it was incorporated in March 2004) and the engaging owner.[2] This occurred on at least 11 occasions before February 2005.

Procedural history

[2]Mr Brown always requested that the short form agreement be signed by the owner and returned to him but that never occurred.

In the High Court a split trial was ordered. One of the preliminary questions was:[3]
(a)Was the model IPENZ/ACENZ SHORT FORM AGREEMENT (the short form agreement) incorporated into the contract between [Montecillo] and [Stevensons] by reason of a previous course of…

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.

Keep reading for free

Create a free CaseChat account to read Stevenson Brown Limited v Montecillo Trust and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2017] NZSC 95
Decision Date: 22 June 2017

CaseChat Overview and Summary

In Stevenson Brown Limited v Montecillo Trust, the Supreme Court of New Zealand considered an application for leave to appeal a decision from the Court of Appeal. The respondent, Montecillo Trust, constructed a rest home and hospital in Dunedin which suffered damage from physical settlement. Montecillo Trust alleged negligence on the part of Stevenson Brown Limited, an engineering firm engaged to design and supervise construction of the foundations. The central issue before the Supreme Court was whether the Court of Appeal erred in concluding that the model IPENZ/ACENZ short form agreement was not incorporated into the contract by reason of a previous course of dealing between Montecillo Trust's agent, Mr Rutter, and Stevenson Brown Limited.

The Supreme Court examined the factual background and the procedural history of the case. It noted that although Mr Brown sent the short form agreement to Mr Rutter along with invoices, it was not signed by Montecillo Trust. The Court of Appeal had held that the contract did not incorporate the short form agreement by reason of a previous course of dealing, but it also observed that it seemed arguable that the parties left open for agreement at a later date a number of terms including risk allocation. However, since this issue was not addressed by counsel, the Court of Appeal could not indulge this line of argument in the absence of evidence.

The Supreme Court concluded that the application for leave to appeal was not in the interests of justice because the narrow preliminary question had already been decided by the Court of Appeal. The Court did not express a view on whether there could be issues of principle involved or on the outcome if other issues relating to the short form agreement were pursued in the High Court. The Supreme Court dismissed the application for leave to appeal and awarded costs of $2,500 to the respondent.

Orders