Stevenson Brown Limited v Montecillo Trust - [2017] NZCA 57

IN THE COURT OF APPEAL OF NEW ZEALAND

CA215/2016
[2017] NZCA 57

BETWEEN	STEVENSON BROWN LIMITED Appellant
AND	MONTECILLO TRUST Respondent

Hearing:	16 November 2016
Court:	Harrison, Cooper and Brown JJ
Counsel:	R W Raymond QC for Appellant D R Tobin for Respondent
Judgment:	13 March 2017 at 10.30 am

JUDGMENT OF THE COURT

A The appeal is dismissed.

B The appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Harrison J)

Introduction

In 2006 the Montecillo Trust completed construction of a rest home and hospital in Dunedin as a care facility for the benefit of veterans and their families. The building has since suffered damage from physical settlement. The estimated cost of remedial work exceeds $5 million.
The Trust engaged David Rutter, an architectural designer, to design the new building and also to recommend professional assistance. On Mr Rutter’s recommendation, and through his agency, Montecillo engaged Stevenson Brown Ltd (SBL), an engineering firm, to design and supervise construction of the foundations. The Trust alleges that the damage to the building and its consequential loss was caused by SBL’s negligence in carrying out the design work. It has issued a proceeding against the firm in the High Court at Dunedin.
By agreement, the parties identified this question for determination before trial: was the model IPENZ/ACENZ short form agreement (the short form agreement) incorporated into the contract of engagement between Montecillo and SBL by reason of a previous course of dealing between Montecillo’s agent, Mr Rutter, and SBL? This question was significant because the short form agreement included a limitation on SBL’s liability for breach of contract to $100,000.
Davidson J answered this question in the negative and entered judgment on it in Montecillo’s favour.[1] SBL now appeals.[2] On appeal counsel materially reframed the question into three composite elements, as being whether (a) Messrs Rutter and Nigel Brown of SBL mutually intended when the contract of engagement was formed that it incorporated the short form agreement; (b) if not, were the limitation of liability provisions of the short form agreement incorporated into the contract by a previous course of dealing; and (c) if so, was the Trust bound by Mr Rutter’s agency? Before us Mr Raymond QC for SBL accepted that the previous course of dealing between Mr Rutter and SBL was subsidiary to the main issue of whether the contract actually entered into between the parties incorporated the short form agreement.
[1]Montecillo Trust v Stevenson Brown Ltd [2016] NZHC 684 [HC judgment].
[2]Davidson J’s answer to a question related to the expiry of the limitation period is not appealed.
Evidence was led in the High Court from a number of witnesses including: Mr Rutter; Mr Brown, who was SBL’s director and shareholder; David More, a Dunedin lawyer and long-time member of the Trust board; and Frederick Daniel, the Trust’s general manager. A good deal of this evidence, including cross-examination, was directed to the…

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.

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Details

Case: [2017] NZCA 57
Decision Date: 13 March 2017 at 10.30 am

CaseChat Overview and Summary

In Stevenson Brown Limited v Montecillo Trust, the Court of Appeal of New Zealand considered whether an engineering firm, Stevenson Brown Ltd (SBL), was liable for damages to a rest home and hospital in Dunedin, which suffered from physical settlement. The Montecillo Trust alleged that the damage was due to SBL's negligence in designing and supervising the construction of the foundations. SBL argued that a limitation on its liability for breach of contract, contained in a model IPENZ/ACENZ short form agreement, should apply. The primary legal issue was whether this limitation clause was incorporated into the contract between the Trust and SBL. The Court held that the short form agreement was not incorporated into the contract of engagement between the parties by reason of a previous course of dealing between Montecillo's agent, Mr Rutter, and SBL. The Court found that the previous course of dealing did not satisfy the legal requirement of an unequivocal meeting of minds on a particular term. Consequently, SBL's appeal was dismissed, and it was ordered to pay Montecillo costs for the standard appeal on a band A basis, together with usual disbursements.

Orders