Target Painters & Decorators Limited v Fehl - [2019] NZHC 3237

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1968

[2019] NZHC 3237

BETWEEN
TARGET PAINTERS & DECORATORS LIMITED

Applicant

AND

PETER JOHN FEHL

First Respondent

OMID CONSTRUCTION MANAGEMENT GROUP LIMITED

Second Respondent

Hearing: 5 December 2019

Counsel:

M R T Colthart for Applicant

No appearance for First Respondent J D McBride for Second Respondent

Judgment:

11 December 2019

JUDGMENT OF WHATA J

This judgment was delivered by me on 11 December 2019 at 11.00 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date: ………………………….

Solicitors: Rainey Law, Auckland
Greenwood Roche, Auckland

TARGET PAINTERS & DECORATORS LIMITED v FEHL [2019] NZHC 3237 [11 December 2019]

[1] The applicant, Target Painters & Decorators Limited (Target) seeks to judicially review a decision of an adjudicator on a construction dispute. The adjudicator found in favour of the second respondent, Omid Construction Management Group Limited (Omid), in the sum of $75,129.41. Target claims that the adjudication is flawed because the procedure for commencing the adjudication did not comply with the statutory process for doing so. Omid does not accept that the adjudication process was flawed or wrongly commenced. Furthermore, Omid contends:

(a)the issue has already been determined by the High Court as part of a statutory demand process in respect of the adjudication sum; and

(b)Target is estopped by its conduct from raising jurisdictional complaint because a representative of Target advised the adjudicator at the commencement of the adjudication process that it was happy to proceed.

Background

[2] Both Target and Omid are companies carrying on business as painting contractors. In about March 2018, Target and Omid entered into a contract whereby Omid agreed to undertake certain painting and gib-stopping work as a sub-contractor to Target on three residential apartment development projects:

(a)Soma Apartments, 10-12 McKelvy Street, Grey Lynn;

(b)Lake Pupuke Apartments, 8 Lake Pupuke Drive, Takapuna; and

(c)Library Lane Apartments, 2 Library Lane, Albany.

[3] The contract was entered into by way of verbal agreement made between the managing director of Target, Mr Sid Cheah, on behalf of Target, and the manager of Omid, Mr Omid Rajabi.

[4] The contract was a construction contract, as defined in s 5 of the Construction Contracts Act 2002 (CCA). Between March 2018 and August 2018, or thereabouts, Omid provided the services to the applicant under the contract. Target claims that in or about December 2018, disputes arose between Target and Omid relating to:

(a)amounts Omid claimed were due and owing under the contract;

(b)defects alleged by Target in services carried out by Omid; and

(c)other issues.

[5] Omid denies this. Omid says the only issue between it and Target was Target’s refusal to pay its invoices.

[6] On or about 25 January 2019, Omid served a notice of adjudication in relation to the disputes under the CCA (the notice of adjudication) on Target. This sets out the background to Omid’s claim. The first respondent, Mr Peter John Fehl, also served a document purporting…

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: [2019] NZHC 3237
Decision Date: 11 December 2019

CaseChat Overview and Summary

Target Painters & Decorators Limited applied to the High Court for a judicial review of an adjudicator's decision in a construction dispute. The adjudicator found in favour of Omid Construction Management Group Limited and ordered Target to pay $75,129.41. Target claims that the adjudication process was flawed because the adjudicator's acceptance notice did not comply with statutory requirements, specifically failing to be in the prescribed form. Omid contends that Target is estopped from raising this issue and that the adjudication was fair and lawful. The court considered the statutory framework for construction adjudications and the principles of judicial review in such cases.

The court found that the adjudicator's acceptance notice was indeed flawed, as it was not in the prescribed form and included a condition regarding the payment of security for costs, which is not allowed under the Construction Contracts Act 2002. However, the court concluded that this error was not material and did not prejudice Target in a way that warranted judicial review. The court emphasised that the statutory scheme is designed for speedy resolution of disputes and that the purpose of the Act would be undermined if errors of this nature were to be grounds for review. Target had an opportunity to participate in the adjudication process, file its own claim, and did not object to the process despite the identified flaws. Therefore, the court declined to quash the adjudicator's decision.

The application for judicial review was dismissed, and costs were awarded to the respondents on a 50% increased basis, reflecting the court's view that the proceedings were an attempt to defeat the statutory demand through a side route. The court invited submissions on the quantum of costs if the parties could not reach an agreement.

Orders