Thomas v Thompson - [2019] NZCA 503

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA405/2018
[2019] NZCA 503

BETWEEN	DAVID EDWARD THOMAS Appellant
AND	IAN ALLEN THOMPSON Respondent

Hearing:	8 August 2019 (further material received 16 August 2019)
Court:	Stevens, Mallon and Moore JJ
Counsel:	S A Grant for Appellant W A McCartney and N R Eilenberg for Respondent
Judgment:	17 October 2019 at 11.00 am

JUDGMENT OF THE COURT

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

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REASONS OF THE COURT

(Given by Mallon J)

Introduction

DD Construction Ltd (DDC) is in liquidation. Mr Thomas (the appellant) is the liquidator. Mr Thompson (the respondent) owned two unit-title townhouses in an eight-unit development which had weather tightness issues. DDC was contracted to carry out the repairs to remedy these issues.
The remedial costs exceeded estimates DDC had provided. Mr Thompson became concerned about this and refused to pay four invoices totalling $20,014.69 that DCC had issued for repair works on his two units. That sum, or a sum very close to it, was held on trust pending resolution of the dispute over these invoices.[1] The dispute had not been resolved when DDC went into liquidation.
[1]The second invoice was not entirely legible. It is for either $4,889.28 or $4,889.26. The four invoices totalled either $20,014.67 or $20,014.69. Some of the documents in the Case on Appeal indicate the amount held in trust was a few cents less. These differences are immaterial for the issues on appeal.
After DDC went into liquidation, Mr Thompson asked Mr Thomas to release the funds to him. Mr Thomas declined to do so. Mr Thompson applied to the High Court under s 284 of the Companies Act 1993 for Mr Thomas’ decision to be reversed. The High Court granted this application.[2] Mr Thomas appeals from this decision.

Background

The contract for repairs

[2]Thompson v Thomas [2018] NZHC 1495.

The unit title development was defectively constructed and suffered damage from water ingress. Substantial remedial work, including recladding each unit, was needed. This was the subject of discussion at the Body Corporate’s Annual General Meeting on 27 May 2013.
Aaron Martin was on the Body Corporate Committee (and became its Chairman on 1 July 2013). He owned three of the units in the development at the time. He lived with Darryl Montgomery, the sole director of DDC before it was placed into liquidation, in one of the units. The minutes of the meeting record that they had paid for preliminary sketches to be done for the upgrade work. They had also paid DDC’s quantity surveyor “to put together a budget figure for each owner to use to approach their financiers to fund the reclad project”. This figure was $350,000 per unit. Owners were to come back with their funding advice before 1 July 2013. The remedial work for each unit was expected to take 18 weeks each, or…

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.

Continue reading Thomas v Thompson

Details

AGLC: Thomas v Thompson [2019] NZCA 503
Case: [2019] NZCA 503
Decision Date: 17 October 2019 at 11.00 am

CaseChat Overview and Summary

The appeal in Thomas v Thompson was brought by the liquidator of a construction company, David Thomas, against Ian Thompson, a unit title owner who had refused to pay for repair works carried out by the construction company. Mr Thompson had sought an order under s 284 of the Companies Act 1993 reversing Mr Thomas’ decision to not consent to the release of money held in trust pending resolution of the dispute over the invoices. The High Court had granted that order. Mr Thomas appealed, but the appeal was dismissed. The Court found that the decision of the liquidator was unreasonable. The funds in question were held by a law firm in a trust account pending resolution of the dispute. The contract between the construction company and the body corporate of the unit title development contained a dispute resolution process that had not been followed. The construction company had ceased trading and gone into liquidation, leaving no prospect of recovery of the funds. The Court found that the liquidator’s refusal to consent to the release of the funds was unreasonable.

Orders