Van den Anker Construction Limited v Wilson McKay Trustee Company Limited

[2024] NZHC 1875

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-2306

[2024] NZHC 1875

UNDER

Sections 124 and 144 of the District Court Act 2016

IN THE MATTER

of an appeal from decision [2022] NZDC 20497 of District Court dated 28 October 2022

BETWEEN

VAN DEN ANKER CONSTRUCTION LIMITED

Applicant

AND

WILSON MCKAY TRUSTEE COMPANY LIMITED, ANNE VALERIE NOBES-JESS AND RODNEY NORMAN JESS

Respondents

Hearing:	On the papers
Counsel:	I J Stephenson for Applicant J A Ruddell for Respondents
Judgment:	10 July 2024

JUDGMENT OF PETERS J

[Application for Leave to Appeal]

This judgment was delivered by Justice Peters on 10 July 2024 at 12.30 pm pursuant to r 11.5 of the High Court Rules

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

VAN DEN ANKER CONSTRUCTION LTD v WILSON MCKAY TRUSTEE COMPANY LTD [2024] NZHC 1875 [10 July 2024]

Introduction

[1]    The applicant seeks leave to appeal to the Court of Appeal against my judgment of 30 November 2023, in which I allowed, in part, an appeal by the respondents against a decision of Judge M Sharp in the District Court.1

[2]The respondents oppose the application for leave.

[3]    The application for leave is made pursuant to s 60(1) Senior Courts Act 2016. I may only grant leave if satisfied the appeal raises a question of law or fact capable of bona fide and serious argument, and in a case involving some interest of sufficient public or private importance to outweigh the cost and delay of a further appeal.2

[4]    In its application, the applicant lists six proposed grounds of appeal. This judgment addresses those on which it has made submissions.

Background

[5]    The background is set out in the District Court judgment.3 What follows is sufficient to put this application in context.

[6]    The parties contracted for the applicant to undertake building work to a residential property. The work was to be done on a “charge up” basis, pursuant to a Cost & Margin (Labour Only) Building Contract entered into in April 2018 (“contract”).

[7]    The applicant rendered several payment claims for its work. The respondents did not pay claim 5 for $48,417 which was rendered in August 2018. On the face of the contract, the respondents should have paid within a matter of days. The respondents were overseas at the time, and there was a suggestion that they did not receive the claim but I put that to one side.

1      Wilson McKay Trustee Company Ltd v Van den Anker Construction Ltd [2023] NZHC 3475.

2      Waller v Hider [1998] 1 NZLR 412 (CA); Snee v Snee [2000] NZFLR 120 (CA); and Butch Pet Foods Ltd v Mac Motors Ltd [2018] NZCA 276 at [4].

3      Van den Anker Construction Ltd v Wilson McKay Trustee Company Ltd [2022] NZDC 20497.

[8]    On 6 September 2018, the applicant rendered claim 6 for $28,976 and then, on 7 September 2018, it suspended work under the contract. The applicant then rendered claims 7 and 8, each for less than $1,000.

[9]    The respondents paid claim 6 on 23 September 2018 but did not pay claims 5, 7 or 8.

[10]   The applicant cancelled the contract on 6 November 2018. It brought proceedings to recover the outstanding sum of $49,920, plus loss of profits, and interest and costs calculated in accordance with the contract.4

[11]    The respondents pleaded a set-off and, amongst other things, counterclaimed for costs incurred in remedying what in due course was agreed to be defective work to the roof, and other items where the standard of workmanship was in dispute.

[12]   The Judge found for the applicant, and awarded the applicant the sum claimed of $49,920. The Judge dismissed the applicant’s loss of profits claim, and dismissed the respondents’ set-off and counterclaim.

[13]   In a later judgment of 9 February 2023, the Judge awarded the applicant interest of $43,487, costs on its claim of $69,000, costs of $30,000 on the applicant’s defence of the respondents’ counterclaim (scale costs plus 50 per cent uplift), expert fees of $24,369, and disbursements of $10,100.5 The principal, interest, and costs and disbursements totalled $227,138.

Appeal to the High Court

[14]   The respondents appealed against the Judge’s dismissal of their counterclaim for the costs of remedying defective work. Of the sum in dispute on appeal, $25,817 was in relation to the roof, with the balance relating to alleged deficiencies in work to other items such as windows and weatherboards.

4      Although the applicant’s solicitors initially asserted that its claims were payment claims under the Construction Contracts Act 2002, this was incorrect. It is common ground that the regime under the Construction Contracts Act did not apply.

5      Van den Anker Construction Ltd v Wilson McKay Trustee Ltd [2022] NZDC 2170.

[15]   I allowed the respondents’ appeal in respect of the roofing work and upheld the Judge’s findings in relation to the other items.

Proposed appeal

[16]   Although the applicant identifies six grounds of appeal, it confined its submissions to two principal points. The applicant requires leave to appeal on both, and must succeed on both, if there is to be any point in an appeal.

First ground

[17]   The applicant’s first contention is that I erred in finding that a cause of action for breach of contract had accrued to the respondents prior to cancellation. This is said to be because a builder cannot, prior to completion, breach a contractual obligation (and statutory and tortious obligations for that matter) as to the required standard of work unless it is clear either that the work cannot be remedied or that the contractor does not intend to remedy.

[18]   This principle is said to be absolute and to derive from two decisions of the Court of Appeal, Oxborough v North Harbour Builders Ltd and Yu v T & P Developments Ltd.6

[19]   Thus, the applicant submits that it cannot have been in breach of contract, given that the building work had not been completed when it cancelled the contract, and nor was the work irreparable. Nor, on the applicant’s view of it, had the applicant refused to remedy the work.

[20]   I said in my judgment that Oxborough and Yu were not on all fours with the present case and, in any event, I did not consider they established that a breach of a term as to the required standard of work could never be proved prior to completion, except in the circumstances referred to.

6      Oxborough v North Harbour Builders Ltd [2002] 1 NZLR 145 (CA) and Yu v T & P Developments Ltd [2003] 1 NZLR 363 (CA).

[21]   The applicant submits that is precisely what those cases establish and, in effect, that the factual differences between them and the present case are irrelevant. The applicant also contends that this is a critical issue for the building industry, and it merits the attention of the Court of Appeal.

Second ground

[22]   The applicant’s second ground concerns my factual finding that, prior to cancellation, the applicant was notified of the deficiencies in the roofing work, but would not come to the site and inspect the work, let alone remedy it. In short, even if the applicant is correct as regards the absolute principle for which it contends, this case was outside it on the facts.

[23]   On Mr Van den Anker’s evidence at trial (the principal of the applicant), the District Court Judge found that, if the respondents had paid all outstanding sums, the applicant would have remedied the work, but it ceased to be under any obligation to do so upon cancellation.

[24]   The applicant submits that I was obliged to treat that finding of fact as definitive, given the Judge’s advantage in hearing the evidence. The applicant submits my alleged failure in this respect raises a matter of public importance in that clarification is required as to the approach to overturning findings of fact by a trial.

[25]   I do not accept that leave is required to clarify this matter. The approach to departing from a finding of fact by a trial Judge is well settled. Whilst appropriate deference is to be given to the trial Judge’s findings of fact, they are not immune from appeal. In this case, the Judge’s finding was inconsistent with the contemporaneous correspondence and documents. Moreover, and as the respondents’ submit, the Judge’s finding does not assist the applicant because, although it was to the effect that the applicant was willing to return to site and remedy the work, that was conditional on it first being paid in full, including for the defective work. The Judge was under the impression that the respondents had not paid for the roofing work. This is not so. They had paid for a substantial part of the work, and the Judge had ordered them to pay claim 5, which was said to have included the balance of the roofing costs.

Discussion

[26]   Even if the applicant’s first ground were to raise a question of law or fact capable of bona fide and serious argument, the second does not. As I have said, the applicant must have leave, and succeed, on both grounds for there to be any point in an appeal.

[27]   Nor is the second element of the test for granting leave satisfied. The applicant submits the case is of sufficient private importance to justify a second appeal. This is not only because of the sum in dispute, $25,817 plus GST, but because of the possible consequences of my decision on the Judge’s costs and interest awards. The applicant submits that it could be set back by between $100,000 and $150,000. Absent agreement between the parties, that will be in the hands of the District Court but I accept it might be as much as $100,000.

[28]   The respondents submit that the matter of costs should not affect the decision I reach on the application. First, there will almost always be significant costs at issue by the time an application for leave to bring a second appeal is made. If costs were enough to give the appeal sufficient private importance, the criterion would rarely be of any use.

[29]   Secondly, in cases in which costs are proportionate to the sum in issue there is no need to have regard to anything other than the substantive amount in question. Parties who have incurred disproportionate costs (and they are disproportionate) should not be advantaged when applying for a second appeal.

[30]   Although I would not go so far as to say that costs can never weigh in consideration of whether a second appeal is warranted, the respondents’ submissions are compelling. The financial implications of my judgment for the applicant do not justify the further expense and delay of a second appeal. The sums expended to date are extraordinary given the underlying quantum.

Result

[31]I decline the application for leave to bring a second appeal.

[32]The parties may make brief submissions on costs if they wish.

Peters J

Solicitors:           Lane Neave, Auckland

Wilson McKay, Auckland

Counsel:            J A Ruddell, Auckland