Zondag v Zondag HC Hamilton CIV-2003-419-328
[2007] NZHC 1871
•19 June 2007
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV-2003-419-328
BETWEEN HERMANUS JOHANNES GERARDUS ZONDAG
Plaintiff
AND BERNARDUS CORNELIUS HERMANUS ZONDAG AND MARIA CRISTINA ROSA ZONDAG SNELDERS Defendants
Hearing: 19-22, 25-29 July 2005, 5-9, 12-16 December 2005, 23-25 January
2006
Appearances: D M O'Neill for Plaintiff
Defendants in person
Judgment: 19 June 2007 at 4:00 p.m.
JUDGMENT OF NICHOLSON J
In accordance with R540(4) I direct that the Registrar endorse this judgment with the delivery time of 4:00 pm on 19 June 2007
Solicitors:
Miller Poulgrain, PO Box 711, Thames
Counsel:
D M O’Neill, PO Box 815, Hamilton
Defendants in person:
BCH Zondag and MCR Zondag Snelders
6 Tapu Creek Farms, RD5,Thames
ZONDAG V ZONDAG AND ZONDAG-SNELDERS HC HAM CIV-2003-419-328 19 June 2007
Table of Contents Paragraph No.
Introduction [1] Claims
Evidence
[12]
[28]
Pertinent facts
Translation
[36]
[129]
Credibility [151] Deceitful invoices
Swimming pool
[158]
Floor coverings [176] Plumbing
North boundary
[177]
[179]
South boundary
Lot 6 arrangements
[220]
[227]
Payments [261] Lot 6 quantum Pleadings [279] Expert quantum evidence [283] The January 2003 invoices [288] Methods of quantum assessment [293] January 2003 invoice overcharge [308] Assessment [495] Lot 6 quantum result [538]
Faulty work [547] Interest on capital [570] Counterclaim
Project cost [582]
Costs unrelated to the construction project [589] Retaining walls [597] Easement repairs [613] Results [645] Costs and interest [655]
Introduction
[1] The plaintiff (Hans) and the male defendant (Berry) are brothers. The female defendant (Mei) is Berry’s wife.
[2] Berry and Mei emigrated from the Netherlands to New Zealand in 1992. They purchased a block of land at Tapu on the Coromandel peninsula and subdivided it.
[3] Hans visited Berry at Tapu in 1998 and 1999 and became interested in immigrating with his family. It was proposed that Hans buy lot 6 of the Tapu subdivision and have a house built on it. Berry and Mei had their house on lot 7.
[4] Hans alleges that after he received immigration approval in September 2000
Berry agreed to design and build the house for him for a fixed price. Berry alleges that it was expressly or impliedly agreed that design and construction would be on a cost plus basis.
[5] When Hans and his family arrived in New Zealand in August 2001, the house on lot 6 had been completed. However, part of the carpark for lot 6 had been built on Berry and Mei’s lot 7. The septic tank for lot 6 was installed on lot 7. National Trust approval was obtained, survey was completed and resource consent obtained
for transfer of a triangular area of 1676m2 (which encompassed the carpark and
septic tank) from lot 7 to lot 6. There is dispute between Hans and Berry about whether there was agreement between them to transfer the 1676m2 or a smaller area of 327m2 and the terms and enforceability of that or any such agreement.
[6] Hans alleges that he paid Berry $1,217,539.87 for the land and the design and construction of the house and driveway.
[7] After Berry declined to transfer the 1676m2 of land, Hans filed this proceeding in October 2002 seeking specific performance.
[8] Berry then asserted that Hans owed more money for the design and construction of the house and driveway. Hans suspected that he had been overcharged and had paid more than he was required to. He requested a statement and full accounting. In response, Berry sent a statement in January 2003 alleging that payments of only $1,097,674.62 had been made and $296,040.73 remained to be paid. The statement was accompanied by about 800 supporting invoices.
[9] Hans thereupon analysed the statement and the invoices. This confirmed his suspicion that he had been overcharged and had paid too much.
[10] The deteriorating relationship between Hans and Berry came to a head when Berry assaulted Hans in March 2003. Hans and his family left the Tapu property later that month.
[11] Hans seeks transfer of the 1676m2 of land, plus refund of $340,926.51 and interest and costs. Berry and Mei deny liability to transfer and pay. They offer to transfer 337m2 or about 500m2 on terms. They counterclaim $299,623.05 as the balance owing for design and construction. They claim interest and costs. They also counterclaim removal and restoration orders, exemplary damages and costs for alleged unauthorised encroachment by retaining walls on lot 7. Finally, they counterclaim $522.16 and costs for alleged easement repairs.
Claims
[12] Hans pleads seven causes of action.
[13] First, Hans alleges an agreement to transfer 1676m2 of lot 7 to lot 6. He seeks specific performance of that agreement plus costs. Second, and in the alternative, he alleges an agreement to transfer 327m2 of lot 7 to lot 6. He seeks specific performance of that agreement plus $16,000 for repositioning the septic tank and driveway, plus costs.
[14] Third, Hans alleges encroachment by the driveway at the bottom of his property in breach of an implied term. He claims $2,500 for repositioning the driveway and costs.
[15] Fourth, Hans alleges a fixed price contract to build the house on lot 6 and its driveway for $540,566.51. Adding the price of the land, accepted driveway overrun, variations and extras and deducting for alleged faulty and incomplete work, he alleges that the total sum payable was $876,613.36 and that he has paid
$1,217,539.87. He claims repayment of the difference of $340,926.51 plus interest and costs.
[16] Fifth, and in the alternative, he alleges that in an undated statement and appendix supported by copies of invoices delivered to his solicitor’s office on 20
January 2003, Berry and Mei invoiced him $950,984.65. He says that he agreed to pay labour costs of $87,200, and had purchased lot 6 for $135,000. He pleads that the difference between the amount he paid and the amounts invoiced, agreed labour costs and purchase price for lot 6 is $44,355.22. He alleges that Berry and Mei charged him in error or over-claimed on their invoices $131,178.75 which, added to the difference of $44,355.22, made an over-payment of $175,533.97 for which he claims judgment, plus interest and costs.
[17] As his sixth cause of action, Hans alleges that there have been defects in the construction of the house or alternatively incomplete work by handrails rusting, plaster cladding cracking, interior downlights requiring replacement, exterior lights malfunctioning, general maintenance and provision of retaining wall due to land slippage. He alleges that such failure constituted a breach of contract for which he has suffered loss and damage of $59,842.15. He claims this plus interest and costs.
[18] As his seventh cause of action, Hans alleges that as a result of the dispute between himself and Berry and Mei, he has moved from the house on lot 6 and purchased an alternative home. He wants to sell the house on lot 6 but alleges he is unable to because of the failure by Berry and Mei to rectify alleged defects caused by them, namely the parking area and septic tank being on another piece of land, the driveway being on another piece of land, and defects in the construction of the home,
as pleaded in the sixth cause of action. He alleges that until such time as the defects are remedied, he is unable to sell the house. He would expect to receive $900,000-
$1,000,000 for the house and land. He pleads that he has lost the use of this sum from the time that he moved from the house, namely 30 March 2003. He claims judgment for interest lost on the capital invested in the house, plus costs.
[19] Berry and Mei plead three counterclaim causes of action.
[20] First, they plead that it was expressly or impliedly agreed that Hans would pay them:
a. For all costs which had to be paid to third parties and for all other contractors and sub-contractors or that [Hans] would pay such costs directly, and
2.For [Berry], remuneration of $20 an hour GST exclusive for a maximum of 60 hours a week for building work on the house alone in the construction period from 21 October 2001, and
3.A reasonable hourly rate for all other work performed on the project for both Berry and Mei, and
4.A reasonable percentage mark-up for architecture, landscape design and project management, and
5.A reasonable percentage mark-up on the costs of contractors, sub- contractors and prices of materials.
[21] They also pleaded this in their statement of defence to Hans’s fourth and fifth causes of action.
[22] Berry and Mei allege they are entitled to payment for:
(a) Resource consent applications 12,776.80 (b)
Earthworks and driveway construction
99,681.54
(c)
House construction and landscaping
949,164.05
[23] Architecture, landscape design and project management 93,617.72
[24] Land 120,422.19 [25]
Costs unrelated to the construction project
587.36
GST 159,533.71
$1,435,803.37
[26] They allege that Hans paid instalments totalling $1,136,180.32 and that there is an unpaid balance of $299,623.05 which fell due as from 20 February 2003. They claim this, plus interest and costs.
[27] As their second counterclaim cause of action, Berry and Mei plead that Hans constructed a retaining wall on lot 6 which encroaches onto lot 7 and also two smaller retaining walls situated entirely on lot 7, without their approval. They allege that Hans’s actions and construction constitute a trespass and nuisance and seek an order that Hans remove the retaining wall where it encroaches into lot 7 and restore the land and vegetation. They also seek exemplary damages and costs.
[28] As an alternative to the second counterclaim cause of action, Berry and Mei plead that the retaining wall encroachments could be remedied by relocation of the boundary. Such relocation would necessarily include the encroachment of the septic tank and could include the encroaching parking area. If land were to be transferred from lot 7 to lot 6 to incorporate the parking area, the septic tank and retaining walls
within lot 6, the total area of such transfer would be approximately 500m2. They
plead that they are willing to undertake the necessary survey, obtain resource consent and transfer the land to Hans on such terms as the Court may consider appropriate and just in the circumstances. They seek an order that Hans pay them such costs as the Court considers appropriate and just for them to undertake the survey, apply for resource consent, and transfer to Hans such land as is necessary to include the parking area, the retaining walls and the septic tank within lot 6. For this alternative, they also seek exemplary damages and costs.
[29] As their third counterclaim cause of action, Berry and Mei plead that access by Hans to lot 6 from the public road includes access by easement of right-of-way over part of lot 7. Such right-of-way incorporates a road together with a swing bridge and concrete ford, as well as infrastructure for water supply, electricity and telephone.
[30] They allege that on 20 June 2002, the right-of-way was damaged by a storm. This had the effect of preventing vehicular access to the side of the river where Hans’s property is located and interrupting the water supply. They repaired the damage at a cost of $3,603.35, of which the share payable by Hans was $522.16. They seek judgment against him for this sum, plus costs.
Evidence
[31] Mr O’Neill called seven witnesses who gave oral evidence at the trial. They were: Hans; Maria; Hans’s partner; Mr K Lord, lighting supplier; Mr K Brokenshire, plumbing supplier; Ms J Lester, swimming pool supplier; Bill, Hans’s “brother-in-law”; and Mr A Gemmell, quantity surveyor. Evidence was also given by Mrs van Vugt, translator, and Youri van Est, Maria’s nephew (Youri). Neither witness was in New Zealand at the time of the trial. Mr O’Neill arranged for Mrs van Vugt’s evidence to be recorded before trial and Youri gave evidence by video/audio link from the Netherlands during the trial.
[32] Berry and Mei called the oral evidence of four people at the trial. They were: Berry; Mr F Millington, surveyor; Mr W Kiewick, translator, and Mr G Bayley, quantity surveyor. They had the evidence of Cornelius Zondag (Kees) and Marcellis Zondag (Marcel), brothers of Berry and Hans, given by video/audio link from the Netherlands and the United States of America respectively during the trial. Mei was present throughout the trial but did not give evidence.
[33] By agreement, after all the evidence was given, I made a site inspection with only a Court Registrar present.
[34] When the three overseas witnesses gave evidence by video/audio link, each read and confirmed his written statement of evidence. I did not make a hand-written note of what was said in cross-examination and re-examination as it was impractical to do so and I wanted to concentrate upon the appearance and impression given by the witnesses as they gave evidence. I had been told and therefore expected that what was said in cross-examination and re-examination would be recorded and would be available later. Unfortunately, because of a technical problem, the tape of
the overseas evidence did not contain a sound recording. When I was told this I
convened a telephone conference with Mr O’Neill and Berry. This was held on 10
February 2006.
[35] At this conference, I said that there seemed to be three options available in the circumstances. First, the evidence could be heard again by video/audio link with opportunity for cross-examination and re-examination again. Second, the parties file a memorandum setting out their recollection of significant points in the cross- examination and re-examination. Third, I could decide upon the basis of the written statements of each of the overseas witnesses, which they confirmed in evidence as being correct, combined with my recollection of the impression made and the content of cross-examination and re-examination. I pointed out that I had made no hand-written note of what was said in cross-examination and re-examination and the reasons for this.
[36] After discussion, both Mr O’Neill and Berry said that in the circumstances the option each accepted was the third, namely that I decide the matter upon the basis of the record in the written statements of evidence and such recollection as I had of the cross-examination and re-examination. I said that my only clear recollection was that Youri agreed in cross-examination that he could not and did not actually hear what Hans said in the telephone calls with Berry.
[37] I gave Berry time to consider his position and said that if he changed his view he was to file and serve a memorandum stating what he submitted was the appropriate course of action. Berry later filed a memorandum confirming his agreement with the third option.
[38] I have considered and applied the evidence of each overseas witness on this basis. Excluding hearsay and unqualified opinion, I accept the evidence-in-chief of Kees and Marcel. However, I found it of little materiality to the primary issues in the case. I refer to the probative value of Youri’s evidence later at [61].
Pertinent facts
[39] There was direct conflict in the evidence of Hans and Berry on many important alleged facts. There was some support for the different versions in the evidence of other witnesses and documents. For the reasons I give later, I prefer the evidence of Hans to that of Berry on the primary issue of whether or not there was a fixed price contract.
[40] Many of the documents in the 10 volume “bundle of documents” were in Dutch. Not all were translated. There was dispute about translation into English of some Dutch passages. Each party called evidence of an expert Dutch/English translator. In the section headed “Translation”, I give reasons for preferring and accepting relevant disputed translations.
[41] I find the following pertinent facts.
[42] Hans and Berry are brothers. Berry is 50 and Hans 46. In 1977, Berry obtained a Diploma in Architecture from the University of Delft and in 1986 a Diploma in Law from the University of Utrecht. He worked for three years in the construction industry in the Netherlands as a designer/draughtsman in an architects’ and engineers’ practice and as manager, quality control and product design, for a company that manufactured precast concrete elements. For most of his career in the Netherlands, he was involved in a computer company initially in product development and marketing functions and then as its managing director. He was a chartered member of the Dutch Institute for Computer Scientists. He has various certificates in marketing and management and has published in trade journals on accounting software and operating systems. In 2005 Berry was finishing a New Zealand Bachelor of Laws degree.
[43] In 1992, Berry and his wife emigrated from the Netherlands to New Zealand. They bought a 300 acre part of a derelict dry stock farm at Tapu which is near Thames on the Coromandel Peninsula. They subdivided it into ten lots and built their house on lot 7. Their aim was to design and build a house on each lot before its sale.
[44] Hans worked and qualified as an actuary in the Netherlands and developed an actuarial consultancy firm. He sold his interest in the firm in early 1998 and later that year visited Berry. They discussed the prospect of Hans, his partner Marjolein (Maria) and their children immigrating to New Zealand and living in a house to be built on one of the Tapu lots.
[45] On his return to the Netherlands, Hans discussed the idea with Maria, her sister, Willeke, and Willeke’s husband, Willem Van Est (Bill). They were all interested in a change of lifestyle and immigrating to New Zealand. The idea involved becoming a family commune living on the Tapu land. Hans and Berry continued to canvass the idea by telephone and email. Hans had money from the sale of his business to invest and he and Berry agreed to enter into a joint business venture through the medium of an investment company. As one of its first projects, the company was to buy lot 3 and Berry was to build a house on it.
[46] On 1 May 1999, Berry emailed Hans saying that he had got a more accurate estimate for the house on lot 3 ready and sent a 9 page schedule of costs with a “Grand Total” of $150,204.49. He made some cost suggestions and asked “Let me know how you feel about this”. [Undisputed translation.]
[47] In an email on 6 May 1999 to Berry, Hans said:
You asked me if I could agree with you about the budget for lot 3. I have to tell you honestly that I instantly believe that the budget is right. Even if I would like to judge the content, it is beyond my capabilities to do so. [Undisputed translation.]
[48] On 6 May 1999, Double Sun Angle Limited (Double Sun) was incorporated in New Zealand. Hans and Berry were its directors. Berry and a Dutch company of Hans were its shareholders. Hans’s Dutch company lent Double Sun about $100,000 which increased to about $1 million before Hans and his family arrived in New Zealand in 2001.
[49] Double Sun entered into a written contract with Berry and Mei trading as Tapu Creek Farm to build a house on lot 3 for a fixed price. Hans and Berry signed it. It was one page and headed “Building Contract”. [Undisputed translation.] It contained the following statements:
[Double Sun] wants to build a house on her property in Tapu, 3 Tapu Creek Farms, and [Tapu Creek Farm] has agreed to accept this building contract according to following conditions:
Agree to the following:
[Tapu Creek Farm] shall build, the house, as detailed on drawings and specifications, known and accepted by parties, as laid down in the budget.
[Double Sun] shall pay [Tapu Creek Farm] the contract sum of $ 160,000 (GST Excl.), in the following instalments:
…
[Undisputed translation.]
[50] Lot 3 was transferred to Double Sun and Berry designed and built a house on it.
[51] Hans and Bill visited New Zealand in October 1999 and stayed with Berry and Mei at Tapu for about 2 weeks. The house on lot 3 had been completed and was tenanted. Hans and Bill discussed immigrating to New Zealand and living on the Tapu land. They looked at the available lots. Hans was interested in lot 6 and Bill lot 5.
[52] After their return to the Netherlands, discussion with family and further communication with Berry, Hans and Bill decided to immigrate to New Zealand with their families and to buy lots 6 and 5 respectively and have houses built on them. Hans considered employing a builder to build his house and getting Berry to supervise. When he suggested this, Berry said that he would be able to do the building and this could be at a cost price.
[53] On 8 November 1999, Berry sent a lengthy email to Hans after a phone discussion between them and a follow-up email from Hans. In his email, Berry responded to points which Hans had made about the desirability of separating the business and personal aspects of the proposed scheme of Hans, Bill and their families immigrating and buying, building and living on part of the Tapu property.
[54] Berry said:
….
4. We all have a mutual kind of trust and acceptance (see my included e-mail) and therefore we dare to venture “it”.
5. That a solution can be found for every ones individual “conditions”. The advantages are evident for each of us:
1. In this way we can fulfill an ideal in which we, with the two of us simply
could not get around to, on the grounds of time and energy. An ideal which incidentally has nothing to do with income, but does so exclusively with quality of living. [Undisputed translation.]
2. You escape from the race and can afford a lifestyle, which you cannot do on your own either, and you will have a house build for cost price, at a scale and quality which would otherwise be outside your reach and therefore we are helping you to increase the value of your private property (outside the (Double Sun)) help what was not available to us. [Accepted disputed translation.]
….
[55] Hans and Berry agreed that Berry would design and build the house on lot 6. They agreed that Hans would buy the land for $120,000, plus GST. Berry advised that the driveway should be constructed in the summer months and that he would need to start on it immediately. Hans was not sure how long it would take the immigration applications to be dealt with but after discussion with Berry they decided to take a risk and build the driveway that summer. They agreed the maximum cost of building the driveway as $50,000, plus GST.
[56] In November 1999, Berry started designing a house for lot 6 and construction of its driveway.
[57] On 21 November 1999, Hans advised Berry by email that he preferred to have a short driveway over lot 6 rather than a long driveway which went partly over lot 5.
[58] Berry replied later that day by email and said in his last paragraph:
I understand your approach and preference. What I will do now is engage the surveyor, so that we obtain an exact measurement of the difference in height between the beginning and the end of the driveway, and information about the distance and critical points between them. That does not involve large sums of money, and it provides us with quantitative information, on the basis of which we can start calculating the costs of this drive more accurately. For the time being, I will retain the amount mentioned (50,000 +
GST) as an absolute maximum. Depending on the surveyor’s planning, I should have a somewhat more accurate indication within a few weeks. [Accepted disputed translation.]
[59] In an email on 7 January 2000, Hans told Berry that he had an appointment with his fiscal adviser about an idea he had to transfer the whole of Double Sun funds privately and that he would also look at the possibility of getting some funds in private to Berry without anybody knowing about it. However, after getting advice from Dutch and New Zealand tax consultants, Berry decided that the only way he should transfer the funds was to follow the exact tax rules and therefore he made all lot 6 payments to Berry in a traceable way through the banking system.
[60] On 8 January 2000, Berry advised by email that he was digging where Hans’s parking area was going to be and that there was encroachment onto lot 7. This led to communications between Hans and Berry which explored the possibility of remedying the encroachment by boundary adjustment. They agreed on boundary adjustment but the size of the adjustment later became the subject of considerable dispute. I will deal with those communications and dispute in detail in the section “North boundary”.
[61] On 20 February 2000, Hans sent Berry a bank draft for $40,000 as part payment for the driveway.
[62] On 4 April 2000, Berry said in an email to Hans:
I won’t be building the house before half April, so you don’t have to worry about that. The way it looks now I will have plenty work until the end of the month with drawing and estimates.
….
However, I can not start without a building permit, and I can only apply for that after we have discussed the budget; and I can only do that after I have completed the detailed drawings. [Undisputed translation.]
[63] Shortly after this, Berry sent Hans a set of drawings and information about the cost of building that design. Hans rejected that design because it was too expensive. Berry told Hans that putting the swimming pool outside would reduce the cost.
[64] Youri was in New Zealand on vacation in April-June 2000 and stayed with Berry and Mei for about two months. Youri was often present when Berry spoke to Hans by telephone. He recalled a specific telephone conversation when he was behind Berry looking at 3D images on Berry’s computer that were being projected as Berry was talking to Hans. Although he could not hear what Hans said, it seemed clear to Youri that they were discussing the cost of the building as Berry talked about changing the design in order to make it cheaper. After that telephone conversation, Berry explained to Youri why putting the pool outside instead of inside would take the price down dramatically. Berry explained that the foundations would be less complicated, there would be no roof over the pool, and there would be no need for dehumidifiers to remove moisture from the interior of the house. Youri’s evidence is consistent with and supports Hans’s evidence that he rejected the earlier design because it was too expensive and Berry reacted by putting the swimming pool outside.
[65] On 21 June 2000 Berry told Hans by email:
I have worked out the costs made for you to and including week 25 and this arrives at : $54.531.= That includes the driveway, electricity, telephone, water supply, plants/landscaping, house design etc. inclusive GST (where I can’t hide it). We therefore won’t send you any invoices.
A while ago you have already transferred $39.980 (antique clock) to me. [Accepted disputed translation.]
[66] The term “antique clock” referred to an arrangement which Berry had earlier requested, that Hans mark the payments for the driveway “antique clock” as he was not planning on disclosing driveway income to the Inland Revenue Department and if asked about it he could say he owned an antique clock in Holland which Hans sold for him and that was where the money came from.
[67] Hans and Berry discussed ideas for a new house design with the swimming pool outside. Berry developed a new sketch-design for this. Hans accepted that design in August 2000.
[68] On 7 September 2000, Hans sent Berry a bank draft for $35,464.62 as a further payment for the driveway.
[69] On 14 September 2000, Hans was advised that his immigration application had been approved in principle. That day he sent an email to Berry which included the following statements:
Today I received an e-mail that my application has been approved in principle. I now need to open a bank account in New Zealand to deposit settlement funds.
….
As far as I am concerned we can now immediately start with the formal land purchase and building permit stage. It seems to me that now I have the principal approval in my pocket it should be possible to realize these things.
….
Are things going OK with the specifications and quotes for the house? [Undisputed translation.]
[70] Berry completed the plans and specifications for the house and swimming pool on lot 6. He got quotes for the lot 6 house and swimming pool. He applied to the Thames Coromandel District Council for building consent. In the application, Berry said that the estimated value (including GST) of the project was $390,000. The application was successful and building consent was issued on 20 October 2000.
[71] About late October 2000, Berry sent information to Hans by email which
Hans printed out as a 20 page document. The first printed page stated:
TOTAL SITE WORKS BASEMENT 1.855.00 TOTAL CONCRETE FLOOR BASEMENT 6.405.46 TOTAL RETAINING/INTERNAL LOADB WALLS 11.381.60 FORMWORK/PROPS HIRE 2.220.00 TOTAL CONCRETE WORKS BASEMENT
21,862.06
TOTAL SUBFLOOR/FLOORING 20.665.88 TOTAL PRE-NAIL FRAMING 23.000.00 TOTAL WALL FRAMING FIRST FLOOR 1.200.00 TOTAL FRAMING FLOOR 14.428.00 WALL FRAMING SECOND FLOOR 2.261.00 TOTAL ROOF FRAMING 4.776.90 TOTAL WINDOWS EXTERNAL DOORS ALUM 46.660.00 TOTAL EXTERNAL CLADDING 65.273.43 TOTAL INTERNAL CLADDING 12.945.27 TOTAL INSULATION 1.629.90 TOTAL FRAMING CLADDING
202.440.68
TOTAL SWIMMING POOL INSTALLATIONS
33.000.00
TOTAL SAUNA INSTALLATIONS 4.550.00 TOTAL ELECTRICAL INSTALLATIONS 10.000.00 TOTAL PLUMBING 26.500.00 TOTAL KITCHEN 25.000.00 TOTAL BATHROOMS 19.750.00 TOTAL FURNITURE TYPE JOINERY 10.500.00 TOTAL FIREPLACES/WOODBURNERS 7.300.00 TOTAL OTHER INSTALLATIONS 15.000.00 151.600.00 TOTAL INTERIOR FINISHING 34.270.00 TOTAL PERMITS, CONSENTS, ENGINEERING 5.000.00 100.960.77 TOTAL NAILS, GLUE, MISC 2.453.00 TOTAL PERMITS, CONSENTS, ENGINEERING 5.000.00 7.453.00 GRAND TOTAL 484.316.51
[72] The other 19 pages gave particulars of the labour, material and equipment make-up of each of the sub-total items. The 20 page document was called the “cost plan” in the statement of claim and in the evidence given by Hans and Mr Gemmell. I will identify it by that name.
[73] Berry strongly denied that he compiled and sent to Hans the 20 page “cost plan”. He said:
Hans has made this document himself on the basis of the spreadsheet files and information sent to him by me.
[74] Mr Gemmell expressed the opinion that the “cost plan” had been professionally prepared, being very detailed and something that one would expect to see as a prerequisite to construction taking place on any major contract constructed in New Zealand. Mr Bayley deposed that he had carefully considered the alleged “cost plan” document and concluded that it may well be the result of a compilation of one or more spreadsheets as alleged by Berry and Mei. For the reasons which I give in the sections headed “Credibility” and “Lot 6 arrangement”, I prefer and accept the evidence of Hans and find that Berry compiled and emailed all the information printed out as the 20 page cost plan.
[75] After Hans received the cost plan, he had telephone discussions with Berry and they agreed about the cost of building the house.
[76] In their statement of defence and their counterclaim, Berry and Mei pleaded that it was expressly or impliedly agreed that Hans would pay them as stated earlier at [20]. In his evidence, Berry asserted that the only agreement relating to the costs of the entire project that he and Hans ever had was to sort it all out after completion. For the reasons given in the sections headed “Credibility” and “Lot 6 arrangement”, I prefer and accept the evidence of Hans and find that about late October 2000 a fixed price oral agreement was made between Hans and Berry and Mei, that Berry would build the house for $484,316.51, as alleged by Hans.
[77] On 13 November 2000, the septic tank for Hans’s house was installed on lot
7.
[78] On 21 November 2000, the National Trust approved a proposal from Berry to exclude lot 7 boundary adjustment land from an open space covenant.
[79] On 27 November 2000, at Berry’s request, Hans transferred $100,000 from a
New Zealand bank to Berry.
[80] In an email on 16 January 2001 to Hans, Berry said:
Concerning the money: it is best to transfer the “next ton” quickly because there are a few big bills coming up. I had notified you that I got the transfer going, so that should be finalized shortly. [Undisputed translation.]
[81] Hans accordingly paid a further $100,000 by bank transfer.
[82] In an email on 16 January 2001, Hans said:
I have at your request instructed the Bank in Thames to transfer an amount of $100,000.00. According to my administration I have paid you the following amounts:
- NZD 40,000 on 17 February 2000
- NZD 35,464.09 on 5 September 2000
- NZD 100,000.00 on 26 November 2000
- NZD 100,000 on 16 January 2001
I understand that you are busy but I am curious or the costs are keeping pace with the budget!! I am not really waiting for big surprises but I don’t succeed myself in figuring out and compare the claimed payments, estimate, progress payments. Can you explain that. [Undisputed translation.]
[83] Berry responded by an email on 16 February 2001, which included the statements:
Thanks to the rain of the day before yesterday afternoon and yesterday from coffee time, I finally got some figures done.
I have some things divided in two categories, on one side the costs directly related to the house, and on the other side costs in connection with the construction of the track etc.
….
…. It is very difficult to get something to fit into the prepared budget because in the meantime we have changed so many things. I have tried as good as possible to filter out the items which are comparable, but to do it right I would have to look through all invoices one by one and compare them against similar items in the budget although part of this was based on a different system (especially construction basement/retaining walls/landscaping). That would take me another couple of days and I think that is a bit over the top. We also made quite a few changes from the original design, and we have during the construction made decisions to carry out work differently.
….
Concerning the second category, which includes items still outstanding in our account of 21 June (example is sexy pump and the resource consent). On top of that are the costs made on the track since that day, (further construction, repair and maintenance). Included in here are costs for surveyor for the boundary change to enlarge your lot (section) changing of QE11 covenant to make the boundary change possible, and of course the biggest amount being my time for making the design, the drawings etc. everything up to the actual start of construction. As I indicated I have restricted my hours for that piece to 40 hours a week, although I made a lot more of course, but I am happy with that.
….
To finish this subject while we are at it; at the time I mentioned that the balance between us for these amounts was $11675, but you transferred to me (regarding clocks) $3544.62.
….
I have already calculated the GST in. We can’t do this any more regarding clocks, so we have to bring that in with what is left.
Concerning the building of the house we unfortunately are considerably outside the original estimate, although it is clear where the exceeding is made.
….
Consequently there is a substantial increase of expenses, on the following points;
….
I was TOTALLY wrong with the budget about the amount of work on excavation and added expenses for trucks etc.
….
- my contractors refuse to work for the amounts I had in the budget.
….
The weather didn’t help much either and caused quite a bit extra work (twice bailing out the foundation etc.)
….
Fortunately we are now also approaching a situation in which considerable uncertainties have disappeared. Now we are “above ground” the building process should run with less surprises, despite having to sort out quite a few items.
All in all, you would owe me right now $179,798.- plus the left over
$8,693.-as above, which is a total of $188,491.- and you transferred
$200.000.
Apart from this, in the coming weeks payments have to be made for the frames, taps, sanitary, roof, and plasterers are coming in, so shortly you again will need to transfer another $100,000. [Undisputed translation.]
[84] Hans was aware that when he and Maria decided on things like bathroom fittings and kitchen appliances, they chose items that were more expensive than the cost plan allowed for and as he had no reason not to trust Berry completely, he thought that he and Maria’s choices of finishing materials represented a further overrun that explained the difference in what they had paid and what Berry was requesting.
[85] Hans continued to accept what Berry said and before June that year paid a further $400,000.00 by bank transfer, as follows:
26/2/01 $100,000.00 10/4/01 $100,000.00 30/4/01 $100,000.00 28/5/01 $100,000.00
[86] The transfer of lot 6 to Hans was registered in May 2001.
[87] Berry and Mei sent Hans an invoice dated 20 June 2001 for $137,250.00 for lot 6 land and associated costs. Hans paid this by bank transfers on 21 June 2001 and
4 July 2001.
[88] On 6 August 2001, Hans, Bill and their families arrived in New Zealand. The house on lot 6 was basically complete with only a couple of things to be finalised involving the outside railing.
[89] Hans was very happy with the project and in a postcard dated 2 September
2001 to his mother, described the house as “ … beautiful, a real masterpiece … .” [Undisputed translation.]
[90] Bill and his family initially stayed with Hans and his family in the house on lot 6 and then lived in the house on lot 3 pending the building of their house on lot 5.
[91] Hans deposed that the day after he arrived, Berry requested a payment of
$38,000 in cash. He said that he withdrew this from his New Zealand bank account on 8 August 2001 and gave it to Berry that day. Berry denies this. He deposed that when Hans arrived he asked him for cash of $31,500 to pay various sub-contractors and labourers for the last weeks of work and extra hours which he had agreed to pay them in cash, following an explicit request from Hans to that effect. He said that he provided Hans with a schedule with names and amounts and Hans gave him $31,500 in cash which was directly handed out to the various people involved. For the reasons which I give later in the sections headed “Credibility” and “Payments”, I prefer and accept the evidence of Hans and find that Hans gave Berry cash of
$38,000 on 8 August 2001.
[92] In August 2001, Hans still trusted Berry and expected to soon receive a final account from him which would confirm all costs and take into account the payments that he had made.
[93] On 3 September 2001, the Thames Coromandel District Council gave resource consent to boundary relocations as shown on a plan dated December 2000 (the December 2000 plan) prepared by F W Millington Ltd, Surveyors (Millington). and which included 1676m2 of lot 7 being joined on lot 6.
[94] Berry deposed that he and Hans had a very clear understanding that they would sit down after Hans’s arrival in New Zealand and go through all the details
and invoices of the project in order to come to a final accounting between them. He said that this had not taken place as Hans refused to comply with this agreement and to discuss the matter once he had arrived. Hans disputed this. He said that he asked for a final account many times but did not receive one. Also, that from his arrival in August 2001 he could not get any information about the way Berry dealt with the finances of Double Sun.
[95] There is no evidence that Berry prepared and supplied to Hans written details of the cost of the project and invoices in support until January 2003. Until Berry provided such documents there was no reasonable basis on which Hans could have prepared for and had final accounting with Berry. I reject Berry’s assertion that, after his arrival, Hans refused to talk about the costs of the project. I accept Hans’s assertion that after his arrival in August 2001 he asked Berry for a final account many times.
[96] Hans’s testified that on or about 27 October 2001, Berry came to Hans’s house and surprised him by handing him a hand-written account which Berry told him was a final account. Berry deposed that the document did not represent an accurate calculation of the project at all, nor did it represent a “final account” as Hans alleged. I prefer and accept the evidence of Hans and find that Berry said it was the final account when he gave it to Hans and Berry and Hans treated it as such. My reasons are my credibility finding, the content of the document, Hans’s actions after receiving it and confirmation by a document Berry handed to Hans in February
2002. I will call this document “the October 2001 final account”.
[97] The two main pages of the October 2001 final account stated [I have marked with an asterisk words I cannot understand or clearly decipher]:
Costs* 830,529.18 Ground* 120,000.00 950,529.18 GST 118,816.14 1,069,345.30 Paid 1,040,549.62 Remain*
28,795.70
Labour
16,160.00
GST 12,190.00
11,760.00 13 months - 52 @ 20 x 60
62,400.00
- 4 @ 30 x 60 7,200.00 97,520.00 109,710.00
28,795.70 138,505.70 NOT INCLUDED
- Bedroom furniture ( $970. = )
- Cutlery tray inserts ( ? )
- Remainder of bathroom
fittings ( $540. = )
- Materials from Placemakers redmon* purchased in
October (not been invoiced)
Einderfehening fairview* ( + 800)
- Final costs of boundary change( + 1500) ?
Disputes
Plasterers
Stainless
dispute about 12.400 I have accepted 3752
[98] Hans gave Berry a cheque dated 28 October 2001 for $38,505.70. That left an outstanding balance of $100,000. At that stage Hans decided that enough was enough, that he did not accept Berry’s figures, and they started to openly disagree about matters. He told Berry that he was surprised by the amount Berry said he still owed him and that he was of the opinion that he had already paid him more than enough.
[99] Although he suspected that he had paid too much after he received the October 2001 final account, Hans decided not to investigate it and thought that the only thing that he and Berry still had to take care of was the boundary adjustment.
[100] Hans became concerned that his investment of about $1 million in Double Sun was at risk. In November 2001, Maria’s pregnancy had complications involving hospitalisation. In this situation, Hans decided to prioritise his actions to be able to save the $1 million he had invested in Double Sun, maintain a workable relationship
with Berry, and finalise the issues regarding the house with as little extra financial damage as possible.
[101] There followed a dispute between Hans and Berry about Double Sun. Although the Double Sun dispute is relevant as a background event in this proceeding, as it was a collateral matter, its issues, merits and terms of settlement were not canvassed at the trial.
[102] Hans and Maria’s third child was born on 22 December 2001.
[103] In February 2002, Berry gave Hans a hand-written two-page document. Both pages had the printed letterhead “Marjolein and Berry Zondag – Tapu Creek Farm”, with address and phone number. On the first page Berry stated [I have marked with
an asterisk words I cannot understand or clearly decipher]:
To pay 100.000 (Inc*) Say 60.000 inc GST 40.000 ex GST GST comp* = To pay = Remains 4444. -
3762. -
682. -
DISPUTES
(1) Plasterer Zeker nogte betalen*
+ $4500 + GST
(2) Stainless Zeker nogte betalen* $ 0. – dispute + $8000 + GST
(b) Lights/Dimmers?
[104] The second page listed the items making up the “To pay” sum of $3,762 on the first page.
[105] Hans deposed that Berry claimed that he still owed him the $100,000, as in the October 2001 final account and as repeated in this document, and told him that he had resolved some of the outstanding matters that now totalled $3,762.98. Berry suggested to Hans that he pay him $60,000, including GST, and $40,000 in cash, excluding GST. Berry said that if Hans did that, he (Berry) would accept responsibility for the payment of the $3,762 and that there would only be the three
dispute matters to resolve as noted on the first page. Hans deposed that he agreed to pay Berry $60,000, inclusive of GST, plus $40,000 cash. He said he gave Berry a cheque for $60,000 and $40,000 in cash.
[106] Berry deposed that the hand-written notes of October 2001 and February
2002 were made during two brief and non-conclusive meetings. He said:
The hand-written notes do not represent an accurate calculation of the project at all, nor do they represent a ‘final account’ as Hans is alleging.
[107] Berry agreed that he received a cheque for $60,000 in February 2002 but denied that Hans gave him $40,000 in cash, saying that Hans gave him only $27,500 by way of cash in February 2002. For the reasons I give in the sections headed “Credibility” and “Payments”, the content of the document and Hans’s actions after receiving it, I prefer and accept Hans’s evidence about the February 2002 document. I find that in addition to the $60,000 cheque, Hans gave Berry cash of $40,000 in February 2002. I will call the February 2002 document “the February 2002 modified final account”.
[108] About February 2002, Hans told Berry that he did not want to invest any more money through Double Sun. Berry was then building an extension to his own house and Hans and Bill were helping him. A few days later, when Hans came to work on Berry’s house, Berry told him that he was no longer welcome.
[109] In March 2002, when Hans was discussing Double Sun matters with him, Berry slapped him in the face. After that, there was little direct communication between them. There followed other upsetting incidents. Hans and Maria thought that the situation would only get worse and reluctantly decided to move from their house on lot 6. They started to look for another house.
[110] During March and April 2002, Hans helped in the building by Berry of Bill’s house on lot 5 but there was little communication between him and Berry who told Hans what to do through Bill.
[111] On 20 June 2002, a storm described as a weather bomb struck. Tapu Creek flooded and damaged land, crossings, fences and electricity and other services.
[112] The Double Sun dispute was settled on terms recorded in a written agreement to terminate business association, dated 25 June 2002.
[113] On 3 July 2002, Hans sent an email to Berry saying that the surveyor had told him that Berry had asked to change the proposed boundary changes in such a manner that changes on lot 8 would be dealt with first and the changes between lot 6 and lot
7 “perhaps sometimes in the future”. The changes on lot 8 did not relate to Hans or his land. Hans said that he did not agree and in an email that day asked Berry to instruct the surveyor to “complete the plan according to the proposal as it is, and we agreed upon …”.
[114] By letter of 8 July 2002, Hans’s Thames lawyer, Mr Poulgrain, wrote to Berry about the boundary matter, saying that Berry was bound by his agreement with Hans to undertake the boundary adjustment and it was not something that Hans would allow to be further delayed. Berry replied by a “sans prejudice” letter dated 14
July 2002.
[115] There followed further correspondence and communications about the boundary matter which included a letter dated 2 August 2002 from Mr Roscoe, a Thames lawyer who Berry and Mei instructed. I will refer to the correspondence in detail in the section headed “North Boundary”.
[116] By letter of 30 August 2002, Berry and Mei sent a draft “report” about maintenance of infrastructure to the owners of property at Tapu Creek farm for perusal and comments. I will describe this and related events in the section headed “Easement repairs”.
[117] On 6 November 2002, Hans and Maria obtained title to a property at Te Puru on the Thames coast. It had an old house which required alterations before it was ready for them to move in.
[118] I accept Hans’s evidence that he paid the $138,505.70 required in the October
2001 final account and confirmed in the February 2002 modified final account so he and Maria could get on with their life and that it was Berry’s refusal to effect the boundary change that forced him into litigation to get the boundary change effected so they could sell lot 6.
[119] On 16 October 2002, Hans filed this proceeding and sought summary judgment for a specific performance order that the 1676m2 of land be transferred from lot 7 to lot 6. The proceeding was served on 13 November 2002.
[120] By letter of 26 November 2002, Mr Roscoe sent a statement of defence and opposing affidavits to Mr Poulgrain and advised that he was taking instructions on a counterclaim.
[121] By letter of 10 December 2002, Mr Roscoe advised Mr Poulgrain:
We again confirm our clients:
1. Will attend a Mediation on all the ever increasing issues.
1) Will transfer the 327m2 upon which the driveway is constructed.
2)May gift the 1670m2 as part of a full and final settlement between the parties of all issues.
Meanwhile Berry will prepare a full accounting in respect of construction of your client’s house and if this cannot be settled at Mediation a Counterclaim will be filed in the High Court at Hamilton to be heard with your client’s Application at the fixture date.
[122] Mr Poulgrain replied that day by fax saying:
We have your letter of 10 December which we have referred on to our client for comment.
In the meantime, we note that we were not aware of there being any outstanding claim by your clients for moneys owing by our client in relation to the construction of the house. We have been corresponding with your client or yourselves on his behalf for six months now and our clients have of course been residing in the house for considerably longer than that.
Is your client now saying that there has not previously been “a full accounting” in respect of the construction of the house? If so, his credibility must seriously be in doubt.
[123] On 13 December 2002, Mr Poulgrain advised Mr Roscoe by fax:
Further to your letter of 10 December, could you please itemise for our client all those issues which your client would want referred to mediation.
We reiterate that it is the boundary adjustment that is the primary concern of our client and we can see that the greater the number of issues to be resolved, the less likely we are to succeed in settling any of them.
We therefore ask that your client try to narrow his focus when confirming the parameters within which he would want to negotiate. We would then confirm whether or not our client was prepared to have those matters referred to mediation.
[124] Mr Roscoe responded by letter of 16 December 2002, stating:
Currently the issues between Berry and Hans are in respect of:
1.Construction of Hans house – as requested a Statement is being prepared.
b. Boundary adjustment – increase beyond 327m2 (High Court
Proceedings).
c. Double Sun Angle Limited – Disputes Tribunal Proceedings. d. Easements – maintenance.
e. Any other issue relating to their properties at Tapu.
[125] On 20 January 2003, Mr Poulgrain received from Berry a letter, a statement, a document headed “Payments made”, and copies of about 800 invoices.
[126] The letter said:
Please find attached the full accounting in respect of your clients’ property, and a statement, as was requested.
[127] The headings, sub-totals and conclusion of the statement were:
STATEMENT
1. RESOURCE CONSENT APPLICATION
….
sub total resource consent application 9,289.75
[128] DRIVEWAY inc POWER, TELEPHONE, WATER
….
Sub-total driveway construction 60,825.64
[129] HOUSE CONSTRUCTION AND LANDSCAPING
….
sub-total house construction 933,753.51
[130] ARCHITECTURAL, LANDSCAPE DESIGN
and PROJECT MANAGEMENT
….
sub total architecture, landscape design and project
management 111,059.95
[131] LAND
….
sub-total land 123,929.24
TOTAL PROJECT COST 1,123.858.09
GST 154,857.26 TOTAL TO PAY
1,393,715.35
PAYMENTS MADE AS PER SPECIFICATION
1,097,674.62
REMAINS TO PAY
296,040.73
[132] Hans analysed Berry’s January 2003 claim and the invoices and decided that he had overpaid Berry and that in fact Berry was indebted to him.
[133] By letter of 30 January 2003, Mr Roscoe wrote to Mr Poulgrain, saying:
Further to your request Berry Zondag prepared and delivered to you on your return to work on 20th January 2003 a full accounting of house construction costs.
Since no response has been received to the options in our letter dated 10
December 2002 we have instructions to file a claim for the balance of
$296,040.73 as a Counterclaim in the Summary Judgment proceedings.
[134] On or about 18 March 2003, there was an incident after Hans went onto lot 7 and turned on a tap to re-establish water supply to Mrs Roberts’ house on lot 2. It involved Hans, Bill, Berry and Mei. Hans reported the incident to the police who then charged Berry with assault. After a defended hearing, Judge Wolff said that he was satisfied from the evidence that Berry punched Hans, who then grabbed him in a bear hug and they rolled upon the ground, during the course of which, either in an attempt to get free or at least secure an advantage, Berry attempted to eye gouge Hans and when Bill became involved, Berry offered to “sort him out” as well. Judge Wolff was satisfied that the elements of assault had been proved beyond reasonable doubt and the charge proved. He said, however, that he did not propose to turn Berry into a criminal as a result of what happened and would discharge him without conviction on condition that witnesses’ expenses of $450 were paid, a $500 donation was made to charity, and there was a bond of $1000 to keep the peace for a period of 12 months. He ordered discharge without conviction accordingly.
[135] The assault incident caused Hans and his family to speed up moving out and they left their house on lot 6 on 29 March 2003.
Translation
[136] There was dispute about the correct English translation of many Dutch passages in the documents. As well as Hans and Berry translating parts of documents themselves, Hans called expert translation evidence of Mrs van Vugt and Berry and Mei called expert translation evidence of Mr Kiewick, both qualified and experienced Dutch/English translators.
[137] After considering all the disputed translation passages, I find that four relate to relevant facts.
[138] First, a sentence in Berry’s email to Hans on 8 November 1999. Parts of this email are quoted earlier at [51].
[139] Hans’s translation of the relevant sentence was:
You can escape from the rat race and will be able to create a lifestyle, which
you would not be able to do on your own and you build a house on cost
price, on a scale and of a quality which otherwise would be without your reach and we contribute to the increase of your private assets (out of DSA), help on which ourselves have not been able to count on.
[140]
Mrs van Vugt’s translation was:
You escape from the race and can afford a lifestyle, which you cannot do on your own either, and you will have a house build for cost price, at a scale and quality which would otherwise be outside your reach and therefore we are helping you to increase the value of your private property (outside the DSA,) help what was not available to us. [141]
Mr Kiewik’s translation was:
You escape the rat race and are able to furnish a lifestyle which you would not be able to achieve on your own, and you build yourself a house at cost price, of a scale and quality that would otherwise be out of your reach, and so we assist you in [or “we effectively contribute towards”] increasing your PRIVATE assets (outside the DSA), assistance that we ourselves could not count on. [142]
There are two pertinent translation disputed passages in that sentence.
First,
the passage:
… you build a house … (Hans’s translation)
… you will have a house build … (Mrs van Vugt’s translation)
and:
… you build yourself a house … (Mr Kiewick’s translation)
[143] Bearing in mind that Hans was to be in the Netherlands when it was intended that the house be built and that for Hans to a physically build a house himself was outside his experience, it is clear that it was intended by Berry that Hans would have the house built for him. I therefore prefer the translation of Hans and Mrs van Vugt of this passage.
[144] The second pertinent disputed translation passage is:
… we contribute to the increase of your private assets … (Hans’s translation)
and
… we are helping you to increase the value of your private property … (Mrs van Vugt’s translation)
and
… so we assist you in [or “we effectively contribute towards”] increasing your PRIVATE assets … (Mr Kiewick’s translation)
[145] I consider that there is little significant difference in the translations of this passage and for consistency accept the translation of Mrs van Vugt.
[146] In my view, the most important and highly relevant words in the whole 8
November 1999 email is the phrase “cost price”, which appears in all three translations.
[147] Second, two sentences in an email from Berry to Hans on 21 November
1999. Mrs van Vugt translated the sentences as:
Presently, I still keep the stated amount of (50.000 + GST) as an absolute maximum. I should have a more accurate indication, depending on the plans of the surveyor.
[148] Mr Kiewick translated them as:
For the time being, I will retain the amount mentioned (50,000 + GST) as an absolute maximum. Depending on the surveyor’s planning, I should have a somewhat more accurate indication within a few weeks.
[149] The main difference is between the word “presently” and the phrase “for the time being”. I accept the evidence of Mr Kiewick that the literal translation of the Dutch word “vooralsnog” is “for the time being”, and I therefore prefer Mr Kiewick’s translation. However, in the context of what was said by Hans in his email of 21 November 1999 and Berry’s full response later that day, the difference is not significant.
[150] Third, there are three differing translations of a paragraph in an email from
Hans to Berry on 24 June 2000. Hans’s translation is:
Youri brought a map of the building site. I notice that it included a right-of- way. I thought we had agreed to finalise this later on with a boundary change??
[151] Mrs van Vugt’s translation is:
Youri brought a drawing of the building site with him. I noticed a right of way in there. Didn’t we at some stage discuss that we in the future would resolve that with a boundary change??
[152] Mr Kiewick’s translation is:
Youri had a drawing of the building site with him. I noticed that it mentioned a ROW. Didn’t we at some stage talk about resolving that in due course with a boundary change?
[153] Both expert translators translated the word “besproken” as “discuss” or “talk”, not as “agree”. The email stated “ROW” not “right-of-way”. I therefore prefer and accept Mr Kiewick’s translation.
[154] Fourth, Hans translated a sentence in an email from Berry to him on 25 June
2000 as:
(We could include that in the contract of the title transfer, to make sure that will be taken care of properly.)
[155] Mrs van Vugt translated it as:
We could write it into the contract of the title transfer so there can be no disagreements.
[156] Mr Kiewick translated it as:
(we could fix that contractually at the time of the transfer of title, so that it is set in stone)
[157] There is closeness in the translation of Mrs van Vugt and Mr Kiewick and on balance I prefer and accept that of Mr Kiewick.
Credibility
[158] The impressions I formed from seeing and hearing Hans and Berry give evidence over many days were, in the context of the other evidence, very helpful in assessing their relative credibility and reliability. Both impressed as being highly intelligent and astute. Both were very adroit with arithmetic.
[159] I formed a favourable impression of Hans as a witness of credibility and reliability. His evidence that normally he would have insisted upon a written detailed contract but did not do so because he was dealing with his brother who he trusted and who he intended to live beside in harmony during his retirement, had the ring of reality. Also his stated attitude that he wanted to know how much the total project would cost before he committed himself to it. His conduct in paying more than agreed, both before and after his arrival in New Zealand, shows a measure of pragmatism, flexibility and recognition that he had requested extras and variations and more expensive items than initially allowed for. His evidence was generally clear and consistent and he was prepared to accept in cross-examination that he did not remember some details or had made a mistake on some matters. When cross- examined he generally gave clear and direct answers and became understandably frustrated when he was asked for an instant answer about a short statement in a
lengthy document or was questioned repeatedly on points he had previously answered.
[160] On the other hand, I formed an unfavourable impression of Berry as a witness of credibility and reliability on contentious issues about his conduct or which adversely affected the financial position of Mei and himself. Some of his evidence-in-chief was implausible, convoluted, or difficult to understand and often in cross-examination he did not give a clear answer when a clear answer was appropriate. Instead, he tended to divert, submerge or obscure points, often with difficult to follow detail. He appeared also to exercise a very selective memory and glossed over his mistakes and wrong doing. An example of this was his use of the euphemisms “administrative matter” and “administrative issue” in correcting his errors. I got the clear impression that important parts of his evidence were reactive fabrications to escape Hans’s claims and were contrived to support the counterclaim. An example of Berry’s convoluted and contrived evidence was his explanation for not acknowledging in prior statements and pleadings the substantial cash payments which he admitted in his evidence he had received from Hans in August 2001 and February 2002. I describe this in the “Payments” section.
[161] Berry’s credibility was also substantially diminished by proved instances of dishonesty by him in attempting to deceive Hans. These involved providing a false swimming pool invoice and providing two floor covering invoices which did not disclose that they were for carpet and marmoleum laid in Berry’s house. There was also an attempt by Berry to deceive Hans by “whiting out”, covering and removing information on original plumber’s invoices which therefore did not appear on the copies given to Hans. I do not make the dishonesty findings lightly but after careful evaluation of all the relevant evidence. I give the basis and my reasons for the dishonesty findings in the following section headed “Deceitful invoices”.
[162] The pertinent events and documents generally supported Hans’s version and discredited Berry’s version of the nature and terms of the lot 6 arrangements.
[163] I consider that it is most unlikely that even in the brother trust situation Hans would, as alleged in effect by Berry, have given him an open chequebook for design
and construction of the house. They certainly agreed on a price for the sale and purchase of the land and for construction of the driveway. In my view, it is consistent and likely that they also agreed on a price for the design and building of the house.
[164] If, as Berry deposed, the only agreement relating to the costs of the entire project that he and Hans ever had, was to sort it out after completion, I consider that Berry could, should, and would have kept a contemporaneous and detailed record of time spent by him, Mei, and other workers on the project and all payments made for materials, labour and services. Berry’s experience in the construction industry and his computer and management skills and experience would have enabled him to do this efficiently and accurately. Furthermore, he could and should have prepared and supplied accurate and detailed costs reports to Hans as the project proceeded. Within a short time of the house being substantially completed in August 2001, he should have given Hans an accurate and detailed final statement of all the costs involved. He did none of this. Rather, he made continual requests for payments, mostly without supporting detail, which culminated with his requiring in October 2001 a final payment of $138,505.70, of which Hans then paid $38,505.70 and reluctantly paid the balance of $100,000 in February 2002. It was only after Hans made an issue of the north boundary matter by filing this Court proceeding in October 2002 that Berry claimed that more money was owing and in January 2003 claimed a total project cost of $1,393,715 with a balance of $296,040 remaining to be paid. Berry increased the alleged total project cost to $1,435,803 in June 2005.
Deceitful invoices
Swimming pool
[165] In the invoices which Berry delivered to Mr Poulgrain in January 2003 was a hand-written invoice from Premier Pools Limited (Premier) dated 24 March 2001 which said:
Tapu Creek Farm re. Hans pool
Install swimming pool 9m x 5m
Includes all construction work
fibreglass tiles and cobblestone finishing
Paid in full Total $52,500.00
[166] In checking the invoices, Hans contacted Premier and found that this invoice was false. I will call it the “false pool invoice”.
[167] Ms J Lester of Premier gave evidence about how and why she wrote that invoice. She deposed that prior to 22 October 2000, she received a telephone call from Berry enquiring about a swimming pool for his “baby brother’s” property. After further telephone discussions, she sent a quote dated 22 October 2000 and contract form for the construction of a swimming pool on Hans’s property for a total contract price, including GST, of $32,650. After this, she had further telephone discussions with Berry about construction of a pool for him and in a further contract dated 7 November 2000, Premier agreed to build a pool on Berry’s property for a total contract price, including GST, of $27,500. Berry paid deposits for both pools. Premier started building both pools at the same time in mid-December 2000. Both pools were completed by the beginning of February 2001 and Premier sent Berry invoices for the final payment due for each pool. Berry then telephoned to say that he had the final cheque available. Following the usual practice of going to see clients once a pool had been finished, Ms Lester and her business partner, Mr Smith, went to see Berry and to pick up the final payment. Berry was not prepared to pay the final amount claimed and raised a number of issues. Ms Lester and Mr Smith could see that Berry was going to be difficult in resolving these. They did not want to get into arguments about who was right and who was wrong and they needed to receive final payment. Berry had a cheque and kept saying that it was available if they were to concede matters. Ms Lester and Mr Smith decided to accept the position and get out of it without any further problems. Berry said he had worked out that he only needed to pay Premier $4,582.66 and that was the amount on the cheque. They agreed in the end to accept that. Berry then said that he wanted one last thing. He left the room and came back with some details written out on a sheet of paper and asked Ms Lester and Mr Smith to enter those details into one of their invoices for him. He asked them to give an invoice to him with those details on it.
At that stage, he still held the cheque. He said he would give them the cheque if they would give him the invoice. Ms Lester wrote out an invoice as per the details on the sheet of paper. This was the false pool invoice. They gave it to Berry. He gave them the cheque. Ms Lester said that Berry’s comments to them about the false invoices were along the lines that his little brother could afford to pay for both pools.
[168] Berry’s cross-examination of Ms Lester on the false pool invoice included –
… you describe some scenario where you are presented with sheets of paper from another room and wrestled into copying what was on those pieces of paper onto your invoice is that correct … That’s correct.
Just about all it says is install swimming pool … that’s what you asked me to do.
But you used the words those details you had to write 3 times in 2 sentences, is that correct … Yes that’s correct.
And then you say how strange you thought it all was is that correct … Yeah, it didn’t – normally when we go to most peoples places its cut and dried, very straight forward. Events on that day were different to normal.
So in the end because you had already seen how difficult I was going to get, and because you thought you would not get your cheque otherwise and because you did not want to get involved in litigation you sort of buckled under pressure … We accepted what was going to happen on the day yes.
[169] Later cross-examination was:
Is it only later you developed misgivings … No not at all. Our policy with any pool is to have a good follow up with anybody and if someone asks for tiles or anything we always try and help.
I put it to you that your recollection of events is somewhat coloured by your misgivings … I don’t think so.
In hindsight wouldn’t you say that the overall atmosphere of somewhat suspect dealings that is created in your evidence is not correct at all … I don’t agree with that.
Isn’t it so that I simply asked you to put different amounts on the invoices and you did so … You did ask me to do different amounts.
I told you it was to hide cash payments … I don’t recall that.
[170] When it was put to Berry in cross-examination that he had never challenged Ms Lester’s evidence that he made comments along the lines that his little brother could afford to pay for both pools, Berry said:
… without putting too sharp a point on it, that remark if made at all would have been true too.
[171] I accept Ms Lester’s evidence that she was pressured into giving the false pool invoice by Berry in the way that she described and that Berry made comments along the lines that Hans could afford to pay for both pools.
[172] Berry gave two explanations for obtaining the false pool invoice. One, that it was to hide cash payments at Hans’s request. The other, that in addition to the payment to Premier there was an amount payable to him and Mei for Hans’s pool. I do not accept either explanation.
[173] First, as stated earlier at [56], after getting advice from consultants, Hans dropped the idea about getting some funds to Berry without anybody knowing about it, which he told Berry about in his 7 January 2000 email, and he made all lot 6 payments in a traceable way through the bank system. All five payments before March 2001 totalling $375,422.62 were made that way. Second, the total amount which Berry claims is payable to him and Mei for Hans’s pool is only $37,653, which is far less than the $52,500 of the false pool invoice.
[174] I infer that Berry extorted the false pool invoice so that he could use it later, if necessary, to justify charging much more than the agreed fixed price.
[175] In cross-examination, Berry said that the January 2003 statement and the
800 invoices were:
… not much more than a copying and adding up process and not done by very accurately and detailed analysis of each and every invoice …
[176] I do not accept this. In his letter of 10 December 2002, Mr Roscoe advised
Mr Poulgrain:
Meanwhile Berry will prepare a full accounting in respect of construction of your client’s house …
[177] Over a month later, Berry delivered the detailed and precise statement of increased claim and copies of about 800 supporting invoices to Mr Poulgrain. I will
call the statement “the January 2003 statement” and the copies of invoices “the
January 2003 invoices”. Berry’s cover letter said:
Please find attached the full accounting in respect of your clients property, and a statement, as was requested.
[178] The $52,500.00 of the false pool invoice and the $2,384.50 and $3,335.00 floor covering invoices which I deal with later, were included in the “House Construction And Landscaping” section of the January 2003 statement. It gave a precise, and not a rounded, total. It said:
Sub-contractors and materials as per attached invoices 792,253.19.
[179] Berry had changed some of the original plumber’s invoices by whiting out, covering and removing information on them and thus supplied false copies. I will describe this when dealing with the plumbing invoices.
[180] For amounts for which he did not provide copies of invoices, Berry wrote notes and attached bank records to verify payment.
[181] These factors evidence lengthy and careful consideration of invoices in compiling the January 2003 statement.
[182] For whatever reason, in February or March 2001, Berry extorted the false pool invoice from Premier. In January 2003, he deliberately used it to support his claim for further payment. I find that in so doing he acted dishonestly with intent to deceive Hans into believing that he had paid Premier $52,500 for Hans’s pool.
Floor coverings
[183] Included in the January 2003 invoices were two invoices issued by Baxters Carpet Court, a Thames floor covering business. Both were dated 7 June 2001. One was for $2,384.50 and the other $3,335.00. They were addressed to Berry and Mei. Neither contained any description of the subject of the invoice. Hans obtained from Baxters a copy of each of these invoices which contained a description of the subject of each invoice. These disclosed that the invoice for $2,384.50 was for supply and
laying of marmoleum and the invoice for $3,335.00 was for supply and laying of charcoal-coloured carpet. The description of the marmoleum had colour codes and when Hans checked these against the supplier’s brochure, he found that no marmoleum of these colours was in his house. Inquiry revealed that it had been laid in Berry’s office in Berry and Mei’s house. Also, that the charcoal-coloured carpet was not laid in Hans’s house but had been laid in Berry and Mei’s house. I find that the two Baxters invoices were for marmoleum and carpet laid in Berry and Mei’s house and that Berry dishonestly included them in the January 2003 invoices with intent to deceive Hans into believing that he had paid Baxters the $2,384.50 and
$3,335.00 for floor coverings in Hans’s house.
Plumbing
[184] In the January 2003 invoices were copies of 38 invoices from Brokenshire & Ross, Thames plumbers. Inspection of the original invoices revealed that information on 18 of them had been obscured, or ripped off, or covered by a white substance, such as Twink, so that it did not appear on the copies delivered to Mr Poulgrain.
[185] In cross-examination, Berry admitted that he did this and answered:
So between the time of receiving the request for your claim in November
2002 and providing the invoices in January 2003 you had covered entries which were on the invoices so that those invoices didn’t appear on copies that you provided to Miller Poulgrain?… We did and we are sorry for that.
That is what you meant by saying you concealed some information which was on the invoice?… I thought that the payment discount was none of Hans business.
Well, without him knowing what you had done he wouldn’t be able to check one way or the other whether it was his business would he?… At that stage of course the dispute had been going for some serious time. As I said these were very small amounts and as I also said in the final settlement with Brokenshire & Ross they had been accounted for in any event and for some reason at that time in December 2002 I decided that I did not consider that to be of Hans business and I concealed it.
I find that by sending copies of the plumber’s invoices which did not show all the information on the originals, Berry acted dishonestly with intent to deceive Hans into
believing that he had paid the plumber the amounts stated on the copies of the invoices.
North boundary
[186] Hans’s pleading for his north boundary adjustment claim is summarised earlier at [13].
[187] Berry and Mei pleaded in response that there was agreement at some point that 327m2 of lot 7 would be transferred to lot 6 for the parking area and that Hans would pay for the costs of surveying the encroachment, the parking area, and application for resource consent to change the boundary to include that area. They denied that there was a contract in respect of the encroachment of the parking area and no written contract existed or had existed. They pleaded that in 2000 they formed an intention to gift to Hans an area of land from lot 7 being in excess of
327m2 required for the parking area and up to 1670m2 and had carried out certain
steps for the purpose of implementing such gift but no deed of such intended gift was entered into and at a latter date they changed their minds and decided not to make such a gift to Hans. They pleaded that they remained willing, able and prepared to transfer such area of land, namely 327m2 for the parking area from lot 7 to lot 6 on such terms, including price, as the Court may consider appropriate and just. In respect of the alternative second cause of action, Berry and Mei pleaded that the
costs of repositioning the septic tank inside lot 6 are $1,500 and that they remain willing, able and prepared to transfer 327m2 for the parking area and 10m2 for the septic tank, from lot 7 to lot 6 on such terms, including price, as the Court may consider appropriate and just.
[188] In the “pertinent facts” section I have stated some of the events relating to the north boundary issue. I now describe the events in detail and make further findings of fact on the issue.
Mr Zondag has confirmed that he has employed Bert Kroon, a local geotechnical engineer, to advise on remedial work to reinstate the support to the structures. I would expect some form of wall to be erected to provide this confinement as well as maintain support to the buried drainage lines. It may be prudent to also review the general drainage system as it is possible that some of the saturation of the filling was as a result of the use of perforated (novaflo) pipes or initial leakage at the displaced sump passing stormwater into the loosely placed filling. Mr Zondag advises that Mr Kroon will undertake further site investigation work as soon as the weather improves and access is available for excavation equipment to remove some or all of the slumped soil.
I would be pleased to review recommendations made by Mr Kroon if it is intended that his report is to support a claim on the Commission by Mr Zondag.
I have taken photographs of the slumped area and these can be made available to clarify my observations made above if required.
[608] Because of the information in the Shrimpton & Lipinski letter, Hans considered that it was necessary to construct a retaining wall. He said that apart
from needing to carry out this work because of endangerment reasons, the work was carried out on the land which he knew would be included in the boundary change that Berry had agreed to do.
[609] Hans instructed Mr Bosselmann, a consulting engineer who designed and supervised the construction of retaining walls. Hans sought to produce the invoices for this work. Berry objected on hearsay ground. I accepted the invoices as proof that such accounts were received for the work but not as proof of responsibility for the cause of the work. The accounts totalled $70,249.15. Hans paid these accounts and received partial reimbursement of $38,407 from the Earthquake Commission.
[610] The length of the encroachment of the three retaining walls on lot 7 was about 15 m in total.
[611] Berry deposed:
Apparently, the “weather bomb” event caused some slippage on the steeper side of Hans’ garden to the West of his house. I was informed in an indirect way that Hans was contemplating earthworks, and intended to build some retaining structure. Hans never sought to communicate with us about this issue at all. …
When becoming aware of Hans’ intentions to undertake works requiring access over our property, I sought to be informed, by asking Hans directly, and through his solicitor. No reply was forthcoming, but Hans continued with the work.
[612] Berry described how the retaining wall work involved 3 ton and 6 ton excavators working on lot 7 and making substantial excavations. He then said:
I have never given Hans permission, express or implied, to go over my property to access his works, or to construct retaining walls on my property. In fact, once the earthworks started, I advised Hans that he should stop the works immediately and confer with me. Hans disregarded that written advice and continued to construct these retaining walls on my property, which I estimate to have been ready by November 2002. …
[613] Berry did not identify in the “bundle of documents”, or produce, a copy of the written advice that he referred to in this evidence.
[614] I prefer and accept Hans’s evidence that Berry noticed and discussed the major slip the morning after it occurred and said that if Hans wanted to do some remedial work then he had to meet Berry’s settlement conditions.
[615] Hans’s acts of intentionally entering onto part of lot 7 without consent and causing the retaining walls to be built on it it constituted trespass to that land.
[616] I find that Hans did not act with contumelious disregard of Berry and Mei’s rights, as alleged by them. Furthermore, I find that Hans’s conduct in causing the retaining walls to be erected on part of lot 7 was not outrageous. At the time, Hans believed on reasonable grounds arising from Berry’s prior statements and acts, that he had a legal interest in the part of lot 7 land involved and that full legal ownership of it would soon be transferred to him. Hans acted solely to preserve his lot 6 property. He did this at considerable net expense to himself. From the information he received, Hans believed that the slipping was Berry’s fault. The retaining walls improved the stability of the lot 7 land and thereby increased, rather than diminished, its market value.
[617] Removal of the retaining walls from lot 7 and repeat restoration of the land and vegetation after this was done, would not only involve further considerable expense but could return instability to the land and thereby diminish its market value. It would also set back the regrowth of the vegetation by five years.
[618] In the circumstances, I consider that the appropriate remedy is not exemplary damages and/or removal and restoration orders, but only nominal damages, which I fix at $1.00. I order that Hans pay nominal damages of $1.00 to Berry and Mei.
Easement repairs
[619] Berry and Mei’s pleading for their “easement repairs” counterclaim third cause of action is summarised earlier at [26]-[27].
[620] In his statement of defence, Hans admits the easement and some storm damage. He also admits that reinstallation of the water supply was required as a
repair. He asserts that the claim relates to a maintenance plan proposed by Berry and Mei which has not been accepted by him and other lot owners and that he is not liable to pay the sum claimed.
[621] Berry deposed that Hans’s lot 6 is accessible from the public road by means of an easement over his lot 7. That easement contains a metal roadway which included a concrete bridge/ford crossing the Tapu river. The easement further contained infrastructure for water supply, power, and telephone. There is also an easement containing a swing bridge over the Tapu river, which provides access when the river floods and makes the ford inaccessible. Berry said that the water supply easement also extended on to his lot 10, where an inlet weir is constructed and a large holding tank installed, from which water is fed into a pipeline system connecting to all the lots on the subdivision.
[622] On 20 June 2002, a storm defined as a “weather bomb” brought high winds and torrential rain to most parts of the upper North Island, including the Coromandel Peninsula. A state of civil defence emergency was declared in the Thames/Coromandel district. Smaller rivers, including the Tapu river, flooded and there was erosion and slipping with disruption to water supply and power services. Berry said that the seven lots on the northern side of the river owned by Berry and Mei, Hans and Bill could not be reached with vehicles, the swing bridge could be used but was unsafe, the water supply to all lots was disrupted and that he, assisted by Mei and their two children, made repairs.
[623] On 30 August 2002, Berry and Mei sent a six page “Maintenance of infrastructure at Tapu Creek Farms” memorandum to other lot owners with a covering letter which said:
The damage done by the recent flooding events, and the upcoming maintenance on some of the Row’s has urged us to start thinking about the way the costs of repair and maintenance will have to be distributed amongst the (growing) number of occupants of Tapu Creek Farms.
In order to explain the issues involved, we have prepared the enclosed report for your perusal.
We would like to receive your comments (if any), before we start applying the methodology contained within this report.
If you have any comments please contact us within the next week, we intend to invoice the distributed cost for the period from 1 Jan 2002 (mainly the storm event repairs) in about 2 weeks.
[624] Berry and Mei did not receive any comments and on 7 September 2002 sent
… the first version of the report on maintenance of infrastructure on Tapu
Creek Farms.
saying that they would issue the first invoices for maintenance and repairs during that week.
[625] On 12 September 2002, Hans wrote to Berry saying:
Thank you for your letter dated 30 August 2002 and enclosed draft report about maintenance costs.
However, the subject you bring up is not our top priority as there are many other matters that ask for our immediate attention.
I will comment on mentioned report soon.
Please be advised that we are not obliged to make any payment of costs of any activity you feel is necessary to perform, without our prior approval.
[626] On 24 September 2002, Berry and Mei wrote to all the other lot owners saying:
Further to our two versions of the memo on infrastructure, we now issue the first invoice on maintenance.
It concerns the repairs and maintenance on the water supply system, which we have invoiced from the “weather bomb” events to date. Please find enclosed a specification of costs and distribution schedule.
The cost distribution for repairs on bridges and driveways cannot yet be apportioned because the repairs have not been concluded.
Since we have not received any comments on the content of our memo, we reiterate our position regarding the water supply system. Although there are easements for transfer of water, we do not have the obligation to supply water or install and maintain a system. Our position therefore will be simple: property owners will have to declare to accept the proposed cost distribution by paying the enclosed invoice before 15th October, or will be disconnected.
[627] The attached invoice was for $787.90. I will describe it and the four other pertinent invoices later.
[628] On 3 October 2002, Mrs Roberts, Double Sun, Bill and Hans, sent a jointly signed letter to Berry and Mei, saying:
As promised in our different letters we respond to your letters dated 30
August 2002 and 7 September 2002 and to your invoices dated 24
September 2002.
This response is a joint response of the owners of the Lots 2, 3, 5 and 6 of the Tapu Creek Farms Subdivision.
You have sent us a report on maintenance of infrastructures, first in draft and one week later in a first version although none of us had commented on your draft yet.
We discussed your proposal and as we all wanted to give you a similar response we decided to make things easier for you by responding jointly.
As the law gives a good set of guidelines for maintenance on right of ways and jointly owned infrastructure we feel there is no need for an additional set of rules as you propose.
Perusal of your proposal learned that the sole purpose of this report seems to be to give Tapu Creek Farm more rights than the other owners on all sorts of items, and to decrease the fair share of the costs that has to be paid by Tapu Creek Farm as owner of 6 lots of the subdivision. We therefore reject your proposal. Future maintenance can be agreed upon when it occurs. There will not be a preferred contractor for maintenance. Every work has to be judged separately and we prefer certified independent contractors.
As a number of statements in your report are not completely true we like to add the following comments.
Introduction
You, the original subdivider, to meet the conditions of the resource consent for the subdivision, have mainly installed the infrastructure. We bought our lots inclusive of the infrastructure that was installed to meet the requirements of the resource consent. Ownership of the infrastructure is therefore joint.
[629] After making detailed comments on the water supply system, electricity, roads, bridges and initiative to repair or upgrade, the joint letter concluded:
Finally we want to respond to the invoices you send each of us on
24 September. As we stated before, we can only be held accountable for
repairs done with our consent. For the last four years Tapu Creek Farm has done maintenance on the water system under the warranty of the houses they sold. Normal practise is that costumers [sic] are informed when the warranty ends, before work is carried out that will be invoiced. As you did not do so we feel we cannot be invoiced, as we were not informed that Tapu Creek Farm had changed his warranty conditions.
We are willing however to address these repairs as maintenance on our water system. As there has been no contracting or subcontracting these costs as mentioned in your invoice are unrealistic. Only the cost for the used materials can be invoiced (and certainly no mark ups). Although we cannot establish if all the materials you mention in your invoice are used on our water system and not on one of your other systems, we will assume that all these costs are genuine.
In future cases (if Tapu Creek Farm is granted the contract for the work to be undertaken although you are not a certified contractor) we will also need to inspect the work and receive a copy of the invoices of the suppliers of the materials.
According to your invoice the total cost of the repairs is $311.73 (excl. GST).
These costs have to be divided by the users, the lots 1, 2, 3, 5 and 6, which results in a contribution per property of $70.14 incl. GST.
We await your corrected invoices.
[630] In a letter dated 4 October 2002, Mr Poulgrain wrote, on instructions from
Hans, Maria, Bill, Mrs Roberts and Double Sun, to Berry and Mei in a similar vein:
….
Of the utmost concern, however, is your threat to disconnect the water supply if your costs are not paid by 15 October 2002. As explained earlier in this letter, you have granted to our clients the right to convey water across your land in a free and unimpeded flow. Nothing gives you the right to disconnect that flow.
….
We trust therefore that a more reasonable and consultative approach can be expected from you in this matter without you feeling the need to take the law into your own hands.
[631] On 4 October 2002, Mr Poulgrain wrote to Mr Roscoe responding to a letter from Mr Roscoe dated 16 September 2002 (a copy of which was not produced), dealing with a number of matters in dispute and stating:
….
6.We believe that our client has responded to your client’s memorandum on maintenance of the subdivision infrastructure which, the writer recalls, would give sole right and responsibility for initiating and effecting repairs and maintenance to your client. This of course fails to recognise the statutory rights of the other occupiers to effect their own repairs and maintenance and if your client’s terms were accepted (which they are not), they would give your client a
monopoly on the maintenance work and enable him to continue to attempt to extract money from the others for labour and material without any prior agreement or consultation as to applicable rates or estimated costs, and without providing any means by which the others can verify the charges.
….
So long as your client’s proposals in relation to the boundary adjustment are linked to and conditional upon our client’s acceptance of the seven other unrelated requirements of your client (listed in your letter numbers 6 to 12 inclusive), no settlement will be possible.
[632] Hans deposed that Berry never sent a corrected invoice, as requested in the joint owners’ letter of 3 October 2002, and when he and Bill later carried out an inspection, they established that the materials charged in Berry’s first invoice of
24 September 2002 had not been used during the repairs mentioned.
[633] On 9 October 2002, Mr Roscoe wrote to Mr Poulgrain saying:
….
Now all the parties have stated their respective positions is it your client’s preference they proceed to mediation or the District Court on the (ever increasing number) of issues.
….
P.S. Enclosed letter regarding Easements:
….
[634] The enclosed letter was a copy of a letter dated 7 October 2002 from
Mr Roscoe to Berry and Mei. It said:
RE: EASEMENTS
Further to our discussion enclosed are copies of:
1. Deposited Plan; Easements Certificate;
Property Law Act and Land Transfer Act schedules specifying easement rights and responsibilities.
The Resource Management Act 1991 is also relevant to Easements.
The Plan and Titles all confirm that you are the owner of the land in which other Titles have easements and therefore it follows that you own the water
pipes and roading formation. This ownership is subject to the easement rights and maintenance responsibilities of other owners.
The Agreement of all owners of all Lots having the benefit and responsibilities of the easements is necessary prior to undertaking maintenance. Failing agreement the District Council or District Court may compel dissenting owners. Since you still own the majority of the lots and formed the rights of way/installed the water system we would expect the District Council/District Court to support any reasonable maintenance proposal given by you to the other owners.
….
[635] Hans deposed that the combined owners asked Mr Poulgrain to send the letter of 4 October 2002 to Berry because of his threat to disconnect the water. Hans deposed that despite this letter, Berry cut off the water supply to lots 2 and 3 on or about 21 March 2003 and when Hans turned on the tap to restore the water supply, there followed the assault described earlier at [127].
[636] Hans testified that he did not disagree with the fact that a fair share of maintenance costs should be paid but disagreed with Berry’s invoices requiring payment of a total of $522.16 by him, on the grounds that he never agreed on the maintenance invoiced as being necessary or on the way it was done, that materials invoiced were not used, Berry and Mei did not complete the construction of the bridge/ford as designed, and he and others did repairs to the water system themselves on various occasions and never charged.
[637] In cross-examination, Berry agreed that there was no agreement between him and Hans about the repairs to the culvert and other related matters.
[638] Berry and Mei’s claims against Hans for easement repairs relate to five invoices. The first invoice, sent initially on 24 September 2002, was for “Repair/Maintenance Watersupply System”. It claimed for “Repairs after 20 June weatherbomb” materials of $311.73, subcontracting of $190.00 and Berry labour of
8 hours and 10% mark-up on materials of $271.17. The subcontracting included
3 hours by Bill, 7 hours by Mei and 2 hours by each of Berry and Mei’s children. The first invoice also included $15.00 for half an hour by Berry “Inspection
28 August, clean inlet filter”. It totalled $787.90. When the first invoice was initially sent to Hans on 24 September 2002 it required a contribution of $131.32
plus GST from him. When it was sent to Hans again on 15 January 2003, a contribution of $87.54 plus GST was sought from him.
[639] The second invoice was sent on 15 January 2003. It was for “Repair/Maintenance Swingbridge”. It claimed for “Repairs after 20 June weatherbomb”, materials of $207.80, 10% mark-up on materials and 2 hours “Berry Zondag excavator” and 6 hours “Berry Zondag labour”. It totalled $578.58. The contribution sought from Hans was $192.86 plus GST.
[640] The third invoice was sent on 15 January 2003. It was for
“Repair/Maintenance Concrete Bridge” and said the period covered was to
15 January 2003. For “Repairs after 20 June weatherbomb”, it charged $850.00 for
10 hours “Berry Zondag excavator”, and for “Repairs after 11 January flood”, it charged $595.00 for 7 hours “Berry Zondag excavator”. The contribution sought from Hans was $144.50 plus GST.
[641] The fourth invoice was sent on 1 March 2003. It was for
“Repair/Maintenance Concrete Bridge/Water Supply”, and said it was for the period
13 January 2003 to 1 March 2003. For “Repairs after 27/28 February storm”, it charged $170.000 for Bridge (2 hours “Berry Zondag excavator”), and for Water Supply $9.00 as 0.3 hour Berry Zondag. The contribution sought from Hans was
$20.25 (including GST).
[642] The fifth invoice was sent on 21 April 2003. It was for “Repair/Maintenance Concrete Bridge”, and said it covered the period 1 March 2003 to 21 April 2003. For “Repairs after storm 28/3 and 20/4”, it charged $212.50 for Berry Zondag excavator of 0.5 hours on 31/3 and 2 hours on 21/4. The contribution sought from Hans was $23.90 (including GST).
[643] The contributions claimed by Berry and Mei from Hans for the five invoices total the $522.16 claimed by Berry and Mei in their counterclaim third cause of action.
[644] A copy of the pertinent easements was not produced.
[645] The easement certificate sent by Mr Roscoe to Berry and Mei with his letter of 9 October 2002 specified 10 right of way, water, electricity and telephone easements. The only reference to rights and powers was:
As set out in the Seventh Schedule to the Land Transfer Act 1952 and the
Ninth Schedule to the Property Land Act 1952.
The rights and powers for the Electricity and Telephone easements shall be the same as set out in the Seventh Schedule of the Land Transfer Act 1952 as if:
i) all references therein to water are deemed to be references to
Electricity and
ii) all references therein to a line of pipes are deemed to be references to Electricity cables, transformers and switchgear.
[646] Prior to its repeal in 2002, the Seventh Schedule of the Land Transfer Act
1952 stated implied rights and powers of use by grantees of certain easements. Those rights included right of way, right to convey water, right to drain water, and right to drain sewage and water. The schedule did not provide for undertaking or contributing to the cost of undertaking any easement repair or maintenance.
[647] The Ninth Schedule of the Property Law Act 1952 states rights implied only in easements of vehicular right of way. That Schedule grants to the occupiers of the land for the benefit of which, and the land over which the easement is granted, the right to a reasonable contribution towards the cost of establishment, maintenance, upkeep and repair of the driveway to an appropriate standard.
[648] Section 126C of the Property Law Act 1952 provides that in the absence of agreement to the contrary, an occupier is not liable to contribute to the cost of undertaking any work required in terms of any positive covenant or of any easement of vehicular right of way unless specified notice is given before the work is done.
[649] Berry submitted that the ordinary notice procedure under s 126C could not be applied as a result of the emergency character of the repairs. The Property Law Act does not recognise such an exception to its notice requirements. The only exception to the notice requirements of s 126C is agreement to the contrary in a positive covenant in an easement.
[650] The claim for $522.16 relates not only to alleged repair to the vehicular driveway after the 20 June 2002 “weather bomb” but also repair to it on other occasions. It also includes alleged repair to the swingbridge and water services. I have considerable reservations about the reasonableness of the amounts charged. However, it is not necessary to decide these aspects as Berry and Mei have not proved a positive covenant in any easement which makes Hans liable to pay any of the $522.16 claimed. They have neither proved agreement to pay by him nor service of notice on him as required by the Property Law Act 1952. Their counterclaim for
$522.16 for easement repairs therefore fails.
Results
[651] Plaintiff’s first cause of action (North boundary transfer of 1676m2 ). Unsuccessful. Judgment for the defendants.
[652] Plaintiff’s second cause of action (North boundary alternative to first cause of action, transfer of 327m2). Successful. Judgment for the plaintiff. The defendants are ordered to transfer from lot 7 to lot 6, 327m2 for the parking area and 10m2 for for the septic tank. The plaintiff is to pay the reasonable expenses incurred with third parties for such transfer, after allowance for payments he has already made in
relation to the north boundary adjustment. The plaintiff not pay any price for the land. The defendants are to forthwith take and promptly pursue and pay for all the necessary steps to achieve the transfer of the 337m2. Reimbursement by the plaintiff of the balance of third party reasonable expenses and resolution of any dispute about the net amount of reimbursement is to take place after registration of the transfer.
[653] Plaintiff’s third cause of action (South boundary). Successful. Judgment for the plaintiff. The defendants are ordered to forthwith take and promptly pursue all the necessary steps to include the area at the southern part of the lot 6 driveway that encroaches onto lot 7 into the existing easement over lot 7 for the benefit of lot 6. The cost of such variation is to be met by the defendants. The plaintiff is ordered to withdraw the caveat which he lodged against lot 7 forthwith after registration of the
transfer of the 337m2 as ordered and registration of the variation of the easement as
ordered have both been completed.
[654] Plaintiff’s fourth cause of action (Lot 6 project repayment). Successful. The defendants are ordered to pay $46,151.62 to the plaintiff.
[655] Plaintiff’s fifth cause of action (Lot 6 project repayment alternative to fourth cause of action). Decision unnecessary.
[656] Plaintiff’s sixth cause of action (Faulty work). Successful in part. Judgment for the plaintiff on this part. It is ordered that within 21 days of the delivery of this judgment, the plaintiff advise Thames Stainless that he wants it to do the remedial work as provided in the settlement agreement. That if within 21 days of receiving that advice from the plaintiff, Thames Stainless does the remedial work to the full satisfaction of the plaintiff, the plaintiff is to sign the settlement declaration within
21 days of the completion of that work and is to courier the original of that declaration to Thames Stainless at the office of its solicitors, Swarbrick Dixon, and to post a copy of that declaration to the defendants at their address for service, namely 6 Tapu Creek Farms, RD5, Thames. When the signed declaration is received by Swarbrick Dixon, they can pay the $4,400 to Thames Stainless. If the original signed declaration is not received by Swarbrick Dixon, as stated, then, in terms of the settlement agreement, it will be of no further effect and Swarbrick Dixon is to refund the $4,400 to the male defendant. If the settlement is not completed on the basis of the agreement, then the defendants are to pay $4,400 to the plaintiff as damages for the faulty stainless steel work. Judgment for the defendants on the parts of the sixth cause of action on which the plaintiff was unsuccessful.
[657] Plaintiff’s seventh cause of action (Interest on capital). Unsuccessful. Judgment for the defendants.
[658] Defendants’ counterclaim first cause of action (Lot 6 project further payment). Unsuccessful. Judgment for the plaintiff. Application for an award on a quantum meruit basis. Unsuccessful. Judgment for the plaintiff.
[659] Defendants’ counterclaim second cause of action (Retaining walls). Partly successful. Judgment for the defendants. The plaintiff is ordered to pay nominal damages of $1.00 to the defendants.
[660] Defendants’ counterclaim third cause of action (Easement repairs). Unsuccessful. Judgment for the plaintiff.
Costs and interest
[661] Mr O’Neill and Berry requested that consideration and decision on costs and interest be deferred until judgment was delivered and they each then had the opportunity to file written submissions on costs and interest. This is appropriate.
[662] Judgment on costs and interest is deferred until written submissions on them have been filed and considered.
[663] I order that the plaintiff is to file and serve a memorandum on costs and interest within 21 days of delivery of this judgment. The defendants are to file and serve a memorandum on costs and interest within 21 days of receiving the plaintiff’s memorandum. The plaintiff may file and serve a further memorandum responding to
the defendants’ memorandum within 14 days of receiving it.
C M Nicholson J
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