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Concrete Structures (NZ) Limited v Dezign Works HB Limited HC NAP CIV 2009-441-115 [2009] NZHC 2335 (22 October 2009)

Last Updated: 13 January 2010

IN THE HIGH COURT OF NEW ZEALAND

NAPIER REGISTRY

_{CIV-2009-441-115}

BETWEEN CONCRETE STRUCTURES (NZ)

LIMITED Plaintiff

AND DEZIGN WORKS HB LIMITED Defendant

Hearing: 16 October 2009

Appearances: K. Badcock - Counsel for Plaintiff

A.J.L. Wedekind - Counsel for Defendant

Judgment: 22 October 2009 at 3.30 pm

_{JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL}

This judgment was delivered by Associate Judge Gendall on 22 October 2009 at

3.30 pm pursuant to r 11.5 of the High Court Rules.

Solicitors: Lance Lawson, Solicitors, PO Box 2279, Rotorua 3040

Morgan Coakle, Solicitors, PO Box 114, Auckland

CONCRETE STRUCTURES (NZ) LIMITED V DEZIGN WORKS HB LIMITED HC NAP CIV-2009-441-115

22 October 2009

Introduction

[1] In this application the plaintiff, Concrete Structures (NZ) Limited (“CSL”) seeks summary judgment against the defendant, Dezign Works HB Limited (“DWL”) for some $207,214.71 interest and costs.

[2] The application is opposed by DWL.

Background Facts

[3] On 22 November 2007 CSL entered into a contract with Carter Holt Harvey Limited (“CHH”), to design and install six new log conditioning chambers (“the chambers”) at CHH’s Kinleith Mill. Around 27 November 2007 CSL entered into a sub-contract with DWL as a provider of engineering design services pursuant to which DWL would carry out the structural design and provide construction drawings

for the chambers. From December 2007 to April 2008 DWL carried out the design work and issued construction drawings on about 7 April 2008.

[4] Between 7 and 22 April 2008 CSL constructed three of the chambers, it says in accordance with DWL’s design. Defects in the chambers later became apparent, in particular, the roof panels had deflected downwards. This had occurred by July

2008. CSL says that it advised DWL about the defects and advised DWL to inform their insurer. CSL claims that the defects are a result of design faults.

[5] On or about 17 July 2008 DWL issued to CSL sketches of remedial work required to correct the problems. Later in July 2008 CSL constructed the next three chambers, incorporating the remedial work, and in September 2008 CSL carried out the remedial work that needed to be done to the first three chambers.

[6] CSL alleges that around the end of July 2008 it discussed these remedial matters with DWL, which advised CSL first that its insurer had instructed DWL to have the repairs carried out, secondly that the insurer had accepted the claim to carry out the remedial work, and thirdly that CSL should invoice DWL’s insurer directly

for the remedial work whereupon CSL would be paid directly by the insurer. CSL alleges that DWL again advised in September 2008 that CSL should send its claim to DWL’s insurer and that all CSL’s costs would be covered by the insurer. In

response, DWL denies that it ever gave assurance that its insurer had accepted the claim.

[7] In its present claim, CSL pleads three causes of actions: breach of contract, breach of the Fair Trading Act 1986, and equitable estoppel. Before me, however, counsel for CSL sought only to pursue the estoppel claim, apparently accepting that the other two causes of action were not appropriate for determination in summary judgment.

Summary Judgment Principles

[8] Rule 12.2(1) of the High Court Rules deals with summary judgment applications and provides that the court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action.

[9] The applicable principles for summary judgment applications are well traversed and summarised in Krukziener v Hanover Finance Ltd [2008] NZCA 187:

“[26] The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1; (1986) 1 PRNZ 183 (CA), at p 3; p 185. The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where

its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan

[1980] AC 331; [1979] 3 WLR 373 (PC), at p 341; p 381. In the end the Court's assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).”

Estoppel

[10] In order to make out a cause of action in estoppel, a plaintiff must show that a belief or expectation was created by a representation made by the defendant; and that the plaintiff relied on that belief or expectation to their detriment, in circumstances where it would be unconscionable for the defendant to depart from the belief or expectation which s/he had created: Gold Star Insurance Co Ltd v Gaunt

[1998] 3 NZLR 80, 86 (CA); Gillies v Keogh [1989] 2 NZLR 327, 346 (CA).

[11] Counsel for CSL argues that, in instructing CSL to carry out the remedial work, DWL gave the following assurances to CSL:

(a) That DWL had contacted their insurer and advised of CSL’s claim; (b) That the insurer had accepted CSL’s claim;

(c) That CSL should carry out the remedial work in accordance with DWL’s remedial design;

(d) That the insurer accepted it would pay CSL the costs of the remedial work.

[12] Counsel further argues that CSL relied on the above representations in carrying out the remedial work, to CSL’s detriment. CSL states that it incurred $133,564.33

to carry out remedial works, a further $34,275.38 for the cost of CHH remedial works, and that it lost its right to an early completion bonus of $39,375.00 because

of the need to carry out the remedial works, hence the present summary judgment claim for an amount totalling $207,214.71.

[13] DWL does not deny representing that the proposed remedial works would fix the sagging roofs of the chambers, nor does it deny that it advised CSL that it had notified its insurer. DWL, however, strongly repudiates the other representations alleged. In particular, DWL denies that it ever advised CSL that its insurers had accepted liability for the cost of carrying out the remedial works.

[14] While this would suggest that facts essential to CSL’s cause of action are in dispute, CSL submits that on the basis of the evidence it has put before the Court, the Court can be satisfied that the disputes raised by DWL are spurious and should not prevent an award of summary judgment here.

[15] On these aspects, the first 13 February 2009 affidavit of Mr Michael John Romanes (“Mr Romanes”) director of CSL, refers to discussions between himself and Mr Russell Grant Nettlingham (“Mr Nettlingham”) a director of DWL, in which Mr Romanes states (at para 21) that Mr Nettlingham advised him that “our instructions from the insurer were to implement the repairs and put a claim into them”. Mr Romanes has exhibited at “MR11” a handwritten file note made by himself of this meeting. In response, Mr Nettlingham in his 17 April 2009 affidavit

at paras 26 to 29 denies making this statement, and says he notified Mr Romanes only that a claim had been notified and that the matter was in the insurer’s hands.

[16] Mr Romanes further claims that at the meeting on 30 July 2008, Mr Nettlingham advised that his insurers accepted the claim and would meet the costs of the remedial works. This is denied by both Mr Nettlingham and Mr Duncan Robert Bruce (“Mr Bruce”), an engineer employed by DWL who was present at the meeting. Mr Romanes exhibits another handwritten file note of this meeting, and also exhibits a facsmile which he says was sent to DWL on 21 August 2008, requesting confirmation that “your insurers have accepted your claim and will meet

all costs of the remedial work”. Mr Nettlingham and Mr Bruce deny having seen this facsmile, and in any event, DWL did not reply. Counsel for DWL submits that Mr Romanes’ file notes are self-serving and are firmly contradicted by DWL’s witnesses.

[17] In my view, there is clearly a substantial factual dispute here between the parties. As I see it, this can only be determined by a thorough testing of the competing evidence at trial. The presentation by Mr Romanes of the facsmile and the file notes is not enough to make this a case where “the credibility of one party is shown to be so suspect that his evidence can be rejected without need to assess him

as a witness or to listen to any further explanation he may wish to make”, as asserted

by counsel for CSL.

[18] I am also concerned at what I see as real credibility issues which arise here. As

I have noted both Mr Nettlingham and Mr Bruce confirm in their affidavits that DWL’s insurers were awaiting a formal claim regarding this matter but had not agreed to meet the claim and the remedial costs. At this early stage of the proceeding it is simply not appropriate to dismiss this evidence of both Mr Nettlingham and Mr Bruce on credibility grounds, given particularly that at the appropriate time they would no doubt have been receiving advice from their insurer and lawyers and would be highly unlikely to advise that the insurer had agreed to meet CFL’s claim if the insurer had not agreed to that course.

[19] Even if there were no conflict of evidence as to whether the alleged representations in question were actually made, in my view, there is a reasonable

argument here that CSL has not shown that it relied on those representations to its detriment. Counsel for DWL argues that CSL was presumably bound by its contract with CHH to deliver appropriate log chambers. Once the problem with the chambers became apparent, CSL had no choice but to remedy this or no doubt it would have been in breach of its contract with CHH. As such, counsel argues that in carrying out the remedial work, CSL could not say that it was relying on the representations, but rather that it was acting as required by its contract with CHH.

[20] In response, counsel for CSL endeavoured to argue that, while it was obliged

to remedy the defects in the chambers pursuant to its contract with CHH, it was not obliged to do so in the particular manner that it did, which incurred over $200,000.00

in repair costs. Counsel states that CSL went with this remedial option in reliance on DWL’s representations that their insurer would meet these costs. It follows therefore that this reliance was detrimental, because without it, DWL maintains it would have resolved the defects in another, presumably less costly, way. This is another matter

of disputed fact. It needs to be acknowledged that there is no conclusive evidence before the Court that CSL only took the option that it did because of the alleged representations, or that other, less costly options were available to CSL in the event that there was no insurance coverage.

[21] I take the view here that there is a clear and genuine conflict of evidence between the affidavits provided on behalf of each party to this proceeding and it follows that there are real questions to be tried in this case. As I see it the plaintiff has been unable to satisfy the Court that the defendant has no fairly arguable defence here. Although this effectively disposes of the present summary judgment application I will turn now to briefly consider the other causes of action raised in the plaintiff’s statement of claim.

Other Causes of Action

[22] As I have noted, the causes of actions in breach of contract and for breach of the Fair Trading Act 1986 were not pursued before me. For completeness, however, I will mention them briefly.

[23] In its claim, CSL argues that DWL was in breach of s 13(b) of the Fair Trading

Act 1986. This states that no person in trade in connection with the supply of

services shall make a false or misleading representation that the services are of a particular standard, kind, or quality. In order to obtain an order under s 43 of the Act, CSL must establish reliance on the representation and show that the reliance caused the loss. In my view, it has failed to do this here in the same way that it has failed to show these elements in the estoppel ground.

[24] It appears that CSL’s claim here is really one involving allegations of negligence or breach of contract against a professional firm. Even if it is assumed that DWL’s design contained errors which were the cause of the chamber defects, that alone would not necessarily show that DWL has been negligent. In order to determine a claim such as this, the Court ultimately may well decide that it must compare DWL’s conduct in creating the design to what can be expected of a reasonably well informed and competent professional engineer: Saif Ali v Sydney Mitchell & Co [1978] 3 All ER 1033, 1043. That is an enquiry which can only be addressed at trial, with expert evidence and the opportunity for cross-examination.

Result

[25] For the reasons outlined above, CSL’s application for summary judgment is dismissed.

[26] Costs are reserved.

‘Associate Judge D.I. Gendall’