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Whangapoua Properties Ltd and ors v Whitianga Excavators Ltd [2006] NZCA 195 (1 August 2006)

Last Updated: 15 August 2006

IN THE COURT OF APPEAL OF NEW ZEALAND

CA136/05

BETWEEN WHANGAPOUA PROPERTIES LTD & ORS
Appellants

AND WHITIANGA EXCAVATORS LTD
Respondent

Hearing: 29 June 2006

Court: Robertson, Gendall and Harrison JJ

Counsel: M C Black and D A Wood for Appellants
D K Wilson for Respondent

Judgment: 1 August 2006

JUDGMENT OF THE COURT

A The appeal is allowed.

B The proceeding is remitted to the High Court for retrial.

C There is no order for costs.

____________________________________________________________________

REASONS OF THE COURT

(Given by Harrison J)

Introduction

[1] The six appellants appeal against a decision delivered in the High Court at Auckland by Frater J on 13 June 2005 entering judgment in favour of Whitianga Excavators Ltd (Whitianga) against them, jointly and severally, for the sum of $341,677 together with costs. Whitianga’s claim was effectively for breach of contract, to recover the balance of its costs owing for roading works carried out between December 1999 and August 2002 on a coastal subdivision owned at various times by some of the appellants. Its case required a determination of what contractual relationship existed in this period and, particularly, who were the contracting parties.
[2] The appeals do not raise contested issues of fact but are directed towards the legal relationships of each appellant with Whitianga and with Mr Clive Currie who purported to act as agent for them, individually and collectively, in dealings with Whitianga.
[3] We shall summarise the nature of Whitianga’s claim before considering the High Court judgment and the merits of the appeals.

Statement of Claim

[4] Whitianga’s statement of claim alleges that:

(a) In December 1998 the first appellant, Whangapoua Properties Ltd (Whangapoua), contracted to acquire ownership of a coastal sheep station at Whangapoua on the Coromandel Peninsula which was then owned by interests of the Denize family ("the Denize block");
(b) Whangapoua was at all times owned by Whangapoua Holdings Ltd whose sole shareholder and director was the second named appellant, Rochelle Longworth, otherwise known as Rochelle Currie, and whose husband is Mr Clive Currie;
(c) In about June 1999 Mr Currie requested Whitianga, through its duly authorised agent, Mr Harold Abrahamson, to provide a feasibility and cost estimate for roading work on the Denize block. At that time Mr Currie advised Mr Abrahamson that his wife was in the course of purchasing the Denize block; that, subject to subdivisional approval, the purchase would be settled and the property vested in various companies which Mrs Currie would own; that he was acting on behalf of his wife and the companies which were to own the land; and that all costs incurred by Whitianga in carrying out the work would be met by Mrs Currie and her companies;
(d) On or about 1 September 1999 Mrs Currie incorporated the third to sixth appellant companies, being Pistoia Ltd (Pistoia), Rauaruhe Ltd (Rauaruhe), Oltrarno Ltd (Oltrarno) and Wainuiototo Bay Property Company Ltd (Wainuiototo); she was at all material times the sole beneficial owner of the shares in the companies and their sole director; and subsequent to June 1999 Pistoia, Rauaruhe and Wainuiototo acquired some of the land in the Denize block;
(e) At Mr Currie’s request Whitianga commenced roading works in December 1999 which continued through until December 2000 when Environment Waikato issued a stop-work notice. As a result all works were suspended and did not resume until June 2002. Whitianga completed the works in August 2002. By that date a balance of $341,677 was due and owing for the work (including $21,857 allegedly owed to Whangamata Metal Supplies).

[5] Whitianga’s claim is divided into two stages. The first is for work carried out to December 2000 to a cost of $207,115. Two payments were made in July and December 2000 of $31,095 and $24,145. Mrs Currie paid a further $74,461 in September 2002. A balance was owing of $77,431. The second stage was for $264,246 (including Whangamata’s claim), all of which remains outstanding.
[6] The appellants filed a composite statement of defence. They admitted all the relevant factual allegations and affirmatively pleaded that the work was carried out "pursuant to a contract with Pungapunga Developments Ltd". They also alleged that the work was defective. They admitted that Pistoia, Rauaruhe, Oltrarno and Wainuiototo were "incorporated in terms of the records registered with the Registrar of Companies" and that Mrs Currie is their director. They denied that Mr Currie was acting as their agent. Whitianga did not file an amended statement of claim following receipt of this statement of defence.

High Court

[7] The proceeding was tried in an unusual way. A fixture for a three day trial was allocated during the week beginning 21 March 2005. About a week before, the appellants applied for an adjournment. Mr Currie swore an affidavit in support.
[8] Venning J declined the appellants’ application. He was heavily influenced by their repeated defaults in complying with interlocutory directions on discovery and inspection, and in exchanging briefs of evidence. He directed the trial to proceed on the basis that Whitianga’s evidence be admitted on formal proof, with the appellants’ participation limited to cross-examination and submissions by their counsel.
[9] Frater J recorded that, while the statement of defence identified two substantive issues, the sole question for determination at trial was which if any of the appellants was liable to pay Whitianga’s account. Quantum was not in dispute. However, as Mr Currie’s agency had been denied, Whitianga had to prove it, and there was an error in assuming otherwise.
[10] Mr Abrahamson was the only witness called by Whitianga. His evidence was substantially by way of verification of the company’s pleaded case. He also produced documentary evidence falling into three categories. In the first were Whitianga’s accounts. In the second were an exchange of correspondence between Whitianga’s solicitors, McBreens of Hamilton, and Pungapunga’s solicitors, Ellis Gould of Auckland, discussing arrangements for payment, and a cheque drawn on Mrs Currie’s account in favour of Whitianga dated 2 September 2002 for $74,461. In the third were company and title searches.
[11] Frater J summarised Whitianga’s invoices for work done in 2002 in this way:

[17] During this time detailed invoices were submitted on a regular basis. The first, for the period 3 June 2002 to 12 June 2002 for a total sum of $12,752.44, was addressed to Pungapunga Developments at Milford, Auckland. The second, covering the period from 15 July 2002 to 3 August 2002 for $119,302.71, was addressed to Mr Currie at the same Milford address. The third, for work undertaken between 5 August 2002 and 31 August 2002 for $91,507.28, was addressed to [Mrs Currie] at Whangapoua, R D, Coromandel. The fourth, for 2 September 2002 to 12 September 2002 for $18,843.75, was issued to Pungapunga at Whangapoua Rd, Coromandel. Finally, [Whitianga] claimed reimbursement for $21,857.20 for metal provided by Whangamata Metal Supplies. None of these invoices has been paid.

[12] The Judge found that Mrs Currie is not, and never has been, the registered proprietor of any titles within the Denize block; and that on 29 June 2000 the Denize family transferred the land to Whangapoua which then transferred part to Pistoia, Rauaruhe, Oltrarno and Wainuiototo (at [23]). She was also satisfied that Mrs Currie was the sole director of and shareholder in all the companies and that Mr Currie was not an officer of or shareholder in any (at [24] and [26]).
[13] Frater J recorded that Mr Michael Black, who was instructed as counsel for the appellants on the day before trial, raised three affirmative defences. First, "the contract was concluded before the companies were incorporated and there is no evidence that any of them subsequently ratified it ...", and accordingly the claim should have been brought against Mr Currie in his personal capacity. Second, as "the contract pleaded by [Whitianga] ..." does not purport to be made by or on behalf of any of the appellants but arguably only for their benefit, Mr Currie, even though holding himself out to be their agent, was the actual party to the contract. Third, Whitianga’s remedy was more properly of a restitutionary nature (at [27]).
[14] The Judge focused primarily on the appellants’ ratification defence. She observed that at best it could only apply to Pistoia, Rauaruhe, Oltrarno and Wainuiototo, which were all incorporated on 1 September 1999 (at [29]). Whangapoua was incorporated the year before.
[15] Frater J dismissed the ratification defence on this factual finding:

[31] While, clearly, there were negotiations between Mr Currie as agent for Mrs Currie and her companies and Mr Abrahamson on behalf of the plaintiff company during the weeks before and after the incorporation of the third, fourth, fifth and sixth defendants, there is absolutely nothing to establish that a contract was entered into before 1 September 1999. In fact, all the evidence is to the contrary. While an estimate was provided on 16 August 1999, no concluded agreement was ever reached on a fixed price contract for all the work subsequently completed. Instead from time to time thereafter Mr Abrahamson and Mr Currie reached agreement concerning a specific project, work got underway and, when it was finished or progress made, an invoice was rendered, on a charge up basis. The evidence suggests that the first agreement was not made until November 1999 and covered ‘a limited amount of roading work’ undertaken from then onwards until March 2000.
[32] There were then further contracts for the work at the end of 2000, the reinstatement work (clearly not envisaged at the time the quotation was given), and the work completed in the second half of 2002.
[Emphasis added]

We shall return to the Judge’s finding that during negotiations (and apparently thereafter) Mr Currie was acting as agent for Mrs Currie and her companies.

[16] The Judge concluded in the alternative as follows:

[34] First, even if the first contract was a pre-incorporation contract (and it is the only one which could possibly be) it has no bearing on the defendants’ liability as the plaintiff is not seeking to recover money owing under that contract. The bill for that work of $55,240.31 was paid in full, in two instalments, on 4 July 2000 and 27 December 2000. The claim relates to the balance of the sum owing for work undertaken from September 2000 to January 2001, and all of the cost of the 2002 work.
[35] Secondly, if there was a pre-incorporation contract, I am satisfied that it was adopted and ratified by the relevant defendant companies. While ratification may consist of a formal decision of the company to that effect, other conduct which plainly indicates that a newly formed company intends to adopt and perform the pre-incorporation contract may suffice: Taylor v Todd [2004] 3 NZLR 76 per Panckhurst J. And that is what happened here. There was no conduct by or on behalf of the four companies to suggest that the contractual arrangements were not to proceed, and Mr Currie represented, on numerous occasions, that the work was to proceed and that it would be paid for by the defendants.
[36] In conclusion, I note Mr Abrahamson’s comment that he is an earthmover – not a lawyer. He was not concerned about the niceties of ownership. The plaintiff company’s concern was to get its money. Clearly Mr Currie held himself out as agent for his wife and the defendant companies and they should pay for the work that was undertaken on their behalf.
[Our emphasis]

Decision

[17] We are satisfied that the appeals must be allowed for reasons which we can state relatively shortly. Essentially they arise from a combination of unsatisfactory circumstances including deficiencies in Whangapoua’s statement of claim and evidence at trial, and the appellants’ collective defaults in satisfying interlocutory obligations. In the result, the cases of both parties were presented inadequately at trial, placing Frater J at a disadvantage when dealing with the issues.
[18] In oral argument before us Mr David Wilson for Whitianga sought to justify these shortcomings on the ground that the company’s evidence at trial was tendered by way of formal proof. However, whether proof of a claim is formal or contested, a plaintiff’s evidence must always be sufficient to satisfy the elements of the cause or causes of action properly pleaded against a particular defendant in its statement of claim. Whitianga failed to discharge that obligation here.
[19] We shall deal separately with the appeals by the corporate appellants and Mrs Currie.

(a) Companies

[20] Frater J held that Whangapoua, Pistoia, Rauaruhe, Oltrarno and Wainuiototo were jointly and severally liable through Mr Currie’s agency to Whitianga for $341,677 plus costs (there was no award of interest). Mr Black’s primary ground of appeal was that there was insufficient certainty of contract between Whitianga and a particular appellant or appellants. He submitted that an omnibus approach was insufficient and that Whitianga had to identify which contract was made with which appellant.
[21] The Judge found that Messrs Abrahamson and Currie entered into a series of contracts from November 1999 onwards although Whitianga’s case was not so pleaded. She found they were progressive or rolling agreements for Whitianga to carry out work as and when required. With respect, these findings were open to her on Mr Abrahamson’s evidence and were not the subject of appeal or cross-appeal. However, we are satisfied that the Judge then erred in failing to determine the nature of the agency relationship, if any, between the appellant companies and Mr Currie and to find which if any of the appellant companies entered into the relevant contracts as principals through Mr Currie’s agency and the amounts for which they were to be liable. We have no doubt that her error was a consequence of the global way in which Whitianga’s case was pleaded and presented.
[22] Whitianga’s statement of claim failed to plead a properly particularised cause or causes of action for breach of contract against each corporate appellant through Mr Currie’s agency. It simply alleged that each was liable for work carried out by Whitianga at Mr Currie’s request after his representations to Mr Abrahamson between June and October 1999 that "... he was acting on behalf of his wife and the companies which were to own" the Denize block. The statement of claim failed to identify the time, place and circumstances of the relevant contract or contracts; the party with which Whitianga contracted at the relevant times and the nature and extent of its liability; and the basis upon which a particular appellant was liable through Mr Currie’s agency. The apparent premise for Whitianga’s claim was that each appellant was liable for all its costs because at some stage it acquired some of the land within the Denize block which was to benefit from the contractor’s work.
[23] The best evidence of the agreed identity of the contracting parties is to be found in the only contemporaneous documents. Whitianga’s first two invoices for roading work undertaken between November 1999 and March 2000 were for $55,240. They were addressed to and, we infer in the absence of evidence to the contrary, paid by Pungapunga.
[24] Whitianga then carried out work between September and December 2000 at a total cost of $151,875. The Judge did not make a finding on this point and Mr Abrahamson’s evidence was uninformative about the parties to which invoices were directed. Additional documents produced by Whitianga confirm that it continued to treat Pungapunga as principal.
[25] Frater J’s principal findings relate to the subsequent contract or contracts entered into in 2002. Whitianga addressed its first and fourth invoices for $12,752 and $18,843, for work done in June and September respectively, to Pungapunga. Its second invoice for work carried out in June and July 2002 for $119,302 was addressed to Mr Currie. And its third, for work undertaken in August 2002 for $91,507, was addressed to Mrs Currie. Also Whitianga claimed reimbursement of $21,857 for metal supplied by Whangamata Metal Supplies.
[26] This evidence suggests that at the relevant times Mr Abrahamson for Whitianga understood that he was contracting with Mr Currie, either in his personal capacity or as agent for and on behalf of Pungapunga or, on one occasion, for Mrs Currie. Mr Wilson was unable to direct us to probative evidence that might identify any of the five corporate appellants as a principal contracting party. His rationale for Whitianga’s claim against them was its satisfaction that Pungapunga was insolvent and Mr Currie was likely to be in the same state.
[27] However, Whitianga cannot treat one party as the other contracting principal and then later cast around for substitutes when questions are raised about solvency. A justifiable legal and evidential basis is required to recreate liability. Whitianga must bear the risk which has now materialised of carrying out extensive and expensive work without first settling the appropriate contractual terms. Whitianga’s re-commencement of work in June 2002, even though $151,875 was outstanding from work carried out 18 months earlier and when Mr Abrahamson knew that Mr Currie "did not have a good reputation for financial or credit matters", verifies his description of the company’s anxiety "to grab anything that was going".
[28] Mr Wilson accepted that there was no evidence from Whitianga to sustain its judgment against the companies. The appeals by Whangapoua, Pistoia, Rauaruhe, Oltrarno and Wainuiototo must succeed.

(b) Mrs Currie

[29] Frater J proceeded on the assumption that Mr Currie was acting as Mrs Currie’s agent at all relevant times, no doubt because her position was not the subject of particular scrutiny at trial. It is, however, at the heart of the case.
[30] Mr Black’s primary argument in support of Mrs Currie’s appeal was that there was no evidence Mr Currie ever acted as Mrs Currie’s agent to bind her to any or all of the contracts which the Judge found to exist.
[31] Agency connotes a relationship where one person has the requisite authority or capacity to create legal relations between another person and a third party: W C Fowler & Sons Ltd v St Stephens College Board of Governors [1991] 3 NZLR 304 at 306 (HC). In order to succeed Whitianga must establish that Mr Currie was acting either: (a) with Mrs Currie’s express or actual authority as agent to engage the company to carry out roading work for her; or, (b) with Mrs Currie’s apparent or ostensible authority. Whitianga relies on the latter, asserting that there was: Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 per Diplock LJ at 503 (CA), cited with approval in Savill v Chase Holdings (Wellington) Ltd [1989] 1 NZLR 257 by McMullin J at 304-305 (CA):

... a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the ‘apparent’ authority, so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract.

[32] To the same effect: Armagas Ltd v Mundogas SA [1985] UKHL 11; [1986] AC 717 per Lord Keith at 777 (HL):

Ostensible authority comes about where the principal, by words or conduct, has represented that the agent has the requisite actual authority, and the party dealing with the agent has entered into a contract with him in reliance on that representation. The principal in these circumstances is estopped from denying that actual authority existed. In the commonly encountered case, the ostensible authority is general in character, arising when the principal has placed the agent in a position which in the outside world is generally regarded as carrying authority to enter into transactions of the kind in question. Ostensible general authority may also arise where the agent has had a course of dealing with a particular contractor and the principal has acquiesced in this course of dealing and honoured transactions arising out of it...

As McMullin J observed in Savill at 305:

... It is the principal’s representation that creates the authority; not the agent’s assertion that he has that authority... It is not enough for a third party to show that he relied on the agent’s representation that he had the authority of his principal. He must show that he relied on the representation of the principal that the agent had the necessary authority.

[33] Whitianga’s statement of claim pleads Mr Currie’s oral representations to Mr Abrahamson "that he was acting on behalf of his wife and the companies which were to own the said land" as evidence of his agency. In support of this allegation Mr Abrahamson said:

The fundamental position from the beginning, however, had been that Clive Currie’s advices to me were that we were doing the work for Rochelle Currie and such of her companies as she organised to take title to various parts of the block. I was content with this because I was concerned to deal with a human being of substance and/or the actual owners of the land on which we were working.

He further said:

Clive Currie assured me that if my company carried out the roading work the costs would be met by his wife and by her companies which were to acquire the various titles... the arrangement I had with him from the very outset was that we were working for the person owning the land. Mr Currie always made it clear that this was his wife and such companies as she would form and use for the holding of title to the blocks of land. I was aware that Rochelle Currie was not the registered owner of the land at the time of these initial discussions but I was satisfied from what Clive Currie said that she was in the process of buying the block and forming the companies which would take title.

[34] Mr Abrahamson’s reliance on Mr Currie’s assertion that he was acting for and representing his wife is insufficient for Whitianga to prove the agency relationship. There had to be a representation from Mrs Currie to Mr Abrahamson of her husband’s authority to enter into a contract or contracts of this kind. Mr Wilson identified what he described as a number of facts and available inferences which showed cumulatively that Mrs Currie made the necessary representation of her husband’s agency to enter into contracts binding her as principal to pay for the roading work.
[35] First, Mr Wilson relied on the legal relationship between Mr and Mrs Currie of husband and wife where ‘there would be a practical acceptance that to some extent one spouse can speak for or represent the other’. We do not accept that the spousal relationship can of itself, or even when considered with other factors, imply that one has the authority to commit the other to a contractual obligation. It is at best a neutral factor.
[36] Secondly, Mr Wilson submitted that the contract in question was for work to be done on a property which was being acquired, as opposed to already being owned, such that Mrs Currie had placed her husband in the position which the outside world would generally regard as carrying authority to enter into transactions of this kind. In support he relied upon Mrs Currie’s presence at the property at times when substantial roading work was in progress as part of the development of the land.
[37] We do not accept that Mrs Currie’s relationship with the Denize block assists Whitianga’s case. Mr Wilson accepted that Mrs Currie never acquired a legal interest in any of the property, and that the only evidence on this point emanated from Mr Currie. At one stage he said that Mrs Currie ‘acquired a degree of beneficial ownership’ because the property was under her control. He conceded, though, that this argument ‘started to wane a little’ once the companies obtained title.
[38] Whangapoua acquired title to the Denize block on 29 June 2000 and immediately transferred parts to Pistoia, Wainuiototo, Rauaruhe and Oltrarno. The bulk of Whitianga’s claim is for work undertaken between September 2000 and January 2001 and separately in 2002. Mr Currie’s hearsay advice could not constitute reliable evidence that Mrs Currie personally had a beneficial interest in the land before 29 June 2000. And her presence at the property does not in itself, or when combined with other factors, assist Whitianga’s case. Mr Abrahamson never dealt with her on the roading question.
[39] Thirdly, Mr Wilson relied on Mrs Currie’s part-payment of Whitianga’s account by her personal cheque dated 2 September 2002 for $74,461. He submitted that it amounted to Mrs Currie’s acknowledgement of her personal obligation and ratification of Mr Currie’s engagement of Whitianga to carry out the work. We accept that this factor is of some relevance. Payment was made on 2 September 2002 (not 2001 as the Judge found), immediately after Whitianga’s submission of an invoice to Mrs Currie for $91,507 for work undertaken between 5 August 2002 and 31 August 2002. Mr Abrahamson said that he sent her the account because he understood in 2002 that she had taken title to the property.
[40] Thus it may be arguably inferred that Mrs Currie tendered her cheque in part-payment of this particular account, thereby acquiescing in the dealings between Messrs Abrahamson and Currie and ratifying a contract between Whitianga and herself as principal through Mr Currie’s agency for the work which was the subject of this invoice. On its own this event might justify judgment in Whitianga’s favour for $17,046, being the balance owing on Whitianga’s invoice for $91,507 and Mrs Currie’s payment of $74,461.
[41] Mr Wilson argued though that Mrs Currie’s cheque, even though paid in 2002, was tendered in part-payment of Whitianga’s invoices outstanding from 2000. He did not identify any evidence in support. However, for reasons which we shall shortly explain, we will not now determine this question or enter judgment but will allow Whitianga to reformulate its claim against Mrs Currie, expressly pleading and leading evidence of ratification or acquiescence from a date earlier than 2 September 2002.
[42] Frater J did not consider or determine the question of whether or not Mr Currie was acting as Mrs Currie’s agent at the relevant times, and we are satisfied there was no evidence tendered at trial sufficient to establish that Mrs Currie held out or represented to Mr Abrahamson that her husband had authority to bind her to contractual obligations to Whitianga as principal, except to the extent that she may have ratified one of the series of agreements by a payment made in September 2002.
[43] Mr Black also submitted that there was no basis for a finding that Mrs Currie, in her capacity as a director of the appellant companies, had on an objective basis assumed personal responsibility for their liabilities: Trevor Ivory Ltd v Anderson [1992] 2 NZLR 517 (CA); Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830 (HL); and Mahon v Crockett (1999) 8 NZCLC 262,043 (CA).
[44] It is unnecessary for us to determine this submission in view of our first finding that none of the appellant companies of which Mrs Currie was a director was liable for Whitianga’s claim.

Result

[45] It follows that we allow the appeals by all appellants and set aside the judgment in the High Court.
[46] Ordinarily the appellants would be entitled to judgment. However, this is a most unusual case. We have already referred to the problems which have arisen from Whitianga’s inadequate pleadings and evidential deficiencies. The central issue of whether or not there was a relationship of principal and agency between any or all of the appellants and Mr Currie has not been the subject of a determination. Such a determination is necessary.
[47] In these circumstances we would be most reluctant to deprive Whitianga of an opportunity to pursue all available rights of recourse to recover some or all of its debt. Its claim may or may not be curable through amended pleadings and provision of evidence of sufficient probity to establish a cause or causes of action against Mrs Currie or a particular company.
[48] While Whitianga should have been in a position to prove its case at trial, the defendants’ consistent procedural defaults resulting in Venning J’s order plainly misled it to believe that its claims were not in material dispute, despite the denials of agency in the statement of defence. We could not endorse a result which allowed the defendants in the Court below to take advantage of their own wrongs at Whitianga’s expense. This is one of those rare cases where the interests of justice require a rehearing: Terry v Gardiner and Knobloch [1991] 3 NZLR 553 at 556 (CA).
[49] Accordingly, we set aside the judgment and remit the proceeding for a new trial in the High Court.
[50] There will be no order for costs.

Solicitors:
Short & Co, Auckland, for Appellants
Raymond S Walker, Auckland, for Respondent

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[1]	The six appellants appeal against a decision delivered in the High Court at Auckland by Frater J on 13 June 2005 entering judgment in favour of Whitianga Excavators Ltd (Whitianga) against them, jointly and severally, for the sum of $341,677 together with costs. Whitianga’s claim was effectively for breach of contract, to recover the balance of its costs owing for roading works carried out between December 1999 and August 2002 on a coastal subdivision owned at various times by some of the appellants. Its case required a determination of what contractual relationship existed in this period and, particularly, who were the contracting parties.
[2]	The appeals do not raise contested issues of fact but are directed towards the legal relationships of each appellant with Whitianga and with Mr Clive Currie who purported to act as agent for them, individually and collectively, in dealings with Whitianga.
[3]	We shall summarise the nature of Whitianga’s claim before considering the High Court judgment and the merits of the appeals.

[7]	The proceeding was tried in an unusual way. A fixture for a three day trial was allocated during the week beginning 21 March 2005. About a week before, the appellants applied for an adjournment. Mr Currie swore an affidavit in support.
[8]	Venning J declined the appellants’ application. He was heavily influenced by their repeated defaults in complying with interlocutory directions on discovery and inspection, and in exchanging briefs of evidence. He directed the trial to proceed on the basis that Whitianga’s evidence be admitted on formal proof, with the appellants’ participation limited to cross-examination and submissions by their counsel.
[9]	Frater J recorded that, while the statement of defence identified two substantive issues, the sole question for determination at trial was which if any of the appellants was liable to pay Whitianga’s account. Quantum was not in dispute. However, as Mr Currie’s agency had been denied, Whitianga had to prove it, and there was an error in assuming otherwise.
[10]	Mr Abrahamson was the only witness called by Whitianga. His evidence was substantially by way of verification of the company’s pleaded case. He also produced documentary evidence falling into three categories. In the first were Whitianga’s accounts. In the second were an exchange of correspondence between Whitianga’s solicitors, McBreens of Hamilton, and Pungapunga’s solicitors, Ellis Gould of Auckland, discussing arrangements for payment, and a cheque drawn on Mrs Currie’s account in favour of Whitianga dated 2 September 2002 for $74,461. In the third were company and title searches.
[11]	Frater J summarised Whitianga’s invoices for work done in 2002 in this way:

[12]	The Judge found that Mrs Currie is not, and never has been, the registered proprietor of any titles within the Denize block; and that on 29 June 2000 the Denize family transferred the land to Whangapoua which then transferred part to Pistoia, Rauaruhe, Oltrarno and Wainuiototo (at [23]). She was also satisfied that Mrs Currie was the sole director of and shareholder in all the companies and that Mr Currie was not an officer of or shareholder in any (at [24] and [26]).
[13]	Frater J recorded that Mr Michael Black, who was instructed as counsel for the appellants on the day before trial, raised three affirmative defences. First, "the contract was concluded before the companies were incorporated and there is no evidence that any of them subsequently ratified it ...", and accordingly the claim should have been brought against Mr Currie in his personal capacity. Second, as "the contract pleaded by [Whitianga] ..." does not purport to be made by or on behalf of any of the appellants but arguably only for their benefit, Mr Currie, even though holding himself out to be their agent, was the actual party to the contract. Third, Whitianga’s remedy was more properly of a restitutionary nature (at [27]).
[14]	The Judge focused primarily on the appellants’ ratification defence. She observed that at best it could only apply to Pistoia, Rauaruhe, Oltrarno and Wainuiototo, which were all incorporated on 1 September 1999 (at [29]). Whangapoua was incorporated the year before.
[15]	Frater J dismissed the ratification defence on this factual finding:

[17]	We are satisfied that the appeals must be allowed for reasons which we can state relatively shortly. Essentially they arise from a combination of unsatisfactory circumstances including deficiencies in Whangapoua’s statement of claim and evidence at trial, and the appellants’ collective defaults in satisfying interlocutory obligations. In the result, the cases of both parties were presented inadequately at trial, placing Frater J at a disadvantage when dealing with the issues.
[18]	In oral argument before us Mr David Wilson for Whitianga sought to justify these shortcomings on the ground that the company’s evidence at trial was tendered by way of formal proof. However, whether proof of a claim is formal or contested, a plaintiff’s evidence must always be sufficient to satisfy the elements of the cause or causes of action properly pleaded against a particular defendant in its statement of claim. Whitianga failed to discharge that obligation here.
[19]	We shall deal separately with the appeals by the corporate appellants and Mrs Currie.

[20]	Frater J held that Whangapoua, Pistoia, Rauaruhe, Oltrarno and Wainuiototo were jointly and severally liable through Mr Currie’s agency to Whitianga for $341,677 plus costs (there was no award of interest). Mr Black’s primary ground of appeal was that there was insufficient certainty of contract between Whitianga and a particular appellant or appellants. He submitted that an omnibus approach was insufficient and that Whitianga had to identify which contract was made with which appellant.
[21]	The Judge found that Messrs Abrahamson and Currie entered into a series of contracts from November 1999 onwards although Whitianga’s case was not so pleaded. She found they were progressive or rolling agreements for Whitianga to carry out work as and when required. With respect, these findings were open to her on Mr Abrahamson’s evidence and were not the subject of appeal or cross-appeal. However, we are satisfied that the Judge then erred in failing to determine the nature of the agency relationship, if any, between the appellant companies and Mr Currie and to find which if any of the appellant companies entered into the relevant contracts as principals through Mr Currie’s agency and the amounts for which they were to be liable. We have no doubt that her error was a consequence of the global way in which Whitianga’s case was pleaded and presented.
[22]	Whitianga’s statement of claim failed to plead a properly particularised cause or causes of action for breach of contract against each corporate appellant through Mr Currie’s agency. It simply alleged that each was liable for work carried out by Whitianga at Mr Currie’s request after his representations to Mr Abrahamson between June and October 1999 that "... he was acting on behalf of his wife and the companies which were to own" the Denize block. The statement of claim failed to identify the time, place and circumstances of the relevant contract or contracts; the party with which Whitianga contracted at the relevant times and the nature and extent of its liability; and the basis upon which a particular appellant was liable through Mr Currie’s agency. The apparent premise for Whitianga’s claim was that each appellant was liable for all its costs because at some stage it acquired some of the land within the Denize block which was to benefit from the contractor’s work.
[23]	The best evidence of the agreed identity of the contracting parties is to be found in the only contemporaneous documents. Whitianga’s first two invoices for roading work undertaken between November 1999 and March 2000 were for $55,240. They were addressed to and, we infer in the absence of evidence to the contrary, paid by Pungapunga.
[24]	Whitianga then carried out work between September and December 2000 at a total cost of $151,875. The Judge did not make a finding on this point and Mr Abrahamson’s evidence was uninformative about the parties to which invoices were directed. Additional documents produced by Whitianga confirm that it continued to treat Pungapunga as principal.
[25]	Frater J’s principal findings relate to the subsequent contract or contracts entered into in 2002. Whitianga addressed its first and fourth invoices for $12,752 and $18,843, for work done in June and September respectively, to Pungapunga. Its second invoice for work carried out in June and July 2002 for $119,302 was addressed to Mr Currie. And its third, for work undertaken in August 2002 for $91,507, was addressed to Mrs Currie. Also Whitianga claimed reimbursement of $21,857 for metal supplied by Whangamata Metal Supplies.
[26]	This evidence suggests that at the relevant times Mr Abrahamson for Whitianga understood that he was contracting with Mr Currie, either in his personal capacity or as agent for and on behalf of Pungapunga or, on one occasion, for Mrs Currie. Mr Wilson was unable to direct us to probative evidence that might identify any of the five corporate appellants as a principal contracting party. His rationale for Whitianga’s claim against them was its satisfaction that Pungapunga was insolvent and Mr Currie was likely to be in the same state.
[27]	However, Whitianga cannot treat one party as the other contracting principal and then later cast around for substitutes when questions are raised about solvency. A justifiable legal and evidential basis is required to recreate liability. Whitianga must bear the risk which has now materialised of carrying out extensive and expensive work without first settling the appropriate contractual terms. Whitianga’s re-commencement of work in June 2002, even though $151,875 was outstanding from work carried out 18 months earlier and when Mr Abrahamson knew that Mr Currie "did not have a good reputation for financial or credit matters", verifies his description of the company’s anxiety "to grab anything that was going".
[28]	Mr Wilson accepted that there was no evidence from Whitianga to sustain its judgment against the companies. The appeals by Whangapoua, Pistoia, Rauaruhe, Oltrarno and Wainuiototo must succeed.

[29]	Frater J proceeded on the assumption that Mr Currie was acting as Mrs Currie’s agent at all relevant times, no doubt because her position was not the subject of particular scrutiny at trial. It is, however, at the heart of the case.
[30]	Mr Black’s primary argument in support of Mrs Currie’s appeal was that there was no evidence Mr Currie ever acted as Mrs Currie’s agent to bind her to any or all of the contracts which the Judge found to exist.
[31]	Agency connotes a relationship where one person has the requisite authority or capacity to create legal relations between another person and a third party: W C Fowler & Sons Ltd v St Stephens College Board of Governors [1991] 3 NZLR 304 at 306 (HC). In order to succeed Whitianga must establish that Mr Currie was acting either: (a) with Mrs Currie’s express or actual authority as agent to engage the company to carry out roading work for her; or, (b) with Mrs Currie’s apparent or ostensible authority. Whitianga relies on the latter, asserting that there was: Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 per Diplock LJ at 503 (CA), cited with approval in Savill v Chase Holdings (Wellington) Ltd [1989] 1 NZLR 257 by McMullin J at 304-305 (CA):

[34]	Mr Abrahamson’s reliance on Mr Currie’s assertion that he was acting for and representing his wife is insufficient for Whitianga to prove the agency relationship. There had to be a representation from Mrs Currie to Mr Abrahamson of her husband’s authority to enter into a contract or contracts of this kind. Mr Wilson identified what he described as a number of facts and available inferences which showed cumulatively that Mrs Currie made the necessary representation of her husband’s agency to enter into contracts binding her as principal to pay for the roading work.
[35]	First, Mr Wilson relied on the legal relationship between Mr and Mrs Currie of husband and wife where ‘there would be a practical acceptance that to some extent one spouse can speak for or represent the other’. We do not accept that the spousal relationship can of itself, or even when considered with other factors, imply that one has the authority to commit the other to a contractual obligation. It is at best a neutral factor.
[36]	Secondly, Mr Wilson submitted that the contract in question was for work to be done on a property which was being acquired, as opposed to already being owned, such that Mrs Currie had placed her husband in the position which the outside world would generally regard as carrying authority to enter into transactions of this kind. In support he relied upon Mrs Currie’s presence at the property at times when substantial roading work was in progress as part of the development of the land.
[37]	We do not accept that Mrs Currie’s relationship with the Denize block assists Whitianga’s case. Mr Wilson accepted that Mrs Currie never acquired a legal interest in any of the property, and that the only evidence on this point emanated from Mr Currie. At one stage he said that Mrs Currie ‘acquired a degree of beneficial ownership’ because the property was under her control. He conceded, though, that this argument ‘started to wane a little’ once the companies obtained title.
[38]	Whangapoua acquired title to the Denize block on 29 June 2000 and immediately transferred parts to Pistoia, Wainuiototo, Rauaruhe and Oltrarno. The bulk of Whitianga’s claim is for work undertaken between September 2000 and January 2001 and separately in 2002. Mr Currie’s hearsay advice could not constitute reliable evidence that Mrs Currie personally had a beneficial interest in the land before 29 June 2000. And her presence at the property does not in itself, or when combined with other factors, assist Whitianga’s case. Mr Abrahamson never dealt with her on the roading question.
[39]	Thirdly, Mr Wilson relied on Mrs Currie’s part-payment of Whitianga’s account by her personal cheque dated 2 September 2002 for $74,461. He submitted that it amounted to Mrs Currie’s acknowledgement of her personal obligation and ratification of Mr Currie’s engagement of Whitianga to carry out the work. We accept that this factor is of some relevance. Payment was made on 2 September 2002 (not 2001 as the Judge found), immediately after Whitianga’s submission of an invoice to Mrs Currie for $91,507 for work undertaken between 5 August 2002 and 31 August 2002. Mr Abrahamson said that he sent her the account because he understood in 2002 that she had taken title to the property.
[40]	Thus it may be arguably inferred that Mrs Currie tendered her cheque in part-payment of this particular account, thereby acquiescing in the dealings between Messrs Abrahamson and Currie and ratifying a contract between Whitianga and herself as principal through Mr Currie’s agency for the work which was the subject of this invoice. On its own this event might justify judgment in Whitianga’s favour for $17,046, being the balance owing on Whitianga’s invoice for $91,507 and Mrs Currie’s payment of $74,461.
[41]	Mr Wilson argued though that Mrs Currie’s cheque, even though paid in 2002, was tendered in part-payment of Whitianga’s invoices outstanding from 2000. He did not identify any evidence in support. However, for reasons which we shall shortly explain, we will not now determine this question or enter judgment but will allow Whitianga to reformulate its claim against Mrs Currie, expressly pleading and leading evidence of ratification or acquiescence from a date earlier than 2 September 2002.
[42]	Frater J did not consider or determine the question of whether or not Mr Currie was acting as Mrs Currie’s agent at the relevant times, and we are satisfied there was no evidence tendered at trial sufficient to establish that Mrs Currie held out or represented to Mr Abrahamson that her husband had authority to bind her to contractual obligations to Whitianga as principal, except to the extent that she may have ratified one of the series of agreements by a payment made in September 2002.
[43]	Mr Black also submitted that there was no basis for a finding that Mrs Currie, in her capacity as a director of the appellant companies, had on an objective basis assumed personal responsibility for their liabilities: Trevor Ivory Ltd v Anderson [1992] 2 NZLR 517 (CA); Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830 (HL); and Mahon v Crockett (1999) 8 NZCLC 262,043 (CA).
[44]	It is unnecessary for us to determine this submission in view of our first finding that none of the appellant companies of which Mrs Currie was a director was liable for Whitianga’s claim.

[45]	It follows that we allow the appeals by all appellants and set aside the judgment in the High Court.
[46]	Ordinarily the appellants would be entitled to judgment. However, this is a most unusual case. We have already referred to the problems which have arisen from Whitianga’s inadequate pleadings and evidential deficiencies. The central issue of whether or not there was a relationship of principal and agency between any or all of the appellants and Mr Currie has not been the subject of a determination. Such a determination is necessary.
[47]	In these circumstances we would be most reluctant to deprive Whitianga of an opportunity to pursue all available rights of recourse to recover some or all of its debt. Its claim may or may not be curable through amended pleadings and provision of evidence of sufficient probity to establish a cause or causes of action against Mrs Currie or a particular company.
[48]	While Whitianga should have been in a position to prove its case at trial, the defendants’ consistent procedural defaults resulting in Venning J’s order plainly misled it to believe that its claims were not in material dispute, despite the denials of agency in the statement of defence. We could not endorse a result which allowed the defendants in the Court below to take advantage of their own wrongs at Whitianga’s expense. This is one of those rare cases where the interests of justice require a rehearing: Terry v Gardiner and Knobloch [1991] 3 NZLR 553 at 556 (CA).
[49]	Accordingly, we set aside the judgment and remit the proceeding for a new trial in the High Court.
[50]	There will be no order for costs.