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High Court of New Zealand Decisions |
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CIV-2006-404-005373
BETWEEN BODY CORPORATE 208191
First Plaintiff
AND D A HOLL & ORS
Second Plaintiffs
AND JOYCE BUILDING LTD
First Defendant
AND D A PAGE & J HENDERSON
Second Defendants
AND GJ & SM JOYCE
Third Defendants
AND
TAYLOR FASCIA (AUCKLAND)
LIMITED
Fourth Defendants
AND G D SYKES
Fifth Defendant
Hearing: 8 September 2009
Counsel: Mr G Shand and Ms O Miles for Plaintiffs
Mr
R Ferguson for Third Defendants
Judgment: 13 October 2009 at 3 p.m.
JUDGMENT OF ASSOCIATE JUDGE DOOGUE
This judgment was delivered by me on
13.10.09 at 3 pm, pursuant to
Rule 11.5 of the
High Court Rules.
Registrar/Deputy Registrar
Date...............
Counsel:
Grimshaw & Co, P
O Box 6646, Auckland - by email: grant.shand@grimshaw.co.nz
Ferguson Law, P O Box 106866, Auckland by email: rob@fergusonlaw.co.nz
BODY CORPORATE 208191 AND ANOR V JOYCE BUILDING LTD AND ORS HC AK CIV-2006-404-
005373 13 October 2009
AND D J STAMPER
Sixth Defendant
AND RICHARDSON-STEVENS
CONSULTANTS (1996) LIMITED
First Third Party
AND THORNE DWYER STRUCTURES
LIMITED
Second Third Party
AND HYDRAULIC SERVICES
CONSULTANTS LIMITED
Third Third Party
Background
[1] On 16 September 2005 the plaintiff (Ms Gayle Humphrey) entered into an
agreement for sale and purchase to buy Unit 1B from
the third defendants (Mr and
Mrs Joyce), at 42-44 Aitken Terrace, Kingsland (the Aitken Terrace complex). The
property has weather-tightness
defects. Ms Humphrey is one of a number of owners
of units in the Aitken Terrace complex (of which 1B is part) who have commenced
proceedings against a range of parties, including the third defendants, from whom
she purchased Unit 1B.
[2] The relevant history
of the Aitken Terrace complex goes back to 19 May
1994, when Mr and Mrs Joyce acquired the land at 42-44 Aitken Terrace, on which
the complex was in due course built. On 1 September 2000 Mr and Mrs Joyce
transferred the land to Joyce Building Limited (JBL). Mr
Joyce has always been the
sole director of JBL and Mr and Mrs Joyce the sole shareholders. JBL developed the
site into an 18-unit
development.
[3] On 20 December 2001 Mr & Mrs Joyce acquired units 1B & 3B from JBL.
On 16 September 2005, Gayle Humphrey, agreed
to purchase 1B from Mr & Mrs
Joyce. The purchase settled 7 October 2005.
[4] The plaintiff has sued JBL and Mr Joyce on the
basis that the former was the
builder of the complex and Mr Joyce was the project manager. This last allegation is
admitted. The
present application will be decided on the basis that both of the factual
conclusions just mentioned are true.
[5] Ms Humphrey
has also brought a claim against Mr and Mrs Joyce. Her claim
is based upon clause 6.2 (5) of the agreement for sale and purchase
that she entered
into with Mr and Mrs Joyce. It reads as follows:
6.2 The vendor warrants and undertakes that at the giving
and taking of
possession: [...]
(5) Where the vendor has done or caused or permitted to be done on the
property any works for which a permit or building consent was
required by law:
(b) The works were completed in compliance with that permit or
consent; and
(d) All obligations imposed under the Building Act 1991 were fully
complied with.
[6] Ms Humphrey's
claim is that because Mr Joyce as the project manager
carried out work to the complex generally, it can be assumed that he did work
on
apartment 1B, which Ms Humphrey purchased. Therefore, the argument continues:
Based on the plain and unambiguous meaning
of clause 6.2(5) Mr & Mrs
Joyce are within the wording of it, so summary judgment ought not be
entered for the Joyces:
· Mr & Mrs Joyce were the vendors;
· Mr Joyce personally did, caused or permitted work that required
a
building consent;
· Mrs Joyce permitted the work;
· The work did not comply with 6.2(5)(b)
& (d) so as to be within
clause C
· Mrs Joyce is jointly and severally liable for Mr Joyce's breaches
(clause 1.3(1));
· There is no temporal requirement in clause 6.2(5), nor is there a
necessity to imply a temporal requirement.
[7] The reference to a `temporal requirement' will become apparent as this
judgment
proceeds.
[8] The explanation that has been advanced by Mr and Mrs Joyce as to how they
came to be the owners of Unit 1B was
that the particular apartment proved
impossible to sell when the complex was marketed for sale. They therefore took
over the property
as owners and as trustees of a family trust.
[9] Mr and Mrs Joyce have now applied for leave to make an application for
summary
judgment against the plaintiff. They need leave because the applicant was
not brought within the time limited by Rule 12.4 of the
High Court Rules, which
provides:
12.4 Interlocutory application for summary judgment
(1) Application for judgment
under rule 12.2 or 12.3 must be made by
interlocutory application.
(2) An application by a plaintiff may be made
either at the time the
statement of claim is served on the defendant, or later with the leave of
the court.
(3) An application by a defendant may be made either at the time the
statement of defence is served on the plaintiff,
or later with the leave of
the court.
[10] Rule 12.2 provides:
Judgment when there is no defence or when no
cause of action can
succeed
(1) 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
in the statement of claim or to a particular part of
any such cause of
action].
(2) The court may give judgment against a plaintiff if the defendant
satisfies
the court that none of the causes of action in the plaintiff's
statement of claim can succeed.
The issues
[11] The
first issue concerns the impact that the relevant Rules and cases have on
the present application. I will deal with the former
in a later section of this
judgment. I will deal with the leave issue on the basis that it is only if the
defendant's application
proves to have merit and ought to be allowed, I shall
consider whether to grant leave.
[12] The central feature of the arguments
advanced by Mr and Mrs Joyce's
counsel was as follows:
25. The key to this argument is to focus on the fact that the warranties
were
"vendor" warranties. Who were the vendors? They were Mr and Mrs
Joyce, not Mr Joyce alone -pg 71. Thus,
had the vendors done,
permitted or allowed work to be done on the apartment it would have to
be shown that
Mr Joyce's involvement was for and on behalf of the
vendors. It is clear that there is no presumed agency due to cohabitation
(Burrows para 16.2.5), so therefore it cannot be presumed that because
they are married that Mr Joyce was the agent of Mrs Joyce. The
uncontested evidence before the court is that Mr Joyce acted as agent
for and on behalf of the first defendant. It
may be properly found or
inferred that Mr Joyce had actual authority from Mrs Joyce to take the
actions he
did in directing or allowing the work to be done on the
apartment if such work was done while the apartment was owned
by the
Joyces. It was not, and the cause of action has therefore no prospect of
success.
[13] I noted
above that Mr Shand (for the plaintiff) said there was
No temporal requirement in clause 6.2(5), and that it was not necessary
to
imply a temporal requirement.
[14] I understand that submission to have the following significance. Mr and Mrs
Joyce
have deposed that no work was in fact done on apartment 1B during the time
that they owned it. Therefore, Mr Ferguson made the submission
that, in effect, the
vendors could only be liable for work done while they were the owners of the
property.
Principles relating
to defendants' summary judgment
[15] The next issue I shall deal with concerns the principles governing the grant of
summary judgment
on the application of defendants, which I can deal with briefly. I
adopt the well known passage from the judgment in Westpac Banking
Corporation v
MM Kembla [2001] 2 NZLR 298:
[62] Application for summary judgment will be inappropriate where there
are disputed issues of material
fact or where material facts need to be
ascertained by the Court and cannot confidently be concluded from
affidavits. It may also be inappropriate where ultimate determination
turns on a judgment only able to
be properly arrived at after a full
hearing of the evidence. Summary judgment is suitable for cases
where abbreviated procedure and affidavit evidence will sufficiently
expose the facts and the legal issues.
Although a legal point may be
as well decided on summary judgment application as at trial if
sufficiently
clear (Pemberton v Chappell [1987] 1 NZLR 1), novel or
developing points of law may require the context provided by trial to
provide the Court
with sufficient perspective.
[63] Except in clear cases, such as a claim upon a simple debt where it is
reasonable to expect proof to be immediately available, it will not be
appropriate to decide by summary procedure
the sufficiency of the
proof of the plaintiff's claim. That would permit a defendant, perhaps
more
in possession of the facts than the plaintiff (as is not
uncommon where a plaintiff is the victim of deceit), to
force on the
plaintiff's case prematurely before completion of discovery or other
interlocutory
steps and before the plaintiff's evidence can reasonably
be assembled.
[64] The defendant bears the
onus of satisfying the Court that none of the
claims can succeed. It is not necessary for the plaintiff to put up
evidence at all although, if the defendant supplies evidence which
would satisfy the Court that
the claim cannot succeed, a plaintiff will
usually have to respond with credible evidence of its own. Even then
it is perhaps unhelpful to describe the effect as one where an onus is
transferred. At the end of
the day, the Court must be satisfied that
none of the claims can succeed. It is not enough that they are shown
to have weaknesses. The assessment made by the Court on
interlocutory application is not one to be
arrived at on a fine balance
of the available evidence, such as is appropriate at trial.
Discussion
[16] In my
view the outcome of Mr and Mrs Joyce's application for summary
judgment will be determined by whether the Court finds itself able
to come to a firm
conclusion on what clause 6.2 (5) means. Whatever basis Ms Humphrey may have
for claiming against either of the
Joyces i.e. the ground that Mr Joyce was the
project developer is an entirely separate matter from any liability that might be
attributed to them in their capacity as vendors under the contract to sell the unit to
Ms Humphrey.
[17] It may be that the Court
can reach sufficient certainty as to the contractual
meaning on the summary judgment application to justify granting Mr and Mrs
Joyce's
application, assuming that the favoured interpretation rules out any
contractual liability on their part. The second possibility
is that the contract,
properly interpreted, does in fact fix them with liability. The third possibility is that
it is premature in
the context of the summary judgment application, in the absence of
all the background material, for the Court to come to a conclusion
as to whether the
Joyces are liable to Ms Humphrey for defective construction that took place prior to
their acquiring the apartment
and which was not in any sense carried out by the
Joyces while owners of the property.
[18] It will assist clarity in analysing
the contract to enquire what would have been
the position had different purchasers been involved as vendors in on-selling the
apartment
to Ms Humphrey. If it is assumed that those vendors had no connection
with Mr Joyce whether as co-owners, co-shareholders in the
company that
developed the apartment complex or a familial relationship with Mr Joyce could it
seriously be argued that those vendors
would be responsible for defects in
construction? The answer is "no". That, in turn, brings the enquiry back to the
wording
of the contract. It would be obvious that the vendors in such an example
could not be said to have done or caused or permitted to
be done any work for which
a permit or building consent was required by law which is the situation that clause
6.2(5) is concerned
with.
[19] The next question is what was the contractual duty designed to achieve?
Clauses involving warranties of this kind by vendors are inserted into contracts
because where
work has been done on the property, during a particular owner's
tenure, the owner will know whether the work was properly permitted
or consented.
That being so, it is reasonable that the purchaser who typically knows nothing of
what occurred on the property before
his time, should look to the vendor for
assurance that the required consents have been obtained. It would be possible for the
purchaser
to attempt to get that information by searching records of the relevant
territorial authorities. However, even if consents can be
located, there may be areas
of doubt about whether a particular part of the construction did or did not fall within
the terms of
a permit on the council file. It is no doubt for reasons of this kind that
the contract was drawn to impose the responsibility on
the vendors for the work done
while they were the owners.
[20] For the purpose of this application it has to be accepted that
no work was
actually done while Mr and Mrs Joyce were the owners. They have given
uncontested evidence that was so.
Work was done during the tenure of an earlier
owner, JBL. But JBL is legally a separate entity from Mr and Mrs Joyce.
[21] Mr
Shand submitted that to adopt the defendants' contentions would be to
imply a term limiting the responsibility of the vendors when
there were no proper
grounds for doing so. With respect, I think that submission commences from the
wrong starting point. The correct
starting point is to construe the contract according
to its plain meaning but having regard to any circumstances that would have
been
known to the parties and which would bear upon the meaning of the contract they
entered into. A party who contends for a meaning
which literally falls within the
meaning of the words does not possess an advantage which enables him to argue that
it then becomes
incumbent on the other party to show reason why the Court should
not adopt the literal meaning.
[22] It might be that the plaintiff's
contentions are literally correct and that one of
the vendors did literally breach the duty in paragraph 6.2(5). But to take such
a view
without enquiring into the purpose and objects of the parties and agreeing on that
provision of their contract seems to me
to be excessively concerned with the wording
of the contract and to follow a literalist course to a conclusion which does not make
sense when viewed from the circumstances that the parties found themselves in at
the time when they entered into the contract.
[23] Before I consider this aspect further, I remind myself of how the Court is
required to approach the task of contractual interpretation.
In Boat Park v
Hutchinson [1999] 2 NZLR 74, the Court of Appeal adopted the statement by the
House of Lords in Investors Compensation Scheme Ltd v West Bromwich Building
Society
[1997] UKHL 28; [1998] 1 All ER 98:
(1) Interpretation is the ascertainment of the meaning which the document
would convey to a reasonable person
having all the background
knowledge which would reasonably have been available to the parties in
the situation
in which they were at the time of the contract.
(2) The background was famously referred to by Lord Wilberforce as the
`matrix of fact', but this phrase is, if anything, an understated
description of what the background may include.
Subject to the
requirement that it should have been reasonably available to the parties
and to the exception
to be mentioned next, it includes absolutely
anything which would have affected the way in which the language of
the document would have been understood by a reasonable man.
(3) The law excludes from the admissible background the
previous
negotiations of the parties and their declarations of subjective intent.
They are admissible only
in an action for rectification. The law makes
this distinction for reasons of practical policy and, in this respect only,
legal interpretation differs from the way we would interpret utterances
in ordinary life. The boundaries of
this exception are in some respects
unclear. But this is not the occasion on which to explore them.
The Court
is not however confined to purely internal linguistic
considerations but will, at least where there is some ambiguity in the
language used, have regard to context. (at pp 81-82).
[24] I respectfully adopt that statement of the law.
[25] As
I have earlier noted, Mr Shand submitted that there was no temporal
requirement imposed by the wording of the contract.
In effect, it was his
submissions that work done by the vendors was not restricted to work done while
they were owners.
[26] Adopting Mr Shand's argument would mean that if a person happened to
purchase a property on which he had previously done
work, he would, through the
act of acquiring the property, assume liability for the work. That is, a liability to
answer for the
quality of work - which had not previously existed - would come into
existence when he later became the owner. I accept that the
wording of 6.2(5) might
literally embrace such a conclusion. But it is difficult to understand why the words
should result in such
a consequence. He would, from the point of becoming the
owner, assume liability to someone who purchased from him for work that had
been
done which had no connection with him. If he had not done, or been in control of
work, which caused loss, the contractual provision
is simply a mechanism to allocate
the risk to the vendor that work when the property was owned by a predecessor
owner had not been
done properly. He would indemnify the purchaser against that
risk.
[27] Then there is the consideration that clause 6.2(5) applies:
Where the vendor has done ... any works
[28] The expression `vendor' in the present circumstances is a collective one
describing Mr and Mrs Joyce. Clause 6.2(5) will have the same meaning if there is
substituted for the word `vendor' the words `Geoffrey
James Joyce and Susan Mary
Joyce'. If, as I believe, it is permissible to interchange the last expression for
"vendor", then clause
6.2 would read as if it stated that the vendor warrants and
undertake that:
(5) Where Geoffrey James Joyce and Susan
Mary Joyce have done or
caused or permitted to be done on the property any works for which
a permit
or building consent is required by law.
[29] This makes it clear that the `vendor' did not carry out any such work. Such
work
as was done was done by that party who had power to do, cause or permit to be
done, any works on the property for which a permit
or building consent was
required. That party was seen to have been the previous owner of the property JDL
and possibly, its agent Mr Joyce. But it does not extend to Mr and Mrs Joyce
collectively.
[30] However, it might have been the case that in a broad factual sense the
purchaser knew that the Joyces, or more accurately
one of them Mr Joyce - as
developer of the property, had information about the entire history of the unit and not
just what had
occurred during the period of the Joyce's ownership of it. That is,
even though in a technical sense works had been carried out by
a company, JBL
and/or its agent, Mr Joyce, rather than by Mr and Mrs Joyce collectively, that
company was closely associated with
the Joyces and indeed Mr Joyce had been the
guiding hand behind JBL. The Joyces, whether as company directors and
shareholders
had built the property. That being so, it may have been implicitly
understood that the Joyces, in practical terms, were responsible
for its state and were
prepared to warrant its quality, the parties not being concerned with the separate
legal identity of the company
and its incorporators. Such an understanding, though,
could only be arrived at if it had the necessary foundation in the background
facts.
The Court would otherwise be unlikely to regard it as a serious possibility.
[31] The point of this discussion is to
show that while the background
circumstances may support a conclusion that the parties' intention, objectively
considered, was defined
by the words bearing their literal meaning, that approach
does not necessarily place the matter completely beyond doubt. There are
elements
of the background which can be invoked to support either interpretation which the
parties advanced at the hearing before
me. On that analysis, the proceeding is not
suitable for summary judgment.
Result
[32] Before the third defendants could succeed
on their summary judgment
application they would have to persuade the Court that this is a case, in the words of
the Westpac Banking
judgment, where abbreviated procedure and affidavit evidence
will sufficiently expose the facts and legal issues. I do not consider
that the
defendant's application passes that test and the application will be dismissed.
Costs
I expect the parties will be able
to agree the matter of costs. If they cannot, they
should within 10 days file a memorandum advising me to that effect and I will
allocate a 9 a.m. hearing time to hear argument to resolve that issue.
______________________
J P Doogue
Associate Judge
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URL: http://www.nzlii.org/nz/cases/NZHC/2009/1417.html