Cambria Commercial 2009 Limited v Pedley HC Palmerston North CIV-2011-454-457 [2011] NZHC 1964 (7 December 2011)

Last Updated: 6 February 2012

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

_{CIV-2011-454-457}

BETWEEN CAMBRIA COMMERCIAL 2009

LIMITED Plaintiff

AND MILTON CHARLES PEDLEY AND JEAN MARGOT PEDLEY Defendants

Hearing: 9 November 2011

(Heard at Wanganui by Video-Link))

Counsel: G. Mason - Counsel for Plaintiff

E.J. Unsworth - Counsel for Defendant

Judgment: 7 December 2011 at 3:00 PM

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

This judgment of Associate Judge Gendall was delivered at 3.00 pm on 7 December

2011 under r 11.5 of the High Court Rules.

Solicitors: Loughnan, Solicitors, PO Box 1257, Palmerston North

_{Horsley Christie, Solicitors, PO Box 655, Wanganui}

CAMBRIA COMMERCIAL 2009 LIMITED V MILTON CHARLES PEDLEY AND JEAN MARGOT PEDLEY HC PMN CIV-2011-454-457 7 December 2011

Introduction

[1] Before me is an application by the plaintiff for summary judgment against the defendants, Milton Charles Pedley (Mr Pedley) and Joan Margot Pedley (Mrs Pedley). The sum claimed is for work done on Mr and Mrs Pedley‘s home in Feilding. That work was undertaken pursuant to a contract made under the Construction Contracts Act 2002 (the Act). Interest on the sum claimed was also sought. That interest claim however has been abandoned on the present summary judgment application.

[2] That application is opposed by the defendants.

[3] While the current plaintiff in this proceeding is stated as Cambria Commercial 2009 Limited, the contract for the work at issue it seems was made between Mr and Mrs Pedley and Cambria Commercial Limited, a separate company to the named plaintiff. The shareholders of both companies however are Keith Michael Tunnicliffe (Mr Tunnicliffe) and a Mr Stewart, and the director of both companies is Mr Tunnicliffe. On 22 August 2011, the plaintiff filed and served a notice of change of plaintiff‘s name pursuant to r 4.54 of the High Court Rules, endeavouring to amend the plaintiff‘s name to Cambria Commercial Limited. Before me, Mr Mason, for the plaintiff, accepted that notice under that rule was not the appropriate course here and that the correct position is simply to say that the wrong company was referred to. I agree: Andrew Beck and others McGechan on Procedure (online looseleaf ed, Brookers) at [HR4.54.01]. Accordingly, before me Mr Mason made an oral application pursuant to r 4.56 of the High Court Rules for addition of Cambria Commercial Limited as new plaintiff and removal of Cambria Commercial 2009 Limited as previous plaintiff. That application was also opposed by the defendants.

[4] After discussing the background to this matter, I will turn to consider that preliminary issue as to the proper parties to this proceeding, before considering the merits of the plaintiff‘s claim.

[5] Since the hearing, Mr Mason has filed a memorandum annexing a further decision of the Court of Appeal which he considers may be of assistance to the Court. The defendants however oppose my considering that decision. While the

hearing of the present application took place nearly one month ago, the assistance from Mr Mason‘s memorandum was minimal. In my own research on the matter I had already considered the decision to which he referred me.

Background

[6] In February 2010, Cambria Commercial Limited entered into a contract under the Act to perform the construction work at the defendants‘ property in Feilding. That contract followed a Deed of Settlement entered into by the parties resolving issues relating to an earlier weathertight homes claim by the defendants against Cambria Commercial Limited. The Settlement Deed was entered into between Mr and Mrs Pedley, a Mr and Mrs Prier, the Manawatu District Council, Cambria Commercial Limited and Mr Tunnicliffe.

[7] Clause 18 of the Settlement Deed provided that the defendants would pay the difference for any increased costs for work variations undertaken. A number of variations were agreed to between the parties. Cambria Commercial Limited undertook additional work, over and above that required under the Settlement Deed. The overall increase in price was $54,068.42 (GST incl).

[8] Paragraphs 42 and 46 of the Settlement Deed also, relevantly, provided:

42. If the proceeding is discontinued all parties agree they will not pursue a claim against any other party relating to issues arising directly or indirectly out of the house and/or the proceeding.

...

46. If the proceeding is discontinued, all parties agree they will not pursue a claim against any other party relating to issues arising directly or indirectly out of the house and/or the proceeding.

[9] On 30 November 2010 and 20 February 2011, accounts headed ―Cambria Commercial 2009 Limited‖ were rendered to the defendants, seeking payment. Those accounts listed a bank account and GST number alongside that company‘s name. While I cannot be sure, for no one has given evidence on this point, I infer that this GST number and that bank account are those of Cambria Commercial 2009

Limited, and these are different from those of Cambria Commercial Limited.

[10] On 25 March 2011, a payment claim headed ―Cambria Commercial Limited‖ was served on the defendants pursuant to s 22 of the Act, claiming $58,914.94. That sum comprised the $54,068.42 principal claim plus interest (but I note that interest is no longer claimed here). The payment claim was specified as being made under the Construction Contracts Act 2002 and it provided a due date for payment of 1 April

2011. The claim period was stated as being from 2 July 2010 to 29 November 2010. The payment claim had attached the aforementioned accounts, headed ―Cambria Commercial 2009 Limited‖, as evidencing the amount due (but again the claim stated that the amount was due to ―Cambria Commercial Limited‖).

[11] The defendants did not respond to that payment claim. They now claim that there are defects in the work carried out on their home which are unresolved, and they have other issues with the plaintiff‘s worksmanship.

Summary Judgment Principles

[12] Rule 12.2(1) of the High Court Rules provides that this 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. The principles relevant to that assessment were summarised by the Court of Appeal in Krukziener v Hanover Finance Ltd: [2008] NZCA 187, [2010] NZAR 307 at [26]; adopted more recently by the Court of Appeal in Cockburn v CS Development No 2 Ltd [2010] NZCA 373, (2010) 24 NZTC 24,431 at [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).

Counsels’ Submissions and My Decision

Preliminary issue

[13] I turn first to consider the preliminary issue of ―parties‖. On this, r 4.56 of the High Court Rules provides:

4.56 Striking out and adding parties

(1) A Judge may, at any stage of a proceeding, order that—

(a) the name of a party be struck out as a plaintiff or defendant because the party was improperly or mistakenly joined; or

(b) the name of a person be added as a plaintiff or defendant because—

(i) the person ought to have been joined; or

(ii) the person's presence before the court may be necessary to adjudicate on and settle all questions involved in the proceeding.

(2) An order does not require an application and may be made on terms the court considers just.

(3) Despite subclause (1)(b), no person may be added as a plaintiff without that person's consent.

[14] Mr Mason for the plaintiff submitted that Cambria Commercial Limited ought to have been joined as a plaintiff from the beginning of these proceedings and further that this company‘s presence before the Court is necessary to adjudicate on and settle all questions involved here. Mr Mason also submitted that there is no prejudice to the defendants in the Court allowing the addition of Cambria Commercial Limited, for the defendants have been aware throughout to whom it was that they owed the moneys in question. On this, it is significant in my view to note that in a letter dated 16 May 2011 from Mr Pedley to Mr Tunnicliffe at Cambria Commercial Limited (exhibited by Mr Pedley to his 18 August 2011 affidavit) Mr Pedley acknowledges a head contract with that company and what he describes as a sub-contract with Cambria Commercial 2009 Limited when he states:

As you chose to sublet your contract to Cambria Commercial 2009 Limited it was not our concern and as stated before, it was their choice to engage all the subcontractors.

[15] For the defendants, Mr Unsworth submitted that r 4.56 is a tool to either strike out a party, or add a person. He said that it may not be used to substitute a

plaintiff for an incorrect party. He further contended that r 4.56 may not be used in a summary judgment process such as the present one where the plaintiff is expected to have its case completely correct when seeking such a remedy.

[16] Mr Unsworth suggested that the defendants would suffer prejudice here if joinder is allowed as the substantive defence raised by the defendants relates to the proper plaintiff issue and not the defence of the contractual claim itself. That prejudice arises he says from the defendants‘ Notice of Opposition. The Notice records at paragraph 3:

The grounds on which the Defendants oppose the making of the order are as follows:

1. The construction contract dated 2 July 2010 was between Cambria

Commercial Limited and the Defendants.

2. The Defendants have no contractual relationship with the Plaintiff.

3. As a result the Defendants do not owe the Plaintiff any money.

4. If the Court accepts that there is a contractual relationship between the Plaintiff and the Defendants (which is denied) the Defendants have a ‗set off‘ against Cambria Commercial Limited which exceeds the Plaintiffs claim against them, and that should be litigated in this proceeding

5. Appearing in the affidavit of Milton Charles Pedley filed herein.

[17] Rule 4.56 is clear that an order may be made at any stage of a proceeding and requires a liberal approach: Chan v The Seyip Association of New Zealand Inc [2007] NZHC 1099; [2008] NZAR 37 (HC). It is also clear that a formal application need not be made. Further, there does not appear to be any issue in this case as to the new plaintiff‘s consent, as the shareholders and director of both companies are the same.

[18] Mr Unsworth commented before me that he could not find any case where addition of a plaintiff had occurred at summary judgment. The authors of McGechan on Procedure refer to the decision of Master Kennedy-Grant in Linnell v Wright HC Auckland CP183/92, 23 June 1992 at [HR4.56.06]. In that case, the plaintiffs applied for summary judgment. The plaintiffs were all former partners in a partnership known as Mangawhai Developments Partnership. The defendant, Mr Wright, was also a partner of that partnership, but was not named as a plaintiff. The plaintiff‘s claim was based on a guarantee, which was given by the defendants to the plaintiffs, which they sought to enforce. However, the guarantee was in favour of

the Mangawhai Developments Partnership. Accordingly, Mr Wright needed to be joined as a plaintiff in order to obtain summary judgment.

[19] In allowing joinder there when considering the application for summary judgment, the Master considered that the defendants would not suffer any prejudice by the granting of the amendments to the statement of claim. The Master continued:

On the authority of Proudfoot and Others v BNZ (1885) 6 LR (NSW) 170, had the three original plaintiffs realised that the partnership was still in existence, they could have brought the proceeding in the name of all four partners whether or not the defendant S. G. Wright consented. They could do so again if I dismiss this proceeding.

[20] As Mr Wright did not consent, the Master added him as a separate defendant in his capacity as a partner of the Mangawhai Developments Partnership. Orders were made accordingly.

[21] I am satisfied that a similar course ought to be adopted in the present case. In my view the addition of Cambria Commercial Limited is necessary here to properly adjudicate the questions involved in this proceeding. It is Cambria Commercial Limited which ought to have been named as plaintiff from the beginning. The defendants contracted with Cambria Commercial Limited as the defendants have clearly acknowledged and so it is that company which must bring a claim to recover the monies owed.

[22] Further, if I was to find that Cambria Commercial Limited could not be joined and these proceedings were discontinued, it would be open to that company to initiate new proceedings against the defendants. Given the stage that these proceedings are at, that course as I see it would not be desirable.

[23] I accordingly order that Cambria Commercial Limited be joined as a plaintiff to these proceedings. Mr Mason has also advised that Cambria Commercial 2009

Limited need not be named as a plaintiff. The defendants owe no liability to that company, and so clearly it has no prospects of success against the defendants: AMP v Architectural Windows Ltd (1988) 1 PRNZ 566 (HC). Accordingly, I am of the view that Cambria Commercial 2009 Limited was mistakenly named as a party to this proceeding and order it to be struck out as plaintiff. There is power for a Court

to do this in my view under r 4.56 as a separate event, notwithstanding any earlier order to add a plaintiff under that rule, as has occurred here.

[24] Of course, those orders do not mitigate the effect of the plaintiff‘s pleadings which purport to identify Cambria Commercial 2009 Limited as the party with whom the defendants contracted. Rule 5.26 provides:

5.26 Statement of claim to show nature of claim

The statement of claim—

(a) must show the general nature of the plaintiff's claim to the relief sought;

and

(b) must give sufficient particulars of time, place, amounts, names of persons, nature and dates of instruments, and other circumstances to inform the court and the party or parties against whom relief is sought of the plaintiff's cause of action; and

(c) must state specifically the basis of any claim for interest and the rate at which interest is claimed; and

(d) in a proceeding against the Crown that is instituted against the Attorney-General, must give particulars of the government department or officer or employee of the Crown concerned.

[25] As noted by the authors of McGechan on Procedure at [HR5.26.03] and [HR5.26.07], consistent with r 5.26(b), a statement of claim must set forth the factual circumstances giving rise to each cause of action alleged. In Price Waterhouse v Fortex Group Ltd CA179/98, 30 November 1998, at 13, the Court of Appeal had this to say on the importance of pleadings:

It has become fashionable in some quarters to regard the pleadings as being of little importance. There was an echo of that approach in the implicit suggestion floated in this case that exchange of briefs of evidence before trial might be seen as curing any lack of particularity in the pleadings. Any such view is misguided. Pleadings which are properly drawn and particularised are, in a case of any complexity, if not in all cases, an essential road map for the Court and the parties. They are the documents against which the briefs of evidence are or should be prepared. They are the documents which establish parameters of the case, not the briefs of evidence.

We are not casting aspersions on the pleadings in this case which, leaving aside issues about necessary particularity, are well drawn on each side. Nor are we advocating a pedantic approach to the topic. Pleadings should be read as conveying what they would reasonably convey, in the context of the case, to a sensible legal mind. Even less are we advocating prolixity of pleadings, or the raising of every conceivable cause of action irrespective of its potential for success; this type of pleading often contains the additional flaw of overlooking R114 which requires each cause of action to be separately pleaded. What we are saying is that both the Court and opposite parties are entitled to be advised of the essential basis of a claim or defence, and all necessary ingredients of it, so that subsequent processes and the trial itself can be conducted against recognisable boundaries. Neither the Court nor opposite parties

should be placed in the position of having to deal with a proposition of whose substance adequate notice has not been given in the pleadings.

[26] The statement of claim does not do that currently. Therefore, an amendment is required under either rr 7.77 or 1.9 or the High Court Rules. Rule 7.77 relates to amendments, primarily prior to trial: McGechan on Procedure at [HR7.77.01]. Whereas, r 1.9 provides:

1.9 Amendment of defects and errors

(1) The court may, before, at, or after the trial of any proceeding, amend any defects and errors in the pleadings or procedure in the proceeding, whether or not there is anything in writing to amend, and whether or not the defect or error is that of the party (if any) applying to amend.

(2) The court may, at any stage of a proceeding, make, either on its own initiative or on the application of a party to the proceedings, any amendments to any pleading or the procedure in the proceeding that are necessary for determining the real controversy between the parties.

(3) All amendments under subclause (1) or (2) may be made with or without costs and on any terms the court thinks just.

(4) This rule is subject to rule 7.18 (no steps after the setting down date without leave).

[27] Sub rules (1) and (2) make it clear that r 1.9 may be used at any stage. Considering an appeal against an application under r 11, now r 1.9 of the High Court Rules, mid way through trial, the Court of Appeal said in: Elders Pastoral Ltd v Marr [1987] NZCA 18; (1987) 2 PRNZ 383 (CA) at 385

In our opinion, if an applicant can surmount the three formidable hurdles of showing that the amendment is in the interests of justice and will not significantly prejudice defendants or cause significant delay, very little if any weight should be given to the suggested desirability of something akin to the denunciation which is an established factor in criminal sentencing.

[28] Eichelbaum CJ allowed a similar application in Elders Pastoral Ltd v Pemberton (1990) 2 PRNZ 188 (HC). In considering the application, the Chief Justice said at 190:

Had the proposed new cause of action caused the plaintiff to have to reassess its position in any way, or investigate any legal aspects (or for that matter any factual ones, although one would have expected those to have been canvassed already) an application for adjournment could have been considered, but counsel for the plaintiff declined the opportunity to seek an adjournment.

[29] Ultimately, his Honour‘s decision turned on the interests of justice in the

case.

[30] In Wright Stephenson & Co Ltd v Copland [1964] NZLR 673, Wilson J said at 678-679:

The Court is not limited, in its power of amendment, to the mere correction of "defects and errors in the proceedings in the action" but, as a general rule should allow "all amendments necessary for the purpose of determining the real controversy between the parties in the action" unless it is satisfied that the party applying is acting in bad faith or that the amendment sought would cause some injury to the opposite party which cannot be compensated by costs or otherwise.

[31] While the Court eventually found that the District Court should not have allowed amendment (see Carr v Ambler Homes Ltd HC Auckland CIV-2009-404-93,

29 June 2011), in Carr v Ambler Homes Ltd [2009] NZHC 571; (2009) 19 PRNZ 422 (HC) Duffy J

commented at [20]:

The manner in which the amendment was ultimately dealt with may not be so procedurally irregular if everyone was expecting an amendment to the statement of claim.

[32] I accept the defendants‘ contention that they may have suffered some possible prejudice here in meeting the claim as brought by the plaintiff (ie the one brought in the name of the wrong party) but the defendants have also, quite rightly, mounted a defence to the proper plaintiff‘s substantive claim. Indeed, that is evidenced by the fact that before me Mr Unsworth did not request an adjournment as a result of and to deal with the plaintiff‘s change in tack. Further, I consider that there would be distinct prejudice caused to the plaintiff if amendment were not allowed in the present case. All parties were well aware from the outset that it was Cambria Commercial Limited which had suffered the alleged loss, and indeed, as I have noted at [14] above, Mr Pedley confirmed his contractual arrangements were with that company and what he presumed were its subcontracting arrangements.

[33] I also acknowledge that the application before me is one for summary judgment. However, the Court of Appeal commented in Cegami Investments Ltd v Amp Financial Corporation (NZ) Ltd [1990] 2 NZLR 308 (CA) at 314:

There is no justification for holding the summary judgment rules suspect and needing to be strictly confined because they are thought to deprive defendants of the privilege of a full trial. They are aimed at cases in which the plaintiff can establish there is no genuine defence, and they should be approached and applied in a way that will most

effectively enable the Court to reach a conclusion on that question. With this in mind we see no good reason why the ordinary provisions about amendment should not apply to such proceedings if the justice of the case requires it and there is no prejudice to the defendant.

[34] That Court in Pemberton v Chappell [1987] 1 NZLR 1 (CA) also noted at 5:

There is nothing to prevent it in the Act or the High Court Rules and if the Judge thinks it inevitable that such a discretion will be exercised, there is every reason to save time and expense by dealing with the matter on the spot. This ground of defence must be rejected.

[35] Here, I consider that the overall justice of this case and the need to deal with this matter now to save time and expense for all the parties concerned require that the exercise of this discretion would be inevitable and so there is no good reason in my view to hold up what is a full consideration of the plaintiff‘s present application for summary judgment. I proceed now on this basis.

The Summary Judgment Application

[36] Before considering the plaintiff‘s application it is useful to outline a general overview of the Construction Contracts Act 2002.

[37] The purpose of the Act is set out in s 3, as an Act to ―reform the law relating to construction contracts, and, in particular‖:

(a) to facilitate regular and timely payments between the parties to a construction contract; and

(b) to provide for the speedy resolution of disputes arising under a construction contract; and

(c) to provide remedies for the recovery of payments under a construction contract.

[38] In considering this general purpose, the Court of Appeal in George Developments Limited v Canam Construction Limited [2006] 1 NZLR 177 (CA) stated at [31]:

The purpose provision of the Act includes the fact that the Act was ‗to facilitate regular and timely payments between the parties to a construction contract‘. The importance of such regular and timely payments is well recognised. Lord Denning (quoted in Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1973] 3

All ER 195, 214 (HL) Lord Diplock) said: ‗There must be a ‗cashflow‘ in the building trade. It is the very life blood of the enterprise‘.

[39] And, in Salem Ltd v Top End Homes Ltd (2005) 18 PRNZ 122 (CA) the

Court of Appeal again reiterated this at [11]:

The whole thrust of the Act is to ensure that disputes are dealt with promptly and payments made promptly, because of the disastrous effects that non-payment has, not only on the head contractor, but also on its employees, subcontractors, and suppliers: George Developments Ltd v Canam Construction Ltd CA244/04 12 April 2005 at [41]-[42]. It is relevant to note, for instance, that employers cannot set up counterclaims, set-offs, or cross demands as a bar to the recovery of a debt under s23 of the Act, unless the employer has a judgment in respect of its claim or there is not in fact any dispute between the parties in relation to the employer‘s claim: s79. The fundamental position under the Act is that, if a progress claim is made and the employer does not respond within the period stipulated in the construction contract or, by default, within the time specified in the Act, the amount of the claim becomes payable forthwith.

[40] Disputes between parties under the Act must be analysed with these purposes in mind: George Developments Ltd v Canam Construction Ltd [2006] 1 NZLR 177 (CA) at [41].

[41] The payment regime established under the Act was considered by Asher J in Marsden Villas Ltd v Wooding Construction Ltd [2007] 1 NZLR 807 (HC). Asher J said at [16]-[17]:

The Act sets up a procedure whereby requests for payment are to be provided by contractors in a certain form. They must be responded to by the principal within a certain timeframe and in a certain form, failing which the amount claimed by the contractor will become due for payment and can be enforced in the Courts as a debt. At that point, if the principal has failed to provide the response within the necessary time frame, the payment claimed must be made. The substantive issues relating to the payment can still be argued at a later point and adjustments made later if it is shown that there was a set-off or other basis for reducing the contractor‘s claim. When there is a failure to pay the Act gives the contractor the right to give notice of intention to suspend work, and then if no payment is made, to suspend work. There is also a procedure set up for the adjudication of disputes.

The Act therefore has a focus on a payment procedure, the results that arise from the observance or non-observance of those procedures, and the quick resolution of disputes. The processes that it sets up are designed to side-step immediate engagement on the substantive issues such as set-off for poor workmanship which were in the past so often used as tools for unscrupulous principals and head contractors to delay payments. As far as the principal is concerned, the regime set up is ―sudden death‖. Should the principal not follow the correct procedure, it can be obliged to pay in the interim what is claimed, whatever the merits. In that way if a principal does not act in accordance with the quick procedures of the Act, that principal, rather than the contractor and sub-contractors, will have to bear the consequences of delay in terms of cashflow.

[42] Section 12 states that the Act may not be contracted out of, except for limited grounds which are provided for in the Act. Section 24 provides that where a payment claim is not adhered to, a payee may recover that claim from the payer in any court. By section 5 a payment claim is a claim issued in accordance with s 20. Section 20 provides that a contractor may serve on a payee a payment claim. Those matters of form must be adhered to in order for a claim to be valid: Foggo v R J Merrifield Ltd HC Christchurch CIV-2009-409-605, 21 September 2009, but it is well established that mere technical quibbles will not invalidate a claim: George Developments Ltd v Canam Construction Ltd [2006] 1 NZLR 177 (CA) at [43].

[43] Under s 20, a payment claim must be served on a payer. Section 19 defines a payer as:

payer means the party to a construction contract who is liable for that payment

[44] Section 20(2) further provides:

(2) A payment claim must—

(a) be in writing; and

(b) contain sufficient details to identify the construction contract to which the progress payment relates; and

(c) identify the construction work and the relevant period to which the progress payment relates; and

(d) indicate a claimed amount and the due date for payment; and

(e) indicate the manner in which the payee calculated the claimed amount; and

(f) state that it is made under this Act.

[45] The defendants‘ first affirmative defence is that the payment claims issued by Cambria Commercial Limited were defective under s 20 of the Act. In particular, Mr Unsworth submits that a payment claim must identify the construction work done.

[46] The payment claim issued provides in the description column: ―Variations as per contract‖ and a dollar figure is provided. The tax invoice attached to the payment claim (which was headed ―Cambria Commercial 2009 Ltd‖) says:

M & J Pedley

5 Te Arakura Road

RD Feilding

To:

Variations as per contract at 5 Te Arakura Road as per schedule attached

$47,016.01

Plus GST $ 7,052.40

_{Total $54,068.42}

[47] Subsequent invoices evidence a claim of interest bringing the claimed amount to $58,914.94, ie equal to that in the payment claim.

[48] Mr Tunnicliffe‘s evidence, at paragraph 15 of his 8 July 2011 affidavit, is that he served a copy of the payment claim on Mr Pedley on 25 March 2011. The payment claim was hand delivered by Mr Tunnicliffe, under cover of a letter, to the letter box of the defendants at 5 Te Arakura Rd, Feilding. In his 28 October 2011 affidavit, Mr Tunnicliffe attached clause 15.1.2 of the contract which provides:

For the purpose of service of payment claims or notices, the postal address of:

(a) The Principal is Milton and Jean Pedley, 5 Te Arakura Road, Feilding – for the attention of: Milton Pedley

...

[49] It seems however that on 18 November 2009, the defendants temporarily vacated their Te Arakura Road residence they say due to health risks that the property presented at the time. They moved to a rental property at 196b Pohangina Road. The defendants shifted back to the Te Arakura Road property on 4 April

2011. Mr Pedley‘s evidence is that he did not receive the payment claim or invoice until 4 April 2011. He deposes that it was only then that he found the payment claim in an envelope on his desk at the Te Arakura Road property. Mr Unsworth submitted that that did not allow him the time to respond under the Act which should have been by 1 April 2011.

[50] And, in determining whether s 20 has been adhered to, the court may ask whether there has been compliance in substance. Further, as commented by

Associate Judge Doogue recently in Loveridge Ltd v Watts & Hughes Construction

Ltd HC Tauranga CIV-2011-470-275, 29 September 2011 at [22]:

My view is that, in broad agreement with that approach, if a reasonable reading of the document as a whole would convey the required information, differences in terminology will not be important.

[51] In the present case, invoices headed ―Cambria Commercial 2009 Ltd‖, which specified that the work for which payment was claimed was work on the defendants‘ property were attached to the payment claim. In those circumstances, the work identified was sufficiently specified and further, I do not understand the defendants to be unaware of what work was being claimed. Where there is no error in substance or confusion created by a mistake and that error or mistake is taken up in defence of a payment, that is the encapsulation of a technical quibble.

[52] While that allows the plaintiff to pass its first hurdle here, there still remains the issue of service. Mr Pedley‘s evidence as noted above is that he did not sight the claim until after the due date for payment had past. In Lindsay Builders Limited v Bird HC Christchurch CIV-2010-409-2724, 13 July 2011 at [8] – [9], Lang J commented in obiter: (footnotes omitted)

It was therefore impossible for the defendants to comply [with the service provisions of the Act] with either payment claim.

One of the mandatory requirements of the Act is that a payment claim specifies a date for payment. Although I have not heard argument on the point, it is difficult to see how a claimant could comply with this requirement by nominating a due date for payment that had already passed.

[53] Here, however, it is not in any way disputed that the payment claim was delivered to the required address on 25 March 2011 by Mr Tunnicliffe. Accordingly, while Mr Pedley did not sight the claim until after the due date for payment had past, if Mr Tunnicliffe validly served the payment claim on 25 March 2011, the defendants‘ argument must fall away.

[54] Section 22 of the Act provides: (emphasis added)

22 Liability for paying claimed amount

A payer becomes liable to pay the claimed amount on the due date for the progress payment to which the payment claim relates if—

(a) a payee serves a payment claim on a payer; and

(b) the payer does not provide a payment schedule to the payee within—

(i) the time required by the relevant construction contract; or

(ii) if the contract does not provide for the matter, 20 working days after the payment claim is served.

[55] Section 80 of the Act sets out the requirements for service of notices. That section provides:

80 Service of notices

Any notice or any other document required to be served on, or given to, any person under this Act, or any regulation made under this Act, is sufficiently served if—

(a) the notice or document is delivered to that person; or

(b) the notice or document is left at that person's usual or last known place of residence or business in New Zealand; or

(c) the notice or document is posted in a letter addressed to the person at that person's place of residence or business in New Zealand; or

(d) the notice or document is sent in the prescribed manner (if any).after the receipt of the payment claim).

[56] Parties to a construction contract cannot contract out of the Act. While, a contract may specify a means for service, ―it follows that it suffices if the serving party can show that the document came to the recipient party‗s attention‖: NCB 2000

Ltd v Hurlstone Earth Moving Ltd HC Auckland CIV-2010-404-8096, 23 June 2011 at [25], citing Marsden Villas Ltd v Wooding Construction Ltd [2007] 1 NZLR 807 (HC) at [93]; West City Construction Ltd v Edney (2005) 17 PRNZ 947 (HC) at [35]; Herbert Construction Co Ltd v Toogood HC Auckland CIV 2010-441-283, 20

August 2010; see also Herbert Construction Company Ltd v Alexander HC Napier CIV-2010-441-500, 21 October 2011; contrast Hawkins Construction Ltd v Ecosse Afrique Enterprises Ltd HC Wellington CIV-2008-485-2327, 25 February 2009 at [48] and Trevor Bills v Arnold Jensen (2005) Ltd HC Christchurch CIV-2008-409-

1349, 10 October 2008 at [36].

[57] In Donovan Drainage & Earthmoving Ltd v Kaipara District Council HC Whangarei CIV-2010-488-319, 18 August 2010 Associate Judge Bell considered whether a payment schedule (under s 80) was ―given to‖ a payee when it was posted by the payer, as opposed to when the payment schedule was received by the payee. At [25] his Honour said: (emphasis added and footnotes omitted)

Accordingly, the defendant in this case has shown that it posted the progress payment to the plaintiff at its place of business in Whangarei. The address for service was the address for the purpose of the contract. The act of posting is sufficient service. If s 80 had been intended to provide that some time would be allowed between the act of posting and the time of deemed receipt, Parliament would have used the provisions that are found in other statutes where documents are deemed to be received in the ordinary course of post. See, for example, s 352(5) of the Resource Management Act

1991. Parliament has not used that on this occasion. It has simply focused on the act of posting and it is that act, when complete, that constitutes sufficient service. The posting and receipt of the document under s 80(c) can straddle the lapse of time for the provision of a payment schedule under s 22.

[58] I see no reason in principle why the service of a payment claim should not follow that same reasoning. The defendants, in the construction contract, specified an address for service. That contract was entered into on 2 July 2010, a considerable period of time after the defendants moved out of the Te Arakura Road property. Therefore, there was ample time for them to specify the rental property in which they were living as the preferred address for service. They chose not to. As service was effected in accordance with s 80(d), I consider that service was validly effected in the present case and that this occurred on 25 March 2010. That provided the defendants with five business days to provide payment to the plaintiff, or alternatively, prepare a payment schedule. In those circumstances, I am satisfied that the defendants have no arguable defence with respect to the purported errors in the payment claim. I now turn to the defendants‘ final argument, estoppel.

[59] On this, Mr Unsworth submitted that clauses 42 and 46 of the Settlement Deed (recorded at [8] above) operate to estop Cambria Commercial Limited in bringing this claim as the claim arises directly or indirectly out of ―the house‖. That argument in my view however cannot be correct. To accept the argument would lead to an absurd interpretation which the parties could never have intended to agree on. Indeed, the Settlement Deed also provided specifically for the situation where variations to the work were required to be carried out. It cannot be the case that the Settlement Deed rendered nugatory the plaintiff‘s rights to bring actions for payment for those variations. Likewise, had the plaintiff been negligent in its repairs and caused the house to be substantially damaged or destroyed, a sensible interpretation of those provisions would not operate to estop the defendants in any claim they might bring against the plaintiff. A proper interpretation of clauses 42 and 46 as I see it limits them to issues arising out of the state of affairs as they were then. In other words, if the plaintiff subsequently had agreed to repair more than it was

actually liable for, by way of variation to the Settlement Deed (as in fact occurred here), this was not caught by the restrictions in clause 42 and 46 and the plaintiff was not estopped from recovering the cost of these repairs. This estoppel argument also must fail.

Conclusion

[60] I am satisfied, therefore, that the defendants have no arguable defence to the claim by the plaintiff, Cambria Commercial Limited here. I accordingly award summary judgment to the plaintiff in the sum of $54,068.42.

[61] There is also the issue of interest. I recorded above at [10] that the plaintiff had abandoned its claim for interest calculated under the contract, originally included in the payment claim. The defendants here argued that interest should not be allowed as originally claimed, but conceded that interest awarded under s 87 of the Judicature Act 1908 might be appropriate. I consider that the plaintiff is entitled to interest on this $54,068.42 at the rate prescribed under s 87 of the Judicature Act

1908 from the date that the account was rendered, 30 November 2010 until the date of final payment. An order to this effect is now made.

[62] The issue of costs remains unresolved. If agreement cannot be reached between the parties, the parties may file memoranda (sequentially) which are to be referred to me and I will decide the question of costs on the basis of the material then before the Court.

‘Associate Judge D.I. Gendall’