Sipka Holdings Limited v Merj Holdings Limited [2015] NZHC 3073 (4 December 2015)

Last Updated: 10 December 2015

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-000199 [2015] NZHC 3073

BETWEEN	SIPKA HOLDINGS LIMITED First Appellant ANG PROPERTY INVESTMENT LIMITED Second Appellant
AND	MERJ HOLDINGS LIMITED Respondent

Hearing:	4 December 2015
Appearances:	T J Rainey for Appellants S R G Judd for Respondent
Judgment:	4 December 2015

_{ORAL JUDGMENT OF WYLIE J}

Solicitors/Counsel: Rainey Law, Auckland S R G Judd, Auckland

SIPKA HOLDINGS LTD v MERJ HOLDINGS LTD [2015] NZHC 3073 [4 December 2015]

Introduction

[1] The respondent applies for an order recalling a judgment I gave in relation to the dispute between the parties on 20 August 2015.¹ It seeks to recall paragraphs [83] and [84] of that judgment. In paragraph [84] I remitted the issue of damages to the District Court for re-hearing. In the alternative the respondent seeks leave to appeal to the Court of Appeal against that part of my decision recorded in paragraphs [83] and [84].

[2] The application is resisted by the appellants.

Background

[3] This litigation arises out of the sale of a commercial property in Matamata by the respondent to the appellants. In the course of negotiations leading up to the sale, the respondent represented that the property was not earthquake prone because its structure was rated at 43 per cent of the then current building standard. The respondent made that representation notwithstanding that it had an engineering report which concluded that the building was rated at or below 33 per cent of the then current building standard, that it required strengthening and that it was accordingly earthquake prone.

[4] The District Court found that the respondent had misrepresented the condition of the building and/or engaged in misleading and deceptive conduct in trade, thereby breaching the Fair Trading Act 1986. The District Court Judge awarded $37,000 to the appellants. He considered that that sum represented the cost of increasing the building from below 33 per cent of the building standard to 43 per cent of the building standard.

[5] The appellants appealed against the damages award, arguing the minimum work required to get over the 33 per cent threshold turned out to be 100 per cent of the new building standard. The respondent cross-appealed against the Judge’s findings as to liability. In the alternative the respondent sought that the award of

_{damages should be vacated.}

¹ Sipka Holdings Ltd v Merj Holdings Ltd [2015] NZHC 1980.

[6] On appeal I upheld the District Court Judge’s findings as to liability. In relation to damages, I concluded that the Judge had erred in his approach to damages. In my judgment the appellants had to upgrade the building to 100 per cent of the Building Code requirements because they elected to change its use. I took the view that the actual costs incurred by the appellants in strengthening the building would have been incurred regardless of the misrepresentation. I noted that the appellants had not called evidence before the District Court to the effect that they paid too much for the building. I also noted that there was no evidence that the cost of upgrading the building to 100 per cent of the new building standard was increased as a result of the misrepresentation. I noted that there was no material available on which the District Court Judge could properly assess damages flowing from the breach, and recorded that I was not prepared to “pluck a figure out of the air”. The question of damages was remitted back to the District Court for re-hearing.

Submissions

[7] Mr Judd for the respondent submitted that the possibility of remitting the damages issue back to the District Court was not canvassed by the parties in their respective submissions, and that it was not raised either by me, or by the appellants. He referred to the well known bases on which a recall can be ordered set out in the

decision of Horowhenua County v Nash (No 2)² and submitted that there are very

special circumstances justifying a recall in this case. It was his argument that, because the possibility of remission back to the District Court was not raised by either party and the decision to do so was made by the Court without hearing fully from the parties, there has been a breach of natural justice. In the alternative, he argued that relief should be granted to appeal to the Court of Appeal. He put it to me that there are two serious and important arguments justifying the grant of leave, first whether or not the direction to remit the matter to the District Court should have been made, and secondly whether the matter should have been remitted given the need for finality in litigation and where there was no miscarriage of justice in the

_{District Court.}

² Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC).

[8] Mr Rainey for the appellants argued that there is no basis on which to recall the judgment. He submitted that the respondent’s real point in the application remains the same as that advanced by it at the appeal hearing – namely that the appellants having approached the assessment of damages on a certain basis should have their clearly meritorious claim based on the misrepresentation/breach of the Fair Trading Act dismissed for want of proof of damages. He argued that that argument was considered and rejected by me in my decision and that accordingly the Court is now functus officio. He submitted that there are no very special circumstances which justify a recall of the decision, and that there is no question of law or fact of sufficient importance to justify a further appeal.

Analysis

[9] I accept Mr Judd’s argument that the parties did not make submissions on whether or not the issue of damages should be remitted to the District Court in the course of the appeal hearing. I cannot recall whether or not the issue was raised in the course of the hearing; nor can Mr Judd. It seems unlikely that it was raised, otherwise the parties would have addressed the issue.

[10] The power to recall a judgment is contained in r 11.9 of the High Court

Rules. It provides as follows:

11.9 Recalling judgment

A Judge may recall a judgment given orally or in writing at any time before a formal record of it is drawn up and sealed.

[11] It is trite law that despite the unfettered discretion given by r 11.9, the recall of a judgment is a serious step to be taken only in reasonably well identified situations. The leading judgment in this area is that of Wild CJ in Horowhenua County v Nash (No 2).³ It was there noted as follows:⁴

Generally speaking, a judgment once delivered must stand for better or worse subject, of course, to appeal. Were it otherwise there would be great inconvenience and uncertainty. There are, I think, three categories of cases in

which a judgment not perfected may be recalled - first, where since the hearing there has been an amendment to a relevant statute or regulation or a new judicial decision of relevance and high authority; secondly, where counsel have failed to direct the Court’s attention to a legislative provision or authoritative decision of plain relevance; and thirdly, where for some other very special reason justice requires that the judgment be recalled.

[12] This statement of the law has been applied by the Supreme Court⁵ and by the

Court of Appeal.⁶

[13] I have accepted that the parties did not address the issue of whether or not the issue of damages should be remitted to the District Court. I also accept that they should have been given that opportunity. In my view this case does fall within the third category identified in Horowhenua County v Nash. There is a very special reason that requires that paragraphs [83] and [84] of the judgment be recalled, namely to afford to the parties the opportunity to present submissions in relation to the issue of remission. Accordingly I direct that paragraphs [83] and [84] of the judgment be recalled.

Further submissions

[14] Mr Judd has today made extensive submissions on whether or not remission is appropriate. He does not seek to advance any further submissions in this regard. Nor does he require a formal hearing in relation to the issue. Mr Rainey takes the same stance. He does however seek the opportunity to file written submissions in relation to the issue.

[15] I direct that any submissions to be made on behalf of the appellants are to be filed and served on or before 18 December 2015. Any reply from Mr Judd is to be filed and served on or before 29 January 2016. I will then deal with the issue on the papers unless I require the assistance of counsel.

Costs

[16] The costs of today’s hearing are reserved. They will be dealt with in the course of determining whether or not the damages issue should be remitted to the

_{District Court.}

Wylie J