Tucker v Musson Building Services Limited [2018] NZHC 1089 (17 May 2018)

Last Updated: 19 June 2018

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-1996 [2018] NZHC 1089

BETWEEN	JAMES PATRICK TUCKER, NICHOLAS RONALD TUCKER as trustees of the TUCKER TRUST together with CLAIRE CHRISTINE ENDEAN as partners of the TUCKER TRUST/ENDEAN PARTNERSHIP Plaintiffs
AND	MUSSON BUILDING SERVICES LIMITED First Defendant
AND	ANDREW ROSS MUSSON Second Defendant
AND	JAMES STARNES Third Defendant

Hearing: [by formal proof]	17 May 2018
Appearances:	S Maloney for Plaintiffs No appearance for Second Defendant
Judgment:	17 May 2018

ORAL JUDGMENT OF TOOGOOD J

[Against the Second Defendant only]

TUCKER & ORS v MUSSON BUILDING SERVICES LIMITED & ORS [2018] NZHC 1089 [17 May 2018]

Introduction

[1] On 21 April 2016, the plaintiffs (referred to collectively as Tucker) entered into a residential building contract under which Musson Building Services Limited (MBSL) agreed to construct and carry out building works at 44A Sprott Road, Kohimarama, Auckland (the Property). The second defendant, Mr A R Musson, assumed responsibility for, and exercised control over, the building works on behalf of MBSL. The third defendant, Mr Starnes, joined Mr Musson in commencing the building works in April 2016.

[2] Tucker commenced proceedings on 30 August 2017 against the defendants. The causes of action against Mr Musson alleged breaches of a duty to take reasonable care; breaches of his personal guarantee as to the way in which the works were to be carried out and conversion by unlawfully taking possession of cedar cladding intended to be used in the building works, ownership of which was alleged to have passed to Tucker.

[3] MBSL is in liquidation. Mr Starnes has filed a statement of defence. Mr Musson has taken no steps in the proceeding, but I am satisfied that he is aware of Tucker’s determination to obtain judgment by formal proof.

[4] The plaintiffs, therefore, have moved to obtain judgment against Mr Musson only. The cause of action based on the personal guarantee is not pursued, Tucker now accepting that, having been given orally, the guarantee does not comply with the requirements of the Property Law Act 2007 and is unenforceable.

[5] Evidence in support of Tucker’s claims under the first and third causes of action has been provided by affidavit, both as to liability and quantum.

[6] I have been assisted by Mr Grove's helpful summary of the plaintiffs' case in his memorandum of 1 May 2018, a copy of which was served on Mr Musson. The relevant factual background is as follows.

Breaches of duty of care

[7] During the construction of the building works, Tucker became concerned about the quality and pace of the building works performed by the defendants. In March 2017, Tucker observed that there had been no activity on the Property for several weeks. A site inspection on 20 March 2017 raised concerns about the standard of the building works. Sealing and backfilling of the walls had not been carried out, and the base cladding and framing were in poor condition. The building site had also been vacant for a period of time, allowing weather to damage the interior. A report by the plaintiffs' architects (the Formis report) identified defects regarding:

(a) waterproofing;

(b) the incorrect use of insulation and protection material;

(c) framing;

(d) discolouration and rot in the particle board on the upper level;

(e) cladding and enclosure, including incorrect nailing and incorrect installation of building wrap; and

(f) the rusting of structural steel.

[8] On 23 March 2017, Tucker served a notice on MBSL alleging that it was in default under the building contract, specifying the nature of the default and requiring certain remedial steps to be taken. On 27 March 2017, a Mr Anderson, on behalf of MBSL, made a request for an extension of time to complete the building works. That request was declined and Tucker required a response to the default notice.

[9] On 31 March 2017, MBSL provided a response and gave an updated completion date of 27 July 2017. It was at that point that Mr Musson and Mr Starnes provided the personal guarantees, on the basis of which Tucker refrained from exercising available rights under the building contract and permitted the defendants to proceed with the building works. Tucker monitored such progress as there was on the
building works over the ensuing four weeks but, by May 2017, established that no further progress had been made to make the Property watertight. Another default notice was sent to the defendants on 14 June 2017 and, in the absence of any satisfactory remedying of the alleged defaults by the defendants, Tucker gave notice of cancellation of the contract, pursuant to clause 78, on 10 July 2017. A new builder was engaged to remedy the defects and complete the building works.

Conversion

[10] The claim for conversion of the cedar cladding is based on Mr Musson’s conduct following the delivery of cedar cladding to the Property in March 2017. MBSL sought payment of $63,881.81 for a "cladding to site" progress payment. On 31 March 2017, Mr Musson confirmed to Tucker by email that the cladding supplier had received full payment for the cedar and that ownership in it had passed to MBSL. On 4 April 2017, MBSL confirmed to Tucker that the cedar was then the property of MBSL and that ownership would move to Tucker following receipt of the payment for the cedar which had been invoiced. On that date, Tucker paid the invoiced amount to MBSL in full for the cedar cladding.

[11] On 11 August 2017, Ms Claire Endean, acting on behalf of Tucker, discovered that half of the cedar cladding had been stolen from the Property, the theft having been concealed to make it look as though the stacks of cedar were still in situ on the site. After the theft was reported, the Police discovered the cedar at Mr Musson's home. Mr Musson told the Police that either he or his company were entitled to remove the cladding and he refused to return it to the plaintiffs.

[12] Under the building contract, MBSL was entitled to repossess goods or materials delivered to the Property only if:

(a) Tucker failed to make any payment by the due date;

(b) MBSL notified Tucker in writing of the failure to make payment; and
(c) MBSL gave Tucker five working days to remedy the failure before MBSL retook possession of the goods or materials.

[13] Ms Endean says that some days after the cedar cladding was taken, MBSL purported to issue several invoices to the plaintiffs but the plaintiffs deny any liability to pay them and has refused to make any payment. Mr Musson has not provided any evidence that the company was entitled to repossess the cladding.

[14] Despite interlocutory orders made by the Court, including an order made on 11 September 2017 by Whata J directing MBSL and Mr Musson to return the cedar cladding to the plaintiffs immediately, the cladding has never been returned to Tucker.

Findings

Breaches of duty of care

[15] I am satisfied on the evidence provided by Ms Endean as to quantum that Tucker has suffered losses totalling $500,378.70 due to the defects and other defaults by the first and second defendants in carrying out the terms of the building works contract. I am also satisfied that these losses flow from breaches by Mr Musson of duties of care he owed to the plaintiffs, including:

(a) failing to ensure that the building works undertaken complied with all requirements of the Building Act 2004, the New Zealand Building Code, good trade practice and industry standards, and other regulations and standards in force at the time;

(b) failing to ensure that practical completion of the building works was achieved within a reasonable period from the commencement;

(c) failing to take reasonable care when carrying out and/or supervising the building works to avoid foreseeable loss arising out of defective construction; and

(d) unreasonable delays in completion of the building works.
[16] I am satisfied, therefore, that Mr Musson is liable for the losses which the plaintiffs have quantified.

Conversion

[17] Tucker has also established to my satisfaction that, at the time of the removal of the cedar cladding after ownership had passed to the plaintiffs on 4 April 2017, Mr Musson converted the cladding which was subsequently found at his home:

(a) he wilfully interfered with the plaintiffs' use and possession of the cladding in a manner inconsistent with the plaintiffs' rights;

(b) he did so with the intention of denying the plaintiffs' rights or asserting an inconsistent right; and

(c) he had no lawful justification for doing so.

[18] The proved value of the lost cedar cladding is $31,050.00.

Judgment

[19] For these reasons, I give judgment for the plaintiffs against the second defendant, Mr Musson, as follows:

(a) Judgment in the sum of $500,378.70 under the first cause of action (breaches of duty).

(b) Judgment for the sum of $31,050.00 under the third cause of action (conversion).

(c) Costs calculated on a 2B basis in the sum of $15,833.00 calculated in accordance with the Schedule attached to Mr Grove's memorandum.
(d) Disbursements of $2,050.00 calculated as set out in the Schedule.

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Toogood J