Case arose from a contract to alter a garage so that it would include a living space
The Court of Appeal has upheld a ruling awarding a homeowner a modest sum of money for the repairs of defects in roofing work conducted by a construction company under a residential building contract.
The respondents in this case were trustees of a trust that owned a residential property. In April 2018, they executed a contract with a construction company – the applicant in this case – for work to alter the property’s garage so that it would include a living space.
Since the building work began in late April 2018, the applicant issued eight payment claims. The respondents, which were overseas from June to September 2018, failed to pay three of these claims. This led the applicant to suspend work in September 2018.
Upon the respondents’ return, they criticised the applicant’s roofing work on the garage. The applicant cancelled the contract in November 2018 and brought in the District Court proceedings seeking payments for lost profits and outstanding claims amounting to $49,920.65.
The respondents made a counterclaim for overcharging and for remedial work, which would include repairing the allegedly defective garage roof. The respondents requested the amount of $25,817.75 plus GST.
The District Court awarded the applicant $49,920.65 for the outstanding payment claims, refused to issue an award for the applicant’s alleged lost profits, and rejected the respondent’s counterclaim.
The judge accepted that the roof needed remedial work. However, she held that the respondents could not sue the applicant for the repairs since they had breached their contractual obligation relating to the payment claims. She saw no contractual breach on the part of the applicant, which was found entitled to cancel the contract due to the respondents’ failure to pay.
On appeal, the respondents’ counterclaim succeeded in the amount of $25,817.75 plus GST. The appeal judge ruled that s. 42 of the Contract and Commercial Law Act 2017 entitled the respondents to their contractual rights at the time of the contract’s cancellation.
The appeal judge decided that the applicant breached the contract by failing to exercise reasonable care and skill in carrying out the roofing work and that the respondents had the right to demand that the applicant remedy the defect or cover the costs of a third party doing the repairs in the applicant’s place.
In Van den Anker Construction Limited v Wilson McKay Trustee Company Limited, [2024] NZCA 654, the Court of Appeal issued a judgment refusing the applicant’s application seeking leave to appeal. The appeal court decided that the interests of justice did not justify granting such permission.
The appeal court rejected the applicant’s argument that the appeal judge inappropriately overturned the factual findings of the District Court’s judge. The appeal court agreed with the appeal judge that the decisive considerations to refuse leave were the relatively modest amount of money involved in this case and the need for proportionality.
The appeal court noted that this matter involved a building contract executed around six years ago, that the applicant has since received an award for $49,920.65, that the only issue here was the counterclaim for repairs of admitted defects in the roofing work, and that the sum involved in the counterclaim was only $25,817.75 plus GST.
