PONNIAH, GOODWIN KAHUKIWA AND JOHNSON TRADING AS CORBAN REVELL V PARALLEL DIRECTIONS LIMITED HC AK CIV 2007-404-001484

PONNIAH, GOODWIN KAHUKIWA AND JOHNSON TRADING AS CORBAN REVELL V PARALLEL DIRECTIONS LIMITED HC AK CIV 2007-404-001484 18 October 2007IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2007-404-001484BETWEEN LAWRENCE PONNIAH, ALAN GOODWIN, JOHN KAHUKIWA AND BRUCE JOHNSON TRADING AS CORBAN REVELL Appellant AND PARALLEL DIRECTIONS LIMITED Respondent Hearing: 15 October 2007 Appearances: A Gilchrist for Appellant R B Hucker and A Cumming for Respondent Judgment: 18 October 2007 at 12 noonJUDGMENT OF VENNING J7KLV MXGJPHQW ZDV GHOLYHUHG E\ PH RQ 2FWREHU  DW QRRQ SXUVXDQW WR 5XOH    RI WKH+LJK&RXUW5XOHV 5HJLVWUDU'HSXW\5HJLVWUDU 'DWH«««««Solicitors: Corban Revell, Henderson Hucker & Associates, Auckland Copy to: A Gilchrist, AucklandBackground[1] Mr Ponniah and his partners in the law firm Corban Revell decided to relocate their office. They sought advice from Parallel Directions about the process and their options. Mr Scott of Parallel Directions provided an estimate of between five and six thousand dollars for certain work. Later the parties completed an agreement for the provision of services. The agreement did not refer to the estimate. Under the agreement Corban Revell agreed to pay Parallel Directions $190 per hour plus expenses plus GST. The agreement included a clause negating any pre- contractual representations made by Parallel Directions. [2] Parallel Directions rendered two accounts, one for $6,584.06 (including GST) and one for $7,545.96 (including GST). Corban Revell refused to pay the amount in excess of the estimate. Parallel Directions took summary judgment proceedings against Corban Revell. Judge Recordon entered judgment for Parallel Directions in the District Court at Waitakere on 1 December 2006 for the full sum. [3] Corban Revell appeal from that judgment.The issues[4] The issues that arise on the appeal are:• Did the Judge apply an incorrect legal test to the application?• What is the scope of the estimate?• What is the legal significance of the estimate?Did the Judge apply an incorrect test to the application?[5] In entering judgment against the plaintiff the District Court Judge concluded that:[20] The defence lacks detail. The onus is on the defence to persuade me that there is an arguable defence. They fall well short. Summary judgment will be entered for $14,721.76. [6] The test to apply on an application for summary judgment is well settled. The onus is on the plaintiff to satisfy the Court that a defendant has no defence: r 152 District Court Rules. It has been variously stated as requiring the plaintiff to satisfy the Court the defendant has "no bona fide defence, no reasonable ground of defence, no fairly arguable defence": Pemberton v Chappell [1987] 1 NZLR 1 CA at pp 3-4 per Somers J. [7] In suggesting that the onus was on the defence to persuade him there was an arguable defence the Judge has misstated the law. Even where the defence adduces evidence, the onus remains on the plaintiff to satisfy the Court there is no arguable defence. In MacLean v Stewart (1997) 11 PRNZ 66 CA the Court of Appeal confirmed that while the onus may be satisfied on the plaintiff's evidence where there is no response from the defendant, where the defendant does adduce evidence the onus does not shift and the Court must still be satisfied on the balance the onus has been discharged by the plaintiff. [8] Mr Hucker submitted that the Judge was doing no more than noting the evidential onus and considering whether sufficient detail had been provided to discharge the evidential onus in light of the plaintiff's evidence. I am unable to accept that submission. The wording the Judge has used at para [20] is clear and unqualified. He has not referred to an evidential onus but the onus generally. [9] I propose to consider the matter afresh applying the test of whether the respondent satisfies the Court the appellant has no arguable defence to the claim. In the circumstances there is no need to consider the application to adduce further evidence, which was directed at the issue of a possible concession by counsel as to credibility.What is the scope of the estimate?[10] Mr Gilchrist confirmed that the appellant wishes to raise defences under the Contractual Remedies Act 1979, the Fair Trading Act 1986 and the Contractual Mistakes Act 1977. All the defences are based on the estimate provided by Parallel Directions to Corban Revell. [11] That requires consideration of what the estimate was to relate to and the legal significance of the estimate. Mr Scott and Mr Goodwin (one of the Corban Revell partners) have different views as to the scope of the work to which the estimate related. Mr Scott's evidence is that the estimate he gave Mr Goodwin at theirmeeting on 26 April 2006 of approximately five to six thousand dollars plus expenses plus GST was the cost for completing a needs specification, effectively the first stage of the process. Mr Goodwin considered that the estimate was for all the work Parallel Directions was to carry out for Corban Revell including a detailed comparison of the options open to them. [12] The initial brief Mr Goodwin provided to Mr Scott by email on 13 April referred to a brief in respect of two alternative accommodation sites, a Waitakere central development and a Central Park Drive property. But in relation to the Waitakere brief, Corban Revell said: No firm negotiations have occurred with regard to rental and costing.In addition, in relation to Central Park they said: There are no specific documents to enclose in regard to this purchase While the two properties were identified as the alternatives available to Corban Revell, at the time, in mid April, there was insufficient information available for Parallel Directions to carry out a detailed comparison of the properties. [13] In response Mr Scott sent an email on 19 April suggesting that the scope of work should be configured to achieve:• A clear definition of how much space you really need for the term of your lease. • A clear understanding of what will be required in your new premises to support your day-to-day operational effectiveness. • An agreed methodology on how you will get buy-in from your staff and clients to the planned changes.• An agreement inside the partnership on what you will be able to afford for rentals and fitting out of the new premises.• An understanding of how you can build in flexibility into your new premises so future changes in your Business Plan can be supported.• A framework of strategies that will be the foundation of future negotiations, whichever new site you choose.The letter did not suggest the work would include a detailed comparison of the two properties. There then followed a meeting on 26 April 2006. Mr Scott presented a letter at that meeting in which he noted :Further to our recent discussion on your prospective relocation, we recommend that your firm carry out a process that will provide it with a foundation of independent data with which it can evaluate prospective schemes and premises options.[14] The letter is consistent with the scoping exercise proposed in the earlier letter of 19 April. At the meeting on 26 April Mr Scott worked through a standard worksheet that dealt with issues such as space quantification, facilities review, staff and client buy-in, deliverables and affordability factors. These were the needs specification and associated work referred to previously. They did not involve an actual comparison of the two alternative properties. His calculations of the time required for the needs specification and associated work (which he did not disclose to Mr Goodwin) came to a total time of 29 hours which formed the basis of his estimate "of $5000 to $6000". [15] After discussing the matter with his partners, Mr Goodwin authorised Parallel Directions to proceed and concluded the agreement for the provision of services (to commence 3 May 2007). [16] Mr Scott also gave evidence that at later meetings with Mr Ponniah and Corban Revell's manager Ms Bryce, he was instructed to do further work which included analysing reports as well as various cost comparisons. He explains thedifference between the estimate and the fee charged on that basis. He also explains the difference on the basis that the details about the Central Park Drive property which enabled work to be done on the comparison was only introduced by Mr Ponniah at the first meeting with him on 3 May 2006 (the record of the meeting of 4 May is apparently a typographical error). Mr Scott's evidence was:The specification of property needs did not include nor was it intended to include any assessment of any specific property or proposal, but was to create what was hoped would be the criteria that would then enable the next step of sourcing premises to be carried out. The steps in completing the analysis were set out in the proposal of 26 April 2006 in the schedule immediately behind the flow diagram. Once these steps were taken the firm's requirements for new premises could then be determined.[17] Mr Goodwin has said generally that he maintained that the assessment and the advice included a comparison of the Waitakere and Central Park properties but does not provide any detail for that understanding other than it was always his expectation and understanding. Mr Goodwin does accept however, that "in considering both the options, [Mr Scott] would first have to ascertain the accommodation needs of the firm and the important deliverables". [18] On the other hand, Mr Scott's evidence is supported by the documentation, both his own and the correspondence he had with Mr Goodwin. The documentation can only lead to the conclusion that the estimate of five to six thousand dollars related to Parallel Directions's assistance to Corban Revell to specify their property needs. It did not, however, extend to a detailed analysis and comparison of the two options. At the time the estimate was confirmed, full details and information regarding the second option had not been provided to Mr Scott. There was no basis upon which he would then have been able to consider making a comparison. That further information was only made available at the subsequent meeting between Mr Scott and Mr Ponniah. [19] At a meeting on 8 May 2006 Mr Ponniah completed a set of notes and provided Mr Scott with the financial details relating to the Central Park Drive property. Mr Scott said that in addition:29. Mr Ponniah then instructed me to do further work in analysing reports that he received as well as various cost comparisons.[20] Mr Ponniah has not responded by way of affidavit to that statement. [21] While Mr Goodwin says he considered that the estimate was to include the comparison, that is his understanding. It was not Mr Scott's understanding. As noted, Mr Scott's evidence is consistent with the contemporaneous documents. Mr Goodwin may have considered the estimate covered all the work, but if so, he was mistaken. I find that the estimate provided by Parallel Directions was only to relate to the initial scope that Mr Scott set out in the letter of 19 April and confirmed in the subsequent letter of 26 April. When all the relevant evidence is considered, particularly the contemporaneous documentation, there can be no dispute as to material facts on this issue so as to require a substantive hearing.What is the legal significance of the estimate?[22] Mr Gilchrist submitted that Corban Revell entered the contract on the basis of a misrepresentation by Parallel Directions as to what the estimate was to include. For the reasons given above there has been no misrepresentation. There was no incorrect representation of fact by Parallel Direction. Parallel Direction's quotation was for the work defined by Mr Scott. To the extent he considered otherwise, Mr Goodwin was at best mistaken. [23] In any event any misrepresentation would be excluded by the exclusion clause. The written contract entered by the parties included the following:3. Implied terms 3.1 The Client warrants that it has not relied on any representation made by Parallel Directions except where it has been expressly written into this Agreement.[24] Mr Gilchrist submitted that notwithstanding the exclusion clause the contract itself was always subject to the pre-contract estimate or representation provided to Mr Goodwin which formed the basis of agreeing the contract. However, parties to a contract are able to contract out of the Contractual Remedies Act: s 4 (1): Brownlie v Shotover Mining Limited CA 181/87 21 February 1992. The appellants are solicitors. They are entered a commercial contract for the provision of professionalservices, a situation they would have been very familiar with. The appellants could be expected to be familiar with the effect of an exclusion clause in these circumstances. For their own reasons the appellants did not seek to include an express warranty as to the estimate in their written contract. Instead they accepted a contract which expressly excluded any representation which would have included that estimate and provided an hourly rate for services. In the absence of fraud Parallel Directions was entitled to rely on the provisions of the written contract which excluded liability for prior representations if it wished to do so: Brownlie v Shotover Mining Limited. There is no suggestion of fraud. It follows that the defence based on contractual misrepresentation is not arguable. [25] Next Mr Gilchrist submitted there was an arguable defence based on a misleading and deceptive conduct under the Fair Trading Act. However, he properly accepted that if there was no misrepresentation then there could be no misleading or deceptive conduct. That was a proper concession to make. There is no basis for an arguable defence of misleading or deceptive conduct on the part of Parallel Directions in this case. Looked at objectively, the evidence does not disclose any misleading or deceptive conduct on the part of Parallel Directions. The respondent set out in writing the scope of the initial work it was to do for Corban Revell. The estimate related to that work. The contract for professional services was silent on the point. [26] Finally, Mr Gilchrist submitted that there was an arguable defence based on contractual mistake. While I acknowledge Mr Hucker's objection that this point was not raised before the District Court Judge, as I am considering the matter afresh it is proper to take it into account. I also accept that on the evidence Mr Goodwin was mistaken as to the scope of the work that was covered by the estimate. The issue is whether it was a common or mutual mistake, for which relief may be available, or a unilateral mistake. [27] Mr Gilchrist submitted that both parties to the contract took differing views about what the work encompassed. But that is not sufficient to make out a common or mutual mistake. Both parties must either be mistaken about the same matter (common) or different matters (mutual). Neither Mr Scott nor Parallel Directionswere labouring under any mistake as to the scope of the estimate, and the work that it covered. The mistake in this case was a unilateral mistake by Mr Goodwin. A purely unilateral mistake is not remedial, unless Parallel Directions knew that Corban Revell was mistaken as to the scope of the estimate. There is no evidence of that. Mr Gilchrist did not submit there was.Conclusion[28] It follows that the estimate does not, in the circumstances of this case have any legal significance and the respondent satisfies this Court that the appellant has no arguable defence. The appeal is dismissed.Costs[29] Costs to the respondent on a 2B basis together with disbursements as fixed by the Registrar. __________________________ Venning J