Mcfarlane v Dickson Marine (Refits) Ltd

JurisdictionNew Zealand
JudgeMILLER J
Judgment Date27 March 2013
Neutral Citation[2013] NZHC 647
Docket NumberCIV-2012-442-375
CourtHigh Court
Date27 March 2013

UNDER District Courts Act 1947

IN THE MATTER OF an appeal against a decision of the District Court at Nelson

Between
Andrew Angus Mcfarlane
Applicant
and
Dickson Marine (Refits) Limited
Respondent

[2013] NZHC 647

CIV-2012-442-375

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

Appeal against a District Court decision awarding $24,700 to respondent in respect of a time and materials contract for repairs on the appellant's boat — respondent gave estimates and promised in correspondence to keep appellant updated about the progress of the work and the costs — initially updated appellant but thereafter did not honour the promise and ultimately invoiced appellant for almost twice the estimates — whether the estimates had been near-quotes — whether the promise to update was a term of the contract which preceded its formation — whether appellant had been obliged to file a counter-claim in order to put the accuracy of the estimates and failure to update in issue — whether appellant had suffered a loss — whether appellant had relied on estimates.

Counsel:

P A Cowey for Appellant

J M Fitchett for Respondent

JUDGMENT OF MILLER J

MILLER J
Introduction
1

Dickson Marine repaired a large launch, the Akarua, at the request of Mr McFarlane. This appeal from the District Court concerns a sum of $24,746.29 that Dickson won from Mr McFarlane for the work. 1

2

The District Court established that this was a time and materials contract with an agreed hourly labour rate. But Dickson had given estimates, and it had promised to tell Mr McFarlane weekly what stage the work had reached and how much time had been expended. It did not honour the promise, and it ultimately invoiced

Mr McFarlane for about twice the estimates. The question on appeal is this: did the District Court err when it denied Mr McFarlane relief for Dickson's admitted breach of that promise
3

The Dickson estimates that are in dispute - a small portion of the work is not contested - totalled $26,650.38. After work began in February 2010 Dickson initially kept Mr McFarlane informed of progress and cost, but it ceased to do so at the end of April. About mid-May it rendered invoices totalling $29,105.05 for work to 30 April. Mr McFarlane paid $28,309.67. In mid-June 2010 he went to Dickson's yard to collect the vessel, and found invoices for a further $25,751.07, which he had not anticipated and refused to pay.

4

It is common ground that the appeal must be allowed in small part, for Dickson conceded in the District Court that it had claimed too much but that concession was not reflected in the judgment. Mr McFarlane's case goes much further than that, however: he says that he has paid more than the reasonable cost of the work. To prove that, he called expert evidence, a challenge to the admissibility of which has been renewed on appeal.

The narrative
5

The Akarua is a 20m launch, built in 2002. Through one of his companies Mr McFarlane bought the vessel in 2005. Between 2006 and 2008 he had extensive repair and maintenance work done, some of it by men who gave expert evidence at the hearing. That work cost more than $400,000.

6

In 2010 Mr McFarlane decided to prepare the vessel for sale. He approached Dickson about necessary repair and maintenance work, explaining why he wanted it done.

7

Before the vessel was delivered to the yard one of Dickson's operations managers, Barry Hart, travelled to Queen Charlotte Sound to inspect it and discuss the work needed. Several days later, on 12 February, he emailed three job sheets and estimates to Mr McFarlane, who had requested them. They included GST and materials:

  • a) Job 130 involved lifting the vessel, washing its bottom, removing aerials and mast, setting down in the shed and re-launching. The estimate was $1141.88.

  • b) Job 301 involved repairs to soft caulking on part of the starboard deck, which comprised teak planks laid over fibreglass-coated plywood. The soft caulking material in the affected area was to be removed, the seams cleaned out and new caulking installed, with any loose planks being re-fastened. The estimate, which included sums of $180 and $52.50 for caulking and glue and other consumables, was $3508.50.

  • c) Job 302 involved repairs to the aft bulwark and paint repairs. It included some sanding and painting the port belting. The initial estimate was $7,886.98, again including specified sums for labour and materials.

8

The total of the three estimates was $12,537.36. In a covering letter Mr Hart advised that:

I have attached job sheets that cover all the work we discussed on Monday.

They are estimates as I don't know the full extent of some of the jobs, such as how many teak planks may be loose, or how many metres of caulking is soft. Also, until we open up the aft bulwark, we will not know the full extent of work required. Our charge out rate is $56 an hour plus GST.

However I will give you updates as we go through the job so you are informed of the extent of the work in all areas.

9

Mr McFarlane replied by email, stating that the estimates were more than he had expected. Mr Hart responded on 16 February, promising that:

… I will closely monitor the work and all materials used and keep you informed weekly of labour hours spent as the job progresses.

10

Mr McFarlane accepted the estimates, and the vessel was delivered to the yard.

11

Soon after the work began Mr McFarlane authorised job 303, which involved some deck and hatch work. No estimate was requested, and there is no dispute about the cost.

12

Mr McFarlane seems to have dealt principally if not exclusively with Brian Bennett, then an operations manager at Dickson, who kept him informed of progress. On 16 April Mr Bennett advised that the transom rebuild was under way, as were the “cosmetics”, and stated:

… I will give you a cost to date, and an estimated cost to completing on Monday.

13

Once the vessel was opened up it became easier to assess the work needed. Mr McFarlane visited the yard on 21 April. In meetings with Mr Bennett and Mr Hart he authorised extensions:

  • a) Job 302 was extended to include repairs to the transom, which was showing signs of rot from a leaking shower unit. The extra work, which was substantial, became job 304.

  • b) Belting repairs to the port side became job 305. The belting comprised two strips of laminated timber approximately 10m long curved around the widest part of the hull. Paint on the belting had blistered, indicating that water had penetrated the laminations, and it was decided to scrape the paint back, dry the belting, and apply a layer of fibreglass.

14

Job sheets were prepared for jobs 304 and 305, but it does not appear that they were given to Mr McFarlane or that he received separate written estimates. Mr McFarlane said that he was advised orally at a meeting with Messrs Hart and Bennett that jobs 302 and 304 together would cost about $17,000, while Mr Bennett told him that job 305 would cost $3,000-$5,000. Mr Hart maintained that he did not attend any such meeting and knew nothing of an estimate for job 305, but Mr McFarlane's evidence finds some confirmation in an internal Dickson spreadsheet which was prepared for trial; it appears that a Dickson accountant made the entry after speaking to Mr Bennett. It recorded that “12k was for superficial repairs only, confirmed the initial estimate increase from 12k to 17k plus 3k for belting.” As noted, Mr Bennett was not a witness, but the Judge admitted a statement from him, written on 24 September 2010, in which he characterised the work as a “charge up” but also noted it had escalated and the escalations had been discussed with Mr McFarlane. That statement neither confirmed nor contradicted Mr McFarlane's account.

15

On 28 April Mr Bennett emailed, advising that the transom was fully rebuilt and ready for fairing, the forward hatch was complete, and the port belting had been stripped and was drying out. Decking was a “can of worms” and the only real solution was to strip the deck, which would not be “realistic price wise”; so Dickson would limit the job to what was obvious unless instructed otherwise. He advised that hours worked “as of end of last week are 275.5”. At $56 per hour that would amount to $15,428.

16

That email led to a discussion about deck repairs, which Mr Bennett followed up with an email on 29 April. He estimated that a deck rebuild would cost $35,000 and recommended patching and repairing the deck.

17

It is not now in dispute that Dickson failed to update Mr McFarlane on progress and cost after 29 April. Sometime in May Mr Bennett left Dickson's employment. Mr McFarlane was not told of his departure.

18

As noted earlier, invoices rendered in May totalled $29,105.05. It is unclear just when they were sent, but an email of 27 May 2010 suggests it may have been mid or even early May. There were seven invoices, one for each job, and they were fully itemised, including labour. The amounts are recorded in the table below. The itemised details showed that the invoices covered work done to 30 April. One of them, for job 130, included a sum for returning the vessel to water. Job 701 dealt with applying antifoul paint and replacing anodes. It had been done without authorisation; the Judge later found that Dickson had simply decided that the work was necessary.

19

On 8 June Mr McFarlane paid $28,309.67. He believes that payment covered all of the work he had authorised, including work done after 30 April.

20

The vessel remained at Dickson's yard until mid-June. Mr McFarlane explained that by saying that the work was “90 percent finished” at the end of April, some minor tidying up items needed attending to, and he faced a number of demands on his time in that period; further, Dickson was happy for him to leave the vessel at the yard.

21

On 27 May Mr Hart emailed Mr McFarlane advising that Dickson would be repainting the port side belting the next day and...

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