IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE	
CIV 2015-404-000964
[2020] NZHC 3494	

BETWEEN	REBNIK PROPERTIES LIMITED
Plaintiff	
AND	TROY JOHN DOBBS
First Defendant	
AND	ALUMINIUM REPAIRS LIMITED
Second Defendant	

	CIV 2015-404-001602	

BETWEEN	
ALUMINIUM REPAIRS LIMITED
First Plaintiff	
AND	TROY JOHN DOBBS
Second Plaintiff	
AND	MICHAEL GRANT RING
Defendant	

Hearing:	24 August – 28 August 2020
31 August – 3 September 2020
8 September – 9 September 2020	
Appearances:	D R Bigio QC and A J Steel for the Plaintiff/Defendants
C R Andrews and K T O’Halloran for the Defendants/Plaintiffs	
Judgment:	22 December 2020	

JUDGMENT OF CAMPBELL J

This judgment was delivered by me on 22 December 2020 at 10.30am Pursuant to Rule 11.5 of the High Court Rules

…………………………
Registrar/Deputy Registrar

REBNIK PROPERTIES LIMITED v DOBBS [2020] NZHC 3494 [22 December 2020]

TABLE OF CONTENTS

[Para]

Introduction	1
Factual narrative	6
Mr Ring’s St Heliers property	7
Initial dealing in 2007	11
Further dealings in 2008 and 2009	17
Entry into the construction contract in issue	21
May 2011 exchange of emails: scope of works and pricing	26
Invoicing June–September 2011	33
September 2011: expansion of scope of works	36
September 2011: a new hourly rate for “techs”	41
October and November 2011: scope of works expanded – decks	45
Initial timelines for completion: mid-January to April 2012	47
March 2012: scope of works expanded – resealing roofs	51
Further timelines for completion: June 2012 through to October 2012	52
October 2012: work on main roof is postponed	62
Some work added after Christmas 2012	64
Overpayment of 7 March 2013 invoice	66
April and May 2013 progress	67
Work added mid-2013	69
August 2013: new invoicing, and further work	70
Moving towards completion	72
Termination	79
Assignment to Rebnik	83
The pleadings	84
Rebnik’s claim against Mr Dobbs or ARL	84
ARL’s and Mr Dobbs’ claim against Mr Ring	90
The issues	92
Assuming there is liability to Rebnik, which of Mr Dobbs or ARL is liable?	98
Introduction	98
Rules in the general law of agency	102
Section 25 of the Companies Act 1993	110
The parties’ submissions	114
When did the parties enter into the contract?	118
Did Mr Dobbs disclose the agency prior to or at the time of entry into the
contract?	122
Subsequent (post-contract) conduct indicating that Mr Dobbs was acting for ARL
138
Summary of Mr Dobbs’ liability under the general law	146
Section 25 Companies Act 1993	147
Was it an implied term of the contract that Mr Dobbs/ARL would charge
Mr Ring only a reasonable price for the work?	148
Introduction	148
Decision	153
Summary	166
What was a reasonable price for the work?	167
The approach to assessing a reasonable price	167
An overview of the expert evidence	171
The quantity surveyors’ assessments of a reasonable price	183
Core work, including adjustment for Mr Dobbs’ scope	186
Allowance for core work as a whole	218
Preliminaries and general	223
Fragmentation	230
Adjustment for agreed rates	242
Margin	260
Consultant fee equivalent	268
Contingency	274
Summary	278
Is Mr Ring (and now Rebnik) estopped from pursuing the claim?	279
Did Mr Ring waive any obligation on Mr Dobbs or ARL to charge only a reasonable price, or waive any breach of that obligation?	291
Is Mr Ring liable to pay the final two invoices?	294
Conclusion	296
Interest	297
Result	301
Costs	303

Introduction

[1]	From April 2011 to February 2014 Mr Dobbs carried out remedial construction work on Mr Ring’s house. Mr Dobbs says he did this work on behalf of his company Aluminium Repairs Ltd (ARL). Over that period Mr Dobbs (or ARL) sent Mr Ring invoices each fortnight. The invoices totalled about $2.53 million. Mr Ring paid about
$2.46 million. He refused to pay the final two invoices.

[2]	The contract for the construction work was informal. It arose from a mix of emails, oral discussions, and conduct. Mr Dobbs specified some of the rates at which he (or ARL) would charge for labour, but no overall price was agreed.

[3]	Mr Ring says that in these circumstances Mr Dobbs (or ARL) was entitled only to a reasonable price for the construction work. Mr Ring says that a reasonable price was about $630,000. He says that he has therefore been overcharged, and asks to be repaid about $1.8 million. Mr Dobbs and ARL deny any overcharging. They say that Mr Ring should pay the final two invoices.

[4]	Two proceedings arose from this dispute. In the first proceeding Mr Ring’s assignee, Rebnik Properties Ltd (Rebnik), sues Mr Dobbs (or ARL in the alternative) for the alleged overcharging. In the second proceeding ARL (or Mr Dobbs in the alternative) sues Mr Ring for payment on the final two invoices. Although the four parties play different roles in the two proceedings, for convenience I will refer to Rebnik and Mr Ring as the plaintiffs, and to Mr Dobbs and ARL as the defendants.

[5]	In summary, I find that Mr Ring was overcharged. Mr Dobbs is liable to pay Rebnik $845,965.32, plus interest.

Factual narrative

[6]	Mr Ring is a barrister. He was admitted to the bar in 1979. For some years he has been a Queen’s Counsel.

Mr Ring’s St Heliers property

[7]	Between 2004 and 2015 Mr Ring owned and lived at a property in St Heliers, Auckland. On the property was a substantial three-level house of around 600 m2. It was built in about 1989. The house had an adjoining double garage. There was also  a detached single garage, a swimming pool, and a tennis court.

[8]	The base level of the house was reinforced concrete blocks, with a plaster finish. The middle and upper levels had concrete block plastered walls with an internal timber frame. The floors were reinforced concrete supported by a steel frame and concrete columns.

[9]	The middle and upper levels of the house had a full-length tiled deck on the north-facing side, with heavy-duty aluminium ranch sliders and window panels. There was also a small quarter deck on the middle level, on the south-facing side. The decks had irregular shapes, with curves at many of their edges.

[10]	The roofs of both the house and the attached double garage were Butynol laid over plywood on a timber frame, with internal gutters. The single garage had external gutters.

Initial dealing in 2007

[11]	In July 2007 Mr Ring wanted maintenance work done to some of the aluminium joinery in the house. He telephoned several businesses that were advertising in the Yellow  Pages.  One of those businesses provided Mr Ring with  Mr Dobbs’ name and contact number.

[12]	Mr Ring telephoned Mr Dobbs, who came to the house to scope the work.  Mr Dobbs’ evidence was that during that visit he told Mr Ring that he was in the process of incorporating a company, through which he would trade. In his evidence Mr Ring disputed that Mr Dobbs talked about incorporating or trading through a company.

[13]	Mr Dobbs then sent Mr Ring a quote for the work (in the form of an invoice), dated 10 July 2007. The quote was in the name “Aluminium Repairs”. That was the trading name that Mr Dobbs was using. Mr Dobbs did not incorporate his company, ARL, until over three months later, on 20 September 2007. The quote also showed a GST number. This was Mr Dobbs’ personal GST number.

[14]	The quote showed an email address of “aluminiumrepairs@xtra.co.nz.” However, Mr Dobbs gave Mr Ring a different email address to use, “tjblue6@xtra.co.nz”. Emails from that address  displayed  the  sender  as  “troy,” Mr Dobbs’ first name.

[15]	Mr Ring accepted the quote. He paid a deposit online into a bank account nominated by Mr Dobbs. Mr Dobbs told Mr Ring that the bank account was in the name “T J Dobbs.”

[16]	Mr Ring used that same account for all online payments of invoices, through until February 2014. He also made some payments by cheque made out to “Aluminium Repairs.”

Further dealings in 2008 and 2009

[17]	In April 2008 Mr Ring emailed Mr Dobbs about a leak in some aluminium joinery. Mr Dobbs did work on the joinery, but not until January or February 2009. On 25 February 2009 Mr Dobbs emailed Mr Ring an invoice for the work. The email came from the “tjblue6@xtra.co.nz” address. It was simply signed “Troy.”

[18]	Although ARL had by then been incorporated, the invoice was in the same format as the quote that had been sent to Mr Ring in July 2007. It showed the name “Aluminium Repairs,” and a GST number that was Mr Dobbs’, not ARL’s.

[19]	On 1 March 2009 Mr Ring emailed Mr Dobbs. He told him that the aluminium joinery was leaking again. Mr Dobbs attended to this in June 2009, and emailed an invoice to Mr Ring dated 26 June 2009. Further glazing work was done in August 2009, and another invoice emailed. Both invoices were in the same format as before. The emails from Mr Dobbs made no reference to ARL.

[20]	There is no suggestion that at the time of any of these dealings in 2008 and 2009 Mr Dobbs made any mention to Mr Ring that he was now trading through ARL.

Entry into the construction contract in issue

[21]	On 3 December 2010 Mr Ring emailed Mr Dobbs that there was another leak in aluminium joinery in the master bedroom (which was on the upper level). After an exchange of emails Mr Dobbs came to the house and looked at the problem. He then sent an email to Mr Ring on 10 December 2010:

Hi Mike

haven’t had time to do a estimate in writing ,but I expect 3 days per area so around 1800 dollars per area ,hard to know exactly until we get started . I have put some time away in late February ,last two weeks if that suits you .

have a great trip and merry xmass troy
[22]	Mr Ring replied by email the same day:

That’s fine. Thanks. I hope you have a good break as well.

[23]	Although Mr Dobbs’ email said that he had put some time away in late February 2011, he encountered delays in starting the work. On 6 April 2011 there was an exchange of emails between Mr Dobbs and Mr Ring, in which the parties agreed that the work should start on 26 April 2011.

[24]	The plaintiffs’ position is that the construction contract was entered into by the 10 December 2010 exchange of emails (with the parties agreeing to extend the scope of works from time to time thereafter). The defendants’ position is that the contract was not entered into until the exchange of emails on 6 April 2011 (they agree that the scope of works was extended by agreement from time to time thereafter). This dispute over the date on which the parties entered into the construction contract is, as I will explain later, relevant to whether Mr Ring (and now Rebnik) can have recourse to  Mr Dobbs, or only to ARL.

[25]	Related to that issue, Mr Dobbs gave evidence that in the early part of this work he took a friend of his, Andrew Light, to visit Mr Ring’s property. Mr Dobbs said that during that visit he told Mr Ring that he had not yet updated his invoices, which were still in the old form and did not yet contain his company’s (ARL’s) full name. He said that he then gave Mr Ring a business card with ARL’s full name on it. Mr Light corroborated Mr Dobbs’ account. Mr Ring disputed that this conversation had ever taken place, or that he had ever been given an ARL business card.

May 2011 exchange of emails: scope of works and pricing

[26]	On 23 May 2011 Mr Dobbs sent Mr Ring an email reporting on progress. He said that the work so far had been exploratory in nature. He told Mr Ring that the following work was needed on the leak identified on the upper level: removal of joinery, replacement of sill trays, some re-tiling of the deck up to the joinery, and extension of the Butynol membrane on the decks. The deck had to be shrink wrapped while this work was being carried out. Mr Dobbs’ email included:

the schedule of works is as follows

1.	remove joinery at terminations and replace sill trays

2.	remove water traps i.e… sections not needed for doors

3.	re-tiling up to joinery

4.	extending butinol inside to form lip ,removing concrete nib where needed to reduce high of outside level to floor

[27]	This work was somewhat expanded from what had been expected from the initial December 2010 discussions.

[28]	In his email Mr Dobbs said the following about price (underlining in original):

I estimate around 10-12 weeks of work with 1x tech full time + labourer part time for lifting glass and me on-site 20-30 hours a week ,(my) mike who you met the other day is my leading hand-a fully qualified builder and trained by me in Aluminium joinery chaz our best labourer you have met ,also I will be there a lot .

price wise ….I have worked it out on a weekly basis 60 hrs >40 (mike) 20 (me)> 60 hrs @ $58 x 60 = 3480 + materials , I would estimate the material worth to be around $2500 total for the entire job . although the shrink - wrapping is extra ,costing $2028 ,

…

note : my normal rate is $75 per hr per tech – I have done the best rate I can in respect to the size of the job.

[29]	Mr Dobbs’ email enclosed an invoice for the (largely exploratory) work to date. The invoice was in the same format as the invoices that had been sent to Mr Ring in 2007 and 2009. It charged “techs” at $58 per hour (plus GST). Mr Dobbs’ email concluded by saying that there was a design flaw in the support for the ceiling in the main bedroom, and that there was a small leak in the roof. Mr Dobbs said that “at the end of the joinery work we can fix this if you wish.”

[30]	Mr Ring responded by email the next day, 24 May 2011:

Thanks Troy. That’s all OK (in the circumstances!). Yes please, in relation to the roof leak as well. Invoice paid. Thanks.

[31]	This exchange of emails was typical, as far as the scope of works was concerned, of communications between Mr Dobbs and Mr Ring throughout the construction work (which ultimately stretched to early 2014). As work progressed, additional remedial or other work was identified (usually by Mr Dobbs). Mr Ring readily agreed to any recommendations that further work be done. At no point was a thorough investigation undertaken of the property to determine the full scope of necessary remedial work. Any scope of works was set out in only brief terms (such as the “schedule of works” in Mr Dobbs’ email). No plans or specifications were prepared. Mr Ring did not ask for any quotes (other than near the end of the work).

[32]	There is a dispute about the extent to which the 23–24 May 2011 exchange of emails entitled Mr Dobbs (or ARL) to charge Mr Ring at the hourly rate that he was subsequently charged. I will come back to that later.

Invoicing June–September 2011

[33]	In June, July and August 2011 Mr Dobbs emailed invoices to Mr Ring that were in accordance with what Mr Dobbs had said about pricing in his 23 May 2011 email. Mr Dobbs charged labour at a weekly rate of $3,480 (except for the last invoice, in which the weekly rate was, without explanation, $3,400). Mr Ring was charged a

total of 10 weeks at that rate. The line entries for labour on the invoices over this period were brief: “labour”; “labour x 1 week”; “2x weeks 2 techs”, “2 techs 2 weeks,” and “labour on site.”

[34]	The last invoice in that series, dated 17 August 2011, included the comment “final invoice.” It was not to be.

[35]	Mr Dobbs emailed that invoice to Mr Ring on 19 August 2011. His email said “see invoice ,next week is last week will all be done (no charge) . have worked out we are about $4,000 (1 week) over my estimate in time money spent approx. … next week is on me”. Mr Ring replied the same day, saying he appreciated the offer, but wanted to pay. Mr Dobbs sent Mr Ring an invoice on 5 September 2011. This had two line entries, one for $3,480, the other for $2,000. Each simply said “labour.”

September 2011: expansion of scope of works

[36]	Even before the “final invoice” dated 17 August 2011, further issues with the house had been identified. Mr Ring raised a minor issue in an email of 4 August 2011: he asked Mr Dobbs to look at a door on the lower level that was sticking. In an email of 5 August 2011 Mr Dobbs said that he would look at the door, and raised some more serious issues: water damage on the basement level associated with a structural support pillar (which Mr Dobbs referred to as a “pole”), and water damage from joinery in the master bedroom’s ensuite bathroom. Mr Dobbs also reminded Mr Ring of the issue with the ceiling in the master bedroom (first raised in the email of 23 May 2011).  Mr Ring emailed a response on 5 August 2011, saying “Next time I see you, let’s have a look and a talk about what to do.”

[37]	It is not clear when Mr Ring and Mr Dobbs next saw each other, or what was discussed.   But  it  appears  that  Mr  Dobbs  did  further  exploratory  work.    On  19 September 2011 Mr Dobbs sent Mr Ring an invoice by email. The invoice had a line item for labour with the explanation: “see email ,work for downstairs explore ,leak test and master bedroom roof replace”. The covering email said:

Hi Mike

no leak in master bedroom that i can find ,good news . but there is signs of moisture build up because the roof is not vented . which i will do – the bedroom door is fibrous plaster good stuff better than gib board but expensive
, also it needs to be painted ,do you want us to fix the cracks in the wardrobe area as well ?,it does a similar thing there dropping down . see pictures . downstairs is leaking from pole as far as we can see its time to pull that section out . securing is an issue but we will come up with something .

ok ,i was looking around the other day and i had a heart attack when i saw that you have the “hover dam”1 in a small room downstairs !!!! . I worked out its part of the old heating system ,but its not up to code ,its just so wrong to have this ,its leaking and its dangerous . its got to go . its putting huge stress on the foundations ,there are cracks .

[38]	Mr Dobbs sent that email at 5.42am. Mr Ring replied eighteen minutes later:

Yes please… To everything! Thanks

[39]	On 30 September 2011 Mr Dobbs sent Mr Ring an email reporting on progress. This email raised further issues with the house that could be addressed: venting the main roof cavity; removing the water tank altogether; leaking in the double garage; and replacing wooden blocks on which joinery glass was sitting with rubber blocks. Mr Dobbs told Mr Ring it was “your call” whether each item of work was done.    Mr Ring’s email response later that day included:

Yes please to all of it – including removal of the water tank. I may as well get everything done that appears to need doing.

[40]	These exchanges of emails on 19 and 30 September 2011 were again typical of the informal way in which the work was scoped.

September 2011: a new hourly rate for “techs”

[41]	The invoice attached to the email of 19 September 2011 had a line item for labour showing: “5x days 2x techs @ 65 per hour.” The amount shown was $5,200, which equates to 80 hours at $65 per hour. Previously techs had been charged at $58 per hour.

[42]	The covering email did not explain the increased rate. Mr Ring said in evidence that there was no prior discussion about the $65 per hour rate, but that he had

1	Mr Ring described this as a large water tank.

“no issue” with it, and that it was still less than the $75 per hour that Mr Dobbs had said was his usual rate. By contrast, Mr Dobbs’ evidence was that he spoke to Mr Ring about this at the time, explaining to him that he considered the increased rate was warranted because of the more complex expanded scope of works. His evidence was that Mr Ring raised no objection to the new rate. I will return to this later.

[43]	The next invoice, dated 30 September 2011, showed that 85 hours of “labour” were being charged. It did not refer to “techs” or to an hourly rate, but had the same amount of $5,200 as the previous invoice. This was an effective hourly rate of $61.18.

[44]	Thereafter, most of the invoices sent to Mr Ring charged labour at the $65 per hour rate. Often the invoices referred to this rate being charged for “techs.” But sometimes the line entry simply said “labour”. There were some exceptions to the $65 rate. On occasions a lower rate of $40 or $45 per hour was charged, for employees who Mr Dobbs apparently regarded either as “labourers” or as otherwise insufficiently qualified to be “techs.” And, as I will come to, from late 2012 Mr Dobbs (or ARL) engaged various temporary workers, who were charged to Mr Ring at $75 per hour.

October and November 2011: scope of works expanded – decks

[45]	Some time in October or November 2011 Mr Dobbs told Mr Ring that he had identified an issue with the Butynol membrane on the middle-level deck. This required removal of all the tiles and balustrades on the deck, and replacing the entire membrane across the deck and under the joinery to the inside of the house. The same issue applied to the top-level deck, and meant that the joinery on that deck would have to be removed a second time (as it had already been removed to allow the initial, but more limited, repair on that deck).

[46]	Mr Ring agreed to  all  of this further work.  Moreover, in  this proceeding  Mr Ring accepts that Mr Dobbs’ initial recommendation to do a more limited repair on the top deck was reasonable. Mr Ring therefore does not criticise Mr Dobbs for any resultant duplication of work on the top deck. In assessing the reasonable price for the construction work, it is common ground that both sets of work to the top deck should be allowed for as separate jobs.

Initial timelines for completion: mid-January to April 2012

[47]	On 14 November 2011 Mr Dobbs sent Mr Ring an email in which he reported “progress ok but will need labourer to give us a fighting chance of finishing on xmass
. there is sooooo much to do.” Mr Ring responded that he had relatives coming to stay in mid-January 2012, and that “if at all possible, it would be nice if everything was done by then.” He added that it was more important to get the job done completely and properly. If the mid-January 2012 timeline was too optimistic, Mr Ring asked Mr Dobbs to let him know “as early as this becomes apparent.”

[48]	A mid-January 2012 timeline did prove too optimistic. Mr Dobbs reported to Mr Ring on 21 December 2011 that progress was “slow going”. After the Christmas 2011 break, work did not start again until 30 January 2012.

[49]	On 24 February 2012 Mr Dobbs emailed Mr Ring that he had made some staff changes, and now had an “all new crew.” He said that as long as there were no hiccups he was ready to break the back of the job “and fly home to the finish line.”

[50]	On 12 March 2012 Mr Dobbs emailed Mr Ring, saying “would expect to be done by end of April.” Mr Ring replied “April would be good – our 1st anniversary!”

March 2012: scope of works expanded – resealing roofs

[51]	By about mid-March 2012 Mr Ring had agreed that the Butynol roofs on the house and on the double garage should be resealed. Prior to this time the parties had referred to some leaks in these roofs, but had not explicitly addressed resealing them.

Further timelines for completion: June 2012 through to October 2012

[52]	On 11 April 2012 Mr Dobbs sent an email to Mr Ring, saying “we are still more or less on track.” Mr Ring responded: “Can you give me an estimate of the total cost from now on to the end of the job (still June?)?”

[53]	Mr Dobbs replied on 23 April 2012 that he had “a time issue with these flashings” and that it was a huge job getting an estimate together but “I am 80% there.” In an email later that day Mr Dobbs explained that the problem with the flashings was

that they had to be welded from scratch, and the detail work in the flashings was very time-consuming. The flashings were for the decks, the main roof, and the double garage roof. In places the flashings had to be curved (such as where the decks had curved edges).

[54]	Mr Dobbs sent a progress report to Mr Ring by email on 20 June 2012. He did not give a timeline for completion. He sent further email updates on 4 and 30 July 2012. Each reported on progress, but neither gave a timeline for completion. His 30 July 2012 email referred to a back injury that Mr Dobbs had suffered.

[55]	In responding to Mr Dobbs’ emails from 23 April to 30 July 2012, Mr Ring did not make any further enquiry as to the timeline for completion. He did raise that question in an email of 10 August 2012, asking “Will you be all finished completely by early October?” Mr Dobbs’ response, the same day, was:

beginning October ,i would say we will be on the roof .until I uplift the tourch on2 ,we cant say how much roof needs to be replaced.

[56]	Mr Dobbs provided further updates in emails through August and September 2012, but without any timeline for completion. By the start of October 2012, the work on the decks and the double garage roof was still not complete, and work on the main roof had not started. On 2 October 2012 Mr Ring emailed Mr Dobbs:

I really want to be sure that everything, including the roof, is finished by Xmas, at the very latest. Is anything more that can and should be done to ensure this? Thanks

[57]	Mr Dobbs replied the same day. He said that there was another month’s worth of work to finish the decks and the double garage, and that the main roof was “unknown”. He suggested that Mr Ring could engage another contractor to do the main roof, but that he would not guarantee another contractor’s job. Mr Ring responded a few minutes later:

No, I definitely don’t want to hire anyone else! I only trust you! Have you got another gang that could start on the roof (or elsewhere)? Thanks

2	This appears to be a reference to Torch-On, a brand of waterproof membrane.

[58]	Mr Dobbs then sent Mr Ring an email saying that he was trying to recruit qualified staff, including temporary workers. He said this was a struggle, and that:

….it’s really an issue of quality control . And how can I be in several places at once .

The reason or secret to why my jobs never fail is that I check everything.

[59]	Mr Ring’s response, still on 2 October 2012, was:

OK, thanks. Whatever you can reasonably do without compromising quality.

[60]	The next day, 3 October 2012, Mr Dobbs reported by email that he had four temporary staff starting the next week. He said that they would go straight to the main roof. His email included:

The temps are 75 per hour unfortunately.

Gives us at least a chance of finishing all by 25 dec

[61]	Mr Ring responded the same day: “Sounds good”. But the work was not completed by 25 December 2012 (nor by 25 December 2013). Much later, Mr Ring discovered that Mr Dobbs (or ARL) was paying the recruitment agency only $21.50–
$33.50 per hour for the temporary workers.

October 2012: work on main roof is postponed

[62]	In mid-October 2012 a storm, which Mr Dobbs described as a “weather bomb,” hit the house. On 15 October 2012 Mr Dobbs emailed Mr Ring, explaining that this made him nervous about doing the work on the main roof (which required a temporary protective cover) before January–March, which he said were the best weather months. He said “What I am thinking is finish everything bar the roof and do the roof in optimum weather.” He asked for Mr Ring’s thoughts.

[63]	Mr Ring queried whether the weather would be any better from January. But it seems that he ultimately accepted Mr Dobbs’ recommendation. On 7 November 2012 Mr Ring sent an email to Mr Dobbs that included “Great to see that we are on track for our Xmas finish for everything except the roof.”

Some work added after Christmas 2012

[64]	Mr Ring returned from his Christmas break in mid-January 2013. He could see that there was still work to be done to complete the areas other than the main roof. On 22 January 2013 he sent an email to Mr Dobbs, asking Mr Dobbs to do some further work: replacing the top rail of a balustrade on a wooden deck out from the laundry.

[65]	On 14 February 2013 Mr Dobbs sent Mr Ring a brief email reporting on progress on the main roof. He emailed a further update on 18 March 2013. This reported progress on the main roof, and on other areas such as a bathroom and joinery. It also reported that the wooden laundry deck had been demolished and new wood was on site for its replacement. It appears that Mr Ring had agreed to more than just the top rail of this deck being addressed.

Overpayment of 7 March 2013 invoice

[66]	Mr Ring mistakenly overpaid an invoice dated 7 March 2013 by $4,000. He did not realise this until  reconciling  invoices  and  payments  in  February  2014.  Mr Dobbs had not said anything to Mr Ring in the meantime.

April and May 2013 progress

[67]	Mr Dobbs emailed a brief update to Mr Ring on 4 April 2013. This said that, all going well, the joinery in the master bedroom’s ensuite bathroom would be reinstalled the following week. In another email dated 22 April 2013 Mr Dobbs said that he would hopefully have that bathroom done “this week.”   On 2 May 2013     Mr Dobbs emailed Mr Ring that “can’t do your bathroom until plasterer is finished he hopes to start next week.” On 28 May 2013 he emailed “plaster done in ensuite
,waiting paint then at last we put your glass back together.” As it turned out, this joinery was still not reinstalled when Mr Ring terminated the construction contract in February 2014.

[68]	In his email of 28 May 2013 Mr Dobbs provided a “progress report/schedule of works”. Of the works listed, he said “the next two weeks should see this list done

/only  issue  is  weather  for  painting  exterior”.	Mr Dobbs described this as the “HOMEWARD STRECH”.

Work added mid-2013

[69]	By the end of June 2013 the work on the main roof was complete, apart from cap flashings on the parapet. Around this time Mr Ring asked Mr Dobbs to do some further works. These were on the single garage, the front entrance to the house, and various drains.

August 2013: new invoicing, and further work

[70]	Mr Dobbs implemented a new invoicing system for ARL in August 2013. Beginning with the invoice dated 4 August 2013, invoices sent to Mr Ring were generated on Xero, and both the invoice and the covering email referred to “Aluminium Repairs Ltd”. Mr Dobbs’ evidence was that he spoke to Mr Ring about this at the time, explaining that he had finally arranged for the invoices to show the correct company name. Mr Ring denied this conversation. He said that he recognised that the email and invoice were Xero-generated, as he had received similar invoices from other suppliers. He said that he paid no particular attention to anything except the invoiced amount and payment date, and did not register the addition of the word “Ltd”.

[71]	At about the same time the following items were added to the agreed work: replacing damaged stormwater pipes on the back lawn; replacing some tiles around the swimming pool; and replacing the wooden front door.

Moving towards completion

[72]	From March 2013 Mr Ring’s ex-wife, Ms Taylor, had been living in Mr Ring’s house. She assisted Mr Ring in organising some aspects of the later parts of the work.

[73]	In early September 2013 Ms Taylor prepared a “completion list” in consultation with Mr Dobbs. This set out the work that Mr Ring and Ms Taylor had identified as outstanding, including some work that was not Mr Dobbs’ responsibility

(and which required other contractors on site), such as re-carpeting the house and re- hanging curtains.

[74]	Soon after preparing the completion list Mr Ring decided to install some home automation. He engaged another contractor, Next AV, to do that. However, installation of some of the automation required further work from Mr Dobbs, such as cutting channels in the concrete floors (for cabling) in various rooms. This was one of several instances in which Mr Dobbs had to co-ordinate with other contractors.

[75]	On 2 October 2013 Mr Dobbs emailed Mr Ring a quote from Shamrock Reroofing Ltd to reroof the single garage in Colorsteel. Mr Dobbs told Mr Ring that he could instead reroof the garage using left-over Butynol and plywood from the other two roofs, which the single garage would then match. Mr Ring agreed to that. There is a dispute over whether Mr Dobbs also told Mr Ring that he could do this work more cheaply than Shamrock’s quote.

[76]	The last significant item of work was added in November 2013. Mr Ring agreed to Mr Dobbs extending the tiled area around the pool, and then to Mr Dobbs stripping the existing painted surface of the pool itself, in preparation for repainting. As part of the pool work, Mr Dobbs erected scaffolding and shrink wrap over the pool.

[77]	While he was stripping the paint surface of the pool, Mr Dobbs advised      Ms Taylor of a concern with hollow or “drumming” sections below the plaster surface. This raised an issue as to whether it was better to replaster the pool altogether, rather than simply strip and repaint it. Shortly before  Christmas 2013, Ms Taylor  asked  Mr Dobbs to stop the stripping, so that Mr Ring could consider his options. By then about half the stripping had been done.

[78]	In January 2014 Ms Taylor arranged for a specialist swimming pool contractor, Mr Thomas, to inspect the pool. Mr Thomas gave Ms Taylor an estimate for stripping the paint from the remainder of the pool of $3,000, but said that the work could not start until early February at  the earliest.  Ms Taylor  discussed  this  estimate with  Mr Dobbs. Ms Taylor’s evidence was that Mr Dobbs gave her a quote of $3,400 to

strip the remainder of the pool. Mr Dobbs denied that any quote was provided. In any event, Ms Taylor asked Mr Dobbs to complete the remainder of the stripping.

Termination

[79]	In mid-January 2014 Ms Taylor and Mr Ring prepared a revised completion list, which Ms Taylor then emailed to Mr Dobbs. Ms Taylor asked Mr Dobbs whether a completion date of 31  January 2014 (which  Mr Dobbs had apparently given to  Mr Ring) was feasible.

[80]	This enquiry led to  a  series  of  communications  between  Mr  Ring  and  Mr Dobbs. There was mutual discontent. Each felt that the other was being unhelpful or obstructive. Matters escalated over the next few weeks. For the first time, Mr Ring queried some of the invoices. Eventually, on 7 February 2014, Mr Ring terminated the agreement, effective immediately. He asked Mr Dobbs to remove everything of his from the site, commencing 10 February 2014.

[81]	The defendants pleaded that Mr Ring unjustifiably terminated the agreement without reasonable notice. Some of the plaintiffs’ evidence was directed at whether Mr Ring was justified in terminating when he did, and with immediate effect. But when the defendants opened their case they advised me that they elected not to prove any damages for premature unjustified termination, and did not seek any finding of breach. It is therefore unnecessary for me to traverse the details of the termination.

[82]	Mr Ring refused to pay two invoices. The first was invoice #25, for $50,358.14 (as amended on 3 February 2014). The second was invoice #42, for $24,654.72. This invoice was dated 14 March 2014 (post-termination), but covered work done from 20 January 2014 to 5 February 2014.

Assignment to Rebnik

[83]	In 2015 Mr Ring transferred the St Heliers property to Rebnik. At the same time he assigned to Rebnik all his rights of action against anyone who had carried out work on the property.

The pleadings

Rebnik’s claim against Mr Dobbs or ARL

[84]	Rebnik claims that the construction contract  was  between  Mr  Ring  and  Mr Dobbs, or alternatively between Mr Ring and ARL. Rebnik pleads two causes of action.

[85]	The first cause of action is for money had and received. Rebnik claims that Mr Ring was charged, and paid, more than a fair and reasonable price. It is common ground that Mr Ring paid $2,464,225.32 (including the $4,000 overpayment of the March 2013 invoice). Rebnik says that a fair and reasonable price was no more than
$631,008. It claims that Mr Dobbs or ARL will be unjustly enriched if they are permitted to retain the excess of $1,833,217.

[86]	The second cause of action is for breach of contract. Rebnik alleges that the construction contract included two implied terms, namely that Mr Dobbs (or ARL) would:

(a)	Carry out the work in a proper and workmanlike manner, including with reasonable expedition so as not to unreasonably inflate the amount charged to Mr Ring.

(b)	Only charge Mr Ring amounts that were a fair and reasonable price for the work.

[87]	Rebnik claims that Mr Dobbs (or ARL) breached these implied terms, as a result of which Mr Ring overpaid $1,829,217. Rebnik also claims that Mr Dobbs (or ARL) failed, in breach of contract, to account to Mr Ring for the $4,000 overpayment on the March 2013 invoice.

[88]	Mr Dobbs and ARL do not dispute that Rebnik is Mr Ring’s assignee. But they deny that there has been any overpayment, that they have been unjustly enriched, or that they breached any implied terms. They also raise three affirmative defences.

First, they raise a set-off for the final two invoices that Mr Ring refused to pay.3 Secondly, they say that Mr Ring repeatedly represented that he accepted and had no issue with the labour rates being charged, or with the extent of the work invoiced to him at the agreed rate. They say that they relied on Mr Ring’s representations, and that he is therefore estopped from claiming that he has been overcharged. Thirdly, they say that by those representations Mr Ring waived any obligation on Mr Dobbs or ARL to charge only a fair and reasonable price, or waived any breach of that obligation.

[89]	The defendants did not plead or raise a change of position defence.

ARL’s and Mr Dobbs’ claim against Mr Ring

[90]	ARL (or Mr Dobbs in the alternative) sues for payment on the final two invoices that Mr Ring refused to pay. Mr Ring says that he has been overcharged for the construction work (as pleaded in Rebnik’s claim), and therefore does not owe anything to either ARL or Mr Dobbs.

[91]	ARL and Mr Dobbs also claimed that Mr Ring had, in breach of contract, failed to give reasonable notice of termination. As noted earlier, they did not pursue that claim at trial.

The issues

[92]	The parties’ closings identified six key issues, which reflected the pleaded cases. I set them out in the order in which they were addressed in the closings.

[93]	The first issue is which of the defendants is liable to Rebnik (assuming that there is some liability, which the defendants denied). Is Mr Dobbs liable (the plaintiffs’ position), or is ARL liable (the defendants’ position)?

[94]	The second issue concerns the basis on which Mr Dobbs/ARL was entitled to charge Mr Ring. Was it an implied term of the contract that Mr Dobbs/ARL would

3	Mr Dobbs and ARL also claimed, as part of the set-off defence, that Mr Ring had, in breach of the construction contract, failed to give reasonable notice of termination, and that this breach had caused them loss. Mr Dobbs and ARL did not pursue this claim.

charge Mr Ring only a reasonable price for the work (the plaintiffs’ position)?4 Or was there no such implied term (the defendants’ position)?

[95]	The third issue arises if I find for the plaintiffs on the implied term. If so, what was a reasonable price for the work?

[96]	The fourth and fifth issues arise if I find that Mr Dobbs/ARL charged more than a reasonable price. If so:

(a)	Is Mr Ring (and now Rebnik) estopped from pursuing the claim?

(b)	Did Mr Ring waive any obligation on Mr Dobbs/ARL to charge only a reasonable price, or waive any breach of that obligation?

[97]	The sixth issue is whether Mr Ring is liable to pay the final two invoices.

Assuming there is liability to Rebnik, which of Mr Dobbs or ARL is liable?

Introduction

[98]	The plaintiffs’ position is that Mr Ring contracted with Mr Dobbs (and therefore Mr Dobbs is liable on the contract), and paid money to Mr Dobbs (and therefore Mr Dobbs is liable for money had and received). The defendants’ position is that Mr Dobbs contracted with Mr Ring, and received money from Mr Ring, merely as an agent for Mr Dobbs’ principal, ARL. The defendants therefore say that, if there is any liability to the plaintiffs (which of course they deny), only ARL is liable.

[99]	The parties pose the issue as being whether Mr Ring entered into the contract
(i) with Mr Dobbs personally or (ii) with ARL. That, with respect, is not quite the issue. There is no doubt that, as between Mr Dobbs and ARL, Mr Dobbs entered into the contract as agent for ARL, and likewise that he received money from Mr Ring as agent for ARL. This means that there was a contract between Mr Ring and ARL.

4	The plaintiffs pleaded that the implied term was that Mr Dobbs/ARL would only charge a fair and reasonable price. But the “fair” aspect (which in my view adds nothing in this context) did not feature in the plaintiffs’ closing submissions.

[100]	But the mere fact of a contract between Mr Ring and ARL does not necessarily mean that only ARL, and not Mr Dobbs, is liable to Mr Ring (whether in contract, or for money had and received). This is because an agent will sometimes also be liable on a contract that he or she has entered into on behalf of a principal. The issue is whether Mr Dobbs is also (in addition to ARL) liable on the contract, and for money had and received.

[101]	Whether Mr Dobbs is also liable essentially depends on whether, as between Mr Dobbs and Mr Ring, it appeared that Mr Dobbs was entering into the contract as agent for ARL. That depends primarily on whether Mr Dobbs’ agency was disclosed to Mr Ring (in the sense required by the general law of agency), and secondarily on a statutory overlay provided by the Companies Act 1993.

Rules in the general law of agency

[102]	Where an agent enters into a contract with a third party on behalf of a principal, and discloses to the third party (when entering into the contract) that he or she is acting as an agent, the general rule is that only the principal (and not the agent) is liable on the contract.5 The situation is one of a disclosed principal.

[103]	By contrast, if an agent enters into a contract on behalf of a principal, but does not disclose to the third party (when entering into the contract) that he or she is acting as an agent, the situation is one of an undisclosed principal. Both the undisclosed principal and the agent are liable on the contract, and the third party may therefore sue either (or both).6 The third party will, of course, only become aware of his or her ability to sue the principal once there has been (subsequent) disclosure of the agency.

[104]	Similar rules apply to restitutionary liability for money had and received. An agent who receives money for the use of his or her principal is generally not liable to

5	Peter Watts and FMB Reynolds Bowstead and Reynolds on Agency (21st ed, Sweet & Maxwell, Thomson Reuters, 2018) at [9-001]. This is the general rule, and so allows for the possibility that the agent has undertaken contractual liability together with the disclosed principal. The plaintiffs did not argue that, if Mr Dobbs had objectively disclosed that he was acting as agent for ARL, Mr Dobbs had nonetheless undertaken personal liability together with ARL. In saying that, I leave to one side the plaintiffs’ argument based on s 25 of the Companies Act 1993.
6	At [8-068]–[8-069] and [9-012].

repay the money to the third party.7 But there is an exception where the agent has contracted personally (such as where the principal is undisclosed), and the money has been paid to the agent pursuant to that contract.8

[105]	It follows that the key issue, in determining whether Mr Ring (and now Rebnik) is entitled to sue Mr Dobbs (whether in contract or for money had and received), is whether Mr Dobbs disclosed to Mr Ring that he was acting as an agent. The onus is on the agent to disclose the agency, and to do so clearly.9 In deciding whether an agent has disclosed the agency, the Court’s approach is objective, not subjective.10 The question is “what a reasonable person, furnished with the relevant information, would conclude”.11

[106]	If, objectively, there has been no such disclosure, there is no onus on the third party to make enquiries that might discover the agency.12 In other words, constructive notice of the agency (that might have been discovered by such enquiries) is not to be attributed to the third party.13

[107]	The disclosure of the agency must be made prior to or at the time of entry into the contract.14 If the contract has been entered into without disclosure of the agency,

7	At [9-101(1)].
8	At [9-101(2)(a)], [9-104], and [9-109(5)]; citing Newall v Tomlinsons (1871) LR 6 CP 405.
9	Hamilton v Hull (1896) 19 NZLR 49 (HC) at 55 per Williams J: “it must clearly appear from the language used at the time of the constitution of the contract that he was merely acting on behalf of some third person”; Farmers Co-operative Organisation Society of New Zealand Ltd v Flynn (1991) 5 NZCLC 67,293 (HC) at 67,295 per Master Williams: “there is an onus on persons entering into such contracts and claiming to be entering into them as agents to make the fact of agency and the identity of the principal plain to the other party to the contract”; Papanui Timber Co Ltd v Parsons HC Christchurch, CP 19/86, 9/4/1987 at 5 per Hardie Boys J: the agent “must clearly state the fact of his agency”; and Rothwell v Mawhinney [1998] 2 NZLR 87 (HC) at 98.
10 Davies v Ernest Adams Ltd CA 7/83, 9 February 1984; Hamid v Francis Bradshaw Partnership [2013] EWCA Civ 470 at [57] and [60]; Baxter v Coleman [2016] NZHC 2693 at [58]; and Papanui Timber Co Ltd v Parsons HC Christchurch, CP 19/86, 9/4/1987 at 4–5. Similarly, see Cynthia Hawes and Dale Lester Laws of New Zealand Agency (online ed) at [135]; and Chiswick Investments v Pevats [1990] 1 NZLR 169 (HC) at 174–175.
11 Hamid v Francis Bradshaw Partnership at [57]; cited by Thomas J in Baxter v Coleman at [58].
12 Hamid v Francis Bradshaw Partnership at [67]–[71]; and Baxter v Coleman at [63].
13      Greer v Downs Supply Co [1927] 2 KB 28 (CA); and Bowstead and Reynolds on Agency, above  n 5, at [8-073].
14 Bowstead and Reynolds on Agency at [1-039(1)]: “known to the third party at the time of the transaction in question”; Hamilton v Hull (1896) 19 NZLR 49 (HC) at 55 per Williams J: “at the time of the constitution of the contract”; Davies v Ernest Adams Ltd CA 7/83, 9 February 1984 at 1 per Hardie Boys J: disclosure “at the time the contract was being negotiated”; Papanui Timber Co Ltd v Parsons HC Christchurch, CP 19/86, 9/4/1987 at 4–5; and Rothwell v Mawhinney [1998] 2 NZLR 87 (HC) at 98.

the agent will be liable on the contract to the third party. Subsequent disclosure of the agency will mean that the third party will then be aware of his or her ability to also sue the (until then undisclosed) principal. But subsequent disclosure will not, of itself, retrospectively remove the liability that the agent undertook when entering into a contract without disclosing the agency.

[108]	This is not to say that subsequent conduct is necessarily irrelevant to an assessment of what was (objectively) disclosed at the time of entry into the contract. When interpreting contracts, evidence of subsequent conduct is admissible if it tends to establish a fact or circumstance capable of demonstrating objectively what meaning both parties intended their words to bear.15 Similarly, subsequent conduct may be relevant to an assessment of what was said and done at the time of entry into the contract.16 But, in both cases, the subsequent conduct is merely evidence of what was (objectively) intended, or was (objectively) disclosed, at the time of entry into the contract.17 The subsequent conduct does not change the earlier meaning, nor change what was earlier disclosed.

[109]	Disclosure of the agency subsequent to entry into the contract may also, when combined with other circumstances, curtail the right that the third party otherwise has to sue either the agent or the principal (or both). I note three ways in which this might occur. First, the third party’s right to sue the agent might be lost through the operation of the doctrine of election (if he or she elected to sue the principal).18 Secondly, in some circumstances the third party might become estopped from suing the agent. Thirdly, the third party and the (now disclosed) principal might agree to novate the contract (that is, enter into a new contract in substitution for the contract that the third party has with the agent). The defendants have not asserted any such election, estoppel, or novation.19

15 Gibbons Holdings Ltd v Wholesale Distributors Ltd [2007] NZSC 37, [2008] 1 NZLR 277.
16 Papanui Timber Co Ltd v Parsons HC Christchurch, CP 19/86, 9/4/1987 at 5.
17 Contractual interpretation: Gibbons Holdings Ltd v Wholesale Distributors Ltd [2007] NZSC 37, [2008] 1 NZLR 277 at [59] per Tipping J and at [114] per Thomas J. Disclosure of agency: Papanui Timber Co Ltd v Parsons at 5.
18 Bowstead and Reynolds on Agency, above n 5, at [8-113]–[8-114] and [9-012].
19 By contrast, the defendants did assert waiver and estoppel in relation to the plaintiffs’ allegation  that the defendants had invoiced more than a fair and reasonable price.

Section 25 of the Companies Act 1993

[110]	I have described the above rules as rules in the “general” law of agency because they apply whenever an agent enters into a contract with a third party on behalf of a principal. The rules are not peculiar to agents who enter into contracts on behalf of principals that are companies.

[111]	But where, as here, the supposed principal is a company, there is a statutory overlay to general agency law in s 25(1) and (2) of the Companies Act:

25	Use of company name

(1)	A company must ensure that its name is clearly stated in—

(a)	every written communication sent by, or on behalf of, the company; and

(b)	every document issued or signed by, or on behalf of, the company that evidences or creates a legal obligation of the company.

(2)	Where—

(a)	a document that evidences or creates a legal obligation of a company is issued or signed by or on behalf of the company; and

(b)	the name of the company is incorrectly stated in the document,—

every person who issued or signed the document is liable to the same extent as the company if the company fails to discharge the obligation unless—

(c)	the person who issued or signed the document proves that the person in whose favour the obligation was incurred was aware at the time the document was issued or signed that the obligation was incurred by the company; or

(d)	the court is satisfied that it would not be just and equitable for the person who issued or signed the document to be so liable.

[112]	Section 25(2) can impose liability on persons who issue or sign certain documents on behalf of companies. This potential statutory liability is additional to, rather than in substitution for, the liability that such persons may have under the general law (such as the general law of agency). This is because s 25 does not expressly or impliedly exclude the operation of general agency law. Indeed, s 25 is

consistent with the general law of agency. First, s 25(1) imposes an obligation on a company (which obligation necessarily must be discharged via the company’s human agents) to ensure that the company’s name is clearly stated in certain communications and documents. This is consistent with the onus placed on an agent to disclose the agency clearly (if the agent wishes to avoid being personally liable). Secondly, the exception to liability in s 25(2)(c) focusses on knowledge “at the time the document was issued or signed” – consistently with the rule that disclosure of the agency must be made prior to or at the time of entry into the contract (again, if the agent wishes to avoid being personally liable).

[113]	But s 25(2) has only a minor role to play in this case. If Mr Dobbs failed to disclose the agency to Mr Ring, Rebnik can have recourse to Mr Dobbs under the general law of agency, without any need to rely on s 25(2). Rebnik needs to rely on s 25(2) only if I find that Mr Dobbs did disclose the agency to Mr Ring (so that, under the general law, only ARL would be liable). But if I do make such a finding, it is difficult to see how any prima facie liability that Mr Dobbs might have under s 25(2) could survive the exceptions in s 25(2)(c) and (d).

The parties’ submissions

[114]	The plaintiffs’ submissions on this issue, while not framed in terms of the general law of agency, were consistent with it.

[115]	The plaintiffs said that determining the identities of the parties to the contract should be based on the parties’ objectively ascertainable knowledge and intentions at the time of contract formation (which they said was December 2010). Post-contract conduct did not assist with an assessment of the identity of the contracting parties at the time the contract was formed. The plaintiffs argued that Mr Dobbs bore the onus of establishing that he was contracting on behalf of ARL, and that he had failed to discharge that onus.  The  plaintiffs  merely  noted  an  alternative  argument  that  Mr Dobbs was liable under s 25 of the Companies Act.

[116]	The defendants’ submissions focussed on s 25. Their submissions seemed to assume that that was the only pathway to Mr Dobbs’ liability. The defendants did not make any submissions squarely addressing the prior question whether Mr Dobbs was

liable under the general law (that is, outside s 25). Nonetheless, the essential argument that the defendants made under the rubric of s 25 was that Mr Dobbs had made it clear to Mr Ring that he was contracting on behalf of ARL. That argument, of course, bears directly on the issue (framed in terms of agency law) whether Mr Dobbs disclosed that he was acting as an agent.

[117]	There is one point on which the parties shared common ground. Both sides pleaded that there was a construction contract (the scope of which was, by agreement, subsequently extended from time to time). When the plaintiffs opened I raised with Mr Bigio QC the possibility of there being a series of discrete contracts. Mr Bigio said (accurately) that neither side had taken that position. That remained so in closing. Neither side suggested to me that there might be two or more discrete contracts.20

When did the parties enter into the contract?

[118]	Disclosure of the agency must be made prior to or at the time of entry into the contract. The plaintiffs plead that the contract was entered into by an exchange of emails between Mr Ring and Mr Dobbs on 10 December 2010. The defendants, by contrast, say that the contract was not entered into until 6 April 2011.

[119]	I find for the plaintiffs on this question. On 3 December 2010 Mr Ring emailed Mr Dobbs about a leak in the main bedroom. There was a brief exchange of emails, after which Mr Dobbs visited the house to look at the leak.   Following that visit    Mr Dobbs emailed Mr Ring on 10 December 2010, saying that he had not had time to do a written estimate, but that he had “put some time away in late February ,last two weeks if that suits you”. Mr Ring replied that day: “That’s fine. Thanks.”

[120]	In my view, this exchange formed a contract under which Mr Dobbs (or ARL) agreed to carry out remedial work on Mr Ring’s house, in exchange for (as I will explain later) a reasonable price. Once this exchange had occurred, Mr Ring could have sued for breach of contract if Mr Dobbs did not turn up to do the work; and

20 I raised this possibility with Mr Bigio before I had heard any evidence or considered the  documents. For what it is worth, having now heard and read the evidence, my impression is that it would have been very difficult to establish that there was more than one contract.

Mr Dobbs (or ARL) could have sued for breach of contract if he turned up in late February 2011 and Mr Ring refused to allow him to do the work.

[121]	The defendants say that the contract was not formed until an exchange of emails on 6 April 2011. But all that happened in that exchange was that Mr Dobbs explained that he had been unable to turn up in late February 2011, Mr Ring said that he had assumed that Mr Dobbs was busy and so had left him alone, and the parties agreed a new start date. This was just an agreed variation (of the start date) to the contract that had already been formed on 10 December 2010.

Did Mr Dobbs disclose the agency prior to or at the time of entry into the contract?

[122]	In determining whether there was disclosure of the agency, I have found the judgment of Hardie Boys J in Papanui Timber Co Ltd v Parsons instructive.21 There the defendant, Mr Parsons, had purchased timber from the plaintiff under a series of discrete contracts. Several of the contracts were made while Mr Parsons was trading on his own account. Mr Parsons then incorporated a company, after which he continued to purchase timber from the plaintiff. The issue was whether Mr Parsons was personally liable for the post-incorporation contracts, or whether only his company was liable.

[123]	Justice Hardie Boys made two points that are relevant to the present case. First, that the need for an agent to clearly state the fact of his agency is “of particular importance where the change from principal to agent occurs in the midst of a course of dealing. The other party must be made aware that the change has occurred before he can be held to have assented to it and to its consequences.”22 I agree. Here there was a course of dealing (from July 2007), albeit more intermittent than in Papanui Timber.

[124]	Secondly, Mr Parsons had given evidence that he had informed the plaintiff of the pending formation of his company. Hardie Boys J had some doubts about this evidence, but held that in any event mere advice of pending formation was insufficient:

21	Papanui Timber Co Ltd v Parsons HC Christchurch, CP 19/86, 9/4/1987.
22	At 5.

“I am quite satisfied that he did not advise anyone that the company had in fact been formed, and that it was to be the customer and not he personally.”23 I agree that mere advice of pending formation is insufficient.

[125]	I now turn to the dealings between Mr Dobbs and Mr Ring leading up to the 10 December 2010 contract. The first dealing was in July 2007. I have described this in detail in the factual narrative. At that time ARL was not yet incorporated. Consistently with that, Mr Dobbs gave every objective indication to Mr Ring that he was acting on his own account: he sent an invoice that used a trade name (not a company name); he used an email address that appeared to be a personal one; his emails were merely signed off “troy”; and he asked for payment to be made to a bank account in his own name.

[126]	Mr Dobbs gave evidence that on about 10 July 2007 (when he sent a quote to Mr Ring) he told Mr Ring, orally, that he was in the process of incorporating a company, through which he would trade. Mr Dobbs said that he told Mr Ring that he had always been advised that he should incorporate a company and that he “was finally getting around to doing that.” Mr Ring denied that Mr Dobbs told him any of this.

[127]	Both Mr Dobbs and Mr Ring presented as credible witnesses on this point. I therefore decide this factual dispute largely by reference to the undisputed contemporary events and documents. There are twin difficulties for Mr Dobbs. First, ARL was not incorporated until 20 September 2007, more than two months after   Mr Dobbs allegedly told Mr Ring that he was in the process of incorporating the company. Incorporating a company in New Zealand is a simple process. It takes a matter of mere days (if that). Mr Dobbs did not explain how, if the incorporation process had started by 10 July 2007, it was not completed until 20 September 2007. Mr Dobbs’ evidence in chief on this point was confused, as he said that he incorporated ARL ten days after sending the 10 July 2007 invoice. On that he was clearly incorrect.

[128]	Secondly, there are various emails between Mr Dobbs and Mr Ring in the period July to October 2007 – that is, beyond ARL’s incorporation date. All of those emails are consistent with Mr Dobbs acting on his own account. None mention ARL.

23	At 7.

I therefore find that Mr Dobbs has not proven, on the balance of probabilities, that he told Mr Ring in July 2007 that he was in the process of incorporating a company.

[129]	Even if I had accepted Mr Dobbs’ account of what he said in July 2007, it would not ultimately have assisted him on the issue of disclosure of the agency prior to the 10 December 2010 contract. This is because, even on Mr Dobbs’ account, all that he told Mr Ring in July 2007 was that he was in the process of incorporating a company. Mr Dobbs did not give any evidence that he ever told Mr Ring (prior to or at the time of the December 2010 contract) that he had finished that process and that he was now operating on behalf of ARL. Mr Dobbs had ample opportunity to tell  Mr Ring just that. He carried out and invoiced jobs for Mr Ring in February, June and August 2009. On each occasion his communications and invoices remained on the same basis as in July 2007: Mr Dobbs presented (objectively) as acting on his own account.   The same is true of the December 2010 dealings.   Mr Dobbs met with   Mr Ring  before providing him  with an emailed estimate on 10 December 2010.   Mr Dobbs did not suggest that, in that meeting, he told Mr Ring that he was now trading through a company. Nothing in the December 2010  emails  indicates  that Mr Dobbs was trading through a company.

[130]	In short (and as Mr Bigio put it), even if Mr Dobbs told Mr Ring in July 2007 that he was in the process of incorporating a company, there was nothing to indicate to Mr Ring in 2009 or 2010 that Mr Dobbs had in fact proceeded to incorporate.

[131]	I therefore find that Mr Dobbs did not disclose to Mr Ring, prior to or at the time of entry into the contract, that he was entering into the contract as an agent for ARL. To be clear, it follows from this that I accept Mr Ring’s evidence, and find, that at the time the contract  was entered into he assumed that he was dealing with        Mr Dobbs as a sole trader, and did not know about ARL.

[132]	For completion, I note that I would have made the same findings even if I had accepted the defendants’ argument that the contract was formed only on the exchange of emails on 6 April 2011. This is because between 10 December 2010 and 6 April 2011 Mr Dobbs did not do anything further to disclose to Mr Ring that he was acting

as ARL’s agent. The email exchange on 6 April 2011 is as devoid as all earlier emails of any suggestion that Mr Dobbs was acting on behalf of ARL.

[133]	The defendants argued that there had been disclosure of Mr Dobbs’ agency in an alleged conversation between Mr Dobbs and Mr Ring during the early part of the job. Mr Dobbs’ evidence was that during an early part of the job he showed a friend of his, Mr Light, around Mr Ring’s property. He then left Mr Light outside while he went in to see Mr Ring. Mr Dobbs said that he then had a conversation with Mr Ring in which, because he had either just given him his first invoice or was about to, he (Mr Dobbs) mentioned that he had not yet updated the invoices to contain “the company’s full name, Aluminium Repairs Ltd”. Mr Dobbs says he then went downstairs to retrieve a business card with ARL’s name, and took the card back up and handed it to Mr Ring.

[134]	Mr Light gave evidence that he had been shown around the site by Mr Dobbs, and had then remained outside while Mr Dobbs spoke to Mr Ring. He said that he could overhear their conversation. Among other things, he said that he  overheard  Mr Dobbs mention to Mr Ring that he was now trading through his company, ARL. He also said that he saw Mr Dobbs come downstairs to retrieve something from the cab of his car, which he could see was a business card of some sort, and that Mr Dobbs then returned back upstairs.

[135]	Mr Ring denied that any such conversation had taken place, and denied that he had ever been given a business card by Mr Dobbs.

[136]	The defendants bear the burden of proving that this conversation, and the provision of the business card, occurred. I find that they have not discharged that burden. This is not, I wish to emphasise, because I formed a firm view that Mr Dobbs or Mr Light were not telling the truth. Both presented as honest witnesses. But so did Mr Ring. The witnesses were giving evidence of events that occurred more than nine years ago. My conclusion that the defendants have not proved, on the balance of probabilities, that these events occurred is based on the following:

(a)	The alleged conversation is at odds with Mr Dobbs’ undoubted failure, for a considerable time both before and after the conversation allegedly occurred, to make any mention of ARL to Mr Ring. It therefore seems an inherently unlikely occurrence, unless there was an explanation for Mr Dobbs deciding on  this occasion to disclose ARL to Mr Ring.   Mr Dobbs’ only explanation was that he had either just given Mr Ring the first invoice, or was about to do so.   But Mr Dobbs  had given   Mr Ring invoices on three separate occasions in 2009 (after ARL’s incorporation), without having felt any apparent need to tell Mr Ring about ARL.24

(b)	Mr Dobbs’ evidence in chief was that the conversation occurred when he had either just given Mr Ring his first invoice “or was about to”. In cross-examination Mr Dobbs insisted that the conversation occurred before he issued the first invoice. The conversation, if it occurred, must have therefore been when Mr Dobbs was about to send the first invoice. The first invoice was attached to an email dated 23 May 2011. The email was detailed. If Mr Dobbs had at that time recently felt it necessary to explain to Mr Ring that his invoices did not yet have ARL’s full name, one would expect there to have been some reference to this in the email. Yet all that Mr Dobbs said about the invoice was “I enclose a pdf invoice for work to date.”

(c)	Mr Dobbs’ evidence was that he told Mr Ring that he “had not yet updated the invoices which were still in the old form and which did not yet contain the company’s full name”. Such a statement would suggest that Mr Dobbs was in the process of updating the format of his invoices, and so one would expect the invoices to have been updated not long after the conversation. Yet the invoices did not begin to contain ARL’s name until 4 August 2013 – more than two years later.

24  The second and third of these invoices were of a similar size to the invoice sent to Mr Ring at  about the time of the alleged conversation. At that time Mr Dobbs was not to know that Mr Ring would eventually be invoiced over $2.5 million for the job.

(d)	Mr Dobbs’ evidence as to the timing of the conversation was not consistent. In his evidence in chief Mr Dobbs said that the conversation occurred “during the early part of this job” and “in May 2011”. Under cross-examination Mr Dobbs changed his evidence. He insisted that the conversation happened “before we started work … not after we’d started”. (Mr Dobbs had agreed, in the email exchange of 6 April 2011, to start work on 26 April 2011.)

(e)	Mr Dobbs’ evidence on cross-examination was also inconsistent with Mr Light’s evidence, which was that the conversation occurred after the work had started.

(f)	Mr Light said that he overheard the conversation while he was in the driveway, with Mr Dobbs and Mr Ring speaking on an outside balcony above him. Mr Dobbs’ evidence was that the conversation occurred on “the landing outside of [Mr Ring’s] office”. I understood this to mean the deck outside Mr Ring’s office.25 Mr Ring explained in cross- examination that this deck was on the opposite side of the house from the driveway. This was consistent with plans for the house. The conversation therefore could not have occurred on a balcony above where Mr Light was standing on the driveway; and Mr Light and     Mr Dobbs were giving inconsistent accounts about the location of the alleged conversation.

(g)	Mr Ring’s account – that there was no such conversation, and that he was not given an ARL business card – is more consistent with the undisputed (and often documented) failures of Mr Dobbs, both before and after the conversation allegedly  occurred,  to  disclose ARL  to Mr Ring.

25   In closing submissions the plaintiffs said that the “landing” was inside.  That took the strict sense of the word landing. I did not understand Mr Dobbs to use the word in that sense.  Neither did Mr Ring, who in cross-examination said he understood Mr Dobbs to be referring to the “terrace” (deck) that was on the outside, not inside the house.

[137]	Finally, even if I had found that this conversation had taken place, it would not have meant that there had been disclosure of the agency before the contract was entered into. This is because the conversation most likely occurred well after 6 April 2011 (let alone 10 December 2010). I have just referred to the evidence on the timing of the conversation. It most likely occurred in May 2011 (which is what Mr Dobbs himself said in his evidence in chief). Even if it happened before the work started (which is what Mr Dobbs said in cross-examination), it is clear from the 6 April 2011 email exchange that at that point Mr Dobbs had not come back to the site (since the December 2010 visit), and so the conversation could not have happened by 6 April 2011. Mr Ring told Mr Dobbs in that exchange that he was about to go away and would not be back until 25 April 2011. He suggested that Mr Dobbs start the work on 26 April 2011. Mr Dobbs agreed to do that. So the conversation, if it did occur, cannot have happened before 26 April 2011.

Subsequent (post-contract) conduct indicating that Mr Dobbs was acting for ARL

[138]	In closing submissions the defendants relied on subsequent (post-contract) conduct that they said must have indicated to Mr Ring that ARL, rather than Mr Dobbs personally, had entered into the contract and was carrying out the construction work. The defendants submitted therefore that, if Mr Dobbs bore prima facie liability under s 25 of the Companies Act, Mr Dobbs was entitled to relief from liability under         s 25(2)(c) or (d).

[139]	This submission did not address the prior question whether Mr Dobbs was liable under the general law (outside s 25). I will nonetheless consider the subsequent conduct, and the submission, through the lens of that question.

[140]	Mr Dobbs is liable under the general law unless, at the time the contract was entered into, he had objectively disclosed his agency to Mr Ring. As I set out earlier,26 subsequent conduct may be relevant to an assessment of what had objectively been disclosed at the time of entry into the contract. But the subsequent conduct cannot change what was disclosed.

26	At [107]–[109].

[141]	The difficulty for the defendants is that, up to the time the contract was entered into, Mr Dobbs did not say anything at all to Mr Ring that could have objectively disclosed that he was acting as an agent for ARL. That is plain to see on the emails and invoices, which gave no hint that Mr Dobbs was acting on behalf of ARL. It is plain from Mr Ring’s unchallenged evidence that he was asked to make payment to Mr Dobbs’ personal bank account. The only possible disclosure was Mr Dobbs’ alleged disclosure to Mr Ring in July 2007 that he was in the process of incorporating a company. I have found that the defendants have not proved that allegation.

[142]	In these circumstances, the subsequent conduct on which the defendants rely cannot re-write the history of what Mr Dobbs disclosed. Indeed, the defendants did not argue that it did. In closing submissions the defendants described most of the conduct merely as “subsequent visual indications or reminders.”

[143]	I now turn briefly to the subsequent conduct on which the defendants relied:

(a)	The first conduct was the alleged conversation in May 2011 that I have just addressed. I have found that the defendants have not proved that this conversation occurred. Even if it had occurred, it would not have changed the fact of what was disclosed by 10 December 2010 (or even 6 April 2011).

(b)	Mr Dobbs’ evidence was that he and ARL staff at the site wore hats that carried ARL’s full name “particularly in the summer months, since some time in 2011”. He also gave evidence that from “late 2011 or beginning of 2012” there was signwriting on vehicles at the site with ARL’s full name. This is not disputed. But none of this can change the fact of what was disclosed at a much earlier time.

(c)	In April 2012 Mr Dobbs sent two emails to Mr Ring in which he signed off “Aluminium Repairs Ltd”.  On  19  July  2013  Mr  Dobbs  sent Mr Ring an email that incorporated a logo with ARL’s full name. From early August 2013 the invoices that were sent to Mr Ring included

ARL’s full name. None of this affects what was disclosed when the contract was (much earlier) entered into.

[144]	It is possible that the subsequent conduct, if combined with other circumstances, might have absolved Mr Dobbs (partially or fully) from liability. If there had been a discrete series of contracts, perhaps those entered into after Mr Dobbs had started sending invoices under ARL’s name could be regarded as contracts solely with ARL. If Mr Ring had been made sufficiently aware by the subsequent conduct that Mr Dobbs was acting on behalf of ARL, perhaps Mr Ring’s continued engagement of Mr Dobbs would have estopped Mr Ring from asserting that Mr Dobbs was from that point personally liable.

[145]	But such matters (which the defendants understandably did not pursue) would likely have been dependent on, among other things, a finding that the subsequent conduct constituted objective disclosure to Mr Ring that Mr Dobbs was acting on behalf of ARL. Signage on hats and vehicles is not objective disclosure of agency, particularly where Mr Ring was largely absent from the site during the day while work was carried out. Isolated instances of emails referring to ARL, among many more emails that did not, is likewise not objective disclosure. The invoices that carried ARL’s full name from early August 2013 might be a different matter.27 But, even if those invoices had constituted objective disclosure to Mr Ring that Mr Dobbs was acting as agent for ARL, it is far from obvious that such a late disclosure (the contract having been entered into in December 2010, and work having been carried out since April 2011) could have given rise to an estoppel preventing Mr Ring from continuing to assert that Mr Dobbs was personally liable.

Summary of Mr Dobbs’ liability under the general law

[146]	In summary, I find that Mr Dobbs did not disclose to Mr Ring, prior to or at the time the contract was entered into, that he was acting as an agent for ARL. It follows that Mr Dobbs is liable (if there is any liability) to Mr Ring (and now Rebnik)

27	And that is regardless of the dispute over whether, at the time, Mr Dobbs orally informed Mr Ring of the change in invoicing.

under the contract, and for money had and received. The subsequent conduct on which the defendants relied did not remove this liability from Mr Dobbs.

Section 25 Companies Act 1993

[147]	Given my finding that under the general law Mr Dobbs is liable (if there is any liability) to the plaintiffs, it is not necessary for me to address whether Mr Dobbs is liable under s 25 of the Companies Act. As noted earlier, I would only have needed to address s 25 if I had first found that Mr Dobbs had objectively disclosed to Mr Ring that he was acting as an agent for ARL (so that Mr Dobbs was not liable under the general law). If I had made such a finding it is likely that any prima facie liability under s 25(2)(a) and (b) (for any failures by Mr Dobbs to use ARL’s name on invoices, emails or other documents that evidenced or created legal obligations of ARL) would have been displaced by the operation of the exceptions in s 25(2)(c) and (d).

Was it an implied term of  the  contract  that  Mr  Dobbs/ARL would  charge Mr Ring only a reasonable price for the work?

Introduction

[148]	Most construction contracts have express terms that provide for the determination of the price that is to be paid by the principal to the contractor. Price provisions can take several forms. A simple construction contract may provide for a “lump sum” fixed price. In more complex contracts the price may be determined on  a “measure and value” basis, or on a “cost reimbursable” basis, either of which usually involves the engagement of a third party to determine payment claims.28

[149]	The contract for the remedial work on Mr Ring’s house did not have any term for determining the price to be paid. There was no fixed price, either for the work as a whole or for its constituent parts. Nor did the contract provide any mechanism for determining the price for the work.

[150]	Leading texts on building and construction contracts say that it is possible to have a construction contract where no price is stipulated. Those texts say that where

28	Nicholas Dennys and Robert Clay (eds) Hudson’s Building and Engineering Contracts (14th ed, Sweet & Maxwell, Thomson Reuters, London, 2020) at [5-001]–[5-016].

no price is stipulated a term will be implied that the principal is to pay a reasonable price for the construction work.29

[151]	The plaintiffs say that proposition applies here.30 The contract did not stipulate any price, nor stipulate any pricing mechanism. A term must therefore be implied that Mr Ring was obliged to pay a reasonable price to Mr Dobbs (or to ARL). That was all Mr Ring was obliged to pay. Mr Dobbs (or ARL) could not charge more than a reasonable price.

[152]	The defendants disagree. They say that the contract was one for the provision of the defendants’ services at agreed hourly rates. They say that it is common ground that there was an implied obligation on the defendants to carry out the work with reasonable expedition, so as not to unreasonably inflate the charges to Mr Ring. In those circumstances, the defendants say, it was neither appropriate nor necessary to imply a further term that the defendants would charge Mr Ring only a reasonable price.

Decision

[153]	In some circumstances the absence of a price provision may mean that the parties have not reached a concluded agreement, so that there is no binding contract at all.31 That was not suggested by either the plaintiffs or the defendants, who both accepted that there was a binding contract. That is not surprising. The position may have been different if the alleged contract had been wholly executory, but here the defendants had carried out construction work, and Mr Ring had made payments, for almost three years. The following statement of principle by Denning J (as he then was) is instructive:32

29 At [5-015]; and Stephen Furst and Vivian Ramsay Keating on Construction Contracts (10th ed, Sweet & Maxwell, London, 2016) at [4-033].
30 In opening the plaintiffs also relied on s 17(4) of the Construction Contracts Act 2002. The plaintiffs did not rely on that provision in closing. Given that the subject contract was a residential construction contract, s 17 appears to have been inapplicable: s 10(a) (since repealed).
31 Even had there been no contract, the defendants would have been entitled to be paid for the work that had been carried out. That payment entitlement would have derived from the law of restitution, rather than from the law of contract, and the payment would have been a quantum meruit (the “amount deserved”), rather than a price. It is not necessary to explore the differences between those avenues of entitlement (as to which, see Benedetti v Sawiris [2013] UKSC 50, [2013] 4 All ER 253 at [9]; and Electrix Ltd v The Fletcher Construction Co Ltd [2020] NZHC 918 at [88] and [97]). It suffices to say that this is not a quantum meruit case.
32 British Bank for Foreign Trade Ltd v Novinex Ltd, unreported. The statement of principle was approved by the Court of Appeal on appeal: [1949] 1 KB 623 at 630. Denning J instanced

In the ordinary way, if there is an arrangement to supply goods at a price “to be agreed,” or to perform services on terms “to be agreed,” then although, while the matter is still executory, there may be no binding contract, nevertheless, if it is executed on one side, that is if the one does his part without having come to an agreement as to the price or the terms, then the law will say that there is necessarily implied, from the conduct of the parties, a contract that, in default of agreement, a reasonable sum is to be paid.

[154]	Similarly, the learned authors of Hudson’s Building and Engineering Contracts
state:33

[S]ilence as to price will not necessarily prevent a contract coming into being, provided that the contract is otherwise sufficiently certain, and a term for payment of a reasonable price will be implied. Obviously, this will be more likely to be the case if the contract is a relatively small one, or in cases where the work has been carried out rather than where a still executory contract is being alleged.

[155]	To the same effect, Chitty on Contracts states that where the construction contract is silent on price, the contractor will be entitled to a reasonable sum “on the basis of an implied term to that effect”.34 Similar statements of principle are found in other leading texts on construction law.35 The principle is of general application to contracts for the sale or supply of goods and services.36 For example, if a contract for the sale of goods is silent on price, the long-codified rule now in s 129 of the Contract and Commercial Law Act 2017 is that the buyer must pay a reasonable price.37 Where there is a contract for services, the United Kingdom Supreme Court has said that if the amount of remuneration for the services is not spelled out “the law will normally imply a term into the agreement that the remuneration will be reasonable in all the circumstances”.38

arrangements where the price was “to be agreed”, but his reasoning is equally applicable where the arrangement is silent as to price.
33 Hudson’s Building and Engineering Contracts, above n 28, at [5-015] (emphasis added).
34 H G Beale Chitty on Contracts Volume II Specific Contracts (33rd ed, Sweet & Maxwell, London, 2018) at [37-171].
35 Tómas Kennedy-Grant and Michael Weatherall Kennedy-Grant & Weatherall on Construction Law: Construction Contracts and Dispute Resolution (LexisNexis, Wellington, 2016) at [220,630]; and Keating on Construction Contracts, above n 29, at [4-033].
36 See Furmans Electrical Contractors v Elecref Ltd [2009] EWCA Civ 170, [2009] All ER (D) 97 (Mar) at [32]; cited in Chitty on Contracts Volume II Specific Contracts, above n 34, at [37-171]. For a recent example in the construction contract context, see Sykes v Packham [2011] EWCA Civ 608 at [24].
37 There are analogous provisions in ss 11 and 31 of the Consumer Guarantees Act 1993. The plaintiffs did not rely on that Act, presumably because of the limited rights of redress that the Act provides.
38 Benedetti v Sawiris [2013] UKSC 50, [2013] 4 All ER 253 at [9].

[156]	Based on these authorities, I accept that there is a general principle that, where a construction contract is silent as to price, a term will be implied that the contractor is entitled to be paid a reasonable price. This principle supports the plaintiffs’ contention that a term is to be implied that Mr Ring was obliged to pay a reasonable price (but no more than that) to Mr Dobbs/ARL, and likewise that Mr Dobbs/ARL was entitled to charge only a reasonable price.

[157]	The defendants did not contest this general principle. But they submitted that on the facts of this case the principle was inapplicable, and therefore that no “reasonable price” term should be implied. They said that the parties had agreed the hourly charge-out rates for the provision of Mr Dobbs’ or ARL’s services. It was also common ground that there was an implied obligation on the defendants to carry out the work with reasonable expedition. The defendants could therefore charge Mr Ring only for a reasonable number of hours, at the agreed hourly rates. In light of that, the defendants said, the reasonable price term did not satisfy at least three of the criteria for the implication of terms set out in BP Refinery (Westernport) Pty Ltd v Shire of Hastings:39

(a)	The business efficacy test was not met. The contract was effective without the term.

(b)	The term was not obvious.

(c)	The term contradicted the express charge-out rate term.

[158]	I do not accept the defendants’ submission, for two independent reasons.

39   BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 (PC).  Given the view I have taken of the defendants’ submission, it is not necessary for me to consider: the extent to which the criteria in BP Refinery remain applicable in the light of decisions such as Attorney- General of Belize v Belize Telecom Ltd [2009] UKPC 10, [2009] 1 WLR 1988; whether the criteria are appropriate to the implication of terms into an informal contract (Jeremy Finn, Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contract in New Zealand (6th ed, LexisNexis, Wellington, 2017) at 223; and McNeill v Gould (2002) 4 NZ ConvC 193,557 (CA)); nor whether BP Refinery applies where a default term has been implied as an incident of a particular kind of contractual relationship (Kim Lewison The Interpretation of Contracts (6th ed, Sweet & Maxwell, London, 2015) at [6.01]–[6.02]).

[159]	First, the defendants’ submission assumes that this was a contract merely for the provision of services.40 Yet the contract was one for work and materials. Even if there had been agreement on hourly rates for all of the defendants’ services (which, as I will explain, there was not), such agreement would not have covered the entire field of the contract. The contract would still have been silent as to the overall price. There still would have been a need for an implied term that that overall price be reasonable.

[160]	Secondly, the parties did not agree the hourly rates for all of the defendants’ services. In closing Mr Andrews submitted that in the 23–24 May 2011 email exchange Mr Ring had expressly accepted an offer of the services of “all of ARL’s staff, including Mr Dobbs” at $58 per hour. Mr Andrews then said that in September 2011 Mr Ring had accepted, at least by his conduct, that the defendants could thereafter charge $65 per hour “for all ARL techs”.

[161]	In the 23–24 May 2011 email exchange Mr Dobbs provided an estimate of his labour charge for what was then expected to be 10–12 weeks of work. His estimate was $3,480 per week. This was based on 60 hours at $58 per hour. The $58 rate was for himself and for his “leading hand”, Mike, who he described as “a fully qualified builder and trained by me in aluminium joinery”. He referred to Mike as a “tech.”  Mr Dobbs explained that his normal rate was $75 per hour per “tech.”.

[162]	Mr Ring agreed to the estimate. I accept that this means that it was agreed that for the 10–12 week period of the estimate Mr Dobbs would charge his time, and his leading hand’s time, at $58 per hour. But there was no agreement on the hourly rate that would apply for any other person. Mr Dobbs’ email referred to a part-time labourer, Chaz, but no hourly rate was specified for him. Mr Dobbs’ email did not say what was meant by the term “tech”, other than highlighting the qualifications and experience of Mike, and using the term in contradistinction to “labourer.”

[163]	The lack of agreement on rates for any other person is reflected in the invoice dated 5 September 2011 (which was the last invoice in the 10–12 week period of the estimate). It had a line entry for labour at $3,480. That is referable to the agreed $58

40	Similarly, the defendants’ submissions tended to conflate the concepts of price and rate.

hourly rate. It had another line entry for labour at $2,000. That is not referable to any agreed rate.

[164]	Nor was there any comprehensive agreement on hourly rates for the period after the initial estimate. I accept that from mid-September 2011 Mr Ring agreed, at least by conduct, to an increase in the $58 hourly rate to $65.41 But that hourly rate still did not cover every person who might be engaged by the defendants. The $65 rate was used for the first time in an invoice dated 19 September 2011. The invoice charged that rate for “techs.” In May 2011 Mr Dobbs had used “tech” by reference to a fully qualified builder whom Mr Dobbs had trained in aluminium joinery. At best for Mr Dobbs, from mid-September 2011 the parties had agreed that he was entitled to charge the $65 rate for someone who fell within that description. For anyone else, there was no agreed rate.

[165]	This is reflected in the invoices that followed. Most applied the $65 rate, but on occasions a lower rate of $40 or $45 per hour was charged. For several invoices the $45 rate was applied to someone who Mr Dobbs referred to as a “trainee tech.”

Summary

[166]	I find that the construction contract was subject to an implied term that a reasonable price would be paid for the work. That reasonable price was all Mr Ring was obliged to pay, and all that Mr Dobbs/ARL was entitled to charge.

41  This is because the next invoice, dated 19 September 2011, had a line item for labour showing:   “5x days 2x techs @ 65 per hour”. Most of the subsequent invoices sent to Mr Ring charged labour at the $65 per hour rate. The covering email to the 19 September 2011 invoice did not explain the increase in the hourly rate to $65. Mr Dobbs’ evidence was that he spoke to Mr Ring about this at the time, explaining to him that he considered the increased rate was warranted because of the more complex expanded scope of works. His evidence was that Mr Ring raised no objection to the new rate. Mr Ring denied any such discussion. I do not have to resolve that dispute. Even on Mr Ring’s account, the increase was brought to his attention, he had (to use Mr Ring’s words) “no issue” with the increase, and for more than two years he continued to engage Mr Dobbs after receiving (and paying) invoices that used that increased rate.

What was a reasonable price for the work?

The approach to assessing a reasonable price

[167]	Subject to one point, there was no dispute as to the approach to assessing a reasonable price for construction work.42 There are no rigid rules. The Court may take into account all relevant circumstances.43 Useful evidence may include negotiations as to price, prices in a related contract, a calculation based on the cost that the contractor has incurred plus a margin for profit, and the opinion of quantity surveyors, experienced builders or other experts as to a reasonable price for the work.44

[168]	In this case the parties relied primarily on expert opinion evidence from quantity surveyors as to a reasonable price. The parties also made submissions as to the relevance of the agreements that were reached as to some of the hourly rates. I will address those matters shortly.

[169]	There was one point of disagreement on the approach to assessing a reasonable price. The defendants submitted that “reasonable” must contemplate a range of potential values, so it could not sensibly be said that one exact figure must constitute a reasonable price. As I understood it, the argument was that any price within that range would be “reasonable”, and therefore that Mr Dobbs/ARL would be entitled to charge any price within that range.

[170]	I do not accept that submission. The word “reasonable” expresses that the price is assessed objectively. It does not allow for a range of prices. Were there a range,  Mr Ring would choose to pay at the bottom of the range, and Mr Dobbs/ARL would choose to charge at the top. That would not be a contract. There have been many instances, in a variety of contexts, in which Courts have been called upon to determine

42  The approach may be different when the Court is called upon to assess a quantum meruit.  There the focus may more be on the benefit to the principal: Benedetti v Sawiris [2013] UKSC 50, [2013] 4 All ER 253 at [9].
43 Keating on Construction Contracts, above n 29, at [4-037]; Hudson’s Building and Engineering Contracts, above n 28, at [5-016]; Chitty on Contracts Volume II Specific Contracts, above n 34, at [37-173]; and Benedetti v Sawiris [2013] UKSC 50, [2013] 4 All ER 253 at [9].
44 Keating on Construction Contracts, above n 29, at [4-040]; Hudson’s Building and Engineering Contracts, above n 28, at [5-016]; and Serck Controls Ltd v Crake & Scull Engineering Ltd (2000) 73 Con LR 100 (EWHC (TCC)) at [45]; citing Anthony May, Adrian Williamson and John Uff Keating on Building Contracts (6th ed. Sweet & Maxwell, London, 1985) at 86.

a reasonable price to be paid under a contract. In none of them has it been suggested, let alone held, that the Court should merely determine a range of prices. The Court’s role is to “fix the price”.45

An overview of the expert evidence

[171]	The first step that the parties took in assessing a reasonable price for the construction work was to scope the works that were carried out. The second step was to price that scope of works, primarily through the opinions of expert quantity surveyors.

[172]	In this case the first step presented some difficulty. I have described in the factual narrative the informal way in which Mr Ring engaged Mr Dobbs, and in which additional remedial work was identified. At no point during the project was a formal or comprehensive scope of works prepared.

[173]	This meant that the parties prepared scopes of works after the event. This was not a straightforward exercise, not helped by the fact that no plans or specifications had been prepared during the course of the work, and that the written communications between Mr Ring and Mr Dobbs described the work in very bare terms. Some disputes arose as to the scope of works that had been carried out.

[174]	In February 2014, soon after he terminated the contract, Mr Ring engaged Bill Cartwright to  determine  the  scope  of  works  that  Mr  Dobbs  had  carried  out.  Mr Cartwright is a qualified builder and a licensed building practitioner. He has been in the building industry since 1970.

[175]	Mr Cartwright conducted three site visits in 2014. He had access to the invoices  from  Mr  Dobbs/ARL,  email  correspondence  between  Mr  Ring   and Mr Dobbs, various photographs, and Mr Ring’s first brief of evidence. Based on this and other information, Mr Cartwright prepared a scope of works.

45	Liebherr Export - AG v Ellison Trading Ltd CA174/03, 29 June 2004 at [52].

[176]	Rebnik’s initial statement of claim particularised, based on Mr Cartwright’s scope of works, the works that it alleged had been carried out. In their initial defence the defendants did not clearly identify that there was an issue as to the scope of works alleged by Rebnik. They did of course put in issue the reasonable price for the works.

[177]	A trial was initially scheduled for 3 July 2017. Prior to that trial the plaintiffs served a brief from Mr Cartwright as to the scope of works that had been carried out, and a brief from a quantity surveying expert, Mr Johnson, as to the reasonable price for Mr Cartwright’s scope of  works.  The  defendants  then  served  a  brief  from Mr Dobbs that, among other things, contained 39 pages of detailed adjustments, corrections, and clarifications to Mr Cartwright’s scope of works. The defendants also served a brief from their expert quantity surveyor, Mr Hanlon, assessing a reasonable price. Mr Hanlon’s assessment was based on Mr Cartwright’s scope together with the expanded scope described in Mr Dobbs’ brief. Mr Hanlon’s assessment also made allowance for the hourly rates that the defendants contended had been agreed.

[178]	The parties disagreed over whether Mr Dobbs’ adjustments to Mr Cartwright’s scope of works, set out in Mr Dobbs’ brief, had been sufficiently pleaded by the defendants. In any event, the parties were of the view that the July 2017 trial could not proceed. The Court vacated that trial at the parties’ request. A new trial was scheduled for July 2018.

[179]	In advance of the July 2018 trial the plaintiffs served a  reply  brief  from Mr Johnson, and a brief from another expert quantity surveyor, Mr Weir. Mr Johnson’s reply was directed at Mr Hanlon’s quantity surveying assessment, but he did not attempt to quantify the impact of the expanded scope described in Mr Dobbs’ brief. By  contrast,  Mr  Weir   assessed  a  reasonable  price   for  the  work   based  on    Mr Cartwright’s scope together with Mr Dobb’s expanded scope. Mr Weir’s assessment was therefore based on the same scope of works as Mr Hanlon’s assessment. Mr Weir provided two alternative assessments: one based on market rates, the other based on the hourly rates that the defendants contended had been agreed.

[180]	Messrs Johnson, Weir and Hanlon conferred on 14 June 2018. They prepared a draft joint experts’ report. A marked-up final version of that report was circulated

by Mr Hanlon to the other experts on 26 June 2018 (but not signed until part-way through this trial).

[181]	The July 2018 trial had to be vacated. So did a further trial scheduled for August 2019.

[182]	In early August 2020, just a few weeks before this trial, the defendants served supplementary briefs from Mr Dobbs and Mr Hanlon.46 Mr Dobbs’ supplementary brief included further clarifications or corrections to Mr Cartwright’s scope of works. Mr Hanlon’s supplementary brief referred to those further clarifications and corrections, but Mr Hanlon did not make any adjustment for them in his assessment of a reasonable price for the works. His supplementary brief responded primarily to Mr Johnson’s and Mr Weir’s briefs.

The quantity surveyors’ assessments of a reasonable price

[183]	The quantity surveyors’ respective assessments of a reasonable price were set out in a detailed schedule, containing 294 line items. This schedule was used as the basis for much of the cross examination of the quantity surveyors, and for submissions on a reasonable price.

[184]	Mr Weir also summarised the quantity surveyors’ respective assessments in a table in schedule 6 of his brief of evidence. I set out that table here, having made some minor changes to the wording:

Category	
Johnson	
Weir

(Market rates)	
Weir

(Agreed rates)	
Hanlon	

Core work	
394,325.00	
442,830.00	
442,830.00	
715,368.37	

46 The defendants had to apply for leave to have the supplementary briefs received at trial. That application was opposed, in part, by the plaintiffs. The application was resolved in my judgment dated 26 August 2020 and in my minute dated 2 September 2020.

Preliminaries and general	
59,149.00	
102,212.00	
125,483.00	
195,214.28	

Fragmentation	
Excluded	
69,274.00	
90,885.00	
256,912.11	

Adjustment for Mr Dobbs’
scope	
Not considered	
147,700.00	
147,700.00	
Included in core work	

Adjustment for	agreed
rates	
Not considered	
Excluded	
192,833.00	
365,326.43	

Margin	
45,347.00	
76,202.00	
Included	
165,466.20	
Consultant fee equivalent	
Excluded	
38,100.00	
49,986.00	
121,844.10	

Contingency	
49,882.00	
87,632.00	
104,972.00	
182,013.35	

Sub-total	
548,703.00	
963,950.00	
1,154,689.00	
2,002,144.84	

GST	
82,305.45	
144,592.50	
173,203.00	
300,321.73	

Total	
631,008.45	
1,108,542.50	
1,327,892.00	
2,302,466.57	

[185]	I will determine a reasonable price for the works by reference to the categories in the first column of this table.

Core work, including adjustment for Mr Dobbs’ scope

[186]	Mr Johnson’s assessment of the core work ($394,325.00) took into account only Mr Cartwright’s scope of works. It did not allow for any of the expanded scope described  by  Mr  Dobbs.   Mr  Weir   assessed   the  core   work   ($442,830)  on  Mr Cartwright’s scope, but also made an adjustment for Mr Dobbs’ expanded scope ($147,700). These produced a total of $590,530. Mr Hanlon’s assessment of the core work ($715,368.37) included Mr Dobbs’ expanded scope.

[187]	There was no dispute at trial that Mr Cartwright’s scope and Mr Dobbs’ expanded scope  described  work  that  was  carried  out.47  For  that  reason,  I  put Mr Johnson’s assessment of the core work to one side (though I take account of his opinion on particular items of that core work).48 The contest lies somewhere between Mr Weir’s and Mr Hanlon’s assessments: $590,530 and $715,368.37.

[188]	I make two general points about these assessments of the core work:

(a)	The assessments were based on market rates, including market labour rates. Mr Weir and Mr Hanlon also made separate adjustments (the sixth line of the table) for the hourly rates that the defendants said had been agreed (those rates being above market). I deal later with whether any such adjustment should be made.

(b)	Each expert made separate allowances for contingency (the ninth line of the table). This reflected limitations and uncertainties that each expert saw in the retrospective scoping of the works. That is, they were each of the view that Mr Cartwright’s scope and Mr Dobbs’ expanded scope did not fully describe the work that had been undertaken.

47 All the quantity surveyors used Mr Cartwright’s scope as the starting point. As to Mr Dobbs’ expanded scope, he was not challenged on this, and in closing the plaintiffs acknowledged that a reasonable price for the work had to include an allowance for that expanded scope. To be clear, I am referring here merely to scope of the work done – not to any views that Mr Dobbs may have expressed as to how many hours the work took.
48  This does not reflect any criticism of Mr Johnson.  That his assessment merely took into account Mr Cartwright’s scope reflected his instructions from the plaintiffs.

[189]	Those assessments of the core work were made up of 277 of the 294 line items in Mr Weir’s schedule 2. Not all of those line items showed amounts (many were just descriptions), but any amounts generally represented a combination of labour and materials. Labour was by far the bigger component. The labour allowance was a product of the market labour rate and the amount of time considered reasonable for the item.49 Mr Weir and Mr Hanlon essentially agreed on the market labour rate ($50 and $49.53 per hour, respectively). The differences between them as to the allowances for each item of core work were, therefore, primarily differences on how much was a reasonable amount of time for each item.

[190]	The parties did not ask (and I hope did not expect) me to make a determination on each of the line items that made up the core work. The joint experts’ report, the cross examination of the quantity surveyors, and the closing submissions focussed on a small subset of those line items. In those circumstances I must necessarily be robust in my overall assessment of a reasonable price for the core work.50

[191]	I will begin by addressing the line items that were the focus of cross examination or submissions. I will then use my conclusions on those items to make an allowance for the core work as a whole.

[192]	Formation of rebate for  flashing  on  middle  level  decks  (line  item  44):  Mr Hanlon allowed $3,013.21 for this line item. Mr Johnson and Mr Weir did not make any specific allowance. They may have allowed for this work under another line item, but that was not explained to me.

[193]	Mr Weir accepted under cross examination that he had assumed that the rebates were formed by saw cutting. When referred to Mr Dobbs’ explanation (in his supplementary brief) that the work had been carried out by grinding, he said he would

49 This is simply to explain the experts’ underlying approaches. For most items, the calculation was shown as based on a lineal or m2 rate, with that rate reflecting underlying allowances for labour and materials.
50 In this respect, the plaintiffs pointed me to Sykes v Packham [2011] EWCA Civ 608.  There the  trial Judge had decided to assess a reasonable price, even though he did not have the very best evidence, rather than to adjourn to allow further evidence to be led. The trial Judge said that he would do the best that he could on the limited evidence, even though there would be an element of “rough justice” in the process. The Court of Appeal approved of this approach.

have to accept that. He was not asked what additional amount, if any, he would have allowed for grinding.

[194]	In re-examination Mr Weir said that any further allowance for this item (and for some other items to which he had been referred in Mr Dobbs’ supplementary evidence) would be well within his contingency allowance, which was there in case there were any gaps in his understanding of the scope of works. I accept that may be so.

[195]	Mr Hanlon was not cross examined on his allowance for this line item.

[196]	The amount at issue in this line item is barely material. However, for the purpose of assessing a reasonable price for the core work, I take into account  that Mr Hanlon has allowed a specific amount for this work, whereas Mr Weir has not.

[197]	Reinstallation of joinery on middle level (line item 60): Mr Hanlon allowed
$20,426.52, Mr Weir $7,000, and Mr Johnson $3,000. This significant difference occurred because Mr Weir (and it seems Mr Johnson) allowed for a single reinstallation of the joinery. Mr Dobbs explained in his supplementary brief that the joinery had been reinstalled multiple times. Mr Hanlon’s assessment took that into account.51 When Mr Dobbs’ explanation was put to Mr Weir in cross-examination, he acknowledged that his estimate was light in that area.

[198]	Mr Hanlon was not cross examined on this point. I will use Mr Hanlon’s allowance. Mr Weir’s estimate is one third of Mr Hanlon’s, so in my view it is not appropriate to treat this difference as covered by Mr Weir’s contingency.

[199]	Tiling  (line item 86): This was for tiling a deck on level  2 of the house.      Mr Johnson allowed $7,680, Mr Weir $10,175, and Mr Hanlon $19,844.06. Their allowances largely reflected different m2 rates (respectively $120, $185, and $296.18), and to a lesser extent their use of different areas for the deck (respectively 64, 55 and 67 m2).

51     As noted earlier, Mr Hanlon did not change his assessment as a result of the further explanations in Mr Dobbs’ supplementary brief. It appears that Mr Hanlon was already aware of those explanations when he prepared his assessment.

[200]	As to the deck area, Mr Johnson said that he had measured it as 64 m2. I will adopt that as the area.

[201]	As to the m2  rates, there was a large difference between Mr Johnson and     Mr Hanlon. The difference reflected different assumptions as to how long the tiling would take. The defendants said that Mr Johnson had not sufficiently allowed for the irregular shape of the decks, and the associated extra time involved in cutting tiles. Mr Johnson was also taken to a United Kingdom industry publication which suggested an allowance of 3.2 labour hours per m2 of tiling. Mr Johnson had relied on a New Zealand industry text that allowed for 0.9 labour hours per m2. Mr Johnson had used
1.0 hour per m2.

[202]	I do not accept that the United Kingdom publication is relevant. It expressly applies to laying of tiles “in small areas”. The 3.2 labour hour rate applies for the first m2, and a 2.4 labour hour rate applies for areas exceeding one m2. This indicates that the publication has in mind maintenance of (small) parts of a deck (or other area), as opposed to re-tiling of an entire deck.

[203]	I do accept that the irregular shape of the decks would affect the m2 rate. Both Mr Weir and Mr Hanlon said that they had determined their rates ($185 and $296.18) by reference to contemporary projects, taking into account the irregular decks. It is difficult in those circumstances to adopt Mr Johnson’s rate of $120. I will adopt a rate of $220. This is closer to Mr Weir’s rate than Mr Hanlon’s. This is because Mr Hanlon said that his rate was based on a 2.4 labour hour rate. He sought support for that in the United Kingdom publication, but acknowledged that that publication was prepared “in relation to maintenance and patchwork in small areas.”

[204]	I therefore allow $14,080 for this item (64 m2 at $220).

[205]	Main garage roof (line item 97): This was an allowance for repairing and replacing decayed timber to roof framing. Mr Hanlon allowed $29,246.20. He assumed 540 hours of work, based on Mr Dobbs’ description that this involved three staff working for four weeks. Mr Weir allowed a provisional sum of $18,000 “due to

difficulty in establishing quantity”. Mr Johnson allowed $14,000, assuming 50 per cent replacement.

[206]	In his supplementary brief Mr Dobbs said that Mr Johnson’s assumption of 50 per cent frame replacement was about right, but described additional time-consuming work in removing all nails from the upper side of the framing. In cross examination Mr Weir was taken to Mr Dobbs’ further description. Mr Weir acknowledged that that would warrant a further allowance, though he did not say how much.

[207]	In re-examination Mr Weir said that any further allowance would be well within his contingency allowance. I accept that was his genuine view.

[208]	Mr Hanlon’s assumption of 540 hours was, as he acknowledged in cross examination, based on Mr Dobbs’ description of the number of hours worked.52 The plaintiffs criticised Mr Hanlon for this, saying that he had relied on Mr Dobbs’ advice without engaging in any independent cross checking. I do not accept that criticism. Mr Hanlon explained in his supplementary brief that he had interviewed Mr Dobbs to understand the work performed and had “either produced my own estimate or taken his advice where I consider it to be fair and reasonable”. He gave a similar explanation in the joint experts’ report. This is reflected in his overall assessment. There are only a few instances in which he accepted Mr Dobbs’ description of the hours worked.

[209]	Faced with these competing assessments, I am going to allow $24,000.

[210]	Gutter on main garage roof (line items 102 and 103): Mr Johnson allowed
$2,900, Mr Weir $8,845, and Mr Hanlon $42,053,73. In part this reflected different measurements that were adopted: Messrs Johnson and Weir assumed 29 m of gutter (based on Mr Cartwright’s scope), whereas Mr Hanlon assumed 48 m. There were also stark differences in the rate: $100, $305, and $876.12 per m respectively.

[211]	These significant differences were not addressed by the experts in their joint report. Only Mr Weir was cross examined on this item. Only the defendants made (brief) submissions on it in closing submissions.

52	540 hours is three staff working 45 hours a week for four weeks.

[212]	As to the measurement, Mr Cartwright was not challenged on his assessment of 29 m. Mr Hanlon did not explain his 48 m in his principal brief. Mr Johnson said in his reply brief that Mr Hanlon’s 48 m appeared incorrect. Neither Mr Hanlon nor Mr Dobbs responded to that in their supplementary briefs. I allow 29 m.

[213]	As to the rates, Mr Weir was taken in cross examination to a photo of the gutter, and to Mr Dobbs’ description of the work. Mr Weir then fairly acknowledged that his per m rate (which was $305) “might be a little higher than that on reflection”. The only explanation that Mr Hanlon gave for his $876.12 per m rate in the schedule that he produced in his evidence in chief was “rate as below”. It is not clear what that referred to. However, he was not cross examined on his rate.

[214]	In this rather unsatisfactory state of evidence I will allow a per m rate of $600, and therefore an allowance for this item of $17,400.

[215]	Drainage (line item 158): This involved digging 23 m of trenches for the purpose of repairing and replacing wastewater pipes. Mr Hanlon allowed $31,203, based on Mr Dobbs’ evidence that the trenches were dug by hand, and had taken three or sometimes four workers “at least 3–4 weeks” to dig. Mr Weir allowed $5,000, based on the work being done with a digger. He regarded the decision to hand dig as unreasonable, based on Mr Ring’s evidence that a digger could have accessed the area.

[216]	In my view hand digging was a reasonable approach. Mr Ring described, by reference to a video of the property, a possible route that a digger could have taken to reach the drains. The route looked very challenging. Mr Ring acknowledged that he did not have the expertise to determine whether it was feasible for a digger to access the property by that route. Mr Dobbs’ evidence was that access would only have been possible through a neighbour’s property.53 Mr Hanlon’s opinion was that a digger was inappropriate given the proximity to a neighbour’s house and inground services.

53 Mr Dobbs was not challenged on this evidence. On the view that I have taken of  the  reasonableness of Mr Dobbs’ decision, it is not necessary for me to determine whether there was ever a conversation between Mr Dobbs and Mr Ring as to the possibility of bringing in a digger through a neighbouring property. I note that Mr Dobbs’ evidence of that conversation was not challenged.

[217]	However, I do not accept Mr Hanlon’s full allowance. His $31,203 allowance allowed for a full four weeks of work, whereas Mr Dobbs said the work took “3–4 weeks”.54 Doing the best that I can, and taking account of the difficulties described by Mr Dobbs in doing this work, I allow $23,000.55

Allowance for core work as a whole

[218]	On the above items I have, on average, arrived at an amount just above the mid-point between Mr Weir and Mr Hanlon. This happens to accord with the general impression I gained of the expert evidence at trial. I will explain that impression by reference to the higher-level criticisms that each side made of the other’s expert or experts.

[219]	The plaintiffs criticised Mr Hanlon for merely relying on Mr Dobbs’ description of the time taken to carry out particular items. I have already dealt with, and rejected, that criticism.

[220]	The defendants criticised Mr Johnson for a lack of objectivity in the way that he critiqued aspects of Mr Hanlon’s evidence. I do not accept that criticism. In my view all three experts were forthright, but respectful, in the way that they engaged with each other’s positions.

[221]	The defendants criticised Mr Weir for being unable to recollect, at trial, information and material on which he had relied when preparing his assessment. They said that Mr Hanlon’s assessment was generally more considered and better supported by appropriate supporting data. I did not see this distinction between these two experts at trial.

[222]	In light of those views, I conclude that my determinations on the above line items are a fair proxy for determining an allowance for the core work as a whole. I

54	Mr Hanlon allowed for 630 hours. Assuming that 3.5 workers were used on average, that equates to 45 hours per week over four weeks.
55	This allows for three weeks, rather than Mr Hanlon’s four weeks. I have then rounded the figure to the nearest thousand.

allow $655,000. This is just above the mid-point between Mr Weir’s assessment ($590,530) and Mr Hanlon’s ($715,368).

Preliminaries and general

[223]	Mr Johnson, who was the first of the experts to prepare an assessment of a reasonable price, calculated preliminaries and general (P&G) by applying a rate of 15 per cent. He applied that rate to his assessment of the price for the core work (which did not include any allowance for, among other things, Mr Dobbs’ expanded scope). On his figures, this produced a P&G allowance of $59,149. Mr Johnson did not expand on this in his brief.

[224]	Mr Hanlon allowed for P&G by applying a rate of 13.4 per cent. He said that he derived that rate from an average of comparable projects. He applied that rate to the total of his assessment for the core work (including Mr Dobbs’ expanded scope), the fragmentation allowance, his adjustment for agreed rates, and his allowance for consultants. That total was $1,459,542. At 13.4 per cent this produced a P&G allowance of $195,214.

[225]	Mr Weir also applied a percentage approach to P&G. Like Mr Johnson, he used 15 per cent. He applied that rate to the same matters as Mr Hanlon, other than the allowance for consultants. Mr Weir gave two P&G figures. One was based on market rates ($102,212), the other on agreed rates ($125,483).

[226]	In his reply brief, Mr Johnson criticised Mr Hanlon for applying an arbitrary percentage from other projects without considering the adequacy of the resultant P&G sum for this specific project. Mr Johnson explained that the level of P&G depends primarily on the time required to complete the work, irrespective of the value of the contract. He gave an example of two projects that require the same work, but in one of which the materials chosen are twice as expensive as in the other. The absolute P&G should be the roughly same in each, and the P&G percentages accordingly lower in the more expensive project.

[227]	I accept Mr Johnson’s general point, but I do not accept that it undermines  Mr Hanlon’s approach. The differences in the experts’ assessments largely reflected

differences in their assessments of the time involved in doing the work, rather than any differences in the cost of materials. I note also that Mr Weir used the same percentage as Mr Johnson, to produce roughly twice the P&G allowance.

[228]	For  completeness,  I  note  that  in  closing  the  plaintiffs  suggested  that   Mr Johnson had arrived at his P&G allowance by an absolute number approach, which he then cross-checked by reference to percentage. I do not accept that. It is clear on the face of Mr Johnson’s estimate that his P&G allowance was calculated merely as a percentage. When, in his reply brief, he criticised Mr Hanlon’s approach, Mr Johnson did not suggest that he (Mr Johnson) had applied an absolute number approach. He merely criticised Mr Hanlon for not considering the adequacy of the resultant sum for this project.

[229]	I will adopt Mr Weir’s rate of 15 per cent. Like him, I will apply that to the core costs (including Mr Dobbs’ expanded scope), the fragmentation allowance, and any adjustment for agreed rates. I will not apply it to the allowance for consultants.

Fragmentation

[230]	As I noted in the factual narrative, at no point was a thorough investigation undertaken of the property to determine the full scope of necessary remedial work. As work progressed, additional remedial or  other  work  was  identified  (usually  by  Mr Dobbs). Mr Ring readily agreed to any recommendations that further work be done. Any scope of works was set out in only brief terms, usually in an email. No plans or specifications were prepared.

[231]	Mr Ring said, in his brief of evidence, that the essential pattern over the course of the work was that, by the time a particular job was fixed, Mr Dobbs had already identified other jobs that also needed doing in other locations. Mr Ring then said:

I do not have any criticism of this. Rather, I am just stating this as the fact of what happened. I invariably agreed that he should attend to these identified jobs, and in the manner and in the order that he recommended. … As a result, when obtaining [Mr Johnson’s] opinion of a reasonable cost for all the work, I asked him to assume that each of the jobs had been done separately.

[232]	Mr Johnson’s estimate said that one of his assumptions was that the work was “carried out concurrently and sequentially, not isolated and out of sequence”.

[233]	Mr Hanlon recorded, in his brief, that he had been instructed that the works were undertaken in the absence of a fully resolved project plan and that significant fragmentation of the work sequence resulted. He made a separate allowance for this in his assessment. His allowance appeared to be based on 20 per cent of the actual hours charged by Mr Dobbs. Mr Hanlon allowed for those hours at his market rate. This came to $256,912.

[234]	Mr Weir agreed with Mr Hanlon that, because the work proceeded on an ad hoc basis (without a fully resolved project plan), this caused fragmentation and additional costs. But he disagreed with Mr Hanlon’s allowance. Mr Weir allowed for
$69,274 (at market labour rates) or $90,885 (at agreed labour rates). His calculations appear to be based on 10 per cent of the core costs (including Mr Dobbs’ expanded scope).56

[235]	Mr Weir also explained in his brief that the conventional approach would have been for Mr Ring to engage a building surveyor to carry out a site investigation, identify the issues and prepare a scope of works. The scope of works could then be used to prepare construction documentation for the purposes of contractor procurement and construction.

[236]	Whether an allowance should be made for fragmentation was very much in dispute at trial. Mr Johnson’s position was that no allowance was appropriate. Responding to Mr Hanlon’s  approach, Mr Johnson  said  that  Mr Ring  relied on  Mr Dobbs to undertake the work in the most efficient manner, and that if Mr Dobbs “did not programme or investigate the works efficiently or correctly”, and that led to fragmentation, that should be at Mr Dobbs’ cost, not Mr Ring’s. Mr Dobbs was cross examined at length as to whether he had programmed or sequenced the works efficiently. In closing the plaintiffs submitted that any inefficiencies in working were

56 It may have been that Mr Weir calculated his fragmentation allowances also by applying 10 per  cent to his P&G allowance. But that would have been circular, as he calculated his P&G allowance by applying a percentage to his fragmentation allowance.

not the fault of Mr Ring, and so the cost of them should not be laid at his door. They submitted that there should be no allowance for fragmentation, or at most a minimal
$20,000 allowance.

[237]	In my view the answer to this dispute lies in the distinction, found in the passage I have just quoted from Mr Johnson, between a failure to “programme” the works and a failure to “investigate” them. I accept the plaintiffs’ submission that there were inadequacies in the way that Mr Dobbs programmed the works. Just by way of example, it appears that he never prepared a formal construction programme, and his own evidence was to the effect that he generally planned two or three weeks ahead. The consequences of those inadequacies should not be borne by Mr Ring.

[238]	The failure to fully investigate the issues with the property, or to develop a full scope of works or any plans and specifications, is a different matter. That was something for Mr Ring. He could have engaged Mr Dobbs (or someone else) to do those things. He chose not to. And he made that choice not only at the start of the project, but repeatedly as the project developed. The email exchanges on 19 and 30 September 2011 (set out in the factual narrative) are but two examples. On both occasions Mr Dobbs reported further issues in the most general of terms, and Mr Ring rapidly gave his approval in equally general terms.

[239]	Mr Ring was free, as property owner, to make that choice. But he should bear the consequences of it, to the extent that it led to increased work. In my view Mr Ring recognised this when he (very fairly) said he made no criticism of Mr Dobbs for the way in which the work developed.

[240]	There should, therefore, be an allowance for fragmentation. But Mr Hanlon’s allowance is too high. It takes into account the lack of programming as well as the lack of investigation and plans. This was reflected in Mr Hanlon’s evidence, in cross examination, that the fluctuation in hours worked was the key indicator of disruption. That fluctuation was as much a reflection on Mr Dobbs’ inadequate programming as on the lack of a full investigation and plan.

[241]	I will allow 15 per cent. This is above Mr Weir’s 10 per cent, which he acknowledged was his “best educated guess”, but results in an allowance well below Mr Hanlon’s. I will apply the 15 per cent to the core work (including Mr Dobbs’ expanded scope), and to any adjustment for the agreed rates. In my view this is a reasonable reflection of the increased work that would have resulted from the way in which the project was (not) investigated, scoped or planned.

Adjustment for agreed rates

[242]	The defendants say that the assessment of a reasonable price must take into account the hourly rates that the defendants say were agreed between Mr Dobbs and Mr Ring. Mr Hanlon made an allowance of $365,326.43 to reflect this.

[243]	The plaintiffs dispute this. They say that there should not be any allowance. Alternatively, they say that the calculations underlying Mr Hanlon’s allowance are flawed.

[244]	In my view it is clear that any agreement on hourly rates should be taken into account. As set out earlier, in assessing a reasonable price the Court may take into account all relevant circumstances, and relevant evidence includes negotiations as to price. If negotiations are relevant, agreements must also be. If a principal has agreed to certain labour being charged at a particular hourly rate, the principal should be held to that agreement.

[245]	I concluded earlier that  there had been agreement between Mr Ring and     Mr Dobbs as to some – but not all – of the hourly rates for labour. For the initial part of the work (up until mid-September 2011) it was agreed that Mr Dobbs would charge his time, and his leading hand’s time, at $58 per hour. From mid-September 2011 the parties had agreed that Mr Dobbs was entitled to charge $65 per hour for anyone who was a “tech” – namely, a fully qualified builder whom Mr Dobbs had trained in aluminium joinery.

[246]	This did not mean that the parties had agreed that, from mid-September 2011, Mr Dobbs was entitled to charge $65 per hour for any worker that Mr Dobbs subjectively decided to call a “tech”. There appears to have been some recognition of

that by Mr Dobbs, because in late 2011 and early 2012 there were instances of him charging workers at $40 or $45 per hour.  By contrast, near the end  of the project  Mr Dobbs was charging general site labourers (including a law student) at the $65 rate. Mr Ring had not agreed to that. On the other hand, I do not accept the plaintiffs’ suggestion that to be a “tech” an employee had to be a licensed building practitioner. Mr Dobbs did not use that designation when proposing his rates in May and September 2011.

[247]	To be clear, Mr Dobbs’ entitlement to charge $65 depended on whether the worker was a “tech”. It did not depend on what that “tech” was engaged to do. This project began as one within the specialism of Mr Dobbs’ aluminium repair business, but in its latter stages encompassed more general work. It must have been obvious to Mr Ring that Mr Dobbs was at times using his specialist “techs” for non-specialist work. But to the extent that Mr Dobbs engaged workers other than “techs” to do that non-specialist work (which he clearly did to some extent), he was not entitled to charge Mr Ring $65 per hour.

[248]	As well as the rates for “techs”, in October 2012 Mr Ring agreed to Mr Dobbs engaging temporary workers to accelerate the work on the roof to enable completion by Christmas 2012. In so doing Mr Ring agreed to the temporary workers being charged at $75 per hour. In closing Mr Bigio submitted that Mr Ring had never agreed to the $75 rate for temporary workers for any purpose other than accelerating the roof work (which Mr Ring subsequently agreed be deferred until 2013). I accept that there was never any express agreement to the $75 rate for any other purpose. But it was clear on the face of the invoices that Mr Dobbs was engaging temporary workers while work was being carried out other than on the roof, and was charging those workers at (for the most part) $75 per hour.57 Mr Ring never objected to that.

[249]	I regard Mr Ring’s lack of objection as agreement, by conduct, to the $75 rate. This does not mean that Mr Dobbs was entitled to charge that rate regardless of the type of work that the temporary workers were  doing.  He had  described them to   Mr Ring in October 2012 as being “qualified” either in waterproofing or building. But

57	From August to October 2013 Mr Dobbs charged about 900 hours of temporary workers at only
$45 per hour.

there is no reason to think that the temporary workers were diverted to other tasks. In closing the plaintiffs submitted that they had done tasks such as cleaning. There was no evidence of that. Mr Dobbs did not charge for temporary workers after October 2013. The cleaning work occurred after that.

[250]	These respective agreements (to rates of $58, $65 and $75) should be taken into account in determining a reasonable price. Doing so, however, is a difficult task. It requires some assessment of how many hours the work should have taken. It also requires some assessment of how much work was done by “techs”, and how much was not. These matters remained rather opaque.

[251]	Of the experts, only Mr Hanlon and Mr Weir made an allowance for the agreed rates. Mr Hanlon allowed $365,326.43. He first calculated the extent to which the agreed rates58 exceeded the market rate ($49.53) that he had used elsewhere in his assessment. He said that, on average, that excess was $16.64 per hour. He multiplied that rate by 21,961 hours. Those were the hours that Mr Hanlon said Mr Dobbs had charged for “trade” and “temp” workers.59 Mr Hanlon said that he calculated that the scope of works should have taken slightly more hours (22,299), but he had instead used the actual (lower) number of hours charged.

[252]	Mr Weir  allowed  $192,833.  He  calculated  this  in  a  similar  fashion  to Mr Hanlon. He used the same hours as Mr Hanlon for “trade” and “temp” workers. He multiplied the trade hours by $15 and the temp hours by $20, apparently reflecting his assessment of the premium by which the agreed rates exceeded the market rates.60 This produced $385,665. Mr Weir then reduced that by 50 per cent, because his firm view was that the number of hours charged by Mr Dobbs was excessive. The result was an allowance of $192,833.

58 Mr Hanlon calculated a weighted average of the rates charged by Mr Dobbs. This therefore took into account the isolated instances in which Mr Dobbs charged $40 or $45 per hour.
59 Mr Hanlon produced a schedule summarising the hours charged by Mr Dobbs. This showed that 25,935 hours had been charged, which Mr Hanlon classified as “supervisor” (3,974 hours), “trade” (16,336 hours), and “temp” (5,625 hours). The 21,961 hours that Mr Hanlon used in his calculation were the trade and temp hours. The supervisor hours appeared to be hours that Mr Hanlon had been able to identify as being charged for Mr Dobbs’ own time.
60 Mr Weir’s market rate was $50 per hour.  The weighted average at which Mr Dobbs charged  “trade” hours was $63.12, so the $15 premium was a little excessive. Conversely, the $20 premium for temporary workers was too low, as the agreed rate was $75. But these matters would have largely balanced each other out.

[253]	These approaches each involved an assessment of how long the work should have taken. Mr Hanlon was cross examined on his assessment that the work should have taken 22,299 hours. He said that he had assessed the core work as requiring 9,631 hours, and fragmentation as accounting for 5,187 hours, a total of 14,181 hours. He said that an allowance also had to be made for the labour component in the allowances for P&G and contingency. It remained unclear to me how this could have brought his total to 22,299 hours.

[254]	Mr Weir effectively allowed for 11,000 hours. He acknowledged in cross examination that his 50 per cent deduction from the actual hours charged was an “experience-based gut feel” or “educated guess”. In his brief he did explain in some detail his view that the hours charged were excessive. I have already found, in relation to fragmentation, that there were inadequacies in the way that Mr Dobbs programmed the works. This would have led to excessive hours being charged. However, in answers to my questions Mr Weir acknowledged that the excessive hours (and hence his 50 per cent deduction) were in part because of the lack of full scoping of the work at the outset. As I also said in relation to fragmentation, that is something that lies at Mr Ring’s door.

[255]	I keep in mind that I am to determine a price that is reasonable in all the circumstances.  That is an objective test.  In that respect it is relevant to note that   Mr Ring should have been aware, well before the end of the project, that there was a trade-off occurring between productivity and perfection. In October 2012 (about half way through the project, by which time many deadlines had passed) Mr Dobbs suggested that Mr Ring could hire another contractor. Mr Ring responded straight away that he did not want to hire anyone else: “I only trust you!”. Mr Dobbs then explained that there was an issue of quality control, and that “the secret to why my jobs never fail is that I check everything.” Mr Ring’s reply was “Whatever you can reasonably do without compromising quality.”61

61 There was also an exchange on 21 June 2012, in which Mr Dobbs said he hoped it was not costing too much. Mr Ring’s response was “Yes, it has been expensive, but necessary. … I have appreciated your commitment to the job, and also to making sure that it’s all done properly.”

[256]	It is not surprising that quality was important to Mr Ring. His house was impressive and substantial. Mr Ring gave the appearance that he was willing to pay for more hours than might usually be spent in order to achieve that quality. This, in my view, needs to be kept in mind in the overall assessment of how many hours the work should have taken.

[257]	I am going to allow for 17,000 hours. This takes into account labour across all categories (for example, the labour allowance within fragmentation and contingency). Mr Hanlon’s and Mr Weir’s assessments of how long the work should have taken each depend on their earlier assessments of the core work, P&G, and fragmentation. On those matters I have reached conclusions that lie between Messrs Hanlon and Weir. I think that Mr Weir’s 50 per cent deduction reflects some excesses for which Mr Dobbs is not to blame. I also  take  into  account  the exchanges  between  Mr  Ring  and  Mr Dobbs.

[258]	From those 17,000 hours I will make a deduction to reflect that some of the work was not done by “techs”. There was very little evidence to assist me on that. However, Mr Ring’s criticisms of Mr Dobbs in this respect focussed on the tail end of the work. Doing the best that I can, I deduct 1,000 hours.

[259]	Using Mr Hanlon’s average premium of $16.64 (which was not challenged), 16,000 hours produces an allowance of $266,240.

Margin

[260]	On one level the experts were agreed as to the appropriate margin to allow for this project. But there was a disagreement as to whether any margin at all should be allowed if the reasonable price was to be assessed by reference to the agreed labour rates. As I have found that the agreed labour rates are to be taken into account, I have to resolve this disagreement.

[261]	It was common ground at the trial that the agreement between Mr Ring and Mr Dobbs was that, apart from labour, all other charges to the project were to be at cost. This was reflected in the invoices, which did not include any margin. The invoices simply charged labour at the agreed rates (without any further margin), and

passed on other charges (such as materials) at cost. There were immaterial exceptions for charges for the hire of some machinery.

[262]	Messrs Johnson and Weir both said that, given that agreement, if a reasonable price was to take account of the agreed rates, there would be double counting if a margin were also added. The plaintiffs submitted the same in closing.

[263]	Mr Hanlon disagreed. He allowed for a margin, as well as the agreed rates. He was cross examined on his position.

[264]	I see the matter quite plainly. It was common ground between the experts that the market labour rate (of about $50) was before any margin, and that in the market a margin would have been charged on top of that rate (as well as the margin being charged on other matters such as materials). If a purely market rate assessment were appropriate, it follows that that assessment would have to allow for a margin. I have held that a purely market rate assessment is not appropriate, because of the parties’ agreement on some of the labour rates. That agreement must be reflected in an assessment of the reasonable price. But one cannot pick some elements of the parties’ agreement and ignore other elements. The agreement was that Mr Dobbs could charge (variously) $58, $65  and $75 per  hour  but that he would  not charge  a margin.   Mr Weir’s assessment gives effect to the italicised words, whereas Mr Hanlon’s does not. Indeed, as far as the labour component of  the reasonable price is  concerned,  Mr Hanlon’s assessment treats the agreed hourly rates as if they were $58 plus margin,
$65 plus margin, and $75 plus margin.  They were not.

[265]	Accordingly, I do not allow for a margin.

[266]	It is appropriate at this point to deal with a related submission by the plaintiffs. They said that if the agreed labour rates were to be taken into account, there should be no allowance for P&G. This was because, just as Mr Dobbs had not charged any margin in his invoices, so he had not made any separate charge for P&G. The way that Mr Johnson put it was that the agreed rates included both P&G and margin.

[267]	I do not accept that submission. First, unlike the position with margin, there was no common ground at trial that Mr Dobbs and Mr Ring had agreed that there would be no separate charge for P&G. Secondly, the fact that the invoices did not describe any charges as P&G is not determinative. P&G can include a variety of costs, including labour. It is almost certain that Mr Ring was charged for labour and other costs that would be characterised as P&G. That Mr Dobbs’ invoices did not use that description is neither here nor there. Thirdly, Mr Weir, while expressing the view that allowing for margin would constitute double counting, did not express that view in relation to P&G.

Consultant fee equivalent

[268]	Mr Johnson did not make any allowance for the cost of consultants (relating to design, project management, and so on). He said these costs would not normally be incurred by the contractor, and in this case were not incurred by Mr Ring.

[269]	Mr Hanlon did make an allowance, of $121,844.10. This was for exploratory work, research and development, consultation and problem solving. His view was that this work was necessary in the absence of any design and specification. In his brief he explained:

This is a cost that would reasonably be expected in the completion of a remedial works project, whether within the contractor’s supply chain (as in this case) or through separate commissions between the project sponsor and consultants (as was avoided in this case).

[270]	Mr Hanlon’s allowance was based on four days per month for the duration of the project. He allowed for 1,190 hours, at a market rate of $102.39 per hour. In a supplementary brief he acknowledged that, as he had otherwise applied agreed labour rates, he should simply have allowed for this at $65 per hour. That would be $77,350.

[271]	Mr Weir said he agreed with Mr  Hanlon’s  approach,  but  disagreed  with Mr Hanlon’s amount. Mr Weir allowed for $49,986. He based this on five per cent of all the other allowances considered above.

[272]	I accept the approach taken by Mr Hanlon and Mr Weir. It was clear from  Mr Dobbs’ description of the work, and from the many photographs in evidence, that

the project would have required the sort of exploratory work, development of solutions, and problem solving described by Mr Hanlon. An assessment of a reasonable price must allow for that work.

[273]	As to the amount of the allowance, Mr Hanlon’s corrected figure ($77,350) is roughly five per cent of his other allowances. Although they have approached it in different ways, Mr Hanlon and Mr Weir have therefore ended up with the same effective percentage. I will apply five per cent (to the same allowances as Mr Weir did).

Contingency

[274]	All three experts allowed for a 10 per cent contingency. The contingency allowance reflected the limitations that they faced in determining, retrospectively, how much work had been done.

[275]	Mr Johnson, however, was of the view that Mr Hanlon’s contingency should be lower than 10 per cent, as Mr Hanlon had had the benefit, when preparing his assessment, of additional information from Mr Dobbs. The plaintiffs submitted in closing that, because the scope of works had been the subject of extensive evidence from Mr Cartwright, which had then been commented on by Mr Dobbs on two occasions (in his principal brief and then his supplementary brief), any contingency allowance should be minimal – between zero and 2.5 per cent.

[276]	I accept the general proposition that the contingency allowance should reduce in line with an improved understanding of scope. But Mr Weir allowed for a 10 per cent contingency even after having the benefit of the detailed comments in Mr Dobbs’ principal brief. It should be clear from my allowances for the items in the core work that there are still significant limitations in understanding how much work was done, or how much time it should reasonably have taken. I do not see any basis for reducing the contingency below the 10 per cent that the experts allowed.

[277]	I therefore allow 10 per cent for contingency.

Summary

[278]	A reasonable price for the work is $1,618,260:

Item	
Amount	
Reference/comment	

Core work	
$655,000	[222]; includes Mr Dobbs’ expanded scope	

P&G	
$158,914	
[229]; 15 per cent, applied to core work, fragmentation, and agreed rates (totalling
$1,059,426)	

Fragmentation	
$138,186	
[241]; 15 per cent, applied to core work, and agreed rates (totalling
$921,240)	
Adjustment for agreed rates	
$266,240	
[259]	

Margin	
Included in (4)	
[265]	

Consultancy	
$60,917	
[273]; five per cent, applied to core work, P&G, fragmentation, agreed rates (totalling
$1,218,340)	

Contingency	
$127,926	
[277]; 10 per cent on above items (totalling
$1,279,257)	

Sub-total	
$1,407,183		

GST	
$211,077		

Total	
$1,618,260		

Is Mr Ring (and now Rebnik) estopped from pursuing the claim?

[279]	The defendants raised, as an affirmative defence, estoppel by representation. They pleaded that Mr Ring should be estopped from claiming that he had been charged too much for the construction work, “whether on the basis of the charge-out rate he had agreed to, or the hours of labour charged to him for those works.”

[280]	To establish an estoppel by representation, the defendants must show that:62

(a)	Mr Dobbs had a belief or expectation that was created or encouraged by words or conduct by Mr Ring (and, to the extent an express representation is relied upon, that it was clearly and unequivocally expressed);

(b)	Mr Dobbs reasonably relied to his detriment on the representation; and

(c)	it would be unconscionable for Mr Ring to depart from the belief or expectation.

[281]	The defendants pleaded that Mr Ring had, by various statements and conduct, repeatedly represented to Mr Dobbs that he (Mr Ring) accepted and had no issue with “the labour rates being charged” or with “the extent of the works completed and invoiced to him on a monthly basis”.  In closing submissions the defendants put it

62 Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd [2014] NZCA 407, [2014] 3 NZR 567 at [44]; citing Burbery Mortgage Finance and Savings Ltd (in rec) v Hindsbank Holdings Ltd [1989] 1 NZLR 356 (CA) at 361 and Gold Star Insurance Co Ltd v Gaunt [1998] 3 NZLR 80 (CA) at 86.

more broadly: that Mr Ring had represented that “he had no claim or maintained no claim that he had been overcharged for the works.”

[282]	The defendants did not plead any particular belief or expectation of Mr Dobbs to which these alleged representations had given rise. In closing the defendants said that it could be inferred that Mr Dobbs believed and expected that Mr Ring “was happy with his work, and content with the pace of the work and/or the associated cost that Mr Ring was facing.”

[283]	As to detrimental reliance, the defendants said that Mr Dobbs had relied on Mr Ring’s representations by repeatedly agreeing to provide further construction services in the belief that he would be paid in full “at the previously agreed rate”. The defendants said that in those circumstances it would be inequitable for Mr Ring to resile from his representations and claim that he had been overcharged.

[284]	There are several difficulties with this defence. The first concerns the representations. The defendants pointed to two types of statements or conduct that were said to constitute the representations. First, there were various complimentary oral and written statements made by Mr Ring to Mr Dobbs throughout the course of the project. Secondly, there was Mr Ring’s conduct in paying the invoices without demurral and then asking Mr Dobbs to do more work.

[285]	I accept that these statements and conduct likely constituted representations by Mr Ring that, at the time he made the representations, he was making no claim of overcharging.63 The problem for Mr Dobbs is that Mr Ring is not, by now making his claim of overcharging, seeking to resile from any such representations. To give rise to the estoppel that Mr Dobbs pleads, Mr Dobbs needs to show that Mr Ring made representations as to the future: that he would not make any claim of overcharging.

63 These representations might have founded a different estoppel, if Mr Dobbs had changed his position in reliance on the belief that  he was entitled to the entirety of the payments made by  Mr Ring. Mr Dobbs did not put forward such an estoppel. In any event, it is unlikely that such  an estoppel could have been made out, given that Mr Ring was not responsible to Mr Dobbs for ensuring the reasonableness of the amounts charged: Piers Feltham and others Spencer Bower: Reliance-Based Estoppel (5th ed, Bloomsbury, London, 2017) at [3.7].

[286]	No such representations were alleged. Nor could such representations be construed from Mr Ring’s statements and conduct.

[287]	The second difficulty concerns detrimental reliance. I accept, of course, that Mr Dobbs continued to carry out construction work. But Mr Dobbs has been paid for that work, and will be retaining payment to the extent of a reasonable price. Carrying out work in exchange for a reasonable price cannot, of itself, be detrimental. There might  have been detrimental  reliance  had Mr  Dobbs, by continuing  to work on  Mr Ring’s house, foregone better opportunities elsewhere. That was not pleaded, nor was there any evidence of it.

[288]	The final difficulty concerns unconscionability. I have found that Mr Ring has been charged, and has paid, more than a reasonable price. All that Mr Ring is seeking to do is recover the excess.   It cannot be unconscionable for him to do so, where   Mr Dobbs’ only reliance has been to carry out work for which he will still retain a reasonable price.64

[289]	For each of those reasons, I find that Mr Ring (and now Rebnik) is not estopped from making the claim of overcharging.

[290]	My conclusion does not mean that the concerns that the defendants raised under the rubric of estoppel are completely irrelevant to the outcome of this proceeding. I have taken some of those concerns into account when determining a reasonable price.65

Did Mr Ring waive any obligation on Mr Dobbs or ARL to charge only a reasonable price, or waive any breach of that obligation?

[291]	The defendants separately pleaded a defence of waiver. They said that Mr Ring had waived any obligation on the defendants to charge only a reasonable price, or had waived any breach of that obligation. They said that they had relied on the waiver by continuing to carry out construction work.

64	As is usually the case, there is a close relation between the elements of detrimental reliance and unconscionability.
65	See the adjustment for agreed rates, particularly [245]–[249] and [255]–[256].

[292]	The defendants did not press this defence in closing, other than to say that this was a case where estoppel and waiver were blurred.

[293]	In my view the type of waiver pleaded by the defendants is indistinguishable from estoppel. This was reflected in the way that the defendants pleaded it. For the same reasons that I have given for rejecting the estoppel defence, I find that there was no binding waiver by Mr Ring.

Is Mr Ring liable to pay the final two invoices?

[294]	It was common ground that, to the extent that the plaintiffs succeeded on their claim, that would extinguish any claim by the defendants against Mr Ring on the final two invoices. It will be clear from my judgment that the plaintiffs have succeeded in an amount well in excess of these two invoices. Mr Ring is therefore not liable to pay anything in respect of them.

[295]	This means that it is unnecessary for me to address several sub-issues that arose in relation to these invoices (such as whether the parties had agreed a fixed price for the stripping of the pool). I will, however, say that I would not have accepted the plaintiffs’ allegation that in these invoices Mr Dobbs had charged for labour that was not actually worked on the job. That allegation was partly based on Ms Taylor’s observations. I do not doubt the honesty of her evidence in this regard, but her observations were occasional and incomplete. I was satisfied by the defendants’ evidence that the labour charged was worked.66

Conclusion

[296]	Mr Ring paid Mr Dobbs $2,464,225.32 (including the $4,000 overpayment of the March 2013 invoice). A reasonable price for the work was $1,618,260. Rebnik is entitled to recover the excess of $845,965.32, both  in  money had  and  received  (Mr Ring having paid the money in the mistaken belief he had been properly charged)

66	Whether a reasonable price was charged is, of course, a different matter.

and for breach of contract (Mr Dobbs having charged more than a reasonable price). Rebnik is entitled to recover that excess from Mr Dobbs.67

Interest

[297]	Rebnik claims interest under s 87 of the Judicature Act 1908. Section 87 remains applicable, because the proceeding was commenced before the Interest on Money Claims Act 2016 came into force.68 Rebnik is content to have interest run from 7 July 2014, which is the date on which the claim for overpayment was quantified and advised to Mr Dobbs’ solicitors.

[298]	Section 87 confers on the Court a discretion to include in a judgment sum interest at a rate, not exceeding the prescribed rate, as the Court thinks fit. Since 1 July 2011 the rate prescribed for the purposes of s 87 has been five per cent.69

[299]	Rebnik seeks interest at the rate of five per cent. I am not going to allow interest at five per cent. The prescribed rate is a maximum. Interest rates have been below five per cent for most (perhaps all) of the relevant time, and are currently well below that rate.

[300]	In the exercise of my discretion under s 87 I am going to award Rebnik interest on the judgment sum as calculated by the internet site calculator maintained under s 13 of the Interest on Money Claims Act, subject to the interest rate not exceeding five per cent. Although that Act is not applicable in its terms, the calculator provides a just way of determining an award of interest under s 87 (since, in broad terms, it provides a small premium on retail term deposit rates).70 The calculator is able to deal with interest start dates prior to 1 January 2018 (when the Act came into effect).

67	Rebnik pleaded its claim against Mr Dobbs, or ARL in the alternative. I will therefore give judgment only against Mr Dobbs.
68	Interest on Money Claims Act 2016, s 7 and sch 1.
69	Clause 4 of the Judicature (Prescribed Rate of Interest) Order 2011.
70 For a more complete explanation, see Blumberg v Frucor Beverages Ltd [2018] NZHC 1876, [2018] 3 NZLR 672 at [74]–[76], where Jagose J likewise awarded interest under s 87 calculated in accordance with the internet site calculator. That aspect of his interest award was not challenged on appeal: Frucor Beverages Ltd v Blumberg [2019] NZCA, [2020] 2 NZLR 51.

Result

[301]	In CIV-2015-404-964, I give judgment to  Rebnik  Properties  Ltd  against Mr Dobbs in the sum of $845,965.32, plus interest on that sum from 7 July 2014 at rates calculated in accordance with the internet site calculator maintained under s 13 of the Interest on Money Claims Act 2016, but not exceeding five per cent per annum.

[302]	In CIV-2015-404-1602, I give judgment to Mr Ring on the claims brought by the plaintiffs.

Costs

[303]	Both parties asked for costs to be reserved, regardless of the outcome.

[304]	If the parties are unable to agree costs, I direct that submissions be filed and served by 26 February 2021 (for the plaintiffs) and 12 March 2021 (for the defendants). Each set of submissions is not to exceed five pages (excluding any cost schedules).

Campbell J

Solicitors/Counsel:
D R Bigio QC, Shortland Chambers, Auckland A J Steel, Barrister, Auckland
McVeagh Fleming, Auckland