IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE	
CIV-2024-404-1120
[2025] NZHC 578	

BETWEEN	DHARMENDRA MEHTA
Appellant/Cross Respondent	
AND	EMENUWAL CHANDRA
Respondent/Cross Appellant	

Hearing:	26 November 2024	
Appearances:	S Carey for Appellant
M Taylor for Respondent	
Judgment:	19 March 2025	

JUDGMENT OF WILKINSON-SMITH J

This judgment was delivered by me on 19/03/2025 at 3 pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel: S Carey, Auckland M Taylor, Auckland

MEHTA v CHANDRA [2025] NZHC 578 [19 March 2025]

Introduction	[1]

Background	[8]

The District Court decision	[26]

The costs decision	[69]

The grounds of appeal	[79]
Mr Mehta’s substantive appeal	[79]
Mr Mehta’s appeal in relation to costs	[97]
Relief sought	[107]

Mr Chandra’s position	[108]
Mr Chandra’s position on the substantive matters	[108]
Mr Chandra’s position in relation to costs	[128]
Relief sought	[137]

Approach on appeal	[138]

Issues	[140]

Discussion	[141]
Construction defects	[141]
The off-centre pillar	[158]
Should the Judge have relied on the Kaizon report in relation to delay?	[160]
Should damages for delay have been awarded other than as a consequence of a breach of contract given the liquidated damages clause of the
Project Management Contract, and given that Mr Chandra was not a party to that contract?	[163]
Should responsibility for delay have been apportioned; and if so, was the
apportionment correct?	[164]
Mr Chandra’s liability	[167]
Was the award of general damages correct?	[175]
Should the cost of the Kaizon report have been apportioned?	[180]
Was the Judge correct to award costs on a 2B basis, and only for steps taken after June 2019?	[183]
Should interest be payable on the judgment sum from October 2010?	[189]

Orders	[196]

Introduction

[1]	On 16 April 2024, Judge K Davenport KC issued a decision on a claim for damages against Mr Emenuwal Chandra in respect of building and project management    work    which    Mr Chandra/his     company     carried     out     at   Mr Dharmendra Mehta’s Mount Roskill home in 2010.1

[2]	Mr Chandra was the owner and sole director of Habitat Builders Ltd (Habitat), a company now removed from  the  New  Zealand  Companies  Register  (Companies Register), which was engaged on a labour-only basis to do carpentry work on Mr Mehta’s house, and to project manage the build.

[3]	Mr Mehta claimed that Habitat and Mr Chandra failed to carry out the building and project management work properly and in a timely manner.

[4]	Mr Mehta was partially successful in his claim but appeals the aspects of the judgment in which he was unsuccessful. Mr Mehta also appeals a subsequent costs decision dated 15 July 2024.2

[5]	Mr Chandra opposes Mr Mehta’s appeal and cross-appeals the District Court Judge’s decision in relation to:

(a)	the award of damages for delays in the building works;

(b)	the finding of liability made against Mr Chandra personally; and

(c)	the award of $10,000 in general damages to Mr Mehta.

[6]	Mr Chandra also appeals the costs decision and submits that costs should lie where they fall.

[7]	Mr Mehta resists the cross-appeal.

1	Mehta v Habitat Builders Ltd [2024] NZDC 4779.
2	Mehta v Habitat Builders Ltd [2024] NZDC 16255.

Background

[8]	This litigation has been ongoing for more than 13 years. The events to which it relates mainly occurred in 2010. Proceedings began when Habitat filed a claim against Mr Mehta in the Disputes Tribunal, which  was  heard in  June 2011.  It is  Mr Mehta’s evidence that the Disputes Tribunal made an order giving him time to either file a counterclaim in the Disputes Tribunal or  to  file  a  claim  in  the  District Court; and pursuant to that order, Mr Mehta commenced proceedings against Habitat as first defendant and Mr Chandra as second defendant in the District Court in late June 2011. The proceedings were struck out by Judge M E  Sharp  in  the District Court in 2016 on the basis of Mr Mehta’s purported non-compliance with Court orders,3 but were reinstated on appeal by Hinton J in 2017.4 The chronology provided by Mr Mehta states that Judge Sharp issued a minute reactivating the proceedings on 19 June 2019. Habitat went into liquidation on 4 December 2013, and was removed from the Companies Register on 4 June 2015. As the judgment reinstating the proceeding records, it was removed as a party to the proceedings on 20 August 2016.5

[9]	The events which underlie the litigation began around 2002 when Mr Mehta decided that he would subdivide his property in Mt Roskill and build another house for himself and his family on the subdivided land. He intended to retain his original house as a rental investment property.

[10]	Mr Mehta obtained a building consent in 2003 but made slow progress until 2009. He had a number of issues, including a falling-out with a previous builder, the discovery of a stream on his property which had not been factored into the consents process, and a dispute with Auckland Council (Council). It appears that by 2009, the Council wanted Mr Mehta to obtain a new building consent because of lack of progress with the build since the work had commenced. In the meantime, standards and consenting requirements had changed, particularly around cladding and watertightness issues. Mr Mehta disputed the changes sought by the Council and eventually obtained agreement to proceed with the original plans.

3	Mehta v Habitat Builders Ltd [2016] NZDC 12971.
4	Mehta v Habitat Builders Ltd [2017] NZHC 2075.
5	See Mehta v Habitat Builders Ltd, above n 4, at [3].

[11]	Mr Mehta contacted Habitat in late 2009 to price the building work for the new house. Mr Chandra’s evidence was that by early 2010, work on the house had progressed to the slab-down stage, including the formation of foundations, slab drains, public drains and retaining walls. Mr Chandra said this work was done by others before Habitat became involved in the project.

[12]	Mr Mehta entered into two contracts with Habitat. The contracts were signed in early 2010, although one of the contracts is dated 5 November 2009. The first contract (the Build Contract) was between Habitat and Mr Mehta for construction work. It provided for staged payments for Habitat’s work, up to a total of $19,720. There were 11 stages set out in the contract, beginning with “Lower floor frames” and finishing with “Completion”. The work that Habitat was contracted to do was carpentry work, with other work to be carried out by subcontractors.

[13]	The second contract (the Project Management Contract) was also between Habitat and Mr Mehta. Mr Chandra signed both contracts on behalf of Habitat. Under the Project Management Contract, the parties agreed that Habitat would manage the construction of a new two-storey townhouse at the relevant address as per the consented plans provided. The management fee was $16,800 plus GST.

[14]	The responsibilities of the project manager were set out as follows:

(a)	to manage the whole construction;

(b)	to organise all sub-tradespersons;

(c)	to liaise with the owner regarding quotes;

(d)	to organise Council inspections;

(e)	to approve payment claims from subcontractors;

(f)	to obtain a Code Compliance Certificate (CCC);

(g)	to provide a Master Build Guarantee; and

(h)	to finish the project in six months’ time from starting.

[15]	The contract further provided:

The project manager is not the principal.

The Project Manager is not responsible for any theft or damage to any materials or malicious damage on site.

The project manager is responsible for finishing the project in 6 months subject to weather conditions and any unforeseen circumstances.
(I.e. Council delays on inspections, engineer’s inspections, and owners input on decision making and selections.)
Or the project manager pays a penalty of $300.00/week.

Sub trades organised by the owners are not project managers responsibility.

[16]	The responsibilities of the owner set out in the contract were:

(a)	to pay tradespersons on the project manager’s authorisation, or as per agreements;

(b)	to select interior/exterior colours, aluminium colour, roof colours, bathroom ware and carpet, and to make any other selections as requested for the smooth running of the project.

(c)	to organise all insurance needed for constructions;

(d)	to provide and pay for all machinery, material, rubbish bins, toilets and perishables;

(e)	all “OSH” compliance; and

(f)	all legal issues in relation to the construction.

[17]	A payment schedule provided for staged payments up to completion of the project.

[18]	The project encountered delays, and Mr Mehta was unhappy with both the progress and quality of the work. By October 2010, which was nine months after the

start of the contracts, the build was not complete. In November 2010, Mr Mehta cancelled the contracts,6 at which time the house was not complete and did not have a CCC. Mr Mehta engaged other tradespeople to complete the build, and in May 2011 a final inspection was carried out. No CCC was issued or ever has been issued; however, it appears that is only because Mr Mehta was required to file a memorandum of encumbrance regarding flooding and has not done so. It seems that by early 2012, a CCC would have been issued had the memorandum of encumbrance been registered.

[19]	Mr Mehta did not pay outstanding invoices to Habitat, and as a result Habitat commenced proceedings in the Disputes Tribunal. In June 2011, Mr Mehta commenced District Court  proceedings  against  Habitat  as  first  defendant  and  Mr Chandra as second defendant. Habitat counterclaimed against Mr Mehta. According to the chronology provided by Mr Mehta, a default judgment was entered against him on 4 October 2011, but that was set aside on 13 February 2012.7

[20]	In the meantime, default judgments had been delivered in the District Court against Habitat and Mr Chandra, which were also eventually set aside in May 2012.8 A previous judgment in this proceeding also records that the matter was set down for a three-day trial in September 2013, but that trial did not proceed.9 The proceedings continued in the District Court until May 2016, when Mr Mehta’s claim was struck out by Judge Sharp for want of prosecution.10

[21]	In 2015, Mr Mehta obtained a report from Kaizon Ltd (Kaizon), commercial and residential building experts (now removed from the Companies Register), presumably to support the litigation that was underway. The report identified four defects, specifically:

6	The email from Mr Mehta’s lawyer dated 12 November 2010 states that “…the agreement dated 5 November 2009 which was signed around 18 January 2010 is hereby terminated effective immediately”. While this appears to refer only to the Project Management Contract, the email also states that “The termination is without prejudice to my client’s rights and remedies…to claim for all of my client’s losses and liabilities that my client has suffered and will suffer as a result [of] having to engage other contractors to complete the works that you have contract[ed] to do”, suggesting that the intention of the email was also to cancel the Build Contract.
7	Mehta v Habitat Builders Ltd DC Waitakere CIV-2011-090-000931, 13 February 2012.
8	This is recorded in Mehta v Habitat Builders Ltd, above n 3, at [3].
9	See Mehta v Habitat Builders Ltd, above n 4, at [6].
10	Mehta v Habitat Builders Ltd, above n 3.

(1)	gaps in the head flashing to a curved window at first floor level to a bathroom;

(2)	defective flashing on a roof to stairwell wall intersection to the rear elevation (U-shaped flashing);

(3)	a defective pillar adjacent to the front entrance door; and

(4)	defects to the cantilevered deck.

[22]	The  Kaizon  report  also  listed  a  number  of  “further  issues”   which  “may preclude issue of a [CCC]”, and various departures from the consented drawings. The report concluded:

It is anticipated the use of a sectional head flashing to the curved window, the poor quality flashings installed to the rear elevation and the deck to wall junctions do not comply with Building Code requirements. This is likely to preclude issue of a Code Compliance Certificate (CCC). The further observations detailed above, including poor base of cladding to paving clearances, are of concern and may also preclude the issue of a CCC on the property.

In respect of the column, the issues are fundamentally aesthetic. The steel column is broadly central on the foundation and therefore is consider[ed] adequate. However, a remediation scheme could be adopted to improve the appearance of the base at a relatively low cost.

In order to remedy the issues to the head flashing to the curved window, the roof to wall junctions to the rear elevation and the deck to wall junctions to the front elevation, substantial remedial works would be required which would be associated with substantial costs.

[23]	It is apparent that the report writer was not aware that the Council had apparently approved a CCC subject only to registration of a memorandum of encumbrance. The problems that Kaizon identified as having the potential, or being likely, to preclude the issue of a CCC did not, in fact, do so.

[24]	At the trial in the District Court, where the case proceeded against Mr Chandra only, Mr Mehta pleaded four causes of action:

(a)	breach of contract;

(b)	breach of the Consumer Guarantees Act 1993 (CGA);

(c)	breach of the Fair Trading Act 1986 (FTA); and

(d)	negligence.

[25]	Judge Davenport dismissed the claim for breach of contract, finding that the contract was between Habitat and Mr Mehta, and not between Mr Chandra and      Mr Mehta.11 Accordingly, the claim for breach of the CGA was also dismissed, on the basis that it was based in contract. As there was no contract between Mr Chandra and Mr Mehta, that cause of action could not succeed.12 The claims in negligence and for breach of the FTA were partially successful.13

The District Court decision

[26]	In her substantive decision, Judge Davenport noted that the case was one of the oldest files in the District Court’s civil jurisdiction, and that the District Court file that had existed between 2011 and 2015 was no longer in existence.14 The Judge then set out the case for the plaintiff and addressed the issues relating to the Kaizon report. The judgment records that the Kaizon report writer was not available for cross-examination, but the report formed the basis of Mr Mehta’s evidence of defects. Further, two other expert witnesses — one for Mr Mehta and one for Mr Chandra — had relied on the Kaizon report in preparing their evidence. The Judge said that without the Kaizon report, there would be no independent or expert evidence, and the evidence of the other experts would be rendered nugatory. The report was therefore admitted under s 19 of the Evidence Act 2006.15

[27]	Judge Davenport then set out the pleadings and listed the losses pleaded by Mr Mehta as follows:16

(a)	Wrongly invoiced by the Second Defendant for the gib lining which he had already paid;	$5625.00

11	Mehta v Habitat Builders Ltd, above n 1, at [61].
12	At [65].
13	See [62]–[73].
14	At [3].
15	At [18]–[19].
16	At [23].

(b)	Placemakers’ charges unsubstantiated by the Defendants but paid by the Plaintiff	$ 780.77

(c)	Further unsubstantiated sums invoiced by the Defendants and paid by the Plaintiff	$2000.00

(d)	Hireage fees of Hirepool for drying equipment together with additional hire charges for Portaloo/machinery due to protracted construction period;
$3099.51

(e)	The cost to complete the construction of the deck despite payment to First defendant of mid-floor progress payment to the defendants;	$3,720.23

(f)	Reimbursement of the sum of money advance to the Second Defendant for the Masterbuild Guarantee;	$1,055.20

(g)	Reimbursement of payment over and above the drain layer quote in the sum of
$1,897.50
(h)	Additional insurance costs arising from protracted construction process;
$ 564.64
(i)	The cost to complete the kitchen ducting in the sum of;	$ 329.00

(j)	The cost to remove and replace the wrongly located original wooden retaining wall on the driveway;	$2,500.00

(k)	Reimbursement for the amount paid over and above the Secure Steel Beam quote in the sum of;	$ 438.75

(l)	Additional scaffolding costs due to extended construction period;
$ 1000.00

(m)	Additional sum charged over Stonewall labour quote for retaining wall;
$ 1071.00

(n)	The estimated cost to rectify construction defects such that the house can obtain a Code Compliance Certificate from Council; (full particulars to be provided within a reasonable period of time before trial)	$100,000.00

(o)	Loss of rental income from alternative property due to delay in completion
$10,220.00

(p)	Expert fees to date in the sum of;	$ 2,873.80

(q)	Expert fees to complete repairs in order to obtain a Code Compliance Certificate;	$15,000.00

[28]	The Judge said it was important to note that the largest sum of $100,000 was for rectifying construction defects so that the house could obtain a CCC from the Council. As the Judge acknowledged, however, the issuing of the CCC depended not

on the fixing of any defective works, but on Mr Mehta obtaining a memorandum of encumbrance, which he had failed to do.17

[29]	Mr  Chandra  was  not  a  party  to  either  the  Build  Contract  or   the Project Management Contract, but the District Court judgment records that Mr Mehta claimed Mr Chandra owed him a non-delegable duty of care in carrying out his job as project manager. Mr Mehta pleaded that under s 28 of the CGA, there was a guarantee in place that Mr Chandra would perform the Build Contract and project management work with reasonable skill. It was noted that Mr Mehta also pleaded a breach of the FTA on the basis that Mr Chandra’s conduct was misleading and deceptive as to the quality, timeliness and cost of the services to be provided — the construction work was not completed within the six-month timeframe, the project was not completed on budget, there were construction defects and the promised 10-year Master Build Guarantee was not provided.18 The Judge identified the issues as:19

(a)	What are the defects?

(b)	What are the costs of fixing them (if any)?

(c)	Is the second defendant personally responsible for any of them?

[30]	The Judge based her analysis of the alleged defects on the Kaizon report. As mentioned above, this report focused on four defects, being:

(a)	the quality of the head flashing installation to the curved window head to the first floor bathroom;

(b)	the formation of the lower roof to stairwell junction to the rear elevation over the garage and the corresponding junction;

17	At [24].
18	At [25].
19	At [26].

(c)	the construction of the pillar adjacent to the pedestrian entrance door and its position on the foundation; and

(d)	the construction and finishing of the cantilevered deck to the front elevation.

[31]	Dealing first with the head flashing, the Judge said that there is a curved window on the first floor within the front elevation of the house. The head flashing is formed of three pieces — the largest spans the majority of the opening, and small sections of metal flashing are installed to each of the two ends. There were gaps between the main flashing and the additional lengths installed to each end sealed with sealant. It appears that the Council eventually passed the design details for this window. The judgment records that there was still a gap with the flashing identified by both experts. Mr Biggelaar, a registered building surveyor called by Mr Chandra to give expert evidence, did not consider the gap to be a defect at all, and commented that it was a maintenance issue.20

[32]	Ms Gillard, an expert called by Mr Mehta, identified a cost for fixing the preliminary head flashing of $6,560. The Judge noted that Ms Gillard was a quantity surveyor, and had not formed a view on the defects, but had simply costed the repair or replacement of the items that the Kaizon report identified as defective.21

[33]	The Judge said Mr Mehta did not identify any leaking from the window, and the Council had passed the flashing. She found that there was insufficient evidence that the head flashing installation was an ongoing problem for Mr Mehta. The Judge agreed with Mr Biggelaar that the flashing requires maintenance but said it does not appear to leak. The Judge said that the problems with the windows have caused no ongoing defects.22

[34]	The Judge then moved to consider the roof to stairwell wall intersection. The Kaizon report identified that a U-shaped section of metal or flashing was installed at

20	At [28]–[30].
21	At [31]–[32].
22	At [33]–[34].

the intersection of the fascia board and the rear wall of the lounge to provide drainage to the cavity. The Kaizon report writer said that the flashing is crudely formed, and a further section of metal is poorly fitted with gaps present to the perimeter.23 This was another matter identified by the Kaizon report as potentially precluding the issuance of a CCC (but again, did not in fact do so).

[35]	The Judge set out Mr Biggelaar’s comments that a:24

…U-shaped flashing was installed as a result of discussions with the Council inspector which is in addition to the cavity construction, the internal corner back flashing and the saddle. He does not believe that this is a defect which requires a remedial solution but says that if there was a problem it could be remedied by removing isolated local sections of cladding, attending to the junction reinstating and plastering the repair locations.

[36]	The Judge found on the balance of probabilities that Mr Mehta had not established that this was a continuing problem. The Judge accepted that the fact that the flashing obtained a CCC pass does not mean that there are no defects. However, the flashing installation was done in conjunction with advice from the Council, and on Mr Mehta’s evidence before the District Court Judge, had not caused any leaking. The claim was disallowed.25

[37]	The third alleged defect related to a pillar on top of the foundation adjacent to the front door. The pillar is made up of a column bolted to a concrete foundation. The judgment states that the cladding timber arrangement gives the appearance that the column is offset on the pad foundation. The Judge noted that Mr Chandra said this would have been remedied at the final stages of the project. The Judge said that it is “unsightly” in the photographs. Mr Biggelaar agreed that it is “unsightly”, but said it is aesthetic only. Ms Gillard costed the remedial work at $1,900, to which the Judge added 25 per cent being builder’s margin and incidentals — a total of $2,375.26

[38]	The final alleged defect was the construction and finishing of the cantilevered deck to the front elevation. The issue identified in the Kaizon report was that the flashings to the deck appear to have been installed in a way that penetrates the

23	At [35].
24	At [36].
25	At [38].
26	At [39].

cladding. The constructed deck apparently varies significantly from the deck design.
Mr Mehta said that the construction was contrary to the consented drawings.27

[39]	Mr Chandra said that the work on the deck was finished after Habitat had been removed from the site. The Judge found that, as the potential problems with the deck were remedied by another company and passed another CCC inspection, there are no longer any defects to be remedied.28

[40]	The Judge accepted that there were delays and departures from the consented building caused by the work done by Habitat.29

[41]	The Judge set out Mr Mehta’s claims and her findings as follows:30

(a)	$5,625 wrongly invoiced by the second defendant for gib lining which Mr Mehta had already paid. This was part of the agreed payments to be paid to the project manager when the gib lining was installed, and it was not the actual cost of the gib lining. I disallow this claim.

(b)	Placemakers’ charges said to be unsubstantiated by the defendant but paid by the plaintiff ‒ $780.77. During the evidence it was accepted that these charges for materials were properly payable by Mr Mehta, and I disallow this.

(c)	Further unsubstantiated sums invoiced by the defendant and paid by the plaintiff $2,000. There is insufficient evidence put forward by the plaintiff to allow me to form a view on this. I therefore disallow this claim.

(d)		The hireage fees from Hirepool for drying equipment for the property $3,099.51. The plaintiff claims that the builders allowed water to come into the property before the roof was installed and there was an additional cost to the plaintiff for heaters and drying equipment in order to get the property dry enough to have it enclosed. The evidence from Mr Chandra is that it is impossible in a two-storey property to completely enclose it when you have scaffolding prior to it being roofed in. Thus, these drying costs are normal. The plaintiff does not present any evidence of industry standards or normal practice to substantiate his claim that these costs were unwarranted. In the absence of evidence as to whether these costs are normal I accept Mr Chandra’s evidence that the

27	At [40].
28	At [41]–[42].
29	At [42].
30	At [43].

drying equipment was required. I do not find that this is a claim which should be payable by the defendant.

(e)	The cost to complete the construction of the deck despite payment to the first defendant of the midfloor progress payment. The plaintiff seeks $3,720.20 which is the cost of another builder to design and complete the deck. Mr Chandra says that this was not a cost incurred by Habitat but costs which were incurred in having to engage a second contractor and designer to finish the works. This cost was incurred after the termination of the work done by Habitat. In my view, the concern of Mr Mehta is that the progress payment made when the midfloor was completed was a payment for work which should have included the deck and thus he had to make a second payment for the deck. However, this is not correct. The payment labelled midfloor was a progress payment which could be claimed at the time the midfloor was being done. It was not a payment made when all the midfloor was complete. Thus, the additional costs incurred were not a double payment to Mr Chandra and I disallow this claim.

(f)	Reimbursement of the sum advanced for the Master Build Guarantee. This sum should be reimbursed to the plaintiff. He paid for this and did not receive it. This is the sum of $1,055.20.

(g)	Reimbursement for the drainlayer quote of $1,897.50. The defendant says that the plaintiff entered into a separate contract with the drainlayers and that this was work done by Ahmed Contract Earth Movers. This is linked to the additional cost of removing and replacing the wrongly located original wooden retaining wall on the driveway of $2,500. This was initially constructed by Ahmeds Contract Earth Movers, and they removed and replaced it using stone. Habitat was not involved in this process. I do not find therefore that Mr Mehta can claim for this cost from the defendant. I disallow this claim.

(h)	Additional insurance costs arising from the protracted construction process in the sum of $564.64. This will be payable by the defendant if I find that the delays were caused by them, and that Mr Chandra is personally liable. The defendant says the delays were caused by Mr Mehta’s indecisive decision making, selection of materials, weather conditions and other unforeseen circumstances. For the reasons set out later in my judgment I apportion 70% of this cost as payable by the defendant. This amounts to $395.29.

(i)	Ducting – $329.00. This is a claim for ducting to complete the kitchen ducting and was a cost which was not covered by the contract between the parties. This was properly payable by the plaintiff.

(j)	$438.75 claimed for steel beam. Mr Chandra says that this was an additional cost incurred for the structural beam installers which Mr Mehta authorised. I disallow this claim by the plaintiff as it was

authorised by him and is most likely a structural beam required by the engineer or Council[.]

(k)	Additional scaffolding cost due to extended construction period
$1,000. This relates to delay. I apportion this as to 70% in favour of the plaintiff, $700 is payable by the defendant. My reasons are in that part of the judgment on delay.

(l)	Additional sum charged over stonewall labour quote for retaining wall. Mr Chandra says that this was a contract entered into between Mr Mehta and Ahmeds Contract Earth Movers. I accept this evidence that this contract was between Mr Mehta and his previous contractors who put in a defective retaining wall. I find that it did not involve the defendant. I allow nothing for this claim.

(m)	Estimated cost to remedy construction defects, $120,000 – see above. I have only allowed for some of the items claimed as outlined in paragraphs [28] to [42]. The costs I have allowed are set out in my summary at [58].

(n)	Loss of rental income from an alternative property due to delay in completion. The plaintiff seeks $365 per week for 28 weeks. There is unfortunately no supporting documentation to corroborate this and in my mind the liquidated damages sum agreed upon for $300 is a genuine pre-estimate of the loss to the plaintiff which must have included the rent. I disallow this claim.

(o)	Cost of the building survey experts $3,373.03. I allow $1,000 for this as being a reasonable proportion of the cost as it relates to the one defect found actionable.

(p)	Quantity surveying cost to complete the remediation. These are disbursements of $1,380 and $905.63. I allow those.

(q)	There are other issues raised which I have not dealt with more fully because no evidence was put forward to convince me that they were issues. These are: the clearances between the base of the cladding and the adjacent paving are below the clearance required by the Building Code, 150mm to paved ground ‒ this is a maintenance issue only. The Council passed the ground clearances when the house had its final inspection. These claims are disallowed.

(r)	There is insufficient clearance between drainage gullies and the base of cladding, as above in (q) ‒ disallowed.

(s)	The meter box has been inadequately flashed ‒ all the evidence heard on this point was that there was no issue with the meter box. This claim is disallowed.

(t)	Rainwater gutters have been constructed against the face of the cladding without sufficient gaps to provide free drainage; this

might be a cosmetic problem, but it is causing no damage and so is disallowed.

(u)	There are cracks to the cladding which may allow water ingress. Plaster finishes require regular maintenance, filling of cracks and repainting. Mr Mehta’s evidence was that he has not been able to afford to do this. I do not find that the defendant is liable for this – it is a failure of the maintenance regime if anything ‒ but there is also no evidence of any water ingress.

[42]	The Judge then turned to the question of delay. She said that on the question of delay Mr Chandra said Mr Mehta was a “nightmare” who was constantly onsite, queried everything and impeded the progress of the work.   Mr Chandra said that   Mr Mehta did not understand the sequence of events, so neglected to give clear and timely instructions when decisions were required. Mr Chandra denied that delays in the project were caused solely by Habitat, himself, or the subcontractors.31

[43]	The other reasons for delay identified by Mr Chandra were:32

(a)	issues identified by Council inspectors;

(b)	failure by Mr Mehta to obtain details for construction design;

(c)	obtaining a new vehicle crossing permit when the previous permit had expired;

(d)	issues with the structural steel in that two piles were recovered;

(e)	that Mr Mehta was trying to confirm the aluminium joinery colour to enable production, but he did not do that until 26 March (from the second week in January);

(f)	that Mr Mehta arranged for his own gib and gib stopper to commence in July 2010, but they did not start until August 2010; and

31	At [44].
32	At [44].

(g)	that Mr Mehta had serious cashflow problems which meant that Habitat had to stop work several times until payment was made.

[44]	The Judge was unable to determine the reliability of this evidence. The information provided by Mr Chandra showed that Mr Mehta was up to date in payments until August 2010, when he apparently stopped paying. By then, the six-month completion target for the build had expired. No detailed analysis of the delays or the reasons for them was provided.33

[45]	The Judge placed weight on a letter dated 28 July 2010 which contained the header: “Att: Ravi Mehta”, and in which Mr Chandra confirmed that Habitat was “confident” that the project would be “finished within the budget that was provided to the owner”. The Judge found that was a document which indicated that Mr Chandra did not believe any further costs should be incurred in completing the project. The Judge said that the letter also supported the view that despite what Mr Chandra said about Mr Mehta, it was expected that the contract34 would be finished within time and at the agreed costs.35

[46]	The Judge said there was a delay of several months before the contract was terminated  in  November  2010.  The  six-month  timeframe  set  out   in   the Project Management Contract meant that the build should have been  finished in  July 2010. The Judge said that there were no formal claims for extension as would be usual in a bigger contract.36 In this case, the Judge found:37
…the reason for the delay seems to have been the weather (unarticulated and not established), and difficulties in getting details from drawings (again unquantified and not established), and a vehicle crossing[.]

[47]	There was also a stop work notice issued by the Council on 24 June 2010, but the Judge was unsure how long this lasted. That was due to concerns about site

33	At [45].
34	References to “the contract” in the District Court judgment appear to include both the Build Contract and the Project Management Contract.
35	At [46].
36	At [47]–[48].
37	At [48].

stability and placement of the building on the site. The Judge noted that there were allegedly payment delays by Mr Mehta.38

[48]	The Judge placed some weight on the Kaizon report, which attempted to apportion the delays between the parties for the four items the writer was asked to comment on. The Judge reminded herself that there was no evidence from anyone from Kaizon and no ability to cross-examine the report writer; however, she said the report did provide some basis upon which to assess delay. The Judge noted that the Council required further details, and it was unclear who had to organise provision of those further details. The Judge assumed that it was probably the contractor, as they were responsible for Council inspections at which the details were required.39

[49]	Some correspondence suggested that subcontractors were not paid, leading to delay caused by Mr Mehta. Mr Mehta denied that he failed to pay any subcontractor. The Judge found that regrettably, there was little evidence upon which to make a proper finding about this.40

[50]	The Judge noted that there was a delay in respect of the roof to stairwell wall intersection where the U-shaped flashing was located. She said that the Council had issued  a  requirement  that  further  detail  of  this  area  was  to  be  provided  on   22 April 2010, but it was only provided and processed by 3 June 2010.41

[51]	The Judge found no evidence to suggest that the pillar adjacent to the entrance door created any delay. While commenting that it is an aesthetic issue, the Kaizon report says that the Council made no comment on it.42

[52]	The Judge noted in respect of the cantilevered deck that, according to the Kaizon report, delays were in part caused by a lack of construction details.43

38	At [48].
39	At [49]–[50].
40	At [50].
41	At [51].
42	At [52].
43	At [53].

[53]	It was held that the Project Management Contract created a positive obligation on the project manager to complete the project within six months or to establish why there were delays or exclusions caused by weather, unforeseen events or other factors. The Judge said Mr Chandra had not been able to provide a comprehensive list of the delays with reasons. Mr Mehta and Mr Chandra had very different views as to who was responsible for the delay overall.44

[54]	In an email dated 26 October 2010 responding to a letter from Mr Mehta’s solicitors, Mr Chandra said that the deck could not be completed as the Council required details of the parapet capping, and that the designer for this job had not been paid so he was  not  willing  to  do  any  further  work  until  payment  was  made.  Mr Chandra said he had brought this to the notice of the owner “months ago”.   Judge Davenport found that this delay was occasioned by Mr Mehta and said that the amount of time that should be apportioned was hard to accurately estimate as the deck was finished after the contract was cancelled. The Judge took a period of three weeks as the best available estimate.   The Judge also noted that in correspondence dated    2 November 2010, Mr Chandra again raised the issue of non-payment by Mr Mehta of sub-traders. The Judge found that while damages for delay can continue after a contract has been cancelled, in  her  view  the  delays  caused  to  the  project  after 12 November 2010 (the date of cancellation) would have been caused by other factors outside Mr Chandra’s control.45

[55]	The Judge found that the Project Management Contract was entered into on or about 18 January 2010 and terminated on 12 November 2010. On this basis, the contract should have been completed by 18 July 2010. It was terminated 117 days, or
16.71   weeks,   over   the    six-month    timeframe    provided    for    in    the Project Management Contract.46

[56]	Damages for delay were apportioned 30 per cent to Mr Mehta and 70 per cent to Habitat. The Judge said that was the best estimate she could make with the conflicting evidence, a lack of detailed analysis as to who caused the delay and her

44	At [54]–[55].
45	At [56]–[57].
46	At [57]–[58].

finding that Mr Chandra should have provided a more detailed analysis of the delays. The Judge awarded Mr Mehta damages for delay for 11.7 weeks, being 70 per cent of
16.71 weeks.  The Judge applied the amount of $300 per week, to arrive at a total of
$3,510 in damages for delay.47

[57]	The Judge found that Mr Mehta suffered the following losses:48

(a)	Cost of remedying the pillar $2,375.00. (b)	Delay $3,510.00.
(c)	Building guarantee fee $1,055.20.

(d)	Insurance as apportioned $395.29.

(e)	Scaffolding as apportioned $700.00.

(f)	For the apportioned building survey cost $1,000.

(g)	For the disbursements incurred for the quantity surveyor $1,380 and
$905.63.

[58]	Having quantified the  loss,  the  Judge  then  turned  to  consider  whether  Mr Chandra is liable for this sum. The Judge noted that Habitat could not be liable as it was in liquidation. Mr Chandra was the director of Habitat and put it into liquidation. He was the  only  shareholder.  The  Judge  noted  that  the  claims  by Mr Mehta were pleaded in contract, tort, under the CGA and under the FTA.49

[59]	The Judge found  that  the  claim  in  contract  could  not  succeed  against Mr Chandra. He was not a party to the Project Management Contract, and there was no suggestion that there was an implied term to that effect.  Part  4A  of  the  Building Act 2004 could not assist because the relevant provisions were not in force when the contract was performed.50

[60]	The Judge said that the position is different in  tort  because  directors  in New Zealand can be personally liable for the wrongdoings of a company on the basis of agency. The Judge discussed the decision of Trevor Ivory Ltd v Anderson, where

47	At [57].
48	At [58].
49	At [59]–[60].
50	At [61].

the Court held that, particularly in the case of an owner/director of a small or “one-man” company, a court should be slow to infer such an assumption of personal responsibility.51 The Judge went on to refer to another line of authority in building cases where a “degree of control” test was developed.52

[61]	The Judge found that Mr Chandra was personally liable for the actions of Habitat — especially for the Project Management Contract — as the sole director and shareholder, and as the person who actually did the work as project manager. The Judge referenced Mr Chandra’s evidence that he was responsible for the work. The Judge found Mr Chandra owed a duty of care to Mr Mehta to ensure that the work was carried out with due skill and care. Where Mr Mehta suffered loss, the Judge found that Mr Chandra did not perform the work with due skill and care. The Judge concluded that Mr Chandra was personally liable in tort.53

[62]	The Judge then moved on to consider the claims under the CGA and FTA. The basis of the claim under the CGA was in contract, and as the Judge had found that Mr Mehta had no case in contract against Mr Chandra, the claim under the CGA also failed.54

[63]	The Judge said it was common ground that a director can be personally liable under the FTA for breaches by a company. The Judge concluded that Mr Chandra’s conduct misled or deceived Mr Mehta, contrary to s 9 of the FTA. The Judge said there was a guarantee of performance on Habitat’s website, which advertised project management services. The website said that a seven-year warranty was provided for its work and that its work was of the highest standard. The guarantee would only have expired in 2017, by which time the company was in liquidation.  The Judge noted  Mr Mehta’s evidence that he was impressed by the assurances on the website and the other work done by Habitat and chose the company for that reason. Further, Mr Mehta wanted a building guarantee for the property — he paid for it, but never received it. The Judge found that Mr Chandra misled or deceived Mr Mehta because Habitat, and

51 Trevor Ivory Ltd v Anderson [1992] 2 NZLR 517 (CA).
52 At [62]–[64]. In setting out the line of authority developing the “degree of control” test, the Judge referred to Hsu v Mahoney [2021] NZHC 1611 and Morton v Douglas Homes Ltd [1984] 2 NZLR 548 (HC).
53         At [64].
54         At [65].

Mr Chandra as project manager, did not carry out the work to the highest standard as promised.55

[64]	The Judge said that Mr Chandra’s conduct, the “shoddy workmanship” and delay caused loss to Mr Mehta. The Judge considered that Mr Chandra’s conduct brought the claim within ss 9 and 43 of the FTA. The Judge noted that the FTA has a three-year limitation period — s 43A provides that an action under the FTA must be brought within three years from the date on which loss or damage, or likelihood of loss or damage, was discovered or ought reasonably to have been discovered.56

[65]	The Judge ultimately found that the proceedings issued in 2011 complied with the District Court Rules in force at the time.57 The original pleadings identified facts and used words (such as “misled”) which would now identify the pleading as a claim under the FTA. The claims were re-pleaded under the new District Court Rules 2014 in 2015, and a breach of the FTA was identified. The Judge found that Mr Mehta did bring his claim within the three-year limitation period.58

[66]	Finally, the Judge addressed general damages and Mr Mehta’s claim that he suffered distress and anxiety, and that he is “worse physically and economically” as a result of Mr Chandra’s wrongful acts.  The  Judge noted that the  case  had taken  12– 13 years to come to court. Some of the delay was caused by Mr Mehta’s inability to continue to pay for the litigation, but the Judge said the case had been a hard fought battle, and Mr Mehta had continued to fight for the 12–13 years leading up to the judgment. The Judge considered it reasonable that Mr Chandra be required to pay some element of damages for “stress and emotional harm” to Mr Mehta. That amount was assessed as $10,000, being one fifth of what was claimed, as the Judge considered this a fair sum for the stress caused by Mr Chandra and proportional to the damages awarded.59

55	At [66]–[68].
56	At [69]–[70].
57	District Court Rules 2009 (revoked).
58	At [73].
59	At [74].

[67]	The Judge awarded Mr Mehta the sum of $11,321.12 plus $10,000 in general damages, being a total award of $21,321.12.60

[68]	The Judge said that Mr Mehta was entitled to costs on a 2B basis, but given the time this case had taken, invited counsel to file memoranda as to the appropriate level of costs. The Judge said that interest was also an issue given the delay. Mr Mehta had claimed interest at the rate of five per cent per annum from 21 June 2011, which would have made interest about $14,000 from 2011.61

The costs decision

[69]	In July 2024, Judge Davenport issued the costs decision.62 The Judge noted that Mr Chandra did not seek costs and submitted that costs should lie where they fall.63

[70]	Mr Mehta submitted that he was entitled to costs according to the sch 2B rate, which came to $37,000.64

[71]	The Judge noted that some costs previously awarded to Mr Chandra remained unpaid, being $955 awarded on 22 June 2020, and further costs and disbursements of
$4106.50 awarded on 8 October 2022.65

[72]	The Judge said that the task of assessing an appropriate costs award in litigation which had been on foot for 14 years was difficult. Mr Mehta had engaged a number of different counsel throughout the proceedings and was legally aided at the time the costs judgment was delivered. Judge Davenport said that she did not propose to order costs exceeding the sum awarded in the substantive judgment. Her Honour said that the litigation was divided into two parts. The first part commenced with the issue of the notice of claim in 2010 and ended when the claim was struck out in 2016. The case was then in the High Court and lay dormant until 2019. The District Court

60	At [75]. The total award was mistakenly recorded in the judgment as being $22,321.12.
61	At [76].
62	Mehta v Habitat Builders Ltd, above n 2.
63	At [3].
64	At [5].
65	At [6].

registry then lost all court records that existed prior to the return of the case from the High Court.66

[73]	The Judge referred to the decision by Hinton J reinstating Mr Mehta’s claim,67 saying it was apparent that Hinton J considered that each side was equally to blame for the delays and difficulties experienced prior to the 2016 strike-out.68

[74]	Judge Davenport concluded that she should not make any costs order relating to steps in the proceeding that were taken before the return of the proceeding from the High Court to the District Court. Costs were dealt with on the appeal, and Hinton J had made orders on outstanding costs awards. Judge Davenport ruled that Mr Mehta could claim costs from June 2019, when the case was  reopened  by  minute  of Judge Sharp.69

[75]	Mr Mehta had paid $5,000 security  for  costs  into  the  District  Court.  Judge Davenport ruled that those costs should be returned to him. However, the Judge noted that there were two payments of costs ordered  to  be paid  by  Mr Mehta  to Mr Chandra in 2020 and determined that the $5,000 must first be applied to payment of those costs to the extent they had not already been met.70

[76]	Judge Davenport awarded costs to Mr Mehta but considered it appropriate for the time allocations to be on a 2A basis. The Judge said it may have been that the case was properly characterised as a 2B case when it commenced but given the decreased complexity of the case by trial, costs on a 2A scale were appropriate.71

[77]	The Judge also allowed the sum of $2,500 for expert fees.72

[78]	The Judge did not consider it appropriate to order interest on the amount claimed under the Interest on Money Claims Act 2016 from the beginning of the claim,

66	At [7].
67	Mehta v Habitat Builders Ltd, above n 4.
68	Mehta v Habitat Builders Ltd, above n 2, at [8].
69	At [9].
70	At [11].
71	At [12].
72	At [13].

but	instead	allowed	interest	to	run	on	the	compensatory	damages	from November 2019.73

The grounds of appeal

Mr Mehta’s substantive appeal

[79]	Mr Mehta appeals against the decision disallowing the claim for three of the four defects identified in the Kaizon report.

[80]	Mr Mehta says in disallowing the claim for the head flashing to the curved window, the Judge erred for the following reasons:

(a)	The questioning of Mr Mehta on which the Judge relied was not about this window; it was general questioning about “current problems” in which the words “window” and “flashing” did not appear. The passage does not support the conclusion that the Judge drew from it, and it was not fair to Mr Mehta for the Judge to have relied on his answers to questions that did not mention the window or its flashing as support for a finding specifically about that issue.

(b)	In response to the Judge’s general questions, Mr Mehta said that the problems he saw today were those identified by Kaizon, and that the problems identified by Kaizon were “not fixed”. Implicitly, that includes the window flashing.

(c)	Mr Mehta’s evidence was that the issues identified by Kaizon, which included the window flashing, were in fact an “ongoing problem”, contrary to the Judge’s summation of his evidence.

(d)	Moreover, even if there were no ongoing problems in terms of leaking, which is what the Judge focused on — and which is not what Mr Mehta’s evidence said — that would not mean that Mr Chandra had fulfilled his obligation to ensure that the work was properly

73	At [14].

carried out. Kaizon considered the work to be defective, and under cross-examination, Mr Biggelaar accepted that leaving gaps in flashing was not best practice, as did Mr Chandra. At the least,
Mr Mehta did not get what he requested and paid for, and he is due relief as a result.

(e)	Mr Mehta had given evidence of issues with the window flashing prior to the Kaizon report.

(f)	Kaizon carried out a site visit and Mr Biggelaar did not. Ms Gillard said that a site visit was important and was not challenged on her evidence.

(g)	Mr Biggelaar accepted under cross-examination that a site visit was best practice but said that in this case he did not conduct a site visit because the Kaizon report was seven years old. As Mr Biggelaar accepted, the reason the report was seven years old was that
Mr Chandra did not engage an expert until late 2022, having had the Kaizon report since at least 2017 — or on Mr Mehta’s evidence, 2016.

[81]	In respect of the roof to stairwell wall intersection to the rear elevation,       Mr Mehta says the following:

(a)	Mr Mehta’s evidence was that the issues he was still experiencing were those identified by Kaizon. This is one such issue.

(b)	Mr Mehta’s evidence was not that this issue did not cause leaking. He was not asked about leaking.

(c)	However, even if there were no leaks in this area, Mr Mehta again did not receive what he asked and paid for. Mr Chandra should not escape responsibility for poor work quality just because it did not cause leaking.

(d)	The Kaizon report, which was closer in time to the emergence of the defect, and which was prepared with the benefit of a site visit, should be preferred to the significantly later evidence of Mr Biggelaar.

[82]	In respect of the cantilevered deck, Mr Mehta challenges the Judge’s finding that there are now no defects to be remedied on the grounds that:

(a)	it conflicts with the Kaizon report, which was prepared after the second contractor had been engaged, and which stated that “substantial remedial works” would be required; and

(b)	the second contractor was engaged to complete the deck, not to re-do or repair work already carried out by Mr Chandra.

[83]	Mr Mehta says that the Judge erred in dismissing his claim for reimbursement of costs paid to mitigate water ingress, and that the Judge erred in finding that the water ingress was normal. Mr Mehta says that Mr Chandra’s evidence that it is never possible to provide any sort of protection from the weather can be viewed with scepticism because Mr Chandra attempted to address the issue by using waterproof covering to protect the build, but that waterproof covering failed. Mr Mehta relies upon photographs which show failed attempts at waterproofing and pooling water covering a floor area on which building materials were stored. Mr Mehta says that the Judge did not refer to his evidence or photographs relating to the water, and expert evidence was not required to confirm that the degree of water ingress was not “normal”.

[84]	Mr Mehta says that the Judge erred in declining his claim for reimbursement of the costs incurred in engaging a third-party contractor to complete the deck because:

(a)	the basis of the Judge’s decision was that payment for the “midfloor” stage was due while the midfloor work was being done, rather than at completion of the midfloor stage. However, that was not Mr Chandra’s evidence. Mr Chandra said that the deck was not part of the midfloor stage; and

(b)	despite Mr Chandra’s evidence, reference to the Build Contract suggests that the deck was in fact part of the midfloor stage, as it does not appear to fall within any subsequent stage.

[85]	In respect of reimbursement of the additional costs of the drainlayer, Mr Mehta says that the Judge erred in dismissing this claim because:

(a)	the Judge failed to address Mr Mehta’s claim in respect of the cesspit;

(b)	the Judge appeared to conflate the earthmover, Ahmeds Contract Earthmovers Ltd (Ahmeds), with the drainlayer, A A Drainage Ltd (A A Drainage) — Ahmeds did not carry out the drainlaying work;

(c)	Mr Chandra’s evidence in chief was that the drainlayer had “nothing to do with Habitat or me”. Under cross-examination, however, Mr Chandra admitted that he sought the quote from
A A Drainage, that he engaged the drainlayer, and that the drainlayer received his instructions from Mr Chandra;

(d)	to the extent, if any, that Mr Chandra’s relationship with Ahmeds is relevant, Mr Chandra accepted that he had also obtained the quote for Ahmeds’ work;

(e)	the Project Management Contract provided that Mr Chandra was responsible for managing the whole of the construction and for organising all sub-trades. Mr Chandra stated in cross-examination
that he was “engaged with every contractor onsite”. The Judge held that Mr Chandra was responsible for the work, and owed a duty to Mr Mehta to ensure that the work was properly carried out; and

(f)	the Judge rejected this claim on the basis that Habitat was not involved. Contrary to the Judge’s ruling, Mr Chandra as project manager was very much involved with the drainlayer.

[86]	In respect of the costs to repair the defective retaining wall, Mr Mehta says the Judge accepted Mr Chandra’s evidence that the relevant work was not carried out by Habitat, but under a separate contract between Ahmeds and Mr Mehta, thereby dismissing his claim for reimbursement. Mr Mehta says this ruling ignores the evidence of both parties that Mr Chandra, as project manager, obtained the quotation from Ahmeds, and that Mr Chandra confirmed that he managed all subcontractors, whether he engaged them or not.

[87]	Mr Mehta also appeals against the Judge’s ruling that he could recover only
$1,000 of Kaizon’s fee because only one of the defects identified by Kaizon was found to be actionable. Mr Mehta challenges the correctness of this reduction on the following grounds:

(a)	If reimbursement of this fee is treated as damages, Kaizon’s full fee was a loss to Mr Mehta. That loss was caused by Mr Chandra’s actions because those actions forced Mr Mehta to commence litigation, which required him to incur this cost. Mr Mehta was forced to take his claim to trial and was found to be the successful party; he should be entitled to reimbursement of loss caused by Mr Chandra.

(b)	If this fee is treated as a disbursement, the Kaizon report is analogous to the fee of an expert. Provided that such fees are reasonable and satisfy the relevant legislative criteria,74 they are typically recoverable in full.75 It was not claimed, or found, that Kaizon’s fees were unreasonable, or that they did not satisfy the legislative requirements.

[88]	In his submissions, Mr Mehta also acknowledges that a disbursement may be reduced under r 14.12(3) of the High Court Rules 2016, but submits that this provision only applies to fees that are disproportionate. As the District Court Judge’s costs

74 The relevant legislative criteria for the purposes of this appeal are found in r 14.12(2) of  the  District Court Rules 2014.
75 Mr Mehta relies on Air New Zealand Ltd v Commerce Commission [2007] NZCA 27, [2007] 2 NZLR 494. This case dealt with the recovery of expert witness fees under the “Disbursements” provision of an earlier iteration of the High Court Rules (Repealed from 31 January 2009), which is materially similar to r 14.12 of the District Court Rules.

decision was governed by the District Court Rules 2014 and not the High Court Rules, this provision is inapplicable regardless.

[89]	Mr Mehta appeals against the Judge’s apportionment of the delay causation. The Judge applied two reductions to the damages awarded to Mr Mehta for delay. The cause of the delay up to the time of Habitat’s termination was apportioned 70 per cent to Mr Chandra and 30 per cent to Mr Mehta. The Judge also apportioned no blame for delay to Mr Chandra from the date of termination of Habitat’s contract(s).

[90]	In respect of the delay prior to termination, Mr Mehta says that Mr Chandra was responsible for finishing the build within six months, unless delay was caused by weather  conditions  or any other unforeseen circumstances.  Mr Mehta  says that   Mr Chandra was prima facie responsible for loss caused by delay, and the onus was on him to provide evidence of weather or unforeseen circumstances that shifted some or all of that responsibility.

[91]	Mr Mehta says that the only delay the District Court Judge appears to have found to have been occasioned by him was a three-week delay relating to payment for details of a parapet capping. Mr Mehta does not accept that he caused the delay in payment. He says the work of the subcontractor in question was not accepted by the Council, and that Mr Chandra had advised him to wait for “the final say of the Council” before paying the subcontractor.

[92]	Mr Mehta says that Mr Chandra should be responsible for all the delay-related loss incurred up to 12 November 2010.

[93]	As to the delays after 12 November 2010, Mr Mehta takes issue with the Judge’s finding that  these  delays  would  have  been  caused  by  factors  outside  Mr Chandra’s control. Mr Mehta says that at the time of cancellation of the contracts, completion of the build was already four months overdue. He submits that as a matter of logic, a four-month delay on a six-month build is likely to have ongoing consequences past the date of termination. Mr Mehta says that his unchallenged evidence  was  that   a  significant  amount  of  work  remained  incomplete  as  at   12 November 2010. After the date of Habitat’s termination, he engaged another

contractor to finish the build and to apply for a final site inspection. The inspection passed on 25 May 2011. Mr Mehta says that, if Mr Chandra had performed his obligations, it should have passed by July 2010. Mr Mehta says it was not realistic to conclude, as the Judge did, that none of the delay between 12 November 2010 and  25 May 2011 was caused by delays prior to 12 November 2010. Mr Mehta asks that Mr Chandra be held liable for all the delay from 12 November 2010 to 25 July 2011, or such other proportion as the Court considers appropriate, at the liquidated damages rate of $300 per week. This was the rate at which delay loss was awarded by the District Court Judge (and was accepted as being a genuine pre-estimate of the loss that would be caused by delay).

[94]	Mr Mehta appeals the Judge’s dismissal of his claims in contract and under the CGA. In submissions, Mr Mehta says his evidence was that he had pre-contractual negotiations with Mr Chandra and was told by Mr Chandra prior to executing the Project Management Contract that Mr Chandra would personally project manage the build. Mr Mehta says he gave evidence that when he saw the name “Habitat” on the Project Management Contract he raised that issue with Mr Chandra, but Mr Chandra told him to “leave it”, and Mr Mehta trusted Mr Chandra. He says that under cross-examination, Mr Chandra agreed he had told Mr Mehta that he would personally project manage the work but denied that Mr Mehta had queried the naming of Habitat on the written contract. Mr Mehta complains that the judgment did not address his evidence as to the parties’  pre-contractual  negotiations  or  subsequent  conduct.  Mr Mehta says that was an error, and the Judge was entitled to address both pre-contractual negotiations and subsequent conduct, relying on ss 7–8 of the Evidence Act and Bathurst Resources Ltd v L & M Coal Holdings Ltd.76

[95]	Mr Mehta appeals against the general damages award of $10,000. He sought general damages of $25,000. He says that the award of $10,000 is lower than is warranted given his evidence as to the significant stress and stress-related illness the events have caused him. He says that the award is out of step with awards in comparable cases. The cases relied on were:

76	Bathurst Resources Ltd v L & M Coal Holdings Ltd [2021] NZSC 85, [2021] 1 NZLR 696.

(a)	Body Corporate No 189855 v North Shore City Council, in which the High Court considered the quantum of general damages awarded in similar cases, and awarded, in 2008, $20,000 general damages to some of the plaintiffs who were living in negligently constructed properties.77

(b)	Bronlund v Thames Coromandel District Council, where an award of
$20,000 was upheld on appeal in 1999.78

(c)	O’Hagan v Body Corporate 189855, where the Court made an award of $25,000 per unit for occupiers in 2010.79

(d)	Johnson v Auckland Council, where an award of $10,000 for joint owner-occupiers was upheld on appeal in 2013. This award was stated to be at “the lower end of the scale”.80

(e)	Body Corporate 346799 v KNZ International Co Ltd, where the Court made general damages awards of $25,000 for single owner-occupiers and $35,000 for joint owner-occupiers in 2017.81

(f)		Hsu v Mahoney, where the Court, taking inflation into account, awarded $25,000 in general damages to each of the two plaintiffs in 2021 after they had lived with defects and associated remediation works. 82

77	Body Corporate No 189855 v North Shore City Council HC Auckland CIV-2005-404-5561, 25 July 2008.
78	Bronlund v Thames Coromandel District Council [1999] BCL 1014 (CA). The submissions incorrectly state that this decision was issued in 2009.
79	O’Hagan v Body Corporate 189855 [2010] NZCA 56, [2010] 3 NZLR 445. The submissions incorrectly state that this decision was issued in 2009.
80	Johnson v Auckland Council [2013] NZCA 662. The submissions incorrectly state that the general damages award totalled $20,000.
81	Body Corporate 346799 v KNZ International Co Ltd [2017] NZHC 511.
82	Hsu v Mahoney, above n 52.

[96]	Mr Mehta says that an award of general damages in the region of $25,000 is justified.

Mr Mehta’s appeal in relation to costs

[97]	The Judge awarded costs to Mr Mehta on a 2A basis rather than a 2B basis. Mr Mehta says that the Judge acted on an incorrect principle and/or was plainly wrong in deciding that 2A costs were appropriate and that costs should only apply from June 2019.   Mr Mehta complains that neither finding satisfies the principle under     r 14.2(1)(g) of the District Court Rules that costs should be predictable and expeditious. Mr Mehta does not agree that the matter, which he says was at the time the oldest civil case in New Zealand, and which required a four-day full trial with expert evidence, was “diminished in complexity” by the time of trial. Mr Mehta says that a four-day full trial will almost inevitably warrant costs on a 2B basis.

[100]	Mr Mehta says that the significant delays that beset the matter created, if anything, a more complex situation than would otherwise have been the case.

[101]	Mr Mehta says that even if the matter had diminished in complexity, the proper course would have been to assess costs on a step-by-step basis and reduce costs for any step in relation to which less time than the band B allocation was required, rather than making a blanket determination that the entire proceeding was at band A level.

[102]	Mr Mehta says that once a costs category has been set, it should only be varied for special reasons. He relies on Tindall v Far North District Council to submit that the fact that an initial categorisation does not adequately reflect a matter’s complexity is unlikely to be a “special reason”.83 Mr Mehta says costs should have been awarded on a 2B basis.

[103]	As to costs being awarded only from June 2019, Mr Mehta says the High Court reinstated his claim on 29 August 2017 and did not hold him responsible for the issues that led to the claim being struck out. He says he was also not responsible for the delay between reinstatement by the High Court on 29 August 2017 and the reopening

83	Tindall v Far North District Council HC Auckland CIV-2023-488-135, 25 May 2007 at [10].

of his claim  in  June 2019.  Mr Mehta says  that  the minute of Judge Sharp dated  19 January 2023 makes it clear that the delay was caused by the Court registry.84     Mr Mehta submits that it is difficult to see why he should be punished by having his entitlement to costs removed for the period up to June 2019 when he was found not to have been responsible for delay in that period. Mr Mehta says  that  both  the  District Court and High Court have concluded that he was not responsible for the extraordinary delays that have “plagued” the matter. He says he incurred legal costs throughout the period, and that the more principled approach would be to award him costs for the full period from 21 June 2011. Mr Mehta says the award of costs from June 2019 excludes both the 21 August 2015 statement of claim on which Mr Mehta succeeded at trial and the 13 January 2015 brief of evidence on which he relied at trial (and, presumably, disbursements relating to those documents).

[104]	Mr Mehta submits that a further issue arises in respect of the $5,000 security for costs that he paid into the District Court in 2017, and its relationship to costs due to both parties from prior matters. He says the Judge ordered that repayment of his security for costs should first be applied to the costs due to Mr Chandra, but the Judge did not address the fact that Mr Chandra also owes costs to Mr Mehta. Mr Mehta acknowledges that may be because the Judge considered she did not have jurisdiction to address costs awarded against Mr Chandra by the High Court. Mr Mehta says that in any event, as a matter of principle, any set-off of costs against security should also account for the $4,000 costs owed by Mr Chandra to Mr Mehta, and he invites this Court to address that.

[105]	Mr Mehta also complains that disbursements were not addressed in respect of his successful High Court appeal in the December 2018 costs minute of Hinton J.  Mr Mehta asks this Court to address that omission.

[106]	Lastly, on the issue of interest, Mr Mehta takes issue with the District Court Judge allowing interest only from November 2019 without explanation as to why that date was selected.

84	This minute was not provided by the parties and is not on the High Court file.

Relief sought

[107]	Mr Mehta seeks the following relief:

(a)	A finding that each head of defect identified by the Kaizon report was loss caused by Mr Chandra to Mr Mehta, for which Mr Chandra is liable to Mr Mehta in the amounts quantified by Ms Gillard or in such other amount as the Court considers just.

(b)	An order allowing Mr Mehta’s claims in respect of the heater, the deck, the drainlayer, and the retaining wall.

(c)	An increase in the amount payable to Mr Mehta for the Kaizon report to $2,873.80.

(d)	Removal or reduction of the 30 per cent deduction made to
Mr Mehta’s claim for delay-related costs in respect of insurance and scaffolding.

(e)	An order extending the period for which delay-related loss is payable by Mr Chandra past 12 November 2010, and up to May 2011, being the date on which the property passed its final inspection, or such other extended date as the Court considers just.

(f)	An order finding Mr Chandra liable for breach of the Project Management Contract and the CGA.

(g)	Increased general damages from $10,000 to $25,000, or such other increased amount as the Court considers just.

(h)	Costs on a 2B basis, from the start of the claim rather than from June 2019.

(i)	An award of interest to Mr Mehta from 1 October 2010, rather than from November 2019.

(j)	An order that any set-off between Mr Mehta’s security for costs and the prior costs due to Mr Chandra also factors in the prior costs due to Mr Mehta.

(k)	Any additional relief that the Court considers appropriate.

Mr Chandra’s position

Mr Chandra’s position on the substantive matters

[108]	Mr Chandra says that none of the grounds relied upon by Mr Mehta are justified, and that no grounds exist for the High Court to overturn or disturb the decisions made by the District Court Judge.

[109]	In respect of reimbursement of the costs incurred to mitigate water ingress, Mr Chandra says that the description of the damage as “water ingress” is somewhat misleading as there is no evidence of any “water ingress” in the sense that the term is typically used. Mr Chandra says that Mr Mehta’s claim was actually for reimbursement of $3,099.51 in hire fees for drying equipment and charges for a Portaloo/machinery due to alleged delays. His position is that this claim is misguided. Mr Chandra says the drying equipment was required to dry the internal framing so as to reach the moisture levels required to satisfy the Council so that the internal lining work could continue. He says this was not “water ingress”, as the house was not closed in or weathertight at this point. Mr Chandra’s submission is that it is not uncommon to require heaters to assist the drying process when building works are being conducted during winter. Mr Chandra also says that Habitat invoiced Mr Mehta for these sums, but they were never paid.

[110]	As to the alleged defects in workmanship generally, Mr Chandra says that there was a notable lack of evidence produced by Mr Mehta. Mr Chandra’s position is that the Kaizon report was hearsay. He submits that there was no opportunity to cross-examine the report writer, and little weight should be given to the contents of that report.

[111]	Mr Chandra points out that there was no evidence produced, and no reference in the Kaizon report, relating to any building code clause,85 standard or regulation that was not met due to defective work. Mr Chandra also submits that the language of the Kaizon report was vague, and that it made no definitive findings.

[112]	On the issue of delays, Mr Chandra says the Judge placed too much reliance on the Kaizon report, which was not produced to address project delays. Mr Chandra points out that the Kaizon report was equivocal in that it referred to alleged defects that “may” or would be “likely” to create issues with obtaining a CCC.

[113]	In respect of the head flashing to the curved window, Mr Chandra says the evidence established that this is not a defect. He submits that the Kaizon report and the evidence of Mr Biggelaar confirmed that the head flashing was constructed as per the consented design. The window was inspected by the Council, certified and approved. Mr Chandra also says Mr Biggelaar’s evidence was that the small gap that opened up between the flashing and the plaster was not problematic.

[114]	In relation to the U-shaped flashing at the roof to stairwell intersection to the rear elevation, Mr Chandra submits that according to Mr Biggelaar’s evidence, the Council inspected this area and was satisfied that the junction complied with the building code. Mr Chandra confirmed that the Council requested the U-shaped stop end as an additional measure over and above what had been installed. Mr Chandra’s position is that he cannot be responsible for changes in the design. As project manager, he ensured that the building was constructed in accordance with the design provided. There was no evidence produced of any failure of the U-shaped flashing, and even if the U-shaped stop end did fail, there would be no damage caused to the property as there were adequate water prevention measures behind the U-shaped stop end back flashing, including a cavity system.

[115]	In relation to the deck, Mr Chandra says that he and Habitat were not onsite and had no involvement with the completion of the deck, deck cladding or cap flashings. At the time Habitat vacated the site, the base of the deck and the upstand at the base of the deck for water run-off had been installed. An alternative contractor,

85	The building code can be found in the Building Regulations 1992, sch 1.

MB Builders Ltd (MB Builders), constructed the side walls of the deck and the cap flashings after Habitat left the site.

[116]	Mr Chandra says the claim for reimbursement of costs to complete the deck is a contractual claim against Habitat. The midfloor progress payment was payable to Habitat when the works reached the midfloor framing stage. Mr Chandra’s position is that the midfloor framing payment did not include deck completion. The deck had been framed and all midfloor framing was complete, which triggered the required contractual payments. Mr Chandra says that payment made to others to complete the deck would anyway have been required — Mr Mehta would have incurred costs to complete the deck whether Habitat continued onsite or not. Further, Mr Chandra submits that Mr Mehta produced no invoices as evidence establishing payments made to another builder to complete the deck.

[117]	In addressing Mr Mehta’s claim for reimbursement of additional drainlayer costs, Mr Chandra says this was a sum that Mr Mehta paid direct to the drainlayer. He disputes Mr Mehta’s complaint that he “overpaid” based on the original pricing on the basis of the contemporaneous documents and says that the invoices provided included the additional works that were required. Mr Chandra submits that the drainlayer’s claim was justified and paid by Mr Mehta at the time.

[118]	Mr Chandra maintains that the cost to remove and replace the wrongly located original wooden retaining wall on the driveway had nothing to do with Habitat because Habitat did not construct any retaining wall. Mr Chandra submits that Mr Mehta entered into a separate contract with the subcontractor that constructed the retaining wall, and that the wall was built before Habitat commenced work onsite. He says it was discovered during the project that the wall was in the wrong location, and        Mr Mehta arranged for the retaining wall to be relocated. Mr Chandra says further that Mr Mehta did not produce any invoices or documentation to confirm the alleged relocation cost of $2,500.

[119]	Mr Chandra also says that Kaizon’s  fees were disbursements incurred by   Mr Mehta. He submits that the Judge reduced the award in respect of these disbursements because only one issue identified in the report was considered relevant.

He contends that the Court may reduce disbursements, and in this case, it was reasonable for the Court to do so.

[120]	Further, Mr Chandra disputes the apportionment of damages for delay. He says that there was a liquidated damages clause in the Project Management Contract, and this was a contractual matter between Habitat and Mr Mehta. It is not a matter for  Mr Chandra,  and  no  delay  damages  should  have  been  awarded  against  him.  Mr Chandra also submits that the Judge relied too heavily on the Kaizon report when apportioning damages for delay. He says this was a report by a building expert on alleged issues with the building work preventing issue of a CCC, and that the Judge should not have considered the report when determining delay issues.

[121]	Further, Mr Chandra says that on the evidence, there were delays in the project due to matters outside of his control, including dealing with the Council over the head flashing detail, which required a designer to prepare a revised design. Initially, the Council did not accept  the revised design,  and  a further version was  necessary.  Mr Chandra also says that the weather would certainly have affected the site during the winter months. In relation to the deck, Mr Chandra says there was an absence of design detail, and this essentially held work up for the entire period of the delay being claimed by Mr Mehta.

[122]	Mr Chandra’s evidence was that when Habitat was terminated there was only around one week of work remaining, provided that the deck detail was supplied. He says that procuring that deck detail was a matter for Mr Mehta and was something Habitat had been waiting for.

[123]	Mr Chandra submits that if Mr Mehta had acted prudently to complete the work after he terminated Habitat, the project would have been completed far sooner than it was.

[124]	Mr Chandra says the appeal against the Judge’s finding that he was not liable for breach of contract or breach of the CGA is easily dispensed with because there is clear and unequivocal evidence that the contract was between Mr Mehta and Habitat. He submits that the Judge reached her finding on the basis of an objective assessment

of the contemporaneous documents, and Mr Mehta’s subjective assessment is irrelevant. Mr Chandra says further that there is no claim for misrepresentation; accordingly, any pre-contractual negotiations are irrelevant.

[125]	Mr Chandra disputes the award of general damages in the amount of $10,000. He submits that the high-water mark for general damages in leaky building claims is
$25,000. However, this is not a leaky building claim, and Mr Mehta has not been living in, and with the effects of, a leaky home. Mr Chandra submits that Mr Mehta was awarded modest damages associated with a dispute under a building contract. He says the awards made in favour of Mr Mehta relate primarily to delays in completion; however, these awards related to building work that was completed in early 2011. As such, any stress or suffering associated with the breaches would have ceased at that point. Mr Chandra says that while the proceedings may have taken 13 years to come to a hearing, that is not his fault.

[126]	Mr Chandra says the award of general damages in the amount of $10,000 should be quashed, and that this is not a case where an award of general damages is appropriate.

[127]	In the alternative, Mr Chandra submits that the award of general damages ought to be proportional to the compensatory damages awarded. Mr Chandra says the Judge erred by referring to the principle of proportionality but failing to apply it when determining the award of general damages. Mr Chandra says that if an award of general damages is to be made, then it ought to be in the sum of $2,000.

Mr Chandra’s position in relation to costs

[128]	So far as costs and interest are concerned, Mr Chandra submits that such an award is  at the discretion of the Court.  Mr Chandra says the amount awarded to   Mr Mehta in the proceedings is commensurate to around 11.5 per cent of the value of his claim against Mr Chandra.86 He submits that in those circumstances, it cannot be said that Mr Mehta was vindicated in the dispute.

86	It appears that the damages awarded to Mr Mehta are actually closer to 10.5 per cent of the total value of his claim.

[129]	Mr Chandra says the primary case advanced by Mr Mehta as to the absence of, or inability to obtain, a CCC for the property was  completely unsuccessful.      Mr Mehta succeeded on only a small fraction of the total amount claimed in relation to minor matters when considered against the primary case. Mr Chandra says that in order to do justice between the parties, this is clearly a case where the Court has to carefully consider the exercise of its discretion as to costs.

[130]	By reference to his submissions provided to the District Court in relation to costs, Mr Chandra submits that the delays to the proceedings were not caused, or in any way contributed to, by defaults or failures on his part; yet he has had these proceedings “hanging over him” for 14 years.

[131]	Mr Chandra submits that it is not appropriate for disbursements to be awarded in relation to applications made to address either the setting aside or staying of default judgments obtained prior to the commencement of the proceedings, or the application to stay strike-out orders.

[132]	In his submissions before the District Court Judge (on which he relies in the present proceeding), Mr Chandra submitted that it would be unfair and contrary to the interests of justice for him to be required to pay interest of $14,459.84, a sum that exceeds the award of compensatory damages made in the case; particularly given that Mr Chandra did not contribute to the delays to the proceedings. Mr Chandra says he was ready to proceed with the hearing on 14 January 2015, but it was vacated the day prior because Mr Mehta did not deliver his evidence and documents within sufficient time to enable the hearing to proceed. According to Mr Chandra, those documents were delivered one day prior to the hearing.

[133]	Mr Chandra submits that this is one of the rare or exceptional cases where the Court should exercise its discretion to make an award of costs that is fair and equitable, and that does justice as between the parties.87 Mr Chandra’s position is that the only award that would do justice is an order that costs lie where they fall.

87	Mr Chandra cites the District Court Rules, r 14.1.

[134]	In the alternative, Mr Chandra submitted in the District Court that it would not be inappropriate for the Court to simply fix costs at a modest sum to reflect the modest quantum of damages awarded. Mr Chandra submitted that costs in the range of
$5,000–$10,000 would be sensible and appropriate given Mr Mehta’s “level of success”.

[135]	Similarly, Mr Chandra submitted in the District Court that there should be no award for pre-judgment interest. He said he should not be penalised for Mr Mehta’s delay, or delay caused by the loss of the court files. Mr Chandra submits that if the Court is minded to award interest, then interest to the date that the hearing ought to have been conducted on 14 January 2015 would be appropriate.

[136]	Mr Chandra accepted in the District Court that post-judgment interest would apply at the applicable rate.

Relief sought

[137]	Mr Chandra seeks the following:

(a)	An order that the findings made in relation to the following decisions be reversed:

(i)	the decision as to the Judge’s reliance on the Kaizon report in relation to delays in the building works; and/or

(ii)	the finding/conclusion that although “the builder” was responsible for the plaintiff’s losses, the cross-appellant was also liable.

(b)	An order that the findings made in relation to the decision as to the award of $10,000 in general damages be reversed and/or replaced with an appropriate award for general damages not exceeding $2,000.

(c)	Costs in relation to the appeals.

Approach on appeal

[138]	The substantive appeals are by way of rehearing.88 The appellate court has the responsibility of arriving at its own assessment of the merits of the case.89 However, the appellate court may rightly hesitate to conclude that findings of fact, or of fact and degree, are wrong where the lower court had a particular advantage; for example, the opportunity to assess the credibility of witnesses where such assessment is important.90 If the appellate court comes to a different view from that of the trial judge, the appeal must be allowed, even if it was a conclusion on which reasonable minds might differ.91 However, the appellant bears an onus of satisfying the appellate court that it should differ from the decision under appeal,92 and must identify the respects in which the judgment under appeal is said to be in error.93

[139]	The costs appeal is an appeal against the exercise of a discretion, and the approach on appeal is different. In order to succeed, the appellant must show that the court below:94
(1)	made an error of law or principle;
(2)	took account of irrelevant considerations;
(3)	failed to take account of a relevant consideration; or
(4)	was plainly wrong.

Issues

[140]	The following issues arise:

(a)	Did the District Court Judge err in her decision to dismiss Mr Mehta’s claims for the following alleged defects:

(i)	head flashing to the curved window;

88	District Court Act 2016, s 127; and High Court Rules 2016, r 20.18.
89	Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [5].
90	Austin, Nichols & Co Inc v Stichting Lodestar, above n 89, at [5]. See also Xiangli Ltd v A Class Coaches 2008 Ltd [2024] NZHC 2871 at [31].
91	Austin, Nichols & Co Inc v Stichting Lodestar, above n 89, at [16].
92	Austin, Nichols & Co Inc v Stichting Lodestar, above n 89, at [4].
93	Green v Green [2016] NZCA 486, [2017] 2 NZLR 321 at [30].
94	K v B [2010] NZSC 112, [2011] 2 NZLR 1 at [32].

(ii)	roof to stairwell wall intersection to the rear elevation;

(iii)	cantilevered deck;

(iv)	water ingress during construction (drying costs);

(v)	cost to complete the deck;

(vi)	additional costs of the drainlayer; and

(vii)	repair to retaining wall?

(b)	Did the Judge err in her decision to allow Mr Mehta’s claim in respect of the off-centre pillar?

(c)	Should the Judge have relied on the Kaizon report in relation to the delays in the building works?

(d)	Should damages for delay have been awarded other than as a consequence of breach of contract given that there was a liquidated damages clause in the Project Management Contract, and Mr Chandra was not a party to that contract?

(e)	Should the responsibility for delay have been apportioned; and if so, was the apportionment correct?

(f)	Was the Judge correct to find that Mr Chandra was not personally liable for breach of contract or breach of the CGA?

(g)	Was the Judge correct to find Mr Chandra was liable in tort?

(h)	Was the Judge correct to find that Mr Chandra was liable for breach of the FTA?

(i)	Was the award of general damages correct?

(j)	Should the cost of the Kaizon report have been apportioned?

(k)	Was the Court correct to award costs on a 2B basis, and only for steps taken after June 2019?

(l)	Should interest be payable on the judgment sum from October 2010?

(m)	Should the set-off between Mr Mehta’s security for costs and the prior costs due to Mr Chandra also factor in prior costs due to Mr Mehta?

Discussion

Construction defects

[141]	The only evidence that the defects alleged by Mr Mehta were in fact defects came in the form of hearsay evidence from the Kaizon report. The weight that could be placed on that report was necessarily limited by the lack of any cross-examination of the report writer. There was a further need for caution because aspects of the report were not borne out by subsequent events. Many of the defects identified in the report were said to be of such a nature that they may preclude the issuance of a CCC. It is clear that the defects identified did no such thing. The question as to whether they were in fact defects was very much live. Mr Chandra called evidence from an experienced expert, Mr Biggelaar, who did not agree with the matters raised in the Kaizon report. It is true that Mr Biggelaar did not undertake a site visit, but he explained that a site visit would not have assisted because of the passage of time.

[142]	Mr Mehta did not seek to engage a further expert to review the Kaizon report or to provide expert evidence to support his contention that the construction of the property was defective. The Court can only act on the evidence before it, and the utility of the Kaizon report was limited in circumstances where the report writer was not available, and the findings were challenged by an expert who was available for cross-examination.

[143]	In respect of the head flashing to the curved window, Mr Biggelaar did not consider this to be a defect at all. Mr Mehta criticised the Judge’s reliance on a passage

of evidence where Mr Mehta said that the current problems with that window are only as stated in the Kaizon report. Mr Mehta referenced some cracks in other areas in the passage cited.

[144]	The Judge set out the passage of evidence where she asked Mr Mehta about the problems with that window.95

[145]	Mr Mehta complains that the passage of evidence set out in the decision did not relate to the window in question and that, in any event, the Judge should not have based a finding on that passage and the answers he gave.

[146]	I find no error in the approach taken by the Judge in that part of the decision. The questioning of Mr Mehta to which she referred seems to be simply an effort by the Judge to try to understand what problem Mr Mehta was actually raising given that the Council had passed the design, Mr Chandra’s expert did not regard it as a defect, and it was not causing any apparent problem.

[147]	Mr Mehta says that he is entitled to damages on the basis that he did not get what he paid for in terms of that flashing. It is apparent from looking at the photographs that the gap is as described by Mr Biggelaar — “tiny”. It is not defective in that it prevents the issue of a CCC (which is what the Kaizon report anticipated might happen). It has caused no ongoing problem; it is not particularly visible given its position and I agree with the finding of the District Court Judge.

[148]	Mr Mehta says that the Judge was incorrect to find that the U-shaped flashing at the roof to stairwell intersection to the rear elevation was not a defect requiring repair.

[149]	For Mr Chandra, it was submitted that this additional U-shaped flashing was required by the Council as a result of Mr Mehta’s insistence on continuing with a building consent issued in the early 2000s. That consent was issued prior to changes to the building code designed to avoid weathertightness issues that had become apparent in the late 1990s and early 2000s.   Mr Chandra’s submission is that the

95	Mehta v Habitat Builders Ltd, above n 1, at [33].

Council was anxious about the design of Mr Mehta’s house, and by inference, the potential liability for issues that could arise. For this reason, the extra U-shaped flashing was required by the Council, although not part of the original design.

[150]	Again, I agree with the finding of the District Court Judge. There is simply insufficient evidence that the U-shaped flashing has caused, or is, a defect.

[151]	The next alleged defect is the cantilevered deck. The Judge found that any issues with the work done before Habitat’s contracts were cancelled were remedied by a new builder, and there is no current defect.

[152]	Mr Mehta sought reimbursement of the cost of engaging a new builder to complete the deck. He said that he had already paid Mr Chandra for that work when he paid the progress payment due when the midfloor stage was completed. Mr Mehta says construction of the deck was part of the midfloor stage and says it does not appear to fall within any subsequent stage set out in the Build Contract. Judge Davenport found that the payment labelled “Mid Floor” was a progress payment which could be claimed at the time the midfloor was being built, not a payment to be made when the entire midfloor was complete.

[153]	The overall contract price was for the work as a whole. The various progress payments fell due at identified stages, one of which was completion of the midfloor. If Mr Mehta is correct that the progress payment was a payment for the completion of the deck, it is illogical that he would have paid it when he did; that is, at a stage when the deck was not completed. Mr Mehta was always going to have to pay for the additional work completed after that progress payment was made, either by paying the further amounts set out in the Build Contract with Habitat, or by engaging another builder to do the work. Having cancelled the Build Contract and not paid Habitat to complete the build, he now wants Mr Chandra to pay for another builder’s work to complete the build.

[154]	I agree with the finding of the District Court Judge on this issue. The progress payment did not amount to payment in advance for the completion of the deck.

[155]	Mr Mehta claims that Habitat and Mr Chandra permitted water ingress during the construction and should be responsible for the drying costs. The District Court Judge did not agree.

[156]	Again, I agree with the District Court Judge on this issue. The need to dry the site was a consequence of a building project being undertaken during winter and a period of heavy rain. My impression from the evidence is that Mr Mehta was clearly concerned about cost. He wanted the project completed in the most cost-efficient way, and he did not want to pay for anything that was not necessary. Extraordinary efforts to ensure that the building site did not get wet during construction were more than he could have reasonably expected. Mr  Mehta  wanted  the  project  completed  by  July 2010. The time of year meant that it was not possible to allow the site to dry naturally, and to complete the build within the desired timeframe. There was no “water ingress” as that term is usually understood in leaky building litigation.

[157]	There were some errors made by subcontractors which had to be rectified. This included removing and replacing an incorrectly located retaining wall. The contactor who constructed the original wrongly placed retaining wall removed and replaced it. According to Mr Chandra, he obtained a quote from the contractor who built the incorrectly placed retaining wall, but the wall was constructed without Habitat’s involvement. The drainlayer also constructed a cesspit which had not been included in the original quote which the drainlayer provided to Mr Mehta. It was submitted that Mr Chandra’s involvement with the drainlayer was limited to managing the timeline of the work. It was not to instruct the drainlayer on the work itself; because Mr Mehta took on this role. The Project Management Contract specifically provided that subcontractors engaged by the owner are not the responsibility of the project manager. Mr Chandra agreed that he identified suitable subcontractors for Mr Mehta but said Mr Mehta actually engaged and paid them. The District Court Judge accepted that evidence, and as she had the advantage of seeing and hearing Mr Chandra and Mr Mehta give evidence, I would not deviate from that finding. The retaining wall was in the wrong place, and Mr Chandra identified the error in accordance with his responsibilities as project manager, but he is not responsible for the cost of rectifying it when Habitat did not manage or supervise the original construction of the retaining wall. Nor should Habitat or Mr Chandra be held accountable for work by a drainlayer

that was invoiced in a way Mr Mehta did not anticipate if Mr Mehta was responsible for negotiating the price and work with the drainlayer.

The off-centre pillar

[158]	Mr Chandra’s evidence was that the off-centre pillar came about because the original plans were amended, and the new design was provided after the concrete had been laid for the pillar. As a result of the new design, the concrete pad was in the incorrect position for the pillar. This problem was identified and discussed during the build. The District Court Judge found that Habitat should have ensured that the pillar did not create the aesthetic issues that it clearly did, and I agree with this finding. While Mr Chandra said the issue would have been remedied at the end of the project, this was not an adequate answer. It gave the appearance of shoddy workmanship, and while the original problem with the placement of the concrete pad was not created by Habitat, under the Project Management Contract it was incumbent on Habitat to ensure that the pillar was constructed in a way that did not appear unsightly.

[159]	If Mr Chandra owed a duty of care and is personally  liable,  then  the  District Court Judge’s decision in respect of the off-centre pillar must be upheld.

Should the Judge have relied on the Kaizon report in relation to delay?

[160]	The Kaizon report was in evidence, at least with the tacit consent of both parties. Mr Mehta certainly wanted it admitted, as it formed the basis of much of his claim. Mr Chandra called Mr Biggelaar as an expert witness, whose evidence was entirely based on a review of the Kaizon report.

[161]	The District Court Judge did not rely disproportionately on the Kaizon report in determining the issue of delay. The fact of delay was obvious. The house should have    been    completed    within    six    months,    as    provided    in    the     Project Management Contract. Mr Chandra gave assurances that it would be, and those assurances were given in circumstances where Mr Chandra knew that the build would continue over winter, and that Mr Mehta wanted to be involved in engaging and paying subcontractors.

[162]	I consider that the Judge was entitled to look at the whole picture of the evidence when considering the cause of the delay, and that included the Kaizon report. The Judge reminded herself of the limitations of the report as hearsay evidence and did not place undue weight on the report.

Should damages for delay have been awarded other than as a consequence of a breach of contract given the liquidated damages clause of the Project Management Contract, and given that Mr Chandra was not a party to that contract?

[163]	This issue feeds into the liability question, which I address later. The Judge did not award liquidated damages. Rather, in assessing the quantum of damages for delay to be awarded in tort and under the FTA, the Judge had regard to the liquidated damages provided for in the Project Management Contract. It was a useful measure to assess damages, and I would adopt the same approach.

Should responsibility for delay have been apportioned; and if so, was the apportionment correct?

[164]	It is  trite to  say that there must  be a causative link between the delay and  Mr Chandra’s conduct before damages can be awarded. Mr Mehta cannot claim damages for delay that he caused, or for delay that was caused by unforeseen events. Mr Chandra says that Mr Mehta was a difficult client. Subcontractors were engaged who were cheap, but apparently not competent. Mr Chandra says that Mr Mehta did not make decisions in a timely manner. At times Mr Mehta did not pay invoices, leading to delay. Mr Chandra says that was because of financial difficulties although Mr Mehta says that he was advised by Mr Chandra to wait before paying some invoices, and that is supported by the contemporaneous documents at least in part. The wet weather also caused delay. Further delay resulted from Mr Mehta’s insistence on proceeding with his original building consent. The Council had reluctantly allowed the build to proceed on that basis, but it led to more scrutiny of the build and to the Council requiring additional design details. Mr Mehta disputes that he caused any delay.   He lays the blame for the delays relating to the Council inspections with     Mr Chandra.

[165]	The evidence as a whole supports apportionment of responsibility for the delay in completing the build. The history of the project reveals that it was subject to delay

and disputes between the Council and Mr Mehta before Habitat became involved.  Mr Chandra says that Mr Mehta wanted to manage aspects of the project himself to reduce costs.  In  order  for  the  build  to  proceed  expeditiously,  Mr  Mehta  and Mr Chandra had to work as a team. However, the correspondence exchanged between them as the build progressed suggests that their expectations as to what could be achieved within the agreed six-month timeframe were not aligned. The Judge appeared to accept Mr Chandra’s evidence that Mr Mehta was “a nightmare and queried everything” during the build. In these circumstances, I consider that responsibility for the delay can fairly be said to lie with both parties.

[166]	The District Court Judge had to carry out an evaluative assessment of the reasons for the delay and I consider that, if anything, the apportionment was generous to Mr Mehta.

Mr Chandra’s liability

[167]	Mr Chandra was not a party to the contracts with Mr Mehta. The Judge said that there was nothing to suggest an implied term to that effect. Mr Mehta gave evidence that he queried the identification of Habitat as the contracting party in respect of the Project Management Contract. Mr Chandra said that Mr Mehta did not do so but agrees that he assured Mr Mehta that he would personally manage the project.

[168]	Mr Mehta contracted with Habitat and not with Mr Chandra personally. If he was not happy with the named party to the contract, it was open to him to refrain from signing it.

[169]	Mr Chandra cannot be liable for breach of a contract he was not party to on the state of the law at the time he signed the contract. Nor can he be liable under the CGA in relation to the supply of services under a contract to which he was not a party.

[170]	The situation is different in tort and under the FTA, and the District Court Judge found Mr Chandra liable both in negligence and for breach of the FTA.

[171]	The scope for company directors to be held personally liable in negligence was recently discussed by Whata J in Dobbe v Taylor.96 The relevant principles were helpfully distilled into a succinct paragraph:97

A director of a company may be liable in negligence if it can be shown that they assumed personal responsibility for the relevant careless conduct.98 A key indicator that responsibility has been assumed, or that there was a sufficient relationship of proximity, is that the director had direct control over that careless conduct.99 Whether the requisite proximity or control has been established involves a fact specific inquiry.100 Cases where a duty of care arose or could arise if the facts are proven include cases involving the director of a building company who had a high degree of control over the operation of the company at the key times;101 a director who had direct personal involvement in all aspects of the building process, including decisions that led [directly to] the damage;102 a director who carelessly constructed a residential building;103 a director who undertook defective design work;104 a director intimately involved in the day to day operation of a development company that had the primary responsibility for supervising the construction work;105 a director who assumed the function of project manager and was responsible for among other things design and supervising building works;106 and a director with both a high level of involvement in decision making during construction and specific involvement in key decisions that caused loss.107

[172]	In the present case, Mr Chandra had direct personal involvement in the building work carried out by Habitat. He also gave assurances that he would personally carry out the Project Management Contract. The price that Mr Chandra charged was modest — so much so that he says Mr Mehta asked Habitat to provide a letter to the bank to confirm the accuracy of its pricing. It seems that Mr Mehta had

96 Dobbe v Taylor [2024] NZHC 3657.
97         At [160].
98 Body Corporate 202254 v Taylor [2008] NZCA 317, [2009] 2 NZLR 17 per William Young P and Arnold J.
99 Morton v Douglas Homes Ltd, above n 52; Trevor Ivory Ltd v Anderson, above n 51; Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830 (HL); Body Corporate 202254 v Taylor, above n 98, at [126] per Chambers J; Body Corporate No 188273 v Leuschke Group Architects Ltd HC Auckland CIV-2004-404-002003, 28 September 2007; Body Corporate 183523 v Tony Tay & Associates Ltd HC Auckland CIV-2004-404-4824, 30 March 2009; and Hsu v Mahoney , above n 52.
100 Stephens v Barron [2014] NZCA 82, (2014) 21 PRNZ 734 at [29]–[31]; and Body Corporate 202254 v Taylor, above n 98, at [97] per William Young J.
101 Morton, above n 99; Carroll v Equus Industries Ltd [2015] NZHC 942; and Davies v K M Smith Builder Ltd [2021] NZHC 2865.
102	Hartley v Balemi HC Auckland CIV-2006-404-2589, 29 March 2007.
103	Body Corporate 202254 v Taylor, above n 98 per Chambers J.
104	Body Corporate No 189855 v North Shore City Council, above n 77.
105	Body Corporate No 199348 v Nielsen HC Auckland CIV-2004-404-3989, 3 December 2008.
106	Body Corporate 208191 v Joyce Building Ltd HC Auckland CIV-2006-404-005373, 16 December 2011.
107	Queenstown Lakes District Council v Dent [2019] NZHC 2140.

perhaps unrealistic expectations of what could be achieved for the price he wanted to pay. He wanted a level of care and attention he was not really prepared to pay for, and he expected every aspect of the project to proceed smoothly and in a highly cost-effective manner. Again, that was perhaps optimistic given the number of different subcontractors onsite and the issues with the initial building consent process. But Mr Chandra, rather than disabusing Mr Mehta as to what could be achieved, reassured him that the work would be done to the highest standard and within a six-month timeframe. The Project Management Contract with Habitat referred to unforeseen circumstances as a legitimate reason for extending that timeframe; however, there does not seem to have been any comprehensive discussion or definition of “unforeseen circumstances” beyond a brief list of circumstances that would qualify. If Mr Mehta’s expectations were unrealistic, Mr Chandra contributed to those expectations by effectively over-promising and under-delivering. Both parties feel aggrieved; Mr Chandra because the difficulty of achieving what Mr Mehta wanted was not worth the contract price, and Mr Mehta because he did not get what he expected.

[173]	If I were deciding this at first instance, I would find that Mr Chandra’s liability arises most readily under the FTA. His representations did mislead Mr Mehta as to the level of care and attention that the project would be given and the safety of the six-month timeframe. These representations included, for example, the guarantee on Habitat’s website that “…we offer highly effective construction & management module to our clients to accomplish projects in time and budget meeting all quality standards, our [clients’] needs and [council’s] code of compliance”. In his evidence, Mr Mehta also states that Mr Chandra assured him that he would strictly comply with the desired six-month timeframe, and that he would be “cost-effective”. I have some sympathy for Mr Chandra, who appears to have thought that Mr Mehta was more commercially resilient than he was. However, Mr Chandra must take Mr Mehta as he found him, and is liable for representations that did mislead.108

108    See Red Eagle Corp Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28], where the Full Court said that s 9 of the Fair Trading Act: “…is directed to promoting fair dealing in trade by proscribing conduct which, examined objectively, is deceptive or misleading in the particular circumstances. Naturally that will depend upon the context, including the characteristics of the person or persons said to be affected. Conduct towards a sophisticated businessman may, for instance, be less likely to be objectively regarded as capable of misleading or deceiving such a person than similar conduct directed towards a consumer…”

[174]	Given the proximity and control exercised by Mr Chandra over Habitat, I also agree that Mr Chandra owed a duty of care personally and was properly found liable in negligence for damage that resulted.

Was the award of general damages correct?

[175]	The purpose of general damages is to compensate for losses that cannot be quantified in monetary terms. General damages cover matters such as pain and suffering, indignity, humiliation and mental distress.109 In Roberts v Jules Consultancy Ltd, it was said that the assessment of general damages is case-specific, and in leaky building decisions, often includes the stress of having to live through the repairs.110 Acknowledging that this factor was not present on the facts of Roberts v Jules Consultancy Ltd, Thomas J said that general damages of around $25,000 were commonly awarded in similar cases.

[176]	The present case does not involve a leaky building. Mr Mehta’s house was completed in 2011. It appears to be eligible for a CCC subject only to Mr Mehta registering a memorandum of encumbrance. There is no suggestion that it requires extensive repairs. In short, there is really not much wrong with it other than some minor and mainly aesthetic matters that can be fixed relatively easily. The compensatory damages awarded in the District Court amounted to $11,321.12. In addition, general damages of $10,000 — almost 90 per cent of the compensatory damages award — were granted. Mr Chandra takes issue and says that no such award should have been made; or, if general damages were called for, an award of no more than $2,000 was appropriate.

[177]	In Wang v Future Urban Ltd, Downs J declined to award general damages in a situation where the plaintiff had initially intended to develop a property as a commercial venture, but then sought to build a family home.111 The defendant represented to the plaintiff that he had been validly nominated as the purchaser of the land. That representation was incorrect, and the deed of nomination was subsequently

109	Roberts v Jules Consultancy Ltd [2019] NZHC 3342, (2019) 21 NZCPR 186 at [109].
110	Roberts v Jules Consultancy Ltd, above n 109, at [109].
111	Wang v Future Urban Ltd [2023] NZHC 2609.

cancelled.	Compensatory damages of $29,686.30 were awarded to the plaintiff. General damages were refused. Downs J said:112

Damages for emotional distress also appear to be recoverable under the Fair Trading Act. However, damages of this nature are not typically awarded in commercial cases unless the purpose of the arrangement is to secure relief from an existing state of anxiety.

I accept Mr Wang was intending to build a family home on the property, and that he and his wife have suffered disappointment. However, I am not persuaded the threshold is crossed for damages of this nature, especially as the arrangement grew out of a commercial venture to develop property.

(footnotes omitted)

[178]	Mr Mehta has experienced real distress and suffering. However, the extent to which that can be laid at Mr Chandra’s door, and the appropriateness of an award of general damages, is questionable. It is not Mr Chandra’s fault that the hearing was delayed or that the court registry lost the file. The degree of suffering is disproportionate to his wrongdoing. While the “eggshell skull” principle applies,113 and Mr Chandra must take Mr Mehta as he found him,114 there must still be a sufficient level of causation,115 and the award of general damages must be proportionate.

[179]	On the award of general damages, I differ from the District Court Judge.     Mr Chandra’s level of negligence was modest. Mr Mehta is not living with the prospect of lengthy repairs. It appears that his house can achieve a CCC and could have had a CCC issued many years ago. The real distress was caused by misrepresentations that fed into unrealistic expectations. That finding was the basis for the finding of liability and the award of compensatory damages in the

112 At [26]–[27].
113 At least in relation to the claim in negligence.
114 See Stephenson v Waite Tileman Ltd [1973] 1 NZLR 152 (CA) at 160–161. See also Page v Smith [1996] AC 155 (HL) at 189, where it was held that this principle is not limited to cases where the primary victim of negligent conduct suffers “physical injury”, but also extends to cases of “psychiatric injury”.
115 See, for example, Christensen v Peat Marwick [1994] 3 NZLR 745 (HC) in relation to the causation requirement in a negligence cause of action. The requirement that there be a causal connection between the conduct of the wrongdoer and the loss or damage suffered by the claimant before damages may be awarded under s 43(3)(f) of the FTA is clear from the wording of s 43(1), which provides that the section applies if it is established that a person “has suffered… loss or damage by conduct of another person…” (emphasis added).

District Court. An award of $10,000 in general damages was disproportionate. I agree that the correct amount should have been $2,000.

Should the cost of the Kaizon report have been apportioned?

[180]	The District Court apportioned this disbursement on a success basis. Because Mr Mehta only succeeded in recovering damages for one of the defects identified in the expert report, recovery of this disbursement was not awarded in full. Mr Mehta says that approach is not permitted by the relevant legislation.

[181]	As a general principle, the successful party is entitled to recover actual expert expenses if they meet the criteria in r 14.12(2) of the District Court Rules requiring that they are of a class that is approved by the Court for the purposes of the proceeding, specific to the conduct of the proceeding, necessary for the conduct of the proceeding and reasonable in amount.116 This is the case regardless of whether that party succeeds on every part of its claim. The expense of obtaining expert evidence may be recoverable even if it is ultimately unhelpful and irrelevant to determining the issues.117 Apportioning an expert report to reflect which parts of the report resulted in the successful outcome is inconsistent with r 14.12 of the District Court Rules. The enquiry is whether the fee for the report as a whole meets the requirements of            r 14.12(2). If it does, it will be recoverable as part of the costs award, provided that such an award is made.

[182]	My view is that Kaizon’s fee meets the requirements of r 14.12(2) given that it was admitted into evidence, the Kaizon report formed the basis of Mr Mehta’s evidence as to the defects on which he based much of his claim, and there is nothing to suggest that the amount claimed is unreasonable. However, I consider that the

116 Air New Zealand Ltd v Commerce Commission, above n 75, at [47] and [64]; and District Court Rules, r 14.12(2).
117 Beach Road Preservation Society Inc v Whangarei District Council (2001) 16 PRNZ 13 (HC) at [18]. See  also Murray v BC Group (2003) Ltd HC Wellington CIV-2007-485-198, 3 August 2009 at [11], which confirms that expert witness fees may still be recoverable even where the witness does not give evidence at the hearing; and Alexander v Clegg (2003) 16 PRNZ 912 (HC) at [10], which confirms that where the court prefers the evidence of the defendant’s expert witness over the successful plaintiff’s expert, the plaintiff may still be entitled to some allowance for its expert’s costs — in that case, the allowance covered the expert’s fees for reviewing the defendant’s evidence, assisting in the preparation of cross-examination of the defendant’s expert and attending court for the presentation of the defendant’s expert evidence.

recoverability of this disbursement should ultimately be subject to whether costs ought to be awarded at all.

Was the Judge correct to award costs on a 2B basis, and only for steps taken after June 2019?

[183]	Both parties appeal the costs decision. Mr Mehta says that costs should have been awarded on a 2B basis and from the commencement of the proceedings  in  June 2011. At the very least, Mr Mehta says costs should have been awarded from 2015 when he filed the claim and evidence upon which he succeeded in part at trial.

[184]	Mr Chandra says that Mr Mehta’s conduct of the proceedings and ongoing breaches of obligations have been unfair to him. Mr Chandra says the courts have indulged Mr Mehta’s right to access the courts for over 10 years. He says Mr Mehta has had at least eight different legal representatives in that time, and periodically represented himself. Mr Chandra submits that the delays in this matter coming to court were not his fault, and he has had the litigation “hanging over him” for over   10 years. Mr Chandra says costs should lie where they fall.

[185]	Costs awards are a matter of discretion,118 and this Court will not interfere with an award that was open to the District Court Judge. In the present case, however, the degree of success which the plaintiff has achieved is reduced on appeal. In those circumstances, I look at the issue of costs afresh.

[186]	This is a matter where the amount of success achieved makes it clear that this matter should never have escalated in the way it has. The meritorious aspects of this case did not in any way justify the amount of litigation which has resulted.

[187]	Hinton J warned the parties of this in 2017, saying:119

Finally,   I   comment   that   counsel   impressed   me   at    this    hearing.  Mr Mehta should take particular notice of that in terms of his ongoing representation. Furthermore, I hope he has taken on board my comments about the substantive proceeding. It seems that the total payments he was liable to make to the defendants under the building contract were something less than
$40,000, yet his claim against Mr Chandra now amounts to something in the

118	District Court Rules, r 14.1(1).
119	Mehta v Habitat Builders Ltd, above n 4, at [49].

order of $150,000. While that is conceivable, a claim of that magnitude as against the original contract price seems unlikely. Mr Mehta also needs to give due regard to the fact that the company with whom he entered into the contract has gone into liquidation. There are cases where a sole director/shareholder has been found liable in negligence or otherwise, and this may well be one, but Mr Mehta needs to take a very practical approach towards this matter. Mr Chandra also needs to take a very pragmatic approach towards resolution. This may be one of those cases where both parties end up losing because of the money they have spent on legal fees.

[188]	In these circumstances, I agree with Mr Chandra that costs (including disbursements) should lie where they fall, both in respect of  the  trial  in  the  District Court and this appeal.

Should interest be payable on the judgment sum from October 2010?

[189]	This proceeding was commenced prior to the Interest on Money Claims Act coming into force, and the entitlement to interest falls to be considered under s 62B of the District Courts Act 1947 (now repealed).120 Under that section, which read as follows, the award of interest was a discretionary matter: 121

62B	Power of Court to award interest on debts and damages

(1)	Subject to subsection (2) of this section, in a proceeding for the recovery of any debt or damages, the Court may, if it thinks fit, order that there shall be included in the sum for which judgment is given interest at such rate, not exceeding the prescribed rate, as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment.

(2)	Subsection (1) of this section shall not—

(a)	Authorise the giving of interest upon interest; or

(b)	Apply in relation to any debt upon which interest is payable as of right, whether by virtue of any agreement, enactment, or rule of law, or otherwise; or

(c)	Affect the damages recoverable for the dishonour of a bill of exchange.

…

120	Interest on Money Claims Act 2016, sch 1 pt 1 cl 2.
121	See, for example, Greary v Accident Compensation Corporation [2014] NZHC 1037 at [55]; and
Loughlin v District Court at Hastings HC Napier CIV-2003-441-379, 9 September 2003 at [11].

(4) In this section the term the prescribed rate means the rate of 11 percent per annum, or such other rate as may from time to time be prescribed for the purposes of this section by the Governor-General by Order in Council.

[190]	The courts have held that the general purpose of the power to award interest under s 87 of the (now repealed) Judicature Act 1908, which was almost identical to s 62B of the District Courts Act, was to enable the court to properly compensate a successful plaintiff for its loss.122 The approach is premised on the basis that a defendant that has had the use of money which should have been available to the plaintiff should compensate the plaintiff.123 Where there has been delay by a party in advancing proceedings, it is not uncommon to delay the running of interest until the date of issue of the proceedings.124 Where there are post-commencement delays, interest may be awarded at a reduced rate.125 The wording of s 62B(1) also appears to provide scope for a reduction in the period for which interest is allowed to run.

[191]	Mr Mehta claims interest at the rate of five per cent  for the period from        1 October 2010 until judgment.

[192]	Mr Mehta says that Mr Chandra contributed to the delay, and he was forced to “battle” for over a decade to bring the matter to trial. Mr Mehta filed a chronology which reflects that both parties contributed to the delay, but Mr Mehta as the plaintiff had an obligation to pursue his claim expeditiously. He did not do so with multiple changes of counsel, late filing of evidence and documents, and other failures to comply with timetable directions. I acknowledge that, to some extent, these delays and failures may have been due to  personal  circumstances and  other  factors beyond  Mr Mehta’s control.126 However, it cannot be said that the delays in this matter are

122 Day v Mead [1987] 2 NZLR 443 (CA) at 463.
123 Day v Mead, above n 122, at 463,
124 Wilson & Horton Ltd v Attorney-General [1997] 2 NZLR 513 (CA). Again, this was a case  decided under s 87 of the Judicature Act 1908 (repealed).
125 For example, in Garden City Helicopters Ltd v O’Malley CA 31-97, 11 September 1997, the award of interest was reduced to half the rate provided for under the Judicature Act for part of the relevant period, in circumstances where the respondent was responsible for post-commencement delays in the proceeding.
126 Details of Mr Mehta’s changes of counsel and failures to meet various timetabling deadlines, and the justifications advanced for them, can be found in Mehta v Habitat Builders Ltd, above n 3; and Mehta v Habitat Builders Ltd, above n 4.

Mr Chandra’s fault. He has been embroiled in litigation for over 10 years in respect of a claim which has only succeeded to a very limited degree.

[193]	I agree with Mr Chandra that an award of interest that exceeds the level of compensatory damages awarded would be unfair and would not be in the interests of justice. Judge Davenport ruled that interest should run from November 2019 without specifying a date in November. I am not clear why that date was chosen. According to Mr Mehta (and not disputed) the District Court proceedings were reactivated on 19 June 2019. I agree that interest should run from 19 June 2019.

[194]	The claimed rate of five per cent is appropriate to reflect ongoing delays which were not the fault of Mr Chandra. Many were not the fault of Mr Mehta either; however, justice must be done to both parties, and it would not be just to require    Mr Chandra to pay interest at a higher rate than five per cent given the delays that plagued this matter even after the proceedings were reinstated. This is especially so as some delays did result from failures by Mr Mehta.

[195]	Interest on the compensatory damages will run from 19 June 2019 until the date of judgment at the rate of five per cent per annum. Post-judgment interest will apply in the usual way.

Orders

[196]	Mr Mehta’s substantive appeal is dismissed.

[197]	Mr Chandra’s cross-appeal is allowed in respect of the award of general damages. The award of $10,000 general damages is quashed and replaced with an award of $2,000.

[198]	Mr Chandra’s appeal as to liability is otherwise dismissed.

[199]	Mr Chandra’s appeal as to costs is allowed. I make an order that costs lie where they fall in respect of the District Court trial and this appeal. Because costs lie where they fall, there is no order in respect of disbursements.

[200]	Security for costs payments should be returned to the relevant party subject to those funds first being applied to satisfy any costs orders which remain outstanding either in the District Court or High Court.

[201]	Interest is awarded on the compensatory damages from 19 June 2019 until the date of judgment at the rate of five per cent per annum. Post-judgment interest is to apply in the usual way.

Wilkinson-Smith J