Tuesday, 27 February 2018

When Judges Bend the Rules

I have been reading two separate items, the first being a blog entry by Joshua Rozenberg about Lord Denning, and a recent decision of the High Court overturning a District Court decision on a construction contract issue. The common theme between the two is that of judges bending the rules to suit the justice of the case. My thoughts started when I read this article:-

Lord Denning was notorious for bending his perception of common law to reach what he thought was the correct result despite principles of law or precedent which said otherwise. Of course, many of his ideas have now been exposed as being somewhat prejudiced – he did not approve of people of colour sitting on juries, made openly anti-Semitic comments and thought hanging was a good idea. But he is perhaps best known for his open and direct writing style. He did not hesitate to create new law, and in cases such as Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 he created a new concept of promissory estoppel, and Gouriet v Union of Post Office Workers and Others [1977] CA, where he said "Be you ever so high, the law is above you."

The House of Lords did not hesitate to overturn decisions from Lord Denning when they departed from the law. So while he was able to make some changes, the parties were obliged to appeal to get a conventional application of law.

So the High Court decision in Floorman Waikato Ltd v Mcrae [2017] NZHC 1063 illustrated a New Zealand District Court Judge looking at the equity of a case and making a decision attempting to exclude well-established construction contract law. The case was about a very small contract for floor sanding for Mr McRae. The flooring company had applied to the District Court for summary judgment for the outstanding account of $6872.50. This is of course well within the jurisdiction of the Disputes Tribunal which can hear claims up to $15,000. Nonetheless the plaintiff was entitled to seek summary judgment and did so on the basis that it had sent Mr McRae a construction claim under the Construction Contracts Act 2002. The act has a fast track method to enable contractors to protect cash flow, which means that when someone receives such a construction claim, and wishes to defend the claim, they must respond with a schedule in the statutory form. The failure to provide a schedule within the required time then entitles the claimant to apply to court for a judgment. That is all well and good, but in this case Judge Ingram considered that his residual discretion to refuse summary judgment should be applied, stating that he thought that the "manifest financial penalty which must attach to the operation of the Construction Contracts Act 2002, is offensive to my sense of justice in the circumstances of this particular case, and I do not accept it can fairly be brought within the terms of r 12.2, and I am not satisfied there is no defence to the plaintiff's claim." No doubt being aware that someone might cite his judgment for its precedential value, he then went on to say that he thought that the use of the act was inappropriate when the claim was within the jurisdiction of the Disputes Tribunal and where there was a layperson involved who did not know about the consequences of the act and the failure to provide a schedule. He indicated that he would transfer the application if he could, but that either party would need to file a claim in the tribunal.

Instead, the plaintiff appealed the decision. In the High Court Justice Paul Davison then had to overturn the decision, because of the very clear process outlined in the Construction Contracts Act. He said that in this case, judge Ingram was plainly wrong as the result of taking an irrelevant matter into account, and in his view that the act should not apply to residential renovations involving homeowners. So the end result was that the flooring company was able to obtain judgment or the claim together with costs, which I expect would have been very substantially greater than the judgment for the claim.

I don't know if Judge Ingram would be flattered or dismayed by the comparison with the approach of Lord Denning. But in a practical way, he sought to achieve some real fairness as between the parties, but regrettably fell foul of the explicit wording and procedure in the Construction Contracts Act. He was not able to use the discretion to refused to enter summary judgment to avoid the regrettably clear process.

I expect Mr McRae is somewhat disillusioned by the court process. The case illustrates the dichotomy between attempting to do the right thing and applying the law. Such niceties would be of little comfort after receiving the costs award.

1 comment:

Paul Mallon said...

Lovin it!