Use
of cheques to settle business debts are falling out of favour but they still
have benefits for suppliers. A fast
track court procedure for getting judgment on a bounced cheque is far quicker
than having to sue on a disputed unpaid debt.
Golden Bay farmer Carolyn Rose was
ordered to pay local builders $176,818 as the amount of two cheques offered in
partial payment of a new dairy shed on her Takaka farm after the two cheques
were dishonoured by her bank for lack of funds.
A cheque by itself is a written promise
to pay, independent of the underlying debt.
A dishonoured cheque is stark evidence of a failure to perform this
written promise to pay. A fast track
summary judgment procedure can be used to get a quick court judgment for the
amount unpaid. It is for the debtor to
prove there is an adequate defence for not honouring the cheque.
The High Court was told Mrs Rose initially
expected her new dairy shed to cost no more than $150,000. Someone else applied for a building consent
from Tasman District Council, estimating the likely building cost at $250,000. Armed with a buillding consent, Mrs Rose
arranged for a local firm of builders to construct the shed apparently without
first getting an estimate or a quote.
The final bill came in at over $500,000.
The builders sued for $450,480 being the unpaid balance.
Mrs Rose disputed the bill. She alleges the shed is not
“Fonterra-compliant”, and that there are problems with the roof height,
drainage channels and sumps. She says
the shed floor is too slippery and will cost $18,700 to remediate. One cow had to be put down after slipping
over.
Associate judge Matthews ruled Mrs Rose
was liable immediately for $176,818 unpaid on the two dishonoured cheques. She had no tenable defence for not honouring
these promises to pay.
The balance payable on the final
construction bill requires a full court hearing to determine whether Mrs Rose’s
complaints about the standard of final construction justify any reduction.
Byrne
v. Rose – High Court (10.12.15)
16.020