Bunnings use of a ‘pay now, argue later’ clause in its terms of trade took a knock when the High Court ruled it does not apply when a customer was misled about a Bunning’s product when signing up.
The High Court dismissed Bunnings fast-track summary judgment application on a claim against builder Sunrise Management Ltd for some $202,300 after hearing evidence Sunrise was sold China-sourced shiplap vertical weatherboard after being told it was a New Zealand made product. A ‘pay now, argue later’ clause should not apply where a customer signs up on the basis of a misrepresentation about the product sold, Associate judge Sussock ruled.
Zhaohui Liu, director of Auckland builder Sunrise, was approached by a Bunnings’ rep in 2019 encouraging a shift to Bunnings as supplier. While completing Bunnings’ credit approval process, Ms Liu made enquiries about delivery of weatherboard cladding. She made it clear she did not want a China sourced product. She was told Pineclad is manufactured in New Zealand. She ordered the product and Sunrise was invoiced for Pineclad. In fact, a China sourced product was supplied. Sunrise is suing Bunnings for about $300,000 being the claimed cost of replacing cladding on four houses. Bunnings claims Sunrise was told of the product switch prior to installation. It sued Sunrise for its unpaid trade account, saying terms of trade required Sunrise to pay now and argue later.
Judge Sussock refused fast-track judgment. Sunrise claims it signed up to Bunnings terms of trade only after being told the product was not sourced from China. If the facts as claimed by Sunrise are substantiated following a full court hearing, it would not be conscionable to enforce the ‘pay now, argue later’ clause, Judge Sussock ruled.
Sunrise Management Ltd v. Bunnings Ltd – High Court (28.02.22)
22.048