Ah Loo v Auckland Council

[2013] NZHC 954

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-7043 [2013] NZHC 954

BETWEEN  TUI TAHUIPARE AH LOO, RICHARD MICHAEL AH LOO AND SDM TRUSTEE COMPANY (2005) LIMITED Plaintiffs

ANDAUCKLAND COUNCIL Defendant

Hearing:         30 April 2013

Counsel:         T J Rainey for the Plaintiffs

C R Goode for the Defendant

Judgment:      2 May 2013

JUDGMENT OF WOODHOUSE J

This judgment was delivered by me on 2 May 2013 at 4:00 p.m. pursuant to r 11.5 of the High Court Rules 1985.

Registrar/Deputy Registrar

……………………………………

Solicitors:

Mr T J Rainey, Rainey Law, Solicitors, Auckland

Ms C R Goode, Heaney & Co., Solicitors, Auckland

AH LOO V AUCKLAND COUNCIL HC AK CIV-2012-404-7043 [2 May 2013]

[1]      The plaintiffs have applied for an order under s 120 of the Weathertight Homes Resolution Services Act 2006 (the Act) for an order that their leaky home claim be transferred for adjudication by the Weathertight Homes Tribunal (the Tribunal).

[2]      Two issues arise:

(a)      Before commencing this proceeding the plaintiffs initiated a claim under the Act by seeking an assessor’s report.[1]     There was a determination in accordance with the Act that the house had been built more than 10 years before the date on which the claim was brought and therefore did not meet the eligibility criteria under the Act.[2]   The first issue is whether there is a claim which can be transferred for adjudication by the Tribunal.   I will refer to this as the “jurisdiction issue”.

[1] Section 32 of the Act.

[2] Sections 13 and 14 of the Act.

(b)If  there  is  jurisdiction,  the  second  issue  is  whether  this  Court’s discretion under s 120 should be exercised in favour of the plaintiffs. The defendant opposes the application. An order may be made only if transfer is in the best interests of justice.

Conclusion in summary

[3]      On the first issue I am satisfied, as a matter of statutory interpretation, that a claim that has been declared ineligible following an application for an assessor’s report is not a claim which can be transferred pursuant to s 120 for adjudication by the Tribunal.   Sections 50 and 60 of the Act, in particular, make clear that the Tribunal cannot adjudicate ineligible claims.  Section 120 is not a provision creating

a substantive alternative to the procedures prescribed earlier in the Act.

[4]      If there is jurisdiction, I am satisfied that it would not be in the best interests of justice to order transfer.  The principal reason is that the claim the plaintiffs wish to advance is one that has already been declared ineligible for adjudication by the Tribunal.    There  was  no  challenge  to  that  decision  by  the  plaintiffs  and  the application now made seeks to circumvent the decision.    Weighing other considerations does not shift the balance in favour of the plaintiffs.

The background facts

[5]      There is no material dispute in relation to the background facts.  They may be set out largely in the form of a chronology.

(a)      13 May 1997: building consent issued for the house which is the subject of the claim.

(b)      6 January 1998: pre-line building inspection. (c)         15 June 1998: electricity meter box installed.

(d)There  is  no  information  as  to  what  occurred  in  respect  of  the completion of the building between the installation of the electricity meter in June 1998 and an inspection in March 2005 as noted below. One of the eligibility criteria is that the house must be “built” within

10 years of the day on which the claim is brought.[3]

[3] Sections 13 and 14 of the Act.  In respect of the meaning of the word “built” see Osborne v The Auckland Council [2012] NZCA 609. Leave to appeal to the Supreme Court has been granted: [2013] NZSC 43.

(e)      May/June 1998: the period during which the assessor concluded that construction would have been completed.   This was based on two matters: the normal rate of progress for construction of a dwelling following the pre-line inspection on 6 January 1998 and his opinion that connection of power would in most cases follow shortly after a

meter box is installed.

(f)      18 March 2005: Council inspection following a request for a code compliance certificate.  From a certificate of title it appears that this application was made by or on behalf of the owner for whom the house was built prior to sale to a predecessor in title of the plaintiffs.

(g)      16 August 2005: code compliance certificate issued. (h)         5 November 2007: transfer of title to the plaintiffs.

(i)4 August 2008: application by the plaintiffs under s 32 of the Act for an assessor’s report.   This was the equivalent of the filing of a proceeding in a Court.[4]    This was, therefore, approximately 10 years and 1 to 2 months after the date on which the assessor concluded that the house would have been built.

[4] Section 37(1) of the Act.

(j)28 October 2008: the date of the assessor’s eligibility report in which he expressed his opinion that the claim did not meet the eligibility criteria.   The date of a formal determination by the chief executive that the claim was ineligible is not in evidence, but the fact of the

determination is not in issue.[5]

[5] The determination is made pursuant to s 48 of the Act. A claimant may seek reconsideration under s 49.

(k)24 February 2009: the plaintiffs’ claim was formally “closed”.   It appears that this was a determination under s 56 of the Act in respect of a claim that had not been pursued.

(l)22  November  2012:  this  proceeding  was  commenced.     It  was therefore commenced approximately 14 years and 4 to 5 months after the date on which the assessor concluded that the house would have been built; over 7 years after the code compliance certificate was issued; and over 4 years after the assessor had expressed the opinion

that the claim was not eligible.  There is no evidence of any relevant

steps  taken  by  the  plaintiffs  between  the  date  of  notification  of ineligibility and the commencement of the proceeding in this Court.

(m)3 April 2013: plaintiffs’ memorandum for the first case management conference (under the new case management procedures).   The plaintiffs recorded their intention to apply for transfer under s 120.

(n)      11 April 2013: application for transfer filed.

The jurisdiction issue

[6]      Section 120, so far as material, is as follows:

120     Transfer of proceedings from court

…

(2)       If proceedings relating to a claim have been commenced in the High Court, a High Court Judge may, on the application of any party or on the Judge's own motion, order that the proceedings be transferred to adjudication.

(3)       If  proceedings  are  transferred  under  subsection  (1)  or  (2),  the tribunal may have regard to any notes of evidence transmitted to it by the Judge, and it is not necessary for that evidence to be given again in the adjudication unless the tribunal requires it.

(4)       An order to transfer proceedings under subsection (1) or (2) may be made only if—

(a)      the parties to the proceedings agree to the transfer; or

(b)      the Judge making the order believes that the transfer is in the best interests of justice.

[7]      Mr Rainey, for the plaintiffs, accepted that it is not open to the plaintiffs to challenge the determination that the claim is not eligible.  He submitted, however, that as a matter of statutory interpretation this does not prevent this Court from exercising its jurisdiction under s 120.   He submitted, in essence, that this is so because there are in effect two independent routes to having a claim adjudicated by the Tribunal.

[8]      Mr  Rainey  submitted  that  one  route  is  that  originally  followed  by  the plaintiffs: to apply for an assessor’s report under s 32.   An assessor is bound to express an opinion as to eligibility and a formal decision is then to be made by the chief executive.[6]    If it is an eligible claim a claimant may then initiate adjudication by the Tribunal by making an application for this purpose as prescribed by s 62. This  route  to  adjudication  could  not  be  pursued  because  of  the  ineligibility

determination.

[6] Sections 38 to 48.

[9]      Mr  Rainey  submitted  that  s 120  is  a  substantive  alternative  route  to adjudication firstly and principally because there is no express requirement in s 120 that the “claim” referred to in the section be an “eligible claim”.  He supported this by reference to several other provisions in the Act.  Relevant points in this regard are discussed below.

[10]     For the defendant, Ms Goode submitted that eligibility is a threshold issue under s 120, as it is under s 62.  She did not argue that on this application for transfer the Court should or could embark on an original enquiry into the question as to whether a claim does meet the eligibility criteria.   But she did submit that s 120 cannot be invoked where there has already been a positive determination of ineligibility.  She submitted that to proceed otherwise would be to ignore what she described as the “lengthy and relevant threshold and gate-keeping provisions” of the Act.

[11]     I am satisfied, as a matter of statutory interpretation, that s 120 is not a provision that can be resorted to where a claim has been declared to be ineligible in accordance with the relevant provisions of the Act.

[12]     As  Ms  Goode  submitted,  the  Act  does  contain  reasonably  elaborate provisions prescribing the eligibility criteria for claims and then prescribing steps to be taken for assessment of eligibility once a claim is first brought.   This detailed statutory threshold at least indicates, at a broad level, that Parliament is unlikely to have intended that a homeowner who fails to meet these eligibility criteria can

effectively by-pass  these provisions  by then  issuing a  claim  in  a Court  for the

purpose of seeking transfer under s 120.   More detailed consideration of the Act confirms that this is the case.

[13]     The Act is in three main parts.  Section 120 is in Part 1 along with all of the other provisions of relevance to the present issue.  These are the provisions directed to the process by which a claim may be initiated, investigated by an assessor and then adjudicated by the Tribunal if it is not resolved by some other means prior to adjudication.  Section 120 is in subpart 9 of Part 1.  It is the final subpart and headed “Miscellaneous provisions”.   The overview of the Act in s 4 states that subpart 9 “sets out various miscellaneous matters that underpin the substantive provisions of Part 1” (emphasis added).  This by itself provides a reasonably firm indication that s 120 was not intended to be a substantive route to adjudication able to be pursued without regard to the preceding provisions of substance, which provisions of substance include the eligibility criteria.

[14]     Two provisions in Part 1 in my judgment make clear that in that a claim positively determined to be ineligible cannot be the subject of adjudication and in consequence cannot have been intended to be capable of being transferred to adjudication under s 120.

[15]     The  first  is  s 50(1)  which  makes  provision  for  remedies  which  may  be claimed under the Act. The opening words of the sub-section are:

As long as it is an eligible claim, a claim under this Act may be for any remedy that could be claimed in a court …

[16]     In Body Corporate 204464 v Waitakere City Council Rodney Hansen J held that this provisions means that the Tribunal is unable to give a remedy unless a building owner has an eligible claim.[7]     With respect, I agree.   The fact that the plaintiffs’ claim is an ineligible claim will not go away if there is an order for transfer pursuant to s 120.  In consequence the object of s 120 cannot be achieved;

that is, transfer for adjudication by the Tribunal.

[7] Body Corporate 204464 v Waitakere City Council HC Auckland CIV-2008-404-007428, 1

December 2010 at [11].

[17]     Mr Rainey submitted that the Tribunal’s powers of determination, prescribed by  s 90  of  the Act,  are  not  expressed  to  be  limited  to  eligible  claims.    That submission ignores other provisions of the Act including, and in particular, s 50(1), and s 60(1) to which I come.

[18]     Section 60(1) is the other pivotal provision.  It is as follows:

60       Right to apply for adjudication of claims

(1)      The owner of a dwellinghouse has the right to apply to the tribunal to have the claim adjudicated if it is an eligible claim.

[19]     Mr   Rainey   submitted   that   this   provision   is   concerned   only   with commencement of adjudication under s 62, rather than adjudication arising following transfer under s 120.  I do not agree.  To an extent it begs the question on the central issue  as  to  whether  s 120  is  an  independent  and  substantive  means  of  getting adjudication by the Tribunal.  Section 60 is a substantive provision which limits the scope of s 120.   The substantive provisions of Part 1 of the Act are given proper effect by interpreting the application to the Tribunal referred to in s 60(1) as meaning a direct application pursuant to s 62 or an indirect application pursuant to s 120.

[20]     Section 120(2) refers to “a claim” and “adjudication”.  Both terms are defined in the Act.  Mr Rainey placed some weight on these definitions, together with the definition of “claimant”.  He noted that a “claim” is not, by definition, confined to an “eligible claim”.  The latter expression is separately defined.   However, this broad definition of “claim” is qualified by s 50(1) in respect of remedies, with remedies being the ultimate objective of a claim, and of adjudication. A “claim” as referred to in s 50(1), and in s 60(1), is not something different from a “claim” referred to in s 120.

[21]     “Adjudication” is defined as meaning an adjudication initiated under s 62 or by transfer under s 120 (or s 121 which is not relevant).  “Claimant” is defined as meaning a person who applies to have an assessor’s report or a person whose claim is transferred under s 120.  In my judgment the reference in these two definitions to the alternatives do not alter the effect of the substantive provisions earlier referred to. The  definition  of  adjudication,  at  least  to  an  extent,  reinforces  the  primary

conclusion;  whichever  route  may  be  taken  it  is  still  an  adjudication  with  the Tribunal’s powers circumscribed by ss 50 and 60.   The definition of “claimant” really takes the matter no distance as it is simply a label.

[22]     For these reasons I am satisfied that the power of transfer in s 120 cannot be exercised in respect of a claim already declared to be ineligible.

Exercise of the discretion: the “best interests of justice”

[23]     In case I am wrong in the preceding conclusion I will consider the question whether the discretion should be exercised in favour of the plaintiffs.

[24]     Even if there is, strictly speaking, power to consider exercise of the discretion when a claim has been declared ineligible, the fact that it has been declared ineligible is in my judgment sufficient reason to conclude that it would not be in the best interests of justice to order transfer.  Rodney Hansen J expressed the same opinion in the case earlier noted.[8]     In that case the Judge was addressing the question on a hypothetical  basis  because  there  had  not  in  fact  been  any  consideration  of  the

question of eligibility under the statutory procedures.  On the basis of the preceding analysis of the jurisdiction issue the order for transfer, although assumed for present purpose to be technically available, would be futile because the Tribunal could not grant remedies.

[8] Body Corporate 204464 v Waitakere City Council above n 5, at [10].

[25]     There are additional considerations bearing on the exercise of discretion. One of significance, in my judgment, is that the course sought to be followed by the plaintiffs would be a form of abuse of process.  In referring to “abuse of process” I am not suggesting that the plaintiffs have consciously set out to act in some improper way.  “Abuse of process” is a technical expression covering a wide range of actions relating to legal claims.  The point is that the plaintiffs would be seeking to have two bites at the same cherry.  They embarked on the standard procedure under the Act by seeking an assessor’s report.  Their claim was declared to be ineligible.  They took no steps to challenge that decision.   They now accept that they are bound by the

decision.  They effectively discontinued the claim they had brought and it has been

formally brought to an end.   But they are now seeking both to ignore and to circumvent this by commencing the proceeding in this Court and then applying for the  transfer.    Mr  Rainey  recorded  in  his  written  submissions  that  there  was  a conscious decision to commence the proceeding in the High Court for the purpose of then seeking to transfer it to the Tribunal because the direct route, under s 62, had been closed. The point of relevance to exercise of the discretion under s 120 is that it has been closed as a consequence of a decision against the plaintiffs which they did not seek to challenge. And it is a decision which was based on the assessor’s opinion notified to the plaintiffs over 4 years before they commenced the proceeding in this Court.

[26]     Mr Rainey referred to a number of considerations which he submitted did mean that it is in the best interests of justice to order transfer.  I will note these, but in my judgment none of them comes close to outweighing the matters just referred to.

[27]     Mr Rainey’s submissions were broadly directed to the fact that the Tribunal is a specialist tribunal and one established for the sole purpose of dealing with leaky buildings, and to the statutory objective of providing owners “with access to speedy, flexible  and  cost  effective  procedures”.[9]      Those  features  and  objectives  are,  of course, ones which are intended to be made available only where there are eligible claims.   Referring to this is not to repeat points already made.   It is part of the balancing exercise.  In any event, I am not persuaded that the particular features of the Tribunal  given  emphasis  by Mr  Rainey or  the declared  statutory  objectives

outweigh what is available if the proceeding continues in this Court.

[9] Section 3(a) of the Act.

[28]     There  are  also  the  questions  of  cost.    The  costs  of  adjudication,  unlike litigation costs in this Court, can only be awarded by the Tribunal in limited circumstances.[10]   Mr Rainey recognised this, but submitted that this may in the end be of benefit to the defendant.  The defendant certainly does not see it in that light. The limited right of recovery of adjudication costs is a factor weighing against

transfer.

[10] Section 91 of the Act.

[29]     Mr Rainey also referred to the availability of a full assessor’s report which would be made available to the plaintiffs at no cost to them.   If a full assessor’s report could in fact be made available that is a cost factor to take into account. However, it would appear that such a report could not be provided in this case because the Weathertight Homes Service has already concluded that the claim is

ineligible.[11]

[11] Sections 38 to 43 of the Act, and s 42(1) and (2) in particular.

[30]     There have been lengthy delays by the plaintiffs at several stages, and some of these have been inordinate. This weighs against transfer.

[31]     There are substantive issues raised by the defendant which, on the face of it, may more appropriately be dealt with in the High Court than in the Tribunal.  These include issues relating to the measure of damages, contentions relating to failure by the plaintiffs to exercise available rights and remedies under the agreement for sale and purchase when they bought the property, and limitation issues.

[32]     There are also interlocutory procedures readily available to the defendant in the High Court which are not automatically available in the Tribunal.  On this last point  I note  Mr  Rainey’s  advice,  in  response  to  an  enquiry  from  me,  that  the plaintiffs would accept conditions on a transfer enabling the defendant to pursue interlocutory steps which are not available as of right in the Tribunal.  However, if this proved workable in practice, it is likely to be less satisfactory from the defendant’s point of view than the clear cut procedures, and remedies for default, available in the High Court.

[33]     For these reasons, if it is possible to consider exercise of the discretion, in my judgment it is not in the best interests of justice to order transfer.

Result

[34]     The plaintiffs’ application for transfer is dismissed.

[35]     The  defendant  is  entitled  to  costs  and  reasonable  disbursements  of  and incidental to the application for transfer.  Costs are fixed in this regard on a 2B basis, without prejudice to the costs categorisation for the proceeding generally.

[36]     By 17 May 2013 the parties, if they can agree, are to file a joint memorandum setting out proposals for further steps in this proceeding, or separate memoranda to that effect if agreement cannot be reached.  The  file is then to be referred back to

Associate Judge Faire for further directions.

Woodhouse J