Auckland Council v Abraham
[2015] NZHC 622
•31 March 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-003259 [2015] NZHC 622
BETWEEN AUCKLAND COUNCIL
Appellant
AND
WILLIAM FRANCIS ABRAHAM and
SHARRON MARY ABRAHAM First Respondent
NOEL JAMES ABRAHAM Second Respondent
GINO BIANCA Third Respondent
MOJOLIKA LIMITED Fourth Respondent
ALBANY STONE MASONS LIMITED Fifth Respondent
GUY ABRAHAM Sixth Respondent
Hearing: 4 March 2015 Appearances:
D J Barr and N M Thompson for Appellant
No appearance for first respondents (abide decision of the
Court)
T Rea for Plaster Systems Ltd (given leave to withdraw)Judgment:
31 March 2015
(RESERVED) JUDGMENT OF ANDREWS J
[Appeal against procedural order 10 declining joinder of Plaster Systems Ltd)]
This judgment is delivered by me on 31 March 2015 at 3 pm pursuant to r 11.5 of the High Court Rules.
..................................................... Registrar / Deputy Registrar
AUCKLAND COUNCIL v ABRAHAM & ORS [2015] NZHC 622 [31 March 2015]
Introduction
[1] The appellant, Auckland Council, is the first respondent in a proceeding in the Weathertight Homes Tribunal (“the Tribunal”). The Council applied to join Plaster Systems Limited (PSL) as a respondent, on the basis that PSL contributed to the damage to the property. In Procedural Order 10 issued on 14 November 2014, the Tribunal (Ms M Roche) declined the application. The Council has appealed against that decision.
[2] The claimants abide the decision of the court. Mr Rea appeared for PSL at the hearing in this Court, but sought leave to withdraw, as he has no instructions. Leave was given. I record Mr Rea’s indication that he can, however, facilitate delivery of this judgment to PSL.
[3] Crucial to this appeal is the Council’s application to adduce evidence on the appeal, being an affidavit by Simon Paykel, a building surveyor.
Background
[4] The proceeding relates to a leaky residential building near Warkworth, constructed with a “Thermaclad” monolithic cladding system. Following construction, in 2004, the property was certified as compliant by the Rodney District Council (now amalgamated into the Auckland Council), save for 14 identified items that required rectification, and producer statements that were to be provided. Those steps were taken and a final re-check requested. However, that was not carried out.
[5] In 2006 the Council advised the claimants that a specialist weathertightness inspection was required, because of the monolithic cladding system. This inspection identified several faults. Targeted repairs were attempted, but revealed significant further weathertightness defects. The claimants undertook significant work to remediate the defects and repair damage.
[6] The claimants claimed in the Tribunal for the costs of remediation and repair, assessed by the Tribunal’s assessor at approximately $1.2 million, plus consequential losses and general damages. The claim named the Council as sole respondent. Since
then, five respondents have been joined. One of those respondents obtained an order for removal, but that order was successfully appealed to this Court.1
[7] On 24 October 2014, the Council applied to join PSL as a respondent on the grounds that it manufactured and supplied the cladding system used in constructing the building, and inspected and provided assurances as to the cladding.2 The Council alleged that the cladding system included a device known as a corner soaker which was intended, in conjunction with the head flashings, sill flashings and silicone sealant, to create a complete seal around window and door openings, so as to divert moisture that enters through window and door openings to the exterior of the cladding. The Council alleged that the cladding system specified the use of a
particular sealant, “SilaflexMS” silicone, or an equivalent product, which is incompatible with the polypropylene from which the corner soaker was manufactured.
[8] The Council contended that it has a tenable claim that weathertightness defects were caused or contributed to by PSL’s breach of its duty of care to the claimants and as such the Council will, if found liable to the claimants, be entitled to contribution from PSL. Accordingly, it contended, it is fair and appropriate that PSL be joined to the proceeding, and its presence before the Tribunal is necessary to determine the issues.
[9] In a communication to the parties on 29 October 2014, the Tribunal raised issues relating to the Council’s application. On 7 November 2014, the Council filed an amended application. Again, the application alleged that the cladding system specified the use of SilaflexMS, which is incompatible with the polypropylene from
which the corner soaker was manufactured.
1 Auckland Council v Abraham [2015] NZHC 415.
2 The Council’s application referred to an “Insulclad” cladding system. However, it was not contested that the cladding system used in the construction of the claimants’ home was a “Thermaclad” system, which at the time of construction was identical in all material respects to the Insulclad system.
Tribunal decision
[10] The Tribunal referred to s 111 of the Weathertight Homes Resolution Services Act 2006 (“the Act”) under which joinder of PSL was sought, and the decision of Harrison J in Auckland City Council v Weathertight Homes Resolution Service3 and observed that sufficiently compelling evidence is required to establish that a claim is capable of succeeding before a party will be joined. She referred to the allegations made by the Council as to the inadequacies of the cladding system manufactured by PSL. She observed that no evidence had been provided to show that the manufacturing fault contributed to the damage, nor was there anything to that effect
in the assessor’s report. Further, the Tribunal considered that the alleged defect was physically too remote from the damage which had occurred to be causative.
[11] The Tribunal also referred to the judgment of Ellis J in Yun and Phon v Waitakere City Council, in which her Honour commented that as Tribunal claims frequently involve numerous respondents and a plethora of third parties, in order to determine claims in a cost-effective way, the Tribunal must be able to perform an active gate-keeping role in terms the joinder and removal of parties.4
[12] The Tribunal concluded that there was an absence of evidence regarding any damage discreetly attributable to PSL, and that a tenable claim had not been established against PSL. Accordingly, the application to join PSL was declined.
Grounds of appeal
[13] The Council appeals on the grounds that the Tribunal’s decision is wrong in
fact and in law in that:
(a) the Tribunal incorrectly applied the criteria for joinder in s 111 of the
Act;
(b)the Tribunal was wrong to find that the Council had not pointed to any evidence that the alleged corner soaker defect contributed to damage;
3 Auckland City Council v Weathertight Homes Resolution Service HC Auckland CIV-2004-404-
4407, 28 September 2004.
4 Yun and Phon v Waitakere City Council HC Auckland CIV-2010-404-5944, 15 February 2011.
(c) the Tribunal was wrong to find that at best it could be argued that if the plastering and jamb/sill installation defects had not been present, moisture ingress may have occurred in any event because of the corner soaker;
(d)the Tribunal was wrong to find that the possible corner soaker defect was too remote from the damage that occurred;
(e) the Tribunal was wrong to find that the Council had failed to point to any causative link between the corner soaker and any damage;
(f) the Tribunal was wrong to decline to join PSL on the basis that there was no evidence identified regarding any damage discreetly attributable to PSL, and as such, misstated the test for concurrent liability.
Right of appeal
[14] Section 93(1) of the Act provides a right of appeal, as follows:
A party to a claim that has been determined by the Tribunal may appeal on a question of law or fact that arises from the determination.
[15] In his judgment in Kells v Auckland City Council, Asher J considered whether an appeal can be brought against an interlocutory decision declining to strike out a party.5
[50] It is necessary first to consider whether an appeal can be brought against an interlocutory decision declining to strike out a party.
…
[52] As stated, a claim is defined at s 8 as the application for an assessor’s report, which leads to the preparation of an assessor’s report, and under s 9 that is how a claim is brought under the Act. Pursuant to s 93(1), a claim can conclude in a “determination”. That “determination” can be appealed. “Determination” is not defined in the Act.
[53] It is stated at s 93(3) that “the amount” at issue in relation to a
determination is the money required to be paid under the determination by
5 Kells v Auckland City Council HC Auckland CIV-2008-404-1812, 30 May 2008 at [50]–[56].
the person filing the appeal, or if the Tribunal has declined to require a payment of money, the amount unsuccessfully claimed. The section therefore contemplates a final determination of the issue against the appellant before a right of appeal is triggered. It is also stated at s 95(2)(b) that the decision of the court on appeal is a “final determination of the claim”, further suggesting that the claim has otherwise been fully determined.
[54] I consider that a final determination could also include a decision to strike out a party as that would be a final determination of the claim in respect of that party. A struck out party would be released from the proceedings. The only redress from the final result would be an appeal against the interlocutory but nevertheless final order. If however, as here, the application to strike out a party is refused, the effect of the order is not final as there will be an opportunity to appeal the substantive issues raised in the unsuccessful application in a later appeal relating to the final substantive determination.
…
[56] I therefore conclude that only determinations that have final effect can be appealed. There is no right of appeal in respect of an interlocutory determination except where that determination finally determines a claim against a party or parties. …
[16] It was not argued before me that ruling 10 was not a “final determination of a claim against “PSL”. I have some doubt that a decision to decline an application to join a party can properly be seen as a final determination of a claim against that party, in the sense that Asher J accepted that a decision to strike out a party is a final determination of a claim against that party. This is because, until such time as joinder is allowed, there is no claim against that party which can be the subject of a “final determination”. It is only if joinder is allowed that there is such a claim. However, as the point was not argued before me, I proceed on the basis that s 93 permits this appeal.
Application to adduce evidence on appeal
[17] As noted earlier, the Council has applied for leave to adduce Mr Paykel’s affidavit evidence in support of its appeal. In its application to adduce the evidence, the Council says that the evidence relates to:
(a) whether the cladding system installed on the building suffers from systemic failure; and
(b)the extent to which the building’s alleged defects and damage are caused by, or attributable to, the systemic failure of the cladding system.
[18] The application further states that Mr Paykel’s evidence is cogent, and was not introduced previously because the Tribunal has specialist knowledge and has an investigative role such that it is able to require and consider any evidence to determine the application. Further, it can refer matters to the assessor for comment. The Council contended that it is in the interests of justice that the evidence is put before the court.
[19] In his submissions for the Council, Mr Barr conceded that Mr Paykel’s evidence could have been submitted in support of the application for joinder. However, he submitted that the Tribunal could have sought the assessor’s opinion on the application, and received his comments.
[20] Mr Barr submitted that the appeal does not stand or fall on Mr Paykel’s evidence, and that it was submitted to this Court by way of assistance, to suggest what the assessor would have told the Tribunal, if asked to comment. He noted that this appeal is a re-hearing, and this Court does not have access to the assessor.
[21] Mr Paykel’s evidence does not focus on the use of the Silaflex sealant, which was the focus of the application to join PSL. Rather, Mr Paykel focuses on the manner in which the jamb and sill flashings were installed. In this respect, Mr Paykel differs from the assessor. The assessor was of the opinion that the sill flashings should have extended beyond the jamb flashings, as is common with other flashing systems.
[22] However, Mr Paykel says that the Thermaclad system is unique in that the sill flashings should not extend beyond the jamb flashing, and the junctions are formed using the corner soakes. Mr Paykel then says that if an incompatible sealant is used (such as is specified in the Thermaclad technical literature) it will not adhere to the polypropylene corner soakers, and will not form a waterproof seal. Mr Paykel then notes that the damage alleged by the assessor and the claimants (that is, entry of
water behind the cladding and/or water being absorbed into the framing) is the same as that alleged by the Council, and that the Council and the assessor are in agreement that the damage arose as a result of a failure at the jamb/sill junctions.
[23] Mr Paykel points out that the difference between the assessor and the Council is that the assessor finds that the failure has arisen from the sill flashings not extending past the jamb flashings (which would be contrary to the Thermaclad technical literature) whereas the Council alleges that the failure is the result of the silicone sealant failing to adhere to the corner soakers.
[24] While the Council annexed a Thermaclad data sheet, and the Silaflex technical literature, to its amended application to join PSL, it did not make any reference to the assessor’s comments as to the jamb/sill flashings. The Council referred only to the incompatibility between the silicone sealant and the polypropylene corner soaker.
[25] The Thermaclad data sheet includes (amongst a great deal of other information) an installation diagram showing the installation of the flashings, but the Council’s application did not alert the Tribunal to its contention that the assessor (and the claimants) were incorrect in asserting that the moisture ingress and damage was caused by the incorrect installation of the jamb and sill flashings (that is, not having the jamb flashings extending beyond the sill flashings).
Should Mr Paykel’s affidavit be admitted?
[26] Clearly, Mr Paykel’s affidavit could have been submitted with the Council’s amended application for joinder. As it was not submitted at that time, the Tribunal was deprived of material that was of considerable significance to the issue of joinder.
[27] I do not accept that the Council’s omission is excused by the fact that the Tribunal has specialist knowledge, can call for evidence, and can refer matters to the assessor. All of those matters are true, but it is incumbent on an applicant for joinder to establish a tenable claim. The applicant cannot leave it to the Tribunal to consider matters not squarely raised in the application.
[28] In all of the circumstances, while Mr Paykel’s evidence is not “new”, and it should have been put before the Tribunal, it is highly relevant to the issue of joinder. I have concluded that it is in the interests of justice that the evidence be admitted on appeal.
Approach on appeal
[29] In another judgment concerning the Abrahams’ proceeding in the Tribunal, Brewer J held that s 112 of the Act, which provides that “the tribunal may, on the application of any party … order that a person be struck out as a party …” confers a discretion.6 Section 111 of the Act, as to joinder, is in similar terms. It provides (as relevant in this case):
111 Joinder of parties
(1) The tribunal may order that a person be joined as a respondent in adjudication proceedings if it considers that—
(a) the person ought to be bound by,… an order of the tribunal
[30] I intend to take the same approach as did Brewer, and to consider the Tribunal’s decision in accordance with the judgment of the Supreme Court in Kacem v Bashir; that is that it must be shown that the Tribunal made an error of law or principle, took account of irrelevant considerations, failed to take account of relevant considerations, or reached a decision that is plainly wrong.7
[31] With respect, I also agree with the comments of Harrison J in Auckland City Council v Weathertight Homes Resolution Service, that in order for a party to be joined, the applicant for joinder needs to lay an evidential foundation, and has to point to sufficiently compelling evidence to establish that the claim against that party
is capable of succeeding.8 Further, I agree with the approach taken by Ellis J in Yun
and Phon v Waitakere City Council, as to the importance of the Tribunal being able to determine claims in a cost-effective way, and its need to be able to perform an
active gate-keeping role in relation to the joinder and removal of parties.9
6 Auckland Council v Abraham, above n 1 at [8].
7 Kacem v Bashir [2010] NZSC 112; [2011] 2 NZLR 1 at [32].
8 Auckland City Council v Weathertight Homes Resolution Service HC Auckland CIV-2004-404-
4407, 28 September 2004, at [31].
9 Yun and Phon v Waitakere City Council, above n 4.
Discussion
[32] I do not accept Mr Barr’s submission that the Council’s appeal does not stand or fall on Mr Paykel’s evidence. Rather, as noted at [3], above, his evidence is crucial. In the absence of that evidence, the Council would have had difficulty establishing that Tribunal erred in concluding that the Council had not made a case for joinder of PSL, and that declining joinder was consistent with the Yun and Phon approach.
[33] As I observed at [27], above, the Council could not leave it to the Tribunal to consider matters not squarely raised in the application for joinder. The significance of the difference between the assessor’s comments, and Mr Paykel’s evidence as to installation of the jamb/sill flashings, and the consequent significance of the use of an incompatible sealant, was not squarely raised in the application.
[34] What was squarely raised in the application for joinder was the cause of the failure of the jamb/sill junctions. The Tribunal will be required to decide what caused the junctions to fail. I have concluded that material evidence that should have been before the Tribunal was not put before it, and that as a result, the Tribunal failed to take a relevant matter into account, and reached a decision that was plainly wrong.
[35] Further, I have concluded that the Council has, on the basis of Mr Paykel’s affidavit evidence, established that it has a tenable case that the cause of the failure of the jamb/sill junctions was the failure of the silicone sealant to adhere to the corner soakers. If the Council succeeds, then (in the event that it is held liable to the claimants) it will be able to pursue a claim for contribution from PSL.
[36] Accordingly, the Council’s appeal is allowed, and I make an order that PSL
be joined as a party to the proceeding. In the circumstances of this case, it is not appropriate to make any order as to costs.
Andrews J