Auckland Council v Staley
[2013] NZHC 2572
•2 October 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2013-404-001753
[2013] NZHC 2572
UNDER THE Weathertight Homes Resolution Services Act 2006 IN THE MATTER
of an appeal from a decision of the Weathertight Homes Tribunal
BETWEEN
AUCKLAND COUNCIL
Appellant
AND
JACQUELINE STALEY
First Respondent
AND
PROPERTY CONCEPTS LIMITED
Second Respondent
| Hearing: | 25 July 2013 |
Appearances: | D J Barr and K Lydiad for the Appellant No appearance for the First Respondent M G Locke for the Second Respondent G K Kohler QC for the Proposed Respondent (N M Lowes) |
Judgment: | 2 October 2013 |
JUDGMENT OF GILBERT J
This judgment was delivered by me on 2 October 2013 at 4.30 pm Pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:………………
AUCKLAND COUNCIL v JACQUELINE STALEY [2013] NZHC 2572 [2 October 2013]
Introduction
[1] Auckland Council is a respondent to a claim by Jacqueline Staley in the Weathertight Homes Tribunal relating to her unit, which is one of eight units in a residential development in Parnell, Auckland. The Council applied to the Tribunal to join Nicholas Lowes as a further respondent contending that he was the project manager and supervised the construction of the development. The Council also applied to join Douglas and Chantal Liggins claiming that they were co-developers of the property. The Tribunal declined to join these parties to the proceedings. The Council appeals against that decision.
Grounds of appeal
[2] The Council advances the following grounds in support of its appeal:
(a)the Tribunal applied the wrong test for joinder; and
(b)the Tribunal made errors of fact and law in finding that the Council had not established a basis for joinder of the proposed respondents.
Approach to the appeal
[3] This appeal is brought pursuant to s 93(1) of the Weathertight Homes Resolutions Services Act 2006 which provides:
93 Right of appeal
(1)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.
[4] It is well settled that an appeal can be pursued under this section from a decision declining to join a party to proceedings.
[5] The appeal is to be determined in accordance with the approach directed by the Supreme Court in Austin, Nichols & Co Inc v Stichting Lodestar:1
Those exercising general rights of appeal are entitled to judgment in accordance with the opinion of the appellate court, even where that opinion is an assessment of fact and degree and entails a value judgment. If the appellate court’s opinion is different from the conclusion of the tribunal appealed from, then the decision under appeal is wrong in the only sense that matters, even if it was a conclusion on which minds might reasonably differ.
Did the Tribunal apply the correct test for joinder?
[6] Section 111 of the Act deals with joinder of parties. It relevantly provides:
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, or have the benefit of, an order of the tribunal; or
(b)the person’s interests are affected by the proceedings; or
(c)for any other reason it is desirable that the person should be joined as a respondent.
[7] Section 111(2) provides that an order for joinder may be made by the Tribunal on the application of any party or on its own initiative. If an order for joinder is made, the claimant must serve a notice on the person joined stating the nature of the claim and giving a brief description of it.2 The person joined must serve a written response to the claim within 25 working days of receiving it, pursuant to s 66.
[8] In Auckland City Council v Weathertight Homes Resolution Service & Dennerly,3 Harrison J stated that the party seeking joinder must be able to point to an arguable factual foundation which would satisfy one of the three statutory criteria set out in the section.4 His Honour stated:
1 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103; [2008] 2 NZLR 141 at [16].
2 Weathertight Homes Resolution Services Act, ss 111(3)(a) and 62(3) .
3 Auckland City Council v Weathertight Homes Resolution Service & Dennerly HC Auckland CIV-2004 404-4407, 28 September 2004.
4 Dennerly was decided under s 33 of the Weathertight Homes Resolution Services Act 2002 but this section is materially the same as s 111 of the 2006 Act.
[27] … Council’s…application to join all parties was predicated on the premises that multiple participation in the design and construction of a building may lead to joint and several liability in tort with consequential rights of cross-claim for indemnity and contribution among respondents. However, this legal proposition, albeit somewhat qualified, was of little use without an arguable factual foundation. Council seemed to rely only upon the assessor’s identification of factors which may have caused or contributed towards damage to the Dennerlys’ home and his recommendations on joinder, coupled with an expectation that some incriminating evidence may emerge at a later stage.
[28] A proposition that one or more of the other parties involved in the project may have owed and breached duties to the Dennerlys was insufficient to justify joinder. Council was bound to point the adjudicator to tenable evidence both of breach by the architects and of a causative link to the estimated costs of remedial work…
[9] Warwick Gendall J applied Dennerly in Thomson v Christchurch City Council:5
[33] …Clearly if there is no tenable evidence of factual foundation put before the Adjudicator to provide some support for a cause of action against an intended party then joinder would be inappropriate.
[10] The Council contends that the correct test for joinder is that outlined in Thomson and is a lower threshold than the test applied in Dennerly. In making this submission, the Council relies on Gendall J’s remarks towards the end of his judgment:
[54] … I consider the same general approach [required for strike-out applications] ought to be applied in a case where joinder is sought by a claimant who alleges a duty of care existed for which there was a breach giving rise to damage. Unless the proposition is so clearly wrong or unsustainable (and this would involve close enquiry of all the surrounding involving factors such as relationship between the parties, the nature of the duty alleged and its breach and so on) it is premature to decline joinder simply on the basis that, as the adjudicator said:
It cannot be established on the evidence so far produced that he [that is Mr Hewitson] owed a duty to the claimants to inspect other parts of the building and to give expert advice. (Emphasis added).
[55] It may be that it is not established that a duty of care existed or that there was any breach of duty, whether vicariously or through the existence of a primary duty of care, by Equus, but that must await full inquiry.
[11] Like the Tribunal, I do not accept the Council’s submission that Gendall J applied a lower threshold test in Thomson than Harrison J applied in Dennerly. First, as is apparent from the passage of his judgment quoted in [9] above, Gendall J agreed with Harrison J that joinder could not be justified in the absence of tenable evidence providing a factual foundation for the intended claim. Second, the passage quoted in [10] above appears in a section of Gendall J’s judgment headed ‘Tenable’ evidence as to Equus’ duty of care, and breach? It is clear from this heading that the starting point accepted by his Honour was that there had to be tenable evidence of duty and breach to justify joinder. Third, Gendall J found that there was an evidential foundation for the intended claim. His Honour considered that joinder should not have been declined simply because the evidence then available was insufficient to prove the claim.
[12] The Tribunal considered that the tests applied in Thomson and Dennerly were the same and it sought to state that test:
[7] I do not accept that Thomson establishes a different or lower threshold for joinder than Dennerly. Clearly tenability is one of the critical factors in determining in the circumstances of each case whether it is fair and appropriate to join a party. Accordingly where a party is applying to join a party they have to produce sufficiently compelling evidence to establish that the claim against that party is capable of succeeding.
[13] I accept the Council’s submission that the Tribunal did not state the test accurately in this paragraph of its decision. The party seeking joinder does not necessarily have to “produce” supporting evidence; it will be sufficient if that party can point to tenable evidence to support the intended claim, such as may be contained in an assessor’s report already on the file. The Tribunal’s use of the words “sufficiently compelling” gives the impression that the evidential burden at the joinder stage is higher than it is. The evidence needs to be tenable, not necessarily compelling. Finally, the words “fair and appropriate” come from s 112 of the Act which deals with removal of a party from a proceeding. Those words do not appear in s 111. The test for joinder is not the same as the test for removal, as is apparent from the wording of these sections. This was confirmed by Cooper J in Fenton &
Ors v Building Code Consultants Limited.6
[14] However, it is clear that the Tribunal was appropriately focused on whether there was sufficient evidence to support a tenable claim given its use of the words “capable of succeeding”. This is also apparent from those parts of the decision where the Tribunal applied the test:
[15] … I conclude that the evidence before me does not provide the basis of a tenable claim against Mr Lowes and I therefore dismiss this application for joinder.
…
[18] … The fact that the Liggins held more than one title in this development is not sufficient to found a tenable claim that they acted as developers or to attribute a duty of care to them.
[15] I conclude that although the Tribunal did not state the test accurately in its decision, it applied the correct test for joinder, as set out in Dennerly and Thomson. I therefore reject this ground of the Council’s appeal.
Was the Tribunal wrong not to join Mr Lowes?
[16] The Council relied on the following evidence in support of its application to join Mr Lowes as a respondent:
(a)Mr Lowes is the sole director of Mason Lowes Limited which Ms Staley identified as the company that built the unit;
(b)the second respondent, Property Concepts Limited, identified Mason Lowes Construction as having been responsible for the construction work;
(c)counsel for Property Concepts Limited wrote to the Tribunal in February 2013 stating “Mr Lowes is understood by my client to have been the staff member of Mason Lowes Construction responsible for projection management and construction supervision”; and
(d)Council’s records show that Mr Lowes was the contact person for the purposes of a number of the Council’s building inspections during the course of the construction.
[17] The Council relied on this evidence to show that Mr Lowes was the construction supervisor and project manager. It sought to join him to the proceedings on the basis that, having acted in that capacity, Mr Lowes was also liable for some or all of the defects.
[18] The Tribunal was not prepared to place any reliance on the February 2013 letter from counsel for Property Concepts Limited because it did not regard this as evidence. The Tribunal was not prepared to infer that Mr Lowes was the project manager and construction supervisor solely from the Council records which indicated that he was the contact person for the purposes of some of the building inspections. The Tribunal stated:7
The only evidence linking Mr Lowes personally with the construction is the Council inspection records. I am not satisfied that the fact that Mr Lowes may have been the contact person, or even on site, for some of the inspections is sufficient to establish that he carried out the role of construction supervisor or project manager and owed a duty of care in that capacity. I conclude that the evidence before me does not provide the basis of a tenable claim against Mr Lowes and I therefore dismiss this application for joinder.
[19] The unsubstantiated assertion from counsel for Property Concepts Limited that Mr Lowes was the project manager and construction supervisor of the development does not qualify as tenable evidence. Nor could it be inferred from the fact that Mr Lowes was the contact person for the purposes of a number of Council inspections that he was the project manager and construction supervisor.
[20] The Council submits that in small, closely held companies like Mason Lowes Construction, it is more likely than not that the directors personally carry out the work or supervise it. It cannot be inferred from the mere fact that Mr Lowes was a director of a small company, that he personally carried out or supervised any of the defective work.
7 Procedural order 2 dated 26 March 2013 at [15].
[21] I agree with the Tribunal’s assessment that there is no tenable evidence to support the Council’s intended claim that Mr Lowes was the project manager and construction supervisor and liable as such for part or all of the remedial costs. In my view, the Tribunal was correct in declining to join him.
Was the Tribunal wrong not to join Mr and Mrs Liggins?
[22] Property Concepts Limited was named as a party to the proceedings on the basis that it was the developer. It accepts that this was the case and that it engaged and/or controlled those persons responsible for the design and construction of the units.
[23] The Council nevertheless contends that Mr and Mrs Liggins were co-developers. It relies on the evidence showing that Mr and Mrs Liggins were one-eighth owners of the land which was comprised in two titles prior to subdivision and that they were the original owners of Ms Staley’s unit. The Council also points to the fact that Mr and Mrs Liggins sold the unit 16 months after the code compliance certificate was issued. The Council submits that it is reasonable to infer from these facts that Mr and Mrs Liggins arranged for the dwelling to be built with the intention of selling it to make a profit and that they are therefore co-developers.
[24] The Tribunal set out its reasons for declining to join Mr and Mrs Liggins in the following paragraphs of its decision:
[18] There is no evidential basis for the Council’s submission that it is a reasonable conclusion that this dwelling was sold for a profit and, even if there was a profit, I do not accept that the making of the profit is synonymous with or evidence of a person being in business as a developer in the absence of any other evidence that they controlled the design, construction, or marketing of the property. In Keven Investments Limited v Montgomery the High Court concluded that if the ‘business element’ is lacking it is unlikely that the defendant will be a developer. The fact that the Liggins held more than one title in this development is not sufficient to found a tenable claim that they acted as developers or to attribute a duty of care to them.
[19] Although, as Council submits, Harrison J in Leuschke found that the word ‘developer’ is a loose description, the passage relied on by the Council identifies ownership of the property and other potential elements as relevant to a finding of developer. Further, this claim relates to one dwelling only and the issue is whether the Liggins were the developer of the claimant’s
property. The Council has not demonstrated any link between any act or omission by the Liggins with any of the defects pleaded by the claimants or the resulting loss.
(footnotes and citations omitted)
[25] I agree with the Tribunal’s analysis and decision. The Council has not been able to point to evidence to support a tenable claim that Mr and Mrs Liggins were co-developers of this property.
Was there a breach of natural justice?
[26] The Council submits that the Tribunal ought to have given it the opportunity to provide further evidence to support its joinder application before declining it. Mr Barr submits that this was procedurally unfair and a breach of natural justice. In particular, he submits that if the Tribunal did not agree with the test for joinder advanced by the Council or did not accept the adequacy of the evidence provided, it should have notified the Council of this and given it an opportunity to provide further submissions and evidence.
[27] I note that this is an appeal, not an application for judicial review. This issue was not raised in the notice of appeal and it would therefore be inappropriate for me to determine it. However, I cannot accept the Council’s position. It knew that its application for joinder would be dealt with on the papers. The Tribunal notified the parties of this in its first procedural order. It was up to the Council to put forward such information as it considered was required to justify joinder. In my view, there can be no suggestion of any breach of natural justice in this case.
Result
[28] The appeal is dismissed.
[29] The Council is to pay the costs of this appeal calculated on a 2B basis.
M A Gilbert J
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