Auckland Council v Weathertight Homes Tribunal
[2016] NZHC 89
•5 February 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-001722 [2016] NZHC 89
UNDER the Judicature Amendment Act 1972 IN THE MATTER OF
an application for judicial review of an order declining the joinder of a party under s 111 of the Weathertight Homes
Resolution Services Act 2006
BETWEEN
THE AUCKLAND COUNCIL Plaintiff
AND
THE WEATHERTIGHT HOMES TRIBUNAL
First Defendant
STEVEN OVAN BROOME, ELIZABETH ANN BAIRD and MATTHEW LANGLEY CARSON Second Defendant
EQUUS INDUSTRIES LIMITED Third Defendant
AQUASTOP LIMITED Fourth Defendant
Hearing: 2 December 2015 Counsel:
D J Barr for the Plaintiff
No Appearance of the DefendantsJudgment:
5 February 2016
JUDGMENT OF EDWARDS J
This judgment was delivered by Justice Edwards on 5 February 2016 at 12.30 pm, pursuant to
r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
THE AUCKLAND COUNCIL v THE WEATHERTIGHT HOMES TRIBUNAL [2016] NZHC 89 [5 February
2016]
Introduction
[1] The plaintiff (Council) seeks to review a decision of the Weathertight Homes Tribunal (Tribunal) refusing to join Bostik New Zealand Ltd (Bostik) as a party to an adjudication before the Tribunal.
[2] The Council sought joinder on the basis of a materials guarantee given by Architectural & Structural Adhesives Ltd (ASA) in respect of a membrane installed in a pool and patio area. The materials guarantee recorded that an ASA employee had certified installation of the membrane. ASA subsequently amalgamated with Bostik.
[3] The Tribunal found that the Council would need to establish an arguable claim that the membrane product supplied was defective. Such a claim was not arguable in the Tribunal’s view as it considered that the product should not have been used at all as it did not comply with the architect’s specifications. It declined the application to join Bostik.
[4] The Council seeks to review the joinder decision on the basis that the Tribunal erred in law and in fact in reaching its conclusions. It also claims that the failure to provide the Council with an opportunity to respond to perceived shortcomings in the application is a breach of natural justice.
[5] Only the Council appeared at the review hearing. The Tribunal did not take a position on the review, but it filed an affidavit which sets out aspects of its procedure.1 I granted leave to the Tribunal to be excused from appearing on that basis.
Background
[6] The second defendants, who are the trustees of a family trust, are claimants in a leaky building adjudication before the Tribunal.
1 This is in accordance with the approach in Shaw v Attorney-General (2002) 16 PRNZ 761 (HC).
[7] One of the issues in the adjudication concerns a liquid applied waterproof membrane applied to a pool and patio area added to the second defendants’ home. The statement of claim in the adjudication includes allegations that there was inadequate installation of that membrane, that it had failed to perform and prevent water transfer, and that it was not suitable for its particular use.
[8] The membrane in issue was manufactured and supplied by ASA. ASA issued a materials guarantee in respect of the membrane which warranted the waterproofing qualities of the product for 15 years, and the adhesive properties for 10 years. As recorded in the materials guarantee, the membrane was installed by a third party which had attended an ASA course, and had provided a producer statement. The materials guarantee also recorded that application of the membrane had been inspected and certified by an employee of ASA. The materials guarantee stated specifically that it was not a “workmanship guarantee, it is the applicator’s responsibility to ensure all work is done to the relevant standards”.
[9] On 25 June 2015, the Council applied to join Bostik and two others (the third and fourth defendants) to the claim. In accordance with the Tribunal’s procedure, the application was made by email. The Council relied on the materials guarantee issued by ASA for the membrane and specifically referred to the fact that the guarantee recorded that an ASA employee had inspected and certified installation. The Council sought joinder on the basis that if any part of the claim against Council succeeded as regards the membrane, then it must also succeed against Bostik for analogous reasons.
[10] By Procedural Order 2 dated 30 June 2015, the Tribunal granted the application to join the third and fourth defendants, but declined the application to join Bostik. Its reasons for declining the application were as follows:
[8] The application to join Bostik is made on the basis that Architectural
& Structural Adhesives Limited (ASA) provided a materials guarantee for the liquid waterproofing membrane applied to the deck and that this membrane has now failed. ASA is now struck off but was a wholly-owned subsidiary of Bostik.
[9] The materials guarantee excluded workmanship therefore, in order for this application to succeed, the Council needs to establish an arguable
claim that the membrane product supplied was defective and that this defect is causative of water ingress and loss by the claimants.
[10] The claimants’ expert, Forensic Building Consultants Limited, engaged Grayson Wagner Co Limited to investigate the liquid applied membrane used for waterproofing. Grayson Wagner noted that ASA provided the materials guarantee for the membrane but concluded that the membrane applied did not comply with the architect’s specifications for a bituminous sheet membrane.
[11] The Grayson Wagner report states that the membrane applied differs from a laboratory sample of the same product but does not conclude that this difference amounts to a product defect. The report considers that the difference may be caused by the amalgamation of ASA with Bostik after the membrane was applied which lead to a change in the product.
[12] The writer observed holes in the membrane and states that the product failed. However I am not satisfied that it is arguable that the membrane was inherently defective. This product should not have been used in the particular circumstances as it did not comply with the specifications. The failure of [sic] follow specifications and the resulting defects are not attributable to the supplier of the membrane.
[11] The Tribunal declined the Council’s application for reconsideration. That decision is not challenged by the Council in this review.
Grounds for review
[12] The Council’s grounds for review are summarised in its written submissions
as follows:
9.Accordingly, the Council now judicially reviews the decision to refuse joinder on the basis that:
(a) the Tribunal erred at law in determining that Bostik could only be liable for an inherently defective product (despite ASA inspecting and approving the product as installed);
(b) the Tribunal failed to consider the potential liability arising from ASA inspecting and approving the product as installed;
(c) the Tribunal erred in fact in determining that the product should not have been used in the particular circumstances as it did not comply with the specifications, where;
(i) the use of an alternative product to that stated in the consent drawings and specifications does not mean the product used was unsuitable; and
(ii) good practice allows for the substitution of products during the construction process.
(d) the Tribunal failed to provide the Council with opportunity to respond to the perceived shortcomings in the Application.
Appeal or review?
[13] There is some uncertainty about whether a challenge to a Tribunal’s decision
declining joinder should proceed by way of appeal or by way of review.
[14] In Kells v Auckland City Council, Asher J considered that there was no right of appeal against a decision refusing to strike out a party.2 Applying that reasoning to joinder decisions, Andrews J expressed some doubt about an appeal right from a refusal to join a party in Auckland Council v Abraham.3 However, as the point was not argued before her Honour, she proceeded on the basis that s 93 of the Weathertight Homes Resolution Services Act (Act) did allow such an appeal.
[15] Because of the uncertainty about the appropriate course, the Council initially filed both a notice of appeal and an application for review. At an early call of the application, Peters J indicated that she considered review to be the better course although she did not make a definitive ruling to that effect having not heard any detailed argument on it. The Council accordingly pursued its challenge to the Tribunal’s decision by way of judicial review.
[16] As there is no appearance by any of the defendant parties, I have not heard any argument on the correct approach. I consider it to be an issue best determined with the benefit of full argument. I accordingly make no ruling in this case on whether appeal or review is the preferred route to challenge decisions declining joinder applications.
Joinder principles
[17] The application for joinder was made pursuant to s 111 of the Act, the relevant part of which provides:
2 Kells v Auckland City Council HC Auckland CIV-2008-404-1812, 30 May 2008 at [50]–[56].
3 Auckland Council v Abraham [2015] NZHC 622 at [16].
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.
[18] The principles applying to s 111 are well settled. In order for a party to be joined, there must be tenable evidence of a factual foundation to support a claim against that party.4
[19] Tenability is not the same as proof of success. The importance of that distinction was highlighted by Gendall J in Thomson v Christchurch City Council where he said:5
[54] … I consider the same general approach 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 inquiry 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 complainants 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.
Errors of law
[20] The Council submits that the Tribunal erred in law by determining that as the guarantee excluded workmanship, Bostik could only be liable for an inherently
defective product. In doing so, the Council claims that the Tribunal failed to take
4 Auckland City Council v Weathertight Homes Resolution Service and Dennerly HC Auckland CIV-2004-404-4407, 28 September 2004 at [28]; Thomson v Christchurch City Council HC Christchurch CIV-2010-409-2298, 28 March 2011 at [33].
5 Thomson v Christchurch City Council, above n 4.
into account a relevant factor, namely, the potential liability arising from ASA
inspecting and approving the product as installed.
[21] Whilst the Tribunal summarised the joinder principles accurately, I consider that in this case it erred in their application. The Council’s application expressly referred to the fact that the guarantee stated that the application of the product had been inspected and certified by an employee of ASA. Although the grounds for joinder could have been expressed in more detail, it was clear that the Council was relying on the guarantee as evidence in support of a claim, not only in relation to a potentially defective product, but also in relation to the inspection and certification of the application of the product.
[22] It is not apparent from the Tribunal’s reasoning that there was any assessment of a potential claim against Bostik on the grounds of liability for inspection and certification. Rather, there is a determination that because the guarantee excludes workmanship, there can only be one possible avenue of liability which is for the supply of a defective product. I therefore agree with the Council’s submission that the Tribunal failed to take into account a relevant factor, namely, the tenability of the evidence in support of a claim based on inspection and certification of the application of the membrane. In this respect, the Tribunal erred in law.
[23] That error flows from the way in which the Tribunal approached the materials guarantee evidence. Rather than weighing it as tenable evidence establishing a factual foundation in support of a claim, the Tribunal assessed it as evidence going to the success of any claim against Bostik. As Gendall J observed in Thompson, establishing whether or not a duty is owed involves a close inquiry of all surrounding factors such as the relationship between the parties, the nature of the duty alleged
and its breach.6 In most cases, it will not be a determination easily made on the back
of a single piece of evidence without the benefit of legal argument. In any respect, the obligation of an applicant in a joinder application is not to produce evidence that proves a claim against Bostik, but to point to tenable evidence in support of such a
claim.
6 Thomson v Christchurch City Council, above n 4, at [54].
[24] I consider the Tribunal also erred in determining that Bostik could not be liable for the defective product because it was not the product specified in the consented plans. It is not a question of whether the Tribunal was right or wrong in its conclusion, but whether it was right to make such a determination in the context of an application under s 111. I consider such a determination went beyond the assessment of tenability and deviated from consideration of the s 111 criteria. In this respect also, I consider the Tribunal erred in law.
Other grounds
[25] My findings on the first issue make it unnecessary to consider whether the
Council’s other grounds for review are also made out.
Relief
[26] It follows from my findings on an error of law that the Tribunal’s decision
should be quashed.
[27] The Council seeks an order from this Court granting the application to join Bostik. It does so on the basis that there is sufficient information before the Court to determine the joinder application and there is no need to remit it back to the Tribunal for reconsideration.
[28] The Tribunal is the specialist body specifically entrusted with the power under s 111 to make a decision ordering a person to be joined as a respondent in an adjudication. I do not consider there to be any basis upon which this Court should usurp that statutory function. I therefore decline to substitute the decision of this Court for that of the Tribunal.
[29] The application for joinder will therefore be remitted back to the Tribunal for reconsideration. The Tribunal is to consider whether any of the criteria set out in s 111(1)(a), (b) or (c) is met. In making its assessment, the Tribunal should consider whether the materials guarantee is tenable evidence of a factual foundation for a
claim against Bostik in respect of potential defects with the membrane, and in relation to the inspection and certification of the application of that membrane.
Result
[30] The decision is quashed.
[31] The application for joinder is remitted back to the Tribunal for reconsideration in accordance with the directions in [29].
[32] The Council did not seek costs and no order as to costs is therefore made.
Edwards J
0