Bhargav v First Trust Limited - [2023] NZHC 1150

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1260

[2023] NZHC 1150

BETWEEN
AMEET BHARGAV AND RANU KHAJURIA

Plaintiffs

AND

FIRST TRUST LIMITED

First Defendant

DAVINDER SINGH RAHAL
Second Defendant

(continued next page)

Hearing: 17 April 2023

Counsel:

S Wroe and B Foster for Plaintiffs A Grant for First Defendant

G Collecutt for Third and Fourth Third Parties

Judgment:

16 May 2023

JUDGMENT OF HINTON J

(Re: Application to set aside third party notices)

This judgment was delivered by me on 16 May 2023 at 10.00 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date: ………………………….

BHARGAV v FIRST TRUST LIMITED [2023] NZHC 1150 [16 May 2023]

AND METSONS (NZ) LIMITED
Third Defendant
VINAY MEHTA
Fourth Defendant
LOCAL REALTY LIMITED
Fifth Defendant
GURBIR SINGH BAL
Sixth Defendant

AND VIVEK PUNJ
First Third Party
HOVERD & CO LIMITED
Second Third Party
SAMAR CONSTRUCTION LIMITED
Third Third Party
MANPRIT SINGH
Fourth Third Party

[1] This judgment relates to a challenge to third party notices issued by the first defendant, First Trust Limited (FTL), shortly after FTL along with others had succeeded in partially setting aside a formal proof judgment entered against them.

Background

[2] The plaintiffs bought a residential property in May 2020 and discovered immediately afterwards that it was a leaky building. They gave notice at the same time to FTL, their vendor. In July 2021, they issued proceedings against six defendants: FTL, a building inspector (Metsons), the real estate agent acting on the sale (Local Realty) and the sole director of each corporate entity.

[3] FTL was served with a statement of claim on 11 August 2021, but it and the second to fourth defendants took no steps in the proceeding. On 20 July 2022, the plaintiffs obtained judgment by formal proof against the first to fourth defendants for breach of warranty (that where work required a building consent, such consent was obtained) and for misleading conduct under s 9 of the Fair Trading Act 1986.

[4] Meanwhile, the proceeding against the fifth and sixth defendants had progressed in accordance with the rules1 and a four-day trial had been set down on 28 October 2021 to commence on 27 February 2023.

[5] The formal proof judgment was served on the first to fourth defendants on 1 August 2022. On 10 October 2022, they applied to set it aside. That application was heard on 7 December 2022. By judgment dated 10 February 2023,2 the formal proof judgment was set aside in part, being as to quantum (only) in relation to the breach of warranty by FTL, and as to quantum and liability in relation to the Fair Trading Act claim. The Judge directed that the first to fourth defendants file a statement of defence within ten working days of the judgment and that the matter be placed in the list for further directions. The first to fourth defendants were ordered to pay the plaintiffs’ wasted costs and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] NZHC 1150
Decision Date: 16 May 2023

CaseChat Overview and Summary

The case of Bhargav v First Trust Limited was heard in the High Court of New Zealand, Auckland Registry, involving a dispute between the plaintiffs, Ameet Bhargav and Ranu Khajuria, and the first defendant, First Trust Limited (FTL). The plaintiffs had purchased a residential property in May 2020, which turned out to be a leaky building. They initiated proceedings against FTL and others in July 2021 for breach of warranty and misleading conduct under the Fair Trading Act 1986. The plaintiffs obtained a formal proof judgment against FTL and others on 20 July 2022. However, on 10 October 2022, the first to fourth defendants applied to set aside the judgment, which was subsequently set aside in part on 10 February 2023. Following the setting aside of the judgment, FTL issued third party notices against Mr Punj, Hoverd & Co Limited, Samar Construction Limited, and Mr Singh on 10 March 2023. The plaintiffs applied to set aside the third party notices, arguing that FTL required leave to issue them and that justice required they be set aside.

The court held that leave was required for FTL to issue the third party notices. The direction made by Tahana J allowing time to file a statement of defence was made under r 15.10 and not under r 5.47, which would have been applicable to r 4.4(2)(a). Additionally, time had expired for issuing third party notices under r 4.4(2) as they had to be issued within ten working days after the expiry of the time for filing a statement of defence. The court also noted that leave was arguably still required under r 7.7 as the close of pleadings date had passed. The court found that FTL’s argument in this regard was without merit and that it should have sought leave.

The court weighed various factors in deciding whether leave should be granted or the notices should be set aside. The factors included unreasonable delay by FTL and the effect of that delay on the plaintiffs, the apparent weakness of FTL’s claims against the third parties, the different issues between the relevant parties and the inconvenience to the third parties and the plaintiffs of being tied up in issues in which they are not involved, and proportionality between the scope of the various claims. The court decided that leave should be granted, but on the condition that FTL pay the hearing fee for the additional three days of hearing time.

The court awarded costs in favour of the plaintiffs on this application, reserving costs in respect of the Samar parties' applications pending the outcome of this proceeding or further Court order. A case management telephone conference was scheduled to set any further directions required.

Orders