Body Corporate 199883 v Auckland Council
[2017] NZHC 2042
•24 August 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2016-404-2038 [2017] NZHC 2042
BETWEEN BODY CORPORATE 199883
First Plaintiff
……………………………/continuedAND
AUCKLAND COUNCIL First Defendant
BC2004 LIMITED AND BC2009
LIMITED
Second DefendantsGAVIN SMITH [Discontinued]
Third Defendant
Hearing: 26 June 2017 Counsel:
CE Lane for plaintiffs
SC Price and JK Wilson for first defendantJudgment:
24 August 2017
JUDGMENT OF FITZGERALD J
[As to strike out application by first defendant ]
This judgment was delivered by me on 24 August 2017 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Grimshaw & Co, Auckland MinterEllisonRuddWatts, Auckland Brookfields, Auckland
Body Corporate 199883 v Auckland Council [2017] NZHC 2042 [24 August 2017]
Second Plaintiffs CLAIRE JENNIFER LAMBDEN, SARAH JAYNE MCCLINTOCK, BARRY AMOR, JANET MARY BRADLEY, ROBERT HENRY BOLSOVER (Half Share) AND ROBERT HENRY BOLSOVER as Executor AND WILLIAMENA BARBARA KNOWLES AS EXECUTOR (Half Share), GILLIAN MARJORIE RODGER, NOEL RONALD THOMAS ATKINS AND ANITA JOYCE ATKINS, MARY REEDER LAMBERT VISSER, AUDREY FRANCES WUNG-WEE TSEUNG, BARRY CLIVE OATES, DAVID KENT BEASLEY, HELYN MARY MCKAY, GAEL ELIZABETH WRIGHT, CHARLETT WENDY DOWSING, MARIGOLD ANNE ALLEN
EDWARDS, RHEA JOSEPHINE PICKETT, CHUNG- ROUNG LEE AND SHIH-CHING YING, PETER LAWRENCE CLARKE AND KEITH MICHAEL CLARKE
Second Plaintiffs
Introduction
[1] The first defendant’s application concerns the adequacy of pleadings in what is sometimes referred to as a “third-wave leaky building case”.1
[2] The plaintiffs are the Body Corporate and the unit owners in respect of the Ridgeview Apartments in Birkenhead. The apartments were constructed from 1999 to 2001. Between 2005 and 2006, they were subject to remedial work because the original construction did not comply with the Building Act 1991 and the Building Code.
[3] The plaintiffs now say the remedial work is defective. They say that as a result, the Ridgeview Apartments still leak and do not comply with the New Zealand Building Code. It is claimed that extensive remedial work will be necessary, including a full re-clad and re-roof.
[4] The plaintiffs claim against the first defendant, Auckland Council, in negligence. Auckland Council is the successor to the North Shore City Council who, at the time of the repairs, was responsible for performing certain duties and exercising certain powers under the Building Act and Building Code.
[5] In short, the plaintiffs say that Auckland Council breached a duty of care in issuing consents for the remedial work, failing to sufficiently inspect the remedial work and issuing a Code Compliance Certificate in respect of the remedial works. The plaintiffs claim for unspecified economic loss (including the costs of the future works required to remedy the defective repairs), and also $620,000 in general damages.
[6] The claim against the second defendants (“Babbage”) is not relevant to the
1 I.e. a dispute involving allegedly defective repairs of a building that used to be leaky. The “first wave” involves the initial claims about the leaky building. The “second wave” involves disputes between the unit owners and the body corporate as to how the repairs were to be effected. The “third wave” involves disputes arising out of what are alleged to have been defective repairs.
present application.2
The pleadings
[7] The original statement of claim, and the amended statement of claim, plead a number of defects in the Ridgeview Apartments by way of a Scott Schedule (Schedule 3 to the pleadings). A copy of the schedule of defects is attached to this judgment, for ease of reference. As can be seen from that schedule, the alleged defects or issues with Ridgeview Apartments were originally collated under the headings “roof”, “cladding”, “balconies”, “courtyard/walkways” and “fire”. In the amended statement of claim the alleged defects or issues with the building are now collated under the broad headings of “roof”, “cladding”, “courtyard” and “fire”.
[8] From the evidence filed, and in particular, the affidavit of Mr Gray (the plaintiffs’ expert), it appears the original statement of claim was prepared and filed under some degree of urgency. In this context, Mr Gray deposes that:
In early August 2016 the plaintiffs engaged me under urgency to report on their apartments. This is because the ten year limitation period was about to expire.
[9] Mr Gray describes how he carried out an inspection of the building on
9 August 2016. He sets out the steps he took during that inspection. He goes on to state that on 19 August 2016, he met the plaintiffs’ solicitors and during the meeting described the defects he had observed in as much detail as possible. He deposes that this resulted in Schedule 3 to the plaintiffs’ statement of claim. The original statement of claim was actually filed on 19 August 2016, i.e. the same day as the meeting between Mr Gray and the plaintiffs’ solicitors. Mr Gray deposes:
I confirm I reviewed Schedule 3 prior to the statement of claim being filed, and it was a true and correct statement of the defects as best I was able to describe them at the time.
[10] The amended statement of claim pleads certain duties on the part of
2 The Body Corporate contracted Babbage in 2003 to investigate the initial defects, and to prepare, organise and supervise the repairs over 2005 and 2006. The claim against the third defendant, Mr Gavin Smith, has now been discontinued.
Auckland Council:3
34.The Original Remedial Work to Ridgeview Apartments was constructed with defects and in particular those in Schedule 3. ("the Original Remedial Work Defects")
35.As a result of the Original Remedial Work Defects Ridgeview Apartments does not comply with clauses B1, B2, C1, C2, C3, C4, E1 and E2 of the New Zealand Building Code.
36.As a result of the Original Remedial Work Defects, Ridgeview Apartments require extensive remedial works, including a full re- clad and re-roof. Further particulars to be provided before trial
("the Future Remedial Works").
…
38.The plaintiffs repeat the above and say that the NSCC was the territorial authority responsible for performing duties and exercising powers under the Building Act 1991 and Building Act 2004 in the district where Ridgeview Apartments were built.
39.In the circumstances, the NSCC owed each of the plaintiffs a duty to exercise reasonable skill and care in performing the following functions under the Building Act:
(a) Issuing the Original Remedial Work Building Consents; (b) Inspecting the Original Remedial Work;
(c) Issuing the Original Remedial Work Code Compliance
Certificates.
[11] The amended statement of claim goes on to plead breaches of the above duties in the following terms:4
40. In breach of its duties the NSCC:
(a) Issued the Original Remedial Work Building Consents when there were not reasonable grounds to be satisfied that the proposed building work would comply with the Building Code;
(b) Failed to ensure that ·a sufficient inspection regime was undertaken and/or did not undertake inspections with sufficient thoroughness so as to ensure that the Original
3 The relevant aspect of the pleading in the original statement of claim was in substantially the same terms.
4 Sub-paragraphs (a), (b) and (e) are in the same terms as the original statement of claim; sub - paragraphs (c) and (d) have been added in the amended statement of claim.
Remedial Work complied with the requirements of the Original Remedial Work Building Consents and/or the Building Code;
(c) Failed to identify the Original Remedial Work Defects in the course of its inspections and/or failed to take steps to ensure the Original Remedial Work Defects were identified;
(d) Failed to take steps to ensure that the Original Remedial
Work Defects were rectified;
(e) Issued the Original Remedial Work Code Compliance Certificates when it did not have reasonable grounds to be satisfied that the Original Remedial Work complied with the Original Remedial Work Building Consents and/or the Building Code.
[12] As can be seen from the above pleadings, together with the defects alleged in the schedule attached to this judgment, the broad thrust of the plaintiffs’ case against Auckland Council is that:
(a) The remedial works were intended to remedy the original defects in Ridgeview Apartments and thereby ensure that Ridgeview Apartments complies with the Building Code;
(b)During the 2005/2006 remedial works, Ridgeview Apartments was built with those particular defects set out in the attached schedule;
(c) Those defects mean that Ridgeview Apartments does not comply with the Building Code in the respects alleged;
(d)Given (b) and (c) above, Auckland Council breached its duties at the consenting, inspection and/or certification stages in respect of the remedial works.
The strike-out application in summary
[13] Auckland Council applies to strike out the plaintiffs’ claim against it on the basis that the pleadings lack sufficient specificity for Auckland Council to understand or defend what is alleged against it.
[14] Auckland Council submits that a proper statement of claim requires the plaintiffs to specifically plead the defects arising out of the remedial works for which they purport to hold the Council responsible. The Council says that in both the original and the amended claim, the defects are not identified or described in any sufficiently meaningful way. In support of its application, the Council has retained an expert who has deposed that he cannot understand the allegations presently made against the Council, nor can he properly advise the Council on its defence.
[15] The Council submits that, for over 10 months since the plaintiffs filed their original statement of claim (in August 2016), it has attempted to engage with the plaintiffs in order to understand their grievances. It says none of these attempts have progressed matters.
[16] As a result of hearing from counsel for Auckland Council at the hearing before me, the Council’s argument on its application may be boiled down to the following three propositions:
(a) First, to the extent that a physical state of affairs is described in relation to each alleged defect, that statement does not inform the Council of how it is alleged that physical state of affairs is a defect in relation to the Council. For example, in the original pleading, the first defect alleged is “the main roof has impact damage and holes”. The Council submits that this tells it nothing as to how that particular physical state of affairs is said to be a defect in respect of the Council, either in terms of its issuing of the consent, inspecting the remedial works and/or issuing the Code Compliance Certificate.
(b)Second, in relation to each defect, there is no information as to whether the defect is alleged to be a defect in design or construction, or some other mechanical, materials or other defect that ought to have been identified by Council.
(c) Third, many of the alleged pleaded defects, both in the original and amended statements of claim, are in reality simply conclusory
statements that also do not assist the Council in understanding the case against it.5
[17] As a result, the Council seeks orders that:
(a) The proceedings purportedly commenced by the statement of claim in August 2016 be struck out or set aside in whole or part and/or declared as a nullity and of no effect; and/or
(b)The plaintiffs file and serve a more explicit statement of claim that complies with the requirements of the High Court Rules. While the amended application does not set out the further pleadings/particulars sought, in written submissions filed for the hearing, counsel for Auckland Council submits that at least the following further information ought to be provided:
(i)A proper description of each defect with appropriate factual specificity and case related detail, including whether it is a design, construction or mechanical defect or some other (e.g. a defect with materials);
(ii)The precise location of each alleged defect. For example, if there is a “hole” in the metal roof, identify each location where the hole is said to exist (if diagrams assist in identifying the defects or location then attach it to the pleading);
(iii)Identify with an appropriate level of factual specificity how each of the alleged defects is said to have arisen from the
reclad remedial works;
5 Examples of this (from the original statement of claim) include “failed water proofing membrane”, “inadequately installed drainage pipes”, “balconies do not shed water” and “glass block joinery frame failing”. Similar defects alleged in the amended statement of claim include “internal rubber membrane gutter does not prevent the penetration of water”, “metal roofing does not prevent the penetration of water”, “the fibre cement cladding is in close proximity with the ground and absorbs moisture” and “pergola does not prevent the penetration of water”.
(iv)If there is an alleged insufficiency with the consented plan(s) and/or specifications, then provide particulars identifying the relevant plan(s) and/or specification the plaintiffs rely on and the location of the alleged insufficiency in the identified plan(s) and/or specifications; and
(v)If the plaintiffs allege particular defects have caused damage through not preventing the penetration of water, then provide particulars of how and where each defect is said to have resulted in water penetration.
[18] The Council also seeks ancillary orders directing that the parties’ experts meet and the plaintiffs’ expert “answers all reasonable questions by [the Council’s expert] regarding the nature and existence of the alleged defects and damage.”
[19] The plaintiffs oppose the making of the orders sought. The plaintiffs say that the statement of claim, in both its original and amended form, fully comply with the Rules and the guidance given by the courts in similar leaky building litigation as to what is required for appropriate pleadings. Further and in any event, they submit that any appropriate remedy ought to be limited to the filing of a more explicit statement of claim, on the basis that the first statement of claim was not an abuse of process which would otherwise justify striking out the proceedings.
[20] The plaintiffs further say that the parties’ experts have already met and there would be no useful purpose served by a further meeting at this time. The plaintiffs say that any further meeting would be more productive after the evidence has been prepared and served.
Legal principles
[21] There is no dispute as to the relevant legal principles. Rather it is their application to the pleadings in this case which is in issue.
[22] Rule 5.26 is the starting point. This provides as follows:
5.26 Statement of claim to show nature of claim
The statement of claim—
(a) must show the general nature of the plaintiff's claim to the relief sought; and
(b) must give sufficient particulars of time, place, amounts, names of persons, nature and dates of instruments, and other circumstances to inform the court and the party or parties against whom relief is sought of the plaintiff's cause of action; and
(c) must state specifically the basis of any claim for interest and the rate at which interest is claimed; and
(d) in a proceeding against the Crown that is instituted against the Attorney-General, must give particulars of the government department or officer or employee of the Crown concerned.
[23] The proper pleading and particularisation of a claim in a defective building case was considered in Platt v Porirua City Council.6 In that case, Kós J summarised the purpose of particulars in a defective building claim as being to:7
(a) inform defendants as to the case they have to meet;
(b) limit the scope of matters the plaintiff may put in issue at trial (or in pre-trial settlement discussion);
(c) enable the defendants to know what witnesses it will need to retain and enable them to start preparing evidence ahead of the formal exchange of evidence; and
(d) provide an opportunity for a defendant to seek summary determination on the basis that the claim as pleaded is untenable.
[24] Kós J went on to observe that:8
In negligent omission cases, particulars have always had to be given in the pleading showing in what respects the defendant was negligent.
[Emphasis added]
[25] Kós J also provided a useful summary of the overall requirements for pleadings in cases such as this:
[24] The plaintiff in a negligence case must plead with particularity the respects in which the defendant is said to have fallen beneath the standard of
6 Platt v Porirua City Council [2012] NZHC 2445.
7 At [19].
8 At [22].
care required of it. If proof and pleading are indirect (in, say, a case based on the defendant’s failure to identify defective construction, design or performance by third parties), the plaintiff needs to adequately particularise the following:
(a) what, physically the defects are that caused loss (i.e. the “where”);
(b) the particular standards that the third parties failed to meet in the case of each defect, either individually or collectively (i.e. “how” they were “defects”);
(c) the circumstances in which the defendant came to have an inspectoral or supervisory role (including, normally, when);
(d) the standard(s) required of the defendant in undertaking that role; (e) particulars of the breach of duty by the defendant; and
(f) the loss thereby caused (that is – the loss caused by the third parties’ defective performance which would have been avoided by the defendant performing its duty to the required standard).
These cases typically are “double standards cases” in the sense that two levels of standards are in issue: those that needed to be conformed to by the designer, builder or contractor, and those that needed to be conformed to by the Council in identifying the prior breach of standard by those other parties.
[26] Similar issues were considered in Body Corporate 351522 v Queenstown Lakes District Council.9 In commenting on the courts’ approach to particularisation, Associate Judge Osborne stated:10
A final point is in relation to the Court’s approach to particularisation, and its relationship to evidence. It has been judicially recognised that the modern arrangements for sequential exchange of written briefs of evidence does not alter the need for, or the pleading of particulars. That said, the Court when considering particulars will be making a decision which involves matters of degree and judgement. Where the parties have exchanged (even on a without prejudice basis) their detailed experts’ reports, the Court may legitimately take into account the availability of such detail to the other side when determining the extent of detail to order by way of further particulars.
[27] In that case, the Court accepted that the defendant was entitled to particulars to identify which category or categories each defect in the claim belonged (for
example, whether it was said to be a design, construction or mechanical engineering
9 Body Corporate 351522 v Queenstown Lakes District Council [2013] NZHC 559 (“Queenstown
Lakes”).
10 At [62].
defect), and how and where each of the alleged defects was said to have resulted in water ingress.
[28] In support of its application for an order setting aside or striking out the pleadings, the Council relies primarily on the decision of Faire J in Body Corporate
348047 v Auckland Council,11 where the statement of claim was found to be so
defective that it held to be a nullity (with the consequence that it was incapable of stopping time running for limitation purposes). In that case, the document simply alleged a bare statement that the building was constructed with building defects, with no specific particulars beyond that. Council also refers to observations to a similar effect by Associate Judge Matthews in Ballantyne Trustees Limited v GBR Investments Limited where he found the claim in that case had been:12
…filed to save the claims from the consequences of limitation defences. The proceedings as filed were frivolous, as it was a proceeding which lacked the seriousness required of matters for the Court’s determination. It was vexatious, as it involved procedural impropriety across a range of Rules, as discussed. It was also an abuse of process as it was brought to save the claim from limitation defences without it being evident that a requisite degree of analysis of the law or the facts had been undertaken.
Striking out as an abuse of process - analysis
[29] Mr Price quite responsibly accepts that striking out the pleading as a nullity is extreme. However, he submits that it is appropriate in this case, given the plaintiffs’ claims fall so far short of the mandatory requirements of a pleading and thus falls in the type of conduct disapproved by the Court as an abuse of process.
[30] I am not satisfied that the plaintiffs’ claims, as framed in either the original statement of claim or the amended statement of claim, fall so far short of what is required of a pleading that the appropriate course is to strike out the claims as an abuse of the Court’s process. Having carefully reviewed the original and amended statements of claim, I consider they are some way from the types of pleadings considered “nullities” in Imperial Gardens and Ballantyne. While the pleadings do require further detail and particulars to be provided (as to which, see [36] below), the
general nature or thrust of the plaintiffs’ claim against the Council is stated – being
11 Body Corporate 348047 v Auckland Council [2014] NZHC 2971 (“Imperial Gardens”).
12 Ballantyne Trustees Ltd v GBR Investment Ltd [2017] NZHC 435 at [146].
as set out at [12] above. The legal basis for the plaintiffs’ claim is also clear, namely
negligence.
[31] Nor am I persuaded that this analysis is altered by the fact that the claim was filed with some degree of urgency in light of (presumed) limitation issues, or that the plaintiffs have had ample opportunity to re-plead but have not done so to date. The claims as filed are either a nullity or they are not. Nor has Council provided any detail or evidence of actual prejudice it has or will suffer as a result of the defects in the pleading (other than broad statements of not presently being in a position to understand the claim against it).
Further particularised pleading - analysis
[32] As flagged above, I accept that the pleadings require further particularisation in order for the Council to be properly informed of the case against it. In short, it is entitled to know, with an appropriate degree of particularisation, what it is about the remedial works that is said to be defective, and, importantly, how it is said that the Council is responsible or liable for that particular state of affairs.
[33] The pleadings allege that each of the particular defects set out in Schedule 3 arose out of the 2005/2006 remedial works.13 To the extent that Schedule 3 pleads only a broad conclusory statement as the defect itself (for example, defect no. 1 “Metal roofing does not prevent the penetration of water”14), I accept the Council’s submission that this would effectively require the Council to consider each possible permeation of why the metal roofing might not prevent the penetration of water, each permeation being a separate matter requiring separate investigation and consideration. I also accept that this has the effect of effectively reversing the onus, in terms of requiring the Council to establish precisely what is said to be wrong with the roof which results in it not preventing the penetration of water.
[34] However, most if not all of the defects pleaded in Schedule 3 to the amended statement of claim do provide some further detail other than just a broad conclusory
statement of the type referred to in the preceding paragraph. The difficulty is that the
13 Amended Statement of Claim, paragraph [34].
14 The pleading simply mirroring the requirements of clauses B2 and E2 of the Building Code.
further factual detail often does not provide significant guidance. By way of example:
(a) Defect no. 1 is stated to be “metal roofing does not prevent the penetration of water”. Particulars are given as “holes in metal roofing iron” (together with a broad location of those holes). This does not inform the Council whether the holes in the roofing iron are alleged to be a design defect that the Council ought to have observed at the consenting stage; a construction defect that should have been picked up by the Council at the inspection stage; or some other defect that ought to have been identified by the Council in carrying out any one or more of its duties at pleaded at paragraph 39 of the amended statement of claim.
(b)For defect no. 14, framed as “the top of the raking inter-tenancy wing walls do not prevent the penetration of water”, further particulars are given as “the top of the wing walls are covered in texture coating and paint”. As such, it is alleged that that physical state of affairs is causing the top of the raking inter-tenancy wing walls to fail to prevent the penetration of water. Again, however, this does not adequately inform the Council why or how it is alleged that it has breached any one or more of its duties in respect of this alleged defect.
(c) Similarly, defect 12, that “the fibre cement cladding is in close proximity with the ground and absorbs moisture” is further particularised with the comment that “the fibre cement cladding is within 20mm of the finished ground and the bottom edge of the fibre cement cladding is not waterproofed”. But is not pleaded how this is a defect vis-à-vis the Council.
(d)Another example is defect 5, namely that “the uPVC pipes that penetrate the courtyard do not prevent the penetration of water or protect from the adverse effects of surface water”. Particulars are
given that “The junction between the uPVC is formed with sealant”. Again, however, it is not clear how or why it is said that the Council has breached any one or more of its duties as a result of the junction being formed with sealant.
(e) Defect 6 is framed as “the floor/wall junctions do not prevent the penetration of water or protect from the adverse effects of surface water”. This is particularised as “the waterproofing membrane terminates short of the vertical face of the wall”. Like the prior examples, this does not inform the Council why it is alleged that this physical state of affairs gives rise to a breach of the Council of any one or more of its pleaded duties.
[35] I am conscious of avoiding the risk of “overworking” pleadings in cases such as this, and that, prior to discovery, plaintiffs may not have all relevant information available to them. Nevertheless, a careful analysis of the pleaded defects in this case highlights that it is not clear why or how each physical state of affairs said to give rise to a breach of the Building Code is to be sheeted home to a breach by the Council of its duties.
[36] As such, I consider that in order to inform the Council adequately of the case against it (i.e. rather than simply the current physical state of certain aspects of the building), the following particulars ought to be given in relation to each alleged defect:
(a) First, whether the alleged physical state of affairs is said to have arisen from defective design during the remedial works, defective construction during the remedial works, some other mechanical defect or the use of defective materials during the remedial works.
(b)Second, in relation to each pleaded defect, what particular duty the Council is alleged to have breached. For example, if it is alleged that a particular defect is a design defect, is Council’s alleged breach limited to a breach of its duty in issuing the consent in respect of that
design defect? Or if a particular defect is said to be a construction defect, is Council’s alleged breach limited to an alleged failure to have identified that construction defect during the course of its inspections?
(c) Third, to the extent that there is any alleged insufficiency with the consented plan(s) and/or specifications, details of the relevant plan(s) and/or specifications the plaintiffs rely on and the location of the alleged insufficiency in the identified plan(s) and/or specifications.
(d) Fourth, further detail in respect of the location of each alleged defect.
Broad locations are given in Schedule 3 to the amended statement of claim, but more precision is required. To the extent that diagrams assist in identifying precise locations, these may be provided.
[37] Some further information in relation to some of the alleged defects has been provided in a table attached as Schedule 2 to Mr Simon Gray’s affidavit sworn
7 April 2017 (Mr Gray being the plaintiffs’ expert). For example, in relation to defect no. 1 (holes in metal roofing iron), Mr Gray states that as a result of the remedial work, “scaffolding was erected and supported on the roof”. Mr Gray goes on to state that “the remedial work and scaffolding has materially contributed to the holes in the roofing iron”. If this is so, then these particulars should be included in the statement of claim. However, allegations such as this also need to be clarified; at present Mr Gray says “the remedial work and scaffolding contributed to the holes”. Is the allegation limited to the scaffolding? If so, is that said to be a construction defect that the plaintiffs allege that the Council ought to have identified during its inspection of the remedial works? It is clarity of these types of issues that the above particulars are intended to achieve.
[38] Turning to the remaining particulars sought by the Council, I am not persuaded that, on the basis that the above further particulars are given, those particulars referred to at [17](b)(iii) are required. Each alleged defect is pleaded to have arisen out of the remedial works, rather than the original construction. The particulars ordered at [36](a) and (b) above will identify how the defect is said to have come about (for example, as a result of defective design or construction) and
why or how it is alleged that the Council has breached its duty or duties as a result. Council submits that aspects of the defects pleaded, including the roof and courtyard, were not a part of the remedial works at all. That may or may not be so. But that proposition is relevant to the prospects of the plaintiffs succeeding on these aspects of its pleaded case, rather than to whether further particulars of the claim are required.
[39] Nor are further particulars required of how and where each defect is said to have resulted in water penetration. As confirmed in the plaintiffs’ submissions on this application, the plaintiffs do not plead that the defects have caused damage to the building. If however, any amended claim alleges damage, adequate particularisation of that would need to be provided (consistent with Associate Judge Osborne’s
observations in Queenstown Lakes15).
[40] There is accordingly an order that within 20 working days of this judgment, the plaintiffs file a further amended statement of claim that provides those particulars set out at [36] above.
Meeting of experts
[41] I consider that in any case such as this, it is useful for the experts to meet. I am conscious that an earlier meeting may not have seemed productive, but in my view, that alone is not a reason to not order a further meeting in the shorter term. I consider any such meeting should, however, take place after the further amended statement of claim has been filed and served, with the purpose of that meeting being for the experts to jointly “walk through” the amended pleading and consider and discuss each pleaded defect.
[42] I do not consider it appropriate or necessary to order that the plaintiffs’ expert answer “all reasonable questions” put to him by the Council’s expert. Such an order would inevitably give rise to disputes and difficulties with enforcement. Nor do I
consider it is appropriate or necessary at this stage of the proceeding to direct the
15 Queenstown Lakes, above n 9, at [109].
experts to prepare and sign a joint witness statement recording the questions posed and answers given in that meeting.
[43] There is accordingly an order in terms of paragraph [1](c)(i) of the Council’s
amended application dated 2 June 2017, save that the date for the meeting is within
10 working days of the filing of the further amended statement of claim.
Without prejudice issue
[44] A separate issue also arose between the parties and upon which I heard from counsel at the hearing. In short, the Council objects to certain correspondence being included as exhibits to the affidavit evidence filed by the plaintiffs, on that basis that the correspondence is subject to privilege pursuant to s 57 of the Evidence Act 2006 ( commonly referred to as “without prejudice” privilege). The Council submits that as without prejudice privilege is a joint privilege, it cannot be waived unilaterally by one party (i.e. the plaintiffs in this case).
[45] Mr Lane on behalf of the plaintiffs’ advanced two submissions in response:
(a) First, that the correspondence in question is not privileged, as evidenced by the fact that it was not labelled “without prejudice”, or “without prejudice save as to costs” or similar.
(b)Second and in any event, even if the correspondence had been privileged, the Council has waived any privilege in the material. This submission was advanced primarily on the basis that the Council has alleged in its amended interlocutory application that the plaintiffs and their expert “have been obstructive to the Council’s efforts to obtain proper information to understand the plaintiffs’ position, in particular the alleged defects”. The plaintiffs wish to refer to the correspondence in question in order to demonstrate that this is not so. Mr Lane accordingly submits that the evidence relied on by the Council in support of its allegation is “inconsistent with communications that have been exchanged [between the parties] and that the [Council] now seeks to exclude.” Mr Lane submits that in
these circumstances, fairness dictates that there has been an implied waiver.
[46] I may deal with these competing submissions briefly.
[47] First, it is correct that the correspondence in question does not contain the label “without prejudice”, “without prejudice save as to costs” or similar. However, any issue of privilege, including without prejudice privilege, is one of substance over form. Having reviewed the full chain of correspondence (with the parties’ consent), the correspondence in question is clearly part of a continuing chain of communications, which commenced with a letter from the plaintiffs’ solicitors expressly stated to be on a “without prejudice save as to costs” basis. The communications involve offers and counter-offers in an attempt to resolve the current interlocutory application. Material provided under cover of a further letter in the chain from the plaintiffs’ solicitors is expressly stated to be provided “on a without prejudice basis”.
[48] I am satisfied that in the context of the continuing chain of correspondence, the particular items of correspondence in question are subject to without prejudice privilege. I do not consider that the mere fact that the correspondence has not been labelled without prejudice clearly signals that the communications are moving to an open basis.
[49] In support of his submissions on waiver, Mr Lane relied on a number of authorities which confirm that privilege may be impliedly waived and speak of “fairness” in this context. For example, in the High Court of Australia decision Attorney-General for the Northern Territory v Maurice, Mason and Brennan JJ held
that: 16
An implied waiver occurs when, by reason of some conduct on the privilege holder’s part, it becomes unfair to maintain the privilege. The holder of the privilege should not be able to abuse it by using it to create an inaccurate perception of the protected communication … In order to ensure that the opposing litigant is not mislead by an inaccurate perception of the disclosed communication, fairness will usually require that waiver as one part of a
16 Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475 at 487-488;
approved in Equiticorp Industries Group Ltd v Hawkins [1990] 2 NZLR 175 (HC) at 180.
protected communicated should result in waiver to the rest of the communication on that subject matter.
[50] However, waiver is not governed by a general sense of “fairness”. Of course, the test is now set out in section s 65 of the Evidence Act as one of, in essence, inconsistency with a claim of confidentiality. Nevertheless, even in the pre-Act authorities, the term “fairness” was used in the context of a partial disclosure or waiver of a privileged communication, yet the privilege holder sought to maintain privilege over the balance of the communication. “Unfairness” arose in those circumstances because the opposing party would be given an inaccurate perception of the particular communication. This can be seen from the above extract from Attorney-General for the Northern Territory v Maurice. Similar observations were made by the Court of Appeal in Ophthalmological Society of New Zealand
Incorporated v Commerce Commission.17 That is not the issue in this case.
[51] Nor is the fact that material contained in the privileged communication is relevant to an issue or allegation in the proceeding sufficient for the purposes of waiver.18 If mere relevance were the test, then waiver would occur in many and broad circumstances. Matters addressed in without prejudice communications will inevitably be relevant to what is stated on an open basis or advanced in submissions before the Court.
[52] I also do not consider there is waiver merely because material written on an open basis (and relied on in submissions or at a hearing) might be said to be “at odds” with material contained in without prejudice communications. Again, that will often be the case. For example, a party may submit that it has a very strong case, yet acknowledge in without prejudice communications that its case may have some weakness and it is therefore willing to compromise.
[53] Rather, waiver will occur where the privilege holder “acts so as to put the privileged communication, information, opinion, or document in issue in a
proceeding” (emphasis added).19 The Court of Appeal has recently confirmed that
17 Ophthalmological Society of New Zealand Incorporated v Commerce Commission [2003]
2 NZLR 145 (CA) at [23] and [25].
18 Astrazeneca Ltd v Commerce Commission (2008) 12 TCLR 116 (HC) at [39].
19 Evidence Act 2006, s 65(3)(a).
the concept of putting the privileged material “in issue” reflects the underlying rational of inconsistency, where “a litigant cannot rely on the content of a document for aspects of the litigation whilst seeking to withhold it otherwise”.20
[54] I do not consider that an allegation that the plaintiffs and its expert have been “obstructive” in providing the further particulars is itself sufficient to “put in issue” the privileged communications between the parties. None of the communications in question, or any part of them, have been relied on or referred to by the Council in support of such an allegation. Whether the plaintiffs want to rely on privileged communications to defend such an allegation is a separate issue. At least in respect of the attempted use of privileged materials to advance an allegation, the Court of
Appeal has said that the law does not permit this.21
[55] For these reasons, and as I indicated to Mr Lane at the hearing, I find that the correspondence in issue is privileged and there has been no waiver in relation to it.
Costs
[56] My initial view is that the Council has been broadly though not wholly successful on its application. In those circumstances, an appropriate outcome may be an award of costs, although discounted to reflect that aspects of its application have not been successful. I should emphasise, however, that these are initial views only and are provided in the hope they assist the parties reach an agreed position on costs.
[57] If the parties are unable to agree, then memoranda may be submitted. The Council’s memorandum is to be submitted within 15 working days of the date of this judgment with the plaintiffs’ memorandum to be filed and served a further five working days thereafter. Absent a request by either party for a hearing on costs, and
subject to any further order the Court, I would then proceed to determine costs on the
20 Minister of Education v Reidy McKenzie Limited [2016] NZCA 326 at [14] and [15].
21 Cooper v Van Heeren [2007] NZCA 207, [2007] 3 NZLR 783 at [29].
papers.
S Fitzgerald J
SCHEDULE 3
CIV 2016-404-2038 Body Corporate 199883 v Auckland Council - Ridgeview Apartments (270 Onewa Rd)
| Defects in Schedule 3 of the Statement of Claim - 19 August 2016 | Defects in Schedule 3 of the ASOC - 1 December 2016 | ||||||
| No. | Defect | Location | Breach of NZBC | No. | Defect | Location | Breach of NZBC |
| Roof | Roof | ||||||
| 1. | The main roof has impact damage and holes | Main roof | B2, E2 | 1 | Metal roofing does not prevent the penetration of water. Particulars: Holes in metal roofing iron | Perimeter edges of the main metal roof | B2, E2 |
| 2. | Roof fixings have penetrated the butyl rubber membrane gutter | Main roof, northern end, membrane gutter | B2, E2 | 2 | Internal rubber membrane gutter does not prevent the penetration of water. Particulars: Holes in rubber membrane roofing. | Main roof internal gutter above fixings | B2, E2 |
| 3. | Roofing iron does not provide adequate cover over timber fascia boards | Main roof, western elevation | B2, E2 | 1 | Metal roofing does not prevent the penetration of water. Particulars: Holes in metal roofing iron | Perimeter edges of the main metal roof | B2, E2 |
| Cladding | Cladding | ||||||
| 4. | Wing walls have no cap flashing and/or no membrane and/or no means to divert water | Eastern elevation, inter- tenancy wing walls | B2, E2 | 14 | The top of the raking inter- tenancy wing walls do not prevent the penetration of water. Particulars: The top of the wing walls are covered in texture coating and paint. | Eastern elevation | B2, E2 |
| 5. | Cladding and control joints not installed in accordance with the | All cladding | B2, E2 | 12 | The fibre cement cladding is in close proximity with the ground and absorbs moisture. Particulars: The fibre cement sheet is within 20mm of the finished ground and the bottom edge of the fibre cement cladding is not waterproofed. | Fibre cement cladding in the courtyard | B2, E2 |
| 6. | Poorly formed horizontal plant on bands | All cladding | B2, E2 | - | N/A | - | - |
| Balconies | Cladding | ||||||
| 7. | Balconies do not shed water | Balconies | B2, E2 | - | N/A | - | - |
| 8. | Flat topped pergola | South eastern balconies | B2, E2 | 15 | Pergola does not prevent the penetration of water. Particulars: The top of the pergola is flat and is covered in texture coating and paint. | Pergola, south eastern elevation, level 3 | B2, E2 |
| 9. | Glass block joinery frame failing | Balconies | B2, E2 | 18 | Glass block joinery does not prevent the penetration of water and corrosion to the steel frame has caused loss of amenity. Particulars: Glass blocks are housed within a steel frame with coating to the external face of the steel frame. There are weep holes/drainage holes in the bottom of the steel frame. | Eastern and western elevations | B1, B2, E2 |
| 10. | Timber barge board inadequately installed | Balconies | B2, E2 | 16 | The junction between the top edge of the raking timber fascia and fibre cement cladding does not prevent the penetration of water. Particulars: The junction has been formed with texture coating and sealant. | Raking timber fascia on the eastern elevation | B2, E2 |
| 11. | Insufficient cladding to balcony clearances | Balconies | B2, E2 | 12 | The fibre cement cladding is in close proximity with the ground and absorbs moisture. Particulars: The fibre cement sheet is within 20mm of the finished ground and the bottom edge of the fibre cement cladding is not waterproofed. | Fibre cement cladding in the courtyard | B2, E2 |
| Courtyard/walkways | Courtyard | ||||||
| 12. | Courtyard/walkways do not shed water | Courtyard/ walkways | B2, E2 | - | N/A | - | - |
| 13. | Inadequately installed drainage pipes | Drainage under the tiles of the courtyard | B2, E2, G10, G12 | 5 | The uPVC pipes that penetrate the courtyard do not prevent the penetration of water or protect from the adverse effects of surface water. Particulars: The junction between the uPVC pipe and the floor is formed with sealant. | Courtyard uPVC pipe penetrations | B2, E1, E2 |
| 14. | Failed waterproofing membrane | Courtyard | B2, E2 | 6 | The floor/wall junctions do not prevent the penetration of water or protect from the adverse effects of surface water. Particulars: The waterproofing membrane terminates short of the vertical face of the wall | Courtyard floor/wall junctions | B2, E1, E2 |
| 15. | Failed waterproofing to external face of the block wall | Block wall adjacent to courtyard | B2, E2 | 8 | Block wall does not prevent the penetration of water. Particulars: The exterior surface of the block wall is not weatherproofed. | Eastern and western boundary block wall | B2, E2 |
| Fire | Fire | ||||||
| 16. | Cavity batten installation does not provide adequate fire rating/stopping | All internal corners between inter tenancy and apartment walls | C1, C2, C3, C4 | 19 | Cavity battens do not provide adequate fire protection. Particulars: The cavity battens are castellated. | All internal vertical corners between inter- tenancy and apartment walls | C1, C2, C3, C4 |
| 17. | Penetrations have no or inadequate fire protection. | All of the building including the car park | C1, C2, C3, C4 | 20 | Penetrations have no or inadequate fire protection | Penetrations in the building including the car parks | C1, C2, C3, C4 |
| 18. | Power boxes not correctly fire stopped | All of the building | C1, C2, C3, C4 | 21 | Electrical switch boxes have no or inadequate fire protection | All of the building | C1, C2, C3, C4 |
| New defects | ||||||
| N/A | - | - | 3 | The metal roof does not prevent the penetration of water at the fixing locations. Particulars: Nails have been used to fix the metal roof. | Main metal roof nail fixings | B2, E2 |
| N/A | - | - | 4 | Raking lead apron flashings do not prevent the penetration of water. Particulars: The horizontal fold of the lead apron flashing extends across half a ridge of a single tile. | Tiled roofs on eastern elevation | B2, E2 |
| N/A | - | - | 7 | Pipe penetrations through the block wall do not prevent the penetration of water. Particulars: The junctions between the pipe penetrations and block wall are formed either with sealant or have been left unsealed. | Western boundary block wall | B2, E2 |
| N/A | - | - | 9 | The external face of the block wall is in contact with the ground and absorbs moisture. Particulars: The block wall tanking is below ground level. | Western boundary block wall | B2, E2 |
| N/A | - | - | 10 | The exterior walls and cladding have been constructed in such a way that the fibre cement cladding: (a) has cracked (ruptured and become unstable); (b) the cracking has caused loss of amenity; (c) the cracking results in the penetration of water. Particulars: The timber framing is uneven and out of plane (true and plumb). The fibre cement cladding is pulling away from the timber frame. The plastered flush joints are separating from the fibre cement sheets. The sealant joints at the internal corners are opening up. The control joint mouldings are pulling away from the sheet joints. | Fibre cement cladding to all elevations | B1, B2, E2 |
| N/A | - | - | 11 | The fibre cement cladding behind the gutters and timber fascia does not prevent the penetration of water. Particulars: The fibre cement sheet has been left bare. | Behind gutters and fascia to all elevations | B2, E2 |
| N/A | - | - | 13 | The letter box roof/wall junctions do not prevent the penetration of water. Particulars: The junctions have been formed with texture coating and sealant. | Courtyard | B2, E2 |
| N/A | - | - | 17 | The junction between the balustrade and fibre cement cladding wall does not prevent the penetration of water. Particulars: The junction has been formed with a cap flashing that terminates against the fibre cement cladding. Sealant has been applied between the end of the cap flashing and the fibre cement cladding. | Balconies/decks on all elevations | B2, E2 |
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