Body Corporate 202692 v Auckland Council
[2019] NZHC 1976
•27 September 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-2087
[2019] NZHC 1976
IN THE MATTER OF THE RETRO APARTMENTS BETWEEN
BODY CORPORATE 202692
First Plaintiff
JAMAC HOLDINGS LIMITED & ORS
Second PlaintiffsAND
AUCKLAND COUNCIL
Defendant
OMAHA INVESTMENTS No 1 LIMITED
First Third PartyMAURICE JOHN HARRIS
Second Third Party
Hearing: 20 August 2019 Appearances:
T Rainey, J Heatlie and JP Wood for Plaintiffs T Weston QC and C Fairnie for Defendant
K Harkess for First and Second Third Parties
Judgment:
27 September 2019
JUDGMENT OF ASSOCIATE JUDGE R M BELL
This judgment was delivered by me on 27 September 2019 at 4:00pm
pursuant to Rule 11.5 of the High Court Rules.
…………………………………
Deputy Registrar
Solicitors:
Rainey Law (Jeanne Heatlie), Auckland, for the Plaintiffs
MinterEllisonRuddWatts (Charlene Fairnie), Auckland, for the Defendants
McElroys (Kiri Harkess/Darren Turnbull), Auckland, for First and Second Third PartiesCopy for:
Tim Rainey, Auckland, for the plaintiffs
Tom Weston QC, Christchurch, for the Defendants
BODY CORPORATE 202692 v AUCKLAND COUNCIL [2019] NZHC 1976 [27 September 2019]
Introduction
[1] This is a limitation decision in a building defects case. Section 37 of the Weathertight Homes Resolution Services Act 2006 relaxes the time for starting leaky home proceedings. The question is how it works in a proceeding in this court where there are other defects besides water penetration.
[2] The case concerns the Retro Apartments in Ponsonby, Auckland. There are 23 units, all but one of them residential. The plaintiffs are the body corporate and the owners of the residential apartments. They sue the Auckland Council for negligence by the former Auckland City Council in inspecting work and issuing a code compliance certificate under the Building Act 1991. The third parties, a structural and civil engineering consultancy and its director, are sued for negligence in giving a producer statement.1 The limitation question arises in applications to strike out pleadings of defects, which have nothing to do with leaks.
[3] Under s 393 of the Building Act 2004, those involved in the design, construction, alteration, demolition or removal of any building and those performing functions under the Act, such as the council issuing a code compliance certificate, have the benefit of a ten-year longstop period for any civil proceeding running from the date of the act or omission on which the proceeding is based. That applies generally to claims for all defects and for all buildings. There is another rule for claims under the Weathertight Homes Resolution Services Act: claims for weathertightness defects in residential buildings (including multi-unit complexes such as the Retro Apartments). When owners of leaky homes apply for an assessor’s report under that act, s 37 stops time running. Owners are given time to investigate, deliberate and begin a proceeding in the Weathertight Homes Tribunal or any court of competent jurisdiction with only a minimal check to ensure that they sue promptly. They may begin a proceeding long after the end of the longstop period in s 393.
1 For this hearing no-one drew any distinction between the director and the company, so I shall refer to them collectively as “the engineer”.
[4] The parties agree that s 37 applies to the plaintiffs’ claims for weathertightness defects and therefore those claims are not out of time. The plaintiffs have, however, sued for other defects going to structural integrity and fire safety. They added these defects to their claim long after the end of the longstop period in s 393 of the Building Act. The council and the engineer say that these are out of time.
[5] Superficially it might seem that s 393 of the Building Act and s 37 of the Weathertight Homes Resolution Services Act can be reconciled. One limitation rule applies to weathertightness defects in homes and the other to all other defects. But in practice they cannot be made to work together. Where a home has weathertightness and other defects and the owners co-ordinate repairs and proceedings, one of the rules has to give. Parliament has not said how this is to be solved. Deciding which one is not so much a matter of statutory interpretation as making a judgment by considering the purposes of the inconsistent provisions and the weight to be given to them to work out which should prevail. In my judgment s 37 applies to all cases of eligible claims under the Weathertight Homes Resolution Services Act in proceedings in this court against those defendants alleged to be liable for both weathertightness and other defects, even if the limitation period under s 393 of the Building Act has passed.
Background
[6] In November 1999 the Auckland City Council granted a building consent for the apartments and construction started the following month. The council conducted a final inspection in January 2002. The engineer, who had prepared structural plans and structural calculations for the apartments, carried out a construction review to check that the apartments had been built in accordance with the building consent and the Building Code. In April 2002 it issued a “producer statement/construction review”. On the same day the council issued a code compliance certificate.
[7] By 2009 the body corporate had instructed consultants to investigate defects with decks. Repair work started, but it was found that the problems were more extensive than first thought. On 9 June 2011 the body corporate applied for a full assessor’s report under s 32 of the Weathertight Homes Resolution Services Act. Under the Act there is a screening process to see whether an owner has an eligible
claim.2 An owner applies for an assessor’s report under s 32. Claims may be made for multi-unit complexes such as Retro Apartments. In this case the assessor’s report of May 2013 found that the body corporate had an eligible claim. By then, more than ten years had passed since the council had issued the code compliance certificate. In addition to the weathertightness defects, the plaintiffs found that there were other defects going to structural integrity and fire safety. The Auckland Council required those defects to be remedied as a condition for a building consent to fix the weathertightness defects. The Court approved a scheme under s 74 of the Unit Titles Act 2010 to carry out remedial work.3 The repairs, started in November 2016, have now been completed. They cost approximately $9 million.
[8] The plaintiffs began this proceeding in September 2017. The council joined the engineer as third parties. The original statement of claim pleaded only weathertightness defects and claimed estimated repair costs of $4,880,000 (plus other damages). The city council was allegedly negligent in carrying out inspections, not carrying out enough inspections, not requiring the builder and subcontractors to certify that their work had been carried out in accordance with the Building Code, and in issuing code compliance certificates when it could not be satisfied that the building work complied with the Building Code.
[9] In its third party claim against the engineer, the council has sued for negligent misstatement but has not sought contribution from it as a concurrent tortfeasor under s 17 of the Law Reform Act 1936. The council says that the engineer was negligent in issuing a producer statement when there were not reasonable grounds on which it could be satisfied that the building work complied with the Building Code. The council relied on the same defects as were pleaded in the plaintiffs’ original statement of claim.
[10] The plaintiffs filed an amended statement of claim in March 2019. Whereas the original statement of claim estimated costs of repair, the amended statement of claim pleaded actual costs. The alleged defects were more extensive and included structural defects (defects 7 and 8 in a defects schedule to the statement of claim) and
2 Osborne v Auckland Council [2014] NZSC 67, [2014] 1 NZLR 766 at [30].
3 Body Corporate 202692 v Jamac Holdings Ltd [2016] NZHC 1226.
fire safety defects (defects 11 and 12). These are separate from water penetration problems. In May 2019 the council amended its claim against the engineer, again relying on the same defects alleged against it.
[11] The engineer has applied to strike out defects 7, 8, 11 and 12 and the council has in turn applied to strike out the same defects in the claim against it. All counsel agreed that the strike out applications stood or fell together. The council and the engineer both submitted that the claims for defects 7, 8, 11 and 12 were out of time. The plaintiffs’ amended statement of claim puts the costs of remedying these defects at $3,321,492. The aim of the strike out applications is to shave the damages claim by that amount.
[12] A pleading may be struck out if the claim is statute-barred. In Murray v Morel & Co Ltd,4 Tipping J stated the approach, referring to his earlier decision in Matai Industries Ltd v Jensen:5
[32] … Read as a whole my judgment in Matai can be seen as holding that the onus is on the defendant to show that a claim, or at least part of it, is statute- barred, unless the plaintiff is able to rely on some extension of the ordinary limitation period or some postponement of the commencement of that period. The question which arises in this case concerns what the plaintiff must do to resist the striking out of a claim which, subject to matters of postponement and extension, is clearly statute-barred.
[33] I consider the proper approach, based essentially on Matai, is that in order to succeed in striking out a cause of action as statute-barred, the defendant must satisfy the court that the plaintiff's cause of action is so clearly statute-barred that the plaintiff's claim can properly be regarded as frivolous, vexatious or an abuse of process. If the defendant demonstrates that the plaintiff's proceeding was commenced after the period allowed for the particular cause of action by the Limitation Act, the defendant will be entitled to an order striking out that cause of action unless the plaintiff shows that there is an arguable case for an extension or postponement which would bring the claim back within time.
[34] In the end the judge must assess whether, in such a case, the plaintiff has presented enough by way of pleadings and particulars (and evidence, if the plaintiff elects to produce evidence), to persuade the court that what might have looked like a claim which was clearly subject to a statute bar is not, after all, to be viewed in that way, because of a fairly arguable claim for extension or postponement. If the plaintiff demonstrates that to be so, the court cannot say that the plaintiff's claim is frivolous, vexatious or an abuse of process. The plaintiff must, however, produce something by way of pleadings, particulars
4 Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721.
5 Matai Industries Ltd v Jensen [1989] 1 NZLR 525 (HC).
and, if so advised, evidence, in order to give an air of reality to the contention that the plaintiff is entitled to an extension or postponement which will bring the claim back within time. A plaintiff cannot, as in this case, simply make an unsupported assertion in submissions that s 28 applies. A pleading of fraud should, of course, be made only if it is responsible to do so.
The limitation rules
[13]Various limitation rules apply. The first is s 4(1)(a) of the Limitation Act 1950:
(1)Except as otherwise provided … the following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say, -
(a)Actions founded … on tort
While the Limitation Act 2010 came into force on 1 January 2011 and repealed the Limitation Act 1950, the 1950 Act continues to apply to proceedings based on acts or omissions before 1 January 2011.6 In building defects cases alleging negligence, the cause of action accrues when the defects are discovered or could with reasonable diligence have been discovered.7 Causes of action that arose before 1 January 2011 are, however, subject to a general longstop period. Under s 23B of the Limitation Act 1950 a claim cannot be brought after 31 December 2015 or 15 years after the date of the act or omission on which the action is based.8 While the 15-year longstop appears to apply in this case, the council and the engineer do not rely on it.
[14] Instead, they focus on the ten-year limitation under the Building Acts. Both s 91 of the Building Act 1991 and s 393 of the Building Act 2004 enact a 10-year longstop period. While the Building Act 1991 was in force when the code compliance certificate was issued in 2002, counsel agreed that for this case s 393 of the 2004 Act applies:
393 Limitation defences
(1)The Limitation Act 2010 applies to civil proceedings against any person if those proceedings arise from—
6 Limitation Act 1950, s 2A; Limitation Act 2010, ss 57 and 59.
7 Invercargill City Council v Hamlin [1996] 1 NZLR 513 (PC) at 522-527, Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721 at [39]-[42].
8 Limitation Act 2010 s 62, which inserted ss 23A and 23B(1)(b) into the Limitation Act 1950.
(a)building work associated with the design, construction, alteration, demolition, or removal of any building; or
(b)the performance of a function under this Act or a previous enactment relating to the construction, alteration, demolition, or removal of the building.
(2)However, no relief may be granted in respect of civil proceedings relating to building work if those proceedings are brought against a person after 10 years or more from the date of the act or omission on which the proceedings are based.
(3)For the purposes of subsection (2), the date of the act or omission is,—
(a)in the case of civil proceedings that are brought against a territorial authority, a building consent authority, a regional authority, or the chief executive in relation to the issue of a building consent or a code compliance certificate under Part 2 or a determination under Part 3, the date of issue of the consent, certificate, or determination, as the case may be;
…
Section 393(2) overrides the Limitation Act 2010, including the limitation rules under the 1950 Act which have been saved. The override goes not only to the normal limitation periods but also to provisions allowing time to be extended.9
[15] These rules are subject to s 37(1) of the Weathertight Homes Resolution Services Act 2006:
(1)For the purposes of the Limitation Act 2010 (and any other enactment that imposes a limitation period), the making of an application under section 32(1) has effect as if it were the filing of proceedings in a court.
…
[16] There is no significant dispute between the parties about how these limitation rules operate on the plaintiffs’ claim for water penetration defects. They agree that the proceeding is within time for those defects. The cause of action for damage to decks appears to have arisen during 2009 when the body corporate obtained a report from a consultant about the damage. While the plaintiffs had six years from discovery of the damage in which to begin proceedings, that was shortened under s 393(2) of the Building Act. The ten-year longstop ran from 12 April 2002, the date of the producer
9 Johnson v Watson [2003] 1 NZLR 626 (CA).
statement and the code compliance certificate, being the last acts or omissions on which the plaintiffs and the council can rely. The ten years had expired before September 2017 when the plaintiffs began this proceeding. They can, however, rely on s 37 of the Weathertight Homes Resolution Services Act, because on 9 June 2011 they applied under s 32 for an assessor’s report. Under s 37(1) that stopped the clock running, not only for any claim made in the Weathertight Homes Tribunal, but also for a proceeding in this court alleging water penetration defects. That comes from the Supreme Court’s decision in Lee v Whangarei District Council.10 It said:
[45] We accept Mr Rainey's submission that the purpose of s 37(1) is to “stop the clock” on limitation while the dwelling is assessed, allowing homeowners to make informed decisions about their options without, in the meantime, any legal claim they may have becoming time-barred. To interpret s 37(1) more narrowly risks those with leaky homes falling into procedural traps. This would not accord with the purpose of the WHRS Act as set out in s 3(a) of providing leaky home owners access to speedy, flexible and cost- effective procedures for both the assessment and resolution of claims.
[46] On the Council's interpretation of s 37(1), leaky-home sufferers could face difficult choices. They would have to keep an eye on the passage of time to make sure that they did not let the limitation period for court proceedings expire. When approaching the time limit, they would have to make an assessment of whether or not any processes they were involved in with any potential defendants, including court proceedings, mediation or adjudication, were likely to produce an acceptable outcome. If they were concerned, they would have to ask the Tribunal to transfer the matter to a court (assuming a matter was before the Tribunal) and/or issue court proceedings themselves, which would terminate any Tribunal proceedings or not allow them to be filed until after the court proceedings ended. Where there are delays in any other processes embarked on or in the adjudication process for whatever reason, complexity would be increased for consumers and they would be forced into making difficult choices, with what appear irrationally different consequences if the Council's interpretation of s 37(1) were correct.
[17] Ms Lee’s was a hard case. She sued in this court within the ten years under s 393 of the Building Act, but more than six years after she knew that her home had weathertightness defects. She had applied for an assessor’s report under s 32 of the Weathertight Homes Resolution Services Act and had begun an adjudication claim in time in the Weathertight Homes Tribunal but she came unstuck because there were other proceedings in the District Court against her involving weathertightness issues and because the Tribunal refused to transfer her proceeding to this court. Since then, however, there have been leaky home proceedings which have taken full advantage of
10 Lee v Whangarei District Council [2016] NZSC 173.
the extended time under s 37(1) to start a proceeding. In some cases, construction of the buildings was completed in the last century. This case is another example.
[18] In Lee, the Supreme Court addressed the lack of a time limit on starting proceedings, after owners had applied under s 32, and any resulting open-ended liability:
[58] It is true that defendants would likely not know of any claim until an application for adjudication is filed or court proceedings have begun. The possible defendants would be identified in a full assessor’s report but it is not served on them. However, if a person has a leaky home, delays of some years in informing possible defendants might be thought very unlikely, subject to a possible design fault of the legislation discussed in the next section.
[59] There is a mechanism in the WHRS Act for dealing with those who fail to pursue claims. Under s 56, the chief executive can terminate a claim where there has been no application for adjudication if he or she believes the claimant is not making enough effort to resolve the claim. Used in this section, the term “claim” must be referring to the filing of the assessor’s report. Once a claim has been terminated in this manner, it cannot be filed again.
[60] All this means that, if the chief executive is diligent in monitoring the progress of claims and uses this power when necessary, the concern about open-ended liability would be misplaced.
[61] Section 37(1) in any event applies in limited circumstances. To be eligible, a dwellinghouse (or multi-unit complex) must have been a leaky home built prior to 1 January 2012. As Mr Rainey points out s 37(1) is also limited in its application in the following ways:
(a)it is limited to the particular dwellinghouse (or multi-unit complex) that is the subject of the application under s 32(1); and
(b)it is limited to the particular application which must be made by the owner of the dwellinghouse.
[19] The parties disagree on how the limitation rules operate when there has been an application under s 32 of the Weathertight Homes Resolution Services Act, but there are other defects as well. The council and the engineer say that the longstop under s 393 of the Building Act applies to the other defects, whereas the plaintiffs say that the relaxation under s 37 applies.
The parties’ arguments
The Council
[20] The council says that the Weathertight Homes Resolution Services Act is concerned only with leaky home claims. The relaxation of the time for starting a proceeding under s 37 applies only to proceedings for water penetration damage. While under Lee, s 37 applies to proceedings in this court, it does not apply to any other building defects. Accordingly, the claims for other defects are subject to the 10- year longstop under s 393 of the Building Act and they are now out of time.
[21] In support it referred to the Weathertight Homes Resolution Services Act, including (emphasis added):
(i) the purpose in s 3:
The purpose of this Act is—
(a)to provide owners of dwellinghouses that are leaky buildings with access to speedy, flexible, and cost-effective procedures for the assessment and resolution of claims relating to those buildings; and
(b)to provide for certain matters relating to the provision of a package of financial assistance measures to facilitate the repair of those buildings.
(ii) definitions in s 8:
“claim”
a claim by the owner of a dwellinghouse that the owner believes—
(a)has been penetrated by water because of some aspect of its design, construction, or alteration, or of materials used in its construction or alteration; and
(b)has suffered damage as a consequence of its penetration by water.
“deficiency”
deficiency, in relation to a building, means any aspect of its design, construction, or alteration, or of materials used in its construction or alteration, that has enabled (or, as the case requires, is likely in future to enable) water to penetrate it
“leaky building”
leaky building means a dwellinghouse into which water has penetrated as a result of any aspect of the design, construction, or alteration of the dwellinghouse, or materials used in its construction or alteration
(iii) s 13 and the eligibility criteria for a claim, in this case under s 16:
The criteria are that the claimant is the representative of the owners of the dwellinghouses in the multi-unit complex to which the claim relates; and—
(a)the complex was built (or alterations giving rise to the claim were made to it) before 1 January 2012 and within the period of 10 years immediately before the day on which the claim is brought; and
(b)water has penetrated the complex because of some aspect of its design, construction, or alteration, or of materials used in its construction or alteration; and
(c)the penetration of water has caused damage to the complex.
(iv) the content of assessors’ reports, including for full reports for multi-unit complexes under s 42(3):
(3) If the report states that the claim meets the criteria in section 16, the report must also state the assessor’s view on—
(a)why water penetrated the multi-unit complex concerned; and
(b)the nature and extent of the damage caused by the water penetrating the multi-unit complex (whether damage to dwellinghouses or damage to common areas, but not including damage to parts of the complex that are neither a dwellinghouse nor a common area); and
(c)the work needed to repair the damage; and
(d)the work needed to make weathertight the dwellinghouses and common areas in the multi-unit complex (both in relation to the deficiencies that enabled the damage to occur and in relation to any deficiencies that are likely in future to enable damage to be caused to dwellinghouses or common areas by water penetrating them); and
(e)the estimated cost of the work referred to in paragraphs (c) and (d); and
(f)the persons who should be parties to the claim.
(v) the remedies under s 50(1):
(1)As long as it is an eligible claim, a claim under this Act may be for any remedy that could be claimed in a court of law in relation to, or for consequences of, all or any of the following:
(a)deficiencies that enabled the penetration of water into the building concerned:
(b)the penetration of water into the building concerned:
(c)damage or loss of value caused by the penetration of water into the building concerned:
(d)loss of value caused by the fact that there are deficiencies in the building concerned:
(e)deficiencies that are likely in future to enable the penetration of water into the building concerned.
(vi) s 60, which limits the right to apply for adjudication to eligible claims.
Section 12 of the Act provides that claimants and respondents may be given guidance and assistance, including the effect for the claim if there are other defects:
(2)The assistance and guidance given may include assistance or guidance on—
…
(c) the implications for the claim concerned if the dwellinghouse concerned has damage or deficiencies not related to weathertightness.
In the council’s submission, that did not detract from the general thrust of the act, which was to address only claims for damage to homes from water penetration.
[22] The council submitted that cases that have taken a wide view of s 37, Lee, Kells v Auckland City Council11 and Heaney v Auckland Council,12 were leaky homes cases where other defects were not in issue. It cited other authorities that have recognised that the act does not apply to claims for other defects:
11 Kells v Auckland City Council HC Auckland CIV 2008-404-1812, 30 May 2008.
12 Heaney v Auckland Council [2018] NZHC 2738.
(a)Walton v Holden, where the Tribunal declined to consider claims for other defects;13
(b)Body Corporate 204464 v Waitakere City Council, where R Hansen J declined to transfer a proceeding from this court to the Tribunal, as the owners alleged other defects besides leaks:14
I am in no doubt that there is no jurisdiction to entertain claims for non-weathertightness defects under the Act.
(c)ISP Consulting Engineers Ltd v Body Corporate 89408, where the Court of Appeal said:15
Structural defects are beyond the jurisdiction of the WHRS Tribunal.
The engineer
[23] The case for the engineer was in line with the council’s but added to it. In its submission, s 37(1) created a special regime that departed from well-settled approaches to limitation in civil proceedings. It conferred an extraordinary exception for the benefit of claimants, by stopping the clock before the claimants could specify the defects or damage or identify liable parties. These benefits extended to new owners. Owners of leaky homes were in a special class. Owners of leaky commercial buildings and owners of defective homes that did not leak were outside s 37 and the Act generally.
[24] The argument for reconciling s 37 with s 393 of the Building Act was that s 37 must be read subject to the engineer’s substantive right to the defence under s 393, unless Parliament clearly intended to abrogate that right. R v Secretary of State for the Home Department, ex p Simms was cited. That was a reference to Lord Hoffmann’s speech:16
13 Walton v Holden NZWHT 00003, 27 February 2004.
14 Body Corporate 204464 v Waitakere City Council HC Auckland CIV 2008-404-7428, 1 December 2010 at [21].
15 ISP Consulting Engineers Ltd v Body Corporate 89408 [2017] NZCA 160 at [4].
16 R v Secretary of State for the Home Department, ex p Simms [1999] UKLH 33, [2000] 2 AC 115 (HL) at 131.
Parliamentary sovereignty means that Parliament can, if it chooses, legislate contrary to fundamental principles of human rights. The Human Rights Act 1998 will not detract from this power. The constraints upon its exercise by Parliament are ultimately political, not legal. But the principle of legality means that Parliament must squarely confront what it is doing and accept the political cost. Fundamental rights cannot be overridden by general or ambiguous words. This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual. In this way the courts of the United Kingdom, though acknowledging the sovereignty of Parliament, apply principles of constitutionality little different from those which exist in countries where the power of the legislature is expressly limited by a constitutional document.
[25] The council and the engineer also said that the addition of the structural and fire safety defects in the amended statement of claim of March 2019 added a new cause of action. As it was time-barred, it did not meet the requirement for adding a cause of action in an amended pleading.17 For them, that argument reinforced their claim that the structural and fire safety allegations were out of time under s 393 but did not add anything new.
The plaintiffs
[26]The plaintiffs say that:
(a)s 37(1) of the Weathertight Homes Resolution Services Act operates for the benefit of any eligible claim, even if it also involves defects that have nothing to do with water penetration;
(b)s 393 of the Building Act applies to “civil proceedings”, not to causes of action;
(c)their amended statement of claim did not add new causes of action, but merely gave more particulars of defects and damage resulting from the council’s negligence; and
17 High Court Rules 2016, r 7.77(2).
(d)even if the council could not be sued for the structural and fire safety defects, fixing those defects was part of the costs of remedying the damage caused by the defendant’s negligence leading to the water penetration problems.
[27] For their first argument, the plaintiffs say that nothing in the Weathertight Homes Resolution Services Act requires that defects be limited to water penetration. The definition of “claim” requires only that an owner believe that the building has damage from leaks. Under s 37 time stops running to allow an owner with the benefit of the report to make an informed decision how to deal with any legal claims relating to the building. That need not be limited to water penetration defects. The plaintiffs accept that the Tribunal’s jurisdiction is limited to leaky home adjudications, but because of the Supreme Court’s decision in Lee, s 37 extends more widely to proceedings in this court as well. Where an owner with an eligible claim wishes to recover for both leaks and other defects in the same proceeding, the owner sues in a court of general jurisdiction. Section 37 applies generally to the proceeding, not to particular classes of defects. The argument sought support from provisions which do not expressly refer to water penetration: s 42(3) and s 50(d).
[28] For the second argument, the plaintiffs say that s 393(2) applies to “civil proceedings relating to building work”. The purpose of the section is to set a cut-off date for civil proceedings (ten years from the date after the act or omission on which the proceeding is based), not particular causes of action. They cited Gedye v South and Carter Holt Harvey Ltd v Minister of Education.18 I take this argument to mean that fresh causes of action can be added within the longstop period.
Responses to the plaintiffs’ arguments
[29] In my view, the plaintiffs’ first and second arguments stretch the text and purposes of the statutes. As a matter of statutory interpretation, it is not possible to read the Weathertight Homes Resolution Services Act as applying to defects additional to water penetration. Without repeating them I refer to the provisions in
18 Gedye v South [2010] NZCA 207, [2010] 3 NZLR 271 at [35], Carter Holt Harvey Ltd v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78 at [129].
paragraph [21] above. The focus of the Act is on weathertightness exclusively. The defendant’s and the engineer’s arguments persuasively show that the Weathertight Homes Resolution Services Act is concerned only with homes with water penetration damage. When read in context, ss 42(3) and 50(d) are concerned only with defects under the act – water penetration. An owner’s belief that his or her house leaks allows a claim to be made, but a belief that the house has other defects gives no basis for claiming under the act. Parliament has not stated what limitation rules are to apply where there is an eligible claim and other defects besides leaks.
[30] The argument that s 393 does not apply to causes of action misses the purpose of r 7.77(2) of the High Court Rules:
(2) An amended pleading may introduce, as an alternative or otherwise, —
(a)relief in respect of a fresh cause of action, which is not statute barred; or
A plaintiff may not begin a proceeding that is statute-barred. The plaintiff cannot get around that by amending pleadings for a pending proceeding to add causes of action that are out of time.19 The longstop in s 393(2) operates in the same way as other limitation rules. If a fresh proceeding made claims out of time, the limitation under s 393(2) cannot be defeated by adding a new cause of action making those claims in a pending proceeding.
[31] The plaintiffs’ third argument is intended to get around objections that the plaintiffs have added a fresh statute-barred cause of action. The argument does not seem necessary. If the plaintiffs are right and they can claim the benefit of s 37, no pleading issue arises because time has stopped running. They can add a new cause of action without any limitation questions. On the other hand, if the council and the engineer are right, any claim for other defects has been statute-barred since April 2012. It would not matter whether other defects were pleaded in the original statement of claim or in an amended pleading: they would be out of time under either pleading.
19 Weldon v Neal (1887) 19 QBD 394 at 395; Smith v Wilkins and Davies Construction Co Ltd [1958] NZLR 958 at 959 (SC).
A decision whether the new defects amount to a new cause of action is not required.
In case I am wrong on this, I consider the matter later in the decision.20
[32] The fourth argument goes to causation and damages. The plaintiffs say that if the council is liable for causing water penetration damage, they can also recover for fixing the unrelated structural and fire safety defects, because that is part of their remedial costs. I do not need to address that argument. The council and the engineer said that they applied to strike out because they could not be found liable for the structural and fire safety defects by reason of the s 393 longstop. I am not required to decide questions of causation and damage. But I note that the plaintiffs may have difficulty with their causation argument. If their building has defects, some caused by tortious conduct and others not, those liable may have to pay for the costs of remedying defects they caused, but not the costs of remedying defects for which they are not liable.21
[33] Mr O’Sullivan, an acknowledged expert in leaky building matters, swore an affidavit intended to show that the repairs of defects 7, 8, 11 and 12 were required because the council would not grant a building consent to repair weathertightness defects, unless the other defects were also remedied. The council and the engineer objected to his evidence. In so far as he claims that as a matter of law the costs of repairing the other defects are recoverable from the council, regardless of its liability, I have ignored him.
Both limitation rules cannot work together
[34] On the arguments for the council and the engineer, there are distinct limitation periods, one for leaky homes under the Weathertight Homes Resolution Services Act and one for other defects under s 393(2) of the Building Act 2004. Where a building is a qualifying home under the Weathertight Homes Resolution Services Act and has only water penetration damage, the owners have the benefit of the clock stopping under s 37(1) if they make a qualifying claim under s 32(1). If any building has defects
20 At [53]-[58] below.
21 See the discussion of multiple causes in Todd on Torts, 8th ed, at 20.2.02. Repair costs may need to be apportioned.
that are outside those caught by the Weathertight Homes Resolution Services Act, the time for starting proceedings for those defects is governed by s 393(2) of the Building Act 2004.
[35] In this case the building has both water penetration defects under the Weathertight Homes Resolution Services Act and other defects which would otherwise be subject to s 393 of the Building Act. If different parts of a building have different damage, and one part can be repaired independently of the other, it may be possible to apply different limitation rules to different categories of damage. But in cases that come to court, it is common to see overlapping defects and damage. As a matter of practicality, owners tend to deal with all defects together. If, say, leaks cannot be remedied without also addressing structural issues, owners will plan to carry out remedial work for both defects at the same time. Equally, it makes sense for them to bring any proceedings against those responsible for all defects at the same time. It would be awkward to sue separately for water penetration and other defects when all defects will be remedied at the same time. Owners invariably claim the costs of repair as part of the damages. Their plans for repair and the costs of remedial work figure in their proceedings. It does not make sense for them to deal with leaks and other defects separately.
[36] When owners take a coordinated approach to remedy both leaks and other defects in their homes, there are difficulties with applying both limitation rules at the same time. Owners of a leaky home may apply for an assessor’s report under s 32. If owners with an eligible claim also wish to sue for other defects and s 393(2) applies, they stand to lose the benefit of s 37. They will be required to bring their claim within time under s 393(2) and will not have the longer time for investigation and beginning a proceeding allowed under s 37 of the Weathertight Homes Resolution Services Act. The Supreme Court’s decision in Lee recognises the importance of owners having the time to investigate and consider options, while the clock is stopped under s 37. Conversely, if owners of a leaky home are to have the full benefit of the time to bring a proceeding under s 37 of the Weathertight Homes Resolution Services Act, those sued for other defects will lose the protection of the 10-year longstop under the Building Act. The rights of one side or the other will be affected: owners of leaky homes lose the benefit of the clock stopping under s 37 because they need to sue within
time under s 393(2) or defendants sued for other defects face proceedings started after the longstop period under s 393. Owners’ rights to have the clock stop under s 37 and defendants’ rights not to be sued after the longstop in s 393 cannot apply at the same time. Which is to prevail?
[37] The courts have stated principles to apply when different statutes overlap. As an example, in Stewart v Grey County Council, Richardson J said:22
It is inevitable that in the complex legislative processes of modern society there will be occasional conflicts and inconsistencies between the provisions of different statutes. There are well established rules for determining which provisions are to prevail. The starting point, of course, is that there be an inconsistency. If it is reasonably possible to construe the provisions so as to give effect to both, that must be done. It is only if one is consistent with, or repugnant to the other, that the two are incapable of standing together, but it is necessary to determine which is to prevail. In that situation, there are two principles for consideration. One is the maxim known as generalia specialibus non derogant. It was explained in Barker v Edger in the following terms:
When the Legislature has given its attention to a separate subject, and made provision for it, the presumption is that a subsequent general enactment is not intended to interfere with the special provision unless it manifests that intention very clearly. Each enactment must be construed in that respect according to its own subject matter and its own terms.
In such a case, the earlier “special” statute continues to have exclusive application to its own subject-matter and the later general Act, although in terms wide enough to extend to the subject matter of the earlier Act, is held not to have any application to it.
The other is the principle of implied repeal which as it relates to legislation affecting special situations, is expressed in 36 Halsbury’s Laws of England (3rd ed) para 712 as follows:
To the extent that the continued application of a general enactment to a particular case is inconsistent with special provisions subsequently made as regards that case, the general enactment is overridden by the particular, the effect of the latter being to exempt the case in question from the operation of the general enactment or, in other words, to repeal the general enactment in relation to that case.
In cases where there is a conflict between general legislation and special legislation, these two principles are, in reality, two sides of the same coin. There may be difficulties in some cases in determining which statute is special. There are some situations in which “each enactment may be called general or special according to the point of view from which it is regarded” (Butler v Attorney-General for Victoria).
22 Stewart v Grey County Council [1978] 2 NZLR 577 (CA) at 583.
(Citations omitted)
[38] It might be thought that under these principles, s 37 of the Weathertight Homes Resolution Services Act ought to prevail, because it was enacted after the Building Act 2004 (just as the repealed Weathertight Homes Resolution Services Act 2002 was enacted after the Building Act 1991). The Building Act limitation under s 393 is general as applying to all defects and all buildings, whereas the Weathertight Homes Resolution Services Act is special as relating only to eligible claims under that Act. But that is not a complete answer. As a matter of statutory interpretation (for the reasons already given), s 37 only applies to eligible claims under the Weathertight Homes Resolution Services Act and the statute does not extend to other defects in a leaky home. Under the principles stated by Richardson J, the section overrides s 393 only for weathertightness defects.
[39] The difficulty here is that Parliament has not said how to deal with cases where both leaks and other defects in a house need to be addressed at the same time, when there are different limitation rules which serve competing purposes – one to give owners generous time to bring claims and the other to set a time limit so that those involved in construction are released from claims after a longstop period. It is sometimes said that where legislation creates a problem that has not been expressly provided for or foreseen, the courts have a responsibility to work out a practical interpretation that appears to accord with Parliament’s general intention, so long as they take care not to take over the policy-making function.23 That may apply where there is one statute, but here there are two and only one can apply.
[40] Nor is it possible to say that some default position applies. In some cases where an act is silent, the court applies the law without applying that statute, on the principle that no answer is also an answer. But that does not work here because one of two acts must apply. The engineer’s argument in paragraph [24] above tries to assert a default position, a presumption based on the principle of legality that express language is required to override s 393. But a limitation defence is not one of the fundamental values which the principle is intended to protect. Burrows and Carter on Statute Law
23 Northland Milk Vendors Association Inc v Northern Milk Ltd [1988] 1 NZLR 530 (CA) at 537- 538.
gives examples:24 liberty of the subject, freedom of property, right to a fair hearing, right of access to the courts, privacy, freedom of speech, lawyer-client privilege, no advantage from own wrong, no retrospectivity. The longstop defence in s 393 is not in this league.
[41] Although there is no clear legislative guidance, a decision is still required. I do not claim to be giving effect to any legislative view as to which purpose should prevail, because I cannot see one. Instead, Parliament has left the court to work out whose interests should prevail, even if that means deciding matters of policy. I assess the purposes of the respective provisions to decide which should carry greater weight.
Resolving the problem
[42] The purpose of providing a longstop under s 393 of the Building Act 2004 is to address the problem that under s 4 of the Limitation Act 1950 a claim where damage is part of the cause of action may arise many years after the work was completed. The Court of Appeal noted the need for such a longstop in Askin v Knox.25 In Invercargill City Council v Hamlin,26 the Privy Council recorded that Parliament had acted on the suggestion. In Klinac v Lehmann Glazebrook J reviewed the legislative history leading to the enactment of s 91(2) of the Building Act 1991.27 The Court of Appeal noted the legislative purpose in Gedye v South.28 The Supreme Court’s recognition of the purpose of s 393 in Carter Holt Harvey Ltd v Minister of Education29 is in line with the earlier decisions.
[43] Section 393 serves a similar purpose to other limitation provisions. Those involved in the construction of a building under the section have a clear cut-off date when claims expire. They will no longer need to keep records of the job and to keep insurance cover for potential claims. With old claims, much evidence may be hard to obtain because of staff changes or may be unreliable because of fading memories.
24 Ross Carter Burrows and Carter Statute Law in New Zealand (5th ed, LexisNexis, Wellington) at 335-342.
25 Askin v Knox [1989] 1 NZLR 248 (CA) at 254-256.
26 Invercargill City Council v Hamlin [1996] 1 NZLR 513 (PC) at 523.
27 Klinac v Lehmann HC Whangarei AP15-01, 6 December 2001 at [13]-[26].
28 Gedye v South [2010] 3 NZLR 271 (CA) at [35].
29 Carter Holt Harvey Ltd v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78 at [86]- [131].
This last aspect is less important in building defects litigation. The disadvantages of unobtainable evidence and poor recollection are likely to have come about well before the ten years are up. Instead the cases are decided on circumstantial evidence.30
[44] Notwithstanding s 393, in some cases claims for building defects may be made more than 10 years after the work was completed. In Klinac v Lehmann and Gedye v South it was held that in claims for misrepresentation or breach of warranty the act or omission under s 393 was the relevant warranty or representation, not the original building work. This meant that building work carried out more than 10 years before would be the subject of a building defects claim.31 It might be thought that vendors can guard themselves against claims for breach of warranty or misrepresentation by deleting any such warranties from their agreements and providing that there will be no remedies for alleged misrepresentations. But many vendors are unaware of the risk. Excluding liability is often easier said than done. In managing leaky building proceedings, I have noticed claims for alleged misrepresentation by conduct where the state of the building itself is said to be misleading. A vendor is said to have presented the house as apparently sound, without any express representations. The purchasers allege that they were misled into buying the house because of the deceptive appearance of the building. I am not aware of any such claims going to a hearing and succeeding, but the risk can be noted.
[45] The extension of time under s 37 for leaky building proceedings is another case where the longstop does not apply.
[46] In those cases where the longstop does not apply, the potential defendants will need to keep their records and their insurance cover. Where a person involved in construction could claim under s 393, but the building is a house and there is a risk of a claim for water penetration, that person will need to keep their records and their insurance cover. If they need to do these things because of the risk of a leaky home claim, it is not too much of an ask for them to do the same for claims for other defects.
30 See for example Re Imperial Gardens, Body Corporate 348047 v Auckland Council [2019] NZLR 1738 at [39].
31 In Klinac v Lehmann, that meant researching the building bylaws of the former Bay of Islands County Council from the 1970s.
[47] In building defects litigation, the courts have shown sympathy to plaintiffs confronted with limitation defences. That can be seen in:
(a)The New Zealand courts’ refusal to follow the House of Lords decision in Pirelli General Cable Works Ltd v Oscar Faber & Partners32 (that a cause of action arose when damage occurred, not when it was discovered).33
(b)The categorisation of damage as continuous, intermittent or fresh so as to treat fresh damage as giving rise to a new cause of action.34 This rule applies when there are no pending proceedings.
(c)Where proceedings are already pending, the tendency not to treat amendments to include fresh defects as pleading a fresh cause of action.35
[48] In weathertight homes litigation, the courts have expressed a concern not to allow plaintiffs’ claims to become procedurally difficult:
(a)In Kells v Auckland Council,36 Asher J said of the Weathertight Homes Resolution Services Act:
This approach reflects the fundamental purpose of the Act, namely to give access to speedy, flexible, and cost-effective procedures for the assessment and resolution of claims relating to leaky homes. I interpret the Act as having been drafted recognising the difficulty that owners of leaky homes have in identifying bad workmanship, and identifying the cause of the building defects and therefore identifying relevant parties in pursuing claims.
32 Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1 (HL).
33 Endorsed by the Privy Council in Invercargill City Council v Hamlin [1996] 1 NZLR 513 (PC) and accepted by the Supreme Court in Murray v Morel & Co as an exception to the general rule that a cause of action in negligence arises when damage occurs, not when it is discovered.
34 Bowen v Paramount Builders (Hamilton) Ltd [1977] 1 NZLR 394 (CA); Burns v Argon Construction Ltd HC Auckland, CIV-2008-404-7316, 18 May 2009.
35 ISP Consulting Engineers Ltd v Body Corporate 89408 [2017] NZCA 160 and Victopia Apartments, Body Corporate 346799 v KNZ International Co Ltd [2016] NZHC 1523.
36 Kells v Auckland City Council HC Auckland CIV 2008-404-1812, 30 May 2008 at [43].
(b)In Osborne v Auckland Council37 the Supreme Court said:
Unless s 37 is of general application, s 14(a) will operate as a trap for lay people, as illustrated by the result for the Osbornes contended for by the Council.
(c)In Lee v Whangarei District Council, the Supreme Court referred to difficult choices facing leaky home claimants if the council’s interpretation of s 37 were adopted.38
[49] If the longstop under s 393 applies to claims for other defects and owners of leaky homes have applied for assessor’s reports, they will face similar difficult choices. When they apply for an assessor’s report under s 32 of the Weathertight Homes Resolution Services Act, they may know that their property has been damaged, but they may likely not know or may have only a limited understanding of the nature of the damage, its extent, its causes, whether there are defects in construction or design, whether the damage comes from water penetration or other defects, and who may be potentially liable for the damage. So long as they apply under s 32 within time under the Limitation Act 2010 and s 393(2) of the Building Act, they are given time to obtain information to receive the assessor’s report, to investigate and establish whether they can bring leaky building proceedings, but they will not have the same time to claim for other defects. Under the case for the council and the engineer, time will continue to run for other defects. The owners could hardly bring a proceeding in this court alleging unspecified non-weathertightness defects. The council would attack the inadequate pleading.39 Given the usual wish to take a co-ordinated approach in dealing with all defects by remedial works and litigation, working to different limitation deadlines for different defects will make litigation even more challenging.
[50] These considerations point to the owners of leaky homes with eligible claims under the Weathertight Homes Resolution Services Act being able to sue defendants alleged to be liable for both weathertightness and other defects, even if the longstop period under s 393(2) has passed. Those defendants stand to be sued for weathertightness liability anyway. The usual purpose of the longstop limitation will
37 Osborne v Auckland Council [2014] NZSC 67, [2014] 1 NZLR 766 at [24](d).
38 See Lee v Whangarei District Council [2016] NZSC 172, [2017] 1 NZLR 401 at [45]-[46].
39 Re Imperial Gardens, Body Corporate 348047 v Auckland Council [2014] NZHC 2971; Re Bianco Off Queen, Body Corporate 406198 v Argon Construction Ltd [2019] NZHC 887.
not apply. Given their ongoing exposure to liability and the need to hold records and keep insured because of that, they do not have a compelling case that they should not be sued for other defects once the longstop has passed. Burrows and Carter Statute Law in New Zealand comments:40
Statutes do not exist in a vacuum: they have effects on those subject to them. Thus a Judge, while acknowledging the obligation to give effect to the intention of the legislature, will in discharging his or her obligation to the citizen try to ensure that the working of the legislation is sensible, just and practical. “Rationality requires that in addition to following the legislative intention he also achieve a result which, on balance, is more desirable than any other decision, based on the consequences it will have for the litigants.” No doubt it is usually easy to say that this must be presumed to have been the intention of the Legislature, although sometimes that presumption has a degree of artificiality about it.
(citations omitted)
While I do not claim to be giving effect to the intention of the legislature – that would be artificial – allowing s 37 to prevail is more sensible, just and practical than rigidly applying the longstop under s 393. This applies when a defendant is sued for both weathertightness and other defects. This decision does not deal with a defendant sued only for other defects. My reasons do not apply in that case.
[51] My decision that the limitation rule in s 37(1) extends to defendants in leaky building proceedings who are sued as well for other defects is not likely to apply to many cases. The eligibility criteria in ss 13-17 of the Weathertight Homes Resolution Services Act allow claims only for the building or alteration of homes before 1 January 2012, and within 10 years before an application is made for an assessor’s report under s 32. It can be expected that most applications under s 32 will have been made already. Any new applications under s 32 would have to be for houses built or altered less than ten years ago but no later than 31 December 2011.
[52] I assume that anyone concerned that they may be potentially liable because they were involved in the construction of residential accommodation will be able to inquire whether any application has been made under s 32 for any buildings for which they were responsible. Enquiries made more than ten years after they completed their
40 Ross Carter Burrows and Carter Statute Law in New Zealand (5th ed, LexisNexis, Wellington, 2015) at 344.
work are likely to tell them whether they are at risk of proceedings and that will allow them, if they wish, to get rid of any records of jobs they completed more than 10 years ago and to discontinue insurance cover for any potential liability.
The question under r 7.77(2)
[53] I come back to the question I left at paragraph [31] above. I have held that s 37 of the Weathertight Homes Resolution Services Act applies to proceedings in this court against defendants who are said to be liable for both weather penetration and other defects in limited situations. Because time stops running under s 37, any amended pleading can add a new cause of action without any limitation difficulties (so long as the application under s 32 was lodged in time). It is therefore not necessary to consider the plaintiffs’ argument that their new pleading did not add a new cause of action. In case this matter goes further, I record my view briefly.
[54]
The Court of Appeal stated the principles in Transpower New Zealand Ltd v Todd Energy Ltd : 41
5F
The relevant principles as to when a cause of action is fresh are summarised in the Ophthalmological case at [22]-[24] as follows:
(a)A cause of action is a factual situation the existence of which entitles one person to obtain a legal remedy against another (Letang v Cooper [1965] 1 QB 232 at 242 – 243 (CA) per Diplock LJ);
(b)Only material facts are taken into account and the selection of those facts “is made at the highest level of abstraction” (Paragon Finance plc v D B Thakerar & Co (a firm) [1999] 1 All ER 400 at 405 (CA) per Millett LJ);
(c)The test of whether an amended pleading is “fresh” is whether it is something “essentially different” (Chilcott v Goss [1995] 1 NZLR 263 at 273 (CA) citing Smith v Wilkins & Davies Construction Co Ltd [1958] NZLR 958 at 961 (SC) per McCarthy J). Whether there is such a change is a question of degree. The change in character could be brought about by alterations in matters of law, or of fact, or both; and
(d)A plaintiff will not be permitted, after the period of limitations has run, to set up a new case “varying so substantially” from the previous pleadings that it would involve investigation of factual or legal
41 Transpower New Zealand Ltd v Todd Energy Ltd [2007] NZCA 302 at [61]–[62], repeated in
Commerce Commission v Visy Board Pty Ltd [2012] NZCA 383 at [141].
matters, or both, “different from what have already been raised and of which no fair warning has been given” (Chilcott at 273 noting that this test from Harris v Raggatt [1965] VR 779 at 785 (SC) per Sholl J was adopted in Gabites v Australasian T & G Mutual Life Assurance Society Ltd [1968] NZLR 1145 at 1151 (CA)).
Transpower also relies on Attorney-General v Carter 42 where the Court observed:
[48] The circumstance that the underlying facts may be the same or similar does not save a cause of action from being fresh if the plaintiff seeks to derive a materially different legal consequence from those facts.
[55] In building defects litigation, two decisions have allowed extra defects to be pleaded without the new defects counting as a new cause of action: ISP Consulting Engineers Ltd v Body Corporate 89408 and Victopia Apartments, Body Corporate 346799 v KNZ International Co Ltd.43
[56] In ISP Consulting Engineers Ltd v Body Corporate 89408, the plaintiffs’ proceeding under the Weathertight Homes Resolution Services Act had been moved to the High Court, but they had also filed another proceeding in the High Court alleging structural defects. The two proceedings were consolidated. The plaintiffs filed a consolidated statement of claim which pleaded only weathertightness defects. Realising that the structural defects had been omitted, they filed an amended statement of claim adding them. The structural engineer objected that the new statement of claim added a new cause of action which was time-barred. The Court of Appeal compared the pleadings, finding that there was substantial overlap both in the general duty of care alleged and in the defects. Some of the structural defects in both pleadings were said to have caused water ingress. The Court considered that the weathertightness and structural defects were causally linked and there was likely to be some overlap in the remedial work required. It held that the second pleading was not essentially different from the first. The claim continued to rely on an engineer’s breach of the same duty of care. The new allegations did not require investigation of factual matters of a new and different nature not raised in the first pleading.
42 Attorney-General v Carter [2003] 2 NZLR 160 (CA).
43 ISP Consulting Engineers Ltd v Body Corporate 89408 [2017] NZCA 160; and Victopia Apartments, Body Corporate 346799 v KNZ International Co Ltd [2016] NZHC 1523.
[57] In Victopia Apartments, not a case involving the Weathertight Homes Resolution Services Act, the plaintiffs amended their pleadings to add a claim for fire safety defects. The earlier pleadings had not made any such allegations. The council applied to strike out, saying that the fire safety defects were a new cause of action, time-barred under s 393 of the Building Act. Palmer J held that the fire safety defects were additional particulars of defects that did not change the essence of the claim against the council. The breaches of duty alleged against the council were for the issue of consents, inspection, and issue of code compliance certificates. The changes were details of what the council should have consented, inspected and issued the code compliance certificate for. While the new pleading raised new factual claims for the council to meet, the case was not “essentially different”.44 Palmer J said: 45
The body corporate is pleading the same duty and the same generic terms of breach against the same party. This comes most clearly into focus when it is recalled that the material facts must be identified “at the highest level of abstraction”. In the Court of Appeal’s words in Commerce Commission v Visy Board Pty Ltd, the basic legal claim is the same and is simply backed up by the addition of new facts. This is also consistent with the other case law summarised above, where additional defects were not struck out as a new cause of action.
[58] Palmer J’s reasoning can be applied to this case. This case can perhaps be distinguished from the ISP case because the plaintiffs here do not appear to allege any overlap between weathertightness defects and the new structural and fire safety defects. As the council pointed out, it is hard to see that there could be any overlap between fire safety defects and water penetration defects. But just as in Victopia Apartments Ltd, the defendant faces the same basic legal claim in negligence for the issue of a code compliance certificate and the engineer also faces the same basic claim in negligence in giving a producer statement. The change is in the details going to the issue of the code compliance certificate and in the engineer giving its producer statement. The Victopia Apartments decision provides authority that the pleading cannot be struck out at this stage for non-compliance with r 7.77(2). At the very least, the issue should be left for trial.
44 At [1] and [26].
45 [25]-[26].
Result
[59] I dismiss the engineer’s strike-out application against the council and the council’s strike-out application against the plaintiffs. The plaintiffs will have costs on the applications. If the parties cannot agree costs, memoranda may be filed.
[60] Lang J gave pre-trial directions on 23 May 2019. I assume that further directions are not required, but reserve leave to apply further.
……………………………….
Associate Judge R M Bell
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