Body Corporate 355492 v Queenstown Lakes District Council
[2022] NZHC 678
•5 April 2022
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE
CIV-2015-425-36
[2022] NZHC 678
BETWEEN BODY CORPORATE 355492
First Plaintiff
JOHN ROBERT CHESTNEY & ORS
Second PlaintiffAND
QUEENSTOWN LAKES DISTRICT COUNCIL
First Defendant
ELLIOTT ARCHITECT LIMITED (IN LIQUIDATION)
Second DefendantEDWIN GERARD ELLIOTT
Third Defendantcontinued …
Hearing: 17 and 18 March 2022 Appearances:
D J Powell and G B Lewis for Plaintiffs (by VMR)
C M Meechan QC and M L Rhodes for First Defendant T E Hutchinson for Tenth Third Party (by VMR)
Judgment:
5 April 2022
JUDGMENT OF ASSOCIATE JUDGE LESTER
(Application by first defendant to strike out part of statement of claim and by tenth third party to strike out claim by first defendant)
BODY CORPORATE 355492 v QUEENSTOWN LAKES DISTRICT COUNCIL [2022] NZHC 678
[5 April 2022]
AND HOLMES STRUCTURES LIMITED (IN
LIQUIDATION)
Fourth DefendantARCH UNDERWRITING AT LLOYD’S LIMITED
Fifth Defendant / Fifth Third Party
ASTA MANAGING AGENCY LIMITED
Sixth Defendant / Sixth Third PartyHARDY (UNDERWRITING AGENCIES) LIMITED
Seventh Defendant / Seventh Third Party
LIBERTY MANAGING AGENCY LIMITED
Eighth Defendant /Eighth Third PartySTEPHEN BRUCE McLEAN
First Third PartyJULIE RAEWYN WENSLEY JACK
Second Third Party
PETER LAWSON
Third PartyDANIEL STEWART
Fourth Third PartyDE GEEST CONSTRUCTION LIMITED
Ninth Third Party (discontinued)DE GEEST BATHROOMS LIMITED
Tenth Third Party
Introduction
[1] The issue in the strikeout application by Queenstown Lakes District Council (QLDC) is whether amendments to the statement of claim on 22 February 2019 and thereafter are time barred by the longstop provision under the Building Act 2004 (the Act).
[2] The amendment subject to QLDC’s application prompted it to claim against the tenth third party which has applied to strike out QLDC’s claim under the longstop.1
[3] This proceeding relates to what is known as the “Oaks Shores Complex” in Queenstown and was issued on 16 April 2015. It is alleged QLDC was negligent in issuing building consents, undertaking inspections of the works and issuing code compliance for the complex (“the negligent conduct”).
[4] QLDC says its last involvement with the project was on 19 September 2007 which was the date of its last inspection and the issue of code compliance. The plaintiffs do not suggest their claim against QLDC is based on any later act or omission.
[5] Accordingly, QLDC says the amended statement of claim added a new head of claim more than 10 years after its last involvement and the amendment it contains is therefore too late.
The claim and its amendment
[6] The Oak Shores Complex (the buildings) is a managed apartment building in Queenstown and was constructed from early 2004 to approximately June 2006. The plaintiffs allege that, soon after construction, they discovered issues with the buildings. The plaintiffs say the buildings appeared to be leaking. The plaintiffs applied to have the buildings assessed by a Weathertight Homes Tribunal assessor, who received that application in May 2013.
[7] The statements of claim preceding the sixth amended statement of claim dated 22 February 2019 allege the building suffered from weather tightness and structural issues. Attached to the fifth amended statement of claim are Schedules of damage which describe the remedial work required as a result of QLDC’s negligent conduct under the following headings:
1 The tenth third party also applied for summary judgment. Neither counsel involved in that application suggested the outcome was dependent on the type of application as the key facts were not in dispute. I deal with both matters as strike outs.
(a)Balconies – a claim the balcony membranes have failed allowing water to penetrate and that balcony rainwater outlets were formed in a way that water enters between the membrane and the structure and then penetrates the building. It is also pleaded the balconies do not shed rain and snow.
(b)Roof and barge junctions – these are said to allow the penetration of water that can cause undue dampness. There is also reference to junctions between skylights and roof allowing penetration of water.
(c)Miscellaneous – service penetrations were alleged to have been installed in external walls which allow penetration of moisture and cause dampness, the construction of the cavity behind the lightweight wall cladding prevents drainage and bottom plate framing to projecting windows is said to be allowing water to cause undue dampness.
(d)Fire defects – fire systems in ceiling voids were alleged not to have stopping that would prevent the spread of fire or smoke to other fire cells, penetrations in fire rated walls were alleged not to have a means of preventing the spread of fire and structural steel/supports were not sufficiently fire rated to avoid collapse during a fire.
(e)Structural – this concerns connections between the tilt slab wall panel to tilt slab wall panels, and tilt slab wall panels to foundation connections. It is pleaded there was insufficient grout to panel inserts around the foundation and wall starter bars and there was corrosion of the starter bars at the foundation to wall connections.
(f)Structural and/or fire and/or acoustic and/or other defects to be particularised.
[8] Accordingly, the claims prior to the sixth amended statement of claim dated 22 February 2019 were of standard causes of external water ingress, deficiencies in fire protection and of structural issues concerning tilt slabs.
[9] QLDC says the 22 February 2019 statement of claim added a head of claim entirely different from the previous claims. The challenged additions to the 22 February 2019 pleading concerns what are called “bathroom pods”. The bathrooms for each of the units in the building was constructed off site by the tenth third party. The prefabricated pods were then craned into location. The concrete slabs of the building had rebates into which the pods were located (the pods themselves having concrete floors). The floor levels of the pods and the floor in the building were then matched on site using shims. The use of these shims is one of the additional claims.
[10] It is pleaded that the pods themselves are not watertight. A claim in respect of the bathroom pods is first mentioned in the 22 February 2019 statement of claim under the heading “Structural”. The claim was: “Bathroom pods structurally deficient floor slab”. It is in the seventh amended statement of claim dated 1 May 2020, that the bathroom pods are dealt with under their own heading in the Schedule of Defects. The defects set out are:
(a)shower outlets constructed in a way that allows water to penetrate behind linings and/or into concealed spaces;
(b)junctions between tiling and water proofing in screens to baths or showers constructed in a way that allows water splash to penetrate behind the linings and/or into concealed spaces;
(c)lack of sealed junctions between fibre cement boards behind water proofing membrane on bathroom walls;
(d)bathroom pods have structurally deficient floor slab in that they were installed on plastic shims with no or sufficient grout applied underneath concrete basis.
[11] Accordingly, the claim for the bathroom pods is for a lack of internal water tightness and a structural claim relating to how the pods were installed in the rebated
floor slabs. QLDC says the defects with the bathroom pods are not connected in any way to the previously pleaded areas of damage.
[12] Accordingly, the bathroom pods were first mentioned in the 22 February 2019 sixth amended statement of claim in relation to a structural issue with the seventh amended statement of claim dated 1 May 2020, expanding the claim to include the lack of water tightness of the bathrooms themselves. The plaintiffs’ thirteenth and last amended statement of claim was filed on 17 December 2021 and repeats the pod claims with additional particulars save that the claim of a lack of seal to junctures described at [10](c) above is dropped.
[13] QLDC’s third party claim against the bathroom manufacturer is that, if the bathroom pods are leaking, then that is the responsibility of the tenth third party. I will deal with QLDC’s application first as if it is successful, it will also resolve the claim by the tenth third party.
The basis of QLDC’s application
[14] QLDC relies solely on the longstop provision under s 393 of the Act which provides:
393 Limitation defences
(1)The Limitation Act 2010 applies to civil proceedings against any person if those proceedings arise from—
(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; and
(b)in the case of civil proceedings that are brought against a person in relation to the issue of an energy work certificate, the date of the issue of the certificate.
[15] Ms Meechan QC, counsel for QLDC, submitted the application stood or fell on the longstop provision – it not being asserted in this application that the additional claim would be statute barred by virtue of the standard six year limitation.
[16] The plaintiffs’ submissions were based on the proposition they issued their proceeding pleading the act or omission for which the additional relief for the bathroom pods was sought, within the 10 year period. The submission was that the act or omission sued for was the negligent conduct. The original claim pleading the negligent conduct was issued in 2015, the “proceeding” in which relief for the bathroom pods was sought, commenced within 10 years of the negligent conduct. In substance, this submission means that the pleading of the negligent conduct took the longstop out of play in respect of any further claim for relief arising from the negligent conduct.
[17] Accordingly, on the plaintiffs case, QLDC’s application is misconstrued. The plaintiffs say the proceeding in which relief for 10 bathroom pods is sought was issued in 2015 and the negligent conduct has been pleaded in thirteen all versions of the statement of claim since then.
[18] In any event, the plaintiffs say the catch all set out at [7](f) above means it was clear the defects said to result from the negligent conduct were not a closed category. Further, the plaintiffs submit the bathroom defects are merely the consequences of the negligent conduct. This submission emphasises that the plaintiffs’ focus is on the acts or omissions, that is, the negligent conduct pleaded from the outset.
[19] QLDC based its submissions on the proposition that the longstop provision prevented the addition of a cause of action seeking relief for building work after the expiry of the 10 years from the negligent conduct. Accordingly, QLDC’s submissions were based on analysing whether the addition of the bathroom pods pleading was in substance a new cause of action, that is, a new claim for relief.
[20] Section 393(2) of the Act prohibits the obtaining of relief (as set out in [14] above). The plaintiffs’ argument focuses only on the act or omission and not on the amended relief that it sought in respect of the bathroom pods.
Principles applying to application to strike out
[21] Counsel were agreed on the principles which were conveniently set out in the submissions of Mr Lewis (counsel for the first defendant) as follows:
18.The strike out application is brought pursuant to rule 15.1. The established criteria for strike out were summarised by the Court of Appeal in Attorney-General v Prince2 as follows:
(a)Pleaded facts, whether or not admitted, are assumed to be true.
(b)The cause of action or defence must be clearly untenable.
(c)The jurisdiction is to be exercised sparingly, and only in clear cases.
(d)The jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument.
(e)The court should be particularly slow to strike out a claim in any developing area of law.
19.The principles set out in Attorney-General v Prince were affirmed by the Supreme Court in Cater Holt Harvey v Minister of Education.3
20.In cases where the strike-out application relates to part of the claim only, a careful assessment is required as to whether the time and expense of the application will, overall, be a compelling and efficient use of the resources of all involved.4
21.In order to succeed in striking out a cause of action as statute-barred the defendant must satisfy the court that the plaintiffs’ 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.5
[22] To the above, I add Ms Meechan’s submissions that r 15.1 of the High Court Rules 2016 (the Rules) entitles the Court to strike out parts of a pleading. Ms Meechan acknowledges that, while r 15.1(1) expressly contemplates the striking out of part of a proceeding, such requires a careful assessment as to whether the time
2 Attorney-General v Prince [1998] 1 NZLR 262 (CA).
3 Carter Holt Harvey v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78 at [10].
4 Whitman v Airways Corp of NZ Ltd (1994) 8 PRNZ 155.
5 Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721 at [33].
and expense of such an application will, overall, be a compellingly efficient use of resources of all involved.
[23] Ms Meechan notes here that the quantum claimed for the bathrooms is approximately $7,665,000 plus GST, professional and consent fees, and contract works insurance. A strike out would also remove the bathrooms as an entire area of factual inquiry. Should a strike out otherwise be warranted, in my view, that it involves part of a pleading in this case would not be a reason to decline the application.
The basis of QLDC’s argument
[24] Counsel says the plaintiffs have added a statute barred cause of action. Ms Meechan referred to the following passage from Commerce Commission v Visy Board Pty Ltd:6
[141] The applicable principles to determine whether an amendment creates a fresh cause of action are summarised by this Court in Transpower New Zealand Ltd v Todd Energy Ltd:7
(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 setup a new case “varying so substantially” from the previous pleadings that it would involve investigation of factual or legal matters, or both, “different from what have already been raised and of which no fair warning has been
6 Commerce Commission v Visy Pty Ltd [2012] NZCA 383.
7 Transpower New Zealand Ltd v Todd Energy Ltd [2007] NZCA 302 at [61] (referring to The Ophthalmological Society of New Zealand Inc v The Commerce Commission CA168/01, 26 September 2001 at [22]-[24]). Leave to appeal refused: Transpower New Zealand Ltd v Todd Energy Ltd [2007] NZSC 106.
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)).
[142] The question is therefore whether the amendment to the pleadings changes the claim against the defendant so that it is something essentially different from what it was before the amendment. A change of that nature can, as is clear from paragraph (c) of the passage of Transpower above, occur as a result of an alteration in matters of fact ...
[25] Ms Meechan said here, the addition of the claim concerning the bathroom pods was based on entirely new facts which were not even hinted at in the prior statements of claim.
[26]The Court in Commerce Commission noted that:8
… in order for an amendment to amount to a new cause of action, there must be a change to the legal basis for the claim. That can, in theory, occur through the addition of new facts, but only if the facts added are so fundamental that they change the essence of the case against the defendant. If the basic legal claims made are the same, and they are simply backed up by the addition or substitution of a new fact, that is unlikely to amount to a new cause of action.
[27]In short, has the essential nature of the claim changed?
[28] Ms Meechan emphasised that all statements of claim prior to 22 February 2019 were essentially on the same terms, all raising weather tightness issues or structural issues related to the tilt slabs. QLDC submits that a change to the factual basis of a claim can be so fundamental as to mean there is a new cause of action. Ms Meechan referred to the Court of Appeal decision in ISP Consulting Engineers Ltd v Body Corporate 89408:9
[22] The issue is whether the Owners were setting up a new case, in the sense of making new allegations that would involve the investigation of an area of fact of a new and different nature, or a new and different legal basis for a claim not put forward in the earlier pleading. To put the question more generally, does the Second CSC have an essentially different character from the First CSC?10 The assessment is objective and the consideration must be of the substance of what is pleaded, rather than the form.
8 Commerce Commission v Visy Pty Ltd, above n 6 at [146].
9 ISP Consulting Engineers Ltd v Body Corporate 89408 [2017] NZCA 160, (2017) 24 PRNZ 81 at [22].
10 The same approach was adopted in Smith v Wilkins & Davies Construction Co Ltd [1958] NZLR 958 (SC) at 959; and Weldon v Neal (1887) 19 QBD 394 (CA) at 395.
[29]The Court of Appeal noted:11
[25] It is clear that the importance of the pleaded fact to the success of the claim is not the test. The question is whether the proposed amendment will change the essential nature of the claim; is there a new area of factual enquiry?12 The fact 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 the facts.13
[30]The Court went on to note:14
… in the end, the assessment of whether there is a fresh cause of action can come down to a question of degree.
[31] The facts of ISP Consulting Engineers (ISP) were unusual. In that case the owners of apartments lodged claims in 2005 under the Weathertight Homes Resolution Services Act 2002, then in 2005 followed by a multi-unit claim in 2007. The claims were against the Wellington Council and ISP was not a party to any of those claims. The owners of apartments undertook remedial work which revealed structural defects beyond the jurisdiction of the Weathertight Homes Resolution Services Tribunal (WHRS Tribunal). In 2010, the apartment owners filed a separate claim for structural damage in the High Court against the Council, ISP and various other parties. An amended statement of claim was filed in those proceedings in December 2012. The apartment owners then considered it advantageous to file a fresh claim with the WHRS Tribunal in February 2014. ISP was named as a defendant in that fresh claim but successfully sought to be removed as a defendant on the basis it duplicated the existing 2010 structural proceedings against it in the High Court. The second WHRS Act weathertightness proceeding was removed to the High Court. It was then consolidated with the 2010 structural proceedings and a consolidated statement of claim was filed on 1 October 2015.
[32] The narrative in the Court of Appeal judgment records that, in the first consolidated statement of claim (2005), the apartment owners omitted to plead against ISP certain structural defects that had been pleaded in the 2010 structural proceedings.
11 ISP Consulting Engineers Ltd v Body Corporate 89408 above n 9.
12 Commerce Commission v Visy Board Pty Ltd, above n 6, at [142].
13 Attorney-General v Carter [2003] 2 NZLR 160 (CA) at [48].
14 ISP Consulting Engineers Ltd v Body Corporate 89408 above n 9 at [26].
Realising their error, the owners filed a second consolidated statement of claim four days later on 5 October 2015 correcting the omission.
[33] The Court of Appeal accepted the submission on behalf of ISP that the second consolidated statement of claim must be considered without reference to the prior pleadings: “A new pleading must render the pleadings it replaces inoperative. It no longer has any legal effect.” The Court held it was irrelevant in considering whether there is a fresh cause of action, that structural defects not pleaded in the first statement of claim were included in the pleadings prior to consolidation, thereby putting ISP on notice of those allegations.15
[34] Ms Meechan submitted the complaints in respect of the bathroom pods were wholly unconnected to previously pleaded defects. She noted the bathroom pods within the building raised internal moisture issues covered by a different part of the Building Code, that being relevant to external moisture. I accept Ms Meechan’s submission. Nothing in the pleading prior to 22 February 2019 touched on the bathroom pods; they are an entirely new area of factual enquiry. Nor do I consider the catchall defects pleading set out at [7](f) above, takes out of play the question of whether from a factual point of view the essential nature of the claim has changed. To accept that submission would be to signal that the longstop can be avoided by the inclusion of such catchall in a pleading. The outcome of QLDC’s application therefore turns on which of the two approaches advanced by counsel is the correct one.
The plaintiffs’ approach
[35] Mr Lewis submitted the question of whether the 10 year longstop applied was a different question from whether a new cause of action had been added to the pleading. Mr Lewis focused on the wording of s 393 and said the acts or omissions on which the claim for the bathroom pods was based, that is, the negligent actions, had been in each amended statement of claim since the claim was commenced in 2015.
[36] Mr Lewis submitted the 10 year longstop was not concerned with the accrual of causes of action. He submitted QLDC’s approach was in error as it mixed two
15 ISP Consulting Engineers Ltd v Body Corporate 89408, above n 9 at para [20].
limitation principles, that is, whether a pleading added a new cause of action and whether the longstop applied.
[37] Mr Lewis also noted the strike out application required leave; it being filed on 25 February 2022 when the close of pleadings date was 17 December 2021. He noted the bathroom pods were first included in the statement of claim dated 22 February 2019 and there is an unexplained delay of over two years before the application to strike out was made. He expressed concern that, should this judgment be subject to review,16 and any subsequent appeal, that there would not be time for those processes to be completed before the scheduled commencement of the hearing in February 2023.
[38] Given the Christmas/New Year break, had the strike out been filed on 17 December 2021, it would not have been heard any earlier than the application filed in the New Year of 2022.
[39] Mr Lewis also submitted the application was an attack on particulars rather than on elements of the cause of action. This was not Mr Lewis’ strongest point, being an issue of form over substance. The addition of the bathroom pods particulars has added a further damages claim in excess of $7,665,000.
[40] Ms Meechan submitted the application is aimed at surgically excising those aspects of the statement of claim dealing with bathroom pods. I accept her submission and do not consider Mr Lewis’ criticism, that the strike out is aimed at particulars, one of substance.
[41]I am satisfied it is appropriate to grant leave for the present application.
16 Review being available in this case as the proceeding was commenced prior to 31 March 2017 – High Court Rules 2016, (as at 18 October 2016) r 2.3.
QLDC’s response to the plaintiffs’ submissions
[42] Mr Lewis said that the decision in Body Corporate 346799 v KNZ International Co Ltd (the Victopia decision) was a six year case rather than a longstop case.17 Ms Meechan submitted that was not correct.
[43] Having reviewed Palmer J’s decision in Victopia, I consider it does not support the plaintiffs’ approach. Victopia is a case with many similarities to the present case. There, the proceeding was issued in 2012 and the statement of claim was amended in 2015 to add allegations of fire safety defects. The Auckland City Council submitted:18
…The fire safety defect aspects should be struck out because they effectively constitute a new cause of action which has been brought outside the limitation periods under the Limitation Act 2010 and the Building Act 2004.
[44] Accordingly, the Victopia decision involved the application of the longstop to an amendment to pleadings after the 10 year period.
[45] Justice Palmer approached the strike out by examining whether the statement of claim that added the fire safety defect claim added a new cause of action. His Honour did so by setting out the test from Transpower relied on by the Council reproduced at [24] above.
[46] The plaintiff in Victopia relied on a similar argument to the one advanced by the plaintiffs here noting:19
… that the limitation provisions of the Building Act 2004 refer to proceedings that “arise out of the issue of a building consent, a code compliance certificate” which these proceedings did before amendment and still do.
[47] Justice Palmer did not dismiss the longstop on the basis proposed by Mr Lewis in the present case. His Honour in Victopia went on to consider whether the addition of the fire claim did add a new cause of action saying:20
17 Body Corporate Body Corporate 346799 v KNZ International Co Ltd [2016] NZHC 1523.
18 Body Corporate 346799 v KNZ International Co Ltd, above n 17 at [8].
19 Body Corporate 346799 v KNZ International Co Ltd ,above n 17 at [22].
20 Body Corporate 346799 v KNZ International Co Ltd, above n 17 at [25].
I consider the fire safety defects are additional particulars of defects alleged in the Statement of Claim that do not change the essence of the claim being met by the Council.
[48] His Honour went on at [26] to say he did not consider that the factual situation which entitled the Body Corporate to claim against the Council was “essentially different” from before.
[49] Accordingly, the strike out was dismissed but in reaching that conclusion Palmer J treated the strike out under the Limitation Act 2010 and the Building Act 2004 as turning on the same point, that is, whether a new cause of action had been added.
Discussion
[50] In my view, when s 393(2) of the Act refers to a proceeding, it is referring to the proceeding as it exists at the time the longstop is said to apply. Section 393(2) is a limitation provision. For limitation purposes, it is the statement of claim as it exists at the time limitation is asserted to apply that is important. As the passage set out from ISP referred to at [33] above confirms, each iteration of the statement of claim replaces the previous ones. Earlier versions of the statement of claim are, for limitation purposes, treated as if they did not exist. Mr Lewis’ submissions proceeded on the basis that the “proceeding” for the purposes of s 393 was the claim as commenced in 2015. “Proceeding” is not defined in the Building Act 2004. “Civil proceeding” is defined in the Limitation Act (as below) but such is not of much assistance:
civil proceeding means a proceeding that is neither a criminal proceeding nor a disciplinary proceeding.
[51] The predecessor to s 393(2) is s 91(2) of the Building Act 1991. As originally enacted, it provided:
(2) Civil proceedings may not be brought against any person 10 years or more after the date of the act or omission on which the proceedings are based.
[52] The 2004 version of the Building Act added the words: “relating to building work” after civil proceedings.
[53] After amendment by s 58 Limitation Act 2010, the wording of s 393 differed in barring the granting of relief in respect of a civil proceedings. The relief sought in a proceeding at any given time depends on the wording of the statement of claim. The relief which is subject to challenge here relates to the bathroom pods. When s 393 refers to “those proceedings”, it is referring to the proceeding in which the challenged relief is sought.
[54] In my view, the statement of claim as at the date the longstop is asserted to apply, is the plaintiffs’ proceeding for the purposes of s 393 and I consider that is consistent with the definition of ‘proceeding’ in r 1.3 of the Rules which is:
proceeding means any application to the court for the exercise of the civil jurisdiction of the court other than an interlocutory application.
[55] The plaintiffs’ application to the Court for the exercise of the Court’s civil jurisdiction, that is, its request for relief, is its current statement of claim. It was the 22 February 2019 claim that for the first time sought relief for defects in the bathroom pods said to arise from the negligent conduct. It is the addition of that claim for relief that is barred by the longstop. Were it otherwise, the policy behind the longstop would be undermined. The plaintiffs’ argument makes the longstop provision subservient to reasonable discoverability.
[56] The commencement of a broadly pleaded statement of claim against a local authority would, on the plaintiffs’ case, from that point take the longstop out of play. It cannot have been intended by parliament that the longstop, being an “overarching limit on liability”, could be sidestepped through judicious pleading.21
[57] Here, as noted, the plaintiffs suggest the bathroom pods claim is not a fresh claim, applying the principles in Transpower set out at [24] above. In any event, I accept Ms Meechan’s submission that the bathroom pods represent the addition of new facts so fundamentally different from the claim as it stood immediately prior to the 22 February 2019 statement of claim, that the bathroom pods claim represents
21 Southland Indoor Leisure Centre Charitable Trust v Invercargill City Council [2014] NZHC 1439 at [71].
a new cause of action, that is, a new claim for relief added to the claim outside the longstop provision.
[58]It follows the application to strike out succeeds.
Further submissions filed
[59] Having reached the point set out above, counsel for QLDC filed a memorandum on 23 March 2022 seeking leave to bring to my attention the decision of Woodhouse J in Body Corporate 360683 v Auckland Council.22
[60]Rule 11.8A of the Rules provides that:
(1)This rule applies after a proceeding or an application has been heard but before judgment has been given.
(2)A party may file a memorandum seeking leave to make further submissions.
(3)The Judge responsible for the judgment may grant leave to a party to make further submissions.
[61] The above rule reflects the requirements of practice note [1968] NZLR 608. The practice note records that it is only in exceptional circumstances that leave will be granted, for example, when “… some pertinent … authority has been overlooked …”. That is the case here, Woodhouse J’s decision is in my view directly on point. Leave was granted and an opportunity given to the plaintiffs to file reply submissions to QLDC’s submissions which in substance only summarised Woodhouse J’s decision.
Woodhouse J’s decision
[62] By a different path, Woodhouse J reached the same view as I have set out above. In Body Corp 360683 (“Orewa Grand”), an architect sought to strike out parts of an amended statement of claim which alleged the architect had negligently carried out on-site observations and inspections during the construction of an apartment building.23 The pleading of negligent on-site observation and inspections was wholly new. The strike out application was brought on the same basis as the present one, that
22 Body Corporate 360683 v Auckland Council [2017] NZHC 1785.
23 Body Corporate 360683 v Auckland Council, above n 22.
the amendments to the pleadings were a new cause of action which were time barred by virtue of the longstop.
[63] The following passage from Orewa Grand, in my view, confirms it deals with the same question in issue here:24
But the owners argue that the reference in s 393(2) to when “proceedings are brought” is a reference, as Ms Grant submitted to ‘the date when a proceeding is commenced initially and not when amendments to the claim may be brought’ ”.
[64] Counsel advancing the submission accepted the argument was novel. However, Woodhouse J described the argument as “misconceived”. The substance of his Honour’s reasoning is as follows:25
[27] Ms Grant’s submissions were directed only to the word “proceedings” and the use of that word in the expression “if the proceedings are brought”. The argument ignores the opening words of s 393(1) – the Limitation Act 2010 applies to civil proceedings as defined in s 393(1). Section 393 must be given effect consistently with the Limitation Act because that Act governs s 393.
[28] The time limits under the Limitation Act are expressly directed to the date on which the claim is brought, not when the proceeding is first filed in Court. The word “claim” replaced the word “action”, and the expression “cause of action” used in the Limitation Act 1950, but that makes no difference.
[29] Under s 11(1) of the Limitation Act 2010, the primary limitation period for the owners’ observation claim is six years after the date of the act or omission on which the claim is based. A further provision in s 11 extends the period by three years after the “late knowledge period”, and there is a “long stop period” of 15 years after the date of the act or omission on which the claim is based.
[3] Section 393(2) of the Building Act introduced the 10 year long stop period for civil proceedings of the type defined in s 393(1). Construing s 393 consistently with the relevant provisions of the Limitation Act 2010, it is clear in my judgment that the word “proceedings” is to be given the same meaning as “claim” in the Limitation Act 2010, and the word “action” in the Limitation Act 1950.
Plaintiffs’ response to Orewa Grand
[65] Plaintiffs’ counsel sought to distinguish Orewa Grand on the basis in that case, new acts or omissions on which the amended claim was based were pleaded. That is
24 Body Corporate 360683 v Auckland Council, above n 22.
25 Body Corporate 360683 v Auckland Council, above 22 at [27]-[30].
said not to be the case here. Further, Mr Lewis submits Orewa Grand does not correctly interpret s 393 of the Act. In addition, Mr Lewis relies on the plaintiffs having applied to have the buildings assessed by the WHRS Tribunal assessor as noted in [6] above.
Orewa Grand
[66] Mr Lewis submits in Orewa Grand the original claim was based on negligent design but was later amended to introduce a claim for negligent observation. It was this new act or omission that gave rise to a new cause of action whereas, here, the plaintiffs’ claim in respect of the bathroom pods is based on the same acts or omissions that have been pleaded throughout, that is, the negligent conduct.
[67] I do not accept this is a valid basis to distinguish Orewa Grand. In discussing the “highest level of abstraction”, the test from Transpower noted at [24] above, part of the test used to determine whether an amendment introduces a new claim. Woodhouse J said:
[11] The highest level of abstraction does not mean the highest theoretical level of abstraction. The abstraction cannot go to a point where the facts relied on by the plaintiff are so abstract that an essential factual element of the cause of action has not been identified.
[68]Woodhouse J went on to say at [17]:
[17] The cause of action in the prior pleading was not that the architects had been negligent in the provision of architectural services. A pleading to that effect would have been so abstract that, although it retained linguistic meaning, it would not be sufficient to identify the activity which, in the words of Brett J in Cooke v Gill, “the defendant would have a right to traverse.”
[69] Here, describing the cause of action against QLDC as being that it was negligent in issuing building consents, undertaking inspections of the works and issuing code compliance for the buildings, would be in the same category as the example in the preceding paragraph. In short, the allegation of negligence cannot be separated from the core factual propositions that make up the cause of action, that is, that found the relief that is sought. The relevant question in this case is whether the essential nature of the factual enquiry introduced by the 2019 amendment gives rise
to a fundamentally different claim. I am satisfied it does. Accordingly, I remain of the view that Orewa Grand is a relevant authority.
[70] Mr Lewis then discussed whether Orewa Grand was binding on an Associate Judge. I consider the authority on point whether it is binding or not. Mr Lewis submitted that “in Orewa Grand there was a new proceeding in terms of s 393 and there was a different legal basis for the claim resulting in a fresh cause of action”. This submission seems to cut across Mr Lewis’ proposition that the proceeding for the purposes of s 393 is as it was originally filed.
[71] A further ground for distinguishing Orewa Grand was advanced on the basis that what QLDC seeks to have struck out here are particulars as opposed to allegations. As I have already commented, I do not see this as a point of distinction. The addition of these “mere particulars” adds a claim of in excess of $7,665,000 plus GST. Whether s 393 applies is a matter of substance, not of labels.
WHRS registration
[72] Mr Lewis notes a further difference between this case and Orewa Grand is that here (unlike in Orewa Grand), an application was made under s 32(1) of the Weathertight Homes Resolution Services Act 2006 well within the 10 year period. Mr Lewis, referring back to his earlier submissions, submits that such an application “stopped time running for the purposes of any claim the owner of the leaky dwelling house may wish to bring in respect of the dwelling house”. Mr Lewis acknowledges that during oral submissions he made the concession that the WHRS application would not improve the plaintiffs’ position as far as limitation was concerned in relation to the longstop but sought to qualify that in his reply submissions.
[73] While it is commonly said applying for an assessor’s report under s 32 of the WHRS Act 2006 stops time running, that is not in fact what s 37 of that Act says. Section 37(1) says:
(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.
[74] It is clear that the effect of applying for an assessor’s report on limitation is the same as if proceedings had been filed in a court. Filing a claim in court does not rob the longstop provision under the Act of any effect. Accordingly, requesting an assessor’s report cannot have that effect. Where an assessor’s report was requested, one approaches the question of whether an amendment to a pleading is barred by the longstop on the same basis as if the proceeding had been filed in the Court from the outset. That is how s 37(1) directs the question of limitation to be addressed.
[75] Accordingly, I do not accept Mr Lewis’ submission that the application for an assessor’s report here, “… stopped time running for the purposes of any claim … the plaintiffs may wish to bring.” That is too wide a description of the effect of s 37(1).
[76] Finally, in respect of Orewa Grand, Mr Lewis submitted that the purpose of s 393 of the Act is to put the parties on notice that a proceeding has been brought against them in respect of an act or omission within the 10 year period. He submits there is no indication that, in enacting s 393, parliament intended to deprive plaintiffs of the ability to add fresh causes of action within the same proceeding based on the same act or omission. It is submitted that would effectively create a second unintended de facto limitation period based on causes of action (in addition to the six year limitation in the Limitation Act 1950).
[77] Here, the claim as it existed prior to the 22 February 2019 claim did not give QLDC any notice of the claim for relief in relation to the bathroom pods. At that stage no such claim had been made. The point of the approach from the Commerce Commission and Transpower set out at [24] and [26] above, is that test asks whether the amendment in question means a defendant is facing a claim of which they have not had prior notice. Applying that approach to whether the 10 year longstop applies to an amendment to a pleading, in my view, is consistent with how amendments have been treated for limitation purposes in the past.
[78] Whether by the approach as set out in Orewa Grand or the one I have articulated, I am satisfied that the addition of the bathroom pods claim is out of time. QLDC’s application is granted. The parts of the thirteenth amended statement of
claim dated 17 December 2021 out at [1](b) of the application dated 25 February 2022, are struck out.
Costs
[79] There is no reason why costs should not follow the event on a 2B basis with certification for second counsel. If no costs submissions are filed by either party within five working days of the date of this judgment, then that shall be the costs order.
The tenth third party’s application
[80] It follows from the conclusion reached above that the bathroom manufacturer’s application to strike out QLDC’s third party claim must be granted as QLDC is no longer facing a claim for the bathrooms.
[81] Given the tenth third party’s application was fully argued, I make some brief comments as to what I would have decided if QLDC’s application had been dismissed. Ms Meechan submitted that QLDC’s claim for contribution was not time barred because applying s 14 of the Limitation Act 1950, the earliest point in time at which everything has happened, which would have to be proved to enable QLDC to obtain judgment against the third party, has not yet occurred. Section 14 of the Limitation Act 1950 provides:
14.Accrual of cause of action on claim for contribution or indemnity
For the purposes of any claim for a sum of money by way of contribution or indemnity, however the right to contribution or indemnity arises, the cause of action in respect of the claim shall be deemed to have accrued at the first point of time when everything has happened which would have to be proved to enable judgment to be obtained for a sum of money in respect of the claim.
[82] Ms Meechan submitted s 14 of the Limitation Act 1950 provides a code for seeking contributions from joint tortfeasors that can be read consistently with the Building Act is longstop provisions, and to the extent the two cannot be remedied, the codified contribution regime should take precedence.
[83] I am not attracted to this submission for the reasons given by Tipping J at para [8] of Johnson v Watson.26 The longstop is not concerned with when a cause of action accrued, which is what s 14 of the Limitation Act 1950 is concerned with. The longstop is a 10 year bar running from the act or omission in issue.
[84] I would not have followed BNZ Branch Properties Ltd v Wellington City Council where the Court said:27
Section 17(1)(c) of the Law Reform Act, together with the operative provisions of the 2010 Act, (and before it the Limitation Act 1950) create a code for the bringing of contribution claims. The right to contribution is untouched by s 393 and the longstop in s 392(2) (and was untouched by s 91 and the longstop in s 91(2)).
[85] This seems to me to treat the rules relating to the accrual of the right to seek contribution as being paramount when the longstop is not concerned with the accrual of rights.
[86]When Tipping J said:
A plaintiff cannot in any circumstances sue more than 10 years after the act or omission on which the proceedings are based, if the case involves, as this one clearly does, building work associated with the construction of a building.
He was confirming the longstop prevents any relief being granted.
[87]Rule 4.7(2) of the Rules provides:
(2)A third, fourth, or subsequent party has the same rights of defence as a defendant to the proceeding.
[88] To me, this rule reinforces that the third party is entitled to rely on the longstop as if it was a defendant to the proceeding. Whether a third party is entitled to rely on a longstop provision is determined as if they were a defendant.
26 Johnson v Watson [2003] 1 NZLR 626.
27 BNZ Branch Properties Ltd v Wellington City Council [2021] NZHC 1058 at [69].
Costs
[89] I make the same order as to costs in favour of the tenth third party, as set out at [79] above.
Associate Judge Lester
Solicitors:
Grimshaw & Co, Auckland (for Plaintiffs)
Wynn Williams, Christchurch (for First Defendant) Anthony Harper, Christchurch (for Tenth Third Party)
Copy to counsel:
C M Meechan QC, Barrister, Auckland (for First Defendant)
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