Body Corporate 417948 v Watts & Hughes Construction Limited

[2019] NZCA 113

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

 CA484/2018
 [2019] NZCA 113

BETWEEN	BODY CORPORATE 417948 AND OTHERS NAMED AT SCHEDULE 1 OF THE NOTICE OF APPEAL Applicant
AND	WATTS & HUGHES CONSTRUCTION LIMITED First Respondent
AND	TAURANGA CITY COUNCIL Second Respondent
AND	AVERY TEAM ARCHITECTS LIMITED Third Respondent
AND	MPM PROJECTS (2003) LIMITED Fourth Respondent
AND	GMR HOLMAC LIMITED Fifth Respondent
AND	TILE TRENDS LIMITED Sixth Respondent
AND	ARMSTRONG PLUMBING (BOP) LIMITED Seventh Respondent
AND	HOLMES STRUCTURES LIMITED (IN LIQUIDATION) Eighth Respondent
AND	OMAHA INVESTMENTS NO. 1 LIMITED Ninth Respondent
AND	ROBERT JAMES FOSTER Tenth Respondent
AND	BAY OF PLENTY ASPHALT LIMITED Eleventh Respondent

Court:	French and Williams JJ
Counsel:	B M Easton and A K Hough for Applicant G J Kohler QC for First Respondent A V Davison Second Respondent No appearance for Third Respondent M S R Lucas for Fourth Respondent V A Whitfield for Fifth Respondent T D Gee for Sixth Respondent N S Elsmore for Seventh Respondent No appearance for Eighth Respondent D P Turnbull and H K Harkess for Ninth and Tenth Respondent M P Ward-Johnson for Eleventh Respondent
Judgment: (On the papers)	16 April 2019 at 10.00 am

JUDGMENT OF THE COURT

AThe application for leave to appeal is granted.

BThe approved question for consideration by this Court is whether the requirements of r 7.6 of the High Court Rules 2016 are satisfied on the facts of this case.

CWe make no order as to costs.

____________________________________________________________________

REASONS OF THE COURT

(Given by Williams J)

1. The applicants seek leave to appeal pursuant to s 56(5) of the Senior Courts Act 2016 having been declined such leave in the High Court.[1]

   [1]Body Corporate 417948 v Watts & Hughes Construction Ltd [2018] NZHC 2692.

2. The proceeding involves a substantial apartment complex suffering from weathertightness issues.  At a case management conference Downs J set the proceeding down for a ten-week trial beginning 13 July 2020.  The applicants were opposed to this course.  They argued:

   The plaintiffs ought to be permitted to complete the repairs and crystallise their losses before a trial date is allocated.  The orders proposed in [the second respondent’s] memorandum cut across that prerogative.

   (Emphasis added.)

3. The applicants proposed that the conference be adjourned for approximately a year to allow the completion of repairs.  The Judge rejected this course in a minute dated 27 July 2018:

   [4]       I am not prepared for the case to “drift” until repairs are complete.  The horizon is too open-ended.  I acknowledge repairs can cost more than is expected, but the experts can allow for contingencies. 

4. In the applicants’ leave application in the High Court the substantive ground upon which leave was sought was that the Judge erred in both fact and law because he allocated a trial date against the wishes of the applicants and the proceeding could not be readied for trial until the property is repaired so that the actual repair costs and consequential losses are crystallised.

5. In the application for leave to this Court, the applicants’ grounds expanded with specific reference to r 7.6 of the High Court Rules 2016.  The grounds included the following:

   It is seriously arguable that the learned High Court Judge erred in fact and in law by fixing a trial before the repairs are finished.  Until such time as that occurs:

   (a)There is the need for significant amendments to the pleadings to reflect information gleaned during the repairs, including actual cost/loss data, and potentially new building defects;

   (b)There is the need for significant refinement of the issues in the proceeding, namely the nature and extent of the building defects, and actual losses incurred by the Body Corporate; and

   (c)The Body Corporate is unable to exercise its “obvious choice”.

6. The applicants filed five affidavits in support of their application to this Court.  The deponents comprised the architect who provided the initial estimated repair timeline for the project, a director of the Body Corporate secretary with experience in issues related to the repair of leaky buildings elsewhere, a quantity surveyor, the Chairman of the Body Corporate, and the Chairman of a different Body Corporate who had experience with similar issues.  The thrust of their evidence was that complex weathertight building remediation often produces significant new issues and unexpected extra costs once the repair work begins and the true state of the building becomes apparent.  Cost assessments, it was said, were sometimes exceeded by significant margins as a result.  This material was not before the Judge.

7. While the case put by the applicants in the High Court for delaying setting the matter down was unsophisticated to say the least, the question now advanced in this Court does raise a matter of importance in the context of the timing of fixtures in complex building remediation cases.  In light of the fact that the allocated fixture is still more than a year away, and that timetabling directions have been made in the meantime, delay occasioned by hearing the appeal is unlikely to be significant.  Finally, we consider the question of the correct application of r 7.6 of the High Court Rules to be arguable. 

8. We grant leave to appeal accordingly on the question of whether the requirements of r 7.6 of the High Court Rules are satisfied on the facts in this case.

9. Should the respondents who opposed leave wish to file evidence in response to that of the applicants, they should advise the Court accordingly so that timetabling orders may be made.

10. In light of the way in which the grounds of the application and appeal have developed in this case we are not minded to make a costs order.

Result

1. The application for leave to appeal is granted.

2. The approved question for consideration by this Court is whether the requirements of r 7.6 of the High Court Rules 2016 are satisfied on the facts of this case.

3. We make no order as to costs.

Solicitors:
Grimshaw & Co, Auckland for Applicant
Hornabrook MacDonald Lawyers, Auckland for First, Fourth and Fifth Respondents
Rice Speir, Auckland for Second Respondent
Gibson Sheat, Wellington for Sixth Respondent
Hollister-Jones Lellman, Tauranga for Seventh Respondent
McElroys, Auckland for Ninth and Tenth Respondents
Lyon O’Neale Arnold, Tauranga for Eleventh Respondent