Body Corporate 421364 v Wellington City Council

[2019] NZHC 739

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2018-485-179

[2019] NZHC 739

BETWEEN

BODY CORPORATE 421364 AND OTHERS

First to twelfth plaintiffs

AND

WELLINGTON CITY COUNCIL AND OTHERS

First to seventh defendants

Hearing:

22 March 2019

Appearances:

E Dalzell and D Thorne for plaintiffs D Barr and N Taylor for first defendant M Freeman for second defendant

No appearances for third defendant J Scragg for fourth defendant

No appearances for the fifth, sixth or seventh defendants

Judgment:

8 April 2019

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

Introduction

[1]    The matter before the Court is an interlocutory application by the first defendant (the Wellington City Council) pursuant to pt 5 of the High Court Rules 2016 for further and better particulars of the plaintiffs’ (Body Corporate 421364 and the owners of the unit titles in the building which the body corporate owns) amended statement of claim dated 23 October 2018.

[2]    At the outset of the hearing I dealt with an unrelated application by the solicitors acting for the second defendant (Headland Group Ltd) for leave to withdraw as solicitors on the record. I granted Thomas Dewar Sziranyi Letts such leave. The

BODY CORPORATE 421364 v WELLINGTON CITY COUNCIL [2019] NZHC 739 [8 April 2019]

second defendant’s address for service is now 11 Rifle Range Road, Ohariu Valley, Wellington 6037. His firm having been granted leave to withdraw, Mr Freeman took no further part in the application.

[3]    The first defendant’s application is generally supported by the fourth defendant, but Mr Scragg, counsel for the fourth defendant, did not offer any submissions during the course of the hearing.

[4]The third, fifth, sixth and seventh defendants took no part in the hearing.

[5]    Before hearing from Mr Barr for the first defendant and Mr Dalzell for the plaintiff, I indicated that it was not obvious to me that it was necessary to hear full argument on the application because the practical solution seemed obvious. In a nutshell, the plaintiffs do not necessarily resist the first defendant’s application for further and better particulars. They say they are obtaining additional expert advice and that when that advice is to hand they will be filing and serving a further amended statement of claim that will provide much, if not all, of the information sought. They freely acknowledge that they are not entitled to ask the Court to set the matter down for trial until that occurs because to do so would be to place the first defendant (and the other defendants) at a disadvantage. It appeared to me that, whatever the merits of the first defendant’s application, the sensible approach would be to allow that process to run its course. I adjourned briefly to allow counsel to discuss this. They did so. However, when the Court resumed, Mr Barr indicated to me that the first defendant proposed to pursue its application, as of course it was entitled to do.

[6]    At the conclusion of the hearing, my view about the proper outcome of this application had not changed.

Principles governing the particularisation of claims

[7]    Part 5 of the High Court Rules 2016 sets out the requirements for pleadings generally.

[8]    The guiding principle as it applies to statements of claim is abundantly clear. A claimant must articulate his, her or its claim with sufficient particularity to ensure

that the parties against whom the claim is made are fairly informed as to the case that has to be met.1 It is as simple as that. However, the courts have always recognised that it may not be possible for a claimant to articulate the case to the extent required on the commencement of proceedings, and that claims expand, contract and alter in their complexion as interlocutory stages proceed. Equally, a claimant’s case may change depending on forensic investigation or the briefing of witnesses of fact or experts. So, it is fair to say that the particularisation of the case is often an iterative process. That is especially so in certain categories of case, and I would venture to suggest that weathertight building litigation is an obvious example of such a category of case. There is ample recognition of all this in the authorities.

[9]    The essential protection for a defendant is the close of pleadings date. The close of pleadings date rules a line. Once it has passed no party may amend its pleadings without the Court’s leave. And of course, no party may lead evidence at trial that goes materially beyond its pleaded case without leave. Generally, leave will not be granted if this would give rise to unfairness.

[10]   So, an important aspect of the management of litigation involves the setting of the close of pleadings date. As a rule, at a final case management conference, once both parties have indicated that they have fully and finally articulated their cases in their pleadings, and do not anticipate any, or any further, amendment, the Court will fix the close of pleadings date. Until that happens, a party is not at risk of being surprised. In this case, we are far from that stage.

The factual background

[11]   It is unnecessary for the purposes of this interlocutory judgment to describe the factual background in great detail.

[12]   The first-named plaintiff is the Body Corporate, which is the registered owner of a unit title complex in Wellington. The second to twelfth-named plaintiffs are the owners of the unit titles in the complex. They say that the complex is not weathertight. They say that they have claims against the first to seventh defendants, all of whom

1      High Court Rules 2016, r 5.26(a) and (b).

they accuse of negligence in relation to the construction of the property, which they say caused the alleged weathertightness problems and their losses. Their primary claim is for the cost of rectification. At this stage, quantum is necessarily speculative because the plaintiffs have not carried out the remedial work. All in all, it is a very common scenario.

The plaintiffs’ claim

[13]   In their amended statement of claim, the plaintiffs make some key accusations as to the alleged negligence of each of the seven defendants, and then say that as a result of that negligence the building suffers from certain defects. Those defects are said to relate to:

(a)the roof;

(b)the cladding;

(c)the decking;

(d)junctions between cladding and joinery;

(e)the block walls;

(f)inadequate protection at the transition points between exterior block walls and internal environments;

(g)the flashings; and

(h)the insulation.

[14]   They plead that those defects have resulted in various types of damage, all broadly related to moisture ingress.

[15]   Then their pleading turns to the necessary remedial work and in paragraph 24 of the amended statement of claim this is described in general terms. For example, it

is said that the replacement of some roof flashings and the removal and relaying of

some areas of the roof cladding will be necessary.

[16]   As to the cost of remedial work, this is estimated to be $1,350,000 plus GST. During the course of the hearing Mr Dalzell told the Court that, since this amended statement of claim was filed and served, further investigations indicate that the figure will be more than double that.

[17]   Appended to the plaintiffs’ amended statement of claim is a schedule referred to as a ‘Defects Chart’. This extends to some 24 pages. It is an attempt to provide detail in relation to each of the defects.

[18]   In the Defects Chart, the first column seeks to break down the alleged defects referred to in paragraph 21 of the statement of claim. So, for example, the defects connected with roofing are broken down into the inappropriate positioning of the downpipes, poor detailing of the flashings, the incompatibility of certain materials that are in contact with each other, poor detailing of the roof cladding itself and the inadequacy of the roofing underlay. The second column contains examples of the locations where these defects have been identified. The third column contains allegations as to the consequential damage and future likely damage. The fourth column seeks to attribute these defects to either design or construction issues. The final column identifies the building standards, trade practices or manufacturers’ instructions that are said to have been breached.

[19]   It is fair to say, as the first defendant says, that the pleading is replete with qualifications. The Defects Chart notes, in relation to each category of defect, that there may be additional defects not listed because not every elevation of every unit has been tested. The phrase “including but not limited to” is used on several occasions throughout the statement of claim. Furthermore, as already mentioned, the listed locations in the Defects Chart are said to be examples and not an exhaustive list.

[20]   As I understand it, there are three key respects in which the first defendant says the plaintiffs’ pleading are inadequate.

[21]   First, it is said that the plaintiffs’ have not provided adequate particulars of the defects they say the property suffers from. The argument is not so much that the plaintiffs have not identified the alleged defects — they have. It is more a matter of the form of the pleading.

[22]   So, at the conclusion of paragraph 21 of the statement of claim, in which the plaintiffs identify the categories of defects from which they allege the building suffers, there is this:

The defects set out above and further particularised in schedule 2 to this statement of claim are collectively referred to as the defects. The defects are based on investigations of the townhouse units undertaken to date and are not exhaustive. Other defects and damage may become apparent as a result of the plaintiffs undertaking additional investigations.

[23] This is a clear message that the plaintiffs’ claim may not be fully particularised and that there may be more to come. Likewise, there are the further such indications in the schedule that I have referred to at [18].

[24]   Finally, the pleading is criticised because the cost of remediation is an estimate only.

The first defendant’s argument

[25]   The first defendant says this is not good enough. It says the plaintiffs must nail their colours to the mast. They must say whether the defects identified, and the examples given, are exhaustive or not. At very least, they must say whether they are asserting that the problem is a systemic one requiring the complete replacement of the allegedly defective aspect of the building (the roof for example) or whether targeted repairs will be good enough. And, of course, they say that the plaintiffs must give them a final claim figure (as opposed to a mere estimate).

[26]   The first defendant’s expert, Ms Dianne Johnson, who is a well-respected surveyor who has given evidence in a number of weathertightness cases, says that, as matters stand, she is unable to identify whether the plaintiffs are alleging that the examples given of defects illustrate a systemic problem or not. The plaintiffs’ expert, Mr Thomas Wutzler, who is equally well respected in the area, disagrees.

[27]   In my view, this difference between the experts is not something that the Court needs to resolve.

[28]   Were it necessary to do so, I would be inclined to prefer Ms Johnson’s evidence, but only because the plaintiffs do not maintain that their case is yet fully particularised.

The plaintiffs’ response

[29]   Mr Dalzell advanced two principal responses to the first defendant’s criticisms of the amended statement of claim.

[30]   First, he submitted that a plaintiff in a case such as this is entitled to plead the existence of a defect and then provide examples of this as illustrations of the way in which the defect has manifested itself. That, in my view, is correct and, broadly speaking, consistent with Kós J’s observations in Platt v Porirua City Council.2 But what it does not respond to is the first defendant’s contention that the plaintiffs should clearly allege the defects are systemic in nature, such that full replacement is necessary, if that is in fact their case.

[31]   Accordingly, if that is as far as the argument went, I would be inclined to order that the plaintiffs state with specificity the remedy that they seek.

[32]   However, Mr Dalzell’s second point which, in my view, is the practical answer to this application, is that as matters stand the plaintiffs themselves are not in a position definitively to say whether the alleged defects are of a systemic nature (or, obviously, put a final figure on the costs of remedial work). The plaintiffs are still gathering information and seeking advice from their expert advisers. When that exercise is complete, they propose to file a further amended statement of claim in which they will:

(a)further particularise the defects and provide any additional examples that become apparent;

2      Platt v Porirua City Council [2012] NZHC 2445.

(b)be in a position to say whether they are seeking, for example, a complete re-roofing or targeted repairs; and

(c)put a final cost on the work they allege is required.

[33]   As he submits, it is hard to see what point there would be in making an order requiring the plaintiffs to file a further amended statement of claim at this stage, providing what further information they currently have to hand, when all concerned know that the investigations are not complete and that a further pleading will need to be filed.

[34]   In the course of argument, Mr Barr emphasised the evidence offered by the first defendant that its motivation in seeking clarity on the pleadings as early as possible was its policy to seek to resolve litigation such as this at the earliest possible stage and that it is unable to initiate settlement negotiations until such time as the claim is adequately pleaded. That approach is to be encouraged. However, as Mr Dalzell submitted, it cannot detract from a plaintiff’s entitlement to carry out all necessary investigations before committing itself to a final pleading.

[35]   The corollary of this is of course that the plaintiffs must accept that they are not entitled to ask the Court to set the matter down for trial until such time as their claim is finalised.

[36]   Once that occurs, the first defendant — and indeed the other defendants — will then be able to re-evaluate the precision of the plaintiffs’ pleading and make a judgement as to whether they wish to obtain any further particulars (or take any other step such as administering interrogatories).

Conclusion

[37]   In my judgement, that is the sensible course here, and I decline to make any order at this stage.

[38]   A matter that received some attention during the course of the hearing was the efficacy or otherwise of the what I will describe as the inclusive components of the

plaintiffs’ current pleading — that is to say, those components that identify defects as

including but not limited to and the locations of the damage being examples only.

[39]   The first defendant expressed concern that if such pleadings remained extant when the matter went to trial, it would entitle the plaintiff to call evidence beyond the scope of the pleading — for example, evidence of unspecified defects or damage.

[40]   In my judgement, that is not the case. If, for example, this case were to go to trial on the basis of the plaintiffs’ current pleading, then the plaintiffs would, in my view, be limited to calling evidence of the defects expressly identified and the examples referred to, unless and until they sought and obtained leave to call evidence going beyond that pleading in the usual way. It simply cannot be the case that the inclusion of such formulae in pleadings obviates the requirement to alert the defendant to the case that he, she or it needs to meet.

[41]   In the circumstances of this case those observations are obviously gratuitous as the plaintiff has clearly signalled its intention further to amend its pleadings. However, in the event of the further amended pleading continuing to include such language, my view is that it will not have the effect that the first defendant fears.

[42]   I reserve costs. Counsel may file memoranda if they are unable to agree, as I would expect them to be able to do.

Associate Judge Johnston

Solicitors:

Parker & Associates, Wellington for plaintiffs Simpson Grierson, Wellington for first defendant

Thomas Dewar Sziranyi Letts, Lower Hutt for second defendant Duncan Cotterill, Wellington for fourth defendant