Capital & Coast District Health Board v Beca Carter Hollings & Ferner Ltd
[2018] NZHC 2862
•5 November 2018
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2016-485-256
[2018] NZHC 2862
BETWEEN CAPITAL & COAST DISTRICT HEALTH BOARD
Plaintiff
AND
BECA CARTER HOLLINGS & FERNER LTD
First Defendant
AND
B R NEWTON
Second Defendant (discontinued)
AND
THE FLETCHER CONSTRUCTION COMPANY LTD
Third Defendant
AND
A W SMITH
Fourth Defendant (struck out)
AND
R P BELBIN
Fifth Defendant
AND
CRANE ENFIELD METALS PTY LTD
trading as CRANE COPPER TUBE Sixth Defendant
AND
CRANE GROUP LTD
Seventh Defendant (discontinued)
AND
CRANE DISTRIBUTION LTD
Eighth Defendant (discontinued)
AND
IPEX PIPELINES AUSTRALIA PTY LTD
Ninth Defendant (discontinued)
AND
CREVET LTD
Tenth Defendant (discontinued)
AND
CREVET PIPELINES PTY LTD
Eleventh Defendant (discontinued)
CAPITAL & COAST DISTRICT HEALTH BOARD v BECA CARTER HOLLINGS & FERNER LTD [2018]
NZHC 2862 [5 November 2018]
AND KEY PLASTICS PTY LTD
Twelfth Defendant (discontinued)
AND
KINGSTON BRIDGE ENGINEERING PTY LTD
Fourteenth Defendant (discontinued)
AND
AUSTRAL BRONZE CRANE COPPER LTD
Fifteenth Defendant (discontinued)
AND
HUDSON BUILDING SUPPLIES PTY LTD
Sixteenth Defendant (discontinued)
AND
MICO NEW ZEALAND LTD
Proposed Seventeenth Defendant
Hearing: 5 September 2018 Appearances:
I J Thain and E B Moran for plaintiff
No appearance for first and fifth defendant K W Fulton for third and sixth defendants
Judgment:
5 November 2018
JUDGMENT OF GRICE J
(Application by plaintiff to join Mico New Zealand Ltd as seventeenth defendant)
Background
[1] Capital & Coast District Health Board (Capital & Coast) owns and operates the Wellington regional hospital. In about December 2005 Fletcher Construction Company Ltd (Fletchers) successfully tendered for the contract to build a new main building at the hospital site in Newtown. The contract was worth in excess of
$140 million. There were over 300 pages of contractual documents.
[2] The construction project ran from December 2005 until about December 2008. These proceedings were commenced in 2016. Interlocutory applications resulted in the claim being discontinued against a number of the defendants.1
[3] The remaining defendants are the first, third, fifth and sixth defendants. This application is about whether Capital & Coast may join Mico New Zealand Ltd (Mico) as a seventeenth defendant. It is the importer of the copper pipes which are at the centre of the dispute.
[4] The copper pipes for the hot and cold-water services in the new hospital building were supplied and installed under the head contract between Capital & Coast and Fletchers. The work was carried out by a joint venture between Aqua Heat Industries Ltd and the Hastie Group as sub-contractors to Fletchers.
[5] The copper pipes have developed “pin hole” type leaks which are sufficiently serious to require the whole system to be replaced according to Capital & Coast. The cause of the leaks will be the subject of evidence at the hearing.
[6] Capital & Coast has now discontinued against the seventh defendant (Crane Group Ltd) which was the manufacturer of the pipes. Mico as the importer is deemed to be a manufacturer under the Consumer Guarantees Act. Fletchers says that is a matter that should be taken into account when considering the present application for joinder.
[7] Fletchers and Crane Enfield Metals Pty Ltd (whom I will collectively call Fletchers) oppose Capital & Coast’s application to join Mico. The fifth defendant, Mr Belbin, has taken no part in the proceedings.
The test for joinder
[8]Rule 4.56 of the High Court Rules 2016 provides:
4.56 Striking out and adding parties
(1)A Judge may, at any stage of a proceeding, order that—
1 Capital and Coast District Health Board v Beca Carter Hollings & Ferner Ltd [2018] NZHC 24.
…
(b)the name of a person be added as a plaintiff or defendant because—
(i)the person ought to have been joined; or
(ii)the person's presence before the court may be necessary to adjudicate on and settle all questions involved in the proceeding.
…
[9] The test for joinder is a “liberal” one.2 It imposes a low threshold.3 Randerson J noted in relation to the predecessor of r 4.56:4
.... Ordinarily, a liberal approach is taken to applications by a plaintiff to join an additional defendant: Westfield Freezing Co Ltd v Sayer and Co Ltd [1972] NZLR 137, 143 and 146. That is because a plaintiff is normally entitled to decide who he or she will sue and to conduct the proceedings accordingly. As well, there is an important public interest in the efficient despatch of litigation and in avoiding duplication of trials. In general, it is desirable that all issues between the parties and any party additional who it is sought to join, be resolved at once.
[10]An application for joinder under r 4.56(1)(b) involves a two-stage inquiry:5
(a)First the Court must consider objectively whether there is jurisdiction to join the proposed party; and
(b)Second, if there is jurisdiction, whether the Court should exercise its discretion to order joinder.
[11] Turning first to the question of jurisdiction, it is clear that r 4.56(1)(b)(i) and r 4.56(1)(b)(ii) address different concerns in a proceeding. The Court of Appeal in Newhaven Waldorf Management Ltd v Allen posed this point as such:6
[42] We note that the first limb of r 4.56(1)(b) – “person ought to have been joined” – addresses persons whose presence is necessary for the Court to
2 New Haven Waldorf Management Ltd v Allen [2015] NZCA 204, [2015] NZAR 1173 at [44].
3 At [46] quoting Beattie v Premier Events Group Ltd [2102] NZCA 257 at [24].
4 Bridgeway Projects Ltd v Webster HC Auckland CIV-2003-404-1965, 7 July 2003 at [8].
5 McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR4.56.08].
6 Newhaven Waldorf Management Ltd v Allen, above n 2.
adjudicate the exact issues arising on the pleadings.7 The second limb, with which we are concerned here, has other and more extensive work to do.
[12] Turning first to the jurisdictional question posed in r 4.56(1)(b)(i) which states “the name of a person be added as a plaintiff or defendant because—the person ought to have been joined”. The word “ought” means “ought to do justice”.8 In the words of McGechan on Procedure:9
The tendency has been to regard persons as parties who “ought to have been joined” if the presence of such parties before the Court is necessary to enable the Court to adjudicate upon the precise issues raised in the proceeding.
[13] Turning now to the jurisdictional question posed in r 4.56(1)(b)(ii) which states that “the name of a person be added as a plaintiff or defendant because— …the person's presence before the court may be necessary to adjudicate on and settle all questions involved in the proceeding.”
[14] In summary this focuses on whether the proposed defendant’s rights against or liabilities to any party to the action in respect of the proceeding will be directly affected by any order which may be made in the action?10 In Mainzeal Barker J identified two formulations of this question from the following cases:11
(a)Lord Denning’s wide interpretation in Gurnter v Circuit where he stated: “It seems to me that when two parties are in dispute in an action at law, and the determination of that dispute will directly affect a third person in his legal rights or in his pocket, in that he will be bound to foot the bill, then the Court in its discretion may allow him to be added as a party on such terms as it thinks fit.”12
(b)Lord Diplock’s interpretation in Pegang Mining Co Ltd v Choong Sam
when he said: “A better way of expressing the test is: will his rights
7 McGechan on Procedure, above n 5, at [HR4.56.07].
8 Edwards v Lowther [1876] 45 LJ CP 417; Mere Roihi v Assets Co [1992] 21 NZLR 673 (CA) at [688].
9 McGechan on Procedure, above n 5, at [HR4.56.07].
10 Mainzeal Corp Ltd v Contractors Bonding Ltd (1989) 2 PRNZ 47, adopting Pegang Mining Co Ltd v Choong San 1/7/69, Privy Council A5/68; Arklow Investments Ltd v Ngai Terangi Iwi Inc Soc CA42/94, 1 June 1994 at 20.
11 Mainzeal Corp Ltd v Contractors Bonding Ltd, above n 10, at 50.
12 Gurtner v Circuit [1968] 2 QB 587.
against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action?”13
[15]Recently in Tourplan Pacific Ltd v Australian Tours Management Pty Ltd,
Venning J noted:14
[22] It is not for the Court on an application such as this to determine the merits of the proposed claim. As Randerson J noted in Bridgeway Projects Ltd v Webb the Court will ordinarily accept the applicant’s factual assertions relevant to the proposed causes of action against the parties to be joined and what is required is a tenable cause of action.15
[16] If the court is satisfied jurisdiction has been established, the discretionary question of whether joinder should be granted is almost always answered positively.16
[17] The issue is therefore whether in the interests of justice Mico should be joined to ensure all matters are dealt with at the same time.
[18] Fletchers oppose the joinder and say that Mico should not be joined because the claim against it could not ever succeed.
Is there a tenable claim?
Capital & Coast’s claim against Mico
[19]The relevant provisions of the Consumer Guarantees Act 1993 provide that:
(a)a consumer has a right of redress against a manufacturer where the goods fail to comply with the guarantee as to acceptable quality contained in s 6;17
(b)acceptable quality is defined under s 7(e) of the Act as goods that are as “durable” as a “…reasonable consumer fully acquainted with the
13 Pegang Mining Co Ltd v Choong San (1969) 2 MLJ 52 at 56.
14 Tourplan Pacific Ltd v Australian Tours Management Pty Ltd [2017] NZHC 2310.
15 Bridgeway Projects Ltd v Webb HC Auckland CIV-2003-404-1965, 7 July 2003.
16 McGechan on Procedure, above n 5, at [HR4.56.11].
17 Section 25(a).
state and condition of the goods, including any hidden defects, would regard as acceptable…” with regard being had to several factors;18
(c)Section 6 provides that, subject to s 41, where goods are supplied to a consumer there is a guarantee that the goods are of acceptable quality. Pursuant to s 2 “consumer” means a person who acquires from a supplier goods of a kind ordinarily acquired for personal/domestic/household use or consumption, but does not include someone who acquires goods or services for the purpose of resupplying them, consuming them in the course of a process of production/manufacture, or repairing or treating in trade other goods or fixtures on land.
(d)Under s 41(1) nothing in the act applies where the goods or services are supplied otherwise than in trade.
[20] Capital & Coast claim Mico “ought” to have been joined because Mico is the manufacturer of the failing copper pipes under s 2(1) of the Consumer Guarantees Act 1993 (the Act).
[21] The allegation is that the copper pipes are goods of a kind ordinarily acquired for personal, domestic, or household use and therefore the plaintiff is a consumer under s 2 of the Act.
[22] Capital & Coast claim that Mico has breached the guarantee of acceptable quality because the copper pipes are not durable. It says the pipes should have had a life of not less than 50 years. But, it says 300 leaks have been found in the copper pipes so they have failed and require replacement. Damages are claimed in terms of the Act.
[23] Fletchers submit there are a number of problems with the proposed claim against Mico:
18 Under s 7(1) these factors include the nature and price of the goods, as well as statements on labelling or packaging about the goods, the supplier of the goods, representations about the goods by the supplier/manufacturer or other circumstances.
(a)Capital & Coast is not a “consumer” pursuant to s 2 of the Act; and
(b)The copper pipes are not “goods” caught by s 2 of the Act.
Is Capital & Coast a consumer for the purposes of the Act?
[24] The Act defines a “consumer” by reference to a person who “ordinarily” acquires the relevant goods for household personal or domestic use.19 Therefore, what the goods are actually used for is irrelevant; the issue is what they are ordinarily acquired for. The definition of “consumer” also expressly excludes goods or services acquired for the purpose of “consuming them in the course of a process of production or manufacture.”
[25] Fletchers says the copper pipes are not ordinarily acquired for personal, household or domestic use and have been incorporated into a building so they have been consumed in the process of production or manufacture.
[26] Turning first to the matter of household or domestic use, counsel referred to a number of cases that assess whether goods are ordinarily acquired for household personal domestic use. In Carter Holt Harvey v Minister of Education, it was considered arguable that shadow clad cladding fell within the definition “goods” under s 2 of the Act.20 Similarly, the Federal Court of Australia held in Bunnings that building insulation was a good ordinarily acquired for household or domestic use. This was despite the fact that the particular type of insulation involved, on the evidence, was only actually acquired for commercial purposes.21
[27] The evidence before me is limited at this stage. The piping is referred to by Mico on most of its invoicing as “residential pipe”. The pipes come in a range of sizes, from 15 to 80 mils. I am advised that pipes of all sizes in the range were used within the building. In my view there is sufficient evidence for the purposes of this application to show it is arguable that the pipe supplied may be ordinarily, for residential, and therefore, domestic purposes.
19 Consumer Guarantees Act 1993, s 2.
20 Carter Holt Harvey v Minister of Education [2015] NZCA 321, (2015) 14 TCLR 106 at [144].
21 Bunnings Group Ltd v Laminex Group Ltd (2006) 153 FCR 479, ATPR 42-115, [2006] FCA 682.
Are the copper pipes “goods”?
[28] Fletchers say the pipes were acquired for the purpose of “consuming them in the course of a process of production or manufacture”.
[29] The definition of “goods” pursuant to s 2 of the Act excludes “…whole building, or parts of a whole building, attached to land…”. Fletcher argues that the contract documents in this case must be viewed as a whole, and Capital & Coast purchased a completed building; there was no separate materials contract. Capital & Coast responds that the pipe was supplied as a component under the terms of the contract. Whether this is the case will require a detailed examination of the documents and consideration of the circumstances. The Court of Appeal relation to the shadow clad cladding in Carter Holt Harvey v Minister of Education did not find the goods were components.22
[30] There is insufficient evidence before me to explore this issue in depth. It will require detailed evidence and consideration of the documents and circumstances. Nevertheless I am satisfied the issue is arguable.
Conclusion
[31] The issues and merits of the claim should be dealt with at trial rather than in a joinder application.23 I also note that for the purposes of a joinder application, the Court will proceed on the basis of the factual assertions made by the plaintiff in relation to the possible cause of action are correct. 24 I am satisfied that the facts as alleged by Capital & Coast in its draft amended Statement of Claim support a tenable cause of action against Mico.
Limitation period
[32] Fletcher argues that Capital & Coast’s claim against Mico is time barred and therefore joinder is not permissible. Specifically, Fletcher submits that most of the piping was supplied in 2006 and 2007, and the completion of the works was not until
22 Carter Holt Harvey v Minister of Education, above n 20, at [141] and [144].
23 Tourplan Pacific Ltd v Australian Tours Management Pty Ltd, above n 14, at [22].
24 At [22].
2009. Pursuant to s 4 of the Limitations Act 1950, Fletcher argues the case against Mico expired six years from the date the pipes were supplied to Fletchers or its subcontractor. It is Fletcher’s submission that the claim against Mico clearly falls outside of that timeframe.
[33] Sargisson AJ in Carter v Metal Design Solutions held that the limitation period for a Consumer Guarantees Act claim against a manufacturer could run from when the issue was reasonably discoverable.25 Fletchers say the Associate Judge was wrong.
[34] The rule generally is that a Court will not add a party where the effect would be to defeat a limitation defence.26 However, recently in Heron Point Projects Ltd Fitzgerald J granted joinder despite the potential for a limitation defence.27
[35] An example of reluctance to join a time barred defendant can be seen in the English Court of Appeal decision in Mabro v Eagle Star and British Dominions Insurance Company Ltd.28 In that case six years had passed since the original writ was issued by Mabro when an application was made to join a new plaintiff – Mr Zok. The defendants opposed this application because there was clearly a limitation defence. Sutton LJ said:29
The objection to joining [Mr Zok] was that if he were joined and treated as a plaintiff as from the time the writ was issued the defendant would be deprived of the benefit of the Statute of Limitations. Whether the matter is one of discretion or not, it appears to me inconceivable that we should make an order which would have the effect I mentioned. It has been the accepted practice for a long time that amendments which would deprive a party of a vested right ought not to be allowed.
[36] In Thompson,30 a case where the limitation issue required factual findings, Hansen J referred to the Court of Appeal decisions of S v G and W v Attorney-General to the effect that it was preferable to make a final determination on limitation issues at the substantive hearing.31 Hansen J went on to state:
25 Carter v Metal Design Solutions [2016] NZHC 1162.
26 Jessica Alexander (ed) Sim’s Court Practice (online looseleaf ed, LexisNexis) at [HCR4.56.15];
McGechan on Procedure, above n 5, at [HR4.56.14]
27 Body Corporate 381372 v Heron Point [2017] NZHC 597 at [17].
28 Mabro v Eagle, Star and British Dominions Insurance Co Ltd [1932] 1 KB 485 (CA) at 489.
29 At 489.
30 Thompson v Good Shepherd Convent Trust (2000) 14 PRNZ 684 (HC).
31 S v G [1995] 3 NZLR 681 (CA); W v Attorney-General [1999] 2 NZLR 709 (CA).
Joinder would not therefore prejudice the intended defendants provided they are protected from the consequences of their joinder being deemed to take effect from the date of issue of the original proceeding. That can be achieved by permitting joinder on terms that the claim against the intended defendants does not operate until the date it was filed. That course was adopted in Liptons Cash Registers & Business Equipment Ltd v Hugin (GB) Ltd [1982] 1 All ER 595, a decision at first instance but approved by the Court of Appeal in Ketteman v Hansel Properties Ltd [1985] 1 All ER 352 (CA). In Liff v Peasley Brandon LJ approved an order in these terms. After discussing the competing interests of the plaintiff and proposed new defendant, and the inability to resolve the limitation question on an interlocutory application, he said at p 643:
In order to get over this difficulty the order giving leave to add the new defendant will have to be made on special terms, namely that the addition shall not relate back but shall take effect from the date of amendment of the writ only.
[37] In Heron Fitzgerald J followed this course and permitted the joining of the unitholders, but on the terms discussed above by Hansen J applied.32 This was to ensure that any limitation defence was not defeated by the joinder.
[38] For the sake of completeness, Fitzgerald J also referred to Commerce Commission v Air New Zealand Ltd where it was noted that cases where limitation issues are not clear cut should have those problems decided at trial rather than at joinder.33
[39] That is the case in the present proceedings. The availability of a limitation defence is a matter that should be decided at trial.
Conclusion
[40] I am satisfied the claims against Mico are tenable. Mico is a party whose presence is required to enable the Court to adjudicate upon the precise issues raised in the proceedings. These relate to the copper pipes imported by Mico which are central to the dispute.
[41]Accordingly, I grant the application for joinder of Mico.
32 Body Corporate 381372 v Heron Point, above n 27, at [17].
33 Commerce Commission v Air New Zealand Ltd, HC Auckland CIV-2009-404-8352, 10 December 2009, at [27] – [29].
[42] For the sake of completeness, I note the application for joinder does not seek back date the joinder to the original date of the filing of this claim. The date of joinder is the date that the present application was made.
Costs
[43] Counsel asked that costs be the subject of submission. Accordingly, unless counsel are able to agree on costs I direct the filing and exchange of memoranda as follows:
(a)Submissions by the third and sixth respondent (Fletchers and Crane) on or before 16 November 2018;
(b)Response by Capital & Coast on or before 23 November 2018;
(c)Any reply by the third and sixth respondent on or before 28 November 2018.
Case management
[44] I note the draft statement of claim has been filed incorporating the claim against Mico. Further timetable directions will be required. The matter will be set down for a further case management conference on a date to be fixed by the Registrar.
Grice J
Solicitors:
DLA Piper, Wellington
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