Carroll v Equus Industries Limited - [2015] NZHC 942

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2010-485-1387 [2015] NZHC 942

BETWEEN
A J CARROLL, M M CARROLL AND

P J MCLAREN Plaintiffs

AND

EQUUS INDUSTRIES LIMITED Defendant (Judgment Creditor)

AND

GARY GEORGE CRAIG
First Third Party (Judgment Debtor)

AND

INTEGRATED PROTECTION SYSTEMS

Second Third Party (Judgment Debtor)

Hearing: 13 October 2014

Counsel:

Q A M Davies for Defendant
G Holgate for First and Second Third Parties

Judgment:

6 May 2015

JUDGMENT OF ASSOCIATE JUDGE SMITH

[1] This is an application by the first and second-named third parties, Mr Craig and Integrated Protection Systems Limited (Integrated), to set aside a judgment entered against them by default on 12 December 2012.

Background

[2] The plaintiffs, in their capacities as trustees of the Carroll Family Trust, are the owners of a property in Captain Edward Daniel Drive, Wellington (the property). They purchased the property from Mr Stephen Matthews in October 2002, taking
possession on 6 December 2002.

A J CARROLL, M M CARROLL AND P J MCLAREN v EQUUS INDUSTRIES LIMITED [2015] NZHC 942 [6 May 2015]

[3] The dwelling on the property (the dwelling) turned out to be a “leaky home”. There were major problems with incorrectly installed cladding, lack of adequate ground clearance, unsealed penetrations through the cladding, leaks through the roof, and poorly constructed decking. Repairs have cost the plaintiffs in excess of
$900,000.

[4] In July 2010, the plaintiffs sued the Wellington City Council (the Council), alleging that the Council had failed to exercise due care and skill in conducting inspections in the course of the construction work, and in issuing a Code Compliance Certificate (CCC) for the dwelling. The Council had carried out some inspections in
1999, in the early stages of the construction work, but had not then been prepared to issue a CCC. It carried out further inspections in November and December of 2002 (when the property was subject to the sale agreement to the plaintiffs and Mr Matthews needed to obtain a CCC for the dwelling), and in February 2003. It eventually issued the CCC on 10 March 2003.

[5] The Council filed a statement of defence to the plaintiffs’ claim, and then issued third party claims against Mr Craig, Integrated, and the party now named as defendant, Equus Industries Limited (Equus). The Council asked for orders that those parties contribute to any liability it might have to the plaintiffs.

[6] Equus was the original manufacturer and supplier of the “Thermexx” cladding system used on the dwelling. Integrated carried out certain remedial plastering and sealing work on the dwelling in November 2002, following the issue of a “Notice to Rectify” by the Council which listed 23 separate areas where remedial work was required. Mr Craig was and is the sole director of Integrated.

[7] The Council’s third party claim against Integrated and Mr Craig alleged that they owed a duty of care to the plaintiffs, and breached that duty of care in various respects. In the event of the Council being held…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] NZHC 942
Decision Date: 6 May 2015

CaseChat Overview and Summary

The plaintiffs, who were the owners of a leaky home, brought a claim against the Wellington City Council (the Council) for its failure to exercise due care and skill in conducting inspections and issuing a Code Compliance Certificate for the dwelling. The Council issued third party claims against Equus Industries Limited, the original manufacturer and supplier of the cladding system used on the dwelling, and Integrated Protection Systems and its sole director, Mr Craig, who carried out certain remedial plastering and sealing work on the dwelling. Equus eventually settled with the plaintiffs and the Council, and sought to enforce its contribution claims against Integrated and Mr Craig. The matter came before the Court on an application by Integrated and Mr Craig to set aside a default judgment entered against them. The key issues for the Court were whether Integrated and Mr Craig had a substantial ground of defence, whether their failure to file a statement of defence was excusable, whether there would be irreparable harm to Equus if the judgment was set aside, and whether there had been or may have been a miscarriage of justice if the judgment was allowed to stand. The Court found that the default in this case arose out of a mistaken assumption by Mr Craig that his letter would be sufficient, and that he and Integrated did not receive notice of the hearing. While inexcusable, the default on its own was not fatal to the application to set aside. The Court found that Integrated and Mr Craig had a substantial ground of defence in relation to the claim for contribution. The Court concluded that there may have been a miscarriage of justice on the issues of the quantum of the judgment which was entered and costs, and on the entry of judgment against Mr Craig on the negligent misstatement cause of action. The judgment should be set aside to that extent. The judgment for liability should stand against Integrated on both causes of action, and against Mr Craig on the contribution cause of action.

Orders