Cridge v Studorp Limited
[2017] NZHC 528
•22 March 2017
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV 2015-485-594 [2017] NZHC 528
BETWEEN TRACEY JANE CRIDGE AND MARK
ANTHONY UNWIN Plaintiffs
AND
STUDORP LIMITED Defendant
CIV 2015-485-773
BETWEEN KATRINA MCKELLAR FOWLER First Plaintiff
ANDSCOTT WOODHEAD Second Plaintiff
ANDSTUDORP LIMITED First Defendant
ANDJAMES HARDIE NEW ZEALAND Second Defendant
CIV 2015-404-3117
BETWEEN BODY CORPORATE 316651 AND ORS Plaintiffs
ANDSTUDORP LIMITED First Defendant
ANDJAMES HARDIE NEW ZEALAND Second Defendant
Hearing: 16 February 2017 Counsel:
D J S Parker and E S K Dalzell for Plaintiffs
J E Hodder QC and A J Wicks for DefendantsJudgment:
22 March 2017
CRIDGE AND UNWIN v STUDORP LTD [2017] NZHC 528 [22 March 2017]
JUDGMENT OF ELLIS J
[1] On 14 October 2016 I issued a judgment making representative orders under
HCR 4.24(b) in:1
(a) Cridge and Unwin v Studorp Ltd CIV-2015-485-594;
(b) Fowler and Woodhead v Studorp Limited and James Hardie
New Zealand CIV-2015-485-773; and
(c) Body Corporate 316651 and others v Studorp Limited and James Hardie New Zealand CIV-2015-404-3117 (known as “the Hub proceeding”).
[2] The defendants now seek a stay of execution of my judgment pending their appeal from it. The stay application is directed only to:
(a) the plaintiffs’ intended further advertising of the fact that the Court has made representative orders or (to use the wording in the plaintiffs’ draft advertisement) that the Court “has granted permission for the claims to be brought as a class action”; and
(b) signing up as new plaintiffs persons who would be ineligible if
James Hardie were to be successful in its appeal.
[3] The defendants say that further steps in the proceeding pending the appeal can continue to be addressed in a case management context, and by any appropriate
directions by this Court.
1 Cridge v Studorp Ltd [2016] NZHC 2451.
Background
[4] The plaintiffs’ claims include causes of action under ss 9 and 10 of the Fair Trading Act 1986 and in negligence. The central allegation is that the defendants were negligent in the design and manufacture of the Harditex and Titan Board cladding systems and products, and that this negligence resulted in homes that leaked and loss to their owners.
[5] In October and December 2015, the plaintiffs filed representative statements of claim and applications for leave to bring the claims as representative claims under r 4.24(b) of the High Court Rules, for opt-in orders, and for other orders.
[6] In my judgment on the applications I made representative orders identifying sufficient common issues as to:
(a) whether a duty of care is owed by James Hardie to plaintiffs in the relevant classes;
(b)if so, whether the duty was breached in the very particular way alleged (namely by designing and manufacturing a building “system” that was not fit for purpose); and
(c) whether statements made in the pleaded technical literature were misleading and deceptive.
[7] I noted determination of the remainder of the representative plaintiffs’ claims will have no binding effect on other class members.
[8] The representative orders were backdated to the date of filing of the relevant representative statements of claim. I made opt-in orders of two weeks for Titan Board and 10 weeks for one of the Harditex claims. A four week opt-in period for the other Harditex claim was subsequently amended by consent to be a 10 week period.
[9] Following the judgment there was some debate as to the scope of the opt-in orders in the judgment. The defendants contended that the further plaintiffs who may opt-in are limited to those specifically identified by 31 December 2015. In a post-judgment minute dated 30 November 2016 I said:
As a matter of logic, I can see no reason to limit that [that is, the relevant class of persons to whom the representative orders potentially apply and who are now entitled to opt-in] other than by reference to the class as defined by the plaintiffs in the original application.
[10] The orders I then approved:
(a) allow the plaintiffs in each of the proceedings to bring their claims as representative proceedings on behalf of themselves and any person who falls within one of the classes defined in the orders and who opts in to the proceeding within the applicable opt-in period;
(b)define the class of persons who may be represented by each plaintiff as:
(i)for the Cridge and Fowler proceedings, persons who own or have owned a property that is or was clad using Harditex building products or accessories and who have suffered loss as a result of the same or substantially similar negligence and/or breaches of ss 9 and/or 10 of the Fair Trading Act 1986 as alleged in the plaintiffs’ statement of claim;
(ii)for the Hub proceeding, persons who own or have owned a property that is or was clad using Titan Board building products or accessories and who have suffered loss as a result of the same or substantially similar negligence and/or breaches of ss 9 and/or 10 of the Fair Trading Act 1986 as alleged in the plaintiffs’ statement of claim.
(a) the plaintiffs do not share the "same interest" in the subject matter of the proceeding as required by r 4.24; and
(b)the representative orders risk causing material injustice to the defendants in defending the claims asserted by the plaintiffs.
[12] In the event the Court of Appeal concludes that any representative orders were appropriate, the defendant alternatively appeals against the specific terms of the orders made. In particular the defendants will say:
(a) that the representative orders define the represented class too broadly and should be limited to claimants who had specifically identified themselves to the plaintiffs' lawyers prior to 31 December 2015; and
(b)that the opt-in periods for the Cridge and Fowler claims should be more restrictive, given the expiry of limitation for the claims on
31 December 2015 and the previous publicity the claim has received. [13] The plaintiffs have cross-appealed in relation to the opt-in periods.
Stay principles
[14] There is no dispute as to the relevant principles. In an application for a stay of execution of an order pending the hearing of the appeal, the question to be determined is whether, in all the circumstances of the case, the interests of justice require a stay. An appellant seeking a stay must persuade the Court that the balance of factors favours the granting of a stay. The Court must weigh the factors in the balance between the successful litigant's rights to the fruits of a judgment and the need to preserve the position in case the appeal is successful.
(a) whether the appeal would be rendered nugatory, if the stay were not granted;
(b) the bona fides of the applicant as to the prosecution of the appeal; (c) the effect on any third parties;
(d) injury or detriment to the respondent if the stay is granted; (e) the novelty and importance of the question involved;
(f) the public interest in the proceedings; (g) the strength of the case on appeal; and (h) the overall balance of convenience.
Discussion
[16] As I have said, the purpose of the stay sought is to avoid advertising of the proceeding as a Court ordered representative proceeding in circumstances where the representative status remains subject to appeal; the defendants do not seek to stay any other steps in the High Court proceeding.
[17] I address each of the Keung factors in turn.
[18] First, it was not and could not be submitted that the appeal would be rendered nugatory, if the stay were not granted. Although Mr Hodder QC raised the question of unfair reputational risk to the defendant if the plaintiffs are permitted to advertise now, that carries little weight with me. Any advertising would need to make it clear that the representative orders were under appeal. Moreover, Mr Hodder accepted
that the plaintiffs could continue to publicise their claim as they had done previously.
2 Keung v GBR Investment Ltd [2010] NZCA 396, [2012] NZAR 17 at [11].
[19] Secondly, the bona fides of the defendant/appellant are accepted. I am also confident that the appeal will be appropriately prosecuted in a timely way and, in any event, conditions to that effect could be placed on the grant of a stay.
[20] Thirdly, I am inclined to accept Mr Hodder’s submission that there is a potential adverse effect on third parties of not granting a stay. He relied in particular on the scope for confusion if the plaintiffs are permitted to advertise now. More specifically, Mr Hodder said that, given both the James Hardie appeal and the cross-appeal relating to the opt-in periods, there are four possible post-appeal scenarios, namely:
(a) if James Hardie succeeds on its main argument then there will be no opt-in periods at all;
(b) if James Hardie succeeds on its secondary argument (see [12] above)
there will also be no opt-in periods;
(c) if the plaintiffs succeed on their cross-appeal, the opt-in period will be six months; and
(d)if neither the appeal nor the cross-appeal succeed the opt-in periods will remain as summarised at [8] above.
[21] Mr Hodder referred in this regard to that part of French J’s decision in Houghton v Saunders [Privilege] where her Honour said that inviting individuals to join a representative action at a time when the representative action and opt-in orders are still subject to appeal can result in confusion over the membership of the class and lead to difficulties in identifying proper plaintiffs in the event an appeal against
the representative orders succeeds.3
3 Houghton v Saunders [Privilege] (2009) 19 PRNZ 476 (HC) at [81] and see also Philip Morris
(Australia) Ltd v Nixon [1999] FCA 1281 at [19]-[22].
[22] Conversely, it must be accepted that a stay does not give rise to any increased limitation risk for third parties (potential plaintiffs). If the appeal is unsuccessful and representative orders are then applied, such persons are protected because time stops running for limitation purposes on the date when the proceeding is filed and stated to be a representative proceeding.4 If the appeal is successful and representative orders are not made, the risk that limitation periods may have expired is simply the same as that which existed previously.
[23] Fourthly, I acknowledge the plaintiffs’ submission that a stay would potentially operate to the detriment of the plaintiffs (the ability to grow the plaintiff group, delay and the consequent risk of attrition). That such a risk is real is, perhaps, evidenced by the fact that, since my judgment, the representative plaintiffs in the Hub proceeding have recently withdrawn.
[24] Equally, however, and as I have said, the defendant accepts that the plaintiffs remain free to advertise the proceeding as they did prior to the issuing of my judgment and a stay would in no way prevent the plaintiffs from seeking to grow the claimant group. The mere fact that the plaintiffs would not be able to say that representative orders have been granted by this Court is unlikely to materially impact the plaintiffs' ability to attract further members of the group, especially given that in order to fully and fairly inform potential class members about the litigation it should
be made clear to them that those orders remain subject to appeal.5
[25] In terms of the fifth and sixth matters, the importance of the question involved in the appeal does not really extend beyond its significance to the parties
and, similarly, there is no particular public interest in the proceedings.
4 Credit Suisse Private Equity LLC v Houghton [2014] NZSC 37, [2014] 1 NZLR 541.
5 In Houghton v Saunders [Privilege], above n 3, at [81], French J acknowledged there was a risk that the claimant group would disperse while a stay on the grant of representative orders was in place, but this did not prevent the grant of a stay.
[26] To the extent I am able objectively to turn my mind to the strength of the case on appeal, it seems to me to be a relatively neutral factor. On the one hand the orders made were case management orders that could, no doubt, be revisited if they become unworkable. On the other, I acknowledge (as I did in my judgment) that the representative orders were predicated on my acceptance that the unique pleading of breach (namely a “systemic” failure that rendered the James Hardie products not fit for purpose) was tenable. I acknowledge that if I was wrong about that then a representative procedure is unlikely to be seen as apt. I am unable to comment on the merits of the other grounds of appeal, some of which appear to be somewhat new points.
[27] In terms of the overall balance of convenience, this seems to me to be an unusual case. I am unable to find that there will be significant prejudice to the defendant if a stay is not granted and nor am I able to find that there will be significant prejudice to the plaintiffs if it is. By and of itself that balance would favour the plaintiffs.
[28] But in the end, I think there is some force in Mr Hodder’s submission that there is potential for confusion amongst potential plaintiffs if advertising is permitted now. While my logical assumption would be that any such advertising would be in terms that made the contingencies of the current position clear, the draft advertisement that was put in evidence by the plaintiffs was deficient in that respect. And unlike a case involving a litigation funder, this Court does not have formal oversight of the advertising process. It is possible that Mr Hodder is right when he said that no amount of redrafting could fairly or adequately explain the possible permutations that presently exist.
[29] Moreover, the terms of the stay sought would not prevent less formal publication of the proceedings with a view to identifying potential plaintiffs who can opt-in, in the event that James Hardie’s appeal does not succeed. In fact it seems to me that the plaintiffs will, as a result of the appeal, end up having considerably more time to rally their forces than if my judgment were simply to take immediate effect on its terms.
[30] For that reason I grant the (limited) stay of execution sought. Because the stay application as originally filed by James Hardie was in general terms it is (again) necessary to ask counsel to confer and advise the Court of the terms of an appropriate order.
[31] Costs are reserved.
Rebecca Ellis J
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