Cridge v Studorp Ltd
[2015] NZHC 3065
•4 December 2015
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2015-485-0594 [2015] NZHC 3065
BETWEEN T J CRIDGE AND M A UNWIN
Plaintiffs
AND
STUDORP LIMITED Defendant
CIV-2015-485-0773
BETWEEN K M FOWLER First Plaintiff
ANDS WOODHEAD Second Plaintiff
ANDSTUDORP LIMITED Defendant
Hearing: 27 November 2015 Appearances:
D J S Parker and E S K Dalzell for the Plaintiffs (in each proceeding)
J E Hodder QC and J A McKay for the Defendant
Judgment:
4 December 2015
JUDGMENT OF THOMAS J
This judgment was delivered by me on 4 December 2015 at 12.30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:………………………….
T J CRIDGE AND M A UNWIN v STUDORP LIMITED [2015] NZHC 3065 [4 December 2015]
Introduction
[1] The plaintiffs in two separate proceedings have applied for consolidation of their proceedings and for leave to bring a representative proceeding (the Application). Eighteen named property owners are listed in the statement of claim in each proceeding as having consented to being represented and a total of 35 named property owners had so consented by the date of the hearing in respect of this decision (the consenting persons).
[2] The defendant opposes the Application.
[3] This decision concerns the plaintiffs’ request that the Court make certain orders contingent on the outcome of the Application because, without those orders, the consenting persons and any persons who might in the future consent to the representative proceedings (the potential claimants) – together described as potential class members – might have their claims time barred pursuant to s 4 of the Limitation Act 1950.
[4] The defendant is opposed to the making of the orders sought.
Background
[5] The plaintiffs seek to bring claims on behalf of themselves and the potential class members, being a class of other persons who own or have owned a property that is or was clad using the defendant’s building products.
[6] There are claims under s 9 of the Fair Trading Act 1986 and in negligence relating to a breach of duty of care and failing to exercise reasonable care and skill in relation to the design, development, manufacture, testing and supply of the defendant’s building products.
[7] The consenting persons’ properties are located in a number of different areas throughout the North Island.
[8] The Application will not be heard until some time in 2016. However, on 31
December 2015, a new 15 year longstop period of limitation comes into effect. By effect of s 62 of the Limitation Act 2010, s 23B of the Limitation Act 1950 provides:
23B Longstop period of limitation
(1) No action to which this section applies may be brought after the last to end of the following periods:
(a) 5 years ending on the close of 31 December 2015:
(b) 15 years after the date of the act or omission on which the action is based.
(2) That period of limitation applies to the action in addition to every other period of limitation that applies to the action.
(3) This section is, in accordance with section 3, subject to Part 2, which provides for the extension of that period of limitation in the case of disability, acknowledgment, part payment, fraud, and mistake.
[9] The defendant’s products were primarily used between 1987 and 2004. For that reason, a significant number of potential class members will be caught by the limitation date (31 December 2015).
[10] The statements of claim were filed on 10 August 2015 and 16 October 2015, and the amended statements of claim were filed on 22 October 2015. If the Application is successful, then the action was brought, for Limitation Act purposes, by the potential class members, through their representatives, on 22 October 2015.
[11] If the Application is successfully opposed, the potential class members will be required to file statements of claim in their own name but a significant number of them will be, by the date of the substantive hearing, time barred.
[12] The question for present purposes is whether a declaration should be made holding that, in the event the Application is dismissed, there was an “irregularity” in the use of a representative action in this case and that such an irregularity is cured by deeming potential class members to have commenced their own individual proceedings at the same time the plaintiffs filed their statements of claim (22 October 2015) and/or by being added as plaintiffs to the proceeding.
The Application
[13] The Application seeks orders directing that the plaintiffs may bring a representative action by way of suing on behalf of, or for the benefit of, a class of persons with the same interest in the subject matter of the proceedings, being:
(a) those persons who own or have owned a property that is or was clad using Harditex building products, approved accessories and/or the Harditex cladding system designed, manufactured and supplied by the defendant, 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’ statements of claim; and
(b) those persons who, in accordance with directions sought under the
Application, consent to join the representative action.
[14] The plaintiffs also seek orders that potential claimants, that is, persons with the same interest in the subject matter of the proceedings who have not yet consented to join, be notified and offered the opportunity to participate by a specified date.
[15] The grounds upon which the Application is brought are:
(a) The plaintiffs and the proposed class members have the same interest in the subject matter of the proceeding.
(b)The representative action is in the interests of justice and will best achieve the just, speedy and inexpensive determination of the subject matter of the proceeding. The proposed representative action will avoid a multiplicity of individual actions concerning the same or substantially similar subject matter.
(c) There are issues of fact and law common to the plaintiffs and the proposed class members and the plaintiffs and the proposed class
members have a significant common interest in the resolution of those questions of fact and law.
[16] The defence opposes the Application on the following grounds:
(a) Substantial experience has shown that claims such as the proposed representative claim inevitably involve an inquiry into the specific features and circumstances of each and every property in issue, having regard to (amongst other things) when it was designed and built, the location, the nature and features of the design, workmanship issues, maintenance issues, any previous repairs, the cladding product used, the performance of other products used in the wall assembly and elsewhere in the building which affect weather tightness (such as the texture coating, waterproof membranes and flashings).
(b)As a result, even the existence of a common duty of care issue cannot be assumed, as the duty will be fact-specific involving multiple permutations of sub-classes, and of appropriate representatives – for example with some properties having features which others lack, and each property will require separate and intensely fact-specific findings regarding breach, causation, reliance and damage.
(c) Further, the inevitable inquiry into the specific features and circumstances of each and every property in issue means it is impossible to set a class or classes of representative plaintiffs such that it can be said with the requisite certainty that success for one would mean success for all, either generally or on specific issues, including duty or breach. Representative orders are inappropriate if this test cannot be met.
(d)Substantial experience has shown that leaky building claims against single (or even multiple) defendants almost inevitably lead to third party claims. In relation to many properties, there will be differing third parties, cross-claims and plaintiff contributory negligence
considerations in each of the proceedings. The “represented class” engaged construction professionals, architects and inspectors, and the presence of site specific workmanship defects is already pleaded by the plaintiffs.
(e) To expand on some of the matters raised above, the focus of the plaintiffs’ claims is on the defendant’s Technical Literature for Harditex. That Literature, which existed in different editions between the times at which the plaintiffs’ properties were built, included architectural details relating to only part of a total wall assembly, some of which are optional, or often modified on site (by architects or builders), or simply not used or relevant to a given property. Any allegation of breach involves an inquiry into both the specific details used on the individual property and into the state of industry knowledge and practice at different points in time, in relation to those design details and any related products or accessories in issue.
Orders sought
[17] The orders now sought are for a declaration of the legal position which would apply in the event the Application is dismissed.
[18] The plaintiffs seek an order as follows:
… to address the situation that would arise if the defendant is successful in its opposition to a representative proceeding. Specifically, should the defendant successfully oppose this proceeding being brought as a representative proceeding, the plaintiffs seek an order that would deem those who have consented to join the representative proceeding (and those whose [sic] decide to consent within a reasonable period following the Court ruling on the representative proceeding application) as having commenced their own individual proceedings at the same time as the representative statement of claim was filed on 22 October 2015 and/or being added as additional plaintiffs to the proceeding (but with particulars of their individual claims to be filed in either an orthodox statement of claim or as otherwise as directed by the Court at a later point).
Submissions
[19] Mr Parker, for the plaintiffs, submitted that it would be contrary to the objectives of the High Court Rules (Rules) for the named plaintiffs and potential class members to each have to file separate statements of claim, now, simply to preserve the possibility of the defendant, at some time next year, being able to successfully oppose the Application.
[20] The better course, in his submission, should the defendant be successful in opposing the Application, is to treat the event as an irregularity pursuant to r 1.5 of the Rules. This approach, he said, is consistent with the approach espoused by the majority in the Supreme Court decision of Credit Suisse Private Equity v Houghton1 and is a situation which is identical to the decision in Cameron v National Mutual Life Association of Australasia (No 2) (considered below).2
[21] Section 9 of the Declaratory Judgments Act 1908 empowers the Court to make a declaration in anticipation of an act not done or an event that has not yet occurred, in Mr Parker’s submission.
[22] The defendant opposes the orders sought as an unsound attempt to deploy the Rules to defeat the provisions and policy of the Limitation Act. In the submission of Mr Hodder QC, for the defendant, given that the Rules are designed to ensure the even-handed determination of issues between plaintiffs and defendants according to law, the orders sought would unjustly disadvantage the defendant by pre-empting a principal benefit of any success from its opposition to the Application.
[23] Section 23(B) of the Limitation Act 1950 provides a “longstop” period of limitation for claims to which that Act applied, ending on 31 December 2015. Defendants are entitled to expect that claims falling within that provision will not be brought after 31 December 2015, Mr Hodder said. The plaintiffs seek orders authorising an undetermined number of persons to file statements of claim after, but unaffected by, the expiry of the limitation period. It was submitted that the
application for these orders should be declined as there is no basis for them in
1 Credit Suisse Private Equity LLC v Houghton [2014] NZSC 37, [2014] 1 NZLR 541.
2 Cameron v National Mutual Life Association of Australasia (No 2) [1992] 1 Qd R 133 (QSC).
authority or the Rules and they are contrary to the clear provisions of the Limitation
Act.
[24] Mr Hodder submitted that the combination of r 4.24(b) and r 5.25 (which states that a proceeding is commenced by the filing of a statement of claim, including proper particulars of material facts) means that if the Application is declined, the potential class members will not have commenced any proceeding. If they have not commenced any proceeding, they will therefore be subject to the Limitation Act in the ordinary way. The declaratory order which the plaintiffs now seek, in Mr Hodder’s submission, would, in effect, “deem” the plaintiffs to have filed individual proceedings or to have joined the proceedings, when in fact they did not.
[25] In Mr Hodder’s submission, the order which the plaintiffs seek is not declaratory in nature. The granting of the orders would involve the exercise of a power by the Court effectively to extend the longstop limitation period under statute. Any such substantive exercise of power by the Court is not grounded in authority or the Rules, Mr Hodder submitted. Furthermore, r 1.5 is not applicable in the present circumstances because, in Mr Hodder’s submission, the potential class members will simply not have commenced an action at all.
[26] Even if there were power to make the orders sought by the plaintiffs, it would not be in the interests of justice to do so, said Mr Hodder, because it would otherwise sidestep s 62 of the Limitation Act 2010. There are important and longstanding policy imperatives which underlie limitation periods, such as avoiding the injustice to defendants of having to face stale claims. Secondly, the orders sought by the plaintiffs seek to secure a riskless outcome for potential class members while the defendant, conversely, maintains risks in all circumstances. Thirdly, the consequences of refusing the Application are not inequitable or harsh, in Mr Hodder’s submission.
Approach
[27] In determining this apparently novel request, I have considered the following:
(a) the Supreme Court decision in Credit Suisse; (b) the Australian authorities relied on by counsel;
(c) r4.24 of the Rules, which provides for persons having the same interest, including a comparison with the rules relevant to the Australian authorities; and
(d)r1.5, which provides for non-compliance with the Rules, in the context of the Limitation Act.
Credit Suisse and other case law
[28] Both parties rely on the Supreme Court decision of Credit Suisse. In that case, the issue was whether (and the extent to which) the making of a representative order under r 4.24 meant that those represented had brought an action for the purpose of limitation periods.3
[29] The majority said that the question of when actions are brought for Limitation Act purposes is a function of the Rules and, therefore, the Rules determine the question.4 They considered the combination of r 5.25, which provides that an action is commenced by the filing of a statement of claim, and r 5.35, which requires a party suing in a representative capacity to show in the statement of claim the capacity in which the party sues, means that a representative action is brought
when the statement of claim is filed. It is brought not only by the representing plaintiff but also on behalf of those represented. The majority decision explained:5
It would be inappropriate to allow the opt-in or opt-out elements of a representative action to influence when limitation periods start to run. To do so would not only run contrary to the language of the relevant rules but would also be a recipe for uncertainty and ongoing dispute. The date of the filing of the statement of claim is certain and easily ascertainable and provides a bright line test.
[30] In Credit Suisse, the date the application to sue in a representative capacity was granted and the date of filing of the statement of claim was the same. The Court said:6
The fact that, under the High Court Rules, an action is commenced when the statement of claim is filed, may necessitate the back dating of a representative order if it is not made at the time of filing. This is necessary and desirable to ensure that the Court’s process does not disqualify those on behalf of whom a representative proceeding is brought, should the limitation period end in the period between filing and when the representative order is made.
[31] The majority judgment discussed the RJ Flowers Ltd v Burns case with approval noting the requirements for representative actions being that:7 (i) the members of the class to be represented must have a common interest in the proceedings; (ii) they all must have been able to claim as plaintiffs in separate actions in respect of the event concerned, with no defences applicable to only some of the class; (iii) the action must be beneficial to all of the class; (iv) the action covers the whole or virtually the whole of the class of potential plaintiffs; and (v) the consent of all represented members to payment of global damages to the
representative plaintiff is given. The Court found that approach was consistent with the objectives of the Rules and the goal of representative proceedings.
[32] In R J Flowers, McGechan J emphasised that “the rule should be applied and developed to meet modern requirements” subject only to keeping in mind “[t]he traditional concern to ensure that representative actions are not to be allowed to work injustice”.8
[33] The majority agreed that requiring the filing of separate proceedings or joinder to the existing representative proceedings at the outset would largely negate the advantages of a representative proceeding and the objectives of the Rules, saying “the whole point of having a representative proceeding is to avoid clogging the
Courts with individual actions covering the same subject matter.”9
6 At [128].
7 R J Flowers Ltd v Burns [1987] 1 NZLR 260 (HC) at 270-271.
8 At 267 and 271.
9 Credit Suisse, above n 1, at [158].
[34] The Court discussed the policy grounds for limitation statutes, being to protect defendants from having to face ancient obligations, to prevent litigation from being determined on stale evidence, and to ensure plaintiffs do not sleep on their rights.10 The primary rationale for limitation provisions was described as fairness to intended defendants, protecting them against endless litigation and the inevitable prejudice in preparing a defence to long dormant claims where evidence is stale or
no longer available.
[35] The dissenting Judges in Credit Suisse considered that a proceeding is not instituted as representative until consent is provided or until representation is established in accordance with the directions of the Court.11 That is the date on which representative claims are “brought” for the purposes of statutory limitation. They considered that relating back to the earlier point when the plaintiff’s claim was filed does not accord with the language in the Rule and would work injustice if it
deprives the defendant of a limitation defence. Nor, they said, does it accord with the legal policy applied in the closely related case of amendment to pleadings to add parties or causes of action. Amendment of pleadings to add a party or a cause of action is not permitted if it would defeat a limitation defence.12
[36] In Credit Suisse, there was no issue before the Court as to whether or not the matter was able to proceed as a representative action because the application to bring a representative proceeding was granted on the day of filing of the statement of claim. In this case, the defendant opposes the proceeding as a representative proceeding and the Application has not been heard. The orders the plaintiffs seek will achieve a quite different result from that obtained in Credit Suisse, namely, that a statutory limitation period is suspended pending determination of the Application. Credit Suisse is not concerned with an order of this nature and does not provide authority for such an order.
Other authorities
[37] The Court in Credit Suisse analysed the decisions of Cameron v National
Mutual Life Association of Australasia Ltd (No 2), Fostif Pty Ltd v Campbells Cash
& Carry Pty Ltd13 and Prudential Assurance Co Ltd v Newman Industries Ltd, all of which were referred to by counsel, as follows.14
[38] In Cameron, a decision of the Supreme Court of Queensland, the claim related to the alleged defective condition of a building in which the plaintiff owned units. It was made in a representative capacity on behalf of himself and other unit owners. The lower court did not allow the claim to proceed as a representative action but all individual unit holders who were not named as plaintiffs were given leave to elect to be joined as plaintiffs. The appeal was on the basis that the joinder of unnamed plaintiffs was time barred. The issue was identified as whether the unnamed parties had brought an action in time, not whether they were parties to the action in time. Rule 10 of the Rules of the Supreme Court provided that persons having the same interest in the subject matter were authorised to sue “on behalf of and for the benefit of all persons so interested”. Because the rule made no distinction between named and unnamed plaintiffs, the Judge was satisfied the rule permitted actions to be brought on behalf of plaintiffs even if they were not named in the writ. The limitation period was held to have stopped running for both named and unnamed plaintiffs when the action was brought by the named plaintiffs on behalf of the others.
[39] Fostif was a decision of the Court of Appeal of New South Wales. Licensed tobacco retailers brought representative proceedings on behalf of themselves and unnamed persons, seeking to recover licensing fees paid before a licensing scheme was declared invalid. Unnamed plaintiffs were required to sign an opt-in notice in order to participate. The Judge, Mason P, endorsed the approach of Cameron in focusing on when the action was brought and decided that the limitation period
stopped for the whole group once the named plaintiffs issued a proceeding.15
13 Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd [2005] NSWCA 83, (2005) 63 NZWLR 203.
14 Prudential Assurance Co Ltd v Newman Industries Ltd [1981] Ch 229 (Ch).
15 Note the High Court in Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd [2006] HCA 41, (2006) 229 CLR 386 allowed the appeal but on different grounds.
[40] In Prudential Assurance, a different approach was taken. The defendant company acquired the assets of another company after a majority of shareholders passed a resolution approving the transaction. Prudential, a minority shareholder, opposed the transaction and then issued proceedings against the company expressed to be on behalf of itself and all other shareholders of the company. Prudential applied to amend its claim, seeking a declaration of entitlement to damages and an award against two directors personally for conspiracy in a representative capacity on behalf of the other company shareholders. The amendment was allowed, the Judge finding no limitation issue arose because the only effect of an order in favour of a plaintiff in its representative capacity would be that the issues covered by that order would be res judicata. He held that persons within the representative class would have to establish damages in separate actions and accordingly would have to bring those actions in compliance with the Limitation Act 1939 (UK).
[41] The majority in Credit Suisse preferred what they described as the fully reasoned and targeted discussion of the nature of representative proceedings in Cameron and Fostif, commenting they were similar to s 4 of the Limitation Act and r
4.24, and noting that limitation was not an issue considered in any depth in the Prudential Assurance case. They noted it was essential to the reasoning of two of the Judges in Cameron that the proceeding had initially been filed as a representative action. They then said:16
Mason P (Fostif) and McPherson SPJ (Cameron) made it clear that it was the actions of the plaintiffs bringing the proceedings that are crucial to determining when the action has been brought and when time has expired. We agree.
[42] Mr Parker also referred to the decision of the Supreme Court of Australia in Visic v Proude.17 The claim arose as a result of bush fire burning a large area of land, including the land of the plaintiff. The plaintiff alleged that his losses were caused by the negligence of the appellant and the South Australian Fire Service. Mr Proude’s statement of claim pleaded that he brought the action on his own behalf and proposed applying for authorisation for a representative action on behalf of all
280 land owners named in a schedule. Authorisation to proceed with the action as a representative action was granted.
[43] The decision concerned r 81 of the Supreme Court Civil Rules and its relationship to r 80. Under r 80:
80 Bringing of representative action where common interest exists
(1) If a group of persons has a common interest in the subject matter of an action or proposed action and a member of the group is authorised in writing by the other members of the group to bring or defend the action as representative of the group, the person may bring or defend the action as representative of the group.
[44] Rule 81 of the Supreme Court Civil Rules permits the court to authorise a plaintiff to bring an action as a representative of a group with a common interest in questions of law or fact to which the actions relate. The question in that case concerned the time at which the action of the group members was commenced for the purposes of the Limitation of Actions Act 1936 (SA) – the question being, was it when the claimant filed the originating process (the summons) or when the Court granted the authorisation under r 8(1) of the Supreme Court Rules 2006?
[45] The Court held that the appellant’s argument was founded on the misconception that the action brought was not representative unless and until the court made the authorisation order.
[46] The Court said:18
The construction for which the appellant contends depends upon steps being taken by the Court, rather than a litigant, for the commencement of an action. Intuitively, this seems an unlikely interpretation. Given the potential for delay before an application for an authorisation might be decided, which might be outside the control of the plaintiff, the Court should shrink from adopting such construction unless compelled to do so because of the consequence of such a construction in relation to the application of the Limitation Act. I do not consider I am compelled to do so. The grant of authority does not, per se, amount to the “bringing of the action”.
[47] The distinguishing feature of the present case, as against the Australian authorities on which Mr Parker relied, is that in the Australian cases, the filing of the
18 At [53].
statement of claim as a representative action was authorised under the relevant rules. An analysis of the Australian rules in comparison with those applicable in New Zealand is addressed in the next section.
Rule 4.24(a) of the Rules
[48] Rule 4.24 provides:
4.24 Persons having same interest
One or more persons may sue or be sued on behalf of, or for the benefit of, all persons with the same interest in the subject matter of a proceeding—
(a) with the consent of the other persons who have the same interest; or
(b) as directed by the court on an application made by a party or intending party to the proceeding.
[49] The minority judgment of Elias CJ and Anderson J in Credit Suisse discussed r 4.24, saying:19
… a person may bring a claim on behalf of others with “the same interest in the subject matter of a proceeding” only with the consent of those with the same interest or “as directed by the Court on an application made by a party or intending party to the proceeding”. If consent has been given, the plaintiff may file a representative claim as of right. Without consent, a representative claim requires the direction of the Court.
…
No other authority for a representative claim than that it is brought with the consent of those represented is necessary
[50] Mr Parker submitted that the consenting persons had a right to bring the claim pursuant to r 4.24(a).
[51] In the commentary on r 4.24(a), McGechan on Procedure says:20
Where a plaintiff has the consent of all members of the class which the plaintiff intends to represent, the plaintiff may issue representative proceedings as of right… Absent consent of all members of the class, a plaintiff intending to sue on behalf of a class should apply to the Court for a representation order under r 4.24.
[52] The first point about r 4.24(a) is the requirement in the introductory words that the claim is on behalf of all persons with the same interest. The comments in Credit Suisse must be read in that context. The consent which is required (which must be the consent of all persons with the same interest) was not an issue in the Credit Suisse decision because of the circumstances of that case where representative status had already been obtained on the date of filing of the claim. In contrast, in this case, representative status has not yet been obtained and there is potentially an extremely wide class of people not readily ascertainable.
[53] The requirement of obtaining the consent of all the class members was referred to in Flowers and approved in Credit Suisse. The policy behind representative actions reinforces that interpretation. Representative actions are intended to corral claims involving the same interest in the same subject matter to avoid a proliferation of proceedings with the same issue. The circumstances of this case, with such a large number of users of the defendant’s product, emphasises the correct interpretation of r 4.24; that is, the basis for representation is founded either in the consent of all those who have the same interest in the subject matter of the proceeding or if the court directs representation on application made by a party or an intending party.
[54] The way in which the Application has been framed suggests that, notwithstanding Mr Parker’s submissions at the hearing, the plaintiffs accept that court approval is required even in respect of the consenting persons.
[55] Mr Parker adopted the stance that r 4.24(a) gave the right to bring a claim but whether or not the claim could continue required court approval, hence the Application, he said. He stressed that approval of representative action was not determinative of when the claim had been brought. The submission as to continuation of a claim in representative form appears to be based on part 8, r 13(1) of the rules of the Supreme Court of New South Wales. As I will discuss in further detail below, the Australian rules differ from r 4.24. The concept of continuation does not exist in r 4.24 and I accordingly reject that proposition.
[56] If r 4.24(a) is read as requiring the consent of all those with the same interest, then, on the facts, that clearly has not been obtained. The right to sue in a representative capacity, therefore, does not arise in the circumstances. The orders sought fall to be considered in the context of an application under r 4.24(b) and court approval is required even in respect of the consenting persons.
[57] Even if I am wrong about that, r 4.24(a) requires the consenting persons to have the same interest in the subject matter as the plaintiffs. Any consent which might have been obtained is effective for the purpose of r 4.24(a) only if the consenting persons have the same interest in the subject matter of the proceeding as the plaintiffs. This is at issue in this case. The fact of consent is, in and of itself, insufficient. Again, this requirement was not addressed in Credit Suisse because it was not relevant.
Rule 4.24(b) of the Rules
[58] In support of the orders sought, Mr Parker relied on the Cameron decision to the effect that, if representative action is not authorised, both the consenting persons and the potential claimants can be deemed to have commenced proceedings, albeit irregularly. In his submission, even if the court does not approve the Application, the claims have still been brought and there would simply be an irregularity which can
be cured. In Cameron, it was held:21
In my view the use of the representative form of action in the present case did not make either the writ itself or the indorsement [sic] of the representative form of claim a nullity. At most it was an irregularity that was capable of being cured, and was cured, by the order made by Dowsett J. giving the unnamed plaintiffs leave to be joined as named plaintiffs. The fact that under the Rules the action ought not to have been brought on their behalf does not mean that it was not so brought…
[59] However, unlike r 4.24(b), order 3, r 10 of the Rules of the Supreme Court of Queensland permitted a plaintiff to sue on behalf of others with the same interest in the proceeding as of right.22 The decision in Cameron, that the proceeding was
“brought” on behalf of the unnamed plaintiffs, reflects the wording of that rule.
21 Cameron, above n 2, at 138.
22 The rule is quoted in the judgment of Ryan J at 139 and relevantly provides: “When there are numerous persons having the same interest in the subject matter of a cause or matter, one or more such persons may sue....”
[60] Mr Parker referred to the comments in Credit Suisse that r 4.24 and the New South Wales and Queensland rules were similar.23 That observation must, however, be considered in the context of what was at issue in the Credit Suisse decision and the comments should not be read any wider than that. I emphasise that in Credit Suisse, representative status had been obtained by a representative order under r 4.24(b) granted the same day as the filing of the statement of claim. In Cameron,
representative status was obtained by filing of the statement of claim.
[61] The dissenting Judges in Credit Suisse were of the view that the Rules of the Supreme Court of Queensland at issue in Cameron differed from r 4.24 in making it clear that a person may institute representative proceedings without having obtained consent or the authority or direction of the Court.24
[62] The dissenting Judges observed:25
In Carney and Cameron, the proceedings were properly constituted by the plaintiff on behalf of those within the class represented, leaving adjustment and the conditions of continuation of the representative claim to be dealt with at the stage when the court was already seized of a representative claim. By contrast, under r 4.24 no claim is properly instituted as representative without consent or under court direction.
[63] In Cameron, the question was the continuation of a claim in representative form and the decline of permission for it to continue in that form. It was important to declare the plaintiff ’s assertion of representative status was an irregularity because the proceeding could not otherwise have been brought on behalf of the unnamed plaintiffs. In contrast, in this case, the potential class members do not have a representative status unless and until the plaintiffs are successful in their Application. Until then, the plaintiffs do not represent the potential class members and the proceeding is not brought on their behalf. In other words, if the Application fails, no proceeding will have been brought on behalf of the potential class members, contrary
to the position in Cameron.
23 Credit Suisse, above n 1, at [136] and [146].
24 At [74].
25 At [75].
Defining the proposed class of persons with the same interest
[64] The first issue which a court must address in an application under r 4.24(b), is whether the plaintiff and the class identified share the same interest in the subject matter of the proceeding. If there is the same interest and the application is granted, then, as the majority in Credit Suisse held, the potential class members will be deemed to have commenced their proceedings at the date of filing the statement of claim.
[65] The problem in this case is that the result of the Application necessarily informs the correct outcome of this decision.
[66] Notwithstanding the fact that consent has been obtained from the consenting persons, the question remains, do they have the same interest in the subject matter of the proceeding as the plaintiffs and other potential class members? The mere provision of consent does not, in and of itself, mean the interest in the subject matter of the proceeding is the same. If the consenting persons do not have the same interest, then the plaintiffs are not entitled to sue in a representative capacity and they cannot be said to have commenced proceedings on behalf of the consenting persons.
[67] Mr Parker accepted that Cameron concerned a class of claimants significantly more readily identifiable than the proposed class in this case. In Mr Parker’s submission, however, the same principle applies and the issue comes down to approval of the proposed class. He observed that the Fostif case concerned a much wider group. However, again, it was a relatively narrowly affected group as was the case in all the authorities provided.
[68] Mr Parker asks the Court to declare that, if the Application is dismissed, those within the potential class, including potential claimants, should still be able to sue within a certain timeframe, notwithstanding the Limitation Act. The problem with that proposal comes back to the central issue of who falls within the potential class. The Court would have to be able to define the class in order to make that directive and, if the Court is not satisfied that there is any such “class”, then it will be unable to make that direction.
[69] The circumstances of this case, involving such a broad potential class, emphasise the difficulties in granting the orders sought. Whether such a “class” in fact exists is a matter for the Application hearing but it also impacts the present decision.
[70] In Mr Parker’s submission, the defendant’s suggestion that separate proceedings should be filed prior to 31 December 2015 would mean that the Court would be endorsing an approach specifically criticised by the Supreme Court in Credit Suisse. However, the comment was made on the premise that the class has the same interest in the same subject matter. In the present case, the issue is what happens when the court hearing the Application finds there is not the required same interest.
[71] The defence suggested it would be a relatively simple matter for the consenting persons to file their own proceedings before the close of
31 December 2015 on the basis that, if there is such a high degree of similarity between the individual claims, preparation of multiple claims would not be arduous. Indeed, the drafting of those proceedings will go quite some way towards answering the central question of whether there is the same interest in the subject matter. If the proceedings for the consenting persons are effectively identical to those already filed, then it can be inferred they are likely to have the same interest in the subject matter of the proceeding. If, however, they are not so similar then that suggests that the defence is right and the defence is entitled to know the particulars of each of the claims.
[72] High Court Rule 5.26 provides:
5.26 Statement of claim to show nature of claim
The statement of claim—
(a) must show the general nature of the plaintiff's claim to the relief sought;
and
(b) must give sufficient particulars of time, place, amounts, names of persons, nature and dates of instruments, and other circumstances to inform the court and the party or parties against whom relief is sought of the plaintiff's cause of action; and
[73] A statement of claim commences proceedings by informing the defendant of the particulars of the claims against it. In representative proceedings, the statement of claim is the statement of claim of all the class and is deemed therefore to contain all their particulars. If the Application is refused, then the effect of that is to say that the proceeding has not commenced as far as the potential class members are concerned. They are therefore deemed not to have provided the particulars of their claim.
[74] This emphasises the futility of trying to deal with the orders sought in this case. The position of the consenting persons depends upon the outcome of the Application and the reasons for that outcome. For example, the court might well conclude that some of the consenting parties have the same interest but others do not. This confirms the impossibility of making the orders sought. To make the orders, I would have to be satisfied that the statements of claim contain the particulars of each potential class member’s claim or, at least, each consenting person’s claim. I do not have the information necessary to reach that conclusion.
[75] Apart from r 4.24, no other basis for representation is provided in the Rules.26
Under r 5.25, a proceeding is commenced by the filing of a statement of claim (including proper particulars of material facts). The combination of these rules means that, if the Application is declined, the potential class members will not have commenced any proceeding. If they have not commenced any proceeding, they will then be subject to the Limitation Act in the ordinary way.
Irregularity
[76] Rule 1.5 provides:
1.5 Non-compliance with rules
(1) A failure to comply with the requirements of these rules—
(a) must be treated as an irregularity; and
(b) does not nullify—
(i) the proceeding; or
(ii) any step taken in the proceeding; or
(iii) any document, judgment, or order in the proceeding.
(2) Subject to subclauses (3) and (4), the court may, on the ground that there has been a failure to which subclause (1) applies, and on any terms as to costs or otherwise that it thinks just,—
(a) set aside, either wholly or in part,—
(i) the proceeding in which the failure occurred; or
(ii) any step taken in the proceeding in which the failure occurred; or
(iii) any document, judgment, or order in the proceeding in which the failure occurred; or
(b) exercise its powers under these rules to allow any amendments to be made and to make any order dealing with the proceeding generally as it thinks just.
(3) The court must not wholly set aside any proceeding or the originating process by which the proceeding was begun on the ground that the proceeding was required by the rules to be begun by an originating process other than the one employed.
(4) The court must not set aside any proceeding or any step taken in a proceeding or any document, judgment, or order in any proceeding on the ground of a failure to which subclause (1) applies on the application of a party unless the application is made within a reasonable time and before the party applying has taken any fresh step after becoming aware of the irregularity.
[77] McGechan on Procedure summarises the principles under r 1.5 as follows:
(a) A liberal approach to r 1.5 is appropriate in order to prevent injustices caused by mindless adherence to technicalities.
(b)The rule may not be employed to obviate the necessity to comply with the requirements of other rules.
(c) In exercising its discretion, the court may look to all the circumstances, including:27
(i)Whether by withholding relief, the applicant would be prejudiced;
(ii)Whether withholding relief would confer a benefit on the defaulting party; and
(iii)Whether granting relief could effect an injustice on the defaulting party.
[78] As discussed, if the Application is refused, the potential class members will not be deemed to have commenced proceedings by the date of filing the statements of claim. There will therefore be no proceeding in which there is any irregularity to be corrected.
[79] More obviously, the potential claimants cannot be deemed to have commenced any proceedings and there is no jurisdiction to make the orders sought.
[80] Rule 1.5 is designed to cure irregularities resulting from non-compliance with the Rules. McGechan on Procedure states:28
It must be noted that only non-compliance with the High Court Rules may be dealt with under r 1.5. Irregularities resulting from non-compliance with other statutes are subject to the provisions of the statute concerned…
[81] The concern is that claims may be time barred if the Application does not succeed. The irregularities the plaintiffs seek to cure will be the result of non- compliance with the Limitation Act, not the Rules. The application of r 1.5 cannot be used to bypass the Limitation Act when Parliament has clearly made limited exceptions as to modifications to limitation periods.29
[82] Rule 1.6 is of no assistance to the plaintiffs. It permits disposal of cases that the rules do not provide for. The Rules and the Limitation Act, however, do provide for this case. Under r 5.25, a proceeding is not commenced until a statement of
claim is filed. Under r 4.24(b), a party does not gain representative status until the
28 McGechan on Procedure (online looseleaf ed, Brookers) at [HR1.5.08].
29 See, for example, Limitation Act 2010, ss 44–49.
court grants it that status (even though that status can be backdated). It follows that if a potential class member chooses to rely on a plaintiff seeking representative status, and the plaintiff is unsuccessful in obtaining representative status, the potential class members will not have commenced a proceeding until he or she or it files a statement of claim in his or her own name.
[83] The orders sought by the plaintiffs would involve the exercise of a power by the Court effectively to extend the longstop limitation period provided under s 23B of the Limitation Act. None of the powers identified by the plaintiffs extend to making such orders.
[84] Important public policy considerations underlie the Limitation Act, as was discussed by the Law Commission.30 The fact that there are discretionary extensions emphasises the statutory policy that any such discretionary extensions have been specifically enacted. Our limitation law is enforced by the Rules.31
[85] Both counsel discussed the Class Actions Bill 2008.32 This draft Bill was prepared by the Rules Committee and proposes a suspension of limitation periods in the case of class actions as defined by cl 14. Clause 14 provides for when the relevant limitation period begins to run in the case of both opt-out and opt-in class actions. It is unclear whether the Bill has progressed to any stage of the parliamentary process. However, the point is that it is not the law.
[86] Mr Hodder emphasised the prejudice to the defendant if the orders sought were granted because the defendant faces the same limitation periods in connection with any third party claims, the obvious third parties being the various local authorities. Mr Parker responded by pointing out that most local authorities will be protected by the 10 year limitation under the Building Act 2004 which, in most cases, will have already expired. He conceded, however, that there may well be some cases where that time period has not yet expired. He said that the defendant could seek orders similar to those sought by the plaintiffs in order to preserve its
position with regard to third party claims.
30 Law Commission Tidying the Limitation Act (NZLC R61, 2000).
31 See, for example, High Court Rules, r 7.77.
32 Class Actions Bill 2008 (PCO 8247/2.3).
[87] However, it would be wholly unsatisfactory for such an order in respect of potential third party claims to be granted. Furthermore, the fact that in this case, a number of potential third party claims might already be time barred does not mean that the orders sought by the plaintiffs are appropriate. The decision needs to be made on a principled basis and not simply because, in this case, there might be only a few potential third party claims.
[88] I accept the defendant’s submission that, if the representative rule has not been properly engaged in this case but the plaintiffs are held to have commenced proceedings at the date of filing the claim under r 1.5, then the defendant will be prejudiced and justice will not have been served.33
Result
[89] For the reasons given, I decline to make the orders sought.
[90] The defendant is entitled to costs. Failing agreement between the parties, the defendant is to file submissions by 5 February 2016, with any response to be filed 14
days thereafter. The decision will be made on the papers.
Thomas J
Solicitors:
Parker & Associates, Wellington. Chapman Tripp, Wellington.
33 The objectives of the Rules are contained in r 1.2 being to secure the just, speedy and inexpensive determination of any proceeding or interlocutory application.
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