Guo v Immigration and Protection Tribunal
[2014] NZHC 802
•16 April 2014
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2013-485-002515 [2014] NZHC 802
BETWEEN GPE HOLDINGS LIMITED
Appellant
AND
TILE 'N' STYLE LIMITED First Respondent
JOHN KARL GRESSLEHNER Second Respondent
BASF NEW ZEALAND LIMITED Third Respondent
Hearing: 14 April 2014 Counsel:
A R Davie for Appellant
No appearance for First and Second Respondents
J E McLennan for Third RespondentJudgment:
16 April 2014
JUDGMENT OF COLLINS J
Introduction
[1] GPE Holdings Ltd (GPE) is a property developer. BASF New Zealand Ltd
(BASF) imports and distributes building products. Between June 2000 and June
2004 GPE developed a 91 unit apartment complex called Greta Point in Evans Bay, Wellington (the complex).
[2] In 2000, BASF made representations to GPE about the quality and suitability of a sealant which BASF supplies. BASF said its product could be used as a
waterproof sealant on decks that were to be constructed on the outside of each
GPE HOLDINGS LIMITED v TILE 'N' STYLE LIMITED [2014] NZHC 802 [16 April 2014]
apartment unit of the complex. BASF also made representations about the competence of Tile ‘N’ Style Ltd (TNS) to apply BASF product to the decks.
[3] The question I have to consider is whether the representations made by BASF fall within the definition of “building work” in s 7 of the Building Act 2004 (the Act). That definition says building work includes “work … for, or in connection with the construction … of a building”.
[4] If the representations made by BASF are “building work”, then GPE’s proceeding against BASF is barred by the 10 year time limit for commencing proceedings “relating to building work” set out in s 393(2) of the Act.1
Context
[5] The question I have to consider arises in the context of an appeal by GPE
from one aspect of a judgment delivered by District Court Judge Broadmore on
24 June 2013.
[6] Judge Broadmore was required to decide a number of pre-trial questions. When answering those questions Judge Broadmore concluded that the representations made by BASF were “building work” as defined in s 7 of the Act. He also decided that GPE’s claim against BASF could not be pursued because of the
10 year time limit in the Act.
Background
[7] The units in the complex have external decks and balconies, some of which are cantilevered from supporting structures, and others which are supported by columns.
[8] The plans for the units originally involved the application of a waterproof membrane called Butynol to the decks and balconies. Butynol is a synthetic butyl
rubber membrane. It is laid in sheets.
1 Building Act 2004, s 393(2): … [N]o relief may be granted in respect of civil proceedings relating to building work if those proceedings are brought against a person after 10 years or more from the date of the act or omission on which the proceedings are based.
[9] During the course of 2000 Mr Turner, an employee of BASF approached GPE and discussed the merits of GPE using a BASF product instead of Butynol. BASF’s product is called HLM 5000 and is applied as a liquid substance which, when it dries, forms a waterproof membrane.
[10] It has been determined in related proceedings that Mr Turner viewed the plans and advised GPE that BASF’s products would ensure watertight protection of
the decks and balconies that were to be constructed.2
Mr Turner also advised GPE
that BASF had appointed TNS as its approved Wellington applicator of BASF
products.
[11] In late 2000, HLM 5000 was applied to the deck of one unit in the complex by TNS under the direction of Mr Turner. A flood test, which lasted several days, was then carried out, after which GPE was satisfied that HLM 5000 was watertight. After this test GPE decided to use HLM 5000. TNS was appointed as the contractor to carry out the installation of HLM 5000 on all of the decks and balconies which
were to be constructed in the complex.
[12] The units to which this appeal relates were completed between 31 January
2001 and 29 June 2001.
[13] Between January and October 2003, GPE became aware that damage had occurred by water penetrating through the membrane that had been applied by TNS on the decks of some of the units. GPE instituted investigations, which included commissioning the Building Research Association of New Zealand (BRANZ) to prepare a report on the cause of the damage to the units. In April 2004, BRANZ issued its report in which it concluded that the thickness of the membrane applied by TNS was inadequate and that as a consequence water penetrated the membrane. The water penetration caused damage to the decks, balconies and internal structures.
[14] On 7 August 2008, GPE received the first complaint in respect of a unit involved in this proceeding. GPE repaired the damage and then commenced
proceedings against TNS, its managing director Mr Gresslehner and BASF.
2 GPE Holdings Ltd v Tile ‘N’ Style Ltd [2010] DCR 602.
[15] GPE has issued four tranches of proceedings. The first tranche of proceedings was commenced in 2006, and concerned 10 units. Those proceedings resulted in a judgment from Chief Judge Johnson, which was delivered on
18 December 2009. Chief Judge Johnson apportioned liability between the parties. However, in the judgment he states that he did not address BASF’s liability for “its part in persuading GPE that HLM 5000 was suitable for the task, and the consequences of directing TNS to apply the membrane in the way it did … [T]hat
unrecovered amount is 30 per cent of the total damage”.3 However, Chief Judge
Johnson also held BASF “was responsible to GPE only for the breaches of the Fair
Trading Act”, which he fixed at 10 per cent.4
[16] The second tranche of proceedings involved six units. That set of proceedings was settled.
[17] The third tranche of proceedings was commenced on 21 April 2011 and involves 20 units. A fourth tranche of proceedings, which was commenced in 2013, involves six units.
[18] This appeal is concerned only with the third tranche of proceedings. I was advised during the hearing of the appeal that the question I am required to focus upon relates to nine of the 20 units covered by the third tranche of proceedings. I was also advised that the fourth tranche of proceedings may effectively be determined by my judgment.
[19] The causes of action brought by GPE against BASF allege:
(1) Breaches of ss 9 and 13 of the Fair Trading Act 1986.5
(2) Negligent misstatement.6
3 GPE Holdings Ltd v Tile ‘N’ Style Ltd, above n 2, at [184].
4 At [184].
5 GPE alleges BASF made misleading and deceptive representations about the standard of training given to TNS, and that TNS’s workmanship was satisfactory.
6 GPE alleges that statements made by BASF about the training given to TNS, TNS’s workmanship and product specifications were false and/or reckless.
(3) Negligence.7
[20] GPE alleges that BASF misrepresented:
(1) The waterproofing membrane products imported and distributed by BASF were of an acceptable quality and reasonably fit for use as a suitable waterproofing membrane for roofs and decks.
(2) HLM 5000, or a combination of BASF’s products would be suitable for application to the decks and balconies at the development.
(3) TNS was BASF’s approved applicator of the waterproofing membrane products in Wellington and TNS was experienced in the application of BASF’s products and in particular, HLM 5000.
(4) BASF would, throughout the application of the waterproofing membrane, provide TNS and its employees with guidance, advice and supervision as to the application of the membrane.
(5) BASF had provided TNS with full training in the application of the waterproofing membrane products.
(6) The standard and quality of TNS’s workmanship with regard to the application of the waterproofing membrane products was acceptable to and of a standard reasonably expected by BASF of its approved applicators.
(7) TNS’s methods of application of the waterproofing membrane products would be in accordance with the manufacturer’s specifications and instructions.
[21] BASF maintains that GPE’s proceeding is barred because it has been brought beyond:
(1) The three year time limit specified in s 43(5) of the Fair Trading Act
1986. That limitation bars proceedings unless they are brought within
7 GPE alleges BASF failed to provide adequate guidance, advice and supervision to TNS.
three years of the date on which the loss or damage, or the likelihood of loss or damage was discovered or reasonably ought to have been discovered;
(2) The six year time limit specified in s 4(1)(a) of the Limitation Act
1950;8 and
(3) The 10 year time limit in s 393(2) of the Act.
[22] After GPE commenced the third tranche of proceedings the parties posed pre- trial questions for determination by the District Court. There were 13 questions put to the District Court to answer, including:
(1) Had GPE’s claim against BASF been brought within three years after the date on which the loss or damage or the likelihood of loss or damage ought reasonably to have been discovered by GPE in terms of s 43(5) of the Fair Trading Act 1986?
(2) Have GPE’s claims in negligence and negligent misstatement been brought within six years of the date on which the cause of action accrued under s 4(1)(a) of the Limitation Act 1950?
(3) Does the 10 year limitation provision in s 393(2) of the Building Act
2004 apply to BASF’s role as alleged by GPE?
(4) If the 10 year limitation provision in s 393(2) does apply, from what date does it apply?
[23] In his comprehensive judgment Judge Broadmore reached a number of conclusions, including:9
(1) GPE’s proceeding was barred by the three year time limit in s 43(5) of the Fair Trading Act 1986.
(2) GPE’s proceeding was brought beyond the six year time limit in
s 4(1) of the Limitation Act 1950.
(3) GPE’s proceeding “obviously related to building work”,10
and thus
was brought beyond the 10 year time limit in s 393(2) of the Act.
[24] GPE has appealed only the aspect of Judge Broadmore’s decision where he held that the 10 year time limit in s 393(2) of the Act applied. GPE abandoned another ground of appeal in which it suggested that the claim under the Fair Trading
Act 1986 was not captured by s 393(2) of the Act.
The appeal
[25] Mr Davie, counsel for GPE, advanced commendably succinct submissions. The grounds of appeal can be distilled to the following two points:
(1) The representations made by BASF about the quality of its product and the abilities of TNS were not “work in connection with the construction of a building” and therefore not within the scope of s 393(2) of the Act.
(2) The representations made by BASF were generic and because they did not relate to a particular building, then s 393(2) of the Act did not
apply.
[26] Mr Davie relied on Deeming v EIG-Ansvar Ltd.11
In that case, the seventh
defendant, Geotek, had been engaged to undertake geotechnical investigations into land to determine if the land was suitable for residential subdivision. Geotek completed its report in July 1999. The land in question was approved by the local authority for subdivision. A house was subsequently constructed on a section in the subdivision by the second defendants who later sold that house to the plaintiff. In
2011 the plaintiff commenced proceedings against a number of defendants, including the local authority and Geotek. Geotek applied to have the proceeding against it
struck out on the grounds that the proceeding was barred by the 10 year limit in s 393(2) of the Act.
[27] Geotek’s application was heard by Associate Judge Doogue, who ruled that the work in question could not be viewed as “building work” for the purposes of s 393(2) of the Act. The Associate Judge held that Geotek’s work was about the suitability of land for subdivision and that Geotek’s report was used to assist the local authority in deciding to grant consent to the subdivision. Geotek’s work was not connected with construction of any specific house and therefore was not within the perimeters of s 393(2) of the Act.
[28] Relying on the reasoning in Deeming, Mr Davie submitted that BASF’s representations “were made well prior to the construction of any of the decks at the Greta Point subdivision” and that “the misrepresentations made by BASF did not relate to any particular unit”.
[29] Mr Davie also drew support from North Shore City Council v Attorney- General, in which a majority of the Supreme Court observed that a report prepared by the Building Industry Authority (BIA) in 1999, four years before the construction of the building that was the subject of that proceeding, was not work in connection
with that building.12 Blanchard, McGrath and William Young JJ said s 393(2) of the
Act could not apply to BIA’s conduct because it did not relate to an individual building.13
[30] Mr Davie also referred to Thomson v Christchurch City Council, in which Gendall J said that a manufacturer’s specification or advice as to how a particular product should be used might fall outside of the definition of “building work” in s 7
of the Act.14
12 North Shore City Council v Attorney-General [2012] NZSC 49, [2012] 3 NZLR 341.
13 At [209]-[210].
14 Thomson v Christchurch City Council HC Christchurch CIV-2010-409, 2298, 28 March 2011 at
[45].
Analysis
[31] In deciding if the representations made by BASF to GPE fit within the definition of building work in s 7 of the Act, I shall examine:
(1) The text of the definition.
(2) The policies underpinning and the purpose of the definition.
(3) The context in which BASF made the representations in question.
Text of the definition of building work
[32] The relevant provision of s 7 of the Act are:
building work
—
(a) means work—
(i) for, or in connection with, the construction, alteration, demolition, or removal of a building.
…
[33] The term “in connection with” in the definition of building work is pivotal in this case.
[34] The words “in connection with” have a wide meaning requiring merely a link or relationship15 between one thing (A) and another (B). It is not necessary, however, for there to be a causal relationship in order for (A) to be connected with (B).16
[35] It is also clear that in order for work (A), to be connected with the construction, alteration, demolition or removal of a building (B), the person
performing (A) must have had (B) in mind. Usually this would involve, at the very
15 Leslie Brown (ed) The New Shorter Oxford Dictionary (Clarendon Press, Oxford, 1993).
16 Dustin v Weathertight Homes Resolution Service HC Auckland CIV-2006-404-276, 25 May
2006; Davidson v Banks HC Auckland CIV-2006-404-6150, 23 March 2009; Our Town FM Pty
Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465.
least, plans and designs for the construction of (B). Any other conclusion would produce a non sequitur because (A) could not be connected with (B) if (B) did not exist at least in the form of plans and designs.
[36] This line of reasoning underpins the conclusions reached in Deeming and the observations of the majority in North Shore City Council v Attorney-General where the buildings which were the subject matter of those cases were not even at the planning or design stages when the representations which were sued upon were made. The analysis I have just undertaken is also entirely consistent with Gendall J’s observations in Thomson v Christchurch City Council.
The policy underpinning and the purpose of the definition
[37] The policy impetus for what became s 393(2) of the Act was “the problems engendered by a discoverability approach in the context of negligence claims pertaining to building work and building control”,17 and in particular the prospect of indeterminate (effectively uninsurable) exposure on Hamlin principles for damage that may become discoverable years after allegedly negligent conduct. To that end, time runs under s 393(2) from the date of the relevant conduct,18 rather than the date on which the cause of action accrues.19
[38] The purpose of the 10 year limitation period in the Act, and the definition of building work in s 7 of the Act can be traced to the report of the Law Commission on Limitation Defences in Civil Proceedings,20 which was considered by the Court of Appeal in Gedye v South.21
[39] The purpose of the 10 year limitation period was to strike a balance between the interests of a plaintiff who may not be able to reasonably discover damage to their building and the interests of defendants, which included developers and
builders who required certainty and assurance that after a specified period of time
17 Gedye v South [2010] NZCA 207, [2010] 3 NZLR 271 (CA) at [35]; citing Klinac v Lehmann (2002) 4 NZConv C 193,594 (HC) at [13]-[25] with approval in Gedye v South at [30]-[34] and [40].
18 At [43].
19 At [36]-[37].
20 Law Commission Limitation Defences in Civil Proceedings (NZLC R6, 1988) at 280.
21 Gedye v South, above n 17.
they were no longer at risk of being sued for acts or omissions in connection with the construction of a plaintiff building.
[40] The Law Commission explained the basis of what has become known as the
“long stop limitation period” in s 393(2) of the Act in the following way:22
The Commission sees extension of limitation periods, particularly on the ground of non-discoverability, as enhancing fairness, although at some cost to the object of certainty and to the legitimate interests of the defendant. Those interests can, however, be prompted by a “long stop” or ultimate limitation period – an overall limit measured from the date of the act or omission alleged against a defendant.
[41] When it opted for the 10 year limitation period in s 393(2) of the Act, based on objective criteria, Parliament intended that the acts or omissions of those involved in all phases of the construction of buildings would be protected from civil liability if proceedings were commenced 10 years after the act or omission in question. That objective was achieved by ensuring the definition of building work was broad and covered all work in connection with the construction, alteration, demolition or removal of a building.
The context in which BASF made the representations in question
[42] Judge Broadmore recorded the context in which BASF made its representations to GPE in the following way:23
In about 2000 GPE was approached by BASF, the importer and distributor of HLM 5000. BASF was seeking to convince GPE to use the product on the decks and roofs of the development. Discussions between GPE and BASF led to GPE engaging the services of TNS to apply the product to decks and roofs in the development. BASF supplied all products for TNS’s work.
[43] I asked Mr Davie if he took issue with the way Judge Broadmore expressed the context in which BASF made its representation. Mr Davie accepted that he could not take issue with this aspect of Judge Broadmore’s decision. That appears to have been a very proper stance for Mr Davie to have taken in light of Chief Judge Johnson’s findings which I have referred to in paragraphs [8] to [11] of this
judgment.
22 Law Commission Limitation Defences in Civil Proceedings, above n 17, at 280.
23 GPE Holdings Ltd v Tile ‘N’ Style Ltd, above n 9, at [22].
[44] I therefore proceed on the basis that BASF made its representations in the context of persuading GPE to use HLM 5000 on the decks and balconies of the units in the complex. Indeed, the rationale for BASF making its representations was to persuade GPE to use its products instead of Butynol which had been specified in the plans for the units at the time BASF approached GPE.
[45] The context in which BASF made its representations involved buildings which had been planned or designed. At least one unit had been completed and a deck constructed which was used to “flood test” HLM 5000. This was therefore quite different from the context in which Deeming and North Shore City Council v Attorney-General were decided where the representations sued upon were made long before the buildings in issue were designed or built.
[46] The facts of this case are also quite different from the situation which Gendall J had in mind when he said in Thomson v Christchurch City Council that a building product manufacturer’s specifications may not fall within the definition of building
work. The question as to what is building work within the meaning of s 7 of the Act
is dependent on the facts.24
Judge Broadmore’s statement of fact lead to the
inevitable conclusion that BASF’s representations were made in connection with the construction of a building.
Conclusion
[47] The appeal is dismissed.
[48] BASF’s representations were work in connection with the construction of a building. Accordingly, because that work occurred more than 10 years prior to the commencement of the proceeding the limitation period in s 393(2) of the Act is engaged.
[49] BASF is entitled to costs on a scale 2B basis.
24 Thomson v Christchurch City Council, above n 14, at [45].
D B Collins J
Solicitors:
Treadwells, Wellington for Appellant
Holdem Horrocks, Auckland for Third Respondent
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