Gwak v Sun
[2022] NZHC 2296
•9 September 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-000453
[2022] NZHC 2296
BETWEEN JUNG SOOK GWAK and JOSEPHINE YEON JU KIM
AppellantsAND
YAN SUN
First Respondent
ALASTAIR COUPER
Second RespondentAUCKLAND COUNCIL (REMOVED)
Third RespondentLAI FOOK CHOY
Fourth Respondent
Hearing: 11 August 2022; further materials filed 19 August 2022 Appearances:
R M Saunders and G R Y Young for Appellants M Thornton for First Respondent
No appearances for or by Second, Third and Fourth Respondents
Judgment:
9 September 2022
JUDGMENT OF WYLIE J
[Appeal against Procedural Order of Weathertight Homes Tribunal]
This judgment was delivered by Justice Wylie On 9 September 2022 at 11.00 am
Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar
Date:…………………………
Solicitors/counsel:
M Thornton, Auckland Wynn Williams, Auckland
GWAK v SUN [2022] NZHC 2296 [9 September 2022]
Introduction
[1] The appellants, Jung Sook Gwak (Mrs Gwak) and Josephine Yeon Ju Kim (Ms Kim), are claimants in adjudication proceedings before the Weathertight Homes Tribunal. The proceedings relate to a leaky home the appellants purchased in Philadelphia Avenue, Albany in 2003. They were commenced in September 2020.
[2] The respondent, Yan Sun (Mr Sun) is one of the defendants to the proceedings. Mrs Gwak and Ms Kim allege that Mr Sun built the home.
[3] Mr Sun applied to be removed from the proceedings on the basis that he could not be liable because he was not the builder. The Tribunal declined this application.1 Mr Sun then engaged counsel and, through counsel, he sought and was granted leave to make a second application for removal.2 On the second application it was argued that Mr Sun should be removed from the proceedings on the basis of inordinate and inexcusable delay by Mrs Gwak and Ms Kim in prosecuting the proceedings. The Tribunal agreed that there had been inordinate delay; it found that the delay was inexcusable and that Mr Sun has been prejudiced by it. Pursuant to s 112 of the Weathertight Homes Resolution Services Act 2006 (the Act), the Tribunal ordered that Mr Sun be struck out as a party to the proceedings.3
[4] Mrs Gwak and Ms Kim now appeal the Tribunal’s decision. Mr Sun supports the decision.
Factual background
[5] Mr Sun was a director of a building company – Sun International Trade Ltd. In 2002, he applied for a project information memorandum and a water supply connection in respect of the property in Philadelphia Avenue. Site and drainage plans were prepared.
1 Gwak v Sun WHT TRI2020-100-6, 7 May 2021 [Procedural Order 2].
2 Gwak v Sun WHT TRI2020-100-6, 1 September 2021 [Procedural Order 4].
3 Gwak v Sun WHT TRI2020-100-6, 25 February 2022 [Procedural Order 5].
[6] The property was purchased by Zhong Lian Cao (Mr Sun’s mother). Ms Cao applied for a building consent from the North Shore City Council. Consent was granted in August 2002 and she engaged Mr Sun and/or his company to build a residential home on the property. The building works were completed by 24 April 2003 and a Code Compliance Certificate was issued on 26 May 2003.4
[7] Mrs Gwak and Ms Kim (who are mother and daughter) entered into a sale and purchase agreement to buy the property from Ms Cao on 23 July 2003. Settlement took place and Mrs Gwak and Ms Kim became registered proprietors of the property on 12 August 2003. Mr Sun had given a three year warranty to Ms Cao; he extended the benefit of this warranty to Mrs Gwak and Ms Kim.
[8] In 2004/2005, Mrs Gwak and Ms Kim noticed water ingress through a downlight in the kitchen following a period of heavy rain. There is nothing to suggest that they took any remedial steps in respect of this leak or that they called on Mr Sun pursuant to the warranty.
[9] In around May 2012, further water ingress occurred, again through a kitchen light. A builder was engaged and sealant was applied in an attempt to deal with the problem. Again there is nothing to suggest that Mrs Gwak or Ms Kim contacted Mr Sun about the water ingress or the remedial work.
[10] In May 2012, Mr Sun’s building company was placed into liquidation by the Inland Revenue Department. No funds were received for the benefit of creditors. The liquidator recommended that the company should be removed from the Companies Register. This occurred and Sun International Trade Ltd was removed from the Register on 25 February 2013.
[11] In mid-June 2012, Mrs Gwak and Ms Kim contacted the Ministry of Business, Innovation and Employment (MBIE) seeking an assessor’s eligibility report. Ms Kim has deposed that neither she nor Mrs Gwak had noticed any leaking but that they were getting concerned about their home due to various media reports on, and neighbours’
4 The Code Compliance Certificate is dated 26 March 2003. It appears this is a typographical error. The Advice of Completion form is dated 24 April 2003 and it is stamped as having been received by the North Shore City Council on 8 May 2003.
concerns about, leaky homes. A report was prepared by MBIE and it issued on 13 July 2012. It recorded that the home had cladding deficiencies and that the criteria for an eligible claim set out in the Act were met.
[12] A full report by an independent building assessor appointed by MBIE was issued on 8 October 2012. The assessor reported that the home had widespread and systemic weathertightness deficiencies and that, unless they were rectified, it would likely suffer future damage. He noted the various persons/entities involved in the construction of the home insofar as they were known and estimated the likely remedial costs at $289,750.01. He also recorded his views as to the liability of the contributing parties to the identified defects. The builder was listed as a contributing party to each defect.
[13] Mrs Gwak and Ms Kim did not however advance their potential claim. Nor did they take any steps to rectify the deficiencies identified in the report of 8 October 2012. Rather, they moved to Christchurch in May 2013. In 2014, they entered into a financial assistance package with MBIE. They have deposed that they tried, albeit unsuccessfully, to get quotes from builders in Auckland so that they could get the home remediated. Periodically between 2014 to 2016, MBIE wrote to Ms Kim asking what progress they were making with their potential claim.
[14] Mrs Gwak and Ms Kim returned to Auckland in mid-2016. They moved back into the home. There was a fire in the home on 13 August 2016. It damaged the interior of the kitchen and the dining room. Mrs Gwak and Ms Kim lodged a claim with their insurer in respect of the fire damage. Ms Kim says that the insurer “refused [their] request to repair the [fire] damage due to existing leaky issues …”. There were then protracted negotiations with the insurer. Mrs Gwak and Ms Kim say they also met with representatives of MBIE and discussed how to progress their claim.
[15] At MBIE’s suggestion, a follow-up addendum to the assessor’s full report of 8 October 2012 was prepared. The addendum was issued on 18 November 2016. It recorded that the extent of the remediation required had increased due to additional damage, not from the fire, but rather from one or more of the deficiencies identified
in the full assessment report. The estimated costs of repair were then put at
$465,838.12.
[16] Mrs Gwak and Ms Kim settled with their insurer in respect of the fire damage in early 2018. They then endeavoured to raise the balance of the finance required to remediate their home. They finally secured finance in late 2018. Mrs Gwak and Ms Kim then engaged an architect and a builder and they submitted a remediation plan to MBIE. The remediation plan was approved by MBIE in July 2019.
[17] Mrs Gwak and Ms Kim did not however proceed with the remediation plan. Rather, they demolished the existing home and built a new dwelling. It was completed in mid-2020 and a Code Compliance Certificate issued for it on 4 June 2020. Ms Kim says that they decided to rebuild because they were concerned about the cost of the remedial works. She says that the builders warned them that the remediation costs could increase depending on the extent of the damage revealed once the remedial works commenced.
[18] On 6 September 2020, Mrs Gwak and Ms Kim commenced their adjudication proceedings in the Tribunal. They claim $528,001.39 from Mr Sun and the other respondents. They say that this is the estimated cost of the remediation works approved by MBIE and not the actual cost of the rebuild.
[19] Mr Sun first became aware of the alleged problems with the original home when the claim was sent to him in early October 2020. He had not been contacted by Mrs Gwak or Ms Kim at any earlier stage. He had not been given the opportunity to attend to any remediation required. He had not been given the opportunity to inspect the original home before it was demolished.
Mr Sun’s response/the Tribunal’s procedural orders 2, 3 and 4
[20] Shortly after he received the claim, Mr Sun sent a letter to the Tribunal’s case manager. The letter is dated 27 November 2020. Mr Sun applied to be removed from the claim, asserting that he did not carry out any building work on the home and that he should not therefore have been named as a respondent in the claim. He stated as follows:
I was a director of Sun International Trade Limited, which was struck off the Companies Office register in 2013. This company built the house 17 years ago. I have not been able to find any documents in relation to this build due to the length of time that has passed. The claimants applied for an eligibility report in 2012 and have known of any issues with the house since then.
The claimants have never contacted me since that time or told me there may be any issues with the house the company built. This has put me at a disadvantage as I was given no opportunity to view the house before it was demolished and the company has no records from that time.
…
Because the house was built such a long time ago, the following is the best I can remember what happened 17 years ago.
(a)I moved to New Zealand in 1997 and started the company in August 1999.
(b)My mother asked the company to build her a house at 9 Philadelphia Avenue, Albany and the company built the house in 2002-2003.
(c)The company was engaged to undertake the construction of the house in relation to carpentry works, such as construct, install and fixtures of timber and wallboard.
(d)The company had four employees who all carried out work on the house. The company also engaged contractors to undertake work on the house which included, but is not limited to the roofing, drainage and exterior wall work.
(e)I did not personally carry out any of the building work on the house. I was responsible for ensuring that the construction works were completed and on time. I was managing a number of sites at the time, therefore I was not always present at the site.
…
[21] The second respondent to the adjudication proceedings, Mr Couper, and the third respondent, Auckland Council, also applied to be removed.
[22] The Tribunal dealt with the removal applications on the papers. It issued its decision – Procedural Order 2 – on 7 May 2021.5 It noted the assertion made by Mrs Gwak and Ms Kim that Mr Sun was the builder of the home and that he had an overall responsibility for all aspects of the construction. It noted the assessors’ reports
5 Procedural Order 2, above n 1.
and the view expressed by the assessors that the home suffered from various building defects which had allowed moisture to enter. It recorded that the assessors’ reports referred to several departures from the building consent and several areas of defective workmanship. The Tribunal then noted as follows:
[21] Whether the first respondent assumed any liability to the claimants is a factual enquiry. It will need to be determined what work the first respondent did, or supervised, and whether any work he did or supervised was sufficient to impose on him legal liability for defective workmanship carried out by him or on behalf of Sun International Trade Ltd by others.
…
[22] On a removal application, a claim against a builder would need very strong evidence indeed for the Tribunal to conclude that there was no tenable claim. There is no such evidence in this case.
[23] There is evidence that the first respondent may have either carried out work that would render him personally liable to the claimants as a tortfeasor or that he took actions that have the effect that, as a matter of law, he is imposed with a legal responsibility for them. The first respondent can be liable for his actions in controlling and supervising construction, he does not necessarily have had to have physically carried out construction work himself.
The Tribunal referred to the available evidence. It considered that such evidence as it had established an arguable case that Mr Sun had a significant role in the construction of the home. It declined Mr Sun’s application for removal.
[23] The Tribunal also declined Mr Couper’s application for removal. It did however grant Auckland Council’s application for removal, on the basis that a private certifier carried out all relevant building inspections and issued the Code Compliance Certificate.
[24] Neither Mr Sun nor Mrs Gwak and Ms Kim took any steps to challenge this decision, whether by way of appeal or judicial review.
[25] Mr Sun then sought to file a further application for removal. The Tribunal issued a Procedural Order – Procedural Order 3 – directing Mr Sun to apply for leave to file a second application for removal. He did so on 8 June 2021. He recorded that he wished to make a fresh application for removal on the basis that Mrs Gwak and Ms Kim had failed to prosecute their claim in a timely fashion. Mr Sun, through his
counsel, filed submissions in support of the application. Mrs Gwak and Ms Kim filed submissions in opposition (Ms Kim is a qualified lawyer).
[26] In Procedural Order 4, the Tribunal granted leave to Mr Sun to make the second application for removal.6 It considered that the first removal application had not raised the issue of delay and went on to say that it would not have granted leave if Mr Sun had raised the issue in that application.
[27] A second application for removal was then filed. It was opposed by Mrs Gwak and Ms Kim. Ms Kim and Mr Sun both filed further affidavits and Mr Sun filed an affidavit from a building expert, Darryl August.
The Tribunal’s Procedural Order 5
[28] Again, the Tribunal dealt with the second removal application on the papers. Its decision – Procedural Order 5 – was issued on 25 February 2022.7 The Tribunal noted the background. It reviewed the principles relevant to applications for removal under s 112 of the Act where want of prosecution is alleged. It noted that it was required to undertake a balancing exercise. It summarised the relevant chronology and then went on to consider whether there had been inordinate delay by Mrs Gwak and Ms Kim. In considering this issue, it considered, first, whether there was “pre-issue delay” and then whether there was “post-issue delay”. It considered the relevant period for considering whether there was pre-issue delay was from 12 August 2003 to 18 June 2012 and, in considering whether there was post-issue delay, from 18 June 2012 to 6 September 2020 when the adjudication proceedings were filed. It concluded that the post-issue delay was inordinate, noting that Mrs Gwak and Ms Kim had had material available to them from at least 18 June 2012 suggesting that their home had water ingress issues.
[29] The Tribunal went on to consider whether the delay was excusable. It noted various explanations for the delay advanced by Mrs Gwak and Ms Kim, but nevertheless found that the delay in commencing the claim was inexcusable.
6 Procedural Order 4, above n 2.
7 Procedural Order 5, above n 3.
[30] The Tribunal then turned to consider whether or not the delay had seriously prejudiced Mr Sun. It noted Mr Sun’s assertions that he was unable to access his company records because the company had been placed into liquidation in May 2012, that he is unable to now locate parties who carried out work or that could be witnesses and that he is unable to inspect the home because it has been demolished. It recorded that Mr Sun is not sued as the builder, but rather as a director of the company that built the home. It observed that it was critical to Mr Sun’s “role definition defence” that he can show precisely what his role was and what work he was involved with.8 The Tribunal considered that Mrs Gwak and Ms Kim’s delay had deprived Mr Sun of the ability to do this. It referred to Mr August’s evidence that, as a result of the fact that relevant documentation is now missing, Mr Sun cannot determine the roles of those who worked on the site or the responsibility of persons (other than the cladding installer) for the defects alleged. It noted that the house has been demolished and that the only evidence about the defects is that contained in the assessors’ reports. It observed that as a consequence, Mr Sun is not able to instruct an expert to investigate the house. Again, it referred to Mr August’s evidence that the assessors’ reports do not assist in determining various key questions. The Tribunal accepted that Mr Sun was seriously prejudiced by the loss of documents, the inability to identify other relevant parties, the loss of the benefit of potential claims for indemnity or contribution, the loss of the ability to identify who was responsible for any proven weathertightness defects and the loss of the ability to obtain expert evidence identifying the defects, the extent of any damage and the responsibility for any defects.
[31] Finally, the Tribunal considered the overall interests of justice for both parties. Standing back, and weighing the rights and interests of both parties, the Tribunal found that the overall justice of the case favoured Mr Sun’s application and that he should be struck out as a party to the claim. It made an order accordingly.
8 Procedural Order 5, above n 3, at [77].
The appeal
[32] The appeal is brought pursuant to s 93(1) of the Act. It provides that a party to a claim that has been determined by the Tribunal may appeal on a question of law or fact that arises from the determination.
[33] The appeal is conferred on a party to a claim that has been determined by the Tribunal. There is no separate right of appeal in respect of interlocutory or procedural orders.
[34] The effect of removing a person or entity as a party to adjudication proceedings is that the claim against that person or entity can no longer be pursued in the Tribunal.9 A decision striking out a party is therefore a final determination of the claim in respect of that party, with the result that the Tribunal’s decision is amenable to appeal under s 93(1).10 Conversely, a decision declining to remove a party can only be challenged by way of judicial review.11
[35] The appeal falls to be determined in accordance with Part 20 of the High Court Rules 2016. Pursuant to r 20.18, it proceeds by way of rehearing. Although there has been a suggestion to the contrary,12 in my judgment, the principles to be applied when considering an appeal under s 93(1) of the Act are those discussed by the Supreme Court in Austin, Nichols & Co Inc v Stichting Lodestar.13 The Chief Justice there summarised the position as follows:
[16] Those exercising general rights of appeal are entitled to judgment in accordance with the opinion of the appellate court, even where that opinion is an assessment of fact and degree and entails a value judgment. If the appellate court’s opinion is different from the conclusion of the tribunal appealed from, then the decision under appeal is wrong in the only sense that matters, even if
9 Auckland City Council v Unit Owners in Stonemason Apartment 27 Falcon Street, Parnell
HC Auckland CIV-2009-404-3118, 11 December 2009 at [23].
10 Kells v Auckland City Council HC Auckland CIV-2008-404-1812, 30 May 2008 at [50]–[56]; Auckland City Council v Unit Owners in Stonemason Apartment 27 Falcon Street, Parnell, above n 9, at [18]; Yun v Waitakere City Council HC Auckland CIV-2010-404-5944, 15 February 2011 at [3]; and Burns v Argon Construction Ltd HC Auckland CIV-2008-404-7316, 18 May 2009 at [12]–[13].
11 Kells v Auckland City Council, above n 10; Auckland Council v Weathertight Homes Tribunal [2013] NZHC 3274 at [15]; and see review of authorities in Auckland Council v Coleman [2011] NZHC 175 at [9]–[13].
12 Auckland Council v Abraham [2015] NZHC 415 at [5]–[9].
13 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.
it was a conclusion on which minds might reasonably differ. In such circumstances it is an error for the High Court to defer to the lower Court’s assessment of the acceptability and weight to be accorded to the evidence, rather than forming its own opinion.
(Footnote omitted.)
The appellant bears the onus of satisfying the appellate court that it should differ from the decision under appeal. It is only if the appellate court considers that the appealed decision is wrong that it is justified in interfering with it.14
Submissions
[36] Ms Saunders for Mrs Gwak and Ms Kim accepted that there was delay but she argued that the test for assessing whether a party should be removed under s 112 of the Act is whether it is “fair and appropriate in all the circumstances to do so”. She submitted that the delay was excusable, that there was no material prejudice to Mr Sun and that it was neither fair nor appropriate to order his removal from the proceedings. She noted the following:
(a)there are disputed issues of fact in relation to Mr Sun’s involvement which can only be resolved following a full hearing;
(b)if Mr Sun remains a party to the proceedings and Mrs Gwak and Ms Kim can prove their allegations against him, he will be liable for a significant portion of their loss;
(c)it is wrong in principle for Mr Sun to escape liability simply because others who may be potentially liable for the same loss cannot now be held to account; and
(d)such documents as are still available to Mr Sun are sufficient for him to prepare his defence and there is no evidence that the loss of any documents is attributable to any delay by Mrs Gwak and Ms Kim in bringing their claim; and
14 Austin, Nichols & Co Inc v Stichting Lodestar, above n 13, at [4].
(e)there is no legal requirement that Mr Sun had to be given the opportunity to inspect the home before it was demolished.
[37] There was one further submission made in oral argument by Ms Saunders. She started by suggesting that the Tribunal had breached the requirements of the rules of natural justice contrary to s 112(2) of the Act by considering Mr Sun’s application to be removed from the adjudication proceedings given its findings in Procedural Order 2.15 In the course of discussions, she modified her submission to assert that there was issue estoppel. She submitted that the issue of delay was before the Tribunal when it decided not to remove Mr Sun from the adjudication proceedings in Procedural Order 2.
[38] Mr Thornton for Mr Sun submitted that it was clear that there was an inordinate delay by Mrs Gwak and Ms Kim, particularly after they became aware of the issues with their home. He argued that this delay was exacerbated by their prior delay. He submitted that the delay was inexcusable and that it has seriously prejudiced Mr Sun. He referred to Mr Sun’s inability to access company records, his inability to locate the parties who carried out the allegedly defective work or who could be witnesses as to his role in the building works and his inability to inspect the house prior to its demolition. He submitted that Mrs Gwak and Ms Kim cannot identify any error, either of law or of principle, by the Tribunal and that there is nothing that suggests the Tribunal’s decision was wrong. He argued that Mrs Gwak and Ms Kim are simply inviting the Court to reconsider the issues that the Tribunal considered but to reach a different conclusion.
Analysis
[39] I deal first with the argument advanced on behalf of Mrs Gwak and Ms Kim that there is some kind of estoppel. I then go on to consider s 112 of the Act and Mrs Gwak and Ms Kim’s assertion that the Tribunal erred in Procedural Order 5.
15 Section 112 is subject to s 57(2), which provides that in managing adjudication proceedings, the Tribunal must comply with the principles of natural justice.
Estoppel
[40] Ms Saunders referred to Mr Sun’s correspondence with the Tribunal’s case manager in November 2020. I have set out the relevant parts of that correspondence above at [20]. She also referred to an affidavit sworn by Ms Kim on 17 December 2020 where she dealt with various of Mr Sun’s assertions. I accept that delay was raised by Mr Sun in his letter to the case manager but note that Ms Kim did not comment on the issue in her affidavit in reply dated 17 December 2020.
[41] To establish an estoppel per rem judicatam, there must be not only a final decision made by a judge or judicial tribunal, but also a decision determining the same question as that sought to be controverted in the later litigation in which the estoppel is raised.16
[42] In the present case, the Tribunal made no reference to delay in Procedural Order 2. There was no prior determination of the issue and, in my view, no estoppel has arisen. This ground of appeal must fail.
Section 112 – did the Tribunal err?
Section 112 of the Act provides as follows:
Removal of party from proceedings
(1)The tribunal may, on the application of any party or on its own initiative, order that a person be struck out as a party to adjudication proceedings if the tribunal considers it fair and appropriate in all the circumstances to do so.
This section is subject to section 57(2).
[44] It was common ground that the Tribunal has jurisdiction under s 112 to remove a respondent where the claimant has delayed.17 It was also common ground that there was delay by Mrs Gwak and Ms Kim.
16 Shiels v Blakeley [1986] 2 NZLR 262 (CA); and see CC Fraser Laws of New Zealand Estoppel at [3] and [17].
17 Snelling v Christchurch City Council HC Christchurch CIV-2010-409-2344, 9 August 2011.
[45] This conclusion was inescapable. The house was completed in early 2003. The adjudication proceedings were not commenced by Mrs Gwak and Ms Kim until September 2020 – some 17 and a half years later. The Courts and the Tribunal have drawn a distinction between delay before the issue of proceedings (pre-issue delay) and delay after the issue of proceedings (post-issue delay).18 If pre-issue delay has occurred, further delay after the issue of proceedings will be looked at more critically and any further delay will more readily be regarded as inordinate and inexcusable.19
[46] Here, the date the proceedings were issued is relevant, but almost all of the delay occurred prior to that date. The generally accepted use of the terms pre-issue and post-issue delay is not strictly appropriate. Accepting uncritically the affidavits filed by Ms Kim for herself and on behalf of her mother, they became aware at the latest of weathertightness problems with their home in July 2012. They were then advised that the dwelling had cladding deficiencies and that they were eligible to take advantage of the various processes and assistance available under the Act. Their concerns were confirmed when the full report from the independent building assessor was obtained in October 2012. July and October 2012 were the critical dates for Mrs Gwak and Ms Kim. There was then a delay of some eight years and three months until the adjudication proceedings were issued. On any view of the matter, this delay was inordinate20 and it is exacerbated by the passage of time between the completion of the home and the assessors’ reports – itself a nine year delay.
[47] The Tribunal referred to a decision of this Court, Snelling v Christchurch City Council, when it reviewed the principles relevant to an application for removal where want of prosecution is raised.21 Snelling is the leading case dealing with delay. The Tribunal did not err in adopting the principles there discussed. Moreover, the Tribunal’s summary of the relevant chronology was accurate. It made no express finding of pre-issue delay (by which it meant delay before the assessors’ reports were
18 Lovie v Medical Assurance Society New Zealand Ltd [1992] 2 NZLR 244 (HC) at 253.
19 At 253.
20 See for example Snelling v Christchurch City Council, above n 17 (six and a half year delay); Hill v Queenstown Lakes District Council WHT TRI-2012-100-32, 27 August 2012 (Procedural Order
7) (four year delay); Burns v Argon Construction Ltd WHT TRI-2007-12, 9 March 2012 (Procedural Order 8) (seven and a half year delay); Auckland Council v Weathertight Homes Tribunal, above n 11 (eight year delay); and Hoskins v Auckland Council WHT TRI-2016-5, 4 August 2016 (Procedural Order 3) (12 years and eight month delay).
21 Snelling v Christchurch City Council, above n 17.
obtained) but it did find that there was post-issue delay (delay after the reports were obtained) and that that delay was inordinate. It did not, in my view, err in law or in fact in these findings and Mrs Gwak and Ms Kim did not suggest that there was any error in this regard.
[48]The next question is whether or not the delay was excusable.
[49] The Tribunal concluded that the delay was inexcusable. Ms Saunders took issue with this finding. She argued that between May 2013 and August 2016 Mrs Gwak and Ms Kim did not reside in the home, having been required to move to Christchurch for work purposes. She submitted that despite this, on the evidence, they continued to attempt as best they could to progress their claim. She further argued that between September 2016 and January 2018, they were endeavouring to deal with the fire that had damaged their home and that between January 2019 and July 2019, they were working on a repair strategy with their architects, the builder and with MBIE. She referred to s 56 of the Act, noting that it allows the Chief Executive to give a claimant written notice that his or her claim will be terminated if the Chief Executive believes that the claimant is not making enough effort to resolve the claim. She noted that at no time was this power invoked.
[50] I agree with Mr Thornton’s submissions. Mrs Gwak and Ms Kim’s delay post mid-2012 may be explicable, but it is not excusable. In my judgment, the explanations offered are simply not sufficiently compelling given the very long period of relative inaction. Mrs Gwak and Ms Kim could have lodged their claim at any time after mid-2012, perhaps earlier. That they moved to Christchurch is irrelevant. Their attempts to progress matters were infrequent and it beggars belief that they could not have done more even from Christchurch. The reality is that little, if anything, was done. The fact that the Chief Executive took no steps under s 56 of the Act is of no moment. Indeed, some of the correspondence annexed to one of Ms Kim’s affidavits shows that MBIE was making not infrequent enquiries from Mrs Gwak and Ms Kim as to what progress they were making. In response, Mrs Gwak and Ms Kim offered platitudes – not action. In my view the explanations offered do not excuse the inordinate delay. The Tribunal so found, and I am not persuaded that there was any error in the way in which it dealt with this issue.
[51] I now turn to the issue of prejudice. Clearly any prejudice has to be serious before it can lead to the conclusion that it is fair and appropriate to order that a person be struck out as a party to adjudication proceedings.
[52]Mr Sun relied on three primary factors before the Tribunal:
(a)his inability to access company records;
(b)his inability to locate parties who carried out work or who could be witnesses; and
(c)his inability to inspect the house.
[53] As noted, Mr Sun’s company, Sun International Trade Ltd, was placed into liquidation in May 2012. It was struck off the Companies Register in early 2013. Pursuant to s 256 of the Companies Act 1993 as it stood at the relevant time, the liquidator was required to retain the accounts and records of the liquidation and of the company for not less than one year after completion of the liquidation. It follows that it would likely have been possible for Mr Sun to access the company’s records until December 2013. He had no reason to do so however. He was unaware of any problems with the house. The company’s records have now been destroyed and Mr Sun cannot access the same. Mrs Gwak and Ms Kim are not responsible for the destruction of the company’s records but had they acted more quickly, it may be that Mr Sun would have been able to access relevant records.
[54] Mr Sun is sued as the builder. He asserts that Sun International Trade Ltd was the builder. Mrs Gwak and Ms Kim respond by asserting that Mr Sun’s liability arises as a result of his obligations as a director of the company, governing and controlling its activities. They submit that liability could arise if Mr Sun carried out the building work himself; it could extend to his supervision and inspection of work done by others; it could also extend to his direction and supervision of sub-contractors working on the site. The company’s documents could well have been of significant assistance to Mr Sun in refuting the allegations and it is difficult for him to fully address the assertions made without the relevant documents.
[55] I agree with the Tribunal’s conclusion that Mr Sun has lost the ability to demonstrate, by reference to documentary evidence held by his company, what his role was when the building works were underway. The Tribunal concluded that Mrs Gwak and Ms Kim deprived Mr Sun of the ability to prove what work he was involved with by their inordinate and inexcusable delay. In my judgment, that finding was open to the Tribunal. Indeed, I agree with it.
[56] Furthermore, with the passage of time, Mr Sun cannot now locate relevant parties who carried out work on the house in the course of its construction or who could be witnesses as to the role he took. Mr Sun has only been able to locate two parties who worked on the house. But for Mrs Gwak and Ms Kim’s delay, Mr Sun might well have been able to locate others, who could have confirmed his role in the building works.
[57] The Tribunal considered that Mr Sun’s inability to locate parties who carried out work or who could be witnesses was a valid concern and that it also impacted on Mr Sun’s ability to defend himself. I agree.
[58] As noted, Mr Sun filed an affidavit from a building surveyor, Mr August. Mr August’s evidence was unchallenged. He noted that it was difficult to fully assess Mrs Gwak and Ms Kim’s claims because he could not review any of the contractual documentation to determine the roles of those who worked on-site or to determine Mr Sun’s role. He could not speak to any of the tradesmen who worked on the property about Mr Sun’s role in the construction and he could not determine the responsibility of sub-contractors, other than the cladding installer, for the defects identified in the assessors’ reports.
[59] Finally, the Tribunal commented on the fact that the house has been demolished and that Mr Sun did not have the opportunity to inspect it.
[60] The Tribunal considered that this was the most persuasive of the arguments advanced by Mr Sun. Again, I agree. The prejudice created is insurmountable. As a result of Mrs Gwak and Ms Kim’s delay and their decision to demolish the house without giving Mr Sun and others the opportunity to inspect it, the only evidence the
Tribunal will have about the defects and the damage suffered is that of the assessors. This is not ideal. The time that has elapsed will have impacted on the assessors’ ability to recall the detail of the defects, their location and their causes. They cannot revisit the house to refresh their memories ahead of the hearing. Nor can Mr Sun or any experts retained by him. Mr August’s evidence was that the material before the Tribunal, including the assessors’ reports, is of no assistance in determining the existence and location of various identified defects or who was responsible for them. He referred to the following:
(a)whether the head flashing was a cause of damage and if so, who was responsible for it;
(b)what was the cause of the cracking at a wall saddle junction;
(c)what was the cause of damage to a timber bottom frame plate;
(d)who was responsible for the window and door flashing deficiencies;
(e)who was responsible for creating apron flashing termination defects;
(f)who was responsible for creating cladding (parapet, penetrations and general) deficiencies;
(g)what damage occurred due to internal leaks;
(h)what damage occurred to fascias embedded within the cladding;
(i)whether the house was properly maintained by Mrs Gwak and Ms Kim; and
(j)what effect increases in repair costs had.
[61] I agree with the Tribunal’s conclusion that all of these matters are important and that they would need to be determined in the course of the adjudication hearing if
Mr Sun remains a party. They cannot be determined satisfactorily as a result of the delay that occurred and the demolition of the house.
[62] There is one additional point not covered by the Tribunal, which reinforces the prejudice caused by Mrs Gwak and Ms Kim’s delay. The assessor in his full report of October 2012 estimated that the remediation costs at that time were $289,750.01. He said that there would be further damage if remediation works were not undertaken. Despite this warning, no steps were taken by Mrs Gwak and Ms Kim. When the addendum report was obtained in November 2016, the extent of the remediation required had increased due to additional damage resulting from the weathertightness defects. The estimated costs of repair were then put at $465,838.12. The increase in costs is attributable solely to Mrs Gwak and Ms Kim’s delay but they seek to visit the costs on Mr Sun.
[63] In summary, I am satisfied that, as a result of Mrs Gwak and Ms Kim’s delay, it is no longer open to Mr Sun to properly defend the claim. He cannot access relevant documents. He is unable to identify other relevant parties. He has lost the benefit of potential claims against them for indemnity or contribution. He cannot obtain expert evidence in relation to the alleged weathertightness defects, the extent of any damage resulting or who was responsible for the defects, as the house has been demolished. He is forced to rely on the assessors’ reports. They are over 10 years old and provide at best an historical snapshot.
[64] Having taken into account all relevant factors and the evidence before it, the Tribunal stood back and weighed the rights and interests of both Mrs Gwak and Ms Kim and of Mr Sun. It found that the overall justice of the case favoured Mr Sun’s application and that he should be removed from the claim. I agree with this conclusion.
[65]No error was made by the Tribunal. The appeal is dismissed.
Costs
[66] Counsel were agreed that costs should be fixed on a 2B basis and I so order. I anticipate that counsel will be able to agree on quantum.
[67]If there is any dispute, I direct as follows:
(a)any memorandum seeking costs is to be filed and served within five working days of the date of release of this decision;
(b)any memorandum in reply is to be filed and served within a further five working days;
(c)memoranda are not to exceed three pages.
I will then deal with the issue of costs and disbursements on the papers, unless I require the assistance of counsel.
Wylie J
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