Hadley v Duncan Cotterill Nominee (Hawke's Bay) Limited

[2025] NZHC 1500

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2024-425-060

[2025] NZHC 1500

BETWEEN

JAMES WILLIAM HADLEY and REBECCA HADLEY
Plaintiffs

AND

DUNCAN COTTERILL NOMINEE (HAWKE’S BAY) LIMITED

Defendant

Hearing:

22 May 2025

Appearances:

A J Casey for Plaintiffs

D M Salmon KC and S D Campbell for Defendant

Judgment:

10 June 2025

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 10 June 2025 at 3.30 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:

HADLEY v DUNCAN COTTERILL NOMINEE (HAWKE’S BAY) LIMITED [2025] NZHC 1500 [10 June 2025]

[1]    The plaintiffs and the defendant own adjoining land. They have entered into an agreement under which the plaintiffs are acquiring some of the defendant’s land following a boundary adjustment (the Boundary Adjustment Site). The defendant has refused to transfer the Boundary Adjustment Site. At issue is the price to be paid for the land, which under the agreement is to be determined by an independent valuer. An independent valuation was obtained from an agreed valuer, but the defendant does not accept it. The plaintiffs sue the defendant for specific performance of the agreement. The defendant is defending the claim and wishes to join the valuer as a third party.

[2]    The application before me is the defendant’s application under r 4.4 of the High Court Rules 2016 (the Rules) for leave to issue a third party notice against the valuer, Valuation Partners Ltd. The defendant requires leave as it did not issue its notice within 10 working days of the expiry of the time for filing its statement of defence.1

[3]    While the defendant’s application was made on the basis that an order should be made under all the grounds in  r 4.4.(1)(a) to (d), at the hearing it relied upon       r 4.4.(1)(c) and (d).

[4]Broadly, the issues that arise are:

(a)whether one of the threshold grounds in r 4.4(1)(c) or (d) for making the order sought exists; and

(b)whether the Court ought to exercise its discretion to join the Valuation Partners as a third party.

Some more context

[5]    The plaintiffs and the defendant entered into an agreement dated 16 July 2021, pursuant to which:

(a)the plaintiffs agreed to provide affected person approval (APA) pursuant to s 95 of the Resource Management Act 1991 to an

1      High Court Rules 2016, r 4.4(2).

application by the defendant for resource consent to carry out a development on its land; and

(b)the defendant agreed to sell the Boundary Adjustment Site to the plaintiffs, to be incorporated into the plaintiffs’ property by way of boundary adjustment.

[6]The agreement contained the following clause:

4.Purchase Price

4.1Within 5 workings [sic] days of a decision to approve the RC application being issued and any rights to appeal such decision have expired, [the defendant] is to provide a copy of the decision, with any conditions, to the [plaintiffs].

4.2Upon receipt of the decision to approve the RC Application the [plaintiffs] are to engage, at their own expense, a suitably qualified independent property valuer (to be agreed on by [the defendant]) to undertake a valuation of the Boundary Adjustment Site. The land will be valued on the basis it will be subject to an amalgamation condition requiring it to be held with the [plaintiffs’] Property.

4.3The parties agree that the valuation obtained under 4.2 above shall be the purchase price for the Land Transaction.

[7]    On about 14 October 2022 the defendant submitted an application to the Queenstown Lakes District Council (QLDC) for subdivision consent for the boundary adjustment. On 9 June 2023, QLDC granted the consent.

[8]    The plaintiffs instructed a valuer to value the Boundary Adjustment Site, but the defendant rejected that valuation on the basis that it had not approved the valuer. The plaintiffs accepted that position.

[9]    On around 27 October 2023, the defendant agreed to the plaintiffs instructing Valuation Partners to carry out the valuation of the Boundary Adjustment Site. Valuation Partners provided a valuation report. It valued the Boundary Adjustment Site at $90,000, on the basis of the amalgamation condition requiring it to be held with the plaintiffs’ property.

[10]   The plaintiffs provided the valuation to the defendant which did not accept it. It considers that, properly valued, the Boundary Adjustment Site has a value of between $600,000 and $1 million. It has refused to take any steps to transfer the Boundary Adjustment Site to the plaintiffs under the agreement.

The claim, defence and proposed third party claim

The plaintiffs’ claim

[11]   The plaintiffs only have one cause of action, which is for breach of the agreement in the defendant’s failure to transfer the Boundary Adjustment Site at the value determined by Valuation Partners. They seek an order for specific performance, along with judgment for a small amount of additional costs in obtaining a topographical survey to advance the defendant’s application for subdivision consent and legal costs.

The defences and counterclaim

[12]   The defendant has filed a statement of defence and counterclaim to the plaintiffs’ claim. The defences raised can be summarised as:

(a)that the conditions for the appointment of Valuation Partners were not satisfied, such that Valuation Partners was not validly engaged and its valuation is invalid;

(b)Valuation Partners did not correctly value the land in accordance with the terms of the agreement due to the valuation methodologies adopted; and

(c)the valuation was not undertaken with the requisite degree of skill and care expected of a valuer in light of the erroneous methodologies adopted, the failure to consider relevant factors, and it being addressed solely to the plaintiffs, such that the valuation cannot be relied on for the purposes of the agreement.

[13]   There are also affirmative defences alleging breaches by the plaintiffs of implied terms of the agreement, estoppel and what is referred to as the rule in Hastings-Bass,2 along with a counterclaim alleging breach by the plaintiffs of the agreement in respect to the engagement of Valuation Partners.

Proposed third party claim

[14]   The defendant’s director, Scott Moran, summarises the basis of its proposed third party claim against Valuation Partners in terms that to a large extent reflect the grounds of the defendant’s defence to the plaintiffs’ claim. He says the grounds are:

(a)The instructions to Valuation [P]artners were not carried out in accordance with the terms of the [a]greement due to the valuation methodologies adopted and/or omitted and the provision of the valuation to the defendant.

(b)The valuation was undertaken in breach of the duty of care owed by Valuation Partners to the defendant in light of the erroneous methodologies adopted, failures to consider relevant factors, and being addressed solely to the plaintiffs such that the valuation cannot be relied on for the purposes of the [a]greement.

[15]   The defendant intends to advance three causes of action against Valuation Partners. The first cause of action is in negligence, alleging Valuation Partners breached a duty of care owed to the defendant in the preparation of its valuation. The second cause of action alleges that both the plaintiffs and the defendant were consumers for the purposes of receipt of the valuation report, and Valuation Partners breached guarantees under the Consumer Guarantees Act 1993 that it would provide its valuation services with reasonable care and skill and that it would be fit for purpose. The third cause of action relies upon s 12 of the Contract and Commercial Law Act 2017. It pleads that the engagement of Valuation Partners by the plaintiffs conferred enforceable benefits on the defendant that the valuation would be prepared in accordance with the agreement and with reasonable care and skill which were breached by Valuation Partners.

The relevant law

[16]Rule 4.4 of the High Court Rules provides:

2      Re Hastings-Bass [1975] Ch 25 (CA).

4.4Third parties

(1)A defendant may issue a third party notice if the defendant claims any or all of the following:

(a)that the defendant is entitled to a contribution or an indemnity from a person who is not a party to the proceeding (a third party):

(b)that the defendant is entitled to relief or a remedy relating to, or connected with, the subject matter of the proceeding from a third party and the relief or remedy is substantially the same as that claimed by the plaintiff against the defendant:

(c)that a question or issue in the proceeding ought to be determined not only between the plaintiff and the defendant but also between –

(i)      the plaintiff, the defendant, and the third party; or

(ii)     the defendant and the third party; or

(iii)    the plaintiff and the third party:

(d)that there is a question or an issue between the defendant and the third party relating to, or connected with, the subject matter of the proceeding that is substantially the same as a question or an issue arising between the plaintiff and the defendant.

(2)A third party notice must be issued within –

(a)10 working days after the expiry of the time for filing the defendant’s statement of defence; or

(b)a longer time given by leave of the court.

(3)A third party notice may be issued only with the leave of the court if an application for judgment is pending under rule 12.2 or 12.3.

[17]Rule 4.8 is also relevant and provides:

4.8 Court’s power and discretion

(1)On an application seeking leave to issue a third, fourth, or subsequent party notice, the court must have regard to all relevant circumstances, including delay to the plaintiff.

(2)On the making of an application of that kind, the court may grant or refuse leave or grant leave on just terms.

[18]   Before a defendant may issue a third party notice at least one of the four grounds set out in r 4.4(1)(a)-(d) must apply. Even if one or more of the grounds is made out the grant of leave to join a third party under r 4.4(2)(b) is at the discretion of the Court.

[19]   The third party procedure allows for related matters to be heard in a single proceeding. Underlying the third party procedure are considerations of practicality and justice, with the latter being the overarching consideration.3

[20]   My attention was directed to TSB Bank Ltd v Burgess,  where Associate Judge Osborne identified the functions of third party proceedings as being to:4

(a)safeguard against differing results, and to ensure that the third party is bound by the decision between the plaintiff and the defendant;

(b)ensure the question between the defendant and the third party is decided as soon as possible after the decision between the plaintiff and the defendant; and

(c)save the expense of two trials.

[21]   In Westwood Group Holdings Ltd v Rilean Construction (South Island) Ltd, Associate Judge Osborne set out the general principles applying to joinder applications as follows:5

(a)The defendant’s claim against the third party must be covered by one of the four grounds set out in r 4.4(1). A defendant may join the third  party  as  of  right  within the  time limit  set  down in  r 4.4(2)(a). An application outside this time limit requires leave of the Court (r 4.4(2)(b)).

(b)Where leave is sought, the Court must consider firstly whether one of the grounds in r 4.4(1) exists and secondly whether to exercise its discretion to join the third party: ANZ Banking Group (NZ) Ltd v Dairy Containers Ltd.

(c)In exercising its discretion, the Court must have regard to all relevant circumstances, including delay to the plaintiff (r 4.8).

(d)The interest of justice between all parties, however, is paramount. While any delay to the plaintiff is regrettable, the attainment of justice by the most efficient means is an overriding consideration:

3      Heale v IAG New Zealand Ltd [2019] NZHC 2829 at [17]–[18].

4      TSB Bank Ltd v Burgess [2013] NZHC 1228 at [36], citing Barclays Bank Ltd v Tom [1923] 1 KB 221 (CA) at 224.

5      Westwood Group Holdings Ltd v Rilean Construction (South Island) Ltd [2013] NZHC 1739 at [15].

KPMG Peat Marwick v Cory-Wright & Salmon Ltd (in rec and liq).

(e)Where the defendant has not been guilty of unreasonable delay, a factor in favour of exercising the discretion will be whether the defendant could have joined the third party as of right if it had applied within the time limit: ANZ Banking Group (NZ) Ltd v Dairy Containers Ltd.

(f)Equally, unexplained or unacceptable delay by the defendant may result in leave being refused: Meroiti v National Australia Finance Ltd.

(g)In cases of serious delay that risk prejudicing the plaintiff, the court may be prepared to make an order for joinder on conditions designed to preserve the hearing date for the plaintiff’s claim against the defendant: Total Air Supply Company Ltd v Total Air Supply Company (2007) Ltd.

(h)Avoiding duplicity of proceedings and preventing the same question being tried with different results militate in favour of allowing the application. The overriding purpose of the third party rules is to enable all the issues to be dealt with in one action: Turpin v Direct Transport Ltd.

(i)There is, however, a need to strike a balance between all the parties’ interests. The extent to which the plaintiff is necessarily involved in the issues between the defendant and the third party is a consideration. Equally, it can be oppressive and unjust to involve a third party in a proceeding where much of the proceeding will not involve that third party.

(j)The Court may have regard to the relative strengths and weaknesses of the parties’ cases, including the case against the proposed third party and the likelihood of recovery: Dairy Containers Ltd v NZI Bank Ltd.

(footnotes omitted)

[22]   With regard to delay, the Court should be forward-looking. What matters is the prospect of future delay.6 In Nissan Datsun Holdings Ltd v R Savory Ltd, Smellie J said:7

It is a question of weighing the respective interests of the parties and in this case comparing the prejudice of delay and possible escalation of issues to be argued so far as the Plaintiff is concerned against the danger

6      TSB Bank Ltd v Burgess, above n 4, at [38](l).

7      Nissan Datsun Holdings Ltd v R Savory Ltd HC Auckland A336/84, 6 October 1986 at 4.

faced by the Defendant of having to conduct two trials with possible inconsistent results.

The threshold question

[23]   The defendant’s contention is that the plaintiffs’ claim and the proposed claim by it against the third party require consideration of common issues for the purposes of r 4.4(1)(c) and (d), namely:

(a)What did the agreement between the plaintiffs and the defendant require for the engagement of a valuer?

(b)Did the valuation comply with the agreement between the plaintiffs and the defendant?

(c)Did the valuation comply with the standard of skill and care required of valuers?

[24]   Ms Casey argues the fact that Valuation Partners is at the centre of a dispute between the plaintiffs and the defendant should not be equated with or confused for an issue that requires resolution between Valuation Partners and either the plaintiffs or the defendant. She referred me to Centre for Advanced Medicine Ltd v Sprott, where the Court said:8

[64] It is always a serious matter to join a third party to a proceeding. Such an order exposes the newly joined party to the expense and inconvenience of litigation commenced by others. The Court should therefore not make an order for joinder unless it is satisfied that the common question or issue is one of reasonable significance, and not merely of peripheral importance to the proceeding as a whole.

[25]   Ms Casey’s primary argument is that there is no issue in the proceeding that is required to be determined as against Valuation Partners. This is because, regardless of the outcome of the plaintiffs’ claim against the defendant, there is no conceivable basis upon which the defendant could claim Valuation Partners caused it any loss and

8      Centre for Advanced Medicine v Sprott HC Auckland CIV-2004-404-1245, 20 August 2004 at [64].

should be involved as a party in the proceeding. Ms Casey identified three possible scenarios to illustrate her submission.

[26]   Scenarios A and B involved the defendant establishing that the plaintiffs could not rely upon the Valuation Partners’ valuation because the agreement to engage it was subject to conditions which were not satisfied, or because it did not correctly value the land on the basis set out in the agreement. Ms Casey submits that in such circumstances the plaintiffs’ claim will fail, another compliant valuation will need to be obtained for the plaintiffs to obtain specific performance of the agreement, and there will be no loss suffered by the defendant which could be claimed from Valuation Partners.

[27]   Scenario C involved the circumstance where the Court found that the valuation had been correctly undertaken in accordance with the agreement but was less than what the defendant thought the value would or should be, in which case, again, there can be no possible claim by the defendant against Valuation Partners.

[28]   While the logic of Ms Casey’s analysis initially appeared compelling, I have concluded, as Mr Salmon submits, that it does not recognise an additional scenario where the plaintiffs succeed against the defendant for specific performance of the agreement but leave the defendant with a valid claim against Valuation Partners.

[29]   Mr Salmon argues that it is not clear how the Court will view cl 4.2 of the agreement, which might be regarded as an expert determination clause or simply a contractual mechanism for assessing value and interpreted according to ordinary principles of contractual interpretation. He submits, in either case the Court might find that Valuation Partners’ valuation was wildly inaccurate (as the defendant contends) but still binding as between the plaintiffs and the defendant. Such a finding would not, he submits, protect Valuation Partners from liability at the suit of the defendant.9

9      See, for instance, in respect to expert determinations Waterfront Properties (2009) Ltd v Lighter Quay Residents’ Society Inc [2015] NZCA 62, [2015] NZAR 492; Peregrine Estate Ltd v Hay [2017] NZCA 496, [2018] 2 NZLR 345; and Smalley v Williamson [2023] NZCA 174.

[30]   Mr Salmon then submits that this reality collapses the plaintiffs’ argument that there is no utility in joining Valuation Partners as a third party, and unless the plaintiffs were prepared to concede that they could not rely on Valuation Partners’ valuation for the purposes of cl 4.2 in the event it was shown the valuation had been prepared negligently, the interests of justice support the making of an order granting the defendant leave to join Valuation Partners as a third party.

[31]   Mr Salmon also took me to correspondence between the lawyers for the parties demonstrating the commonality of issues arising in the plaintiffs’ claim against the defendant and the proposed third party claim, and in particular to an email of 2 October 2024 where the plaintiffs’ counsel advised as follows:

While the issues raised in the proposed claim are substantially the same as issues raised in the claim between the plaintiff and the defendant, the defendant’s proposed claim will be determined in its entirety by the resolution of the plaintiffs’ claim. Consequently, Valuation Partners’ presence as a party is not required (other than as a witness).

The matter of whether the valuation was properly undertaken already falls to be determined in the primary proceeding. The allegations made against Valuation Partners in the draft claim are essentially the same as the grounds relied on by the defendant in its statement of defence to the [plaintiffs’] statement of claim. That is, the same matters that the defendant seeks to put in issue between it and the third party are already squarely in issue between the plaintiffs and the defendant. Any alleged loss caused to the defendant by Valuation Partners is entirely contingent upon the outcome of the plaintiffs’ claim, and the success or otherwise of that claim will depend entirely on the very same matters as are raised by the defendant in its proposed claim against Valuation Partners.

[32]   This is not a case where I can be satisfied the defendant’s proposed third party claim will not serve any useful purpose regardless of the outcome of the claim as between the plaintiffs and the defendant. I also accept the defendant’s contention that the issue arising between the defendant and Valuation Partners, whether the valuation was prepared with the requisite degree of care and skill or was prepared negligently, is an issue related to and connected with the subject matter of this proceeding, and is substantially the same issue arising between the plaintiffs and the defendant. I consider the threshold requirement of r 4.4(1)(d) is therefore satisfied.

The discretion

[33]   Notwithstanding that one of the grounds in r 4.4(1) is made out, the Court may refuse leave to issue a third party notice in the exercise of its discretion. The plaintiffs argue there are good reasons why it should do so in this case.

The merits

[34]   The Court can, and does, take into account the strength and weakness of the parties’ respective cases. It is also generally the position that if a prima facie case is made out for bringing a proposed third party claim within r 4.4(1), the Court will not investigate disputed questions of fact and the factual allegations alleged in the third party notice will be presumed to be capable of proof.

[35]   Ms Casey submits I should consider the strength of the defendant’s case against the plaintiffs and third party. This is the issue with which I have been most concerned on this application because it appears to me that, on first appearances at least, the defendant’s position in relation to both the plaintiffs and Valuation Partners is not strong, as Ms Casey submits.

[36]   However, Mr Salmon argues that in its proposed claim against Valuation Partners the defendant has raised viable claims. What is more, there were no submissions for the plaintiffs that the proposed pleading on its face did not disclose arguable causes of action. I expect that was because it was accepted the Court would not embark on such an inquiry on this application given it would require close analysis of disputed facts and expert evidence. On what is presently before me, I accept that the case the defendant wishes to advance against Valuation Partners is arguable.

Delay

[37]   Ms Casey argues that the Court should take into account the defendant’s failure to file a third party notice in time. The defendant was served on 6 June 2024. The plaintiffs agreed to an extension of time for the filing of a statement of defence to     7 August 2024, so the defendant had until 21 August 2024 to issue a third party notice,

but did not do so. Ms Casey says it was three months later, on 26 November 2024, that notice was given of the intention to join Valuation Partners.

[38]   I do not consider any delay in making this application a significant factor. The delay was short and of itself will likely have little, if any, impact on the course of the proceeding to trial. Relevantly, I note that in cases where a defendant has not been guilty of unreasonable delay a factor in favour of exercising the discretion will be whether the defendant could have joined the third party as of right if it had applied within the time limit. That is the case here, and is in the defendant’s favour.10

[39]   Ms Casey then argues that the proposed third party claim is not straightforward, raises complex issues which will require additional witnesses to be called, and will extend the trial. She contends that an increase in the length of the trial will also likely result in delay because the longer the duration of the trial the further out the availability of suitable trial dates. She submits the future delay to resolution of the plaintiffs’ claim is disproportionate.

[40]   Mr Salmon submits that adding Valuation Partners will not extend the trial significantly nor result in a delay in allocating a trial date. He says the trial will not be lengthy; the plaintiffs’ counsel having indicated in correspondence that the plaintiffs would be calling only four witnesses and estimated the length of the trial to be three days.

[41]   Mr Salmon also argues that the defendant’s claims against Valuation Partners do not raise extra facts that will not already be the subject of any trial between the plaintiffs and the defendant. He estimates if Valuation Partners is joined as a third party there should only be one additional witness required, and additional legal issues that arise will take up almost no time at trial. He submits no additional discovery or other interlocutory steps will be required either.

[42]   Mr Salmon also argues that I should consider the situation that will apply if leave to join Valuation Partners is refused. He says then the defendant would bring a claim against Valuation Partners in a separate proceeding which would likely result in

10     ANZ Banking Group (NZ) Ltd v Dairy Containers Ltd CA156/92, 17 December 1992.

an application that the two proceedings be case managed and heard together, unnecessarily complicating the process and thus increasing the cost and time of the proceeding.

[43]   It is difficult to look into the future and assess with confidence what impact joining Valuation Partners will have on the course of the proceeding and the trial. It is possible, for instance, that Valuation Partners may wish to apply to set aside the third party notice under r 4.16 which would cause some delay. However, based on what is before me I agree with Mr Salmon that the extent of any delay should not be significant. Whether joined as a third party or not, Valuation Partners will be required to give evidence at the trial. I accept that if joined as a party Valuation Partners will likely call evidence in addition to the plaintiffs’ evidence, but the facts of this case fall within a small compass and it should not be the case that Valuation Partners would call more than a few witnesses. Joining Valuation Partners as a third party will extend the trial but not to a significant degree and not to an extent, in my view, as to extend out the trial date.

[44]   This is also not a case where the claims the defendant wishes to bring against Valuation Partners are quite separate and independent claims from that which the plaintiffs bring against the defendant, such that the plaintiffs or Valuation Partners will be idle in a trial involving issues that do not concern them.11

Other prejudice

[45]   An issue that arose at the hearing was whether joining Valuation Partners would be prejudicial to the plaintiffs, because they will not have direct access to Valuation Partners in preparing their case. It is to be expected that if joined as a party Valuation Partners will instruct counsel to represent its interests in the proceeding.

[46]   Mr Salmon argues that this is not a factor that should influence my decision. He submits that whether called as a witness or participating as a party, the evidence to be given by Valuation Partners must be the same. In any event, he argues, the plaintiffs will benefit from being able to cross-examine Valuation Partners, which they could

11     TSB Bank Ltd v Burgess, above n 4, at [38(l)].

not otherwise do. He says also that Valuation Partners will benefit from being a party because they will not be subject to an additional proceeding, and will have everything determined at one time with the benefit of their own legal representation and counsel.

[47]   I accept this is not a factor that can carry much weight having regard to the purposes of third party proceedings and that, in any event, the lack of direct access by the plaintiffs to Valuation Partners is unlikely to be prejudicial in circumstances where their interests are closely aligned.

Balancing the considerations

[48]   Ultimately, I must stand back and balance the respective interests of the parties having regard to the prejudice of delay and possible escalation of issues and costs as far as the plaintiffs are concerned against the prospect of the defendant having to conduct two trials with possible inconsistent results.

[49]   I accept the proceeding will become more complex by the addition of Valuation Partners as a party and that there will be some increase in the issues and, to some extent, costs.

[50]   Against that, the case has not yet had a first case management conference and with proper case management the addition of a third party should not delay the allocation of a trial date.

[51]   It is relevant also that should I refuse to make the order sought it is likely the defendant would commence a separate proceeding and seek to have the proceedings case managed and heard together which would be difficult for the plaintiffs to resist. But, even if that was not ordered, it will be more efficient and consistent with the purposes of the third party procedure that all claims be brought and determined in the one proceeding, ensuring that Valuation Partners is bound by the decision between the plaintiffs and the defendant and avoiding the expense of two trials.

[52]On balance, I am satisfied that the best course is to make the order sought.

Result

[53]   The defendant is granted leave to join Valuation Partners Ltd as a third party and must file their third party documents within 10 working days.

[54]   The case should be set down for a first case management conference in the first week of July 2025. Counsel shall file any memoranda addressing the issues in sch 5 of the Rules by 3.30 pm three working days prior to the teleconference.

[55]   Costs shall be reserved and may be addressed at the next teleconference if any party seeks costs.

O G Paulsen Associate Judge

Solicitors:

Todd & Walker Law, Queenstown

Campbell & Associates, Christchurch