Hamilton City Council v Tompkins

[2013] NZHC 785

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-6529 [2013] NZHC 785

IN THE MATTER OF      an appeal from a determination under the Weathertight Homes Resolution Services Act 2006

BETWEEN  HAMILTON CITY COUNCIL Appellant

ANDIRENE FAY TOMPKINS, DOROTHY LOVELL & ISLA MAY TRAPSKI AS TRUSTEES OF ICE TRUST & SWEETBIX LIMITED

First Respondents

ANDWAIKATO BUILDING REPORTS LIMITED

Second Respondent

ANDIAN RUNCIMAN Third Respondent

Hearing:         11 April 2013

Appearances: P A Robertson for the Appellant

T J Wood for the First Respondent (I F Tompkins)
I Runciman, Third Respondent in person and for Second Respondent

Judgment:      11 April 2013

ORAL JUDGMENT OF PRIESTLEY J

Counsel:

P A Robertson, Heaney & Co, Auckland. Email: [email protected]
T J Wood, Jones Fee, Auckland. Email: [email protected]

Copy to:

I Runciman   Email: [email protected];

HAMILTON CITY COUNCIL V TOMPKINS & ORS HC AK CIV-2012-404-6529 [11 April 2013]

Amendment

[1]      For some reason the first named first respondent is recorded as Irene Fay Thompson.  It is clear from the documents that her last name is “Tompkins”.  Her name is thus wrongly recorded both on this Court’s file and also on the fronting sheet of the decision under appeal. An amendment is made accordingly.

The appeal

[2]      On 3 October 2012 an adjudicator with the Weathertight Homes Tribunal (the Tribunal) made a procedural order removing the second and third respondents as parties to the adjudication.

[3]      This  appeal  challenges  that  adjudication  made  by  Mr  P  R  Cogswell,  a member of the Tribunal.

[4]      The appeal is lodged under fairly broad powers contained in s 93 of the Weathertight Homes Resolution Services Act 2006 (the Act).   Because the claim currently before the Tribunal exceeds $200,000 the High Court is the appropriate appellate forum.

[5]      I note that in terms of s 95 of the Act this Court has broad powers on an appeal, including (s 96(1)(a)), the traditional powers of confirming, modifying, or reversing the Tribunal’s determination.

The parties

[6]      A trust, of which Ms Tompkins is one of three trustees (Ice Trust), owns the relevant property, 180 Thomas Road, Rototuna, Hamilton, as a tenant in common in an equal share.   The co-owner (also a tenant in common in an equal share) is Sweetbix Limited which is a company operated by Ms Tompkins’ daughter Mrs E Hughes.

[7]      Mr Runciman and his company Waikato Building Reports Ltd (Waikato) provided Ms Tompkins and Mrs Hughes with two building reports dated 5 October and 9 October 2009 respectively.

[8]      Exactly who the contracting parties were; what the terms of engagement were; what the agreed scope of the two building reports was; the extent on which they were relied; and importantly whether the solicitor acting for Ms Tompkins and Mrs Hughes on the purchase ever sighted these reports, are problematic, highly relevant, and matters of evidence ultimately before the Tribunal.   I need make no further comment in that regard.

[9]      Mr Runciman and Waikato currently have no legal representation.  Although Ms Wood, acting for Ms Tompkins, did this Court the initial courtesy of an appearance and intended to abide by this Court’s decision, she has, understandably in the circumstances, decided to remain throughout and intervened helpfully on two or three occasions.

[10]     Mr Robertson has advised me that he has made verbal enquiries and, as best he can assess it, the Tribunal intends to abide by this Court’s decision.

Background

[11]     The property in question, which clearly can be described as a leaky building, was  built  in  late  2000.    There  were  two  previous  registered  proprietors.    On

27 September  2009,  Ms  Tompkins  entered  into  an  agreement  to  purchase  the property from its then owners.   The recorded purchaser was Ms Tompkins or her nominee.  Settlement was to take place four weeks later.

[12]     Ms Tompkins apparently had it in mind to own the property jointly with her daughter, or with some interest which her daughter controlled.  Two days after the agreement was executed, Mrs Hughes for her part appears to have agreed that she would be happy to be nominated as a co-purchaser, provided an acceptable building inspection report was available.   Certainly so far as Mrs Hughes was concerned,

available evidence suggests she would not have been interested in proceeding as a co-purchaser if reports indicated there were weathertightness issues.

[13]     Around 30 September 2009, Waikato was engaged to carry out some form of inspection.   I say nothing about what the terms of engagement were.   These, as I have said, are highly relevant.  There are aspects of the two building reports to which I have referred which suggest that some areas of risk were pointed out.  That could well however be contested by the claimants before the Tribunal.

[14]    The inevitable happened.  After the purchase was settled, the claimants discovered there were formidable problems with the building.  Thus the Tribunal has become engaged.

The Tribunal’s decision

[15]     Under s 112 of the Act, the Tribunal has broad powers to remove a party from proceedings. The provision relevantly provides:

112      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.

…

[16]     It is the removal of the second and third respondents which the appellant challenges.  The Tribunal’s procedural order is tightly reasoned and articulated with commendable clarity.  Mr Cogswell sets out the policy underlying s 112 and refers to High Court authority on that provision. Although the reported High Court decisions

contain matters of differing emphasis, those matters are not the grounds of appeal.[1]

[1] I am not required to review these authorities which include Fenton v Building Code Consultants Ltd HC Auckland CIV-2009-404-6348, 15 March 2010 Cooper J; Wong v Weathertight Homes Tribunal  [2011]  NZCCLR  5  Venning  J;  Auckland  City  Council  v  The  Unit  Owners  in Stonemason  Apartment  &  Ors   HC  Auckland  CIV-2009-303-3118,  11   December  2009

Andrews J; Yun & Phon v Waitakere City Council HC Auckland CIV-2010-404-5944 Ellis J; and

Saffioti v Jim Stephen Architect Ltd [2012] NZHC 2519 Katz J

[17]     My preference , for what it is worth, would be to adopt the approaches of Ellis and Katz JJ.  It seems to me the power conferred on the Tribunal by s 112(1), although akin to a strike-out power, is not identical to it.

[18]    Mr Cogswell then went on to assess the factual background relating to ownership of the property.  He focused on the 27 September 2009 agreement for sale to which Ms Tompkins was a party.  He pointed out that essentially the contract was unconditional, obliging Ms Tompkins to settle the purchase on 28 October 2009.  He further observed that Waikato was not engaged until 1 October 2009.

[19]     Mr Cogswell had read the reports.  He perceptively pointed out that it was at least arguable that the reports had been prepared negligently, but additionally observed that there were strong arguments available to the second and third respondents there was sufficient information in the reports to place a purchaser on

notice of potential weathertightness defects.[2]    As Mr Cogswell pointed out, there

would have to be cross-examination to determine the accuracy or otherwise of the

second and third respondents’ reports.

[2] At [21] of the Tribunal’s procedural order.

[20]     But the Tribunal did not see this as the issue.  It stated:

[23]     There is, however, no dispute as to the key issues.  This agreement was an unconditional one at the outset.  Accordingly, the purchaser was not entitled to cancel that agreement as a result of any matter disclosed in the building inspection report, as she was unconditionally bound to settle the purchase.

[24]      The only way the purchaser could avoid the agreement is if there was a condition that was not satisfied or if she was induced to enter into it by a pre-contractual misrepresentation that would allow her to cancel under the Contractual Remedies Act 1979.

[21]     Mr Cogswell then went on to state that because there was no pleading of, and indeed no evidence of, any pre-contractual misrepresentation, Ms Tompkins had no entitlement  to  cancel  the agreement  even  if  the building  inspection  reports  had demonstrated before settlement the house was seriously defective.  He observed (and correctly so) that there was no representation or warranty given by the vendors about the quality of the property by Ms Tompkins.  He effectively saw the purchase by Ms Tompkins as one covered by the maxim caveat emptor.

[22]     The  Tribunal  then  went  on  to  examine  another  aspect  of  the  claimants’ statement of claim before it.   Around 29 September 2009 Ms Tompkins and Mrs Hughes  had  agreed  that  if the building  report  identified  significant  defects,  Ms Tompkins for her part would pursue contractual remedies and Mrs Hughes for her part would not proceed with the purchase of a half interest at all.

[23]     On this matter Mr Cogswell said:

[33]      For the reasons set out above, that legal analysis is erroneous.  There were no “contractual remedies” available to the purchaser.   She could not avoid the contract as a result of any term of the agreement.  I have already found that there is no evidence to support an allegation of an actionable pre- contractual misrepresentation.

[34]      Any remedies the second claimant may have may lie against the first respondent. They do not lie against the second and third respondents.

[24]     The Tribunal went on to opine that any remedies which the plaintiffs might be seeking against Waikato and Mr Runciman would have to be causative of loss.  In the Tribunal’s view there was no such causal nexus.  He repeated his view that the claimants would have been obliged to settle the purchase of the property in any event and  stated  (at  [38])  that  the  claimants  could  not  sheet  home  liability  to  the respondents because nothing the respondents did caused any loss.

[25]     It was on that basis that the Tribunal exercised its s 112(1) power to remove both the second and third respondents from the claim before it.

[26]     There are essentially two errors which Mr Robinson submits need  to be corrected on appeal. They are:

(a)      The  Tribunal’s  analysis,  centred  as  it  was  on  the  contractual obligations  of  Ms  Tompkins  under  the  agreement  for  sale  and purchase, failed to weigh independently the position of Mrs Hughes, who had pleaded that if reports had indicated weathertightness problems,  she  would  not  have  been  interested  in  accepting  her mother’s nomination as a co-owner.

(b)The Tribunal’s same analysis of Ms Tompkins’ position overlooked what might be sound conveyancing practice.   Had available reports indicated weathertightness problems, even though there was no mention of such reports in the agreement for sale and purchase and such agreement was unconditional, nonetheless there were “chances” available to Ms Tompkins which would have included such options as trying to negotiate a reduced purchase price, or more likely forfeiting the deposit (or indeed not paying a deposit) and generally walking away from the transaction, keeping counter-claims in reserve should

the disgruntled vendors choose to sue.[3]

[3] There is relatively clear authority that a loss of chance can legitimately be a litigation factor and relevant to quantification of damages. Benton v Miller & Poulgrain [2005] 1 NZLR 66 (CA).

[27]     On the second limb of his appeal (Mr Robinson having in effect taken up the cudgels on Ms Tompkins’ behalf), the appellant sought leave to adduce evidence on the appeal.  That evidence, relating to established conveyancing practice, came from a highly experienced and reputable Auckland practitioner, Mr C A Jones, who has filed a detailed affidavit.  Mr Jones’s conclusion, so far as the agreement for sale and purchase is concerned, was that a reasonable and competent solicitor, if presented with building reports pointing to weathertightness problems, would have recommended extreme caution; would have recommended to Mrs Hughes she not

proceed with the transaction; and would have further recommended to Ms Tompkins

a range of problematic options including cancellation, discounting price, refusing to complete the sale, or forfeiting the deposit.

[28]     Mr Runciman, who as I have stated is acting for himself, has filed extensive submissions which I have read and which he has discussed with me.  Mr Runciman has made a number of pertinent points.  Those, however, are highly relevant to the substantive claim before the Tribunal and the merits or otherwise of the claimants’ case against the two respondents.  They are not of central relevance so far as the two issues on this appeal are concerned.   I can perfectly understand Mr Runciman’s desire to remain out of the proceedings rather than to be re-joined to them.

[29]     Mr Runciman has nominally opposed the appellant’s application to receive Mr Jones’s evidence.  However, the grounds of his opposition (totally understandable from a lay perspective) are that there is nothing which Mr Jones can really say about the factual background and that, dealing with events of September and October

2009, Mr Jones is not in a position to produce any new or relevant evidence whatsoever.   However, there does seem to be a factual basis for Mr Runciman’s submission that neither Ms Tompkins nor Mrs Hughes ever showed the two reports to the solicitor acting for them on the purchase of the Thompson Road property. This undercuts somewhat the probative value of Mr Jones’s evidence and weakens the causal nexus of any negligence.

[30]     On the substantive issues, these matters are highly relevant.   They do not, however, as I think Mr Runciman understands, have particular relevance to the more narrow issues of this appeal.  I therefore rule that Mr Jones’s evidence is admissible on this appeal and I have read it.

Analysis

[31]     Were Ms Tompkins the sole claimant before the Tribunal, the broadly based balancing exercise which the Tribunal was required to carry out under s 112 might well have justified the removal of Waikato and Mr Runciman from the proceedings. As is clear from Mr Jones’s evidence, Ms Tompkins’ position would be difficult, given the unconditional nature of her obligation to purchase.  But the clear error, so

far as Ms Tompkins is concerned, is the Tribunal’s (understandable perhaps) assumption that the unconditional nature of the agreement was totally determinative. The Tribunal did not, of course, have the benefit of Mr Jones’s evidence.  Nor, as far as I can see, was the careful submission advanced to me today by Mr Robertson in this area placed before the Tribunal in its current form.  Certainly there seems to be evidence that, despite being bound unconditionally to purchase the property, Ms Tompkins did rely to some extent on the two building inspection reports.

[32]     The position is very different so far as Mrs Hughes is concerned.   With respect, the Tribunal does not seem to have addressed in any comprehensive way what I understand Mrs Hughes’ position to be, which is that she quite simply would not have proceeded with the transaction for her own part  (nor would  she have accepted her mother’s nomination) had she been aware of the fact that the property had weathertightness problems.

[33]     In short, my conclusion is that the removal of the respondents at this stage is premature, and the grounds, for the reasons I have stated, for removing them are in error. As Mr Cogswell properly indicated, the terms of engagement of Mr Runciman andWaikato; the advice he was engaged to give; the effects such advice had on the claimants; their reasons for failing to provide the reports to their solicitor; and the contractual terms which might be spelled out from various conversations and e-mails between Mr and Mrs Runciman on the one part and Ms Tompkins and Mrs Hughes on the other part, are all matters which may need careful scrutiny by the Tribunal and consideration (including cross-examination) of the evidence.

[34]     At the core of the Tribunal’s procedural order no. 2 is its assumption that the claims against Waikato and Mr Runciman by either claimant could not succeed.  For the reasons I have stated I do not believe that such a comprehensive finding can be justified at law.

Result

[35]     For the reasons I have stated, the appeal is allowed.

[36]     The Tribunal’s decision (Amended Procedural Order 2) dated 3 October 2012 is reversed to the extent that neither the second respondent nor the third respondent are to be removed from the proceeding before the Tribunal.

Costs

[37]     Mr Robertson seeks costs.  I have pointed out to him that my perception is Mr Runciman appeared today largely as a matter of courtesy to this Court.   Not having the benefit of legal advice, he did not totally understand the procedural nature of this appeal.

[38]     Mr Robertson  accepts that had Mr Runciman  taken no steps  or  had  not appeared, there would be no obvious target for a costs award.

[39]     Mr Robertson’s costs application is based on the traditional ground that he has been successful.   That is indeed correct.   However, as I have pointed out to counsel, there was nothing in Mr Runciman’s submissions which presented any significant obstacle to the appellant’s objective.   There was no formal objection raised by Mr Runciman to the admissibility of Mr Jones’s evidence.

[40]     Costs are ultimately a discretionary matter.   I take the view that, given the appellant would have had to have appeared in any event, even if Mr Runciman had not chosen to appear, I should decline to order costs against Mr Runciman.  Costs will lie where they fall.

.......................................…

Priestley J