Hawke�s Bay Regional Council v Herbert Construction Company Limited
[2013] NZHC 1068
•15 May 2013
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
CIV-2012-441-161 [2013] NZHC 1068
BETWEEN HAWKE'S BAY REGIONAL COUNCIL Plaintiff
ANDHERBERT CONSTRUCTION COMPANY LIMITED
Defendant
ANDNAPIER CITY COUNCIL First Third Party
ANDOPUS INTERNATIONAL CONSULTANTS LIMITED Second Third Party
Hearing: 2 May 2013 (Heard at Napier)
Counsel: D.J. O'Connor - Counsel for Defendant Herbert Construction
Company Limited
M.J. Wenley - Counsel for Fourth Third Party Wrightson Contracting
Limited
Judgment: 15 May 2013
JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL
This judgment was delivered by me on 15 May 2013 at 3.30 pm pursuant to r 11.5 of the High Court Rules.
Solicitors: Lunn & Associates, Solicitors, PO Box 846, Napier 4140
Willis Toomey Robinson, Solicitors, Private Bag 6018, Napier 4142
HAWKE'S BAY REGIONAL COUNCIL V HERBERT CONSTRUCTION COMPANY LIMITED HC NAP CIV-2012-441-161 [15 May 2013]
Introduction
[1] In around 2004/2005, the defendant Herbert Construction Company Limited (Herbert) as main contractor was engaged in completing construction of a commercial building at 159 Dalton Street, Napier (the building) for the plaintiff local authority, Hawke’s Bay Regional Council (HBRC). HBRC now sues Herbert with respect to alleged defects in the construction of this building and says the building leaks and has weather-tightness issues. In this substantive proceeding brought by HBRC, Herbert has joined a fourth third party, Wrightson Contracting Limited (Wrightson) alleging that Wrightson completed certain stone work and paving on the building and surrounds which may well prove to be defective when these weather- tightness issues are considered. Herbert says that if the construction work completed by Wrightson is found to be defective, then it is entitled to contribution or indemnity from Wrightson for any amount that Herbert is found liable to HBRC in relation to the specialist construction work completed by Wrightson on the building.
[2] Wrightson denies any liability in this matter. In its present application it has applied for what is effectively defendant’s summary judgment against Herbert with respect to this third party claim.
Preliminary
[3] At the outset I need to mention a preliminary matter which has arisen in this matter subsequent to the hearing of Wrightson’s present application on 2 May 2013. This occurred on 6 May 2013 when Mr O’Connor, counsel for Herbert filed in this Court a memorandum in relation to the application, which purported to put before the Court a matter involving a third party which he maintained was relevant to my considerations.
[4] On this aspect, Practice Note 3 [1968] NZLR 608 issued by the Judges of this
Court contains the following practice direction:
Where either counsel after the hearing of a matter is concluded, but before delivery of judgment, desires to make further submissions, applications must first be made to the Judge for leave. It is only in exceptional circumstances that leave will be granted as, for example, where some pertinent consideration or authority has been overlooked or a new matter has arisen since the hearing which has not been
anticipated by counsel. In the event of either counsel desiring to make such an application, an appointment should be sought with the Judge in chambers through the Registrar. No submissions or memoranda filed without leave will be considered.
[5] And s 98 of the Evidence Act 2006 is also relevant here:
98 Further Evidence After Closure of Case
(1) In any proceeding, a party may not offer further evidence after
closing that party’s case, except with the permission of the Judge.
(2) In a civil proceeding, the Judge may not grant permission under subsection (1) if any unfairness caused to any other party by the granting of permission cannot be remedied by an adjournment or an award of costs, or both.
.....
(5) The Judge may grant permission under subsection (1), -
(a) if there is a jury, at any time until the jury retires to consider its verdict:
(b) in any other proceeding, at any time until judgment is delivered.
(emphasis added)
[6] McGechan on Procedure at HR 10.01.07(2) deals with this and says:
Discretion to Admit
Subject to s 98(2), the Court has a broad discretion to admit further evidence for the Judge’s own satisfaction or when the interests of justice require it: Montego Motors Ltd v Horn [1974] 2 NZLR 21 at 25; Easton v Cramp Developments Ltd [1975] 1
NZLR 641. In Montego Motors, Cooke J recognised “the power naturally possessed by a Court of civil jurisdiction to entertain further evidence after judgment is reserved”, although restricting that power to “exceptional cases only” (at 25 and 26 respectively). In Equiticorp Industries Group Ltd (in stat man) v Hawkins [1996] 2
NZLR 82, (1995) 9 PRNZ 313 at 85, 317, Smellie J approved this summary emerging from an exhaustive analysis by counsel of recent authorities (which the Judge lists):
(a) The discretion should be exercised sparingly once the cases on both sides have closed and leave should only be given in exceptional circumstances.
(b) Only if the failure to call evidence at the proper time is adequately explained should the discretion be exercised.
(c) The justice of the case must require the admission of the additional evidence.
(d) Leave will be refused if the evidence would have been available had due diligence been exercised.
(e) If the party is taken by surprise, leave will be more readily granted; and
(f) The distinction between a failure to tender evidence, and an election not to call evidence, can be important.
Those principles are similar if not identical to those applying when leave is sought to adduce further evidence on appeal: New Zealand Rail Ltd v ARCI Corp & New Zealand Rail Corp HC Wellington CP473/93, 21 September 1995; United Bank Ltd v Everett HC Auckland VP157/93, 24 October 1995.
[7] In the present case, Herbert did not make any application for leave to adduce this further material or to make further submissions. But, in any event under all the circumstances prevailing in this case, I would have refused any such application for leave had it been brought. Exceptional circumstances do not exist here. The material and evidence sought to be introduced by Herbert does not relate directly to matters properly at issue before me, and in my view is not relevant here. Accordingly, I have not taken it into account in reaching my decision outlined in this judgment.
Background
[8] In its substantive statement of claim in this proceeding, HBRC claims amongst other matters that Herbert constructed the building with defects and in particular, that the building is leaking and there is water penetration in the cladding system. For the loss it says it has suffered as a result, HBRC seeks damages of more than $2 million outlined in its statement of claim.
[9] The relevant background allegations by Herbert in its 4 December 2012
Statement of Claim against Wrightson are:
Background
11. On 30 August 2004, HBRC and Herbert entered into a construction contract to build a new office building at 159 Dalton Street, Napier.
12. On 18 July 2005, Herbert accepted the tender price by Wrightson to complete the stonework for the new office building.
13. Wrightson completed the stonework, which was the feature cladding of the surrounds to the Dalton Street frontage of the new office building.
14. Wrightson provided solid plaster materials for the external cladding of the new office building.
15. Wrightson undertook excavation for the structural elements to the new office building including the foundations for the exterior stairway and floor slabs.
[10] In response, Wrightson contends in its present Application for Summary Judgment filed 31 January 2013, that none of the causes of action in Herbert’s statement of claim against it can succeed based on the following grounds:
(a) The statement of claim incorrectly states that “HBRC claims that the stonework completed by Wrightson, the exterior cladding, the exterior stairway, and the floor slabs are defective and have caused damage”.
(b) There is no factual basis for the claim made by the defendant against
Wrightson as:
(i) It did not do any of the stonework which was the feature cladding of the building. The only stonework that it did was in the nature of an extension to the footpath and was part of the siteworks roading contract.
(ii) It merely used its vehicles to transport the solid plaster materials for Wynands Masonry Limited, the provision of which transport services could not form any basis of any claim.
(iii) Whilst it undertook limited excavation work for the new office building, it did not construct any foundations which does not form any part of the claim.
[11] In this present application, according to counsel for Wrightson, the crux of the matter is that Herbert confuses Riverstone cladding (which was carried out by the third third party Wynands Masonary Limited (Wynands)) and Riverstone paving (which was carried out by Wrightson). Wrightson and Wynands are associated companies with the same directors and it seems the same office, but they are separate legal entities.
[12] On this aspect, according to Herbert, it was one Mr Geradus Theodorus Anthony Wynands (Mr Wynands) who did all the stone work cladding on the building and also all the stone work paving there. The stone work cladding it seems was completed however on behalf of Wynands and the stone work paving was completed on behalf of Wrightson. Mr Wynand’s first affidavit sworn 29 January
2013 and filed in this proceeding for Wrightson, appears to make this contractual distinction quite clear. In this affidavit, Mr Wynands also appears to deal first, with the allegations advanced by Herbert regarding solid plaster materials, which it seems to be accepted now were merely transported to the Dalton Street site of the building by Wrightson and secondly, with the other site works carried out by Wrightson which it seems were excavations and not construction.
[13] During the hearing of this application before me, counsel for Herbert also acknowledged that Herbert now accepted that it was Wynands that completed the exterior stone cladding on the building and that it was Wrightson that completed the stone paving.
[14] And also before me, all parties appeared to accept that, despite what may have been included in earlier pleadings, if the alleged defects in the building are found to relate only to Riverstone cladding and not Riverstone paving, then this is a matter for Wynands who carried out and invoiced this work and not Wrightson who undertook only the Riverstone paving.
[15] On this aspect, Mr Wenley for Wrightson contended that this position is put beyond doubt by para [5] of a response from HBRC to a notice issued by Herbert for further particulars dated 12 April 2013 where HBRC stated:
5 Riverstone paving
With reference to paragraph 41(m) is it alleged that:
aThe riverstone paving breaches the ground clearances requirements under the Building Code?
It is not alleged that the riverstone paving breaches the ground clearance requirements under the building code.
bThe riverstone paving is defective because of drainage requirements?
It is alleged that the riverstone cladding is defective in that no drainage provision was made either within the concrete masonry or in the stonework, causing water penetration.
(emphasis added)
[16] Mr Wenley mentioned that this factual background relating to drainage to the Riverstone cladding was also borne out by a site visit report completed for HBRC by their experts (“the Longman Report”) which was produced by way of initial disclosure to the Court in this proceeding.
[17] All this seems to leave outstanding before me here, one principal question which relates to an issue of ground clearance between the cladding for the building and the paving.
[18] On this question of ground clearance, Herbert has engaged an expert, Mr Barry James Gill (Mr Gill) to inspect the building which he has done. In support of Herbert’s present claim, Mr Gill has provided an affidavit dated 19 April 2013 and a reply affidavit dated 1 May 2013.
[19] Mr Gill is a registered building surveyor and member of the New Zealand Institute of Building Surveyors and a Certified Water-Tightness Surveyor. He has apparently worked as a Building Consultant for more than 23 years.
[20] According to Mr O’Connor for Herbert, Mr Gill’s expert opinion here is that the riverstone paving stone work completed by Wrightson is defective because it breaches minimum ground clearance requirements. Mr Gill’s professional opinion is that there is insufficient clearance to the base of the cavity cladding system.
[21] On this, Mr Gill appeared to explain the issues arising from the insufficient clearance at para 21 of his 19 April 2013 affidavit in this way:
“Insufficient clearance to the base of a cladding system is a known cause of water penetration into the base of the cladding of a building. As stated within the Longman report, failure to provide sufficient clearance not only reduces the required ventilation effect within the cavity but it also reduces the ability of the base of the cladding to effectively drain. In addition to this, a “splashback effect” can often occur whereby rainwater can splash up from the paving onto the base of the cladding.”
[22] And, the importance of ensuing sufficient clearance is provided to the base of a cavity cladding system is mentioned in the Longman report at para 2.02.95 as follows:
Effective cavity construction relies on air circulation and drainage at the base. Cavities formed without adequate base ventilation do not function correctly and generally only serve to separate the cladding system from the support framing.
[23] In reply, Mr Wynands filed an affidavit which deposes that the riverstone paving complied with the building plans, plans that were presumably approved by the local authority. Those plans required a minimum ground clearance height of 30 mm.
[24] And, at para 5 of his 30 April 2013 affidavit, Mr Wynands deposes that the:
“dimensions recorded by Mr Gill confirm that the Riverstone paving was installed in accordance with the plan”.
[25] But it does seem that Mr Gill’s evidence, supported by photographs, is that in a few specific locations the paving does not precisely comply with the plans, as some of the stone work clearance gap seems to be less than 30 memorandum.
[26] And, in his second (reply) affidavit dated 1 May 2013 at para 7 Mr Gill deposes that he does:
“not accept the view of Mr Wynands that approval of a detail by the territorial authority, as part of the building consent application, is confirmation in itself that the works, if carried out, comply with the Building Code.
And, in this para 7 Mr Gill also makes clear:
“that other “contested” details relating to various elements to the building have suffered moisture ingress despite Councils initial approval at the Building Consent stage.”
and he notes also that:
“The Napier City Council has been joined as a party to this proceeding.”
[27] In conclusion, Mr O’Connor for Herbert noted that Mr Gill, in his concluding para 11 of his 1 May 2013 affidavit, said his professional opinion was that insufficient clearance had been provided between the base of the stucco cladding on the building and the Riverstone paving. Mr Gill had deposed earlier that the issues involve restricted ventilation of the cavity, inadequate drainage to the cavity and splashback. And, Mr Gill says also that the slope of the paving does not eliminate, or mitigate any of these factors, as was suggested otherwise by Mr Wynands in his evidence.
[28] In response, Wrightson’s position is that even Mr Gill’s own evidence establishes that the work it completed was in fact almost totally carried out in accordance with the plans. The necessary 30 mm ground clearance gap was largely achieved in virtually every area with only the odd exception where the clearance gap was reduced to about 25 mm which in any event was inconsequential.
[29] In addition, Wrightson contends that Mr Gill in his report and affidavits does not give proper consideration to the fact that the architects for the building designed
the paving with a clear slope away from the foot of the building and only a 30 mm clearance, and these factors were presumably approved by the local authority.
The Law on a Defendant’s Summary Judgment Application
[30] Summary judgment applications by defendants are provided for in r 12.2(2) High Court Rules which provides:
(2) The Court may give judgment against a plaintiff if the defendant satisfies the Court that none of the causes of action in the plaintiff ’s statement of claim can succeed.
[31] Here, Herbert is effectively in the position of a plaintiff and Wrightson a defendant. And, on this r 12.2(2), McGechan on Procedure at HR12.2.07 notes in part:
Where the defendant applies for summary judgment, the position is rather different from an application by the plaintiff. A defendant’s application is similar to a striking-out application in that the defendant has to show that the plaintiff cannot succeed. The difference between an application for summary judgment and an application to strike out is that the summary judgment application requires affidavit evidence to be provided. It will therefore be possible to obtain judgment on the basis of material other than that contained in the pleadings. As in the case of an application by the plaintiff, if there are material disputes of fact which cannot be resolved on affidavit, summary judgment will have to be refused.
...........
Ferrymead Tavern Ltd v Christchurch Press Ltd (1999) 13 PRNZ 616 and A-G v
Jones (2001) 15 PRNZ 347 (CA), (A-G v Jones (2003) 16 PRNZ 715 (PC)).
............
Summary judgment will not be appropriate where it is possible for the plaintiff to amend its claim so as to remedy the defects relied on by the defendant; it should be used only where the defendant has a clear answer to the plaintiff which cannot be contradicted: Westpac Banking Corp v M M Kembla NZ Ltd [2001] 2 NZLR 298, (2000) 14 PRNZ 631 (CA); A-G v Jones (2003) 16 PRNZ 715 (PC).
.............
The defendant has to show that none of the plaintiff ’s causes of action can succeed. While the plaintiff may obtain summary judgment on one of several causes of action, the defendant must be able to knock out the entire claim in order to be able to apply for summary judgment. ....................
[32] Significantly too, McGechan on Procedure at para HR12.1.08, in dealing with building disputes in which summary judgment generally is sought states in part:
HR12.1.08 Building disputes
In Appletrees Nominees Pty Ltd v Jodanto Nominees Pty Ltd [1984] 1 Qd R
286, summary judgment was held not to be appropriate in a case where the plaintiff claimed a declaration that a contract for the sale of land had been
rescinded and damages for breach of contract. Building disputes that rely on expert evidence are generally regarded as unsuitable for the summary judgment procedure: see Savory Holdings Ltd v Royal Oak Mall Ltd [1992]
1 NZLR 12; MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court of Appeal held that summary judgment cannot be granted where the defendant has produced credible expert evidence.
(emphasis added)
My Decision
[33] Here the critical question as I see it is whether or not it is appropriate to grant summary judgment in favour of Wrightson if this is seen as a situation where it is possible for Herbert to amend its claim so as to remedy the defects relied upon here by Herbert – see McGechan on Procedure at HR 12.2.07.
[34] The issue and perhaps the only issue on which Wrightson may be vulnerable on the evidence at present before the Court could be the question whether the minimum 30 mm ground clearance of the paved surface required under the contract for the building has been met by Wrightson. Certainly the evidence from Mr Gill in his affidavits seems to indicate that the ground clearance, although for the most part exceeding 30 mm in several places is smaller than this 30 mm gap.
[35] On this Mr Wenley for Wrightson contended that it was critical here that Mr Gill did not say what was the effect of the difference between for example a 25 mm and a 30 mm gap and that in any event the performance under the contract on the part of Wrightson in this case could only be seen as de minimis.
[36] Further, Mr Wenley noted that this difference in the clearance between paving and cladding was not part of HBRC’s substantive claim against Herbert. Nor he contends was this a subject of any complaint in the report of Mr Longman, the expert employed by HBRC.
[37] Finally, before me Mr Wenley contended that I should disregard the evidence of Mr Gill on the basis that he is alleged to be partisan and his evidence insubstantial. No evidence was put before the Court however to substantiate these claims and at this point I have no choice but to dismiss them.
[38] On all of this, what is clear to me here is that HBRC’s present claim for water ingress into the building is complex factually. And additionally, the present statement of claim issued by Herbert against Wrightson would seem to be deficient in many respects. Notwithstanding this, the present case is one where, as I see the position, it is possible for Herbert to amend its claim against Wrightson so as to remedy the defects which it relies upon. This amendment no doubt would plead that Wrightson as the installer of the Riverstone paving contributed to leaking and weather-tightness issues in the building in that it did not ensure that a minimum ground clearance of at least 30 mm was provided throughout.
[39] Whilst even this amendment may result in very little if any liability ultimately being established for water leakage and damage to the building on the part of Wrightson, it is difficult for the Court to conclude at this early stage of the proceeding that this would simply not be a possibility here. And, after all, it is the effectively uncontradicted evidence of Mr Gill at paras [6] and [10] of his 1 May
2013 affidavit that:
6. The Riverstone paving was not installed in accordance with the plan. As noted in my affidavit dated 19 April 2013, the clearance was lower than 30 mm at several locations.
10. Annexed and marked “A” are photographs which I took during my site inspection showing that the minimal gap between the base of the Stucco cladding and the paving has allowed a build up of debris to effectively close the gap. This build up of debris does not occur when sufficient gap is provided. The debris will allow a transfer of moisture from the paving up onto the base on the cladding.
[40] That said, and given that for the defendant’s summary judgment application to succeed in this case Wrightson must show that none of Herbert’s causes of action against it (including an amended cause of action along the lines of what I have signalled above) can succeed, I conclude that the present summary judgment application must fail.
[41] I understand too that the substantive claim by HBRC against Herbert remains un-particularised in part at this point. HBRC has apparently started remedial work to the building but much of the cladding is yet to be removed. The HBRC claim it is said remains to be properly clarified, and thus the third party claim against
Wrightson might also require further clarification once the amended pleading noted at [38] above is filed.
[42] Although I reach all these conclusions only by a fine margin, this appears to me to be a case where the Court is unable to find that Wrightson has been able here to knock out the entire claim against it, and to show that it has a clear and complete answer to all the possible causes of action on the part of Herbert against it.
Conclusion
[43] For all these reasons the present application by Wrightson must fail. The application is dismissed.
[44] In reaching this conclusion, however, I have found that the present pleaded statement of claim on the part of Herbert against Wrightson is significantly deficient and requires amendment. (A direction to this effect is to follow).
[45] That being the case, and given what has transpired (at a rather late stage before the hearing of the present application) to be significant contested factual evidence between the parties, I cannot conclude that Wrightson acted improperly in bringing this present application such that Herbert is entitled to an award of costs here. Herbert’s current statement of claim against Wrightson is substantially deficient.
[46] All that said, I take the view that this is an appropriate case for costs to lie where they fall. There is to be no costs order made with respect to this application.
Directions
[47] A direction is now made that within fifteen working days of the date of this judgment Herbert is to file and serve an amended statement of claim against Wrightson to remedy the deficiencies outlined in this judgment in its present pleading and in particular to consider the issues outlined at [38] above.
‘Associate Judge D.I. Gendall’
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