Hermann v Weathertight Homes Tribunal
[2018] NZHC 1843
•24 July 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2017-404-2692
[2018] NZHC 1843
UNDER the Judicial Review Procedure Act 2016 IN THE MATTER
of an application for review of a decision made pursuant to s 112 of the Weathertight Homes Resolution Services Act 2006
BETWEEN
DAVID THOMAS HERMANN
First Applicant
HERMANN ENTERPRISES LIMITED
Second ApplicantAND
WEATHERTIGHT HOMES TRIBUNAL
First Respondent
contd: … /2
Hearing: 20 July 2018 Appearances:
B M Easton and C E Lane for the applicants E S K Dalzell for the second respondent
Judgment:
24 July 2018
JUDGMENT OF JAGOSE J
This judgment is delivered by me on 24 July 2018 at 11.30am pursuant to r 11.5 of the High Court Rules.
Solicitors:
Grimshaw & Co, Auckland
Parker & Associates, Wellington
Copy to:
Crown Law, Wellington
.....................................................
Registrar / Deputy Registrar
HERMANN v WEATHERTIGHT HOMES TRIBUNAL [2018] NZHC 1843 [24 July 2018]
JULIE MARTIN, BELINDA MARTIN and NOEL CAVE AS TRUSTEES OF THE JULIE M MARTIN TRUST and THE
BELINDA The MARTIN TRUST
Second Respondent
GRAEME JOHN EVANS
Third Respondent
BRUCE POVEY
Fourth Respondent
[1] David Hermann and his architectural company seek my review of a decision of the Weathertight Homes Tribunal, refusing their applications to be removed as parties to an adjudication proceeding brought against them (among others).
[2]The Tribunal, named as first respondent, abides my decision.
Background
[3] Mr Hermann, a registered architect, designed the Martins’ house, with construction being completed in mid-2006. The Martins say construction defects and water ingress resulted in damage to the house, which has since been fixed at substantial expense to the Martins. They allege the damage occurred in part because Mr Hermann (or his company) failed to identify, and/or to require correction of, various construction diversions from his design of their house.
[4] Under the Weathertight Homes Resolution Service Act 2006, the Martins applied for an assessor’s report in respect of the house on 24 January 2013, this being how a person brings a claim under the Act.1
[5] The subsequent 21 February 2013 eligibility assessor’s report assessed the Martins had an ‘eligible claim’ in terms of the Act. The 7 June 2013 full assessor’s report stated, among other things, what work was necessary to repair the damage and to make the house watertight. It also identified Mr Hermann’s company as a person who should be a party to the claim.
[6] The Martins then completed the identified remedial work, before initiating adjudication of the claim in the Weathertight Homes Tribunal on 23 June 2017. Mr Hermann and his company were included as parties to the claim.
Application for removal
[7] Mr Hermann and his company sought to be removed as parties to the adjudication proceeding.
1 Weathertight Homes Resolution Service Act 2006, s 9.
[8] The Tribunal has jurisdiction to “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”.2 It was accepted the test for striking out in circumstances of delay was that set out in Lovie v Medical Assurance Society New Zealand Limited.3
[T]he applicant must show that the plaintiff has been guilty of inordinate delay, that such delay is inexcusable, and that it has seriously prejudiced the defendant. … [T]hese considerations are not necessarily exclusive, and at the end one must always stand back and have regard to the interests of justice ….
[9] By its Procedural Order 4,4 the Tribunal found the Martins’ delay in initiating adjudication to be “inordinate and inexcusable”, prejudicing Mr Hermann’s and his company’s ability to defend the claim. But the Tribunal considered the effect of the prejudice did not either prevent justice being achieved if Mr Hermann and his company remained parties to the claim, or meet the criteria for their removal.
Application for review
[10] Mr Hermann and his company (henceforth, “Mr Hermann”) now seek my review of the Tribunal’s decision. He asserts the Tribunal:
(a)erred in law by:
(i)incorrectly concluding there was a post-commencement delay of three years and six months, when the period between the Martins’ application for an assessor’s report and initiation of adjudication of their claim was four years and six months;
(ii)finding Mr Hermann only to be “prejudiced” and not “seriously or significantly prejudiced”, when the Martins had not earlier notified him of their claim (he disposing of his work records for them in April 2017), or provided him with access to the house in advance of the remedial work (to investigate the alleged causes of damage);
2 Section 112.
3 Lovie v Medical Assurance Society New Zealand Limited [1992] 2 NZLR 244 (HC) at 248.
4 Martin v Hermann TRI 2017-100-006, 7 November 2017 (“WHT decision”)
(iii)applying too high a threshold on the ‘justice’ or ‘fair and appropriate’ considerations, to allow such remained achievable if Mr Hermann was “not entirely prevented” or “[not] entirely unable” to defend the claims;
(b)had improper purpose, being other than the Act’s obligation to manage adjudication proceedings “in a manner that tends best to ensure that they are speedy, flexible, and cost-effective”, and compliant with principles of natural justice;5
(c)was unreasonable and unfair in an administrative law sense; and
(d)did not take account of all relevant matters, and considered irrelevant matters.
The latter grounds of review – (b), (c), and (d) above – were brought essentially on the same foundation as the former ground (a).
[11] From that perspective, Mr Hermann’s application engages all the broadly- comprehended heads of judicial review, being that susceptible powers are to be exercised “in accordance with the law, fairly and reasonably”.6 The overlapping nature of the considerations makes discrete analysis unnecessary.7 Because of the view I take of the case,8 I mean no disrespect to counsel for Mr Hermann, Bryan Easton, or his carefully categorised submissions and volumes of caselaw, by reviewing the Tribunal’s decision more economically.
Analysis
[12]The Tribunal did not err in law in identifying the delay or prejudice:
(a)the Tribunal clearly comprehended and expressly referred to the chronological gap between the Martins’ applications for an assessor’s
5 Weathertight Homes Resolution Service Act 2006, s 57.
6 New Zealand Fishing Association Inc v Minister of Agriculture and Fisheries [1988] 1 NZLR 544 (CA) at 552.
7 Official Assignee v Chief Executive of the Ministry of Fisheries [2002] 2 NZLR 722 (CA) at [85].
8 That view includes my awareness of the Tribunal’s wish for an indication of the availability of this judgment by 31 July 2018.
report and application for adjudication of their consequent claim. Of the intermediate four and a half years, the Tribunal considered the latter three and a half of them to constitute delay, and inordinate and inexcusable delay at that. There is something counterintuitive about Mr Hermann’s claim the Tribunal should have considered the longer period to be the qualifying delay;
(b)the Tribunal did not expressly describe the prejudice as ‘serious’ or ‘significant’. But it clearly accepted the delay prejudiced Mr Hermann’s “ability to defend the claim”,9 both in his inability to access his contemporaneous documents and to inspect the house in advance of the remedial work. Of course, every defendant is ‘prejudiced’ to some extent by being included as a party to a claim, especially a delayed claimed. But here the Tribunal found the prejudice to be material. On my reading of the authorities, this is all ‘serious’ or ‘significant’ should be taken to mean. The very case on which Mr Hermann relies for the ‘special prejudice’ threshold specifies what is required is “prejudice of a material degree”;10 and
(c)the Tribunal also clearly accepted Mr Hermann’s prejudice was due to the delay, even if he may have contributed to it by some possible imprudence on his part in disposing of his documents over ten years after conclusion of contract works.
[13] However, the Tribunal did err in law on its ‘standing back’ consideration. The Tribunal did not fully consider ‘the interests of justice’, or what is “fair and appropriate in all the circumstances”,11 but only whether Mr Hermann is “entirely prevented from defending” or “entirely unable to defend” the Martins’ claim.12 The ‘interests of justice’, or what is ‘fair and appropriate in all the circumstances’, is not met by consideration at the margins. Rather, as in judicial review itself, those are ‘the
9 WHT decision at [37].
10 New Zealand Industrial Gases Ltd v Andersons Ltd [1970] NZLR 58 (CA) at 63.
11 Weathertight Homes Resolution Services Act 2006, s 112.
12 WHT decision at [38(c)] and [38(f)].
ultimate inquiries’ – to “do justice between the parties”.13 (Although the Tribunal also refers under this head to questions about the causative effect of the delay,14 that is a question about the necessary source of qualifying prejudice, and not about this ultimate issue.)
[14] I accept the Tribunal has a broad remit in the interest of “owners of dwellinghouses that are leaky buildings”.15 Its obligations in management of adjudicative proceedings,16 and its powers therein17 – including in particular its permitted investigatory role,18 and powers of inference19 – are wide. And there is good reason not to constrain this specialist tribunal with less applicable considerations arising in other civil disputes.20
[15] But the Tribunal’s ‘standing back’ assessment still should have taken into account all the plaintiffs’ and Mr Hermann’s respective relevant interests. These include the Martins’ contribution to the present circumstances, including in non-observance of the Tribunal’s standard direction:21
When claimants intend to complete the remedial work prior to filing a claim with the Tribunal they should give notice to all known potential respondents prior to commencing the remedial work and give those potential parties a reasonable opportunity to inspect the property before, and during, the remedial work. A copy of the assessor’s report should be included with the notice given to potential respondents.
[16] The Martins’ counsel, Stuart Dalzell, says the ‘direction’ is just a recommendation, not articulated in mandatory terms, and unable to bear the discipline asserted by ‘unless’ orders. But the standard directions also note immediately thereafter why that recommendation is made – because “[r]espondents or their expert
13 Gibson v Dentists Disciplinary Tribunal HC Auckland CIV-2004-404-3706, 19 July 2004 at [12] (emphasis added). See also Glenfield Video Ltd v The New Zealand Lotteries Commission HC Auckland M290-/95, 21 April 1995 at 15.
14 WHT decision at [38(a)-(b)].
15 Weathertight Homes Resolution Services Act 2006, s 3(a).
16 Section 57.
17 Section 73.
18 Section 73(1)(a).
19 Sections 74 and 75.
20 Vero Insurance New Zealand Limited v Weathertight Homes Tribunal [2014] NZHC 342 at [19]- [22].
21 Weathertight Homes Tribunal “Chair’s Directions: for Standard Dwellinghouses claims” (August 2010) at [15.1] (applicable as at 21 February 2013, the date of the eligibility assessor’s report).
advisors are entitled to inspect the claimant’s property for the purposes of responding to the claim”.22 That ‘entitlement’ did not feature in the Tribunal’s ultimate consideration at all.
[17] Thus, it is not a question of asking whether Mr Hermann is ‘entirely’ prevented from raising a defence, but whether – as between the parties – it is just, or fair and appropriate, his defences are limited to the extent they are. That was not the Tribunal’s ultimate consideration.
[18] On such ultimate consideration, the import of the Tribunal’s acknowledgement of “the potential impact if the alleged prejudice is found to be significant at a full hearing of the claim” also is unclear.23 Neither counsel adequately could explain the meaning of the acknowledgement in the context of the ultimate issue. If it is to say the Martins’ delay and/or failures may be taken into account under s 74(b)(iv),24 to enliven the Tribunal’s powers of inference under s 75, the Tribunal should clearly have articulated how such may be substantively to ‘do justice between the parties’, in circumstances of Mr Hermann’s constrained defences at trial.
Result
[19] For those reasons, I would set aside the Tribunal’s Procedural Order 4 as invalid. However, under s 17(3) of the Judicial Review Procedure Act 2016, I may instead direct the Tribunal “to reconsider and determine, either generally or in respect of any specified matters, the whole or any part of any matter to which the application relates”.
[20] Mr Easton says I have before me all the information before the Tribunal now myself to determine Mr Hermann’s application to be removed as party to the adjudication proceeding. But that decision is peculiarly one within the Tribunal’s
22 At [15.2] (emphasis added).
23 WHT decision at [38(g)].
24 Which provides: “The tribunal’s powers to determine a claim are not affected by … (b) the failure of any party to— … (iv) do any other thing the tribunal asks for or directs”.
specialist jurisdiction,25 especially given its procedural nature, which the Tribunal is especially qualified to determine.26
[21] For that reason, I will instead direct the Tribunal to reconsider Mr Hermann’s application in accordance with this judgment. I leave it to the Tribunal to decide, in accordance with its adjudication management objectives, whether it can make that decision on the materials presently before it, or on some other basis.
Direction
[22] I direct the Tribunal to reconsider and determine the first and third respondent’s application dated 8 September 2017 in accordance with the consideration set out at
[17] above, for the reason set out at [13] above.
Costs
[23] In my preliminary view, given the default position parties should bear their own expenses incurred in adjudication proceedings,27 the same should apply here. That is because this essentially is an interlocutory challenge, which has only been effective to the extent of having the Tribunal reconsider the removal application. Mr Hermann cannot be said to be so successful on his application as to justify an award of costs.
[24] If that is not accepted by the parties, and they cannot otherwise agree on costs, costs are reserved for determination on short memoranda of no more than five pages
– annexing a single-page table setting out any contended allowable steps, time allocation, and daily recovery rate – to be filed and served on the other by:
(a)Mr Hermann within ten working days of the date of this judgment;
(b)the respondents within five working days of service of Mr Hermann’s memorandum; and
25 Weathertight Homes Resolution Services Act 2006, ss 57, 73, and 112.
26 Hartley v Balemi HC Auckland CIV-2006-404-2589, 29 March 2007 at [51]-[53].
27 Weathertight Homes Resolution Services Act 2006, s 91(2).
(c)Mr Hermann strictly in reply within five working days of service of the respondents’ memorandum.
—Jagose J
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