Hitex Building Systems Limited v Wilkinson Building and Construction
[2014] NZHC 475
•14 March 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-1123 [2014] NZHC 475
BETWEEN HITEX BUILDING SYSTEMS LIMITED First Appellant
ANDI C HOLYOAKE Second Appellant
ANDWILKINSON BUILDING AND CONSTRUCTION LIMITED First Respondent
ANDR A J AND C WILKINSON Second Respondents
ANDAUCKLAND COUNCIL Third Respondent
ANDR J & S K ZAGORSKI Fourth Respondents
ANDT BURCHER Fifth Respondent
Hearing: 9 - 11 July 2013
Appearances: A J Thorn for Appellant
M C Black for First Respondent
F M R Cooke QC & C D Boell for Second Respondents
P A Robertson for Third Respondent
S Robertson & E E Cowle for Fourth Respondents
Appearance for Fifth Respondent excused
Judgment: 14 March 2014
JUDGMENT OF KEANE J
This judgment was delivered by on 14 March 2014 at 4pm
pursuant to Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
Date:
HITEX BUILDING SYSTEMS LIMITED v I C HOLYOAKE [2014] NZHC 475 [14 March 2014]
[1] In May 2006 Mr and Mrs Zagorski, who had moved to New Zealand from Australia in mid 2004, purchased from the trustees of the Wilkinson Trust a property in Meadowbank, Auckland. They were told by the agent that it had been a leaky home but that the owners had resolved all damage and reclad the house. It was ‘as new’ and in ‘excellent condition’.
[2] The Zagorskis were given a copy of a LIM report, dated 29 May 2006, showing that in 2004 the Auckland Council had issued a building consent for the remedial work and that on its completion in 2005 had issued a code compliance certificate. The Zagorskis also obtained a favourable pre-purchase report from Allied House Inspections Limited; a report which also stated ‘moisture plugs noted throughout the house’.
[3] In February 2010 the Zagorskis decided to return to Australia. To assist in the sale of their property they obtained a further building report from a different assessor. This time the Zagorskis were advised to have readings taken from the moisture probes by their supplier, Moisture Detection Company Limited (MDCL). Also to obtain any earlier readings that had been taken.
[4] The Zagorskis then discovered that the house had been moisture tested on 18
May 2006, 10 days before they entered into the agreement for sale and purchase with the Wilkinson trustees; and that some moisture readings then taken had been as high as 80 per cent and one third had been at 18 per cent or higher. By February 2010, moreover, the moisture readings remained concerning.
[5] The Zagorskis were advised that, if they wished to sell their property in its then state, they would have to disclose that state to any potential purchaser. They were advised to lodge a claim with the Weathertight Homes Resolution Service, and to have their house assessed by an accredited building surveyor themselves.
[6] Before doing so they met Richard Wilkinson, one of the three Wilkinson trustees and the managing director of Wilkinson Building and Construction Limited (WBCL), which had been responsible for the 2004 – 2005 remedial work. Mr Wilkinson told them that the trust was not prepared to buy back the property.
Instead, he arranged a meeting with Ian Holyoake, the principal both of Hitex Building Systems Limited (Hitex), which had reclad the house in 2004 -2005, and of MCDL, which had installed the moisture probes. Mr Holyoake recommended further probes and further monitoring.
[7] The Zagorskis decided instead to lodge a claim with the Weathertight Homes Resolution Service against all three Wilkinson trustees, Mr and Mrs Wilkinson and their lawyer, Timothy Burcher; and Mr Wilkinson’s company, WBCL, and the Auckland Council.
[8] They lodged that claim in June 2010 and in September 2010 the Service released the full assessment it had obtained. That report concluded that the exterior cladding of the Zagorskis’ house was not weather tight, that there had been water ingress and actual and likely damage, and that a full reclad was needed at a likely cost of $508,044 (including GST).
[9] In November 2010, after the chief executive of the Service, or his delegate, had decided that their claim was eligible to be resolved under the 2006 Act, the Zagorskis took it to the Weathertight Homes Tribunal, which throughout this case comprised the Chair, Ms P A McConnell, and Ms M A Roche. Soon after, Hitex and Mr Holyoake were joined to the claim on the application of the Wilkinson interests. Mediation either did not take place or proved unfruitful.
[10] In a decision, dated 3 February 2012, after a conference on 11 October 2011 of the experts instructed for the various parties and a four day hearing in November
2011, the Tribunal held all respondents except Mr Burcher liable; the Mr and Mrs Wilkinson in contract as well as negligence, and the remaining respondents in negligence. It adjourned to a remedial scope hearing whether a full reclad or targeted repair was called for; an issue in part contingent on whether the Auckland Council would consent to a targeted repair. Hitex and Mr Holyoake immediately appealed.
[11] In its decision on remedial scope, dated 24 August 2012, after a second
experts’ conference on 19 April 2012 and a one day hearing on 31 July 2012, the
Tribunal held that a targeted repair was feasible, as long as Hitex carried it out. (Hitex 50, the cladding system in place, was incompatible with any other.) But, the Tribunal held, to ensure the consent of the Council, Hitex or Mr Holyoake would have to give a producer statement or warranty for the entire exterior cladding; and this, the Tribunal said, Hitex and Mr Holyoake were unwilling to do.
[12] Mr Holyoake had by then made it clear that he did not accept the Tribunal’s decision on liability, then under appeal, and wished to assess for himself to what degree the existing cladding did need to be removed and repaired. He was only prepared to have Hitex complete and warrant work he considered justifiable. That meant, the Tribunal held, that a full reclad was unavoidable, almost doubling the damages award.
[13] In a third decision, dated 21 September 2012, made on submissions in writing, the Tribunal awarded the Zagorskis the estimated cost of the remedial work called for, $385,337, and $22,750 for loss of rent and $25,000 general damages; in all $433,087. It set the contribution that Hitex and Mr Holyoake were to make at 73 per cent, $316,154, apportioning the balance amongst the other respondents.
[14] In their appeal against those three decisions, and the costs award, dated 15
November 2012, Mr Holyoake and Hitex contend, first, that the Tribunal acted with procedural impropriety and in breach of its statutory duty. It denied them natural justice, in some instances contrary to its own directions and assurances. Secondly, they contend, the Tribunal made substantive errors of fact and law as to their liability, and as to remedial scope, quantum and contribution, and costs.
[15] As to the first of these grounds especially, which rests on a highly detailed critique of the Tribunal’s conduct, Duffy J, in a decision dated 30 April 2012, granted Mr Holyoake and Hitex leave to adduce on this appeal limited further categories of evidence. To respond to that first ground critique I must, myself, begin by setting out in unusual detail how the case evolved, especially as it related to Hitex and Mr Holyoake.
[16] I need not refer in this decision to the cross appeal brought by the Zagorskis against the Tribunal’s decision insofar as it excused Mr Burcher from any liability. Whether it proceeds is in part contingent on this decision.
EVOLUTION OF CASE
[17] This case required two conferences of experts, and two substantive hearings. It resulted in four substantive decisions. As it evolved it was the subject of 16 procedural rulings. How it evolved is instructive in itself.
Angell report
[18] The initial foundation for the Zagorskis’ case before the Tribunal lay in the report of the WHRS assessor, Richard Angell, dated 26 August 2010, who first expressed the opinion that their claim was eligible for resolution under the 2006
Act; then itemised in considerable graphic detail, with photographs, the defects in the 2004 – 2005 remedial work that entitled them to relief, the resulting damage and the cost of repair.
[19] The house was built in the 1990s outside the 10 year limitation period. It had already suffered water damage once, and that had resulted in a claim under the 2002
Act. The Wilkinson trustees then purchased the property and in 2004 – 2005 WBCL was responsible for the remedial work called for, the principal part of which was carried out by Hitex, which reclad the exterior completely with its own unique proprietary product, Hitex 50.
[20] In ten places in the exterior cladding, Mr Angell said, defective detail design, or workmanship, had allowed in water compromising the timber framing actually or potentially. Some framing was moist or frankly wet. Some was already decayed. There was mould. Though some might already have been damaged in 2004, and left in place, the damage he saw was recent and, unless rectified, was likely to increase. It already called for a full reclad, on a quantity survey likely to cost $497,000, including GST.
Initial pre-trial orders
[21] On 30 November 2010 the Tribunal convened a preliminary conference. It directed disclosure to be made and privilege claimed by 17 December 2010. The Zagorskis were to file their own expert’s report and any amended claim by 22
December 2010. On the application of the Wilkinson interests the Tribunal joined
Hitex and MPCL on 11 February 2011 and Mr Holyoake himself on 21 April 2011.
[22] In these initial orders, the Tribunal required the Zagorskis to make their claim fully particular and the respondents to be equally explicit. The respondents had to identify the aspects of the claim they accepted and those they did not and the reasons why. They had to identify any affirmative defences and any issues as to mitigation or quantum. They had to file any evidence, and any schedule or breakdown of costs on which they relied.
[23] The Tribunal set the claim down for mediation for 16 June 2011, and also allocated to it a four day fixture to begin on 9 August 2011. The Zagorskis had to finalise their claim and file witness statements and other information by 8 July 2011. The respondents had to file their final responses and witness statements by 26 July
2011. Replies were to be in by 2 August 2011. There was to be a pre-hearing telephone conference on 3 August 2011:
to confirm formal arrangements for the hearing and to identify which parties and witnesses are required to be available for questioning.
[24] On 2 June 2011, the Tribunal directed those respondents that had filed inadequate responses, or none at all, to remedy that immediately; or to face the possibility at mediation that they might be unable to rely on anything disclosed late.
[25] On 24 June 2011, in order 8, the Tribunal gave a direction that has figured in this claim, to which I will refer later. It required that the solicitors engaged by Hitex and Mr Holyoake, whom they had given as their address for service, Dawsons Lawyers, Howick, were to send and to receive any documents on their behalf. It also said this:
The Tribunal will continue to copy Mr Holyoake into emails sent out to parties and will deal with emails and communications from him.
[26] On 4 July 2011, Mr Endean of Dawson Lawyers, then counsel for Hitex and Mr Holyoake, notified the Tribunal that Alan Light was to give expert evidence for Hitex, that Mr Holyoake was also to give evidence, and that a second expert witness was likely.
[27] Mr Endean said also that, when the experts met at the property on 29 June
2011, Mr Light had late notice and, when he arrived, the four exterior cladding points first opened up by Mr Angell, and re-opened that day, had already been closed. Mr Light wished to re-open those four areas. He wished to install 59 further moisture probes he considered should have been installed before. Also to redrill drill holes already made, to assess and compare timber extracts, because there was
‘obvious decay left in place from the original failure’. Also to check lintels, and whether framing had been treated with Framesaver, and to have access to all Mr Angell’s photographs.
[28] Mr Light considered all of this essential, Mr Endean said, to respond to deficiencies in Mr Angell’s report. By opening up the cladding, Mr Little considered, Mr Angell had made it more difficult to identify framing already damaged in 2004, but left in place.
[29] Mr Endean confirmed that the witnesses for Hitex and Mr Holyoake were still to be Mr Light, Mr Holyoake himself, and one other witness. He proposed an amended timetable, but agreed that a four day hearing was called for.
[30] On 6 July 2011, in a further memorandum for the conference that day, Mr
Endean again contended, any decay might already have been active or incipient in
2004. This was a ‘second time round leaking home’. As to any such then existing damage, he said, the Zagorskis were time barred. The Tribunal would need evidence enabling it to decide whether the damage claimed for was recent or pre-existing.
[31] In order 9, dated 14 July, following a conference on 12 July 2011, the Tribunal directed Richard Maiden, the Zagorskis’ expert, to re-open the four areas in issue on 22 July 2011 in front of any expert who wished to be there. It declined to allow Mr Light to install further probes. Second time claims, it said, were
uncommon but not unknown. Seventy one probes were already in place. More could have been installed earlier had that then been thought necessary. The Tribunal did accept that ‘whether damage has been caused by the remedial work or by inadequately or non-remediated original construction’ was in issue. It permitted Mr Light to re-drill the existing drill holes by 22 July 2011. If he wished to go beyond that he was to submit ‘a reasonable proposal’.
[32] The Tribunal set down the hearing for the weeks of 17 October 2011, or 14
November 2011. The Zagorskis had until 19 August 2011 to amend their claim, if they wished, and to file witness statements. All respondents, except Hitex and Mr Holyoake, were to respond by 2 September 2011. Hitex and Mr Holyoake were to file their responses and witness statements by 16 September 2011. There was to be a telephone conference on 11 October 2011.
Witness statements
[33] On 18 August 2011, when the Zagorskis filed their amended statement of claim they also filed the witness statement of their expert witness, Richard Maiden, in which he agreed generally with Mr Angell’s report as to the defects in the exterior cladding and as to the need for a full exterior reclad , and as to the cost.
[34] The Wilkinson’s expert, Geoffrey Bayley, in his witness statement, dated 9
September 2011, questioned Mr Angell’s conclusion that some of the damage might have been incipient in 2004. Also whether the exterior needed to be fully reclad. The 11 leak sites identified, he said, had specific causes. He thought the cost of repair likely to be closer to $232,190.
[35] The Council’s expert, Clint Smith, in his witness statement, dated 12
September 2011, doubted that any damage was incipient before the reclad. The Council had required decayed framing to be removed and any left in place, which was already treated timber, to be recoated with Framesaver. He concluded that the cladding had leaked, not because Hitex 50 was inherently unsound, but because of poor workmanship. He agreed with a full reclad and questioned whether the Council would consent to a part repair. The apparent defects were too widespread and varied. His cost estimate was $385,337.
Further pre-trial directions
[36] On 27 September 2011 the Tribunal issued two procedural orders, 10 and 11. In the first it declined to strike out the third Wilkinson trustee, Mr Burcher. In the second, as to Mr Holyoake and Hitex, the seventh and eighth respondents, the Tribunal’s Chair, Ms McConnell, said this:
In procedural order 9 I directed the seventh and eighth respondents to file their final responses and witness statements by 16 September 2011. To date they have not been filed and the claimants are due to file any reply briefs by
28 September 2011.
If the seventh and eighth respondents are intending to file witness statements they must do so by 5pm on Wednesday 28 September 2011. In order to file statements after this time they must formally seek leave and provide very good reasons why they have not complied with the timetable set on 14 July
2011.
An extension will be granted to the claimants to file replies should further evidence be filed. If the claimants or any other respondent incur additional costs due to the late filing of any evidence they can apply for costs.
[37] On 30 September 2011 Hitex and Mr Holyoake said that their witness statements were late because WBCL and Mr Burcher had been late, and Mr Holyoake had been unwell for three weeks. On 3 October 2011 the Zagorskis sought an unless order, contending that Mr Light’s evidence at least could have been filed on time. The experts were to convene on 11 October 2011. They needed to know what Mr Light’s position was.
[38] On 4 October 2011 the Tribunal agreed but in the order it then made it allowed Mr Light’s witness statement to be filed the following day, 5 October 2011, and Mr Holyoake’s statement the day after, 6 October 2011, ‘provided a medical certificate is also filed confirming that he has been unwell’. It extended to all other parties the right to respond by 10 October 2011.
[39] The Tribunal also required Hitex and Mr Holyoake to state, that day, whether they intended to call any other witness, and if so who that was to be. Any further expert witness statement was to be filed by 5 October 2011, and any other by the following day. The Tribunal added this:
The Tribunal will not accept any evidence filed outside of the directions and timetable contained in this procedural order unless the seventh and eighth respondents have the consent of all other parties to a further extension in advance of the expiry of the dates provided.
Light - Holyoake witness statements
[40] In his witness statement, dated 5 October 2011, Mr Light questioned whether any water ingress since the reclad had caused damage to framing, whether any decay was active and ongoing, and whether there was structural damage requiring framing to be replaced. Discrete failures, he said, could be fixed discretely.
[41] Mr Light identified four conventional reasons for recladding, none of which he said figured: (i) to inspect the framing for damage and to remove structural damage; (ii) to treat framing to be retained to stop incipient and early decay and increase durability; (iii) to ensure that the cladding system had draining and drying capacity; and (iv) to remove systemic defects likely to cause future damage.
[42] Mr Light questioned how adequately Mr Angell and Mr Maiden had investigated the underlying framing. He put in issue the accuracy of Mr Angell’s moisture readings. Mr Angell, he said, had failed to allow for the fact that framing treated by Framesaver gave elevated readings. Once corrected, he said, many fell within normal range.
[43] Mr Light also contended that Mr Angell and Mr Maiden had been unacceptably invasive. They had extensively damaged until then sound cladding and had contributed to the problem they were investigating. A level of recladding would be called for just to cope with the level of damage they had caused. In that sense the Zagorskis’ claim had become academic.
[44] In his own witness statement, dated 6 October 2011, and in the formal response to the Zagorskis’ amended claim filed for Hitex and for himself, Mr Holyoake said that when Hitex completed the 2004 – 2005 reclad, the timber framing was already covered with building wrap. Hitex was entitled to assume any decayed or damaged timber had been removed and replaced. Then, speaking from
his own expertise, Mr Holyoake responded in detail to the expert opinion evidence as it related to each defect identified in the Angell report.
[45] Mr Holyoake held Mr Wilkinson’s company, WBCL, accountable for most defects identified; the Zagorskis accountable for not relying earlier on the MDCL moisture probes in place when they purchased; and Mr Angell and Mr Maiden for investigating the exterior cladding invasively.
Reply witness statements
[46] On 12 October 2011, in order 13, the Tribunal adjourned the hearing to 14
November 2011. The Zagorskis’ counsel had become unexpectedly unavailable. The
Tribunal required responses, reply briefs and written openings to be filed by 11
November 2011; the openings to ‘cover the main elements of the claim or defence and address what each party considers to be the key issues in dispute’.
[47] In his reply brief, dated 20 October 2011, Mr Maiden disagreed with Mr Light’s opinion that any existing framing that was showing some sign of actual or potential damage, but was apparently still viable, should remain in place. That, he said, was inconsistent with building science, with prudent construction and with the Building Code requirement that structural timber last 50 years.
[48] He also said that even if, as Mr Light maintained, Framesaver might have elevated Mr Angell’s moisture readings, the extent could not be assessed and, in any event, the increase in moisture readings evident indicated that moisture was present. Mr Angell, he said, had found ‘free water’ and ‘decay as a consequence’.
[49] In his reply brief, dated 10 November 2010, Mr Bayley put in issue how reliable the 2004 – 2005 probes were, contending that they were then experimental. Also what could be taken from a visual appraisal of timber extracted from the framing by drilling. He too considered, relying on the Angell and Maiden assessments and on his own inspection, that there was damage to the framing and that it had resulted from cladding leaks attributable to Hitex.
[50] Like Mr Maiden, Mr Bayley discounted any distorting effect of Framesaver on the Angell moisture readings. ‘Visually’, he said, ‘there was clear evidence of decay and damage from both my inspections, from Mr Maiden’s photographs and also from the WHRS assessor’s photographs’.
[51] To Mr Light’s four reasons for recladding, Mr Bayley added a fifth ‘the imminent risk of cladding failure in similar areas’; and the defects already evident, he said, called for ‘reasonably substantial remedial work’. He did not accept that Mr Angell and Mr Maiden had damaged ‘perfectly good claddings’.
First experts’ conference
[52] On 11 October 2011 Mr Angell and the four other experts convened. They assessed two issues. One concerned the scope of remedial works in 2004 – April
2005. The other concerned the extent of any existing damage and whether it had preceded the remedial work or was attributable to it.
[53] As to the former, all experts except Mr Light noted that the building consent, issued on 20 May 2004, required that any existing framing to remain in place be treated with Framesaver before recladding, and also that any windows and door flashings installed comply with a nominated standard.
[54] The majority then identified eight areas where, they considered, defective detail design or workmanship had allowed in water and resulted in actual or potential damage. They were: (i) defects in the design and fitting of the deck balustrades; (ii) ground clearances that were insufficient according to Hitex’s own specification; (iii) fascias buried in the exterior cladding; (iv) defective inter-story cladding control joints; (v) exterior cladding that overlapped deck membrane; (vi) design or work defects in the retaining wall cappings; (vii) roof to wall flashings that were inadequate or ineffective; (viii) incorrectly installed door and window joinery.
[55] The majority saw the eighth defect they identified as the ‘tipping point’ that was likely to result in the Council declining consent for a targeted repair. A general repair was, they considered, inevitable. They agreed with Mr Smith’s assessment of cost, though Mr Bayley contended for a slightly higher figure.
[56] The report concluded by noting the four reasons why Mr Light dissented from the majority opinion: (i) the extent to which water had got in had not been evidentially verified; (ii) the damage, if any, resulting from the 2004 work had not been reliably identified; (iii) ‘if sil tray is not accepted as a defect then reclad is no longer justified’; and (iv) ‘if Council consent is a driver for reclad then it should not be’.
[57] I take the third of these reasons to refer to a critical concern about the window joinery, the supposed absence of any sill tray; a defect I understand critical to the opinion of the majority that defects in the door and window joinery constituted the ‘tipping point’ compelling a complete reclad.
Liability hearing
[58] The hearing, which was intended to resolve all issues of scope and quantum as well as liability, extended over three days, 14 – 16 November 2011 with closing submissions five days later on 22 November 2011.
[59] At the outset Mr Endean, as counsel for Hitex and Mr Holyoake, contended that Mr Bayley’s evidence concerning the accuracy of the moisture probes had emerged late and they wished to rebut it. WBCL contended that all he had done was to contest Mr Holyoake’s evidence. However, Ms McConnell accepted that Mr Bayley’s challenge might extend to the accuracy of the probes themselves.
[60] Each counsel then opened and, for Hitex and Mr Holyoake, Mr Endean contended that the case was unusual in four ways:
(a) The cladding system had not generally failed. It had worked perfectly well. In issue were some discrete areas.
(b)At their conference the experts had not reached complete consensus and the issues for the Tribunal were as Mr Light identified them in his dissent.
(c) The property had already undergone one remedial repair and the
framing left in place or introduced had been treated with Framesaver, suggesting that any damage might have preceded the remedial work.
(d)The moisture probes installed after the repair had not been used as they should have been. The Wilkinson trustees had not disclosed their pre-sale readings to the Zagorskis. The Zagorskis had not had timely readings made.
Mr Holyoake, Mr Endean said, was a director of Hitex but had not directed or supervised the reclad. His focus then was the moisture detection program.
[61] Mr Zagorski gave evidence first followed by Mr Wilkinson and Mr Burcher as to the Zagorski purchase. Then Mr Wilkinson resumed as to the state of the house on purchase and the remedial work by WBCL and Hitex. He was cross-examined extensively by Mr Endean, amongst other counsel.
[62] At 11.40 am on the second day Mr Holyoake was called and by 3 pm his evidence was effectively complete. He had been questioned by Ms McConnell, cross-examined, and largely re-examined. But Mr Endean remained concerned that he might need to give further evidence. He had not seen the witness statements of two Council witnesses still to give evidence, Mr Durand and Mr Van Beurden. He had not been cross-examined about what they were to say. He needed to review their witness statements.
[63] That was acceptable to the Council and Ms McConnell reserved that issue until the following day after the experts, then about to be empanelled following the afternoon adjournment, had completed their evidence. The Zagorskis’ counsel asked the Tribunal to direct Mr Holyoake, who remained on oath in case of recall, not to speak to his counsel or anyone else and, though Ms McConnell did not reply, she must have intimated that order.
[64] At 3.16 pm, after the adjournment, the five expert witnesses were empanelled, they gave their opinions in summary, they were questioned by Ms McConnell, cross-examined by all counsel including Mr Endean, and re-examined.
Then, just before they completed their evidence at 10.43 am the following morning Mr Holyoake entered a protest. During the panel’s evidence, he said, Ms McConnell’s direction to him just before the panel began had denied him the ability to instruct Mr Endean.
[65] Ms McConnell asked why this had not been raised earlier. If it had been, she said, she would have allowed Mr Holyoake to speak to Mr Endean as long as they did not discuss any proposed evidence he was still to give. She gave Mr Holyoake and Mr Endean leave to confer during the morning adjournment. Then at 11.39 she adjourned any further questioning of Mr Holyoake until after lunch. She said, ‘Mr Holyoake you can speak to Mr Endean about any issues to do with the Council evidence and things like that’.
[66] The two Council witnesses then in issue, Mr Durand and Van Beurden, gave their evidence next followed by a further Council witness, Mr De Leur. Mr Endean questioned all three. Then, at 2.54 pm the Tribunal adjourned and resumed at
3.06 pm when three valuers gave their evidence as a panel. After that there was one final Council witness as to the 2004 building consent and the 2005 code compliance certificate.
[67] At 4.35 pm there remained an issue about Mr Holyoake’s recording of his meeting with Mr Wilkinson and the Zagorskis, before the Zagorskis made their claim. The Zagorskis wished it produced and were having a transcript made. Mr Endean said that Hitex and Mr Hitex saw no value in that but, if it were introduced, they had no issue to raise. Ms McConnell proposed that everyone listen to the tape before closing submissions. Any issue arising was to be identified then.
[68] On 22 November 2011 during closing submissions Mr Endean made no further reference to this recording. Rather he affirmed the position that Hitex and Mr Holyoake had taken, in main outline, throughout. Any damage to the framing must have been incipient and left unresolved by WBCL and the Council during the 2004-
2005 repair. It could not be attributable to Hitex or Mr Holyoake. Some if not all of the damaged framing had remained dry.
[69] As to the extent of any repair, Mr Endean endorsed the consensus that had emerged during the liability hearing that a targeted repair was feasible and would attract Council consent. He contested the opinion evidence that, despite the fact that the windows did have sills, they were draining into the walls. The windows had performed for six years. A full reclad was unjustifiable.
Liability decision
[70] In its decision on liability, dated 3 February 2012, the Tribunal accepted with one exception the opinion of the majority as to the defects in the exterior cladding, as to the reasons for them, and as to the actual or potential resulting damage. By then, however, as it said, a majority of experts had discounted the window joinery, the eighth defect, originally seen as the tipping point.
[71] The Zagorskis, the Tribunal held, were not entitled to cancel the sale and purchase agreement on the ground of any misrepresentation by the Wilkinson trustees. They had entered the agreement on condition that the property passed inspection, and had relied on Allied’s report. They had not relied on any warranty as to quality. They had enjoyed the property for six years, five before becoming aware of any problem.
[72] The Wilkinson trustees, the Tribunal held, were fully liable for breach of their vendor warranty that they had met all their obligations under the Building Act. (Mr Burcher only avoided liability because the Zagorskis had not required him to sign the agreement for sale and purchase.) Mr and Mrs Wilkinson had not, however, acted as developers. Nor had Mr Wilkinson or WBCL, as builders, breached their duty of care to future purchasers.
[73] WBCL, the Tribunal held, had only removed existing cladding and decayed timber, treated the remaining timber with Framesaver, put on building paper and installed the windows and parapet flashings over the curved roof and back deck. Neither WBCL nor Mr Wilkinson was liable for defects in the cladding attributable to Hitex subcontractors. Mr Wilkinson was liable for landscaping affecting the adequacy of ground clearances. Also for one defect in the wooden capping of a deck balustrade wall.
[74] Allied, the Tribunal held, was fully liable in negligence for failing in its pre-purchase report to advise the Zagorskis, before they purchased, of the purpose of the moisture plugs and for failing to ensure that readings were taken before the Zagorskis finally decided to purchase.
[75] The Council the Tribunal held, was negligent in issuing the building consent on inadequate plans and specifications, and for not taking issue with some departures from the consent. But neither was causative. The Council was fully liable in negligence for not noting that the wooden capping of one of the deck balustrades was enmeshed in plaster, or that the fascias were buried, or that the ground clearances were inadequate and inconsistent with the Hitex specification.
[76] Finally, the Tribunal held Hitex fully liable in negligence, though it found nothing defective in Hitex 50 as a cladding system. The defects in the exterior cladding, it held, were attributable to ‘a poor standard of workmanship and several decisions made by Hitex officers, which gave rise to the creation of the defects’. It held Mr Holyoake liable for three defects, even though he was not site supervisor. He was involved in the related decisions.
[77] There was some possibility, the Tribunal held, that some of the damaged framing had been in place in 2004-2005 and may already then have been vulnerable to decay. But that was not significant. The ‘current leaks’ called for the house to be reclad wholly or partly and that, the Tribunal held, left two issues, the scope of remedial work and quantum.
[78] As to scope, the Tribunal said, while at the experts had originally agreed that the window and door joinery defects were the ‘tipping point’, and required a full reclad, only Mr Maiden and Mr Angell remained convinced that the windows were a source of likely future damage. The Tribunal found that this had not been established and said this:
The finding that the windows do not need to be remediated raises the question of whether a full reclad is in fact required or whether a partial reclad or more targeted repairs will suffice. An important determinant of this is whether the Auckland Council will give consent for targeted repairs or a partial reclad. This question cannot be resolved on the evidence. The issue
of targeted repairs arose late in the hearing and although experts gave ad hoc opinions about whether consent would be achievable, there is no proper basis for us to make a finding on this point.
As it is uncertain whether the Zagorskis would be able to obtain building consent for targeted repairs, it is not possible to determine the scope of remedial work and the quantum of damages. In addition we are not prepared to make a determination on the quantum of any partial reclad or targeted repairs based on information one of the respondent’s experts calculated during the course of the hearing.
[79] On that basis the Tribunal made this decision:
The issues of remedial scope and quantum are accordingly adjourned to allow the Zagorskis to obtain further expert advice and if necessary make an application for building consent to carry out targeted repairs to correct the established defects and repair the damage they have caused. Once the outcome of this is known a further short hearing will be organised if the parties are unable to reach agreement on the scope of repairs and the quantum of damages.
[80] The Tribunal then held that Hitex, ‘whose work is responsible for the majority of defects ... will have joint and several liability for the full amount of the Zagorskis’ damages’. But to decide the liability of the other respondents it needed to know whether a targeted repair was feasible or not; and if it was feasible:
... it will be appropriate to make a location by location assessment to determine contribution and liability. It is anticipated that Mr Wilkinson’s cross claim against Mr Holyoake will be resolved in this context. If a full reclad is required, it is more likely the three other parties with responsibility for defects will also be jointly and severally liable for the full amount.
Zagorski’s immediate response
[81] On 14 March 2012, six days after Mr Holyoake and Hitex appealed the that decision to this Court, the Zagorskis filed a memorandum setting out their position on the basis of a report from Mr Maiden, in which he expressed the strong opinion that the Council was unlikely to consent to a targeted repair and recommended that the Zagorskis not apply.
[82] First, Mr Maiden said, under the Building Act 2004, all building work had to comply with the Building Code, whether a consent was required or not, and whether
it was new or remedial work;1 and historically councils were only likely to grant a consent for remedial work if able to rely on a producer statement.
[83] Secondly, Hitex 50 was a unique product. It was not a cavity batten system. It was fixed directly to the timber framing. It could not be joined with another cladding system. Unless Hitex 50 was used, the exterior would have to be reclad entirely with a different product. In either event, the Council would require a warranty that the entire cladding was code compliant. A warranty for a part reclad was unlikely to be acceptable.
[84] Thirdly, there were existing specific risks of future failure, most obviously inherent in the embedded fascia boards; and, fourthly, the sill trays to the windows, though in place, only drained water away from their frames, not away from the window jambs. They directed water into the wall interiors and that carried a high risk of future failure.
[85] Mr Maiden accepted that the Tribunal had already decided this issue. But the Tribunal had asked whether the Council would consent to a targeted repair and, on the Tribunal’s own finding, there were potential issues with one or more windows. Also, while the majority expert opinion had been that defective door and window joinery was likely to be the ‘tipping point’, the other seven defects called for a full reclad.
[86] To demonstrate that, Mr Maiden attached the house elevations that Mr Smith had earlier hatched to identify the known leak points and the likely water paths, in which he had extended the hatching by one metre beyond the identified areas of decay. Those enlarged hatched areas, the elevated moisture levels and the embedded fascias, he said, made a targeted repair untenable.
[87] Finally, Mr Maiden said, if the Zagorskis did apply for consent for a targeted repair the Council was sure to ask for further details and specifications; and, in any event, he said, to identify ‘the true extent of all the damage caused’ it would be
necessary to remove the entire exterior cladding. Thus he concluded:
1 Building Act 2004, s 17.
I am of the firmest opinion that an application for a consent for targeted repairs would not be accepted by Auckland Council for this building and, as said above, you would not receive from Council a definitive statement requiring a full reclad consent application. The time and costs would essentially be wasted.
Order 14
[88] In Order 14, dated 29 March 2012, the Tribunal convened a further experts’ conference for 19 April 2012. Mr Holyoake, who by that point was representing himself, applied for an order that the Zagorskis release Mr Maiden’s original report to them . The Tribunal declined that order. That report, it held, was likely to be the subject of litigation privilege. It was also too late. Mr Maiden had given his related evidence at the first hearing.
[89] Then, in answer to Mr Holyoake’s concern that Mr Maiden might be putting in issue the drainage capacity of Hitex 50 Ms McConnell, who issued the order, said that this was not so. What Mr Maiden had put in issue was whether the diagonal drainage grooves on new Hitex 50 panels could be exactly aligned with those in the existing panelling. The Tribunal added:
... other parties’ experts are provided with the opportunity to comment on the issues raised by Mr Maiden and if appropriate provide further evidence in reply. Any relevant evidence as to the Hitex diamond back cladding system is only likely to be in relation to its use in targeted repairs or partial reclad situations. The key issue is not the integrity of the system as such but whether the defects in the Zagorskis’ property can be appropriately remediated by anything short of a full reclad.
Second experts’ conference - standing
[90] On 19 April 2012 the experts reconvened at a conference chaired by a Tribunal member, not one of the two presiding, Mr Kilgour, and there was an immediate issue. This was a conference of experts not of parties but Mr Holyoake, then representing himself, believed that as the designer and manufacturer of Hitex 50 he had a right to attend. He also wished to introduce at that conference as a further expert witness Mark Hazlehurst, a building surveyor.
[91] Mr Kilgour declined to permit either to attend. As a party, he apparently held, Mr Holyoake was disqualified from attending. Though Mr Hazelhurst was an
independent building surveyor, he apparently held, he could not attend either. He had not been a witness before the Tribunal at the liability hearing. Mr Holyoake did not accept either decision and immediately asked to speak to Ms McConnell, who met him in the office area.
[92] Mr Holyoake recorded their exchange, without disclosing to Ms McConnell that he was doing so, or seeking her consent, but that transcript was admitted on this appeal by Duffy J and I will return to it later. The immediate outcome was that Mr Hazelhurst was allowed to attend the conference as an observer only and Mr Holyoake was not permitted to attend at all.
[93] In their exchange, Mr Holyoake contends, however, Ms McConnell assured him that he would not be prejudiced. If the experts did agree on a targeted repair there would be a remedial scope hearing as to the extent and the cost. He would have the opportunity to apply to call fresh evidence. He contends, indeed, that she went further. Her ‘clear message’ to him was that he would be able to call that evidence.
[94] As a result, Mr Holyoake contends, once the majority at the second conference did agree a targeted repair was feasible, he obtained a further witness statement from Mr Light, and witness statements from Mr Hazelhurst and two others, Dr Adrian Spiers, a microbiologist, and Paul Probett, a further building surveyor.
Second experts’ conference - outcome
[95] At this second experts’ conference the majority, this time including Mr Light but excluding Mr Maiden, the Zagorskis’ expert, joined in this statement:
Each of the other experts agree, now that the defects and their location have been determined by the Tribunal decision of 3 February 2012, that a partial reclad is all that is required with a Hitex diamond back cladding system. The areas of remediation are shown on the attached elevation plans.
[96] Mr Maiden still considered that the Council would not consent to a targeted repair. But he did accept that, if Hitex 50 were used, it was compatible with the existing cladding. And all five experts joined in this qualification, referring back to
their conclusions at their first conference on 11 October 2011 before the liability hearing:
None of the five experts named above resiles from their agreement on leak location and remedy of Tuesday 11 October 2011 now that there is a Tribunal finding that the doors and windows installation in item 7 is not a proven defect.
By that I take those in the majority at the first conference to have affirmed their conclusions then as to the defects they identified requiring a repair and Mr Light, at that first conference in dissent, to have affirmed his dissent.
Further scope directions
[97] On 27 April 2012, after the Tribunal had offered to allocate a one day fixture to the scope hearing, the Zagorskis accepted that the hearing would be confined to whether there was to be a complete or partial repair, but contended there were still three issues to resolve.
[98] The first the Zagorskis identified was this. In its liability decision the Tribunal had accepted that there were ‘potential issues’ with windows, which it did not identify. The Zagorskis considered that the Tribunal must have been referring to, and to have accepted the fact of, defects in two windows that Mr Angell and Mr Maiden had identified without challenge at the hearing. Those defects had not been referred to by the majority of experts at the second conference. The second issue was whether framing did need to be removed up to one metre beyond any identified decay in three instances on the southern elevation. The third was whether the cladding would have to be re-plastered completely, even if there were a partial repair.
[99] At about this time also, evidently, Mr Holyoake and Hitex, relying on material obtained under the Official Information Act, applied to have Mr Angell removed as WHRS assessor, and his foundational report for the Service declared inadmissible, on the ground of bias. On 7 May 2012, in order 15, Ms Roche declined this application. Mr Angell’s evidence had already been received and relied on at the liability hearing.
Fresh evidence application
[100] On 26 July 2012, five days before the quantum hearing on 31 July, Mr Holyoake, also representing Hitex, filed the new evidence he contends he had Ms McConnell’s assurance he was entitled to file as to scope and quantum: a supplementary witness statement from Mr Light and completely new witness statements from Mr Hazlehurst, Dr Spiers and Mr Probett.
[101] That day the Zagorskis responded by asking the Tribunal to confirm the focus of the remedial scope hearing. Liability had been determined, they said, and they understood the hearing to be confined to whether the reclad called for was to be complete or targeted. While a one day hearing had been allocated, only one hour would be needed. They applied to have Mr Holyoake’s new evidence struck out as an attack on the Tribunal’s liability decision.
[102] On 27 July 2012 Mr Holyoake replied that order 14 envisaged expert opinion evidence responding to the issues raised by Mr Maiden in his recent report proposing a full reclad. He relied on the basis on which the majority at the second conference had agreed on a targeted repair.
[103] That memorandum apparently crossed with a Tribunal email, also dated 27
July 2012, in which a Tribunal officer said that Ms McConnell had confirmed:
(a) The only issue at the hearing was to be that of remedial scope as
discussed at the most recent experts’ conference.
(b)The only witnesses that the Tribunal would hear were the experts who gave evidence at the substantive hearing and attended the last experts’ conference.
(c) The Tribunal would nevertheless consider whether to allow additional witnesses on quantum following the scope hearing.
[104] In an immediate response that day, Mr Holyoake said, ‘scope can only be
defined with certainty in an unchallenged way if it is based on correct evidence
before the Tribunal’. Where there is no evidence, he said, a lack of evidence, doubtful evidence or incorrect evidence, the Tribunal could not decide scope accurately. His witnesses had ‘worked hard to assess the evidence and determine from that what is required to be done to the green areas ... to determine scope’.
[105] In order 16, dated 30 July 2012, the Tribunal declined to receive the further evidence on the basis that it was inconsistent with the 27 July email and, furthermore, on this basis:
At the time of the last experts’ conference Mr Holyoake was personally advised that the Tribunal would not be allowing additional witnesses to be called in relation to the scope issue although additional evidence might be allowed on quantum depending on the decision made in relation to the remedial work.
[106] The Tribunal stated that it had already determined that there were defects in the exterior cladding that had led to damage, and liability, and had only left to be resolved whether those defects and that damage could be met by a targeted, as opposed to a full reclad. The Tribunal said:
It was not intended, nor would it be appropriate, to provide a further opportunity for any of the parties to produce further or additional evidence on defects and damage. These issues have already been determined and a substantive decision made on these issues.
[107] The Tribunal accepted that the Hitex – Holyoake fresh evidence might go to the scope of repair ‘if scope is given its widest definition’, but held that this evidence was ‘an attempt to re-open issues that have already been determined’. It admitted only one exception:
Those parts of Mr Hazelhurst’s brief where he proposes an alternative scope
for at least parts of the remedial work, but that is challenged by Mr Light.
Response witness statement
[108] In his witness statement in response, on behalf of the Wilkinson interests, dated 30 July 2012, Mr Bayley said that when, as a result of order 14, the experts met on 19 April 2012 Mr Maiden’s proposals were discussed in detail. All but Mr Maiden agreed on a targeted reclad and the points in the cladding where that was called for, together with any repair to the underlying framing.
[109] As to Mr Maiden’s concern about the feasibility of a targeted repair, Mr Bayley said, a producer statement or warranty could only be for the new remedial work, not for pre-existing work. But if Hitex did that work it might be able to give a producer statement for the entire cladding. Joining new Hitex cladding with existing cladding appeared feasible, as Mr Light had demonstrated at the conference.
[110] As to Mr Maiden’s extended hatched areas, he said, not all were supported by adverse moisture readings. He gave three instances. Furthermore, the hatched areas as they were before Mr Maiden had extended them, agreed at the second experts’ conference, were very conservative. They required cladding to be removed beyond framing directly affected by adverse moisture content readings.
[111] Finally, Mr Bayley said, while Mr Maiden might have considered that the Council would not accept targeted repairs, the evidence was to the contrary; and in making these points in response, I understand, Mr Bayley spoke for the other members of the majority of the second conference except perhaps for Mr Light.
Remedial scope hearing
[112] On 31 July 2012, before the Tribunal heard the experts in a panel as to a complete or targeted repair, Mr Holyoake wanted to substitute Mr Hazlehurst for Mr Light as his witness, leaving Mr Light as witness for Hitex. The Tribunal allowed that, because Mr Hazlehurst had been at the second conference, if only as an observer, and it saw no prejudice arising. Mr Hazlehurst was mostly to comment on the evidence of the others.
[113] Once the panel had completed its evidence Mr Holyoake also gave evidence. He was asked by the Zagorskis’ counsel whether Hitex would provide a producer statement, if Hitex 50 were used to make targeted repairs, and:
the Council required a producer statement to confirm that the new sections of wall are appropriately installed and meet the durability requirements of the Building Code and other requirements.
[114] Mr Holyoake said that Hitex would not. His reason was this:
I have been involved in 4000 houses getting consents, we do repairs all the time, dozens per year. This Tribunal has heard deficient evidence that has not got to the facts and you’re wanting me to then go and repair to this particular process and issue a warranty. That won’t happen. What will happen to this, is if it comes to me, we will then go and work out exactly what’s wrong with this building and then we’ll put a proper submission to the Council and then we’ll do the work and then we’ll give it a consent. But I certainly will not be giving it on the basis of what I’ve heard today.
[115] The Zagorskis’ counsel then said that perhaps he had put the wrong question. He asked this: ‘if the scope was a scope your contractors and Hitex agreed with, would a producer statement be provided?’ Mr Holyoake answered ‘yes’. Ms McConnell then asked, ‘if the scope was involved a partial reclad would Hitex give the warranty required?’ Mr Holyoake said, ‘that’s what we do all the time’.
[116] Mr Holyoake then added that, as he had earlier said in a memorandum, he had sold the Hitex brand. It was now owned by Exterior Finishing Limited, a company belonging to a former employee. He could only speak personally. But Hitex still existed, he still owned Hitex and it was solvent. Hitex could give a producer statement, because it was still ‘part of the network’.
Final scope submissions
[117] On 3 August 2012 the Zagorskis filed their submission, still contending for a full reclad, maintaining that there was no prospect of a consent, and contending also that the areas for remediation identified by the experts at their conference on 19 April
2012 did not set out the true extent of the work called for. The Tribunal had accepted that there were issues with one or more of the windows.
[118] The Zagorskis accepted that the window damage might have been the legacy of the original construction. But, they contended, during the 2004 – 2005 work any defect should have been recognised by WBCL and the Council and Hitex. That negligent omission, they contended, brought any such defects within the 10 year limitation period.
[119] Their main concern, they made clear, was to avoid a targeted Hitex repair. If the Tribunal ordered one, they would be held to ransom. Mr Holyoake would refuse to carry out any repair until he had tested and monitored moisture levels to his own
satisfaction. He had declined to give a producer warranty. Indeed he had sold the brand and the fact that he had done so after June 2012 had to be concerning.
[120] In his final submission, Mr Holyoake again put in issue whether there needed even to be a targeted reclad. There was no evidence, he said, that framing left in place during the 2004 – 2005 repair was unsound. Anything defective then should have been removed. The old and the new framing was treated with Framesaver. It should resist decay under moderate levels of water entry. The moisture probes had proved accurate and showed that moisture levels within most of the framing were normal.
[121] To the extent that there were gaps allowing water in, Mr Holyoake said, all that needed to be done was to stop them up and allow the Hitex 50 system to work. Any water behind the cladding would then drain away and any wet framing would then dry out with ventilation. To the extent that a repair did need to be made, it could be highly targeted and, as to two points identified, he relied on the evidence he would have called from Dr Spiers and Mr Probett.
[122] Mr Holyoake went on to say that there had been some confusion at the end of the remedial scope hearing about the issue of a Hitex warranty. If the cladding was repaired using Hitex 50 installed by an approved Hitex contractor, Exterior, which now manufactured and installed Hitex, would give a 15 year warranty.
[123] In its final submission, dated 6 August 2012, the Auckland Council agreed that a targeted repair was feasible. Hitex 50 had not failed and any defective sections could be replaced. But a targeted repair would need the approval of a building surveyor, and a producer statement. The Wilkinson interests promoted targeted repairs within the area agreed by the majority of experts. The Zagorskis had no right to betterment.
Remedial scope decision
[124] In its decision, dated 24 August 2012, the Tribunal said that after the Zagorskis decided not to pursue anything less than a full reclad the parties agreed at the 22 March 2012 case conference that the scope of repair should be settled at a
second experts’ conference or, if need be, at a hearing on remedial scope. The majority agreed on a targeted repair, though Mr Light contended for a less extensive repair.
[125] At the 31 July 2012 hearing, the Tribunal then said, it had allowed Mr Holyoake to call Mr Hazelhurst but not his two other proposed witnesses, having earlier said that it would not allow this to happen. But, in his closing submissions, Mr Holyoake had effectively tried to introduce that evidence and had asked the Tribunal to allow it in. That, the Tribunal said, was the first thing it had to decide
[126] The Tribunal adhered to its decision. The further evidence, it held, was inconsistent with the agreement at the 22 March 2012 case conference that the claim would proceed on the evidence of the then experts; a point again made clear at the beginning of the second experts’ conference on 19 April 2012. Yet two working days before the reconvened hearing Mr Holyoake had attempted to introduce his further evidence.
[127] In main part, moreover, the Tribunal held, the new evidence concerned not scope and quantum but the defects and damage already determined. Dr Spier’s evidence on the condition of the framing involved a critique of the methods of the expert witnesses and raised a question about the reliability of specific moisture readings. Mr Hazelhurst’s evidence, while it went more to remedial scope and quantum, relied on the evidence of Dr Spiers and Mr Probett.
[128] The Tribunal affirmed its order, dated 30 July 2012. The hearing the day after that order, it again said, was not intended to provide a further opportunity for any party to produce further evidence on defects and damage. Though Dr Spiers and Mr Probett were well qualified, their evidence should have been given at the initial hearing. Mr Holyoake’s recourse lay on appeal.
[129] As to the scope of the remedial work called for, the Tribunal began by saying
‘this is not a typical leaky home claim’ because of the 2004 – 2005 remedial repair, which was meant to be a complete answer. But the defects and leaks that it was satisfied existed were not systemic or widespread. There were relatively few high
moisture readings. There were discrete failures and the framing timber had been treated, and in some cases doubly treated, with Framesaver or its equivalent. The Tribunal agreed equally with the second conference majority that Hitex 50 could be used to make a targeted repair in the hatched areas they had agreed, shown on the elevations marked up by Mr Smith (not those extended by Mr Maiden).
[130] In the result, the Tribunal concluded that something short of a full reclad would be feasible and that it was likely that the Council would consent to one as long as Hitex were willing to provide a warranty or producer statement. But there remained this difficulty. Mr Holyoake was unwilling to have Hitex complete and warrant work the Tribunal had found to be necessary but with which he disagreed.
notion that contract has general primacy over tort’, but are rather to be resolved on
‘ordinary principles of causation and the concurrency of two causes of action’.50
[284] In that case the majority of the Court held the contract breaker, the vendor, to be primarily liable because it had overstated an attribute of the property, and thus sold at an over value, and that misrepresentation had the status of a term of contract. The tortfeasor council was only liable because in its LIM report it compounded the vendor’s misrepresentation. But for that misrepresentation the Council would not have been liable.
[285] The second conclusion, which also influenced the majority decision that it would be unjust to require the tortfeasor Council to contribute, was correlative to its first conclusion, that the contract breaking vendor was primarily and wholly liable. To require the Council to contribute to the vendor, Blanchard J held, would restore to the vendor, to the extent of that order, part of the excess in the purchase price referable to the over stated attribute.
[286] In this aspect of the analysis, it made no difference that the vendor had been required to pay to the purchaser far greater damages, on the contractual measure; the cost of providing the purchaser with the over stated attribute. That only went to the fact that the measures of damage, as between contract breaker and tortfeasor in that case, were contrasting and incoordinate.
[287] In this case, by contrast, the Tribunal was entitled to hold Hitex and Mr Holyoake primarily liable as tortfeasors for the cost of remedying the cladding defects, subject to contribution not just from other tortfeasors, but also from the Wilkinson interests as vendors. As vendors, the Wilkinson trustees only became liable because the cladding defects for which Hitex and Mr Holyoake were accountable made a misrepresentation of the Wilkinsons’ undertaking to the Zagorskis that the house was code compliant.
[288] The Wilkinson trustees obtained no measurable windfall from that misrepresentation at the time of sale. The extent to which the house was less
50 Marlborough District Council v Altimarloch Joint Venture Ltd, above n 43, at [108].
valuable than then represented is incapable of being assessed on the evidence. The only evidence that there is relates to the state of the house as it was some five years later. That apart, the Tribunal did hold them answerable for not responding responsibly to the heightened moisture readings taken before they sold to the Zagorskis, and in that they did not begin to compare with Hitex. Nor ought they to be held accountable for Mr Holyoake’s stance as to a targeted remedial repair.
Costs revisited
[289] In the appeal against the costs award, dated 15 November 2012, Mr Holyoake and Hitex first rely on their challenge to the Tribunal’s liability. Those grounds, given my own findings on this appeal, are unsustainable. The Tribunal’s award under s 91 was confined in scope and modest in amount. In making that award the Tribunal made no error of principle.
CONCLUSION
[290] In the result, I find, throughout each phase of this protracted claim, the Tribunal accorded to Hitex and Mr Holyoake their rights as a matter of natural justice. To the extent that the Tribunal curtailed Mr Holyoake, and Hitex, it did so to oblige him to act consistently with its procedural orders and with its liability decision most especially. As to that the Tribunal had no choice. After its liability decision holding Hitex primarily liable Mr Holyoake effectively attempted to start his case, and that of Hitex, afresh.
[291] I conclude also that the Tribunal made no error in its liability, remedial scope, quantum and costs decisions. It was entitled, in particular, I find, to hold Mr Holyoake equally liable with Hitex for 73 per cent of the Zagorskis’ damages award, even though he was not equally responsible for their primary loss. When he refused at the remedial scope hearing to have Hitex undertake and warrant a targeted remedial repair at a stroke he effectively doubled the Zagorskis’ loss and the liability of all respondents.
[292] In that contribution order and in the others that it made, I find, the Tribunal fairly and accurately rated the culpability of each respondent and did so in accordance with law.
[293] I dismiss the appeal. The respondents are entitled to an award of costs. Their memoranda are to be filed and served within ten working days of the date of this decision. The memorandum for Hitex and Mr Holyoake is to be filed and served
within the ten succeeding working days.
Solicitors:
Adina Thorn Limited, Auckland
Short & Partners, Auckland
Heaney & Co., Auckland
Kensington Swan, Auckland
P.J. Keane J
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