ISP Consulting Engineers Limited v Weathertight Homes Tribunal

[2015] NZHC 1106

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2014-485-11560 [2015] NZHC 1106

UNDER

Part 1 of the Judicature Amendment Act

1972

IN THE MATTER OF

the judicial review of a decision in respect of a removal application under s 112 of the Weathertight Homes Resolution Services Act 2006

BETWEEN

ISP CONSULTING ENGINEERS LIMITED

Plaintiff

AND

THE WEATHERTIGHT HOMES TRIBUNAL

First Defendant

BODY CORPORATE 89408 & OTHERS Second Defendants

WELLINGTON CITY COUNCIL Third Defendant

Hearing:

16 March 2015

Appearances:

M Freeman for plaintiff
No appearance for first defendant (abiding)
P H Bremer and S J Baldwin for second defendants

No appearance for third defendant (supporting second defendants’ position)

Judgment:

21 May 2015

JUDGMENT OF CLIFFORD J

Introduction

[1]      The plaintiff, ISP Consulting Engineers Limited (ISP), says a claim brought against it by the second defendants, Body Corporate 89408 and others (the Owners),

ISP CONSULTING ENGINEERS LTD v THE WEATHERTIGHT HOMES TRIBUNAL [2015] NZHC 1106 [21 May 2015]

before  the Weathertight  Homes  Tribunal  (the  Tribunal)  in  2014  duplicates  civil proceedings which the Owners commenced against it in this Court in 2010.   ISP therefore applied to the Tribunal to be removed from that claim.   The Tribunal declined that application.   ISP now challenges  that decision by way of judicial review.

Facts

[2]      The Owners are the body corporate and individual owners of a multi-unit complex1 at 26-32 Allan Street, Wellington known as Townsend Apartments.

[3]      Townsend Apartments was developed in 1998 and 1999 by the renovation and extension of an existing building. Townsend Apartments is a leaky building.

[4]      In or about August 2005 individual owners of Townsend Apartments began lodging individual claims under the Weathertight Homes Resolution Services Act

2002 (the 2002 WHRS Act).  Various assessors’ reports were prepared with respect to  those  claims.    A multi-unit  claim  under  the  Weathertight  Homes  Resolution Services Act 2006 (the 2006 WHRS Act) was registered in 2007 (the 2007 WHRS Claim).  ISP is not a party to either of those claims.

[5]      The   2006   WHRS   Act   provides   two   pathways   for   resolution   of weathertightness claims – adjudication2 and mediation.3

[6]      Before applying for a multi-unit complex claim to be adjudicated by the

Tribunal, the claimant must either:

(a)       have a full assessor’s report in respect of the claim; or

(b)have done the work needed to make the complex weathertight and to repair the damage in respect of which the claim was brought, and hold

receipts for all payments required to be made for that work.4

1      As that term is defined in the Weathertight Homes Resolution Services Act 2006, s 8.

2      2006 WHRS Act, ss 57 to 76.

3      2006 WHRS Act, ss 77 to 88.

4      2006 WHRS Act, ss 16, 42 and 60(8).

[7]      After filing the 2007 WHRS Claim, the Owners decided to undertake the necessary work to make Townsend Apartments weathertight, and then to seek adjudication.  During repair work in 2010, structural issues were discovered to exist. Then, given that the Tribunal’s jurisdiction is limited to weathertightness claims, the Owners filed a separate claim for structural damage in the High Court (CIV-2010-

485-545, the 2010 High Court Structural Claim).  Limitation issues meant that claim had to be filed urgently in March 2010.

[8]      The  2010  High  Court  Structural  Claim  is  brought  against  ISP as  fourth defendant and the Wellington City Council (the Council) as fifth defendant.   As relevant, the Owners say that ISP had, as advising structural engineer, negligently failed to carry out its duty as a result of which Townsend Apartments suffered from a range of structural defects.  The most recent iteration of the statement of claim in those proceedings estimates damages provisionally totalling $5,683,300 for the cost of the required structural repairs.   In the alternative, if the building has to be demolished, the costs of demolition and replacement of at least $12,840,000 are claimed.

[9]      The 2010 High Court Structural Claim proceeded in the High Court to the point where, on 16 September 2013, it was indicated that the parties had agreed the matter  was  to  be  mediated.    In  a  minute  of  a  subsequent  case  management conference on 25 November 2013, which principally dealt with questions raised by the illness of one of the defendant property developers, Associate Judge Bell made the following comment:

The plaintiffs say that there are also weathertightness problems.   They propose to file and serve a claim in the Weathertight Homes Tribunal, and then to have that claim transferred to this court.  They want to take that route so as to take advantage of the fact that time will have stopped running under s 37 of the Weathertight Homes Resolution Services Act 2006, because an application was made for an assessor’s report some years ago and they believe that they will not run into limitation issues when the claim is transferred to this court.

[10]     I find that explanation, which I note was the Owners’ and not the Associate

Judge’s, a little confusing.   I am confused because the Owners do not refer to the

2007  WHRS  Claim.    That  claim  was  already  before  the  Tribunal,  presumably

because it involved the very weathertightness issues that, albeit caused by structural problems, continued to exist.  I am also a little unsure of the reference to avoiding limitation issues, given – again – the filing of the 2007 WHRS Claim.

[11]     In the meantime, in April 2011, and in furtherance of the 2007 WHRS Claim, the Owners had sought a full assessor’s report pursuant to s 32 of the 2006 WHRS Act.  That report was completed on 23 February 2012.  In the context of limitation issues, that report observed:

The application date for this Full Assessment report was received from the Body Corporate on 15 April 2011.   This is more than 10 years after the assessed Built date.  However this does not mean this claim is out of date. Twelve owners of individual apartments and the Body Corporate requested reports from the WHRS during the period 2005 to 2007.   The application date of the first report from the owner of Apartment 2C was received by the WHRS on 9 August 2005.   As a result 13 reports were prepared for the WHRS during the period March 2007 to January 2008.   Accordingly the claim is considered in time as applications from most of apartment owners and the Body Corporate were received well before the 10 year time limit under a former Act, the Weathertight Homes Resolution Services Act 2002.

[12]     Whether or not that assessment of limitation questions is legally accurate is a matter I have not considered.

[13]     As prefigured in November 2013, however, the Owners did file a new claim with the Tribunal in February 2014 (the 2014 WHRS Claim).  That claim, as I was informed is the practice by counsel when I heard this judicial review application, was in the form of a fully pleaded civil proceeding.   ISP was named as the fourth defendant.

The removal decision

[14]     ISP applied to be “removed” from the 2014 WHRS Claim.  Section 112 of the 2006 WHRS Act provides:

112      Removal of party from proceedings

(1)       The tribunal may, on the application of any party or on its own initiative, order that a person be struck out as a party to adjudication proceedings if the tribunal considers it fair and appropriate in all the circumstances to do so.

(2)       This section is subject to section 57(2).

[15]     In support of its removal application, and arguing on the basis of normal strike out principles, ISP argued that – as structural engineers retained as such – they did not have a duty to ensure the weathertight performance of Townsend Apartments. Neither the specific allegations as to the nature of the work allegedly negligently carried out negligently by it, nor more general considerations relating to novel duties of care supported that proposition.  In terms of what has been characterised as the Tribunal’s “active gate-keeping role” under s 112, a consideration of the evidence available (the reports of three assessors) showed that there was no evidence brought before the WHT to support ISP’s inclusion in the weathertightness claim.  None of those reports, in assessing weathertightness defects and the proper parties to the claim, identified work that was the responsibility of ISP nor concluded that it was a proper party to the claims.  Furthermore, and in terms of s 60(5) of the Act, the 2014

WHRS Claim alleged the same defects and breaches of duty as were alleged in the

2010 High Court Structural Claim.  Accordingly, the Tribunal should have granted

ISP’s removal application on that basis also.

[16]     It is the provisions of s 60(5) that in my view, and as I indicated at the hearing of this application, are decisive.  Section 60(5) provides:

An owner of a dwellinghouse may not, however, apply to have an eligible claim adjudicated, or continue adjudication proceedings, if, and to the extent that, the subject matter of the claim is the subject of –

(a)       an arbitration that has already commenced; or

(b)      proceedings   initiated   by   the   claimant   (including   by   way   of counterclaim) by way of –

(i)       proceedings in a court or a disputes tribunal; or

(ii) proceedings under s 177 of the Building Act 2004.

[17]     The introductory paragraphs of the 2014 WHRS Claim (paras 1 to 23) are, subject only to changes required to reflect the fact individual owners are not personally parties to that claim, identical to the introductory paragraphs of the statement of claim in the 2010 High Court Structural Claim.   The parties are identified, their roles in the construction of Townsend Apartments are set out.  The detailed  history  of  the  sale  of  the  units  and  the  grant  of  building  consents  is

confirmed.  Significantly, the work undertaken by the defendants is also pleaded in identical terms save that:

(a)      In the case of the first to third defendants, in addition to the work being described as structural work, building of units, fitting of interior and exterior cladding and building of roofs etc, an additional element of “work” is pleaded, namely “work to make the buildings weathertight”.

(b)In the case of ISP, the 2014 WHRS Claim, after setting out the design and supervision work carried out by ISP, pleads the following additional element of “work”:

Designing and certifying the structure that directly supported the cladding.

The  role  of  ISP in  providing  a  producer  statement  is  pleaded  in identical terms.

[18]     Both statements of claim then record the defects that are alleged to have occurred as a result of the work performed in breach of duty.

[19]     In  the  case  of  the  2010  High  Court  Structural  Claim,  those  defects  are detailed by reference to defects in structure.   The issue of weathertightness is not mentioned.  Nor is weathertightness referred to in the consequences the defects have for Townsend Apartments in the particulars of the ways in which various defendants are asserted to have been negligent or in the description of the damages claimed which are “for the estimated cost of partial structural repairs”.  As regards ISP as fourth defendant, its negligence is generally particularised as a failure to ensure that Townsend Apartments  were  “safe and  structurally sound”  and/or  accommodated certain specific design requirements.

[20]     The defects asserted in the 2014 WHRS Claim are – in general terms – quite different. They appear under a series of headings:

·     inadequate installation of joinery into wall claddings;

·     inadequate installation of building wrap;

·     inadequate weatherproofing to flat top of balustrade;

·     inadequate jointing of wall cladding;

·     inadequate installation of overflow to balconies;

·     inadequate     termination     of     cladding     and     waterproofing     to decks/balconies;

·     inadequate installation of deck/balcony substrates and failure of liquid applied membranes;

·     absence of external wall  cladding and  incorrectly rated internal  wall linings resulting in inadequate weatherproofing and fire rating;

·     inadequate flashing/detailing of balcony wall opening;

·     further defects causing water ingress; and

·     the buildings were inadequately designed.

[21]     As relevant to ISP, however, they are the same.  Mr Freeman, for ISP, listed those  defects,  and  the  relevant  paragraphs  of  the  statements  of  claim,  in  the following table:

Alleged defects	WHRS paragraphs	HC paragraphs
90 x 40 timber framing inadequate to meet wind loading requirements Studs set on flat Building consent called up NZS 3604 but  was outside the scope of that standard and required a specific design Use of timber framing inadequate (among other things the building consent called up NZS 3604 when should have been a specific design Fixing of timber framing inadequate (should have been specific design) Timber framing and timber framed bracing walls in Unit 4A were inadequate and in any case not in accordance with the building consent and/or building  consent  documents  because  of (particulars omitted for purposes of brevity) Gib  wall  bracing  to  the  roof  top  apartment (particulars omitted for brevity) Timber framing (particulars omitted for brevity)	51.1, 52.1 and 54.1 51.2 56.2 57.1 57.2 57.3 58.1 59.1	23.6, 23.8, 31.1 23.8.3, 31.2 23.3 23.3 23.4 23.8 26 31

[22]     On that basis, I am satisfied that the claim against ISP in the 2014 WHRS Claim is the same claim as made against it in the 2010 High Court Structural Claim. That is, the claim alleges that ISP negligently, or in breach of a contractual term, provided defective advice on structural matters.   If those structural defects have contributed to structural damage and associated water ingress and weathertightness issues, then, subject to the usual rules, ISP may be liable accordingly.  It is not an answer from ISP to such a claim to say that it had no formal responsibility for “weathertightness”  issues.     Rather,  the  question  would  be  one  principally  of causation.

[23]     When pressed by me, neither counsel for the Owners, Messrs Bremer and

Baldwin, were able to identify any way in which the 2014 WHRS Claim added to the

2010 High Court Structural Claim.

[24]     Moreover, I think the concern as to limitation, which would appear to have been the reason for the filing of the 2014 WHRS Claim, is – at least as regards ISP – misplaced for the same reason.  That claim is effectively pleaded in the 2010 High Court Structural Claim, which – at least as I understand it – is not suggested to be out of time.

[25]     It might be wondered why, in these circumstances, ISP objected to being part of the 2014 WHRS Claim.  In response to that question, Mr Freeman submitted that ISP, as an engineer, has a liability policy that does not cover or extend to claims for weathertightness issues.  If it was not removed, therefore, it would have to itself fund its defence to the 2014 WHRS Claim.  I was advised by Mr Freeman its insurer’s legal representatives could not undertake that task.

[26]     I therefore grant judicial review of the decision of the Tribunal not to remove

ISP from the 2014 WHRS Claim, and order that it is so removed.

[27]     On  19  January 2015,  and  again  as  anticipated,  the Tribunal  ordered  the removal of the 2014 WHRS Claim to this Court.  The proposal is for the 2010 High Court Structural Claim and the 2014 WHRS claim as transferred to be consolidated. The Tribunal’s transfer decision was, as I understand it, effectively by consent.

[28]     Section 119 of the 2006 WHRS Act provides for transfer in the following terms:

The Tribunal may order a claim to be transferred to a District Court or the High Court in its ordinary civil jurisdiction if, in the Tribunal’s view, it is more appropriate for a Court to determine the claim for all or any of the following reasons:

(a)       the claim presents undue complexity: (b)  the claim presents a novel claim:

(c)       the subject matter of the claim is related to the subject matter of proceedings that are already before the court.

[29]     For the Owners, Mr Bremer in oral argument – at least as I understood his remarks – indicated that, once transferred to the High Court, the alternative dispute resolution procedures of the Tribunal would, in effect, form part of the jurisdiction of this Court.   I doubt that is the case.   Nevertheless, that matter can be considered when the application for consolidation is considered.

Result

[30]     ISP is removed from the 2014 WHRS Claim, including as transferred to this

Court.

[31]     I see no reason why costs should not follow the event.  I would not expect that counsel would need to file a costs application.

Clifford J

Solicitors:

Thomas Dewar Sziranyi Letts, Lower Hutt for plaintiff. Grimshaw & co, Wellington for second defendants.

Heaney & Partners, Auckland for third defendant.