Kerr v South Wairarapa District Council HC Wellington CIV-2010-035-156
[2011] NZHC 1775
•9 December 2011
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2010-035-156
BETWEEN VINCENT PETER KERR AND PETER JAMES CONNOR
Plaintiffs
ANDSOUTH WAIRARAPA DISTRICT COUNCIL
First Defendant
ANDMARTINBOROUGH ESTATE LIMITED Second Defendant
ANDHOLMES CONSTRUCTION GROUP LIMITED
Third Defendant
ANDWAIRARAPA PROPERTY INSPECTIONS LIMITED Fourth Defendant
ANDDAVID UNRRA ROWBERRY First Third Party
Hearing: 30 November 2011
Counsel: P Bremer for Plaintiffs
E Horner for Second Defendant
A G Hazelton and R P Conner for Third Defendant
Judgment: 9 December 2011
JUDGMENT OF MILLER J
[1] A house at 7 Barlow Road, Martinborough, is said to be a leaky building. Its present owners sue (in order of their appearance in the intituling) the local authority, the developer, the builder, and the building inspector. The first defendant has brought a cross-claim for contribution or indemnity against the second and third
defendants, and has joined the director of the fourth defendant as a third party.
VINCENT PETER KERR AND PETER JAMES CONNOR V SOUTH WAIRARAPA DISTRICT COUNCIL HC WN CIV-2010-035-156 9 December 2011
[2] The house was completed during 2000. That fact gives rise to the present application for summary judgment, which has been brought by the developer and the builder. They invoke the 10-year longstop limitation period in s 393 of the Building Act 2004, saying that it is a complete answer to the plaintiffs’ claims and the first defendant’s cross-claim.
The narrative
[3] The narrative is based on the pleadings and affidavits filed for the developer, Martinborough Estate Ltd, and the builder, Holmes Construction Group Ltd. It has not been contested by the plaintiffs, except to contend, in an affidavit sworn by a solicitor, that their claim rests on facts which can only be ascertained after discovery and trial.
[4] The property was developed by Martinborough Estate and Holmes Construction under a joint venture agreement covering what appears to be two properties at Barlow Road. I note that there is some dispute about the address given on the documents produced in evidence; the invoices relating to building work are ultimately tied to this property, as opposed to any other developed at the same time by the joint venture, only by reference to a job number. It is clear that a building consent was issued on 20 December 1999, and it is said that by April 2000 most of the building work had been completed and by the end of May 2000 practical completion had been achieved.
[5] It is said that on 8 August 2000 the Council and the building inspector were told that the work had been completed, and a final inspection by the building inspector was requested. The record does not disclose when the final inspection was held. I am told that a builder and a developer would normally attend such inspection and attend to any defects identified by the inspector. The inspection may have been as late as November, for a file note made on 25 October records that “the house is not yet finished” but was expected to be finished by the first week of November. The witnesses believe that painting and overlay flooring only remained to be completed. They maintain that this work was not required as part of the building consent, nor did it relate to any of the pleaded defects in the property, which concern
the roof, cladding, pergola structure, window-cladding and joinery, slab, and ground work.
[6] A code compliance certificate was issued on 22 November 2000. [7] The plaintiffs purchased the property in 2008.
[8] The claim was first filed in the District Court on 18 August 2010, using the notice of claim form now provided for in the District Court Rules. It claimed separately against Martinborough Estate and Holmes Construction. As against Martinborough Estate, the claim alleged that the defendant was the “developer” and owed a non-delegable duty of care to:
(a) Ensure that due care and skill was exercised in relation to all aspects of the construction work for the dwelling;
(b) Build a reasonably sound structure using good materials and workmanlike practices in accordance with the building code.
The duty was said to have been breached in that the building was defective, which had led to water ingress.
[9] As against Holmes Construction, the claim alleged that the defendant built the house and owed a duty of care in relation to:
(a) Ensuring that due care and skill was exercised in relation to all aspects of the construction work for the dwelling;
(b) Building a reasonably sound structure using good materials and workmanlike practices in accordance with the building code.
The duty was said to have been breached in that Holmes Construction built the house, which is defective.
[10] The Council was also sued; it promptly cross-claimed against Martinborough
Estate and Holmes Construction.
[11] The claim exceeded the District Court’s jurisdiction, so it was soon transferred to this Court. A statement of claim against all defendants was filed on 8
June 2011. Strictly it was an amended claim, of course, but it was the first to be pleaded under the High Court Rules. The claim now contained one cause of action against Martinborough Estate, in which it was said that as the developer who engaged the architects, applied for the building consent, engaged contractors and was involved in decision-making about construction, Martinborough Estate owed a non- delegable duty of care to take proper care and skill in developing the property and arranging its construction.
[12] The claim pleaded two causes of action in negligence against Holmes Construction. The first was as developer under a joint development agreement with Martinborough Estate, and the second was for the construction and associated work.
[13] On 11 August 2011 the Council filed an amended cross-claim against the second to fourth defendants.
[14] An amended statement of claim was filed on 30 August 2011. It amended the claim against the fourth defendant but it made no material alterations to the claim against Martinborough Estate and Holmes Construction. They have moved for summary judgment on both the claims and the cross-claims. The application is opposed by the plaintiffs, while the Council abides the Court’s decision.
Limitation: the long stop period
[15] The Limitation Act 2010 applies generally to proceedings relating to building work. However, s 393(2) of the Building Act provides that no relief may be granted “in respect of civil proceedings” relating to building work if those proceedings are brought after 10 years or more from “the date of the act or omission on which the proceedings are based.” The purpose of the longstop period was discussed by Courtney J in Dustin v Weathertight Homes Resolution Service:[1]
[1] Dustin v Weathertight Homes Resolution Service HC Auckland CIV-2006-404-276, 25 May 2006 at [22].
The objective of a long stop period is to create finality by preventing claims being brought outside it. The inevitable result is that some, otherwise valid, claims will be precluded. However, that result is inherent in the concept and operation of the long stop period. Its purpose is to ensure fairness to all
parties, given the effect of time on the freshness of memories and availability of witnesses. Further, it gives certainty to the intended defendants so that they can plan such things as document destruction and liability insurance.
[16] Limitation periods for contribution claims among joint tortfeasors are governed by s 34 of the Limitation Act. The limitation period is extended for two years after the claiming defendant’s liability is quantified by an agreement, award or judgment. Mr Hazelton contended that s 393 trumps this provision for building claims, citing Dustin and subsequent authorities in which it appears that proposition was accepted. On the view I take of the application, I need not address that issue.
[17] Although s 393 speaks of proceedings, a limitation defence may defeat a discrete cause of action.[2] Under r 7.77 of the High Court Rules an amended claim may introduce a new cause of action provided it is not time-barred. It is a question of fact and law whether an amended pleading introduces a new cause of action.
The summary judgment application
[2] Mountain Road (No 9) Ltd v Michael Edgley Corporation Pty Ltd [1999] 1 NZLR 335 (CA).
[18] The application is brought under r 12.2(2). The Court must be satisfied that none of the causes of action can succeed. Of the predecessor rule the Court of Appeal said in Westpac Banking Corporation v M M Kembla New Zealand Ltd that:[3]
Except in clear cases, such as a claim upon a simple debt where it is reasonable to expect proof to be immediately available, it will not be appropriate to decide by summary procedure the sufficiency of the proof of the plaintiff's claim. That would permit a defendant, perhaps more in possession of the facts than the plaintiff (as is not uncommon where a plaintiff is the victim of deceit), to force on the plaintiff's case prematurely before completion of discovery or other interlocutory steps and before the plaintiff's evidence can reasonably be assembled.
[3] Westpac Banking Corporation v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA) at [63].
[19] Even in a longstop case, a limitation defence depends on the evidence. If the plaintiff might reasonably prove that time had not begun to run until 10 years before the claim was filed, the limitation defence must be held over for trial.[4] It is because evidence is admissible in summary judgment applications that the defendants have
pursued that remedy rather than a strikeout.
[4] Lee v North Shore City Council HC Auckland CIV-2009-404-2091, 12 April 2010.
[20] As to when time began to run, I accept Mr Hazelton’s submission that the commencement date is that of the act or omission on which the proceedings are based. But in a negligence claim brought against a builder or developer, it must be taken as arguable for summary judgment purposes that time did not run for so long as the builder or developer was under a continuing duty to remedy defects: Johnson
v Watson.[5] I decline Mr Hazelton’s invitation to revisit that principle in a summary
judgment setting; the precise extent and duration of the duty must rest on the factual context, and on policy considerations which the argument did not equip me to address. It is further arguable that that duty continues until the final inspection is completed,[6] and perhaps even until the development is completed by the issue of a code compliance certificate, on the principle that the duty continues so long as the defendant retains the practical ability to remedy its breach.[7]
[5] Johnson v Watson [2003] 1 NZLR 626 (CA) at [27].
[6] Litchfield v The Country Cottage Co Ltd [2011] NZWHT Auckland 33.
[7] Body Corporate 188273 v Leuschke Group Architects Ltd (2007) 8 NZCPR 914 (HC).
[21] Martinborough Estate says that the claim against it was out of time when first filed, for all of the allegedly defective work was completed by 8 August 2000, 10 years and 10 days before the proceeding was first issued. It is upon the actual construction work, narrowly interpreted, that the Court must focus, since the claim as originally filed in the District Court pleaded only a claim against Martinborough Estate qua builder. As I understood Mr Hazelton, it is immaterial that the claim named Martinborough Estate as “developer”, for the actual pleading was confined to building work. Not until the statement of claim was filed in this Court on 8 June
2011, long out of time, was a claim mounted against Martinborough Estate qua developer.
[22] Holmes Construction accepts that it was sued initially qua builder, but it too contends that all of the allegedly defective work was completed by 8 August 2000.
[23] The plaintiffs say that summary judgment is both inappropriate and premature. It is inappropriate because the claim rests on a continuing duty of care owed qua developer until at least the date when the code compliance certificate was issued. On the evidence before me, all building works were not completed, the final
inspection was probably not undertaken, and code compliance was not achieved,
until after 18 August 2000. And it is premature because until discovery is had the Court cannot be sure that all relevant information has been considered. The Court needs to know the nature of the joint venture and the roles of the parties in relation to the building at any relevant time.
[24] Martinborough Estate and Holmes Construction have filed affidavits in response confirming that all documents relevant to the summary judgment application have been discovered.
Were the acts or omissions giving rise to the claim completed by 18 August
2000?
[25] The defendants’ witnesses assert that all of the work that was allegedly defective was completed by 8 August 2000. The plaintiffs contend that further defective work may yet be identified, and they do not accept that all of the work particularised was complete at that date. They highlight the evidence that the building was not completed by the defendants, and code compliance not achieved, until 22 November, and point to weaknesses in the defendants’ evidence, which rests on statements of opinion or belief about the extent to which the defective work was completed by 8 August. For example, the defendants contend that a final inspection would not have been requested unless the work was complete at that date.
[26] I accept the plaintiffs’ submissions on this point. Following Kembla, the question is not simply whether the evidence filed at this point favours the defendants but whether the Court thinks it reasonable for the plaintiffs to have proof immediately available. This is of course a case in which the evidence is largely in the hands of the defendants and their agents at the time. I acknowledge that affidavits have been filed stating that all documents relevant to summary judgment have been disclosed. However, it is a matter not merely of discovery but of evidence.
[27] More importantly for present purposes, it is enough to point to an act or omission giving rise to the claim. The duty alleged includes a duty to remedy the defects so long as it was within the defendants’ power to do so. It is at least arguable
that the defendants’ duty subsisted until the final inspection had been held, and the evidence does not show that the inspection was done before 18 August 2000. On the contrary, it invites an inference that the inspection happened later.
[28] That is enough to dispose of the application for summary judgment insofar as it rests on the work of both defendants qua builder. It is not in dispute that both were sued qua builder in the original claim. The remaining question is whether the original claim extended to Martinborough Estate’s role as developer. I strictly need not address it, but I do so to forestall any attempt that may be made to strike out part of the current statement of claim on limitation grounds.
What was encompassed by the first claim filed in the District Court against
Martinborough Estate?
[29] Mr Hazelton’s argument was that not until June 2011 was Martinborough Estate sued in its capacity of developer. Until then the District Court pleading alleged the same duty that was pleaded against Holmes Construction; that is, liability qua builder. That being so, the claim against Martinborough Estate qua developer is out of time.
[30] This proposition confronts the insuperable difficulty that summary judgment can only be granted in respect of the entire claim. The application must be dismissed insofar as it attacks the cause of action against Martinborough Estate qua builder, for the reasons given in the last section of this judgment.
[31] As a matter of procedure, it does not follow from the fact that separate causes of action are pleaded against Martinborough Estate in this Court that the same approach must have been taken in the District Court. Under the District Court Rules
2009, statements of claim have been replaced by notices of claim, and the required content has changed. Under DCR 2.11 a claim need only name the parties, give a succinct description of the facts justifying the claim, and state the remedy wanted. This is a relatively informal procedure, and the Brookers commentary suggests that the detailed rules of pleading no longer apply, although the facts must still disclose a
cause of action.[8] By contrast, the High Court Rules still require sufficient facts and circumstances to inform the Court and the defendant of “the plaintiff ’s cause of action.”[9] Counsel did not squarely address pleading obligations under the District Court Rules, and I express no view about them. I simply record that I am not persuaded that the plaintiffs were required to separate their claim in the District Court into separate allegations against the same party in different capacities, or that they must plead the duty was a continuing one.
[8] Roderick Joyce QC Civil Procedure: District Courts & Tribunals (online loose leaf ed, Brookers)
at [DCR 2.11.01]–[DCR 2.11.02].
[9] Rule 5.26.
[32] On the merits, I am not persuaded that the original claim against Martinborough Estate was narrowly confined to construction work. Martinborough Estate was expressly identified as the “developer”, and the alleged duty was to “ensure” that due care and skill was used “in relation to all aspects of the construction work”, suggesting a supervisory role. As Harrison J noted in Body Corporate 188273, “developer” is not a term of art but it does have broad connotations arising from ownership and control of the property and its development
for sale.[10] By using it the plaintiffs put Martinborough Estate on notice that it was
sued in that capacity.
Other matters
[10] At [31]-[32].
[33] It is not necessary to deal with Mr Bremer’s argument that summary
judgment is inappropriate because discovery has not been undertaken.
Decision
[34] The defendants may have a good limitation defence, but it cannot be made out to the required standard at this stage. The application for summary judgment
against the plaintiffs and first defendant is dismissed.
[35] The plaintiffs are entitled to one set of costs of the application on a 2B basis with provision for one counsel. Counsel must seek agreement on costs. If they cannot agree, memoranda may be filed.
Miller J
Solicitors:
Grimshaw & Co, Wellington for Plaintiffs
Morrison Kent, Wellington for Second Defendant
Hazelton Law, Wellington for Third Defendant
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