Lee v Composite Cladding & Signage Manufacture and Installation Limited
[2012] NZHC 3189
•28 November 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2012-404-005491 [2012] NZHC 3189
UNDER Section 72 of the District Courts Act 1947
IN THE MATTER OF an appeal pursuant to s 72 of the District
Courts Act 1947
BETWEEN OLIVIA LEE Appellant
ANDCOMPOSITE CLADDING & SIGNAGE MANUFACTURE AND INSTALLATION LIMITED
Respondent
Hearing: 21 November 2012
Counsel: G J Beresford for the Appellant
R G Espie for the Respondent
Judgment: 28 November 2012
[RESERVED] JUDGMENT OF WYLIE J
This judgment was delivered by Justice Wylie on 28 November 2012 at 2.00 pm
Pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Distribution:
G J Beresford: [email protected]
R G Espie: [email protected]
LEE V COMPOSITE CLADDING & SIGNAGE MANUFACTURE AND INSTALLATION LIMITED HC AK CIV 2012-404-005491 [28 November 2012]
Introduction
[1] The applicant, Ms Lee, has filed a notice of appeal against a decision given by Judge M E Sharp in the District Court at Auckland on 16 August 2012. The appeal is due to be heard on 18–21 February 2013, and if necessary, on Tuesday,
26 February 2013.
[2] Ms Lee has applied for leave to adduce further evidence when the appeal is heard. The application is made in reliance on r 20.16 of the High Court Rules.
[3] The proposed evidence the subject of the application is before the Court in a number of affidavits. They are as follows:
(a) Affidavit of Barry James Gill dated 8 November 2012;
(b) Affidavit of James Vincent Colin White dated 8 November 2012; (c) Affidavit of Dr Nicholas Garth Powel dated 9 November 2012;
(d) Supplementary affidavit of Nicholas Garth Powel dated 19 November
2012; and
(e) Affidavit of Olivia Lee dated 20 November 2012.
[4] The respondent, Composite Cladding and Signage Manufacture and
Insulation Limited (“CCS”) opposes the application.
Background
[5] In 2004, Ms Lee purchased some land in Sanford Road, Ruakaka. The land is elevated and it has sweeping sea views.
[6] In August 2006, Ms Lee applied to the Whangarei District Council for building consent to erect a residential dwelling on the land, and consent was granted in October 2006. At much the same time, Ms Lee contacted CCS. She wished to
install exterior cladding on her home, and in November 2006, CCS provided Ms Lee with a quotation for the installation of the cladding.
[7] Building work commenced on the house in January 2007. Ms Lee assumed responsibility for much of the work. She engaged a builder on a labour only basis. Ms Lee employed other subcontractors directly. She imported the exterior aluminium cladding from China.
[8] As I understand it from counsel, the builder erected the exterior framing and placed a plywood pre-cladding around the dwelling. It was intended that the exterior aluminium cladding would be affixed over the top of the plywood pre-cladding. The aluminium cladding imported by Ms Lee had to be folded before it could be fixed to the plywood cladding. CCS commenced installing the aluminium cladding in July
2007. Work extended through until about February 2008.
[9] CCS accepted from an early stage that there were some defects in the works it undertook. It offered to attend to those defects, but Ms Lee wanted any remedial works deferred.
[10] There was a final Council inspection of the property on 18 February 2008.
[11] Ms Lee failed to pay CCS for its work, and it sued her for $53,979.40. In October 2008, she counterclaimed against CCS. She claimed that the house leaked. She alleged that the leaks were due to CCS’s negligent installation of the aluminium cladding. She sought:
(a) $60,328.12 for remedial work relating to damage alleged to have taken place to a membrane over a balcony;
(b) $14,023.12 for removing, repairing and reinstalling aluminium panels; (c) $229,441.06 for the replacement of 660 panels; and
(d) $2,531.25 for damage caused by CCS’s scaffolding.
[12] The matter proceeded to a hearing before Judge Harvey in the District Court in October 2009. In support of her counterclaim, Ms Lee sought to rely on two reports, the first by a building consultant, a Mr Beattie, and the other, by a Mr Gill, a building surveyor. Mr Gill’s report was prepared under the Weathertight Homes Resolution Services Act 2006. Ms Lee did not call either Mr Beattie or Mr Gill to give evidence, and Judge Harvey considered that their reports were hearsay. He excluded them, and that was fatal to Ms Lee’s counterclaim. He gave judgment in favour of CCS.
[13] Ms Lee then appealed to this Court.[1] Hansen J noted that Ms Lee represented herself and held that Judge Harvey could, and should have, done more to assist her as an unrepresented litigant. In the circumstances, he allowed Ms Lee’s appeal, and quashed Judge Harvey’s decision dismissing her counterclaim. The counterclaim was remitted to the District Court for rehearing.
[1] Lee v Composite Cladding & Signage Manufacture and Installations Ltd HC Whangarei CIV-
2009-488-828, 16 December 2010.
[14] It is noteworthy that in the course of his judgment, Hansen J recorded that Mr Beresford, who was appearing for Ms Lee on the appeal, submitted that the evidence from Mr Beattie and from Mr Gill should be admitted on the appeal. Hansen J was not prepared to accede to that submission. He recorded that the evidence was plainly not fresh, and that it could, with reasonable diligence, have been called at trial.
[15] The rehearing was held before Judge Sharp on 10, 11 and 14 October 2011,
17 October 2011, 20 December 2011, 14 March 2012, and 30 and 31 July 2012. Judge Sharp’s decision issued on 16 August 2012. She found that there were multiple causes of water ingress to Ms Lee’s house. She also found that Ms Lee’s witnesses had not properly understood the type of cladding system that was used on the house, and that this fundamental lack of understanding, combined with illogical conclusions about how water was achieving its ingress, had led to the counterclaim. She considered that the counterclaim was, and remained, misconceived. She noted that there were some breaches of warranties implied by the Building Act 2004 into
the contract between CCS and Ms Lee. However, she considered that no damage
had been identified as flowing from the breaches, that they were of minimal scope, and that they would not have been of any moment had the pre-cladding not failed. Judgment on the counterclaim was entered against CCS in favour of Ms Lee, but only on the breach of a warranty claim. Nominal damages of $100 were awarded to Ms Lee. The Judge expressed the view that Ms Lee had sued the wrong party, and that CCS was not responsible for the leaking to Ms Lee’s house.
The Evidence before Judge Sharp
[16] Judge Sharp noted that many witnesses were called by the parties, but that the two pivotal witnesses were Mr Gill for Ms Lee, and a Mr Beran for CCS. She summarised Mr Gill’s evidence. She noted that Mr Gill gave evidence that the design, manufacture, and installation of the aluminium composite panel claddings from China, provided by Ms Lee, had led to moisture ingress at multiple locations around the dwelling. She noted that Mr Gill identified some 21 alleged defects with the installation of the aluminium cladding. Those defects had been recited in Ms Lee’s amended statement of counterclaim.
[17] One of the alleged defects asserted that “incorrect materials had been used for panel backing”. It was Mr Gill’s evidence that plywood packers had been used, but that plastic shims should have been used.
[18] Mr Beran for CCS gave evidence that the plywood packers did the same job as the plastic shims, and that the substitution was of no consequence at all.
[19] Judge Sharp considered the competing evidence in some detail. Inter alia, she found that the use of plywood packers by CCS did not give rise to an actionable defect, and that it was not proved by Ms Lee that they were the source of water ingress to the underlying timber frame. Judge Sharp preferred Mr Beran’s evidence in this regard.
The Application
[20] As noted, the application is brought pursuant to r 20.16 of the High Court
Rules. Relevantly, it provides as follows:
20.16 Further evidence
(1) Without leave, a party to an appeal may adduce further evidence on a question of fact if the evidence is necessary to determine an interlocutory application that relates to the appeal.
(2) In all other cases, a party to an appeal may adduce further evidence only with the leave of the court.
(3) The court may grant leave only if there are special reasons for hearing the evidence. An example of a special reason is that the evidence relates to matters that have arisen after the date of the decision appealed against and that are or may be relevant to the determination of the appeal.
(4) Further evidence under this rule must be given by affidavit, unless the court otherwise directs.
[21] An appeal from the District Court to this Court proceeds as a rehearing. However, as is noted in McGechan on Procedure, in general, an appeal proceeds on the evidence that was presented to the decision maker, and the parties do not have an opportunity to bolster their case with new evidence on the appeal.[2]
[2] Andrew Beck and others McGechan on Procedure (online looseleaf ed, Brookers) at
[HR20.16.01].
[22] Leave to adduce further evidence will only be granted if there are special reasons for adducing the evidence. The law was helpfully summarised by Andrews J in Green & McCahill Holdings Ltd v Auckland Council.[3] She noted as follows:
[3] Green & McCahill Holdings Limited v Auckland Council [2012] NZHC 858 at [34] (footnotes omitted).
The approach to be adopted when considering applications for leave to adduce further evidence was set out in the Court of Appeal’s judgment in Rae v International Insurance Brokers.
The general rule is that to be admissible, the further evidence must be fresh, credible, and cogent. Evidence is fresh if it could not, with reasonable diligence, have been produced at trial. However, the absence of freshness is not an absolute disqualification for admission. Evidence which is not fresh may still be admitted where there are exceptional circumstances an
compelling grounds to justify it. Such evidence must still pass the tests of credibility and cogency. The discretion is to be exercised sparingly.
[23] An applicant must show that the evidence could not reasonably have been discovered at an earlier stage. The Courts have disapproved any notion that an appeal should be regarded as a new trial, with the first instance hearing acting as a dummy run only.[4] Further evidence will not generally be permitted if the appellant has had ample opportunity to assemble his or her evidence at an earlier stage, and has not complained of any prejudice previously.[5] However, the Courts have emphasised the discretion to admit further evidence remains, even where it is not fresh.[6]
[4] Telecom Corporation of New Zealand Ltd v Commerce Commission [1991] 2 NZLR 557 (CA) at
558.
[5] Rugby Union Players Association Inc v Commerce Commission [1997] 3 NZLR 79 (HC).
[6] Complaints Committee No 1 of the Auckland District Law Society v P (2007) 18 PRNZ 760 (HC) at [8].
Analysis in the Present Case
[24] Here, it is and has been Ms Lee’s stance from the outset that her house leaks because the exterior aluminium panels installed by CCS were installed negligently, and in breach of relevant building requirements. One of the alleged defects raised by Mr Gill and recited in the amended statement of claim related to CCS’s use of plywood packers, rather than plastic shims. It was asserted that the use of plywood packers, inter alia, led to moisture ingress in multiple locations around the dwelling.
[25] The onus was on Ms Lee to establish her assertions on the balance of probabilities. She was required to call evidence to support her assertions.
[26] Mr Beran, in a brief of evidence filed in advance of the hearing in the District Court before Judge Sharp, asserted that the panel cladding system was only a rain screen, and that the pre-cladding system had to be watertight. This was his primary contention. He also gave evidence that only some of the 21 defects alleged by Mr Gill were attributable to CCS, and that defect “Q”, the use of plywood
packers, was not a code compliance issue. It was his evidence that it was the
pre-cladding system that failed, and not the aluminium panel cladding system installed by CCS.
[27] Mr Gill, in advance of the hearing, filed a brief of evidence in reply. He
disagreed that defect “Q” was not a code compliance issue.
[28] At the hearing, Mr Beran said in his oral evidence that the use of plywood packers did not cause water to enter the property. Ms Lee was given the opportunity to re-call Mr Gill to give evidence in relation to this issue. Her counsel did not seek an adjournment. Nor did he claim that Ms Lee was prejudiced. Rather, Mr Gill was re-called and he gave evidence that water could enter through the plywood packers, particularly via screw holes through the packers. Judge Sharp did not accept Mr Gill’s evidence. Rather, she relied on Mr Beran’s evidence that the plywood packers did not transmit moisture and that the screws used to fix the plywood packers did not transmit moisture either.
[29] The additional evidence that Ms Lee wishes to call from Dr Powel relates to this issue. Dr Powel’s evidence is based on his scientific testing of pieces of plywood that were made available to him by Ms Lee. It is Ms Lee’s evidence that the plywood which she provided to Dr Powel comprises surplus plywood packers left behind on the property by CCS. It is Dr Powel’s evidence that the plywood Ms Lee made available to him is not waterproof. In his affidavit, he concludes that water can travel through plywood packers of the type made available to him by Ms Lee, and that stainless steel screws can provide a pathway for the ingress of moisture.
[30] It cannot be said that this evidence is fresh. The onus was on Ms Lee to prove that water was entering the property as a result of CCS’s negligence. She was alleging that the use of plywood packers was one of the causes for the water ingress. She must have appreciated that this required her to prove, amongst other things, that the use of plywood packers in some way contributed to the moisture she says is entering her home. She failed to do so. She cannot now obtain leave to adduce further evidence. The evidence could and should have been produced at the hearing
before Judge Sharp. There are no exceptional circumstances or compelling grounds to justify receiving the evidence at this late stage.
[31] Further, there are doubts about the cogency and reliability of Dr Powel’s evidence. Mr Coffman, who is a director of CCS, has filed an affidavit asserting that the plywood provided by Ms Lee to Dr Powel is not plywood packers of the type he used in the installation process. Rather, he says that the plywood Dr Powel has tested is untreated packing ply. The plywood packers he says he used in the installation process were treated plywood packers, approved by the local authority.
[32] I am not in a position to determine this conflict on the affidavits. However, it is clear that it cannot be assumed that Dr Powel’s evidence is relevant, let alone cogent and reliable. If he has tested the wrong type of packing, his evidence is of no assistance at all.
[33] The application insofar as it relates to the affidavit evidence of Dr Powel and
Ms Lee is declined.
[34] I now turn to consider the other two affidavits from Mr Gill and from
Mr White.
[35] Judge Sharp found that CCS installed horizontal timber battens above the window joinery, and that it did so incorrectly. She noted that Mr Beran accepted that the horizontal timber battens did not comply with the Building Code, and they were required to be fixed. The Judge however found that no actual damage had been identified as flowing from this defect; rather when the house is re-clad, the battens should be removed. It was Mr Beran’s view that the defect could be easily remedied by removing the aluminium panels directly over the battens. The Judge concluded that the defect was yet another problem caused by an amalgam of Ms Lee’s mistakes in regard to the construction of her own home.
[36] As noted, Judge Sharp awarded Ms Lee nominal damages of $100. As I
understand Mr Beresford, it will be argued on appeal that CCS is liable for the faulty
installation of the horizontal timber battens, and that the Judge should have called for further evidence to quantify the cost of remedying this defect.
[37] Mr Gill’s and Mr White’s affidavits are designed to provide evidence of the likely cost of repairing the defective horizontal timber battens. Mr Gill’s evidence deals with the scope of the works necessary to repair the battens and Mr White estimates that it will cost Ms Lee $122,236.46 to fix the timber battens.
[38] Again, there is a problem for Ms Lee. Both Mr Gill and Mr White gave evidence at the trial. Their evidence was focussed on the costs of a full re-clad of the house. It was not broken down into fixing parts of the dwelling.
[39] Mr Beresford argued that the additional evidence contained in the affidavits from Mr Gill and Mr White could not have been produced at trial, because it related to a repair which was different in scope from that contemplated by Ms Lee. He argued that the evidence is credible, cogent, specific and reliable, and that it is necessary that this Court hear the evidence when the appeal proceeds.
[40] With respect, it seems to me that Mr Beresford’s arguments miss the point. First, Judge Sharp found that no damage flowed from the defective horizontal battens. Mr Gill’s and Mr White’s proposed affidavits do not deal with this issue. Secondly, and more importantly, Ms Lee was counterclaiming against CCS. The onus was on Ms Lee to prove her loss. She should have reasonably anticipated that CCS might be liable for some work, and not for other work. The evidence she called in support of her claim should have been structured on that basis. Evidence of the alleged repair costs of fixing the timber battens could and should have been produced at trial. Thirdly, the proposed evidence is not essential to the appeal hearing. If the Judge hearing the appeal concludes that Ms Lee’s arguments on appeal are correct, then it will be open to him or her to remit the matter back to the District Court, so that it can hear fresh evidence in relation to the quantum, if any, of Ms Lee’s losses arising from the identified defect.
[41] The application for leave to adduce further evidence from Mr Gill and
Mr White is also declined.
[42] CCS is entitled to its costs, which I fix on a 2B basis. It is also entitled to its reasonable disbursements. Any dispute in relation to disbursements is to be settled
by the Registrar.
Wylie J
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