Lister v 2 Harrogate Street Limited HC Christchurch CIV 2008-409-1071
[2010] NZHC 2177
•9 December 2010
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2008-409-001071
BETWEEN ANDREW ROSS LISTER
123 TRUSTEES LIMITED
AS TRUSTEES OF THE LISTER TRUST Plaintiffs
AND2 HARROGATE STREET LIMITED First Defendant
ANDPAUL MAURICE FOLEY Second Defendant
AND FOLEY DESIGN LIMITED Third Defendant
ANDPAYNTER INVESTMENTS LIMITED Fourth Defendant
ANDOWEN BRENT ENNOR Fifth Defendant
Hearing: 2 December 2010
Appearances: D Smith for Plaintiffs/Respondents
O G Paulsen for Applicant/Fifth Defendant
Judgment: 9 December 2010
JUDGMENT OF ASSOCIATE JUDGE DOHERTY
on Application for Summary Judgment
Introduction
[1] The fifth defendant (“Ennor”) seeks summary judgment against the plaintiffs
(“Lister”) on a number of grounds.
LISTER AND ORS V 2 HARROGATE STREET LIMITED AND ORS HC CHCH CIV-2008-409-001071 9
December 2010
[2] I do not intend to deal with all of those because the conclusion I have reached is that Ennor’s application can be sustained on the basis that Lister’s action against Ennor is statute-barred (operation of s 4(1) Limitation Act 1950).
The principles of summary judgment brought by a defendant
[3] Just as a plaintiff seeking summary judgment must show that the defendant has no defence to the claim, so a defendant seeking summary judgment must show that none of the causes of action in the statement of claim can succeed. The following relevant principles appear from Westpac Banking Corporation v M M Kembla [2001] 2 NZLR 298:
i)Where a claim is untenable on the pleadings as a matter of law, it will not usually be necessary to have recourse to the summary judgment procedure, because a defendant can apply to strike out the claim. Rather, the summary judgment procedure permits a defendant who has a clear answer to the plaintiff, which cannot be contradicted, to put up the evidence which constitutes the answer, so that the proceedings can be summarily dismissed.
ii)The difference between an application to strike out a claim and summary judgment is that the strike out is usually determined on the proceedings alone. On the other hand, summary judgment requires evidence.
iii)Summary judgment is a judgment between the parties on the dispute which operates as an issue estoppel, whereas if a pleading is struck out or is untenable as a matter of law the plaintiff is not precluded from bringing a properly constituted claim.
iv)The defendant has the onus of proving on the balance of probabilities that the plaintiff cannot succeed.
v)Except in clear cases, it will not be appropriate to decide by the summary judgment 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, to force on the plaintiff's case prematurely before completion of discovery or other interlocutory steps and, therefore, before the plaintiff's evidence can reasonably be assembled.
vi)At the end of the day, the Court must be satisfied that none of the plaintiff's claims can succeed. It is not enough that they are shown to have weaknesses. The assessment made by the Court on an interlocutory application is not one to be arrived at on a fine balance of the available evidence, such as is appropriate at trial.
[4] A restrictive approach to a defendant's summary judgment application was indicated by the Court of Appeal in Bernard v Space 2000 Ltd (2001) 15 PRNZ 338, where the Court thought that the application had to amount “to a king hit". Summary judgment should not be granted to a defendant on the basis of defects to a pleading, if those defects can be remedied by an amendment – Scotia Contracting v Hartner (High Court, Auckland, CP 197, 30 April 2002, Paterson J.).
[5] Counsel for Ennor referred to Lee v North Shore City Council HC Auckland CIV-2009-404-002091, 22 February 2010, Associate Judge Bell, which noted similarities between the approach taken to limitation issues on strike out applications and an application for summary judgment based on the same issues. In Lee, Associate Judge Bell referred to Matai Industries Limited v Jensen [1989] 1 NZLR
525 at 532:
If the plaintiff in opposition to the defendant’s proposition can show that it has a fair argument that the claim is not statute barred or that the limitation period does not apply or is extended for any reason, then of course the matter must go to trial. To hold the interests of plaintiffs and defendants in fair balance in this context the Court should in my view be slow to strike out a claim or cause of action altogether in limine but against that, if the position is quite clear, then a defendant should not be vexed by having to go to full trial when the answer is obvious and inevitable.
This case
[6] Lister commenced its claim against Ennor by virtue of a second amended statement of claim in the original proceeding on 8 February 2010. The cause of action is founded in an alleged negligent misstatement on the part of Ennor that when an agent of Lister enquired as to the condition of the motel premises at issue in this litigation, that agent was advised by Ennor that there had been prior issues concerning leaks in the building but he believed that they had been solved. Lister alleges that Ennor had no basis for such a belief and that in the circumstances the statement made was misleading and negligent and caused Lister damage.
[7] Ennor’s case is that:
i)the cause of action arose on 30 May 2002 (at the time the agreement for sale and purchase was declared unconditional), thus the cause of action is barred by s 4(1) Limitation Act
1950;
ii)the reasonable discoverability test re latent building defects (Invercargill City Council v Hamlin [1996] 1 NZLR 513) does not apply;
iii)even if it did, the Hamlin test was satisfied by 1 October 2003 at the latest (when Lister agreed with the motel’s tenant to call for an “independent assessment” of the leak problem);
iv)the evidence of Lister contradicts the pleading of its cause of action;
v) in any event, Lister did not rely upon the alleged misstatement.
Taking Lister’s best argument
[8] I doubt that the observations of Tipping J in Trustees Executors Ltd v Murray
[2007] 3 NZLR 721 (SC) extend the policy of reasonable discoverability to a tort
such as negligent misstatement as Lister argued. But even if Lister’s argument that the doctrine of reasonable discoverability applies, the evidence is such that Ennor can show Lister’s cause of action cannot succeed.
[9] Basing its argument upon reasonable discoverability Lister argues that the damage was only discoverable upon receipt of an expert’s report which was received by Lister on 10 February 2004.
[10] If reasonable discoverability is the highest point of Lister’s argument on limitation then if an analysis shows the damage was reasonably discoverable by Lister prior to 8 February 2004, the claim will fall foul of s 4(1).
The facts
[11] The first defendant constructed a motel complex known as The Drifters Inn in Hanmer. Ennor is and was then a shareholder director of the first defendant. At about the time of completion it leased the inn to a third party. On 7 May 2002 the first defendant sold The Drifters Inn to (ultimately) Lister. On 26 June 2002 there was a transfer of the original lease to another third party. On 7 August 2003 there was a transfer of the same lease to the present tenants (Poiner). Over the period since Poiner was the tenant there were disputes between Poiner and Lister.
[12] Prior to the purchase, a Mr Glassey provided a valuation of The Drifters Inn “to be used as part of a due diligence process to purchase the motel”. Mr Glassey’s report (dated 27 May 2002) said:
From our inspection of the property, no defects requiring attention were noted by us. The proprietor [allegedly referring to the third party lessee] when questioned as to any defects, advised that there were not leaks in the building and the existing lessor [alleged to be the first defendant] had rectified earlier notified leak and defects which became apparent shortly after original construction.
[13] Counsel for Ennor referred to an exchange of correspondence between Lister’s counsel and the first defendant and Ennor’s solicitors earlier this year. An email from Lister’s counsel referred to a telephone conversation between counsel’s instructing solicitors and Poiner on 22/23 September 2003 which discussed, amongst
other things, a damage problem in a bathroom wherein the repairs took four days. Objection was taken to this material being used in the way that it was, and whilst I make no comment on the ethical propriety of the matter, that email and accompanying emails from Lister have been presented as evidence. Whilst Lister complains that the contents of counsel’s email are hearsay, those contents were relied upon in support of Lister’s case. Certainly the attached correspondence from Lister would be, and is, admissible as those documents would have been discoverable. No privilege is claimed.
[14] Counsel’s email also contained the following:
A meeting was held on 1 October 2003 with the tenant to discuss payment and any other issues. They then raised other matters as to leaks and it was agreed that an independent assessment would be undertaken.
Andrew Lister arranged for his brother and a building advisor to inspect. While George Lister turned up the builder did not. This led to attempts to get him there until in exasperation SKM were engaged in late December and their report was received in February as you know.
[15] The correspondence from the plaintiff, Andrew Lister, to Poiner confirmed that, at least as at 22 October 2003, the arrangement referred to in counsel’s email was in place, to the extent that Andrew Lister was “sure that my brother George has been in contact with you to arrange a visit to look at the water leak problem” – this in an email couched as “following up on items we discussed during my visit on 1
October…”).
[16] In a reply of 23 October 2003 Poiner said:
George and a builder are due tomorrow at 12 noon. The leak in the dining room has got worse in the weeks past. I am anxious to have it repaired sooner rather than later. But it is a good example for the builder to see. We have also found another couple of areas – the balcony of upstairs apartment and in the east wing hallway, near the exit. Again these are “historical” problems that have never been dealt with.
[17] On 18 November 2003, Andrew Lister sent a further email:
… I hope you have by now had a visit from the Christchurch builder who must be involved in the construction of Drifters Inn. I am awaiting his report before we move forward to solve the leaking issue once and for all.
As indicated to your client by email on 5 December, said sum is held, awaiting a visit from your clients ‘builder’, who has made several appointments to assess damage as previously mentioned to your client by email, and to date has not arrived.
Furthermore it is our intention to withhold next month’s lease payment until the matter has been ‘assessed’ and a mutually agreed strategy on how to proceed is found. There was a ‘reasonable’ agreement between your client and myself, that the damage not be remedied until his assessment was complete. We have hosted a visit by your client’s brother, who was sent by your client as his representative, Mr G Lister agrees the damage is considerable and falls outside of the sole responsibility of the ‘current’ tenant and that the matter requires independent assessment. Your client’s representative will advise that the builder did not turn up to the appointment on that day either. We understood that time was required, but now believe that three months is beyond reasonable.
We formally advise that the damage is unsightly and is affecting business. The ‘stench’ in one of the suites particularly, is rendering it impossible to use. This ‘time’ your client requires is costing us in lost income. As has been advised to your client, this is not covered by insurance as the matter is deemed ‘pre-existing’. We are currently seeking legal advice on how to proceed further, to minimise the ongoing losses we are incurring.
[19] Sometime in December 2003 Lister instructed a firm of consultants to prepare a report on the leaks. It was this report referred to earlier as being received on 10 February 2004.
[20] The consultants’ report listed a number of defects (and the remedial work necessary to repair damage) on a “room by room basis”. It contains a litany of leakage issues and the reasons for them.
Discussion
[21] Even if a reasonable discoverability test applied, the test for such (at least in latent building defect cases) in Hamlin is as per the speech of Lord Lloyd of Berwick at page 526:
… the cause of action accrues when the cracks become so bad, or the defects so obvious, that any reasonable homeowner would call in an expert. Since the defects would then be obvious to a potential buyer, or his expert, that marks the moment when the market value of the building is depreciated, and therefore the moment when the economic loss occurs.
But the plaintiff cannot postpone the start of the limitation period by shutting his eyes to the obvious.
[23] It seems to me on the basis of the evidence (of Lister) that the defects became so obvious that the cause of action accrued when Lister, through Andrew Lister, saw fit to call in a consultant for a report. At the very latest, that was in December 2003.
[24] I am not attracted to either of the two arguments proffered by Lister on the issue.
[25] First, that the actual date of the accrual of the claim is much later than even the receipt of the consultants’ report, and that is because the defects now claimed (and upon which the claim for damages is based), except for one or two minor exceptions, are not for the matters raised in the consultants’ report. Rather, these are matters which have come to the knowledge of Lister during prolonged investigations to sort out what was causing the leaking problems. What is claimed in paragraph 22 of the amended statement of claim are twenty-eight specific defects which are pleaded as “a non-exhaustive list and are subject to such other matters as may be discovered with invasive and other testing”.
[26] Eighteen of the twenty-eight alleged defects relate to damage caused by inappropriate ingress of water and causes thereof. Thus the defects claimed are similar to the defects identified by Poiner in October 2003, and although the losses now claimed do not arise from the matters set out in the consultants’ report, the defects are of the same genre that did.
[27] The second argument is that the commissioning of the consultants’ report was motivated not by the leakage problems but by the view of Lister that Poiner was using the leakage issues as a reason not to pay rental. This had been part of an ongoing dispute between Lister and Poiner over the term of their relationship. Whilst that may have been part of the motivation, it is clear from the exchanges of correspondence referred to above that there were very real issues of damage caused
by water which needed to be investigated and which a reasonable owner of the buildings would have investigated, as Lister did.
Decision
[28] On that analysis of the facts, the action against Ennor has clearly not been brought within the time limit prescribed by s 4(1) Limitation Act 1950, and thus I am satisfied that the cause of action against him cannot succeed.
[29] There is judgment for Ennor against Lister.
Costs
[30] Both counsel agree costs should be on a schedule 2B basis. I order costs to
Ennor on a schedule 2B basis, together with disbursements as set by the Registrar.
Associate Judge Doherty
Solicitors:
BentonLaw, Auckland
(Counsel: Advocacy Chambers, Auckland)
Cavell Leitch Pringle & Boyle, Christchurch
Cuningham Taylor, Christchurch
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