Manhire v Tuatara Structures Limited - [2024] NZHC 930

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2022-409-501

[2024] NZHC 930

UNDER the Building Act 2004

IN THE MATTER

of a claim for defective building work

BETWEEN

DEBORAH LEE MANHIRE and ALAN MANHIRE

Plaintiffs

AND

TUATARA STRUCTURES LIMITED

Defendant

Hearing: 19 April 2024

Appearances:

K W Clay and K K Montu for Plaintiffs J I Taylor and J B Fletcher for Defendant

Judgment:

26 April 2024

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 26 April 2024 at 2.45 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:

MANHIRE v TUATARA STRUCTURES LIMITED [2024] NZHC 930 [26 April 2024]

[1] The plaintiffs (the Manhires) entered a written contract with the defendant (Tuatara) for Tuatara to plan and construct an exterior shell and midfloor of a two- storey building on their property at Mayfield. The terms of the contract excluded specific works in respect to the construction of the building. Tuatara commenced construction, but before completion of the works the Council issued a stop work notice. Code of compliance has not been achieved.

[2] The Manhires allege they requested Tuatara to rectify the defective works but that it failed and/or refused to do so. In the statement of claim they seek damages of
$238,219 to cure the defective works as well as an amount for loss of rent for the property and general damages. However, the Manhires have since obtained expert evidence that the cost of the repairs is $861,242. Tuatara denies liability and says defects in the works do not exist or are very minor or that it is not responsible for them. It seeks to recover a balance it says is owing for the works of $25,356 excluding interest.

[3] The Manhires have obtained litigation funding to bring their claim from Claims Resolution Service (2015) Ltd. The Manhires’ counsel advised the identity and location of the funder and that it is amenable to the jurisdiction of the New Zealand courts.1 Tuatara has also been provided with a redacted copy of the litigation funding agreement between the Manhires and the funder.

[4]Tuatara now applies for orders that the Manhires:

(a)provide security for costs in the proceeding; and

(b)disclose the full terms of the litigation funding agreement.

[5]Tuatara is seeking an order that the Manhires pay security in the sum of

$72,102 or such other sum as the Court considers sufficient.

[6] As far as the funding agreement is concerned, Tuatara says the redacted agreement that has been provided is insufficient and the Court should require full

1 Waterhouse v Contractors Bonding Ltd [2013] NZSC 89, [2014] 1 NZLR 91 at [76].

disclosure to enable an assessment to be made as to whether the funding is champertous, an impermissible assignment of a cause of action or otherwise an abuse of process.

[7]The issues that arise are:

(a)Has Tuatara satisfied the Court of a threshold requirement for the ordering of security for costs…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NZHC 930
Decision Date: 26 April 2024

CaseChat Overview and Summary

The plaintiffs, Deborah and Alan Manhire, engaged Tuatara Structures Limited to construct an exterior shell and midfloor of a two-storey building on their property in Mayfield. The Manhires allege that Tuatara failed to complete the works to the required standard and are seeking damages to rectify the defects and for other losses. Tuatara disputes liability and denies the defects exist or are significant. It also claims the Manhires owe it money for work done. The Manhires have obtained litigation funding to bring their claim. Tuatara applies for orders that the Manhires provide security for costs and disclose the full terms of the litigation funding agreement. The court had to decide whether there was reason to believe the Manhires would be unable to pay Tuatara’s costs if they were unsuccessful, how to exercise its discretion, the amount of security, whether to stay the proceeding until security was provided, and whether to order disclosure of the funding agreement.

The court found there was reason to believe the Manhires would be unable to pay costs if unsuccessful. The Manhires had faced financial difficulties, had no savings or investments, and their only substantial asset was their property which may be worth less than their mortgage. However, the court found that the merits of the Manhires’ claim, their impecuniosity due to Tuatara’s conduct, and Tuatara’s delay in applying for security weighed against ordering security. The court declined Tuatara’s application for security for costs. The court also declined Tuatara’s application for disclosure of the full funding agreement. There was no application before the court to which the funding agreement was relevant. The court dismissed Tuatara’s applications and ordered the Manhires to pay Tuatara’s costs on a 2B basis.

The court dismissed Tuatara’s applications for security for costs and disclosure of the full funding agreement. The Manhires were ordered to pay Tuatara’s costs on a 2B basis. The case was directed to proceed to trial.

Orders