Masterbuild Services Ltd v Toorak Properties Ltd HC Auckland CIV 2009-404-2102 - [2010] NZHC 1314

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2009-404-002102

BETWEEN MASTERBUILD SERVICES LTD & ORS Plaintiffs

ANDTOORAK PROPERTIES LTD & ORS Defendants

Hearing: 2 June 2010

Appearances: H Twomey and K Harvey for Fourth Third Party
M C Black for the First and Second Defendants

Judgment: 21 July 2010 at 2:00 pm

JUDGMENT OF ASSOCIATE JUDGE BELL

This judgment was delivered by me on 21 July 2010 at 5:00 pm pursuant to Rule 11.5 of the High Court Rules. Registrar/Deputy Registrar

Date: ………………….

Solicitors/Counsel:
Shieff Angland, PO Box 2180, Shortland Street, Auckland
Macky Roberton, PO Box 37622, Parnell, Auckland

M C Black, PO Box 1984, Shortland Street, Auckland

MASTERBUILD SERVICES LTD & ORS V TOORAK PROPERTIES LTD & ORS HC AK CIV-2009-404-
002102 21 July 2010

[1] QBE Insurance (International) Ltd, the fourth third party, has applied to set aside the third party proceeding against it by the first and second defendants, and has also applied for summary judgment against the first and second defendants.

[2] This leaky building case is about seven residential premises at 39 Garnet Road, Westmere, Auckland. The first defendant, Toorak Properties Ltd, is the developer. Murphy William McDade, the second defendant, is a director of the first defendant. The Auckland City Council is the third defendant. Masterbuild Services Ltd, the first plaintiff, is a subsidiary of the Registered Master Builders Federation. The second to eighth plaintiffs are owners of the residential properties, lots 1 to 7, at
39 Garnet Road. The first and second defendants have also joined as third parties the director of a water proofing-contractor which has gone into liquidation, a director of a building company that has since been struck off and a plaster contractor.

[3] The plaintiffs’ statement of claim says that Toorak Properties Ltd was a member of the Registered Master Builders Federation and bound by membership rules of the Federation. The membership rules provide for registered master builders to give a masterbuild guarantee to their customers. A masterbuild guarantee covers non-completion of building work, defects in materials and defects in workmanship. Customers of a registered master builder who hold a guarantee, can claim under the guarantee where there are defects in workmanship or materials. The claims are first referred to the registered master builder who carried out the work, but if he or she fails to resolve the claim satisfactorily within 90 days, then the first plaintiff investigates the claim. If the claim is upheld, the first plaintiff instructs the registered master builder to undertake remedial work. If the registered master builder does not carry out that work, the first plaintiff appoints another registered master builder to carry out the work at no cost to the customer.

[4] The plaintiffs’ case is that as a registered master builder, the first defendant applied for, and the first plaintiff provided, guarantees for its construction work on the development at 39 Garnet Road. Guarantees were given on 5 May 2000. Eight units were built under a building consent between September…

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

AGLC: Masterbuild Services Ltd v Toorak Properties Ltd HC Auckland CIV 2009-404-2102 [2010] NZHC 1314
Case: [2010] NZHC 1314
Decision Date: 21 July 2010

CaseChat Overview and Summary

Masterbuild Services Ltd and other plaintiffs brought proceedings against Toorak Properties Ltd and others in relation to residential premises at 39 Garnet Road, Westmere, Auckland. The plaintiffs' case was that Toorak, as a registered master builder, was bound by membership rules of the Registered Master Builders Federation, which included a masterbuild guarantee to cover defects in workmanship and materials. The plaintiffs alleged that Toorak failed to carry out remedial work after guarantees were given, and that the first plaintiff had to engage another contractor to do so at a cost of at least $882,814.39. Toorak and others issued a third party notice against QBE Insurance International Ltd, relying on insurance policies. QBE applied to set aside the third party proceeding against it and for summary judgment against Toorak and others. QBE argued that there was no cover under the contracts works and statutory liability policies. The court held that QBE was correct. The court accepted that construction work began before the start of the policy period, and that the total value of the contract works exceeded the sum insured. Further, the court held that the claim for water ingress did not fall within the policy wording for sudden and accidental physical loss or damage. In relation to the statutory liability policy, the court held that the policy was a claims notified policy and that the claim was notified out of time. Accordingly, the court struck out the claims under the contracts works and statutory liability policies, but not the claims under the general liability policy. QBE's application for summary judgment was struck out. QBE was awarded costs and disbursements.

Orders