Minister of Education v Argon Construction Limited HC Auckland CIV 2008-404-4551

[2009] NZHC 2596

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2008-404-004551

BETWEEN  MINISTER OF EDUCATION Plaintiff

ANDARGON CONSTRUCTION LIMITED First Defendant

ANDAUCKLAND CITY COUNCIL Second Defendant

ANDMIKE BARNS AND ASSOCIATES LIMITED

Third Defendant

ANDMAURICE HARLEY Fourth Defendant

ANDPAUL DAVID STYLES First Third Party

ANDSTUDORP LIMITED (FORMERLY JAMES HARDIE BUILDING PROJECTS LIMITED)

Second Third Party

ANDDAVID BRUCE GOODLEY TRADING AS CHALLENGE ROOFING

Third Third Party

Hearing:         4 November 2009

Counsel:         Brian Dickey and Lana Hamilton for Plaintiff, to oppose

Chris Booth and  Julian de Lange for First Defendant, in support Philippa Fee and Bradley Alcorn for Fourth Defendant, in support Elizabeth Turner for Second Third Party

Andrew Steele for M F Astley Limited
(party in associated litigation)

Judgment:      17 December 2009 at 3:00pm

MINISTER OF EDUCATION V ARGON HC AK CIV-2008-404-004551  17 December 2009

RESERVED JUDGMENT OF HUGH WILLIAMS J.

This judgment was delivered by The Hon. Justice Hugh Williams on

17 December 2009 at 3:00pm

pursuant to Rule 11.5 of the High Court Rules

……………………………………………..

Registrar/Deputy Registrar

A.  The applications brought by the First and Fourth Defendants to strike out the claim are dismissed on the terms appearing in this judgment.

B.  Costs are to be dealt with in accordance with para [70]

TABLE OF CONTENTS

Paragraph

Introduction  [1] Facts           [7] Affidavits  [21] Submissions  [23] Discussion and Decision  [47] Result       [69]

Introduction

[1]      Jurisprudentially, it is odd that over recent decades much of the development of the law of contract and tort has occurred in applications to strike pleadings out on the ground that they disclose no reasonably arguable cause of action when such applications:

a)        proceed on the assumption that the pleaded facts are provable when that assumption is necessarily fallacious;

b)cannot succeed if the pleading attacked is capable of being amended to plead a reasonably arguable cause of action;   and

c)        often  do  not  result  in  the  proceeding  being  disposed  of  or  the proceeding being struck out, or at least not fully.

[2]      Not too much should be made of that observation – Donoghue v Stevenson [1932] AC 562 was brought under the Scots equivalent of striking-out – but it nonetheless remains the case that, despite judicial criticism of the procedure (see McGechan on the 1986 Rules para HR186.02(3) (4) p1-987-988), the striking-out procedure remains arguably the most over-used of the interlocutory applications provided for in the High Court Rules.

[3]      Of  particular  relevance  to  the  striking-out  applications  with  which  this judgment deals, while in Marshall Futures Ltd v Marshall [1992] 1 NZLR 316, 323-

324,  Tipping  J  said,  of  the  right  to  amend,  that  the  difference  was  between  a “pleading which is a total write-off and one which is deficient but is capable of effective repair”, the authors of the current issue of McGechan observe (para HR15.1.08(1) p1-1705):

this makes an application to strike out a ‘repairable’ pleading somewhat pointless.

[4]      The principles are not in doubt.  Of the many instances available, perhaps the most often cited is that in Attorney-General v Prince & Gardner [1998] 1 NZLR

262, 267:

A striking-out application proceeds on the assumption that the facts pleaded in the statement of claim are true. That is so even although they are not or may not be admitted. It is well settled that before the Court may strike out proceedings the causes of action must be so clearly untenable that they cannot possibly succeed (R Lucas & Son (Nelson Mail) Ltd v O'Brien [1978]

2 NZLR 289 at pp 294 – 295; Takaro Properties Ltd (in receivership) v

Rowling [1978] 2 NZLR 314 at pp 316 – 317); the jurisdiction is one to be exercised sparingly, and only in a clear case where the Court is satisfied it has the requisite material (Gartside v Sheffield, Young & Ellis [1983] NZLR

37  at  p  45;  Electricity  Corporation  Ltd  v  Geotherm  Energy  Ltd  [1992]

2 NZLR 641); but the fact that applications to strike out raise difficult questions of law, and require extensive argument does not exclude jurisdiction (Gartside v Sheffield, Young & Ellis).

...    Where  the  hypothetical  facts  cover  a  range  of  factual  possibilities, deciding wide public policy questions may lead to an unfocused approach because the inquiry is then set against too broad a factual canvas. And empirical evidence and other expert evidence properly tested may help the Court in making the right public policy choices.

[5]      As put more shortly in Twin Bright Shipping Co S A v Tauwhareparae Farms

Ltd (HC Gisborne Civ-2003-416-1, 26 June 2006, Williams J, para [5])

... what striking-out applicants must show is that those claiming on them will undoubtedly lose if the case goes to trial.  A weak case or one imperfectly pleaded is not enough;  they must show the claimant’s loss is inevitable.

[6]      With all the infelicities of generalization, this is a striking-out application where the first and fourth defendants, Argon Construction Limited and Mr Harley, say the claims against them by the plaintiff, the Minister of Education, are statute- barred and cannot succeed.  The Minister/Ministry denies that but says that, if the claims are, at least in part, statute-barred, the Court should tell the parties what parts of the claim survive and in what form.

Facts

[7]      This proceeding began when the Ministry’s statement of claim was filed on

17 July 2008.

[8]      It concerns the construction of the Te Kura Kaupapa Mäori Maungawhau

School in Mt Albert Auckland.

[9]      An amended statement of claim filed on 11 March   2009 pleads that on

20 November 1996 the third defendant, Mike Barnes and Associates Limited, on behalf of the Ministry, applied to the second defendant, Auckland City (since struck out), for a building consent to construct the school, that application being approved on 13 February 1997.

[10]     The  amended  claim  then  pleads  Argon  was  appointed  as  builder  and constructed the school “between about August 1997 and December 1998” with Mike Barnes and Associates acting as architect.

[11]     The amended claim asserts that “between about August 1997 and 17 July

1998” Auckland City inspected the works and on the latter date issued a Compliance

Certificate for the new school.

[12]     The amended claim then pleads that “some time between about 21 August

1998 and January 1999” Mike Barnes and Associates issued a Certificate of Practical

Completion.

[13]     The amended claim also pleads Mr Harley was appointed the clerk of works for the project but does not say when or for how long.   His role is described as ensuring that the “quality and workmanship of the works [was] in accordance with the  design  specifications  and  recognised  quality  standards  including  the  New Zealand Building Code”.

[14]     The amended claim then goes on to plead that “in or about April 2008” the school was found to be leaking, an expert was commissioned and on 14 May 2008 a large number of defects are pleaded to have been discovered.  The result is that the school is not weathertight, has suffered damage from moisture and poses health and safety risks for occupants.

[15]     The amended claims against Argon are in negligence and breach of contract. The former asserts Argon owed the Ministry a duty of care to ensure that “prior to Practical Completion being issued any defects ... were corrected with reasonable skill and care in accordance with the Building Act 1991 and the New Zealand Building Code and that any sub-contractors exercise such reasonable skill and care”.   In contract, the amended claim asserts that implied terms of the 1997 construction contract  were  that  Argon  would  “exercise  reasonable  skill  and  care  in  the performance of the contract and the finished works would not pose health and safety risks to the users”.

[16]     The  sole cause of  action  in  the  amended  claim  against  Mr  Harley is  in negligence.   The Ministry “repeats the foregoing allegations” - without specifying which – and avers that “at all material times” – again without specifying which – Mr Harley owed the Ministry a duty of care to “ensure that the quality of materials and workmanship” would result in the building being built in accordance with the design specifications and the New Zealand Building Code.  As part of Mr Harley’s duty of care, he is pleaded to have been required to ensure the school was “built with reasonable  skill  and  care”  and  “prior  to  Practical  Completion  being  issued  any defects in the works were corrected with reasonable skill and care” in accordance with  the  Building  Act  1991  and  the  Building  Code,  provisions  of  which  are specified.  It is pleaded Mr Harley knew the school was to be used as such and knew his failure to ensure the quality of materials or workmanship could create health and safety risks.  The Ministry relied on Mr Harley to ensure the work met recognised quality standards under the Building Code and knew the Minister would have to act to address defects in the buildings.

[17]     Breaches of the duty of care in the amended claim include failure to ensure that materials and workmanship were free of defects or were corrected or that the school met recognised quality standards and complied with the Code and the Act. Mr Harley is also pleaded to have failed to ensure the school was built in accordance with specifications, all of which are unparticularized as to date.

[18]     The amount claimed against each defendant is $2,296,965.71 plus rental or purchase costs of temporary classrooms whilst remediation is in progress.

[19]     Argon’s defence is that both claims against it are outside the limitation period of six years for contract and tort claims prescribed by s 4(1)(a) of the Limitation Act

1950 and that, in addition, the claims are time-barred by s 393(2) of the Building Act

2004 as having been brought more than 10  years after the dates of the acts or omissions on which the proceeding is based.

[20]     Mr Harley raises the same affirmative defences.

Affidavits

[21]     The applicants filed affidavits generally describing the construction of the school and exhibiting relevant documents.   The plaintiff objected, though filiing – not on oath – a bundle of 41 documents which it claimed were relevant.

[22]     The place of affidavits in striking-out applications is well-settled.  Generally they are inadmissible unless consistent with the pleading or are evidence of indisputable fact.  No effort at resolution of disputed fact is attempted and where, as here, documents capable of more than one construction were apparently created around the critical time – 17 July 1998 – caution is to be exercised in their interpretation (Attorney-General v McVeagh [1995] 1 NZLR 558, 566). To the extent they will be considered at all, the affidavits filed in relation to these applications will be dealt with on that basis.

Submissions

[23]     Mr Booth, leading counsel for Argon, first dealt with the facts saying Argon handed the school’s keys to the trustees on 3 June 1998, notified the project manager the following day that the works had been completed and asked for a Certificate of Practical Completion.   The school held its official opening ceremony on 6 June

1998.   The final Code Compliance Certificate for the building was issued by Auckland City on 17 July 1998.   He asserted that Argon achieved practical completion on 21 August 1998 and on the same day the architect issued an unsigned Practical Completion Certificate.  Argon then attended to minor maintenance issues up until December 1998.

[24] He submitted commencement of the claim was plainly outside the six year limitation period provided by s 4(1)(a) of the Limitation Act 1950 and accordingly attention should be focused on s 393(2) of the Building Act 2004 which debars “civil proceedings relating to building work” after “10 years or more from the date of the act or omission on which the proceedings are based”.

[25]     He – and other counsel – laid particular stress on the decision of the Court of Appeal in Johnson v Watson [2003] 1 NZLR 626. There Mr Watson built a house for the Johnsons up until December 1990 and then returned over the period until

1998 to undertake prevention work on leaks.   In October 1999 a report stated Mr Watson’s original work was not up to standard and in March 2001 the plaintiffs commenced a claim concerning the original work.   Mr Watson was successful in obtaining summary judgment on the basis that the claims were barred by s 91(2) of the Building Act 1991 – identical in material terms to s 393 of the 2004 Act – but so far as is material to these applications, the appeal was dismissed.  Tipping J, for the Court, held (at 629):

[7] Mr Kohler, for the Johnsons, accepted that unless s 28 of the Limitation Act 1950 (which deals, amongst other things, with concealment of a cause of action by fraud) prevails over s 91(2), his clients’ claim based on the original work was barred by s 91(2). The acts or omissions claimed to amount to defects in the original work all took place prior to 16 December 1990. The proceedings were commenced more than ten years later in March 2001. Hence, unless s 28 applies, s 91(2) clearly bars this head of the Johnsons’ claim, whether that claim be framed in contract or in tort.

[8] We cannot, however, accept Mr Kohler’s submission that if there was concealment by fraud, as is alleged, s 28 operates so as to extend the ten- year period prescribed by s 91(2). Section 28 is concerned with when a cause of action accrues. If concealed by fraud, its accrual is postponed. Section

91(2) is by contrast concerned with the act or omission on which the proceedings are based. An act or omission occurs on a particular day. No

question of extension of time can logically arise when the starting point is

measured from the day of the occurrence of an act or omission. Furthermore, it is clear from the introductory words of s 91(2) that the provisions of the

Limitation  Act  do  not  apply  to  the  subs  (2)  time  limit  of  ten  years.

Subsection (2) is in this respect a statutory bar which is self-contained, both as to the commencement of the period allowed and its duration. In short, s

91(2) means exactly what it says. A plaintiff cannot in any circumstances sue

more than ten years after the act or omission on which the proceedings are based, if the case involves, as this one clearly does, building work associated with the construction of a building.

[26]     Mr Booth said Argon accepted it may have remedied minor omissions and defects  after  the  school  opened  but  the  giving  of  a  Certificate  of  Practical Completion on 17 July 1998 showed the Ministry was satisfied construction work under the building consent was complete by that date.  That triggered the Minister’s obligation to advise Auckland City of completion and Auckland City’s obligation then to issue a Code Compliance Certificate (Building Act 1991 s 43).   That certificate, as pleaded, was issued that day.   Thus it could not be the case, as the Ministry’s notice of opposition said, that the Certificate of Practical Completion was not issued by the architects until some time after 23 September 1998.  He relied on a letter  from  Auckland  City  of  17  June  1998  saying  final  inspection  had  been completed and a Code Compliance Certificate would be issued on payment of the inspection costs though, on 22 August 1998, the Project Managers wrote to the Ministry enclosing  a  progress  claim  from  Argon  “for  work  to  completion  with Practical Completion granted 21 August 1998” with retentions being held until “completion of the Defects Liability period on 21 November 1998”.

[27]     Mr Booth drew attention to the five month period pleaded in the amended claim for the issue of the Certificate of Practical Completion.   The only such certificate which he said had been discovered in the proceeding was an unsigned and undated certificate issued by the architect which stated that Argon “completed all contract works as described in the contract documentation” on 21 August 1998.

[28]     Mr  Booth  directed  attention  to  this  contract  being  under  the  general conditions of NZS3190:1987, cl 9.4.1 of which defined practical completion as the stage when the works were “completed except for minor omissions and minor defects” and the maintenance period began.

[29]     Based on those submissions and Johnson, Mr Booth submitted that any cause of action against Argon in relation to any work up to the issue of the Certificate of Code Compliance on 17 July 2008 was barred by s 393.  He submitted any claim for remedial or maintenance work carried out after that date was a separate and distinct cause of action for faulty original workmanship and was also statute-barred.

[30]     Mr  Harley’s  leading  counsel,  Mrs  Fee,  submitted  that  once  the  school officially opened on 6 June 1998 the only work remaining was the issue of the Code of Compliance Certificate by Auckland City, the Practical Completion Certificate by the architect and maintenance.

[31]     She referred to authority to the effect that s 393 was absolute in its terms and was passed to create finality for parties involved in building work even though meritorious claims might thereby be statute-barred (Dustin v Weathertight Homes Resolution Service HC AK Civ-2005-404-276, 25 May 2006 Courtney J,  Davidson v Banks H C AK Civ-2006-404-6150, 23 March 2009, Associate Judge Faire).

[32]     The essence of the claim against Mr Harley, as pleaded, she submitted, was that he could at any time prior to the issue of the Practical Completion Certificate, ensure the correction of the list of defects (even though, as the particulars of claim show, that almost required the school to be re-built).   She submitted that on the Ministry’s interpretation of s 393, the duty to correct defects would theoretically last indefinitely, notwithstanding the 10 year period in s 393.

[33]     She  relied  on  the  decision  of  this  Court  in  Rowlands  v  Collow  [1992]

1 NZLR 178, as to the duties of clerks of works. In that case it was held the clerk of works was “responsible for ensuring that the construction would proceed in accordance with the approved plans” but, when the judgment is read, it is plain that description was specific to the facts of the case and, in any event, it must be a matter for trial – if this case goes to trial – for the plaintiff to define Mr Harley’s duties and, of course, to prove breach. For the present, the Ministry’s pleading of Mr Harley’s role must be accepted.

[34]     Mrs Fee analysed the pleading and submitted some of the claimed defects related to construction prior to occupation while the remainder were only those which came to notice after that date.  They were not, she submitted, latent defects causing undiscoverable damage to the property but patent defects.   Those which were or should have been discoverable were rectified during the maintenance period.

[35]     After she, too, referred to Johnson, she submitted the Ministry’s claim was that the rectification work required was not remedial but a continuation of the construction work or was, alternatively, preventative.   The former argument, she submitted, was untenable.   The latter was similarly untenable because the defects were constructed before handover.

[36]     She  submitted  the  work  done  after  handover  was  not  done  to  prevent additional damage applying from the pleaded defects.

[37]     She submitted the Practical Completion Certificate may have had contractual consequences between the Ministry, Argon and the architect but did not mean the Ministry lost the ability to sue Argon for repairs discovered after it was issued (Body Corporate  189855  v  North  Shore  City  Council  HC  AK  CIV-2005-404-005561

25 July  2008  Venning  J).    In  any  event,  the  certificate  was  irrelevant  to  the Ministry’s claim on Mr Harley, particularly as far as the suggested obligation to correct defects installed before the certificate was issued.

[38]     She  also  submitted  that the  Ministry’s  proposed  amendments  might  well infringe r 7.77.

[39]     For the Ministry, Mr Dickey, leading counsel, first submitted the affidavit evidence filed on behalf of the applicants was inappropriate in present circumstances and might even have been misleading.  He submitted the Ministry should not have to refer to documentation because the claim was “pleaded over the permissible period that is within the ten year long stop period”.

[40]     He accepted additional particulars might have been helpful but said neither Argon nor Mr Harley had sought such.   Accordingly the applications were to be determined on the claim as it stood.

[41]     He submitted that Johnson stood for the proposition that the builder might be responsible either in contract or tort “each time he returns to effect prevention work” and that:

Even if the original work is found to be causative of the total damage this does not mean that the prevention work could not be an additional and concurrent cause of part of the damage.

[42]   He submitted any amendment to include a claim based on remedial or maintenance work was not a separate and distinct cause of action – and was not statute barred – as:

a)       The evidence supported that the work carried out by the first and fourth  defendants  with  regard  to  repairing  the  serious weathertightness issues present as at 18 July 1998 were a continuation of the original building work.

b)       No practical  completion certificate had ever been issued as at 3 June

1998 when the defendants claim their work was complete.   The Architect advised on 26 July 1998 that worrisome leaks were in fact preventing the first defendant from reaching Practical Completion.

[43]     Mr Dickey submitted that no claim could be struck out on limitation grounds on the basis that no cause of action was disclosed.  Striking out could only occur on the basis that the claim was frivolous, vexatious or an abuse of process.  In support he cited Murray v Morel & Co Ltd [2007] 3 NZLR 721, 736, para [33] but, in that passage of his judgment, Tipping J merely indicates that striking out on limitation grounds is more appropriately brought under r 15.1(1)(b)-(d) rather than r 15.1(1)(a), not that it was debarred.

[44]     Responding  to  Argon’s  application,  Mr  Dickey  detailed  the  evidence available to the Ministry and urged the Court to adopt some further particulars which he set out in his submissions.  He adopted a similar stance in relation to Mr Harley’s application.

[45]     As  a consequence,  he submitted  that  the claims  against  Argon  were not barred in tort or contract because “major weathertightness issues [were] discussed in correspondence from 17 July 1998 throughout much of the remainder of 1988”. Similarly, the claims against Mr Harley were not barred under s 393 having regard to the facts which he detailed of Mr Harley’s involvement after 17 July 1998.  He also

submitted the claim against Argon in contract was not barred by the Limitation Act because this was a latent building defect case (Mt Albert Borough v Johnson [1979]

2 NZLR 234, Invercargill City Council v Hamlin [1996] 1 NZLR 513) and drew attention to cases discussing – and rejecting – the doctrine of reasonable discoverability in limitation matters as summarised by Beck “Limitation in the Supreme Court” [2007] NZLJ 213.

[46]     All of that notwithstanding, Mr Dickey said that the Ministry conceded that

“acts that occurred prior to 17 July 2008 are caught by this limitation defence”.

Discussion and decision

[47]     Fraud  and  concealment  by  fraud  are  not  alleged  in  this  case.    Though Mr Dickey said it was a latent building defect case – denied by Mrs Fee – and Mr Dickey mentioned the doctrine of reasonable discoverability, those issues were not argued extensively and in any case the claim presently does not appear to be pleaded on those bases.   Accordingly, the watershed provision governing these applications is s 393 which reads:

Limitation defences

(1)The provisions of the Limitation Act 1950 apply to civil proceedings against any person if those proceedings arise from—

(a)building work associated with the design, construction, alteration, demolition, or removal of any building; or

(b)the performance of a function under this Act or a previous enactment relating to the construction, alteration, demolition, or removal of the building.

(2)       However, civil proceedings relating to building work may not be brought against a person after 10 years or more from the date of the act or omission on which the proceedings are based.

(3)For the purposes of subsection (2), the date of the act or omission is,—

(a)in the case of civil proceedings that are brought against a territorial authority, a building consent authority, a regional authority, or the chief executive in relation to the issue of a building consent or a code compliance certificate under Part

2 or a determination under Part 3, the date of issue of the

consent, certificate, or determination, as the case may be;

and

(b)in the case of civil proceedings that are brought against a person in relation to the issue of an energy work certificate, the date of the issue of the certificate.

[48]     Section 393(1) has no application in the present case, other, perhaps, than by analogy.   Similarly, the descriptions or definitions in subs (3) are inapplicable to these applications.

[49]     The first observation to be made is that these applications are premature.  As the passages cited earlier in this judgment from the amended claim amply demonstrate, the claim is currently not appropriately particularised in terms of the rules.     These  applications  should  have  been  preceded  by  notices  for  further particulars  under  r  5.21  and,  if  need  be, by defended  interlocutory applications designed to crystallise – especially in terms of dates – what the Ministry claims and what the defendants face.   That is particularly the case where, as here, by any measure the commencement of the claim was at the outer margins of the limitation period.  Before hearing these applications, the defendants and the Court were entitled to have pleadings particularized in accordance with the Rules to know what the defendants faced and the Court had to deal with.

[50]     Secondly,  even  though  Mr  Dickey put  forward  certain  suggestions  as  to particularised amendments to the claim, applications for striking-out are no place for the Court to draft the parties’ pleadings for them.  Such an exercise – if undertaken by the Court at all – are for determination on defended interlocutory applications for further particulars.

[51]  Thus, these applications require to be determined in their present unparticularised state, not least because Mr Booth and Mrs Fee did not offer detailed comment on the amendments contained in Mr Dickey’s submissions.

[52]     As noted, these proceedings were filed on 17 July 2008.  Since law takes no account of fractions of a day ((Wellington City Council v Stains (1891) 10 NZLR

329, 335, 337 “Time”, Laws NZ (p 20, para 54), it follows that the claim is deemed to have commenced at midnight on 16-17 July 2008.

[53]     The limitation period within which the actions or omissions of Argon and Mr Harley might conceivably be the subject of this claim is therefore determined by s 393(2).  Though not the subject of submissions from counsel, that section creates a limitation period of 10 years “from the date of the act or omission on which the proceedings are based”.

[54]     In  circumstances  such  as these where the date of  commencement of  the proceedings is critical, that necessitates a consideration of the precise date in 1998 of the “act or omission on which the proceedings are based”.

[55]     The Acts Interpretation Act 1924 s 25(b) read:

25.(b)  If in any Act any period of time dating from a given day, act, or event is prescribed or allowed for any purpose, the time shall, unless a contrary intention appears, be reckoned as exclusive of that day or of the day of that act or event:”

and s 35(2) of the Interpretation Act 1999 is materially similar.  It reads:

(2)  A period of time described as beginning from or after a specified day, act, or event does not include that day or the day of the act or event.

[56]     Similarly  again,  in  the  section  “Time”,  Laws  NZ  (p  20,  para  28),  the following appears:

28.      Exclusion of initial day where period prescribed by statute:

Where, for any purpose, any Act prescribes or allows a period of time dating from a particular day, act, or event, the time is to be calculated as exclusive of that day or of the day of that act or event, unless a contrary intention appears.

[57]     Limitation having been raised as a defence by Argon and Mr Harley (Matai Industries  Ltd  v Jensen  [1989] 1 NZLR 525, 531-532), the next question is to ascertain the date which is “10 years or more from the date of the act or omission on which the proceedings are based”. The proceeding is deemed to have been commenced at midnight on 16-17 July 2008. Deducting 10 years would take the commencement of the limitation period back to midnight on 16-17 July 1998 but, since s 393(2) uses the word “from”, ss 25(b) and 35(2) require that date – that is to say, 17 July 1998 - to be excluded. Therefore, to be within time, these proceedings

can only assert liability on the part of the first and fourth defendants for acts and omissions from midnight on the night of 17-18 July 1998.

[58]     The Ministry faces a further restriction as to the basis for the claims against Argon and  Mr  Harley,  which  is  that  their  proceedings  must  relate to  “building work”.

[59]     That phrase is defined in s 7 as:

7.        “ building work” - ...

...

(b)      includes sitework;  and

(c)       includes design work (relating to building work) that is design work of a kind declared by the Governor-General by Order in Council to be restricted building work for the purposes of this Act;  and

(d)in Part 4, and the definition in this section of supervise, also includes design work (relating to building work) of a kind declared by the Governor-General by Order in Council to be building work for the purposes of Part 4.

[60]     To sum all that up, Argon and Mr Harley can only be liable, if at all, in contract or tort, to the Ministry for “building work’ carried out by them in relation to the school from midnight on 17-18 July 1998.

[61]     What is crucial is that, to be within time, the Ministry will need to prove, first, the factual situation, including what are now known to be defects, as they existed  at  midnight  on  17-18  July 1998.    Actions  or  omissions  of  and  by  the defendants and others prior to that date can be given in evidence as part of the proof of the factual situation existing at midnight on 17-18 July 1998, but cannot be sued upon.   The Certificate of Practical Completion given on 17 July 1998 is not determinative of the commencement of the limitation period but merely evidence as to the factual situation that then existed.   Thus Argon, Mr Harley and the other defendants  are,  subject  to  what  follows,  statutorily  freed  from  liability  for  any actions or omissions undertaken by them prior to that point in time.

[62]     The second matter the Ministry will need to prove is the state of knowledge of Argon, Mr Harley and the other defending parties at and after midnight on 17-18

July 1998 concerning both the state of the school and, as the point about to be

discussed shows, their obligations and their knowledge of them on and after that point of time.

[63]     That leads on to the third point which is that in order to be successful in this claim – or, more pertinently, to defeat the applications to strike it out – the Ministry must plead and prove actions, omissions or an ongoing obligation in contract or in tort on the part of Argon or Mr Harley.   Given the school and the certificate of practical completion had been handed over before the limitation period began to run, that may require the Ministry to plead and prove an obligation, unsatisfied in the circumstances, to correct and remediate defects.

[64]     It may be as well to make the point that in proving the obligations of Argon or Mr Harley in contract or in tort on and from midnight on 17-18 July 1998, the Ministry may be unable to rely on hindsight unless they are able to demonstrate that correction or repair of the defects discovered many years later can be proved to be part of the known obligations of Argon and Mr Harley on and from the critical time. The duty of care and the contractual obligation would seem likely to encompass only what was known during their currency.

[65]     Against that definition of possible liability, does the amended claim assert that against Argon and Mr Harley or, if it does not, is it incapable of amendment so that it does?

[66]     As far as Argon is concerned, the pleading that it constructed the school between August 1997 and December 1998 may be pleaded as factual background but can only give rise to potential liability on Argon’s part for acts and omissions after midnight on 17-18 July 1998.  The allegation that Argon owed a duty of care to the Ministry to  correct  defects  in  the  school  prior  to  the  pleaded  date  of  practical completion cannot stand.   That would seem to apply similarly to the breach of contract claim against Argon, though, in the current state of pleading of the amended claim, it is difficult to be sure.  However, as mentioned, actions and omissions by Argon together with  any obligation  arising or  continuing after midnight on 17-

18 July 1998 would seem to be capable of giving rise to a claim.

[67]     As against Mr Harley, while the current description of his role as Clerk of Works may remain apposite, the phrase “all material times” needs further definition and, as with Argon, the pleading that Mr Harley owed the Ministry a duty of care to correct any defects prior to practical completion may or may not be within time depending on the date on which that certificate was issued.   Currently, it seems possible that claim may be within time.  That observation is subject to the comments already made as to the commencement of the limitation period and proof of state of knowledge, the factual position and any new or continued obligation after midnight on 17-18 July 1998.

[68]     That is as far as the Court can currently go.   That is regrettable given the effort and resources devoted to bring the claim to its present position but, as mentioned, the claim requires significant re-pleading and particularisation in accordance with this judgment and Argon and Mr Harley need an opportunity to reconsider their positions once a properly pleaded statement of claim is filed against them.

[69]     In those circumstances – particularly having regard to the fact that the claim would seem to need significant re-pleading - the appropriate course, rather than leaving the striking-out applications on a part-heard basis, is to dismiss them both and leave it to the parties to advance the matter further – including further striking- out applications – if they consider it appropriate.

[70]     In  those  circumstances  when  the  plaintiff’s  claims  against  Argon  and Mr Harley have been preserved largely through infelicities in the Ministry’s pleading and factual conflicts unable to be determined on applications such as these, the Court is minded to let costs lie where they fall but if any counsel seeks to persuade the Court to a different viewpoint, memoranda may be filed.

[71]   In light of this judgment the parties in the associated litigation, if still appropriate, may apply for a fixture for their striking-out application.

.................................................................

HUGH WILLIAMS J.

Solicitors:

Crown Solicitor, PO Box 2213, Auckland 1140, for plaintiff

Kensington Swan, Private Bag 92101, Auckland 1142, for First Defendant

Jones Fee, PO Box 1801, Auckland 1140, for Fourth Defendant

Chapman Tripp, PO Box 2206, Auckland 1140, for Second Third Party

Martelli McKegg, PO Box 5745 Auckland 1141, for M F Astley Ltd (party in associated litigation)

Case Officer:

In[email protected]z /  Gordon[email protected]