Minister of Education v James Hardie Ltd
[2018] NZHC 1481
•21 June 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2013-404-1899
[2018] NZHC 1481
UNDER the Consumer Guarantees Act 1993, the Fair Trading Act 1986, the Building Act 1991 and the Building Act 2004 BETWEEN
THE MINISTER OF EDUCATION and
others
First to Fourth PlaintiffsAND
JAMES HARDIE LIMITED
First Defendant
STUDORP LIMITED
Second DefendantCARTER HOLT HARVEY LIMITED
Third Defendant
CSR BUILDING PRODUCTS (NZ) LIMITED
Fourth Defendant
……………………………/continued
Hearing: 8 and 9 February 2018 Counsel:
JA Farmer QC, NF Flanagan and J Carlyon for Ministry
JG Miles QC, M Heard and ED Nilsson for Carter Holt Harvey Ltd
TC Weston QC and JRJ Knight for Councils
Judgment:
21 June 2018
JUDGMENT OF FITZGERALD J
[As to determination of separate questions and pleadings issues]
This judgment was delivered by me on 21 June 2018 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar…………………………….. Date……………
The Minister of Education v James Hardie Limited [2018] NZHC 1481 [21 June 2018]
CSR BUILDING PRODUCTS (NZ) LIMITED
Fourth Defendant
AND AUCKLAND COUNCIL AND OTHER TERRITORIAL AUTHORITIES LISTED IN SCHEDULE 1 TO THE FIRST
AMENDED STATEMENT OF CLAIM BY THIRD DEFENDANT AGAINST FIRST TO FIFTIETH THIRD PARTIESFirst to Fiftieth Third Parties
Contents
History of the Ministry’s claims........................................................................ [11]
The approach to the determination of separate questions............................. [22]
The competing proposals
The Ministry’s proposal — the approach and suggested benefits.................... [27]
Carter Holt’s criticism of the Ministry’s proposal........................................... [36]
Carter Holt’s proposal — the approach and suggested benefits...................... [43]
The Ministry’s criticism of Carter Holt’s proposal.......................................... [49]
Which of the competing approaches is more likely to result in the just,
speedy and efficient determination of the proceeding?............................ [53]
Demarcation of preliminary issues from remaining issues.............................. [55]
Evidence at Stage-1 trial/determination of entire proceedings....................... [65]
The scope for issue estoppel............................................................................ [68]
The time to get to a Stage-1 hearing................................................................ [70]
The risk of duplication between staged hearings............................................. [73]
The scope and length of a Stage-1 trial on 20 buildings................................. [77]
The Ministry’s application to strike out aspects of the defence
Introduction...................................................................................................... [85]
Factual background — more detail................................................................. [89]Discussion...................................................................................................... [101]
Miscellaneous directions sought
Introduction.................................................................................................... [115]
Status of Boards of Trustees........................................................................... [117]Defences of contributory negligence “attach” to Boards of Trustees............ [120]
Leave to Carter Holt to file a counterclaim................................................... [125]
Determination of costs associated with buildings withdrawn fromthe claim.................................................................................................. [129]
Result................................................................................................................ [139]
Costs.................................................................................................................. [141]
[1] These proceedings concern 833 separate school buildings throughout New Zealand clad (in whole or in part) in a product called “Shadowclad”. Carter Holt Harvey Ltd (“Carter Holt”) is the manufacturer and supplier of Shadowclad. The plaintiffs (collectively “the Ministry”) say Shadowclad is inherently defective, being unsuitable for the purpose for which it is manufactured and supplied. The Ministry says because of the defects, the school buildings leak or will leak. It says that as a result, the buildings fail, or will fail, to achieve compliance with recognised building standards, the weathertightness aspects of the Building Code and related provisions of the Building Acts.1
[2] In relation to all the buildings, the Ministry is undergoing a staged programme of removal and replacement of Shadowclad. It says Carter Holt should pay all costs associated with the removal and replacement. And in the case of many of the buildings, the Ministry alleges the Shadowclad product has already led to water ingress and thereby resulted in structural and other physical damage to the buildings which also needs to be remedied.2 The Ministry also sues Carter Holt for the cost of remedying this damage.
[3] Carter Holt denies Shadowclad is inherently defective. Further, having inspected approximately 100 of the 833 schools, it says that any structural or other physical damage is caused not by its product but by a combination of faulty installation, construction and design defects. Carter Holt has accordingly joined 54 territorial authorities (“Councils”), seeking contribution to any loss for which it is liable to the Ministry. Several Councils have in turn joined further parties, such as architects, builders and others.
[4] The proceedings are extremely large, probably the largest claim currently before the High Court. As a result, a traditional approach to determining the claims is not feasible. It is estimated that if a traditional approach were adopted, the substantive hearing would last many years. All parties agree that a staged approach is required. They disagree, however, over what each stage should involve.
1 Building Act 1991 and Building Act 2004, as applicable to any given school building.
2 There is also alleged risk to health and safety, due to the build-up of mould and fungal spores.
[5] The Ministry’s proposed approach is for three issues common to the entirety of its claim to be dealt with first, in a Stage-1 trial. Those three issues are:
(a)whether the Shadowclad product is defective in fact;
(b)whether Carter Holt owes the Ministry a tortious duty of care to design, manufacture and supply the product for use on the school buildings that complied with recognised building standards, the Building Code and the Building Acts; and
(c)if Carter Holt does owe the Ministry such a duty of care, whether it breached that duty by designing, manufacturing and/or supplying the product for installation on the school buildings.
[6] The Ministry says this approach addresses the key issues in its claim and will result in findings which are binding in relation to all buildings in the claim. Individual issues of causation and loss (relating to particular buildings, for example) would then be dealt with in a Stage-2 trial.
[7] Carter Holt, on the other hand, says the Ministry’s approach ignores the real issue in contention: why the school buildings leak. It therefore proposes a sampling or “test case” approach, whereby the entirety of the Ministry’s claim, together with Carter Holt’s defences and contribution claims against the Councils (and their claims against further parties) are heard in full, in relation to 20 of the 833 school buildings. A Stage-2 trial would then address the remaining 813 buildings.
[8] While acknowledging that findings on causation and loss in relation to the 20 buildings would not be binding in relation to the remaining buildings, Carter Holt says that such findings will nevertheless provide real guidance and learnings for the balance of the claim, and therefore be more likely to drive settlement.
[9] The key issue for determination is accordingly which of these two approaches best serves the objective of securing the just, speedy and inexpensive determination of the proceedings.3
[10] This judgment also deals with several ancillary and procedural matters requiring attention, namely:
(a)the Ministry’s application to strike out the parts of Carter Holt’s statement of defence referring to the need for further particulars, on the basis the parties agreed some years ago that no further particulars were required;
(b)Carter Holt’s application for directions in relation to the Ministry’s ability to sue for and on behalf of individual school Boards of Trustees (and associated pleadings issues); and
(c)Carter Holt’s application for leave to file a counterclaim against the Ministry and Boards of Trustees, which mirrors affirmative defences already pleaded against the Ministry in the main proceeding.
History of the Ministry’s claims
[11] The Ministry commenced its proceedings against Carter Holt (and others) in 2013.4 Its primary claim against Carter Holt is in tort (negligence), though there are also a number of other causes of action, including under the Fair Trading Act 1986 and the Consumer Guarantees Act 1993.
[12] Shortly after the Ministry commenced its proceedings, Carter Holt filed an application to strike out the claim against it, primarily on the basis it was not arguable that, as a product manufacturer, it owed a duty of care to the Ministry (as the end-user of the product).
3 High Court Rules 2016, r 1.2.
4 The Ministry has since settled and discontinued its claims against the first, second and fourth defendants.
[13] Pending determination of its strike out application, Carter Holt filed third-party notices against the Councils. It did not, however, serve the notices at that time. Rather, it took the view that it would await determination of its strike out application before doing so.
[14] In a judgment delivered on 4 April 2014, Asher J dismissed Carter Holt’s strike out application.5 In relation to the negligence cause of action, his Honour held that although the matter was “finely balanced”, it was arguable Carter Holt owed the pleaded duty of care to the Ministry.6
[15] Carter Holt appealed Asher J’s decision. In a judgment delivered on 23 July 2015, the Court of Appeal allowed the appeal in part, in that the third cause of action (negligent misstatement) was struck out.7 Carter Holt’s appeal was otherwise dismissed.
[16] Carter Holt sought and was granted leave to appeal the Court of Appeal’s judgment to the Supreme Court.
[17] The Supreme Court delivered its judgment on 29 July 2016, dismissing Carter Holt’s appeal (the “Strike-out Judgment”).8 It also allowed the Ministry’s cross-appeal and quashed the Court of Appeal’s order striking out the negligent misstatement cause of action. As a result, all causes of action originally pleaded by the Ministry remain on foot. In dismissing Carter Holt’s appeal, the Supreme Court emphasised that the nature of the Ministry’s claim against Carter Holt is a product liability claim.9 In doing so, it rejected Carter Holt’s submission that at its core, the claim was a proceeding “relating to building work”.10
[18] Carter Holt thereafter took steps to serve the third-party notices on the Councils. Carter Holt had also by that time commenced separate proceedings against
5 Minister of Education v Carter Holt Harvey [2014] NZHC 681.
6 At [72].
7 Carter Holt Harvey v Minister of Education [2015] NZCA 321, (2015) 14 TCLR 106.
8 Carter Holt Harvey v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78.
9 At [102].
10 At [102].
the Councils seeking contribution (“Contribution Proceedings”), in the event its third- party notices were struck out.
[19] By application dated 15 March 2017, the Councils applied to set aside the third-party notices and/or strike out the Contribution Proceedings, primarily on the basis that:
(a)they were seriously prejudiced by the excessive delay in service of the third-party notices;
(b)the lack of sufficient particulars in Carter Holt’s claims against the Councils rendered Carter Holt’s claims vexatious or an abuse of process; and
(c)that many of Carter Holt’s claims against the Councils were time barred under the long-stop limitation provisions of the Building Act 1991 and Building Act 2004.
[20] I determined those issues in a judgment dated 26 January 2018.11 I held, inter alia, that:
(a)The long-stop provisions in the 1991 and 2004 Building Acts did apply to Carter Holt’s contribution claims.
(b)While Carter Holt’s delay in service of the third-party notices was inordinate and inexcusable, the Councils had not suffered serious prejudice such as to warrant the notices being set aside or struck out.
(c)A relatively small number of Carter Holt’s claims against the Councils were so clearly time barred that they ought to be struck out.
(d)Carter Holt’s pleading against the Council was defective in relation to particulars. I ordered that Carter Holt provide further particulars
11 Minister of Education v James Hardie New Zealand [2018] NZHC 22.
without further delay. I observed that the need for Carter Holt to particularise its claim would require it to inspect buildings at a considerably faster rate than it had to that point.
[21] Accordingly, as at the date of this judgment, while the Ministry’s claims have been on foot since 2013, there has not been any real progress in its substantive claims. Rather, from 2013 until July 2016, the focus was first, Carter Holt’s application for further and better particulars of the Ministry’s claim, and second, its strike out application, the determination of which is summarised above. Since that time, the focus has been on various preliminary skirmishes in relation to Carter Holt’s claims for contribution from the Councils (in which the Ministry has no direct interest). This judgment therefore represents the first step in the determination of the substance of the Ministry’s claim.
The approach to the determination of separate questions
[22] The determination of separate (preliminary) questions is governed by r 10.15 of the High Court Rules 2016, which provides:
10.15 Orders for decision
The court may, whether or not the decision will dispose of the proceeding, make orders for—
(a)the decision of any question separately from any other question, before, at, or after any trial or further trial in the proceeding; and
(b)the formulation of the question for decision and, if thought necessary, the statement of a case.
[23] The purpose of r 10.15 is “to expedite proceedings by limiting or defining the scope of the trial in advance or obviating the need for a trial altogether.”12 The jurisdiction to order the determination of a separate question is discretionary and is to be determined by reference to efficiency, not only for the parties to the proceeding, but also for other court users.13 A court has to carefully consider the expected consequences of ordering determination of a separate question, and be alive to the risk that ordering such determination may ultimately prolong and/or unnecessarily
12 Innes v Ewing (1986) 4 PRNZ 10 (HC) at 18.
13 Turners & Growers Ltd v Zespri Group Ltd HC Auckland CIV-2009-404-4392, 5 May 2010 at [9].
duplicate aspects of the overall trial. As has been stated in earlier cases, Judges are alert to avoid “treacherous short cuts”.14 As all parties and counsel acknowledge, however, such caution in this case needs to be balanced against the sheer impossibility of proceeding to a single trial on all fronts.
[24] When considering whether to order the determination of a separate question, and in formulating the question for determination, a court will need to consider matters such as:15
(a)whether there will be difficult demarcation questions between those issues to be addressed at the first trial and those left for the second;
(b)whether the separate question will bring proceedings to an end;
(c)potential time-saving does the separate question may offer;
(d)how appeals will be dealt with; and
(e)whether there are any other practical considerations tending one way or another (which might include, for example, the effect on interrogatories and discovery).
[25] The benefits of determining separate questions have been acknowledged in very complex litigation, and an analogy (of sorts) can be made with the courts grappling with similar issues in the context of representative actions. In such cases, a series of common issues (common to the representative plaintiff and all represented parties) are often identified and determined in a Stage-1 trial. The Stage-1 trial generally involves determination of the representative plaintiff’s full claim, including issues which are specific to that plaintiff (for example, reliance, causation and loss). In light of findings on the common issues, individual issues for all represented plaintiffs will then need to be dealt with in a Stage-2 trial.
14 Tilling v Whiteman [1980] AC 1 (HL) at 25 per Lord Scarman.
15 Haden v Attorney-General (2011) 22 PRNZ 1 (HC) at [50].
[26] In that way, a court considering an application for representative orders when the claim will only be partly representative will inevitably consider matters such as the demarcation of issues to be determined at separate trial stages. For example, in Bright v Femcare Ltd, a decision of the Federal Court of Australia, Lindgren J observed that the identification and formulation of the common issues for the purposes of representative proceedings calls for care and attention “of the same kind as does the identification and formulation of a separate question.”16 In this jurisdiction, the High Court and Court of Appeal judgments in Cridge v Studorp Ltd are recent illustrations of similar issues being considered in the context of representative claims.17
The competing proposals
The Ministry’s proposal — the approach and suggested benefits
[27] The Ministry’s proposal involves separate determination of the three questions set out at [5] above.18
[28] In relation to the first question, the Ministry says that it has prepared “a battery’ of evidence that will demonstrate the inherent defects in Shadowclad. This includes:
(a)testing of Shadowclad models and wall assemblies;
(b)monitoring data which has been collected from four school buildings;
(c)computer modelling that predicts how Shadowclad will perform in different circumstances;19
(d)evidence from a small building (a “test hut”) which has been specifically built for the proceedings, said to be perfectly constructed in compliance with the Shadowclad specifications and clad in the product;
16 Bright v Femcare [2002] FCAFC 243, (2002) 195 ALR 574 at [14].
17 Cridge v Studorp Ltd [2016] NZHC 2451, (2016) 23 PRNZ 281; Cridge v Studorp Ltd [2017] NZCA 376, (2017) 23 PRNZ 582.
18 The first question involves several sub-issues.
19 This is said to be evidence of a type used in North American construction and weathertightness litigation, but not used previously in New Zealand.
(e)evidence from a number of buildings included in its claim, to supplement and be illustrative of the evidence outlined above; and
(f)expert evidence on a range of other specific matters, including the experts’ experience with Shadowclad over a number of years; evidence as to the adequacy of treatment applied to Shadowclad sheets; painting expert evidence; corrosion expert evidence and evidence as to the risk to human health posed by fungi and mould caused by damp Shadowclad.
[29] Mr Farmer QC, for the Ministry, submits the Ministry’s proposal will not depend on an examination of particular buildings to determine the core proposition of the Ministry’s case, namely: is Shadowclad inherently defective? Mr Farmer urges the Court to focus on the true nature of the Ministry’s claim, which is a defective product claim. He says this was reinforced by the Supreme Court in its Strike-out Judgment, which rejected Carter Holt’s attempt to characterise the claim as a normal, albeit very large, leaky building claim. Accordingly, if the Ministry does not succeed on its core proposition, the entire proceedings will come to an end.
[30] Mr Farmer submits the three questions set out at [5] above are capable of demarcation from remaining issues, as recently confirmed by this Court and the Court of Appeal in Cridge.20 Further, the Ministry says these issues are common across all buildings, and will therefore result in binding rulings across the entirety of the Ministry’s claim.21
[31] In terms of the practicalities and timeframes involved, the Ministry submits that a trial on the separate questions could (subject to court availability) occur within a relatively short timeframe (at least in the context of this proceeding), in around 12 or so months’ time. Discovery on the preliminary questions would be limited to the Ministry and Carter Holt. It will not involve the raft of third (and subsequent) parties
20 See Cridge v Studorp Ltd [2017] NZCA 376, (2017) 23 PRNZ 582 at [32].
21 While the claim concerns a range of Shadowclad products over time, it is not suggested that any changes over time would negate the binding nature of findings on a Stage-1 hearing. Indeed, Carter Holt’s evidence explains that the manufacturing process for Shadowclad during the relevant times did not change in any material way since it was first produced and all Shadowclad sheets share the same basic characteristics.
which Carter Holt has brought into this proceeding. In this context, the Ministry notes that given Carter Holt’s claims against the 50-plus Councils (and their claims against other parties) are claims for contribution, they are of no concern to the Ministry, which is entitled to judgment in full from Carter Holt. The Ministry may then stand back and take no part in what is likely to be complex and lengthy litigation as to how Carter Holt’s liability ought to be shared.
[32] The Ministry submits that a trial on the separate questions would take approximately 10 to 12 weeks.
[33] The Ministry also submits that while the use of the separate question procedure in a product liability case is novel in New Zealand (largely because product liability cases themselves are novel), the approach it proposes is orthodox in other jurisdictions. In particular, the Ministry refers to observations of the British Columbia Court of Appeal in Harrington v Dow Corning Corp (considering case management of a class action about defective silicone breast implants), in which Huddart JA stated that:22
… the first step in every product liability case alleging negligent design, manufacture, or marketing is the determination of whether the product is defective under ordinary use … some American authorities referred to this step as “general causation”, whether a product is capable of causing the harm alleged in its ordinary use.
[34] The Ministry also refers to United States authorities which it says separate the (individual) causation issues to achieve more efficient case management of trials and increase prospects of settlement.23
[35] Finally, in relation to settlement, the Ministry submits that its approach is highly likely to facilitate settlement. If it is successful on its claim that Shadowclad is inherently defective, Carter Holt would not be able to maintain its current position that there is nothing wrong with its product and that it has no prospect of any liability.
22 Harrington v Dow Corning Corp (2000) 193 DLR (4th) 67 (BCCA) at [42] per Huddart JA, with whom Rowles and Ryan JJA concurred. Finch and Esson JJA dissented.
23 Re Beverly Hills Fire Litigation 695 F 2d 207 (6th Cir 1982) at 216 and 227; Re Richardson- Merrell Inc “Bendectin” Products Liability Litigation 624 F Supp at 1212 (SD Ohio 1985) at 1248-1249; Re Bendectin Litigation 857 F 2d 290 (6th Cir 1988) at 320.
Carter Holt’s criticism of the Ministry’s proposal
[36] While much of Carter Holt’s evidence on this application took issue with the framing of the Ministry’s preliminary questions, those criticisms and Carter Holt’s submissions in opposition boil down to two key points:
(a)first, the Ministry’s proposal does not deal with the key issue in this case, causation; and
(b)second, the question of whether Shadowclad is inherently defective cannot be determined by reference to laboratory testing and other similar evidence, but only by evidence of how it performs in situ, “in the real world”.
[37] In relation to (a) above, Carter Holt submits the Ministry’s approach depends on a false distinction between proving “defects” in a product liability case, and proving “defects” in a building defects case. Carter Holt submits that what are said to be defects by the Ministry are simply “characteristics” of the Shadowclad product. Whether those characteristics are in fact defects can only be determined by analysing whether those buildings have in fact failed (in terms of the Building Code) and, if so, why. Carter Holt says this reinforces that the existence of “defects” is inherently linked to the question of causation. In this context, it says the question of whether a building product is defective cannot be answered without also answering the question of how the product performs in the real world.
[38] In terms of (b) above, Carter Holt’s expert evidence filed on this application criticises the evidence the Ministry says it will call in a Stage-1 trial, which is directed at simulating how the product performs in the real world. Carter Holt’s experts say that simulation of the type proposed by the Ministry is not possible or reliable.
[39] Carter Holt says a careful analysis of the overseas authorities relied on by the Ministry indicates the issue is more nuanced than the Ministry suggests. Carter Holt notes, for example, that Huddart JA’s views in Harrington, and on which the Ministry relies, were expressed in a very tentative form. Carter Holt also notes that the Court was split in that case on the formulation of a separate question regarding defectiveness,
with two powerful dissenting judgments. Further, Carter Holt says that while determining the defectiveness (or otherwise) of the relevant product might be a useful preliminary issue in a single-cause type case (such as allegedly defective silicone breast implants), such an approach is not suitable for a case involving multiple complex causes of the alleged defective state of the buildings.
[40] In terms of practical matters, Carter Holt says the Ministry’s approach will unacceptably duplicate evidence. For example, in respect of the evidence proposed by the Ministry and referred to at [28] above, Carter Holt notes that the Ministry has not clearly stated how many buildings in relation to which it proposes to produce evidence, and therefore the Ministry’s approach is likely to involve a significant degree of duplication between the first and second trials. Carter Holt also says that under the Ministry’s approach, it will call evidence in relation to actual school buildings to show the true cause of them leaking (or being likely to leak), which further exacerbates the level of duplication.
[41] Carter Holt reiterates its position that the Ministry’s claim is in substance a case about leaky buildings, given it alleges that defects in the product mean buildings have failed, or will fail, to achieve compliance with the Building Code requirements. Carter Holt notes that the primary remedy sought is damages reflecting the cost of the repairs necessary to make the buildings Code compliant. Carter Holt says that:
… whilst it is correct that the plaintiffs plead that the product is defective per se, the standard against which the presence or absence of defects must be measured is the performance requirements of the Building Code. The claim cannot be divorced from all that follows.
[42]Carter Holt therefore says:
(a)The Ministry’s proposal is very unlikely to end the litigation;
(b)No issue estoppel arises on any significant issue (given general findings that Shadowclad possesses certain characteristics will not materially advance determination of the overall proceeding);
(c)The proposal will increase the likelihood of multiple appeals; and
(d)The proposal will result in a lengthy first-stage trial which will leave most aspects of the claim unresolved.
Carter Holt’s proposal — the approach and suggested benefits
[43] Carter Holt’s proposal involves a full trial of all issues and claims, in respect of 20 buildings. Carter Holt says that such an approach is the most efficient first step, as it will resolve a significant number of legal and factual issues that will “be common to all or many of the buildings and will therefore help to streamline the resolution of the remaining claims”.
[44] In terms of the 20 school buildings, it is proposed that 10 are selected by the Ministry and 10 by Carter Holt. It says that findings at the Stage-1 trial on a number of essential common issues would be binding in respect of other buildings in the claim.24 As well as determining these common issues, Carter Holt’s approach would also address the key issue of causation, as well as loss, apportionment of any liability and its claims of contributory negligence. And while Carter Holt acknowledges that these are individual issues and thus would not give rise to formal issue estoppels, it says findings on 20 buildings would nevertheless “be instructive” or provide “guidelines” which will provide a real and genuine basis for all parties to consider settlement.
[45] Carter Holt acknowledges that due to the variation between the 833 different buildings in the claim, a complete trial of all issues cannot be achieved in an efficient way by representative sample. Mr Neil Alvey, an expert retained by Carter Holt, says that a representative sample would need to include “at least” 167 buildings. Carter Holt nevertheless says that while a range of different building types and styles are needed to provide the broadest guidance possible, the school buildings are of a relatively simple design, such that findings in relation to 20 of them would indicate a
24 Although it does not say so expressly, presumably those binding common issues are those identified by the Ministry and set out at [5] above.
pattern of defects.25
[46] Carter Holt says that the number of buildings it has chosen reflects a pragmatic approach, being large enough to cover a range of construction timeframes and locations, and sufficiently limited to be dealt with in one trial. It says that a Stage-1 trial of approximately 12 to 14 weeks is feasible. It further says that while single building weathertightness trials have occupied significant trial time, the buildings in this case are much simpler than the multi-unit buildings in those cases.26
[47] Carter Holt also submits that its approach limits the departure from standard procedures, so that all issues are considered in their proper context, with no issue being dealt with in isolation and separated from relevant surrounding evidence.
[48] Carter Holt further submits that its first trial would reduce the prospect of multiple appeals, given later hearings on individual matters are likely to be limited to factual rather than legal findings rather than legal findings. It says that its approach avoids duplication of evidence, which is a real risk under the Ministry’s proposal.
The Ministry’s criticism of Carter Holt’s proposal
[49] The Ministry (supported by the Councils) submits that Carter Holt significantly underestimates the length and complexity of both the time needed to get to a Stage-1 trial under Carter Holt’s approach and the length of the Stage-1 trial. It also says Carter Holt significantly overstates the suggested benefits flowing from its approach.
[50] As to trial length, the Ministry says that, by definition, Carter Holt’s Stage-1 trial will be significantly longer than under the Ministry’s approach, given it will need to determine all the common issues to be considered under the Ministry’s approach, plus the multiplicity of individual issues arising from Carter Holt’s claims. Moreover, rather than the issues being confined to the Ministry and Carter Holt, Carter Holt’s
25 Carter Holt filed expert evidence to the effect that of the 100 buildings inspected by late 2017, there was a pattern of such defects. These are said to include failures to ensure the existence of sufficient ground clearances and capillary gaps; failures to properly install flashings around window joinery; and failures to properly nail the cladding sheets to the building. Carter Holt’s experts also give evidence of basic maintenance failures, including failures to maintain proper paint coatings, clear guttering and keep vegetation away from bottom edges of cladding sheets.
26 Carter Holt estimates two days per school building, together with pre-trial expert conferences.
Stage-1 trial will involve at the very least, the Ministry, Carter Holt, and on a building- by-building basis, all relevant Councils plus any additional parties those Councils have joined as further parties in relation to the 20 chosen buildings.27
[51] In terms of the time needed to get to a Stage-1 trial, the Ministry (again supported by the Councils) says that the alleged construction, design and other defects in individual building would need to be fully particularised across the whole of Carter Holt’s claim, so that the 20 buildings could be properly and fairly selected. That is likely to take considerable time given that by late 2017, Carter Holt had inspected only 100 out of the 833 school buildings. And once the 20 buildings are chosen, all necessary third and subsequent parties would need to be joined and full discovery given, before evidence could be contemplated. The Ministry also points to the raft of issues to be determined on Carter Holt’s claims, including claims of contributory negligence, many of which will require discovery and evidence on a building-by- building basis. Given Carter Holt has not progressed its claims to any significant degree in the last three years, the Ministry notes that determination of the narrower common issues under its approach will be significantly delayed while Carter Holt’s claims (and the Council’s claims against further parties) are readied for a Stage-1 trial.
[52] Finally, the Ministry submits that, given it would be appropriate to select 20 buildings with as much variation as possible, and from various locations around New Zealand, findings in respect of 20 buildings are unlikely to be binding or to provide significant guidance on the remaining 813 buildings.
Which of the competing approaches is more likely to result in the just, speedy and efficient determination of the proceeding?
[53] Neither of the above approaches provides a perfect solution. Under both, significant issues will remain to be determined at a Stage-2 trial.
[54] Having carefully considered the competing proposals and the evidence filed in relation to them, I am satisfied the Ministry’s proposal best meets the objective of
27 As noted in my January 2018 judgment, at that time, the Councils had commenced some 47 claims for contribution from other parties. See Minister of Education v James Hardie New Zealand [2018] NZHC 22 at [112].
securing the just, efficient and speedy determination of these proceedings. I have reached this conclusion for the following reasons.
Demarcation of preliminary issues from remaining issues
[55] First, I am satisfied the three preliminary (common) issues under the Ministry’s approach are capable of sufficient demarcation from remaining (individual) issues, and in particular, causation.
[56] Carter Holt is right to raise the issue of causation, and whether issues such as duty and breach can be sufficiently divorced from causation to make a Stage-1 trial on the latter issues the most appropriate way forward. The British Columbia Court of Appeal in Harrington v Dow Corning Corp, for example, grappled with the same issue, and similar submissions to those made by Carter Holt in this proceeding.28 As noted,29 the Court was divided on the outcome, though the majority concluded a Stage- 1 trial on duty and breach to be the most efficient way forward.
[57] Having reviewed that decision and the dissenting judgments, I do not consider it to be as different from this case as Carter Holt suggests. As noted at [39] above, Carter Holt characterised Harrington, and others where duty and breach have been determined in a Stage-1 trial, to be “single-cause” cases. They say, in contrast, this case, involves potential multiple causes of the alleged damage. However, to the extent Shadowclad is inherently defective (in terms of not being fit for its intended purpose), then the cause of a considerable aspect of the damage pleaded by the Ministry is a “single-cause” type case. As Mr Farmer submitted, to the extent the product is not fit for purpose, the “damage” will have occurred “as soon as the product leaves the factory” or is installed on a building, irrespective of whether there is also physical damage to the building itself. As Tipping J said in Spencer on Byron:30
[45] In cases where negligent inspection has given rise to the potential for physical damage but no such damage has yet occurred, it cannot be the law that you have to wait for physical damage to occur before you are regarded as
28 Harrington v Dow Corning Corp (2000) 193 DLR (4th) 67 (BCCA). Harrington was the only authority to which I was referred that considered the proposed separate determination of “general’ and “individual” causation in some detail.
29 See [33] above.
30 Body Corporate No 207624 v North Shore City Council [2012] NZSC 83, [2013] 2 NZLR 297 [Spencer on Bryon].
having suffered loss or harm. It is not determinative whether the loss suffered at the outset is characterised as financial or physical. It is measured by the cost of bringing the building up to the standard required by the code and thereby removing the potential for physical damage and the associated health and safety concerns. A duty of care should be recognised in respect of preemptive expenditure as well as expenditure necessary to reinstate or repair physical damage which has actually occurred.
[58] There is no reason why these principles (at least in terms of what will constitute loss or harm in a negligence claim in New Zealand) ought not to apply to negligent manufacture of a building product. In those circumstances, and assuming all other elements of the cause of action are made out, the Ministry would be entitled to remove and replace the cladding.
[59] Accordingly, it is only where there is also consequent physical damage to the structure of a building that the cause of that damage will be in issue. While the Ministry alleges physical damage in relation to the majority of the buildings in its claim, determining whether Carter Holt has been negligent in designing, manufacturing and distributing Shadowclad will nevertheless advance the claim in a material way, given the Ministry’s pleaded loss includes the cost of replacing the cladding on all buildings in its claim.
[60] In addition, the dissenting judgments in Harrington were premised on the position that the implants in that case were fit for purpose (the purpose of breast augmentation), with the primary issue being whether they were defective because they caused the injuries said to have been suffered by individual plaintiffs. 31 On this basis, Finch JA distinguished earlier Canadian cases (Campbell v Flexwatt Corp,32 which concerned radiant ceiling heating panels, and Chace v Crane Canada Inc,33 which concerned toilet tanks), in which fitness for purpose had been determined as a preliminary issue.34 On that basis, Finch JA considered the individual issues in Harrington would overwhelm the common issues. It is also clear that the dissents in
31 Harrington v Dow Corning Corp (2000) 193 DLR (4th) 67 (BCCA) at [138] per Finch JA (Esson JA concurring at [156]).
32 Campbell v Flexwatt Corp (1997) 44 BCLR (3d) 343 (CA).
33 Chace v Crane Canada Inc (1997) 44 BCLR (3d) 264 (CA).
34 Harrington v Dow Corning Corp (2000) 193 DLR (4th) 67 (BCCA) at [138]–[140].
Harrington were influenced by the fact that the (purported) common issue of whether the implants were fit for purpose was not clearly a common issue.35
[61] I am also influenced by the High Court and Court of Appeal’s observations in Cridge v Studorp Ltd (a case also concerning building cladding) on whether issues of alleged inherent defects, duty of care and breach can be determined separately from individual issues such as causation.36 The High Court and the Court of Appeal said they could. Carter Holt seeks to distinguish Cridge, on the basis the High Court and Court of Appeal considered whether representative orders ought to be made, rather than the determination of separate questions. But while that is strictly correct, the courts’ findings nevertheless involved consideration of the demarcation of the common issues from the individual issues, and the benefits, or otherwise, of split hearings in the case of represented plaintiffs. In this context:
(a)The plaintiff’s proposed way forward in Cridge, accepted by both the High Court and Court of Appeal, was that while there would be a full trial of the representative plaintiffs’ claim, a split trial would be adopted for all represented plaintiffs.37
(b)The courts were clearly alive to and considered the risks involved in split trials for the represented plaintiffs. For example, Ellis J observed that:38
… where the determination of identified common issues would be followed by individual determination of individual issues, it is much less obvious that permitting the matter to proceed on a (partly) representative basis will be expeditious. The Court should not ignore the well-known complications that can flow from attempting separately to determine discrete issues arising in a proceeding. These can include difficulties in demarcating between the (supposedly) separate issues, determining the extent of any estoppels, and the potential delay and expense of multiple appeals.
35 At [140] per Finch JA; at [163] to [164] per Esson JA.
36 Cridge v Studorp Ltd [2016] NZHC 2451, (2016) 23 PRNZ 281 and Cridge v Studorp Ltd [2017] NZCA 376, (2017) 23 PRNZ 582.
37 See, for example, Cridge v Studorp Ltd [2016] NZHC 2451, (2016) 23 PRNZ 281 at [27]–[28].
38 At [35].
(c)The defendants in Cridge also made submissions on, and the courts were alive to, the alleged distinction between single and multi- causation cases,39 as well as whether the elements of a negligence cause of action can be sufficiently demarcated from each other.40 As noted, the High Court and Court of Appeal both considered that the issues of alleged inherent defects, duty and breach could be demarcated from individual issues of causation and loss, and thus determined on a representative basis.41
[62] For completeness, I observe that in Cridge, James Hardie sought leave to appeal to the Supreme Court, including on the basis that:42
(a)orders for representative orders ought not to be made in cases of a “complex and evolving system” of cladding, rather than the “paradigm” cases of a single-event or single-cause case; and
(b)there are difficulties in distinguishing the issues selected for trial at the first stage from the remaining issues, and in particular, causation.
[63] The Supreme Court declined to grant leave, primarily on the basis that the principles applicable to representative orders had been examined by the Court in Credit Suisse Private Equity LLC v Houghton.43 But the Court did not consider it to be in the interests of justice to hear and determine the appeal before trial, noting that the matters raised by James Hardie could be dealt with at trial in any event, or otherwise addressed through case management. The Supreme Court therefore did not express any immediate concern at the demarcation of the issues selected for a Stage-1 trial (in the case of the represented plaintiffs) in that case.
39 See [39].
40 See [48], [60] and [62]; and Cridge v Studorp Ltd [2017] NZCA 376, (2017) 23 PRNZ 582 at [15]–[16], [19] and [21].
41 See Cridge v Studorp Ltd [2016] NZHC 2451, (2016) 23 PRNZ 281 at [62] and [64]; and Cridge v Studorp Ltd [2017] NZCA 376, (2017) 23 PRNZ 582 at [32].
42 Studorp Ltd v Cridge [2017] NZSC 178 at [11]–[12].
43 Credit Suisse Private Equity LLC v Houghton [2014] NZSC 37, [2014] 1 NZLR 541.
[64] Finally in this context, Mr Miles QC, appearing for Carter Holt, referred to Fogarty J’s observations in an earlier decision in these proceedings, in which his Honour noted that he was not aware of nor referred to any authorities distinguishing between a product liability and negligence claim.44 Carter Holt says that Fogarty J’s observations reinforce the difficulty of separating the quality issue from causation and loss. However, his Honour’s observations were made prior to the Supreme Court’s comments as to the nature of the Ministry’s claim and, more importantly, were directed at whether the Ministry had adequately pleaded causation, damage and loss. Fogarty J’s comments were therefore not directed to whether breach and duty could be demarcated from causation, damage and loss for the purpose of staged hearings.45
Evidence at Stage-1 trial/determination of entire proceedings
[65] Both the High Court and Court of Appeal in Cridge also rejected James Hardie’s submission that whether the cladding product in issue in that case was inherently defective could only be determined through examination of its performance “in the real world”, rather than through laboratory-type testing (at least as a basis for withholding a representative order). The Court of Appeal noted that:46
[34] It is of course the representative owners who will bear the onus of proof and if Mr Hodder is correct (and that is not accepted by the owners) that may mean they have difficulty discharging that onus.
[66] A similar approach applies here. Ultimately, the Ministry bears the onus of proving Shadowclad is inherently defective. That is an evidential issue on which the Ministry takes the risk, rather than a reason for declining to order that that issue be determined in a Stage-1 hearing. Much of Carter Holt’s evidence on this application was directed to a critique of the type of evidence the Ministry intends to adduce in a Stage-1 trial. If the Ministry cannot discharge the onus, the entire proceedings (or at least its primary claim of negligence) will come to an end. And as observed in Cridge, the fact the product is actually a system of linked components is likely to favour Carter Holt on that preliminary question.47
44 Minister of Education v James Hardie New Zealand [2014] NZHC 2432 at [42].
45 See similar observations of Ellis J in Cridge v Studorp Ltd [2016] NZHC 2451, (2016) 23 PRNZ 281 at [59].
46 Cridge v Studorp Ltd [2017] NZCA 376, (2017) 23 PRNZ 582.
47 See Cridge v Studorp Ltd [2016] NZHC 2451, (2016) 23 PRNZ 281at [63]; and Cridge v Studorp Ltd [2017] NZCA 376, (2017) 23 PRNZ 582 at [39].
[67] Carter Holt further submits it will be on very strong ground on the issue of breach, given Shadowclad was certified as an “Acceptable Solution” for the purpose of compliance with the Building Code. Carter Holt says it therefore complies with the very regime the Government set up to control standards in the building industry. Mr Farmer responded that the evidence Carter Holt intends to adduce on this issue is also largely based on laboratory and other similar testing, which renders Carter Holt’s criticisms of the Ministry’s evidence somewhat ironic. But even putting that aside, if Carter Holt is correct, then the question of whether the product is inherently defective will be determined in Carter Holt’s favour, and will be determinative of most, if not all, of the proceeding.
The scope for issue estoppel
[68] The Ministry’s approach will also give rise to findings of fact and law which will be binding across the entirety of its claim. While additional building-by-building findings on individual issues of causation and loss in relation to 20 buildings might provide some guidance in relation to the remaining 813 buildings, I consider Carter Holt overstates those benefits, at least when weighed against the extra time to get to a Stage-1 trial under its approach, and the length of any such Stage-1 trial.
[69] A range of different buildings will need to be chosen for the Stage-1 trial. Selecting a broad range may reduce the scope for guidance or learnings in relation to the remaining buildings. For example, a finding that a builder has engaged in defective construction methods in relation to a school building in, say, Auckland, is unlikely to be accepted by a builder in relation to a school building constructed in, say, Invercargill several years earlier (unless the alleged construction defect is the same or extremely similar). Indeed, Carter Holt’s own expert evidence is that any truly representative sample would need to include at least 167 buildings — many more than the 20 proposed. Carter Holt also fairly acknowledges that “there may be instances where the extent of the issue estoppel may become an issue in subsequent trials.” That would not be the case under the Ministry’s approach; it was not suggested that either party could dispute the binding effect of findings on the three issues to be determined.
The time to get to a Stage-1 hearing
[70] Importantly, in my view, the Ministry’s approach also provides a clear and relatively efficient pathway to a Stage-1 hearing. That is not to underestimate the complexity of a Stage-1 hearing, even on the Ministry’s approach. But in my view, it is manageable. The issues concern the Ministry and Carter Holt only. Discovery and evidence would be required from only those parties. Any remaining interlocutory skirmishes would be similarly confined. And the Ministry at least suggests it is relatively advanced in the preparation of its evidence for a Stage-1 trial.
[71] This is in contrast with the pathway to a Stage-1 hearing under Carter Holt’s proposal, even if limited to 20 school buildings. As noted earlier, proper and fair selection of the 20 buildings, including to permit the Councils to participate in that process,48 would require Carter Holt to complete the particularisation of its building- by-building claims. While I proceed on the assumption that Carter Holt is progressing that exercise as promptly as it can, given it had only inspected 100 of the 833 buildings by the end of last year, it is to be assumed that such an exercise could take many more months to complete. There would then need to be time for the Councils to join any further parties it says should share in any loss. Full discovery would then be required from all parties, including in relation to Carter Holt’s claims of contributory negligence. Further interlocutory skirmishes, cross claims and appeals cannot be ruled out. Factual and expert evidence from each party involved in relation to each of the 20 buildings would then need to be prepared. In the meantime, determination of the Ministry’s three preliminary issues would be on hold, despite those issue not turning on the individual issues which are the subject of Carter Holt’s contribution claims.
[72] Carter Holt properly recognises that the time to a Stage-1 trial on its approach could be in the order of one year later than a Stage-1 trial on the Ministry approach. If anything, I consider that is likely to underestimate the delay between the two. The position might have been different had Carter Holt’s contribution claims been progressed in a substantive way over the last three or more years. Mr Miles for Carter Holt candidly accepted there has been delay while Carter Holt pursued its strike out application to the Supreme Court. It was, of course, entitled to do so. Nevertheless,
48 Given Carter Holt’s contribution claims are solely directed at those entities.
as matters currently stand, its claims remain in early stages, and ought not to hold up the determination of core issues under the Ministry’s claim which can be efficiently progressed in the interim.
The risk of duplication between staged hearings
[73] Nor am I satisfied that the potential risk of duplication of some aspects of evidence undermines the utility of the Ministry’s approach, at least as a reason to reject it. While I accept that in a case of this nature some duplication is inevitable, I consider Carter Holt overestimates these issues.
[74] Carter Holt points in particular to the Ministry’s indication that in its Stage-1 trial, it will adduce evidence in relation to some individual buildings from its claim, and criticises the Ministry for being unclear as to just how many buildings this would encompass. At the hearing, Mr Farmer clarified that any building-specific evidence will be limited to the four school buildings which are the subject of detailed monitoring (see [28](b) above), supplemented by expert evidence about the buildings of a more general nature, as a result of the experts’ experience of inspecting the buildings generally. Mr Farmer confirmed that the Ministry does not propose to call detailed evidence at a Stage-1 hearing in relation to other particular school buildings. Mr Farmer also noted that the Ministry’s evidence would be narrower in scope in any event, being directed to the cladding, rather than any broader issues alleged by Carter Holt.
[75] Carter Holt says it will also adduce evidence in relation to particular buildings at a Stage-1 trial under the Ministry’s approach, which will need to be duplicated in any Stage-2 trial. However, Carter Holt did not clarify the precise nature of this evidence, nor how many buildings it would cover. Moreover, to the extent Carter Holt is correct that the Court’s examination of such evidence will produce useful guidance or learnings, then any such duplication may come with associated benefits.
[76] I also respectfully agree with Ellis J’s observations in Cridge that “a finding of inherent defects in the cladding system would render the issues of causation and
damage more straightforward.”49 A similar observation was made by the majority in Harrington.50 And while Ellis J acknowledged that the position may be complicated by issues of contribution and intervening causes, she further observed, and I agree, that complexity exists in claims like these in any event.51
The scope and length of a Stage-1 trial on 20 buildings
[77] Given the sheer number of issues and parties potentially involved in a 20-building hearing, any Stage-1 hearing under Carter Holt’s approach is likely to be considerably longer than a Stage-1 trial under the Ministry’s approach.
[78] The Ministry estimates a trial of some three months for its three preliminary issues. I consider that realistic. So, a Stage-1 trial on Carter Holt’s approach must necessarily be longer. In addition to the Ministry’s three preliminary questions, the Court hearing Carter Holt’s Stage-1 trial would need to address at least the following issues, most of which will need to be determined on a building-by-building basis:
(a)the cause of any structural damage alleged by the Ministry in relation to any particular building;52
(b)what loss the Ministry has suffered as a result;
(c)when the damage complained of was reasonably discoverable and any other affirmative limitation defences pleaded by Carter Holt;53
(d)whether the Ministry caused or contributed to its own loss by, for example:
49 Cridge v Studorp Ltd [2016] NZHC 2451, (2016) 23 PRNZ 281 at [70].
50 Harrington v Dow Corning Corp (2000) 193 DLR (4th) 67 (BCCA) at [63] per Huddart JA (with whom Rowles and Ryan JJA concurred).
51 Cridge v Studorp Ltd [2016] NZHC 2451, (2016) 23 PRNZ 281 at [70].
52 Which will need to canvass a range of alleged construction, design and inspection defects, including installation of Shadowclad, design principles applied to the buildings and alleged failings in other elements (said to include flashings, waterproofing membranes, sealant, joinery and paint or stain coatings).
53 For example, based on the alleged introduction of new causes of action pleaded in the fifth statement of claim.
(i)failing to ensure proper standards of design and workmanship in the construction of any given building (including negotiating unrealistically low prices from building work professionals);
(ii)failing to ensure each Board of Trustees had access to sufficient funds to carry out required maintenance of the relevant school buildings;
(iii)failing to ensure that proper maintenance was in fact carried out in relation to any given building;
(iv)failing to address concerns raised by the Ministry’s experts, contractors and employees regarding the standards of construction, design and maintenance of school buildings;
(v)failing to ensure that school buildings were not altered in a manner that adversely affected weathertightness;
(e)whether the Consumer Guarantees Act applies to any “supply” of Shadowclad;
(i)if so, whether the relevant Shadowclad has failed to comply with any applicable guarantees in the Consumer Guarantees Act;
(ii)if so, whether s 26 of the Consumer Guarantees Act applies;
(f)whether any of Carter Holt’s promotional activities, as defined in the statement of claim, breached s 9 of the Fair Trading Act; and
(g)if breaches are established, what remedies are appropriate.
[79] A trial involving all the above issues in relation to 20 buildings, in addition to the three preliminary issues under the Ministry’s approach, would be very lengthy. Mr Weston QC for the Councils estimated two weeks per building, being 40 weeks.
Added to this is the 12 weeks for the issues suggested for the Ministry’s Stage-1 trial, which results in a 52-week hearing — more than a full sitting year.
[80] In countering this estimate, Mr Miles emphasised that the school buildings are relatively simple in design and construction, at least in contrast to an apartment building or a significant residential home, where leaky claim hearings can last for several weeks.
[81] As far as the Court is presently aware, there has only been one leaky school proceeding to date. The hearing in Minister of Education v H Construction North Island Ltd ran from 12 February to 7 March 2018, and for a further two days on 12– 13 March — cumulatively four full sitting weeks, with extended court sitting hours for most of the trial.54 While the claim involved nine separate buildings, these were all at the same school and had been built by the same builder. There were only four parties involved: three plaintiffs55 and one defendant (the builder). The architect had not been joined.56 The plaintiffs alleged seven primary defects, with approximately 18 “sub-defects”. By Downs J’s description, and even in relation to relatively simple school buildings, “the parties called phalanxes of expert witnesses”; the plaintiffs called eight experts and the defendant called seven.57
[82] In light of the above, while a Stage-1 hearing might not be the 52 weeks estimated by the Councils, in my view, it is likely to be nearer to that length of time rather than the 12 weeks suggested by Carter Holt. I note, for example, that even on this interlocutory application, I was provided with 14 affidavits from 10 different experts.
[83] Finally, I do not ignore the fact that in order to determine the entirety of the proceedings, all of the issues arising from the Ministry’s claims, as well as Carter Holt’s and the Councils’ contribution claims, will need to be grappled with at some
54 Minister of Education v H Construction North Island Ltd [2018] NZHC 871 at [340].
55 The Minister of Education, Secretary for Education and the Board of Trustees of Botany Downs Secondary College, all represented by the same counsel.
56 See [12].
57 At [13].
stage, under either approach.58 On balance however, I am not persuaded the additional time and complexity to get to a Stage-1 trial under Carter Holt’s approach, and the much lengthier Stage-1 trial involved, is compensated by what may ultimately be relatively limited “guidelines” or “learnings” from resolution of individual issues in relation to 20 of the 833 buildings. That is particularly so when it will delay resolution of three core aspects of the Ministry’s claim, resolution of any one of which in Carter Holt’s favour may well bring the proceedings to an end.
[84] For those reasons, there will be orders in accordance with the Ministry’s approach. Carter Holt’s application to proceed to a Stage-1 trial by a sample of 20 buildings is dismissed.
The Ministry’s application to strike out aspects of the defence
Introduction
[85] The Ministry applies to strike out four aspects of Carter Holt’s statement of defence, which state that Carter Holt is not in a position to plead further to the relevant allegation in the statement of claim until further particulars are provided.59 The Ministry says these aspects of Carter Holt’s statement of defence are an abuse of process because, in 2015, the parties entered into an agreement which concluded all issues between them as to the sufficiency of particulars to the statement of claim (the “Agreement”).
[86] Carter Holt acknowledges the Agreement, but says it must be considered in context.
[87] At the outset of these proceedings, Carter Holt applied for further and better particulars of the Ministry’s claim. That application was resolved by Fogarty J across two substantive judgments.60 Each party appealed or cross-appealed his Honour’s findings. The appeal and cross-appeal were resolved during the hearing of the appeal
58 In all likelihood, any second-stage trial (or trials) will need to deal with classes or subcategories of issues and buildings.
59 The application concerns paragraphs 38(k), 49(c), 65(d) and 130(d) of the statement of defence to the sixth amended statement of claim.
60 Minister of Education v James Hardie New Zealand [2014] NZHC 2432 and Minister of Education v James Hardie New Zealand (No 2) [2014] NZHC 3344.
by way of the Agreement, which was recorded in a joint memorandum presented to the Court of Appeal.
[88] Carter Holt says the appeal did not address all the particulars which it now says are or will be required. In addition, it says that while the Agreement records that it concludes all issues between the parties as to the sufficiency of particulars, there have been significant developments in the claim since that time. Carter Holt also submits the Agreement cannot, nor does it purport to, deprive the Court of its jurisdiction to order particulars of its own volition in any event. Finally, Carter Holt says that the quite extraordinary nature of these proceedings demands a flexible approach, particularly given the Agreement was entered into at a relatively early stage.
Factual background — more detail
[89] Given the basis for Carter Holt’s opposition to the Ministry’s strike out application, it is necessary to traverse the earlier interlocutory skirmish between the parties on particulars.
[90] In June 2014, Carter Holt filed a wide-ranging application for further and better particulars of the (then) second amended statement of claim.61 In summary, Carter Holt sought further and better particulars of:
(a)the allegation that each building has failed or will fail to meet the requirements of the Building Code due to the Defects (as defined in the third amended statement of claim);
(b)which Cladding Sheets Defects and Cladding System Defects (also defined) allegedly exist in respect of each building;
(c)the nature and various causes of the damage alleged in relation to each building;
61 The application was then updated to reflect the subsequent filing of the third amended statement of claim.
(d)which buildings the Ministry says have already been subject to physical damage, and which have not yet been subject to physical damage, but which the Ministry says will suffer such damage;
(e)the period within which each building was constructed;
(f)Carter Holt’s allegedly negligent acts or omissions when designing, manufacturing, importing and supplying Shadowclad;
(g)the contract or contractual chain under which it was alleged the Shadowclad product had been supplied to one or more plaintiff parties (in connection with the Ministry’s cause of action under the Consumer Guarantees Act);
(h)the Ministry’s reliance on the alleged negligent misstatements by Carter Holt; and
(i)the dates on which it is alleged Carter Holt acquired knowledge of the pleaded defects (in connection with the Ministry’s claim of a breach of a duty to warn).
[91] Carter Holt’s application was determined by Fogarty J in a judgment dated 3 October 2014.62 In short, the Judge ordered the Ministry to give further particulars in relation to (a), (b), (c), (d) and (e) above, as well as “particulars detailing the deficiencies in the context of whether or not accepted solutions were followed or attempted to be followed in each particular case”.63 Carter Holt’s remaining requests for particulars were dismissed.
[92] The parties subsequently disagreed on whether the further information provided by the Ministry complied with Fogarty J’s orders. Carter Holt framed two issues arising out of the disagreement, namely:
62 Minister of Education v James Hardie New Zealand [2014] NZHC 2432.
63 At [120].
(a)whether adequate particulars of damage said to have been caused by Carter Holt’s negligence had been provided; and
(b)the correct interpretation of the requirement for “particulars detailing the deficiencies in the context of whether or not accepted solutions were followed or attempted to be followed in each particular case”, and whether such particulars had been provided by the Ministry.
[93] The Ministry took issue with Carter Holt’s approach, submitting that its claim of non-compliance went well beyond the particulars it had sought and which were the subject of Fogarty J’s judgment. Counsel for the Ministry submitted that it was inappropriate for Carter Holt to seek further particulars in that manner, rather than bringing a fresh application.
[94] Fogarty J considered these matters in a judgment delivered on 19 December 2014.64 He concluded that the particulars given by the Ministry of the damage to the buildings, and the various causes of the damage, were adequate.65 In this context, he noted that:66
If CHH considers it needs more particulars than provided by the spreadsheet, then I agree with Mr Flanagan’s submission that CHH should file an application for further particulars.
[95] Fogarty J’s observation, reflecting the Ministry’s submission, accordingly recognised that it would have been open to Carter Holt at that time to seek further particulars of damage, and the cause of that damage.
[96] The second issue framed by Carter Holt centred on particulars of how it was said Carter Holt was negligent in the context of the manner in which Shadowclad is to be affixed to buildings, notwithstanding the apparent utilisation of an Acceptable Solution under the Building Code for such affixing. In his first judgment, Fogarty J concluded that further particulars were required of how it was alleged Carter Holt was negligent in this context, despite adopting an Acceptable Solution. In his second
64 Minister of Education v James Hardie New Zealand (No 2) [2014] NZHC 3344.
65 At [16].
66 At [16].
judgment, Fogarty J concluded that the Ministry was bound by the orders made in his first judgment and was not at that time in compliance with them.67
[97]The parties then appealed and cross-appealed Fogarty J’s first judgment:
(a)the plaintiffs appealed the requirement for the Ministry to provide particulars of material facts amounting to negligence on the part of Carter Holt, notwithstanding the adoption of an Acceptable Solution, as well as the requirement to provide particulars of the period within which each building was constructed; and
(b)Carter Holt cross-appealed the dismissal of its application to require the Ministry to provide particulars of the contractual arrangements or chain of the alleged supply of Shadowclad (in relation to the Consumer Guarantees Act cause of action), and the dismissal of its application for further particulars in relation to the Ministry’s alleged reliance on representations said to have been made by Carter Holt.
[98] Neither party appealed or cross-appealed any aspect of Fogarty J’s judgments in relation to particulars of damage and the causes of damage, nor did Carter Holt file any application for further particulars.
[99] As noted, part way through the appeal hearing, the parties resolved their differences in relation to particulars. Relevantly, the Agreement provides as follows:
1. The parties have conferred on the outstanding issues on the appeal and cross appeal and have agreed to resolve both appeals on the basis set out below.
…
General
9.The information provided by the plaintiffs will not be provided by way of particulars.
10.The parties may refer any issues arising out of this agreement to the High Court for resolution as a case management issue.
67 At [33] and [37].
11.The appeal will be allowed by consent and the cross appeal will be withdrawn by consent and this will conclude all issues between the parties as to the sufficiency of the particulars to the statement of claim as pleaded (including, for the avoidance of doubt, an application to strike out the claim for want of particulars). Also for the avoidance of doubt, nothing in this agreement resolving the particulars appeal and cross-appeal is intended to affect:
a.either party’s arguments in the strike out appeal before the Court concerning whether the 4ASC as pleaded discloses arguable causes of action or;
b.the orders set out in paragraph 3(a)(i)-(iii) of the sealed order of the High Court dated 3 October 2014.
12.There is no issue as to costs.
(Emphasis added)
[100] The reference at cl 11(b) of the Agreement to the sealed orders relates to the particulars ordered by Fogarty J in his first judgment and set out at [90](a) to (d) above.
Discussion
[101] As a preliminary observation, I note that at no time since Fogarty J’s judgments, the Agreement, or in response to the Ministry’s application to strike out aspects of its defence, has Carter Holt filed an application for further particulars. In addition, it is evident from Carter Holt’s submissions that it does not propose to serve a notice or file an application for further particulars at this time. Rather, it states that its approach reflects a “responsible approach being taken to the signalling of potential future amendments to the statement of defence as more information comes to light in the course of this proceeding”.
[102] Having regard to the parties’ earlier positions in relation to particulars, and importantly, the terms of the Agreement, but subject to my comments at [109], [112] and [114] below, I consider it is an abuse of process for Carter Holt to continue to plead a requirement for further particulars in the specified paragraphs of its statement of defence.
[103] I accept that neither Fogarty J’s judgments nor the Agreement can prevent Carter Holt from seeking further particulars altogether. For example, if the Ministry’s claims were amended from the form in which they existed at the time of Fogarty J’s
judgments and the Agreement, Carter Holt must be entitled to seek particulars of any new allegations. But that is not the basis upon which Carter Holt seeks to resist the strike out application. The relevant aspects of the sixth amended statement of claim is in substance or in form in the same terms as the third amended statement of claim.68
[104] The parties had obviously expended considerable time and energy on the issue of particulars, including Carter Holt’s wide-ranging application; that being dealt with across two judgments of this Court; and then aspects of those judgments being subject to appeal. Those matters were then resolved by the Agreement set out in the joint memorandum, which was presented to the Court of Appeal and was the basis on which the appeal and cross-appeal were resolved.
[105] Carter Holt is correct that the particulars under appeal were (somewhat) narrower than those aspects of the statement of claim in respect of which Carter Holt says it now requires further particulars. However, the Ministry’s allegations in paragraphs 49 and 65 of the sixth amended statement of claim were the subject of Carter Holt’s application for further and better particulars which was determined by Fogarty J.69 Neither party appealed his Honour’s findings in relation to paragraph
49.70 Fogarty J ruled that further particulars were not required in relation to paragraph
65. Carter Holt appealed that finding, but then resolved the appeal on the terms set out in the Agreement.
[106] As the Ministry acknowledges, res judicata does not ordinarily apply to interlocutory orders, though a party who fails on an interlocutory application must not apply for the same or similar order without leave of a Judge, and such leave may only be granted in special circumstances.71 As the Ministry also notes, while those rules may not be directly applicable here, they reflect the general proposition that interlocutory matters ought not to be relitigated in the same proceeding. The fact that
68 Paragraph 130(d) of Carter Holt’s statement of defence is in fact part of one of Carter Holt’s affirmative defences (namely its allegation that the Ministry failed to address concerns raised by its own experts as to school construction standards and design). Further particulars of Carter Holt’s own pleading are said to turn on the provision of the further particulars of Loss pleaded at paragraph 49 of the statement of claim, and accordingly stand or fall with that paragraph.
69 Paragraph 65 of the sixth amended statement of claim corresponds with paragraph 63 of the third amended statement of claim.
70 Minister of Education v James Hardie New Zealand [2014] NZHC 2432 at [65]–[68] and [120].
71 High Court Rules 2016, r 7.52.
interlocutory orders do not ordinarily give rise to issue estoppel is also reflected in Fogarty J’s observations,72 and counsel for the Ministry’s submission (referred to at
[93] above), that if Carter Holt considered it needed more particulars than those being given in response to Fogarty J’s first judgment, the proper course was to file a fresh application for further particulars.
[107] But irrespective of the content and effect of the Court’s earlier orders on particulars, the Agreement could not be in clearer terms. It concluded “all issues between the parties as to the sufficiency of the particulars to the statement of claim as pleaded.” It was not limited to issues between the parties on Carter Holt’s earlier application for further particulars; nor to issues between the parties on the appeal. Mr Miles acknowledged that if this was “normal” litigation, then it would be “too late” for Carter Holt to seek further particulars, given the Agreement’s terms.
[108] At the time of entering into the Agreement, the parties had also clearly turned their minds to those aspects of Fogarty J’s first judgment which had not been appealed, including his Honour’s orders in relation to particulars of the nature and cause of the damage to the buildings. In this context, cl 11(b) of the Agreement confirms that nothing in it affects the Ministry’s obligation to provide the particulars ordered by Fogarty J in his first judgment, and as set out in paragraphs [3](a)(i)-(iii) of the sealed orders dated 3 October 2014.73 This is relevant given there is a suggestion in Carter Holt’s submissions that the Ministry has not provided the particulars required by Fogarty J and reflected in paragraphs [3](a)(i)-(iii) of the sealed orders. Carter Holt also suggests that the Ministry is not fully complying with the terms of the Agreement itself. I comment no further on these issues, however, as it is not appropriate to address such allegations in a vacuum.
[109] While Carter Holt is entitled to insist on full performance of the Agreement (and there is a dispute resolution clause in it), as well as compliance with paragraphs [3](a)(i)-(iii) of the sealed orders dated 3 October 2014, it has not demonstrated why it ought not to be bound by the remaining terms of Agreement. The position it took in
72 Minister of Education v James Hardie New Zealand [2014] NZHC 2432 at [124].
73 Which must of course reflect his Honour’s views on what is and is not required for proper compliance with those orders, as set out in his second judgment.
the Agreement was clearly a considered one, at a time when it was advised by experienced solicitors and senior counsel. Nor has it persuaded me that that there have been such significant developments since the Agreement was entered into that it ought somehow to be “released” from it. In fact, the substance of the pleadings has not materially changed as between the third and sixth amended statements of claim.
[110] Carter Holt points to the pursuit of its claim for third-party contribution from the various Councils as a significant development. At the time it entered into the Agreement, however, it had already filed its third-party notices. All that has happened in the interim is that it has served the notices on the Councils. Nor do I consider the other matters referred to by Carter Holt as somehow serving to frustrate, or otherwise justifying Carter Holt being permitted to resile from, the Agreement. 74
[111] Carter Holt also points to observations by Fogarty J in his second judgment as to concessions made in interlocutory hearings, which ought not to bind the parties beyond the particular interlocutory application being determined (particularly in very complex litigation such as this).75 However, I regard the (written) Agreement, presented to the Court of Appeal, as going considerably beyond a (likely oral) “concession” made by counsel in the course of an interlocutory hearing. And the fact these are significant and complex proceedings cuts both ways. Such proceedings can only be effectively progressed and managed when there is a considerable degree of reasonableness, cooperation and pragmatism between the parties. The environment for this to occur is undermined if the parties enter into agreements but later seek to unilaterally depart from them.
[112] Finally, Carter Holt is correct that the parties’ agreement cannot exclude the Court ordering further and better particulars of its own volition. The Ministry accepts that. There is no appropriate basis upon which I ought to order any further and better particulars, at least in this judgment. However, it may assist the parties if I record that I accept Carter Holt’s position that at some point, the Ministry must plead (as precisely
74 Other matters referred to included the determination of the Court of Appeal and Supreme Court’s decisions on Carter Holt’s strike out applications; and the Ministry’s withdrawal of its application for representative orders in relation to the Boards of Trustees.
75 See Minister of Education v James Hardie New Zealand (No 2) [2014] NZHC 3344 at [39].
as possible) the actual loss it says it has suffered in relation to each building.76 That is a clear requirement of r 5.32 of the High Court Rules, given the Ministry pleads that it has suffered financial loss as a result of Carter Holt’s alleged failings. At present, the Ministry’s claim simply seeks an inquiry into its losses. While that has been accepted in other cases as a “stop-gap” measure, it ought not to continue to be so used when a plaintiff can assess actual losses, or provide a robust estimate of such losses. For example, in Hunt v New Plymouth District Council the Court of Appeal said:77
It is no answer to say that the evidence of a valuer would have been necessary to establish any such losses. If Mr Hunt wished to pursue his claim in this respect, he should have provided the necessary particulars. It is not sufficient to assert there is a loss and then to seek an inquiry into damages. This is not a case where some loss is established but the extent of it is unknown.
[113] Again, I do not make any orders in this context, as it is only the Ministry’s strike out application under consideration in this judgment. But as part of ongoing case management, this will be a matter for consideration.78
[114] The Ministry’s application to strike out those aspects of Carter Holt’s statement of defence referenced in the Ministry’s application is accordingly granted. This does not affect, however:
(a)The Court’s own ability to order the Ministry to provide further and better particulars; or
(b)Carter Holt’s ability to require the Ministry’s compliance with:
(i)the Agreement; and
(ii)paragraphs [3](a)(i)-(iii) of the sealed orders of the High Court dated 3 October 2014.
76 Carter Holt accepts that time may be required before particulars of loss are given.
77 Hunt v New Plymouth District Council [2011] NZCA 406 at [82].
78 Recognising that the provision of particulars of actual loss will likely need to be provided on a progressive basis.
Miscellaneous directions sought
Introduction
[115] In its notice of interlocutory application dated 21 November 2017, Carter Holt sought the following further trial directions:79
…
(d)A direction that the issue of whether the third plaintiff may sue and be sued on behalf of the Boards of Trustees of the Schools specified in Schedule 4 to the plaintiffs’ statement of claim (Boards) in this proceeding be determined at the First Stage Trial.
(e)Directions that, irrespective of the ultimate answer the question in paragraph (a) above:
(i)Defences of contributory negligence based on the conduct of the Boards are properly pleaded against the plaintiffs as asserted representatives of the Boards, and for limitation purposes were brought against the Boards when served on the plaintiffs.
…
(f)An order granting leave to CHH to file a counterclaim against the third plaintiff and the Boards.
(g)An order that the plaintiffs pay to CHH expert costs incurred by CHH in inspecting School Buildings that have subsequently been removed from the proceeding by the plaintiffs.
[116]I address each issue in turn.
Status of Boards of Trustees
[117] The third plaintiff, the Ministry of Education, sues “as representative of the Boards of Trustees” as listed in Schedule 4 to the statement of claim. The Ministry originally filed an application for representative orders to this effect, which was subsequently withdrawn. The Ministry says that the Boards of Trustees have each consented to the Ministry suing on its behalf, and thus pursuant to r 4.24(a), no formal orders are required.
79 A number of further directions were sought by Carter Holt, but not pursued at the hearing.
[118] Carter Holt disputes whether each Board of Trustees has in fact consented to the Ministry suing on its behalf.
[119] During the hearing, it was agreed that any remaining issue in this regard is appropriately dealt with at the Stage-1 trial. I make a direction to that effect.
Defences of contributory negligence “attach” to Boards of Trustees
[120] Mr Heard for Carter Holt clarified at the hearing that the orders sought by Carter Holt at paragraph 1(e)(i) of its application do not seek the Court’s confirmation that Carter Holt’s defences of contributory negligence are “properly pleaded” in a substantive sense. Rather, an order is sought that those defences “attach” to the Board of Trustees (for limitation purposes), given the Ministry says it is suing for and on behalf of the Board of Trustees. Mr Heard explained that such a direction was sought given Carter Holt disputes the validity of the Ministry’s stated representative capacity and wishes to “cover-off” any uncertainty as to the defences attaching to the Boards, in the event it is found to be correct on that issue.
[121] Mr Heard referred to the Court of Appeal’s decision in Cridge, which confirms that proceedings filed by a representative plaintiff are to be treated as filed by the represented plaintiffs for limitation purposes, even if it is subsequently determined that it was not appropriate for the proceedings to have been commenced on a representative basis.80 Carter Holt says this must also be the case in relation to defendants, such that affirmative defences pleaded against a representative plaintiff are also to be treated as filed against the represented plaintiffs, prior to the question of whether the action has been properly commenced as a representative action being determined.
[122] Through discussion at the hearing, Mr Flanagan (for the Ministry) accepted that this must be the case. Otherwise, the Ministry would effectively “have its cake and eat it too”.
[123] By the conclusion of the hearing, both Mr Flanagan and Mr Heard accepted that it may not be necessary for me to make any formal orders in this regard, which
80 Cridge v Studorp Ltd [2017] NZCA 376, (2017) 23 PRNZ 582 at [86].
would be given in a vacuum. The Ministry does not challenge the affirmative defences on the basis of limitation, and its representative capacity is at large. Both parties accepted that, for present purposes, some “judicial wording” to the effect of what was acknowledged at the hearing would be appropriate. In light of the Court of Appeal’s decision Cridge, it would be somewhat unusual if the position set out in Cridge did not also apply to defendants’ pleadings against a representative plaintiff (for example, affirmative defences).
[124] In light of the position reached at the hearing, I do not make any formal orders on this aspect of Carter Holt’s application. This is without prejudice to further orders being sought in relation to this issue, should the need arise.
Leave to Carter Holt to file a counterclaim
[125] Mr Heard confirmed that Carter Holt’s proposed counterclaim simply mirrors the affirmative defences of contributory negligence which it has already pleaded against the Ministry. Carter Holt seeks leave to proceed with the counterclaim, in the event it is incorrect that the contribution issues have also been pleaded against the Boards of Trustees. As such, the counterclaim is also prophylactic in nature.
[126] The Ministry says there has been a four-year delay in filing the counterclaim and nothing has changed since the original round of pleadings in 2013. As such, the counterclaim could and ought to have been filed at that time. Mr Flanagan submits that the Ministry’s withdrawal of its application for representative orders does not alter matters, as Carter Holt’s position has always been, and remains, that the Ministry does not validly sue in a representative capacity.
[127] Nevertheless, the Ministry was unable to articulate any prejudice in the event leave was granted. As Mr Heard submits, Carter Holt’s allegation that the Boards of Trustees have contributed to the damage to school buildings (through lack of maintenance, among other things) was pleaded in Carter Holt’s first statement of defence, and will form part of any trial, irrespective of whether leave is granted for it to be progressed by way of a counterclaim.
[128] Accordingly, while the delay is lengthy and I am not particularly convinced by the reasons advanced by Carter Holt to explain it, given there is no prejudice to the Ministry in leave being granted, I grant leave. It strikes me that the appropriate course may be for the counterclaim to simply lie on the court file, with no further steps being required in relation to it, at least pending determination of whether the Ministry validly sues in a representative capacity. However, as I did not hear from the parties on what further steps may be appropriate in the event leave was granted, leave is reserved to the parties to file a joint memorandum (or if required, separate memoranda) within 15 working days of this judgment, on whether any further timetable orders in this regard are required.
Determination of costs associated with buildings withdrawn from the claim
[129] Unsurprisingly in relation to a claim of this nature, there have been several amendments over time to Schedule 4 to the statement of claim, with various school buildings being removed from the claim and some being added. Carter Holt seeks an order that costs be determined now in relation to 13 buildings which have been removed from the claim, rather than costs being reserved to a later stage.
[130] Carter Holt submits that each building is an individual cause of action (or at least akin to an individual cause of action), such that on discontinuance, costs ought to be awarded in its favour and determined now. In the alternative, if each building is simply a component of the total loss pleaded by the Ministry, the removal of buildings from the claim represents an amendment to the pleading, such that, pursuant to r 7.77(8), “the party filing the amended pleading must bear all the costs of and occasioned by the original pleading and any application for amendment”.
[131] Carter Holt notes that the changes to the plaintiffs’ claim have been extensive, pointing to the fact that the original claim included 1,476 buildings, whereas the most recent version of Schedule 4 includes only 833 buildings (643 fewer buildings). Carter Holt says that it has incurred significant costs associated with buildings withdrawn from the claim, which are wholly wasted. These relate primarily to experts’ costs associated with building inspections, carrying out destructive testing and preparing reports. It estimates the costs associated with such activities to be as much as
$30,000 to $70,000 per building. There are also associated legal costs in reviewing documents relevant to the buildings in the claim. Carter Holt proposes to quantify its wasted costs if and when a costs order is made.
[132] The Ministry disputes that each building represents a separate cause of action, and says the amendments are more properly characterised as contributing to the extent of the Ministry’s loss. It submits that in the ordinary course, amendments to the loss alleged would not give rise to a new, or one less, cause of action. The Ministry further submits that it is by no means clear that costs associated with buildings removed from the claim will be wholly wasted, as Carter Holt suggests. This is because evidence in relation to those buildings may nevertheless be utilised in a Stage-1 (or Stage-2) trial. In this context, the Ministry notes that its evidence filed on the application explains how the costs associated with buildings removed from the claim may still be relevant, and Carter Holt did not dispute this evidence in reply.81
[133] Accordingly, the Ministry’s position is not that wasted costs should not be awarded to Carter Holt; rather it is a matter of how wasted costs will be ascertained, and thus the timing of such costs orders.
[134] While I have some sympathy with Carter Holt’s concern that any wasted costs may ultimately get “lost in the mix,” in the context of a much broader and later costs inquiry, I do not consider it appropriate to make to costs orders now on buildings removed from the claim. That is irrespective of whether each building constitutes a separate cause of action, or constitutes a part of the Ministry’s overall loss.
[135] First, it is open to Carter Holt to ensure that it maintains an appropriate record of costs associated with buildings removed from the claim and to advance a claim for wasted costs at the appropriate time.
[136] Second, and more fundamentally, I agree that it may be difficult, in advance of trial, to determine which of Carter Holt’s costs have been wholly wasted. As Woolford
81 In her affidavit, Ms Halpin for the Ministry refers to correspondence from Carter Holt’s solicitors, in which it is stated, in relation to buildings removed from the claim, that given the Ministry’s allegation that there are systemic issues with Shadowclad, the performance of any Shadowclad on these buildings is also relevant to the proceeding.
J observed in the context of a similar application, “[i]t may be quite difficult to isolate the wasted costs involved in responding to an original pleading unless and until the amended pleading goes to trial.”82
[137] I was originally minded to make a costs order now in relation to those buildings removed from the claim which are not in fact clad in Shadowclad.83 It is difficult to see what evidence or learnings could have been drawn from those buildings and which could be utilised at trial. On reflection, however, I consider that the difficulty in isolating wasted costs may apply even to these buildings. For example, to the extent Carter Holt seeks to demonstrate that there are systemic weathertightness issues with school buildings irrespective of their cladding (for instance, as a result of systemic design and construction issues), then it cannot be excluded that evidence in relation to buildings removed from the claim might have some relevance to the broader claim.
[138] In these circumstances, I decline to make an order as to costs associated with buildings removed from the claim. This is, however, without prejudice to Carter Holt seeking an order to the same effect at some future point, for example, should there be ongoing substantive amendments which give rise to clearly wasted costs or if increasing numbers of buildings are removed from the claim for no apparent reason.
Result
[139]In light of the above, I make the following orders and directions:
(a)The Ministry’s (amended) application for determination of separate questions dated 24 January 2018 is granted.
(b)Carter Holt’s application for determination of separate questions (as set out at [1](a) of its application dated 21 November 2017) is declined.
82 Jones v Norterra Rural Resources Ltd [2014] NZHC 2855 at [32].
83 Carter Holt says that at least two of the 13 buildings removed from the claim (for which it now seeks costs) were not clad in Shadowclad.
(c)The Ministry’s application to strike out parts of Carter Holt’s defence dated 25 August 2017 is granted (subject to those matters set out at
[114] above).
(d)Leave is granted to Carter Holt to file a counterclaim in terms of [1](f) of its application dated 21 November 2017.
(e)By consent, a direction is made in terms of [1](d) of Carter Holt’s application dated 21 November 2017.
(f)Carter Holt’s application for an order as to costs in terms of [1](g) of its application dated 21 November 2017 is dismissed, subject to those observations set out at [138] above.
(g)A joint memorandum or separate memoranda are to be filed in accordance with [128] above.
[140] A two-hour face-to-face case management conference is to be scheduled before me on the first available date 15 working days after the date of this judgment.
Costs
[141]The parties are to seek to agree costs. In the event agreement is not possible:
(a)Any party seeking costs is to file and serve a memorandum within
10 working days of the date of this judgment.
(b)Memoranda in reply are to be filed and served within a further
5 working days.
(c)No memorandum is to exceed five pages in length.
(d)I will thereafter determine costs on the papers.
Fitzgerald J
Solicitors: Meredith Connell, Auckland
LeeSalmonLong, Auckland Simpson Grierson, Auckland
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