Minister of Education v James Hardie New Zealand
[2018] NZHC 22
•26 January 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 22
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 NEW ZEALAND
First Defendant
STUDORP LIMIITED
Second DefendantCARTER HOLT HARVEY LIMITED
Third Defendant
CSR BUILDING PRODUCTS (NZ) LIMITED
Fourth Defendant
……………………………/continued
Hearing: 28 and 29 September 2017 Counsel:
TC Weston QC, JRJ Knight and DJ Barr for Councils
JG Miles QC and ED Nilsson for Carter Holt Harvey Ltd NF Flanagan and J Carlyon for Ministry
Judgment:
26 January 2018
JUDGMENT OF FITZGERALD J
This judgment was delivered by me on 26 January 2018 at 3:30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar ........................................................ Date………………………..…
The Minister of Education and Others v James Hardie New Zealand 2018 NZHC 22 [26 January 2018]
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
CIV-2016-404-2991
BETWEEN CARTER HOLT HARVEY LIMITED
Plaintiff
ANDAUCKLAND COUNCIL AND OTHER TERRITORIAL AUTHORITIES LISTED IN SCHEDULE 1 TO THE PLAINTIFFS’ NOTICE OF PROCEEDING AND STATEMENT OF CLAIM
First to Fiftieth Defendants
Contents
Introduction.......................................................................................................... [1]
Factual background............................................................................................. [6]
Nature of a contribution claim.......................................................................... [29]
First and fifth grounds - prejudice by excessive delay in service of Third Party Notices/some of CHH’s claims are time-barred
Councils’ submissions...................................................................................... [30]
CHH’s submissions.......................................................................................... [35]
Analysis – do the Building Act longstop provisions apply to contributionclaims?....................................................................................................... [41]
Analysis – should the Third Party Notices be set aside or struck out for
prejudice/abuse of process?...................................................................... [94]
Analysis – are aspects of CHH’s claims so clearly statute-barred that
they ought to be struck out?.................................................................... [122]
Second ground – delay in service is an abuse of process
Councils’ submissions.................................................................................... [144]
CHH’s submissions........................................................................................ [146]
Analysis – was the delay in service of the Third Party Notices an abuseof process?............................................................................................... [147]
Third and fourth grounds – CHH’s claims are not sufficiently particularised/no evidential foundation
Councils’ submissions.................................................................................... [149]
CHH’s submissions........................................................................................ [157]
Analysis – ought CCH’s claims be struck out for lack of particulars?.......... [162]
Sixth ground –Ministry and CHH’s claims - “same damage” 58
Councils’ submissions.................................................................................... [173]
CHH’s submissions........................................................................................ [177]Analysis – are the Ministry and CHH’s claims in relation to the “same damage”? [180]
Conclusions and orders................................................................................... [214]
Costs.................................................................................................................. [216]
Introduction
[1] In proceeding CIV-2013-404-1899 (“Main Proceedings”), the Minister, Secretary and Ministry of Education (“Ministry”) sue Carter Holt Harvey (“CHH”) in relation to allegedly defective cladding products (“Shadowclad”) installed on approximately 833 school buildings in New Zealand. In very broad terms, the Ministry seeks damages for the costs to remove and replace the Shadowclad product and also for the costs of consequent repairs where it is alleged the Shadowclad product has allowed water to ingress, causing damage to surrounding building structures. The Crown also points to potential health and safety issues arising as a result of the allegedly defective product permitting the growth of mould spores, with consequent adverse health implications.
[2] CHH denies its Shadowclad product is defective, or that it has caused the damage alleged. Further, it says to the extent it is liable in respect of any of the damage pleaded by the Ministry, the relevant Territorial Authorities (“Councils”) are concurrent tortfeasors from whom CHH is entitled to contribution. CHH says any damage suffered by the Ministry has been fully or partly caused by defective building works, and thus the Councils’ failures in carrying out their supervision of design and construction of the school buildings, and ultimate sign-off through the provision of a Code Compliance Certificate (“CCC").
[3] CHH has filed contribution claims against 54 Councils under s 17(1)(c) of the Law Reform Act 1936 (“LRA”) in two separate proceedings:
(a)First, by way of third party notices in the Main Proceedings (“Third Party Notices”). CHH filed the Third Party Notices in December 2013 but did not serve them until December 2016.
(b)Second, by way of separate contribution claims in a proceeding commenced by CHH on 18 November 2016, namely CIV-2016-404- 2991 (“Contribution Proceedings”). The Contribution Proceedings were also served on the Councils in December 2016.
[4] The Councils now seek to set aside and/or strike out the Third Party Notices, or alternatively strike out all or parts of the Contribution Proceedings on a variety of grounds, including that the Councils are prejudiced by the excessive delay in the service of the Third Party Notices; that significant aspects of CHH’s claims are time- barred; and that the claims are insufficiently particularised and thus amount to an abuse of process in any event. The Councils also say that the Ministry’s claims against CHH and CHH’s claims against the Councils are not in respect of the “same damage”, which is a requirement for a contribution claim under s 17(1)(c) of the LRA.
[5] CHH opposes the Councils’ application, and in turn applies for an order extending the time for service of the Third Party Notices and that the Main and Contribution Proceedings be consolidated.
Factual background
[6]The relevant facts may be briefly stated.
[7] As noted above, in the Main Proceedings, the Ministry sues CHH in relation to what it says is CHH’s defective Shadowclad product. The Ministry’s claim covers approximately 833 school buildings throughout New Zealand. In relation to most though not all of the buildings, the Ministry says that not only is the Shadowclad product defective and likely to cause the buildings to leak in the future, but also that it has already permitted water ingress and thus caused consequential structural damage to the buildings. As also noted earlier, the Ministry also points to related health and safety concerns as a result of mould and spore build-up.
[8] The Ministry’s primary claim against CHH is in 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.
[9] Shortly after the Main Proceedings were commenced, CHH 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).
[10] Pending determination of its strike out application, CHH filed the Third Party Notices. As noted above, it did not serve the notices at that time. Rather, it took the view that it would await determination of the strike out application before doing so. CHH says that it viewed (and views) the Ministry’s claim as fundamentally lacking merit. Given the wide-ranging and substantial nature of the proceedings, they have and will require significant resources to defend. As a result, CHH did not consider it appropriate to serve the Third Party Notices while its strike out application and any appeals were pending. CHH says that it did not wish to put the Councils to the very significant cost and inconvenience of being involved with the Ministry’s claims when it considered they were likely to be struck out.
[11] CHH’s position in this regard was supported, to a degree, by the Ministry, as it agreed that, in return for CHH not serving the Third Party Notices while the parties engaged in settlement negotiations, the Ministry would (if required by CHH, in the event there was no settlement and the Councils objected to late service) consent to orders extending the time for service or granting leave for the issue of fresh third party notices.1
[12] In a judgment delivered on 4 April 2014, Asher J dismissed CHH’s strike out application.2 In relation to the negligence cause of action, his Honour held that although the matter was “finely balanced”, it was arguable CHH owed the pleaded duty of care to the Ministry.3
[13] CHH did not take steps to serve the Third Party Notice on the Councils at this time. Rather, it 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.4 However, CHH’s appeal was otherwise dismissed.
1 Evidently CHH has not required the Ministry to consent to its application to extend the time for service of the Third Party Notices, as the Ministry simply abides the Court’s decision on CHH’s application.
2 Minister of Education v Carter Holt Harvey [2014] NZHC 681.
3 At [72].
4 Carter Holt Harvey v Minister of Education [2015] NZCA 321, (2015) 14 TCLR 106.
[14] CHH again did not take steps at this time to serve the Third Party Notices on the Councils. It sought and was granted leave to appeal the Court of Appeal’s judgment to the Supreme Court.
[15] In a judgment delivered on 29 July 2016, the Supreme Court dismissed CHH’s appeal.5 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. Relevant to later aspects of this judgment, in dismissing CHH’s appeal, the Supreme Court also emphasised the nature of the Ministry’s claim against CHH, namely a product liability claim. In doing so, it rejected CHH’s submission that at its core, the claim was a proceeding “relating to building work”.6
[16] CHH thereafter took steps to serve the Third Party Notices (though this did not occur for some months after the Strike Out Judgment). For present purposes, the Councils accept the date of service was 16 December 2016. CHH had also by that time commenced the Contribution Proceedings, which were served at the same time as the Third Party Notices.
[17] By application dated 15 March 2017, the Councils applied to set aside the Third Party Notices and/or strike out the Contribution Proceedings. There are six grounds to the Councils’ application:
(a)First, they are seriously prejudiced by the excessive delay in service of the Third Party Notices;
(b)Second, the delay in serving the Third Party Notices is an abuse of process in the Main Proceedings;
(c)Third, the lack of sufficient particulars in CHH’s claims against the Councils renders CHH’s claims vexatious or an abuse of process;
5 Carter Holt Harvey v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78 (“Strike Out Judgment”).
6 At [102].
(d)Fourth, CHH’s claims against the Councils are made with evidential foundation and are an abuse;
(e)Fifth, claims by CHH against the Council’s in respect of at least 326 of the school buildings in the Main Proceedings, and at least a further 90 school buildings in the Contribution Proceedings, are time-barred (the relevant buildings having been completed more than 10 years before the Third Party Notices were filed or the Contribution Proceedings commenced); and
(f)Sixth, CHH’s claims for contribution from the Councils in both proceedings are so different from the Ministry’s claims against CHH that they cannot be sustained.
[18] In response, CHH filed a cross-application dated 5 May 2017 seeking orders extending the time for service of the Third Party Notices and/or consolidation of the Main and Contribution Proceedings. The Councils oppose that cross-application.
[19] Before considering each ground of the Councils’ application, I first summarise the nature of a contribution claim. A number of the basic concepts which underpin a contribution claim are relevant to later aspects of this judgment.
Nature of a contribution claim
[20] CHH seeks contribution from the Councils on the basis that if CHH is liable to the Ministry, CHH and the Councils are concurrent tortfeasors in relation to the damage suffered by the Ministry. In other words, both CHH and the Councils are liable for the same damage.
[21] Multiple defendants’ liability for the same damage is based on the in solidum principle, namely each defendant is liable for the whole of the plaintiff’s loss (referred to as “solidary liability”). That is so even if other wrongdoers might have also caused the plaintiff’s loss. This regime protects the plaintiff. As a result of solidary liability, it is irrelevant as between the plaintiff and the first defendant (D1) that the plaintiff
also has claims against D2 and D3, or that D1 may be entitled to contribution from D2 and/or D3.7
[22] Where D1 is found liable for the whole of the plaintiff’s loss, it may seek contribution from D2 and/or D3. At common law, such claims could not be brought as between tortfeasors.8 This was remedied by statute, and in New Zealand, contribution claims between joint and concurrent tortfeasors are governed by s 17 of the LRA.
[23]This relevantly provides as follows:
17 Proceedings against, and contribution between, joint and several tortfeasors
(1)Where damage is suffered by any person as a result of a tort (whether a crime or not)—
…
(c) any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued in time have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability in respect of which the contribution is sought.
…
(2)In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person’s responsibility for the damage; and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity.
[24] As can be seen, any contribution must be in respect of the “same damage”. I return to this concept later in this judgment, as the sixth ground of the Councils’ application is that CHH’s contribution claims against the Councils are not in respect of the “same damage”.
7 Law Commission Apportionment of Civil Liability (NZLC R47, 1998) at [6].
8 Merryweather v Dixon (1799) 8 D&E 186, 101 ER 1337 (KB).
[25] The main alternative to solidary liability is what is known as “proportionate liability”. Under this form of liability, a joint or concurrent tortfeasor is only liable to the plaintiff for its proportionate share of the plaintiff’s loss. Under proportionate liability, the risk of one defendant’s “share” of the plaintiff’s loss being uncollected (due to, for example, that defendant’s insolvency) rests with the plaintiff.
[26] It has been said that the solidary approach to liability is unfair, in that it shoulders a (solvent) defendant with the whole of the plaintiff’s loss, even when other parties have also caused that loss. In response, it is argued that proportionate liability introduces into examination of the plaintiff’s claim against D1 the irrelevant issue of D2’s liability to the plaintiff. This argument is bolstered by the fact that “the whole basis of the law of civil liability is that quantification is determined not by the degree of the defendant’s fault but by the extent of injury to the plaintiff”.9 It is said this principle should not yield simply because there is more than one wrongdoer.10
[27] There has been consideration in recent decades of moving from solidary to proportionate liability.11 The Law Commission has examined this in some detail on two separate occasions, but in both its reports, has recommended that solidary liability remain the general rule.12
[28] Finally, and relevant to the first and fifth grounds of the Councils’ application, the limitation period for contribution claims only commences once the claimant’s primary liability to the plaintiff in the main claim has been determined (or settled).13
[29]I now turn to the grounds of the Councils’ application.
9 Law Commission Apportionment of Civil Liability (NZLC R47, 1998) at [7].
10 Law Commission Apportionment of Civil Liability (NZLC R47, 1998).
11 For example, Australia has already moved to a proportionate liability scheme.
12 Law Commission Apportionment of Civil Liability (NZLC R47, 1998); Law Commission Liability of Multiple Defendants (NZLC R132, 2014).
13 Limitation Act 1950, s 14; Limitation Act 2010, s 34.
First and fifth grounds - prejudice by excessive delay in service of Third Party Notices/some of CHH’s claims are time-barred
Councils’ submissions
[30] The Councils highlight that High Court Rule 4.12 requires a third party notice to be served within 25 working days of being filed. In this case, the Third Party Notices were not served until some three years after being filed. CHH did not seek leave for such late service.
[31] The Councils acknowledge that r 1.19 permits the Court, in its discretion, to extend the time for doing any act and that the discretion may be exercised after the expiration of the relevant time period. However, the Councils say there is not an unqualified right to an extension of time, and the Court’s discretion ought not to be exercised when the failure to comply with the Rules results in prejudice.14
[32] The Councils say they are seriously prejudiced by CHH’s delay in serving the Third Party Notices for three reasons:
(a)First, the ten-year longstop provisions in the Building Act 1991 (“1991 Act”) and Building Act 2004 (“2004 Act”) apply to claims for contribution. Given this, the Councils are unable to pursue fourth parties responsible for the design and construction of school buildings completed more than 10 years ago. The Councils say that between the issuing of the Third Party Notices (in December 2013) and service of the notices (in December 2016), the ten-year longstop period expired for contribution claims by the Councils in respect of least 49 school buildings. The Councils therefore say CHH’s delay in serving the Third Party Notices has caused prejudice because otherwise timely claims against design and construction parties became time-barred.
(b)Second, the Councils say that even if the ten-year longstop provisions do not apply (as CHH submits), there will still be significant prejudice, because the 15-year general longstop limitation period enacted in 2010
14 Day v Ost (No. 2) [1974] 1 NZLR 714 (SC).
came into force on 31 December 2015. Accordingly, if CHH had served the Third Party Notices promptly in or around December 2013, the 15-year longstop limitation period would not have been in force and therefore no longstop provision would have prevented Councils from claiming contribution from other parties for acts and omissions which occurred more than 15 years earlier.
(c)Third, the Councils submit they are also prejudiced by their inability to inspect buildings which were substantially remediated or demolished in the three-year period between the filing of the Third Party Notices and their service in December 2016.
[33] The Councils say CHH’s view that the Ministry’s claims were without merit and/or would be struck out did not justify the delay in service. At the very least, any such view could not reasonably have survived the decision of Asher J in April 2014 dismissing CHH’s strike out application. The Councils further submit that any potential cost issues for the Councils had the Third Party Notices been served promptly could have been managed by agreement, for example that no substantive defence needed to be pursued pending final determination of the strike out application. The Councils say this would have at least enabled it to take what steps it considered necessary to protect its own position, for example by joining fourth parties and inspecting buildings that were about to be remediated or demolished.
[34] The first ground of the Councils’ application significantly overlaps with the fifth ground. Under the fifth ground, the Councils say a significant number of CHH’s claims are time-barred as a result of the Building Acts’ ten-year longstop provisions applying. The Councils say that any claim in relation to a school building where the CCC was issued more than 10 years prior to the Third Party Notices being filed are plainly time-barred and thus ought to be struck out.15 The Councils say 326 school buildings fall into this category, and claims in relation to a further 90 school buildings in the Contribution Proceedings will be also be time-barred.
15 The issuing of a CCC typically being the last act by a council in relation to building works.
CHH’s submissions
[35] CHH says the delay in serving the Third Party Notices was neither “intentional and contumelious”, nor “inordinate and excusable” and giving rise to serious prejudice to the Councils, which might otherwise justify setting the notices aside.16 CHH submits there were good reasons for delaying service, given a hearing of its application to strike out the Ministry’s claims was imminent. As noted earlier, it says service prior to final determination of the strike out application could have resulted in significant wasted costs to CHH and the Councils, had CHH’s application been successful.
[36] Further, CHH submits no substantial prejudice has been suffered by the Councils in any event. It says that the 10-year longstop provisions do not apply to contribution claims, and therefore does not prevent further contribution claims being made by the Councils against others. CHH says its contribution claims are not “proceedings relating to building work” for the purposes of the longstop provision, but rather are a separate statutory claim with their own separate limitation period. It says that particularly clear words would have been required to override the specific limitation period for contribution claims, and the Building Acts longstop provisions simply do not do that. CHH points to conflicting High Court decisions on this issue.17
[37] CHH further says the Supreme Court’s Strike Out Judgment in the Main Proceedings leaves open the door to a finding that the longstop provisions do not to apply to contribution claims. CHH also refers to certain judgments from appellate courts in the United Kingdom and Australia, which it says supports its submission that the longstop provisions do not apply to contribution claims.
[38] In respect of the prejudice suggested by the Councils, CHH also notes the Councils have already commenced 47 contribution claims. It also submits difficulties in identifying or pursuing potential further contributors is not a valid ground in and of itself to set aside or strike out of an otherwise meritorious claim in any event.
16 Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229 (CA) at 318, cited with approval in Bank of New Zealand v Savril Contractors Ltd [2005] 2 NZLR 475 (CA) at [51].
17 There is no senior appellate authority.
[39] Finally, CHH says that even if the longstop provisions do apply to contribution claims, it would not be appropriate to strike out any of the claims in this case. That is because the factual basis for the dates upon which the relevant CCCs are said to have been issued is in many cases unclear and internally inconsistent. Given this, CHH says it would be quite unsafe to strike out those claims now.
[40] I note the comprehensive and very helpful written and oral submissions by all parties on these issues. I mean no disrespect to the quality of the submissions by summarising them in the relatively brief manner set out about.
Analysis – do the Building Act longstop provisions apply to contribution claims?
[41] The longstop provision currently in force is s 393 of the 2004 Act, which provides as follows:
393 Limitation defences
(1)The Limitation Act 2010 applies to civil proceedings against any person if those proceedings arise from—
(a)building work associated with the design, construction, alteration, demolition, or removal of any building; or
(b)the performance of a function under this Act or a previous enactment relating to the construction, alteration, demolition, or removal of the building.
(2)However, no relief may be granted in respect of civil proceedings relating to building work if those proceedings are brought against a person after 10 years or more from the date of the act or omission on which the proceedings are based.
(3)For the purposes of subsection (2), the date of the act or omission is,—
(a)in the case of civil proceedings that are brought against a territorial authority, a building consent authority, a regional authority, or the chief executive in relation to the issue of a building consent or a code compliance certificate under Part 2 or a determination under Part 3, the date of issue of the consent, certificate, or determination, as the case may be; and
(b)in the case of civil proceedings that are brought against a person in relation to the issue of an energy work certificate, the date of the issue of the certificate.
[42] Its predecessor was s 91 of the 1991 Act, which was in similar but not the same terms:
91 Limitation defences
(1)Except to the extent provided in subsection (2) of this section, the provisions of the Limitation Act 1950 apply to civil proceedings against any person where those proceedings arise from—
(a)Any building work associated with the design, construction, alteration, demolition, or removal of any building; or
(b)The exercise of any function under this Act or any previous enactment relating to the construction, alteration, demolition, or removal of that building.
(2)Civil proceedings relating to any building work may not be brought against any person 10 years or more after the date of the act or omission on which the proceedings are based.
(3)For the purposes of subsection (2) of this section if—
(a)Civil proceedings are brought against a territorial authority, a building certifier, or the Authority; and
(b)The proceedings arise out of the issue of a building consent, a building certificate, a code compliance certificate, or an Authority determination—
the date of the act or omission is the date of issue of the consent or certificate or determination.
(4)For the purposes of subsection (2) of this section, if civil proceedings are brought against the Authority and the proceedings arise out of the issue of an accreditation certificate, the date of the act or omission is the date at which the accreditation certificate was relied on.
(4A) For the purposes of subsection (2) of this section, if—
(a)Civil proceedings are brought against any person; and
(b)The proceedings arise out of the issue of an energy work certificate,—
the date of the act or omission is the date of the issue of the certificate.
(5)Notwithstanding section 93(1)(a) of this Act, subsection (2) of this section applies to any proceedings commenced after this Part of this Act comes into operation, except proceedings commenced before the 1st day of July 1993.
[43] Both parties agree that nothing turns on the textual changes between the two provisions, both having the same substantive effect.
[44] I first summarise CHH’s proceedings against the Councils. That is relevant to whether those proceedings are “civil proceedings relating to building work” and thus whether the longstop provisions apply to them.
[45]The essence of CHH’s defence in the Main Proceedings is that:
(a)the relevant school buildings were:
(i)not built in accordance with the Building Code, the Building Code requirements or the applicable Building Acts;
(ii)not built in accordance with the relevant cladding system specifications;
(iii)built with a range of construction defects (the “Construction Defects”);
(b)any water ingress or defects complained of in the Main Proceedings were caused by:
(i)failures by building work professionals;
(ii)failures by territorial authorities in issuing building consents, carrying out inspections and/or issuing CCCs;
(iii)failures by the plaintiffs in the Main Proceedings to maintain the school buildings; and
(c)any loss suffered by the Ministry was or will be suffered as a result of the Construction Defects, and not as a result of any defects in CHH’s Shadowclad product.
[46] On this basis, CHH’s claims against the Councils centre on CHH’s allegation that each Council breached its duty of care to the Ministry when reviewing and issuing
building consents for the building works; carrying out inspections of the building works; and issuing CCCs. CHH accordingly pleads that each Council:
(a)issued building consents notwithstanding that the plans and specifications did not comply with the Building Code then in force;
(b)failed to identify the Construction Defects during the course of its inspections; and
(c)thus negligently issued the relevant CCCs.
[47] Turning now to the longstop provisions themselves, the courts have considered the policy and legislative history to those provisions in a number of earlier decisions. In particular, Glazebrook J conducted a detailed review of the longstop’s legislative history in Klinac v Lehmann.18 Her Honour noted the issues arising from the reasonable discoverability test to the commencement of the limitation period for negligence, and that the Law Commission had recommended a longstop provision to provide a balance between the interests of homeowners and those involved in the construction industry. In essence, the Law Commission saw a longstop provision as providing finality and certainty to those in the construction industry.
[48] The Law Commission’s recommendations were subsequently reflected in the draft Bill that became the 1991 Act, which included a longstop period of 15 years. In Parliament’s consideration of the draft Bill, the Hon John Carter, Chair of the Internal Affairs and Local Government Committee said the following:19
…the select committee introduced what it has called a 15-year long-stop provision for building liability. In other words, no action can be taken after
15 years against a builder, or a certifier, or anybody involved in the construction of a building. After 15 years the responsibility for the construction rests entirely with the building’s owner.
[49] By the time of the second reading of the Bill, the longstop period had been reduced to 10 years, primarily as a result of insurance cover to those in the construction industry not being available for a 15-year period. In speaking to that version of the
18 Klinac v Lehmann (2002) 4 NZ ConvC 193,547 (HC) at [13] to [26].
19 (31 October 1991) 520 NZPD 5296.
Bill, the then Minster of Internal Affairs, the Hon Graeme Lee, noted the Australian experience was that 98 per cent of building faults become apparent within the first 10 years of the life of building, such that the 10-year longstop period would still provide adequate protection for the public. In Klinac, Glazebrook J also noted that, while the primary motivation for the longstop was to provide protection for local authorities, amendments in 1993 broadened the longstop’s application to professionals and contractors involved in the building design process.
[50] In Gedye v South, the Court of Appeal endorsed Glazebrook J’s summary of the longstop’s legislative history.20 The Court recognised that finality was a primary motivator behind the enactment of the longstop provisions, concluding that:21
History shows that the impetus for a longstop provision in New Zealand was the problems engendered by a discoverability approach in the context of negligence claims pertaining to building work and building control. Equally clearly, we think the purpose of s 91(2) was to restrict the litigation of faulty building claims to a maximum 10-year period.
[51] As can be seen from the text of s 91 of the 1991 Act and s 393 of the 2004 Act set out above, for the 10-year longstop period to apply, the relevant civil proceedings must be “proceedings relating to building work”. In the Strike Out Judgment, the Supreme Court concluded that the phrase “relating to building work” was a shorthand way of referring back to civil proceedings of the kind described in s 393(1).22 And although the Supreme Court was concerned with s 393 of the 2004 Act, the same must be the case in respect of s 91 of the 1991 Act, and its reference to “civil proceedings relating to building work”.23
[52] Accordingly, if proceedings arise from any of those activities set out in s 91(1) of the 1991 Act or s 393(1) of the 2004 Act (or in shorthand, “relate to building work”), then the 10-year longstop provision will begin to run from the date of the “act or omission on which the proceedings are based”. The Supreme Court also emphasised in the Strike Out Judgment that the focus of the inquiry is on the nature of the
20 Gedye v South [2010] NZCA 207, [2010] 3 NZLR 271.
21 At [35].
22 Carter Holt Harvey v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78 at [94] and [129].
23 Section 91(2). The words “relating to building work were added to s 91(2) by the 1993 amendments to the 1991 Act.
proceedings, rather than whether the defendant’s act or omission was itself building work.24
[53] As CHH has emphasised, there are conflicting High Court decisions on whether the longstop provisions apply to contribution claims.
[54] In the first of the relevant High Court decisions, Cromwell Plumbing Drainage & Services Ltd v De Geest Brothers Construction Ltd, the plaintiffs, a Mr and Mrs Ward, sued De Geest for negligent construction of a house. In turn, De Geest claimed against Cromwell, the plumber, as a third party. The claim as between the Wards and Cromwell was time-barred, given the longstop period applied. The issue before the Court was whether De Geest’s contribution claim against Cromwell was similarly time-barred.
[55] John Hansen J held that the longstop provision did not apply to De Geest’s contribution claim.25 In a passage at the heart of Mr Miles QC’s submissions on this point for CHH, the Judge concluded that s 17 of the LRA and s 14 of the Limitation Act 1950 (which specified the limitation period for contribution claims) “provide a specific and self-contained code laying down the timeframe for a claim for contribution”.26 His Honour went on to state that:27
The effect of s 33 [of the Limitation Act] means that the Limitation Act does not apply to any action where a period of limitation would be prescribed by any other enactment. Section 91 of the Building Act relates to civil proceedings arising from any act or omission associated with the design, construction, alteration, demolition, or removal of any building. In the present case, the cause of action relied on by Geest Brothers against Cromwell Plumbing does not arise from the provisions of the Building Act. It arises from the specific statutory cause of action created by s 14 [sic]. In my view, the time limitation in s 91(2) applies to actions where the cause of action is based on the matters set out in s 91(1)(a). It does not apply to causes of action that are statutorily created by the provisions of s 14 of the Limitation Act.28
[Emphasis added]
24 Carter Holt Harvey v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78 at [95] and [125].
25 Cromwell Plumbing Drainage & Services Ltd v De Geest Brothers Construction Ltd (1995) 9 PRNZ 218 (HC).
26 At 221.
27 At 221.
28 It seems that John Hansen J’s references in this passage (and elsewhere in his judgment) to the statutory cause of action having been created by s 14 (of the Limitation Act) was in error, the correct reference being s 17 (of the LRA).
[56] It is also clear from John Hansen J’s judgment that he was concerned that if s 393 applied to contribution claims, it “would effectively render s 17(c) meaningless in all cases relating to buildings”.29
[57] There then followed a line of High Court decisions which disagreed with Cromwell and concluded the longstop provisions do apply to contribution claims. The first of these is Courtney J’s judgment in Dustin v Weathertight Homes Resolution Services.30 While Courtney J’s conclusions in relation to the application of the longstop provisions were obiter, her reasoning has been approved and adopted in a number of subsequent cases.31
[58]Courtney J’s reasoning in Dustin can be summarised as follows:
(a)She noted John Hansen J’s concerns in respect of rendering s 17 of the LRA meaningless, and accepted that it may be that the effect of the longstop is more noticeable in contribution claims, given there can be a delay between a plaintiff bringing a claim and the commencement of a claim for contribution. However, Courtney J noted that the effect of the longstop period was to truncate the time period within which claims relating to building work can be brought, and that is not a valid reason in and of itself for not applying the provision to claims for contribution. She respectfully considered that the Judge in Cromwell had overstated the position when concluding that applying the longstop to contribution claims would render s 17 of the LRA “meaningless”, particularly where the claim for contribution is brought as a third party claim in the plaintiff’s main proceeding.
(b)Courtney J also saw the rationale for the longstop period supporting it applying to contribution claims. She noted that the policy behind the longstop provision was to bring certainty and finality to the
29 At 222.
30 Dustin v Weathertight Homes Resolution Service HC Auckland CIV-2006-404-276, 25 May 2006.
31 Carter Holt Harvey Ltd v Genesis Power Ltd (No 8) HC Auckland CIV-2001-404-1974, 29 August 2008; Davidson v Banks HC Auckland CIV-2006-404-6150, 23 March 2009; Body Corporate 169791 v Auckland City Council HC Auckland CIV-2004-404-5225, 17 August 2010; Perpetual Trust Ltd v Mainzeal Property and Construction Ltd [2012] NZHC 3404.
construction industry, by preventing what might otherwise be valid claims being brought outside it. She also noted that it ensures fairness, given issues as to freshness of memories and availability of witnesses, as well as providing certainty to defendants, in relation to matters such as retention of documents and liability insurance. Courtney J observed that these issues are just as relevant in the context of a contribution claim as in a primary claim.
(c)Further, Courtney J considered the wording of the longstop provision to be “as plainly worded as it is possible to be”,32 and on this basis, did not consider there was any need for the statute to go on and expressly specify that it applies to claims for contribution, as well as to claims by plaintiffs.
(d)Finally, Courtney J considered that the Court in Cromwell had been wrong to focus on the statutory nature of the cause of action under s 17 of the LRA. Courtney J considered the wording of the longstop provisions easily accommodate a claim for contribution based on the claimant’s own liability for building work.
[59] In Carter Holt Harvey Ltd v Genesis Power Ltd, Randerson J agreed with Courtney J’s conclusions and her analysis as summarised above.33 Randerson J did not, however, examine the issue in any further detail, the key issue before the Court in that case being whether “design work” also fell within the longstop provision’s scope.
[60]In Davidson v Banks, Associate Judge Faire (as he then was) considered
Cromwell, Dustin and Carter Holt, and preferred Courtney J’s reasoning in Dustin.34
32 Referring to similar observations of the Court of Appeal in Johnson v Watson [2003] 1 NZLR 626 (CA) at 629.
33 Carter Holt Harvey Ltd v Genesis Power Ltd (No 8) HC Auckland CIV-2001-404-1974, 29 August 2008.
34 Davidson v Banks HC Auckland CIV-2006-404-6150, 23 March 2009.
[61] Subsequently, in Body Corporate 169791, Lang J again considered these decisions and also adopted the Dustin approach.35 Lang J concluded that s 393 of the 2004 Act imposes a separate limitation period in respect of all civil proceedings relating to building work and overrode the general limitation provisions contained in the Limitation Act. In reaching this conclusion, Lang J said the following:
[40] The principal concern that I have about the reasoning in Cromwell is that it concentrates almost exclusively on the right of a defendant to seek a contribution from a concurrent tortfeasor, and the impact that application of s 91(2) would have on that right. It does not place any weight at all upon the plain and unambiguous wording used in s 92(2).
[41] I consider that Parliament has worded s 91(2) and s 393(2) carefully. In using the phrase “civil proceedings”, it has endeavoured to capture every form of civil proceeding regardless of its source or makeup. Similarly, in using the words “relating to building work” Parliament has attempted to capture every civil proceeding that arises out of building work as that term is defined in s 2 of the Act. If Parliament had intended s 91(2) or s 393(2) to apply only to claims between a plaintiff and a defendant, it would have used wording that would have made that fact clear.
[42] That conclusion is supported by powerful policy considerations. The enactment of s 91(2) and s 393(2) signalled that Parliament intended that civil proceedings relating to building work were to be subject to a 10 year long stop period. That policy decision was taken in the interests of achieving a higher goal, and its implementation has necessarily been at the expense of some claims that would otherwise have been valid. I see no justification for distinguishing in this context between a primary claim by a plaintiff against a defendant and a claim for contribution by a defendant against a concurrent tortfeasor.
[62] Finally, in Perpetual Trust, Andrews J conducted a detailed review of the cases and issues discussed above, and, adopting similar reasoning to Courtney and Lang JJ, also concluded the longstop provision applies to contribution claims.36 Andrews J examined the legislative history of the longstop provision in some detail, observing that:
[45] It is clear from the speech just cited that Parliament’s intention was that the ten-year longstop would apply to all claims against people in the construction industry. No distinction was made as to who was to make such claims, or in which form; that is, whether it was claims by owners against building professionals, or cross-claims as between building professionals. The intention was that building professionals should be able to obtain insurance cover, and such cover is required in respect of cross-claims between
35 Body Corporate 169791 v Auckland City Council HC Auckland CIV-2004-404-5225, 17 August 2010.
36 Perpetual Trust Ltd v Mainzeal Property and Construction Ltd [2012] NZHC 3404.
professionals as much as it is for claims by owners against building professionals.
[63] Having carefully considered the above decisions and the reasoning contained in them, I respectfully agree with the approach adopted in the Dustin line of cases. I can add little to the reasoning set out in those cases, and in particular, that of Courtney, Lang and Andrews JJ, which I gratefully adopt.
[64] In my view, to exclude contribution claims which clearly relate to building work would be contrary to the plain wording of the longstop provisions in both the 1991 and 2004 Acts, as well as the clear Parliamentary intent which lies behind those provisions. As Andrews J noted in Perpetual Trust, there is no suggestion in the legislative history that cross-claims as between building professionals and/or territorial authorities, or third party contribution proceedings, were to be excluded from the finality and certainty which was sought through the longstop provision. Had such an important and broad exclusion been intended from the otherwise plain words used, one might have expected Parliament to have said so expressly.
[65] I respectfully agree with Lang J’s observations as to the reasoning in Cromwell, in that it unnecessarily focuses on the legal basis or cause of action giving rise to the defendant’s obligation to the claimant in the contribution proceedings, rather than on the matters to which those proceedings relate. I therefore also respectfully agree with Andrews J’s reasoning in rejecting the submission made in Perpetual Trust that as a contribution claim is a statutory cause of action between two defendants (or one defendant and a third party) independent of the main claim by the plaintiff, it is not therefore a “proceedings relating to building work”. I also consider it would be technical and artificial to approach a proceeding which clearly relates to building work as not being such a proceeding simply because it is brought by way of a claim for contribution. I do not consider Parliament intended the finality and certainty intended by the longstop provision to depend on the arbitrariness of whether a party is sued directly by the plaintiff or by a defendant by way of a contribution claim, when the nature of the claim against that party is the same in both cases.
[66] I also consider the approach adopted in the Dustin line of cases to be consistent with the Court of Appeal’s judgment in Gedye v South.37 In that case, the Gedyes had commissioned building work for which a building consent was required on a residential property they owned. That work had been carried out in 1997. In 2003, the Gedyes sold the property and the sale and purchase agreement contained a warranty that any works undertaken on the property which required a building consent had been performed in full compliance with the Building Act 1991. In 2008, the purchasers of the property sued the Gedyes for breach of the contractual warranty. The Gedyes applied for summary judgment against the purchaser, on the basis that the claim was time-barred by s 91(2) of the 1991 Act.
[67] The Court of Appeal agreed with the Gedyes’ submission that the proceeding arose from building work associated with the “design, construction, alteration, demolition, or removal of any building” for the purposes of s 91(1) of the 1991 Act. The proceedings were therefore civil proceedings “relating to building work” for the purposes of s 91(2). On that basis, the longstop provision did apply. However, given the “act or omission on which the claim was based” for the purposes of s 91(2) was the act of warranting the previous building work was compliant (i.e. rather than the carrying out of the building work itself), time began to run from the date of that act, namely from entry into the sale and purchase agreement. As a result, the longstop provision began to run at the same point in time as the general limitation period.38
[68] In Gedye v South, the legal basis to the claim, or the cause of action, was breach of contract. In terms of the reasoning in Cromwell as set out at [55] above, the longstop provision would not have applied, as that cause of action did not arise from those matters set out in s 91(1)(a) of the 1991 Act. Rather the proceeding arose from the entry into a contract containing a warranty as to earlier building work. Contrary to the reasoning in Cromwell, however, and as noted, the Court of Appeal had no difficulty in finding the proceedings nevertheless related to building work. The Supreme Court in Carter Holt Harvey Ltd v Minster of Education also observed there was “no doubt”
37 Gedye v South [2010] NZCA 207, [2010] 3 NZLR 271.
38 At [43].
in both Gedye v South and Klinac (which was also a contractual claim for breach of warranty regarding building work) that the proceedings related to building work.39
[69] I accept the above cases did not concern contribution claims. However, it is difficult to see why contractual claims for breach of warranties concerning earlier building work are “proceedings relating to building work”, but a claim for contribution based entirely on a party’s alleged failure to prevent defective building work is not.
[70]In addition, in the Strike Out Judgment, the Supreme Court stated:40
[W]here a regulator is sued in relation to defects in building work that it is alleged that they should have prevented, the claim relates to building work and the longstop therefore applies.
[71] The fact a regulator is sued by a defendant by way of contribution rather than directly by the plaintiff ought not, in my view, to lead to a different result. In both proceedings, the claim against the regulator, namely its duty, acts and/or omissions said to have caused the plaintiff’s loss, is the same, despite s 17 of the LRA giving the defendant the legal right to sue the regulator in relation to those matters.
[72] It follows that I do not accept CHH’s reliance on various UK and Australian cases in support of the proposition that the longstop provisions do not apply to contribution claims. In this context, CHH relies primarily on the English Court of Appeal’s decision in Tuckwood.41 Given this decision (and those which follow it) were not considered by the Court in any of the earlier New Zealand decisions in which it has been held the longstop provisions apply to contribution claims, it is necessary to examine them in some detail.
[73] In Tuckwood, the plaintiff sought an indemnity from the City of Rotherham in respect of compensation paid to one of the plaintiff’s employees (under to the Workmen’s Compensation Act (UK)) for injuries sustained in a collision with a city tramcar. Under the Workmen’s Compensation Act, an employee could choose to sue either the employer or the city direct. The accident took place on 4 April 1919. The
39 Carter Holt Harvey v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78 at [114].
40 At [122].
41 Tuckwood v Rotherham Corporation [1921] KB 526 (CA).
workman sought compensation from the plaintiff/employer on 16 August 1919, and on 16 September 1919, the plaintiff filed its answer, as well as a third party notice against the city. The city took no steps in that proceeding, such that under the Workmen’s Compensation Rules, the city was deemed to accept the ruling in the employee’s compensation claim. The judge in the compensation claim found for the employee. The plaintiff/employer subsequently sued the city on 10 December 1919, seeking an indemnity pursuant to s 6 of the Workmen’s Compensation Act.
[74] The city responded by submitting the claim for indemnity was time-barred by s 1 of the Public Authorities Protection Act 1893 (UK). Under that section, any claim against the city “in respect of any alleged neglect or default in the execution of any such Act [of Parliament], duty, or authority” was time-barred unless commenced within six months of the act, neglect or default complained of. If that provision applied, the plaintiff’s claim was time-barred as of 4 October 1919.
[75] The Court of Appeal rejected the city’s argument on the basis that the statutory claim for indemnity did not fall within the scope of the Public Authorities Protection Act. It is helpful to set out the key reasoning of each member of the Court.
[76]In his judgment, Bankes LJ stated the following:42
The question thus is, is this action claiming the right to the statutory indemnity an action in respect of any alleged neglect in the execution of any such duty? In my opinion it is not. It is true that in order to succeed in the action the plaintiff must establish that the workman would have been entitled to recover damages against the corporation for the negligence of their servant driving the tramcar. That no doubt is an essential part of his cause of action; but I do not think that it is true to say that the right to the statutory indemnity is an action in respect of any alleged neglect in the execution of a duty within the language used in the section. To accept any other interpretation of the statute would lead to this result, that in a very large number of cases, if not the great majority of cases, a person who sought to take advantage of the indemnity clause … would find that he would be out of time, because the proceeding instituted by the workman might very probably not be concluded by the establishment of the workman’s right to recover compensation within six months of the date of the accident.
In my judgment the Public Authorities Protection Act does not apply to this particular and very special kind of action…
[Emphasis added]
42 At 533.
[77] Scrutton LJ reached the same conclusion. He described the question as “one of considerable difficulty”, arising from the fact that the Public Authorities Protection Act was framed in general terms and “has to be applied to a large number of cases, which were not obviously present to the mind of the Legislature”. Scrutton LJ gave three reasons, in conjunction with the policy of the legislation, for finding the employer’s claim not time-barred. His second reason was that:43
…the claim against the corporation is not … in respect of a neglect in the execution of any such Act, duty or authority. It is true that negligence is one of the ingredients of the liability to indemnity, but there are several other ingredients of liability – namely, that the person asking for indemnity has, under the Workmen’s Compensation Act, either paid or been compelled by an order to pay the compensation provided by the Act, which may be something quite different from the damages which would follow at common law for an act of negligence.
[78]Scrutton LJ went on to say the following:44
Those are the three reasons which lead me to think the appeal on this point should be dismissed. I should like to say that the reason why I think, on the combined effect of those three grounds, that I am right, although I am not sure on which of them, is the position which would arise in the event of the defendants’ contention being right…One knows that the question of liability of an employer to pay compensation to an injured workman is often taken to the House of Lords… The proceedings… might easily take more than six months, and if the defendants’ contention were right, the person whose servant was negligent would escape, because the sub-contractor would not be able to claim an indemnity until the decision of the House of Lords was given.
[79] The third member of the Court, Atkin LJ, expressed similar reasoning for dismissing the city’s argument:45
But the words “in respect of” are very general words which must have some limitation. In the case referred to [i.e. where the workman sued the city directly] the cause of action arose directly out of and in consequence of the neglect or default complained of. That is not the position here, because in this case the alleged neglect or default in not driving the tramcar with proper skill gave no cause of action to the plaintiff. He derives his right to make a claim against the defendants, not because of their act or default, but because the Act of 1906 has imposed a liability on them to indemnify him if he has had to pay compensation to his injured workman by reason of that neglect or default. So that is doubly removed, if I may say so, from the act or default. First, the plaintiff has to rely on the statutory right of indemnity, and, secondly, he does not acquire that statutory right to indemnity unless the
43 At 536.
44 At 537.
45 At 538-539.
workman has recovered compensation from him. In view of those considerations and in view of the consequences which would follow from any other construction of the Act, it appears to me that it would be wrong to hold that the Public Authorities Protection Act applied to a case of this kind. I find it difficult to believe that the Legislature can have imposed a limit of six months unless upon the supposition that a cause of action, which is prohibited if it is not brought within six months, came into existence at the beginning of the six months…If that is the true view, one can understand the Act applying, because, because then there is a period of six months during which proceedings might be taken against the public authority but when an action is brought in respect of, in one sense, a neglect or default under circumstances where no cause of action has arisen during the six months, and which, if the defendants’ were correct, would be barred after the expiration of the six months, it appears to me impossible to suppose that that Act, passed for the protection of the public authority, should be so applied as to defeat any cause of action against the public authority at all.
[Emphasis added]
[80] I accept the decision in Tuckwood supports CHH’s argument that a contribution claim does not arise from or relate to building work, but rather is something new and separate to the primary claim, and arises from the claimant’s statutory right to seek contribution from the relevant third party. However, a careful reading of the judgments in Tuckwood highlights that each member of the Court was very alive to the fact that a contrary interpretation of the statutory provision in issue would have meant that in most, if not all, cases, claims for indemnity against the public authority would be time- barred. This stemmed from the very short limitation period in that case, and that it did not appear to be the case that the employer’s claim for indemnity by way of separate proceedings could be commenced (i.e. rather than determined) until after the employee’s claim against the employer had been determined. It was against those practical consequences that the specific statutory words were interpreted.
[81] Further, it was relevant to the reasoning in Tuckwood that the limitation period in question was of general application, and the Court did not consider Parliament had intended it to apply to the particular indemnity claim before it. In this case, the Building Act longstop provisions are not of general application, and Parliament clearly gave considerable thought to the somewhat arbitrary nature of a longstop provision being adopted, but considered a clear and definite cut-off for claims in relation to defective buildings to be in the broader interests of justice. Moreover, a claim for
contribution will often be brought within the plaintiff’s main proceeding,46 meaning the quite stark practical consequences which loomed large in Tuckwood do not arise.
[82] I accordingly do not read Tuckwood as supporting the conclusion that, despite the plain wording of the Building Act longstop provisions and the clear legislative intent behind them, all claims for contribution under s 17 of the LRA were intended to be excluded from their reach.
[83] Similar observations apply to subsequent cases which have considered and/or applied Tuckwood (also involving limitation provisions in relation to claims against public authorities). In Littlewood v George Wimpey & Co Ltd, the statutory provision providing for contribution was framed in similar terms to s 17 of the LRA.47 At issue was whether s 21 of the Limitation Act (UK) applied to contribution claims. Section 21 of the Limitation Act (UK) was in the same terms as the limitation provision considered in Tuckwood, though the limitation period was one year rather than six months.
[84] The focus of the Court’s decision in Littlewood was on other aspects of the statutory provisions which are not relevant for present purposes. However, in relation to the limitation argument, Singleton LJ did not in fact consider Tuckwood helpful and would have held s 21 of the Limitation Act applied in that case. Denning LJ considered what limitation period applied, and noted that “at first sight”, it was the 12- month period set out in s 21 of the Limitation Act, because the action was brought “in respect of” neglect in the public authority’s public duty. He went on to observe, however, without further analysis, that:48
…the decision of this court in Tuckwood v Rotherham Corporation in my view, binds us to hold that the words “in respect of” do not cover an action for indemnity where, beside the neglect, there are other ingredients necessary to give rise to the cause of action.
46 See Law Commission Liability of Multiple Defendants (NZLC R132, 2014) at [2.8].
47 Littlewood v George Wimpey & Co Ltd [1953] 2 QB 501 (CA).
48 At 520.
[85] Morris LJ also decided the case on grounds other than limitation, though expressed the (somewhat tentative) view that the reasoning in Tuckwood “would suggest that the 12 months’ period of limitation was not applicable.”49
[86] Tuckwood was cited with approval by the High Court of Australia in Unsworth v Commissioner for Railways.50 The statutory provision in issue in that case was one which limited the quantum of damages in “any action brought against the Commissioner to recover damages or compensation in respect of personal injury”. Fullager J referred to Tuckwood, noting that he preferred Aitken LJ’s reasoning to that of Bankes LJ. He concluded that the statutory language in issue in Unsworth contemplated proceedings taken to enforce liability for acts or omissions which are wrongful as against the person taking the proceedings, which therefore did not extend to contribution proceedings. Taylor J expressed a similar view, also with reference to Tuckwood, holding that a contribution claim “is in no sense an action to recover damages in respect of personal injury”. The third member of the Court, McTiernan ACJ, did not address this particular issue. However, the decision again turned on the proper interpretation of the statutory wording in issue.
[87] CHH also referred me to a decision of the New South Wales Court of Appeal in Nickels v Parks.51 That case also concerned the limitation period applicable to contribution claims against statutory authorities. In that case, and again with reference to Tuckwood, Jordan CJ held that, while in a contribution claim, negligence on the part of the statutory authority is an essential part of the claimant’s cause of action, it was only one ingredient and was accordingly not an action against the statutory authority “for neglect or default” in the performance of their statutory duties. Again, I read that decision as turning on the proper interpretation of the statutory wording in question.
[88] I also reject CHH’s submission that if Parliament had intended to “override” the limitation period in respect of contribution claims, it would have needed to do so in very clear terms, when it has not done so. As noted in earlier cases, including by the Court of Appeal in Johnson v Watson, the longstop provisions are in very clear
49 At 525.
50 Unsworth v Commissioner for Railways (1958) 101 CLR 73.
51 Nickels v Parks (1948) 49 SR (NSW) 124 (CA).
terms.52 For example, it is clear from the combination of the introductory words of s 91(1) of the 1991 Act and the s 91(2) longstop provision itself that none of the provisions of the Limitation Act 1950 (including s 14 concerning contribution claims) will apply to the extent s 91(2) applies to the relevant civil proceeding. The same conclusion is reached from the combination of the opening words to s 393(1) of the 2004 Act and the word “however” at the beginning of s 393(2). Clear and express words have been used.
[89] CHH also submits a different approach to that taken in the Dustin line of cases is now warranted given the “narrow approach” taken by the Supreme Court to the phrase “civil proceedings relating to building works” in the Strike Out Judgment. I disagree that the Court adopted a “narrow approach”. In that case, there was no dispute that the Shadowclad product was not itself “building work”. Ultimately, the Court simply concluded that the concept of “civil proceedings relating to building work” did not extent to proceedings relating to a defective product, even if that product happened to have been incorporated in a building. That was not a “narrow” approach, but rather the application of the plain words of s 393(2) of the 2004 Act to the true nature of the Main Proceedings.
[90] I also do not accept CHH’s submission that any “unfairness” in applying the longstop to contribution claims mandates a contrary conclusion. Any limitation period is in a sense arbitrary and unfair, given it precludes the bringing of what might otherwise be a meritorious claim. Further, to the extent CHH is found liable in respect of its alleged defective Shadowclad product, it will obviously be liable only for damage caused by its defective product, albeit where there might have been other parties who also caused that damage. While it may be unfortunate for CHH not to be able to spread its own liability across other concurrent tortfeasors, as the Supreme Court observed in the Strike Out Judgment, that is the consequence of the legislature determining that the longstop applies to some but not all claims relating to buildings.53
[91] Finally, I accept CHH’s submission that prior concerns as to “open ended litigation” are now lessened, given the Limitation Act 2010 has shortened the
52 Johnson v Watson [2003] 1 NZLR 626 (CA).
53 Carter Holt Harvey v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78 at [128].
limitation period for contribution claims from six to two years and introduced a general 15-year longstop provision. Nevertheless, that was not the position when the Building Act longstop provisions were enacted, and they must be construed in accordance with their plain wording and what, if anything, can be gleaned in respect of the Legislature’s intent in enacting them. The proper statutory meaning cannot change over time as a result of later legislative or other broader events. While subsequent developments may give rise to a question mark over whether the specific Building Act longstop provisions are still required,54 that is a matter for Parliament and not the courts.
[92] I accordingly conclude that the Building Act longstop provisions apply to contribution claims, to the extent the claim relates to building work. There was no suggestion that, other than because they are contribution claims, CHH’s claims against the Councils do not relate to building work.
[93] That is not, however, the end of the matter. Two subsidiary issues arise out of the first and fifth grounds of the Councils’ application; first, are the Councils prejudiced by the delay in serving the Third Party Notices in the sense required to set those notices aside? And second, are aspects of CHH’s claims so clearly untenable that they should be struck out?
Analysis – should the Third Party Notices be set aside or struck out for prejudice/abuse of process?
[94] Mr Weston QC for the Councils acknowledges that if the Councils cannot demonstrate prejudice, CHH’s application for an extension of time to serve the Third Party Notices will inevitably be granted.
[95] The prejudice said to arise from the delay in serving the Third Party Notices is set out at [32] above.
54 A point noted by the Supreme Court in Carter Holt Harvey v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78 at [131].
[96] As CHH notes, the threshold for setting aside or striking out proceedings for delay is high. Delay in and of itself will not be sufficient.55 In general, an action should only be dismissed on the ground of delay where:56
(a)The plaintiff’s default has been intentional and contumelious;57 or
(b)Where there has been inordinate and inexcusable delay giving rise to a substantial risk that a fair trial would not be possible or to serious prejudice to the defendant.
[97]The overriding consideration is whether justice can be done despite the delay.58
[98] In Lovie, Eichelbaum CJ observed that the plaintiff had “frankly explained the reason” for the 13-month delay in that case, and did not seek to excuse the delay. His Honour declined to label the conduct as “contumelious”.59 I consider the same to apply here. CHH has explained the delay in service of the Third Party Notices, namely pending the final outcome of its strike out application in the Main Proceedings. Rightly or wrongly, it considered it preferable to keep the Councils out of the Main Proceedings pending final resolution of the application – which if determined in CHH’s favour would likely have brought the entire proceedings to an end. It held and holds the view that the Ministry’s claims are invalid. Accordingly, the lengthy delay, whilst inordinate and probably after at least the Court of Appeal’s decision on its strike out application, inexcusable, was more an honest mistake of judgment, rather than an intentional and contumelious course of conduct.
[99] The Councils’ primary position is that the delay was inordinate and inexcusable, and they have been seriously prejudiced by that delay, being time-barred from joining further parties to claims in respect of approximately 49 school buildings.
55 Arbuthnot Latham Bank Ltd v Trafalgar Holdings Ltd [1998] 1 WLR 1426 (CA) at 1432; Lovie v Medical Assurance Society New Zealand Ltd [1992] 2 NZLR 244 (HC) at 253.
56 Birkett v James [1977] 2 All ER 801; [1978] AC 297; Bank of New Zealand v Savril Contractors Ltd [2005] 2 NZLR 475 (CA) at [99].
57 The latter generally defined as being scornful, insulting and/or insolent.
58 Lovie v Medical Assurance Society New Zealand Ltd [1992] 2 NZLR 244 (HC) at 253; Commerce Commission v Giltrap City Ltd (1998) 11 PRNZ 573 at 579; Bank of New Zealand v Savril Contractors Ltd [2005] 2 NZLR 475 (CA) at [99].
59 Lovie v Medical Assurance Society New Zealand Ltd [1992] 2 NZLR 244 (HC).
[100] Prejudice arising from the inability to join further parties to the proceedings has been considered in other High Court decisions concerning leaky buildings. I was not referred to any appellate authority on this particular issue.
[101] In Carter Holt Harvey Ltd v Genesis Power Ltd, Randerson J considered the plaintiff’s application for leave to amend the statement of claim to include claims in relation to seismic issues. As noted earlier, in his judgment in that case, Randerson J held that s 91 of the 1991 Act did apply to contribution claims. That issue had arisen because Rolls-Royce, one of the defendants, proposed to seek contribution from two named third parties if the seismic issues were permitted to be added to CHH’s claim. Having found that Rolls-Royce would have been out of time to seek such contribution, Randerson J concluded it would not be just to grant leave to amend the claim, given:60
…Rolls-Royce would face the possibility of being found liable for substantial damages in relation to the seismic issue but would not have the opportunity to seek contribution or indemnity from the proposed third parties (or at least the Jones Gray Partnership who I assume would be the principal target since they carried out the relevant calculations).
[102] In Snelling v Christchurch City Council, French J held that the right to seek contribution from a co-defendant is a matter capable of amounting to undue or serious prejudice for the purposes of the strike out rule.61 However, as Ellis J noted in Auckland Council v Weathertight Homes Tribunal (see below), by the time of the hearing before French J, the Council no longer relied on the potential inability to join other parties as a ground of prejudice, such that French J’s comments were obiter only.
[103] In Auckland Council v Weathertight Homes Tribunal, Ellis J determined an application for judicial review arising from a decision of the Tribunal not to remove the Council as a party to leaky building proceedings.62 Part of the Council’s case for removal was prejudice arising from the delay in the proceedings, and in particular, the Council’s inability to seek contribution from at least two potential joint tortfeasors.
60 At [61].
61 Snelling v Christchurch City Council HC Christchurch, CIV-2010-4309-2344, 9 August 2011 at [71], citing Stewart v Grey River Gold Mining Ltd HC Christchurch A517/78, 19 December 1991.
62 Auckland Council v Weathertight Homes Tribunal [2013] NZHC 3274.
[104] A key reason for Ellis J declining the Council’s application was the in solidum principle of liability, and the consequently “legal reality” that the Council’s own liability to the plaintiff was unaffected by the presence or absence of other tortfeasors.63 In this context, Ellis J referred to extracts of the Law Commission’s report considering whether to move from in solidum to proportionate liability, and the rationale for maintaining in solidum liability.64 She also noted that a corollary of the Council’s stance was that, notwithstanding the Council’s negligence might have been an operative cause of all of the plaintiff’s losses, it should escape liability altogether, based on the inability to share its own liability with others.65
[105] Ellis J also noted the inability to seek contribution was a “contingent” prejudice only, being the loss of a chance only of sharing responsibility. She noted there was no suggestion the Council could not defend the proceedings against it, such that no “fair trial” issues arose. Ultimately, Ellis J concluded:66
It would in my view be wrong in principle for the Council to escape its liability entirely simply because the others who are also potentially liable for the same loss cannot now be held to account.
[106] Mr Miles also referred to Associate Judge Bell’s decision in Minister of Education v Warren and Mahoney Architects Ltd.67 In that case, the Minister sued Warren and Mahoney for alleged defective design, as well as negligent inspection, observation and supervision of the relevant building works. Warren and Mahoney in turn sought contribution from the Council (and others) and issued separate contribution proceedings to that effect. However, it delayed for five months in serving the proceedings – largely on the basis that discussions were ongoing with the Ministry in the main proceeding. Once they had been served, the Council applied to set aside or strike out the contribution proceedings, on the basis the delay in service had caused prejudice to it. One of the grounds of prejudice advanced was that it had lost the opportunity to join parties from whom it also wished to claim relief. I interpolate to note that it appears to have been accepted that the 10-year longstop applied to Warren
63 At [27].
64 At [28].
65 At [29].
66 At [30].
67 Minister of Education v Warren and Mahoney Architects Ltd [2015] NZHC 2724.
and Mahoney’s claim for contribution from the Council, and to the Council’s own claims against others involved in the construction works.68
[107] Associate Judge Bell referred to French J’s judgment in Snelling and Ellis J’s judgment in Auckland Council v Weathertight Homes Tribunal. He proceeded on the assumption that the loss of an ability to join other parties is an available head of prejudice. However, Associate Judge Bell decided the Council’s application on a different ground, namely that as the claim against the Council was for contribution pursuant to s 17 of the LRA (i.e. it was not exposed to solidary liability), it could not make contribution claims against other tortfeasors requiring them to share in its own particular liability.69
[108] Associate Judge Bell did hold, however, that the Council could, in theory, have other, direct claims against certain third parties, for example claims in negligent misstatement in relation to producer statements on which the Council relied when carrying out its functions. Only three remaining parties not already joined or insolvent were identified and Associate Judge Bell concluded that the potential inability to sue those parties in respect of obligations owed by them directly to the Council did not amount to serious prejudice.
[109] Associate Judge Bell did not refer to any authorities for the proposition that, as the claim against the Council was itself a contribution claim, it was not possible for the Council to join further parties by way of contribution. Mr Weston submits this aspect of Minister of Education v Warren and Mahoney Architects Ltd is wrongly decided, though he could not point to any particular authorities directly on point. However, he submits Associate Judge Bell’s approach is overly mechanistic and is thus inconsistent with a number of other decisions in which a broad approach has been taken to determining multiple defendants’ shares of the plaintiff’s overall loss. In particular, Mr Weston refers to Body Corporate 326421 v Auckland Council (the Nautilus); Fisher v CHT Ltd; Dubai Aluminium Co Ltd v Salaam; and Wilkinson
68 At [10], [13], [51].
69 At [59].
Building and Construction Ltd v Auckland Council.70 Mr Weston also refers to the Supreme Court’s observations in Hotchin v New Zealand Guardian Trust Company Ltd to the effect that s 17 of the LRA is remedial and thus ought not to be interpreted narrowly.71
[110] I do not consider the position is as black and white as suggested in Minister of Education v Warren and Mahoney Architects Ltd. Nor does CHH go so far as to suggest there is no prejudice to the Councils as they cannot, being defendants to contribution claims, issue further claims for contribution from other potential tortfeasors. Nor is there anything in the words of s 17 of the LRA which would restrict the Councils from doing so. Rather, I accept the Councils’ submission that the policy of s 17 of the LRA is to arrive at a broad assessment of a just and equitable sharing of liability between all tortfeasors.72 While the Councils cannot pass off their own determined/particular liability through a contribution claim,73 the Court’s overall assessment of the respective responsibility of various parties for the same damage may well be influenced by the particular parties to that exercise. Nevertheless, I agree with CHH that any prejudice stemming from the inability to join further potential tortfeasors is lessened when the party claiming such prejudice is not itself exposed to solidary liability.
[196] Elias CJ linked s 17(1)(c) to the principle that contribution should be available where a plaintiff could proceed against either defendant in respect of the damage, and that either could be liable for that damage (whether in whole or in part).108 Her Honour went on to make the following points:
(a)“Same damage” is not a term of art. It does not mean “substantially or materially similar”. Nor does it mean contribution requires that the
107 It also sought contribution under common law equitable contribution.
108 At [140].
concurrent tortfeasor be liable for the same measure of damages.109 Care is needed not to be over-influenced by the possibility of different formulations of the meaning.110
(b)Contribution does not turn on cause of action. The “same damage” may arise out of different fault and circumstances, and so the basis for liability in tort is irrelevant.111
(c)It is not necessary to the damage to be coextensive. Contribution will be available where there is overlap.112
(d)Whether damage is the “same damage” is a question of fact and degree and is, to some extent, a matter of impression.113
[197] Glazebrook J expressed general agreement with William Young J’s views (see below).114 She emphasised that “the same damage” should interpreted broadly, in a manner consistent with the LRA’s remedial policy:
[73] In my view, the words of the statute require only the same damage. These words should not be given a strained or narrow meaning but be interpreted in line with the policy of the 1936 NZ Act, which was a remedial statute intended to provide a broad basis for contribution. Admittedly, this was passed before there were extensive economic torts, including negligent misstatement. But that is no reason not to interpret the words in line with the original policy.
[198] Her Honour explained that the LRA’s policy was to allow a right of contribution where the same damage was caused by the separate, wrongful acts of several persons.115 Glazebrook J framed the losses in the case before her broadly, being the loss in value of the investments. She did not consider that s 17(1)(c) necessitated legal analysis of the claims in search of common liability, emphasising
109 At [137].
110 At [138].
111 At [144].
112 At [142], [144].
113 At [139].
114 At [70]-[72].
115 At [74], referring to Law Revision Committee Third Interim Report (Cmd 4637, 1934) (UK).
that contribution will be available where there is a single harm to which the different tortfeasors contributed in different ways.116
[199] Her Honour acknowledged this approach may expand the scope for contribution, that it could draw in more third party claimants into lengthy trials, and lengthen trials for plaintiffs.117 She said these drawbacks were “the price necessary to secure simplicity and a just result.”118 Glazebrook J also observed that not all cases will be able to be dealt with on the “just and equitable” ground (of s 17(2)) at a strike- out stage, given the wide variety of circumstances that can be taken into account.
[200] William Young J gave a comprehensive judgment which reviewed the history of contribution, case law from abroad, and the use of multiple analogies. His Honour’s focus was on the consequences of the tortfeasors’ actions on the investors, and he broadly framed this consequence as the loss of investment. For the purpose of the present case, however, it only need be said that his views broadly aligned with Elias CJ and Glazebrook J.
[201] Perhaps more significant, however, are William Young J’s dicta as to contribution in defective building cases. His Honour noted that although the obligations of builders and local authorities are distinct, claims for contribution in respect of them have been accepted without much analysis:
[198] Contribution issues often arise in respect of claims in relation to defective buildings and, particularly in New Zealand, leaky buildings. In a typical New Zealand case, the owner of a leaky building will have claims against the builder (which New Zealand courts accept can be brought in tort). As against the builder, the claim in tort will be based on breach of a duty of care associated with compliance with the Building Code. As against the local authority, the claim will be for breach of a duty of care associated with its inspection and certification functions. The damage suffered by the plaintiff will be a combination of (a) the laying out of money for a defective building and (b) the cost of ensuring that the building complies with the Building Code.
[199] In this situation, the obligations of the builder and local authority are different in character; the obligations of the former being addressed to the construction of a Code-compliant building and those of the latter primarily to withholding certification in respect of non-compliant buildings. In practice,
116 At [82], [89].
117 Her Honour acknowledged that some cases could be dealt with by requiring separate trials.
118 At [72].
claims for contribution in such circumstances have been accepted without much analysis.
[Emphasis added]
[202] His Honour went on to note that England’s more restrictive approach to contribution (which requires “common liability”) might lead to results in the building sphere which, to New Zealand eyes, seem “a little odd”. His view was that a builder, its construction engineer, and the building owner’s employed engineer can all be liable for contribution as the (same) damage is “the defective state of the building”.119
[203] O’Regan and Arnold JJ would have dismissed the appeal. They were of the view that the House of Lords decision in Royal Brompton made it clear that “same damage” required common liability, and that a legal analysis of the claims was necessary to assess this:
[260] Our review of these cases leads us to conclude that the inquiry as to whether two tortfeasors are liable for the same damage requires a legal analysis of the claims against each of them to determine whether the tortfeasors have a common liability to the plaintiff. …
…
[263] If the damage caused by Mr Hotchin’s negligent misstatement is defined in a generic sense as “lost money”, then it could be argued that, as Guardian Trust’s negligence has, in the broadest sense, caused the investors to lose money, the damage caused by Mr Hotchin and Guardian Trust is the same damage. That is the underlying premise of Mr Gedye’s argument and of the approach taken by the majority. We acknowledge that some of the cases provide support for that broad approach to defining “same damage” in cases involving economic loss. For the reasons we will come to when analysing those cases, we consider s 17(1)(c) requires an approach to the “same damage” analysis that assesses the damage caused by each tortfeasor by reference to the claim made against it and asks whether the tortfeasor against whom contribution is sought has a common liability with the tortfeasor seeking contribution for the damage caused by the latter, in which case they will be liable for the same damage.
[Emphasis added]
[204]I am of course bound by the majority approach in Hotchin.
119 At [200]-[202].
[205] Before applying the approach adopted by the majority in Hotchin to this case, it is relevant to note some further observations by the Supreme Court in relation to the Ministry’s claim in this case, in the Strike Out Judgment:120
(a)First, it summarises the Ministry’s claim against CHH as follows:121
The respondents say that a large number of school buildings have been affected by weathertightness issues and allege that these problems have arisen because the cladding sheets and systems supplied by CHH are defective.
(b)Second, it notes that:122
It is alleged that not only do the cladding sheets cause damage to buildings, but they also provide an environment in which fungal spores can grow, which can be harmful to human health when inhaled.
(c)Third, it records counsel for the Ministry’s submission that:123
…it was an essential part of the respondents’ claim that the cladding sheets manufactured and supplied by CHH were not only unfit for purpose, but also caused damage to the buildings owned or managed by the respondents because they not only absorb moisture, but transferred it to other parts of the building, causing those other parts to rot.
(d)Fourth, the Court also notes that:124
We were given to understand that the claim by the respondents is, in relation to most buildings covered by the claim, a claim not only that the cladding sheets are defective, but that they have caused damage to structures. Similarly, the creation of spores from rotting wood has given rise to health risks. It may be that when the facts are fully known, it will become apparent that at least some claims are only in relation to the defectiveness of the cladding sheets themselves….
[206] Finally, I note that when considering CHH’s submission in the Strike Out Judgment that a duty of care ought not to exist as between it and the Ministry because of its potential inability to seek contribution from parties involved in the construction
120 Carter Holt Harvey v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78.
121 At [1].
122 At [8].
123 At [67].
124 At [68].
of the school buildings (due to limitation issues), there was no suggestion in either the submissions or the judgment that contribution would not be available because the claims would not relate to the “same damage”. I immediately accept that particular issue was not before the Court in the Strike Out Judgment, but simply note that any immediate conceptual difficulty in CHH bringing a contribution claim on the basis there was no “same damage” did not arise as a relevant factor.
[207] Applying the approach to “same damage” mandated by the majority in Hotchin, I am satisfied that it is arguable, for the purposes of a strike out application, that the Ministry’s claim against CHH and CHH’s claim against the Councils is in relation to the “same damage”.
[208] Turning first to those buildings in respect of which it is claimed that, not only is the Shadowclad product defective, but also the product has caused damage to the building structures itself, the relevant harm or loss alleged is the defective state of the building (from a weathertightness perspective) and the resulting cost to remediate the building so as to comply with the Building Code and Building Acts. It seems to me to be artificial to suggest that it is simply not possible for both a defective product and defective building works (which a territorial authority ought to have recognised) to have both contributed to that same damage. In “traditional” leaky building cases, there will often by multiple, separate causes of the same damage; for example, defective building techniques; defective design; defective waterproofing application and so on. While not in any way suggesting the Ministry’s claim is a “traditional” leaky building claim (as the Supreme Court made clear in the Strike Out Judgment it was not), I cannot see why a defective product cannot be added to that “list” of potential contributors. Accordingly, and despite the Ministry’s claim being a defective product claim and CHH’s claim being a defective building works claim, the fact that CHH and the Councils’ respective obligations are “entirely different” does not mean the resulting damage cannot be the “same damage”.125
[209] The position can be tested by Glazebrook J’s example of the primary plaintiff choosing to sue the respective parties in a different way. In this case, imagine if the
125 Hotchin v New Zealand Guardian Trust Company Ltd [2016] NZSC 24, [2016] 1 NZLR 906 at [193].
Ministry had sued the Councils and not CHH for the cost to repairing and replacing structural elements of the School Buildings damaged by moisture ingress behind the cladding. That claim would have been based on the Council’s alleged failure to properly carry out its own functions in relation to building works.126 It would be unjust if, at trial, the Councils could demonstrate that not only did they fail in their obligations owed to the building owner, but a defective product also contributed, perhaps significantly, to the weathertightness issues, but they could not seek contribution from the product manufacturer.
[210] I accept Mr Weston’s submission that there may be weathertightness issues in relation to the school buildings that have nothing to do with the cladding or its installation. He cited the examples of defective windows and the like. He submits that CHH, as a product manufacturer, can never be liable for that damage and therefore can never seek contribution in relation to it from the Councils. While that may be so, as the majority made clear in Hotchin, it does not matter that the liability of the defendant and the third party may not be co-extensive; as the Chief Justice explains, there may be overlapping liability in respect of part only of the same damage.127 In such cases, it is only the overlap in respect of which contribution can be claimed.
[211] So, for example, if the failure of any one building to comply with the Building Code was due to CHH’s defective product in one area of the building, but also one defective window installation in a quite separate area, it might be said there was no overlap, and therefore no basis for the party liable for the costs to repair an area of defective cladding to seek contribution from the window installer (who will only be liable for cost to repair the window). However, in cases such as this, the determination of the precise extent and cause of the school buildings’ weathertightness issues will be complex and intensely fact driven. I do not think it can be said on a strike out application that it is untenable as a matter of principle that the Councils (or any other building professionals involved in the building works) cannot have also contributed to the weathertightness issues and consequent structural damage and thus the costs to repair.
126 The Prendos report and Mr Alvey’s evidence of his firm’s findings from a survey of more than 70 buildings provide some basis to suggest that such a direct claim would not have been inconceivable.
127 At [142].
[212] I accept the position is conceptually more difficult where the damage or harm alleged by the Ministry is limited to the costs of repairing and replacing the cladding sheets themselves.128 Mr Miles submits the position should be no different, as part of CHH’s defence to such claims is that damage has been caused by defective installation of the cladding sheets.129 However, to seek contribution, it is to be assumed CHH is liable, i.e. its product is inherently faulty. If that is the case, then irrespective of how the product had been installed, the damage (i.e. the cost to repair and replace the cladding) will still have been suffered by the Ministry. In that way, the damage caused by the faulty product might be said to be independent of or separate from any damage caused by faulty installation. Or alternatively, even if it could be said to be the “same damage”, CHH might be seen as the primary wrongdoer and the installer (and in this case, the Councils) the secondary wrongdoer(s). On that basis, a claim for contribution might not be available (as discussed by William Young J in Hotchin),130 or it would not be “just and equitable” for CHH to be able to pass off any of its own liability to the secondary wrongdoer (the approach preferred by Glazebrook J and acknowledged by William Young J).131 And as noted, at least in relation to the latter point, Glazebrook J observed that such issues may be difficult to deal with on a strike out application.132
[213] Further as recorded in the Strike Out Judgment, an “essential” part of the Ministry’s claim is that harm or damage suffered by the Ministry extends to remediating structural damage to the school buildings, and applies to “most” buildings in the claim. Further, Schedule 4 records in relation to a number of buildings that whether such structural damage exists is “not known”. For those buildings where it is recorded there is no structural damage, I do not understand that to be an acceptance by the Ministry that there may not be structural damage; rather only that none has yet manifested. I accordingly consider it premature to strike out CHH’s claim for contribution in respect of buildings for which structural damage is either listed as “No” or “Not known” in Schedule 4 to the Ministry’s claim.
128 In other words, it is not suggested the defective cladding has caused any consequential structural damage to any other aspects of the building.
129 As noted earlier, it was not suggested by the Councils on this application that if there was defective installation, they could be liable in relation to that.
130 At [224] to [228].
131 At [75] and [227] respectively.
132 At [72].
Conclusions and orders
[214]For the reasons set out in this judgment, I conclude that:
(a)The longstop provisions in the 1991 and 2004 Building Acts apply to contribution claims.
(b)While CHH’s delay in service of the Third Party Notices was inordinate and inexcusable, the Councils have not suffered serious prejudice such as to warrant the Third Party Notices being set aside or struck out.
(c)CHH’s claims in respect of those buildings colour-coded blue in the schedule produced by the Councils are so clearly time-barred that they ought to be struck out. The remaining claims are not so clearly time- barred for the purposes of striking out.
(d)The parties are to engage on a potential process for resolving residual uncertainty in respect of the identification of CCCs for each building in CHH’s claim in advance of trial, particularly in respect of those buildings colour-coded yellow and orange in the schedule produced by the Councils.
(e)CHH’s current pleading is defective in relation to particulars. However, it is not appropriate to strike out the pleading at this stage. Rather CHH is to provide further particulars without further delay. As discussed at
[172] above, the parties are to engage and if required, the Court will rule on the precise form of the orders for further and better particulars. The need for CHH to particularise its claim without further delay will require CHH to inspect buildings at a considerably faster rate than it has to date.
(f)It is arguable the damage allegedly suffered by the Ministry and the damage pleaded in CHH’s claims against the Councils is the “same damage” for the purposes of s 17 of the LRA.
(g)The Main Proceedings and the Contribution Proceedings are to continue to be case managed together. It is premature to consider consolidation and that may not be necessary in any event, given the findings made in this judgment.
[215]As a consequence, the following orders are made:
(a)CHH’s claims in relation to buildings colour-coded blue in the schedule produced by the Councils at the hearing are struck out. The Councils’ application to set aside or strike out the Third Party Notices and/or the Contribution Proceedings is otherwise dismissed.
(b)CHH’s application for an extension of time for service of the Third Party Notices is granted.
(c)The Councils and CHH, and to the extent necessary (given the need for inspections), the Ministry, are to confer and seek to agree the further particulars to be provided by CHH, the timing of the provision of further particulars in relation to the buildings CHH has already inspected and the timing and process for the provision of particulars in respect of the remaining buildings. A joint memorandum, or failing agreement, separate memoranda as to these matters, is to be filed and served within 20 working days of the date of this judgment. Absent agreement, the Court will determine the form of the orders for particulars, after a short conference or hearing with the parties, or on the papers if all parties agree that is appropriate.
(d)CHH’s application for an order that the Main Proceedings and the Contribution Proceedings are consolidated is dismissed.
Costs
[216] Costs on the applications ought to be determined now. Absent agreement on costs:
(a)The Councils are to file and serve a memorandum as to costs within 20 working days of the date of this judgment;
(b)CHH is to file and serve a memorandum in response within a further
five working days;
(c)The Ministry may file a memorandum on costs within a further five working days;
(d)No memorandum is to exceed seven pages in length;
(e)Costs will thereafter be determined on the papers.
Fitzgerald J
Solicitors:Meredith Connell, Auckland (K Francis, B Thompson) LeeSalmonLong, Auckland
Simpson Grierson, Auckland
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