New Zealand Railways Staff Welfare Trust v Tauranga City Council

[2022] NZHC 1067

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2019-470-106

[2022] NZHC 1067

IN THE MATTER

of 19 Grove Avenue, Mount Maunganui

BETWEEN

NEW ZEALAND RAILWAYS STAFF WELFARE TRUST

Plaintiff

AND

TAURANGA CITY COUNCIL

First Defendant

PARADISE COATINGS LTD
Second Defendant

AND

KEITH SMALL

First Third Party

ROWAN BLACK

Second Third Party (Discontinued)

Hearing:	11 May 2022 (via VMR)
Counsel:	A C Harpur and J K Attenberger for First Defendant No appearance by or on behalf of Second Defendant
Judgment:	17 May 2022

JUDGMENT OF BREWER J

This judgment was delivered by me on 17 May 2022 at 10 am pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors:
Rice Speir (Auckland) for First Defendant

NZ RAILWAYS STAFF WELFARE TRUST v TAURANGA CITY COUNCIL [2022] NZHC 1067 [17 May 2022]

Introduction

[1]        The first defendant (the Council) cross-claims against the second defendant (Paradise) for $176,197.88. The second defendant did not produce any evidence and ceased taking part in the proceeding. The cross-claim comes before me on a formal proof basis.

Background

[2]        The plaintiff sued the Council and Paradise for weathertightness defects to units owned by the plaintiff in Mt Maunganui.

[3]The Council settled with the plaintiff on 12 April 2022 and paid $650,000.

[4]        The Council pleads that $176,197.88 is Paradise’s proportionate share of the settlement sum.

[5]        Essentially, the plaintiff’s claim, accepted by the Council, was that Paradise negligently failed to ensure that an inter-storey junction installed by it would prevent water ingress.

The cross-claim

[6]The Council pleads three causes of action:

(a)That Paradise is a concurrent tortfeasor with the Council for the inter- storey defects and consequential work and losses.

(b)That Paradise negligently issued a Producer Statement, in breach of a duty of care to the Council, which the Council relied on.

(c)That Paradise breached the Fair Trading Act 1986 because the Producer Statement was misleading or deceptive.1

1      Fair Trading Act 1986, s 9.

[7]        The Council’s claim for proportionate contribution (adjusted slightly in favour of Paradise in its submissions) relates to a total of $220,247.35 calculated as follows:

a.        Remedial cost $152,351.54;

b.        Interest on remedial cost from 01.02.2019 to 29.04.2022: $10,826.48;

c.Loss of rental income (1/3 contribution): $10,898.33;

d.Plaintiff’s expert fees (1/3 contribution): $10,000;

e.Plaintiff’s 2B scale costs $33,221; and

f.Plaintiff’s court fees $2,950.

Discussion

[8]The Council’s evidence consists of:

(a)The affidavit of Grant Andrew Hunt, filed on 9 May 2022. Mr Hunt is a quantity surveyor.

(b)The affidavit of Simon Paykel, filed on 9 May 2022. Mr Paykel is a registered building surveyor.

(c)The affidavit  of  Mary  Nicola  Battersby,  filed  on  9 May  2022.  Ms Battersby is a solicitor employed by the Council.

[9]This evidence satisfies me, on the balance of probabilities:

(a)That Paradise was responsible for installing the inter-storey junction.

(b)That Paradise negligently failed to ensure that the inter-storey junction would prevent the ingress of water.

(c)That Paradise prepared and tendered the Producer Statement to the Council knowing that the Council would rely on it and owing a duty of care to the Council to exercise reasonable skill and care in its preparation.

(d)That the Producer Statement incorrectly, and negligently, stated (in effect) that the work done by Paradise met the required standards.

(e)That the Council issued a code compliance certificate for the units in part reliance on the Producer Statement thereby becoming a concurrent tortfeasor with Paradise as against the plaintiff.

(f)That the Producer Statement was misleading or deceptive in terms of  s 9 of the Fair Trading Act 1986.

[10]      Accordingly, on the balance of probabilities, I find Paradise liable to pay a contribution to the Council on all three causes of action.

Contribution

[11]      The Council submits that, overall, Paradise should contribute 80 per cent of the sum paid by the Council to the plaintiff in respect of the remediation of the defective inter-storey junction and consequential damages and costs.

[12]      I accept that in the defective building context, where the owner of a defective building sues the tradesman responsible for the defects in negligence and the local authority for negligence in inspecting the defective work, a usual proportion of responsibility is 80:20.2

[13]      There is nothing in the evidence to suggest that this proportion should not apply in this case. I will adopt it.

[14]      The cost of remedying the defects in and related to the inter-storey junction, according to Mr Hunt, was $152,351.54. That is the sum the Council agreed to pay to the plaintiff, and has paid. I accept Mr Hunt’s figure.

[15]      The interest period has been estimated pragmatically. The overall remedial work spanned a period from about August 2018 to September 2019. Not all of the

2      Mt Albert Borough Council v Johnson [1979] 2 NZLR 234 (CA).

work related to the inter-storey junction. The Council estimates that work relating to the junction took place in the period from 1 February 2019. Hence the period for which interest is claimed is from 1 February 2019 to the settlement date of 29 April 2022. I accept the period is appropriate.

[16]      The quantum of interest is as per the Interest on Money Claims Act 2016 calculated for the period on the remedial cost of $152,351.54.

[17]I accept the Council’s interest quantum of $10,826.48.

[18]      The claim of $10,898.33 for loss of rental income is a pragmatic estimate of the proportion of lost rental income attributable to remedying the inter-storey junction and consequential damage. The Council claims one-third of the overall loss of rental income.

[19]      I said to Ms Harpur at the hearing that where a pragmatic approach is taken to the calculation of loss, the claimant has to satisfy the court that the defendant’s liability is at least the assessed sum. Ms Harpur’s response was that given the significance of the inter-storey junction to the overall remediation work, a one-third contribution meets the at least criterion.

[20]      I noted that the overall claim by the plaintiff for remediation was $713,000 which included $152,351.54 for the inter-storey junction work. Ms Harpur accepted that assessing liability for consequential work on a $713,000 : $152,351.54 ratio would satisfy the at least criterion. On my calculation that results in a contribution of

21.4 per cent.

[21]I will allow a loss of rental income sum of $6,996.73.

[22]      The Council claims $10,000, being one-third of the plaintiff’s experts’ fees. Again assessed on a pragmatic basis. Again, I will allow a contribution of 21.4 per cent. That amounts to $6,420.00.

[23]      The Council submits that a straight 80 per cent contribution towards the plaintiff’s 2B scale costs and its court fees is reasonable. They would have been

incurred by the plaintiff if its claims had related only to the inter-storey junction defects and consequential damage.

[24]      Costs awarded in a case by a court are conceptually different to any damages awarded in the case. Apportionment of awarded costs between joint tortfeasors would not necessarily be in the same proportion as a damages award. However, in this case I accept that the proportion should be the same. The sum paid to the plaintiff by the Council for its scale costs to that point was not a sum assessed by a court. It was akin to damages: a consequential loss payment. On a formal proof application I can be, and am, satisfied that this is a reasonable division.

[25]      The sums on which the 80 per cent contribution by Paradise is to be calculated are:

(a)Remedial cost: $152,351.54.

(b)Interest on remedial cost: $10,826.48.

(c)Loss of rental income: $6,996.73.

(d)Plaintiff’s experts’ fees: $6,420.00

(e)Plaintiff’s 2B scale costs: $33,221.00.

(f)Plaintiff’s court fees: $2,950.00.

The total is $212,765.75

[26]Paradise’s 80 per cent amounts to $170,212.60.

Costs

[27]      The Council is also entitled to 2B scale costs for the cross-claim. I accept the calculation set out at annexure C to the Council’s submissions. I will allow costs of

$13,942.41.

Decision

[28]      The Council’s cross-claim against Paradise is allowed. Paradise must pay the Council $170,212.60.

[29]I award 2B scale costs to the Council in the sum of $13,942.41.

Brewer J