O'Sullivan v Hempel (Wattyl) New Zealand Ltd (Formerly Valspar Paint NZ Limited)

[2023] NZHC 1477

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2023-425-23

[2023] NZHC 1477

BETWEEN

HELEN BERNADETTE O’SULLIVAN, FIONA CHERIE WHITE AND ANDREW RODGER WILTON AS TRUSTEES OF

THE WILTON FAMILY TRUST
Appellants

AND

HEMPEL (WATTYL) NEW ZEALAND LTD (FORMERLY VALSPAR PAINT (NZ) LMIMITED)

Respondent

Hearing:

6 June 2023 (by way of telephone conference)

Appearances:

J Eckford for Appellants

A V Davison for Respondents

Judgment:

13 June 2023

JUDGMENT OF EATON J

This judgment was delivered by me on 13 June2023 at 4.15 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

O’SULLIVAN v HEMPEL (WATTYL) NEW ZEALAND LTD [2023] NZHC 1477 [13 June 2023]

[1]                  On 1 May 2023, the appellants filed an appeal against the refusal of the Weathertight Homes Tribunal’s Procedural Order 21 refusing the appellants’ application for costs. The appeal was set down for a telephone conference before me on 6 June 2023.

[2]                  In advance of the appeal, Ms Davison, on behalf of the respondent, filed an appearance under protest to jurisdiction and a memorandum seeking an order that the appeal be dismissed under r 5.49(3) of the High Court Rules 2016 on the grounds that this Court has no jurisdiction to hear and determine the appeal.

[3]                  Ms Eckford filed a memorandum on behalf of the appellant submitting that this Court does have jurisdiction and, if not, an order that the appeal be transferred to the District Court.

[4]I heard brief argument from counsel at the telephone conference.

Relevant facts

[5]                  The appellants brought proceedings in the Weathertight Homes Tribunal (the Tribunal) against several parties, including the respondent. The appellants say the respondent failed, without notice, to appear at a mediation scheduled by the Tribunal to take place on 29 November 2022. The dispute did not settle at mediation. The appellants maintain they would not have attended the mediation if they had known of the respondent’s non-appearance. They sought wasted costs in the sum of $26,134.18 pursuant to s 91 of the Weathertight Homes Resolution Services Act 2006 (the Act). In Procedural Order 21, the Tribunal declined to award costs.

[6]                  The amount in dispute before the Tribunal is a claim for damages in the sum of $705,203. A substantive hearing has been held, and a decision is pending.

Legal principles

[7]Section s 3(a) of the Act provides:

3        Purpose of this Act

The purpose of this Act is—

(a)to provide owners of dwellinghouses that are leaky buildings with access to speedy, flexible, and cost-effective procedures for the assessment and resolution of claims relating to those buildings;

...

[8]A right of appeal is prescribed in s 93 of the Act:

93       Right of appeal

(1)A party to a claim that has been determined by the tribunal may appeal on a question of law or fact that arises from the determination.

(2)An appeal must be filed in—

(a)the District Court if the amount at issue does not exceed

$350,000; and

(b)the High Court if the amount at issue exceeds $350,000.

(3)For the purposes of subsection (2), the amount at issue in relation to a determination is—

(a)the amount of any money required to be paid under the determination by the person filing the appeal (including any amount determined under section 90(2)); or

(b)if the appeal relates to a determination in which the tribunal has declined to require payment of any amount of money (or money’s worth in terms of section 90(2)) to a claimant, or has required payment of an amount of money (or money’s worth in terms of section 90(2)) that is less than the amount claimed by the claimant, the amount claimed unsuccessfully by the claimant.

...

[9]Costs may be awarded under s 91:

91       Costs of adjudication proceedings

(1)The tribunal may determine that costs and expenses must be met by any of the parties to the adjudication (whether those parties are or are not, on the whole, successful in the adjudication) if it considers that the party has caused those costs and expenses to be incurred unnecessarily by—

(a)bad faith on the part of that party; or

(b)allegations or objections by that party that are without substantial merit.

(2)If the tribunal does not make a determination under subsection (1), the parties to the adjudication must meet their own costs and expenses.

Discussion

[10]              Ms Eckford raised three arguments in submitting this Court has jurisdiction to hear this appeal.

[11]              First, Ms Eckford submitted that a procedural order is not a “determination” by the Tribunal for the purpose of s 93(1) and, consequently, the jurisdictional restriction, being an amount in issue exceeding $350,000, does not apply. Ms Eckford contends that s 93 applies only to the determination of the substantive claim.

[12]A right of appeal arises only when a claim has been determined by the

Tribunal. Section 8 defines a claim:

claim means a claim by the owner of a dwellinghouse that the owner believes—

(a)has been penetrated by water because of some aspect of its design, construction, or alteration, or of materials used in its construction or alteration; and

(b)has suffered damage as a consequence of its penetration by water

[13]              In my view, a costs decision falls outside the definition of a claim. The costs decision under appeal was made in relation to a claim that is yet to be determined by the Tribunal. That does not, however, aid the appellant. A party to a claim may appeal against a costs decision,1 but not before the substantive claim is determined. That limitation is consistent with the objective of achieving speedy, flexible, and cost- effective procedures to resolve leaky building disputes. The Act does not provide for an appeal against a procedural order made prior to determination of the claim. The appellant’s right to appeal the costs decision will not crystallise until the claim is determined.

1      IAG New Zealand Ltd v Dewes [2022] NZHC 3555.

[14]              The appeal must therefore be dismissed. I deal briefly with the other arguments advanced by Ms Eckford.

[15]              Ms Eckford has referred, I believe, to the District Court Act 2016 as providing that the High Court may be seized of jurisdiction notwithstanding that the amount at issue may be the amount of the costs determination. She notes s 89, which provides that the High Court must have regard to particular factors in exercising its discretion and ordering removal of a proceeding to the High Court. That rule only has application to a proceeding that has been filed in the District Court. It does not apply to this appeal.

[16]              Alternatively, Ms Eckford submitted that if the Court was not satisfied as to jurisdiction, that an order should be made transferring the appeal to the District Court. However, in my view, if the Court does not have jurisdiction to entertain the appeal, it does not have jurisdiction to order the transfer of the appeal to the District Court.

[17]              Ms Eckford referred to the appeal involving matters of general public importance and, in particular, the costs consequences of a party’s non-attendance at a mediation. Again, absent statutory jurisdiction to entertain the appeal, an issue of public or general importance is of no relevance.

[18]              I am satisfied Ms Davison is correct. This Court does not have jurisdiction to entertain this appeal. I dismiss the appeal under r 5.49(3). In the absence of jurisdiction, it is not open to this Court to make an order transferring the appeal to the District Court.

[19]              Ms Davison seeks uplifted or indemnity costs. She submits that the respondent pointed out the jurisdictional problem immediately upon receipt of the appeal, but the appellants were persistent in pursing it, notwithstanding the jurisdictional barrier.

[20]              In the circumstances, I am satisfied an order for increased costs is appropriate. I invite counsel for the respondent to file a costs submission of no more than two pages within five working days. The appellants are to respond within three working days thereafter.

[21]              Given what I anticipate is the limited sum involved, the parties are strongly encouraged to resolve the question of costs.

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

Eaton J

Solicitors:

Parker Cowan, Queenstown Jackson Russell, Auckland