Red Stag Timber Limited v Juken New Zealand Limited
[2022] NZHC 103
•4 February 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-2753
[2022] NZHC 103
BETWEEN RED STAG TIMBER LIMITED
Plaintiff
AND
JUKEN NEW ZEALAND LIMITED
Defendant
Hearing: On the papers Counsel:
N F Flanagan and C Fleming for the Plaintiff
A R Galbraith QC, C L Bryant and G J Luen for the Defendant
Judgment:
4 February 2022
JUDGMENT OF GAULT J
(Applications for leave to appeal and cross-appeal)
This judgment was delivered by me on 4 February 2022 at 4:00 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………
Solicitors / Counsel:
Mr N F Flanaghan and Ms C Fleming, Meredith Connell, Auckland Mr A R Galbraith QC, Barrister, Auckland
Ms C Bryant and Ms G J Luen, Hesketh Henry, Auckland
RED STAG TIMBER LTD v JUKEN NEW ZEALAND LTD [2022] NZHC 103 [4 February 2022]
[1] Following my judgment of 6 October 2021 addressing various interlocutory applications,1 Juken New Zealand Ltd (JNL) applies for leave to appeal that part of the judgment which declined to strike out the claim by Red Stag Timber Limited (Red Stag) for contraventions of the Fair Trading Act 1986 (FTA) in the period prior to December 2012.2
[2] Red Stag opposes leave. But if leave is granted, it seeks leave to cross-appeal in relation to the need for leave to bring the strike out application and separately in relation to one aspect of discovery.
[3] The parties agreed that leave should be determined on the papers following the filing of written submissions.
[4] The application for leave was filed two days late, but Red Stag does not oppose an extension. Similarly, Red Stag seeks an extension of time for filing its amended notice of cross-appeal, which is also not opposed. There is no prejudice and the extensions sought are granted.
Background
[5] Red Stag and JNL compete as producers and suppliers of timber for use in the construction of buildings. Since about 2007, JNL has manufactured, promoted and supplied a structural framing product called “J-Frame” which is an engineered wood product comprising laminated veneer lumber (LVL). J-Frame is treated with boron for use where hazard class H1.2 applies, that is where building elements are above ground and protected from the weather but there is a possibility of exposure to moisture.
[6] Red Stag claims that since 2007 JNL has made misrepresentations about J-Frame’s compliance with building standards in breach of the FTA. The parties interpret the standards very differently. The standards also changed over time, so the interpretations apply in two main periods: before and after December 2012.
1 Red Stag Timber Ltd v Juken New Zealand Ltd [2021] NZHC 2662.
2 At [62]-[74].
[7] Red Stag commenced this proceeding on 17 November 2017. Its cause of action for the period to December 2012 was struck out on procedural grounds on 19 September 2018.3 It was reinstated on 19 December 2019.4
[8] JNL applied for orders striking out Red Stag’s pleading / granting leave to apply for summary judgment / entering summary judgment on limitation grounds under s 43A of the FTA. Red Stag submitted that leave was also required to bring the strike out application under r 7.52 of the High Court Rules 2016 given JNL’s earlier unsuccessful application to have its limitation defence determined as a preliminary issue.
[9] In relation to the period to December 2012, Red Stag did not dispute that it was aware of the relevant facts before 19 December 2016; that is, three years before the claim for the earlier period was reinstated on 19 December 2019. Instead, it said that its reinstated claim is not a new cause of action as it is essentially the same as its claim for the later period (and 17 November 2014 remains the relevant date for limitation purposes).
[10] Separately, Red Stag applied for particular discovery, including of JNL’s internal correspondence regarding the proper interpretation of the relevant building standards and requirements.
Relevant parts of my decision
[11] I concluded (at [13]) that JNL did not require leave under r 7.52. The earlier application under r 10.15 called for assessment of the factors weighing for and against proceeding by way of a split trial. The application itself did not involve substantive determination of the limitation issue. That would have followed only if a split trial had been ordered. In terms of r 7.52, the strike out application was not seeking the same or a similar order as the earlier application under r 10.15. Also, Associate Judge Bell made clear that a further claim by Red Stag would still be susceptible to challenge on limitation grounds.
3 Red Stag Timber Ltd v Juken New Zealand Ltd [2018] NZHC 2459.
4 Albeit originally in a separate proceeding – the parties agreed that on the claim for losses prior to December 2012 time would stop running on 19 December 2019.
[12] As to whether Red Stag’s pleading in relation to losses to December 2012 raises a new cause of action for limitation purposes, I referred (at [67]) to the well-established principles set out by the Court of Appeal in Ophthalmological Society of New Zealand Inc v Commerce Commission,5 summarised in Transpower New Zealand Ltd v Todd Energy Ltd6 and repeated in ISP Consulting Engineers Ltd v Body Corporate 89408.7
[13]The operative part of my decision was as follows:
[72] I accept that whether the amended pleading is essentially different is a question of degree. Here, the claim for the earlier period involves the same legal basis; that is, false or misleading representations in breach of the FTA. I also accept that, although the pleading of new facts is in theory capable of creating a fresh cause of action, it will be rare that factual matters are so vital as to affect the essence of the case brought.8 At a level of generality, the claims for the two periods involve the same alleged representations; that is, compliance with applicable preservative treatment standards. It is necessary, however, to view the representations in context; that is, by reference to the prevailing standards. In that sense, the effect of the alleged representations varies over time and raises different factual interpretation issues. In particular, whereas the claim for the later period focuses on not using Zelam’s glueline treatment, the claim for the earlier period involves the separate factual elements that J-Frame was not treated to comply with the penetration requirement and complete sapwood penetration was not achieved or always achieved (in the alternative to the claim that the standards did not recognise boron treatment).
[73] Even so, I consider on balance that the claim for the period prior to December 2012 is not essentially different to the claim for the later period. Over both periods, the primary claim is that JNL used boron treatment, which was not compliant, even though the argument for the later period is that the standards required Zelam’s glueline treatment (for LVL in hazard class H1.2). It is the alternative claims that raise additional factual allegations regarding penetration. The alternative claims are somewhat different, but I consider that applying the essential difference test they should not be characterised as new causes of action. Also, while assessment of whether the representations were false depends on the prevailing standards, I do not consider that every change in standard requires a separate cause of action.
[74] Accordingly, 17 November 2014 remains the knowledge date applicable to the claim for the period prior to December 2012. In the context of the claim for the period after December 2012, I have already concluded that JNL has not shown that Red Stag knew (or ought reasonably to have known)
5 Ophthalmological Society of New Zealand Inc v Commerce Commission CA168/01, 26 September 2001 at [22]-[24].
6 Transpower New Zealand Ltd v Todd Energy Ltd [2007] NZCA 302 at [61].
7 ISP Consulting Engineers Ltd v Body Corporate 89408 [2017] NZCA 160, (2017) 24 PRNZ 81 at [21].
8 Commerce Commission v Visy Board Pty Ltd [2012] NZCA 383 at [145]-[146].
before 17 November 2014 that J-Frame was not treated with Zelam’s treatment and that the standards arguably required that. Zelam’s treatment is irrelevant to the claim for the period prior to December 2012. But in this strike out and summary judgment setting, even if I could infer that Red Stag knew (or ought reasonably to have known) before 17 November 2014 that J-Frame was treated with boron and that the standards arguably did not recognise a boron treatment for LVL hazard class H1.2, I consider that JNL falls short of showing that Red Stag knew (or ought reasonably to have known) that J-Frame was not treated to comply with the penetration requirement, that complete sapwood penetration was not achieved or always achieved and that the standards arguably required boron treated LVL to comply with the penetration requirement for solid timber in NZS 3640. There is also an alternative referring to omitting a label for envelope treatment. Accordingly, I cannot say in relation to the period prior to December 2012 that there is no reasonable possibility that the case was brought within time.
[14] On the discovery application, having referred to the adverse documents test (at [84]-[85], I did not consider that internal correspondence regarding JNL’s view of the proper interpretation of the relevant building standards and requirements was of actual and direct relevance (at [95]).
Principles governing interlocutory appeals
[15] The principles governing interlocutory appeals are well established and not in dispute. They were summarised by the Court of Appeal recently in Tomar v Tomar:9
[6] In Finewood Upholstery Ltd v Vaughan, Fitzgerald J appropriately observed that the requirement for leave to appeal should serve as a filtering mechanism to ensure that unmeritorious appeals of interlocutory orders, or appeals of interlocutory orders of no great significance to either the parties or more generally, do not unnecessarily delay the proceedings in which the orders were made.10 The following considerations were recognised as relevant on an application for leave to appeal:11
(a)A high threshold exists.
(b)The applicant must identify an arguable error of law or fact.
(c)The alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value.
(d)The circumstances must warrant incurring further delay.
9 Tomar v Tomar [2021] NZCA 419.
10 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13].
11 At [9] and [14], citing A v Ministry of Internal Affairs [2017] NZHC 887.
(e)The ultimate question is whether the interests of justice are served by granting leave.
[7] This Court in Ngai Te Hapu Inc v Bay of Plenty Regional Council indicated that considerations similar to the principles applicable to applications under the former s 24G of the Judicature Act 1908, as explained in Meates v Taylor [Leave],12 apply to applications under s 56(5) of the Senior Courts Act, stating:13
We agree that leave to appeal should only be granted where the significance or implications of an arguable error of fact or law, either for the particular case or for the applicant or as a matter of precedent, warrants the further delay which the appeal process would involve.
Grounds of appeal
[16] JNL seeks leave to appeal against my conclusion that Red Stag’s reintroduced claim for representations made prior to December 2012 is not essentially different from its claim for representations made in the latter period and a knowledge date of 19 December 2016 accordingly does not apply to the reintroduced claim. It says that in essence I held that the representations made in the earlier period were part of a continuing course of conduct, and should be treated as the same claim for limitation purposes. It says that is not the correct approach to the time bar in s 43A. The bar applies even if the claimant brings a claim within time for later contraventions which have a similar factual or legal basis. It also challenges the conclusion that the claim for representations made prior to December 2012 is not essentially different from the claim for representations made in the latter period.
Grounds of cross-appeal
[17] Red Stag says that I erred in finding that JNL did not require leave to bring its strike out application by applying an overly strict interpretation of r 7.52 that did not take into account its purpose.
[18] Separately, in relation to discovery, Red Stag says that “relevant” should be applied in its wider common usage sense whereas I applied a narrower test akin to the test for admissibility.
12 Meates v Taylor (1992) 5 PRNZ 524 (CA) at 526.
13 Ngai Te Hapu Inc v Bay of Plenty Regional Council [2018] NZCA 291 at [17].
Analysis
[19] Dealing first with JNL’s application, I did not conclude that the representations made in the earlier period were part of a continuing course of conduct. I concluded that the claim for representations made prior to December 2012 is not essentially different from the claim for representations made in the latter period, seeking to apply the principles referred to by the Court of Appeal in the cases referred to at [12] above. But I accept it is arguable that ongoing conduct does not operate to prevent time running under s 43A in respect of earlier conduct and thus, at least in the unusual circumstances of this case where the claim for representations made prior to December 2012 was reintroduced in December 2019, it is arguable that the claim for representations made prior to December 2012 is essentially different from the claim for representations made in the latter period.
[20] I also accept that the intersection of the time bar in s 43A and r 7.77 of the High Court Rules 2016 has not previously been considered by an appellate court, and a judgment on this point (rather than the factual and legal components of Red Stag’s claims for representations made before and after December 2012) will have some general and precedential value.
[21] Of course, JNL could appeal following trial and advance its limitation argument then. But a successful appeal would narrow the issues at trial – which is currently allocated ten weeks.
[22] Given that JNL has not sought to stay execution of the judgment (including the discovery order) and the trial is not scheduled until February 2024, JNL’s proposed appeal will not lead to further delay.
[23]Ultimately, I consider the interests of justice favour granting leave.
[24] Turning to the proposed cross-appeal and the first ground that JNL required leave to bring its strike out application, my decision to grant JNL leave to appeal is a relevant factor but I must still consider whether there is an arguable error.14 I accept
14 It was not suggested that interlocutory cross-appeals are governed by different principles from those referred to at [15] above.
it is unusual for a strike out application on limitation grounds to follow an unsuccessful application under r 10.15 for an order that the limitation issue be determined as a separate preliminary question. However, even taking a purposive interpretation, I do not consider the decision on the application of r 7.52 involves an arguable error. In addition, notwithstanding my decision to grant JNL leave to appeal, I would decline leave to cross-appeal against this finding on the basis that any error is not of general or public importance warranting determination or otherwise of sufficient importance to Red Stag to outweigh the lack of general or precedential value. The decision made no difference to the outcome given the overlap between the applications for strike out and summary judgment – for which leave was granted. If leave were required under r 7.52, that overlap and the relevant facts emerging from Red Stag’s discovery were likely special circumstances. The issue does not justify an interlocutory appeal.
[25] Finally, in relation to the discovery point, Red Stag acknowledges this is separate from the point raised by JNL. The discovery point may be a short one but again I must still consider whether there is an arguable error in the conclusion that internal correspondence regarding JNL’s view of the proper interpretation of the relevant building standards and requirements is not of actual and direct relevance. Notwithstanding the authorities cited, in the context of this case, I do not consider there is an arguable error. In any event, I would decline leave on the basis that any error is not of general or public importance warranting determination or otherwise of sufficient importance to Red Stag to outweigh the lack of general or precedential value. This discovery issue does not justify an interlocutory appeal.
Result
[26]JNL’s application for leave to appeal is granted.
[27]Red Stag’s application for leave to cross-appeal is dismissed.
Gault J
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