Weaver v HML Nominees Limited - [2015] NZHC 514

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-3130 [2015] NZHC 514

BETWEEN
ANN-LOUISE EVELYN CHANTAL WEAVER

and GRAHAM WILLIAM ANDERSON

Plaintiffs

AND

HML NOMINEES LIMITED First Defendant

HELEN MARTHA MOORE Second Defendant

Continued…..

Hearing: 17 March 2015

Counsel

D J Barr and S Meares for Third Defendant
V Toon (liquidator) for First and Tenth Third Party

Judgment:

17 March 2015

ORAL JUDGMENT OF KATZ J

[Application for leave to continue proceedings against party in liquidation]

Solicitors: Rainey Law, Auckland Simpson Grierson, Auckland Wilson Harle, Auckland
Rice & Co, Auckland

Counsel: D R Bigio, Shortland Chambers, Auckland

Copy to: V Toon, Corporate Restructuring Limited, Auckland

WEAVER & ANDERSON v HML NOMINEES LIMITED & ORS [2015] NZHC 514 [17 March 2015]

AUCKLAND COUNCIL Third Defendant STONESCAPES LIMITED First Third Party
FLEXCO (NZ) LIMITED

Second Third Party

ASHTON MITCHELL ARCHITECTS LIMITED (DISCONTINUED)

Third Third Party

BUILDING CODE CONSULTANTS LIMITED (DISCONTINUED)

Fourth Third Party

KELVIN LEONARD WALLS (DISCONTINUED)

Fifth Third Party

COOPER ROOFING COMPANY (DISCONTINUED)

Sixth Third Party

FLEXCO (NZ) LIMITED

Seventh Third Party

MOHAN ROOFING SERVICES LIMITED

Eighth Third Party

POINT CONSTRUCTION LIMITED

Ninth Third Party STONESCAPES LIMITED Tenth Third Party
JACKSON CLAPPERTON AND PARTNERS LIMITED (DISCONTINUED)

Eleventh Third Party

Introduction

[1] Ann-Louise Weaver and Graham Anderson own a property in St Mary’s Bay, Auckland. In this proceeding they seek to recover losses they have allegedly suffered as a result of the failure of remedial work that was undertaken by the previous owner of the property, HML Nominees Limited, in 2005 and 2006. That remedial work was undertaken pursuant to a building consent issued by Auckland Council, the third defendant.

[2] The Council has joined a number of third parties to the proceedings including Stonescapes Limited (“Stonescapes”). Stonescapes installed stone cladding at the dwelling as part of the remedial work that was undertaken during 2005 and 2006.

[3] On Friday 6 March 2015 Stonescapes went into liquidation. This trial was scheduled to commence (and did commence) the following Monday, 9 March 2015. At the outset of the hearing the Council sought the court’s leave to continue its claim against Stonescapes, pursuant to s 248 of the Companies Act 1993. I granted leave on an interim basis, pending further argument of the issue and the provision of further information to the court regarding Stonescapes’ insurance position. That information has now been provided.

Further background

[4] The Council’s third party claim against Stonescapes was commenced on

20 December 2013. Stonescapes did not file a statement of defence or take any steps in the proceedings until late 2014. On 28 January 2015 Stonescapes served a brief of evidence of Mark Jenkins, a director and shareholder of Stonescapes. Stonescapes also sought leave to file a statement of defence at the pre-trial conference. Leave was opposed by other parties. Hinton J recorded in her pre-trial teleconference minute that:

Stonescapes will need to serve the parties with the proposed statement of defence as soon as possible and, if leave is still opposed, make a formal…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] NZHC 514
Decision Date: 17 March 2015

CaseChat Overview and Summary

The High Court of New Zealand was asked to decide whether the Auckland Council could continue its legal claim against Stonescapes, a company that had recently gone into liquidation, in a proceeding that involved allegations of defective building work. The plaintiffs, Ann-Louise Weaver and Graham Anderson, sought to recover losses they had allegedly suffered due to the failure of remedial work carried out by the previous owner of their property, HML Nominees Limited. The Auckland Council had joined Stonescapes, among others, as a third party to the proceeding as it had installed stone cladding as part of the remedial work in question.

The key legal issue before the court was whether the Council could continue its claim against Stonescapes despite the company being in liquidation and its liquidator not consenting to the continuation of the legal proceedings. The court had to weigh the principles of equality among creditors, avoiding wasteful litigation, and the interests of justice against the specific circumstances of this case. The court considered whether the claim against Stonescapes was sustainable, the complexity and stage of the proceedings, and the potential for recovery from Stonescapes.

The court reasoned that the claim against Stonescapes was not easily dealt with in the liquidation proceedings, given the advanced stage of the current trial and the interdependencies of various claims and cross-claims. The court found that the principle of equality among creditors would not be undermined by allowing the claim to proceed as the Council would need to claim alongside other unsecured creditors in Stonescapes' liquidation. The court also noted that there was no risk of the company's negligible assets being dissipated in wasteful litigation since Stonescapes had not been actively participating in the proceedings. While the prospects of recovery against Stonescapes appeared weak, the court decided it was premature to conclude that there were no prospects of success in a claim against the insurer. Therefore, the court granted leave for the Council to continue its proceedings against Stonescapes.

The court's final order was that leave was granted to the Auckland Council to continue its proceedings against Stonescapes. The costs of the Council's application were reserved for further consideration.

Orders