Carter Holt Harvey Limited v Paine [2019] NZCA 606 (3 December 2019)

Last Updated: 11 December 2019

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA382/2019 [2019] NZCA 606

	BETWEEN	CARTER HOLT HARVEY LIMITED Applicant
	AND	DAVID ERIC PAINE AND LYNDA CAROLINE BOWERS First Respondents
	AND	KEVIN BRYAN START AND FLORENCE ELIZABETH START Second Respondents
	AND	DONALD BRAMWELL JACKSON AND HEATHER MAY PROCTOR JACKSON AND DONALD BRAMWELL JACKSON, HEATHER MAY PROCTOR JACKSON AND HOLLAND BECKETT TRUSTEE NO 11 LIMITED (AS TRUSTEES) Third Respondents
	AND	STEPHEN MATHEW DEVCICH, JESSIE DIANA DEVCICH AND JOHNNY CHARLES AUGUST (AS TRUSTEES) Fourth Respondents

Hearing:	25 November 2019
Court:	Miller and Brown JJ
Counsel:	J G Miles QC and M Heard for Applicant A S Ross QC and R A Dellow for Respondents
Judgment:	3 December 2019 at 10.00 am

JUDGMENT OF THE COURT

1. The application for leave to appeal is dismissed.
2. CHH must pay the respondents costs for a standard application on a band B basis with usual disbursements. We certify for second counsel.

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REASONS OF THE COURT

(Given by Miller J)

[1] Carter Holt Harvey Ltd (CHH) seeks leave to appeal from an interlocutory decision of Downs J in which the Judge declined to order some of the particulars that CHH sought from the respondents.^[1] He also declined leave to appeal.^[2]
[2] The proceeding is a representative action brought by a group of about 134 owners whose homes are clad with a CHH-manufactured product called Shadowclad. It is a bonded plywood used (in differing specifications) for exterior cladding and interior walls. The respondents say that Shadowclad is inherently defective and will fail in specified ways; notably, it will crack, warp and delaminate, and host mould and admit water. Some of them say that it has in fact failed on their properties, and others that the defects remain latent. They sue in negligence, negligent misstatement, negligent failure to warn, and for breach of the Consumer Guarantees Act 1993 and Fair Trading Act 1986.
[3] CHH says the particulars required are those typical of leaky building cases, citing Platt v Porirua City Council.^[3] Downs J erred in this case by relieving the plaintiffs of their obligation on the ground that this is a product liability case. In the result, the Judge did not require the plaintiffs to specify precisely which defects are present in each property, where those defects are found, the particular standards applicable to each defect, the damage caused by each defect, and the loss resulting. CHH says that the Judge proceeded on the false premise that the plaintiffs’ claim is that Shadowclad will always cause damage.
[4] As noted, this is a representative action. The trial is to be split. It is also being case-managed by Downs J. In a minute delivered on 8 November he ordered, by consent, that certain questions are to be tried at stage one. Notably, those include whether Shadowclad has all or any of the pleaded defects and risk characteristics and, as a result, is not weathertight and has caused or will cause damage.
[5] In the judgment which is the subject of this application the Judge also contemplated that CHH will get further evidence (it already has some basic details of the type of loss claimed) of loss and damage at trial.^[4] Property-by-property questions of causation and loss will be examined at the stage two trial. He also concluded that particulars of defects and risk characteristics are adequate and stated that CHH’s concerns about further details emerging could be met through case management.^[5]
[6] CHH maintains that all particulars must be provided now, including those of causation and loss. It is said that the particulars go to CHH’s defence that any defects are the consequence of bad installation practice. Characterisation of the case as a defective product claim should have no bearing on pleadings.
[7] We are not persuaded that leave ought to be granted. First, underpinning CHH’s complaint about this not being a defective product claim appears to be an assertion that it is simply wrong to say Shadowclad will always fail; and that being so, CHH is effectively being required to investigate every plaintiff’s claim to ascertain what was the specific installation fault. But the plaintiffs are entitled to, and do, claim that Shadowclad is inherently defective and for that reason will always cause loss even where it was correctly installed and has yet to fail. The claim seems in this respect very similar to that brought by the Ministry of Education in respect of Shadowclad, about which this Court said that the claim was at heart a latent defect claim against a manufacturer.^[6] CHH may meet that claim by contending that Shadowclad will fail only where improperly installed. There is some force in the respondents’ submission that what is being sought is not particulars of the claim but information in aid of CHH’s defence.
[8] Second, we do not accept that the proposed appeal raises any general question of pleading practice. This case is not the same as Platt, a generic leaky building case in which a local authority was the principal defendant and which involved allegations about inspection and certification that are absent here. Pleadings should be tailored to the needs of this case, in which the plaintiffs allege against the manufacturer that the product is inherently defective. They intend to prove that by adducing evidence about its properties.
[9] Third, we accept that to the extent the plaintiffs also seek to prove inherent defect by reasoning back from actual product failure they must give particulars of where and how it failed for purposes of the stage one hearing. But the plaintiffs have done that in a schedule attached to the second amended statement of claim. The Judge also ordered some further particulars of each installation, including building consents. It is far from self-evident that those particulars are inadequate to give CHH fair notice of the case it must answer. The Judge did note an open-ended quality to the pleading of defects (it is said that the defects “include” those listed) but made it clear that he is alert to the risk of ambush should fresh allegations emerge.^[7]
[10] Fourth, it is not in dispute that in due course CHH will be given further particulars about every property in the class represented by the named plaintiffs, including details of the causal link between each specific defect and the damage, what remedial work is needed, what the work will cost, and what other losses have been suffered. The real question is whether that information must be provided now, for stage one, or deferred until stage two. CHH’s complaint is that the Judge has decided to defer its provision for some properties until stage two, when every plaintiff will need to prove their membership of the class, the specific damage to their property, and causation and loss. The staging of disclosure in that way is a practical case management decision in which this Court should be reluctant to intervene, not least because it is not strictly before us. As we understand it the precise bounds of the first stage, including how many properties will be examined there, has yet to be decided. We add that the trial Judge is best placed to monitor the boundary between first and second stages and to manage disclosure of relevant information through the combination of particulars, discovery and evidence.
[11] Fifth, we accept that CHH may need to prove defective installation to pursue third party claims against local authorities it has joined to the proceeding, but this too is a timing question. The theory on which the third party claims are based is not before us. What matters is that it appears the claims will be “parked” until after the first stage of this proceeding has been decided.
[12] For these reasons the application does not cross the leave threshold.^[8] It is dismissed.
[13] CHH must pay the respondents costs for a standard application on a band B basis with usual disbursements. We certify for second counsel.

Solicitors:
LeeSalmonLong, Auckland for Appellant
Adina Thorn Lawyers, Auckland for Respondents

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^[1] Paine v Carter Holt Harvey Ltd [2019] NZHC 478 [Interlocutory decision].

^[2] Paine v Carter Holt Harvey Ltd [2019] NZHC 1614 at [116].

^[3] Platt v Porirua City Council [2012] NZHC 2445 at [19].

^[4] Interlocutory decision, above n 1, at [65] and [67].

^[5] At [53].

^[6] See Carter Holt Harvey Ltd v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78 at [17] citing Carter Holt Harvey Ltd v Minister of Education [2015 NZCA 321, (2015) 14 TCLR 106 at [47].

^[7] Interlocutory decision, above n 1, at [47] and [53].

^[8] Senior Courts Act 2016, s 56(5); and Ngai Te Hapu Inc v Bay of Plenty Regional Council [2018] NZCA 291 at [16]–[17].