Turner v Attorney-General sued as Department of Building and Housing (Weathertight Services) HC Auckland CIV-2011-404-003968 [2011] NZHC 1079 (7 October 2011)

Last Updated: 13 October 2011

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

_{CIV-2011-404-003968}

BETWEEN PETER WAYNE TURNER Applicant

AND ATTORNEY-GENERAL SUED AS DEPARTMENT OF BUILDING AND HOUSING (WEATHERTIGHT SERVICES)

First Respondent

AND PETERS TRUSTEE COMPANY LIMITED

Second Respondent

AND AUCKLAND CITY COUNCIL (NOW AUCKLAND COUNCIL)

Third Respondent

AND NORMAN WILTON Fourth Respondent

AND STANLEY ARMON Fifth Respondent

AND BARFOOT AND THOMPSON Sixth Respondent

Hearing: 14-15 September 2011

Judgment: 7 October 2011 at 4:30 PM

_{JUDGMENT OF COURTNEY J}

This judgment was delivered by Justice Courtney on 7 October 2011 at 4:30 pm

pursuant to R 11.5 of the High Court Rules

Registrar /Deputy Registrar

Date............................

Solicitor: Crown Law – R Chan – Email: [e-mail]

Minter Ellison Rudd Watts – S C Price – Email: [e-mail]

Heaney & Co – P Robertson – Email: [e-mail]

McElroys – A Priaulx – Email: [e-mail]

Counsel: D R Bigio – [e-mail]

TURNER V ATTORNEY-GENERAL HC AK CIV-2011-404-003968 7 October 2011

Introduction

[1] Anyone wanting to utilise the procedures available under the Weathertight Homes Resolution Services Act 2006 (WHRS Act) in respect of a dwellinghouse must satisfy the criteria set out in s 14 of the WHRS Act. These include the requirements that the claimant owns the dwellinghouse and that the dwellinghouse was built before 1 January 2012 and within ten years of the day before the day on which the claim was brought.

[2] In a claim by Peters Trustee Company Ltd (PTC) the Chief Executive of the Department of Building and Housing (DBH), by her delegate, Ms Wheeler, decided that both these criteria were satisfied. Mr Peter Turner who is a respondent in the WHRS proceedings brought by PTC maintains that neither was satisfied. He has applied for judicial review of that decision, asserting errors of law by Ms Wheeler.

[3] The claim was originally lodged by Mr and Mrs Peters, who are the directors and shareholders of PTC. Ms Wheeler subsequently amended the claim to show PTC as the claimant. Mr Turner asserts that Ms Wheeler failed to properly consider the ownership criterion and that her purported amendment of the name of claimant was ultra vires her powers.

[4] In relation to the “built” criterion, Mr Turner asserts that Ms Wheeler failed

to correctly apply the test for determining when the house was built.

Ownership of the property

[5] In January 1997 Mr Turner, with his then wife, purchased the property at 39

Lammermoor Drive in St Heliers as a development project. They undertook substantial alternations and additions to the existing house and sold it later that year. In 2002 the purchasers on-sold the house to Mr and Mrs Peters, who subsequently transferred it to PTC.

[6] On 28 March 2008 Mr and Mrs Peters applied to the DBH under the WHRS Act for an assessor’s report. They made the application in their own names even though PTC was the registered proprietor of the property. The Chief Executive

accepted the claim as being eligible to proceed. That decision was reviewed in 2009 when the discrepancy between the name of the claimant and the registered proprietor was noticed. After a fresh assessment the Chief Executive, by her delegate, Ms Wheeler, amended the name of the claimant to PTC and confirmed the eligibility of the claim.

[7] Mr Turner asserts that Mr and Mrs Peters could not lodge the claim themselves, as they were not the owners and could not do so on behalf of PTC. Further, he maintains that the DBH did not have the power to amend the claim so as to show it being brought by PTC and that allowing PTC to assume the status of claimant retrospectively deprived him of a valid limitation defence; it is common ground that time for bringing a claim under the WHRS Act had expired by 2009.

Were Mr & Mrs Peters owners for the purposes of the Act?

[8] Ms Chan, for the DBH, submitted that Mr and Mrs Peters were entitled to bring the claim in their own names because they fall within the definition of “owner” in the WHRS Act, which:1

In relation to a dwellinghouse, includes a shareholder of a company, the principal purpose of which is to own the dwellinghouse or the dwellinghouses within the company share complex concerned.

[9] Mr Price, for Mr Turner, submitted that this definition does not apply to Mr and Mrs Peters because it relates only to the shareholders of companies that own company share complexes. “Company-share complex” is defined as:

...a complex containing dwellinghouses owned by a flat-owning or office- owning company that has issued 1 or more licences to occupy in relation to a specified residential flat or residential flats in it.

[10] Ms Chan’s interpretation would require the reference to “dwellinghouse” (singular) in the definition to be read as applying to a dwellinghouse that is not part of a company share complex. But I do not consider that the definition can be interpreted in that way. That interpretation would require the words “within the company share complex concerned” to qualify only dwellinghouses (plural), leaving

“dwellinghouse” (singular) to stand unqualified. This interpretation is distinctly clumsy and leaves unanswered the question why, if a dwellinghouse owned by any company falls within the definition, there is any need to specifically identify companies owning company-share complexes.

[11] If, however, the words “within the company share complex concerned” were treated as qualifying both “dwellinghouse” and “dwellinghouses” then the definition makes sense; the use of both singular and plural simply reflects the fact that although a company-share complex, by definition, contains more than one dwellinghouse, there may only be one claim and therefore only one dwellinghouse involved.

[12] I also consider that this interpretation is consistent with and explicable by the fact that shareholders in flat-owning or office-owning companies have no means of direct ownership.

Should Mr and Mrs Peters be viewed as agents of PTC?

[13] Ms Chan also argued, not very forcefully, that Mr and Mrs Peters were authorised by PTC to bring the claim on its behalf.

[14] A company is a separate legal entity and an agency relationship does not arise merely by virtue of a shareholding.2 Nor do the facts in this case support an argument that Mr and Mrs Peters were acting as agents for PTC in lodging the claim The form they completed had specific provision on it for companies who wished to claim, as opposed to individuals. Mr and Mrs Peters completed the form without any reference whatsoever to PTC. Further, in 2009 when the issue was raised with

them they responded by way of letter stating:

When we filed our claim with the Weathertight Services Group we filed under the names Kelly Douglas Peters and Judith Ann Peters. However our home is actually owned by our company, Peters Trustee Company Ltd, of which we are directors ...

We understand that you require confirmation as to who the claimant is so that documentation is consistent with the named owner and so that our eligibility certificate and WHRS Report can be amended accordingly. We can confirm that the correct owner of 39 Lammermoor Drive is the Peters

2 Salomon v Salomon & Co Ltd [1897] AC 22.

Trustee Company Ltd and that we (Kelly and Judith Peters) are authorised to bring the claim.

[15] The clear tenor of that letter is that Mr and Mrs Peters filed the claim in their personal capacity in 2008. In any event, there is no provision either in the WHRS Act or the District Court Rules (which apply in the absence of a specific rule3) that would have permitted shareholders or directors to lodge a claim on behalf of a company that is the owner of the subject property.

Was the Chief Executive entitled to amend the name of the claimant?

[16] It is evident that within a short time of the claim being lodged the DBH knew that Mr and Mrs Peters were not the owners of the property. The claim was lodged on 28 March 2008 and DBH records show that by 3 April 2008 it had obtained a copy of the Certificate of Title for the property and a company search of PTC. When the eligibility report was produced on 30 June 2008 it identified the claimants as:

Kelly Douglas Peters and Judith Ann Peters

(Peters Trustee Co Ltd)

[17] Had the discrepancy been queried then the current problems may have been avoided. However, notwithstanding that the DBH obviously realised by early April

2008 that PTC was the owner of the property, it wrote to Mr and Mrs Peters personally confirming that the claim was eligible. It was not until 2009 that the DBH turned its mind to the discrepancy. Ms Wheeler took control of the file for the purposes of re-considering the earlier eligibility decision. She considered that she was entitled to amend the application form to show PTC as the claimant, which she did. She then advised PTC of the eligibility of the claim.

[18] Mr Price submitted that Ms Wheeler did not have the power to amend the name of a claimant either at all or, at least in this case, because doing so would defeat Mr Turner’s limitation defence.

[19] Ms Chan submitted that the purpose of the Act was to resolve matters for persons who discover they own a leaky building and that it would be contrary to the

purpose of the Act not to allow the Chief Executive to amend the claim so as to reflect the correct claimant. She characterised the amendment as merely clarifying the ownership position. This submission, however, does not reflect the significance of identifying the correct owner.

[20] Although the threshold for eligibility is relatively low, the criterion of ownership is clear. It is also very important because of the effect that lodging a claim has on the limitation period. Under s 37 applying for an assessor’s report has the same effect as filing proceedings in court for the purposes of the Limitation Act

2010 i.e. it stops time running against the defendant for the purposes of any limitation defence. The identity of the claimant is therefore crucial; in Mountain Road (No 9) Ltd v Michael Edgley Corporation Pty Ltd the Court of Appeal observed that:4

Time continues to run in favour of a prospective defendant in respect of an existing cause of action unless and until someone entitled to enforce the cause of action validly commences proceedings for the purpose.

[21] In this case time would have stopped running for the purposes of the limitation period on 28 March 2008 had Mr and Mrs Peters been entitled to request an assessor’s report. But they were not entitled to do so and by the time Ms Wheeler formally amended the DBH’s documents to record PTC as the owner in 2009, the limitation period had expired.

[22] Although I consider that the Chief Executive does have the power to amend the name of a claimant so as to reflect the correct claimant, that power is not an unfettered one and is to be exercised in a principled manner. A significant purpose of all limitation periods is the protection of prospective defendants from excessively old claims. In civil proceedings brought in the courts the power to amend the name of a party will generally not be exercised where it would have the effect of defeating

a limitation defence.5 In the absence of specific rules made in relation to

_{proceedings under the Act, the District Court’s Rules apply to such proceedings. As}

4 _{Mountain Road (No 9) Ltd v Michael Edgley Corporation Pty Ltd [1999] 1 NZLR 335 (CA) at 345.}

5 Registered Securities Ltd v Jensen Davies & Co Ltd [1999] 2 NZLR 686 at 691, citing Davies v

Elsby Bros Ltd [1961] 1 WLR 170; [1960] All ER 672 (CA).

a result, the same approach should be taken to the amendment of a claimant’s name under the WHRS Act.

[23] In considering a change to a party’s name a distinction is drawn between cases of “misnomer”, being a misdescription of the correct party’s name, and a misidentification, being the naming of the wrong party. In the former case the amendment would usually be permitted. In the latter, the amendment would not usually be permitted if the effect would be to defeat a limitation defence. It is evident from my earlier discussion that Mr and Mrs Peters were not the correct party. This was a case of misidentification. PTC is an entirely separate legal entity and amending the claim to show it as the claimant was not a case of simply amending the name of the correct party; it was the substitution of a new party.

[24] It follows from these conclusions that the claim lodged by Mr and Mrs Peters was not an eligible claim. Because time had expired for PTC to bring a claim by 2009, Ms Wheeler made an error in amending the claim so as to show it as the claimant.

Did the Chief Executive make an error of law in applying the test for the “built”

criterion?

[25] My conclusion regarding the ownership criterion means that Mr Turner’s application must succeed. However, I go on to make some comments on interpretation of “built” in the eligibility criteria because of its significance to other cases and the fact that, although there are three other decisions on this point, Mr Bigio, for Mr and Mrs Peters, sought to persuade me that all these decisions were wrong. I do not, however, need to consider the other arguments raised by Mr Turner in relation to this aspect of the application.

The issue

[26] Under s 14(a), an eligible claim requires that the dwelling-house:6

... was built (or alterations giving rise to the claim were made to it) before 1

January 2012 and within the period of ten years immediately before the day on which the claim is brought.

[27] In reaching a decision as to when 39 Lammermoor Drive was “built” for the purposes of s 14(a), the assessor used the “habitation” test assessed by reference to the Code Compliance Certificate inspection date:

No date is available of when the dwelling house was first inhabited but it would be reasonable to assume that habitation was after the final CCC inspection date of 21/04/1998. The date on which this claim was brought is

28/03/2008 which makes it within the ten year period and therefore in my opinion – eligible.

[28] On reviewing the eligibility decision, Ms Wheeler formed the view that the alterations giving rise to the claim had been made within the required period of ten years immediately before the day on which the claim was brought. In particular, she noted that building inspections had occurred between 14 August 1997 and 21 April

1998. That final inspection failed but only, apparently, as a result of a minor storm- water run-off problem. The Code Compliance Certificate notes the three further inspections that were required before the final certificate was issued on 30 June

1998.

[29] In terms of the test that she applied, Ms Wheeler said that the “habitation” test was being used at the time and she applied it by reference to the final stucco inspection:

37. At the time I made this eligibility decision, the test that was being applied by the Department to determine “built” date was when a dwelling- house (or as in this case, the altered dwelling-house) was ready for day-to- day occupation. In the present case, although the building work concerned was alterations rather than a new build, the house would not have been fit for occupation given the significant nature of the work being done which included replacement of the window joinery and cladding. The “ready for occupation” test remained appropriate ...

41. In this case, although I was working with limited information from the assessor’s reports, I could see that on 17 March 1998 the final stucco inspection took place. I considered that there would likely have been further work to do to finally ready the house for occupation following the stucco inspection such as completion of internal plastering, decorating, electrical finishing and the like. On balance I did not consider it likely that this work would have been completed by the cut-off date of 28 March 1998.

[30] Mr Turner’s complaint about this approach was that Ms Wheeler wrongly used the date of the final inspection to determine whether the house was habitable. Relying on Auckland City Council v Attorney-General7 (generally referred to as Garlick), Mr Price argued that this approach failed to address the date on which the required work had actually been done; in Garlick, Lang J suggested that where a house passes its final inspection the date on which that inspection was requested may be regarded as the date on which the house was built.

[31] Mr Bigio, however, argued that the test in Garlick was problematic because of the uncertainty in identifying the date of the request for final inspection. He emphasised that any test must be able to be applied nationwide, and the fact that one council may have accurate records will not necessarily mean that the test can be applied easily in other areas. Mr Bigio contended for a test that turned on the date of the Code Compliance Certificate (rejected in Sharko v Weathertight Homes Tribunal8

and Osborne v Auckland City Council9) because that gave certainty. In the absence

of a certificate he suggested the final inspection date be taken. His argument rested primarily on the need for consistency with the Building Act 2004 and the fact that a more expansive meaning was in keeping with the purposes of the WHRS Act.

The statutory scheme

[32] It is convenient to briefly outline the statutory scheme in which the decision was made. The WHRS Act (and its predecessor, the Weathertight Resolution Services Act 2002) were enacted in response to the plight of numerous homeowners whose houses were built during the 1990s and early 2000s and are “leaky buildings”, which suffer from water penetration resulting from defects in design or construction. The purpose of the WHRS Act is “to provide owners of dwelling- houses that are leaky buildings with access to speedy, flexible and cost-effective procedures for the assessment and resolution of claims relating to those buildings” and “to provide for certain matters relating to the provision of a package of financial

_{assistance measures to facilitate the repair of those buildings”.}10

7 _{Auckland City Council v Attorney-General HC Auckland CIV-2009-404-1761, 24 November 2009.}

8 _{Sharko v Weathertight Homes Tribunal HC Auckland CIV-2010-404-5960, 1 August 2011.}

9 Osborne v Auckland City Council HC Auckland CIV-2010-404-006582/583, 9 September 2011.

[33] The WHRS Act provides a procedure for the owners of leaky homes to have their claims assessed and evaluated at low (or no) personal cost and mechanisms for the resolution of claims against those liable for the damage resulting from the water ingress. These include mediation, binding adjudication and determination by the Weathertight Homes Tribunal (WHT). The processes under the WHRS Act are intended to provide for the complete range of claims from lower value claims which might be most appropriately disposed of through free mediation at which parties will not necessarily be legally represented through to very substantial claims determined by the Tribunal which can be enforced as orders of the District Court.

[34] However, not all those whose houses leak will be eligible for the procedural advantages and financial assistance that the scheme offers. Because the WHRS Act was intended as a specific response to a specific problem, access to the statutory scheme is restricted through the eligibility criteria. Those whose claims do not meet the eligibility criteria may continue to bring court proceedings in the usual way.

[35] The eligibility assessment process in Part 1 of the Act is intended to identify claims that meet the eligibility criteria quickly and cheaply. A claim becomes eligible if the Chief Executive decides under s 48 (or the Chair decides under s 49 following declinature by the Chief Executive) that the claim is eligible. The process for determining eligibility begins when the owner of a dwelling-house who wishes to bring a claim applies to the Chief Executive to have an assessor’s report prepared.

On receipt of an application that complies with the relevant requirements11 the Chief

Executive must make an initial assessment as to whether the information in the application indicates that the claim meets or is capable of meeting the eligibility criteria.12 If the Chief Executive considers that the information does indicate that the claim meets or is capable of meeting the criteria the Chief Executive must arrange for an assessor’s report (the eligibility report).13 If not, the application for an

_{assessor’s report must be declined.}14

11 _{e.g. That is, in the approved form, accompanied by necessary permissions to allow inspection.}

12 _{S 32(2).}

13 s 32(3).

[36] The eligibility report states whether or not, in the assessor’s opinion, the claim meets the eligibility criteria and the additional matters set out in ss 41(2) – (4).15 The Chief Executive must evaluate the assessor’s report and decide whether the claim meets the eligibility criteria. In doing so, the Chief Executive must consider only the report itself and any submission made by the claimant. If the Chief Executive advises that the claim does not meet the eligibility criteria the claimant may write to the Chair requesting that the decision be reconsidered and providing submissions on the eligibility criteria.

The “built” criterion in s 14(a)

[37] The decisions in Garlick, Osborne and Sharko each held that “built” in s 14(a) refers to the physical completion of the dwelling-house or the alterations and that the issue of the Code Compliance Certificate is not required to determine that; that is, “built” should be given its plain and ordinary meaning.

[38] As the Act does not define “built” its meaning is to be determined by reference to the context in which the word is used, which is the eligibility assessment in Part 1 of the Act. The determination of eligibility by the Chief Executive on the basis of the eligibility report is effectively a screening process. It does not purport to determine any substantive aspect of the claim. In particular, apart from the fact that lodging a claim under the WHRS Act has the effect of stopping time running for limitation purposes under the Act, the eligibility process has no effect on the statutory limitation periods (including the long-stop period under s 393 of the Building Act 2004), which continue to apply in proceedings under the Act. Limitation defences remain live in proceedings determined by the WHT. Even on Mr Bigio’s argument, this means that some claims will satisfy the “built” criterion yet fail on limitation grounds at the substantive determination. The question he raises is whether, conversely, it is right that there should be claims that would succeed in civil proceedings in court but are excluded from the statutory scheme because they do not satisfy the “built” criterion.

[39] Self-evidently, if the eligibility criteria does not affect the relevant limitation periods the ten-year limitation in s 14(a) serves another purpose. This purpose is limiting the type of claims that will come within the scheme and has to do with the genesis of the scheme. As I have already observed, the scheme was enacted (originally in 2002) to respond to a specific problem. Over the last several decades there will have been many houses that have been badly designed, constructed, inspected and certified. Many do not have Code Compliance Certificates. The WHRS Act was not intended to respond to claims by the owners of all such houses. It was intended to encompass claims brought promptly in relation to the particular types of houses that display the well-known characteristics associated with leaky buildings constructed during the relevant period.

[40] If the test that Mr Bigio contends for, based on the date of the Code Compliance Certificate, were correct, the owners of houses who did not obtain certificates for years after the construction work was completed, or who never obtained them, could be eligible, notwithstanding that the house may have been built well before the “leaky building crisis”. The taxpayer could bear the cost of determining such claims, even though the claimants would have recourse to the courts in the usual way. Interpreting “built” so as to refer to physical construction work is more likely to capture houses that are truly the product of this unfortunate era. It is likely that this is the reason that the WHRS Act imposes the long-stop date of 1 January 2012 and the limitation period of ten years prior to the claim being brought.

[41] Although initially attractive, arguments that depend on linking the long-stop period under the Building Act 2004 with the “built” criterion are ultimately not convincing. The long-stop period under s 393 of the Building Act 2004 serves a different purpose and under it time runs forward from the dates of the various acts or omissions sued on. In comparison, the ten-year period under s 14(a) runs back from the commencement of the claim. The acts or omissions that might form the basis of the claim do not form any part of that calculation.

[42] There are many unsatisfactory aspects ascribing a plain and ordinary meaning

to “built”. In particular, many claimants are subsequent purchasers who have little or

no information about the physical completion of the dwelling-house apart from what can be gleaned from Council records. Further, the assessor undertakes his or her assessment without input from any prospective respondent. It is clear, therefore, that the process of producing the assessor’s report is not intended to be a comprehensive fact-finding exercise. It is to be expected that prospective respondents will hold information and documents that could be relevant but to which the assessor has neither access nor any obligation to obtain. As a result, in many, if not most, cases the assessor will reach an opinion (and the Chief Executive a decision) based on incomplete material.

[43] Further the eligibility decision is undertaken before either the identity of the ultimate respondents or the precise acts or omissions to be alleged are known. The conduct that may ultimately form the basis of a claim ranges from work undertaken at the very earliest stages of the development (design), through to the actual construction process and to the very last stages of the development, being inspection and issuing of a Code Compliance Certificate. Typically, these various activities will have occurred over a period of many months, sometimes years.

[44] Without question, the most unsatisfactory aspect of an interpretation based on the plain meaning of “built” is the difficulty, indeed in many cases, the impossibility, of being able to say at the assessment stage when all work was completed. The decisions to which I have referred all grapple with this problem.

[45] I consider the Council’s “habitation” test is a sensible response to these difficulties. Although many people live in houses which have yet to been fully finished, the essential elements that affect water tightness are also those generally regarded as necessary for human habitation. These include that the structure is fully closed in, which would require all roofing and joinery to be installed and completion of the exterior cladding system.

[46] Given that many claimants do not have sufficient information to identify when these various aspects were completed, I see no objection to the assessor (and subsequently the Chief Executive) taking into account the dates on which a final inspection was requested and dates of council inspections in attempting to determine

the likely date when the work was completed. The fact that this may not produce an exactly accurate result in terms of identifying when the last building work was done is not a reason to reject this approach. The respondents ultimately joined into the proceeding have available to them the usual limitation defences and that aspect can be properly explored with the benefit of the information they hold.

[47] I therefore agree with the previous judges who have held that “built” is limited to physical construction in the sense of all the work required to satisfy the requirements of the building consent having been completed. It also follows that, in reaching the decision regarding the “built” criterion, Ms Wheeler did not make any error in applying the test.

Result

[48] I have concluded that Mr and Mrs Peters were not owners of the house in March 2008 and were not entitled to lodge a claim under the WHRS Act. Nor were they acting (nor entitled to act) on behalf of PTC in lodging the claim. The DBH should not have amended the name of the claimant to PTC because that deprived Mr Turner of the limitation defence available to him.

[49] Mr Turner’s application therefore succeeds. The decisions of the DBH amending the name of the claimant and confirming the eligibility of the claim are set aside.

[50] Parties may address the issue of costs by memoranda filed by Mr Turner by

12 October 2011, the DBH and Mr and Mrs Peters by 19 October 2011, and Mr

_{Turner in reply by 26 October 2011.}

P Courtney J