Body Corporate 207715 v Auckland Council (formerly known as Rodney District Council) [2012] NZHC 519 (23 March 2012)

Last Updated: 12 April 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2008-404-4976 [2012] NZHC 519

BETWEEN BODY CORPORATE 207715

First Plaintiff

AND A E BABBAGE & OTHERS Second Plaintiffs

AND AUCKLAND COUNCIL (FORMERLY KNOWN AS RODNEY DISTRICT COUNCIL)

Defendant

AND I J BEATTIE First Third Party

Hearing: 23 February 2012

Appearances: Ms H M McKee for Applicant fifth third party

Ms S A Thodey for Respondent Auckland Council (formerly Rodney

District Council) Judgment: 23 March 2012

_{JUDGMENT OF ASSOCIATE JUDGE DOOGUE}

This judgment was delivered by me on

23.03.12 at 10 am, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

_{Date...............}

Solicitors:

Glaister Ennor, P O Box 63, Auckland - [e-mail]

_{Heaney & Co Solicitors, P O Box 10539, Auckland –} [e-mail]

BODY CORPORATE 207715 & Ors V AUCKLAND COUNCIL (FORMERLY KNOWN AS RODNEY DISTRICT COUNCIL)& Ors HC AK CIV-2008-404-4976 [23 March 2012]

AND KAIMAMAKU CONSULTANCY LIMTIED Second Third Party

_{AND C J LUSBY}

Third Third Party

AND M J SCREEN Fourth Third Party

AND PLASTER SYSTEMS LIMITED Fifth Third Party

[1] This is an application for orders which the fifth third party (Plaster Systems Ltd) seeks requiring more explicit pleading of the defendant’s amended statement of claim.

[2] The following background statement is largely based upon the synopsis filed by Ms McKee on behalf of the applicant. Ms Thodey for the second defendant (the Auckland Council) does not significantly dispute any part of the background so described.

[3] This case concerns a leaky building proceeding brought by the body corporate and the registered proprietors of 65 units in a residential development located at 340 Gulf Harbour Drive, Whangaparaoa, (known as the Santa Rosa complex) against the Auckland Council. The Auckland Council (“the Council”) has joined several parties to the proceedings as third parties, including the fifth third party, Plaster Systems Limited (“PSL”). PSL is the manufacturer of the cladding products used in the construction of the development.

[4] The quantum of the plaintiff’s claim is yet to be formally particularised by

the plaintiff, but is expected to be in excess of $10 million.

[5] This application has been amended three times, because though the Council has filed successive amended pleadings in response to each application by PSL, PSL still contends that the current pleading does not include sufficient particulars to give it fair notice of the case it has to meet.

[6] PSL’s current application is dated 2 February 2012 and is supported by the affidavit of Caroline Rosemary Eric. It is made in response to the most recent amended statement of claim filed by the Council dated 24 January 2012.

[7] In the Council’s current pleading against third parties, the Council alleges that PSL:

1. Owed a duty of care to the plaintiffs in respect of alleged inspections at the property;

b) Breached that duty of care;

c) Caused loss to the plaintiffs as a result of that alleged breach;

d) Owed a duty of care to the plaintiffs in respect of the training and licensing of its contractors who were responsible for the installation of its products;

e) Breached that duty of care; and

f) Caused loss to the plaintiffs as a result of that alleged breach.

[8] In pleading the facts giving rise to the alleged duty of care, the Council alleges in its most recent statement of claim that:

a) From time to time during the period of the construction of the units [PSL] inspected the installation of its product and its junctions with other product in or around the units:

i) Inspections were undertaken by employees and/or representatives of PSL, including Jack Bakka;

ii) Inspections occurred during the period of construction between November 2000 and July 2005;

iii) Inspections were carried out at the request of Mark Screen and/or PSL licensed contractors to approve and/or advise on the method of installing and inspecting the cladding material as instructed.

[9] With respect to breach of the duty of care the Council alleges that PSL:

[F]ailed to ensure that on any inspection carried out by it, it identified those defects [set out at paragraph 16 of the Council’s claim in so far as they relate to the installation of

PSL’s product] and that they did not comply with the

building code and the Building Act 1991.

... [and]

[F]ailed to warn the building parties on site including its licensed applicator that the installation of its products and their interaction with other products in the units did not comply with the building code and the Building Act 1991.

[10] However, limited particulars have been provided with respect to the alleged inspections by PSL, including when they are said to have taken place, the parties involved (other than Jack Bakka and Mark Screen), the units or houses inspected, the specific reasons for which these inspections were requested and the nature of the advice and/or approval allegedly provided by PSL.

[11] With respect to the alleged duty of care to provide adequate training to parties installing its products, the Council further alleges in its most recent statement of claim that PSL:

[F]ailed to provide adequate training to ensure that its products were installed (including in conjunction with other products) in compliance with the building code and the Building Act 1991.

[12] The applicant claims that inadequate particulars have been provided in relation to this alleged failure.

[13] As a result, by letter dated 25 January 2012, PSL served a notice on the Council requiring further particulars regarding the alleged inspections and any advice provided at any such inspections. The particulars sought have not been provided.

[14] In opposition the Council says that the particulars provided are adequate, and that PSL seek to impose too higher a burden upon it in respect of the particulars sought.

Principles and case law

[15] Rule 5.26 of the High Court Rules 2008 provides the following:

5.26 Statement of claim to show nature of claim

The statement of claim—

...

(b) must give sufficient particulars of time, place, amounts, names of persons, nature and dates of instruments, and other circumstances to inform the court and the party or parties against whom relief is sought of the plaintiff’s cause of action; and

...

[16] Rule 5.21 of the High Court Rules 2008 provides the following:

5.21 Notice requiring further particulars or more explicit pleading

(1) A party may, by notice, require any other party—

(a) to give any further particulars that may be necessary to give fair notice of—

(i) the cause of action or ground of defence; or

(ii) the particulars required by these rules; or

(b) to file and serve a more explicit statement of claim or of defence or counterclaim.

(3) If the party on whom a notice is served neglects or refuses to comply with the notice within 5 working days after its service, the court may, if it considers that the pleading objected to is defective or does not give particulars properly required by the notice, order a more explicit pleading to be filed and served.

[17] Both counsel made reference to the acknowledged leading cases on the subject of when particulars will be directed. Ms Thodey referred me (as an example of what she described as the traditional approach) to the decision given in Price Waterhouse v Fortex Group Ltd,[1] where the Court of Appeal affirmed that pleadings are an “essential road map” for the Court and the parties, as they are the documents against which briefs of evidence are or should be prepared, and which establish parameters of the case.[2]

[18] Ms Thodey also noted that in Fortex, the Court of Appeal went on to describe the purpose of pleadings as “an abbreviated summary ‘statement’ of the basic facts said to give rise to the claim and of the relief which is sought”.[3] She submitted that even in Fortex the Court was keen to stress that a balance was required. It stressed that “as so often is the case in procedural matters, in the end a common-sense and balanced judgment based on experience as to how cases are prepared and trials work is required. It is not an area for mechanical approaches or pedantry”.[4]

[19] Ms Thodey further noted that in BNZ Investments Ltd v Commissioner of Inland Revenue (No 5),[5] the Court held that insisting upon excessively refined pleadings is unnecessary and wasteful of costs and court time, especially in complex cases where over-pleading will obscure rather than clarify the issues, and that case management should ensure that each side is fairly informed of the case they must

_meet.[6]

Analysis

[20] It will be helpful to consider the scope and width of the allegations made: to try and assess the area of ground that they cover and then to judge whether the pleadings as they stand are bereft of particulars to the point where the defendant as a result be unfairly disadvantaged in coping with the Council’s claim. In deciding if there is unfair disadvantage, one has to have regard to the functions that pleadings are designed for. They include providing sufficient information so that the factual enquiries the opposing party will need to make can be defined with reasonable clarity. While the claimant does not need to set out submissions of law, that there must be reference to any statutory provision that is going to be relied upon together with the basic legal effect of the facts alleged, such as an allegation that as a result there was a breach of contract or a breach of trust, needs to be supplied.

[21] The Council’s pleading in this case asserts that unspecified persons who were employees of the defendant over approximately five years may have been guilty of certain omissions that are said to amount to a breach of duty of care, in relation to an unspecified number of units out of the 65 total structures.

[22] Whether or not allegations of such a width are supported by necessary particulars requires further consideration of the factual position.

[23] There does not seem to be any reference in the evidence as to how large an organisation PSL is. In a case where the target organisation is a small one comprising two or three individuals, has a stable workforce and the alleged actions took place in the recent past, the obligation to identify which of the employees who were allegedly implicated may not be a particularly onerous one. That is because common sense suggests that their identities will be able to be ascertained with a minimum of enquiries. As well, in cases where the defendant has a satisfactory set of records such as timesheets and other material used for invoicing, it might be expected that they will be able to identify with relative ease which employees actually did the work that is now under scrutiny.

[24] By contrast, it may be difficult for the plaintiff because of the lapse of time and other reasons to provide the names of specific employees. This point may have

particular force where a large number of persons came onto a construction site, where there were no particular formalities adopted to record what was said and done by whom (in contrast to the case, where meetings between project managers and builders are routinely followed by brief minutes).

[25] I remind myself that if the Court comes to the view that, when the pleadings are assessed against the background I have just set out, it would not be an oppressive or unfair exercise for them to make the necessary enquiries to position themselves to meet the case, it would indicate that particulars are not required. On the other hand, one can imagine a case where there are so many unspecified contingencies that the applicant would have to investigate to be sure that it had not left any stone unturned in preparing to meet the case at trial, that the Court would require the Council to whittle down the scope of its assertions by providing additional particulars.

[26] So long as the Council’s claims are coherent and do not impose an unnecessary and disproportionate burden upon the applicant who has to formulate a defence, then the particulars will not be required.

[27] The question of how the Council will prove its claim at trial is logically a separate matter. If the Council cannot do any better than formulating its claim in the vaguest terms, one may reasonably question how it proposes to prove the claim at trial. The paucity of particulars will generally reflect a shortage of cogent evidence to support the claims. Provided that the party who is bringing the claim can get over that hurdle of framing its pleadings is an acceptable way, it will be open to the Council to extract information from the applicant (and indeed non-parties) by the coercive processes of the Court (such as discovery interrogatories). It will be open to the defendant in this case to invoke such procedures. All that the Council is required at this stage to do is to ensure that its claim is stated in a way which is not so lacking certainty that the applicant is faced with a very difficult, if not impossible, task in trying to divine the essential outline of the claim.

[28] Ms Thodey contended that briefs of evidence will be supplied well in advance of the trial, giving the applicant additional information about the nature of the Council’s claim. I would not consider this on its own to be a complete answer;

the significance of pleadings is not just concerned with preparation for trial. Having clear pleadings also assists the party to make decisions about what interlocutory applications it needs to make, and provides a guideline as to whether and when it should attempt to settle the case. By the time briefs of evidence have arrived, it is almost certainly too late to make further interlocutory applications about aspects of the case raised by the briefs that may surprise the applicant. It may also be too late for settlement discussions to take place.

[29] Ms McKee made a number of critical comments about the content of the various duties of care that the Council alleged. These duties of care were the basis of the corresponding claim that there had been breaches causing loss to the Council. Ms McKee, when dealing with the allegation that there had been breaches of duty on the part of the applicant to inspect the work carried out at the site, made a number of relevant points. She pointed out (and there was no dispute about this) that PSL was the supplier of the type of building material. Why should it be supposed, she asked rhetorically, that a supplier in that position would be subject to a duty to ensure that the product was properly applied? There may well be legal force on the submission but at this stage the question is ascertaining who went to the site and what they did there.

[30] Ms McKee also said that it would be necessary for the applicant to have an understanding of when the allegedly defective inspections took place, because the timing of them was significant. An inspection towards the end of the installation of the plaster material might possibly have revealed all of the cumulative faults that had occurred until that point. An inspection at an earlier time might have predated the occurrence of defective installation. In such a case, PSL would be able to defend the claim on the additional ground that its failure to intervene following inspection to have the faults corrected was unsustainable, given that the faulty installation had not by then taken place and was not therefore visible. Ms McKee also said that it must be doubtful that a supplier of product necessarily had an obligation to ensure that applicators were properly trained in use of the product, and in particular, how it should be interfaced with other products on the site such as Harditex.

[31] All of these are serious questions that arise in connection with the viability of the claims that the Council makes against PSL, but they would arise irrespective of the degree of the particularisation the Council provided. Irrespective of who was responsible for these alleged breaches of duty, and when they occurred, the applicant has viable legal arguments to mount to negate duties of the type alleged. Presumably, one of the possibilities is whether PSL’s employees came onto the site to assist approved applicators — employees who had been appointed to install their products for the benefit of those applicators, and without in any way subjecting themselves to a duty to ensure that no harm was caused to the Council. Another possibility is that there was a different, but again limited, purpose in PSL coming onto the site — to ensure that the applicators were not carrying out substandard installation which may cause the product to perform inadequately, and be potentially detrimental to the product’s reputation.

[32] My conclusion is that on a fair reading, the statement of claim provides sufficient notice to PSL as to the legal and factual basis of the Council’s claim. Preparation of a defence to the claims will be possible because the claims are comprehensible. Further there is no apparent basis for concerns that the extent of the enquiries and research that the applicant will be required to make in order to anticipate the claims will not be so large in scale or so resource intensive that it will have an oppressive impact upon the applicant.

[33] The application is therefore dismissed. The parties should confer on the matter of costs. In the unlikely event that they do not come to agreement on that matter, each side has leave to file memoranda not exceeding three pages addressed to

_{my attention within 14 days of this judgment.}

J.P. Doogue

Associate Judge

---

[1] _{Price Waterhouse v Fortex Group CA179/98, 30 November 1998.}
[2] _{Ibid, at 17.}
[3] _{Ibid, at 18.}
[4] _{Ibid, at 19.}
[5] _{BNZ Investments Ltd v Commissioner of Inland Revenue (2008) 23 NZTC 21, 821.}

[6] Ibid, at [45].