Auckland Council v Gormly [2013] NZHC 721 (11 April 2013)

Last Updated: 19 April 2013

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2012-404-006768 [2013] NZHC 721

UNDER the Weathertight Homes Resolution

Services Act 2006

IN THE MATTER OF an appeal from a decision of the

Weathertight Homes Tribunal

BETWEEN AUCKLAND COUNCIL Appellant

AND NIGEL CHARLES GORMLY AND SUZANNE MARIE GORMLY AND MACKY TRUSTEE COMPANY LIMITED AS TRUSTEES FOR THE MOTUIHE TRUST

First Respondents

AND GRAEME JOHN ENDERBY AND HELEN ANNE ENDERBY

Second Respondents

AND ROBERT GERADES MEDEMBLIK Third Respondent

AND WAYNE DAVID MARTIN Fourth Respondent

AND CHRIS DOIDGE BUILDERS LIMITED Fifth Respondent

Hearing: 11 April 2013

Appearances: D J Barr and K Lydiard for the Appellant

No appearance by or on behalf of Any Other Party

Judgment: 11 April 2013

_{ORAL JUDGMENT OF WOOLFORD J}

AUCKLAND COUNCIL V GORMLY & ORS HC AK CIV 2012-404-006768 [11 April 2013]

Introduction

[1] On 12 October 2012, the Weathertight Homes Tribunal allowed an application made by the Auckland Council (the Council) to join Chris Doidge Builders Limited as a respondent to weathertightness proceedings brought by The Motuihe Trust against it and a number of other respondents in respect of a property situated at 67A Edmund Street, St Heliers. In the same procedural ruling, made without hearing from the parties, the Tribunal refused applications to join Christopher Doidge personally as well as Chenery Contracting Limited (Chenery), Nicks Timber Joinery Limited and Fairview Window Solutions Limited as respondents.

[2] The Council now appeals against the dismissal of its application to join

Mr Doidge and Chenery.

Legal Principles

[3] For a party to be joined to proceedings when filed, it is only necessary to name that party on the application for adjudication.1 Section 111(1) of the Weathertight Homes Resolution Services Act 2006 (the Act) provides for joinder of parties after an application is filed. It provides:

(1) The tribunal may order that a person be joined as a respondent in adjudication proceedings if it considers that—

(a) the person ought to be bound by, or have the benefit of, an order of the tribunal; or

(b) the person's interests are affected by the proceedings; or

(c) for any other reason it is desirable that the person should be joined as a respondent.

[4] In Thomson v Christchurch City Council2 Gendall J stated at [33]:

Clearly if there is no tenable evidence of factual foundation put before the Adjudicator to provide some support for a cause of action against an intended party then joinder would be inappropriate.

1 _{Section 62 of the Weathertight Homes Resolution Services Act 2006.}

2 Thomson v Christchurch City Council HC Christchurch CIV-2010-409-2298, 28 March 2011.

[5] In Thomson, Gendall J also gave some consideration to whether the approach to a joinder application should be the same as an application to strike-out a person as a party to the proceeding, but in the circumstances of this case, I do not think it is necessary for me to go beyond the plain wording of s 111(1) of the Act.

Weathertight Homes Tribunal decision

[6] In its decision, the Tribunal referred to the matters that it needed to weigh up in considering applications for joinder before citing two High Court cases, Auckland City Council v WHRS and Dennerly3 and Yun v Waitakere City Council.4 It then stated:

[6] Clearly tenability is one of the critical factors in determining in the circumstances of each case whether it is fair and appropriate to join a party. Accordingly where a party is applying to join a party they have to produce sufficiently compelling evidence to establish that the claim against that party is capable of succeeding.

[7] As to the application to join Mr Doidge personally, the Tribunal stated:

[10] Mr Barr submits that Mr Doidge should be joined as he is the sole director of Chris Doidge Builders Limited. It is submitted that the fact that the invoice from CDB stated that cheques should be made payable to Chris Doidge is relevant. However there is no evidence that Mr Doidge personally carried out any relevant work. I am not satisfied that the fact that Mr Doidge asked for a cheque to be made out to him personally demonstrates that he assumed personal responsibility for any relevant work such that he owed a duty of care to the claimants. I therefore decline this application for joinder, however, if any evidence of actual involvement by Mr Doidge is provided there may be grounds for reviewing this application.

[8] With respect to Chenery, the Tribunal stated:

[11] The Council applies to join Chenery Contracting Limited (Chenery) on the ground that it supplied and installed lead flashings around the chimney to Chris Doidge Builders Limited. Mr Barr submits that the claimants allege defects to the capping to the chimney in their statement of claim and that these defects, if proven, were caused or contributed to by the work carried out by Chenery.

3 Auckland City Council v WHRS and Dennerly HC Auckland CIV-2004-404-4407, 28 September

_2004.

4 Yun v Waitakere City Council HC Auckland CIV-2010-404-5944, 15 February 2011.

[12] The claimants rely for evidence of the alleged defects on the report and schedule of defects prepared by their expert, Stuart Wilson of Maynard Marks. The inadequately installed capping to the chimney breast on the west elevation is identified as Defect E in the schedule of defects prepared by Mr Wilson. He describes this defect as a combination of the incorrect application of the stucco solid plaster and the fact that the turn down to the capping does not incorporate a drip edge to divert moisture away from the elevation. In addition, the report states that the plaster has cracked as a result of differential movement between the capping and the plaster.

[13] The repairs required to remedy these defects are described as recladding of the chimney and replacement of the capping which is estimated at 5 per cent of the total repair costs, approximately

$14,3375.50.

[14] Given that the incorrectly installed capping is only one of the contributing factors to this defect, I am not satisfied that joinder of Chenery to this proceeding is justified. It is clear from from the report of the WHRS assessor and Mr Wilson that there are other defects which on their own have created a need for a full reclad of the property. In these circumstances, I am not satisfied that the cost to Chenery and the other parties of joining Chenery to these proceedings is proportional to any potential liability by Chenery. The application is therefore dismissed.

Discussion

[9] Counsel for Auckland Council submitted that the Tribunal misapprehended the test in Thomson v Christchurch City Council and that the Tribunal’s test was inconsistent with the test for removal of a party as well as being impractical and inconsistent with the policy of the Act.

[10] The Council’s position may be summarised as follows:

(a) Unless a proposition is so clearly wrong or unsustainable it is premature to decline the joinder application (Thomson v Christchurch City Council).

(b) An applicant for joinder must be able to point to evidence of a factual foundation (Thomson v Christchurch City Council and Auckland City Council v WHRS & Dennerly). However,

(i) If facts could be established through viva voce evidence (either in chief or through cross-examination) of a party other than the party seeking joinder, the Tribunal cannot require the party seeking joinder to provide affidavit or other documentary evidence. An allegation is sufficient to point to evidence of a factual foundation unless the allegation is in itself so clearly wrong or unsustainable that joinder is inappropriate. If the allegation could never be made out, the appropriate relief is an award of costs (after the allegation is successfully refuted) rather than a refusal to join;

(ii) Natural justice requires that the Tribunal must ignore evidence which points away from joinder unless a formal opportunity has been provided to the party seeking joinder to provide evidence to the contrary (Yun v Waitakere City Council);

(iii) If the party seeking joinder can point to tenable evidence, the Tribunal should grant joinder and cannot consider the relative strengths and weaknesses of the evidence. If the evidence is not considered tenable, the party seeking joinder must be given the opportunity to adduce further evidence; and

(iv) The Tribunal should err on the side of granting joinder, recognising that:

1. Parties that are joined have the right to subsequently apply for removal; and

2. If a party is joined on the basis of an allegation that lacks substantial merit, this can sound in costs.

(c) Both Auckland City Council v WHRS and Dennerly and Yun v Waitakere City Council arise from extraordinary circumstances (a “fishing expedition” and a recalcitrant party). While they correctly

state and apply the principles of joinder and removal respectively in those circumstances, neither case (and in particular the outcomes) can be read as a general rule for joinder or removal. The approach taken in the majority of cases will be that taken in Thomson v Christchurch City Council (for joinder) and Saffioti v Jim Stephenson Architect Ltd.5

[11] It seems to me that there is merit in the Council’s position. I am also of the view that the Tribunal clearly seems to be overstating the position when it comments that a party applying to join a party has to produce “sufficiently compelling evidence to establish that the claim against that party is capable of succeeding”. I have not however heard full argument as there has been no appearance by the respondents to this appeal and, as noted above, I am of the view that the appeal can be dealt with on a narrow basis.

[12] As to Mr Doidge, the Tribunal stated that there was no evidence that Mr Doidge personally carried out the relevant work. With respect to the Tribunal, there is already cogent evidence of Mr Doidge’s personal involvement. At [3] of her affidavit sworn on 10 October 2012, Helen Enderby states:

Around January 2004 Graeme and I requested Chris Doidge, builder, to build the homes. We liked Chris and got on well with him. We had seen him working in building houses in Remuera and thought he did a good job as the site looked tidy and well managed. We wanted to manage costs effectively and wherever possible Chris was to carry out the work. When he was unable to do something he let us know who he had previously dealt with and, on his recommendation, we usually went along with that person doing the work. Some of them invoiced us directly to avoid us having to pay a builder’s margin.

[13] This is confirmed by her husband, Graeme Enderby, who states in an affidavit, also sworn on 10 October 2012:

Helen and I wanted to build our retirement home. We engaged Chris Doidge, who is a well-respected builder to do this. When needed, he let us know the names of subcontractors he had previously dealt with and we paid them directly. ... We entrusted Chris to build the house and Mr Medemblik to design it.

5 Saffioti v Jim Stephenson Architect Ltd [2012] NZHC 2519.

[14] Mr Doidge is not represented today but counsel for the Auckland Council has provided me with a letter written by him to counsel dated 27 November 2012, in which he states:

In reply to the Appeal by the Auckland Council to join me personally as a respondent to the proceedings, I would like it registered that the property at

67A Edmonds Street, St Heliers was built between January 2004 and

October 2004.

I was hired on a labour only basis and at no times received any payment for supervision or project management.

On the 29 March 2004, whilst fixing the building wrap at the above site, I fell from a ladder shattering my right heel and breaking my right wrist. I was admitted to hospital and went on to have reconstruction surgery on my heel and was on ACC for the period 5 April 2004 to the 5 September 2004, shortly before the house was completed.

I would submit that I personally cannot be held responsible for any building work carried out on this project during this period as I carried out no physical hands on work.

Furthermore I would like it noted that all other sub-contractors contracted for work carried out not included in my original quote, roofers, internal and external plasterers, internal and external painters, water proofers, tiling, landscapers, kitchen installers, garage door installers, spouting, plumbing, gas fitters, electrician and concrete contractors on the above site were engaged by Mr & Mrs Enderby.

[15] The Tribunal therefore erred in refusing to join Mr Doidge personally. In any event, Chris Doidge Builders Ltd is a respondent already and joinder of Mr Doidge himself will not add significantly to the scope of the proceedings.

[16] As to Chenery, who are also unrepresented on the appeal, the Tribunal acknowledged that Chenery had undertaken work, namely, capping to the chimney, which may have contributed to the damage to the house. However, the recladding of the chimney and replacement of the capping was estimated to cost only $14,337.50 and so joinder of Chenery was not justified, as being disproportionate to Chenery’s potential liability.

[17] I am of the view however, the fact that the remedial work may only cost

$14,337.50 is not sufficient to warrant Chenery’s exclusion from the proceedings.

$14,337.50 is not de minimis.

[18] In any event, at this stage of the proceedings, it is too early to make any definitive assessment of the proportion of the cost of remedial work attributable to the various parties. It is possible that the inadequate capping to the chimney caused damage well beyond the chimney itself. Moreover, the cost to Chenery of being a party can be managed by the Tribunal in its procedural directions and at any hearing of the application by excusing attendances and through other means while the cost to the other parties of joining Chenery is minimal, in my opinion.

[19] The finding by the Tribunal that Chenery may have some liability meant that it should properly be a respondent.

[20] I therefore allow the appeal and reverse the decision of the Tribunal with respect to Mr Doidge and Chenery. In its place I make an order under s 111 of the Act, joining Mr Doidge and Chenery as respondents to the application for adjudication. There will be no order as to costs.

.....................................

Woolford J

Solicitors/Counsel:

Simpson Grierson, Private Bag 92518, Auckland for the Appellant

M Thornton, Solicitor, PO Box 91 441, Auckland for the First Respondents

Adian Thorn, Lawyers, PO Box 1753, Shortland Street, Auckland for the Second Respondents