Davey v Baker [2014] NZHC 1574 (7 July 2014)

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BETWEEN	IAN WALTON DAVEY, NOVA ELIZABETH DAVEY and CARL JORGENSEN First Plaintiffs
AND	IAN WALTON DAVEY and NOVA ELIZABETH DAVEY Second Plaintiffs
AND	NICHOLAS DE CHAIR BAKER Defendant
AND	NORMAN MICHAEL PAVELKA First Third Party
AND	SELWYN RAYMOND COLWELL LIGHT _{Second Third Party}

Hearing:	23 June 2014
Appearances:	G W Allan for Plaintiffs G M Downing for Defendant G J Praat for Second Third Party No appearance for First Third Party
_Judgment:	_{7 July 2014}

[2] On 17 February 2014 the Court granted leave to the plaintiffs to file a second amended statement of claim, to include a cause of action based on rectification of the

_{easement. A second amended statement of claim was then filed, and a
statement of}

defence followed. Shortly after that, within a period of 10 working days, the defendant filed and served third party notices against Mr N M Pavelka, the first third party, who owned the property now owned by the defendant at the time the easement was created, and against Mr S R C Light, the surveyor who acted in relation to creation of the easement.

[3] The plaintiffs apply to set aside the third party notices, under r 4.16(2). The relevant parts of r 4.16 are these:

(2) A party to a proceeding served with a third party notice issued and served without leave of the court may apply to the court to have the notice set aside.

(ii) without prejudice to the right of the defendant to pursue that claim against the third party in an independent proceeding; or

[4] The defendant opposes the application. Neither third party has taken any steps on this application, but each has filed a statement of defence, in which each pleads as a positive defence that each claim now brought by the defendant is statute- barred.

[5] When considering an application under r 4.16 the Court is to have regard to r 4.4(1) which sets out four circumstances in which a third party notice may be issued.¹Rule 4.16 does not require the Court to be confined to the circumstances set out in r 4.4.²Even if a third party notice is properly issued under one of the sub- paragraphs in r 4.4(1), it may still be set aside under r 4.16. A defendant cannot

insist that a third party be joined to a proceeding as of right.³Broader considerations, such as convenience and overall justice, may separately justify an order setting aside a third party notice.⁴Factors for consideration when assessing the overall justice of a case may include the strength of the claim against a third party, delay to the plaintiff ’s proceeding, and whether the lengthening of the trial brought about by additional parties being involved is outweighed by such positive aspects as allowing all issues arising from a certain fact situation to be determined at the same time.

[6] Mr Downing says that the defendant has brought each third party proceeding on the basis that each fits within sub-paragraphs (c) and (d) of r 4.4(1). These provide:

(c) that a question or issue in the proceeding ought to be determined not only between the plaintiff and the defendant but also between –

(d) that there is a question or an issue between the defendant and the third party relating to, or connected with, the subject matter of the proceeding that is substantially the same as a question or an issue arising between the plaintiff and the defendant.

[7] Mr Allan says that neither of the claims against the third parties is within either of these paragraphs, that in any event each claim is statute-barred, and that the claims should not be allowed to lengthen and increase the cost of the plaintiffs’ proceeding. Mr Downing says that neither claim is statute-barred, each of the third parties would be a witness at the trial in any event, and that the trial of the proceeding would not be delayed or lengthened.

[8] The issue in this case is whether, in relation to each of the third party claims, it is within the ambit of paragraphs (c) and (d) and whether, if it is, it should nonetheless be set aside in the circumstances of this case.

[9] For completeness, Mr Allan says that each third party notice should be set aside without prejudice to the right of the defendant to pursue his claim against that party in an independent proceeding.

[10] In the second amended statement of claim the plaintiffs plead an agreement between the first-named plaintiff, Mr I W Davey, and the first third party, Mr N M Pavelka, on the line that the agreed right of way was to follow. In their first cause of action the plaintiffs seek rectification of the easement which was subsequently created, to reflect the agreed line the easement should follow. Mr Allan says that the plaintiffs will bear all costs associated with this exercise.

[11] In their second, and alternative, cause of action the plaintiffs plead that the easement is a restrictive covenant, the burden of which for both the plaintiffs and the defendant is, or is likely to be, increased as a result of the position of the easement because the cost of maintaining it is likely to be higher, given the instability of the land over which it has been created. It is said that the easement should be modified, and the proposed modification would reduce those burdens. It is said that the modification is necessary, for stated reasons. The plaintiffs claim an order that the easement be modified by relocating it to a different area on the defendant’s land. Again, Mr Allan says that the plaintiffs will bear the cost.

[12] In their third, and alternative, cause of action the plaintiffs plead that the defendant has allowed trees to obstruct the plaintiffs’ ability to use the existing easement, and that the defendant is obliged to remove the trees and to take certain other steps so the easement can be used. They seek orders to that effect.

[13] In their fourth cause of action the plaintiffs plead numerous breaches by the defendant of the implied term in Schedule 4 cl 14(b) of the Land Transfer Regulations 2002 to meet and in good faith try to resolve the dispute between the plaintiffs and the defendant. They seek $75,000 by way of damages for breach of this obligation.

[14] In their fifth statement of claim the plaintiffs seek aggravated damages as a result of the conduct relied on in the fourth cause of action. In my view the fifth cause of action is not a separate cause of action. It is a further claim for relief on the fourth cause of action, and I treat the two causes of action as one for present purposes.

[15] The defendant says the first third party owed a duty of care (of unspecified ambit) to subsequent purchasers of the servient land (which include the defendant). He says that the first third party failed to ensure that the right of way easement followed the line of the existing track on the property and/or the most practicable and obvious route over the property (where the track was indefinite), that he failed to properly instruct the surveyor and/or failed to ensure that the surveyor’s plans achieved what he had agreed with the plaintiffs, and that he failed to ensure that the subdivision application which created the right of way achieved what he had agreed with the plaintiffs. He says that these failures constituted a breach of the duty of care. He says he only became aware of the first third party’s negligence, as he describes it, when the plaintiffs filed this proceeding.

[16] The defendant then says that if the Court makes any order against the defendant in favour of the plaintiffs there should be an order that the first third party pay to the defendant all damages, losses and costs suffered by the defendant resulting from such order.

[17] The defendant says the second third party owed a duty of care to subsequent purchasers of the servient land, though, again, he does not specify the ambit of that duty. He says that the second third party failed to follow the instructions of the plaintiffs and the first third party in carrying out the survey of the easement, that he failed to ensure that the easement which was created followed the line of the existing track and/or the most practicable and obvious route (where the track was indefinite), and that he failed to ensure that the subdivision application which created the

easement achieved what he had been instructed to do by the plaintiffs and the first third party. He says that the duty of care was owed to him as a subsequent purchaser of the servient land and that he only became aware of the second third party’s negligence, as he describes it, when the plaintiffs filed this proceeding.

[18] As a result the defendant seeks an order that the second third party pays to the defendant all damages, losses and costs suffered by the defendant resulting from any order made in favour of the plaintiffs.

[19] Looked at broadly the first two causes of action raise the question of whether the right of way is in the location that it was intended to be at the time that it was created. This is certainly squarely raised in the first cause of action; the second cause of action raises the same point, albeit more obliquely, on the basis that a negative covenant has been created that is more burdensome to both parties than it should have been.

[20] In his claims against the first and second third parties the defendant says that if this is so, it is the fault of one or other or both of them.

[21] Viewed narrowly, this is a different issue from the issue between the plaintiffs and the defendant. Viewed more broadly, however, both issues raise the fundamental question of what was agreed at the time, not only by the original parties to the easement (the plaintiffs and the first third party), but also between the first third party and the second third party. Viewed this way, the ground for the issue of a third party notice under r 4.4(1)(d) might be seen to be made out. However, that is not, in my view, sufficient to determine this application in favour of the defendant, in relation to the first and second causes of action. There are further issues to be considered.

[22] First, as noted earlier, the plaintiffs do not seek from the defendant any part of the cost of carrying out the rectification or modification which they seek. They simply seek an order that one or other of these actions occur. There is not, therefore, any cost to the defendant which can be the basis of a claim against either the first or

the second third party, under either of the first or second causes of action, leaving aside questions of litigation costs.

[23] The defendant also claims any “losses” or “damages” he might suffer as a result, but none is pleaded even in general terms, let alone with sufficient particularity for the Court to understand how there might be any sum for the defendant to recover.

[24] Secondly, as I have noted, the duties of care alleged on the part of each of the third parties are not specified. There can be little doubt that each of the third parties will require particulars, and given the tenuous relationship between the defendant and each of the third parties, there is a real prospect that the existence of any duty of care, however it may be particularised, will be firmly called into question, whether by way of an interlocutory application for strike out or summary judgment, or by way of defence at trial. This issue alone has the potential to embroil the plaintiffs in a prolonged proceeding, either before or at trial. Even though the plaintiffs would not be involved in the provision of further particulars of the alleged causes of action, nor necessarily in any applications that might be made for strike out or summary judgment by the third parties, this proceeding would be delayed while these processes took place.

[25] Thirdly, both third parties have pleaded limitation as a separate defence. This, too, is an issue which may give rise to an application to strike out or for summary judgment, but if not will occupy time at trial. Again, the plaintiffs would be delayed by an application for strike out or summary judgment, and the trial would be prolonged if the point were left to argument at that stage.

[26] All these points weigh in favour of the third party notices being set aside, in relation to the first and second causes of action. A further point in favour of this outcome is that no limitation issue has been identified which might exist now, but which did not exist when the third party proceedings were issued. Therefore it appears the defendant can now sue the third parties in separate proceedings without any additional barrier by way of limitation standing in his way.

[27] The third cause of action relates to the trees which were planted on parts of the existing right of way, in around 1992. The defendant bought the properties with the trees on it, in 2002. If the plaintiffs succeed on this cause of action, the cost of removal of some of the trees, and other works as may be required, would fall on the defendant. On this cause of action, therefore, if the defendant were found liable to the plaintiffs he would incur costs which he would then seek to recover from the third parties. In this way, this cause of action differs from the first and second causes of action. However, the defendant’s claims face much the same hurdles as are faced on the first and second causes of action: the second and third factors I have identified above again weigh in favour of the third party notices being set aside, on this cause of action.

[28] The fourth and fifth causes of action do not fall within either (c) or (d) of r 4.4(1). They rely entirely on the conduct of the defendant some 20 years after either the first or second third party was last involved in this case. I cannot see any basis upon which the defendant might recover from the first or the second third party any damages that may be awarded against him under either of these causes of action.

[29] Mr Downing notes that the defendant appears under objection to the jurisdiction of this Court to hear and determine parts of this claim, as the easement registered on the titles of the plaintiffs and the defendant provides for any dispute or difference arising between them, relating to the easement or its meaning or interpretation, to be referred to arbitration. The objection refers to the amended statement of claim filed in April 2013, not the current pleading, but relates to the causes of action which are now the third, fourth and fifth causes of action in the second amended statement of claim.

[30] So far as the present third cause of action is concerned, Mr Downing says that this is already the subject of a proceeding in the District Court for the removal of the trees, and that Court has decided that this issue is subject to arbitration and has ordered a stay. Therefore issue estoppel prevents the question of whether this part of the claim can be considered by the Court being revisited.

[31] It is unclear how a claim that this cause of action is issue-estopped, and that in any event it is subject to an objection to jurisdiction, assists with the proposition that a third party claim in respect of it should remain on foot. It also seems arguable that the defendant has submitted to the jurisdiction of this Court, in any event, given the filing of two statements of defence, which challenge the merits of the proceeding, as well as the filing of third party proceedings. These might form the basis of a submission that the defendant has submitted to the jurisdiction of this Court

observation beyond noting that I do not find the protest to jurisdiction of any assistance either way in reaching my conclusion on this application.

[32] Mr Downing notes that at an earlier point the Court allowed the filing of a second amended statement of claim, after a stipulated close of pleadings date, noting that the alternative for the plaintiffs was to file a new proceeding (which would not have been time-barred) and then to apply for consolidation. Mr Downing says that it would be fair to treat the defendant in a similar way. Accurately, he notes that when dealing with that issue, I said that it was in the interests of justice that all causes of action were heard at the same time. Analysis, however, shows that there is little similarity between the two situations. Although the leave granted to the plaintiffs had the effect of allowing all the plaintiffs’ causes of action against the defendant to be heard in one single proceeding, that would almost inevitably have occurred in any event, had the plaintiff taken the alternative option of a separate proceeding and consolidation. The position here differs. Although the defendant seeks, also, to have all his issues relating to this right of way decided in the same proceeding, on this application there is potential for real prejudice to the plaintiffs, for the reasons I have set out. Two additional parties would be involved, and the causes of action against them face self-evident head winds. It is by no means a foregone conclusion that any separate proceeding the defendant may bring against the first or second third party would be consolidated with this one.

_{[33] For these reasons I conclude that the third party notices
should be set aside.}

[34] Each of the third party notices is set aside and the defendant’s statements of claim against the first and second third parties are dismissed, without prejudice to the rights of the defendant to pursue each claim against either or both of the third parties in an independent proceeding.

[35] The plaintiffs are entitled to costs on a 2B basis together with disbursements to be fixed by the Registrar.

[36] The case will be called at the Nelson List on 21 August 2014, for review. In the meantime, any further interlocutory application will be filed and served no later than 10 clear working days prior to the next call.

[37] Counsel are to consider the effect of the notice of objection and the steps to be taken in relation to it.

[38] A close of pleadings date will be set very shortly after the next call, and a timetable set for the exchange of briefs of evidence.

High Court of New Zealand Decisions

Davey v Baker [2014] NZHC 1574 (7 July 2014)