Kwak v Park [2014] NZHC 275 (25 February 2014)

Last Updated: 24 March 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2013-404-4674 [2014] NZHC 275

BETWEEN JOONG SONG KWAK and HYE SOOK KWAK

Appellants

AND HYUN SU PARK (also known as MARIO PARK and DUK SUN LIM

Respondents

Hearing: 20 February 2014

Appearances: A J Steele and J Scott for appellants

J Holland for respondents

Judgment: 25 February 2014

_{JUDGMENT OF FOGARTY J}

In accordance with r 11.5 I direct that the Registrar endorse this judgment with the delivery time of 3.30 pm on Tuesday 25 February 2013

Solicitors:

A J Steele Martelli McKegg, Auckland

J Scott, Martelli McKegg, Auckland

Britt Slater, Auckland

JOONG SONG KWAK and HYE SOOK KWAK v HYUN SU PARK (also known as MARIO PARK and DUK SUN LIM [2014] NZHC 275 [25 February 2014]

[1] This is an appeal from the Weathertight Homes Tribunal decision, removing the first respondents, Mr Park and Ms Lim, from proceeding TRI 2013-100-38.

[2] The appellants are the owners of a leaky home in Auckland. They contend that the respondents built the home as residential home developers. Ms McLaughlan was engaged under private contract by the respondents to act as a building certifier. She and her agents carried out at least 15 inspections on the home.

[3] The respondents sold the home to another person. Ms McLaughlan issued a code of compliance certificate, and the appellants purchased the home from the purchaser who bought from the respondents.

[4] The appellants, Mr and Mrs Kwak, continue their claim against the respondents as developers, based on them having a non-delegable duty of care in relation to the alleged negligent inspection and certification done by Ms McLaughlan as a private certifier. It is the alleged non-delegable duty of care in respect to the work of a private building certifier which is at the nub of this appeal.

[5] The respondents applied to be removed as respondents to this claim to the Weathertight Homes Tribunal. They denied that they had a non-delegable duty of care. The appellants’ claims before the Tribunal in these proceedings, submitted that Mr Park and Ms Lim were liable as developers arising from allegedly defective building inspections carried out by a private certifier, Ms McLaughlan.

[6] The Tribunal held that the primary issue in this case is whether there is a tenable claim that the developer’s duty of care to future owners encompasses liability for allegedly defective inspection work carried out by a private certifier. It records Mr Steele placing considerable reliance on the fact that the private certifier is a contractor engaged by the developer and arguing there is no distinction in this regard between acts of a builder in construction and acts of a private certifier in inspecting the building and work, and that the developer owes a non-delegable duty of care in respect of both.

The difficulty with this proposition is that the ambit of the developer’s duty is well defined in case law and relates to construction, not inspection and certification, which are regulatory functions.

[8] Developing that reasoning, the Tribunal then came to the conclusion at [15]:

Given the absence of case law, establishing that a developer is liable for inspection as opposed to building work, I consider that the claim against the developers is not tenable. There is no logical basis for extending of a developer’s duty to include regulatory functions.

[9] As a result of that reasoning, the Tribunal then made its final order at [20]:

I direct that Mario Park and Duk Sin Lim be removed as parties.

[10] In the appeal to this Court, Mr Steele argues the same proposition he advanced before the Tribunal. He argues effectively that there is no real distinction between the developer engaging a contractor from engaging a building certifier.

[11] The non-delegable duty of care was first recognised by the Court of Appeal in Mt Albert Borough Council v Johnson.¹ Non-delegable duties of care have a consequence, that the normal rule that a duty can be discharged by retaining a competent independent contractor, is not available. To illustrate the normal rule, if I had a car which I know is dangerous and I take it to an A Grade mechanic of good reputation to fix it, and the mechanic sends it back apparently fixed, I drive the car and it has not been fixed and causes damage to another person’s property, then I will not be liable in negligence to that person, because there is no carelessness on my part

that has caused the damage, but rather the mechanic who did not fix the car will likely be liable in negligence.

[12] That reasoning does not apply when there is a non-delegable duty of care. As the textbooks explain, particularly I find the most helpful analysis in Fleming’s the Law of Torts,² non-delegable duties of care can be and are identified by Judges in the

_{common law, but they are relatively rarely identified.}

¹ _{Mt Albert Borough Council v Johnson [1979] 2 NZLR 234 at 240.}

² Carolyn Sappideen and Prue Vines (eds) Fleming’s The Law of Torts (10^th ed, Thomson Reuters, Australia, 2011)

[13] The principle of a property developer owing a non-delegable duty of care is now well settled in New Zealand. But the point that has been raised in this case, set out above, has not been examined by the High Court, let alone the Court of Appeal or the Supreme Court. Indeed, the Tribunal relied on the fact that Mr Steele was not able to cite a case on the very point.

[14] The Court of Appeal has recently decided that there is no right of appeal from judgments of the High Court on appeal from the Weathertight Homes Tribunal.³

[15] The consequence of that decision is that if this Court decides this point, there is no right of appeal available to either of the parties in this case. Second, the consequence will be that the finding of this Court will hereafter bind the Weathertight Homes Tribunal until there is any decision of the Court of Appeal or the Supreme Court to the contrary, or until another High Court Judge decides the point the other way. That has a consequence that it may be a period of time where a decision of this Court will bind the Weathertight Homes Tribunal, when it turns out later on that the Court of Appeal or the Supreme Court will differ on the point.

[16] The second problem is that the identification of a non-delegable duty of care is an exceptional event. It is entirely appropriate that it should only be identified by a Court very superior in the hierarchy of the courts. In New Zealand it was by the New Zealand Court of Appeal at the time. It is appropriate that any authoritative delineation of the scope of a non-delegable duty of care should be decided by the Court of Appeal, if not the Supreme Court.

[17] I have considered converting this proceeding into a judicial review, thereby enabling rights of appeal from the High Court to the Court of Appeal and to the Supreme Court. That probably can be done. I have in other cases converted appeals to judicial review for various reasons. But I am of the view that it would be better for the Court of Appeal Judges rather than a High Court Judge to express an opinion

_{as to the scope of the non-delegable duty of care in the first instance.}

³ Osborne v Auckland City Council [2012] NZCA 199.

64 Transfer of civil proceedings from High Court to Court of

Appeal

(1) If the circumstances of a civil proceeding pending before the High Court are exceptional, the High Court may order that the proceeding be transferred to the Court of Appeal.

(2) Without limiting the generality of subsection (1), the circumstances of a proceeding may be exceptional if—

(a) A party to the proceeding intends to submit that a relevant decision of the Court of Appeal should be overruled by the Court of Appeal:

(b) The proceeding raises 1 or more issues of considerable public importance that need to be determined urgently, and those issues are unlikely to be determined urgently if the proceeding is heard and determined by both the High Court and the Court of Appeal:

(c) The proceeding does not raise any question of fact or any significant question of fact, but does raise 1 or more questions of law that are the subject of conflicting decisions of the High Court.

[19] Section 2 identifies three circumstances, none of which precisely apply here, but are not inconsistent with subs (1) being applied.

[20] I classify proceedings before the Weathertight Homes Tribunal as civil, not criminal proceedings. The Tribunal was set up so that civil proceedings could be conducted before the Tribunal at a much lower cost and efficiently than if they had to be pursued in the High Court, or if the sum was low enough, then the District Court. I am therefore satisfied that the jurisdiction in s 64(1) is available.

[21] For the benefit of the parties listening to this oral judgment, when the matter is transferred to the Court of Appeal, the Judges of that Court, strictly speaking are sitting exercising the jurisdiction of the High Court. In a sense that is a formality only. Transferring this matter to the Court of Appeal will enable that Court to consider the ambit of the decision in Mt Albert Borough Council v Johnson, which I referred to earlier as being the decision of the Court of Appeal establishing the non- delegable duty of care.

[22] Earlier I explained informally this logic to counsel and they sought the opportunity to take instructions. They have taken instructions from their clients present in court, and have advised the Court that they have no opposition to me exercising this power of transfer. I am grateful for that.

[23] Accordingly, these proceedings are transferred to the Court of Appeal for hearing, pursuant to s 64(1) of the Judicature Act.

[24] Mr Holland has drawn my attention to the fact that there was another issue raised in a reply submission which concerns him. While my reason for transferring this matter to the Court of Appeal is solely confined to the interpretation and scope of the non-delegable duty of care, it is my understanding that the consequence of transferring these proceedings to the Court of Appeal is that all matters pertaining to this litigation, such as they are in the High Court, are now transferred to the Court of Appeal. That includes matters which of themselves would not be of sufficient justification to transfer, and also includes the question of costs.

Fogarty J