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Carter v Metal Design Solutions Limited [2016] NZHC 1162 (31 May 2016)

High Court of New Zealand

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Carter v Metal Design Solutions Limited [2016] NZHC 1162 (31 May 2016)

Last Updated: 5 July 2016


IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY



CIV-2015-404-001170 [2016] NZHC 1162

BETWEEN
JOHN CARTER, PEGGY CARTER, AND
GRANT MCCURRAH AS TRUSTEES OF THE J L & P A CARTER NO.2
FAMILY TRUST Plaintiffs
AND
METAL DESIGN SOLUTIONS LIMITED
First Defendant
AND
MICO NEW ZEALAND LIMITED Second Defendant


Hearing:
10 May 2016
Appearances:
S J Corlett and E D Davies for the Plaintiff / Respondent
R Ewen for the First Defendant
J K Goodall and R Keenan for the Second Defendant / Applicant
Judgment:
31 May 2016




JUDGMENT OF ASSOCIATE JUDGE SARGISSON



This judgment was delivered by me on 31 May 2016 at 4.30 p.m. pursuant to Rule 11.5 of the High Court Rules.



Registrar/Deputy Registrar



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


Solicitors:

Brookfields, Auckland

Wynyard Wood, Auckland

J Goodall, Auckland


CARTER & Ors v METAL DESIGN SOLUTIONS LIMITED & Anor [2016] NZHC 1162 [31 May 2016]

[1] The second defendant, Mico New Zealand Limited, applies to strike out the plaintiffs’ claims in negligence and under the Consumer Guarantees Act 1993. Mico says that the tort action is time-barred as it was filed more than six years after the date on which the cause of action accrued; and that the claim under the Consumer Guarantees Act must be barred also, because it too is time-barred.

[2] Mico also argues in the alternative that, even if the tort action is not time-barred due to the operation of the reasonable discovery principle, it must be excluded because it would be unfair to impose a duty of care allowing plaintiffs to use tortious rules to get around a bar on a Consumer Guarantees Act action.

[3] The plaintiffs say that the actions are not time-barred because the action accrued later than the date on which the cladding was installed (because there are reasonable discoverability issues); and that the Consumer Guarantees Act is designed to cover similar or identical ground to the tort of negligence in many situations, so that there is no unfairness in maintaining liability under both simultaneously.

[4] For reasons I will turn to presently, I am not satisfied that the plaintiffs’

claims should be struck out.


Background

[5] The plaintiffs are trustees of a family trust which holds a house. Mico imports, distributes and supplies cladding products.

[6] In 2008, the plaintiffs decided that the exterior of the house should be reclad. They engaged the first defendant, Metal Design Solutions Limited (MDS), to install Anthra Zinc, a high end black cladding, at a cost of approximately $500,000. This product is manufactured in France and imported into New Zealand by Mico. Mico supplies the product to MDS, which installs it. (The plaintiffs also claim in their pleadings that Mico may manufacture the product, which remains contentious.)

[7] Before the cladding was installed, when they were considering their options, MDS advised the plaintiffs that some white staining might naturally appear, but it would gradually become incorporated into the colouring of the cladding and would become unnoticeable; and in any case it could be removed either by rainwater naturally running over it, or by washing down the affected area. As the plaintiffs further explored their options, they say that more representations were made as to the visible appearance of the cladding and the temporary status of any potential staining.

[8] MDS provided a quote for the work on 15 May 2008, in which it explicitly guaranteed its workmanship for five years following the completion of the installation. In late May 2008, the plaintiffs entered into a contract with MDS to supply and install the zinc cladding.

[9] The installation occurred between 1 May 2008 and 25 July 2009. The cladding MDS installed had been supplied by Mico.

[10] In March 2010, the plaintiffs discovered a large white stain under the entry canopy of the house. MDS replaced this section with an alternative aluminium product, and supplied the plaintiffs with a bottle of oil. MDS advised that applying this oil to the cladding would prevent any further staining. However, although the plaintiffs applied the oil as they had been instructed to, further staining occurred.

[11] In March 2011, MDS advised the plaintiffs that the staining could be removed with a heated water blaster. The plaintiffs attempted this removal method, but it failed. From March 2011 onwards, the white staining became significantly worse and more visible around more areas of the house.

[12] When the claim was first filed in 2015, Mico was not named as a defendant. The plaintiffs had joined the wrong party, a company named Wakefield Metals Ltd. On 11 November 2015, they filed a memorandum seeking leave to join Mico. Leave was granted on 17 November 2015, and the claims against Mico were first pleaded in the amended statement of claim dated 8 December 2015.

[13] Therefore, Mico was joined more than six years after the installation, but less than six years after the plaintiffs say they noticed the white staining.

[14] For the purposes of this application, Mico has accepted, among other things, that it is a manufacturer in terms of the extended definition in the Consumer Guarantees Act. However, it disputes whether it can be considered a manufacturer in terms of the ordinary definition of the word, and therefore for the purposes of the negligence claim.

Law

Strike out

[15] The application is made under r 15.1(a) of the High Court Rules, which relevantly states:

15.1 Dismissing or staying all or part of proceeding

(1) The court may strike out all or part of a pleading if it—

(a) discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading

...

[16] The general principles applying to a strike out application such as this are well established:1

(a) Pleaded facts are assumed to be true.

(b) The cause of action must be clearly untenable. The court must be certain that it cannot succeed.

(c) The jurisdiction is to be exercised sparingly and only in clear cases, reflecting the Court's reluctance to terminate a claim short of trial.

(d) The jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument.



1 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33]; Attorney-General v

Prince and Gardner [1998] 1 NZLR 262 (CA) at 267.

(e) The Court should be particularly slow to strike out a claim in any developing area of the law.

[17] The Court is entitled to receive affidavit evidence, but will not attempt to resolve genuinely disputed issues of fact. In general, the claim will be considered on the basis that the facts as pleaded by the plaintiff are correct. However, there are occasional cases where an essential factual allegation is so demonstrably contrary to indisputable fact that the matter will not be allowed to proceed.2

[18] A claim may be struck out wholly if it discloses no reasonable cause of action, or partially if the result will be a genuine reduction in the scope of the case.3

Analysis

[19] In this case, the questions I must determine are whether the two causes of action are clearly time barred; and whether the Consumer Guarantees Act so cuts across any duty of care that the duty cannot stand. If the answer to any of those three questions is inarguably yes, that part of the claim can be struck out.

[20] In my analysis, I bear in mind the comments of Tipping J in Murray v

Morel:4

[33] I consider the proper approach, based essentially on Matai, is that in order to succeed in striking out a cause of action as statute-barred, the defendant must satisfy the Court that the plaintiffs’ cause of action is so clearly statute-barred that the plaintiffs’ claim can properly be regarded as frivolous, vexatious or an abuse of process. If the defendant demonstrates that the plaintiffs’ proceeding was commenced after the period allowed for the particular cause of action by the Limitation Act, the defendant will be entitled to an order striking out that cause of action unless the plaintiff shows that there is an arguable case for an extension or postponement which would bring the claim back within time.

Accrual of cause of action: negligence

[21] It is not in dispute that, but for principles of reasonable discoverability, the action in negligence would be out of time.5 Mico argues that the cause of action

2 Attorney-General v McVeagh [1995] 1 NZLR 558 (CA) at 566.

  1. Attorney-General v Prince and Gardner [1998] 1 NZLR 262 (CA); Couch v Attorney-General, above n 1; Ferrymead Tavern Ltd v Christchurch Press Ltd (1999) 13 PRNZ 616 (HC) at 619.

4 Murray v Morel & Co Ltd [2007] NZSC 27; [2007] 3 NZLR 721 at [33].

“accrued” immediately on delivery of the cladding, not when the problem became apparent, because if the cladding was defective, the plaintiffs lost out when they acquired a product which was worth less than they had paid. It says that the categories of action in which reasonable discoverability can assist a plaintiff are limited, and though reasonable discoverability has been held to apply to defective cladding in the context of leaky home litigation, this context is sufficiently different

that it cannot apply here.6

[22] Though Mico is correct that the categories of action in which reasonable discoverability can assist a claimant are limited, those categories do include latent defects in building materials and particularly cladding. In Hamlin, the category was defined explicitly as “latent defects in buildings”.7

[23] I accept that there are some differences between the established leaky building category and the present case. In the traditional leaky building case, the damage is structural rather than cosmetic, and the measure of loss is the diminution in market value of the property. In the present case, it appears possible that the more appropriate measure of loss is the cost of either the cladding currently on the house, or appropriate replacement cladding. That would point to a “loss” which is a defective product, not a delayed effect on the value of the building, and therefore to a conclusion that reasonable discoverability principles do not apply. However, that is not so clearly the case that it is not legally arguable. The plaintiffs say that until visible staining appeared they could have sold the house for market value, unaffected by the latent defects.

[24] Without factual evidence of the extent of the defects and the valuation of the house, and bearing in mind the factual proximity of this action to leaky building actions, I do not consider that the test for strike out has been met.

[25] Nor, in light of the Court of Appeal judgment in Carter Holt Harvey v

Ministry of Education, is Mico necessarily assisted at the strike out stage by its

5 Limitation Act 1950, s 6.

6 Citing Murray v Morel & Co Ltd, above n 4.

  1. See Invercargill City Council v Hamlin [1996] 1 NZLR 513 at 526 and see also subsequent cases.

argument that, as a supplier, its only liability is in contract or under the Consumer Guarantees Act.8 Carter Holt discussed the liability of indirect suppliers (those who supply to a third party, which then installs the material or constructs the building) and manufacturers in very similar terms, and at points in the judgment used the two terms interchangeably. In that case, Carter Holt had taken components and combined them into a new product, and there was initially some dispute about

whether Carter Holt was a manufacturer or merely a supplier. In either case, however, the Court of Appeal refused to exclude the possibility that it might be liable; and further, it rejected the argument that the relationship was necessarily controlled by the chain of contracts between the different parties. There might still be a duty of care owed by the manufacturer/supplier to the end user to ensure that the product was made with care. Asher J in the High Court had found the same way, and

conducted a rather more detailed analysis of duty of care as regards suppliers:9

[68] There are a number of factors which militate against the finding of a duty of care. There are no specific duties placed on the suppliers of components under the

2004 Act, and the situation is different from the position in Spencer on Byron where the Supreme Court placed weight on the specific duties placed by the Act on

territorial authorities. The supply of shadowclad arises from commercial contracts

between parties of relatively equal negotiating power, who may be able to control their relationships by contract. They may be able to make contractual provision for

where the risk will fall if cladding leaks. On the other hand, that argument is not as

strong as in cases such as Rolls-Royce where there were direct dealings between the parties.

[69] In favour of a duty is the obvious foreseeability of loss, and the fact that the damage resulted from loss is not just economic. There will be damage to property from water ingress and a risk to health. The risks to health in particular point in favour of recognising a duty, although there is at this stage no precise analysis of the alternative remedies available to the occupants of these buildings in the event that there is a threat to health. There is also the fact that, on some occasions at least, the involvement of school boards in the contractual situation distinguishes the present case from a truly commercial situation. It may be arguable that there is a heightened degree of vulnerability and reliance on the part of such boards.

[70] I do not accept that the imposition of a duty of care would necessarily provide the plaintiffs with a free warranty as to quality as was suggested by Mr Goddard. To prove negligence actual carelessness must be shown, a requirement that does not exist in the context of a contractual guarantee. Suppliers have paid for their services and manufacturers make profits from their products. They have the ability to add a margin. It may be considered that requiring them to insure against the risk of failures causing leaky building claims will be for the benefit of the public.

8 Carter Holt Harvey Ltd v Minister of Education [2015] NZCA 321.

9 Minister of Education v Carter Holt Harvey [2014] NZHC 681.

[71] I note Tipping J’s observation in Spencer on Byron that once proximity is established a duty of care should be found to exist unless it would not be in the public interest to recognise the duty. Tipping J observed:

If the loss is reasonably foreseeable and the parties are otherwise in a proximate relationship I do not consider it just to deny the plaintiff a cause of action for loss negligently caused by the defendant unless the wider interests of society mandate that denial.

[72] The decision as to whether there is a duty of care is finely balanced. Bearing in mind the recent warnings of the Supreme Court against precluding cases where the circumstances are capable of giving rise to a duty of care from going to trial, I am not prepared to strike out the statement of claim or any portion of it in relation to this cause of action. I do not consider that the fact that the supplies arose in a largely commercial context and could have been covered by contract, is conclusive in finding against a duty. I conclude that it is arguable that there was the necessary proximity between Carter Holt and the plaintiffs. While I recognise the force in the policy argument of commercial certainty, I am not of the view that this sufficiently militates against the possibility that a duty may be found.

[26] I note also this comment of the Court of Appeal:

[49] The alleged defects are not visually apparent and it is unlikely to have been within the skill or expertise of the respondents or their contractors to determine or identify these risk characteristics upon examination. It is alleged the defects as pleaded are latent: the harm occurs only after some time, and the inherent defect of the product itself needs to be established by scientific analysis. Accordingly, the pleading is that any inspection or examination of the products by representatives of schools or building professionals acting on their behalf would not have been a meaningful opportunity to prevent the harm that occurred.

[27] I note also that in this case, where the defendants claim that the manufacturer is overseas, if there were no remedy against the supplier, then the installers and the end users might be left without a remedy. Though that on its own would not be decisive, I do consider it relevant.

Accrual of cause of action: Consumer Guarantees Act

[28] The accrual of the action under the Consumer Guarantees Act is somewhat more complex, and in this context Mico’s arguments are rather more persuasive. The plaintiffs argue that the scheme of the Act, which requires evidence that a product is not of acceptable quality in order to found an action, results in something like a

reasonable discoverability principle in actions under the Act. This allows them to circumvent the Limitation Act in order to make the claim.10

[29] There is no case law directly on point, and the Consumer Guarantees Act provides no guidance as to precisely when a cause of action is deemed to have accrued. However, it is clear that though a defect is a necessary component of the cause of action, loss is not a formal requirement; I accept the defendants’ submission on that point.11 Loss is, however, required in order for the plaintiff to have an effective remedy: s 27 provides for injured consumers to recover the “loss in value” resulting from the breach of a guarantee.

[30] I accept also that the plaintiffs are caught in terms of their argument: either the damage was already latent when the cladding was supplied, in that it was unusually susceptible to staining, or something happened later which caused the staining. If the latter, the damage could hardly be sheeted home to Mico as the manufacturer, and indeed, the plaintiffs are not arguing that there was some kind of interference. The plaintiffs must therefore accept that the former case applies.

[31] I consider that the crucial point on the applicability of the principle comes from Murray v Morel.12 That case involved claims in negligence and breach of trust which overlapped with territory covered by the Securities Act 1978. The Court considered whether the reasonable discoverability principle could be extended to liability under the Securities Act. Counsel for the plaintiffs had argued that the reasonable discoverability principle could be extended across the board. Tipping J explained the concept of reasonable discoverability as follows:

[42] The reasoning of the Privy Council means that cases of the Hamlin kind do not involve any departure from the conventional approach to when a cause of action accrues. The element of knowledge or discoverability affects when the loss occurs. Only through that issue does it affect when the cause of action accrues. The focus remains upon occurrence of loss rather than on discoverability of a loss which has already occurred. Their Lordships expressly reinforced the general limitation position when they observed:



10 Limitation Act 1950, s 4.

11 Consumer Guarantees Act 1993, ss 6, 7, 25.

12 Murray v Morel & Co Ltd, above n 4.

“[Our] approach is consistent with the underlying principle that a cause of action accrues when, but not before, all the elements necessary to support the plaintiff's claim are in existence. For in the case of a latent defect in a building the element of loss or damage which is necessary to support a claim for economic loss in tort does not exist so long as the market value of the house is unaffected.”

...

[69] In my view the numerous references in the Limitation Act to accrual of a cause of action can only be construed as references to the point of time at which everything has happened entitling the plaintiff to the judgment of the Court on the cause of action asserted. Save when the Limitation Act itself makes knowledge or reasonable discoverability relevant, the plaintiffs’ state of knowledge has no bearing on limitation issues. Accrual is an occurrence-based, not a knowledge-based, concept. The Limitation Act as a whole is structured around that fundamental starting point. The periods of time selected for various purposes must have been chosen on that understanding. The circumstances of postponement and extension have themselves been similarly framed.

[Emphasis added].

[32] Reasonable discoverability in sexual abuse cases was slightly different in that it was the cause, not the loss, which was unknown until it was discovered much later. That scenario is not comparable to the situation at hand, and the plaintiffs did not argue that it was.13

[33] So taking the above statements together with Tipping J’s comment as to strike outs in relation to statute bars on actions, the question is whether an action under the Consumer Guarantees Act so clearly accrues at the time the product is supplied that a suit alleging otherwise is frivolous, vexatious or an abuse of process. Though I have serious doubts about how arguable this claim is for the plaintiffs, I do not consider that it meets that high threshold.

[34] I find Mico’s treatment of Simms Jones, a case under the Sale of Goods Act

1908, persuasive in relation to the general proposition that damage in respect of defective goods normally arises when the goods are supplied.14 However, that case did not involve a category of goods for which a reasonable discoverability argument

was available. Indeed, it was decided before Hamlin. Where reasonable


13 At [48].

14 Simms Jones Ltd v Protochem Trading NZ Ltd [1993] 3 NZLR 569 (HC).

discoverability would be available in respect of a tort claim, the following statements from Murray v Morel are directly applicable. Tipping J said:

[88] The tenth cause of action alleges against the Morels, as issuers and promoters, that the plaintiffs subscribed for their securities on the basis of the registered prospectus and that it contained untrue statements, of which particulars are given. The plaintiffs say that the untruthfulness of the impugned statements was not reasonably discoverable by them until 1999, when a named firm indicated that they might need to review the forestry industry. The plaintiffs contend they have suffered losses as particularised. The losses claimed are losses said to flow from the untruthfulness of the statements impugned.

[89] This pleading, although not stating as much, was said to be based on s 56 of the Securities Act, which allows the Court to order payment of compensation to subscribers who rely on untrue statements in a prospectus. It was struck out by the High Court as statute-barred and not reinstated by the Court of Appeal. The plaintiffs seek to have it reinstated by this Court. There is no extended discussion in the Court of Appeal’s judgment concerning this cause of action, probably because their Honours saw the cause of action as depending on reasonable discoverability which they had already rejected as a general proposition. In short, the cause of action seeks to make the Morels responsible for losses said to have occurred by dint of statements in the prospectus being untrue.

[90] This cause of action is designed to recover a sum recoverable by virtue of an enactment and is therefore subject to the general six-year period of limitation prescribed by s 4 of the Limitation Act. The cause of action accrued outside the six-year period and is statute-barred unless, as the pleading recognises, it can be rescued by a general doctrine of reasonable discoverability. For the reasons already given it cannot. The tenth cause of action must therefore remain struck out.

[Emphasis added].

[35] This rather implies that reasonable discoverability might be available in respect of a claim under a statute, depending on the underlying substance of the claim. Similarly, McGrath J said:

[101] I do not, however, regard this triumvirate of Court of Appeal decisions as laying down reasonable discoverability as a generally applicable principle in New Zealand tort law when deciding whether a cause of action has accrued. Nor do I accept Mr O’Callahan’s submission that consistency with these three decisions requires that the principle be applied in relation to the tenth cause of action in this case. In the continuing absence in New Zealand of legislative reforms enacted by other jurisdictions, the application of reasonable discoverability, to determine whether a cause of action has accrued in tort, remains a matter of judgment to be made in particular situations having regard to decided cases and analogies that can be fairly drawn from them. In that regard it must be borne in mind that the unfairness to plaintiffs, if damage is treated as arising before they knew or ought to have known of it, in some situations will be matched and outweighed if allegations of wrongful conduct can be raised many years after what is complained

of happened. I understand this to be the concern of Cooke P in Hamlin when he said that his preference was to proceed step by step. Provided the Hamlin principle is applied on this basis, I regard it as sound in principle and a valuable development in New Zealand law. I would affirm it.

[102] The question then is whether the principle of reasonable discoverability should be applied in determining when a cause of action accrues in a claim for civil liability for misstatements in a registered prospectus under s 56. To allow such claims to be brought many years after the issue of the prospectus, without limitation, to my mind, has the potential to create great unfairness to the issuers of securities, in particular where there is volatility over time in the value of the investments. Because of that factor I see little analogy between the circumstances of the present case and those in the cases where the Court of Appeal has applied the approach it first took in Hamlin. Accordingly, I would not apply the principle of reasonable discoverability to the statutory tort created by s 56 of the Securities Act. For these reasons I would hold the tenth cause of action to be outside of the limitation period under s 4(7) of the Limitation Act.

[Emphasis added]

[36] As can be seen, their Honours’ objections to the applicability of the reasonable discoverability doctrine were specific to the case at hand. They did not reject outright the proposition that, in an appropriate case, it could apply to a claim under statute.

[37] I bear in mind also the comments of Elias CJ regarding the extremely cautious approach to be taken in striking out a claim in a novel area of law:15

[35] Cooke P’s warning in Re Chase as to the dangers of limited foresight when abjuring jurisdiction applies in particular in a preliminary determination of law ahead of findings of fact. Unless there is a clear and fatal flaw (such as statutory impediment) warranting peremptory determination, the court in such a case is required to identify legal principles for the future exercise of jurisdiction without the factual context to provide points of distinction in the cases of tomorrow. There is particular risk in areas of developing or disputed common law. Ex cathedra statements about the organisation and limitation of jurisdiction too often end in confusion or worse.

[38] Given the above, I am not satisfied that the plaintiffs’ case is not reasonably

arguable, despite the significant hurdles they will face in proving it.








15 Couch v Attorney-General (No 2) [2010] NZSC 27; [2010] 3 NZLR 149.

Interaction between Consumer Guarantees Act and tort

[39] The Consumer Guarantees Act provides remedies to consumers where suppliers or manufacturers fail to comply with a number of specific guarantees that are implied when the goods are supplied. These guarantees include guarantees as to acceptable quality and fitness for purpose. The Act is not a code, but rather provides rights and remedies additional to any other rights or remedies under any other rule of law, unless those rights or remedies are expressly or impliedly repealed or modified

by the Act.16

[40] Mico has raised questions about the interaction between the Act and negligence law, particularly as regards reasonable discoverability. Mico argues, citing Murray v Morel & Co, that reasonable discoverability cannot apply to actions under the Act because the cause of action is complete once the item is purchased, and the category of actions to which reasonable discoverability applies is limited.17 This, Mico says, means that the negligence action would illegitimately extend the scope of the Act. As I have discussed, however, though this argument is attractive in some respects, it is at least arguable that something akin to reasonable discoverability may

apply even to actions under the Act. The question has not previously been addressed in enough detail for me to exclude the possibility on an application such as this.

[41] Mico also argues that it is a supplier, not a manufacturer, and therefore its liability is limited.18 It says this is one of those rare cases where an essential factual allegation is so demonstrably contrary to indisputable fact that the matter should not be allowed to proceed. However, when pressed on this at the hearing, counsel for the plaintiffs was unwilling to abandon the allegation that Mico had not made any improvements or changes to the product that might qualify it as a “supplier”. I am

not willing to conclude that this is a situation where a fact is so clearly false that I

should reject it out of hand.19 At this juncture I also address the defendants’

application to adduce further affidavit evidence relating to Mico’s status as a

16 Consumer Guarantees Act 1993, s 4.

17 Murray v Morel & Co Ltd, above n 4.

18 As stated above, Mico is indisputably a manufacturer in terms of the Consumer Guarantees Act, but that is a function of the extended definition in the Act. This debate refers to whether Mico is a manufacturer in the ordinary sense of the word for the purposes of tort law.

19 As per Attorney-General v McVeagh, above n 2.

supplier. The evidence in question is a lawyer’s affidavit exhibiting documents that refer to the French manufacturer that the defendants say manufactures the product, which is not then modified. The application is opposed and I am not inclined to grant leave, given the late filing, the indirectness of the connection between the lawyer and the matter at hand, and what I am about to say.

[42] In my view, whether or not Mico was clearly a supplier makes little difference to the outcome of this strike out application in any case. This Court has previously refused to strike out claims brought simultaneously in tort in relation to leaky buildings. In Body Corporate 160361 v BC 2004 Ltd, for example, Whata J found against the Babbage entities, which carried out multidisciplinary architectural and engineering work, in both negligence and under the Act.20 In Carter Holt Harvey v Minister of Education, both the High Court and the Court of Appeal refused to strike out claims against Carter Holt Harvey even though the Ministry of Education pleaded that a tortious duty of care would cut across the Act.21 The

Supreme Court has since granted leave to appeal that judgment.22 It was initially

unclear in that case whether Carter Holt was to be treated as a manufacturer or an

indirect supplier; the Court of Appeal’s discussion, however, referred to both.

[43] My conclusion in that respect is reinforced by the scheme and language used in the Act. Absent a clear intention to do so, I find it difficult to conclude with certainty that the Act – which in many respects expands liability significantly – was intended to restrict consumers’ options for redress. It seems to me that the Act was intended to simplify actions. It is arguable that the complication regarding reasonable discoverability, if such it is, is an unfortunate side-effect of the Act’s relaxed

standards of proof than a reason to restrict the availability of tort actions.23

[44] I note the Simms Jones case, in which the plaintiff had attempted to use a tort claim (based on a duty of care from the Sale of Goods Act) to buttress a time-barred

contract claim; and I recognise that there may be implications for suppliers and

20 Body Corporate 160361 v BC 2004 Ltd [2015] NZHC 1803.

21 Carter Holt Harvey Ltd v Minister of Education, above n 8.

22 Carter Holt Harvey Ltd v Minister of Education [2015] NZSC 182.

23 Consider the extended definition of “manufacturer”; the lack of a requirement of damage; and the requirement that goods be of “acceptable quality” without necessarily proving duty of care directly.

manufacturers in terms of apportioning any penalty.24 Notwithstanding the potential issues regarding limitation, however, and potential questions as to whether Mico’s status as a supplier rather than a manufacturer may affect its liability, the weight of precedent suggests that the issue is too complex for me to exclude the possibility of a claim entirely at this early stage.

[45] In the absence of authoritative statements to the contrary, I am reluctant to too readily accept the submission that suppliers’ liability is so limited as to exclude the possibility that a tortious claim may succeed despite the Act. That leave to appeal the decision in Carter Holt Harvey has now been granted indicates to me that this is a highly contentious area. The present case is not sufficiently clear for me to conclude that there is no arguable claim in negligence.

Further comments

[46] Mico’s claim that the plaintiffs’ statement of claim inadequate relies, in practical terms, on its contention that Mico is indisputably a supplier and not a manufacturer. As I have said, I am not convinced that that is such an obvious fact that I should apply McVeagh to the claim. Also, as I have said, even if that were the case, I am not convinced that that would necessarily resolve the issue.

[47] I am not convinced that the defect is so serious that the claim need be struck out. As I read the pleading, it essentially says that Mico had a duty, either as supplier or manufacturer, to take reasonable care not to manufacture or supply a product that was defective; it supplied a product that was defective, and breached that duty. It remains open to the defendants to seek that the plaintiffs further particularise the duty and the breach claimed.

Result

[48] I comment that I have reached this decision by a very fine margin. Whether

the plaintiffs’ claims will survive the closer scrutiny that will be brought to bear at

trial is very much an open question. For the present, however, the claims survive.

24 Simms Jones Ltd v Protochem Trading NZ Ltd, above n 11.

[49] The application is declined.

[50] Mico’s application to file supplementary affidavit evidence is declined.

[51] As costs follow the event, the plaintiffs are to have costs on a 2B basis and disbursements as fixed by the Registrar.

[52] The Registrar is to allocate a case management conference.









Associate Judge Sargisson


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