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High Court of New Zealand Decisions |
Last Updated: 9 August 2016
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV-2013-488-434 [2016] NZHC 1506
IN THE MATTER OF
|
the BRIDGEWATER BAY
APARTMENTS
|
BETWEEN
|
BRIDGEWATER BAY APARTMENTS AND BODY CORPORATE 324525
First Plaintiff
GRAEME PHILLIP DICKESON and JULIE MAE DICKESON & ORS Second
Plaintiffs
LARRY LAWRENCE SMALL and K M TRUSTEE SERVICES LIMITED & ORS Third
Plaintiffs
DEREK PETER WHEELDON and CAROL MAY WHEELDON & ORS Fourth
Plaintiffs
|
AND
|
FAR NORTH DISTRICT COUNCIL First Defendant
YED251 (formerly BRIDGEWATER DEVELOPMENTS LIMITED) (In Liq) Second
Defendant
WOODING CONSTRUCTION LIMITED Third Defendant
ARCON LIMITED
Fourth Defendant (Discontinued)
LAWRENCE DAVID WOODING Third Party
|
Hearing:
|
30 June 2016 at 2:15pm
|
Appearances:
|
R Kettelwell and J Hakaria for First Defendant, in support
K Kommu for First and Second Plaintiffs, to oppose
No appearance for other parties
|
Judgment:
|
4 July 2016
|
BRIDGEWATER BAY APARTMENTS AND BODY CORPORATE 324525 v FAR NORTH DISTRICT
COUNCIL [2016] NZHC 1506 [4 July 2016]
JUDGMENT OF ASSOCIATE JUDGE R M
BELL
This judgment was delivered by me on 4 July 2016 at 4:30pm
pursuant to Rule 11.5 of the High Court Rules
.............................................................
Registrar/Deputy Registrar
Solicitors:
Grimshaw & Co (K Kommu/B M Easton), Auckland, for 1st and 2nd Plaintiffs and non-party
Barry E Brill Limited, Paihia, for 3rd and 4th Plaintiffs
Sharp Tudhope (R Kettelwell), Tauranga, for 1st
Defendant
[1] The Far North District Council seeks summary judgment in this leaky building claim. It says that all the allegations in respect of watertightness defects are time-barred under s 4(1)(a) of the Limitation Act 1950 and the allegations going to fire safety defects in the latest statement of claim are outside the 10-year limit under s 393(2) of the Building Act 2004. The plaintiffs began this proceeding on
4 October 2013. The council filed its statement of defence on 20 January
2014. It did not apply for summary judgment until this
year. Accordingly it
needs leave under r 12.4(3) of the High Court Rules. The first and second
plaintiffs oppose. The third and
fourth plaintiffs do not.
[2] I gave directions on the papers on 22 June 2016 for the summary
judgment application to be heard on 14 September 2016 on
the assumption that
leave would not be in issue. It turned out that the first and second
plaintiffs did oppose leave being granted.
I directed a telephone conference
for Thursday 30 June 2016 to hear counsel on the leave application. All parties
filed memoranda.
Counsel for the third and fourth plaintiffs was not, however,
able to take part as he was at sea. I have nevertheless taken his
written
submissions into consideration. In case it is necessary for costs, the
conference took two hours.
[3] It is desirable to decide the leave question before the summary judgment application itself. Otherwise the parties will have to put in the considerable efforts required for an opposed summary judgment application and the question of leave will, in effect, fall away:1
In this case the leave application and the summary judgment application were heard together. That meant that both parties prepared thoroughly for the summary judgment application. The effect was virtually to pre-empt the leave decision. Once both parties have invested in an opposed summary judgment application, then it is almost impossible for the court to refuse leave. Considerations directed at saving the parties time on the application fall away. The need to recognise that, having prepared, the parties should be heard on the application outweighs other factors.
[4] The council has filed affidavits in support of its application, but
the plaintiffs have not filed any evidence yet. While
I have assessed the leave
application on the council’s evidence, I have taken into account judgments
in the proceeding by the
third and fourth plaintiffs against the body corporate
but have kept in mind that the council is not a party to that
proceeding.2
[5] The substantive hearing for the entire proceeding is to be heard
for eight weeks beginning 1 May 2017. I am advised
that remedial
works are nearly completed and the plaintiffs will shortly provide updating
discovery relating to the remedial
works. The first and second plaintiffs filed
a third amended statement of claim on 7 June 2016 which included, for the first
time,
allegations going to fire safety defects. The case is at a state where,
apart from the summary judgment application, pre-trial
directions can be
given.
[6] The Court of Appeal described the Bridgewater Bay Apartments as
follows:3
[5] The apartment complex was built in 2003. At ground level, which is
level one of the complex, there is a carpark that is
common property. There are
10 units on level two, 10 on level three, and two on level four. The complex
is what is commonly known
as a “wedding cake” style, with each floor
set back from the one below; the decks of the level two apartments form the
roof
of the carpark, the decks of the level three apartments form the roofs of the
level two apartments, and the decks of the level
four apartments form the roofs
of the level three apartments.
[6] The base of each level is constructed from a single concrete slab.
These slabs extend for the whole length and width of
the levels and form both
the inside floor and the outside deck of each apartment. Each
apartment has its own individual
deck. The individual tiled decks are
separated by vertically-placed concrete block dividing walls erected at
intervals along the
slab. The tiles were laid over an acoustic cork mat
sandwiched between liquid membranes. The membrane did not extend up the
inter-tenancy
dividing walls. It now appears that the membrane may not have
been waterproof, contrary to what was previously thought.
[7] The northern façade of the building at levels two and three
is almost entirely glazed, save for timber framed “Titan
board”
panels in 16 of the 20 level two and three units.
[8] The storm water reticulation system is largely internal. The
level two and three decks have drain holes which allow water
to drain into pipes
located in the inter-tenancy dividing walls at levels two and three. From
there, the water moves to the underground
storm water system at the
ground
2 Wheeldon v Body Corporate 342525 [2015] NZHC 884; Wheeldon v [2016] NZCA 247.
3 Wheeldon v Body Corporate 342525 [2016] NZCA 247 at [5].
level. The level four decks drain into pipes located in the level three
ceiling cavity before joining the system common to the other
levels.
Problems
[9] For some years prior to 2013 there were concerns about
the weather-tightness of the level four apartments because
of leaks into some
level three apartments. However, because the level four apartments had a
different drainage arrangement from
the lower levels there was no concern that
the problem might be more widespread. The possibility of weather- tightness
problems
beyond those directly associated with the level four units was first
recognised in early 2013. The minutes for the annual general
meeting (AGM)
held on 26 January 2013 recorded a discussion about “the fact that some
decks were experiencing problems with
difficulties relating to deck falls, the
ponding of water and the lifting of tiles”. It was resolved that the Body
Corporate
Committee would arrange a suitable consultant or contractor to
investigate the affected decks with a view to identifying and recommending
a
repair process.
[7] The council would not agree with all of the last paragraph. It would say that the awareness of weather-tightness problems before 2013 was not limited to leaks from the level four apartments into some level three apartments. Its argument in its summary judgment application is that weather-tightness problems in general were discoverable more than six years before the proceeding was started on 4 October
2013.
[8] On a defendant’s summary judgment application, the
court applies the
principles in Westpac Banking Corporation v MM Kembla New Zealand
Ltd:4
[58] The applications for summary judgment were made under Rule
136(2) of the High Court Rules which permits the Court to give judgment
against the plaintiff “if the defendant satisfies the
Court that none of
the causes of action in the plaintiff’s statement of claim can
succeed”.
[59] Since Rule 136(2) permits summary judgment only where a
defendant satisfies the Court that the plaintiff cannot
succeed on any of its
causes of action, the procedure is not directly equivalent to the
plaintiff’s summary judgment provided
by Rule 136(1).
[60] Where a claim is untenable on the pleadings as a matter of law, it will not usually be necessary to have recourse to the summary judgment procedure because a defendant can apply to strike out the claim under
Rule 186. Rather Rule 136(2) permits a defendant who has a clear answer to
the plaintiff which cannot be contradicted to put up the
evidence which
constitutes the answer so that the proceedings can be summarily dismissed. The
difference between an application to
strike out the claim and summary judgment
is that strike out is usually determined on the pleadings alone whereas summary
judgment
requires evidence. Summary judgment is a judgment between the
parties on the dispute which operates as issue estoppel,
whereas if a
pleading is struck out as untenable as a matter of law the plaintiff is not
precluded from bringing a further properly
constituted claim.
[61] The defendant has the onus of proving on the
balance of probabilities that the plaintiff cannot succeed.
Usually summary
judgment for a defendant will arise where the defendant can offer evidence which
is a complete defence to the plaintiff’s
claim. Examples, cited in
McGechan on Procedure at HR 136.09A, are where the wrong party has
proceeded or where the claim is clearly met by qualified privilege.
[62] Application for summary judgment will be inappropriate where there
are disputed issues of material fact or where material
facts need to be
ascertained by the Court and cannot confidently be concluded from
affidavits. It may also be inappropriate
where ultimate determination turns on a
judgment only able to be properly arrived at after a full hearing of the
evidence. Summary
judgment is suitable for cases where abbreviated procedure and
affidavit evidence will sufficiently expose the facts and the legal
issues.
Although a legal point may be as well decided on summary judgment application as
at trial if sufficiently clear (Pemberton v Chappell [1986] NZCA 112; [1987] 1 NZLR 1),
novel or developing points of law may require the context provided by
trial to provide the Court with
sufficient perspective.
[63] Except in clear cases, such as a claim upon a simple debt where it
is reasonable to expect proof to be immediately available,
it will not be
appropriate to decide by summary procedure the sufficiency of the proof of the
plaintiff’s claim. That would
permit a defendant, perhaps more in
possession of the facts than the plaintiff (as is not uncommon where a
plaintiff is
the victim of deceit), to force on the plaintiff’s case
prematurely before completion of discovery or other interlocutory steps
and
before the plaintiff’s evidence can reasonably be assembled.
[64] The defendant bears the onus of satisfying the Court that none of the claims can succeed. It is not necessary for the plaintiff to put up evidence at all although, if the defendant supplies evidence which would satisfy the Court that the claim cannot succeed, a plaintiff will usually have to respond with credible evidence of its own. Even then it is perhaps unhelpful to describe the effect as one where an onus is transferred. At the end of the day, the Court must be satisfied that none of the claims can succeed. It is not enough that they are shown to have weaknesses. The assessment made by the Court on interlocutory application is not one to be arrived at on a fine balance of the available evidence, such as is appropriate at trial.
[9] It is important to remember that:
[a] on a summary judgment application the legal onus remains on the
defendant throughout to show that none of the plaintiff’s
causes of action
can succeed;
[b] it is not enough that the plaintiff’s case may be weak;
and
[c] the decision is not made on a fine balance of the evidence.
[10] The starting point for limitation defences for claims arising from
building work or inspection of work under the Building Act 2004 is s
393:
393 Limitation defences
(1) The Limitation Act 2010 applies to civil proceedings against any person
if those proceedings arise from—
(a) building work associated with the design, construction, alteration,
demolition, or removal of any building; or
(b) the performance of a function under this Act or a previous
enactment relating to the construction, alteration, demolition,
or removal
of the building.
(2) However, no relief may be granted in respect of civil proceedings
relating to building work if those proceedings are brought against
a person
after 10 years or more from the date of the act or omission on which the
proceedings are based.
(3) For the purposes of subsection (2), the date of the act or omission
is,—
(a) in the case of civil proceedings that are brought against a territorial authority, a building consent authority, a regional authority, or the chief executive in relation to the issue of a building consent or a code compliance certificate under Part 2 or a determination under Part 3, the date of issue of the consent, certificate, or determination, as the case may be; and
(b) in the case of civil proceedings that are brought against a person in relation to the issue of an energy work certificate, the date of the issue of the certificate.
[11] In this case for the fire safety defects the council relies on subs
(2) for the 10 year longstop running from the date of
the act or omission on
which the proceeding is based.
Limitation for discoverable weathertightness defects
[12] For the weather-tightness defects, the council relies on the
limitation provision in subs (1). The Limitation Act
2010 came into force on 1
January 2011. It repealed the Limitation Act 1950, but the 1950 Act continues to
apply to proceedings based
on acts or omissions before 1 January 2011.5
The plaintiffs’ claims against the council are in tort for acts or
omissions before 1 January 2011. The relevant provision is
s 4(1)(a) of the
Limitation Act 1950:
(1) Except as otherwise provided in this Act ... the following actions
shall not be brought after the expiration of 6 years
from the date on which the
cause of action accrued, that is to say, —
(2) actions founded ... on tort ...
[13] This turns on when a cause of action accrues. When a claim is
based on negligence, damage is an essential part of the cause
of action. Until
the damage has occurred the cause of action is not complete. In Invercargill
City Council v Hamlin, the Privy Council held that in building defects
cases, the plaintiff’s loss was not the physical damage to the structure,
but the economic loss which arose only when defects were discovered or could
have been discovered:6
Once it is appreciated that the loss in respect of which the plaintiff in the
present case is suing is loss to his pocket, and not
for physical damage to the
house or foundations, then most, if not all the difficulties surrounding the
limitation question fall
away. The plaintiff’s loss occurs when the
market value of the house is depreciated by reason of the defective foundations,
and not before. If he resells the house at full value before the
defect is discovered, he has suffered no loss.
Thus in the common
case the occurrence of the loss and the discovery of the loss will
coincide.
But the plaintiff cannot postpone the start of the limitation period by
shutting his eyes to the obvious. In Dennis v Charnwood Borough Council,
a case decided in the Court of Appeal before Pirelli reached the House of
Lords, Templeman LJ said that time would begin to run in favour of a local
authority:
5 Limitation Act 1950, s 2A; Limitation Act 2010, ss 57 and 59.
“... if the building suffers damage or an event occurs which reveals
the breach of duty by the Local Authority or which would
cause a prudent
owner-occupier to make investigations which, if properly carried out, would
reveal the breach of duty by that
Local Authority.”
In other words, the cause of action accrues when the cracks become so bad, or
the defects so obvious, that any reasonable homeowner
would call in an expert.
Since the defects would then be obvious to a potential buyer, or his expert,
that marks the moment when
the market value of the building is depreciated, and
therefore the moment when the economic loss occurs. Their Lordships do not think
it is possible to define the moment more accurately. The measure of the loss
will then be the cost of repairs, if it is reasonable
to repair, or the
depreciation in the market value if it is not. ...
The Supreme Court confirmed that approach for building defects cases in
Murray v
Morel & Co Ltd.7
[14] In appropriate cases a defendant may obtain summary judgment against a plaintiff in a building defects case by showing to the summary judgment standard that the plaintiff knew or could have discovered the defects more than six years before the proceeding was started.8 But that is not this case. That part of the council’s application relying on the discoverability limitation defence raises complex issues as to ownership of property, identification of separate causes of action, identification of defects, separation and identification of causes of action, state of knowledge or deemed knowledge and whether damage was one off, intermittent, or continuous. It raises matters of such legal and factual complexity that it is
inappropriate for a summary judgment application.
[15] Before applying for summary judgment, the council obtained discovery of the plaintiffs’ documents and also interrogated the plaintiffs. It relies on two affidavits. One is by a senior building specialist at the council, the other is by a building surveyor who is advising the council in relation to this proceeding. She has been on site and is familiar with the remedial work being undertaken as well as with the documents in the proceeding. Their affidavits exhibit documents showing awareness by some unit owners of some water ingress problems. Their thrust is summed up in
the building surveyor’s affidavit:
7 Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721at [41] and [42].
My reading of the documented evidence is that the body corporate was aware of and was undertaking or instigating repairs in two distinct locations at the property prior to December 2007:
(i) the rear elevation stair/lift well;
(ii) the front elevation central level four balconies and pebble
gutters to apartments 401 and 402.
[16] There is authority that discovery of some defects only is enough to
start time running. In Pullar v R (acting by and through the Secretary for
Education), the Court of Appeal said:9
... It is not necessary, in order for time to start running, to be able to
pinpoint with precision the exact cause of every defect.
Indeed, that would
frequently mean time could not start running until the remedial work was under
way! That would in turn mean that
the building owner could not sue the builder
in advance of the repair work as no cause of action would have by
then
accrued. That is not and never has been the law. What one is concerned to
ascertain is when economic loss occurred: when was the
market value of the
building affected? We suspect the market value of this building was affected
back in 1997. But it was clearly
affected by the time the Barnett report was
prepared in December 1998.
[17] That does not necessarily apply in the case of a building in unit title ownership. Some parts of the building will be common property belonging to the body corporate.10 Other parts will be unit property owned by individual owners of principal and accessory units. Building elements under the Unit Titles Act 2010 may
be common property or unit property.11 Any
particular part cannot be both common
9 Pullar v R (acting by and through the Secretary for Education) [2007] NZCA 389 at [19].
10 Common property is defined in s 5 of the Unit Titles Act 2010:
common property
means—
(a) all the land and associated fixtures that are part of the unit title
development but are not contained in a principal unit, accessory
unit, or future
development unit; and
(b) in the case of a subsidiary unit title development, means that part of the principal unit subdivided to create the subsidiary unit title development that is not contained
in a principal unit, accessory unit, or future development unit
Under s 54(1), the body corporate owns the common property.
11 See the definition in s 5 of the Unit Titles Act:
building elements
includes the external and internal components of any part of a building or land on a unit
plan that are necessary to the structural integrity of the building, the exterior aesthetics of the building, or the health and safety of persons who occupy or use the building and including, without limitation, the roof, balconies, decks, cladding systems, foundations systems (including all horizontal slab structures between adjoining units or underneath the lowest level of the building), retaining walls, and any other walls or other features for the support of the building.
property and unit property at the same time. Surveying evidence
is normally required to establish what is common or unit
property. So far the
defendant has not adduced any such evidence. Watertightness defects may cause
damage to building elements
that may be variously common property or unit
property.
[18] An owner may sue for damage to its property. Some lesser interests
in property may also give standing to sue. Arguably
a right to occupy a
property may give a right to a claim to the extent that the right to occupation
has been adversely affected.
In unit title leaky building cases where
apartments have suffered water ingress damage, both the body corporate and the
affected
unit owners sue. That goes to ensure that all necessary parties are
before the court.
[19] The first and second plaintiffs’ pleading against the council
is set out as a single cause of action for negligence
in considering and issuing
the building consent application, inspecting during construction and issuing the
code compliance certificate.
Wrapped up in that pleading are a number of causes
of action. That can be shown by considering the different plaintiffs required
for claims for different damage. It appears that the rear elevation stairs/lift
well is solely common property. For that damage
only the body corporate needs to
sue. For damage to a second level apartment, the body corporate and that
particular unit
owner are appropriate plaintiffs, but the other unit owners
do not need to be. Where different owners sue in respect of different
damage,
there are separate causes of action. For damage in any unit, the body
corporate’s claim to common property will be
a separate cause of action
from the unit owner’s claim for damage to unit property.
[20] That goes to discoverability questions for limitation purposes. The inquiry appears to be whether damage was discoverable by a particular plaintiff. During the hearing, I asked counsel for the first defendant whose knowledge counted. He did not have a ready answer. Counsel for the first and second plaintiffs, from a law firm that does a lot of leaky building cases including claims for unit title developments, also did not have a ready answer. This appeared to be relatively unexplored territory.
[21] The council’s evidence, at its highest, goes to suggest
knowledge by the body corporate of water ingress problems on
some parts of the
property and knowledge of some of those problems by some of the owners. But its
evidence does not show that all
apartment owners knew or could have known of the
damage set out in the schedule of defects in the latest statement of claim. It
would be ambitious for the council to argue on a summary judgment basis that
apartment owners who were not aware of any problem
in their apartments
should have inferred that they have suffered damage because other parts of
the building have suffered
water ingress damage.
[22] Different damage may occur at different times, so that causes of
action may accrue at different times. In Bowen v Paramount Builders
(Hamilton) Ltd, Cooke J said: 12
I agree with the President and Woodhouse J that the mere fact
that a purchaser was later in the chain than the present
plaintiffs, or that a
much longer time went by before damage occurred, should not automatically rule
out a cause of action against
the builder. Causation would always have to be
proved, and a reasonable expectation of adequate intermediate examination would
always
be a defence. In practice those two difficulties would militate against
successive actions, which are certainly not to be encouraged,
but in principle I
would adopt as applicable the following passage in Salmond on Torts:
"Where the act of the defendant is actionable per se, there is no doubt that
all damage, both actual and prospective, may and must
be recovered in one
action. But where the act of the defendant is not actionable per se, but is
actionable only if it produces actual
damage, and it produces damage twice at
difference times, is there one cause of action, or are there two? If, for
example, the defendant
by an act of negligence has created a source of
danger which on two successive occasions causes personal harm to the
plaintiff,
is the plaintiff barred from recovery for the second harm because he
has already recovered damages or accepted compensation for the
first? Both on
principle and on authority it seems that when an act is actionable only on proof
of actual damage, successive actions
will lie for each successive and distinct
accrual of damage. But where the damage sued for in the second action is not in
reality
distinct from that sued for in the first, but is merely a part of it or
consequential upon it, it cannot be recovered. For it is
clear that the second
damage in order to be recoverable in a second action must arise directly from
the wrongful act of the defendant
and not indirectly through the damage already
sued for. In other words, compensation for the first damage includes
compensation for
all the ulterior consequences of
that damage whether already accrued or not, but
it does not include compensation for entirely distinct damage accruing from the
defendant's
act independently of the damage first sued for".
That principle may be quite easily workable when the plaintiff has suffered
personal injuries from the same cause on different occasions.
Its application is
less straightforward when property suffers damage more or less continuously. In
cases of interference with the
natural support of land it is well settled that
each further slip creates a fresh cause of action: Morris v Redlands Bricks
Ltd, per Lord Upjohn. Salmond speaks of that kind of case as one of
"intermittent" damage. In Maberley v Henry W Peabody & Co of London
Ltd, a nuisance case and the main authority cited in Salmond for the passage
already set out, Stable J went as far as to say:
"It may well be that a fresh cause of action arises as each brick topples
down, and that there is a continuing cause of action until
the root of the
trouble is eradicated . . ." (ibid, 194).
Presumably, however, it is a question of fact and degree whether damage is
sufficiently distinct to result in a separate cause of
action. On the evidence
in the present case it seems to me that the damage suffered by the building was
not truly continuous; and
that between the slight damage during the McKays'
ownership and the considerable damage after the Bowens bought there were a
difference
and an interval marked enough to justify treating the latter damage
as distinct.
[23] Similarly, in S v G, Gault J said:13
Separate and distinct damage may give rise to a separate cause of action in
negligence: Bowen v Paramount Builders (Hamilton) Ltd, Mount Albert
Borough Council v Johnson, and where the cause of action is in respect of
sufficiently separate and distinct damage or injury the reasonable
discoverability
test might be applied to that.
[24] It is also necessary to note the distinctions drawn in Cooke J’s judgment in Bowen v Paramount Builders between one-off damage, intermittent damage and continuous damage.14 From the council’s evidence it appears that some repair work was carried out but signs of water ingress were detected later. As the one with the legal onus on a summary judgment application, the council would need to establish that that damage was continuous damage, not intermittent damage. Decisions such
as Burns v Argon Construction Ltd show that this is a reasonably tough
proposition
to make out.15
13 S v G [1995] 3 NZLR 681 (CA) at 687 (citations omitted).
14 Bowen v Paramount Builders (Hamilton) Ltd, above n 12.
15 Burns v Argon Construction Ltd HC Auckland CIV-2008-404-7316, 18 May 2009.
[25] In the hearing, counsel for the council almost conceded that he was
unlikely to be able to establish on a summary judgment
hearing that all the
available causes of action had accrued more than six years before the start of
this proceeding. Instead, he
submitted that there would be advantages in
eliminating from the plaintiffs’ claims those parts which the council
could establish
on a summary judgment basis as statute-barred, while leaving
in place other parts of the plaintiffs’ claims.
Technically it
might be possible to separate claims by some plaintiffs from claims by others,
so that only those whose damage became
discoverable during the six years before
the start of the proceeding are left in, but that is going to be very difficult
to deal
with in a defended summary judgment application. Suppose that the body
corporate is held to have relevant knowledge but
that cannot be
imputed to a particular unit owner. Even if the body corporate’s causes
of action are removed, the unit
owner may have a sufficient possessory interest
to give standing to sue for damage to common property that is a building element
for his or her unit, as well as standing to sue for damage to unit property.
The benefit of a successful summary judgment application
is to give a final
clear answer, but that seems unlikely here.
[26] The council’s evidence shows that apartment owners
had varying understanding of the weathertightness
problems in the complex.
It relied on an affidavit sworn by an apartment owner in Wheeldon v Body
Corporate 34252516 to show that he was aware of leaks from a
penthouse on level four but, in the same affidavit, the apartment owner denies
other damage
in his apartment, even though that damage is the subject of claims
in this proceeding. On that evidence it is unlikely that the
court will be
able to make findings uniform across all unit owners as to the discoverability
of damage.
[27] To the extent that the limitation defence relies on discoverability, the council’s evidence shows only partial knowledge of the defects. The case therefore may involve the proposition that even if apartment owners did not know, they ought to have known. Although findings as to actual knowledge may be possible in a
summary judgment application, findings as to what people ought to
have known are
16 Above, n 2.
more difficult.17 Given that the progress of water ingress
damage is gradual, it will require a very careful factual inquiry to establish
the point
when any particular owner should have known. The council’s
evidence at present is not enough to show to a summary judgment
standard that
apartment owners ought to have known, even if they did not know.
[28] The council has an arguable limitation defence under s
4(1)(a) of the Limitation Act 1950, but the place to decide
it is the
substantive hearing, not a summary judgment application.
[29] The first and second plaintiffs raised other objections.
They pointed to alleged delay by the council in applying
for summary judgment
and then serving it late. They also argued that any appeal from any summary
judgment decision could throw
the May fixture into jeopardy. Ideally
defendants’ summary judgment applications should be decided early, but I
accept the
council’s point that it was still obtaining information,
particularly through discovery and interlocutories. The delay would
not have
counted against it, if I did consider that there really was something in its
summary judgment application.
[30] Mr Brill, for the third and fourth plaintiffs submitted:
[a] The questions posed by the first defendant are suitable for a
summary judgment application.
[b] The hearing will require expert evidence from several parties, but
a judgment as to whether that evidence is credible and
incompatible may
determine the outcomes of the principal issues and be suitable for summary
judgment.
[c] Rulings made in a summary judgment application will assist
the parties in negotiating a comprehensive settlement.
17 For an example of a case of an unsuccessful a pre-trial application to strike out a claim on the ground that the damage was discoverable, see Body Corporate 169791 v Auckland Council HC Auckland CIV 2004-404-5225, 14 November 2007.
[d] Questions of fact as to whether ponding on the penthouse
decks would be enough to prompt investigations by prudent
owners and occupiers
is a suitable question to be determined on an interlocutory
application.
[e] There is nothing in the complaints by the other plaintiff of
stalling by the first defendant.
[31] Apart from the last point (e), I do not accept any of these
submissions. If anything, the submissions point in the opposite
direction
– the matters are unsuitable for a contested summary judgment application,
especially the suggestion that the court
should decide contested factual matters
and choose between competing expert evidence.
Fire safety allegations
[32] The council’s amended summary judgment application alleges that
the plaintiffs’ third amended statement of claim
introduces a new cause of
action – breach of the building code in respect of the prevention of fire
occurring. That cause
of action is said to be time-barred because it is based
on work undertaken by the council more than 10 years before the plaintiffs
filed
their amended statement of claim on 7 June 2016.
[33] That matter alone cannot be the basis for a summary judgment application, because it will not get rid of all the plaintiffs’ causes of action. On the other hand, it can suitably be considered as an application to strike out part of the plaintiffs’ latest statement of claim on the ground of the limitation defence under s 393(2) of the Building Act 2004. Causes of action may be struck out on the basis of an affirmative defences on the ground that the claim is so clearly statute-barred that it can be
properly be regarded as frivolous, vexatious or an abuse of
process.18
[34] This matter can be decided on the pleadings. Paragraph 13 of the
statement of claim says that the first defendant
issued a code
compliance certificate on
18 Murray v Morel & Co Ltd, above n 7, at [33].
5 December 2003. The date of the final compliance certificate fixes the
last time under the pleadings when the council did any work
in relation to its
functions under the Building Act 1991. Evidence is not required.
[35] Accordingly I allow the first defendant’s application to run
on a limited basis: only as an application to strike out
the allegations
relating to fire safety, based on limitation under s 393(2) of the Building
Act.
[36] I give these directions:
[a] The plaintiffs are to file and serve their notices of opposition to the
application based on s 393(2) of the Building Act by 11 July
2016.
[b] The first defendant is to file and serve a casebook, synopsis
of submissions and copies of authorities relied on by
8 August
2016.
[c] The plaintiffs are to file and serve their synopsis of submissions and
copies of authorities relied on by 22 August 2016.
[d] The application will be heard for one half day only at 10:00am
on
14 September 2016.
[e] The costs of the conference will be dealt with as part of the
council’s
application.
[f] If the parties resolve matters before the hearing, the hearing time will
be used for a telephone conference to give further
directions.
.......................................
Associate Judge R M Bell
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URL: http://www.nzlii.org/nz/cases/NZHC/2016/1506.html