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High Court of New Zealand Decisions |
Last Updated: 9 March 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2010-404-7840 [2016] NZHC 192
BETWEEN
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BODY CORPORATE 330324
First Plaintiff
MATTHEW NICHOLAS BROWN, HUI QUIN PAN, BIN XU and NAU XU; YUN YUNG PANG;
GILES INVESTMENT HOLDINGS LIMITED; ZHOU SHEN; MALCOLM JAMES
HOLMES and NELSON
KEITH HOLMES; BOON
HAO –YEUNG; QIONG LI; THOMAS Second plaintiffs
continued over
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AND
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AUCKLAND COUNCIL First Defendant
WHL LIMITED (in liquidation) Second Defendant
DOWNER NEW ZEALAND LIMITED (formerly known as Downer Edi Works
Limited
Third Defendant
continued over
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Hearing:
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9 February 2016
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Counsel:
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HAH MacFarlane for sixth defendant/first third party/applicant
SB Mitchell for respondent
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Judgment:
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17 February 2016
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JUDGMENT OF FAIRE J
This judgment was delivered by me on 17 February 2016 at 3 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date...............
Body Corporate 330324 v Auckland Council [2016] NZHC 192 [17 February 2016]
JOHN LOWNDES and PEGGY LOWNDES; SIU WING CHAN and; BRENDA MARIE TURLEY; WON SUN SHIM; ZHI MING ZHANG, XIAO-LIN GE and WILLIAM LIEW; NICOLA FAYE BAUGHEN; MARY BERNADETTE TAY; AN- YU LIU; LAI FONG JOE and NORMAN JOE; DANIEL ROBERT OUNG and KELLY JANE BORWN; MURRAY GRAHAM CHANDLER; LI CHU HU; LI-CHENG WANG; MEHRDAD ESKANDARI NEJAD and SAU MUN CHAU; COLIN NEIL LATTER and MARILYN KAYE SHALLARD; LUCIANA
BERTOLUCCI; ALEXIS TANSEAU and RAYMONDE TANSEAU; THI KIM PHONG TRINH; WENYUN YU; CLAUDIA URSUAL WYSS
and EMIL TELLENBACH; DNGYUAN YANG and JUNHUA LI; TAEHOON KIM and HYUN OK KIM; YUHANG GAO; CAIQING WU; MICHAEL DESMOND ORR; JIANXUN ZHANG; TAT HON WONG and SWEE TING TEOH; MGW1 LIMITED; HOW LONG POH and POH LIM YAP; FANG LI; ESHA’S INVESTMENTS
LIMITED; TERENCE KEITH
JOHN ERASITO and LUCY MARY ERASITO; WEI ZHONG WANG and JIAN SHEN; KWOK KIN
LAM; BOCK HWAN KIM; ZHI QIANG GUAN; KIRAN DAHYA LALA and SHASHI KIRAN LALA; MINSHAN REN; DIANE CHEN; HAILONG WANG and CANHONG CHENG; GARY RONALD HENDRICK; LAN YAO; BRETT GREGGORY PALMER; CHRIS NOEL BAILEY; ROBERT McGILL, NINA MORISSETTE and HPJ TRUSTEES NO 5 LIMITED; AZ PROJECTS LIMITED; STEPHANIE JANE HOLMES; ZUE YAN LI; JONG BOON SUH KIM, YONG KYUN SUH and JRF TRUSTEE COMPANY LIMITED; ARAGON
ST-CHARLES; GHAIK KHOON THE; TAI-CHEN CHIU and MAI- RUNG TSAI; YOLANDE MEI YEH WAN; SIEW WAH PHOON;
XIANG QUESTION HUANG; DE PING REN and YING SONG; STEVE HEIARII JACQUES POMMIER and HIRIATA TEARERE TANIA POMMIER; GILLIAM MARGARET ELLIS; CHING-HUA YU; JUN CHEN and PINGZHEN ZHOU; YI WEI;
ZHENNIAN WEI and CHUNHONG CHEN; EDMOND JISSANG and LUCIANA JISSANG; GREEN DOOR PROPERTIES LIMITED; ALBERTO BACATAN NOGOY and MARIA FLORA MURIEL NOGOY; YANFU ZHAO; 1628 TRUSTEE
CO LIMITED; TRYSTAN DAE KYU WHANG and KWANG HEE LEE; ROIMATA BEATRICE MARAMA and ALBERT UEVA TERAI; KUEN-RONG SHEN and TSUI-PING KUO; DANIEL YEE KUUI CHOI; ZEST PACIFIC INVESTMENTS LIMITED; YIN- CHUN WU; PAOLO GIOVANNIE DELMONTE and RAFAELLA MARIA SANTINI; PIK-YING CHAN; SHUQIANG LI; JUNYAO ZHAO; YOUNG YOUP KIM and YOUNG HEE KIM; HONJUN WANG and MUKTI ARYAWAN; WANQING HUAN; NEW ZEALAND PROPERTY MANAGEMENT & INVESTOR SERVICES LIMITED; GRACE TSUN-CHUNG CHAN; ; YA LAN HUANG; RAMONITO MALLARI VASQUEZ, ROWENA NAGUIT VASQUEZ and RONNEL NAGUIT VASQUEZ; PHILIPPE BIENAIME and MARIE-ODILE GABRIELLE BERTHOMIER BIENAIME; MURIEL JEAN LILBURN, LOUISA JEAN GORDON, PHILLIPPA KATE LILBURN and PAUL STEPHEN COE; HOCK HENG TAN and SAY FONG
CHEW; WEI HAN and DUO LU; CARYN FRANCES HAYNES; OLIN MICHALE LIDDALL and CAROL JOY LIDDALL; ROBERT CHRISTOPHER LOUDEN and DONNA JEANNETTE LOUDEN; JINGWEN LU and XUE QING LU; DOUGLAS BRUCE HICKSON and MARJORIE McGILLIVRAY; RITCHIE INVESTMENTS LIMITED; LING PANG and LING JIANG WANG; CHANJIAO YIN; JINGHUA SHEN; ETIENNE YERSIN and ELIANE YERSIN; TEPAU YVES ARAI; CHE TSUEN LAI; PAUL JAMES FEENEY and
FRANCIS JAN FEENEY; YAN LIN; ALPHONSE NUFOUY, THERESE NUFOUY, GASTON NUFOUY and IVAN NUFOUY; FEN LIN and LAI- CHI CHUANG; SHIU TSEUNG YAN and CHOR WAN HO YAN; LOREN CHU discontinued); MITHRA EBENEEZER VIJAYASENAN, PREMILA VIJAYASENAN and GIBSON SHEAT TRUSTEES LIMITED; CATHERINE ANNE ADDIS; YE CHEN; QING LIN; AMALEX INC LIMITED; SUI KIN LO and YIM HING CHAN, SIRI ALANA McKELVIE; WELLESLEY LAND CO LIMITED; XIUFANG CHEN; GUANGMING YANG and ZHENGZHEN HU; COLIN BRUCE ECCLES, SUSAN MARY ECCLES and DIPROSE MILLER TRUSTEES LIMITED; DEALEX LIMITED; EVELYN SUET MEI CHOW; ; BARBARA RAABE and KM BUCHANAN TRUSTEE
COMPANY LIMITED; PEPE WONG LISSON and HORTENSE LISSON; CHAO ZHAO and LIN LIN; JIANMING JIANG and PING WANG; SEA CHANT INVESTMENTS LIMITED; COLIN FAUX and ELIZABETH ANNE FAUX; QIONG DUAN; CEMACK INVESTMENTS LIMITED; SANG HYUN CHOI and GIL JA CHOI;
LIFOUICINE JOHNSTON; PACIFIC LANKA LIMITED; MILAX GAGATES LIMITED; JULIE HE; A FU PAN and PEIMING IN; BRIAN EDWARD BIDDLE and LAURENCE WILLIAM ROBERTS; EMAD AL-
JUBBAWEY, JENAN SAMAKA and
ONEHUNGA TRUSTEE COMPANY LIMITED; AKEEL ALKUBAISY, HAIFA SAID and ONEHUNGA TRUSTEE COMPANY LIMITED; DING LI; NGOC VINH NGUYEN; ERICA VILMA VACCARELLA; FRANKLIN SUI, DEYANNA SUI and YANN SUI; ZHUOPING XIE; DIPAK KUMAR SHAH and NITA DIPAK SHAH; WEIMIN XU; SHULING ZHAO; KYUNG OK CHOI and EUN MI LEE; YOUNG SOOK HONG and SOO KYUNG CHAE; VICTOR WONG and PATRICK WONG; HAZELMAN PROPERTIES LIMITED; XUFENG LI; YUEN YUEN TSUI; LAM
TSUI; MASASHI SAKAMOTO; KANTILAL TEJSHI SHAH and SARLA KANTILAL SHAH; HYUN BAE KIM and HEA OK PARK KIM; FRANCESCO TRIMBOLI and RICHARD JAMES BARNETT; LU XIA and QIANTANG XIA; JUNLI HUANG and JINRUI OU; JOSEPH CHONEL and FLORA CHONEL; QIN TRUSTEE COMPANY LIMITED as assignee of BIANLING YANG; CHENG-JUNG FAN; MYUNG JOO CHUNG; JOSELYN GERARD DE CONCEICAO; CHUAN HE; XIANGQIN WANG and CHAO XU; YUANHUA LI; SIMON CLYDE MALE and CHRISTINE ANNE MALE; BINGXIN CAI and ZHIBIN WEI; NICOLE LIAO; HORTENSE LAUX and JAMES LAU; ZILIANG YANG; PIRIPI HARAWIRA TAIAPA and LINDA MARY TAIAPA [discontinued]; JIM LIN formerly named as JUN HE
; YI PAN, A FU PAN and PEI MING IN; JOHN NIGEL DUNN; ERNEST LOU and LY-LEN LOU; JINGMING YANG as assignee of the cause of action of JINHUA DAI and JINGTING JIANG; AND DANIEL ADIN SHIRLEY, PAUL SHIRLEY and LINDSAY ROBYN SHIRLEY and ERIC ZHU
Second Plaintiffs
Defendants continued
CCSNZ LIMITED (formerly known
as Symonite New Zealand Limited
Fourth Defendant/Fourth Third Party
TYCO NEW ZEALAND LIMITED (trading as Climatech)
Sixth Defendant/First Third Party
TAL LIMITED
Fifth Defendant/Second Third Party
AND 1280899 LIMITED (formerly known as Auckland Height Services
Limited)
Third Third Party
ARCHITECTURAL WINDOW SOLUTIONS LIMITED
Fifth Third Party
MacMILLAN PLUMBING LIMITED
Sixth Third Party
POSITIVE INSTALLATION LIMITED
Seventh Third Party/Fourth Party
Contents
Introduction ............................................................................................................[1] The Application ....................................................................................................[12] Climatech’s Submissions .....................................................................................[16] Council’s Submissions .........................................................................................[20]
Analysis ......................................................................................................................
Cross-claim or fourth party claim? [24]
Is an order required?
[33]
Conclusion............................................................................................................[36]
Costs
.....................................................................................................................[39]
Introduction
[1] This proceeding concerns a claim by the owners of a building made
up of an eight-storey car park and a further 21 levels
of apartments located in
central Auckland, this building is known as City Gardens.
[2] The plaintiffs, who are the Body Corporate together with the unit
owners, allege that the building has been constructed
with a multitude of
defects. They seek damages which include an economic loss claim in excess
of $32,000,000, plus general
damages slightly in excess of
$4,000,000.
[3] For the purposes of the application which I am considering in this judgment the economic loss claim includes a claim in relation to ventilation matters of
$2,196,332.79.
[4] The claim was brought against the Council, first defendant, the head contract Watts & Hughes Ltd, second defendant (now named as WHL Ltd in the proceeding), two major subcontractors Downer New Zealand Ltd and Symonite New Zealand Ltd, the third and fourth defendants, and the tiling subcontractor, the fifth defendant.
[5] After the proceeding was issued, the claim was amended on 3 May
2012 to introduce issues relating to ventilation. That resulted
in WHL Ltd and
the Council joining Tyco New Zealand Ltd (trading as Climatech and referred to
from here as Climatech) as a third
party to each of their claims. The Council
and WHL Ltd cross- claimed against each other in respect of the matter raised in
the amendment.
At the time, the plaintiffs did not sue Climatech, who was a
subcontractor.
[6] Climatech was the mechanical ventilation subcontractor. The
amendment which led to its joinder as a third party arose
from the plaintiffs
alleging that each of the Council and WHL Ltd are liable for certain defects in
the design and construction of
the building. As against WHL Ltd, those defects
included defect ‘t’ and defect ‘u’, both of which
pertain
to the bathroom extract fan system. They are referred to in this
judgment as the “ventilation defects”.
[7] In mid-2015, the plaintiffs amended their claim and removed the
ventilation defects from the particulars claimed against
the Council,
although the plaintiffs maintained their general claims of negligent
inspection and negligent issuance of code compliance
certificates.
[8] On 24 June 2015, WHL Ltd was placed into liquidation. On 26 August
2015, WHL Ltd assigned its causes of action and rights
to contribution in the
proceeding in relation to the claim against Climatech to the first plaintiff and
served notice of assignment
on Climatech.
[9] A close of pleadings date had been fixed for this proceeding as 26
September
2014 in anticipation of a trial to commence on 20 July 2015. The trial date was subsequently adjourned by Muir J. No alteration to the close of pleadings date was made. Accordingly, the plaintiffs sought leave from Fogarty J to file an amended statement of claim which referred to the assignment of the cause of action and sought the joinder of Climatech as sixth defendant in respect of the assigned cause of action. An order granting leave was made on 13 October 2015. An amended statement of claim was filed the following day.
[10] The amended statement of claim filed by the plaintiffs on 13 October
2015 contains two assigned causes of action against
the sixth defendant. The
first is a claim for losses in negligence. The second is for contribution as a
concurrent tortfeasor. Both
causes of action rely on the claim that Climatech
breached a duty of care when it performed the ventilation work in such a way
that
the ventilation defects occurred.
[11] Also filed on the same day as the amended statement of claim was
the application which I must now deal with, that is the
application by Climatech
to file a cross-claim against the Council.
The Application
[12] Climatech, in its position as the sixth defendant, applies for leave
to file a cross-claim against the first defendant, the
Council. It relies on r
4.18 of the High Court Rules and, because it is made after the close of
pleadings date, r 7.7.
[13] Climatech is concerned that if the cross-claim is not allowed, it
must then rely on the WHL Ltd cross-claim against the Council
to seek
contribution. Climatech notes that the WHL Ltd cross-claim refers to defects in
the City Garden Apartments generally, without
further particularising the
ventilation defects. This is, presumably, why Climatech seeks leave to file a
cross-claim of its own
against the Council.
[14] In the proposed cross-claim, Climatech seeks that if it should be
found liable as a concurrent tortfeasor on the basis of
the allegations in the
claim made by WHL Ltd (as assigned to the first plaintiff) in respect of the
ventilation defects, that the
Council is also responsible as a concurrent
tortfeasor for the same losses.
[15] Climatech asserts this claim on the grounds that the Council was at all material times the territorial authority responsible for performing duties and exercising powers under the Building Act 1991.1 In particular, the Council in the building consent approval processes, issued code compliance certificates. As a
result, the Council owed the plaintiffs a duty to exercise reasonable
skill and care
1 This Act has now been replaced by the Building Act 2004.
when performing its functions under the Building Act. Climatech submits that
the Council breached this duty of care by issuing the code compliance
certificates either without becoming
aware of defects which were reasonably
discoverable, or without requiring these defects to be remediated.
Climatech’s Submissions
[16] Climatech frames its submissions having regard to r 7.7. It submits
that under the rule and relevant authority,2 the test that must be
met is whether granting leave:
(a) would be in the interests of justice;
(b) would not significantly prejudice other parties; and
(c) would not cause significant delay.
[17] Climatech submits that the cross-claim is not statute barred
under the Building Act 2004, s 393(2). In asserting this, Climatech relies on
the decision of Fogarty J in Body Corporate 330324 v Auckland City Council
(referred to from here as “Downer”), which related to
parties in the present case.3
[18] Climatech submits that Fogarty J’s reasoning that cross-claims
are not causes of action between defendants and therefore
do not fall under s
393, applies in this case.
[19] Climatech submits that even if s 393 of the Building Act is found to
apply, and therefore the claim under s 17 of the Law Reform Act 1936 is deemed
to be out of time, Climatech’s claim
for equitable contribution can
survive the longstop.
Council’s Submissions
[20] The Council opposes the granting of leave for Climatech to file
a cross-claim.
2 Elders Pastoral v Marr [1987] NZCA 18; (1987) 2 PRNZ 383 (CA) at 385.
3 Body Corporate 330324 v Auckland City Council [2015] NZHC 995.
[21] The Council submits that the effective position of Climatech
in the proceeding is as a third party, as it is only
if WHL Ltd is found liable
that the Court will consider whether Climatech is liable. Therefore, the Council
submits, there is no
standing for Climatech to issue a cross-claim against the
Council.
[22] The Council submits that Downer does not apply, as the claim
in this case is, in effect, a fourth party claim rather than a cross-claim.
Therefore, the longstop provisions
of the Building Act apply, and the claim is
statute barred.
[23] The Council submits that if Climatech wished to pursue a claim
against the Council it should have issued a fourth party claim
at the time when
it was joined as a third party by WHL Ltd.
Analysis
Cross-claim or fourth party claim?
[24] Climatech was brought into the proceeding by WHL Ltd, who issued a
third party claim against it. WHL Ltd then assigned the
causes of action against
Climatech to the first plaintiff. The plaintiffs were then granted leave to add
Climatech as the sixth defendant.
[25] The Council argues that despite Climatech being named as a
defendant, the proposed cross-claim is, in effect, still a fourth
party claim.
This submission assumes that the words in rr 4.4 and 4.5 “...who is not a
party to the proceeding...” must
be read as “...who is not a party
to the third party (or fourth party) proceeding...” In short, that the
words do not
include all parties in the entire proceeding.
[26] Climatech argues that the second cause of action against it,
relating to a breach of a duty of care owed to the plaintiffs,
is exactly the
nature of claim that would give rise to a cross-claim between
defendants.
[27] The plaintiffs have received an assignment of the chose in action of WHL Ltd, which is more particularly described in the recitals to the deed of assignment as:
The Assignor has agreed to assign to the Assignee the Assignor’s third
party claim and any other claim the Assignor may have
against Climatech in
relation to the construction of City Gardens and proceeds of any damages or
compensation awarded under such
claims claim on certain terms. The Assignor and
Assignee wish to record the terms of their agreement.
[28] Where there has been an assignment, the practice has been for an
assignee to join the assignor as a co-defendant with the
debtor if the assignor
is uncooperative with the debtor.4 That then creates a position where
the assignee sues as the assignor and also the debtor. By joining
Climatech as a defendant,
the plaintiffs have achieved the same
position here, meaning that both WHL Ltd as assignor and Climatech as
the debtor
are sued as defendants.
[29] However, the rights which the plaintiffs are exercising under the
assignment are, in terms of s 50(1) of the Property Law
Act 2007, “...all
the rights of the assignor in relation to the thing in
action”.
[30] That leads me to conclude that Climatech, as a named defendant as a
result of the assignment, is not a defendant for the
purposes of issuing
cross-notices pursuant to r 4.18 of the High Court Rules. Its claim against
the defendant Council has to start
from the premise that it is claiming as a
third party against the defendant Council. Nothing has changed as a result of
its joinder
as a defendant. I therefore conclude that the pleading position of
the parties immediately prior to the order joining Climatech
as a defendant is
what the court will have to rule upon when this matter comes to
trial.
[31] Climatech’s position is different from that considered
by the Court in Downer. In Downer the plaintiffs have a
direct cause of action against Downer. Here, the plaintiffs’ cause of
action is dependent on an assignment.
[32] The application by Climatech does not suggest that it should be
allowed to file a fourth party claim against the Council;
therefore, I do not
consider that issue.
4 Bowdens Patents Syndicates Ltd v Herbert Smith & Company [1904] 2 Ch 86 at 91 per
Warrington J.
Is an order required?
[33] I am satisfied that the issues raised by WHL Ltd’s cross-claim
against the Council, the third party proceeding against
Climatech, and
Climatech’s defence to the third party claim sufficiently address issues
of contribution and indemnity in respect
of the plaintiffs’ claim against
WHL Ltd. As the claim against Climatech relates only to what WHL Ltd is found
responsible
for, I consider that the current pleadings sufficiently address the
issues and there is no risk of injustice if Climatech is unable
to file the
cross-claim claim.
[34] I was not provided with a statement of defence by the Council to WHL
Ltd’ cross-claim. Therefore, I assume, in light
of r 4.20, that the
Council does not wish to raise an affirmative defence to the
cross-claim.
[35] If I am wrong in this respect and the pleadings as they
stand do not sufficiently address the issues of contribution
and indemnity,
the trial judge has sufficient discretion under r 4.22 to make the appropriate
order for contribution.
Conclusion
[36] In conclusion, the plaintiffs received an assignment of the third
party claim against Cilmatech from WHL Ltd. The plaintiffs
have no direct cause
of action against Climatech.
[37] Climatech is unable to file a cross-claim against the
Council.
[38] Accordingly, leave is not granted for Climatech to file a
cross-claim against the Council.
Costs
[39] Although the defendant has been successful, my overall conclusion hopefully clarifies the precise issues involving the first defendant and the sixth defendant/first third party. In short, both attain benefit.
[40] Accordingly, I conclude that costs should follow the result of the final determination between the first defendant and the sixth defendant/first third party.
The issues of costs is reserved for this
purpose.
Solicitors: Hesketh Henry, Auckland
Heaney & Partners, Auckland
JA Faire J
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