Body Corporate Number 368533 v Napier City Council [2018] NZHC 1526 (25 June 2018)

Last Updated: 5 November 2018

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV 2012-441-000126 [2018] NZHC 1526

BETWEEN	BODY CORPORATE NUMBER 368533 Plaintiff
AND	NAPIER CITY COUNCIL First Defendant
	ROMANUS LIMITED (IN LIQUIDATION) Second Defendant
	ALEXANDER LACHLAN LIMITED Third Defendant (Removed)
	AQUAGUARD LIMITED (IN LIQUIDATION) Fourth Defendant (Discontinued)
	NAPIER SANDBLASTING CO LIMITED Fifth Defendant (Discontinued)
	Continued over/...

Hearing:	15 September 2017
Appearances:	V Whitfield for the Plaintiff J G Donkin for the First Defendant No appearance for the Seventh and Eight Defendants M J Wenley for the Fourteenth and Fifteenth Defendants
Judgment:	25 June 2018

JUDGMENT OF ASSOCIATE JUDGE SMITH

This judgment was delivered by me on 25 June 2018 at 3.00pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

BODY CORPORATE NUMBER 368533 v NAPIER CITY COUNCIL [2018] NZHC 1526 [25 June 2018]

HOLMES STRUCTURES LIMITED Sixth Defendant

LATTEY CIVIL ENGINEERS LIMITED Seventh Defendant

HUGH PETER LATTEY Eighth Defendant

ALEXANDER CONSTRUCTION COMPANY LIMITED Ninth Defendant

MOLLER ARCHITECTS LIMITED Tenth Defendant/First Third Party

CRAIG JEREMY MOLLER Eleventh Defendant/Second Third Party

PATTON ENGINEERING LIMITED Twelfth Defendant

RED STEEL LIMITED Thirteenth Defendant

GEAREY PAINTING COMPANY (1998) LIMITED Fourteenth Defendant

IAN STUART GEAREY Fifteenth Defendant

M J FOGARTY PAINTING & DECORATING LIMITED Sixteenth Defendant

DUAL NEW ZEALAND LIMITED Seventeenth Defendant

WIGHT ALUMINIUM LIMITED Eighteenth Defendant

JASON RONALD MILBURN Nineteenth Defendant

TIMOTHY JOHN PIKE Twentieth Defendant

GEOFFREY NORMAN KELL Twenty First Defendant

MARK JOHN HAMILTON
Twenty Second Defendant

IAN ROBERT LESLIE
Twenty Third Defendant (Third Third Party)

GLOBE HOLDINGS LIMITED
Twenty Fourth Defendant

ANDREW JAMES FAWCET
Twenty Fifth Defendant

HOLMES FIRE & SAFETY LIMITED
Twenty Sixth Defendant

KEVIN IRWIN
Twenty Seventh Defendant

BOOT MAC CONTRACTING LIMITED
Twenty Eighth Defendant

FIRE PROTECTION INSPECTION SERVICES LIMITED Twenty Ninth Defendant

BUILDING SERVICES CO PARTNERSHIP FIRE PROTECTION LIMITED Thirtieth Defendant

HOTCHILLY LIMITED Thirty First Defendant ARCH UNDERWRITING AT LLOYD'S LIMITED Thirty Second Defendant BARBICAN MANAGING AGENCY LIMITED Thirty Third Defendant HISCOX SYNDICATES LIMITED Thirty Fourth Defendant LIBERTY MANAGING AGENCY LIMITED

Thirty Fifth Defendant

[1] The fourteenth and fifteenth defendants (respectively, Gearey Painting and Mr Gearey) apply for summary judgment on the claim by the plaintiff (the Body Corporate), and on the cross-claims against them by the first defendant (the Council), and the seventh and eighth defendants (respectively, Lattey Engineers and Mr Lattey).

Background

[2] Gearey Painting was one of three painting firms that were subcontractors for external painting work on the West Quay project, a large residential apartments complex at Ahuriri, Napier (the development).

[3] The construction of the development was a substantial project. There were 4 blocks, being blocks A, B, C and D, each of five levels.

[4] According to the Body Corporate’s fifteenth amended statement of claim (the Claim),¹ the development was constructed between 2005 and 2007. The Council was the territorial authority responsible for issuing building consents and Code Compliance Certificates.

[5] Lattey Engineers was the subcontractor responsible for the supply and installation of pre-cast panels, pre-stressed beams, pre-cast stairs and pre-cast balconies used in the majority of the construction work, and Mr Lattey was and is a director of Lattey Engineers. Mr Lattey is alleged to have signed a Producer Statement for the construction work, on 23 May 2006.

[6] The Body Corporate says that Gearey Painting provided painting and coating services at the development, including but not limited to applying the coatings on structural steel on blocks A, B, D1 and D2. Mr Gearey was and is a director of Gearey Painting, and the Body Corporate alleges that he was on-site at the development attending weekly subcontractors’ meetings, receiving instructions from the site foreman, supervising Gearey Painting's work, and physically performing Gearey

1. Since the hearing, the Body Corporate has filed a sixteenth amended statement of claim. However no party has sought to adduce further evidence or make further submissions directed to the sixteenth amended statement of claim, and I apprehend that the document does not substantially affect the Body Corporate's allegations against Gearey Painting and Mr Gearey as they were argued at the hearing.

Painting's work. The Body Corporate says that Mr Gearey signed a warranty on behalf of Gearey Painting in relation to Gearey Painting's work.

The Claim

[7] In the Claim, the Body Corporate alleged that there were substantial defects in the construction of the development, and that it has undertaken, and will need to undertake, remedial works to both the common property and to the individual unit title properties.

[8] Among the numerous defects the Body Corporate pleaded, were the following (collectively "the Defects"):

No	Defect	Location(s)	Effect(s)	Consent document / Contract references	Building Code / NZ Standard references	Manufactur ers’/Good Trade Practice Guide References	Restorative work scope and costs
(“Steel Coatings Defects”)
24.	Delamination or	Widespread but	In some places		Non-compliance		Scaffold
	chipping of top and	most noticeable	both top and an		with clauses		water blast,
	undercoat to	east and west	underlying paint		B2.3.1(a), E2.2 and		abrade to key
	exposed structural	ends of Block A,	coat lost as result		E2.3.2 of the		surface and
	frame on front	north end of block	of large blisters.		Building Code. Non-		recoat
	elevation of all	C and generally on	Apparent cause		compliance with
	blocks	block D. Affects	likely to be poor		AS/NZS2312:2002
		web of some	bond between		Protection of Steel
		beams and	factory and site		from Atmospheric
		external corners of	applied coatings /		Corrosion by
		channels/RSJs	failure to wash		Protective Coatings.
		elsewhere.	salt etc off
		Systemic failure	between coats.
			Protective coating
			to steel
			compromised. No
			effective coating
			on stop ends of
			beams at
			interfloor corner
			junctions
25.	Corrosion of	Affects all blocks,	Base plates not	Non-compliant	Non-compliance		Rake out,
	balcony baseplates	worse at lower	appropriately	with Structural	with clauses B1 and		blast clean
	face-fixed to, or	levels and where	coated and/or	Steelwork	B2 of the Building		neutralise
	cast into, the	edge rather than	painted for salt	Specification	Code. Non-		corrosion,
	concrete walls.	face fixed. Most	environment,		compliance with		reinstate and
		noticeable at	existing paint coat		AS/NZS2312:2002		overcoat
		upper levels and	inadequate in		Protection of Steel
		external corners of	thickness and		from Atmospheric
		blocks e.g East	quality. Rust		Corrosion by
		and west ends of	stains issuing		Protective Coatings.
		Block A, north end	from between
		of block B, Higher	base plates and
		levels of block C	concrete.
		and generally on	Significant
		block D	structural
		particularly north	attachment item.
		end	Extensive,
			comprehensive
			work required
25A	Corrosion of weld	All units presumed	Weld plates and	Non-compliant	Non-compliance		To be
	plates and cleats.	to be affected.	cleats are not	with Structural	with clauses B1 and		determined
			galvanised and/or	Steelwork	B2 of the Building
			appropriately	Specification	Code. Non-
			coated.		compliance with
					AS/NZS2312:2002
					Protection of Steel
					from Atmospheric
					Corrosion by
					Protective Coatings.
(“the Structural Defects”)
37.	Failure to install /	A, B, C and D	Weldplates not	Non-	Non-compliance		To be
	attach Weldplates	Blocks.	adequately	compliance	with clauses B1 and		determined
	adequately to		connected to	with A.05.02,	B2 of the Building
	concrete walls or		concrete panels	A.01.04 and	Code.
	balcony structure		or balcony	A5067/A1513
			structure.

[9] In the Claim, the Body Corporate alleged against Gearey Painting that, as a painting subcontractor, it owed a duty to the Body Corporate and to the individual unit owners to exercise reasonable skill and care when completing the work it carried out on the development. The Body Corporate alleged that Gearey Painting breached that duty of care in the following respects:

139. ...

1. It failed to ensure that all structural steel on the exterior of the buildings in the Unit Title Development which it was responsible for was appropriately coated in accordance with the relevant specification; and/or

2. It failed to take steps that a reasonably prudent painting contractor would take including advising other contractors that the relevant coating specification or system was not suitable for the particular environment in which it was to be deployed.

[10] For the purposes of this summary judgment application, the Body Corporate did not rely at the hearing on any contention that the relevant coating specification or system was not suitable for the particular environment in which it was to be deployed. The particulars of negligence on which the Body Corporate did rely, were set out in Ms Whitfield's written submissions as follows:²

• 2.5.1 [Gearey Painting] failed to ensure that there was adequate preparation of the substrate of the balcony framework steel before applying the top coats;

2.5.2 [Gearey Painting] failed to comply with the Resene Specification A08-01-06 ("Resene Specification") and only applied a single coat of

2. These particulars were later incorporated in the Body Corporate's sixteenth amended statement of claim.

acrylic paint on the exterior of the weld plates in such a manner that the thickness of the coating was frequently under that specified;

2.5.3 [Gearey Painting] failed to ensure that the exposed connecting plates were adequately primed before applying the top coats, and also failed to ensure that two top coats were applied in accordance with the Resene Specification. In respect of some exposed connecting plates, these were either not painted at all, or bare steel has been painted, or the painting that was applied was inadequate;

2.5.4 [Gearey Painting] failed to paint the column plates in accordance with the Resene Specification;

2.5.5 [Gearey Painting] failed to raise any concerns about access or substrate deficiencies before or during the works undertaken by [Gearey Painting].

[11] As a result of those alleged breaches of duty, the Body Corporate says in the Claim that it has suffered or will suffer loss arising from the Defects.

[12] At the hearing of the summary judgment application neither party suggested that Defect No. 37 (relating to alleged inadequacy of the attaching of weld plates) affected the claims against Gearey Painting or Mr Gearey. The argument focused on Defects 24, 25 and 25A.

[13] In its claim against Mr Gearey, the Body Corporate said that, by virtue of his personal involvement or control of Gearey Painting's works, Mr Gearey owed a duty of care to the Body Corporate and to the individual unit owners to exercise reasonable skill and care when supervising Gearey Painting's works.

[14] The Body Corporate alleged that Mr Gearey breached that duty of care in the following respects:

(a) failing to ensure Gearey Painting had coated all exterior steel in accordance with the relevant specification; and/or

(b) failing to take steps that a reasonably prudent painting contractor would take including advising other contractors that the relevant coating
specification or system was not suitable for the particular environment in which it was to be deployed.³

[15] The Body Corporate alleged that, as a result of those alleged breaches, the Body Corporate and or the unit owners suffered or would suffer loss arising from the Defects.

[16] The Body Corporate says that the registered proprietors of the 105 individual unit titles in the development have assigned their claims against the defendants to the Body Corporate.

The cross-claims by the Council, Lattey Engineers and Mr Lattey

[17] The Council's first cross-claim cause of action against Gearey Painting and Mr Gearey is based on s 17 of the Law Reform Act 1936, which generally provides for claims for contribution between joint or several tortfeasors. The Council says, in effect, that if it is liable in negligence to the Body Corporate, then so too are Gearey Painting and Mr Gearey. In the event that it is found liable to the Body Corporate, the Council asks for an order for indemnity from Gearey Painting and Mr Gearey, or that they be ordered to contribute to the Council's liability in such sum as the Court might consider just.

[18] In its second cause of action on its cross-claim, the Council refers to a Warranty Agreement between Gearey Painting and the developer (the first defendant – "Romanus") dated 26 June 2006. The Warranty Agreement was signed by Mr Gearey on behalf of Gearey Painting.

[19] The Warranty Agreement contained a warranty by Gearey Painting to Romanus that all work performed by Gearey Painting:

3. In its sixteenth amended statement of claim, the Body Corporate provided further particulars of these allegations by pleading that Mr Gearey breached his duty of care by failing to ensure that Gearey Painting took the steps identified at subparagraphs 2.5.1-2.5.4 of Ms Whitfield's written submissions (set out at paragraph [10] of this judgment), and that he failed to raise the concerns identified at subparagraph 2.5.5 of those submissions.

... shall be in accordance with the standard and quality specified in the contract and the relevant drawings and specifications and if not stipulated the work shall be of good trade practice ...

[20] The Council then alleges that Gearey Painting and Mr Gearey owed it a duty to exercise reasonable care and skill when carrying out Gearey Painting's works and/or when supervising Gearey Painting's works and/or when issuing the warranty. In the event that it is found that the Defects exist, and the Council is found liable to the Body Corporate (or any other party), the Council says that Gearey Painting and Mr Gearey breached their duties of care, and that they are liable to the Council for any loss suffered by the Council as a result.

[21] The Council's third cause of action again relies on the Warranty Agreement, and the Gearey Painting warranty contained therein. The Council says that Gearey Painting and Mr Gearey knew or should have known that the Council would rely on the warranty, and that it did so when it issued the Code Compliance Certificate for the development. In those circumstances, the Council says that Gearey Painting and Mr Gearey were guilty of misleading and deceptive conduct in trade, contrary to s 9 of the Fair Trading Act 1986.

[22] The cross-claims by Lattey Engineers and Mr Lattey seek contribution from Gearey Painting and Mr Gearey under s 17 of the Law Reform Act 1936.

Application by Gearey Painting and Mr Gearey for summary judgment

[23] Gearey Painting and Mr Gearey contend that none of the causes of action against them by the Body Corporate, the Council, or Lattey Engineers and Mr Lattey can succeed. Gearey Painting and Mr Gearey plead the following grounds:

2. ...

(a) The exterior painting of steel carried out by Gearey Painting at West Quay was limited to washing down pre-primed steel, applying spot-priming to damaged primed surfaces on structural steel, and applying two top coats.

(b) The work was carried out pursuant to a Resene Coatings Specification and pursuant to a warranty and guarantee whereby Gearey Painting was liable to carry out remedial work notified within 3 years of completion for which no notice was ever given and Resene as manufacturer guaranteed

adhesion and general film integrity for a period of not less than 3 years.

(c) Resene, as the paint manufacturer, provided maintenance advice, available to [the Body Corporate] and West Quay owners, recommending that the painted surfaces be washed down, repaired as required, and repainted after 10 years.

(d) Any repairs and maintenance required after the expiration of 3 years from the date the painting was completed are the responsibility of [the Body Corporate] and/or West Quay owners for which [Gearey Painting and Mr Gearey] bear no responsibility or liability.

(e) The main contracted works were completed by August 2006 and the minor remedial works by December 2006. Consequently, the claim is statute barred.

(f) [Gearey Painting's and Mr Gearey's] liability in tort is modified by the contractual terms contained in the Warranty Agreement by which the parties contracted for a 3-year warranty.

(g) [Mr Gearey] as Director assumed no personal responsibility for the actions of [Gearey Painting] and he neither supervised nor participated in the painting of exterior steel.

...

The notices of opposition

[24] The application for summary judgment is opposed by the Body Corporate and the Council. While Lattey Engineers and Mr Lattey filed a notice of opposition, they elected not to participate in the hearing. A memorandum was filed on their behalf advising that they would abide the decision of the Court on the application.

[25] The Body Corporate says in its notice of opposition that Gearey Painting's works included washing down pre-primed steel, applying spot-priming to damaged primed surfaces on structural steel, and applying two top coats. It says that although Gearey Painting was required to provide a warranty, that does not modify the duty of care it is said to have owed to the Body Corporate. It says that Gearey Painting carried out the work without applying a reasonable level of skill or care, causing loss to the Body Corporate. The Body Corporate specifically pleads that the losses have not arisen as a result of any lack of maintenance, but as a result of Gearey Painting's alleged breaches of its duty of care. In any event, any issue of failure to maintain
(denied by the Body Corporate) could only give rise to a claim for contributory negligence.

[26] The Body Corporate denies that its claims against Gearey Painting and Mr Gearey are statute-barred. It contends that the defects in the work carried out by Gearey Painting were latent defects, and were not reasonably discoverable earlier than six years before the Body Corporate commenced its proceeding against Gearey Painting and Mr Gearey.

[27] In respect of Mr Gearey, the Body Corporate says that he personally owed a duty of care to it to ensure that Gearey Painting's works were carried out with reasonable skill. Again, the fact that Gearey Painting may have provided a warranty for the work it carried out does not modify or affect Mr Gearey’s duty of care, and consequent liability in tort. The Body Corporate repeats the same contentions relating to any failure to maintain the development, and limitation of its claims, as it pleads against Gearey Painting. Finally, the Body Corporate says that there are disputed issues of fact that cannot be resolved in a summary judgment hearing.

[28] In their notices of opposition to the application for summary judgment on the cross-claims by Gearey Painting and Mr Gearey, the Council, Lattey Engineers and Mr Lattey all adopt the grounds of opposition pleaded by the Body Corporate in its notice of opposition.

Applications by defendants for summary judgment – legal principles

[29] Rule 12.2(2) of the High Court Rules provides:

12.2 Judgment when there is no defence or when no cause of action can succeed

...

(2) The court may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff's statement of claim can succeed.

[30] I accept that r 12.2 applies equally to a cross-claim made by a co-defendant as it does to a claim made by a plaintiff against a defendant.⁴

[31] The principles applicable to an application for summary judgment by a defendant were discussed by Elias CJ in Westpac Banking Corp v MM Kembla NZ Limited:⁵

• [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 cannot offer evidence which is a complete defence to the plaintiff's claim.

...

[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 [1987] 1; [1986] NZCA 112; (1986) 1 PRNZ 183 (CA), 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.

The evidence for Gearey Painting and Mr Gearey

[32] Mr Gearey provided two affidavits in support of the application for summary judgment. The first was sworn on 9 May 2017, and the second (an affidavit in reply) on 11 August 2017.

4. That follows from the definitions of "plaintiff" ("the person ... by whom a proceeding is brought"), "defendant" ("a person served ... with a proceeding"), and "proceeding" ("any application to the Court for the exercising of the civil jurisdiction of the court other than an interlocutory application), in r 1.3 of the High Court Rules.
5. Westpac Banking Corp v M M Kembla NZ Limited [2000] NZCA 319; [2001] 2 NZLR 298, (2000) 14 PRNZ 631 (CA) at [61]- [62].

[33] Mr Gearey said that he has been a professional painter for 50 years. Gearey Painting was incorporated in September 1988, and he has been a director of Gearey Painting since that time.

[34] Mr Gearey said that Gearey Painting carried out the following exterior steel painting decoration work at the development:

(a) Block B, which work was commenced and completed in August 2006 for a contract price of $10,143.55;

(b) Block D1, which work was commenced in January 2006 and completed in February 2006, for a contract price of $7,682.00;

(c) Block D2, which work was commenced in June 2006 and completed in August 2006, for a contract price of $1,699.10.

[35] Mr Gearey said that Gearey Painting also carried out interior painting work on Blocks A, D, D1, and D2, and that on or about 27 September 2006 it did some very minor painting work (to the value of $340.00) on Block A. He said there was also some further minor remedial painting work done in December 2006.

[36] Mr Gearey's evidence was that the developer adopted the Resene Coatings Specification (the Resene Specification) for the exterior steel work. He said that he regarded Resene Paints Limited (Resene) as the expert on its products, and there was nothing in the Resene Specification which in his experience or to his knowledge could have imposed any duty on Gearey Painting or himself to advise other contractors that the Resene Specification or system was not suitable for the particular environment in which it was to be deployed.⁶

[37] Mr Gearey referred in his affidavit to a number of statements in the Resene Specification, and in the Resene Maintenance Guide. The Resene Specification, which appears to have been written specifically for the exterior steel work at the development, stated that the scope of the work would be to "prepare surfaces and apply

⁶ A reference to the Claim, paragraphs 139b and 142b.

Resene paint in accordance with the specification". Under a heading "GUARANTEE", the painting contractor guaranteed the work under normal conditions of use against failure of the materials, "according to 1(v) Durability of Paint Systems in the Resene Paints On-line Specifications and a Product Data Manual."

[38] Section 1(v) of the On-Line Specifications and Product Data Manual included a chart indicating the typical timespan that could be expected from a well-maintained paint system before recoating was required. "Well maintained" was defined as meaning "regular washing and repairing any obvious damage". For an acrylic system applied to walls, the chart indicated that the expected timespan for an ideal surface ("a new surface in excellent condition, without defects, and without any exposure to the weather") would be 10 years. The chart indicated that a shorter timespan could be expected in respect of surface conditions that were less than ideal in that sense.

[39] Mr Gearey noted that the Resene Specification obliged the painting subcontractor to guarantee its work against all defects that might occur within three months from the completion of the subcontract, and that the subcontractor would be required to make good any such defects at its own cost.

[40] Gearey Painting in fact provided a warranty (dated 26 June 2006) in respect of its workmanship for three years from the date of practical completion (materials were separately guaranteed under a Resene warranty, which guaranteed the adhesion and general film integrity of the paint system for the three year period). Gearey Painting was not to be liable under its warranty for any defect or damage caused by wilful act or negligence by the principal or any other person other than Gearey Painting, its agents, employees, or sub-contractors.

[41] Mr Gearey said that no notice of any defect was given to Gearey Painting within the three-year period following the date of practical completion. He also asserted that the Body Corporate and the unit owners at the development failed to carry out the programme recommended by Resene to maintain the painted surfaces. In his opinion, that was the primary cause of the present complaints about the state of the decorative paint finish.
[42] The Resene Specification provided that the exterior structural steel would be "erected on site and primed with Armourcote 220 over zinc arc spray". Mr Gearey explained that it was the responsibility of other contractors to erect the steel and prime it with Armourcote 220 over zinc arc spray – that work did not form part of Gearey Painting's contract.

[43] The Resene Specification then described the work to be carried out by the painting contractor as follows:

Note 1: Wind blown salt deposits should be thoroughly washed off with copious amounts of water and the surfaces allowed to dry before painting commences and at the beginning of each day's painting. Any contaminants such as airborne pollutants, greases, oils, dirt, dust, which would effect the integrity of the applied coating must be removed prior to application of paint coatings.

PREPARATION FOR PAINTING:

1.1 Mix one part of Resene Roof Wash & Paint Cleaner with three parts of fresh water. Apply a liberal wash of this mixture to the surface with a nylone bristle brush or broom. Thoroughly scrub the surface to ensure complete removal of all grease, moss and mould residue, and any other contaminants. ...

1.2 Waterblast at 3000 psi @ 20 litres/minute minimum to remove all salts, grease, dirt, surface chalk, dust and any other contaminants. Allow the surface to dry.

1.3 Thoroughly sand to provide a good key for adhesion. Remove dust.

Note 2: The performance of the subsequent paint systems will be largely dependent on the thoroughness of this surface preparation stage.

PAINTING:

1.4 Prime any damaged or repaired areas only with Resene Armourcote 221 to achieve a dry film thickness of 50 microns. ...

1.5 Apply a full coat of Resene Imperite IF503 Metallic by roller and lay off consistently in the same direction to achieve a dry film build of 50 microns. ...

1.6 Apply a finishing coat of Resene Imperite IF503 Metallic by roller and lay off consistently in the same direction to achieve a dry film build of 50 microns.

[44] Mr Gearey described the product "Resene Armourcote 221" as the "brush-on" equivalent of Armourcote 220 (a spray-on product, that was not suitable for touch-up repairs).
[45] Mr Gearey referred to the Resene Maintenance Guide, which recommended cleaning of exterior paintwork on an annual basis to help maintain the fresh appearance of the paintwork. Special attention to areas not subject to regular rainwashing was recommended. All areas sheltered from rainwashing were recommended to be washed down with fresh water on a quarterly basis, and on a yearly cycle all painted surfaces should be washed down with Resene Paint Pre and Housewash, followed by rinsing with fresh water. That procedure was recommended to remove salt, dirt, and contaminant build-up on painted areas. Resene recommended that the paintwork be inspected at the end of year one, and any areas of damage or coating breakdown be repaired. Resene said the inspection process should be repeated at year five, and based on the results of a condition survey, a decision made on future maintenance actions, which might include touch-up/repair of areas, or a full recoat.

[46] Mr Gearey noted that the development is close to the inner harbour and the ocean, which is a harsh environment for paint. In such circumstances, proper maintenance of the paintwork is critical. Gearey Painting had no responsibility for maintenance of the paintwork.

[47] Gearey Painting set out its scheduled rates in a letter to the construction company dated 20 April 2005. The rates provided were for the decorative finished coats. All other work, ie, blasting, grinding and primers, were to be the steel fabricator's responsibility.

[48] Mr Gearey said that, while two top coats provide a protective coating for the steel, it is only a secondary defence, and it has to be maintained. The top coats cannot overcome any inherent defect in surface treatments applied by the steel fabricator (for the accessible exterior steel, "Armourcote 220 over zinc arc spray"). Under the Resene Specification, Gearey Painting was required to prime any damaged or repaired areas only, with Resene Armourcote 221 to a dry film thickness of 50 microns. Mr Gearey said that his understanding was that the areas that needed to be reprimed were minimal, and that there is no evidence to suggest that the repriming work was not done.

[49] Mr Gearey expressed the view that the structural steel specifications for the development made it clear that the application of protective finishes for the steel work
was the responsibility of the structural steel contractor, not the painting contractor. The structural steel specifications contained a schedule of surface finishes, which set out different specifications for inaccessible steel work, and exterior steel work which would be accessible for regular cleaning maintenance.

[50] Mr Gearey said that on 26 September 2006, after it had completed its warranted work, Gearey Painting received a request to paint steel columns from the ground floor to level 2 of Block A. The steel work had been welded the previous day, and it needed to be primed and painted to the same specifications as the rest. Gearey Painting did not otherwise do exterior painting on Block A.

[51] Gearey Painting also received a request on 4 December 2006 to apply top coat to two columns and beams, after remedial work had been done to bring this part of the development up to specification.

[52] Mr Gearey said that there is no basis to suggest that either of these additional works was not done to specification.

[53] Addressing the claim against himself, Mr Gearey said that he had a limited role at the development, particularly as he fell ill in April 2004 and was consistently in and out of hospitals in Hastings and Auckland until late 2006. He acknowledged that he did carry out some work for Gearey Painting during this period when he was available, but said that he was operating at "very low capacity", and was available for site meetings only very rarely throughout the contract. He said that he did very little work physically on the site, and at the end of the contract was looking after interior defects list works only. The employees of Gearey Painting were experienced painters, and required little supervision.

[54] Specifically in respect of the exterior steel painting work, Mr Gearey said that his personal involvement was nil: he neither supervised Gearey Painting employees painting exterior steel, nor applied any paint to the exterior steel himself.

[55] Referring to the alleged defects in respect of which the Body Corporate makes claims against Gearey Painting and Mr Gearey, Mr Gearey observed that only
Defect 24 appeared to relate to the exterior steel paintwork. At the time the painting work was completed by Gearey Painting it passed inspection, and no defects were notified in the three years following completion. In his opinion, it is speculation to say that the loss of the top and underlying coats as the result of large blisters (one of the Body Corporate's allegations), was attributable to failure to wash salt off between the application of the coats. Mr Gearey speculated that the underlying primed surface may have been unsuitable for some reason beyond the control of the painter, such as the primer being defective in some respect, or the primed surface being too aged: that would affect the adhesion of the top coats. In any event, these were very minor matters that should have been rectified as a result of Resene's wash down and maintenance regime for the building. Mr Gearey contended that such maintenance has been wholly lacking on the part of the Body Corporate and the unit owners.

[56] Mr Gearey referred to a report obtained by the Body Corporate in 2012, relating to the repainting of the exterior steel work. The report noted that the development is directly across the road from the sea, and that the steel was installed and painted, in a dark charcoal metallic paint, some six years earlier. The report described the painted, arc-sprayed steel as generally being in reasonable condition. There was some chipped and flaked paint visible, especially on the edges of some horizonal sections.

[57] Mr Gearey described this report as unremarkable, calling only for maintenance work that should have been carried out as a matter of routine.

[58] Mr Gearey produced a photograph of a steel base plate showing rust leaching from underneath. He said this was definitely not the responsibility of the painter who was responsible for spot-priming and top-coating, as the rusting area was inaccessible. And the loss of top coat on the edge of the iron "beam" was a maintenance issue, that could have been caused by a ladder. Mr Gearey also produced a photograph showing loss of areas of top coat. Again, he characterised these as maintenance issues for the Body Corporate and unit owners, arising after the expiry of the three-year warranty period.
[59] Mr Gearey referred to Resene's Guide to the New Zealand Building Code, and the Paint Manufacturers Association Guide to the New Zealand Building Code to which it refers. These documents distinguished between decorative coatings and protective coatings. Mr Gearey noted that the minimum performance standard for a protective coating is five years. The Paint Manufacturers Association Guide referred, under the heading "B2 DURABILITY", to the distinction between protective coatings and decorative coatings, saying:

There is no durability requirement for decorative coatings, but a 5 year minimum period for protective coatings.

...

In relation to paint, whether a paint coating is only decorative or also protective is often in practice not clear cut. As a guide-line the following definitions are provided:

Decorative Paint Coating

"a paint coating whose function is essentially only to adorn a surface ..."

Protective Paint Coating

"a paint coating whose function is to protect substrate building materials from the harmful effects of moisture, chemical attack and weather and the absence of the coating would render the substrate inadequate to meet the requirements of the NZ Building Code."

[60] Mr Gearey's view is that, according to the Resene Maintenance Guide recommendations, the exterior steel should have been repainted entirely in 2016, and prior to then it should have been washed down and repaired by the Body Corporate and/or unit owners.

Evidence for the Body Corporate

[61] Mr Paul Probett, a building consultant, provided an affidavit for the Body Corporate.

[62] Mr Probett described the various steel components comprising the balcony steel work at the development. First, there was exposed balcony framework, visible from the exterior.
[63] Then there were three different types of weld plates that are relevant to the issues:

(i) Panel end-mounted weld plates. These are weld plates made of prefabricated steel that is corrosion-coated, and they are intended to be cast into the top corners of the 150 mm thick reinforced concrete wall panels for the support of the beam steelwork.

(ii) Weld plates incorporated in the steel structure which serve to provide a means of connecting the adjacent parts, called "connecting plates".

(iii) "Column plates".

[64] Mr Probett summarised his concerns with the work undertaken by Gearey Painting as follows:

1. There is significant delamination of the paintwork to the steelwork on Blocks, A, B, C and D. The delamination has not arisen through any lack of maintenance, but as a result of inadequate surface preparation pre-treatment. In Mr Probett's view, more than normal maintenance was required to remediate the affected areas.

2. In respect of the panel end-mounted weld plates, these are cast-in to the concrete panels and sit flush against the concrete panel. Proper application of the corrosion protection system specified by Resene is critical to the structural integrity of these weld plates. In Mr Probett's opinion, Gearey Painting did not comply with the Resene Specification, only applying a single coat of acrylic paint on the exterior of the weld plates, in such a manner that the thickness of the coating was frequently under that specified. In Mr Probett's opinion, that failure is contributing to the corrosion issues occurring with the panel end-mounted weld plates.
3. In respect of the connecting plates, some have been identified as either not being painted at all, or bare (unprimed) steel has been painted. Mr Probett acknowledged that some connecting plates might have had an indeterminate, but thin and temporary primer, but an experienced painter would immediately have appreciated that it was not part of a primer coat that was ready for top coat applications. In his view, Gearey Painting was responsible for ensuring that these connecting plates were coated with an appropriate primer, before applying the top coats. It ought also to have ensured that two top coats were applied in accordance with the Resene Specification.

4. In respect of the column plates, these and the sides of the open-ended vertical void they form, have not been painted at all. They are difficult to access, but if Gearey Painting had any concerns they should have been raised with the developer. Mr Gearey has not suggested that any concerns were raised with the developer.

[65] Mr Probett referred to the following additional clauses in the Resene Specification:

1. If any substrate or surface cannot be brought up to a standard that allows painting or clear finishing of the required standard then do not proceed until remedial work is carried out. [Section 3.9]

2. Do not expose primers, undercoats and intermediate coats beyond a few days before applying the next coat. [Section 3.22]

3. Lightly sand all primers, sealers, undercoats and all intermediate coats to remove dust pick-up, protruding fibres and coarse particles. Complete by removing dust immediately before applying the next coat. [Section 3.24]

4. Each coat of paint and the completed paint system to have proper covering of corners, crannies, thin edges, cracks, end grains and other difficult places of application. [Section 3.27]

[66] Mr Probett noted that the development is located in an area that means that the steelwork is very susceptible to corrosion. Accordingly, a high level of paint protection and the proper selection and application of the coating system, were of the utmost importance.
[67] Mr Probett considered the application of the durability requirements of the Building Code, noting that cl B2 is concerned with durability. The functional requirement of this clause is that building materials, components and construction methods shall be sufficiently durable to ensure that the building, without reconstruction or major renovation, satisfies the other functional requirements of [the Building Code] throughout the life of the building.

[68] Some standard specifications for the corrosion protection of steel are set out in the AU/NZS2312. In this case, Resene provided a specification for the exterior steelwork at the development, and Mr Probett assumed that Resene had prepared its specification having regard to both the AU/NZS2312 and the requirements of the Building Code. Thus, the Resene Specification would have been written to ensure compliance with the Building Code.

[69] Mr Probett rejected Mr Gearey's suggestion that the two top coats Gearey Painting was required to apply were only "decorative". He said that each layer of paint adds an additional level of protection to the steel, and each layer is a critical element to ensure that the steel is not exposed to oxygen, and therefore at risk of corrosion.

[70] Mr Probett considered each of the areas of the development where the exterior paintwork is said to have been defective. First, he said that the paintwork on the balcony steel in Blocks A, B, C and D continues to suffer from large blisters, widespread delamination, cracking, peeling, and detachment of the paint surface. Essentially, the top coat of paint is falling off, and the level of adhesion to the underlying coats is poor. He described the delamination of the balcony steelwork as unusual, and said that it has been occurring since approximately 2010, some five or so years after the development was built.

[71] Mr Probett noted that the zinc-rich primer and epoxy intermediate coatings would both have been applied off-site. After erection of the steelwork and the carrying out of spot repairs on site, the final coats would have been applied at the site by Gearey Painting. He expressed the view that delays in applying the final coats would have allowed contaminants to accumulate on the surface, and some chalking to develop. This contamination was required to be cleaned, and the surface prepared, before a top
coat was applied. Proper preparation would have included sanding to roughen the epoxy surface (as required by the Resene Specification).

[72] Mr Probett referred to another consultant's tests that are said to have shown that the adhesion of the zinc-rich epoxy and the High Build Epoxy intermediate coat to steel was sound; however, there was consistently poor adhesion of the top coat to the underlying epoxy and intermediate coat.

[73] Mr Probett said that proper and careful sanding provides the key for the next coat to bond, as not only does it remove material that should not be applied over; it also removes weathered surfaces that can become glazed, and it makes tiny grooves in the surface to ensure keying of the top coat to the primer or undercoats is effective. If this preparation is not done well, the bond between the coats will fail.

[74] Mr Probett expressed the view that if adequate surface preparation had been undertaken, the expected life of the coating system would have been 10 to 20 years without the delamination failure of the top coat that is now occurring. Any maintenance painting during these periods would have been purely decorative, with minor touch-ups only. But because of the problems with delamination, more than normal maintenance is now required to be undertaken.

[75] Turning to the panel end-mounted weld plates, these weld plates were cast into the concrete, and the balcony steel work was then welded onto them on site. The cast-in weld plate is located on the outer corner of the balcony structure, and as such formed part of Gearey Painting's responsibility for the exterior painting of the buildings. When Gearey Painting arrived on site, the panel end-mounted weld plates should have been primed and ready for painting. Mr Probett said a number of them are showing visible evidence of corrosion within the steel/concrete interface.

[76] The panel end-mounted weld plates should have had two top coats of Resene Imperite IF503 Metallic over a 50 micron coat of Armourcote that should have been applied over a properly prepared steel surface. This was not undertaken in respect of many of the panel end-mounted weld plates, particularly on D Block. These weld plates had a single coat of primer, and then appeared to have been coated with only
one coat of white acrylic paint (the same as the paint used to coat the adjacent concrete). In some cases Imperite was used, but it did not coat the sides of the weld plate, and often the coating was below the minimum dry film thicknesses specified in the Resene Specification.

[77] In Mr Probett's opinion, the lack of adequate coating of the panel end-mounted weld plates is a factor that has contributed to the significant failure of these plates in Blocks A, B (front and rear), C and D. In his view, a reasonably prudent painter would have ensured compliance with the Resene Specification, and if it had any concerns about the application of the Resene Specification to the panel end-mounted weld plates, it ought to have raised the concerns with the developer.

[78] The next area of concern addressed by Mr Probett was the connecting plates. The connecting plates were site-welded to the panel end-mounted weld plates, for the purpose of providing the balcony beams with structural connections onto the ends of the pre-cast concrete panels. The balcony structures are not sealed, and there are gaps in some areas where the connecting plates join the panel end-mounted weld plates. These gaps are visible, and the steel is therefore exposed to the weather in the areas where the gaps are present. That exposure means the connecting plates had to be corrosion-coated in accordance with the requirements for exterior steel.

[79] A number of the connecting plates were not hot-dip galvanised or appropriately primed, and in other cases not even coated with the two required top coats. Gearey Painting either applied the two top coats directly onto the bare steel, or they applied paint to a clearly inadequate primer, or they failed to paint the bare steel at all, leaving it exposed and vulnerable to corrosion.

[80] Mr Probett said that some (if not many) of the connecting plates are suffering from severe corrosion. Extensive remedial works are required.

[81] In Mr Probett's opinion a reasonably prudent painter:

• (a) would have ensured that adequate primer was in place before overcoating the exposed areas of the connecting plates with the two required top coats;

(b) would not have continued to apply the top coats where there was no primer and/or the primer was visibly inadequate (he referred to the Resene Specification, and the requirement that works should not proceed in the event of poor substrate); and

(c) would have raised these issues with the developer.

[82] The last of the areas with alleged defects in the coating of exterior steelwork was the column plates.

[83] The column plates are prefabricated onto the external column steelwork, and they provide a means of connecting external balcony beams to the external columns, by bolting or welding.

[84] Mr Probett acknowledged that the confined space between the column plates and column web/flanges in this external steelwork are difficult to access. A vertical slot is formed by the construction, and the slot is uncapped. Mr Probett said that it appeared that Gearey Painting had simply brushed the paint down where it was easily accessible and then stopped. Where the coating had not been applied, corrosion has occurred. Remedial works are now required to these areas.

[85] Mr Probett said that painting these areas is not difficult – "nook and cranny" baby rollers are made just for that purpose.

[86] In summary, Mr Probett considered that the work undertaken by Gearey Painting was below the standard that he would have expected of a reasonably competent painter.

[87] The next affidavit for the Body Corporate was that of Mr Craig Ross. Mr Ross is a director of Napier Sandblasting Co. Limited. He said that he had been asked to comment on Mr Gearey's affidavit of 9 May 2017.
[88] Mr Ross has had over 20 years' experience in the corrosion control and coatings industry. He said that he was familiar with the development, and that his company had been contracted to undertake limited works at the development. His company had also previously been a defendant in the proceeding, but was removed some years ago.

[89] Mr Ross said he had reviewed Mr Probett's affidavit, and that he agreed with Mr Probett's conclusions.

[90] In respect of A, B and C Blocks, Mr Ross said he was not sure of the condition the steelwork was in when it was handed over to the painters. But when the works were handed over to the on-site painters to complete the two top coats, something similar to the following process should have been followed:

(a) as the surface had been exposed to weather for a period, the area would have required washing of some description, using something like Resene Roof Wash and Paint Cleaner;

(b) a low-pressure water wash to remove any residue;

(c) light sanding; and

(d) application of the specified finish coats, being two coats of Imperite, at 50 microns dry film thickness per coat.

[91] Mr Ross said that he had personally inspected a number of weld plates at the development. He noted that many of the panel end-mounted weld plates were affected by obvious corrosion. Some connecting plates had no coatings at all, and in others it appeared that the top coats had been applied to bare steel. Further, as there was still a high degree of mill scale present, it could be assumed that no abrasive blasting of the plate had been carried out. While many of the connecting plates were fully enclosed in the balconies, some protruded and were visible from the exterior. He also noted there were significant areas where the column plates had received no coating protection.
[92] Mr Ross expressed the view that, had the weld plates been prepared and coated to the degree required by the Resene Specification, the corrosion would not have occurred as it has.

[93] Mr Ross noted Mr Gearey's view that Gearey Painting was not responsible for the priming of the steelwork. Mr Ross's response was that it is common industry practice that a painter will check the substrate on which a coating is to be applied, and should not proceed unless satisfied with the substrate. Mr Ross said this practice was reflected in the Resene Specification, which stated:

If any substrate or surface cannot be brought up to a standard that will allow painting or clear finishing of the required standard then do not proceed until remedial work is carried out.

[94] Mr Ross expressed the view that a minimum requirement for ensuring that the underlying coatings were suitable would have been a visual inspection of the surfaces. In his opinion, even an unqualified eye would have noticed that what was present in respect of the panel end-mounted weld plates, the connecting plates and the column plates was not correct, and required further work. While it is difficult to determine the dry film thickness of epoxy zinc visually (it is a relatively thin-build coating), you would be able to determine other faults, such as misses and overbuild, visually.

[95] In respect of the connecting plates, Mr Ross noted that there were a number that appeared to have no primer, or if there was a primer, it must have been visibly inadequate at the time (as a result of the level of corrosion that was apparent). In his opinion, a reasonably prudent painter would have brought the issue to the attention of the developer, so that it could be remediated by the appropriate party, prior to any further finishing work being done. Likewise, any issues with access to the column plates should have been brought to the attention of Alexander Lachlan as head contractor/project manager.

[96] Mr Ross also noted that the panel end-mounted weld plates had been painted with white acrylic paint. If the Resene Specification had been followed, they should have received two top coats of Imperite to a total dry film thickness of 100 microns. When these were tested, they were generally below the required dry film thickness. It appeared to Mr Ross that the exterior painter had simply continued the exterior
concrete paint over the cast-in weld plates, failing to recognise the need to apply to the weld plates the same coating system as that specified for the steelwork. In Mr Ross' view, a reasonably prudent painter would not have done that.

[97] Mr Ross also referred to the delamination failure on the balcony steelwork. He noted that the balcony steelwork was fabricated off-site, abrasive blasted, primed, and had an intermediate coat applied prior to being taken to site for erection. Before the exterior steelwork painter was involved, the buildings would have been essentially finished externally, including the installation of the balcony formwork and waterproofing. The finish coating of the remaining exposed-to-view steelwork was completed a number of months after the steel was erected. Mr Ross expressed the opinion that the lack of adhesion of the finish coat of Imperite to the underlying coatings is likely to have been caused by a lack of surface preparation prior to the application of the finish coat.

[98] Mr Ross said that the epoxy coatings used on the balcony steelwork throughout the development have a limited recoat window, and with some months having passed between the two applications, the recoat window would certainly have been exceeded. If the recoat time window is exceeded, then the epoxy coat requires additional surface preparation prior to coating.

[99] Looking at the Resene Specification, Mr Ross noted that the level of surface preparation detailed there allowed for solvent cleaning, water blasting, and abrading, which would be considered standard practice. Looking at what appears to have been done on site by Gearey Painting, Mr Ross expressed the view that, at best, only very minor preparation work had been completed. In all likelihood, only low pressure water blasting was carried out, and this would not have amounted to more than a very quick wash. Another factor contributing to the delamination failure was that there were residual surface contaminants, such as chlorides and chalked epoxy. Had the water blasting been completed properly, these contaminants would have been fully removed.

[100] Mr Ross referred to adhesion tests that had been carried out at the development. He said that it was very easy to remove reasonably sized areas of finished coat to expose the underlying epoxy. In no areas, when exposed, were there any discernible
markings that Mr Ross would have expected to see if hand-sanding had been completed before the top coats were applied. Also, the appearance of the epoxy was identical to the areas that had been concealed in the balcony formwork and not overcoated at time of construction.

[101] Mr Ross said that the sanding of the hard-cured epoxy is a vitally important component of the surface preparation. The sanding helps by providing a degree of mechanical adhesion, similar to abrasive blasting, and provides a much higher degree of adhesion of the subsequent coatings.

[102] Mr Ross said that the delamination occurring on the balcony steelwork is extensive and widespread. Had the coating system been applied properly, he would have expected only minor maintenance works to be required.

[103] In Mr Ross' opinion, normal maintenance of paintwork should not require removal of the underlying coatings – it should be based more around simple overcoating. However, the types of failures seen at the development will usually grow exponentially, and eventually affect all areas. In his opinion, the only way the paint coatings can now be repaired is by full removal of the Imperite finished coat and then application of a new finishing coat. The process is now considerably more involved than it would have been if the Imperite had been sound and well-adhered. The remedial work is now relatively involved, and in Mr Ross' view might well cost in excess of $1 million.

[104] The last affidavit provided for the Body Corporate was that of Mr Boshier, the Deputy Chairman of the Body Corporate. Mr Boshier is also, with his wife, the owner of one of the units in the development.

[105] Mr Boshier said that the first instance of paint loss on the exterior steel that he could recall was in September 2010, when some minor issues with paint flaking were identified with some of the steel beams in Block C. Minor touching-up remedial work was done in these areas.
[106] In 2012, the Body Corporate became aware that the affected areas were more widespread, and were becoming apparent in Blocks B and D. It was about this time that the Body Corporate became concerned about the paint coating on the weld plates. Rust stains had become visible on the paintwork immediately adjacent to the weld plates.

[107] Mr Boshier said that the Body Corporate was not aware of the issues with the lack of coating on the connecting plates and column plates, until a full investigation of the balcony of one of the units in Block B was undertaken. The issues identified with these weld plates were not obvious, as they were either enclosed within the balcony, or in the case of the column plates, are not visible when standing on the balcony. That investigation was completed in 2015.

[108] Mr Boshier referred to some of the documents disclosed on discovery. One of the documents was a site instruction given by Alexander Lachlan to Gearey Painting on 10 February 2006, in which the head contractor/project manager asked to be kept up with the play regarding progress of painting on exterior steel. It asked that if there were any issues regarding this, to contact it in writing. On 13 February 2006, Mr Gearey replied confirming that all was well, and that Gearey Painting was proceeding with the structural steel top coats of the Imperite to the D1 exterior. Mr Gearey said that Gearey Painting was awaiting confirmation of the remedial work being completed to the pre-cast walls, so that it could apply the finishing coats.

[109] Another site instruction was given to Gearey Painting on 29 May 2006. Gearey Painting was asked to reinstate paintwork to steelwork on balconies.

[110] On 6 June 2006, Gearey Painting wrote to Alexander Lachlan advising of delays regarding access to the exterior walls.

[111] There was a further site instruction to Gearey Painting on 29 June 2006, in which Gearey Painting was asked to finish off the structural steel in the foyer areas, so that Alexander Lachlan could make a decision whether another coat was necessary. Alexander Lachlan also asked Gearey Painting to keep the bottom panel of D1, pre-cast panels, on the radar. Mr Boshier noted that this last request confirmed that
Gearey Painting was involved not just in painting the exterior steel, but also the exterior pre-cast panels.

[112] Gearey Painting was given a site instruction on 30 June 2006 to repaint structural steel members and foyers 2 and 3, and a further instruction was sent on 26 September 2006 requiring the steel columns to be painted from ground floor to level 2. The site instruction said that the steelwork "needs to be primed and painted to the same specs as the rest".

[113] Finally, Mr Boshier noted that Mr Gearey had attended a number of sub-contractor meetings representing Gearey Painting.

Reply affidavit for Gearey Painting and Mr Gearey

[114] In his reply affidavit, Mr Gearey accepted that there has been some delamination of the paintwork on the exterior steel. However, he said that the delamination had occurred progressively over time, and is something that should have been remedied by a normal maintenance programme. He said that whilst inadequate preparation may be a factor in the deterioration of the paintwork on the exterior steel, contributing factors also include the lack of wash-down, maintenance and repair.

[115] Mr Gearey noted that a further factor is that the two top coats were a dark colour, and accordingly subject to heat absorption. Heat absorption puts continuous stress on substrates decorated in dark colours. Deep hue colours can be expected to break down more quickly, and they have a shorter life expectancy than lighter colours within the same environment.

[116] Mr Gearey noted that Gearey Painting was one of three painting sub-contractors employed on the site to do exterior painting. It had no control over the timing of when the top coats were applied, with the result that the primer applied by the steel fabricator had apparently aged significantly before the top coats were applied. He noted Mr Ross' evidence that, in this case, the "recoat window' was certainly exceeded.
[117] Mr Gearey referred to the structural steel specification, which placed a responsibility on the structural steelwork sub-contractor to ensure that the steelwork was properly protected during transportation, erection "and in temporary exposure". The structural steelwork specification went on to state that:

... where erection sequence or the work programme for subsequent closing in will dictate extended periods of exposure in conditions which the protective system has not been designed for in its final use, the structural steelwork sub-contractor shall be responsible for providing temporary cover, repairing the system to its new condition, or respecifying the protective treatment to suit the final condition.

Mr Gearey said that no re-specification was issued by the structural steel contractor to reflect the delay and aging of the primer coat.

[118] On the panel end-mounted weld plates, connecting plates, and column plates, Mr Gearey said that Gearey Painting was never required to paint the enclosed portions of the balcony structure. Those areas were physically inaccessible at the time the painting of the exposed steel would have been carried out. It was physically impossible to paint those areas given the presence of the decking, soffits, and framing structure.

[119] Referring to Mr Probett's evidence that the panel end-mounted weld plates attached to the precast concrete panel ends are showing visible evidence of corrosion within the steel/concrete interface, Mr Gearey produced a recent photograph of the balcony structure in Block D showing rust leaching out from behind the weld plate. The photographed area is the subject of Defects 25 and 25A in the Defects summary schedule in the Claim, which referred to non-compliance with the structural steelwork specification, and inadequately galvanised or appropriately coated steelwork. Mr Gearey said that Gearey Painting was in no way responsible for the galvanising or coating of those parts of the steel that were fitted into the concrete. Anything that Gearey Painting was required to paint was exposed to plain view, and could be re-painted as part of normal maintenance.

[120] Mr Gearey said that Gearey Painting was required by the head contractor to paint the top surface of the weld plates in white acrylic, to match the concrete panels. He said the white acrylic still provides a protective coating to the steel, and is
accessible to be washed down, maintained, and repainted. He said that that painting scheme was accepted at the time, and the painting on the front face of the weld plates is still sound after 11-plus years.

[121] Mr Gearey said that repainting of the external steel was well overdue, and should only involve removal of unsound areas and the preparation for painting along the lines of Resene's document issued on 1 June 2012. In Mr Gearey's opinion, it is unnecessary to strip the paint that has not failed.

Matters accepted by Gearey Painting and Mr Gearey for the purpose of the summary judgment argument

[122] For the purpose of the summary judgment application (where Gearey Painting and Mr Gearey must show that it is clear on the affidavits that the claims against them cannot succeed), Mr Wenley accepted that the following are reasonably arguable for the Body Corporate, the Council, Lattey Engineers and Mr Lattey:

(i) that Gearey Painting owed a duty of care to the Body Corporate and the future unit owners to exercise reasonable care in the work that it did, to ensure that the work complied with the Building Code;⁷

(ii) that the two top coats applied by Gearey Painting to the exterior steelwork were part of a protective system for the steel, and were thus a "protective coatings" for the purposes of section B2 (Durability) of the Building Code. The protective coatings, with normal maintenance, were required to continue to satisfy the performance requirements of the Building Code for a minimum period of 5 years; and

(iii) the delamination or other deficiencies of the top coats were arguably the fault of Gearey Painting through deficient preparation and a failure to wash down and/or sand adequately, or a failure to achieve an adequate thickness of paint.

⁷ In accordance with Body Corporate No 207624 v North Shore City Council [Spencer on Byron]

[2012] NZSC 83; [2013] 2 NZLR 297.

The Issues

[123] The following issues arise:

(1) What was the scope of the work carried out by Gearey Painting? Did it arguably include painting steelwork that is or may now be corroding?

(2) Did Gearey Painting's duty of care to the Body Corporate and to the unit owners arguably extend beyond exercising reasonable care and skill to ensure that, with normal maintenance, the two top coats applied by it would have a life (ie continue to perform their function) for five years from the date of application? If it did, what was the extent of Gearey Painting's duty of care?

(3) Is it reasonably arguable for the Body Corporate, the Council, Lattey Engineers and Mr Lattey that Gearey Painting breached its duty of care in any of the following respects:

(i) failing to ensure that there was adequate preparation of the substrate of the balcony framework steel before applying the top coats;

(ii) failing to comply with the Resene Specification and only applying a single coat of acrylic paint on the exterior of the weld plates in such a manner that the thickness of the coating was frequently under that specified;

(iii) failing to ensure that the exposed connecting plates were adequately primed before applying the top coats, and also failing to ensure that two top coats were applied in accordance with the Resene Specification. (And in respect of some exposed connecting plates, not painting them at all, or painting over bare steel, or carrying out painting that was otherwise inadequate);
(iv) failing to paint the column plates in accordance with the Resene Specification; or

(v) failing to raise any concerns about access or substrate deficiencies before or during the works undertaken by it?

(4) Is it clear that any breach or breaches of its duty of care by Gearey Painting have not caused any loss (because any necessary remedial work falls into the category of ordinary maintenance work, for which the Body Corporate and/or the unit owners are responsible)?

(5) Is it clear that the Body Corporate's claims against Gearey Painting are statute-barred under s 4 of the Limitation Act 1950?

(6) Is it clear that Mr Gearey:

(a) did not owe any duty of care to the Body Corporate or the unit owners; or

(b) (if he did owe such a duty) that he did not breach that duty?

(7) If the answers to Issue (6)(a) and (b) are both "no", is it clear that:

(a) any breach by Mr Gearey did not cause any loss to the Body Corporate or the unit owners; or

(b) that the claims against Mr Gearey are statute-barred under s 4 of the Limitation Act 1950?

(8) Is it clear that the cross-claims cannot succeed?

[124] I will address each issue in turn.

Discussion and conclusions

Issue (1) What was the scope of the work carried out by Gearey Painting? Did it arguably include painting steelwork that is or may now be corroding?

[125] Mr Gearey acknowledges in his affidavits that Gearey Painting carried out the paintwork to the exterior steel on Block B, and on Blocks D1 and D2.

[126] Mr Probett described the relevant steel components at the development as comprising balcony steelwork framing, panel-mounted weld plates, exposed connecting plates, and column plates.

[127] Mr Probett summarised the Body Corporate's four areas of concern as:

(a) the balcony steelwork, and the failure to ensure adequate adhesion;

(b) the failure to properly coat the panel end-mounted weld plates in accordance with the Resene Specification;

(c) the failure to ensure that the connecting plates were primed and/or adequately coated; and

(d) the failure to ensure that the column plates were properly coated.

[128] The Body Corporate's concerns with the works undertaken by Gearey Painting on the balcony steelwork framing are that there is "significant delamination of the paintwork to the steelwork on Blocks A, B, C and D". Mr Probett said that it continues to suffer from large blisters, widespread delamination, cracking, peeling and detachment of the paint surface. Essentially, the top coat of paint is falling off, and the level of adhesion to the underlying coats is poor. In Mr Probett's opinion, the delamination of the balcony steelwork is unusual, and has been occurring since approximately 2010.

[129] In Mr Probett's opinion, the panel end-mounted wall plates were required to be painted in accordance with the Resene Specification, including the two top coats
applied over a properly prepared surface. He said that was not done in respect of many of the panel end-mounted weld plates, particularly on Block D, where one coat of white acrylic paint, as used to coat the adjacent concrete, appeared to have been applied over a single coat of primer. In Mr Probett's opinion, the lack of adequate coating of the panel end-mounted weld plates is a contributory factor to the significant failure of those weld plates that is occurring in all Blocks, including Blocks B and D painted by Gearey Painting. In his opinion, a reasonably prudent painter would have ensured compliance with the Resene Specification, and if it had any concerns about the application of the Resene Specification to the panel end-mounted weld plates, it ought to have raised those concerns with the developer. Significant and extensive remedial works are required to the panel end-mounted weld plates.

[130] In her submissions Ms Whitfield accepted that Gearey Painting was not obliged to apply the coating system behind the panel end-mounted weld plates. The Body Corporate's submission is that the negligence lay in the failure to apply the specified two top coats of Imperite paint, over a properly prepared surface, to the faces of these weld plates.

[131] Addressing the connecting plates, Mr Probett expressed the opinion that, because they would be exposed to the weather, they should have been properly corrosion-coated. Mr Ross noted that it was "common industry practice" for a painter to check the substrate before applying a coating and not proceed unless satisfied of its quality.

[132] Turning to the column plates, Mr Probett said that it appeared that Gearey Painting had simply brushed the paint down where it was easily accessible, and then stopped. He said that painting in these areas is not difficult – "nook and cranny" baby rollers are made just for this purpose. His evidence was that where the coating had not been applied, corrosion has occurred. In his opinion, a reasonably prudent painter would have ensured that all exterior steelwork was appropriately coated, and if there were areas where inaccessibility was an issue, the developer ought to have been advised of that.
[133] In his affidavit, Mr Gearey emphasised that Gearey Painting's brief was limited to "painting exterior steel". He referred to the Resene Specification, which described the contract work as "paint exterior steel", and "paint system for the structural steel to the above site".

[134] In Mr Gearey's opinion, Gearey Painting was never required to paint the enclosed portions of the balcony structure, which were physically inaccessible at the time the painting of the exposed steel was carried out.

[135] In respect of the panel end-mounted weld plates, Mr Gearey said that Gearey Painting was in no way responsible for the galvanising or coating of these parts of the steel. Anything Gearey Painting was required to paint was exposed to plain view, so that it could be re-painted as part of normal maintenance.

[136] In respect of the application of the coat of white acrylic paint to the panel end-mounted weld plates, Mr Gearey said that Gearey Painting was required by the head contractor to paint the top surface of the weld plates in white acrylic, to match the concrete panels.

Conclusion on issue (1)

[137] Mr Probett's evidence is clear that the four areas of concern with the exterior painting work identified by him are present in all of the Blocks (and thus present in Blocks B, D1, and D2, painted by Gearey Painting).

[138] Mr Gearey says (in effect) that Gearey Painting's contract was limited to painting only the exterior steelwork which was accessible at the time the painting work was carried out. In respect of the application of the white acrylic paint to the panel end-mounted weld plates, he appears to accept that this did not comply with the Resene Specification, but says that it was done at the direction of the head contractor.

[139] Mr Probett produced photographs of connecting plates in two apartments in B Block, where it appeared that some attempt had been made to apply the two top coats, but there was no zinc or primer, and the top coats appeared to have been applied to
bare steel. Mr Probett expressed the opinion that a reasonably prudent painter would have ensured that adequate primer was in place before overcoating the exposed areas of the connecting plates with the two required top coats.

[140] In his reply affidavit, Mr Gearey said that Gearey Painting was never contracted to (and did not) paint the enclosed surfaces of the balcony structure as shown in [the two photographs just referred to]. He went on to say that it was physically impossible to paint "these internal surfaces", given the presence of the decking, soffits, and framing structure.

[141] It appears to be the case that the connecting plates were at some stage enclosed within the structure of the balconies (although the Body Corporate's solicitors say that in some cases there is a small gap between the structural steel beam and the panel end-mounted weld plate in which you can see the connecting plate). But it appears from Mr Probett's affidavit that someone attempted to apply two top coats to at least some of these connecting plates,⁸ and on the basis that Gearey Painting was the painting subcontractor for Block B there is clearly a disputed factual question as to whether that "someone" was Gearey Painting.

[142] Similarly in respect of the column plates, there is an issue as to whether Gearey Painting should have used a baby roller or other means to get into difficult-to-access areas, rather than brushing the paint down only as far as the steelwork was easily accessible. Mr Probett's evidence was that where the coating was not applied, corrosion has occurred. If and to the extent the steelwork Gearey Painting did not get to was susceptible to corrosion if not properly primed and top coated, there is an obvious question as to why Gearey Paintings' brief would have allowed those areas to go unpainted (if it did). That is a question best explained at trial, where all of the relevant evidence can be considered.

[143] Gearey Painting relies on certain parts of the structural steel specification, and in particular s 6.1.8 dealing with "Finishes". He relied in particular on s 6.1.8.4, which set out a schedule of surface finishes. This schedule provided for the application of

8. Mr Ross' evidence in respect of the connecting plates was that there are a number that appear to have no primer (or if there was a primer it must have been visually inadequate at the time).

different surface finishes to the steelwork, depending on whether the steelwork was "interior steelwork concealed in its completed state", "interior steelwork exposed in its completed state", or "exterior steelwork, accessible for regular cleaning and maintenance".

[144] But it seems to me that this schedule was concerned only with "protective finishes" to be applied by the structural steel fabricator (priming with Armourcote 220 over zinc arc spray), and it is not clear that the divisions between the three kinds of the steelwork referred to at s 6.1.8.4 of the structural steelwork specification necessarily had anything to do with the work Gearey Painting was to carry out under the Resene Specification. I note in that regard that in s 6.1.8.2 of the structural steel specification, headed "Finishes", the following is stated under the sub-heading "General":

Note that in some cases, two top coats may be necessary to achieve the full colour depth for exposed finishes, to the complete satisfaction of the Architect. The structural steelwork-contractor shall allow for this in the tender.

[145] It appears that in this case the developer or Architect did require the two top coats, but they were separately provided for in the Resene Specification, option A, which was expressed to apply in respect of "Exterior Structural Steel".

[146] The reference in s 6.1.8.2 of the structural steel specification to "exposed finishes" in the passage quoted above, may suggest that "exterior structural steel" was intended to refer to steel which would be "exposed" to the elements, but it is neither necessary nor appropriate for me to make any finding on that in the context of the present summary judgment application. It is enough for me to find, as I do, that it is reasonably arguable for the Body Corporate on the evidence produced that the work carried out by Gearey Painting did include painting steelwork in areas (specifically, in Blocks B and D) where the steelwork (or adjacent steelwork) is suffering from corrosion, or the paint systems are subject to serious delamination or adhesion failure.

Issue (2) Did Gearey Painting's duty of care to the Body Corporate and to the unit owners arguably extend beyond exercising reasonable care and skill to ensure that, with normal maintenance, the two top coats applied by it would have a life (ie continue to perform their function) for 5 years from the date of application? If it did, what was the extent of Gearey Painting's duty of care?

[147] It is clear from the Supreme Court decision in Spencer v Byron⁹ that Gearey Painting owed a duty to the Body Corporate, and to future owners of units in the development, to exercise reasonable care and skill to ensure that the development would comply with the Building Code.

[148] In this case, the relevant provisions of the Building Code appear to be the "Structure" provisions of clause B1, and the "Durability" provisions of cl B2.

[149] Clause B1.3.1 requires that:

... buildings, building elements and site work shall have a low probability of

... becoming unstable ... or collapsing throughout their lives.

Under cl B1.3.2:

Building and building elements are required to have a low probability of causing loss of amenity through undue deformation degradation, or other

physical characteristics throughout their lives ....

[150] The objectives of cl B1 include safeguarding people from injury caused by structural failure, and protecting other property from physical damage caused by structural failure.

[151] The objective of cl B2.1 is to ensure that a building will, throughout its life, continue to satisfy the other objectives of the Building Code.

[152] The functional requirement of cl B2 is that building materials, components, and construction methods shall be sufficiently durable to ensure that the building, without reconstruction or major renovation, satisfies the other functional requirements of [the Building Code] throughout the life of the building.

[153] The performance requirements of cl B2 ¹⁰ are that building elements must, with only normal maintenance, continue to satisfy the performance requirements of the Building Code for the lesser of the specified intended life of the building, if stated, or:

⁹ Body Corporate 207624 v North Shore City Council [Spencer on Byron], above n 7.

¹⁰ Building Code, cl B2.3.1.

(a) The life of the building, being not less than 50 years, if:

(i) Those building elements (including floors, walls and fixings) provide structural integrity to the building; or

(ii) Those building elements are difficult to access or replace ...

...

(c) 5 years if:

(i) The building elements (including surfaces, linings, renewable protective coatings, and fixtures) are easy to access and replace, and

(ii) failure of those building elements to comply with the Building Code would be easily detected during normal use of the building.

[154] Mr Wenley relies on cl B2.3.1(c), which provides that building elements (including "renewable protective coatings") that are easy to access and replace, must satisfy the performance requirements of the Building Code for a minimum period of only five years. On this argument, any duty of care owed by Gearey Painting would be discharged on the expiration of five years from the issue of the Code Compliance Certificate.

[155] I think this argument is misconceived, because it focuses only on the specific "building elements" provided by Gearey Painting (the two top coats and any required "repair" priming). It may prove to be the case that the two top coats applied by Gearey Painting, with only normal maintenance, would have satisfied the five years minimum life requirement of cl B2.3.1(c), but the Body Corporate's claims are not restricted to the quality of the elements supplied by Gearey Painting themselves. In fact it appears that the Body Corporate's complaints are more concerned with Gearey Painting's "construction methods" (a matter covered by cl B2.2 of the Building Code), including such matters as alleged failure to properly prepare the substrate before applying the top coats, and proceeding with the painting work without first ensuring that the connecting plates had been properly primed.

[156] Clause B2.2, which establishes the functional requirement for the durability provisions of the Building Code, is directed to the building as a whole, and in particular whether the materials, components, and construction methods used are sufficiently
durable that the building will satisfy the other functional requirements of the Building Code throughout the life of the building. In the absence of evidence to the contrary, I take the "life of the building" in this case to be not less than 50 years, in accordance with cl B2.3.1 of the Code.

[157] The functional requirement of cl B1, is that buildings and building elements must withstand the combination of loads that they are likely to experience throughout the life of the building.

[158] The Body Corporate's principal concern is with premature damage (corrosion) to the structural steelwork building elements, and I think it is clearly arguable that the structural steelwork does provide structural stability to the building (cl B2.3.1(i)). Accordingly, to the extent that a painting subcontractor carrying out its work on the site may have negligently contributed to the premature deformation or degradation of the structural steelwork, I think it arguable that that painting subcontractor would have breached its duty to exercise reasonable care and skill to ensure that the building complied with the Building Code for its 50 year lifespan.

[159] My answer to the first part of Issue (2) is accordingly "yes": Gearey Painting's duty to the Body Corporate and the future unit owners arguably did extend beyond exercising reasonable skill and care to ensure that, with normal maintenance, the two top coats applied by it would have a life of at least five years from the date of application. Specifically, Gearey Painting arguably had a duty to exercise reasonable care and skill to ensure that, in carrying out its work, it did not cause or contribute to damage to the structural steelwork that would or might render it non-compliant with the structure and durability requirements of the Building Code.

[160] I do not consider Mr Wenley's submissions based on the fact that Gearey Painting only guaranteed its work for a period of three years assists his clients. I accept Ms Whitfield's submission on that issue. The warranty did not purport to exclude liability in negligence of the kind that is now alleged, and of course many manufacturers and suppliers provide warranties for limited periods under which they accept "rectify or replace" obligations in respect of defects notified within the warranty period whether or not they have been negligent. Nor can the fact that the warranty
may have been assignable by the developer affect the matter. A unit holder acquiring his or her unit in, say, 2011 or 2012 would have been entitled to look to Gearey Painting if it had negligently failed to exercise due care and skill (in areas affected or potentially affected by its work) to ensure that the building complied with the Building Code, but the unit holder would have had little use for a warranty that expired in 2009, even if he or she had known of it.

[161] This is in my view a quite different case from Rolls Royce New Zealand Ltd v Carter Holt Harvey Ltd, where Carter Holt was fully aware of the details of the relevant contract and was taken to have acquiesced in the limitation of liability.¹¹

[162] As McGrath and Chambers JJ noted in Spencer on Byron:¹² "No one can be a party to the construction of a building which does not comply with the Building Code."

Issue (3) Is it reasonably arguable for the Body Corporate, the Council, Lattey Engineers and Mr Lattey that Gearey Painting breached its duty of care in the respects set out at paragraph [123] of this Judgment?

[163] It is not necessary for the purposes of the summary judgment application to consider all of the respects in which Gearey Painting is alleged to have breached its duty of care. To succeed with their summary judgment application, Gearey Painting and Mr Gearey must show that none of the Body Corporate's claims can succeed.

[164] In this case, there is evidence from Mr Probett and Mr Ross that there was inadequate preparation of the substrate of the balcony framework steel before the top coats were applied, and also evidence that (apparently contrary to the Resene Specification) Gearey Painting applied only a single coat of acrylic paint to the exterior of the weld plates. Mr Gearey appears to accept the latter allegation, but says that Gearey Painting was told by the head contractor to apply the single coat of acrylic paint, and that it was accepted at the time.

[165] Whether or not the coating of the panel end-mounted weld plates may have been accepted at the time by the head contractor, the issue at trial will be whether

¹¹ Rolls Royce New Zealand Ltd v Carter Holt Harvey Ltd [2004] NZCA 97; [2005] 1 NZLR 324.

¹² Body Corporate 207624 v North Shore City Council, above n 7, at [193].

Gearey Painting discharged its duty to exercise reasonable care and skill to ensure that the building complied with the Building Code, and I think it must be arguable for the Body Corporate that Gearey Painting could not have been relieved of a duty of care owed to future owners of units in the development, by an instruction given to it by the head contractor. In any event, that is not an issue suitable for determination on a summary judgment application.

[166] Mr Wenley submitted that the primary issue with respect to the panel end-mounted weld plates is failure by the steel fabricator to properly galvanise and/or prime the steel. There may be some force in that argument, but I do not think it is possible on a summary judgment application such as this to conclude that the application of only one coat of white acrylic paint to the panel end-mounted weld plates had no causal effect on the corrosion in those areas.

[167] But the greater difficulty for Gearey Painting is Mr Probett's evidence that the two top coats required by the Resene Specification were applied in some instances to the connecting plates over bare (unprimed) steel. Mr Geary denies that that occurred, and Mr Wenley submitted that the first of the photographs produced by Mr Probett simply shows that the primer has failed, and with it the top coat. He characterised this as simply an area requiring repair, as part of normal maintenance. He submitted that the second photograph in fact shows the protective coating still in place. Determining where the truth lies between those positions is again a matter for determination at trial; it is not suitable for determination on a summary judgment application. Also a matter for trial is whether Gearey Painting should have painted into the "nooks and crannies" on the column plates. It appears that some attempt was made to paint at least some of the column plates, and if there were access difficulties that prevented painting all parts of the column plates Mr Ross says that those difficulties should have been brought to the attention of the head contractor. In those circumstances I think it would be dangerous for the Court to conclude, on the limited evidence available on a summary judgment application, that Gearey Painting clearly had no responsibility to paint the difficult-to-access parts of the column plates.

[168] Mr Wenley submitted that it is not enough for the Body Corporate to rely on alleged failure by Gearey Painting to comply with the Resene Specification. I accept
that submission as far as it goes (the issue is not compliance with Resene Specification, but compliance with the Building Code), but I think the submission was sufficiently addressed for present purposes in Mr Probett's evidence, where he referred to the AU/NZS2312 Standard for steelwork, and recorded his assumption that Resene would have written the Resene Specification to comply with both that Standard and the Building Code. Whether Resene did that or not was not in the evidence, but it would seem unlikely that a paint manufacturer would have written a specific specification for the development without ensuring that, if it was properly followed, the work would satisfy the relevant requirements of the Building Code. It is enough for present purposes to say that it is not sufficiently clear on the evidence that the breaches of the Resene Specification alleged by the Body Corporate would not also amount to breaches of Gearey Paintings' duty to exercise reasonable care to ensure compliance with the Building Code.

[169] My answer to Issue (3), then, is that it is reasonably arguable for the Body Corporate, the Council, Lattey Engineers and Mr Lattey, that Gearey Painting breached its duty of care in at least one of the respects alleged by the Body Corporate.

Issue (4) Is it clear that any breach or breaches of its duty of care by Gearey Painting has not caused any loss (because any necessary remedial work falls into the category of ordinary maintenance work, for which the Body Corporate and/or the unit owners are responsible)?

[170] The evidence of Mr Probett and Mr Ross on this issue is clear. In their view, the problems are more than mere maintenance work. Mr Ross, for example, said:

The delamination occurring on the balcony steel work is extensive and widespread. Had the coating system been applied properly, I would have expected only minor maintenance works to be required.

In regards to the expected maintenance of the finish coat, if it wasn't delaminating as this is, then it would require aesthetic maintenance when the owners deemed the look to be substandard and in need to freshening. Normally this is anywhere from 10 to 20 years depending on where the client and funds are at. But in saying this, the maintenance at this point should not require removal of the underlying coatings and be more based around simple overcoating.

Unfortunately these types of failures will usually grow exponentially and eventually affect all areas. With this in mind I believe the only way the

coatings can be repaired is by full removal of the Imperite finish coat and then full new finish coats.

...

The process is now considerably more involved than it would have been if the Imperite was sound and well adhered.

[171] Mr Wenley submitted that paint systems are by their very nature impermanent
– they need to be maintained, repaired and eventually replaced. He submitted that this point has even more force when it is considered that the paint at the development was a dark coloured paint, more susceptible to heat effects, applied in a relatively harsh marine environment.

[172] But it seems to me that can only be part of an answer. I accept that all paint systems must have a limited lifespan, but if during that lifespan defects in the application of the coating system cause damage (in this case corrosion) to other building elements (such as the structural steel), I doubt that the painter could say that it had discharged its duty of care without breach. And the five year lifespan provided for protective coatings at cl B2.3.1(c) of the Building Code is itself only applicable where any failure of the protective coating would be "easily detected during the normal use of the building". Especially if Gearey Painting applied the top coats on the connecting plates over unprimed steel in Block B, as the Body Corporate alleges, or did not paint at all into the "difficult-to-access" parts of the column plates, the five year lifespan provided for in cl B2.3.1(c) would appear to have no application (I am not able to say on the evidence before me that any such failures would have been easily detected).

[173] To the extent that any faults in the work carried out by Gearey Painting have caused premature corrosion or other damage to the steelwork, I think it must be reasonably arguable for the Body Corporate that the alleged negligence has caused actual damage (or at least it is not sufficiently clear that it has not done so). I accept there may be an issue as to exactly when any such damage first occurred, and there may or may not be an argument for Gearey Painting that any damage to the steelwork only occurred after the lifespan of the paint system that the Body Corporate and the unit owners were entitled to expect. But there was insufficient evidence for me to
make any finding on that issue, and it too cannot be resolved on this application. The issue has to be fully explored at trial. The answer to Issue (4) is "No".

Issue (5) Is it clear that the Body Corporate's claims against Gearey Painting are statute-barred under s 4 of the Limitation Act 1950?

[174] Under s 4 of the Limitation Act 1950, the proceeding as against Gearey Painting and Mr Gearey had to be commenced within six years from the date the cause of action accrued. As the claims against Gearey Painting and Mr Gearey were commenced in late September 2015, they would be out of time in respect of any cause of action accruing before late September 2009.

[175] Mr Wenley submitted that this is not a case of latent damage, to which the principle of reasonable discoverability laid down by the Privy Council in Invercargill City Council v Hamlin ¹³ applies. All of Gearey Painting's work was on exposed visible surfaces (especially if the Body Corporate and/or unit owners had carried out the recommended maintenance). He submitted that the damage occurred, at latest, when Gearey Painting completed its work.

[176] For the Body Corporate, Ms Whitfield submitted first that a cause of action in negligence accrues only from the date of damage.¹⁴ She submitted that the reasonable discoverability period does no more than provide a principle by which it can be determined when the loss has been suffered by the plaintiff. The loss in a case involving building defects, such as the present case, is economic loss, and accordingly damage is not regarded as having been suffered until the market value of the property has been affected. As Lord Lloyd of Berwick put it in Invercargill City Council v Hamlin:¹⁵

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 re-sells the house at full value before the defect is discovered, he has suffered no loss. the cause

of action accrues when the cracks become so bad, or the defects so obvious, that any reasonable home owner 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...

¹³ Invercargill City Council v Hamlin [1996] 1 NZLR 513.

¹⁴ Citing Bowen v Paramount Builders (Hamilton) Limited [1977] 1 NZLR 394 (CA).

¹⁵ Invercargill City Council v Hamlin, above n 13, at 526.

[177] Ms Whitfield submitted that the loss in this case could not have accrued on completion of the works by Gearey Painting, because there was not then any awareness of potential issues with the development, and therefore no depreciation of the market value had then occurred. In response to Mr Wenley's submission that the paint was "exposed and visible", Mr Whitfield submitted that defects associated with inadequate preparation of the substrate, and/or direct application of paint over an inadequate substrate, or failure to paint in difficult-to-access areas, would not have been "exposed and visible". None of those issues could have been identified by a unit owner until deterioration of the coatings occurred, either through corrosion or delamination of the top of the paint. It was only then that the market value of the development could have been affected, and economic loss sustained.

[178] I accept Ms Whitfield's submissions on this issue. It is at least reasonably arguable for the Body Corporate that at least some of the damage alleged in this case (for example, damage to the steelwork resulting from applying top coats over an unprimed or inadequately prepared substrate) was latent, and that economic loss did not occur until 2010 at the earliest, when Mr Boshier says that the first instances of paint loss (minor flaking) were noticed.

[179] Mr Wenley submitted that the allegations that Gearey Painting and Mr Gearey failed to warn about the state of the primer (or the lack thereof) are statute-barred, but it seems at least arguable that these allegations are just as much allegations of covering over unsuitable surfaces that should not have been covered over, as they are allegations of a breach of a duty to speak up. To the extent that the action of covering over an inadequately prepared surface created a latent defect in the paint system, I think it must be arguable that the Hamlin "reasonable discoverability" principle applies.

[180] This is an issue which is not so clear-cut in favour of Gearey Painting and Mr Gearey that it can be decided in the absence of properly tested evidence given at trial. Accordingly, the answer on Issue (5) is "No".

[181] A further factor that persuades me that it would not be appropriate to enter summary judgment for Gearey Painting and Mr Gearey on limitation grounds, is that the claims of some of the individual unit holders may have been brought within time
under the principle established by the Supreme Court in North Shore City Council v Body Corporate 188529 (Sunset Terraces),¹⁶ that time will not begin to run in respect of latent defects that are unknown to a purchaser, until the purchaser acquires the property. It is only then that the purchaser suffers any economic loss.¹⁷ It appears from schedule 2 to the Claim that a number of the unit owners who have assigned their claims to the Body Corporate only acquired their units after October 2009. I did not hear argument on the point, so I do not base my answer to this issue on it. However if there is anything in the point it might not be appropriate to enter summary judgment on limitation grounds, at least or in respect of some of the unit owners' claims that have been assigned to the Body Corporate.

Issue (6) Is it clear that Mr Gearey:

(a) did not owe any duty of care to the Body Corporate or the unit owners; or
(b) (if he did owe such a duty) that he did not breach that duty?

[182] As the case was argued, it is not necessary to answer the questions posed by this issue.

[183] In his submissions, Mr Wenley simply adopted the position that Mr Gearey's application for summary judgment would stand or fall with Gearey Painting's application. While that might not necessarily have been the position, I do not think it would be fair to the Body Corporate, Lattey Engineers, and Mr Lattey to consider Mr Gearey's position separately from that of Gearey Painting. As the summary judgment by Gearey Painting fails, so too must Mr Gearey's application.

Issue (7) If the answers to Issue (6)(a) and (b) are both "no", is it clear that:

(a) any breach by Mr Gearey did not cause any loss to the Body Corporate or the unit owners; or
(b) that the claims against Mr Gearey are statute-barred under s 4 of the Limitation Act 1950?

[184] Again, for the reasons set out under Issue (6), it is not necessary to address these issues. The summary judgment application by Gearey Painting has failed, and

¹⁶ North Shore City Council v Body Corporate 188529 (Sunset Terraces) [2010] NZSC 158; [2011] 2 NZLR 289.

¹⁷ At [29].

Mr Wenley accepted that Mr Gearey's personal position should be the same as that of Gearey Painting.

[185] The result is that the applications by both Gearey Painting and Mr Gearey will be dismissed.

Issue (8) Is it clear that the cross-claims cannot succeed?

[186] The answer on this issue is "No".

[187] The cross-claims by the Council, Lattey Engineers and Mr Lattey all include claims for contribution under s 17 of the Law Reform Act 1936, and such claims are dependent upon both the party seeking contribution and the party from whom contribution is sought being tortfeasors vis a vis the plaintiff. I have found that it is not sufficiently clear that Gearey Painting and Mr Gearey have no liability in tort to the Body Corporate for me to hold that they are entitled to summary judgment, and there is even less of an evidential basis on which I could hold that the Council, Lattey Engineers and Mr Lattey have no liability in tort to the Body Corporate. In those circumstances, it is not sufficiently clear that the cross-claims based on s 17 of the Law Reform Act 1936 cannot succeed.

[188] Having made that finding on the cross-claims under s 17 of the Law Reform Act 1936, there is no need for me to consider the Council's other cross-claims, based on duties allegedly owed direct by Gearey Painting and Mr Gearey to the Council. That is because a defendant (including a defendant on a cross-claim) can only obtain summary judgment if it shows that none of the claims against it can succeed.

Result

[189] The result is that all of the applications by Gearey Painting and Mr Gearey fail. They are dismissed accordingly.
[190] Costs on the applications are reserved.

Associate Judge Smith