Heaney v Auckland Council [2018] NZHC 2738 (23 October 2018)

Last Updated: 29 November 2018

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2017-404-002670 [2018] NZHC 2738

BETWEEN	DAVID JONATHAN HEANEY and DENESE ROSEMARY BATES Plaintiffs
AND	AUCKLAND COUNCIL Defendant
	Continued over

Hearing:	8 October 2018
Appearances:	C Fleming/K Dillon for the Plaintiff (No appearances) S Price/J Wilson for the Defendant A Gilchrist/K Caisley for the First Third Party S Lucas/I Shennan for the Third Third Party (no appearances) M Dennett/G Beresford for the Fourth Third Party (no appearances)
Judgment:	23 October 2018

JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

This judgment was delivered by me on

23.10.18 at 3:30pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

HEANEY and BATES v AUCKLAND COUNCIL & ORS [2018] NZHC 2738 [23 October 2018]

AND	BRACKENRIDGE BUILDERS LIMITED First Third Party
	ALLIED EXTERIORS LIMITED Second Third Party
	O’HAGAN BUILDING CONSULTANTS LIMITED Third Third Party
	SCRIBBLE LIMITED Fourth Third Party
	COLIN GREEN Fifth Third Party

Introduction

[1] This is an application by the first third party, Brackenridge Builders Ltd (Brackenridge), for summary judgment and/or strike out in leaky home proceedings. At issue is the application of the 10 year long-stop limitation period (s 393 of the Building Act 2004) in the context of s 37 of the Weathertight Homes Resolution Services Act 2006 (WHRSA).

[2] Section 37 of the WHRSA provides that for the purposes of any limitation period, the making of an application for an assessor’s report under the WHRSA has the same effect as filing proceedings in a court. That section was considered by the Supreme Court in Lee v Whangarei District Council¹. It held that it was not the purpose of s 37(1) to limit the concession created by the WHRSA to proceedings under that Act but it extended to court proceedings. An application for an assessor’s report was not an election to pursue a proceeding under the WHRSA.

[3] In Lee the dispute was between a plaintiff and defendant. The issue here is whether the special regime in s 37 extends to contribution claims between a defendant and a third party, brought pursuant to s 17 of the Law Reform Act 1936. Has Brackenridge demonstrated that the defendant cannot possibly succeed against it because the defendant’s claim for contribution has been brought outside the 10-year limitation period, and despite the fact that the plaintiff applied for an assessor’s report within the 10-year period?

[4] I conclude that the contribution claim by the first defendant is not limitation barred. Section 37 is not restricted to proceedings between a plaintiff and defendant but extends to claims between a defendant and a third party in court proceedings. The application is dismissed.

¹ Lee v Whangarei District Council [2016] NZSC 173, [2017] 1 NZLR 401.

Relevant legal principles

[5] Rule 12.2 of the High Court Rules provides that 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.

[6] Rule 15.1 provides that the court may strike out all or part of a pleading if it discloses no reasonably arguable cause of action.

[7] The principles in relation to both rules are settled and well known. They are not repeated here.²

Background

[8] The facts are not in dispute. The relevant chronology is as follows:

Date	Event
February 2007	Brackenridge enters into a contract with the plaintiffs to carry out building work on the subject property
19 February 2008	The plaintiffs terminate their contract with Brackenridge
February 2008	The plaintiffs engage another builder to complete the building work
13 May 2009	Council issues a code compliance in respect of the building work
15 December 2016	The Ministry of Business, Innovation and Employment received an application by the plaintiffs for an assessor’s report
8 November 2017	The plaintiffs file proceedings against the Council naming it as the only defendant
26 April 2018	The Council files third party claims against a number companies involved in the building works, including one of the builders, Brackenridge

[9] In 2008 the plaintiffs brought proceedings in this Court against Mr Stephenson, the director of Brackenridge.³ Following a judicial settlement conference in March 2010, those proceedings were settled.

² Westpac Banking Corp v MM Kembla NZ Ltd [2000] NZCA 319; [2001] 2 NZLR 298 and Attorney-General v Prince

[1998] 1 NZLR 262.

³ CIV 2008-404-1484.

The grounds of the application

[10] Brackenridge contends that the claim for contribution brought by the defendant is clearly limitation barred because of the operation of s 393 of the Building Act 2004. The defendant’s claim for contribution cannot succeed because the defendant has not brought the proceedings against Brackenridge within 10 years of the date the building works were carried out by Brackenridge. As a result, the defendant’s claim against Brackenridge is untenable as a matter of law.

[11] For limitation purposes, the date on which a cause of action for contributions between tortfeasors is deemed to have accrued is the date on which liability of the defendant making the contribution claim has been ascertained, either by judgment and/or by settlement of the action against the defendant. However, where a contribution claim is in respect of building works, s 393 of the Building Act provides for a 10 year long-stop limitation period. There is now a consistent line of High Court authority concluding that the 10 year long-stop limitation period does apply to contribution claims.⁴

[12] Brackenridge contends that the focus of the WHRSA is on the owners of dwelling houses. To extend s 37(1) and the legislation to apply to contribution claims between defendants and third parties is not, it is contended, consistent with the plain meaning of the words used nor the purpose of the Act.

Analysis and decision

[13] The issue is ultimately one of statutory interpretation of s 37(1), construed in light of the purpose of the legislation as articulated by the Supreme Court in Lee⁵.

[14] One of the key purposes of the legislation is the promotion of speedy, flexible and cost-effective procedures for the assessment and resolution of claims.⁶ This includes avoiding narrow and arbitrary legal technicalities that might inhibit the

4. See Minister of Education v James Hardie New Zealand Ltd [2018] NZHC 22 where the authorities, including Dustin v Weathertight Homes Resolution Services HC Auckland CIV-2006- 404-276, 25 May 2006 are reviewed.

⁵ Lee v Whangarei District Council , above n 1.

⁶ Weathertight Homes Resolution Services Act 2006, s 3.

resolution of those claims. It is also important to observe that the joinder of additional parties and/or tortfeasors, whether by the plaintiff owner or by a defendant party, can very much be to the benefit of the plaintiff owner in the resolution of his or her claims.

[15] As counsel for the defendant submitted, the words of s 37(1) are very general. They do not specify, procedurally, how they are to operate should a claimant elect to pursue its claim in the High Court rather than the Weathertight Homes Tribunal (the Tribunal) – and it is clear from Lee that the concession or special regime of s 37 applies to proceedings in this Court.

[16] In concluding that s 37 is a special regime, one that departs from usual and well-settled approaches to limitation in civil litigation, the Courts have repeatedly interpreted the legislation with a practical, permissive approach based on purpose and policy.

[17] It is equally clear in my view that had this proceeding been brought in the Tribunal, and the defendant sought to join Brackenridge after the expiry of the 10 year long-stop limitation period, the proceedings would not be limitation barred. That is apparent from the High Court decision Kells v Auckland City Council,⁷ Asher J held that even though a new party may be joined as a respondent outside the ordinary limitation period, by virtue of s 37 the claim against the respondent will be held to have started in time. The reasoning of Asher J clearly demonstrates the practical, permissive approach based on policy and purpose:⁸

[43] The position of the joinder of parties in respect of claims under the Act is entirely different from that which applies in civil proceedings in Court. The Weathertight Homes Act clearly contemplates that the necessary parties would not be identified at the time the claim is made. Appropriate parties would be identified as proceedings progressed, which might indeed involve some proceedings being discontinued and others initiated, while the advantage of having claimed within a limitation period is retained. This approach reflects the fundamental purpose of the Act, namely to give access to speedy, flexible, and cost-effective procedures for the assessment and resolution of claims relating to leaky homes. I interpret the Act as having been drafted recognising the difficulties that owners of leaky homes have in identifying bad workmanship, and identifying the cause of the building defects and therefore identifying relevant parties and pursuing claims.

⁷ Kells v Auckland City Council HC Auckland CIV 2008-404-1812, 30 May 2008.

⁸ At [43]-[44].

[44] I conclude therefore that the relevant limitation period for the filing of claims under the Weathertight Homes Act is ten years, and that the filing of a claim stops time running as against all parties. In other words, as long as the claim was filed within the ten-year period, further parties can be joined at a later date without limitation concerns.⁹ (emphasis added)

[18] The same approach to statutory interpretation of the WHRSA, was taken by Dobson J in Body Corporate 85970 v Wellington City Council & Ors¹⁰ (St Pauls). In that case a group of owners in a multi-unit apartment complex applied for an assessor’s report. Later, other owners sought to join the claim. At issue was the question of whether s 37 should be interpreted to mean that the initial application for an assessor’s report stops time running for all owners. Dobson J concluded:¹¹

I do not accept that allowing additional claimants because they can coat-tail on an existing claim is materially different from adding to the range of potentially liable parties, simply because, in the first case claimants are being added whereas in the second, potentially liable parties are being joined. Certainly conceptually, the joinder of further claimants increases the size of the claim whereas joinder of additional respondents introduces the prospect of spreading the same extent of liability between a greater number of liable parties. However, that is not a distinction relevant to the policy behind the application of time limits under this Act. The concerns to achieve efficient resolution apply equally in multi-unit claim, and the balancing of interests for later-added owners as claimants, and later-added potentially liable parties as respondents, are comparable.

The concerns raised for the second respondent that interpretation of these provisions in the Act should not create an implicit exception to otherwise well settled limitation rules is not sufficient to override respect for the policy drivers behind the regime established by the Act. Fears that the approach I have adopted to s 37 holds open the prospect of additional claims on an indefinite basis are, with respect, somewhat overstated. (emphasis added)

[19] In Lee¹² the issue for the Supreme Court was whether the application of an assessor’s report “stopped the clock” for limitation purposes in proceedings against the Whangarei District Council in the High Court.

9. Note that it is clear from the context of the judgment that Asher J’s reference to “claims” being filed is intended as a reference to applying for an assessor’s report. The Supreme Court in Lee, above n 1, at [42], accepted that the term “claim” is effectively used in two senses in the WHRSA: to mean both an application for an assessor’s report and an application for adjudication (where the first claim – for the assessor’s report – does not lead inexorably to the second – adjudication).

¹⁰ Body Corporate 85970 v Wellington City Council [2013] NZHC 2852.

¹¹ At [43]-[44].

¹² Lee v Whangarei District Council , above n 1.

[20] The relevant facts of Lee were as follows: Ms Lee had a house built for her in 2007 and early 2008. It was not watertight. She obtained a building report in April 2008. After various disputes with the builder, she applied for a full assessor’s report in August 2008. The assessor’s report concluded that the house had weathertight defects and damage. Ms Lee then filed High Court proceedings in May 2014 against the Whangarei District Council. The Council applied to strike out Ms Lee’s High Court proceedings on the basis that it was statute barred as it had been filed after the expiry of the six-year limitation period.

[21] Section 37(1) does not expressly state that the “stop the clock” effect of applying for an assessor’s report in the Tribunal was intended to extend to a claim brought in the Court. However, adopting a purposive approach, the Supreme Court concluded that that was exactly what the legislature intended:¹³

We do not agree, however, that a purpose of s 37(1) was to limit the concession...to proceedings under the WHRS Act. If that had been the purpose, we consider that it would have been expressed in clear language, particularly in the context of a statute intended to provide a scheme to benefit consumers.

...we consider that the clock was stopped for limitation purposes when Ms Lee applied for an assessor’s report. Her proceedings filed in the High Court against the Council were not statute barred.

[22] In my view it would be contrary to the purpose of the legislation, as articulated by the Supreme Court in Lee, to limit s 37 to claims between a plaintiff and defendant. There is no basis for limiting the application to a part of a resolution of such claims. In Lee¹⁴ the Supreme Court expressly referred to s 3 in rejecting the contention that s 37 does not apply to Court proceedings.

[23] I accept the submission of Mr Gilchrist for Brackenridge that the WHRSA focuses on the owners of leaky homes. That is apparent from ss 3, 8 and 32. However, that argument does not provide a basis for restricting s 37 to claims as between plaintiff and defendant. As Mr Price submitted, having the right parties before a court to enable it to get to the justice of the dispute is critical to an efficient and fair resolution of claims for all parties, including the owners. The same point was made by Dobson J in

¹³ At [38], [67].

¹⁴ At [45].

St Pauls where he held that “...the joinder of additional respondents can introduce the prospect of spreading the same extent of liability between a greater number of liable parties”.¹⁵ That can often be to the greater benefit of an owner/plaintiff whether in mediation or litigation. In this regard, the Courts have consistently held that the potential unfairness to a party being joined outside the normal 10-year period is far outweighed by the potential unfairness to homeowners if the right parties are not in the claim.

[24] I reject the submission of Mr Gilchrist that the different nature of claims for contribution, as opposed to claims between the plaintiff and defendant, justifies a narrower interpretation of s 37. Having regard to the scheme and context of the legislation there is no principled reason for treating them differently. To do otherwise could lead to anomalies and arbitrary distinction. Say for example if the claim for contribution was to be held to be outside the 10-year period by virtue of s 393, could that problem be cured by the Court ordering that the third party be joined as a defendant to the proceeding pursuant to High Court Rule 4.56?

[25] Fitzgerald J in Minister of Education v James Hardie New Zealand Ltd¹⁶ held that Parliament did not intend the finality and certainty provided by the 10-year longstop in s 393 of the Building Act 2004 to depend on the arbitrariness of whether a party is sued directly by the plaintiff or by a defendant by way of a contribution claim, when the nature of the claim against that party is the same in both cases. Here, of course, Parliament in enacting s 37 has created a special regime which is an exception to s 393 of the Building Act. The policy of that special regime should likewise not depend on the arbitrariness of whether a party is sued directly by the plaintiff or by the defendant by way of a contribution claim.

[26] The limitation period at issue in Lee was the six-year limitation period under the Limitation Act 1950. It was not concerned with the longstop limitation provision in s 393 of the Building Act. However, nothing turns on that distinction. It is clear from the express words of s 37 that it applies both for the purposes of the Limitation

¹⁵ Body Corporate 85970 v Wellington City Council, above n 10, at [43].

¹⁶ Minister of Education v James Hardie New Zealand Ltd, above n 4 at [65].

Act 2010 and any other enactment that imposes a limitation period. That must clearly include the longstop provision in s 393.

[27] Mr Gilchrist submitted that the importance of the distinction between claims for contribution and claims between an owner and a defendant is further illustrated by the circumstances of this case. He contends that the plaintiffs are not in a position to bring proceedings directly against Brackenridge as a defendant because of the settlement, following the judicial settlement conference in March 2010. Mr Gilchrist says that the plaintiffs have no claim against Brackenridge in this case. However, I am not in a position to resolve that issue, especially in the context of a summary judgment where the facts are in dispute. In any event the settlement is in my view irrelevant to the broader question I have to decide, namely one of statutory interpretation of s 37. If Brackenridge does have a valid ground to defend a claim for contribution on the basis of the settlement, that is a separate matter from the question of limitation.

[28] I conclude that s 37 is not restricted to claims as between a plaintiff and defendant but extends equally to claims for contribution as between a defendant and a third party. Brackenridge has not demonstrated that it has a clear answer to the first defendant’s claim for contribution which cannot be contradicted. Likewise, it has not demonstrated that the pleading of the first defendant discloses no reasonably arguable cause of action.

Result

[29] The application for summary judgment and/or strike out is dismissed. Costs are awarded to the defendant, the Auckland Council, on a 2B basis plus disbursements.

Associate Judge P J Andrew