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High Court of New Zealand Decisions |
Last Updated: 13 February 2019
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
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CIV-2017-404-1902
[2018] NZHC 3056 |
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BETWEEN
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AMG TRUST LIMITED and KMG TRUST LIMITED
Plaintiffs
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AND
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SKELLERUP INDUSTRIES LIMITED
Defendant
BRUCE NEIL ARMSTRONG
First Third Party
BRUCE ARMSTRONG BUILDERS LIMITED
Second Third Party
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Hearing:
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20 November 2018
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Appearances:
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L L Fraser and L C Bercovitch for the Defendant P L Rice for the Third
Parties
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Judgment:
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20 November 2018
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ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL
Glaister Ennor (Brett Vautier), Auckland, for the Plaintiff
Chapman Tripp (LL Fraser/LC Bercovitch), Auckland, for the Defendant Harris Tate Lawyers, Tauranga, for the Third Parties
Copy for:
Phillip L Rice, Auckland, for the Third Parties
AMG TRUST LIMITED v SKELLERUP INDUSTRIES LIMITED [2018] NZHC 3056 [20 November 2018]
[1] In this building defects case, the third parties apply for strike-out and summary judgment against the defendant who has claimed contribution from them under s 17 of the Law Reform Act 1936. The third parties say that a contribution claim cannot be available because they did not cause the same damage as that alleged against the defendant. They also say that the claim is out of time under s 393(2) of the Building Act 2004.
[2] The plaintiffs own a building called Bank Chambers on the corner of Wharf Street and Willow Street, Tauranga. In 2008 and 2009, they had the outside of the building clad with Alucobond composite panels. That is a product which Skellerup Industries Ltd used to fabricate and install. I understand that it no longer carries on that business. The plaintiffs had other work carried out but that work is not relevant to this case. Griffiths Merchants Trust Ltd was the employer for the project. The architect was Mr Rod Moyes, who I understand has now died.
[3] Bank Chambers is an old concrete building. Alucobond panels could not be affixed directly to the concrete building. Instead, timber battens were put up and Alucobond panels were in turn affixed to the battens.
[4] Bruce Armstrong Buildings Ltd, a building contractor, was engaged to fix the timber battens to the concrete walls at Bank Chambers, before the Alucobond composite panels were installed. It also contracted to supply the scaffolding. Mr Armstrong, the first third party, is the director of Bruce Armstrong Builders Ltd.
Background
[5] In August 2007, the plaintiffs and Skellerup entered into a contract for Skellerup to supply and install the Alucobond panels to the façade of Bank Chambers. The work was carried out in 2008 and 2009. A certificate of practical completion was not issued until 10 June 2009. The plaintiffs plead that Skellerup Industries Ltd gave a written guarantee as to the quality of the materials and workmanship. In June 2016, the plaintiffs discovered defects in the Alucobond
cladding. They carried out investigations and identified defects. They notified Skellerup of the defects and invited Skellerup to remedy the cladding. Skellerup did not do so.
[6] The plaintiffs began this proceeding in August 2017. The original statement of claim has a single cause of action for breach of contract. An amended statement of claim of 21 November 2017 adds a cause of action in negligence. There is a schedule of defects to the amended statement of claim. Six classes of defects are listed. The cladding issues are said to be:
(a) undersized panel joint widths;
(b) undersized panel joint depths;
(c) panel joints around windows incorrectly sealed;
(d) cladding panels with missing and/or incorrect fixings –
There are also defects relating to parapet caps.
[7] For this case, the fourth cladding issue is relevant. These particulars are given for the fourth cladding defects:
(a) Location:
Widespread across the façade of the building, in particular the bottom edge and the bottom sheet missing for most fixings. In some cases, only four screws secured panels to the wall. Most fixings are undersized and only fixed to packers. Some panels have a hole drilled for fixing but no fixings.
(b) Description of the defect:
Panels are insecure and flex. On some large panels, fixings are only about 25 per cent of the design.
(c) Breaches of the Building Code: B1.1, B1.2, B1.3.1 and B1.3.2.
(d) Relevant standards and industry documents:
References to two manuals: the Alucobond NZ manual and the Kaneba manual with references to passages in the manuals.
(e) Required remedial works:
Remove all sealant, progressively checking each fixing. Replace underlength screws and fit missing fixings as required by the Alucobond Manual. This will require the removal of all affected panels.
[8] Skellerup’s statement of defence denies liability generally and alleges
affirmative defences:
(a) the damage was caused by the plaintiffs;
(b) contributory negligence;
(c) limitation under s 4 of the Limitation Act 1950 for the negligence cause of action, because the defects were said to be discoverable before 21 November 2011 – that is six years before the negligence cause of action was first brought; and
(d) limitation for the contract cause of action because the alleged breaches of contract occurred more than six years before 17 August 2017.
[9] In a case management conference minute of 30 May this year, Associate Judge Sargisson fixed 29 June 2018 as the last day for joining additional parties. She has given the case a fixture for seven days beginning 29 May 2019. The close of pleadings date is 21 January 2019. The case management directions allow for evidence by third parties.
[10] Skellerup issued its third party claims against Mr Armstrong and his company on 29 June 2018. Much of the statement of claim against the third parties pleads the plaintiffs’ claims against Skellerup while not admitting any liability to the plaintiffs. The allegations against the third parties are relatively brief.
9. At all material times the third parties were involved as a sub- contractor for the plaintiffs, and were responsible for building work as part of the work at Bank Chambers undertaken between 2008 and 2009, of which the alleged project works were one component part.
...
The pleading against the second third party is in similar terms to paragraphs 13 and 14 against the first third party.
[11] I have not so far dealt with the dates of the third parties’ participation in the
building project. I will come to that when I deal with the limitation defence.
The third parties’ applications
[12] The third parties say that Skellerup cannot claim contribution from them under s 17(1)(c) of the Law Reform Act 1936 because they were not involved in any of the alleged defective work in the schedule to the plaintiffs’ amended statement of claim. They also say that any claim for contribution is statute-barred under s 393(2) of the Building Act 2004. The third parties have filed separate applications – one for strike out, and the other for summary judgment. For their strike-out application, they rely only on the Limitation Act defence. For their summary judgment application they rely on both grounds.
[13] In making these applications, the third parties are asking for summary disposal of the proceeding. They are saying that the proceeding against them can be brought to an end now, and that it is unnecessary for the case against them to
go to a full defended hearing where the usual interlocutory steps have been taken, such as discovery, followed by exchange of written statements of evidence, and a hearing with oral examination of witnesses, as in any ordinary proceeding where facts are in dispute.
[14] A defendant (or a person in the position of a defendant) seeking summary disposal of a proceeding says that the case against them is so defective that it should not be allowed to go any further. Arguments for summary disposal of a proceeding can be made on procedural or substantive grounds. In an application to strike out a pleading under r 15.1 of the High Court Rules, the applicant may rely on both procedural grounds and substantive grounds. Substantive grounds can be seen in the test laid down by the Court of Appeal in Attorney-General v Prince,1 and upheld by the Supreme Court in Couch v Attorney-General2 where no reasonable cause of action is disclosed on facts presumed to be true, the plaintiff cannot hope to succeed at law – and where the cause of action pleaded is not one recognised at law. There can also be substantive strike-out when a defendant is able to show an incontrovertible affirmative defence, the classic example being the limitation defence – as shown by the Supreme Court’s decision in Murray v Morel & Co Ltd.3
[15] In addition to substantive grounds, a pleading may be struck out as procedurally deficient, as when a pleading is unnecessarily prolix, pleads purely evidentiary material, is unintelligible, or pleads irrelevant matters. And in the context of defective building claims, a statement of claim has been held to be so deficient as to be struck out when it failed to give any particulars of defects or damage.4
[16] In contrast to applications to strike-out under r 15.1, a defendant’s summary judgment application is a judgment on the merits.5 Procedural deficiencies in a case are not sufficient for the court to give summary judgment to a defendant.
3 See Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721 at [33].
4 Body Corporate 348047 v Auckland Council [2014] NZHC 2971 [Imperial Gardens Apartments].
5 Westpac Banking Corporation v MM Kembla (NZ) Ltd [2000] NZCA 319; [2001] 2 NZLR 298 (CA).
Are the third parties alleged to be liable to the plaintiffs for the same damage as the defendant?
[17] The third parties, of course, deny that they have caused any damage at all, but they say that if they have caused any damage to the plaintiffs it is not the same damage as that caused by the defendant. There is discrete damage and in the absence of the same damage being caused by them both, there cannot be a claim for contribution under s 17(1) of the Law Reform Act. That section says:
(1) Where damage is suffered by any person as a result of a tort (whether a crime or not)—
(a) judgment recovered against any tortfeasor liable in respect of that damage shall not be a bar to an action against any other person who would, if sued, have been liable as a joint tortfeasor in respect of the same damage:
(b) if more than one action is brought in respect of that damage by or on behalf of the person by whom it was suffered, or for the benefit of the estate, or of the wife, husband, [civil union partner, de facto partner,] parent, or child of that person, against tortfeasors liable in respect of the damage (whether as joint tortfeasors or otherwise), the sums recoverable under the judgments given in those actions by way of damages shall not in the aggregate exceed the amount of the damages awarded by the judgment first given; and in any of those actions, other than that in which judgment is first given, the plaintiff shall not be entitled to costs unless the Court is of opinion that there was reasonable ground for bringing the action:
(c) any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued in time have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability in respect of which the contribution is sought.
[18] It is perhaps not surprising that the third parties have attacked the defendant’s claim under this head. That is because the contribution claim is pleaded badly. For contribution claims under s 17 of the Law Reform Act the party seeking contribution, and the party from whom contribution is sought, must both be liable in tort to the plaintiff for the same damage. The defendant’s statement of
claim against the third parties adequately sets out the basis on which Skellerup is alleged to be liable in tort to the plaintiffs. But it is procedurally deficient because it does not show how the third parties are liable in tort to the plaintiffs. The plea of the third parties’ involvement as a sub-contractor of the plaintiffs, who carried out building work at Bank Chambers between 2008 and 2009, is not enough to show that the third parties breached any duty of care to the plaintiffs. The third parties must have been at a loss to know what they were being sued for. Ms Fraser acknowledged that if the case is to carry on against the third parties, Skellerup will need to file an amended pleading giving proper particulars of any breach of duty of care by the third parties to the plaintiffs and how those breaches of duty of care did cause any damage.
[19] While there are shortfalls in the pleadings, Skellerup has attempted to make up for it with evidence. Skellerup has identified cladding defect 4 as damage for which the third parties are also arguably liable. Skellerup’s evidence includes an affidavit by a building surveyor, a Ms Johnston, who has been instructed by Skellerup for the proceeding. She assesses the scope of work which the third parties were to undertake as:
(a) the arrangement for, or the erection of scaffolding;
(b) the removal of decorative polystyrene features from the existing concrete façade and parapet;
(c) installation of a timber sub-frame for the cladding panels (which would be supplied and installed by Skellerup); and
(d) removal of the scaffolding after the external envelope works had been completed.
[20] Architectural drawings have been put in evidence. Ms Johnston says that the drawings show this: a 75 x 50 H3.1 primary batten shot-fired to the existing concrete structural wall, flame proof building wrap, and a 75 x 25 H3.1 outer batten. (She goes on to refer to the composite panels and the location of louvres,
but that is not relevant here). Her evidence, based on photographs and her observations on site, is that the timber battens have not been installed according to the architect’s plans. She notes these aspects: the architectural drawings required shot-fired fixing to the primary batten, and there ought to have been adequate strapping for the Alucobond panels to be affixed to. She says that the photographs show 70 x 45mm timber strapping, with only one batten, and not two battens with building wrap beneath as shown in the architectural drawings. The timber strapping appears to have been screwed to the concrete wall. She says that the work required more than 70 x 45mm timber strapping. She suggests that the strapping was not correctly installed and that the vertical strapping might be outside the installation tolerances for Alucobond panels. She goes on:
16. If the defect relating to the cladding panels is missing and/or incorrect fixings is proven to exist, then that defect for any damage could have been caused and/or contributed to by the incorrect fixing of the timber strapping by the third parties.
[21] The third parties do not accept that evidence. They have in turn instructed a building surveyor, and Mr Armstrong has given an affidavit in reply on those points as well. That evidence shows reasons why the battens were not shot-fired but affixed by screws, and gives reasons for the timber strapping used.
[22] Mr Rice presented detailed submissions that I should not accept Ms Johnston’s theory of liability of his clients. He referred to the architectural plans, which make it clear that the contractor installing the timber battens does have some give-and-take, given that there are variations in the external walls of the Bank Chambers. Mr Rice submitted that it was speculative that a failure to follow the plans exactly was enough to give rise to the damage alleged in defect 4 in the schedule of defects to the amended statement of claim. He pointed to an evidential failure on the part of Skellerup to reply to evidence from the third parties that the work by the third parties had been carried out with the apparent approval of the architect and of Skellerup, and that if the work had been deficient Skellerup would not have started the installation of the Alucobond panels.
[23] Mr Rice is trying to persuade me to make findings on the existence or otherwise of building defects where there are disputed factual matters which cannot
be resolved simply on affidavit evidence. In a summary judgment application I decline to become involved in the detailed examination of building defects to state whether the third parties carried out their work without causing any defects.
[24] It is important to bear in mind the caution expressed by the Court of Appeal in Westpac Banking Corporation v MM Kembla (NZ) Ltd6 that it is generally unwise to reject a plaintiff’s case simply on the inadequacy of the plaintiff’s evidence. The court was concerned that a plaintiff might be prematurely prevented from going to hearing by the defendant pressing for summary disposal before the plaintiff had had the opportunity to assemble its case fully. In building defects cases, it often happens that as the case develops there is greater examination of the building and more information comes to light. That caution tells me that I should not find for the third parties on an essentially factual issue when not all the information is necessarily available at present.
[25] Mr Rice also submitted that even if the third parties had breached any duty to the plaintiffs, they had not caused the same damage as the plaintiffs allege against Skellerup. His argument was based on differentiating the work that each undertook to carry out. The work provided by Skellerup did not involve the fixing of timber battens or the erection of scaffolding. The third parties on the other hand did undertake to do that work. His case was that because the scaffold work was different, any defects that work caused was also distinct and there could not be shared liability.
[26] With respect, I am unable to accept that argument. It is commonplace in building defects litigation that more than one person involved in a building project may be responsible for defects. For example, a defect may be the result of both a fault of construction and an error of design. There may be those with primary responsibility (such as contractors) and those with secondary responsibility (such as local authorities) who may share responsibility for defects. And equally, two contractors working independently by their combined methods may cause damage
6 Westpac Banking Corporation v MM Kembla (NZ) Ltd [2000] NZCA 319; [2001] 2 NZLR 298 (CA).
where each may be liable to the plaintiff for that damage. Where there is that overlap, there can be claims for contribution.
[27] It is important to bear in mind that damage in this context constitutes a defect amounting to a breach of the building code which requires remediation – Spencer on Byron: Body Corporate 2075624 v North Shore City Council.7 Here, the pleaded fourth defect in the schedule to the amended statement of claim is apparent damage, a breach of the Building Code requiring remediation. Grounds have been shown for arguable liability not only by Skellerup but also by the third parties. At this stage, it is arguable for Skellerup that defects in installing the timber battens, in the way identified by Ms Johnston, contributed to the flexing of the composite panels. The third parties have not succeeded in discrediting that arguable case. I therefore dismiss that part of the third parties’ application.
Is the third party claim statute-barred?
[28] The third parties say that in any event the defendants’ claim against them is statute- barred under s 393 of the Building Act 2004:
393 Limitation defences
(1) The Limitation Act 2010 applies to civil proceedings against any person if those proceedings arise from—
(a) building work associated with the design, construction, alteration, demolition, or removal of any building; or
(b) the performance of a function under this Act or a previous enactment relating to the construction, alteration, demolition, or removal of the building.
(2) However, no relief may be granted in respect of civil proceedings relating to building work if those proceedings are brought against a person after 10 years or more from the date of the act or omission on which the proceedings are based.
...
[29] Ordinarily, a claim for contribution under s 17 of the Law Reform Act arises only when liability is established against the party claiming contribution. Liability can be established by judgment, award or agreement.8 Skellerup has not yet been found liable to the plaintiffs and therefore time has not started running against Skellerup under s 34 of the Limitation Act 2010 for any contribution claim it might make against the third parties. Section 393 of the Building Act cuts across that.9 It is not disputed that the work by the third parties was building work as it went to the alteration of a building.10 Section 393(2) imposes a single limitation period of 10 years from the date of the act or omission on which the proceedings are based. There are no grounds for extending that time limit.11
[30] On a summary judgment application, the third parties have the onus of establishing that Skellerup is suing more than 10 years after the acts or omissions on which the claim against them is based. It is perhaps necessary to indicate that there is a slight difference where there are claims under the Limitation Act 1950. In Murray v Morel & Co Ltd,12 Tipping J said that on a strike-out application the defendant has to satisfy the court that the plaintiff’s cause of action is so clearly statute-barred that the plaintiff’s claim could properly be regarded as frivolous, vexatious, or an abuse of process. But that is subject to the plaintiff showing an arguable case for an extension or postponement which would bring the claim back within time. The plaintiff had to give an air of reality to the contention that it was entitled to an extension. While that may be appropriate under the Limitation Act 1950, I do not apply it under s 393 where there is a single limitation period of 10 years without any possibility of extension or postponement. The onus accordingly remains throughout on the party alleging the limitation defence.
[31] Skellerup filed the claim against the third parties on 29 June 2018. The third parties have to show that the acts or omissions on which they are sued took place no later than 29 June 2008. Mr Armstrong gives this evidence: his company began fixing the timber strapping to the building on Wednesday the 16th or Thursday the 17th of April 2008. He refers to an email from the architect to Skellerup dated 15 April 2008:
8 Limitation Act 2010, s 34; Limitation Act 1950, s 14.
10 See the definition of “building work” in s 7 of the Building Act 2004.
11 Johnson v Watson [2002] NZCA 313; [2003] 1 NZLR 626 (CA), a decision under s 91(2) of the Building Act 1991.
12 Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721.
The builder has cleaned all the polystyrene etc off the building. The bad weather has meant that he has been unable to start the battening. He anticipates a start on Wednesday pm or Thursday am.
He says that the installation of the battening took approximately one month to complete. The vertical battens were installed by the end of April. The horizontal battens were installed in the first two weeks of May. All of the batten installation work was performed under the guidance of the defendant. He attaches an email from the architect to the defendant dated 25 April 2008 which says (amongst other things):
The vert battens will all be up by Tuesday all going well. The builder will then be awaiting your horizontal set-out requirements...
[32] Mr Armstrong says that he no longer has any records such as invoices which he can produce in evidence. He says that the company’s files and business papers were stored in a container on a rented property but they went missing when the tenants cleared out the container for their own use. He has, however, put two bank statements in evidence. One bank statement for May 2008 shows a payment of $18,893.71. The payer is Griffiths Merchant Trust Ltd. The second payment was received on 30 June 2008. It is also from Griffiths Merchant Trust Ltd and is for $14,884.19. Mr Armstrong makes the reasonable point that those payments were made after invoices were sent, and the invoices were sent after the work had been carried out. He therefore invites the court to find that the work must have been carried out before the end of May 2008 for payment to be made during the following month.
[33] Skellerup contests that. It submits that Mr Armstrong’s affidavit evidence is scant on detail. It points out that scaffolding stayed on site. The scaffolding had to stay on site so that Skellerup could erect its composite panels. Mr Armstrong and his company had further work to do while on site. They put in evidence an email from the architect to the plaintiffs’ building manager, identifying outstanding items for repair, which included matters which Skellerup had to remediate. Those matters were attended to in May 2009. The certificate of practical completion was not given until June 2009.
[34] It is, of course, arguable for Skellerup that the scaffolding had to stay on site longer while the Alucobond panels were installed. But, as Mr Rice submitted, the scaffolding has nothing to do with the third parties’ alleged liability for defect 4. That relates to the
installation of the timber battening. The third parties were being sued for fixing the strapping, that is, the battens. That had to be put in place before the Alucobond panels were fixed. That work had to be completed before Skellerup began installing its panels.
[35] I accept that Mr Armstrong has not given evidence as to who worked on site. He has not produced any work records as to when people came on site and when people left. But the matter goes beyond simple assertions on his part. I regard the emails by the architect and the records of payment as sufficiently objective evidence to show that the work of putting up the battens had been completed by the end of May 2008 in order for payments to have been made by the end of June 2008. I am satisfied on that evidence that the acts or omissions on which the third parties are being sued is work carried out no later than May 2008. They may not have left the site then, they may have returned to the site, but any further involvement with the project after that had nothing to do with the work of putting up the battens.
[36] I am satisfied that the third parties have made out the limitation defence under s 393(2) of the Building Act 2004. I accordingly enter judgment for the first and second third parties against the defendant.
[37] The third parties are entitled to costs. Costs are category 2. I encourage counsel to confer as to costs. If they cannot agree, memoranda may be filed and I will decide costs on the papers.
[38] I have reviewed with Ms Fraser whether any further case management directions are required. She indicates none now, but I reserve leave to the plaintiffs and the defendant to ask for a conference for further directions if necessary.
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Associate Judge R M Bell
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