Auckland City Council v Effuzi (International) Ltd Hc Ak
| Jurisdiction | New Zealand |
| Judge | D.I. Gendall |
| Judgment Date | 19 October 2011 |
| Neutral Citation | [2011] NZHC 1290 |
| Court | High Court |
| Docket Number | CIV-2009-404-6044 |
| Date | 19 October 2011 |
[2011] NZHC 1290
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2009-404-6044
M. Lloyd - Counsel for Plaintiff
K.P. Sullivan - Counsel for Defendant
This judgment of Associate Judge Gendall was delivered on 19 October 2011 at 4.00 pm under r 11.5 of the High Court Rules.
JUDGMENT OF ASSOCIATE JUDGE D.I. Gendall
This proceeding involves a claim by the plaintiff against the defendant for the supply and installation in 1999 of seats alleged to be defective in the auditorium of the plaintiff's Civic Theatre at Queen Street, Auckland.
Before me are applications by the defendant to strike out the plaintiff's fourth amended statement of claim dated 5 August 2011, or to award the defendant summary judgment against the plaintiff.
The plaintiff asserts two claims. First, it contends the defendant was negligent in that it caused the plaintiff loss by breaching its duty to exercise reasonable skill and care while performing the contract in relation to supplying seats that were not dangerous in the event of fire. Second, it says that under the Contractual Mistakes Act 1977 the contract was entered into under a mutual mistake resulting in an unequal exchange of values in that both of the parties entered into the contract in the mistaken belief that the seats were fire safe.
The defendant's response is that no such duty of care was owed or breached and in any event the plaintiff's claims are time barred. It is common ground that s 4 of the Limitation Act 1950 provides for a six year limitation period on claims of this type. With regard to the claim of mutual mistake, the defendant argues that no such mistake was made.
The defendant's grounds for strike-out are that the plaintiff's claim is so clearly statute-barred that its claim can properly be regarded as frivolous, vexatious or an abuse of process. And, its ground for summary judgment is that the pleadings contain no reasonably arguable cause of action, they are frivolous and vexatious or an abuse of process.
The plaintiff opposes the applications on the basis that the two remaining causes of action (negligence and mistake) are not time barred. In particular it alleges that the causes of action did not accrue until June 2007, when it could first reasonably have discovered that the seats were dangerous from a fire safety perspective. As proceedings were filed in September 2009 the plaintiff says they are not therefore time barred.
With respect to the duty of care issue, the plaintiff says that there is at least an arguable case i.e. a case that should go to trial, for a duty of care having been owed and a strong case for it having been breached. Similarly it says that there is a strong case for there having been mutual mistake leading to an unequal exchange of values.
In 1998 the plaintiff began the refurbishment of the auditorium of the Civic Theatre, a large and historic public theatre in central Auckland. On 7 December 1998 the plaintiff put out for tender the supply and installation of public theatre seating in the auditorium.
The terms on which tenders were sought included the following:
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a) The seats supplied were to be of merchantable quality and free from defects in material, workmanship and design;
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b) The seats were to be fit for the purpose for which they were required, namely for the comfortable and safe seating of theatre goers within what is a heritage building; and
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c) The seats were to have a high level of fire safety/resistance and in particular were to comply with the provisions of an industry standard which was then in force (AS 1530).
In January 1999 the defendant, through its director Mr Murray Maclean Treweek (Mr Treweek), submitted a written tender which appears to have complied with those requirements. Between January and May 1999 the parties entered into negotiations including discussions over the need for the seats to comply with the above requirements and in particular to be fire safe/resistant. In May 1999 the defendant's tender was accepted and in July 1999 the parties entered into a formal written contract (the contract).
The seats to be supplied by the defendant were the same as seats it had some time earlier installed in a casino in Sydney, Australia under a contract it had with the casino operator, except for the actual fabric covering required for the Civic Theatre seat and the plywood seatback. That particular change was a variation made by the plaintiff to the defendant's tender. Under the tender documents specification a 100 per cent wool or 95 per cent wool and 5 per cent crepe nylon fabric was to be used. However, the plaintiff subsequently required that a specific fabric was to be used for the seat covering, the design for which had been procured by the plaintiff.
When the defendant had its earlier seats installed in the casino in Sydney, it seems that fire safety testing was undertaken and those seats complied there with the relevant standards. In a 9 April 1999 letter from Mr Treweek of the defendant to Carson Group, the project managers employed by the plaintiff for the renovation of the theatre, Mr Treweek stated:
b) Fire Testing: The fire testing is indeed the [Sydney casino] seat but the components are the same as those to be used at the Civic. By this we mean the foam seat and back are to the same specification and comply with AS1530 part 2. The steel cradle is of no significance and the ply back caused no notable problem. If anything having a fire retardant fabric over the back could only improve the results.
That recommendation appears to have been accepted and despite later discussions on the issue, no comprehensive testing of the seats for the Civic Theatre was undertaken prior to installation.
Indeed, on 13 April 1999 a Mr Martin Feeney (Mr Feeney) of Holmes Fire and Safety, Consulting Enginners, the plaintiff's fire and safety consultants, wrote to Mr Malcolm Neil Sabourin (Mr Sabourin) project manager for Carson Group at the time:
We understand that the seats to be used for the Civic are the same as those tested for the Sydney Casino except that there is a fabric covering to the plywood seat back.
We are satisfied that the test results for the seats used in the Sydney Casino can be used as evidence of satisfactory performance of the seats to be installed at the Civic Theatre. Therefore we are satisfied that the seat construction is within the bounds of our fire design assumptions and that there is no need to carry out further fire testing of the seats for the Civic Theatre project.
Subsequent to this, Mr Treweek, at paras [11] and [12] of his 18 July 2011 affidavit filed in this proceeding, deposes to concerns he had raised in mid 1999 about fire retardancy issues with the fabric to be used for the seats. The fabric, now specified and required for the contract by the plaintiff, was a special fabric designed and manufactured by Fabriche Textiles Limited (Fabriche Textiles).
On this aspect, following communications with Fabriche Textiles, Mr Treweek deposes in his 18 July 2011 affidavit that he contacted Carson Group in July 1999 as follows:
Specifically I brought the lack of fire retardancy to the attention of Carson Group in my letter of 5 July 1999. I was concerned that some testing of the fabric under the standard had not been done. I drew the importance of this to Carson Group.
With respect, however, Mr Treweek's 5 July 1999 letter to Carson Group was not quite that unequivocal. Instead, he simply notes in that letter:
6) Fire Retardancy – You requested fire retardancy to AS 1530 parts 2 and 3. An official test report has been provided for part 3 tests but not part 2. Part 2 has reasonable importance as this states the flammability results.
It is that report dated 11 March 1998 from AWTA Textile Testing, Victoria, Australia which was attached that shows what I understand to be a high ignitability index. However, there is no discussion of that fact, only a bare figure (14 on a “Range” specified as “0-20”) in a column.
On 22 July 1999, however, it appears Mr Treweek obtained further fabric tests from Fabriche Textiles, these being from APL Applied Physics Laboratory, Auckland and WRONZ Developments, Christchurch. Those tests appear to suggest a more favourable level of flammability. Subsequently, it seems the defendant and the plaintiff's agents discussed the prospect of further testing. It appears that the only option, to obtain the required testing, was to send four seats to Australia. That would have delayed the installation for several weeks and been at a not insignificant cost. It did not occur.
The contract then proceeded and in November 1999 the defendant supplied and installed the seats in the Civic Theatre. Completion occurred by March 2000. Payment under the contract was made by the plaintiff (around $978,578.30), although the defendant alleges that there is still some money outstanding.
Little happened it seems until June 2007 when, following complaints of ergonomic, comfort and structural problems with the seats the plaintiff commissioned a full assessment and analysis of the seats by an independent expert. That assessment also apparently revealed that the seats might not comply with fire safety standards. Then, between June 2007 and June 2008, further expert assessment was undertaken by the plaintiff to determine the seats' fire safety standard. That it is said confirmed the earlier suspicion that the seats did not comply with relevant standards as allegedly represented by the defendant.
Thus, the plaintiff maintains that in 2009 it had no choice but to replace all the seats for fire safety reasons at a cost of around $1.4 million.
The plaintiff now seeks to recover one-half of this...
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