Cross and Others v Queenstown Lakes District Council

• Jurisdiction: New Zealand
• Judge: Nation J
• Judgment Date: 20 October 2016
• Neutral Citation: [2016] NZHC 2503
• Docket Number: CIV-2015-425-000097
• Court: High Court
• Date: 20 October 2016

Between

Adrian John Cross, Gladys Sarah Cross and Bronyn Mary Teat as Trustees of the N R & G S Cross Trust

Plaintiffs

and

Queenstown Lakes District Council

Defendant

[2016] NZHC 2503

CIV-2015-425-000097

IN THE HIGH COURT OF NEW ZEALAND

INVERCARGILL REGISTRY

Application to strike out the plaintiffs' claim on the basis that they had not established standing and that the delay in bringing proceedings had prejudiced the defendant as it could not join third parties — the defendant Council said that the plaintiffs had not provided evidence that they were suing as trustees of the property — the Council argued that the one of the plaintiffs had initially been registered on the title as a joint tenant and that this told against trusteeship — it also said that the plaintiffs decision to bring proceedings in the High Court rather than continue them in the Weathertight Homes Resolution Tribunal (where time had stopped running) meant that the Council was prejudiced by an inability to join third parties as the limitation period had run out — whether the claim could be dismissed at strike out stage on the basis that the plaintiffs had not established their standing as trustees who were entitled to sue — whether the Council was prejudiced as it said it could not join third parties.

Appearances:

M R C Wolff & Ms O'Brien for the Plaintiffs

R M Saunders & A Walker for the Defendant

JUDGMENT OF Nation J

1 The defendant, the Queenstown Lakes District Council (the Council), has applied to strike out the claim of Adrian John Cross, Gladys Sarah Cross and Bronyn Mary Teat as trustees of the N R and G S Cross Trust (the plaintiffs).

Background

2 The claim is made in an amended statement of claim dated 1 February 2016. In that statement of claim, the plaintiffs say:

• (a) they are the registered proprietors of a property at 14 Sunrise Bay Drive, Sunrise, Wanaka (the property) as trustees of the N R and G S Cross Trust (the trust);

• (b) the Council issued a building consent for the construction of a dwelling with double garage on the property on 1 May 2003;

• (c) the dwelling was constructed between May 2003 and June 2006. Prime Building Compliance Ltd (PBC), a private certification company, carried out various inspections of the property between 29 January 2004 and the final inspection on 9 March 2005;

• (d) on 25 March 2005, PBC notified the Council that its authority to inspect the dwelling was limited and that it would not be completing the inspections of the property;

• (e) the Council inspected the property on 6 May 2004 and 7 June 2006;

• (f) on 8 June 2006, the Council issued a code compliance certificate for the work undertaken pursuant to the dwelling building consent;

• (g) on 4 April 2007, Norman John Cross and Gladys Sarah Cross were registered on the certificate of title as trustees of the trust;

• (h) on 18 January 2008 the Council issued a building consent for the construction of a new garage at the property;

• (i) the garage was constructed between February 2008 and December 2011;

• (j) the Council undertook inspections of the property on 28 February 2008 and on 12 December 2011, and on the latter date issued a code compliance certificate for the work undertaken pursuant to the garage building consent;

• (k) on 25 August 2014, Bronyn Mary Teat and Adrian John Cross were registered on the title as trustees of the trust;

• (l) the dwelling and garage were constructed with defects, as detailed in the amended statement of claim;

• (m) the plaintiffs have suffered loss, being the cost of the remedial works currently estimated at $560,823.76 (including GST) and consequential losses to be particularised prior to trial;

• (n) the Council owed the plaintiffs a duty to exercise reasonable care in carrying out functions under the Building Act 1991 and the Building Act 2004 with regard to its inspection of work relating to the two consents and issuing the code compliance certificates;

• (o) the Council breached that duty and was negligent in ways detailed in the amended statement of claim;

• (p) the plaintiffs suffered distress, anxiety and inconvenience arising from the discovery of defects and the need to carry out remedial works; and

• (q) the plaintiffs claim special damages in the sum of $560,823.76 and general damages in the sum of $35,000, interest and costs.

3 On 27 May 2016, Associate Judge Matthews made a direction in accordance with a consent memorandum that interlocutory applications had to be filed and served by 8 June 2016. On 6 July 2016, the Council filed an interlocutory application for an order striking out the plaintiffs' claim and for an order granting leave to make that application. The plaintiffs filed notices of opposition to both applications.

4 The delay in making the application was modest. In the circumstances, leave is granted.

5 The strike out application was made on the basis:

• (a) the amended statement of claim disclosed the plaintiffs had no reasonable cause of action against the Council because the plaintiffs have not provided any evidence that they own the property in question in their capacity as trustees and have no locus standi in relation to the claim; and

• (b) the claim will prejudice the Council as it has lost the ability to seek a contribution from joint tortfeasors due to the plaintiffs' delay in bringing the claim. The plaintiffs were on notice of the alleged defects in December 2014 but did not file proceedings until November 2015, at which point the Council asserts that all claims against other potentially liable parties were time-barred.

Principles of strike out

6 Counsel agreed as to the relevant principles against which I must consider the application: 1

• (a) pleaded facts are assumed to be true but this does not extend to pleaded allegations which are entirely speculative and without foundation;

• (b) the cause of action must be clearly untenable. The Court must be certain it cannot succeed;

• (c) the jurisdiction is to be exercised sparingly and only in clear cases; and

• (d) the jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument.

7 I also accept the submission of Mr Wolff that, while the Court is entitled to receive affidavit evidence on a strike out application, it should not attempt to resolve genuinely disputed issues of fact. In Attorney-General v McVeagh, the Court of Appeal observed: 2

The Court is entitled to receive affidavit evidence on a striking-out application, and will do so in a proper case. It will not attempt to resolve genuinely disputed issues of fact and therefore will generally limit evidence to that which is undisputed. Normally it will not consider evidence inconsistent with the pleading, for a striking-out application is dealt with on the footing that the pleaded facts can be proved.

Do the plaintiffs have standing?

8 For the Council, Ms Saunders submitted that, for the plaintiffs to have a cause of action against the Council, they must own the property as trustees of the trust and the property must have been acquired in 2006 by Mr and Mrs Cross in their

capacity as trustees of the trust. She argued there was no evidential basis on which these facts could be established

9 In making that submission, she noted that, in their initial statement of claim dated 12 November 2015, the plaintiffs had pleaded simply that on 4 April 2007 Mr Norman Cross and Mrs Cross were registered on the certificate of title. Primarily, her argument relied on the fact that the Council had made an issue over whether the plaintiff trustees had standing to bring the claim in that capacity. This had been noted by the Associate Judges in minutes of 4 April 2016 and 19 July 2016. The Council had also, through correspondence from its solicitors, made an issue as to whether the trustees were bringing their claim in their capacity as trustees, arguing that it was not apparent from the certificate of title that they owned the property as trustees. They asked for documentation supporting the plaintiffs' assertions as to the property being owned by trustees. Although the plaintiffs confirmed they had made full discovery of relevant documents, very few documents indicative of the property being owned by either Mr and Mrs Cross or the plaintiffs as trustees had been produced.

10 The solicitors also asserted in a letter of 17 June 2016 that it appeared Mr and Mrs Cross had purchased the property as joint tenants. They said this “suggests that the property was purchased by the Cross' in their personal capacities in 2007 and transferred to the trust on 25 August 2014”. They referred to the fact the title showed that:

• (a) on or about 4 April 2007, the property was purchased by Norman and Gladys Cross;

• (b) on 6 March 2012, ownership was transmitted to Mrs Cross as survivor; and

• (c) on 25 August 2014, the property was transferred to Mrs Cross, Mrs Teat and Mr Adrian Cross.

11 Ms Saunders also relied heavily on evidence presented by way of an affidavit in reply from Mr Logan. He is an experienced Christchurch solicitor, well qualified to give expert evidence as to documentation that one might expect to see associated with the purchase and continued ownership of a property by trustees. It was his opinion that there was very little, if any, such documentation in existence. Ms Saunders' argument was that there cannot be substance without form and with there being, in her submission, no documentation consistent with the property being owned by a trust, there could be no evidential basis on which ownership by the plaintiffs as trustees could be established. She argued that this meant they could have no standing to bring the claim.

12 Ms Saunders acknowledged there is no authority directly on point which establishes a precedent for striking out a claim in these circumstances. She relied heavily on statements made by Andrew Beck in his book Principles...