Deeming v Eig-Ansvar Ltd and Others

• Jurisdiction: New Zealand
• Judge: Judge Doogue
• Judgment Date: 02 May 2013
• Neutral Citation: [2013] NZHC 955
• Docket Number: CIV-2011-404-6476
• Court: High Court
• Date: 02 May 2013

Between

Susan Jane Deeming

Plaintiff

and

Eig-Ansvar Limited

First Defendant

and

Leung Ming Chu and Cheng Hua Lui

Second Defendant

and

Mountfort Estate Agent Limited

Third Defendant

and

Michael Alexander Davidson

Fourth Defendant

and

The Inspector Limited

Fifth Defendant

and

Auckland Council

Sixth Defendant

and

Geotek Services Limited

Seventh Defendant

and

Simon James Woodward

Eighth Defendant

[2013] NZHC 955

CIV-2011-404-6476

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

Application by Geotek Services Ltd and Woodward (collectively “Geotek”) for strike out and summary judgment in relation to alleged “building work” carried out on subdivision where plaintiff's house was located — developer obtained geotechnical reports in 1998 and 1999 from Geotek to be used in support of an application for resource consent approving subdivision — plaintiff purchased house in 2008 and discovered cracks — plaintiff claimed house and land were being damaged irreparably as a result of geotechnical issues caused in part by work Geotek carried out when preparing the geotechnical reports and issued proceedings in 2012 — whether actions of Geotek came within the meaning of “building work” in s393 Building Act 2004 (limitation defences) so as to apply 10 year longstop limitation defence in s393 causing the action to be time barred — whether the cause of action in negligent misstatement was made out.

Appearances:

Mr P Wright for plaintiff

Ms R Moses for sixth defendant

Ms E Tobeck and Mr Bierre for seventh and eighth defendants

Counsel:

Mr P Wright, Barrister, — pwright@shortlandchambers.co.nz

Heaney & Co Solicitors, P O Box 105391, Auckland – rlm@heaneyco.com Morgan Coakle, P O Box 114, Auckland – etobeck@morgancoakle.co.nz

JUDGMENT OF ASSOCIATE Judge Doogue

Background

1 The seventh and eighth defendants (to be collectively referred to as “Geotek”) prepared three reports dated 21 August 1998, 2 June 1999, and an addendum dated 6 July 1999. The question is whether this work carried out by Geotek was “building work” in accordance with the Building Act 1991 and the Building Act 2004, so that the plaintiff's claims are barred by the limitation provisions in s 393 of the Building Act 2004. Such a result would follow from the fact that the proceedings were filed on 7 August 2011, more than 10 years after the work was undertaken which has given rise to the claim that is made against the seventh and eighth defendants. The circumstances in which Geotek came to perform the work will appear from the account that follows.

2 The plaintiff, Mrs Deeming, owns a property at 32 Lansell Drive, East Tamaki Heights.

3 Howick Parklands Limited, which was the developer (“Parklands”), obtained geotechnical reports from the seventh and eighth defendants to be used in support of its application for resource consent approving a subdivision of the land which resulted in the issue of, amongst other titles, the title to the property in question. Geotek was engaged by exchange of letters in June 1998 to undertake a geotechnical investigation for the purpose of determining whether the land at Flatbush Road, Manukau was suitable for residential subdivision. Those reports were produced on 21 August 1998, 2 June 1999 and an addendum report on 6 July 1999.

4 The property was part of a subdivision which was consented to by the Manukau City Council (“the Council”) which was the relevant territorial authority at some point prior to October 1999. Following the construction of the house on the title, the Council issued a final code of compliance certificate for the structure on 5 December 2001.

5 The plaintiff purchased the property from the second defendants by agreement for sale and purchase dated 21 December 2008. They had been the first owners of the property following the issue of a Certificate of Title on 7 October 1999 and the subsequent construction of the house on the property in or about 2001.

6 Within weeks of her taking possession of the property, the plaintiff discovered cracks in the house. She says that the house and land are being damaged irreparably as a result of geotechnical issues. Essentially she says the property has nil value. She has brought claims against a number of defendants but the present applications concern only the seventh and eight defendants. She says her loss is in the amount of $895,000. She claims that the loss she suffered was in part caused by work which the seventh and eighth defendants carried out when preparing the geotechnical reports in 1998 and 1999. She makes that claim on the ground that conditions were unsuitable for the construction of her house which has resulted in ground movement and the resulting cracking appearing in it.

7 One of the parties to the proceedings is the Auckland Council which is the successor to the Manuakau City Council. It also represents Manukau City in its capacity as the authority issuing the building consent and the final code compliance certificate for the property.

8 Auckland Council claims against the seventh and eighth defendants for a contribution or indemnity for any amount the Council is found liable to pay to the plaintiff.

9 The resource consent for the subdivision was forthcoming on 27 April 1999 and it included the following requirements:

• 4(a) A Foundation Completion Report for the site shall be submitted to the satisfaction of the Manager – Development compliance upon the completion of the land modification works.

• (b) For any lot for which the Foundation Completion Report recommends specific engineering investigation and design or other additional works beyond the scope of NZS 3604–1990 at building consent stage the development of such lots shall be undertaken generally in terms of the recommendations in that report.

  A consent notice shall be registered on the Certificate of Title of the relevant lots in accordance with section 221 of the Act to require compliance with the foundation requirement on a continuing basis.

10 It is necessary to make brief mention of the reference to NZS 3604–1990. I was informed that that standard was a relevant code of practice for light timber framed buildings at the relevant time. It was explained to me that if a light timber framed building was not expected to exceed a certain live and dead ground loading, there would be no requirements for additional foundation engineering. The effect of the condition in the resource consent therefore was to require that the completed subdivision earthworks should meet the standard set out in NZS 3604–1990 for buildings which are described in that standard.

11 On 2 June 1999 Geotek provided a further report entitled “Geotechnical Completion Report”. I apprehend that at that point the earthworks for the subdivision had been completed. In that report Geotek confirmed that all lots were NZS 3604–1990 compliant and that, from a geotechnical perspective, the plaintiff's lot, 304, was suitable for construction on the basis of NZS 3604. The essence of that advice was passed on to the Council by the consulting engineers and surveyors with overall responsibility for making the application, Harrison Grierson, on 23 June 1999. The involvement of Geotek ended in 1999 so about two years went by before the house was built by Newcastle Homes Limited.

12 The parties accept that the reports produced by Geotek were subject to disclaimers, the terms of which I will make further reference to below.

13 As I have noted already, shortly after taking possession the plaintiff apparently noticed that there were significant cracks developing in the house. I gather that this would have occurred in or about January 2009. She subsequently issued these proceedings on 8 June 2012, some three and a half years later. Her proceeding would not be barred by operation of the six year limitation period contained in the Limitation Act. However, Geotek takes the point that given that the geotechnical reports were issued in 1998 and 1999, if the ten year longstop limitation defence provided for in s 393 of the Building Act 2004 applies, her proceedings were issued too late and are time barred under that Act. Whether or not the proceedings are time-barred depends upon whether the actions of Geotek came within the scope of s 393 of the 2004 Act and this is the matter which will be considered subsequently.

14 Geotek now applies for summary judgment or strike out orders in respect of the plaintiff's causes of action. The plaintiff accepts that if the proceeding is caught by s 393 then her claim is time-barred.

Principles relating to strike out and summary judgment applications

15 There was broad agreement between the parties as to the principles to be applied when the Court is dealing with strike out and summary judgment applications. As to the former, I accept the submissions made by counsel for Geotek, Mr Bierre and Ms Tobeck that r 15.1 High Court Rules (“HCR”) provides that the Court may strike out all or part of a pleading if it discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or is likely to cause prejudice or delay; or is frivolous or vexatious; or is otherwise an abuse of the Court.

16 I also accept that the summary that appears in McGechan on Civil Procedure at para 15.1.02, to which counsel referred, is applicable: 1

The established criteria for striking out was summarised by the Court of Appeal in A-G v Prince [1998] 1 NZLR 262, (1997) 16 FRNZ 258, [1998] NZFLR 145 (CA) at 267, and endorsed by the Supreme Court in Couch v A-G [2008] NZSC 45 at [33], per Elias CJ and Anderson J:

• (a) Pleaded facts, whether or not admitted, are assumed to be true. This does not extend to pleaded allegations which are entirely speculative and without foundation.

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