Keith Michael Newton, Joanne Lesley Davey and Scott Moran as Trustees of The Davey-Newton Family Trust v Wayne Peter Stewart and Lee-Bin Tee Hc Wn
| Jurisdiction | New Zealand |
| Judge | Ronald Young J |
| Judgment Date | 18 April 2012 |
| Date | 18 April 2012 |
| Court | High Court |
| Docket Number | CIV 2010-485-2116 |
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV 2010-485-2116
And
And
And
And
D Webb for first defendant
M D Atkinson for second third party
N K King for third third party
JUDGMENT OF Ronald Young J
Mr Stewart and Ms Tee, the first defendants in this litigation bought a house at 2 Huxley Grove in Churton Park from Mr Hastie (the first third party and third defendant) in July 1999. Mr Hastie had built the house. Mr Stewart and Ms Tee shifted in on 23 December in that year.
In mid 2003, they decided to sell the property. They entered an agreement for sale and purchase with prospective purchasers. The agreement was conditional on the purchasers obtaining a builders report acceptable to them. The purchasers brought the contract to an end on the basis of a pre purchase building report.
That report was prepared by Mr Lyttle, the second third party. Mr Stewart, aware of Mr Lyttle's involvement, asked him to undertake testing for him on the property. This arose because Mr Stewart understood that the house may be a leaky home. Mr Lyttle was contracted to Valuation Consultants New Zealand Limited (VCNZ) (the third third party). Mr Lyttle undertook the further testing requested. Ultimately a report from VCNZ (Mr Lyttle's) was provided in November 2003. The report identified concern about levels of moisture in the framing of the house.
The first defendants then had Mr Hastie undertake repairs arising from the report. Mr Stewart then asked Mr Lyttle (through VCNZ) to return and undertake further testing on the house. He reported in May 2004.
In late 2004 the first defendants sold the house at what is accepted to be full value to the plaintiffs. In 2010 the plaintiffs tried to sell the house but a pre purchase inspection indicated serious leaky home problems. As a result they obtained a report which indicated serious defects in the house, the remedial cost was then said to be anywhere from $225,000 to $350,000.
The plaintiffs claim against the first defendants arises from the sale and purchase agreement between them. In that agreement the first defendants warranted that all construction work on the house had local authority approval (where required)and had been completed to comply with the relevant Building Code. The plaintiffs' case is that the remedial construction work did not meet the requirements of the Building Code and that it required local authority consent.
The first defendants' claim against the second third party, Mr Lyttle, is a claim in negligence. The first defendants' contractual relationship, with respect to the work done by Mr Lyttle was with his head contractor, VCNZ. The first defendants therefore allege that a duty of care arose such that Mr Lyttle owed them a duty to take reasonable care and exercise reasonable skill in performing the services required by the first defendants' contract with VCNZ. VCNZ is said to be liable by virtue of implied terms in their contract with Mr Stewart. The implied terms match the duties pleaded against Mr Lyttle. There is no further need to distinguish between them.
The particular allegations of breach of duty of care are (with parallel contractual implied terms and breaches alleged): 1
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(a) in the event that it is found that the remedial works failed to meet the Building Code (which is denied) failing to recommend remedial works that were fit for purpose and in accordance with the Building Code, in particular so as to avoid the entry of external moisture in breach of the requirements of cl E2 of the Building Code;
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(b) in the event that it is found that a building consent was required for the remedial works (which is denied) failing to advise the first defendants prior to the first third party commencing the remedial works (or at all) that a building consent was required.
As a result of a breach of this duty of care it is said that the first defendants gave warranties to the plaintiffs when they signed the agreement for sale and purchase.
Both the second and third party now seek summary judgment and/or to strike out the first defendants' claim against them. The third third party seeks summary judgment or strike out because:
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(a) the first defendants' cause of action against the third third party is barred by the operation of s 4(1)(a) under the Limitation Act 1950; and
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(b) the first defendants' cause of action relating to the third third party is inconsistent with the terms of the retainer between the first defendants and it and therefore Mr Stewart's claim against VCNZ cannot succeed.
As to the second third party, his application for summary judgment/strike out alleges the first defendants cause of action is barred by the operation of s 4(1)(a) of the Limitation Act 1950.
High Court Rule 12.2(2) provides that summary judgment may be ordered against the (as here) first defendants with respect to their claim against the third parties if the defendants' causes of action are unsustainable. Broadly, summary judgment is appropriate if VCNZ (as relevant here) can provide a clear answer to the first defendants' claim by way of a complete defence which cannot, by further evidence, be challenged.
Further, if VCNZ and Mr Lyttle can provide a limitation defence which cannot be answered then summary judgment or strike out is appropriate. These principles are always subject to the proposition that if pleadings can be amended to provide a sustainable cause of action then the summary judgment application must fail.
As to strike out r 15.1 of the High Court Rules permits strike out of all or part of a pleading where:
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(a) the pleading discloses no reasonably arguable cause of action; or
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(b) it is likely to cause prejudice or delay; or
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(c) is frivolous or vexatious; or
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(d) is otherwise an abuse of the Court process.
An application for strike out must proceed on the basis that the facts pleaded in the statement of claim are true. Essentially what must be shown is that the claim by the first defendants against the third parties is so untenable that it could not possibly succeed.
I consider the “merit” 2 argument of the third third party first. The first defendants' claim against VCNZ is set out in its statement of claim. I include below the pleadings relating to the second third party for a full understanding of the first defendants' case:
15. In or around late November 2003 the first defendants retained the third third party to undertake further investigations into the high moisture levels and provide advice as to any remedial action required ( Third Third Party Retainer).
16. It was an implied term of the Third Third Party Retainer that:
(a) the services would be undertaken in a competent and professional manner;
(b) the second third party would exercise reasonable care and skill in investigating the high moisture levels and providing advice as to any remedial works required;
(c) any remedial work recommended would be fit for purpose and meet the requirements of the building code; and
(d) if a building consent was required for any remedial work the second third party would notify the first defendants of this requirement together with any other relevant regulatory requirements.
17. The services under the Third Third Party Retainer were provided by the second third party.
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21. At all material times the second third party owed the first defendants a duty to take reasonable care and exercise reasonable skill in performing the services under the Third Third Party Retainer.
22. The second third party owed his duty of care independent of the third third party. At all material times:
(a) the first defendants relied on the skill and expertise of the second third party in performing the services under the Third Third Party Retainer; and
(b) the second third party knew, or ought to have known, that the first defendants were relying on the skill and expertise of the second third party in performing the services under the Third Third Party Retainer.
23. The second third party has breached the duty of care.
Particulars of Breach
(a) in the event that it is found that the remedial works failed to meet the building code (which is denied) failing to recommend remedial works that were fit for purpose and in accordance with the building code, in particular so as to avoid the entry of external moisture in breach of the requirements of paragraph E2 of the building code;
(b) in the event that it is found that a building consent was required for the remedial works (which is denied) failing to advise the first defendants prior to the first third party commencing the remedial works (or at all) that a building consent was required.
24. As a consequence of the second third party's breach of its duty of care the first defendants gave the vendor warranties contained in clause 6.2(5) of the Contract.
Two reports were obtained by the first defendants from Mr Lyttle and VCNZ regarding the condition of their house which gave rise to the first defendants' claim against them. Mr Stewart has sworn an affidavit as to the circumstances under which VCNZ and Mr Lyttle came to be instructed.
At [11] Mr Stewart in his affidavit said:
[11] After receiving Mr Lyttle's contact details I contacted him. He seemed the logical person to contact as he apparently had knowledge of the potential issues. Mr Lyttle discussed his concerns about the property and said the property would...
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