Rea and v 360 Degrees Ltd
| Jurisdiction | New Zealand |
| Judge | Associate Judge C B Taylor |
| Judgment Date | 04 May 2022 |
| Neutral Citation | [2022] NZHC 916 |
| Docket Number | CIV-2021-404-1764 |
| Court | High Court |
[2022] NZHC 916
Associate Judge C B Taylor
CIV-2021-404-1764
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA
TĀMAKI MAKAURAU ROHE
Limitation — application for strike-out — claim for damages concerning an alleged leaky building — limitation defences — late knowledge — sufficient knowledge — consideration of English authorities — Building Act 2004 — Limitation Act 2010
N L K Stone/ C Harnett for the Plaintiffs/respondents
T Weston QC / JRJ Knight for the Fouth Defendant/Applicant
Thomas C Weston QC, Auckland, for the Fourth Defendant (Applicant)
This judgment was delivered by me on 4 May 2022 at 4:00pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
Mr Anthony Rea and Mrs Judith Rea, as trustees of the Waiatarua Trust, are the registered owners and occupiers of the residential property at 19A Te Atatu Road, Te Atatu, Auckland (the property). They allege the property suffers from serious building defects. They have brought a claim against four defendants involved in the development, construction and consenting of the property.
The fourth defendant in the proceeding is Auckland Council (the Council). The plaintiffs claim the Council acted negligently in processing the building consent, undertaking inspections and issuing a Code Compliance Certificate ( CCC) for the property.
The Council seeks strike out of the plaintiffs' claim against it. It says every alleged negligent act or omission occurred more than six years before the proceeding was filed, the proceeding is prima facie time-barred, and the proceeding does not plead or disclose any basis for extension or postponement of the primary limitation period.
The parties disagree on the correct interpretation of the Limitation Act 2010, the Building Act 2004 and the case law that applies to the dispute.
On 12 December 2012, the Council issued a building consent for the property's construction. Between January and August of the following year, it undertook inspections of the property. The Council issued a CCC for the property on 18 October 2013.
The plaintiffs became owners of the property on 11 February 2014. In August of that year, they claimed under their Master Build insurance policy for minor aesthetic issues on the property.
On 22 June 2015, after a site visit from Master Build Services Ltd, a letter was sent to the plaintiffs advising them that the builder, Tony Cathro Construction Ltd, would attend to the remediation. The remediation was later inspected and passed by Mr Grant Hayes of Master Build.
On 14 September 2015, Tony Cathro Construction Ltd sent a letter to the developer, 360 Degrees Ltd, and copied the plaintiffs about further remedial items to which Mr Cathro would attend.
On 3 February 2016, Maynard Marks, a building surveying firm, inspected the property at Master Build's behest. On 10 March 2016, it issued a report to the plaintiffs and Master Build, identifying 31 internal, external, structural and other defects with the property.
In March 2016, ACH Consulting Ltd, a civil and structural engineering firm, carried out a structural review of the property at Maynard Marks' behest. In a report dated 24 May 2016, it identified five structural and weathertightness defects, recommending remedial works. This report was released to Maynard Marks and Master Build, with the latter forwarding it to the plaintiffs.
On 23 March 2017, Maynard Marks issued a scope of remediation works to the plaintiffs and Master Build. It included remedial works recommended by ACH Consulting Ltd.
On 30 January 2018, Maynard Marks produced a quantity surveyor's report.
The plaintiffs engaged a further building surveying firm, Fraser Thomas Ltd, on 19 October 2018. It produced a report dated 19 March 2019, recording structural defects and extensive workmanship issues with the property. Whether those defects were the same ones identified in Maynard Marks and ACH Consulting Ltd's previous reports is a point of dispute between the parties.
The plaintiffs then applied to the Ministry of Business, Innovation and Employment ( MBIE) to determine whether the Council's decision to grant the CCC should be confirmed, reversed or modified.
On 4 May 2021, MBIE issued a determination that the Council was correct to issue the CCC at the time it had, but that the Council's decision should now be reversed in light of the property's defects. On 2 June 2021, the Council accordingly reversed the CCC for the property.
The plaintiffs issued the present proceeding on 9 September 2021. The Council filed its statement of defence on 17 November 2021. The plaintiffs then filed a reply to affirmative defences on 25 November 2021.
The Council filed the present application for strike out on 6 December 2021.
The Council applies for orders: 1
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(a) That the plaintiffs' statement of claim, dated 9 September 2021 ( the Claim), be struck out;
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(b) That the plaintiffs' reply to the statement of defence of the fourth defendant, dated 26 November 2021 ( the Reply), be struck out; and
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(c) For costs.
The grounds on which the orders are sought are: 2
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(a) The Claim alleges that the Council acted negligently in processing the building consent, undertaking inspections and issuing a Code Compliance Certificate ( CCC) for the property.
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(b) The issue of the CCC is the last alleged act or omission of the Council. The claim alleges the CCC was issued on 18 December 2013 (it was in fact issued on 18 October 2013).
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(c) This proceeding was filed by the plaintiffs on 9 September 2021, more than six years after the alleged and actual dates of issue of the CCC.
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(d) Section 11 of the Limitation Act 2010 a defence to the Claim if it was filed more than six years after the alleged act or omission on which the Claim is based.
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(e) The Claim is statute-barred on its face, and is therefore frivolous, vexatious, or otherwise an abuse of process.
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(f) The Reply denies that:
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(i) All alleged acts or omissions of the Council occurred on or before 18 October 2013; and
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(ii) The date on which the Claim was filed was at least six years after the dates of each act or omission on which the claim against the Council is based.
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(g) Neither the Claim nor Reply pleads any act or omission of the Council that occurred after the issue of the CCC (dated 18 October 2013).
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(h) The applicant repeats paragraphs 2(a)-(c) above, and says that the denials by the plaintiffs in the Reply are contrary to the facts alleged by the plaintiffs in the Claim, and the Reply is therefore vexatious and an abuse of process.
Ms Sarah Hann, solicitor at the Council, has made an affidavit in support of the Council's interlocutory application for strike out. She produces the CCC and confirms it was included in the plaintiffs' initial disclosure. 3
The plaintiffs oppose the Council's application: 4
3. The plaintiffs refer to the grounds in the Strike Out Application and say:
(a) The plaintiffs agree with the grounds in paragraph 2 and subparagraphs 2(a), 2(b), 2(c), 2 (d) and 2(g) of the Strike Out Application.
(b) The grounds in subparagraph 2(e) are wrong in law;
(c) The grounds in 2(h) are wrong in fact;
(d) The grounds in subparagraph 2(f) are wrong in fact and in law.
4. Making such arguments is vexatious, oppressive, unnecessary and an abuse of process and indemnity or increased costs should be awarded to the plaintiffs.
5. The plaintiffs' further grounds of opposition are as follows:
(a) The plaintiffs' reply dated 26 November 2021 was appropriately drafted having regard to:
(i) Rule 5.63(2) of the High Court Rules;
(ii) The limitation defence raised by the fourth defendant, which was itself inadequate as it inexplicably omitted reference to the other relevant limitation periods;
(iii) The stage of the proceedings as at 26 November 2021;
(iv) The plaintiffs' statement of claim, reply and Fraser Thomas Limited report and MBIE decision provide the fourth defendant with an “air of reality” such that competent counsel would understand the nature of the case, including the applicability of the limitation periods inherent in all construction cases; and
(b) The Strike Out Application and the fourth defendant's affirmative defence omit reference to all of the limitation periods relevant in a construction case as referred to in the Limitation Act 2010, the Building Act 2004 and in relevant case law, and the Strike Out Application should be dismissed on this basis alone.
(c) In the alternative, the plaintiffs should be permitted to amend their reply to incorporate affirmative defences with virtually identical wording as the fourth defendant's statement of claim, referring to the six-, up to nine — and finally the ten-year limitation periods.
(i) That the plaintiffs' pleadings are appropriately drafted, and comply with the High Court Rules, including Rule 5.63(2).
(ii) There is no basis to compel the plaintiffs to provide affirmative defences to affirmative defences, the High Court Rules militate against such drafting practices, and such convoluted pleadings are in any event not in the interests of justice;
(iii) That if the plaintiffs' pleadings are flawed, then the defendants' pro forma affirmative defences are equally flawed by not affirmatively denying that the other limitation periods apply;
(iv) That...
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Understanding limitation periods for claims of building defects
...considered sufficient for the clock to start on your limitation period? A recent decision of the High Court, Rea v 360 Degrees Limited [2022] NZHC 916, provides some guidance as to when a building owner will have sufficient knowledge of any defects to trigger the start of a limitation What ......