Body Corporate 199883 v Auckland Council [2017] NZHC 2042 [24 August 2017]

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

CIV-2016-404-2038

[2017] NZHC 2042

BETWEEN

BODY CORPORATE 199883

First Plaintiff

……………………………/continued

AND

AUCKLAND COUNCIL

First Defendant

BC2004 LIMITED AND BC2009

LIMITED

Second Defendants

GAVIN SMITH [Discontinued]

Third Defendant

Hearing:

26 June 2017

Counsel:

CE Lane for plaintiffs

SC Price and JK Wilson for first defendant

Judgment:

24 August 2017

JUDGMENT OF FITZGERALD J

[As to strike out application by first defendant ]

This judgment was delivered by me on 24 August 2017 at 4 pm,

pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors: Grimshaw & Co, Auckland MinterEllisonRuddWatts, Auckland Brookfields, Auckland

Second Plaintiffs

CLAIRE JENNIFER LAMBDEN, SARAH JAYNE

MCCLINTOCK, BARRY AMOR, JANET MARY

BRADLEY, ROBERT HENRY BOLSOVER (Half

Share) AND ROBERT HENRY BOLSOVER as

Executor AND WILLIAMENA BARBARA

KNOWLES AS EXECUTOR (Half Share), GILLIAN

MARJORIE RODGER, NOEL RONALD THOMAS

ATKINS AND ANITA JOYCE ATKINS, MARY

REEDER LAMBERT VISSER, AUDREY FRANCES

WUNG-WEE TSEUNG, BARRY CLIVE OATES,

DAVID KENT BEASLEY, HELYN MARY MCKAY,

GAEL ELIZABETH WRIGHT, CHARLETT WENDY

DOWSING, MARIGOLD ANNE ALLEN

EDWARDS, RHEA JOSEPHINE PICKETT, CHUNG-

ROUNG LEE AND SHIH-CHING YING, PETER

LAWRENCE CLARKE AND KEITH MICHAEL

CLARKE

Second Plaintiffs

Introduction

[1] The first defendant’s application concerns the adequacy of pleadings in what

is sometimes referred to as a “third-wave leaky building case”.1

[2] The plaintiffs are the Body Corporate and the unit owners in respect of the

Ridgeview Apartments in Birkenhead. The apartments were constructed from 1999

to 2001. Between 2005 and 2006, they were subject to remedial work because the

original construction did not comply with the Building Act 1991 and the Building

Code.

[3] The plaintiffs now say the remedial work is defective. They say that as a

result, the Ridgeview Apartments still leak and do not comply with the New Zealand

Building Code. It is claimed that extensive remedial work will be necessary,

including a full re-clad and re-roof.

[4] The plaintiffs claim against the first defendant, Auckland Council, in

negligence. Auckland Council is the successor to the North Shore City Council who,

at the time of the repairs, was responsible for performing certain duties and

exercising certain powers under the Building Act and Building Code.

[5] In short, the plaintiffs say that Auckland Council breached a duty of care in

issuing consents for the remedial work, failing to sufficiently inspect the remedial

work and issuing a Code Compliance Certificate in respect of the remedial works.

The plaintiffs claim for unspecified economic loss (including the costs of the future

works required to remedy the defective repairs), and also $620,000 in general

damages.

[6] The claim against the second defendants (“Babbage”) is not relevant to the

1 I.e. a dispute involving allegedly defective repairs of a building that used to be leaky. The “first

wave” involves the initial claims about the leaky building. The “second wave” involves disputes

between the unit owners and the body corporate as to how the repairs were to be effected. The

“third wave” involves disputes arising out of what are alleged to have been defective repairs.

present application.2

The pleadings

[7] The original statement of claim, and the amended statement of claim, plead a

number of defects in the Ridgeview Apartments by way of a Scott Schedule

(Schedule 3 to the pleadings). A copy of the schedule of defects is attached to this

judgment, for ease of reference. As can be seen from that schedule, the alleged

defects or issues with Ridgeview Apartments were originally collated under the

headings “roof”, “cladding”, “balconies”, “courtyard/walkways” and “fire”. In the

amended statement of claim the alleged defects or issues with the building are now

collated under the broad headings of “roof”, “cladding”, “courtyard” and “fire”.

[8] From the evidence filed, and in particular, the affidavit of Mr Gray (the

plaintiffs’ expert), it appears the original statement of claim was prepared and filed

under some degree of urgency. In this context, Mr Gray deposes that:

In early August 2016 the plaintiffs engaged me under urgency to report on

their apartments. This is because the ten year limitation period was about to

expire.

[9] Mr Gray describes how he carried out an inspection of the building on

9 August 2016. He sets out the steps he took during that inspection. He goes on to

state that on 19 August 2016, he met the plaintiffs’ solicitors and during the meeting

described the defects he had observed in as much detail as possible. He deposes that

this resulted in Schedule 3 to the plaintiffs’ statement of claim. The original

statement of claim was actually filed on 19 August 2016, i.e. the same day as the

meeting between Mr Gray and the plaintiffs’ solicitors. Mr Gray deposes:

I confirm I reviewed Schedule 3 prior to the statement of claim being filed,

and it was a true and correct statement of the defects as best I was able to

describe them at the time.

[10] The amended statement of claim pleads certain duties on the part of

2 The Body Corporate contracted Babbage in 2003 to investigate the initial defects, and to

prepare, organise and supervise the repairs over 2005 and 2006. The claim against the third

defendant, Mr Gavin Smith, has now been discontinued.

Auckland Council:3

34. The Original Remedial Work to Ridgeview Apartments was

constructed with defects and in particular those in Schedule 3. ("the

Original Remedial Work Defects")

35. As a result of the Original Remedial Work Defects Ridgeview

Apartments does not comply with clauses B1, B2, C1, C2, C3, C4,

E1 and E2 of the New Zealand Building Code.

36. As a result of the Original Remedial Work Defects, Ridgeview

Apartments require extensive remedial works, including a full re-

clad and re-roof. Further particulars to be provided before trial

("the Future Remedial Works").

…

38. The plaintiffs repeat the above and say that the NSCC was the

territorial authority responsible for performing duties and exercising

powers under the Building Act 1991 and Building Act 2004 in the

district where Ridgeview Apartments were built.

39. In the circumstances, the NSCC owed each of the plaintiffs a duty to

exercise reasonable skill and care in performing the following

functions under the Building Act:

(a) Issuing the Original Remedial Work Building Consents;

(b) Inspecting the Original Remedial Work;

(c) Issuing the Original Remedial Work Code Compliance

Certificates.

[11] The amended statement of claim goes on to plead breaches of the above

duties in the following terms:4

40. In breach of its duties the NSCC:

(a) Issued the Original Remedial Work Building Consents when

there were not reasonable grounds to be satisfied that the

proposed building work would comply with the Building

Code;

(b) Failed to ensure that ·a sufficient inspection regime was

undertaken and/or did not undertake inspections with

sufficient thoroughness so as to ensure that the Original

3 The relevant aspect of the pleading in the original statement of claim was in substantially the

same terms. 4 Sub-paragraphs (a), (b) and (e) are in the same terms as the original statement of claim; sub-

paragraphs (c) and (d) have been added in the amended statement of claim.

Remedial Work complied with the requirements of the

Original Remedial Work Building Consents and/or the

Building Code;

(c) Failed to identify the Original Remedial Work Defects in the

course of its inspections and/or failed to take steps to ensure

the Original Remedial Work Defects were identified;

(d) Failed to take steps to ensure that the Original Remedial

Work Defects were rectified;

(e) Issued the Original Remedial Work Code Compliance

Certificates when it did not have reasonable grounds to be

satisfied that the Original Remedial Work complied with the

Original Remedial Work Building Consents and/or the

Building Code.

[12] As can be seen from the above pleadings, together with the defects alleged in

the schedule attached to this judgment, the broad thrust of the plaintiffs’ case against

Auckland Council is that:

(a) The remedial works were intended to remedy the original defects in

Ridgeview Apartments and thereby ensure that Ridgeview Apartments

complies with the Building Code;

(b) During the 2005/2006 remedial works, Ridgeview Apartments was

built with those particular defects set out in the attached schedule;

(c) Those defects mean that Ridgeview Apartments does not comply with

the Building Code in the respects alleged;

(d) Given (b) and (c) above, Auckland Council breached its duties at the

consenting, inspection and/or certification stages in respect of the

remedial works.

The strike-out application in summary

[13] Auckland Council applies to strike out the plaintiffs’ claim against it on the

basis that the pleadings lack sufficient specificity for Auckland Council to

understand or defend what is alleged against it.

[14] Auckland Council submits that a proper statement of claim requires the

plaintiffs to specifically plead the defects arising out of the remedial works for which

they purport to hold the Council responsible. The Council says that in both the

original and the amended claim, the defects are not identified or described in any

sufficiently meaningful way. In support of its application, the Council has retained

an expert who has deposed that he cannot understand the allegations presently made

against the Council, nor can he properly advise the Council on its defence.

[15] The Council submits that, for over 10 months since the plaintiffs filed their

original statement of claim (in August 2016), it has attempted to engage with the

plaintiffs in order to understand their grievances. It says none of these attempts have

progressed matters.

[16] As a result of hearing from counsel for Auckland Council at the hearing

before me, the Council’s argument on its application may be boiled down to the

following three propositions:

(a) First, to the extent that a physical state of affairs is described in

relation to each alleged defect, that statement does not inform the

Council of how it is alleged that physical state of affairs is a defect in

relation to the Council. For example, in the original pleading, the first

defect alleged is “the main roof has impact damage and holes”. The

Council submits that this tells it nothing as to how that particular

physical state of affairs is said to be a defect in respect of the Council,

either in terms of its issuing of the consent, inspecting the remedial

works and/or issuing the Code Compliance Certificate.

(b) Second, in relation to each defect, there is no information as to

whether the defect is alleged to be a defect in design or construction,

or some other mechanical, materials or other defect that ought to have

been identified by Council.

(c) Third, many of the alleged pleaded defects, both in the original and

amended statements of claim, are in reality simply conclusory

statements that also do not assist the Council in understanding the

case against it.5

[17] As a result, the Council seeks orders that:

(a) The proceedings purportedly commenced by the statement of claim in

August 2016 be struck out or set aside in whole or part and/or

declared as a nullity and of no effect; and/or

(b) The plaintiffs file and serve a more explicit statement of claim that

complies with the requirements of the High Court Rules. While the

amended application does not set out the further pleadings/particulars

sought, in written submissions filed for the hearing, counsel for

Auckland Council submits that at least the following further

information ought to be provided:

(i) A proper description of each defect with appropriate factual

specificity and case related detail, including whether it is a

design, construction or mechanical defect or some other (e.g. a

defect with materials);

(ii) The precise location of each alleged defect. For example, if

there is a “hole” in the metal roof, identify each location where

the hole is said to exist (if diagrams assist in identifying the

defects or location then attach it to the pleading);

(iii) Identify with an appropriate level of factual specificity how

each of the alleged defects is said to have arisen from the

reclad remedial works;

5 Examples of this (from the original statement of claim) include “failed water proofing

membrane”, “inadequately installed drainage pipes”, “balconies do not shed water” and “glass

block joinery frame failing”. Similar defects alleged in the amended statement of claim include

“internal rubber membrane gutter does not prevent the penetration of water”, “metal roofing

does not prevent the penetration of water”, “the fibre cement cladding is in close proximity with

the ground and absorbs moisture” and “pergola does not prevent the penetration of water”.

(iv) If there is an alleged insufficiency with the consented plan(s)

and/or specifications, then provide particulars identifying the

relevant plan(s) and/or specification the plaintiffs rely on and

the location of the alleged insufficiency in the identified

plan(s) and/or specifications; and

(v) If the plaintiffs allege particular defects have caused damage

through not preventing the penetration of water, then provide

particulars of how and where each defect is said to have

resulted in water penetration.

[18] The Council also seeks ancillary orders directing that the parties’ experts

meet and the plaintiffs’ expert “answers all reasonable questions by [the Council’s

expert] regarding the nature and existence of the alleged defects and damage.”

[19] The plaintiffs oppose the making of the orders sought. The plaintiffs say that

the statement of claim, in both its original and amended form, fully comply with the

Rules and the guidance given by the courts in similar leaky building litigation as to

what is required for appropriate pleadings. Further and in any event, they submit

that any appropriate remedy ought to be limited to the filing of a more explicit

statement of claim, on the basis that the first statement of claim was not an abuse of

process which would otherwise justify striking out the proceedings.

[20] The plaintiffs further say that the parties’ experts have already met and there

would be no useful purpose served by a further meeting at this time. The plaintiffs

say that any further meeting would be more productive after the evidence has been

prepared and served.

Legal principles

[21] There is no dispute as to the relevant legal principles. Rather it is their

application to the pleadings in this case which is in issue.

[22] Rule 5.26 is the starting point. This provides as follows:

5.26 Statement of claim to show nature of claim

The statement of claim—

(a) must show the general nature of the plaintiff's claim to the relief

sought; and

(b) must give sufficient particulars of time, place, amounts, names of

persons, nature and dates of instruments, and other circumstances to

inform the court and the party or parties against whom relief is

sought of the plaintiff's cause of action; and

(c) must state specifically the basis of any claim for interest and the rate

at which interest is claimed; and

(d) in a proceeding against the Crown that is instituted against the

Attorney-General, must give particulars of the government

department or officer or employee of the Crown concerned.

[23] The proper pleading and particularisation of a claim in a defective building

case was considered in Platt v Porirua City Council.6 In that case, Kós J

summarised the purpose of particulars in a defective building claim as being to:7

(a) inform defendants as to the case they have to meet;

(b) limit the scope of matters the plaintiff may put in issue at trial (or in

pre-trial settlement discussion);

(c) enable the defendants to know what witnesses it will need to retain

and enable them to start preparing evidence ahead of the formal

exchange of evidence; and

(d) provide an opportunity for a defendant to seek summary

determination on the basis that the claim as pleaded is untenable.

[24] Kós J went on to observe that:8

In negligent omission cases, particulars have always had to be given in the

pleading showing in what respects the defendant was negligent.

[Emphasis added]

[25] Kós J also provided a useful summary of the overall requirements for

pleadings in cases such as this:

[24] The plaintiff in a negligence case must plead with particularity the

respects in which the defendant is said to have fallen beneath the standard of

6 Platt v Porirua City Council [2012] NZHC 2445.

7 At [19].

8 At [22].

care required of it. If proof and pleading are indirect (in, say, a case based on

the defendant’s failure to identify defective construction, design or

performance by third parties), the plaintiff needs to adequately particularise

the following:

(a) what, physically the defects are that caused loss (i.e. the “where”);

(b) the particular standards that the third parties failed to meet in the

case of each defect, either individually or collectively (i.e. “how”

they were “defects”);

(c) the circumstances in which the defendant came to have an

inspectoral or supervisory role (including, normally, when);

(d) the standard(s) required of the defendant in undertaking that role;

(e) particulars of the breach of duty by the defendant; and

(f) the loss thereby caused (that is – the loss caused by the third parties’

defective performance which would have been avoided by the

defendant performing its duty to the required standard).

These cases typically are “double standards cases” in the sense that two

levels of standards are in issue: those that needed to be conformed to by

the designer, builder or contractor, and those that needed to be conformed

to by the Council in identifying the prior breach of standard by those

other parties.

[26] Similar issues were considered in Body Corporate 351522 v Queenstown

Lakes District Council.9 In commenting on the courts’ approach to particularisation,

Associate Judge Osborne stated:10

A final point is in relation to the Court’s approach to particularisation, and its

relationship to evidence. It has been judicially recognised that the modern

arrangements for sequential exchange of written briefs of evidence does not

alter the need for, or the pleading of particulars. That said, the Court when

considering particulars will be making a decision which involves matters of

degree and judgement. Where the parties have exchanged (even on a

without prejudice basis) their detailed experts’ reports, the Court may

legitimately take into account the availability of such detail to the other side

when determining the extent of detail to order by way of further particulars.

[27] In that case, the Court accepted that the defendant was entitled to particulars

to identify which category or categories each defect in the claim belonged (for

example, whether it was said to be a design, construction or mechanical engineering

9 Body Corporate 351522 v Queenstown Lakes District Council [2013] NZHC 559 (“Queenstown

Lakes”). 10

At [62].

defect), and how and where each of the alleged defects was said to have resulted in

water ingress.

[28] In support of its application for an order setting aside or striking out the

pleadings, the Council relies primarily on the decision of Faire J in Body Corporate

348047 v Auckland Council,11

where the statement of claim was found to be so

defective that it held to be a nullity (with the consequence that it was incapable of

stopping time running for limitation purposes). In that case, the document simply

alleged a bare statement that the building was constructed with building defects, with

no specific particulars beyond that. Council also refers to observations to a similar

effect by Associate Judge Matthews in Ballantyne Trustees Limited v GBR

Investments Limited where he found the claim in that case had been:12

…filed to save the claims from the consequences of limitation defences. The

proceedings as filed were frivolous, as it was a proceeding which lacked the

seriousness required of matters for the Court’s determination. It was

vexatious, as it involved procedural impropriety across a range of Rules, as

discussed. It was also an abuse of process as it was brought to save the

claim from limitation defences without it being evident that a requisite

degree of analysis of the law or the facts had been undertaken.

Striking out as an abuse of process - analysis

[29] Mr Price quite responsibly accepts that striking out the pleading as a nullity is

extreme. However, he submits that it is appropriate in this case, given the plaintiffs’

claims fall so far short of the mandatory requirements of a pleading and thus falls in

the type of conduct disapproved by the Court as an abuse of process.

[30] I am not satisfied that the plaintiffs’ claims, as framed in either the original

statement of claim or the amended statement of claim, fall so far short of what is

required of a pleading that the appropriate course is to strike out the claims as an

abuse of the Court’s process. Having carefully reviewed the original and amended

statements of claim, I consider they are some way from the types of pleadings

considered “nullities” in Imperial Gardens and Ballantyne. While the pleadings do

require further detail and particulars to be provided (as to which, see [36] below), the

general nature or thrust of the plaintiffs’ claim against the Council is stated – being

11

Body Corporate 348047 v Auckland Council [2014] NZHC 2971 (“Imperial Gardens”). 12

Ballantyne Trustees Ltd v GBR Investment Ltd [2017] NZHC 435 at [146].

as set out at [12] above. The legal basis for the plaintiffs’ claim is also clear, namely

negligence.

[31] Nor am I persuaded that this analysis is altered by the fact that the claim was

filed with some degree of urgency in light of (presumed) limitation issues, or that the

plaintiffs have had ample opportunity to re-plead but have not done so to date. The

claims as filed are either a nullity or they are not. Nor has Council provided any

detail or evidence of actual prejudice it has or will suffer as a result of the defects in

the pleading (other than broad statements of not presently being in a position to

understand the claim against it).

Further particularised pleading - analysis

[32] As flagged above, I accept that the pleadings require further particularisation

in order for the Council to be properly informed of the case against it. In short, it is

entitled to know, with an appropriate degree of particularisation, what it is about the

remedial works that is said to be defective, and, importantly, how it is said that the

Council is responsible or liable for that particular state of affairs.

[33] The pleadings allege that each of the particular defects set out in Schedule 3

arose out of the 2005/2006 remedial works.13

To the extent that Schedule 3 pleads

only a broad conclusory statement as the defect itself (for example, defect no. 1

“Metal roofing does not prevent the penetration of water”14

), I accept the Council’s

submission that this would effectively require the Council to consider each possible

permeation of why the metal roofing might not prevent the penetration of water, each

permeation being a separate matter requiring separate investigation and

consideration. I also accept that this has the effect of effectively reversing the onus,

in terms of requiring the Council to establish precisely what is said to be wrong with

the roof which results in it not preventing the penetration of water.

[34] However, most if not all of the defects pleaded in Schedule 3 to the amended

statement of claim do provide some further detail other than just a broad conclusory

statement of the type referred to in the preceding paragraph. The difficulty is that the

13

Amended Statement of Claim, paragraph [34]. 14

The pleading simply mirroring the requirements of clauses B2 and E2 of the Building Code.

further factual detail often does not provide significant guidance. By way of

example:

(a) Defect no. 1 is stated to be “metal roofing does not prevent the

penetration of water”. Particulars are given as “holes in metal roofing

iron” (together with a broad location of those holes). This does not

inform the Council whether the holes in the roofing iron are alleged to

be a design defect that the Council ought to have observed at the

consenting stage; a construction defect that should have been picked

up by the Council at the inspection stage; or some other defect that

ought to have been identified by the Council in carrying out any one

or more of its duties at pleaded at paragraph 39 of the amended

statement of claim.

(b) For defect no. 14, framed as “the top of the raking inter-tenancy wing

walls do not prevent the penetration of water”, further particulars are

given as “the top of the wing walls are covered in texture coating and

paint”. As such, it is alleged that that physical state of affairs is

causing the top of the raking inter-tenancy wing walls to fail to

prevent the penetration of water. Again, however, this does not

adequately inform the Council why or how it is alleged that it has

breached any one or more of its duties in respect of this alleged

defect.

(c) Similarly, defect 12, that “the fibre cement cladding is in close

proximity with the ground and absorbs moisture” is further

particularised with the comment that “the fibre cement cladding is

within 20mm of the finished ground and the bottom edge of the fibre

cement cladding is not waterproofed”. But is not pleaded how this is

a defect vis-à-vis the Council.

(d) Another example is defect 5, namely that “the uPVC pipes that

penetrate the courtyard do not prevent the penetration of water or

protect from the adverse effects of surface water”. Particulars are

given that “The junction between the uPVC is formed with sealant”.

Again, however, it is not clear how or why it is said that the Council

has breached any one or more of its duties as a result of the junction

being formed with sealant.

(e) Defect 6 is framed as “the floor/wall junctions do not prevent the

penetration of water or protect from the adverse effects of surface

water”. This is particularised as “the waterproofing membrane

terminates short of the vertical face of the wall”. Like the prior

examples, this does not inform the Council why it is alleged that this

physical state of affairs gives rise to a breach of the Council of any

one or more of its pleaded duties.

[35] I am conscious of avoiding the risk of “overworking” pleadings in cases such

as this, and that, prior to discovery, plaintiffs may not have all relevant information

available to them. Nevertheless, a careful analysis of the pleaded defects in this case

highlights that it is not clear why or how each physical state of affairs said to give

rise to a breach of the Building Code is to be sheeted home to a breach by the

Council of its duties.

[36] As such, I consider that in order to inform the Council adequately of the case

against it (i.e. rather than simply the current physical state of certain aspects of the

building), the following particulars ought to be given in relation to each alleged

defect:

(a) First, whether the alleged physical state of affairs is said to have

arisen from defective design during the remedial works, defective

construction during the remedial works, some other mechanical defect

or the use of defective materials during the remedial works.

(b) Second, in relation to each pleaded defect, what particular duty the

Council is alleged to have breached. For example, if it is alleged that

a particular defect is a design defect, is Council’s alleged breach

limited to a breach of its duty in issuing the consent in respect of that

design defect? Or if a particular defect is said to be a construction

defect, is Council’s alleged breach limited to an alleged failure to have

identified that construction defect during the course of its inspections?

(c) Third, to the extent that there is any alleged insufficiency with the

consented plan(s) and/or specifications, details of the relevant plan(s)

and/or specifications the plaintiffs rely on and the location of the

alleged insufficiency in the identified plan(s) and/or specifications.

(d) Fourth, further detail in respect of the location of each alleged defect.

Broad locations are given in Schedule 3 to the amended statement of

claim, but more precision is required. To the extent that diagrams

assist in identifying precise locations, these may be provided.

[37] Some further information in relation to some of the alleged defects has been

provided in a table attached as Schedule 2 to Mr Simon Gray’s affidavit sworn

7 April 2017 (Mr Gray being the plaintiffs’ expert). For example, in relation to

defect no. 1 (holes in metal roofing iron), Mr Gray states that as a result of the

remedial work, “scaffolding was erected and supported on the roof”. Mr Gray goes

on to state that “the remedial work and scaffolding has materially contributed to the

holes in the roofing iron”. If this is so, then these particulars should be included in

the statement of claim. However, allegations such as this also need to be clarified; at

present Mr Gray says “the remedial work and scaffolding contributed to the holes”.

Is the allegation limited to the scaffolding? If so, is that said to be a construction

defect that the plaintiffs allege that the Council ought to have identified during its

inspection of the remedial works? It is clarity of these types of issues that the above

particulars are intended to achieve.

[38] Turning to the remaining particulars sought by the Council, I am not

persuaded that, on the basis that the above further particulars are given, those

particulars referred to at [17](b)(iii) are required. Each alleged defect is pleaded to

have arisen out of the remedial works, rather than the original construction. The

particulars ordered at [36](a) and (b) above will identify how the defect is said to

have come about (for example, as a result of defective design or construction) and

why or how it is alleged that the Council has breached its duty or duties as a result.

Council submits that aspects of the defects pleaded, including the roof and courtyard,

were not a part of the remedial works at all. That may or may not be so. But that

proposition is relevant to the prospects of the plaintiffs succeeding on these aspects

of its pleaded case, rather than to whether further particulars of the claim are

required.

[39] Nor are further particulars required of how and where each defect is said to

have resulted in water penetration. As confirmed in the plaintiffs’ submissions on this

application, the plaintiffs do not plead that the defects have caused damage to the

building. If however, any amended claim alleges damage, adequate particularisation

of that would need to be provided (consistent with Associate Judge Osborne’s

observations in Queenstown Lakes15

).

[40] There is accordingly an order that within 20 working days of this judgment,

the plaintiffs file a further amended statement of claim that provides those particulars

set out at [36] above.

Meeting of experts

[41] I consider that in any case such as this, it is useful for the experts to meet. I

am conscious that an earlier meeting may not have seemed productive, but in my

view, that alone is not a reason to not order a further meeting in the shorter term. I

consider any such meeting should, however, take place after the further amended

statement of claim has been filed and served, with the purpose of that meeting being

for the experts to jointly “walk through” the amended pleading and consider and

discuss each pleaded defect.

[42] I do not consider it appropriate or necessary to order that the plaintiffs’ expert

answer “all reasonable questions” put to him by the Council’s expert. Such an order

would inevitably give rise to disputes and difficulties with enforcement. Nor do I

consider it is appropriate or necessary at this stage of the proceeding to direct the

15

Queenstown Lakes, above n 9, at [109].

experts to prepare and sign a joint witness statement recording the questions posed

and answers given in that meeting.

[43] There is accordingly an order in terms of paragraph [1](c)(i) of the Council’s

amended application dated 2 June 2017, save that the date for the meeting is within

10 working days of the filing of the further amended statement of claim.

Without prejudice issue

[44] A separate issue also arose between the parties and upon which I heard from

counsel at the hearing. In short, the Council objects to certain correspondence being

included as exhibits to the affidavit evidence filed by the plaintiffs, on that basis that

the correspondence is subject to privilege pursuant to s 57 of the Evidence Act 2006

( commonly referred to as “without prejudice” privilege). The Council submits that

as without prejudice privilege is a joint privilege, it cannot be waived unilaterally by

one party (i.e. the plaintiffs in this case).

[45] Mr Lane on behalf of the plaintiffs’ advanced two submissions in response:

(a) First, that the correspondence in question is not privileged, as

evidenced by the fact that it was not labelled “without prejudice”, or

“without prejudice save as to costs” or similar.

(b) Second and in any event, even if the correspondence had been

privileged, the Council has waived any privilege in the material. This

submission was advanced primarily on the basis that the Council has

alleged in its amended interlocutory application that the plaintiffs and

their expert “have been obstructive to the Council’s efforts to obtain

proper information to understand the plaintiffs’ position, in particular

the alleged defects”. The plaintiffs wish to refer to the

correspondence in question in order to demonstrate that this is not so.

Mr Lane accordingly submits that the evidence relied on by the

Council in support of its allegation is “inconsistent with

communications that have been exchanged [between the parties] and

that the [Council] now seeks to exclude.” Mr Lane submits that in

these circumstances, fairness dictates that there has been an implied

waiver.

[46] I may deal with these competing submissions briefly.

[47] First, it is correct that the correspondence in question does not contain the

label “without prejudice”, “without prejudice save as to costs” or similar. However,

any issue of privilege, including without prejudice privilege, is one of substance over

form. Having reviewed the full chain of correspondence (with the parties’ consent),

the correspondence in question is clearly part of a continuing chain of

communications, which commenced with a letter from the plaintiffs’ solicitors

expressly stated to be on a “without prejudice save as to costs” basis. The

communications involve offers and counter-offers in an attempt to resolve the

current interlocutory application. Material provided under cover of a further letter in

the chain from the plaintiffs’ solicitors is expressly stated to be provided “on a

without prejudice basis”.

[48] I am satisfied that in the context of the continuing chain of correspondence,

the particular items of correspondence in question are subject to without prejudice

privilege. I do not consider that the mere fact that the correspondence has not been

labelled without prejudice clearly signals that the communications are moving to an

open basis.

[49] In support of his submissions on waiver, Mr Lane relied on a number of

authorities which confirm that privilege may be impliedly waived and speak of

“fairness” in this context. For example, in the High Court of Australia decision

Attorney-General for the Northern Territory v Maurice, Mason and Brennan JJ held

that: 16

An implied waiver occurs when, by reason of some conduct on the privilege

holder’s part, it becomes unfair to maintain the privilege. The holder of the

privilege should not be able to abuse it by using it to create an inaccurate

perception of the protected communication … In order to ensure that the

opposing litigant is not mislead by an inaccurate perception of the disclosed

communication, fairness will usually require that waiver as one part of a

16

Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475 at 487-488;

approved in Equiticorp Industries Group Ltd v Hawkins [1990] 2 NZLR 175 (HC) at 180.

protected communicated should result in waiver to the rest of the

communication on that subject matter.

[50] However, waiver is not governed by a general sense of “fairness”. Of course,

the test is now set out in section s 65 of the Evidence Act as one of, in essence,

inconsistency with a claim of confidentiality. Nevertheless, even in the pre-Act

authorities, the term “fairness” was used in the context of a partial disclosure or

waiver of a privileged communication, yet the privilege holder sought to maintain

privilege over the balance of the communication. “Unfairness” arose in those

circumstances because the opposing party would be given an inaccurate perception

of the particular communication. This can be seen from the above extract from

Attorney-General for the Northern Territory v Maurice. Similar observations were

made by the Court of Appeal in Ophthalmological Society of New Zealand

Incorporated v Commerce Commission.17

That is not the issue in this case.

[51] Nor is the fact that material contained in the privileged communication is

relevant to an issue or allegation in the proceeding sufficient for the purposes of

waiver.18

If mere relevance were the test, then waiver would occur in many and

broad circumstances. Matters addressed in without prejudice communications will

inevitably be relevant to what is stated on an open basis or advanced in submissions

before the Court.

[52] I also do not consider there is waiver merely because material written on an

open basis (and relied on in submissions or at a hearing) might be said to be “at

odds” with material contained in without prejudice communications. Again, that will

often be the case. For example, a party may submit that it has a very strong case, yet

acknowledge in without prejudice communications that its case may have some

weakness and it is therefore willing to compromise.

[53] Rather, waiver will occur where the privilege holder “acts so as to put the

privileged communication, information, opinion, or document in issue in a

proceeding” (emphasis added).19

The Court of Appeal has recently confirmed that

17

Ophthalmological Society of New Zealand Incorporated v Commerce Commission [2003]

2 NZLR 145 (CA) at [23] and [25]. 18

Astrazeneca Ltd v Commerce Commission (2008) 12 TCLR 116 (HC) at [39]. 19

Evidence Act 2006, s 65(3)(a).

the concept of putting the privileged material “in issue” reflects the underlying

rational of inconsistency, where “a litigant cannot rely on the content of a document

for aspects of the litigation whilst seeking to withhold it otherwise”.20

[54] I do not consider that an allegation that the plaintiffs and its expert have been

“obstructive” in providing the further particulars is itself sufficient to “put in issue”

the privileged communications between the parties. None of the communications

in question, or any part of them, have been relied on or referred to by the Council in

support of such an allegation. Whether the plaintiffs want to rely on privileged

communications to defend such an allegation is a separate issue. At least in respect

of the attempted use of privileged materials to advance an allegation, the Court of

Appeal has said that the law does not permit this.21

[55] For these reasons, and as I indicated to Mr Lane at the hearing, I find that the

correspondence in issue is privileged and there has been no waiver in relation to it.

Costs

[56] My initial view is that the Council has been broadly though not wholly

successful on its application. In those circumstances, an appropriate outcome may

be an award of costs, although discounted to reflect that aspects of its application

have not been successful. I should emphasise, however, that these are initial views

only and are provided in the hope they assist the parties reach an agreed position on

costs.

[57] If the parties are unable to agree, then memoranda may be submitted. The

Council’s memorandum is to be submitted within 15 working days of the date of this

judgment with the plaintiffs’ memorandum to be filed and served a further five

working days thereafter. Absent a request by either party for a hearing on costs, and

subject to any further order the Court, I would then proceed to determine costs on the

20

Minister of Education v Reidy McKenzie Limited [2016] NZCA 326 at [14] and [15]. 21

Cooper v Van Heeren [2007] NZCA 207, [2007] 3 NZLR 783 at [29].

papers.

____________________

S Fitzgerald J

SCHEDULE 3

CIV 2016-404-2038 Body Corporate 199883 v Auckland Council - Ridgeview Apartments (270 Onewa Rd)

Defects in Schedule 3 of the Statement of Claim - 19 August 2016 Defects in Schedule 3 of the ASOC - 1 December 2016

No. Defect Location Breach

of

NZBC

No. Defect Location Breach

of

NZBC

Roof Roof

1. The main roof has impact

damage and holes

Main roof

B2, E2 1 Metal roofing does not prevent

the penetration of water.

Particulars: Holes in metal

roofing iron

Perimeter edges

of the main metal

roof

B2, E2

2. Roof fixings have penetrated

the butyl rubber membrane

gutter

Main roof,

northern end,

membrane

gutter

B2, E2 2 Internal rubber membrane gutter

does not prevent the penetration

of water.

Particulars: Holes in rubber

membrane roofing.

Main roof internal

gutter above

fixings

B2, E2

3. Roofing iron does not provide

adequate cover over timber

fascia boards

Main roof,

western

elevation

B2, E2 1 Metal roofing does not prevent the penetration of water.

Particulars: Holes in metal

roofing iron

Perimeter edges

of the main metal

roof

B2, E2

Cladding Cladding

4. Wing walls have no cap

flashing and/or no membrane

and/or no means to divert water

Eastern

elevation, inter-

tenancy wing

walls

B2, E2 14 The top of the raking inter-

tenancy wing walls do not prevent

the penetration of water.

Particulars: The top of the wing

walls are covered in texture

coating and paint.

Eastern elevation B2, E2

5. Cladding and control joints not

installed in accordance with the

manufacturer’s literature

All cladding

B2, E2

12 The fibre cement cladding is in

close proximity with the ground

and absorbs moisture.

Particulars: The fibre cement

sheet is within 20mm of the

finished ground and the bottom

edge of the fibre cement cladding

is not waterproofed.

Fibre cement

cladding in the

courtyard

B2, E2

6. Poorly formed horizontal plant

on bands

All cladding B2, E2 - N/A - -

Balconies Cladding

7. Balconies do not shed water Balconies B2, E2 - N/A - -

8. Flat topped pergola

South eastern

balconies

B2, E2 15 Pergola does not prevent the

penetration of water.

Particulars: The top of the pergola

is flat and is covered in texture

coating and paint.

Pergola, south

eastern elevation,

level 3

B2, E2

9. Glass block joinery frame

failing

Balconies B2, E2 18 Glass block joinery does not

prevent the penetration of water

and corrosion to the steel frame

has caused loss of amenity.

Particulars: Glass blocks are

housed within a steel frame with

coating to the external face of the

steel frame. There are weep

holes/drainage holes in the

bottom of the steel frame.

Eastern and

western elevations

B1, B2,

E2

10. Timber barge board

inadequately installed

Balconies B2, E2 16 The junction between the top

edge of the raking timber fascia

and fibre cement cladding does

not prevent the penetration of

water.

Particulars: The junction has

been formed with texture coating

and sealant.

Raking timber

fascia on the

eastern elevation

B2, E2

11. Insufficient cladding to balcony

clearances

Balconies B2, E2 12 The fibre cement cladding is in

close proximity with the ground

and absorbs moisture.

Particulars: The fibre cement

sheet is within 20mm of the

finished ground and the bottom

edge of the fibre cement cladding

is not waterproofed.

Fibre cement

cladding in the

courtyard

B2, E2

Courtyard/walkways Courtyard

12. Courtyard/walkways do not

shed water

Courtyard/

walkways

B2, E2 - N/A - -

13. Inadequately installed drainage

pipes

Drainage under

the tiles of the

courtyard

B2, E2,

G10,

G12

5 The uPVC pipes that penetrate the

courtyard do not prevent the

penetration of water or protect

from the adverse effects of

surface water.

Particulars: The junction between

the uPVC pipe and the floor is

formed with sealant.

Courtyard uPVC

pipe penetrations

B2, E1,

E2

14. Failed waterproofing membrane

Courtyard B2, E2 6 The floor/wall junctions do not

prevent the penetration of water

or protect from the adverse effects

of surface water.

Particulars: The waterproofing

membrane terminates short of the

vertical face of the wall

Courtyard

floor/wall

junctions

B2, E1,

E2

15. Failed waterproofing to external

face of the block wall

Block wall

adjacent to

courtyard

B2, E2 8 Block wall does not prevent the

penetration of water.

Particulars: The exterior surface

of the block wall is not

weatherproofed.

Eastern and

western boundary

block wall

B2, E2

Fire Fire

16. Cavity batten installation does

not provide adequate fire

rating/stopping

All internal

corners between

inter tenancy

and apartment

walls

C1, C2,

C3, C4

19 Cavity battens do not provide

adequate fire protection.

Particulars: The cavity battens are

castellated.

All internal

vertical corners

between inter-

tenancy and

apartment walls

C1, C2,

C3, C4

17. Penetrations have no or

inadequate fire protection.

All of the

building

including the

car park

C1, C2,

C3, C4

20 Penetrations have no or

inadequate fire protection

Penetrations in the

building including

the car parks

C1, C2,

C3, C4

18. Power boxes not correctly fire

stopped

All of the

building

C1, C2,

C3, C4

21 Electrical switch boxes have no or

inadequate fire protection

All of the building C1, C2,

C3, C4

New defects

- N/A - - 3 The metal roof does not prevent

the penetration of water at the

fixing locations.

Particulars: Nails have been used

to fix the metal roof.

Main metal roof

nail fixings

B2, E2

N/A - - 4 Raking lead apron flashings do

not prevent the penetration of

water.

Particulars: The horizontal fold of

the lead apron flashing extends

across half a ridge of a single tile.

Tiled roofs on

eastern elevation

B2, E2

N/A - - 7 Pipe penetrations through the

block wall do not prevent the

penetration of water.

Particulars: The junctions

between the pipe penetrations and

block wall are formed either with

sealant or have been left unsealed.

Western boundary

block wall

B2, E2

N/A - - 9 The external face of the block

wall is in contact with the ground

and absorbs moisture.

Particulars: The block wall

tanking is below ground level.

Western boundary

block wall

B2, E2

N/A - - 10 The exterior walls and cladding

have been constructed in such a

way that the fibre cement

cladding:

(a) has cracked (ruptured and

become unstable);

(b) the cracking has caused loss

of amenity;

(c) the cracking results in the

penetration of water.

Particulars: The timber framing is

uneven and out of plane (true and

plumb). The fibre cement

cladding is pulling away from the

timber frame. The plastered flush

joints are separating from the

fibre cement sheets. The sealant

joints at the internal corners are

opening up. The control joint

mouldings are pulling away from

the sheet joints.

Fibre cement

cladding to all

elevations

B1, B2,

E2

N/A - - 11 The fibre cement cladding behind

the gutters and timber fascia does

not prevent the penetration of

water.

Particulars: The fibre cement

sheet has been left bare.

Behind gutters

and fascia to all

elevations

B2, E2

N/A - - 13 The letter box roof/wall junctions

do not prevent the penetration of

water.

Particulars: The junctions have

been formed with texture coating

and sealant.

Courtyard B2, E2

N/A - - 17 The junction between the

balustrade and fibre cement

cladding wall does not prevent the

penetration of water.

Particulars: The junction has been

formed with a cap flashing that

terminates against the fibre

cement cladding. Sealant has been

applied between the end of the

cap flashing and the fibre cement

cladding.

Balconies/decks

on all elevations

B2, E2