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].
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