|
|
Home
| Databases
| WorldLII
| Search
| Feedback
High Court of New Zealand Decisions |
Last Updated: 18 February 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2003-404-007259
BETWEEN BODY CORPORATE 170812
First Plaintiff
AND BUDIHARTO WIDJAJA & ORS Second Plaintiffs
AND AUCKLAND CITY COUNCIL First Defendant
AND DAINTY ALDERTON & ASSOCIATES Second Defendants
AND MANSON DEVELOPMENTS LIMITED Third Defendants
AND WATER WORKS LIMITED Third Party
Hearing: 26 April 2007
Further written submissions: 19 May 2008, 22 May 2008 and
29 May 2008
Counsel: T J Rainey/A K Hough for Plaintiffs
F R McLaren for Defendants
Judgment: 29 August 2008 at 2:30pm
JUDGMENT OF ASSOCIATE JUDGE ABBOTT
This judgment was delivered by me on 29 August 2008 at 2:30 pm pursuant to Rule 540(4) of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Grimshaw & Co, PO Box 6646, Auckland 1001 for plaintiffs
Fortune Manning, PO Box 4139, Auckland 1104 for
defendants
BODY CORPORATE 170812 AND ANOR V AUCKLAND CITY COUNCIL AND ORS HC AK CIV 2003-
404-007259 29 August 2008
CIV 2006-404-002611
AND BETWEEN BODY CORPORATE 180812
First Plaintiff
AND ELISABETH RACHEL MOORS & ORS Second Plaintiffs
AND AUCKLAND CITY COUNCIL First Defendant
AND MANSON DEVELOPMENTS LIMITED Second Defendant
[1] This judgement is given on an application by Manson Developments
Limited (Manson) for an order that the plaintiffs provide
further particulars of
their claims in these closely related proceedings.
[2] The plaintiffs jointly are suing parties associated with the design
and construction of a multi-unit residential apartment
building to recover
losses suffered as a consequence of alleged defects in the building.
Manson is sued as the developer.
[3] Manson contends that the existing pleading does not inform it
sufficiently of the plaintiffs’ claims that it was negligent.
The
plaintiffs have declined to provide any further particulars saying that their
claims are sufficiently pleaded and that the particulars
requested are either
not material to their causes of action against Manson or comprise matters of
evidence.
Background
[4] The first plaintiff in both proceedings (the Body
Corporate) is a body corporate established under the Unit Titles
Act 1972 in
respect of a single structure (9 storey), 86 unit residential development in
Wakefield Street, Auckland (known as Embassy
Apartments). The second
plaintiffs (the unit owners) are the owners of individual unit titles within the
building.
[5] The building was designed and constructed for Manson (as
developer) between about July 1993 and August 1996 (a
code compliance
certificate was issued on 16 August 1996). Units were sold as individual titles
were issued. This occurred progressively
from early 1996.
[6] The building was found to have defects. The plaintiffs engaged an expert to investigate the defects. The plaintiffs in CIV 2003-404-7259 (the first proceeding) issued that proceeding on 19 December 2003. They pleaded that various owners noticed defects in the building in 2002.
[7] Manson filed its statement of defence in February 2004. It included an affirmative defence that the plaintiffs knew or ought to have known of the defects by
19 December 1997, so that the claim was time barred.
[8] Ownership of some of the units changed over the course of time.
Some joint owners were also found to have been omitted
from the initial
proceeding. The plaintiffs applied to join the additional owners or new
owners. When that was opposed (primarily
due to perceived limitation
issues) those owners issued proceeding CIV 2006-404-2611 (the second
proceeding). The second
proceeding was the same in almost all material
respects as the first proceeding (it did not identify the date on which the
plaintiffs
discovered the defects but did set out the circumstances under which
they had acquired ownership). The two proceedings have not
been formally
consolidated but are being heard together. The present application is brought
in respect of both proceedings.
History in relation to particulars
[9] Manson had signalled its wish to have further particulars as early as the first case management conference in March 2004. The plaintiffs indicated that they would be filing an amended statement of claim, but as at April 2005 had provided further particulars only of their claim in respect of defective pipe work (identifying where failures had occurred). At a case management conference on 20 April 2005
Associate Judge Lang (as he then was) noted that there were live pleading
issues as between the plaintiffs and the defendants.
[10] The plaintiffs filed an amended statement of claim in May 2005 including some further particulars in relation to repair of pipe-work, but there was no other significant amendment of the pleading against Manson. Manson was not satisfied by the amended statement of claim. It served the plaintiffs with a formal notice to provide further particulars. The plaintiffs responded in July 2005 providing some further particulars but declining to provide particulars of the dates on which unit owners first noticed defects (saying that this was a request for evidence), or as to precise location of defects (saying that the claim as pleaded provided sufficient particulars of the alleged defects and damage).
[11] In April 2006 Manson renewed its request for particulars of the
location of defects. In a case management conference on
20 April 2006 the
plaintiffs were directed to file an amended statement of claim providing (inter
alia) “a breakdown of defects
affecting individual units (where
applicable).”
[12] On 18 August 2006 the plaintiffs in both proceedings filed
amended statements of claim, which almost exactly mirrored
one another save for
the identity of the second plaintiffs and the basis on which they measure their
loss (the majority of the second
plaintiffs in the second proceeding were
subsequent purchasers who say that they acquired their interests without
knowledge of the
existence of the defects or damage, or took an assignment of
the previous owners’ causes of action).
[13] On 8 September 2006 Manson served notice on the plaintiffs
requiring further particulars of the amended statements
of claim, so as to
distinguish between the Body Corporate’s and the unit owners’
causes of action, and again seeking
particulars as to when defects were first
noticed and as to the precise location of defects and the damage alleged to have
resulted
from each defect. The present application is based on this
notice.
[14] The plaintiffs responded by memorandum on 3 November 2006. They
said that the Body Corporate’s cause of action was
based on it having
suffered the full cost of the repairs. The plaintiffs also said that they did
not allege a separate cost associated
with repairing common property, as against
individual unit property, as all of the repairs were required to repair both.
The plaintiffs
did not answer the request for particulars as to when defects
were noticed (in respect of particular units), and declined to answer
the
request for particulars of the location of defects, both on the ground that
those matters were not material to their cause of
action.
[15] The second defendant in the first proceeding (a firm of architects) had also been pursuing further particulars. They had filed an application seeking to separate remedial costs in respect of common property and individual units. The application was considered in a case management conference on 21 November 2006. Counsel for the plaintiffs told the Court that the particulars were not being provided as they were not relevant to the claim being advanced by the plaintiffs (that the plaintiffs
jointly were seeking recovery of all costs incurred through the vehicle of
the Body Corporate, but if it was found that damaged suffered
by individual unit
owners was relevant the plaintiffs’ case was that unit owners were
carrying costs in proportion to their
(fixed) unit entitlement.
[16] Following that conference the plaintiffs provided a breakdown of
repair costs per unit (in accordance with unit entitlement)
as a
consequence of which the architects withdrew their application. Manson
indicated that it still wished to pursue its request
for particulars. The
present application followed.
Legal principles
[17] The application is brought under r 185 of the High Court Rules which
reads:
185 Notice requiring further particulars or more explicit
pleading
(1) A party may, by notice, require any other party—
(a) To give such further particulars as may be necessary to give fair notice
of—
(i) The cause of action or ground of defence; or
(ii) The particulars required by these rules; or
(b) To file and serve a more explicit statement of claim or of defence or
counterclaim.
(2) A notice under subclause (1) shall indicate as clearly as may be
the points on which the pleading in respect of which it
has been served is
considered defective.
(3) If the party on whom a notice under subclause (1) is served
neglects or refuses to comply with the notice within 7 days
after service
thereof, the Court may, if it considers that the pleading objected to is
defective or does not give particulars reasonably
required by the notice, order
a more explicit pleading to be filed and served.
(4) Notwithstanding that no notice has been given under this rule, the
Court may of its own motion order a more explicit pleading
to be filed and
served.
[18] When considering a request for particulars, the Court must examine the adequacy of the statement of claim. Rule 108 is the starting point for that consideration. The relevant parts of that rule for present purposes, read:
108 Statement of claim to show nature of claim, etc
The statement of claim—
(a) Shall show the general nature of the plaintiff's claim to the
relief sought; and
(b) Shall give such particulars of time, place, amounts, names
of persons, nature and dates of instruments, and other
circumstances as may
suffice to inform the Court and the party or parties against whom relief is
sought of the plaintiff's cause
of action ....
[19] In essence, the statement of claim must sufficiently inform the
Court and the opposite parties of the factual situation,
the existence of which
(if proven) entitles the plaintiff as a matter of law to claim relief:
McGechan on Procedure HR 108.08
[20] The underlying theme is that the claim must be pleaded with
sufficient particularity for the Court and the defendant to have
fair notice of
the case they need to meet: Price Waterhouse v Fortex Group CA 179/98,
30 November 1998 (CA) p 18
...What we are saying is that both the Court and opposite parties are
entitled to be advised of the essential basis of a claim or
defence, and all
necessary ingredients of it, so that subsequent processes and the trial itself
can be conducted against recognisable
boundaries. Neither the Court nor opposite
parties should be placed in a position of having to deal with a proposition of
whose substance
adequate notice has not been given in the
pleadings....
The pleading
[21] The essence of the plaintiffs’ case against Manson lies
in the following pleading (taken from the second amended
statement of claim in
the first proceeding):
13. Between 11 August 1994 and 16 August 1996 (“the Construction
Period”):
(a) the Embassy Apartments were built by the third defendant
...
16. On the dates particularised in Schedule 1 to this statement of
claim, the second plaintiffs became the registered proprietors
of certain Units
as particularised in Schedule 1. Subsequently, the plaintiffs, have noticed
defects in the Embassy Apartments,
including but not limited to:
... (“the Defects”)
17. As a result of the defects referred to in sub-paragraphs 16 (a) to (l)
above:
(a) There has been extensive moisture ingress into the units
causing damage to the structure of the Embassy Apartments;
and
(b) Various portions of the pipe work have had to be repaired or
replaced.
(“the Damage”)
18. The first plaintiff Body Corporate has resolved to repair the
Defects and the Damage with the cost of those repairs to be
met by levies on the
owners of the Units in accordance with their unit entitlement. Full particulars
of the repairs required to rectify
the defects and the damage are provided in
Schedule 2 to this statement of claim (“the Repairs”).
19. The total estimated costs of the Repairs is currently estimated at
$10,287,607.03 particulars of which are provided in Schedule 3 to this
statement of claim.
20. As a result of the need to undertake repairs the second plaintiffs
have suffered economic loss made up as follows:
(a) In the case of those second plaintiffs listed in schedule 5
hereto:
(i) The diminution in the value of their units caused by the
discovery of the Defects as measured by their share of the cost
of repairing the
common property and unit property in the Embassy Apartments:
(ii) Consequential costs including but not limited to lost rental
income while the repairs are effected full particulars of
which will be provided
before trial.
(b) In the case of [name of owner], one of the above-named second
plaintiffs in respect of Unit [number] the diminution in the
value of [the] unit
... caused by the discovery of the Defects as measured by the difference between
the value of the unit had it
not had the Defects when it was sold ... and the
actual sale price achieved ... .
WHEREFORE THE PLAINTIFFS CLAIM FROM THE THIRD
DEFENDANT:
A. Special damages for the losses pleaded at paragraph [20].
B. General damages in the sum of $25,000 for each of the second
plaintiffs specified in Schedule 4.
...
[22] In further particulars (provided on 3 November 2006 to Manson’s
request of
8 September 2006) the plaintiff expanded upon the pleading of loss,
saying:
The plaintiffs allege that as a result of the discovery of the Defects and
the Damage the first plaintiff has suffered the full cost
of the Repairs which
is currently estimated at $10,287,603.03
[23] Subsequently in a spreadsheet attached to a memorandum dated 8
December
2006 the plaintiffs gave particulars of the share of costs being carried by
individual unit owners, according to individual unit
entitlements.
The particulars sought and issues for
determination
[24] Manson seeks particulars both of the claims generally and of specific
aspects. The general aspects it seeks are:
1. Of the various plaintiffs’ claims:
(a) Please specify precisely the particulars of the first plaintiff’s
claim in respect of each cause of action.
(b) Please specify precisely the particulars of each of the second
plaintiffs’
claims in respect of each cause of action:
(i) To repair their individual units; and
(ii) To repair common property.
[25] The more specific aspects, all of which relate to the defects
pleaded in paragraph 16 of the statement of claim,
are:
2. Of paragraph 16 “the defects”
a) Please specify precisely which of the owners within
the Embassy
Apartments noticed which of the defects, and precisely when.
(i) the exact
location of each defect, identifying levels of the building or specific
apartments as appropriate;
(ii) greater detail of the defect (how and when it caused damage);
and
(iii) what damage resulted.]
[26] The following issues arise on the application:
a) Must the Body Corporate plead a separate cause of action?
d) Are the defects and damage pleaded sufficiently?
Must the Body Corporate and the unit owners plead separate causes of
action?
[27] Manson contends that the Body Corporate and the unit owners have different factual positions in relation to possible breach of duty of care and remedies claimable, which should be recognised in separate causes of action. It points to their pleading that the unit owners (not the Body Corporate) have suffered the economic loss. It also says that even if there is an alternative claim available to the Body Corporate, it can only be in respect of damage to common property (s 13 of the Unit Titles Act permits a body corporate to bring an action on behalf of owners, but only in respect of common property). Counsel for Manson relied on the finding of Heath J in Body Corporate 188529 & ors v North Shore City Council & ors (No 3) (HC AKL CIV 2004-404-3230, 30 April 2008, Heath J) (at para [110]) that the body corporate rules in that case, which purportedly imposed an obligation on the body corporate to repair or maintain unit property, were ultra vires the Unit Titles Act
1972.
[28] The plaintiffs contend that both the Body Corporate and the unit
owners are entitled to sue (in the alternative) for the
whole of the loss. In
other words they contend that the Body Corporate is not limited to suing in
respect of common property.
They say they have pleaded all the facts and
circumstances necessary to support that case and that the particulars on this
(questions
1 (a) and (b)) are not material to their case. Nevertheless they
propose to amend paragraph 20 of the statement of claim to clarify
the
alternative pleading.
[29] Counsel for the plaintiffs accepted that Manson could argue at trial that the evidence adduced did not support the claim they were advancing, and could even seek to have it struck out ahead of trial as failing to disclose an arguable cause of action, but submitted that that was quite different to demanding that the plaintiff provide particulars of a case that they were not pursuing. He submitted that the form of pleading adopted by the plaintiffs in this case (joint pleading of their causes of action but with alternative pleadings of loss) had been accepted in Body Corporate
188529 v North Shore City Council, and that the body corporate’s
claim was limited to common property was of no general application: it was
based on a finding
that the amended rule was ultra vires – and there is
conflicting authority: Young v Body Corporate 120066 (HC AK CIV
2007-404-002375, 6 December 2007, Harrison J). He submitted that it remained
open for the plaintiffs to argue at trial
that the Body Corporate can sue for
the entire cost of repair (regardless of whether repairs were to common property
or unit property)
and whilst Manson was free to argue its position at trial, it
could not, by an application for the particulars, dictate the way in
which the
plaintiffs pursued their case.
[30] I accept generally the submission of counsel for the plaintiffs that
it is for them to decide the nature of their case.
For the purposes of the
present application the critical issue is whether the nature of that case is
apparent from the pleading,
and conforms to the rules.
[31] Subject to a point which I will address next, I do not see it necessary to direct separate pleadings of the causes of action as currently pleaded. The plaintiffs are entitled to sue jointly on their causes of action against the various defendants. There is a commonality of interest (the unit owners constitute the Body Corporate: s12 of
the Unit Titles Act 1972) and the same facts are relied upon as establishing
the alleged duties, defects, damage and repair work.
There is precedent in
Body Corporate 188529 v North Shore City Council for joint pleading of
both the Body Corporate’s and the unit owners’ causes of action, but
with alternative pleadings
of loss.
[32] The further point relates to the standing of a body
corporate to sue for damages to individual units rather than
just common
property. The plaintiffs plead defects and damage in relation to the exterior
cladding of the building and the pipe
work for the building’s water
supply. The unit plan expressly states that boundaries of units are the
exterior faces of external
walls (and the centre of internal walls) unless
otherwise shown. The exterior cladding therefore forms part of the common
property
only if it abuts common property. The pipe work is part of a system
servicing the whole of the building, even though it extends
into individual
units.
[33] The plaintiffs’ case is that the Body Corporate has the obligation not only to repair and maintain common property (pipe work and cladding abutting common areas) but also to repair, maintain and keep the exterior of the building waterproof. They contend that these obligations arise under ss 15 and 16 of the Unit Titles Act
1972, and the Body Corporate’s rules:
a) The relevant provisions of s 15 read:
15 duties of body corporate
(1) The body corporate shall—
(a) Subject to the provisions of this Act, carry out any duties imposed on it by the rules:
...
(f) Keep the common property in a state of good repair.... b) The relevant provisions of s 16 read:
16 Powers of body corporate
Subject to the provisions of this Act, the body corporate shall have all such
powers as are reasonably necessary to enable it to
carry out the duties
imposed on it by this Act and by its rules....
c) The relevant provisions of the Body Corporate rules read:
2 THE Body Corporate shall:
...
(b) Repair and maintain all pipes, wires, cables, ducts, and all other
apparatus and equipment of whatsoever kind and
wheresoever situate which
may be reasonably necessary for the enjoyment of an incidental right which may
from time to time exist
by virtue of section 11 of the Unit Title Act
1972.
...
(f) Repair maintain and keep waterproof the exterior of the building
in which the units are situated.
(g) Repair and maintain all common property.
(h) Repair and maintain all structural supports, walls and
divisions between units or divisions between units and any
common property or
between Accessory Units and units or between accessory units and any common
property ....
[34] Notwithstanding the argument of counsel for the plaintiffs that s 13
of the Unit Titles Act 1972 does not limit the Body
Corporate’s capacity
to sue, it now seems reasonably settled that unless the default rules (schedule
2 of the Act) are validly
amended to place a wider obligation on a Body
Corporate, its ability to sue is limited to damage to common property: refer
Body Corporate 188529 and the extensive analysis by Heath J of the
obligations under the Act).
[35] The issue is not as clear where the Body Corporate’s rules have been amended to place a wider obligation on the Body Corporate, as in the present case. There appears to be conflicting authority as to whether rules can be amended to place an obligation on the Body Corporate to act generally to repair and maintain the structure of a building, notwithstanding that that involves work on individual units. In Body Corporate 188529 v North Shore City Council Heath J found that a rule purporting to place this obligation on the Body Corporate was ultra vires. In Young
v Body Corporate 120066 (decided before Body Corporate 188529 v
North Shore City Council) Harrison J formed the view that a rule extending
the Body Corporate’s repair and maintenance obligation to the exterior of
apartments
was not ultra vires (on the basis that work done to the individual
units was reasonably necessary to protect the common property).
In the face of
this conflicting authority, it cannot be said that the plaintiffs cannot advance
their case as counsel has outlined
it.
[36] I do not accept, however, counsel for the plaintiffs’
submission that the existing pleading contains all
the facts necessary to
establish the Body Corporate’s standing to sue in respect of the whole of
the loss.
[37] Counsel for the plaintiffs produced with his submission a proposed
revised pleading of paragraph 20 of the statement of claim
which refers to the
“plaintiffs” and not just the “second plaintiffs” having
suffered economic loss. This
revised pleading now makes explicit the Body
Corporate’s claim that it has suffered loss in the form of the cost of
repairs.
The unit owners’ claim is pleaded expressly as an alternative
(in the event that the Body Corporate is held not to be able
to sue in respect
of those losses). This will address the point raised for Manson that the
pleading refers to the unit owners only
suffering economic loss. This has been
addressed, albeit not clearly, in the plaintiffs’ answers, given on 3
November 2006,
to Manson’s request for particulars.
[38] This revised pleading still lacks proper particulars of the Body Corporate’s obligation to undertake the repairs. Counsel for the plaintiffs argued, correctly, that the plaintiffs are not required to plead the legal basis on which they are advancing their case. However, the factual basis for that case is not pleaded clearly. In paragraph 18 of the statement of claim the plaintiffs plead that the Body Corporate has resolved to repair defects, with repair costs to be met by levies. Counsel argued that the Body Corporate’s obligation to undertake those repairs arose out of the duties under s 15 and powers under s 16 of the Act, and its obligations under the Body Corporate’s rules. Although counsel referred in submissions to rules 2(f) and (g), and evidence was given of them, neither they nor the resolution(s) passing them are pleaded.
[39] The plaintiffs are to provide particulars of the specific rules and
resolutions which they allege place the obligation
on the Body Corporate
to undertake all repairs. It will be a matter for Manson to decide whether
that discloses a reasonable
cause of action (and whether to pursue strike-out in
light of the apparently differing authorities).
Is it necessary to plead damage to common property and individual units
separately?
[40] The second general aspect of pleading with which Manson takes issue
is the plaintiffs’ joint claim for more than $10
million for global repair
costs. As already mentioned, Manson contends that the Body Corporate can only
sue for damage to the common
property and therefore must show damage to common
property separate to damage to individual units. They also contend that the
unit
owners should plead a break down of damage claimed in relation to each
unit.
[41] The difference between the parties on this point stems from Manson’s view as to what the plaintiffs’ claims should be, as distinct from what the plaintiffs say their case is. The plaintiffs point out that their claim is for economic loss (measured in term of the cost of repairs carried out and paid by the Body Corporate) suffered as a result of the need to effect the repairs. They say that for this reason it is unnecessary to separate costs of repair between individual units and common property (in other words, the plaintiffs’ claims do not correlate directly with physical damage). They say that their argument is supported by the approach taken to assessment of damage in decisions such as Murphy v Brentwood District Council [1991] UKHL 2; [1991] 1 AC 398 and Winnipeg Condominium Corporation No. 36 v Bird
Construction Co (1995) 121 DLR (4th) 193 and
Invercargill City Council v Hamlin
[1994] 3 NZLR 513 (CA) and [1996] 1 NZLR 513 (PC). They accept, however, the possibility that the unit owners rather than the Body Corporate could be held to be the parties suffering loss. Accordingly, they put their case in the alternative, and have provided particulars of the losses being claimed by individual unit owners (calculated by reference to unit entitlements).
[42] Counsel for Manson argued that different evidential and legal
considerations may flow from the allocation of damage as between
the common
property or individual units. It will of course be open for Manson to argue
this at trial, but for the purposes of
the present application, I am
satisfied that the plaintiffs have provided proper particulars of the basis
on which their
case is being put. In my view the case is comparable to the
global pleading of loss accepted in Price Waterhouse v Fortex Group Ltd,
(at p 20). The plaintiffs’ alternative pleading (as between the Body
Corporate and the unit owners) is an acceptable form
of pleading and
sufficiently identifies the way in which it is being advanced: Sew Hoy &
Sons Ltd (in Rec. & Liq) v Coopers & Lybrand [1996] 1 NZLR 392,
401.
[43] The Body Corporate’s claim may have to be proportionately rebated to the extent that Manson has a defence to individual unit owner’s claim (Body Corporate
189555 v North Shore City Council (HC AKL CIV 2005-404-5561, 25 July
2008, Venning J) but that aspect in itself does not required the particulars
Manson is seeking.
In similar vein, counsel for the plaintiffs recognised that
there is an unresolved issue whether the Body Corporate can recover
the
proportion of repair costs attributable to units that have been sold. That too
will be a matter for trial.
Is it necessary for the plaintiffs to plead the dates on which defects or
damage were discovered?
[44] Counsel for Manson accepted that it had the onus of proving that the
claim was time barred “where there is a case of
genuine doubt as to the
date of discoverability”: Humphrey v Fairweather [1993] NZLR 91,
101. She submitted, however, that a valid distinction could be made between the
date that a defect or damage was
“noticed” (saying that this was
unlikely to be disputed) and when it was reasonably discoverable (usually
contentious).
She argued that the plaintiffs should be required to plead the
date or dates when plaintiffs allegedly “noticed” the
defects or
damage as those dates were highly material to their claim:
a) Subsequent owners would have no cause of action in respect of a previously noticed defect or damage in the absence of an assignment of the previously owner’s cause of action; and
b) The dates on which unit owners themselves contend that they noticed
defects would determine whether unit owner prima facie
had a cause of action at
all.
[45] Counsel submitted that these were facts which Manson had a right to traverse, and therefore were facts which the plaintiffs had to plead as part of their cause of action: Body Corporate 950335 v Auckland Regional Council CA 215/92,
22 March 1993 (where the Court of Appeal adopted a definition from 37
Halsbury’s
Laws of England 4th Ed para 20) (at p 8):
“Cause of action” has been defined as meaning
simply a factual situation the existence of which entitles one person to
obtain from the
court a remedy against another person. The phrase has been held
from the earliest time to include every fact which is material to
be proved to
entitle the plaintiff to succeed, and every fact which the defendant would have
a right to traverse.
[46] I will deal with these points in reverse order, as the latter is of
more general application. Counsel for the plaintiffs
acknowledged that the date
when the plaintiffs first became aware of the existence of the defects and the
damage, having been raised
by Manson’s affirmative defence, was a matter
at issue in the proceeding. He submitted, however, that it was a matter of
evidence
rather than a material part of the plaintiffs’ cause of
action.
[47] I accept the submission of counsel for the plaintiffs that the date
when a defect or damage was noticed (actual discovery)
is not a
material part of the plaintiffs’ cause of action, needing to be
pleaded. Their claim is for economic loss.
The cause of action accrues when the
defects are of such a degree that the value of the property is affected. The
Body Corporate’s
case is that this occurred when it called for expert
advice. Counsel for the plaintiffs acknowledged that claims by unit owners
may
have to be determined on a unit by unit basis. However, it will be a matter of
fact for trial when the defects or damage reached
the point that the value of
the unit was affected: Invercargill City Council v Hamlin.
[48] The date that a defect or damage was in fact noticed is obviously a material fact which Manson is entitled to explore (and has explored) by way of interrogatories. However, raising of an affirmative limitation defence (to which the
date of discovery is relevant) does not elevate that date into an ingredient
of the plaintiffs’ cause of action.. I record
counsel for the
plaintiffs’ comment that they would not object to amended interrogatories
on the point if Manson considered
there were still facts on this point
which had not been answered by previous interrogatories.
[49] As to the second point, counsel for Manson argued that the date when
a defect or damage was noticed was particularly relevant
where the plaintiff was
a subsequent owner, as he or she only had a cause of action in respect of damage
arising in his or her ownership.
She submitted that subsequent owners could
only sue on any cause of action that had accrued before that ownership, if he or
she
had taken an assignment of the previous owner’s right of action:
Sparham-Souter v Town and Country Developments (Essex) Limited [1976] 2
All ER 65; Mt Albert Borough Council v Johnson [1979] NZCA 46; [1979] 2 NZLR 234, at 238
and 242; S Todd Latent Defects in Property and Limitation Act; a
defence of the “discoverability test” (1983) 10 NZULR 311.
Counsel submitted, accordingly, that such plaintiffs had to plead the date when
defects or damage were noticed
to show that they had a cause of action to sue
upon.
[50] This proposition was rejected by Heath J in Body Corporate 188529
v North
Shore City Council at paras [223] –[231]. His conclusion was (at
[231]):
For present purposes, it is sufficient to hold that a purchaser (or
subsequent purchaser) of a dwelling unit is not removed from the
scope of the
Council’s duty, or barred from suing on it, merely because he or she
acquires the unit after damage has manifested
itself.
[51] Counsel for Manson argued that Body Corporate 188529 could be distinguished on the grounds that it did not refer to the authorities she had cited (Sparham-Souter and Mt Albert Borough Council), and submitted that the decision of this Court in Body Corporate 169791 & ors v Auckland City Council & ors (HC AKL CIV 2004-404-005225, 14 November 2007, Associate Judge Robinson) supported her argument that the date of discovery was in fact an essential ingredient in the cause of action.
[52] Heath J did refer to Mt Albert Borough Council (in a footnote
to paragraph [230]. I remain of the view that the other authorities do not
assist Manson on this application. The
Court in Sparham-Souter and
Mt Albert Borough Council were focused either on whether a limitation
defence was available or whether there was in fact evidence of damage available
to the
plaintiff, rather than the pleading of the claim. Body Corporate
169791 v Auckland City Council does not add anything further to the
argument. Associate Judge Robinson merely referred to Sparham- Souter
and Mt Albert Borough Council in the course of recording submissions
for the applicant to strike-out. He determined the application on the basis
that the cause
of action accrued when economic loss was sustained, not when
damage was discovered, and that was a matter of evidence not
pleading.
[53] Counsel for Manson also referred me to two other cases: Phillips v Petrou (HC AKL CIV 2007-404-1771, 1 February 2008, Associate Judge Robinson) and Body Corporate 197217 & ors v Auckland City Council & ors (HC AKL CIV 2004-
404-818, 16 May 2008, Associate Judge Sargisson). They too do not add
anything further. The former focused on limitation issues
and the latter on the
need to show a date for damage that fell within an insurance policy, (where the
plaintiff had to allege damage
occurring during the period of
cover).
[54] I note that Manson has issued interrogatories in an attempt to
establish the necessary evidence for its limitation defence,
but considers that
it has not received a proper response. Counsel for the plaintiffs has defended
the responses provided, contending
that the interrogatories have been answered
to the best of the plaintiffs’ abilities. He notes in particular that
unit owners
who are subsequent purchasers are not in a position to state when a
previous owner noticed defects or damage.
[55] If dissatisfied with these responses, the proper course for Manson
to take is either to apply formally for an order than
an interrogatory be
answered, or (taking into account comments made by counsel for the plaintiffs
that in some case the interrogatories
did not ask the appropriate question) to
apply to issue a second set of interrogatories. The information is clearly
relevant to
limitation defences and should be established in the appropriate
way, if at all possible, before trial.
[56] Manson seeks further particulars of each of the defects pleaded in
paragraph
16 of the amended statement of claim. Put broadly it contends that it has
been given insufficient information as to the location
of the defects and as to
the damage those defects have caused. It says that it needs this information
to determine whether alleged
damage was in fact caused by the pleaded defects,
and to assess the scope and reasonableness of the remedial work (and hence
quantum).
Manson contends that its expert is having difficulties understanding
the amended statement of claim.
[57] The plaintiffs’ response to these specific requests is that
the claim has been pleaded with sufficient information
to allow Manson to
understand the case against it. They point to paragraphs 16 to 20 of the
statement of claim (the defects are
not set out above as they cover 4 pages) and
to the schedules to the statement of claim. Schedule 2 comprises 2 ½ pages
summarising
repair works to the exterior of the building (five specified
elevations, the roof, and a parapet wall on the roof) and three aspects
of the
piping system. Schedule 3 is a list of repair costs claimed in relation to
those items (some already incurred but the largest
element being the accepted
tender sum).
[58] The issue can be illustrated by reference to a sample
defect and the particulars being sought in respect of it.
In paragraph 16(b)
of the statement of claim, the plaintiffs plead the following
defects:
(b) Joints between the concrete frame, cladding and blockwork on the
North West elevation (refer D701/A4A) and North East
elevation (refer
sheet D701/A3A) are finished inappropriately with sealant and lack flashings and
are allowing excessive moisture
into the building. The sealant was not applied
in a purpose designed sealant joint with a ratio of 2 wide to 1 deep with a bond
breaking mechanism at the back of the sealant joint. Unless sealant joints are
purpose designed the sealant is subjected to excessive
stress and cannot
accommodate movement whilst weatherproofing the joint.
As to 16(b), please specify:
(i) The exact location on the North West and North East elevation
that it is alleged there are inappropriately finished sealant
joints and lack of
flashings allowing excessive moisture into the building.
(ii) Please specify precisely how, where and when the sealant has
failed and if so what damage has resulted.
(iii) Whether these sealant joints are vertical or horizontal.
(iv) What sealant ratio (width to depth) has been utilised on the
North
West elevation and North East elevation and where.
[60] Manson argues that the plaintiffs should be required to provide this
level of particulars to allow it to determine the particular
acts on its part
which give the plaintiffs cause for complaint, and to know the alleged cause of
the defects so that it does not
need to direct evidence to matters which the
plaintiffs may or may not consider have caused the defect. Counsel also relied
on Price Waterhouse v Fortex Group Limited where the Court of
Appeal said (at p9) that in more complex litigation detailed particulars
can be warranted.
[61] Counsel for the plaintiffs did not contest the principles underlying Manson’s request. The opposition was rather that the level of detail being sought is not necessary to understand the nature of the claim being made. The plaintiffs’ claim is that the defects affect all units in the building in that they result in moisture ingress through the exterior building envelope into the structure of the building (paragraph
17) or the pipe-work for the whole of the building. The loss is economic loss due to the need to re-clad the building (and replace pipe work). They say that if the information requested is material to this claim, it is a matter for evidence rather than pleading. Counsel submitted that if the information was wanted prior to receipt of the plaintiffs’ briefs, it could be obtained by interrogatories. He relied on the distinction between particulars and interrogatories to be found in McGechan on Procedure at HR 185.[04]:
Particulars ordered under r 185 are to be distinguished from interrogatories obtainable under r 278. Particulars are matters of pleading, designed to make plain to the opposite party the case to be raised. Interrogatories are sworn statements of fact, procured by the opposite party to assist that party in proving his or her case. The one is pleading; and the other proof. Buckley LJ is reported as saying in G & W Young & Co Ltd v Scottish Union & Natural Insurance Co (1907 24 TLR 73, at p
74, that there was:
“a very plain line of demarcation between interrogatories and
particulars. The principle underlying particulars was that they
were given in
order to make the plaintiff’s case plain, while interrogatories on the
other hand were to assist the opposite
side, and they had nothing to do with
particulars.”
[62] It will always be a matter of judgment in the individual case
whether there is sufficient information to enable the defendant
and the Court to
understand the claim. I am satisfied in this case that the plaintiffs
have provided sufficiently full
particulars, with one exception.
[63] Going back to the illustration of the pleading of paragraph 16(b),
the general thrust of the claim is clear from that pleading.
The critical issue
will be whether the failure is systemic and has led to moisture ingress
generally rather than the precise number
and location of joints which have
failed. How the sealant has failed is properly a matter for evidence. I have
already given my
view that the timing of the failure is not a material element
of the plaintiffs’ claim requiring pleading but rather a matter
of
evidence on an issue in Manson’s defence. Similarly, in the absence of
any evidence from Manson as to the importance of
whether sealant joints are
vertical or horizontal, I do not see that this is an issue of pleading. The
same can be said of the width
to depth ratio of the sealant.
[64] I also note that although Manson said that its expert was having
difficulty correlating pleaded defects to the repair work
in schedule 2 of the
claim, there is no evidence from him directly as to his inability to advise
Manson on the case. His queries
can be addressed by
interrogatories.
[65] The only respect in which I consider that the particulars could be lacking is a failure to identify the nature of the damage caused to the structure of the building. I consider that the plaintiffs should provide general particulars of the damage caused by the defects (rather than the specific defect by defect basis sought by Manson) which necessitates the re-cladding. They have provided such general particulars of
damage in relation to the defective pipe-work but not in relation to the
defects in the external cladding. If the damage differs
between areas
(which I anticipate is unlikely), it should be identified in respect of the
different areas.
[66] Counsel for the plaintiffs acknowledged in the hearing that he could
not object to Manson issuing further interrogatories
if the Court ruled
that the information being sought was inappropriate for further particulars.
I have already indicated that
that may be the appropriate course for Manson to
try to establish the dates that the plaintiffs first noticed defects or damage.
Similarly, if there are matters of fact regarding defects or damage that
Manson considers it still needs to know in advance of
the plaintiffs’
briefs to prepare its defence they can be the subject of further
interrogatories. A meeting of experts can
also be directed to ascertain the
critical areas of dispute, particularly on what appears to be the central
question as to whether
the defects and damage warranted a complete
recladding.
Decision
[67] The plaintiffs are directed to file and serve an amended statement
of claim in both proceedings incorporating their proposed
amendment to paragraph
20 and providing particulars of the body corporate rules as set out in paragraph
[39] and damage as set out
in paragraph [65]. The amended statement of claim is
to be filed and served within 21 days, but leave is reserved to apply for
extension
of this time if it proves impossible to comply.
[68] Manson has leave to issue further interrogatories in respect of the
matters referred to in paragraphs [55] and [66]. Any
such interrogatories are
also to be issued within 21 days. The plaintiffs are to respond within a
further 21 days. Again leave
is reserved to apply for extension of these times
if it proves impossible to comply.
[69] Both parties have had some success in this application. I make no order
as to
costs.
Associate Judge Abbott
NZLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.nzlii.org/nz/cases/NZHC/2008/2551.html