AMG TRUST LIMITED v SKELLERUP INDUSTRIES LIMITED [2018] NZHC 3056

AMG TRUST LIMITED v SKELLERUP INDUSTRIES LIMITED [2018] NZHC 3056 [20 November 2018]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2017-404-1902[2018] NZHC 3056BETWEEN AMG TRUST LIMITED andKMG TRUST LIMITEDPlaintiffsAND SKELLERUP INDUSTRIES LIMITEDDefendantBRUCE NEIL ARMSTRONGFirst Third PartyBRUCE ARMSTRONG BUILDERSLIMITEDSecond Third PartyHearing: 20 November 2018Appearances: L L Fraser and L C Bercovitch for the DefendantP L Rice for the Third PartiesJudgment: 20 November 2018ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELLSolicitors:Glaister Ennor (Brett Vautier), Auckland, for the PlaintiffChapman Tripp (LL Fraser/LC Bercovitch), Auckland, for the DefendantHarris Tate Lawyers, Tauranga, for the Third PartiesCopy for:Phillip L Rice, Auckland, for the Third Parties[1] In this building defects case, the third parties apply for strike-out andsummary judgment against the defendant who has claimed contribution from themunder s 17 of the Law Reform Act 1936. The third parties say that a contributionclaim cannot be available because they did not cause the same damage as thatalleged against the defendant. They also say that the claim is out of time unders 393(2) of the Building Act 2004.[2] The plaintiffs own a building called Bank Chambers on the corner of WharfStreet and Willow Street, Tauranga. In 2008 and 2009, they had the outside of thebuilding clad with Alucobond composite panels. That is a product which SkellerupIndustries Ltd used to fabricate and install. I understand that it no longer carrieson that business. The plaintiffs had other work carried out but that work is notrelevant to this case. Griffiths Merchants Trust Ltd was the employer for theproject. The architect was Mr Rod Moyes, who I understand has now died.[3] Bank Chambers is an old concrete building. Alucobond panels could notbe affixed directly to the concrete building. Instead, timber battens were put upand Alucobond panels were in turn affixed to the battens.[4] Bruce Armstrong Buildings Ltd, a building contractor, was engaged to fixthe timber battens to the concrete walls at Bank Chambers, before the Alucobondcomposite panels were installed. It also contracted to supply the scaffolding.Mr Armstrong, the first third party, is the director of Bruce Armstrong BuildersLtd.Background[5] In August 2007, the plaintiffs and Skellerup entered into a contract forSkellerup to supply and install the Alucobond panels to the façade of BankChambers. The work was carried out in 2008 and 2009. A certificate of practicalcompletion was not issued until 10 June 2009. The plaintiffs plead that SkellerupIndustries Ltd gave a written guarantee as to the quality of the materials andworkmanship. In June 2016, the plaintiffs discovered defects in the Alucobondcladding. They carried out investigations and identified defects. They notifiedSkellerup of the defects and invited Skellerup to remedy the cladding. Skellerupdid not do so.[6] The plaintiffs began this proceeding in August 2017. The originalstatement of claim has a single cause of action for breach of contract. An amendedstatement of claim of 21 November 2017 adds a cause of action in negligence.There is a schedule of defects to the amended statement of claim. Six classes ofdefects are listed. The cladding issues are said to be:(a) undersized panel joint widths;(b) undersized panel joint depths;(c) panel joints around windows incorrectly sealed;(d) cladding panels with missing and/or incorrect fixings –There are also defects relating to parapet caps.[7] For this case, the fourth cladding issue is relevant. These particulars aregiven for the fourth cladding defects:(a) Location:Widespread across the façade of the building, in particular thebottom edge and the bottom sheet missing for most fixings. In somecases, only four screws secured panels to the wall. Most fixings areundersized and only fixed to packers. Some panels have a holedrilled for fixing but no fixings.(b) Description of the defect:Panels are insecure and flex. On some large panels, fixings are onlyabout 25 per cent of the design.(c) Breaches of the Building Code:B1.1, B1.2, B1.3.1 and B1.3.2.(d) Relevant standards and industry documents:References to two manuals: the Alucobond NZ manual and theKaneba manual with references to passages in the manuals.(e) Required remedial works:Remove all sealant, progressively checking each fixing. Replaceunderlength screws and fit missing fixings as required by theAlucobond Manual. This will require the removal of all affectedpanels.[8] Skellerup's statement of defence denies liability generally and allegesaffirmative defences:(a) the damage was caused by the plaintiffs;(b) contributory negligence;(c) limitation under s 4 of the Limitation Act 1950 for the negligencecause of action, because the defects were said to be discoverablebefore 21 November 2011 – that is six years before the negligencecause of action was first brought; and(d) limitation for the contract cause of action because the allegedbreaches of contract occurred more than six years before 17 August2017.[9] In a case management conference minute of 30 May this year, AssociateJudge Sargisson fixed 29 June 2018 as the last day for joining additional parties.She has given the case a fixture for seven days beginning 29 May 2019. The closeof pleadings date is 21 January 2019. The case management directions allow forevidence by third parties.[10] Skellerup issued its third party claims against Mr Armstrong and hiscompany on 29 June 2018. Much of the statement of claim against the third partiespleads the plaintiffs' claims against Skellerup while not admitting any liability tothe plaintiffs. The allegations against the third parties are relatively brief.9. At all material times the third parties were involved as a sub-contractor for the plaintiffs, and were responsible for building work as part ofthe work at Bank Chambers undertaken between 2008 and 2009, of which thealleged project works were one component part.13. In the event the defendant is liable to pay for any losses or damages,or liability to the plaintiffs (which is denied), the first third party is also liableto the plaintiffs for the same loss or damage as pleaded against the defendant.14. Accordingly, the defendant is entitled to a contribution to the extentof a complete indemnity from the first third party pursuant to s 17(1)(c) of theLaw Reform Act 1936.The pleading against the second third party is in similar terms to paragraphs 13 and14 against the first third party.[11] I have not so far dealt with the dates of the third parties' participation in thebuilding project. I will come to that when I deal with the limitation defence.The third parties' applications[12] The third parties say that Skellerup cannot claim contribution from themunder s 17(1)(c) of the Law Reform Act 1936 because they were not involved inany of the alleged defective work in the schedule to the plaintiffs' amendedstatement of claim. They also say that any claim for contribution is statute-barredunder s 393(2) of the Building Act 2004. The third parties have filed separateapplications – one for strike out, and the other for summary judgment. For theirstrike-out application, they rely only on the Limitation Act defence. For theirsummary judgment application they rely on both grounds.[13] In making these applications, the third parties are asking for summarydisposal of the proceeding. They are saying that the proceeding against them canbe brought to an end now, and that it is unnecessary for the case against them togo to a full defended hearing where the usual interlocutory steps have been taken,such as discovery, followed by exchange of written statements of evidence, and ahearing with oral examination of witnesses, as in any ordinary proceeding wherefacts are in dispute.[14] A defendant (or a person in the position of a defendant) seeking summarydisposal of a proceeding says that the case against them is so defective that it shouldnot be allowed to go any further. Arguments for summary disposal of a proceedingcan be made on procedural or substantive grounds. In an application to strike outa pleading under r 15.1 of the High Court Rules, the applicant may rely on bothprocedural grounds and substantive grounds. Substantive grounds can be seen inthe test laid down by the Court of Appeal in Attorney-General v Prince,1 andupheld by the Supreme Court in Couch v Attorney-General2 where no reasonablecause of action is disclosed on facts presumed to be true, the plaintiff cannot hopeto succeed at law – and where the cause of action pleaded is not one recognised atlaw. There can also be substantive strike-out when a defendant is able to show anincontrovertible affirmative defence, the classic example being the limitationdefence – as shown by the Supreme Court's decision in Murray v Morel & Co Ltd.3[15] In addition to substantive grounds, a pleading may be struck out asprocedurally deficient, as when a pleading is unnecessarily prolix, pleads purelyevidentiary material, is unintelligible, or pleads irrelevant matters. And in thecontext of defective building claims, a statement of claim has been held to be sodeficient as to be struck out when it failed to give any particulars of defects ordamage.4[16] In contrast to applications to strike-out under r 15.1, a defendant's summaryjudgment application is a judgment on the merits.5 Procedural deficiencies in acase are not sufficient for the court to give summary judgment to a defendant.1 Attorney-General v Prince [1991] 1 NZLR 262 (CA) at 267. See further McGechan on Procedure(online looseleaf ed, Thomson Reuters) at HR15.1.02.2 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33] per Elias CJ andAnderson J.3 See Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721 at [33].4 Body Corporate 348047 v Auckland Council [2014] NZHC 2971 [Imperial Gardens Apartments].5 Westpac Banking Corporation v MM Kembla (NZ) Ltd [2001] 2 NZLR 298 (CA).Are the third parties alleged to be liable to the plaintiffs for the same damageas the defendant?[17] The third parties, of course, deny that they have caused any damage at all,but they say that if they have caused any damage to the plaintiffs it is not the samedamage as that caused by the defendant. There is discrete damage and in theabsence of the same damage being caused by them both, there cannot be a claimfor contribution under s 17(1) of the Law Reform Act. That section says:17 Proceedings against, and contribution between, joint and severaltortfeasors(1) Where damage is suffered by any person as a result of a tort(whether a crime or not)—(a) judgment recovered against any tortfeasor liable in respectof that damage shall not be a bar to an action against anyother person who would, if sued, have been liable as a jointtortfeasor in respect of the same damage:(b) if more than one action is brought in respect of that damageby or on behalf of the person by whom it was suffered, orfor the benefit of the estate, or of the wife, husband, [civilunion partner, de facto partner,] parent, or child of thatperson, against tortfeasors liable in respect of the damage(whether as joint tortfeasors or otherwise), the sumsrecoverable under the judgments given in those actions byway of damages shall not in the aggregate exceed theamount of the damages awarded by the judgment firstgiven; and in any of those actions, other than that in whichjudgment is first given, the plaintiff shall not be entitled tocosts unless the Court is of opinion that there wasreasonable ground for bringing the action:(c) any tortfeasor liable in respect of that damage may recovercontribution from any other tortfeasor who is, or would ifsued in time have been, liable in respect of the samedamage, whether as a joint tortfeasor or otherwise, so,however, that no person shall be entitled to recovercontribution under this section from any person entitled tobe indemnified by him in respect of the liability in respectof which the contribution is sought.[18] It is perhaps not surprising that the third parties have attacked thedefendant's claim under this head. That is because the contribution claim ispleaded badly. For contribution claims under s 17 of the Law Reform Act the partyseeking contribution, and the party from whom contribution is sought, must bothbe liable in tort to the plaintiff for the same damage. The defendant's statement ofclaim against the third parties adequately sets out the basis on which Skellerup isalleged to be liable in tort to the plaintiffs. But it is procedurally deficient becauseit does not show how the third parties are liable in tort to the plaintiffs. The pleaof the third parties' involvement as a sub-contractor of the plaintiffs, who carriedout building work at Bank Chambers between 2008 and 2009, is not enough toshow that the third parties breached any duty of care to the plaintiffs. The thirdparties must have been at a loss to know what they were being sued for. Ms Fraseracknowledged that if the case is to carry on against the third parties, Skellerup willneed to file an amended pleading giving proper particulars of any breach of dutyof care by the third parties to the plaintiffs and how those breaches of duty of caredid cause any damage.[19] While there are shortfalls in the pleadings, Skellerup has attempted to makeup for it with evidence. Skellerup has identified cladding defect 4 as damage forwhich the third parties are also arguably liable. Skellerup's evidence includes anaffidavit by a building surveyor, a Ms Johnston, who has been instructed bySkellerup for the proceeding. She assesses the scope of work which the thirdparties were to undertake as:(a) the arrangement for, or the erection of scaffolding;(b) the removal of decorative polystyrene features from the existingconcrete façade and parapet;(c) installation of a timber sub-frame for the cladding panels (whichwould be supplied and installed by Skellerup); and(d) removal of the scaffolding after the external envelope works hadbeen completed.[20] Architectural drawings have been put in evidence. Ms Johnston says thatthe drawings show this: a 75 x 50 H3.1 primary batten shot-fired to the existingconcrete structural wall, flame proof building wrap, and a 75 x 25 H3.1 outerbatten. (She goes on to refer to the composite panels and the location of louvres,but that is not relevant here). Her evidence, based on photographs and herobservations on site, is that the timber battens have not been installed according tothe architect's plans. She notes these aspects: the architectural drawings requiredshot-fired fixing to the primary batten, and there ought to have been adequatestrapping for the Alucobond panels to be affixed to. She says that the photographsshow 70 x 45mm timber strapping, with only one batten, and not two battens withbuilding wrap beneath as shown in the architectural drawings. The timberstrapping appears to have been screwed to the concrete wall. She says that thework required more than 70 x 45mm timber strapping. She suggests that thestrapping was not correctly installed and that the vertical strapping might beoutside the installation tolerances for Alucobond panels. She goes on:16. If the defect relating to the cladding panels is missing and/or incorrectfixings is proven to exist, then that defect for any damage could havebeen caused and/or contributed to by the incorrect fixing of the timberstrapping by the third parties.[21] The third parties do not accept that evidence. They have in turn instructeda building surveyor, and Mr Armstrong has given an affidavit in reply on thosepoints as well. That evidence shows reasons why the battens were not shot-firedbut affixed by screws, and gives reasons for the timber strapping used.[22] Mr Rice presented detailed submissions that I should not acceptMs Johnston's theory of liability of his clients. He referred to the architecturalplans, which make it clear that the contractor installing the timber battens doeshave some give-and-take, given that there are variations in the external walls of theBank Chambers. Mr Rice submitted that it was speculative that a failure to followthe plans exactly was enough to give rise to the damage alleged in defect 4 in theschedule of defects to the amended statement of claim. He pointed to an evidentialfailure on the part of Skellerup to reply to evidence from the third parties that thework by the third parties had been carried out with the apparent approval of thearchitect and of Skellerup, and that if the work had been deficient Skellerup wouldnot have started the installation of the Alucobond panels.[23] Mr Rice is trying to persuade me to make findings on the existence orotherwise of building defects where there are disputed factual matters which cannotbe resolved simply on affidavit evidence. In a summary judgment applicationI decline to become involved in the detailed examination of building defects tostate whether the third parties carried out their work without causing any defects.[24] It is important to bear in mind the caution expressed by the Court of Appealin Westpac Banking Corporation v MM Kembla (NZ) Ltd6 that it is generallyunwise to reject a plaintiff's case simply on the inadequacy of the plaintiff'sevidence. The court was concerned that a plaintiff might be prematurely preventedfrom going to hearing by the defendant pressing for summary disposal before theplaintiff had had the opportunity to assemble its case fully. In building defectscases, it often happens that as the case develops there is greater examination of thebuilding and more information comes to light. That caution tells me that I shouldnot find for the third parties on an essentially factual issue when not all theinformation is necessarily available at present.[25] Mr Rice also submitted that even if the third parties had breached any dutyto the plaintiffs, they had not caused the same damage as the plaintiffs allegeagainst Skellerup. His argument was based on differentiating the work that eachundertook to carry out. The work provided by Skellerup did not involve the fixingof timber battens or the erection of scaffolding. The third parties on the other handdid undertake to do that work. His case was that because the scaffold work wasdifferent, any defects that work caused was also distinct and there could not beshared liability.[26] With respect, I am unable to accept that argument. It is commonplace inbuilding defects litigation that more than one person involved in a building projectmay be responsible for defects. For example, a defect may be the result of both afault of construction and an error of design. There may be those with primaryresponsibility (such as contractors) and those with secondary responsibility (suchas local authorities) who may share responsibility for defects. And equally, twocontractors working independently by their combined methods may cause damage6 Westpac Banking Corporation v MM Kembla (NZ) Ltd [2001] 2 NZLR 298 (CA).where each may be liable to the plaintiff for that damage. Where there is thatoverlap, there can be claims for contribution.[27] It is important to bear in mind that damage in this context constitutes adefect amounting to a breach of the building code which requires remediation –Spencer on Byron: Body Corporate 2075624 v North Shore City Council.7 Here,the pleaded fourth defect in the schedule to the amended statement of claim isapparent damage, a breach of the Building Code requiring remediation. Groundshave been shown for arguable liability not only by Skellerup but also by the thirdparties. At this stage, it is arguable for Skellerup that defects in installing thetimber battens, in the way identified by Ms Johnston, contributed to the flexing ofthe composite panels. The third parties have not succeeded in discrediting thatarguable case. I therefore dismiss that part of the third parties' application.Is the third party claim statute-barred?[28] The third parties say that in any event the defendants' claim against them is statute-barred under s 393 of the Building Act 2004:393 Limitation defences(1) The Limitation Act 2010 applies to civil proceedings against anyperson if those proceedings arise from—(a) building work associated with the design, construction,alteration, demolition, or removal of any building; or(b) the performance of a function under this Act or a previousenactment relating to the construction, alteration, demolition,or removal of the building.(2) However, no relief may be granted in respect of civil proceedingsrelating to building work if those proceedings are brought against a personafter 10 years or more from the date of the act or omission on which theproceedings are based.7 Body Corporate 2075624 v North Shore City Council [2012] NZSC 83, [2013] 2 NZLR 297[Spencer on Byron].[29] Ordinarily, a claim for contribution under s 17 of the Law Reform Act arises onlywhen liability is established against the party claiming contribution. Liability can beestablished by judgment, award or agreement.8 Skellerup has not yet been found liable tothe plaintiffs and therefore time has not started running against Skellerup under s 34 of theLimitation Act 2010 for any contribution claim it might make against the third parties.Section 393 of the Building Act cuts across that.9 It is not disputed that the work by thethird parties was building work as it went to the alteration of a building.10 Section 393(2)imposes a single limitation period of 10 years from the date of the act or omission onwhich the proceedings are based. There are no grounds for extending that time limit.11[30] On a summary judgment application, the third parties have the onus of establishingthat Skellerup is suing more than 10 years after the acts or omissions on which the claimagainst them is based. It is perhaps necessary to indicate that there is a slight differencewhere there are claims under the Limitation Act 1950. In Murray v Morel & Co Ltd,12Tipping J said that on a strike-out application the defendant has to satisfy the court thatthe plaintiff's cause of action is so clearly statute-barred that the plaintiff's claim couldproperly be regarded as frivolous, vexatious, or an abuse of process. But that is subject tothe plaintiff showing an arguable case for an extension or postponement which wouldbring the claim back within time. The plaintiff had to give an air of reality to the contentionthat it was entitled to an extension. While that may be appropriate under the LimitationAct 1950, I do not apply it under s 393 where there is a single limitation period of 10 yearswithout any possibility of extension or postponement. The onus accordingly remainsthroughout on the party alleging the limitation defence.[31] Skellerup filed the claim against the third parties on 29 June 2018. The third partieshave to show that the acts or omissions on which they are sued took place no later than29 June 2008. Mr Armstrong gives this evidence: his company began fixing the timberstrapping to the building on Wednesday the 16th or Thursday the 17th of April 2008. Herefers to an email from the architect to Skellerup dated 15 April 2008:8 Limitation Act 2010, s 34; Limitation Act 1950, s 14.9 Dustin v Weathertight Homes Resolution Service HC Auckland CIV-2006-404-276, 25 May 2006at [29] per Courtney J.10 See the definition of "building work" in s 7 of the Building Act 2004.11 Johnson v Watson [2003] 1 NZLR 626 (CA), a decision under s 91(2) of the Building Act 1991.12 Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721.The builder has cleaned all the polystyrene etc off the building. The badweather has meant that he has been unable to start the battening. Heanticipates a start on Wednesday pm or Thursday am.He says that the installation of the battening took approximately one month to complete.The vertical battens were installed by the end of April. The horizontal battens wereinstalled in the first two weeks of May. All of the batten installation work was performedunder the guidance of the defendant. He attaches an email from the architect to thedefendant dated 25 April 2008 which says (amongst other things):The vert battens will all be up by Tuesday all going well. The builder willthen be awaiting your horizontal set-out requirements[32] Mr Armstrong says that he no longer has any records such as invoices which hecan produce in evidence. He says that the company's files and business papers were storedin a container on a rented property but they went missing when the tenants cleared out thecontainer for their own use. He has, however, put two bank statements in evidence. Onebank statement for May 2008 shows a payment of $18,893.71. The payer is GriffithsMerchant Trust Ltd. The second payment was received on 30 June 2008. It is also fromGriffiths Merchant Trust Ltd and is for $14,884.19. Mr Armstrong makes the reasonablepoint that those payments were made after invoices were sent, and the invoices were sentafter the work had been carried out. He therefore invites the court to find that the workmust have been carried out before the end of May 2008 for payment to be made during thefollowing month.[33] Skellerup contests that. It submits that Mr Armstrong's affidavit evidence is scanton detail. It points out that scaffolding stayed on site. The scaffolding had to stay on siteso that Skellerup could erect its composite panels. Mr Armstrong and his company hadfurther work to do while on site. They put in evidence an email from the architect to theplaintiffs' building manager, identifying outstanding items for repair, which includedmatters which Skellerup had to remediate. Those matters were attended to in May 2009.The certificate of practical completion was not given until June 2009.[34] It is, of course, arguable for Skellerup that the scaffolding had to stay on site longerwhile the Alucobond panels were installed. But, as Mr Rice submitted, the scaffoldinghas nothing to do with the third parties' alleged liability for defect 4. That relates to theinstallation of the timber battening. The third parties were being sued for fixing thestrapping, that is, the battens. That had to be put in place before the Alucobond panelswere fixed. That work had to be completed before Skellerup began installing its panels.[35] I accept that Mr Armstrong has not given evidence as to who worked on site. Hehas not produced any work records as to when people came on site and when people left.But the matter goes beyond simple assertions on his part. I regard the emails by thearchitect and the records of payment as sufficiently objective evidence to show that thework of putting up the battens had been completed by the end of May 2008 in order forpayments to have been made by the end of June 2008. I am satisfied on that evidence thatthe acts or omissions on which the third parties are being sued is work carried out no laterthan May 2008. They may not have left the site then, they may have returned to the site,but any further involvement with the project after that had nothing to do with the work ofputting up the battens.[36] I am satisfied that the third parties have made out the limitation defence unders 393(2) of the Building Act 2004. I accordingly enter judgment for the first and secondthird parties against the defendant.[37] The third parties are entitled to costs. Costs are category 2. I encourage counsel toconfer as to costs. If they cannot agree, memoranda may be filed and I will decide costson the papers.[38] I have reviewed with Ms Fraser whether any further case management directionsare required. She indicates none now, but I reserve leave to the plaintiffs and the defendantto ask for a conference for further directions if necessary..Associate Judge R M Bell