AUCKLAND COUNCIL v BODY CORPORATE 202692 [2019] NZCA 635

AUCKLAND COUNCIL v BODY CORPORATE 202692 [2019] NZCA 635 [11 December 2019]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA573/2019[2019] NZCA 635BETWEEN AUCKLAND COUNCILApplicantAND BODY CORPORATE 202692First RespondentJAMAC HOLDINGS LIMITED ANDOTHERSSecond RespondentsOMAHA INVESTMENTS NO. 1 LIMITEDThird RespondentMAURICE JOHN HARRISFourth RespondentCA575/2019BETWEEN OMAHA INVESTMENTS NO. 1LIMITEDFirst ApplicantMAURICE JOHN HARRISSecond ApplicantAND AUCKLAND COUNCILFirst RespondentBODY CORPORATE 202692Second RespondentJAMAC HOLDINGS LIMITED ANDOTHERSThird RespondentsCourt: Cooper and Collins JJCounsel: T C Weston QC and C M Fairnie for Auckland CouncilH K Harkess and D P Turnbull for Omaha Investments No. 1Limited and Maurice John HarrisT J Rainey for Body Corporate 202692 and Jamac HoldingsLimited and othersJudgment:(On the papers)11 December 2019 at 11.00 amJUDGMENT OF THE COURTA The application for leave to appeal is declined.B Auckland Council, Omaha Investments No. 1 Ltd and Mr Harris are to payone set of costs to the Body Corporate 202692 and Jamac Holdings Ltd fora standard application on a band A basis with usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Collins J)Introduction[1] The Auckland Council (the Council), Omaha Investments No. 1 Ltd (Omaha)and Mr Harris, seek leave under s 56(5) of the Senior Courts Act 2016 to pursuean appeal from a decision of Associate Judge Bell delivered in the High Court atAuckland on 27 September 2019.1 For convenience, and consistent with the approachtaken by counsel, we refer to Omaha and Mr Harris as "the engineer".[2] In his judgment the Associate Judge dismissed applications by the Council andthe engineer to strike out certain claims against them in a building defects proceedingbrought by the Body Corporate 202692 (Body Corporate) and other plaintiffs.[3] On 21 October 2019, the Associate Judge dismissed an application for leave toappeal his judgment.21 Body Corporate 202692 v Auckland Council [2019] NZHC 1976 [High Court judgment].2 Body Corporate 202692 v Auckland Council [2019] NZHC 2696 [Leave judgment].[4] The criteria for granting leave under s 56(5) of the Senior Courts Act havepreviously been addressed by this Court. In Moir v IHC New Zealand Inc it was saidthat leave should not be granted under the subsection:3unless the proposed appeal raises some question of law or fact capable of bonafide and serious argument in a case involving some interest, public or private,of sufficient importance to outweigh the cost and delay of the appeal.Moreover, leave should not be granted unless the proposed appeal has somereasonable prospect of success.Background[5] In November 1999, the Council issued a building consent for the developmentof an apartment complex in Ponsonby (apartment building). In early 2002,the engineer conducted a review to ensure the apartment building had been built inaccordance with the building consent. On being so satisfied, the engineer issueda "Producer Statement". The Council then issued a code compliance certificate on12 April 2002.[6] By 2009, defects had been discovered in the apartment building.On 9 June 2011 the Body Corporate applied for a full assessor's report under s 32 ofthe Weathertight Homes Resolution Services Act 2006. In a report issued inMay 2013, the assessor concluded the Body Corporate had an eligible claim underthe Weathertight Homes Resolution Services Act.[7] In addition to weathertight defects, the Body Corporate found there werestructural and fire safety deficiencies in the apartment building. The Council requiredthese defects to be fixed as a condition to issuing a building consent to addressthe weathertightness defects. Repairs were commenced in November 2016 and havenow been completed.[8] On 11 September 2017, the Body Corporate commenced proceedings seekingthe estimated repair costs in the sum of $4,881,538.40 (plus other damages) in relationto the weathertightness issues associated with the apartment building.3 Moir v IHC New Zealand Inc [2018] NZCA 130, (2018) 24 PRNZ 45 at [6] (footnote omitted).[9] On 29 March 2019 the Body Corporate filed an amended statement of claimseeking an increased amount of repair costs, $9,001,111.79 (plus other damages) toreflect the additional cost in respect of the structural and fire safety defects.[10] The Council and engineer applied to strike out the claims relating tothe structural and fire safety defects on the basis that those claims were barred bythe 10-year limitation period prescribed in s 393 of the Building Act 2004.They contend that as the structural and fire safety defects are not weathertightnessdefects, the Body Corporate cannot benefit from s 37 of the Weathertight HomesResolution Services Act which effectively suspends the limitation periods inthe Building Act.High Court decision[11] When dismissing the strike-out application, the Associate Judge recognisedthat the interrelationship between s 393 of the Building Act and s 37 ofthe Weathertight Homes Resolution Services Act involves an important question oflaw.[12] The Associate Judge reasoned that s 37 of the Weathertight Homes ResolutionServices Act applied in the circumstances of this case and that accordingly,the Body Corporate was not prevented from pursuing its claim for damages forthe structural and fire safety defects.4Analysis[13] We accept that the proposed appeal raises important issues, which requirean analysis of the extent, if any, to which s 37 of the Weathertight Homes ResolutionServices Act impacts on the limitation provisions of the Building Act, and the extentto which the Supreme Court's judgment in Lee v Whangarei District Council appliesto the circumstances of this case.54 High Court judgment, above n 1, at [50].5 Lee v Whangarei District Council [2016] NZSC 173, [2017] 1 NZLR 401.[14] We are, however, not satisfied that leave should be granted to appealthe Associate Judge's judgment before the trial. Our reasons for reaching thisconclusion are:(a) There are important unresolved factual issues about the extent to whichthe structural and fire safety defects are interconnected tothe weathertightness issues. The Body Corporate has submitted beforeus that the repairs to the structural and fire safety defects werenecessary in order to remedy the weathertightness defects inthe apartment building. Accordingly, the cost of the structural and firesafety repairs forms part of the cost of repairing the weathertightnessdefects. This aspect of the Body Corporate's claim would requirecareful assessment of the evidence that is adduced at trial.(b) While the factual and legal issues associated with the structure and firesafety defects will add to the time and cost of the trial, we do not thinkthose concerns outweigh the prejudice that will be suffered bythe Body Corporate if the hearing of the trial is delayed by an appeal.The current fixture date for the trial is May 2020 and, if rescheduled,will not be heard until 2022. If leave is granted, this is likely to causea delay of up to two years to the hearing in the High Court.(c) Ultimately, the Council and engineer can advance the arguments thatthey wish to pursue at the trial and in any appeal that may be considerednecessary if they are held liable for the structural and fire safety defects.[15] We are not satisfied that the Council and the engineer have satisfied the criteriafor leave to be granted to bring an appeal under s 56(5) of the Senior Courts Act.In particular, we do not believe that the issues raised by the proposed appeal aresuitable for determination in a pretrial appeal or justify the cost and inconvenience ofa substantial delay to the hearing of the High Court trial.Result[16] The application for leave to appeal is declined.[17] Auckland Council, Omaha Investments No. 1 Ltd and Mr Harris are to payone set of costs to the Body Corporate 202692 and Jamac Holdings Ltd for a standardapplication on a band A basis with usual disbursements.Solicitors:MinterEllisonRuddWatts, Auckland for Auckland CouncilMcElroys, Auckland for Omaha Investments No 1. Limited and Maurice John HarrisRainey Law, Auckland for Body Corporate 202692 and Jamac Holdings Limited and others