CARTER HOLT HARVEY LIMITED v PAINE & ORS [2019] NZCA 606

CARTER HOLT HARVEY LIMITED v PAINE & ORS [2019] NZCA 606 [3 December 2019]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA382/2019[2019] NZCA 606BETWEEN CARTER HOLT HARVEY LIMITEDApplicantAND DAVID ERIC PAINE AND LYNDACAROLINE BOWERSFirst RespondentsAND KEVIN BRYAN START AND FLORENCEELIZABETH STARTSecond RespondentsAND DONALD BRAMWELL JACKSON ANDHEATHER MAY PROCTOR JACKSONAND DONALD BRAMWELL JACKSON,HEATHER MAY PROCTOR JACKSONAND HOLLAND BECKETT TRUSTEENO 11 LIMITED (AS TRUSTEES)Third RespondentsAND STEPHEN MATHEW DEVCICH, JESSIEDIANA DEVCICH AND JOHNNYCHARLES AUGUST (AS TRUSTEES)Fourth RespondentsHearing: 25 November 2019Court: Miller and Brown JJCounsel: J G Miles QC and M Heard for ApplicantA S Ross QC and R A Dellow for RespondentsJudgment: 3 December 2019 at 10.00 amJUDGMENT OF THE COURTA The application for leave to appeal is dismissed.B CHH must pay the respondents costs for a standard application on a bandB basis with usual disbursements. We certify for second counsel.____________________________________________________________________REASONS OF THE COURT(Given by Miller J)[1] Carter Holt Harvey Ltd (CHH) seeks leave to appeal from an interlocutorydecision of Downs J in which the Judge declined to order some of the particulars thatCHH sought from the respondents.1 He also declined leave to appeal.2[2] The proceeding is a representative action brought by a group of about 134owners whose homes are clad with a CHH-manufactured product called Shadowclad.It is a bonded plywood used (in differing specifications) for exterior cladding andinterior walls. The respondents say that Shadowclad is inherently defective and willfail in specified ways; notably, it will crack, warp and delaminate, and host mould andadmit water. Some of them say that it has in fact failed on their properties, and othersthat the defects remain latent. They sue in negligence, negligent misstatement,negligent failure to warn, and for breach of the Consumer Guarantees Act 1993 andFair Trading Act 1986.[3] CHH says the particulars required are those typical of leaky building cases,citing Platt v Porirua City Council.3 Downs J erred in this case by relieving theplaintiffs of their obligation on the ground that this is a product liability case. In theresult, the Judge did not require the plaintiffs to specify precisely which defects arepresent in each property, where those defects are found, the particular standardsapplicable to each defect, the damage caused by each defect, and the loss resulting.CHH says that the Judge proceeded on the false premise that the plaintiffs' claim isthat Shadowclad will always cause damage.1 Paine v Carter Holt Harvey Ltd [2019] NZHC 478 [Interlocutory decision].2 Paine v Carter Holt Harvey Ltd [2019] NZHC 1614 at [116].3 Platt v Porirua City Council [2012] NZHC 2445 at [19].[4] As noted, this is a representative action. The trial is to be split. It is also beingcase-managed by Downs J. In a minute delivered on 8 November he ordered, byconsent, that certain questions are to be tried at stage one. Notably, those includewhether Shadowclad has all or any of the pleaded defects and risk characteristics and,as a result, is not weathertight and has caused or will cause damage.[5] In the judgment which is the subject of this application the Judge alsocontemplated that CHH will get further evidence (it already has some basic details ofthe type of loss claimed) of loss and damage at trial.4 Property-by-property questionsof causation and loss will be examined at the stage two trial. He also concluded thatparticulars of defects and risk characteristics are adequate and stated that CHH'sconcerns about further details emerging could be met through case management.5[6] CHH maintains that all particulars must be provided now, including those ofcausation and loss. It is said that the particulars go to CHH's defence that any defectsare the consequence of bad installation practice. Characterisation of the case as adefective product claim should have no bearing on pleadings.[7] We are not persuaded that leave ought to be granted. First, underpinningCHH's complaint about this not being a defective product claim appears to be anassertion that it is simply wrong to say Shadowclad will always fail; and that being so,CHH is effectively being required to investigate every plaintiff's claim to ascertainwhat was the specific installation fault. But the plaintiffs are entitled to, and do, claimthat Shadowclad is inherently defective and for that reason will always cause loss evenwhere it was correctly installed and has yet to fail. The claim seems in this respectvery similar to that brought by the Ministry of Education in respect of Shadowclad,about which this Court said that the claim was at heart a latent defect claim against amanufacturer.6 CHH may meet that claim by contending that Shadowclad will failonly where improperly installed. There is some force in the respondents' submission4 Interlocutory decision, above n 1, at [65] and [67].5 At [53].6 See Carter Holt Harvey Ltd v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78 at [17]citing Carter Holt Harvey Ltd v Minister of Education [2015 NZCA 321, (2015) 14 TCLR 106 at[47].that what is being sought is not particulars of the claim but information in aid of CHH'sdefence.[8] Second, we do not accept that the proposed appeal raises any general questionof pleading practice. This case is not the same as Platt, a generic leaky building casein which a local authority was the principal defendant and which involved allegationsabout inspection and certification that are absent here. Pleadings should be tailored tothe needs of this case, in which the plaintiffs allege against the manufacturer that theproduct is inherently defective. They intend to prove that by adducing evidence aboutits properties.[9] Third, we accept that to the extent the plaintiffs also seek to prove inherentdefect by reasoning back from actual product failure they must give particulars ofwhere and how it failed for purposes of the stage one hearing. But the plaintiffs havedone that in a schedule attached to the second amended statement of claim. The Judgealso ordered some further particulars of each installation, including building consents.It is far from self-evident that those particulars are inadequate to give CHH fair noticeof the case it must answer. The Judge did note an open-ended quality to the pleadingof defects (it is said that the defects "include" those listed) but made it clear that he isalert to the risk of ambush should fresh allegations emerge.7[10] Fourth, it is not in dispute that in due course CHH will be given furtherparticulars about every property in the class represented by the named plaintiffs,including details of the causal link between each specific defect and the damage, whatremedial work is needed, what the work will cost, and what other losses have beensuffered. The real question is whether that information must be provided now, forstage one, or deferred until stage two. CHH's complaint is that the Judge has decidedto defer its provision for some properties until stage two, when every plaintiff willneed to prove their membership of the class, the specific damage to their property, andcausation and loss. The staging of disclosure in that way is a practical casemanagement decision in which this Court should be reluctant to intervene, not leastbecause it is not strictly before us. As we understand it the precise bounds of the first7 Interlocutory decision, above n 1, at [47] and [53].stage, including how many properties will be examined there, has yet to be decided.We add that the trial Judge is best placed to monitor the boundary between first andsecond stages and to manage disclosure of relevant information through thecombination of particulars, discovery and evidence.[11] Fifth, we accept that CHH may need to prove defective installation to pursuethird party claims against local authorities it has joined to the proceeding, but this toois a timing question. The theory on which the third party claims are based is not beforeus. What matters is that it appears the claims will be "parked" until after the first stageof this proceeding has been decided.[12] For these reasons the application does not cross the leave threshold.8 It isdismissed.[13] CHH must pay the respondents costs for a standard application on a band Bbasis with usual disbursements. We certify for second counsel.Solicitors:LeeSalmonLong, Auckland for AppellantAdina Thorn Lawyers, Auckland for Respondents8 Senior Courts Act 2016, s 56(5); and Ngai Te Hapu Inc v Bay of Plenty Regional Council [2018]NZCA 291 at [16]–[17].