JUKEN NZ LTD v RED STAG TIMBER LTD [2023] NZCA 242

JUKEN NZ LTD v RED STAG TIMBER LTD [2023] NZCA 242 [16 June 2023]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA65/2022[2023] NZCA 242BETWEEN JUKEN NEW ZEALAND LIMITEDAppellantAND RED STAG TIMBER LIMITEDRespondentHearing: 14 June 2022 (further submissions received 21 and 28 June 2022)Court: Cooper P, Mander and Fitzgerald JJCounsel: A R Galbraith KC and C L Bryant for AppellantN F Flanagan and C M Fleming for RespondentJudgment: 16 June 2023 at 11.00 amJUDGMENT OF THE COURTA The appeal is allowed.B We make an order striking out those parts of the fourth amendedstatement of claim that seek relief in respect of representations and/orconduct by JNL prior to December 2012 and all claims (or any partthereof) based or relying on such allegations.C Red Stag is to pay JNL's costs on the appeal calculated for a standardappeal in band A, together with usual disbursements. We certify forsecond counsel.D The order for costs made in the High Court is set aside and is to bereviewed in accordance with this judgment.____________________________________________________________________REASONS OF THE COURT(Given by Cooper P)Table of ContentsPara NoIntroduction [1]The proceeding in the High Court [8]The High Court judgment [24]The issues on appeal [31]Submissions [37]Analysis [57]Result [75]Introduction[1] This is an appeal against parts of an interlocutory judgment of Gault J decliningapplications to strike out and for summary judgment in respect of claims brought byRed Stag Timber Ltd (Red Stag) against Juken New Zealand Ltd (JNL) under s 43 ofthe Fair Trading Act 1986 (the FTA).1 The Judge granted leave to appeal to this Courtunder s 56(3) of the Senior Courts Act 2016.2[2] The appellant, JNL, manufactures a product called J-Frame, which is astructural framing product made of laminated veneer lumber (LVL). J-Frame ismarketed and sold to merchant outlets supplying building and timber products such asIndependent Timber Merchants, PlaceMakers, Bunnings Warehouse and Mitre 10, andframe and truss manufacturing factories associated with them. The product is thenpurchased by tradespeople, including builders working in the commercial andresidential building sectors, and individual consumers.[3] The respondent, Red Stag, produces and sells a solid wood framing productthat competes with JNL in the market for structural framing. On 17 November 2017,Red Stag commenced a proceeding in the High Court, claiming that JNL had actedcontrary to the FTA. Red Stag alleged that JNL had, in trade, engaged in misleadingor deceptive conduct generally in breach of s 9, misleading conduct in relation togoods in breach of s 10, and had made false or misleading representations contrary tos 13(a) and (e).1 Red Stag Timber Ltd v Juken New Zealand Ltd [2021] NZHC 2662 [High Court judgment].2 Red Stag Timber Ltd v Juken New Zealand Ltd [2022] NZHC 103.[4] Red Stag alleges that JNL has, between 2007 and 2017, mademisrepresentations about J-Frame in relation to its hazard class and associatedpreservative treatment requirements, its compliance with building standards for timberproducts derived from various applicable New Zealand and Australian standards andits compliance with the requirements of the Building Code.3 Red Stag claims thatJNL's representations allowed JNL to achieve a greater share of the market for timberframing in Aotearoa New Zealand. It is said that if customers knew the true positionabout J-Frame's treatment and failure to comply with standards, fewer customerswould have purchased it, and they would have purchased Red Stag's products instead.Red Stag also claims its sales of timber by-products were adversely affected by JNL'spresence in the market and that the presence of a non-compliant product in the marketadversely affected the price of timber framing products generally. Due to theseadverse effects, Red Stag claims relief under s 43 the FTA.[5] However, a potentially serious impediment to some parts of Red Stag's claimis whether they are time-barred by the three-year limitation period in s 43A of the FTA.Section 43A requires proceedings seeking relief for unlawful conduct, to becommenced within three years after the date on which loss or damage, or the likelihoodof loss or damage, was discovered, or ought reasonably to have been discovered.[6] This case turns on the proper application of s 43A. The context of this claimis an application to strike out parts of Red Stag's claim that are based onrepresentations and conduct prior to December 2012. JNL says the High Court shouldhave struck out those parts of the claim based on conduct prior to December 2012.Red Stag responds by asserting its right to amend its claim, which it says wasotherwise commenced in time, so as to include allegations that do not constitute a freshcause of action.[7] The issues fall to be addressed in the context of a reasonably complexprocedural setting, which it is necessary to explain.3 Building Regulations 1992, sch 1 (Building Code).The proceeding in the High Court[8] Red Stag's proceeding was commenced in the High Court on17 November 2017 (the 2017 proceeding). Five causes of action were pleaded, eachalleging a breach of ss 9, 10, 13(a) and 13(e) of the FTA in different time periods:(a) 2008 to December 2012;(b) 5 December 2012 to 18 June 2015;(c) 18 June 2015 to 9 June 2017;(d) 9 June 2017 to late August 2017; and(e) late August 2017 to 31 August 2017.[9] JNL filed a statement of defence on 22 December 2017. It denied theallegations and also raised limitation as an affirmative defence, pleading that:[Red Stag's] claims are statute barred under section 43A of theFair Trading Act 1986. It is more than three years after the date on which theloss or damage, or likelihood of loss or damage, was discovered or oughtreasonably to have been discovered.[10] Section 43A of the FTA provides:43A Application for order under section 43A person may apply to a court or the Disputes Tribunal for an orderunder section 43 at any time within 3 years after the date on which theloss or damage, or the likelihood of loss or damage, was discoveredor ought reasonably to have been discovered.[11] The arguments on appeal can only be understood in the context of the way inwhich the pleadings have evolved. The first cause of action, covering the periodbetween 2008 and December 2012, relevantly alleged that at all material timesJ-Frame did not comply with NZS 3640 and AS/NZS 1604.4. NZS 3640 is aNew Zealand standard specifying preservative retention and penetration requirementsfor some species of sawn and round timber. The statement of claim alleged that JNLbreached the standard by not using the "glueline method" for the treatment of J-Frame.AS/NZS 1604.4 is a joint Australian and New Zealand standard specifying treatmentstandards for LVL. The statement of claim also alleged that JNL had breached thisstandard as it had treated J-Frame to an "envelope penetration pattern" but had failedto mark the product in accordance with the requirements for that treatment set by thestandard.4[12] It was further alleged that during the relevant period, JNL engaged in conduct,and made representations in trade, in relation to J-Frame's compliance with applicablelaws and standards, and the treatment process to which J-Frame was subject.The pleadings stated that particulars would be provided following discovery.[13] Red Stag alleged that through this impugned conduct JNL, "being in trade",had engaged in conduct or made representations that were misleading or deceptive, orwere likely to mislead or deceive. The pleadings stated that, without discovery,Red Stag was unable to particularise all breaches of the FTA by JNL during the2008 to 2012 period, but that it "claim[ed] relief in respect of all such acts".[14] In March 2018, JNL applied to strike out the first cause of action on the basisof a lack of particulars. It also sought to have the limitation defence heard as apreliminary question.[15] In a judgment delivered on 19 September 2018, Associate Judge Bell struckout the first cause of action.5 He held that the pleading of that cause of action containedinsufficient particulars, applying r 5.26(b) of the High Court Rules 2016.6No evidence had been called suggesting it might be appropriate to let the pleadingstand until discovery had been provided to enable the plaintiff to provide particularsof the claim, nor was there any basis for ordering pre-commencement discovery.7The claim in the first cause of action was struck out accordingly, the Judge noting thatthe strike out was for procedural reasons (the absence of particulars), and would notbar Red Stag from starting a fresh proceeding alleging breaches of the FTA between4 Specifically, it was pleaded that J-Frame ought to have been marked with both an "E" and anenvelope treatment warning label.5 Red Stag Timber Ltd v Juken New Zealand Ltd [2018] NZHC 2459.6 At [29].7 At [28].2008 and 2012, so long as it was "procedurally compliant" and also met "substantiverequirements (including any limitation rules)".8 There was no appeal from thatjudgment.[16] An amended statement of claim was filed on 26 March 2019. As in the firststatement of claim, the allegations were divided into different time periods. As aconsequence of the strike out, the period between 2008 and December 2012 wasomitted. The allegations for the subsequent periods, in material respects, remained thesame.[17] However, the litigation subsequently followed an unusual procedural path.On 19 December 2019, Red Stag commenced a separate proceeding(the 2019 proceeding). This included a claim in respect of the period between"2007 to 2012" which again alleged that JNL, being in trade, engaged in conduct ormade representations that were misleading or deceptive, or were likely to mislead ordeceive. Further causes of action were alleged in respect of subsequent periods,although they did not correspond with the periods alleged in the 2017 proceeding.[18] JNL once more applied to strike out the claim, but the 2019 proceeding wasdiscontinued in accordance with an agreement reached between the parties. This wasrecorded in a joint memorandum of counsel, dated 3 July 2020, which included thefollowing terms:91 This joint memorandum is filed in relation to CIV-2017-404-2753 (the2017 proceeding) and CIV-2019-404-2783 (the 2019 proceeding).2 The parties have conferred in relation to [Red Stag's] proposeddiscontinuance of the 2019 proceeding. They have agreed it shall bediscontinued on the basis that:(a) To the extent that the first and third causes of action in the2019 proceeding are pursued in the 2017 proceeding, asamended, they shall be treated for limitation purposes as ifthey had been filed on 19 December 2019. [JNL] retains thebenefit of any limitation (or other) defences it has, or wouldhave had, in the 2019 proceeding.8 At [29]. The formal order made by the Judge referred in evident error to part of the pleadingrelating to the second cause of action, instead of the first. The reasoning of the judgment makesit plain that this was simply a mistake.9 Footnote omitted.(b) The parties' rights are otherwise preserved. [JNL]hassignalled its intention to apply to strike out that part of theamended pleading in the 2017 proceedings that correspondswith the first cause of action in the 2019 proceeding.(c) Costs are to be determined by the Court.3 A notice of discontinuance is filed along with this Joint Memorandumby consent and on the basis set out above. Orders as to discontinuanceare sought accordingly.[19] A third amended statement of claim was also filed in the 2017 proceeding on3 July 2020. This was followed by a fourth amended statement of claim filed on21 October 2020. The latter is the vehicle for the further interlocutory proceedingsthat have taken place. The manner in which the claim was pleaded was substantiallychanged by the third amended statement of claim, an approach repeated in the fourth.[20] Instead of alleging all of the FTA breaches in separate causes of actioncorresponding to time periods, the discrete causes of action pleaded corresponded witheach section of the FTA allegedly breached: the first concerned s 9 of the FTA,the second s 10, the third s 13(a) and the fourth s 13(e). In each cause of action, it wassaid that JNL "was at all material times in trade" and had engaged in the relevantunlawful conduct. There was no definition of what the material times were. However,the claims include events, and rely on relevant regulatory controls, dating back to2007. The time frame could be ascertained by noting the use of phrases such as:(a) "[f]rom approximately 2007 onwards", referring to the period forwhich Red Stag and JNL had been direct competitors in New Zealand;(b) "[s]ince in or around 2007", referring to the period in which JNL hasmanufactured, promoted and supplied J-Frame in New Zealand; and(c) "[a]t all material times", referring to the development and publicationof standards by Standards New Zealand | Te Mana Tautikanga oAotearoa. Particular pleaded standards and specifications forpreservative treatment (the relevant standards) were said to have beenapplicable to J-Frame between 1 April 2004 to 4 April 2011, from4 April 2011 onwards, and before and after December 2012.[21] This is also made explicit in sch 1 to the pleading (which lists particularrepresentations relied on alongside the requirements of the relevant standards andreasons why the representations were alleged to be false or misleading) and sch 2(which gives the details of the promotional representations relied on by Red Stag).In each case there are references to time frames extending back to 2007, and in somecases even earlier. It is not in dispute that the amended pleading is intended to capturerepresentations and conduct occurring well before the date when, as Red Stagconcedes, it had knowledge of loss or damage for the purposes of s 43A. As noted byGault J:10[66] Red Stag does not dispute that it was aware of these facts before19 December 2016; that is, three years before the claim for the earlier periodwas reinstated on 19 December 2019. Instead, it says that its reinstated claimis not a new cause of action as it is essentially the same as its claim for thelater period (and 17 November 2014 remains the relevant date). [22] The reference to 19 December 2019 reflects the agreement reached on3 July 2019 in the joint memorandum of counsel that the claims were to be treated asif they had been filed on 19 December 2019, with JNL retaining the benefit of anylimitation defence it had or would have had in the 2019 proceeding. Three pointsshould be noted:(a) Initially, the reservation of the limitation rights was in respect of thefirst and third causes of action in the 2019 proceeding. However, asmatters have developed it is only the reference to the first cause ofaction that matters here, being based on conduct allegedly in breach ofthe FTA in the period between 2007 and 2012.(b) Relatedly, the importance of 19 December 2019 is that on that day, byfiling the 2019 proceeding, Red Stag resurrected a claim purporting toreach back prior to December 2012. The new claim, advanced byamendment to the 2017 proceeding, included claims based on conductprior to December 2012, but expressly subject to a limitation argumentthat JNL could raise in the circumstance that effectively such a claimwas raised in December 2019 for the first time. Although pleaded in10 High Court judgment, above n 1.the first statement of claim, that cause of action had been struck out,and could only subsequently be resurrected as if advanced for the firsttime in December 2019. This required a focus on the point whenRed Stag had acquired the actual or constructive knowledge requiredfor time to commence running under s 43A.(c) The Judge found, at least for the purposes of the strike out and summaryjudgment applications, that the relevant knowledge had not beenacquired before 17 November 2014:11 I consider that JNL falls short of showing that Red Stagknew (or ought reasonably to have known) before17 November 2014 that J-Frame was not treated with Zelam's[glueline] treatment and that the standards arguably requiredthat. In relation to the period after December 2012, I cannotsay there is no reasonable possibility that the case was broughtwithin time. In strike out terms, JNL has not shown thatRed Stag's claim is so clearly statute-barred that it canproperly be regarded as frivolous, vexatious or an abuse ofprocess. In summary judgment terms, I cannot say there is noreal question to be tried or no real doubt or uncertainty.[23] This meant, both in the High Court and in this Court on appeal, the argumentsabout the application of s 43A took place on the basis that the three-year periodcommenced to run on 17 November 2014. This had obvious implications for any newclaim advanced after 17 November 2017, the date on which the 2017 proceeding wascommenced.The High Court judgment[24] JNL's applications for strike out and summary judgment were both based onJNL's limitation defence under s 43A of the FTA. The Judge approached the issues byconsidering separately the claims relating to the periods after December 2012 and theperiod prior to December 2012, an approach adopted in response to the arguments heheard about the way in which the three-year period referred to in s 43A of the FTAshould be calculated. Determining the method of calculations required considerationof what level of actual or constructive knowledge was necessary before time wouldbegin to run, including knowledge about the legal interpretation of the building11 High Court judgment, above n 1, at [60].standards underlying the dispute. In 2012, there had been changes to the provisionsof two of the relevant standards, NZS 3640 and AS/NZS 1604.4, in respect of therequirements for preservative treatment appropriate for products such as J-Frame.[25] In relation to the period after December 2012, the Judge concluded there wasa reasonable possibility the case was brought within time. JNL had not shown thatRed Stag's claim was so clearly statute-barred that it could properly be struck out asbeing frivolous, vexatious or an abuse of process. And in the context of the summaryjudgment application, it was not possible to conclude there was no real question to betried or no real doubt or uncertainty.12[26] With respect to the period prior to December 2012, he concluded that JNL hadnot shown that Red Stag knew or ought reasonably to have known that J-Frame wasnot treated to comply with the relevant standards and again, in these circumstances, hecould not conclude that there was no reasonable possibility that the claim had beenbrought within time.13[27] JNL had argued that Red Stag's original causes of action were based onJ-Frame's alleged failure to comply with the 2012 editions of the relevant standards,essentially because Zelam's glueline treatment was the singular compliant treatment.Because that treatment had not been used, representations that J-Frame complied withthe relevant statements were a breach of the FTA. Such representations could onlylogically relate to the period after the 2012 edition came into force.But representations made prior to December 2012 related to whether J-Framecomplied with earlier editions of the standards. A claim based on alleged breachesprior to December 2012 would have to rely on allegations that different standards hadbeen breached. This would constitute a new cause of action. The essential nature ofthe claim for the period prior to December 2012 was different from the claim for theperiod after December 2012.[28] But, as summarised by the Judge, Red Stag countered that its claim remainedone for breach of ss 9, 10 and 13 of the FTA, based on false or misleading claims about12 At [60].13 At [74].J-Frame's compliance with applicable treatment standards, including a failure to labelJ-Frame as having an envelope treatment pattern.14 The basic claim was that JNL hadrepresented that J-Frame complied with the prevailing standards for the relevant classof product when it did not in fact comply, and adding NZS 3604 and NZS 3602 to itspleading, did not change the claim's essential character: Red Stag had simply"clarified" the claim, rather than alleging a fresh cause of action.15[29] The Judge took the test for what constitutes a fresh cause of action from thisCourt's decision in ISP Consulting Engineers Ltd v Body Corporate 89408.16This required him to consider whether the amended pleading was "essentiallydifferent", which he accepted was a question of degree.17 He considered the claim forthe earlier period involved "the same legal basis", namely false or misleadingrepresentations in breach of the FTA.18 While pleading new facts might in theorycreate a new cause of action, the Judge thought it would be rare that factual matterswould be so vital as to affect the essence of the case brought.19 Here, "at a level ofgenerality" the claim for the two periods involved the same alleged representations,which he characterised as "compliance with applicable preservative treatmentstandards". He continued:[72] It is necessary, however, to view the representations in context;that is, by reference to the prevailing standards. In that sense, the effect of thealleged representations varies over time and raises different factualinterpretation issues. In particular, whereas the claim for the later periodfocuses on not using Zelam's glueline treatment, the claim for the earlierperiod involves the separate factual elements that J-Frame was not treated tocomply with the penetration requirement and complete sapwood penetrationwas not achieved or always achieved (in the alternative to the claim that thestandards did not recognise boron treatment).[73] Even so, I consider on balance that the claim for the period prior toDecember 2012 is not essentially different to the claim for the later period.Over both periods, the primary claim is that JNL used boron treatment, whichwas not compliant, even though the argument for the later period is that thestandards required Zelam's glueline treatment (for LVL in hazard class H1.2).14 At [69].15 At [69].16 At [67] quoting ISP Consulting Engineers Ltd v Body Corporate 89408 [2017] NZCA 160, (2017)24 PRNZ 81 at [21].17 ISP Consulting Engineers Ltd, above n 165, at [21(c)] quoting Chilcott v Goss [1995] 1 NZLR263 (CA) at 273 quoting Smith v Wilkins and Davies Construction Co Ltd [1958] NZLR 958 (SC)at 961; and High Court judgment, above n 1, at [72].18 High Court judgment, above n 1, at [72].19 At [72] citing Commerce Commission v Visy Board Pty Ltd [2012] NZCA 383, at [145]–[146].It is the alternative claims that raise additional factual allegations regardingpenetration. The alternative claims are somewhat different, but I consider thatapplying the essential difference test they should not be characterised as newcauses of action. Also, while assessment of whether the representations werefalse depends on the prevailing standards, I do not consider that every changein standard requires a separate cause of action.[30] This meant that 17 November 2014 remained the date that knowledge wasacquired for the period prior to December 2012. Even though Zelam's gluelinetreatment was not relevant for the pre-December 2012 claims, JNL had not shown thatRed Stag knew or ought reasonably to have known prior to 17 November 2014 thatJ-Frame was not treated to comply with penetration requirements of the relevantstandards in the period prior to December 2012. Consequently, the Judge was unableto conclude there was no reasonable possibility that the case was brought withintime.20The issues on appeal[31] JNL appeals against those parts of the High Court judgment declining to strikeout Red Stag's claim for alleged breaches of the FTA in the period prior toDecember 2012. Leave to appeal was not sought in respect of the part of the claimwhich related to conduct after December 2012.[32] The appeal is advanced on the basis that Red Stag was purporting to make aclaim for losses alleged to have been caused by contraventions in the period prior toDecember 2012, when it was acknowledged that Red Stag was aware of all of theelements of the claim for those losses before it reintroduced its claim on 19 December2019. The relevant facts for the period prior to December 2012 included that J-Framewas treated with boron and that complete sapwood penetration was not achieved.As the Judge noted, Red Stag does not dispute that it was aware of those facts before19 December 2016, that is three years before the reinstatement of the claim for theearlier period.21[33] JNL argues that if Red Stag suffered loss or damage by a contravention in theperiod prior to December 2012, it was required under s 43A to make an application to20 At [74].21 At [66].recover that loss within three years of the date on which it acquired actual orconstructive knowledge of the loss. It had not done so. Consequently, Red Stag'sclaim for losses caused by contraventions in the period prior to December 2012 wastime-barred, regardless of whether the claims for later contraventions of the FTA hada similar factual basis.[34] JNL also argues that the treatment standards at issue in the proceeding changedsignificantly in December 2012. JNL argues that the respects in which J-Frame didnot comply with the earlier standards had an essentially different factual basis to theclaim for the period after December 2012.[35] In opposing the appeal, Red Stag's principal argument rests on r 7.77 of theHigh Court Rules, and the right it gives to amend pleadings as of right, including byintroducing relief in respect of a fresh cause of action which is not statute-barred.The issue, as framed by Mr Flanagan for Red Stag, is whether Red Stag introduced a"fresh cause of action" when it amended its claim to include allegations about JNL'sconduct before 2012. He submits it is only if that part of the claim is a fresh cause ofaction that it must be treated as having been brought for the first time on 19 December2019. In that eventuality, it would have been time-barred by s 43A of the FTA. Butthe Judge's reasoning and conclusion on this issue were essentially correct.[36] On the other hand, if it is not a fresh cause of action, then it is simply part ofthe claim brought on 17 November 2017. Mr Flanagan also argues that JNL must betaken as accepting that the question of whether the claim brought on17 November 2017 was then out of time was a question of fact to be determined attrial, because that aspect of the High Court's judgment had not been appealed.Submissions[37] The issue which must be addressed is whether Red Stag was barred as at19 December 2019 from amending its claim to include allegations of breaches of theFTA in the period from 2007 to 2012.[38] Section 43A of the FTA required any claim to be brought "within 3 years afterthe date on which the loss or damage, or the likelihood of loss or damage, wasdiscovered or ought reasonably to have been discovered". The key submission ofMr Galbraith KC for JNL was that the alleged contraventions causing loss which werediscovered more than three years prior to 19 December 2019 had already ceased to beactionable at that date and could not subsequently be resurrected by dint of a pleadingargument.[39] Rule 7.77 of the High Court Rules, on which Mr Flanagan relies, relevantlyprovides as follows:7.77 Filing of amended pleading(1) A party may before trial file an amended pleading and serve a copy ofit on the other party or parties.(2) An amended pleading may introduce, as an alternative or otherwise,—(a) relief in respect of a fresh cause of action, which is not statutebarred; or(b) a fresh ground of defence.(4) If a cause of action has arisen since the filing of the statement of claim, it maybe added only by leave of the court. If leave is granted, the amended pleadingmust be treated, for the purposes of the law of limitation defences, as havingbeen filed on the date of the filing of the application for leave to introduce thatcause of action.(5) Subclause (4) overrides subclause (1).(10) This rule is subject to rule 7.7 (which prohibits steps after the close ofpleadings date without leave).[40] The drafting of r 7.77(1) confers a general right to amend a pleading, whethera statement of claim or a statement of defence. However, if the amendment of astatement of claim introduces relief in respect of a fresh cause of action, it followsfrom r 7.77(2)(a) that the fresh cause of action must not be one which is statute-barred.The bar against the introduction of an amendment to advance a statute-barred claim isin the rule itself; this means that the right conferred by r 7.77(2)(a) to introduce a freshcause of action can only be exercised to introduce claims that are not statute-barred.Mr Galbraith submits the rule cannot be relied on to introduce claims that are statute-barred by joining them with claims that are not.[41] As noted above, the Judge's approach was based on the law set out inISP Consulting Engineers Ltd v Body Corporate 89408.22 In that case, this Courtsaid:23 The relevant principles set out in Ophthalmological Society ofNew Zealand Inc v Commerce Commission were summarised in TranspowerNew Zealand Ltd v Todd Energy Ltd:(a) A cause of action is a factual situation the existence of which entitlesone person to obtain a legal remedy against another (Letang v Cooper[1965] 1 QB 232 at 242–243 (CA) per Diplock LJ);(b) Only material facts are taken into account and the selection of thosefacts "is made at the highest level of abstraction" (Paragon Financeplc v D B Thakerar & Co (a firm) [1999] 1 All ER 400 at 405 (CA)per Millett LJ);(c) The test of whether an amended pleading is "fresh" is whether it issomething "essentially different" (Chilcott v Goss [1995] 1 NZLR 263at 273 (CA) citing Smith v Wilkins & Davies Construction Co Ltd[1958] NZLR 958 at 961 (SC) per McCarthy J). Whether there is sucha change is a question of degree. The change in character could bebrought about by alterations in matters of law, or of fact, or both; and(d) A plaintiff will not be permitted, after the period of limitations hasrun, to set up a new case "varying so substantially" from the previouspleadings that it would involve investigation of factual or legalmatters, or both, "different from what have already been raised and ofwhich no fair warning has been given" (Chilcott at 273 noting that thistest from Harris v Raggatt [1965] VR 779 at 785 (SC) per Sholl J wasadopted in Gabites v Australasian T & G Mutual Life AssuranceSociety Ltd [1968] NZLR 1145 at 1151 (CA)).[42] But the issue in this case of whether a cause of action may be described as"fresh" cannot be assessed without asking at the same time whether the cause of actionproposed to be added is statute-barred. Mr Galbraith argued that the Judge was wrongto consider whether the allegation was fresh as the first question, when the properapproach was to ask whether the proposed amendment would be to add a claim thatwas statute-barred. As Mr Galbraith put it in argument, if a cause of action has notbeen pleaded before becoming statute-barred, the question of whether it is fresh doesnot arise.22 ISP Consulting Engineers Ltd v Body Corporate 89408, above n 15. Citing OphthalmologicalSociety of New Zealand Inc v Commerce Commission CA168/01, 26 September 2001 at [22]–[24];and Transpower New Zealand Ltd v Todd Energy Ltd [2007] NZCA 302 at [61].23 At [21] (footnotes omitted).[43] He supported these propositions by reference to observations of this Court inMurray v Eliza Jane Holdings Ltd, a case decided under the FTA before it assumed itscurrent form but which nevertheless provided, in s 43(5), for a three-year limitationperiod as s 43A of the FTA now does.24 When Murray was decided, the three-yearperiod provided by the statute ran "from the time when the matter giving rise to theapplication occurred", as opposed to the current point of when the loss or damage "wasdiscovered or ought reasonably to have been discovered", but that difference is notsignificant for present purposes.[44] The Court noted, under the heading "Policy considerations" that the FTA'sthree-year limitation period was less than the six-year limitation period for claims andcontract, and tort.25 The Court saw this as an indication that Parliament intended toshorten and confine the limitation period as a "counterweight against the potentialwidth and reach of the Act for the purpose of giving to those engaged in trade somereasonable certainty as to when their potential liability under the Act will come to anend".26[45] Mr Galbraith also referred to the report of Te Aka Matua o te Ture |the Law Commission titled "Tidying the Limitation Act".27 That report contained adiscussion of the limitation provision in the FTA.28 The Law Commission noted thatunder the wording of what was then s 43(5) of the FTA, a claim might be barred byeffluxion of time before a potential applicant became aware of the existence of thefacts on which an application might be made.29 To deal with this issue,the Law Commission favoured amending the FTA to provide for a five-year limitationperiod from the time when the matter giving rise to the application occurred, or a three-year limitation period which ran from the date on which the loss or damage, or itslikelihood was discovered or reasonably ought to have been discovered.30 But the24 Murray v Eliza Jane Holdings Ltd (1993) 6 PRNZ 251 (CA).25 At 258.26 At 258–259.27 Te Aka Matua o te Ture | Law Commission Tidying the Limitation Act (NZLC R61, 2000).28 At [15]–[18].29 At [15].30 At [17].Law Commission cited the policy considerations discussed in Murray, that justified ashorter limitation period than applies for claims in contract and tort, with approval.31[46] The Law Commission's recommendation for three and five-year limitationperiods was not adopted by the legislature. However, s 43(5) was amended by s 3 ofthe Fair Trading Amendment Act 2001 to read:An application under subsection (1) may be made at any time within 3 yearsafter the date on which the loss or damage, or the likelihood of loss or damage,was discovered or ought reasonably to have been discovered.[47] Subsequently, s 32 of the Fair Trading Amendment Act 2013 inserted s 43A inits current form. The three-year limitation period has been preserved, and time runsfrom the date on which the loss or damage, or the likelihood of loss or damage, wasdiscovered or ought reasonably to have been discovered.[48] Mr Galbraith also relied on Blackmount Forests Ltd v Trinity Foundation(Services No 2) Ltd, in which the lack of exceptions to the FTA limitation period wasreferred to.32[49] Mr Galbraith argued that by its 19 December 2019 pleading, Red Stag hadsought to recover relief for alleged contraventions in the period prior to 2012 whichwere not the subject of the March 2019 pleading, and which relate to alleged lossdiscovered more than three years prior to that date. This was an attempt to treat earliercontraventions as part of the same course of conduct that took place after 2012, ineffect maintaining that if a claim for later conduct was brought within time, thelimitation period would not apply in respect of the earlier conduct.[50] Mr Galbraith submitted that approach was inconsistent with the terms of s 43A,and wrong in principle. The limitation period should not be regarded as suspended,because the defendant subsequently engaged in further alleged wrongful acts of asimilar nature. Red Stag's proposition that it could amend the claim to allegecontraventions over an earlier period that are statute-barred, and which require the31 At [15] and [18].32 Blackmount Forests Ltd v Trinity Foundation (Services No 2) Ltd HC Auckland CIV-2004-404-4037, 9 June 2008 at [32] citing Murray v Eliza Jane Holdings Ltd, above 243, at 260; and Gosperv Re Licensing (NZ) Ltd [1998] 3 NZLR 580 (CA) at 583.pleading of different factual and legal matters, lacked support in any relevant authority.Effectively, Mr Galbraith argued that Red Stag was impermissibly attempting toextend its claim backwards in breach of the bar in s 43A and r 7.77(2)(a) of theHigh Court Rules.[51] Mr Flanagan submitted for Red Stag that JNL's argument rested on the ideathat conduct could not be pleaded by amending a statement of claim to make a newallegation barred by s 43A. He claimed that proposition was incorrect. He submittedthat the High Court had correctly approached the issues by asking whether what wasproposed introduced a fresh cause of action, that is, whether the amended pleadingwould amount to an essentially different case.[52] Mr Flanagan submitted that while it was correct that each time a false ormisleading representation was made there was a breach of the FTA, it could also bebreached by conduct comprising a number of actions or omissions assessed togetherand cumulatively. That is now how Red Stag has formulated its claim. Whether thefacts were capable of giving rise to a cause of action is a different question thanwhether an amendment to a pleading amounted to a fresh cause of action. Mr Flanaganclaimed that JNL was conflating those two distinct questions. In this respect, hereferred to the observations of this Court in ISP Consulting Engineers Ltd vBody Corporate 89408 that:33[36] Whether facts are capable of giving rise to a fresh cause of action forlimitation purposes is a different issue than the issue to be decided in thepresent case, which is whether the amendment to the pleading amounted to anew cause of action. These two distinct areas, the start point for limitationperiods and the amendment of pleadings, involve an examination through adifferent lens. Significantly, in this case, the claim of structural defects plainlycannot be said to be successive and distinct. [53] Mr Flanagan submitted that the distinction, on which JNL relied, betweendiscrete breaches of the FTA and the continuing course of conduct, was irrelevant.The fundamental question was whether Red Stag's claim about JNL's conduct before2012 was essentially different from claims that had been commenced in time. It wasnot, because the legal basis for Red Stag's claim was unchanged. And while the claimas amended would allege further instances of contravening conduct, the questions of33 ISP Consulting Engineers Ltd v Body Corporate 89408, above n 15.fact at the heart of the case were the same and concerned whether JNL's labelling andmarketing of J-Frame was misleading or likely to mislead, because it conveyed toconsumers that J-Frame had a certain level and type of treatment which it did not have,and that it complied with certain building standards when it did not.[54] Mr Flanagan challenged JNL's proposition that there was a significant changeto the requirements of the relevant standard in 2012 and claimed that there was noclear dividing line between the applicable regulatory standards. The key issue to bedetermined was whether Red Stag had introduced a "fresh cause of action" when itamended its claim to include allegations about JNL's conduct before 2012. It was onlyif that part of the claim constituted a fresh cause of action, that it must be treated ashaving been brought for the first time on 19 December 2019. If not, then it was simplypart of the claim brought on 17 November 2017 and Red Stag had sued within therelevant limitation period by filing in 2017. Thereafter, the question was whatamendment could be made of that proceeding.[55] Mr Flanagan argued that Red Stag did not change the basis for its claim byintroducing allegations about JNL's conduct before December 2012. The claimremained that JNL breached the FTA by marketing and labelling J-Frame in a way thatwas misleading or likely to mislead, including by omitting to label J-Frame as havingan envelope treatment pattern. The addition of further instances of that conduct didnot constitute a fresh cause of action.[56] Importantly, Mr Flanagan submitted that the material facts relied on in thefourth amended statement of claim were largely unchanged from those previouslypleaded in the amended statement of claim filed on 26 March 2019. In this respect,he referred to a list of material facts set out in the amended statement of claim whichwere repeated in the fourth amended statement of claim, and underpinned the pre-2012claims:34(a) J-Frame is marketed for use in framing applications as a directalternative to solid timber products, including Red Stag's products.34 Footnotes omitted.(b) J-Frame has an envelope treatment pattern. It does not have gluelinetreatment or full sapwood penetration.(c) At all material times, J-Frame therefore did not comply with H1.2,Acceptable Solution B2/AS1, NZS 3640 and AS/NZS 1604.4.(d) Nonetheless, J-Frame was marketed and sold as if it did.(e) Moreover, J-Frame did not comply with the relevant labellingrequirements, as it had envelope treatment but was not labelled withan "E" and a warning label.(f) JNL's conduct created the overall impression that J-Frame compliedwith the relevant standards, was an Acceptable Solution, and had fullsapwood penetration.Analysis[57] We consider the starting point must be s 43A of the FTA. By its terms, theright to seek relief under FTA is conditional upon the application being made withinthree years after the date on which the loss or damage, or the likelihood of loss ordamage, was discovered or ought reasonably to have been discovered. As a generalproposition, it must be the case that a claim for relief which relates to a period morethan three years after the date on which the loss or damage was discovered, or oughtto have been discovered, would be contrary to the statute. We consider Mr Galbraithwas correct to argue that in such a case the claim cannot be made, because it is not onecountenanced by the FTA.[58] The question then is whether r 7.77(2)(a) affects that conclusion. Whiler 7.77(1) gives a general right to file an amended pleading before trial, that right issubject to r 7.77(4) which provides that if a cause of action has arisen since the filingof the statement of claim, it may be added only by leave of the Court. The right is alsosubject to r 7.7, which prohibits steps after the close of pleadings date without leave.[59] Turning then to r 7.77(2)(a), it provides that an amended pleading mayintroduce relief in respect of a fresh cause of action, which is not statute-barred.This means that an amended pleading may not introduce relief in respect of a freshcause of action which is statute-barred. This is consistent with the fact relief cannotbe sought which is statute-barred: that is not the consequence of application of therule, but rather the consequence of application of the statute which bars the relevantclaim for relief. The wording of the rule refers to fresh causes of action, doubtless onthe assumption that if a statement of claim has already been filed, it will not be seekingrelief which is statute-barred. So, for the purposes of considering the right to amend,the purview of the provision is limited to an amended pleading which purports toadvance a fresh cause of action. There is no need for the rule to deal with causes ofaction which are not fresh but statute-barred because the bar will be in the relevantstatutory provision.[60] We note that r 7.77(2)(a) assumed its present form by amendment pursuant tor 18(1) of the High Court Amendment Rules (No 2) 2010. That provision inserted thewords "relief in respect of" before "a fresh cause of action" at the outset of r 7.77(2)(a).The explanatory note to the amendment referred to the change in the following terms: Rule 7.77(2)(a) is amended so that it recognises clearly that the effect of alimitation defence, if established, is to bar by statute not a cause of actionitself, but relief in respect of one. [61] It is therefore clear that any amended pleading advanced under the authority ofr 7.77(2)(a) must not seek relief in respect of a cause of action which is statute-barred.It is not to be read as an authority to introduce an amended pleading seeking relief foractions that took place outside a limitation period. The policy underlying the three-year limitation period in s 43A of the FTA, addressed in Murray,35 was preserved, asdiscussed above, following the Law Commission's review of the FTA, illustrating theimportance of adhering to it. For these reasons, we consider that Mr Galbraith'sargument that the limitation question should be considered first must be correct.[62] In his submissions to the contrary, Mr Flanagan relied on a number ofauthorities. We refer first to ISP Consulting Engineers Ltd v Body Corporate 89408,the relevant extract from which we have set out above at [42].36 It was itself derivedfrom Transpower New Zealand Ltd v Todd Energy Ltd.37 We do not consider thatRed Stag can derive support for its position from the principles set out in that case.35 Murray v Eliza Jane Holdings Ltd, above 23, at 258–259.36 ISP Consulting Engineers Ltd v Body Corporate 89408, above n 15, at [21].37 Transpower New Zealand Ltd v Todd Energy Ltd, above n 22, at [61].[63] First, if reference is made to para (a), about what constitutes a "cause ofaction", the "cause of action" here, for the period between 2007 and December 2012,embraces a factual situation which does not entitle Red Stag to obtain a legal remedy.To acknowledge that would be to contemplate relief which is statute-barred unders 43A of the FTA. That is so regardless of anything in r 7.77(2)(a). In terms of theprinciple stated in para (b), while it may be necessary to select the material facts onthe basis of the "highest level of abstraction", that cannot require the exclusion of thefacts which establish that the claim is statute-barred, that is the actions relied on priorto December 2012.[64] We now turn to paras (c), which states the test for whether an amended pleadingis fresh, and (d), which states that a plaintiff cannot run, after the period of limitation,a new case "varying so substantially" from the previous pleadings such that it wouldinvolve investigation of different factual and/or legal matters. As to these principles,even if it were to be established that the new pleading was not otherwise different fromcauses of action already pleaded, there would remain the significant and importantdifference that the statement of claim filed in March 2019 did not seek relief in relationto the period between 2007 and December 2012. Relief in respect of that period wouldrequire the investigation of factual and legal matters relevant to that period, which hadnot previously been subject to the claim.[65] Other cases on which Mr Flanagan relied included:(a) Bryan v Philips New Zealand Ltd.38 In that case, the plaintiff had beenrequired to work with sheets of asbestos paper. He alleged that he hadbeen exposed to and ingested significant volumes of airborne asbestosfibres to which he would not otherwise have been exposed. Whencommenced, the claim was advanced on the basis of a serious risk thatthe plaintiff would contract an asbestos-related condition. An amendedstatement of claim was then proffered which alleged actual harm. Itwas argued that the change from an allegation of fear or likelihood ofasbestos-related harm to an allegation of actual harm was a new cause38 Bryan v Philips New Zealand Ltd [1995] 1 NZLR 632 (HC).of action which was statute-barred and therefore not permitted. Afterreferring to relevant authorities,39 Barker J said:40Applying these tests to the present case , the basis of theclaim of negligence against the defendants is unchanged as isthe allegation that the plaintiff was subjected to exposure toasbestos. The only change is from fear of future injury toactual injury. I do not think this change betokens a "newcase" which would involve investigation of matters of fact orquestions of law different from those already raised. Thelegal basis is the same.(b) Cridge v Studorp Ltd.41 In that case, claims made under s 43 of theFTA included claims based on incorrect instructions given in technicalliterature provided by James Hardie setting out installation rules for theHarditex system which was the subject of the litigation. The defendantsopposed the amendment of the pleadings to rely on four furtherdocuments that had not previously been the subject of the pleadings.Simon France J noted that if the reference to the four further technicaldocuments constituted a fresh claim, the amended pleading would bestatute-barred under s 43A.42 After referring to the relevant principlesfrom ISP Consulting Engineers Ltd, the Judge said:[856] The core allegations contained in the amendmentsare not fresh but substantially reflect existing allegations. Thedocuments in which they are found are new and haveindependent relevance in that each may be, for some of therepresentative group, the JHTI operative at the time ofbuilding. That feature of new documents is capable ofsupporting a conclusion the amendments are time-based, butI prefer to focus on the concept underlying the idea oflimitation. The amendments add nothing substantively newto the proceeding as it existed prior to the amendment. Theyare just further examples of existing alleged issues.(c) Minister of Education v H Construction North Island Ltd (formerlyHawkins Construction North Island Ltd).43 That claim concerned nine39 At 636 including Gabites v Australasian T & G Mutual Life Assurance Ltd [1968] NZLR 1145(CA) at 1151; and Harris v Raggatt [1965] VR 779 at 785.40 At 636–637.41 Cridge v Studorp Ltd [2021] NZHC 2077, [2022] 2 NZLR 309.42 At [854].43 Minister of Education v H Construction North Island Ltd (formerly Hawkins ConstructionNorth Island Ltd) [2018] NZHC 871.buildings at a secondary school built between 2003 and 2009 whichallegedly leaked because of numerous construction defects. The claimwas in negligence. The statement of claim was amended several timesand the defendant alleged that in its final form it raised new defectswhich were time-barred under the 10-year limitation period in s 393 ofthe Building Act 2004. Downs J noted that the claim contained anallegation that certain buildings were built with inadequate roof pitch,but later iterations of the claim extended that allegation to differentbuildings and later construction stages. A further claim allegedinadequate provision for thermal movement, and amendments laterincluded an additional building in that claim.44The Judge noted that the original claim had identified all allegeddefects, but subsequent amendment related the claim to differentbuildings and later construction stages. With each amendment, thequantum of the claim rose.45The defendant argued that the successive addition of buildings to theclaim had resulted in the claims becoming "essentially different incharacter" from the original claim.46 After noting that the partiesagreed the applicable yardstick was whether the claim introduced, insubstance, a fresh course of action,47 the Judge continued:48[264] The law's concern in this area is the protection ofdefendants from claims, which, through a change of nature orcharacter, expose them to otherwise time-barred allegations.This is not such a case. The first amended statement of claimcontained the same defects as later iterations. True, differentlanguage was used to describe some, but the gist of each wasthe same. And remained constant. The only material changeswith each amendment were the construction stages andbuildings. Put broadly, both expanded. So too, of course,quantum. Everything else, however, remained constant,including, materially, the nature of the allegations against[the defendant] vis-à-vis the School. In summary, while the44 At [261].45 At [264].46 At [262].47 At [263].48 Footnotes omitted.claim has been enlarged since 25 September 2013, neither itsingredients nor character has changed to result in anessentially fresh (time-barred) cause of action.(d) Commerce Commission v Visy Board PTY Ltd.49 In that case this Courtanalysed an amended pleading in accordance with the principles set out inTranspower New Zealand Ltd v Todd Energy Ltd and other cases.50 This Courtconcluded that the amended pleading did not change the essential nature of theclaim.51 It had merely added an additional fact, referring to the conduct of thedefendant in New Zealand. While the new allegation was important toestablish the jurisdiction of the New Zealand courts to deal with theCommission's claim against Visy Board, it did not change the essential natureof the claim against the defendant. The claim remained the same as it hadalways been.[66] Mr Flanagan submitted that the rationale of all of these cases was that afundamental change to the legal basis for the case that the defendant has to answerwas required before there would be a finding that a new cause of action was alleged.Simply enlarging the claim, or even adding a critical allegation necessary for it tosucceed is not enough. The fact that a claim added by amendment could have stoodalone, and would be time-barred if filed as a separate proceeding, was not the issue.[67] However, we do not consider the cases establish a proposition as broad as thatwhich Mr Flanagan asserts. In each of the cases on which he relies, the amendmentsadded causes of action able to be brought within the ambit of r 7.77(2) or itspredecessors. But in each instance, the original proceeding had been commenced intime; and the new allegations sought to be added by the amended pleading did notreach back in time to a point earlier than that covered by the claim initially pleaded.[68] An amendment to a statement of clam which seeks relief in relation to a periodearlier than that covered by the existing claim, and in breach of a statutory bar, is notauthorised by r 7.77(2)(a). The fact that it might be characterized as not "essentiallydifferent" in nature, or as not giving rise to legal issues different from those already49 Commerce Commission v Visy Board Pty Ltd, above n 18.50 At [142]–[148].51 At [147].raised by the claim, does not mean that the statutory bar can be ignored. That isreflected by the wording of r 7.77(2)(a) itself. The rule is not to be applied on a basisthat treats the "freshness" inquiry as determinative of the issue of whether the statutorybar applies in circumstances where the proposed amendment would extend the periodcovered by the statement of claim to an earlier point in time and contrary to a statutorybar.[69] That is essentially what was authorised by the judgment under appeal, and wedo not consider it was correct.[70] JNL's notice of appeal sought an order striking out those parts of the fourthamended statement of claim that comprised or contained allegations of representationsand/or conduct by JNL prior to December 2012, and all claims (or any part thereof)based or relying on such allegations. At the conclusion of the hearing, against thepossibility that the appeal might be allowed, we invited the parties to confer and file amemorandum identifying more particular relief that should be ordered if the appealwere allowed.[71] The parties conferred but were unable to reach agreement on the form that theamendments should take. JNL filed an amended form of the claim with passagesstruck out. Red Stag did not agree with what was proposed and suggested the proposedamendments were "plainly overbroad".[72] In the absence of agreement, we consider the appropriate course is to allow theappeal on the basis of the relief claimed, albeit in a slightly modified form.Consistently with the reasoning set out above, we consider the appropriate form ofrelief is to strike out those parts of the amended statement of claim that seek relief inrespect of representations and/or conduct by JNL prior to December 2012 and allclaims (or any part thereof) based upon or relying on such allegations.[73] It will be for Red Stag to amend its pleading in a manner that conforms withthis judgment. The pleadings will of course remain under the supervision of theHigh Court as the case proceeds.[74] Gault J delivered a costs judgment on 21 December 2021.52 In the costsjudgment he had to assess what costs should be awarded to each party given the factthat both had succeeded in part on the various interlocutory applications dealt with inthe High Court judgment. For reasons he gave, the net outcome was an order in favourof Red Stag in the sum of $11,828.60 (for both costs and disbursements).53 Given theconclusions we have reached, it will be appropriate for that order to be set aside, andfor the issue of costs in the High Court to be reviewed having regard to the terms ofthis judgment.Result[75] The appeal is allowed.[76] We make an order striking out those parts of the fourth amended statement ofclaim that seek relief in respect of representations and/or conduct by JNL prior toDecember 2012 and all claims (or any part thereof) based or relying on suchallegations.[77] Red Stag is to pay JNL's costs on the appeal calculated for a standard appealin band A, together with usual disbursements. We certify for second counsel.[78] The order for costs made in the High Court is set aside and is to be reviewedin accordance with this judgment.Solicitors:Hesketh Henry, Auckland for AppellantMeredith Connell, Auckland for Respondent52 Red Stag Timber Ltd v Juken New Zealand Ltd [2021] NZHC 3584.53 At [15].