BUNTING AND GARDNER V AUCKLAND CITY COUNCIL HC AK CIV-2007-404-002317

BUNTING AND GARDNER V AUCKLAND CITY COUNCIL HC AK CIV-2007-404-002317 13 August 2008IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV-2007-404-002317BETWEEN LAWRENCE ANDREW JAMES BUNTING AND SARA-JANE GARDNER Applicants AND AUCKLAND CITY COUNCIL Respondent Hearing: 28 July 2008 Appearances: P M Fee for the Applicants H M Rice for the Respondent Judgment: 13 August 2008JUDGMENT OF DUFFY JThis judgment was delivered by Justice Duffy on 13 August 2008 at 3.00 pm, pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar Date:Solicitors: Jones Fee P O Box 1801 Auckland 1140 for the Applicants Heaney and Co P O Box 105391 Auckland 1001 for the Respondent[1] This is an application to review a decision of Associate Judge Doogue striking out the applicants' civil proceeding in this Court on the ground it was time barred. The application is opposed. [2] The only issue for determination is whether or not the Associate Judge erred in law when he decided the applicants' proceeding was commenced out of time. [3] The parties agree that the relevant limitation period is that provided in s 393 of the Building Act 2004. Section 393 provides:393 Limitation defences(1) The provisions of the Limitation Act 1950 apply to civil proceedings against any person 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 previous enactment relating to the construction, alteration, demolition, or removal of the building. (2) However, civil proceedings relating to building work may not be brought against a person after 10 years or more from the date of the act or omission on which the proceedings are based. (3) For the purposes of subsection (2), the date of the act or omission is,— (a) in the case of civil proceedings that are brought against a territorial authority, a building consent authority, a regional authority, or the chief executive in relation to the issue of a building consent or a code compliance certificate under Part 2 or a determination under Part 3, the date of issue of the consent, certificate, or determination, as the case may be; and (b) in the case of civil proceedings that are brought against a person in relation to the issue of an energy work certificate, the date of the issue of the certificate.[4] The struck out proceeding was brought against a territorial authority and alleged actionable errors and omissions on its part arising from the issue of a code of compliance certificate for a building erected on the applicants' land. It follows that for the proceeding to satisfy s 393(2) it had to have been issued no later than 10 years from the date of the issue of the code of compliance certificate.[5] In this case the respondent issued its code of compliance on 4 October 1996. It follows that 4 October 2006 is 10 years after the issue of the code of compliance certificate. The proceedings were filed in this Court on 27 April 2007. Unless the applicants can establish that in law their proceeding was commenced at a date earlier than 27 April 2007, their proceeding is clearly time barred. [6] The applicants seek to establish that their proceeding was commenced earlier than the date on which it was filed in this Court through a particular interpretation of s 55(1) of the Weathertight Homes Resolution Services Act 2002 (the WHRS Act). If s 55(1) has the interpretation for which the applicants contend, they can avoid their proceeding being time barred by relying on a legal fiction that has the effect of deeming them to have commenced their proceeding at a time which falls within the 10 year time limit of s 393(2) of the Building Act. [7] The respondent argues that s 55(1) cannot be read in the way for which the applicants contend. It submits that a proper interpretation of s 55(1) excludes the legal fiction on which the applicants rely. [8] The relevant legislation has since been amended. It is the former legislation found in the WHRS Act 2002 that is applicable.Facts[9] The applicants are the owners of a property at 32b Ngake Street, Orakei, Auckland, which comprises land and a dwelling in the form of a townhouse. The townhouse was constructed for the applicants between September 1994 and August 1995. During this time the respondent carried out various inspections of the dwelling pursuant to its statutory duty. As mentioned earlier, the code of compliance certificate for the work done on the dwelling was issued on 4 October 1996. [10] In March 2005, the applicants began to market the property for sale. In June 2005 they received an offer to purchase the property conditional upon the purchaser obtaining a report into the weather-tightness and structural integrity of the building. On 14 June 2005 such a report was obtained and it identified high moisture readingsin the property. The offer on the property fell through, as the remedial works to cure the high moisture readings in the property could not be carried out in a suitable timeframe for the purchaser. The applicants proceeded to have some remedial work carried out. Leaks re-occurred. Consequently, on 13 June 2006 the applicants filed an application to the Weathertight Homes Resolution Service (WHRS) pursuant to s 9 of the WHRS Act. On 20 July 2006 a WHRS assessor visited the dwelling and assessed it for the purposes of determining eligibility under the WHRS Act. A report was issued, dated 11 August 2006, which confirmed that, in the writer's opinion, the claim met the criteria set out in s 7(2) of the WHRS Act. The report identified a number of defects in the dwelling. The applicants estimate that the cost of rectifying the defects and damages will be approximately $300,000. [11] However, on 18 October 2006 the applicants were advised that their claim under the WHRS Act was ineligible as their application under that Act was filed more than 10 years after the dwelling-house was built. Section 7 of the WHRS Act limits that Act's application to eligible claims. Eligibility is determined by the age of the building, or the alterations, which have given rise to the claim. These must have been completed within 10 years of the date of the application, under s 9 of the Act. [12] By the time the applicants learned their application to the WHRS was ineligible for being out of time under the WHRS Act, it was more than 10 years since the respondent had issued its code of compliance certificate. This meant that any new civil proceeding against the respondent that was filed in Court after 18 October 2006 was time barred by s 393 of the Building Act. Had the applicants commenced civil proceedings against the respondent when they first learned of the dwelling's defects, those proceedings would have been within the 10 year time limit s 393 of the Building Act imposes on the commencement of civil proceedings.Discussion[13] The applicants contend that the struck out proceeding is not time barred as s 55 (1) of the WHRS Act deemed the proceeding to have been filed on the day they made their application to the WHRS. Since that date was 13 June 2006, theproceeding would be within the limitation period in s 393 of the Building Act. The respondent contends that s 55(1) does not have this effect. [14] Section 55 of the WHRS Act provided:55 Application of other enactments to adjudications –(1) For the purposes of the Limitation Act 1950, and any other provision that imposes a limitation period, the making of an application under s 9(1) is deemed to be the filing of proceedings in a Court. (2) Adjudications must be treated as – (a) Proceedings for the purposes of s 24 of the Insolvency Act 1967; and (b) Actions or proceedings for the purposes of s 42 of the Corporations (Investigation & Management) Act 1989; and (c) Legal proceedings for the purposes of s 248 of the Companies Act 1993.[15] The applicants' interpretation of s 55(1) leads to unusual results. It enables their claim, which is otherwise time barred under both the Building Act (s 393) and the WHRS Act (s 7 makes it ineligible), to be deemed to be within s 393's limitation period. They contend that their claim's ineligibility under the WHRS Act does not strip the claim of s 55(1)'s benefit and that this outcome accords with the scheme and purpose of the WHRS Act. [16] There is no doubt that Parliament intended the WHRS Act to provide the owners of leaky dwelling-houses with a flexible, speedy and cost-effective process for resolving claims against persons who could be held responsible for the leaky condition of those buildings. The Act contains processes that are designed to fit the peculiar conditions of disputes arising from leaky dwellings. For example, unlike civil proceedings where a plaintiff must file a claim disclosing a reasonable cause of action against named defendants, all a claimant to the WHRS need do is file an application setting out the address of the dwelling, the owners' names, and a brief description of the alleged damage that has occurred as a result of the dwelling being a leaky building. No allegedly liable parties are joined at the time the application is filed. It is only after the assessor completes his report, which includes his assessment of who should be joined as a party, that persons potentially liable for theclaimed damage are joined as parties. Consequently, in contrast to civil proceedings, once an application to the WHRS is filed, time stops for limitation periods even before the persons potentially liable under the claim are notified of its existence. Similarly, any later joinder of additional parties is unconstrained by limitation periods in the way that occurs with civil proceedings: see Kells v Auckland City Council & Ors HC AK CIV 2008-404-1812 30 May 2008 Asher J at [43]. [17] These features of the resolution of claims under the WHRS Act are consistent with its purpose of seeking to avoid burdening dwelling-house owners with the costs of preparing a case against the potentially liable persons. Whereas litigants in civil proceedings carry the financial burden of establishing the cause of the alleged damages and who is allegedly responsible for it, under the WHRS Act it is the WHRS's assessors who obtain that information. [18] In balancing the rights of potential defendants to enjoy the protection of limitation periods against the needs of the claimants, Parliament has chosen to adopt an approach that differs from the approach adopted in civil proceedings. This is understandable since procedures under the WHRS Act do not give claimants the same degree of control that plaintiffs have in civil proceedings. [19] Once the dwelling-house owners file their applications, many steps in the progress of the claim are under the control of other persons. The filing of the application is followed by an assessor's report. An evaluation panel then determines if the application as assessed by the assessor is eligible. After that the claimant can have the claim sent to mediation if all other persons affected by it agree to this course of action. If not, the claimant can initiate adjudication under the WHRS Act. This is an inquisitorial process in which the adjudicator has the power to add and strike out parties of his or her own motion. The adjudicator has the power to transfer a claim to the District Court or the High Court if he or she is satisfied the conditions for such transfer are met. After an application is filed there is much that can happen to a claim that is beyond a claimant's control. In such circumstances it is understandable that Parliament would not place the burden of meeting limitation requirements on a claimant. And since aspects of the cause of a dwelling's leaky problems may only become known part way through the progress of a claim,Parliament has chosen a limitation requirement that best suits the nature of claims of this type. [20] Section 55(1) ensures that claims that are subsequently transferred by an adjudicator to either the District Court or the High Court do not encounter limitation barriers. Because the original application under s 9(1) is deemed to be the commencement of a civil proceeding, there is no room for argument over limitation issues should a claim later be transferred to a Court. This much about the section's purpose is clear. [21] There is no doubt that the WHRS Act contains major departures from the processes usually followed in litigation. However, usually the purpose of those departures is clear and is related to some aspect of how claims are dealt with under the WHRS Act. The hurdle the applicants face in this case is that their claim under the WHRS Act is ineligible. Even though that claim has come to an end before the WHRS, they contend it remains alive for the purpose of s 55(1). It is difficult to see what purpose there could be in enabling an application in an ineligible claim (which is therefore excluded from the WHRS Act) to stop time running against the commencement of civil proceedings in this Court. Permitting this event to occur serves no purpose under the WHRS Act. Why something that is excluded from that Act should still obtain a benefit under it is hard to see. [22] The respondent submits that the present case is analogous with the circumstances that prevail when a civil proceeding is discontinued before the expiry of the relevant limitation period or what used to occur when the procedural rules relating to non suit were in force. In those circumstances, a plaintiff could commence a second proceeding but time for the purposes of the Limitation Act ran from the filing of the second proceeding. A plaintiff could not rely on the date of filing the original proceeding (once discontinued) in order to avoid any subsequently filed proceeding being time barred. Here the respondent contends that the application has been extinguished by the claim being ineligible so that any subsequent claim or proceeding (which would include the struck out proceeding) must qualify on its own account under any relevant limitation period. There is nopossibility of relating a later claim or proceeding back to the time of the filing of the original application. [23] I think the analogy the respondent draws is sound. The effect of the applicants' interpretation of s 55(1) would be that once an application under s 9(1) of the WHRS Act was made, it would open the door to the filing of any civil proceedings relating to the same subject matter, no matter how distant, in time and in sequence, from the date the application was made. If the section enabled the subsequent filing of any civil proceeding, the applicants could commence more than one such proceeding. Provided their serial proceedings did not constitute an abuse of process, they would be free to file a series of proceedings unhampered by the time limits that usually deter plaintiffs from that approach. [24] The interpretation for which the applicants contend would have an extraordinary outcome. This is even more so when it is understood that the very application which would give rise to the open ended ability to file civil proceedings was time barred from being pursued as a claim under the WHRS Act. [25] Section 55(1) refers to "proceedings". Had the draftsman used the singular form of the word, which then would have required an accompanying article, the necessary link between the application and the fictional proceeding would have been clearer. Nonetheless, I consider that the intent of the section is to deem the application that has been filed to be a proceeding for the purpose of the WHRS Act. In that way any limitation problems are avoided should the application later be transferred to a Court. [26] An application for an ineligible claim has no purpose under the WHRS Act. I think, therefore, that the scope of s 55(1) is limited to applications for eligible claims under that Act. Once a claim is found to be ineligible, it is excluded from the scope of the WHRS Act and, consequently, all the provisions of the Act cease to apply to such an application. It follows that the struck out proceeding cannot be deemed to have been filed on 13 June 2006 and, therefore, to be within the limitation period. The Associate Judge was right to strike it out. Accordingly, the application to review his judgment is dismissed.Result[27] The application to review the judgment striking out the applicants' proceeding is dismissed. Duffy J