BOULTON v CHRISTIE [2023] NZHC 2241

BOULTON v CHRISTIE [2023] NZHC 2241 [18 August 2023]IN THE HIGH COURT OF NEW ZEALANDWHANGAREI REGISTRYI TE KŌTI MATUA O AOTEAROAWHANGĀREI-TERENGA-PARĀOA ROHECIV-2021-488-63[2023] NZHC 2241BETWEEN RAYMOND JOHN BOULTONPlaintiffAND PAUL JAMES CHRISTIE andVICKI LOUISE CHRISTIEFirst DefendantsWHANGAREI DISTRICT COUNCILSecond DefendantHearing: 7 August 2023Appearances: Jose San Diego for the Plaintiff (by VMR)Paul Biddle for the First Defendants (by VMR)Judgment: 18 August 2023JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR[application for leave to issue third party notices]This judgment was delivered by me on 18 August 2023 at 3:00pmpursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:Cowan Law (Doug Cowan/Jose San Diego), Auckland, for the PlaintiffHenderson Reeves (Paul Biddle/Jeremy Browne), Whangarei, for the First DefendantsTABLE OF CONTENTSParagraphIntroduction [1]Background [2]Mr and Mrs Christie's application for leave to issue third party notices[7]Affidavit of Paul James Christie, dated 23 June 2023 [9]Affidavit of Sarah Jane Wainwright, dated 28 June 2023 [21]Mr Boulton's opposition [22]Legal principles [23]Analysis [26]Mr and Mrs Christie's submissions [28]Issues in disputes are substantially the same [28]Joinder of right [32]Delay [33]Interests of justice [35]Mr Boulton's complicity [39]Mr Boulton's submissions [41]Result [45]Orders [47]Introduction[1] Mr Paul Christie (Mr Christie) and Mrs Vicki Christie (Mrs Christie) seek anextension of time to bring third party proceedings, or alternatively, for leave to issuethird party notices against three third parties — Mainmark Ground Engineering (NZ)Limited (Mainmark), Whangarei District Council (the Council) and Topp Limited(Topp) (together, the Third Parties).Background[2] The substantive proceeding, filed in June and served in July 2021, is for breachof contract and negligence for alleged defects in a property at 37 Lawson Drive,Tutukaka (the property) developed and sold by Mr and Mrs Christie to Mr RaymondBoulton (Mr Boulton).[3] On 7 December 2022, Mr and Mrs Christie issued a third party claim forcontribution under the Law Reform Act 1936 and in equity against Mainmark, whichwas served on it on 8 December 2022.[4] On 27 February 2023, Mr and Mrs Christie issued further third party claimsfor contribution under the Law Reform Act 1936 and in equity against the Council andTopp, which were served on them on 1 March and 29 March 2023 respectively.[5] Mr and Mrs Christie subsequently appreciated that those notices were invalidas the time had elapsed to file them as of right. On 4 July 2023, they then filed thisapplication for an extension of time to bring third party proceedings, or alternatively,for leave to issue third party notices. This judgment determines that application.[6] I note the substantive proceeding is set down for a seven-day fixturecommencing 2 October 2023.Mr and Mrs Christie's application for leave to issue third party notices[7] Mr and Mrs Christie seek orders:11 Interlocutory application on notice for leave to issue third party notices dated 4 July 2023 at [1].(a) Under rule 1.19 extending the time for bringing third party proceedingsto 7 December 2022 (in the case of Mainmark Ground Engineering (NZ)Limited) and 27 February 2023 (in the case of Whangarei District Counciland Topp Limited); and extending the time for the Third Parties to file andserve defences until 10 working days after the order in (a) is made.(b) Or in the alternative to the above, granting leave to the first defendants toissue third party notices against the first third party, Mainmark GroundEngineering (NZ) Limited, the second third party, Whangarei DistrictCouncil, and the third party, Topp Limited.(c) Or in the alternative to (a) and (b) above, granting leave to the firstdefendant to issue the third party notices sought above on the basis thatshould the Third Parties be unable or unwilling to participate in theupcoming trial on 2 October 2023, any adjournment would be only inrelation to the first defendants' claim against the Third Parties and wouldnot affect the hearing of the plaintiff's claim against the first defendants;(d) Costs on the application (if opposed).[8] The grounds on which the orders are sought are:2(a) The applicants/first defendants are entitled to relief or a remedy relatingto the subject matter of the proceeding from the Third Parties and the reliefor remedy is substantially the same as that claimed by the plaintiff againstthe applicants/first defendants.(b) The proposed Third Parties were served with the proposed third partyproceedings in December 2022 and March 2023 and it is in the interestsof the just, speedy and inexpensive determination of the proceeding orinterlocutory application to extend time as sought.(c) The applicants/first defendants did not issue third party notices inaccordance with rule 4.4(2)(a) HCR and seek leave of the court under rule4.4(2)(b) HCR.(d) As appears in the memorandum of counsel filed in support of thisapplication.Affidavit of Paul James Christie dated 23 June 2023[9] Mr Christie has made an affidavit in support of his and Mrs Christie'sapplication.3 He says he and his wife brought the property as bare land in February2009.2 At [2].3 Affidavit of Paul James Christie in support of interlocutory application on notice for leave to issuethird party notices dated 23 June 2023.[10] Mr Christie deposes that in 2009, they engaged Alpha Architectural DesignLimited (Alpha) as architect, Vinny Marotta of Studio Marotta (Marotta) as engineer,and Topp as the main building contractor. Topp's construction included the property'sfoundations and engineered concrete floors in accordance with the specificationssubmitted to the Council for building consent.[11] Regarding the Council's file and building consent, Mr Christie highlights thefollowing:(a) On 4 November 2009, Alpha completed the building consentapplication, which the Council approved on 15 January 2010.(b) On 9 June 2010, an amendment was requested over the location of thedwelling based on the advice of Alpha and others, which the Councilapproved on 21 June 2010.(c) The building consent required Marotta to inspect pile driving operation(the pile inspection), obtain a pile driving log (the pile log), provide aproducer statement construction review (PS4) and provide a PS4 fordriving piles. Mr Christie says he relied on Marotta's advice and Topp'sconstruction in accordance with it in respect of the foundation and otherstructural works.(d) Between January 2010 and March 2011, the house was constructed, andthe Council undertook assessment, decision and inspection works.(e) On 4 April 2011, Marotta provided a PS4 for the foundation works.(f) On 24 June 2011, the Council issued the code compliance certificate(CCC).(g) Marotta provided a PS4 for the foundation driven poles but did notprovide the pile log. Despite this and neither Topp nor Marottaproviding a PS4 for "driving piles", the CCC was issued.[12] Regarding the post-construction issues and remedial work, Mr Christiedeposes the following:(a) In June 2012, he noticed the front 12 metre wide ranch sliders were outof alignment, and he contacted Ken Topp (Mr Topp) from Topp, whorecommended Whangarei Aluminium re-align them. WhangareiAluminium did so and said the issue was common among large ranchsliders.(b) Between 2013 and 2015 Whangarei Aluminium and Retro Worksadjusted the ranch sliders, until in early 2015 Retro Works said theycould not adjust them further and suggested the builder have a look.(c) Both Topp and Marotta identified movement of the upper beamsupporting the sliders and settlement in the floor. Marottarecommended monitoring for further movement over six months beforemaking repair recommendations.(d) In November 2015, after the six-month monitoring, Topp and Marottaconcluded there was no further movement. Marotta prepared aremedial design and Topp undertook the works to realign the frame andadd extra support to the upper beam. Neither Topp nor Marottaprovided any measurements nor a report. Further, despite givingMarotta instructions to ensure consents were obtained if required,Marotta gave no advice on consents and did not apply for them.(e) Despite the remedial works, in 2016 and 2017 further adjustments wererequired.[13] Mr Christie says that in 2018 he and his wife moved to a house in Whangareiand initially used the property as a beach house. The ranch sliders still did not lockeasily and there was a slight gap when they were closed.[14] In July 2018, Mr Christie says the decision was made to sell the property, butthey intended to address the issue with the ranch sliders. By this time Mr Topp wasnot interested in pursuing further works and instead recommended Mainmark to dofloor relevelling and realignment of the sliders and joinery frames. Mainmark agreedto relevel 10 to 20 m2 of the floor after identifying slab settlement of 20 mm — workthat was completed on 16 January 2019. Having paid Mainmark on 28 February 2019,Mr Christie says he assumed the floors were now fully repaired, the floor and sliderappeared fixed, and they were happy to market the property for sale. Mr Christie notesthat while Mainmark's contract excluded their responsibility for consent he made apoint to Mainmark to make sure that the Council's consent be obtained if required.Mainmark gave them no advice and no consent was obtained.[15] Mr Christie deposes that sale of the property occurred to Mr Boulton withsettlement occurring on 3 May 2019. Mr Boulton then filed a claim against him, hiswife, and the Council on 22 June 2021.[16] Following initial difficulties in engaging a geotechnical expert and structuralengineer, Cook Costello was engaged in August 2021. In June 2022, Cook Costellovisited and inspected the property, taking samples for its geotechnical assessment.Mr Christie says a draft of Cook Costello's report was provided in October 2022.[17] Having discussed the report with their solicitors and Cook Costello on3 November 2022, Mr Christie says he was advised to make a contribution claimagainst Mainmark for the 2019 relevelling work as there were no limitation issues.This claim was made on 7 December 2022.[18] Mr Christie says that having discovered Marotta had ceased trading and itsinsurance run-off cover had expired in June 2019, they did not pursue a claim againstthem.[19] Mr Christie deposes he was aware there may be a potential limitation defencefor the Council and Topp and that Mr Boulton had discontinued his claim against theCouncil in June 2022. He and his wife were reluctant to file if limitation issuesaffected their claim against the Council and Topp. Although, he says they wereinformed that the Court of Appeal in Beca Carter Hollings & Ferner Limited vWellington City Council (the Beca decision) was then considering the same issue uponwhich they would be seeking to claim against the Council and Topp.4 The Becadecision was released on 14 December 2022 and resulted in legal advice in the NewYear that their contribution claim against the Council and Topp was not time-barred.Consequently, Mr Christie says that on 25 January 2023, they instructed their solicitorsto make the contribution claims against the Council and Topp, which were filed on27 February 2023.[20] Regarding the claims generally, Mr Christie says he and his wife relied on theprofessional expertise and experience of the Third Parties and Marotta. He says thatif Mr Boulton is successful, they will have claims for breaches of duties against theThird Parties given they relied on the Third Parties' expertise and advice or lackthereof regarding consents. He concludes that if this application is not granted, theywill be denied their only opportunity to claim against the Third Parties for theircontribution to any liability established.Affidavit of Sarah Jane Wainwright dated 28 June 2023[21] Ms Wainwright, a legal secretary at Mr and Mrs Christie's lawyers (HendersonReeves), has made an affidavit in support of their application.5 She produces twoemails between Henderson Reeves and Mr Boulton's lawyers. Henderson Reevesnotified Mr Boulton's lawyers about the Beca decision and the imminent claimsagainst the Council and Topp. Mr Boulton's lawyers then replied following up on theirjoinder saying "get them joined for your clients and active and there is plenty of timeto trial".Mr Boulton's opposition[22] Mr Boulton opposes the application on the following grounds:64 Beca Carter Hollings & Ferner Limited v Wellington City Council [2022] NZCA 624.5 Affidavit of Sarah Wainwright in support of interlocutory application on notice for leave to issuethird party notice dated 28 June 2023.6 Plaintiff's notice of opposition to the first defendants' interlocutory application on notice for leaveto issue third party notices dated 6 July 2023 at [1]–[3].(a) The first defendants' delay in joining [the] Third Parties [is] unacceptableand entirely of their own making.(b) Allowing leave to join the Third Parties at this late stage of the proceedingwould unduly prejudice the firm fixture set on 2 October 2023.(c) The interest of justice would not be met if Third Parties are joined and,consequently, the firm fixture on 2 October 2023 is adjourned. Theproceeding has been in the Court system for 2 years without beingdisposed of.Legal principles[23] Rule 1.19 of the High Court Rules 2016 provides:1.19 Extending and shortening time(1) The court may, in its discretion, extend or shorten the time appointed bythese rules, or fixed by any order, for doing any act or taking anyproceeding or any step in a proceeding, on such terms (if any) as the courtthinks just.(2) The court may order an extension of time although the application for theextension is not made until after the expiration of the time appointed orfixed.[24] Rule 4.4(2)(b) provides:4.4 Third Parties(2) A third party notice must be issued within—(a) 10 working days after the expiry of the time for filing the defendant'sstatement of defence; or(b) a longer time given by leave of the court.[25] Rule 4.8 further provides:4.8 Court's power and discretion(1) On an application seeking leave to issue a third, fourth, or subsequentparty notice, the court must have regard to all relevant circumstances,including delay to the plaintiff.(2) On the making of an application of that kind, the court may grant or refuseleave or grant leave on just terms.Analysis[26] As a preliminary matter, during the hearing Mr Biddle abandoned the thirdoption set out at [7](c) above as a possible order and so only an order under [7](a) or(b) is sought by Mr and Mrs Christie.[27] The issue to be determined in this judgment is whether it is in the interests ofjustice to grant one or other of the orders sought by Mr and Mrs Christie as set out at[7](a) and (b).Mr and Mrs Christie's submissionsIssues in disputes are substantially the same[28] Mr Biddle, for Mr and Mrs Christie, submits that the major benefit of the thirdparty rules is to deal with issues that are substantially the same and can be dealt withat the one time. He refers to the decision in Dairy Containers Ltd v NZI Bank Ltdwhere the Court allowed the joinder of the Auditor-General by the defendant banks,emphasising that "the overriding object of the third party rules is to enable all issuesto be dealt with in one action".7[29] Mr Biddle submits that the design and construction elements of the allegeddefects being differential settlement to the foundation and floor (the Defects) arefundamental to Mr and Mrs Christie's case. The Defects pursued by Mr Boultonagainst Mr and Mrs Christie are the same as those between Mr and Mrs Christie andthe Third Parties.[30] Mr Biddle submits that if leave is not granted Mr and Mrs Christie would beprejudiced because:(a) If Mr Boulton's claim with respect to the Defects is proven, Mr andMrs Christie's third party claim could not be consideredcontemporaneously with Mr Boulton's claims;7 Dairy Containers Ltd v NZI Bank Ltd [1993] 1 NZLR 160 (HC) at 164. See also Turpin v DirectTransport Ltd [1975] 2 NZLR 172 (SC) at 175.(b) Mr and Mrs Christie would be denied the opportunity to put before theCourt, contemporaneously with Mr Boulton's claims, their contributionclaims in evidence against the Third Parties.(c) Mr and Mrs Christie would have to consider commencing separateproceedings for their third party claims and the resulting time lagbetween the current and new proceedings would prejudice Mr andMrs Christie, particularly if substantial damages are awarded againstthem, bearing in mind the quantum claimed in this proceeding exceeds$1.24 million. There is a further risk of the possibility the Court willreach a different result in the separate proceedings and the findings offact in these proceedings cannot bind the Third Parties in separateproceedings.[31] Mr Biddle submits that these factors favour granting leave as sought.Joinder as of right[32] Mr Biddle submits that a factor in favour of the Court exercising its discretionwill be whether the Third Parties could have been joined as of right, had Mr andMrs Christie done so within the time limit.8 Mr Biddle submits that the Third Partiescould have been joined as of right if the third party notices had been issued within theprescribed time-frame. This is a factor in favour of granting the orders sought.Delay[33] Mr Biddle acknowledges the issue that delay is the critical consideration fordetermination in respect of the Court exercising its discretions under rr 1.19 and 4.8.He submits that the sequence of events resulting in the application for leave beingmade when it was are as follows:(a) In August 2021, Mr and Mrs Christie's defence was initially filed andserved but Mr and Mrs Christie did not yet have advice on the Defects8 ANZ Banking Group (NZ) Ltd v Dairy Containers Ltd CA156/92, 17 December 1992.to the extent that third party claims could be advanced. That advicewas not received until November 2022 and once the advice was to hand,there being no limitation issues, Mr and Mrs Christie acted promptlyand made their claim against Mainmark on 7 December 2022.(b) The third party claims against Topp and the Council relating to theDefects were potentially subject to the Building Act 2004 longstoplimitation issues given the original construction commenced in early2010, and the foundations were completed by June 2010. Mr andMrs Christie delayed issuing these third party claims by some threemonths after receiving advice from their expert to consider the Court ofAppeal's decision in Beca in January 2023. Mr and Mrs Christie thenacted quickly and instructed counsel to file contribution claims againstthe Council and Topp, and filed the third party claims on 27 February2023.[34] The delay from 27 February 2023 to Mr and Mrs Christie filing the applicationfor leave on 4 July 2023, from the discussion with Mr Biddle at the hearing, appearsto have arisen from a mistaken belief that leave had been granted.Interests of justice[35] Mr Biddle submits that paramount considerations for the Court are the interestsof justice between all the parties, and the attainment of justice by the most efficientmeans. He refers to the Court of Appeal in the decision of KPMG Peat Marwick vCory-Wright and Salmon Ltd (In Rec and In Liq), where the Court stated:9The interests of justice between all the parties must be paramount If thereis delay it will be regrettable but the attainment of justice by the mostefficient means has to be the overriding consideration.[36] Mr Biddle submits that the claims against the Third Parties disclose reasonablecauses of action and are meritorious, as supported by the evidence of Mr Christie asto the involvement of each of the Third Parties in the house's construction.9 KPMG Peat Marwick v Cory-Wright and Salmon Ltd (In Rec and In Liq) CA77/94, 20 May 1994at 5.[37] Mr Biddle submits that the delay by Mr and Mrs Christie seeking leave isneither unexplained nor unacceptable. The pleadings set out the narrative of the stepstaken by Mr and Mrs Christie in advising Mr Boulton of their intention to join theThird Parties and the progress they were making in obtaining expert advice withrespect to the role of the Third Parties in relation to the Defects.[38] Mr Biddle submits that while the delay is regrettable, it is in the interests ofjustice that Mr Boulton's case on the Defects should be heard and consideredcontemporaneously with Mr and Mrs Christie's contribution claims against theThird Parties.Mr Boulton's complicity[39] Mr Biddle submits that Mr Boulton and his counsel have been complicit withMr and Mrs Christie's joining the Third Parties and were at all times alive to the issueof delay that would affect the scheduled trial date. He submits that:(a) The third party's claim against Mainmark was filed on 7 December2023 and served a day later, and there was no objection by Mr Boulton;(b) On 26 January 2023, counsel emailed Mr Boulton's solicitor advisingof Mr and Mrs Christie's intention to make claims against the Counciland Topp as a result of the Beca decision. Mr Boulton's solicitorresponded on 13 February 2023 as follows:" two weeks is nearly up. Are you on track? Get them joinedfor your clients and active and there is plenty of time to thetrial.We can address any adjustments to the trial timetable onceRice Speir and Ken Topp's lawyers are back on the scene/onthe scene. "(c) The claims against the Council and Topp were filed on27 February 2023 and there was no objection to the joinder byMr Boulton.(d) There was a formal agreement between the parties by way oftheir joint memorandum of 26 May 2023. The parties soughtorders to amend the timetable with respect to amended pleadingmatters for the Third Parties' claims and to advise the Court ofthe possible effect on the trial date and the timetable. Orderswere granted, subject to a trial review on 10 July 2023.[40] Mr Biddle also refers to the decision of Hall v Hall as authority for theproposition that the Court will enforce an informal agreement between the parties asto pre-trial actions.10Mr Boulton's submissions[41] Mr San Diego, for Mr Boulton, submits that the delay by Mr and Mrs Christiein bringing the application is not acceptable and that Mr and Mrs Christie have beenaware of their own rights to bring a proceeding against the Third Parties as early asNovember 2022. He submits that the trial is starting on 2 October 2023 and theoverarching consideration for Mr Boulton is to preserve the trial date. Given theproximity of the trial, Mr San Diego submits that it will be inevitable that the ThirdParties, once joined, will be seeking an adjournment of the trial as there is insufficienttime for them to prepare for, and participate in, the trial.[42] As to Mr and Mrs Christie's reliance on the decision in Hall, Mr San Diegosubmits that that case is distinguishable from the present situation as it is apparent thatin Hall the delay was short, being three or four months, and Tipping J stated that thedelay did not give him "any great concern".11 Mr San Diego submits the delay in thepresent case is much more significant with the new hearing date likely to be some timein 2025.[43] As to Mr Boulton being complicit, Mr San Diego submits receiving notice ofthe potential for Mr and Mrs Christie to join the Third Parties does not makeMr Boulton complicit. Further, he contends making enquiries whether Mr and Mrs10 Hall v Hall HC Christchurch M516/89, 16 April 1991.11 Above, n 10, at 4.Christie have prepared and served third party notices is not complicity. He submitsthat Mr Boulton is not complicit with Mr and Mrs Christie to join the Third Parties,and has not given consent to join them. He further submits that the joint memorandumdated 26 May 2023 is not evidence of complicity from Mr Boulton and that anysubmissions arising from the joint memorandum are irrelevant.[44] Mr San Diego submits, in summary, that the prejudice to Mr Boulton by a delayof the trial is very significant and granting leave to Mr and Mrs Christie to join theThird Parties when the delay is of their own making is not justified. Accordingly,Mr Boulton should not be prejudiced by the delay of the trial by such a significantamount.Result[45] I am of the view that leave should be granted to Mr and Mrs Christie to jointhe Third Parties. The reasons for this view are as follows:(a) The most important factor is that the overall interests of justice mustprevail, as stated in the KPMG Peat Marwick decision. Here it isapparent from the evidence the high degree of reliance Mr andMrs Christie placed on the professionals who are the Third Parties, andthe Council in respect of the issue of the CCC, in the construction oftheir house. The claims against the Third Parties are substantially thesame as Mr Boulton's claims against Mr and Mrs Christie and it istherefore appropriate that all of these issues are dealt with in the onetrial.(b) Given the close correlation between Mr Boulton's claims againstMr and Mrs Christie, and Mr and Mrs Christie's claims against theThird Parties, the risk of different findings in different trials is, in myview, an unacceptable one — all claims should be dealt with in the onetrial.(c) Mr and Mrs Christie could have joined the Third Parties as of right ifthey had done so in a timely fashion and this weighs in favour ofgranting leave.(d) The delay of the trial is regrettable, particularly given its likely length,but in my view it is overridden by the interests of justice in having allclaims relating to the Defects dealt with in the one trial.The delays by Mr and Mrs Christie have been explained, although the delay fromFebruary to July 2023 was unfortunate.Orders[46] In reaching the conclusion set out at [45], I have not placed much significanceon the arguments advanced by Mr Biddle of the complicity of Mr Boulton in thejoining of the Third Parties, or the argument that the Court should enforce a prioragreement with Mr Boulton based on the Hall v Hall decision. As noted at [45](a),the overriding issue is that the interests of justice are served which in my view requiresMr Boulton's claims against Mr and Mrs Christie, and Mr and Mrs Christie's claimsagainst the Third Parties to be heard in one trial.Orders[47] In granting leave to Mr and Mrs Christie to join the Third Parties, in my view,it is preferable to adopt the alternative set out at [7](b) of granting leave to Mr andMrs Christie to issue third party notices against the Third Parties under r 4.4(2)(b),rather than extend the time to validate the existing service of third party notices on theThird Parties under r1.19 as proposed in [7](a). I make the order below accordingly.Orders[48] I make the following orders:(a) Mr and Mrs Christie are granted leave in accordance with r 4.4(2)(b) ofthe High Court Rules 2016 to issue third party notices to the ThirdParties.(b) Counsel are directed to endeavour to agree costs. Failing agreement,within 20 working days of the date of this judgment, counsel forMr and Mrs Christie will file a memorandum as to costs (not exceedingfive pages) within 10 working days of expiry of the 20 working dayperiod, and counsel for Mr Boulton will file a reply (not exceeding fivepages) within 5 working days of receipt of counsel for Mr and MrsChristie's memorandum. A decision as to costs will then be made onthe papers...Associate Judge Taylor