RED STAG TIMBER LTD v JUKEN NEW ZEALAND LTD [2022] NZHC 103

RED STAG TIMBER LTD v JUKEN NEW ZEALAND LTD [2022] NZHC 103 [4 February 2022]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2017-404-2753[2022] NZHC 103BETWEEN RED STAG TIMBER LIMITEDPlaintiffAND JUKEN NEW ZEALAND LIMITEDDefendantHearing: On the papersCounsel: N F Flanagan and C Fleming for the PlaintiffA R Galbraith QC, C L Bryant and G J Luen for the DefendantJudgment: 4 February 2022JUDGMENT OF GAULT J(Applications for leave to appeal and cross-appeal)This judgment was delivered by me on 4 February 2022 at 4:00 pmpursuant to r 11.5 of the High Court Rules 2016.Registrar/Deputy RegistrarSolicitors / Counsel:Mr N F Flanaghan and Ms C Fleming, Meredith Connell, AucklandMr A R Galbraith QC, Barrister, AucklandMs C Bryant and Ms G J Luen, Hesketh Henry, Auckland[1] Following my judgment of 6 October 2021 addressing various interlocutoryapplications,1 Juken New Zealand Ltd (JNL) applies for leave to appeal that part ofthe judgment which declined to strike out the claim by Red Stag Timber Limited(Red Stag) for contraventions of the Fair Trading Act 1986 (FTA) in the period priorto December 2012.2[2] Red Stag opposes leave. But if leave is granted, it seeks leave to cross-appealin relation to the need for leave to bring the strike out application and separately inrelation to one aspect of discovery.[3] The parties agreed that leave should be determined on the papers following thefiling of written submissions.[4] The application for leave was filed two days late, but Red Stag does not opposean extension. Similarly, Red Stag seeks an extension of time for filing its amendednotice of cross-appeal, which is also not opposed. There is no prejudice and theextensions sought are granted.Background[5] Red Stag and JNL compete as producers and suppliers of timber for use in theconstruction of buildings. Since about 2007, JNL has manufactured, promoted andsupplied a structural framing product called "J-Frame" which is an engineered woodproduct comprising laminated veneer lumber (LVL). J-Frame is treated with boronfor use where hazard class H1.2 applies, that is where building elements are aboveground and protected from the weather but there is a possibility of exposure tomoisture.[6] Red Stag claims that since 2007 JNL has made misrepresentations aboutJ-Frame's compliance with building standards in breach of the FTA. The partiesinterpret the standards very differently. The standards also changed over time, so theinterpretations apply in two main periods: before and after December 2012.1 Red Stag Timber Ltd v Juken New Zealand Ltd [2021] NZHC 2662.2 At [62]-[74].[7] Red Stag commenced this proceeding on 17 November 2017. Its cause ofaction for the period to December 2012 was struck out on procedural grounds on19 September 2018.3 It was reinstated on 19 December 2019.4[8] JNL applied for orders striking out Red Stag's pleading / granting leave toapply for summary judgment / entering summary judgment on limitation groundsunder s 43A of the FTA. Red Stag submitted that leave was also required to bring thestrike out application under r 7.52 of the High Court Rules 2016 given JNL's earlierunsuccessful application to have its limitation defence determined as a preliminaryissue.[9] In relation to the period to December 2012, Red Stag did not dispute that it wasaware of the relevant facts before 19 December 2016; that is, three years before theclaim for the earlier period was reinstated on 19 December 2019. Instead, it said thatits reinstated claim is not a new cause of action as it is essentially the same as its claimfor the later period (and 17 November 2014 remains the relevant date for limitationpurposes).[10] Separately, Red Stag applied for particular discovery, including of JNL'sinternal correspondence regarding the proper interpretation of the relevant buildingstandards and requirements.Relevant parts of my decision[11] I concluded (at [13]) that JNL did not require leave under r 7.52. The earlierapplication under r 10.15 called for assessment of the factors weighing for and againstproceeding by way of a split trial. The application itself did not involve substantivedetermination of the limitation issue. That would have followed only if a split trialhad been ordered. In terms of r 7.52, the strike out application was not seeking thesame or a similar order as the earlier application under r 10.15. Also, Associate JudgeBell made clear that a further claim by Red Stag would still be susceptible to challengeon limitation grounds.3 Red Stag Timber Ltd v Juken New Zealand Ltd [2018] NZHC 2459.4 Albeit originally in a separate proceeding – the parties agreed that on the claim for losses prior toDecember 2012 time would stop running on 19 December 2019.[12] As to whether Red Stag's pleading in relation to losses to December 2012raises a new cause of action for limitation purposes, I referred (at [67]) to thewell-established principles set out by the Court of Appeal in Ophthalmological Societyof New Zealand Inc v Commerce Commission,5 summarised in TranspowerNew Zealand Ltd v Todd Energy Ltd6 and repeated in ISP Consulting Engineers Ltd vBody Corporate 89408.7[13] The operative part of my decision was as follows:[72] I accept that whether the amended pleading is essentially different isa question of degree. Here, the claim for the earlier period involves the samelegal basis; that is, false or misleading representations in breach of the FTA.I also accept that, although the pleading of new facts is in theory capable ofcreating a fresh cause of action, it will be rare that factual matters are so vitalas to affect the essence of the case brought.8 At a level of generality, the claimsfor the two periods involve the same alleged representations; that is,compliance with applicable preservative treatment standards. It is necessary,however, to view the representations in context; that is, by reference to theprevailing standards. In that sense, the effect of the alleged representationsvaries over time and raises different factual interpretation issues. In particular,whereas the claim for the later period focuses on not using Zelam's gluelinetreatment, the claim for the earlier period involves the separate factualelements that J-Frame was not treated to comply with the penetrationrequirement and complete sapwood penetration was not achieved or alwaysachieved (in the alternative to the claim that the standards did not recogniseboron 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).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.[74] Accordingly, 17 November 2014 remains the knowledge dateapplicable to the claim for the period prior to December 2012. In the contextof the claim for the period after December 2012, I have already concluded thatJNL has not shown that Red Stag knew (or ought reasonably to have known)5 Ophthalmological Society of New Zealand Inc v Commerce Commission CA168/01, 26 September2001 at [22]-[24].6 Transpower New Zealand Ltd v Todd Energy Ltd [2007] NZCA 302 at [61].7 ISP Consulting Engineers Ltd v Body Corporate 89408 [2017] NZCA 160, (2017) 24 PRNZ 81 at[21].8 Commerce Commission v Visy Board Pty Ltd [2012] NZCA 383 at [145]-[146].before 17 November 2014 that J-Frame was not treated with Zelam'streatment and that the standards arguably required that. Zelam's treatment isirrelevant to the claim for the period prior to December 2012. But in this strikeout and summary judgment setting, even if I could infer that Red Stag knew(or ought reasonably to have known) before 17 November 2014 that J-Framewas treated with boron and that the standards arguably did not recognise aboron treatment for LVL hazard class H1.2, I consider that JNL falls short ofshowing that Red Stag knew (or ought reasonably to have known) thatJ-Frame was not treated to comply with the penetration requirement, thatcomplete sapwood penetration was not achieved or always achieved and thatthe standards arguably required boron treated LVL to comply with thepenetration requirement for solid timber in NZS 3640. There is also analternative referring to omitting a label for envelope treatment. Accordingly,I cannot say in relation to the period prior to December 2012 that there is noreasonable possibility that the case was brought within time.[14] On the discovery application, having referred to the adverse documents test (at[84]-[85], I did not consider that internal correspondence regarding JNL's view of theproper interpretation of the relevant building standards and requirements was of actualand direct relevance (at [95]).Principles governing interlocutory appeals[15] The principles governing interlocutory appeals are well established and not indispute. They were summarised by the Court of Appeal recently in Tomar v Tomar:9[6] In Finewood Upholstery Ltd v Vaughan, Fitzgerald J appropriatelyobserved that the requirement for leave to appeal should serve as a filteringmechanism to ensure that unmeritorious appeals of interlocutory orders, orappeals of interlocutory orders of no great significance to either the parties ormore generally, do not unnecessarily delay the proceedings in which the orderswere made.10 The following considerations were recognised as relevant on anapplication for leave to appeal:11(a) A high threshold exists.(b) The applicant must identify an arguable error of law or fact.(c) The alleged error should be of general or public importancewarranting determination or otherwise of sufficientimportance to the applicant to outweigh the lack of general orprecedential value.(d) The circumstances must warrant incurring further delay.9 Tomar v Tomar [2021] NZCA 419.10 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13].11 At [9] and [14], citing A v Ministry of Internal Affairs [2017] NZHC 887.(e) The ultimate question is whether the interests of justice areserved by granting leave.[7] This Court in Ngai Te Hapu Inc v Bay of Plenty Regional Councilindicated that considerations similar to the principles applicable toapplications under the former s 24G of the Judicature Act 1908, as explainedin Meates v Taylor [Leave],12 apply to applications under s 56(5) of the SeniorCourts Act, stating:13We agree that leave to appeal should only be granted where thesignificance or implications of an arguable error of fact or law, eitherfor the particular case or for the applicant or as a matter of precedent,warrants the further delay which the appeal process would involve.Grounds of appeal[16] JNL seeks leave to appeal against my conclusion that Red Stag's reintroducedclaim for representations made prior to December 2012 is not essentially differentfrom its claim for representations made in the latter period and a knowledge date of19 December 2016 accordingly does not apply to the reintroduced claim. It says thatin essence I held that the representations made in the earlier period were part of acontinuing course of conduct, and should be treated as the same claim for limitationpurposes. It says that is not the correct approach to the time bar in s 43A. The barapplies even if the claimant brings a claim within time for later contraventions whichhave a similar factual or legal basis. It also challenges the conclusion that the claimfor representations made prior to December 2012 is not essentially different from theclaim for representations made in the latter period.Grounds of cross-appeal[17] Red Stag says that I erred in finding that JNL did not require leave to bring itsstrike out application by applying an overly strict interpretation of r 7.52 that did nottake into account its purpose.[18] Separately, in relation to discovery, Red Stag says that "relevant" should beapplied in its wider common usage sense whereas I applied a narrower test akin to thetest for admissibility.12 Meates v Taylor (1992) 5 PRNZ 524 (CA) at 526.13 Ngai Te Hapu Inc v Bay of Plenty Regional Council [2018] NZCA 291 at [17].Analysis[19] Dealing first with JNL's application, I did not conclude that the representationsmade in the earlier period were part of a continuing course of conduct. I concludedthat the claim for representations made prior to December 2012 is not essentiallydifferent from the claim for representations made in the latter period, seeking to applythe principles referred to by the Court of Appeal in the cases referred to at [12] above.But I accept it is arguable that ongoing conduct does not operate to prevent timerunning under s 43A in respect of earlier conduct and thus, at least in the unusualcircumstances of this case where the claim for representations made prior to December2012 was reintroduced in December 2019, it is arguable that the claim forrepresentations made prior to December 2012 is essentially different from the claimfor representations made in the latter period.[20] I also accept that the intersection of the time bar in s 43A and r 7.77 of the HighCourt Rules 2016 has not previously been considered by an appellate court, and ajudgment on this point (rather than the factual and legal components of Red Stag'sclaims for representations made before and after December 2012) will have somegeneral and precedential value.[21] Of course, JNL could appeal following trial and advance its limitationargument then. But a successful appeal would narrow the issues at trial – which iscurrently allocated ten weeks.[22] Given that JNL has not sought to stay execution of the judgment (including thediscovery order) and the trial is not scheduled until February 2024, JNL's proposedappeal will not lead to further delay.[23] Ultimately, I consider the interests of justice favour granting leave.[24] Turning to the proposed cross-appeal and the first ground that JNL requiredleave to bring its strike out application, my decision to grant JNL leave to appeal is arelevant factor but I must still consider whether there is an arguable error.14 I accept14 It was not suggested that interlocutory cross-appeals are governed by different principles fromthose referred to at [15] above.it is unusual for a strike out application on limitation grounds to follow an unsuccessfulapplication under r 10.15 for an order that the limitation issue be determined as aseparate preliminary question. However, even taking a purposive interpretation, I donot consider the decision on the application of r 7.52 involves an arguable error.In addition, notwithstanding my decision to grant JNL leave to appeal, I would declineleave to cross-appeal against this finding on the basis that any error is not of generalor public importance warranting determination or otherwise of sufficient importanceto Red Stag to outweigh the lack of general or precedential value. The decision madeno difference to the outcome given the overlap between the applications for strike outand summary judgment – for which leave was granted. If leave were required underr 7.52, that overlap and the relevant facts emerging from Red Stag's discovery werelikely special circumstances. The issue does not justify an interlocutory appeal.[25] Finally, in relation to the discovery point, Red Stag acknowledges this isseparate from the point raised by JNL. The discovery point may be a short one butagain I must still consider whether there is an arguable error in the conclusion thatinternal correspondence regarding JNL's view of the proper interpretation of therelevant building standards and requirements is not of actual and direct relevance.Notwithstanding the authorities cited, in the context of this case, I do not considerthere is an arguable error. In any event, I would decline leave on the basis that anyerror is not of general or public importance warranting determination or otherwise ofsufficient importance to Red Stag to outweigh the lack of general or precedentialvalue. This discovery issue does not justify an interlocutory appeal.Result[26] JNL's application for leave to appeal is granted.[27] Red Stag's application for leave to cross-appeal is dismissed.________________________________Gault J