BODY CORPORATE NUMBER DPS 91535 & ANOR v 3A COMPOSITES GmbH & ORS [2022] NZHC 985

BODY CORPORATE NUMBER DPS 91535 & ANOR v 3A COMPOSITES GmbH & ORS [2022] NZHC 985[10 May 2022]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2020-404-2509[2022] NZHC 985BETWEEN BODY CORPORATE NUMBER DPS91535First PlaintiffAND ARGOSY PROPERTY NO. 1 LIMITEDSecond PlaintiffAND 3A COMPOSITES GmbHFirst DefendantAND TERMINUS 2 LIMITEDSecond DefendantAND SKELLERUP INDUSTRIES LIMITEDThird DefendantHearing: 17 February 2022Appearances: J A Farmer QC, S P Pope, M J A Taylor & F A A Shahbaz forPlaintiffsA R Galbraith QC & J Q Wilson for First DefendantJudgment: 10 May 2022JUDGMENT OF PAUL DAVISON JThis judgment was delivered by me on 10 May 2022 at 2pmpursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:Russell McVeagh, AucklandBell Gully, AucklandIntroduction[1] The first defendant, 3A Composites GmbH (3AC) is a German corporation andmanufacturer of a building exterior cladding product branded as Alucobond PE(Alucobond) which was installed on the exterior of the first plaintiff's building in oraround 2006-2008.Having been served in Germany with the first plaintiff'sproceeding, 3AC filed an appearance and protest to jurisdiction pursuant to r 5.49(1)of the High Court Rules 2016.1 The first plaintiff now applies pursuant to r 5.49(5) toset aside 3AC's protest to jurisdiction.Background[2] The first plaintiff is a body corporate comprising the proprietors of theresidential units known as the Cutterscove Resort Apartments located in MountMaunganui. The second plaintiff, Argosy Property No.1 Limited, owns commercialproperties in Don McKinnon Drive, Albany and Favona Road, Māngere.[3] In its amended statement of claim dated 23 December 2021, the first plaintiffalleges that 3AC's Alucobond cladding product was supplied to it and affixed to theexterior of its building in or around 2006-2008 pursuant to a construction contractentered into with Moyle Construction Limited in 2006. Moyle Construction had beensupplied with the Alucobond by the third defendant, Skellerup Industries Limited(Skellerup) which imported and distributed Alucobond in New Zealand between 2005and 2009. The second plaintiff alleges that its buildings in Albany and Māngere werefitted with Alucobond cladding in or around 2010 or 2011 by construction companiesengaged to carry out work on the buildings at a time when the second defendantTerminus 2 Limited (Terminus), then known as Kaneba Limited, had supersededSkellerup, and was the importer and supplier of Alucobond in New Zealand.[4] The plaintiffs say that Alucobond cladding consists of two aluminium coversheets with a core containing polyethylene (PE) and other materials laminated andbonded together. The plaintiffs allege that the core in Alucobond PE cladding,supplied and affixed to their buildings as external walls (or parts of external walls),1 3AC's initial appearance and protest to jurisdiction dated 5 November 2021 was succeeded by anamended appearance and protest to jurisdiction dated 15 November 2021.comprised approximately 100 per cent PE which they say is a highly flammablesynthetic thermoplastic polymer with a high calorific value similar to that of petrol orpropane gas.[5] The plaintiffs further allege that the Alucobond cladding affixed to theirbuildings was combustible within the meaning of the New Zealand Building Code(Building Code), and when used as cladding on an external wall or other buildingelement there is a material risk that in the event of a fire the flammable core of theAlucobond will cause or contribute to the rapid spread and severity of fire in a buildingwith the risk of loss of life and damage to the building and adjacent buildings.[6] The plaintiffs say that over recent years there has been a growing recognitionthat aluminium composite panels (ACP) with PE cores such as Alucobond are not fitfor use as exterior cladding in buildings because of the risk that they will fuel the rapidspread of fire. They note that the October 2019 report of the inquiry into fire atGrenfell Tower in London found that the principal reason why fire spread so rapidlyup and down and around the apartment building was because of ACP panels with PEcores which fuelled the fire.[7] The plaintiffs plead six causes of action against the defendants:(a) Breach of s 6 of the Consumer Guarantees Act 1993.(b) Negligence.(c) Negligent misstatement.(d) Negligent failure to warn.(e) Breach of s 9 (misleading or deceptive conduct) of the Fair Trading Act1986.(f) Breach of s 13 (false or misleading representations) of the Fair TradingAct.[8] 3AC bases its notice of appearance and protest to jurisdiction pursuant to r 5.49on the grounds that it is a German company which is not present in New Zealand. Itnotes that the plaintiffs effected service of the proceedings on it in Germany withoutprior leave of the Court by relying on rr 6.27(2)(j)(ii), 6.27(2)(a)(ii) and 6.27(2)(h)(i),notwithstanding that none of those rules which permit service out of New Zealandwithout leave, are applicable to the plaintiffs' pleaded claims against it. Furthermoresays 3AC, there is no other basis for the proceeding to have been served out of NewZealand under the High Court Rules, and therefore the plaintiffs have not establishedthat a New Zealand Court has jurisdiction to determine the claims in the proceeding.The relevant High Court Rules[9] Part 6 of the High Court Rules contains the rules regarding service ofproceedings, and subpart 4 with service of proceedings out of New Zealand. Serviceof proceedings out of New Zealand without prior leave may be effected where theclaim made falls within the scope of r 6.27:6.27 When allowed without leave(1) This rule applies to a document that initiates a civil proceeding, or isa notice issued under subpart 4 of Part 4 (third, fourth and subsequentparties), which under these rules is required to be served but cannotbe served in New Zealand under these rules (an originatingdocument).(2) An originating document may be served out of New Zealand withoutleave in the following cases:(a) when a claim is made in tort and—(i) any act or omission in respect of which damage wassustained was done or occurred in New Zealand; or(ii) the damage was sustained in New Zealand:(b) when a contract sought to be enforced or rescinded, dissolved,annulled, cancelled, otherwise affected or interpreted in anyproceeding, or for the breach of which damages or other reliefis demanded in the proceeding—(i) was made or entered into in New Zealand; or(ii) was made by or through an agent trading or residingwithin New Zealand; or(iii) was to be wholly or in part performed in NewZealand; or(iv) was by its terms or by implication to be governed byNew Zealand law:(c) when there has been a breach in New Zealand of any contract,wherever made:(d) when the claim is for—(i) a permanent injunction to compel or restrain theperformance of any act in New Zealand; or(ii) interim relief in support of judicial or arbitralproceedings commenced or to be commenced outsideNew Zealand:(e) when the subject matter of the proceeding is land or otherproperty situated in New Zealand, or any act, deed, will,instrument, or thing affecting such land or property:(f) when the proceeding relates to the carrying out or dischargeof the trusts of any written instrument of which the person tobe served is a trustee and which ought to be carried out ordischarged according to the law of New Zealand:(g) when any relief is sought against any person domiciled orordinarily resident in New Zealand:(h) when any person out of the jurisdiction is—(i) a necessary or proper party to proceedings properlybrought against another defendant served or to beserved (whether within New Zealand or outside NewZealand under any other provision of these rules), andthere is a real issue between the plaintiff and thatdefendant that the court ought to try; or(ii) a defendant to a claim for contribution or indemnityin respect of a liability enforceable by proceedings inthe court:(i) when the proceeding is for the administration of the estate ofany deceased person who at the time of his or her death wasdomiciled in New Zealand:(j) when the claim arises under an enactment and either—(i) any act or omission to which the claim relates wasdone or occurred in New Zealand; or(ii) any loss or damage to which the claim relates wassustained in New Zealand; or(iii) the enactment applies expressly or by implication toan act or omission that was done or occurred outsideNew Zealand in the circumstances alleged; or(iv) the enactment expressly confers jurisdiction on thecourt over persons outside New Zealand (in whichcase any requirements of the enactment relating toservice must be complied with):(k) when the person to be served has submitted to the jurisdictionof the court:(l) when a claim is made for restitution or for the remedy ofconstructive trust and the defendant's alleged liability arisesout of acts committed within the jurisdiction:(m) when it is sought to enforce any judgment or arbitral award.[10] Where service of a proceeding has been effected without leave in reliance onr 6.27, and the New Zealand court's jurisdiction is protested under r 5.49 as is the casehere, r 6.29 applies:6.29 Court's discretion whether to assume jurisdiction(1) If service of process has been effected out of New Zealand withoutleave, and the court's jurisdiction is protested under rule 5.49, thecourt must dismiss the proceeding unless the party effecting serviceestablishes—(a) that there is—(i) a good arguable case that the claim falls whollywithin 1 or more of the paragraphs of rule 6.27; and(ii) the court should assume jurisdiction by reason of thematters set out in rule 6.28(5)(b) to (d); or(b) that, had the party applied for leave under rule 6.28,—(i) leave would have been granted; and(ii) it is in the interests of justice that the failure to applyfor leave should be excused.(2) If service of process has been effected out of New Zealand under rule6.28, and the court's jurisdiction is protested under rule 5.49, and it isclaimed that leave was wrongly granted under rule 6.28, the courtmust dismiss the proceeding unless the party effecting serviceestablishes that in the light of the evidence now before the court leavewas correctly granted.(3) When service of process has been validly effected within NewZealand, but New Zealand is not the appropriate forum for trial of theaction, the defendant may apply for a stay, or for a dismissal of theproceeding under rule 15.1.(4) This rule is subject to section 27(1) of the Trans-Tasman ProceedingsAct 2010 (see rule 5.49(7A)).[11] Accordingly, when service has been effected out of New Zealand and thecourt's jurisdiction has been protested pursuant to r 5.49, specified parts of r 6.28 areengaged. It provides:6.28 When allowed with leave(1) In any proceeding when service is not allowed under rule 6.27, anoriginating document may be served out of New Zealand with theleave of the court.(2) An application for leave under this rule must be made on notice toevery party other than the party intended to be served.(3) A sealed copy of every order made under this rule must be served withthe document to which it relates.(4) An application for leave under this rule must be supported by anaffidavit stating any facts or matters related to the desirability of thecourt assuming jurisdiction under rule 6.29, including the place orcountry in which the person to be served is or possibly may be found,and whether or not the person to be served is a New Zealand citizen.(5) The court may grant an application for leave if the applicantestablishes that—(a) the claim has a real and substantial connection with NewZealand; and(b) there is a serious issue to be tried on the merits; and(c) New Zealand is the appropriate forum for the trial; and(d) any other relevant circumstances support an assumption ofjurisdiction.[12] As service of the proceeding was effected out of New Zealand and withoutleave, r 6.29 mandates that the court must dismiss the proceeding against the partyprotesting jurisdiction unless the party effecting service (here the plaintiffs) establishthat they have a good arguable case that their claim falls wholly within one or more ofthe paragraphs of r 6.27(2) and, the court should assume jurisdiction by reason of thematters set out in r 6.28(5)(b)–(d). Alternatively, the plaintiffs can succeed in avoidingdismissal of the proceeding if it can establish that, had it applied for leave under r 6.28,leave would have been granted and it is in the interests of justice that the failure toapply for leave should be excused.The Court's approach to dismissing a proceeding under r 6.29[13] The Court of Appeal in Wing Hung Printing Co Ltd v Saito Offshore Pty Ltdexplained the two-stage approach to the question of whether the party effecting servicehas established the requirements of r 6.29(1)(a).2 It said:[32] Where r 6.29(1)(a) is relied upon, there is a two-stage inquiry. Theparty effecting service must first establish under r 6.29(1)(a)(i) that there is agood arguable case that the claim falls wholly within one or more of theparagraphs of r 6.27 (relating to the circumstances in which service overseasmay be effected without leave). This part of the inquiry may be regarded as agateway or threshold which must be established before moving to consider thestage two issues.[33] The good arguable case test required at this stage does not relate tothe merits of the case but to whether the claim falls within one or more of thecircumstances under r 6.27 in which service overseas may be effected withoutleave. This is a largely factual question to be assessed on the basis of thepleadings and the affidavit or other evidence before the Court. It may benecessary, however, to consider questions of law (or mixed questions of factand law) as part of the first-stage determination, for example, whether acontract was made in New Zealand or whether it was by its terms orimplication to be governed by New Zealand law. Similarly if there is aquestion as to whether a binding contract was made at all (as in the presentcase).[34] It may be the case under some of the categories in r 6.27(2) that aconclusion in the first stage of the inquiry may substantially answer part of thesecond stage of the inquiry. For example, if it is established there is a goodarguable case that there has been a breach of contract in New Zealand underr 6.27(2)(c) then the claimant should not have much difficulty establishing atthe second stage of the inquiry that there is a serious issue to be tried on themerits. We discuss below the distinction between the tests of good arguablecase and serious issue to be tried.(footnotes omitted)[14] If the party which has effected service shows that it has a good arguable casefalling within one or more of the paragraphs of r 6.27(2)(a)–(m), in the second stageunder r 6.29(1)(a)(ii) the court must consider whether it should assume jurisdiction byreason of the matters set out in r 6.28(5)(b)–(d). The Court of Appeal in Wing Hungalso addressed the question of whether there is any significant difference between a2 Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd [2010] NZCA 502, [2011] 1 NZLR 754.plaintiff establishing a "good arguable case" and "a serious issue to be tried". TheCourt observed:[41] in practice, the distinction between the two standards may bedifficult to draw. It is clear, however, that the good arguable case test does notrequire the plaintiff to establish a prima facie case. This recognises thatdisputed questions of fact cannot be readily resolved on affidavit evidence. Onthe other hand, there must be a sufficiently plausible foundation establishedthat the claim falls within one or more of the headings in r 6.27(2). The Courtshould not engage in speculation.[42] The serious issue to be tried test to be applied at the second stage ofthe inquiry was described by Lord Goff in Seaconsar as whether "at the endof the day, there remains a substantial question of law or fact or both, arisingon the facts disclosed by the affidavits, which the plaintiff bona fide desires totry".(footnotes omitted)[15] Addressing r 6.28(5)(c) and whether New Zealand is the appropriate forum forthe trial, the Court of Appeal noted that the onus of showing New Zealand is theappropriate forum for trial is on the party effecting service. The Court of Appealcommented:[45] In considering whether another forum is more appropriate, the Courtlooks for the forum with which the proceeding has the most real andsubstantial connection. Relevant factors include issues of convenience orexpense, availability of witnesses, the law governing the relevant transactionand the places where the parties resided or carried on business.[46] We accept that other relevant considerations also bear on the issue ofappropriate forum. These include the cautious approach already discussed tothe subjection of foreigners to the jurisdiction of a New Zealand Court;whether other related proceedings are pending elsewhere; whether the NewZealand Court would provide the most effective relief or whether a foreigncourt is in a better position to do so; whether the overseas defendants willsuffer an unfair disadvantage if a New Zealand court assumes jurisdiction; andany choice of jurisdiction previously agreed by the parties.(footnotes omitted)[16] Turning to r 6.29(1)(b) the Court of Appeal noted that unless a party effectingservice establishes both of the matters in r 6.29(1)(a), the court must dismiss theproceeding unless, as an alternative, the party effecting service is able to establish thematters set out in r 6.29(1)(b). Namely, that leave would have been granted if it hadbeen sought under r 6.28, and that it is in the interests of justice that the failure to applyfor leave should be excused. The first of these requires the party effecting service tosatisfy each of the four matters set out in r 6.28(5)(a)–(d). As regards the requirementthat the party effecting service show that it is in the interests of justice to excuse theirfailure to apply for leave, the Court of Appeal described it as being a "broad rubric"which may encompass a broad range of considerations.[17] The Court of Appeal also observed that where multiple causes of action arepleaded r 6.29 requires separate consideration of each:[71] It will often be the case that a number of causes of action are pleadedarising from the same set of facts. This case is a good example. But weconsider that r 6.29 requires separate consideration of each cause of action. Atthe threshold stage of the inquiry, the question whether a particular cause ofaction falls within r 6.27 will depend on which (if any) of the circumstancesset out in that rule applies. As this case demonstrates, this aspect requires anassessment of whether the cause of action is in contract, tort, a claim under anenactment or none of those. And in the second stage, an assessment is requiredas to whether there is a serious issue to be tried will require separateassessment of both the factual and legal bases for each cause of action. Theremay be commonalities but it is not permissible to reason that if one cause ofaction passes muster, the others arising from the same or similar facts mustmeet the criteria too.[72] That said, it will often be appropriate to assess the appropriate forumissue and any other relevant factors supporting the assumption of jurisdictionon a global basis where there are multiple causes of action.Service out of New Zealand[18] The plaintiffs say that their proceeding against the defendants falls within thescope of r 6.27 and that they were entitled to effect service on 3AC in Germany withoutleave pursuant to r 6.27(2)(h)(i), as the first defendant is a necessary and proper partyto their claim against the second and third defendants.[19] They say that there is a serious issue to be tried on the merits and that NewZealand is the appropriate forum for the trial.3 They note that although 3AC disputesNew Zealand as being the appropriate forum, it has not identified any other availableforum for the trial and has not presented any evidence on the issue.3 High Court Rules 2016, r 6.28(5)(b)–(c).First cause of action: the Consumer Guarantees Act 1993The plaintiffs' submissions[20] The plaintiffs' first cause of action is against all three defendants and allegesthat by supplying the plaintiffs with Alucobond PE cladding they breached s 6 of theConsumer Guarantees Act (the CGA) by failing to satisfy the statutory guarantee thatthe goods were of acceptable quality as defined in s 7 of that Act.4 The plaintiffs saythat they were supplied with Alucobond PE cladding either as consumers as definedin s 2 of the CGA, or alternatively that they derived their ownership or leaseholdinterest in a building fitted with Alucobond cladding through a predecessor in title whowas a consumer as defined in the CGA.[21] Mr Farmer QC for the plaintiffs says that the CGA has extraterritorial effect,and that 3AC was the manufacturer of the Alucobond PE cladding which was:(a) supplied in or about 2008 by Skellerup to Moyle Construction Limitedfor affixing to the first plaintiff's Cutterscove building;(b) supplied in or about 2010 or 2011 by Kaneba to Stanley Constructionfor affixing to Argosy's Don McKinnon Drive premises; and(c) supplied in or about 2010 or 2011 to an unknown construction businessfor affixing to Argosy's Favona Road building, at a time when thebuilding was owned by a previous owner.[22] The plaintiffs allege that at the time Skellerup supplied Alucobond for affixingto the first plaintiff's building, Skellerup was being directly or indirectly supplied withAlucobond by 3AC as manufacturer of the product. The plaintiffs say that theAlucobond supplied and fitted to their buildings was not of acceptable quality inaccordance with the statutory guarantee in s 6 of the CGA, because:(a) it possessed material fire risk properties;4 Amended Statement of Claim dated 23 December 2021 at [49]–[69].(b) it had Building Code non-compliance properties; and/or(c) Building Code non-compliance risk properties;(d) it is and was not fit for the purposes for which goods of that type arecommonly supplied; and(e) it is and was not safe.[23] The plaintiffs refer to and rely on the evidence of their expert witness, SimonWeaver, who is a Chartered Professional Engineer and fire engineer. He says thatAlucobond is combustible, and that the use of Alucobond when the first plaintiff'sCutterscove building was reclad in 2006–2008 was inconsistent with and contrary tothe applicable provisions of the Building Code which required external walls and roofsto be resistant to the spread of fire, appropriate to the fire load within the building andthe proximity of other household units and other property. He says that the use ofAlucobond PE cladding on the plaintiffs' buildings will cause or contribute to the rapidspread and severity of a fire in the building, including the rapid vertical and horizontalspread of a fire in the building, with the result that in the event of a fire in the building,the use of the Alucobond cladding will increase the risk of loss of life and the risk ofextensive damage being caused to the building and its contents, as well as to anyadjacent buildings.[24] The plaintiffs allege that they have or will suffer loss and damage by reason ofthe fitting of Alucobond on their properties by the cost of removing and replacing theAlucobond on their buildings or alternatively the cost of implementing other measuresto rectify the impact of the Alucobond on their buildings by reason of its non-compliance with the acceptable quality guarantee, the reduction in value of theirbuildings as a result of the Alucobond, increases in their building insurance premia,and the costs of building safety assessments. The plaintiffs accordingly seek an awardof damages pursuant to ss 25 and 27 of the CGA.[25] They say that there is therefore a serious issue to be tried in relation to theirfirst cause of action.[26] With respect to its argument that 3AC is a manufacturer for the purpose of theCGA, the plaintiffs note that 3AC does not dispute that it is the manufacturer ofAlucobond in Germany. They further note that 3AC is the registered proprietor of theAlucobond trademark in New Zealand which was registered in New Zealand on 27November 2017, and that as owner of the trademark, 3AC has caused or permitted itsAlucobond brand to be attached to the Alucobond cladding supplied in New Zealand.[27] The plaintiffs submit that for their first cause of action to succeed they are notrequired to show that the CGA has extra-territorial effect as the Act applies to goodssupplied to consumers in New Zealand which were manufactured overseas. Theplaintiffs say that in enacting the CGA, Parliament intended to strengthen and clarifythe rights of consumers by mandating a set of minimum quality standards in respectof the supply of both goods and services, which includes direct rights of redress againstmanufacturers of goods. They say that the Alucobond cladding was manufactured by3AC and supplied to New Zealand consumers using 3AC's brand, with the knowledgeand consent of 3AC. The plaintiffs accordingly submit that it is sufficient to engagethe statutory guarantees in the CGA and that they apply to 3AC as the manufacturerof Alucobond.[28] The plaintiffs nevertheless submit that the CGA does have extraterritorialeffect having regard to its text and purpose. The plaintiffs submit that s 2(1) of the Actcontains an expanded definition of a "manufacturer" to include the actualmanufacturer of goods and also: (a) any person that holds itself out as being themanufacturer of the goods; (b) any person that attaches its brand or mark, or permitsits brand or mark to be attached to the goods; and (c) any person who imports ordistributes goods where those goods are manufactured outside New Zealand and theforeign manufacturer of the goods does not have an ordinary place of business in NewZealand.[29] The plaintiffs say that the first two limbs of the definition of "manufacturer" ins 2(1) are silent as to the place of manufacture of goods, and Mr Farmer submits thatproperly construed, the third limb (c) does not purport to limit the application of theCGA to local or domestic manufacturers. The plaintiffs say that subclause (c) of thedefinition merely functions as a tool of convenience to allow consumers to sue localimporters and distributors of goods manufactured outside New Zealand where suing aforeign manufacturer would be inconvenient. The plaintiffs accordingly submit thatthe provision is permissive in nature and does not limit the scope of the CGA tomanufacturers located in New Zealand and to New Zealand importers and distributorsof goods where they are made by a foreign manufacturer.3AC's submissions[30] As regards the plaintiffs' first cause of action relating to the CGA, 3AC saysthat there is no serious issue to be tried on the merits because the plaintiffs' claim isbased on ss 25 and 27 of the CGA, and the Act does not have extraterritorialapplication to manufacturers such as 3AC. It says that the plaintiffs' submission thatthe claim under the CGA does not require the Court to find that the Act has extra-territorial effect, because the Act applies where goods manufactured overseas aresupplied to consumers in New Zealand, is misconceived.[31] 3AC says that here, where the goods were imported by New Zealand-baseddistributors who are deemed by the CGA to be the manufacturers of those goods, andthose imported goods were allegedly supplied to building owners or constructioncompanies by New Zealand based parties, 3AC can only be liable under the CGA inrespect of goods it manufactured outside New Zealand if it also imported, distributedand supplied the goods in New Zealand. 3AC submits that the plaintiffs' interpretationof the CGA would have the effect of imposing New Zealand consumer productstandards on any overseas manufacturer notwithstanding that they had not imported,or distributed the goods within New Zealand, and notwithstanding they do not havean ordinary place of business in New Zealand.[32] Mr Galbraith QC says that it is a well-established principle and approach tostatutory interpretation that unless a contrary intention is clear either by words orimplication, an enactment is to be presumed as not having extraterritorial effect. Hesubmits that the Court's interpretation of the CGA should focus on the text and schemeof the Act, and he notes that it does not contain any express extra-territorial provision.[33] Mr Galbraith submits that the two references to "foreign manufacturers" in theCGA both point away from interpreting the Act as being intended to have extra-territorial effect. He notes that limb (c) of the definition of "manufacturer" createsstatutory obligations on an importer or distributor of overseas manufactured goods asif that importer or distributor was the actual manufacturer. Mr Galbraith submits thatthis is consistent with the CGA not applying to overseas manufacturers. He says thatlimb (c) would make no sense if an overseas manufacturer of goods who did not havean ordinary place of business in New Zealand is nevertheless covered by the Act, asthat would mean that there would be no need for limb (c) as the importer or distributorwould be liable as a supplier of the goods in the same manner as is the case formerchants and other intermediaries in the supply chain who acquire goods from NewZealand manufacturers and supply them.[34] Mr Galbraith notes that the only other reference in the CGA to "foreignmanufacturer" appears in the s 2(1) definition of "ordinary place of business in NewZealand", and provides that the term "manufacturer" in the Act does not include a NewZealand subsidiary of a foreign manufacturer. He submits that this means that aforeign manufacturer does not have an ordinary place of business in New Zealand,simply because it has a New Zealand subsidiary with an ordinary place of business inNew Zealand.[35] Mr Galbraith accordingly submits that both of the references to a foreignmanufacturer, indicate that the CGA is not intended to impose statutory guarantees onmanufacturers outside New Zealand whose goods are imported into New Zealand byNew Zealand based importers and distributors. He submits that it is because the CGAdoes not apply to foreign manufacturers that it contains the provision which deems theNew Zealand importer to be the manufacturer for the purposes of the manufacturer'sguarantees under the Act, and the New Zealand supplier of goods is responsible forthe statutory warranties imposed in respect of supply of the goods.[36] Mr Galbraith further submits that even if the CGA has extra-territorial effecton 3AC as an overseas manufacturer, the statutory guarantees and warranties imposedby the Act only apply to goods "of a kind ordinarily acquired for personal, domestic,or household use or consumption" in accordance with the definition of the term"consumer" in s 2(1). He submits that the plaintiffs are not consumers within themeaning of the CGA as the Alucobond cladding does not constitute goods of a kindordinarily acquired for personal, domestic, or household use or consumption in respectof which the statutory guarantees and rights of redress against suppliers ormanufacturers apply.[37] He notes that the plaintiffs rely on instances of Alucobond being supplied tocommercial construction businesses for use in residential construction projects, andsubmits that does not amount to personal, domestic, or household use or consumptionwithin the meaning of the CGA. Mr Galbraith submits that such supplies are to andfor the use of specialist construction businesses for use in their construction projects.He submits that the CGA only applies to goods ordinarily acquired by householdersfor their personal use, as opposed to construction businesses which acquire theAlucobond for the construction of premises. Mr Galbraith says that evidence beforethe Court regarding the process by which the Alucobond cladding products wereacquired and installed in relation to the buildings owned by the plaintiffs is consistentwith that process, and more generally there is no evidence to show that the Alucobondcladding is ordinarily acquired by people for their personal, domestic, or householduse or consumption.First cause of action: analysisDoes the CGA have extra-territorial effect?[38] The approach to the interpretation of statutes to determine whether or not theyhave extraterritorial effect was considered by the Supreme Court in Poynter vCommerce Commission:5[36] Bennion on Statutory Interpretation states, as a general proposition,that an enactment is to be treated as not having extraterritorial effect unless acontrary intention appears and subject to any relevant rules of privateinternational law. Craies on Legislation states, to the same effect, that, in theabsence of contrary evidence, a legislative proposition is addressed to anyonewho is within the territory to which the proposition extends. An enactmentwill generally apply to things done and people in the territory to which itextends, and no further. There is a presumption that Parliament does not intendto assert extraterritorial jurisdiction, which can be rebutted only by clear wordsor necessary implication.[37] These principles are underpinned by considerations of internationalcomity. As Lord Lindley MR put it in Re A B & Co, "unless Parliament has5 Poynter v Commerce Commission [2010] NZSC 38, [2010] 3 NZLR 300 (footnotes omitted).conferred upon the Court that power in language which is unmistakable, thecourt is not to assume that Parliament intended to do that which might soseriously affect foreigners who are not resident here, and might give offenceto foreign Governments". [38] As early as 1863, Dr Lushington stressed the same point as that madeby Lord Simon when he said in The Amalia that "the British Parliament hasno proper authority to legislate for Foreigners out of its jurisdiction [no]statute ought, therefore, be held to apply to Foreigners with respect totransactions out of British jurisdiction, unless the words of the Statute areperfectly clear". This principle has been said to apply with even greaterstrength to Acts which impose penalties. The tenor of these authorities hasvery recently been affirmed in a context not dissimilar to that in the presentcase by the decision of the House of Lords in Office of Fair Trading v LloydsTSB Bank Plc in which Lord Hoffmann said that there is a presumption thatlegislation is not intended to have extraterritorial effect. The key principlewhich derives from these authorities is that the courts should not treatlegislation as having extraterritorial effect unless and then only to the extentParliament has made that clear by means of express words or necessaryimplication.[45] We are by no means insensitive to the suggestion thatextraterritoriality issues should now be viewed from the perspective of thesubstantial changes that have taken place in recent times in the way peopleand businesses communicate with each other. Nor are we insensitive to whatthe Court of Appeal called the realities of globalisation. We do not, however,consider it is appropriate in the present context for the courts to imposepiecemeal common law glosses on to a statutory code. The more is this so ifsuch glosses require significant development of the common law. It is farbetter, both in principle and pragmatically, for Parliament to address the issuesarising in a comprehensive way rather than for the courts to effect ad hocadditions by a process which does not accord with appropriate principles ofstatutory interpretation. The presumption that express language or necessaryimplication is required to achieve extraterritorial effect exists to reinforce theproposition that it is for Parliament, not the courts, to decide whatextraterritorial effect an enactment should have. The policy issues in makingthat assessment are for Parliament, not the courts. The courts simply giveeffect to such extraterritorial reach as Parliament has clearly specified.[39] Addressing what the phrase "necessary implication" means in this context theSupreme Court said:6It is important to recognise that [the Commerce Act 1986] is a code and, forextraterritoriality purposes, the court should confine itself to the express termsof the Act and any additional extraterritorial effect which flows as a matter ofinevitable logic from those express terms read contextually in the light of thepurposes of the Act. That is what necessary implication means. A necessaryimplication is not something judicially engrafted on to legislation as a judicial6 At [46] (footnotes omitted).value or policy judgment, however reasonable that judgment may appear tobe.[40] Applying that approach and those principles to the CGA, it is clear that thereare no express words in s 1A of the CGA, in which the legislative purpose of the Actis set out, or elsewhere in the Act, which indicate that Parliament intended the Act tohave extraterritorial effect. The only express reference to matters concerning theextraterritorial reach of the Act are those contained in the definitions of the terms"manufacturer" and "ordinary place of business in New Zealand" set out in theinterpretation section, s 2(1).[41] The term "manufacturer" is defined in s 2 of the CGA as:manufacturer means a person that carries on the business of assembling,producing, or processing goods, and includes —(a) any person that holds itself out to the public as the manufacturer ofthe goods:(b) any person that attaches its brand or mark or causes or permits itsbrand or mark to be attached, to the goods:(c) where goods are manufactured outside New Zealand and the foreignmanufacturer of the goods does not have an ordinary place of businessin New Zealand, a person that imports or distributes those goods.[42] In my view, the clear inference to be drawn from paragraph (c) of the definitionof the term "manufacturer" in s 2(1) of the Act, deeming a New Zealand basedimporter or distributor of goods manufactured outside New Zealand by a foreignmanufacturer who does not have an ordinary place of business in New Zealand, asbeing the manufacturer of the imported goods for the purposes of the Act, is that thelegislative purpose was to provide a remedy for New Zealand consumers of thoseimported goods, because the reach of the Act does not have extraterritorial effect. Theeffect of paragraph (c) is to impose on the New Zealand-based importer or distributorof goods, the statutory guarantee of the goods being of acceptable quality.7 By doingso it imposes legal responsibility on New Zealand-based importers and distributors ofgoods, the same obligations as are imposed on New Zealand based manufacturers that7 Consumer Guarantees Act 1993, s 6(2)(b).their goods are of acceptable quality as defined by s 7, and renders the importersamenable to claims by consumers seeking redress under the Act.[43] I consider that paragraph (c) provides a clear signal that the CGA was notintended by Parliament to have extraterritorial effect. There would be no utility inimposing the manufacturer's liability under the Act upon a New-Zealand basedimporter of goods, if the Act was intended to have extraterritorial reach enablingconsumers to seek redress under the Act directly from the manufacturer of the goodsoutside New Zealand, wherever in the world they may happen to have manufacturedthe goods.[44] I agree with Mr Galbraith's submission that paragraph (c) of the"manufacturer" definition is consistent with an interpretation of the Act as not havingextraterritorial effect, and I reject Mr Farmer's submission that its purpose is to providea means for consumers to sue New Zealand-based importers of foreign manufacturedgoods where suing the foreign manufacturer directly would be inconvenient. In myview, the fact that Parliament has imposed the obligations of the manufacturer'sstatutory guarantee upon a New Zealand-based importer, is because the Act is notintended to have extraterritorial effect, and Parliament has imposed the manufacturer'sstatutory obligations upon a New Zealand-based importer of goods to afford NewZealand consumers the protections and rights of redress provided for by the Act inrespect of those imported goods.[45] Although the CGA is not a legislative code as was the case in Poynter, thegeneral principles described by the Supreme Court as applicable to the interpretationof a statute as to whether it has extraterritorial effect are equally applicable here, andI find that there is neither express language nor any necessary implication which wouldlead the Court to interpret the CGA as being intended to have extraterritorial reach.[46] The consequence of my finding that the CGA does not have extraterritorialeffect and reach means that the plaintiffs cannot succeed in their first cause of actionfounded on an allegation that 3AC failed to comply with s 6 of the Act by supplyinggoods that were not of acceptable quality, as the Act does not apply to it. Accordingly,I find that the plaintiffs have failed to show a "good arguable case" or that there is "aserious issue to be tried" as regards their first cause of action founded on allegedbreaches of the CGA.[47] Although that finding is dispositive of the plaintiffs' first cause of action, I shallnevertheless also address the second ground advanced by 3AC as to why the plaintiffs'first cause of action cannot succeed.Is Alucobond cladding goods "of a kind ordinarily acquired for personal, domestic,or household use or consumption"?[48] The term "consumer" as used in the CGA is defined as meaning a person who:(a) acquires from a supplier goods or services of a kind ordinarilyacquired for personal, domestic, or household use or consumption;and(b) does not acquire the goods or services, or hold himself or herself outas acquiring the goods or services, for the purpose of—(i) resupplying them in trade; or(ii) consuming them in the course of a process of production ormanufacture; or(iii) in the case of goods, repairing or treating in trade other goodsor fixtures on land[49] The plaintiffs submit that they are themselves consumers or that the Alucobondcladding when supplied for affixing to the buildings that they now own, was suppliedto the previous building owners who were consumers within the statutory definition.The plaintiffs say that goods will often be capable of being used in various ways, bothcommercially or personally, and the word "ordinarily" as used in the definition of"consumer" in the Act simply means "as a matter of regular practice or occurrence"or "in the ordinary or usual course of events or state of things".8[50] The plaintiffs submit that goods or services are likely to have been ordinarilyacquired for personal, domestic or household use or consumption, either when it is notextraordinary for them to be acquired for those purposes, or where the supplier ormanufacturer of the goods holds them out as being suitable for personal, domestic, or8 Nesbit v Porter [2000] 2 NZLR 465 (CA) at [28]–[29]; and Sleight v Beckia Holdings Ltd [2020]NZHC 2851 at [332].household use or consumption. The plaintiffs say that here there is evidence showingthat it was not uncommon for Alucobond cladding to be purchased for private use, andthat in the case of the first plaintiff, Alucobond was acquired for domestic use to recladthe Cutterscove apartments in order to remedy weathertightness issues. The plaintiffsalso say that Alucobond cladding has been used to clad other residential buildings inNew Zealand for the purpose of rectifying watertightness problems which had causedthe original exterior façade to fail. By way of examples, the plaintiffs refer to theevidence showing that three commercial construction businesses: The BuildingAgency; Cudoclad; and Amalgamated Builders Limited, have used Alucobondcladding for residential applications.[51] In reply the first defendant, 3AC says that the examples provided by theplaintiffs all relate to Alucobond being supplied to commercial constructioncompanies who purchased it for use on residential construction projects. 3AC submitsthat acquisition of Alucobond panelling by building and construction companies foruse in the construction of residential premises is not within the scope of the definitionof consumer in the CGA and the acquisitions of Alucobond used on the first plaintiff'sCutterscove building, and on the other buildings identified by the plaintiffs were notgoods or services of a kind ordinarily acquired for personal, domestic, or householduse or consumption within the meaning of the CGA.[52] 3AC says that the CGA applies to goods ordinarily acquired by householdersfor their personal use and not to goods purchased by construction companies for usein their construction projects, notwithstanding that the building under constructionmay be a residential premises to be occupied and used by householders. Mr Galbraithsubmits in Kaori Ltd v Shrinkforce Shrink Wrap Services Ltd (in rec) Duffy Jsuccinctly explained the phrase "ordinarily acquired for personal, domestic, orhousehold use or consumption" in relation to the definition of "consumer" under theCGA, when she said:9[48] For the plaintiff to be a "consumer" under the Act, the goods orservices must have been ordinarily acquired for personal, domestic orhousehold use or consumption. Nesbit v Porter [2000] 2 NZLR 465 (CA) at[29] makes it clear that "ordinarily" is used in the Act in the sense of "as amatter of regular practice or occurrence" or in the "ordinary or usual course9 Kaori Ltd v Shrinkforce Shrink Wrap Services Ltd (in rec) [2012] NZHC 3204of events or state of things". The defendant's evidence is that for the most part,it supplies its shrink wrapping services to construction or renovationprofessionals. I accept the defendant's evidence. I am satisfied that the shrinkwrapping service that it provides is not something that is ordinarily acquiredfor personal, domestic or household use. It follows that I find the Act does notapply. But in case I am wrong on this issue, I turn next to consider whether, ifthe Act does apply, it has been excluded by the contract between the parties.[53] 3AC notes that the evidence before the Court shows that the Alucobondcladding was acquired by specialist construction companies or businesses for use incommercial, and residential complexes. The first defendant also refers to the evidenceshowing that the Alucobond was being specified for use in a construction project bydesign professionals and that it was described in product literature published by 3ACand the second defendant as relevant to large scale building projects.[54] 3AC further says that the plaintiffs have not produced any evidence to showthat Alucobond cladding are goods ordinarily acquired by householders for personal,domestic, or household use or consumption.[55] The first defendant accordingly submits that the plaintiffs have not establishedthat Alucobond is a kind of product to which the CGA applies.Does the supply of Alucobond to commercial construction businesses fall within thescope of the CGA?[56] The purpose of the CGA is set out in s 1A which provides:(1) The purpose of this Act is to contribute to a trading environment inwhich—(a) the interests of consumers are protected; and(b) businesses compete effectively; and(c) consumers and businesses participate confidently.(2) To this end, the Act provides that consumers have—(a) certain guarantees when acquiring goods or services from asupplier, including—(i) that the goods are reasonably safe and fit for purposeand are otherwise of an acceptable quality; and(ii) that the services are carried out with reasonable careand skill; and(b) certain rights of redress against suppliers and manufacturersif goods or services fail to comply with a guarantee.[57] The term "goods" is also defined, and:10(a) means personal property of every kind (whether tangible orintangible), other than money and choses in action; and(b) includes—(i) goods attached to, or incorporated in, any real or personalproperty:(ii) ships, aircraft, and vehicles:(iii) animals, including fish:(iv) minerals, trees, and crops, whether on, under, or attached toland or not:(v) non-reticulated gas:(vi) to avoid doubt, water and computer software; but(c) despite paragraph (b)(i), does not include a whole building, or part ofa whole building, attached to land unless the building is a structurethat is easily removable and is not designed for residentialaccommodation.[58] Unless paragraph (c) applies, exterior cladding such as Alucobond which isattached to and incorporated in a building, is personal property falling within the scopeof the definition of "goods" in paragraph (a). However, paragraph (c) excludes fromthe definition of "goods" a whole building or part of a whole building attached to landunless the building is a structure that is easily removeable and not designed forresidential accommodation. Here the Alucobond cladding attached to the exterior ofthe first plaintiff's apartment building and the second plaintiff's commercial buildingsis a building material that has been used and attached to the buildings and is notattached to an easily removable structure not designed for residential purposes.I therefore find that paragraph (c) applies, and that the Alucobond cladding does notcome within the scope of the term "goods" as used in the CGA.10 Section 2(1).[59] However, in case I am wrong in that conclusion I now turn to consider whetherthe plaintiffs come within the definition of "consumer" as used in the CGA. A"consumer" under the CGA is a person who acquires from a supplier "goods orservices of a kind ordinarily acquired for personal, domestic, or household use orconsumption", and who does not acquire the goods or services for the purpose ofresupplying them in trade, or consuming them in the course of a manufacturingprocess. The consumer is therefore, a person who is the 'end user' of the goods, andthe provisions of the Act imposing the statutory guarantees are directed at the kind ofgoods and services "ordinarily acquired for personal, domestic, or household use orconsumption".[60] While the Alucobond cladding is a product that is used in the construction ofresidential premises used by householders, it is not a product that householdersthemselves ordinarily acquire for their personal use or consumption. It is a productthat is ordinarily acquired by construction contractors or building companies for useand incorporation in the residential and commercial buildings that they construct, andwhich in the case of residential premises will be used by householders to live in. Theplaintiffs' own evidence shows this to be the case as regards the Alucobond purchasedby building and construction companies in New Zealand. This interpretation is alsoconsistent with paragraph (c) of the definition of "goods" which excludes wholebuildings or parts of whole buildings unless they are easily removeable structures notdesigned for residential accommodation.[61] I accordingly find that the CGA does not apply to the Alucobond claddingwhich was acquired by the construction company for use and fitting to the firstplaintiff's Cutterscove residential apartment building, or to the commercial buildingsand premises purchased by the second plaintiff. In light of that finding, the plaintiffs'first cause of action founded on the CGA could not succeed.[62] Furthermore, for the reasons set out above, I have also found that the Act doesnot have extraterritorial effect and does not apply to the first defendant as an overseasbased manufacturer of the Alucobond product that does not have an ordinary place ofbusiness in New Zealand, or a person that imports or distributes the product in NewZealand.[63] As I have found that the plaintiffs' first cause of action could not possiblysucceed, it follows that the plaintiffs have failed to show that they have a good arguablecase or that there is a serious issue to be tried on the merits as regards their first causeof action, and accordingly I shall uphold the first defendant's protest to jurisdiction inrelation to it.Second, third and fourth causes of action: negligence, negligent misstatement andnegligent failure to warn[64] As the plaintiffs' allegations contained in their second, third, and fourth causesof action involve substantially similar and overlapping allegations of negligence andbreaches of duty of care owed by the defendant to them, and for the purposes of 3AC'scurrent application, I shall deal with these causes of action collectively.Second cause of action — negligence[65] The plaintiffs' second cause of action alleges that 3AC together with the secondand third defendants, owed the plaintiffs a duty to take reasonable care to ensure thatthe Alucobond cladding it designed, manufactured, and/or supplied:(a) complied with the Building Act 2004, and the Building Code set out insch 1 of the Building Regulations 1992;(b) was not subject to the material fire risk properties;(c) was not subject to the Building Code non-compliance properties;(d) was not subject to the Building Code non-compliance risk properties;and(e) was fit for all of the purposes for which goods of its type are commonlysupplied including for the purposes of being used for external walls orother building elements and structures for residential, commercial, orbuildings constructed for public or government administrationpurposes.[66] The plaintiffs allege that 3AC breached the duty it owed to the plaintiffs bynegligently failing to notice, or having noticed, failing to act in response to the factthat Alucobond was designed such that it did not comply with the Building Act andwith the Building Code then in force, due to it suffering from Building Code non-compliance properties and/or Building Code non-compliance risk properties (thedefects). The plaintiffs further allege that 3AC had and has, a system of productionand manufacture of Alucobond which allowed the cladding to be produced sufferingfrom those defects, or alternatively operated a system of production and manufacturethat failed to ensure that the Alucobond cladding was free of the defects.[67] The plaintiffs allege that as a result of the negligence of 3AC, and also that ofthe second and third defendants by their importing and distributing the Alucobondcladding suffering from the defects, the plaintiffs have and will suffer loss and damagefor which they seek damages, interest, and costs.[68] The plaintiffs allege that 3AC owed them a duty to take reasonable care toensure that the Alucobond cladding that it designed, manufactured and supplied foruse as exterior cladding upon buildings such as theirs complied with the Building Actand Building Code, and was fit for all of the purposes for which goods of Alucobond'stype are commonly supplied and used as exterior cladding on residential andcommercial buildings. The plaintiffs allege that in breach of its duty of care, 3ACfailed to notice or, or having noticed failed to take heed of the fact that Alucobondfailed to meet those standards and was consequently not fit for use as exterior claddingon residential and commercial buildings such as the plaintiffs' buildings.Third cause of action — negligent misstatement[69] The plaintiffs' third cause of action alleges that 3AC and the second and thirddefendants, made negligent misstatements representing that Alucobond was suitablefor use for external walls or other building elements and structures for residential orcommercial buildings, or for buildings constructed for public or governmentadministration purposes or any combination of those uses. The plaintiffs also allegethat 3AC made representations regarding the fabrication methods that could be utilisedwith Alucobond, as well as representations as to Alucobond's fire performance and itscompliance with the Building Code and standards. The plaintiffs allege that theserepresentations were repeated over time and were continuing representations.[70] The plaintiffs allege that the representations as to the suitability of theAlucobond cladding for those purposes were contained in the documents distributedand/or published in New Zealand by 3AC and by the other defendants for the purposesof promoting the Alucobond cladding product.[71] The plaintiffs allege that the representations made by the defendants includedrepresentations regarding the fabrication methods such as cutting, welding and drillingwhich could be employed by third parties prior to the Alucobond cladding being fittedto buildings and which would not materially affect the performance and safety of theproduct, and that Alucobond cladding was a product which protected against fireand/or did not increase the risks associated with fire in a building to which it was fitted.They also allege that 3AC and the second and third defendants represented thatAlucobond had passed all fire safety tests required by the Building Code and theapplicable New Zealand building standards, and that it complied with the BuildingCode.[72] The plaintiffs allege that 3AC and the other defendants owed a duty of care tothe plaintiffs not to make false, misleading, or negligent statements in relation toAlucobond which might result in them suffering economic loss or physical harm.They allege that in making the representations 3AC along with the second and thirddefendants acted in beach of their duties of care owed to the plaintiffs by failing toadequately research and verify the accuracy of the representations they were making,or alternatively having done so failing to ascertain that the representations being madewere, or might be false or misleading. They allege that those representations werefalse and misleading because the Alucobond was not suitable for the various buildingpurposes because of the cladding's fire risk properties, and because the aluminiumsheeting of the cladding did not protect the PE core from fire, and because it possessedmaterial fire risk properties. They further allege that the representations were false ormisleading because the Alucobond cladding had not passed all of the fire safety testsrequired by the applicable building codes and standards, and because it was notcompliant with the Building Code by reason of its non-compliance properties and non-compliance risk properties.[73] The plaintiffs' allegations are supported by the affidavit evidence ofMr Weaver. Mr Weaver, who holds Bachelor of Engineering and Master ofEngineering qualifications, explains that he has extensive experience in fireengineering, fire protection, and evacuation. In his affidavit filed by the plaintiffs,Mr Weaver describes his examination of the Alucobond product and its qualities, andsets out his conclusions regarding whether Alucobond is combustible, and as to thecombustibility of the first plaintiff's Cutterscove building and how the presence ofAlucobond cladding on the building would impact on the building's compliance withthe Building Code. Mr Weaver summarises his conclusions as follows:In summary, in my opinion, based on the facts, assumptions, reasons andliterature referred to above:(a) Alucobond PE and Alucobond Plus are combustible; and(b) when the Cutterscove complex was reclad in 2006-2008, theNew Zealand Building Code relevantly required externalwalls and roofs to have resistance to the spread of fire,appropriate to the fire load within the building and to theproximity of other household units and other property. In myopinion the presence of Alucobond PE cladding isinconsistent with these requirements; and(c) where there are combustibility requirements in thecompliance documents of the New Zealand Building Code,there is no evidence that those requirements have been met forAlucobond PE and Plus.[74] In a further affidavit Mr Weaver11 replies to the second affidavit filed byMs Gillian Stopford12 who is a Chartered Professional Fire Engineer, in which sheexpresses her opinion that Alucobond Plus would pass the relevant internationaltests.13 Mr Weaver notes however that Ms Stopford has not responded to the opinionshe has expressed about Alucobond PE, which was the product installed at Cutterscove,and has instead focused on Alucobond Plus. Mr Weaver says:11 Third affidavit of Simon Weaver, sworn 15 February 2022.12 Second affidavit of Gillian Stopford, sworn 4 February 2022.13 At [14].As regards Alucobond Plus, Ms Stopford accepts that NFPA 285, BS8414-2tests, using a typical New Zealand construction, have not been carried out.However, Ms Stopford expresses the view that these tests would, if performed,be passed. Nothing in Ms Stopford's affidavit causes me to change myopinions set out in my first or second affidavit.At paragraph [13.1], Ms Stopford quotes from the Audit Notes to Dr Enright'sreport for MBIE. This report is at page 0684 to the exhibit marked SDW-1 tomy first affidavit. The passage from which Ms Stopford quotes is at paragraphD on page 0690. It is part of a series of Audit Notes headed "Warning – UKfull-scale tests cast doubt on FR products". As appears from paragraph A, thequoted comments relate to the tests performed by BRE Global, not to NFPA285.I therefore do not agree with Ms Stopford, that Dr Enright's analysisconfirmed that Alucobond Plus would pass NFPA 285 where non-combustibleinsulation is installed.[75] The plaintiffs allege that they relied upon the representations made by 3ACand the other defendants by using or permitting their agents to use Alucobond forcladding the exterior of the Cutterscove apartment building when remediating theleaky building/weathertightness faults in 2006–2008, and in relation to the secondplaintiff's buildings, when permitting their agents to use and fit Alucobond on theirbuildings or when acquiring ownership or leasehold interests in buildings fitted withAlucobond.[76] The plaintiffs say that as a result of their reliance on what they allege were falseor misleading representations negligently made by 3AC and the second and thirddefendants, they have suffered and will suffer loss and damage for which they seekdamages, interest, and costs.[77] The plaintiffs allege that 3AC made representations that its Alucobond productwas suitable for use as cladding on exterior walls of residential, commercial, andindustrial buildings. The plaintiffs say that 3AC's representations as to the suitabilityand use of the Alucobond product were made or impliedly made by means of imagesof various types of buildings fitted with Alucobond contained in documents distributedand/or published by 3AC, the second defendant or Skellerup. They refer to fourdocuments they say contain the representations. These documents and others are alsorelied upon by the plaintiffs in relation to their allegations regarding the representationconcerning the available methods of fabrication of the Alucobond cladding, and therepresentations regarding Alucobond's compliance with Fire Performance standardsand the Building Code. The documents identified and relied on are:(a) "Alucobond: at a glance".(b) 3A Composites Safety Data Sheet, Alucobond, initial release date14 February 2003, revised date 18 February 2013.(c) Alucobond: Processing and Technical Data, dated 1 July 2012.(d) Alucobond: Lap Joint System Manual (v1).[78] The plaintiffs further allege that the representations made by 3AC regardingAlucobond were expressly or impliedly also made by the second and third defendantsin a series of documents published or distributed by them in New Zealand for thepurposes of marketing and promoting Alucobond. These documents are identified as:(a) Alcan Composites, "Alucobond processing at a glance", dated 1 July2003.(b) Skellerup Alucobond Standard Details, dated 7 July 2005.(c) Skellerup Alucobond, Producer Statement – Construction, dated12 September 2006.(d) A letter from Skellerup Alucobond to Moyle Construction Limiteddated 25 November 2008 enclosing a revised Producer Statement andGuarantee also dated 25 November 2008.(e) Kaneba, Alucobond Fixed Cassette System, Version 1, dated 24 March2013.Fourth cause of action — negligent failure to warn[79] The plaintiffs' fourth cause of action alleges that 3AC and the second and thirddefendants owed the plaintiffs a duty of care requiring them to warn the plaintiffs thatthe Alucobond cladding was not suitable and/or not safe for use on all residential orcommercial buildings, or alternatively if it was suitable and safe for only somebuilding purposes what those limited purposes were. The plaintiffs say that the dutyof care included a duty to warn the plaintiffs of the effect that different fabricationmethods of fitting the Alucobond cladding to buildings had on the behaviour ofAlucobond cladding in the event of a fire in the building, that the aluminium sheets ofthe cladding did not protect the inflammable PE core from igniting, and that thecladding possessed fire risk properties, had not passed fire safety tests and was notcompliant with the Building Code. The plaintiffs allege that 3AC and the second andthird defendants breached their duty of care owed to the plaintiffs by negligentlyfailing to publicly disclose or otherwise warn the plaintiffs regarding these matters.[80] The plaintiffs say that as a result of the negligent failure of 3AC and the firstand second defendant to publicly or otherwise warn them:(a) about the limitations of Alucobond in terms of its suitability forbuilding uses and that it is only suitable and safe when used for thoselimited purposes or when combined with specified materials ortechnology;(b) that in the event of a fire, fire resistance and flammability of Alucobondwas materially affected by the fabrication methods used when fitting itto buildings;(c) the aluminium cover sheeting does not protect the PE core of thecladding from igniting in the event of a building fire; and(d) Alucobond had not passed applicable fire safety standards and wasdeemed combustible and was either non-compliant or there was a riskthat it was non-compliant under the Building Code when used forcertain purposes;they have suffered and will suffer loss and damage for which they seek damages,interest, and costs.The plaintiffs' submissions[81] Mr Farmer submits that the plaintiffs have shown that they have a goodarguable case that their three causes of action alleging negligence fall withinr 6.27(2)(a)(ii) because the claims are made in tort and the damage was suffered inNew Zealand. He submits that it is well-established that manufacturers of claddingproducts owe a duty of care to property owners who clad their buildings with themanufacturer's defective cladding.14 He further submits that it is arguable thatmanufacturers of cladding owe a duty to warn the owners of properties clad with themanufacturer's product, about the existence of any defects of their cladding, withintheir knowledge.[82] Mr Farmer submits that the fact that 3AC was not directly involved in therecladding of the first plaintiff's Cutterscove building does not preclude the existenceof a duty of care, as the manufacturer's role in the construction of a residence is'generic'. Similarly, it does not matter whether or not 3AC specifically referred to theBuilding Code in its publications regarding Alucobond, as compliance with the codeis only one aspect of the plaintiffs' tort claims and they also rely on the lack of fitnessfor purpose and the fire risk properties of Alucobond.3AC's submissions[83] Mr Galbraith submits that each of the plaintiffs' three tort causes of actionrequire there to have been representations or a failure to warn by 3AC to give rise tothe duties of care alleged. He says that is consistent with the scope of a manufacturer'sresponsibilities as described in s 14G of the Building Act, which relevantly provides:14G Responsibilities of product manufacturer or supplier(2) A product manufacturer or supplier is responsible for ensuringthat the product will, if installed in accordance with the14 Cridge v Studorp Ltd [2021] NZHC 2077 at [678(a)] and [679] referring to Carter Holt HarveyLtd v Minister of Education [2016] NZSC 96, [2017] 1 NZLR 78.technical data, plans, specifications, and advice prescribed bythe manufacturer, comply with the relevant provisions of thebuilding code.[84] Mr Galbraith accepts that the Building Act is not a code, and says that while aclaim in tort alleging duties outside the scope of the statutory duties can be brought, itwould be extraordinary for a duty of care to exist that was not confined by amanufacturer's instructions and directions as to the appropriate applications and useof their product and regarding the proper methods for fixing and installing the product.[85] Mr Galbraith notes that in Cridge v Studorp Ltd this Court found that JamesHardie sold cladding panels to the general market on the basis that it was a soundproduct which if installed correctly would produce a weathertight home.15 He submitsthat a manufacturer's obligations in tort are linked to the particular way in which aproduct is held out by the manufacturer to the market. And he submits that it wouldmake no sense for a duty to exist other than in relation to the particular use or uses forwhich a product was intended by its manufacturer, and any obligations in tort must belinked to the particular way in which the product is held out by the manufacturer asappropriate for its use.[86] He says the plaintiffs must provide some evidence to support their allegationsand show that 3AC made representations either directly to them or indirectly to themarket, however all they have been able to point to are four documents which fallshort of showing that 3AC made any representations regarding Alucobond to theplaintiffs, or that it had a duty to warn them as regards their Alucobond product.Mr Galbraith submits that the documents relied on by the plaintiffs do not contain orconvey the pleaded representations or misrepresentations. He notes that three of thedocuments refer to testing of the Alucobond product carried out in China or Europeancountries and the results of the testing. He submits that apart from setting out theresults of the tests referred to, the documents relied on by the plaintiffs contain norepresentations.15 Cridge v Studorp Ltd, above n 14, at [678(b)].[87] Mr Galbraith accordingly submits that none of the three categories of tortclaims pleaded by the plaintiffs can succeed as there were no relevant representationsmade to them by 3AC.Second, third and fourth causes of action: analysis[88] The proposition that a manufacturer of building products has a duty of care toensure that its products are fit for purpose including compliance with buildingstandards contained in applicable legislation and building codes is already well-established in New Zealand. As Simon France J referring to Carter Holt Harvey Ltdv Minister of Education observed in Cridge v Studorp Ltd:16[679] Put concisely, the Supreme Court in effect says a manufacturer isconceptually no more immune from tortious liability than any other playerinvolved in the construction of the homes, and there is nothing particular inthis case to set it apart. [681] I consider the proposition of no duty is untenable as regards thesheet[17] itself. If, for example, the sheet's composition was flawed, it is hardto imagine that would not constitute a breach of duty to homeowners sufferingloss as a consequence. It would be a latent defect in a product that is a keycomponent in a house which is, for many New Zealanders, the majorinvestment and asset in their life. [682] I doubt the label "novel" is particularly appropriate here except in atechnical sense of this being the first time in New Zealand one of these caseshas required a trial judgment to confirm a duty which various preliminarydecisions of our highest courts have recognised likely exists. Themanufacturer is the start of a chain of persons involved in the building of ahouse, and I believe it to be accurate to say a duty has been recognised onevery actor subsequent in the chain to the manufacturer. The obviousdifference is the manufacturer's role is generic, whereas the role for everyoneelse in the chain is house specific. [89] Having regard to Mr Weaver's affidavit evidence in which he expresses hisopinion that Alucobond PE and Alucobond Plus are combustible, and at the time whenthe Cutterscove building was re-clad in 2006–2008 the Building Code requiredexternal walls and roofs to have resistance to the spread of fire, appropriate to the fireload within the building and to the proximity of other household units, and AlucobondPE was inconsistent with those requirements, and there being no available evidence16 See Carter Holt Harvey Ltd v Minister of Education, above n 14.17 A cladding sheet manufactured by Carter Holt Harvey Ltd called "Shadowclad".that either Alucobond PE or Alucobond Plus met those requirements, I am satisfiedthat the plaintiffs have shown that they have a good arguable case regarding the non-compliance of Alucobond with the New Zealand Building Act and Building Code, andthat the use of Alucobond on the first plaintiff's Cutterscove building appears to haveresulted in the building's non-compliance with the combustibility requirements of theBuilding Code.[90] My finding that the plaintiffs have shown that they have a good arguable caseas regards whether the Alucobond supplied and installed on the Cutterscove buildingand on the second plaintiff's commercial building complied with the applicableBuilding Code standards, does not of course determine the matter, which will bedetermined on the basis of full evidence at trial. I am nevertheless satisfied thatMr Weaver's considered opinion which appears to be based on his extensive research,provides a credible foundation for the plaintiffs' allegations regarding the non-complying properties of the Alucobond cladding supplied and installed on theCutterscove and second defendant's buildings.[91] Although it was contended on behalf of 3AC that the plaintiffs have failed toproduce any evidence that 3AC had made the alleged representations as to thesuitability, fabrication, fire performance, and compliance of Alucobond prior to or atthe time when the first plaintiff's Cutterscove building was re-clad with Alucobond,I consider that the plaintiffs have nevertheless shown themselves to have an arguablecase to prove that representations regarding Alucobond's compliance with theBuilding Code were made at that time, if not by 3AC itself then by the second andthird defendants on its behalf and with its knowledge.[92] A "Producer Statement – Construction" document issued by "SkellerupAlucobond" addressed to the first plaintiff and dated 12 September 2006 advised:In respect of: Supply and installation of Alucobond composite wall claddingin accordance with the principals [sic] as set out in the Skellerup Alucobondspecification including typical details and to areas as indicated on ProjectManagement Enterprises architectural drawings.We certify that the works are to be completed in a manner to meet the criteriaas set out in the Building Code for Durability (B2) and External Moisture (E2)for an alternative product, as defined as Skellerup Alucobond CompositeAluminium wall cladding system and in accordance with SkellerupAlucobond's specification, the system being suitable for the intended use.[93] Chairman of the first plaintiff, Mr George Kinloch, states that when the firstplaintiff was re-cladding the Cutterscove building in order to rectify weathertightnessissues, the body corporate chose Skellerup Alucobond because although it was moreexpensive than other products, it was being marketed and distributed in New Zealandby Skellerup which it considered to be reputable, and it was assumed that the productwas safe and complied with the requirements of the Building Code. Although the fireprotection provisions of the Building Code were not referred to in the SkellerupAlucobond Producer Statement issued on 12 September 2006 prior to commencementof the re-cladding work by Moyle Construction, it is not unreasonable to assume thatit implied that the Alucobond product also complied with any other relevantrequirements of the Building Code, including fire protection requirements.[94] The plaintiffs have also produced an Alcan Composites document entitled"Flying High" which was obtained from web.archive.org (archive dated 5 November2005) which predates the first plaintiff's decision to use Alucobond when re-claddingCutterscove. The date of the document is further informed by the inclusion in thedocument of an Environmental Management Certificate awarded to Alcan GmbH forits compliance with the environmental management system, issued on 6 February 2003and valid to 5 February 2006. The document refers to Alcan Composites as a "true'global player'", having a worldwide distribution network for its Alucobond product.The document also contains a table headed, "Fire behaviour of ALUCOBONDpanels", in which it sets out the results of testing of Alucobond, Alucobond Plus, andAlucobond A2, against the relevant standards of a number of European countries andGreat Britain with the results indicating that it had satisfied their various standards.As regards the standards of Denmark, Norway and Sweden, Alucobond is recorded as"hardly inflammable".[95] Further documents produced by the plaintiffs as indicating the nature andcontents of product information being issued and distributed by 3AC and itsrepresentatives including Skellerup are three letters written to MM Architectsregarding the cladding to be used on the Aura apartments in Cook Street, Auckland,regarding the obtaining of a building consent involving the use of Alucobond cladding.In a letter dated 10 May 2005 from a Technical Consultant of Skellerup Alucobond toMM Architects the author lists over a dozen significant buildings in New Zealand onwhich Alucobond cladding had been used including Auckland, Wellington andChristchurch International Airports, and several major commercial buildings inAuckland during the period from 1992–2005. He states:We have been involved with the supply and installation of AlucobondAluminium Composite Material (ACM) since 1985. During that periodAlucobond has been installed to approximately 2,000 buildings throughoutNew Zealand and the South Pacific.Alucobond is used extensively as an external cladding materialinternationally. There are a number of systems available to meet design criteriaand regulatory body requirements. Alucobond has gained acceptance with architects as an ideal product, not onlyfor high-class cladding, but also as a material suitable for providing expressivearchitectural features.Our company provides a high quality design, fabrication and installationservice backed by Alucobond product warranties of 10 years and 15 years forsealant to ensure that any building developer/owner will have peace of mind.[96] The letter written by the Managing Director of Alcan Alucobond (Far East) PteLtd to MM Architects is dated 27 April 2005. In this letter he sets out a brief historyof Alcan's manufacture of Alucobond and says: Today, ALUCOBOND is produced by Alcan Composites in four plantswhich are located in Germany, the U.S.A, China and in Brazil. In all plantsALUCOBOND is manufactured in accordance with the same stringent qualitystandards. Their quality management systems are all certified to comply withISO 9001 standards.Provided ALUCOBOND panels are applied in accordance with theinformation provided in the manufacturer's recommendations and designcriteria stated in the Processing Manual and Product Data Sheets and inconjunction with other approved building systems and materials,ALUCOBOND panels will satisfy the performance requirement of the NewZealand Building Code B2.3.1 b for use as building envelope for more than15 years.As a further reference to prove that ALUCOBOND panels satisfy internationalstandards for external wall cladding applications, we attach a copy of theAgreement Certificate No 97/3411/c issued by the British Board of Agreement(BBA), which is the authority for the assessment of products for constructionin the U.K.[97] The British Board of Agreement Certificate issued to Alcan in relation to theAlucobond Cladding System includes a section entitled: "Behaviour in relation to fire"which sets out the results of tests of Alucobond as against two British Standards andconcluded that the product had achieved the Class 0 requirement as defined in thenational Building Regulations.[98] While these letters written by management of Skellerup Alucobond and AlcanAlucobond (Far East) Pte Ltd obviously involve parties other than the plaintiffs, theydo inform an assessment of the likelihood of similar representations being made by3AC and the second and third defendants regarding Alucobond to the market duringthe period prior to the first plaintiff deciding to use Alucobond for the re-cladding ofits building.[99] The "Alucobond: at a glance" document also referred to and relied on by theplaintiffs is undated. The document exhibited to Mr Weaver's affidavit was obtainedby Mr Weaver from a New Zealand website in 2020. While it is undated and there isno evidence as to when it was first distributed and made accessible to the public viathe internet, its terms imply that it is likely that it (or the substance of its contents) wasdistributed over a period commencing well before 2020. The document contains thefollowing:ABOUT ALUCOBONDALUCOBOND came into existence in 1969. Since then it has not only beenthe most preferred brand of aluminium composite material (ACM) or panel(ACP) for architecture cladding applications, but also shaped the waybuildings are looking and built worldwide.ALUCOBOND adapts perfectly to the buildings' contours. It can easily be cutand shaped, without having to compromise on the surface finish, compared toother ACM/ACP or metal cladding materials commonly available in themarket. Whether soft curves or perfect flatness, ALUCOBOND will providea perfect design. The unmatched properties of this material can give shape toany project - from a private home to a corporate building, from a stadium toan airport, from a shopping mall to an institution. Be it a façade cladding or aroofing application, be it an interior column cladding or a ceiling application,can give it a distinguished look which will last forever.ALUCOBOND can boast of being the only truly global ACM/ACPmanufacturer, having production facilities, customer service sites anddistribution partners all over the world, reaching out to customers with bestquality products along with seamless service at all times. The advantage ofthis global presence is best seen in a situation - wherein an architect or a façadeconsultant could be based in [a] certain part of the world, the local consultantcould be based in another, and the fabricator could be based in yet anotherpart, ALUCOBOND helps by joining the dots and is able to serve all thestakeholders with utmost proficiency.Reasons to choose ALUCOBOND:• Right formulation and quality of mineral-filled core for non-combustible (ALUCOBOND A2) and fire-retardant(ALUCOBOND plus) product.THE PRODUCTALUCOBONDALUCOBOND is a rigid, yet flexible façade material for architectural uses.ALUCOBOND is extremely weatherproof, impact-resistant and break-proof,vibration-damping, and ensures easy and fast installation. ALUCOBOND isproduced with various core thicknesses in a continuous lamination processand then customised regarding dimensions.ALUCOBOND plusALUCOBOND plus has been developed exclusively for the more stringentrequirements of the fire prevention regulations in architectural products.Thanks to its mineral-filled core ALUCOBOND plus meets the stricterrequirements of the fire classifications. It is hardly inflammable and offers allthe proven product properties of the ALUCOBOND family, such as flatness,formability, resistance to weather and easy processing.ALUCOBOND A2ALUCOBOND A2 is the only non-combustible aluminium composite panelused in architecture that fulfils the respective standards worldwide. Thanks toits mineral-filled core, ALUCOBOND A2 meets the strict requirements of thefire regulations and enhances the possibilities for the concept and design ofbuildings. ALUCOBOND A2, just like all the products of the ALUCOBONDfamily, allows simple processing, is impact-resistant, break-proof andweatherproof and, above all non-combustible.[100] Having regard to these materials located and produced by the plaintiffs inwhich representations are made regarding the fire-resistant properties of Alucobondpanelling and its compliance with fire protection building standards and legislation,I am satisfied that the plaintiffs have shown that they have a good arguable case on allthree of their negligence causes of action.[101] I am satisfied by the contents of Mr Weaver's affidavit18 that the plaintiffs havean arguable case that the Alucobond panels supplied and used in the recladding orcladding of the plaintiffs' buildings did not meet the applicable provisions of the NewZealand Building Code and that the combustibility of the Alucobond panels and theassociated fire risk to buildings and their occupants was a feature of the product thatwas discoverable by 3AC prior to the first plaintiff's use of the product for re-claddingits Cutterscove building in 2006–2008. While I note that Ms Stopford in her affidavitdisputes Mr Weaver's opinion regarding the combustibility of Alucobond PE andAlucobond Plus and as to their compliance with the relevant requirements of theBuilding Code, at this stage of the proceeding it is not necessary or appropriate for theCourt to endeavour to determine the dispute between the expert witnesses engaged bythe parties and who have filed affidavits. At this early stage of the proceeding it issufficient for the plaintiffs to show that they have a good arguable case in support oftheir allegations set out in the three negligence causes of action, and I am satisfied thatthey have done so.[102] As already noted, I am also satisfied that the plaintiffs have shown that theyhave a good arguable case that 3AC owed them a duty of care to ensure that itsAlucobond product was fit for purpose and use as an exterior cladding material, andthat it did not meet the requirements of the applicable provisions of the Building Actand Building Code as regards fire protection. Such a duty if found to exist is likely toalso include a duty requiring 3AC to warn the plaintiffs that the Alucobond claddingwas not suitable and/or not safe for use on all residential or commercial buildings, oralternatively if it was suitable and safe for only some building purposes what thoselimited purposes were, and furthermore to warn them that in the event of a fire in theirbuilding, that the Alucobond's aluminium cladding would not protect and prevent theinflammable PE core from igniting.[103] In this context it is also important to note that at this stage there has been nodiscovery and it is realistic to expect there to be a significant amount of documentationthat would be required to be discovered by 3AC and the other defendants regarding18 Affidavit of Simon David Weaver, sworn 29 November 2021.the promotional materials and statements made to the public prior to 2006 regardingthe properties of Alucobond, should the plaintiffs' claim be allowed to proceed.[104] For these reasons I find that the plaintiffs have established that they have agood arguable case in relation to each of the negligence causes of action which fallwithin r 6.27(2)(h)(i), 3AC being a necessary or proper party to proceedings properlybrought against another defendant served or to be served (whether within New Zealandor outside New Zealand under any other provision of these rules), and there being aserious issue as between the plaintiffs and 3AC that the court ought to try.Fifth and sixth causes of action: the Fair Trading Act 1986[105] The plaintiffs' fifth and sixth causes of action are respectively founded onalleged breaches of ss 9 and 13 of the Fair Trading Act (FTA). Although each causeof action is ultimately to be considered individually, it is convenient to also deal withboth of them together in this section of my judgment.[106] The plaintiffs' fifth cause of action alleges that 3AC and the other defendants,made the representations (or failed to provide warnings) the plaintiffs have relied onfor their tort claims, in trade in connection with the supply, or possible supply ofAlucobond cladding, or in connection with the promotion of the supply of Alucobondcladding. The plaintiffs allege that 3AC and the second and third defendants engagedin conduct, in trade, that breached s 9 of the FTA by:(a) making representations regarding the suitability of the Alucobondcladding for use as part of an external wall or attachment to an externalwall in buildings or building elements where the buildings wereintended to be used for residential purposes; commercial or industrialpurposes; public or government administration purposes or anycombination of those uses or applications;(b) failing to give appropriate warnings as to quality, or alternatively as tolimitations regarding safe and appropriate uses; and(c) by aiding and abetting, counselling or procuring, or being in any wayeither directly or indirectly knowingly concerned with, or party to thematters alleged in (a) and (b).The plaintiffs' submissions[107] The plaintiffs say that the promotional material published and distributed by3AC regarding Alucobond was intended to have global reach. They say that since atleast 2004, 3AC's website has contained material promoting Alucobond withrepresentations as to its fire performance qualities and suitability for use as a claddingon residential and commercial buildings. Examples of this promotional material isproduced in the affidavit of the plaintiffs' witness Ms Amelia Cina. The plaintiffs saythat this material was freely available to be accessed and downloaded by New Zealandconsumers. The plaintiffs say that 3AC's intention that its promotional materialsincluded New Zealand consumers is evident from the fact that its website referred tobuilding projects in New Zealand where Alucobond has been used and includedinformation where New Zealand consumers could find out how to purchaseAlucobond. The plaintiffs also note that promotional and specification materials fromthe 3AC website have been located on the property files of a number of localauthorities in New Zealand which further supports their allegation that 3AC's intentionthat its marketing materials have a global reach did reach New Zealand and did resultin New Zealand consumers purchasing Alucobond for use on their New Zealandbuildings.[108] The plaintiffs note that 3AC appointed an exclusive distributor of itsAlucobond product in New Zealand and authorised the publication in New Zealand ofpromotional and technical information about Alucobond as evident by the letterpreviously referred to, written by the Managing Director of Alcan Alucobond (Far EastPte) Ltd to MM Architects in Auckland to which he annexed the British Board ofAgreement certificate and technical information relating to Alucobond. The plaintiffsrefer to a press release dated 19 April 2005 entitled: "Skellerup adds another premiumbrand to portfolio", in which Skellerup announced that it had purchased the assets ofthe exclusive New Zealand importer, fabricator and installer of Alucobond. The pressrelease states:19The acquisition continues Skellmax's growth strategy outlined in the 2004Annual Report of purchasing businesses that complement existing operations.Alucobond currently has 25% market share in New Zealand so there aresignificant opportunities to grow the business using our sales and marketingrepresentation. Aluminium cladding complements our range of waterproofingcladding products and strengthens our sales offer to architects of specialistproducts for cladding of buildings.[109] The plaintiffs allege that the defendants' conduct was misleading and/ordeceptive, or likely to mislead or deceive as to: the nature; characteristics; suitabilityfor purpose; standard; quality; composition; performance characteristics; uses; and/orbenefits of Alucobond cladding. The plaintiffs allege that the defendants representedthat Alucobond had the characteristics and qualities that meant it was suitable for useon residential and commercial premises, and that it was a product that protectedagainst fire, did not have material fire risk properties, Building Code non-complianceproperties, or Building Code non-compliance risk properties, when each of thoserepresentations was untrue. The plaintiffs further allege that they and their agentsrelied on the defendants' representations and were misled and deceived by them, whichhad caused the plaintiffs loss or damage. As regards the first plaintiff the loss anddamage suffered as a result of their reliance on the alleged misleading and/or deceptiverepresentations includes the cost of removing the Alucobond fixed to their buildingand replacing it with another product that complies with the Building Code, orimplementing measures to rectify the effect on the Cutterscove building caused by thenon-compliance of Alucobond with the Building Code and CGA guarantee as toacceptable quality, and the reduction in value of the Alucobond cladding as a result ofits fire risk and non-complying characteristics.[110] The plaintiffs seek relief against 3AC by way of damages, and other reliefunder s 43 of the FTA, together with interest and costs.19 Affidavit of Amelia Cina, sworn 29 November 2021).3AC's submissions[111] Mr Galbraith notes that although s 3 of the FTA expressly extends its reach tothose engaging in conduct outside New Zealand, it does not apply to the plaintiffs'claims against 3AC, as 3AC is and has not been resident in New Zealand and has notbeen carrying on business in New Zealand. He therefore submits that the initialgateway provided by s 3 for a claim against an overseas party such as 3AC does notapply.[112] Mr Galbraith says that a claim under the FTA fundamentally requires there tohave been a representation made by someone, to someone, and relied upon bysomeone. He submits that the plaintiffs have failed to produce any evidence that 3ACmade representations relating to the supply of products in New Zealand on which theplaintiffs relied. Mr Galbraith says that none of the plaintiffs' witnesses assert thatthey or their agents received or relied on any representations made by 3AC, and henotes that Mr Kinloch's evidence is that he was impressed that Skellerup was areputable company and assumed that the product they were supplying would be safeand complied with the relevant requirements of the Building Code. He further notesthat the second plaintiff has not presented any evidence on the issue of whether arepresentation was made and relied upon.[113] Mr Galbraith says that the documents relied on by the plaintiffs were notpublished or distributed by 3AC, but by the second or third defendants. He notes thatsome of the documents relied on by the plaintiffs post-date the cladding andconstruction of the plaintiffs' buildings and are documents sourced from files relatingto other properties, and they cannot assist the plaintiffs' case as they were notdocuments that they relied on in deciding to purchase and use Alucobond on theirbuildings. Mr Galbraith disputes the plaintiffs' contention that 3AC impliedly adoptedthe various statements made by the second and third defendants regarding Alucobond.He submits that the most that can be said is that 3AC had given its permission to thesecond and third defendants to use its Alucobond name and brand, but that is notenough to amount to the making of a representation by 3AC itself.[114] As to the Alucobond technical literature and product specifications relied onby the plaintiffs as amounting to making or containing representations, Mr Galbraithsays that in each case the documents produced by the plaintiffs post-date the re-cladding and construction undertaken by the plaintiffs in relation to their buildings,and they cannot have been relied upon by the plaintiffs in connection with theirdecisions to use Alucobond on their buildings. Furthermore, none of the documentsthat pre-date the construction and re-cladding of the plaintiffs' buildings contain anyrepresentations regarding the requirements of the New Zealand Building Code.[115] He accordingly submits that the FTA causes of action cannot possibly succeedand the Court should dismiss them.Fifth and sixth causes of action: analysis[116] Section 3(1) of the FTA provides:This Act extends to the engaging in conduct outside New Zealand by anyperson resident or carrying on business in New Zealand to the extent that suchconduct relates to the supply of goods or services, or the granting of interestsin land, within New Zealand.[117] It is clear from the evidence produced by the plaintiffs that 3AC has neverestablished itself as a trading entity in New Zealand. As evident from the 19 April2005 press release issued by Skellerup, 3AC had appointed a New Zealand companyto be an exclusive importer and distributor of its Alucobond products in New Zealand.While 3AC has clearly promoted its Alucobond product globally in a manner thatextended its marketing and promotion of its products to consumers located in NewZealand, there is no evidence that it has ever engaged in carrying on the business ofselling and supplying its product to consumers in New Zealand. In light of thatfinding, the plaintiffs' claims against 3AC founded on the FTA cannot possiblysucceed.[118] However, it is also quite clear from Mr Kinloch's evidence that neither 3ACnor Skellerup made any representations to him on behalf of the first plaintiff regardingAlucobond and its suitability for use for the re-cladding of the Cutterscove building.Mr Kinloch presumed that as Skellerup was a reputable company it could be relied onto be suppling a product that was suitable and safe for the purposes of the re-claddingof Cutterscove. While it was not unreasonable for Mr Kinloch and the body corporateto proceed to make its decision to use the Alucobond product being supplied bySkellerup, the making of such an assumption cannot be reframed as amounting to arepresentation made by Skellerup for and on behalf of 3AC regarding the suitabilityof Alucobond for the Cutterscove re-cladding. It is clear that neither 3AC nor itsagents made any representations to the first plaintiff regarding the suitability ofAlucobond or its properties, including its compliance with any applicable provisionsof the Building Code.[119] I also agree with the first defendant's submission that the various documentsidentified and relied on by the plaintiffs as containing information regardingAlucobond that could amount to representations regarding the product, either post-date the building work undertaken on the plaintiffs' buildings or make no mention ofthe New Zealand Building Code and compliance with it.[120] In the absence of any evidence to show that 3AC made any representationswhatsoever to the plaintiffs regarding Alucobond prior to the first plaintiff proceedingto use Alucobond on its building in 2006–2008, and similarly no representations beingmade to the second plaintiff, there is no foundation for the sixth cause of action broughtpursuant to s 13 of the FTA alleging the making of false and misleadingrepresentations.[121] For the same reasons, I find that there is no evidence that 3AC engaged inconduct that was misleading or deceptive or likely to be misleading or deceptive ofthe plaintiffs in relation to their choice and use of Alucobond on their buildings.[122] I accordingly find that the plaintiffs have failed to show that they have a goodarguable case against 3AC in relation to their fifth and six causes of action based onss 9 and 13 of the FTA.Limitation issues[123] Pursuant to s 4(1)(a) of the Limitation Act 1950, actions founded on tort shallnot be brought after the expiration of six years from the date on which the cause ofaction accrued.[124] In its notice of opposition 3AC contends that the plaintiffs' CGA and FTAclaims are time barred. Having regard to my findings that the plaintiffs have failed toshow that they have a good arguable case against 3AC in relation to those causes ofaction, it is unnecessary to address or determine the limitation issue as regards them.[125] No limitation issue is raised by 3AC in relation to the plaintiffs' second(negligence) and third (negligent misstatement) causes of action. Therefore the onlyremaining limitation issue raised by 3AC that requires consideration anddetermination relates to the fourth cause of action (negligent failure to warn).[126] Mr Galbraith notes Mr Kinloch's evidence that he first learned of the potentialdangers of aluminium composite panels in June 2017 following the Grenfell Towerfire, and that the body corporate first learned that the Alucobond was combustible in2020. Mr Galbraith also notes that the second plaintiff's representative says that itengaged a contractor to remove panels from its two Auckland buildings in November2021 to investigate whether they were Alucobond panels. He submits that theevidence provides no seriously arguable basis for applying a reasonablediscoverability extension to the limitation period. He submits that at the latest thealleged dangers of aluminium composite panels were discoverable in June 2017 in thecontext of the media reporting and commentary regarding the Grenfell Tower fire. Henotes that neither plaintiff says that they discovered any particular new informationabout the safety of the panels after that date. He says it is significant however thatboth plaintiffs were solicited by litigation funders and announced in November 2019that they were exploring the commencement of a class action.[127] Mr Farmer notes that the first plaintiff only discovered that the Alucobondcladding on its building was defective (by reason of being combustible) in late 2020.He also notes that Mr Kinloch in his affidavit says that he first learned about thepotential dangers associated with aluminium composite panelling after the GrenfellTower fire in London which occurred in June 2017. The Body Corporate first learnedthat the Alucobond cladding was combustible in 2020 and in late 2020 itcommissioned a contractor to remove one of the panels from the exterior of theCutterscove building. An inspection of the panel showed it to be an Alucobond brandproduct. Mr Farmer further notes that the plaintiffs' proceedings were filed andcommenced on 18 December 2020. He submits that the plaintiffs' fourth cause ofaction (negligent failure to warn) is therefore within time when the reasonablediscoverability test is applied. He submits that application of the reasonablediscoverability test to the plaintiffs' claim is conventional, and says that the firstplaintiff's discovery in late 2020 that its building was clad with Alucobond that wascombustible marks the point at which its economic loss occurred and the cause ofaction was complete and arose.[128] Mr Farmer accordingly submits that application of the reasonablediscoverability test means that the plaintiffs' fourth cause of action is well within thetime for commencing an action in tort. He says that furthermore, the proposedrepresentative nature of the plaintiffs' claim is relevant to when limitation issues areconsidered. He submits that even if the plaintiff does face limitation obstacles asregards its claims, there will be other claimants in the plaintiff group who do not haveto contest with limitation issues and who are likely to have valid claims amounting toserious issues to be tried. Mr Farmer says that the Court should not at this preliminarystage of the proceeding decline jurisdiction because of limitation issues, because doingso would be to pre-empt the Court's broad powers to deal with specific limitationissues that may arise following the joinder of other parties. Mr Farmer submits that inthe context of this proceeding limitation issues are more appropriately addressed andconsidered in relation to individual parties. He says that the objectives of r 4.24 canstill be served by the Court assuming jurisdiction and allowing the representativeplaintiff to advance the issues which are common to the members of the group. Andby assuming jurisdiction and setting aside its protest to jurisdiction, 3AC will notsuffer any prejudice because it will still be able to raise a limitation defence, and doso at a more appropriate stage of the proceeding.Decision on limitation issues[129] I consider that it is premature to determine limitation issues at this preliminarystage. The issue of whether it is appropriate to apply a reasonable discoverabilityextension of the limitation period is a matter best left until the issue of whether arepresentative class action is approved, and if so whether there are limitation issuesthat apply to members of the plaintiff group that require evidence to be presentedregarding the reasonable discoverability of the cause, or causes of action relied on.I agree with Mr Farmer that 3AC will not be prejudiced by the Court deferringconsideration and determination of limitation issues until the full scope of theproceeding is known and when the composition of the plaintiff group is determinedshould a representative action be permitted to proceed.Result[130] For the reasons set out above I find as follows:(a) The first defendant's protest to jurisdiction as regards the plaintiffs'first, fifth and sixth causes of action succeeds and is upheld.(b) The plaintiffs have shown that they have a good arguable case againstthe first defendant in relation to the second, third, and fourth causes ofaction which the Court should hear and determine. The first defendant'sprotest to jurisdiction in respect of those causes of action fails and isdismissed.Costs[131] As both parties have been successful in part, I make no order for costs. Costsshall lie where they fall._____________Paul Davison J