“An oldie but a goodie” for Architects – Miller Construction Limited v Olsen & Anor; Netten (Third Party) – No Liability for construction defects.

February 7, 2017

In this month’s article (the first of 2017), I wish to review a decision of 1972 heard in the Auckland Supreme Court (the equivalent of the High Court today).  It has never been overturned by subsequent case law to the best of my knowledge.

It was a decision of Justice Henry and concerned a block of flats located at No. 59 Sarsfield Street, Herne Bay, Auckland.  The architect had contracted to design the 11 flats and supervise construction.  The fixed price quoted to construct these units was a mere $38,910.

Ultimately the flats were constructed, however some defects were identified by the Principal being Olsen.  The key defect identified was the squeaky floor boards on the top storey.  It was alleged by Olsen that the distance between the floor joists on the upper storey exceeded the specifications, the floor joists having been laid at 20 inch centres not 18 inch centres.  Furthermore Olsen claimed that the manner in which the floor had been constructed on the upper level resulted in an irritating squeaky noise, for the tenants below.  As a result of this defect plus some other identified defects, the Architect refused to issue his final certificate which ultimately would have triggered Olsen’s requirement to meet the final invoice rendered by the building company.

It was the building company that brought proceedings against the Principal in the first instance seeking payment of its final invoice.  Olsen in turn issued a counterclaim which represented the estimated cost to remedy the defects, and in response the Builder issued a third party claim against the Architect seeking that he indemnify it for any liability apportioned to it.  In time the Principal brought its own direct claim against the Architect.  It was alleged the Architect was negligent in failing to supervise the construction with reasonable professional skill or permitting the builder to construct the building in a manner that was not proper and workmanlike or according to appropriate standards of good building practice.  There was also a more specific allegation that the Architect had failed to provide for flashings thus allowing water to drip from the upper storey onto the doorways/windows of the flats on the lower floor.  The Court ruled that it was not negligent of the architect to provide flashings in the circumstances.  There was evidence that a design change was made at the request of the Council which had ultimately resulted in this defect.

As regards the upper floor defect, Justice Henry concluded that the Architect was not called upon to design more than a reasonable and functional wooden structure properly constructed with proper materials, based upon the applicable budget.  He had done that and the squeaky floor resulted from either poor materials or poor workmanship.  He went onto find that the Architect could not be held liable for the state of the floor.  Relying upon English authority he said the Architect had no responsibility to advise the builder how it was to carry out its building operations.  The Architect was under no obligation to tell the builder promptly that it was building something incorrectly.  He was well within his contractual rights to draw the squeaky floor boards to the attention of the builder when Olsen discovered it (near the end of the construction contract).  The Architect was not in breach of his duty by failing to discover the cause of the squeaking at the time construction of the upper floor was being completed.  The position may have been different had he ever passed the said work.  The function of the Architect (as agent of the Principal) was to make sure that in the end when the work was completed, the Principal had a building properly constructed, in accordance with the contract, plans, specification, drawings and any supplementary instructions given by the Architect.

I note the judgment remains silent on whether the said duty could have been owed to the Principal, although the judgment is dismissive generally as to any claim existing as between Principal and Architect.

It followed that the Architect was well within its rights to fail to withhold its final certificate pending the defects being remedied.  In conclusion, the Architect was completely exculpated from any liability, whereas the building company was found liable to the Principal for the upper floor defect.


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