The importance of the Code Compliance Certificate – Campbell & Campbell v Auckland City Council

June 1, 2011

The High Court decision of Campbell considers the significance of the issuing of a Code Compliance Certificate by the Council, and what potential liability flows where this is wrongly issued by the Council.

 

This proceeding concerned a leaky home that was bought by Mr and Mrs Campbell in March 1999.  The claim brought against Council was for the negligent issuing of a Code Compliance Certificate (CCC).  The issuing of the consent, and all relevant inspections including the final inspection had been carried out more than ten years before the proceedings had been brought by the Campbells.  So the sole basis that they could allege negligence against the Council was on the basis of the negligent issue of a CCC.

 

This hearing was an interlocutory one only, and arose out of the Council bringing a summary judgment application against Mr and Mrs Campbell.  In particular the Council argued among other matters:-

  • The concept of general or community reliance does not apply to certificates;
  • the Campbells cannot argue specific reliance upon the Certificate, and therefore its issue is not causative of any loss.

The onus was upon Council to show that the Campbells could not succeed in any action pleaded as it was a summary judgment application by it.

 

Community reliance on certificates.

On this argument, the Court ruled that the effect of a CCC is that it is certification on behalf of Council that all its obligations have been fulfilled.  It held that it is an assurance of performance.  It confirms that it has occurred.

At paragraph 11 Associate Judge Christiansen states:-

“If it is the Council’s contention that the Certificate is a somewhat formal document to confirm that only previous inspections and consents have been done/given, then I think that submission is wrong.  It is certification, it gives certainty, that a territorial authority’s obligations have throughout been attended to.  Its existence is important to those who rely upon it.  It is a document by which Council’s obligations in connection with the actions certified, can be judged”. 

 

The Court ruled that the Campbells were entitled to rely on the Council, and where a CCC had been issued negligently, the Campbells were entitled to the losses suffered in respect of that negligent act.

 

Was the CCC causative of any loss?

The Council argued that the Campbells were committed to purchasing the property before the CCC was issued, thus no loss had flowed from the issue of the CCC as they suffered loss on the date the sale went unconditional.  Further they argued that the obligation to supply a CCC prior to purchase was not a condition precedent to the sale proceeding.

 

This submission was quickly dismissed by the Court.  Prior to the settlement proceeding the Campbells had received an assurance from Council that a CCC would be issued in respect of the house.  There was in existence a Certificate Memorandum recording that the property had passed a final inspection on 30 March 1999.  He also considered that the supply of the CCC was a condition of the finance, and the sale was in turn conditional on finance being approved.  So in effect, the sale was conditional on this CCC being issued, and the Campbells together with the Bank had the assurance this would be issued, by way of a representation by a Council Officer, together with a Certificate Memorandum stating that the house had passed its final inspection.

 

In conclusion the Court ruled that there was in fact on the evidence, an arguable claim against Council, based upon the negligent issue of the CCC.  The summary judgment application was dismissed.

 

This case importantly states that a CCC is not just a certification of the Council work that has gone before it, and where it has been negligently issued, Council will attract liability.