Leaky Building Claim fails against Vendor, Council and Builder.

August 14, 2014

Timothy Bates and Katrin Saran Lee of Auckland law firm Legal Vision examine a recent High Court decision (Hooft Van Huijsduijnen & Anor v Woodley & Ors [2012] NZHC 2685) in which the High Court was required to consider (on appeal), a claim in negligence against the Council, the builder, and a claim for breach of warranty by the vendor.

 

Overview

This claim before the High Court was an appeal of a decision in the Weathertight Homes Tribunal. The Appellants (the owners) purchased a house in Papakowhai (“the house”) from the Woodleys (the vendors) in 2002. Soon after, they discovered dampness in certain areas of the house.

A claim was filed with the Tribunal against the vendors, the Porirua City Council, the builder, the architect, and the engineer.  Prior to the hearing by the Tribunal, the architect and the engineer were removed from the proceedings.  The Tribunal concluded that the defects to the house were not caused by any negligence of the builder and/or the Council.  The Tribunal also found that the Woodleys had not breached the warranties given to the Appellants, pursuant to the sale and purchase agreement (“the agreement”).  This decision was appealed to the High Court.

The issues before the High Court were:

  • Whether the builder was negligent for failing to construct the house in a proper workmanlike manner;
  • Whether the Woodleys breached the warranty in the agreement;
  • Whether the Council was liable in negligence on the basis that it failed to exercise the requisite skill and care:
    • To ensure that the building plans and specifications complied with the Building Code when it issued the building consent;
    • When it carried out inspections and issued the Code Compliance Certificate; and
    • When it failed to “establish and enforce an inspection system that would give effect to the Building Code”.

 

Breach of Warranty by Vendor

The Appellants argued that the fact the house leaked was a breach of clause E2 of the Building Code because the house within at least 50 years of construction had not provided adequate resistance to penetration by water ingress.

The High Court found that the house was built in accordance with the Act and Code at the time of its construction.  It concluded that the warranty in clause 6.2(5)(d) of the agreement did not impose an obligation on the vendor to warrant a standard of construction that did not exist at the time of the warranty.  The fact that it subsequently turned out that the house may not have been watertight because of unpredictable product failure, and/or the use of building techniques subsequently found to be inadequate, and/or subsequent events outside of the vendors’ control, did not constitute a breach of warranty.  The claim against the vendors failed.

 

Claim against the Council

The Appellants alleged that parts of the plans and specifications prepared by the architect were inadequate and in breach of the Building Code, and therefore the Council was negligent in failing to pick up on these inadequacies at the consent stage. The architect was previously removed from this claim as it was found that the architect was not negligent in drawing up the plans and specifications. Whilst the Appellant was not prevented from claiming against the Plaintiff for reasons of issue estoppel, it was ruled that it was an abuse of process by the Appellant to now claim that the Council was negligent in issuing the building consent based on plans and specifications that were previously found adequate by the Tribunal.

The High Court then considered the inspections carried out by Council.  It analysed each of the defects and found that the Council was not negligent for a number of reasons which included:

(a)    the house was built in accordance with the plans and specifications and there was no reason to doubt the efficacy of the plans and specifications;

(b)   there was no breach of the relevant BRANZ guide, or the manufacturer’s specifications at the time; or

(c)    the defects would not have been obvious to the Council inspector during inspections.

 

Claim against the Builder

The High Court upheld the Tribunal’s decision that the builder was not negligent as the house was constructed in accordance with the Building Code at the time and that the architect’s plans and specifications were followed.

 

Conclusion

This decision illustrates the point that in order to succeed in a claim against the Council and/or other parties involved in the construction process, it is not sufficient to establish that the house leaked.  It has to be shown that there was the requisite breach of the duty of care creating a construction defect from which loss/damage flows.

 

NOTE: This article is not intended to be legal advice (nor a substitute for legal advice).  No responsibility or liability is accepted by Legal Vision to anyone who relies on the information contained in this article.