Obtaining a Code Compliance Certificate – More than just a Matter of Council Bureaucracy?

August 15, 2014

Timothy Bates and Katrin Saran Lee of Auckland law firm Legal Vision examine a recent High Court decision (Aldridge & Anor v Hamilton City Council & Anor [2013] NZHC 1784) in which the High Court was required to consider (on appeal), a claim in negligence against the Hamilton City Council (Council) and the building surveyor. However, this article will only examine the cause of action against the Council in negligence and negligent misstatement.

 

Overview

The Appellant, as trustees of the SL and KM Aldridge Family Trust bought a home (the house) from the trustees of the family trusts associated with the Boes (vendors). A CCC had not been issued for the house and the terms of the sale and purchase agreement excluded liability of the vendors for structural soundness.

The Appellant bought the house from the vendors around 2006. Following settlement of the sale, the Appellants set about to obtain a CCC for the house. The Council refused to issue a CCC. Invasive moisture testing was subsequently carried out and it was determined that there was non-compliance with the Building Code. The house has subsequently been totally reclad.

The Appellants filed a claim in the Weathertight Homes Tribunal on 7 July 2008 against the Council, the vendors, the building surveyor engaged by the vendors, and the parties involved in the original construction, seeking to recover the repair costs. The claim was dismissed by the Tribunal. An appeal to the High Court was partly successful and the case was referred back to the Tribunal. However, the Tribunal dismissed the claim and the Appellants lodged a second appeal to the High Court on the basis that the Council had been negligent in not identifying the defects during its inspections of 2000 and 2005. The Council was also criticized by the Appellants for failing to note in the Council file its reasons for not issuing the CCC.

 

Was Council Liable?

The Court held that the lack of identification of all the defects (on its site inspections on 27 January 2000 and 22 February 2005) which may have been able to be identified by visual inspection, did not breach the Council’s duty of care. In order for Council to issue a Code Compliance Certificate, it needed to be satisfied that the building complied with the Building Code. A CCC was never issued as the Council had not been satisfied of the house complying with the Building Code. Accordingly it was found that the letter sent by the Council to the vendors on 17 March 2006, which allegedly did not identify all visual defects, did not support an action in negligence as the Council made it clear that they did not have the expertise to assess whether the house was weathertight.

Furthermore, it was found that the oral communication between the Council officers and the vendors at the time of the auction, did not amount to negligent misstatement because the Council officers did not speak directly to the Appellant. Instead, the officers’ oral communication was made to the vendors directly, which was passed onto the Appellant third hand via email. The email was a hearsay statement upon which the Council officers did not have an opportunity to comment on, and therefore it could not form the basis of Council’s liability for negligent misstatement. The official Council position was recorded in its letter of 17 March 2006. As a result, the appeal was dismissed.

 

Conclusion

This decision illustrates that the process of obtaining a CCC is more than just a matter of navigating the bureaucracy, and if a CCC is not issued by the territorial authority, this is a good reason for a discerning purchaser not to proceed with a transaction.

 

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.