Body Corporate 160361 v Bc 2004 Ltd and Bc 2009 Ltd

• Jurisdiction: New Zealand
• Judge: Whata J
• Judgment Date: 31 July 2015
• Neutral Citation: [2015] NZHC 1803
• Docket Number: CIV-2011-404-4890
• Court: High Court
• Date: 31 July 2015

Between

Body Corporate 160361

First Plaintiff

Body Corporate 160362

Second Plaintiff

Fong Hong Yuen & Others

Third Plaintiffs

and

Bc 2004 Limited And Bc 2009 Limited

First Defendants continued over….

Andrews Property Services Limited

Second Defendant

Auckland Council

Third Defendant

Pbs Distributors Limited

First Third Party (In Liquidation)

FaÇAde Design Services Limited

Second Third Party

Ronald Charles Hanley

Third Third Party

John Lukaszewicz

Fourth Third Party

[2015] NZHC 1803

CIV-2011-404-4890

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

Appearances:

M C Josephson, G B Lewis, M L Gibson for First, Second and Third Plaintiffs

D A Cowan and J D McBride for Second Defendant (Andrews Property Services Ltd)

S A Thodey, K M Parker and T C Wood for Third Defendants (Auckland Council)

Fourth Third Party in Person

JUDGMENT OF Whata J

Whata J

This judgment was delivered by Justice Whata on 31 July 2015 at 4.00 p.m., pursuant to

r 540(4) of the High Court Rules

Registrar/Deputy Registrar Date:

Table of Contents

	Para No
PART ONE: INTRODUCTION	[1]
The defects	[3]
The live issues	[5]
PART TWO: BACKGROUND	[8]
Investigation, tender and recommendation	[9]
Onsite works commence and approach to rust	[19]
Application for building consent	[20]
Processing of application	[21]
Consent granted	[25]
The Overclad installation	[30]
Only limited repairs undertaken	[33]
Inspections	[34]
Code compliance process	[35]
Settlement of original claim with the Council	[41]
Prendos review	[45]
PART THREE: LIABILITY	[48]
The Claims against Babbage	[48]
Who is Babbage?	[50]
Was the Overclad solution conceptually sound?	[51]
Were the design details inadequate?	[53]
Was Babbage obliged to survey the building for water damage prior to the
installation of the Overclad?	[54]
Did Babbage fail to secure the proper survey of the building?	[56]
Did Babbage undertake to repair and or remove all damaged elements?	[61]
Did Babbage properly assess the suitability of the structure?	[62]
Was there structural failure?	[64]
Was the Prendos remedial solution justified?	[67]
Did Babbage fail to secure the proper installation of cladding on the Northern
Elevation?	[75]
Summary of findings on supervision	[76]
What are the losses attributable to Babbage's failures?	[84]
Result on Babbage's liability	[86]
The Claims against APS	[87]
A preliminary pleading issue	[89]
The nature of APS's duty of care to the Plaintiffs	[92]
Did APS install an appropriate remedial system?	[107]
Did APS undertake to BC1 to identify and remove all damaged elements?	[108]
Did APS fail to identify or fail to advise Babbage of any obvious defects?	[110]
Was APS obliged under the Building Act 2004 to require a survey of the building
in accordance with SW1-A-1?	[114]
Did APS install the Overclad with the incorrect screw fixings?	[120]
Did APS fail to comply with SW6-A-10?	[121]
Did APS breach an implied duty to install the cladding in a proper
workmanlike manner?	[124]
Did the failure to comply with SW6-A-10 (if any) make a material difference?	[126]
Did APS issue a flawed producer statement?	[129]
Is APS liable for the poor workmanship on northern columns?	[133]
What losses are attributable to APS's failures?	[134]
Result on APS's liability	[138]
The Claims against the Council	[139]
What was the nature and content of the Council's duty to the Plaintiff?	[141]
Did the Council have a proper basis to issue building consent?	[145]
Was a survey of existing damage required by the building consent as granted?	[154]
Did the Council have the power to impose a condition requiring survey?	[162]
Were the works properly inspected before the Council was satisfied that the
work was Code compliant?	[164]
Was it reasonable to rely on the producer statement process?	[165]
Did the Council have sufficient information to issue code compliance?	[166]
Did the Council's failures materially contribute to the Plaintiffs’ losses?	[174]
Summary of outcome of claims against the Council	[176]
The Cross and Other Claims	[177]
Joint/concurrent tortfeasor	[180]
The direct claim by Council: the flawed producer statements from APS	[182]
Negligent Misstatement and the FTA framework	[184]
Were the statements misleading?	[190]
Did Ms Watkinson in fact rely on the statement?	[191]
Were the statements causative of the claimed loss?	[193]
What is the proper apportionment of the losses for misleading conduct?	[195]
Did Mr Lukaszewicz mislead the Council?	[198]
The limitation issue	[203]
The Council's affirmative defences	[210]
Was there accord and satisfaction?	[212]
Is the present claim time barred?	[215]
Contributory negligence	[216]
Mr Dobson E3	[219]
Mr Petersen G5	[220]
Ms Seto E5	[221]
Discount on sale	[222]
PART FOUR: QUANTUM	[225]
General damages	[227]
Consequential losses	[228]
Compensatory damages	[230]
The proper measure of compensatory damages	[232]
The 2005/2006 owners: standing to sue	[236]
Quantum of loss	[237]
Compensatory damages	[237]
The wasted costs	[238]
The repair bill	[241]
The increased costs	[245]
The net sum	[246]
Northern column and elevation repair	[247]
Body corporate fees	[248]
General damages	[249]
Losses on units A3, C4 and D4	[250]
The purchasers’ losses	[252]
Consequential losses	[254]
PART FIVE: OUTCOME	[255]
Babbage liability	[256]
APS liability [260]	[260]
The Council	[264]
Mr Lukaszewicz	[268]
Final quantum	[269]
Costs	[272]
Annexure A – Observations at 3 September 2014
Annexure B – The Eterpan Literature
Annexure C – Plan A601

Did the Council's failures materially contribute to the Plaintiffs’ losses? [174]

Summary of outcome of claims against the Council [176] The Cross and Other Claims [177]

Joint/concurrent tortfeasor [180]

The direct claim by Council: the flawed producer statements from APS [182]

Negligent Misstatement and the FTA framework [184]

Were the statements misleading? [190]

Did Ms Watkinson in fact rely on the statement? [191]

Were the statements causative of the claimed loss? [193] What is the proper apportionment of the losses for misleading conduct? [195] Did Mr Lukaszewicz mislead the Council? [198]

The limitation issue [203]

The Council's affirmative defences [210]

Was there accord and satisfaction? [212]

Is the present claim time barred? [215]

Contributory negligence [216]

Mr Dobson E3 [219]

Mr Petersen G5 [220]

Ms Seto E5 [221]

Discount on sale [222]

PART FOUR: QUANTUM [225]

General damages [227]

Consequential losses [228]

Compensatory damages [230]

The proper measure of compensatory damages [232] The 2005/2006 owners: standing to sue [236]

Quantum of loss [237]

Compensatory damages [237]

The wasted costs [238]

The repair bill [241]

The increased costs [245]

The net sum [246]

Northern column and elevation repair [247]

Body corporate fees [248]

General damages [249]

Losses on units A3, C4 and D4 [250]

The purchasers’ losses [252]

Consequential losses [254]

PART FIVE: OUTCOME [255]

Babbage liability [256]

APS liability [260]

The Council [264]

Mr Lukaszewicz [268]

Final quantum [269]

Costs [272]

Annexure A – Observations at 3 September 2014

Annexure B – The Eterpan Literature

Annexure C – Plan A601

PART ONE: INTRODUCTION

1 The Fleetwood Apartments leaked. On the advice of Babbage Consulting Limited 1 (Babbage) the owners approved the installation of an “Overclad” rain shield cavity system to protect the apartments from water damage. Andrew Property Services Limited (APS) was retained to undertake the works. The Auckland City

Council (as it then was) granted building consent for the installation. APS then installed the Overclad, with assistance from Babbage and Cladding Systems Limited (CSL). Messrs Lukaszewicz and Hanley were then directors of CSL. Mr Hanley was also a director of FaÇade Design Limited. They provided advice that the Overclad system complied with building code. The Council granted code of compliance in September 2006. By August 2011 cracks in the Overclad sheets were noted and a report from Prendos identified underlying weather tightness damage. It recommended complete removal of the Overclad, pre-existing cladding and steel framing. The remediation works are just about to be completed.

2 The Bodies Corporate 160361 and 160362 (BC1 and BC2) together with the past and present owners of the apartments (the Plaintiffs) sue Babbage, APS and the Auckland Council for the full cost of the latest round of remediation together with general damages.

The defects

3 The pleadings allege specified defects in the following terms:

• 16. The Remedial Works to the Fleet Street apartments were constructed with deficiencies including but not limited to the following:

  • (a) the use of the overclad fibre cement cladding system as a repair solution was inappropriate as:

    • (i) The overclad system was not suitable for use over an unsound lightweight substrate;

    • (ii) The repair solution did not fully identify and remediate the existing damage.

• (b) The fixing of the overclad fibre cement cladding system was inadequate in that:

  • (i) There were an insufficient number of...