Brichris Holdings Ltd v Auckland Council

• Jurisdiction: New Zealand
• Judge: Miller J
• Judgment Date: 16 August 2012
• Neutral Citation: [2012] NZHC 2089
• Docket Number: CIV-2011-404-7973
• Court: High Court
• Date: 16 August 2012

Under the Weathertight Homes Resolution Services Act 2006

In The Matter Of an Appeal pursuant to s 93 of the Weathertight Homes Resolution Services Act 2006

Between

Brichris Holdings Limited

Appellant

and

Auckland Council

First Respondent

and

Allan Forster Irwin

Second Respondent

and

Dean Chandler

Third Respondent

and

Wayne John Mcdonnell

Fourth Respondent

and

Brent Michael Barrett

Fifth Respondent

and

Igor Arakelian

Sixth Respondent

and

Jan Ponichtera

Seventh Respondent

[2012] NZHC 2089

CIV-2011-404-7973

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

Appeal from Weathertight Homes Tribunal decision removing the Auckland Council as a respondent to appellant's claim for compensation concerning two leaky townhouses — appellant was a family company which had subdivided a property and built townhouses — intention was that family members would live in them but they ended up renting them out — Tribunal concluded appellant was a developer but did not explain why it had discounted the explanation as to why the appellant was not a developer — whether the appellant could be said to be developer — whether the claim against the Council was untenable and should be struck out.

Counsel:

D K Wilson for Appellant

F Divich for Auckland Council

JUDGMENT OF Miller J

Miller J

1 Brichris Holdings Limited brings this appeal from a decision of the Weathertight Homes Tribunal removing the Auckland Council as a respondent to its claim for compensation concerning its two leaky townhouses.

2 The Tribunal reasoned that Brichris was the developer of the townhouses and a local authority owes no duty of care to a developer. 1 Brichris says that the Tribunal was wrong to characterise it as a developer, and argues that its claim ought not to have been struck out in limine.

The procedural setting

3 The Tribunal's decision responded to an application by the Council under s 112 of the Weathertight Homes Resolution Services Act 2006. That section provides that the Tribunal may remove a party from proceedings if the Tribunal thinks it fair and appropriate in all the circumstances to do so.

4 The parties agree that the question is whether the claim against the Council is untenable, and that when answering that question the Tribunal might consider not only the pleadings but also other documents filed and evidence for and against the removal application. 2

5 In this case the record included assessors' reports and several affidavits. For the Council, Malcolm McCluskey swore an affidavit attaching substantial parts of the Council's file and reciting the hearsay claims of other respondents about the role played by one of Brichris's directors, Brian Davis. For the claimant, affidavits were sworn by Mr Davis and Keith MacKinlay and Pamela Clews. The latter witnesses deposed that Mr Davis is a jeweller rather than a builder or developer, and Mr Davis explained how the townhouses came to be developed and what role he played.

6 The Tribunal had all of this material before it but the application was decided on the papers, so allegations in the affidavits could not be tested. Counsel agree that

oral evidence and cross-examination will probably be required at the substantive hearing in the Tribunal

7 The Tribunal's decision was a final determination under the Act, and an appeal lies on law or fact. 3

The narrative

8 The following narrative is drawn from the affidavits, principally that of Mr Davis. Counsel agree that the Tribunal might accept his evidence at the hearing. Put another way, it was not suggested that I should discount his evidence on the ground that it is inconsistent with contemporaneous documents or otherwise lacks credibility.

9 In September 1997 Brian and Christine Davis signed an agreement to buy 419 Beach Road, Mairangi Bay, from New Zealand Post. The site contains a former Post Office. Mr Davis is a jeweller and Mrs Davis a clothing retailer. Both had existing businesses at Mairangi Bay. They bought 419 Beach Road because they wished to fit out and operate the existing building as a fashion boutique. For that purpose, according to Mr Davis, they formed the appellant, which took title to the property in November 1997. Brichris is an amalgam of their forenames.

10 However, the Davis's soon decided to build townhouses on the property, intending that they and members of their family would live there. They have an adult daughter, Jody, who is severally handicapped and needs 24-hour care, and another daughter, Lisa, who assists Christine when required with caregiving and the boutique. The Davis's envisaged that they and Jody would live in one apartment, while Lisa and her husband might live in the other.

11 Mr Davis says that they engaged Peter Neeve, a planner, who handled the consent application and all communications with the Council. At his suggestion they sought permission to build four residential units, anticipating that the Council would

decline that application but look favourably on two townhouses, which was all they ever intended to build. That is what happened. The property was accordingly subdivided into three; that is, the original building and the two townhouses

12 Mr Davis next says that Brichris engaged a builder, Dean Chandler, who had built an extension to a previous family home. That project supplied the couple's only previous building experience. Mr Chandler recommended a larger firm, Irmac Builders Limited (now in liquidation), which in turn engaged Mr Chandler as its lead tradesman. Gascoigne and Associates, Architects, designed the townhouses and prepared the application for building consent, but they did not manage the construction. Mr Davis maintains that he did not manage it either, although he visited the site regularly. He accepts that he engaged various contractors, including a tiler, but others were subcontractors to the builder.

13 The Council issued a code compliance certificate for the townhouses on 4 April 2001. At about that time, Mr Davis says, the family decided not to live in them. He explains that they found the living areas too small and realised that because the townhouses are separated from the boutique Jody would be isolated from Christine throughout the day. At about the same time they learned that the District Plan was about to change, allowing an increase in the permissible building height: that meant they could build an apartment over the boutique. They seized the opportunity. When the apartment was completed in 2002 they moved into it and have lived there ever since. I understand they have never lived in the townhouses.

14 Brichris retains ownership of the townhouses, which are tenanted. The Davis's say they still have no intention of selling; rather, their daughters will inherit the townhouses in due course.

15 Brichris lodged its claims with the Weathertight Homes Resolution Services in February 2010. It has been established that the townhouses are leaky buildings. They exhibit defects in roof and balcony edge parapets, window flashings, threshold heights above balconies, and rain head scuppers. The parties include individual builders and various subcontractors, including I am told the tiler engaged by Mr Davis.

The Tribunal decision

16 The Council moved on 30 August 2011 for an order removing it from the proceeding. The application was dealt with on the papers. The Council asserted that it owes no duty of care to a developer and Brichris Holdings was a developer as that term is used in the authorities. It conceded that Brichris still owns the townhouses, but what mattered was that Brichris bought the property, subdivided it, arranged the development, sought financial gain from the development, and actually received such gain through tenanting the townhouses.

17 The Tribunal accepted these submissions. It cited Mount Albert Borough Council v Johnson 4 for the proposition that a developer owes a non-delegable duty to an intended owner of a home to properly supervise the construction, and Body Corporate No 188273 v Leuschke Group Architects Ltd 5 for the proposition that a developer directs a project, invariably for its financial benefit, deciding on the contractors and taking responsibility for implementing and completing the development. It held that “a developer is a developer due to the aspects of its involvement in acquiring the land, changing its landscape, designing and commissioning the build of residential units for return”. 6

18 The Tribunal did not discuss the evidence, concluding simply that Brichris was a developer because it acquired the land and changed its configuration, and designed and caused the building and renovation of a complex of buildings, all for a financial return.

19 The Tribunal went on to hold that the Council owes no duty of care to a developer. For that proposition it cited Bell v Hughes, 7 Three Meade Street Limited v Rotorua District Council, 8 and Zhang, Liu and Boston Trustees 2949 Limited v4Mount Albert Borough Council v Johnson[1979] 2 NZLR 234 (CA).5 Body Corporate 188273 v Leuschke Group Architects Ltd (2007) 8 NZCPR 194.6Brichris Holdings Limited v Auckland Council & Ors WHT TRI 2011–100–16, 14 November 2011 at [27].7Bell v Hughes HC Hamilton A110/80, 10 October 1984.8Three Meade Street Limited v Rotorua District Council[2005] 1 NZLR 504.Waitakere City Council, 9 together with the Tribunal's own decision in Clearwater Cove Apartments Body Corporate 170989 v Auckland Council. 10

Difficulties with the Tribunal's findings of fact

20 The Tribunal evidently approached its decision on the assumption that it might not merely consider affidavit evidence but also resolve factual controversies. At the same time it did not explain why it discounted Mr Davis's evidence, as it must have done to decide that the townhouses formed part of a single development undertaken for financial gain. The Tribunal may have considered mistakenly that its findings were common ground or...