Little v Warwick

JurisdictionNew Zealand
JudgeSmith
Judgment Date15 April 2019
Neutral Citation[2019] NZHC 822
CourtHigh Court
Docket NumberCIV-2017-404-2748
Date15 April 2019
Between
Andrea Louise Little and SDM Trustee Company Limited
Plaintiffs
and
Rodney Stephen Warwick and Sally Joan Macfarlane Warwick
Defendants

[2019] NZHC 822

CIV-2017-404-2748

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

Contract, Property — summary judgment application by defendant — sale and purchase of property — leaky building — misrepresentation by silence

Appearances:

G R Grant and M C Frogley for the Plaintiffs

W McCartney for the Defendants

JUDGMENT OF ASSOCIATE JUDGE Smith

1

The defendants apply for summary judgment on the plaintiffs' claims against them.

Background
2

The case arises out of an agreement for sale and purchase dated 27 November 2011 (the Agreement), under which the plaintiff Andrea Little (or nominee) agreed to purchase a residential property in Brookfield Street, St Heliers (the property) owned by a trust associated with the defendants (Mr and Mrs Warwick). The trust was the Rod and Sally Warwick Family Trust (the Trust), and its sole trustee, R & S Warwick Trustee Company Limited, was the registered proprietor of the property

3

The Agreement provided for the purchaser to obtain a building report and a LIM report, although the real estate agent acting for the vendor had already provided a LIM report to the solicitors acting for Ms Little. Ms Little obtained a building survey report from a company called Dwell Healthy Homes Limited (the Dwell report) on 29 November 2011, and on 1 December 2011 she instructed her solicitor to declare the agreement unconditional. Settlement was completed on 13 January 2012.

4

Ms Little says that, in August 2017, she learned that the house on the property (the dwelling) is leaking. She obtained expert advice, and was told that extensive repairs would be necessary, including a full re-clad.

5

Ms Little and her nominated co-purchaser, SDM Trustee Company (2007) Limited (SDM), commenced the present proceeding in November 2017. They contend that certain misrepresentations were made by or on behalf of Mr and Mrs Warwick, and that Ms Little was induced by those misrepresentations to enter into the Agreement.

6

The plaintiffs say that the misrepresentations were made either deceitfully by Mr and Mrs Warwick, or that they constituted negligent misrepresentations. In either event, they say that Mr and Mrs Warwick are liable to them for damages currently estimated at $500,759, plus consequential losses to be particularised before trial. They also seek an award of general damages in the sum of $25,000 or such other sum as the Court might deem just.

7

The vendor under the Agreement, R & S Warwick Trustee Company Ltd, has not been joined as a defendant. The Trust was wound up after the sale to the plaintiffs, and R & S Warwick Trustee Company Limited was removed from the Register of Companies on 15 June 2015.

8

Mr and Mrs Warwick contend that the plaintiffs' claims against them are not reasonably arguable, and they ask the Court to enter judgment on the basis of the affidavits filed, without the need for a trial. 1

The evidence of fact
The Warwicks
9

Mr and Mrs Warwick bought the property in 2007. It was intended to provide a home for them for the rest of their lives, although the property was put into the Trust on the advice of their lawyer.

10

Before they bought the property, they say that they asked the real estate agent selling it whether it was a leaky home. They say they were assured it was not: they were told that it was made of treated timber and had been built before the years in which leaky houses were being built.

11

Mr Warwick and Mrs Warwick say they had no reason to doubt that advice. However, they were clearly alert to at least some of the issues involved with leaky houses, and they understood that houses with plaster construction such as the dwelling required vigilance as to maintenance.

12

Mrs Warwick said in her evidence that she saw an advertisement in 2009 offering moisture tests for owners of plaster homes, and thought it would be a good idea to have the dwelling checked out. She and her husband were not aware of any leaks or problems of any sort at the time, and they were shocked when the company

that did the moisture testing reported that they had found some high moisture readings, and that the Warwicks should have some repair work done
13

At the time of her first affidavit Mrs Warwick could not remember the name of the company that did the moisture testing work in 2009, and that company's report was only located subsequently by solicitors acting for the plaintiffs. The report in question was provided by a company called The Imaging Specialists Limited, trading as “Drybuild Infrared Solutions” on 4 November 2009. Details of this report, which I will call “the Drybuild report”, are set out at paragraphs [49] to [59] below.

14

Mrs Warwick said that the testing company recommended a company called ECOS Homes (NZ) Limited (trading as ROK Build) to do the necessary work. Mr and Mrs Warwick contacted Mr Nigel Armstrong of ROK Build, and he came to the property and looked at the moisture report. He then told them what work needed to be done. They instructed him to proceed with the work.

15

In her first affidavit, Mrs Warwick said that Mr Armstrong assured the Warwicks that the work would involve targeted repairs and maintenance only, for which no building consent would be required. As he was a professional builder and had been recommended to them, Mr and Mrs Warwick accepted that advice.

16

The Warwicks proceeded with the work recommended by ROK Build. As Mrs Warwick put it in her evidence, they did not skimp on anything — they had ROK Build do everything that Mr Armstrong thought needed to be done.

17

Mrs Warwick said that she never saw any exposed timber framing, and she had no reason to think that any framing timber was replaced in the course of the work.

18

After the plaster work was done, Mr Armstrong recommended that the dwelling should be repainted with elastomeric paint, to give the plaster the best possible protection. That was done. Mr Armstrong also recommended replacement of the whole roof, and that was also done.

19

The targeted repair and maintenance work was carried out between December 2009 and January 2010. When it was finished, ROK Build provided a letter dated 1 February 2010 (the ROK Build report) confirming that the works referred to had been carried out to the standards required by the New Zealand Building Code. A copy of the ROK Build report was later made available to the plaintiffs when they were considering purchasing the property, and the plaintiffs say that they relied on it in making their decision to buy the property.

20

The Warwicks had intended to remain living in the dwelling as their permanent home, but Mr Warwick ran into health issues which resulted in his early retirement. Mr and Mrs Warwick decided to downsize, and they put the property on the market.

21

Mrs Warwick's evidence was that, although the house was in good condition, she and her husband wanted some peace of mind on that issue, so they telephoned Mr Armstrong at ROK Build. Mr Armstrong suggested that they have an inspection done by a company called Leakscan.

22

Mr Lineham of Leakscan came and did an inspection, probably in September 2011. The Leakscan inspection used infrared thermal imaging, which detects any higher moisture levels.

23

Mrs Warwick's recollection was that Mr Lineham noticed a small crack in the plaster, which the Warwicks had not noticed. He said they should get it fixed. He also recommended some work to two window junctions.

24

Mr and Mrs Warwick asked ROK Build to come back in to carry out those repairs, and Mr Armstrong arranged for his subcontractor to attend to the work. The Warwicks then got Mr Lineham back in to inspect the work, and he inspected the whole house. He provided a report dated 5 October 2011 (the Leakscan report), in which he summarised the condition of the dwelling as being “very good … with only a minor area of concern which is currently being repaired”.

25

In her evidence, Mrs Warwick said she did not understand why Mr Lineham had said that the minor area of concern was “currently being repaired”. She said Mr Lineham did two inspections, but only one report, and the report was prepared after ROK Build's subcontractor had been back to fix the issues identified by Mr Lineham.

26

Mrs Warwick said that when open homes were conducted by the Barfoot & Thompson agent who acted in the sale, Caroline Holden, the ROK Build report and the Leakscan report were both left out for prospective purchasers to look at. So was a warranty document which had been issued for the new roof.

27

The Warwicks never met Ms Little — all the negotiating was done by Ms Holden.

28

The Warwicks say they had no idea about any problems experienced by Ms Little with the dwelling until they were contacted by her solicitors in October 2017.

Mr Armstrong
29

Mr Armstrong said that he was a director of ROK Build (a division of ECOS NZ Homes Limited), which specialised in targeted preventive repairs on plaster houses.

30

Initially Mr Armstrong could not recall having seen the Drybuild report. However, when the Warwicks' lawyer showed him a copy of the Drybuild report, he noted that it was dated very close to the date his own work was commenced. He concluded that the Drybuild report probably was the report that he was shown at the time the ROK Build work was done.

31

Mr Armstrong arranged for a subcontractor, Mr Ian Chisholm, to do the remedial work. Mr Armstrong said he occasionally called in to check on progress and the quality of the work.

32

Mr Armstrong said that one of his visits to the property in the course of the repair work resulted from...

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