North Shore City Council v Body Corporate 188529 (Sunset Terraces)
Jurisdiction | New Zealand |
Judge | Elias CJ,Blanchard,Tipping,McGrath,Anderson JJ,Tipping J |
Judgment Date | 17 December 2010 |
Neutral Citation | [2010] NZSC 158 |
Docket Number | SC 27/2010 |
Court | Supreme Court |
Date | 17 December 2010 |
AND
AND
AND
AND
[2010] NZSC 158
Elias CJ, Blanchard Tipping McGrath and Anderson JJ
SC 27/2010
SC 28/2010
IN THE SUPREME COURT OF NEW ZEALAND
Appeal against a Court of Appeal decision which held the appellant Council liable in negligence in the discharge of its statutory duties regarding two multi-unit residential developments — whether Invercargill City Council v Hamlin should be followed — whether liability should be restricted according to the form of ownership or type of residence — whether a body corporate could sue for damage to common property — whether a duty was owed to successive owners where the cause of action had already accrued to the original owner — whether a duty was negated by the involvement of architects and other consultants — whether a duty of care was negated by the absence of a Code of Compliance Certificate — whether the Council's liability was negated by the opportunity for an intermediate inspection (LIM report).
D J Goddard QC, D J Heaney SC, S A Thodey and S B Mitchell for Appellant
J A Farmer QC, M C Josephson and G B Lewis for Respondents
S C Price and I J Stephenson for 7th and 8th Named Second Respondents in SC 27/2010
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A The appeals are dismissed.
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B The respondents represented by Mr Farmer QC are awarded costs against the appellant in the sum of $40,000; those represented by Mr Price in the sum of $15,000, plus disbursements in each case to be fixed if necessary by the Registrar.
Para No | |
Elias CJ | [1] |
Blanchard, Tipping, McGrath and Anderson JJ | [13] |
Territorial authorities control building in New Zealand under statutory duties conferred for the protection of building users. 1 The North Shore City Council in effect invites the Court to hold that it owed no duty of care to building owners for discharge of its statutory responsibilities of inspection and approval in claims to recover loss in value of the building or the cost of repairs. The effect of such holding would be to depart from the 1996 Privy Council decision on appeal from New Zealand in Invercargill City Council v Hamlin. 2 It would overturn the line of authority 3 followed by New Zealand courts in respect of builders since Bowen v Paramount Builders (Hamilton) Ltd 4 in 1976 and in respect of the supervisory
The Council appeals from findings in the High Court, 7 affirmed on appeal by the Court of Appeal, 8 that it is liable to the owners of units in two residential apartment blocks, “Sunset Terraces” and “Byron Avenue”, for their losses due to water damage resulting from faulty construction which would have been identified had the Council performed its statutory duties of inspection and consent with reasonable care. Some of the owners bought from the developer of the complexes. Others purchased from the original purchaser. Some are owner-occupiers. Others have let the apartments, in some cases intending to take up occupancy themselves at a later stage, in other cases because they have bought the apartments as investments for letting rather than to occupy personally. In the “Byron Avenue” appeal, there is a claim by the Body Corporate for damage to common property.
I have had the advantage of reading in draft the reasons of Tipping J, which allows me to summarise my reasons for reaching the same conclusions. I, too, consider that the New Zealand authority confirmed in Hamlin is correct and should continue to be followed. Liability to home-owners for loss of value or repair costs in respect of faulty building work, negligently passed by Council inspectors, has been imposed on territorial authorities with statutory responsibilities to supervise building for more than thirty years. Such liability fits within the wider framework of responsibility in negligence described in South Pacific Manufacturing Co Ltd v5Mount Albert Borough Council v Johnson[1979] 2 NZLR 234(CA).6Dutton v Bognor Regis Urban District Council[1972] 1 QB 373 (CA).7Body Corporate 188529 v North Shore City Council[2008] 3 NZLR 479 (HC); Body Corporate No 189855 v North Shore City Council HC Auckland, CIV-2005-404-5561, 25 July 2008.8North Shore City Council v Body Corporate 188529 [Sunset Terraces][2010] NZCA 64, [2010] 3 NZLR 486; O'Hagan v Body Corporate 189855 [Byron Avenue][2010] NZCA 65, [2010] 3 NZLR 445.New Zealand Security Consultants & Investigations Ltd 9 and applied in relation to duties arising out of a background of statutory responsibility by this Court in Couch v Attorney-General. 10 In addition, recognition of such liability to successive owners (whether for negligent inspection or for the negligent construction itself by the builder) is consistent with the questioning of a requirement of privity in cases where successive ownership of apparently durable constructions or products is usual. 11
The position taken in New Zealand in relation to both aspects (liability of territorial authorities and liability to successive owners) is similar to that reached in Canada. 12 It is also consistent with the approach to negligence taken by the English Court of Appeal in Dutton and by the House of Lords in Anns v Merton London Borough Council 13 In respect of the liability to successive owners, it is comparable with the liability of builders in some jurisdictions of the United States, arrived at in part by adaptation of the law of product liability. 14
In the United Kingdom and in Australia a more restricted view of liability in negligence for loss of value or the cost of repairs has been taken in more recent decades. In the United Kingdom, liability for such loss has been rejected in relation to both builders and territorial authorities. 15 In Australia, the liability of builders
The decision in Hamlin itself is likely to have settled and confirmed such expectations in the fifteen years since it approved the pre-existing New Zealand case law. The liability of the Council to the plaintiffs in these appeals entails no extension of established principle. Nor do the changes to the legislation governing building provide justification for revisiting the New Zealand case law. The Building Act 1991 was considered by the Court of Appeal and the Privy Council, although not applicable to the case in issue. I agree with the assessment by those Courts that the Act is not inconsistent with continued common law liability when territorial authorities are negligent in carrying out their responsibilities of inspection and control.
In agreement with Tipping J, I do not consider it would be principled to introduce restrictions on the liability of territorial authorities according to the form of ownership, the type of residence, or the value of the building. While in Hamlin in the Court of Appeal, Cooke P in describing the facts of the case referred to the property in issue as “a comparatively modest one-storey suburban house”, 21 the reasoning in the Court of Appeal and the Privy Council does not suggest any limitation upon the principle of liability according to these circumstances. Indeed,
It was suggested in argument in this appeal that in larger developments it may be expected that architects, engineers, and other consultants are likely to be engaged and that purchasers are more likely to rely on such experts than on the inspection and controls under the Building Act. That there may be overlapping duties of care owed by different potential defendants, including architects and engineers, is however no answer to the Council's liability for its own negligence. Apportionment of responsibility may be sought where available. And in some cases questions of reliance may bear on whether any breach was causative of loss in fact.
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