North Shore City Council v Body Corporate

• Jurisdiction: New Zealand
• Judge: Baragwanath J,William Young P
• Judgment Date: 22 March 2010
• Neutral Citation: [2010] NZCA 64
• Docket Number: CA673/2008
• Court: Court of Appeal
• Date: 22 March 2010

BETWEEN

North Shore City Council

Appellant

and

Body Corporate 188529

First Respondent

and

Stephen Robert Devlin & Others

Second Respondents

and

Robert Henry Graham Barton and Kay Barton

Third Respondents

and

R F Coughlan & Associates

Fourth Respondent

AND BETWEEN

Body Corporate 188529

First Appellant

and

Stephen Robert Devlin & Others

Second Appellants

and

North Shore City Council

First Respondent

and

Robert Henry Graham Barton and Kay Barton

Second Respondents

and

R F Coughlan & Associates

Third Respondent

[2010] NZCA 64

Court:

William Young P, Arnold and Baragwanath JJ

CA673/2008

CA66/2009

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal against a decision of the High Court holding that North Shore City Council owed a duty of care to owners in a residential apartment development — whether the duty under Hamlin extended to owners of apartments in substantial complexes — whether Hamlin extended to cases where experts (architects and engineers) had been engaged — whether subsequent owners, investors and non-occupiers could sue — whether a subsequent owner could sue when some damage had crystallised at the time of purchase — Judgment to be read in conjunction with Byron Avenue [2010] NZCA 65.

Counsel:

D J Goddard QC, D J Heaney SC and G R Grant for Appellant

M C Josephson and A K Hough for First and Second Respondents other than Seventh and Eighth Second Respondents

S C Price and D D Watterson for Seventh and Eighth Second Respondents

No appearance for Third Respondents A G McLean for Fourth Respondent CA66/2009

M C Josephson and A K Hough for First and Second Appellants other than Seventh and Eighth Second Appellants

S C Price and D D Watterson for Seventh and Eighth Second Appellants

D J Goddard QC, D J Heaney SC and G R Grant for First Respondent No appearance for Second Respondents

A G McLean for Third Respondent

This decision may be cited as Sunset Terraces [2010] NZCA 64. CA673/2008

• A The Council's appeal is dismissed.

• B The cross-appeal in respect of the Blue Sky claims is allowed. If the parties are unable to agree as to the practical effect of this result they may file memoranda, the second respondents within 15 working days and the Council within a further 15 working days.

• C The respondents are entitled to costs against the Council for a complex appeal on a band B basis and usual disbursements. We certify for three counsel. If any issue arises as to apportionment among respondents we should receive memoranda.

• D Leave to apply to this Court for further directions or clarifications is reserved in terms of [132] of the reasons for judgment.

CA66/2009

• A The appeal in respect of the claim by Mr Devlin is allowed. B In all other respects the appeal is dismissed.

• C The Council and RF Coughlan & Associates are ordered to bear equally the amount of Mr Devlin's award and interest thereon.

• D We reserve costs. The appellants in CA66/2009, including Mr Devlin, may file their submissions within 15 working days and the Council and RF Coughlan & Associates may respond within a further 15 working days.

• E Leave to apply to this Court for further directions or clarifications is reserved in terms of [132] of the reasons for judgment.

JUDGMENT OF THE COURT

REASONS

Baragwanath J	[1]
William Young P	[134]
Arnold J	[205]

Baragwanath J

Table of Contents

	Para No
A Overview	[1]
B Duty issues	[9]
(a) Was Hamlin correctly decided and, if so, did the Building Act alter that position?	[9]
Context	[9]
CA673/2008: The owner/lessee appeals	[12]
CA66/2009: The designer appeal	[14]
The Council's argument	[15]
Primary submission: no duty of care for substantial development	[15]
(i) the general law comprising common law principles and the Building Act contribution	[15]
Discussion	[21]
Murphy and Hamlin	[26]
The Building Act	[32]
Primary submission: no duty of care for substantial development (ii) the Building Act and s 44A of the Local Government Official Information and Meetings Act 1987
Conclusion on primary submission	[77]
(b) Does the Hamlin principle extend to apartments and cases where experts (architects and engineers) have been engaged?	[78]
(c) May owners other than the initial owners sue?	[80]
(d) May investors in such properties who are not occupiers sue?	[83]
(e) May a subsequent purchaser sue when a prior owner has suffered loss?	[84]
(f) The Local Government and Official Information and Meetings Act 1987	[85]
C This Case
CA673/2008 summary: the owner/lessee appeals	[87]
The successful respondents in CA673/2008:	[90]
Mr Devlin/Devlin Properties Ltd	[90]
The Misses Turner	[93]
Mr Halford	[96]
Mr and Mrs Parkinson	[98]
Decision	[101]
The unsuccessful Blue Sky claims	[102]
Decision	[109]
CA66/2009: Designer appeal	[111]
Negligent preparations of the plans	[120]
Negligent issue of “certificates of practical completion”	[122]
Decision	[128]
Contribution	[129]
Costs	[130]
Leave to apply in both appeals	[132]
Postscript	[133]

A Overview

1 In the wake of the Building Act 1991 there has arisen a very large number of so-called “leaky building” claims requiring this Court to identify the principles to be applied by trial courts. Important among them are those concerning the liability of local authorities.

2 To date litigants have accepted the authority of the decisions of this Court and the Privy Council in Hamlin v Invercargill City Council. 1 On this appeal from a judgment against the North Shore City Council (the Council), Mr Goddard QC for the Council appellant recognised that this Court is bound by Hamlin and did not directly seek to persuade us that it was wrongly decided. But he reserved the right to challenge Hamlin in the Supreme Court. The Council's reason for seeking to limit the scope of Hamlin, which this Court has described as “exceptional” (the description in Te Mata Properties Ltd v Hastings District Council 2), is the overarching premise that the decision is wrong in principle. The context of that statement in Te Mata is provided below. 3

3 Although we are bound by Hamlin it is necessary for us to assess whether it should be confined to its facts, as Mr Goddard contends, or treated as stating principles extending beyond the modest house the subject of that case.

4 Do owners of apartments in substantial complexes built under the Building Act 1991 have the same right to claim damages against a local authority for carelessness in the performance of their function of monitoring construction as Hamlin held was available to the owner of a modest house? That is the major issue on this Sunset Terraces appeal from the judgment of Heath J, 4 and the related Byron Avenue appeal in which we are also giving judgment today. 5 My answer is yes.

5 The issues considered in this judgment are:

The judgment deals also with CA66/2009. This is an appeal by the respondents in CA673/2008 against the High Court's decision that the designer of the development was not negligent in preparation of the plans and in issuing documents described as “certificates of practical completion”.

• (a) Was Hamlin correctly decided and, if so, did the Building Act alter that position?

• (b) Does the Hamlin principle extend to apartments and cases where experts (architects and engineers) have been engaged?

• (c) May owners other than the initial owners sue?

• (d) May investors in such properties who are not occupiers sue?

• (e) May a subsequent purchaser sue when a prior owner has suffered loss?

6 In the Byron Avenue judgment we consider in addition:

• (f) May a council which has not issued a code compliance certificate be sued?

• (g) What is the appropriate outcome when there is fault on the part of purchasers, and what is the effect of the attribution of knowledge of problems to purchasers?

• (h) May a body corporate under the Unit Titles Act 1972 sue?

• (i) What is the effect on claims of the Local Government Official Information Act and Meetings Act 1987?

7 The present judgment and that in Byron Avenue deal also with the individual cases under appeal.

8 These reasons for judgment contain my analysis concerning the Sunset Terraces. We agree as to the result. Separate reasons are given by the other members of the Court.

B Duty issues

(a) Was Hamlin correctly decided and, if so, did the Building Act alter that position?

Context

9 The appellant in CA673/2008, the Council, was the territorial authority responsible for relevant building control functions under the Building Act 1991. Body Corporate 188529 (the Body Corporate), the first respondent, was constituted under the Unit Titles Act 1972 in respect of a 21–unit residential development in Mairangi Bay, Auckland, known as the Sunset Terraces Development. Proceedings were issued by the Body Corporate and, in respect of 17 of the units, by their owners or lessees, the second respondents, alleging negligence by the Council in connection with the performance of its functions under the Building Act.

10 In the High Court, Heath J held that the Council was liable to owners of four of the units. The claims by the Body Corporate and the other 13 plaintiffs failed. So too did a claim against the designer of the project. The developers were held liable in respect of all claims but are without means.

11 Heath J held that the Council owed a duty of care to anyone who acquired a property, the intended use of which has been disclosed as residential in the plans and specifications submitted with the building consent application, or was known to the Council to be for that end purpose. The duty is to be satisfied on reasonable grounds that a building consent should issue, to take...