Palmer v Hewitt Building Ltd

• Jurisdiction: New Zealand
• Judge: Cooke J
• Judgment Date: 18 June 2021
• Neutral Citation: [2021] NZHC 1460
• Docket Number: CIV-2019-435-005
• Court: High Court

Between

Barbara Lynn Palmer

Plaintiff

and

Hewitt Building Limited

First Defendant

and

Mark Wilson Hewitt

Second Defendant

[2021] NZHC 1460

Cooke J

CIV-2019-435-005

IN THE HIGH COURT OF NEW ZEALAND

MASTERTON REGISTRY

I TE KŌTI MATUA O AOTEAROA

WHAKAORIORI ROHE

Building, Contract — claim for breach of statutory warranties arising under the Building Act 2004 or for breach of statutory duty and negligence — construction contract — personal liability of the second defendant director — assumption of responsibility — tort of breach of statutory duty — duty to comply with the building consent — builder's duty of care — impartiality of expert witnesses — Building Act 2004 — Building Code

Appearances:

P W Michalik for the Plaintiff

R P Conner and S J Martin for the Defendants

JUDGMENT OF Cooke J

Table of Contents

What happened?	[5]
Second cause of action: Breach of statutory duties	[22]
Statutory warranties	[25]
Breach of statutory duty	[32]
Third cause of action: negligence	[39]
Evidential issues	[41]
Recoverable loss	[42]
Expert evidence	[44]
Measurement of damages	[48]
Evidence on claim against first defendant	[51]
The builder's duty of care	[53]
Trevor Ivory — assumption of responsibility	[57]
Obligation to comply with the Consent not the Code — the Building Act 2004	[66]
Individual elements of disallowed claims	[81]
Water tank	[83]
South elevation cladding — Coloursteel not Abodo	[86]
Omitted roof	[91]
Roof eaves and fascia boards	[96]
Masport fireplace	[99]
Regency gas fireplace	[104]
Garage size	[108]
Concrete steps and base for gas cylinders	[110]
HySpan beams/girder truss	[113]
Unstable walls	[115]
Ceiling batts	[120]
Other omissions	[125]
Provisional sums and diminution of value	[128]
Conclusion on claims against first defendant	[133]
Individual elements where claims potentially upheld	[137]
Abodo cladding	[138]
Roof	[153]
Flashings to Coloursteel cladding	[161]
Roof support posts	[167]
Summary	[172]
Conclusion	[173]

1 In June 2016 Ms Barbara Palmer signed a fixed price building contract with Hewitt Building Ltd to extend and renovate a house that she had purchased on the outskirts of Masterton. She remained living onsite whilst the building works were undertaken. The building work was largely completed by December 2016 but a series of problems and disputes had emerged and continued to emerge through 2017 and 2018. The Masterton District Council issued a Notice to Fix deficiencies with the building on 19 October 2018, and at the date of trial no Code of Compliance Certificate has yet been issued.

2 Ms Palmer commenced these proceedings in 2019. They involve claims in contract against the contracted building company, Hewitt Building Ltd as first defendant, and additional personal claims against Mr Hewitt as the second defendant. Mr Hewitt is the owner and sole director of the first defendant. Shortly before trial the first defendant advised it was not defending the claims brought against it, such that those claims would proceed at the trial by way of formal proof. At trial Mr Hewitt confirmed it would not have the assets to meet the judgment sought against it. The trial has focused, therefore, on Mr Hewitt's personal liability to Ms Palmer.

3 Ms Palmer pursues two causes of actions against Mr Hewitt, namely:

• (a) A claim for breach of statutory warranties arising under the Building Act 2004, or for breach of statutory duty (the second cause of action); and

• (b) A claim in negligence (the third cause of action).

4 As against the first defendant the formal proof relates to its claims under the first and second causes of action.

What happened?

5 I will first briefly address the factual background to the claims, making factual findings where appropriate. I will not do so in detail as many of the background facts are not ultimately material to determining the plaintiff's claims. This is a domestic building project that has gone seriously wrong. By the time of the trial, at which both Ms Palmer and Mr Hewitt gave evidence, Ms Palmer regarded Mr Hewitt as incompetent, unreliable and dishonest, and Mr Hewitt regarded Ms Palmer as obdurate, unreasonable and vindictive. It is not the Court's function to adjudicate on these views. Some of the criticisms will be relevant to the findings that the Court needs to make, but the Court's ultimate function is to determine the disputes in accordance with law.

6 Ms Palmer was first introduced to Mr Hewitt in April 2015, and subsequently purchased the property she wished to renovate in June. She moved into the property in August. Concept designs were prepared in November. By this stage Ms Palmer began paying the first defendant for design work. Demolition work for the parts of the building that were to be removed began in about April 2016 although no contract had yet been signed at this stage. A fixed price building contract was prepared and presented to Ms Palmer in or around April 2016, although it was not signed by her until 1 June. The fixed price was $526,317.05 (GST included).

7 The contract was between Ms Palmer and the first defendant. Ms Palmer's earlier engagement with Mr Hewitt involved the suggestion that Design Builders (Wairarapa) Ltd would be the contracted building company. The first defendant was fully owned and controlled by Mr Hewitt, whereas Design Builders (Wairarapa) Ltd was a branch of a New Zealand group of which it was the Wairarapa representative. Mr Hewitt had been a 60 per cent shareholder in that company, with the balance owned by the group. I accept Ms Palmer's evidence that when the change in the contracting entity was raised by her, Mr Hewitt said that the change did not make a difference as he would still be the builder responsible for doing the works.

8 A building consent was issued by the Masterton District Council on 28 April 2016, and the work progressed following that time. I accept Ms Palmer's evidence that Mr Hewitt did not give her a copy of the consented plans. All that he provided her was six pages of earlier design plans which were conceptual in nature. I also accept her evidence that the consented plans were not retained on site in a manner that she could inspect them.

9 The plans pursuant to which the consent was granted were not of good quality. Mr Hewitt's own expert witness, Mr Sean Batchelor described them as “pretty poor”. In effect Mr Hewitt treated them as outlining the essence of what Ms Palmer wanted, but he would depart from them not only to deal with variations agreed with Ms Palmer, but also where he could save costs on the fixed price contract. This was part of Mr Hewitt's modus operandi through his company. If Mr Hewitt could achieve the building work in the consented plan in a different way from that in the plan that he thought that Ms Palmer would be happy with, and which the Masterton District Council would accept, he would seek to do so if it involved cost saving. In terms of variations from the building consent, and therefore the building contract, when he could personally do the variation work he would not arrange a contractual variation. He would also complete some works that should properly have been undertaken by one of the other trades. He would only arrange a formal variation if sub-contractors work was required which needed to be paid for. Otherwise he would treat it as part of the swings and roundabouts he was seeking to manage for the overall project through which he hoped to make a profit. As part of this process he would also seek to persuade the Masterton District Council that any departures from the consented plan should be able to be dealt with by a variation to the consent, or if he believed he could get away with the change without informing the Council he would keep the change to himself.

10 The disagreements between the parties began almost from the beginning. There was a disagreement about the signing of the contract, and there were other disputes about the standard of workmanship. For example, Ms Palmer did not like one of the tradespeople on site, and asked he not be involved in the project. After Mr Hewitt removed him there was an unfortunate incident where Ms Palmer's dog was taken, although it was later returned. I accept that Ms Palmer had reasonable grounds to suspect that the removed tradesman was to blame. By this stage the personal relationship between Ms Palmer and Mr Hewitt was strained.

11 By December 2016 much of the building work had been done, and Ms Palmer had by that point paid $542,988 — more than the fixed price because of variations and other elements. Mr Hewitt took the view that he had achieved practical completion, but Ms Palmer raised a series of concerns she had with the building work. There was agreement that some items needed to be fixed, and disagreement with others. Lawyers were first engaged from about this time.

12 On 8 May 2017 the Council undertook an inspection, and a number of items did not pass. A series of further problems then developed. In July 2017 the septic tank system flooded, and in August there was a problem with water in the pipes freezing. Both the gas fire and open fire had problems arising from faulty installation. In August the parties attempted mediation, but this failed. Later in October the property flooded because the stormwater disposal system did not appear adequate, and it was also identified that the toilets were incorrectly vented into the ceiling space.

13 A series of lists were exchanged of remedial works without agreement. Mr Hewitt attended to some of the works, but not all those that Ms Palmer raised. The relationship between the parties had completely...