Roberts v Jules Consultancy Ltd

• Jurisdiction: New Zealand
• Judge: Thomas J
• Judgment Date: 17 December 2019
• Neutral Citation: [2019] NZHC 3342
• Court: High Court
• Docket Number: CIV-2017-485-130
• Date: 17 December 2019

UNDER the Fair Trading Act 1986

Between

Michael Douglas Roberts

Plaintiff

and

Jules Consultancy Limited

First Defendant

Jules Leloir

Second Defendant

[2019] NZHC 3342

Thomas J

CIV-2017-485-130

IN THE HIGH COURT OF NEW ZEALAND

WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE WHANGANUI-A-TARA ROHE

Damages, Fair Trading, Leaky Building — quantum and measure of damages for false representations concerning weather tight issues of an apartment complex — whether the purchaser had contributed to his loss by failing to obtain a building report — reasonably prudent purchaser — Fair Trading Act 1986 — Contributory Negligence Act 1947

Counsel:

B M Easton and H E T Thomson for Plaintiff

J K Mahuta-Coyle for Defendants

JUDGMENT OF Thomas J

(QUANTUM)

Table of contents

Introduction	[1]
The pleadings	[3]
Assessment of loss	[9]
Did Mr Roberts contribute to his loss?	[14]
Was Mr Roberts at fault in not obtaining a building report?	[15]
Background	[15]
Evidence at quantum hearing	[16]
Was it likely that a building report would have identified the defects in the Sirocco Apartments?	[36]
Was Mr Roberts at fault in not obtaining further information such as the building management reports or Body Corporate committee minutes before confirming the SPA unconditional?	[49]
Conclusion on fault	[56]
What reduction should be made to reflect Mr Roberts' contribution to the loss?	[57]
How should damages be assessed?	[62]
Market value of the Apartment	[69]
Unaffected Market Value	[72]
As Is Market Value	[75]
Market value of the Apartment at the time the Representations were made	[91]
Purchase price	[92]
2014 As Is Market Value	[93]
General damages	[108]
Other claims	[111]
Result	[112]

Introduction

1 In March 2014, the defendants made false and misleading representations concerning the characteristics of the Sirocco Apartments in Wellington (the Representations) in connection with the sale of Unit 812 (the Apartment). In my judgment of 25 March 2019, I concluded the defendants breached s 14 of the Fair Trading Act 1986 (the Act). 1 They were therefore liable to the plaintiff for his loss. This decision addresses the quantum of that liability and is to be read in conjunction with my judgment on liability.

2 The Representations were that, while the Sirocco Apartments had weathertightness issues, they related only to the walkways and had been rectified.

The pleadings

3 Jules Consultancy Limited is effectively the alter ego of Jules Leloir. 2 Mrs Leloir represented the defendants at the hearing into liability. I gave the defendants leave to file an amended statement of defence to include the affirmative defence of contributory negligence. This resulted in the defendants pleading: 3

36. The first and second defendants plead that with respect to any damages that may be awarded against them, that the plaintiff's contributory negligence be taken into account:–

• 1. In that he made a deliberate decision not to obtain a pre-inspection report (building report) before purchasing his apartment.

• 2. The Plaintiff failed to request his legal representative to request and obtain further information, such as Building Management Reports or Body Corporate Committee Minutes, from the Body Corporate Secretary Manager which may have alerted the Plaintiff to supposed weathertightness issues which may have affected his decision to purchase.

  …

4 The plaintiff has amended his claim a number of times in relation to damages. As at the date of the hearing into liability, the third amended statement of claim applied. The claim was based then on the plaintiff's share of the estimated cost of remedial works at $456,916 (plus other related matters). As at the date of the liability hearing, the evidence from the defendants was that any loss the plaintiff may have suffered had not yet crystallised. 4 The Body Corporate had not determined what, if any, action it would take in relation to the defects in the Sirocco Apartments and the options included demolition of the building.

5 Since the liability hearing, the estimated cost of repair has increased to $26,105,000 (GST inclusive). This results in what Timothy Truebridge, a registered valuer called by the plaintiff to give evidence, describes as “a negative outcome of $2,868,000”. In other words, it would be uneconomic to repair the Sirocco Apartments. This was recognised at an extraordinary general meeting of the Body Corporate on 10 September 2019. However, as yet, the Body Corporate has not made any decisions regarding the future of the Sirocco Apartments.

6 As a result, the fourth amended statement of claim seeks, as an alternative to remedial losses, damages calculated on the basis of a loss in value of the Apartment, claiming $671,830 loss in value, $11,460.62 for the special levies paid by the plaintiff to investigate the defects, moving costs of $2,702.50 and conveyancing costs on the sale of the Apartment of $1,500. 5 The total claimed is $687,493.12. The plaintiff also

claims general damages of $30,000 for stress, anxiety, inconvenience and loss of enjoyment

7 The defendants agree that diminution in value is the correct measure of damages in the circumstances. The defendants say, however, that any loss should be determined by reference to the price paid by Mr Roberts for the Apartment less its “true” market value in light of the weathertightness issues as at 20 February 2014, when Mr Roberts entered into the agreement to purchase the Apartment (SPA). The defendants also say the special levies to investigate the defects are too remote from the Representations and Mr Roberts has not suffered any loss in relation to moving or conveyancing fees.

8 Mr Roberts disputes that damages should be reduced because of any failure on his part, contending he acted reasonably in the circumstances by relying on the defendants' Representations. Alternatively, he says a pre-purchase building report (building report) would not necessarily have identified the defects in the Sirocco Apartments.

Assessment of loss

9 Section 43 of the Act provides that, where the Court finds a person (Person A) has suffered, or is likely to suffer, loss or damage by conduct of another person (Person B), that constitutes a breach of the relevant provisions of the Act, the Court may make an order directing Person B to pay Person A the amount of the loss or damage.

10 The Supreme Court described the discretion under s 43 as ultimately “a matter of doing justice to the parties in the circumstances of the particular case and in terms of the policy of the Act”. 6

11 The Supreme Court also said that, in applying s 43, the Court must ask itself whether the claimant's carelessness (if there were any) should be regarded as the sole or a contributory operative cause of the loss. 7

12 This consideration is assisted by the law on contributory negligence. The Contributory Negligence Act 1947 provides:

3 Apportionment of liability in case of contributory negligence

(1) Where any person suffers damage as the result partly of his own fault and partly of the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such extent as the court thinks just and equitable having regard to the claimant's share in the responsibility for the damage:

provided that—

• (a) this subsection shall not operate to defeat any defence arising under a contract:

• (b) where any contract or enactment providing for the limitation of liability is applicable to the claim, the amount of damages recoverable by the claimant by virtue of this subsection shall not exceed the maximum limit so applicable.

13 The test is an objective one, although expressed in terms of the person's own general characteristics. 8 The focus is on the causal potency of the act/omission in question, and moral blameworthiness/the degree of departure from the standard of the reasonable person. 9

Did Mr Roberts contribute to his loss?

14 I begin by addressing the question whether Mr Roberts contributed to his loss as this includes the factual narrative which is important to the overall assessment of loss.

Was Mr Roberts at fault in not obtaining a building report?

Background

15 In order to provide context to this part of the decision, I include an extract from my judgment on liability: 10

[38] On 22 January 2014, Mrs Leloir, as Body Corporate Secretary Manager for the Sirocco Apartments, issued the pre-contract disclosure statement, 11 for prospective buyers of the Apartment. As required, 12 the disclosure statement addressed whether the Apartment or common property was or had been the subject of a claim or proceedings in respect of water penetration. The statement said:

10. The unit or the common property is not currently, and has never been, the subject of a claim under the Weather tight Homes Resolution Services Act 2006 or any other civil proceedings in relation to water penetration of the buildings in the unit title development.

[39] The pre-contract disclosure included copies of the minutes of the Body Corporate AGMs for the years 2011 to 2013 inclusive. In respect of a motion to approve the annual accounts for the year ending 31 March 2013, the 2013 AGM minutes record an owner querying what was covered under general repairs. Mrs Leloir is reported as explaining that the budget line included “interior apartment repairs as a result of leaks from other apartments”.

[40] On 20 February 2014, Mr Roberts signed a conditional agreement to purchase the Apartment (the SPA). The purchase price was $397,000. The SPA specified that the purchaser did not require a building report. The SPA was...