Saffioti v Ward

• Jurisdiction: New Zealand
• Judge: Asher J
• Judgment Date: 29 October 2013
• Neutral Citation: [2013] NZHC 2831
• Docket Number: CIV-2013-404-003390
• Court: High Court
• Date: 29 October 2013

In the Matter of an appeal against the decision of the Weathertight Homes Tribunal at Auckland

Between

Carl Santo Saffioti and Eija Marita Linden Saffioti

Appellants

and

Gregory Paul Ward and Kim Michelle Ward

First Respondents

Tony Heron

Second Respondent

[2013] NZHC 2831

CIV-2013-404-003390

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

Appeal from a Weathertight Homes Tribunal decision which held that appellant's claims against the previous owners of their leaky building and the building inspector failed — appellant said that respondent had breached the vendor warranties in the sale agreement that the building complied with the Building Act 1991, and that the building inspector had been negligent — first respondents had built the property but had no particular knowledge of or skill in building, and had used an architect and employed builders — they had also employed a building certifier, to carry out the certification process — no weathertightness issues evident after completion of the work or through the duration — whether the agreement required compliance with the Building Code — whether by signing the code compliance certificate the second respondent had assumed responsibility for compliance with the Building Code.

Counsel:

TJ Rainey for Appellants

S Grant for First Respondent

Second Respondent in person

JUDGMENT OF Asher J

Table of Contents

	Para No
Introduction	[1]
Lead up to the claim	[2]
The Tribunal decision	[5]
The Ward appeal
Introduction	[12]
Case law	[18]
Interpretation of cl 6.2(5)(d)	[24]
Subclause (b)	[45]
Breach	[57]
The Heron appeal	[72]
Result	[83]

Introduction

1 In 2004, Carl and Eija Saffioti purchased a home at 34 Wairere Avenue, Mt Albert. It proved to be a leaky building and was re-clad. The Saffiotis sought to recover the cost of that re-cladding by issuing proceedings in the Weathertight Homes Tribunal against a number of parties. Those parties included the first respondents Gregory and Kim Ward from whom they had purchased the property, and the second respondent Tony Heron, who had signed the code compliance certificate. Although they succeeded against some parties, the Saffiotis failed in their claims against the Wards and Mr Heron. This is an appeal against those two parts of the Weathertight Homes Tribunal decision. 1

Lead up to the claim

2 In 2002, Gregory and Kim Ward built a home for themselves at 34 Wairere Avenue, Mt Albert (the property). They had no particular knowledge of or skill in building. They used an architect and employed builders. There was a building consent for the work done, and after the work was completed they obtained a code compliance certificate (CCC). They employed Approved Building Certifiers Ltd (ABC), a building certifier, to carry out the certification process. One of the employees of ABC was the second respondent, Mr Heron. There were no weathertightness issues evident after completion of the work or through the duration

of the Wards' ownership of the property. There was no suggestion that they were aware of any problems

3 On 26 September 2004, the Wards and Saffiotis entered into an agreement for sale and purchase of the property to the Saffiotis for $600,000. The agreement was conditional on obtaining a LIM report and a satisfactory pre-purchase building report. These reports were obtained and did not contain significant adverse information.

4 The Saffiotis settled and occupied the property for almost five years without any leaking issues becoming apparent. Then, in June 2009, they experienced a leak in the lounge. On 26 November 2009, they made an application for an assessor's report under's 32 of the Weathertight Homes Resolution Services Act 2006 (WHRSA). In due course the Saffiotis re-clad their house (but not the roof). Ultimately this led to a hearing, the decision of the Weathertight Homes Tribunal (the Tribunal) and this appeal.

The Tribunal decision

5 Two building experts gave evidence before the Tribunal, an expert assessor Mr Noel Casey appointed under the WHRSA, and Mr Barry Gill, a registered building surveyor who gave evidence for Mr and Mrs Saffioti. It was Mr Gill's uncontradicted evidence, which was accepted by the Tribunal, that the defects which caused or contributed to the leaks in the house were as follows: 2

• A. The timber barge boards were imbedded within the EIFS cladding.

• B. The joinery penetrations lacked an adequate weathertight seal.

• C. The parapet cap flashings were ineffective.

• D. The apron flashings lacked a kick-out or appropriate means of diverting water away from the cladding.

• E. The service penetrations were not sealed.

• F. There were no saddle flashings provided at the parapet cladding junctions.

6 All of the defects arose from the original construction of the house and were present at the time of the CCC issuing on 16 April 2002, as well as when the agreement for sale and purchase between the Wards and the Saffiotis was settled on 8 December 2004. At the hearing, the experts agreed that a full re-clad of the house had been required save for the roof of the house or eaves replacing the former parapet caps. Mr Gill's evidence, which the Tribunal accepted, was that defect “B” on its own had required a full re-clad. With some windows there was no sealant between the sill and jamb flashings, and with others inadequate sealant. This defect was accentuated by a lack of correct drip detail at the base of the cladding. There was no dispute before the Tribunal as to the reasonableness of the amount spent on re-cladding of $281,588.87.

7 The Tribunal's decision covered a range of claims. The appeal is limited to two aspects of its determination, namely:

• • The decision to dismiss the claim against the Wards alleging a breach of the vendor warranties; and

• • The decision to dismiss the claim against Mr Heron alleging that as an employee of ABC he was negligent in issuing the building certificate in reliance on which the building consent was issued, and in issuing the code compliance certificate.

8 The Tribunal determined that the claim against the Wards turned on the interpretation of the warranties contained in cls 6.2(5)(b) and (d) of the agreement for sale and purchase. It concluded that the warranties did not extend to a warranty that there had been compliance with the Building Code when the house was built, or a warranty that the Building Code had been complied with in all respects. Therefore, the Saffiotis' claims against the Wards failed. The Tribunal's reasoning will be considered in greater detail later in this judgment.

9 The claim against Mr Heron was dismissed on the basis that although Mr Heron owed a duty to exercise due skill and care in performing his building control functions, there was no evidence that he had breached that duty of care or done any work in a negligent fashion.

10 I accept Mr Rainey's submission that this is an appeal by way of a rehearing and that the Court has the responsibility of arriving at its own assessment of the merits of the case. 3 The appellant bears an onus of satisfying the appeal Court that it should differ from the decision below. 4

11 There are in effect two separate appeals before the Court: the appeal against the claims against Mr and Mrs Ward, and the appeal against the claim against Mr Heron. They will be considered separately.

The Ward appeal

Introduction

12 Clause 6.2(5) of the agreement for sale and purchase read:

The vendor warrants and undertakes that at the giving and taking of possession:

…

• (5) Where the vendor has done or caused or permitted to be done on the property any works for which a permit or building consent was required by law:

  • (a) The required permit or consent was obtained; and

  • (b) The works were completed in compliance with that permit or consent; and

  • (c) Where appropriate, a code compliance certificate was issued for those works; and

  • (d) All obligations imposed under the Building Act 1991 were fully complied with.

  (emphasis added)

13 The form of agreement was the seventh edition of the Auckland District Law Society form. There is now an eighth edition and cl 6.2(5)(d) has been deleted.

14 Mr Rainey, who appeared for the Saffiotis, asserted that both cls 6.2(5)(b) and (d) were breached and that the Tribunal's decision to the contrary was in error. There are common themes running through his submissions on both cls 6.2(5)(b) and (d), and in the submissions of Ms Grant who appeared for the Wards. The principles on interpretation that are to be applied were not the subject of debate between counsel, and do not require elaboration.

15 As was observed by the Court of Appeal in Pyne Gould Guinness Ltd v Montgomery Watson (NZ) Ltd, the “best start to understanding a document is to read the words used, and to ascertain their natural and ordinary meaning in the context of the document as a whole”. 5 The natural and ordinary meaning of the words used by the parties must be understood in the proper context, not just of the document, but against the background facts. In that regard, the Court can look outside a written contract to ascertain from the background facts the objective intentions of the parties. 6 The background can be used as a cross-check or to assist in difficult interpretation points.

16 In this case, part of the immediate context is the Building Act 1991, which is referred to in cl 6.2(5)(d), and the New Zealand Building Code (the Building Code). 7 The Building Code was enacted under's 48, which provides for the making of regulations. Mr Rainey made submissions first in relation to cl 6.2(5)(d), and submitted that it must include the obligation under's 7(1) of the Building...