Stephen MacKfall v Gordon and Kathryn Beattie Hc Wn

JurisdictionNew Zealand
CourtHigh Court
Judgment Date22 December 2011
Date22 December 2011
Docket NumberCIV 2011-485-82 CIV 2011-485-208


CIV 2011-485-82

CIV 2011-485-205

CIV 2011-485-208

In The Matter Of an appeal from a Determination issued in the Weathertight Homes Tribunal under the Weathertight Homes Resolution Services Act 2006

Stephen Mackfall
Gordon And Kathryn Beattie
First Respondent


Porirua City Council
Second Respondent


Stockland Limited
Third Respondent


David Keith Smithson
Fourth Respondent


Inspect It 1St Limited
Fifth Respondent


Grant Morrison Bennett
Sixth Respondent

V A Whitfield and R Hill for Appellant

P H Bremer and S J Baldwin for First Respondents

P A Robertson for Second Respondent

A Davie for Third and Fourth Respondents

Sixth Respondent in Person and for Fifth Respondent


This case concerns three appeals from a decision of the Weathertight Homes Tribunal. The subject matter of the proceedings is a house built in 2001 in the Whitby area of Wellington. In 2008, moisture issues emerged. The then owners of the house, Mr and Mrs Beattie, are the third registered owners of the property. They took the matter to the Tribunal to recover repair costs which are in the order of $380,000.


The arrangements for the building of the house were that the primary responsibility lay with a company then called Homecreators Limited. The principal of the company was Mr David Smithson. They are the third and fourth respondents respectively. 1 Mr Smithson was project manager. For the purpose of these proceedings, he accepted liability for any sub-contractors whom he had engaged.


The original owners of the property were Mr and Mrs Jones. They had a friend, a Mr Stephen Mackfall, who was the principal of a cladding company, Texturite Coatings Limited. Mr and Mrs Jones wanted their friend to do the cladding work, and to pay him directly. The arrangement that was reached was the cladding work would stand outside the main house contract. 2 Texturite Coatings Limited no longer exists and is not a party to the proceedings.


The third major player is the Porirua City Council which was of course responsible for giving building inspection approval at the various stages.


The fourth participant is Mr Grant Bennett, and his company Inspect It 1st Limited. He had nothing to do with the building, but did do a pre-purchase inspection for Mr and Mrs Beattie in 2007 before they purchased the property. Both are parties as an issue arises regarding the capacity in which Mr Bennett did the inspection.

The decision and the appeals

Before the Tribunal, there was a large measure of agreement over what the defects to the house were, and how much it would cost to fix. The hearing really concerned who was responsible for the defects, and to what extent.


A panel of experts identified the main defects, and also had an agreed position on the extent to which each defect contributed to the overall problem. The Experts’ Report also then identified a sequencing of the people who could be held responsible for each defect, without attributing responsibility within the people named. The Tribunal made the findings within each defect as to who was to be held responsible. Finally, the experts assessed the percentage that each defect contributed to the overall loss.


As a last step, the Adjudicator made an apportionment between the parties he held responsible for the loss:

  • (a) the Council's share of liability was assessed at 30 per cent;

  • (b) the builder's at 7.5 per cent;

  • (c) the cladder/plasterer at 62.5 per cent.


Perhaps the main issue on the appeal is the position of Mr Mackfall. He maintains that his company, Texturite Coatings, was the contracting party. He appeals the finding of the Adjudicator that the contract was with him personally. If he is successful on that appeal, the Council has cross-appealed, claiming that Mr Mackfall, in his capacity as director and agent of the company, became personally liable for the cladding shortcomings.


Second, Mr Bennett is the pre-purchase inspector. He also says the contract was with his company, not him personally. The Adjudicator disagreed, or alternatively held Mr Bennett to be nevertheless personally liable. The Adjudicator found that Mr Bennett was negligent in failing to draw the Beatties’ attention to the risks associated with a building of this type. However, the Adjudicator went on to hold that Mr Bennett was nevertheless not responsible for any of the loss suffered through the deficient building work. Accordingly, he was not directed to pay money to the claimants, nor was he included in the exercise that apportioned responsibility between the respondents. The Council appeals this, and is supported in the appeal by the builder, Mr Smithson.


Finally, there is an issue between the parties as to what the effect of the adjudication was. In particular, what is the individual liability of each of the three tortfeasors to the claimant’ The claimants say the joint tortfeasor rule means they can look to any of the liable respondents for the total loss. This is disputed.


I deal with the issues in turn, starting with Mr Bennett's position.

Issue one – the liability of the pre purchase inspector

Mr Bennett carried out a pre-purchase inspection. The Adjudicator held him to have been negligent in that he did not alert the purchasers to the risks involved with this type of property, namely that it was a house without eaves in a high wind zone. However, as noted, despite this finding of negligence, the Adjudicator held Mr Bennett not liable to pay compensation to the claimants. The Council appeals this outcome, and is supported by Mr Smithson.


Mr Bennett acts for himself. He did not file anything in relation to the appeal. He appeared in person and presented oral submissions which focussed on why he was not negligent rather than on the issue of liability if negligent. Pursuant to r 20.11(4)(a) of the High Court Rules, I consider it appropriate to allow this to happen.


The Tribunal's ruling presents challenges for an appeal. First, because Mr Bennett was held negligent for not commenting on something, the Tribunal made no findings on the main challenges to Mr Bennett, namely that the Inspection Report was at fault in what it did say. In this regard there were claims of negligence, under the Fair Trading Act 1986 that were not addressed, but which are again advanced on appeal. Second, the basis on which liability was found is not clear. Mr Bennett said the contract was with his company. The Tribunal seems to accept this since it says his liability was as director and employee. There is then, however, no analysis of why personal responsibility is imposed. Third, having found Mr Bennett negligent, the Tribunal makes no award against him because he did not cause the loss. This appears to be a reference to the building defects, but of course the alleged causative link between Mr Bennett's negligence and Mr and Mrs Beattie is that the Beatties would not have bought the house had Mr Bennett not been negligent. This question is not addressed.


In his submissions on behalf of the Council, Mr Robertson contends that:

  • (a) the contract was with Mr Bennett personally, and was breached; and/or

  • (b) Mr Bennett personally owed a common law duty of care and breached that; and/or

  • (c) Mr Bennett breached the Fair Trading Act 1986 in that he engaged in misleading conduct in trade, and thereby caused loss.


The essential proposition is that if Mr Bennett had done his job properly, the Beatties would not have bought the property and therefore they would not have suffered any loss. Mr Robertson invites the Court to attribute 25 per cent of the loss to Mr Bennett.


Having reviewed the material, I consider it is clear that the contract was with Mr Bennett personally, trading under a name “Inspect It 1st”. Mr Bennett's office was contacted by Mr Beattie who had been given Mr Bennett's card, probably by the land agent. The card refers to “Inspect It 1st” and thereafter gives Mr Bennett's personal details. There is a reference on the card to a website, but nowhere is it mentioned that the business is a company. The same is true of the Inspection Report itself. The only references are to the trading name and to Mr Bennett.


The inspection occurred within a very short space of time of being requested and the Report was then provided to Mr Beattie. By that stage, there was nothing to suggest that the Beatties were dealing with anyone other than Mr Bennett personally. Any reference to a company (which came through the invoice) occurred after the contract was entered into, and indeed after the work had been done. By then it is too late to suggest the company was the other party. Accordingly, I consider Mr Bennett's liability is to be assessed on the basis that he was contracting, and undertaking the work, in his personal capacity.


The specific finding of negligence focuses on what Mr Bennett failed to do, rather than on any defects in what the Inspection Report did say. Despite some expert evidence challenging the conclusions made in the Report, there is no finding at all by the Adjudicator on the contents of the Report and their accuracy and adequacy. However, on appeal the Council repeats its criticisms of the Report, and invites alternative findings of negligence and breach of s 9 of the Fair Trading Act 1986. It is convenient to look at these prior to considering the Tribunal's findings.


The main commentary on the Inspection Report came from two experts who were engaged in the proceedings primarily to comment on the damage, the causes, and the repairs needed. Mr Cooney was engaged by the Council, and Ms Johnson by the builder. Mr Beattie, the claimant, did not call evidence on this aspect of the case.


Mr Cooney said he was familiar with preparing...

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