University of Canterbury v The Insurance Council of New Zealand Incorporated

• Jurisdiction: New Zealand
• Judge: Asher J
• Judgment Date: 08 October 2013
• Neutral Citation: [2013] NZCA 471
• Docket Number: CA127/2013
• Court: Court of Appeal
• Date: 08 October 2013

BETWEEN

University of Canterbury

Appellant

and

The Insurance Council of New Zealand Incorporated

First Respondent

Christchurch City Council

Second Respondent

Body Corporate 423446 (Oxford Body Corporate)

Third Respondent

[2013] NZCA 471

Court:

Harrison, White and Asher JJ

CA127/2013

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal from a High Court decision which held that the second respondent, Christchurch City Council, could not by issuing a notice under s124 Building Act 2004 (“BA”) (Dangerous etc and earthquake-prone buildings: powers of territorial authority) require building owners to strengthen existing buildings to a capacity of up to 67 per cent of the current building code requirements — cross-appeal against the making of a second declaration that s124 BA enabled the council to require an owner to reduce or remove specific vulnerabilities capable of causing injury, death or property damage — policy of 67% strengthening was adopted by the council under s131 BA (territorial authority must adopt policy on earthquake-prone buildings) — issue arose as to criteria for assessing “earthquake prone buildings” under s122(1) BA (earthquake prone if (a) ultimate capacity exceeded in moderate earthquake and (b) would be likely to collapse) — whether the “and” in s122(1) BA was conjunctive so that to be earthquake prone a building had to both have its ultimate capacity exceeded and be likely to collapse — whether s124 BA empowered a territorial authority to issue a notice in relation to a building that was dangerous in an earthquake whether or not it met the definition of earthquake-prone — whether the second declaration was necessary.

Counsel:

T C Weston QC, D A Webb and D McBeath for Appellant

D J Goddard QC and T A Spinka for First Respondent

D J S Laing for Second Respondent

C A McVeigh QC and S T Cottrell for Third Respondent

• A The appeal is dismissed.

• B The cross-appeal is allowed and declaration two is quashed.

• C The appellant is to pay costs to the first respondent for a standard appeal on a band A basis together with usual disbursements. We certify for two counsel.

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by Asher J)

Introduction

1 In 2010, after the first Christchurch earthquake, the Christchurch City Council (the City Council) decided on a policy that enabled it to require building owners to strengthen existing buildings to a capacity of up to 67 per cent of the current building code requirements. The Insurance Council of New Zealand Inc (ICNZ) brought judicial review proceedings questioning the lawfulness of the policy. By a judgment delivered on 4 February 2013, Panckhurst J declared that the City Council could not require a building owner to take steps to strengthen a building to that extent. 1 Parts of the policy were struck out. That decision is not appealed by the City Council, but is challenged on appeal by the appellant, the University of Canterbury, a significant building owner in the Christchurch area, and another building owner, the Oxford Body Corporate. There is also a cross-appeal by ICNZ which relates to a second declaration that was made.

Background

2 The policy challenged in the proceedings was adopted by the City Council in accordance with the obligation placed on territorial authorities under's 131 of the Building Act 2004 (the Act) to adopt a policy on dangerous, earthquake-prone and insanitary buildings within its district. Under's 131(2)(a) of the Act, the policy must state the approach that the territorial authority will take in performing its functions under the part of the Act relating to dangerous, earthquake-prone and insanitary buildings. Section 132 of the Act requires the City Council to review its s 131 policy at intervals of not more than five years.

3 The policy was adopted at an extraordinary meeting of the City Council on

10 September 2010. The meeting followed the first Canterbury earthquake on 4 September 2010. There was a detailed consideration of the legality of requiring strengthening beyond 33 per cent of the new building standard (the NBS) issued in1Insurance Council of NZ Inc v Christchurch City Council [2013] NZHC 51, [2013] NZRMA 113 [High Court judgment].accordance with the building code.2 In the policy ultimately adopted by the City Council it was noted that the City Council would be guided by the recommendations of the New Zealand Society of Earthquake Engineers that 67 per cent of “full code levels” was a reasonable level of strengthening to reduce the risk posed by existing buildings. The City Council decided to use that level of strengthening to reduce or remove the danger posed by specific buildings.

4 In its document “Guidance on exempted consented building works for earthquake damaged buildings”, the City Council recorded that the policy increased the strengthening level for earthquake-prone commercial buildings from 33 per cent of the building code to a target of 67 per cent. This would mean that some buildings would need to undergo further strengthening to reach the highest standard of compliance with the building code. It was stated that the 67 per cent earthquake strengthening standard was a target and not fixed, and that an assessment of whether the 67 per cent standard would be required would be done by the City Council on a case by case basis. For convenience we refer to the 2010 policy and guidance document as “the policy”.

5 In the High Court ICNZ was concerned that the new policy would increase the cost of earthquake repairs for building owners who would in turn seek to claim the cost of those repairs from their insurers. If a 67 per cent requirement was to be imposed, the estimated increase to the repair bill of insurers could run into hundreds of millions of dollars.

6 ICNZ's statement of claim asserted that the City Council's decisions under ss 131 and 132 of the Act to adopt the policy were unlawful and invalid. It referred to the City Council's power under's 124 of the Act to give notice requiring work to be carried out if a building is dangerous, earthquake-prone or insanitary. It was pleaded that the policy provides for the City Council to issue s 124 notices that impose requirements on property owners that are not authorised by and are inconsistent with the Act. It was stated that the policy is invalid.

7 Declarations were sought that the City Council's decision to adopt the policy was unlawful and invalid. Orders were applied for setting aside the 2010 policy in whole or in part, and a declaration was sought that the City Council could not, by issuing a s 124 notice, require a building owner to increase the seismic strength of an existing building above 33 per cent of the NBS.

8 The question is whether the Act conferred on councils such as the City Council the power to require strengthening work beyond one-third and up to 67 per cent of the NBS. If it did the policy was lawful. If not it was unlawful. Panckhurst J approached the application, rightly in our view, as raising an issue of statutory interpretation. What power was conferred by the Act to require works to a particular standard? Panckhurst J concluded that the City Council in enacting a policy whereby it could require earthquake strengthening beyond 34 per cent had acted unlawfully and gone beyond the authority conferred on it by the Act.

9 The appellant submits that in doing so he made an error of law, and that the proper interpretation of the Act is that strengthening up to the 67 per cent level can be required by the City Council.

10 There was affidavit evidence filed on behalf of the parties recording the background, the history of the 2010 policy, the efficacy of the standard and the City Council's approach. There were also affidavits filed as to the impacts upon the parties and the effects on individual building owners. However, none of this factual material was the subject of detailed oral submissions before us, and like Panckhurst J we see no need to refer to the detailed history or the practical merits of the policy. If Parliament has clearly imposed a standard, it is not for the courts to second-guess the merits of that standard.

11 The statement of claim in the High Court also raised issues as to the City Council's power to impose requirements on the issue of building consents. However, the City Council has accepted it cannot impose the requirements in relation to a building consent, and that issue has not been argued before us.

The Building Act 2004

12 It is a purpose of the Act to provide for the setting of performance standards for buildings to ensure that people who use buildings can do so safely and without endangering their health. 3 Under's 12(2) a territorial authority, such as the City Council, grants waivers and modifications of the Building Code, 4 and performs functions relating to dangerous, earthquake-prone or insanitary buildings. 5

13 The relevant part of the Act is subpt 6 of pt 2 which is headed “Special provisions for certain categories of buildings”. That subpart sets out meanings for the phrases “dangerous building”, “earthquake-prone building”, “insanitary building” and the powers of territorial authorities in respect of such buildings. We have already referred to ss 131 and 132 of this subpart to the Act, which require territorial authorities to adopt policies on such buildings and review that policy. It is the provisions in this part of the Act that the City Council has relied on in passing the 2010 policy and it is necessary to consider them in detail.

14 Section 121 defines a dangerous building:

121 Meaning of dangerous building

• (1) A building is dangerous for the purposes of this Act if,-

  • (a) in the ordinary course of events (excluding the occurrence of an earthquake), the building is likely to cause-

    • (i) injury or death (whether by collapse or otherwise) to any persons in it or to persons on other property; or

    • (ii)...