DECISIONS

This appeal considered the liability of territorial authorities where a code compliance certificate was issued by a building certifier that is not authorized to certify compliance.  Here, the developer of a property had engaged a building certifier to certify code compliance of the property rather than the council.  During construction, the Building Industry Authority restricted the certifier’s ability to certify; that restriction allegedly meant the certifier was not authorized to certify the property.  However, the certifier continued to certify the property and issued a code compliance certificate for the property.  The plaintiffs then purchased the property from the developer; the house subsequently leaked.

 

The plaintiffs claimed against a number of parties, including the council.  They alleged that the code compliance certificate was invalid and the council should not have accepted it as it knew or ought to have known the certifier was not authorized to certify the property.  The council applied for strike-out and/or summary judgment of the claims against it on, amongst other things, that no duty was owed.  The owners opposed that application.  In the high court, Associate Judge Christiansen considered the council could be liable as it was arguable the council had a duty to check whether the building certifier had authority to issue the code compliance certificate.

 

The council appealed.  The court of appeal granted that appeal and granted summary judgment to the council; the council does not owe a duty of care unless Hamlin applies.  In this matter, Hamlin did not apply.  There was also nothing in the Building Act to impose a duty of care where a building certifier was engaged, especially as the council was in direct competition with the building certifier.  The court noted, however, that the situation may be different where notice was provided to the council, under the procedure described by the Act, that the certifier could no longer certify the property.  Otherwise, the council was under no duty to take additional steps to ensure certifiers were issuing code compliance certificates within their authority.

 

The effect of the court’s decision is that owners may not seek compensation from territorial authorities for economic loss said to result from negligent certification by a building certifier.

 

 

 

This is a claim that involved a fire at the Blanket Bay Lodge in Queenstown.  The owner of the luxury lodge, Charterhall Trustees Limited, sued the council and local architects alleging negligence in the design of a twin flued chimney which it said caused the fire.  The council unsuccessfully applied to the high court to have the claim against it struck out on the basis that it does not owe a duty of care to owners of commercial property. 

The council then successfully appealed the decision to the court of Appeal.  The court of appeal applied the principles set out in its own judgment issued earlier in 2009; Te Mata Properties Limited v Hasting District Council [2009] 1NZLR 460.  That is, it accepted the proposition that councils do not owe duties of care to owners of commercial properties. A luxury lodge clearly fell within this definition. 

The court of appeal’s judgment will hopefully close the door on claims by commercial property owners against territorial authorities for negligence in the performance of their statutory functions, whether in relation to weathertightness issues, fire safety issues, and/or foundation issues. 

The decision is now on appeal to be heard on 12 April 2010. 

On 28 October 2008 the court of appeal issued a decision that discussed whether a council owed duties of care to the owners of a motel which was found to leak and needed repair. 

It said that local authorities have a duty to inspect building work and this is an exception to the general rule that claims involving pure economic loss (i.e. repair costs) cannot be recovered if negligence is found.  The court said that the exception is based on public interest in habitation and health and means that councils owe a duty of care to house owners.  However motel-owners’ interests are different in that a motel is not necessarily their home and so does not carry the same potential health risk  This could not be changed without demolishing the general rule.