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Leaky buildings Round 2 — council potentially caught twice for the same house despite settlement agreement in place

Leaky buildings Round 2 — council potentially caught twice for the same house despite settlement agreement in place

I  wish to review the recent decision of Devany & Others v Wellington City Council & Others which concerned a Wellington house in the suburb of Newlands that was diagnosed twice as a leaky building.

 

Facts

  • The house in question was originally issued a building consent in April 1998.

  • Kingdom Residential constructed the house and ultimately sold it to the plaintiffs in February 1999. A Code Compliance Certificate was issued by the council at or around the same time.

  • Leaks were discovered in the house in February 2003, and the plaintiffs lodged a claim with the Weathertight Homes Resolution Service (WHRS).

  • The WHRS report identified a number of weathertightness and associated structural issues which meant the house had shortcomings in its ability to comply with Clauses E2 External Moisture and B2 Durability of the Building Code.

  • Ultimately, the WHRS claim was mediated and settled as between the plaintiffs, the council and Kingdom Residential.

  • The terms of the settlement entered into had Kingdom Residential return to the house and carry out significant repairs. The council was to pay an undisclosed sum of money to Kingdom, no doubt to be applied towards the cost of the repair works.

  • The claim was thereafter terminated.

  • On March 12, 2005, Kingdom obtained a building consent for repair work on the house. The repair work comprised strengthening the frames around six windows on the south east/south west elevations, and replacing the three windows on the south east elevation.

The 2005 consented building work was not co-extensive with the 2003 WHRS recommended repair work, nor the repair work that was agreed to by way of the settlement agreement.

  • Notwithstanding the repair work, the plaintiffs discovered leaks again in June 2010.

  • High Court proceedings were issued by the plaintiffs in October 2014 as against the council, alleging negligence and seeking $597,000 to repair the weathertightness issues.  

 

The claim in negligence brought against the council was for the negligent issue of the 2005 consent, its negligent inspections and the negligent issue of a Code Compliance Certificate for the repair work.

 

But behind those generic allegations made against the council, the underlying claim as against the council was that it was under a duty to ensure the repair work carried out by Kingdom Residential was sufficient to, and did, satisfactorily address the house’s weathertightness issues.

 

The council brought an application to strike out this allegation. Whilst accepting that it could be liable for any negligence surrounding the 2005 consent authority work, it argued that there was no additional duty of it to address any defects that did not come within the scope of the consented work.

 

As regards any defects outside the 2005 building consent, the council maintained it was:

(a) statute barred by a limitation defence,

(b) precluded by the “full and final settlement” terms of the settlement agreement, and

(c) based on alleged duties of care that were novel and not tenable, as they were inconsistent with the scheme of the Building Act 2004, and go beyond those recognised in relevant case law.

 

The court ruled that it was not tenable to argue that a consent authority, when issuing a consent for certain work, inspecting that work, and issuing a CCC, has responsibilities that go beyond that work, and extends to ensuring that the consented work would remediate the house’s weathertightness issues.

 

However, the court went on to rule that the facts and the circumstances that gave rise to the original settlement agreement, plus the terms of that agreement itself, altered the position.

 

In short, the council had not issued the 2005 Building Consent in a vacuum, but with all of this information available. It was also issued with the framework of the Weathertight Homes Resolution Services Act 2002 fully in place, with the claim successfully settled and terminated using the methods prescribed by this Act.

 

Judge Clifford held that it was at least arguable in tort that the circumstances which led to, and the signing of, the settlement agreement created the necessary proximity or relationship between the plaintiffs and the council, such that it had to concern itself with the ability of the consented repairs to remedy the weathertightness issues in the house.

 

There was also a suggestion that there was a contractual claim open to the plaintiffs as against the council pursuant to the settlement agreement, where it placed the repair obligation not only on Kingdom Residential but also the council.

 

The strike out application was declined, and the council now faces not only potential liability in respect of this house, but a new class of claim where the consented remediation plan does not achieve the requirement of achieving weathertightness — effectively a Round 2 of already settled leaky building claims.

 

Note: This article is not intended to be legal advice (nor a substitute for legal advice). No responsibility or liability is accepted by Legal Vision or Building Today to anyone who relies on the information contained in this article.


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