Leaky buildings — vendor/council/contractor found liable

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Tim Bates

Timothy Bates, principal of Auckland law firm Legal Vision, looks at a recent decision involving an Auckland home that suffered leaky building issues a second time, after having been purportedly repaired.


The house was originally built as a family home for Ms Moore in 1997. In 2004, Ms Moore discovered that the house was leaky. She arranged for extensive remedial work to be undertaken. Significant recladding work was completed, and the chosen repair works involved attaching Niwala stone slips to the exterior cladding.

A final Code Compliance Certificate was issued by the council for the work on October 16, 2006. However, in early 2007, some of the stone slips delaminated and fell off the house.

Further remedial works were then undertaken to the areas that had delaminated. Shortly thereafter, HML Nominees Ltd placed the house on the market. It was purchased by the plaintiffs in June 2007, and settled in September 2007.

In 2009, further stone slips started falling from the house. It was not in dispute within the proceedings that, in order to remedy the defects discovered in 2009, a full reclad was required of the stone cladding.

The reclad was undertaken in 2012. The plaintiffs sought $181,831.07 in the High Court, which represented the costs of repairing the stone cladding plus additional remedial works.

 

Summary of defects

The court held that the stone wall cladding in the house suffered from the following defects:

The substitution of Miracryl for Flexi-Seal because Miracryl was an inferior product

Incorrect mixing of the Miracryl membrane

Failure to follow the Flexi-Seal system

The use of the spot adhesion method of affixing the stone slips to the Eterpan

The use of Flex-Seal general purpose adhesive rather than high performance adhesive

The incorrect mixing of the adhesive

The failure to install control joints, grouting and ventilation/weep holes between the stone slips.

In respect of the other defects the court ruled:

The chimney flashing had been reused rather than replaced in the 2005/2006 remedial work, compromising the weathertightness of the chimney and allowing water ingress.

A zinc/aluminium flu vent was installed through the new copper roof during the 2005/2006 remedial works in breach of the Building Code. Corrosion was occurring.

A claim in contract was brought against the vendor for breach of the standard warranties as to building works completed. It was ruled by the High Court that the substitution of the Miracryl for the Flex-Seal system meant the consent warranty contained in the sale and purchase agreement was breached.

A claim was also brought as against the vendor for pre-contractual representations. It was accepted by the court that the vendor, through the agent, had represented that the vendor “had completed the remedial works to the highest standards, and the house was better than new”.

The court ruled that the vendor knew of the 2007 issues at the time the representation was made making it untrue, but this representation had not induced the plaintiffs to purchase the house.

In particular, the court found that it was the LIM and the CCC that the plaintiffs had relied upon in terms of the quality of the remedial works.

It was alleged that Ms Moore was behind the decision to substitute the Miracryl for the Flex-Seal system.

The court ruled on the evidence it could not hold that Ms Moore was behind this change, especially since she was unaware of the substitution until well after the building of the stone cladding was complete. This claim failed.

The council was found liable for a negligent inspection and a negligent issue of the Code Compliance Certificate in its inspection of the stone cladding. The council was also found liable for not identifying the chimney flu and flashing defects.

 

Other findings:

The council’s third party claim as against Stonescapes succeeded as the court concluded it was liable for its defective workmanship in the application of the adhesive, and its failure to install the necessary control joints, grouting and ventilation/weep holes between the stone slips.

The vendor’s claim against Flexco in negligence failed also. The thrust of the claim made against them was that in 2007 when the vendor became aware of issues with the stone cladding it had met with Flexco on site. It alleged that the advice provided by Flexco at that time was negligent.

However, the court, in the first instance, ruled no duty of care was owed by Flexco to the vendor, and even if it could be established that there was a duty, there simply was nothing more it could have done to alert Ms Moore to the fact that there were serious systemic problems with the stone cladding work.

The vendor’s cross claim as against the council failed also. The court ruled that the council’s negligent acts (negligent inspections culminating in the issue of the Code Compliance Certificate) did not cause the loss suffered by the vendor pursuant to the consent warranty.

As at the time of the sale contract being entered into by the vendor, it was well aware that there were potentially serious problems with the stone cladding. It took a calculated risk in providing vendor warranties.

Judgment was entered in the sum of $98,525.20 for the repairs caused by the defects, and general damages were awarded in the sum of $20,000, $10,000 to be met by the vendor and council alike.

The council was entitled (if possible) to recover 60% of the liability apportioned against it from Stonescapes for the defective stone cladding work.

 

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.