Defective Bulidngs Flashcards
Junior books
Initially prepared to extend Ann’s - subcontractor, flooring
D v F Estates
Rejected Junior Books as laying down any principle of application
Left open the possibility of a complex structure argument - that one element of a structure could be considered distinct from the other so that damage to one party caused by the defect could qualify as ‘damage to other property’ in which case Donoghue principles could suffice
But held where there was no physical damage or damage to ‘other property’, financial loss could not be recovered
- undermined Anna
Murphy
Overruled Ann’s.
Claim against defendant council who approved a faulty house design resulting in a dimunation of value succeeded based on danger to health. But HOL held unanimously it should be overturned.
- rejected the danger to health argument as illogical and lacking principle
- no sensible distinction between a mere defect of quality and a supposedly dangerous one
- Ann’s was financial loss and nothing more
ALLOWING A CLAIM WOULD LEAD TO MASS OF PRODUXTUVE LIABILTY CLAIMS WND INDEFINATE TRANSMISSIBLE WARRANTIES OF QUALITY
owners claim - purely economic, had to fail
Australia
Bryan v Maloney
Declined to follow Murphy
Builder who negligently carried out work owed a duty to the subsequent purchaser who was entitled to recover the consequential loss measured by decrease in value
Court held duty arose from the relationship of proximity and foreseeability of economic loss
Canda
Winnipeg
Rejected Murphy upheld danger to health argument concrete cladding - builder liable
Still stands
La Forest J ‘where a person has participated in the construction of a large and permanent structure which has the capacity to cause serious danger to others if negligently constructed he should be liable’
New Zealand
Initially duty - Bowen Mt Albert
Stiller - took this further (but pre Murphy)
Post Murphy - Invercargill CC
Plaintiff contracted with builder and an inspector to inspect foundations, 15 years experienced issues
Brought proceedings 1990 against council
HC - inspector had been negligent
Inspector appealed, relying on Murphy
COA preferred their own approach to Murphy
CoA: Cooke P - distinct features of NZ housing market meant people relied on local authorities to exercise care in not allowing unstable homes
- building act and 10 years of research into it didn’t question the DOC which courts had recognised in this field
- nothing to require reconsideration
- held unanimously NZ law ought not to be disturbed
- Richardson J: to change NZ tort law to comply with Murphy would have have significant direct and indirect economic consequences and require a major attitudinal shift
Appel dismisses - NZ were consciously departing from English law on the grounds the conditions were very different
Ambit
- early cases concerned an action against builder or council
- from 1990s a new problem emerged in NZ - leaky building syndrome. Failings in design, inadequate provision for ventilation, use of unsuitable materials, flawed building techniques which meant water would
leak into the structure
Ambit - residential buildings
Sunset terraces
First major leaky building case
SC invited to reconsider Hamlin and affirmed it and held it applied in respect of buildings intended for residential use, whatever form the building took
Tipping J - satisfied Murphy had been correctly decided and the enactment of building Act gave no basis for reconsideration. Furthermore, argument that Hamlin should be restricted to stand alone, modest, single dwelling houses was restricted - no distinction based on ownership, structure, size or configuration
Additionally, the court rejected the argument that the council should not owe a duty where other professionals such as engineers were involved. For these reasons, it was concluded the council did owe a duty of care in their inspection roles to owners - both original and subsequent designed to be used as homes.
HAMLIN AFFIRMED in respect of residential use buildings - other buildings the position was left open
(Linear unit title development, 21 town houses)
OTHER BUILDINGS
Australia
Woolcock
Woolcock Street - purchaser of a building brought proceedings in negligence against the developer
Focusing on vulnerability, HC held engineer owed no duty. Owner could have protected himself against the economic consequences by obtaining a warranty from vendor
Court refrained from distinguishing between residential and commercial property and focused on vulnerability
- subsequently applied in BROOKFIELD
Other buildings - New Zealand
CHH v RR
First major commercial property case was Rolls Royce. Here, CHH contracted with ECNZ to design, manufacture and construct an industrial plant. ECNZ then contracted with RR to design, construct and commission the plant
CHH subsequently claimed the plant built by RR was defective and did not conform to contractual specifications, alleged that they owed a duty to take care in ensuring it was contracted according to specifications.
Glazebrook J was satisfied that in these circumstances there was no duty to take care. Firstly, because the parties were sophisticated, commercial parties with equal bargaining power (similar to Australia view) and because the terms of the contract differed in various aspects. Glazebrook J also was concerned with the need for commercial certainty - that their negotiations would not be disturbed by courts and were normally capable of looking after their own interests
Similar approach taken in Queenstown Lakes and Te Mata
Other buildings -
Spencer on Byron
Following CHH came the leading case - Spencer on Byron
23 storey building used for both commercial and residential purposes. Building leaked, hotel owners and residential owners sued the council alleging negligent
The claim by hotel owners failed in the HC based on the fact it was in respect of commercial property which the council did not owe a duty. In COA it was held this was an ‘all or nothing’ case and the essential character of building was commercial so the authority did not owe a duty.
In the SC, in a majority decision the claims were successful in establishing a doc. Chambers J rejected the argument that the councils liability had always been confined to residential homes. He held there was no principled distinction between domestic dwellings and commercial premises. He also held a duty was not inconsistent with Building Act and there was no indication that Parliament wanted to alter the line of authority that had developed in NZ as to distinguish between different buildings.
Held Hamlin confirmed the pre-Murphy law, permitted NZ to continue this approach. No case for introducing the middle ground as introduced in Australia (Woolcock)
Also held it didn’t make sense to assume all homeowners were vulnerable and all owners of commercial buildings were wealthy. Duty was owed - recognition of a duty In commercial cases, and on the council.
William J dissented and held there were a number of reasons why territorial authorities didn’t owe a duty of care in respect of non residential buildings, nevertheless decision has stood
LIMITATION ISSUE
Limitation Act 2010: defence to a money claim if the defendant proves it is filed at least 6 years after the date of the act or omission on which the claim is based (s 11)
Limitation Act 1950: s4(1) actions founded on simple contract or tort shall not be Brought after six years from the date when the CAUSE OF ACTION ACCRUED
(2010 Act repealed 1950 Act however remains in force in respect of acts or omissions occurring BEFORE 2010)
Date of accrual (1950 Act)
Sparham-Souter held the owners cause of action accused and time began to run only when they had discovered or ought to have discovered defective state of property
Pirelli however - HoL took the view time ran from the date of physical damage not the date of discovery
Todd - pirelli is wrongly decided, defective property is a claim for economic loss. Accordingly money is lost only when defect is reasonably discoverable until this point no loss is suffered as the owner can sell it without knowing.
Hamlin - privy council held pirelli had been wrongly decided, agreed with Todd’s argument. Time runs from time defect is reasonably discoverable
But cannot postpone the start of limitation period by shutting their eyes to the ovbious
Section 11 Building Act means this is becoming obsessed because this puts a 6 year Barr on claims from the act or omission IS BASED
Sale after defect is discoverable yet purchaser pays undamaged value
Sunset Terraces - SC resolved this issue, held there was no reason to absolve a negligent council from its liability to a subsequent owner simply because the owners predecessor was able to sue but didn’t and it is on sold.
Thus, duty recognised by the council which is owed by the owner for the time being even after a defect is discoverable or has been discovered by previous owner
- led to issues- owner gets a cause of action upon purchasing the property which means a limitation period can commence on every sale of property
Operation of a long stop
The potential harshness of Hamlin has led to introduction of a 392(2) Building Act 2004 - civil proceedings in relation to building work may not be brought after 10 years or
more from date act or omission is based
- imposes a long stop period
Note; there are TWO long stop periods - 1. Six years, Building Act. 2. Decide whether long stop period comes into operation
Operate in tandem
