Council exposed after arranging weathertightness repairsThe number of weathertightness claims faced by Councils in certain parts of the country is significant. Those involved in settling the claims on behalf of the Councils are faced with the challenge of minimising settlement costs in order conserve ratepayer funds.
One way Councils seek to minimise cost is to arrange for repairs to leaky buildings as a part of a settlement. They do so in association with other defendants such as architects, builders, and developers who provide services and materials for the projects. The Councils then carry out their usual functions in relation to the issue of building consents and certifying code compliance.
In Devany & Ors v Wellington City Council  NZHC 1087 (Clifford J), the Council was party to a weathertightness claim arising out of defects in the original construction of the property. In settlement of the claim the Council entered into an agreement to pay a sum of money to the builder/developer who in turn would carry out repairs to the property.
The repairs in Devany were unsuccessful. The owners sued the Council on the basis that firstly the repairs were not extensive enough to repair all of the defects in the building and secondly the repairs themselves failed. The Council applied to strike out the plaintiff’s claim in respect of any damage which did not arise directly out of the faulty repair.
The Court held that when issuing a consent building work, inspecting that work and certifying code compliance, a consent authority normally does not have responsibilities that go beyond that work. However, it was "at least arguable that the Council’s duty to the plaintiffs in these circumstances was not limited...to its actions in consenting to and certifying the 2005 Consented Repair Work as complying with the Building Code." The Council’s wider duty related to the building generally and arose out of:
- Its involvement in the original weathertightness claim; and
- The terms of the agreement in settlement of that claim.
The Court also left open the possibility of a claim under the terms of the settlement agreement based on an implied term that the Council had a responsibility to ensure adequate remediation of the building.
So, based on Devany, a Council’s weathertightness settlement may serve to expand the duty it owes in relation to the remediation of the property. This serves as a warning to defendants who seek to minimise their exposure to weathertightness claims by offering to carry out or contribute towards the cost of repairs. They may incur additional liability in the event a ‘second generation’ failure occurs.