When refusing to issue a Code Compliance Certificate is not enough

03 November 2016

Commentary , Building Defect Claims

In Lee v Auckland Council [2016] NZHC 2377 the High Court in Auckland considered an appeal from the Weathertight Homes Tribunal regarding a leaky home.

The Lees (the claimants) purchased a house from a friend and later discovered that it was leaky. The claimants did not obtain a Land Information Memorandum (LIM) before they purchased the property.  At the time of the purchase the Auckland Council had not issued a Code Compliance Certificate (CCC) for the property due to several concerns, including weathertightness.  These issues were identified well in advance of the claimants purchasing the property.

The Weathertight Homes Tribunal refused the claimants’ claim because:

a. It found that the Council’s inspections and the inspection process were not negligent; and

b. It concluded that the failure of the Council to issue a Notice to Rectify (NTR) in respect of weathertightness issues did not cause loss to the claimants because it was not proven that the notice would have been brought to their attention.

Both parties appealed the decision of the Weathertight Homes Tribunal.  The appeal succeeded in part, and the High Court found that the Council had a duty to issue a notice to rectify which caused the claimants’ loss, but found that the claimants had contributed to their own loss by failing to obtain a LIM. The key findings were:

a. In accordance with the Building Act 1991(s43(6)) a council can rely on a producer statement (a document from a council-approved expert) instead of physically inspecting aspects of the building if it was reasonable to so do. The more complex the work, the greater the need for the Auckland Council to actually inspect the work. In the present case, the Court found that the Auckland Council was not negligent for relying on a producer statement without inspecting the work.

b.The Council was obliged to issue a notice to rectify with regard to the weathertightness issues it identified at the property. The Court found that the Council was negligent for refusing to issue a CCC and not take any other steps, namely issuing a notice to rectify. The Council’s inaction exposed the public to a non-compliant leaky.

c. The Court found that the fault was evenly shared between the Auckland Council and the The Council could not be said to have been a major contributor to the claimants’ losses and the claimants failed to protect themselves by not obtaining a LIM before they purchased the property. The damages awarded to the claimants were reduced by 50% to account for their own actions.

This decision highlights the number of ways in which a Council may be liable in the exercise of maintaining compliance with the Building Code.  It is also a reminder of the importance of obtaining a LIM before purchasing a property.

Under the new “Notice to Fix” mechanisms in the Building Act 2004, a Council must issue a Notice to Fix if it considers that compliance has not been achieved. Failure to issue a notice to fix may result in a claim against the Council.

If you believe you have purchased a leaky home and are unsure whether you have a remedy, Grimshaw & Co can help. Call us on +64 09 377 3300, or email (litigators@grimshaw.co.nz) for a confidential discussion.