Auckland Council v Chief Executive of the Ministry of Business, Innovation and Employment
[2013] NZHC 1108
•15 May 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-5561 [2013] NZHC 1108
UNDER Part 1 of the Judicature Amendment Act
1972
IN THE MATTER OF Weathertight Homes Resolution Services
Act 2006
BETWEEN AUCKLAND COUNCIL Plaintiff
ANDTHE CHIEF EXECUTIVE OF THE MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT First Defendant
ANDHEATHER LOUISE JONES Second Defendant
Hearing: 18 March 2013
Counsel: M S Harrison and K R Lydiard for Plaintiff
R Chan for First Defendant
M R C Wolff for Second Defendant
Judgment: 15 May 2013
JUDGMENT OF KATZ J
This judgment was delivered by me on 15 May 2013 at 4:00 pm
Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors: R Chan, Crown Law, Wellington
M S Harrison/ K R Lydiard, Simpson Grierson, Auckland
M R C Wolff, Grimshaw & Co, Auckland
AUCKLAND COUNCIL V THE CHIEF EXECUTIVE OF THE MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT HC AK CIV-2012-404-5561 [15 May 2013]
[1] Heather Jones owns a house at Muriwai beach. It has weathertightness issues and requires extensive remedial work.
[2] The Rodney District Council issued a building consent for the house in early
2000. The Auckland Council (“Council”) is the successor to the Rodney District
Council. The Council carried out eight building inspections between 13 June and
12 September 2000. Over a year later, on 23 November 2001, a final inspection was undertaken. The property failed that inspection, but passed a second final inspection on 10 December 2001. A code compliance certificate was issued by the Council on
31 January 2002.
[3] Ms Jones purchased the property from the original owners in late 2004. On
4 October 2011 she applied for an assessor’s report, pursuant to the Weathertight Homes Resolution Services Act 2006 (“Act”). This constitutes the bringing of a claim under that Act.1 Claims must be brought within ten years of the date on which the relevant dwellinghouse was “built”.2
[4] The assessor’s report concluded that the house had a “built” date of
10 December 2001. Based on the assessor’s report, the Chief Executive of the Ministry of Business, Innovation and Employment (“Chief Executive”)3 decided that Ms Jones’ claim met the eligibility criteria in the Act, having been brought within ten years of the house being built (“eligibility decision”).
[5] Ms Jones alleges in the Weathertight Homes Tribunal (“Tribunal”) that the Council was negligent in failing to identify defects in her property. The Council says that Ms Jones’ claim is not eligible in terms of the Act. It seeks to judicially review the Chief Executive’s eligibility decision. The key issue before me is whether the Chief Executive erred in fact or in law, or made procedural errors, in making the
eligibility decision.
1 Weathertight Homes Resolution Services Act 2006, s 9.
2 Ibid, s 14(a).
3 By his delegate, pursuant to s 41(1) of the State Sector Act 1988.
[6] The leading authority on the meaning of “built” under the Act is Osborne v Auckland Council & Anor. 4 In Osborne the Court of Appeal considered several previous High Court decisions on the meaning of “built” which had concluded that a dwellinghouse was “built” when it had been completed to the extent required by the building consent. The Court of Appeal expressly approved such an approach, observing that the point at which the dwellinghouse is completed to the extent required by the building consent is best assessed by reference to the dwellinghouse passing its final inspection: 5
We view this test as appropriate to make [the Act] work...and as having the advantage of a clear-cut method of determining the issue. It also avoids the uncertainties and difficulties of proof inherent in the retrospective exercise which the assessors and other decision makers have been undertaking to date in eligibility decisions under [the Act]. In many cases, the homeowner may be a subsequent purchaser who has little knowledge of what occurred when the house was under construction. The eligibility assessment will sometimes have to be made years after the relevant events. It is particularly important that the decision maker is not required to make unwarranted assumptions or to resort to guesswork or speculation. For example, the mere fact that utilities such as power or telephone have been livened and/or the house has been occupied is not necessarily determinative of the fact that physical construction is completed at that time. The property may have been occupied when it was closed in but at a stage when it was still well short of physical completion.
We conclude that a dwellinghouse will be “built” for the purposes of s 14(a) of [the Act] when it has been completed to the extent required by the building consent issued in respect of that work. In all but exceptional cases, this point will be reached when the dwellinghouse has actually passed its final inspection. If it does not pass its final inspection (other than in a trivial way), then it will not be “built” for eligibility purposes until it has passed its final inspection. Any exceptions to this approach are likely to be rare but might include, for example, a case where a request for the final inspection is unduly delayed and there is clear evidence that the dwellinghouse was built to the extent required by the building consent prior to that date.
4 Osborne v Auckland Council & Anor [2012] NZCA 609.
5 Ibid, at [51] – [52].
[7] The Council submitted that the present case is one of the “exceptional” cases where the date of the “passed” final inspection does not equate to the “built” date. In particular, the Council submitted that :
(a) The house failed its first final inspection in a “trivial” way and was in fact “built” prior to the date of the failed inspection on 23 November
2001.
(b)The final inspection was unduly delayed and there is clear evidence that the house was built prior to the final inspection being passed on
10 December 2001.
I will consider each issue in turn, although there is a degree of overlap between them.
Did the house fail its first final inspection on 23 November 2001 in a “trivial”
way?
[8] The November 2001 inspection failed because of the lack of a “handrail to internal stairs” and because producer statements were required for “Geo, foundations and effluent field”. The Council submitted that these deficiencies were “trivial” and should not have prevented a finding being made that the house was built as at
23 November 2001.
Lack of a handrail
[9] The approved building specifications provided, under the heading “Stairs”, as follows:
Supply handrails ex 75 x 50mm bevelled and rounded to one side of each flight of stairs with suitable balusters under.
Stairs, handrails and balusters to comply with the requirements of the New
Zealand Building Code Handbook, Part D1 Access Routes.
[10] Mr Danford, the original home owner, gave evidence for the Council that:
We had placed a flat rimu 200x50 timber on top of the wall that formed the balustrade. The Council inspector was unhappy with that approach and requested a handrail. Given the relative insignificance of such a request, it was easier and cheaper to agree to install a handrail than argue our approach.
[11] The Chief Executive and Ms Jones submitted that, without a handrail, the house did not comply with the consented plans or specifications or the requirements of the Building Code.6 This was not merely a “trivial” non-compliance, as handrails are an essential health and safety requirement. They provide the person using the stairs with something to hold, in order to prevent a fall.
[12] The Council took the contrary view and submitted that the lack of an internal handrail was a trivial matter in the overall scheme of the building work that was required to construct the house.
[13] I accept the Council’s submission on this issue. Simply because an item is required by the consented plans and specifications, or the Building Code, does not make it incapable of being trivial. Indeed any matters that result in a dwelling failing its final building inspection will likely involve some lack of compliance with the Building Code or the approved plans and specifications. Nevertheless the Court of Appeal clearly envisaged in Osborne that a final inspection may still fail for a
reason that is “trivial”.7
[14] In determining whether a matter is “trivial” it is therefore of little assistance to focus primarily on whether the matters which resulted in a property failing its final inspection involved non-compliance with the Building Code or the plans and specifications. They almost certainly will have. Rather, the inquiry should in my view focus on whether the relevant matters were “trivial” in the sense that rectifying them required little or no further construction work.8 If little or no further construction work is required then the house could be considered already built,
despite those particular matters being outstanding.
6 As set out in Schedule 1 to the Building Regulations 1992
7 At [52].
8 I use “construction” in a broad sense to cover not only “building” work (e.g. carpentry) but all other aspects of the work undertaken to construct a dwelling, including electrical work, plumbing and so on.
[15] In this case the fact that the internal balustrade was topped with a rimu plank or slab rather than a hand rail was a matter which would not, in my view, be sufficient to prevent the house being “built” as at 23 November 2001. This is not a situation where the stairs were open to one side, giving rise to a risk that a person could fall off the edge. Rather, the stairs were bordered by a concrete balustrade, which was topped with a rimu plank. The plank did not, however, comply with the specifications required of a handrail. It therefore needed to be altered, added to or replaced in order to be compliant. This was a fairly minor “tidy up” item that could be achieved relatively quickly and easily. It was not indicative of any further substantive construction work being required.
Absence of producer statements
[16] The Council can only issue a code compliance certificate if it is satisfied that a building complies with the Building Code. A producer statement is a document from a Council approved expert that the Council may accept as evidence that particular design or building work is compliant. In this case the Council required certain producer statements before it was willing to approve the final inspection.
[17] The relevant producer statements had not been provided as at 23 November
2001 and accordingly the Council could not be satisfied that the house was compliant as at that date. The statements were subsequently provided. With one exception they were all dated some time during 2000. The exception related to the foundations. The geotechnical engineers provided a producer statement in relation to these under cover of a letter dated 3 December 2001. It was apparent from the annexed producer statement that the foundations had been constructed some time during 2000 (pre-dating the other construction work).
[18] The Council argued that this reason (lack of producer statements) for the house failing its first final inspection was “trivial” in the Osborne sense, given that all of the work that the producer statements related to had in fact been completed well prior to 23 November 2001.
[19] I accept that submission. That is not to say that the provision of producer statements is in itself a trivial requirement. The requirement is clearly an important one. However, the production of producer statements was an administrative matter. No further construction work was required or undertaken in order to be able to finalise and provide the producer statements to the Council. Their absence on
23 November 2001 did not mean that the house had not been built as at that date, but simply that it was not possible to satisfy the Council on that date that certain aspects of the completed construction were compliant. The producer statements were, however, available to the assessor. It would have been apparent on their face that the work to which they related had all been completed well prior to the November 2001 failed inspection.
[20] I therefore conclude that the items (lack of a handrail and producer statements) that caused the 23 November 2001 inspection to fail were “trivial” in the Osborne sense and, as a consequence, the house was “built” as at that date.
Significance of house being built as at 23 November 2001
[21] The key date for eligibility purposes is not, however, 23 November 2001, but
5 October 2001, almost seven weeks earlier. The house being built as at
23 November 2001 does not therefore directly assist the Council. Ms Jones’ claim was brought within 10 years of 23 November 2001 and would still be eligible if
23 November 2001 was adopted as the built date. In order for her claim to be ineligible under the Act the house must have been “built” on a date prior to
5 October 2001.
[22] To address this difficulty, the Council submitted that if the Chief Executive had correctly identified that the house was already built as at 23 November 2001 (because it had failed the final inspection on that date for trivial reasons), then his next step should have been to try and identify whether the house was built prior to
5 October 2001. As the passed final inspection could not be used as a reliable
indicator of when the house was “built”, determining the built date must “ultimately
be a matter of judgment based on all the information that is available”.9
9 Auckland City Council v Attorney General (“the Garlick case”) HC Auckland CIV-2009-404-
1761, 24 November 2009 at [90].
[23] Based on all the information now before the Court the Council submitted that the Chief Executive erred (in fact and law) in finding that the house was built on 10
December 2001 rather than prior to 5 October 2001.
Did the Chief Executive err in making his decision as to the “built” date based
solely on the information before him?
[24] A preliminary issue arises as to what information the Chief Executive was required to consider in circumstances where an exception to the rule in Osborne applies and the passed final inspection cannot be relied on as the “built” date.
[25] The Council filed extensive factual and expert evidence aimed at proving that the house was built prior to 5 October 2001. However, most of this information was not before the Chief Executive when he made the eligibility decision. The Council submitted that the Chief Executive should have realised that the information before him in the assessor’s report was not sufficient to determine the built date. He should therefore have sought out further information, including information available on the Council file. This, it was submitted, would have led him to the conclusion that it was “highly likely” that the house was built prior to 5 October 2001.
[26] The Chief Executive and Ms Jones submitted, on the other hand, that the Chief Executive did not err in making his decision as to the “built” date based solely on the information before him. Rather, the lawfulness of the eligibility decision should be examined on the basis of the information before the decision maker at the time of the decision. On this approach, “expert” evidence that is introduced for the purpose of these proceedings is irrelevant. It was submitted that this is even more so the case where, as here, there are clear restrictions imposed by statute on what the Chief Executive is entitled to consider.
[27] The purpose of the Act is to provide the owners of dwellinghouses that are leaky buildings with access to speedy, flexible and cost effective procedures for the
assessment and resolution to claims relating to those buildings.10 A claim under the
10 Weathertight Homes Resolution Services Act 2006, s 3(a).
Act is commenced by making an application for an assessor’s report.11 A claim must satisfy the eligibility criteria set out in ss 14-18.12 The initial assessment process places the responsibility for gathering information on a claim in the hands of an experienced assessor.13 The assessor’s eligibility report (or if requested a full report)14 will state whether, in the assessor’s opinion, the claim meets the eligibility criteria under the Act and provide reasons for this opinion.15
[28] The Chief Executive must evaluate every assessor’s report and decide whether the claim to which it relates meets the eligibility criteria.16 The Chief Executive must only consider the report itself, and any submission made by the claimant. 17 A dissatisfied claimant may apply to have the Chief Executive’s decision reconsidered by the Chair of the Weathertight Homes Tribunal.18 In most cases eligibility assessments will be relatively simple. It is only when a claim is filed on the cusp of the ten year limit (as is the case here) that the determination of the “built”
date may be difficult.
[29] As set out at [6] above, in Osborne the Court of Appeal noted the uncertainties and difficulties of proof inherent in the retrospective exercise which the assessors and other decision makers had been taking prior to Osborne. The Court observed that in many cases the homeowner may be a subsequent purchaser who has little knowledge of what occurred when the house was under construction. The eligibility assessment will sometimes have to be made years after the relevant events. In this context the Court observed that it is particularly important that the decision maker is not required to make unwarranted assumptions or to resort to guesswork or
speculation.19
[30] Taking all of these matters into account, in my view the Chief Executive did not err in making his decision as to the “built” date based solely on the assessor’s
11 Ibid, s 9.
12 The relevant section depends on the type of building.
13 Engaged by the Ministry of Business, Innovation and Employment.
14 Weathertight Home Resolution Services Act 2006, ss41 and 42.
15 Ibid, s 41.
16 Ibid, s 48.
17 Ibid, s 48(2).
18 Ibid, s 49.
19 At [51].
report which he had before him. He had no obligation to conduct further investigations in order to determine the “built” date of the house. An extensive “retrospective” investigation was not required and would be inconsistent with both the general statutory context (which emphasises speed and cost effectiveness) and also s 48(2) of the Act. The Chief Executive’s decision must therefore be judged on the information available to him at the time.20 The issue is whether, based on that information, the correct decision was made.
Was there “clear evidence” before the Chief Executive that the house was built before 5 October 2001?
[31] The Council submitted that this case falls into the “exceptional circumstances” exception in Osborne because there was “clear evidence” that the house was built before 5 October 2001. For the reasons outlined above, I will limit my consideration of this issue to the evidence that was before the Chief Executive when he made his decision.
[32] The assessor, in the section of his report entitled “Built date basis for opinion” only referred to the dates of the final inspections and code compliance certificate to determine the built date. He also contacted the electricity company, who advised him that power had been connected in January 2000, but he did not consider that this was helpful. He also noted in his report that there had been a
14 month gap between the post line inspection (the penultimate inspection) and the
first failed final inspection and that this was “unexplained.”
[33] The Council submitted that two documents annexed to the assessor’s eligibility report indicated it was highly likely that the dwelling was physically complete prior to 5 October 2000. Those documents indicated that the gas hob in the kitchen was functional and compliant by 8 December 2000 and the drainage and irrigation were completed by 23 August 2001. Based on these documents, the Council submitted, it was highly likely that the dwelling was built prior to 5 October
2001 and the Chief Executive should have found accordingly.
20 This view is also consistent with Garlick at [46]-[49] and Turner v Attorney General HC Auckland CIV-2011-404-3968, 7 October 2011 at [42].
[34] The assessor did not expressly refer to the relevant documents in his “built date” analysis. Mr Johnson, the Chief Executive’s delegate, deposed that it is his usual practice to review all the documents attached to the assessor’s report. However, he could not recall whether he had specifically considered whether the two documents relied on by the Council were significant to the built date.
[35] Mr Johnson deposed that, from the evidence available to him, it was not clear that the dwelling was built prior to the first final inspection. He said that he did take the 14 month gap between the post line inspection and the first final inspection into account. However, on the information available, including the inspection date, he considered he had no basis for concluding that the dwelling could be considered “built” during that period.
[36] In my view the Chief Executive did not err in his approach. The Court of Appeal in Osborne clearly saw the previous practice of extensive retrospective investigations to determine the built date as undesirable. The Chief Executive was entitled (indeed required) to make a decision on the basis of the information before him. The Act is intended to provide speedy, flexible and cost effective procedures for the assessment and resolution of certain leaky building claims. As the Court of Appeal observed in Osborne, “the mere fact that utilities such as power or telephone have been livened and/or the house has been occupied is not necessarily
determinative of the fact that physical construction is completed at that time.”21 The
Court further observed that the fact that a property may have been occupied is not determinative of the “built” date either – it may have been occupied when it was closed in but was still well short of physical completion.
[37] The documents relied on by the Council indicated that the gas hob in the kitchen was functional and compliant by 8 December 2000 and the drainage and irrigation were completed by 23 August 2001. It is therefore at least possible that physical construction of the house had been completed by August 2001. Equally, however, there could have been significant other matters still outstanding as at August 2001 which did not fall within the “trivial” category. The fact that a house
has a live gas connection and functioning drainage and irrigation does not establish
21 At [51].
that all aspects of physical construction of the house, to the extent required by the building consent (save for trivial matters), have been completed.
[38] The evidence relied on by the Council therefore falls short of providing
“clear evidence” that the house was built prior to 5 October 2001.
Pleadings issues
[39] Finally, I note for completeness that it became apparent during the course of the hearing that there were deficiencies in the plaintiff’s statement of claim. In particular, although the Chief Executive was (correctly) identified as the decision- maker, no specific errors were alleged on his part. Rather, various errors were alleged on the part of the assessor, with no linkage (or insufficient linkage) to any decisions made by the Chief Executive.
[40] The parties submissions were based, however, on the assumption that it was the Chief Executive who had erred (based in part on erroneous advice from the assessor). Leave was accordingly sought at the conclusion of the hearing to amend the statement of claim to reflect the real issues in the case, as advanced in submissions. The defendants reserved their position until they had an opportunity to review the proposed amended statement of claim. An amended statement of claim was filed shortly after the hearing. The first defendant did not oppose the amendment and filed an amended defence in response. The second defendant abided the decision of the Court.
[41] For the avoidance of doubt, leave is granted to file the amended statement of claim and amended defence of the first defendant. This judgment is based on the claims as pleaded in the amended statement of claim.
Conclusion
[42] In conclusion:
(a) The Chief Executive erred in finding that the house was only “built”
as at 10 December 2001, when it passed its final inspection, because it
failed its first final inspection on 23 November 2001 in a “trivial” way and was therefore “built” as at that date (at the latest).
(b)The Chief Executive was entitled to rely solely on the information before him (the assessor’s report) in making his eligibility decision and was not required to undertake his own investigations and inquiries.
(c) There is no “clear evidence” that the house was built as at 5 October
2001, the relevant date for eligibility purposes under the Act. The possibility that physical construction was only completed between
5 October 2001 and 23 November 2001 cannot be excluded, based on the information available to the Chief Executive at the time of his decision.
(d)Accordingly the Chief Executive did not err in the ways alleged by the Council, when he made the eligibility decision.
Result
[43] The application for judicial review is dismissed.
[44] My preliminary view is that each of the defendants should be entitled to an award of scale costs on a 2B basis. If costs issues cannot be agreed based on this indication, then the plaintiff has leave to file a memorandum within 21 days and the
defendants within 7 days thereafter.
Katz J
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