Auckland Council v Ryang HC Auckland CIV 2011-404-002570

[2011] NZHC 1261

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2011-404-002570

BETWEEN  AUCKLAND COUNCIL Appellant

ANDCHUN HEE RYANG Respondent

Hearing:         8 & 9 September 2011

Counsel:         F P Divich for Appellant

M Strauss for Respondent

Judgment:      28 September 2011

JUDGMENT OF FOGARTY J

The judgment was delivered on 28 September 2011 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules.

.................................... Registrar/Deputy Registrar

[1]      This is an appeal against a final determination of the Weathertight Homes Tribunal (Mr K D Kilgour) delivered on 5 April 2011.   The Tribunal found the Auckland Council had breached a duty of care owed to Mrs Ryang, the owner of a home in Albany, Auckland, a leaky building, and the Council was ordered to pay her the sum of $427,655.04.   Water had penetrated into the home as a result of perforations in its cladding.    The two sources of the perforations were the top of the parapets and the fixings of the handrails through the top of the parapets.

[2]      The Council  says  the Tribunal  should  have  rejected  liability and  instead determined:

AUCKLAND COUNCIL V RYANG HC AK CIV 2011-404-002570 28 September 2011

(a)       That there was no evidence that the cap flashings as installed now were  the  same  as  those  installed  at  the  time  the  house  was constructed in 2003.

(b)      The cap flashings appear to have been removed and refitted retrospectively.

(c)       The way the balustrades were fixed was considered appropriate by the industry in 2003.

(d)       That the Council had checked that the parapet cap flashings had been properly secured to the building.

(e)       That the Council could not see that the rivets had penetrated the underlying membrane.

(f)       That the Council’s inspections did not fall short of the standards of

the day.

(g)       That the Council’s system of inspections was adequate.

The cap flashings as installed now and as at the time of construction

[3]      The house is a three storey building.  It has a deck on three sides, around the master bedroom, and another deck accessible from the nursery.  The exterior walls are clad with EIFS cladding directly fixed without a cavity.   The EIFS cladding sheets are made up of polystyrene boards with a plaster and paint finish.  The top of the external walls are parapets, that is that they project above the flat roofs.  These parapets  are  capped  with  metal  flashings.    Lengths  of  metal  flashings,  riveted together are then placed directly on top of the parapets.  The tops of the parapets are horizontal.  The butynol from the flat roof folds up towards the top of the parapets. The sides of the metal flashings come down past the top of the butynol and are side fixed. The joints of the flashings also have sealant underneath.

[4]      The flashings were inspected after it became known that the home was leaky and show signs that they have been tampered with since construction.   There are indentations and creases to the metal, and surface sealant more consistent with being applied after the flashings have been secured rather than before the flashings were lowered onto the top of the parapet.  The expert opinion was that the poor fitting of these metal flashings is the cause of leaks and the deterioration of the structure required recladding.

[5]      The  capped  flashings  were  not  detailed  in  the  application  for  building consent.  On the contrary, the parapet and box gutter detail in the construction details lodged with the application for building consent advised that a 40 mm “Insulclad” insulation would cap the top of the parapets.   That drawing shows the top of the parapets to be flat/horizontal.   The Council copy of the Insulclad specifications provides  two  alternative  methods  of  sealing  the  top  of  the  parapets.     Both alternatives have the parapets finished on a minimum slope of 15 degrees.  One has a metal parapet cap;  the other has a proprietary waterproof membrane coating system. The metal parapet cap is side fixed.

[6]     The cap flashing on this house is not in accordance with Insulclad’s specifications.  The adjudicator made the finding that the Council building inspector passed the cap flashings as appropriately constructed when they were clearly constructed contrary to the consented plans, and that the inspector said in evidence to Ms McTavish-Butler that the cap flashings were incorrectly riveted and it was clearly observable that the method of riveting would have penetrated the underlying membrane.  On appeal Ms Divich disputed the finding of fact in the second part of this sentence.  But she did not dispute the finding that they were clearly constructed contrary to the consented plans.

[7]      Rather she sought to draw a distinction between construction in accordance with the building consent and compliance with the building code.

[8]      Putting aside the question as to whether or not the capping was subsequently damaged and replaced, she argued that the fixing and sealing of the joints was not something that a reasonable Council officer would have checked during his inspection.

[9]      The home was constructed in 2003.  The application for building consent was lodged in January, granted later in the same month, and the home built between February and November.

[10]     At that time such construction was regulated by the Building Act 1991.  The scheme of the Act was that all building work would comply with the Building Code

and the Act provided for a national building code.  This was a performance based code.  It was mandatory to apply to territorial authorities for building consent which would be granted if the territorial authority was1:

... satisfied on reasonable grounds that the provisions of the building code would be met if the building work was properly completed in accordance with the plans and specifications submitted with the application.

[11]     At the end of construction a building certifier could issue a code compliance certificate (CCC) if the building certifier was satisfied on reasonable grounds that the building work complied with the provisions of the building code on the date of certification.2     Note, there is a dislocation between the two standards.  The building consent is for construction in accordance with plans lodged.   The CCC is for construction  in  accordance  with  the  provisions  of  the  building  code.    So  the

argument of the Council is that it does not matter if the specifications as originally proposed to obtain a building consent are not followed in the construction.   That does not, however, answer the question of negligence.

[12]     Where a builder has changed the specifications relied on to obtain a building consent, a building inspector is obviously on notice to re-examine the changed detail in construction.  No-one disputed the proposition that a Council building inspector would be expected to have the building consent plans with him or her at the time of inspection.

[13]     In Byron Avenue3in the High Court Venning J reasoned:

[124] Mr Bracewell confirmed that the building inspector would have seen the windows set in place before the plastering was carried out. Mr Oden obviously saw the windows did not have head flashings. There are a number of references in the inspection reports to inspection of window flashings, scribers and plugs. While Mr Miller may have been entitled to issue the consent in reliance upon the later provision of manufacturer’s drawings, when Mr Oden was presented with windows without head flashings he was on notice that that was an alternative solution under the code. At that point he should have checked the consented plans to confirm the alternative solution had been approved when the consent was issued. On learning that it had not, he would then have to take reasonable steps to satisfy

1      s 34(3) Building Act 1991

2      s 56(3)

3      Body Corporate No. 189885 and Anor v North Shore City Council and Ors HC Auckland

CIV 2005-404-005561, 25 July 2008

himself that the proposed alternative solution would perform in accordance with the code. Mr Oden said he had no specific recollection of the further construction drawings concerning the windows. Under cross- examination, he accepted that as the design was drawn up by Mr Smythe he would have assumed that it would “probably” comply with the Building Code and be acceptable as an alternative solution. Mr Oden said that as the windows were to be recessed he anticipated they would be protected from adverse weather. He was not unnecessarily concerned by the fact they lacked head flashings as he considered the overhead protection together with the drip edge would provide sufficient protection. Mr Oden’s approach follows through to the inspection reports where he ticked-off the window flashings at various points – e.g. the final building checklist for five units on 25 May

1999.

[14]     By the end of 2002 and early 2003 the problem of leaky buildings was public knowledge.  In the same judgment of Byron Avenue Venning J reasoned at paragraph [334]:

[334]  Although  Mr  Coulthard  said  that  he  had  not  heard  about  leaky buildings before he bought unit 5, by November 2003 there had been a good deal of publicity around the issue. In particular there had been two articles in the New Zealand Herald, on 24 September 2002 and 25 January 2003 as well as other media comment and television reporting. It is frankly unlikely Mr Coulthard was unaware of the problem. ...

[15]     There is no doubt in my mind that at that time the risk of a leaky building was well known to building inspectors.   On top of that the polystyrene nature of the cladding and use of untreated timber framing obviously made it even more important that building construction comply with the basic building code requirements that roofs and exterior walls should prevent the penetration of water that could cause undue dampness or damage to building elements.4

[16]     Understandably then the Council’s principal argument was that there is no proof that the inadequate cap flashing seen on the building was the flashing as constructed. The Council’s theory of the case was that the flashing could easily have been lifted and replaced after construction.

[17]     One cannot be sure either way but I do not think this argument succeeds. This is because one would only lift and repair and replace cap flashing if it was failing.   All  the  signs  are  that  the  flashing  seen  by  the  inspectors  and  experts

examining the cause of the leaky building was the original capping that had been tampered with.   It is probable that it was tampered with in an effort to repair the leaks.  The inevitable conclusion is that the capping originally did not comply with any  recognised  proprietary  code,  let  alone  with  the  plans  as  submitted  for  the building consent.

[18]     The experts discussed ways in which such cladding might comply including being careful to rivet lengths of cladding together when supported by blocks of wood before being laid flush onto the top of the wall and then fixed laterally.

[19]     The Council was concerned generally about the poor quality construction of the building.  There were 19 inspections.  Part of the Council argument was that that showed that the Council was taking care.  This argument cuts the other way as well. The Council was on notice that this was a problematic construction of a home using materials susceptible to significant damage from leaks, in a high rainfall climate. That should create a heightened sense of caution, and a correspondingly higher level

of care.5    The Council inspector inspected the cap flashings only after the second

attempt to do so.  It may be that the Council inspector was more concerned that the flashings may not have been appropriately fixed to the side.  But what the Council inspector should have noticed was that the flashings were not those provided for in the plan submitted for the building consent.  The Council inspector might have been casual and merely looked at the working drawings and not checked the Insulclad proprietary instructions.   Contrary to the drawings which showed the top of the parapet as level and then capped, both drawings of the Insulclad specifications have the slope at 15 degrees minimum. Then, of course, they have the detail.

[20]     I have read Mr Stone’s evidence in cross-examination by Ms Butler on the question of these flashings and would not make the same finding of fact as the adjudicator: that Mr Stone had agreed that the cap flashings were incorrectly riveted. He certainly acknowledged that the riveting through the top of the flashings could lightly penetrate the membrane, as they penetrate the metal cap flashing.

[21]     However, having heard detailed argument, I am satisfied that it was negligent for the Council officer to clear the cap flashings without having checked for compliance according to an industry standard, whether proprietary or BRANZ, particularly in the context of an overall concern about poor quality construction of this building.   Therefore, for slightly different reasons I agree with the finding of negligence by the adjudicator.

The top fixing of the balcony handrails

[22]     The appellant’s argument was that that method of fixing, top fixing, was perfectly acceptable at the time and that is it only with the benefit of hindsight we know that it was a high risk method of construction.  There is some substance to this proposition in the expert evidence.  The evidence was that at that time some Council inspectors  would  allow  balustrade  posts  fixed  through  the  top  of  the  parapet provided the penetrations sealed adequately.

[23]     There is also, however, the evidence I have referred to recorded by and found by Venning J in Byron Avenue that by this time the community was alive to the danger of leaky homes.  The Council’s expert gave evidence that from around 2001 it was understood that this was not good practice and that top fixing of handrails had started to be phased out.   The solution is side fixing.   The adjudicator was of the view that the fixing of the deck rails through the membrane was a defect which should have been observed and noted by the Council during its inspections.

[24]     It is sometimes a matter for the Courts to decide at what stage standards of care   ought   to   be   required   notwithstanding   practice   which   tolerates   certain procedures6.  I think it was an entirely appropriate judgment by the adjudicator based on the appreciation of the problem by the industry and regulators at the time.  I think it was negligent by the Council to tolerate top fixing of balustrades at the time this building was constructed.

Conclusion

[25]     It follows that the Council’s appeal against the finding of negligence fails.

The respondent is entitled to costs on a 2B basis.  Quantum is reserved.

Solicitors:

Heaney & Co, Auckland, for Appellant