Goodman-Jones v Hughey
[2023] NZHC 180
•13 February 2023
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2017-409-000839
[2023] NZHC 180
BETWEEN PHILLIPPA ANNE GOODMAN-JONES and GARETH GOODMAN-JONES
as Trustees of the Bayview Trust Plaintiffs
AND
DAVID JOHN HUGHEY
First Defendant
AND
BUILDING CHOICES LIMITED
Second Defendant
AND
CHRISTCHURCH CITY COUNCIL
Third Party
Hearing: 10-20 October 2022 Appearances:
P J Shamy and S B Henry for the Plaintiffs
J E Bayley and F H Scrase for the First Defendant B G Walker for the Second Defendant
S H Macky for the Third Party
Judgment:
13 February 2023
JUDGMENT OF NATION J
GOODMAN-JONES v HUGHEY [2023] NZHC 180 [13 February 2023]
Introduction 1
Claimed unreasonable labour cost and failure to complete the contract
within a reasonable time, and claim for general damages 9
Background to the plaintiffs’ residual claims 21
Termination of the contract 57
Claim for damages for the cost of removal and replacement of all existing
cladding 64
The framework – spacing of the dwangs - pleadings 68
Framework - Spacing of the dwangs - Determinations 85
Spacing of the dwangs — claim against PlaceMakers 181
The cedar cladding — spacing between the vertical boards 190
The cedar cladding — Cupping 246
Nailing issues 263
Flashings 268
Holes in the cladding 273
Vermin strips 274
Nailing off bottom of cladding on north and eastern elevations 275
Installation of balustrade strapping 281
Appropriate remediation costs as estimated for Mr Hughey 287
Whether removal of the existing cladding and recladding is required to obtain a code compliance certificate from the Council for all work
associated with the home? 291
Summary 338
Costs 351
Introduction
[1] Phillippa and Gareth Goodman-Jones (the plaintiffs) are two of the three trustees of the Bayview Trust. The trustees are the owners of a steep hillside property near Charteris Bay on the Lyttelton Harbour. The property has views to the north over the harbour, Lyttelton and the hills beyond. From late 2014 and through 2016, the plaintiffs built an architecturally designed home on the property.
[2] The plaintiffs contracted the first defendant (Mr Hughey) to be their builder. He traded as David Hughey Builders and employed others on the build. When referring to Mr Hughey’s business, I refer to the first defendant as “Hughey Builders”.
[3] The plaintiffs’ contract with Hughey Builders was terminated by mutual agreement on 10 June 2016.
[4] In these proceedings, the plaintiffs made claims against Hughey Builders in both contract and tort for alleged negligence in carrying out building work on their home.
[5] Part of their claim related to the alleged defective ordering, acceptance and installation of external wall framing and the fixing of vertical cedar cladding to those walls. The plaintiffs claimed it is necessary to remove the existing cladding and reclad the home at a cost of $465,427, including GST. The plaintiffs also claimed Hughey Builders failed to complete the work required of them within a reasonable time and the hours and total amount they charged were excessive. The plaintiffs claimed judgment for $162,043 on account of this.
[6] Hughey Builders claimed, if they were liable for any loss suffered by the plaintiffs, the amount due to the plaintiffs should be reduced on account of the plaintiffs’ contribution to that loss.
[7] The external wall framing was made by the second defendant. It trades as PlaceMakers and is referred to in this judgment as “PlaceMakers”. The plaintiffs claimed that PlaceMakers was liable in both contract and negligence for not supplying framing in accordance with the consented specifications.
[8] The defendants joined the Christchurch City Council (the Council) to the proceedings. The defendants claimed that, if they have any liability to the plaintiffs, the Council should have to share in that liability because the Council was negligent in carrying out building inspections.
Claimed unreasonable labour cost and failure to complete the contract within a reasonable time, and claim for general damages
[9] The plaintiffs pleaded the contract with Hughey Builders in full but said it included express and implied terms, including “[t]hat the property would be built as agreed within a reasonable time”.
[10]The plaintiffs pleaded:
(a)the total labour costs invoiced to them by Hughey Builders was
$389,281.33 including GST, based on 7,579 hours at an average rate of
$51.36 per hour including GST;
(b) those hours were excessive and unreasonable given the stage the property was at when the contract was cancelled; and
(c) a reasonable labour cost for the work done by Hughey Builders, based on the same hourly rate, was $227,238 being 4,424 hours.
[11] The plaintiffs pleaded in contract and in tort that, as a result of Hughey Builders’ failure to undertake and complete the work required of them in a proper workman-like and reasonable manner, failure to complete the contract within a reasonable time and other breaches of contract, particularly in relation to the cladding, they suffered significant stress, anxiety and inconvenience. They sought a figure in general damages for compensation, that figure to be supplied prior to trial. No such figure was provided with opening submissions for the plaintiffs.
[12] The plaintiffs’ third amended statement of claim reflected the opinion of an expert witness, Mr Moore, as to what would have been reasonable hours and costs for Hughey Builder’s work.
[13] The plaintiffs’ claim was the subject of detailed evidence from them and careful cross-examination of them as to what happened over the course of the contract, ultimately the breakdown of the relationship between the parties and the agreed premature termination of the contract on 10 June 2016. The claim also required the collection of some 780 pages of documents in the common bundle and detailed consideration of those documents by expert witnesses. This led to a conferral of expert witnesses and a joint report for the Court. Mr Bayley’s cross-examination of Mrs Goodman-Jones as to all that happened over the course of the contract took up some 48 pages of the notes of evidence.
[14] The plaintiffs’ expert on these issues, Mr Moore, was not available to give his evidence as briefed on Friday 14 October 2022 and, by agreement, the trial was adjourned to Monday 17 October 2022 for this to happen. On the morning of 17 October 2022, Mr Shamy advised the Court that Mr Moore had read the evidence of Mrs Goodman-Jones from the trial. Mr Shamy advised the Court that Mr Moore did not consider he would be of further assistance to the Court and the plaintiffs would not be calling him to give evidence. As to this, Mr Bayley noted the plaintiffs’ claim had been based on the opinion evidence of Mr Moore.
[15] Evidence was then called for Hughey Builders, first with evidence from Mr Hughey and then from their expert witness Mr Hunt.
[16] The plaintiffs’ contract with Hughey Builders was for the plaintiffs to meet Hughey Builders’ costs on an hourly basis. Hughey Builders was engaged on a labour- only basis and not as project manager. Mr Hughey’s evidence addressed in detail what happened over the course of the contract, the basis on which work had been charged, and particular hold-ups for which he said the plaintiffs were responsible either through changes they made to the consented plans, particular work they were undertaking or issues with other contractors they were engaging.
[17] Mr Hunt and Mr Moore expressed their differing opinions as to whether Mr Hughey’s costs and time taken on the build had been reasonable in the experts’ joint report to the Court after their conferral. In his evidence as briefed, Mr Hunt explained why he considered Mr Moore had not taken account of all the work required of Hughey
Builders. When Mr Hunt reached that part of his evidence as briefed, Mr Bayley enquired of the Court as to whether Mr Hunt was required to give this evidence given the plaintiffs’ decision not to call Mr Moore as a witness. In response to a query from the Court, Mr Shamy confirmed that the plaintiffs were not abandoning that part of their claim. Mr Hunt then continued with his evidence as to this.
[18] The presentation of evidence for all parties finished at 3.05 pm on 19 October 2022. The parties were to make submissions the following day.
[19] When the Court reconvened on 20 October 2022, Mr Shamy advised the Court and the other parties that the plaintiffs were not pursuing this aspect of their claim or their claim for general damages.
[20] Accordingly, the plaintiffs’ claims for $162,043.33 for unreasonable costs and time taken by Mr Hughey for the building work required of him, and their claim for general damages are dismissed. There is judgment for Mr Hughey on those aspects of the plaintiffs’ claim.
Background to the plaintiffs’ residual claims
[21] With the plaintiffs’ abandonment of the above claims, it has not been necessary for me to traverse in detail what happened while Mr Hughey was engaged in building the plaintiffs’ home. I need however to refer to aspects of what happened between the parties to explain the background to these proceedings and the remaining issues which I must determine.
[22] The plaintiffs obtained concept plans for their new home in January 2013 and obtained a building consent for the home in March 2014.
[23] At that time, Mrs Goodman-Jones had some 32 years’ experience in the construction industry as a quantity surveyor, had founded her own quantity surveyors’ company and had been a former national president of the New Zealand Institute of Quantity Surveyors. One of the services she provided was project management of costs. Related to that, the work she did for clients could involve liaising with architects and builders and making weekly and monthly site visits. She could also assist clients
with arranging mortgage drawdown payments. This would have required her to look at construction costs claimed and certifying for the bank that those costs were reasonable. The services she provided included reviewing and analysing contractors’ work on site and providing a recommendation for payment. She agreed that, apart from more recent earthquake-related work, the bread-and-butter work of her business was tendering build estimates and costs planning for small to medium sized architectural builds. The architectural build of the plaintiffs’ home was typical of this.
[24] In 2014, Mr Goodman-Jones had been the South Island/Christchurch Manager for the ITI Timspec business (Timspec) for more than 10 years. Timspec sold the Canadian western red cedar cladding, which was to be used with the build, and Mr Goodman-Jones had quite a lot of experience dealing with that building material. Through that business, he had been involved in previous projects with Mr Hughey. Mr Goodman-Jones recommended Mr Hughey to his wife as a local architectural builder.
[25] Mr Hughey had been a carpenter and builder for almost all his working life and established his own business in 1986. He specialised in architecturally designed homes with expertise on difficult sites, including the in Lyttelton Harbour and Sumner areas.
[26] Mrs Goodman-Jones said in her briefed evidence that, after Mr Goodman- Jones approached Mr Hughey in January 2014, she expected the build to start in the coming months and in mid-April had asked Mr Hughey to provide a start date for the house. She referred to the fact they did not receive and sign a contract with Hughey Builders until May 2014 and Mr Hughey did not provide a start date for the build.
[27] Mr Hughey sent the plaintiffs a draft contract on 19 May 2014. Mr Goodman- Jones responded with some required information and suggested a change. The contract was signed on 20 May 2014.
[28] The contract was the Registered Master Builders Federation Labour Only Building Contract. This contract specifically stated the building project was to construct a residential home to the lock up shell stage of building. The contract
provided the plaintiffs were engaging the registered master builder to provide labour- only building services for the works.
[29] Under the contract, the plaintiffs were to be responsible for scheduling work and thus the commencement date for building work to begin. Mr Hughey’s building work could not start until excavation work, which the plaintiffs were arranging, had been completed. The excavation contractor did not start work on the site until mid- September 2014. That work had not been completed by the contractor when that contractor abandoned the work in September 2014.
[30] Mrs Goodman-Jones said in her briefed evidence that Mr Hughey “finally started on site in late November 2014”. That was not however to begin the building work required under the contract. The excavation contractor was supposed to have completed the driveway retaining wall but, due to its workload, was unable to do so. Mr Goodman-Jones asked Mr Hughey to do this work and he agreed.
[31] I do not consider there was any way in which Mr Hughey was in breach of contract or negligent because of the time at which he started work on the building project. Indeed, had he not been prepared to do the excavation and retaining wall work that had been required of the plaintiffs’ original excavation contractor, the building work on the home could have been further delayed.
[32] The plaintiffs initially pleaded that Mr Hughey was to be project manager for the build but, after a judgment of the Court dealing with an application for particulars, that pleading was dropped. Nevertheless, in evidence, Mrs Goodman-Jones said, despite the terms of the contract, Mr Goodman-Jones had agreed with Mr Hughey that Mr Hughey would act as project manager for the build. Mr Hughey denied this.
[33] I was satisfied that, with the labour-only charge out contract, Mr Hughey did not assume any responsibility as far as overall project management was concerned. The plaintiffs had the responsibility for engaging contractors for other work, such as electrical, plumbing and GIB stopping. They contracted with PlaceMakers for PlaceMakers to supply the framing. They arranged for window and door joinery to be supplied. Mr Hughey had to tell them what timber and other materials were required
but it was for the plaintiffs to acquire that material and have it delivered to site. I am satisfied from all the evidence that the plaintiffs wanted to manage overall the build and they thought, with Mrs Goodman-Jones’ expertise and experience, they would be able to do so. Despite this, in 2016, after Mrs Goodman-Jones objected to amounts invoiced by Hughey Builders, she referred to the time Mr Hughey had recorded for his time on the build as “project management”.
[34] In his briefed evidence, Mr Goodman-Jones said, when he arranged for Mr Hughey to do the work, Mr Hughey said “he would focus exclusively on building our house, and would not start any other projects until our one had been completed”.
[35] I do not accept the parties proceeded on the basis that at no time when Mr Hughey was working on the plaintiffs’ build would he become involved with another building project. On 24 January 2015, Mr Goodman-Jones sent Mr Hughey contact details of a neighbour looking for a builder for a new architectural house. The reference was for another architecturally designed house in the same neighbourhood. Mr Goodman-Jones said the architect was “very keen to find a good builder to work with and their plans are in for consent”. That email was consistent with Mr Goodman- Jones having confidence in Mr Hughey with the work he had already done and suggesting Mr Hughey might be interested in working on another project where building would soon start.
[36] Hughey Builders’ work continued until the end of June 2015. Invoices were issued on 11 February 2015, 31 March 2015, 30 April 2015 and 17 June 2015. These all detailed the hours worked by Mr Hughey and four other people working for him. The invoices were all paid promptly.
[37] The plaintiffs accepted in evidence that Mr Hughey’s progress on the build had been good through until June 2015. This was despite a hold up in Mr Hughey’s work after Mr Goodman-Jones had asked Mr Hughey on 7 March 2015 to put on hold all work on the studio wing because the plaintiffs were seeking to vary the consented plans to alter the conservatory, studio bedroom and bathroom, and to provide for additional decking. This held up getting the roof on. Mr Hughey received the revised consented plans seven weeks after the work was put on hold.
[38] Mrs Goodman-Jones said, as Mr Hughey had started building a new house build up the road, he was not on site in July 2015. Mr Goodman-Jones said, in July 2015, Mr Hughey was “nowhere to be seen on site”. Their assertions as to that were inconsistent with the evidence of Mr Hughey, the hours charged in an invoice of 31 August 2015 for the previous two months, and an email of 26 July 2015 where Mrs Goodman-Jones was positive about apparent progress.
[39] I accept Mr Hughey’s evidence that he had been ready to install the cedar cladding in June 2015 but it could not be fixed until windows and other joinery had been delivered to the site and installed. Mr Goodman-Jones said the windows and cedar were not supplied to the site until 20 September 2015. Mr Goodman-Jones accepted in cross-examination that, as at the end of August 2015, with the cedar and windows still to be organised, and none of the interior finishes having been started, it was probably unrealistic to expect that Mr Hughey would be near the end of the build.
[40] Mr Hughey issued an invoice dated 30 September 2015 for work since 31 August 2015.
[41] The hours charged were consistent with Mr Hughey and his employees working on the build in the same way as they had in the period through to June 2015.
[42] Despite that, on 9 October 2015, Mrs Goodman-Jones sent an email to Mr Hughey, copied to Mr Goodman-Jones, consistent with her being extremely stressed at the time the build was taking and what it was costing. Despite what was in the invoice of 30 September she said both she and Mr Goodman-Jones were “bitterly disappointed with progress on the house in the last week” and that he was “seriously letting the side down”. They were incurring costs in the order of $1,180 (scaffolding
$930 and rent $250) a week and were having to obtain another loan. She suggested Mr Hughey had said they would be at the lock up stage by 19 November. She asked for urgency in getting the cladding on and the windows and doors in.
[43] On 18 December 2015, Hughey Builders issued an invoice for work as at 30 November 2015. Including GST, it was for a total of $33,452.35 and included time
for Mr Hughey of 14.5 hours and substantially more hours for four other employees consistent with them working full-time on the site.
[44] Mrs Goodman-Jones sent an email to Mr Hughey on 24 December 2015 in which she said she was “bitterly disappointed with the progress on the house” and was beginning to think that the house would never be finished. She said:
I don’t doubt that the guys have been on site but we gave up the rental on the cottage on the assurance by you that we would be in the studio by Christmas, now we are faced with at least another month in the trailer.
Gareth & I have spent last week pleading with the subcontractors to come & finish wiring & plumbing so the gib fixer can get started in January as there seems to have been to [sic] communication or co-ordination – sorry I thought we had engaged you to project manage the build for us as we are both extremely busy.
[45]The email, signed off by both she and Mr Goodman-Jones, ended:
Extremely disappointed and upset all round, I have attached a payment schedule for the assessed work to date, we have no interest in discussing it with you until after our holidays & we are back at work on the 11th January[.]
[46] The attached schedule was for a total of $16,195.45 with no allowance for Mr Hughey’s time (which was described in the schedule as if it was for “project management”) and the amounts payable for the four employees described as “assessed base wage”, being half of what Hughey Builders had claimed in the 18 December 2015 invoice. The amounts invoiced by Hughey Builders were consistent with previously invoiced hourly rates. The email was sent to Mr Hughey at 2.05 pm on Christmas Eve.
[47] Both Mr and Mrs Goodman-Jones said, around this time, Mrs Goodman-Jones was on the verge of a mental breakdown.
[48] There was a Council inspection on 5 January 2016. It stated “[c]edar vertical shiplap generally completed”.
[49] Mrs Goodman-Jones said Mr Hughey contacted them on 6 January 2016 and suggested a meeting to discuss progress and create a schedule of work to complete the project.
[50] On 15 January 2016, Mr Hughey issued an invoice for work as at 18 December 2015. It had no charge for his 9.5 hours but work for three other employees was charged as if they had been working full time on the site through until 18 December 2015. Mr Hughey said, and I accept, that his hours as detailed then and in subsequent invoices were for time he spent actually working on the site as a builder and not time he spent on the site supervising and checking on the work others were doing.
[51] On 18 January 2016, Mrs Goodman-Jones issued a payment schedule relating to the invoice for work through to 18 December 2015. There was to be no payment for Mr Hughey’s time which she again described as project management. Her allowance for the three employees was half the rate Mr Hughey had charged.
[52] On 28 January 2016, Mr Hughey issued an invoice for work carried out to 15 January and 18 to 22 January. The invoice detailed the work done. There was no charge for Mr Hughey’s 3.5 hours. The two employees’ time was charged consistent with them working time and at the hourly rate at which their work had been charged in previous accounts. Mrs Goodman-Jones paid that account in full stating “progress on site has been what I would expect”. At the same time, she provided a schedule setting out further work to be completed with the time she forecast would be needed for that work.
[53] The parties met on 1 February 2016. At that meeting, they agreed the amount charged for time in the November and December invoices would be halved. Mr Hughey issued a credit accordingly and a revised statement.
[54] Mr Hughey issued further invoices on 16 February, 20 March, 8 April and 18 May 2016. Those invoices detailed Mr Hughey’s time but charged at zero and for employees at specified hourly rates consistent with earlier invoicing. The work covered in those invoices was set out in some detail in the accounts.
[55] The plaintiffs were living on site over that period. Mrs Goodman-Jones was working there. She was fully familiar with the work they had to do and what they had achieved. On 1 May 2016, Mrs Goodman-Jones issued an updated work schedule.
[56] On 2 June 2016, Mrs Goodman-Jones asked Mr Hughey for his thoughts as to what would be needed to have the building completed to “practical completion” on 19 June 2016. Mr Hughey provided a list. On 7 June 2016, Mrs Goodman-Jones came back with her and Mr Goodman-Jones’ suggestions.
Termination of the contract
[57] Mr Hughey and the plaintiffs arranged to meet on the site early on 8 June 2016 to discuss the further work the plaintiffs wanted Mr Hughey to do. Mr Hughey said he was not well and slept in. He thus failed to attend the meeting. Mr Hughey said, as soon as he realised what had happened, he rang Mr Goodman-Jones and apologised, and Mr Goodman-Jones said he accepted Mr Hughey’s apology. This was consistent with Mr Goodman-Jones’ evidence. Nevertheless, at 10.50 pm that night, Mr Goodman-Jones sent Mr Hughey an email. It was in emotional and derogatory terms, banned one of Mr Hughey’s employees from the site but clearly indicated the plaintiffs no longer had any trust in Mr Hughey.
[58] Mr Hughey said, overnight, he decided he could no longer continue with the contract. He arranged to meet with Mr Goodman-Jones the next day and did so at Mr Goodman-Jones’ work place.
[59] Mr Goodman-Jones told Mr Hughey they did not think Mr Hughey was capable of completing the home and they were terminating their contract with him. Mr Hughey said he had never not completed a house but he accepted the termination and confirmed that in a letter of 10 June 2016. The plaintiffs confirmed the termination in an email but thanked him for his “considerable effort and input”.
[60] Hughey Builders subsequently invoiced the plaintiffs for work carried out on 2-6, 9-10 and 16-20 May 2016, 30 May–3 June and 7-10 June 2016.
[61] On 4 August 2016, Mrs Goodman-Jones sent Mr Hughey a detailed schedule of work said to have been completed between 14 January and 10 June 2016, with a schedule of the hours which they allowed for the work she had detailed and claiming as a result that there was an overcharge of $11,869.14 including GST. The plaintiffs purported to charge Mr Hughey for that amount.
[62] On 12 October 2016, Hughey Builders issued an invoice for the amount credited to the plaintiffs in early January 2016 as to earlier invoices and for work and travel he said he was entitled to charge under his contract with the plaintiffs.
[63] An arbitrator held the plaintiffs had to pay Hughey Builders’ invoices for work done in May and June 2016 but made no determination as to the invoice issued on 12 October 2016. Hughey Builders never pursued the amounts they had invoiced the plaintiffs with that invoice. The plaintiffs’ invoice for a claimed over-charge was effectively subsumed in the claim they made in these proceedings which was ultimately abandoned.
Claim for damages for the cost of removal and replacement of all existing cladding
[64]The home was to have vertical cedar board cladding supplied by Timspec.
[65] The plaintiffs claimed, in breach of contract and their duty in tort to undertake and complete the work in a proper workman-like and reasonable manner, Hughey Builders failed to install the cladding in accordance with:
(a) Timspec CertClad installation literature;
(b) the approved consented plans;
(c) the New Zealand Building Code (the Building Code), cl E2;1 and
(d) good practice applicable for the installation of the cladding.
[66] The plaintiffs claimed, because of the defective installation of the cedar cladding, all the cladding needs to be removed and replaced with new cladding. They sought damages in the sum of $465,427 including GST for the cost of doing this work.
[67] The plaintiffs claimed $19,000 including GST for alternative accommodation while this work is being carried out, general damages as already referred to, and
1 Building Regulations 1992, sch 1.
interest on the judgment sum from 9 December 2019, when an amended statement of claim was filed, to the date of payment.
The framework – spacing of the dwangs - pleadings
[68] The cladding had to be fixed to framework the plaintiffs obtained from PlaceMakers. The consented plans and specifications for the framework required dwangs to be spaced at 400 mm centres. The framework supplied by PlaceMakers generally had the dwangs spaced at 480 mm centres, or thereabouts, with some spacing in excess of that.
[69] The plaintiffs claimed Hughey Builders was negligent in installing cedar cladding fixed to dwangs which were not at 400 mm centres and not nailing off the cladding at 400 mm spacing.
[70] Hughey Builders pleaded the framework was supplied by PlaceMakers to the plaintiffs in accordance with an estimate which specified the spacing for the dwangs was to be at 480 mm centres. The plaintiffs did not bring to the attention of Hughey Builders the difference between the spacing required of PlaceMakers at 480 mm centres and the spacing of 400 mm as referred to in the consented plans and specifications.
[71] Hughey Builders admitted there were isolated areas in the garage where nails through the cladding had missed dwangs. They said that defect could be remedied through the nails being punched out and with re-nailing into the dwang. Hughey Builders denied that issues with the cladding needed to be addressed through removal and replacement of the cladding as claimed by the plaintiffs. They pleaded the installed cladding either:
(a) complied with Ministry of Business, Innovation and Employment’s (MBIE) acceptable solution E2/AS1 and therefore complied with cl E2 of the Building Code, pursuant to s 22 of the Building Act 2004;2 or
2 Ministry of Business, Innovation and Employment Acceptable Solutions and Verification Methods
- For New Zealand Building Code Clause E2 External Moisture (3rd ed, Ministry of Business, Innovation and Employment, 2014).
(b) sufficiently complied with MBIE acceptable solution E2/AS1 to be compliant with cl E2 of the Building Code.
[72] In their pleadings, Hughey Builders admitted there were isolated instances of nails installed without declining pitch, missing nails, hammer marks on (or otherwise damage to) cedar boards and dents in flashing attributable to workmanship requiring remediation by the isolated replacement of cedar boards, new nailing and tweaking out the dents in the flashing.
[73] Hughey Builders pleaded the plaintiffs were contributorily negligent and/or failed to mitigate the alleged losses and are estopped from raising the claim as to the dwangs and cladding installation. Hughey Builders pleaded the plaintiffs:
(a) were responsible, under the general conditions of contract, for supervising PlaceMakers’ work in providing the framing and, by reason of Mrs Goodman-Jones’ expertise and experience as a registered quantity surveyor and Mr Goodman-Jones’ knowledge as the South Island manager of Timspec, they were aware, or ought to have been aware, throughout the project works of the issues with the cladding pleaded by them;
(b) did not, during the contracted works, issue any written notice of default pursuant to cl 46 of the general conditions of contract;
(c) did not afford Hughey Builders any reasonable opportunity, including under cl 46 of the general conditions of contract, to inspect and (if necessary) rectify the issues pleaded by them; and
(d) did not during the contracted works issue any notice under cl 53 of the general conditions of contract specifying a dispute and requiring mediation.
[74]Hughey Builders said:
(a) On 11 May 2015, for the purpose of ensuring the building work was being carried out in accordance with the building consent, the Council inspected the dwang spacing in the dwelling (excluding the garage) prior to any
cladding being affixed. It recorded in a report that dwangs were “at 500 centres”. The inspection outcome was a pass.
(b) On 28 July 2015, the Council undertook an inspection of cavity battens to which the cladding had to be fixed, consistent with dwang placement. The placement of the battens was approximate to the dwang centres which were typically at 480 mm centres and up to a maximum of 500 mm centres in the building. The Council issued a site inspection notice on 28 July 2015 recording the cavity battens had been inspected and were in accordance with consent plans.
(c) On 27 October 2015, the Council passed building work for the garage where the spacings were at 500 mm, 470 mm and 495 mm centres.
[75] Hughey Builders joined the Council as a third party, claiming contribution under s 17 of the Law Reform Act 1936. They claimed that, if the dwangs did not conform with the consented plans and specifications or the Building Code, then the Council, in carrying out its inspection role under the Building Act 2004, breached a claimed duty of care to the plaintiffs in passing the building work inspected on 11 May 2015, 28 July 2015 and 27 October 2015, with dwangs in the framework at spacings typically at 480 mm centres and up to a maximum of 500 mm centres.
[76] Hughey Builders pleaded that, had the Council identified an issue as to the spacing of the dwangs and brought this to the attention of Hughey Builders, the dwang spacing could have been changed and the plaintiffs would not have suffered any or the majority of the loss which they pleaded as against Hughey Builders. Hughey Builders accordingly pleaded that, if they were liable to the plaintiffs as a tortfeasor (which they denied), then they sought a contribution from the Council as a joint tortfeasor.
[77] As against PlaceMakers, the plaintiffs claimed for breach of contract and in negligence. The plaintiffs claimed PlaceMakers had been at fault in not spacing the dwangs in accordance with the consented plans and with the Timspec cladding
specifications. The Timspec installation manual required dwangs to be at a maximum of 480 mm centres.3
[78] The plaintiffs claimed that, as a result of PlaceMakers’ failure to supply framework with the stipulated dwang spacings, the plaintiffs cannot obtain a code compliance certificate from the Council and do not have the benefit of the warranties and guarantees provided by Timspec. They claimed that, as a result, the existing cladding needs to be removed and the home re-clad. They sought damages against PlaceMakers in the same way as they had claimed against Hughey Builders.
[79] PlaceMakers pleaded that it supplied the framing in accordance with a quote of 5 May 2014 for the plaintiffs in which dwang spacing was recorded at 480 mm, which complied with the building code. They pleaded that Mrs Goodman-Jones accepted that quote and this was the basis on which PlaceMakers manufactured the framing. They pleaded the framing was fit for the purpose and complied with the requirements of:
(a) the relevant quote;
(b) the Building Code;
(c) para 9.1.8.5 of acceptable solution E2/AS1 published by MBIE;4 and
(d) the Timspec CertClad Weatherboards Vertical Shiplap Cavity System with Rigid Air Barrier Installation Manual.5
[80]PlaceMakers denied the framing required remediation and recladding.
[81] PlaceMakers also pleaded liability to the plaintiffs was excluded by limitation of liability clauses in the terms of trade attaching to the credit account which the plaintiffs had arranged with PlaceMakers, terms which applied to PlaceMakers’ manufacture and supply of the framework.
3 Timspec Timber Specialists Timspec CertClad Weatherboards Vertical Shiplap Cavity System with Rigid Air Barrier Installation Manual (Version 2, Timber Specialists Ltd, Auckland, 2015).
4 Ministry of Business, Innovation and Employment, above n 2.
5 Timspec Timber Specialists, above n 3.
[82] PlaceMakers also pleaded that, if the plaintiffs had suffered loss as a result of the fault of PlaceMakers (which they denied), such loss was a result of the plaintiffs’ conduct in signing the second of the quotes recording the dwangs were to be spaced at 480 mm intervals, taking delivery of the framing and not notifying PlaceMakers of any alleged defects in timeframe stipulated in the terms of trade or at all.
[83] PlaceMakers also made a claim against the Council for contribution under s 17 of the Law Reform Act essentially on the same basis and with the same particulars as Hughey Builders had made their third party claim against the Council.
[84] The Council denied it had any liability to Hughey Builders or PlaceMakers. In opening, it submitted the plaintiffs’ complaints could be adequately addressed through the plaintiffs applying to the Council for a minor variation to the building consent to vary the dwang spacings from 400 mm centres to 480 mm centres. The Council’s case was that, once the remaining building construction work had been completed, if an application for a minor variation was made, a code compliance certificate would likely be issued. The Council’s case was that its involvement with the property to date had not fallen below a reasonable standard of care and the Council’s involvement had not caused the plaintiffs any loss.
Framework - Spacing of the dwangs - Determinations
[85]My determinations as to this follow.
[86] The dwangs are the wooden horizontal supports fixed between the upright studs. The spacing between the dwangs is stipulated by reference to the required distance between one dwang and the dwang either below or above, measured from the centre of one dwang to the centre of the next dwang, hence the reference to a measurement at 400 mm or 480 mm centres.
[87] The plaintiffs’ architect completed working drawings and specifications for the home in November 2013. The plans provided for dwang spacing at 400 mm centres, closer than the Timspec specification for spacing at a maximum of 480 mm centres. The plans and specifications were not prepared in a way that drew attention to this required spacing. Spacings at that measurement were highly unusual. PlaceMakers,
which had supplied framing for similar architectural residential homes and other builds in Canterbury, had never previously been asked to supply framing at 400 mm spacings. MBIE specifications issued in accordance with the Building Code for this cladding stipulated spacings at 480 mm centres. The construction of framing with dwangs at 400 mm centres would thus have required the use and cost of timber not needed to meet building code requirements.
[88] Mrs Goodman-Jones, through her business as a quantity surveyor, had the experience and expertise to understand the detail and requirements of those plans and, in particular, the requirement for framework for external walls to be with dwangs at 400 mm centres. Mr Goodman-Jones, as the manager of the business supplying the Timspec cladding, was familiar with the Timspec specification that framework be at a maximum of 480 mm centres. He said he was aware that the requirement in the architect’s specifications was for dwang spacing at 400 mm centres.
[89] The Council issued its building consent for the plaintiffs’ home on 28 March 2014. That consent was for the home to be built in accordance with the architect’s specifications. Those specifications included the requirement for dwangs to be placed at 400 mm centres in the framework for external walls.
[90] On 3 December 2013, Mrs Goodman-Jones approached the owner of PlaceMakers, who she knew through her work as a quantity surveyor. That led to her being able to open an account with PlaceMakers, not as normally applied for other builders but on a better “friends and family” cost plus 10 per cent basis.
[91] Mrs Goodman-Jones provided PlaceMakers with the consented plans and specifications and sought an estimate of the cost of all materials required from PlaceMakers for the build.
[92] On 19 December 2013, PlaceMakers provided an estimate for the cost of materials for the plaintiffs’ home. The estimates listed Mrs Goodman-Jones as both the customer and the builder. The estimate included $27,629 for pre-nail frames “as per quote”. It referred to external frames as being 100 x 50 rad SG8 H1.2 PD KD and dwangs at 480 mm.
[93] After receiving the estimates, Mrs Goodman-Jones went back to PlaceMakers to clarify that the exterior wall framing was 140 mm x 50 mm, not 100 mm x 50 mm and that they were intending to use LVL (laminated) framing.
[94] On 5 May 2014, Mrs Goodman-Jones received revised estimates from PlaceMakers. The detail for pre-nail frames as referred to in that estimate was for dwangs at 480 mm centres.
[95] On 26 November 2014 at 7.55 pm, Mrs Goodman-Jones emailed consent drawings for the home to Mr Hughey, with a copy to Mr Gee of PlaceMakers.
[96] At 7.56 pm, Mrs Goodman-Jones emailed Mr Hughey, with a copy to Mr Gee. The email said:
This time - Specification attached – PLEASE NOTE – we are going for J FRAME framing – Placemakers have given a [sic] us a revised quote for this
[97] Attached was a PlaceMakers “Manufacturing Job Book-In” document. Highlighted on it was a reference to J Frame LVL studs and, in handwriting, details of the stud size at 150 x 100 and dwang centres on external framing at 480.
[98] At 7.47 am on 27 November 2014, Mr Gee emailed Mrs Goodman-Jones thanking her for her email with the plans and advising he would be meeting with Mr Hughey that morning “to book dates”.
[99] Having heard the evidence from Mr Hughey and Mr Gee, I am satisfied that, at that point, neither checked the consented plans and specifications as to the required spacing of the dwangs. They probably would not have had time to do so. Mr Gee would not, at that time, have produced all the plans and specifications in paper form.
[100] Later that day, on 27 November 2014, Mr Gee went to the building site and met with Mr Hughey to discuss delivery dates. Neither Mr Gee nor Mr Hughey took the consented plans and specifications to this meeting. As a result of that meeting, Mr Gee prepared the book-in sheet.
[101] In his prepared brief of evidence, Mr Gee said this form was filled out together with Mr Hughey. Mr Gee said he recorded in it that the dwang spacing was to be at 480 mm based on Mr Hughey’s instructions to him. In his evidence, Mr Hughey denied ever seeing this form. Mr Hughey said they did not discuss anything in relation to the framing design and specification. Mr Gee accepted in cross-examination that the wording in his brief was not correct. He accepted that, apart from the delivery dates, the information in that pre-order form was based on the details in the estimates provided to Mrs Goodman-Jones.
[102] Although Mr Gee said in briefed evidence that Mr Hughey agreed on the specifications, I accept Mr Hughey’s evidence that they did not then discuss the detailed specifications for the framing. There would have been no reason to do so. There was evidence from Mr Strawbridge, the head detailer for PlaceMakers frame and truss making business, and the evidence of Mr Ruth, the detailer who implemented the software programme used in the manufacture of framing such as this. I am satisfied that those at PlaceMakers making the frames would have been primarily concerned with ensuring that the specifications met what Timspec required for their cladding system, that is dwang spacing at 480 mm centres. This was also the spacing normally required for such cladding systems in accordance with building code requirements. There would thus have been no reason for Mr Gee and Mr Hughey to be discussing that aspect of the estimate.
[103] The booking form prepared by Mr Gee had spaces for it to be signed on behalf of PlaceMakers and by the customer. Consistent with Mr Hughey’s evidence that he had not seen this document and the fact he was not the customer, he did not sign that document.
[104] Consistent with the labour-only contract between the plaintiffs and Mr Hughey, the plaintiffs were responsible for arranging for PlaceMakers to manufacture and supply the framing. Consistent with her experience and the responsibility Mrs Goodman-Jones had assumed in effectively overseeing and managing the whole project, she concerned herself with the details of the specifications that PlaceMakers had relied upon. She picked up that they had quoted for the job with the framing at the incorrect size and for it having to be for LVL framing.
[105] At their meeting, Mr Hughey asked Mr Gee to send to him copies of PlaceMakers’ estimates so he was aware of the materials and quantities the plaintiffs were proposing to use in the build. On 28 November 2014, PlaceMakers sent him the 40-page estimate documents. In his evidence, Mr Hughey noted that, in the documents, there was a reference to dwangs at 480 mm centres but he did not say that, on receiving all those documents, he had gone through them and picked up this detail. In cross-examination, it was not suggested he had done so.
[106] In January 2015, Mrs Goodman-Jones emailed Mr Hughey requiring him to confirm measurements for windows which PlaceMakers was making.
[107] The book-in sheet prepared by Mr Gee was not signed by any party. Nevertheless, I am satisfied that PlaceMakers proceeded to make the required trusses and framework in accordance with the previous estimates and associated specifications with the variations Mrs Goodman-Jones required as to the size of framing, use of LVL and some amendments for window measurements which, in accordance with Mrs Goodman-Jones’ request, Mr Hughey had provided. Those measurements did not relate to dwang spacing.
[108] I find that the contract for the supply of the framing was between PlaceMakers and the plaintiffs and was for the framework to be made with dwangs at 480 mm centre spacings. Mr Hughey did not require or instruct that framework be made at 480 mm spacings. I am satisfied that PlaceMakers made the framework required for external walls in accordance with dwang spaces as specified in their estimates and the plaintiffs agreed to them proceeding on that basis. They paid PlaceMakers’ account for the making and delivery of the framework without controversy.
[109] The framing was delivered to the site on 30 January 2015 and 17 February 2015. PlaceMakers expected that, if there was a problem with the building of frames, they would be advised of this by the builder on site. The contractual documents which the plaintiffs had with PlaceMakers also required the customer, here the plaintiffs, to advise PlaceMakers promptly of any defects with the framing.
[110] Mr Hughey measured and checked the spacing, adequately enough to be satisfied that the framing had been made generally with spacings at or around 480 mm centres.
[111] Mr Hughey said, and I accept, that nothing jumped out to him to suggest there was an issue over the spacing. He said it never entered his mind that the plaintiffs or PlaceMakers would have specified for PlaceMakers to build framing on a basis that the plaintiffs were not happy with. He had the Timspec installation manual and knew that dwangs spaced at 480 mm centres met Timspec requirements. He had no reason to be concerned because the spacings at 480 mm centres was consistent with building code compliance documents for vertical shiplap weatherboards.
[112] The framing was not installed immediately because building work was delayed as a result of the plaintiffs wanting to change plans for the studio and conservatory. The plaintiffs were regularly around the site after the framing had been delivered. Neither of the plaintiffs had any concern as to the framing.
[113] Mr Goodman-Jones subsequently put in the insulation after the rigid air barrier (RAB) plywood backing had been fixed to the framing. To do that, he had to measure the spacing between the dwangs. He thus knew that the spacing was generally at 480 mm centres or thereabouts and must have known that, in some instances, it was more than that. Although he said he had been aware that the consented plans and specifications required the spacing to be at 400 mm centres, he did not raise this as an issue with either Mr Hughey or PlaceMakers at that time. PlaceMakers was not aware of any allegation that they had manufactured the frames incorrectly until shortly before they were joined in the proceedings as a second defendant in 2019.
[114] The frames were subsequently put up with the spacing clearly evident to the plaintiffs and to all those working on the site. No one considered there was an issue as to that spacing.
[115] On 11 May 2015, a council inspector carried out a pre-roof inspection. In a report from that inspection of 11 May 2015, the inspector noted nogs (dwangs) at 500 mm centres as being a passed item.
[116] On 28 July 2015, a council inspector undertook a building and sill wrap or cavity batten inspection. The report from that inspection dated 28 July 2015 recorded that consented plans had been viewed on site, RAB board had been installed appropriately, supervision had been competent, RAB board had been nailed off in accordance with the consented plans, and cavity battens had been inspected and were in accordance with consent plans.
[117] On 27 October 2015, another council inspector carried out a pre-roof inspection for the detached garage. Catherine McPherson, has been a building inspector with the Council since 2013. At the time of the hearing, she was a building consent processing officer with the Council. Prior to being with the Council, she had been an architectural draftsperson.
[118] In her evidence, Ms McPherson said this was an on-demand inspection which she fitted into her programme for the day at the request of Mr Hughey. She said she did that to assist the owners and the builder to progress the build (a matter which I note was, at the time, a priority for the plaintiffs). Without measuring the spacing, she noted the dwangs were at the correct spacing of 400 mm. She said this was how they appeared to her. She said she did not measure or detail what she observed in ways that she might normally have done because her experience with Mr Hughey led her to be confident that he would have ensured the dwangs had been placed in accordance with relevant specifications. There was no suggestion from her that Mr Hughey had said to her that the dwangs were at 400 mm spacings.
[119] The framing was thus installed in ways that the Council had approved, with spacing generally consistent with the specification for spacing as referred to in PlaceMakers’ estimates, accepted by the plaintiffs.
[120] In accordance with the consent plans and also the Timspec manual for the use of Timspec cedar cladding, plywood was then fixed to the outside of the framing.6 Castellated battens were fixed to this cladding in line with the dwangs. The castellated battens have indentations as shown in the diagram below:
6 Timspec Timber Specialists, above n 3.
[121] The plywood, described as RAB board, provided considerable further structural strength to the framing. It also ensured there was a solid barrier between air movement from the exterior to the interior of the house so as to prevent moisture ingress beyond the RAB board. With the castellated battens in place, there was to be a cavity between the RAB board and the vertical cedar cladding. The vertical cedar cladding was to be nailed through the battens on to the dwangs. This ensures there can be air movement within that cavity space. If any moisture gets past the cladding, it can be aerated and dispersed through air movement. In an extreme weather event, moisture can escape from the base of the cavity space.
[122] The plaintiffs referred to the BRANZ House Building Guide, which makes the point:7
Air barriers
In most buildings, the air pressure inside is lower than that outside, particularly when windy, and air will move freely from the outside to the inside through any gaps, holes or joints. This flow can carry any water that is present into the building. Therefore, the design and construction of our buildings needs to
7 Trevor Pringle House Building Guide (3rd ed, BRANZ, Porirua, 2011).
incorporate an air barrier to stop this occurring – it is a requirement of designs to E2/AS1. The aim is to have the air pressure on the face and the back of the cladding almost the same to remove the driving force from the pressure difference.
[123] The cedar cladding was delivered to the site in late September 2015. As the Council had noted, the fixing of cladding was generally completed by 5 January 2016. There was only one small area of cladding on the upper southern elevation of the building to be installed when the contract was terminated on 10 June 2016.
[124] The plaintiffs were living in a caravan on the site from early 2016. I am satisfied that, over the intervening time, the plaintiffs were fully aware of all that had been happening with the build.
[125] I am satisfied that, as at the date of termination, neither the plaintiffs, nor Mr Hughey nor the Council inspectors had considered there was an issue the building work did not comply with the consented plans and specifications for dwang spacings to be at 400 mm centres.
[126] Mr Calvert is a building expert with the firm Maynard Marks. In November 2016, Mr Calvert was instructed by counsel for the plaintiffs to investigate the installation of the cladding and produce a report making comment on alleged defects and deficiencies discovered. In his summary of construction defects with potential for future failure, the first item he mentioned was “incorrect installation of cedar cladding fixings (stainless steel nails): Horizontal Nailing Installation”. In that report he said the nailing of the cladding was measured on site at multiple spacings ranging from 455 mm to 683 mm centres. He noted that the building consent documentation required dwangs at 400 mm centres and the Timspec CertClad installation manual required dwangs to be at a maximum of 480 mm.8 He said, in the garage, some nails had missed the dwangs, it was not known if this defect was reflected within the dwelling and further investigation would be needed to establish if that was the case.
[127] Mr Calvert said, to remediate construction and workmanship defects he had identified, as a minimum, the recommended works required the following:
8 Timspec Timber Specialists, above n 3, at 5.
(a) careful removal and disposal of the shiplap cedar weatherboards;
(b) removal and disposal of the RAB;
(c) removal and reinstallation of the framing dwangs to suit design and manufacturers’ specifications;
(d) replacement of the RAB;
(e) supply of shiplap cedar weatherboards; and
(f) installation of shiplap cedar weatherboards to the specifications in the manufacturers’ installation manual.
[128] Mr Calvert advised that multiple defects, poor installation and workmanship issues with the cedar cladding installation meant the cladding did not conform with the conditions and limitations set out the Timspec CertClad manual and would not be guaranteed by the manufacturer. He said it was Maynard Marks’ opinion that the Council would not have reasonable grounds to issue a code compliance certificate as the dwelling and garage had not been constructed to the design documentation.
[129] Mr Calvert’s report and opinion were reflected in the plaintiffs’ initial statement of claim filed on 10 October 2017.
[130]Mr Calvert made a further inspection of the home on 1 November 2018.
[131] In letters to the plaintiffs of 11 October and 20 November 2019, Mr Calvert reported on the invasive investigation of five interior areas of cut-out plasterboard to establish the actual dimensions of the structural frame for evidential purposes. None of the dwang spacing was identified at more than 500 mm. No evidence was found of nails missing dwangs through those invasive investigations. In those letters, he referred to the consented documents requiring dwangs at 400 mm centres without any reference to the Timspec specification for 480 mm centres.
[132] On 17 July 2020, Mr Thornton from the Council carried out a further inspection of the property with checks as to roof, cladding and weather tightness. In a report
from that inspection, he advised they discussed a potential issue over flashings and, as to that, the report said:
It has been discussed on site during this inspection and the owners are not aware of any issues with moisture/leaks etc. in the time of ownership since the dwelling has been enclosed.
In the garage it has been observed there [are] signs of blackening to the timber
– this has been discussed and is consistent with staining from construction.
…
Whilst the timspec cladding system refers to the cladding over dwangs/battens @ 480 mm crs, the plans and specs refer to 400 mm centres.
As per the third-party investigation reports from Maynard Marks (20th November 2019 and 11th October 2019) it has been discovered the dwang spacing is typically 480mm average (465mm-500mm). This does not align to the plans and specifications but appears to have been constructed to align with the cladding specifications.
During the conversation with Graham Calvert (Maynard Marks) we asked if any undue moisture had been present - to which none had been found.
We discussed the path to try and see if any amendment could be considered to see if the cladding would comply with the performance requirements of NZBC E2 whilst not in accordance with the consented design, and it is the owners wishes for this work to be constructed as per the consented plans/specs.
[133] On 22 February 2022, Mr Calvert produced a further report. In that report, he said defects he had identified with the framing and cladding required the remedial removal of existing material and recladding in the manner he had described earlier.
[134] On 29 June 2018, on the instructions of Mr Hughey’s solicitors, Mr Hunt of Hunt Building Consultants inspected the home during a site visit that lasted from 10.00 am until 5.35 pm.
[135] Mr Hunt prepared a detailed report of 22 June 2022 in response to the Maynard Marks report of 22 February 2022. In his report, he identified spacings of dwangs in the garage from the bottom plate, going up at between 460 mm and 500 mm, 220 mm from the fifth dwang to the top plate. He also said he measured the average centre line of the nailed head fixings that secure the cedar cladding around the buildings and identified them as being between 470 and 500 mm. On the northern elevation of the house (referred to on some occasions in documents and evidence as the west elevation
but on the plans as the north elevation), he identified a spacing of 630 mm but that was because the bottom of the cladding had not been nailed off at that point. Mr Hunt said removal of the cladding and RAB board and recladding was not needed to remedy the relatively minor defects he had observed with the building work. He then provided an estimated cost for remedying such defects as he had identified at $34,655 including GST.
[136] In their experts’ report to the Court of 22 July 2022, Mr Calvert and Mr Hunt agreed the framing did not comply with the approved building consent plans, approved specifications and the Timspec installation manual. Mr Calvert considered the non- compliance needed to be physically remediated. Mr Hunt was of the view that the exterior wall framing was unlikely to need additional dwangs to be installed for the purpose of the cladding complying with the performance criteria of the Building Code.
[137] Both Mr Calvert and Mr Hunt were well qualified to give the evidence they did as experts. There were certain important issues in the case where they were ultimately in agreement. There were however some significant areas of disagreement.
[138] One such issue was over whether the spacing between the external vertical cladding boards, as apparent from the outside, indicated they had been nailed to the framing in a way which was defective. A related issue was whether the spacing between the vertical boards would result in damage to the cladding and weathertightness issues and thus require recladding of the whole house and garage as an appropriate remedial measure. Another issue was whether nailing the foot of exterior cladding on the northern elevation of the home required removal of decking and of a ribbon board which supported the decking next to the cladding on that side of the house, and the propping up of the deck to allow access to the cladding in that area.
[139] Generally, where there were conflicts between these two experts, I preferred the evidence of Mr Hunt. This was because he was able to justify his opinion with reference to his practical experience of working with the materials and his actual observation of the material, such as the cedar cladding which he was discussing. He also demonstrated knowledge and experience of how such cladding would perform over time, and how it could be affected by exposure to sunlight, moisture and weather
conditions in the way he described. When he did give such explanations, I found them to be considered, logical and rational, and thus not based just on speculation or assumption.
[140] I was also concerned that, given the circumstances in which Mr Calvert was engaged by the plaintiffs, the focus of his initial investigation had been on finding evidence of defective workmanship. He had not determined to what extent any defects he identified would compromise the structural integrity of the building work or mean that the building might fail to meet Building Code requirements, and thus what steps the plaintiffs should reasonably take to remedy the defects he had identified and to be able to obtain a code compliance certificate. This was most evident in his failure to acknowledge in any of his reports for the plaintiffs that the dwang spacing, as he had identified in the building, with nailing off of cladding and weathertightness protection as had happened, would provide the same structural integrity for the framing and the cladding as would have been achieved with dwang spacings at 400 mm or 480 mm centres. He had failed to advise the plaintiffs of this despite saying in his initial report to the plaintiffs that recommended remediation work would require the installation of shiplap cedar weatherboard to the manufacturer’s manual specifications, not the 400 mm spacings referred to in the consented plan and specifications.
[141] In his initial report of November 2016, Mr Calvert identified for the plaintiffs that there was sporadic spacing between the vertical cladding likely compromising the 2 mm expansion gap specified by Timspec. There was no apparent consideration in that report of whether such spacing created a weathertightness issue for the building or whether the spacing Mr Calvert had observed compromised the requirements in cl E2 of the Building Code.
[142] Mr Calvert had made no enquiry as to why the architect’s specification for 400 mm centres was required.
[143] I was also concerned that, in his report, Mr Calvert was willing to accept as a possibility that clinch nails had not been used when the vertical cedar cladding was attached to the exterior. Photographs in evidence at trial showed that clinch nails had been used. Mr Calvert had not made any enquiry of Mr Hughey as to whether such
clinch nails had been used. Mr Calvert said Mr Goodman-Jones had told him that, on termination of the contract, there were many clinch nails around the site. I accept Mr Hughey’s evidence that clinch nails were used in fixing the cladding.
[144] In his initial report of November 2016, Mr Calvert said he had been engaged to assess whether there was defective workmanship in the way the builder installed cladding to the home. Despite saying that was what he was instructed to do, Mr Calvert took it upon himself to make observations as to other aspects of the building which he suggested were evidence of defective workmanship. In doing so, he did not point out that certain defects, such as the way holes in the cladding for pipes and wiring had not been sealed off, were not the responsibility of the builder. He also made no mention of the fact that some of the defects he identified might reasonably have been identified by the builder on completion of the work and been rectified had the plaintiffs’ contract with the builder not been prematurely terminated. He also noted cladding on the upper southern elevation of the home was not installed correctly because of the gap between the bottom of the cladding and the roof below it. This was not work for which Hughey Builders was responsible as the plaintiffs had engaged another builder to fix the cladding on that area after termination of the contract with Hughey Builders.
[145] Consistent with what I found to be the focus of Mr Calvert’s approach to the issues he had to deal with, I noted he was at the home when the council inspector attended for an inspection on 17 July 2020. The inspector then suggested to the plaintiffs that the spacing of the dwangs would not be an impediment to their obtaining a certificate of completion if they were to apply for a modification to the consent. In his evidence as briefed, Mr Calvert did not suggest this could be a means of addressing the issue that had arisen because the spacing was not in accordance with the consented specifications. There was no suggestion in his evidence, the evidence of the plaintiffs or the report of the inspector to suggest that Mr Calvert had acknowledged this could be a reasonable way of dealing with the issue of non-compliance. In giving evidence, Mr Calvert said he had not expressed any opinion as to the inspector’s proposal because it was the plaintiffs’ wish to insist on strict compliance with the specifications.
[146] Mr Calvert inspected the cladding on 16 February 2022 and again just prior to trial on 10 October 2022, almost seven years after the installation of the cladding. In his evidence, Mr Calvert suggested there could potentially be weathertightness issues with the cladding as installed. It was of concern to me that Mr Calvert expressed those opinions without conducting any of the tests MBIE guidelines normally require to determine whether there is a weathertightness issue with the exterior envelope to the home.
[147] The Timspec specifications stipulated that dwangs at 480 mm spacings with RAB board would be adequate for “extra high” wind zones. The architect had prepared plans on the basis his plans and specifications were appropriate for the “high” wind zone he adopted for his specifications. The architect was not called to provide evidence or give an explanation as to why he had specified 400 mm centres in his specifications. Engineers had been engaged in planning the build. There was no engineering evidence explaining why 400 mm centre spacing was necessary.
[148] Once it was recognised that, in certain areas, a gap which Mr Calvert had identified as being between a row of nails reflected the space between a sub-floor joist and the first dwang rather than the space between dwangs, the maximum spacing of the dwangs on the framing as constructed was at no more than 500 mm centres.
[149] Mr Calvert also accepted that neither the Timspec installation manual nor the acceptable solution specified that nail fixings had to be at 480 mm centres. He said the nails had to hit the dwangs but the spacing of the dwangs themselves and the height of the dwangs set out an inherent physical tolerance for the nails.
[150] Mr Hunt pointed out, neither the Timspec installation manual nor that paragraph of the acceptable solution state that nail fixing lines are to be at a maximum of 480 mm centres. As he pointed out, it would be possible for nail fixings to be spaced up to 520 mm centres with dwangs at 480 mm centres.
[151] Mr Calvert accepted that the cladding did not have to be nailed off at 400 mm centres. In re-examination, he said nailing off at 485, 490 even 500 mm centres would be within range for nailing off to be approved by the Council as an acceptable solution
for compliance with the Building Code. As to nailing off, if it was above that, he said only “that it should be looked at”. He accepted nailing off a few rows at 520 mm centres was not going to cause the cladding to fail.
[152] Under cross-examination, Mr Calvert agreed that the structures did not need to be reclad simply because the dwangs had not been set at 400 mm centres. He accepted that, even with dwangs at 500 mm spacings, you could get 480 mm spacings of fixings to the dwangs.
[153] Acceptable solution E2/AS1 published by the MBIE building and housing group provides:9
Dwangs shall be at a maximum of 1350 mm centres generally and maximum of 480 mm centres for direct-fixed vertical weatherboard profiles, and vertical metal corrugated and symmetrical trapezoidal claddings.
[154] Mr Hunt was of the opinion that cl E2 of the Building Code can be complied with even if the acceptable solution E2/AS1 specification is exceeded. Mr Hunt considered there would be no practical distinction between dwangs set at 480 mm centres and dwangs fixed at 500 mm centres.
[155] Under cross-examination, Mr Calvert accepted the spacing of the dwangs at 480 mm would satisfy the acceptable solution standards of the Building Code and the Timspec manual. Mr Calvert accepted there would be scope for the Council to allow modification of the conditions of the consent so it could approve the framing as it had been manufactured and installed.
[156] Mr Hunt explained in his evidence why, once it was appreciated the placement of nails near the bottom of cladding on the east elevation and north elevation of the home reflected not the placement of dwangs but the fact cladding had been nailed off to the bottom plate, the cladding installation complied with table 2.1 of NZS 3604:2011 pertaining to timber framing tolerances so that the dwang set out and vertical nailing installation complied with the performance standards of the Building Code.
9 Ministry of Business, Innovation and Employment, above n 2, at [9.1.8.5].
[157] I am thus satisfied on the evidence that the framing provides the same structural integrity for the home and, with its current dwang spacing and cladding installation (in some areas yet to be completed), the same weathertightness as would have been achieved with the dwangs spaced at 400 mm centres as required by the consented specifications or 480 mm centres as specified in the Timspec installation manual and acceptable solution E2/AS1.
[158] The conclusion I have reached in this regard is consistent with Mr Goodman- Jones not being concerned at the way the spacing was in excess of 400 mm centres when it was delivered to the site and when he was installing insulation in the walls.
[159] Consistent with this conclusion, was also the evidence given from witnesses for PlaceMakers. PlaceMakers manufactures frames and trusses using a particular MiTek 20/20 truss design system. Once the framing specifications are entered into that software programme, a design for the framing is produced. Paperwork is then printed which the factory workers use to build the framing on the factory floor. The specifications entered into the MiTek programme for the plaintiffs’ home was for framing with dwangs at 480 mm centres. This accorded with the Timspec specifications. The head detailer for PlaceMakers, Mr Strawbridge, said there had been no mistake in the way these frames had been manufactured, with deviations of up to plus or minus 20 mm from 480 mm centres, using the MiTek engineering design programme.
[160] The obvious inference from Mr Strawbridge’s evidence is that the placement of dwangs within a 20 mm tolerance of the design specification entered into the programme accords with manufacturer’s specifications and Building Code requirements, and provides the framework with the strength and integrity required to support the cladding. I also infer from the evidence of PlaceMakers’ witnesses that the framing met the requirements of all the many builders, architects and other customers who used framing manufactured by PlaceMakers in the building of architectural homes in Canterbury.
[161] The plaintiffs’ pleaded Hughey Builders was in breach of contract in ordering from PlaceMakers framing at 480 mm centres and installing the framing when the dwangs were not spaced in terms of the consented plans and specifications.
[162] As referred to earlier, I am satisfied it was the plaintiffs, not Mr Hughey, who ordered the framing from PlaceMakers.
[163] The plaintiffs’ second cause of action against Hughey Builders was in negligence. I accept Hughey Builders owed the plaintiffs a duty of care to undertake and complete the work in a proper workman-like and reasonable manner. In the circumstances of this case, I do not accept that this duty included a duty to ensure the framing delivered by PlaceMakers as to the spacing of the dwangs conformed with the consented plans or the specifications of the manufacturer and supplier of the cladding.
[164] The plaintiffs were responsible for arranging with PlaceMakers to manufacture the framing. Mrs Goodman-Jones initially provided PlaceMakers with the consented plans and specifications. She checked the details in PlaceMakers’ quote as to what they were going to manufacture.
[165] Even if Hughey Builders had a duty to check the consented plans and specifications and advise the plaintiffs of the way the spacings differed from the consented specifications, I do not accept they were negligent in accepting the framework as had been supplied and delivered to them. They were entitled to assume the framework had been manufactured in accordance with the specifications acceptable to the plaintiffs, especially so when the spacing generally complied with Timspec specifications and the requirements of the Building Code. Mrs Goodman- Jones had sent Mr Hughey the PlaceMakers “Job Book-In” form showing the framework was to be constructed with dwangs at 480 mm centre spacings.
[166] The plaintiffs’ contract with Hughey Builders required Hughey Builders to build the plaintiffs’ home in accordance with the consented specifications. Clause 34 of the “General Conditions of Contract” required the plaintiffs to arrange, employ and supervise any other contractors’ work, labour and materials. I am satisfied that, in terms of dwang spacings in external framework, the contractual obligation on Hughey
Builders to install external framing with dwangs at 400 mm centre spacings was varied by Mrs Goodman-Jones contracting with PlaceMakers for them to supply framing at
480 mm centres and her emailing Mr Hughey informing him this was what PlaceMakers were doing for the plaintiffs.
[167] The framework as constructed did have some spacings in excess of 480 mm centres. I consider, with the framing as constructed, there was reasonable compliance with the varied specification that the framework have dwangs at 480 mm centre spacings.
[168] The plaintiffs have not established that, either as to the tort of negligence or in contract, Hughey Builders were under an obligation to ensure that all dwangs in the external framing were at no more than either 400 or 480 mm centres. If they had proved Hughey Builders did have such an obligation, the plaintiffs have also not established that Hughey Builders are liable for the cost of removing all existing cladding, altering the existing framing or recladding the home.
[169] The plaintiffs sought as damages, for alleged breach of contract and in negligence, the cost of removing the existing cladding and RAB board, altering the framework so it has dwangs at 400 mm spacings and recladding the home.
[170] I am satisfied that the removal of the existing cladding, removal of the castellated battens and RAB board, alterations to the cladding and framing, and all that would be required to re-clad the home, is not necessary for the framing to meet Building Code requirements. For reasons I will discuss later, I am also satisfied that, with the framing as installed, the Council will be able to issue a code compliance certificate for the build.
[171] Relevantly, a party who has lost the benefit of their contract may claim the difference in value between what was promised and what was supplied, or the cost of curing the breach.
[172] There is no evidence that, with the framework installed as built, the weathertightness protection provided by the attached cedar cladding will be any less.
There is no inherent vulnerability or weakness in the structure of the home on account of the dwang spacing that would detract from its market value. There is also no evidence to suggest that the difference in dwang spacing would, in any way, detract from the plaintiffs’ or any other occupiers’ enjoyment of the home.
[173] With building disputes, the Court takes a pragmatic attitude and adopts which of the two alternatives just referred to seems appropriate. The choice is ultimately based on considerations of reasonableness, as the authors of Burrows, Finn and Todd on the Law of Contract in New Zealand refer to.10 The United Kingdom House of Lords decision in Ruxley Electronics and Construction Ltd v Forsyth illustrates the point.11 There, the respondents had contracted for a swimming pool to be built with a diving area at a depth of seven feet and six inches. The pool was built at a depth of only six feet.12 The House of Lords referred to the central importance of reasonableness in selecting the appropriate measure of damages.13 If reinstatement was not the reasonable way of dealing with the situation, then the diminution in value, if any, is the true measure of the plaintiffs’ loss. If there is no diminution in value, the plaintiffs have suffered no loss.14 The House of Lords held the respondents were not entitled to recover in damages the cost of rebuilding the pool to provide a diving area at a depth of seven feet six inches.
[174] In Marlborough District Council v Altimarloch Joint Venture Ltd, Elias CJ said, if the cost of cure is the appropriate measure of damages to achieve conformity with the contract, “[t]he work must not only be ‘necessary to produce conformity’, it must also ‘be a reasonable course to adopt’”.15
[175]Tipping J said:
[156] It is as well to remember at the outset that what damages are appropriate is a question of fact. There are no absolute rules in this area, albeit
10 Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contract in New Zealand (7th ed, LexisNexis, Wellington, 2022) at 828.
11 Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344 (HL).
12 At 354.
13 At 357-358 per Lord Jauncey and at 365-370 per Lord Lloyd.
14 Todd and Barber, above n 10, at 828, with reference to Ruxley Electronics and Construction Ltd v Forsyth, above n 11.
15 Marlborough District Council v Altimarloch Joint Venture Ltd [2012] NZSC 11, [2012] 2 NZLR 726 at [39], citing Bellgrove v Eldridge (1954) 90 CLR 613 (HCA) at 618-619.
the courts have established prima facie approaches in certain types of case to give general guidance and a measure of predictability. The key purpose when assessing damages is to reflect the extent of the loss actually and reasonably suffered by the plaintiff. The reference to reasonableness has echoes of mitigation. A plaintiff cannot claim damages which could have been avoided or reduced by the taking of reasonable steps.
[291] The plaintiffs pleaded that, as a result of Mr Hughey’s failure to ensure the cladding was installed as per the consented plans and specifications of the manufacturer, all cladding must be removed and replaced. They pleaded that, because of the defects, the cladding was at high risk of twisting and warping from inconsistent fixing support, water within and between the boards and moisture inevitably trapped between the cladding boards and horizontal battens. They pleaded this would cause decay to the cladding and allow water to travel across the cavity and through penetration openings in the RAB board. They pleaded the cladding would not meet the durability requirement of 15 years under cls E2 and B2 of the Building Code. Because of this, a code compliance certificate had not been granted. They submitted, to obtain a code compliance certificate, there would thus have to be removal and replacement of the cladding at the cost of $465,427 for which they sought judgment against both Mr Hughey and PlaceMakers.
[292] As was accepted by the Council, it will be important that the plaintiffs can obtain a code compliance certificate for their home. The Building Act specifies that the Council can only issue a code compliance certificate if the Council has reasonable grounds to conclude that the building work complies with the building consent.33
[293] As matters currently stand, the Council cannot, in the future, issue a code compliance certificate because the construction of the dwang spacings at 480 mm centres does not comply with the building consent.
[294] Valuation evidence was presented from two valuers for the plaintiffs. They were not required for cross-examination.
[295] Mr Shalders has been a valuer since 2010. He said he was asked to assess the property’s current market value, firstly on the basis the dwelling was constructed to a proper and workman-like standard and with a code compliance certificate provided by the Christchurch City Council. The second scenario took into account building defects
33 Building Act 2004, s 94(1).
as described in Mr Calvert’s brief of evidence dated 27 July 2022, assuming the lack of code compliance certification and an expectation that the known defects would have to be rectified before a code compliance certificate was issued.
[296] Mr Shalders assumed there were defects in the construction of the home as had been identified by Mr Calvert. For reasons discussed, I have not accepted there were such defects in construction or that they would require the removal and reinstatement of cladding as the plaintiffs claimed.
[297] Mr Shalders said he had inspected the home internally and externally on 21 September 2022. He said, when inspected, the property was in a very tidy condition with no signs of excess wear and tear since construction had been completed approximately five to six years ago. Mr Shalders referred to the alleged defects, including variances between the as-built wall construction and the original building consent specification of the wall framing, the nail fixing patterns of the roof and wall cladding, and issues with the flashings and window and door joinery. He said it appeared the spacing of the dwangs in the wall framing might be outside the 400 mm centres defined in the building consent documents and the nailing patterns on the cedar vertical boards looked also to be outside the consented spacings. Similarly, he said the spacing between the weatherboards and the alignment of the nailing securing the vertical board cladding appeared to be irregular. He also referred to Mr Calvert saying in his brief that there had been a failure to install fixing to the balcony perimeters. He did not say he had seen cupping of the vertical boards in a way that detracted from the appearance of the home. He also said he had been instructed that the building issues and lack of code of compliance had been disclosed by the plaintiffs to their insurer who had agreed to provide full insurance cover despite the alleged failings.
[298] Mr Shalders based his opinion as to the requested values on comparisons from the sale of properties sold with weathertightness issues, a sector of the market where he said regular transactions occur for properties with known defects. He assumed the comparison was appropriate. He explained how weathertightness issues were associated with non-cavity roughcast cladding systems that related to buildings built circa 1991 to the early 2000s. He said, with that type of monolithic cladding system, moisture which penetrated the external cladding, roofings or flashings tended to gather
in the space between the external wall cladding and the internal linings of the dwelling, with no wall cavities to enable air circulation to dry out the wall structure once moisture had entered the building. He said cavities were required in the construction of these types of home from the early to mid-2000s which allowed for air circulation through the wall areas and largely removed the risk of moisture retention. He said:
The parallel between the subject property which is alleged to have cladding, wall framing and flashing defects with dwellings suffering weathertightness issues are obvious.
… Both will require removal of the existing wall cladding, possible replacement flashings and most likely improvements to the wall framing.
…
Homes with weathertightness issues can have areas of rotted framing where the subject dwelling may need additional lateral framing members (dwangs).
[299] The assumptions on which Mr Shalders expressed his opinion have been shown to be invalid.
[300] The cladding on this house was installed in accordance with a system which allowed for air circulation through the wall areas and largely removed the risk of moisture retention. There was no evidence that, with cladding as installed, there was in fact a weathertightness issue. Flashings had been installed in a way that met the Council’s requirements. Because there was no evidence of weathertightness issues with the home, there was no reason to consider there could be issues with rotted framing.
[301]Mr Shalders referred to the estimated costs of recladding the house as between
$397,000 and $532,000 including GST. He said, with such a cost, he regarded the dwelling as being “comparable to a home with relatively advanced weathertightness failings”. There was no evidence that this home has advanced weathertightness failings.
[302] With the assumptions Mr Shalders made, he gave his opinion as to what the home would sell for with no known building defects and with a code compliance certificate in place. Applying a 30 per cent discount for the property with what he
referred to as known faults and without code compliance, he suggested its value would be $450,000 less.
[303] A licenced sales consultant, Ms Carter, also expressed an opinion as to the value of the home, firstly, assuming that defects in the building identified by Mr Calvert were made out and would have to be repaired in the way he suggested to obtain a code compliance certificate. Secondly, on the basis the alleged building defects had been repaired and a code compliance certificate issued. Her opinions as to both were consistent with the property being worth $450,000 less if sold as is.
[304] The value of the plaintiffs’ home would be reduced if they did not obtain a code compliance certificate for the building. In pursuing their claim against Hughey Builders for failing to complete the building in accordance with the consented plans and specifications, the plaintiffs nevertheless have a duty to take such steps as would reasonably be required to mitigate their loss.
[305] As was submitted for the Council, the question for me is whether, in the future, the house is capable of obtaining a code compliance certificate if some isolated repair and completion work, as described in the evidence of Mr Hunt, is carried out.
[306] This would result in some dwang spacings remaining at 500 mm centres rather than 480 mm centres but with most of the spacings being at or close to 480 mm centres and the framework having been manufactured by PlaceMakers in the way they considered most appropriate to provide framework at 480 mm centres, as required by the Building Code and the Timspec manual specifications.
[307]Relevantly, cl E2 of the Building Code states:
Functional requirement
E2.2Buildings must be constructed to provide adequate resistance to penetration by, and the accumulation of, moisture from the outside.
…
E2.3.2 Roofs and exterior walls must prevent the penetration of water that could cause undue dampness, damage to building elements, or both.
[308] Consistent with the evidence of Ms McPherson, a council’s role in terms of approving and inspecting building construction is governed by the Building Act. A council’s focus is on assessing whether the building work complies with the Building Code.34 A property owner who causes building work to be carried out at their property is obligated to ensure that building work complies with the Building Code.35
[309] Councils are not authorised to insist on building methods that are in excess of or additional to the minimum requirements of the Building Code.36
[310] The Council called evidence from Robert Tierney, the managing director of New Zealand’s largest International organisation for Standards (ISO) accredited team of specialist compliance consultants who have in-depth knowledge of the Building Code and environmental health related legislation. From 2003 to 2011, Mr Tierney was a building inspector, and then team leader and manager of the building inspection team for the Wellington City Council.
[311] Mr Tierney gave expert evidence on the Council’s inspection and approval process during the construction of the plaintiffs’ home. The documents he reviewed included the pleadings in this case, the expert evidence of the plaintiffs, Mr Hughey, Mr Calvert and Mr Hunt, and evidence from witnesses for PlaceMakers.
[312] As he explained, the Building Act requires a council to issue a code compliance certificate if it has reasonable grounds to consider the building work complies with the building consent. The MBIE publishes acceptable solutions for the construction of buildings, specifying methods of carrying out commonly used building materials and systems. If a design complies with an acceptable solution, it must be accepted by a council as meeting the performance requirements of the Building Code.
[313] Acceptable solution E2/AS1 would have required framework to be constructed with dwangs at 480 mm centres.37 This was also consistent with Timspec manual specifications. Mr Tierney said, in his experience, the requirement for dwangs to be
34 See Building Act, s 12.
35 Section 14.
36 Section 18.
37 Ministry of Business, Innovation and Employment, above n 2, at [9.1.8.5].
fixed at 400 mm centres was unusual. He explained, if dwangs are placed closer than the Building Code requires, that will significantly increase the cost of the framing.
[314] Mr Tierney was aware that there were approximately two locations in the plaintiffs’ house where the spacing exceeded 480 mm centres. There were two at 500 mm centres. There were also a number in the standalone garage that were fixed at more than 480 mm centres. Mr Tierney said, allowing for a tolerance of 20 mm from the 480 mm specified in the Timspec manual and with nailing off of the cladding at an average of 485 mm spacings, there would be reasonable compliance with Timspec specifications.
[315] Mr Tierney agreed with evidence from Mr Hunt and Mr Calvert that there was no breach of the Building Code in relation to the dwang set out or the nail fixes.
[316] Mr Tierney also said, even if some building work was not strictly in accordance with an MBIE acceptable solution, it could still be considered to comply with the Building Code as an alternative solution. He said councils would rely on the evidence of experts in deciding whether some aspect of a building work could be approved as an acceptable solution. He considered, on the evidence of Mr Hunt and with the framework as built, it could be approved as an alternative solution.
[317] Mr Tierney said it would be appropriate to use the minor variation procedure to vary the detail as to the dwang spacing in the building consent. It was his opinion that the minor variation application would be granted because the variation sought would not change the level of compliance of the cedar cladding with the Building Code.
[318] On 27 October 2015, Ms McPherson carried out a pre-roof inspection of the detached garage. She noted in her inspection records that the dwangs were at the correct spacing of 400 mm. She said she would not have measured the centres with a ruler, had done a naked eye assessment only and would have relied on the builder who she said she knew to be a careful and competent builder to build in accordance with the plans and specifications and in accordance with the Building Code.
[319] The consented plans required the dwangs to be at 400 mm centres. However, the fact this inspector, with the naked eye assessment, considered the framework would comply with Building Code requirements, is consistent with it complying with the Building Code, even if it was not in accordance with the consented specifications.
[320] It was Ms McPherson’s evidence that, as far as the Council was concerned, from a Building Code compliance point of view, removal of the cladding and its replacement with cladding fixed at 400 mm centres rather than 480 mm centres would not be necessary because of the way the framework was constructed in accordance with Timspec manual specifications. She confirmed that variations from 480 mm spacings up to 500 mm spacings would also be approved and that was also the opinion of her senior technical advisors.
[321] Subject to some minor completion work being carried out, Ms McPherson said it would be possible for the plaintiffs to seek a minor variation to the consent so the Council can issue a code compliance certificate for the building as constructed. Ms McPherson was confident that, if the plaintiffs sought a minor variation, the code compliance certificate would be issued.
[322] Another Council inspector, Ms Homer, carried out a pre-roof inspection on 11 May 2015. As to structural framing on the mid-floor, she had noted studs were at 600 mm centres and dwangs at 500 mm centres. She passed the framing on that basis. She was not called as a witness but her record of having passed the framework at 500 mm centres is further evidence the Council would likely approve the framing, as built, as being code compliant.
[323] Another Council inspector, Mr Thornton, inspected the building on 6 November 2018. As to exterior cladding and weathertightness, he noted he had the report from Mr Calvert detailing defects and areas of concern, and that further investigation was required into the installation of the cedar cladding and cavity battens.
[324] Mr Thornton carried out a further inspection on 17 July 2020. The information the Council had from the plaintiffs on that inspection was that they were not aware of
any issues with moisture ingress or leaks in the time of ownership since the dwelling had been enclosed. He also recorded that Mr Calvert had confirmed no undue moisture had been present.
[325] Mr Thornton’s report referred to the Timspec cladding system requiring dwangs at 480 mm centres and the consented plans and specifications referring to 400 mm centres. It referred to Maynard Marks’ reports from 20 November 2019 and 11 October 2019 discovering dwang spacing was typically 480 mm average (465-500 mm) which did not align with the consented plans and specifications but appeared to have been constructed to align with the cladding specifications. The inspector then discussed with the plaintiffs if they would consider seeking an amendment to see if the cladding would comply with the performance requirements of cl E2 of the Building Code whilst not in accordance with the consented design. The plaintiffs wish was for the work to be constructed as per the consented plans and specifications.
[326] The information recorded by the Council inspector in his report also indicated that, if an amendment was sought to the terms of consent for the framework and cladding, the Council would likely be able to issue a code compliance certificate that the building, as constructed, complied with the Building Code.
[327]As stated in Burrows, Finn and Todd on the Law of Contract in New Zealand:38
The law does not allow a plaintiff to recover damages to compensate for loss which would not have been suffered if he or she had taken reasonable steps to mitigate the loss. Whether the plaintiff has failed to take a reasonable opportunity of mitigation is a question of fact dependent upon the particular circumstances of each case. The burden of proving such failure rests upon the defendant.
(footnote omitted)
[328] In their pleadings, the plaintiffs claimed the framing had been constructed and installed in ways that did not meet the requirements of cl E2 of the Building Code. Relevantly, cl E2 as to the issue of external moisture defines the criteria for managing water that impacts on a building exterior. The clause states that building exteriors must prevent the penetration and accumulation of water. It also allows for the fact
38 Todd and Barber, above n 10, at 881.
that, in extreme situations, water may penetrate the building exterior and the building should be designed to allow water to dissipate without causing damage to components.
[329] The Timspec cedar cladding, with as built dwang spacings generally at 480 mm centres, does comply with the Building Code and the Timspec manual specifications.
[330] As already discussed, the evidence has satisfied me that, with the frames as built and dwangs between no more than 480 mm and 500 mm centres, and with vertical cladding fixed, there is no reason to suspect there will be a failure of the cladding system or weathertightness issues that could affect the value of the home.
[331] I have the benefit of all the evidence I heard in this case. That evidence includes expert evidence of the sort the Council would rely on in deciding whether it will approve a variation to the consent. Hughey Builders and the Council have established the plaintiffs will be able to obtain a code compliance certificate for the building of their home as built once certain completion work is carried out.
[332] The evidence establishes that the framing and cladding, as installed, will provide the protection that cl E2 of the Building Code requires. It will not be necessary to remove the existing cladding and do all that would be necessary to reclad the house with dwangs at 400 mm centre spacings to obtain a code compliance certificate.
[333] Mr Tierney and Ms McPherson said, with the issuing of a code compliance certificate, the certificate as to durability would relate back to the time at which the cladding was installed, rather than from the date when the compliance certificate is issued. That would however be recording what the Council would have been certifying if such a certificate had issued soon after the cladding was installed.
[334] On the evidence, I am not satisfied there has been any significant deterioration in the cladding since it was installed above what might have been expected as normal with the time it has been up. The evidence does not suggest there has been any deterioration for which Hughey Builders is liable.
[335] The backdating of the certificate as to durability would accordingly not put the plaintiffs in any worse position than they would have been if the builders’ work had been certified soon after the plaintiffs and Hughey Builders had terminated their contract.
[336] Mr Hughey has thus proved on the balance of probabilities that, if the plaintiffs take reasonable steps to mitigate any loss they might have suffered through the framing not being in accordance with consented specifications, they will be able to obtain a code compliance certificate for their home as it was built by Hughey Builders. They will not suffer any loss through their not having a code compliance certificate for the build.
[337] The plaintiffs will be able to obtain a code compliance certificate through applying to the Council for a minor variation to the building consent to approve the construction of the building with dwangs and vertical cladding as installed.
Summary
[338] Hughey Builders’ contract with the plaintiffs required them to build the plaintiffs’ home in accordance with consented plans and specifications. These required dwangs at 400 mm centres. That requirement was changed by the plaintiffs agreeing with PlaceMakers that the framing be made with dwangs at 480 mm centres. Hughey Builders also had to fix vertical cedar cladding to the framework with a minimum of 2 mm expansion gaps between the shiplap vertical cladding boards.
[339] The plaintiffs have not proved that the shiplap cladding was fixed with expansion gaps of less than 2 mm. The framework was constructed and installed with typically 480 mm centre spacings, but with some at 500 mm spacings. Spacings at 480 mm would comply with the Building Code. A variation of up to 20 mm in some instances would be considered by the Council to reasonably comply with the Building Code. Subject to some minor rectification work, for which Hughey Builders accepts liability, the framework and cladding, as installed, will comply with cl E2 of the Building Code and will provide the same structural integrity and weathertightness protection as provided for with the consented plans and specifications.
[340] Under the Building Act, the Council can issue a code compliance certificate only if there is reasonable compliance with the consented plans and specifications. The plaintiffs have a duty to take reasonable steps to mitigate any loss they might have suffered through Hughey Builders not installing framework that complied with the consented specifications. Subject to them carrying out the minor rectification work and some other work for which Hughey Builders is not responsible, the plaintiffs will be able to obtain a code compliance certificate for their home as built through applying to the Council for a minor variation to the terms of the consent. The building work carried out by Hughey Builders can then be certified as complying with the Building Code.
[341] Hughey Builders were not in breach of their contract or negligent in their workmanship in ways that reasonably require the removal of all existing cladding and the rigid air barrier board, alteration to external wall framework, and recladding.
[342] Subject to the liability, which they accept, for certain minor rectification work, Hughey Builders are not liable for damages as claimed by the plaintiffs. It has accordingly not been necessary for the Court to decide whether any award of damages to which the plaintiffs might have been entitled should be reduced on account of the way the plaintiffs had contributed to the loss. It has also not been necessary to decide whether and to what extent the Council should have to contribute to damages for such a loss under the Law Reform Act 1936.
[343] Hughey Builders were neither in breach of contract nor negligent in the way they fixed flashings, where required, to the exterior walls of the building. Hughey Builders’ photographs of the way they carried out that work have satisfied the Council that such work was carried out consistent with the consented plans and specifications and in accordance with the Building Code. The way Hughey Builders carried out that work does not require the removal of existing cladding and rectification of such cladding.
[344] There are two areas where the vertical cladding needs to be nailed off at the bottom of the cladding. Hughey Builders accept liability for the costs of doing this. On the northern elevation, that can be done without removing a ribbon board
supporting the deck and having to then prop up the deck with scaffolding. The reasonable costs allowed for doing that work are $2,700 plus GST.
[345] Hughey Builders accept liability for the costs of strapping associated with the deck and an external balustrade. The plaintiffs’ claim $6,018 for that work, the amount they were charged by a builder who has completed that work. The Court has ruled all that cost did relate to the strapping and balustrade and is payable by Hughey Builders.
[346] Hughey Builders are, as they accepted, liable for the rectification work detailed in Mr Hughey’s evidence at his estimated cost of $34,655, adjusted for the cost of nailing off part of the cladding being $2,700 plus GST and the cost of strapping the balustrade being $6,018.
[347] The plaintiffs’ claim for $162,043 for costs unreasonably charged by Hughey Builders and for an unreasonable delay in completing the work required of them through to the mutual termination of the building contract was abandoned during the trial. Judgment is given for Hughey Builders on that part of the plaintiffs’ claim.
[348] The second defendant (PlaceMakers) constructed the external wall framing for the plaintiffs. They had been provided with the consented plans and specifications when they were asked to provide an estimate of the costs for supplying materials for the build. However, the estimate they provided was based on the dwangs being at 480 mm centres in accordance with Timspec specifications and normal Building Code requirements. The plaintiffs, through Mrs Goodman-Jones, had PlaceMakers build the framework in accordance with the quote they had provided to her, so PlaceMakers was not in breach of contract in designing and manufacturing the framework with dwangs generally at 480 mm centres. To the extent there was a 20 mm difference from that spacing in certain instances, there was still reasonable compliance with what they had to build. The framework they provided was fit for purpose. Because it complied with the Building Code and a code compliance certificate can be issued with the framework as constructed, the plaintiffs have suffered no loss through PlaceMakers constructing and supplying the framing as used.
[349] It is accordingly not necessary for the Court to determine whether and to what extent the Council should have to contribute to any damages for which PlaceMakers might have been liable to the plaintiffs. It is also not necessary for the Court to determine whether the PlaceMakers was excluded from liability through the application of exclusion or limitation clauses attached to the contractual arrangements the plaintiffs had with PlaceMakers.
[350] The Council was involved as a third party only through the claims Hughey Builders and PlaceMakers had made against it for contribution if either of those parties had any liability to the plaintiffs. As Hughey Builders and PlaceMakers have no liability to the plaintiffs, the Council has no liability to those defendants. There must be judgment for the Council against Hughey Builders and PlaceMakers on those third party claims.
Costs
[351] Both defendants have been successful as against the plaintiffs and will be entitled to costs accordingly.
[352] Normally a defendant who has successfully defended the plaintiffs’ claim will be ordered to pay the costs of a third party joined by that defendant. In some circumstances unsuccessful plaintiffs may be ordered to pay the third party’s costs directly. Alternatively, the successful defendant may be permitted to add the costs which it is ordered to pay to the third party to the costs which the plaintiff should pay that defendant.
[353] In McGechan on Procedure, it is said a successful defendant should only be called on to meet a third party’s costs if the joinder was unnecessary or was, for some other reason, unjustified.39
[354]Unless there is agreement as to costs:
39 Robert Osborne (ed) McGechan on Procedure (online ed, Thomson Reuters) at [HRPt 14.08].
(a) The Council is to file a memorandum as to the costs it seeks and the party or parties against whom it seeks costs within 20 working days of this judgment.
(b) Hughey Builders and PlaceMakers are to file their memoranda as to the costs they seek and in reply to the memorandum for the Council within 10 working days of receiving the Council’s memorandum.
(c) The plaintiffs are to file their memorandum in response to the memoranda from Hughey Builders and PlaceMakers within 10 working days of receiving the memoranda from PlaceMakers and Hughey Builders.
(d) Hughey Builders, PlaceMakers and the Council may file memoranda in reply within 10 working days of receiving the memorandum from the plaintiffs.
(e) The memoranda, excluding relevant and necessary attachments, are to be no longer than five pages.
[355]I will resolve costs issues on the papers.
Solicitors:
P J Shamy, Barrister, Christchurch S B Henry, Barrister, Christchurch Rhodes & Co., Christchurch
B G Walker, Barrister, Christchurch Heaney & Partners, Auckland.
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