Hepburn v Cunningham Contracts Limited - [2013] NZHC 210

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2011-485-1308 [2013] NZHC 210

BETWEEN HEPBURN & ORS Plaintiffs

AND CUNNINGHAM CONTRACTS LIMITED
& ANOR Defendants

Hearing: 30 July-3 August 2012

Counsel: P H Bremer for Plaintiffs
G W D Manktelow for Defendants

Judgment: 15 February 2013

In accordance with r 11.5, I direct the Registrar to endorse this judgment with the delivery time of 11:00am on the 15th February 2013.

JUDGMENT OF WILLIAMS J

Solicitors:
Grimshaw & Co, Wellington
Manktelow, Guy & Toby, Lower Hutt

HEPBURN & ORS V CUNNINGHAM CONTRACTS LIMITED & ANOR HC WN CIV-2011-485-1308 [15
February 2013]

Table of Contents

Introduction [1] The facts [2] The property [2] Pre-purchase inspection [5] The inspection report [11] The invoice [24] Post-report discussions [29] Purchase completed [33] Repairs and maintenance [34] The 2010 re-inspection [35] Attempted sale and Realsure Limited inspection [39] The Ian Vaughan Realsure inspection – December 2006 [42] The Weathertight Homes Resolution Service assessment [51] Proceedings and leave to amend [54] The cases [59] The witnesses [67] Issues [69] Contract with whom? [71] Scope of obligation in contract and tort [74] Negotiated limitations [78] What was at stake? [84] Price [85] Visual inspection [87] The Standard [88] Conclusion on scope [99] Damage and physical causes [101] Breach [105] Causation [126] Voluntary assumption of risk [133] Contributory negligence and duty to mitigate [141] Fair Trading Act [152] Limitations [152] Misleading or deceptive? [156] Quantum [165] Loss in value or cost of repair? [165] Amounts claimed [171] Was remediation reasonable? [172] Next steps [187]

Introduction

[1] This is a case about the liability of a pre-purchase inspector for the costs of remediating a residential property. The plaintiffs purchased the property in reliance on his pre-purchase inspection report but the house was later found to have significant weathertightness issues.

The facts

The property

[2] On 17 February 2007, Mike and Sharon Hepburn together with Sharon’s sister Tracey MacKinnon, entered into a conditional agreement for the purchase of the property at 28 Imran Terrace, Khandallah. The price agreed upon at that stage was $665,000.

[3] The house on site was completed in May 2000 and a code compliance certificate was issued on 30 May of that year. It is a three-level building of
260 square metres gross floor area. The building is constructed on a reinforced concrete slab. It is benched in on its eastern elevation so that a part of the exterior wall on that side is foundation and retaining wall. The rest of the lower level and upper levels are constructed on a typical timber-framed suspended floor. The roof utilises hip and gable configuration and is clad with lightweight metal tiles.

[4] Lower level roof planes terminate against upper level walls. All eaves project

600 mm from wall planes. There is a balcony on the west elevation accessible from the upper level living area. The balcony is waterproofed with a fibre mesh reinforced applied membrane. No secondary flow path is fitted. The balcony barrier wall or balustrade has no…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Hepburn v Cunningham Contracts Limited

Details

AGLC: Hepburn v Cunningham Contracts Limited [2013] NZHC 210
Case: [2013] NZHC 210
Decision Date: 15 February 2013

CaseChat Overview and Summary

Hepburn and others commenced proceedings against Cunningham Contracts Limited and its director, Trevor Cunningham, seeking damages for the cost of remediating a residential property. The Hepburns had purchased the property in reliance on a pre-purchase inspection report prepared by Cunningham, but the house was later found to have significant weathertightness issues. The Hepburns argued that Cunningham owed implied obligations in contract and a duty of care in tort to carry out the pre-purchase inspection with reasonable skill and care, which he breached. The Hepburns claimed damages for the cost of remediation, weathertightness stigma, project insurance, weathertightness assessments, day care, interest, and general damages. Cunningham and Cunningham Contracts Limited argued that the Hepburns assumed all risks by proceeding with the purchase after Cunningham advised them of the faults associated with the house. The Hepburns had also failed to mitigate their losses and were contributorily negligent. The Hepburns also claimed damages under the Fair Trading Act, alleging that Cunningham's report was misleading. Williams J found that Cunningham owed the Hepburns an obligation of reasonable skill and care in carrying out the pre-purchase inspection and that this obligation was breached. The Hepburns' losses were within the scope of the risk created by Cunningham's conduct. The Hepburns did not voluntarily assume the risk, as they did not fully appreciate the extent of the problem they faced with the dwelling. The Hepburns contributed to the deterioration of the building, but fault was clearly to be shared. The Hepburns' claim under the Fair Trading Act was upheld, as the ABS report was capable of misleading and did in fact mislead the Hepburns. The Hepburns were entitled to the cost of repair, which was $364,649.53 plus interest at 7.5 per cent per annum, less 50 per cent in contributory negligence. The Hepburns were also entitled to general damages of $25,000.

Orders