Jerard v Auckland Council - [2014] NZHC 2493

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-7422 [2014] NZHC 2493

BETWEEN
KENNETH JAMES JERARD and LINDA

IRENE LEADER Plaintiffs

AUCKLAND COUNCIL First Defendant

AND

BRYCE WARRAN PAXTON and AMANDA SARAH PAXTON Second Defendants

BROWN BROTHERS BUILDERS LIMITED

First Third Party

IAN HUTCHINSON CONSULTANTS LIMITED

Second Third Party

BRETT CONWAY BROWN Third Third Party

MATTHEW TICKLE Fourth Third Party

POLE SPECIALISTS LIMITED Fifth Third Party

DEAN HENSHAW Sixth Third Party

SHORE PLUMBING LIMITED Seventh Third Party

Hearing: 6-9 October 2014

Appearances:

T J Rainey, D A Cowan and J Heard for plaintiffs
No appearance for second defendants

Judgment:

10 October 2014

JERARD v PAXTON PAXTON [2014] NZHC 2493 [10 October 2014]

JUDGMENT OF LANG J

This judgment was delivered by me on 10 October 2014 at 3 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

[1] This proceeding concerns a property situated at 12 Fairhaven Walk, Arkles Bay (“the property”). The plaintiffs, Mr Jerard and Ms Leader, are the present owners of the property. They purchased the property in December 2005 from the second defendants, Mr and Mrs Paxton.

[2] The plaintiffs commenced this proceeding in order to recover from the defendants the cost of rectifying defects they have discovered in relation to the property. They now seek judgment against the second defendants by way of formal proof.

[3] The plaintiffs originally sued Mr and Mrs Paxton in both negligence and for breach of contract, but ultimately restricted their claim to the latter. They allege that Mr and Mrs Paxton breached the warranties relating to building work contained in the agreement for sale and purchase that both parties signed when the plaintiffs agreed to purchase the property. Mr and Mrs Paxton defended the plaintiffs’ claim up until July 2013, but thereafter took no steps to serve evidence in support of their defence or in support of their claims against the third parties. They did not appear when the trial commenced on 6 October 2014.

[4] On the second day of the hearing, counsel for the remaining parties advised the Court they had reached an unconditional settlement that will involve the plaintiffs receiving the sum of $260,000 from those parties. For that reason the trial proceeded by way of formal proof against the second defendants alone.

[5] When the trial began, the plaintiffs sought damages based on the cost of rendering the property code compliant. They contended that remedial works to the land would be likely to cost approximately $657,000, and that remedial works to the house will probably cost approximately $250,000. The plaintiffs also sought consequential losses totalling $42,514.69, and general damages for stress and inconvenience in the sum of $25,000.

[6] When the plaintiffs closed their case, they sought damages calculated on the basis of the extent to which their property has diminished in value by virtue of the

defects that have been identified. They sought damages in the sum of $550,000 on this basis, reduced by $260,000 to reflect the payment…

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.

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Details

Case: [2014] NZHC 2493
Decision Date: 10 October 2014

CaseChat Overview and Summary

The case of Jerard v Auckland Council involves the plaintiffs, Kenneth James Jerard and Linda Irene Leader, who purchased a property from the second defendants, Bryce Warran Paxton and Amanda Sarah Paxton. The plaintiffs sought to recover the cost of rectifying defects they discovered in relation to the property. They alleged that the second defendants breached the warranties relating to building work contained in the agreement for sale and purchase. The legal issues in the case were whether the second defendants breached the warranties in clause 6.2(5) of the agreement for sale and purchase, and if so, whether the plaintiffs were entitled to damages based on the cost of remedial work or the diminution of value of the property.

The court found that the second defendants breached the warranties in clause 6.2(5)(a) and (b) of the agreement for sale and purchase, as they carried out work on the site before obtaining the necessary consents, and the construction work did not comply with material requirements imposed by the Building Code. However, the court concluded that it would be inappropriate to award performance-based damages, as there was a realistic prospect that the plaintiffs would use the funds recovered from the litigation to dispose of the property and acquire alternative accommodation. Therefore, the court awarded damages to the plaintiffs in the sum of $290,000, based on the diminution of value of the property. The court also awarded general damages of $15,000 for the severe impact the issues had on the plaintiffs.

In summary, the court found the second defendants liable for breaching the warranties in the agreement for sale and purchase, but awarded damages based on the diminution of value of the property rather than the cost of remedial work. The final orders included an award of $290,000 in damages and $15,000 in general damages, along with costs on a Category 2B basis.

Orders