Lee v Auckland Council - [2016] NZHC 2377

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-970 [2016] NZHC 2377

BETWEEN
BU-RYE LEE AND JEOM-YOUL LEE

Appellants

AND

AUCKLAND COUNCIL Respondent

Hearing:
10 August 2016

Further written submissions received 25 August 2016

Counsel:

G R Grant for Appellants
J R Knight for Respondent

Judgment:

11 October 2016

JUDGMENT OF WHATA J

This judgment was delivered by me on 11 October 2016 at 4.00 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………………….

Solicitors: Rainey Law, Auckland
Simpson Grierson, Auckland

BU-RYE LEE AND JEOM-YOUL LEE v AUCKLAND COUNCIL [2016] NZHC 2377 [11 October 2016]

[1] Bu-Rye and Jeom-Youl Lee (the Lees) purchased a house from a friend. They did not seek a LIM before doing so. It is a leaky home. The Auckland Council (the Council) had not issued a Code Compliance Certificate (CCC) for, among other reasons, concerns about weathertightness.

[2] The Weathertight Homes Tribunal (WHT) awarded damages to the Lees against the developer, Goodland Investments Ltd (GIL), but refused to award damages against the Council, finding that:

(a) The Council’s inspections and the inspection process were not

negligent; and

(b)The failure of the Council to issue a notice to rectify (NTR) in respect of weathertightness issues did not cause loss to the Lees because it was not proven that the notice would have been brought to their attention.

[3] In fixing the quantum of damages, the WHT adopted a change in value approach with the loss fixed by reference to the unaffected value less the actual value. The WHT also found that the Lees contributed to their loss by failing to obtain a LIM. The damages quantum was reduced by 30 per cent. This resulted in a damages award of $269,619 against GIL in the Lees’ favour. The claim against the Council was dismissed.

[4] The Lees claim that the WHT erred in fact and law:

(a) In finding that the Council did not breach its duty of care to the Lees in relation to its inspections of the dwelling during construction;

(b)In finding that, although the Council breached its duty of care to them by failing to issue a NTR on about 4 March 2004, that breach did not cause loss to the Lees;

(c) By not including the selling costs in the measure of loss.

[5] The Council cross-appeals, claiming that:

(a) The WHT erred in fact and law in fixing the level of contributory negligence at 30 per cent;

(b) The Lees were 100 per cent liable for their own loss; and

(c) The unaffected value of the property should take into account the absence of a CCC and the condition of the home, resulting in a damages quantum of $80,170, which is then to be reduced by 100 per cent to reflect the Lees’ negligence.

Issues

[6] Against this backdrop I must resolve whether the WHT erred in respect of the following issues:

(a) Whether the Council’s inspections and/or inspection process were

negligent;

(b) Whether the Council’s…

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: [2016] NZHC 2377
Decision Date: 11 October 2016

CaseChat Overview and Summary

Bu-Rye and Jeom-Youl Lee (the Lees) appeal against the decision of the Weathertight Homes Tribunal (WHT) that the Auckland Council (the Council) was not negligent in its inspections of a house that the Lees purchased, which was found to be a leaky home. The Lees also appeal against the quantum of damages awarded against the developer, Goodland Investments Ltd (GIL). The Council cross-appeals against the level of contributory negligence and the measure of damages. The Lees contend that the Council was negligent in its inspections and/or inspection process and that its failure to issue a notice to rectify (NTR) caused their loss. They also contend that the WHT erred in reducing the quantum of damages by 30 per cent for their failure to obtain a limitation of indemnity (LIM) report. The Council contends that the WHT correctly found that it was not negligent in its inspections and/or inspection process and that its failure to issue an NTR did not cause the Lees’ loss. It also contends that the Lees were 100 per cent liable for their own loss and that the measure of damages should take into account the absence of a code compliance certificate (CCC). The court found that the Council was not negligent in its inspections and/or inspection process. It was reasonable for the Council to rely on a producer statement process to establish the correct installation of the cladding system. The Council breached its duty to issue an NTR on 4 March 2004, which was a material cause of the Lees’ loss. The Lees’ failure to obtain a LIM contributed rather than caused their loss, and the quantum of damages should be reduced by 50 per cent to reflect this. The quantum of damages should not include the costs of sale. The proper measure of unaffected value is based on a house without the defects. The appeal is allowed in part. The Council must pay damages in accordance with the court's findings. If they cannot be agreed, memoranda are to be filed within 10 working days. Costs submissions may be filed at the same time, but the court's current thinking is that the Lees are entitled to costs on a standard 2B basis, reduced by 25 per cent to take into account the Council's partial success on the cross-appeal.

Orders