Minister of Education v H Construction North Island Ltd
[2018] NZHC 871
•1 May 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2013-404-001504
[2018] NZHC 871
IN THE MATTER of Botany Downs Secondary College BETWEEN
MINISTER OF EDUCATION
First PlaintiffSECRETARY FOR EDUCATION
Second Plaintiff
THE BOARD OF TRUSTEES OF BOTANY DOWNS SECONDARY COLLEGE
Third PlaintiffAND
H CONSTRUCTION NORTH ISLAND LIMITED (FORMERLY HAWKINS CONSTRUCTION NORTH ISLAND LIMITED)
Defendant
Hearing: 12 February – 7 March and 12-13 March 2018 Counsel:
MT Davies, JS McTavish Butler, WR Potter and RJ Gibson for Plaintiffs
AC Skelton, BM Cash, SJ Thyne, SH Ginders and J Guo for Defendant
Judgment:
1 May 2018
JUDGMENT OF DOWNS J
This judgment was delivered by me on Tuesday, 1 May 2018 at 11 am
pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors/Counsel:
Meredith Connell, Auckland. Kensington Swan, Wellington. AC Skelton, Wellington.
MINISTER OF EDUCATION v H CONSTRUCTION NORTH ISLAND LTD (FORMERLY HAWKINS CONSTRUCTION NORTH ISLAND LTD) [2018] NZHC 871 [1 May 2018]
Table of Contents
Para No
The case [1]
The buildings Hawkins made [4]
Preliminary observations
Where is the architect? [12]
The elephant that is the roof [13]
Scene view [23]
A duty of care? [24]
A duty of care: The common law [26]
Is the duty excluded by contract? [41]The scope of the duty [56]
Defect 1: poorly formed metal roofs? [59]
Inadequate roof pitch [64]
Inadequate sub-roof formation [76]
Poorly formed roof edges [91]
Poorly formed roof penetrations [94]
Inadequate provision for thermal movement [97]
Over-tightening of fixings [100]
Inadequate length of fixings [103]
Causation and cumulative effect [104]
Do the poorly formed roof defects breach the Building Code? [110]The scientists [123]
Dr Wakeling [126]
Dr Spiers [129]
Ms Burnie [133]
Analysis [134]
Defect 2: poorly formed internal gutters [145]
Inadequate fall? [146]
Are the gutters too shallow? [151]
Poorly formed outlets [155]
The gymnasium gutter [161]
A breach of the Building Code? [163]Defect 3 [166]
Defect 4 [173]
Defect 5 [178]
Inadequate ground clearance [179]
Cold joints [185]
Hawkins’ position [188]
Code contravention? [196]Water-blasting [206]
Defect 6 [211]
Sheets are incorrectly joined [212]
Sheets lack adequate support [214]
Sheet edges are unpainted, and hence unsealed [217]
Flashings and sealants are incorrectly installed [221]
Defect 7: the gymnasium floor [226]
Is the cold joint component of defect 5 also time-barred? [238]
Other limitation defences [241]
Hawkins’ final limitation defence [260]
Quantum [266]
Excessive rates? [280]
Inconsistent rates? [283]
Percentage of rotten or decaying timber? [285]Betterment [288]
Temporary accommodation [301]
An intention to repair? [310]
Intention to remedy [312]
Likelihood of implementation [314]Indemnity? [322]
Contributory negligence? [331]
Summary [336]
Orders [337]
Addendum – exclusion of very late evidence [339]
The case
[1] Botany Downs Secondary College (the School) is a large, co-educational school in east Auckland. The School opened in 2004. It has 1,906 pupils and 118 teachers. H Construction North Island Ltd, formerly known as Hawkins Construction North Island Ltd (Hawkins), built the School’s buildings between 2003 and 2009.1 The plaintiffs—the Minister of Education, Secretary for Education and the School’s Board of Trustees—contend nine buildings leak because of a host of construction defects.2 And, will cost over $17 million to repair.3 The plaintiffs argue Hawkins is liable in negligence to meet this cost.
[2] Hawkins accepts the buildings suffer what it refers to as “issues”, and related poor workmanship. But, it submits they comply with the Building Code. Hawkins contends its contractual relationship with the plaintiffs precludes liability in negligence in any event. Affirmative defences are advanced too, including limitation defences under the Limitation Act 1950 and Building Act 2004, and contributory negligence.
1 Hawkins changed its name in 2017 when Downer New Zealand Ltd purchased Hawkins’ construction business.
2 The first and second plaintiffs represent the Crown, which owns the land and buildings. The third plaintiff is responsible for operating the School under the Education Act 1989. The Board of Trustees owns an 18 per cent interest in the library.
3 The figure includes consequential loss, but not GST.
[3]A multiplicity of issues arises. Sadly, a long judgment is unavoidable.
The buildings Hawkins made
[4] The School comprises a series of interlinked two-storey buildings, built over three stages. Stage I was in 2003 and 2004. Then built were the gymnasium and performing arts centre, administration building, library and three classroom blocks: whanau 1, whanau 2 and whanau 3. Stage II was from 2004 until 2006. Three further classroom blocks were built: whanau 4, whanau 5 and whanau 6. Stage III occupied 2008. Whanau 3 was upgraded and the library extended. For ease of reference, I refer to the whanau blocks as W1, W2 and so on.
[5] The buildings’ most striking feature is their interconnecting roofs.4 Those for W1–W6, administration building and library interlink to form a very large surface of approximately 10,000 square metres. All use metal Zincalume cladding supported by steel purlins. Purlins are horizontal beams that lie under the roof cladding. The cladding sheets are long; many are well over 12 metres.
[6] Most of the roofs have a pop-up section, which provides light and ventilation. Each pop-up roof is surrounded by an internal gutter. And, each pop-up roof is accommodated by a step involving a short fall to the next roof section below.
[7] The roofs have a slight pitch of approximately three degrees. Eaves are large and well above the ground. These too are made from Zincalume cladding. And Colorsteel.
[8] There are walkways between the administration block and each of W1 and W3. Each walkway is protected by a section of translucent plastic roofing. So too a walkway between the library and W2.
[9] The buildings have Zincalume cladding, interspersed with areas of fibre cement. The Stage I buildings have no cavity, meaning there is no space between their wall claddings and internal structure to allow air to circulate. Later iterations of the
4 The terms roof and roofs are used interchangeably, unless context requires otherwise.
Building Code required or were interpreted to require a cavity, which explains why Stage II and Stage III buildings have one.
[10] The gymnasium and performing arts centre (the gymnasium) adjoin each other and have roofs separate from the other buildings. These too have Zincalume cladding on a slight pitch, but with internal gutters and parapet walls.
[11]The result from above:
Preliminary observations
Where is the architect?
[12] An aspect of Hawkins’ defence, at least to some elements of the claim, is that fault lies with the architect because of design failings. However, Hawkins did not join the architect as a (third) party, or subpoena any of its personnel as witnesses. This approach is available, but artificial.5 Consequently, this judgment does not identify the architect. Or, make determinations adverse to it.
5 There is no suggestion the architect is impecunious. Or unavailable as either a party or witness.
The elephant that is the roof
[13] The parties called phalanxes of expert witnesses including building surveyors, architects, quantity surveyors and scientists:
(a)The plaintiffs called eight experts, primarily from Prendos New Zealand Ltd (Prendos), a construction consultancy company with extensive leaky building experience.6
(b)Hawkins called seven.
[14] Much time was spent examining experience, assumptions and methodologies in the hope of forensic advantage. However, the most important testimony came not from experts but lay witnesses at the School. Recitation explains why.
[15] Mrs Karen Brinsden is the School’s principal. Mrs Brinsden was the deputy principal when the School opened in 2004, and has been at the School for all but 20 months.7 Mrs Brinsden described “constant” and “extensive leaking” across the School. She said water regularly comes through the roofs of all whanau blocks and the administration building, including her office. Buckets are used to collect rainwater in classrooms. Some have been in place for months. Mrs Brinsden described an incident in which a ceiling tile fell from the roof because of rain. She said at the time of the trial, “we had water coming from the roof through the ceiling tiles next to the lights in the staffroom kitchen, we had a leak beginning in the art room in W6, and on the Monday of last week, on the ceiling of [her] office”. Mrs Brinsden cited examples of leakage back to May 2010.
[16] Mr Duncan Veitch was the School’s senior caretaker from early 2008 until late 2016. He recalled the roof leaking within weeks of his arrival, typically when there
6 Hawkins argues the Prendos witnesses lack independence because they are from the same organisation, and because Prendos has a longstanding relationship with the Ministry (the Ministry has retained Prendos in relation to many leaky schools). Criticism is made of Mr O’Sullivan on the basis that, as a former director, he has or might have had a financial interest in the outcome of the case. Criticisms of this nature are rather Old School. And unpersuasive. All experts— Hawkins’ included—were conscientious; made appropriate concessions; and were mindful of their responsibilities to the Court.
7 Mrs Brinsden was the principal of Ormiston Senior School between April 2014 and December 2015.
was heavy rain. From 2010, Mr Veitch said the “leaking issues across the School, particularly the roof, gutters, soffits and gym floor … kept getting worse”. The witness was clear these were not maintenance matters: “the problems kept occurring right across the School”. Mr Veitch would respond to email correspondence of staff reporting leaks from the ceiling “almost every time after it rained”. He gave extensive examples. The following is a selection only:
(a)On 21 May 2010 PF5 was reported as having leaked “overnight”. A classroom in the gymnasium was “now leaking too”.
(b)On 16 September 2010 “leaks again” were reported above the deep fryer in BL2.4.
(c)On 7 March 2011 Mr Veitch corresponded about a leak “coming through in W2 upstairs commons and in Y2.1”.
(d)On 8 March 2011 “quite a lot of flooding” was reported in relation to the storeroom. Water in the netball hoops’ base was described as appearing “again”.
(e)On 11 May 2011 Mr Veitch was invited to look at “a new leak” inside the gymnasium. The correspondent informed Mr Veitch of “good news”: “the old leak isn’t leaking”.
(f)The same day Mr Veitch was asked to respond to a leak to the business department office. And told, “we have put an icecream container to collect water”.
(g)On 11 August 2011 Mr Veitch’s attention was invited to “some flooding in the pantry and in BL2.4 overnight”. Water entry was in “the usual places”.
(h)On 25 July 2012 rain was described as “getting into the resource room through the light fitting”. Mr Veitch was invited to “come and help”.
(i)On 25 September 2013 Mr Veitch was requested to deal with “water in the light fittings in the pantry”. The correspondent said she had “almost had a hair wash”.
(j)On 5 December 2013 Mr Veitch was asked to respond to a leak in G2.8. Water was “coming around one of the lights”. And, “dangerously close to wiring”.
[17] Mr Veitch regularly inspected roofs and gutters. He considered external help necessary when problems with “blown out” washers to roof fixings became “widespread”.
[18] Ms Adele Seekup was the School’s business manager for two years from November 2015. She said the leaks became worse as she arrived. By the time of her departure, all buildings except W4 had “rapidly deteriorated”. By the middle of 2017, buckets were “scattered everywhere”.8
[19] A snapshot from early 2017 is illustrative. On 22 February 2017, a W1 classroom suffered a leak. Its floor became “very damp”. In early March 2017 water entered the ceiling of the food preparation room in W5. And a light fitting. It blew. Water also entered the room immediately below. Power was disconnected. One classroom was left without light. In April 2017, the ceiling to the W1 music room leaked. Water reached keyboards. In early 2017 water entered the ceiling of the mathematics resource room in W1. Lights were disconnected. Temporary lights were required for at least three weeks.
[20] Ms Seekup was regularly “accosted” by people citing leaks or inquiring when they would be fixed. She said if she were to outline every instance of a ceiling leak in her two-year tenure, her brief of evidence would extend to 30 or 40 pages. The leaks occurred not just with “major rain events”, but also when rain was not heavy.
[21] Unsurprisingly, temporary repairs have been necessary. These include the replacement of approximately 200 water-stained ceiling tiles, installation of temporary
8 Except W4.
gutters to the pop-up roofs, extensive replacement of roof fixings and use of temporary flashings. More about flashings later. Mr Hill, a building surveyor instructed by the School, said all of this was “like putting a finger in a dam”. Mr Hill was at the School on 12 February 2018. He discovered two new ceiling leaks.
[22]Materially, none of this evidence was contested.9
Scene view
[23] With the parties’ agreement, I visited the School on day two of the trial. It rained throughout. Two live leaks were obvious: from the gymnasium roof, onto the floor; and from the roof of the administration building into the staffroom.10 Each had an accompanying bucket.
A duty of care?
[24] The plaintiffs’ claim is in tort, not contract. It alleges Hawkins owed the plaintiffs a duty to exercise reasonable skill and care in the buildings’ construction. The alleged duty is expressed as three-fold, and as requiring:
(a)Reasonable care and skill in the design, construction and supervision of building work.11
(b)An obligation to ensure building work was designed, constructed and supervised in accordance with the Building Code; and, that the work complied with the Code.
(c)An obligation to ensure defects liability remedial work was undertaken to a reasonable standard of care and skill; and, that the remedial work complied with the Code.
9 Hawkins challenged the admissibility of the evidence of Mr Veitch, Mr Hill and Ms Seekup at trial, on the basis it lacked relevance and probative value when Hawkins abandoned its partial defence the plaintiffs had not adequately maintained School buildings. I admitted the evidence. Its relevance and probative value are self-evident. And high.
10 Counsel for the plaintiffs invited attention to a third alleged leak (in W6). Counsel for Hawkins disputed its existence.
11 The design component is confined to Stages II and III; Stage I was a build-only contract.
[25] Hawkins’ response is also three-fold. It contends the law has not recognised a duty of care in this context; tortious liability is excluded by contract; and a duty of care, if owed, was confined to Building Code compliance, not more. Addressing each avoids the need for separate discussion of proximity and policy.
A duty of care? The common law
[26] In Bowen v Paramount Builders (Hamilton) Ltd the Bowens bought two flats built by Paramount Builders.12 The flats subsided, and suffered damage. The Bowens argued Paramount Builders owed them a duty of care in tort; they could not sue in contract, as there was no contract between them and Paramount Builders. The Court of Appeal held a builder owed a duty of care to those the builder could reasonably foresee as likely to suffer damage from negligence: the Bowens.13
[27] Richmond P treated proximity as the primary criterion affecting the class to whom the duty was owed; so too Woodhouse J. Cooke J considered it would be “ironical” if the law of contract necessarily precluded liability in tort.14 All three judgments appear to have contemplated a builder being liable in tort to the original owner—the other party to the contract.
[28] Then came Invercargill City Council v Hamlin.15 Mr Hamlin entered a contract with a firm of builders, through which he bought land and a home constructed by the firm. Many years later, Mr Hamlin discovered the foundations were defective. He sued the council and firm. And won. On appeal, Cooke P said since “Bowen in 1976 it has been accepted … a duty of reasonable care actionable in tort falls on house builders and controlling local authorities”.16 Gault J said it was settled law “builders and local authority building inspectors may be liable to owners and subsequent purchasers for defects caused or not prevented by them through negligence”.17
12 Bowen v Paramount Builders (Hamilton) Ltd [1977] 1 NZLR 394 (CA).
13 Richmond P dissented on the facts, but agreed with the majority about principle.
14 At 423.
15 Invercargill City Council v Hamlin [1994] 3 NZLR 513 (CA).
16 At 522.
17 At 533.
[29]The case reached the Privy Council.18 The Board affirmed, observing:19
In a succession of cases in New Zealand over the last 20 years it has been decided that community standards and expectations demand the imposition of a duty of care on local authorities and builders alike to ensure compliance with local bylaws.
[30] In Board of Trustees, Glen Innes Primary School v Ahead Buildings, Keane J struck out the Minister of Education’s tortious claim, as owner, against a builder.20 His Honour held a duty of care was not arguable on the facts. The Court of Appeal reversed.21 Arnold J observed:22
First, the liability alleged is owed by a builder to the owner of the property being built, albeit that the owner in this case was not party to the contract with the builder. A duty of care in such circumstances does not create a liability which is disproportionate to any wrongdoing. Indeed, in the residential context builders have been held to owe duties not only to the original owner but also to subsequent purchasers [citing Bowen]. In this sense, the duty of care alleged in the present case is orthodox.
[31] The distinction between residential and other buildings was swept away by the Supreme Court in Spencer on Byron.23 There, a majority of that Court held councils owe a duty of care to owners of commercial (and other non-residential) buildings when completing regulatory inspections. Much of the majority’s reasoning is logically referable to builders too. As with councils, it is “eminently foreseeable that carelessness” on the part of a builder may cause loss to both the present owner and subsequent owners.24 Chambers J, in the lead judgment, used broad terms that include builders in describing the duty:
(a)“There is no principled basis for distinguishing between the liability of those who played a role in the construction of residential buildings and the liability of those who played a role in the construction of other kinds of buildings”.25
18 Invercargill City Council v Hamlin [1996] 1 NZLR 513 (PC).
19 At 521.
20 Board of Trustees, Glen Innes Primary School v Ahead Buildings, an operating Division of Econicorp Buildings Ltd HC Auckland CIV-2006-404-1884, 21 December 2009.
21 Minister of Education v Econicorp Holdings Ltd [2011] NZCA 450, [2012] 1 NZLR 36.
22 At [55].
23 Body Corporate No 207624 v North Shore City Council [Spencer on Byron] [2012] NZSC 83, [2013] 2 NZLR 297.
24 At [27].
25 At [71].
(b)“The duty of care owed by those responsible for the construction or supervision of the erection of buildings was never expressly or implicitly confined to residential homes”.26
(c)“… the law of negligence could be used to compensate building owners for economic loss sustained through latent defects in a building for which defendants (which might include local authorities) had responsibility”.27
(d)“The underpinning rationale of the duty of care in this area is the need to provide encouragement to those responsible for the construction of buildings to use reasonable care in their respective tasks within that overall undertaking”.28
(e)“If the premises are not safe and healthy because of the negligence of others, then it is to those others the owner should be able to turn for appropriate compensation”.29
(f)“It makes more sense economically for liability to fall on those responsible for negligent construction, including, where appropriate, the inspecting authority which saw the building under construction and was therefore in a position to prevent defective construction occurring”.30
[32] Chambers J also relied on extra-judicial reasoning of Sir Robin Cooke, which was described “as potent today as it was in 1991”:31
The point is simply that, prima facie, he who puts into the community an apparently sound and durable structure, intended for use in all probability by a succession of persons, should be expected to take reasonable care that it is reasonably fit for that use and does not mislead. He is not merely exercising his freedom as a citizen to pursue his own ends. He is constructing, exploiting or sanctioning something for the use of others. Unless compelling grounds to
26 Spencer on Byron, above n 23, at [135].
27 At [135].
28 At [162].
29 At [165].
30 At [192].
31 Robin Cooke “An Impossible Distinction” (1991) 107 LQR 46 at 70.
the contrary can be made out, and subject to reasonable limitations as to time or otherwise, the natural consequences of failure to take due care should be accepted.
[33] The High Court has subsequently held a builder owes a duty of care to the owner of a non-residential building. In Minister of Education v YQT Ltd, Venning J said while Spencer on Byron “was an appeal concerning council liability the position of the liability of a builder to the owners of the building is a fortiori.”32 In Body Corporate 321655 v Albert Park Holdings Ltd, Woolford J applied Spencer on Byron in relation to the builder of an apartment complex containing both residential and commercial units.33 The Judge considered the reasoning behind the leading New Zealand cases “is supportive of a duty of care being owed in respect of all buildings regardless whether they are used as residences or for commercial purposes”.34 In Minister of Education v Coastline Builders Ltd, Toogood J held the builder of a school owed the Crown, as owner, a tortious duty of care.35
[34] These three cases were by way of formal proof, but they are consistent with the Supreme Court’s observation in Hotchin v New Zealand Guardian Trust Co Ltd that:36
In a typical New Zealand case, the owner of a leaky building will have claims against the builder (which New Zealand courts accept can be brought in tort). As against the builder, the claim in tort will be based on breach of a duty of care associated with compliance with the Building Code. As against the local authority, the claim will be for breach of a duty of care associated with its inspection and certification functions.
[35] This is not to ignore counterpoint. In Blain v Evan Jones Construction Ltd, William Young J’s dissent in Spencer on Byron was cited as possible foundation for an argument a duty would not be owed by a builder to its principal in relation to commercial premises.37 Applicable law was described as “unsettled”.38 And, in Invercargill City Council v Southland Indoor Leisure Centre Charitable Trust, the
32 Minister of Education v YQT Ltd [2014] NZHC 2198 at [8].
33 Body Corporate 321655 v Albert Park Holdings Ltd (formerly Clearwater Construction Ltd) (in liq) [2014] NZHC 2478.
34 At [13].
35 Minister of Education v Coastline Builders Ltd [2015] NZHC 419.
36 Hotchin v New Zealand Guardian Trust Co Ltd [2016] NZSC 24, [2016] 1 NZLR 906 at [198].
37 Blain v Evan Jones Construction Ltd [2013] NZCA 680 at [34].
38 At [34].
Court of Appeal appeared to accept a builder would not necessarily be liable in tort for negligence.39 The Court’s observations, however, appear to have been directed to a different proposition, namely, a duty of care that might otherwise arise may be excluded by the operation of contract. In any event, the Supreme Court reversed.40
[36] Overall, the trend is clear. A preponderance of authority recognises a builder owes a tortious duty of care to owners—both immediate and later, and irrespective of whether the building is residential or otherwise.41 This conclusion is consistent with the Building Act 2004 and its predecessor, the Building Act 1991.42
[37] Section 7 of the 1991 Act required all building work to comply with the Building Code, irrespective of whether a building consent was necessary. That Act established a “system of assurance under which all undertaking building work” were obliged to observe Building Code standards.43 As Tipping J observed in Spencer on Byron, “imposition of the duty is … wholly consistent with the fundamental policy goal of the Act, namely to ensure that all buildings are code compliant”.44
[38] The 2004 Act maintains embracing obligations in relation to Code-compliance. Sections 17 and 18 provide:
17 All building work must comply with building code
All building work must comply with the building code to the extent required by this Act, whether or not a building consent is required in respect of that building work.
18 Building work not required to achieve performance criteria additional to or more restrictive than building code
(1) A person who carries out any building work is not required by this Act to—
(a)achieve performance criteria that are additional to, or more restrictive than, the performance criteria prescribed in the building code in relation to that building work; or
39 Invercargill City Council v Southland Indoor Leisure Centre Charitable Trust [2017] NZCA 68, [2017] 2 NZLR 650 at [70].
40 Southland Indoor Leisure Centre Charitable Trust v Invercargill City Council [2017] NZSC 190, [2018] 1 NZLR 278.
41 The scope of the duty is discussed at [56]–[58] of this judgment.
42 The 1991 Act applied to Stage I.
43 Spencer on Byron, above n 23, at [16].
44 At [48].
(b)take any action in respect of that building work if it complies with the building code.
(2) Subsection (1) is subject to any express provision to the contrary in any Act.
[39] Subpart 4 was added to Part 1 of the Act on 13 March 2012. Although for “guidance only”, it outlines the following responsibilities:
14B Responsibilities of owner
An owner is responsible for—
(a) obtaining any necessary consents, approvals, and certificates:
(b) ensuring that building work carried out by the owner complies with the building consent or, if there is no building consent, with the building code:
(c) ensuring compliance with any notices to fix.
…
14D Responsibilities of designer
(1) In subsection (2), designer means a person who prepares plans and specifications for building work or who gives advice on the compliance of building work with the building code.
(2) A designer is responsible for ensuring that the plans and specifications or the advice in question are sufficient to result in the building work complying with the building code, if the building work were properly completed in accordance with those plans and specifications or that advice.
14E Responsibilities of builder
(1) In subsection (2), builder means any person who carries out building work, whether in trade or not.
(2) A builder is responsible for—
(a)ensuring that the building work complies with the building consent and the plans and specifications to which the building consent relates:
(b)ensuring that building work not covered by a building consent complies with the building code.
(3) A licensed building practitioner who carries out or supervises restricted building work is responsible for—
(a)ensuring that the restricted building work is carried out or supervised in accordance with the requirements of this Act; and
(b)ensuring that he or she is licensed in a class for carrying out or supervising that restricted building work.
[40] These responsibilities are self-evidently consistent with the imposition of a duty of care.
Is the duty excluded by contract?
[41] Stage I was a construction only contract; the architect was responsible for design. Hawkins was obliged to perform the works “diligently”,45 and to the architect’s satisfaction.46 Hawkins was not liable for loss or damage caused by a design defect.47 The architect was to inspect defective works during the defects liability period.48 If satisfied these had been remedied, the architect was to certify that.49 Similarly, the architect was to certify practical completion.50 The contract included an indemnity for damage due to any act or omission of the Ministry, architect or contractor employed by the Ministry.51 Hawkins was required to provide guarantees, including a weathertightness warranty for a minimum period of two years.52
[42] Hawkins contends these conditions demonstrate the Stage I contract was “specifically structured to place the principle obligation on the architect … to ensure the building work complied with the New Zealand Building Code”. It argues the imposition of a tortious duty of care “would be directly contrary to the intent of the parties set out in the contract”. I disagree.
[43] First, the Stage I contract is silent on tortious liability. As a large and sophisticated commercial entity, Hawkins could have negotiated express exclusion of tortious liability. It did not. Instead, it entered a standard form construction contract used widely in the construction industry, with a modest suite of special conditions.53
45 Clause 1.
46 Clause 1.
47 Clause 44.1(d).
48 Clauses 46.3 and 46.8.
49 Clauses 46.3 and 46.8.
50 Clause 68.
51 Clause 51.
52 Clause 53.
53 See [41] above.
[44] Second, central to Hawkins’ argument is the proposition the architect assumed either exclusive or primary responsibility for Building Code compliance. The proposition sits awkwardly with the Building Acts, which are directed to the world at large. As Tipping J said in Spencer on Byron, those performing functions “within the scope of the Act owed statutory duties not to breach the building code”.54
[45] Third, other conditions of the Stage I contract emphasised Hawkins’ responsibilities as builder. Hawkins was required to ensure its workmanship conformed with “good trade practice”.55 It was responsible for the correctness of the works even if seen or inspected by a clerk of works or inspector.56 Hawkins was required to provide all necessary supervision of the works.57 And, its obligations and liability were not affected by its use of subcontractors.58 Similarly, architectural certification Hawkins had remedied defects during the defects liability period did not affect its liability to fulfil an unperformed or poorly performed contractual obligation.59
[46] Fourth, others’ responsibilities—here, those of the architect—are not inconsistent with a duty of care on Hawkins. If, for example, the architect was negligent, it could bear an appropriate share of liability for loss.60
[47] Fifth, Hawkins’ provision of warranties is a dual-edged sword in this context. These responsibilities cut across those of the architect, and a duty of care is not inconsistent with warranty provision.
[48] Sixth, exclusion of design liability merely reflects Hawkins’ role. The Stage I contract presupposed Hawkins would not be designing anything. The rationale for the exclusion of design liability in these circumstances is obvious: no responsibility, no liability. But this says nothing about Hawkins’ liability in tort in relation to construction.
54 Spencer on Byron, above n 23, at [39].
55 Clause 41.3.
56 Clause 13.3.
57 Clause 14.
58 Clause 42.3.
59 Clause 46.9.
60 Spencer on Byron, above n 23, at [195].
[49] In summary, the Stage I contract is silent on Hawkins’ tortious liability. It could have been provided for, but was not. Nothing in the contract implies the parties intended to preclude a duty of care on the part of Hawkins vis-à-vis Building Code compliance.
[50] In relation to the Stage II and Stage III contracts, Hawkins contends its design obligation was limited by the requirement for uniformity of design across the School in accordance with the Stage I design template. Hawkins notes also both contracts provided for weathertightness warranties from it and a defects liability period.
[51] These conditions do not affect the calculus. As observed earlier, warranty provision is not inconsistent with a duty of care. The requirement for design uniformity was framed only generally:61
The Principal has approved the breakdown of the Budget Estimate as set out as Appendix F but recognises that, as designs are developed and the works are tendered, there may be revisions necessary to the design and specifications and the price may vary. The Contractor will ensure that the quality, scope and cost of the Contract Works as identified in the Budget Estimate will be adhered to as closely as possible to ensure a uniform approach to the Project and to maintain quality of the Work.
[52] Nothing above implies an intention to exclude tortious liability for non-compliance with the Building Code. And as with the Stage I contract, Hawkins was required to employ workmanship “in accordance with good trade practices”.62
[53] Hawkins submits circumstance is analogous to that in Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd.63 There, it was held no duty of care existed between Rolls-Royce and Carter Holt, each of which had a contract with Electricity Corporation of New Zealand Ltd (ECNZ), but no contract with each other. The Court of Appeal concluded the parties had chosen to define their obligations by
61 Clause 1.2 of the Background section.
62 Clause 5.1.7 of each contract.
63 Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd [2005] 1 NZLR 324 (CA). Hawkins also emphasises the sophistication of the parties to the contracts—the Crown and a large construction company—and reliance by the Ministry on professional advisors. The Ministry engaged Bovis Lend Lease, a construction consultancy firm; Maltbys, quantity surveyors; Fraser Thomas, civil engineers; and Connell Mott MacDonald, building services designers. But this is to beg the question: if well-informed, well-advised parties intended to exclude a duty of care, why not do so expressly?
detailed contracts with ECNZ, with which it would be wrong to interfere given voluntary allocation of risk and commercial certainty.
[54] Rolls-Royce is far removed from this case. It involved a different duty; one allegedly owed by Rolls-Royce to Carter Holt to take reasonable care in performing Rolls-Royce’s contract with ECNZ to build an electricity plant. Unlike the plaintiffs and Hawkins, no contractual relationship existed between Rolls-Royce and Carter Holt. And, the contractual arrangements in that case were detailed and complex. Those here are not. The Building Code did not feature in Rolls-Royce. As observed, it is directed to the world at large, and creates statutory obligations of compliance. In any event, Rolls-Royce’s vitality in this context is not free from doubt. In Carter Holt Harvey Ltd v Minister of Education, the Supreme Court observed:64
It will also need to be determined at trial how much of the analysis in Rolls-Royce continues to apply after this Court’s decision in Spencer on Byron.
[55]A duty of care is not excluded by contract.
The scope of the duty
[56] The claim alleges the duty of care is multi-faceted; see [24]. However, in closing, the plaintiffs appeared to acknowledge the force of recent authority, which has sharpened the duty to one of Building Code compliance, in turn reflecting legislative advances ala the Building Acts. For example, in Spencer and Byron Tipping J said:65
In expressing myself in this way I am not to be taken as suggesting that the law of tort, through the mechanism of a duty of care, should provide the owner of a building with what amounts to a warranty of quality. Generally, quality is for contract. But if a negligently caused deficiency in a building is apt to impinge on the interests the Act is designed to protect, tort law can properly become involved.
In Rolls-Royce, the Court of Appeal was concerned about how quality standards would be set if a duty were to be recognised. That may be a valid concern if the tort duty would be unclear as to the precise standard required. But in the present context there is no difficulty in this respect. The standard the duty requires is compliance with the building code. That is as clear and
64 Carter Holt Harvey Ltd v Minister of Education [2016] NZSC 95, [2017] 1 NZLR 78 at n 26.
65 Spencer on Byron, above n 23, at [46]–[47].
precise as the subject matter allows. There is no quality or commercial uncertainty as to what the duty requires. The parties cannot bargain for a standard below code compliance in return for a lesser price. The imposition of the duty leads to total clarity as to where the risk falls.
[57] Similar observation appears in Hotchin v New Zealand Guardian Trust Co Ltd, in which the duty was described as “compliance with the Building Code”. 66
[58] This approach has obvious advantages foreshadowed by Tipping J. The content of the duty is clear, readily articulable, precise and in accordance with statute (the Building Act).67 Confinement to a base duty also promotes certainty. I see no reason to depart the recent and authoritative trend.
Defect 1: poorly formed metal roofs?
[59] The plaintiffs contend “poorly formed metal roofs” breach the Building Code through the cumulative effect of seven defects:
(a)Inadequate roof pitch.
(b)Inadequate sub-roof formation.
(c)Poorly formed roof edges.
(d)Poorly formed roof penetrations.
(e)Inadequate provision for thermal movement.
(f)Overtightening of fixings.
(g)Inadequate length of fixings.
[60] Hawkins acknowledges (c)–(g), but not (a) or (b). It contends the architect is responsible for (a) and (b) in any event, albeit without joining it as a (third) party. And,
66 Hotchin v New Zealand Guardian Trust Co Ltd [2016] NZSC 24, [2016] 1 NZLR 906 at [198]. See also Capital and Coast District Health Board v Beca Carter Hollings & Ferner Ltd [2018] NZHC 24 at [302].
67 For example, see s 18 of the 2004 Act.
it denies any or all breach the Building Code. Hawkins also invites attention to an antecedent definitional issue. To it first.
[61] Mr Rex Bray and Mr Mark Hazlehurst, building surveyors instructed by Hawkins, describe a defect as “as-built construction that has caused undue dampness or damage”.68 The definition is idiosyncratic; Mr Bray and Mr Hazlehurst offer it as their own.
[62] I decline to use the term this way. “Defect” is not defined by either the Building Act or Building Code. The proposed definition is unknown to the law of negligence. Tort. And the High Court Rules 2016. The definition risks excluding from its purview defects which aggravate undue dampness or damage, but do not cause it. Similarly, the definition implies an exclusive cause must be identified for there to be a breach of the Building Code. Defective buildings, however, often suffer many defects, some inter-related. Sometimes identification of a single operative cause is impossible. On Hawkins’ schema, a plaintiff would have no redress. The law of negligence, however, recognises the possibility of multiple causes of harm, including by different actors, hence the concept of joint tortfeasors. And, the common law generally insists upon contextual analysis both as to fact and causation. The proposed definition would artificially constrain both.
[63] Consequently, I use the term in an untechnical way, and as meaning only some error, shortcoming or imperfection in relation to an aspect of construction.
Inadequate roof pitch
[64] Roof pitch is the gradient of a roof. A roof with a 45-degree pitch is steep, whereas a roof with a two-degree pitch is almost flat. The architect specified a three-degree pitch, the minimum recommended by the cladding’s manufacturer. Three degrees is also the minimum pitch under the Profiled Metal Roofing Design and Installation Handbook (roofing handbook),69 and Code of Practice New Zealand Metal
68 Mr Bray’s definition has an additional requirement: a defect must directly cause undue dampness or damage.
69 A publication prepared by and for the New Zealand Metal Roofing and Cladding Manufacturers Association, and used within the construction industry.
Roof Wall Cladding (code of practice). Elementary physics explains why: as pitch decreases, so too speed rainwater moves to the gutters. Consequently, a low-pitch roof is slower to shed its water, and, if there is hole in the roof, more likely to leak (everything else being equal).
[65] Mr Joshua Rawlinson, a building surveyor with Prendos, measured the pitch using an electronic level.70 So too, separately, Mr Bray for Hawkins. Of their readings:71
(a)47 are between 2.7 and 2.9 degrees.
(b)15 are below 2.7 degrees (including three readings of two degrees).
(c)1.4 degrees is the lowest.
[66] Mr Rawlinson said some areas are obvious to the naked eye. He referred to a “banana or bow shape to the roof that shouldn’t have been there”. The alleged defect affects W1–W6—so all classroom blocks—and the library.
[67] Hawkins contends the defect is not established on the balance of probabilities given the evidence of Mr Peter Lalas. Mr Lalas is a façade engineer from New South Wales. Mr Lalas said the readings may not be reliable because digital devices must be correctly calibrated, neither Mr Rawlinson nor Mr Bray said anything about calibration, and as the measurements are close to three degrees, the margin of error is fine. Mr Lalas also said the readings are towards the bottom of the range of instrument capability.
[68] This evidence has modest utility. Mr Lalas was not present when the readings were taken. Nor did he take readings of his own.72 Mr Lalas’ concerns about calibration and range are rebutted by the broad harmony between the readings of
70 Hawkins described Mr Rawlinson as a “junior building surveyor” and “difficult witness”. While Mr Rawlinson has modest experience, much of his evidence was ultimately accepted by Hawkins’ experts. As to testimony, Mr Rawlinson was no more “difficult” than any other expert witness; cross-examination in this context typically entails a contest between questioner and expert.
71 Some readings are three degrees; many are above that.
72 Mr Lalas did not attend the Court-directed experts’ conference. He said a prior commitment precluded his attendance.
Mr Rawlinson and Mr Bray, which were taken on separate occasions with different instruments. In short, it is highly unlikely both sets of independent readings are unreliable.73
[69] I find the defect exists for the reasons implicit above: competing experts agree many parts of the roof are less than three degrees contrary to architectural specification and good trade practice as informed by relevant literature.
[70] This leaves one issue in relation to roof-pitch. Hawkins contends the defect is attributable to the architect, not it, because of “deflection”. Large metal structures can sag because of the load on them, or even under their own weight through gravity. Architects and structural engineers allow for the phenomenon of deflection when designing buildings. Hawkins submits it is clear the architect did not do so.
[71] The experts agree it is likely the beams deflected. They disagree, however, whether Hawkins had a responsibility to check the pitch before constructing the roofs. Mr Aitken, an architect and expert witness for Hawkins, said in his experience, Hawkins would not be expected to consider the possibility of deflection. Mr Aitken said this is within the “traditional role of the designer”. However, Mr Aitken accepted cl 8 of the roofing handbook provides the contractor should inspect the “true plane” of the structure before installing the roof.
[72] Ms Cockerell, an architect with Prendos, cited the roofing handbook in support of her opinion it was Hawkins’ responsibility to check the pitch before installing the roof. She gave an example of a project in which the contractor identified roofing columns which were “deflecting quite badly”. The contractor raised the problem with the architect, who referred it to the designer. The designer changed the columns. And, rectified the problem. Ms Cockerell said this is what should have happened at the School, through Hawkins conducting “proper checks” using a laser level.
73 No same piece of roof was measured by both. However, both found many areas less than three degrees. And, some readings were taken from at least the same area. For example, Mr Rawlinson measured the pitch near a cluster of roof penetrations on W5. So too Mr Bray. Mr Rawlinson’s measurements are 2.9 and 2.5 degrees. Mr Bray’s are 2.7 and 2.5 degrees.
[73] Mr Lalas, Hawkins’ façade expert, agreed a builder should first check the pitch. Likewise, Mr Bray. He said a contractor should “ensure … the underlying structure is adequate to meet the recommended pitch”.
[74] I find Hawkins had a responsibility to check the pitch. The weight of expert opinion is to this effect. So too the roofing handbook. Such a step is rudimentary. And reasonable. To this mix should be added one fact: Hawkins was reminded about the importance of pitch at an early stage of construction. On 10 March 2013, the cladding’s manufacturer wrote to Hawkins summarising points that “may assist in specifying our product”. One concerned pitch, noting the cladding “is … suitable for pitches from three degrees up”.
[75] There is no evidence Hawkins checked the pitch.74 If it did, it must have ignored obvious deflection during its construction of the roofs at Stages I and II. I accept Ms Cockerell’s evidence there is only a “very low possibility” the roof deflected later; she said deflection typically happens “under self-load”. No other expert offered a contrary view. Inadequate roof-pitch is established as a defect.
Inadequate sub-roof formation
[76]The sub-roof is the area beneath the roof cladding. Typically, it contains:
(a)The underlay: building paper that protects the sub-roof and aids ventilation.
(b)A species of insulation.
(c)An air gap between the cladding and (a) and (b).
74 Hawkins contends this line of argument only emerged at trial. I disagree. Ms Cockerell’s brief of evidence referred to the roofing handbook and said: “Hawkins has not made allowance for deflection”. Hawkins also contends three degrees should not be regarded as the minimum pitch, as it is reasonable to assume the manufacturer included a safety margin of, say, one degree. Mr Hazlehurst promoted this view in testimony. Mr Rawlinson accepted the concept of a safety margin was available. However, there is no evidence from the manufacturer a lesser pitch would be adequate for its product. And as observed above, it wrote to Hawkins and emphasised the need for a three-degree pitch.
[77] Mr Rawlinson lifted or partially lifted 34 sheets of the Zincalume cladding.75 On the Stage I roofs, he found no air gap between the cladding, underlay and building insulation blanket or BIB. A BIB is, essentially, a long Pink Batt. In many places, the cladding has compressed the underlay and BIB. Squashed is a better term; photographs show the cladding’s clear impression on both.
[78] It is common ground none of this is causing the roofs to leak.76 However, the plaintiffs contend sub-roof formation is a defect, as among other things, an air gap helps ameliorate the effect of moisture if rain water penetrates the cladding. Reference was made to a homely analogy: wet socks dry on a clothesline but go mouldy in a closed drawer.77 Which is why, the plaintiffs contend, the architect specified for the BIB to be draped across the purlins and loose between them. Correctly followed, the sub-roof elements would not be squashed (save at the purlins). And, there would be a ventilating air-gap, albeit discontinuous, throughout the sub-roof.
[79] Mr Rawlinson also invited attention to Hawkins’ sub-roof use of expanding foam. To elaborate, the architect specified the use of Ecofoam foam strips at the edges of the cladding. These ventilate a sub-roof, as they are vented. Hawkins did not follow this detail during Stage I. Instead, it sealed the edges with expanding foam.
Mr Rawlinson said this product inhibits ventilation.78
[80]Hawkins contends its sub-roof formation does not constitute a defect because:
(a)Of the way that term is defined by Mr Bray and Mr Hazlehurst (which imports the question of breach of the Building Code to this stage of the analysis).
75 Hawkins was critical of Mr Rawlinson for not entirely removing every sheet, describing his methodology as “sneak and peak”. The criticism is misplaced. Hawkins’ experts lifted nine roof sheets, but they fully removed only two; p 1369 of the notes of evidence. More importantly, complete removal of a cladding sheet is not necessary to gauge the condition of its underside or the sub-roof.
76 Sections of the roofs of W1, W2, W3, library and gymnasium bulge, and are spongy underfoot (particularly where the BIB is placed over the purlins). Aspects of the plaintiffs’ case implied this was a component of defect 1. The point was not pursued.
77 Mr O’Sullivan offered this analogy in relation to condensation, but it remains illustrative of the plaintiffs’ point.
78 Hawkins’ experts accepted use of foam constituted poor workmanship.
(b)The sub-roof complies with the architect’s specifications, so any deficiency is a design failing rather than a construction defect.
[81] Argument (a) is an example of the definitional argument rejected earlier. Now (b).
[82] The relevant architectural specification—detail 111—received much trial attention. It is easier to show than describe:
[83] Mr Brian Aitken, an architect and expert witness for Hawkins, was not sure why the detail had been drawn this way, as to his eye it appears to show no air gap despite “the normal practice of incorporating an air gap” in the sub-roof. On his view, the detail shows the BIB hard against the underside of the cladding.
[84] Ms Cockerell offered a different view. She acknowledged the detail is “difficult to understand”, but noted it explicitly refers to the BIB being “draped” over
the purlins. Ms Cockerell said the BIB was not intended to be taut against the cladding other than where it met the purlins. Elsewhere the BIB should have “sagged down so it wasn’t pushing up against the underside of the roofing”. So installed, there would be “little pockets of air …. [to] allow the underlay to dry out”.
[85] Each’s view was supported by other experts. Exegesis is, however, unnecessary for two reasons. First, the experts agree it is undesirable to have “insulation under pressure sandwiched between the steel”. Insulation is not supposed to be laid this way. Second, the evidence is clear Hawkins understood the detail in the manner contended for by the plaintiffs.
[86] Mr John Overton was a site manager for Hawkins on Stage I. When asked about detail 111, Mr Overton said:79
A My recollection was that the netting was drooped in between the purlins, over the purlin and the insulation sat in on top of that netting and then went over the purlin. That was my memory of it.
Q As you recount that you give a motion with your hand, suggesting that the netting and the insulation blanket are draped and loose?
A Well like that drawing there, in between the purlins, and then going over the purlin.
Q So tight at the point it's over the purlin but otherwise loose? A Drooping in between, that was my memory of it, yeah.
Q And that’s how you understood it was to be done? A As far as I’m aware, yes.
[87] The point was put beyond doubt in re-examination. Mr Overton was again shown the detail. And then asked, “do you see it droop in the insulation blanket”? Mr Overton said “Yes”, “between the purlins”.
[88] Mr Overton said Hawkins had difficulty drooping the insulation in accordance with the detail. He said Hawkins abandoned its attempts to do so to avoid delay and additional cost.
79 Notes of evidence at p 1429, li 14–27.
[89] In short, Mr Overton accepted Hawkins did not construct the sub-roof in accordance with architectural specification, albeit for reasons he considered legitimate. In doing so, Hawkins also ignored the roofing handbook, which specifically warns against insulation being placed hard against the underside of cladding. The defect is established.
[90] The remaining five roof defects—poorly formed roof edges, poorly formed roof penetrations, inadequate provision for thermal movement, overtightened fixings and inadequate fixing length—are addressed briefly. This because Hawkins accepts these exist. However, as observed earlier, it does not accept any or all breach the Building Code.
Poorly formed roof edges
[91] Mr Rawlinson said the roof edges are poorly formed. The architect had provided for greater protection of the timber framing where the Zincalume and translucent plastic roofing meet between the library, administration building and W1-W3. The specifications show two types of roofing, one over the other, for two crests. Instead, Hawkins had installed to a single crest. Mr Rawlinson said this provided inadequate protection for roof elements, some of which had sustained some damage.
[92] The architect had also provided the building paper underneath the roof cladding—the underlay—should extend just into the gutter. On this schema, any water that managed to penetrate the cladding would likely travel on the underlay into the gutter. Ms Cockerell said this specification reflected “standard trade practice”. Hawkins did not follow this specification either. The underlay to most of the Stage I buildings is short. So too areas of the Stage II roofs adjacent to eaves and gutters.
[93] A roof splay cut is when roof cladding is cut on an angle rather than straight across. Splay cuts can be difficult as the resulting edge can face up rather than down, with the risk water will run under the cladding into the sub-roof. Stage I and two roofs have ineffective turn-downs in consequence of splay cuts. These largely relate to the pop-up roofs and their gutters. Mr Rawlinson gave evidence of associated instances of deterioration of the roof underlay and BIB.
Poorly formed roof penetrations
[94] Some definitions first. Roof penetrations are objects that come up through a roof, such as an exhaust vent, pipe or duct. These necessarily affect the flow of water. A flashing is a thin sheet of metal to protect a section of a roof or wall from weather and water.
[95] Mr Rawlinson said the roof penetrations are poorly formed. Those in relation to the gymnasium, W6 and the library extension have no triangular diverter flashing, a flashing designed to divert water through its shape. Sealant had instead been used. And poorly. Consequently, roof water leaks into the ceiling space. These leaks are visible on ceiling tiles. The same difficulty affects W5. Related uneven use of sealant has caused corrosion to the administration block and W1 roofs.
[96] Rubber boot flashings should be installed like a diamond shape, so the water can run down each side of the flashing. Hawkins, however, had installed these flashings as squares so the top edge catches and retains water on the roofs of W1 and W3.
Inadequate provision for thermal movement
[97] Metal roof parts can heat and cool differently. For example, roof cladding is liable to heat and cool more quickly than metal below it. This for obvious reasons. This can give rise to opposing forces on a roof fixing, known as “shearing”.
[98] Mr Rawlinson said inadequate provision had been made for this phenomenon in relation to the use of long sheets of metal cladding, which are over 12 metres in length. Fixings had sheared off above W1, W2, W4 and W6. Similar forces had caused parts of the roof to buckle on the administration building, gymnasium, W1, W3, W4 and the library extension.
[99] Unsurprisingly, various building techniques and devices are available to combat, or at least ameliorate, thermal expansion. Mr Rawlinson said Hawkins had used none. All experts agree.80
Over-tightening of fixings
[100] Fixings hold the roof cladding to the building. But for them, the roof would blow away. Typical fixings are nails or screws. Hawkins used different types of screws, all with a large head and rubber washer.
[101] Fixings must be properly tightened, neither too tight nor too loose. Too loose and the underlying hole risks being unprotected from the elements. Water may get in. The same risk arises if the fixing is too tight, as the rubber washer on the fixing can bulge, leaving part of the hole exposed. Overtightening can also damage the washer so that, over time, it may fall off. Again, water may get in. Mr Rawlinson said more than half of the fixings he inspected were squashed, damaged or missing. Sealant had been used to fix the problem. Sealant, however, is not a durable solution. It breaks down with ultra violet light. Everyone knows New Zealand sun is fierce.
[102]Over-tightened fixings were discovered on all buildings.
Inadequate length of fixings
[103] Mr Rawlinson found “isolated” areas of roof cladding not properly fixed to the purlins. The fixings are too short: they penetrate the cladding but do not reach the purlins. Mr Rawlinson found instances of this on W2, W3 and the administration block.
Causation and cumulative effect
[104] The plaintiffs argue all defects combine so the roofs do not function. Cumulative effect is emphasised. Inadequate pitch means water struggles to leave the roofs, which in turn ponds around penetrations and inside internal gutters. Both leak,
80 With reference primarily to theory, Mr Lalas said thermal movement was unlikely to cause the fixings to break in the manner described by the plaintiffs’ experts. Nothing turns on this.
as do holes exposed by overtightened or missing fixings. So too fixings and flashings compromised by thermal movement. Sub-roof formation allegedly exacerbates all of this, as penetrating water cannot dry; the wet socks analogy discussed earlier.
[105] Hawkins’ case is that inadequate pitch and sub-roof formation add nothing to the mix, and are merely neutral vis-à-vis acknowledged (but harmless) water ingress. Again, the divergence reflects competing expert opinion.
[106] As will be recalled, Mr Lalas gave evidence in relation to roof-pitch. Mr Lalas also said the roof sheds water as departures from the required pitch are so slight. And, because he had been on the roof after rain, and it was dry.81 Mr Bray and Mr Hazlehurst said this was their experience too. Mr O’Sullivan, a building surveyor, quantity surveyor and former director of Prendos, said he had seen water ponding around penetrations and in gutters, which in his view, demonstrates the roof is not performing correctly. Mr Rawlinson said he had seen water “struggling to find its way off the roof” after rain because of inadequate pitch.
[107] I find inadequate pitch is a contributing factor in the manner alleged. Mr Lalas acknowledged he had seen water ponding in drains. And, Mr Bray accepted he had observed water ponding around penetrations and in gutters. So, there is agreement water is not leaving parts of the roof. Pitch affects the speed at which water does so. It is more likely than not inadequate pitch, in conjunction with other defects, is contributing to leakage and exacerbated risk of leakage, because water is not dispersing as it should. This conclusion accords with the direct experience of Mr Rawlinson, who spent more time on the roof than any expert. It also accords with circumstantial evidence. W4’s roof leaks the least. It is a roof with fewer:
(a)Areas of inadequate pitch.
(b)Penetrations.
81 Mr Lalas was not at the School when it rained. Nor did he know how much rain there had been.
[108] Now sub-roof formation. Mr Stephen Hogg is a mechanical and hydraulic engineer, and an expert for Hawkins.82 Mr Hogg said the primary purpose of roofing underlay is to manage condensation; its secondary purpose to combat “very minor” leaks. Mr Hogg said an air gap between the underlay and BIB was unlikely to make any difference “to the dispersion of any moisture” if the cladding leaked. Mr Hogg said: “I don’t think [an air gap] would make a lot of difference.” However, Mr Hogg accepted compression of the BIB is undesirable. Ms Cockerell, Mr Rawlinson and Mr O’Sullivan said an air gap would ameliorate the effect of water ingress through ventilation.
[109] I accept the commonsensical evidence of Ms Cockerell, Mr Rawlinson and Mr O’Sullivan. Photographic evidence provides support for their conclusion. Sections of the BIB exposed to rainwater present as significantly damaged. All of which is unsurprising; these are sandwiched under pressure and unventilated.
Do the poorly formed roof defects breach the Building Code?
[110] In issue are B2 and E2, clauses of the Building Code directed at durability and external moisture.83 These provide:
Clause B2—Durability Provisions
Objective
B2.1The objective of this provision is to ensure that a building will throughout its life continue to satisfy the other objectives of this code.
Functional requirement
B2.2Building materials, components and construction methods shall be sufficiently durable to ensure that the building, without reconstruction
82 Mr Hogg was to give extensive opinion evidence about condensation in the context of the sub-roof. I concluded the evidence lacked relevance because (i) the claim did not allege condensation was a consequence of inadequate sub-roof formation; and (ii) the plaintiffs expressly disavowed any reliance on condensation as part of their claim; see Minute (No 10). Hawkins argued the evidence was relevant to Mr O’Sullivan’s “credibility” as an expert witness, for, Mr O’Sullivan said the sub-roof failed to address climatic condensation (through the cooling of moist air). However, the appropriate remedy for irrelevant evidence—that of Mr O’Sullivan in relation to condensation— is not more irrelevant evidence; credibility is not a conventional measure of expert opinion evidence; and Mr Hogg’s additional evidence would have served only to needlessly prolong the proceeding (contravening s 8 of the Evidence Act 2006).
83 The Building Code is in sch 1 of the Building Regulations 1992. Clause B2 has not changed since 11 September 1997. Clause E2 was amended in 2007 but the changes are not material for present purposes.
or major renovation, satisfies the other functional requirements of this code throughout the life of the building.
Performance B2.3 [Revoked]
B2.3.1 Building elements must, with only normal maintenance, continue to satisfy the performance requirements of this code for the lesser of the specified intended life of the building, if stated, or:
(a)the life of the buildings, being not less than 50 years, if:
(i) those building elements (including floors, walls, and fixings) provide structural stability to the building, or
(ii) those building elements are difficult to access or replace, or
(iii) failure of those building elements to comply with the building code would go undetected during both normal use and maintenance of the building.
(b)15 years if:
(i) those building elements (including the building envelope, exposed plumbing in the subfloor space, and in-built chimneys and flues) are moderately difficult to access or replace, or
(ii) failure of those building elements to comply with the building code would go undetected during normal use of the building, but would be easily detected during normal maintenance.
(c)5 years if:
(i) the building elements (including services, linings, renewable protective coatings, and fixtures) are easy to access and replace, and
(ii) failure of those building elements to comply with the building code would be easily detected during normal use of the building.
B2.3.2 Individual building elements which are components of a building
system and are difficult to access or replace must either:
(a)all have the same durability,or
(b)be installed in a manner that permits the replacement of building elements of lesser durability without removing building elements that have greater durability and are not specifically designed for removal and replacement.
Clause E2 —External moisture Provisions
Objective
E2.1 The objective of this provision is to safeguard people from illness or injury that could result from external moisture entering the building.
Functional requirement
E2.2 Buildings must be constructed to provide adequate resistance to penetration by, and the accumulation of, moisture from the outside.
Performance
E2.3.1 Roofs must shed precipitated moisture. In locations subject to snowfalls, roofs must also shed melted snow.
E2.3.2 Roofs and exterior walls must prevent the penetration of water that could cause undue dampness, damage to building elements, or both.
E2.3.3 Walls, floors, and structural elements in contact with, or in close proximity to, the ground must not absorb or transmit moisture in quantities that could cause undue dampness, damage to building elements, or both.
E2.3.4 Building elements susceptible to damage must be protected from the adverse effects of moisture entering the space below suspended floors.
E2.3.5 Concealed spaces and cavities in buildings must be constructed in a way that prevents external moisture being accumulated or transferred and causing condensation, fungal growth, or the degradation of building elements.
E2.3.6 Excess moisture present at the completion of construction must be capable of being dissipated without permanent damage to building elements.
E2.3.7 Building elements must be constructed in a way that makes due allowance for the following:
(a)the consequences of failure:
(b)the effects of uncertainties resulting from construction or from the sequence in which different aspects of construction occur.
(c)Variation in the properties of materials and in the characteristics of the site.
[111] I have no doubt the poorly formed roofs breach both clauses. No other conclusion is available, even on the lay evidence from School witnesses alone. Hawkins argues this evidence is “understandably emotional” but unhelpful in “identifying precisely what leaks have occurred, when, to what extent, the cause of
such leaks, [and] whether they are linked to alleged defects that Hawkins is said to be responsible for”.
[112] I disagree. The lay evidence establishes the roofs have leaked systemically since at least 2010.84 The Stage I roofs were then only six years old. The same evidence demonstrates the roofs are defective; the primary function of a roof is to protect a building and its inhabitants from weather and water. Hawkins’ experts disregarded this evidence. Or, gave it little weight. All wrongly assumed it had little relevance to their task. Hawkins’ experts also downplayed the significance of the leakage. Mr Aitken, Mr Bray and Mr Hazlehurst said some leaks should be anticipated given the size of the roofs, and their age. The finite nature of roof cladding was emphasised, especially its anticipated 15 year lifespan under the Code. Replacement of approximately 200 roofing tiles was rationalised on the basis the figure represents only a small number of tiles per building. Wet carpet was dismissed as irritating but “minor”. So too use of buckets to collect rainwater, water in light fittings, damp floors and stained ceiling tiles. Similarly, Hawkins’ experts emphasised the apparently excellent condition of much of the cladding, as if this implied the roof was functioning. All of this is misconceived. Hawkins’ experts ignored an elephant.
[113] Something more about damage. Hawkins’ position is that its defective works caused only minor and isolated damage to building elements.85 The point occupied much trial time, largely because of the experts’ competing views. For example, expert opinion was offered on whether visible corrosion beneath roof cladding or on steel beams was severe or otherwise; so too the extent of such corrosion across the School. Implicit to Hawkins’ case is the proposition the Code distinguishes between acceptable and unacceptable damage in consequence of water ingress. On this view, some “reasonable” water damage to internal building elements is anticipated by the Building Code. And, not in contravention of it.
84 As will be recalled, Mr Veitch described leakage during periods of heavy rain shortly after his arrival at the School in 2008. The preponderance of evidence, however, including contemporaneous email correspondence, implies systemic leakage began no later than 2010.
85 The Building Code defines building elements as “any structural or non-structural component and assembly incorporated into or associated with a building. Included are fixtures, services, drains, permanent mechanical installations for access, glazing, partitions, ceilings and temporary supports”; see cl A2.
[114] Hawkins relies on Arrow International Ltd v QBE Insurance (International) Ltd as to what damage means.86 There, MacKenzie J discussed a spectrum of damage beginning with “microbiological infestation”87 of timber and ending with its “structural failure”.88 His Honour considered each case “must be examined on its own facts to determine when an alteration to the physical state has occurred to an extent which is more than de minimis”.89 Only then could one determine if there had been damage.
[115] As has been said by others before, context is everything in law. Arrow International concerned the interpretation of an insurance policy, not the Building Code. Indeed, the policy in question specifically excluded damage arising from non-compliance with the Code (in the years 2004 and 2005).90
[116] To return to it, cl E2.3.2 provides roofs and exterior walls must prevent the penetration of water that “could” cause damage to building elements. Anticipation and prohibition of potential damage makes clear actual damage is not required for a breach of the Code. A similar point was made by Tipping J in Spencer on Byron:91
In cases where negligent inspection has given rise to the potential for physical damage but no such damage has yet occurred, it cannot be the law that you have to wait for physical damage to occur before you are regarded as having suffered loss or harm. It is not determinative whether the loss suffered at the outset is characterised as financial or physical. It is measured by the cost of bringing the building up to the standard required by the code and thereby removing the potential for physical damage and the associated health and safety concerns. A duty of care should be recognised in respect of pre-emptive expenditure as well as expenditure necessary to reinstate or repair physical damage which has actually occurred.
[117] In Carter Holt Harvey Ltd v Minister of Education, the Supreme Court confirmed Spencer on Byron was authority for the proposition “a building owner may claim for the costs of repairing a defect before it causes damage to property or health”.92
86 Arrow International Ltd v QBE Insurance (International) Ltd [2009] 3 NZLR 650 (HC).
87 At [80].
88 At [79].
89 At [82].
90 At [6].
91 Spencer on Byron, above n 23, at [45].
92 Carter Holt Harvey Ltd v Minister of Education, above n 64, at [66] (emphasis added).
[118] It follows the Code does not contemplate “reasonable” damage in consequence of water ingress. Rather, it seeks to prevent damage.
[119]Hawkins advances a similar argument in relation to “undue dampness”:
“Undue” dampness must therefore be considered against a standard of acceptable or reasonable dampness. The extent of water ingress in a building may be very little and infrequent, and the likelihood of occurrence and any consequent damage may come within the bounds of what is an acceptable risk. For example, where there is dampness at certain points on a building, but that dampness does not detrimentally affect the building occupants or building elements, this cannot be defined as “undue”. Intermittent moisture can also be acceptable if the level or frequency is low or the building has sufficient drainage and drying capacity.
[120] The Building Code is clearly concerned with undue dampness and potential undue dampness. That much is evident from its language. Consequently, not every instance of water ingress will breach the Code. Some water may be able to harmlessly escape. Or evaporate. However, the Code does not envisage dampness arising from leakage. Rather, and as with damage, it seeks to prevent just that.
[121] Clause E2.2 provides buildings must be constructed to provide “adequate resistance to penetration by, and the accumulation of, moisture from the outside”. Adequate is defined in cl A2 as “adequate to achieve the objectives of the building code”. The relevant objective of the Building Code is to “safeguard people from illness or injury that could result from external moisture entering the building”.93 In Spencer on Byron, Tipping J said the “primary statutory purpose” of the Building Act 1991 was “the construction of buildings that do not pose health and safety risks to their occupants”.94 This purpose is reflected in s 3 of the Building Act 2004. And as observed earlier, the Code precludes potential undue dampness. Clause E2.3.2 of the Code provides roofs and exterior walls must prevent water penetration that could cause damage, undue dampness, or both to building elements.
[122] To recapitulate, the lay evidence establishes the poorly formed roofs breach cls B2 and E2 of the Building Code.
93 Clause E2.1.
94 Spencer on Byron, above n 23, at [50].
The scientists
[123] The plaintiffs called two scientists: Dr Robin Wakeling and Ms Adrienne Burnie. Hawkins called one: Dr Adrian Spiers.95 All three examined samples taken from the School.
[124] Dr Wakeling and Dr Spiers are former colleagues—and highly critical of each other. Dr Spiers said Dr Wakeling had invested this area with “mystique”, and his reports exhibited “overkill”. Dr Wakeling said Dr Spiers was a well-respected plant pathologist, but inexpert in the field of bio-deterioration. Dr Wakeling questioned whether Dr Spiers could properly assess deterioration of wood at the microscopic level.96 Each had a different view of the significance of moisture meter readings taken at the School.
[125] But there were concessions too. Dr Spiers accepted Dr Wakeling had accurately analysed his samples. He also acknowledged Dr Wakeling is “New Zealand’s leading expert on wood deterioration in leaky buildings”. Each agreed the major contest is what the samples imply.
Dr Wakeling
[126] Dr Wakeling is a microbiologist and bio-deterioration expert. Dr Wakeling analysed 68 wood samples taken from the School between July 2012 and December 2017. Dr Wakeling said these had been exposed to moisture conditions inconsistent with sound building practice and weathertight design. In his opinion, remediation is necessary.
[127]Dr Wakeling said:
(a)Three samples taken in 2012 showed advanced decay or early soft rot.
95 Drs Wakeling and Spiers were the experts before MacKenzie J in Arrow International Ltd v QBE Insurance (International) Ltd [2009] 3 NZLR 650 (HC).
96 Despite Dr Wakelings’ stance, the plaintiffs did not challenge Dr Spiers’ standing as an expert or the admissibility of his evidence. For this reason, I assume Dr Spiers is an expert in this context and his evidence constitutes admissible expert opinion. But as will be explained, I prefer the evidence of Dr Wakeling (and Ms Burnie).
(b)Two 2016 samples exhibited superficial soft rot.
(c)Two 2017 samples exhibited superficial soft rot and likely incipient brown rot. Another sample from this period also likely revealed incipient brown rot.
(d)Nine samples displayed evidence of stachybotrys. Stachybotrys is a soft rot fungus that degrades wood fibres and products containing wood.
[128] As with Dr Spiers, Dr Wakeling visited the School. He said it is almost inevitable the School harbours stachybotrys; he saw “telltale” signs of serious but unexplored infestations. Dr Wakeling said it is unarguable the School suffers an unacceptably high moisture level, and one damaging building elements, including timber.
Dr Spiers
[129] Dr Spiers is a plant pathologist. Dr Spiers has researched interactions between plants and fungi for 45 years. Since 2005, Dr Spiers has analysed timber samples from leaky buildings for fungal decay.
[130] Dr Spiers analysed 20 wood samples taken from the School between November and December 2017. Dr Spiers said the School is not a leaky building in “accepted parlance” because:
(a)Only one of the 20 samples contained evidence of decay.
(b)Extensive moisture readings had been taken from timber at the School. These average 11 per cent. This level is below the threshold for the establishment of decay.
(c)The samples show evidence of treatment with tin. Tin-treated wood can cope with intermittent water ingress, hence its use as a wood preservative.
[131] Dr Spiers also analysed underlay samples taken from the School at the end of 2017. He saw “sparse fungal growth” on these. Dr Spiers considers there is no evidence of health risk to those at the School.
[132] Dr Spiers said the results suggest the buildings comply with the Building Code in relation to durability and water ingress: “My results are consistent with a School which is sound and decay free.”
Ms Burnie
[133] Ms Burnie is a microbiologist. She examines building materials other than timber. Ms Burnie examined 28 samples taken from the School between July 2012 and December 2017. Ms Burnie said 12 of the these showed probable evidence of moisture ingress, including the presence of fungi. Ms Burnie said fungi “should not be present in a normal, healthy building”, and some of those identified required “sustained moisture”, meaning “weeks, months if not longer”. Dr Spiers agreed.
Analysis
[134] I prefer the evidence of Dr Wakeling and Ms Burnie to that of Dr Spiers.97 First, unlike Dr Wakeling and Ms Burnie, Dr Spiers placed considerable weight on moisture meter readings in interpreting samples from the School. More importantly, Dr Spiers appears to have treated these readings as both reliable and diagnostic. Elaboration is necessary.
[135] Mr Bray supervised moisture meter testing in November and December 2017 on behalf of Hawkins. So too Mr Leon Goodwin for the plaintiffs, a building surveyor
97 Hawkins contends Dr Wakeling’s evidence is unreliable because his early reports, which go back to 2012, foreshadowed compounding damage, and there is no evidence this has occurred. I reject the criticism for the reasons given by Dr Wakeling: later samples would need to be taken from the same location for the point to be evaluated; a building “riddled with severe … leakage scenarios
… and severe mould” can still exhibit normal results as decayed areas can be easily overlooked; and the results, overall, demonstrate a moisture-compromised building.
with Prendos.98 Their readings range between seven per cent and 21 per cent. Seven per cent is low; 21 per cent high. Moisture meter readings are often used as an investigative tool in this context. However, they are only a tool. Moisture is transitory. Timber moisture levels fluctuate. A moisture meter records a snapshot of moisture in timber at that time, not more. Consequently, low readings must be treated with care, as damaged wood might have dried through heat and ventilation. High readings, however, imply a potential water ingress problem. In summary, moisture meter readings require caution.
137 For example, see Warren & Mahoney v Dynes CA49/88, 26 October 1998 at p 22.
[268] The real contest lies between A and B. C is inapt for eight reasons, some interrelated.
[269] First, C lacks coherent detail. Mr Hazlehurst accepted Hawkins’ proposed scope is “really a methodology statement”. C fails to allow for all but certain necessary works: removal of material that may constitute a biological hazard; painting or replacement of internal ceilings or walls; replacement of decaying or rotten timber; and correction of some gutter outlets. C also fails to provide for scaffolding and roof-cover protection in relation to gymnasium works.138 Mr Hazlehurst assumed most of the roof cladding would be re-used. Conversely, Mr James White, the quantity surveyor retained by Hawkins for this part of the case, assumed the cladding would be replaced with new cladding. In cross-examination, Mr Hazlehurst accepted the BIB should be removed. But C does not allow for that.
[270] Second, C makes no provision for remediation of two aspects of the poorly formed roofs: inadequate roof pitch and sub-roof formation. C presupposes the roofs do not need to be packed to achieve a three-degree pitch. And, it assumes the sub-roof may remain as it is, without an air gap to facilitate ventilation, and with the BIB firmly compressed by cladding. Or as earlier observed, squashed.
[271] Third, C assumes the remedial works could be finished within 20 weeks (over two consecutive Christmas breaks and one Easter break). This is largely because C presupposes no work is required in relation to either pitch or sub-roof. Both, however, require significant work. With them, a 20-week schedule is unmanageable. And as time increases, so too cost.
[272] Fourth, C envisages a less expensive but high-risk remedy in relation to the internal gutters, defect 2. Mr Hazlehurst considers these could be replaced by a new membrane bonded onto a welded flashing. However, and as Ms Cockerell observes, this would likely replicate an aspect of the existing defect, as thermal movement may cause the membrane to lift from the flashing, thereby allowing water underneath. And leakage.
138 C presupposes the application of frame-saver (a fungicide) to damaged timber, not its replacement.
[273] A related issue arises. Works to remedy defects must, of course, comply with the Building Code. Ms Cockerell considers for these to be Code-compliant, a “tried and true method” should be adopted, in which the new gutters would discharge into the external gutters, thereby minimising risk of water ingress through the roofs. The remedial works contemplated by Hawkins, as reflected in C, do not contemplate this step. While Ms Cockerell’s solution is not necessarily the only Code-compliant one, a matter on which the evidence admits no definitive conclusion, Mr Hazlehurst’s proposal attracts heightened risk to which the plaintiffs should not be exposed in consequence of Hawkins’ negligence.
[274] Fifth, as will be apparent, C has a band-aid like quality. For example, it makes no allowance for the replacement of decaying or rotten timber. To provide another example, C eschews an additional flashing to protect the gymnasium’s tilt-slab junction (defect 3) even though Mr Aitken accepted use of an additional flashing constitutes “a normal solution” involving “an additional safeguard” against water ingress.
[275] Sixth, C presupposes a building consent is not required for the remedial works. The assumption is misplaced. Put broadly, a building consent is not required for maintenance work or repair work. However, the exemption does not extend to elements that have failed to satisfy the durability requirements of the Building Code, for example, through a failure to comply with the Code’s external moisture requirements—the very basis for much of Hawkins’ liability. Mr Aitken accepted if cl E2 had been breached, there would be no ability to avoid the requirement for a building consent.
[276] This matters not just because a building consent costs money, but because other costs become likely too. For example, when the cladding is removed to achieve compliance with ground clearance rules, it is all but certain the Council will require it to be reinstalled on cavity battens, so the Stage I buildings would then have a cavity system (like the Stage II and III buildings). Mr White acknowledged C makes no provision for this.
[277] Seventh, Ms Cockerell said C’s scope of works risks poor workmanship. I consider these observations prescient for the reasons she gave:139
It sounds like a great solution in theory. My concern is you’re doing exactly what was done with this project when it’s constructed. You’re trying to cram a lot of very specific work into a short timeframe with absolutely no scope for extension on that timeframe. We see, we’ve gone through you know, for quite a while on what effect that short timeframe has had on the original build and that’s been given as a reason for some of the quality issues. I think you technically could probably do it in those holiday timeframes. The reality is, on remediation projects, you find things that you do not expect. You need to have a buffer in those timeframes to allow for that. If everything is shoehorned into those holiday breaks and you have no contingency for accommodation should the works go over by one week or two weeks, you're in exactly the same position we started with, which is being in a big rush to get the work finished as quickly as possible, rushing things, not having proper quality assurance procedures and having poor workmanship. I believe it is technically possible but would be extremely high risk to do the work in that manner.
[278] Which leaves A and B. A was prepared by Mr O’Sullivan and Ms Heidi van Eeden, a Prendos quantity surveyor. B was prepared by Mr White. As observed earlier, B constitutes Hawkins’ pricing of A.
[279] The two are a little under $3 million apart. Mr White said A is needlessly expensive because Ms van Eeden adopted excessive rates; was inconsistent in her treatment of these; allowed for the replacement of too much timber; and engaged in “betterment”.
Excessive rates?
[280] Mr White said Ms van Eeden’s construction rates were too high and her justification for them—an operating school environment—is “frankly … a bit of a red herring”.140 Mr White said an operational school is little different from an operational commercial building, call centre or apartment building. Mr White also said care was required to ensure rates do not reflect the frenetic pace of the current construction market, particularly when remedial work may not commence for some time.
139 Notes of evidence at p 454, li 1–18.
140 Hawkins also contends Ms van Eeden’s contingency allowance and allowances for professional fees are too high. I reject this criticism because of the wholly plausible premise underlying Ms van Eeden’s testimony: remediation projects of this nature generally cost more than anticipated.
[281] Ms van Eeden did not accept these criticisms. She said the rates reflected the reality of remedial work in an operational school environment, which was necessarily slower—and hence more expensive—than other types of construction. Ms van Eeden also identified heightened health and safety requirements. And, the limited number of reliable contractors in the field.
[282] I accept Ms van Eeden’s evidence. The rates she adopted have a sound methodological basis: they are based on tenders. Ms van Eeden has considerable experience in the remediation of leaking schools. Mr White does not. I accept too the core animating proposition: schools are costly to fix for the reasons given by Ms van Eeden as augmented by Mr O’Sullivan, an expert with perhaps unrivalled experience in this field.141 In brief:
(a)School populations are often large, and engage much movement. Pupils and teachers move between buildings, sometimes hourly.
(b)All aspects of construction must be quarantined, including personnel and deliveries.
(c)Buildings typically require several types of works: repairs to roofs, walls, flashings etc. Some can be simultaneous. Others not.
(d)Strict health and safety requirements form an integral component of remedial works. For example, fences must be high enough to deter “the climbers”. And the unduly inquisitive.
(e)Security is paramount, particularly at weekends. Schools attract unwanted attention from vandals, particularly if they are also a construction site. Cameras, alarms and smoke detectors are a necessity.
(f)Construction must not interfere with education. If the two would conflict, the former must yield.
141 Mr O’Sullivan has been involved with more than 100 leaky schools since 2006.
(g)Holidays are not panaceas. Schools run courses and holiday programmes. Teachers often come to work or catch up on work during them.
(h)Complexity attracts additional time and cost, including elevated consultancy and professional fees.
Inconsistent rates?
[283] Mr White said Ms van Eeden was inconsistent in her use of rates. Ms van Eeden was cross-examined in relation to pricing installation of insulation at
$55 per square metre, whereas insulation for the gymnasium she priced at $201 per square metre. Ms van Eeden said the difference reflected the need for erection and use of scaffolding in relation to the gymnasium.
[284] The response addresses the criticism. No other example was advanced in cross-examination.142
Percentage of rotten or decaying timber?
[285] Mr White allowed $34,000 for replacement of rotten timber in the frame, being five per cent of the frame. Ms van Eeden allowed $107,540, or between 15 and 20 per cent. Mr White considers this excessive.
[286] Both experts were reliant on the assessment of other experts; Mr Hazlehurst and Dr Spiers on the one hand, and Mr Rawlinson and Dr Wakeling on the other. And in truth, prognostication.
[287] Middle ground—approximately $71,000—is appropriate. Until cladding is removed, no one can know how much timber needs to be replaced. Materially, Dr Wakeling accepted much timber in a moisture-compromised building can be
142 Mr White gave evidence of other alleged inconsistences, but these were not put to Ms van Eeden for comment. Ms van Eeden and Mr White met twice before trial. Ms van Eeden suggested a third meeting in the hope of resolving outstanding pricing differences and preparation of a joint schedule. Mr White did not respond to her suggestion.
sound, even when other timber is rotten. It follows A should be ameliorated by
$36,540.
Betterment
[288] This is advanced as an affirmative defence as well as a criticism of Ms van Eeden’s costing of A. Fulsome citation of Professor Todd is apt:143
Where a damaged chattel is repaired with new parts, or a destroyed building is reinstated, the owner may wind up with an item that is more efficient or useful than the original, or has a longer lifespan. In such a case it can be argued that the value of this improvement in the plaintiff’s position should be deducted from the damages payable by the defendant in order to ensure that the plaintiff does not end up better off than before the commission of the tort. On the other hand, deducting the full value of “betterment” ignores the fact that the plaintiff may effectively be compelled to upgrade the property at a time when the plaintiff does not wish to do so and perhaps cannot afford to. Consequently, the courts have traditionally been rather reluctant to make an allowance for betterment, and in the leading English case the plaintiff was allowed to recover the full cost of rebuilding business premises destroyed by fire. The more recent New Zealand decisions have taken a middle course, recognising that betterment should not simply be ignored and that it will often be appropriate for a deduction to be made, while at the same time making allowances for the disadvantage of involuntary investment by the plaintiff. The onus rests on the defendant to prove that the plaintiff has in fact benefited as a result of the reinstatement.
[289]I adopt this commentary as a statement of principle.
[290] A presupposes replacement of the Zincalume roof cladding with Colorsteel. The additional cost is approximately $350,000. Hawkins contends this is an obvious instance of betterment, particularly as the Ministry contemplated Colorsteel for the roofs, only to abandon it in favour of cheaper Zincalume at the design change.
[291] Mr O’Sullivan resisted this analysis on the basis the Council is likely to require a more robust product having regard to the corrosive environment.
[292] As a matter of principle, remedial work to achieve Building Code compliance should not be considered betterment. Such work is involuntary, in the sense it is the product of another’s wrong. And more particularly, the product of negligence. Why
143 Stephen Todd (ed) Law of Torts in New Zealand (7th ed, Thomson Reuters, Wellington, 2016) at [25.2.08].
should the owner bear the cost of this element of repairs when the builder was required to comply with the Building Code—but failed to—when constructing the building? Building Code requirements have changed since the School was built. Put generally, more onerous requirements exist now than was the position then. But again, the timing of the work is the product of circumstance, not choice. And the plaintiffs have never enjoyed the benefit of healthy, Code-compliant buildings. In a sense, the point can be conceptualised as the logical extrapolation of the egg skull principle; just as a defendant must accept the complainant as he, she or it found them, so too Hawkins and heightened Building Code requirements.
[293] All of this said, Mr O’Sullivan’s position is speculative. The Council may require Colorsteel use. Or not. No evidence was adduced from the Council. Nor is this requirement obvious in terms of Code-compliance, still less self-evident.144 The sum of $350,000 constitutes betterment.
[294] A allows approximately $124,000 for the installation of new insulation across the entire sub-roof. Hawkins contends much of the existing insulation could be safely re-used. The plaintiffs respond some of the BIB is damaged; more damage will be revealed when the cladding is lifted; and much of the BIB may stick and rip given its sandwiching.
[295] The plaintiffs’ submission reflects the position ultimately adopted by Hawkins’ experts. Mr Hazlehurst and Mr Aitken accept the BIB is likely to be damaged when the cladding is lifted, and new insulation will be required. No deduction is warranted for these reasons.
[296] A assumes replacement of the transparent plastic roofing with new roofing, at an approximate cost of $88,000. The plaintiffs appear to acknowledge this cladding is at the end of its lifespan and would require replacement irrespective of their claim. However, they resist betterment on the basis Hawkins did not install the more robust product specified by the architect, which would have lasted longer.
144 Cf the cavity-batten requirement discussed at [276].
[297] A facsimile from the architect to Hawkins on 5 December 2003 provides evidential support for this argument, but the argument was not ventilated until closing submissions, other than at best elliptically. Consequently, it would be wrong to accede to it. Deduction of the full amount is appropriate.
[298] This leaves more general deductions for betterment, which Hawkins’ contends should be made to reflect the fact new is replacing old. I do not agree for the reasons expressed at [292]. It follows Hawkins has established a case for betterment to the value of $438,000, the bulk of which reflects proposed Colorsteel use on the roofs.
[299] Professor Todd notes at this stage of the analysis, allowance should be made “for the disadvantage of involuntary investment by the plaintiff”.145 Mr Robert Campbell, a senior official with the Ministry, gave evidence it had “spent about $1 million to date remediating health and safety issues” at the School. The plaintiffs contend this amount should be offset against any betterment adjustment, thereby cancelling the latter. The point would have force if the evidence disclosed what this means or how the money was spent. It does neither. Mr Campbell offered this evidence but did not elaborate. In fairness to him, no one asked him to. Consequently, no detail was provided. Conversely, detail was provided of roofing repairs at a cost of $1,817.00. This amount should be offset.
[300]The result: betterment of $436,183 is established.
Temporary accommodation
[301] Remediation is expected to take well over 100 weeks, a timeframe consistent with similar projects. It took six years to fix Rangitoto College; five to remedy Macleans College. Mr O’Sullivan and Ms van Eeden consider each whanau block must be vacant during repairs, in turn requiring temporary accommodation for pupils and staff for much of the project. As observed earlier, construction within a school must be strictly quarantined. Temporary accommodation was required at Rangitoto College for four years.
145 Stephen Todd (ed) Law of Torts in New Zealand, above n 143, at [25.2.08].
[302] The original figure for temporary accommodation was $2,457,000. Mr White for Hawkins acknowledged that sum was “fair”.146 However, it presupposed 155 weeks of construction, and remediation of all defects. I invited post-trial submissions on what allowance should be made for temporary accommodation if defects 1, 2, 3 and 5 were established, 147 but not the balance.
[303] Hawkins contends no allowance should be made because Ms van Eeden did not contemplate this precise scenario at trial. It submits the claim for temporary accommodation “is the most egregious aspect of the [plaintiffs’] global claim”. Scottish authority is relied on.
[304] The Scottish decision—John Doyle Construction Ltd v Laing Management Scotland Ltd—has little relevance.148 In that case, a global claim was brought in relation to delayed construction works. The claim was criticised because it was not clear which events had caused disruption, and hence loss. Here, temporary accommodation will be required. Plainly, students and teachers cannot be in classrooms while roofs are removed and rebuilt, and cladding reconstructed. As observed, temporary accommodation was required at Rangitoto College for several years; see [301].
[305] Hawkins also contends the plaintiffs did not expressly seek leave to increase the cost of temporary accommodation from that identified in the statement of claim:
$1,697,595.92. However, in opening, the plaintiffs foreshadowed Ms van Eeden’s figure of $2,457,000. In context, the plaintiffs were obviously seeking leave to amend that identified in the statement of claim. Hawkins could have raised this point at trial. It did not. Hawkins cross-examined Ms van Eeden. It did so knowing her position was that temporary accommodation would cost $2,457,000, as that was the figure in her brief, related workings, and plaintiffs’ opening. It follows this submission is a belated attempt to advance an argument implicitly abandoned at trial. The real issue then is how the cost of temporary accommodation is calculated in the absence of evidence directly on point.
146 Hawkins offered no competing figure, presumably because its scope of works, C, assumed everything could be done within 20 weeks (during holidays).
147 And the gymnasium window aspect of defect 6.
148 John Doyle Construction Ltd v Laing Management Scotland Ltd [2004] SC 713.
[306] Ms van Eeden analysed Hawkins remedial scheme, C, at trial. She concluded if the works envisaged by C were carried out adequately, and in a Code-compliant manner, construction would take 126 weeks.149 And, temporary accommodation would be required at a cost of almost $2.3 million. Materially, C envisaged modest remedial work only in relation to defects 4 and 6, and work in relation to the gymnasium floor. Consequently, the plaintiffs contend Ms van Eeden’s reappraisal of C is broadly symmetrical with the established defects, and therefore a platform for extrapolation of the cost of temporary accommodation once gymnasium-related work is removed. All of which produces a figure of $2,232,887.85.
[307] Hawkins submits matters should not be approached this way—and no allowance made—as this aspect was not directly addressed at trial. Neither party seeks a further hearing. Indeed, Hawkins resists one.
[308] Ms van Eeden was a very careful and conscientious witness. Her costings were detailed. I therefore accept the plaintiffs’ approach, at least in broad terms. However, the plaintiffs’ proposed figure must be discounted because Ms van Eeden’s not insubstantial reworking of C is not coterminous with the works envisaged by this judgment. Put another way, Ms van Eeden’s reappraisal of C provides a useful mechanism on this issue, not a precise template. Absent a further hearing, a broad brush is now necessary.
[309] Ms van Eeden’s base cost for temporary accommodation was $1,576,007.80; meaning, the cost to establish temporary accommodation and later remove it.150 Materially, much of the cost of temporary accommodation arises from its establishment, not duration. For these reasons, I adopt the base cost figure as a deliberately conservative one for the cost of temporary accommodation.
149 As will be recalled, Hawkins envisaged C would take 20 weeks.
150 Ms van Eeden’s second schedule refers to this figure as “Building Works”. It excludes various matters, including contingencies; hence the term “base cost”.
An intention to repair?
[310] Damages in this context are awarded when a plaintiff intends to make repairs; a plaintiff may not sue for damages to repair a building unless he, she or it means to.151 Hawkins contends there is inadequate evidence the plaintiffs “intend to undertake remedial works”, particularly as they have “discovered no documents that show a genuine intention to complete the scope of works prepared by Mr O’Sullivan” and Ms van Eeden. Hawkins submits the scope of works reflected in A, including the cost for temporary accommodation, is an exercise in theory only because no “business case” has been advanced within the Ministry to implement A, and the Ministry has not discussed A’s implementation with the School.
[311] The submission conflates two distinct points: (i) intention to remedy; and (ii) likelihood of implementation. Separate treatment is necessary.
Intention to remedy
[312] The evidence is clear the Ministry intends to repair the School. In brief, Mr Campbell said many schools leak and need to be repaired. Sadly, the needs of some are more pressing, albeit the School is “reasonably high” on the list of those to be fixed. But, the Ministry will do so irrespective of the outcome of the litigation. Mr Campbell accepted no internal “business case” had yet been advanced within the Ministry, and nothing more than “informal talks” had occurred with the School. He was, however, unequivocal the School would be repaired:
Q Well I put it to you, Mr Campbell, that contrary to what you say in your evidence, there is no intention on the part of the Ministry to carry out the remedial works recommended by Prendos which are the subject of this proceeding. What’s your response to that question?
A I disagree.
[313] I accept Mr Campbell’s evidence. It is credible; was not the subject of any searching challenge or contrary testimony; and accords with the Crown’s obligation to provide pupils and staff a safe environment.
151 Johnson v Auckland Council [2013] NZCA 662 at [110].
Likelihood of implementation
[314] Hawkins notes decisions of this magnitude are made within a chain of command. So, while Mr Campbell contemplates remediation in terms of A, it does not follow A will ultimately prevail. Similarly, A’s cost is not cast in stone. Recent events are illustrative.
[315] A originally contemplated much more expensive works to correct inadequate pitch, until Mr O’Sullivan decided the roofs could be packed, thereby saving approximately $7 million. Consequently, Hawkins contends A should not be regarded as co-extensive with reasonable remedial cost, particularly when executive government may ultimately receive and adopt another less expensive approach.
[316] These arguments are unpersuasive. The case must be decided on evidence, not speculation; no other credible work scheme has been advanced;152 and B—Hawkins’ pricing of A—leaves A unbruised.153 True, A is now less expensive than it was, but that is to Hawkins’ advantage. And, Mr O’Sullivan’s concession in favour of a less expensive approach was reasonable and responsible. It demonstrates independence, not uncertainty.
[317] The chain of command point might have purchase if the decision was one for Cabinet, but its applicable threshold is $25 million. Indeed, the decision need not even reach the Minister, for whom the threshold is $15 million. All of which is to say the uncertainty accompanying a command chain does not arise on the evidence.
[318]To return to it, Mr Campbell said in evidence-in-chief:154
I confirm that it is the Ministry’s intention to undertake the remediation work recommended by Prendos at the School at the most suitable time. It is a significant project that will take some years to complete and each stage will need to be carefully planned and managed in close consultation with the School.
[319]Cross-examination on this point appears at [312].
152 C was not for the reasons identified at [269]–[277]. .
153 Save for modest adjustment in relation to timber and betterment; see [287] and [300].
154 Mr Campbell’s Brief of Evidence at para 9.
[320] In summary, Mr Campbell said A would be used as the basis for the government’s remediation. Again, I accept this evidence for the reasons given earlier.
[321]To recapitulate, I find:
(a)A is the only credible scheme of works to remedy the established defects.
(b)The cost of A is reasonable.
(c)The Ministry intends to remedy the School’s defects using A.
Indemnity?
[322] Hawkins contends the Stage I contract contains an indemnity clause in its favour, which precludes liability in relation to several aspects of the claim. The plaintiffs argue the point has a fundamental failing, as Hawkins cannot establish the clauses even form part of the contract. This because the signed contracts cannot be found.
[323]The plaintiffs’ “knock-out” submission fails because:
(a)It is common ground the parties adopted NZIA Standard Conditions of Contract SCC1:2000.
(b)Clauses 50 and 51 of it are indemnity clauses.
(c)Mr Young of Hawkins said he could not recall whether the signed contract contained material changes, but doubted it did.
(d)Mr Young was not cross-examined in relation to (c).
[324] This chain constitutes satisfaction of the civil standard of proof. So, it is more likely than not the Stage I contract contains the following:
Indemnity by Contractor
50 The Contractor must indemnify the Principal against any loss or liability arising from damage to any property, or personal injury to anyone, or illness or death of anyone, that arises in any way from the carrying out of the Contract Works.
50.1This does not apply in relation to the following:
(a)loss or liability that arises from the permanent use of permanent occupation of the Site by the Contract Works.
(b)loss or liability that arises from the exercise by the Principal of a right to build or replace any part of the Contract Works.
(c)death or illness or injury or damage which is the unavoidable result of the carrying out of the Contract Works.
(d)death or illness or injury or damage due to any act or omission by the Principal, the Architect, or other contractor employed by the Principal.
(e)death or illness or injury or damage that arises from the risks listed in rule 44.1 (excepted risks) or from a risk specifically excluded in the Contract.
(f)the extent to which the Principal is required to insure against the damage under Section D (Insurance).
Indemnity by Principal
51 The Principal must indemnify the Contractor against any loss, liability, death, injury, illness or damage referred to in rule 50.1. The Principal must also indemnify the Contractor against any Costs necessarily incurred by the Contractor in relation to any of those matters.
[325] Now the defence itself. Hawkins submits cl 51 precludes its liability in relation to inadequate roof pitch; inadequate sub-roof formation; internal gutter design; and inadequate ground clearance. It contends in each instance, the “damage [is] due to any act or omission by the … Architect”; see cl 50(d). More accurately, Hawkins contends the plaintiffs are not entitled to damages against it, for, the plaintiffs have indemnified Hawkins against just that.
[326] The submission is unsustainable. An indemnity is “normally limited to describing a contract to save the promisee from loss caused by the claims of third parties”;155 meaning, against claims from those who are not party to the contract. So,
155 Laws of New Zealand Guarantees and Indemnities (online ed) at [244].
for example in this context, to a claim by a visitor to the site during construction. This point was made by Associate Judge Bell during the interlocutory phase of the case:156
Besides, the indemnity clause appears to serve another purpose. Indemnity provisions typically apply for liabilities to a third party, not liabilities to the other party to the contract. The likely purpose of the pleaded cl 51 is to allocate ultimate liability between the plaintiffs and the defendant in the event that either of them is found liable to a third party. The defendant might incur liability to a third party for which it might wish to invoke the indemnity in cases of strict liability, for example for nuisance, under Rylands v Fletcher, breaches of workplace safety legislation and resource management legislation. If the parties wished to allocate responsibilities between each other for their respective performance under the contract, they would not use indemnity provisions but are more likely to stipulate what matters would amount to breaches of contract.
[327] Relatedly, the clauses say nothing about the negligence of one party vis-à-vis the other. And, as the learned authors of Keating on Construction Contracts observe:157
[I]t is inherently improbable that one party to a contract should intend to absolve the other party from the consequences of the latter’s negligence, and even more inherently improbable that one party should agree to discharge by indemnity the liability of the other party for acts which the other is responsible.
[328] Consequently, only the clearest language could achieve the interpretation for which Hawkins contends. That employed implies something altogether different: indemnity for liability to a third party for acts or omissions which are not the contractor’s fault; beyond the contractor’s control; or both.
[329] A last point. Hawkins’ argument presupposes the architect was responsible in each instance. However, no determination exists to ground the submission. To conclude “damage [is] due to any act or omission by the … Architect” in its absence would contravene principles of natural justice, a point foreshadowed early in this judgment and returned to from time to time.
[330]The defence is dismissed.158
156 Botany Downs Secondary College v H Construction North Island Ltd [2017] NZHC 3147 at [46].
157 Stephen Furst and Vivian Ramsey Keating on Construction Contracts (10th ed, Thomson Reuters, London, 2016) at [3-092].
158 The plaintiffs also argue the indemnity is unlawful under the Public Finance Act 1989, and reliance on the defence time-barred. No determination of either is necessary.
Contributory negligence?
[331] Hawkins contends the plaintiffs were contributorily negligent, particularly in relation to defect 4. As will be recalled, I dismissed that aspect of the plaintiffs’ claim. It is not clear whether Hawkins advances contributory negligence to other aspects. On the assumption it does, its submission is that contributory negligence arises because:
(a)Stage I suffered budget pressure. Design decisions were made to reduce cost.
(b)The design for Stages II and III replicated Stage I.
(c)The Board of Trustees complained to the Ministry about the budget and design decisions.
[332] All of this is true. However, none of these points alone or in combination constitutes a substantial contributing cause of the defects, which exist because of Hawkins’ negligence.
[333] Take the poorly formed roofs for example. The roofs leak because they suffer a host of construction defects, including missing fixings and poorly formed penetrations. Nothing the plaintiffs did or did not do causes them to leak. Another obvious example is the poorly formed internal gutters, which leak because of various construction failings. Again, nothing the plaintiffs did or did not do causes the gutters to leak. And so on.
[334] The defence’s underlying premise is also erroneous. Most construction projects face budgetary and time pressures, but neither without more causes a builder to contravene the Building Code. These points were made by Ms Cockerell in testimony. They are unanswerable:159
The client is not responsible for ensuring that the design or finished building complies with the NZBC – this is the responsibility of the professional firms they have engaged, and they are reliant on advice given by these professionals.
159 Ms Cockerell’s reply brief of evidence at paras 9.2, 9.3 and 9.8.
It is well known among architects and contractors who carry out work for the Ministry that construction budgets are very tight. But that is not just a reality for the ministry – almost all clients are price conscious. ...
...
In my experience, tight budgets are a common problem, but if the desired design cannot be delivered within the allowed budget, then either the budget must increase or the design must change to suit the budget whilst still remaining compliant: the compliance of the design cannot be compromised in order to cut costs.
[335]The defence is dismissed.
Summary
[336] Hawkins is liable to pay the cost of remedying defects 1, 2, 3 and 5, and the gymnasium window component of defect 6. The sum is not small, but Hawkins was paid approximately $28 million to build the School; pupils and teachers have not had the benefit of healthy Code-compliant buildings for eight years; and the award reflects the amount necessary to repair the School, not more.
Orders
[337]Hawkins must pay the plaintiffs $13,424,967.40 and GST on this sum.160
[338] Agreement is encouraged in relation to costs. If this proves impossible, the plaintiffs are to file a submission of not more than eight pages by 15 May 2018. Hawkins is to respond, again with a submission of not more than eight pages, by 29 May 2018.
Addendum – exclusion of very late evidence
[339] On day 10 of the trial, Hawkins sought leave to file six additional briefs of evidence; five in relation to existing witnesses and a sixth in relation to a new witness.
160 $12,285,142.60 to remedy the defects (A less $36,540 in timber); less betterment of $436,183; plus $1,576,007.80 for temporary accommodation. The plaintiffs did not address interest in their closing submissions, presumably because they have not yet paid for the repairs.
The proposed evidence was in response to the plaintiffs’ reply briefs of evidence.161 I excluded five of the six briefs.162
[340] The timetable did not anticipate—and hence made no provision for—a fourth wave of evidence, let alone introduction of new evidence during trial. Admission of the evidence would have prolonged the trial beyond its four-week estimate—an estimate maintained only through extended sitting hours—in turn requiring the trial to be adjourned part-heard. If adjourned, the trial could not have reconvened for many months (because of my schedule).
[341] The offering of late evidence reflected Hawkins’ own inactivity for much of the proceeding. It engaged new counsel late; so too expert witnesses. And, rather than grappling directly with the substance of the case, Hawkins filed a host of late interlocutory applications, including an unsuccessful application for an adjournment of the trial.163
[342] The proposed evidence had only modest probative value, and some was likely inadmissible. For example, Mr Lalas’ additional brief of evidence was to the effect cladding could sustain damage if water-blasted from too close a distance.164 Physics was offered as illustrative:
Cladding Pressure = Dr Choi’s test specimen pressure Gerni water line pressure test hose line pressure
or cladding pressure Pc /1740psi = 2124Pa/35psi
so cladding pressure Pc = 2124 Pa x 1740psi/35psi = 103,000Pa
[343] Doubt attaches to whether such evidence is substantially helpful under s 25 of the Evidence Act 2006, as Mr Lalas’ underlying point is likely a matter of common
161 The plaintiffs’ reply briefs were filed immediately before trial, largely because the conference of experts was delayed through medical unavailability of one of Hawkins’ expert witnesses.
162 Rule 9.8 of the High Court Rules 2016 requires supplementary evidence to be served as soon as possible. Use of such evidence is at the discretion of the Court. The overarching concern is the interests of justice; see, for example, Western Park Village Ltd v Baho [2013] NZHC 1909.
163 The background to this chapter is recorded by Whata J; see Minister of Education v H Construction North Island Ltd [2017] NZHC 3228.
164 Mr Lalas’ proposed evidence was not that the cladding had sustained damage from water-blasting; see [206]–[210].
knowledge; the mundane is not made otherwise through cloak of expertise. Similarly, Mr Noel Flay was to give evidence as to whether remedial works would require a building consent. However, much of his evidence concerned matters of law.165 In short, and irrespective of admissibility, the proposed evidence would have needlessly prolonged the proceeding contrary to s 8 of the Evidence Act.
[344] The only evidence of significance was from Dr Spiers in relation to criticisms of his expertise, and, from Mr White in relation to the plaintiffs’ proposed scheme of works. I admitted Mr White’s brief of evidence in its entirety. I also permitted Dr Spiers to respond to the criticisms.
……………………………..
Downs J
165 Mr Rawlinson gave not dissimilar evidence on behalf of the plaintiffs. I had no regard to it for this reason.
12
12
1