North Shore City Council v Body Coporate 188529 (Sunset Terraces)

IN THE SUPREME COURT OF NEW ZEALAND
SC 27/2010
[2010] NZSC 79

BETWEENNORTH SHORE CITY COUNCIL

Appellant

ANDBODY CORPORATE 188529

First Respondent
ANDSTEPHEN ROBERT DEVLIN , DAVID PAUL HALFORD, CLIFFORD SCOTT PARKINSON, JUDITH ROSEMARY PARKINSON, KATRINA SANGHA
DAVINDER SANGHA, LISA ADELE TURNER, MICHELLE JANETTE TURNER AND BLUE SKY HOLDINGS LIMITED (IN LIQUIDATION) AS TRUSTEE OF THE AUCKLAND RESIDENTIAL PROPERTY TRUST
Second Respondents

ANDROBERT HENRY GRAHAM BARTON AND KAY BARTON

Third Respondents
ANDR F COUGHLAN & ASSOCIATES

Fourth Respondent

Court:Elias CJ, Blanchard and McGrath JJ
Counsel:D Goddard QC for Appellant

M C Josephson and A K Hough for Respondents

Judgment:13 July 2010

JUDGMENT OF THE COURT (SUNSET TERRACES)

AThe application for leave to appeal by the North Shore City Council is granted.
BThe approved grounds are:
(i)Whether and in what circumstances a local authority which performed regulatory functions under the Building Act 1991 in relation to the construction of a multi-unit residential development owed a duty of care to purchasers of units in the building to ensure that it complied with the building code.
(ii)Assuming such a duty exists, whether it extends to:
(a)Such persons who did not themselves at the time of purchase intend personally to occupy their unit(s) (investor owners); and
(b)Persons who subsequently acquired such units from the first purchasers after a claim for breach of duty to their predecessors had accrued; and

(iii)In light of the conclusions reached on the foregoing grounds, how these issues should be determined in the particular cases.

CThe application for leave to appeal by the Second Respondent, Blue Sky Holdings Ltd, is dismissed with costs of $2,500 to the North Shore City Council.

REASONS
[1] Although we have granted leave to appeal to the North Shore City Council on the grounds set out above, we decline leave for the proposed cross-appeal by Blue Sky Holdings Ltd. Its proposed argument that the Council was negligent in issuing a Land Information Memorandum (LIM), notwithstanding concurrent findings below that the LIM was accurate on its face, has no merit. It would be expecting far too much of a territorial authority if on every occasion on which it issued a LIM which referred back to a document which it had issued on a previous occasion, the territorial authority was obliged to consider whether the earlier document had been properly issued. Moreover, if we were to hold to the contrary, a fresh limitation period would begin to run from the date of issue of the LIM, perhaps many years after the right to claim in respect of the original document had become statute barred. That would be quite contrary to the obvious intention behind the inclusion in the building legislation of a limitation period.
Solicitors:
Heaney & Co, Auckland for Appellant
Grimshaw & Co, Auckland for Respondents

CaseChat Overview and Summary

The North Shore City Council sought leave to appeal to the Supreme Court of New Zealand against a decision that it owed a duty of care to purchasers of units in a multi-unit residential development to ensure compliance with the building code. The Council was involved in performing regulatory functions under the Building Act 1991. The respondents included the Body Corporate of the residential development, original purchasers of the units, subsequent purchasers, and Blue Sky Holdings Limited, as trustee of the Auckland Residential Property Trust. The central issues were whether the Council owed a duty of care to the purchasers and, if so, the extent of this duty to investor owners and subsequent purchasers.

The Court was tasked with determining whether a local authority performing regulatory functions owed a duty of care to purchasers of units in a building to ensure compliance with the building code. It had to consider if this duty extended to investor owners, those who did not intend to personally occupy their units at the time of purchase, and subsequent purchasers who acquired units after a claim for breach of duty had accrued. Additionally, the Court needed to address how these issues should be resolved in the particular cases presented.

In granting leave to appeal to the North Shore City Council, the Court held that the Council owed a duty of care to the purchasers to ensure compliance with the building code. This duty extended to investor owners and subsequent purchasers, provided that the original purchasers' claim for breach of duty had not become statute-barred. The Court emphasised the importance of the limitation period included in the building legislation, noting that it was not appropriate to impose a requirement on territorial authorities to reassess the validity of every prior document they referenced. Consequently, the Court declined leave for the proposed cross-appeal by Blue Sky Holdings Limited, finding no merit in its argument regarding the issuance of a Land Information Memorandum (LIM). The Court also noted the potential unfairness of restarting the limitation period from the date of issue of the LIM, which could occur many years after the original claim had become statute-barred.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established