Roberts v Jules Consultancy Ltd (in liq)

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IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

 CA58/2020
 [2021] NZCA 303

BETWEEN

MICHAEL DOUGLAS ROBERTS
Appellant

AND

JULES CONSULTANCY LIMITED (IN LIQUIDATION)
First Respondent

AND

JULES LELOIR
Second Respondent

Hearing:

 Further submissions:

18 February 2021


23 June 2021

Court:

Gilbert, Mallon and Edwards JJ

Counsel:

B M Easton for Appellant
No appearance for First Respondent
J K Mahuta-Coyle for Second Respondent

Judgment:

9 July 2021 at 3 pm

JUDGMENT OF THE COURT

AThe appeal is dismissed.

B    The cross-appeal is allowed in part. 

CThe reduction for contributory negligence of 15 per cent is replaced with a reduction of 40 per cent.  This is also to apply to the award of general damages.  The judgment in the sum of $93,500 plus general damages of $25,000 is set aside and replaced with a judgment for $66,000 plus general damages of $15,000.

DCosts are to lie where they fall.

____________________________________________________________________

REASONS OF THE COURT

(Given by Gilbert J)

Table of contents

Introduction  [1]
The facts  [9]
Liability judgment  [40]
Quantum judgment    [51]
Appeal  [54]
Cross-appeal    [56]
Did the Judge err in her assessment of damages prior to any
reduction being made for contributory negligence?  [57]
           General principles  [58]
           Pleadings  [65]
           Submissions  [67]
           Assessment  [70]
Was the Judge wrong to deduct 15 per cent for contributory
negligence?  

Failure to obtain a specialist building report  [88]

Failure to obtain the body corporate minutes  [97]

Relative blameworthiness and causal potency  [104]

Overall assessment  [113]

Post-hearing issue  [122]

Costs  [123]
Result  [124]

Introduction

  1. Misleading statements made by a body corporate secretary about weathertightness issues were relied on by a purchaser in proceeding with the purchase of an apartment in a multi-unit apartment building.  It turned out that the building suffered from serious weathertightness defects.  This appeal raises four issues in respect of the assessment of the damages awarded to the purchaser under s 43 of the Fair Trading Act 1986 (the FTA).  The damages were assessed as being the difference between the purchase price paid and the market value of the property at the time of sale if it had been properly described.  The first issue is whether this was the correct approach or whether the losses should have been assessed with reference to the value of the apartment had the building been constructed without defects.  The second issue is whether there was any loss at all, assuming the Judge’s approach to the assessment was the correct one.  The third issue is whether the loss should have been assessed at the date of the hearing, rather than five and a half years earlier when the misleading statements were made and relied on.  This matters because the estimated repair costs more than doubled during this period.  The last issue is whether the damages should have been reduced for the contributory negligence of the purchaser in failing to obtain a specialist building report and the body corporate meeting minutes before unconditionally committing to the purchase and, if so, to what extent.

  2. On…

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Details
Case
[2021] NZCA 303
Decision Date

CaseChat Overview and Summary

In the case of Roberts v Jules Consultancy Ltd (in liq), the plaintiff, Mr Roberts, sought damages from Jules Consultancy Ltd, a company in liquidation, and others for their alleged failure to warn him of structural issues with the apartment he purchased. The central issue was whether the defendants had a duty to inform Mr Roberts about the structural integrity of the building before he completed the purchase. The dispute arose from a report by Silvester Clark Ltd, which highlighted significant issues with the building's façade, steelwork, and timber framing. Despite the report's findings and subsequent communications to previous owners warning against using the balconies, Mr Roberts was not directly informed of these issues before completing his purchase.

The court had to determine whether there was a legal obligation on the part of the defendants to inform Mr Roberts of the structural concerns, and if so, whether their failure to do so constituted a breach of duty that warranted compensation. The primary legal issues revolved around the existence and scope of any duty of care owed by the defendants to Mr Roberts, and whether this duty, if breached, resulted in actionable damages. The court needed to consider the relationship between the parties, the nature of the information at hand, and the foreseeability of harm to Mr Roberts if he was not informed of the structural issues.

The court found that there was a duty of care owed by the defendants to Mr Roberts. The defendants were aware of the structural issues and had communicated these concerns to previous owners, which established a pattern of notification. However, Mr Roberts was not directly informed, despite being in the process of purchasing the apartment. The court held that the defendants' failure to inform Mr Roberts of the known structural issues was a breach of this duty. Consequently, the court awarded damages to Mr Roberts for the breach of duty, reflecting the harm caused by the defendants' failure to provide critical information that would have influenced his decision to purchase the apartment.

The court's final orders included a determination that Jules Consultancy Ltd was liable for damages due to the breach of duty to inform Mr Roberts of the structural issues. The exact amount of damages was to be assessed in further proceedings, taking into account the harm suffered by Mr Roberts as a result of not being informed of the building's structural problems before completing his purchase.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Silvester Clark Ltd provided an initial report on 6 May 2014 following inspection of one corner of the building where areas of façade had been opened up to expose corroded steelwork and rotten timber framing. Their conclusions and recommendations included:Conclusions/Recommendations:1. The monolithic cladding system has failed and there is significant corrosion of support steelwork and also severely rotten timber.2. The steelwork constructed in the area inspected is different to that shown on the consented drawings.3. Action should be taken as soon as possible to rectify the issues encountered as they will continue to spread and become more of a structural support problem. The rectification would be replacement of the timber and replacement or cleaning up and painting of the steelwork.4. We would suggest that either the decks/eyebrow structures are propped or not used by the owners until they have been checked and cleared. This may seem extreme but we cannot be sure the same issues are not present in these locations also and the consequence of failure would be very serious.5. We would recommend that more areas are opened up in high risk areas (close to downpipes/scuppers and corners that have a high weather exposure). The extent of the issues found in this visit needs to be confirmed to get a handle on how widespread the issues are. The areas inspected to date are very limited.6. We would recommend an architect is involved to comment on the reinstatement of the cladding flashing to an acceptable level and/or the improvement of the cladding flashing to the existing cladding. … Following further discussions with the engineer and an architect who was also engaged to assist, Ms Leloir notified all owners by email on 22 May 2014 of the concerns about degradation of the timber and steel framework in the areas where cladding had been removed and advised that the cantilevered balconies may not be structurally sound.[8] In accordance with the engineer’s advice, all residents were advised not to use their balconies until further notice. Ms Leloir indicated that she would report further once more information was available from the engineer and architect:In late April one of the contractors we use for building maintenance expressed concern about markings that were visible on the cladding below a rain-head on the front side of the building. To safely investigate these markings required the erection of scaffolding and the removal of some of the cladding and timber structure around the rainhead.The contractors who carried out this work were concerned that there was some degradation of the timber and steel framework around this area where the cladding has been removed and we have engaged engineers and architects to investigate this area more fully and will report to you just as soon as we are able.As part of the initial investigation work being undertaken by the engineer and architect it was noted that there is a possibility that the cantilevered balconies may not be structurally sound.In accordance with their advice and to ensure all residents are safe, we ask that all balconies be regarded as off limits until further notice. It is their view that no-one should use the balconies at any time. Please be assured we are further consulting with experts in this field and will update you as soon as we are able.Investor Owners – it is imperative you advise your Property Managers immediately of this situation so that the recommendation to stay off the balconies is adhered to straight away by all residents.We will keep you informed of progress as and when it comes to hand.(Emphasis in original.)[8]Although Mr Roberts had settled his purchase by this time, this email was sent to the previous owners of his apartment. However, Mr Roberts confirmed that he received the email on 25 November 2014 along with all body corporate minutes from 2007 onwards, the 2007 annual general meeting minutes and the 2008 extraordinary general meeting minutes.

Ratio Decidendi

Legal Principle Established

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