Sheehan v Watson

Case [2010] NZCA 454


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IN THE COURT OF APPEAL OF NEW ZEALAND

CA52/2010
[2010] NZCA 454

BETWEENMICHAEL PATRICK SHEEHAN AND ROSEMARY AINSLEY PATERSON AND DAVID WILLIAM COLE AND JONATHON ROSE TOGETHER TRADING AS OTAHUHU JOINT VENTURE PARTNERSHIP
Appellants

ANDTREVOR WATSON
First Respondent

ANDKEITH ROBINSON
Second Respondent

Hearing:18 August 2010

Court:Stevens, Venning and Simon France JJ

Counsel:C R Langstone for Appellant
C J Hlavac and A L Shakespeare for Respondents

Judgment:5 October 2010 at 3.30pm

JUDGMENT OF THE COURT

A        The appeal is dismissed.

BThe appellants must pay costs to the respondents on a band A basis plus usual disbursements.  We certify for second counsel.

____________________________________________________________________

REASONS OF THE COURT

(Given by Venning J)

Introduction

[1]       This is an appeal from a decision of Harrison J in which he determined that:[1]

(a)the provisions of the Property Law Act 2007 (the Act) prevent a lessor from bringing a claim against an employee of the lessee for damage to the leased premises caused by the employee’s negligence; and

(b)such employees do not owe the lessor an independent duty of care in tort.

Factual basis

[2]       The following facts are taken from the lessor’s statement of claim:

(a)The plaintiffs are trustees of two trusts which together, as the Otahuhu Joint Venture Partnership (OJVP), own industrial premises in Otahuhu, Auckland. 

(b)By deed dated 1 May 2006 OJVP leased the premises to Penrose Commercial Centre Ltd which in turn assigned its interest to GTR Access Equipment Ltd (GTR) on 7 November 2007. 

(c)The respondents are employed by GTR.

(d)On or about 14 March 2008 there was a fire in the workshop at the premises resulting in extensive damage.

(e)The fire was caused by the respondents’ negligence.

(f)OJVP seeks to recover the cost of repairing the damage of $122,874.00 from the respondents.

(g)OJVP had insured the premises with QBE Insurance (International) Ltd, which has indemnified the lessor for its loss. 

The decision under appeal

[3]       Harrison J identified the first issue as the construction of the relevant provisions of the Act, ss 268–270 in particular:

268     Application of sections 269 and 270

(1)Sections 269 and 270 apply if, on or after 1 January 2008, leased premises, or the whole or any part of the land on which the leased premises are situated, are destroyed or damaged by 1 or more of the following events:

(a)fire, flood, explosion, lightning, storm, earthquake, or volcanic activity:

(b)the occurrence of any other peril against the risk of which the lessor is insured or has covenanted with the lessee to be insured.

(2)Section 269 applies even though an event that gives rise to the destruction or damage is caused or contributed to by the negligence of the lessee or the lessee's agent.

(3)In this section and sections 269 and 270, lessee's agent means a person for whose acts or omissions the lessee is responsible.

269     Exoneration of lessee if lessor is insured

(1)       If this section…

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Sheehan v Watson [2010] NZCA 454
Case
[2010] NZCA 454
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CaseChat Overview and Summary

Sheehan v Watson is an appeal against a decision of Harrison J in which he determined that the provisions of the Property Law Act 2007 prevent a lessor from bringing a claim against an employee of the lessee for damage to the leased premises caused by the employee’s negligence and that such employees do not owe the lessor an independent duty of care in tort. The appeal was dismissed. The Court found that the purpose of the Property Law Act was to address the unsatisfactory state of the case law and its economic unreality by imposing the risk of damage or destruction of the premises on the lessor, even in the absence of insurance, and preventing the insurer, from exercising by subrogation, a right to claim against the lessee. The Court concluded that the purpose of the Act would be frustrated if the lessor (or its insurer by subrogation), while prevented from suing the lessee, could still sue the lessee’s agents. The Court found that the purpose of the Act would not be met if the lessor (or its insurer by subrogation), while prevented from suing the lessee, could still sue the lessee’s agents. The appeal was dismissed and the respondents are to have costs.

Orders

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

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Ratio Decidendi

Legal Principle Established

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