W&W Construction 2010 Limited v East Bay Surveys Limited
[2013] NZHC 2457
•19 September 2013
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
CIV 2012-463-000874 [2013] NZHC 2457
BETWEEN W&W CONSTRUCTION 2010 LIMITED Plaintiff AND
EAST BAY SURVEYS LIMITED First Defendant/Respondent
ADRIAN PAUL COOPER Second Defendant/Respondent
WHAKATANE DISTRICT COUNCIL First Third Party/Applicant
Hearing: 17 September 2013 Appearances:
R E Kettlewell and R Catley for the First and Second
Defendants/Respondents
A Hough for the Third Party/ApplicantJudgment:
19 September 2013
JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN
This judgment was delivered by me on
19.09.13 at 4:30pm, pursuant to
Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
W&W CONSTRUCTION 2010 LIMITED v EAST BAY SURVEYS LIMITED [2013] NZHC 2457 [19
September 2013]
[1] This decision deals with a summary judgment application by the third party, the Whakatane District Council (the Council). The Council’s case is that the claims by the first defendant, East Bay Surveys Limited (EBS) and its director (Mr Cooper) the second defendant cannot succeed against it.
The substantive proceeding
[2] This proceeding is about an incorrectly sited building work. The plaintiff in the substantive claim is W&W Construction 2010 Limited (W&W). W&W engaged EBS to undertake specific surveying work regarding the siting of a gridline, a purpose of which was to detail where building works would be positioned relative to the site boundaries.
[3] In or about 2011 the owner of the Mary Shapley Home decided to undertake a redevelopment of its Whakatane site. It engaged a specialist consultant to administer the tender process for the redevelopment. The redevelopment included the construction of a new rest home/hospital wing and apartment block on the site. Tender documents for the redevelopment were prepared.
[4] On 6 November 2011 W&W was awarded the tender for the redevelopment.
[5] The first stage of the redevelopment was the completion of earthworks and included the removal of numerous trees on the site. It was a requirement of the Resource Consent that a survey be undertaken before the concrete foundation was poured.
[6] Under the contract W&W was responsible for setting up the contract works including locating the building correctly within the site boundaries.
[7] It is W&W’s case that in late October 2011 its site manager, Tony Arlidge, contacted Mr Cooper to undertake surveying work at the site to ensure that the building was correctly sited within the site boundaries in compliance with the Resource Consent.
[8] W&W believes that on or about 1 November 2011 Mr Arlidge on behalf of W&W and Mr Cooper on behalf of EBS entered into a verbal contract by which EBS agreed to undertake survey work for W&W on the site. Further, that Mr Cooper was provided with a disk containing an electronic copy of the tender copy of the plans which included the Resource Consent and a hard copy of the basic plans of the site.
[9] According to W&W the scope of the work required EBS to:
(a) Set out and define the gridlines to enable the major measurements to be completed on the site;
(b)Check existing building floor levels in accordance with the plans supplied and the Resource Consent. Also it is W&W’s case that the scope of the work required EBS to undertake three major measurements and to ensure that the survey work complied in all respects with the requirements of the documents.
[10] The survey work was required to be completed before W&W could commence construction of the building onsite.
[11] After the survey work was completed W&W requested from EBS written confirmation that the survey work had been conducted in accordance with the Resource Consent and architectural drawings. W&W state that by letter dated 11
November 2011 EBS confirmed that it had carried out the survey work at the development including establishing boundary lines in accordance with the plans, calculating plan dimensions, setting out grid profile positions and checking existing building floor levels as required. W&W then forwarded a copy of EBS’s letter to the Council.
[12] W&W say that during the marking out of a storm water easement months later it discovered that the property was in breach of the Resource Consent because:
(a) The building’s foundations had been built at least 800mm too close to the eastern boundary.
(b)EBS’s grid A1 was 590mm further away from the northern boundary than is detailed in the architects building consent drawings and specifications, which W&W said put the other key measurements out.
[13] By the time of these discoveries the block work walls on the ground floor had been completed as had approximately half of the timber framing on the second floor. It was neither practicable nor economic to demolish the building and start construction again.
[14] A few days later on 20 March 2012 W&W was put on notice by the Council that the work on the affected area of the building was to cease until a resolution was reached.
[15] W&W had to undertake design modifications; it had to apply for changes to the Resource Consent; there were negotiations with neighbours affected by the encroachment; and property and/or parcels of land were purchased from neighbours.
[16] W&W issued proceedings against the defendants for breach of contract, in negligence, and in breach of the Fair Trading Act. W&W says the defendants:
(a) Failed to ensure the survey work was conducted in accordance with instructions, the plans and specifications provided and the Resource Consent;
(b)They failed to calculate the true position of the gridlines with reference to the actual boundary;
(c) They incorrectly set gridlines which resulted in the encroachment;
(d)They failed to request additional information and/or clarification regarding the plans and drawings if it was considered there was insufficient information contained in those.
[17] In their defence the defendants admitted that in undertaking the grid-line survey they incorrectly located grid point A1. They acknowledged the purpose of
the grid-line survey was to enable W&W to erect the building profiles. However, they say W&W was required to have the building profiles checked with a second survey “the Building Profiles Survey” prior to the concrete floor slab being poured, as described in the Resource Consent.
[18] The defendants say the purpose of the Building Profiles Survey was to:
(a) Check for any inadvertent movement of the grid-line pegs as the grid- line survey was conducted during early stages of earthworks;
(b)Confirm prior to the pouring of concrete, the direct building line to boundary measurements for the Natural Light Plane (NLP) calculations and the building orientation, as required by the Resource Consent.
[19] The defendants say they were not engaged to undertake nor did they perform: (a) The Building Profile Survey in terms of the Resource Consent;
(b)Preparation of advice to the Council that building foundations were in accordance with the approved site plan and that the building, when constructed in accordance with the approved plans, would comply with Rule 4.2.12 NLP of the Whakatane District Plan with the allowed deviation in terms of the Resource Consent.
[20] The defendants say their contract was for the grid-line survey and not the Building Profiles Survey or preparation of survey advice for the Council as required by the Resource Consent.
[21] The defendants acknowledged that the foundations were poured too close to the eastern boundary and that grid A1 was 590mm further away from the northern boundary than is detailed in the plans, but they deny any responsibility for that.
[22] The defendants say by way of an affirmative defence alleging contributory negligence, that the plaintiff failed to bring to the attention of the defendants:
(a) The Resource Consent requirement;
(b) The critical nature of the location of the building foundation.
[23] The defendants say that W&W breached the Resource Consent because it failed, prior to proceeding with the pouring of the concrete foundations, to engage the first defendant or any surveyor to undertake a Building Profile Survey in terms of the Resource Consent, and to prepare advice to the Council that the building foundations were in accordance with the approved site plan and that the building when completed would comply with the Council’s NLP requirement.
The defendants’ claim for contribution from the Council
[24] The defendants have sued the Council and from them have claimed a contribution in the event the defendants have any liability to W&W.
[25] They say that the Resource Consent required a registered valuer or other suitably qualified person to inspect the building profiles prior to any concrete being poured on the site and to advise the Council that the building foundations are in accordance with the approved site plan and that there would be compliance with the NLP.
[26] The defendants plead that on or about 23 November 2011 a building inspector employed by the Council inspected the building site and undertook a siting and foundation inspection before concrete was poured; and that in undertaking the pre-pour inspection the Council relied on a letter from EBS dated 11 November 2001 relating to the Grid-line Survey. The defendants’ position is that letter was addressed to W&W and not to the Council. Also that the letter did not address any of the matters specified in the Resource Consent as requiring checking by the Council prior to the concrete foundations being poured.
[27] The defendants say that in approving the location of the building in the pre- pour inspection without having advice from a registered surveyor or other suitably qualified person to confirm that the building profiles were correctly located and
likewise without have taken advice from a registered surveyor that the NLP
requirements would be met, the Council breached its duty of care to the plaintiff.
[28] In its statement of defence to the defendants’ claim the Council:
(a) Admits that on 23 November 2011 a building inspector employed by it undertook a siting and foundation inspection for grids 5 – 9; (b)
Denies that in undertaking that inspection it relied on EBS’s letter
dated 11 November 2011 to W&W and says that it received a five
page surveyor certificate from EBS as well as the letter and that the
certificate was received prior to the siting and foundation inspection that took place on 23 November 2011; (c)
Says it and W&W relied on the defendants as a specialist surveyor to exercise reasonable skill and care when calculating the correct
position of the subject building; (d)
Says that if it was negligent in performing its inspections then such
negligence was not the material and substantial cause of alleged losses
and that the defendants had failed to perform the survey work with the
reasonable skill and care that was the material and substantial cause of the alleged losses. [29]
The
Council pleads that if it is at fault then any losses are partly attributable
to the fault of the plaintiff and the defendants.
Council’s application for summary judgment
[30] The Council pleads that the plaintiff ’s claim against it cannot succeed because:
(a) It did not breach any alleged duty; and/or
(b) If it did breach an alleged duty this did not cause any loss.
[31] The Council relies on affidavits sworn by Mr Jordan a principal of a building consultancy company, and by Mr Winship a building control officer employed by the Council.
The evidence
[32] On 7 July 2011 the Council received the report of its hearings committee upon the development application. It noted the main features of the application as being:
(a) The departure from the single-storey of the existing complex; (b) The reduced boundary distances;
(c) The light claim encroachment from the proposed apartments. [33] Neighbours had filed objections.
[34] In its resource consent grant conditions included:
(kk) That the registered surveyor or other suitably qualified person shall inspect the building profiles prior to any concrete being poured on- site and advise the council that the building foundations are in accordance with the approved site plan and that the building, when constructed in accordance with the approved plans, will comply with Rule 4.2.1.2 (Natural Light Plane) of the Whakatane District Plan with the allowed deviation.
[35] When the council issued a building consent on 6 November 2011 it noted that the consent was subject to 20 stated conditions. As well it noted:
The following additional advice notes are also relevant to this building consent:
...
[36] The second of those contained exactly the same wording that was contained in condition (kk) of the resource consent grant, and referred to in para [34] herein.
[37] The relevance of the requirement of a surveyor’s inspection has significance for counsels’ submissions. In the building consent the requirement for a surveyor’s inspection was not a condition of the grant of the building consent but rather (merely) relevant to the building consent.
[38] The Council says it assumes no responsibility to oversee work associated with the surveyor’s inspection. The defendants say the surveyors’ inspection was a matter of significance and importance for which the Council ought to assume responsibility. Further that by the wording of the advice notes it is clear that two surveyor inspections were contemplated. Namely an initial inspection to position building profiles pre concrete pour and secondly, when the building was constructed and before the roofing was placed that a second surveyor’s inspection was required to provide verification of NLP requirements.
[39] Each party takes a different view of the extent of the defendants’ obligations
in connection with their engagement as surveyor.
[40] As earlier noted W&W pleaded that the defendants failed to ensure the survey work was conducted in accordance with instructions, the plans and specifications provided and the resource consent. Its evidence was that all of that information was provided to the defendants when they were instructed.
[41] The defendants say their instructions were of a more limited kind. They refer to the fact that when their services were engaged by W&W they received an order form which merely noted:
Surveying services to set out grids from boundary and check floor RLs.
[42] Also when they completed the gridline survey they sent plans and a letter to
W&W dated 11 November 2011. The letter noted:
Re: Boundary definition and gridline survey
...
1.The Northern and Eastern Boundary lines have been defined by survey to enable the correct calculations and setting out of the
project gridlines in accordance with plan dimensions A1.10 & A1.11 attached.
2.The grid datum references to boundaries have been calculated to plan dimensions as shown...
3.Position grid F/10 calculated at 2.445m to eastern boundary which was checked measured correctly on site.
4. Grid profile positions have been set out by survey on site.
...
5. The existing Floor Level RL... was checked correct to WDC
benchmarks.
[43] The defendants say there is nothing in this letter concerning the inspection of building profiles or commenting upon NLP compliance. Therefore there is nothing in this report which indicates that the advice note requirements were being addressed, much less that they were required to be when the defendants confirmed the gridline set out.
[44] The defendants say that they were unaware that its letter was being provided to the Council or relied upon for the purposes of the pre-pour foundation inspection.
[45] When the Council received a copy of the survey documents and performed a siting and foundation inspection under the building consent its inspector, Mr Winship completed an inspection record. On it there contained a handwritten note: “Building corners marked. Survey docs rec”.
[46] The inspection form was filled in and noted that boundary pegs had been flagged, that there were approved building consent documents on site, that relevant conditions of consent were met, and a surveyor’s certificate was held.
[47] Those notings were clearly a reference to the documents that were comprised
in the defendants’ report dated 11 November 2011.
[48] Mr Winship deposed his inspection may have lasted little more than half an hour. He had had dealings previously with the second defendant. To his knowledge the Council had no issues in the past with Mr Cooper’s work. He was known to
provide a professional surveying service and there had been no reason to doubt any of the work previously performed.
[49] Mr Winship was satisfied that the building consent advice note had been complied with when he performed his own inspection on 23 November 2011.
[50] Mr Winship has considerable experience with pre pour inspections. He said they occur at the very start of the construction process and their purpose is to ensure appropriate steps have been taken to verify the location of the proposed building work and that the foundations are to solid ground and have complied excavation and reinforcing.
[51] He said that usually an inspector will see that boundary pegs have been installed and that building profiles were up. Those are used to indicate where a building will be physically located once complete. On this occasion the inspection was to cover the portion of foundation construction from grids 5 – 9 that was being constructed at the time of the inspection. He says in this case the survey documents stated that the boundary lines had been defined by survey, the gridlines have been checked and measured correct on site and the existing floor level had been checked correct to Council guidelines. He relied on the survey documents when approving the inspection and saw nothing to suggest that the building work was incorrectly sited.
[52] The import of Mr Winship’s evidence is that whilst consent conditions are mandatory and the Council may assume the responsibility of ensuring they have been met, the same obligation does not apply with respect to advice notes which Mr Winship says are more discretionary in nature. It is the Council’s position that it bore no responsibility with regard to advice note requirements and was entitled to rely upon a surveyor’s report that its obligations in this regard had been attended to.
[53] As was noted by Heath J in the Sunset Terraces decision 1:
In carrying out its inspection, it is plain that the council ought not to be regarded as a clerk of works or as a project manager. Even before the
Building Act was passed, the council’s duty to third parties was “to exercise reasonable care, not an absolute duty to ensure compliance”. The council’s role is to provide an appropriate degree of oversight for public policy reasons. Its performance must be judged against the standards of the day and knowledge of the quality (or otherwise) of particular products used in the construction process. It does not take on any responsibility for ensuring, in fact, that all completed work complies with the code.
...
The obligation of the council can be no higher than expressed in the statue itself: namely, to be satisfied on reasonable grounds that a building consent should issue; to take reasonable steps in carrying out inspection and to be satisfied on reasonable grounds that code compliance should be certified.
[54] Mr Hough for the Council also refers the Court to the judgment of Hardie- Boys J in Morton v Douglas Homes Ltd 2 in which it was noted that in appropriate cases a local authority will need to rely upon and will therefore call for an expert’s certificate, particularly in matters beyond the resources of its own technical staff. The Learned Judge went on to dismiss an argument that the Council in that case was responsible for negligence of the principal wrongdoer, stating “It [the builder] had no
right to rely on the Council’s inspector to point out its own default”.
Considerations and discussions
[55] In this case Mr Kettlewell for the defendants challenges claims on behalf of the Council that it had no responsibility to review the process which the Council considered it had no responsibility for ensuring had been attended to. The defendants rely upon the evidence of a Mr Cartwright, proffered as an expert on the matters in issue in this case. Mr Cartwright disagrees with Mr Winship’s statement that whilst consent conditions must be complied with, advice notes are viewed as more discretionary. In Mr Cartwright’s experience it has always been the role of the building inspector to ensure that all aspects of the approved building consent comply and that this includes advice notes.
[56] Mr Cartwright also comments that the survey to locate the gridlines was carried out after the site had been cleared of vegetation but that he understood that the earthworks were not complete and the site had not then yet been levelled. He
understands the gridlines were established and positioned on very temporary profile like structures and were at various heights due to the unfinished contours of the ground.
[57] Of course Mr Cartwright’s evidence must be viewed as of a person drawing conclusions from information he had been supplied rather than from observations made at the relevant time. These observations however alert the Court at this time to the difficulties of drawing conclusions from circumstances where there are differences of expert opinion and disagreement regarding relevant facts.
[58] The essence of the defendants’ case is that they were denied the opportunity of completing a second survey for the purpose of attending to the advice note requirements which the defendants say, by its wording, contemplated a further survey for the purpose of NLP requirements. The defendants say had they been given that opportunity then they may have realised the siting errors made in their initial survey. On their account it must appear that the first survey served little purpose at all except to suggest that boundary proximity indications were correct and they were clearly not.
[59] What is clear is had the grid site survey been correct then the building development would have occurred in the right place. It follows there would have been no breach of NLP requirements. The plaintiff would not have suffered the losses incurred to complete its development. There would be no proceeding.
[60] It is understandable in this assessment of matters that the Council submits that even if it has breached its duty in connection with the pre-pour foundation inspection process (which it denies) any such breach did not cause any loss; that such loss is directly attributable to the defendants’ actions and too remotely connected with its own.
[61] The Council concedes it owed a duty to W&W and also to the owners of the property. In this case Mr Hough submits that for the defendants to succeed against the Council in this case would in affect impose strict liability on councils to ensure compliance with advice notes in building consents. Mr Hough submits that in this
case the evidence establishes that advice notes are non-mandatory and are not to be taken as conditions of building consent. Also, as Sunset makes it clear the Council take the reasonable care approach rather than owing an absolute duty to ensure compliance. A surveyor has no right to rely upon the Councils inspector to point out its own default.
[62] Regardless, Mr Hough submits the claim against the Council must fail for want of causation. He submits that even if the Council had required the surveyor to amend the survey documents to incorporate the exact wording of the advice notes that this would not have led to the survey errors being identified and corrected. This is because the survey errors were inadvertent and neither the surveyor nor the Council had knowledge of them until they were later discovered by W&W.
[63] Mr Hough also submits that even if proven, the Council’s alleged negligence did no more than create an opportunity for the loss to occur. They did not perform the survey work in question and it cannot in any sense be said to have caused the incorrect siting of the building works. At best it may have denied the surveyor of another chance to identify and correct the survey errors.
[64] Mr Hough further submits that given the surveyor committed the previous survey errors the Court cannot be satisfied the surveyor would have successfully identified and corrected those errors if given a second chance. The Council’s position is that the defendants survey errors always were and always will remain the only material and substantial cause of the incorrect siting and the plaintiff ’s loss.
[65] The Council says the surveyors’ claims against them savour of a tortfeasor attempting to shift the blame with a speculative claim for contribution. It notes that the plaintiff’s lawyers have resisted suing the Council against the usual imperative of joining as many potentially liable parties as possible. The Council believes it has a complete answer to the claims against it because appropriate exercise of skill and care was undertaken when performing the foundation inspection. In any event they contend that the alleged negligence was never a material or substantial cause of loss.
Conclusions
[66] In a summary judgment hearing a Court is entitled to take a robust approach where it can be satisfied that a party has a clear answer to the claim against it which cannot be contradicted. The Court is entitled to side step claims of evidential dispute where reason and probability clearly favour the case of one party over the other.
[67] These considerations notwithstanding there are issues in this case about the extent of the defendants’ engagement and the purpose for which their report was adopted by the Council. Clearly the Council owed a duty of care to W&W and to the development owner. There has been a breach of that duty. It is not entirely clear whether the Council is unconnected with that breach or whether in that outcome it is unconnected with a degree of responsibility for the losses that have occurred.
[68] As to whether or not there was a breach of duty we have a conflict of evidence from the experts. That conflict impacts upon a consideration of how the survey evidence ought to have been regarded and whether it was correctly addressed. W&W had clear ideas about the significance of the defendants’ survey report. Whether that assumption was correct may be questionable. The evidence may support a more restricted purpose of engagement and less significant purpose of outcome. The Council’s treatment of it may need further enquiry. Questions about whether or not a further survey report was required may affect issues regarding materiality of connection with losses caused. Questions of remoteness and proximity need examination to ensure that losses cannot be connected to Council’s actions. It may be foreseeable that if that connection involves development closer to a boundary than it should have been then arguably the actions of Council are not too remote.
[69] But for the defendants’ errors no loss would have been caused. The temptation is to accept therefore that the defendants’ errors are primarily responsible for that loss. The question is whether or not a second chance survey would have enabled a correction of the first survey.
[70] The issues involved are factual. The input of oral evidence from experts may be significant.
[71] Considerations of robustness aside this case could benefit from the hearing of evidence at trial.
Judgment
[72] The Council’s summary judgment application is dismissed.
[73] Costs are reserved for consideration in the resolution of the proceeding.
Associate Judge Christiansen
0
0
1