Wilkins v 77 Degree Builders Limited
[2024] NZHC 2457
•29 August 2024
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2023-409-000618
[2024] NZHC 2457
UNDER THE Consumer Guarantees Act 1993 BETWEEN
MATTHEW COLIN WILKINS and HEATHER KAREN JENKINS
Plaintiffs
AND
77 DEGREE BUILDERS LIMITED
First Defendant
AND
SIMON ISAAC WASHBOURNE
Second Defendant
Hearing: 18 June 2024 Appearances:
E Farrell for Plaintiffs
Judgment:
29 August 2024
JUDGMENT OF PRESTON J
This judgment was delivered by me on 29 August 2024 at 3.30 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date……………
WILKINS v 77 DEGREE BUILDERS LIMITED [2024] NZHC 2457 [29 August 2024]
Introduction
[1] Shortly after the plaintiffs, Matthew Wilkins and Heather Jenkins (the Wilkins), bought a property in suburban Christchurch they decided to carry out renovations. To that end, they met the second defendant licensed builder Simon Washbourne. Mr Washbourne was, and is, a shareholder and the sole director of the first defendant building company, 77 Degree Builders Ltd (77DB).
[2] The Wilkins entered into a fixed price contract with 77DB to undertake the renovations. The works were estimated to take approximately eight weeks. In the event, 77DB was on site for over one year and four months. The works exceeded the fixed price and, the Wilkins say, were defective in multiple respects, but principally due to a failure to instal replacement cladding using the necessary cavity system. Because the renovations went so badly wrong the Wilkins must undertake significant further building to remediate the defective work, at significant cost.
[3] Due to the defective work the Wilkins sue the building company and Mr Washbourne.
[4]They claim against the company for:
(a)breach of contract;
(b)negligence; and
(c)a breach of s 28, Consumer Guarantees Act 1993 (CGA).
[5]The Wilkins sue Mr Washbourne personally in negligence.
Relief sought
[6] Orders are sought that the defendants are jointly and severally liable for damages of $400,852.75, being the cost of repairing the defective work; general damages of $25,000 to each plaintiff ($50,000); interest and costs.
Renovations
[7] Mr Wilkins, a software developer and Ms Jenkins, a scientist do not have any experience in the construction industry.
[8] The property is the Wilkins’ family home, its purchase was settled on 9 December 2020. It is a 347 m3 property of timber framed construction on a concrete slab. When the plaintiffs purchased it, the property was clad with red bricks and horizontal kahikatea weatherboards, with long-run roofing and butynol above dormer windows. The windows were singled glazed with aluminium joinery. Built in 1985, the home was in moderately good condition, however with some deterioration of the butynol and weatherboards.
[9] Mr Wilkins and Ms Jenkins decided the cladding, butynol and windows needed some maintenance or renovation. A friend recommended Mr Washbourne to them and they first met with him on 18 December 2020.
[10] Over the next eight months they had many meetings at the property with Mr Washbourne and on occasions subcontractors he introduced. Mr Washbourne said he would arrange the entire project. Work to be undertaken included insulation sprayed into walls and the skillion roof and replacement of the timber cladding, all exterior windows and butynol.
[11] The Wilkins agreed a fixed price contract in the sum of $166,323.30 (including GST) which they signed with Mr Washbourne’s company 77DB, on 5 August 2021. The work was scheduled, as recorded in the contract, to take approximately eight weeks from 27 September 2021 to 26 November 2021.
[12] Mr Wilkins says he and his partner consistently expressed to Mr Washbourne in discussions their desire for the job to be done legally and to a high standard because the property is their family home. I return to Mr Wilkins’ evidence below.
Formal proof hearing
[13] Neither defendant filed a statement of defence nor took any step in the proceedings.1 The Wilkins seek judgment by formal proof.
[14] A formal proof is not a “rubber stamp exercise”; the plaintiffs must prove their claim and each cause of action. The affidavit evidence must establish each cause of action relied on, to a Judge’s satisfaction. The evidence must provide sufficient information to enable the Judge to calculate and fix damages where sought.2
[15] The Wilkins accept they must prove their case on the balance of probabilities, however they are not required to engage with any matters of affirmative defences, set- off or counter-claim.3 In support of their claim they filed evidence from Matthew Wilkins and expert evidence from Rory Crosbie, a building surveyor and quantity surveyor as to the defective work and from Peter Chai, a quantity surveyor as to costs of remedial repairs.
The Contract
[16] The contract was completed on a New Zealand Certified Builders Association (NZCB) form. 77DB undertook to carry out building work as follows:
(a)full replacement of timber cladding;
(b)full replacement of all exterior windows;
(c)lifting of roofing iron, and all roofing nails to be removed and replaced by roofing screws;
(d)placing spray foam insulation into all exterior walls where the cladding is being replaced, and above all dormer windows, and sides of dormer windows;
1 Service was effected electronically, upon the defendant’s solicitor: Minute of Paulsen AJ dated 9 April 2024.
2 High Court Rules 2016, r 15.9(4).
3 Ferreira v Stockinger [2015] NZHC 2916 at [36], affirmed in Wulff v DeMarco [2021] NZHC 3110.
(e)replacement of all butynol roofing to ensure all areas of the house are watertight; and
(f)removal of the roof over skillion roof in lounge to place spray foam insulation.
[17] Clause 2 of the contract provides, as relevant, undertakings of workmanship (together the “contract standard for the building work”) including that:
(a)77DB4 will carry out the building work to the standard required by the contract;
(b)77DB will carry out the building work diligently and conscientiously, and as soon as is reasonably practicable;
(c)the building work will be carried out in a proper and competent manner and in accordance with any plans and specifications;
(d)all materials will be suitable for the purpose for which they are used and unless otherwise stated in the contract, be new;
(e)the building work will be carried out in accordance with, and will comply with, all laws and legal requirements including without limitation the Building Act 2004;
(f)the building work will be carried out with reasonable care and skill and be completed by the date specified in the contract, or if no date is specified, within a reasonable time;
(g)if the contract states the particular purpose for which the building work is required, or the result that the plaintiffs wish the building work to achieve, the building work and any materials used in carrying out the
4 The “Builder” under the contract.
work will be reasonably fit for purpose and of such a nature and quality that it can be reasonably expected to achieve any particular result;
(h)there is a guarantee to consumers that the building work will be reasonably fit for purpose and of such a nature and quality that it can reasonably be expected to achieve any particular result, made known to 77DB.
Evidence
Matthew Wilkins
[18] Mr Wilkins describes many meetings at the home with Mr Washbourne before the Wilkins entered into the contract on 5 August 2021. Mr Washbourne advised them
— and it is not disputed — that he was a licensed building practitioner and a certified builder.
[19] Mr Washbourne proposed that new cladding should be installed: he recommended a James Hardie product, Linea Oblique 200 mm horizontal weatherboard (LOW) as the Wilkins requested that the new cladding be durable and easy to maintain. Mr Washbourne identified, introduced and organised all subcontractors and under the contract provided the material, including the LOW cladding. He had two employees who worked on the job whom he instructed and supervised in installing the cladding. Alongside the employees Mr Washbourne himself removed the old cladding and installed the new. Mr Wilkins describes that Mr Washbourne was involved in both a supervisory role and hands on: if not working himself “on the tools” he was onsite first thing most weekday mornings to discuss and direct work to be done with his employees or subcontractors. At times, including during recladding work and reinstallation of windows, Mr Washbourne was the main hands-on worker.
The building work issues from the Wilkins’ perspective
[20] Mr Wilkins recites a catalogue of errors which occurred over the course of the renovations. The house has a series of dormer windows in its upper floor. The builder’s first attempt to prepare the dormers for butynol installation by the roofing subcontractors resulting in those subcontractors walking off the job after six days in November 2021. Mr Washbourne had to redo that work at the Wilkins’ expense in order for the next butynol subcontractor to proceed. This included removal of the sides of the dormers and some insulation foam and installation of extra timber bracing. The newly installed cladding developed cracks between scarf joints. After Mr Washbourne’s multiple attempts at repairing the cracks they were ultimately filled with silicone by one of his subcontractors again at the Wilkins’ expense.
[21] Mr Washbourne’s apprentice drilled holes for external lights through cladding joints instead of in the middle of boards; Mr Washbourne was notified and cladding re-done in that section of wall but incurring further labour costs accordingly. Kitchen windows were installed out of square and would not open. As a result, and on the only occasion that he contacted a subcontractor first before contacting Mr Washbourne, Mr Wilkins advises the builder reinstalled the windows and charged the Wilkins for the cost of reinstallation.5
[22] A number of other windows or window related issues occurred. Mr Washbourne’s employees failed to prepare one of the recessed dormers correctly with the result being the butynol at the bottom was not flush with that at the sides of the window and a seal was impossible. Mr Washbourne’s solution was to put a bit of wood under the window. This itself was exposed and not covered by the butynol. Mr Wilkins says that Mr Washbourne’s “final solution” to this mess was to, on 12 December 2022 pull the piece of wood out leaving a large gap. Leaks occurred into the property over a period of six months following inadequate temporary water proofing. Because of the sequence of mistakes and repeated fixes while preparing the dormer windows, the builder and his employees frequently had to wrap the dormers up at the end of every day but drove staples through the water proofing plastic rendering it useless.
5 The supplier, Rylock confirmed the windows were not square but could be fixed by the builder.
[23] Mr Wilkins describes other workmanship errors or lack of care by Mr Washbourne’s employees or subcontractors, some of which he acknowledged when drawn to his attention and repaired including defective installation of roofing flashing initially undertaken by Mr Washbourne’s employees.
[24] Emblematic of the catalogue of errors which the Wilkins themselves identified during the course of the work is Mr Wilkins’ evidence of installation of the windows. It will be recalled the scope of work included replacement of all exterior windows:
Mr Washbourne did not install sill pans/trays when installing the windows. Rylock, the window supplier, had provided sill trays, however neither Mr Washbourne nor his employees knew what they were for, so they repurposed them as head flashings. Rylock had also provided dozens of plastic sill tray ends; again, Mr Washbourne didn't know what they were for. At this early stage in the project, I trusted Mr Washbourne, but I was curious, so I emailed James at Rylock about them. James emailed Mr Washbourne and I with instructions on their use. I texted Mr Washbourne, Mr Washbourne replied indicating he had the information from Rylock and was working through it. Unfortunately, Mr Washbourne didn't follow the guidance and installed the windows without sill pans/trays, which led to windows leaking, and over a year later the upstairs windows had to be removed, sill trays installed, and the windows reinstalled. On 20 May 2022, I alerted Mr Washbourne and Rylock to the first leak in an email. An example of a leaking window is in [exhibited photograph]. Mr Washbourne took six months from the discovery of the first leak to reinstall 11 upstairs windows. Mr Washbourne can be seen redoing one of the windows in [exhibited photograph].
(Exhibit references omitted)
The issue with the cavity cladding
[25] At the heart of the allegations of defective repairs is the installation of the LOW cladding without a cavity system. The building surveyor, Mr Crosbie’s expert evidence addresses this below in detail. But Mr Wilkins explains discussions he and Ms Jenkins had in early 2023 which are also relevant.6 By that time the Wilkins had been alerted to the requirement that the LOW system must be installed over a cavity in accordance with the manufacturer’s guidelines and in order to comply with the Building Code.
6 In his affidavit Mr Wilkins refers to the meetings occurring in 2022 but this appears a typographical error when compared with correspondence exhibited in support.
[26] In late January 2023 the Wilkins sought an in person meeting with Mr Washbourne and his partner, Ms Mason who works at 77DB. The purpose of the meeting was to ask if the cladding should have been installed on a cavity and if there should have been a building consent. Mr Wilkins deposes that Mr Washbourne said at the meeting that technically James Hardie might say their product needs to be installed over a cavity but that is just them covering themselves since the “leaky building stuff” and that he (Mr Washbourne) had complete confidence in the product. Mr Washbourne advised the Wilkins he would investigate the building consent issue.
[27] Another in-person meeting followed, on 8 February 2023. At this meeting Mr Washbourne explained that he had emailed Christchurch City Council at some point during the project and they had replied saying he did not need a consent. Moreover, he had recently discussed the cavity issue with one of his experienced builder friends who said cavities were not needed.
[28] The same evening, Ms Mason provided the Wilkins with an exchange of emails between Mr Washbourne and a council officer. It shows an historic enquiry by Mr Washbourne in November 2021 of a council officer. I set out in full Ms Mason’s 9 February 2023 cover email to Mr Wilkins which attached the historic exchange with the Council.
Hi Matt
No we didn’t ask for a discretionary exemption. We proceeded on the basis that because the works were repairs that didn’t need consent (as per Schedule 1.1) a discretionary exemption wasn’t required. The key thing to note is that the cladding hadn’t failed it’s durability, and there was no damage to the framing and structure underneath. It was like-for-like replacement and therefore low risk. Simon sought advice from Council to verify this but his understanding always was the repairs didn’t require consent because there were no structural repairs, and no failure of the cladding within 15 years of it first being constructed (i.e. it hadn’t failed it’s durability). So yes, MBIE guidelines and Council email were enough. Hopefully this all makes sense. Thanks.
Kind Regards,
[29] Attached with the above email, as the initial email in the sequence provided, was a brief email dated 18 November 2021 from a council officer to Mr Washbourne. It included a link to Government guidance published online in relation to Schedule 1.1
of the Building Act 2004 which deals with building work involving repairs, maintenance and replacement exempt from consent. The email then states: “If the proposed repairs for the cladding are not due to a failure in durability – i.e within 15 years from installation, a consent is not required for repairs and maintenance. Replacing like for like is fine.” The email exchange as provided to the Wilkins concludes with a further brief enquiry by Mr Washbourne to the officer in relation to a follow up enquiry about the proposed butynol work: whether “the replacement of butynol on the dormer does not also” need a consent. The council’s response again refers in general terms to Schedule 1.1 and comments “[i]f the proposed works fits within the criteria for Schedule 1.1 … and is not because of a failure of durability … then it should be fine.”.
[30] Notably, Mr Washbourne did not provide to the Wilkins his original enquiry to the council apparently founding the email exchange. There is no evidence of the details he provided of the proposed repairs for the cladding or any indication of an enquiry as to whether the replacement of the timber cladding with the LOW system needed a building consent or was a “like for like” replacement as Mr Washbourne’s and Ms Masons’ subsequent communications to the Wilkins suggested.
[31] The Wilkins have made enquiries of the council direct. Mr Wilkins deposes there is no evidence of any written enquiry from Mr Washbourne to the council asking whether replacement of the weatherboard cladding needed a consent and no correspondence referring to the weatherboard cladding or its replacement with the new James Hardie product proposed.
[32] As is discussed below, the expert evidence available in this case rejects the express and implied assertions in Mr Washbourne and 77DB’s communications with the Wilkins that the cladding repairs were a “like for like” replacement such that they did not require building consent.
The Wilkins’ attempts to have 77DB remedy the defects
[33] As noted, issues with defective workmanship were identified throughout the project, some of which were addressed with varying results.
[34] Once the Wilkins learned of the overall issue with the cladding they had two in-person meetings and related correspondence with Mr Washbourne raising the issue with the cladding. Mr Washbourne denied there was any issue with the absence of a cavity or, related, absence of a building consent. As Mr Wilkins puts it:
Mr Washbourne has left our house in a precarious position: no warranty on the cladding because it wasn’t installed to manufacturers’ specifications, and unconsented building work.
[35] The contract includes a dispute resolution process. The Wilkins engaged this, through counsel to Mr Washbourne’s counsel without success.
Payments under contract
[36] The Wilkins have paid a total of $197,666.64 for the project, which it will be recalled was a fixed-price contract. On the evidence before me they paid Mr Washbourne (77DB) $188,687.01 and $8,979.63 to subcontractors and for miscellaneous materials in lieu of the builder reducing some invoices. An example is when Mr Washbourne declined to pay the scaffold subcontractor who, as a result, threatened to remove the scaffolding. Mr Washbourne told the Wilkins he did not have the money to pay. So on 22 April 2022 the plaintiffs paid $7,728 directly to the subcontractor on an understanding that Mr Washbourne would reduce the next invoice.
Stress/anxiety during process
[37] It was a stressful process from start to finish for the Wilkins — I refer to this when addressing the claim for general damages.
The building surveyor’s evidence
[38] Rory Crosbie is a duly qualified independent building surveyor. He inspected the building work and provided his report. Mr Crosbie found multiple aspects in which the building work 77DB undertook is defective in its workmanship.
LOW cladding system
[39] Mr Washbourne recommended and installed the James Hardie Linea Oblique weatherboard cladding. The manufacturer requires the LOW cladding is installed on a cavity. This was in replacement of the former directly fixed timber weatherboard cladding on the home. 77DB did not instal the LOW on a cavity, instead directly fixing it on to the property’s superstructure timber framing. As a result, the building work is highly unlikely to comply with E2 (external moisture) and B2 (durability) provisions of the Building Code.
[40] Because 77DB did not instal the product in accordance with the manufacturer’s guidelines, which require the cavity, James Hardie will not provide a warranty for the product. Further, Mr Crosbie notes the works 77DB carried out involved full replacement of the original directly fixed cladding system and full replacement of exterior windows and skylights. Because the works involved the complete replacement of a cladding system a building consent should have been sought before building work began on site. Mr Crosbie deposes the consent authority, Christchurch City Council, would not have given consent for the building work that was in fact carried on.
[41] Directly fixing the cladding does not adhere to the acceptable solutions in E2 demonstrating compliance with the Code. The purpose of a cavity system is to ensure prevention of moisture ingress. Further, the direct fixing of the cladding is in breach of the manufacturer’s guidelines that the system MUST be installed on a cavity. It is Mr Crosbie’s opinion that council would have requested an amendment to the works and provision of a design — incorporating a cavity — aligning with the acceptable solutions of E2/AS1 and with the manufacturer’s guidelines. Incorporating a cavity in the cladding system would also have altered the detailing required at cladding joinery junctions and at cladding roof junctions.
[42] Repairs required to return the property to code compliance status are the removal and disposal of the existing LOW, installation of a cavity and installation of new LOW. Work is required to the property’s external joinery and roof to ensure they align with the design and detailing of the new LOW.
Requirement for building consent for the LOW work
[43] Mr Crosbie deposes it is very well known in the building industry that a building consent is needed when a cladding system is substantially replaced with another different cladding system. He notes it is unclear from the correspondence between 77DB and the council whether the council was aware of the details of the proposed building work; no email is in evidence from 77DB to the council showing details of the proposed works. For all these reasons, Mr Crosbie rejects the assertion the replacement of the timber cladding with the LOW cladding was a “like for like replacement” and therefore did not require building consent.
[44] In summary, in Mr Crosbie’s opinion council would not have consented to the work carried out if a building consent was sought, as:
a. The actual building work completed does not comply with the acceptable solutions, E2/AS1, if followed, would deem compliance with the Building Code;
b. 77DB do not appear to have prepared any design work to demonstrate how the building work could have complied with the Building Code. As the building work involved the complete removal and replacement of a cladding system with a different cladding system, the council would require design work to be submitted as part of a building consent application;
c. 77DB did not follow JH’s specifications for installing the LOW;
d. 77DB did not provide any design details for addressing critical weathertight junctions such as openings, and interfaces between the LOW and other building elements such as roofs and brickwork.
(emphasis added)
Replacement of existing timber cladding
[45] I am satisfied a building consent should have been obtained for replacement cladding work because this was a complete or substantial replacement of the previous cladding system. LOW cladding is a fibre cement product. It relies on a cavity as part of its system to prevent water ingress. I am also satisfied on the balance of probabilities that a cavity system was required — firstly, such would have been required by the building consent which should have been obtained and secondly, to meet the manufacturer’s requirements. Since the home’s original cladding installed
(circa 1985) acceptable design solutions for external cladding systems have changed: the majority of cladding systems are now required to be installed on a cavity to demonstrate compliance with the acceptable solution E2/AS1 to meet E2 of the Building Code. Installation of a cavity brings a knock-on effect for some of the associated building work. As a result of the cavity the new cladding system is pushed out beyond the original cladding line. Specific design details should have been obtained, accordingly, to ensure that the interface between the LOW and the veneer sections of cladding, dormer windows and feature joinery aligned with the acceptable solutions in E2/AS1 and the manufacturer’s design guidelines.
[46] There is no evidence that design work was carried out. Rather, the cladding product was directly fixed to superstructure framing. Detailing at junctions between the cladding and the other external cladding elements were worked out between the various sub-trades as the cladding was being installed, without any reference to the manufacturer’s guidelines. The manufacturer’s technical specifications for the product are clear. They specify, in addition to the installation on a cavity, flashing details and other details for when the product meets other interfaces. None of these requirements were satisfied.
[47] The main purpose of the LOW’s cavity is to allow any water that penetrates it to drain away from the building. As a result of the failure to instal a cavity the building work is likely to lead to failure to comply with E2 and B2 of the Building Code.
[48] Mr Crosbie found, in respect of flashings, the cladding junctions were poorly formed and do not adhere to the acceptable solutions set out in E2/AS1. He noted defects apparent during inspection:
(a)gaps at some weathertight junctions;
(b)sealant applied at weathertight junctions to form watertight seals, instead of flashings;
(c)in some cases head flashings have been omitted — at the garage door heads;
(d)ground clearance does not comply in some locations; and
(e)insufficient clearances are present at roof junctions.
[49] As the building work involved installation of the cladding against existing openings at windows and doors, roof junctions and brick cladding, detailed design drawings should have been prepared to demonstrate how the builder was going to ensure the interfaces were weathertight. As there is no cavity, cavity battens were not used. The manufacturer’s specifications require the cladding is fixed hard against cavity battens. The LOW is already beginning to show early signs of deterioration: parts of it are bowing, in Mr Crosbie’s opinion probably as a result of the cladding not having been so fitted. No vertical jointers have been used at butt joints. This has caused the sheet joints to start to open up, which is visibly obvious.
Joinery replacement and other defects
[50] 77DB replaced all the original single glazed aluminium joinery with new double glazed thermally broken aluminium joinery. The units were installed as part of the cladding system replacement and, along with other building elements — such as the LOW and roof — form part of the property’s cladding system to keep it weathertight. Interfaces between the property’s joinery and the LOW, and between the joinery, the LOW and butynol membrane are critical weathertight junctions requiring close attention to detail — again, no such design work was completed by 77DB or Mr Washbourne.
[51] In addition to the defective installation of LOW cladding, Mr Crosbie’s evidence identifies numerous further deficiencies in the work performed, including joinery. The specific detailing for the joinery part of the design work discussed above, would have addressed the minimum requirements of the weathertightness provision E2, and the manufacturer’s installation and design guidelines. Some windows do not have sill flashings. Design detailing should also have been carried out in relation to the new butynol rubber membrane to the dormers and how it complied with code.
[52] Again, cladding installation on a cavity should have resulted in the butynol lining of dormers being adjusted in line with the new system which would require new flashing details. The new butynol rubber membrane was laid down hard on the metal apron roof flashings with no record of underlay being applied. Similarly, design detailing was required to show compliance of the metal roof sheeting work with the Building Code.
[53] Some timber framing has been removed and there is no record of whether like for like framing was reinstated in its place, nor whether all the decayed framing has been replaced. The original timber framing does not appear to have been treated with any framesaver prior to installation of the pumped foam insulation or fitting of the new underlay.
[54] Mr Crosbie notes there is no record of how the installation of the wall underlay was carried out or whether that work complied with the building code or if the underlay is compatible with the new cladding system or the pumped insulation. Nor is there any record of how the underlay laps with the existing underlay behind the brick veneer of the home.
[55] Further, building consent was required for the installation of the pumped insulation but was not obtained. The insulation is hard up against the newly installed underlay and electrical wires are buried within the insulation. Again, there is no evidence of design detailing which should have been prepared to show compliance of the work performed with code. There is no record of how the air seal has been formed in the course of removal and reinstatement of internal rimu window liners.
First cause of action: breach of contract (77DB)
[56] The first cause of action is against 77DB for breach of contract. The Wilkins claim 77DB breached the contract, in particular that the defective building work identified by Mr Crosbie falls below the standard of workmanship set out in clause 2 as follows:
Cladding failures
[57] I am satisfied the failure to instal the LOW cladding on a cavity and in accordance with the manufacturer’s requirements, and the manner of its installation, fails to comply with the Building Code and breached clauses 2.1, 2.2, 2.3 and 2.4 of the contract. Clause 2.1 required the company to carry out the work to the standard required by the contract documents and if applicable the relevant building consent. For the reasons Mr Crosbie identifies, the full cladding replacement, using the LOW system which required installation over a cavity triggered a design requirement and associated building consent application: none was sought.
[58] Far from 77DB carrying out the work diligently and conscientiously as soon as reasonably practicable as required under clause 2.2, the work was protracted and error ridden. It appears from Mr Wilkins’ evidence some if not much of the delay caused by subcontractors’ departure or non-attendance apparently lay with Mr Washbourne and the company’s failure to pay the subcontractors in a timely way. A knock-on effect was inevitable and plainly in breach of clause 2.2. Similarly, clause
2.3 required the work to be carried out in a proper and competent manner in accordance with any plans and specifications and that materials used would be suitable for their purpose. For the reasons already discussed, I am satisfied the LOW installation in particular was not carried out in a proper or competent manner nor in accordance with the manufacturer’s specifications. The windows are a further notable example. The omission to utilise the sill trays and sill tray ends supplied by the manufacturer in accordance with the Rylock instructions led to leaking. Some windows were reinstated to allow the installation of sill flashing, but others still do not have flashings. The reality is that with the need to fit a cavity system the windows must be removed and reinstalled in accordance with manufacturer requirements.
[59] Clause 2.3 also required the work to be carried out with reasonable care and skill and be completed by the date specified — 26 November 2021. The contract work overran by some 14 months at least beyond that date. The catalogue of defects which Mr Crosbie identified all instance, in my view, a failure to carry the work out with reasonable care and skill. The LOW cladding as installed is already failing, by sagging visibly and cracking likely due to the absence of the underlying timber battens to
which it is required to be fixed hard. Mr Farrell, counsel for the Wilkins, submits, and I accept, on the basis of the expert evidence the work in that regard is not reasonably fit for purpose and cannot reasonably be expected to achieve the weathertightness it should provide, as a result. Accordingly, it is in breach of clause 2.3f. of the contract set out at [17] above.
[60] The warranties in clause 2.3 of the contract apply as the contract is a residential building contract within the meaning of s 362B(1) of the Building Act. Clause 2.3 replicates the wording of the implied warranties for building work in relation to household units under s 362I of that Act.
[61]As the building work constitutes services to which the CGA applies, by clause
2.4 there is a guarantee that the work will be carried out with reasonable care and skill. Under the clause, 77DB also guaranteed the work would be reasonably fit for purpose and of such a nature and quality as could reasonably be expected to achieve any particular result made known to the building firm before or at the time of the contract.
[62] Mr Farrell submits, and I accept, the work was defective as identified by Mr Crosbie and further in breach of the standards of workmanship in clause 2 of the contract in the following ways:
(a)failure to instal adequate flashings at openings and weathertight junctions;
(b)failure to instal the LOW on cavity battens, which is the probable cause of the LOW showing early signs of deterioration;
(c)failure to instal vertical joiners at butt joints of the LOW;
(d)failure to instal the joinery within a cavity system, and to instal adequate flashings around the joinery;
(e)failure to keep a record of how the building work to the dormers complies with the Building Code, and failure to consider that the requirement for the LOW to be installed on a cavity, will require the front of the dormers to be brought out in line with the new building line;
(f)failure to record how the work to the metal roof sheeting complies with the Building Code or manufacturer of the new underlay’s requirements;
(g)failure to record how the work to the timber framing was carried out or complies with the Building Code;
(h)failure to treat the remaining timber with frame saver;
(i)failure to record how the installation of the wall underlay was carried out or complies with the Building Code;
(j)failure to record how the pumped insulation complies with the Building Code, is compatible with the underlay, or compatible with electrical wires.
[63] Finally, if fundamentally, I am satisfied on the balance of probabilities the work was not carried out in compliance with the Building Code in relation at least to the installation of the LOW cladding system and the cascade of associated deficiencies which flowed from that. In this respect it was in breach of s 17 of the Building Act and clause 2.3c of the contract, requiring the building work to comply with the code, relevantly as to weathertightness and durability of materials used. I accept Mr Farrell’s submission, based on the evidence of Mr Crosbie that the cladding is already showing signs of failure, that it is unlikely to keep the home watertight for 15 years.7
[64] Unsurprisingly, the protracted process and the legal proceedings which have followed the unsuccessful efforts to use the contract dispute resolution process have caused both Mr Wilkins and Ms Jenkins considerable anxiety and stress. There were
7 Building Regulations 1992, sch 1, B.2.3.1(b) (Building Code).
repeated subcontractor delays: some pressured the plaintiffs for payment as 77DB was not paying them, others voted with their feet and did not attend for the same reason, the scaffolder threatened to remove the scaffolding as discussed. As well as repeated instances of faulty work by Mr Washbourne or his employees, they persistently left significant mess on the site over the extended period. The works prevented any access to the plaintiffs’ driveway for over a year.
Second cause of action: negligence (77DB)
[65]The second cause of action is a claim in negligence against the company.
[66]The Wilkins claim that 77DB breached their duty of care by:
(a)failing to carry out the building work in accordance with the Building Code;
(b)failing to instal a cavity system when replacing the cladding;
(c)failing to ensure all building products and methods complied with manufacturer guidelines;
(d)failing to engage employees and subcontractors with the skill and expertise to ensure the work will comply with the Building Code;
(e)failing to supervise employees and subcontractors;
(f)failing to ensure that its acts and omissions did not cause damage to the Property or the plaintiffs, and causing the defective work;
(g)failing to repair the defective work when notified;
(h)telling the plaintiffs the building work is practically complete when it was non-compliant;
(i)failing to keep proper records of how the building work complies with the Building Code.
Third cause of action: Consumer Guarantees Act (77DB)
[67] The third cause of action against 77DB is for breach of s 28 of the CGA. This section provides that where services are carried out to consumers, there is a guarantee that the service will be carried out with reasonable skill and care. The supplier of the services must be in trade.
[68] The Wilkins were consumers and, at all relevant times, 77DB was in trade. The Wilkins claim the building work was defective and therefore not carried out with the requisite skill and care and it follows that 77DB breached their guarantee under the CGA. Under s 32(c) of the CGA, a consumer can obtain from the supplier of defective services damages that are reasonably foreseeable. Mr Farrell submits it is reasonably foreseeable that providing defective workmanship will result in liability for the cost of repair.
[69]The Wilkins allege the following particular failures by 77DB:
(a)they failed to prepare a scope of works that would result in the work complying with the Building Code;
(b)they failed to carry out the work in a way that complies with the Building Code;
(c)they failed to instal a cavity system when replacing the cladding;
(d)they caused the defective work by failing to carry out the work in a proper and competent manner;
(e)they failed to appoint personnel with the requisite level of skill and expertise;
(f)they failed to adequately supervise employees and subcontractors;
(g)they breached their duty of care;
(h)they failed to repair the defective work when notified;
(i)they caused damage to the property; and
(j)they failed to engage in the Contract Dispute Resolution Procedure.
Second and third causes of action
[70] I deal with the second and third causes of action together. In a real sense they do not add anything to the contract cause of action. I adjourn the Wilkins’ claims under these causes of action because at the moment the quantum of their loss is an estimate based on the evidence of a quantity surveyor. If judgment was entered for the Wilkins on all their causes of action based on that evidence they could not claim any additional costs should the need arise. This course keeps open the ability to seek judgment for additional losses under the second and third causes of action without prejudicing the Wilkins’ position given they obtain judgment under the first cause of action.
Fourth cause of action: negligence (Mr Washbourne)
[71]The final claim is against Mr Washbourne personally for negligence.
[72]The Wilkins allege that Mr Washbourne:
(a)owed them a duty of care when carrying out the tasks he performed during the building work on their property;
(b)breached that duty of care resulting in the defective work already outlined; and
(c)that the Wilkins suffered loss as a result of Mr Washbourne’s breach, being the cost of repairing the property.
[73] As outlined at [19] above, Mr Washbourne was directly involved in all aspects of the build. In a practical sense he was project manager as well as undertaking much of the work himself. Mr Washbourne was responsible for key decisions in relation to the planning and completion of the defective work. It was Mr Washbourne’s decision not to instal a cavity system for the LOW cladding.
[74] As to a builder’s personal responsibility when it is their company that contracted to undertake the building work, Justice Cooke said in Palmer v Hewitt Building Ltd:8
A builder has a personal duty of care to a building owner to meet the standards of a reasonable builder when engaging in building work. That is so whether they are an employee, a director of a company or are self-employed. That duty is different from the contractual obligation of the entity obliged to undertake the building work. An action in contract against the entity promising to perform the building work is concerned with a failure to perform contractual promises. An action in negligence against the individual builder is directed to compensation for the loss caused by the builder’s failure to build with reasonable care. Conceptually they address different issues. In the present case this line of analysis would mean that Mr Hewitt cannot be sued for the failure of Hewitt Building Ltd to build in accordance with the contract with the plaintiff, but he can be sued for any loss caused by his failure to conduct the building work he personally undertook with reasonable care.
[75] Mr Wilkins’ evidence, who was on site during the building works, is that Mr Washbourne personally undertook the following work or gave the following assurances:
(a)said he would arrange the entire project;
(b)proposed that new cladding should be installed, and recommended that the James Hardie Linea Oblique Weatherboard is used;
(c)told the Wilkins that the installation of the new weatherboard cladding did not require a cavity, or a building consent;
(d)directed how the building work was carried out and supervised the building work;
8 Palmer v Hewitt Building Ltd [2021] NZHC 1460 at [55].
(e)selected the sub-contractors and provided the materials;
(f)removed the old cladding, instructed his employees on how to instal the new cladding, and along with his employees installed the new cladding;
(g)reinstalled the windows; and
(h)failed to instal sill pans/trays to the new windows.
[76] Mr Wilkins’ evidence is clear that it was Mr Washbourne who was the supervisor/project manager of the job.
[77] Mr Wilkins’ evidence about the nature of Mr Washbourne’s role is consistent with that of Mr Crosbie the expert building surveyor, who is also a duly qualified quantity surveyor.
[78] Mr Crosbie refers to an unsigned “Record of Works” that names Mr Washbourne as the supervisor of the restricted work carried out at the property. That Record of Works was provided to Mr Wilkins by 77DB.
[79] Mr Crosbie’s analysis of the Record of Works shows that it was Mr Washbourne who was the licenced building practitioner who supervised the following works:
(a)work to walls;
(b)replacement of windows;
(c)replacement of wall cladding, or wall cladding systems;
(d)other unspecified work; and
(e)design work.
[80] There is substantial overlap between Mr Wilkins’ evidence as to what Mr Washbourne said he would personally undertake and the Record of Works produced by Mr Washbourne’s company.
[81] The focus of this part of the Wilkins’ claim is on Mr Washbourne’s personal failure to conduct the building work he personally undertook with reasonable care in terms of the test from Palmer v Hewitt set out above. Mr Washbourne is liable not because he was director of 77DB but because of the work he did or did not do.
[82] Mr Washbourne was personally involved in all aspects of the defective cladding issue. Not only did he recommend the system, not instal it in accordance with the manufacturer’s requirements and without a building consent, he told the Wilkins that the LOW system did not require a cavity: itself a negligent statement.
[83] Mr Farrell also refers to Mr Washbourne’s failure to keep proper records of the work that was done as being a further breach of Mr Washbourne’s duty.
[84] It follows from my conclusions in relation to the breach of contract cause of action that I am satisfied Mr Washbourne is personally liable in negligence for the work he personally undertook, as identified by Mr Wilkins. Essentially, that is all of the defective work as Mr Washbourne was directly involved with all aspects of the work at the Wilkins’ property from initial discussions, planning, instruction of sub-contractors, advice (or lack of it) as to consenting, the selection of materials and the undertaking of the work or its supervision. There is no aspect of the defective workmanship with which Mr Washbourne was not involved.
[85]I find that Mr Washbourne was negligent in relation to the matters set out at
[75] above as his work or omissions in respect of that work was a breach of the duty of care that he owed the Wilkins.
Quantum
[86] Quantum evidence comes from Mr Chai who is a quantity surveyor. Mr Chai gives expert evidence in accordance with the High Court Rules 2016.
[87] The normal measure of loss for a breach of contract by a builder is the cost to repair.9 Mr Chai’s estimate of the cost of repairing the defective work is $400,852.75 including GST as at 12 October 2023.
[88] Mr Chai is employed by the building consultancy firm, Prendos New Zealand Ltd (Prendos).
[89]Mr Crosbie is a director and deputy chair of Prendos.
[90] The Scope of Works subject to Mr Chai’s cost estimate was that prepared by Mr Crosbie. Mr Chai confirms that during the preparation of his estimate he reviewed the Scope of Works with Mr Crosbie to ensure that his estimate takes into account all aspects of the work associated with the completion of the repair work.
[91] I have no reason not to accept Mr Chai’s estimate of the cost to repair the defective workmanship.
[92] The Wilkins seek damages for curing the breach that has occurred. They intend to carry out the repairs which is entirely reasonable. They have a house with unconsented works and where the cladding is failing, as already noted. It is entirely reasonable that they should have damages based on the cost of curing the breach by 77DB.
[93] Accordingly, I am satisfied it is appropriate to enter judgment against 77DB in the sum of $400,852.75.
[94] In the negligence cause of action against Mr Washbourne, the measure of loss is the amount of money required to put the Wilkins into the same position they would have been in had his negligence not occurred, that is, the cost to repair — that being the sum required to give the Wilkins a home constructed to a reasonable standard, in compliance with the Building Code and with the necessary Council consents.
9 Johnson v Auckland Council [2013] NZHC 165 at [163] and [164].
[95] Accordingly, I enter judgment against Mr Washbourne in respect of the negligence cause of action in the sum of $400,852.75.
Interest
[96] Given the quantification of repair costs was as at 12 October 2023, an award of interest is made pursuant to the Interest on Money Claims Act 2016 on $400,852.75 from 12 October 2023 until paid.
General damages
[97] Mr Wilkins and Ms Jenkins each seek general damages of $25,000 for the stress and anxiety caused arising from the building process completely misfiring. Mr Wilkins describes the effect of the drawn out building process as being frustrating and exhausting. The Wilkins had to deal with subcontractors who were not being paid by 77DB, including describing a painter being in such a state that he broke down crying in the Wilkins’ living room because he could not pay his bills because 77DB would not pay him. There were changes of subcontractors (four different painters and two different plasterers) because they were not paid and would not return to the site. The Wilkins’ property was left in a mess over an extended period including their not being able to use their driveway because of scaffolding and the storage of building materials. Stress was caused by Mr Washbourne coming up with costs he had “apparently forgotten” even though it was a fixed sum contract. The uncertainty around the building work and the numerous errors understandably was stressful.
[98] Mr Wilkins describes his experience with Mr Washbourne resulting in him finding it hard to trust people as he used to do.
[99] Where a plaintiff has a cause of action in negligence, general damages are available for stress, vexation, inconvenience and the like, if reasonably foreseeable as a consequence of the breach of duty.10
10 Body Corporate 406198 v Argon Construction and Auckland Council [2023] NZHC 3034 at [289].
[100] There is no doubt that damages for substantial inconvenience, discomfort, distress et cetera are available in relation to the negligent construction of a residential property11. Awards vary. The maximum amount appears to be in the region of $25,000 for each plaintiff. That is the sum that is sought here.
[101] I am satisfied that while the whole building project and its aftermath have been extremely stressful for the Wilkins, a claim at the top of the range is not warranted.
[102]Doing the best that I can in the circumstances, I assess general damages of
$15,000 to each of the plaintiffs, a total of $30,000. That is an award of damages against Mr Washbourne as it is against him that there is a judgment in negligence.
Costs
[103] There is no reason why costs should not follow the event on a 2B basis as sought by the Wilkins.
[104] Accordingly, there is an award of costs against 77DB and Mr Washbourne on a 2B basis plus disbursements as fixed by the Registrar. I confirm that the disbursements are to include the costs of the expert witnesses.
………………………………………
Preston J
Solicitors:
Smyth & Co, Christchurch
Copy to: M P Davis, Taylor Shaw, Christchurch
11 Body Corporate no. 189855 v North Shore City Council HC Auckland CIV-2005-404-5561, 25 July 2008.
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