High Court finds in favour of council

Two claims lodged against the Far North District Council for alleged negligence and breaches of its statutory duties under the Building Act have been successfully defended by the council in the High Court.

The first claim, brought by the owners of Blue Pacific, a multiple-unit holiday resort property in Paihia, was for estimated repair costs of $872,757, lost rental of $260,778 and general damages totalling $330,000.

The second claim from the owner of a house in Doves Bay Rd, Kerikeri, was for estimated repair costs of between $262,060 and $677,508 to make the house habitable.

Environmental management general manager Fran Mikulicic said the council had a professional team of building inspectors and a sound inspections regime, which was borne out by the court's findings in the two cases.

"We are naturally pleased that our defence has stood up to rigorous inspection by the High Court," she said. "It is reassuring for our building inspection team and good news for our ratepayers who can have confidence that we are doing the job well."

The Blue Pacific owners alleged that the building suffered from defects in design and construction which did not comply with the building code. They claimed that the council negligently failed to identify this when issuing the consent, inspecting the work during construction, and issuing a code compliance certificate for the completion of the work.

The council applied to strike out the claim on the basis that it did not owe a duty of care to the owners of commercial developments and this view was upheld when the case was heard in the Auckland High Court earlier this year.

It successfully argued that Blue Pacific was a commercial development and the primary use of the building was as a hotel/motel complex rather than for private dwellings. Associate Judge Abbot concluded that the intended use was commercial and no duty of care was owed.

The owners also claimed that the council owed them a duty of care to safeguard them from possible injury, illness or loss of amenity by ensuring that the building work complied with the building code.

This was rejected on the basis that the owners were not suing because their health and safety had been put at risk, but rather for the cost of repairing defects and for economic loss before the repairs were carried out.

The second claim was brought in the Whangarei High Court against the council, the Mullane Family Trust and builder Michael Mullane by Michael Scandle, the owner of a property in Doves Bay Rd, Kerikeri.

Mr Scandle alleged that the council had breached statutory duties under the Building Act and was therefore negligent.

Justice Duffy heard that the council had discovered substandard work when inspecting the home and had issued a notice to rectify under section 42 of the Building Act.

Mr Mullane engaged consulting engineers and architects to develop a new design and a private certifier, Nationwide Building Certifiers, to inspect and certify the rest of the building work.

Justice Duffy noted that Nationwide had issued a code compliance certificate for the work, even though it barely conformed to the new design, did not rectify defects noted in the notice to rectify, and did not implement the architects' and engineers' solutions to the problems identified.

He concluded that it was reasonable for the council to rely on the design work done by Mr Mullane's consultants and to conclude that a building constructed in accordance with that design work would be a sound building which met the requirements of the Building Act.

He added that unless there was something to put the council on notice that the private certifier was not carrying out the inspection services correctly, the council could quite justifiably conclude that there was no need for it to carry out its own inspections.

Justice Duffy was not prepared to accept the repair estimates and instead ordered that the Mullane Family Trust and Mr Mullane pay $437,000 for the reduction in value of the property and $15,000 general damages.

- Bay Chronicle