Glacier motelier's lawsuit nixed
A Franz Josef Glacier motelier has been denied the chance to sue a West Coast council for failing to mention a huge fault line when he bought the property, which later devalued it by $2.85 million.
A Court of Appeal decision released today struck out legal action by Alpine Glacier Motel Ltd and Peter York, who bought the property before setting up the family-owned company.
The court decision stated the claim had been laid outside the six-year period of limitations so had "no prospects of success", overturning an earlier High Court decision.
In September 2005, York bought the motel's land and buildings for $2.4m, a sale conditional on the Land Information Memorandum or LIM from Westland District Council. The business was bought for a further $800,000.
However, the LIM contained no information in its "special land features" section about the Alpine Fault, New Zealand's largest fault line, which stretches 600 kilometres from Marlborough to Fiordland along the west side of the Southern Alps.
It failed to mention anything about possible earthquake damage to Franz Josef if the fault ruptured and that the Government had suggested local authorities should create "fault-avoidance zones" along fault lines.
The motelier said he learned of those omissions only in November 2010, when the council first mooted a fault-avoidance zone.
That zone was finalised in 2012 and affected the motel so the family sued in July 2012.
They claimed the loss of value for the property and business was suffered when the market learned about the zone in 2010, meaning their legal action fell within the limitation period.
In response, the council asked for the legal action to be struck out on limitation grounds, which the High Court declined.
The council also denied it knew where the Alpine Fault lay or where any yet-to-be proposed fault-avoidance zones would go when the motel was bought in 2005 so it had not failed in its duty of care.
The Court of Appeal said any financial loss suffered from the council's omission was a result of the company and York paying more for the property than it was worth in 2005.
"That loss was suffered at the latest of 30 September 2005. It follows that the claim is out of time."
The family were also ordered to pay Westland District Council's legal costs.
York declined to comment today.
- Fairfax Media