In this month’s article I wish to revisit the case of Southland Indoor Leisure Centre Charitable Trust v Invercargill City Council that I have previously reviewed in the context of the limitation defence pursuant to section 393 of the Building Act 2004. This proceeding has now ascended to the Supreme Court on other issues.
Factual background
• In 1999 the Southland Indoor Leisure Centre Charitable Trust (“the Trust”) was granted consents by the council to construct an indoor sports and leisure complex in Invercargill. The building consents contained structural plans from the consulting engineer.
• During construction it became apparent that several of the steel trusses which spanned the roof of the community courts section were visibly sagging.
• In November 1999, the Trust engaged Harris Consulting Ltd (HCL) to peer review the original design of the community court trusses to ensure that following remedial work, the structure was sound and within acceptable design standards.
• In December 1999 HCL provided a structural report which identified defects in the design of the trusses. The consulting engineer prepared a structural steel modification drawing which provided for modifications to be made to the community courts trusses.
• On January 4, 2000, HCL provided a producer statement — PS2 Design Review — which incorporated remedial detail in line with the modification work to the community courts trusses. It also included a letter which contained the proposed remedial detail.
• On January 14, 2000, the council issued a building consent for the modification work to be completed in accordance with the revised design prepared by the consulting engineer. A condition of the consent was that it incorporated the remedial detail prepared by HCL.
• The modification work was carried out in January 2000 in accordance with the revised design. A Code Compliance Certificate (CCC) was issued by the council on November 20, 2000, and on January 17, 2001, the consulting engineer provided a further producer statement.
• In April 2006 the council became aware of movement in the roofline where the trusses spanned over the community courts. As a result, on April 12, 2006, the Trust engaged Mr Harris and his firm HCL to review the roof structure to ensure that the building was safe in the event of snowfall on the roof.
On June 9 HCL provided a report which confirmed the ability of the trusses over the community courts to withstand the loading changes of wind and snow, but did recommend inspections of the truss weldings and support fixings.
• On September 18, 2010, the roof collapsed on the Indoor Leisure Centre following a heavy snowstorm. As a result of the loss suffered by the Trust, High Court proceedings were issued against the council. The council denied liability and issued proceedings (albeit it third party proceedings) as against Mr Harris and his firm HCL (the third parties).
The council’s third party proceedings were ultimately resolved out of court. The Trust’s claim was successful against the council in the High Court.
This outcome was overturned by the Court of Appeal on the basis that the only cause of action that was available against the council (other causes of action were statute barred because of limitation defences) was in negligent misstatement based upon the wrongly issued Code Compliance Certificate.
The Court of Appeal ruled that there had been no reliance by the Trust upon this document.
There were two issues taken on appeal from the Court of Appeal to the Supreme Court. The first of these was the issue of whether, in fact, there was available to the appellants (the Trust) a cause of action in negligence simpliciter as against the council.
The council had argued successfully at Court of Appeal level that the only cause of action available to the appellant was negligent misstatement based upon the issue of the CCC.
The Supreme Court considered the statutory framework set out in the Building Act 1991 in considering whether a cause of action based upon negligence simpliciter existed against the council in this instance.
The Supreme Court unanimously ruled that a duty of care was owed by the council in all the regulatory functions that it delivers. It originated from its regulatory role which was directed at ensuring buildings comply with the relevant building code.
This meant that the duty was not obviated by another party’s negligence. Furthermore, there was no distinction between a council issuing a consent, inspecting construction work or issuing the CCC.
Reasonable care must be exercised in carrying out these roles, otherwise its key regulatory function would not be achievable.
Accordingly, the Court of Appeal was wrong to consider this as only a negligent misstatement case, and the council had breached its duty of care by negligently issuing a CCC when the building was not code compliant.
Actual reliance was therefore not a necessary constituent of a successful claim in negligence against the council, and the finding of liability against the council by the High Court was reinstated.
On the other issue of contributory negligence, the majority affirmed the Court of Appeal’s decision in this regard, and ruled the damages apportionment found against council ought to be reduced by 50%.
Note: This article is not intended to be legal advice (nor a substitute for legal advice). No responsibility or liability is accepted by Legal Vision or Building Today to anyone who relies on the information contained in this article.
