Brebner v Collie [2013] NZHC 63 (8 March 2013)

Last Updated: 11 April 2013

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-1447 [2013] NZHC 63

BETWEEN MICHELLE ANNE BREBNER AND DARCY RAYMOND WENTZEL Appellants

AND LUONIE BETH COLLIE Respondent

Hearing: 28 June 2012

Appearances: G D R Shand and N J van der Wal for Appellants

Respondent in person

Judgment: 8 March 2013

_{JUDGMENT OF PETERS J}

This judgment was delivered by Justice Peters on 8 March 2013 at 3 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date: ...................................

_{Solicitors: Grimshaw & Co, Auckland: [e-mail]}

Copy for: L B Collie, [e-mail]

_{G D R Shand, Auckland: [e-mail]}

BREBNER V COLLIE HC AK CIV-2012-404-1447 [8 March 2013]

Introduction

[1] The Appellants (“purchasers”) appeal from a decision of the Weathertight

Homes Tribunal (“Tribunal”), sitting at Auckland.1

[2] The purchasers commenced proceedings in the Tribunal in respect of leaks in a residential property they purchased from the Respondent (“vendor”) in 2007. They sought relief in tort on the basis that the vendor was liable to them for breach of a duty of care and in contract for breach of warranty in the agreement for sale and purchase between the parties (“agreement”). The claim in contract was based on clause 6.2(5)(b) of the agreement, being clause 6.2(5)(b) of the eighth edition of the Auckland District Law Society form of agreement for sale and purchase.

[3] The Tribunal determined:

(a) that the house was subject to moisture ingress due to deficiencies in the installation of joinery; a flat topped chimney; and insufficient ground clearances on some elevations;2

(b) that further damage was likely as a result of other defects;3

(c) that remediation of the house would cost $350,384 (including GST)

and that the vendors had suffered consequential losses of $37,593.48;

(d) that the vendor was not liable in tort as she did not owe a duty of care to the purchasers; and

(e) that the vendor was not liable in contract as she had not breached clause 6.2(5)(b) of the agreement.

1 _{Brebner v Collie [2012] NZWHT Auckland 15.}

2 _{Ibid, at [55].}

3 Ibid, at [56].

[4] On appeal the purchasers contended that moisture ingress has been caused by a greater number of defects than the Tribunal determined, and that the Tribunal erred in the determinations referred to in (d) and (e). The purchasers sought an award of the sums referred to in (c) and an award of $50,000 general damages, being $25,000 for each of them. Before me the vendor took issue with the cost of repairs but she did not file a notice of cross appeal, and for that reason I do not propose to consider that issue.

Jurisdiction/approach on appeal

[5] The purchasers have a general right of appeal from the determination, as follows:4

93 Right of appeal

A party to a claim that has been determined by the tribunal may appeal on a question of law or fact that arises from the determination.

[6] The approach of the Court on appeal is that set out in Austin Nicholls & Co

Inc v Stichting Lodestar.5

[7] The Court’s powers on appeal are as follows:6

95 Determination of appeal

(1) In its determination of any appeal, the court may do any 1 or more of the following things:

(a) confirm, modify, or reverse the determination or any part of it:

(b) exercise any of the powers that could have been exercised by the tribunal in relation to the claim to which the appeal relates.

_...

4 _{Weathertight Homes Resolution Services Act 2006, s 93.}

5 Austin Nicholls & Co Inc v Stichting Lodestar [2008] 2 NZLR 141. See also Chee v Stareast

Investments Ltd HC Auckland CIV-2010-404-7804, 2 June 2011; Boyd v McGregor HC Auckland

CV-2009-404-5332, 17 February 2010.

6 Weathertight Homes Resolution Services Act 2006, s 95.

[8] There is also power to refer the matter back to the Tribunal for further consideration.7

[9] No appeal lies from a decision of the High Court on appeal from the

Tribunal.8

Facts

[10] I have taken the facts from the determination. Those which are relevant to the issues that arise on appeal are as follows.

[11] In 1999 the vendor bought a section in Orakei, Auckland. The vendor subdivided the section into two lots, selling one and retaining the other.

[12] In 2002 the vendor entered a “turn key construction” contract with a builder trading as “Euro Vision Homes”, Mr Marston (now deceased), to build a house on the site that she had retained. The essence of a turn key construction contract is that the contractor will carry out works for a fixed price, the intention being that the other party will be required to do little more than “turn a key” to the completed building.

[13] In April 2002 the builder lodged an application for building consent to construct the house. What is now Auckland Council (“Council”) granted building consent on 7 May 2002 (“consent”). Matters relating to the consent are important to the appeal but for now it is enough to say that consent was sought and granted for the construction of a monolithically clad house, without a ventilated cavity between the exterior cladding and internal timber framing.

[14] The house was built in 2002, during which time the Council carried out several inspections. The works passed each such inspection.

[15] The relationship between the vendor and Mr Marston broke down and

_{Mr Marston ceased work on the site in late 2002 or early 2003.}

7 _{Arakelian v Auckland City Council HC Auckland CIV-2009-404-8107, 11 May 2010 at [17].}

8 Osborne v Auckland Council [2012] NZCA 609.

[16] The Council’s first “final” inspection took place on 17 January 2003. The Council did not identify any weathertightness issues at this inspection but advised that it required six relatively minor matters to be attended to before it would issue a Code Compliance Certificate (“CCC”). These matters included the installation of a top rail to balustrades on a deck, that rail itself becoming a possible cause of moisture ingress.

[17] On 16 January 2004 the Council carried out a second “final” inspection. In a subsequent letter to the vendor, the Council confirmed that the items that it had identified as requiring attention after the first final inspection had been completed. However, the Council said its inspector had noted the lack of a cavity between cladding and framing and it advised that a team of experts would carry out a further inspection of the cladding.

[18] Following this inspection, the Council issued a “Notice to Rectify” dated

19 July 2004,9 requiring the vendor to rectify some of the works.

[19] The vendor disputed the notice and applied for determination of the dispute.10

The Department of Building and Housing (“DBH”) issued its determination in May

2005 which was to the effect that various matters required attention and that the cladding system as installed did not comply with the building code. The DBH stated that these were deficiencies in respect of ground clearances, control joints and flashings, inadequate balcony outlets and overflows and failed balcony deck membranes.

[20] The determination said that the rectification of a list of items, to the approval of the Council, would result in the house complying with the building code. The determination stated that a new Notice to Fix should be issued.

[21] The vendor engaged another builder, Mr John Andrews, to carry out the required work.

9 _{Building Act 1991, s 42.}

10 Ibid, s 17.

[22] On 30 August 2006 the DBH issued a second determination regarding the Council’s refusal to issue a CCC. The purpose of this determination was to assess whether, in light of the work that had been carried out since the first determination, the house complied with clauses B2 (durability) and E2 (external moisture) of the building code.

[23] The determination stated that the cladding complied with clause E2 but not with B2. In particular the determination held that inter-cladding junctions were adequately waterproofed and that the provision of control joints in the cladding was not necessary. The DBH determined that rectification of three particular items to the satisfaction of the Council would render the building weathertight and in compliance with clause B2.

[24] In February 2007 the Council determined that the three items identified in the second determination had been completed to its satisfaction. The Council issued a CCC for the house on 28 February 2007. Amongst other things the CCC said that the Council was satisfied on reasonable grounds that the building work complied with the consent.

[25] In or about June 2007 the vendor put the house on the market for sale. That led to the agreement and subsequent settlement of the sale and purchase. The purchasers had at least some knowledge of the DBH determinations referred to above before the agreement was executed.

[26] The agreement was conditional on various matters, including (in summary) the purchasers’ obtaining and approving a builder’s report. The purchasers obtained a builder’s report from Inspect First Limited dated 28 July 2007 (“builder’s report”), which report identified matters of concern as to weathertightness. That led to correspondence between the parties’ solicitors. The purchasers subsequently advised that the agreement was unconditional and settlement took place thereafter. The extent and effect of the purchasers’ knowledge, both before and after execution of the agreement, was a significant issue in the Tribunal’s determination regarding the vendor’s contractual liability.

[27] The purchasers took possession on 28 September 2007. Leaks developed and in June 2010 the purchasers applied to the Weathertight Homes Resolution Service for an Assessor’s Report. This report concluded that there was widespread damage and systemic deficiencies on all elevations and that a full re-clad of the property was required.

[28] The purchasers commenced proceedings against the vendor in December

2010.11 The Tribunal heard evidence from the parties, the builder that the vendor engaged after the first DBH determination, the real estate agent who acted for the vendor on the sale, the two DBH building inspectors who previously had inspected the house, namely Mr Templeman and Mr Dibley, and evidence as to the cost of remedial works.

[29] It is apparent from the transcript of the evidence and the determination that the Tribunal gave careful consideration to all of the evidence in reaching its findings of fact and in reaching its determination. The purchasers submitted that I should vary or reverse many of the Tribunal’s findings of fact. Having considered the submissions, I am not satisfied that the Tribunal made any errors of fact on the evidence before it and I do not propose to interfere with them.

Defects

[30] The Tribunal determined that the principal defects giving rise to moisture ingress were those to which I have referred in [3](a) above. On appeal, the purchasers submitted that the Tribunal erred in not determining that other defects in design and/or construction had led to moisture ingress, these additional matters being:

(a) a lack of flashings or seals at junctions;

(b) “top fixed” penetrations through flat topped fibre cement balustrades

(those penetrations being inevitable from the Council’s instruction to

_{install a rail);}

11 Statement of claim dated 20 December 2010.

(c) a lack of control joints in the cladding; and

(d) sloping butynol placed on a fibre cement roof.

[31] The Tribunal considered each of these alleged deficiencies. It held that either they were not established on the evidence12 or that there was no sufficient evidence that the defects were causing damage. I am not persuaded that the Tribunal erred in these findings of fact. I accept that there is evidence that some of the matters may be a possible cause of moisture ingress but that is not sufficient.

[32] I turn now to address the legal issues which arise on the appeal.

Tort

[33] The purchasers’ case before the Tribunal was that the vendor was liable to them in tort on the basis that she acted as a “developer” and, as such, owed a non- delegable duty of care to future purchasers. Alternatively, the purchasers’ case was that the vendor was liable in tort in respect of the role that she had assumed in the building process, after Mr Marston ceased work on the site.

[34] The Tribunal determined that the vendor had not acted as a developer and that she did now owe the non-delegable duty of care alleged. The Tribunal referred to the High Court’s decision in Body Corporate 188273 v Leuschke Group Architects Ltd13 and considered whether the vendor had the degree of control and profit motive that generally is relevant to determining whether a party has acted as a developer.

[35] The Tribunal determined that any degree of control which the vendor had come to exercise had been unintentional but necessary after Mr Marston ceased work. The Tribunal also determined that the vendor did not have the necessary profit

_{motive, accepting as a fact that the vendor had intended to live in the house herself.}

12 _{Brebner v Collie, above n 1, at [53].}

13 Body Corporate 188273 v Leuschke Group Architects Ltd (2007) 8 NZCPR 914 (HC).

[36] The Tribunal then considered whether the vendor owed a duty of care on the basis of the role that she had assumed in respect of works carried out to meet the notices to fix issued by the Council and the matters raised by the DBH determinations. The Tribunal referred to Aldridge v Boe14 and Potter J’s analysis of features generally found to give rise to liability on the part of an owner when acting in a “head contractor” role. The Tribunal was not satisfied that the vendor had

assumed that role and held that the vendor did not owe the purchasers a duty of care. The Tribunal also determined that, had any such duty been made out, the purchasers were contributorily negligent to a high degree, given the knowledge of defects which they possessed before entering into the agreement and again before declaring the agreement unconditional.

[37] The purchasers challenged each of these determinations.

[38] I am satisfied that the Tribunal’s conclusion, as to whether the role the vendor undertook was sufficient to attract the imposition of a duty of care (developer’s or otherwise) was correct. The degree of control the vendor exercised whilst Mr Marston was on site does not appear to have been any greater than that to be expected of anyone engaging a builder to build a house in which they intend to live. I am also satisfied that the vendor was not motivated by a wish to make a profit in the sense required of a developer. Moreover, the evidence is that the deficiencies that have been proved to give rise to moisture ingress were features of work that Mr Marston undertook or for which he was responsible. Accordingly, even if the purchasers were able to establish that a duty of care had arisen after Mr Marston ceased work on the site, the question of causation would arise.

[39] The purchasers also took issue with the Tribunal’s statement that the degree of contributory negligence on their part was high. They submitted there was no such contributory negligence.

[40] I cannot accept this submission. Prior to entering into the agreement the purchasers knew that the DBH had given two determinations, each of which advised

_{of matters that plainly would affect weathertightness. The purchasers also received}

14 Aldridge v Boe HC Auckland CIV-2010-404-7805, 10 January 2012.

the builder’s report before declaring the agreement unconditional. That report

alerted any reader to many issues with the property.

[41] In their case before the Tribunal, the purchasers placed considerable emphasis on assurances that they said the real estate agent had given them. The agent denied giving any such assurances. Whatever the position may have been, any assurances given by the agent could not possibly diminish the significance of the content of the DBH determinations and the builder’s report.

[42] In my view, the Tribunal did not err in the conclusions it reached on the

purchasers’ claim in tort.

Contract

[43] Before the Tribunal, the purchasers contended that the vendor had breached the warranty given in clause 6.2(5)(b) of the agreement (“warranty”), and that such breach had caused loss. The Tribunal dismissed this claim.

[44] Clause 6 of the agreement contains warranties and undertakings given by the vendor to the purchaser. All of the warranties and undertakings in the standard form were included in the agreement. Clause 6.2 reads as follows:

6.2 The vendor warrants and undertakes that at the giving and taking of possession:

...

(5) Where the vendor has done or caused or permitted to be done on the property any works:

(a) any permit, resource consent or building consent required by law was obtained; and

(b) the works were completed in compliance with those permits or consents; and

(c) where appropriate, a code compliance certificate was issued for those works.

[45] There was and is no dispute that the vendor did or caused to be done works on the property (being the construction of the house), that she obtained the building

consent required by law for the works, and that a CCC was issued for the works. The issue before the Tribunal was whether or not the vendor had breached clause 6.2(5)(b), that is, whether the works were completed in compliance with the consent. The purchasers’ case was that they had not been because:15

[78] It is alleged that the building work that [the vendor] caused or permitted to be done was not completed in accordance with the building consent in the following respects:

The house leaks and therefore does not comply with the Building Code. The building work did not comply with the specifications [forming part

of the consent].

The building work did not comply with the plans [forming part of the consent].

The house was not constructed according to NZS 3604:1999 [clause 14 of the conditions of consent].

The finished floor level condition was breached [condition 16 of the conditions of consent].

[46] In respect of the submission that the vendor was in breach because the works did not comply with the building code, the Tribunal held that clause 6.2(5)(b) was not to be construed as a warranty that the works had been so completed. Nor, as I read the determination, was the Tribunal satisfied that the warranty was breached due to any failure there may have been to comply with the specification for the works or that any defect causing damage resulted from a failure to complete the works in compliance with the plans. As to the purchasers’ case that the warranty had been breached because works were not completed in compliance with two conditions of the consent, the Tribunal held that these conditions had not been met. The Tribunal held, however, that clause 6.2(5) was to be “read down” in light of the matters known to the purchaser prior to the agreement being declared unconditional, and that

_{the vendor was not in breach if the clause was so read down.}

15 Brebner v Collie, above n 1, at [78].

Clause 6.2(5)(b)

[47] On its face, clause 6.2(5)(b) is a warranty by a vendor that the works that they have (in this case) caused to be undertaken have been completed in compliance with the building consent issued for the works.

[48] The Tribunal considered the construction of the warranty at [93] to [151] of the determination. The Tribunal referred to Ford v Ryan16 as authority for the proposition that clause 6.2(5)(b) is not to be construed as a warranty as to issues of performance and quality. The Tribunal held that those defects that had been proved and which had caused damage were issues of performance or quality and so fell outside the ambit of clause 6.2(5)(b).17

[49] The Tribunal then referred to Aldridge v Boe.18 In that case, Potter J was required to determine whether the circumstances that prevailed at the time the agreement was executed were such that clause 6.2(5)(b) should be read down. On the facts of that case, Potter J ultimately concluded that the parties intended that the clause should bear its ordinary and natural meaning. On the basis of that authority, however, the Tribunal held that the purchasers in the present case could not rely on the warranty to recover the cost of remedying defects identified in the builder’s report.19

[50] Because of these conclusions, the Tribunal considered it unnecessary to make any finding on whether the purchasers might be taken to have waived their right to rely on any breach there may have been of clause 6.2(5)(b). That is an issue which I address later in this judgment.

[51] Counsel for the purchasers submitted that the warranty bears its ordinary and

natural meaning and that nothing in parties’ knowledge or in the circumstances

_{prevailing as at the date of the agreement leads to a different construction.}

16 _{Ford v Ryan [2007] NZHC 1454; (2007) 8 NZCPR 945, 13 December 2007.}

17 _{Brebner v Collie, above n 1, at [119].}

18 _{Aldridge v Boe, above n 14.}

19 Brebner v Collie, above n 1, at [151].

[52] I accept that submission. I am not satisfied that the parties intended any different meaning, simply because the purchasers were in possession of excerpts of the DBH determinations (a matter known to the vendor’s real estate agent at least). The facts in Aldridge were quite different to those in the present case and, as I say, even then Potter J was not persuaded that any different meaning was intended.

[53] Accordingly, I proceed on the basis that clause 6.2(5)(b) is a warranty at the giving and taking of possession that works the vendor has caused to be carried out have been completed in compliance with any consent they were required by law to obtain for those works.

Works

[54] The next issue which arises is to identify the works for which consent was given.

[55] The consent reads as follows:

Th[is] Building Consent is a consent under the Building Act 1991 to undertake building work in accordance with the attached plans and specifications so as to comply with the provisions of the New Zealand Building Code. It does not affect any duty or responsibility under any other Act nor permit any breach of any other Act. All endorsements on plans form part of the Building Consent and must be adhered to.

...

Clause B2 (Section 2) of the Building Codes Acceptable Solutions specifies the requirements relating to the durability of specific building elements.

...

This building consent is issued subject to the conditions / endorsements, overleaf. This Building Consent Approval includes Drainage Conditions. Refer “Special Conditions” – Foundation Piles.

Signed:

Officers name: Bruce Wilding

Date of Issue: 7 May 2002

[56] In Keven Investments Ltd v Montgomery,20 Woodhouse J considered a similarly worded consent. Woodhouse J held that the consent consisted of the consent itself, the plans (there were no specifications in that case) and any conditions imposed by the Council.21

[57] Woodhouse J also had to consider whether it was a term or condition of the consent that the works be carried out in accordance with the building code. This submission was based on the words in the body of the consent “so as to comply with the provisions of the New Zealand building code”. Woodhouse J held that those words were the statement of an objective, rather than a requirement of the consent, and that of themselves they did not require compliance with the building code. I agree with that view, for the reasons given by Woodhouse J, and proceed on the basis that the “consent” referred to in clause 6.2(5)(b) is the consent itself, and the plans and specifications and conditions to which it refers.

[58] The vendor did not contend that the works for which consent was granted were varied in any respect by the subsequent DBH determinations. No issue arises on that matter accordingly. As I understand it, no plans or specification were “attached” to the consent. However, the Tribunal and parties have proceeded on the basis that the relevant plans and specification are those submitted with the application for building consent and I shall do likewise.

Breach

[59] Before the Tribunal and on appeal, the purchasers proceeded on the basis that they would have established a breach of the warranty if they could establish a failure to observe any aspect of any plan, specification or condition (or the building code for that matter, although that submission now falls away). That is not the correct approach. In my view a purchaser who seeks to establish a breach of clause

6.2(5)(b) must satisfy the Court that the works as a whole were not completed in

_{compliance with the consent read as a whole. For instance, if the purchasers were}

20 _{Keven Investments Ltd v Montgomery [2012] NZHC 1596; [2012] NZCCLR 20 (HC).}

21 Building Act 1991, s 2 “Building consent”. Such conditions formed part of the consent by virtue of the Building Act 1991.

able to establish a failure to comply with a provision in the specification forming part of the consent, the issue would then become whether the effect of the failure was that the works had not been completed in compliance with the consent. Not every omission or departure will give rise to a breach of warranty.

Purchasers’ case

[60] On appeal, the purchasers’ case as to why the vendor was in breach of warranty was the same as that before the Tribunal, namely that the vendor breached clause 6.2(5)(b) because the:22

...

(a) Building work had not been done so as to comply with the

Building Code;

(b) Building work did not comply with the plans;

(c) Building work did not comply with the specification;

(d) House was not constructed in compliance with conditions in the consent about:

(i) Compliance with NZS 3604:1999 (joinery issues); (ii) Finished floor levels.

Building code

[61] For the reasons given, it is unnecessary to consider the respects in which the purchasers allege that the vendor breached the warranty because the works did not comply with the building code.

Plans

[62] The purchasers’ case was that the works were not completed in compliance

with the plans in that:23

_{107. Contrary to the plans:}

22 _{Appellants’ submissions dated 18 May 2012 at [33] and [34].}

23 Appellants’ submissions dated 18 May 2012 at [107].

(a) Fibre cement is used as a cladding on some return walls and the balustrades;

(b) Fibre cement/butynol is used as a roof cladding.

[63] As to the first of these, the Tribunal determined that any departure from the plans that there may have been had not given rise to a defect causing damage.24 As to the second, the Tribunal was not satisfied that the same constituted a departure from the plans or, if it did, that such departure had given rise to a defect causing damage.25 That is a decision the Tribunal reached after having the benefit of hearing the evidence of Mr Templeman and Mr Dibley and I am not satisfied that the Tribunal erred in reaching that conclusion on the evidence before it.

Specification

[64] The purchasers relied on the following provisions in the specification:

1.12 STANDARD OF WORK

Unless otherwise provided in the Contract Documents, all materials shall be new and of normal size and pattern suitable for their purpose, and shall comply with the relevant by-laws and NZ Standard specifications, including end use. Installation shall be in accordance with the product manufacturers recommendations unless directed otherwise by the owner.

...

All workmanship throughout shall confirm [sic] to good trade practise [sic], and the relevant codes of practise [sic] in current use in New Zealand, and only competent workers shall be employed.

...

[65] The purchasers’ case was that many aspects of the works did not comply with these provisions of the specification, and that this non compliance constitutes a breach of clause 6.2(5)(b).

[66] The specification consists of 10 “Divisions” or sections, being a “Preliminary and General” section, of which clause 1.12 is part, and then nine sections addressing

_{discrete aspects of work to be completed such as “Concrete Work” and “Carpentry}

24 _{Brebner v Collie, above n 1, at [85].}

25 Ibid, at [87] and [88].

and Joinery”. The purchasers do not allege any breach of any part of the specification, other than clause 1.12.

[67] It is apparent from the wording of the specification that it formed part of the contract between the vendor and Euro Vision Homes. For instance, the first clause in the Preliminary and General section reads:

The scope of this contract is described in the outline specification and shown on the drawings or inferred therefrom.

[68] The outline specification has not been made available, if it exists. The Preliminary and General section also contains references to how ambiguities, discrepancies and omissions in documents are to be resolved; what might or might not constitute an “extra” within the contract; the extent to which Euro Vision Homes gives any warranties; provisions requiring Euro Vision Homes to check dimensions and levels and report matters to the owner (presumably the vendor); and provisions to the effect that the builder shall be liable for replacing or removing defective work, materials and fittings and so on. These matters are of interest solely to the contracting parties and outside the matters relevant to the consenting territorial authority when considering an application for building consent.

[69] Counsel for the purchasers submitted that the provision within clause 1.12 beginning with the words “All workmanship throughout shall [conform]” is a term or condition of the consent and that, in effect, the consent required that all work should be completed in conformity with good trade practice, with guidelines issued by Building Research Association of New Zealand (“BRANZ”) to be evidence of what constitutes such practice. Counsel submitted there were many instances in which the completed works did not comply with BRANZ guidelines.

[70] I do not accept the purchasers’ submission on this issue. First, I am not satisfied that provisions in a specification that address matters solely of concern to the contracting parties form part of the consent for the purposes of clause 6.2(5)(b). The statement in clause 1.12 on which the purchasers reply is such a provision.

[71] Secondly, even if I am wrong in that, I am not willing to accept without more that a failure to act in accordance with a BRANZ guideline constitutes a failure to observe good trade practice. Counsel for the purchasers referred me to Dicks v Hobson Swan Construction Ltd (in liquidation)26 as authority for the proposition that BRANZ guidelines are evidence of what constitutes “good trade practice”. I am not, however, able to read that case as authority for the proposition that a failure to follow

a BRANZ guideline is evidence of a lack of good trade practice. In my view, the case illustrates clearly the difficulties that may be encountered in identifying what does constitute good trade practice.

[72] To conclude, I am not satisfied that there was any failure to comply with the specification and/or consent because of alleged failures to comply with the aspects of clause 1.12 on which the purchasers rely.

Conditions

[73] The Tribunal did find that there had been a failure to comply with two conditions imposed by the Council, being conditions 14 and 16(e).27 The Tribunal did not, however, consider this failure gave rise to a breach of clause 6.2(5)(b) because of the manner in which it construed the provision.

[74] Conditions 14 and 16(e) read as follows:

14. NZS 3604 : 1999

The buildings in this consent have been designed to NZS 3604 : 1999 and must be constructed accordingly.

...

16. FOUNDATION AND FLOOR SLAB REQUIREMENTS

...

(e) The finished floor level height above adjacent ground level is to be no less than:

_{For masonry veneer wall claddings}

26 _{Dicks v Hobson Swan Construction Ltd (in liquidation) [2005] NZHC 1657; (2006) 7 NZCPR 881 (HC).}

27 Brebner v Collie, above n 1, at [90] - [92].

100mm if ground is permanently paved.

150mm if unpaved.

For claddings other than masonry:

150mm if ground is permanently paved.

225mm if unpaved. ...

[75] NZS 3604 : 1999 concerns construction requirements for timber framed buildings. The Tribunal was satisfied that the joinery failed to comply with clause 11.6.1 of NZS 3604 : 1999, which reads as follows:

Joints between windows and doors, and the cladding, shall be made weatherproof by one or a combination of the following systems. ...

a) Head, jamb and sill flashings;

b) Scribers;

c) Proprietary seals;

d) Sealants that are:

i. Not directly exposed to sunlight or weather;

ii. Easy to access and replace.

[76] I am satisfied that the failure to complete the works in compliance with conditions 14 and 16 did give rise to a breach of warranty, that is the failure rendered the completed works non compliant with the consent. I have not been referred to any aspect of the plans or specifications which might bear on the matter and in any event I am satisfied the conditions would prevail, given that the consent is issued subject to those conditions (see [55] above).

Damages

[77] Given that conclusion, it is necessary to consider the loss caused by the failure to complete the works in compliance with those two conditions and the consequential losses flowing from the breach. Those sums are likely to be less than the amounts referred to in [3] above.

[78] The Tribunal did not consider general damages, given the conclusion it reached. Before me, counsel for the purchasers submitted that each of the purchasers

should be awarded $25,000 by way of general damages. An award of general damages, and in that amount, does not follow as a matter of course. Nor does it follow, as a matter of course, that an award will be made on a “per purchaser” basis. Relevant cases include Cao v Auckland City Council and Burrows v B R Hansen & Son Ltd.28 It will be for the Tribunal to determine whether, in the circumstances of the case, an award of general damages should be made and, if so, in what sum.

[79] Given the different views that the Tribunal and I have reached on this matter, it will be necessary to refer the matter back to the Tribunal to consider that issue, and the issue to which I now refer.

Events post agreement

[80] The final issue is the effect, if any, of events after the parties entered into the agreement. It is clear from the determination that the extent of the purchasers’ knowledge weighed heavily with the Tribunal.

[81] As I have said, the agreement was conditional on the purchasers obtaining and approving a builder’s report. The relevant clause of the agreement reads as follows:

15 This Agreement is conditional upon the Purchaser obtaining and approving a report on the building (“the Builder’s Report”) to be carried out by a person of the Purchaser’s choosing. Should the Purchaser in good faith disapprove any aspect of that report (such disapproval to be limited to those aspects which relate or specify defects in the building which would not have been readily apparent to the Purchaser on reasonable inspection of the property) then the Purchaser may terminate this agreement by giving written notice to the Vendor or the Vendor’s solicitor, such notice to be received by

4pm on the seven[th] working day after the date of this agreement.

The Purchaser’s notice under this clause must specify those aspects in the Builder’s Report which are the subject of the Purchaser’s

disapproval. The Vendor authorises the Purchaser and/or its Builder

to inspect all files and plans relating to the property as are held by the relevant local authority. This condition is inserted for the sole benefit of the Purchaser.

28 Cao v Auckland City Council HC Auckland CIV-2010-404-7093; and Burrows v B R Hansen & Son

Ltd [2012] NZHC 2210.

[82] It was open to the purchasers to waive clause 15, as the condition was for their sole benefit. That follows from clause 8.7(6) of the agreement which reads as follows:

8.7 If this agreement is expressed to be subject either to the above or to any other condition(s), then in relation to each such condition the following shall apply unless otherwise expressly provided:

...

(6) At any time before this agreement is avoided the purchaser may waive any finance condition and either party may waive any other condition which is for the sole benefit of that party. Any waiver shall be by notice.

[83] Had the purchasers waived clause 15, in my view there could be no argument that they would be able to sue on the warranty if they discovered a breach.

[84] The purchasers did not, however, waive clause 15. They obtained a comprehensive builder’s report which, amongst other things, referred to deficiencies in the installation of joinery and the failure to comply with ground clearances required by the consent. I do not consider the purchasers’ rights to sue for breach of warranty are affected adversely by their mere receipt of the builder’s report, when they might have waived the relevant condition altogether. That, however, is not the end of the matter.

[85] Following receipt of the report, the purchasers sought an extension of time in which to declare clause 15 satisfied. In seeking that extension, the purchasers advised that they required time to consider the report, to obtain “a second opinion” and to discuss the same with the vendor.29 The parties agreed an extension to

7 August 2007. A separate condition remained outstanding, and that condition was

to be satisfied on or before 10 August 2007.

[86] Clause 17 of the agreement allowed the vendor to give notice requiring the purchasers to declare the agreement unconditional within three working days if

_{another purchaser made an offer the vendor wished to accept. The vendor gave}

29 Vallant Hooker & Partners to Davenports dated 31 July 2007.

notice on 7 August 2007. The effect of the notice was to give the purchasers until

10 August 2007 to confirm that the agreement was unconditional.

[87] The purchasers’ solicitors advised by return that clause 15 was satisfied, and then recorded advice, said to have been given by the agent and by the vendor, that the vendor would rectify the defects referred to in the builder’s report.

[88] The vendor’s solicitors replied on 8 August 2007, to the effect that the agent and vendor denied giving any such advice and that the vendor would not undertake any remedial work. The purchasers were asked to advise whether they “accepted the builder’s report” or whether they wished to “withdraw” from the agreement. The purchasers’ solicitors then sent a fax to the vendor’s solicitor saying “we are unconditional”.30

[89] Assuming that there has been a breach of warranty in the respects referred to above, there may remain an issue as to the effect, if any, of the receipt of the report and the contents of the correspondence. As I have said, I have some reservations as to whether mere receipt of the report would be sufficient. I express no view on the effect of the correspondence. The issue was expressly left open by the Tribunal and there was no argument on the matter before me.

Result

[90] I do not consider that the Tribunal erred in its conclusion that the vendor did not owe the purchasers a duty of care.

[91] I am satisfied that the vendor breached clause 6.2(5)(b) of the agreement as a result of the fact that the completed building works did not comply with conditions

14 and 16 of the conditions to the building consent.

[92] The case is remitted back to the Tribunal for further argument and determination of the following issues:

30 Vallant Hooker & Partners to Davenports dated 10 August 2007.

(a) The quantum of damages that flow from the breach;

(b) The consequential losses and/or general damages, if any, that should be awarded to the purchasers

(c) Whether events after execution of the agreement and prior to it being declared unconditional preclude the purchasers asserting a breach of

_{warranty or recovering for any such breach.}

Costs

[93] The vendor, having represented herself, is not eligible for an award of costs. The purchasers may wish to seek costs, in which case they should file and serve a memorandum, with the vendor to file and serve any response to that memorandum within 14 days of receipt. The purchasers should bear in mind however that much time was taken up addressing many points on which they were unsuccessful and any award is likely to be modest.

..................................................................

M Peters J