RUSCO CONSTRUCTION LIMITED v CONNELL WAGNER LIMITED [2000] NZCA 77 (6 June 2000)

IN THE COURT OF APPEAL OF NEW ZEALAND

ca209/99

	between	RUSCO CONSTRUCTION LIMITED
		Appellant

	and	CONNELL WAGNER LIMITED
		Respondent

Hearing:	29 May 2000
Coram:	Gault J
	Doogue J Robertson J
Appearances:	D M Lester for Appellant
	J R Wain for Respondent
Judgment:	6 June 2000

judgment of the court delivered by ROBERTSON J

[1] This is an appeal from a decision of Panckhurst J delivered in the High Court at Christchurch on 29 July 1999 following a four day hearing.The Judge found for the respondent on a claim brought by the appellant which had its genesis in the fact that foundation and floor slabs for four units in a subdivision in Kingsford Street, Christchurch, were laid approximately 200 millimetres too low.As a result it was not possible to back-fill the sections with topsoil in order to obtain minimum ground level as required by the local authority to avoid flooding.As an endeavour to alleviate this problem a bung wall had to be constructed.

[2] The appellant was a building company which had been incorporated in 1994 by Mr Russell Robinson who had been a builder on his own account for some 25 years.The respondent is a Wellington registered, but national based company which offers a multi disciplinary service including engineering, surveying, town planning and development management in Christchurch among other places.

[3] The appellant (Rusco) had traditionally used another firm of consultants on its subdivisional work but in more recent times had formed an association with the respondent (Connell Wagner).In respect of the Kingsford subdivision Mr Robinson's contact was primarily with Mr Alistair Greig as surveyor, and Mr Michael Wilton a civil and structural engineer, both of whom had substantial experience in subdivisional developments.

[4] Rusco had engaged a Mr Grant Miles of Architectural Designs Limited, to provide building plans, specifications and a site plan in respect of the development.

[5] At trial there was no dispute that the buildings were constructed at a level which was wrong and that it had been necessary to take various remedial steps.The units sold for less than otherwise would have been the case and the appellant incurred various costs and expenses.It sought to recover these from the respondent.

The High Court judgment

[6] The crucial issue at the hearing was whether Connell Wagner had a duty to check the height of the boxing for the floor slab before concrete was poured. There was no question that it had not done so and therefore if it had such an obligation then it had been breached.As the Judge concluded :

In legal terms the pivotal issue was the determination of the extent of the duty which rested upon Connell Wagner.Put another way, what was the extent of their retainer and did it include responsibility to check the height detail, which went unchecked and at such cost in this instance.

[7] The Judge on the basis of the submissions which had been presented considered the issue of liability under four headings :

[diamond] Contractual background;

[diamond] Supervision of engineering works;

[diamond] The ribraft floor;

[diamond] The profile certificate.

[8] A detailed assessment of the factual matters led the Judge to conclude that on the contractual background the subdivisional development involved two distinctive parts, the land subdivision and building construction.He concluded that the prime responsibility in respect of building construction was with Rusco.He found that the essential failure to check the height of the floor slab boxing before concrete was poured was a building issue.The Judge held that responsibility could not be sheeted home to Connell Wagner on the basis of responsibility arising from a general retainer to see the subdivision through to completion.

[9] On the second issue of supervision of engineering works, the Judge noted that Connor Wagner did not shrink from the fact that they had significant responsibility in this area, but again on the basis of the division of responsibility, the Judge concluded that it was unrealistic to suggest that Connell Wagner because it had a survey responsibility in relation to the minimum section levels at completion of the work, was bound to monitor the construction work to prevent any error which might impact on those levels.The Judge held that such an argument ignored the meshing of responsibility entailed when a number of parties contribute to a major project such as a subdivision.

[10] On the third issue of the ribraft floor (a concrete floor structure designed to meet problems associated with the stability of the ground) the Judge noted that the appellant argued that the respondent was responsible under this head on the basis of a producer statement supplied by Mr Wilton to the Council, and further because Mr Wilton had conducted an inspection the day before concrete was poured when he had been required to check the boxing height (which at that stage would not have been difficult) before the pour occurred and it was too late.

[11] In this aspect of the case particular emphasis was placed on the operative content of the producer statement:

The drawings, specifications and other documents according to which the building is proposed to be constructed comply with the relevant provisions of the Building Code.

[12] Mr Lester had submitted that because it necessarily carried with it obligations of inspection to ensure compliance, there had been a clear breach of this requirement and consequently liability arose.The Judge did not agree.He said :

Thereby it was suggested "Connell Wagner said in black and white that they had checked the foundation and they gave a certificate to that effect.The Producer Statement is not qualified in any way."This submission is simply wrong.The Producer Statement does not certify that all had been done in accordance with the plans and specifications.Rather it certified that the drawings and specifications provided by Mr Wilton, according to which the building was proposed to be constructed, complied with the relevant parts of the Building Code.Its subject-matter was the engineering work for the Ribraft floor, for which the certifier provided a plan and specifications.

[13] Further the Judge rejected the argument that the producer statement certified the building plans generally.He concluded that it had to be read in the context of the document as a whole which he said made it plain that the certificate was limited to the ribraft floor design for which Mr Wilton was indeed responsible.

[14] As to the subsidiary argument that Mr Wilton had been required to check the boxing height in the course of various inspections, Mr Wilton's evidence had been that he was of the view that the location of the boxing and its height relative to final ground level were matters which were the concern of the builder, the architect and the Council.He accepted that he had not made any inquiry about the level on any of his visits, but specifically said :

I had been doing them for 20 years, (and) I haven't checked any levels unless specifically asked to.It is a matter that the Council attend to.

[15] The Judge noted that his was the only evidence on this point from a qualified engineer.Mr Clark, a surveyor called by the appellant, had ventured other views, but in cross-examination his conjectures did not stand up.The Judge concluded that no liability arose by reference to the producer statement.

[16] The final issue at trial related to the profile certificate.

[17] Because of Council's requirements relative to the building consent, Mr Greig, a surveyor employed by Connell Wagner,had originally been going to provide a pegging certificate.He however persuaded the Council to accept a profile certificate.This was done on 31 July.It was in the following form :

I Alistair Noel Greig registered surveyor, hereby certify that I have been instructed by the owner to set out the profiles for the proposed buildings to be erected at 115 Kingsford Street more particularly described as lot ... .

[18] Mr Lester's argument had been that the profile certificate spoke for itself and Mr Greig was required to ensure that the profile boards at the corner of each unit were correctly set.

[19] On this aspect of the case the Judge had heard from Mr Clark, a surveyor called by Rusco and Mr Paul Stenning called by the respondents.

[20] The Judge noted what Mr Stenning had said about the document in question :

I believe that it is understood generally among survey consultants in the Christchurch area that a Profile Certificate can be used as a substitute for a Pegging Certificate in certain circumstances.I further believe that when a Profile Certificate is used as a substitute for a Pegging Certificate, it is understood and accepted by surveyors and experienced developers (at least in the Christchurch area) that no site levels are provided or certified.

[21] The Judge addressed in detail the difference of opinion between the two experts the resolution of which he acknowledged he did not find straight forward.But he concluded that on balance he was not satisfied that Connell Wagner had a duty to check the finished floor levels before concrete was poured.

[22] Accordingly the Judge found that liability had not been established under any head.He made some brief comment about other issues which had been raised including contributory negligence, limitation of liability and quantum, but they were not of operative effect following his decision on liability.

The appeal to this Court

[23] Three grounds of appeal were advanced before us which we accept, as submitted by Mr Wain for the respondent, were essentially the same issues which had been considered by the trial Judge and fundamentally questions of fact.

[24] The first related to the profile certificate issued by the respondent which the appellant argued would convey to a builder like Rusco the fact that Connell Wagner would at least check the heights of the profile.

[25] We are not satisfied that there is any validity in this argument.

[26] On its face the document does not make the assertion or promise which is suggested by Mr Lester.The clear words are not a promise to check, determine or supervise the level of the profile.If Mr Robinson believed that was what was happening he was mistaken.He gave evidence about what his anticipation might have been and his understanding of practice in the building trade, but none of that was sufficient to persuade the Judge that apart from the words of the certificate (which did not say what counsel now asserts) there was any basis for his belief.

[27] To issue a pegging certificate would have required fixing pegs and marking boundaries of the sections in the subdivision when subsequent earthworks would likely disturb them.The purpose of the pegging certificate was to ensure correct location of the unit to be built on each site.The profile certificate appears to have been acceptable to the Council as substitute assurance of the unit locations.No issue of levels was involved.They were specified in the building plans.

[28] In fact Mr Robinson did not ever expect that the surveyors would actually erect the profile boards by which the location and levels for each unit would be based.It was always intended that he would set his own building profiles from a datum point established by the surveyor.That is what was done and accorded with Mr Robinson's practice over many years.He made no request to the respondent to check the profile.He accurately constructed his own profiles using the pegs and on-site bench marks placed and established by the respondent.The mistake in the floor levels occurred simply because Mr Robinson used the wrong set of building plans.

[29] We are unable (despite the careful argument of Mr Lester) to see any basis upon which it could be suggested that the Judge was in error in the conclusion which he reached on the force or effect of that certificate.We agree with the finding of the Judge that the fact that Connell Wagner is a multi disciplinary firm does not mean that in the provision of a certificate on one aspect of the work (as was the case here) they are providing a general guarantee that everything which is being done by anyone on the site has been correct in every aspect.Whether Mr Robinson knew why there was the profile certificate instead of a pegging certificate does not in any way alter the facts that the profile certificate did not promise supervision of levels and in any event there was no evidence that Mr Robinson was placing reliance on Connell Wagner's certificate in this area.

[30] The changing relationship between the Council and those involved in the construction when it was found that some alteration needed to be made to the construction of the floor because the ground was softer than had been anticipated does not alter that situation.

[31] There was no evidence that Connell Wagner were duty bound to provide assistance on site levels and therefore there could be no breach of a legal obligation.

[32] There was no evidence that Mr Robinson was relying on the respondent to do this in any event.The reality is that the incorrect level arose because of the use of the wrong building plan by the appellant.

[33] The first ground of appeal cannot succeed.

[34] The second issue raised on appeal was rooted in the meaning and construction of the producer statement.

[35] The operative provision is set out in paragraph 11.It is to be noted that it is a statement issued by the respondent to the plaintiff with a copy to be supplied to the Christchurch City Council, "In respect of foundation design".

[36] The trial Judge adopted what the appellant now describes as a narrow or limited approach to the certificate.It is argued that when it is read as a whole there was an error in interpretation to limit or cut back the breadth of the document.We do not agree.The Judge read the certificate in its entirety and reached an inevitable conclusion as to its meaning.

[37] It is submitted that the Council's height requirement was intended to protect houses from the risk of flood.The appellant sought to argue that the height of the floors was a matter of design and therefore well and truly within the producer statement especially when the top of the foundation was in fact the floor level.

[38] Accordingly it was submitted that references in the certificate to various regulations related to a wider sphere of work than just the issue of foundation design.

[39] The document on its face talked about clauses B1 and B2 of the Building Regulations 1992.

[40] The headings in the Regulations in respect of B1 and 2 are respectively structure and durability.The wide and open texture of the language of the code led Mr Lester to submit that a certificate given in this form necessarily included everything in the code and in particular matters covered under clause E1 relating to surface water and clause E2 to external moisture in the Building Regulations also.

[41] In this regard we have considered the cross-examination of Mr Wilton on the issue of compliance with the requirements of the building code generally.It is clear that the general thesis that this certificate provided an across the board enduring guarantee that all issues relating to the building code had been complied with was not accepted by the witness.In our judgment such an approach never could arise as a matter of construction under the document in any event.

[42] We accept that Mr Wilton did not have regard to matters which arise under paragraphs E1 and E2 of the building code.We reject the submission that on the basis of the producer statement, Mr Wilton had such an obligation because that ignores the words of the certificate itself.It was issued in respect of foundation design which it was certified had been in accordance with B1 and B3 which relate to relevant matters.

[43] The appellant has not persuaded us that the producer statement was misconstrued by the Judge.We accept that it had nothing to do with finished floor levels or with the actual construction of the foundations.It was a statement about the engineering design of the foundations and related to issues of durability and strength, being design matters falling within the responsibility of the structural engineer.We accept Mr Wain's submission that the functional requirements of the building code in E1 could only have an impact to the extent that they related to the durability and strength of the foundation design.Any problems which arose with regard to surface water do not arise from any defect in the engineering design of the foundation.They arose by reason of the fact that the building was constructed at the wrong level because the wrong site plan was used.

[44] When Mr Wilton made inspections in both September and November 1997, he was there to ensure that the structural engineering design of the foundation had been complied with.It has not been shown that there was an obligation in respect of other issues, particularly surveying issues.

[45] Although Mr Robinson thought and treated the respondent as a one-stop shop, that cannot in and of itself create an obligation in law upon the respondent.The second ground of appeal accordingly fails.

[46] The final ground of appeal arose from the rejection by the trial Judge of the appellant's submission that the general nature of the relationship between the appellant and the respondent was such that a duty arose to check the level of construction.It was noted that the Judge had accepted that there was a general retainer but he assessed the evidence as indicating that there was a demarcation of roles.The issue of ensuring minimum ground levels was not the responsibility of the respondents.

[47] We can see no basis for going behind the Judge's assessment of the facts in this aspect of the case either.Notwithstanding the fact that there were various professionals within the respondent company, it was clearly open to the Judge to conclude that where there was a request for the respondent to carry out engineering work, there was not automatically a duty to provide advice, supervision or checking with regard to a raft of other matters.It is particularly to be noted that there was no specific evidence of any requests being made in this regard.Much of the argument was permeated by what we are persuaded was a misreading of the terms and effect of both the profile certificate and the producer statement.There is no validity in this general challenge on the facts.

[48] Accordingly the appeal must be dismissed.

[49] It is unnecessary to advert to the subsidiary issues which do not arise for consideration.

[50] The respondent is entitled to costs of $5000 together with disbursements (including travel and accommodation expenses of counsel) as fixed by the Registrar.

Solicitors

Saunders & Co, Christchurch

Burton & Co, Auckland