Auckland Council v Lamb [2012] NZHC 2932 (7 November 2012)

Last Updated: 30 November 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-003516 [2012] NZHC 2932

UNDER the Weathertight Homes Resolution

Services Act 2006

IN THE MATTER OF an appeal from a decision of the

Weathertight Homes Tribunal

BETWEEN AUCKLAND COUNCIL Appellant

AND OWEN LAMB Respondent

Hearing: 24 October 2012

Counsel: MSC Harrison for Appellant

DK Wilson for Respondent

Judgment: 7 November 2012

_{JUDGMENT OF ASHER J}

This judgment was delivered by me on Wednesday, 7 November 2012 at 1pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Simpson Grierson, DX CX 10092, Auckland. Email: [e-mail]

DK Wilson, DX CP 24054, Auckland. Email: [e-mail]

AUCKLAND COUNCIL V LAMB HC AK CIV-2012-404-003516 [7 November 2012]

Introduction

[1] The respondent, Mr Owen Lamb, is a builder. Between October 2000 and February 2001 he and his brother worked on a house being erected by Jing Huang at Ngake Street, Orakei. The house turned out to be a leaky building and Mr Huang sued, among others, the Auckland Council and Mr Lamb.

[2] The Auckland Council conceded liability for substantial defects in the construction and consented to judgment in favour of the first respondent in the sum of $340,000. It then proceeded to seek contribution from Mr Lamb pursuant to s 72(2) of the Weathertight Homes Resolution Services Act 2006 (“the Act”) for 80 per cent of the $340,000, being $272,000.

[3] It failed in this claim before the Weathertight Homes Tribunal (“the Tribunal”) which dismissed the Council’s claim on 25 May 2012.1 The Council now appeals that decision.

The issue

[4] Mr Lamb is an experienced builder. He was contracted to install the windows including the head, jamb and sill flashings, as well as carrying out other specific work. He worked on the site with his brother. They were directly responsible to a project manager and site supervisor who engaged all the sub-trades, including Mr Lamb.

[5] Although Mr Lamb did a range of work and the Tribunal considered a number of issues, the Council appeals the decision in relation to certain specific work done by Mr Lamb. The Council’s central submission is that the Tribunal overlooked the clear evidence that Mr Lamb was negligent in relation to the window flashings, and this had caused Mr Huang’s loss. Ms Harrison asserted for the Council that Mr Lamb had departed from the technical literature in installing the

_{head jamb and sill flashings and that this had caused moisture ingress.}

1 Huang v Auckland Council [2012] NZWHT Auckland 26.

[6] It was asserted that the Tribunal had considered a number of irrelevant factors including the systemic failure of the stucco cladding system and Mr Lamb’s limited role in the construction. The Tribunal had, it was submitted, wrongly focussed on a lack of awareness in the industry generally about flashing systems and Mr Lamb’s reliance on specific advice of Council inspectors and the site supervisor, rather than his particular negligence.

[7] Mr Wilson for Mr Lamb submitted that the essential issue was whether any negligence had been shown in the installation of the window flashings by Mr Lamb. He submitted that the issue was one of fact and that the Tribunal’s determination of that factual issue was open to it and entirely correct.

Approach to the appeal

[8] This is a general appeal by way of a rehearing.2 The well established approach to general appeals set out in Austin, Nichols & Co Inc v Stichting Lodestar3 applies to appeals under s 93 of the Act.4 The appellant has the onus of satisfying the appeal court that it should differ from the decision under appeal. The appeal court,

however, has the responsibility of arriving at its own assessment of the merits of the case. If the appellate court considers the appeal decision is wrong is it justified in interfering. It is recognised that the Tribunal has a particular advantage through experience of weathertightness technical matters, and that it had the opportunity to assess the credibility of witnesses.5

The Tribunal decision

[9] Mr Lamb had represented himself at the hearing. The adjudicator P J Andrew of the Tribunal noted:6

2 _{High Court Rules, r 20.18.}

3 _{Austin, Nichols & Co Inc v Stichting Lodestar [2008] 2 NZLR 141.}

4 _{Burns v Argon Construction Ltd HC Auckland CIV-2008-404-7316, 18 May 2009 at [14]; Boyd}

v McGregor HC Auckland CIV-2009-404-5332, 17 February 2010 at [48]; and Chee v Star East

_{Investments Ltd HC Auckland CIV-2009-404-5255, 1 April 2010 at [13].}

5 _{Austin, Nichols & Co Inc v Stichting Lodestar, above n 3 at [5].}

6 Huang v Auckland Council, above n 1 at [26].

Mr Lamb presented as a very experienced builder. He was a credible witness. He produced a number of references testifying to his competence as a builder.

[10] It was noted that Mr Lamb had correctly and responsibly accepted that he owed the claimants a duty of care in carrying out the building work and to exercise reasonable care and skill.7 In relation to the head flashings, it was observed that the system used by Mr Lamb contributed to moisture ingress, but this was only one aspect of the overall wider problem.8 The Tribunal was not satisfied that Mr Lamb

_{had breached the relevant standard of care in relation to those head flashings.}9 _The

Tribunal concluded that the Council had failed to establish that the jamb flashings had contributed to water ingress problems.10 In relation to the lack of stop-ends on the sill flashings the Tribunal concluded that the Council had not established that Mr Lamb breached the relevant standard of care in not installing them.11 It also observed that a significant reason why the house leaked was because of the flawed nature of the stucco cladding system that was used.12

Discussion

[11] Ms Harrison for the appellant criticised references in the Tribunal decision to the wider problem of a general failure of the system, and its reference to Mr Lamb’s reliance on the approval of the supervisor and building inspectors. Mr Wilson on the other hand submitted that the core issue was whether it had been shown that Mr Lamb was negligent in relation to his installation of the window flashings, and in particular the sill flashing. Had he in fact acted in breach of his duty of care and not in accordance with good practice?

[12] If Mr Wilson is right in his submission on this point, it is not necessary to go further and consider the wider observations in the Tribunal decision. So the starting point is a question of detailed fact. Was Mr Lamb negligent in installing the window

_{flashings? There are three window flashings: head, jamb and sill.}

7 _{Huang v Auckland Council, above n 1, at [37].}

8 _{At [55].}

9 _{At [56].}

10 _{At [45].}

11 _{At [50].}

12 At [51].

The flashings

The head flashings

[13] The head flashing is the flashing above the window. Although the head flashing extended a short distance past the outside parameters of the glass in the window frame, it did not extend beyond the jamb flashing which ran down the side. It was common ground that the technical literature stated that the head flashing should extend 30 mm past the window frame and the jamb flashing on the side. It was argued that Mr Lamb had wrongly chosen not to so extend the head flashing.

[14] However, despite indications by the Tribunal to the contrary in its decision,13

Mr Lamb’s evidence was that any water that got in through the head flashing would go down the jamb flashing to the sill flashing. The assessor who was appointed to prepare the report under Part 1, Subpart 4 of the Act noted only that the head flashing had “a potential” for water ingress. Moisture would be contained by the jamb flashing and discharged to the area of the sill flashing by capillary action.

[15] Mr Lamb said in evidence that he chose not to extend the head flashing out to the 30 mm mark beyond the jamb flashing because that would lead to water running out and down the wall on timber and plaster, rather than running down the jamb flashing beside the window. Also he noted that he had reasonably anticipated that there would be a thick plaster eyebrow above the head flashing on each window which would assist in diverting water. Such eyebrows were shown in the plans. However, such eyebrows were only put on the windows in the front of the house and not on those at the back of the house. Mr Nevill, the assessor, in the end examined only one window, and that was a window without an eyebrow. The lack of the eyebrow would, it was asserted for Mr Lamb, have contributed to water ingress.

[16] In the end Ms Harrison did not press the submission that the lack of any extension of the head flashing had caused leaks, accepting that the central question related to the sill flashing at the bottom of the window. From my examination of the

_{evidence, neither Mr Nevill nor the Council’s expert Mr Gillingham were ultimately}

13 Huang v Auckland Council, above n 1, at [54]–[56].

suggesting that the failure to extend the head flashing out was a direct cause of water ingress. Rather it was a potential cause at worst.

[17] Mr Lamb’s explanation as to why he chose not to extend the head flashing out makes perfect sense. Although my reasoning differs somewhat from that of the Tribunal, I consider the conclusion that it reached that Mr Lamb was not negligent in the installation of the head flashing was correct. To extend the flashing out may have caused leaks, and the lack of extension was not a direct cause of leaking.

The jamb flashings

[18] The jamb flashings are the flashings that run down the side of the window. Mr Nevill was of the view that any deficiencies with the jamb flashings was not a major contributing factor to the water ingress problems. Ultimately neither Mr Nevill nor Mr Gillingham suggested that the jamb flashings were a significant cause of water ingress. The water would have flowed down the jamb flashings beside the windows to the sill flashings as expected.

[19] As submissions developed, Ms Harrison did not submit that the Tribunal made an error in its conclusion that the Council had not discharged the burden of proof to show negligence by Mr Lamb in relation to the jamb flashings. She was correct to do so.

The sill flashings

[20] The core negligence allegation related to the sill flashings. The sill flashings are the flashings that are at the bottom of the window. The design and installation is critical as the water flowing down from the head flashings and jamb flashings and down the window will end up there. It was in relation to these that Ms Harrison focussed her criticism of the Tribunal’s factual findings.

[21] The experts Mr Nevill and Mr Gillingham agreed that there was a problem with the sill flashings which led to water ingress. The water which came down to the

sill flashings, rather than being diverted out of the building, was leaking into the walls.

[22] Both experts focussed on the lack of any turn-up or “stop-ends” at the ends of the sill flashings to divert water away from the inside of the walls. The Council argued that the lack of stop-ends and the ability of the water to be diverted or to escape meant that water flowed down from the sill flashings into the building. I note that Mr Gillingham observed that there did not appear to have been a robust attempt to waterproof the sill flashings. However, he did not traverse the explanation as to the alternative system that Mr Lamb said he installed.

[23] Mr Lamb acknowledged that he did not use sill flashings with turn-ups or stop-ends at the end. He explained why. He said a turn-up on the sill flashing would encapsulate the plaster, weakening it and causing it to break off in due course. By this he meant that the uplift would isolate a portion of plaster inside the uplift from the rest of the plaster, which because of the separation would leave the plaster unsupported, and it would crumble or break off. He said that rather than putting in such an uplift he applied a line of sealant between the bottom edge of the jamb flashing and the outer edge of the sill flashing which acted in the same way as a turn- up or stop-end to direct water from flowing off the sill. He gave a physical demonstration to the Tribunal of what he did. He explained that the jamb flashing overlapped the sill flashing but did not fully overlap it.

[24] Critically he explained that he provided a channel through from the sill flashing to the outside. This meant that the water which arrived on the sill having come down the jamb flashing or otherwise could escape. The channel would direct the water out of the wall to the outside of the cladding. The silicone strip would stop it leaking into the building.

[25] Mr Lamb gave evidence that after he had done the work, someone had come along and blocked the drainage channels with sealant or by the application of plaster hard underneath the sill flashing. This destroyed the efficiency of the water egress design, and meant that the water would flow into the wall.

[26] So in essence, Mr Lamb said that he had not put in a stop-end but had put in an equivalent system which would have ensured adequate water egress, and that a later builder or plasterer had come along and prevented it from working.

[27] In his report, the assessor (Mr Nevill) noted that there was no escape route for the water at the sill flashing. He did not see any channel of the type described by Mr Lamb, but he only took apart one window from one area. He discussed industry knowledge as to sill flashings and turn-up ends. He noted that the Good Stucco Practice Guide in NZS 3604, the 1996 edition, did not make any reference to turn-up ends. He stated that over the past nine years he had dismantled a number of buildings and he had never come across turn-up stop-ends on the sill flashings. The building industry had not been using them.

[28] Mr Nevill acknowledged that stop-ends were referred to in the September

1998 BRANZ bulletin No. 375 (“the 1998 BRANZ bulletin”). This, in a general section on flashings for aluminum windows and doors, stated at 3.1.3 that sill flashings “be folded to form a tray upstand at the ends”. There was no specific diagram or photograph.

[29] Mr Nevill could remember as an apprentice being instructed on how to install sill flashings without such stop-ends. He stated that if stop-ends were put in the system was going to fail given the make-up of the stucco product and its application. In such a situation there would still have been moisture ingress.

[30] I note that the 1998 BRANZ bulletin reference is not specific to a stucco plastering system. I am satisfied that despite that reference to stop-ends, it was not common practice to install them in 2000 and 2001. Mr Gillingham noted that there was no specific requirements or industry standards for stop-ends to sill flashings and does not appear to have been aware himself of the 1998 bulletin. There is no evidence as to the bulletin’s status. It is one sentence in a very long and non-specific bulletin extending over hundreds of pages. The Tribunal in its decision noted this evidence and that the need for stop-ends was not really reinforced until a new draft came out in 2004.

[31] Having regard to all the circumstances, including Mr Lamb’s limited role and, as the Tribunal observed, “... the lack of awareness in the industry generally about the need for stop-ends on sill flashings, and the significant problems with this cladding system generally”,14 it was not shown that Mr Lamb breached the relevant standard of care in relation to stop-ends.

[32] The Tribunal did not specifically address Mr Lamb’s evidence that he had put in effectively an alternative system to a stop-end, namely a line of sealant at the end of the sills to divert water and a channel for the water to escape. However, it had earlier held that Mr Lamb was a very experienced builder and a credible witness. Mr Lamb’s testimony on the point was unshaken when he gave evidence. It was Mr Lamb’s evidence that he had done six to eight houses with the same head flashing detail and that he had never had a failure. The failure in the system he installed arose only because the bottom channels had been silicone sealed. He also observed that this should have been noted by the Council inspectors.

[33] I accept Ms Harrison’s submission that the fact that there is no industry standard on a point is not necessarily conclusive. However, in the end I am of the view that the Tribunal was right in its decision that Mr Lamb was not negligent in relation to the sill ends. I agree with the Tribunal that there was no industry standard requiring turn-ups at the ends of the sills.

[34] My reasons, however, go further than those of the Tribunal. Even if it is now good practice to have these stop-ends, the fact that there was no general expectation for them to be installed at the time is highly relevant to the assessment of negligence. But to be coupled with this aspect is Mr Lamb’s evidence as to the alternative channel system he put in. Mr Lamb was held to be a credible witness and I consider that this was a credible explanation. It was the sort of system that would be expected to be installed by a competent builder. For some reason later builders or plasterers by their actions in filling the channels precluded that system from working. That was not Mr Lamb’s fault. It may have been a supervisory failure to point out the need to maintain the channels, or a failure by individual workers, but that is not the

_{error of Mr Lamb. Mr Nevill did not note any signs of sealant or a channel, but he}

14 Huang v Auckland Council, above n 1 at [50].

was not looking for them, and only took apart one window. The lack of evidence from him on the point did not mean that Mr Lamb was lying about what he did.

[35] I conclude that the Tribunal was correct in deciding that no negligence against Mr Lamb was proven, again for reasons that go somewhat further than those of the Tribunal.

Broader submissions

[36] It is not necessary to consider the Council’s wider submissions concerning Tribunal error in taking into account the failure of the wider system generally, or the legal authorities put forward as to the standard of care and causation. The lack of any proven negligence on Mr Lamb’s part is the end of the matter.

[37] I do, however, record that I am far from persuaded by Ms Harrison’s submissions that the Tribunal was wrong to consider that in causative terms it was difficult to blame anything Mr Lamb had done for the damage. I note Mr Nevill’s evidence that it was most unusual for him to have explored only one window detail, but that he saw no point in looking at any further window details as there were such areas of deficiency and framing decay in the building that it was a hopeless case – as he put it in evidence, the building was “stuffed”. This was why he did not investigate more than one window.

[38] Mr Gillingham did not totally agree with Mr Nevill’s assessment as to the state of the building and noted that stucco buildings in Napier in the 1930s had lasted for many decades. However, as Mr Gillingham himself noted, different plaster was used and different wood such as kauri and rimu, plus a very high standard of workmanship was adopted. It is hard to see how that example, which involved the use of different materials in a totally different work environment, took away from the force of Mr Nevill’s general assessment.

[39] Given the failures of the system and the large number of defects it is difficult to see how anything Mr Lamb did was a substantial and material cause of the loss. However, it is not necessary for me to determine that point as the claim fails at the

outset because of a failure to prove negligence. Mr Lamb did competent work, which failed because of errors by later builders or plasterers.

Result

[40] The appeal is dismissed.

[41] The question of costs, if it cannot be resolved, is reserved with the respondent to file any submissions within 14 days, and the appellant in a further 14 days.

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

Asher J