Insurance Council of NZ Incorporated v Christchurch City Council [2013] NZHC 51 (4 February 2013)

Last Updated: 5 February 2013

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV 2012-409-2444 [2013] NZHC 51

BETWEEN THE INSURANCE COUNCIL OF NZ INCORPORATED

Applicant

AND CHRISTCHURCH CITY COUNCIL Respondent

AND UNIVERSITY OF CANTERBURY Second Respondent

AND BODY CORPORATE 423446 (OXFORD BODY CORPORATE)

Third Respondent

Hearing: 12 December 2012

Counsel: D J Goddard QC and T A Spinka for Applicant

DJS Laing and J A Cheyne for First Respondent

T C Weston QC and A D McBeath for Second Respondent

C A McVeigh QC and S T Cottrell for Third Respondent

Judgment: 4 February 2013

_{JUDGMENT OF PANCKHURST J}

An application for judicial review

[1] The applicant, the Insurance Council of NZ Incorporated (ICNZ) seeks judicial review of a policy of the Christchurch City Council (the Council), the Earthquake–Prone, Dangerous and Insanitary Buildings Policy 2010 (the Policy). ICNZ claims that the Policy is unlawful and invalid, at least in part, because its terms

_{overreach the Council’s statutory powers under the Building Act 2004 (the Act). In}

THE INSURANCE COUNCIL OF NZ INCORPORATED V CHRISTCHURCH CITY COUNCIL HC CHCH CIV 2012-409-2444 [4 February 2013]

particular, the applicant claims that the Policy provides that the Council can require the strengthening of earthquake-prone buildings to a level higher than that prescribed in regulations made under the Act.

[2] The concern of ICNZ is that the Policy, if allowed to stand, will result in buildings damaged in the Christchurch earthquakes being strengthened beyond the level at which they are defined as earthquake-prone. This will increase the cost of earthquake repairs for building owners, who will in turn seek to claim against their insurers. The estimated increase to the repair bill of insurers may be several hundred million dollars.

[3] The Council contends that the terms of the Policy reflect a proper exercise of the statutory power conferred under the Act. Despite the magnitude of the sum potentially at stake the issue for determination, one of statutory interpretation, is within a relatively narrow compass.

The Proceeding: The Parties

ICNZ

[4] ICNZ is a long established industry organisation which represents insurers who write approximately 95% of New Zealand’s property and casualty insurance business. Members of ICNZ have been asked to indemnify building owners holding material damage insurance policies for the cost of strengthening earthquake damaged buildings to 67% of the new building standard. The insurers consider they are only liable to indemnify up to 34% of that standard. Material damage policies commonly provide indemnity for the cost of reinstatement of a property to its pre event condition, but including the cost of repairs necessary to comply with any law. Hence, whether as a matter of law seismic strengthening must be to 67% of the new building standard, or only to 34%, is of vital concern to both the insured and the insurer.

[5] An affidavit sworn by John Lucas in support of ICNZ’s case records that an

impasse has developed concerning the level of seismic strengthening that may be

legally required by the Council. As a result repairs to some earthquake damaged buildings in Christchurch are on hold. Building owners are reliant upon indemnity from their insurers, but the extent of insurance cover is in doubt. ICNZ further anticipates that if seismic strengthening to 67% is required the cost of reinsurance will increase and the willingness of reinsurers to invest in the New Zealand insurance market may be compromised.

The Council

[6] Three affidavits were filed on behalf of the Council; from Christian van den Bosch (the Engineering Services Manager), Stephen McCarthy (the Resource Consents and Building Policy Manager) and John Hare (an earthquake engineer). These outline the history of the Policy and explain the Council’s approach to its implementation.

[7] A Policy was adopted by the Council in May 2006. Section 132 of the Act required that the initial policy be reviewed within 5 years and this was in train at the time of the first Christchurch earthquake on 4 September 2010. On 10 September

2010 the new Policy was adopted, at an extraordinary meeting of the Council. I shall refer to the aspects of the Policy which are challenged shortly.

[8] Applications for a consent to effect building repairs must be accompanied by plans and specifications. If the building is earthquake-prone the Council also requires the applicant to provide an engineering assessment. Although the Policy identifies 67% of the new building standard as the preferred level of seismic strengthening, this is an aim of the Council not a fixed requirement. Invariably, a process of negotiation follows. The extent of the damage, the level of danger posed by the building, the cost of repairs and the use to which the building is to be put all influence the Council’s assessment of the strengthening required in an individual case. The capacity of a building, expressed as a percentage of the new building standard, is but one part of the exercise. Many buildings, particularly older ones, are a danger to occupants, pedestrians and others on account of the danger posed by specific parts of the building – facades and chimneys for example – as opposed to their structural strength.

[9] The negotiation process enables a compromise to be achieved between risk reduction and affordability. The primary concern of Council staff in assessing a strengthening proposal is whether the particular risks associated with the building have been assessed and addressed, not whether the proposal attains the 67% standard, although this remains the preferred outcome.

[10] In practice owners want their buildings strengthened to the 67% threshold or more. Strengthening to this level is perceived as good practice, better addresses risk and is therefore commercially advantageous. To date the Council has not issued any notices under s 124 of the Act requiring work to be carried out on an earthquake-prone building. Any issues in relation to the necessary level of strengthening have arisen in the context of negotiations between the Council and building owners.

[11] In June 2012 ICNZ wrote to the Council with regard to the content of the Policy, and of a supporting protocol and guidance material provided to building owners. These contained a focus upon strengthening to a level of 67% as the Council’s preference and aim. ICNZ said that the Council’s approach impacted in relation to the dealings between insurers and building owners concerning the extent of insurance cover under individual policies. ICNZ questioned whether strengthening above 34% could be insisted upon. An exchange of correspondence followed involving solicitors in the latter stages. The Council maintained that s 124 of the Act was susceptible of “different interpretations”.

[12] In early November 2012 this application for judicial review was filed. Helpfully, the parties have co-operated to ensure that the application could be heard promptly, given the need for certainty concerning the extent of the Council’s powers as the Christchurch rebuild gathers momentum.

The University and Oxford

[13] The University of Canterbury and Body Corporate 342446 (Oxford Body Corporate) were added as second and third respondents subject to the understanding that they will not receive or be liable for costs. The University and Oxford have

filed affidavit evidence that details engineering aspects and highlights the practical significance of the dispute from their individual perspectives.

[14] Jeffrey Field (the Registrar) described the impacts upon the University “of the 34/67% issue”. The University campus contains about 240 buildings, all of which suffered some degree of earthquake damage. Some buildings have been demolished, others are in the course of repair. The University Council is committed to repairing buildings to a minimum of 67% of the new building standard, provided this is technically and economically feasible. It considers that a rebuild to this standard is necessary if the University is to recoup student numbers following a 13% decline in 2011, including an even larger reduction in full fee paying international students. The University has comprehensive insurance cover and anticipates making claims of the order of $500 million, but is also budgeting upon expenditure of a similar sum from its own money. It is estimated that the differential between insurance cover to 34% strengthening, as opposed to 67%, is about $140 million.

[15] Oxford provided affidavit evidence from Robin Hughes (a member of the body corporate), David Harris (a registered valuer) and Dr Grant Wilby (an engineer). The Oxford is a 10 residential apartment building in the central city area, built in 2005. It was damaged in September 2010 and suffered further damage in the February 2011 earthquake. The apartments have not been occupied since that time. Dr Wilby considers that the building is earthquake–prone as defined in s 122 of the Act. He thinks that not only does the building require strengthening to 67% of the new building standard, or higher, but that there is also a need for design modifications to provide improved ductility.

[16] Mr Harris is of the view that the resale value of apartments in the building will be significantly affected by the level of strengthening and improved ductility, resulting from the repair design. He thinks the Christchurch market is affected by a “perception” that “high rise buildings might be dangerous or hazardous” – a perception capable of diminishing the market value of such apartments to a considerable degree.

The relevant legal principles

[17] The ICNZ statement of claim is uncluttered. It raises one cause of action,

that the Council’s Earthquake–Prone, Dangerous and Insanitary Buildings Policy

2010 is unlawful and invalid because it provides for the Council to require strengthening beyond 34% of the new building standard, when the Council is not empowered to do so under the Act. In short the ICNZ contends that as a matter of statutory construction the Council can require building owners to carry out work on an earthquake-prone building only to the level necessary to reduce or remove the danger that renders the building earthquake-prone.

[18] Mr Goddard QC referred to one authority, Unison Networks Limited v Commerce Commission,[1] a case that concerned a challenge to a price control policy established by the Commerce Commission. McGrath J, in delivering the judgment of the Court made these observations:

[51] Public bodies must exercise their statutory powers in accordance with the statutes which confer them. If they make decisions that are outside the limits of their powers they abuse them. The courts control any misuse of public power through judicial review.

[52] It is unnecessary in this case to attempt a comprehensive description of all circumstances in which the exercise of a statutory power will amount to an abuse. Two conventional instances have been raised for consideration. The first is where the power is exercised for a purpose that is not within the contemplation of the enabling statute. The second, to which we will return, is where the decision maker applies the wrong legal test in exercising the power.

[53] A statutory power is subject to limits even if it is conferred in unqualified terms. Parliament must have intended that a broadly framed discretion should always be exercised to promote the policy and objects of the Act. These are ascertained from reading the Act as a whole. The exercise of the power will be invalid if the decision maker “so uses his discretion as to thwart or run counter to the policy and objects of the Act”. A power granted for a particular purpose must be used for that purpose but the pursuit of other purposes does not necessarily invalidate the exercise of public power. There will not be invalidity if the statutory purpose is being pursued and the statutory policy is not compromised by the other purpose.

[54] Ascertaining the purpose for which a power is given is an exercise in statutory interpretation which is not always straightforward. This is partly

because legislative regimes differ in the specificity with which they grant powers. In this area the courts are concerned with identifying the legal limits of the power rather than assessing the merits of its exercise in any case. They must be careful to avoid crossing the line between those concepts.

The present case concerns the alleged application of an incorrect legal test in framing the terms of the Policy.

[19] Often it is convenient to begin a statutory interpretation exercise with a broad review of the terms of the empowering Act. In this instance, however, I think it preferable to start with the key sections in one relevant subpart of the Act, form a view in relation to these and then examine that view in the broader context of the Act.

The operative sections

[20] Part 2 of the Act, entitled Building, contains detailed provisions concerning the requirement for building work to comply with a building code, and for the administration and functioning of that code. Subpart 6, headed Special provisions for certain categories of buildings is largely concerned with dangerous, earthquake-prone, and insanitary buildings.

[21] Section 131 provides that territorial authorities must adopt a policy on dangerous, earthquake-prone, and insanitary buildings, and state:[2]

(a) the approach that the territorial authority will take in performing its functions under this Part; and

(b) the territorial authority’s priorities in performing those functions;

and

(c) how the policy will apply to heritage buildings.

[22] Section 132 requires that the policy be adopted in accordance with the special consultative procedure in the Local Government Act 2002 and that the policy must be reviewed at 5 yearly intervals (s 132(4)). As required, the Christchurch City

Council adopted a policy in 2006 and in mid September 2010 adopted the 2010

Policy. I shall refer to the challenged portions of the Policy later.

[23] What are “dangerous” and “earthquake–prone” buildings? Section 121(1)

defines a dangerous building:

121 Meaning of dangerous building

(1) A building is dangerous for the purposes of this Act if,—

(a) in the ordinary course of events (excluding the occurrence of an earthquake), the building is likely to cause—

(i) injury or death (whether by collapse or otherwise) to any persons in it or to persons on other property; or

(ii) damage to other property; or

...

[24] The section was modified in 2011 by the addition of three further means by which a building may become dangerous, one addition being:

“(c) there is a risk that the building could collapse or otherwise cause injury or death to any person in the building as a result of an earthquake that generates shaking that is less than a moderate earthquake...” [3]

This and the other two additions apply from 17 September 2011 to 16 September

2013. Although counsel noted this addition, no-one suggested it affected the definition of an earthquake-prone building, to which I now turn.

[25] Section 122 relevantly provides:

122 Meaning of earthquake-prone building

(1) A building is earthquake prone for the purposes of this Act if, having regard to its condition and to the ground on which it is built, and because of its construction, the building—

(a) will have its ultimate capacity exceeded in a moderate earthquake (as defined in the regulations); and

(b) would be likely to collapse causing—

(i) injury or death to persons in the building or to persons on any other property; or

(ii) damage to any other property.

...

Subsection (2) provides that residential buildings are not earthquake-prone unless they are 2 or more storeys high and contain 3 or more household units.

[26] A “moderate earthquake” is defined in regulation 7 of the Building (Specified

Systems, Change the Use, and Earthquake-prone Buildings) Regulations 2005.

7 Earthquake-prone buildings: moderate earthquake defined

For the purposes of section 122 (meaning of earthquake-prone building) of the Act, moderate earthquake means, in relation to a building, an earthquake that would generate shaking at the site of the building that is of the same duration as, but that is one-third as strong as, the earthquake shaking (determined by normal measures of acceleration, velocity, and displacement) that would be used to design a new building at that site.

Hence, moderate earthquake shaking is defined as one third as strong, (but of the same duration), as shaking used to design a new building on the subject site. This formulation is for convenience sometimes expressed as 34% of the new building standard or NBS. New buildings are required to achieve a seismic strength expressed as 100% of NBS.

[27] Section 123 gives the meaning of an insanitary building, but this is not of present relevance. Section 124 relevantly provides:

124. Powers of territorial authorities in respect of dangerous, earthquake-prone, or insanitary buildings
     

(1) If a territorial authority is satisfied that a building is dangerous, earthquake-prone, or insanitary, the territorial authority may—

(a) put up a hoarding or fence to prevent people from approaching the building nearer than is safe:

(b) attach in a prominent place on, or adjacent to, the building a notice that warns people not to approach the building:

(c) give written notice requiring work to be carried out on the building, within a time stated in the notice (which must not be less than 10 days after the notice is given under section

125), to—

(i) reduce or remove the danger; or

(ii) prevent the building from remaining insanitary.

...

(emphasis added)

The rival contentions

[28] The issue is narrow. Where a territorial authority is satisfied a building is earthquake-prone, what work can it require the owner to carry out to reduce or remove the danger?

_{[29] Mr Goddard submitted:}

A building was defined as earthquake-prone by reference to its failure to

_{meet the 34% of the new building standard requirement.}

So the power to give a s 124 notice cannot be exercised in relation to a

_{building that exceeds the 34% level.}

The work that can be required is that needed to reduce or remove the danger.

The danger must refer to the “earthquake proneness” of the building.

_{So only work necessary to reduce or remove that condition can be required.}

[30] Put another way, counsel argued that the purpose for which the s 124 power had been conferred was to address the danger caused by a building being earthquake-prone. The power cannot be exercised for some other purpose. In particular, regional authorities cannot exercise the power to achieve strengthening up to 67% of the new building standard, or for that matter strengthening to any other level in excess of 34%.

_{[31] Mr Laing submitted:}

A building is earthquake-prone when two distinct elements exist, namely that its ultimate capacity is exceeded in a moderate earthquake, and the building would be likely to collapse causing injury, death, or damage to other

_property.

‘Likely’ means that injury, death or property damage could well happen.

The power of territorial authorities to require work to be carried out on a

building to ‘reduce or remove the danger’ is referable to both dangerous and

_{earthquake-prone buildings.}

Section 124(1)(c)(i) should not be read down as limiting strengthening to a maximum of 34% of the NBS, as the power is to be exercised to reduce or

_{remove the danger.}

A discretion is given to territorial authorities to determine how best to reduce or remove the danger on a case by case basis and in light of the condition and

_{construction of the building, and the ground conditions.}

The policy of a territorial authority must identify the approach it will take including the priorities to be adopted and how heritage buildings will be

_{accommodated.}

The policy provides guidance to building owners and may include targets or aspirational levels provided that ultimately any s 124 notice is focussed upon

_{the danger posed by the particular building.}

Counsel described the reference to 67% of the NBS as a convenient way of providing guidance to building owners concerning what may be required to remove or reduce danger. This did not, however, reflect an ‘immutable position’ as to the level of strengthening to be required in all cases.

[32] To my mind the key point of difference between counsel arose in relation to the linkage between the capacity deficiency in s 122(1)(a) and the words in s 124(1)(c)(i) ‘reduce or remove the danger’. Mr Goddard advanced a direct linkage whereby the capacity test (34% of the NBS) also governed what may be required by way of work to remove or reduce the danger. Mr Laing, however, argued against any such direct linkage. The 34% capacity test informed but did not govern the discretionary judgment of a territorial authority to define the work to be carried out under a s 124 notice. Mr Weston QC and Mr McVeigh QC also disputed the direct linkage thesis.

[33] The former submitted that while 34% of NBS was a ‘trigger’ to a building being characterized as earthquake-prone, it was ‘mechanistic’ to define danger by reference to the same percentage figure. A 34% cut-off would largely obviate the need for territorial authorities to promulgate a policy and, more importantly, would inhibit the legislative goal of enhancing safety.

[34] In a not dissimilar argument Mr McVeigh stressed the two-pronged nature of the earthquake-prone definition. An earthquake-prone building has less than moderate earthquake resistance capacity and also exhibits the likelihood of collapse causing injury, death or property damage. Capacity comprises a ‘threshold’ test, but the likely risk provides the ‘essential test’. Hence, the argument continued, it was not sensible to circumscribe the territorial authority’s power of intervention by reference to the capacity test alone. Strengthening a building to 34% of the NBS may not address the statutory risks from a building collapse. Mr Hare and Dr Wilby’s expert engineering evidence demonstrated as much. Even when the ultimate capacity of a building was exceeded most do not fail. Failure reflects low ductility, being critical vulnerabilities or brittle characteristics. Addressing these requires a targeted approach; a general appraisal of the building performance including a focus on parapets, chimneys and other ornamentation. Hence, s 124(1)(c)(i) should be construed by reference to both limbs of s 122(1).

Analysis

[35] I think it convenient to summarise my conclusions in a series of propositions. These are:

‘The danger’ in s 124(1)(c)(i) refers to both ss 121 and 122, being a

_{shorthand for the risk from dangerous and earthquake-prone buildings.}

The danger is the likelihood of injury, death or damage to other property from the inherent danger (in the ordinary course of events), fire or earthquake-

_{prone risk posed by a building.}

Earthquake-prone in s 122(1), however, is defined by reference to both capacity and consequence, whereas there is no similar qualitative characteristic to the definition of inherently dangerous buildings or buildings

_{that pose a fire risk.}

Territorial authorities are empowered to require work to either reduce or remove the danger, a legislative recognition that elimination of the risk may

_{not be reasonably attainable so that an exercise of judgment is required.}

The primary focus in requiring work on earthquake-prone buildings is upon managing the likely risk of collapse causing injury or death, or damage to other property; but in the context that collapse is defined with reference to

_{buildings with an ultimate capacity under 34% of the NBS.}

Accordingly, territorial authorities may not use s 124 notices to advance a policy of increasing building capacity to a level above 34% of the NBS. However, they are not prevented from requiring work to reduce or remove specific vulnerabilities capable of causing injury, death or property damage where the subject building is also under 34% of the NBS.

I note that Mr Goddard accepted that there is nothing to prevent territorial authorities from encouraging strengthening of buildings to 67% of the NBS. Likewise, if the only practicable method of strengthening a building to 34% of the NBS will in fact achieve strengthening above that level a territorial authority can require that method of construction. I agree with those propositions.

Broader analysis

[36] Messrs Goddard and Laing analysed other sections of the Act in order to place the operative sections in broader context. This broader analysis did not, to my mind, alter the conclusions reached by virtue of the contextual analysis although certain features of the statutory scheme are worthy of mention.

[37] Part 1, which contains preliminary provisions, identifies in s 3 the purposes of the Act including:

(a) to provide for the regulation of building work, the establishment of a licensing regime for building practitioners, and the setting of performance standards for buildings to ensure that-

(i) people who use buildings can do so safely and without endangering their health; and

...

[38] Section 4 records the principles to be applied in performing functions or duties, or exercising powers under the Act. This section applies to territorial authorities but only when they are exercising functions, duties or powers in relation to waivers or modifications of the building code and ‘the adoption and review of policy on dangerous, earthquake-prone, and insanitary buildings.....’.

[39] Subsection (2) records 17 principles to be taken into account by decision makers. These are very wide ranging and include values such as promoting human health, building durability, mindfulness of building cost, promoting building innovation, preservation of heritage buildings, building efficiency and sustainability

and achievement of compliance with the building code amongst others. Clearly, the application of these principles necessitates a balancing exercise in making decisions under the Act.

[40] Part 2 of the Act headed Building governs the performance of all building work in New Zealand. Subpart 2 provides for the primacy of the building code. Section 17 specifies that all building work must comply with the building code, while s 18 provides that persons carrying out building work may not be required to achieve criteria additional to or more restrictive than the criteria in the code itself.

[41] In the main the oversight of building work by territorial authorities is achieved by virtue of the s 40 requirement that buildings may not be constructed, altered, demolished or removed without consent. That is, a building consent is required, subject to certain exceptions recognised in s 41. Following application for a building consent the consent authority must grant one if satisfied that the provisions of the building code will be met: s 49.

[42] Finally, s 112 governs alterations to existing buildings. The interpretation section, s 7, provides that ‘alter’ includes the rebuild, re-erection and repair of a building. A consent authority may not grant a building consent to alter an existing building unless satisfied it will be compliant in relation to fire escape and disability access and facilities; and would otherwise comply with ‘the building code to at least the same extent as before the alteration’. Subsection (2) provides a discretion to relax these requirements where improvements to the fire escape and disability attributes of an altered building will result, albeit these do not meet the requirements of the building code.

[43] These various provisions of the Act indicate the statutory scheme. The building code governs building requirements in New Zealand. Compliance with the code is required in relation to new building work. Persons may not be required to achieve performance criteria above those prescribed in the code. These tenets support the conclusion earlier reached as to the interpretation of s 124(1)(c)(i). It would be anomalous if territorial authorities could as a matter of policy utilise s 124

notices to achieve a strengthening performance criteria higher than that used to define an earthquake-prone building.

Relief

[44] ICNZ’s statement of claim identified five passages in the Policy adopted by

the Council in 2010 as unlawful and invalid. These were:

Section 1.2.3 Significant alteration, for the purpose of the Policy, is:

(a) any building work that affects the structural performance of the building; or

(b) building work that has a value of more than $50,000 or 25% of the rateable value of the building, whichever is the higher, in any twelve month period.

Section 2.3.1 The Council will use the New Zealand Society of Earthquake Engineers’ (NZSEE’s) Recommendations as its preferred basis for defining technical requirements and criteria, including the level of strengthening required to reduce or remove the danger posed by each building. These Recommendations state that strengthening existing buildings to 67% of current Building Code requirements for structural performance is considered to reduce the risk posed by these buildings to a reasonable level, taking into account the economic feasibility of strengthening. The Recommendations are designed to be used in conjunction with AS/NZS 1170 Loadings Standard, NZS 3101 Concrete Structures Standard, NZS 3404 Steel Structures Standard and other materials Standards.

Section 2.3.3 As noted in section 2.3.1 of this Policy, the Council will determine the level of strengthening required to reduce or remove the danger on a building-by-building basis. It will be guided by the Recommendations of the New Zealand Society of Earthquake Engineers that 67% of Full Code Levels is a reasonable level of strengthening to reduce the risk posed by existing buildings.

Before exercising its powers under section 124, the Council will discuss options for action with owners, with a view to obtaining from the owner a mutually acceptable approach for dealing with the danger, leading to receipt of a formal proposal from the owner for strengthening or removal of the earthquake-prone building. In the event that discussions do not yield a mutually acceptable approach and proposal, the Council will serve a formal notice on the owner in accordance with section 124 of the Building Act

2004.

Section 2.3.5 When an application for a consent for a Significant Alteration to a building is received and the building may be earthquake- prone as defined in the Building Act 2004, evidence must be provided that the building has a collapse strength of over 33% of the current Building Code, or the building will be required to be strengthened as part of the

consent. The Council will follow sections 2.3.1 and 2.3.3 of this Policy in determining the level of strengthening required for each building.

Section 2.3.6 Buildings may suffer damage in a seismic event. Applications for a building consent for repairs will be required to ensure structural strength. The Council will follow sections 2.3.1 and 2.3.3 of this Policy in determining the level of strengthening required for each building.

If a building consent application for repairs is not made and/or the repair work is not completed within a timeframe that the Council considers reasonable the Council reserves the right to serve notice under section 124(1) of the Building Act 2004 to require the work to be done.

The first passage is definitional rather than objectionable in its own right.

[45] At the hearing, Mr Goddard sought relief in these terms:

(a) a declaration that the Council cannot require, as a condition of granting building consent for alterations (including repairs) to an existing building, that the building be strengthened to a level greater than before the alterations are carried out;

(b) a declaration that the Council cannot, by issuing a s 124 Notice, require a building owner to increase the seismic strength of the building beyond the point at which it is no longer earthquake-prone;

(c) a declaration that the Council’s Earthquake-Prone, Dangerous and Insanitary Buildings Policy 2010 is unlawful and invalid to the extent that it provides for the Council to;

(i) require, as a condition of granting building consent for alterations (including repairs) to an existing building, that the building be strengthened to a level greater than before the alterations are carried out;

(ii) require, by issuing a s 124 Notice that a building owner increase the seismic strength of the building beyond the point at which it is no longer earthquake-prone.

(d) a direction under s 4(5) of the Judicature Amendment Act 1972 that the Council reconsider the 2010 Policy in the light of the judgment of the Court.

[46] Mr Laing questioned the need for declaration (a), because he accepted that s 112 does not empower a Council to require a structural upgrade as part of alteration/repair work. That said, Mr Laing maintained that if alterations or repairs

necessitated the construction of new foundations (for example) this would be new building work, subject to s 17 and would require full compliance with the code.

[47] As to declaration (b) Mr Laing submitted a similar caveat was needed should new building work be necessary to achieve 34% of the NBS. Declarations (c)(i) and (c)(ii) attracted similar responses to those advanced in relation to declarations (a) and (b) respectively. Declaration (d) was characterised as unnecessary if declaration (b) was made in the terms suggested by counsel.

[48] In the course of argument counsel agreed there was merit in reserving the terms of relief to allow for consultation to be followed by the submission of a draft order. I consider this is an appropriate course. To my mind the relief sought by ICNZ was expansive given the relatively narrow ambit of the application. Nor do I think it is advisable to make a declaration relating to s 124 including reference to

‘the point at which (a building) is no longer earthquake-prone’, given my finding that there are two dimensions to that concept. A percentage of the NBS seems to be a clearer approach to identifying the limits of seismic strengthening. Nor am I sure that the caveat contended for by Mr Laing in relation to a declaration pertaining to building consents for alterations is appropriate, given the bounds of the argument and of this decision.

[49] I await receipt of the draft order.

Costs

[50] Mr Goddard sought costs on a 3B basis, including costs for two counsel and travel costs from Auckland and Wellington. Mr Laing did not respond in relation to this aspect. I am tentatively of the view that 3B costs are appropriate, but in case there is a contrary view, leave is reserved for a memorandum setting out the Council’s position to be filed.

Solicitors:

DJ Goddard QC: [e-mail]

TA Spinka: [e-mail]

DJS Laing/J A Cheyne: [e-mail]

TC Weston QC: [e-mail]

AD McBeath: [e-mail]

CA McVeigh QC: [e-mail]

ST Cottrell: [e-mail]

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[1] [2008] 1 NZLR 42 (SC)

[2] Building Act 2004 s 131(2).

[3] Canterbury Earthquake (Building Act) Order 2011