Photo supplied: BUCHANAN AND MARSHALL v TASMAN DISTRICT COUNCIL [2023] NZHC 53
By Frana Divich, partner, Heaney & Partners.
The High Court recently found that a ‘duty of care’ is owed by councils to pool owners to exercise reasonable skill and care when inspecting swimming pool fencing in a case called Buchanan & Ors v Tasman District Council [2023] NZHC 53.
In 2006 the Tasman District Council (the council) issued a code compliance certificate (CCC) for a high-end award-winning home centred around a swimming pool. The plaintiffs bought the house in 2008 when one of them became the chief executive of the Nelson City Council.
In 2009 and 2012 the council inspected the pool fencing and said that the pool complied with the Fencing of Swimming Pools Act 1987 (FOSPA).
In 2019 the plaintiffs put their home on the market. Seeing the house advertised for sale, the council inspected the pool again and this time it failed because the doors were not self-closing or alarmed and the east gate in the side fence did not self-close. The pool, and the gates and doors that lead to it, had not changed in any material way during the plaintiffs’ ownership. It was agreed at the trial that the pool fencing had never complied.
The plaintiffs took the property off the market and then challenged the council’s decision by seeking a formal determination from MBIE under section 177 of the Building Act. In the first half of 2020, the plaintiffs commissioned costings of remedial solutions.
On 16 December 2020, MBIE issued a draft determination. It found that the pool must, but did not, comply with the requirements to have self-locking or self-closing doors or to have a physical barrier that restricted access to the pool by unsupervised children under the age of five. It also determined that the pool fencing was not compliant with the current Building Code and Act, had not complied with the Building Code at the time of construction, did not comply with the FOSPA at the time of construction, and had not been exempted from the requirements of the FOSPA. This was not disputed during the trial.
In 2021 a building consent for remediation work was issued with the work done in 2022. The work passed its final inspection and was issued a CCC in June 2022. The plaintiffs said the required remediation destroyed the central design feature of the house by interposing a reflective box like structure into the central courtyard, ruining the character of the property.
The plaintiffs issued proceedings against the council and sued it for negligence, negligent misstatement and breach of statutory duty. They sought damages and a declaration.
The plaintiffs’ evidence during trial was that the whole experience drastically affected their emotional well-being.
It was accepted by the plaintiffs that they could not recover from the council for its breaches of duty in relation to the issuing of the building consent and the CCC because it was building work carried out more than 10 years before proceedings were issued and were thus, time barred. Instead they sued the council for the 2009 and 2012 pool inspections, arguing that these inspections had caused them to lose the opportunity to sue the council within time for negligently issuing the CCC. This had not been argued before and accordingly is deemed to be a novel duty of care.
The court had little difficulty in finding that a duty of care was owed to pool owners as councils are in the best position to act as an independent check on the compliance of pool design and pool owners rely on it. In finding that the council had been negligent and made negligent misstatements Justice Palmer said:
“Councils routinely bear liability for economic loss in relation to their role in regulating residential construction. Defects during the construction process of a residential home that are contrary to regulatory requirements may not be obvious to homeowners because they are defects that only become apparent after some time or because it is technically difficult to establish that they do not comply with the requirements. Either causes information asymmetries to the disadvantage of the homeowner.
When such defects are discovered, they can cause serious economic loss to whoever happens to be the property owner, by requiring expensive remediation which is then priced into the value of the property until it is undertaken… The regulatory regime of the Building Act recognises and requires that territorial authorities are in the best independent position to mitigate this risk, by approving design plans before construction, by inspecting construction as it occurs, and by certifying immediately after construction is finished that it complies with the relevant regulatory standards.
Accordingly, tort law assigns liability for negligent construction of residential houses to those best able to mitigate that risk: to the builders, architects, and the territorial authorities exercising their independent regulatory role.”
The council’s lawyers successfully argued that there was no statutory duty imposed and the 2009 pool inspection was time barred by the 10-year long stop. However, the 2012 inspection was found to be within time.
The court made a declaration that the council: “Negligently issued the building consent, negligently carried out the original inspection and issued the CCC, negligently carried out the 2009 and 2012 inspections, made negligent misstatements about the property’s compliance in the inspections, and caused loss” to the plaintiffs.
The court awarded damages of approximately $270,000 to compensate for the loss in value the property suffered, pool fencing work required, interest, valuation costs and damages for distress and humiliation plus legal costs. LG