Home | Databases | WorldLII | Search | Feedback High Court of New Zealand Decisions

Bates v Auckland Council [2021] NZHC 2558 (29 September 2021)

Last Updated: 1 December 2021

JUDGMENT OF GWYN J

This judgment was delivered by me on 29 September 2021 at 12.00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar Date:

Solicitors:

Cameron Flemming Associates Limited, Auckland MinterEllisonRuddWatts, Auckland

Wotton Kearney, Auckland

BATES v AUCKLAND COUNCIL [2021] NZHC 2558 [29 September 2021]

TABLE OF CONTENTS

Introduction [1]
The parties [4]
The claims [7]
Background [12]
Discovery the house is a leaky building [12]
Consent process for the remedial works [18]
The remedial works [25]
Discovery of current issues [37]
The evidence at trial [40]
Scene view [57]

THE CLAIM AGAINST THE COUNCIL [58]

Did the Council owe a duty of care to Mr Heaney and Ms Bates? [62]
Ms Bates’ position [67]
The Council’s position [70]
Discussion [80]

Did the Council breach its duty to Mr Heaney and Ms Bates? [86]

Particular 2 – calculations or other verification of subfloor compliance with

E2/AS1 [87]

Discussion [92]

Particular 1 – polythene sheet to be laid on subfloor [97] Discussion [106]

Particular 3 – calculations or other verification for O’Hagan amendment in July 2007 [111]

Discussion [120]

Particular 5 – vapour barrier [125]

Particular 4 – failure to identify that there was inadequate provision for subfloor ventilation provided for in drawings for the building consent and the amended building consent [127]

Discussion [130]

Particular 6 – alleged failure to observe during inspections that the proposed ventilation holes had not been installed [132]

Discussion [142]
“Superseded” [148]

Proposed ventilation holes not installed [156] Particular 7 – alleged failure to observe during inspections that there was inadequate provision for subfloor ventilation [166]

The issue of the Code of Compliance Certificate [169] Discussion [171]

Was the Council’s negligence a material cause of, or contributor to, the damage to the house? [172]

Discussion [177]

Defect/damage [177]
Causation [192]
Different course of action [197]
Other causes [199]

Conclusion on negligence claim against the Council [205]

THE CLAIM AGAINST O’HAGAN [206]

Did O’Hagan owe a duty of care to Mr Heaney and Ms Bates? [208]

Ms Bates’ position [208]
O’Hagan’s position [214]
Discussion [217]

Did O’Hagan breach its duty to Mr Heaney and Ms Bates? [218] The removal and replacement of the subfloor timbers [219] Discussion [221]
The issue of the PS4 [230]

Discussion [233]

Design advice and obtaining Council approval for Detail 12 in July 2007 [242] Obtaining the amended building consent (ABA-62145B) [245] Was O’Hagan’s negligence a material cause of, or contributor to, the damage to the house? [247]

Conclusion on negligence claim against O’Hagan [254]

Affirmative defences [255]
Third party claim [257]

Scope of remedial work [258]

Costs [259]

Introduction

• [1] David Heaney and Denese Bates had a house designed and built for them, at Matakana, north of Auckland, in 1987. While the house was initially to be a holiday home, Mr Heaney and Ms Bates intended that it would ultimately be their main residence.

• [2] In 2005 Mr Heaney and Ms Bates discovered that the house was a leaky home. They had remedial work done to the house in 2007-2009. In 2016, to their dismay, they discovered damage in the subfloor area of the house, caused by a serious moisture problem. They say it will cost in the order of $1.5 million to repair the house, and the Auckland Council (the Council) and O’Hagan Building Consultants Limited (O’Hagan) are liable to meet this cost.

• [3] The hearing commenced on 9 March 2020, but was adjourned part-heard on 23 March 2020 as a result of the COVID-19 Level 4 lockdown. It resumed on 21 September 2020. Sadly, in the intervening period Mr Heaney died. Ms Bates continued with the proceeding as the sole plaintiff.

The parties

• [4] The first defendant, the Council, is a statutory successor to the Rodney District Council, a territorial authority constituted under the provisions of the Local Government (Auckland Region) Reorganisation Order 1989. The Rodney District Council issued the building consents under which the remedial work to the house was carried out. For ease of reference, I refer to both the Auckland Council and the Rodney District Council as “the Council” throughout this judgment, as nothing turns on the distinction between the two entities.

• [5] The second defendant, O’Hagan, is a building consultancy firm. It was engaged by Ms Bates and Mr Heaney in 2007, initially to remove and replace affected timber in the course of the remedial work to the house.

• [6] Prior to trial, the parties to the proceeding also included various entities involved in the remedial work: Allied Exteriors Limited, an exterior finishes company;

Scribble Limited (Scribble), a provider of architectural services; Brackenridge Builders Limited (Brackenridge), the builders who initially carried out the remedial work; and Mr Colin Green, the builder who carried out the remainder of the remedial work. As matters have progressed, some of the issues have been resolved or settled. As at the commencement of the hearing, third party claims brought by both the Council and O’Hagan against Mr Green remained alive, and Mr Bates appeared as counsel for Mr Green. However, those claims were subsequently settled, and I granted Mr Bates leave to withdraw early in the proceeding.

The claims

• [7] Ms Bates’ primary claims against both the Council and O’Hagan are in negligence. There is no dispute that each of the Council and O’Hagan owed duties to Mr Heaney and Ms Bates to exercise reasonable skill and care in carrying out their respective roles - its functions under the Building Act 2004 in the case of the Council, and its contractual obligations in the case of O’Hagan.

• [8] What is in dispute is what those duties required of each of the Council and O’Hagan in the particular circumstances of this case and, following from that, whether the Council and/or O’Hagan breached any duties owed. If so, there is also dispute about whether that negligence was a material cause of, or contributor to, the damage to the house. Finally, if Ms Bates establishes liability, the scope of the remedial work required to the house must also be established.

• [9] The Council advances three affirmative defences against Ms Bates – contributory negligence under the Contributory Negligence Act 1947, failure by the plaintiff to mitigate her loss and damage, and betterment. Similarly, O’Hagan pleads contributory negligence on the part of Ms Bates. I will need to consider these matters only if I find that the relevant defendant is liable to Ms Bates.

• [10] In addition, the Council and O’Hagan each cross-claim against the other in the event they are found liable to Ms Bates. The Council and O’Hagan also maintain third party claims against Brackenridge, in the event they are found liable to the plaintiff.
• [11] The hearing concluded on the basis that this judgment will determine liability issues and, if necessary, the scope of the work required to rectify the damage to the house. The quantification of the cost of the remedial work will be deferred to a further hearing, if necessary.

Background

Discovery the house is a leaky building

• [12] The house that Mr Heaney and Ms Bates had designed and built for them is a two-storey timber-framed construction built on a concrete block perimeter foundation. The perimeter foundation supports the external timber-framed walls and a suspended timber floor. The cladding on the house was originally a James Hardie product commonly known as “Harditex”, a texture-coated fibre cement sheet fixed directly to the framing of the building.

• [13] Mr Heaney was the founding partner of a specialist litigation firm called Heaney & Co, which acted for many local authorities throughout New Zealand, advising and providing representation in relation to legal claims made against councils. A significant part of Mr Heaney’s work involved defending local authorities in leaky building cases.

• [14] In his professional role, Mr Heaney often encountered the question whether the Harditex product could perform if the product was installed in accordance with the James Hardie technical information. Mr Heaney believed that the house he and Ms Bates had built was a good example of a Harditex-clad house that did not leak.

• [15] Mr Heaney discussed the house with an expert on building construction, Mr Stephen Alexander, a building surveyor and principal of Alexander & Co Limited, a firm of building surveyors and dispute resolution consultants. Mr Alexander investigated the house in 2004 or 2005, as part of his general research into leaky buildings. Mr Alexander discovered that the house was a leaky home. He found that the cladding on the house did not have a cavity to drain any moisture which penetrated beyond the external face of the cladding. There was moisture ingress through the

cladding, particularly around the windows, which had caused significant damage to the timber frame of the house.

• [16] Significantly for the purposes of this proceeding, Mr Alexander had access to the subfloor space under the house during his investigations. He inspected the subfloor space for damage, but aside from an area affected by the leaks through the deck on the south-east elevation, he observed no signs of decay or problems affecting the subfloor of the house.

• [17] In June 2006, Mr Alexander, accompanied by another building surveyor, undertook further investigations of the house and again had access to the subfloor area of the house. Mr Alexander’s evidence at the hearing was that if there had been any deterioration of the subfloor timber, he could have seen it at the time of this inspection, and he would have taken a photograph and samples of the timber for analysis. He did not. Mr Alexander also said that, when viewed from the subfloor space, he could see the subfloor ventilation situation was “not satisfactory”, but there was no detriment in performance:

... Other than the limited area of wet and partially decayed timber due to the deck issue [arising from the deck being directly fixed to the wall], I observed no decay. The earth was not saturated, the sub-floor framing did not cause me sufficient concern to take extensive moisture metre readings, although I may have taken a few measurements. I did not observe mould or dampness on the sub-floor timber.

I observed no direct flow of water into the subfloor area.

Sub-floor ventilation present would not have complied with the Acceptable Solutions for complying with the Building Code or relevant standards at the time of my inspection but was adequate to prevent significant deterioration up to that point. The subfloor complied with the performance requirements [in] the Building Code because there had been no detriment in performance but the situation was not satisfactory and needed attention to avoid future deterioration.

Consent process for the remedial works

• [18] Mr Heaney and Ms Bates engaged Alexander & Co to design the required remedial work to the house.
• [19] On 8 September 2006, Alexander & Co, on behalf of Mr Heaney and Ms Bates, submitted an application to the Council for building consent for “Re-cladding and bathroom extension to existing residential house. Works include new paving around perimeter of the house and lowering of site levels.” The plans and specifications prepared by Alexander & Co were submitted with the application for building consent.

• [20] The plans prepared by Alexander & Co proposed that the house be completely re-clad. Relevant to the present proceedings, it also proposed improvements to the subfloor ventilation:

(a) The addition of 15 ventilation holes of 125 mm diameter around the perimeter of the house (the proposed ventilation holes), shown on plan A-03. It was Mr Alexander’s view that an “engineer”, by which he meant a person overseeing works, needed to have oversight of the best place to locate the proposed ventilation holes. The need for an “engineer” was noted on plan A-03.

(b) Subsoil drainage around the perimeter of the house.

(c) A gap under the timber decking at the south eastern end of the house to promote airflow.

(d) The laying of a polythene sheet on the ground under the house. This detail was not included on the plans, but was recorded in the scope of work document.

• [21] On 26 January 2007 the Council issued building consent ABA-62145 (the building consent), authorising the work contained in the Alexander & Co plans and specifications, which were stamped as approved by the Council. The building consent described the Building Work as “Re-cladding & bathroom extension to existing house”.

• [22] Tenders were called for the repairs based on the plans and specifications submitted to the Council. In January 2007 Mr Heaney arranged for Brackenridge to

carry out the work. Mr Heaney and Ms Bates did not have a written contract with Brackenridge.

• [23] After discussion with Mr Steve Brackenridge, Mr Heaney and Ms Bates decided that it would be unnecessary to contract Alexander & Co as a clerk of works to oversee the project, believing it would be more efficient to use Brackenridge’s clerk of works. This was despite the fact that it was Alexander & Co’s usual policy to insist on monitoring works that it had designed. Mr Alexander emailed Mr Heaney on 2 February 2007 recording a concern about Brackenridge, which by then had commenced the remedial work. Mr Alexander said:

The detail in question is shown 17 times in the plans. It is of considerable concern that the builder had not read the plans, thought he would do it the way he thought was right and then asked [the architect] rather than us about what the plans intended. I am concerned that Brackenridge will not have an understanding of this type of work and will not follow the plans.

• [24] From that point, Alexander & Co had no further involvement in the work.

The remedial works

• [25] Construction work began on the house in February 2007.

• [26] On 29 March 2007, Brackenridge applied, on behalf of Mr Heaney and Ms Bates, for a formal amendment to the building consent to change the cladding system on the house from the STO system specified by Alexander & Co to the Nu-Lite cladding system. That application was approved by the Council on 17 April 2007 as amendment ABA-62145A. It is common ground that the 17 April 2007 amendment is not relevant to the issues in the proceeding.

• [27] One of the conditions of the building consent was that a suitably qualified building surveyor supervise the removal and replacement of all timber showing any sign of decay, and treatment of timber within one metre of the decayed timber. That building surveyor was then to provide a Producer Statement Construction Review (PS4) to the Council,¹ certifying that the timber replacement had been carried out in

¹ Under the now-repealed Building Act 1991, a decision to issue a code compliance certificate turned on whether the territorial authority was satisfied, on reasonable grounds, as to compliance.

accordance with certain technical specifications, before the commencement of the re-cladding. Mr Heaney and Ms Bates contracted O’Hagan to carry out this work. Their instructions to O’Hagan were recorded in a series of emails, on 11 May 2007.

• [28] During the course of the remedial works, Mr Heaney wanted to make a change to Detail 12 of the consented works, relating to the connection between the patios and the adjacent walls. Mr Heaney’s evidence was that he wanted the cladding above the patios to finish close to the external ground level, for aesthetic purposes. On 16 July 2007 O’Hagan, on behalf of Mr Heaney and Ms Bates, provided the Council with details of these changes, as well as an unrelated change to the chimney flashing detail, based on plans prepared by Scribble. The plans were noted as approved on the same day.

• [29] In September 2007 Brackenridge instructed their sub-contractor to carry out work on the house, which in Mr Heaney’s view departed from the design prepared by Alexander & Co and approved by the Council. In particular, Brackenridge arranged for the plastering sub-contractor to install the Nu-Lite external cladding system without the reveals around the windows that were recorded on the original plans prepared by Alexander & Co. Brackenridge also arranged for the joinery sub-contractor to install PVC flashings in place of the aluminium flashings that were required in the plans and specifications prepared by Alexander & Co and approved by the Council.

• [30] Mr Heaney and Ms Bates learned of these changes in October 2007 and instructed Brackenridge to stop work until the issues could be resolved. A dispute then arose as to who should pay for the additional work necessary to achieve what had been originally specified.

The 1991 Act contemplated that such a decision might be on the basis of, among other things, producer statements, which were defined as meaning a statement supplied by or on behalf of an applicant for, or the holder of, a building consent that would be, or had been, carried out in accordance with certain technical specifications. The 2004 Act does not provide for the general use of producer statements, but there is nothing in the Act to prevent territorial authorities from relying on them and they continue to be regularly considered as part of the building consent process.

• [31] On 29 November 2007 O’Hagan applied, on behalf of Mr Heaney and Ms Bates, for a second formal amendment to the building consent to change the cladding from the Nu-Lite cladding system to Plaster Systems Thermaclad EIFS system. That application for amendment was approved by the Council in principle on 8 May 2008 and finally approved on 1 August 2008, as ABA-62145B (the amended building consent). Some 20 documents that formed part of the building consent, including plan A-03, were stamped “superseded” on 8 May 2008.

• [32] On 19 February 2008 Mr Heaney and Ms Bates cancelled their contract with Brackenridge. They subsequently issued proceedings against Brackenridge, which were settled by agreement dated 12 March 2010.

• [33] On 10 March 2008 Mr Heaney and Ms Bates contracted Mr Green to complete the work on the house. There was no formal contract with Mr Green, but Mr Heaney said he tried to set out in an email on 10 March 2008 what they were expecting Mr Green to attend to in completing the remedial works. That email did not include reference to installation of the proposed ventilation holes. Mr Green started the work on 17 March 2008. Mr Heaney did not recall providing Mr Green with a set of the plans and specifications.

• [34] Mr Green completed the remaining remedial work between March 2008 and November 2008. He continued to be involved at the property until after the Code of Compliance Certificate was issued by the Council in May 2009.

• [35] On 30 April 2009 O’Hagan issued a PS4 confirming “Replacement timber and certification of existing timber”. O’Hagan had carried out three timber inspections, on 24 May 2007, 30 May 2007 and 26 June 2007.

• [36] On 13 May 2009 the Council issued a Code of Compliance Certificate for the building work authorised under the building consent and the subsequent amendments to that consent, which recorded:

The Rodney District Council are satisfied, on reasonable grounds, that –

• The building work complies with the consent

Discovery of current issues

• [37] In 2016 Mr Heaney noticed that the floor in the downstairs bedroom of the house appeared spongy. In December 2016 Mr Heaney and Ms Bates applied for an assessor’s report under the Weathertight Homes Resolution Services Act 2006. Mr Alan Bolderson was appointed by the Weathertight Homes Resolution Services (WHRS) to investigate the claim. Mr Bolderson attended the property in February 2017 to carry out an investigation, and produced a report on 16 March 2017 setting out his findings (the WHRS report). The WHRS report itself was not part of the evidence before me.

• [38] Mr Bolderson concluded that there was a severe moisture problem in the subfloor areas of the house; there was insufficient ventilation, and openings in the foundation walls were allowing water to drain under the house. The damage observed by Mr Bolderson included damage to the framing timber in the south-east elevation of the house, which had been re-clad during the remedial work.

• [39] This proceeding was commenced in the High Court on 8 November 2017.

The evidence at trial

• [40] During the trial, some key facts relevant to the plaintiff’s claim were established about the remedial works:

(a) Five or six of 13 patio vents that had existed prior to the remedial works had been covered over during torch on membrane work around the tiled areas during the remedial work (the covered patio vents).

(b) The 15 proposed ventilation holes in plan A-03 of the Alexander & Co plans were never installed.

(c) The polythene sheet suggested by Alexander & Co was not installed.

(d) Part of an underdeck accessway that had functioned in effect as a ventilation opening prior to the remedial works was enclosed in the course of the remedial work.

• [41] Mr Heaney was candid in his acknowledgement that, because of his busy professional life combined with his visual impairment, he was not closely involved in the process for seeking consent for the remedial work and the carrying out of the work. He said he did not recall seeing the plans and specifications prepared by Alexander & Co before they were lodged for Council consent. He relied on Mr Alexander for that. He was also unaware of the correspondence, pre-consent, between Mr Alexander and the Council in relation to subfloor ventilation.

• [42] Mr Alexander gave evidence for the plaintiff. As noted above, Mr Alexander is a building surveyor and principal of Alexander & Co. Mr Alexander has considerable experience and expertise in the investigation of building defects and modes of failure, design and management of remedial work, and as an expert witness in building litigation. In this matter, he gave evidence as a witness of fact.

• [43] Mr Alexander’s evidence in cross-examination was that when he viewed the photographs taken after the remedial works he observed a very different subfloor condition from when he had investigated it in 2004/2005. He said that “something had changed that made things deteriorate, certainly more rapidly than historically.”

• [44] In cross-examination, Mr Alexander confirmed that through his plans he was proposing to increase the ventilation in the subfloor area, and there was nothing in his drawings that would propose to reduce any part of the building’s compliance with the Building Code.

• [45] Mr Alexander’s conclusion, under cross-examination, having seen the report of subsequent investigations of the house, was that the plans Alexander & Co had drawn had not been implemented in terms of the subfloor situation. His view was that one could not simply overlook those subfloor issues: “They were too significant, and the notes on the drawings were significant enough to be readily identifiable. So it

doesn’t seem to be a simple oversight to not do them.” He said it looked to him as though it was a conscious decision not to implement the plans.

• [46] Expert evidence for Ms Bates was given by Mr Trevor Jones, Mr John-Paul Biggelaar, and Mr Peter Jordan. Mr Jordan is an experienced building consultant and principal of Building Condition Assessments Limited. He worked in various roles for councils before establishing his own business in 1991. He has provided various services since then, including advice about the building regulation regime set up by the Building Act 1991 in relation to issuing consents, the inspection process, and the issuing of code compliance certificates. He has also investigated defective buildings under the Building Act 2004, and has previously been engaged by lawyers in leaky building litigation.

• [47] Mr Jones is a building surveyor and director of Maynard Marks Limited, a firm of building surveyors, project managers, quantity surveyors, and registered architects that has been involved with the remediation of a number of defective buildings. Mr Jones himself has inspected and reported on numerous leaky buildings, including more than 250 private dwellings and 40 multi-unit developments. On 13 February 2018 Mr Heaney and Ms Bates engaged Mr Jones to investigate the defects in the house and provide them with advice on remedial work required. Mr Jones carried out an examination of the house, including the subfloor area, on 23 February 2018. He made a second visit to the house on 24 May 2019 to inspect the subfloor ventilation provisions. Mr Jones observed damage in the subfloor timbers, and he took moisture readings and timber samples. As part of his remit to advise Mr Heaney and Ms Bates, Mr Jones also reviewed the relevant parts of the Council’s property file for the house. Mr Jones’ opinion was that there was inadequate subfloor ventilation.

• [48] Mr Jones’ evidence canvassed in some detail those parts of the Building Code most relevant to his evidence – cls E2 (External Moisture), B2 (Durability) and B1 (Structure). He particularly referred to Acceptable Solution E2/AS1 (E2/AS1).² Paragraph 10.2.4 states:

² Building Code clauses have acceptable solutions, which are documents that set out methods of complying with the Building Code. Anyone who complies exactly with the methods described in

The subfloor space of all suspended timber floors shall be ventilated. This requirement shall be met by providing openings in the foundation wall, at the rate of no less than 3500 mm² of net open area for every m² of floor area. The openings shall be as near as possible to the underside of plates and bearers.

• [49] Paragraph 10.2.5 of E2/AS1 states:

Ventilation openings shall be constructed by either one of the following methods, or by a combination of both methods:

(a) Create continuous gaps, of at least 20 mm wide, between baseboards around the entire perimeter of the building, and/or

(b) Install perimeter wall ventilators to give sufficient net open area. Ventilators shall be spaced regularly, commencing 750 mm from wall corners and at intervals no greater than 1.8 m to all sides of the building.

• [50] Paragraph 10.2.7 states:

Where the subfloor space cannot be adequately ventilated in accordance with Paragraph 10.2.6, the ground under a suspended timber floor shall be entirely covered with a vapour barrier...

• [51] Clause 10.2.7.1 provides minimum ventilation requirements to be constructed, together with the vapour barrier:

Even with a vapour barrier, ventilation openings shall:

(a) Have a net open area of no less than 700 mm² for every m² of floor area, and

(b) Be located to provide cross-flow air to all parts of the subfloor space.

• [52] In Mr Jones’ opinion, the subfloor area of the house following the remedial work was not constructed in a manner that prevents the accumulation of moisture in the subfloor, resulting in damage to the timber floor and wall framing. He says, “The damage as described by Alan Bolderson in the WHRS report ... can be expected to occur when there is inadequate provision for sub-floor ventilation in suspended timber floors.”

the acceptable solution for a Building Code clause is deemed to comply with the Building Code. However, as discussed below at [92], it is not mandatory to follow an acceptable solution. Alternative methods of construction that comply with the relevant Building Code requirements become alternative solutions. Acceptable Solution E2/AS1 is the main acceptable solution for meeting the requirements of E2 of the Building Code. (BRANZ, Building Code Compliance).

• [53] Mr Jones’ conclusion was that the as-built extent of subfloor ventilation was not enough to meet E2/AS1 or its predecessor, NZS 3604.³ He concluded, “as a result of the lack of sub-floor ventilation, building elements have been extensively damaged.”

• [54] After the joint experts’ conference, Mr Jones amended his original statement of evidence. In the amended portion of his evidence, Mr Jones observed that 13 openings in the perimeter foundation had been blocked and were not venting to the outside air. Mr Jones did not know how many of these provided subfloor ventilation when the house was constructed, but noted that they were now redundant. He assumed that at least six of these vents (the covered patio vents) were covered over during the remedial work.

• [55] Mr Patrick O’Hagan and Mr Geoffrey Pope gave evidence for O’Hagan.

• [56] The Council elected not to call evidence.

Scene view

• [57] With the parties’ agreement I visited the house, with counsel, at the commencement of the trial to obtain an orientation of the layout of the house.

THE CLAIM AGAINST THE COUNCIL

• [58] I deal first with the claims against the Council. In some respects, there is overlap in the factual issues relating to the claims against both and Council and O’Hagan, but I will come to that in the course of my analysis.

• [59] Ms Bates’ case – both the key aspects of the evidence and the submissions – shifted during the course of the trial. The final form of Ms Bates’ case was not clear until closing submissions. Unfortunately, that meant the defendants were left to attempt to answer a fluid case, including at the time of making their closing submissions. I have endeavoured to analyse each aspect of the plaintiff’s claim as it

³ NZS 3604 was an acceptable solution for Building Code cl B1. It was the predecessor to E2/AS1.

was pleaded, noting where the nature of the claim changed during trial, but the inconsistencies in the plaintiff’s case has made that difficult.

• [60] The plaintiff has pleaded two causes of action against the Council, in negligence and negligent misstatement, but acknowledged that the second cause of action adds nothing to the claim in negligence; to succeed in negligent misstatement Ms Bates would have to prove the elements of negligence and show reliance on the negligent misstatement. In relation to the negligence claim, Ms Bates says the Council breached its duty to:

(a) ensure it issued a building consent for building work that complied with the Building Code;

(b) ensure the building work would be undertaken so as to comply with the Building Code;

(c) ensure any building work undertaken would be in accordance with the building consent plans and specifications; and

(d) issue a Code of Compliance Certificate only if it was satisfied on reasonable grounds that the building work undertaken was in compliance with the Building Code and/or the building consent.

• [61] The issues relevant to the claim against the Council are:

(a) Did the Council owe a duty of care to Mr Heaney and Ms Bates? If so, what was the nature and scope of that duty?

(b) Did the Council breach its duty to Mr Heaney and Ms Bates, in relation to the grant of the building consent, inspection of the work, and the issue of a Code of Compliance Certificate? The particulars of the alleged breach of duty are:

(i) First, the Council failed to consider and require details of the polythene sheet to be laid on the subfloor beneath the dwelling

including membrane thickness and junctions with foundations before granting building consent.

(ii) Second, the Council failed to request and/or receive calculations or other verification to confirm whether the Alexander & Co proposed subfloor ventilation plan (if fully installed) would comply with the ventilation and air flow requirements set out in E2/AS1 and NZS 3604.

(iii) Third, the Council failed to request and/or receive calculations or other verification that the amended plan submitted by O’Hagan on 16 July 2007 would comply with the Building Code.

(iv) Fourth, the Council failed to identify that there was inadequate provision shown on drawings for subfloor ventilation in both the original Alexander & Co building consent ABA-62145 and the Scribble drawings with the amended building consent.

(v) Fifth, the Council failed to specify a vapour barrier as part of the building consent.

(vi) Sixth, the Council failed to observe during its inspections that the proposed ventilation holes provided for in the consented plans had not been installed.

(vii) Seventh, the Council failed to observe during its inspections that there was inadequate provision for subfloor ventilation.

(viii) Eighth, the Council issued the code compliance certificate when it did not have reasonable grounds to be satisfied that the building work complied with the requirements of the building consent and/or the Building Code.

(c) If the Council did breach its duty, was the Council’s negligence a material cause of, or contributor to, the damage to the house?

(d) If yes, what is the scope of the remedial work required?

Did the Council owe a duty of care to Mr Heaney and Ms Bates?

• [62] The Council does not dispute that it owed Mr Heaney and Ms Bates a duty to take reasonable care in carrying out its building control functions under the Building Act 2004, including in issuing the building consent, issuing amendments to the building consent, carrying out inspections, and issuing a Code of Compliance Certificate.⁴

• [63] The Council also agrees that a duty of care imposed on a council in relation to its building control functions under the Building Act 2004, “marches in step” with its statutory functions.⁵ In Sunset Terraces, Justice Heath described the duty to take reasonable care in performing the three regulatory functions at issue:⁶

The obligation of the Council can be no higher than expressed in statute itself; namely, to be satisfied on all reasonable grounds that a building consent should issue; to take reasonable steps in carrying out inspections and to be satisfied on reasonable grounds that code compliance should be certified.

• [64] An assessment of the scope of the duty therefore requires an assessment of the relevant provisions of the Building Act 2004. In Body Corporate 160361 v BC 2004 Ltd and BC 2009 Ltd, Whata J usefully summarised the Council’s obligations under the Building Act 2004, and I adopt his summary:⁷

[142] The Council’s common law duty of care is informed by legislative policy. For present purposes, I do not consider that the obligations under the Building Act 2004 are materially different from the obligations under the 1991 Act:⁸

⁴ Invercargill City Council v Hamlin [1994] 3 NZLR 513 (PC).

⁵ Body Corporate No 207624 v North Shore City Council [2012] NZSC 83, [2013] 2 NZLR 297 [Spencer on Byron] at [71] and [194].

⁶ Body Corporate 188529 v North Shore City Council [2008] NZHC 2300; [2008] 3 NZLR 479 (HC) [Sunset Terraces] at [220]-[221].

⁷ Body Corporate 160361 v BC 2004 Ltd [2015] NZHC 1803.

⁸ Spencer on Byron, above n 5, at [217].

(a) The purpose of the Act remains the same, namely to bring about safe and healthy buildings.⁹

(b) The role of building consent authorities is to issue building consents, inspect building work for which it has granted consent, issue notices to fix and issue Code Compliance Certificates.¹⁰

(c) All building work must comply with the building code to the extent required by the Act, whether or not a building consent is required in respect of building work.¹¹

(d) A person must not carry out any building work (including construction, alteration, demolition or removal of a building) except in accordance with a building consent.¹²

(e) Before granting a building consent, the building consent authority must be satisfied on reasonable grounds that the provisions of the building code would be met if the building work were properly completed in accordance with the plans and specifications that accompanied the application for consent.¹³

(f) Every building consent is subject to the condition that the building consent authority is entitled during normal working hours to inspect building work and inspection means taking all reasonable steps to ensure that the building work is being carried out in accordance with the building consent.¹⁴

(g) The owner of the building must apply for and the building consent authority must issue a Code Compliance Certificate within 20 working days¹⁵ if it is satisfied on reasonable grounds that the building work complies with the building consent.¹⁶

(h) The building consent authority may issue a notice to fix to a person carrying out or supervising the building work if there are reasonable grounds they are contravening or failing to comply with the Act.¹⁷

• [65] Where Ms Bates and the Council disagree is as to how those statutory requirements apply in this case.

⁹ At [171]; see the Building Act 2004, s 3 and the Building Act 1991, s 6(1)(a).

¹⁰ Building Act 2004, s 12.

¹¹ Section 16.

¹² Section 40.

¹³ Section 49.

¹⁴ Sections 90(2) and (3); and s 222.

¹⁵ Section 93(1)(a), but note the building consent authority may request further information – s 93(4).

¹⁶ Section 94(1)(a).

¹⁷ Section 163.

• [66] An essential question is: what were the building works for which consent was sought by Mr Heaney and Ms Bates and granted by the Council? The consented works are set out in the plans and specifications (including the amended plans and specifications) for which consent was sought by them.. The scope of the consented works is pivotal to the Council’s duty of care. This issue also requires consideration of s 112 of the Act.

Ms Bates’ position

• [67] Ms Bates says that the building work related, in part, to the subfloor of the house because:

(a) the installation of the proposed ventilation holes was for the purpose of improving the subfloor ventilation;

(b) some of the decayed and damaged timber to be removed was in the subfloor; and

(c) some of the cladding and damaged framing to be removed was within the subfloor.

• [68] In order to issue a building consent for that work, the Council had to be satisfied that, if it were completed in accordance with the plans and specifications, it would comply with the performance requirements of the Building Code. The Building Code included the specific requirements in cl E2 relating to subfloor moisture.

• [69] The essence of Ms Bates’ argument is that, because of that connection to the subfloor, in carrying out its Building Act functions the Council had a duty to ensure that when the building works were complete, the subfloor area would comply with the Building Code. Ms Bates says that s 112 does not materially change the scope of that duty owed by the Council. Ms Bates’ case is that the subfloor area is not in accordance with E2/AS1 (and/or the Building Code).

The Council’s position

• [70] The Council rejects Ms Bates’ assertions as both wrong at law and contrary to the plaintiff’s own evidence. It says, first, that E2/AS1 was not in existence at the relevant time; at that time E2/AS1’s relevant predecessor was NZS 3604. More importantly, whatever the relevant acceptable solution, it was not mandatory; what was required was that the building work perform in accordance with the Building Code, it did not matter how the building work complied.

• [71] Second, the Council says the relevant provisions of the Building Act 2004 require only that the proposed new building work comply with the Building Code; the performance of the existing building under the Building Code must not be worsened.¹⁸ It is not the Council’s obligation, nor does it have the power, to determine what other work, in addition to the proposed new building work, might be required to the house. Nor can it require an upgrade to existing parts of the house, except in limited circumstances.¹⁹ The Council’s role is to be satisfied that:

(a) the proposed (new) work would be compliant with the Building Code, if done properly; and

(b) the existing building’s level of compliance with the Building Code will not worsen.

• [72] The Council says it is for Ms Bates to establish that the new work for which the building consent was sought (the consented works) did not in some way comply with the Building Code.

• [73] Here, the proposed new work was for a re-clad, a bathroom extension, and the addition of 15 ventilation holes to be drilled into the existing perimeter foundations of the house. There is no suggestion in the evidence that any of that proposed new building work would not, if built in accordance with the plans and specifications, perform in accordance with the Building Code.

¹⁸ Sections 17, 49 and 112.

¹⁹ For example, fire egress and disability access (s 112) and if the building is dangerous or unsanitary (s 122).

• [74] The building consents, and the ambit of the work covered by them, were:

(a) The building consent issued on 26 January 2007 (ABA-62145): the application included the following description of the building work – “Re-cladding and bathroom extension to existing residential house. Works include new paving around perimeter of the house and lowering of site levels.” The consent itself described the building work as “Re-cladding & bathroom extension to existing house”.

(b) The first amendment to the building consent, issued on 17 April 2007 (ABA-62145A): the application to amend the consent described the work as “change plaster coat from STO to Nulite cladding”. The consent replicated the description of work from the original consent – “Re-cladding & bathroom extension to existing house”.

(c) The amended building consent issued in August 2008 (ABA-62145B): the application describes the amendment as “Change of cladding from Nu-Lite to Plaster Systems Thermaclad EIFS System”.

• [75] The Council says the subfloor area was pre-existing; it was not constructed under any of ABA-62145, ABA-62145A or ABA-62145B.

• [76] The Council accepts that the purpose of the proposed ventilation holes contained in plan A-03 was to increase the pre-existing subfloor ventilation, but says there is no suggestion from Ms Bates that the proposed ventilation holes would worsen the existing building’s code compliance; nor was there any suggestion that the creation of the proposed ventilation holes could not be done in a way that would be Code-compliant. But that, the Council says, is a fundamentally different matter to imposing a requirement to bring the existing subfloor area, constructed some 20 years earlier, to current Code-compliance. That, it says, is the effect of Ms Bates’ argument that because the creation of the proposed ventilation holes touch or concern the subfloor ventilation, then that somehow means that the subfloor itself must be brought up to Code.
• [77] The Council accepts that the consented works included the potential for replacement of decayed timber, including decayed timber within the subfloor area. However, it rejects Ms Bates’ contention that the Council was asked to issue a building consent for building work which involved replacing all decayed timber within the structure of the house including timber within the subfloor space adversely affected by moisture ingress.

• [78] The Council’s submission is that the building consent did not identify any specific timber to be replaced, but rather provided that if decayed timber was discovered during the carrying out of the re-cladding works under the building consent, then it was to be dealt with in the manner stated in the conditions of the consent:

Repairs of Timber affected by Decay

All timber showing any sign of decay is to be removed from the building and replaced by treated timber as required by NZS 3602. Timber within one metre of the decayed timber and accessible timber is to be treated with an appropriate preservative such as “Osmose Framesaver” or “Metalex”.

• [79] The Council says that Ms Bates conflates the proposed new building work (specifically, drilling the proposed ventilation holes) with the existing building. The fact that the new work touches on or concerns part of the existing building does not mean that the Council was required to be satisfied that, following the completion of the consented works, the pre-existing floor area would comply with the airflow requirements set out in E2/AS1.

Discussion

• [80] Section 112 of the Building Act 2004 provides:

112 Alterations to existing buildings

(1) A building consent authority must not grant a building consent for the alteration of an existing building, or part of an existing building, unless the building consent authority is satisfied that, after the alteration,—

(a) the building will comply, as nearly as is reasonably practicable, with the provisions of the building code that relate to—

(i) means of escape from fire; and

(ii) access and facilities for persons with disabilities (if this is a requirement in terms of section 118); and

(b) the building will,—

(i) if it complied with the other provisions of the building code immediately before the building work began, continue to comply with those provisions; or

(ii) if it did not comply with the other provisions of the building code immediately before the building work began, continue to comply at least to the same extent as it did then comply.

(2) Despite subsection (1), a territorial authority may, by written notice to the owner of a building, allow the alteration of an existing building, or part of an existing building, without the building complying with provisions of the building code specified by the territorial authority if the territorial authority is satisfied that,—

(a) if the building were required to comply with the relevant provisions of the building code, the alteration would not take place; and

(b) the alteration will result in improvements to attributes of the building that relate to—

(i) means of escape from fire; or

(ii) access and facilities for persons with disabilities; and

(c) the improvements referred to in paragraph (b) outweigh any detriment that is likely to arise as a result of the building not complying with the relevant provisions of the building code.

(3) This section is subject to section 133AT.

• [81] There are very few decisions considering the effect of s 112. Ms Bates cites Wheeldon v Body Corporate 342525, where the High Court noted that s 112 does not detract from the s 17 requirement that all building work must comply with the Building Code and, after alterations, the whole building must comply with the Building Code to the extent specified by the Building Code.²⁰ While that statement in Wheeldon is correct on its face, it is somewhat circular. Fitzgerald v IAG New Zealand Ltd contains a more helpful and direct statement of the effect of s 112:²¹

[The Building Act] only requires the aspects of the house that are being repaired to be brought up to current compliance levels. Elements that are not repaired may be left at the same level of compliance as they were originally.

²⁰ Wheeldon v Body Corporate 342525 [2015] NZHC 884, (2015) 16 NZCPR 829 at [159]- [160];

cited in Andrews Property Services Ltd v Body Corporate 160361 [2016] NZCA 644, [2017] 2 NZLR 772 at [112].

²¹ Fitzgerald v IAG New Zealand Ltd [2018] NZHC 3447 at [50].

• [82] The Ministry of Business, Innovation and Employment (MBIE), the agency responsible for the Building Act 2004 and associated regulations, has published a guide to altering an existing building under the legislative regime, which engages s 112. In the relevant part, that guide says, under “Meeting the requirements for altering existing buildings”:

Building consent applicants need to ensure their building consent application includes all the required information to demonstrate:

• that compliance with other Building Code clauses is no less than what it was prior to the alteration

• compliance ‘as nearly as is reasonably practicable’ with the Building Code for fire and accessibility (if applicable), including evidence of weighing up the sacrifices and benefits of achieving full compliance. This evidence is best provided in a thorough report

• that in the case of a substantial alteration to an earthquake-prone building, the alteration includes the necessary seismic work so the building is no longer earthquake prone

• that the proposed alteration (ie new building work) complies with the Building Code.

• [83] A number of MBIE Determinations, made under Part 3, subpart 1 of the Building Act 2004, apply a similar interpretation of s 112.²²

• [84] Section 112 provides that a building consent must not be granted for the alteration of part of an existing building unless the overall building, following the alteration, will continue to comply with the Building Code to at least the same extent as before the alteration. That means that the proposed alterations must make the existing building no worse (subject to the limited exceptions referred to in s 112 itself). I agree with the Council that there is no obligation – either for the owner to do, or for a council to require – to improve an existing building’s performance against the Building Code, even where the existing building does not comply with the Building Code pre-works.

• [85] What that means in this case is considered below in the context of each particular alleged breach of the Council’s duty.

²² MBIE Determination 2012-023; MBIE Determination 2014-058; MBIE Determination 2018-061.

Did the Council breach its duty to Mr Heaney and Ms Bates?

• [86] Ms Bates alleges breaches of the duty owed by the Council in respect of each phase of the Council’s functions – the grant of the building consent, inspection of the building work, and issue of the Code of Compliance Certificate. The statement of claim sets out seven particulars of those alleged breaches. I have considered the particulars in the order in which the Council addressed them.

Particular 2 – calculations or other verification of subfloor compliance with E2/AS1

• [87] Particular 2 of the statement of claim alleges the Council:

Failed to request and/or receive calculations or other verification to confirm whether the Alexander proposed subfloor ventilation plan (if fully installed) would comply with the ventilation and air flow requirements set out in E2/AS1 and NZS3604.

• [88] The Building Act 2004 requires that before issuing a building consent, the Council must be satisfied on reasonable grounds that the provisions of the Building Code would be met if the building work were properly completed in accordance with the plans and specifications that accompanied the application for consent.²³

• [89] Ms Bates’ case is that the application for consent included extensive building work within the subfloor of the house, including: upgrading the subfloor ventilation with the installation of the new ventilation shown on plan A-03; removing all damaged and decayed timber which formed part of the subfloor; and removing the cladding and all damaged framing, including component parts of the subfloor in the south-eastern corner of the house. Mr Jones’ opinion was that there was inadequate consideration of subfloor ventilation at the time the building consent was issued.

• [90] The Council says, first, that E2/AS1 is not mandatory. What is required is compliance with the Building Code, not an acceptable solution per se. Second, Mr Alexander’s evidence for Ms Bates was that as at 2005/06 the subfloor of the house was performing in accordance with the Building Code. His plans for the remedial

²³ Building Act 2004, s 49.

works would not have reduced that compliance. Finally, there is no evidence from Ms Bates of any industry-wide practice of providing such calculations.

• [91] The Council also submitted that the allegation is in direct contradiction to Mr Jones’ amended evidence for Ms Bates that the subfloor conditions are attributable to the covered patio vents, which were not part of any of the consented works. I consider that issue below, when I come to consider causation.

Discussion

• [92] Both Mr Alexander and Mr Jones, in their evidence for Ms Bates, accepted that E2/AS1 is not mandatory. The house was built before E2/AS1 existed; at that time NZS 3604 would have been the relevant standard. In terms of subfloor ventilation, NZS3604 was almost identical to the later Building Code. Regardless, the essence of what is required is that the building work must perform in accordance with the Building Code, rather than in accordance with an acceptable solution; it does not matter how the building work complies. Work undertaken in accordance with an acceptable solution is simply deemed to comply with the Building Code; whereas work not undertaken in accordance with an acceptable solution, but which nonetheless complies with the Building Code, is known as an alternative solution.

• [93] The plaintiff’s own evidence was that, prior to the consented remedial works, the subfloor area of the house was compliant with the Building Code. When Mr Alexander investigated the subfloor in 2004 and 2006 he found no signs of deterioration – there was no decay, no mould or dampness on the subfloor timber, and the earth in the subfloor was not saturated. He concluded that it had, from its construction in 1987, performed in accordance with the Building Code.

• [94] Mr Alexander confirmed that there was nothing in his proposed plans for the remedial work that would have reduced any part of the building’s compliance with cl E2 of the Building Code. His plan to add the proposed ventilation holes would improve the ventilation in the existing subfloor area.

• [95] The specific allegation by the plaintiff is of a failure by the Council to request and/or receive calculations or other verification to confirm whether the Alexander &

Co proposed subfloor ventilation plan (if fully installed) would comply with the ventilation and airflow requirements set out in E2/AS1 and NZS 3604. There was no evidence before the Court that this was an industry-wide, or even a common, practice. Mr Alexander said that it was never his practice.

• [96] I conclude that this aspect of the claim cannot succeed.

Particular 1 – polythene sheet to be laid on subfloor

• [97] Particular 1 of the statement of claim alleges the Council:

Failed to consider and require details of the polythene sheet to be laid on the subfloor ground beneath the dwelling including membrane thickness and junctions with foundations before granting building consent.

• [98] This claim relates to an exchange between the Council and Alexander & Co, prior to the Council issuing the building consent. On 2 October 2006 the Council wrote to Alexander & Co seeking further information in respect of the application for consent, including: “Sheet A-29 details sub floor ventilation requirement, provide details to comply with NZS 3604: 1999 s 6.14 or specific technical information.”

• [99] Alexander & Co replied on 7 November 2006 saying in relation to this query:

Sub-floor ventilation of the existing house is insufficient mainly due to the lack of cross ventilation and the high ground levels around significant areas of the house. We have improved the sub-floor ventilation by providing vents in all possible areas and therefore providing cross ventilation that is currently absent. As an additional precaution we are willing to specify a polythene sheet to be laid on the sub-floor ground beneath the house to mitigate any concern with inadequate sub-floor ventilation. Locations of sub-floor ventilation are shown on page A03.

• [100] The Council annotated this response: “Good idea”.

• [101] The plans and specifications as approved by the Council when it issued the building consent on 25 January 2007 were not amended to require that a polythene sheet be laid on the subfloor ground. Mr Alexander’s evidence was that the polythene sheet was not added to the drawings, but to the scope of work that was part of the builder’s specification.
• [102] Mr Jones said he did not know why the suggestion made by Alexander & Co on 7 November 2006 that a polythene sheet be laid on the subfloor ground underneath the house was not incorporated into the building consent documentation, nor required in any conditions to the building consent.

• [103] Mr Jones also said:

... If the original ventilation provisions are considered in combination with the proposed new 15 openings in the Alexander design, I assess that the ventilation requirements of E2/AS1 and NZS3604 would likely have been met.

If a vapour barrier had been specified, even without the original openings being known of or taken into consideration, the Alexander proposed new 15 ventilation holes would likely have complied with the requirements of E2/AS1.

• [104] Mr Jordan said that the Council ought to have required that details of the polythene sheet be incorporated into the plans and specifications when it issued the consent, in order to be satisfied that the proposed building work would comply with the Building Code.

• [105] In response, the Council says that the polythene sheet, although suggested by Mr Alexander, was not specified. No evidence was led by Ms Bates on that issue. The Council does not have authority to impose additional requirements on building work over and above those contained in the Building Code.

Discussion

• [106] The application for building consent, and the consented plans and specifications, did not include provision for laying a polythene sheet in the subfloor. Mr Heaney acknowledged that the polythene sheet was specified in the builder’s specification only, not in the plans and specifications that went to the Council for consent.

• [107] While Mr Alexander did specify laying of a polythene sheet as part of the scope of works included in the builder’s specification, his evidence was that nothing raised by the Council at that point had caused him to think he had got anything wrong in his proposed plans. No evidence was led as to why Mr Heaney and Ms Bates, or their

builders, did not lay the polythene sheet under the house during the course of the remedial works (it appears they did so subsequently, in February 2019).

• [108] I agree with the Council that, notwithstanding its notation that a polythene sheet was a “good idea”, in the absence of the polythene sheet being included in the plans and specifications for which consent was sought, the Council did not have authority to impose additional requirements in addition to those required in the Building Code. I therefore find the Council was not negligent in failing to require specification of a polythene sheet before granting the building consent.

• [109] I also note that by the stage of closing submissions Ms Bates conceded that the alleged negligence of the Council in relation to issue of the building consent would not have caused any loss, if it were the only negligent act on the part of the Council. She says if the proposed ventilation holes shown on the Alexander & Co plans had been installed as required, the total subfloor ventilation of the house would have been sufficient to meet the requirements of NZS 3604. She says, relying on Mr Jones’ evidence, that it is more likely than not that the damage would not have occurred had the proposed ventilation holes shown on the plans been installed.

• [110] This aspect of the claim cannot succeed.

Particular 3 – calculations or other verification for O’Hagan amendment in July 2007

• [111] Particular 3 of the statement of claim alleges the Council:

Failed to request and/or receive calculations or other verification that the amended plan submitted by O’Hagan Building Consultants Limited (16 July 2007) would comply with the Building Code.

• [112] This claim relates to the change to the plans sought by O’Hagan in July 2007. Mr Heaney’s evidence was that he wanted the cladding above the patios to finish close to the external ground level, for aesthetic purposes. He contacted Mr Pope at O’Hagan to discuss a possible solution whereby waterproofing would be installed under some of the tiles, extending up the wall beneath the cladding. Mr Heaney asked Mr Pope to provide a sketch of the solution, which Mr Heaney then emailed to the Council.

Mr Pope and Mr Borich (an employee of Brackenridge) then met with the Council on site on 6 July 2007 to discuss the solution.

• [113] After the meeting Mr Pope wrote to the Council, on 16 July 2007, in the following terms:

We have replaced detail 26, page A36 with a new chimney flashing detail provided by Scribble Ltd. We have also replaced detail 12 page 24 with Scribble Ltd details as per attached.

The crossflow ventilation as proposed on original drawings should now be deleted as the torchon membrane will be covering this area. Crossflow ventilation should be created from the north and south end of the dwelling and from under timber deck as per original drawings A03 proposed ventilation.

• [114] As noted above, five or six of 13 existing patio vents that had existed prior to 2007 were covered over during the torch on membrane work around the tiled areas during the remedial work. It appears that they were covered over, presumably by Brackenridge, when executing the O’Hagan/Scribble design to meet Mr Heaney’s desire to allow the cladding to be brought down to the level of the patios.

• [115] Mr Jones notes that the 16 July 2007 letter from O’Hagan to the Council was not followed up with updated plans to confirm the intended change to the subfloor ventilation. Nor were calculations provided to confirm whether the proposed ventilation would comply with the Building Code.

• [116] It is that letter and the attached Scribble plan that Ms Bates says required the Council to seek from O’Hagan calculations or other verification that the amended plan would comply with the Building Code. This particular of the claim against the Council must be seen in the context of the claim pleaded against O’Hagan which refers to the changes proposed on 17 July 2007 as “altering the sub-floor ventilation”. The calculations or verification sought relate to those alleged alterations to the subfloor ventilation. Ms Bates says the consequence of adopting the detail provided by O’Hagan was to cover over existing ventilation holes on the patio.

• [117] Mr Jordan said that a prudent council would have required calculations and/or appropriate verification that the subfloor ventilation proposed would comply with the Building Code, before it approved the amended details.
• [118] As with the claim at particular 2, the Council points to the absence of any evidence of an industry-wide practice of requiring such calculations. It refers to the evidence from Mr Alexander, who said it was not his practice.

• [119] The Council also refers to the plaintiff’s own evidence, through Mr Jones, that the subfloor condition is attributable to the covered patio vents. Mr Jones accepted in cross-examination that there was no evidence to suggest that the 16 July 2007 letter and attached Scribble detail concerned those pre-existing vents. Mr Jones also accepted that the covering of the patio vents was not part of the consented plans for the remedial work. He accepted in cross-examination that the torch on membrane work referred to in the 16 July 2007 letter could have been executed without covering the existing patio vents, because it would be possible to dress the membrane into the vents rather than taking the membrane over the top. On Mr Jones’ evidence, the Council says, there was no proposed change to the subfloor ventilation and therefore no obligation on the Council to seek further information.

Discussion

• [120] While a claim about the reference to ventilation in the 16 July 2007 letter had previously formed part of Ms Bates’ claim against O’Hagan, that was not the case by the time of trial. In closing, Mr Rainey, counsel for Ms Bates, said the only remaining relevance of this particular aspect of the claim against the Council was in respect of the Council’s assertion that the requirement for the proposed ventilation holes shown on Alexander & Co’s plan A-03 was “superseded” when the amended building consent was approved in 2008. Ms Bates, as I will come to discuss, does not accept that assertion and says the requirement to include the proposed ventilation holes remained. I consider that issue in relation to particular 6 of the claim discussed below, but for completeness at this stage I confirm my view that the 16 July 2007 letter did not specify or require removal of the proposed ventilation holes, and I do not accept that the effect of the 16 July letter was to specify or require the covering of the patio vents.

• [121] The O’Hagan letter of 16 July was, on its face, somewhat ambiguous. The first sentence referred to cross-flow ventilation “as proposed on original drawings” being deleted. One might take that as a reference to the Alexander & Co drawings.

However, the second sentence refers to creating cross-flow ventilation “as per original drawings A-03 proposed ventilation”, which suggests otherwise.

• [122] Mr Pope, the author of the letter, said it was not intended to mean the deletion of any existing ventilation, and the resulting approved change to Detail 12 made no changes to drawing A-03 in terms of the proposed ventilation holes. As I have noted, Mr Jones accepted that was so. Mr Jordan accepted under cross-examination that where the 16 July 2007 letter said, “created from the north and south end of the dwelling and from under the timber deck as per original drawings A-03 proposed ventilation”, it was referring to the proposed ventilation holes. He too agreed that Detail 12 drawn by Scribble, and submitted by O’Hagan, did not impact on the proposed ventilation holes.

• [123] In light of Ms Bates’ revised position I conclude that I am not required to reach a view on the claim at particular 3. If I had been, I would have concluded (as for the claim at particular 2) that in the absence of evidence that requirement of such calculations was a widespread or usual practice, the Council was not negligent in not seeking such calculations before issuing its consent to the amendment.

• [124] In any event, as the Council flagged, Mr Jones’ evidence that the subfloor condition was attributable to the covered patio vents, together with his acceptance that the reference to crossflow ventilation “as proposed on the original drawings” was a reference to plan A-03, would have caused difficulties for Ms Bates in establishing causation in relation to this particular of the claim.

Particular 5 – vapour barrier

• [125] Particular 5 of the statement of claim alleges the Council:

Failed to specify a vapour barrier as part of the building consent.

• [126] It is not clear how this particular of the claim differs from particular 1, which is discussed above. As the Council notes, it has no “specification” role under the Building Act 2004. I reach the same conclusion as in relation to particular 1.

Particular 4 – failure to identify that there was inadequate provision for subfloor ventilation provided for in drawings for the building consent and the amended building consent

• [127] Particular 4 of the statement of claim alleges the Council:

Failed to identify that there was inadequate provision shown on drawings for subfloor ventilation in both the original Alexander building consent ABA-62145 and the amended Scribble drawings with amended building consent ABA62145B.

• [128] The claim at particulars 2 and 3 was that the Council ought to have sought calculations or other verification in order to be sure that the original consent application, and the changes by O’Hagan in 2007, would comply with the relevant acceptable solution or the Building Code. Particular 4 is a related but broader claim.

• [129] Mr Jones was critical of the fact that no calculations were provided or required to confirm whether the Alexander & Co proposed ventilation plan would comply with the ventilation and airflow requirements in E2/AS1 and NZS 3604. Mr Jones did his own calculations and concluded that the proposed ventilation holes alone would not comply with E2/AS1 and NZS 3604. However, he concluded that the proposed ventilation holes together with original ventilation provisions would likely have been sufficient to meet the requirements of E2/AS1 and NZS 3604. Alternatively, the proposed ventilation holes together with the polythene sheet would have met the requirements.

Discussion

• [130] I accept the Council’s submission that this is in effect an allegation that the Council ought to have required that the existing subfloor area was upgraded as part of the proposed (new) building work. I agree that the claim is misconceived because:

(a) It is premised on E2/AS1 being mandatory, which it is not.

(b) Mr Alexander’s evidence for Ms Bates was that the subfloor area of the existing building had performed in accordance with the Building Code, notwithstanding it was constructed other than in accordance with E2/AS1.

(c) As I have already found, the Council’s obligations are different in respect of the proposed (new) building work and the existing building. The obligation under ss 17 and 49 of the Building Act 2004 is to consider whether the proposed building work detailed in the building consent application complies with the Building Code; the proposed work, as an alteration, does not need to bring the whole building into compliance with the Building Code. The Council need only consider whether the building as a whole will continue to comply with the other provisions of the Building Code to at least the same extent as prior to the alteration. There was no evidence that anything in the Alexander & Co plans, if implemented correctly, would have worsened the performance of the existing building.

(d) Finally, I note that this aspect of the claim is inconsistent with Mr Jones’ amended evidence during the trial that the subfloor conditions can be attributed to the covered patio vents (which were not subject to any building consent), not anything in the consented plans or amended consented plans.

• [131] For those reasons, I conclude that the Council was not negligent in respect of particular 4.

Particular 6 – alleged failure to observe during inspections that the proposed ventilation holes had not been installed

• [132] Particulars 6 and 7 of the claim relate to the Council’s inspection obligations.

• [133] Particular 6 of the statement of claim alleges the Council:

Failed to observe that the ventilation holes provided in the consented plans had not been installed during its inspections.

• [134] Alexander & Co’s plans included, at plan A-03, the proposed ventilation holes
• – provision for the installation of 15 new ventilation holes of 125 mm diameter, opening directly into the subfloor space, around the perimeter of the house. Mr Alexander’s evidence in cross-examination was that Details 15 and 17 of the

design provided for the installation of vents through the cladding in those areas of the house where the concrete footing did not come as high as the floor level of the house, so some of the subfloor outer wall was formed by cladding. In those areas, the design was to install vents through the cladding to provide further ventilation. In some places, there would be a hole in the masonry for the ventilation. In other places, there would be a hole in the subfloor timber framing and the plaster system. That was because the ground levels changed around the house. The important thing was that the hole was clearly above ground level and would not allow water to flow through it. Mr Alexander said that his intention was that the 125 mm ventilation openings would have a grill or a grate installed over them, but one that effectively maintained the same ventilation area and did not materially reduce the available opening of 125 mm diameter.

• [135] As noted above, the 15 proposed ventilation holes were not installed during the course of the remedial work.

• [136] Ms Bates relied on the evidence of Mr Jordan and Mr Jones in relation to the Council’s inspection function. The Council carried out 18 inspections between 14 May 2007 and 11 February 2009. Mr Jordan observed that the Council’s inspection list did not include any specific inspection during which subfloor ventilation would be inspected. His view was that a “prudent Council would have given consideration to and identified a lack of sub-floor ventilation” during the following inspections:

1. Bathroom foundations – 14/5/07

2. Bond beam – 18/5/07

100. Concrete slab en-suite – 12/6/07

4. Preline, stage 1 – 26/6/07

5. Wet area membrane, ground floor over concrete – 24/9/08

6. Drainage, including comment for deck clearance northern side of house

– 3/11/08

g. Final – 11/2/09

• [137] Mr Jones said that at the time of the Council’s final inspection it “would have been straightforward to see that the ventilation holes provided in the consented plans, had not been installed.”

• [138] The Council says it is telling that Mr Jordan’s evidence on this issue was cast in general terms. Notwithstanding his willingness to make other specific criticisms of the Council, Mr Jordan did not specifically comment on whether the Council should have observed the absence of the proposed ventilation holes during its inspections. The Council also says that Mr Jordan had not worked as a council officer in a consent processing role under the Building Act 1991 or the Building Act 2004, and is unable to give any meaningful evidence as to what was required of a Council to meet its requisite standard of care. Mr Jordan candidly acknowledged in cross-examination “My evidence is really not what a council officer did, but more what it ought to have done to meet its obligations.”

• [139] The Council also said that Mr Jones did not assert or qualify himself as having any expertise in Council matters, and his evidence does not constitute evidence as to what would be expected of a council.

• [140] The Council says that, since the proposed ventilation holes were not in fact installed, it is unclear why Ms Bates alleges the Council should have inspected them. Decisions about reducing or increasing the work to the house as originally proposed were within the plaintiff’s knowledge. But Ms Bates led no evidence as to why the proposed ventilation holes were not installed and chose not to re-examine Mr Alexander on his opinion that it must have been a conscious decision not to install the vents, not simply an oversight.

• [141] The Council also says that plan A-03 was not works relating to the re-clad, nor to the bathroom extension. The proposed ventilation holes were an upgrade to the existing subfloor. Consent was given, but that did not mean that Ms Bates and Mr Heaney were obliged to carry out those works. Obtaining a building consent does not mean it is mandatory to do that building work. The owner is entitled to reduce the scope of the proposed work.

Discussion

• [142] Section 90 of the Building Act 2004 defines the relevant powers of building consent authorities in relation to inspections and also imposes a duty on them to take all reasonable steps to ensure that the building work is carried out in accordance with the building consent. It provides:

90 Inspections by building consent authorities

(1) Every building consent is subject to the condition that agents authorised by the building consent authority for the purposes of this section are entitled, at all times during normal working hours or while building work is being done, to inspect—

(a) land on which building work is being or is proposed to be carried out; and

(b) building work that has been or is being carried out on or off the building site; and

(c) any building.

(2) The provisions (if any) that are endorsed on a building consent in relation to inspection during the carrying out of building work must be taken to include the provisions of this section.

(3) In this section, inspection means the taking of all reasonable steps to ensure that building work is being carried out in accordance with a building consent.

• [143] In Reeves v Lakes Environmental Ltd,²⁴ Dunningham J said:

It is clear from s 90 that the express purpose of an inspection is to ensure that the building work being inspected complies with the building consent. That ensures that, at each stage of the building process, the building consent has been implemented, allowing a code compliance certificate to issue when the work is completed.

• [144] Here, the building consent included the addition of the proposed ventilation holes. On the face of it, the Council’s duty to inspect included a duty to inspect the installation of the proposed ventilation holes.

• [145] The Council did not call any evidence about what was entailed in each of the inspections it undertook as part of its inspection regime. Nor did Ms Bates call any

²⁴ Reeves v Lakes Environmental Ltd [2014] NZHC 2760 at [64].

expert evidence other than the general evidence of Mr Jordan; for example from a building inspector, as to exactly when and how the absence of the proposed ventilation holes should have been detected. There was no evidence about what the Council reported to Ms Bates and Mr Heaney following its inspections; it appears that it did not report to them that the proposed ventilation holes had been installed.

• [146] I am left to infer from that absence of evidence that the Council did not inspect for the installation of the proposed ventilation holes. The question is whether it was negligent in not doing so. There are two complicating factors in answering that question:

(a) The “superseded” stamp which was applied to plan A-03, amongst other documents, on 8 May 2008.

(b) The fact that the proposed ventilation holes were not in fact installed and, as I have noted, as at March 2008 were no longer part of the scope of works between Ms Bates and Mr Heaney, and their builder Mr Green. Further, at that point it was, in practical terms, too late to install them.

• [147] I consider each of those factors in turn.

“Superseded”

• [148] As noted above, some 20 documents that formed part of the building consent were stamped “superseded” on 8 May 2008, the same day that the amended building consent was approved. On each of them there was a handwritten notation “Refer ABA62145/B” – the amended building consent to allow for the change of the cladding system. Some of those documents also contained a reference to new Scribble plans, but plan A-03 was not among those.

• [149] The submission for Ms Bates is that plan A-03 was superseded only in relation to those details approved as part of the amended building consent. Ms Bates says that the application for amendment sought to change only the type of cladding on the house, not to make any other amendments. Mr Alexander confirmed that the amended

Scribble designs relating to the amended building consent did not change the design intent of his plan regarding subfloor ventilation. It was, he said, “effectively the same as my plan ... except ... they’ve changed the cladding.”

• [150] Ms Bates has not made any allegation that the Council did anything wrong in stamping plan A-03 “superseded”.

• [151] The Council chose not to call any evidence, and there was therefore no evidence before the Court as to why plan A-03 and the other documentation was stamped “superseded”. The Council’s submission was that interpretation in relation to a public document (such as a notated plan forming part of a building consent) is an objective exercise; the test is simply what an ordinary member of the public would make of the information contained in a public document.

• [152] In Body Corporate 160361 v BC 2004 Ltd and BC 2009 Ltd,²⁵ Whata J in the High Court applied the approach of the Privy Council in Opua Ferries Ltd v Fullers Bay of Islands Ltd,²⁶ and held that the subjective view of the Council officer who applied the stamp was not probative as to the legal effect. Justice Whata (endorsed by the Court of Appeal on this point²⁷) adopted and refined the Privy Council test:²⁸

The persons ordinarily expected to rely on specifications are qualified builders and building inspectors, not ordinary members of the public. The proper test is therefore, in my view, what would the ordinary builder or inspector make of the revised stamp?

• [153] I adopt Whata J’s test, that is, what would the “ordinary building inspector” make of the “superseded” stamp?

• [154] Plan A-03 was titled “Proposed New Paving, Ventilation & Cladding Termination Detail Locator Plan”. In my view a building inspector would not simply have assumed from the “superseded” stamp that everything in that plan was superseded, but would have looked to other relevant documents to understand what “superseded” meant. Underneath the “superseded” stamp on A-03 was the

²⁵ Body Corporate 160361 v BC 2004 Ltd [2015] NZHC 1803 at [157]- [158].

²⁶ Opua Ferries Ltd v Fullers Bay of Islands Ltd [2003] UKPC 19, [2003] 3 NZLR 740 at [20].

²⁷ Andrews Property Services Ltd v Body Corporate 16036, above n 20.

²⁸ Body Corporate 160361 v BC 2004 Ltd, above n 25, at [157].

handwritten reference to the amended building consent. Although, as I have noted, there was no reference on plan A-03 to the new Scribble plans, in my view the building inspector would have looked at the amended building consent application and related documents to understand how and in what way the specification at A-03 was affected. That exercise would have revealed that the Alexander & Co Detail 15 was replaced with the Scribble detail that shows the same proposed ventilation holes as on plan A-03.

• [155] That being the case, the Council’s inspection obligation in relation to the proposed ventilation holes would have remained.

Proposed ventilation holes not installed

• [156] However, I have concluded that the “superseded” stamp is something of a red herring. Of greater relevance to the Council’s response to Ms Bates’ allegations is what appears to have been an earlier decision by Ms Bates and Mr Heaney not to install the proposed ventilation holes.

• [157] Mr Alexander’s evidence was that the omission of the proposed ventilation holes could not have been a simple oversight; this aspect of the plans was too significant to have been simply overlooked, and it must have been due to a conscious decision to omit certain features in the Alexander & Co plans. As Mr Alexander put it in cross-examination, “evidently ... somebody thought they were not very important”. Mr Heaney’s evidence in cross-examination was that Mr Alexander was a “very thorough, competent building surveyor” and that he does “the best job you can get.” Mr Alexander impressed me as a careful, detached and objective witness, notwithstanding his earlier involvement in the project. I accept his evidence on the omission of the proposed ventilation holes. Significantly, Ms Bates’ counsel did not re-examine Mr Alexander on that aspect of his evidence.

• [158] It is not clear when the decision to omit the proposed ventilation holes was made, or who made the decision. Mr Heaney’s evidence was that he was not aware of the proposed ventilation holes set out by Mr Alexander in the building consent drawings. Although Mr Heaney had in February 2007 asked Mr Alexander for the building consent documentation so he could “review it in its entirety”, Mr Heaney’s

evidence at trial was that in fact he would not have looked at the plans once received. In addition, Brackenridge had on two occasions provided Mr Heaney with a programme which referred to the installation of the proposed ventilation holes and sought direction from him, but Mr Heaney’s evidence was that he had not read those documents.

• [159] Ms Bates led no evidence on why the proposed ventilation holes were not installed by Brackenridge prior to the termination of their engagement in about February 2008. Brackenridge representatives were not called to give evidence.

• [160] Mr Heaney’s detailed instructions to Mr Green of 10 March 2008, which commenced “I shall identify below what I think are the tasks left to complete. There may be more that I have overlooked ...” did not include any reference to installation of the proposed ventilation holes. The plaintiff did not call Mr Green to give evidence.

• [161] Mr Jones accepted that by May 2008 it would have been impractical to install the proposed ventilation holes, given the cladding had been completed.

• [162] Ms Bates nevertheless says that the Council was negligent in not detecting and reporting on the absence of the ventilation holes as part of its inspection obligation. She relies on Birch v Palmerston North City Council.²⁹ What was at issue in Birch was the Council’s inspection obligations in relation to defective building work. The Council’s inspection did not detect the absence of “birdsmouthing” over the top wall plate, which led to inadequate structural support of the roof and concrete tiles upon it.³⁰ The Court found that there were “serious defects in the structural integrity” of the building.³¹

• [163] Here, the alleged negligence was the failure to detect and/or report on an omission to carry out work, rather than defective work per se. It was not an important structural omission, which went to the integrity and safety of the consented building works, as in Birch.³² I have accepted that the installation of the proposed ventilation

²⁹ Birch v Palmerston North City Council HC Wellington CP 116/92, 22 July 1998.

³⁰ At 3.

³¹ At 3.

³² At 6.

was an upgrade to the existing building subfloor (Mr Alexander’s evidence was that prior to the remedial work the subfloor complied with the performance requirements of the Building Code). It was open to Ms Bates and Mr Heaney, as building owners, to reduce the scope of the consented work.

• [164] I find that I can properly draw the inference that as of April 2008 Ms Bates and Mr Heaney (or their builder, Brackenridge) had decided not to install the proposed ventilation holes. I arrive at that conclusion through a combination of factors: the plaintiff did not re-examine Mr Alexander on his evidence that the decision not to install the ventilation must have been deliberate; the plaintiff did not call either Brackenridge or Mr Green to rebut the suggestion that, as at early March 2008, the proposed ventilation no longer formed part of the scope of works; and nor did Mr Heaney himself address the question in his evidence.

• [165] However, the difficulty for the Council is that there is no evidence that it received notification of that decision, whether from Mr Heaney and Ms Bates themselves, or from Brackenridge. The Council says the "superseded" stamp supports the view that Ms Bates and Mr Heaney had made that decision, but in the absence of direct evidence on the point, it is not enough to say the owners must have already known (although that of course would be relevant to any question of contributory negligence by Ms Bates and Mr Heaney). I conclude that the Council's inspection obligation required it to inspect whether the proposed ventilation had been installed and report to the owners accordingly and it failed to do so.

Particular 7 – alleged failure to observe during inspections that there was inadequate provision for subfloor ventilation

• [166] Particular 7 of the statement of claim alleges the Council:

Failed to observe during its inspections that there was inadequate provision for subfloor ventilation.

• [167] As the Council noted in closing submissions, it is not clear what this specific allegation means. Plainly it is intended to be broader than particular 6, which relates specifically to the alleged failure to observe that the proposed ventilation holes had not been installed. Ms Bates relies on Mr Jordan’s evidence that “a prudent Council

would have given consideration to and identified a lack of subfloor ventilation” at the inspections listed above at [136]. The Council says that is inadequate to establish that the Council was in breach.

• [168] To the extent that the allegation refers to a failure by the Council to identify that the existing subfloor area was not constructed in accordance with E2/AS1, then for the reasons already advanced in relation to particular 4,³³ that claim cannot succeed. To the extent that it replicates particular 6, I repeat my finding in relation to that aspect of the claim.

The issue of the Code of Compliance Certificate

• [169] Ms Bates did not plead particulars of the allegation that the Council was negligent in issuing the Code of Compliance Certificate. In closing counsel for Ms Bates submitted that the failure to install the proposed ventilation holes could easily have been identified by the Council in the course of its inspections, prior to issuing the final Code of Compliance Certificate, but was not. None of the producer statements received by the Council related to the subfloor ventilation. Accordingly, the Council did not have any grounds to be satisfied that the building work had been completed in accordance with the consent, and its decision to issue the Code of Compliance Certificate was negligent. The Council ought to have insisted that the proposed ventilation holes be installed.

• [170] In response, the Council says that to the extent that the subfloor ventilation was relevant to the re-clad works, that could only be in relation to the new subfloor framing, and the Council did ultimately receive a PS4 from O’Hagan. Ms Bates has not alleged that the Council was unreasonable to rely on the PS4 from O’Hagan.

Discussion

• [171] It follows from my findings in relation to particular 6 that the Council could not have been satisfied that the building work had been completed in accordance with the consent, and ought not to have issued a Code of Compliance Certificate.

³³ See above at [130].

Was the Council’s negligence a material cause of, or contributor to, the damage to the house?

• [172] In view of my findings that the Council breached its duty to Mr Heaney and Ms Bates in its inspection obligations in relation to the proposed ventilation holes (particular 6) and the issue of the Code of Compliance Certificate, I now consider whether the Council’s negligence in those respects was the cause of Ms Bates’ loss.

• [173] Ms Bates says that the Council’s negligent acts or omissions in relation to the remedial work are the “but for” cause of the damage to the subfloor of the house. Ms Bates says that she has established that if the proposed ventilation had been installed as provided for in plan A-03, the subfloor would have complied with NZS 3604. However, because of the Council’s negligence, the proposed ventilation was not installed and the ventilation of the subfloor was inadequate to achieve compliance with the performance requirements of the Building Code.

• [174] The Council says, first, that Ms Bates has not clearly identified the damage for which she claims.

• [175] In terms of causation, the Council points to Mr Jones’ evidence that he attributed the subfloor condition to the covered patio vents. There is no allegation that the Council was responsible for the covering of the patio vents. In addition, the covering of the patio vents was unconsented works; the Council did not have a duty to protect against the consequences of unconsented works done by or on behalf of Ms Bates and Mr Heaney.

• [176] On the basis of Mr Jones’ evidence, the Council says that Ms Bates must establish that the negligence in relation to the omission of the proposed ventilation holes was a material cause of or contributor to the damage to the subfloor. It says the requirements of legal causation are not met.

Discussion

Defect/damage

• [177] The plaintiff has the legal burden of proof as to alleged damage and also, as a matter of fact, has the power to investigate and prove damage. In Sunset Terraces Heath J said:³⁴

... evidence must be weighed according to the proof which it was within the power of one side to have produced and in the power of the other to have contradicted.

• [178] The plaintiff’s statement of claim describes the “defect” in the house that is alleged to have been caused by the defendants’ negligence in the following terms:

Inadequate provision for prevention of dampness within the sub-floor space, including a lack of ventilation resulting in undue dampness to building elements, including decay to structural timber framing.

(Failure to achieve B2.3.1, E2.3.2)

• [179] I agree with the Council that is an unhelpful pleading, in that it conflates what is alleged to be the “defect”, that is, the error of construction, and the resulting “damage” (and thus breach of the Building Code). The Council cites Ministry of Education v H Construction Ltd where Downs J considered a similarly imprecise use of the terms and concluded that the term “defect” means “some error, shortcoming or imperfection in relation to an aspect of construction.”³⁵

• [180] The Council also submits that Ms Bates has not clearly identified what the “defect” is. The plaintiff’s evidence as filed (the evidence of Mr Jones) was that the defect, or what was done wrong, was that the subfloor was not constructed in accordance with E2/AS1. However his subsequent evidence pointed to the covered patio vents as the alleged “defect”.

• [181] A Joint Experts’ Statement from Mr Jones, Mr Biggelaar, Mr Geoff Bayley, and Mr Matthew Earley records:

³⁴ Sunset Terraces, above n 6, at [58].

³⁵ Ministry of Education v H Construction North Island Ltd [2018] NZHC 871 at [61]- [63].

All experts agree that there is damage to the southern end sub-floor timbers caused by moisture as a result, at least in part to inadequate ventilation. ...

The experts agree there are various contributing moisture sources as per their individual briefs.

• [182] As both defendants note, the only relevant expert witness to give detailed evidence on this issue was Mr Jones. Mr Jones’ evidence (as served) was that the lack of adequate subfloor ventilation has caused extensive damage to the subfloor of the house. In his brief of evidence, Mr Jones said:

The sub-floor area following the remedial re-cladding work in 2008 has not been constructed in a manner that prevents the accumulation of moisture in the sub-floor resulting in damage to the timber floor and wall framing, as a result of inadequate provision for sub-floor ventilation. The damage as described by Alan Bolderson in the WHRS report and by me later in this brief, can be expected to occur when there is inadequate provision for sub-floor ventilation in suspended timber floors.

• [183] The plaintiff’s evidence as to damage to the subfloor was not comprehensive. Although Mr Jones referred to the damage to the subfloor as “widespread”, his evidence did not convincingly establish that. As the Council notes, Mr Jones’ assertion of “widespread damage” was evidentially supported by only eight samples taken by Mr Jones (all located at the south-east end of the house and chosen because they appeared moisture-affected), together with about 30 photos from within the subfloor void, 10 showing moisture-meter readings and, in the Council’s words, “overall simply lacking any cogent evaluation.”

• [184] Mr Jones confirmed that he did not take any samples or undertake any other form of destructive testing other than the eight samples. He did not carry out any form of assessment to verify or form his own view in respect of the testing and samples undertaken by the WHRS assessor and described in the WHRS report. Of Mr Jones’ eight samples, in fact only seven indicated damage to the subfloor structure.

• [185] Mr Jones conceded that he did not undertake any testing of the northern end of the property, although he accepted that it would have been possible to do so from the inside of the house (albeit testing of a more destructive nature). Mr Jones also confirmed that he did not personally undertake any testing of the joists at the far north-western end of the property. He admitted that he was merely expecting the

timber throughout the entire subfloor structure would need to be replaced. That was his estimation as to the extent of damage, and he had not actually tested or investigated the timber to verify that assumption.

• [186] Under cross-examination, Mr Jones conceded that from his visual investigations, the most obvious location of blackened or decayed timber was in the dining/lounge area of the property, which was the area already included in his samples.

• [187] Mr Jones was reliant on the testing results provided by Beagle Consultancy, a specialist laboratory to whom the timber samples were sent for testing, in order to determine their condition and any potential decay and mould that may be present. Aside from Mr Jones’ visual inspections, he did not carry out any investigations or testing in order to form his own view or confirm the results set out in the Beagle report.

• [188] As the Council points out, there was no evidence from the plaintiff as to what
• – if any – replacement timber subfloor framing, rather than the pre-existing subfloor, was damaged.

• [189] The Council says (and this submission was echoed for O’Hagan) that Ms Bates, in effect, asks the Court to deem non-compliance as proof of inadequate ventilation. No evidence was called by Ms Bates as to how the proposed ventilation holes and/or the covered patio vents would have successfully restricted the build-up of moist air and prevented damage, notwithstanding any other issues.

• [190] As I have previously noted,³⁶ Mr Jones supplemented his evidence during the course of the trial to address the question of the covered patio vents. Mr Jones said in cross-examination that he had always known about the covered patio vents, and that he attributed the subfloor conditions he had observed to the covering of the patio vents. He said that, at the time he prepared his original evidence, he “believed them [the covered patio vents] to be very important.” He thought this belief was reflected in his original brief of evidence.

³⁶ See above at [54].

• [191] In closing submissions, Mr Rainey acknowledged that Mr Jones had accepted in his evidence that there were other sources of moisture within the subfloor area contributing to the moisture load within the subfloor space, but said that did not detract from Mr Jones’ original opinion that the failure to install the proposed ventilation holes contributed to the damage he observed throughout the whole of the subfloor of the house.

Causation

• [192] Causation is generally split into two separate enquiries: causation in fact and causation in law.³⁷ Causation in fact is usually addressed by application of the “but for” test, which asks whether the plaintiff would have suffered the injury without the negligent act or omission of the defendant.³⁸

• [193] As to causation in law, in Price Waterhouse v Kwan the Court of Appeal said there is “a crucial difference between causing a loss and providing the opportunity for its occurrence.”³⁹ It is not sufficient for a plaintiff to establish that a defendant’s act or omission provided the opportunity for the occurrence of the loss; the act or omission must have had a real influence on the occurrence of the loss, as a substantial and material cause,⁴⁰ and must have made a more than de minimis or trivial contribution to the occurrence of the loss. As Todd on Torts says, the “defendant is not liable if he or she has done no more than contribute to the coincidence of time and space in which damage could happen.”⁴¹

• [194] I am also conscious of the Court of Appeal’s observation in Accident Compensation Corporation v Ambros:⁴²

The generous and unniggardly approach referred to in Harrild may, however, support the drawing of “robust” inferences in individual cases. It must,

³⁷ Accident Compensation Corporation v Ambros [2007] NZCA 304, [2008] 1 NZLR 340 at [24] and [70].

³⁸ Stephen Todd (ed) Todd on Torts (8^th ed, Thomson Reuters, Wellington, 2019) at [20.2.01].

³⁹ Price Waterhouse v Kwan [1999] NZCA 311; [2000] 3 NZLR 39 at [28].

⁴⁰ Party Bus Co Ltd v New Zealand Transport Agency [2017] NZHC 413, [2017] 3 NZLR 185 at [72].

⁴¹ Todd, above n 38, at [20.3.01]; citing the example given by Lord Hoffmann in Environment Agency (formerly National Rivers Authority) v Empress Car Co (Abertillery) Ltd [1998] UKHL 5; [1999] 2 AC 22 (HL) at 30-31.

⁴² Accident Compensation Corporation v Ambros, above n 37, at [70].

however, always be borne in mind that there must be sufficient material pointing to proof of causation on the balance of probabilities for a court to draw even a robust inference on causation. Risk of causation does not suffice.

• [195] I am not persuaded that there is sufficient material supporting proof of causation, on the balance of probabilities, connected to the relevant breaches by the Council in relation to the proposed ventilation holes. First, there is the question of the plaintiff’s own evidence. Mr Jones’ evidence as it developed was that the condition of the subfloor could be attributed to the covered patio vents. While he insisted that was at least implicit in his written statement of evidence, I did not find that convincing. As I have noted, no allegation is made against the Council in relation to the covered patio vents and, as the Council observes, it was unconsented works for which the Council cannot be held responsible.

• [196] The closing submissions for Ms Bates continued to assert that it was the failure to install the proposed ventilation holes that was causative of the damage. What is decisive though is the evidence: it did not establish the causal link that Mr Rainey invited me to draw.

Different course of action

• [197] Ms Bates faces a further issue in terms of causation: it is not clear what different course she and Mr Heaney would have taken, had the Council reported to them, as part of its inspection function, that the proposed ventilation holes had not been installed.

• [198] That situation is in contrast to Birch, where Heron J said:⁴³

It has to be demonstrated here, that as a result of any failure to adequately inspect, a warning or some other action would have been taken and the plaintiffs would have taken a different course of action from the one adopted. In this case the focus must be on what occurred as a result of any inadequate inspection...

⁴³ Birch v Palmerston North City Council, above n 29, at 4.

Other causes

• [199] Finally, as the evidence and submissions for O’Hagan made clear, Ms Bates’ evidence failed to eliminate other causes of the subfloor ventilation issue. In particular, it did not exclude the enclosure of the lounge deck and drainage issues as being the true causes of the excess subfloor moisture and damage to the timber.

• [200] I turn first to the enclosure of the lounge deck. Photographs taken by Mr Alexander at the time of his inspection of the property in 2006 show that the space beneath the deck was enclosed by a trellis. Mr Alexander’s evidence was that air could move relatively freely through the trellis and then through the under-deck accessway, and that it functioned in effect as a ventilation opening. Mr Jones confirmed that the trellis provided “absolutely no restrictions on airflow”, and that the vast majority of the subfloor ventilation from 1987 to 2008 was being provided by this area.

• [201] Mr Jones’ evidence was that when he visited the property in 2018 the deck was “very different” from before the remedial works. However, his evidence was that enclosing the deck would have “little if any impact” on ventilation. He said he arrived at that conclusion through a “mental exercise in my head”. Mr Jones did not measure the impact of enclosing the deck on air movement through the under-deck accessway.

• [202] O’Hagan submits that the effect of enclosing the deck has not been measured or properly assessed. It is just as, if not more, likely that the alleged excess moisture in the subfloor has been caused by the enclosure of the deck, rather than any change to ventilation openings.

• [203] In terms of the drainage issues, it was apparent from Mr Heaney’s evidence under cross-examination that he was aware of the need for drainage around the perimeter of the house and ventilation under the house in June/August 2006. Mr Heaney’s evidence was that Mr Alexander had told him that he should put in drainage around the perimeter of the house, and that he accepted that it needed to be dealt with. Mr Alexander confirmed that he thought that Mr Heaney had prior knowledge – possibly from discussions with the architect of the house – about issues with drainage and potential damp ground in patches around the house. Mr Alexander

prepared a drainage plan. The plan was not among those documents stamped “superseded”.

• [204] No evidence was called about whether the proposed drains were constructed. However, photographs taken in December 2019 show drains terminating under the lounge deck and pooling of water. Mr Alexander confirmed in cross-examination that it was not a part of his design to have any land drains terminating under the deck. Mr Jones agreed that it was not part of the building consent plans to have any drains terminating under the deck.

Conclusion on negligence claim against the Council

• [205] I conclude that, although the Council breached its duty in respect of its inspection obligation and in consequence ought not to have issued a code compliance certificate, the plaintiff’s evidence did not establish a causative link between that breach and the damage Ms Bates has suffered.

THE CLAIM AGAINST O’HAGAN

• [206] Ms Bates’ claim against O’Hagan is framed in negligence and negligent misstatement, with a further cause of action alleging misleading and deceptive conduct under the Fair Trading Act 1986. Counsel for Ms Bates conceded that the negligent misstatement and Fair Trading Act claims did not add anything to the negligence claim, and that if the negligence claim is not made out then the Fair Trading Act cause of action will also fail.

• [207] The issues as between Ms Bates and O’Hagan are:

(a) Did O’Hagan owe a duty of care to Mr Heaney and Ms Bates? If yes, what was the nature and scope of that duty?

(b) Did O’Hagan breach its duty to Mr Heaney and Ms Bates, in relation to:

(i) the removal and replacement of the subfloor timbers;

(ii) the issue of the PS4;

(iii) design advice and obtaining Council approval for Detail 12 in July 2007; and

(iv) obtaining the amended building consent?

(c) If O’Hagan did breach its duty, was O’Hagan’s negligence a material cause of, or contributor to, the damage to the house?

(d) If yes, what is the scope of the remedial work required?

Did O’Hagan owe a duty of care to Mr Heaney and Ms Bates?

Ms Bates’ position

• [208] Ms Bates says that O’Hagan owed her and Mr Heaney, as owners of the house, a duty to exercise reasonable skill and care in performing their contractual services.⁴⁴ Ms Bates acknowledges that the scope of O’Hagan’s duty of care arises out of their contract. There were four aspects to those services:

(a) the removal and replacement of the subfloor timbers;

(b) the issue of the PS4;

(c) design advice and obtaining Council approval for Detail 12 in July 2007; and

(d) obtaining the amended building consent, to change the cladding from Nu-Lite to Thermaclad EIFS.

• [209] There was no formal written contract between Ms Bates and Mr Heaney and O’Hagan for any of the services it provided. However, it is common ground that

⁴⁴ Bowen v Paramount Builders (Hamilton) Ltd [1977] 1 NZLR 394.

O’Hagan was initially contracted to fulfil the role of the suitably qualified building surveyor, referred to in the building consent conditions:

Repairs of Timber affected by Decay

All timber showing any sign of decay is to be removed from the building and replaced by a treated timber as required by NZS 3602. Timber within one metre of the decayed timber and accessible timber is to be treated with an appropriate preservative such as “Osmose Framesaver” or “Metalex”.

This work is to be supervised by a Suitably Qualified Building Surveyor who must provide a Producer Statement Construction Review (PS4) to Rodney District Council, before the commencement of the re-cladding, confirming that the decayed timber was removed and that the retained timber within 1m of the decayed timber and all accessible timber has been appropriately treated so that the requirements of cl B2 of the Building Code has been met.

• [210] It is also common ground that O’Hagan was contracted to provide the PS4 required by the conditions of the building consent:

Producer Statement (PS4)

Producer Statement Construction Review (PS4) is to be submitted by Suitably Qualified Building Surveyor for the observation of the removal and installation of new timber work and certification that these comply with the design as approved by this building consent and the requirement of the New Zealand Building Code in respect to clauses B1 and B2.

• [211] The plaintiffs originally pleaded that O’Hagan was engaged to inspect and monitor the building work to be carried out under the building consent and the two amendments to the consent. By the time Mr Rainey presented closing submissions on behalf of Ms Bates, it was conceded that O’Hagan had not been engaged to oversee the remedial work, but rather to supervise the repair of timber affected by decay and the treatment of remaining timber as required by the conditions of the building consent.

• [212] Ms Bates alleges that O’Hagan was not only required to confirm that the decayed timber was removed and replaced as required by the building consent conditions, but also to confirm that the replacement timber would meet the durability requirements of cl B2 of the Building Code. Ms Bates says that assessing durability under cl B2 requires consideration of cl E2 of the Building Code because, if the

requirements of E2 are not met, then the building will not meet the durability requirements of B2.

• [213] Similarly, Ms Bates alleges that in providing advice about the change to Detail 12 in July 2007, and in seeking amendment to the consent in relation to cladding in late 2007/08, O’Hagan had a duty to ensure that there was adequate provision for subfloor ventilation in the house.

O’Hagan’s position

• [214] O’Hagan agrees it owed a duty of care to Mr Heaney and Ms Bates to carry out the tasks for which it was engaged with reasonable skill and care and in accordance with standard practices at the time. The dispute is as to what that duty required of O’Hagan in the particular circumstances of this case.

• [215] O’Hagan says that the scope of the duty owed to Ms Bates and Mr Heaney was a limited one and turned on the terms of its engagement. It did not assume a duty to ensure that the house as a whole achieved full compliance with the Building Code. Its obligations in relation to the PS4 were limited to what was required by the conditions to the building consent and its instructions from Mr Heaney. Similarly, the work it undertook in July 2007 in relation to Detail 12, and in 2007/08 in seeking the amended building consent, was limited to specific and discrete tasks.

• [216] O’Hagan points to the fees it received for the services as an indicator of the very limited role it played; for all four tasks its fee was a total of $4,125 plus GST. Ms Bates’ claim against it is for more than $1.5 million.

Discussion

• [217] As with my analysis of the claim against the Council, I consider below what was required of O’Hagan, in the context of each particular alleged breach of duty.

Did O’Hagan breach its duty to Mr Heaney and Ms Bates?

• [218] Ms Bates’ claim against O’Hagan shifted during the course of the proceeding. Each of the four aspects of the claim, as they developed, is discussed below.

The removal and replacement of the subfloor timbers

• [219] In relation to the timber replacement, no evidence was called to show that O’Hagan failed to properly identify and replace all decayed timber and treat adjacent timber. By the time of Mr Rainey’s closing submissions for Ms Bates, there was no direct claim against O’Hagan in respect of the installation of the replacement framing timber. The essence of the remaining allegation in respect of this aspect of O’Hagan’s services is that, in carrying out this work, it failed to identify that the subfloor ventilation of the house was inadequate and, in particular, that the proposed ventilation shown on plan A-03 had not been installed.

• [220] O’Hagan accepts that it owed a duty to conduct the timber inspection with reasonable skill and care in accordance with standard practices at the time, but says the scope of its initial engagement was limited to making sure that decayed timber was replaced and adjacent timber treated. The duty it owed to Ms Bates did not extend beyond that, and certifying the same in the PS4. Nor was it under a duty to warn Ms Bates and Mr Heaney.

Discussion

• [221] Whether O’Hagan assumed a responsibility to take care in the respects alleged by Ms Bates will depend on the precise nature of the relationship between O’Hagan and Ms Bates and Mr Heaney, and the role it assumed in the remediation works. In Andrews Property Services Ltd v Body Corporate 160361 the Court observed:⁴⁵

[94] ... whether a duty of the nature found exists will turn on the circumstances of the individual cases. As Whata J correctly noted, whether APS, as a contractor, assumed a responsibility to take care in respect of specific works depended on the precise nature of the relationship with Babbage, as the architect/engineer, and the owners and the role it assumed in the remediation works.

...

[114] We therefore do not consider that a contractor such as APS, when undertaking a discrete remediation task, has a duty to undertake remedial work outside of its contractual responsibility to ensure that the entirety of a building will be code compliant.

⁴⁵ Andrews Property Services Ltd v Body Corporate 160361, above n 20.

• [222] The plaintiff’s instructions to O’Hagan in respect of the timber removal were recorded in an email from Mr Heaney on 11 May 2007:

I refer to my discussion with you today. My building consent for the remedial work at Whitmore Road requires a registered surveyor like you to tick off on the timber replacement. You are familiar with the drill imposed by Rodney.

...

You have told me that you do not need to see any adversely affected framing before it is removed but you will need to inspect before replacement timber is installed.

The builder started stripping the cladding on Wednesday and there is evidence of rot in the south western corner and in the vicinity of a handrail fixing on the back deck.

• [223] In a subsequent email to Mr O’Hagan, Mr Heaney said:

I confirm my discussion with you yesterday. You will attend to the inspections as discussed in my earlier email and at the end of the repair work you will provide the Rodney District Council with a PS4 Producer Statement. You are to send me a contract but we have agreed that you should charge me on an hourly basis at the rate of $150 per hour with a fixed fee of $500 for the PS4 statement at the end of the job.

• [224] On 2 April 2009 Mr Heaney emailed Mr Pope, attaching a letter from the Council dated 17 February 2009 requesting a PS4 in the following terms:

Original Producer Statement Construction Review (PS4) from the building surveyor confirming that the decayed timer (sic) was removed and that the retained timber within 1.0m of the decayed timber and all accessible timber has been appropriately treated so that the requirements of clause B2 of the Building Code has been met

• [225] O’Hagan’s role was therefore to ensure that decayed timber was removed, and that the retained timber within one metre of the decayed timber and all accessible timber had been appropriately treated so that the requirements of cl B2 of the Building Code had been met. O’Hagan was then to provide a PS4, providing confirmation within the terms set out at [209] and [210] above.

• [226] Both Mr O’Hagan and Mr Pope gave evidence that their usual practice was to have the builder decide when and what timber is exposed for inspection. If exposed timber is damaged and near an area of unexposed timber, they would instruct the

builder to remove further cladding or otherwise expose more timber to be inspected, to make sure that all damaged timber is replaced.

• [227] Mr Pope’s evidence was that the usual process of timber inspection is to do a visual inspection of all exposed timber, as well as physical testing of the timber by pushing a screwdriver or chisel (or something similar) into the timber to check if it is soft or not. The timber that is soft or visibly decaying is then marked for replacement using a spray paint. The retained timber is then treated with a preservative product that helps prevent damage caused by fungi and wood-boring insects, like FrameSaver or Metalex. The preservative is usually applied by the builder onsite, and normal practice is to apply two coats of the preservative. Mr Pope’s evidence was that, in the case of the house, Metalex was the preservative product applied. A final inspection is done to check that all of the damaged timber has been removed and remaining timber has been treated correctly.

• [228] The inspections of the timber removal and subsequent replacement were initially carried out by Mr O’Hagan, and then by Mr Pope. Mr O’Hagan did the first inspection of the house on or about 24 May 2007, and Mr Pope did two inspections on 30 May 2007 and 26 June 2007. When Mr O’Hagan and Mr Pope were onsite carrying out those instructions, the remediation works were ongoing. Mr Pope’s evidence was that he carried out his inspections and testing in accordance with his usual practice. He observed, in particular, that there was timber damage in and around the decking area.

• [229] On the face of Mr Heaney’s instructions to O’Hagan in relation to the timber removal, there is nothing to suggest that O’Hagan’s role was to go beyond what was stated. The question then is whether the further obligation alleged was explicit or implicit in the requirement to issue the PS4.

The issue of the PS4

• [230] Ms Bates says that O’Hagan was negligent in its issue of the PS4. The PS4 was issued in respect of: “Replacement timber + certification of existing timber”. Ms Bates says that O’Hagan was thereby certifying that the replacement timber and certification of the existing timber had been completed in accordance with the plans

and specifications that had been approved by the Council in the building consent. As a prudent building surveyor, O’Hagan could not and should not have issued the PS4 unless it had confirmed the installation of the proposed ventilation holes shown in the Alexander & Co plans. Had it carried out proper inspections, it would have readily observed that the proposed ventilation holes had not been installed. Ms Bates says it was negligent in not doing so.

• [231] However, Ms Bates also conceded (at least implicitly) that the PS4 which O’Hagan was required to produce was limited to the terms of the building consent:

... the observation of the removal and installation of new timber work and certification that these comply with the design as approved by this building consent and the requirement of the New Zealand Building Code in respect to clauses B1 and B2.

• [232] O’Hagan says it made no representations about subfloor moisture by way of its PS4.

Discussion

• [233] Again, as in Andrews Property Services Ltd, the focus must be on what it was that O’Hagan was asked to do and what in fact it certified (by reference to the words used in the PS4).⁴⁶

• [234] Mr Pope, on behalf of O’Hagan, filled out a PS4 on or about 30 April 2009, which Mr O’Hagan signed. Mr O’Hagan’s evidence was that he and Mr Pope discussed the PS4 and reviewed the photographs that both of them had taken of the timber framing, before Mr O’Hagan signed the PS4.

• [235] O’Hagan issued the PS4 on 30 April 2009. Mr O’Hagan’s evidence was that he noted the requirement for the PS4 in his diary on 6 July 2007, but he could not recall why it was not issued until April 2009. For present purposes, nothing turns on the delay.

⁴⁶ Andrews Property Services Ltd v Body Corporate 160361, above n 20.

• [236] The PS4 was issued in respect of “Replacement timber + certification of existing timber.” The PS4 recorded that O’Hagan had been engaged by Mr Heaney to provide “Technical + Consultancy” services in respect of the requirements of B2 of the Building Code for the “building work” described on “Drawings consented by [the Council] and drawn by Alexander & Co and the specification and other documents according to which the building is proposed to be constructed.”

• [237] Ms Bates did not call any evidence as to general practice and requisite standards on the part of tradespeople in O’Hagan’s role, in terms of the removal of the timber or the issue of the PS4. Mr Jordan did give evidence for Ms Bates that, in his opinion, a prudent Council would not place any reliance on the PS4 when considering compliance with the requirement for subfloor ventilation. But his evidence did not extend directly to O’Hagan’s obligation. In any event, nor is there a pleading in relation to the Council’s reliance on the PS4.

• [238] Ms Bates’ remaining case against O’Hagan appears to be that O’Hagan could not have expressed an opinion about the durability of the replaced and treated timber without being satisfied, not only as to the durability requirement in cl B2, but also the functional requirement of cl E2 in relation to external moisture: “Buildings must be constructed to provide adequate resistance to penetration by, and the accumulation of, moisture from the outside.” In failing to identify that the proposed ventilation holes specified on plan A-03 had not been installed, Ms Bates says O’Hagan failed in its performance of these contracted services; O’Hagan ought not to have issued the PS4 without confirming the installation of the proposed ventilation holes specified in plan A-03.

• [239] I do not accept that assertion. It is not consistent with the relevant passage in the conditions to the building consent which required the PS4. I accept that the only reasonable interpretation of the PS4 is as confirmation of what the Council had asked for in its 17 February 2009 letter – that is, that:

... the decayed timer (sic) was removed and that the retained timber within 1.0m of the decayed timber and all accessible timber has been appropriately treated so that the requirements of clause B2 of the Building Code has (sic) been met

• [240] That is consistent with the conditions of the building consent and with Mr Jordan’s evidence that:

The producer statement refers only to replacement and certification of existing timber and does not include reference to sub-floor ventilation. A prudent council would not place any reliance on this document when considering compliance with the requirement for sub-floor ventilation.

• [241] I accept that, at the point when O’Hagan was carrying out the timber inspections (May and June 2007), there was no obvious reason for it to fear that the building consent would be departed from. I do not consider it would be reasonable to hold that O’Hagan had a duty to satisfy itself that the subfloor ventilation provided for in plan A-03 was being or had been implemented, or to warn that it was not, before certifying as to the durability of the timber that had been retained and treated. While the PS4 was not in fact issued until 30 April 2009, Mr O’Hagan’s evidence was that was an oversight on O’Hagan’s part and O’Hagan did not undertake a further site visit at that point.

Design advice and obtaining Council approval for Detail 12 in July 2007

• [242] The third aspect of O’Hagan’s involvement in the remedial work occurred in July 2007 when O’Hagan provided advice and obtained approval for Detail 12. As noted above,⁴⁷ this related to the termination point of the cladding, and during the course of this work being completed it appears some existing patio vents were covered.

• [243] As I have already found, O’Hagan’s 16 July 2007 letter did not specify the covering of the patio vents,⁴⁸ and the plaintiff’s own evidence was that the covering of the existing patio vents was not necessitated by the amendment to Scribble’s Detail 12. Therefore this argument must also fail because, as with the removal and replacement of the timber and the issue of the PS4, any actions (presumably by Brackenridge) in covering the patio vents were outside the scope of O’Hagan’s work (a discrete design task, rather than ensuring building work undertaken by others would be code-compliant) and the duty it owed to Ms Bates and Mr Heaney. I also note that

⁴⁷ See above at [112]-[114].

⁴⁸ See above at [120].

Ms Bates did not plead a discrete duty on O’Hagan to warn; nor would the facts have supported such a duty.

• [244] For completeness, I note Ms Bates faced a further significant difficulty with the claim against O’Hagan in relation to this aspect of the remedial works: she accepts that, even if O’Hagan was responsible for the covering over of the existing patio vents, that was not causative of the damage to the subfloor (notwithstanding the evidence from Mr Jones on Ms Bates’ behalf that it was causative).

Obtaining the amended building consent (ABA-62145B)

• [245] The final allegation in relation to O’Hagan related to the amended building consent issued in 2008, to change the cladding on the house from Nu-Lite to Thermaclad EIFS. The initial claim was that the Scribble drawings submitted with the application made inadequate provision for subfloor ventilation. Ms Bates’ position by the close of the trial was that the amended building consent did not involve removing the proposed ventilation holes provided for in plan A-03. Ms Bates advances her negligence claim against O’Hagan in respect of the amendment only if I conclude that the application for the amended building consent did involve removing the proposed ventilation holes provided by A-03.

• [246] Given I have found the proposed ventilation holes remained a part of the planned works after the issuing of the amended building consent (despite plan A-03 being stamped “superseded),⁴⁹ this claim against O’Hagan falls away.

Was O’Hagan’s negligence a material cause of, or contributor to, the damage to the house?

• [247] Ms Bates says that as a result of O’Hagan’s failure to identify the lack of subfloor ventilation in the as-built construction, the house was built with inadequate subfloor ventilation. That negligence is a substantial and material cause of the damage suffered by Ms Bates.

⁴⁹ See above at [154].

• [248] Although I have found O’Hagan did not breach its duty to Ms Bates, for completeness I make some observations about causation in relation to the claim against O’Hagan.

• [249] First, as in the analysis of whether O’Hagan breached its duty, I again emphasise the relevance of the scope of the duty. BNZ v Guardian Trust illustrates an approach to the cause in law test by reference to the scope of the duty owed by the defendant.⁵⁰ The Court of Appeal cited the House of Lords’ decision in South Australia Asset Management Corporation v York Montague Ltd, where it said “the real question in this case is the kind of loss in respect of which the duty was owed.”⁵¹ It is important to identify the purpose of the relevant cause of action, and the nature and scope of the defendant’s obligation in the particular circumstances.

• [250] Ultimately, Ms Bates’ surviving allegations against O’Hagan come down to the same thing: in the course of undertaking its contractual duties – identifying and removing decayed timber and treating adjacent timber; issuing the PS4; preparing and seeking consent for the amendment to Detail 12; seeking amendment to the consent in relation to the change of cladding – it ought to have identified that the proposed ventilation holes provided for in plan A-03 had not been installed, but failed to do so. I have found that clearly fell outside the scope of O’Hagan’s engagement.

• [251] Even if a broader duty existed, there was no evidence before me as to whether, at the time of its timber inspections, O’Hagan would in fact have been able to identify that the ventilation holes provided for in A-03 had not been installed.

• [252] Second, Ms Bates faced one specific challenge in relation to O’Hagan: her primary arguments in relation to the July 2007 work around Detail 12 related to the covered patio vents, which she conceded were not causative of the damage she has suffered. More generally, Ms Bates would have faced similar issues to those she faced in the claim against the Council, in establishing the cause of the damage to the requisite standard, including a failure to exclude other causes of the damage to the subfloor.

⁵⁰ Bank of New Zealand v New Zealand Guardian Trust Co Ltd [1999] 1 NZLR 664 at 683.

⁵¹ South Australia Asset Management Corporation v York Montague Ltd [1996] UKHL 10; [1997] AC 191 (HL) at 212.

• [253] Ms Bates’ case is inconsistent as to what was ultimately causative of the damage to the subfloor: her principal expert witness said it was the covering over of the patio vents; plaintiff’s counsel said it was not, and was, rather, the failure to install the proposed ventilation holes.

Conclusion on negligence claim against O’Hagan

• [254] I conclude O’Hagan did not breach its duty to Ms Bates, and, in any event, the evidence for the plaintiff would not have established a causative link between any breach and the damage alleged.

Affirmative defences

• [255] In light of my findings that Ms Bates’ claims against both the Council and O’Hagan have failed, it has not been necessary for me to go on and consider the affirmative defences raised by each of the Council and O’Hagan against Ms Bates.⁵²

• [256] For the same reason, I have not considered the cross-claims, which fall away as a consequence of my findings in relation to Ms Bates’ claims against each of the Council and O’Hagan.

Third party claim

• [257] O’Hagan has a remaining third party claim against Brackenridge. Similarly, that claim falls away as a consequence of my finding that O’Hagan has no liability to Ms Bates.

Scope of remedial work

• [258] It has also been unnecessary for me to go on and consider the scope of any remedial work to the house.

⁵² See above at [9].

Costs

• [259] I invite the parties to agree costs. If they are unable to do so, the defendants are to file submissions of no more than ten pages within 15 working days of the date of this judgment; and the plaintiff is to file any submissions in response, of no more than ten pages, within a further 15 working days.

Gwyn J