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Saga finally concluded The New Zealand Supreme Court has had the final word in a long-running building negligence case. It released its decision late last year in Southland Indoor Leisure Centre Charitable Trust v Invercargill City Council [2017] NZSC 190. The Southland Indoor Leisure Centre Charitable Trust (SILCCT) owns and operates Stadium Southland. The stadium's construction started in 1999 and it was completed in early 2000. Issues with the roof were discovered during construction and remedial work conducted in 2000. Invercargill City Council (ICC) issued a code compliance certificate in November 2000. The remedial work proved defective, as the stadium roof collapsed in September 2010 after a heavy snowstorm. There was no dispute over how and why the roof collapsed. It was agreed in the High Court that a "combination of poor quality welding and a failure to follow the plans and specifications for remedial work to the roof trusses meant the roof was unable to carry the snow loadings experienced that day". SILCCT issued proceedings against ICC in negligence and negligent misstatement over the stadium's remedial work. The High Court found in SILCCT's favour, relying on the Supreme Court's previous decision in Body Corporate No 207624 v North Shore City Council (Spencer on Byron). The Court of Appeal subsequently set aside the High Court's decision, distinguishing Spencer on Byron. The Supreme Court considered whether Spencer on Byron should be followed and whether SILCCT was contributorily negligent, given it had sought further engineering advice on the roof in 2006.
In 2012 in Spencer on Byron, the Supreme Court held that local authorities' duties under the Building Act 1991 are owed to original and subsequent owners "regardless of the nature of the premises". When inspecting the construction of a building, the same duty of care is owed by the council to all owners, whether commercial or residential. Spencer on Byron is also authority for the proposition that a council's duty is not affected by the involvement of other professionals in the construction process.
In Stadium Southland, the Supreme Court overturned the Court of Appeal's decision and unanimously reaffirmed the court's earlier decision in Spencer on Byron. The Supreme Court made no distinction between the two cases. A duty of care was owed by ICC. By issuing a code compliance certificate for the remedial work in 2000 without first knowing if the work complied with the code, ICC had acted negligently. There was no dispute that, if there was a duty of care, it was breached and the breach was causative of the loss. The Supreme Court confirmed there are no policy reasons for limiting the duty of care owed by local authorities and it should apply to all buildings, whether residential or commercial, and whether built by a commissioning owner or a developer. A distinction cannot be drawn between issuing a code compliance certificate and ICC's other functions. Issues of contributory negligence may arise with commissioning owners, but that will not obviate the council's duty.
While the Supreme Court unanimously found a duty of care was owed (and breached), the issue of contributory negligence divided the court. The majority (Elias CJ, O'Regan and Ellen France JJ) found SILCCT was contributorily negligent and reduced damages awarded to it by 50%. SILCCT had sought further engineering advice in 2006, after concerns about the roof leaking. While the recommendations sought were made in the context of a particular issue, the roof leaking, the majority found SILCCT was still concerned with safety more generally. It had been recommended that the trusses and welds be inspected by an engineer. If all the recommendations had been followed, the High Court found it was more probable than not that the truss welding deficiencies would have been discovered. SILCCT should have actioned the recommendations it received. By ignoring them, the majority found SILCCT was contributorily negligent. The minority (William Young and Glazebrook JJ) favoured the High Court's approach. The 2006 recommendations were made in the particular context of SILCCT's safety concern, which was triggered by the roof leaking. Once satisfied the roof's flexing (which was causing the leaks) was within design tolerances, and the leaks were stopped, SILCCT's safety concerns had been addressed. The recommendations did not indicate workmanship defects which could cause a collapse. In that context, the minority found not implementating recommendations about the trusses and welds could not be seen as contributory negligence.
The Supreme Court's decision in Stadium Southland is significant, including insofar as it clarifies the scope of duties owed by local authorities. The Court of Appeal, by distinguishing Spencer on Bryon, had favoured a narrower scope of duties being imposed on local authorities. The Supreme Court has clarified that councils owe a duty of care regardless of whether a building is residential or commercial, or built by a commissioning owner or a developer. The duty owed by councils has not been reduced in scope.
As mentioned in the December issue of Resolve, Professor Rob Merkin QC will present the third annual NZILA lecture series in Christchurch, Wellington and Auckland in March. Rob is a Professor of Law at the University of Exeter in England, and teaches insurance at masters' level in the universities of Auckland, Sydney, Queensland and Hong Kong. His academic interests span all areas of arbitration law and insurance and reinsurance law. Rob has held roles with the British Insurance Law Association and the International Insurance Law Association (AIDA) and was a consultant to the UK Law Commission and parliamentary adviser on what was to become the Insurance Act 2015. In his lecture, Can the assured's conduct defeat a claim? Rob will discuss fraud in the claims process, criminality, and negligent act and reasonable care. Members' tickets cost $60 (incl GST) and non-member tickets are $90 (incl GST). Register at http://www.nzila.org/events/, or contact secretariat@nzila.org if you would like to register multiple attendees.
Auckland Christchurch Wellington |
Resolve is the official publication of the Australian Insurance Law Association and
the New Zealand Insurance Law Association.
