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Date: Tue, 28 Oct 2008 16:39 From: Geoff McLay Subject: Council liability for building defects in New Zealand - no liability for economic loss!
Colleagues may be interested in the following judgment released by the New Zealand Court of Appeal last night. In this decision the Court upholds the striking out of a claim by motel owners that the Council ought to have better inspected their property and thus prevented them suffering economic loss in repairing the property. The motel suffered from water ingress, officially known in NZ as “weathertightness” issues, or better known as leaky home syndrome. The Court confirms a previous High Court decision, Three Meade, that the Hamlin line of cases (that refused to follow Murphy) does not apply to commercial premises. Moreover the court holds in line with Carter v A-G that the New Zealand building cases are sui generis (Carter concerned a supposed negligent inspection of a commercial ship) and not of general application. The Court finds that distinction in “health and habitation”. The Court in so doing rejects Stephen Todd’s argument in the paper that many of you heard at Jason’s conference and is in the edited book. The Court of Appeal’s endorsement of the Hamlin decision on domestic dwellings is a big deal in NZ. The liability of the Auckland City Council for leaky buildings is put at between $300-500 million – or the largest civic work in the history of Auckland! The case is of real theoretical importance for those interested in government liability for economic loss, it raise the point nicely put by Alan Beever in the introduction to his NZ tort case book – why are houses really so special? One might add that New Zealand is a nation of small house investors where trying to make money from real estate is a national obsession, and it is unclear why this investment is protected by courts.
Geoff The case is Te Mata Properties Limited and Ors v Hastings District Council
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