Tasman District Council v Buchanan & Anor

Masterbuilder House of the Year 2007 – Non-compliant pool

Does the Council owe property owner duty of care for economic loss?

The decision I choose to review in this month’s article, concerns an ex- House of Year that retained a non-compliant pool in terms of the Fencing of Swimming Pools Act 1987 (FOSPA). On appeal the Court of Appeal overturned the High Court to find that whilst completing its duties under the FOSPA, it owned no duty of care to protect home or pool owners from suffering economic loss.  

Facts.  
The key facts can be summarised as follows:

  • 2004 the Tasman District Council granted a building consent for this architecturally designed home oriented around a swimming pool set in a central courtyard.  

  • 2006 a Code Compliance Certificate was issued by the Council.

  • 2008 Buchanan and Marshall purchased the property.  

  • 2009 the Council inspected the swimming pool to check compliance with the FOSPA. Council passed the pool as compliant.

  • 2012 the Council inspected again the swimming pool and confirmed compliance with the FOSPA.  

  • In 2019 Buchanan and Marshall looked to sell the property and downsize. Council conducted a further inspection of the pool having seen the property advertised for sale. The Council failed the inspection because the doors were not self-closing nor alarmed, and the east gate did not self-close.  

  • Buchanan and Marshall challenged the Council decision through the MBIE determination process to no avail>  Ultimately the pool was held to be non-compliant broadly for the reasons set out above but excluding the requirement for an alarm.  

  • Buchanan and Marshall in December 2020 issued proceedings against the Council.

  • The pool fencing ultimately was not made compliant until 2021.

Claim
The claim brought by Buchanan and Marshall was for the negligent pool inspections completed by the Council in 2009 and 2012. The claims brought were in negligence, negligent misstatement and breach of statutory duty under the FOSPA. The loss contended for by the Owners was that, ultimately the Council by not identifying the pool’s non-compliance in 2009 and 2012, meant that by the time they actually learnt of the non-compliance in 2019, they were statute barred in terms of the original construction work by operation of the ten year long stop limitation defence pursuant to section 393 of the Building Act 2004.  

Point of interest.  
Whilst many arguments were raised on appeal by the Council, the important finding on appeal for the purposes of this article, was whether a duty of care was owed by Council to Buchanan and Marshall as property owners, for the economic losses suffered, being the loss of their recovery rights against Council.  

The Court considered the purpose of FOSPA and the inspections. It concluded that the purpose of the inspection was to ensure that the owner of a pool continued to properly fence his/her pool, noting the underlying statutory obligation on the regulated person was to promote the safety of young children. Conversely, the purpose of the pool inspection was not to identify for the benefit of the property owners, rights of action that they may have against builders, architects or councils in relation to the original construction of the pool. As stated by the Court of Appeal:-

“The inspections are carried out to enforce compliance with the legislation by the owner, not to assist the owner to identify rights of recovery against the Council and/or third parties.”

The Court of Appeal, applying the decision Attorney-General v Carter ruled that the sole purpose of the relevant legislative scheme under FOSPA was for the protection and safety of young children. The purpose of inspections after construction was to ensure that there was no supervening risk to the safety of young children. It was not to protect the economic interests of property owners. The Court ruled the requisite proximity between the Council and the Owners to found a claim in negligent misstatement was not present. Further, policy reasons also pointed against a duty of care being imposed. The High Court decision was overturned by the Court of Appeal, and the Council was found not liable in negligent misstatement nor negligence simpliciter,

Comment.  
This decision goes to show that liability cannot be made out against a territorial authority where there has been a negligent inspection by Council. The Courts will look back and analyse the statutory purpose of the inspection process, before imposing a duty of care in any given circumstance. The purpose here was child safety not the protection of property rights for land owners. 

Note: This article is not intended to be legal advice (nor a substitute for legal advice). No responsibility or liability is accepted by TM Bates & Co. or Building Today to anyone who relies on the information in this article.