Johns v Hamilton City Council & Ors – Leaky building decision – Builder liability

In this March 2022 decision the Court considers the liability of various trades involved in the construction of a leaky home. The decision includes careful analysis of expert testimony and makes some general statements of law as to builder and trade liability in this context. It is however voluminous in length so this article is limited to addressing the findings against the building trades only. 

 Facts

  • Mr Davey was a builder of some 30 years experience, and was the owner of the property from 13 June 2007. 

  • 22 February 2008 Mr Davey obtained building consent to build 2 x two storey houses on the property with attached garages. 

  • Construction began in March 2008, Mr Davey contracting the builders and subcontractors. He was project manager.

  • ECDL worked on site on a labour only basis carrying out carpentry services. ECDL were responsible for

    • laying the foundations and concrete slab

    • erecting light timber frames

    • installing the first floor on a suspended timber frame

    • constructing the low-pitched timber rafter and a truss roof system

    • installing the aluminium joinery, excluding ranch slider

    • closing in;

    • installing interior lining and doors;

    • Finishing lines and hardware fit off.

  • ECDL work was supervised by Mr Davey with the odd exception.

  • Other trades were engaged by Mr Davy including roofing and plastering.

  • The work thereafter progressed and a Code Compliance Certificate was issued on 1 April 2009. 

  • On 2 August 2009 Mr Johns purchased one of the now two properties from Mr Davey. 

  • Mr Johns went to sell the property in April 2014 but defects were discovered by a potential purchaser.

  • A minor targeted repairs was completed in 2014 without a building consent. 

  • Ultimately further defects were identified such that by 2018 Mr Johns knew he had a full blown leaky building that he required to be reclad. 

  • The remedial work began in August 2018 and the work was completed in February 2019.

  • The property was sold in 17 May 2019 in a fully remediated state. 

 

The role in construction of ECDL

ECDL operated as a building construction company. It had a verbal contract with Mr Davey to provide labour only services in respect of parts of the construction. They worked as builders “on the tools”. An hourly rate was agreed but nothing was confirmed in writing. The directors worked together on site with some apprentices, but Mr Davey organised materials and Council inspections, he managed all subtrades including them and Mr Davey was on site daily. ECDL denied any liability for any of the defects. 

The Defects. 

The following defects were established to exists although Defects 3-5 were determined to be causative of the need to reclad the house:-

  1. Poorly sealed or unsealed gaps between the cladding and joinery;

  2. Lack of sufficient cladding cavity drainage and ventilation ;

  3. Poorly formed roof metal parapet cap flashing junctions;

  4. No provision to seal or flash rivet penetration through the roof metal parapet flashing;

  5. Poorly formed parapet to wall junctions;

  6. Incorrectly installed deck membrane to wall upstairs;

  7. Poorly installed balustrade fixings.

Claim against Mr Davey

The claim brought against Mr Davey was twofold both as Developer and as project managing builder, and was brought in negligence. 

The case for Mr Davey was that whilst he accepted he owed a duty of care to the Plaintiff as developer and builder, he says he did not breach that duty of care. His subcontractors were responsible for all the defects, and if he was found liable, then he should be completely indemnified by those that he contracted the works out to. 

Ultimately, he was found liable for all defects both as Developer and Builder. When considering the claim brought against Mr Davey the Court stated as a useful restatement of the law:-

“Builders owe a duty to take reasonable care to prevent damage to persons reasonably expected to be affected by their work, including purchasers. The scope of this duty is to ensure compliance with the building code, good trade practice and other relevant statutory requirements. The duty cannot be avoided by delegation to subcontractors.”

 

Claim against ECDL

The claim brought by Council and Mr Davey against the labour only builders (ECDL) was also in negligence. They were held liable for only defects 5, and 6 because of their involvement in the installation of the saddle flashings (Defect 5), and their involvement in the sequencing of the building paper/membrane interface on the deck (Defect 6). 

The Court ultimately ruled in favour of the Plaintiff in a judgment sum in excess of $600,000. The apportionment applied to the Mr Davey was 40%. ECDL together with its directors were apportioned 10% of the total liability. The Plaintiff also succeeded in obtaining $25,000 in general damages for stress and suffering. 

Postscript.

This decision is a timely reminder of the wealth of law provided by leaky building cases, and that some of these claims are still making their way through the Courts, in this case 14 years after the CCC was issued.

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.