Engineer remains in construction defects claim for Producer Statement

Body Corporate 444813 v Auckland Council

In this month’s article we focus upon the aforementioned decision where an Engineer and his company are brought into a proceeding by Council for the issue of a Producer Statement Construction Review where the building is subsequently discovered to suffer from construction defects. 

Facts. 

This case concerned a Mount Eden, Auckland multi-unit apartment complex which suffered from various structural defects, as well as more general construction defects. The Body Corporate had brought proceedings against the Council for these defects. The Council in turn joined in the Engineering company and the Engineer himself who observed construction and signed the PS4. This decision addressed an attempt by the Engineer to remove the company and himself from the proceedings on the basis that the claim could not succeed. 

  • September 2007 the HCL engages BJEL to provide the structural design and working drawings, together with construction review for the Tawari Mews development.

  • After Tawari Mews was constructed, the building suffered from defects. The Plaintiffs claim that as a result of the defects they need to carry out remedial works to the common property and unit property.

  • In its capacity as qualified independent certifier, BJEL certified the development’s structural steel works as complete in a PS4 dated 9 November 2011. Mr Jones personally signed the PS4 which recorded that BJEL was engaged to provide CM4 observation for the building works, and that Mr Jones believed on reasonable grounds that the structure was completed in accordance with B1 of the Building Code. 

  • The claim brought by Council against BJEL, and Mr Jones was to the effect that if Tawari Mews is proved to suffer from defects, BJEL owed the plaintiffs a duty of care to exercise reasonable skill and care in carrying out monitoring and certification to ensure compliance with B1, and that the building works were carried out with good trade practice. Similarly this duty is also owed by Mr Jones. 

  • Council seeks a contribution or indemnity from the Engineer. 

 

The Engineer made the following arguments to support its application to remove itself from the proceedings. 

  • CM4 construction monitoring does not require permanent on-site supervision, just periodic audit;

  • B1 is solely concerned with the stability of a building’s structure and does not encompass durability issues. He further argued that he and the Council had agreed that the monitoring would encompass B1 stability monitoring with B2 durability monitoring excluded. The PS4 was so limited as a result. He said the PS4 was correctly issued based upon the work procedures, construction materials and components used on the site. 

  • The PS4 contained express disclaimers that it was only to be relied upon by Council and that liability would only accrue to the company not Mr Jones himself. 

  • He says there are only 4 defects that have anything to do with structural steel concerns. 

The Council obviously argued the contrary position and called evidence from their own engineer. The Council Engineer concluded that the 2 of the defects that were relevant to the structural steel (deflection of the balcony precast concrete slab), were observable/preventable during construction. The other defects were preventable too, in that Mr Jones ought to have been testing the application of the coating to the structural steel having completed the structural steel calculations originally, to ensure the application was correct. 

The Council through Counsel made these key submissions:

  1. It is common ground that the purpose of issuing a PS4 was to allow the Council confidently to issue the Code Compliance Certificate for the structural steel works. 

  2. The claim against the Engineer was not in negligent misstatement but negligence simpliciter;

  3. The liability of the Engineer arises applying the first principle of reasonable foreseeability- the Engineer ought to have known that loss to the plaintiffs was a reasonably foreseeable consequence of their negligent observation and verification of the building works as complying with B1 of the Building Code. 

  4. In terms of the 4 defects in issue, the fact that there was conflicting evidence upon the responsibility of the engineer for these defects supports that factual conflict being deferred to a final hearing (not interim decision on papers), where all evidence can be heard and tested via cross-examination. 

 

The Court concluded that there was a reasonable argument that the Engineer has potential liability to the plaintiffs in negligence for the works carried out by the Engineer such that if the Council was found liable for the 4 defects discussed above, then the Engineer arguably has liability as a joint tortfeasor in respect of them. The Court concluded further that since Mr Jones as a registered engineer personally carried out the observations as required for B1 of the Building Code and signed the PS4, then there is potential liability for him personally to the plaintiffs, if the Council is found liable to the plaintiffs. 

 

Comment. It is clear from this decision that those issuing producer statements cannot rely upon any limitation they impose upon them in writing in terms of excluding their liability to parties who they are not parties to them. 

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. Barristers / Solicitors to anyone who relies on the information contained in this article. All copyright in this article is retained by TM Bates & Co.