Environmental / Resource Management

Many Tortfeasors Make Light Work Of Compensation

VIECELI V CHRISTCHURCH CITY COUNCIL [2014] NZHC 748

This case concerns the approach to apportionment of liability between district councils and developers for the cost of repairs of defects in the construction of buildings.

The developer, Gilgamesh Limited, owed a non-delegable duty of care pursuant to its contract with a purchaser of a property to ensure that the property was constructed in accordance with the building consent, the Building Act 1991 (as it was at that time) and in a proper and workmanlike manner. The Christchurch City Council successfully argued that the developer had breached this duty of care and was therefore liable to the Council as a joint tortfeasor for a contribution to the settlement paid by the Council.

The Council accepted that it failed to identify the construction defects in its inspections of the building work including at the final inspection stage. The defects were identified in the assessor's report pursuant to the Weathertight Homes Resolution Services Act 2006.

Through mediation the Council settled the claim made by the purchaser at a total of $115,000, of which the Council paid $82,500 and a third party $32,500. The Council then continued a claim against the developer to recover part of its share of the cost of the settlement.

The High Court considered the evidence presented on behalf of the Council and found that there were construction defects that were contrary to the Building Code and relevant workmanship standards at the time of the building consent in 2001. On the balance of probabilities the Court was also found that Gilgamesh Limited, as the developer, breached its non-delegable duty of care by constructing the house with these defects.

The Court was able to arrive at this decision because, importantly, section 17 of the Law Reform Act 1936 provides that, where damage is suffered by any person as a result of a tort, any tortfeasor who is liable in respect of that damage may recover a contribution from any other tortfeasor who is, or would if sued in time have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise.

The Council sought an apportionment of liability of 15% of the settlement cost to be borne by the Council and 85% by the developer. In consideration of the case authority, the Court held that the primary responsibility for building defects lies with the developer who has a non-delegable duty of care. The 85/15 apportionment was granted as requested. The Council was also entitled to interest on the sum claimed.

While the case makes no new law, it does provide a relatively rare example of an occasion where the territorial authority has been able to recoup its costs from a developer still around to meet its responsibilities. It is also a reminder that, in such cases, the primary tortfeasor is seldom the territorial authority.

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The contents of this publication are general in nature and are not intended to serve as a substitute for legal advice on a specific matter. In the absence of such advice no responsibility is accepted by Brookfields for reliance on any of the information provided in this publication.

 

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