CONSTRUCTION LAW UPDATE – No. 604
COUNCIL & CERTIFIER LIABLE TO SUBSEQUENT
OWNERS
Moorabool
Shire Council v Taitapanui 2006 VSCA
30
Introduction
Watson
Constructions (in liquidation) designed and built a home on its own land in
Torquay. The Moorabool Shire Council
approved the house plans through its private certifier, Mr Mellis. Watson sold the home to the Pozmans. Eighteen months later, they sold it to Mr
& Mrs Taitapanui. Within a few months, the Taitapanuis began to notice
defects. Rain falling on the balcony
leaked into the downstairs area, water leaked from above French doors, and
tiles began to lift. They sought expert
advice but in the meantime Watson Constructions had ceased trading.
The
home
The land
contained highly reactive clay and was classified “H”. The home was a two storey construction, with the
lower floor being clad with CSR Hebel Powerpanel. The CSR Powerpanel user’s guide requires
builders to, as a minimum, comply with conventional masonry veneer construction
as specified in AS2870. The minimum
requirement under AS2870 for masonry veneer on a “H” site is a reinforced
concrete perimeter strip footing.
Contrary to
this requirement, the home was constructed using stumps on sole plates. The expert told the Taitapanuis that this footing
system was entirely inappropriate to support Powerpanel walls. He said that the house would need to be
demolished and rebuilt as rectification work would not be possible. He said that the problems would only continue
to get worse.
The
claims start
The Taitapanuis
claimed on the Home Owners Indemnity scheme. The insurer accepted liability but disputed
the quantum of the claim, suggesting that the house could be reclad with
Hardieplank or similar. The Taitapanuis issued proceedings against the insurer,
the Moorabool Council and Mr Mellis, the certifier.
They said
that the Council (through Mr Mellis) should not have approved the stump
footing system.
During the
hearing, the parties inspected the site.
After the inspection, all parties agreed that the house was seriously
defective. The Council and the Certifier
both decided not to call answering expert evidence. However, they continued to dispute which party
should pay for the rectification works, and how much should be paid.
The
Tribunal found that the insurer and the local Council (through the certifier)
were equally liable for the rectification costs including demolition and
rebuilding. The Council and the Certifier
appealed to the Supreme Court. The
appeal was dismissed. The recent decision
relates to their further appeal to the Court of Appeal.
Were
the Council and the Certifier liable
The Court
of Appeal upheld the decision of the Tribunal and found that the Council and
the private certifier were liable for the defective house.
The finding
is based on the negligence of the private certifier and the delegation to him
of the Council’s duty to certify that the plans were in compliance with the
building code.
The plans
as submitted to the Certifier were inadequate – while showing a stump type
footing system, they failed to show the external wall material for the
downstairs section of the home, although specifying a 250mm. wall thickness. This should have put the Certifier on notice
that masonry type construction was proposed.
The court’s
decision does not create new law, but incrementally advances the principles set
down in
The
principles that apply
Bryan v Maloney was a 1995 case in which a builder was found liable to the third owner
of a home, for failing to install proper foundations in the home. This was the first occasion on which a
builder had been found to owe a duty of care to subsequent owners of a home. After Bryan
& Maloney, State governments enacted legislation limiting the time
period for making such claims to 10 years following completion of the home.
Woolcock Investments was a 2003 case in which the High Court found that a subsequent owner
of commercial property was not owed a duty of care by the engineers who
designed the footings for the building, principally because the original owner
had expressly limited the extent of the engineer’s site investigations.
In Moorabool the Court noted that the
Council, through Mr Mellis, was under a statutory obligation to inspect
the application to build the home and to decide whether or not to issue the
building permit. Mr Mellis was not
at liberty to limit his duty of care.
Under the Act, Mr Mellis also inspected the home and issued the
certificate of occupancy. The issue of
the permit and the certificate of occupancy gave rise to statutory obligations
that extended beyond the original owners of the home. Structural deficiencies may well be concealed
once the building work has advanced beyond its early stages, making subsequent
owners more vulnerable to concealed defects.
The Court noted that particulars of any building permit must be provided
to any prospective purchaser for the first seven years of the life of the
building, giving rise to the implication that the permit is intended to give
reassurance to purchasers of the adequacy of the design of the home.
Conclusion
Private
certifiers and local councils are under a duty of care to subsequent owners
when they inspect and certify the plans and specifications for proposed
building work.
The
certification of inadequate plans, or of a defective design, can lead to liability
for the cost of any resulting damage.
Contributor: Tom Grace
Tom is a
former engineer who ran his own construction company for 20 years before
becoming a construction lawyer. He has
wide experience in the engineering and construction fields and specialises in
the resolution of commercial disputes.
Contact Details:
Tom Grace – Partner
Ph. (08) 8110 8004
Jeanie Elliott – Partner
Ph. (08) 8110 8006
April 2006
This publication is not legal advice. It is for general interest. You should not rely on it without obtaining
legal advice.
Fenwick
Elliott Grace is a law firm that specialises in providing legal services to the
construction and engineering industry.
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