Suing the subcontractors

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A common practice in building defect cases is to join anyone and everyone to the proceedings. Unfortunately this means that plaintiffs often strike trouble trying to establish, where there is no contractual relationship, negligence by certain defendants. Subcontractors have been a great example of this, although the position is not as clear as you may think.

Where negligence is pleaded, the first hurdle is establishing that it is fair, just and reasonable for the defendant to owe the plaintiff a duty of care. Originally, courts declared that subcontractors could never owe a duty to owners. The view was that subcontractors were only answerable to the head contractor for their breaches.

Now, at least in residential building cases, the courts and the Weathertight Homes Tribunal have made it clear that subcontractors can be found liable to owners in negligence. This is particularly true where a subcontractor’s negligence has resulted in weathertightness issues in a property. So, for example, labour-only subcontractors have commonly been found liable when the flashings they installed leaked. It is also clear that the terms ‘builder’ or ‘contractor’, as used in leading cases such as Bowen v Paramount Builders (Hamilton) Ltd [1977] 1 NZLR 394, are being interpreted to include most specialists or qualified tradespeople.

However, subcontractors will not owe a duty of care to the principal where the parties are involved in complex commercial relationships and have negotiated for contractual risk allocation (Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd [2005] 1 NZLR 324).

Ultimately, there are no fixed rules for negligence. As emphasised by the Supreme Court last week (Carter Holt Harvey v Minister of Education [2016] NZSC 95), even the general test for a duty of care operates as a framework rather than a straightjacket. Therefore you can sue the subcontractors although, depending on the facts of your case, you may not be successful.

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