Contractor partially successful in leaky homes appeal

A contractor has successfully appealed against elements of a negligence award against them for their work on a leaky apartment building in Auckland in the recent Court of Appeal case of Andrews Property Services Limited v Body Corporate 160361 [2016] NZCA 644.

In a 2015 High Court decision (Body Corporate 160361 v BC 2004 Limited and BC 2009 Limited [2015] NZHC 1803) Andrews Property Services was found liable for 40 per cent of the owners’ losses. This figure included 20 per cent apportioned to APS by the judge and a further 20 per cent that that was apportioned to Auckland Council but subsequently assigned to APS as the result of a cross appeal. Babbage Consulting Limited was apportioned the remaining 60 per cent.

In the 2015 decision the judge held that, while APS’s tender had transferred to Babbage the obligation to undertake a survey of damage which the tender specification required, APS was obliged to be satisfied that Babbage had undertaken a proper survey. APS had failed to do this. APS had also failed to correctly install exterior cladding properly which resulted in cracking on movement. Finally APS’s producer statement mislead the Council into thinking the survey had been undertaken and the cladding affixed properly.

In reviewing APS’s liability in respect of the survey, the Court of Appeal held that the High Court had incorrectly found APS liable. The Court of Appeal found that APS was not under a duty to warn the owners about Babbage’s performance of the inspection obligation.

In respect of the other grounds of APS’s liability the Court of Appeal found that the High Court was correct in respect of the improperly affixed cladding. From the above two determinations it followed that the Producer Statement to the Council was only misleading in respect of the cladding, not the survey.

The issue of contribution amongst the parties awaits the determination of a cross-appeal.

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