The Supreme Court recently released its long awaited decision in relation to the collapse of the Southland Stadium.
From 1999 to 2000, the Southland Indoor Leisure Centre Charitable Trust (the Trust) had a stadium built to provide indoor sporting and recreational facilities. Remedial work to the roof carried out in 2000 was defective and in 2010 the roof collapsed from the weight of snow.
The Trust brought proceedings against the Council in negligence and negligent misstatement in relation to the remedial work. The High Court upheld this, finding that the Council owed a duty of care to the Trust when they issued the code compliance certificate (per Spencer on Byron which stated that an authority’s duties under the Building Act 1991 were owed to original and subsequent owners regardless of the type of premises). It was also found that the Trust was not contributorily negligent. We discussed the High Court Decision in an earlier blog here – [https://nzconstructionblog.com/2015/09/27/stadium-southland-collapse-engineer-and-councils-17m-negligence/]
Court of Appeal
The Council appealed the High Court decision to the Court of Appeal which distinguished Spencer on Byron because this case concerned the owner of a building whose contractors were responsible for creating defects which caused the loss and it was not fair to impose a duty where the Trust’s own contractors had caused the loss.
The Court of Appeal also determined that the only possible basis for the claim was negligent misstatement, as the claim was based on the negligent certificate of code compliance. This cause of action failed as there was no specific reliance, an element which had to be proven to successfully establish liability. The Court also found that the Trust was contributorily negligent when it sought engineering advice on the roof and failed to follow recommendations. See an earlier article for more detail on the Court of Appeal decision [https://nzconstructionblog.com/2017/03/28/court-of-appeal-rejects-claim-of-negligent-misstatement-for-code-compliance-certificate/]
The appeal to the Supreme Court addressed whether the Court of Appeal was right to reverse the High Court judgment. This question included issues of whether the Court of Appeal was correct in distinguishing this case from Spencer on Byron, whether it was correct in casting the claim based on the code compliance certificate as a claim in negligent misstatement, and whether the Trust’s actions constituted contributory negligence.
The Supreme Court determined that there is no distinction between this case and Spencer on Byron when determining whether a duty of care arises. The Court of Appeal took insufficient account of the fact that the Council’s duty arises from their regulatory role under legislation and there is no distinction between physical inspections and issuing documents like the code compliance certificate as a basis to avoid or mitigate liability by relying on the actions of the Trust’s contractors. The Supreme Court found this was not a negligent misstatement case, rather a cause of action in negligence as the High Court had dealt with it.
The Court then considered if the Trust’s actions amounted to contributory negligence. Contributory negligence was found because the Trust should have asked an engineer to inspect the trusses based on advice from the architect. While not directly related to the concerns the Trust had (which were related to leaks), the recommendation to inspect the trusses has to be viewed in light of all of the facts. While they were concerned with the leaks, they also clearly had safety in mind and there was no reassurance about safety from the architect. The Trust also knew about concerns with the roof moving and other ongoing issues. Consequently, the trust was contributorily negligent and damages should be reduced by 50%.
However William Young and Glazebrook JJ disagreed with the finding of the majority on the point of contributory negligence. They considered that just because remedial work that may have followed from an inspection was likely to have prevented the roof collapse, a finding of contributory negligence did not necessarily follow. There was nothing in the recommendation that the trusses be checked, or that suggested there were issues with the construction that could cause the roof to collapse. It was not unreasonable to continue with inspections when the original issue (the leaks) appeared to be resolved. Further when it was determined that the movement of the roof was within design tolerances, concerns about safety were resolved. According to the minority, it is not considered contributory negligence that other recommendations were not pursued.
What this means
Local Authorities are required to carry out their regulatory role and are not able to avoid liability simply by relying on others. This confirms that all parties involved in a construction project are required to actively perform their role with the requisite level of skill and care.
The judgment also highlights the obligation on owners to also take reasonably practical steps and that the courts will reduce any awards where the owner has contributed to their loss.