The unfortunate incident of the dog and the Builder
The unfortunate incident of the dog and the builder: the High Court clarifies extent of builder’s personal liability - Palmer v Hewitt Building Limited [2021] NZHC 1460
Is there a difference between a builder’s obligations under the Building Code, and those under a specific Building Consent? The High Court recently considered this question in two important contexts:
· Statutory warranties under the Building Act 2004.
· Under a building contract that the builder is not personally party to.
Background
Ms Palmer and Hewitt Building Limited (“HBL”) entered into a fixed price building contract to extend and renovate Ms Palmer’s home. Mr Hewitt was the sole director and owner of HBL.
Unfortunately, the project went seriously wrong.
The problems began with poor quality plans, which were treated by Mr Hewitt as simply outlining the essence of what Ms Palmer wanted. Mr Hewitt would depart from the consented plans to deal with variations agreed with Ms Palmer and to save costs on the fixed price contract.
There were disagreements from the beginning. One of the subcontractors was removed from site, which appears to have escalated to an unfortunate incident where Ms Palmer’s dog was taken (although, happily, returned). The relationship remained strained.
After what Mr Hewitt thought was practical completion, disputes remained unresolved, and defects manifested - the septic tank system flooded, the gas fire suffered from faulty installation, water in the pipes froze. No code compliance certificate had been issued at the time of the trial.
Ms Palmer sued HBL and Mr Hewitt under the Building Act, the building contract, and also in negligence.
Statutory warranties
Part 4A of the Building Act 2004 (“the Act”) implies consumer protection measures into residential building contracts. They include implying warranties into residential building contracts and remedies for breach, and requiring defective work under a residential building contract to be remedied if notified within one year of completion, among others.
The question before the Court was whether, as the warranties are implied into the contract with the building contractor, they apply only to the entity named in that contract – in most cases, the building company.
The Court confirmed that to be the case. Unless the individual builder or principal of that company is also a party to that contract, they will not be subject to the statutory warranties.
Obligation to comply with the consent, not the Code
That doesn’t mean that an individual builder does not face liability. A builder has a duty to conduct building works that comply with the standards set by the Building Code. But what happens if a builder complies with the Building Code, but deviates from the Building Consent?
A departure from consent might be relevant to an allegation that the builder failed to build in accordance with the standards of a reasonable builder. That is because the consent is a means to an end and the end is compliance with the sound building standards which are set by the Code.
However, the Court made clear that a departure from the consent neither defines the duty nor establishes a breach of it. It is common for people engaged in building work to make changes as they go. If a departure from the consent is without the agreement of a building owner, but that departure remains consistent with the Building there is no claim in negligence.
Comment
The Court here has made clear that the extent of liability in a building contract and in negligence can be very different. A builder who is not expressly party to the building contract only has an obligation to build a home that complies with the Building Code, and but not one that necessarily meets the additional requirements of the contract – or indeed the Building Consent.
If you have concerns about how this decision might affect your rights and obligations, please contact one of our team today.
