Tasman District Council v Louise Buchanan, Keith Marshall and Alistair Donald as Trustees of the Buchanan Marshall Family Trust - [2024] NZCA 133
Date of Judgment
26 April 2024
Decision
Summary
Fencing of Swimming Pools Act 1987 — Inspections of swimming pool — Negligent misstatement —Novel duty of care — Limitation periods — Appeal allowed
In 2004 the Tasman District Council (the Council) granted building consent for an architecturally designed home oriented around a swimming pool set in a central courtyard. A code compliance certificate (CCC) was issued by the Council in 2006; and in 2008 Ms Louise Buchanan and Mr Keith Marshall purchased the property (the owners). They purchased the property in reliance on the assurances provided by the CCC.
The swimming pool at the property was inspected by the Council in 2009 and 2012 to check that it complied with the Fencing of Swimming Pools Act 1987 (FOSPA). The Council said on both occasions that it did. It was discovered however in 2019, when the owners tried to sell the property, that the property did not comply with FOSPA in a number of respects. The owners undertook remedial work, as required. But this work impaired the amenity of the property and reduced its value.
The Council admitted that it had been negligent in giving building consent in 2004 and providing the CCC in 2006. But it was common ground that claims in negligence in respect of those acts were time-barred by the 10-year longstop in s 393(2) of the Building Act 2004 (2004 Act).
In 2020 the owners brought proceedings against the Council in tort, claiming that the 2009 and 2012 inspections had been negligent, and because of that negligence they had lost the opportunity to sue the Council in respect of its earlier negligence in 2004 and 2006. The owners claimed that the 2009 and 2012 inspections caused them loss equal to the amount they would have recovered if they had successfully sued the Council in respect of the 2004 and 2006 negligence in time.
In the High Court, Palmer J held that the 2009 and 2012 inspections were negligent, and that negligence caused the owners to lose their opportunity to sue in respect of the 2004 and 2006 negligence. The Judge granted declarations that the Council had been negligent in 2004, 2006, 2009 and 2012; and ordered the Council to pay the owners special damages totalling approximately $246,000 and general damages totalling approximately $25,000: Buchanan v Tasman District Council [2023] NZHC 53, [2023] 2 NZLR 287 (High Court judgment).
The Council now appeals from the High Court judgment. Its primary submission is that the purpose of FOSPA, and therefore the inspections in 2009 and 2012, was to protect the safety of young children, not the economic interests of the owners. Therefore any duty which was owed by the Council to the owners when it carried out its 2009 and 2012 inspections did not extend to the type of loss suffered by them.
Held:
Negligent misstatement
The owners’ claims focus on the statements made by the Council after its 2009 and 2012 inspections that the swimming pool complied with FOSPA. It is appropriate to consider the negligent misstatement claim first.
The approach to a claim for negligent misstatement is well established. The requirements which must generally be met to establish sufficient proximity to found a claim are: the advice is required for a purpose that is made known to the adviser; the adviser knows that the advice will be communicated to the advisee; the adviser knows that the advisee is likely to act on the advice without independent inquiry; and the advisee does act on the advice to its detriment.
The purpose of the pool inspections and the statements which followed those inspections was not to assist the owners in identifying rights of recovery against the Council and/or third parties. If the inspector at each of the inspections had been asked why they were inspecting the pool, the answer would have been to ensure the pool did not present a threat to the safety of young children, and more specifically to ensure that the owners had not made changes to the property that affected FOSPA compliance and created a risk to young children. The first requirement is therefore not met.
The second and third requirements are met. But the fourth is not. The owners did not act on the inspections by making a decision not to initiate proceedings against the Council before the time-bar expired. The owners were not contemplating bringing proceedings, and the Council was not aware that its inspections were being relied on to assist the owners to make decisions about such claims. If the inspections had not happened, the position would have been the same as it was after the inspections took place. No new course of action was adopted by the owners after the 2009 and 2012 inspections. The statements were thus not acted on in the relevant sense.
The owners’ claim is in all material respects indistinguishable from the claim struck out by this Court in Attorney-General v Carter [2003] 2 NZLR 160 (CA).
The necessary proximity for a claim for negligent misstatement seeking to recover economic loss suffered by the owners as a result of not bringing timely proceedings against the Council was not present in respect of the 2009 and 2012 inspections. The appeal in relation to this aspect of the owners’ claim must therefore be allowed.
Negligence and damages
Nor have the owners established sufficient proximity between them and the Council in respect of the 2009 and 2012 inspections to found their claim in negligence, for the same reasons set out above. The Council did not, when it carried out those inspections and advised the owners of their outcome, owe the owners any duty to take care to protect them from loss of rights of action against the Council and others. The appeal in relation to this part of the owners’ claim against the Council must also be allowed.
If a duty of care had been owed, the Court would not have disturbed the Judge’s award of special and general damages.
Limitation periods
If the Council owed the owners a duty of care in respect of the 2009 and 2012 inspections, the earliest point the owners could say they suffered loss because of the inspections was when the 10-year longstop provision in the 2004 Act barred a claim based on the Council’s negligence in 2006. That would be in 2016. Arguably however, the owners did not suffer any loss until 2019, when non-compliance of the pool was discovered.
The Limitation Act 1950 applies in relation to the claim based on the 2009 inspection. As the relevant loss was suffered in 2016 at the earliest, which is therefore the earliest point at which the cause of action arose, the six-year limitation in the 1950 Act had not expired when the owners filed their claim in 2020.
The Limitation Act 2010 applies in relation to the claim based on the 2012 inspection. The standard limitation period would have expired in 2018, six years after the act or omission on which the claim is based (the 2012 inspection). However there is a strong argument that the late discovery period of three years provided in s 14 of the 2010 Act would apply, meaning that the limitation period had not expired when the owners filed their claim in 2020.
Declaratory relief
If the owners’ claims had succeeded, this was not a case where it was appropriate to grant declarations in addition to an award of damages, which would have met the need for vindication in the present case. The declarations in respect of the 2004 and 2006 negligence were also precluded by the longstop in s 393(2) of the 2004 Act, which provides that no relief may be granted in respect of civil proceedings once the 10-year longstop applies.
Result
The appeal is allowed.
In 2004 the Tasman District Council (the Council) granted building consent for an architecturally designed home oriented around a swimming pool set in a central courtyard. A code compliance certificate (CCC) was issued by the Council in 2006; and in 2008 Ms Louise Buchanan and Mr Keith Marshall purchased the property (the owners). They purchased the property in reliance on the assurances provided by the CCC.
The swimming pool at the property was inspected by the Council in 2009 and 2012 to check that it complied with the Fencing of Swimming Pools Act 1987 (FOSPA). The Council said on both occasions that it did. It was discovered however in 2019, when the owners tried to sell the property, that the property did not comply with FOSPA in a number of respects. The owners undertook remedial work, as required. But this work impaired the amenity of the property and reduced its value.
The Council admitted that it had been negligent in giving building consent in 2004 and providing the CCC in 2006. But it was common ground that claims in negligence in respect of those acts were time-barred by the 10-year longstop in s 393(2) of the Building Act 2004 (2004 Act).
In 2020 the owners brought proceedings against the Council in tort, claiming that the 2009 and 2012 inspections had been negligent, and because of that negligence they had lost the opportunity to sue the Council in respect of its earlier negligence in 2004 and 2006. The owners claimed that the 2009 and 2012 inspections caused them loss equal to the amount they would have recovered if they had successfully sued the Council in respect of the 2004 and 2006 negligence in time.
In the High Court, Palmer J held that the 2009 and 2012 inspections were negligent, and that negligence caused the owners to lose their opportunity to sue in respect of the 2004 and 2006 negligence. The Judge granted declarations that the Council had been negligent in 2004, 2006, 2009 and 2012; and ordered the Council to pay the owners special damages totalling approximately $246,000 and general damages totalling approximately $25,000: Buchanan v Tasman District Council [2023] NZHC 53, [2023] 2 NZLR 287 (High Court judgment).
The Council now appeals from the High Court judgment. Its primary submission is that the purpose of FOSPA, and therefore the inspections in 2009 and 2012, was to protect the safety of young children, not the economic interests of the owners. Therefore any duty which was owed by the Council to the owners when it carried out its 2009 and 2012 inspections did not extend to the type of loss suffered by them.
Held:
Negligent misstatement
The owners’ claims focus on the statements made by the Council after its 2009 and 2012 inspections that the swimming pool complied with FOSPA. It is appropriate to consider the negligent misstatement claim first.
The approach to a claim for negligent misstatement is well established. The requirements which must generally be met to establish sufficient proximity to found a claim are: the advice is required for a purpose that is made known to the adviser; the adviser knows that the advice will be communicated to the advisee; the adviser knows that the advisee is likely to act on the advice without independent inquiry; and the advisee does act on the advice to its detriment.
The purpose of the pool inspections and the statements which followed those inspections was not to assist the owners in identifying rights of recovery against the Council and/or third parties. If the inspector at each of the inspections had been asked why they were inspecting the pool, the answer would have been to ensure the pool did not present a threat to the safety of young children, and more specifically to ensure that the owners had not made changes to the property that affected FOSPA compliance and created a risk to young children. The first requirement is therefore not met.
The second and third requirements are met. But the fourth is not. The owners did not act on the inspections by making a decision not to initiate proceedings against the Council before the time-bar expired. The owners were not contemplating bringing proceedings, and the Council was not aware that its inspections were being relied on to assist the owners to make decisions about such claims. If the inspections had not happened, the position would have been the same as it was after the inspections took place. No new course of action was adopted by the owners after the 2009 and 2012 inspections. The statements were thus not acted on in the relevant sense.
The owners’ claim is in all material respects indistinguishable from the claim struck out by this Court in Attorney-General v Carter [2003] 2 NZLR 160 (CA).
The necessary proximity for a claim for negligent misstatement seeking to recover economic loss suffered by the owners as a result of not bringing timely proceedings against the Council was not present in respect of the 2009 and 2012 inspections. The appeal in relation to this aspect of the owners’ claim must therefore be allowed.
Negligence and damages
Nor have the owners established sufficient proximity between them and the Council in respect of the 2009 and 2012 inspections to found their claim in negligence, for the same reasons set out above. The Council did not, when it carried out those inspections and advised the owners of their outcome, owe the owners any duty to take care to protect them from loss of rights of action against the Council and others. The appeal in relation to this part of the owners’ claim against the Council must also be allowed.
If a duty of care had been owed, the Court would not have disturbed the Judge’s award of special and general damages.
Limitation periods
If the Council owed the owners a duty of care in respect of the 2009 and 2012 inspections, the earliest point the owners could say they suffered loss because of the inspections was when the 10-year longstop provision in the 2004 Act barred a claim based on the Council’s negligence in 2006. That would be in 2016. Arguably however, the owners did not suffer any loss until 2019, when non-compliance of the pool was discovered.
The Limitation Act 1950 applies in relation to the claim based on the 2009 inspection. As the relevant loss was suffered in 2016 at the earliest, which is therefore the earliest point at which the cause of action arose, the six-year limitation in the 1950 Act had not expired when the owners filed their claim in 2020.
The Limitation Act 2010 applies in relation to the claim based on the 2012 inspection. The standard limitation period would have expired in 2018, six years after the act or omission on which the claim is based (the 2012 inspection). However there is a strong argument that the late discovery period of three years provided in s 14 of the 2010 Act would apply, meaning that the limitation period had not expired when the owners filed their claim in 2020.
Declaratory relief
If the owners’ claims had succeeded, this was not a case where it was appropriate to grant declarations in addition to an award of damages, which would have met the need for vindication in the present case. The declarations in respect of the 2004 and 2006 negligence were also precluded by the longstop in s 393(2) of the 2004 Act, which provides that no relief may be granted in respect of civil proceedings once the 10-year longstop applies.
Result
The appeal is allowed.