SUNSET TERRACES (SC)

Susan Thodey and Shyrelle Mitchell, together with leading counsel, acted for the North Shore City Council in respect of appeals from two judgments of the Court of Appeal known as “Sunset Terraces” and “Byron Avenue”.

The approved grounds of appeal were : (a) whether, and in what circumstances, a local authority which performed regulatory functions under the Building Act 1991, in relation to construction of a multi-unit residential development, owed a duty of care to purchasers of units in the building to ensure that it complied with the building code; (b) assuming such a duty existed, whether it extended to: (i) such persons who did not themselves at the time of purchase intend to personally occupy their unit(s) (investor owners); and (ii) persons who subsequently acquired such units from the first purchasers after a claim for breach of duty to their predecessors had accrued; and in “Byron Avenue” further grounds: assuming such a duty existed, whether it extended to the body corporate; and whether the conclusions which would otherwise be reached were

affected in circumstances where the Council decline to issue a code compliance certificate.

This was the first time the Supreme Court had been asked to consider the Hamlin duty and whether it continued to apply.

The Supreme Court unanimously held that councils owe a duty of care in their inspection role, to both original and subsequent owners of premises designed to be used as homes.  The rationale for imposing this duty of care was based on the control which councils had over building projects and on the general reliance which people acquiring premises to be used as a home placed on councils to have exercised their independent powers of control and inspection with reasonable skill and care; in particular, of features that would be covered up. As a matter of principle that duty extended to all homes, whatever form the home took, including: when professionals such as architects and engineers had been involved; when the owners of residential properties were not occupiers; and when no code compliance certificate had been issued.