The recent decision of Buchanan v Tasman District Council concerned determining whether (and to what extent) a Council could be held liable for a Code Compliance Certificate mistakenly having been issued on multiple occasions for a swimming pool at a residential property.
Ms Buchanan and Mr Marshall bought a property in Wakefield, near Nelson, in 2008. The high-end, award-winning home was centred on a swimming pool for which the Tasman District Council had issued a Code Compliance Certificate in 2006. Following the purchase, the pool was inspected in 2009 and then again in 2012 and deemed compliant with the Fencing of Swimming Pools Act 1987 (“FOSPA”) by the Council.
When Ms Buchanan and Mr Marshall decided to put the property up for sale in 2019, the pool was again inspected. This time the Council determined the fencing around the pool did not comply with FOSPA. It was later established that the pool had never been compliant.
Ms Buchanan and Mr Marshall sued the Council for negligence, negligent misstatement and breach of a statutory duty. The couple sued with regard to the pool inspections in 2009 and 2012 but not the inspection completed in 2006 as this was time-barred.
Court Decision - Duty of Care
In making a decision on Ms Buchanan and Mr Marshall’s claims, the Court first needed to determine whether the Council owed the pair a duty of care to use reasonable skill and care in inspecting the pool in 2009 and 2012. To do this, it needed to determine:
- Whether it was reasonably foreseeable that a negligent pool inspection would cause loss
- Whether there was sufficient relation between the Council and Ms Buchanan and Mr Marshall when the loss occurred
- Whether it was fair, just and reasonable to impose a duty of care on the Council
The Court found it was reasonably foreseeable that if the Council had mistakenly assessed the pool to be compliant, it would cause loss - a non-compliant pool would need to be remedied and any such remedying would cost money. Furthermore, especially in this case where the pool had been designed around the pool, the value of the property would be affected.
With regard to the relationship between the Council and Ms Buchanan and Mr Marshall, the Court found that there was a sufficiently close relationship to attribute liability. The Council was in the best position to act as an independent check on the pool’s compliance and Ms Buchanan and Mr Marshall should not have to second guess the Council’s authority. Therefore the couple were reliant on the Council and there was sufficient relation between the two.
The Court then found that as it had already determined the loss to be foreseeable and the relationship sufficiently close, this was like the majority of such cases where it was fair and reasonable to impose a duty of care.
Having found that a duty of care was owed, the Council accepted that with its 2009 and 2012 inspections it had breached this duty.
The Council knew its advice it gave in relation to its inspections in 2009 and 2012 were likely to be acted on without independent inquiry as it is the only body accorded the responsibility of making independent inspections. It also knew that Ms Buchanan and Mr Marshall did act on the Council’s advice to their detriment as they did not remedy the pool (as they did not know it needed to be remedied). For these reasons, the Court found the Council had made negligent misstatements on which the couple had relied.
Breach of Statutory Duty
This cause of action was dismissed. The Court found that as Parliament had no clear intention of giving an additional right in tort to sue councils for breach of statutory duty under FOPSA, the Courts would not impose such additional liability.
An important consideration for this case was whether Ms Buchanan and Mr Marshall were time barred from bringing action. The Court found that the Building Act 1991 and Limitation Act 2010 gave Ms Buchanan and Mr Marshall a 10 year period from when the latent defects were reasonably discoverable to take action. Thus an action for the 2012 inspection was not time barred (Ms Buchanan and Mr Marshall filed proceedings in 2020) but the 2009 inspection was. Nevertheless the Court later awarded damages to Ms Buchanan and Mr Marshall for loss of opportunity to sue the Council for loss of value in their property.
In effect, the Court found that the Council’s initial certification of the non-compliant pool was not the only relevant date in terms of claims that may be time barred. Each of the Council’s subsequent inspections which deemed the pool compliant gave rise to a claim and renewed the time period within which Ms Buchanan and Mr Marshall could make a claim.
The Court declared that the Council had negligently issued the building consent, carried out negligent inspections in 2006, 2009 and 2012, negligently issued the code compliance certificate in 2006, and made negligent misstatements about the property’s compliance causing loss to Ms Buchanan and Mr Marshall. The fact that Mr Marshall was a former chief executive of council could not in any way contribute to the Council’s negligence.
Ultimately the Court awarded Ms Buchanan and Mr Marshall $195,000 for the loss of property value when they bought it, $45,000 for their costs to remedy the non-compliant pool. With further costs including for distress and humiliation, Ms Buchanan and Mr Marshall’s total damages awarded amounted to approximately $270,000.00 plus interest and costs.
In conclusion, where a Council has issued a Code Compliance Certificate for a property and upheld this certificate upon subsequent inspections despite a property being non-compliant, the property owner may be able to sue the Council on the grounds of negligence. Additionally, a new cause of action will arise for each new inspection completed and will not necessarily be time-barred based on when the first inspection was carried out.