MITCHELL v MURPHY as trustee of the VICTOR SYDNEY TRUST [2019] NZHC 3262

MITCHELL v MURPHY as trustee of the VICTOR SYDNEY TRUST [2019] NZHC 3262 [11 December 2019]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2018-404-965[2019] NZHC 3262BETWEEN HOWARD BRENT MITCHELL ANDLYNNE MARY MITCHELLPlaintiffsAND CLARE DIANA MURPHY as trustee of theVICTOR SYDNEY TRUSTFirst DefendantIAN BRUCE KEMPSecond DefendantBARFOOT & THOMPSON LIMITEDThird DefendantHearing: 14-18, 21-22, 30 October and 1 November 2019Appearances: S Wroe and M Ibram for the PlaintiffsD Collecutt for the First DefendantNo appearance by or on behalf of the Second and ThirdDefendantsJudgment: 11 December 2019JUDGMENT OF GORDON JThis judgment was delivered by meon 11 December 2019 at 4.00 pm, pursuant tor 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitors: Rainey Law, AucklandGanda & Associates, AucklandCounsel: S Wroe, AucklandD Collecutt, AucklandTABLE OF CONTENTSIntroduction [1]A preliminary matter [12]Background [20]Construction of the townhouses [20]Ownership and occupation of units 6 and 7 [23]Leaks in units 1 to 6 [27]Unit 7 — leaks prior to sale to the Mitchells [66]Work in unit 7 prior to sale [89]Sale to the Mitchells [94]First cause of action — s 35 CCLA [117]What representations were made to Mr Mitchell? [124]Were the representations actionable? [131]Discussion [136]Were the representations false [153]Is unit 7 a leaky home? [153]The alleged defects [166]Alleged defect 1(a) — metal pipes buried within the top plaster surface ofthe balustrade [167]Alleged defect 1(b) — metal parapet cap buried within the top parapetsurface of the balustrade to the ensuite balcony [174]Alleged defect 1(c) — apron flashings inserted into the Duraplast claddingwith limited/no turnouts [177]Alleged defect 1(d) — failing membrane on the surfaces of the deckscombined with defective drain outlet installation [182]Alleged defect 1(f) — poorly conceived/detailed pipe penetration and pipethrough the balustrade of the ensuite balcony [187]Alleged defect 1(g) — generic failure of the flashing system on doors andwindows [188]Alleged defect 1(h) — defective membrane/cladding detailing at balconydoors [194]Alleged defect 1(i) — inadequate and failing waterproofing in the shower inthe ensuite bathroom. [195]Was unit 7 built with extra care? [201]Inducement [202]Did Mrs Murphy intend that Mr Mitchell would be induced by themisrepresentation to enter into the SPA? [202]Did Mrs Murphy use language that would induce a reasonable person in thesame circumstances to enter the contract? [206]Did the Mitchells rely on the misrepresentations? [207]Was it reasonable for Mr Mitchell to rely on the representations? [224]Is it fair and reasonable that cl 22 be conclusive between the parties? [225]Section 50 of the CCLA [239]Discussion [224]Second cause of action — Fair Trading Act 1986 [257]Is Mrs Murphy guilty of misleading and deceptive conduct? [269]Did the misleading conduct cause the Mitchells' loss or damage? [272]"Failure to maintain" [276]Accessory liability — s 43(1) [284]Loss [292]Scope of work [295]Items of disagreement between the quantity surveyors [318]Timber propping and samplings [319]Provision of temporary support to existing roof structure during remediaworks [321]Protection of adjoining property [323]Length of project [326]Mr Hanlon's comparison and benchmark [331]Conclusion on loss/cost of repair [332]Consequential costs [333]General damages [334]Interest [339]Should damages be reduced on the basis of an increase in value? [343]Claim against second defendant [346]Liability of an employee [348]Do the exclusion of liability clauses operate to protect Mr Kemp? [350]Alleged breaches by Mr Kemp [352]Did Mr Kemp's report mislead the Mitchells? [357]Measure of loss under the FTA — Mr Kemp [362]Apportionment between first and second defendants [367]Result [369]Orders [372]Costs [374]Introduction[1] Howard Mitchell entered into an agreement (SPA) to purchase a town house at7/103 Remuera Road (unit 7) from the first defendant, Clare Murphy, in her capacityas a trustee of the Victor Sydney Trust (the trust). On settlement, both Mr Mitchelland his wife, Lynne Mitchell, became the registered proprietors of unit 7.[2] The real estate agent acting for Mrs Murphy on the sale was Jocelyn (or Joss)Goodall of Barfoot & Thompson Ltd (Barfoots). Mr Mitchell says that Ms Goodallsaid to him and his wife that the owner says unit 7 is not a leaky home. Ms Goodallfurther said that the unit had been built with extra care and included some superiorfeatures as compared to the other units in the property.[3] Mr Mitchell also says that Ms Goodall told him and his wife that Mrs Murphyand her husband were the original developers for the block of seven townhouses andthat unit 7 had been built for Mrs Murphy and her husband and they had lived in it.[4] The Mitchells say that the representations in [2] above were untrue; that therepresentations induced them to enter into the SPA; and that they have suffered loss asa consequence. The Mitchells bring a claim against Mrs Murphy under s 35 of theContract and Commercial Law Act 2017 (CCLA).[5] Mrs Murphy primarily relies on the "as is, where is" clause in the SPA whichshe says precludes any reliance by the Mitchells on pre-contractual representations.She says that under s 50 of the CCLA it is fair and reasonable that that clause isconclusive between the parties. But in any event, Mrs Murphy denies anymisrepresentation and says that whatever Ms Goodall said was only an opinion andnot a representation of fact.[6] The Mitchells' second cause of action against Mrs Murphy is under the FairTrading Act 1986 (FTA) alleging misleading and deceptive conduct (s 9). They saythat Mrs Murphy was in trade when she sold unit 7 to them — it had been rented outfor a large part of the time that Mrs Murphy had owned it as a trustee. An alternativeclaim under the FTA is that Mrs Murphy is liable under s 43(1)(d) for being knowinglyconcerned in contravention of the FTA by Ms Goodall.[7] In response, Mrs Murphy pleads that she was not in trade. Mrs Murphy alsosays that the Mitchells cannot prove that unit 7 is as defective as they claim, and theyhave failed to mitigate, and instead have exacerbated, their losses.[8] The Mitchells also brought a claim under the FTA against Barfoots allegingmisleading and deceptive conduct. They settled with Barfoots prior to the hearing.1As a consequence, the claim against Barfoots has been discontinued, as has Barfoots'cross-claim against Mrs Murphy.[9] The Mitchells also bring a claim under s 9 of the FTA against the seconddefendant, Ian Kemp, who inspected the property and provided a report after the SPAwas signed but prior to the Mitchells declaring the purchase unconditional. Mr Kemphas taken no steps in the proceeding and the Mitchells seek judgment against him byway of formal proof.[10] The claim, excluding interest and costs, is $552,833.00, being:(a) Repair costs $449,091.00(b) Consequential costs $ 68,742.00(c) General damages $ 35,000.00[11] Interest of $32,531 is also claimed, bringing the total claim to $585,364.2A preliminary matter[12] Mr Collecutt, for Mrs Murphy, belatedly raised the issue of Mrs Mitchell'sstanding, on the basis that it was Mr Mitchell who signed the SPA. It is thereforenecessary to address this issue at the outset.[13] The SPA records the purchaser as "Howard Brent Mitchell and/or nominee".1 There are confidentiality clauses in the settlement agreement between the Mitchells and Barfoots.For that reason, the settlement sum will be redacted from the published version of this judgment.2 These amounts are rounded down by the Mitchells to the nearest dollar.[14] In Laidlaw v Parsonage, the appellants agreed to sell a house to a purchaser"and/or nominee".3 The respondents, trustees of a family trust, became the nomineeunder the agreement and the property was transferred to them. The house leaked, andthe respondents sought summary judgment for breach of warranty, in the agreementfor sale, that the house had been completed in accordance with building consent andrelevant obligations under the Building Act 1991. The claim was upheld: the promiserelied upon by the respondents was made to the purchaser and the purchaser includedthe nominee.[15] However, in the present case, the representations were not in a deed orcontract.4 Under s 35 of the CCLA, a representation inducing a contract between arepresentor and representee is treated as if it were a term of the contract, but it doesnot actually become a term. Therefore, as stated in Burrows, Finn and Todd on theLaw of Contract in New Zealand, on its face, a pre-contractual representation is not a"promise contained in a deed or contract" for the purposes of s 12.5[16] There are conflicting authorities on the issue. On the one hand, in PragmaHoldings Ltd v Great South 507 Ltd, Associate Judge Faire (as he then was) refused tostrike out a claim by a third party alleging an inducing misrepresentation by one of thecontracting parties.6 However, in Closurepac NZ Ltd v WS 2014 Ltd, Thomas J heldthat the predecessor to s 12 did not include an inducing misrepresentation.7[17] The learned authors of Burrows, Finn and Todd suggest that Thomas J's viewis arguably the better one.8 I respectfully tend to that view also. However, it is notnecessary, for the purposes of this judgment, to reach a concluded position as Iconsider the issue can be resolved on the basis of agency.[18] I consider it is more likely than not that Mr Mitchell was acting as the agentfor himself and his wife at the time. Mr and Mrs Mitchell inspected the property3 Laidlaw v Parsonage [2009] NZSC 98, [2010] 1 NZLR 286.4 Contract and Commercial Law Act 2017, s 12.5 Jeremy Finn, Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contractin New Zealand (6th ed, LexisNexis, Wellington, 2018) at 566.6 Pragma Holdings Ltd v Great South 507 Ltd HC Auckland CIV-2005-404-1931, 30 August 2006.7 Closurepac NZ Ltd v WS 2014 Ltd [2015] NZHC 1587 at [148]–[164].8 Finn, Todd and Barber, above n 5, at 567.together; the representations were made by Ms Goodall to both of them; the SPAincludes the words "and/or nominee"; following settlement both Mr and Mrs Mitchellbecame registered proprietors of unit 7; and they live together in unit 7 as their familyhome.[19] Mrs Mitchell therefore has standing to bring the claims. In the end, this issuemakes little or no difference to the proceeding as it is not suggested that Mr Mitchelldoes not have standing.BackgroundConstruction of the townhouses[20] Unit 7 is the last in a row of seven townhouses, each with its own freehold title,constructed between 1996 and 1998. New Zealand Pinewood Ltd (NZPL) was thedeveloper. At the time of construction and until 20 August 2007, Mrs Murphy and herlate husband, Bernard Murphy, were the two directors of NZPL, which went intoliquidation on 14 December 2007.[21] Construction of all the units generally consists of a masonry base with a furthertwo floors above,9 constructed using a light timber frame. Roofing is a mixture of claytiles and Butynol-covered flat roofs. Unit 7's roof differs from the other units in orderto accommodate height to boundary restrictions. The first floor is constructed as a traydeck with a concrete topping. All the units were built with the same style of windowsand each has tiled balconies over a membrane, with living space underneath. Unit 7has five balconies, with the two upper balconies (on the second floor) being timberframed and two (on the first floor) being concrete. The fifth balcony, which is on thefirst floor, is constructed in metal and is attached to the building and cladding.[22] The external cladding is a light-weight plaster system, "Duraplast", applied todirectly fixed fibre-cement sheet to timber framing. Unit 1 has since been reclad withweatherboard. The external cladding of the other units is unchanged from the originalconstruction9 I will refer to the floors as: ground floor, first floor and second floor.Ownership and occupation of units 6 and 7[23] NZPL owned both units 6 and 7 from construction. Mr and Mrs Murphymoved into unit 7 when it was completed in or about December 1997. They continuedto live there until about 2004. Mrs Murphy's evidence was that they moved outbecause Geoffrey Read, who owned (and still owns) unit 4 was making a nuisance ofhimself. More of that later. After the Murphys moved out, NZPL rented out unit 7.Unit 6 was also rented out.[24] On 13 October 2006, units 6 and 7 were transferred from NZPL to Mr andMrs Murphy as trustees of the Victor Sydney Trust. Both units 6 and 7 continued tobe rented out. On 26 February 2013, Mrs Murphy became the sole owner of both units6 and 7 as a trustee, following the death of her husband.[25] Mrs Murphy, as trustee of the trust, sold unit 6 to Eric Buisman and his wifewho had been renting that unit, with settlement occurring on 22 April 2016. More onunit 6 shortly.[26] Mrs Murphy moved back into unit 7 in January 2016 and lived there untilapproximately one week prior to settlement of the sale to the Mitchells, which was on30 March 2017.Leaks in units 1 to 6[27] There was evidence that there were leaks in units 1 to 6 commencing fromaround 2002. Whether Mrs Murphy had knowledge of those leaks is relevant in thisproceeding. Leaking in those other units, and more particularly any defects causingthose leaks, is also potentially relevant to the allegations of defects causing leaks inunit 7.[28] Mr Read, who owns unit 4, was called as a witness on behalf of the Mitchells.He and his wife bought unit 4 from NZPL with settlement occurring on 22 April 2002.Prior to that date, NZPL had rented out unit 4 for about four years. Mr Read said thatwhen he bought unit 4, he was aware that there were possible leaks. He had noticedsigns of leaking around the downstairs shower and therefore ensured there was a clausein the SPA that required NZPL to repair the leaks. He says this clause was wordedwidely enough to cover all leaks. He asked NZPL to fix the downstairs leak before hecompleted the purchase.[29] Mr Read said that after he and his wife moved in, it soon became clear therewere problems beyond the shower. He contacted Prendos Ltd to investigate. Prendosprepared reports dated 21 June and 8 August 2002 which, Mr Read says he gave to theMurphys and asked them to fix the problems. Mrs Murphy's position is that she neversaw those reports.[30] I interpolate here to record that during his closing submissions, Mr Collecuttmade a late objection to the admissibility of the Prendos reports and other reports inrelation to unit 4 and other units in the complex. He accepted that the reports wererelevant to Mrs Murphy's knowledge and therefore admissible on that issue, but hemade the submission, for the first time, that the reports were not admissible to provethe truth of their contents.[31] In my view, the reports all qualify as "business records"10 and the statementscontained within those reports are admissible on the basis that undue delay would havebeen caused if those persons were required to give evidence.11 In relation to theearliest reports in 2002 and 2003, I also consider that no useful purpose would havebeen served by requiring the persons who supplied the information for the compositionof the reports to be witnesses as those persons cannot reasonably be expected torecollect the matters dealt within the reports.12[32] I return to the Prendos reports. The areas identified with water ingress issues,which are common to the allegations made in relation to unit 7, are: flashings at thewindow junctions; pipe rail penetrations into the balcony balustrades; method ofconstruction of balconies, including membranes; and internal showers.[33] There were two meetings held in September 2002 attended by the owners ofthe units, Mr Murphy and his builder. The minutes of 2 September 2002 record that10 Evidence Act 2006, s 16(1).11 Section 19(1)(c).12 Section 19(1)(b).there were "discussions around leaks of building, concern of leaking around windowsand also through balcony".[34] The minutes of the 16 September 2002 meeting record:Consensus of opinion there are four issues:(a) Decks(b) Cladding around windows(c) Little isolated issues with each of the three units [3, 4 and 5](d) Showers within the units[35] Mr Read said he thought about bringing a claim against NZPL and there wascorrespondence between his lawyer and NZPL's lawyer. However, having been toldit would cost a lot in legal fees to pursue a claim, Mr Read decided to put the moneytowards repairs. He obtained a report from Pilchers Waterproofing Ltd in December2002. Pilchers undertook the works on units 3 and 4. Mrs Murphy said she never sawthe Pilchers report. She said it was never delivered to them (the Murphys) as, by then,Mr Read had banned Mr Murphy from his property.[36] Pilchers completed the remedial work for units 3 and 4 in late 2002 and early2003. Mr Read's evidence was that, in unit 4, they pulled out the windows andreinstalled them so that they were watertight. They completely redid the decks, pullingup the tiles and the membrane. The showers were also replaced. In all, Mr Read saidhe spent about $50,000 on remedial work.[37] In February 2006 and again in May 2007, unit 7 was listed for sale. Mr Readsaid that he passed on information about the history of the units to real estate agentsand to members of the public coming to view unit 7. He says he was also approachedby a professional contact of his, a financial advisor, and Mr Read gave him access tohis reports and file so that any interested buyers could draw their own conclusions.Unit 7 did not sell at that time.[38] The owners of unit 1, Christopher Frame and his wife, had also identifiedproblems in 2002/2003. Mr Frame, who gave evidence for the Mitchells, says that heand his wife moved into unit 1 in 1996. They later purchased unit 2 as well. Mr Framesaid that he attended the second meeting referred to in [34] above on 16 September2002. He had been reluctant to accept that he would have problems with his unit butaround December 2002 he noticed that there was bulging around the skirting boardsin their lounge. He says this was just under the window near the fireplace. He put ahose against the window on the outside and he says water poured in. A few monthslater they carried out some further investigations themselves by removing gib boards.Mr and Mrs Frame then applied to the Weathertight Homes Resolution Service(WHRS) on 14 February 2003 but did not receive a report until May 2004. That reportrecommended a total reclad of unit 1.[39] Mr Frame said that prior to getting the report, he and his wife had alreadyattempted to get Mr Murphy and his builder to accept responsibility for repairs thatneeded to be done to a lot of the units, including his. He was not satisfied with whatthey proposed. He said there were some attempts to mediate with NZPL and thebuilders in 2004 and 2005. He then put the WHRS claim on hold in January 2006because of his wife's health.[40] He returned to the issue in April 2008, when he advised WHRS that he wishedto proceed with the claim and requested an addendum report. This was provided inJune 2008. On 20 April 2010, Mr Frame's representative wrote to Mr Murphy,advising that an assessor had identified significant weathertightness issues with unit 1and that remedial work was necessary. That work was done under the management ofO'Hagan Building Consultants Ltd (O'Hagans) and the recladding (in weatherboard)was completed in August 2010. Mr Frame said that when the cladding came off it wasnot as bad as they had feared but where it did leak "it was bad".[41] The O'Hagan report of 19 May 2011 stated that below the majority of thewindows there was decayed framing and mould was growing on the Hardibackersheet. The report further stated that, because of this defect, a full reclad of unit 1 wasrequired.[42] In August 2011, Mr Murphy was served with a statement of claim filed withthe Weathertight Homes Tribunal13 and documents including the WHRS addendumreport and the O'Hagan report referred to above. The WHRS addendum reportincluded that "[t]he investigation confirmed the presence of timber decay and mouldin the framing of this building".[43] Mr Frame said that the whole process with the WHRS and negotiating with thedeveloper had taken such a long time that he decided not to proceed with anadjudication, opting instead to take the Government's financial assistance package.[44] Mrs Murphy's position was that she had not seen the WHRS report of May2004 nor the later supplementary report nor the O'Hagan's report. She did, however,admit that she had been aware of potential claims in the Weathertight Homes Tribunalagainst NZPL in relation to both units 1 and 4, and that NZPL had received documentsthat related to claims against it. She also accepted that those documents includedreports outlining the defects alleged in relation to those units.[45] In relation to unit 2, Mr Frame said they sold that in January 2004. By thenthe Frames knew that there were some leaks on the ground floor of unit 2. Theydisclosed this to the buyer and showed her through unit 1, where the gib was still offthe walls. There was a reduction in the purchase price for unit 2, which Mr Framebelieved was around $20,000.[46] Mr Buisman and his wife rented unit 6 from Mrs Murphy in 2011. They laterpurchased it from her under an agreement dated 18 March 2014 containing a longsettlement period, with settlement occurring on 22 April 2016. They agreed to buyunit 6 for $800,000 on the condition that Mrs Murphy pay for any repairs.[47] During the Buismans' tenancy there had been problems with water ingress.Mr Buisman liaised with Mrs Murphy over these issues. In summary, there was workdone on the downstairs bathroom including repairs to the shower a number of timesduring the two years that the Buismans rented the property. The bathroom shares aparty wall with unit 7 and the shower is located against that party wall. Mr Buisman13 Mr Murphy was named as a respondent as NZPL had been liquidated by then.said that one of the walls in the bathroom became flaky, and you could put your fingersthrough it. Once the plaster had been taken off there was mould apparent on the timberbehind. There was a recurring issue with dampness in this wall.[48] Mr Buisman's evidence was that he also had to replace ceiling panels in adownstairs bedroom as a result of water coming into the lounge on the floor abovethrough the balcony into the bedroom below. He described this as quite a major leakwhich caused a lot of damage. Mr Buisman's evidence was that he advisedMrs Murphy of all of these issues, including the recurring problem with dampness inthe bathroom wall. Mrs Murphy organised tradesmen and paid for the work duringthe tenancy period.[49] Mr Buisman said as the settlement date was approaching, he began to thinkabout obtaining finance for the purchase. He knew the bank would want a buildingreport, which he commissioned in October 2015, leaving time for any problems to berepaired by Mrs Murphy before settlement. The report highlighted issues with theunit. As to the cladding, it stated that, "Cracks are sighted to many areas, past repairsare noted. Repairs and re-coating is required." There were also high moisture contentlevels in some areas, which were noted to be of immediate concern.[50] Mr Buisman raised this with Mrs Murphy and sent her the report in October2015. Her emailed response included:Many of his "findings" are incorrect, it is populated with normal simple basicmaintenance, facts relevant to all buildings, and others that have no relevanceto your property. However there are other items we should discuss.[51] Mrs Murphy nonetheless maintained she had not read the report at the time.She said she simply scanned it.[52] Mr Buisman's position was that he had agreed with Mrs Murphy that shewould remain responsible for the issues raised in the October 2015 report. MrsMurphy's position was that there was no such agreement. An email from MrBuisman's solicitor to Mrs Murphy's solicitor dated 22 April 2016 states:My client has instructed me to advise that there has been agreement incorrespondence between your client and our client in terms of which yourclient has undertaken to remedy the moisture issues in the downstairsbathroom and downstairs adjacent rooms, and that this obligation on yourclient's part remains, notwithstanding settlement taking place today.[53] Through her lawyers, Mrs Murphy denied any responsibility.[54] Mrs Murphy did however arrange for some work to be done on unit 6 and alsounit 7 at the same time. This was in February 2016. It included resealing cracks inthe external plaster and repainting. Her position in relation to unit 6 was that she wasnot obliged to do so under the agreement with Mr Buisman.[55] It is not for this Court to determine where the obligation lay. The point is thatMr Buisman was asserting in April 2016 (around seven months before the sale ofunit 7 to the Mitchells) that there were ongoing problems with leaks in unit 6. He sayshe ended up arranging for a tradesman to repair what he described as the"faulty/leaking roof" and the Butynol which was causing water to enter down theceiling fan in the bathroom which had been a recurring problem.[56] A second report, once the external plaster work had been completed, wasapparently accepted by Mr Buisman's bank. A copy of that report was not available.[57] Mr Buisman said he has spent about $100,000–$120,000 on unit 6, trying tosort out the various problems which he says were caused by poor workmanship. Hehas not yet replaced the membrane on the balcony.[58] Finally, as to reports on other units, there is a report dated 14 October 2011from Drybuild in relation to unit 5. Drybuild conducted infrared testing for moistureingress both internally and externally. The report recorded slightly elevated moisturereadings on the sides of two downstairs doors; high moisture readings in a downstairsbathroom due to a possible flat roof junction failure above; high moisture readings ina downstairs bedroom due to a possible balustrade failure on the deck above; signs ofa leak from next door with water tracking down the internal wall; high moisturereadings in a toilet on level one due to a joinery failure coupled with a possible flatroof failure; and slightly elevated moisture readings by windows in the lounge on levelone and bathroom and bedrooms on level two.[59] Under cross-examination, Mrs Murphy said she had not seen the Drybuildreport until discovery of documents in this proceeding. There was no other evidencewhich contradicted her evidence. However, the reports in relation to unit 4 alsoimplicated unit 5.[60] With that summary of evidence regarding other units in the complex, I turn tomy findings as to Mrs Murphy's knowledge of the defects in those units. I first recordthat in some respects Mrs Murphy has given differing accounts. For example, shedenied having seen or read the reports in relation to units 1 and 4. However, in hersworn list of documents, she confirmed that NZPL did have documents in relation toa potential claim against it, but that she no longer had them. Her sworn response tointerrogatories confirmed that this statement related to claims for units 1 and 4.[61] She also acknowledged in cross-examination that she was aware (prior to thesale of unit 7) that the WHRS report for unit 1 essentially found that the building hadnot been constructed in a way that complied with the Building Code. Further, she saidthat she understood that there were allegations that external water had got into unit 1and caused damage.[62] In relation to unit 4, she referred to a letter which she had typed on behalf ofNZPL, dated 2 November 2004, in which it was asserted that there were noarchitectural or building issues with unit 4. Under cross-examination, Mrs Murphyaccepted that allegations had been made, but, as to whether they had been clearlyidentified, she said, "if it's a Prendos report you really need to do more investigativework". Under further questioning, she then acknowledged that the confirmatory reportfrom Pilchers would have been enough to confirm the problems identified by Prendos.She also acknowledged her husband's handwriting on a letter enclosing the Pilcher'sreport which addressed issues with unit 3 as well as unit 4.[63] Further in relation to unit 4, Mrs Murphy was aware of the steps taken byMr Read to inform prospective purchasers and the real estate agents in 2006 and 2007,when unit 7 was being marketed, of the weathertightness issue he had experiencedwith unit 4. She was also aware that Pilchers had done work on unit 4.[64] In relation to unit 6 and the report obtained by Mr Buisman, she said that shedid not read it, but an email at the time indicates that she did. Under cross-examination, she accepted that she scanned the report.[65] I therefore find that at the material time, that is before the marketing of unit 7in 2016, Mrs Murphy was aware of allegations of watertightness issues in relation tounit 1, unit 3, unit 4, unit 5 and unit 6.Unit 7 — leaks prior to sale to the Mitchells[66] Going back to 2006 or 2007, Mr Frame said he went into unit 7 when it wasbeing marketed for sale. He said that when he walked around unit 7, he could smell adamp musty smell, particularly in the master bedroom on the second floor.[67] In late 2011, while unit 7 was tenanted, there was a serious leak into the ceilingof the kitchen (which is on the first floor) which caused the ceiling to sag (the ensuitebathroom on the second floor is above the kitchen). There was also a leak in theensuite bathroom. The tenants had moved out saying they did so because of theseverity of the damage to the kitchen ceiling. They had feared for their safety as theythought the ceiling would collapse.[68] Mrs Murphy's evidence was that she engaged Auckland Butynol Ltd todiagnose and fix the cause of the mould on the ceiling gib of the second-floor ensuitebathroom. She believes that Auckland Butynol's employee told her that the leak wasprobably due to the Sky TV satellite dish installation being a rough job and he hadinstalled silicon to fix the problem.[69] Mrs Murphy says she also has a recollection that, at some stage or stages,Auckland Butynol told her they had also investigated the extractor fan above thesecond floor ensuite and roof area generally and they were unable to identify thesource of the leak with certainty; and they had installed silicon around the aerials andany other areas that they thought might have been causing the problem. She cannotrecall with certainty when that advice was given. She said her focus in 2011 and 2012was on her husband, who was very ill.[70] Mrs Murphy filed a claim with her insurer, Vero Insurance, around November2011. The loss adjuster's report of 30 November 2011 records the cause ofloss/damage as follows:Split butinol [sic] lining on roof [above second-floor ensuite bathroom],insured advises tenants had a TV aerial installed and assumes the hole was putin the butinol [sic] at this time. This was approximately a year ago.[71] The full description of loss/damage in the loss adjuster's report is as follows:All wall and ceilings throughout the level 2 [ensuite] bathroom have waterdamage. There is mould on the ceilings and walls are showing signs of rot.The tenants were catching leaking water with a bucket.The ceiling in the kitchen on level 1 is also badly sagged and insured seemsto think this is water leaking down through walls of and also from the butinol[sic] on the roof above on level 2. We suspect this area of damage is alsocontributed by the shower in level 2 bathroom which appears to be leaking atthe corners of the shower unit.[72] As to reinstatement/replacement, the report records as follows:Gib wall and ceiling linings in level 2 bathroom to be removed and replacedand painted throughout. Kitchen ceiling on level 1 approximately 8 sqm ofgib to be removed and replaced. Ceiling throughout to be painted.[73] As to the claim status, Vero initially took the view that:Since our visit to the property yesterday, the insured has called and advised,the damage is how it would be after a single event. We do not fully agree withthis as there is mould and gib is rotten in areas throughout the level 2bathroom. The level 1 ceiling in the kitchen has a large sagg [sic] and in ourview has been an on-going problem.[74] Vero then commissioned a report from a building expert who confirmed thatthere had been damage to the Butynol ridge capping which had been repaired. Thathad caused the damage to the ensuite bathroom on the second floor. In relation to thekitchen ceiling, the report noted that the damage could possibly be attributed to thesame cause but could also be a leak of the pipe to the shower mixer, as there was waterdamage to particle board in that location underneath the shower. In the end, Vero gaveMrs Murphy the benefit of the doubt in relation to the possible cause of damage to thekitchen ceiling and allowed the claim.[75] Mrs Murphy says she commissioned Fix It Building Services to repair thekitchen and bathroom ceilings. An invoice for this work was issued on 26 April 2012.Mrs Murphy's son, Brendan Murphy, who is a builder, also did repair work on thekitchen ceiling between approximately late November 2011 to 3 February 2012 inresponse to the ceiling issue I have referred to.[76] Mrs Murphy's evidence was that her belief at the time was that it was thetenants' use of the shower for hydrotherapy that had caused the water to leak from theshower down to the kitchen ceiling. She said as part of the repairs, silicon wasinstalled around the shower mixer plate. She said she believed the shower leak wasfixed.[77] However, leaks occurred again during the period of the next tenancy.Mrs Murphy leased unit 7 to John O'Toole around May 2012. He was the last tenantof unit 7, remaining there until late 2015. Mrs Murphy said that, during his tenancy,Mr O'Toole advised her on at least two occasions there was an intermittent leak in theceiling of the second-floor ensuite bathroom. This was in the same location as the areaAuckland Butynol had investigated in late 2011. Mr O'Toole, who gave evidence forMrs Murphy, confirmed there was such an intermittent leak. Mrs Murphy said she gotAuckland Butynol in again. She said their employee told her he could not see anythingwrong. There are invoices dated 5 August 2013 and 30 October 2014 for repairingwater damage to the ensuite ceiling and repainting it. Mr O'Toole says he cannotrecall the leak in the bathroom ceiling recurring in the last year of his tenancy.[78] The second area where leaks occurred during Mr O'Toole's tenancy was againin the kitchen ceiling.[79] Mrs Murphy said she called in a plumber and her son Brendan. Brendan'sevidence was that they installed silicone around the shower mixer in the ensuitebathroom. He then replaced approximately 1 m2 or less of gib in the kitchen ceiling.He said it was only the gib that had been damaged.[80] Mrs Murphy says the leak in the kitchen ceiling did not recur after Brendanand the plumber fixed it. However, this is the same area where the Mitchells had50 litres of water come through several days after settlement.[81] Mrs Murphy acknowledged that there was no investigation into the drainagefrom the ensuite deck to the kitchen ceiling by any of the plumbers. Her position wasthis was not a factor as the leak in the kitchen ceiling could be attributed to leakingaround the face plate of the mixer in the ensuite shower.[82] Mr O'Toole says that, in general (apart from the problems I have referred to),he did not notice any problem during his tenancy with leaking, mould or excesswetness in unit 7.[83] However, Mr Read gave evidence that in 2016, before Mrs Murphy movedback in, he walked through unit 7 with Eric Buisman and Ross Fernandez of unit 5.At that stage, unit 7 was empty. Mr Read described the condition of unit 7 in his briefof evidence as follows:18. The condition of the place was terrible. I could see that this wasmore than general wear and tear. I could see evidence of thedeteriorated timber in the corner of the kitchen. There was a big crackrunning down the middle of the kitchen and I could see water marksaround the crack. I remember thinking it would be very difficult torepair this crack as it was impossible to tell where it began and whereit ended.19. I saw that the edges of carpet were wet and had signs of mould andthe beginning of rot. There was another quite bad area of waterdamage near the balcony door. [84] In oral evidence, Mr Read said he remembered looking in the corner of thekitchen and he said, "there's a bubble up there at one stage and I thought, 'You know,a serious amount of water's coming through there.'" The corner of the kitchenMr Read was referring to was the corner of the kitchen/dining room area to the left-hand side of the balcony. This is the area where the painters engaged by the Mitchellsidentified water damage to the wall and swollen skirting boards shortly after they tookpossession following settlement on 30 March 2017.[85] Mr Read was cross-examined about his ability to make assessments aboutproperty damage and it was put to him that he was not a building expert but rather alay person. Mr Read's position is that he had worked for a building company,Fletchers, for a long time. He said he was Homestar-rated, so he is able to assesspeople's houses and give advice on making them healthier to live in. He said hetherefore did know what he was dealing with.[86] In terms of dampness, there is some consistency with the evidence ofMr O'Toole, who said he recalled the downstairs bathroom and the cupboard smelt abit damp because of the cupboard under the stairs. He said he did not know whatcaused the smell. He said there was no mould, wetness or leaks in the cupboard.[87] Mr Buisman also gave evidence of his walk through unit 7 with Mr Read whilethe property was empty, after Mr O'Toole moved out but before Mrs Murphy movedin. In his brief of evidence, he said:23. We walked around the property which was the first time I saw itwithout any furniture. I immediately noted a strong smell of mouldand an odour of dampness in the downstairs. [88] Under cross-examination, Mr Buisman accepted that the strong smell of mouldand odour of dampness in the downstairs could have been associated with thedownstairs cupboard.Work in unit 7 prior to sale[89] Around late February 2016, after Mrs Murphy had moved back into unit 7, aButynol contractor was doing some work on the roof of unit 6 for the Buismans.Mrs Murphy asked the contractor to look at the Butynol on her roof above the ensuitebathroom. She said he found a pinprick hole and he applied a hot patch to repair it.Mrs Murphy says she waited for unit 7 to go through another winter and then had theensuite ceiling repaired (including making good the gib in the ceiling, stopping andpainting) in October 2016.[90] Mrs Murphy also had the exterior of unit 7 painted in February 2016 byUno Plasterers Ltd.[91] Mrs Murphy replaced the carpet in unit 7 in October/November 2016. She saidthat was because the carpet was approximately 20 years old and there had been tenantsin unit 7 for around 12 years. She said that she did not see any mould on the originalcarpet when it was replaced and the underlay was reused.[92] Kevin Giles, who has owned Giles Carpets Ltd for around 38 years, measuredup for replacement carpet. He said he saw nothing untoward about the carpet such asa mouldy smell or dampness on the carpet that would have precluded laying newcarpet on the existing underlay. However, in oral evidence, Mr Giles said that hisevidence was not based on a clear recollection of the work he undertook but insteadbased on his usual practice. He also accepted that, for the purposes of his inspection,he would have just pulled up one corner of the carpet. He would not have inspectedthe whole house. Mr Giles also acknowledged that he was not there when the carpetwas removed.[93] The Mitchells' position is that the work undertaken by Mrs Murphy was todisguise the effects of water ingress. Mrs Murphy disputes that. It will therefore benecessary to determine what Mrs Murphy knew, or should have known, in relation towater ingress in unit 7 and any manifestation of problems associated with wateringress. I will address that issue later in this judgment.Sale to the Mitchells[94] In the spring of 2016, the Mitchells were looking to purchase a property inRemuera. They were first attracted to the townhouses at 103 Remuera Road whenthey saw advertising material for 2/103 Remuera Road. They went to inspect unit 2and met Ms Goodall of Barfoots there. Ultimately, the Mitchells did not pursue theirinitial interest in unit 2. They had a property which they had not sold at the time ofthe auction for unit 2 and they also thought it would be slightly above their price range.[95] In November 2016, Ms Goodall telephoned Mr Mitchell and told him that theowner of unit 7 wished to sell. Mr Mitchell responded to Ms Goodall saying that theywere still in the market for a property in the particular area and that they would like toview unit 7. They met Ms Goodall at unit 7.[96] Mr Mitchell's evidence was that Ms Goodall made a very enthusiastic salespitch about the property. Unprompted by either Mr or Mrs Mitchell, she said, "Theowner says it is not a leaky home". Mr Mitchell's evidence in this regard is supportedby Mrs Mitchell's evidence. She says Ms Goodall repeated it several times at the firstviewing. Mr Mitchell said that Ms Goodall seemed very impressed with unit 7, tellingthem that Mrs Murphy and her husband were the original developers of the block oftownhouses and that unit 7 had been built for Mrs Murphy and her husband and theyhad lived in it. He said that Ms Goodall said, for that reason, unit 7 was built withextra care and included some superior features as compared to the other units in thecomplex.[97] Mr Mitchell said he noted some disturbance to paint around the skylight abovethe stairs on the first floor and in the corner of the kitchen/dining room ceiling nearestthe doors opening onto the balcony. (I interpolate to add that the latter area is the areawhich was identified by Mr Read on his walk through in early 2016). He says he doesnot recall specifically anything that was said about previous leaks in these areas. Buthe recalls feeling reassured that there was nothing to worry about in relation to thoseareas or anything else to do with the property. From what Ms Goodall said to them,Mr Mitchell says they were of the understanding that anything that had been done tothe property was basic maintenance and any problems had been minor and taken careof.[98] Mr Mitchell says that they visited unit 7 at least two or three times prior tomaking an offer. They decided to make an offer of $1,150,000. Mr Mitchell spoke toa solicitor at Fortune Manning. That firm had acted as their solicitors over the years.[99] On 22 November 2016, Mr Mitchell sent Ms Goodall a copy of three clausesdrafted by the solicitor acting for them (the Mitchells). Those clauses became furtherterms of sale as follows:19.0 Agreement Conditional on Due Diligence19.1 This agreement is conditional on the purchaser carrying out acomprehensive due diligence investigation of the property,including without limitation the following:(a) All legal and title issues relating to the property;(b) Resource Management, Code of Compliance andLIM matters relating to the property;(c) A building inspection report including engineering,structural integrity and weather tightness issues;(d) Finance condition19.2 The date for satisfaction of the condition in clause 19.1 is the15th working day after the date of this agreement. If thecondition is not satisfied the purchaser will not be required tostate any reason for the condition not being satisfied.19.3 The parties acknowledge that the condition in clause 19.1 isinserted for the sole benefit of the purchaser and may, at anytime prior to the agreement being cancelled, be waived by thepurchaser giving written noted to the vendor.20.0 Sale of Purchaser's Property20.1 This agreement is conditional upon the purchaser obtainingan unconditional agreement for the sale of the purchaser'sproperty situated at 98 Glenmore Road, Sunny Hills at a priceand on terms and conditions acceptable to the purchaser byTuesday 28th February 2017. This condition is inserted forthe sole benefit of the purchaser and may, at any time prior tothe agreement being cancelled, be waived by the purchasergiving written notice to the vendor.21.0 Escape Clause21.1 If before this agreement becomes unconditional the vendorreceives an acceptable offer from a third party to purchase theproperty, then the vendor may serve on the purchaser a noticerequiring the purchaser to advise within 10 working days afterservice of the notice whether all conditions for the benefit ofthe purchaser have been satisfied or waiver, and whether therequisition procedure clause in 6.0 of the General Terms ofSale has been completed to the purchaser's satisfaction. If thepurchaser does not notify the vendor within the period set outabove that the above matters have all be [sic] satisfied and thatthis agreement is accordingly unconditional, then thisagreement will immediately terminate.[100] Ms Goodall responded on 22 November 2016 with a draft agreement, includingthe three clauses (cls 19–21) and an additional clause entitled "Purchaseracknowledgment" (cl 22). It is this latter clause that is the basis of Mrs Murphy'sprimary defence. The clause reads:22.0 Purchaser acknowledgment22.1 The purchaser acknowledges that:(a) the dwelling has been built with a plaster claddingsystem;(b) prior to entering into this agreement the purchaser hasbeen advised to and has had the opportunity to makeindependent enquiry in respect of the construction,the cladding and weathertightness issues.22.2 Notwithstanding anything in this agreement the vendorprovides no representations or warranties in respect of thematters set out in clause 22.1(a) and (b) and the vendor shallnot be liable for any claims, costs, losses, damages orliabilities whatsoever suffered or incurred by the purchaser inrelation to the matters set out in clause 22.1 and relating to theconstruction of the property, the cladding system and theweathertightness therefore.22.3 The purchaser agrees that the purchaser is purchasing theproperty on an @as is where is@ basis and the vendorwarranties in clause 7.1 and 7.3 of this agreement shall applyto the matters set out in clause 22.1.14(footnotes added)[101] Mr Mitchell recalls that this clause had been briefly mentioned by Ms Goodall,who had suggested that it was the type of clause that was standard for a plaster cladhome. He said it was presented to him as something that he should not particularlyworry about.[102] Mr Mitchell forwarded the blank SPA to their solicitor. Mr Mitchell thensigned the SPA with their proposed purchase price of $1,500,000 and a proposedsettlement date of 26 May 2017. Mrs Murphy responded on 30 November 2016 witha revised purchase price of $1,200,000; a reduction in the period for due diligencefrom 15 working days to 10 working days; a reduction in the notice period under theescape clause from 10 working days to five working days; and with settlement to beon 5 May 2017.14 The parties are agreed that the word "not" should be inserted after the word "shall" so as to read"shall not apply".[103] Mr Mitchell then spoke by phone to a solicitor at Fortune Manning. He saysthey discussed the terms of the SPA. He said the SPA did not ring any serious alarmbells for them, given the highly positive view they had already had of the property.So, he signed it on 1 December 2016 and returned it to Ms Goodall.[104] On 2 December 2016, Mr Mitchell received a copy of the SPA by email backfrom Ms Goodall. In her covering email, Ms Goodall provided the names of threebuilding inspectors who the Mitchells might use for their building inspection report.They decided to use one of those, Ian Kemp. As he had prepared the report in relationto unit 2, the Mitchells thought he would be a good choice on the basis that he alreadyhad some knowledge about the complex.[105] Mr Kemp provided a report entitled "General non-invasive building structureand moisture inspection". In the report, he noted one area near the balcony door fromthe ensuite bathroom on the second floor which had moisture in the "minor to mid-range". He attributed it to broken down sealant to the corner of the bottom sill of thedoor. He described the condition of unit 7 generally as "good". Mr Mitchell said thatneither Mr Kemp's report nor Mr Kemp's discussion with him raised any red flagsabout unit 7 or any reason to be concerned.[106] The Mitchells visited the property again after Mr Mitchell had signed the SPAand Mrs Murphy was present. There was evidence about a discussion on one of thoseoccasions. The parties disagree as to what was said. I will come to that whenconsidering the issue of inducement and reliance under s 35 of the CCLA.[107] Mr Mitchell says that Ms Goodall began to put some pressure on them to bringforward the unconditional date. The Mitchells knew there were other interested partiesand they were keen to be able to go ahead with the purchase and did not want someoneelse to put in an offer which would allow Mrs Murphy to rely on the escape clause toget out of the SPA. Mrs Murphy offered to reduce the purchase price by $10,000 ifthe Mitchells declared the property unconditional by 23 December 2016. On that date,the Mitchells instructed their solicitor to declare the purchase unconditional. Thepurchase price at that stage was therefore $1,190,000.[108] The settlement date was also brought forward to 30 March 2017.[109] Mrs Murphy allowed the Mitchells access to unit 7 to obtain quotations forpainting and associated work prior to settlement. At a pre-settlement inspection on27 March 2017, the Mitchells were at unit 7 with a painter who drew their attention tothe ceiling in the entry area on the ground floor. When the painter put his finger on it,the material in the ceiling disintegrated and water appeared. Mr Mitchell telephonedMs Goodall about this, and she recommended that Mr Mitchell talk to his solicitor.There then followed an exchange of correspondence between the Mitchells' solicitorand Mrs Murphy's solicitor.[110] Mr Mitchell's evidence is that he also spoke to Mrs Murphy a couple of times.Mr Mitchell says she told him that the problem was "new". There had been a lot ofheavy rainfall that month and Mr Mitchell's evidence was that Mrs Murphy said it waslikely due to a blocked or broken drain or downpipe.[111] Because settlement was imminent, and they would not have time to have thematter investigated further, after some back and forth between the solicitors, theMitchells proposed that the purchase price be reduced by $5,000. Mr Mitchell said heproceeded on this basis because they accepted this was a minor problem and believedthat Mrs Murphy would have told them if there were other problems.[112] Mrs Murphy accepted that she had sent an email to the Mitchells on 30 March2017 (the settlement date) saying it was "new damage". The email also states that "ithappened on my watch so I [Mrs Murphy] must bear the cost of repair and makinggood". Mrs Murphy denies saying it was a minor problem and would be easy to fix,as she says she did not know what the cause of the problem was. Under cross-examination, she accepted that she might have suggested to Ms Goodall that a checkbe made for blocked drains and a broken downpipe. Settlement occurred on 30 March2017. The purchase price was $1,185,000.[113] When the Mitchells moved in, they made arrangements to have the interiorrepainted. Mr Mitchell says that when the painters were looking at the wall in thekitchen/dining area near the balcony, they showed him that the wall was damaged bywater and the skirting boards were swollen. Within a few weeks of settlement, duringa stormy wet period and while the painters were still working in the kitchen/diningarea, they alerted Mr Mitchell to serious amounts of water coming through the ceilinginto the kitchen. Mr Mitchell distributed trays and bins to collect the water, and in one24-hour period, over 50 litres of water entered the kitchen in this way. Mr Mitchellsays that, at this stage, they thought they had been unlucky due to the excessively wetweather and did not suspect bigger problems.[114] Mr Mitchell contacted Mr Kemp who put him in touch with a water prooferand then a builder. Mr Mitchell says that builder's investigations established that themembrane on the balcony outside the bathroom on the second floor (and directly abovethe leaks into the kitchen ceiling) was not operating effectively and that was lettingwater into the downstairs and the kitchen. Mr Mitchell says that, as investigationswere carried out over a few months, it became clear that there were serious problemswith the property. In the meantime, Mr Mitchell had put tarpaulins over the ensuitebalcony on the second floor and the kitchen/dining room balcony below on the firstfloor. Ultimately, in August 2017 the builder downed tools because of the extent ofproblems with the property. By that time, the Mitchells were convinced that they hadbought a leaky home.[115] In August 2017, the Mitchells called in John-Paul Biggelaar, a buildingsurveyor with experience in dealing with leaky homes.[116] As a result of Mr Biggelaar's involvement, more permanent scaffolding andfurther tarpaulins were put in place. Mr Mitchell says there has been on-goingmaintenance to allow the property to be habitable at a basic level until permanentrebuilding work takes place.First cause of action — s 35 CCLA[117] The first cause of action is brought under s 35 of the CCLA. Section 35(1)(a)provides:35 Damages for misrepresentation(1) If a party to a contract (A) has been induced to enter into the contractby a misrepresentation, whether innocent or fraudulent, made to A byor on behalf of another party to that contract (B),—(a) A is entitled to damages from B in the same manner and to thesame extent as if the representation were a term of the contractthat has been breached; and[118] A misrepresentation is a representation of past or present fact that is false ormisleading, and excludes statements of intention, opinion and law. What matters isthe meaning that the words convey.15 The meaning is what it would be reasonablyunderstood to mean in its context and circumstances.16[119] An opinion may be actionable if it implies past or present fact. An opinionstatement may also be actionable where it is found that the opinion was not honestlyheld, or that a reasonable person possessing the representor's knowledge could notreasonably have it.17[120] The Court of Appeal, in Magee v Mason, addressed the framework formisrepresentation in an appeal where the vendor had told the purchaser the building"isn't a leaky house".18 The Court stated:19The first question in all misrepresentation cases is "What was the meaning ofthe misrepresentation". In other words, was the statement made fairly capableof the meaning alleged.[121] The Court of Appeal addressed inducement (albeit only briefly, as the majoritydetermined that the appeal succeeded on the ground there was no misrepresentation asthe statement did not convey any meaning that was false). The majority stated that, tobe actionable, the representee must show that:15 Shen v Ossyanin [2019] NZHC 135 at [16], citing on Finn, Todd and Barber, above n 5, at 369.16 West v Quayside Trustee Ltd (in rec and in liq) [2012] NZCA 232, [2012] NZCCLR 16 at [30].17 Tompkins v Wensley Developments The Marina Ltd (in liq) [2012] NZHC 1863 at [15].18 Magee v Mason [2017] NZCA 502 at [33].19 At [26], paraphrasing D W McLauchlan "Intention to Induce: Should it be a Requirement forActionable Misrepresentation?" (2001) 7 NZBLQ 43 at 47, citing Bisset v Wilkinson [1927] AC177 (PC) at 183.(a) The representor intended that he or she would be induced by themisrepresentation to enter the contract; or(b) The representor used language that would induce a reasonable personin the same circumstances to enter the contract; 20 and(c) The representee relied on the representation when entering the contractand that such reliance was reasonable.21[122] I adopt the following framework for the issues to be determined under s 35:(a) What representations were made to the Mitchells?(b) Were they actionable representations?(c) If they were statements of opinion:(i) Did Mrs Murphy honestly hold that opinion; or(ii) Would a reasonable person with Mrs Murphy's knowledge haveheld that opinion?(d) Were the representations false?(i) Was unit 7 a leaky home?(ii) Was unit 7 built with extra care and to a high standard?(e) Were the Mitchells induced to enter into the SPA by themisrepresentations?(i) Did Mrs Murphy intend the Mitchells would be induced by therepresentations to enter into the SPA?20 At [42], citing Savill v NZI Finance Ltd [1990] 3 NZLR 135 (CA) at 145–146.21 At [51].(ii) Did Mrs Murphy (through Ms Goodall) use language that wouldinduce a reasonable person in the same circumstances to enterinto the SPA?(f) Did the Mitchells rely on the misrepresentations?(g) Was it reasonable for the Mitchells to rely upon the misrepresentations?[123] Having determined those issues, the issue then is whether cl 22 of the SPAshould be conclusive between the parties. Mrs Murphy, as the party seeking thebenefit of this provision, has the burden of demonstrating why it should prevail.22What representations were made to Mr Mitchell?[124] The only two witnesses to what Ms Goodall actually said were Mr andMrs Mitchell. As set out in [96] above, Mr Mitchell's evidence was that, unpromptedby either him or his wife, Ms Goodall, said "the owner says it is not a leaky home".Mr Mitchell's evidence on this issue is supported by Mrs Mitchell. She said that shedistinctly remembered the conversation with Ms Goodall at the first viewing of theproperty. Ms Goodall mentioned the fact that the owner said it was not a leaky homewithout any prompting from either Mr or Mrs Mitchell. Mrs Mitchell said it was partof a sales pitch that she was giving in relation to the property and that she repeated itseveral times at the first viewing.[125] The cross-examination of Mr Mitchell contains the following:A. We were told that she has said it was not a leaky home. That's whatwe accepted.Q. Isn't it possible that what you were told was that effectively inMrs Murphy's opinion it wasn't a leaky home?A. No we were never told that.[126] As further set out in [96] above, Mr Mitchell also said that Ms Goodall seemedvery impressed with unit 7 telling them that Mrs Murphy and her husband were the22 Bushline Trustees Ltd v ANZ Bank New Zealand Ltd [2019] NZCA 245 at [245].original developers for the block of townhouses and that unit 7 had been built forMrs Murphy and her husband and they had lived in it. He said that Ms Goodall said,for that reason, unit 7 was built with extra care and included some superior features ascompared to other units in the complex.[127] Mrs Murphy has not called any evidence that contradicts what the Mitchellssay they were told by Ms Goodall. Mrs Murphy was asked about what she had saidto Ms Goodall. She accepted that she had told Ms Goodall that unit 7 "was morehighly specked inside". Mrs Murphy was also asked whether she passed on toMs Goodall that it was built "for you and your husband, the developers to live in?"She answered, "Correct, in fact he built it for me".[128] Mr Collecutt, for Mrs Murphy, acknowledged that he was in a "weak position"in terms of challenging precisely what had been said, not having called Ms Goodall.[129] There is no good reason for the Court not to accept the evidence of Mr andMrs Mitchell. I accept that Ms Goodall told Mr and Mrs Murphy that "the owner saysit is not a leaky home" and that it was "built with extra care and included superiorfeatures as compared to other units in the complex". I accept that Ms Goodall alsoexplained to Mr and Mrs Mitchell that Mrs Murphy and her husband were the originaldevelopers for the complex at 103 Remuera Road and that unit 7 had been built for theMurphys to live in.[130] Ms Goodall was the agent for Mrs Murphy. The statements she made werewithin the scope of her authority.23 It therefore follows that what she said wererepresentations by Mrs Murphy.Were the representations actionable?[131] Ms Wroe, for the Mitchells, says that the meaning of the representations reliedupon by the Mitchells is that:(a) Particular care had been taken in the construction of unit 7;23 See Snodgrass v Hammington CA254/93, December 1995 at 15.(b) Unit 7 was built to a higher standard;(c) Unit 7 was not a leaky home which conveyed the following meanings(following the analysis in Magee):(i) Mrs Murphy had no knowledge of leaks in the property(meaning one); and/or(ii) Mrs Murphy knew of no reason why the property would beprone to leaking (meaning two); and/or(iii) The property was not built or designed in a manner that renderedit prone to leaking (meaning three).[132] The Mitchells' case is that the representations made by Ms Goodall conveyedeach of the three Magee meanings and went further due to the additional commentsmade by Ms Goodall, namely, that the Murphys were the developers of the complexand that unit 7 was built for the Murphys to live in.[133] Ms Wroe submits that if the Court is of the view, in relation to meaning three,that Mrs Murphy was doing no more than conveying an opinion in relation to whetherthe design and construction of the house was such that it was prone to leaking, thenshe did not honestly hold that belief or, alternatively, that a reasonable personpossessed with her knowledge of the property and the other townhouses could notreasonably have held that opinion.[134] Further, and/or alternatively, the Mitchells plead that Mrs Murphymisrepresented the condition of unit 7 by:(a) causing the Mitchells to believe that she had conveyed to them allmaterial information in relation to the issue as to whether the propertywas a leaky home; and(b) failing to advise the Mitchells of the history of leaks and repairs inrelation to the other townhouses and the property.[135] For Mrs Murphy, Mr Collecutt submits that what was said by Ms Goodall tothe Mitchells did not constitute a misrepresentation of fact. It was a mere opinion.Further, the opinion that unit 7 was not a leaky home was honestly and reasonablyheld.Discussion[136] In Magee, the Court of Appeal acknowledged that the third meaning (that abuilding is not, through design or construction, prone to leak) could be an opinion butthat it may carry with it representations of past or present facts. I examine thesurrounding evidence in order to understand the meaning of what was said.[137] First, I contrast the context in which the representations were made in Magee.In that case, the representations were made in a more informal setting and contained aqualification in relation to the vendor's experience whilst they owned the property.[138] In this case, the statement that the owner says the property was not a leakyhome needs to be seen in the context of the other statements made by Ms Goodall.They were supportive of that statement, rather than qualifying it, as was the case inMagee.24 Here, there was the added endorsement by Ms Goodall, who wasrepresenting a former direction of the developer, and therefore it carried theimplication that unit 7 had been built properly, including in relation to such matters asfollowing the architect's plans and technical literature. By Mrs Murphy describingherself as the developer, without qualifying her expertise, she held herself asknowledgeable both about the construction of the property and its history. Thesituation is somewhat akin to the case of Humphries v Edinborough, where the Courtof Appeal accepted that a real estate agent had held herself out as an expert in relationto an apartment building.25[139] The instant case also bears some similarity to the circumstances in RidgwayEmpire Ltd v Grant.26 In that case, Mr Ridgway had marketed and sold the particularunit himself. His statements — "the unit does not leak" and "it is not a leaky building"24 Magee v Mason, above n 18, at [36] and [37].25 Humphries v Edinborough [2010] NZCA 416.26 Ridgway Empire Ltd v Grant [2019] NZCA 134.— were determined to be expressed as statements of present fact and were notqualified in any way or expressed as merely being his opinions. He was found to havesuperior knowledge of the state of the particular unit, having owned it for a period ofaround six years prior to sale, having carried out significant renovation and thenhaving lived in an adjoining unit for a period.[140] There is also the fact that Ms Goodall had sold unit 2. This carries with it animplication of some knowledge of the complex on her part beyond the propertyconcerned.[141] For the above reasons, in my view, Ms Goodall's statement that the "ownersays it is not a leaky home" was a representation of fact, not a statement of opinion.[142] Which of the three meanings does this statement of fact carry? For the reasonsI have discussed, I consider, first, that it carries meaning three, namely that unit 7 wasnot built or designed in a manner that rendered it prone to leaking.[143] I consider that the statement that unit 7 was not a leaky home was also capableof carrying the meaning that Mrs Murphy had no knowledge of leaks in the property(meaning one). This is a statement of fact on behalf of Mrs Murphy who was thedeveloper, had lived in unit 7, the then-landlord and who then returned to live in unit 7.[144] There was some further evidence given by Mr Mitchell, which I refer to inorder to consider whether it acted to qualify this meaning. In his brief of evidence,Mr Mitchell, referring to the first visit when Ms Goodall made the representations,said:9. I noticed some disturbance to paint around the skylight and in thecorner of the kitchen ceiling [by the doors leading out from thekitchen/dining area onto the balcony]. I do not recall specificallyanything that was said about previous leaks in these areas. I do recallfeeling reassured that there was nothing to worry about in relation tothose areas or anything else to do with the property. From what Joss[Goodall] said to us, we were of the understanding that anything thathad been done to the Property was basic maintenance and anyproblems had been minor and taken care of.[145] Mr Mitchell was asked about this evidence in cross-examination. Theexchange was as follows:A. We're not building inspectors. I mean, we were babes in the wood atthat time. We noticed some paint disturbance there. We had a briefdiscussion with Clare [Murphy] I think or may have been Joss aboutthings in the ceiling, didn't ring any alarm bells, we just wonderedwhat they were. I mean things happen in houses, minor things.Q. You go on at the end of that paragraph to say, "From what Joss said tous we were of the understanding that anything that had been done tothe property was basic maintenance and any problems had been minorand taken care of." Isn't it the case that Joss had actually told you thatthere had been minor leaks and they had been fixed?A. Yeah, and she seemed to be very hazy herself in this in the sensethat I don't think, I don't know if she really knew. She'd spoken tothe owner, it sounded like everything had been downplayed, it wasvery brief in passing, there was nothing there to alert us that there wereany serious issues.[146] I do not consider that this evidence operates in any way to qualify meaningone. The leaks referred to in the discussion were passed off as being minor and havingbeen remedied; something quite different from leaks as a result of a property being aleaky home.[147] I consider the statement "the owner says it is not a leaky home" is also capableof carrying meaning two, namely that Mrs Murphy knew of no reason why theproperty would be prone to leaking. It is a statement of fact, namely that Mrs Murphyknew of no reason that would put the property in the category of a leaky home.[148] There is then the representation that unit 7 was built with extra care andincluded superior features as compared to other units in the block. I will consider thatstatement in two parts. First, the statement that unit 7 was built with extra care.I consider this is a representation of fact rather than opinion, for the same reasons thatI have determined that the statement that the property is not a leaky building is astatement of fact not a statement of opinion. It carries with it the meaning that this isa property which would not have construction defects or faults that would give rise toweathertightness issues.[149] I see the statement by Ms Goodall that unit 7 included "some superior featuresas compared to other units in the property" somewhat differently. Mrs Murphy'sevidence was that she had told Ms Goodall that unit 7 "was more highly speckedinside". I do not consider that the representation necessarily carries the meaning thatunit 7 was built to a higher standard. It is equally capable of bearing the meaning thatMrs Murphy said she conveyed to Ms Goodall, namely that the interior fit out was ofa higher standard than the other units — in cross-examination, Mrs Murphy says thatshe referred to "the marble benches, the parquet flooring, the quality of the carpet".Taking that as the objective meaning, I do not consider it is an actionablerepresentation. It goes to the quality of the interior fittings rather than to any defect inconstruction.[150] To conclude on this issue, and in summary, the statements that unit 7 was nota leaky home and that particular care had been taken in the construction of unit 7 areactionable representations.[151] As to Ms Wroe's further submission set out in [134] above, I accept thatMrs Murphy misrepresented the position by causing the Mitchells to believe she hadconveyed all material information on the issue as to whether unit 7 was a leaky home.She did not tell them that there had been a recurring leak in the bathroom ceiling that"had plagued the life out of her". What she presented to Ms Goodall was that it wasa minor leak (a pinprick hole in the Butynol) that had been fixed. She did not tell themthat an external influence had not been ruled out in relation to the kitchen ceiling leak.There was some mention of a previous leak in the kitchen ceiling but no mention ofits severity and that it had recurred.[152] I also accept that she further misrepresented the condition of unit 7 by failingto advise the Mitchells of the allegations of leaks in and repairs to other units.Were the representations falseIs unit 7 a leaky home?[153] The term "leaky home" or "leaky building" is commonly understood to meana house or building that is prone to leak as a result of design and construction defects.27[154] Mr Biggelaar gave evidence on behalf of the Mitchells. Mr Biggelaar is abuilding surveyor based in Auckland operating his own consultancy company. Amonghis qualifications are that he is a registered member of the New Zealand Institute ofBuilding Surveyors (NZIBS); a certified weathertight inspector (2005); a full memberof NZIBS (February 2008); Trade Certificate in Carpentry (Advanced) and Joinery.[155] Mr Biggelaar served an apprenticeship in the building industry in the 1970s,which was followed by extensive experience in other facets of the timber industry.Since 2005, he has completed a large number of building assessments on behalf of theWeathertight Homes Tribunal. Since 2008, he has completed a number of fullremedial projects, both by his own company and also as engineer's representative forother building surveying companies. His work extends from remedial works onsingle-storey dwellings through to complex large homes, including multi-storeymixed-use apartments and commercial buildings. He has acted as an expert witnessin a number of claims, both under the Weathertight Homes Tribunal banner and alsoin this Court. I accept that Mr Biggelaar is well qualified to give the evidence he didand that his evidence and opinions fall within his area of expertise.[156] He examined unit 7 in August and October 2017. His evidence, in short, wasthat unit 7 is a leaky home. His evidence, which was supported by his expertise andexperience, was that there were active leaks, some going on for a very long time "froma very early stage in the life of the building". For example, in relation to the kitchenceiling leak, he referred to "stains, long-term stains, long-term moisture ingress, long-term rot and decay to all the timbers".27 See Weathertight Homes Resolution Services Act 2006, s 8: "leaky building means adwellinghouse into which water has penetrated as a result of any aspect of the design, construction,or alteration of the dwellinghouse, or materials used in its construction or alteration".[157] Geoffrey Bayley gave evidence on behalf of Mrs Murphy. Mr Bayley is thedirector of a private dispute resolution practice which specialises in dispute resolutionfor construction disputes and provision of expert evidence in construction matters. Heis a qualified and registered quantity surveyor and a qualified architectural draftsman.He has a New Zealand certificate in Quantity Surveying and also in ArchitecturalDrafting. Mr Bayley has been engaged in the construction industry since 1976,initially as a qualified architectural draftsman and then as a project manager,architectural draftsman and quantity surveyor in a small to medium size constructioncompany. Mr Bayley has acted as an expert in dispute processes and proceedings inthe Weathertight Homes Tribunal, District Court, High Court and in arbitrations.Many of the disputes have been in respect of residential, multi-unit and commercialleaky buildings. I am satisfied that Mr Bayley has the necessary expertise to giveevidence and provide opinions on this issue. Mr Bayley first visited unit 7 on27 August 2019, some two years after Mr Biggelaar.[158] His position was that unit 7 was not built or designed in a manner that renderedit prone to leaking in 1998 when the Code Compliance Certificate was issued, but,with subsequent changes to the Building Code in 2005, some of the design elements(which I will come to when addressing the alleged defects) became a recognisedpotential risk. With the greatest of respect to Mr Bayley, this explanation lackscredibility. A change to the Building Code is irrelevant on this issue. The functionalperformance requirements in the Code have not changed.[159] Mr Bayley was asked the following in cross-examination:Q. Just going back again to whether or not we agree that this meets thedefinition of a leaky building under the Act, Mr Bayley. Whether it'sa crack at the junction or not, it is, is it not, attributable to theconstruction detail and therefore a leaky building defect?A. I don't regard, "The detail", as being a leaky building detail. It is,over the years, has been found to be defective when not maintained.And so, as a result of that, the design details have been changed in2005 to make them more robust. So, I would regard this as a buildingwith some leaks, rather than a leaky building.[160] Again, with respect to Mr Bayley, his accepting that there has been a failure ofaspects of construction which have then led to moisture ingress means that unit 7 meetsthe statutory definition of a leaky building.[161] Additionally, Mr Bayley's statement seems to be somewhat inconsistent withhis further evidence that "the original design resulted in undiagnosed defects thatmanifested themselves after significant weather events without further timelymaintenance" by the Mitchells. Mr Bayley did not put forward any evidence to showthat the weather conditions were more adverse than any others experienced throughoutMrs Murphy's ownership.[162] In respect of the second part of Mr Bayley's opinion in the above paragraph,namely a lack of timely maintenance, in effect, his position is that this arises in theperiod from the Mitchells' ownership from 30 March 2017.[163] Mr Mitchell responded to that proposition. He said:2. Mr Bayley suggests that unprotected decks on my house wereexposed to "significant rainfall and wind events ([four] in April, twoin May and one in July 2017) before the initial tarpaulin was erected".3. Throughout April, May, June and July 2017 we did not do any exteriorbuilding work on the house. The roofer and plumber came to have alook but essentially the house was in the same condition outside as itwas when we bought it. The work outside did not start until weengaged Superior Waterproofing Limited in August 2017.4. The first tarpaulins that were in place were ones that I put up myselfin April. These tarps were in place until Superior Waterproofingput theirs on, which was in August 2017.6. I made the handwritten note on the quote [from SuperiorWaterproofing] which says they were due to start around 14 August2017. The first thing they did was to put up bigger tarpaulins over thekitchen and ensuite decks. They did not lift any of the deck tiles orinterfere with the decks in any way until their tarpaulin was up.7. This tarpaulin was still up when Mr Biggelaar first visited. Itremained in place until it was removed and immediately replaced bythe shrink wrapping and other protection arranged by Mr Biggelaar.8. Mr Bayley's brief of evidence suggests that the large influx of waterthat we saw was somehow due to a lack of maintenance, significantweather events and possibly unprotected decks. The first major leakin the kitchen occurred when we had serious storms, so of courseweather was a factor. However, the other two factors cannot havebeen relevant as we had not disturbed the decks (so they were notexposed and unprotected) and we had only just bought the property.9. I actually remember the first leaks [about 50 litres of water throughthe kitchen ceiling] as being very close to the settlement date(30 March), within just a few days. Looking at the weather evidencethat Mr Bayley has produced, I believe it was 4 April 2017, whenMr Bayley says there was very high rainfall and near gale force winds.Mr Bayley says the next day, the 5th, also had high rainfall. Thatcorresponds with my memory of it being a stormy period and usgetting the tarps afterwards before more bad weather set in. 10. Mr Bayley says the house has suffered due to a lack of maintenanceon our part. We have followed all the advice we have been given bythe experts in relation to protecting the house, including clearingdrains and leaf build-up on the decks. When Mr Bayley visited ourhouse for his inspection it was arranged on very short notice and wasjust after a period when we had been away overseas and we had had aparticularly busy period in my business. It would be wrong for himto assume that since leaves were there when he visited we have notbeen keeping on top of the debris and leaves since we moved in overtwo years ago. When we have noticed the leaves building up, we havecleared them out.[164] Mr Mitchell's evidence is supported by the evidence of Mr Biggelaar, whoassessed unit 7 at the higher end of damage based on his experience completing otherremedial projects. He said the following under cross-examination, when it was put tohim in relation to one area of damage that it was due to leaks occurring from April2017 through to August or October 2017, which just had not been fixed:A. in all my years of doing this work, I can categorically say that this isnot an incident or the issue, it's a long term leaky home weathertightnessissue. So [regarding the] deck, you can see as explained yesterday, thatthe bottom plates were missing from the deck above due to the decay, theapron flashings are leaking, the membranes are leaking, there was doublearrow tiles, the metal posts are leaking, the (inaudible ) was leaking, it'sjust caused extensive decay so in my opinion, this wall that we're seeingis evidence of long term moisture increase.[165] While it may be possible to conclude that unit 7 is a leaky home and was suchat the time of sale to the Mitchells based on Mr Biggelaar's evidence as to the extentof the damage referred to above, there is disagreement between Mr Biggelaar andMr Bayley over each of the individual alleged defects. My conclusion on each ofthose will inform any conclusion on whether the representations were false. Myconclusion on the alleged defects is also relevant to the issue of loss.The alleged defects[166] Before I come to the individual alleged defects, I make an observation as toone aspect of Mr Bayley's evidence. He accepts that certain of the defects alleged byMr Biggelaar would have been visible to Mr Kemp.28 However, as will be apparentfrom discussion of the alleged defects below, Mr Bayley does not accept they aredefects based on his other observations and various photographs he refers to. There isa degree of inconsistency in those two positions.Alleged defect 1(a) — metal pipes buried within the top plaster surface of thebalustrade[167] This allegation relates to the metal railing, or more particularly the balustersattached to the railing, which penetrate the top plaster surface of the balustrades oneach of the four balconies (excluding the metal balcony on the first floor): one eachoff the kitchen/dining room and lounge on the first floor, and one each off the masterbedroom and ensuite on the second floor.[168] Mr Biggelaar's position was that all of the balcony balustrades contain severedecay to the majority of the balustrade framing as a consequence of this defect.Mr Biggelaar referred to the resulting decay saying:In my experience, decay of that nature doesn't happen overnight. it wouldbe leaking from a very early stage in the life of the building you can seewhere the pipe penetrates the top of the balustrade and the plaster will crack.In the heat of the sun, the metal will expand; a little crack will form aroundthe pipe and water will flow into the junction and cause that decay [in thetimber top plate and the adjacent timber framing].[169] In an area he photographed, Mr Biggelaar referred to "black mush" beingunable to support any structure. He said he would expect, to varying degrees, decayat every metal pipe when all the cladding is removed.[170] Mr Bayley's position was that, in relation to the balcony off the kitchen/diningarea, the only area of rot to the (timber) top plate is at the areas where the balustrade28 Alleged defects: 1(a) (metal pipes buried within the top plaster surface of the balustrade); 1(b)(metal parapet cap buried within the top parapet surface of the balustrade to the ensuite balcony);and 1(c) (apron flashings inserted into the Duraplast cladding with limited/no turnouts).intercepts with the building itself. In other words, his position is that there waslocalised damaged associated with the junction of the balustrade and the building but,as one moves from those junction points, there is actually no damage to the top plateoutside those localised corners.[171] Mr Biggelaar did not accept that proposition when it was put to him. He saidthe metal pipes destructed on two other balconies showed severe decay around thepipes (balusters) with high non-invasive moisture readings using a meter and that thetimber bottom plate in the kitchen/dining balcony had decay (not just in the junctionpoint referred to by Mr Bayley). While not all of the cladding had been cut away (andMr Biggelaar accepted that it would be necessary to cut away more of the plaster todetermine the exact extent of the decay), in any event, MBIE rules require replacementof at least a metre either side of the decay.[172] Mr Bayley referred to one crack in the corner of the lounge balustrade and twoor three cracks in the corner of the master bedroom balcony balustrade which heattributed to lack of maintenance from the time of the sale of the building. The cracks,which were unsealed, could have allowed water penetration.[173] I prefer the evidence of Mr Biggelaar. This defect and resulting damageobserved by him and the further damage which he expects to see when the rest of thecladding on the balconies is removed, has been on-going for a lengthy period of timeand does not arise as a result of lack of maintenance (that is, sealing of any cracks) onthe part of the Mitchells since the end of March 2017.Alleged defect 1(b) — metal parapet cap buried within the top parapet surface of thebalustrade to the ensuite balcony[174] Mr Biggelaar explained that where the balustrade meets the wall of the stairs(which go through the central core of the unit under a sloping roof), there is a metalcap that goes over the roofing membrane which was buried in the plaster of thebalustrade. At that junction, there is concrete plaster and metal which expand atdifferent rates. A crack had formed, causing damage to the timber in the bottom of thebalustrade, extensive decay to the floor joists, boundary joists, king plates and damageto the ceiling lining including damage to the wall of the adjacent angled stairwell wall.[175] Mr Bayley agreed that whether it was a buried cap flashing or the absence ofsaddle flashing, that was an aspect of construction that could have allowed cracking,which, if left unsealed, would have allowed water in. Mr Bayley accepted that, as aresult of that construction detail, water had penetrated and caused damage to thebuilding. Notwithstanding that concession, Mr Bayley did not agree that this meantthat unit 7 met the definition of a leaky building. His position was that the damageand decay observed by Mr Biggelaar was attributable to the six-month period after thesale and purchase (up to the time of Mr Biggelaar's photographs taken on hisinspection). He referred to the fact that there did not appear to be any noticeabledeterioration by way of bleaching on the Duraplast surface which occurs when watergets into Duraplast. However, unit 7 had been repainted in 2008 and again in 2016.The exterior plaster was repaired and repainted. Mr Bayley accepted that anexplanation for the absence of any bleaching on the surface could be explained byrepainting of the exterior.[176] Again, I prefer the evidence of Mr Biggelaar and conclude that this defectexisted at the time of sale to the Mitchells.Alleged defect 1(c) — apron flashings inserted into the Duraplast cladding withlimited/no turnouts[177] This refers to the apron flashings to the sides of the balcony doors where theroof butts into the adjacent wall. Rather than the metal flashing being inserted into thecladding (as it was), it should have been turned around so that any water coming downthe roof gets directed into the gutter system. Referring to the master bedroom balcony,Mr Biggelaar's evidence was that this particular defect resulted in damage to thetimber bottom plate of that balcony. In relation to the ensuite balcony, he says that iswhat caused the damage in the kitchen ceiling and also down into the area to the left-hand side of the dining room balcony doors in the kitchen/dining area leading out ontothe balcony.[178] Mr Biggelaar's evidence was that, having regard to the severe decay to thetimber framing on either side of the dormer doors, this damage would have beenpresent immediately prior to the sale to the Mitchells.[179] Mr Bayley agreed with Mr Biggelaar's evidence in relation to the apronflashing abutting the cladding on either side of the doors to the ensuite balcony andthe master bedroom balcony, namely that it was incorrectly installed. However, hemaintained his position that the damage had been caused by blocked gutters.[180] Even without Mr Mitchell's evidence of their regular clearing of the gutterswhen there was leaf build up, there was Mr Biggelaar's evidence that the gutters on ahouse are designed to overflow either on their front or back edge as the case may be.This particular building has copper gutters externally mounted, so, in circumstancesof heavy rain or if there has been leaf build up, the gutters overflow over the back edgeand drop down onto the deck or the ground, as the case may be. So, Mr Biggelaar didnot accept that blocked gutters would have any contribution whatsoever to the damage.His position was that the gutters were not buried in the plaster. In his opinion, theywere performing as intended.[181] I accept Mr Biggelaar's evidence that damage from this defect would havebeen present immediately prior to the sale to the Mitchells.Alleged defect 1(d) — failing membrane on the surfaces of the decks combined withdefective drain outlet installation[182] Mr Biggelaar's evidence was that this defect resulted in severe decay to thetimber framing including walls, floor joists and balustrades from the balconies, whichcontinued down the walls into the kitchen. There was also resulting damage to theplywood substrate of the deck and framing, especially around the overflow outlets.[183] Mr Bayley's position was that there was no evidence of membrane failureprovided.[184] It was put to Mr Biggelaar, in cross-examination, that the various areas ofdamage, which he referred to as supporting his position that there had been a failurein the membrane, could be due to other defects or other factors as opposed to a failureof the membrane system. Mr Biggelaar acknowledged that was possible but not likely.[185] Mr Bayley's various theories of cracked tiles were put to Mr Biggelaar, and hemaintained his position that if the membrane or balcony was working, then it wouldnot be leaking.[186] I am satisfied that Mr Biggelaar has answered all Mr Bayley's theories. Thiswas a defect that was present immediately prior to the sale to the Mitchells.Alleged defect 1(f) — poorly conceived/detailed pipe penetration and pipe through thebalustrade of the ensuite balcony[187] The parties were agreed that this alleged defect had already been covered inthe context of alleged defect 1(a).Alleged defect 1(g) — generic failure of the flashing system on doors and windows[188] Mr Biggelaar's position was that a high degree of damage is expected to beevident in the timber and flooring below and around the windows and doors, includingsevere decay and missing components.[189] Mr Biggelaar said he took some non-invasive readings around the windows(on the eastern and western faces of unit 7) and got high readings. He thereforeexpected a high degree of damage around the windows and doors. There are alreadysigns of decay at the bottom plates on the internal carpet at the master bedroombalcony and the ensuite balcony. He referred also to the damage at the dining roombalcony and high moisture reading on the outside of the lounge balcony.[190] Mr Biggelaar accepted there had been no invasive testing and he had not cutout a window head flashing or sill flashing to view the damage. But he consideredthat, since all units were built at the same time under the same building consent, likelyby the same builder and were all given a Code Compliance Certificate at the sametime, the methodology used to construct the window flashing will have allowed decayas identified in the O'Hagan report for unit 1. He said that there is no easy way toreplace the flashing system without taking the windows right out of the building,removing all of the cladding, replacing the frame and reinstalling them correctly.When asked how likely he thought that there will be damage around the window, hisresponse that he was 100 per cent convinced that they are damaged.[191] Mr Bayley's position is that there was no investigation done to determinewhether there was any generic failure to the door and window flashing systems. Uponinspection, he said there were no tell-tale problems that he could see that indicated anyproblems at all to the windows.[192] The following evidence was put to Mr Bayley in cross-examination: thatMr Mitchell said that he was advised prior to purchase that sealant was requiredaround the doors leading from the ensuite bathroom to the balcony; units 3 and 4 hadtheir windows taken out and reinstalled to fix flashing systems; the report by Drybuildshowed high moisture around the windows in relation to unit 5 and, in relation tounit 6, there was high moisture around the bottom of the door joinery. It was thereforesuggested to Mr Bayley that, having regard to the preponderance of problems withwindows across the other six units, it was extremely likely that there would beproblems with the windows in unit 7. Mr Bayley initially answered "No". On beingasked to reconsider his answer, Mr Bayley conceded that if all the other six units didhave a problem, he might agree that there was a "possibility" that unit 7 might be inthat same category.[193] I take into account that concession by Mr Bayley. It supports my preferencefor Mr Biggelaar's evidence that there was a generic failure of the flashing system ondoors and windows, which was present immediately prior to the sale to the Mitchells.Alleged defect 1(h) — defective membrane/cladding detailing at balcony doors[194] The parties were agreed that this alleged defect had already been covered inthe context of alleged defect 1(d).Alleged defect 1(i) — inadequate and failing waterproofing in the shower in theensuite bathroom.[195] Mr Biggelaar's evidence was that the opening up of the kitchen ceiling (belowthe ensuite bathroom) showed decayed floor joists and particle board flooring. Thiswas under the shower and resulted from prior leaks. He said that the timber framingaround the shower and the ensuite, which is concealed, will also be damaged and willrequire remedial work. This is damage that would have been present immediatelyprior to the sale to Mr Mitchell.[196] Mr Bayley's position was that there was no evidence provided for anywaterproof failure to the shower. He referred to the evidence of others of historic leaksin the bathroom and said they appeared to have been remedied.[197] Under cross-examination, Mr Biggelaar accepted that it was possible thatMr Bayley's theory as to the cause of the water that Mr Biggelaar released from thekitchen ceiling on his first site visit came from sources apart from the shower.[198] The witness's evidence then turned to focus more particularly on the extent ofthe remedial work required. Mr Biggelaar's position was that, in any event, the shower(which is adjacent to the balcony off the ensuite) will end up coming out. He said that,to fix the outside wall, floor, balcony and timber joists under the ensuite door, theshower will need to be repaired regardless. For his part, Mr Bayley acknowledgedthat there was obviously decayed timber framing down either side of the ensuite whereit goes into the balcony joists supporting the balcony. He said it was hard to knowwhether that would be sufficient to require the deconstruction of the shower. At worst,the reconstruction of the external wall would require the reconstruction of the showerat that point and possibly the floor or part of the floor going into the shower, and itmay require a retiling and slight reconstruction. Mr Biggelaar's position was that youcannot fix half a shower.[199] Having regard to Mr Biggelaar's concession in [197] above and even takinginto account problems with the showers in other units, I consider that the Mitchellshave not established that the waterproofing in the shower is a defect. Notwithstandingthat, I accept Mr Biggelaar's evidence that the shower will need to be reconstructed aspart of any remedial works.[200] To conclude on this issue — unit 7 is a leaky home. It was such at the time ofsale to the Mitchells; it is not the Mitchells' conduct and "lack of maintenance" thathave caused the design defects to manifest themselves subsequent to 30 March 2017.The representation that unit 7 was not a leaky home was therefore false.Was unit 7 built with extra care?[201] Having regard to my conclusion that unit 7 is a leaky home, in my view, itfollows that unit 7 was not built with extra care. This representation was also false.InducementDid Mrs Murphy intend that Mr Mitchell would be induced by the misrepresentationto enter into the SPA?[202] It can be inferred that the vendor of a plaster clad home who tells a potentialbuyer that it does not leak intends to induce that buyer to enter into a sale and purchaseagreement.[203] This is not a case where the representation was made in response to a questionfrom a buyer seeking reassurance.29 Mrs Murphy, through her agent, pre-emptivelyprovided that assurance. Mrs Mitchell's evidence was that Ms Goodall repeated therepresentation several times. Mr Mitchell's evidence was that she endorsed it with herown enthusiastic marketing and emphasised the vendor's knowledge of the complexand her status as the developer.[204] It is to be noted that unit 1, which is highly visible at the front of the complex,stands out as having been reclad in weatherboard. The inference is open, and I drawthe inference, that this was part of a marketing strategy to differentiate unit 7 fromunit 1.[205] I am satisfied that the Mitchells have established that Mrs Murphy intendedthat the Mitchells would be induced by the misrepresentation to enter into the SPA.29 Magee v Mason, above n 18, at [49].Did Mrs Murphy use language that would induce a reasonable person in the samecircumstances to enter the contract?[206] The answer to this question is "Yes". The statement was plain — "the ownersays it is not a leaky home". It was supported by the statements that Mrs Murphy andher husband were the developers, it was built for them to live in, and she was a long-standing owner of unit 7. That all gave added weight and would have induced areasonable person to enter into the contract.Did the Mitchells rely on the misrepresentations?[207] The majority in Magee made the following points about inducement:30(a) There may be more than one factor inducing entry. The test for anysingle inducement is whether it had a material effect on the decision.(b) In New Zealand conveyancing practice it is usual to reduce the materialterms to writing, meaning to be bound by the document, but each caseturns on its own facts.(c) A purchaser's independent inquiries may bring reliance to an end, sonegating the effect of a misrepresentation, but that need not be so.(footnotes omitted)[208] In this case, the Mitchells obtained a building report from Mr Kemp afterMr Mitchell signed the SPA and before declaring the agreement unconditional. Doesthat preclude inducement by the misrepresentations I have found were made?Mr Collecutt submits that, by their conduct in obtaining an independent report as toweathertightness, the Mitchells did not rely on any unprompted statement made by thereal estate agent.[209] In his brief of evidence, Mr Mitchell referred to their reliance as follows:10. Lynne and I are very cautious people. I found it reassuring to knowthat Ms Murphy had such a long history with this Property and therest of the block. Joss [Goodall]'s comments left us with theimpression that Ms Murphy would have known if there were leaks.30 At [48].22. It was always our intention to get a building report in relation to anyproperty we bought. When deciding what other investigations werenecessary, one of the most important factors for me was the fact thatthe person who had been living in the property, was partly responsiblefor the development and knew the property and the townhouses well,had given it a clean bill of health. We decided that no more than astandard pre-purchase inspection report was necessary.29. On 23 December 2016, we instructed our solicitor to declare thepurchase unconditional. In doing so we were relying on a number offactors. Ms Murphy's representation about the property not being aleaky home remained one of the most influential factors.30. We also relied on Mr Kemp's report as confirming what Ms Murphyhad already told us through the real estate agent. We believed that ifthere were serious issues with the property then they would have beennoticed by the vendor and disclosed to us and would certainly havebeen picked up in a pre-purchase report.35. Had Ms Murphy told us everything she knew about this property orthe other townhouses then we would not have purchased it.44. We like the area very much but had we been informed of the truenature of the property (and the ongoing serious problems with manyothers in the same block) rather than the very persuasive assurancethat it was what any reasonable person would expect their home tobe – 'not a leaky home', we would not have purchased the property.[210] Mr Mitchell was tackled on this evidence more than once under cross-examination and consistently maintained his position. For example:Q. isn't the reason that the agreement didn't ring any serious alarmbells was that you knew, "We are going to get this propertyindependently investigated and if that investigation finds a problem,weathertightness issues, we can pull out of the agreement" ?A. I think it's really important to understand that the investigation by thebuilding inspector was not the primary reason that we purchased theproperty, it was a backup. The advice that we had been given by theowner and endorsed by the real estate agent was our real bedrock forproceeding.[In essence,] the builder's report was a backup or confirmation thatthere were no problems. That was not the prime reason that wepurchased the property.[211] I need to refer to a discussion between Mrs Murphy and the Mitchells toconsider whether what was said impacts on the asserted reliance on themisrepresentations. There was conflicting evidence as between the Mitchells andMrs Murphy about this conversation, said to have been in December 2016, that tookplace at unit 7. Accepting the date as correct, it would have been after the SPA wassigned and before the Mitchells declared it unconditional. Mr Mitchell was cross-examined on this discussion. He said that he had met Mrs Murphy at the propertyseveral times and he was "a little hazy on what happened at what meeting". But hedid not suggest there was not a discussion. There was the following exchange in cross-examination:Q. I'll just ask at this meeting do you recall any discussion with MrsMurphy in relation to whether or – in relation to weathertightnessissues?A. I don't remember any discussion of any consequence. There wascertainly nothing to suggest that there were or could beweathertightness issues.Q. – I'll put it to you that at this meeting, on the site, that Ms Murphynow recalls that there was a discussion where she suggested that youand your wife talked to the owners of unit 1 because they had recladtheir property. And the background to that suggestion was that eitheryou or your wife had asked Ms Murphy whether or not the propertywas a leaky home and her response was, "I'm biased. However, youshould talk to the Frames, because they are carrying out a reclad oftheir property."31(emphasis added) (footnotes added)A. I don't recall that. In fact, she told us quite specifically that they hadreclad their home and it turned out that they didn't need to.Q. Just one question and then I'll finish. Isn't it really the case that you actually asked Ms Murphy, "Is the property a leaky building?" andMs Murphy's response was "I'm biased, but you should talk to theFrames," isn't that what actually happened?A. No, I – that's not my recollection at all.[212] Mrs Mitchell was also cross-examined on what was said by Mrs Murphy:31 Query whether this should read "have carried out".Q. Now just turning back to the meeting with [Mrs] Murphy, JossGoodall, you and Howard back in – on our understanding – December2016 where you've talked about the views at Mt Eden and Mt Hobsonand the St Marks development. Didn't Mrs Murphy at that meetingsuggest to you that you talk to the owners of Unit 1, the Frames?A. No, she didn't.Q. And I put it to you that what actually happened was that there'd beena discussion along the lines of either you or Howard askingMrs Murphy to confirm that it wasn't a leaky home, and that herresponse to you was "I'm biased, that you should talk to the ownersof Unit 1 who reclad," isn't that what happened at that meeting?A. No, it isn't. Her response to us for – about Mr Frame was in relationto the showers. She said, Mrs Murphy said, Mr Frame had reclad andhe had no reason to, he'd wasted a lot of money.Q. So there was a discussion at that meeting in relation to Mr Frame andhim recladding?A. No there was no discussion. That is what Clare Murphy responded tous about just shortly after we had had the tile – the terracotta tilediscussion about the shower. It was about a few seconds after that. Q. So we're talking the same meeting here aren't we?A. Yes.Q. At that meeting there was a discussion talking about Unit 1 and itbeing reclad?A. It wasn't a discussion, it was a passing comment.Q. Now Mrs Murphy says that she has no recollection of discussing tileshowers with you at that meeting, but she does have a recollection ofreferring you to Mr Frame in relation to water tightness reclad issues.Isn't it really the case that you were buying the property as is and thatMrs Murphy was saying, "I'm biased. What you should do is makeenquiries of the Frames?"A. that's not correct. She did not direct us to contact Chris Frame.[213] Despite the issue of weathertightness being a critical issue, in fact the issue, inthe proceeding, Mrs Murphy, in her brief of evidence, when referring to several visitsby the Mitchells to unit 7 in December, said, "I did not talk to them about whether theproperty had had leaks". This only arose in supplementary oral evidence at the hearing(giving rise to the cross-examination set out above).[214] In her brief of evidence, Mrs Murphy had said she made the suggestion thatthe Mitchells talk to the Frames:200. I suggested to the Mitchells to talk to the people in unit 1 (as I hopedMr Frame would tell them what I understand he had told everyoneelse that has reported back to me, namely that the house did not reallyneed to be reclad but he is glad he had done it for resale value).201. I have no recollection of discussing tiled showers with the Mitchells.[215] In evidence-in-chief, Mrs Murphy was asked about the conversation asfollows:Q. What was the background to that suggestion?A. Well, it's really obvious coming onto the property that unit 1 is reclad.So I thought rather than not mention it, it's better to direct them to goand talk to these people because I was sure of what they would say.But – I had a point there and I lost it. It made sense to address the issueand so I mentioned that they should perhaps talk to some of theneighbours and I said in particular people in unit 1. And Howard said,"Well, I've already spoken to some neighbours," and I said well that'sexcellent, something along those lines. I'm paraphrasing.Q. Just immediately prior to this discussion, what was being discussed?A. it was leaves. The Mitchells had asked me and I said in a sort of athrowaway line that "You couldn't ask me, I was biased," they neededto get [some] independent [advice] and I can't remember whether Iused verification or I can't remember exactly what words but the senseof it was that they needed to get independence on that because myhead said I love the property and I'm biased. They needed a properscientific investigation, not how much I love the property. And that'swhy I brought up the subject of suggesting they talk to Mr Frame.[216] Under cross-examination, Mrs Murphy said:A. I would say that we remembered different things of that conversation but it just doesn't smack of reality that I would have said, "They'vewasted a lot of money," because about a subject like this you don'ttalk money, I mean I suggested that they go and talk to them andHoward's response was, "Oh we've already spoken to several of theneighbours," he was quite chipper about the fact that he'd alreadydone that.[217] I prefer the evidence of Mr and Mrs Mitchell in relation to this conversation.First, it was not put to Mr Mitchell in cross-examination that he had spoken toneighbours. Nor were the three neighbours who gave evidence asked about that.Mr Mitchell's evidence was that he and his wife are very cautious people. Given thehistory of watertightness issues in the other units, I would have expected that, had hespoken to the neighbours, he would have been told about that and he would havefollowed up on it by making further inquiries in relation to unit 7. But moreparticularly, I have found that Mrs Murphy had knowledge of the allegations of leaksin other units and associated reports, including unit 1. I acknowledge Mr Frames'evidence that the damage was not as bad as they had feared. But he did not say that areclad was not necessary. That is contrary to what was said in the reports for unit 1.I do not accept that, in the light of the knowledge that Mrs Murphy had in relation tothose other units, she would have told the Mitchells to speak to the Frames.[218] There is further evidence on the issue of reliance. Mr Mitchell was asked incross-examination about an email which he sent to Mrs Murphy on 23 March 2017.Although, by this time, the SPA was unconditional, it is relevant to the question ofreliance. In his email, Mr Mitchell said:One thing we did want to ask about as we have the window man comingtomorrow – there seems to be a disturbance in the paint in the corner of thedining area wall (by the balcony). Has there been a bit of historical weatherintrusion, perhaps from the window in that area? We just wanted to give himany background we can to help him assess if there's any required work.[219] Mr Collecutt put the following proposition to Mr Mitchell in cross-examination:Q. I put it to you that if you entered into this agreement on the basis ofyour understanding that Ms Murphy had told you via her agent thatthe place was not a leaky home, you wouldn't be asking in March –shortly before settlement – whether there'd been any historicalweather intrusion, because the whole basis upon you say that youentered into this agreement was you'd been told it's not a leaky home.Isn't it really the case that at the time of leading up to settlement youknew that there hadn't been an unqualified statement made thatthere'd been no historical leaks with this property?A. Exactly the opposite. We had been told that it was not aleaky home, so I'm wondering if there's a bit of disturbance here hasit come in through the window. I would hardly call a leaky window aleaky home.[220] In my view, that is a logical and coherent response and consistent withMr Mitchell's evidence that he relied on the estate agent's statement that the ownersays this is not a leaky home.[221] Mr Mitchell's evidence, which was not undermined in cross-examination,satisfies the test for inducement as expressed in Magee, namely whether it had amaterial effect on the decision. It did. Mr Mitchell continued to rely on therepresentation when declaring the agreement unconditional.[222] This case may be distinguished on its facts from those cases in which apurchaser's reliance on a building report was found to preclude inducement by avendor's representation.[223] On this issue, I therefore find:(a) That the misrepresentations made by Ms Goodall, the estate agent, hada material effect both on the Mitchells' decisions to enter into the SPAand to declare it unconditional; and(b) Neither the discussion with Mrs Murphy in December 2016 after theSPA was signed but before it became unconditional nor the obtainingof Mr Kemp's inspection report brought that reliance to an end.Was it reasonable for Mr Mitchell to rely on the representations?[224] Mr Mitchell was entitled to rely on Mrs Murphy's unqualified representationshaving regard to her superior knowledge of unit 7. When she met with the Mitchellsin December 2016, she also provided information about unit 1 (namely, that it hadbeen reclad unnecessarily), which reinforced her representation. That gives furthersupport to the reasonableness of Mr Mitchell continuing to rely on what he had earlierbeen told when it came to declaring the contract unconditional.Is it fair and reasonable that cl 22 be conclusive between the parties?[225] It is first necessary to consider the meaning of cl 22. I set it out again here forease of reference:22.0 Purchaser acknowledgment22.1 The purchaser acknowledges that:(a) the dwelling has been built with a plaster claddingsystem;(b) prior to entering into this agreement the purchaser hasbeen advised to and has had the opportunity to makeindependent enquiry in respect of the construction,the cladding and weathertightness issues.22.2 Notwithstanding anything in this agreement the vendorprovides no representations or warranties in respect of thematters set out in clause 22.1(a) and (b) and the vendor shallnot be liable for any claims, costs, losses, damages orliabilities whatsoever suffered or incurred by the purchaser inrelation to the matters set out in clause 22.1 and relating to theconstruction of the property, the cladding system and theweathertightness therefore.22.3 The purchaser agrees that the purchaser is purchasing theproperty on an @as is where is@ basis and the vendorwarranties in clause 7.1 and 7.3 of this agreement shall [not]apply to the matters set out in clause 22.1[226] Mrs Murphy's primary position in defending the claim is that, by acceptingcl 22, Mr Mitchell confirmed he was accepting that no representations had been made,that they had been advised to undertake their own investigations and that unit 7 wasbeing sold on an "as is, where is" basis. Essentially, Mr Collecutt submits that it is anon-reliance clause.[227] It is first necessary to interpret what cl 22 means. In doing so, the Court mustadopt an objective approach:32 to ascertain "the meaning which the document would convey to areasonable person having all the background knowledge which wouldreasonably have been available to the parties in the situation in which theywere at the time of the contract". 32 Firm PI 1 Ltd v Zurich Australian Insurance Ltd t/a Zurich New Zealand [2014] NZSC 147, [2015]1 NZLR 432 at [60].[228] Ms Wroe submits, and I agree, that the background knowledge that the partieshad prior to signing the SPA is that:(a) Representations had been made by the real estate agent;(b) It was known that the vendor's knowledge of unit 7 dated back to thetime of construction, as she and her husband were the developers of thecomplex;(c) The Mitchells had visited unit 7 at least a few times and had not yetobtained an independent building report;(d) Mr Mitchell provided some terms of the SPA from his solicitor,including a due diligence clause before cl 22 was added;(e) Clause 22 was drafted by the real estate agent on behalf of the vendor;(f) Clause 22 was added to the Mitchells' clauses as part of the full draftagreement; and(g) Mr Mitchell spoke to his solicitor before counter-signing the SPA.[229] Mrs Murphy bears the burden of proving that the clause applies to thecircumstances in this proceeding, since the clause was drafted by Mrs Murphy's agent.Any ambiguity is to be assessed contra proferentem.[230] I turn now to the ambit of cl 22. The ambit of the clause is determined bycl 22.1, which confines it to matters relating to the "plaster cladding system" and thepurchasers' "opportunity to make independent inquiry in respect of the construction,the cladding and weathertightness issues". Clause 22.1 is framed as anacknowledgment and does not purport to limit Mrs Murphy's liability or in any wayprevent an inquiry into a misrepresentation.[231] Clause 22.2 commences, "Notwithstanding anything in this agreement thevendor provides no representations". It does not expressly override or rule out theeffect of oral representations. It is also limited to matters relating to cl 22.1. I addressthat latter point in [238] below.[232] Clause 22.3, the "as is, where as" clause, is not clearly expressed in terms ofits effect. A reasonable person might understand the clause to mean that the purchaserwas not only buying what was presented physically, but as it had been represented bythe developer, namely that it was not a leaky home. Although Mr Mitchell's subjectiveunderstanding is not relevant when it comes to interpreting this clause, it may representwhat the reasonable person would consider the clause to mean. Mr Mitchell stated:To me that would have presumed that the property is as you see it, but Iwould've presumed that it was if the property was presented to us truthfullywithout any misleading, lies, tricks or anything else.[233] As already noted, the parties agree there is an error in cl 22.3, which shouldread that "clause 7.1 and 7.3 of this agreement shall [not] apply to the matters set outin clause 22.1".[234] I accept Ms Wroe's submission that the limitation of the excluded cls 7.1 and7.3 give support to her submission that cl 22 does not preclude reliance on, and liabilityfor, matters to do with the vendor's knowledge, which had been passed on to theMitchells. Clause 7.1 is the clause in a standard form SPA relating to requisitions anddemands. Clause 7.3 relates to a compliance schedule and warrant of fitness for theproperty.[235] Clause 7.2, which is not excluded, includes, at cl 7.2(5)(b), a warranty as to thevendor's knowledge that, where work has been done on the property, the works werecompleted in compliance with permits or consents.[236] Ms Wroe accepts that the Mitchells could not rely on that warranty as it wasNZPL that caused the work to be done, not Mrs Murphy. But Mrs Murphy made itknown through the estate agent that she was the developer, and she used herknowledge of unit 7 as an inducement (as I have found).[237] Therefore, an objective interpretation that the wording of cl 22 deliberatelyleaves open oral representations in matters to do with the vendor's knowledge of theconstruction is therefore reasonably available.[238] I do not accept that the representations go beyond the ambit of cl 22.1. Thefalse elements of the representations relied upon go beyond the plaster cladding systemreferred to in cl 22.1(a) and include the deck membranes, showers and apron flashings.However, those elements are all related to weathertightness. Clause 22.1(b) refers toboth "the cladding and weathertightness issues". I therefore do not accept thesubmission that the representations go beyond the ambit of cl 22.1. But for the otherreasons set out above, I consider that Mrs Murphy has not discharged the burden ofproving that cl 22 applies. However, in case I am wrong, I go on to consider theposition under s 50 of the CCLA.Section 50 of the CCLA[239] Section 50 of the CCLA provides:50 Statement, promise, or undertaking during negotiations(1) This section applies if a contract, or any other document, contains aprovision purporting to prevent a court from inquiring into ordetermining the question of—(a) whether a statement, promise, or undertaking was made orgiven, either in words or by conduct, in connection with or inthe course of negotiations leading to the making of thecontract; or(b) whether, if it was so made or given, it constituted arepresentation or a term of the contract; or(c) whether, if it was a representation, it was relied on.(2) The court is not, in any proceeding in relation to the contract,prevented by the provision from inquiring into and determining anyquestion referred to in subsection (1) unless the court considers that itis fair and reasonable that the provision should be conclusive betweenthe parties, having regard to the matters specified in subsection (3).(3) The matters are all the circumstances of the case, including—(a) the subject matter and value of the transaction; and(b) the respective bargaining strengths of the parties; and(c) whether any party was represented or advised by a lawyer atthe time of the negotiations or at any other relevant time.[240] The predecessor of this section was s 4 of the Contractual Remedies Act 1979,which was discussed in the recent Court of Appeal judgment in Bushline Trustees Ltdv ANZ Bank of New Zealand Ltd.33 The Court stated:[244] Whether it is "fair and reasonable" for a party to rely upon adisclaimer despite s 4 will depend heavily on the facts of each case. As thisCourt said in PAE (New Zealand) Ltd v Brosnahan, the section ultimatelyrequires the court to strike a balance:Section 4(1) recognises a wide judicial discretion to determinewhether it is "fair and reasonable that the provision should beconclusive". While the issue is to be determined "having regard to allthe circumstances of the case", the specified criteria focus the inquiryon an assessment of the relative positions of the parties and theiraccess to independent legal advice. Its apparent purpose is to protectone party's relative vulnerability from another party's power toimpose an exemption from liability which is contrary to the factualreality or an existing legal obligation and is thus unreasonable andunfair. Section 4(1) is a mechanism for striking balances, bothindividually between parties and conceptually between freedom ofcontract and unfair or unreasonable commercial conduct.[245] When considering the reasonableness of such a clause, the court willhave regard to all the circumstances of the case, including the subject matterand value of the contract, the respective bargaining strength of the parties andwhether they were represented. Other relevant matters can include thecircumstances in which the representation was made and whether thedisclaimer was in a standard form or drafted especially. In the end, the partyseeking the benefit of such a contractual provision has a persuasive burden ofdemonstrating why it should prevail.[256] It is also of some significance that s 4 does not save disclaimer clauses,unless the court considers that to do so would not be fair and reasonable: ratherit obviates their effect unless the court considers that it is fair and reasonabletheir provisions should be conclusive.(footnotes omitted)[241] Mr Collecutt, for Mrs Murphy, submits that it is fair and reasonable for cl 22to apply for the following reasons:33 Bushline Trustees Ltd v ANZ Bank of New Zealand Ltd, above n 22.(a) Mr Mitchell had equal bargaining power. This is not a case where oneparty was in a position to dictate that the agreement must include cl 22(for example, when a bank dictates it is non-negotiable on the terms ofits lending agreements).(b) He had been advised to, and had in fact, received legal advice in relationto cl 22.(c) He had read, understood and initialled cl 22.(d) He understood he was buying the property on an "as is, where is" basiswith no representations or warranties as to weathertightness issues.(e) He ultimately purchased the property for $45,000 less than itsunaffected market value.(f) He was aware of the leaky building/homes crisis, the risk of hiddendefects, and the risk of buying the property as is.(g) He was aware that the property had had some leaks/water ingress issues(which Mrs Murphy believed she had fixed).(h) Unlike Mrs Murphy, he carried out his own independent investigationof the property.(i) To the extent that there was an inequality of information, it was inMr Mitchell's favour.(j) Mrs Murphy did not represent that she was a building expert, had beensignificantly involved in the development of the property, or hadobtained expert advice as to whether or not the property was a leakyhome.(k) It was unreasonable for Mr Mitchell to assume that Mrs Murphy wouldknow whether the property was a leaky building.(l) Mrs Murphy had not represented that she had and would provide someexpertise in relation to determining whether the property was a leakyhome.[242] In terms of the matters set out s 50(3) of the CCLA, Ms Wroe submits that theonly factor that Mrs Murphy is able to rely on is that Mr Mitchell received legal adviceprior to signing the SPA.[243] In terms of the respective bargaining strengths of the parties (s 50(3)(b)),contrary to the submission made by Mr Collecutt, Ms Wroe submits that Mrs Murphyheld nearly all the cards. She was selective in the information that she provided,withholding information that would have been relevant to the Mitchells' decision topurchase the property. She submits, therefore, that there was a significant imbalanceof knowledge. Ms Wroe also refers to the fact that the clause was drafted on behalf ofMrs Murphy and was presented as standard or routine; the fact that Mr Mitchell didrely on the misrepresentation; the advice from their lawyer was brief and proceduraland Mr Mitchell's evidence was that the clause did not impact on the very positiveview they already had of the property; that the representations were untrue; andMrs Murphy knew, or ought to have known, that they were untrue.Discussion[244] First, in relation to the subject matter and value of the transaction, inSipka Holdings Ltd v Merj Holdings Ltd, Wylie J referred to the subject matter of thevariation agreement being land and the price being paid was not insignificant($600,000 plus GST, if any).34 That, Wylie J said, should have engendered in eachparty a need for caution.35 I consider the same could be said here. This factor istherefore neutral.[245] Secondly, an important aspect of the parties' respective bargaining strengths iswhat Mrs Murphy knew, or ought to have known, about the weathertightness of unit 7at the time of sale to the Mitchells.34 Sipka Holdings Ltd v Merj Holdings Ltd [2015] NZHC 1980.35 At [57].[246] In his brief of evidence, Mr Bayley gives his opinion in relation to a numberof the alleged defects as to whether a "reasonable home owner" would have knownabout those defects. His opinion is only admissible if it is likely to be of "substantialhelp".36 The term "substantial help" is an amalgam of "relevance, reliability andprobative value".37 I consider that Mr Bayley's evidence as to what a "reasonablehomeowner would have known" does not satisfy the test. The issue is not whether thereasonable homeowner knew, or ought to have known, about the defects or issuesresulting from those, but rather what Mrs Murphy knew, or ought to have known, giventhe history of leaks in unit 7 and the allegations and reports in relation to leaks in otherunits.[247] My view, therefore, is that Mr Bayley's evidence as to what a reasonable homeowner would have known is inadmissible.[248] The evidence establishes that Mrs Murphy knew that unit 7 had problems evenif she did not understand their full extent. I accept she most likely did not know thedetail of each defect, but she knew enough to know that unit 7 was likely to be a leakyhome. I say that for the following reasons:(a) There is Mrs Murphy's own evidence that there were leaks in unit 7during her ownership, that is recurring leaks in the ensuite bathroomceiling and in the kitchen ceiling below the ensuite bathroom.Mr Biggelaar's opinion is that kitchen ceiling leak was due to acombination of factors, including external water ingress. Mrs Murphyought to have recognised the possibility of external leaks for tworeasons: first, Vero's loss adjuster's report stated that a leak fromelsewhere had not been ruled out, and secondly, the leak recurred onmore than one occasion after it had been "fixed".36 Evidence Act, s 25(1).37 Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd [2016] NZCA 67, [2016] 2 NZLR 750at [94].(b) Mr Biggelaar's evidence, which I accept, is that the leak in the ceilingof the lounge is in an area where the leak is so bad it is likely to haveneeded repair at some point in the history of unit 7.(c) There was Mr Read's evidence as to condition of the property when heand Mr Buisman visited after Mr O'Toole moved out and beforeMrs Murphy undertook work on it before she moved in. In my view,Mr Read was a credible witness. He openly acknowledged hisprejudice against Mrs Murphy at a time when he interfered with Mr andMrs Murphy's attempts to sell unit 7 by informing buyers what he hadgone through with the need to repair his unit. He also madeconcessions, for example, that he could not be sure that Mrs Murphyattended the first meeting in September 2002 and also that most of hisdealings were with Mr Murphy. He denied exaggerating his assessmentof the condition of unit 7. He noted water damage in the ceiling in thekitchen/dining area. That would suggest that was one of the areas thatwas remediated prior to sale.(d) There was the mouldy smell that was present when Mr Read andMr Buisman visited.(e) Mr Buisman gave evidence of noticing water stained carpet and gibboards being removed from unit 7 at this time.(f) Contemporaneous invoices indicate plastering work being done in theensuite bathroom as late as October 2016. This is despite Mr O'Toole'sevidence that the effects of the leaks that had occurred when he wasresident had been fixed prior to him moving out.(g) Mr Biggelaar points to the swollen skirting boards in the dining/loungearea adjacent to the balcony. Mrs Murphy should have been on alertfor issues such as this, given the 2016 report on unit 6 confirming highmoisture levels. There is reference to the moisture levels being off thescale on the metre in unit 6.(h) Mrs Murphy knew that even after the sale to Mr Buisman he wascomplaining of on-going moisture ingress issues in unit 6.(i) Then there were the earlier weathertightness issues with the other unitsin the complex. There were defects in those units which were commonto the defects identified in unit 7; pipe penetrations into the balconybalustrades; membrane issues with the balconies; and flashingsembedded into plaster.(j) Although Mrs Murphy used the word "allegations", these were notsimply unsupported allegations made by the owners of the units. Forexample, in relation to unit 1, she was aware that a report filed in theWeathertight Homes Tribunal, essentially found that the unit had notbeen constructed in a way that complied with the Building Code. Shealso understood that there were allegations that external water got intounit 1 and caused damage (which is essentially the legal definition of aleaky building).[249] While some of the effects would not have been visible to Mrs Murphy, forexample, the effects of the pipe penetrations in the balcony balustrades, she was onnotice that this was a defect referred to in the Prendos report for unit 4 putting her onalert to the same issue in unit 7.[250] Generally, as to the reports in relation to other units, most of them wereprovided to her in circumstances where litigation was being pursued or contemplatedagainst a company of which she was director. She ought to have inquired further intothose reports and the repairs in other units before making an unqualified representationthat unit 7 was not a leaky home.[251] As she did not do that and as she had experienced problems with leaks, therewas no reasonable basis for her to say that unit 7 had been built with extra care or thatit was not a leaky home. It was open to Mrs Murphy to instruct Ms Goodall not to sayanything to prospective buyers about the weathertightness of unit 7. Instead therepresentation that "the owners says that this is not a leaky home" was part of the salespitch to the Mitchells, proffered voluntarily and without any inquiry on the part of theMitchells.[252] Under cross-examination, she said she had become aware, for the first time, onlooking at the Barfoots standard form as she was being cross-examined, that thatrequired a disclosure of leaks, not just in relation to the property but in other units inthe complex. This is despite the fact that she had signed the form ticking the box thatsaid "No" to the question asking if she was aware of "any past or present waterpenetration issue(s) affecting the property and/or complex". She acknowledged that,had she read the word "complex", she would have said that there were allegations ofproblems with water ingress in other units.[253] On the other side of the ledger, the Mitchells had the opportunity to take legaladvice, and did so, before counter-signing the SPA. Mr Mitchell acknowledged hediscussed the terms of the agreement with his solicitor. He said, however, theagreement did not ring any serious alarm bells for he and his wife "given the highlypositive view they had already had of the property". That positive view came fromthe representations made by Ms Goodall.[254] Also on the other side of the ledger is the fact that the Mitchells did get abuilding inspector's report. I refer back to Mr Mitchell's evidence that it was reallyimportant to understand that the investigation by their building inspector was not theprimary reason that they purchased the property, it was a back-up.[255] In conclusion and weighing all the above matters, in my judgment, it wouldnot be fair or just to find that clause 22 should be conclusive between the parties. Thebargaining position of the parties was not equal. Mrs Murphy was in possession ofrelevant information as to weathertightness of both unit 7 and other units in the block.She did not provide that information.[256] I therefore find in favour of the Mitchells on the first cause of action.Second cause of action — Fair Trading Act 1986[257] The Mitchells allege misleading and deceptive conduct under s 9 of the FTA.That section provides:9 Misleading and deceptive conduct generallyNo person shall, in trade, engage in conduct that is misleading or deceptive oris likely to mislead or deceive.[258] The elements the Mitchells need to prove are:(a) Was Mrs Murphy acting in trade when she sold the property to theMitchells?(b) Is Mrs Murphy guilty of misleading and/or deceptive conduct?(c) Have the Mitchells suffered loss or damage "by" Mrs Murphy'scontravening conduct?[259] The impugned conduct does not have to have been the sole cause of loss ordamage. It is sufficient if it materially contributed to the decision and was an effectivecause of the loss.38 An intention to mislead or deceive is not a necessary prerequisiteto liability under s 9.39 The relevant consideration is the conduct itself, not the stateof mind of the person carrying out the conduct.40[260] Mr Collecutt submits that Mrs Murphy was not "in trade" at the time and,accordingly, the Mitchells' case under this cause of action fails at the first hurdle.[261] "Trade" is defined in the FTA as follows:41trade means any trade, business, industry, profession, occupation, activity ofcommerce, or undertaking relating to the supply or acquisition of goods orservices or to the disposition or acquisition of any interest in land.38 Red Eagle Corporation Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [29].39 At [28].40 Lindsay Trotman and Debra Wilson Fair Trading: Misleading and Deceptive Conduct (2nd ed,LexisNexis, Wellington, 2013) at [3.37].41 Fair Trading Act 1986, s 2(1).[262] Ms Wroe acknowledges that ordinarily an individual selling their home wouldnot be acting "in trade". But, in the circumstances here, Ms Wroe submits thatMrs Murphy was acting in trade. Ms Wroe refers to the fact that unit 7 was part ofNZPL's commercial endeavour of constructing the complex and that unit 7 was alwaysrented out while the trustees of the trust owned unit 7 (prior to Mrs Murphy movingback in, in January 2016).[263] Ms Wroe submits that the contemporaneous documents, including her email toMr Buisman on 29 October 2015, suggest that Mrs Murphy moved back into unit 7intending to sell. That email states:My plans have now changed and in that I will shift back into [unit 7] to put iton the market as I can't ask it of a tenant. The timing that would suit me wouldbe early next year.[264] Mr O'Toole's evidence was that "[Mrs Murphy] had told me in 2015 that sheintended to move back into the property prior to selling it". Ms Wroe also points toMrs Murphy's evidence that she sold unit 7 to "realise the investment that was tied upin those units so that [she] could retire further north". Further Mrs Murphy acceptedthat the unit had been a source of income for her for about 12 years of tenancy.[265] Mr Collecutt referred the Court to the judgment of Clifford J inCashmore v Sands42 and the judgment of Venning J in Mitchell v Zhang.43 In neitherof those cases, nor in the judgments discussed in those two cases, were the factualsituations identical to that in the present case. However, the judgments make it clearthat a one-off sale of property can be "in trade", and whether a one-off transaction is"in trade" is a question of fact to be determined on the facts and circumstances of theparticular case.44[266] Reference to contemporaneous documents can be of assistance to a court inanalysing any oral evidence. In that regard, Mrs Murphy's email to Mr Buismansaying that she was shifting back into unit 7 to put it onto the market, in my view, isindicative of Mrs Murphy's intentions at the time. But that in itself is not42 Cashmore v Sands (2007) 8 NZBLC 101,897 (HC)43 Mitchell v Zhang [2017] NZHC 3208.44 Hunt v Macartney HC Auckland CIV-2010-404-1881, 25 August 2019 at [27].determinative. It needs to be seen in the context of all the other facts which are relevantto this issue. They are:(a) Unit 7 had originally been built to be used as Mr and Mrs Murphy'shome;(b) While Mr and Mrs Murphy moved out of unit 7 due, Mrs Murphy said,to the problems Mr Read was causing, the intention was to move backinto it;(c) The trust was not regularly buying and selling properties;(d) Unit 7 was not sold in conjunction with a business;(e) The decision to sell was not a decision to enable the trust orMrs Murphy to be active commercially; and(f) Mrs Murphy was living in unit 7 at the time it was sold (albeit I havefound she moved in to live there for the purpose of readying it for sale).[267] In my view, and to borrow the expression of Clifford J in Cashmore v Sands,the "hue" was private as opposed to commercial. I therefore find that Mrs Murphywas not acting "in trade" at the time she sold the property to the Mitchells.[268] In case I am wrong, I will go on to consider the other elements that theMitchells need to prove under this cause of action.Is Mrs Murphy guilty of misleading and deceptive conduct?[269] As well as the facts which I have found that make up the misrepresentations,the Mitchells rely on additional conduct by Mrs Murphy. As to that additional conduct,I have already accepted that Mrs Murphy did not give Ms Goodall (and thus theMitchells) the full history of unit 7 and the other townhouses in the complex andwithheld material information. She emphasised her knowledge about unit 7 and thatcarried the implication that she had disclosed all material information. I have alreadyfound that she did not do so.[270] Also on this issue, I refer back to the evidence of Mr Read and Mr Buismanregarding the condition of unit 7 after the tenant, Mr O'Toole, moved out. I comparethat to the condition of unit 7 when it was presented for marketing. By that stage,Mrs Murphy had replaced the carpet, she had removed water damaged gib boards andre-plastered and painted. The exterior had also been repainted. This work created amisleading impression as to the condition of the property.[271] Mrs Murphy is therefore guilty of misleading and deceptive conduct.Did the misleading conduct cause the Mitchells' loss or damage?[272] This issue has already been addressed, at least in part, in relation to my decisionon the first cause of action. I have accepted that the Mitchells relied on Mrs Murphy'srepresentations through the estate agent up to the point that they declared the SPAunconditional.[273] Mr Mitchell's evidence was that he would not have purchased unit 7 if theyhad been informed of the true nature of the property. He said:35. Had Ms Murphy told us everything she knew about this property orthe other townhouses then we would not have purchased it.44. We like the area very much but had we been informed of the truenature of the property (and the ongoing serious problems with manyothers in the same block) rather than the very persuasive assurancethat it was what any reasonable person would expect their home tobe – 'not a leaky home', we would not have purchased the property.[274] Although the hallway leak on 27 March 2017 occurred after the SPA wasdeclared unconditional, in proceeding to settlement (albeit with a price reduction toenable Mr Mitchell to complete repairs), Mr Mitchell accepted Mrs Murphy'srepresentation that the leak was new.[275] As to whether it was reasonable for the Mitchells to rely on the representationsand Mrs Murphy's additional conduct relied on under this cause of action despite cl 22,for the same reasons already expressed in relation to the first cause of action, it wasreasonable (in the context of the presentation of the property) for Mr Mitchell to takewhat was said about unit 7 at face value, despite the "as is, where is" clause."Failure to maintain"[276] This brings me back to Mr Bayley's opinion that the original design resultedin undiagnosed defects that manifested themselves after significant weather eventswithout further timely maintenance.[277] Relying, in part, on that evidence, Mr Collecutt's submission is essentially thatthere was no misrepresentation as unit 7 was not a leaky building when Mrs Murphysold it and has only become one because the Mitchells failed to maintain it; and anaffirmative defence based on an allegation that the Mitchells have failed to mitigatetheir loss.[278] Ms Wroe submits that Mrs Murphy is entitled to rely on an allegation of failureto maintain in relation to the first aspect, that is, that unit 7 was not a leaky buildingwhen Mrs Murphy sold it. But she submits that, since no affirmative defence was everpleaded nor was leave sought to amend, Mr Mitchell cannot raise it now.[279] I have already determined that the alleged failure to maintain on the part of theMitchells did not lead to unit 7 becoming a leaky building. To a large extent, thatcovers at least some of the grounds of the alleged failure to mitigate loss. AlthoughMs Wroe is correct that this affirmative defence was not pleaded, I will neverthelessconsider it. It is necessary for Mrs Murphy to show:(a) What reasonable steps Mr Mitchell could have taken to mitigate theloss;(b) That those steps were not in fact taken; and(c) That the steps Mrs Murphy says should have been taken would havereduced the damage (that is, the scope of the remedial work increasedas a result of the failure).45[280] Mr Bayley's evidence of his observation as to leaves in the gutters in August2019 is not sufficient to counter Mr Mitchell's evidence that in fact, over their periodof ownership, the Mitchells cleared out leaves from guttering when they built up.[281] Mr Bayley also makes the suggestion that the balconies ought to have beencovered from the date of possession. In my view, that is unreasonable.[282] I acknowledge Mr Biggelaar's acceptance that the tarpaulin put up by SuperiorWaterproofing could have been installed "a bit better", but he said that it neitherincreased or decreased the scope of works which he has recommended.[283] Therefore, even if Mrs Murphy had pleaded an affirmative defence of failureto mitigate loss, it would not have been established.Accessory liability — s 43(1)[284] Having accepted that Mrs Murphy was not acting "in trade" at the relevanttime, it is necessary to consider the alternative basis for the second cause of action. Ifthat is not proven, then the second cause of action must fail.[285] The Mitchells make an alternative claim under the FTA that Mrs Murphy isliable for Ms Goodall's misleading and deceptive conduct, as Mrs Murphy was"directly or indirectly knowingly concerned in, or a party to, contravention of" s 9.46[286] Section 43(1)(d) provides:43 Other orders(1) This section applies if, in proceedings under this Part or on theapplication of any person, a court or the Disputes Tribunal finds thata person (person A) has suffered, or is likely to suffer, loss or damage45 White v Rodney District Council (2009) 11 NZCPR 1 at [25]–[32].46 Fair Trading Act, s 43(1)(d).by conduct of another person (person B) that does or may constituteany of the following:(d) being in any way directly or indirectly knowingly concernedin, or party to, a contravention of a relevant provision:[287] For accessory liability, the Mitchells must show that Mrs Murphy knew of theessential aspects of the misleading conduct and knowingly participated in it. First, itcannot be disputed that Ms Goodall was "in trade". Mr Collecutt did not seek tosubmit otherwise.[288] The only information that Mrs Murphy gave to Ms Goodall was in relation towhat she described as the pin-prick leak in the roof above the ensuite bathroom, whichshe told Ms Goodall had been fixed. I have found that unit 7 had greater problems ofwhich she was, or ought to have been, aware. Additionally, Mrs Murphy gaveMs Goodall incomplete information. She accepted she knew at least of allegations ofweathertightness problems with the other units in the complex, but she did not providethat information, despite being asked directly about that in the Barfoots disclosureform. This form provided the basis for what Ms Goodall would pass on to prospectivebuyers. She knew therefore it was misleading and deceptive. The information wasboth wrong and incomplete.[289] I therefore find that Mrs Murphy was knowingly concerned in or a party tomisleading and deceptive conduct on the part of Ms Goodall.[290] For the reasons already given in [272]–[275], this misleading and deceptiveconduct caused the Mitchells' loss/damage.[291] I therefore find that the Mitchells succeed on their alternative ground ofaccessory liability under s 43(1) on the second cause of action.Loss[292] Mrs Murphy does not dispute that the cost of repair is the appropriate measureof loss for the claims under both causes of action.[293] The Mitchells initially claimed the sum of $558,262 (including GST). Theyhave, however, accepted that some of the items claimed are more properly seen asbetterment or maintenance. One example is the replacement of the Butynol roofingwhich is over 20 years old. Additionally, discussions between the two quantitysurveyors, one called for by each party, have resulted in a large measure of agreement.The claim is now the sum of $449,091.[294] I first need to determine the scope of the work required and then makedecisions on the few remaining areas of disagreement between the two quantitysurveyors.Scope of workA full or partial reclad?[295] There is disagreement between Mr Biggelaar and Mr Bayley as to whether afull or partial reclad is required. Associated with this issue is whether a ventilated anddrained cavity will be necessary.[296] Mr Biggelaar's evidence is that a full reclad is required. He says that unit 7 isso severely decayed at all locations that the only practical option is to fully remove allthe cladding and roofing so that the extent of the damaged structural framing can beremediated, while attending to correct detailing, step heights and structure, beforereplacing with a new correctly installed cladding system. Associated with that, a fullydrained and vented cavity system is necessary. He says a partial reclad would not bean acceptable method of repair. It would also not be possible to obtain anyprofessional services that would offer a warranty or design certificate that wouldenable a Code Compliance Certificate to be obtained.[297] On the other hand, Mr Bayley says all that is required is a partial reclad tobalustrades and decks and to walls which he considers are affected. He agrees that aventilated and drained cavity is necessary but only to the limited reclad walls.[298] Mr Bayley's position rests in large part on his opinion that the evidence doesnot establish moisture ingress on the eastern and western walls. In relation to themaster bedroom on the western side, he says:I do not agree that all walls in the building need to be replaced because therewas no demonstration from my observation of any moisture ingress towindows that were further back from the deck, namely the windows in themaster bedroom which were on the western side.[299] In cross-examination, Mr Bayley maintained that:A. I believe that the western and eastern walls to the property appearto be unaffected other than in the corner adjacent to the dining roomarea [the eastern side] and also in the corner adjacent to the loungearea [the western side] which are both directly below the externalmitered corners of the decks above. [300] He expressed the view that, in terms of reclad, to have a ventilated cavityabutting a non-ventilated cavity wall can be done if the detail is considered carefully.[301] I have already preferred Mr Biggelaar's evidence on the amount of decay heassesses will be present on the eastern and western walls around the windows.Mr Biggelaar said:I'd say it's a highly risky venture and if I was asked to do a design on thatbuilding and leave those two walls [eastern and western] because nothing – Iknow, you just wouldn't. You just wouldn't do it. You wouldn't.[302] Further, in terms of a partial reclad, he says there are just too many unusualjunctions and interfaces.[303] Overall, I prefer Mr Biggelaar's evidence on this issue. I have accepted hisevidence on the amount of decay he considers is present. He says, "it's all got to comeoff, you can't just reclad half a building with this amount of decay".Timber framing (excluding roof framing)[304] As to the amount of timber required to be replaced, Mr Biggelaar's evidenceis that he has only allowed for 50 per cent framing replacement. In other words, halfthe timber will be replaced and half will be retained. He says it could be higher, buthe has adopted 50 per cent as a conservative figure. Mr Bayley says 25 per cent.[305] I take into account Mr Biggelaar's experience as a designer, remediationspecialist and registered building surveyor as being relevant in identifying andmarking timber for replacement. Arguably, as a quantity surveyor, Mr Bayley'sexperience is not so directly relevant.[306] I therefore accept Mr Biggelaar at 50 per cent.Any work required in relation to fire wall compliance?[307] This relates to the inter-tenancy wall between unit 7 and unit 6. Mr Biggelaaralso includes acoustic requirements because of the inter-tenancy nature of the twoadjacent units requiring sound compliance. He considers that the two units will havedamaged timber framing where the walls, roofs and building elements all intersect.[308] Mr Bayley's position is that there is no evidence to support the view thatfirewall work is required. However, the two external walls that abut unit 6 are theeastern and western walls. I have accepted Mr Biggelaar's evidence as to likelydamaged timber framing on those walls. There is also the issue of the installation ofa cavity on one unit against an existing unit where none is installed on that other unitwhich will require attention to compliance. Mr Biggelaar properly accepted that theposition would not be known "100 per cent until we take the cladding off and look atit". However, he went on to say that it is highly probable that there is damage and,looking at the elevation photo, he notes that there is no inter-storey junction and alsothat the masonry wall butts into the concrete wall with no external flashing. So, heconcluded that "it's highly, highly likely we will find damage. Limited maybe, it'shard to say, but until we get it off you just won't know."[309] On the basis of Mr Biggelaar's evidence, I consider the Mitchells haveestablished that allowance should be made for firewall compliance.Roof[310] I deal with this issue in two parts: (1) removal and replacement of the timberframing and (2) other work in connection with the roof.[311] Mr Bayley excludes all of this work from the scope of works required.[312] First, I start with what I have referred to as "other work". I have already notedthat the Mitchells have removed from their claim the item of the Butynol membranebecause of its age, accepting that any removal and replacement amounts to betterment.Under cross-examination, Mr Biggelaar accepted that if the Mitchells determine toreplace the membrane, which at the time of purchase was outside its life-span of15 years, then they would have had to replace the plywood beneath the membrane. Heacknowledged that if they did choose to replace the membrane, replacement of theplywood would be required in order to follow current Building Code standards. In myview, other items such as removal of skylight and restoring for use, reuse, removingrain water head and storing for reuse and replacing those items are all also connectedto the removal and replacement of the roof membrane. I propose to remove items inthis category, including replacement of the plywood, from the scope of repairs.47[313] As to replacement of the timber framing for the roof, Mr Bayley's position wasthat there was no evidence of any decay to the timber flat roof framing. However,Mr Biggelaar's evidence relies on the fact that the roof structure and the wall structureare interconnected and so are structurally nailed together. There is also the issue ofthe previous ongoing leaks into the roof of the ensuite which, in Mr Biggelaar's view,will give rise to damage to the timber framing. There is also the whole of the centralcore of the building which he considers is likely to require replacement timber framingbecause the two wing walls on either side are decayed at the bottom. Mr Biggelaaragrees that in relation to the master bedroom, there is no evidence that supports any47 Quantity Surveyor Schedule, section headed "Roof": line 4 ($234.90); line 5 ($846); line 6($64.30); line 11 ($3,672) and line 15 ($1,203). The total sum to be subtracted from the claim is$6,020.20)timber framing replacement. That is why he has taken the flat roof as a whole andallowed for the 50 per cent replacement of the timber roof reframing.[314] I accept Mr Biggelaar's evidence.Overhang of the bottom plate[315] As to the position of the timber bottom plate, Mr Biggelaar explained that itsits on the concrete floor. It is the timber member that runs along the bottom thatcarries all the vertical studs and the loads above it. Mr Biggelaar explained the issue,saying that New Zealand Standard 3604 requires that the bottom plate must overhang6 mm. Currently, the plaster system is flush with the timber and the concrete base justcontinues into the ground. Mr Biggelaar expanded on that, saying that the wholebuilding has a concrete floor with some masonry walls and then framing in between.The bottom plates need to be hung out 6 mm to comply with the current BuildingCode. On top of that, Mr Biggelaar said the holes he drilled and the cut-outs he madeshow that the decay in the bottom plate is so bad that it needs to be replaced as part ofthe works.[316] I accept Mr Biggelaar's evidence that this work is necessary.Work at the inter-tenancy wall[317] I have accepted Mr Biggelaar's evidence on the need for work in relation tothe inter-tenancy wall. It follows that two particular items for supplying and installingvertical inter-tenancy back-flashing and making good existing inter-tenancy wall,including for the removal and replacement of the existing linings, should be includedin the scope of work.Items of disagreement between the quantity surveyors[318] There are five items where there remains disagreement between the twoquantity surveyors. I address each in turn.Timber propping and samplings[319] As an item in relation to the external envelope, Ms Parkinson, quantitysurveyor for the Mitchells, includes a line item for removing decayed timber wallframing and replacement with suitably treated timber. She includes, as a separate item,the provision of temporary support to existing wall structures during remedial worksand sampling. Mr Hanlon, quantity surveyor for Mrs Murphy, considers that the ratefor the first item includes what is separately allowed for by Ms Parkinson for proppingand for timber sample collection. (There is also a further separate item whichMs Parkinson includes for the testing of timber samples. This is not part of thedisagreement).[320] Ms Parkinson's evidence is clear that the rate that she has included in herestimate for removal and replacement does not include either propping or sampling.The rate allows purely for the labour and materials associated with the replacement ofdecayed timber. Ms Parkinson's evidence was that the rate she used was based on thelibrary of rates which is maintained by her employer, Kwanto Ltd. It is a reputablefirm with relevant experience. Ms Parkinson herself has worked as a quantity surveyorfor over eight years, both in New Zealand and overseas. She explained how the ratewas built up and that the rates for materials were based on the Carters' trade rates thatshe has access to at Kwanto. Ms Parkinson has first-hand knowledge of the model sheused. Her evidence was that she began working on the model when she first started atKwanto in 2011 and had been managing it and updating it regularly since she returnedto work there in 2017. Consequently, she says she is very familiar with the library ofrates which she relied on. I accept her evidence that the rate she has used allows purelyfor labour and materials to remove and replace decayed timber and that propping andsampling is properly included as a separate item.Provision of temporary support to existing roof structure during remedial works[321] Ms Parkinson makes an allowance of $300 for this line item. Mr Hanlon'sposition is that that is already included in the rate for removing and replacing decayedtimber flat roof framing, which is a separate item. Ms Parkinson says that it is not.[322] I have accepted Ms Parkinson's evidence in relation to the build-up of rates forwall framing in relation to the previous item. This present item relates to timber roofframing and is essentially based on the same approach. Having acceptedMs Parkinson's evidence in relation to the wall framing, I also accept her evidence inrelation to the roof framing. There is no reason to differentiate between the two.Accordingly, the provision of temporary support is properly included as a separateitem.Protection of adjoining property[323] Ms Parkinson has made an allowance for both labour and materials to provideprotection to the adjoining properties. She refers to the fact that it is a rather narrowdriveway and also the fact that unit 6 is connected to unit 7, so an allowance is madefor protection of that unit. As far as the labour involved, Ms Parkinson referred toerecting protection in terms of plywood to the adjoining units and/or the removal ofmaterials along the driveway. This allowance is over and above what would typicallybe provided specifically because of the location of unit 7. It also takes into accountwork on the party wall between unit 6 and 7. I have already accepted Mr Biggelaar'sevidence on the need for that work.[324] Mr Hanlon considered the work unnecessary. As far as the scaffolding wasconcerned, he suggested all that might be required is some warning tape and orangecones and, if it is a 'making good' issue, then that should be covered in the allowancesmade for the party wall (if the party wall in fact does need to be interfered with).[325] Having been to the site during the hearing, I accept Ms Parkinson's evidencethat the work will provide challenges, having regard to the narrow driveway and thelocation of unit 7 at the back of the property. While I acknowledge Mr Hanlon's pointthat the foreman will be on site anyway, given the particular challenges in relation toaccess and also the fact that unit 7 adjoins unit 6, even without the work on the firewall, I consider this item is properly claimed.Length of project[326] The estimated length of the project informs some of the other costs such ascosts of alternative accommodation, allowance for scaffolding and the buildingsurveyor rate. Ms Parkinson estimates 26 weeks. Mr Hanlon says 17 weeks.[327] Ms Parkinson based her estimate on Mr Biggelaar's scope of work, which Ihave accepted. Her assessment was based on similar projects in which she was directlyinvolved in making assessments and for other estimates that have been prepared atKwanto. She says her evidence is that the duration is in line with those other estimates.[328] Mr Hanlon acknowledged that programming is a fairly involved topic and hedid not pretend for one minute to be a programmer. However, having said that, he alsosaid he is often called on to estimate the timeframe for a project. He said he typicallyrefers to the Australian Institute of Quantity Surveyors' Estimated Times forConstruction and Cashflow, which has been in use for many years. He didacknowledge, however, that the document does not take account of New Zealandweather.[329] Relevant to this item is the likely extent of timber replacements.Mr Biggelaar's evidence is 50 per cent as opposed to Mr Bayley's 25 per cent. I haveaccepted Mr Biggelaar's evidence in that regard.[330] In the end, I take into account the consistency of this estimate with otherestimates provided by Kwanto and also the 50 per cent timber replacement asproviding support for Ms Parkinson's assessment. I accept that the allowance that shemakes of 26 weeks is a fair and proper estimate.Mr Hanlon's comparison and benchmark[331] Mr Hanlon says that he has had involvement in the full reclad remediation ofseveral terrace developments. Based on that experience, he gives a reclad estimateand concludes that Ms Parkinson's estimate is overstated. However, those projects areall repairs to multiple units and are substantially larger. There is also the fact that unit7 is an end unit with three elevations and would result in a higher cost per square metrerate than a middle unit due to the additional external wall area. Other relevant factorsinclude access to the site, how the contract was procured and how long the projectlasted. In other words, there is not enough information for Mr Hanlon's figures so asto provide a useful comparison. They therefore do not undermine Ms Parkinson'sestimate.Conclusion on loss/cost of repair[332] The Mitchells claim is for $449,091. I deduct from that sum the amount of$6,020.20, being the cost of the roof items referred to in [312] above which areassociated with the replacement of the Butynol roofing (which itself is now notclaimed). The loss/cost of repair is therefore $443,070.80.Consequential costs[333] In a schedule to the amended statement of claim, the Mitchells claimedconsequential damages of $72,848.44 as compensatory damages. At the beginning ofthe hearing, the Mitchells filed a second amended statement of claim. An amendedschedule was attached. The amount now sought is $68,742. The various items are forinvoices, all properly proven, in relation to investigations and work undertaken toassess the defects and provide reports; waterproofing; and assessed costs foralternative accommodation and storage during the remediation period along withmoving costs. I accept the amount of $68,742 as properly claimed under this heading.General damages[334] The Mitchells seek general damages of $35,000 for stress, anxiety andinconvenience. Mr Mitchell says, as well as huge uncertainties for the future, the stressof having to live in a semi-habitable dwelling through three winters has taken a greattoll on his family. He says it is not a place conducive to any sort of normal lifestyle.He further noted the "all or nothing" nature of the required work; it is not a case wherepatching things up will make the property temporarily comfortable.[335] Mrs Mitchell echoes that evidence, saying, the constant uncertainty of whetherthey will be able to continue living in unit 7 after dealing with all the leaks, mould,dampness, dirt and financial outgoings has been draining and has led to many sleeplessnights. She says they have not yet fully unpacked well over two years after movingin. This has resulted in anxiety and stress. This has led to an increase in her bloodpressure and general anxiety leading her to see her GP.[336] Mr and Mrs Mitchell were not cross-examined on this aspect of their evidence.I can see no reason why I should not accept it.[337] The purchaser(s) of defective premises can recover for distress resulting fromthe pressure of having to live in the premises or deal with the problem.48 In O'Haganv Body Corporate 189855, which was an appeal concerning leaky apartments, theCourt of Appeal referred to awards for general damages in previous High Courtdecisions as follows:49[115] High Court decisions include Court v Dunedin City Council ($6,000);Chase v de Groot (two years' disturbance, $15,000); Birch v Palmerston NorthCity Council ($10,000); Battersby v Foundation Engineering Ltd (total loss ofcliff property to family with four children, $20,000 joint award to husband andwife); Dicks v Hobson Swan Construction Ltd ($22,500); Sunset Terraces($25,000 per person); Body Corporate 185960 v North Shore City Council($25,000); Body Corporate 183523 v Tony Tay & Associates Ltd ($25,000 perperson).[116] The facts of these cases vary considerably but generally entailedoccupancy of a leaky building for a significant period and the associatedanxiety.[152] I consider that this Court has a role in giving general guidance as toappropriate levels of compensation for non-economic loss in leaky homescases. Rules of thumb would serve to reduce the cost of resolving litigationof this sort, and, as well would facilitate consistency. On the other hand, Iagree with Baragwanath J that this is not an ideal case for such generalguidance to be given, primary because, as he notes, the material before us wasrather too limited for us to be confident that we have a reasonably completegrasp of all the relevant issues.[153] For the reasons given by Baragwanath J, I support awards for non-economic loss in this case which proceed on the bases that:48 See RA & TJ Carll Ltd v Berry [1981] 2 NZLR 76 (HC); Stieller v Porirua City Council [1986] 1NZLR 84 (CA); Snodgrass v Hammington, above n 23; Smith v Singh HC Wellington CIV-2004-485-1169, 27 March 2007; Watts v Morrow [1991] 1 WLR 1421 (CA); and Patel v Hooper &Jackson [1999] 1 WLR 1792 (CA).49 O'Hagan v Body Corporate 189855 [Byron Avenue] [2010] NZCA 65, [2010] 3 NZLR 445.(a) Such awards should not made in favour of corporate owners;(b) $15,000 is appropriate per unit for non-occupiers; and(c) $25,000 is appropriate per unit for occupiers.As Baragwanath J points out, however, not all the claims can be neatlycategorised in this way and some evaluative assessment may be required.[154] This approach involves elements of rough justice. By way ofillustration of this proposition, a purchaser with a phlegmatic disposition doesas well as one who is more prone to stress and allowances for the length oftime the purchasers have lived with the problem are broad-brush at best. Onthe other hand, there is a limit to the extent to which it is practical to go intofine detail on assessments of this kind.(footnotes omitted)[338] I consider that this is a case where an award of general damages to reflectstress, disruption and inconvenience to the Mitchells is appropriate. Adopting the levelof compensation in O'Hagan, I award the sum of $25,000.Interest[339] Mr Mitchell seeks an award of interest under s 10 of the Interest on MoneyClaims Act 2016 (IMCA).50 Awards of interest under the IMCA are mandatory.51[340] The rationale behind an award of interest under the IMCA is that a defendanthas had the use of money which should have been available to a plaintiff for therelevant period. In this case, the Mitchells seek interest from 22 January 2018, beingthe date that Kwanto first quantified the cost of the remedial work.52[341] In calculating interest claimed, Ms Wroe acknowledges the payment of[readacted] by Barfoots on 19 August 2019. Interest of $32,531 is claimed.53[calculations redacted]50 The Interest on Money Claims Act 2016 came into effect on 1 January 2018 prior to thecommencement of this proceeding.51 Section 10.52 Section 9(1)(a)(ii).53 Interest under the Interest Money Claims Act is made using the Civil Debt Interest Calculator.[342] In making an award of interest, the amount sought needs to be adjusted, havingregard to my deduction of $6,020.20 for some of the repair costs and $25,000 forgeneral damages as opposed to $35,000 claimed. The amount is therefore $536,812.80rather than $552,833 (the amount claimed). The amount of interest is therefore$31,494.08.[calculations redacted]Should damages be reduced on the basis of an increase in value?[343] Mr Collecutt does not make the basis for this claim clear. If it is "betterment"this was not pleaded as an affirmative defence, nor was leave sought to amend thepleading. Neither did Mrs Murphy advance evidence to prove betterment.54Mr Collecutt did cross-examine Christopher Swann, the expert valuer called by theMitchells, aiming to adduce evidence from him of the difference in value of unit 7 ina complete state and the sum that the Mitchells paid for unit 7. There was however noevidence that the difference in value is betterment and there was no evidence fromMr Swann as to the value of any such betterment.[344] It is also important that betterment not be conflated with an increase in capitalvalue, which will occur in every case where a building is remediated.[345] There is no basis to reduce damages because of an increase in value.Claim against second defendant[346] Mr Mitchell brings one cause of action under s 9 of the FTA for misleading anddeceptive conduct against Mr Kemp, the pre-purchase inspector who inspected unit 7and provided the Mitchells with a report after Mr Mitchell had signed the SPA butprior to the purchase being declared unconditional.[347] Before considering the claim, there are two preliminary issues to bedetermined:54 Grant v Ridgway Empire Ltd [2018] NZHC 2642 at [57].(a) Can Mr Kemp be held liable for representations made in his capacityas an employee or agent of A K Property Consultants Ltd?(b) Do the exclusion of liability clauses in A K Property Consultants'contract protect Mr Kemp?Liability of an employee[348] In Body Corporate 202254 v Taylor, the Court of Appeal considered this issueand noted that references to "professions" and "occupation" in the definition of "trade"in the FTA can include a person who is not trading on their own account.55 It wassufficient that the conduct was undertaken as an agent for some other party on whoseaccount the business was being undertaken.[349] Mr Kemp therefore cannot escape liability on the basis that he was anemployee or agent of A K Property Consultants.Do the exclusion of liability clauses operate to protect Mr Kemp?[350] Clause 15 of the standard form for A K Property Consultants reads:15. No liability for any defect related to "leaky building" syndrome.It is agreed that A K Property Consultants Ltd is not liable for any loss,cost, defect or damage whatsoever to any building, structure, personor animal whether identified or not identified in he [sic] buildinginspection, not any claim, defense [sic] cost or injury cost, which isdirectly or indirectly caused by or contributed to by or arises directlyor indirectly out of:(c) Any failure to discover or identify any defect or damage or for theexaggeration of minimisation of any defect or damage of the typereferred to in (b) or (c) above [include the effects of rot, decay, gradualdeterioration, failure to meet the New Zealand Building Code inrelation to moisture entering the building or structure].55 Body Corporate 202254 v Taylor [2008] NZCA 317, [2009] 2 NZLR 17 at [71].[351] It is immediately apparent from the above clause that the contract was withMr Kemp's company. He was not a party to it and therefore cannot rely on theexclusion clause. In any event, parties cannot contract out of liability under the FTA.56Alleged breaches by Mr Kemp[352] The Mitchells' case is that Mr Kemp's report contained false statements whichmisled and/or deceived them. It is pleaded that, in the report, Mr Kemp falsely:(a) attributed raised moisture levels near a door leading out to the balconyfrom the ensuite bathroom to sealant around the sill of the doorrequiring replacement;(b) presented findings of "acceptable" moisture levels near exterioropenings as confirmation of there being no water ingress issues withunit 7; and(c) described unit 7 as being in good condition, well built with qualitymaterials and maintained to a good standard.[353] Based on the evidence of Mr Biggelaar, which I have accepted, thosestatements were false because:(a) The raised moisture level was due to more serious defects in theconstruction of the balcony and water migrating from other areas, forexample, from the defective apron flashing;(b) Replacing sealant around the sill of the balcony doors would not rectifythe defects and would not repair the damage by way of decay that hadalready occurred;(c) There was moisture ingress on all levels of unit 7;56 Smythe v Bayley's Real Estate Ltd (1993) 5 TCLR 454 at 472 (HC), approved in Body Corporate202254 v Taylor, above n 55, at [63].(d) The property was, and is, a leaky home;(e) There were aspects of its construction which rendered it prone to leak;and(f) There was evidence that leaks had already occurred, and this wouldhave been obvious to a reasonably competent building inspector.[354] In relation to the last point, Mr Bayley agreed with Mr Biggelaar that Mr Kempought to have noticed aspects of construction which created a risk of water ingress.[355] This case bears some similarity to the situation in Hepburn v Cunningham,where the Court found that the pre-purchase inspector had breached s 9 of the FTA,saying:57[160] The report taken as a whole, suggested the dwelling was generallyin good condition with the only matters of significance being cladding cracksand retaining wall moisture levels. [161] the whole thrust of the report was that the building had some issues,but they were not "huge". Its condition was generally good, and, apart fromthe rumpus room, moisture readings were normal throughout the house. [356] Similarly, in this case, the condition of unit 7 was far from "good". TheMitchells have established that Mr Kemp's report contained false statements.Did Mr Kemp's report mislead the Mitchells?[357] Mr Mitchell, in his brief of evidence, said:25. After the inspection I was left with the impression that there wasnothing to be concerned about in relation to the property. I understoodthat since it had been built in the late 1990s it would require somemaintenance, such as checking the sealant in the area Mr Kemp hadidentified. Neither his report nor his discussion with me raised anyred flags about the property or any reason to be concerned.[358] While Mr Mitchell's evidence was that Mrs Murphy's representation about theproperty not being a leaky home remained one of the most influential factors, he said57 Hepburn v Cunningham [2013] NZHC 210.they also relied on Mr Kemp's report as confirming what Mrs Murphy had told themthrough the real estate agent. He said that they believed that if there were seriousissues, they would certainly have been picked up in a pre-purchase report.[359] It is also pertinent to note that Mr Kemp was one of several building surveyorsrecommended by Ms Goodall, and Mr Mitchell selected him as Mr Kemp was familiarwith the complex and had previously reported on unit 2.[360] I find therefore that the Mitchells reasonably relied on Mr Kemp's knowledgeand experience generally as a building surveyor but also as one who was familiar withthe complex.[361] The Mitchells succeed on their cause of action against Mr Kemp.Measure of loss under the FTA — Mr Kemp[362] Ms Wroe submits, and I accept, that home owners are generally entitled to thefull cost of repair if it is reasonable.58 An award of less than the full amount ofdamages should not be lightly made because the policy of the FTA relates to thestandard of conduct of those in trade.59 The factors in favour of awarding remedialcosts are present in this case.60 First, the property was purchased as a family home asopposed to an investment property. The Mitchells gave evidence that they wished tolive in unit 7 as it is in an ideal location for them. It is close to the train station atNewmarket, Mr Mitchell's office is nearby and it is on transport routes for their sonwho is at university.[363] Secondly, it is reasonably possible to remedy the defects. As is alreadyapparent from this judgment, there is a scope of works prepared by Mr Biggelaar, andthe quantity surveyor engaged has prepared a remedial estimate based on that scopeof works. The Mitchells intend to have unit 7 repaired and it is reasonably able to berepaired.58 At [165].59 Goldsboro v Walker [1993] 1 NZLR 394 (CA).60 Warren & Mahoney v Dynes CA49/88, 26 October 1988.[364] It is therefore reasonable for Mr Mitchell to be awarded the cost of repairs.[365] In exercising the discretion when awarding damages under the FTA, relevantconsiderations in leaky building cases have included the role played by a defendant;the benefit obtained by the defendant; their relationship or proximity to the plaintiff;and the plaintiff's contribution to the loss.61[366] I have already accepted that the role played by Mr Kemp was a material factorin inducing the Mitchells to purchase unit 7. Their dealings with Mr Kemp were inthe context of a professional relationship. They took reasonable steps to prevent theirloss by engaging Mr Kemp. Finally, they acknowledge that the benefit received byMr Kemp was limited compared to the benefit received by Mrs Murphy. MrMitchell's evidence was that Mr Kemp charged somewhere between $600–$800 forhis report.Apportionment between first and second defendants[367] I accept that the Mitchells are able to recover their entire loss againstMrs Murphy. It is her actions which are the primary cause of the loss. They aretherefore entitled to the full amount of the claim against Mrs Murphy less the[redacted] recovered from Barfoots. In relation to Mr Kemp, having regard to thesignificantly lesser benefit compared to that obtained by Mrs Murphy, I consider thatMr Kemp's liability is properly assessed at 20 per cent of the balance of the claim afterthe deduction of the [redacted] settlement sum. In doing so, I adopt the approach ofWhata J in Mok v Bolderson, where the Judge assessed the liability of a pre-trialinspector at 25 per cent of the loss suffered under the FTA.62 Whata J said:[185] I take some support from the approach taken by the courts toapportionment of responsibility to councils at 15 per cent and 20 per cent inthe Body Corporate litigation. I add another 5 per cent to take into account theproximity between Mr Bolderson and the pre-purchasers.(footnotes omitted)61 Mok v Bolderson [2011] 13 TCLR 209 (HC) at [171]–[177] at [184].62 At [184].[368] In this case, the factor of proximity between the inspector and the pre-purchaser does not exist. Hence, I have adopted the percentage figure of 20 per centrather than 25 per cent as in Mok v Bolderson.Result[369] The Mitchells have succeeded in their claim against Mrs Murphy on the firstcause of action under s 35 of the CCLA on the balance of probabilities.[370] The Mitchells have succeeded in their claim against Mrs Murphy on the secondcause of action under the FTA on their alternative basis under s 43(1)(d) of the FTAon the balance of probabilities.[371] The Mitchells have succeeded in their claim against Mr Kemp on the first causeof action against him under the FTA on the balance of probabilities.Orders[372] I enter judgment in favour of the Mitchells against Mrs Murphy in the sum of[redacted] (being the total of repair costs of $443,070.80; consequential costs of$68,742; general damages of $25,000; plus interest of $31,494.08; less [redacted]recovered from the third defendant).[373] I enter judgment in favour of the Mitchells against Mr Kemp in the sum of[redacted] (being 20 per cent of the judgment sum against Mrs Murphy).Costs[374] Costs are reserved. If the parties are able to agree costs, a joint memorandumis to be filed within 30 working days from the date of this judgment.[375] If costs cannot be agreed the Mitchells are to file and serve their memorandumwithin 10 working days of the date for the joint memorandum and Mrs Murphy is tofile and serve her memorandum within a further 10 working days. Memoranda shouldnot exceed five pages (excluding any attachments).___________________________________Gordon J