SOUTHLAND INDOOR LEISURE CENTRE CHARITABLE TRUST v INVERCARGILL CITY COUNCIL [2017] NZSC 190

SOUTHLAND INDOOR LEISURE CENTRE CHARITABLE TRUST v INVERCARGILL CITY COUNCIL[2017] NZSC 190 [14 December 2017]IN THE SUPREME COURT OF NEW ZEALANDSC37/2017[2017] NZSC 190BETWEEN SOUTHLAND INDOOR LEISURECENTRE CHARITABLE TRUSTAppellantAND INVERCARGILL CITY COUNCILRespondentHearing: 10 and 11 August 2017Court: Elias CJ, William Young, Glazebrook, OʼRegan andEllen France JJCounsel: M G Ring QC, C J Jamieson and D R Weatherley for AppellantD J Heaney QC and K B Dillon for RespondentJudgment: 14 December 2017JUDGMENT OF THE COURTA The appeal is allowed in part.B The finding made in the High Court upholding theappellant's claim against the respondent is restored. Thefinding of the Court of Appeal that the appellant wascontributorily negligent and that an award of damagesshould be reduced by 50 per cent is upheld. Judgment isentered accordingly. Leave is reserved to the parties toapply if any issues arise about the calculation of thejudgment sum (including interest).C The respondent must pay the appellant costs of $15,000and reasonable disbursements to be determined by theRegistrar if necessary. We allow for second counsel.D The costs awards made in the Court of Appeal and in theHigh Court are set aside. If costs in those Courts cannotbe agreed they should be set by the Court of Appeal andthe High Court respectively in light of this judgment.____________________________________________________________________REASONSPara No.Elias CJ, O'Regan and Ellen France JJ [1]William Young and Glazebrook JJ [118]ELIAS CJ, O'REGAN AND ELLEN FRANCE JJ(Given by Ellen France J)Table of ContentsPara No.Introduction [1]Background [7]The factual narrative [8]The initial construction phase [11]The first phase of remedial work [14]The investigation of further concerns about the roof [28]The roof collapses [30]Proceedings are brought [32]The judgments below [35]The High Court [36]The Court of Appeal [39]Is this case distinguishable from Spencer on Byron? [51]The case for the Council [52]Discussion [55]Other issues [84]Conclusion [87]Contributory negligence [88]How the issue of contributory negligence arises [89]The High Court judgment [91]The Court of Appeal judgment [93]The factual narrative [96]Submissions [107]Discussion [109]Result and costs [115]Introduction[1] In 1999–2000 the appellant, the Southland Indoor Leisure Centre CharitableTrust (the Trust), had a stadium built in Invercargill to provide indoor sporting andrecreational facilities for the Southland community. As constructed, theSouthland Stadium comprised a foyer, amenities area and squash courts, two mainevents courts and five community courts.[2] Problems were identified during construction with the roof over thecommunity courts. Remedial work had to be undertaken in 2000 on the roof.Unfortunately, that work was defective with the result that on 18 September 2010 theroof collapsed under the weight of a snowstorm. Fortuitously, those in the stadium atthe time escaped unharmed. A new and improved complex has been built to replacethe collapsed building.[3] The Trust subsequently brought proceedings against the respondent, theInvercargill City Council (the Council), in negligence and negligent misstatement inrelation to the remedial work on the stadium. The Trust was successful in theHigh Court.1 Dunningham J said that whether a duty of care was owed by the Councilto the Trust was governed by this Court's decision in Body CorporateNo 207624 v North Shore City Council (Spencer on Byron).2 On this basis the Judgeconcluded the Council owed a duty of care to the Trust when issuing the codecompliance certificate on 20 November 2000.3 Dunningham J found that the Councilwas negligent in this respect4 and that this negligence was causative of the loss.5 Inaddition, there was a finding that the Trust was not contributorily negligent.6 The Trustwas awarded the sum of $15,126,665.35 reflecting the agreed cost of rebuilding less$750,000 for betterment.7[4] The Council appealed successfully to the Court of Appeal.8 In setting aside theHigh Court judgment, the Court of Appeal distinguished Spencer on Byron.9 TheCourt unanimously found that the only possible basis for a claim was in negligentmisstatement. That was because the only claim brought within time was that based on1 Southland Indoor Leisure Centre Charitable Trust v Invercargill City Council [2015] NZHC 1983(Dunningham J) [Southland Leisure (HC)].2 Body Corporate No 207624 v North Shore City Council [2012] NZSC 83, [2013] 2 NZLR 297[Spencer on Byron].3 Southland Leisure (HC), above n 1, at [94]–[99].4 At [113]–[124].5 At [139]–[148].6 At [167]–[172].7 The total judgment sum was $16,998,225.66 which included $85,826 for agreed loss of rentalincome and $2,035,764.31 in interest at five per cent per annum. That final judgment sum wasless a negotiated $1,000,000 contribution from Mr Major: Southland Leisure (HC), above n 1,at [238].8 Invercargill City Council v Southland Indoor Leisure Centre Charitable Trust [2017] NZCA 68,[2017] 2 NZLR 650 (Harrison, Miller and Cooper JJ) [Southland Leisure (CA)].9 Spencer on Byron, above n 2.the negligent certificate of code compliance.10 Harrison and Cooper JJ (in a judgmentgiven by Harrison J) held there was no duty of care where the defects causing thecollapse of the stadium were the result of the negligence of the Trust's agents, that is,the architect, engineer and builders, engaged by the Trust to construct the building.11Miller J said the Council owed a narrow duty, namely, to check that a suitably qualifiedperson had provided "adequate evidence that the consent conditions had been met".12The Court of Appeal was unanimous that the cause of action in negligent misstatementfailed for lack of specific reliance.13 Finally, the Court would have found the Trust'sactions in 2006 when it sought engineering advice on the roof amounted tocontributory negligence.14[5] Leave to appeal to this Court was granted on the question of whether the Courtof Appeal was correct to reverse the High Court judgment.15 The principal issuearising is whether the Court of Appeal was right to distinguish this case from thedecision in Spencer on Byron.16 That question also requires consideration of whetherthe Court of Appeal was right to characterise the claim based on the certificate of codecompliance as a claim of negligent misstatement. The other principal issue arising onthe appeal is whether the Trust's actions amounted to contributory negligence.[6] We discuss these issues after setting out the background.Background[7] There is no dispute about the narrative of events leading to the collapse of theroof. The details are set out in the judgments in the High Court17 and the Court ofAppeal.18 We draw extensively on those descriptions in this summary of the factualbackground which follows.10 Southland Leisure, above n 8, at [72] per Miller J and at [164] per Harrison J (delivering thejudgment of Harrison and Cooper JJ).11 At [177]–[185].12 At [98].13 At [111]–[117] per Miller J and at [199]–[207] per Harrison J.14 At [136]–[140] per Miller J and at [208]–[209] per Harrison J.15 Southland Indoor Leisure Centre Charitable Trust v Invercargill City Council [2017] NZSC 81.16 It was not argued the Court should re-visit Spencer on Byron, above n 2.17 Southland Leisure (HC), above n 1, at [8]–[57]. Dunningham J also discusses the aftermath to thecollapse: at [58]–[73].18 Southland Leisure (CA), above n 8, at [10]–[46] per Miller J and at [168]–[172] per Harrison J.The factual narrative[8] Six community organisations, including the Council, decided to build astadium.19 They decided to establish the Trust to plan, build and run the stadium. Eachof the organisations appointed a trustee and the trustees could choose up to six moretrustees as they thought necessary to address the need for additional expertise and soon. The trustees were unpaid volunteers.[9] The Council owned the land in Tay Street, Invercargill, on which the stadiumwas to be built. Under the project agreement between the Council and the Trust, theCouncil agreed to lease the land and to contribute to the project by undertaking theinfrastructure and roading for entry into the stadium. The Trust agreed to build andoperate the stadium.[10] There were three phases of the project for which some detail is necessary.The initial construction phase[11] The initial phase began with the construction in June 1999. The Trust engagedthe architect, McCulloch Architects Ltd; the engineer, Anthony Major; and the builder,Amalgamated Builders Ltd, to undertake the work required.[12] Over the period of construction from June 1999 to the opening of the buildingon 25 March 2000, the Council issued building consents for various phases of thework. There were a number of inspections by the Council and a number of codecompliance certificates issued. As part of this process, the Council relied on producerstatements provided by the engineer, Mr Major.20 Under the Building Act 1991 (the1991 Act), a producer statement was a statement provided by an applicant for abuilding consent, or by a person who had been granted a building consent, that certainwork had been or would be done in accordance with particular technicalspecifications.2119 The other organisations were the Invercargill Licensing Trust, the Southland District Council, theCommunity Trust of Southland, the Southland Building Society, and Sport Southland.20 Provision was made under s 43(8) of the Building Act 1991 for a local authority to rely on aproducer statement when issuing a code compliance certificate.21 Section 2.[13] As Dunningham J records, the stadium as initially constructed "was a large,generally rectangular building".22 The foyer, amenities area, squash courts and twolarge events courts were on one side. The five, smaller, community courts were on theother side of the building. The roof of the community courts had "a long span and ashallow pitch".23 Welded steel trusses supported the roof across its span.The first phase of remedial work[14] While the stadium was being built, a Council inspector saw that several of thesteel trusses in the roof over the community courts were sagging. Both the Trust andthe Council were concerned. As part of the response, an independent structuralengineer, Maurice Harris of Harris Consulting Ltd, was asked by the Trust to reviewthe design.[15] In his report of December 1999, Mr Harris identified an error by Mr Major incalculating loads on the trusses. This meant six of the trusses in the roof over thecommunity courts had been designed for about half of the live load, that is, "the loadin use, affected by wind and other environmental conditions".24 There were otherissues as well.25[16] Mr Harris outlined in his report how the problems should be remedied.Miller J summarises the key proposals in this way:[19] Mr Harris proposed that the trusses should be strengthened bypropping them up, cutting them at three points and precambering them atprescribed levels before joining them and removing the supporting props. Theobjective of precambering was that under load the roof would assume itsdesigned profile. The work involved cutting each of the top trusses' chords atthree points, lifting them and adding spacer plates to achieve the designedprecamber, re-welding them, and welding strengthening plates along the sidesof the top and bottom chords at mid-span. Notably, the strengthening plateswere to cover the middle of the three points where each of the top chords hadbeen cut and re-welded. Beams and columns also needed strengthening, and22 Southland Leisure (HC), above n 1, at [13].23 Southland Leisure (CA), above n 8, at [15] per Miller J.24 At [18].25 The precast columns were designed for lighter loads and a lighter gauge than was designed wasused in some of the chords ("the square steel beams along the top and bottom of the trusses"):Southland Leisure (CA), above n 8, at [18] per Miller J.truss connections to concrete columns needed modifying. Mr Major endorsedthis solution.[26][17] The Council was also involved, advising the architect that a building consentamendment was necessary and that it must include a producer statement addressingthe cause of the problem and rectification and including a peer reviewer's comments.An explanation was also sought by the Council from Mr Major along with anindication the Council might review its response to his producer statements. Mr Majorresponded. He accepted mistakes were made and he set out how the remedial workwould resolve them. Mr Major also responded to a request from the Council that hegive assurances about his procedures for quality control.[18] On 7 January 2000, the Trust sought a building consent for the remedial work.The application attached a letter from Mr Harris of 4 January 2000 setting out how thework was to be done. There was also a producer statement from Mr Major, a PS1which certified that the design complied with the relevant parts of the Building Code,and a PS2 from Mr Harris. The PS2 is a producer statement – design review. The PS2was treated as a peer review. A building consent was issued. It is not suggested thatissuing the building consent was negligent and nor that there was any problem withthe design of the work to be undertaken.[19] The terms of the consent required that Mr Major provide written confirmationthat the precamber measurements on the community courts trusses matched those inthe letter of 4 January 2000 from Mr Harris as well as a record of the individual trussmeasurements. Mr Major was also required to provide a PS4 – producer statementconstruction review – for the remedial work.[20] The remedial work was undertaken in early 2000. There was no inspection bythe Council. Rather, the Council relied on Mr Major to inspect and then certify asrequired by the consent. Providing a PS4 required Mr Major to inspect the work. Hedid not do so. He also failed to provide both the PS4 and the truss measurements.26 Graeme Coles, an engineer who gave evidence on behalf of the Trust, defined the "precamber" as"the distance that an engineer specifies that the mid span of a beam must be higher than its endswhich gives a slightly arched profile. The pre-camber is built into the beam during fabrication. the pre-camber reduces the amount the beam sags under the dead load".[21] As Miller J notes, the work was not in fact done in the way Mr Harrisanticipated or in terms of the conditions of consent:27Notably, cuts made in the chords to insert packers and achieve precamberought to have been spliced with welds around all four sides, but the tops werenot welded at all. Strengthening plates along the sides of the trusses ought tohave covered the centre splices but did not, and stitch welds used to fix thestrengthening plates to the chords were inadequate. Welds to the box sectionand packers had not penetrated adequately.[22] The Council followed up with Mr McCulloch, the architect, in February 2000in respect of the PS4, but there was no response. There was a final inspection of thelast of the works on the stadium and then an interim code compliance certificate wasissued. There were a number of outstanding issues noted in the interim certificate butnone of them included the remedial work. The stadium was opened on 25 March 2000.[23] The Council followed up again on the PS4 and the truss measurements withMr McCulloch in October 2000 so that a final code compliance certificate could beissued. However, on 20 November 2000, before receiving the PS4, the Council issueda code compliance certificate for the remedial work. It is not disputed this wasnegligent because the Council did not know if the work did comply with the Code. Ittranspired at trial a clerk had issued the code compliance certificate without anyreference (as would have been expected) to Simon Tonkin, the Council's chief buildinginspector.[24] On 22 January 2001, Mr Major eventually provided a PS4 which said thechanges had been "generally" constructed in accordance with the relevant drawingsand associated specifications. He also gave the Council a letter setting out how theremedial work had been undertaken. The letter did not say that the precamber for thesix trusses over the community courts was consistent with the letter from Mr Harris of4 January 2000. What was said, as Miller J explained, was that:28 measurements were taken to ensure the induced initial precamber was thesame for truss one, with a visual check to ensure that the result was acceptableonce the trusses were welded and the props removed.27 Southland Leisure (CA), above n 8, at [27].28 At [32].[25] Mr Tonkin went back to Mr Major saying he was to confirm the trusses'precamber matched that in the letter from Mr Harris. He also noted the individualtruss measurements were to be included. Mr Major did not re-submit his PS4 as hewas asked. Mr Tonkin wrote to Mr Major on 23 July 2001 asking for the "datumheights of the community courts trusses" and then repeated that request on12 September 2001, after a meeting with Mr Major on 10 September.[26] On 28 November 2001, the architects provided the Council with a plan byMr Major showing only the heights from the floor to the trusses.29 There was noconfirmation that the actual precamber measurements matched those in the letter fromMr Harris. There is no dispute that the precamber measurements were not in line withthe letter. Only one truss in fact came close to meeting the required precamber.30[27] The Council issued a final code compliance certificate for the last stage of theconstruction on 9 April 2003.The investigation of further concerns about the roof[28] There were ongoing issues with the stadium roof. The roof leaked and it movedconsiderably, as much as six inches, under wind loads. Graham Jones, an engineerwith the Southland District Council, was volunteered by that Council's representativeon the Trust to assess the leaks. The Trust also became concerned about the effect ofa snowfall on the roof. That concern arose after there was publicity about the collapseof a stadium in Poland under snow.[29] Advice was again sought from Mr Harris. We will come back later to theadvice provided. For now, it is sufficient to note that the Trust took the view it couldrely on Mr Harris' assessment that the design of the roof met the Building Code.Further, repairs undertaken resolved the leaks.29 As Miller J explained at [33]: "The Judge found that it seemed the very precise requirements ofMr Harris' letter of 4 January 2000 had evolved into a mere request for truss heights" as a basisfor checking future deflections.30 At [35].The roof collapses[30] As has been foreshadowed, the roof collapsed under a snowfall in September2010. The cause of the collapse is not in dispute. As Miller J explained, the collapsebegan:31 with the failure of truss one at the mid-span of the top chord, triggering acollapse sequence on trusses one to five. the evidence is that but for themissing weld atop the mid-span of truss one the roof would have withstoodthe snow load.It was also common ground that if the stadium had been built as it was designed, itshould have withstood the snowfall so the collapse was not a result of a failure indesign.[31] The Department of Building and Housing instigated investigations into thecollapse. We need only note that following on from the Department's report theInstitute of Professional Engineers of New Zealand (IPENZ) brought an "own motion"complaint against Mr Major. Following an investigation, which concluded thatissuing the PS4 was "unacceptable" in the circumstances, Mr Major was expelled frommembership of IPENZ.32Proceedings are brought[32] The claim was filed on 19 November 2010. The Trust pleaded negligence inrelation to various actions of the Council including issuing the building consent,inspecting the remedial work to the community courts' trusses and issuing a codecompliance certificate for that remedial work. There was a further claim in negligentmisstatement relating to the issuing of the code compliance certificate on20 November 2000.[33] Mr Major was named as the second defendant in the claim. He played noactive part in the proceeding.33 Dunningham J records Mr Major agreed to contribute31 At [42].32 Southland Leisure (HC), above n 1, at [72].33 At [73].$1,000,000 to the Trust's claim against him. The Council cross-claimed against himseeking a finding it was entitled to a full indemnity if the Council was found liable.34[34] The Council pleaded that claims relating to actions of the Council prior to19 November 2000 were time-barred.35 The Trust accepted that it could only maintainits claim against the Council in respect of the issue of the code compliance certificateon 20 November 2000. It was accepted the Trust could not rely on negligent acts oromissions prior to then.36The judgments below[35] In terms of the High Court judgment, it is helpful to set out excerpts from thesummary of findings from the judgment.The High Court[36] Dunningham J summarised her findings as follows:37A. The Council owed a duty of care to the Trust when issuing the codecompliance certificate (CCC) and there are no reasons to distinguishthe decision of the Supreme Court in Spencer on Byron, which heldthat a territorial authority's duties under the Building Act 1991 wereowed to both original and subsequent owners "regardless of the natureof the premises".B. The Council was negligent in issuing a CCC on 20 November 2000,for remedial works to the stadium roof trusses, when it had noinformation before it on which it could have reasonably concluded thework complied with the building code.C. The Council's negligence was causative of the loss as there was nosubsequent point where the Council could show that it could haveproperly issued the CCC and yet the damage would still haveinevitably occurred. This is primarily because condition 4 of thebuilding consent [the requirement that Mr Major certify as to themeasurements of the precamber on the six community court trusses]was never satisfied, and a reasonable and prudent Council would haverequired it to be before a CCC was issued. If it had been satisfied, itis likely that the defects would have been detected.34 At [73].35 Building Act 1991, s 91; and Building Act 2004, s 393 (both imposed a ten year limitation period).36 Southland Leisure (HC), above n 1, at [80].37 At "Summary of Findings".D. The Trust was not contributorily negligent by failing to implement allthe recommendations made by HCL [Harris Consulting Ltd] in itsletter dated 9 June 2006, as the advice did not put the Trust on noticeof the potential safety risk the trusses posed.[37] In addition, the Judge concluded that an indemnity in the lease between theCouncil and the Trust did not apply to indemnify the Council. Dunningham J alsofound that the agreed sum of the Trust's loss should be discounted by $750,000 byway of betterment. Finally, the Judge determined that GST should not be added to thejudgment sum because it was a compensatory payment and should only reflect theTrust's loss.[38] The Council appealed. The Trust cross-appealed challenging the findings onbetterment and as to GST.The Court of Appeal[39] In allowing the Council's appeal, Harrison and Cooper JJ took as the startingpoint the fact that only the claim grounded on the negligent certificate of codecompliance was within time.38 That claim, Harrison J said, must be arguable only asa claim for negligent misstatement under which specific reliance must be proved.39[40] Harrison J stated that this Court's decision in Spencer on Byron was notdeterminative in establishing whether there was a duty of care in this case.40 Hedescribed the present case as "conceptually unique" because it concerned the ownerof a building whose contractors were "alone responsible for creating the defects whichcaused its loss" seeking to recover the full amount of that loss from another party.41On this basis, Harrison J said that the decision in North Shore CityCouncil v Attorney-General (The Grange) in fact provided the closest analogy.42[41] In determining whether it was reasonable to impose a duty of care, Harrison Jfocused on the role of the Trust's contractors. His Honour said it was not fair or38 Southland Leisure (CA), above n 8, at [164].39 At [164].40 At [165].41 At [173].42 North Shore City Council v Attorney-General [2012] NZSC 49, [2012] 3 NZLR 341 [The Grange].reasonable to impose a duty where the Trust's own contractors had caused the loss.Those contractors, the architect, the engineer and the builder, were not agents in the"orthodox" sense.43 Nonetheless, Harrison J stated, "different considerations" applywhere the Trust, whose loss was caused by those contractors, asserts that the Councilowes a duty.44 The actions of the contractors, and so the loss, were to be attributed tothe Trust.45[42] Nor was there the requisite proximity where "a commissioning owner seeksdamages where it was clearly not relying on the Council to protect it against theclaimed loss".46 That factor distinguished the present case from that in this Court'sdecision in North Shore City Council v Body Corporate 188529 (Sunset Terraces).47[43] In the context of the proximity inquiry, Harrison J accepted the codecompliance certificate was "notice to all interested parties", including the Trust, "ofthe Council's reasonable satisfaction that the building has been constructed inaccordance with the building code, reflecting a territorial authority's ultimate controlover the building process".48 But, Harrison J said, the notion of the Council's controlas a rationale for providing protection did not encompass "the economic interests of acommissioning owner which has chosen to protect itself against physical damage andeconomic loss by engaging professional advisers and contractors".49[44] Although not necessary to decide the matter, Harrison and Cooper JJ alsoconcluded the Trust had not proved specific reliance.50[45] In reaching the view the Council owed a limited duty to check "that anappropriately qualified person had supplied adequate evidence that the consentconditions had been met", Miller J also distinguished Spencer on Byron.51 He tootreated the claim as one in negligent misstatement on the basis the negligence claim43 At [179].44 At [179].45 At [184]–[185].46 At [191].47 North Shore City Council v Body Corporate 188529 [2010] NZSC 158, [2011] 2 NZLR 289[Sunset Terraces].48 Southland Leisure (CA), above n 8, at [189].49 At [190].50 At [199]–[207].51 At [98].was out of time.52 Further, like Harrison and Cooper JJ, the Judge saw it as adistinguishing feature that other cases did not deal with what the Court described as"commissioning" owners.53[46] Miller J identified a number of other distinguishing factors. First, it wasarguable the project agreement between the Council and the Trust qualified orexcluded "anticipated or actual reliance and so [affected] any duty of care in negligentmisstatement".54 Second, unlike Spencer on Byron, the present case was a negligentmisstatement case, requiring specific reliance to be proved.55 Third, whilevulnerability was "discounted" in Spencer on Byron, that view was subsequently"cautiously qualified" in Carter Holt Harvey Ltd v Minister of Education.56Vulnerability was a question of fact and Carter Holt "may introduce" a commissioningowner's "control-in-fact" over the particular aspect of construction under the parties'contractual arrangements "as a relevant consideration when considering whether aduty was owed to that owner".57 Finally, Miller J placed some emphasis on the factthis case involved producer statements. In particular, the Judge considered a PS4showing code compliance might mean the local authority was not required to inspectthe work itself.58[47] Having distinguished Spencer on Byron, Miller J addressed whether a duty ofcare was owed on a "first principles" basis.59 The Judge considered the variousdistinguishing factors identified and wider policy considerations and concluded asfollows:[98] In my opinion, the Council should not be taken to have assumed aduty to inspect the work to ensure that it complied, as built, with the code; tothe Trust's knowledge it relied on the Trust's agent, Mr Major, as thelegislation allowed. The Trust accordingly knew that the Council could notcertify of its own knowledge that the work actually complied with the buildingcode. Rather, the Council assumed a different and lesser responsibility, that52 Miller J said that this Court in Spencer on Byron (and Sunset Terraces) "assumed that a claim ona code compliance certificate must be brought in negligent misstatement": at [72].53 At [69].54 At [70].55 At [71]–[73].56 At [74], citing Carter Holt Harvey Ltd v Minister of Education [2016] NZSC 95,[2017] 1 NZLR 78.57 At [77].58 At [83].59 At [84].of checking that an appropriately qualified person had supplied adequateevidence that the consent conditions had been met. There is nothing unfair orunreasonable about the imposition of a duty to do that much. I consider thatthe Council owed the Trust a duty to take care to that extent.[48] In Miller J's view, the claim relying on a breach of the limited duty identifiedfailed for want of causation. There was no reliance on the code compliance certificatewhen the Trust decided not to action the recommendations from Mr Harris.60[49] The Judge went on to consider whether the Trust's omission amounted tocontributory negligence. Miller J concluded it did and would fix the Trust'scontributory negligence at 50 per cent.61[50] All members of the Court agreed that the Trust's cross-appeal against theassessment of betterment should be dismissed.62 As the parties indicated they hopedto resolve the GST issue, leave was reserved to bring that aspect of the cross-appealback to the Court.63Is this case distinguishable from Spencer on Byron?[51] For the reasons which follow, we consider that Dunningham J was right that,in terms of whether a duty of care arises, there is no distinction between the presentcase and Spencer on Byron.64 As there was no distinction to be made, the Judge wascorrect to conclude there was a duty. Apart from the question of contributorynegligence, there is no dispute that if there is a duty of care, it was breached and thebreach was causative of the loss. We set out our reasons for our conclusion byconsidering, first, the case as advanced by the Council in this Court and, secondly,distinguishing factors identified by the Court of Appeal that are not otherwiseaddressed by our analysis of the Council's arguments.60 At [117].61 At [136]–[140]. Harrison and Cooper JJ agreed with Miller J on this aspect: at [209].62 At [158].63 At [159].64 See above at [36].The case for the Council[52] In a case like the present, where the claim that is brought within time relates tothe code compliance certificate and not physical inspections carried out by theCouncil, the principal proposition advanced by the Council is that the Trust, as acommissioning owner, cannot rely on the certificate of code compliance to recoveragainst the Council absent proceeding on the basis of negligent misstatement. In thelatter situation, the submission is that specific reliance is necessary.65 Or, to put itanother way, the Council says that the Trust cannot recover in negligence in the presentcase where there has been no "operational" blunder in the form of a physical inspectionby the Council within the limitation period.66 The Council points to the Trust's controlover the building work through its engagement of the various contractors as anotherfactor telling against the imposition of a duty. The Council says the Trust was acommissioning owner and it (or its agents) was responsible for fulfilling the conditionsof the building consent underlying the code compliance certificate.[53] It was also important for the Council's case that the Trust knew, either becauseit had actual knowledge or by attribution, that the code compliance certificate had beenissued without the underlying conditions being complied with. While the Councilissued the certificate carelessly, the Trust was aware of that and, in thesecircumstances, it would not be fair or reasonable to impose a duty of care.67[54] Mr Heaney QC for the Council also relied on other policy and factual matters.In terms of policy considerations Mr Heaney submitted that a risk of not sheetinghome responsibility to the commissioning owner was that the commissioning ownermay take shortcuts and cut corners safe in the knowledge the ultimate responsibilitywill fall to the Council. The factual matters on which reliance is placed included theproject agreement between the Trust and the Council, under which the Trust agreed to65 It is a little unclear whether the proposition extended to any situation where the owner relied on acode compliance certificate or whether it was confined to the situation where there had been nophysical inspections by the Council. On our analysis, any distinction between these two situationsis immaterial.66 As noted, above at [23], the Council accepts that the code compliance certificate was carelesslyissued.67 The case for the Council was put in varying ways so that the extent to which knowledge was anessential part of the case varied. On our approach whether or not knowledge was seen as anessential part of the argument is not relevant. In any event, the evidence about the Trust'sknowledge was insufficient.comply with all statutes, regulations and bylaws in carrying out the works, and the factthat there was a PS4 which the Trust's agent had issued.Discussion[55] It is helpful to begin by summarising the relevant aspects of the Court's earlierdecisions in Sunset Terraces68 and Spencer on Byron.69[56] In Sunset Terraces the Court was asked to depart from the decision of the PrivyCouncil in Invercargill City Council v Hamlin.70 The Privy Council in Hamlin upheldthe decision of the Court of Appeal in that case.71 The Court of Appeal had affirmedthe well-settled principle of New Zealand law that councils "were liable to originaland subsequent home owners for loss caused by the failure of building inspectors tocarry out the inspection functions with reasonable skill and care".72 This Court inSunset Terraces declined to depart from Hamlin, instead affirming that the duty thedecision established was sound, a "firmly based principle of New Zealand law", andsupported by the relevant policy considerations.73[57] The Court in Sunset Terraces said that the Hamlin duty was not dependent onfactors such as whether the dwelling was stand-alone or part of a block of dwellings.Rather, councils owed a duty of care "in their inspection role, to owners, both originaland subsequent, of premises designed to be used as homes".74 Elias CJ agreed thatthere was no principled basis to introduce restrictions on liability "according to theform of ownership, the type of residence or the value of the building".75 TheChief Justice considered that limiting the liability to owner/occupiers was "contrary to68 Sunset Terraces, above n 47.69 Spencer on Byron, above n 2.70 Invercargill City Council v Hamlin [1996] 1 NZLR 513 (PC).71 Invercargill City Council v Hamlin [1994] 3 NZLR 513 (CA).72 Sunset Terraces, above n 47, at [17] per Tipping J (for Blanchard, Tipping, McGrath andAnderson JJ). Tipping J noted that the Privy Council "added the explanation that in cases of latentstructural defects which a council by negligent inspection had failed to prevent, the owner's losswas not the physical defect in the structure but loss either in the form of diminution of the marketvalue of the property or the cost of repair, if that were reasonably possible":at [17].73 At [26] per Tipping J. See also at [3] and [6] per Elias CJ.74 At [51] per Tipping J.75 At [7].the policy of the legislation, which is concerned with protecting all users ofbuildings".76[58] Tipping J said that the underlying rationale for the duty was the control whichcouncils have over construction projects and the general reliance for which persons:77 acquiring premises to be used as a home place on the Council to haveexercised its independent powers of control and inspection with reasonableskill and care and, in particular, to have exercised with reasonable skill andcare its powers of inspection of features that will be covered up.[59] In Sunset Terraces the Court left open the question of whether councils oweda duty of care to present and future owners of commercial buildings and othernon-residential premises.78 That question was answered "yes" in Spencer on Byron.The conclusion of the Court, William Young J dissenting, was that councils owe a dutyof care in their inspection role to owners, both original and subsequent, regardless ofthe nature of the premises.79[60] Importantly, for present purposes, Spencer on Byron confirmed the importanceof the Council's role and responsibilities under the 1991 Act and the emphasis onstatutory purpose.80 The relevance of the statutory basis is apparent from thereferences to the interlocking regulatory framework,81 the Council's control over theconstruction process and associated reliance,82 and in the reference to the fact that thecommon law duty of care "marches in step with the statutory functions" Parliamentimposed on local authorities and building certifiers.83 As to the purpose, that included,but is not limited to, protection of the health and safety of those using the building.76 At [7] with reference to the Building Act 1991, s 6(1)(a).77 At [48].78 At [9] per Elias CJ and at [51] per Tipping J.79 At [22] per Elias CJ, at [26] per Tipping J, and at [215]–[216] per Chambers J (for McGrath andChambers JJ).80 Miller J observes that the judgments of Tipping J and of McGrath and Chambers JJ rest "primarilyon the Council's statutory control of construction processes and building standards":Southland Leisure (CA), above n 8, at [59].81 Spencer on Byron, above n 2, at [14], [16] and [17] per Elias CJ.82 At [35] and [36] per Tipping J.83 At [71] per Chambers J. See also at [185] and [193]. At [193] Chambers J noted that theobligations in tort, "whether of the inspecting authority or of any supervising architect or engineer,will be limited to the exercise of reasonable care with a view to ensuring compliance with thebuilding code" (emphasis added).The purposes are promoted by ensuring compliance with the building code as aminimum standard.84[61] It is also significant that the Court in both Sunset Terraces and Spencer onByron did not consider the involvement of other professionals in the constructionprocess affected the Council's direct duty. In Sunset Terraces, Tipping J stated:85[50] Nor do we find persuasive the Council's argument that councilsshould not owe a duty of care in cases where professionals such as engineersand architects have been involved. This is not a viable proposition for severalreasons. Purchasers are unlikely to know the extent of the instructions uponwhich the other professionals were engaged. Fundamentally, the proposeddistinction is not consistent with the rationale for the duty which councils owe,being essentially their power of control and the general reliance which isplaced on their independent inspection role. The part played by otherprofessionals should not absolve councils from liability; the proper way toreflect their involvement is to require them, if negligent in a relevant way, tobear an appropriate share of the responsibility for the ultimate loss.[62] The exception from the approach in Spencer on Byron and Sunset Terracescontended for by the Council is very narrow but it is apparent that, even on that basis,the Council's case cannot sit with the principles emerging from these (and otherearlier) authorities. The duty of care on councils under the 1991 Act springs fromcouncils' regulatory role under that Act. That is a different role from commissioningthe building work or undertaking the construction. The distinction the Council seeksto draw on the basis that the Trust was a commissioning owner is not one made in thelegislative scheme.86 In this context, as we shall explore further shortly, there is novalid distinction between the issuing of a certificate of code compliance and councils'other functions such as the granting of a building consent or inspections. All of thesefunctions, including the issuing of a code compliance certificate, are directed at84 At [15]–[16] per Elias CJ, at [42], [44] and [47]–[48] per Tipping J and at [146] per Chambers J.85 In Spencer on Byron, above n 2, Elias CJ stated at n 33: "the fact that others (such as developers,designers, builders and certifiers) may have primary responsibility does not absolve the Councilof its direct duty to the owners the statutory system is one of checks". See also at [195] perChambers J, citing Sunset Terraces, above n 47, at [8] per Elias CJ and at [50] per Tipping J.86 The authors of The Law of Torts in New Zealand note that the "special position of a building ownerwho actually commissions the building and who then sues the local authority for negligence ininspecting it needs separate consideration": Stephen Todd (ed) The Law of Torts in New Zealand(7th ed, Thomson Reuters, Wellington, 2016) at [6.4.05]. The authors note also that in Spenceron Byron, William Young J's approach, which would lay primary responsibility for compliancewith the 1991 Act on the defaulting building owner, did not carry the day and "seemingly the firstowner's position should continue to be determined on the basis of an assessment of the cause ofthe harm and of any possible contributory negligence".ensuring buildings comply with the relevant building code. This means that the dutyis not obviated by another party's negligence or knowledge, albeit the 1991 Actimposes obligations on owners, and there may be issues of contributory negligence.Further, as a matter of policy, the actions and knowledge of independent contractorshave not been attributed to the owner.[63] Applying this concept of the duty of the Council, the present case is not anegligent misstatement case and Dunningham J was correct to deal with the case onthe basis of the cause of action in negligence.87 Because of our view this is a negligencecase, we do not need to deal with the requirements for negligent misstatement.[64] In terms of the Council's submission that different principles arise when thereis no physical inspection or "operational" blunder, as Mr Heaney put it, in the form ofan inspection within the limitation period, it follows from what we have said that thereis no distinction in this respect between the issuing of the certificate of codecompliance and other functions.88 These matters are all directed at ensuringcompliance with the statutory functions.[65] In terms of policy considerations, in support of the submission about the risksof not sheeting home responsibility to the commissioning owner, the Council relied onthe decision of the House of Lords in Governors of the Peabody DonationFund v Sir Lindsay Parkinson & Co Ltd (Peabody).89 That case dealt with damagearising from an unsatisfactory drainage system constructed as part of a housingdevelopment. The owner-developers of the building site had statutory responsibilities87 The Court of Appeal was also wrong to treat Spencer on Byron as authority for the propositionthat a claim based on a code compliance certificate must be brought in negligent misstatement:Southland Leisure (CA), above n 8, at [72] per Miller J and at [166] per Harrison J. The primarypoint being made in Spencer on Byron was that while, on the approach of McGrath andChambers JJ at least, the cause of action in negligent misstatement did not add anything it shouldnot have been struck out: at [49] per Tipping J and at [219]–[222] per Chambers J.88 For completeness, we note that in Montgomery v Auckland Council [2012] NZHC 1732, AssociateJudge Bell declined to strike out a claim against Auckland Council in relation to a leaky buildingwhere the only action within the 10-year limitation period was the issuing of the code compliancecertificate. We note also Campbell v Auckland City Council HC Auckland CIV-2009-404-1839,10 May 2010 at [9]–[10] in which, in the context of a summary judgment application,Associate Judge Christiansen rejected a submission that "general or community reliance on theCouncil to properly exercise its regulatory functions does not apply to Code ComplianceCertificates".89 Governors of the Peabody Donation Fund v Sir Lindsay Parkinson & Co Ltd [1985] AC 228 (HL)[Peabody].to ensure the drains met the design approved by the local authority but had acceptedthe advice of their architects to install a different design. The House of Lords did notconsider it was reasonable or just to impose liability on the local authority in thesecircumstances.[66] As Mr Ring QC for the Trust submitted, the decision in Peabody pre-datedHamlin and dealt with a different regulatory regime. It is clear from Sunset Terracesand Spencer on Byron and earlier authorities that although the agents of acommissioning owner, such as the architects in Peabody, may be negligent thatliability does not absolve councils of liability.90[67] In a similar vein, the Council in this case relied on observations of Tipping J inThe Grange in which it was held that a third party claim by the North Shore CityCouncil against the Building Industry Authority (BIA) was correctly struck out.91 TheCouncil's claim in The Grange was based on a report the BIA prepared for itsresponsible Minister, and copied to the Council, which made no recommendations formajor changes to the approach taken by various councils, including the North ShoreCity Council, in relation to council functions concerning building consents andinspections.[68] Subsequently, the North Shore City Council granted a building consent to abuilding known as "The Grange". The building was to be built with monolithiccladding over untreated timber. After it was built, the BIA provided another report tothe Council, not dissimilar to the first report, but which set out various problems withthe Council's operations. It transpired that The Grange was not weathertight. Theproperty owners sued the Council and the Council joined the BIA as a third party. Inessence the Council averred that the BIA, despite its special expertise, did not alert theCouncil to the problems with the Council's consenting and inspection regimes.90 See, for example, Sunset Terraces, above n 47, at [8] per Elias CJ and at [50] per Tipping J; Spenceron Byron, above n 2, at [195] per Chambers J; Brown v Heathcote County Council [1987] 1 NZLR720 (PC); Riddell v Porteous [1999] 1 NZLR 1 (CA) at 6; and Hamlin, above n 70. See alsoStieller v Porirua City Council [1986] 1 NZLR 84 at 93–94 where the Court of Appeal rejectedthe application of Peabody in that case on the basis that the New Zealand building control regime,unlike that in the UK, was not addressed solely to health and safety.91 The Grange, above n 42.[69] Mr Heaney points to the observation of Tipping J that the Council was inessence claiming the BIA "must contribute to the losses [the Council] has suffered asa result of its own negligence".92 That comment was made in a different context wherethe Council was saying that its responsibilities should be shifted to another regulatorybody. The point made by Tipping J was that the Council's contention was notreasonable "in view of the legislative scheme".93[70] Nor do we see, as Harrison J suggested, that The Grange reflects "the closest"analogy with the present case.94 As the discussion of Tipping J's observationforeshadows, the approach in The Grange reflected the statutory provisions relating tothe BIA. Accordingly, Blanchard J (writing for Blanchard, McGrath andWilliam Young JJ) pointed to, amongst other matters, the inability of the BIA tocontrol the operations of the Council and the fact the BIA was not set up to undertakechecks on individual buildings.95 That absence of control is a factor distinguishing thecase from the present as is the fact that the majority in The Grange characterised theclaim as one in negligent misstatement.[71] We turn then to consider the submission based on the project agreementbetween the Trust and Council. The Council's submission is that the agreementallocated the responsibility for statutory compliance to the Trust and the Trustessentially seeks to re-allocate the risk. Mr Heaney relies in particular on cl 3.2 of theagreement under which the Trust "agrees that it will comply with all statutes,regulations and bylaws in carrying out [the] works". The clause continued that,"without limitation", the Trust shall ensure that it complies with the relevant healthand safety legislation.[72] All that needs to be said on this aspect is that the clause is not sufficient todisplace the Council's obligations. The Council cannot, except as permitted by the1991 Act, contract out of those statutory obligations.9692 At [227].93 At [227].94 Southland Leisure (CA), above n 8, at [173] and see above at [40].95 The Grange, above n 42, at [177]–[179].96 A similar point was made in Spencer on Byron, above n 2, at [39]–[40] per Tipping J.[73] Next, the Council points to the fact it was intended the Council would rely onthe PS4, the certificate from Mr Major as the IPENZ certified engineer, that he hadsupervised the work and that it met the design code B1 for structure and stability.97[74] We can leave for another case consideration of the role of the producerstatements including the PS4. That is because, as Dunningham J observed in thepresent case, the PS4 was not provided until 2001, after the code compliance certificatehad been issued, and there was no evidence of reliance by the Council on an "oral"PS4, "or on a promise that a PS4" was coming.98 Further, the Council did not withdrawthe certificate or make further checks when the PS4 was inadequate and themeasurements not compliant.[75] Dunningham J also dealt with the Council's argument that the PS4 was relevantto causation. In particular it was said that, based on the PS4, the Council could haveissued the code compliance certificate in 2001 without being found to be negligentmeaning the collapse of the roof was not "caused" by the Council's negligence.Dunningham J was satisfied that the Council was negligent in not ensuring fullcompliance with condition 4 of the building consent (requiring written confirmationas to the precamber measurements) and in not checking the information with which itwas provided against the requirements of the letter of 4 January 2000 from Mr Harrisabout the remedial work. That meant that, even if issued at the later time, the codecompliance certificate would have been negligently issued.99[76] That conclusion must be right because, as the Judge said, the precambermeasurements were not simply a question of aesthetics but, rather, "a way of checkingthat the work had been carried out correctly and would perform as expected".100 Notsurprisingly, therefore, Mr Tonkin (the Council's chief building inspector) confirmedthis was information he contemplated would be relevant to the decision as to whetherto issue a code compliance certificate.101 Further, at the least, Mr Major's statement97 See also Southland Leisure (CA), above n 8, at [83] per Miller J.98 Southland Leisure (HC), above n 1, at [121].99 At [146].100 At [145].101 At [145].in the PS4 that the works were completed "generally" in accordance with the detailsin the drawings and specifications warranted further inquiry.102[77] This discussion leads into the remaining point in the Council's case we need toaddress, namely, the submission that the Trust knew that the code compliancecertificate was issued without compliance with the conditions in the building consent(the producer statement and precamber measurements). Mr Heaney said that the Trusteither had direct knowledge of that fact or knowledge could be attributed through theknowledge of the Trust's agent, Mr McCulloch, the architect who was also managingthe stadium project.103 This aspect of the Council's case fails on the facts.104[78] In terms of direct knowledge, the Council relies primarily on a file noteprepared by John Watson, the building code inspector, on 17 January 2001, nearly twomonths after the code compliance certificate had been issued.105 That note refers toan on-site inspection with management of the stadium, the Trust and tradespersons.However, the file note does not assist in that at the outset, at least, it suggests anawareness that there are "outstanding requirements which are to be completed in orderto obtain the code compliance certificate" (emphasis added).106 Further, while thenote stated that a Council representative informed the architects that they were waitingfor the producer statements for the community court trusses, there is no evidence thatthe Trust was told about this in the note. In other words, it is not clear that therepresentatives of the Trust present were made aware that the code compliancecertificate had been issued prior to compliance with the building consent conditions.[79] As such, it was not established on the evidence whether at the time the Trustobtained the certificate it knew that there was outstanding material to be provided tomeet the requirements of the Council.102 Mr Tonkin accepted that this language possibly should have raised a question mark in his mindbut it did not at the time. Rather, at the time, he thought that it was acceptable.103 Knowledge of the lack of the PS4 or the provision of the required measurements cannot beautomatically equated to knowledge the building did not in fact comply with the plans.104 We assume for these purposes that the argument is properly characterised as one of negligence,not contributory negligence.105 See above at [23].106 The other correspondence relied on by the Council does not advance the question of the Trust'sdirect knowledge. John Acton Smith, at the time a trustee and later chairperson of the Trust, saidhe did not look at the certificate so his evidence also did not assist in terms of the Trust's directknowledge.[80] As to the submission that knowledge can be attributed through Mr McCulloch,the file note referred to above supports the view that Mr McCulloch was aware of theneed for further documentation. He was aware the code compliance certificate hadbeen issued. There is also other correspondence over September and October 2001which is evidence Mr McCulloch was aware the required information had not beensupplied. For example, Mr McCulloch wrote to Mr Tonkin at the Council on30 October 2001 stating that they were still waiting on dimensions for the datum forthe steel trusses.[81] We do not consider Mr McCulloch's knowledge can be attributed to the Trust.The Council's submission on this aspect was not developed in great detail but, inessence, the argument was that the obligation of the owner undertaking building workis to comply with the Building Act, apply for a building consent and carry out the workin accordance with that consent. In this case, as Mr McCulloch signed on behalf ofthe Trust for the building consent, it was contended he took on these legalresponsibilities on behalf of the Trust, making him their agent.[82] This argument fails as a matter of policy and on the facts. As to the policyconsiderations, Mr Heaney relied in this respect on Peabody which, for the reasonsalready discussed, does not assist.107 The rationale for rejecting the notion thecommissioning owner is in a different position is also relevant. In terms of the facts,there is little evidence about the detail of the relationship between Mr McCulloch andthe Trust, other than that he was acting as a "project manager" and signed off theapplication for the building consent. But the Council did not point to any evidenceabout matters such as the extent of Mr McCulloch's relationship with the Trust and ofhis responsibilities.[83] In any event, as Mr Ring submitted, by November 2001 the Council wassatisfied that the stadium was safe, having by then accepted the measurementsprovided. That was prior to the collapse in 2010. It would be a little odd if,107 See the discussion of Peabody above at [65]–[66]. Reflecting similar policy considerations in adiscussion in the context of a builder or architect giving advice to a purchaser as to the soundnessof a building, in O'Hagan v Body Corporate 189855 [2010] NZCA 65, [2010] 3 NZLR 445 thepoint was made that while the actions of a solicitor in not checking on a Land InformationMemorandum will be attributed to a client, the actions of architects and engineers will not: at [99]–[100] per Baragwanath J, at [145] per William Young P, and [190] per Arnold J.nonetheless, the Trust was fixed with the earlier knowledge of its agent, the high pointof which was that documentation had not been provided to show that the buildingcomplied with the plans and the consent.Other issues[84] It is necessary to briefly address two other points both of which arise out of thejudgments in the Court of Appeal.[85] First, the Court placed some emphasis on the fact a number of the decisions onthe duty of care, including Spencer on Byron and Sunset Terraces, were decisions ona strike-out.108 That does not, however, appear relevant to the question of the basis forthe duty of care. That basis is the same here, after trial, as it was in Spencer on Byronand in Sunset Terraces. Or to put it another way, nothing has emerged at trial to alterthe position.[86] Secondly, some reference needs to be made to vulnerability. Miller J suggestedthat as a result of this Court's judgment in Carter Holt Harvey Ltd v Minister ofEducation109 "vulnerability is a relevant consideration when deciding whether a dutywas owed to a building owner".110 There is, however, nothing in Carter Holt tosuggest that the position in relation to the consideration of the Council's liability in thepresent case has changed. The Court in Carter Holt said no distinction had been drawnin Spencer on Byron "on the basis that the question of vulnerability must be looked atnot in relation to the plaintiff in the case at hand but in relation to likely plaintiffs as aclass".111 We note also that Carter Holt was decided in relation to theBuilding Act 2004.Conclusion[87] The effect of our approach is that the Council's case there was no duty of caremust fail and the Court of Appeal was wrong to distinguish Spencer on Byron.108 Southland Leisure (CA), above n 8, at [66] and [74] per Miller J and at [191] and [194] perHarrison J.109 Carter Holt, above n 56.110 Southland Leisure (CA), above n 8, at [75].111 Carter Holt, above n 56, at [54]. See also Stephen Todd "Personal liability, vicarious liability,non-delegable duties and protecting vulnerable people" (2016) 23 TLJ 105 at n 24.Essentially the Court took insufficient account of the fact that the duty springs fromthe Council's regulatory role under the 1991 Act and there is no valid distinction forthese purposes between physical inspections and the issuing of a code compliancecertificate. The claim should accordingly have been considered as a negligence caseand not as one of negligent misstatement. It follows also that the Court of Appeal wasnot correct to rely on the roles undertaken by the Trust's contractors nor on the notionthat commissioning owners are in a different category. The only issue remaining iswhether the Trust's actions amounted to contributory negligence.Contributory negligence[88] A brief introduction as to how this question arises is helpful.How the issue of contributory negligence arises[89] In April 2006 the Trust sought advice from Mr Harris, of Harris ConsultingLtd, in relation to the ongoing issues with leaks in the roof over the community courts.The Trust's request for advice from Mr Harris was also prompted by reports of astadium in Poland collapsing under a snowfall. In a letter of 9 June 2006 Mr Harrisconfirmed "that the strength of the trusses over the community courts is adequate tosupport the design loads specified in the relevant codes when constructed". The advicefrom Mr Harris included various recommendations, including a recommendation thatthe truss welds and support fixings should be visually inspected "by a suitablyqualified person to determine if there are any signs of deterioration or fatigue".[90] No visual inspection was undertaken. Dunningham J found that if all of therecommendations in the letter from Mr Harris, including that relating to an inspection,had been followed it was "more probable than not that the deficiencies in the trusswelding would be found".112 However, the Trust's position was that its concern wasprincipally with the design. Mr Harris confirmed there was no issue with design andthe repairs undertaken fixed the leaks so that the Trust was reassured nothing furtherwas required. Before us, the focus of the Council's case was that the Trust's omissionin this respect amounted to contributory negligence.112 Southland Leisure (HC), above n 1, at [167].The High Court judgment[91] The High Court found that the Trust's omission did not amount to contributorynegligence. Dunningham J considered that it was important that the recommendationsto check for deterioration or fatigue of the truss welds and support fixings did notindicate to the Trust that there could be workmanship defects that could cause acollapse.113 Dunningham J stated:114It was not unreasonable for the Trust, having worked through the first tworecommendations which appeared to resolve the leaks, to not incur expenseon the balance of the recommendations.[92] And, more significantly, the Judge said that the Trust's associated concernsabout the ability to withstand a snowfall were "squarely addressed" in the letter.115Dunningham J noted that the Trust was not "alerted to the prospect that thewelding-related construction work may have been defectively carried out and wronglycertified by the Council".116 The Judge saw the omission to undertake a visualinspection for another purpose that, as it happened, would have resulted in itdiscovering the defects as "no more than a missed opportunity to avoid the occurrenceof the loss".117 Finally, Dunningham J emphasised that there was no qualification inthe letter that, in order to be satisfied the roof was safe, it should be checked in anyspecific way.118The Court of Appeal judgment[93] The Court of Appeal however found that the Trust's failure to follow up onMr Harris' recommendations amounted to contributory negligence. Miller J took adifferent view from Dunningham J and found that the Trust was aware that there wasa need to inspect the trusses closely.119113 At [167].114 At [168].115 At [169].116 At [169].117 At [169].118 At [171].119 Southland Leisure (CA), above n 8, at [113].[94] He considered it was important, first, that the Trust had concerns about thebuilding's structural integrity:120 as a result of the roof being seen to flex disconcertingly under wind load,that its concerns extended specifically to snow load, that Mr [Acton] Smithtold Mr Harris that the Trust was worried about collapse and wantedconfirmation that the stadium was safe; and specifically, that Mr [Acton]Smith wanted reassurance that the roof's flexibility under wind load did notsignal a structural problem.Secondly, Miller J noted that at two points in his June letter Mr Harris said that theprecamber measurements, "the very departure from design requirements that the Trustrelies upon to argue that the Council ought to have identified the welding issues",should have been checked.121 On this basis, Miller J found that the Trust was "squarelyon notice" of Mr Harris' recommendations and ought to have had an engineer inspectthe trusses and welds.122 This would have revealed the defects and avoided the loss.123The Judge said he would fix the Trust's contributory negligence at 50 per cent.124[95] Harrison and Cooper JJ agreed with Miller J for the reasons he gave that, if theCouncil was liable, the award of damages should be reduced by 50 per cent to reflectthe Trust's contributory negligence to its own damage in 2006.125 Harrison J alsosuggested the Council could have pleaded contributory negligence on the basis it wasarguable "that the Trust contributed substantially to its own damage through its agents'negligence".126 This approach was open because, it was said, the agents' "fault wasattributable to the Trust on the principles earlier discussed".127The factual narrative[96] The starting point for present purposes is the meeting of the Trust on24 March 2006. Graham Jones, the engineer whose assistance was provided to theTrust by the Southland District Council, was present to report on his investigation of120 At [113].121 At [113].122 At [139].123 At [139].124 At [140].125 At [209].126 At [208].127 At [208].the "problem in the main stadium building". The minutes of that meeting record asfollows:[Mr Jones] advised that the initial problem with sagging and leakage in thecommunity courts roof had been corrected. However, there still remainedsome leaks from the roof area that needed to be addressed.[Mr Jones] has reviewed the roof structure and believes some repairs need tobe made. He also expressed some concern about the level of flexibility in theroof which has been creating these leaking problems. While the structure doesmeet all the building code requirements there still remains a problem to becorrected which may involve the installation of temporary/permanent poles tosupport the roof structure or to strengthen the existing trusses. This workwould be done in order to reduce the level of flexibility in the roof.[97] We interpolate here that in his evidence at trial Mr Jones said the scope of hisinvestigations was solely on the leaks and that in carrying out that work, there wasnothing of a structural nature which caused him any concern.[98] The Board resolved to investigate the matter further. The minutes of the Boardmeeting of 24 March 2006 record an agreement to refer the matter back to McCullochArchitects with the expectation they would go back to their original consultingengineer "and obtain recommendations on what work would need to be done in orderto reduce the level of flexibility in the roof structure that would lead towards solvingthe leakage problem".[99] Mr Acton Smith accordingly wrote to Mr Harris on 12 April 2006 asking himto investigate the roof structure of the stadium. The letter explained thatMr Acton Smith and Ray Harper (then the chairperson of the Trust) had been workingon the stadium extension and they had become "increasingly concerned with themovement" in the roof over the community courts. The letter continued:Following the collapse of roofs in Eastern Europe in this last year where a lotof people were killed and injured, we are concerned that a major snowfall,which Southland has not experienced for 12 years, is due. Having becomeaware that the roof is moving up to six inches under considerable wind loads,we have asked ourselves what the effect would be of a heavy snowfall that didnot melt and its weight on the building.[100] Mr Acton Smith also explained that the engineer, Mr Major, was looking athow the movement could be prevented. However, he said, he and Mr Harper were"more concerned with the loading on the roof through snow and the prevention of anyaccidents to people using the facilities". He asked Mr Harris to give an "assessment"of the roof "for we want to be certain that the building is totally safe?". Subsequently,at a meeting on 19 May 2006, the Trust noted that Mr Jones had discussed the roofissues with McCulloch Architects. The minutes of that meeting note that while theBoard understood that the movement in the roof was at an acceptable level in terms ofbuilding code limits, further steps would be taken to reduce the flexibility and that thiswould "also help to reduce or eliminate the leaks".[101] Mr Harris responded to the Trust by letter dated 9 June 2006. He said that theroof structure and various details about the roof had been reviewed. The letter notedthat the Trust's "concerns and requirements generally include" a number of matters.In particular, Mr Harris noted:• A reassurance that the roof structure is able to support the ultimateloads specified in the New Zealand Loading Code NZS 4203.(These specifically include wind and snow loads)• That the roof is safe.[102] The letter recorded the figures as to deflections due to live loads, snow loadsand wind uplift. Mr Harris said:The strengthened trusses were precambered to ensure that the truss deflectionsdue to the self weight of the roof did not result in any visible sag. This needsto be checked.The truss deflections due to wind are within the suggested serviceability limitsfor deflections as outlined in NZS 4203:1992, the code used when the buildingwas designed.(emphasis added)[103] The letter went on to set out Mr Harris' recommendations as to the items to beinvestigated. These recommended checks included:3) Check that the community court roof trusses have an upward camberat midspan when carrying the roof self weight only.4) That a visual inspection of the truss welds and support fixings iscarried out by a suitably qualified person to determine if there are anysigns of deterioration or fatigue.5) That suitable ties or props are installed at midspan of the trusses onlyif the roof movement is causing a problem with patrons and it isconfirmed that maintenance issues are indeed caused by the roofdeflections.[104] Mr Harris confirmed that the "strength of the trusses over the communitycourts" was "adequate to support the design loads specified in the relevant codes"when built. The letter concluded in this way:Once each of our recommendations have been investigated we are happy toreview any further work that is thought to be necessary.[105] Following receipt of the letter from Mr Harris, the Trust's minutes of 2 August2006 stated that Mr Harris' advice had confirmed that the "flexibility in the roofstructure is acceptable but that further work needs to be carried out on improving theflashings and gutters". Finally, in terms of the records, in the Trust Board minutes of5 September 2006, there was discussion of the expenditure for repairing the roof to"try and eliminate the leaks".[106] At trial Mr Acton Smith's evidence was, in essence, that the Board's concernsabout the roof structure were alleviated by the June 2006 letter from Mr Harris.Mr Acton Smith maintained that the Trust's concern was principally as to design, notconstruction. In addition, he said that the repairs undertaken had fixed the leaks andneither Mr McCulloch nor Mr Major had reported back on any other matter.Mr Acton Smith believed that the Trust's "responsibility was discharged when wegave it to our professional people to conduct the work for us and we relied entirely ontheir ability to do that".Submissions[107] The Council seeks to uphold the decision of the Court of Appeal. It argues theTrust was contributorily negligent in not following up on the recommendations madeby Mr Harris. The Council also says the Trust, through its agents, should havefollowed up on those recommendations.[108] The arguments for the Trust can be considered under three key propositions.First, the Trust's actions did not amount to contributory negligence because they didnot undertake what was an apparently unnecessary inspection of the trusses.Mr Ring submits that the recommendation was made for the purpose of identifyingthe cause of the leaks. As the leaks were remedied, the recommendations becameredundant. Secondly, the Trust adopts the characterisation of Dunningham J, namely,that this was just an opportunity for the occurrence of the loss not a material andsubstantive cause of the loss. Again, it is submitted that the inspection was for anunrelated purpose and of no merit for that purpose albeit, coincidentally, it would haverevealed the defects. Finally, it is submitted that the Trust was reasonably entitled torely on its investigation team.Discussion[109] Section 3(1) of the Contributory Negligence Act 1947 provides that:Where any person suffers damage as the result partly of his own fault andpartly of the fault of any other person or persons, a claim in respect of thatdamage shall not be defeated by reason of the fault of the person suffering thedamage, but the damages recoverable in respect thereof shall be reduced tosuch extent as the court thinks just and equitable having regard to theclaimant's share in the responsibility for the damage: [128][110] We agree with Miller J that the Trust should have asked an engineer to inspectthe trusses and the welds, as recommended by Mr Harris.129 In not doing so, and inignoring the recommendation about checking the precamber measurements, the Trustwas contributorily negligent.[111] The primary focus of the Trust may have been on design and the Trust may nothave focused on construction. But the Trust clearly was concerned about safety – thatwas one of the instructions to Mr Harris.130 Importantly, the reference by Mr Harristo deterioration and fatigue was clearly referable, without the need for furtherexplanation, to a safety concern particularly where the Trust was aware Mr Harris hadnot himself inspected the trusses and the welds. There was therefore no reassurancefrom Mr Harris in this respect. This inspection was not therefore unrelated to theTrust's concerns. Added to that, there was the background of ongoing issues over theroof including its movement. Mr Harris' recommendation the precamber should bechecked to ensure there was no sag has to be viewed with this factual matrix in mind.128 "Fault" means "negligence or other act or omission which gives rise to a liability in tort":Contributory Negligence Act 1947, s 2.129 Southland Leisure (CA), above n 8, at [139].130 See above at [99]–[100].[112] We acknowledge Mr Jones' evidence was that he had no concerns about thestructure of the roof.131 But the material before the Trust did at least advert to thispossibility.[113] Against this background the Trust should have, at least, made some inquiry ofits investigative team. It could not, reasonably, rely on its investigative team to haveraised any concern in terms of the recommendations.132 In this respect, the Trust didhave control over what work was carried out. The Trust asked for and was given thereport from Mr Harris. The failure to make these further inquiries accordinglyamounted to contributory negligence.[114] It is common ground that if the Trust is contributorily negligent, the damagesshould be reduced by 50 per cent to reflect that contribution.Result and costs[115] For these reasons, the appeal is allowed in part. The finding made in theHigh Court upholding the appellant's claim against the respondent is restored. Thefinding of the Court of Appeal that the appellant was contributorily negligent and thatan award of damages should be reduced by 50 per cent is upheld. Judgment is enteredaccordingly. As we have noted, the judgment sum in the High Court was calculatedwith a deduction for betterment, an inclusion for rental and interest.133 We did nothear argument about the calculation of the judgment sum depending on the outcomeof the appeal so reserve leave for the parties to apply if any issues arise about thecalculation of that sum, including interest.[116] Costs should follow the event. The appellant has succeeded on the liabilityissue but not on contributory negligence. The usual costs award should therefore behalved. Accordingly, in this Court, the respondent must pay the appellant costs of131 Compare Southland Leisure (CA), above n 8, at [139] per Miller J.132 Mr Jones accepted the recommendation to inspect was "worthwhile" following through,although he stated that he did not believe that Mr Harris' fourth recommendation could have beenrelevant to the leaking issue.133 Above at [3] and n 7.$15,000 together with reasonable disbursements to be determined by the Registrar ifnecessary.134 We allow for second counsel.[117] The costs awards made in the Court of Appeal and in the High Court135 areset aside. If costs in those Courts cannot be agreed they should be set by the Courtof Appeal and the High Court respectively in light of this judgment.WILLIAM YOUNG AND GLAZEBROOK JJ(Given by William Young J)[118] We agree with the reasons of the majority, save as to contributorynegligence.136[119] In issue is whether the Invercargill City Council (the Council) wascontributorily negligent in not acting on engineering advice to check the welds,support fixings and the precamber of the roof trusses over the community courts.[120] The background was that there was a persistent problem with water leakingthrough the roof onto the courts below. This was thought to be associated with flexingof the roof. The minutes of the meeting of the Southland Indoor Leisure CentreCharitable Trust (the Trust) on 24 March 2006 record:REPORT ON COMMUNITY COURTS – LEAKING ROOFMr Graeme Jones, the Resource Engineer from the Southland DistrictCouncil, was in attendance to report on his investigation of this problem in themain stadium building.He advised that the initial problem with sagging and leakage in the communitycourts roof had been corrected. However, there still remained some leaks fromthe roof area that needed to be addressed.He has reviewed the roof structure and believes some repairs need to be made.He also expressed some concern about the level of flexibility in the roof whichhas been creating these leaking problems. While the structure does meet allthe building code requirements there still remains a problem to be correctedwhich may involve the installation of temporary/permanent poles to supportthe roof structure or to strengthen the existing trusses. This work would bedone in order to reduce the level of flexibility in the roof.134 A day and a half hearing.135 Southland Indoor Charitable Trust v Invercargill City Council [2016] NZHC 41.136 See the majority above at [88]–[114].Following a full discussion it was moved that this matter be referred back toMcCulloch Architects who designed the original Stadium Southland building.We would expect them to go back to their original Consulting Engineer andobtain recommendations on what work would need to be done in order toreduce the level of flexibility in the roof structure that would lead towardssolving the leakage problem.[121] Soon afterwards, one of the trustees,137 Mr John Acton Smith, learnt of thecollapse of a stadium in Poland which had caused loss of life. He became concernedwhether the flexing of the roof might signify a design or building defect which couldresult in a catastrophic failure. So he wrote to Mr Maurice Harris, a structuralengineer, in these terms:Ray Harper and I have been working on the Stadium Southland extension andwe are becoming increasingly concerned with the movement that is occurringin the roofline on the spans over the community courts.Following the collapse of roofs in Eastern Europe in this last year where a lotof people were killed and injured, we are concerned that a major snowfall,which Southland has not experienced for 12 years, is due. Having becomeaware that the roof is moving up to six inches under considerable wind loads,we have asked ourselves what the effect would be of a heavy snowfall that didnot melt and its weight on the building.Currently Tony Major is looking at how he can prevent the uplift occurring.Ray and I are more concerned with the loading on the roof through snow andthe prevention of any accidents to people using the facilities. Would you giveyour assessment of the roof your attention, for we want to be certain that thebuilding is totally safe?[122] There followed investigation into the movement of the roof and the extent towhich roof movement could be correlated to the leaks. The position as it was at19 May 2006 was summarised in the minutes of a meeting of the Trust in this way:REPORT ON COMMUNITY COURTS ROOF REPAIRSSince our last meeting Mr Graham Jones has discussed this issue withMcCulloch Architects who have since prepared a progress report on the roofinvestigation. This report was tabled at the meeting which identified someactions to be taken to help correct the leaks and also to determine a method ofreducing movement in the roof. We understand that the movement is at anacceptable level and it is not outside of the building code limits expected fora structure of this size.Trustees discussed this issue at length and agreed that it was now best torequest an independent report from [Maurice] Harris of Harris FosterConsulting on the roof movement. It is envisaged that this report will provide137 Mr Acton Smith was elected chair at a meeting on 2 August 2006.some indication of what expenditure, if any, needs to be spent on reducing theflexibility in the roof structure which will also help to reduce or eliminate thewater leakage problem that currently exists.Following a full discussion it was moved that the report be received and theactions taken be confirmed.[123] Mr Harris' reply letter of 9 June 2006 (accompanied by a report) was relevantlyin these terms:The strengthened trusses were precambered to ensure that the truss deflectionsdue to the self weight of the roof did not result in any visible sag. This needsto be checked.The truss deflections due to wind are within the suggested serviceability limitsfor deflections as outlined in NZS 4203:1992, the code used when the buildingwas designed.We understand that a measurement of the actual roof movement undermeasured wind speeds have been carried out and that these confirm thecalculated deflections for maximum serviceability loads are in the "rightorder".The roof movement due to wind should be upward as the roof is at a very lowpitch. Obviously, however the roof movement will go up and down as thewind gusts. If this movement is considered disturbing to the building usersthen ties could be installed as suggested by A S Major to reduce the roofdeflections.If these ties were installed they would need to be designed to resist the fulldesign wind load. We have had a preliminary look at the footing required andin order to resist the uplift load, the footing/pile would be quite significant.At this stage, we would recommend that the following items are investigated.1) Confirm where roof leaks are occurring or have occurred in the pastand review roof fastening details particularly if the end bays arecausing problems.2) Confirm that the roof light glazing has been installed with adequateclearance to the aluminium mullions.3) Check that the community court roof trusses have an upward camberat midspan when carrying the roof self weight only.4) That a visual inspection of the truss welds and support fixings iscarried out by a suitably qualified person to determine if there are anysigns of deterioration or fatigue.5) That suitable ties or props are installed at midspan of the trusses onlyif the roof movement is causing a problem with patrons and it isconfirmed that maintenance issues are indeed caused by the roofdeflections.6) That thermal effects on the roofing are checked to ensure these are notcontributing to the maintenance issues.At this stage we confirm that the strength of the trusses over the communitycourts is adequate to support the design loads specified in the relevant codeswhen constructed.We have also had a look at the loads specified in AS/NZS 1170 the loadingcode now being used. The loading changes for both wind and snow are notcritical.Once each of our recommendations have been investigated we are happy toreview any further work that is thought to be necessary.[124] Recommendations 3 and 4 were not implemented. The finding ofDunningham J in the High Court was that, had they been implemented, it is moreprobable than not that the defects in the trusses which resulted in the collapse wouldhave been detected.138 Remedial work could then have been carried out and the roofwould not have collapsed.[125] The reasons for non-implementation were not fully documented at the time butit seems reasonably clear that it was because:(a) The Trust's concerns about the flexing of the roof were allayed by,amongst other things, Mr Harris' report; this on the basis that themovement was within design tolerances.(b) Mr Harris had confirmed that "the strength of the trusses over thecommunity courts is adequate to support the design loads specified inthe relevant codes when constructed".(c) By the end of 2006, the leaking problem had been resolved.(d) The particular issues which had initially given rise to Mr Acton Smith'sconcerns about safety having thus been resolved, there was no occasionfor further implementation.138 Southland Indoor Leisure Centre Charitable Trust v Invercargill City Council [2015] NZHC 1983(Dunningham J) at [167].[126] In her judgment, Dunningham J said:[167] While I accept that, had all the recommendations listed in the letter of9 June 2006 been followed it is more probable than not that the deficienciesin the truss welding would be found, that, of itself, does mean there has beencontributory negligence. In the context of trying to identify the cause of thetruss deflections, the recommendation that the welds be checked for fatiguedid not, in my view, indicate to the Trust that there may be workmanshipdefects in the trusses that could cause the building's collapse. Nobody avertedto that possibility, including the Council. Thus it is not like the case in Johnsonv Auckland Council, where the purchaser was held to be contributorilynegligent when she was aware of the possibility that the house was a "leaky"building, but failed to take any steps to check that before committing topurchase the property.[139][168] Here, the recommendation by [Mr Harris] was included in a list ofmatters to consider, in the course of identifying whether it was structural ormaintenance issues which were causing leaks from the ceiling. It was notunreasonable for the Trust, having worked through the first tworecommendations provided by its architects, and which appeared to resolvethe leaks, to not incur expense on the balance of the recommendations. AsMr Jones said "we did locate the source of those leaks and we did fix thatproblem without [resorting] to structural intervention".[169] Even more importantly, the Trust's allied concerns about thebuilding's ability to withstand snow loadings anticipated by the currentbuilding code were squarely addressed at the end of [Mr Harris'] letter. TheTrust was not alerted to the prospect that the welding-related constructionwork may have been defectively carried out and wrongly certified by theCouncil. Its failure to undertake an inspection for another purpose that,coincidentally, would have resulted in it discovering this, was no more than amissed opportunity to avoid the occurrence of the loss. It was not, in thecircumstances, negligent.[127] The point the Judge was making was that the recommendations now relied onby the Council were made in the particular context of a safety concern on the part ofMr Acton Smith which had been triggered by leaks and the flexing of the roof. Oncehe was satisfied that the flexing of the roof was within design tolerances and the leakswere stopped, his safety concern was adequately addressed. Mr Harris'recommendations were firmly founded in Mr Acton Smith's concerns about the leaksand flexing of the roof. There was nothing else related to the building which couldreasonably be seen as warranting investigation of the kind proposed inrecommendations 3 and 4. Thus, with leaks resolved and the assurance that the flexingwas within design tolerances, the non-implementation of the recommendations is notfairly seen as contributory negligence.139 Johnson v Auckland Council [2013] NZCA 662.[128] In short, we see no error on the part of Dunningham J and are content to resolvethis aspect of the case on the basis of the reasons that she gave.Solicitors:Young Hunter, Christchurch for AppellantHeaney & Partners, Auckland for Respondent