Hawkins liable for $13.4 million: summary of the latest case involving builder negligence

In a judgment released on 1 May 2018 Downs J, in a 344 paragraph judgment, has found H Construction North Island Limited (formerly Hawkins Construction North Island Limited) (Hawkins NI) liable for serious building defects at the Botany Downs Secondary College (School). Damages were ordered in the sum of $13,424,967.40 plus GST.

While long, the judgment is useful for the approach that courts will take to complex cases involving negligent builders. Unfortunately, this note is somewhat lengthy. But it has reduced the judgment from 88 pages to eight.

Background

The Minister of Education, the Secretary for Education and the School's Board of Trustees (plaintiffs) sued Hawkins NI for defective construction of the School between 2003-2009. Over $17 million was sought from Hawkins NI stemming from allegations of negligence.

Hawkins NI constructed a number of buildings at the School. Downs J stated that the "most striking feature" of the buildings was their "interconnected roofs". One area of roof consisted of over 10,000 square metres. The roof pitch was low at approximately three degrees. There was much expert evidence about the roof leaking. But the Judge considered some of the most important evidence, which was not contested, to be that of lay witnesses who described extensive leaking issues throughout the School.

An element of Hawkins NI's defence was that the architect was liable for the damage. It did not join that architect nor obtain any evidence from its personnel. While the reasons for this approach are not known, the Judge criticised this approach.

Duty of care

General

This case arose in tort (negligence) not in contract. The Court reviewed multiple authorities, from Invercargill City Council v Hamlin [1996] 1 NZLR 513 (PC) to Southland Indoor Leisure Centre Charitable Trust v Invercargill City Council [2017] NZSC 190, [2018] 1 NZLR 278 in holding that Hawkins NI is liable in negligence to the School.

The Court's discussion on the duty of care should be noted for the fact that a builder's liability in negligence is now accepted. There is less and less room for arguments that there is no duty of care by builders in relation to commercial buildings (although there is still some scope).

Exclusion by contract

Hawkins NI sought to argue that the contract it had for stage I excluded liability because it was a construction only contract that required works to be undertaken diligently to the satisfaction of the architect. Hawkins NI was not responsible for loss or damage caused by a design defect, and the architect was responsible for inspecting works during the defects liability period, and for certifying practical completion. Hawkins NI provided a weathertightness warranty for a period of two years. The Court rejected this argument for the following six reasons:

The stage I contract is silent on tortious liability. As a large and sophisticated commercial entity, Hawkins NI could have negotiated an express exclusion of liability but it did not. Rather, it relied on the standard form agreement. The shifting of responsibility to the architect sits uncomfortably with the Buildings Act which provides a directive that the Building Code is not to be breached. This directive is to the world at large. Other provisions of the stage I contract emphasised Hawkins NI's responsibilities as a builder. The imposition of responsibilities on other parties is not inconsistent with Hawkins NI's primary duty of care as a builder. The provision of the two year warranty cuts across the duties placed on the architects and is not inconsistent with the imposition of a duty of care. The exclusion of design liability merely meant that Hawkins NI would not be responsible for design work and therefore could not be liable for the same. That says nothing about Hawkins NI's responsibility for construction works. Scope of the duty

Downs J acknowledged that in recent cases the scope of the duty had been narrowed to one of building code compliance, which reflects the responsibility imposed on builders by legislation. The focus in such a case must therefore be on what the relevant Act(s) are designed to protect.

Poorly formed metal roofs

One of the main building defects alleged was "poorly formed metal roofs" which are said to breach the building code as a result of the weighted effect of the following seven defects:

Inadequate roof pitch Inadequate sub-roof formation Poorly formed roof edges Poorly formed roof penetrations Inadequate provision for thermal provision Overtightening of fixings Inadequate length of fixings Inadequate roof pitch

The pitch of the roof was three degrees which was the lowest pitch recommended for the roofing iron in question, and the lowest recommended in the Profiled Metal Roofing and Design Handbook. In this case, several areas of the roof were installed...