Background to the arguments presented to us
[64]
Whether the courts should recognise a duty of care in new circumstances is
ultimately a matter for judicial evaluation of competing policy factors. Often an important policy factor is the relevant statutory framework within which the potential duty-bearer is working. The law in this area moves incrementally. 72 [65]
In Sunset Terraces, the North Shore City Council challenged the policy
choices that courts throughout the Commonwealth had made in the 1970s and 1980s in holding that councils, builders, engineers and architects were subject to a duty of care with respect to their respective roles in the construction of buildings. It wanted this Court to do what the House of Lords had done in Murphy v Brentwood District Council in 1990.73 In that case, their Lordships reviewed the law as it had developed in England and held that councils were not under a duty to take reasonable care with respect to the economic loss which could flow from inadequate inspections during the building process. The House of Lords “overruled” the English Court of Appeal decision which first imposed a duty of care on councils, Dutton v Bognor Regis Urban District Council,74 and “departed from” the famous House of Lords authority which had confirmed the Dutton line of authority, Anns v Merton London Borough Council.75 These cases, and the many relying on them, were held to be “an extension of principle that should not, as a matter of policy, be affirmed”.76 [66]
This Court rejected that submission. The Court affirmed the way in which
the law had developed in New Zealand in the 1970s and 1980s and held that the Court of Appeal had been right in Invercargill City Council v Hamlin77 not to follow Murphy. The Court reviewed a large number of the New Zealand cases affirming a
72
73 74 75 76 77
When we use that term, we use it in the sense in which Cooke P used it in South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd [1992] 2 NZLR 282 (CA) at 295: “Some Australian and English Judges speak in terms of an ‘incremental’ approach. I fully and respectfully agree that in deciding whether or not there is a duty of care in a new situation the Courts should decide gradually, step by step and by analogy with previous cases. That has invariably been done in New Zealand.” Murphy v Brentwood District Council [1991] 1 AC 398 (HL). Dutton v Bognor Regis Urban District Council [1972] 1 QB 373 (CA). Anns v Merton London Borough Council [1978] AC 728 (HL). Murphy, above n 73, at 399. Invercargill City Council v Hamlin [1994] 3 NZLR 513 (CA) [Hamlin (CA)].