Leaky Building Purchasers Johnson and Others vs Auckland Council and Another  NZHC165 A trap for the unwary purchaser has recently snapped closed on the very unfortunate purchasers of a leaky building. In Johnson and Others v Auckland Council and Another  NZHC 165 the High Court was faced with the purchasers of an expensive home that was subsequently discovered to be a leaky building. The purchasers sued the Council and others, under what is now regarded as a normal type of leaky building claim. The Council admitted it was negligent in its actions, but maintained that the purchasers were themselves negligent in not fully checking out their purchase. In other words, that they failed to take the steps any normal reasonable prudent purchaser would take. This is called “contributory negligence”, where the claimants own actions or omissions contributed to their own loss. The Council also attempted to convince the Court that the correct measure of loss was not the cost of repairs, but the difference in value between the building in a non-leaky state, and the building as it was at the time of purchase. The Court reviewed the law on contributory negligence starting with the Act of 1947 by that name, and the cases on the Act since. The Judge held (at para 16): “Plaintiffs, like defendants sued in negligence, are held to an objective standard of care. One consequence of this is that a failure by the plaintiffs to appreciate a risk which was reasonably foreseeable will not preclude a finding of contributory negligence.” The Judge went on to find that there was no reason to make an exemption from this general principal for residential purchasers. He then reviewed the evidence of the instant case, including evidence from expert witnesses, who deposed to what a reasonable purchaser should do. Particular attention was drawn to the standard terms of a sale and purchase agreement, which contains specific warnings that a person should not sign an agreement until first obtaining legal advice. As an aside, if legal advice is taken prior to signing, your lawyer can advise you on what terms should be in the contract. If you only see a lawyer after signing, they can only tell you the effect of the terms that are in the contract.
By Ross Dillon • Ross has been a partner and litigator in a leading mid-sized Auckland firm for almost a quarter century. He has specialized in dispute resolution • Ross has a Bachelor of Law (Honours) (1980) and Master of Commercial Law (First Class Honours) (2000) Auckland
Ross Dillon looks at Johnson and Others vs Auckland Council and Another  NZHC165