Background
Shortly after buying a property in Christchurch, the plaintiffs (the homeowners) entered into a contract with a construction company for renovations. The company’s sole director was the builder, who eventually led the home’s renovations. The contract was a fixed price, and the works were estimated to take eight weeks.
Unfortunately, the works exceeded the price and took nearly a year and a half to complete. Worse still, the renovations appeared to be defective in a number of ways. This necessitated further work to remediate the defects.
Issues
In the homeowners’ view, the way in which the builder conducted the works caused the defects. The homeowners consequently brought claims against the company for:
- breach of contract;
- negligence; and
- a breach of section 28 of the Consumer Guarantees Act 1993 (CGA).
The homeowners also sued the builder personally in negligence. One of the questions that was raised was how a builder’s personal responsibility should be assessed when the company contracted to undertake the building work.
Decision
Breach of contract
The homeowners claimed that the company had breached the contract by not conducting its work to the standard set out in the second clause of the contract. In some respects, the disparity was easy to prove. There had been objective goals within clause 2, such as the requirement that the builder install LOW cladding.
Other requirements were also laid out in the contract. For example, at clause 2.3 the work was required to be carried out with reasonable care and skill. Based on the evidence, this clearly was not the case.
Claims under negligence and under the CGA
The Court found that these claims did not add to the contract cause of action.
A company undertaking still requires personal responsibility
The Court looked at the view of Justice Cooke in Palmer v Hewitt Building Ltd[2] as to how the builder’s work should be assessed when it was the company that had been contracted. The Court agreed with Justice Cooke that despite being an employee, director of a company or self-employed, a builder has a personal duty of care to a building owner to meet the standards of a reasonable builder when engaging in building work.
Justice Cooke went on to say that that the duty
is different from the contractual obligation of the entity obliged to undertake the building work. An action in contract against the entity promising to perform the building work is concerned with a failure to perform contractual promises. An action in negligence against the individual builder is directed to compensation for the loss caused by the builder’s failure to build with reasonable care. Conceptually they address different issues.
The Court then looked at the assurances made by the builder throughout the process. The builder had personally undertaken work constituting the bulk of the renovations. However, as the Court pointed out, these assurances had not translated into quality work – practically at any point in the process. As the Court stressed, there is no aspect of the defective workmanship with which [the builder] was not involved.
Stress and anxiety from the ordeal
The final point for the Court to consider was the emotional turmoil experienced by the homeowners. When assessing damages, a court can make an award based on whether the breach of duty caused the contracting occupier to feel anxious or stressed, and this consequence was reasonably foreseeable.[3]
In making this assessment, the Court listed the consequences faced by the homeowners as a direct result of the defective renovations. These included repeated subcontractor delays, faulty work, a near-constant mess on the site and the homeowners inability to use their driveway for over a year.
The Court did not think the level of stress warranted the top level of awards (the maximum amount sits at around $25,000). However, it did award $15,000 to each homeowner. This was a distinct award in addition to the much higher sum of $400,000 awarded against the company for the cost of repairs.
Conclusion
In Wilkins, the Court took a robust assessment of the degree to which the company and the builder failed the homeowners. The company had not met the quality assurances of the contract, and the key builder did not meet his duty. Ultimately, this case is a sign of the willingness of the courts to uphold building standards.
References
[1] Wilkins v 77 Degree Builders Limited [2024] NZHC 2457.
[2] Palmer v Hewitt Building Ltd [2021] NZHC 1460.
[3] Body Corporate 406198 v Argon Construction and Auckland Council [2023] NZHC 3034.
