MARTY SHARPE
The Dominion Post
29 October 2008
The buyers of two leaky Havelock North motels have been unsuccessful in suing Hastings District Council despite a court ruling that states guests might have suffered "dire consequences".
Te Mata Properties and Te Mata Village Properties bought Te Mata Lodge and Village Court motels in 2002, then discovered that both suffered from leaky building syndrome.
Both motels were built by Crown Houses NZ. Te Mata Lodge was built in 1998; Village Motel in 2001.
A builder's report found the motel blocks had significant toxic mould and fungi between the external claddings and interior linings, which exposed guests to health risks. The decay would also ultimately result in structural failure of some parts of the buildings.
The companies sued Hastings District Council in the High Court in July last year for the cost of repairs, loss of value and general damages. They claimed the council had been negligent in granting building permits, inspections and issuing certificates of compliance. Their claim was struck out in August last year.
They appealed, but a Court of Appeal ruling issued by Justice David Baragwanath yesterday has gone against the companies and ordered them to pay costs. Justice Baragwanath noted that the owners based their case on economic loss and cited a case involving a domestic dwelling, which he found could not be applied to the motels.
Parliament had chosen to treat households as deserving special treatment for the purposes of dealing with leaky-building claims. Councils owed a duty of care to home owners, Justice Baragwanath said, but that did not apply to owners of commercial property.
"New Zealand law has not yet pronounced upon the duty of a council in relation to the proprietor of a motel complex, which does not fit easily into either the commercial or residential categories that have thus far defined responsibility," he said.
In his ruling, Justice Baragwanath outlines why a house differs from a commercial property such as a motel. He says the motels' conditions could have had "dire consequences" on guests, but this had no bearing on his ruling because the case related to economic loss and not to health and safety issues.
Neither Te Mata Properties director Robert Simpson nor council officers would comment.
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