Summary
A husband and wife were unsuccessful in claiming against a local authority for a mistaken assurance that their pool complied with the Fencing of Swimming Pools Act 1987 (“FOSPA”).
Background
In 2008, Ms Buchanan and Mr Marshall (“Plaintiffs”) purchased a property in Nelson. A selling feature of the property was its centrally located open-plan swimming pool area.
The Tasman District Council had certified in 2006 that the pool complied with the FOSPA. This was confirmed in subsequent pool inspections in 2009 and 2012.
However, the Council’s advice was incorrect– the pool had never been FOSPA-compliant. The Council made this clear to the Plaintiffs in a pool inspection in 2019, and required the Plaintiffs to undertake expensive remediation, including installing a barrier that undermined the open-plan layout of the pool area and thereby reduced the market value of the property.
It was undisputed that the Plaintiffs were outside of the statutory deadline to make a claim in respect of the 2006certification. Well-established case law recognised that the Council owed a duty of care to the Plaintiffs in respect of that certification.
To get around the claims deadline, the Plaintiffs claimed against the Council in respect of the 2009 and 2012 inspections. They argued the claim on the basis that the inspections had given them a false sense of security that the pool complied with the FOSPA, thereby depriving them of an opportunity to sue in respect of the 2006 certification within the statutory limitation period.
The Council admitted negligence but disputed the existence of a duty of care.
The case
The Plaintiffs claimed against the Council in negligence, negligent misstatement, and breach of statutory duty. They claimed damages reflecting lost market value of their property, remediation cost, and general distress.
The deciding issue in the case was whether the Council owed the Plaintiffs a duty of care in respect of the 2009 and 2012 inspections.
The High Court
The High Court found that the Council owed the Plaintiffs a novel duty of care in negligence.
They found that a duty existed because the Council, as the sole body responsible for conducting FOSPA inspections, was the appropriate party to bear responsibility for failure to undertake them properly. Their statutory function meant it was inevitable that they would provide assurances to homeowners about FOSPA compliance, and that homeowners would take their assurances as read. The court drew an analogy with well recognised duty of care councils owe to those to whom they issue building and code of compliance certificates under the Building Act.
The court found that a duty in negligent misstatement existed, largely on the same basis.
However, the breach of statutory duty claim was rejected as there was no suggestion Parliament intended that a breach of the FOSPA would be enforceable as a civil action for damages.
The court went on to find that while the 2009 inspection was barred by the 10 year limitation period under the Building Act, the 2012 inspection was within time. Accordingly, the court awarded the Plaintiffs the majority of their claimed damages for lost amenity value, remediation costs, and general distress.
Court of Appeal
The Court of Appeal held that no duty of care existed, overturning the High Court. The result was that the Plaintiff’s claim against the Council for damages failed in its entirety.
The court held that it was wrong for the High Court to analyse the matter as a novel duty of care. They should have applied the orthodox test for negligent misstatement. The requirements for a duty of care in negligent misstatement were as follows:
a) Advice is given for a purposethat is made known to the adviser (expressly or implicitly);
b) The advisor knows that advice will be communicated to advisee (individually or as a class);
c) The advisor knows that the advice is likely to be acted on without independent inquiry; and
d) The advisee acts on the advice to its detriment
Requirements (a) and (d) were not met in this case.
Requirement (a) was not met because there was no connection between the purpose for which the advice was given and the loss suffered. The court drew on prior case law that established that the existence and extent of a duty of care owed in respect of a statutory function will be coloured by the purpose of the empowering statute.
The purpose of the Council’s inspection function under the FOSPA was to minimise the risk of harm to children. However, the claimed duty related to economic interests of property owners (who were the subjects rather than the beneficiaries of FOSPA regulation) in preserving their ability to sue the Council in respect of prior acts of negligence. Recognising such a duty would have clashed with the scheme of the FOSPA.
Requirement (d) was also unmet, in that the Plaintiffs had in no way relied on Council statements in the 2009 and 2012 inspections. They were not planning to sue the Council at any point prior to 2019. Reliance on the statements may have promoted a false sense of security, but it did not lead the Plaintiffs to take any step they would not otherwise have taken.
Accordingly, no duty of care in negligent misstatement existed. Following from this, the court refused to recognise a novel duty of care in negligence, holding that to do so would cut across the already well-established law.
Result
The Plaintiffs failed in their claim for damages against the Council on the basis that no duty of care existed.
The decision has the hint of unfairness, given that the Council was admittedly negligent in their original and subsequent inspections. However, as the Court of Appeal noted, the unfairness arose as an inevitable side effect of statutory limitation periods. It was not appropriate for principles underpinning the law of torts to be distorted, however harsh the consequences may have been for the Plaintiffs.
Update: On 20 August 2024, the Supreme Court granted the Plaintiffs leave to appeal. The sole question on appeal will be whether the Court of Appeal was correct to hold that there was no duty of care owed by the Council to the Plaintiffs when carrying out FOSPA inspections.
For future information on this case or similar issues please contact Brigitte Morten, Director
