The Wellington High Court has heard that Masterton District Council [MDC] never issued a code of compliance certificate for Wairarapa Hospital, because Te Whatu Ora never applied for one.
The court was also told that serious policy questions are raised by this case, where a local authority is being sued by a central government agency, in what has been described as “floodgates territory” that could financially overwhelm any council.
The claims were made by Christine Meechan KC, who is representing MDC in the case Te Whatu Ora [formerly Wairarapa DHB] has brought against it in relation to defects in the hospital’s construction. The four-week hearing started on Monday.
Te Whatu Ora is claiming just under $90 million dollars in damages from the council, plus interest and costs, which it claims is the cost of repairing the damaged hospital building. It alleges MDC issued a code of compliance certificate [CCC] for the hospital when it shouldn’t have because
the building is defective.
MDC is robustly defending the claim, on the basis that no application for a CCC was ever made, and whether there was a breach of a duty of care by MDC. Questions relating to both causation of the damage, and timing of the claim have also been raised.
Experts for MDC also estimate relevant repairs to the structure of the hospital would cost about $2.6 million plus GST.
Meechan said important questions of public policy are before the court in this case.
“No case has considered the question of whether a local authority which is funded by ratepayers and activities within a district owes a duty of care to the most financially powerful and sophisticated entity in society, namely the Crown,” she said.
Meechan said relevant case law had not anticipated that central government would sue local government for building defects.
“The analysis is one of looking at whether it’s fair, just, and reasonable to impose a duty of care.”
Meechan acknowledged this argument was “bold”.
“I appreciate it’s bold, but it is our position,” she said.
Meechan said the Crown is not a typical commercial building owner, has greater financial resources than any local authority, and is exempt from paying full rates.
“In contrast, this council’s financial backing is modest. Its rates revenue for 2022-23 was just over $44 million. It has only 11,000 ratepayers. It does have revenue from other sources; user charges for the local tip, roading subsidies, and other things. But its total revenue is just over $71 million. From that, it must meet operating costs of $58.1 million and fund capital projects.
“It is now being asked to meet a claim of $89 million plus GST.
“We are in what I would describe as ‘floodgates’ territory. If this duty is imposed, the floodgates are well and truly open, and will overwhelm this council and indeed any council.
“This is a serious policy issue that the court will need to address.”
In its Statement of Defence, MDC said Te Whatu Ora has not produced evidence MDC is at fault, the claim was brought too late, and the amount claimed is excessive.
“MDC says that no application for a CCC was ever made, no CCC exists; Te Whatu Ora doesn’t have one, the council doesn’t have one, the builder does not have one, and the consultants Maunsell do not have one,” Meechan said.
Meechan said Te Whatu Ora had made an application in 2018 to MDC for the building consent file, and a copy of the CCC itself. At that time MDC said it did not have a copy of the CCC but had provided a copy of an electronic record relating to the issue of the CCC dated January 2011.
“That is the electronic record which is at the heart of the Plaintiff’s claim.”
Meechan said Te Whatu Ora had the legal obligation to prove duty, breach and causation.
“All three of those elements are contested here,” she said.
“You are entitled to real evidence in relation to what was done, who did it, and where it was done. And what the plaintiff appears to be basing its case on is simply not enough.”
Meechan said the standard of proof and the onus on Te Whatu Ora is critical in this case.
“We say if Te Whatu Ora cannot establish it applied for a CCC, and that the CCC was issued, then the plaintiff’s case falls away.” – NZLDR
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