Buying an existing building yet to get Council compliance sign off and then repurposing the building set in train a decade long trail of legal issues leading to Nichola Keast suing Auckland Council for $7.5 million dollars alleging negligence. Councils owe no duty to protect people from economic loss following council refusal to issue a Building Act code compliance certificate, the High Court ruled.
Problems multiplied for Ms Keast as Council required compliance with a building consent issued for the initial build constructed prior to her purchase plus compliance with a further building consent for her later work converting a West Auckland proposed retirement village into tenanted apartments.
In addition, further issues arose when it was discovered a re-survey of the land dividing the intended retirement village into three separate bodies corporate had inadvertently left Ms Keast’s building with no legal access to the street.
Her project intended in 2012 to create tenanted investment apartments providing retirement income eventually saw mortgagee sales of one of these apartments and a separate property on Big Bay Road north of Waiuku put up as collateral security.
Ms Keast claimed Auckland Council’s certifying process was to blame for her financial losses.
In the High Court, Justice Wilkinson-Smith said Auckland Council could not be held responsible for Ms Keast’s failure to appreciate the complexities of purchasing a building not having a code compliance certificate, her delays in applying for certification and her failure to act on advice received early in the project about lack of legal access.
Evidence was given of Ms Keast buying part of a newly built retirement village off McLeod Road in Te Atatu.
The village did not operate as a retirement village, being subdivided in 2008 into several different titles and sold off as investment assets.
Ms Keast purchased what became lots two and four in the subdivision; built as the administration and recreation centre for the proposed village, including an indoor swimming pool and tennis court.
A 2012 building consent allowed Ms Keast to convert this administration building into three apartments.
The court was told these apartments were completed and tenanted within a year, but no steps were taken for another three years to get Building Act code compliance signed off.
What followed was a further five years of ongoing disputes between Ms Keast and Council over what was or was not required to achieve compliance with both the original building consent and the further 2012 consent.
Ms Keast alleged Council unnecessarily and negligently delayed issuing a compliance certificate.
A compliance certificate was eventually issued in May 2019.
Then, when it was later proposed to further subdivide lot two, a lack of legal access became a complication.
Physical access for lot two exists, but without protection of a registered easement.
Justice Wilkinson-Smith ruled lack of an easement was not Council’s fault.
Ms Keast had preferred to rely on incorrect advice from surveyors instead of acting on corrected advice given her back in 2016, she said.
When sued, Auckland Council said there is no obligation on local authorities to tell property developers what to do to achieve code compliance; there is no duty to help, it said.
A code compliance certificate does have economic value: certifying a building satisfies the building code; consequentially enhancing value of the property and protecting commercial interests of the owner.
But delays in issuing a certificate at a time when a building is later shown to be compliant does not entitle a building owner to damages, Justice Wilkinson-Smith ruled.
That would shift the cost of establishing compliance from the building owner to Council and its ratepayers, she said.
Councils’ Building Act regulatory function does not create a private right to sue for economic loss, she ruled.
Keast v. Auckland Council – High Court (29.05.26)
26.167