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The High Court's decision in Gibson Sheat Shelf Company No 28 Ltd v Courtenay Car Park Ltd1 is a cautionary tale for building owners, head contractors and specialist subcontractors.
When a five-tonne concrete block fell through the roof of an adjacent apartment complex during demolition, the Court found multiple parties liable – including the building owner, despite having engaged reputable contractors to carry out the work.
The facts
Courtenay Car Park Ltd (CCPL) was issued a warrant by Wellington City Council under s 129 of the Building Act 2004 requiring that it remove the damage sustained in the 2016 Kaikōura earthquake to a multi-storey carpark CCPL owned in the CBD.
CCPL engaged Naylor Love as head contractor, who in turn engaged Ceres, a specialist demolition contractor with whom it had experience following the Christchurch earthquakes.
Ceres proposed using a high reach excavator – a heavy machine with demolition shears attached to a long arm – as the "safest and most efficient" method. A debris screen was installed to protect adjacent buildings. The demolition proceeded largely without incident until the final stage, adjacent to an apartment building known as Maison Cabriole.
On 22 February 2017, debris fell past the screen and damaged the apartment building's balcony. The following day, a five-tonne concrete beam fell through the roof, causing substantial damage. Two plaintiffs sued: the body corporate and an individual unit owner.
The defendants were CCPL (the building owner), Naylor Love (head contractor), and Ceres (demolition subcontractor).
Key findings
The demolition subcontractor was negligent
The Court found that the cause of the accident was operator error. It was unpersuaded by Ceres’ argument that an unexpected structural failure caused the beam to fall the "wrong way". Several factors pointed to negligence: the operator was not experienced with high reach equipment; the final and most risky stage of work was rushed when it did not need to be; damage to neighbouring properties occurred over three consecutive days without pause for review; and Ceres failed to call the operator to give evidence on the cause of the accident.
The head contractor failed to supervise
Naylor Love was found liable as a joint tortfeasor. Although the plaintiffs had not pleaded a direct duty of care against Naylor Love, the Court found that it had failed in its contractual obligation to CCPL by failing actively to supervise Ceres' work and was also negligent.
Naylor Love did not verify the operator's experience, did not ensure Ceres provided a fatigue management plan (despite having requested one), did not monitor damage to adjacent properties, and did not pause works after damage occurred on 22 February to investigate its cause.
The building owner was strictly liable in nuisance
CCPL was found liable in nuisance on the basis of a non-delegable duty of care. CCPL argued it had no liability because the earthquake created the dangerous situation, and it had engaged reputable contractors to address it.
The Court rejected this. While liability in nuisance is fault-based where a nuisance results from natural hazards (following Young v Attorney-General2), that did not apply here. The relevant nuisance was caused by negligent demolition, not by the earthquake – the earthquake was simply the context. CCPL's liability was strict.
CCPL also argued it had ceded occupation and control to Naylor Love. The Court rejected this too. A building owner who authorises work to be carried out on its property cannot avoid liability in nuisance simply by engaging a contractor.
Pre-existing defects limited the plaintiffs' recovery
The plaintiffs claimed the cost of demolishing and replacing the damaged apartment building. The Court awarded significantly less. The building had a long history of non-compliant building work and weathertightness deterioration that had never been remediated. The plaintiffs' recovery was limited to the cost of targeted repair of the demolition damage – not a full rebuild that would have given them a compliant building. Had full rebuild costs been awarded, the Court would have applied a 55% reduction for betterment.
Contractual indemnities did not protect the negligent parties
Naylor Love and Ceres had sought indemnities from CCPL. Because Ceres was negligent, those indemnities did not apply. CCPL was entitled to an indemnity from Naylor Love, and Naylor Love was entitled to an indemnity from Ceres. Contribution was apportioned 80% to Ceres and 20% to Naylor Love.
Practical implications
Building owners
Engaging reputable contractors does not insulate an owner from liability. Where work on your property causes damage to neighbours, you may be strictly liable in nuisance regardless of whether you were personally at fault. The risk allocation in your construction contracts, including indemnities and insurance, should reflect this exposure.
Head contractors
Delegating specialist work to subcontractors does not discharge a head contractor's duty of care. Active supervision is required, particularly for high-risk activities adjacent to neighbouring properties. Head contractors should verify that subcontractor personnel have the necessary experience for the specific equipment and methodology being used, and should monitor for damage that may indicate problems with the work.
Subcontractors
Specialist subcontractors will bear primary responsibility for negligent work, regardless of upstream indemnities. The failure to call the operator to give direct evidence on the cause of the accident was significant – the Court drew an adverse inference.
Claimants
Pre-existing defects in the damaged property may substantially limit recovery. The Court will not award damages that would give a claimant a windfall by replacing a defective building with a compliant one at the defendant's expense.
1. Gibson Sheat Shelf Company No 28 Ltd v Courtenay Car Park Ltd [2026] NZHC
2. Young v Attorney-General [2023] NZSC 142)
