Legal Update – General damages in New Zealand

In cases where the plaintiff has a viable cause of action based on negligence, general damages may be awarded for distress, vexation, inconvenience, and similar consequences that are reasonably foreseeable as a result of the breach of duty. But just how do you value those damages?

Recent cases

General damages (GDs) were sought in Body Corporate 406198 v Argon Construction Ltd [2023] NZHC 3034 (aka Argon), and in Body Corporate 366567 & Ors v Auckland Council & Ors [2024] NZHC 32 (aka Harbour Oaks), together with remedial costs, consequential losses, consultants’ costs and professional fees.

In Argon, the Judge found that GDs were to be awarded as follows (at [294]):

(a) $10,000 for single non-resident owners;

(b) $16,500 for joint non-resident owners;

(c) $16,500 for single owner-occupiers; and

(d) $23,000 for joint owner-occupiers.

There was no award of general damages to the six second plaintiffs who were assigned their causes of action (at [295]).

The Judge found the main impact suffered by unit owners in that case had been financial and associated stress, exacerbated in some cases by being non-New Zealand residents or nationals with a lack of familiarity with local circumstances. The Judge also took account of the fact that none of the unit owners would need to move out for the remedial works.

The sense, then, is of a mid-range level of loss or damage in sense of worry and stress.

In Harbour Oaks, the Judge found that GDs were to be awarded in the amount of $4.62m across 400 units (an average of $11,550). There was no award for “distress caused by the litigation itself,” nor for the distress caused by defects for which there was no finding of liability.

One can understand the logic of all that, although just how you value GDs where there is worry and stress falling within the “tariff regime” for defects for which liability is found and non-tariff worry and stress, is not clear.

Again, no award for GDs was made to plaintiffs who had taken an assignment of a claim on buying an apartment (at [1616]).

Given the average $11,550 award, the sense is of a relatively low level of loss or damage.

Byron Avenue

Such awards would seem to fall significantly short of the sorts of awards seen in leading cases like Byron Avenue[1], where Baragwanath J referred to the award of $20,000 in the Court of Appeal in Bronlund v Thames Coromandel District Council[2] and a number of High Court decisions where awards ranged from $6,000 to $25,000.[3] (at [115]).

Baragwanath J noted that the facts of these cases “vary considerably” but “generally entailed occupancy of a leaky building for a significant period and the associated anxiety”.[4]

While agreeing it was not an appropriate case in which to give general guidance, William Young P said he supported awards for non-economic loss in that case which proceeded on the basis that there would be no awards for corporate owners, $15,000 as an appropriate figure per unit for non-occupiers and $25,000 as an appropriate figure per unit for occupiers.

The Court of Appeal again declined to give general guidance in Johnson v Auckland Council[5], but upheld the trial Judge’s award of $20,000 for joint owner-occupiers, on the basis that “there was a basis for an award at the lower end of the scale”: unlike some leaky building owners they were not forced, in the interim for economic reasons, to live in a seriously leaky home.

In Victopia Apartments[6], the High Court rejected a “tariff style” approach in favour of an “holistic assessment”, before making awards for GDs as follows:

a)      $15,000 for single non-resident owners;

b)      $25,000 for joint non-resident owners;

c)      $25,000 for single owner-occupiers; and

d)      $35,000 for joint owner-occupiers.

Comment

The anchoring effect of the awards in Byron Avenue is remarkable.

And, although there was some adjustment for inflation in Victopia Apartments, it must be acknowledged that it has been some time since that case (in 2017) let alone Byron Avenue (in 2013).

In that time, it is notable that the Employment Relations Authority and Employment Court have adopted a “banding framework” for valuing compensation for humiliation, loss of dignity, and injury to feelings, under s 123(1)(c)(i) of the Employment Relations Act 2000.[7] That banding approach is as follows:

·         Band 1: (low-level loss or damage): up to $12,000;

·         Band 2: (mid-range loss or damage): $12,000 – $50,000; and

·         Band 3: (high-level loss or damage): over $50,000.

The question must be asked whether it is time for the sums awarded for general damages in New Zealand to be reviewed bearing in mind the approach in other jurisdictions, both here and overseas, and the impact of high inflation since the Court’s decision in Byron Avenue.

Thanks to Emily McLean for assistance in writing this Insight.

[1] O’Hagan v Body Corporate 189855 [2010] NZCA 65; [2010] 3 NZLR 486 (aka Byron Avenue) 

[2] CA190/98, 26 August 1999

[3] At [115]

[4] At [116]

[5] [2013] NZCA 662

[6] Body Corporate 346799 v KNZ International Co Ltd [2017] NZHC 511

[7] A similar approach has been adopted in the Human Rights jurisdiction