New Zealand Courts Wellington City Council v Dallas
[2014] NZCA 631
At issue was a leaky house built by Kingdom Residential Housing
Ltd (Kingdom). The home owners sued Wellington City Council for
defects in the house's construction. The Council in turn sued
third parties involved in the construction process, including Mr
Dallas, the former managing director of Kingdom. It alleged that Mr
Dallas had been misleading by stating that the kick outs on the
house had been completed by a Kingdom plumber and that the house
complied with the Building Act 1991.
The High Court found that Mr Dallas did not breach s 9 of the
Fair Trading Act.
But the Court of Appeal reversed the High Court's decision,
saying that the High Court had not asked the right question. It had
asked whether the Council's reliance on Mr Dallas was
reasonable but the test, under s 9 of the Act, is whether a
reasonable person in the Council's position and with
characteristics which Mr Dallas knew or
