Landmark Leaky Home Judgment

Published: Tue 23 Jan 2007 10:53 AM
Landmark Leaky Home Judgment
DICKS v. Swan & Waitakere City Council
We are very pleased for Maria Dicks that Justice Baragwanath has set down such a comprehensive ruling. We hope for her sake that the Council will not continue to spend ratepayers money in defending their negligence by appealing the decision and that they pay her what she is so rightfully hers to allow her to get on with repairing her defective home and restoring some normality and security in her life.
We applaud the efforts of Grimshaw in representing Ms Dicks and achieving a significant result for the benefit of all leaky home owners. This judgment, if it stands will assist many leaky home owners in their pursuit of compensation either via the courts or the new Weathertight Tribunal as it sets strong precedents in this area.
The judgment has effectively quashed what we believe are the spurious arguments that Councils all over the country have used in relation to their duty to home owners and subsequent home owners along with their duty to competently inspect during construction.
It will certainly benefit those going through the WHRS and the Weathertight Tribunal so far as it will enable them to rest on this judgment as a precedent and may well compel Council’s and other respondent parties to make far more meaningful attempts to settle these claims early and relieve the leaky home owners from having to endure the litigation process.
We have long since argued that common practice does not a standard make, and yet the Council’s have continued to mask their failure to properly understand and execute their duties and obligations under the 1991 Building Act (and subsequent amended versions) by conveniently arguing that any individual Council did what every other Council was doing and therefore that was somehow taken as an acceptable standard of practice – they should all be brought to account for their collective performance failures.
It is the systemic failures of the Council’s processes that have given rise to defective dwellings being built – the failure of senior building officials to understand their duties and obligations under the Building Act has lead to the standards not being properly articulated and imposed on the design and building industry as a whole. It is our opinion that there has been a serious lack of quality processes with in the Council’s and that, combined with the poor levels of experience, training and proper auditing has contributed to the dire consequences being experienced by thousands of home owners – sadly some that don’t even realise it yet!
The Council’s are responsible for several “defensive barriers” in terms of their ability to have prevented the failure of these homes the;
1. issuing of the building consent;
2. conduct of building inspections;
3. issuing of the code compliance certificate.
These are the three areas where they have the power and the duty to ensure that the homes are going to meet the performance and durability standards of the code. For this reason we believe that the Council’s should bear more than the 20% liability as apportioned in precedent – not withstanding the fact that the Council’s are generally left to pay a significantly higher amount or all of the damages as a consequence of being found joint and severally liable (Law of Torts).
The primary barrier is of course the building consent; if that is flawed then in logic everything else that follows is flawed. Most, if not all of the failed homes are characterised by plans submitted for building consent lacking the necessary level of detail and specifications such that a positive impression is gained by the Council as to how the construction will meet the requirements of the building code. There has been this grey area between consent drawings and construction drawings and in our view there should be NO difference. The result is that most developers/owners just did not bother with the expense of getting construction drawings and left the poor builder to improvise. The drawings then give no guidance to the building inspector as to how the details were to be constructed and the chain of failures is perpetuated.
The builder in this case has been found to have been personally liable (negligent) and has not been able to hide behind his limited liability company which is in liquidation. This is another very significant aspect of the judgment which will have very wide implications in the building industry. Whilst we have some sympathy with the builder given what we say about the Council’s failures in regard to the issuing of the building consent based on flawed plans (he has been compelled to build in accordance with those plans and if they lacked detail was in a difficult position), this has now dealt with the more unscrupulous builders who are “serial liquidators” of their companies – i.e. using shelf companies for each project.
The personal liability aspect of this is significant as it bears out all of what we have said previously in regard to the significant impact that the failure of a person’s home has on them physically, emotionally and financially – it is ruinous for some. The building industry has had a blatant disregard for the importance of sustaining quality and durability and has put profits before ensuring that home owners do not suffer any economic loss, injury or loss of amenity – and they have done so with impunity given that they have shielded themselves behind limited liability companies.
The judgment notes that there are 40,000 leaky homes out there – less than 4000 registered with the WHRS. It is rather disconcerting that there are over 35,000 leaky homes out there and people are living in them and perhaps oblivious (or in denial) of the fact that their home is at risk – even more worrying is the number of these homes that are being sold. Even those who have done the right thing in terms of getting a pre-purchase inspection carried out are sometimes being caught out by the poor standards set by some pre-purchase inspection companies. Then there are those who are not exercising due caution in buying ANY home by not getting an inspection done at all.
All in all we must surely be going to see an increase in the number of homes that will fail and unfortunately they will likely fall outside of the 10 year limitation on bringing a claim in any jurisdiction for compensation – that is why we argued for the 10 year limitation to be increased to 15 years and the Governments reasons for not doing so were absurd – there is no consumer protection and we and the Consumers Institute are the lone voices in advocating for this change and indeed home owners rights in general – it seems that the Government was more interested in protecting the interests of the local bodies and the building and insurance industries than that of the home owners. We have more consumer protection in place surrounding the purchase of home appliances than we do for buying a home worth hundreds of thousand of dollars. Even building guarantees from large building firms or professional building associations are not necessarily worth more than the paper they are written on!
We urge homeowners to have their homes properly maintained (at least annually by setting down a maintenance plan) and surveyed to ensure that there are no major issues – maintenance should be ongoing, but if there is any doubt about the weathertightness risks and the home is less than 10 years old they need to get it checked out and file a claim with the WHRS as soon as possible if moisture is found to have penetrated the building envelope.

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