Landmark Leaky Home Decision Could Open Door for Hundreds of Claims

A lawyer says hundreds of leaky-home owners could seek to overturn rejected compensation bids after a landmark Supreme Court decision.

In a judgment released today, the court clarified the start time for the 10-year period people have to make claims to the Weathertight Homes Tribunal.

It is now clear that the time starts when a code compliance certificate is issued by a local council, rather than when construction of the property ended.

Auckland couple John and Helen Osborne successfully argued for that at New Zealand’s highest cort, the Supreme Court, where they took their claim against Auckland Council.

Mrs Osborne said the house, which they still live in, was “an absolute nightmare” while it was leaking.

“I’m absolutely overwhelmed. I can’t believe we’ve finally had a yes. We’ve never had a yes in the seven years we’ve been trying to get compensation,” she told One News.

The Osbornes’ lawyer, Tim Rainey, told Newstalk ZB today the judgment meant there were potentially 369 claimants previously deemed ineligible who could push for a re-hearing.

“We believe the tribunal or the [Ministry of Business, Innovation and Employment] should be reviewing all of its eligibility decisions and remaking those decisions applying the correct standard and the correct law.”

He said the time difference between building completion and the issuing of compliance certificates could be anything from days to two or three years. But, no matter how long it was, being on the right side of the limitation was important for potential claimants.

There was no need to be sympathetic toward councils who could now have to settle on matters of admitted negligence when they previously hid behind a “procedural excuse”, Mr Rainey said.

Home Owners and Buyers Association of NZ president John Gray said the organisation was seeking legal advice over what courses of action were available to home owners previously denied the chance to make a claim in the same circumstances as the Osbornes.

The decision would not help owners of homes built in the 1990s and early 2000s anyway, he said, as they would be outside the 10-year period however it was judged.

Mr Gray said the association would like legislation amended to make the time limit for claims 15 or 20 years.

The Osbornes’ trouble with their 1996 Remuera home began shortly after they bought it in April 1997. That month, and in February 1997, code compliance certificates were issued.

Failed repair attempts were carried out between July 1997 and 2002, and the Osbornes filed a claim with the tribunal in February 2007.

However, only matters related to later repairs were deemed by the tribunal as eligible for claims. A year ago the couple had spent $500,000 fully repairing their home, where they still live.

Previously the Osbornes had sought a judicial review of the tribunal decision but the High Court upheld the tribunal’s decision.

The Court of Appeal declined to hear the case, but last year the Supreme Court decided it would pick it up.

Its judgement said the Osbornes and the council reached a conditional settlement after the hearing, subject to the Supreme Court not releasing its decision.

But the court decided to make its judgment public because “the case raised questions of public importance”. The Osbornes and the council will now have to go to the tribunal if they can’t reach another settlement.

The Supreme Court also ruled Auckland Council must pay the Osbornes $25,000 in costs.

In a statement today, the council said it would not comment on the decision until it had the chance to consider the full written judgment.

“The council’s offer to the Osbornes is now null and void and the claim will go back to the tribunal. This is not to say the claim is not capable of settling on different terms at a later date but all the building parties of both the original works and the unconsented repairs will be included in the resolution of the claim.”

The statement said Auckland Council had settled 1124 leaky home claims and had another 85 yet to be settled, involving 2170 dwellings or units.

A statement from the Ministry of Business, Innovation and Employment said it was considering the judgment and what, if any, implications it had on eligibility decisions under the Weathertight Homes Resolution Services Act.

– NZ Herald

Broker Launches Revolutionary New Product

Insurance Business New Zealand – 9 July 2014

A recent entrant to the market here hopes a new 10 year warranty product will prevent crises such as the leaky building problems that have blighted the New Zealand building industry from happening again.

Ex-pat Brit Duncan Colebrook of Stamford Insurance has the sole rights in New Zealand to the new Lloyd’s-backed product which can cover single residential homes, apartments, and commercial buildings, including re-clads of leaky homes.

“It is high time homeowners could obtain a guarantee backed by an ‘A’ rated insurer of international standing,” says Colebrook.  “We saw a gap in the market and persuaded Lloyd’s to give us coverholder status here”.

He said previous policy offerings were seriously flawed: “Whilst many builders offer their own guarantee or provide a third party guarantee from someone like Master Build, the leaky building situation has shown that much broader and more secure cover is needed for current and future homeowners.”

Colebrook says the product was based on a UK model and tweaked to suit New Zealand specifications.

“We’re having to be more flexible regarding the types of products and materials used, and design in New Zealand is quite different from the UK.  We cover defects arising from faults and design or specification so we had to pay close attention to new design concepts that are common here that don’t apply to the UK and incorporate them into the underwriting thoughts and process.  It’s quite possible that the leaky building problems could have been avoided if this had been brought in sooner,” he added.

The warranty is transferrable to new owners if a property is sold on within the 10 year policy term and approved builders will have the option to seek indemnity from any claims made against them after two years giving additional protection not currently available in the market.

Colebrook, who is part of the Insurance Advisernet network, hopes to tap into the group to make the product available around the country.

“We are hoping this product will help revolutionise the way buildings are guaranteed in New Zealand for future generations and remove the need for government intervention.”

by Maryvonne Gray