Landmark decision will ‘make it difficult for councils to turn back the tide’

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A home owner has been awarded $250,000 to replace her Waitakere home in a landmark ruling by a High Court judge, who has also strongly criticised council inspectors.

Lawyers and experts say the decision will expose councils, builders and architects to more liability and more litigation.

And it would seem that ratepayers will be the ones to ultimately bear the brunt of the hundreds of millions of dollars in costs.

Justice David Baragwanath awarded $250,900 to Hobsonville home owner Colleen Dicks in a case heard in two sittings during September and October last year.

The money will allow her to repair or demolish and re-build, and is one of the single largest sums awarded since the leaky homes crisis came to public attention in 2001.

Mrs Dicks sued builder Hobson Swan Construction (in liquidation), its director Robert Henry McDonald and the Waitakere City Council, which issued consents and inspected her house.

In 1994 Mrs Dicks contracted Hobson Swan to build a house. The council gave approval and carried out inspections.

Repairs not done
But soon after moving in, she found water pouring down the inside of windows. She later discovered her house had leak problems and, although McDonald agreed to fix it, repairs were not done.

Justice Baragwanath found the builder’s failure to install seals around windows enabled water to run behind aluminium joinery and penetrate wood framing.

The water then rotted the frame of the house, making it uninhabitable. The judge said the builder failed to maintain proper standards of workmanship.

The council was negligent because staff were “untrained or simply careless”, and had treated the approval process as “a mere formality”.

“There has been a simple abdication of responsibility by the council,” he found, noting that the council had not called its inspectors or offi cers responsible for the building approval process as witnesses in the case.

Matt Josephson of Grimshaw & Co, the law firm which represented Mrs Dicks, said the decision meant councils, builders and architects were more liable for leaky building costs.

“They’re in the gun because this ruling has the potential to cost them all more,” he said.

Mrs Dicks said she had not lived in the house for 14 months and would like to sell it or demolish it and re-build.

“I’d like to start from scratch but I have to get some quotes and see what’s logical,” she said.

Waitakere mayor Bob Harvey said he did not know about the case but if the court found against it, the council should pay what was owed and not appeal.

“If we’ve not done what we’re supposed to do, we say sorry and write the cheque and that’s the way it is.

“I don’t want to prolong people’s agony. Leaky buildings are a nightmare for everyone and I don’t think we’ll be the only ones making provision for writing hefty cheques.”

The council’s legal services manager, Denis Sheard, said it was up to the council’s insurer to decide whether an appeal would be lodged.

He was worried about a move towards blaming councils almost solely for leaky building problems.

Mr Josephson said the judgment found the council failed.

“The council’s evidence was essentially that it complied with the standards of the time, which were not particularly high.

“The court held that even if the council did meet the prevailing standards, this did not fulfil the council’s obligations and the council was accordingly negligent.

“We hope the result will assist other leaky home owners and in their claims against architects, builders and councils. The principles will apply equally to them.”

Widespread implications
Philip O’Sullivan of building consultants Prendos, which made reports on the house, said the case had widespread implications.

“The judge has said council standards were too low in this case and probably across the board, so this will make it difficult for councils to defend similar claims. And there are many.

“The judge effectively awarded 100% damages, including general damages for anxiety and distress of $22,500, which is considered high.

“Councils will find it very difficult to turn back the tide with this decision in place.”

The Weathertight Homes Resolution Service had more than 3000 leaky building claims. Of those, 1419 were within Auckland City boundaries.

At time of going to press the Waitakere City Council was set to challenge the ruling through the Court of Appeal.