Demands for compensation over leaky buildings mounting

By FRANCESCA MOLD and ANDREW LAXON

The Government is under pressure to widen the inquiry into the multimillion-dollar leaky buildings crisis to include the key issue of compensation for homeowners who face crippling repair bills.

An about-face by Internal Affairs Minister George Hawkins yesterday saw him announce a parliamentary select committee investigation into the leaky homes, just two days after ruling out a public inquiry.

But critics say the investigation is too narrow because its terms of reference do not mention liability issues or compensation.

Mr Hawkins had been under intense pressure to call an inquiry after a report commissioned by the Building Industry Association estimated the repair bill for leaky homes could reach $240 million.

The Herald has revealed that hundreds of new apartments nationwide are affected by the problem, which includes rotting floors, unsafe balconies and toxic mould.

Stung by criticism from Opposition MPs, Mr Hawkins said yesterday that liability for shoddy buildings did not lie with the Government.

But the Government came under further pressure last night when two Auckland lawyers urged homeowners to join forces to sue.

The lawyers cited as an example the consortium that represented 125 Air New Zealand passengers who won $21 million damages over the Mt Erebus disaster.

Keith Peterson and Neil Murray, who organised the Erebus claim with a third lawyer, Bruce Davidson, said home-owners would have more clout if they acted together.

Mr Peterson felt the Government could be liable for its 1996 decision to allow untreated timber to be used in house framing, which many experts say is a leading cause of the problem.

Mr Peterson said that by suing the Government home-owners would force a full public inquiry.

But a spokeswoman for Grant Cameron and Associates, a Christchurch firm that handled collective claims over the Cave Creek platform collapse and Lake Alice abuse allegations, said joint action might be difficult.

The firm had investigated taking a joint claim over leaky buildings two years ago, but had decided against it because every building was different, she said.

Within hours of the report's release on Tuesday, Mr Hawkins had flatly rejected calls for a full public inquiry.

A day later, and facing mounting pressure in Parliament, his opposition appeared to have softened when he said it was premature to call for an inquiry.

Yesterday Mr Hawkins did a u-turn, revealing he had asked a select committee to hold an inquiry.

But Opposition MPs are already labelling the inquiry a "whitewash".

The MPs are concerned that the committee responsible for the investigation has a majority of Labour MPs and will not be independent.

Mr Hawkins said it would not be useful to hold a full royal commission or judicial inquiry into the leaky building matter.

"We want answers as soon as possible. We do not want to wait for 18 months or two years for an inquiry to come up with the answers."

The Government administration committee is made up of Labour MPs Dianne Yates (chairwoman), Jill Pettis and Russell Fairbrother, plus National MPs Pansy Wong and Coromandel MP Sandra Goudie.

Ms Yates said the inquiry had been referred to the committee because it was responsible for the Building Industry Authority and Internal Affairs. Public submissions will close on October 21.

New Zealand First MP Brent Catchpole said the makeup of the committee meant it could not do justice to the task of investigating the leaky building syndrome.

National MP Wayne Mapp described the inquiry as a "cop-out".

"A select committee weighted in Labour's favour is no place for an inquiry into the leaky building crisis," he said.

Act MP Deborah Coddington raised concerns that the inquiry's terms of reference did not address the issue of who was liable.

She said compensation was a key concern for affected homeowners.

The terms of reference include investigating the level of detail to be provided with building consent applications, the inspection regime, consents, the decline in building skills and "any other matters".

Greg O'Sullivan, founding director of leading leak-investigation firm Prendos, said the terms of reference ignored a main cause of rot.

"Unless they put some treatment back into timber, we're all dead in the water, regardless of what they do."

THE INQUIRY

The terms of reference:

* The level of detail to be provided with building consent applications with respect to weathertightness.

* The inspection regime as part of the code compliance certification process.

* The split responsibility of building certifiers and territorial authorities with respect to building consents, inspection and code compliance certification.

* The decline in the level of skills in the building sector, its causes and possible solutions; and

* Any other matters the committee considers appropriate.

* If you have information about leaking buildings,
email the Herald or fax (09) 373-6421.

Further reading
Feature: Leaky buildings

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