Don't blame authority for leaky homes, says QC

The Government's now-defunct Building Industry Authority was not a consumer protection agency established to compensate design and construction faults such as leaky homes, the Court of Appeal was told.

A High Court ruling in February upheld the right of owners of the Sacramento housing complex in Auckland's Botany Downs to sue the authority for negligence.

The three-day hearing on the authority's appeal to overturn the judgment began yesterday.

Restructured and absorbed into the Department of Building and Housing last year, the authority is among 10 defendants in a multimillion-dollar claim by the owners of the 153-unit complex which is so rotten it is estimated one-third will have to be demolished.

The owners of Sacramento - which was built using monolithic cladding on untreated timber - have lodged a $19.2 million claim for remedial works and a further $3.06 million for loss of value caused by stigma and consequential costs.

Represented by Sacramento's body corporate and its chairman, Chris Kittow, the owners are suing the building certifiers, builders, architects, the suppliers of cladding systems, the developer and project manager including the authority. There are also 17 third parties including suppliers and insurers listed in the case which is unlikely to go to trial before next year.

Mary Scholtens, QC, lawyer for the Office of the Attorney-General which is representing the authority, said the multi-functioning body was set up to protect homeowners from workmanship which didn't meet minimum standards.

"It is not the prime regulator," she told the full five-judge bench of the Court of Appeal. "That responsibility rests with the territorial authorities.

"Its primary role is to set the minimum standards for the industry based largely around health and safety matters. It is not a consumer protection agency."

The authority - which had only 13 staff - had a duty to monitor problems arising in the building industry both nationally and internationally, Mrs Scholtens said. It did this by focusing on "acceptable standards" industry could use.

Laws which established the authority did not support compensation for anything the authority "did or did not do", she said.

However, Sacramento body corporate lawyer Robert Fardell, QC, said Parliament established the authority to provide industry safeguards.

He said that the authority was negligent through inaction after it was told in 1998 about shortcomings with the cladding.

The authority was also negligent by failing to review the building code and in the scope of its insurance scheme, which "took the risk" with an all-claims indemnity.

The authority had $10 million liability insurance but nationally the cost of repairing leaky homes is estimated to range from $1 billion to $5 billion.

- NZPA