Family struggles for compensation from leaky home

By GEOFF CUMMING

The Mediterranean townhouse up a long driveway was the end of a long search for Yvonne Badcock, Bruce Walton and their 8-year-old daughter Lena. They ticked off the requirements: three bedrooms, split levels, handy to Bruce's work in Ellerslie, big enough for Yvonne to work from home and, most importantly, low maintenance.

"We'd just renovated and sold Bruce's old family home in Mangere Bridge and it was a huge effort," says Badcock. "We wanted to be kind to ourselves - it was time for easy living."

They bought within days of fixing eyes on the 3-year-old, plaster-clad home with its attractively angular design and aluminium windows.

"We didn't have time to do a builder's inspection," she says. "We saw a nearly new house and the owner had no idea there was a problem."

For a couple of years after taking possession in mid-1998, all seemed well. Their first thought, when they noticed the water mark on the carpet near the fireplace, was that it was from a pot plant. But the dampness wouldn't go away and they found a corresponding wet patch on the other side of the fireplace.

"When we lifted the carpet, we saw a huge hole in the floor," says Walton.

A building inspection found their half-million-dollar home was a classic leaky building. Beneath virtually every window was rotting framing. Under the carpet, what they had assumed was a concrete pad was a rotting wooden floor.

"I could push a screwdriver through it in places," says Walton.

Tests found the toxic stachybotrys mould, linked to respiratory problems and skin rashes, growing on the flooring.

The nightmare was revealed just after Badcock gave birth to twins Hannah and Matthew. "We were bidding at auctions for a bigger place. Then we realised we wouldn't be able to sell until this was all fixed."

The family was among the first to sign on in late 2002 when the Government set up the Weathertight Homes Resolutions Service. Eighteen months later, and six months after the service awarded Walton and Badcock $43,000, they are still battling to escape their leaky home.

The twins, now nearly 3, sleep in the master bedroom. Badcock has shifted her office into the lounge while Lena, now 14, sleeps in a room so poorly designed that her bed had to be cut down to fit. And work has yet to start to stop water getting in.

"Every time it rains we feel dread," says Walton. Although the problems are not obvious (until you lift the carpet) he points to rot hidden beneath windows throughout the lounge and in the floor beneath aluminium doors that open at ground level to a small courtyard.

"They still don't know how much damage is behind the window frame. No one really knows until you strip the cladding back."

The award of $43,000 against builder William Ross Holden and subcontractor Taylor Roofing followed an out-of-court settlement for $31,000 with the Auckland City Council, which allowed the unusual, and poorly fixed, plaster system and issued a code of compliance certificate after the house was built.

But the family fear the money will cover less than half the cost of rebuilding their home to a saleable state. "We believe all the cladding has to come out of the house and we are doing that out of our own pockets. Who would buy at market value if you said you had a leaky building and had taken out the windows and patched?"

At any rate, the council is insisting that repairs include the cavity lining it now requires on new monolithic-clad homes before it will issue a code of compliance for the completed work. So the cladding has to come off anyway, adding $50,000 to $60,000 to the bill.

The couple saw the establishment of the weathertight service in December 2002 as a low-cost alternative to court action. In March last year, a service assessor made a thorough inspection and took moisture readings.

After an evaluation panel found the claim had merit, the couple opted for adjudication over mediation because "we weren't going into a casual meeting with a builder I'd never met and had no faith in", says Walton. But the hearing in February, before an adjudicator with the power to apportion blame and decide penalties, left them bruised and confused.

"While it's a reasonably casual environment it's still legal proceedings, we were cross-examined and what we said was challenged."

Most of the flaws the couple identified were ruled inadmissible because they were not directly proven to cause leaks.

Despite numerous cracks in the plaster system, damage to the timber framing was attributed to the absence of flashings around the chimney and windows.

The builder hired his own assessor to challenge the service assessor's opinion, arguing that only part of the cladding needed replacement. Though the couple had estimates for repairs ranging from $150,000 to $230,000, the adjudicator ruled that only parts of the exterior needed recladding.

"We trusted the process," says Badcock. "We didn't get a second independent assessment or retain a lawyer. We presented our own evidence. We thought we didn't need a lawyer. We were so wrong."

Their experience reflects a disputes resolution process that building consultant Philip O'Sullivan believes is "the wrong model" for a massive problem.

"It's an adversarial situation," says O'Sullivan, among the first to raise the leaky building scandal.

"To me it was set up to resolve $20,000 to $30,000 disputes. But a lot of disputes are going over the $200,000 mark."

Uncertainty surrounding the causes - and the culprits - in leaky building cases makes disputes resolution a flawed process, he says. Often, it's impossible to tell the extent of the damage without stripping a home back to its framing. Though assessors can drill holes and conduct moisture tests, they are still making considered guesses.

"Often you don't know who did what on a building site five years ago. You can have three or four leaks on one wall.

"It takes quite a bit to get to the point you can say with confidence 'this is what's


wrong, this is who's responsible and this is what it takes to fix'."

And claimants need to be doubly sure when they have a dozen or more respondents - including architects, developers, builders, roofers, plasterers, the council and the Building Industry Association - ducking for cover.

Walton and Badcock took on only the builder, the roofer and the city council in their hearing but found presenting their own arguments "very, very difficult".

"The builder argued we could pull out windows and patch-plaster," says Walton. "Our argument was that the extent of timber damage inside the wall couldn't be accurately assessed and all the cladding had to come off. The two assessors disagreed on the remedial work required and the adjudicator simply made a judgment.

"There was no advice for us. I wouldn't recommend anyone going through it without a lawyer. You probably need $5000 to $10,000 to prepare properly for an adjudicated hearing but you can't seek costs."

Six months after the settlement, the couple have yet to get repair work under way. The council rejected their plans for lack of detail - ironic given the council's attitude during construction.

"Essentially we have to respecify the house - all the drawing details have to be re-speced. We've got 35 pages of flashing details - there was nothing required back then. And we can't start negotiating with builders until we've got the plans finalised."

The work will involve removing the cladding, taking out all windows, replacing rotten framing, installing a cavity system and flashings, then replacing the windows and cladding.

"We'll have to find somewhere to rent so it can be fixed," says Badcock. "But the adjudicator disallowed an accommodation allowance - they expect us to live through the repairs."

The couple believe an alternative is needed to the disputes resolution process - such as a compensation scheme or a building industry fidelity fund.

"In this case the builder walks away and we have to drag them to court to become accountable," says Walton.

"We wouldn't be here if we didn't have this problem," Badcock says. "It's affected our ability to get on with life. It's a very stressful situation."