Leaky buildings crisis costs councils thousands

By EUGENE BINGHAM

Councils have been forced to pay hundreds of thousands of dollars in legal disputes over leaking and rotting new houses.

The crisis is also forcing a shake-up of building inspections, meaning the 20,000 homes built each year will face tougher scrutiny to make sure they are watertight.

A Weekend Herald investigation into the extent of the problem of leaks and rotting timber frames revealed last week that the Auckland City Council was being taken to court by the owners of a block of Ponsonby terrace houses.

They are suing the council for allegedly failing to properly oversee the building process.

This week, the Weekend Herald has learned of about 60 more claims against local authorities.

Many have been settled out of court, with the councils making confidential payouts to aggrieved owners. In most cases, the councils are named as defendants alongside builders and developers.

Auckland City has made confidential settlements in 13 cases since 1995 and has 15 claims against it now.

The Manukau City Council said it faced 15 cases, including 12 relating to a particular type of cladding.

Wellington City confirmed it had faced about five claims, most of which had been settled out of court.

North Shore City Council has reached settlements in five cases over the past three years and has two more outstanding.

Waitakere, Palmerston North, Franklin and Dunedin councils have all dealt with claims or have outstanding cases against them.

The cases against local authorities revolve around whether building inspections should have picked up flaws that led to leaks and rotting, a problem that has affected thousands of homes around the country.

The crisis, which is under investigation by a Government-appointed panel, is blamed on factors including modern designs and cladding, the use of untreated timber and declining building standards.

In one of the few cases that has been to court, a judge ruled that the Auckland City Council was liable for damage after issuing a final inspection certificate. The council was ordered to pay $40,000.

A report for the council says professional negligence claims are expected to increase almost 20 per cent this year, with most involving building and planning.

In the 4 1/2 years to December 31, the council paid $2.2 million for professional negligence claims. No breakdown for building disputes was available.

Auckland City's manager of compliance, Barry Smedts, said the number of claims was not high when compared with the number of building consents - about 9000 - it issued each year.

But the council was concerned about liability and was putting additional checks in place for properties deemed at risk.

Maurice Hinton, the president of the Building Officials Institute, whose members include council inspectors and private certifiers, said the leaky building crisis had prompted the institute and other industry players to write a code of practice for inspections.

"The traditional critical focus has been the structure itself - foundations, framing, compliance with plumbing and drainage," he said.

"There has been a general check on cladding but the focus has never been specifically on the weathertight issue of the cladding.

"The trap for all of us is the variety of product and the changing design of building. That has caught everyone a little bit on the hop."

Mr Hinton said that as the issue had become more widely known, inspectors had paid closer attention to claddings and flashings.