Ratepayers face prospect of liability

By BERNARD ORSMAN

Thousands of Auckland building projects are in limbo as councils try to cope with the collapse of a major building certifier.

The downfall of A1 Building Certifiers - which closed last week because it could not renew insurance cover - has affected building inspections on 5500 building jobs.

Many are traditional jobs, such as brick and tile homes, which were previously unaffected by the leaky building crisis.

Councils have stepped in to take over A1's work, but builders are concerned about costly holdups, whether councils will accept liability for inspections to date and whether councils will issue a final code of compliance certificate.

Council lawyers are assessing what, if any, liability ratepayers are exposed to.

Private building certifiers, who undertake about half the 40,000 building projects in Auckland each year, have warned of a catastrophe in the housing market if they cannot get insurance.

Five of the six main building certifiers in Auckland are still operating, but there are fears they will not be able to get insurance as their certification licences come up for renewal.

John Davis, whose Australian company Harwood Pacific has 70 homes under construction in New Zealand, said moving the onus for inspections on to councils would throw the industry into chaos.

In the short term there would be a huge slowdown in the completion of houses, affecting builders, suppliers and people waiting to move into homes.

"There is only one solution to the poor standard of building in New Zealand and that is to license all builders and associated trades and charge a fee for all building applications to go into a fund for repairs to buildings."

Mr Davis said a similar model in Queensland had virtually eliminated the problem in five years.

Michael Just, who is building a $350,000 brick and tile home for his partner and their children at Karaka in South Auckland, said the Franklin District Council had put him through the bureaucratic hoops to transfer his job over from A1. He got another private certifier to carry out a garage inspection yesterday.

Franklin council building team leader Ewan Higham has told A1 to ask its former clients to contact the council directly with paperwork for the project and a means of paying council fees for the remaining certification work.

The council yesterday did five inspections for former A1 clients.

The principal building officer for Auckland City Council, Bob De Leur, said the council had to make sure it was completely covered before it would issue a final code of compliance certificate for any work started by A1 Building Certifiers.

North Shore Mayor George Wood said the Building Act required the council to take over the consents in the city left by A1, "but we need to ensure we do not take on any liability for work they have already completed".

The chief executive of the Building Industry Authority, Bill Porteous, said there was nothing the authority could do to help private building certifiers. It was a matter between them and the insurance companies.

Insurance Council chief executive Chris Ryan said there was no blanket removal by insurers on providing professional indemnity cover for building certifiers.

As far as he was aware, some certifiers would get insurance based on their history and relationship with their insurers, and others would not.

He said professional indemnity insurance was a very competitive and fast-growing market. If one insurer pulled out, another would come in and take its market share.

However, Graham Coe, the immediate past-president of the Master Builders Federation, said the insurance industry had opted out of professional indemnity cover for any leakiness in homes.

The fear is that insurers will cancel professional indemnity cover for other building professionals, such as architects and engineers.

* The Cabinet yesterday considered mediation procedures. An announcement is expected this week. The Government does not favour legislating for dispute settlement tribunals to help out-of-pocket homeowners - the solution the National Party proposes.

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

Further reading
Feature: Leaky buildings

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