Experts pick holes in leaky building deal

Specialists in leaky-building litigation have raised difficulties with the Government's $1 billion financial assistance package announced last week.

Paul Grimshaw, founding partner at Grimshaw & Co, is sceptical about whether victims will get much help from the 50:25:25 scheme where homeowners, the state and councils fund repairs.

"It remains to be seen as to how many owners will qualify for the package. Apartment owners are unlikely to because in most bodies corporate at least 75 per cent agreement is required and it will be difficult to get that kind of agreement to the Government package.

"It is also disappointing that those owners who are outside the 10-year period will not qualify for government assistance.

"I suspect most owners will continue through the courts to recover 100 per cent," Grimshaw said.

But Building and Construction Minister Maurice Williamson says now that all parties have agreed to the package, more leaky homes will be fixed instead of homeowners spending thousands in costly litigation.

"I am proud that this Government has been able to deliver owners of leaky homes a positive, alternative way of getting their home fixed so they can move on with their lives," he said last week.

Gareth Lewis, a partner at Grimshaw & Co, criticised the new scheme for being too complicated. "A significant amount of work is required to identify whether any particular homeowner is eligible. It requires that homeowners sign lengthy contracts with the Government in which they give up significant rights.

"We advise homeowners not to sign these agreements without taking legal advice. ... There are many fish hooks in the scheme for homeowners.

"The option of claiming through the courts is a lot simpler. It allows the homeowner to claim for the full cost of repairs together with consequential losses and general damages for distress. The option of claiming through court also provides more flexibility to the homeowner in that they have a choice as to what they do with the money recovered.

"Unfortunately, the new package is not available to homeowners who cannot obtain bank funding for their 50 per cent contribution," Lewis said.

Structural engineer John Scarry said: "The Government, and hence taxpayer, should be paying for the repairs, and then the Government should sue liable materials suppliers and others for billions.

"Much mention has been made of the $1 billion cost to the Government of this aid package, but there is no cost. Getting off with only 25 per cent of repair costs for just some of the affected houses, by the time GST at 15 per cent is considered, plus the PAYE tax on the workers, and supplier and contractor taxes on profits are paid, the Government will be showing a profit."