$5m leaky building suit pushes floodgates

The Government-appointed Building Industry Authority is being sued for more than $5 million for failing to stop the leaky building crisis.

The test case, if successful, has the potential to expose the authority - already under heavy political pressure over its role in the crisis - to hundreds of millions of dollars in further lawsuits.

The Government may also be added to the lawsuit if any firm evidence emerges that shows it knew of the problem and failed to act.

Lawyer Paul Grimshaw, who represents about 600 leaking home owners, told the Weekend Herald yesterday that he was suing the authority for its failure to stop leaks at an 85-unit site in Grafton.

Mr Grimshaw is also suing the industry-run Building Research Association for approving the James Hardie cladding system, Harditex, which was used on the Greenwich Park site.

He says Harditex, which has been used on thousands of New Zealand homes in the past decade, is fundamentally flawed because it lets water in but does not allow it to drain away.

Mr Grimshaw, a partner in Auckland law firm Cairns Slane, is already suing James Hardie, along with builders Federal Construction; inspectors, Approved Building Certifiers; the developers, Castlerock Property Holdings; and that company's individual directors.

Yesterday he said the Building Industry Authority had a duty to administer and review the building code and to tell the building industry how to construct buildings that complied with that code.

As the Herald revealed last month, the authority had been warned since 1998 that the combination of monolithic claddings (seamless plaster-style finishes) and untreated timber was producing houses that rotted and leaked.

Yet it did not act quickly to review the code and to stop leak-prone houses from being built. Greenwich Park was not built until late 2000.

"They had two years to get their act together and pass new standards," said Mr Grimshaw.

The Greenwich Park claim is made up of an estimated $3.5 million repair bill, general damages of $1.2 million for distress and anxiety and unspecified damages for loss of property value, which could top $2 million.

Last month Mr Grimshaw announced that he was setting up a freephone number (0800-002-525) for leaky home owners seeking advice.

Mr Grimshaw said both the BIA and Branz were likely be sued in other leaky building cases he was working on.

He planned to include the Government as a defendant if any evidence emerged that ministers knew of the problems but failed to act.

BIA chairman Barry Brown could not be contacted for comment yesterday.

Branz science and engineering services general manager Wayne Sharman would not comment until he had seen the legal papers.

National leader Bill English has called on Internal Affairs Minister George Hawkins to resign because he either knew about the crisis or failed to find out when he should have done so.

Mr English yesterday released a file of 150 Herald stories on leaky buildings, which he said made it impossible to believe that Mr Hawkins - an Auckland-based MP - did not know what was going on.

Mr Hawkins indicated again on National Radio that top staff at the authority were likely to lose their jobs.

However he refused to stop and answer questions on the subject after hosting a press conference on Auckland's police shortage in the town hall and ducked into a waiting ministerial car.

Meanwhile minutes from a telephone conference call between BIA chairman Barry Brown and Mr Hawkins on October 22 show the authority is planning to make heavily chemically treated H3 timber compulsory for outside walls in houses with monolithic cladding. Builders have previously estimated this could add between $1000 and $4000 to the cost of a house.

The minutes, obtained by the Weekend Herald under the Official Information Act, show the BIA approved the changes last month and is planning to introduce them from next week.