News & Resources
James Hardie cladding systems on trial
Since the early 2000s, some building experts have claimed that James Hardie cladding systems marketed and sold from the 1990s are defective. These experts say the systems allow water ingress and require installation methods that cannot practically be achieved in real world conditions.
James Hardie has always argued there is nothing inherently wrong with its cladding systems and that installation failures and poor workmanship are to blame for the weathertightness failures in houses clad with James Hardie products.
Wherever the truth lies, thousands of homeowners throughout New Zealand with homes clad in James Hardie products such as ‘Harditex’ fibre cement cladding sheets have discovered their homes are subject to weathertightness failures and decay damage. They are required to reclad their homes at significant cost, often several hundred thousands of dollars.
Many owners, whose homes were signed off by a council and were still within the 10 year limitation period, took Court action against the council and others involved in the construction to recover compensation. Other owners were left with the option of a claim against James Hardie as manufacturer of the cladding systems.
Two groups of claimants formed to bring claims against James Hardie, a group of 144 homeowners in Wellington and a larger group in Auckland comprising the owners of 1,236 residential homes, 5 commercial buildings and 5 retirement villages.
In August 2020 the stage 1 trial of the Wellington claim commenced in the High Court. The stage 1 trial will determine whether James Hardie owed a duty of care to the owners, if so whether that duty was breached and whether James Hardie made misleading statements in its technical literature.
Grimshaw & Co Partner Gareth Lewis advises: “In view of recent developments in tort law there are good arguments to say James Hardie owed a duty of care to the homeowners.” If James Hardie is found liable there will need to be a stage 2 trial in which the Court determines whether any shortcomings in the cladding systems contributed to the water ingress and damage on the facts of each case and, if so, to what extent. According to Mr Lewis “this second stage could be a drawn-out process as experts often find multiple causes of moisture entry and damage in leaky homes and these would need to be taken into account in determining whether James Hardie caused loss.”
The High Court decision on the Wellington claim is likely to be issued in early to mid-2021.
The larger Auckland based claim is brought against more companies in the James Hardie group and is due to proceed to a stage 1 trial in May 2021, on similar terms to the Wellington claim.
Grimshaw & Co are experts on building defect claims, construction disputes and Construction Contracts Act adjudications. Call us on 09 377 3300 for specialist assistance.
Calling all writers – applications are now open for the 2021 Grimshaw Sargeson Fellowship.
Media release: 14th September 2020
The Grimshaw Sargeson Fellowship is back looking for writers ready for their 2021 placements. The Fellowship, now in its 34th year, is a national literary award offering published New Zealand writers the chance to focus on their craft full-time, a historic environment to write in, along with financial support and networking opportunities. Applicants must be a New Zealand Citizen or have New Zealand permanent residency Frank Sargeson Trust Chair Elizabeth Aitken-Rose says now more than ever it is important to support New Zealand authors and creatives. “It’s great that we can provide these well deserving writers the opportunity to focus solely on their literary work for a few months. It gives them the opportunity to devote more time and explore ideas they might not otherwise be able to.”
“We want this Fellowship to enrich and nurture New Zealand’s literary landscape. It’s always exciting to see the work that our recipients create during their tenure, and we look forward to seeing what new concepts are put forward by this year’s talent.”
Writing about sex, human relationships and immigrant perspectives, poet Hera Lindsay Bird and fiction writer Michalia Arathimos were Grimshaw Sargeson’s 2020 fellows. Auckland-based Hera had to adapt, like most New Zealanders, and completed her fellowship at home due to COVID-19 lockdown. This didn’t dent her experience however, and she still continued to develop her project.
“It was such a pleasure to have a few uninterrupted months of time to focus on my work. Even though I didn't get the opportunity to use the building, it was still a great experience,” says Hera. “I really value the time and support this residency afforded, and don't think I would be where I am with my project without this concentrated period of time to think, reflect and work.
“Over the pandemic, most of the writers and artists I know have been reconsidering the function, intent and audience for their work, and while re-evaluating everything can be daunting, it can also be exciting and re-invigorating. I'm going to keep working on my book with renewed clarity and energy.”
Michalia is due to come up from Wellington at the end of the year to undertake her tenure at the Sargeson Centre in Auckland.
Aitken-Rose also says that it is wonderful to see a diverse range of authors apply for the Fellowship across all genres and encourages all established writers to consider applying, whether they are poets, biographers, playwrights or novelists.
“The contribution that they make to New Zealand’s culture is invaluable,” says Paul Grimshaw, Partner of Grimshaw & Co, “that’s why we continue to support New Zealand’s literary talent.”
Applications close on Friday 16 October 2020, with the tenure due to begin in April 2021.
Further information on the Fellowship is available here. Any queries can be directed to Elizabeth Bennie at elizabeth.bennie@grimshaw.co.nz or on +64 9 375 2393.
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About Grimshaw & Co
Grimshaw & Co are leaders in dispute resolution, with experience across all areas of civil and commercial litigation. Established in 2005, Grimshaw & Co are based in Auckland, representing clients across the country.
About the Frank Sargeson Trust
The Frank Sargeson Trust was formed in 1983 by Christine Cole Catley, Frank Sargeson’s heir and executor. The Trust aims to continue Sargeson’s lifelong generosity to writers through providing residential fellowships while preserving his house in Takapuna, Auckland, as New Zealand’s first literary museum. The first fellowship was awarded to Janet Frame in 1987. Learn more about Frank Sargeson and the Fellowship here.
For media enquiries contact:
Nick Davies
P: +64 4 494 6144
M: +64 27 5484442
E: ndavies@acumenrepublic.com
Hot tips for body corporate remediation projects
A major repair or renovation to an apartment building is a significant undertaking which requires careful planning, clear lines of communication and specialist expert advice.
There is a lot at stake for the owners. A well-managed remediation project will take less time, enhance the reputation of the building and add value to the apartments. A poorly managed project can lead to incomplete repairs and years of delay and frustration.
Here are 10 hot tips for bodies corporate undergoing remediation or renovation projects:
Take independent building advice. The body corporate should take advice on building defects and remediation options from independent building professionals. Avoid taking informal advice from others such as the developer or members of the body corporate.
Beware of targeted repairs. There can be a temptation to undertake ‘targeted’ or ‘patch’ repairs which are cheaper but essentially cover over problems and do not address the underlying issues. These repairs often fail and result in the need for further repairs in the future. Seek confirmation the proposed repairs will be durable in the long term.
Obtain advice on claim options. Consult legal advisors who specialise in building defect claims to identify whether you have a claim against those involved in the construction or certification of the complex for the cost of repair works. All claims are subject to strict limitation periods, so legal advice should be sought as soon as possible.
Get the owners on board. Any remediation project needs the support of the owners. This means satisfying the owners the work is necessary and there is a commercial benefit in undertaking the work. Provide a valuation report which sets out the potential capital gain and a business plan with details of the estimated cost and timing of the repair project.
Apply for a section 74 scheme. Engage lawyers to apply to the High Court for a repair scheme under section 74 of the Unit Titles Act. This will clarify the basis upon which owners are to be levied for the work and authorise the body corporate to undertake work to both unit and common property, amongst other things. The scheme provides an assurance the project will proceed in an organised and professional manner.
Engage a body corporate manager with experience in remediation projects. Body corporate managers who have managed other remedial projects are familiar with the issues that are likely to arise, know the best experts, will have systems that can be used to manage the project and can provide useful advice to owners throughout the project.
Put in place clear lines of responsibility. The contractual arrangements between the body corporate, the building professionals and the head contractor are important. Seek legal advice in relation to the contracts. Ensure there is a clear understanding as to the responsibilities of each building professional and who ultimately oversees the work.
Appoint an owners representative. An owners representative fulfils an important role in liaising between the building professionals and the owners. He or she provides important information to the owners, such as when they need to vacate their apartments, and can assist with other matters such as finance and alternative accommodation options.
Provide regular updates. The body corporate should provide regular updates to the owners so they have a clear understanding of how the project is progressing and have up to date estimates of the costs and timing of the work. Reports from the building experts should be provided to explain any significant changes in the scope of the work.
Resolve disputes quickly. If disputes between the body corporate, building professionals and/or the head contractor develop it can result in significant delays to the project or at the conclusion of the project the body corporate may have difficulties obtaining the producer statements it needs from contractors. Address any disputes which arise as soon as possible, and where necessary invoke the dispute resolution process in the contract.
Grimshaw & Co regularly acts for bodies corporate undergoing remedial work projects. We are experts in building defect claims, construction contract disputes, section 74 schemes and the Unit Titles Act 2010. Call us on 09 377 3300 for practical expert advice.
Covid-19 lockdown and lease disputes
On 25 March 2020 the Government declared a civil emergency and enforced a Level 4 lockdown. Aside from the unprecedented social impact, shockwaves reverberated throughout businesses operating in New Zealand.
If you owned/operated a business at a leased premise before the lockdown, then almost certainly you have acquired rights when it comes to the payment of rent during the lockdown period.
The standard form Auckland District Law Society lease document (6th edition, 2012) has special provisions relating to “No Access in Emergency”. These were incorporated as a response to the Christchurch Earthquakes and fall out from the Red Zones created following those catastrophes. Put simply, a qualifying lessee will be entitled to withhold a “fair proportion of the rent and outgoings”. Other standard form leases have similar provisions which may be engaged by the circumstances of the lockdown.
On the flipside, if you were the landlord of commercial premises during the lockdown then you will need to carefully consider your approach to the enforcement of rent payments.
Grimshaw & Co is able to provide tailored advice to your situation, after considering the applicable lease documents, and your particular lessor-lessee relationship. We are able to think outside the box to offer a strategy suited to your individual circumstances. This may simply involve an exchange of correspondence, or more formal measures such as mediation, expert determination or quick form arbitration.
Get in touch if you would like to speak to one of our experienced lawyers today.
Covid-19: Suspension of Construction Contracts
The Covid 19 lockdown resulted in many contractors and property owners examining the provisions of their construction contracts in order to check the circumstances in which the contract may be suspended and the implications of a suspension for both parties.
The most common form of contract used for large construction projects in New Zealand is NZS 3910:2013. Clause 6.7.1 of the General Conditions states:
“If the suspension of the whole or a part of the Contract Works becomes necessary, the Engineer shall instruct the Contractor in writing to suspend the progress of the whole or any part of the Contract Works for such time as the Engineer may think fit, and the Contractor shall comply with the instruction”.
When the Alert Level 4 took effect many contractors asked the Engineer to the contract to suspend the contract works under clause 6.7.1 on the basis laws passed by the Government prevented the contractor from continuing work. These laws included amendments to the Health Act to give the Government powers to stop the spread of infectious diseases, an Epidemic Notice under the Epidemic Preparedness Act 2006 and a Health Order issued under the Health Act. These measures required that all premises close (excluding houses and essential businesses amongst other things) and prevented people from congregating in outdoor places.
The list of “essential businesses” included “Tradespeople” but only in respect of “maintenance if it is to maintain the necessities of life or critical to safety. This includes electricians, plumbers and builders.” Most building projects contracts did not fall into that category and could not continue.
Clause 6.7.3 of NZS 3910:2013 states unless the suspension is due to default on the part of the Contractor, the suspension is to be treated as a Variation. Clause 5.11.10 also states that a Variation arises when the Government passes laws that increases the cost of performing the contract to the contractor. The Variation is to be valued in accordance with clause 9.3 and the Engineer is to grant an extension of time to the contractor for the net effect of the Variation under Clause 10.3.1.
Under clause 9.3 the contractor is to notify the Engineer of any Variation claim within 1 month of the Engineer issuing the suspension notice (9.3.2). A Variation claim arising from the lockdown would likely include time related costs including off-site and on-site overheads and profit for the period of the suspension. Where the contract includes a schedule of prices with applicable rates, including working day rates, these would apply. Otherwise, the formulas set out in clause 9.3 for determining time-related costs are used.
The assessment of the contractor’s time related costs during the Alert Level 4 period is likely to be an area of dispute between contractors and owners. The extent to which problems may arise will depend on whether the relevant rates are clearly stated in the Special Conditions of Contract and the ability of the parties to work together to resolve any differences. Covid 19 is an extraordinary event and it will require collaborative approach from contractors and owners in order to resolve the issues arising from the lockdown. If this is not possible, the adjudication process in the Construction Contracts Act is available for the parties to resolve their differences.
Grimshaw & Co regularly acts for contractors, property owners and bodies corporate in construction contract disputes and adjudication claims under the Construction Contracts Act. Call us on 09 377 3300 for practical expert advice on how to manage your dispute.
Warning signs emerge regarding viability of building guarantee schemes
MBIE’s Building System Legislative Reform Package includes a proposal to require compulsory guarantee and insurance products (GIPs) for residential new builds and significant alterations. In August 2019 MBIE published a summary of the public submissions on its Reform Package. 76% of submitters supported the proposal to require GIPs, although some submitters expressed doubts that the insurance market would be prepared to support the proposal and others suggested Government involvement by way of a backstop cover.
The reservations expressed by some of the submitters has been borne out in recent news reports in New Zealand and Australia which cast doubt as to whether building guarantee schemes of this type are financially viable.
The Sydney Morning Herald recently reported that the New South Wales Government paid out more than $200 million in one year to prop up a home warranty scheme with further increases expected. The scheme enables owners of homes and apartment buildings of 3 levels or less to make an insurance claim in respect of defects if the builder becomes insolvent, dies, disappears to has their license suspended. The premiums are paid by builders but over time these have been insufficient to meet claims. In 2010 the NSW stepped in to cover unfunded claims and it has since amassed more than $639 million liabilities. There is no warranty scheme for apartment buildings above 3 levels as both private insurers and the government pulled out due to the risk in 2003.
More recently the Stuff website reported two private guarantees offered by New Zealand building companies, the Stamford Insurance 10-year new build guarantee and the New Zealand Certified Builders’ Halo 10-year guarantee, have lost their underwriter and cover will end when the policies expire in December 2019 and January 2020. This has led to some calls for a mandatory nationwide warranty of the type being investigated by MBIE.
In view of New Zealand’s record of poor building work over the last 30 years the prospects of private insurers providing long term cover, whether for private guarantee schemes or industry wide compulsory guarantees, appears to be slim. That leaves the Government as the only funding option, but there is unlikely to be much appetite for taxpayers to foot the bill for the indeterminate liability it would face. If and when the reputation of the New Zealand’s building industry improves insurance cover may become available but that is unlikely to be for some time.
In the meantime, a more productive focus for regulatory reform is likely to be the strengthening of the processes within building consent authorities to ensure everything possible is being done to avoid defective building work in the first place.
Grimshaw & Co are experts in all aspects of building defect law. Email Gareth Lewis on gareth.lewis@grimshaw.co.nz for assistance.
Why your body corporate home is not necessarily your castle
For many New Zealanders who grew up in a home on a quarter acre section it takes time to adapt to the complex issues that can arise from owning and living in an apartment building. One of these issues is the extent to which owners have control over their own apartments and, in particular, who is responsible for repairs and maintenance to the apartments. In this article we discuss the way in which the law relating to work of this nature has developed from a position of some autonomy for unit owners to one of collective responsibility.
The Unit Titles Act 1972 introduced laws to govern bodies corporate. To a large extent the Act gave unit owners control over their own unit space. It allocated responsibility for the repair and maintenance of a unit to the owner and responsibility for common property to the body corporate. The Act granted the High Court the power to sanction schemes for the repair of buildings, including cost apportionment, but in the leading Court decision, Tisch, the Court of Appeal ruled scheme cost allocations should only depart from the Act where this was necessary to achieve fairness between the parties. As a result, most Court decisions on schemes under the 1972 Act allocated the cost of unit repairs to the owners of the unit and the cost of common property repairs to the body corporate.
In this way, although the owners collectively managed the common property, they exercised a degree of autonomy over their own apartments.
The Unit Titles Act 2010 was passed in response to the leaky building crisis and the difficulties that bodies corporate often faced in undertaking remedial work to the exterior of buildings, in particular to unit property. The 2010 Act gives bodies corporate the power and the obligation to repair and maintain all building elements which relate to or serve more than one unit, irrespective of whether these building elements are within unit or common property. The costs of these works are payable by all unit owners and may only be reapportioned to individual owners in certain circumstances. This change in the law has been reflected in a number of recent Court decisions:
In The Links the Court approved a body corporate scheme to apportion all weathertightness repair costs according to utility interest in circumstances where the balconies and at least part of the exterior were within unit property but the work benefitted the building as a whole.
In Sebel Suites the Court held that weathertightness repairs to a deck over a restaurant in Auckland’s Viaduct Harbour, which was within unit property, was payable by all owners in accordance with utility interest.
In Otway the Court of Appeal held that repairs to decks within unit property over shops in a Mt Maunganui tower block were payable by all owners in accordance with utility interest, as the repairs were important for the storm water system for the entire building and were of benefit to all owners.
In Pavilions the Court approved a body corporate scheme for repairs (including a reclad) to a 4 level tiered apartment building in Mt Maunganui in accordance with utility interest, on the basis the works addressed the weathertightness and compliance of the building as a whole.
This case law reflects the reality that building elements in an apartment building will often be interlinked and that significant remedial works will often benefit all of the owners. In these situations the interests of the owners are interdependent so that the maintenance of the building is necessarily a collective responsibility. In many ways, a body corporate of this type is more accurately described as a group ownership arrangement rather than a collection of individual properties. This may mean that your body corporate home is not necessarily your castle, in the sense that there is not the same level of control as a stand alone home. But that is not necessarily a bad thing. It is a different form of property ownership which needs to be managed in its own way.
Grimshaw & Co regularly acts for bodies corporate. We are experts on the Unit Titles Act and are well placed to advise your body corporate on the validity of body corporate rules, repair and maintenance obligations, section 74 schemes and provide other specialist advice. For assistance please contact Gareth Lewis on (09) 375 2376 or Gareth.Lewis@grimshaw.co.nz.
A Body Corporate Guide For First-Home Buyers
One of the by-products of high house prices in Auckland and our expanding population is that more and more first-home buyers are choosing apartment living as their primary step on the property ladder.
For Grimshaw & Co partner Gareth Lewis the trend comes with an added incentive for home-owners to be more aware of their responsibilities and rights when living in a shared structure.
“Compared to say 10 years ago, more and more people around town have either lived in apartments or have owned them and are a lot more people are aware of what’s involved in owning an apartment, how they’re levied and what their obligations are,” Gareth says.
“But its still quite common for first-home buyers to have their first home-buying experience in an apartment building.”
Gareth says the three main issues to consider when buying a unit in an apartment block are:
Body corporate levies: People are used to paying rates and then separate amounts for power, maintenance etc but in an apartment building all of that is administered by the body corporate which bills you a significant amount per annum. Gareth says that getting used to the levies and understanding how these are calculated needs to be considered right from the outset.
Building defects: Gareth warns against buying into an apartment building with weathertightness, fire rating or structural problems. “Unfortunately a lot of buildings in Auckland do have these issues and it can lead to very expensive repairs.” The best way to be pre-warned about any potential problems is to get body corporate minutes from meetings going back as far as possible. “It’s hard when buying into a unit title complex to identify all problems but you should look at the minutes. You have to accept the fact that you’re going to contribute to repairs in other parts of the building and for common property, but you tend to find that defects are common throughout a building and some issues will relate to more than one unit. So, yes, if someone on level five is having major deck problem or a ranch slider leaking, it could well be your apartment next.”
Understanding that the majority rules: Although there are a lot of benefits in body corporate living – someone else taking care of maintenance and living close to the middle of town and all those services – Gareth says it’s important to realise that you are “sacrificing control” over many aspects of your property. “Generally the courts have said that you have to go along with the wishes of the majority – whether that’s over repairs or even painting it a different colour.”
So if you are buying into a body corporate should you seek to be involved in the body corporate committee? Gareth says there are two key requirements:
You must have plenty of time as understanding the obligations of a body corporate committee and handling body corporate affairs can be a very time-consuming process.
You must be the sort of person who is willing to seek advice from qualified professionals and not try to run the show yourself. Gareth says problems arise usually when body corporate committees makes decisions or carry out actions when they don’t have the expertise or are not independent. “It’s when someone has a brother who’s a builder who can carry out any work, or who takes on the cleaning contract, or who has a small amount of accounting experience or who thinks they know the law, that it becomes a problem. You must be willing to take advice where appropriate.”
Gareth Lewis is a Partner at Grimshaw & Co with expertise in construction claims, body corporate disputes and employment law. He is a Fellow of the Arbitrators and Mediators Institute of New Zealand and uses various forms of dispute resolution, including mediations and arbitrations. He has appeared in the Employment Relations Authority, WHT, District Court, High Court, Court of Appeal and Supreme Court, including interlocutory applications, trials, appeals, interim injunction applications and insolvency matters.
You could potentially still have EQC cover on an “as is where is” house.
In Christchurch there are a number of people who have purchased an “as is where is” property, being an unrepaired earthquake damaged property. A lot of these properties cannot be insured for further earthquake damage, and are at risk should a further earthquake event occur in Canterbury.
However, it may be possible to insure these properties with the inclusion of an earthquake exclusion clause (this will obviously depend on the property and the level of damage and advice would be required from an insurance professional). If the property can be insured with an earthquake exclusion, it is likely that there will still be EQC cover for the dwelling up to the maximum of $115,000 (including GST) if there was another earthquake. This may seem strange, but it is because of the specific wording of the Earthquake Commission Act.
The Act that Governs EQC, the Earthquake Commission Act 1993, provides that a person has EQC cover for natural disaster damage for their residential building if they have a valid contract of fire insurance for the period of time that the fire insurance policy is in place (s18). A contract of fire insurance is defined as:
a contract whereby any property is insured against physical loss or damageby fire (other than natural disaster fire), whether the contract includes other risks or not; but does not include any contract of marine insurance or any contract of reinsurance. (s2)
Therefore, a fire insurance policy on an “as is where is” property with an earthquake exclusion, would still be sufficient to qualify the property for EQC cover up to the $115,000 cap. This may be beneficial if further Earthquakes strike the Canterbury region.
While there would be cover for the dwelling, Land damage may not be covered as the section covering land damage (s19) requires the dwelling to be insured for Natural disaster damage, and this may not be covered because of earthquake exclusion. However, we recommend anyone in this situation seek expert advice.
We record that the above information may depend on the contract wording, and recommend that you seek legal or the other necessary professional advice if you are in that situation or before you enter into any insurance policies/contracts.
Ridgecrest NZ Ltd v IAG - The Supreme Court considers how an insurance policy responds to multiple events during one policy period.
In Ridgecrest NZ Ltd v IAG the Supreme Court held that an insured party that has suffered losses over multiple events during one policy period, can recover up to the maximum insured limit for each event and is not limited to a single maximum amount. However, the insured party cannot claim for the same loss twice and is limited to the overall cost to replace the building. This means that in certain circumstances insured parties who have suffered from damage caused by more than one event, the sum of which is greater than their maximum policy entitlement, may be able to recover more than their maximum policy limit. If you have a claim that is the result of multiple events and exceeds your maximum policy entitlement we suggest you seek legal advice on how the Ridgecrest decision may have affected your claim.
Claim for a multi-unit complex
What is a multi-unit complex claim?
A multi-unit complex claim can be brought for:
a group of units and common areas
a group of units with no common areas
common areas only if no units are affected
a single unit only if no common areas or other units are affected.
If you claim for common areas only or for a single unit only and we become aware that other units or common areas are affected, your claim will be terminated as a claim for the whole complex would have to be brought.
There is a separate claim form that can be completed if you wish to bring a stand-alone complex claim. This type of claim is only for units or buildings in a multi-unit complex where no common areas are affected by leaking. It allows owners to group together by building rather than by complex. Each claim type has a separate statutory declaration that must be completed and attached to the claim form.
What constitutes a house or unit?
The application uses 'house' or 'unit' to mean 'dwellinghouse' as defined in the Weathertight Homes Resolution Services Act 2006 (the Act). Under the Act, a dwellinghouse:
(a) means a building, or an apartment, flat, or unit within a building, that is intended to have as its principal use occupation as a private residence; and
(b) in the case of a dwellinghouse that is a building, includes a gate, garage, shed, or other structure that is an integral part of the building; and
(c) in the case of a dwellinghouse that is an apartment, flat, or unit within a building,
includes a door, gate, garage, shed, or other structure that—
(i) is an integral part of the building; and
(ii) is intended for the exclusive use of the occupier of the dwellinghouse; but
(d) does not include a hospital, hostel, hotel, motel, rest home, or other institution.
What criteria must be met to bring a claim?
1. You must be appropriately authorised to bring the claim
For multi-unit complexes a representative must bring the claim on behalf of the owners. Authorisation of the representative is confirmed by a statutory declaration as required under the Act. A statutory declaration is a written statement signed in the presence of a lawyer, justice of the peace, notary public or other person authorised to take a statutory declaration.
2. The claim property must be used as private residences
A private residence includes a unit rented to another person as a private residence. A 'time-share' unit is not a private residence. A unit principally used for commercial purposes is not a private residence. A unit used for both residential and commercial purposes, but principally for residential purposes, will generally be considered a private residence. Common areas are considered residential if they are part of the building the residential units are in and are intended principally for the use of the owners or occupiers of the residential units.
3. The claim property must have been built or altered within the last 10 years
Building or alteration work giving rise to the claim must have been completed within the 10 years immediately preceding the date your application is received by the Department.
The date built or altered will generally be taken to mean the date the claim property was capable of meeting the consent requirements under the Building Code, or failing evidence of that, when the house was habitable or the alterations were fit to be used. The date a code compliance certificate was issued will not necessarily be accepted as the built date. You may be required to provide further proof of the date the property was habitable, for example, when the power was connected. Generally, alterations must have changed or modified the original design or construction of the building. Home maintenance and repairs are not necessarily considered as alterations.
4. The claim property must be or have been a leaky building
A leaky building in a multi-unit complex includes a unit and/or common areas into which water has penetrated as a result of any aspect of the:
design
construction
alteration
materials used
in its construction or alteration.
This may include property that was leaking but has now been repaired. The water must have come in from the outside, not from internal sources such as plumbing leaks.
5. The claim property must have been damaged by the leaking
Evidence of this damage includes peeling paint, wallpaper or lino, visible presence of water, high moisture readings, musty smells, rotting wood, or staining. Provide as much detail of the damage as possible on the claim form. If one or more individual units and common areas are affected, a claim must be brought for the whole complex with appropriate authorisations.
A claim can be made for an individual unit or common areas only when no other unit or common area is leaking or damaged.
Who can bring a claim for property in a multi-unit complex?
An authorised representative must bring the claim. For a claim that is for units and/or common areas:
if the property is a unit title complex, the body corporate must be the representative that brings the claim
if the property is a cross-lease complex, a nominated representative (eg, a lawyer, an owner, an expert) must bring the claim
if the property is a company-share complex, the company must be the representative that brings the claim.
For a claim for a single unit only, the owner may bring the claim.
See Resolving Weathertight Problems for more information.
Walled-in by a nightmare
"In a parklike setting in a quiet right-of-way and just metres to the Panmure Basin," said the Harcourt's brochure. "Built by quality tradesman (his home is next door) using the Cornerstone building system. The large dining area flows in two directions to the patio on the east side and garden area on the west, all completely private. Absolutely modern with a European flavour."
To all appearances, the Ireland Rd townhouse lived up to the hype. Ursela Beasley paid $466,000 off the plans and took possession in January 2004. But her dream home has become her Kafkaesque nightmare.
Two years of stonewalling and blind alleys have reduced the once upbeat business analyst to the point where she can no longer work.
Accustomed to solving problems for corporates, the obfuscation between builder, subcontractors, lawyers, consultant and officialdom has gradually overwhelmed her.
Beasley, 51, set her sights 10 years ago on a modern, low-maintenance home and worked hard towards her goal. With two adult children, she was looking forward to easing back.
Wary of leaky homes and untreated timber framing, she wanted a house with "no hassles" and was encouraged that developers Alan and Josette Prince, sub-licensees for the Cornerstone concrete and polystyrene structural system, were building one for themselves next door.
But the Auckland City Council has refused to issue a building code compliance certificate for either home and the Department of Building and Housing has backed its decision.
Beasley's situation is best explained in negatives. The council isn't satisfied she doesn't have a leaky home so it won't issue a code compliance certificate.
She has spent $20,000 in legal fees trying to get Prince Developments to fix the problem. But more than two years on, not a hammer has been lifted.
Beasley is not the sort to take a step back or the easy way out. She's unwilling to rent or sell the house until the issues are resolved. Anyway, without a compliance certificate she would struggle to get her money back.
As for the sales pitch of having the builders living next door, relations have descended to Neighbours From Hell status.
"This home has become my prison. I can't deal with two things at the same time any more. I'm just mentally and emotionally exhausted.
"I'm single, self-employed and dependent on my income. At the end of the day, if I can't make money I'll have to walk out and leave everything behind."
Beasley's story is a warning to other homebuyers that, four years on from the leaky homes crisis, the odds remain stacked against owners when it comes to resolving new home defects.
What is frightening is that hundreds of others are living similar nightmares.
Homes are still being bought without a code compliance certificate, even though this is noted on the LIM report.
The Department of Building and Housing acts as a quasi-appeal authority on compliance issues. Of 166 determinations by the department last year, 144 were for homes refused a certificate because of cladding/weathertightness matters.
Most applicants were home-owners - and cases sent for determinations represent only a few of many.
Beasley's problems began when she took possession of the nearly completed home before the builder had a compliance certificate.
She says her former lawyer went on holiday and failed to check whether the certificate had been gained.
She plans to sue the lawyer. He won't comment but has indicated he will defend the claim.
Why all the fuss about a piece of paper? Compliance certificates state that the house, properly maintained, will meet building code requirements for 50 years. Councils can become jointly liable for any defects which show up within 10 years of issue.
Without one, owners have little chance of selling for anywhere near market value.
Beasley's townhouse shows none of the trademark leaky home symptoms such as damp spots, mould or rot but has been branded a potentially leaky home.
The council and departmental concerns include: plaster cladding in contact with the ground; hints that the plaster was too thinly applied in places; two hairline cracks below one window; insufficient height difference between floor and patio paving; and water penetration around windows.
The bureaucratic caution is understandable following the leaky homes scandal, from the viewpoint of future homebuyers and of ratepayers paying millions of dollars for repairs to defective homes which council building inspectors have approved.
In Beasley's case, it might seem the neighbourly thing for the builder to nip over the fence and fix the faults. That this hasn't happened after two years is far from straightforward.
Alan Prince disputes that he is personally liable as builder for the defects in Beasley's home.
He says he "left the subcontractors to get on with it".
The firm responsible for the plastercladding, Ironcladd, went into liquidation in June 2004 and was wound up, although director Steven Ray Vestal now trades as Ironcladd Homes. Vestal could not be contacted.
Beasley still doesn't know what needs to be done to achieve compliance with the building code. Until the extent and cost of repairs is known, damages claims against Prince Developments and Alan Prince as builder must wait.
"I don't know whether it will cost $63,000 or $263,000," says Beasley.
But the efforts of lawyers and consultants to thrash out a solution which satisfies the council seem only to have protracted the dispute.
"It's like a roller-coaster ride. One minute you think you're nearly there and then you're not. As long as something is seen to be happening that's good enough."
Beasley suspects the process is being dragged out "in the hope that financially I won't be able to carry on. This will only get resolved as long as I can fund [the legal costs]".
She estimates that will take three years and another $100,000 in legal fees. "I'm totally emotionally and financially drained. No one cares."
One complication seems to be the Cornerstone design, an energy-efficient building concept invented by Christchurch architect Mary Ginn.
Walls are made of poured concrete posts and beams, separated by thick blocks of polystyrene. Very little wood is used.
Various cladding options are possible. At Ireland Rd plaster was applied directly, as happens with solid-wall (concrete block) construction.
Ginn has franchised the system and says several hundred Cornerstone homes have been built throughout the country without incident.
"The crazy part about it is the solid wall construction is a far better option [for avoiding rot] because it doesn't have wood."
But the unusual structure may have heightened bureaucratic caution. When the council refused to issue the compliance certificate, Prince sought a formal determination from the Department of Building and Housing.
But assessor Nick Dibley agreed with the council, itemising a number of faults, most of them easily fixed.
Weathertightness was the biggest concern. Moisture tests found levels in the wall structure between 21 and 22.9 per cent - levels above 18 per cent indicate moisture is getting in.
Dibley recommended the installation of a "cavity" layer between cladding and wall structure to provide ventilation and allow water to escape.
At the time of Dibley's assessment, the department was planning to amend the building code, making cavity systems mandatory to reduce the problem of rot in timber framing.
But retro-fitting them during leaky home repairs, as councils often require, can add tens of thousands to the cost.
Prince maintains that the concrete/polystyrene construction, which uses very little framing timber, makes the cavity system unnecessary and difficult to install.
In a written response to the damages claim lodged last August in the Manukau District Court, Prince disputed several of the defects identified by the council and the department's assessor.
As an experienced builder, he saw Cornerstone as an answer to the leaky home crisis.
He engaged architect Norman Williams to find an alternative solution. One year on, little progress has been made.
For its part, the council says Beasley needs an expert advising her. Beasley believes her builder should take responsibility.
"My view is if someone stuffed up, they should sort out the problem."
What irks Beasley is that her neighbours are getting on with their lives - expanding their business and taking holidays, while her spare money goes on legal costs.
"There's no timeframe for anything to happen."
The Princes' cellphone is diverted straight to voicemail and they failed to respond to Weekend Herald inquiries. They have been advised not to discuss the case because a claim is before the courts, says their lawyer, Paul Hunter.
They appear to have given up obtaining a code compliance certificate for their own home and resorted to a different structural system for a third, adjoining townhouse.
Norm Williams, the architect hired a year ago to sort out the compliance issues on Beasley's home, is exploring alternatives to removing the cladding and installing a ventilating cavity.
"I'm still awaiting a proposal from a cladding firm," he said. "I've been waiting for quite a while. Maybe they don't want to get involved in case things go wrong and they get hooked in."
Within days of the Weekend Herald's inquiry, staff from cladding firm Rockcote turned up to inspect the home.
Williams said he also wrote to Cornerstone's Mary Ginn but had yet to hear back.
Contacted by the Weekend Herald, Ginn recalled a letter from Williams in January which she had meant to reply to. She has since contacted Williams.
Ginn says Prince built the homes "according to where things were at that point in time [but] the rules changed in the meantime.
"The whole thing was about windows allowing water in. Now it's dispersion of water out of there."
She says there are cheaper ways to fix the faults than installing a cavity, such as drilling holes to allow water to escape. "They've wrongly labelled the system - the rest of the country is saying it's solid wall construction."
Beasley's decision to go public with her frustration may at last have sparked some activity but has hardly improved neighbourly relations.
Prince Developments' lawyer Paul Hunter, in an email to Beasley's lawyer Paul Cogswell, wrote: "My view is my clients are doing much more for your client than many developers would do by engaging Norm Williams to try to find a way to obtain a code compliance certificate for your client's property ...
"Please note that your client is seriously jeopardising my clients' ongoing co-operation by going to the media in relation to this matter."
A reply from Cogswell elicited a further email: "Our clients understand your client's growing sense of frustration ... [and] accept it is her right to contact the media if she wishes to ...
"However, we are concerned that media coverage may affect the approach the Auckland City Council takes to this matter to your client's detriment and it may also deter contractors from becoming involved with the required remedial work."
Beasley: "I just can't deal with it any more - it's like a nightmare that I'm living in. You've got more rights with a toaster."
When things go wrong
It's essential to obtain independent expert advice before buying a house or in any building dispute, says the Department of Building and Housing. A pre-purchase inspection may identify potential problems; a building code compliance certificate increases your options should defects show up later.
The department and the Consumers' Institute jointly run a comprehensive website (see link below) which includes steps to resolving problems with architects, builders and tradespeople. It has sections on buying a house and weathertightness.
If you think you have a leaky home, contact the Weathertight Homes Resolution Service and/or a lawyer specialising in leaky home disputes. The Leaky Homes Action Group provides, support, resources and information.
Action group chairman John Gray says a building consent must be obtained for any remedial work and a building surveyor should oversee the work.
Leaky condos still a disaster
B.C.'s leaky condo disaster is entering its third decade. The worst of it is behind us but it is far from over and we are not nearly finished paying for it, or arguing about who is to blame.
The human cost of the disaster is not measurable. Hundreds of thousands of British Columbians have been touched by it.
For some, it was no more than a financial inconvenience. Their homes leaked, and they paid to repair to them.
Others, especially in the 1990s, lost their homes, their savings and their health.
Tens of thousands of condo units built during the B.C. building boom of the mid-1980s to the late 1990s suffered water damage as wind-driven rain entered the walls of badly designed, badly built buildings.
The home building industry's warranty program collapsed under the weight of the claims, and many homeowners got little or nothing back. They included older couples who intended to spend their golden years in a low-maintenance condo and young families buying their first homes.
In the worst cases, the walls leaked so badly homes were all but flooded. Wet carpets sprouted mushrooms. Moulds, some of them toxic, stained the walls, making some people sick. And the walls rotted.
Some condo owners walked away from their mortgages and their homes. Some slipped into bankruptcy. Some developed respiratory and stress-related illnesses.
There was no government help until the end of the 1990s following two public inquiries, when the province set up its Homeowner Protection Office and offered condo owners interest-free repair loans.
The financial cost of leaky condos is measurable, but only parts of it are being measured.
We do know that the average cost of repairing water-damaged condos has nearly doubled since the Homeowner Protection Office was created. Some figures indicate it has more than tripled.
Government and industry sources agree the cost is going up because:
-More and more concrete highrise condo owners are discovering leaks, and they're more expensive to fix than low-rises;
-Low-rise buildings whose owners have put off repairs -- sometimes for years -- or tried to cover up the problem with cosmetic fixes are coming up for repairs with more advanced rot than buildings that were dealt with early;
-Construction costs are rising fast as B.C. rides another major building boom.
One indicator of per-unit repair costs is the interest-free repair loans provided by the HPO.
"The average value of the loans has been going up quite significantly," said HPO chief executive Ken Cameron, "so it's now in the $60,000-to-$75,000 per unit range, whereas it used to be in the $35,000-to-$40,000 range."
The number of low-rise buildings turning up with building envelope problems is past its peak, but a second wave of leaky condos -- concrete highrise buildings -- is well under way.
"It's not over," said Carmen Maretic, a real estate agent who has been advocating for leaky condo owners for years. "It's very much still a problem.
"People are still dealing with the whole process of evaluating their buildings and going through whether a majority of owners can agree to do repairs."
Maretic, who heads the CASH (Consumer Advocacy and Support for Homeowners) Society, said HPO statistics show that in the last eight months, the HPO approved nearly $139,000 per day in repair loans.
"As shocking as these costs are, this only represents a portion of the true repair costs as many homeowners do not qualify for HPO no-interest or deferred loans," Maretic said.
Her figures indicate the average loan has more than tripled, from $19,733 as of March 2000 to nearly $60,500 in the last eight months.
Maretic called on the provincial government to provide more help for leaky condo owners and press the federal government to kick in more money.
Ottawa kicked in about $28 million early on for the HPO interest-free loans fund, but serious negotiations for a larger federal contribution petered out years ago.
Green shrouds
One highrise after another, along the New Westminster waterfront, on the North Shore, in downtown Vancouver and elsewhere in Greater Vancouver, is getting its walls stripped down to concrete, scaffolding erected to roof level and green shrouds draped over the building to keep the rain out during repairs.
Advocates like Maretic and James Balderson of the Coalition of Leaky Condo Owners are keenly aware of them, engineers like Pierre Gallant of Morrison Hershfield who oversee the repairs say they're seeing more leaky highrises relative to low-rises, and the HPO's Cameron acknowledges there are proportionally more highrises joining the lists of leaky buildings.
On virtually all of them, the outer cladding -- usually "face seal" systems attached to the concrete walls with steel studs -- has failed to keep the rain out. The fix is to strip off the cladding and replace it with rain-screen wall systems that include a cavity between inner and outer wall components to let any water that gets in drain out again.
Leaky highrises were predicted in the late 1990s by Dave Ricketts of RDH Building Engineering, among others.
"It would be surprising if these buildings did not leak," Ricketts wrote in the engineering journal Innovation in 1999. "The key difference is the time it takes for the problems to manifest themselves and create a health and safety hazard."
Gallant agreed. It takes longer for highrises to show problems because, simply, "wood rots faster than steel rusts," he said.
A face-seal wall "relies on perfection" to keep the rain out, "and therefore fails."
Low-rises with face-seal walls often leaked in spots where doors, windows, balconies and other features are attached to the walls, and the joints are imperfectly sealed, especially on the upper floors, which are more exposed to rain and wind.
"The exposure on highrises is much higher because the wind exposure is far greater. But the materials are more robust and take longer to decay, typically," Gallant said.
A few highrises have failed catastrophically: Sections of cladding have let go and plunged to the ground. But most of them just show the same symptoms as leaky highrises -- water inside the windows, wet spots and mould on the walls.
Highrise or lowrise, the expert advice is that the longer you put off repairing a leaky building, the more expensive it will be.
Yet there are still dozens if not hundreds of low-rise wood-frame buildings where the owners haven't realized their walls are rotting, or are refusing to acknowledge the problem, or have tried cosmetic fixes when major repairs are needed, or are deadlocked with their neighbours over whether and how much to spend on repairs.
Many strata councils are pursuing slow-moving lawsuits, trying to recover at least some of their repair costs from developers, contractors, architects, engineers, window manufacturers, municipal governments -- anyone connected with their leaky buildings with deep enough pockets to sue.
Most of the suits are settled through mediation and with non-disclosure agreements attached, so there is no public record of the average settlement. But lawyers say strata councils typically get 40 to 60 cents back for every dollar they spend on repairs.
For those who can't reach a consensus, or can't muster the resources to get through the daunting process of hiring technical and legal expertise to assess the damage, finance the repairs and recover at least some of the cost, it's an unending nightmare.
"The longer you wait, the more the damage," said Gallant. "And the cost is going to be higher not only because there's more damage, but because construction costs are going up. So putting your head in the sand is not going to solve the problem."
"Many people are still suffering," Maretic added, "particularly those that went into bankruptcy and those that have health consequences."
No registry
After all these years, no one can yet say with any certainty just how big the problem is.
There are no solid statistics for the number of leaky condos or how much it is costing to fix them, although the HPO is sticking with a five-year-old estimate that about 65,000 condo and co-op units have suffered water damage and the total repair bill will be about $1.5 billion.
But there is no registry of leaky condos, no comprehensive list, no certainty about how many buildings have been touched by the rot.
"No one knows the extent of B.C.'s leaky condo crisis," said Louise Murray, who operates the bccondos.ca advocacy website, "because, unbelievably at this late stage in the game, no one is tracking it."
It is guesswork whether the HPO's loan statistics reflect actual repair costs.
Only those who can show they don't have the assets and income to shoulder the cost of repairs, and are prepared to follow the HPO's repair guidelines, are eligible for the loans. Those with more resources, whose homes may be more expensive and cost more to fix, are not eligible and not counted. Those who try to make do with patch-work repairs are not counted. Not surprisingly, many suspect the HPO's numbers are low.
"We've never trusted their estimation," said Balderson. "We continue to think they underestimate the magnitude of the problem and the total cost."
Balderson says only 20 per cent of condo owners qualify for HPO assistance -- leaky condo welfare, he scathingly calls it.
That means 80 per cent of the problem is not accounted for by HPO statistics, and Balderson notes the 80 per cent includes upscale buildings where no one qualifies for loans, and repairs run as high as $125,000 per unit or more.
"I think their number's low on total costs incurred," concurred John Singleton, a lawyer whose firm, Singleton Urquhart, has defended many building professionals in leaky condo suits. "My sense is it's over $2 billion."
That's for residential buildings. The HPO counts only leaky condos and co-ops. But they were not the only buildings affected by design and construction problems in the '80s and '90s.
"We have seen failures in all kinds of buildings," said Gallant, whose company is one of the region's leading engineering firms for building remediation work.
Rental housing, social housing, office buildings, schools, churches, even shopping malls are infested with the same problems as leaky condos. Water gets in the walls, it can't get out again, and the wall components slowly rot. We don't hear much about them because they don't have angry owners clamouring for media attention. Gallant says their owners file insurance claims, do the repairs and file lawsuits with no public fanfare.
So what's the grand total? Nobody knows.
Might it be higher than the official estimate?
"It might," Cameron conceded. "It's hard to say."
Gallant and others with an overview of the construction industry guess that residential housing probably accounts for the majority of the damage. So if the real cost of repairing leaky condos is more than $2 billion and repairs to all other types of buildings amount to only one-third of the total, the bills add up to at least $3 billion -- double the province's estimate.
Next: Want to buy a leaky condo?
-- bboei@png.canwest.com
LEAKY CONDO LOANS
More than 14,000 leaky condo owners in 45 municipalities have received interest-free loans from the provincial government's Homeowner Protection Office.
CITY Number
Abbotsford 720
Barkley Sound 1
Belcarra 1
Brentwood Bay 8
Burnaby 570
Campbell River 10
Chemainus 34
Chilliwack 133
Comox 59
Coquitlam 1,181
Courtenay 27
Delta 188
Duncan 2
Forest Grove 1
Harrison Hot Springs 13
Kamloops 9
Ladner 7
Ladysmith 29
Langley 528
Maple Ridge 213
Mission 65
Nanaimo 364
Nelson 29
New Westminster 726
North Vancouver 418
Pitt Meadows 185
Port Alberni 1
Port Coquitlam 685
Port Moody 124
Powell River 7
Qualicum Beach 28
Richmond 862
Saanichton 7
Salmo 1
Sechelt 17
Sidney 31
Squamish 2
Surrey 1,960
Tofino 20
Vancouver 3,099
Vernon 1
Victoria 1,708
West Vancouver 43
Whistler 1
White Rock 105
Total applications received: 14,223