An Experts Guide to Leaky Building Claims and Other New Zealand Construction Issues

New Zealand’s building boom over the past two and a half decades has spawned a number of issues around how those new buildings have been constructed – and a host of claims and cases over poor workmanship.

With many of those claims and cases still in the headlines, we spoke to Grimshaw & Co Senior Associates Rebecca Harvey and Charles Lane about the key issues that home and building owners should watch for to see whether they have an issue, and how best to get it resolved.

Leaky buildings have been an issue for such a long time now that you are receiving cases from issues surrounding remedial work undertaken to fix the original problem. What’s the first step a building owner should take if they feel there are construction issues in any repairs they’ve had carried out?

Charles: Anyone involved in any kind of construction dispute needs to be aware that there is a 10-year limitation defense so a building owner only has 10 years to bring a claim from the date of the building work – miss it by one day then bad luck. That’s the most important advice we’d like to pass on to any building owner. Some people come to us and say I think I’ve got an issue – now we’re not building experts so we’d ask what kind of issue they have. Do you have leaks? Well, we’ll go and get a building surveyor. Is your roof making a racket and it feels like it’s going to blow off then let’s get someone to look at it. All of our claims are expert driven and we rely heavily on their advice and without that advice we simply couldn’t make a claim.

Rebecca: We’ve got a lot of contacts so we can send them off to the right person. A lot of the time we might also tell them to lodge with the Weathertight Claims Resolution Service to stop the clock in relation to weathertightness defects. If it’s a small issue then we will know the right people to put it right simply and quickly, but it’s from that first meeting you can gauge the size of the claim.

Charles: Like any industry, we like to work with the best experts who we know are going to do a good job and who provide affordable rates. If you are concerned you have an issue don’t just put it on back burner. Phone us, let us know your concern because the sooner we know about it, the better.

Rebecca: If the building issues result from previous remedial work that was the subject of a previous claim and settlement then we would need to review the settlement agreement to make sure there are no restrictions on any further claims.

And why would someone with an issue be best served by coming to a company like Grimshaw & Co?

Charles: We’ve been doing this since these claims existed. We have more experience than any other firm in the country and the recent law created within the construction law industry, right up to Supreme Court, was created by cases that were run by Grimshaw & Co.

Rebecca: Every lawyer in the firm does this work so we have systematic ways of running files which means we can do it more efficiently and more economically because we do it all the time as opposed to people who only do these cases occasionally and have to implement those processes.

So what type of clients are you seeing coming in now?

Rebecca: Failed remedial work has certainly increased but we’re also still getting instructions from building owners that have structural, fire, acoustic and ventilation defects – slightly different to leaky houses. A lot of these new instructions are in relation to high rise buildings that have massive structural issues, that aren’t earthquake compliant, aren’t fire complaint and the repairs on those types are buildings are huge.

Charles: And we are still getting new instructions from people with typical leaky building problems.

Rebecca: We have received instructions from building owners that had code compliance certificates issued as late as 2011 – so those homes owners have until 2021 to bring a claim. Again we stress, if you think you have a building issue, come and see us because you only have 10 years to bring a claim to hold the negligent parties (Council, builders, architects, engineers) responsible.

With so many cases arising, how can building owners check that their building is compliant?

Charles: The buildings that have fire or structural issues are tending to be high rise apartments or high rise commercial buildings and we’d want to encourage owners of those properties to have annual reviews of those types of issues.

Rebecca: I think most people (although not all) in a standalone house would have some obvious indicator that something isn’t quite right – either cracking in your ceiling or ponding on your balcony and in that case they get a tradesman in to get the particular issue fixed and that might alert them to a problem. Other things to look for might include:

  • Cracking anywhere in ceilings or walls;

  • Water coming in joinery;

  • Ponding – water sitting on decks, balconies or flat roofs;

  • Any form of internal leak leading to a damp carpet or Gib board;

  • Although it takes a specialist to diagnose acoustic problems, watch when you do any DIY if you pull tiles off a wall and see it’s straight onto bare concrete.

What sort of timeframe can people expect if they have to deal with a construction dispute?

Rebecca: It depends on the case but if you have just a few leaks and it’s low cost and you go through the weathertight homes tribunal, it can be resolved in a year to 18 months – but if you’re one apartment owner in a building of 400 then your journey is going to be longer. But, in saying that, don’t put your head in the sand because it’s not going to go away and construction costs keep going up every few months. So yes you embark on a long journey and it feels stressful but it’s better than paying your share of millions of dollars for repairs.

Charles: But that’s not to say you can’t reach a resolution very quickly – even on large claims. In some cases, where the responsible parties have had a pragmatic attitude towards the claim, the claim has been resolved within six months with a settlement that included full repair of the building. And there have been various single dwellings – mum-and-dad type houses – where we’ve written to the council or the developer and said ‘these are the issues – listen we can embark on this 18 month journey or just cut through that and have a meeting next week and see whether we can resolve it’. Sometimes it works but ultimately it’s driven by the defendants. Of all the building defect claims that are filed in the Court/Tribunal, in our experience less than 5% of those claims would end up at a trial. Generally claims are resolved by way of private mediation or through some other form of negotiated outcome.

Is there a growing construction issue with commercial buildings too?

Charles: Yes, it’s something that I’m not sure commercial building owners are that attuned to. Residential bodies corporate seem to be in tune to the fact that there are all these other defects and are generally very prompt at engaging experts and coming to Grimshaw & Co for legal advice. Logic tells you that if these defects exist in residential buildings then they’re likely to also exist in commercial buildings as well.

Rebecca: And we have had individual units within commercial units such as retail properties but I’d say there would be a lot of private daycares and private rest homes for example that potentially have quite a lot of issues but are yet to identify the defects. Claims based on commercial buildings have the potential to be very significant when you calculate in a claim for both the repairs and business interruption claims.

Charles: And there’s no reason why commercial owners shouldn’t pursue a claim – the Supreme Court ruled in the case of Spencer on Byron (argued by Grimshaw & Co) that the council owes a duty of care to a commercial building owners so most of these commercial building owners should be able to sue the council for their losses – but again we can’t do anything about it unless we a) they know about it, b) they come and see us and c) we have the experts engaged.

And how can commercial building owners take steps to ensure their building is safe and secure?

Charles: If I owned a commercial property it would be worthwhile spending money on someone to review the health of the building for weathertightness, structural, fire, acoustics, ventilation and other defects. And in grand scheme of things, the cost to have this type of review undertaken is a drop in the bucket compared to the amount of money they’d have to outlay to repair all the defects out of their own pocket – anyone who knows what they’re doing, will see the issues are obvious after a couple of days on site.

For more information or advice about construction issues, contact us on (09) 377 3300 or email us via the website.