Owners launch $9 million leaky building lawsuit

A $9 million landmark leaky building case is about to go to court after the Government-appointed Building Industry Authority turned down all offers to settle to stave off drawn-out and costly litigation.

Owners of Auckland's 85-unit Greenwich Park in Grafton between Spaghetti Junction and Symonds St said yesterday that they had lodged a comprehensive claim against seven parties including the authority, the Building Research Association and manufacturer James Hardie.

The seven parties initially named in the suit have in turn named a further eight parties to the proceedings.

Greenwich Park owners' lawyer Paul Grimshaw, who represents a further 2000 Auckland leaky building victims, said he was frustrated that the authority refused to enter mediation when all other six parties had agreed.

But authority communications manager Laurie Edwards said the High Court was the only forum for the matter.

"We can't comment on the details ... but we believe that the issues were substantive enough that court was the appropriate venue or forum for this to be considered in."

After months of putting the case for mediation, Mr Grimshaw said he got word a few days ago that the authority would not enter any arbitration.

The Greenwich Park case is now set down for an eight-week hearing in the High Court at Auckland from July 19, but the amount involved has nearly doubled since litigation was flagged late in 2002.

Then, Mr Grimshaw estimated that the suit for the two-level townhouses on Burton St would be for $5 million but it has since grown to $9 million made up of:

* $5,397,750 sought for remedial work which would involve stripping exterior claddings from the units, replacing rotten timber and re-building the units.

* $2 million for stigma attached to the units, based on valuation advice.

* General damages of $1.7 million, or $20,000 a unit, to compensate for owners' stress and anxiety.

* Consequential costs, for which a price is yet to be determined, but it includes the cost of professional fees and other expenses such as owners' moving costs while repair works were completed and the price of storing their possessions.

Greenwich Park victims are suing Approval Building Certifiers, alleging it failed to ensure that the units' plans and specifications were drawn to a workmanlike standard and met the Building Code's requirements, as well as other issues.

Their action is also against Level 666, formerly known as Federal Construction, which was the main building contractor on the Greenwich Park job. The owners are claiming negligence and failing to exercise a duty of care to construct the units to a workmanlike standard.

James Hardie NZ, which supplied Harditex cladding for Greenwich Park - a product used on thousands of other houses - is named for failing to produce or manufacture a cladding system that was fit for its purpose. The claim said technical information on the cladding system was inadequate.

Castlerock Property Holdings and directors Rod and Greg Nielsen - who were Greenwich Park's developers - are also named and the claim is for negligence.

The case against the Building Industry Authority states that the organisation was told from 1998 onwards by building consultants Prendos that it was inappropriate to use untreated timber as framing.

The authority was informed of deficiencies in monolithic cladding systems such as those produced by James Hardie yet had breached its duties, the claim says.

The Building Research Association is named for approving the James Hardie cladding system which failed at Greenwich Park.

Other parties named in the action include architects Davis Design, architects Allen Design, engineers Kingston Partners, roofing manufacturers Metalcraft Industries and QBE Insurance.

Prendos chief Greg O'Sullivan said his firm had a backlog of clients waiting for inspections and that the average cost of repairs for a leaky building was $90,000. Fixing a leaking three-bedroom house of about 180sq m would cost $120,000 to $180,000.

What went wrong

Castlerock developed 85 units on a Burton St site near the Southern Motorway.

In about mid-2001, owners noticed defects in the outside claddings.

Water is penetrating the walls so legal proceedings are starting.

Owners say water gets through the cladding and into the walls.

Timber framing is rotten and decaying and needs to be replaced, they say.