Government stonewalls over leaky homes

By Geoff Cumming

Thousands of homes are rotting while the Government ducks attempts to test its liability for the leaky homes fiasco, say frustrated owners and lawyers.

Efforts to take the Building Industry Authority, which presided over the scandal, to court or to the Weathertight Homes Resolution Service are running into a brick wall as the Crown seeks to strike out claims and appeals against any adverse decisions.

The Government spent $2.3 million last year and has earmarked $4.5 million this year to keep the BIA out of court and weathertight service mediation. Lawyers say the Government's approach is understandable - the BIA has only $10 million liability insurance and leaky homes repair cost estimates range from $1 billion to $5 billion.

Cabinet papers obtained under the Official Information Act reveal a deliberate strategy to have the BIA removed from leaky homes court cases and weathertight service claims. By February, the BIA had escaped mediation in 25 of 28 claims in which it was cited. In half, it simply refused to attend mediation. In eight, an adjudicator upheld its application for removal.

"We've been told that in all cases where the BIA is named it will not go to mediation," says Cairns Slane partner Paul Grimshaw.

"The Government on the one hand sets up the weathertight homes resolution service, and within that a mediation service, and on the other its building agency refuses to attend - it's sheer hypocrisy."

Grimshaw's colleague Tim Rainey: "The Crown Law Office have said they will not pay anything at mediation settlements. Even if ordered to come along they are refusing to contribute. They have said the only time they will pay is if they've lost in court and it has gone all the way through the New Zealand appeal system."

Claimants believe the Government is culpable for creating a "lighthanded" regulatory regime in the 1990s overseen by an underfunded BIA, whose responsibilities included the building code and a failed insurance scheme for private building certifiers. The BIA also approved the use of untreated timber in 1998.

But with the BIA keeping itself out of litigation, homeowners are settling for less than half the cost of repairs and in some cases are left with no one to sue. It is thought that many are onselling to unsuspecting buyers.

Incoming Building Issues Minister Chris Carter says the courts will ultimately decide the Government's liability and denies the Government is needlessly drawing out the process. "Our advice is that the Government will not be held to be liable," he says. "As minister, I have a responsibility to all taxpayers and it would be completely irresponsible to accept liability ahead of a court ruling."

National MP Nick Smith brands the Crown's approach "deep pocket litigation".

"They're saying, 'Regardless of whether we win or lose we'll go to the Supreme Court because you will run out of money before us'. The Crown is applying for strike-outs and then appealing if they fail, and it's not even on the substantive issue."

Homeowners say they are tired of the legal jousting and political pointscoring. They want a cross-party approach to provide the money needed to fix their homes.

LEAKY HOMES PROBLEM GETS WORSE

The leaky homes timebomb is still ticking away, rotting houses and ruining lives. Even if you do not own a leaky home, the issue affects you. How can you be sure the next house you buy does not have a problem? And how much of your taxes and rates are being soaked up by this scandal? The numbers are staggering.

$5b

Upper limits of estimated cost of repairing leaky homes.

40,000

Building surveyor Greg O'Sullivan's estimate of the number of homes affected.

100

Average number of new claims to the Weathertight Homes Resolution Service each month.

12

Average number of cases resolved by the service each month.

$4.5m

Amount budgeted by the Government to fight liability claims this year.

$53.3m

Administration budget for the service until 2009.

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