Leaky payout shows failings: expert

The Nautilus apartment building in Orewa suffered a range of issues. Picture / Dean Purcell

Record leaky homes judgment points to need for warranty system, says owners group.

New Zealand's biggest leaky building payout points to serious flaws in our system, according to an industry expert.

John Gray, the president of the Home Owners & Buyers Association, said the Nautilus apartment owners' $25.07 million win against Auckland Council and others showed that many aspects of our building sector suffered flaws.

"This is bad for the council but this is what you get when there is no insurance-backed warranty to cover companies that have gone bust," he said.

"We need a system like the Canadians introduced with 25-year insurance-backed warranties," he said.

The warranties would mean buyers would get backup for the construction methodology and if that failed, they would get a payout.

"We also need to see developers licensed and not being able to hide behind special vehicle limited liability companies that are liquidated at the end of the project," Gray said.

Greg O'Sullivan of building consultants Prendos backed warranties but not licensing developers which he said would be an "utter waste of time".

Justice Murray Gilbert's decision on the Nautilus case was interesting because it was so clearly written, he said.

"It defined not only council's role but also the role of the architect and the need for robust producer statements and in this case, it didn't happen," O'Sullivan said.

Prendos first became involved with Nautilus owners in 2008 when O'Sullivan examined a failed deck, then reviewed the whole building and found multiple issues.

He praised Rainey Law for doing a marvellous job and working so hard on the case.

Tim Rainey, one of the lawyers acting for Nautilus owners, noted that many of the defendants named in the case had gone into liquidation.

They were the builder Brookfield Multiplex Constructions (NZ), Walker Architects and Facade Technologies.

They cited a range of cases including:

• 14C Glenmore St, Wellington - Body Corp 90247 & Ors v Wellington City Council. High Court judgment by Ronald Young on February 27, 2014. Four leaky townhouses - judgment sum: $1,896,003 plus $25,000 general damages (plus legal and expert costs).

• Madison Apartments, 160 Symonds St, Auckland - Body Corp 321655 & Ors v Albert Park Holdings Ltd, High Court: $4,746,501 awarded for repairs, consequential costs and general damages, 71 units.

• Ellerslie Gardens, 1a Harrison Rd, Ellerslie - Body Corp 183523 & Ors v Tony Tay & Associates, High Court judgment March 30, 2009: $4,507,759 awarded total (excluding costs).

• Kilham Mews, 6 Exmouth Rd, Northcote - Body Corp 105950 v North Shore City Council, High Court judgment April 28, 2009: $1,655,355 awarded total (excluding costs), Council settled with the plaintiff owners for $900,000 and then went to trial to seek judgment and contribution from the developer/project manager.

• 45 Byron Ave, Takapuna, North Shore - Body Corp 189855 & Ors v North Shore City Council, July 25, 2008. High Court, Court of Appeal, Supreme Court, about $2 million.