Cabinet seeks solution to leak disputes

By BERNARD ORSMAN and JOHN ARMSTRONG

The Cabinet will today consider ways of settling disputes over the liability for leaky homes as building certifiers warn of a collapsing house market if they cannot get insurance.

Prime Minister Helen Clark remained adamant last night that the Crown bore no liability for the crisis, but she said the Cabinet would consider ways of facilitating the settlement of homeowners' disputes.

She said the Government was unlikely to go as far as legislating for dispute settlement tribunals - the solution the National Party proposes.

"There may be other ways of facilitating movement," she said yesterday. "There is a range of interests. There is local government, insurance, master builders and the customers. The question is, how are people best brought together."

Building certifiers yesterday held an emergency meeting in Drury where they revealed that inspection work had stopped on thousands of jobs because of insurance risks.

The Government has now been directly affected by leaky building syndrome, after one inspection company, A1 Certifiers, had to stop work at a 29-unit Housing NZ development.

Hundreds of homeowners face mounting repair bills for leaking homes, some with rotting floors, walls and balconies, but so far no one is admitting responsibility.

A report commissioned by the Building Industry Authority estimates that nationally repairs could cost $240 million.

It criticised many sectors of the industry, including architects, developers and poorly skilled builders, and also questioned building inspection procedures.

Helen Clark said yesterday that legal advice to the Government was clear that there was no Crown liability for the problems.

She had read the officials' advice accompanying a Crown Law Office opinion and it was "very clear" there was no Crown liability, even taking into account Crown agencies such as the Building Industry Authority.

At yesterday's Drury meeting at the offices of A1 Certifiers, which was forced to close last week because it was unable to get professional indemnity cover for watertightness of buildings, inspectors warned of a catastrophe in the industry.

The company has stopped work on 5500 properties, including a $1.2 million Papakura home, which could leave a builder $250,000 out of pocket.

Graham Coe, the immediate past president of the New Zealand Master Builders Federation, who chaired the meeting, said the industry could grind to a halt unless urgent steps were taken to help building certifiers to obtain insurance.

Building certifiers are private inspectors who are responsible for ensuring that houses comply with the Building Code. They sign off houses before they can be sold by issuing a code of compliance. They undertake about half of the 40,000 building projects each year in the Auckland area, with council inspectors doing the rest.

"What we are going to see is unfinished houses, builders unable to get progress payments, bankruptcies and ultimately people unable to get their homes," Mr Coe said.

Bevan Smith, of Professional Building Certifiers in East Tamaki, said he feared he would not be able to get professional indemnity insurance when his certification renewal came up before the end of the year.

His staff of eight has 1000 projects on its books.

The building certifiers have formed a fighting group and are requesting an urgent meeting with Internal Affairs Minister George Hawkins.

* If you have information about leaking buildings,
email the Herald or fax (09) 373-6421.

Further reading
Feature: Leaky buildings

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