Duped first home buyers awarded $900,000 in damages over leaky South Auckland home

Ameet Bhargav and his wife Renu outside their leaky house in Goodwood Heights, Manukau shortly after buying the property in 2020. Photos / Supplied

Clarification: This story was originally published on August 20. None of the findings made by Justice Hinton applied to Mr Gurbir Singh Bal, who was the agent for the vendors. The purchaser's claim against Mr Bal, which Mr Bal is defending fully, has not yet been heard by the High Court. It is scheduled to be heard in February 2023. The Herald did not intend to suggest the judgment reported below concerned Mr Bal, and apologises for any confusion.

A young couple have been awarded $900,000 in damages after being duped into purchasing a rot-infested leaky house by a businessman in what a judge described as "quite literally a cover-up".

And a building inspection company has been found jointly liable for deceptive conduct after signing off the property as sound and weathertight, despite having prior knowledge that it leaked.

First home buyers Ameet Bhargav, 35, and his wife Renu, 34, say they have endured three years of mental anguish and stress in their fight for justice, racking up tens of thousands of dollars in legal costs while juggling the birth of their first child.

They say it was important to expose the men who misled them and hold them to account for their actions.

"Three years of our life got wasted on this case," Renu told the Weekend Herald.

"All those first happinesses of your life - first home, first child - everything was ruined."

The couple purchased the three-bedroom Goodwood Heights property in March 2020 for $665,000 from First Trust Limited (FTL), which is owned by respected Queen's Service Medal recipient Davinder Singh Rahal and his wife Jivan.

Former Governor General Sir Jerry Mataparae with Davinder Singh Rahal (right) as he receives the Queen's Service Medal for services to the Indian community in 2012. Photo / Supplied

The sale and purchase agreement was conditional on the young couple obtaining finance, a building inspection report and copy of the LIM.

The property was marketed by Century 21 Papakura agent Gurbir "Gary" Bal, who is the director Local Realty Limited.

A High Court decision handed down last month by Justice Anne Hinton says the couple were conscious of the financial risks associated with leaky homes and sought assurances the 1990s plaster-clad property was weathertight.

Bal allegedly told them, "If this house were a leaky home, he would not have sold it to them as they were his good friends".

It's also alleged he told them they should trust him and buy the property as it was a "good deal".

Bal denies making these representations and a claim against him is scheduled for trial early next year.

Hinton's decision says Bal suggested using the building inspection firm Metsons (NZ) Limited.

The company's director, Vinay Mehta, carried out a pre-purchase inspection on about March 16, 2020 and provided a written report to the couple saying the property was in "generally good condition" with "no moisture detected any place in the house".

He followed up with a text message to the couple saying: "No issues for weathertightness. Absolutely no worries."

The sale went unconditional later that day and settled on May 1, 2020.

A day later, the couple visited their new property during heavy rain and discovered water was entering the house.

Concerned the property was leaky, they commissioned a second building inspection report from another company. It confirmed significant weathertightness problems, with multiple water entry points.

Another expert found building work carried out by the previous owner, FTL, was non-compliant with the building code and unconsented.

The couple commissioned a valuation which found the property was worth about $750,000 if "unaffected by defects", but just $450,000 "as is".

The estimated cost of repairs was $750,000 or up to $1.05 million to demolish and rebuild.

Building inspector Vinay Mehta was found jointly liable to pay $900,000 in damages for deceptive conduct. Photo / Supplied

Distraught and juggling a newborn baby with the stresses of lockdown, the couple then turned amateur detectives to prove they had been duped.

They tracked down a relative whose family sold the house to Rahal's company in 2019, and found the real estate agent who had handled the earlier transaction, Vivek Punj.

Both men provided affidavits confirming the property had a history of weathertightness problems.

"Mr Punj's affidavit confirms that prior to FTL purchasing the house, it was
advertised with explicit disclosure of leaking, damp and mould issues," the decision says.

Punj's affidavit also stated that before settlement in 2019, Rahal's company had engaged Metsons to undertake a building inspection - the same firm that later assured the couple the house was dry and sound.

Barrister and specialist in property litigation Sarah Wroe filed successful proceedings against the defendants in the High Court. Photo / Sharlene Ferguson

Armed with this evidence, the couple hired property litigation barrister Sarah Wroe to take up their case.

Wroe filed civil proceedings in July last year against Rahal and FTL, Mehta and the building inspection firm, and against Bal and Local Realty Limited.

The couple claimed breach of contractual warranty against FTL for unconsented building work.

They also claimed misleading and deceptive conduct in breach of the Fair Trading Act against Rahal and Mehta, and sought damages, interest and costs.

Justice Hinton's reserved decision was scathing, ruling that the young couple had been deliberately deceived.

She found the house suffered from significant moisture ingress, "which has caused severe decay and rot to structural members and timber framing throughout the house".

The couple paid $665,000 for this Goodwood Heights, Manukau home in March 2020. It turned out to be infested with rot. Photo / Supplied

Bitumen tape had been used as an attempt to address water entry. And a new timber plate had been installed over a severely decayed bottom plate during the refurbishment.

The decision says Rahal's company presented the house as newly renovated "as opposed to a leaky home in need of extensive repair work", and covered up evidence of water damage by replacing ceiling gib boards and repainting the interior "to mitigate and conceal the effect of the external leaks".

"I agree that the conduct set out above was misleading or deceptive," Hinton wrote.

"It was deliberately undertaken to mask known defects with the property and mislead potential buyers such as the plaintiffs into thinking the property was of good quality and had no issues with leaking.

"It was quite literally a 'cover-up'."

She found the couple "reasonably concluded that the home was newly renovated and in good condition" based on the defendants' actions.

"If the defects had been obvious they would not have bought the house or at least would have interrogated the findings in the Metsons' pre-purchase report."

The couple were awarded damages of $861,113 plus costs and disbursements of $33,000.

Neither Rahal or Mehta engaged in the court process and Rahal is yet to respond to demands for payment.

The Weekend Herald visited the property this week during rain. Water was entering the house, dripping down internal walls and pooling on the floor.

Renu said she had a gut feeling something was wrong as soon as they moved in but it took months to prove the home was leaky after commissioning expert reports.

She said she and her husband were lucky they had good paying jobs and could afford the legal bills. Many other families would not be in the same financial position.

The stress had been all-consuming on their lives, she said.

"My house was leaking, it was raining, it was peak Covid and we did not know where our lives were going because we had bought a leaky house."

First home buyers Ameet Bhargav and his wife Renu have been awarded $900,000 after claiming breach of contract and deceptive conduct. Photo / Supplied

After learning the house leaked, the couple say they approached Rahal.

"He said, 'I sold this house in good condition. If it's leaking it's not my responsibility'," Renu said.

"I think they just thought we were like other immigrants who were not that well educated and were not aware of our legal rights and how the system works in New Zealand."

The couple now plan to demolish their home and rebuild on the site.

Rahal told the Weekend Herald he denied acting deceptively.

While he was aware the house had moisture issues at the time of purchase he said he did not know it leaked and claimed not to have seen the advertising disclosure.

"I was not aware of that. If I knew the property was leaking why should I buy?"

He said he had serious health problems, was receiving a sickness benefit and had no money to pay the damages order. He was happy to be bankrupted.

"They're going to get nothing, nothing, nothing. They think I'm a millionaire but I'm not."

Rahal said he was an honest man and his credibility was on the line.

"This is a stress and harassment for me. I'm [living] in New Zealand over 34 years. I never cheat a guy for a single cent so why should I do these guys? No way."

Mehta also denied acting deceptively. He planned to ask the court to set aside the judgment and defend the case.

He said Rahal did some "fixing" on the property after it was found to be leaking in 2019.

The March 2020 "non invasive" inspection occurred during dry weather, Mehta said.

"Because the previous owner Mr Rahal did the masking, new painting and other things, I could not detect any moisture at that time.

"I was given the impression Mr Rahal had done the fixing. When I checked the house it was all looking good."

Bal's lawyer said the court finding did not involve his client and Bal planned to challenge the claim against him.