Homeowners warned of $20m bill for leaking village

By ANDREW LAXON and ANNE GIBSON

New Zealand's biggest leaky building disaster to date will cost $20 million to fix and some homes may have to be demolished, says a confidential report.

Owners of 153 units at the village-sized Sacramento development in Botany Downs have been warned to make emergency repairs to rotting stairs and balconies before the structures collapse and someone is killed or badly injured.

A report by building surveyors Alexander & Co has found rotting timber throughout the site and "a collective and systemic failure" by the development team to meet Building Code standards.

The residents have now filed a $20 million lawsuit against the developers, Taradale, and nine other defendants, including cladding manufacturers James Hardie, the Government-appointed Building Industry Authority and the industry-run Building Research Association (Branz).

Owners say they are fed up with a year's stalling by Taradale and other companies involved, and are deeply concerned about the growth of rot and toxic mould in their homes as winter approaches.

"I'm paranoid about it," says Megan McCormick, who lives with her husband, Mike, and two young boys in a three-bedroom unit, for which they paid $265,000 three years ago.

"Every time we have a really bad downpour, I go round knocking on the walls."

The lawsuit caps a disastrous year for Taradale, the country's biggest developer of condominium and terraced housing, and its founder Tim Manning.

One year after the Weekend Herald exposed the true scale of the leaky building crisis, the company has been swamped by a flood of legal and financial demands from leaky-home owners, short-changed investors and unpaid creditors.

Weekend Herald inquiries have established that Taradale also faces

* A $1 million lawsuit from 26 owners at the company's West End development in Grey Lynn.

* A winding-up action in the High Court by two creditors against Taradale Management.

* Threatened legal action from investors owed at least $2 million in unpaid rental guarantees.

* Creditors' claims of more than $300,000 over two abandoned projects in Hamilton.

The Sacramento report says there are failures at every level in the design, construction and inspection processes on the site. Advanced timber decay was found in all the deck beams inspected, raising serious concerns that they might collapse.

Other glaring faults included uncapped rooftop parapets which allowed rainwater to pour straight in, decks not correctly attached to supporting pillars and poles planted straight into the ground without concrete.

The report notes that private building certifiers last inspected and formally approved two stages of the development in April 2000 - six months before construction finished in October.

It warns owners that they must immediately pay for $160,000 of repairs to rotting stairs and balconies themselves or face the legal consequences if someone is hurt in a collapse.

Shocked residents - who have already spent about $60,000 on legal and building surveyors' fees - last month agreed to pay a $2800 levy for the emergency repair work, plus further repairs and legal bills estimated at $430,000. The owners plan to repair up to six units themselves to get a more accurate estimate of repair costs for their legal challenge.

Taradale founder Tim Manning said he had been advised not to comment directly on the lawsuit.

"However, I can say our role as a developer is a facilitator of a number of trades and consultants ... Sacramento at all appropriate stages had full inspections, building consents, a resource consent and full code of compliance certificate at the conclusion.

"We firmly believed we were building a quality development."

Mr Manning blamed the Government for not coming up with a solution and noted that the authority and Branz had been accused of failing to ensure that building practices and materials were of a proper standard.

He said Taradale ranked last on the list of 10 defendants, which indicated its relative responsibility in the opinion of the owners' lawyer, Paul Grimshaw.

But Mr Grimshaw said the real problem was that the units were sold through two one-off companies, which Mr Manning could legally shut down at any time, leaving the owners with no one to sue.

Mr Grimshaw said he would still sue Taradale as the developer responsible for Sacramento, at the firm request of the owners.

Asked if the $20 million repair estimate was just a tactical move designed to force a settlement, he said it was based on expert advice and included the likely demolition of some units.

"It's shockingly high, I realise, but that's likely to be the cost. My experience shows that, if anything, these cost estimates are underestimated because when you actually start tearing off the cladding, the extent of the damage ... is more than you originally thought."

Owners committee chairman Chris Kittow, who has a three-bedroom unit, said residents were disappointed by the response from all the defendants.

"They know there's a problem. They've admitted there's a problem. We've had personal letters saying, 'We're going to sort it out' and nothing's been done."

Mr McCormick believes the Government, which set the rules for the building industry in the 1990s, must also take its share of the blame,

"If we were state house tenants, we would have this fixed already. I want to invite Helen Clark and Michael Cullen and an MP from every party and say - you look at this, you see what you're responsible for."