Landslide and legal loophole strand families

Leonie Brittain, husband Chris and son, Jackson, on the road above their land in Paihia the Earthquake Commission says they cannot build on. Photo / Dean Wright

The subdivision where the Brittain family were to build their dream home is sliding down the hill, and nobody will accept responsibility. Their battle with bureaucracy reveals thousands of families could be equally vulnerable when they try to fulfil the Kiwi dream: building homes for their families. Susan Edmunds reports.

Holes in the slumped road are patched with hot mix. Pavements buckle and sewage pipes burst. The Brittain family are renting a home while they work out what to do with the section on which they had hoped to build their dream home, a section that they have discovered is critically compromised by a 200,000-tonne slip that is threatening to crash through the property.

This isn't Redcliffs or Sumner in Christchurch, it's coastal Paihia in the Bay of Islands. And it highlights an insurance loophole that leaves anyone who owns an undeveloped section at risk, whether it's the intended site of a dream holiday home with million-dollar views or a demolished house in Christchurch.

With 20,000 empty residential sections on the market around New Zealand, and an estimated 12,000 homes to be demolished in Christchurch, many thousands of New Zealanders could be affected. No habitable home means no insurance cover. No insurance cover means no Earthquake Commission cover, not even for the value of the undeveloped block of land.

Quotable Value senior valuer Glenda Whitehead described a residential property in Rodney, Auckland, where the corner the owner had designated for the house fell away before building could start. There was no cover. Valuers recommended a geotechnical report to work out the full extent of the damage, which was believed to be weather-related.

A property valuer who did not want to be named was asked to revalue a piece of coastal land for a foreign investor who had planned to subdivide. But work done to the hillside was too invasive and it collapsed in a storm, leaving it too unstable to sustain any building.

"The section went from being worth quite a lot of money to being worth nothing. What is a section worth if you can't do anything with it?"

For Leonie Brittain, it's a nightmare that has been going on for eight years. While pregnant with her son Jackson, now 7, she and husband Chris decided to sell their property on Hihitahi Rise and buy a section down the road, to build a bigger house. "We did everything right. We got a Lim report and paid for a geotech report," she says. "That turned out to be not worth the paper it was written on."

Before building work could begin, the Brittains were contacted by an Earthquake Commission engineer, sent to examine Hihitahi Rise after a series of claims. Five claims were tabled in 2005, the time the Brittains wanted to start building, out of a subdivision of 25 properties.

"He found a 10,000cu m slip encompassing some of the road and many sections, including ours," Brittain says.

Eight sections are affected. One other is undeveloped, and is in a worse situation than the Brittains' because it was bought with a mortgage. The owner did not want to be identified out of fears of alerting the bank.

If it had happened just weeks later, Brittain could have filed a claim with the EQC that would have provided some compensation for the $55,000 they put into the $190,000 section. But because work had not started on her new home, she did not yet have any insurance. Insurance cannot be obtained on bare land and without it, there is no EQC cover.

So, for eight years, the family of three lived in a rented home down the road, passing their empty section every time they go to work or take Jackson to swimming lessons in nearby Waipapa.

Every time someone comes to patch a hole in the road or repair a pavement, Brittain asks how things are progressing. But, at present, the Far North District Council is making only cosmetic fixes. She describes the situation as a stalemate, "caught between the EQC which says we cannot build on the section and the council which says we can".

Brittain believes the council has liability because it signed off the subdivision and provided a Lim report that gave no indication of the problem. But she can't afford to fight the case in court. The section is valued at about $190,000, a lawyer estimates the case would cost about $100,000.

FAR NORTH Mayor Wayne Brown says a Lim is not a guarantee.

"I was an engineer for 30 years and part of my job was telling people that cliffs grow backwards," Brown says. "People think they'll discover the last bit of coastal land that no one else has noticed and there'll be no problems with it. But why do you think no one else has built on it?"

He does agree people should be able to trust an engineer's report, but says it is unfair to expect ratepayers to shoulder the cost of steep sections people buy seeking fabulous views. "People think ratepayers should cover every decision they make."

Brittain has formed a Hihitahi Rise Action Group. "The road could completely collapse and someone could be driving on it. If they fix the road, they'll have to fix it all and hopefully our section as well."

But the council says a long-term fix is not available. "Extensive in-ground retaining would be required to protect the road and services within it," a spokesman says. "The other option is to continue to patch the road if there is further movement. The first option could cost more than $500,000 and there would not be any guarantee that the retaining would protect the road totally from damage."

ANYONE WHO owns a section and has not built on it is exposed. Insurance Council chief executive Chris Ryan says it is a more widespread problem than most realise.

"You do not get the protection of the EQC unless there is a habitable dwelling on the property. If you just own a section, you can't get cover for it."

Kim Willems, president of the Christchurch Property Investors Association, says the problem will become much worse in earthquake-affected Christchurch, as properties continue to be demolished but building plans are put on hold because of a shortage of tradespeople.

"It's something lawyers have been letting people know to be careful about. When homes are demolished, it's often some months before building begins and if they sustain any more damage in that time that destroys the section, there's no cover for that."

Julie Williams knows this. She is living in her garage, waiting for her earthquake-destroyed home to be demolished. "I asked whether it could come down now but was told that the longer it stays up, the longer I have EQC cover."

She is worried about being exposed to risk when it is demolished and has been told efforts will be made to build as soon as possible after the existing house is taken down.

Further north, it's not earthquakes causing the problem but slips bringing down people's dream holiday homes.

The Far North District Council expects to see more problems like Brittain's as people move to the coast. Spokesman Richard Edmondson says: "In some coastal areas, the steeper land is all that is available now for development. There is obviously a higher level of risk of instability in these areas and therefore there may be an increase in these types of problem."

Brittain's lawyer, Thomas Biss, says some liability likely lies with the council and the company that prepared the Brittains' geotech report, neither of which identified the problem with the landslide. But fighting the case in court is prohibitively expensive.

Brittain sometimes wishes she had not been so quick to stop work when she was first told about the problem. "Had we gone ahead and done it, we would have had a home."

On the verge of tears, she recounts her battle . "We don't want to build a flash mansion. All we have ever wanted to do is have a modest family home. My son says, 'Why can't I have a dog?' ... we may never have a home. I have to be able to say to him that I've tried everything I can."