Leaky developer 'vindicated'

Problem-plagued property developer Tim Manning feels vindicated after surviving another scrap with unhappy home owners.

In a landmark ruling last week, the weathertight homes resolution service awarded $700,000 to seven owners in the Ponsonby Gardens townhouse complex built in 1996 by an offshoot of Manning's Taradale Properties.

But it found Manning was not personally liable as a director for leaks which began to show within two years of construction. The townhouse owners had the townhouses stripped, reclad and extensively repaired at their own expense, each paying between $80,000 and $100,000 in repairs and fees.

In the first group hearing by the service, the owners filed claims totalling $1.36 million against Manning, site manager Steven Lay, project manager Bruce Christian, architect Peter Townsend, contractor Architectural Waterproofing Ltd and the Auckland City Council. All but Manning were found liable.

The company formed for the development, Taradale Ponsonby Gardens Ltd (renamed Sigatoka Investments No 5 Ltd), was not named in the claims as it had been placed in liquidation by Manning in September 2003.

But the owners claimed Manning, as the man at the top of the chain of command, should be held responsible and that his negligence allowed the leaks to occur. They also alleged he "hid behind companies" to avoid liability.

Adjudicator Tony Dean found that Manning had no personal liability as a director because he had not "worked at the coalface" on Ponsonby Gardens. He did not design the buildings or carry out the building work but delegated most tasks to others.

"He may have encouraged his people to cut costs, time and corners, but he never instructed his people to build in contravention of the building code."

But it was not quite that simple, said Mr Dean. "I probably would have found that [Taradale] was responsible for the building defects that I have found existed in these dwellings."

Instead, the site manager and project manager employed by Manning were found liable for more than half the award. Site manager Steve Lay was fined $243,000 and project manager Bruce Christian $138,000.

An owner who represented the seven claimants, John Gray, said the decision sent "a huge signal" to all connected with building projects to act honourably - and to distance themselves personally.

"It's a message to anybody working on a building site to be responsible and think of the consequences because as individuals given some authority they will end up having to pay, whereas the managing director may walk away scot-free."

Manning declined to speak to the Herald but a spokesman said the decision helped "to bring some proper perspective to the leaky building issue".

"There's growing media and public awareness that cases are many and widespread."

His lawyer, William McCartney, earlier said that it was common practice in the building industry for companies to be formed for single projects and then wound up - and banks often required it.

Last August, then Associate Commerce Minister John Tamihere signalled legislation to deal with "phoenix" construction companies set up for individual building projects and then deregistered. A draft Insolvency Law Reform Bill has been out for consultation and is expected to be introduced to Parliament this year.

Manning is listed as the director of 68 companies, nearly half of which have gone into liquidation. The keen distance runner and rugby fan rose to prominence on the back of Auckland's high density housing boom in the early-1990s before branching into "gated" developments and resorts in Queenstown and Rotorua.

His 153-unit Sacramento development in Botany Downs was hailed as an outstanding example of intensification; Manning was pictured in 2000 cutting the ribbon with Manukau Mayor Sir Barry Curtis.

But things turned sour when Sacramento and another flagship project, the Grange in Albany, became textbook leaky buildings.

At the height of the leaky homes scandal in 2002, Manning told the Herald he was totally gutted by the problems. He changed his construction methods and "turned my business upside down". But he now regrets "putting his hand up" and becoming the public face of the scandal. His spokesman said dozens of other builders whose housing projects leaked had kept quiet and escaped media scrutiny.

Ponsonby Gardens was a rare example of a case before the weathertight service being open to the media. Most claimants have chosen confidential mediation.

* Owners of Sacramento, where a third of the 153 units need to be demolished and rebuilt, have not named Manning in a $19 million lawsuit. But they have named four Manning companies: Taradale Property Developments Ltd, Sigatoka Investments No 12 Ltd, Sigatoka Investments No 16 Ltd, and Sigatoka Investments No 11 Ltd. All are in liquidation.