KEY POINTS:
News that courts are increasingly targeting developers in leaky-homes cases has been welcomed by owners' representatives.
But they warn it will not be easy to make them share the blame and force them to pay up.
Bob Tuxford, owners' committee chairman at Auckland housing complex Sienna Terraces, said
he was deeply sceptical about the eventual outcome of two landmark court rulings which found developers liable.
He was commenting on two separate and unrelated rulings from the High Court at Auckland which found against developers Greg Nielsen and Brian Gailer, who might be forced to pay about $2.5 million for leaky building disasters.
Mr Nielsen must pay $1,199,389 for creating poorly built leaky townhouses at 3 Laxon Tce, Newmarket, while Mr Gailer is expected to pay $1.4 million for his role in the leaky 10-unit complex Kilham Mews near the Northcote shopping centre.
Mr Tuxford said most developers had been let off the hook, even when judges had ruled they had to pay.
He lives at Sienna Terraces, a 60-unit housing complex in Gibraltar Cres, Parnell, where most units have been fixed after owners paid about $70,000 each.
They have hired lawyers Grimshaw & Co to take their case to the High Court and expect the case to start in September.
But Mr Tuxford said councils would remain the main target for leaky-home victims because most developers would be able to escape.
He cited the case of Takapuna's 10-unit Byron Ave case, saying that even though developer Stephen Smythe was found partly responsible, the North Shore Council was being asked to pay.
"It is one thing to be found liable but quite another to get the money out of them. You report some of these people as saying they have no money. The local authority will most likely be paying the whole lot.
"What developers, architects and builders are doing is perfectly legitimate. Most everyone has schemes in place to avoid legal liability. Where it all comes unstuck is that territorial authorities do not have that option and are being caught as last man standing all the time," Mr Tuxford said.
The leaky-homes disaster is estimated to cost owners $500 million to $5 billion in repair bills, affecting about 80,000 houses and causing misery for thousands of victims often forced to fix the problem before they know if they will get any compensation.
John Gray, president of the Homeowners' and Buyers' Association, said he was pleased judges had found against the developers who built the 21-unit estate at 3 Laxon Tce and the 10-unit Kilham Mews.
But the cases were somewhat unusual in the leaky-housing disaster, he said.
"The directors have been found personally liable as a result of being closely associated to the construction project and have been found to have 'proximity and control' over the works.
"It is likely that smaller developers will always fall into this category where one or more of the directors are at the coalface." Developers of larger leaky-building estates had better resources and infrastructure around their projects, he said.
"Those directors will not normally have a direct input into the project and are therefore far more removed and the proximity test fails and yet they can tacitly control the quality or otherwise of the building works as they control the purse strings and set the culture of the company with regard to its commitment to quality and compliance. The directors of such larger companies can, in my opinion, be equally as culpable as the directors of the smaller companies, but they can evade liability.
"It is even more galling to see that servants or agents of such larger companies, such as project managers or site foremen, have been the fall-guys and they have in some cases copped personal liability," Mr Gray said.
Many developers deserved to be made liable for their failure to focus on the quality and compliance of the buildings they commissioned, he said.
But others who had tried to complete good projects were now under the blowtorch, either via the courts or the Weathertight Homes Tribunal, he said.
"I have some sympathy for them because they are almost as much of a victim of the councils' permissiveness when they have failed to properly discharge their duties and obligations under the Building Act."
THE ROT SETS IN
* An estimated 80,000 houses affected.
* Cost could be $500 million to $5 billion.
* Councils footing most of those bills.
* Now developers are in the gun.
