Million dollar dream home misery

From dream home to nightmare: This Doves Bay Rd house, overlooking Kerikeri's Opito Bay marina, has been condemned and is slowly being engulfed by bush and weeds. Photo / Northern Advocate

Two Aucklanders are $1 million out of pocket after their dream holiday home in one of Northland's most exclusive streets was condemned and the people responsible declared bankrupt or liquidated.

Mike and Paula Scandle sought and were awarded damages through the courts but will not see a cent.

They paid $500,000 for the home in Doves Bay Rd near Kerikeri - which has some of the priciest real estate in the region - in 2004 from Corina and Michael Mullane.

Their dream quickly turned to disaster - serious defects in the house emerged, forcing the Scandles to move out. It turned out the house, which Mr Mullane had built, failed to meet the Building Code due, in part, to his failure to comply with the code, as well as defective supervision by private building certifier Nationwide.

Mr Scandle sued in the High Court and was awarded more than $450,000 in damages against Mr Mullane, as the builder, and the Mullanes' family trust, as the vendor.

The Mullanes could not pay. Mrs Mullane had gone bankrupt and proceedings to bankrupt Mr Mullane were in progress. There was no point suing Nationwide because it was already in liquidation.

Mr Scandle then sued the Far North District Council, claiming it had been negligent in its supervisory duties. Mr Scandle lost the case in the High Court and appealed to the Appeal Court, which dismissed the appeal.

"We wish to record that we feel very sorry for Mr Scandle and his family for the predicament which has befallen them," the Appeal Court judges said in their decision.

"The problem for them is that, in our view, the council is not the villain of the piece."

The home has been condemned, and as well as losing the $500,000 spent buying it, fighting for justice has cost the Scandles several hundred thousand dollars - and the total is rising. They are now liable to pay the FNDC's costs.

"The council was found to have done nothing wrong by law, but there's been no justice for us," Mr Scandle said.

"Under the old (Building) Act they did nothing wrong, but this wouldn't be allowed to happen under the new act, which places more responsibility on councils to ensure that when they have issued a (failure to comply) notice that the defects are rectified before they issue a code of compliance."

Mr Scandle said it could end up costing the family $1m and they still had no house.

"We haven't done anything wrong but we are going to be out of pocket big-time. That's the difference between the law and justice. While everything was done according to the law of the time, we've got no justice."

The Court of Appeal decided the council could not be held liable for failing to carry out certain supervisory duties, when the builder had engaged a private certifier to perform those duties.

The council gave Mr Mullane consent in 2000 to build the house.

A council inspection later found much wrong with the work, and it issued a notice requiring all work to stop until the defects were fixed up.

Mr Mullane got two engineering firms to report on the defects and to come up with a new design, and Nationwide to inspect and certify the rest of the work.

Once the council was notified that Nationwide had been engaged, that certifier took over the building inspection work from the council.

Mr Mullane resumed the work but didn't follow the approved amended design or the Building Code.

Nationwide still issued a code compliance certificate, not telling the council that his work was defective.

Northland/Auckland Master Builders' Association president Darrell Trigg said the case highlighted the need for people to get an independent warranty for building work. He said the Scandles were the victims of circumstances, but such heartache could be avoided if people got a 10-year warranty through a body like the MBA.

Mr Mullane could not be contacted for comment.