Ratepayers face $1.4m bill as leak claims rise

By BERNARD ORSMAN and REBECCA WALSH

Rising claims for leaking and rotting new homes are forecast to cost Auckland City ratepayers $1.4 million this year.

Hundreds of home owners are suing or planning to sue Auckland City and other councils for allegedly failing to oversee the building consent process, in the knowledge that councils have the financial resources to pay up.

Local authorities hope an independent report on leaky homes will provide clear guidelines on their role in the building process and the growing risk of exposure.

It is in Auckland that the combined effects of wet weather and poorly designed and built terraced housing and apartment developments are causing the greatest alarm.

Hamilton City Council chief executive Tony Marryatt yesterday said his council had accepted partial liability for just one leaky building and had one more claim before it.

Tauranga District's acting environmental services manager, Terry Wynyard, said his council was monitoring the crisis closely because of a housing boom running at between 1200 and 1400 building permits a year, many for apartment and terraced houses.

Mr Wynyard said the drier climate was one reason there had been no claims so far. "It is a relief."

At Auckland City, the council has made more than 13 confidential settlements since 1995 and has more than 15 claims before it, including one from owners at the 5-year-old Quest apartment building in Queen St, which the Herald revealed was being stripped floor by floor in an $800,000 repair job.

The cost of negligence claims, most involving building and planning, has rocketed from $459,000 four years ago to $1.2 million in the last financial year.

Claims are budgeted to rise to $1.4 million this year.

Auckland City's finance director, David Rankin, said yesterday that the jump in professional negligence claims was clearly a concern.

North Shore Mayor George Wood said his council had about seven cases of leaking buildings on its files. Another five cases had been settled out of court.

"Obviously considerable litigation could stem from this," Mr Wood said.

Brian Gunson, North Shore City's compliance and monitoring team leader, said several new cases, including the leaking and rotting 105-unit Grange development in Albany, would "come to the council's attention".

Manukau Mayor Sir Barry Curtis said he was not aware of any problem buildings that had been signed off by council inspectors.

Council officers told the Herald in April that the council faced 15 cases, including 12 relating to a particular type of cladding.

More than 150 owners at the $30 million Sacramento development at Botany Downs in Manukau City are preparing to sue the developer, Taradale Developments, for faults that include mushroom-sprouting mould.

Waitakere Mayor Bob Harvey said he was unaware of any claims before his council.

He was "bloody pleased" that the council's building inspectors, perhaps thought of as over-zealous, had been strict in applying the building code.

Wellington Mayor Kerry Prendergast said several cases of leaky buildings, including apartments and stand-alone houses, had been reported to her council.

She said the council had not identified what its level of responsibility was.

It was waiting for tomorrow's report commissioned by the Building Industry Authority for guidance.

"We do not expect anything of the problem Auckland has got in terms of size and number of issues."

* If you have information about leaking buildings,
email the Herald or fax (09) 373-6421.

Further reading
Feature: Leaky buildings

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