KEY POINTS:
Pauline Hough is dreading this winter and the weeks of rain it could bring.
But most of all, she fears her body corporate's demands for $182,000 which will soon begin flooding in: $54,000 due in three instalments, for starters.
She says she cannot afford the $182,000 and has
been selling assets just to survive. "I'm going to lose my home."
Ms Hough owns a place in the development once known as Byron Terraces, a cluster of monolithic-clad properties at the end of Takapuna's Byron Ave overlooking the coastal marine area tucked in behind Barrys Point Rd.
Owners have voted to spend $2.3 million on private legal fees, repairs and other costs to make their units weathertight and claim money from various parties, including North Shore City Council.
As a group, they rejected using the Government's Weathertight Homes Resolution Services, although Ms Hough said some individual owners had lodged claims.
To use the WHRS, the majority of owners would have had to agree. Instead, they decided on private litigation.
"I have been dragged along kicking and screaming, crying and at times humiliating myself, by a majority of owners who are investors," Ms Hough said.
She cannot afford to pay high legal bills or the steep cost of repairs. Even selling her place is not an option because she fears getting so little money that she would be still left with a mortgage, and nowhere to live.
She already has a $210,000 mortgage, a flatmate to help meet repayments and a second job just to pay expenses.
At 55, she feels defeated. "I have no future. I am scared. I am tired beyond belief and I am at a loss to know where to turn."
Within three months of buying her house in 2002, she found a puddle on the carpet, then discovered the complex had major weathertightness issues.
The owners engaged leaky building lawyers Grimshaw & Co to represent them and Craig Leishman, formerly of Crockers Property Management and now of Boutique Body Corporates.
They have been told they have a good case and they are expecting a hearing in the High Court at Auckland next year.
John Gray, of the Leaky Homes Action Group, said Ms Hough's situation was typical of many other multi-unit actions where dissenting minority unit owners were outvoted.
But the situation was wrong, he said, and he vowed to help her.
"The owners have limited her access to government funding by not putting in a WHRS claim. They have compromised her incredibly."
Mr Gray is looking for a barrister to represent Ms Hough against other owners.
Some body corporates had spent close to $500,000 on legal and consultants' bills and had still not even begun repairing their places. He wants victims to fix first and claim later, a move backed by Phil O'Sullivan, of consultants Prendos. This course limits costs and defines the arguments: instead of fighting over how serious the leaks are and if reports are correct, owners instead have repair bills to present and can claim compensation more easily.
Ross Wilson, an owner and a member of the Byron Ave owners' committee, said he was comfortable with the majority decision to sue privately rather than use the state-funded WHRS.
"We're accepting the advice of our solicitors," he said.
Another owner, John McConville, said the situation was delicate. He opposed media coverage because it could hinder owners' success in the High Court next year.
Compo quagmire
* Owners of multi-unit apartments are battling for compensation.
* Weathertightness issues are forcing them to the state or the courts.
* Thousands are faced with this choice, creating a dilemma.
* Many cannot agree on the best route but the majority must decide.
* One Takapuna woman is complaining about the steep charges.
DEALING WITH THE PROBLEM ON A LARGER SCALE
Rules for apartment owners claiming for weathertightness issues are different from the law governing standalone houses.
This guideline answers some of the questions commonly asked by people dealing with the rotting homes problem on a larger scale.
What are the options for multi-unit homeowners when they seek compensation for the cost of repairs to fix their places?
Two choices: they can take their case either to the state-funded Weathertight Homes Resolution Service or privately via civil litigation to the courts.
If they go the state way, what is the path?
The owners must basically agree. This is the cheapest option. Only one claim, one assessment report and one resolution process are allowed to be lodged. Apartment owners can't go to the WHRS on an individual basis. All the weathertightness issues must be dealt with at the same time.
Who handles all this for the owners?
A leader needs to emerge from the unit owners, although often the body corporate secretary takes on that role.
What if all the people owning units in a block or joining each other can't agree?
If 80 per cent of the owners agree, they can bring a class action claim via the WHRS, unless otherwise stated by the body corporate rules. A WHRS tribunal adjudicator will decide on whether to involve the other 20 per cent of owners. Before invasive testing begins in an attempt to discover the cause of leaks and the extent of damage, 75 per cent of the owners must agree.
What if only one of all the units leaks?
Highly unusual but a single-unit WHRS claim can be brought only when no other unit has been damaged and when no common areas have been damaged.
If one owner denies any weathertightness problems, why should they be charged for repairs?
Common property could be affected such as the entire exterior cladding, so even if one unit doesn't leak, the owner of that unit will be liable to pay for repairs.
What is the worst that can happen to dissenting owners?
They could be levied for expensive repairs, sued for payment by their neighbours via the body corporate. They might have to sell their place, declare themselves bankrupt or be issued with summary court judgment after action by other owners demanding payment.
What sort of due diligence should the body corporate do before lodging a claim or starting repairs to a multi-unit block?
These complexes can cost $1 million to $10 million to fix. A special committee should be formed with good resources and experience to handle this complex procedure. If they lack the skills, they should seek external advice.
What should owners expect of their body corporate before embarking on fixing their units?
The body corporate should call for a range of proposals to be presented from experts. Terms and conditions of engagement should be made available saying what the experts will do for the owners and clearly defining their role, any warranties or guarantees. The successful contract should be presented to a lawyer before being signed, then put to all the owners before works starts. Some body corporate secretaries are calling on only one firm of experts for legal or building consultant advice, providing no choice to owners.
What role does a body corporate secretary play in fixing a rotting complex?
No role, says Leaky Building chief John Gray, unless they enter into a written service agreement with the owners. They administer a trust fund, call meetings and keep minutes, send out levies for payments and collect the money. Mr Gray said many body corporate secretaries were seriously over-stepping the limit of their duties and acting outside the true scope of their role.
