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Builders who put up leaky homes could be made to pay after a powerful insurer yesterday abandoned its appeal against a court ruling in favour of a house owner - and resolved to recover its costs from the builder.
Robert McDonald, who built the Hobsonville house at the
centre of the test case, will be chased for most of the $250,900 awarded to Colleen Dicks.
The insurer, RiskPool, which covers the Waitakere City Council, yesterday withdrew its Court of Appeal action against Mrs Dicks, a 69-year-old widow, on advice from Rob Fisher, QC.
Riskpool now vows to track down Mr McDonald for his share of the costs and reassures ratepayers they will not be left to foot the entire bill for the non-watertight home.
Michael Ross, RiskPool's chairman, said it would be unfair if ratepayers were left to cover the full costs. The court only found the council liable for 20 per cent and said the builder should pay 80 per cent.
It also found Mr McDonald personally liable for most of the settlement, even though his company, Hobson Swan, has folded.
In his judgment, Justice David Baragwanath said the builder could be held personally liable because "Mr McDonald did not merely direct but actually performed the construction of the house and was personally responsible for the omission of the seals. His carelessness is ... a breach of a duty of care owed by him to Mrs Dicks."
The decision is expected to lead to similar legal action against builders in the same circumstances.
Mrs Dicks welcomed RiskPool's decision. "I'm absolutely over the moon, it could not be better for me," she said. She has yet to decide whether to demolish and rebuild or sell the rotten house and use her payout to help buy another place.
Mr McDonald said he was not personally bankrupt "at the moment" but could be if the council came after him.
"I'm not a builder hanging out in Surfers Paradise," he said yesterday. He denied he had assets other than a car worth about $500. "I have nothing. What part of that don't you understand? You can't get blood out of a stone. I built that house 12 years ago and it's done and dusted."
He said he owned no property and was staying with friends but refused to say where he lived or declare his current occupation. "It's none of your business."
Pieter Burghout, chief executive of the Registered Master Builders Federation, said RiskPool's move sent a clear message to builders to fix leaky homes fast.
"Potentially, builders will have to pay more after this decision which is a timely reminder for builders to go back to the table and sort out claims," he said.
Mr Ross vowed to pursue Mr McDonald.
"RiskPool fully intends to take whatever steps are reasonable to pursue the builder in the near future because ratepayers should not be subsidising deficient building practices and materials," he said.
Vanessa Neeson, a Waitakere city councillor, welcomed RiskPool's move, adding: "We as a council have felt a huge amount of sympathy for Mrs Dicks so we are very pleased the matter has been resolved. Now Mrs Dicks can put this behind her and get on with her life."
The council would now put the heat on the Government to take responsibility for leaky building issues, she said.
Building Issues Minister Clayton Cosgrove had been invited to the next mayoral forum on March 9, she said.
John Gray, head of the Leaky Homes Action Group, said an appeal for Mrs Dicks had raised thousands of dollars. Herald readers were asked to contribute and he said money flooded in from people and organisations.
He will now ask donors if they want their money back but hopes to keep the money and establish a charitable trust to help other homeowners.
He welcomed RiskPool's move, saying builders should be held fully accountable for their role in the rotting homes scandal.
Andrew McKenzie, Auckland City's finance chief, also welcomed RiskPool's move, saying builders should carry more blame for leaky buildings.
