Leaky building judgement

From City Scene, published on 1 February, 2009.

Auckland City Council has successfully sued the developer of a Newmarket townhouse complex which suffered leaky building problems after he attempted to deny responsibility for the issue.

Defective building work resulted in severe water leakage and rotting of the timber frames at a number of townhouses at 3 Laxon Terrace, Newmarket.

After settling claims made by the complex's body corporate, the council - on behalf of the body corporate and the individual plaintiffs - sued Greg Nielsen, a director of the companies involved in the development and construction of the units. This was to recover the amount paid on the settlement and the balance of the plaintiffs' losses on the basis that he, personally, assumed duties owed by developers to property owners.

In the High Court Mr Neilsen was found to have personally owed a duty of care to the owners of the town houses. The court entered judgement for the sum Auckland City Council had already paid to the owners plus $174,389.82 for the balance of the costs of the remediation, as well as interest and costs.

Hon. John Banks, Mayor of Auckland city says, "This is a step forward for local authorities and for other parties involved in weathertightness claims. The courts have delivered a decision that will assist us in pursuing developers who try to hide behind sham company and trust arrangements.

"This decision will also help those living in leaky buildings by forcing ruthless developers, who have traditionally tried to hide behind liquidated companies, to participate in finding a solution. Developers are generally those who have profited the most from a development and therefore should be contributing to its repair when it fails.

"We accept that the council has an element of liability in the leaky building issue, but our goal is to ensure participation by all responsible parties and fair division of liability payments."