Weathertight e-news
Issue 1 - January 2009
Welcome to the first edition of the Department of Building and Housing's Weathertight e-news. This is a quarterly newsletter for those with an interest in the resolution service.
In this issue we cover:
Current figures - December 2008
As at 4 January 2009 the Department has received 5,646 claims lodged for 6,399 properties and completed assessments for 6,056 properties.
Under the WHRS Act 2006 we accept applications for multi-unit properties as single claims.
Total claims
 |
 1,068 resolved claims (19%)
 2,432 closed claims (43%) 1
 2,146 active claims (38%) |
Active claims
 |
185 claims in a process of assessing eligibility (9%)
 389 claims awaiting claimant decision (18%) 2
 1,572 claims pursuing resolution (73%) |
Claims pursuing resolution
 |
684 claims with claimant pursuing repairs (44%)
535 claims in alternative jurisdictions (34%)
 61 claims in the WHRS Act 2002 dispute resolution (4%)
292 claims in the WHRS Act 2006 dispute resolution (19%) |
1. Claims can be closed for a number of reasons including the following: claim discontinued by a claimant; claim being ineligible; property changed ownership; claim withdrawn under the WHRS 2006 Act so that the claimant may join a class action; claim not progressing; claim transferred to another jurisdiction by the Weathertight Homes Tribunal (WHT) or claim terminated by the WHT.
2. Claimants can decide between 'eligibility' or 'full' assessment of the property. After the claim is decided eligible, they can decide to repair first or to resolve the claim and then proceed with repairs.
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Making a claim: when was the work completed?
If you are making a weathertight claim arising from building or alteration work, that work must have been completed within 10 years prior to the date the claim is received by the Department.
The completion date is generally considered to be the date the house or building was habitable or the alterations were fit to be used. Alterations must have changed or modified the original house design or materials.
The date of a code compliance certificate (CCC) may not necessarily be accepted as the date of completion should there be significant delay in issue after completion of the building work. You may be required to provide evidence of when the house was habitable – for example, when the power was connected for domestic purposes.
For many properties, the 10-year time limit for making a WHRS claim is just around the corner. If you suspect or have discovered a leaky home problem, and the building or alteration is still within the 10-year period, you should take immediate action to make a claim.
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'Sunset Terraces' case and its implications for WHRS claims
This section sets out some of the developing principles of weathertight case law and the way judges have interpreted different factual circumstances.
Since the 'Hamlin' case in the early 1990s, a local council signing off building work on a residential property owes a duty of care to any purchaser for up to 10 years from the date of signing off. The High Court has more recently and consistently held that there is still community reliance on councils' building approval processes, irrespective of any changes in New Zealand social or economic conditions.
Recently, the High Court decided 'Body Corporate 188529 v North Shore City Council', commonly referred to as the ‘Sunset Terraces’ case. The court confirmed that a number of principles that apply to stand-alone dwellings also apply to apartments or residential units in a multi-unit complex, whether the dwelling was purchased for self-occupancy or as an investment. A local council signing off building work owes the same duty of care (that applies to stand-alone dwellings) to anyone who purchases an apartment or unit in a complex. Also, a purchaser of an apartment will not necessarily be held to be contributory negligent just for failing to make adequate enquiries and/or inspections themselves, or for failing to get a pre-purchase inspection by a qualified expert, or for relying on the advice of their solicitors or other parties when purchasing a property.
In 'Sunset Terraces', however, the court held that when a purchaser purchases with knowledge of weathertightness defects and does not rely on the council-issued code compliance certificate, then the council might not be held liable to that purchaser for losses arising from those defects. In such cases, the ‘chain of causation’ of the purchaser’s losses may be broken by the purchaser’s reliance on factors other than the CCC. This principle may also apply in purchases of stand-alone dwellings.
Many of the decisions in 'Sunset Terraces' have been appealed to the Court of Appeal by several of the parties for a hearing in 2009.
In cases referred to as 'Sienna Villas' and 'Byron Ave', the Court of Appeal and the High Court have reaffirmed the principle that where a claimant has contracted with a company to do building-related work, a director can be held personally liable if the director has assumed personal liability to the claimant to carry out the company's obligations. The Court of Appeal, however, has suggested that the courts might yet go further in lifting the ‘corporate veil’ in the case of limited liability companies, to hold directors liable in a greater range of circumstances than at present. It may be advisable to get legal advice if you are pursuing a claim where a director may be personally liable, particularly in cases where the company has gone into liquidation.
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Why WHRS claims are terminated when a property is sold or ownership has changed
Under section 55 of the WHRS Act 2006, ‘A change in the ownership of a dwellinghouse on or after the transition date [1 April 2007] terminates any claim made in respect of that dwellinghouse alone by its former owner.’
Section 55 excludes a change occurring by operation of law (eg, upon death or insolvency), changes in trustees only (if the registered proprietors hold the property subject to a trust) or a change in shareholders resulting in a change of control (if the property is owned by a company).
A change in ownership, however, is not limited to an agreement for sale and purchase. For example, title can be transferred to a family member or to a trust, or gifted.
A change in ownership will mean that the claim can no longer be pursued by the former owner in the WHRS jurisdiction and could prevent the new owner from making a WHRS claim (eg, if the 10-year limitation period for making a claim has passed at date of settlement). This means that both sellers and buyers of leaky dwellings, and claimants otherwise transferring ownership, need to make decisions that take into account any existing WHRS claim.
Claims are terminated under section 55 when a property is sold or ownership is changed because the WHRS Act 2006 focuses on physical damage to dwellings and assisting current owners to make repairs. The WHRS Act is not structured to deal with claims purely for economic loss suffered on sale of a dwelling. Former owners with claims for economic loss may seek other redress in the courts.
In addition, if a claim were attached to a property and not the current owner, there could be competing claims in the WHRS system. Also, limitation periods for bringing a claim under the WHRS Act 2006 and for commencing proceedings against those responsible (for example, the ‘longstop’ limitation period under the Building Act 2004 that limits proceedings to within the 10 years of building-related work) could be extended indefinitely and unfairly to new owners.
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Mitigating your loss by doing repair work
When you find out about damage to your dwelling, you have a duty at law to prevent that damage from getting worse. This is called ‘mitigating damage’.
Our advisors have seen cases where claimants have made a claim and done nothing to mitigate any of the problems identified in the assessor’s report. If you do not mitigate damage, the parties you are claiming against can argue that you are liable for some of the more recent damage. This is called ‘contributory negligence’. In some cases, adjudicators have reduced the amount they would have awarded to claimants because of their contributory negligence in failing to mitigate damage.
Tenanted properties
If your property is tenanted you need to be aware of your responsibilities to your tenants under the Residential Tenancies Act 1986 in relation to repairs. If you are aware of any maintenance or repairs required (which may include weathertightness repairs), you should take steps to get the work done. This is regardless of whether the tenant has mentioned it to you or not. Get more information on the Residential Tenancies Act.
Advantages of full repair work
There are advantages in fully repairing a leaky house or complex as soon as possible because early and full repair:
- prevents damage from getting worse
- mitigates loss
- gives you more evidence of the extent of the damage, to use in your claim
- gives you the amount the repairs actually cost, to use in your claim
- prevents possible bad effects on health.
All parties need to know about repairs
It is advisable to inform potential parties to the claim when planning repairs. This is to give them an opportunity to see the property prior to repairs and what extra evidence is uncovered during repairs, before that evidence is removed or can no longer be seen.
Organising property visits can reduce argument over the causes of damage, the extent of repairs, and liability, resulting in the speedier resolution of claims. Your claims advisor can help with how to go about this.
Building consent required for weathertight repairs
The Building Amendment Act 2008 came into force on 15 March 2008 and revised requirements for consent for weathertight repairs (Building Act 1991, Schedule 1(a)).
A building consent issued by your local council is now required for:
- the complete or substantial replacement of a specified system
- the complete or substantial replacement of any component or assembly contributing to the building's structural behaviour or fire-safety properties
- the repair or replacement (other than maintenance) of any component or assembly that has failed to satisfy the Building Code for durability (for example, through a failure to comply with external moisture requirements).
As a result, in all cases of weathertightness failure and repairs (eg, replacement of rotted cladding or framing with the same or similar materials – a former ‘like for like’ exemption), building consent is required and the Land Information Memorandum (LIM) will be noted by the council as an alert to the weathertightness history of the property.
Information on repairs
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Want more info on the Weathertight Homes Tribunal process?
The Weathertight Homes Tribunal runs public seminars for parties involved in leaky home claims. Regular sessions are held in Auckland and Wellington. Due to demand from other areas, seminars are now also held in Christchurch and Tauranga. These seminars cover not only Tribunal processes and causes of action and the nature of defences in leaky home claims, but also assist parties in preparing and presenting their claim or defence within the Tribunal.
To book a place please call 0800 777 757 or email whtenquiries@justice.govt.nz
More details and info on other seminars can be found on the Weathertight Homes Tribunal website
.