Auckland's $300m leaky home bill

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Last updated 05:00 23/02/2014

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Auckland Council has estimated its total payouts on leaky buildings will be almost exactly $300 million, just a fraction of the estimates for the national cost of the crisis.

While no-one will ever know exactly the cost of fixing all leaky buildings, many of which have been left unrepaired by their owners, a 2008 PwC report to the Government remains the best estimate at just over $11 billion.

Most of the tens of thousands of leaky buildings, both low and high rise, are in the areas covered by the seven councils which merged to form the super city.

In response to an Official Information Act request, Auckland Council said it had paid out about $242m since 2001. The council's latest financial statements for the year ending June last year showed it had also provided for a further $59m for leaky building payouts.

It has paid an additional $3m to 144 homeowners who entered homeowner agreements with the Crown and the council through the Financial Assistance Package (FAP), and these homes are in various stages of repair.

Under the FAP homeowners pay 50 per cent of the repair cost, with the government and the council (providing it approved the original work) paying 25 per cent each. The homeowner gives up the right to sue either party.

The council said while it had not completed proper analysis as yet, it appeared repair costs through the FAP process were significantly less than those repaired after litigation, as homeowners who had to pay for half the costs had a direct financial interest in keeping costs as low as possible.

Under the OIA request the council said it currently faced 108 claims, including multi-unit complexes - 48 in the High Court, seven in the District Court and just 53 in the Weathertight Homes Tribunal, which is winding down.

Weathertight buildings expert Roger Levie from the Homeowners and Buyers Association said he would have expected the amount the Auckland Council had paid out so far to have been much higher. "But many of the claims have involved other parties as contributors on settlements, and in many cases the councils' contributions have been around the 20 per cent mark."

Fees paid to Heaney & Co (now Heaney & Partners), the law firm that specialised in defending all seven legacy councils and now Auckland Council in leaky building claims, amount to $31m since 2002.

Levie says that spend would also represent only a portion of the costs of fighting cases, as a lot of the legal spend had not been on lawyers, but on experts and building professionals.

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Auckland Council refused to release any documents relating to the 52 leaky building claims between 1990 and October 2002, despite settling 35 cases and having paid out in 20 of those.

Auckland litigation lawyer Adina Thorn has been attempting to get the council to release pre-2002 documents following a case she handled last year which resulted in a settlement. She was stunned when the council argued in front of the Weathertight Homes Tribunal last May that it would be too costly and onerous to find the pre-2002 documents Thorn believed must exist, and which she wanted to progress a client's case.

"They were not saying the documents don't exist. It was just too hard to meet their obligations [for legal discovery]," Thorn said.

But in response to the request for documents, the council told the Sunday Star-Times that all documents relating to those claims were legally privileged.

Thorn says it is "ridiculous" for the council to claim every document is covered by legal privilege, which has a quite specific legal definition.

"For example, the council will have copies of letters written to it by claimants or their lawyers, and copies of statements of claim, as well as responses and statements of defence."

Such documents do not, and cannot, fall within the definitions of privilege, Thorn said.

The Sunday Star-Times has asked the council to reconsider its refusal of the request and has asked the Ombudsman to investigate.

- Sunday Star Times

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