Cheap fixes devaluing thousands of homes

MESSY REPAIRS: Bevan Craig of Underfoot Services points out the kind of botched repairs he is finding in earthquake-damaged foundations.
Stacy Squires / Fairfax NZ
MESSY REPAIRS: Bevan Craig of Underfoot Services points out the kind of botched repairs he is finding in earthquake-damaged foundations.

Is the consent process for the fixing of homes following the Canterbury earthquakes all back to front? Or no, is that in fact how in New Zealand things are meant to work?

It is simply our long-accepted and light-handed "performance-based" approach to regulation in action. And please do not mention its past failures like stockmarkets, leaky homes or Pike River. Our authorities know what they are doing by now.

Bevan Craig of Underfoot Services, a foundation specialist, is poking around the outside wall of another Earthquake Commission (EQC) patched up house. With disgust he prises out the filler concealing cracks that go right through the ring of concrete supporting the home.

He digs down in the dirt to demonstrate that this "repair" does not even extend below the soil line. He pulls back shrubs to show where other foundation cracks have not even been squirted with cheap mastic.

"It's not a structural repair. All they're doing is covering it over, painting it up as quick as possible, so they can move on," he growls.

Craig has joined the many independent experts protesting about the loose approach to fixing homes. It is what the authorities are letting the EQC and the other insurers get away with.

Craig says the Ministry of Business, Innovation and Employment (MBIE) has brought out slack earthquake repair guidelines - an industry-favouring interpretation of the building code.

At the same time, Christchurch City Council (CCC) is letting Fletcher EQR and the other project management organisations (PMOs) do too much of the work via consent exemptions and the promise of self- certification.

Craig says what is happening is that a builder with a clipboard and ruler - no engineering qualifications needed - can check foundation cracks in either a ring or slab foundation, and if the house looks reasonably level, the cracks no larger than the 5mm tip of a pencil, sign it off for cosmetic repairs.

"It's back to front," Craig protests. Especially in TC2 and TC3 suburbs where every house has been shifted and the foundations were never strong.

Craig says most of the homes have full insurance cover - the promise any damage would be repaired to "as new" - and the first eyes to check them should be a professional with geotechnical and structural engineering training. Someone who is a member of a disciplinary body and with the indemnity insurance if a wrong decision gets made.

But MBIE is endorsing a system where damage is presumed not to be serious according to guidelines written hastily after the quakes, and then through its system of exemptions, CCC is washing its hands of liability for the quality of work that comes after.

Craig says there is a whole arsenal of cheap fixes the Building Act interpretations allow - epoxy filler, under-floor expanding foam, jacking and packing, notching the bearers. None of them "as new", but worse is that no expert actually has to assess the buried damage.

He predicts it will be known as Canterbury's creaky home crisis - tens of thousands of houses devalued by bodged repairs. "They're trying to glue Christchurch back together like Humpty Dumpty."

And collusion might not be too strong a word for it, Craig says. MBIE documents show how cosy the relationships have been behind the scenes. "The EQC and insurance industry were well represented in the actual drawing up and input into those guidelines."

Others are equally blunt about the failure of the authorities to step in and regulate.

Lisa Ferguson, business development manager for Concrete Connect, a specialist in fixing commercial tilt-slab buildings, says Canterbury is the centre of the world when it comes to the number of crack repairs that are taking place, yet it has the flimsiest of official repair standards.

Ferguson says as it stands, being so uncontrolled, anyone can go down to the local DIY centre, load up a trolley with tubes of epoxy and injection gear, and set themselves up in business.

"There's no requirements for training or accreditation. The general public aren't aware of that. So they're hiring companies trusting that they know what they're doing."

Ferguson says New Zealand needs a small book on the proper methods like they have in Europe. It should be mandated that core samples are drilled to check a crack has been filled right through.

You have to have this kind of step- by-step detail so if the work fails, an owner has clear grounds for saying the work was not correctly done, she says. And right from the start, Concrete Connect has been pressing MBIE to produce such a code of practice.

"But they said it wasn't their responsibility, it was the building owner's. It became incredibly frustrating."

The result is again going to be many Christchurch buildings left with bodged repairs, says Ferguson. Once a crack in a tilt-slab has been filled, the walls covered up, how are owners going to be any the wiser if it was a cowboy job?

Back to front? Peter Sparrow, CCC's director of building control, recruited as a former ministry high-flyer to sort out a council department which had been stripped of its consent accreditation and is still struggling to get back on track, ponders for a moment.

Yes, he can see why the public might think that, he concedes affably. They believe it ought to be the job of the authorities to set rules and enforce them. Insurance repairs need to be policed in a heavy-handed fashion.

But in fact, ever since the late 1980s, ever since the reforms of Rogernomics, New Zealand has adopted a performance-based approach to building regulations. The Building Code sets minimum standards to achieve, however as far as possible leaves it up to industry as to how it achieves them.

It is the smart and efficient way to do things, says Sparrow. And compared to some other countries like the US or UK, New Zealand authorities do still keep a close eye on what happens. "We're probably one of the most legislative and checking nations in the world."

Sparrow gives a quick primer on how the consent system works, especially when it comes to what for many is the crucial question of foundation repairs.

He says the Building Act sets the legally enforceable standards. The council is then there to issue consents and inspect. Yet the act does have clauses allowing repair and alteration of foundations as exempt activities as of right - so long as the work is not deemed "substantial".

Thus invoking this exemption clause, EQC or whoever can get on and fix a house in any way they choose and the council never even need know about it. Under performance-based regulation, it is the responsibility of building owners and their agents simply to get the job right.

This freedom might sound alarming but Sparrow says the outcome still must satisfy the building code. If bad work is later uncovered, those involved would make themselves liable to legal redress.

Sparrow says the Building Act also allows for an interim option.

If home owners or builders are unsure of their own judgement - like what is a substantial looking foundation crack - they can seek a schedule 1.2 exemption where almost like an ordinary consent process, there are plans submitted and council inspections made.

This puts the council's eyes on the work, but without the extra hoops of a full consent.

And of course, if people really want, they can always apply for a full consent on anything. "You could come in here and apply for a building consent to put a letterbox at the end of your driveway and we would be legally obliged to issue it," Sparrow laughs.

So there is a hierarchy of checking when it comes to earthquake repair decisions and the system is designed to allow those doing the work to shoulder their own risks to a reasonable extent. Well, that's better than having bureaucrats hovering over your shoulder the whole time, Sparrow suggests.

That is the theory. However in a city where every foundation has been shaken, the damage often not instantly visible, there is also the question about how well this system is working he admits.

There is the central issue of what counts as a substantial foundation repair? Before the quakes, most would have thought exempt work meant the replacement of a few rotten piles. Since the quakes, rule of thumb became 20 per cent or even 49 per cent.

A few cases slipped through where it was 100 per cent - Sparrow says the council has frowned on those.

Sparrow says this is why MBIE started issuing clearer guidance on when to interpret foundation cracking as substantial and so when the need for professional engineering opinion ought to be triggered.

But he adds that it is still the responsibility of owners and their agents to decide for themselves if work can go ahead on the assumption it is exempt. So the insurers and the PMO's enjoy a lot of leeway, even though whatever they do must be justifiable as reasonable practice if questions get asked.

Sparrow also acknowledges there is the complaint that the EQC and other insurers are often taking these very decisions out of the home-owners hands.

Insurers are claiming that policies assign them the right to control the repair process, while home-owners believe that triggering a full consent would force the kind of scoping that would turn many a repair into a rebuild.

There is legal action on this matter still working its way through the courts, says Sparrow.

Yet in the end, he says, the council's job is not to police the insurers, forcing them into the consent process or making them bring homes back to the "as new" standard promised in policies.

It is not even within the council's statutory remit to go out and inspect the exempt work that is taking place, second-guessing the PMOs on their decisions of what amounts to an adequate repair.

As with leaky homes, if there is some systemic issue arising in the rebuild, it will all eventually come out in the wash as home-owners, and commercial property owners too, take the EQC, their insurers, the PMOs, or whoever, to court and proves their performance did not match up to the expectations of the Building Act or the promises of their policies.

As it turns out, the clamour about skimped and unconsented repairs in Christchurch has reached the point where MBIE has in fact been forced to mount just such an investigation.

MBIE chief engineer Mike Stannard has flown down from Wellington for the day, inviting along Nick Traylen of Christchurch's Geotech Consulting, a member of MBIE's engineering advisory group (EAG), as he too wants to explain how a performance-based regulatory system is working.

But first Stannard reveals that because of the weight of complaints from advocacy groups, an MBIE task force will begin auditing quake repairs next week.

The checks will start with a dozen homes where the owners want an official second opinion. Then in October, MBIE's experts plan to run their ruler over a further sample of 100 houses where the repairs have been carried out under exemption.

"Inspections will consider whether the repair work complies with the NZ Building Code, the appropriateness of the repair solution, whether or not a building consent was needed for the work, and if MBIE's earthquake repair technical guidance was applied properly," says the brief.

Stannard says this audit shows the authorities are not sitting on their hands or colluding with the insurers. Instead, as Sparrow says, a lot of the criticisms are based on a misunderstanding of the New Zealand approach - which other countries find quite impressive.

A Japanese counterpart, dealing with the earthquakes there, recently told him he was surprised at MBIE's willingness to get so involved in the detail of how things should be done with its various repair trials and guidance documents.

So MBIE is certainly working closely with EQC and the insurers, says Stannard, but it is not being leant on to soften standards.

The EAG's Traylen adds what was the alternative? "If MBIE hadn't produced the guidelines, then the insurers would've been able to make it up completely. There's at least this backstop, a minimum standard you've got to achieve to have a reasonable level of repair."

Traylen says take cracks in house foundations as the particular example. There was a whole city to scope and never enough time, bodies or money to assign a squad of professional to every one.

MBIE's guidance was designed to filter out the small cracks, the ones unlikely to be any great problem, while ensuring escalation to a full specialist scoping where they were.

So Traylen says fears are being overplayed. The red-zoning of the worst land in Christchurch immediately removed some 8000 houses from the equation. The Building Act only requires the rest be repaired to a level that is structurally sound enough to meet its code.

"The thing with a foundation is all that it is doing is transferring the weight of the building down to the ground. And even if it's got a crack in it, it's still got the same amount of foundation area in contact with the ground," Traylen points out.

Cracks less than 5mm in ring and slab foundations are usually just an aesthetic issue. All you need is a cosmetic fix to keep out the water and prevent internal decay.

Traylen says the EAG did not see a need for a more stringent approach as dealing with concrete cracks is something builders do every day. It focused its attention more on unfamiliar territory like developing the appropriate standards for the foundations of brand new houses going back on to liquefiable land.

And when it came to tilt-slab buildings, another large chunk of the insurance repairs, the reasoning was that commercial property owners would be hiring their own experts to ensure the work was properly carried out. So no call for the authorities to interfere there.

Traylen says there is all the talk of homes being devalued because EQC is just patching them up. Yet his own home in lower Cashmere, bought long before the quakes, had small foundation cracks. As an engineer, it did not worry him.

And so long as a home is passed as structurally sound after its quake repairs, he cannot see any long term effect on its property value.

Stannard says like the council, MBIE has to work within its legal remit. Its repair guidelines are not there to protect Christchurch's house prices but to spell out what would constitute a reasonable repair given a good standard of workmanship.

MBIE does not have the job of policing insurance policies, making sure every house-owner gets the full coverage promised. Any arguments over "as new" are purely a commercial issue to be settled between claimants and insurers.

Satisfactory? Hardly say the likes of Craig and Ferguson who believe MBIE and CCC are simply out of touch with the realities of how the earthquake recovery is unfolding.

Light-handed performance-based regulation does not deal well with a city full of stressed and vulnerable home-owners, or insurance companies and their PMOs who can be expected to be driven by their bottom-line.

Craig says almost all of the TC2 foundation repairs have now been signed off. So how many owners really understood the onus was on them to make sure their damage was not merely being concealed with a quick squeeze of filler?

And next come the TC3 homes where the land has been left even more weakened, the internals of old foundations even more scrambled. "There's nothing in MBIE's guidelines that even covers rubble foundations. Yet nearly any pre-1950s house in Christchurch will have one."

Craig says such houses are merely being propped up as they stand, waiting to see what happens the next time there is a big shake.

Ferguson repeats that without crack-injection standards - procedures that require the cost and time of steps like core sampling - even commercial buildings are at risk of having their problems papered over. The temptation of the quick buck will be just too great.

So performance-based regulation sounds theoretically elegant. And perhaps it is right, as the authorities claim, that it has provided the framework for them to be more actively involved in the detail of the repair practices - Canterbury's building guidelines being better than the nothing of disasters elsewhere.

But the fears remain of a reliving of the whole leaky homes saga and that it is going to be the creaky building crisis next.

The Press