Introduction

The leaky building crisis affects many thousands of New Zealand home owners. The problem is not limited to homes and apartments. Many schools and a range of commercial properties are also affected by typical leaky building defects and damage.

PricewaterhouseCoopers in their report of July 2009 commissioned by the Department of Building and Housing estimated the number of homes affected to be between 22,000 and 89,000 and estimated repair costs could range from $5.9 billion to $22.9 billon. Some experts working in the area think the problem could be much larger and more expensive to fix. Many potentially affected properties were built in the period between 1991 and 2004 and the problems did not stop after that.

However the news is not all bad. Many owners have brought successful recovery actions to obtain compensation for their losses and have been able to repair and move on with their lives. The vast majority of these claims are being resolved through alternate dispute resolution (“ADR”) whether through mediation, Judicial Settlement Conferences (“JSC”) or private negotiation. Most parties regularly involved in these cases are able to assess the risks involved and to ultimately reach solutions that they are prepared to accept and live with. Almost always these settlements are protected by confidentiality.

This seminar is aimed at advisers of parties involved in leaky building claims. We start from the perspective of owners bringing the recovery action. The same considerations tend to apply to defendants. We consider separately some of the issues for defendants typically involved in these disputes.

It provides practical guidance on the relevant steps from the start of the process through to resolution of the claim, whether through alternate dispute resolution or hearing.

Leaky building litigation tends to involve a significant amount of technical expert evidence and fact finding to work out what is wrong with the building and how the defects came about. This involves piecing together events up to 10 years before the claim was brought.

This seminar and accompanying paper does not purport to present an exhaustive statement of the law but merely to touch on the key legal principles applying as at July 2011. Our focus is to try and provide some practical guidance to assist in resolving these disputes within the applicable legal framework.