Lawyers hammer Building Authority over leaky homes

By Coran Lill

Friday 24th September 2004

The Building Industry Authority is under fire from a law firm representing hundreds of litigants across Auckland after the authority refused to take part in mediations with victims of the so-called leaky building saga.

Paul Grimshaw, a partner at law firm Cairns Slane, which is representing 3000 owners in 30 to 40 multimillion-dollar leaky building claims, described the Building Industry Authority's decision to reject private mediation as "hypocritical in the extreme."

The refusal to mediate relates to proceedings filed in the High Court against the Building Industry Authority. Homeowners can also go through the Weathertight Homes Resolution Service, where mediation is an option. But in recent months the service has been under fire for being too slow and Grimshaw said he lacked confidence in the system.

"The Building Industry Authority is a Crown entity. The Weathertight Homes Resolution Service [which offers mediation] is set up through the Department of Internal Affairs. The government set up the mediation service but refuses to mediate. What sort of logic is that?"

The authority has been joined in a number of High Court proceedings on two grounds:

* the authority approved timber for use and home owners allege this was a major contributing factor to problems they face, and

* the authority had allegedly failed to ensure there was an adequate scheme of insurance for building certifiers. The Building Act requires the authority to approve a scheme of insurance to apply in respect of any insurable civil liability of building certifiers.

Whether the authority can be liable in the areas above have not previously been tested in the courts.

The authority has denied liability.

Grimshaw said he had "little confidence" in the mediation system set up by the Weathertight Homes Resolution Service to help resolve the dispute, saying it was unsuitable for multi-unit development claims.

He has asked the High Court to convene a court-led settlement conference but Grimshaw said such judge-led mediations often lacked the flexibility of more popular private mediations.

In addition to refusing to take part in mediation, the authority has also filed an application to strike out High Court proceedings against it.

In July, the authority lost a similar application in adjudication before the Weathertight Homes Resolution Service.

Authority spokesman Blair McLaren offered little insight into the reasons the authority was digging its heels in and refusing to attend mediation.

"As a government-funded organisation, the authority has a duty to ensure claims against it are properly tested, particularly as no liability has been determined against the authority.

"Our advice is that we are not liable for such claims. The issues to be determined are complex and therefore need to be fully heard and our response to litigation is considered on a case by case basis."

But Grimshaw he understood said the decision to reject mediation covered all High Court leaky building claims.

Litigation lawyers said that if the authority declined to attend mediation, and lost in the High Court, it could be ordered to pay a higher amount of legal costs as a result.

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