By Andrew Steele - 28 Jan 2011
The Supreme Court has released its long-awaited decision on
leaky homes. This newsletter summarises the law around leaky
homes and the effect of recent decisions.
The Building Act requires councils to inspect homes when they
are being built and on completion, to certify that they comply with
the Building Code. The Code requires homes to not leak, among other
things.
Therefore, councils owe homeowners a duty to make sure that the
inspections are accurate and houses comply with the building
code. If this duty is breached, councils may be sued.
The Supreme Court decided:
- Because councils are generally relied on by the public,
particular homeowners do not have to rely on the council personally
for the council to owe them a duty to undertake careful inspections
and considered certification.
- Councils' duties extend to apartments and large-scale projects,
not just houses.
- Councils owe homeowners a duty of care even if professional
architects, designers and engineers have been employed. Purchasers
do not know the scope of those professionals' roles, nor rely on
them in buying the property. Yet they do know about and generally
rely on the council's role.
- Councils owe duties to subsequent owners and investor-owners
who do not occupy the house, as well as initial purchasers and
owner/occupiers.
- Councils that have not issued code compliance certificates
still owe duties to homeowners to undertake careful inspections and
therefore may be sued.
- The Supreme Court has affirmed the present legal position of
councils.
What this means for home-owners
These decisions should encourage homeowners.
When leaks are found in a house, the parties involved in its
construction may be hard to find or have no financial worth. Often
the builder may not be trading; the architect may have no money;
the developer may be overseas and the engineering company may have
been put into liquidation.
However, the council is the one party who is both present and of
sufficient means to ensure any Judgment obtained against it will be
paid.
The Supreme Court has confirmed that if a building is signalled
to the council to be a residential dwelling, then the council is
under a duty to take reasonable care in inspecting its construction
and in certifying its code compliance. This is the law regardless
of who owns the home, what they do with it, who constructed it or
what type of home it is.
If you require any further information, or have any questions
about how the Court decision could affect you, please contact our
leaky
building team or your usual contact at Martelli McKegg on 09
379 7333.