Good News for Leaky-Home Owners

June 2014...The “leaky home” crisis has been a familiar feature in the media for the last decade. The crisis was brought on by a combination of deficient designs, materials, and certification processes, commonly used in the 1990s, but which failed to make homes weathertight, and led to damaged structures which also presented risks to human health.

For owners of leaky homes, this issue has been particularly distressing, as often the effects of a leaky home are not felt until years after construction, once moisture has had time to permeate the building. By the time the problem is discovered, it can be very difficult and costly to resolve.

Amidst the inevitable finger pointing, local Councils have often been dragged into the mix as they are responsible for signing off construction work as being compliant with the Building Code. In retrospect, local Councils had oftentimes not used adequate processes, and so they may face liability to leaky homeowners.

The catch has been section 14(a) of the Weathertight Homes Resolution Services Act 2006, which requires that a compensation claim must relate to a house that was “built” within the period of ten years before the day the claim is brought.

What exactly “built” means has been the subject of contention. For the last decade, the courts have held that home owners had to count 10 years from the date that the construction work was completed on their property and it became habitable.

This interpretation has recently been overturned by the Supreme Court, which, after  an 8 year court battle fought by  Auckland couple John and Helen Osborne, has ruled that time should run from the date of issue of the Code Compliance Certificate by the local Council. This can make a huge difference to home owners, where the time between completion of construction and issue of the CCC can sometimes run into years.

The Supreme Court had looked closely at s 14(a) and held that it should be construed in light of the definition of “building work” in the Building Act 2004, which encompasses certifications.

This ruling opens the door to compensation claims for hundreds of leaky home owners who have previously time-barred.

Case: Osborne v Auckland City Council [2014] NZSC 67