Ponsonby Gardens WHRS Claims

Auckland City Council

The Ponsonby Gardens Claimants are dismayed to learn today that the Auckland City Council has filed an application for leave to appeal the WHRS determinations handed down by Adjudicator Dean on 12 March 2005. This application falls three months after the close off date for appeals and contrary to earlier advice from the Council that they did not intend to appeal. The Council has spent approximately $350,000.00 to defend the claims and it is somewhat surprising that the Council is prepared to spend more of the ratepayer’s money to fund an appeal

The Council has paid the individual amount they were found liable for which totals $127,936.00. However, under the joint and several liability they were found liable for $587,919.00 of the total of $701,886.00 awarded and given leave to recover $472,410.00 of that from the other respondents

The Ponsonby Gardens claimants formally demanded that the Council pay $459,983.00, plus interest accrued from the date of determination, being the balance of their total liability. This demand was made on 13 May, 2005 and the Council has failed to meet its obligation to pay

In a media release on June 6th, the CEO of the Auckland City Council, Mr David Rankin said;

“In his decision, the adjudicator Mr Dean considered other defendants were liable for a significant part of the loss incurred by the owners of Ponsonby Gardens. Those defendants should not expect ratepayers to pay what they owe”

The claimants think that it is unfortunate that the burden of payment in most cases, either through the courts or the WHRS will rest with the ratepayer, but that is the law of the land. Mr Rankin needs to understand that the Council is liable for $587,919.00 because it was found to have been negligent and to have owed the claimants a duty of care. Had they clearly understood their duties and obligations under the Building Act and executed their duties diligently, they would not have been found liable, and suffice to say, the extent of the leaky homes crisis in the Auckland region would have been markedly reduced

It is also important for the ratepayers to be aware of the fact that the Council is not insured for this or any claim brought against it in respect of leaky homes. Mr Robert De Luer made the statement in his evidence put before the Ponsonby Gardens hearing that;

“The Council has carried no insurance for claims of this type for some years” The Council has therefore risked the public purse by not ensuring that their processes were robust enough to mitigate the risk of not carrying insurance to cover any potential liability. It is therefore not the Ponsonby Gardens claimants, nor any claimants’ fault that the ratepayers have to bear that burden. No one has been called to account for any of the failings that have put this extra burden on the ratepayers, or to account for the vast sums that are being spent by Council to defend their negligence

Mayor Hubbard and Mr Rankin have denied that there are any problems as they have relied on the “audits” carried out by the former BIA. This reliance is unsound in that they were never “audited” by the BIA, rather it was a simple review of their operations and not of sufficient depth to be relied upon in such a way. The Council hold the review up as having given them confidence in the Auckland City Evironments processes and systems, when in reality, the October 1996 review noted several flawed processes and criticism of the Councils “reactive” culture. The mere fact that these very processes and systems have been found wanting in light of the Ponsonby Gardens determinations should give the rate payers cause for continued concern

The Ponsonby Gardens claimants have been frustrated by the delays and it has just added to the agonizing years spent in dealing with their leaky and defective homes

The only saving grace is that their homes have been remediated and therefore they do not have to contend with any continued degradation of the structure and the accumulation of toxic mould which would have undoubtedly rendered them unsafe to live in

There are hundreds, if not thousands of unfortunate leaky home owners in the community who are in a living hell; if they are unable to afford to remediate then litigate, their health, welfare and financial security is under threat by living in unsound and unhealthy homes. But what hope have they got considering the lengthy delays and enormous cost that they are confronted with when seeking justice – they have done nothing wrong and yet they continue to suffer

It is about time the Council took some responsibility for this matter up front and halt the expenditure related to defending these cases to the extent that it is destroying people’s lives. The question has to be asked as to what the Council achieved by spending $350,000.00 defending the Ponsonby Gardens claims, and what will they gain by spending more ratepayer’s funds to appeal the determinations. The Council is heartless in prolonging the agony by pursuing an appeal at this late stage

The Council have already stated that they need to look at alternative methods of dealing with leaky home claims but that now appears to have be rather disingenuous

In regard to the 1000 plus claims they are faced with, the Council needs to accept a minimum liability and then work alongside the claimants to firstly ensure the dwellings are remediated to the proper standard and then level their “legal guns”, not at the claimants, but at the others found to be responsible for the defective materials, poor workmanship and poor design

We are not denying any of the respondents their right to appeal these decisions, but the appeals in this case have to be seen as a cynical measure to prolong the settlement and as an attempt to coerce the claimants into accepting less than they were awarded, and certainly less than they deserve

The Weathertight Homes Resolution Service

It does not bode well for others following in the footsteps of the Ponsonby Gardens claimants as there is a very clear message to all WHRS claimants, and indeed to those pursuing their remedies in the courts, that winning in these cases boils down to having the deepest pockets. It demonstrates that although very noble in purpose, in reality the Governments Weathertight Homes Resolution Service proves that it is fundamentally flawed in so many ways. Along with the Territorial Authorities, Central Government must take urgent steps to accept some liability for the defective homes crisis and put the matter right and look at alternative methods for resolution and compensation

For the most part the Ponsonby Gardens claimants were well served by the WHRS, but they object to being held up as an example of the success of the service as did the former CEO Dr Lisa Ferguson. The success of these claims, if you can now call it that, can be put down to sheer determination and the fact that the claimants had completed the remedial work so that the full extent of the damage and the remedial cost were established beyond doubt. As discussed previously, it is unrealistic for claimants to represent themselves in either mediation or adjudication, particularly if the remedial costs have not been established

Reliance on the WHRS assessors report is fraught with risk as there is evidence of some of these reports being incomplete to the extent that they do not provide accurate details of the extent of the damage and therefore cannot accurately estimate the total remedial cost. Another problem with the reports is that even if accurate as to the extent of the damage and consequential costs, some estimates are falling well short of what the market is actually dictating for work of this nature. It is most unfortunate that the only option if the WHRS declines to have the assessor re-visit the report is to commission an independent report from a professional building surveyor. This may cost anywhere between $4,000 and $8,000 for the average defective home and whilst this cost is compensatable through adjudication, it is unlikely that you will get that cost back through mediation. But the real problem is that the claimant is forced to fund that report up front which is an unacceptable burden in itself. There is also the matter of costs relating to the author of the report appearing in a mediation or adjudication. The report is worthless unless the author presents it as an “expert witness” and the cost of his or her preparation and appearance as witness expenses is not compensatable under the WHRS act

The fact that the legal expenses incurred by the claimants in the Ponsonby Gardens case were quite minimal must also be considered a factor in their success. They did not have legal representation; so if they were to have received full settlement, it would still have been a meaningful amount in relation to the cost of remediation. However, it is totally unrealistically for most, if not all WHRS claimants to consider representing themselves, and because the cost of representation is not compensatable under the WHRS Act, it must be paid out of the amount they are awarded if successful in bringing their claim. As a result, it is unlikely that they will have enough money left to actually have their homes remediated – particularly considering that the award will be based only on the estimated remedial cost. Of course that is also assuming that all respondents to their claim have the ability and or the will to pay what they are found liable for, and that they do not appeal. The cost of defending any appeal will likely wipe out any balance remaining or anticipated, and the claimants will be back where they started – without hope

Instead of spending millions of dollars in setting up and maintaining the bureaucracy, the Government must accept some liability and set up a fund to “front end” the whole process so that first and foremost the defective homes will be remediated to the appropriate standard and rendered safe and sanitary to occupy. Claimants should not be forced to wait on a settlement in order to have their homes and most valuable possession remediated so that it can be occupied without risk to their health and safety. Had the Ponsonby Gardens claimants not been in a position to have the work carried out before proceeding with their claim, there is no doubt that their homes would have been rendered uninhabitable by the time settlement, if any, is received

The thousands of homes throughout New Zealand that are affected by this crisis represent an enormous social and economic impact on our community, equal to, or exceeding that, of any natural disasters that have occurred in recent times (and at least our homes are insured to a certain extent for that sort of loss). Yet the Government has conveniently used the WHRS to sweep the matter under the carpet in the hope that the frustration, disappointment and financial ruin experienced by so many in pursuing their claims will silence those that follow; to the extent that the others will not bother to follow up on their claims. Perhaps the WHRS will then be able to crow more loudly about the reduction in active claims they are managing! The reality is that the problem will still exist and the impact severe on those most undeserving of suffering the loss of amenity of their homes and the destruction of their financial security

John R Gray Ponsonby Gardens Claimant – WHRS Claim 00027

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