Defective Repairs & Building Standards

Duncan WebbLane Neave

Insurance repairs – the framework

Policy

Building contract

Council consent

Statutory obligations

Building ActBuilding Act

Building Code

Building standards

Guidance / Industry Practice

Building Code

• Sets minimum requirements• Performance based

• Key requirements are:• Structural• Durability (different for different parts)• Safety (fire etc.)• Moisture (flooding / weather tightness)• Health (sanitation, light etc.).

• The Building Code does not deal with quality / cosmetic issues.

Consenting

• Not all work needs a consent (first schedule):• Repair / maintenance / replacement• But not where:

• there is a substantial replacement of structural system or

• where the item has failed to meet Code.• Consenting authority may exempt work where:

• it is likely to comply with Code; or• Unlikely to cause a danger

• All work must “comply with the building code to the extent required by this Act” whether or not consented (s 17)

Consenting and Repairs Cont..

• S 112 - May grant consent for work which does not comply with Code where:• if it did not comply with the other provisions of the

building code immediately before the building work began, continue to comply at least to the same extent as it did then comply

• Purpose of s 112 is to ensure that work is not deferred because of onerous code requirements.

• No obligation to repair a building unless it is “dangerous” (s 121).

Building Act Warranties for Consumers (s 362I)

• Work carried out in a “proper and competent manner”

• Work will be completed “with care and skill”• Materials fit for purpose• In compliance with law• Completed within reasonable time• Will be suitable for occupation

Other Rights

• Consumer Guarantees Act 1993• Care and skill / reasonable time / fit for purpose

• Fair Trading Act 1986• No misleading or deceptive conduct

The Repair Contract

• Whose Contract?• Insurer - builder / homeowner – builder / homeowner – insurer –

builder.• Check the Policy• If there are additional works then you may need to be a party.

• Contract terms are negotiable. Look out for:• Variations• Completion dates• Penalties• Unforeseen conditions

• Insurer can be liable for increases in cost (where no final cash settlement).

• Get the contract reviewed.

Defective Repair…What Now?

• Who is “on the hook”?• Builder / subcontractor / project manager • Consenting Authority• Insurer (possibly)

• Options:• Negotiate a remediation (often default under contract)• Negotiate a settlement• Look at dispute resolution clauses (mediation /

arbitration)• Litigation (the last resort)

The Limitation Question

• The right to sue for a breach does not last for ever.• General rule that the right lasts for six years “after the date of the act

or omission on which the claim is based” (Limitation Act 2010).• A conservative approach would say that the omission of an insurer

occurs at the moment of the damage as that is when the obligation to reinstate arises.

• A alternative approach would say that the omission occurs when there is a breach because the repair did not occur within a reasonable time.

• Insurers can (and may) waive the right to rely on limitation – but this would need to be express.

• A claim is “brought” only when it is filed in Court.

The Parliamentary Petition

• A Royal Commission to:• Identify the causes of the defective repairs;• Recommend steps to prevent such defective repairs

being carried out in future; and• Provide such advice to the Earthquake Commission,

private insurers and territorial authorities to ensure that in future the risk of defective repairs is substantially reduced.

• Circulate to friends / colleagues