The Eye of the Fish

March 23, 2010

Leaky Building Syndrome

The horror that is this Leaky Building Syndrome continues to grow, and it is a disaster of epic proportions, no doubt about that. There seems to be a fair bit of sticking heads in the sand and hoping it will all go away, or that someone else will pay for it. Having been confined mainly to the Auckland Councils previously, as noted in our previous post, with the reasons behind set out clearly in the three excellent postings by tiresome right wing architect blogger Not-PC, it now seems that the problem is surfacing to a greater degree in the South Island as well. Will Wellington be next – or are we really already there?

On the one hand, the potential figures are mind-blowing. McCrone’s article on the South Island indicates that it really is serious:

“It seems no-one wants to talk much about New Zealand’s leaky buildings scandal – not the owners, architects and builders, council or government. But walk around the streets, and it is staring you in the face. A few are also realising it could be New Zealand’s greatest single financial disaster. Economist Brian Easton recently pointed out that with an estimated $11.5 billion bill to fix about 33,000 homes (and many would happily double those figures), the cost to the country in relative terms will be about 10 times what the United States has spent to bail itself out of the global credit crunch.”

Are these figures correct? Will it really cost $350,000 to fix every single leaky home? Surely that is about the price of building the home in the first place, and yet there is no suggestion that every single square metre of floor space needs replacing.

I’ve not had the displeasure of having a leaky house, and so can’t tell if indeed the whole house needs rebuilding, but assuming that the roof is ok, and that the floors inside the house are ok, and the bathrooms and the carpets etc are all ok: aren’t we really just talking about the external skin? Even then, the windows will be being reused to, so is it more than just stripping away all the polystyrene and plaster, replacing rotting studs and dwangs, and recladding with a cavity and proper flashings this time? Putting the external skin at an estimated 20% of the total building cost, then: Where is the extra cost coming from?

One guess is that all the extra cost is going straight to Lawyers pockets. ‘Heroic’ legal firm Grimshaw are in there batting for the Leaky Home Victims, but are also no doubt taking a hefty cut of the proceedings. There has been a recent ‘landmark’ ruling in the North Shore, which the Court of Appeal has upheld rulings by the High Court.

“Gareth Lewis, a Grimshaw partner who represented the Byron Ave owners, said the decisions were the most significant rulings on leaky homes since the disaster began to unfold about a decade ago.
“The court rejected arguments by the council that it should not owe a duty of care to investor-owners or owners in large-scale developments where other professionals are involved. In the Byron Ave decision, the court upheld High Court awards to the body corporate and the 12 owners of more than $2 million and increased the general damages awards for distress and anxiety for investor owners from $12,500 to $15,000, and for resident owners from $20,000 to $25,000.”

I just dunno. That is what insurance is for – and yet, the insurance companies were the first to see this disaster coming, and all of them promptly got out of the scene completely, years ago, with insurance for leaking buildings now impossible to get in NZ. Arguing over the cost for 10 years while the lawyers wrangle things out is just mental. Getting stuck in and doing the work asap will ensure that the work involved is minimised. Isn’t the answer: Just Do It ?

Kent Duston
23 - 03 - 10

The whole leaky building problem is only going to get solved when we start seeing it as a societal issue rather than a private one.

Let’s assume that 33,000 homes need complete rebuilding and/or demolition … if the circumstances were different and those same 33,000 homes were damaged due to war or other natural (or even man-made) disaster, we would rally around as a society and simply stump up the cost of doing the work. We would recognise in short order that having people effectively dispossessed and with nowhere to live is going to cause social disruption on a huge scale, and it will cause completely unnecessary suffering across the country.

If 33,000 homes were destroyed in a foreign invasion, we would have every architect and every tradesperson in the country working day and night to repair the damage in order to mitigate the effects on our fellow New Zealanders. And this heroic effort to make things right would be front page news for however many months and years it would take to complete the work.

Faced with the same disaster on the same scale due to poor design, we seem incapable of doing anything – yet the impact on the people who own these homes is the same as if they had been damaged by an act of war. So it seems to me that the problem has much to do with the ideological biases of government (both the previous one and the current lot) than any rational assessment of what is the best thing to do for New Zealand. And the fact that the current Minister (Maurice Williamson) has a long-standing reputation for hands-off laziness merely aggravates the problem.

We need to spend a whole bunch less time trying to apportion blame, and a whole lot more time mitigating the damage on our society. And the best way to do that is to adopt a no-fault approach and fund the replacement work through the taxation system. After all, if government won’t get involved when people have lost their homes, what’s the point of having a government at all?

23 - 03 - 10

An item posted on the NZIA’s chatlist today, referred to articles printed in a magazine called “Gauntlet” which can be found at – not to be confused with which is also a Gauntlet magazine, albeit of a very different kind. Anyway, in the Gauntlet, so handily thrown down by the immortal Mr Hay, the following points are noted:

“Architect Roger Hay discusses the origins of the leaky building crisis”

“There are various urban myths about the ‘actual cause’ and the extent of the rotten buildings problem. Most are wrong, as they are not factually based, let alone grasp the complex sequence of technical factors involved.

The problem is serious in its extent, but it is far more serious in the way it came about. In fact, there is just one primary technical cause, that only occurred because of a complete failure of technical governance.

Failure of technical governance refers to four successive governments making four sets of serious technical policy mistakes. These mistakes were all due to one government’s initial naive creation of a vacuum:
• in its policy intelligence about the basic responsibilities and standards in building technology, and
• also in its policy understanding of how these responsibilities and standards should be best developed and ‘regulated’.

The consequence of that policy vacuum is that central government itself, including Parliament, directly paved the way for the rotten buildings crisis, and so should now take full responsibility for removing the rot and paying for the damage.”

23 - 03 - 10

And Hay furthermore refers to a NZ Herald article by an Auckland architect Kevin Clarke:

Where he says:
“Kevin Clarke: Govt can’t escape leaky homes blame”
“The leaky building epidemic did not happen by accident. It was primarily caused by government mismanagement over more than a decade. Two government-funded agencies – the Building Industry Authority (BIA) and the Building Research Association of NZ (BRANZ), approved and endorsed new low-cost forms of monolithic cladding that had no chance of working in New Zealand. Both also endorsed and approved the replacement of traditional flashings with sealant. That had no realistic chance of working either.

Then, having approved such sure-to-fail methodologies, BIA and BRANZ endorsed the idea of fixing porous cladding to untreated timber framing. Increased thermal insulation requirements restricted air movement in substrate framing, which exaggerated the problem. Thereupon, new and inherently problematic construction methodologies delivered catastrophic results. Buildings were designed by design professionals who, at the time, were permitted to provide assurance of weathertight construction not by detailing it to be so, but rather, by specifying the result was to be weathertight.

That saved a great deal of design time, and allowed fees to be screwed down to less than one third the cost of designing buildings adequately. Those who read the designers’ specifications were oftentimes not familiar with the technical preconditions for weathertight construction, as a consequence of government’s abandonment and denigration of apprenticeships. During construction, the government permitted developers to make more cost savings, by omitting design professionals from their traditional site observation and authorisation roles.

Instead, the built results were inspected by local government officers, few of whom had the knowledge or training to determine what constituted weatherproof construction and even fewer of whom were even expected to look at weathertightness issues, prior to certifying approval of the faulty construction they inspected. Along the way, major building industrialists applied their significant financial and political leverage to having their attractively-priced monolithic claddings and untreated timber framing duly approved by the appropriate building industry authorities. Those approvals were forthcoming, but should never have been.

The size of the problem has recently been stated as $23 billion. That figure is well short of the mark because it presupposes the problem has just started. It hasn’t…..” and more on another page

26 - 03 - 10

More on the continuing Soggy Saga: “Leaky building repairs a tax boost – mayor”
“The Government would get a $2 billion tax windfall from a leaky buildings repair package, a new report says. However, the Government’s own analysis concludes that any package would have no effect on the tax take. North Shore City Mayor Andrew Williams will today table a report at the Auckland Mayoral Forum.

The report was commissioned by the North Shore council to try and establish the Government’s tax take from repairs to leaky homes, estimated to cost $11.3b. The report says about 25 per cent of spending on repairs would go back to the Government in tax revenue.
The cost of fixing homes, excluding legal costs, would be about $8b, so the Government could expect $2b in tax receipts. Government intervention to resolve leaky homes disputes more quickly would also help cut compliance and legal costs; hasten repairs, meaning smaller repair costs; and have public health benefits from improved housing.

“This is a man-made disaster, the scale of which far exceeds the cost of any of New Zealand’s most common large-scale natural disasters,” the report, by economics research company Covec, says.

Williams said the report showed that the Government’s contribution to a rescue package should be at least 25 per cent because the tax receipts would make it cost-neutral. “This should crystallise their thinking,” he said. “They’ve always said that they only think 10 per cent is the area they should be paying … but at 10 per cent, they are actually going to make a profit.”

Negotiations between the Government and six mayors broke down last year. However, the Government is working on a package where it would shoulder 10 per cent of the cost of fixing an estimated 42,000 homes. Documents released to Fairfax yesterday show Prime Minister John Key asked for Treasury advice about whether the Government would get a large GST windfall from the additional spending on repairs. He wanted to know if any windfall would mean it could afford to contribute more towards repair costs. Treasury advice, issued last December, said there would be little change in GST receipts overall, meaning there was no scope for more assistance. The money the Government, councils and homeowners would spend on repairing leaky homes would otherwise be spent on other goods and services.

“These goods and services would also be subject to GST, so there is unlikely to be any net increase in GST,” the Treasury advice says.

Building and Construction Minister Maurice Williamson last night said the same logic applied to other taxes, such as personal income tax and company tax.

27 - 03 - 10

So architects (who presumably have professional design/quality control roles) have nothing to do with it?
Did they lobby furiously in the past 20 years, pointing out the likely problems?
Does caveat emptor mean nothing?
Should all the poorly off in old-style weatherboard housing subsidise the rebuilding of Parnell?
Are you fed up with rhetorical questions?

Kent Duston
27 - 03 - 10

Owen – and here’s another rhetorical question to add to your list:

Why are New Zealanders so obsessed with blaming someone when they could equally well spend the same amount of time and effort solving the problem?

27 - 03 - 10

I guess that some of the solution is about assigning responsibility so that damages can be claimed from the appropriate organisations. We can’t just dream that money up.

Owen, I suspect that the majority of leaky buildings are not architecturally designed (I could be wrong though), which would mean a whole lot of trouble for businesses like Master Builders. As for caveat emptor – do you hold that for Toyota’s recent woes as well? Telecom? Do buyers have no rights to expect the product to perform in a way that is consistent with how a product of its type should perform and is advertised to perform (implicitly or explicitly)? These questions are not rhetorical – I am interested in your position…

But I do agree that designers (whether registered architects, architectureal draughtspeople, or other) should hold a degree of responsibilty for what comes off their drawing boards – did they not understand the detailing, and if not why blindly specify it? Because it was authorised by a panel of industry/government appointed experts that’s why… call me weird, but, I still maintain that a designer should understand and approve what it is that they are so-called ‘designing’, from the doorhandle to the impact of their design on the surrounding environment…

I believe that there is too much abdication of responsibility from ALL parties – buyers, designers, and the Government – how ’bout a 33.3333% split? (I’m not sure if we can through the manufacturers in there too, for a 25% split each way – as I am unsure of whether they promoted that particular detailing for NZ – but even if they did, the BIA approval kind of lets them off the hook…)

27 - 03 - 10

And furthermore, if it weren’t for government involvement (of the worst kind), there would be a very clear path of responsibility, in line with the consumers act – Homeowners seek damages from the designers, who can in turn pass the claims up the chain to the suppliers. The suppliers might have case for taking it to the manufacturers if in fact the maufacturers guaranteed the products for sale in NZ – the onus should be on them (or the suppliers) to do this, not the NZ govt. Government interference, and the dumbing-down of design that it created, has clouded the ‘natural’ order of things…

27 - 03 - 10

My solution, seeing as you all asked, is for the govt to set up a building team specifically for repairing the homes. The teams make no money beyond covering administration, labour, and material costs – thereby removing some of the profiteering from the situation, and significantly reducing the cost of the work. The much lower cost of the work is shouldered by a split between the govt, designers (insurance), and the homeowners… If private businesses could tender lower than the govt teams, then all the better, but I suggest that they would need some incentive such as this to lower their prices (if they could)…

The teams are quickly disbanded after the problem is resolved. (as a bonus, it would appear that the govt was creating jobs in a time of need also – although this would be a mischevious interpretation).

Addresses designer responsibilty, government responsibility, and caveat emptor… beautiful… what’s not to like? (I mean it – I am sure there are holes in there somewhere…)

27 - 03 - 10

“What’s not to like?” you ask… well, you’re absolutely right about setting up a team to do the work – its a good idea, actually. In terms of deepness of pockets and the technique of “last man standing”, however, architects and designers have got themselves horribly in the headlights. Quite simply, if the cost was put at 33% on the architects, I believe that every single architect involved would have no option but to declare bankruptcy and disappear into a hole, never to be seen again. The insurers, who SHOULD be there, long since abdicated their responsibilities. Rats, leaving ship…

Its a fine theory that architects may sue their supplier, who in turn would supply the manufacturer, but have a look at this as an example: James Hardie Industries, who is in the gun for not just leaky buildings but also multiple asbestos-related claims for their products – they’ve recently just moved the domicile of the office offshore, to Switzerland I believe. Beyond the reach of sueing… Same reason, probably, that Michael Fay lives in Switzerland so he can’t get sued for ripping off New Zealand (ie BNZ, NZ Rail, etc).

How many Swiss domiciled architects do you know?

27 - 03 - 10

Thanks for the comments. I understand that real estate purchases (inc leases) are the last holdout of caveat emptor: no Sale of Goods Act, etc etc. A lawyer may care to butt in here. . .
Anyway, I think that in the end the State will not step in in any significant way, if only for (1) the huge amounts involved and (2) the public perceptions that they’ll end up paying for the “rich pricks” that bought these sorts of buildings (not quite my own view, just channeling Winston). The properties will eventually be sold at their correct value, and, in eco-speak, the market will clear. Back to another point: BRANZ etc didn’t make the new construction methods compulsory: builders could (and some did) stick to traditional methods.

27 - 03 - 10

“BRANZ etc didn’t make the new construction methods compulsory” – hence why I think designers need to front up too (whether architects, builder-designers or whatever…)

27 - 03 - 10

” I believe that every single architect involved would have no option but to declare bankruptcy and disappear into a hole”

For the architects who designed such rubbish, would that necessarily be a bad thing? It would be a strong lesson for the importance of design quality…

28 - 03 - 10

oh m-d, you are such a hard task master. “Would that necessarily be such a bad thing?” None of us are perfect, and so hence all of us make mistakes. Basing a building on a product system that has been heavily endorsed by respected governmental bodies – is that really a bad thing to do? Or an entirely reasonable action? Short of constructing everything out of precast concrete, and overcladding with a separate watertight sheathing, there isn’t a building in Wellington that doesn’t leak a little in a southerly like we had last week. Whether it is weatherboards or hardies products, the wind would have been pumping water into every cavity in that cyclone, and everything inside will have been drenched. Old houses, with rimu studs and boards, and no insulation in the walls, will be drying out still, even this week. But they won’t rot, because the timber is naturally resistant. But our modern pinus piss-porous, is no match. We have no option to specify rimu studs now – does that make the architects using pine bad people?

Yes, in hindsight we are all a lot wiser now.

28 - 03 - 10

“does that make the architects using [untreated] pine [combined with piss poor detailing] bad people?” – No, just bad designers…

I maintain that the readily availabile off-the-shelf technical details have dumbed down the craft of architecture. We haven’t had this problem before because designers in the past have had to think about details and know how they work (or not). We also had overhangs, flashing, and good quality durable materials – all design decisions…

The “we all make mistakes” mantra is all well and good, and I more than anyone am well aware of that, but most of us attempt to take responsibility for our erroneous ways. You are in fact admitting the fact that designers are partly the cause – so then why shouldn’t they accept some responsibility (and be part of the solution rather than quitely sticking head in sand)? If I pay an architect to design me a house that is functional, durable, and handsome, I am engaging that designer as my expert in these matters – not the government or anyone else. If they fail to deliver on any one of my criteria, I should be able to seek reparation – it is only fair. The fact that the designer has abdicated their design expertise to product catalogues and the like (Govt. authorised or not) should in no way protect them from a dissatisfied client.

Last week’s weather was hardly typical, I might add, and not the sort of weather that has caused this problem all around NZ either…

“in hindsight we are all a lot wiser now.” – great, but hardly solves the problem that we have been landed as a result of the massive failure of design/design education in this country…

60 MPa
29 - 03 - 10

I get asked by friends to do pre-purchase house inspections quite a bit and I tell them over the phone not to buy anything with plaster cladding unless they can get it for the price of the section. Even the 1950’s era ones.

The reason is not structural but purely perception. No-one will buy them (at the price the on-seller will expect) even though the ones with a cavity and cap flashings are usually ok. The older ones have been caught up in that perception, too.
NB- I am not talking about rationality here – just human behaviour.

Maximus – the old places had black building paper and rain through rotten cladding or rusty corrugated roofing in a gale will hit that stuff and run right off if it’s been laid out properly. I’ve seen black paper hold rain out for 5+years on some places. The sort of fungus that grows inside polystyrene spray-panel houses eats the paper itself on lots of occasions too so it’s a double-whammy but yeah, when detailing, silicone sealant is NOT a structural element..

Besides, a lot of those older places have had the outer ring of totara piles rot and have slumped down in need of repiling around the perimeter so, while NZers may love their villas, the happiest villa owners I know have ones that are modernised on the inside and well insulated.

Tina Johnston
30 - 03 - 10

Maximus – In relply to one of your questions in the original content:

“Will Wellington be next – or are we really already there?”

We are already there – in quite a large proportion :(

Just thought you’d like to know.

30 - 03 - 10

Auckland City Council………….2021
North Shore City Council………..445
Waitakere City Council…………..352
Manukau City Council……………125
Wellington City Council………….361
Christchurch City Council……….229
Dunedin City Council………………..2

AKL wins: 3000 out of 3500.

31 - 03 - 10

Ahh – let’s just hand over the issue for the shiny new super-council to address then – that’ll test their mettle…