Decisions by the High Court at Auckland have held developers financially accountable, a move hailed as extremely significant by lawyer Matt Josephson of leaky building specialists Grimshaw and Co.
"The big news is that developers are being held liable despite the fact that they used a company. The two cases are fact-specific, but it's got to be good news for homeowners," said Mr Josephson.
Developers' personal assets, such as their houses, were no longer automatically protected and could be used in claims for settlement in big disputes, he said.
On December 3, Justice Paul Heath ruled that Auckland developer Gregory Campbell Oliver Nielsen must pay $1,199,389.82 for creating poorly built leaky townhouses at 3 Laxon Tce in Newmarket.
On December 22, Justice Ailsa Duffy ruled against North Shore developer-project manager Brian Gailer for his role in the leaky 10-unit Kilham Mews complex near the Northcote shopping centre.
A settlement hearing is pending, but a judgement of more than $1 million is expected against him.
Lawyer David Heaney, whose firm Heaney and Co acts for most councils on leaky building issues, said the decisions provided hope for many victims.
"It has always been the case that those involved in building of leaky homes who have been negligent in the way they performed their function have been exposed to liability, and now the courts are finding even directors of development companies liable," he said.
Last May, Justice Heath ruled against Shore developers Robert Henry Graham Barton and Kay Barton over the leaky Sunset Terraces in Mairangi Bay, where a $1.9 million recladding is needed and $800,000 has already been spent on repairs. But the Bartons say they cannot pay.
Last July, Justice Geoffrey Venning said the $2 million-plus he awarded to owners of the leaky 12-unit Byron Ave estate in Takapuna would probably be paid by North Shore City. The project was by architect-developer Stephen Smythe.
For most of this decade, developers have successfully escaped footing the bill for leaky homes by winding up project-specific companies well before leaks are discovered. That has left victims with few places to turn except against wealthy councils.
Mayors from Auckland and Wellington met the National Party before the election to discuss dividing the cost between the Government, councils and homeowners, and Auckland Mayor John Banks has criticised developers, builders and contractors.
Mr Josephson said leaky building litigation case law was still evolving, but judges in the two latest cases had ruled the developers "had a "non-delegable duty" meaning they could not pass the buck nor hide behind companies.
The rotting homes scandal had forced thousands of homeowners to choose between a widely criticised state-funded system perceived to be too cumbersome or the expense of private litigation.
Mr Gailer described the ruling against him as "nonsense" and said he had no assets.
Mr Josephson, who acted for Kilham Mews' owners, was confident of recovering payment.
John Gray, president of the Homeowners and Buyers Association dealing with more than 2000 leaky-building victims, welcomed the latest decisions but blamed councils for signing off shoddy buildings.
"It's ironic but I can't help but feel some sympathy for developers who have really suffered from councils' negligence for failing to properly control building works.
However, I don't forgive developers who had complete control over decisions about the quality or otherwise of construction so they do deserve to pay," Mr Gray said.
Justice Duffy said Mr Gailer was directly to blame for problems. "His alleged liability arises in two ways, first as a developer of Kilham Mews and secondly as the project manager of the development," ruled Justice Duffy.
"Damage included rotting and decayed timber framing that had lost its structural integrity, moisture damage to the interior plaster board linings and the presence of fungi and other organisms that are deleterious to an occupant's health," Judge Duffy said.
