Your rights.

When things go wrong with building work, there are two main laws that can help you.

The Consumer Guarantees Act (CGA) requires work done by tradespeople to be carried out with reasonable skill and competence. If it’s not, the CGA says you can ask the person who did the job to fix it at no cost to you. If they can’t or won’t fix it, then you can employ someone else and claim the cost from the original tradesperson.

The CGA applies to services provided by the building industry but not to buildings and building materials – they’re covered by the Building Act.

The Building Act requires tradespeople to provide warranties that work will be done competently using suitable materials. These warranties form part of every contract for residential building work, regardless of whether the contract refers to the warranties or not.

Enforcing your rights

It’s when it comes to enforcing your rights that things get tricky. There are industry bodies that’ll investigate complaints about their members but many tradespeople don’t belong to these bodies (see "Industry schemes", below). So where next?

Adjudication

This is an option if a dispute arises under a construction contract. The Construction Contracts Act 2002 introduced a formal process for adjudicating on building disputes. The Act covers all types of construction work – from building a home to altering or decorating one.

If you go down this route, a qualified and independent adjudicator looks at the issues and makes a decision on what should be done. It’s designed to be relatively quick: you should have a decision within 25 working days.

However, it can be costly. Parties to the dispute have to pay the adjudicator’s costs. These can vary hugely – from several thousand dollars to tens of thousands – depending on the scale and complexity of the dispute. On top of this, you’ll have to meet any other costs you incur such as legal fees.

You and the other parties can agree who will act as the adjudicator. If there’s no agreement, there’s a process for having an adjudicator selected – but you may be charged a fee ($400 to $500) for this.

Mediation & arbitration

These are other forms of dispute resolution that can be used to resolve problems arising under a construction contract. But unlike adjudication, which is a statutory process, you and the tradesperson have to agree to use these options and also have to agree on a mediator/arbitrator.

At $2000 to $4000 a day mediation is less costly than arbitration. But there’s no guarantee you’ll get a resolution: the mediator’s role is to facilitate discussion, not make a decision. You’ll get a binding decision from arbitration but you’ll also pay more: arbitration can cost tens of thousands of dollars.

Disputes Tribunal

The Disputes Tribunal is an option for relatively minor matters. As Barry and Marian Wilson found (see the Case studies), cases involving complex issues about how a floor is laid may not be easily dealt with.

Another drawback is that the Tribunal can only hear claims up to $15,000 – or up to $20,000 if both parties agree. For many disputes this will be far too low.

Weathertight Homes Tribunal

Owners of leaky homes can take their case to the Weathertight Homes Tribunal. The Tribunal deals with claims on dwellings built or altered within the previous 10 years.

Making a claim can be a complex business – and you’re likely to need a lawyer. In one recent case, the successful claimants’ legal costs were estimated to be $60,000.

The Tribunal has limited power to award costs so the expense of hiring expert help may have to come out of your own pocket.

Court action

Going to court is the last resort. Ministry of Justice figures show there are long waiting times for civil hearings. In the High Court, it can take up to a year for your case to be heard.

Legal costs are also high: the expense involved in taking a civil action can be out of proportion to the scale of the dispute. 

Industry schemes

Unfinished building.

In an effort to plug the gaps, some trade organisations (such as the Registered Master Builders Federation and Master Painters New Zealand) have set up schemes to deal with complaints about their members.

You can use these schemes to try to resolve disputes; but these trade bodies have no formal enforcement powers.

Building guarantees can offer some redress if things go wrong. The two major building trade organisations – Certified Builders Association of New Zealand and the Registered Master Builders Federation – offer these guarantees for work done by their members.

They cover loss of deposit, defects and non-completion of work (although only up to set limits). There are also a number of exclusions under each guarantee. 

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