Thursday, July 17, 2014

A significant case to be followed

See the following new on Herald for some background:

Leaky home owner has 'arguable case' against seller

Can also see the case summary listed on High Court website for a clear picture:

Edwards v Cull [2014] NZHC 1556 (1 July 2014)

The case has just kicked off and yet to have a long journey to go, can easily drag years to finalise. There are 13 respondents involved, including the previous owner, real estate agent, builder, engineer, inspectors, and of course Council. 

Here is the simplified summary of the case process up to date:

The current owner Edwards bought the St Helier's "concrete" house back early 2011 from the previous owner Culls, which showed a positive inspection report produced by Dwell Healthy Homes (Dwell) during marketing of the property. Being impressed by Dwell's report, Edwards have engaged another inspector Chris Underwood, which has found some high moisture spots and recommended further invasive inspections. Chris's report was challenged by Dwell, which indicated to Edwards that Chris is not competent. Some how Edwards decided to trust the previous owner's inspector, went ahead to the auction and bought the house, which found 2 years later to be seriously leaking and needs some 700k for repair works. 

This first stage court decision has found that: Edwards have got some solid stands to sue the previous owner Culls, even though the "positive" report is not produced by Culls, and Culls never had any clue the house was leaking. While this has got nothing to say that Edwards will win the case, this case is worth to be seriously monitored as it may become a floodgate from the following aspects:

  • Vendor may be liable for a cosmetic inspection report showed to potential buyers during marketing stage;
  • An inspector producing a cosmetic report for a vendor may become liable for potential buyers;
  • Vendor may be liable for opinions given by his/her real estate agent and inspector;
  • Councils may be liable for concrete leaky buildings, which leaked, but may not be suffering structure integrity issue.
There are going to be some more related hot topics such as:
  • How to judge which inspector is competent for doing inspections?
  • Which inspector can be relied on, the Vendor's or the Buyer's?
  • How the Joint and several liabilities in a more complicated background can work (All 13 respondents are "Live"). 
The case can also remind some arguable concepts:
  • Who said post 2005 houses would be safe?
  • Who said cavity based houses would be safe?
  • What said Limitations and Disclaimers will make inspectors safe?
  • Who said concrete house will be OK?

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