The High Court ruled recently that Mike and Sharon Hepburn and Tracey McKinnon had been misled by the inspection report for the property in Khandallah, Wellington.
The inspector had stated the house was in generally good condition, with some, mainly minor, remedial work required, and signed a certificate of inspection in accordance with the New Zealand standard.
Building Officials Institute of New Zealand (BOINZ) chief excutive Nick Hill says the case highlights the importance of using only a suitably qualified and accredited building surveyor to carry out inspections.
“People need to be aware that even if an inspector claims to be an ‘accredited building surveyor’ (ABS) — although it is not suggested that was the case in this situation — or operates to the NZS4306:2005 New Zealand residential property inspection standard, that does not mean they are accredited,” Mr Hill says.
“BOINZ has developed the ABS to provide home buyers with confidence in the quality of inspections undertaken, and bring much needed professionalism to this unregulated part of the building market.
“It is in the interests of the three key players in the property sale — seller, buyer and realty agent — to work with an ABS.
“Only by using one of these can you be confident that your inspector has acquired the professional ability, education and standard of competence required to undertake building survey inspections in accordance with NZ Standard 4306:2005.
“This should also serve as a warning to property inspectors that, if they are referencing the Standard when carrying out inspections, then they can expect to be assessed against that if problems ensue.”
The High Court heard that the Hepburns and Mrs Hepburn’s sister Tracey McKinnon, agreed to buy the 260sq m house in 2007, conditional on a satisfactory pre-purchase inspection report.
The real estate agent provided details for pre-purchase inspector Trevor Cunningham, a one-man business, based in Johnsonville, and operating as ABS Contractors and Cunningham Consulting Ltd (CCL).
Having received Mr Cunningham’s report and, following verbal discussions with him, the purchase went ahead, with the buyers paying $652,500.
However, in 2010 they decided to sell the property and received an offer subject to a satisfactory property inspection. That inspection, carried out by Realsure, a BOINZ-accredited surveyor, found serious weathertightness issues, subsequently confirmed by the Weathertight Homes Resolution Service (WHRS).
The owners also found that Realsure had also carried out inspections on the property for two other potential buyers shortly before they had purchased it, and both had withdrawn their offers due to issues outlined in those reports.
They launched legal action against Mr Cunningham and his business for breach of contract, negligent mis-statement and breach of section nine of the Fair Trading Act.
They also took action against the real estate agent Elizabeth Capovilla and Tommy’s Real Estate Ltd. These were settled in 2012.
Justice Williams awarded the plaintiffs gross damages of $364,649,53 plus interest, minus 50% in contributory negligence, due to the fact that they had not carried out remedial works recommended in the ABS report.
A final figure for damages will be set once the court has apportioned liability between the three defendants.
BOINZ is a membership-based and member-focused, not-for-profit charitable organisation, representing Building Control Officials in New Zealand since 1967.
The Accredited Building Surveyor programme is managed by BOINZ and is formal industry recognition of the professional ability, education and standard of competence required to undertake building survey inspections.
Once accredited, the individual will have undergone a stringent assessment procedure and will have successfully obtained accreditation as set out in the programme.
The accreditation process is managed by the Building Surveyors Accreditation Division (also referred to as the National Accreditation Division) of the Building Officials Institute of New Zealand. This process does not contravene the Privacy Act.