$1.3 million deck disaster leads to gruelling fight

Friday, 4 October 2019

Michelle van der Veer says her family has sold all their assets to pay for their legal battle.

Michelle van der Veer says her family was driven to the edge of financial ruin over an $80,000 deck.

A catalogue of problems with building the deck resulted in spiralling construction and legal costs blowing out the family's debt, ultimately forcing them to sell their home, their business and an investment property bought to pay for their retirement.

She estimated the ordeal has cost the family around $1.3 million thanks to the fire sale, and the missed opportunities that flowed from it.

'It is unbelievable to me, even now, to find ourselves go from being well-off and financially secure to have it all go up in smoke over a small wooden deck replacement,' Michelle van der Veer says.

The 2015 ordeal was followed by the refusal of the deck architect's professional indemnity insurer to compensate the family for losses resulting from what van der Veer alleges are mistakes by the architect.

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The insurer remains nameless, because unlike other forms of insurance, indemnity insurers have woven a web of secrecy around themselves so people who make claims against their policyholders may never learn who the insurer is.

The van der Veers' experience and subsequent legal fight, which began in 2017, prompted her to share her story with government officials reviewing the country's insurance laws. .

The van der Veers had to sell their home.

Have you had an experience with professional indemnity insurance you wish to share? Email rob.stock@stuff.co.nz.

DECK DISASTER

Van der Veer said she and her husband Ton hired an architect to manage the replacement of an elevated deck at her Auckland home, with the stipulation it should not infringe on the cross-lease they shared with multiple neighbours.

But the deck was built too close to the boundary, she said, and was also built so low cars could no longer be parked under it, and the van der Veers had to pay to excavate so they would fit. The removal of the soil necessitated concrete work to strengthen the foundations of the house.

She said the fall or slope on the deck was too shallow requiring remediation, and as the deck altered the building's footprint, it breached the cross-lease shared with neighbours. As a result the can der Veers had to pay their lawyers' fees through months of negotiations to correct it.

MOUNTING DEBT

The legal fees and remedial building work led to van der Veer's debts growing hundreds to thousands of dollars.

'We were left with nearly a million dollars of debt secured against a house with a defective title that we could not sell.

'We had been left in a dire situation and had to make the heartbreaking call to put our home and company on the market and sell what we could to pay down the debt.

'The house sold the week the title finally came through. My business attracted a lot of interest and was sold quickly.

'We had only 15 working days over Christmas to vacate our family home of 14 years and move into emergency housing, putting everything we had in storage.'

She also had to sell a church, and church hall, just off the Clutha Gold Cycle Trail, which the couple had bought as investments, and planned to renovate.

ARCHITECT DENIES WRONG

The architect, who cannot be named because he is being investigated by the New Zealand Registered Architects Board, confirmed van der Veer had lodged a civil claim against him and that his professional indemnity insurer was managing it.

But he said Michelle van der Veer was 'absolutely wrong' to claim she had hired him to manage the project for her and her husband.

'They did originally, but they said, 'No, we want to manage it. We want to save costs'. My obligation in that regard was eliminated,' he said.

'The crux of the matter is they wanted to know what the planning rules were, and I told them what they were.

'My role as an architect is to design buildings.'

He said he advised the couple they would need to consult other owners on the cross-lease about the deck design.

'They didn't do that. That's what it boils down to.'

INSURANCE FIGHT

Van der Veer launched a bid for compensation from the architect, triggering his professional indemnity insurance and beginning a legal fight, with the insurer effectively running the architect's defence.

'Our legal advice warned of how insurers would play their hand, and they have not disappointed, they have behaved as per the advice we received at the outset,' said van der Veer.

This Otago church and church hall were to be the van der Veer's retirement investment.

'Victims, likely already at a low emotional and financial ebb given the event that brought them here, are unwillingly subjected to years of legal 'slap and tickle', a game they do not wish to participate in. Victims are often simply too broken and cannot see the point in continuing, achieving any justice a futile exercise that you cannot win.

'Consumers are lulled into a false sense of security on hearing professionals and the professional bodies they are members of, hold indemnity cover should something go terribly wrong.'

'To date we have lost much of our life's savings; for us, that is about $1.3 million … over a deck. The losses would have been minimal if the insurer had fronted up and fixed up early on, then dealt with the insured.'

CONSUMER NZ'S CONCERNS

Jessica Wilson, Consumer NZ head of research, said van der Veer's case highlighted issues of national importance.

'From what we have seen there is a case to answer,' Wilson said.

Van der Veer's plight highlighted the need for a fast and efficient building tribunal to be established, Wilson said.

'Even though building work is the area where you spend the most money, and have the biggest risk, you are on your own to chase builders and architects through the courts for recompense.'

There was too little transparency about professional indemnity insurance, and little public understanding of how it worked.

Consumer NZ head of research Jessica Wilson says a building court is needed to deal with building compensation claims in an efficient and timely way.

'As a consumer you are relying on the fact that your contract with an architect says they have professional indemnity insurance, but if you do need to claim on that, you can't deal with the insurer directly,' she said.

Nor did consumers know how much the insurance was for, she said.

INSURANCE FAILURE

Insurance Council figures show payouts on professional indemnity-style policies are the lowest of any type of insurance policy.

And as indemnity insurances pay the legal defences of the professionals they cover, some of the claims paid would not have resulted in benefits to people claiming negligence against the professionals who held the policies.

Insurance Council chief executive Tim Grafton said professional indemnity insurance 'generally covers the insured legal liability to others for incorrect professional advice. It also covers the insured defense costs'.

'We have no evidence to support the view that payouts from insurers for this cover is low, he said.

'The vast majority of this cover in New Zealand is provided by offshore insurers and there has been some withdrawal in capacity in recent years due to higher losses.'

Insurers had told him claims costs for professional indemnity insurers were running at a high level.

PROFESSIONAL COMPLAINTS

Van der Veer laid a complaint against the architect at the Registered Architects Board in November 2017.

Chief executive Paul Jackman said an increase in the number of complaints had led to delays dealing with them.

'Since then her complaint has been investigated by an investigating committee. As a result of that investigation, in June 2019 the complaint was referred to a formal disciplinary hearing which is scheduled to take place in early December.'

A formal disciplinary hearing is the final stage of the board's complaints process where evidence was presented and a decision was made as to whether the architect is at fault Jackman said.

Wilson was concerned by the delay as a decision could have provided van der Veer with 'ammunition in taking her claim'.

WHERE TO NEXT?

Van der Veer vowed to fight the claim through the courts, and had built a support team to help her.

She and her husband are back on the property ladder with a home loan, but it was a do-up, and taking on a 30-year mortgage when nearly 50 was daunting, she said.

'Retirement is a bleak outlook now,' she said.