Reviewed Feb 2017The leaky building debacle has established the role of the building surveyors, and their reports on the physical state of the buildings and building code compliance.Almost invariably the legal claims made on the basis of such reports fail to distinguish between lack of maintenance, earthquake damage, subsequent building/landscaping alterations, achievable and usual performance criteria, or the failure of particular building products from established manufacturers; and they assert that mere (past) deviation from present-day best practice or Acceptable Solution is a defect. Only rarely is there a timely attempt to evaluate the significance of the building surveyor’s detailed reportage, or to distinguish between the real world and a perfect one. One might speculate whether this is professional laziness or legal stratagem by the claimants’ advisers, but everybody is thus dragged into the gladiatorial arena either to do battle (with commensurate cost) or to be squeezed (for a payout to avoid the former).In addition to the claims against designers, the commercial toll upon the building construction industry has been enormous, with many contractors being forced into liquidation. The flow-on effect of this has ruined other successful industry contributors who have themselves been put into liquidation as a cash-flow consequence of defaulting head contractors. The law of negligence has been changed significantly by judicial interpretation and decisions. Changes in legislation have shifted responsibilities away from Territorial Authorities, and all of you will be aware of the increase in the documentation now required for a building consent.It seems that the peak of leaky house claims may have now passed, although there are still multi-unit claims in the wings, and more recently NZACS members have faced a welter of claims from the MoE, much of it related to leaking buildings. Whilst NZACS has seen a fall-off in the total number of claims over the past year, the elevation in the art of building disputes will no doubt continue to feed a well-honed industry with a vested interest in maintaining the flow of construction defects claims. It has also alerted clients of the opportunity to make a legal claim or complaint to NZRAB. Many claims (or counterclaims in response to a fees demand) are made irrespective of merit; and many complaints arise from a breakdown in the professional relationship between client and architect, which could ordinarily be resolved by the dispute provisions in the contract for service. It matters not that a claim is dubious or that NZRAB does not have the jurisdiction to resolve contract issues: the value to the claimant/complainant lies in the coercive or punitive power of threatening or making such a claim or complaint.Faced with such circumstances, some architects have commented upon the perceived merit in “going bare”, viz, having no PI insurance. But it is a current requirement of an NZIA practice that the firm holds a minimum PI insurance policy with an indemnity of $250,000. Failure to disclose this may be a potential breach of the Fair Trading Act; going bare won’t save you from a complaint to NZRAB, and is likely to run foul of their rules of ethical conduct.There have been cases where architects have pleaded no personal assets, and referred to assets in family trusts being under the direct control of others. Plaintiff’s lawyers have then countered this by inviting the architect to seek a loan from the trust or otherwise face a bankruptcy petition which could potentially put the architect out of business.Like all professions, we face a litigation risk for our acts of negligence and breach of contracts. We will often be challenged upon our perceived performance by dissatisfied clients or affected interests. We have many ways of addressing this commercial risk to our architectural practice. Having the backing of an appropriate PI insurance policy is but one of these risk minimising opportunities.