Out-of-court settlement on 'defective' apartment building in Mt Maunganui

Thursday, 23 December 2021

The Pacific Apartments building in Mt Maunganui was alleged to have “problems with weather-tightness, as well as structural and passive fire issues”.

A dispute over Mt Maunganui apartments alleged to be leaky and have fire and structural issues has been settled with a confidential sum.

The Pacific Apartments building, at 8 Maunganui Road, was built in 2006 and was at the centre of a dispute about “historical defective building claims”, which has spanned several years, a statement from Tauranga City Council said.

“Like many other New Zealand buildings constructed around that time, it was later alleged to have problems with weather-tightness, as well as structural and passive fire issues,” the statement said.

The claims were heading for a 10-week trial in 2022, but the council and other parties have settled out of court.

Tauranga City Council put $29.4m towards a payout, the total of which remains confidential.

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The payout’s total was confidential, but the council put in $29,435,000 and got permission to share that information “in the interests of public transparency”, chief executive Marty Grenfell said.

The Pacific Apartments building was constructed by head contractor Watts and Hughes Construction Ltd, council’s statement said.

It was developed by Asia Pacific Management Ltd and Lincon Pacific Ltd (removed from the Companies Register).

The architect was Avery Team Architects Limited; and the project manager was MPM Projects (2003) Limited.

The dispute over the Pacific Apartments building would have gone to trial if not for the out-of-court settlement.

Councils around New Zealand have had to deal with “legacy liabilities” linked to building deficiencies, Grenfell said.

They have a regulatory role through issuing building consent, and the ability to fund such liabilities, which means they are often left to pay a disproportionate share of claims which should be jointly funded by developers, constructors or professional service providers, the statement said.

Tauranga City Council had earmarked funds for weathertight building claims in its last annual report, Grenfell said.

“We’ve opted to resolve this matter through mediation, which provides certainty to apartment owners who have been dealing with this stressful situation for a number of years.”

The council has also made fundamental changes to its regulatory approach since the early 2000s.

For example, consenting and inspection activities were outsourced in 2005, but are now “a core part of our inhouse regulatory function”.