Council settles multi-million dollar leaky-building claim, but cost to Napier ratepayers remains secret

Friday, 1 March 2019

The council said not all the issues with the apartments on Humber Street are related to weathertightness.

A multi-million dollar leaky-building claim has been settled out of court by Napier City Council, but ratepayers will not know what it's cost them.

The claim concerned the Waterfront apartments, in Napier, which were completed in 2007 and later found to be leaky buildings.

Napier City Council chief executive officer Wayne Jack said the laws around joint and several liability 'need urgent review by government'.

In 2013 apartment owners launched legal action against the council and ten other parties involved in the construction of the apartments.

The apartment owners claimed the council was negligent because as building regulator it owed a duty of care in performing regulatory functions as an inspector, and it breached that duty in each of the three components of that role (issuing building consents, inspections during construction, and issuing code compliance certificates).

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The Humber Street apartments, finished in 2007, were later found to have a raft of issues, including structural steel corrosion and a leaky roof.

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The owners said that as a result of these breaches the apartments were defectively constructed. The cost of remedial work had been estimated at $9,336,298.

The owners and the council settled out of court last month.

Council chief executive officer Wayne Jack said the settlement was subject to a confidentiality agreement 'which is customary in these cases', and he would not divulge the actual cost ratepayers.

'It is good to get this settled, not only from a council perspective, but also for the owners of the apartments, as this matter has been going on for some time,' he said.

He said the laws around joint and several liability 'need urgent review by government'.

'Because 'last man standing' system is not a fair system upon the ratepayer,' he said.

A spokeswoman for the Ministry of Business, Innovation and Employment said the ministry was providing advice on the issue.

'Public consultation on proposals for legislative change is expected to take place in the coming months,' she said.

Some of the faults on the Humber street building involved weathertightness.

The council is insured under the Local Government Mutual Funds Trustee Ltd, or 'RiskPool'.

In a High Court ruling last year the council accepted it would not be indemnified for any weathertightness and any part-weathertightnes defects, but argued it could be indemnified for the non-weathertightness defects.

The council, which is still arguing the case in the High Court, told Justice Anne Hinton that several of the issues in the building were unrelated to weather-tightness and it sought indemnity cover from Riskpool to cover it for its liability.

Riskpool wouldn't indemnify the council and applied to strike-out the claim on the basis that the council had 'no tenable claim for indemnity in respect of any liability'.

Riskpool said the council was facing a statement of claim from a third party that arose from issues related to weather-tightness and on that basis it should be excluded from cover.

Justice Hinton did not agree with RiskPool's argument.

'RiskPool has failed to satisfy me that the council has no realistic prospect of establishing a right to indemnity, in the event the council is found liable to the Waterfront Plaintiffs,' Justice Hinton ruled.

The matter is still before the court.

Remediation of the buildings has been partially completed.