Council wants $25 million for building sold for a dollar
Wednesday, 17 April 2024
Tauranga City Council wants to recoup $25 million it lost when it pulled the plug on a parking building
It sold the building to a lead contractor for $1 after seismic issues were discovered.
Council claimed the millions was lost because two businesses involved in the building’s design had breached a number of laws.
A High Court judge has rejected Tauranga City Council’s bid to recoup $25million over a failed car park building that the council sold for a dollar when serious defects were discovered.
The parking building on Harrington St was part of a plan by a previous council, to revitalise the city centre. It was set to be a transport hub for 550 cars and 250 bicycles in the CBD.
It wasn’t until construction had started that serious defects were discovered including thin foundations that would need reinforcing, as well as weaknesses in the floor, column and bracing in the building. At that stage council had already sunk $20m into the project.
Council sold the partially built building for $1 in 2021 to avoid further costs by considering options such as demolition, reinforcement and additional materials.
In a recently released High Court ruling it showed the council’s failed attempt to claw back the $25m of ratepayers money it lost in the venture by suing the two companies involved in the design and structural review of the car park building.
Harrison Grierson Holdings Ltd, who designed the carpark building, and Constructure Auckland Ltd who was engaged to review the structural design refuted the council’s claims it was in “breach of a duty of care (negligence); breach of a statutory duty under the Building Act 2004; breach of a duty of care (negligent misstatement); breach of the Fair Trading Act 1986 and breach of contract.
The companies argued that a clause in the contract they signed with the council limit the amount they are liable for and the judge agreed.
Justice Tahana, in her ruling, said that it was “surprising” the issue of liability had not come before the courts given the building code had been in force for two decades.
“Certainly, the evidence indicates that the market has behaved as though limitations of liability are enforceable.”
Justice Tahana ruled that the limitation clauses in the contracts are enforceable.
“Liability is therefore limited by each of the limitation clauses in the Harrison Grierson Contract and the Constructure Contract and the limitation clauses in the producer statements are unenforceable against Tauranga City Council as building owner.”
The Justice granted the council 20 days from March 28 to amend its claim.
But this is not the first time issues surrounding this carpark have been raised.
In 2021, in a letter from the Office of the Auditor General it raised “significant issues” given the millions already sunk into the build.
“In the end, the Council will have nothing to show for the money it has spent,” the letter to council chief executive Marty Grenfell said, criticising the council’s processes and governance.
Four government-appointed commissioners led by former National MP, Anne Tolley have been running the city since 2021, when they were appointed to replace the dysfunctional administration which had been involved in the parking building fiasco.
Correction:** An earlier version of this story incorrectly stated that the plan for the carkpark happened during former Mayor Tenby Powell’s tenure. The plan was instigated by the council prior.**