Hilton claim one of five QLDC 'vigorously' defending

by Kim Bowden - Apr 04, 2023

The Queenstown Lakes District Council is "vigorously" defending itself against five legal challenges arising from alleged building defects.

The claims total $12.9 million.

Some of them involve weathertightness issues.

Yesterday Crux reported the owners of the Hilton hotel and its body corporate are claiming more than $5.5 million in damages from the council, alleging it failed in the manner it carried out building inspections and in issuing a Code Compliance Certificate for the accommodation complex.

A spokesperson for the council says regular updates on the council's liability relating to these sorts of claims are provided to the Audit, Finance and Risk Committee.

"At the time of this response council had five unresolved claims which total $12.9 million. In most cases further work is necessary for council to assess each claim in more detail.

"The nature of the potential liability means there are significant inherent uncertainties in estimating the likely costs that will be incurred as a result of the outcome of future court proceedings."

For now, the council is waiting for further submissions of evidence and expert assessments to determine a clearer picture of what's at stake.

"It is common for there to be significant variation in the amounts claimed by owners and the amounts assessed by council in determining council liability, if any."

What is known: the council "intends to vigorously defend these claims", the spokesperson says.

Also: the latest claims pale in comparison to two recent settlements reached with owners of the Oaks Shores and Oaks Club Resort units, where the council forked out an estimated $160 million and $40 million respectively to bring an end to leaky-building claims.

Speaking at a council meeting two weeks ago council finance boss Stewart Burns says while the current claims on council's books are not to the same scale as the Oaks' settlements there's no guarantee there will not be another like them.

In response to a question from councillor Esther Whitehead about what reassurance there is for ratepayers that the council is doing all it can to mitigate the risk of liability to ratepayers, Mr Burns said the council has “a lot of confidence that the way we operate now (when it comes to checks and balances on building work) is appropriate.”

The law, as it stands, often leaves councils as "the last man standing" in claims arising from botched building projects. They have bigger balance sheets, so become the easiest target, and they're not going anyway, unlike construction companies that can be wound up, generally with limited consequences.

However, this idea is being challenged, with opponents to the law advocating for a reduction or capping of councils' liability, which is common practice in other countries.




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