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Council and community trust settle out of court

Buildings involved in a legal battle between Masterton Trust Lands Trust and Masterton District Council and engineers. PHOTOS/EMILY IRELAND

After a lengthy legal battle, Masterton District Council and Masterton Trust Lands Trust have reached multiple out-of-court settlements regarding buildings the council signed off on that were later found to have structural issues.

The settlement details could not be disclosed by either party.

The issues with the trust-owned buildings were first highlighted in 2016 and court proceedings commenced later that year, and during 2017 and 2018.

Masterton Trust Lands Trust [MTLT] manager Andrew Croskery said the trust had four cases [covering five buildings] in the High Court, and one case in the district court relating to structural design faults in several of its buildings.

Engineer Kevin O’Connor and Associates Limited and Masterton District Council [MDC], as the building consent authority, were defendants in all five cases.

The engineer was the primary defendant and the council was the second defendant.

The council’s peer review engineers were also defendants in three of the cases.

Croskery said the four High Court cases had now settled with all defendants. Settlements were agreed on between August and October.

“The district court case has settled with Kevin O’Connor and Associates Limited, but continues against Masterton District Council and its peer review engineers,” Croskery said.

“One further non-structural High Court case remains outstanding.

“That case relates to architectural, consenting, and construction issues at Waiata House and Masterton District Council is again a defendant.”

Waiata House is currently the home of Masterton council meetings after the council bought the building from MTLT in 2017.

The trust managed and completed structural remedial works before the building was handed over in March 2018.

Because weather-tightness issues are part of the outstanding claim, no insurance cover is available for Waiata House, the council’s annual report stated.

Law firm Heaney and Partners have been appointed to act in the council’s defence.

Regarding the settled cases, Croskery said MTLT was pleased to have these four cases resolved.

“This allows us to plan for the future with some certainty, enabling the strengthening of buildings and also planning for future annual grants rounds.”

Annual reports from the trust show about $2.9 million has been spent on seismic review works since 2016.

There were 11 trust-owned buildings found to have structural issues, however the council and engineering firm’s liability was time-limited, Croskery said.

Acting MDC chief executive David Hopman said the council had been “pulled into the liability claims brought against the engineering firm responsible for the designs”.

The council had a role in the consenting process for these buildings and had sought peer reviews of the designs before giving consent, he said.

MDC carries professional indemnity cover from Civic Liability Pool.

“Civic have determined, based on policy wording, any costs associated with defending the proceeding [including any legal fees and expert costs] might be met by Civic,” Hopman said.

“The impact of costs incurred to date by the council is from the income generated by the building services function.

“The current high level of activity in the building sector have allowed the council to pay most of the legal costs to date from this income [not rates].”

MDC’s annual report said the potential for recovery of a substantial portion of the council’s costs remained subject to legal precedent, to be decided by the Court of Appeal.

“This comment relates to a court case by Napier City Council which is challenging in court an insurance company decision that it is not liable for any costs related to a claim on a building involving both weather-tightness and other structural issues,” Hopman said.

“The council’s position is that the non-weather-tightness issues should be covered.”

Two other legal proceedings have been filed against MDC with respect to the council’s role in the building consenting process, its annual report stated.

One relates to structural issues with the Wairarapa Hospital, which was built in 2006/07, and another relates to plumbing issues in the Glenwood Masonic Hospital.

Both proceedings were launched last year.

Legal and insurance advice has been sought for these two issues.

There is no indication of the likelihood of MDC’s defence being successful or otherwise, so no financial provision has been made, the annual report stated.

Hopman said there was an “increasing appetite for finding someone liable for perceived failings in buildings”.

He said that had extended to councils, who have a statutory role in ensuring compliance with the building code. – NZLDR

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