Queenstown Lakes District Council faces leaky-building claims of $11.9 million – but even if the council is pinged, former consents company CivicCorp’s ex-owner appears legally in the clear.
The council’s recent annual report lists three unspecified weathertightness claims as “contingent liabilities”.
Council boss Adam Feeley confirms code compliance certificates – a local body’s sign-off – on the allegedly leaky buildings were issued by CivicCorp.
CivicCorp, a private company owned by the council’s ex-regulatory manager Rene Kampman and family interests, was contracted by the council to handle building and resource consents from 1998 to 2007.
Continuing controversy about consents saw the council buy out CivicCorp in March 2007.
Lakes Environmental, a new council-owned company, emerged to take over CivicCorp’s role.
CivicCorp shares, including its assets and liabilities, were bought as a going concern before any suggestion of leaky-building issues.
Mountain Scene’s been reliably told that following the sale, Kampman has no residual liability for his former company’s activities.
To meet the $11.9m leaks claims, the council has reserved just $1m – it says several other parties are also being sued.
Yet the annual report warns: “Council’s liability in relation to these claims has not been established and it is not possible to determine the outcome of the claims at this stage.”
Then-acting council boss Stewart Burns issued a dire warning to councillors on leaky buildings in October last year:
“It’s difficult to determine the size of the problem. There’s no insurance available to cover [claims and a court has found] the community should be paying for these.
“As a consequence, rates will probably increase across the board,” Burns warned.
In 2009, CivicCorp and Lakes Environmental were fingered in a Department of Building & Housing report for defective weathertightness checking processes between 1998 and 2008.
About 11,000 homes and buildings were constructed locally during that time.
The largest current leaks claim faced by the council is for the 75-unit Greenstone Terraces on Frankton Road, completed in 1999.
This lawsuit – for $10m-plus – lists the council as first defendant, claiming consents were not properly handled, building inspections incompetent, and a code compliance certificate issued when it shouldn’t have been.
It’s understood the claims are being defended.
Greenstone body corp-orate chair Steve Wilde says a two-day mediation hearing is scheduled for December 16.
If rates rise as a result of Greenstone Terraces or other leaky-building lawsuits, the council’s CivicCorp buyout is likely to be raked over.
Former mayor Clive Geddes – who announced the CivicCorp purchase in 2006 – refused to discuss leaky-building problems and liability exclusions with Mountain Scene last week.
Geddes: “I’ve been out of the mayoralty for three years, I’ve not commented on any matter to do with council in that time and I intend to continue that policy.
“I have no up to date information and I can’t recollect ever getting a briefing on any matter like that in the time I was mayor.”
Ex-CivicCorp owner Kampman didn’t return repeated calls.
The council paid Kampman and his family interests $3.05m for CivicCorp, based on $190,000 monthly compensation for the 15 months lost by the company being sold before its council contract expired.
Subsequent Mountain Scene investigations also revealed CivicCorp paid shareholder dividends of $2.6m in the two years before the buyout.
In the wash-up, Queenstown’s council mistakenly overpaid Kampman $218,353.
Kampman willingly repaid it.