Queenstown’s council could face multi-million dollar lawsuits from the owners of leaky and defective commercial buildings.
Councillors were told this morning (Tuesday) that a ruling by the New Zealand Supreme Court means the authority can now potentially be sued.
Queenstown Lakes District Council has previously settled out of court with several residential home owners after signing off work done by builders.
Now it could face claims from the owners of buildings such as schools, hotel, motels and offices.
Stewart Burns, who was acting chief executive until this week, told councillors: “It is difficult at the moment to determine what the size of the problem is and we’re doing some work in that area.
“There’s no insurance available to cover those costs, so the implication of the court’s decision is that the community should be paying for these claims, they shouldn’t be levelled at the current owners. The community as a whole has the responsibility to fund that.
“That will mean our costs will increase as a sector and as a consequence rates will probably increase across the board.”
On October 10, the Supreme Court ruled North Shore City Council is liable for the code of compliance it issued for the Spencer on Byron Hotel Tower.
The ruling, which overturned an earlier Court of Appeal decision, means apartment owners in what is a commercial building can now sue what is now Auckland Council for damages – opening the door for other commercial building claims.
Burns gave the Ministry of Education as an example – which is currently spending $1 billion to repair defective schools.
Burns says it’s “not beyond the realms of possibility” that councils could be liable for a percentage of that, and if a builder has gone bust, councils could foot the whole bill.
Local authorities become liable when they issue building consents and code compliance certificates to builders whose work does not comply with the Building Code.
But there is a 10-year time limit on claims and claims after 2005 could be voided by changes to the Building Act that year.
The 75 owners of houses in the Greenstone Terrace apartment complex filed joint claims in 2011 against the authority and builder Naylor Love, among several claims over recent years relating to “weathertightness”.
Two of five claims across the district in 2010 were settled out of court.