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Massive rebuild: A weathertightness claim over the Oaks Shores could rise to more than $160m

By PHILIP CHANDLER

About a quarter of Queenstown council’s proposed rates increase stems from ‘leaky-building’ claims, for which one bust ex-developer’s largely responsible.

Of the proposed 5.96% rates rise, 1.6% stems from council spending about $40 million in
the past financial year defending and/or resolving weathertightness claims.

Council boss Mike Theelen confirms ‘‘a very substantial chunk’’ is in relation to apartments developed in the late 2000s by Invercargill-based developer Ross Wensley, whose daughter-in-law Olivia Wensley’s standing for the mayoralty this year.

In trying to recover repair costs for serious building defects, apartment owners haven’t been able to sue Ross Wensley, as his development company, other directors of which were Raewyn Wensley, Greg Wensley and Julie Jack, went bust.

Instead, they’ve lodged claims against the council, as the body that issued building  consents, and other parties.

Mountain Scene last December reported owners of the 41-unit Oaks Club Resort, on  Queenstown’s Frankton Road, for which the repair bill was estimated to be $40m to $45m, had sued the council and other parties, however they’d settled just days before a scheduled court case.

Settled for tens of millions: The Oaks Club Resort on Frankton Rd

Scene understands that settlement cost ratepayers tens of millions of dollars.

Meanwhile, the council and other parties are also facing a claim of at least $120m — that could rise to $160m-plus — from owners of another Frankton Rd Wensley complex, the
84-unit Oaks Shores, which is being rebuilt block by block.

Last week, a council committee agenda revealed council, in the nine months from July 1 last year, paid lawyers Wynn Williams $2,828,631 to defend weathertightness claims.

Council can be the ‘last person standing’

Theelen says council’s settled leaky-building claims in the past, but none on this scale.

‘‘We haven’t got the largest claims in the country — Auckland, I think, has — but I think the challenge for this community is we have to defray this over a much smaller population base.’’

The leaky-building component of the proposed rates rise — due to be confirmed next Thursday — is $50 on a median residential property.

Theelen says the problem in NZ is council can end up as the ‘last person standing’, when it comes to leaky-building claims.

Minimising cost: Council boss Mike Theelen

‘‘The law doesn’t say, as it does in Australia, your liability is limited to your degree of potential liability.

‘‘The way the law is written in NZ is [liability] is held jointly and severally, so if the builder’s not there, and we are, we’re exposed to that.

‘‘That’s something we and other councils have tried to have MBIE [Ministry of Business, Innovation and Employment] address.’’

The other problem, Theelen says, is you can’t get insurance, either.

‘‘Our fundamental role is to minimise the cost on ratepayers, and make sure as many parties are able to be joined as possible — that’s a responsible thing for me to do.’’

“You don’t turn up to a gun-fight with a knife”

It’s also why the council doesn’t stint on legal advice.

‘‘We also engage a QC, through Wynn Williams, and look, you put that in the context of what the size of the claim was — it’s the old adage, you don’t turn up to a gun-fight with a knife.’’

Theelen says it’s not council’s policy to reveal exactly what they fork out to settle a case.

‘‘We don’t want to incentivise the litigants by saying, ‘this is how much we paid’ or ‘this is how much we put in our budget potentially to pay you’.’’

scoop@scene.co.nz