Reviewing burden

Costing millions: A weathertightness claim over the Oaks Shores could rise to $160 million

A new review of the building consent system will examine how risk is allocated and managed — potentially saving Queenstown ratepayers millions of dollars in future.

Under the system at present, local authorities are often left holding the can when it comes to leaky-building claims.

Last month Queenstown council’s chief executive Mike Theelen told Mountain Scene the
way the New Zealand law is written, liability is held jointly and severally, so if the builder
isn’t there, and the council is, ‘‘we’re exposed to that’’.

But after behind-the-scenes lobbying by an industry working party, which includes Queenstown mayor Jim Boult, the Ministry of Business, Innovation and Employment (MBIE) have initiated a review of the system.

Housing Minister Megan Woods says it won’t revisit the joint and several liability rule, which provides the greatest assurance building owners will be compensated for any loss resulting from building defects.

‘‘However, the review will closely examine how we manage and allocate risk within the
building system,’’ she says.

That’s music to Boult’s ears.

Call for compulsory long-term insurance

He tells Scene government started looking at ways to speed up the process of issuing building consents — he was invited on to the working party through his role as Local Government NZ’s metro chair.

Other members of the working party included engineers, builders, architects and other trade representatives.

“The system is just crazy”: Queenstown mayor Jim Boult

‘‘One of the points that I made to them right at the start was local authorities issuing consents are always going to take a conservative view when they know that they could end up being the last man standing, as you will have seen has happened in our district.’’

Last month, Scene reported 1.6% of council’s proposed rates rise stemmed from City Hall spending about $40 million in the past year defending and/or resolving weathertightness claims.

That largely relates 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.

Apartment owners, trying to recover repair costs for serious building defects, couldn’t sue Ross Wensley because his development company, other directors of which were Raewyn Wensley, Greg Wensley and Julie Jack, went bust.

Settled: Queenstown’s council reached a confidential settlement over the leaky Oaks Shores Resort, developed by a company associated with Ross Wensley and family

Instead, they lodged claims against the council.

A claim over the 41-unit Oaks Club Resort, on Frankton Road, was settled days before a scheduled court case — the repair bill was estimated to be up to $45m.

Boult says terms of that settlement are confidential, but ‘‘it was a significant sum’’.

A second claim, from the owners of another Wensley complex, the 84-unit Oaks Shores, is ‘‘in the order of $150m’’, but it could rise further.

He believes not only is that unfair to ratepayers, ‘‘the whole law is wrong’’.

‘‘It was set up to, rightly, protect mum and pop from a leaky house.

‘‘We went through that process 10 years ago, or so, where a number of houses ended up leaking after they were built and, quite rightly, there needed to be some protections for mum and dad around that.

‘‘In the two [Wensley] cases … they are commercial buildings; apartment buildings.’’

While MBIE staff initially told the working party reviewing the risk allocation and management was ‘‘outside the gambit’’ of things they’d consider, Boult says he kept pushing, pointing out unless it was taken into account, the consenting process wouldn’t be sped up.

He says he’s ‘‘delighted’’ they’ve now released two separate papers for consultation — one looking at ways to hasten the consenting process, and the other to address the risk.

Ideally, he says, NZ will adopt the model which is commonplace elsewhere in the world, in which there’s a compulsory long-term insurance requirement against building faults between the builders and building owners.

‘‘The law commission looked at this back about 2015 and advised government that the current system is right.

‘‘I think they were wrong, quite wrong.

‘‘The system is just crazy.’’

Submissions close on September 4.

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