Taking on quake liability ‘stupid’
The former boss of Fletcher Building says it would have been ‘‘an absolutely stupid decision’’ to accept liability for earthquake repair work the company managed on behalf of the Earthquake Commission (EQC).
The project management office agreement the building company signed in 2011 included a clause that said it was not responsible for the design or construction of any work, nor the work of any contractors or consultants. The Press reported those details in 2015.
More than seven years on from the earthquakes, EQC is dealing with about 2600 outstanding quake claims, all of which are understood to be re-repairs. EQC Minister Megan Woods has pushed for remaining claims to be settled quickly and changes to be made, resulting in former EQC chairman Sir Maarten Wevers’ resignation in February.
Former Fletcher Building chief executive Mark Binns, who left the company at the end of 2011, signed the contract, along with then-EQC chief executive Ian Simpson. Speaking to Radio NZ’s Checkpoint programme yesterday, Binns said he would not have taken on the contract without that clause being included.
He said he was not prepared to put Fletcher in a position where it would have to take on the risks from a ‘‘massive’’ base of unproven subcontractors.
‘‘The risk that we would be taking relative to the fee meant it was an absolutely stupid decision to accept that liability, and at the end of the day, that position was accepted by EQC and the government.’’
Binns said there had been some push-back from either EQC or from then-Earthquake Minister Gerry Brownlee’s office at the time.
‘‘We weren’t doing the work ourselves, we were managing it, and the project was on such a scale we were going to take on resources we hadn’t worked with before, and from a commercial point of view it just would have been plain stupid for us to accept the liability and not have such indemnities from the government.’’
He thought attempting legal action against the company would be ‘‘a very long bow to draw’’ given the contract.
‘‘In legal cases there’s always some chance . . . but on the contract as I remember it and my understanding of contract law, that would be a very very difficult claim to make.’’
EQC was ‘‘probably not in a ready state to deal with such a large catastrophic earthquake’’ directly after the Canterbury quakes, and it had to resource up from a low base, Binns said.
‘‘They most certainly did not have a lot of construction expertise inside the organisation for a rebuild.’’
Binns said there were some teething issues during the build-up phase, some of which ‘‘might be understandable given the issues in resourcing and getting competent people and good systems in’’.
He said the original government timeframe was ‘‘unrealistic’’, which he pushed back on, saying it would be impossible to put a timeframe on due to issues with gearing up and getting in, finding people and accommodation, and dealing with insurers.