Council, builder, developer face $36m lawsuit

Natalie Akoorie

Home owners in a Mount Maunganui luxury apartment building have launched a $36 million civil suit against 16 defendants including Tauranga City Council, a prominent developer and a building company, after major defects were found.

All but one of the 48 apartment owners at the Cayman Apartments on Maunganui Rd are part of the legal action that began after Tauranga City Council issued a notation against the $46m building’s property file.

The notation, discovered in early 2016, read the council was aware of “defects” in one apartment and there could be defects in the lot.

It said that the code compliance certificate [CCC] “may have been issued in error and therefore we do not recommend reliance on it”.

The note came after one apartment owner successfully settled out of court with Tauranga City Council over defects to his apartment.

Cayman Apartments body corporate chairman Paul Clark said the news was a huge shock to the owners who bought their apartments relying on the CCC certifying that the building met the Building Code.

“It was tantamount to the council saying the building didn’t have a code compliance certificate, in other words the building possibly didn’t comply with the Building Code . . . it makes it virtually impossible for home owners to sell their apartments or if they do it would likely have to be at a significantly discounted price.”

Clark, a retired lawyer, said the council declined to remove the note based on an engineer’s report it had commissioned, the full details of which it refused to divulge. Owners had no option but to investigate the building and its construction, he said.

A review raised “significant concerns” and a more in-depth investigation found major defects. The cost to owners so far was more than $2 million.

Alleged defects include:

● Building structural integrity compromised;

● Waterproofing issues on balconies, courtyards and roof;

● Inadequate passive fire protection;

● Stormwater issues. In extreme rain events, ground-floor apartments flooded.

The claim alleges a substituted building material substantially altered the building’s structural integrity, did not meet Building Code standards, was not approved under consent, and that council was negligent in its oversight of the build.

“It’s a nightmare,” Clark said. “The owners have no choice but to bring proceedings, to recover the cost of the work needed to remediate the building, against the parties whose errors or omissions created the problem.

“All owners, many of whom are elderly and on fixed incomes, are suffering financial hardship from meeting their share of the cost associated with the investigation and litigation. The situation is also taking a mental toll.”

Owners also faced having to find temporary accommodation for at least 18 months during repair work.

One elderly owner-resident, who did not want to be identified, said the findings had “completely devastated” him and his wife. They had paid tens of thousands toward investigations and legal fees: “It’s cleaned us out.”

It comes as retired judge Graeme Colgan investigates the council’s building inspections after the Bella Vista subdivision debacle, where it issued code compliance certificates on shoddily built houses.

The council was forced to buy back the houses from the 21 affected owners late last year, at a cost of $14m, of which ratepayers paid $3.5m.

The Ministry of Business, Innovation and Employment is also investigating the council’s consenting process.

Other defendants of the Cayman proceedings include XMP & D Ltd building company, whose directors before it went into voluntary liquidation included Peter Cooney and Matthew Largerberg of Classic Builders, one of the biggest residential builders in the Bay of Plenty.

Cooney said he didn’t believe the case would amount to much because he had done nothing wrong. He said Cayman Apartments was built to the accepted standard under the Building Code at the time but it had since changed.

“None of those buildings [from that era] are going to comply . . . We do everything that we’re supposed to do by the book. We stick to the code that’s given us.”

A Tauranga City Council spokesman, asked if the council should have been more vigilant when the Cayman was built in 2007, said because the case was complex and before the courts he could not comment.

However, he said the case had nothing to do with Bella Vista, which was unrelated to weather-tight issues.

A hearing is set for May next year at the High Court in Tauranga.