Council pays out seven figures in secret settlement
Gag order on deal after new-build home demolished
Auckland Council secretly paid a North Shore homeowner a sevenfigure financial settlement after a house built to the roof line had to be demolished due to alleged structural concerns, the Weekend Herald can reveal.
The deal is shrouded in confidentiality, gagging the parties from divulging details of its terms.
In addition to the secret payout, the council has confirmed it spent $530,000 on legal bills defending the case.
The settlement was agreed in November last year just days after Auckland Mayor Wayne Brown was elected to office promising to “fix Auckland” and address the council’s perilous finances.
Brown says he was unaware of the payout or legal expenses until contacted by the Herald this week and is seeking a briefing on the case.
The confidential settlement deal came halfway through a High Court civil trial which homeowners Christopher and Kathryn Dron took against building company Home Design Company Ltd, concrete specialists Concrete Engineering Ltd and Auckland Council as the consenting body.
As a result of the settlement, the trial was discontinued and no determination of fault handed down.
Proceedings were originally filed in 2020, with a provisional High Court ruling from October 2021 describing the case as involving allegations of defective building.
“It concerns the plaintiffs’ new home in Greenhithe.
“The plaintiffs allege that the defendants are responsible for significant inadequacies in the design and construction of the concrete raft slab and pile foundations to the home.”
It is the second time the Eastvale Close property had to be demolished.
The original 150-year-old villa was first bulldozed after being damaged by fire in 2018, resulting in a sevenfigure payout from the Drons’ insurance company.
The property had nearly been rebuilt when alleged structural concerns emerged in 2019.
Work was eventually stopped on the site, legal proceedings launched and the home eventually pulled down again.
A new home has been consented and is now under construction.
The Weekend Herald sought access to the court file after learning of the large payout. The publication argued it was a matter of public interest involving the integrity of council consenting processes, buildings being built to safe standards and the expenditure of public money on behalf of ratepayers to settle a legal dispute.
The application was declined. The council was the only party opposing the Weekend Herald’s application.
The Drons declined to comment on the case, citing the confidential terms of their settlement.
A spokesman for Home Design Company Ltd confirmed the company was party to the settlement agreement but not the financial payout.
He declined to comment further, saying doing so would breach confidentiality obligations.
The owner of Concrete Engineering Ltd confirmed the matter was settled out of court but said he could not comment further without speaking to his lawyers.
Auckland Council building consents general manager Ian McCormick said the settlement agreement limited what he could say about the case.
Asked how much the council paid out and why the payment was shrouded in secrecy, he said every dispute settlement was subject to a degree of confidentiality to encourage settlement and protect the legal process.
“In the case of this settlement, the terms of the confidentiality clause are wide-ranging and all parties are bound by them.
“Auckland Council is not prepared to breach our obligations under these terms by disclosing any details of the settlement or the underlying facts and allegations relating to the proceeding.”
McCormick stressed the allegations were never determined in court and urged caution around reporting on “any unsubstantiated claims related to defects in the building work and the consenting and inspection process”.
He added that building work on the Greenhithe property was not “signed off ” by the council, only the consents.
“Once issues with the building work became apparent, council inspectors stopped work on the site.
“The building was never completed and no code compliance certificate was sought or obtained.”
The trial began in July last year but was adjourned after it emerged important council documents were not before the court.
McCormick said those documents included policies, training materials and codes of practice.
“This documentation was not specific to the property and was not considered relevant to the claim until part-way through the hearing,” McCormick said. “The council supplied these once they were requested and their possible relevance became apparent.”
McCormick refused to say whether ratepayer money or insurance had funded the settlement payout.
In declining the Weekend Herald’s court file application, Justice Anderson said the council argued open justice principles were adequately met by an earlier provisional court decision summarising the case.
The council also argued the case was never determined due to a settlement being reached, the terms of which included “ongoing confidentiality obligations that are commercially sensitive”.
The judge ruled that while there was public interest in consenting processes and buildings being built to safe standards, publication of “untested” evidence and court documents would not advance that public interest.