Mount Maunganui Cayman Apartments lawsuit settled out of court

The Cayman Apartment complex in Mount Maunganui. Photo / File

An out-of-court settlement has been negotiated in a lawsuit over defects in a $46m luxury Mount Maunganui apartment building.

But the parties involved won't yet reveal the final number because of a strict confidentiality agreement.

All but one of the owners of 48 units in the Cayman Apartments on Maunganui Rd joined a $36 million civil suit against 16 defendants including the Tauranga City Council.

Cayman Apartments body corporate chairman Paul Clark told NZME an out-of-court settlement had been made.

"Settlement has been reached between the parties and both parties are satisfied with the outcome. The terms of settlement are confidential."

Asked about the future of the building, he said: "The owners are yet to decide. They still have to look at all the options available."

Tauranga mayor Tenby Powell said he could not release the council's portion of the settlement because of the confidentiality agreement.

He said the council was working out how and when it could publicly release that information.

"The outcome was very good for ratepayers, in the circumstances," Powell said.

"No one wants to face a watertight issue of that magnitude."

He said the final settlement figure was "nothing like" some of the figures that had been made public.

Powell said all councils in New Zealand faced the issue of weathertight homes.

Tauranga mayor Tenby Powell. Photo / File

Council corporate services general manager Paul Davidson said the settlement date was May 21.

"We are in discussion with other parties about disclosing the specifics of [the] council's contribution to the settlement."

Tauranga City Council has set aside money in its budget for weathertight home payments.

As of its most recent annual report, from September last year, that amount was $19m. Of that, $9m was added that year.

At that time, the council was facing five significant multi-unit claims for weathertight repairs that were at various stages of legal proceedings and had a potential total liability of $63m.

The council expected its liability to be closer to $13m, but increased its provision to $19m based on claims history and the value of actual claims, according to the September report.

Tauranga City Council corporate services general manager Paul Davidson. Photo / File

The Bay of Plenty Times has sought an update from the council about the provision and proceedings.

The Cayman building was completed in 2007. It has 48 three-bedroom apartments between 150-180sq m.

The legal action began after the council issued a notation against the 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 all apartments.

The six-storey Cayman Apartments complex has 48 units and was completed in 2007. Photo / File

It said the code compliance certificate "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 the council over defects to his apartment.

Clark previously told NZME the council declined to remove the note or divulge the full engineer's report it was based on, leaving owners no option but to investigate the building and its construction. This revealed major defects.

The civil case was launched and a hearing was set for May in the High Court at Hamilton.

As of January 2019 - the most recent immediately available figures - 127 properties in Tauranga have open claims at the Government's Weathertight Homes Resolution Service. Apartments and units are counted as individual properties. The number of total open claims was 15.

Bella Vista update

Tauranga City Council's prosecution against five parties involved in the failed Bella Vista development is due to resume on Monday.

The trial started in March but was paused midway because of the Covid-19 pandemic.

In April, the Ministry of Business, Employment and Innovation completed its review of the council's building control functions, which arose out of the Bella Vista saga.

MBIE released the results of its investigation in March last year and found multiple failings in the council's building control procedures. It identified 10 areas that needed action.

The ministry made its last formal follow-up visit in March this year to check the council's progress and confirmed in April that changes had been made in all areas.

Only one action was still to be fully implemented, relating to a change to the city plan that deals with large-scale earthworks and associated infrastructure, which was delayed by the pandemic.

The council is in the process of seeking a buyer for the Bella Vista land in The Lakes, which it bought from homeowners for $14m, but has not released the list or number of parties being considered, citing commercial negotiation sensitivities.