Fletcher dismisses claims of defects

Payments on Wellington's $100 million Holiday Inn were suspended by an independent party because of defects, construction industry sources said yesterday.

They were commenting on this week's move by a Fletcher Building business to seek confirmation of payment of a $1.77 million bill by developer Nigel McKenna in the Auckland District Court.

Mark Binns, infrastructure and construction chief executive at Fletcher Building, said the industry sources were wrong and the allegations laughable.

"This is utterly laughable. All these issues have been dealt with in the court," Binns said.

"No defects were raised until well over a year after May 26, 2007, when the Holiday Inn was finished. Also, no defects were raised until after Fletcher had issued a statutory demand against Melview Featherston Street. McKenna withdrew his claims and counterclaims on March 22.

"So all this is totally at odds with the findings of the Building Disputes Tribunal's findings," Binns said.

The industry sources said Fletcher would not be paid the money until it fixed the alleged problems.

The fight came down to a simple issue: Melview demanding Fletcher fix defects in the new building and Fletcher in turn demanding payment before it went ahead.

Melview would not pay until defects - particularly relating to hot water and plumbing - were fixed, the sources said.

In turn, Fletcher has demanded Melview make payments after it won a case before the Building Disputes Tribunal in February.

McKenna had until this week to make the full payment.

Melview is understood to be now preparing an attempt to seek a new hearing before an adjudicator at the Building Disputes Tribunal, citing verification from an independent verifier that it was correct not to pay Fletcher for work up to that stage.

Graeme Christie, acting for Fletcher, told the district court on Tuesday that McKenna had agreed to a schedule so payments could be made.

But McKenna had breached the terms of this and paid only only about $500,000 of the amount owed, which had now ballooned from $1.5 million to $1.77 million as interest accrued.