Downer in dispute with Nautilus owners over roof repairs

Downer is in a dispute with owners of leaky apartments in Orewa's Nautilus tower, now under repair after a $25.07 million court payout.

At issue is the repair of the roof of the building, partly covered in a 12-level protective wrap as builders fix it. Downer, which is listed on both sides of the Tasman, was initially involved in litigation over the apartments but successfully removed itself as a respondant in 2014.

The Nautilus apartment building in Orewa. Photo/Doug Sherring

Michael Sharp, Downer Group's Sydney-based group head of corporate affairs, yesterday outlined issues between the two parties, describing how a deal had been struck four years ago for Downer to fix the roof.

"Downer, the body corporate and owners reached a settlement in early 2013. As part of the settlement, Downer agreed to carry out specified repairs to the roof - in particular to rectify alleged membrane defects," Sharp said.

"Downer remains willing to carry out the works as agreed and Downer has also offered to pay the cost of the works to the owners so that, if the owners prefer, their own contractors can carry out the works," he said.

But the agreement had broken down over the terms of the work, said Sharp of Downer Group, which has a A$4.26b market capitalisation on the Australian Stock Exchange.

"We are engaging with all parties to resolve this issue and hope agreement is reached soon," Sharp said.

The $25.07m that owners won in court did not include the repair of the roof "because Downers said they would undertake that at their expense", the owner said.

Legacy Construction won the contract to fix the block and Prendos were employed by the body corporate to design and project manage the work. More details are here.

"We don't want to go through all this again in 10 years," the owner said, fearing issues with the roof.

Lawyer Tim Rainey has represented Nautilus owners and said in 2015 when he won the case that the $25.07m was the highest leaky building payout at the time.

Today, Rainey acknowledged the dispute over the scope of the repairs.

"I am acutely concerned the matter is the subject of ongoing discussions. What happened was that when the case settled with Downer, it was agreed that Downer would carry out the repairs required to the roof. Certain things were excluded and the body corporate was going to do those things and Downer was going to apply for a building consent or get a waiver to do certain repairs," Rainey said.

But there was a dispute between the body corporate's experts and Downer's experts over the scope of those repairs, which had been "sold" to the owners on the basis that Downer would get consent and code compliance at the end with the 30-year guarantee, Rainey indicated.

Downer had legal advice over the repair scope, which differed from what the body corporate's experts said was required, Rainey indicated.

When he won the case, Rainey described it as a landmark victory.

After a six-week trial, Auckland Council was ordered to pay more than $25m to numerous owners with interests in the 150-unit.

Completed in 2004, Nautilus has dealt with a number of construction defects, compromising the water-tightness of the structure's roof, cladding and balconies, Rainey said after winning the case.

Nautilus owners won:
• $21,958,133 remediation costs

• $1,800,000 general damages

• $1,284,673 consequentials (lost rent, alternative accommodation costs, storage of items, etc)

•$29,701 interim repair costs

• $25,072,507 total. Further $1 million costs, including $800,000 expert witness fees, yet to be decided