Councillors Sally Butler, Ian Sharp and Kelly Annand said yesterday that the announcement from the chief executive was completely unexpected.
Mr Sharp said he had attended a meeting with Ms Maguire, Mr Hirler, Mr Butler and Building Consent Authority's (BCA) team leader Jock Hyde last year, after having been made aware of the difficulties that had arisen getting compliance for the shed.
At that meeting, Mr Sharp said it was made clear by Mr Hirler that he had milled the timber himself.
"I came out of that meeting feeling all issues around it had been resolved," Mr Sharp said.
He, Mrs Butler and Mrs Annand were surprised to find out the claims that had been made about Mr Watts and that the council had apologised to him.
"The first thing we heard about that was when we were presented with the letter of apology on Thursday last week," said Mrs Annand.
Not only that, they were disappointed to be told there was a gagging order placed on them and that the settlement was only signed by the chief executive and the mayor with no consultation with the other councillors.
"I'm also concerned that the staff are acting unilaterally on our behalf, sending this email from the CHB District Council when we knew nothing about it," Mr Sharp said.
Mrs Butler said it was like a "bolt from the blue".
"The whole process of reviewing the BCA has been shrouded in secrecy with information only being released to selected councillors.
"That is so frustrating when we have a policy of no surprises and collective decision making."
She said the matter brought up a whole raft of questions around the BCA review and detracted from the fact the current council had been a successful one that had achieved a lot.
She added that they were committed to resolving this matter and getting to the bottom of who made the initial complaint, when they sent it and why councillors were not informed, and were determined to get answers before the new council's term began.
Ms Maguire and Mr Hirler said they were also astonished to find out about the claims levelled at Mr Watts, and denied they had bought any wood off him, although they sought his advice on whether what they had already used would be compliant.
It's now been more than a year since they last attempted to get sign-off from the BCA on the structure and they still do not have a certificate of acceptance, despite trying to meet all the conditions.
"We're exhausted and distressed about this whole thing," Ms Maguire said.
"We also feel terrible that Andy has been treated this way."
Mr Hirler said the shed was not the main issue for them, it was the way they had been used to try and discredit Mr Watts, and the impact on the community.
"How can a council be gagged when they are working on the behalf of the ratepayers, the people that employ them?" he asked.
"We need them to represent us and they are not being allowed to."
The three councillors met again with Ms Maguire and Mr Hirler and members of the building department yesterday to try and find a way forward for them to finally get their lean-to consented.
"We are confident that the matter is on its way to being resolved soon," Mrs Butler said.
Ms Maguire said Mrs Butler and Mr Sharp had been very helpful once they became aware of the problems, and that although the complications in gaining consent for their building over the last year had been trying, they appreciated the councillors' support.
"It's devastating that council staff can have so much power over this entire community including councillors who should be working hard on elections at the moment and not dealing with side issues like a garden shed," Mr Hirler said.
Mr Watts said he could not comment on the settlement or the situation at hand.
He did, however, say that he first brought up the issues with the building department, which subsequently resulted in an audit of the BCA, when he was contacted by a builder's wife who was worried about her husband's mental health because of the stress of dealing with the department.
"Before I knew it we had 100 people submitting to the audit review in person, which is unheard of in CHB.
"I have nothing to gain from this personally or politically.
"The community needs to keep the issue alive because they have not been able to operate without fear nor favour for far too long."
CHB Mayor Peter Butler and chief executive John Freeman said the gagging order prevented them from making any comment.