KEY POINTS:
Auckland City Council should minimise its financial exposure to leaky building claims and "aggressively" pursue dodgy developers if it is to cope with a half-billion-dollar bill.
That is the stark warning contained in an internal memo sent by finance and strategy committee chairman Doug Armstrong to the council's chief executive, calling for a "brainstorming" session to face the leaky building crisis.
In the memo, Armstrong says the council has underestimated the cost of the leaky building disaster, and it has become clear that the Government will "resile from their responsibility" to help fund repairs, leaving the council to pick up the tab.
The council has already paid out more than $28 million in leaky building cases - $7m of which has been swallowed up in lawyers' fees and expert advice.
Armstrong said the Government's position was "absolutely disgraceful", and he has called for a meeting this week to discuss new ideas to deal with the crisis, estimated to affect at least 80,000 buildings around the country. Suggestions include:
Minimising council's financial exposure.
Minimising council's professional costs, by tendering legal services.
Seeking accountability from other parties, including inhibiting future ability to trade. "May involve aggressive action even if it costs money, eg, seeking bankruptcy, attacking trusts, taking out public notices recording the facts (name and shame), requiring a more draconian inspection regime for buildings whose prime parties have had a leaky building history."
Taking more cases to court where other parties can be enjoined.
Re-assessing liability based on all mono-clad homes being leaky and new case law.
Armstrong stressed the ideas in his memo were still at the brainstorming stage and "don't have legs yet".
But some aspects, particularly attempts to minimise financial exposure, will raise the hackles of critics who have accused the council of "dragging its heels" on investigating leaky buildings, hoping that they will pass the 10-year limitation period in which owners can seek redress.
"There is a 10-year limitation, but we are not playing on that," said Armstrong. "That's not part of our strategy at all, we are not hiding behind it - if a claim comes through, it comes through. But the council has to defend itself from financial expense. If someone claims after 10 years and we don't have to accept the claim, we won't accept the claim."
Armstrong accepted there were difficulties in aggressively pursuing people involved in the construction of leaky buildings as many had since disappeared, or reinvented themselves as new companies. But he said the council had to try, even it meant pursuing someone to bankruptcy.
He said any developers who had caused problems in the past ought to face more "draconian" inspections.
Bill Duval from the Stop Leaky Building Group said he would be concerned if the council changed its strategy "mid-stream".
He said legislation should be passed in future to protect local bodies, but for the next two to three years the council should concentrate on dealing with legitimate claims from home owners.
Duval said naming and shaming would achieve little and stricter inspections were also unlikely to solve the problem.
