KEY POINTS:
Insurance giant RiskPool has decided against taking a Court of Appeal case against an Auckland homeowner whose home is rotting.
RiskPool, which insures Waitakere City Council, had investigated taking an appeal against Colleen Dicks after she won $250,000 in a High Court decision.
But the insurer issued a statement at noon today, ditching the court action.
"RiskPool, the provider of public liability and professional indemnity protection to local government authorities, today decided not to proceed with its appeal of Justice David Baragwanath's decision in the High Court at Auckland in relation to Mrs Dicks," it announced.
Michael Ross, RiskPool's chairman said the insurer had lodged the appeal "to enable proper consideration of the High Court decision and to give us time to seek advice from senior legal counsel".
He said: "This was received by us yesterday. While the decision not to proceed will leave a number of legal issues unresolved; following the legal advice we have received, we have elected to test those issues in another case."
The judgement from Justice Baragwanath in December found that the principal of the building company - Robert McDonald - was personally liable and that fault was apportioned 80 per cent to the builder and 20 per cent to the Waitakere City Council.
The landmark High Court ruling left the council to pay the full bill of $250,900 in compensation because Mr McDonald's company, Hobson Swan Construction, is in liquidation.
The ruling said Mr McDonald failed to maintain proper standards of workmanship and the council was negligent because staff were untrained or careless.
Lawyers said the judgment could expose councils to huge payouts if they are deemed liable for the leaky homes disaster.
Pursue
Today's statement added that RiskPool would pursue the builder because ratepayers should not be subsidising deficient building practices and materials.
"We feel very sorry for Mrs Dicks and the situation she has found herself in and we trust that today's decision provides certainty and closure for her," he said.
"However, given that all claims against local authorities are eventually borne by ratepayers, RiskPool has an obligation to seek advice and properly consider whether or not to test the issues this judgment raised.
"We look forward to being able to do so in a way that does not impose any unwarranted further economic suffering that Mrs Dicks may have experienced had we pursued this appeal."
ABOUT RISKPOOL:
RiskPool is a mutual fund created by New Zealand local authorities to provide long term, affordable public liability and professional indemnity protection.
RiskPool is administered by Local Government Mutual Funds Trustee Limited a 100 per cent subsidiary of Civic Assurance. Civic is also the Fund Manager. The day to day running of the Pool is contracted to Jardine Lloyd Thompson Limited as scheme manager.
Similar mutual funds have also been established successfully by local government bodies around the world, as an alternative to conventional insurance products.
Membership of RiskPool is open to all local authorities. Contributions are levied according to each member's actual risk profile, claims experience and management of risk. RiskPool started on June 30 1997 and currently has 82 of the total 85 local authorities as members.
