The Central Otago District Council (CODC) and Queenstown Lakes District Council (QLDC) are among southern councils hit with a combined insurance bill of more than $500,000 after their liability insurer lost a case over a leaky Napier apartment building.
QLDC is facing a cost of $146,489 while CODC’s bill is set to be $71,935.
The hefty bills for the councils come about after a long drawn out battle between the councils’ insurer and a group of apartment owners in Napier.
The issue came to a light at a Gore District Council committee meeting earlier this week. Council interim chief executive Stephen Parry highlighted the fact the council was going to be hit with a bill to pay out a liability claim it had lost. It was facing a bill of $60,656, he said.
All up the councils were looking at a combined payout of $529,403.
The councils were part of the Riskpool group which paid premiums every year to cover liability.
The liability scheme provided protection to the councils for the likes of watertight building cases. Being in the club meant each member had to pay a bit more in the event of claims exceeding reserves.
Riskpool lost a Supreme Court case over the Napier apartments and was now liable for a $12.884 million payout.
Mr Parry said in the council report this was not the type of Christmas present the council was expecting.
When contacted, Mr Parry said it was one of those things which happened in the leaky homes climate and there was possibly some more residential liability out there the council may face.
The Riskpool scheme was in the throes of being wound up.
Mr Parry said the council would have paid about half a million dollars in premiums and not made a claim.
But the council had to have insurance — as a chief executive he could not recommend not having insurance.
The ‘‘madness of building regulations’’ in the period between 2002 and 2014 had led to many of the claims, he said. Some councils were more conservative with their regulations but still had to pay.
The Queenstown Lakes District Council had moved a motion at a meeting in October to lobby central government to limit council liability to 20% of any liability claim. It seemed like the Gore council was being hit harder than others involved in the build of the Napier apartments, Mr Parry said.
‘‘Everyone else has collapsed and the council is the only one left standing and becomes accountable for everything. It hardly seems fair,’’ he said,
The Queenstown Lakes District Council was already paying out considerable costs after it agreed a confidential settlement with the body corporate of the Oaks Shore apartments in Queenstown, which had initially claimed $163m for leaky building repairs.
The Oaks Shore settlement was expected to cost each ratepayer in the district $300 annually for 30 years.
The Queenstown council was paying the most of any council in the South for its Riskpool contribution, having to pay $146,489.
The councils were part of the Riskpool group which paid premiums every year to cover liability.
