QLDC legal cost blowout $2.9m

Leaky home claims were yesterday revealed to be largely behind a $2.9 million legal cost overspend by the Queenstown Lakes District Council for the past financial year.

Legal costs of $606,000, a legacy of the Queenstown Airport share-sale litigation, were last month said to be the only major overspending by the Queenstown Lakes District Council for that year.

However, in the draft 2010-11 annual report presented at yesterday's full council meeting, Debra Lawson's chief-executive report said a $2.4 million provision for claims against the council had also been included.

The annual report goes on to list a total of five building-related legal claims received in the district on June 30, four of which related to "alleged weather-tightness building defects".

Two of the five claims, to which the council has been joined as a party, had been settled, with the remaining claims totalling $9.9 million.

Council liability and the likely outcome was yet to be determined, the report said.

However, the council estimated its exposure to the claims would be $4 million.

When approached by the Otago Daily Times, QLDC deputy chief executive Stewart Burns said such situations occurred when the developer of a leaky home "has no money" to pay for a claim.

If the QLDC was named in the development proceedings, as in these particular cases, it might then be forced to "make a large contribution" on the claim.

He confirmed this year was not the first time a leaky home claim had been received by the council, but said no specific information could be given on the claims, for reasons of confidentiality.

Speaking during the meeting, Queenstown Lakes Mayor Vanessa van Uden said that, as a general principle, she was "very uncomfortable" with how the matter stood, but the situation also required ratepayers to "step up".

"This issue single-handedly has a huge profile and it's all about how people take care of their houses and how they handle these things."

Cr Cath Gilmour raised the possibility of pursuing action at a national level to prevent the costs coming back to ratepayers.