Tauranga Council Seeks $25 Million For Building Sold At A Dollar

A recent High Court ruling has dealt a blow to Tauranga City Council's efforts to recoup $25 million following the sale of a troubled car park building for a mere dollar. The council had hoped to recover funds lost after serious defects were discovered in the building, which was originally intended to be a key component of the city centre's revitalisation plan, news portal Stuff reported.

The parking building, located on Harrington St, was part of a scheme initiated by the previous council, led by then Mayor Tenby Powell, to create a transport hub capable of accommodating 550 cars and 250 bicycles in the CBD. However, construction revealed significant flaws, including thin foundations requiring reinforcement, as well as weaknesses in the floor, columns, and bracing.

Despite already investing $20 million into the project, the council made the decision to sell the partially constructed building in 2021 for a nominal fee to avoid further escalating costs. Options such as demolition, reinforcement, and additional materials were considered to rectify the defects.

The council's attempt to recover the lost funds by suing Harrison Grierson Holdings Ltd, the design company, and Constructure Auckland Ltd, engaged for structural review, was unsuccessful. Both companies refuted claims of negligence, breach of statutory duty, and other allegations, pointing to contractual clauses limiting their liability. The court upheld these clauses as enforceable.

Judge Tahana, in his ruling, expressed surprise that the issue of liability had not been brought before the courts earlier, given that the building code had been in effect for two decades. He noted that the market had consistently treated limitation clauses as enforceable.

The judge granted the council 20 days from March 28 to amend its claim, acknowledging the complexities of the case. This setback is not the first for the council regarding the car park project. In 2021, the Office of the Auditor General raised concerns about the project's management, highlighting the likelihood that the council would have nothing to show for the substantial investment made.

Since 2021, the city has been under the administration of four government-appointed commissioners, including former National MP Anne Tolley. They were tasked with overseeing the city's affairs following the dismissal of the previous administration, which was implicated in the car park building fiasco.