Kiwi Income Property Trust suing builder of $540 million shopping mall over alleged building defects.

Kiwi Income Property Trust is suing global builder Brookfield Multiplex over alleged building defects at New Zealand's biggest shopping mall.

After a case note appeared on a daily court list, Kiwi chief executive Chris Gudgeon confirmed action over the $540 million Sylvia Park Shopping Centre.

"This is to do with some defects that have yet to be remedied under the terms of our Sylvia Park construction contract with Brookfield Multiplex," he said.

Full details are yet to emerge and Gudgeon is refusing to say more.


"As the matter is before the courts it is not appropriate for us to comment further," he said.

A case management telephone conference was scheduled last Wednesday in the High Court at Auckland where Sylvia Park Business Centre is taking action against Brookfield Multiplex Construction, before Associate Justice John Fair.

Companies Office records showed Sylvia Park Business Centre is owned by NZ Permanent Trustees and its directors are Kiwi Income Property Trust chiefs Chris Gudgeon, Mark Luker, Gavin Parker and ex-chief executive Angus McNaughton.

Brookfield Multiplex built Kiwi's most valuable mall at a time it was extremely active here and before it wound up its interests.

On December 4, New Zealand-registered Brookfield Multiplex Constructions (NZ) appointed liquidators because of a lack of new projects in a tough market, although it had largely ceased operating here in 2011. The company has liquidators, receivers or voluntary administrators appointed.

Anthony McCullagh and Stephen Lawrence, of PKF Corporate Recovery in Auckland, said in their first report that they had been advised "of claims against the company in relation to various construction contracts. The validity and quantum of these claims has yet to be determined. The liquidators understand the claims relate to The Spencer on Byron, Nautilus Apartments, Century on Anzac, Victopia Apartments and Sylvia Park Shopping Centre."

They found a $2.1 million shortfall for unsecured creditors in the book value of the business and named a number of body corporates on the creditor list, represented by leaky building specialists Grimshaw & Co of the Chorus tower in Wyndham St and Rainey Law of the Vero in Shortland St. Auckland Council, represented by its leaky building specialist counsel Heaney & Co Barristers and Solicitors, were also named as creditors, along with Sylvia Park Business Centre, represented by lawyers MinterEllisonRuddWatts.

"It's all being handled by everyone's solicitors at the moment and part of the reason everyone is agreeing to adjournments is that people are trying to establish how Brookfield Multiplex's insurance fits into all of this and potentially the fact that some of the claimants might be secured creditors," Lawrence said, citing a number of insurers.

Once a company has gone into liquidation, the court's leave must be granted for it to remain named as a party to action.

"We don't want to be seen as frustrating any of the claims so we took a neutral position, staying as a named party for easy of discovery," Lawrence said.

On Thursday, Kiwi released an operational update showing Sylvia Park's value had risen $36.7 million or 7.3 per cent in the year to March 31 "due to its strong trading performance".

Sylvia Park

*71,247sq m Mt Wellington mall
*Completed June 2007
*4002 undercover and open carparks
*100 per cent occupied
*Generated $30.8m net annual rent