Fix the leaks, Downer told

The Silverfield Terraces development in St Lukes. Picture / Paul Estcourt

The High Court has barred a builder from taking a leaky townhouse dispute to the Court of Appeal and reinforced an arbitrator's decision that the construction firm must repair its multi-million-dollar Auckland project.

Downer Construction (NZ) designed and built Silverfield Terraces, a 65-townhouse complex at 3 Wagener Place in St Lukes. Silverfield Developments sold all the units but most are suffering from water damage, according to the High Court judgement.

Silverfield wanted Downer to spend more than $4.2 million fixing the units, but Downer refused and opposed doing the work by a series of legal moves, many this year.

Downer objected to a ruling by disputes arbitrator Tomas Kennedy-Grant, QC, who found that Downer must fix the townhouses. Downer challenged the arbitrator's ability to issue that order.

In the latest move, Downer went to the High Court at Auckland, applying for leave to go to the Court of Appeal to challenge the earlier ruling - for which it needed special permission because it was five weeks out of time - and the right to appeal against an earlier High Court judgment.

Justice Rhys Harrison heard both matters together. He dismissed them both and ordered the builder to pay Silverfield's costs.

Justice Harrison described the matter as having a long history. He began his judgment by summarising Downer's court applications.

Problems began when Downer designed, built and delivered the $6.5 million development, according to the judgement. The contract had warrants and covenants that the townhouses would be watertight. Building work was carried out between August 2000 and July 2001 and Silverfield pre-sold most of the townhouses off the design plans.

But soon after people moved into the development, they reported water leaks, so Silverfield engaged consultant Alexander & Co to investigate, according to the judgement. Its 2002 report found water ingress was widespread and substantial remedial works were necessary.

Justice Harrison described how Downer had initiated four separate applications to the High Court over the matter. The first was an unsuccessful challenge to Mr Kennedy-Grant's jurisdiction to consider a Silverfield claim. The second was an application for leave to appeal, a matter heard by Justice Tony Randerson. The third was a substantive appeal heard by Justice Harrison earlier this year.

"This is the fourth," Justice Harrison said. Downer had identified 10 questions of law arising from one judgment alone, he said.

"It could be said that the company seeks to challenge virtually every opinion," Justice Harrison said. Downer could not use its right of appeal as "a back-door means" of expanding its arguments into a wider challenge. The appeal funnel should narrow rather than widen.

He said he also expected Downer could fix the townhouses.


COURT ACTION

Leaky building dispute - litigation so far this year:

* January 20 and 23: Downer files court applications to appeal against ruling from Tomas Kennedy-Grant, QC.

* February 13: Justice Randerson grants Downer leave to appeal against an award over weathertightness issues.

* March 22: Justice Harrison hears Downer's appeal over townhouse problems in St Lukes.

* May 11: He again delivers judgement in favour of developer Silverfield.

* June 9: He hears Downer application to go to the Court of Appeal over his latest ruling.

* July 11: He dismisses Downer's application and notes the number of challenges.