The Auditor General has agreed to pay $5.3 million to the Kaipara District Council in an out-of-court settlement without accepting liability for her failure to monitor expenses relating to the controversial Mangawhai wastewater scheme.

Both parties issued a statement late yesterday to confirm the settlement, reached after a mediation conducted by retired High Court judge Rodney Hansen.

In late 2013, the council took Auditor General Lyn Provost to the High Court for her alleged failure to scrutinise poor work done by the Audit Office when scrutinising the council books over the sewerage scheme. Under the then elected council's watch, the size of the project doubled from $35.6 million to an estimated $57.7 million.

Ms Provost offered an unreserved apology to the Kaipara community for the failings in some audit work carried out by her office but disputed the council's claim for damages arising out of those failings. The council alleged that some of the poor decisions it made could have been averted if her office had performed its responsibilities appropriately. Ms Provost's office yesterday said the amount of $5,375,000 was arrived at through mediation between her office, its insurers, and the council. The money will be paid by insurers. Both parties will bear their own costs in the litigation to date.


Council chairman of commissioners, John Robertson, said the payment was a reasonable settlement under the circumstances. He said the High Court action was meant to first establish there was negligence on the Auditor General's part and therefore damages should be paid.

The settlement sum, he said, would be used to reduce council debt which currently stood at $74 million.

The Mangawhai Ratepayers and Residents' Association questioned why the Auditor General was only liable for $5.3million and not the entire amount mismanaged in the project.

"The non admission of liability is some sort of trickery to avoid being taken to court by someone else," association chairman Bruce Rogan said.

He said the council has demonstrated a total lack of concern for the ratepayers by agreeing to an out-of-court settlement.

High Court judge Paul Heath last year said the Auditor-General's assessment that the council's decision to basically double the size of a controversial wastewater project from $35.6 million to an estimated $57.7 million "wasn't appropriate" was a "gross understatement".