St Lukes Garden Apartments is a 17-building, 285-unit project undergoing massive repairs because of weathertightness defects. Photo / Mike Scott
Administrators have been appointed at an Auckland apartment complex described as the country’s biggest leaky building after huge delays and cost overruns.
St Lukes Garden Apartments is a 17-building, 285-unit project built between 2003 and 2011 in the Mt Albert/Sandringham area.
Weathertightness defects were first detected in 2014. It is now considered New Zealand’s largest leaky building repair project, with remediation work estimated to cost $240 million.
Apartment owners have been told body corporate levies can no longer fund the repair bill and administrators have been brought in to secure external finance to complete the project.
And while there appears to be significant support for the move, one unit owner told the Herald the appointment would lump extra costs on homeowners already facing financial ruin.
“We’ve been through this saga for the last 12 years. It’s unbelievable what we’ve been through, what we’re still going through. We face losing everything.”
Owners filed civil proceedings in 2014. A settlement worth tens of millions of dollars involving Auckland Council was signed in 2019, with the funds used to begin repairs that year.
At the time of settlement, the repairs were estimated to cost $85m and last about four years.
The complex’s body corporate has been managing the repair project to date.
However, in a letter this week, homeowners were informed the High Court had appointed Deloitte as administrators because of “significant delays in the remediation programme being completed, along with the estimated costs significantly exceeding the original budget”.
“We are advised that one of the consequences of this is that the funding of the project cannot be undertaken by levies alone and external finance is required,” Deloitte administrator Robert Campbell wrote.
“The body corporate, and most of its owners, believed that having regard to the size of the project, and the need to minimise the risk of further delay and complications, it is in their best interests to appoint administrators.”
The letter sets out the administrators’ powers and responsibilities, saying they shall have full legal oversight of the remedial works for the body corporate until the work is completed on all affected apartment blocks, or otherwise ordered by the court.
The time frame includes the issuing of code compliance certificates and “resolution of all financial matters related to the remedial project”.
However, the body corporate and committee will retain “full powers, rights, duties and obligations” in relation to other day-to-day operations, the letter says.
The administrators have been granted access to all records relating to the repair programme, including levying and enforcement actions against unit owners.
The Deloitte appointees must report back regularly on the repair project, including payments, enforcement action and compliance with obligations to creditors.
The administrators are now coming up to speed with the remediation programme and the body corporate’s financial position, the letter says.
“Our primary focus is to take steps to ensure that the remedial work is progressed without further delays.”
A judgment from Justice Rebecca Edwards, granting the appointment of administrators last week, said she was satisfied it was necessary given “the unusual circumstances of this case”.
She cited numerous delays caused by “unforeseen factors”, including previously unidentified defects, construction design challenges, Covid-19 restrictions, and structural, seismic and code compliance issues.
While the first of the three stages of the repairs was now complete, it had taken two years longer than planned.
Stage two was expected to be completed in March 2026, three years behind schedule. The remaining work is expected to be completed in 2027.
Repair costs had “grown exponentially”, the judge said, with the latest estimate $240m.
“Affidavit evidence before the court establishes that the remediation project is the largest of its kind in New Zealand.”
Unit owners would be required to meet any costs not covered by the settlement funds through body corporate levies. The body corporate was trying to arrange a loan to manage the funding risk and mitigate delays because of some owners’ inability to fund the works.
The decision says owners overwhelmingly voted in favour of the body corporate applying to appoint administrators at a special meeting last year.
The judge found while body corporate “dysfunction” was the most common reason to appoint administrators, other circumstances could also necessitate the move.
In this case, the body corporate had performed an “excellent job” in managing the remediation programme to date.
However, it believed administrators had the necessary expertise to help secure more funding, which remained the biggest risk to timely completion, the judge said.
Justice Edwards approved the application on the basis that unit owners had faced years of escalating costs and delays, and could not finance the remaining work without external funds.
“The sums of money involved and the need to secure future funding to complete the repairs within budget and without delay poses complexities in the way the final stages of the remediation project will be managed.
“The appointment of administrators is in the best interests of all owners at this critical stage of the remediation project.”
Home Owners and Buyers Association chief executive Roger Levie said the decision was the first to appoint administrators where a body corporate was not dysfunctional.
It was “good news” for owners and would provide certainty, Levie said.
It meant experts would now take over the project from a committee of eight unit owners who were giving their time voluntarily and did not necessarily have the required expertise to run such a large and complex project.
Lane Nichols is Auckland desk editor for the New Zealand Herald with more than 20 years’ experience in the industry.
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