The Clutha District Council has been ordered to pay nearly $2 million to Dunedin businessman Russell Lund after losing its fight over Balclutha's botched Centennial Pool upgrade.

The Otago Daily Times (ODT) understands the order, by the Building Disputes Tribunal, relates to the long-running dispute over defects, delays and disparaging comments that emerged during and after the pool project.

The council, in a statement late yesterday, confirmed it had "a liability" to pay $1.963 million relating to "significant contractual works undertaken some years ago".

The determination had been made by "an authority", although all details relating to it - including the name of the authority and the other party involved - remained confidential, the statement said.


The ODT understands the party is Lund, having last year reported Lund was threatening a "significant" financial claim against the council relating to the pool project's headaches.

Balclutha's upgraded pool opened in 2012, more than eight months late and $3.3 million over its original $1 million budget.

Last August, the council's then-corporate services group manager, Alan Dickson, confirmed details of the "ongoing dispute" with Lund, although Mayor Bryan Cadogan said at the time he could not comment.

Cadogan said yesterday legal advice meant he was still "absolutely constrained" from discussing the matter.

However, in the council statement released yesterday, Cadogan said he was "sickened" by the situation, which should never have happened.

The "frustration that a project from so many years ago now comes back to haunt us is rightfully a concern for all ratepayers", he said.

"The determination highlighted deficiencies that needed to be addressed and while all possible measures are now in place ... to ensure this can't happen again, council will be conducting a further review to ensure our processes are as robust as possible," he said.

The determination was received only late last week, and the payment approved at a hastily arranged and non-public council meeting on Monday.

The council was now "assessing our options to make sure we do the best by our ratepayers", he said, without elaborating.

The ODT understands the determination could yet be appealed, but it was not clear yesterday whether the council also faced other costs, such as legal fees relating to the dispute, on top of the determination.

Lund, contacted late yesterday, said he was not able to comment, either.

The determination was the latest twist in the long-running saga of the problematic pool project, which struck trouble when the budget began escalating - from $1 million in 2009 to $4.3 million two years later.

By then, the council had identified more than 60 defects it wanted the contractor to fix, including a leaking roof and malfunctioning water heating system, which led to a series of complaints and closures.

Dickson, speaking at the time, said the council had tried to get Lund to fix the faults, but he "sort of went missing in action for a while", before pursuing his claim last year.

Lund would not discuss details at the time, but said he would have "something to say about that, most definitely".

Cadogan, in yesterday's statement, said the council had taken steps to improve its processes since the problematic project - which he did not identify - occurred.

That included the introduction of the council's audit and risk committee, with an independent chair, and major project supervisory groups.

That had helped smooth the way for the successful $3.1 million upgrade of Balclutha's main street, and other projects were "tracking well", he said.