The parent company of a defunct building business has been ordered to pay $1.1 million for slowing a leaky school claim from the Ministry of Education.
The High Court has ruled McConnell Ltd, the ultimate shareholding company of H Construction North Island, should pay increased costs after it rejected a settlement offer and attempted to seek an adjournment that wasn't just unsuccessful, but unnecessary.
Last year, the ministry won its case against H Construction North Island, with the court ordering a $13.4m payment to help repair nine leaky buildings at Botany Downs Secondary College in Auckland.
But H Construction North Island Ltd, formerly known as Hawkins Construction North Island Ltd (Hawkins), did not fork out the sum, according to the ministry.
Ten days after Justice Downs' ruling, Hawkins was placed in receivership.
Within a month of the judgment, Hawkins went into voluntary liquidation.
The ministry then sought almost $1.5 million in costs and disbursements, and wanted McConnell Ltd and two of its directors, David McConnell and John McConnell, to pick up the tab.
In a High Court decision released today, Justice Downs ordered McConnell Ltd to pay $1.1m, having accepted the building company's inability to pay had been exploited.
The ministry had offered to settle for $7.1m, when Hawkins' highest counter offer was $2.1m, the judgment showed.
Legal advisers had recommended settling several times, the judgment reads.
"In summary, McConnell authorised Hawkins to vigorously defend a claim that should have been settled; knew HGL was paying Hawkins' legal fees and disbursements because Hawkins could not; was complicit in wielding Hawkins' likely insolvency as a weapon; and guaranteed representation for its subsidiary when Hawkins would otherwise have been unrepresented," Justice Downs said.
Ministry of Education's head of education infrastructure service Kim Shannon said they were pleased to have been awarded $1.1m costs from McConnell Ltd.
Shannon said legal action was always a last resort for the ministry.
However, it expected construction companies to "stand behind their workmanship" and if necessary be held accountable for "negligent building practices".
Shannon said a remediation package of $20m had been approved to ensure the repairs on the school were carried out and students were able to learn in spaces that are fit for purpose.
"We have addressed any urgent health and safety issues at Botany Downs Secondary College in the past as they have arisen, and we will continue to do so as necessary while the remediation work is progressed," Shannon said.
"We plan to stage the remediation of the buildings at the school over three years.
"Initial planning work is under way and work on the buildings is expected to begin later this year."
The leaky building crisis, which emerged in the early 2000s, hit schools particularly hard.
In 2011, then Prime Minister John Key said about 96 per cent of school buildings modified between 1995 and 2005 had weathertightness issues.
Additional reporting Paul McBeth, BusinessDesk