Legal battle costs piling up

The legal stoush involving the Whanganui District Council and the MWH Global, the company that designed the city's wastewater treatment plant, has so far cost the council $860,000 in legal fees.

The council is suing MWH Global, citing shortcomings in the concept and final design of the Airport Rd facility.

The council has decided it has to replace the plant at a currently estimated cost of $38 million. That includes $7.7 million of design and sludge removal costs, which has already been spent.

The exact amount the council is seeking in compensation has not been publicised, but earlier it was considering claims of up to $10 million.

Up until the end of December payments made to lawyers acting for the council had reached $860,000.

Yesterday councillor Hamish McDouall, who is leading the council's legal review team, told the Chronicle that if a settlement is reached out of court "costs will usually lie where they fall".

Mr McDouall said the council would seek costs if the matter went to court but given the issue was in mediation that probably was not going to happen. Therefore any settlement would not involve either side paying costs.

The district council decided in July 2013 to sue MWH over the plant, which has been troublesome since it was commissioned in 2007. Late last year Mr McDouall told the Chronicle he was confident a resolution will be reached.

The first mediation took place in Wellington on October 15-16 before an independent arbitrator and was ordered by Justice Denis Clifford.

A judicial decision, released in June, initially had the case going to trial, but at a pre-trial conference, MWH applied for the trial to be postponed. Justice Clifford decided to postpone a trial but, more importantly, ordered MWH to enter into mediation with the council. He also said MWH must make a bona fide effort at mediation with the council.

Mr McDouall said the council's legal team met with MWH in Wellington over two days in October, but no final resolution was reached.

No date had been set for a further meeting and, at the moment, lawyers for both parties were corresponding.

He said the council was still expecting a decent settlement but the amount of money would remain confidential.

"Generally, in any settlement in these situations, there's no admission of liability, and the figure is kept confidential. Unfortunately, any mediation is usually like that, where the sum involved is never revealed, and that's the reality," Mr McDouall said.

If mediation does not bring about a settlement, it would go to court, and a court date may not be available until later this year.