An out-of-court settlement paid to the Whanganui District Council by MWH, the designers of the city's failed wastewater treatment plant, should remain a secret, the Ombudsman has ruled.

The company settled the lawsuit brought against it by the council with a payment on March 11, 2016, with MWH New Zealand Ltd admitting no fault or liability.

But the sum paid is subject to a confidentiality clause and has never been made public.

However, in March 2016 the council applied $8 million to debt reduction.


Read more: Whanganui District Council gets tick from auditors on wastewater plant

Council sued MWH in July 2013 over what it claimed was a faulty design and, at that time, was said to be considering a claim of up to $10m for negligence.

At the time of the settlement, the Chronicle made a request for details under the Local Government Official Information and Meetings Act 1987 but this was declined by council which said maintaining the confidentiality of the settlement outweighed the public interest.

The Chronicle took the matter to the Ombudsman which ruled council was entitled to refuse the request for the settlement amount but instead recommended it should disclose a "certain level of information".

The Ombudsman said there was public interest in council disclosing "adequate information to promote the council's accountability, when dealing with public funds, in achieving a settlement that was responsible and reasonable in all the circumstances".

Chief executive Kym Fell said the council accepted the Ombudsman's recommendation.

"I now advise that the out-of-court settlement resulted in the council receiving an amount in excess of (both) the total costs associated with the litigation, including legal costs and expert fees, and the professional fees paid to MWH New Zealand Ltd in connection with the wastewater plant.

"The council followed the Ombudsman's recommendation to the letter. It will not be providing any more official information," Mr Fell said.

Up until the end of 2015, payments made to lawyers acting for the council had reached $860,000.

The city's new $39m wastewater treatment plant is due to be completed shortly and operating by mid-2018.