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Fears Mainzeal collapse could hurt Auckland ratepayers

Published: 7:42PM Friday February 08, 2013 Source: ONE Sport

Leaky building owners and Auckland ratepayers face another multi-million dollar bill, after the collapse of construction company Mainzeal this week.

It is feared they will have to cover the massive repair bill for a raft of leaky buildings - including Auckland's Spencer Hotel on Byron, Hobson Gardens Apartments and Botany Downs Town Centre - all built by Mainzeal.

Those repairs could cost tens of millions of dollars.

"If there's work that's incomplete, that will put a burden back, likely onto the principals, which will be the owners," said building consultant Greg O'Sullivan.

Property lawyers believe leaky building claims crippled Mainzeal. A Supreme Court decision that last year paved the way for commercial property owners to claim compensation proved the straw that broke the company's back.

"That opened up, effectively, to have a go at Mainzeal, if they had poorly constructed commercial properties," said leaky homes lawyer Paul Grimshaw.

"Prior to that, it was simply residential properties."

Now that Mainzeal Construction is in receivership, its assets and liabilities are frozen, just like its work sites. That means claimants will have to seek compensation from other parties.

"The fact that Mainzeal are no longer there is going to be problematic for leaky home owners," said Grimshaw.

"They will now obviously have to look to the other people involved in the construction process, such as councils, developers and so on."

Roger Levie of the Home Owners and Buyers Association said "It's a bit unfortunate that Mainzeal can affectively close this company and not carry responsibility forward through its parent company"

"That's an area, I think, the New Zealand legislator needs to look carefully at," he said.

Auckland City Council is playing down concerns, saying it doesn't have "massive exposure".

It says it has one leaky building case, jointly with Mainzeal, before the High Court, but will not say which building or how much compensation is being claimed.