Businesses leave unstable units

23:07, Mar 18 2014
Southland Times photo
Units five to 12 of the Gorge Rd Retail Centre. Three units have major subsidence issues.

Cracking walls, no insurance and a sinking building. Grant Bryant reports.

A sinking building at the Gorge Rd retail centre has led to tenants buying their way out of leases early, unit owners unable to insure, and a brewing real estate deal dispute.

The situation has been dubbed ''Gorge-Gate'' after the Watergate scandal by one tenant who has negotiated her way out of a lease early after fears of what would happen in even a minor earthquake.

Three retail units, with two apartments built upstairs are affected.

A geotechnical report, completed late last year and obtained by the ifMirrornf states one unit has subsided by 234mm and a unit next door has settled by 198mm - making the whole block un-insurable.

The subsidence is caused by a circular slip failure zone - swampy ground unable to support the weight of the building.


It has been no secret among locals, but the report, commissioned by Pitcaithly Body Corporate Services and completed by GM Designs shows it was a concern even as the concrete floor slabs dried during construction in 2000 and 2001, and states concerns over an ''out of control'' building contractor who had since gone into liquidation - along with the building certifier.

''You had a contractor who was out of control in the building of these units ... records show the contractor laid concrete against any advice.''

Fast-forward 14 years and the problems have multiplied, causing grief for owners and tenants.

''It is difficult for owners who have bought these units to understand how such a situation could even exist,'' the report notes.

Dog Day Care owner Erica Wymore started the dog sitting business in August 2012, leasing a double unit at the northern end of the block.

Setting up the business involved laying interlocking rubber mats which were glued to the floor and erecting fencing on top of that to divide the space.

Moisture seeping upwards along the joins of the rubber mats and gates swinging open in the fencing were the first signs of something wrong, and upon seeing the report she pulled the pin on the business.

''The landlord asked why I wanted to end the lease early, saying it wouldn't affect business, but if I stayed there's no telling how bad it could have got, or how quickly. The big thing I worried about was what would happen in an earthquake. Dogs are part of people's family and I didn't want to be explaining that something terrible might have happened in even just a small earthquake.''

She would not have invested in the business at all had she known of the subsidence.

Since paying rent in advance to get out of the lease and ripping up the rubber flooring, large cracks were found on the unit's floor.

There were also concerns that because the building was built on unstable swampy ground that gasses could be leaching through the floor, Ms Wymore said.

Refuel cafe owner Steve Kay will vacate his unit - the most badly affected by subsidence - on Friday.

He did not want to comment other than to say he was very glad to be leaving and tenants needed disclosure of any building defects before signing a lease - something he says did not happen in his case.

The remaining unit is vacant.

From the GM Designs reports

● Because of ''gradual settlements ... no insurance cover extends to these units in any form and from any source.''

● One solution to the overall problem would be to ''urethane jacking'' - pumping urethane between the ground and underside of the concrete flooring to bring the building back to level. This could cost ''in the order'' of $100,000 per unit.

● ''Some responsibility'' could still be held by the Queenstown Lakes District Council for the overall situation but litigation costs to determine any level of culpability would be ''most significant.''

When questioned whether he had any responsibility for the current subsidence situation in some of the units, the Gorge Road Retail Centre's original developer Dennis Thompson said all compliance had been carried out at the time of construction.

''The building was done to the engineering standards of the time, and passed. If there's been subsidence since then - which happens all over the place when you've got bad ground -  well that's a fact of life,'' he said.

When asked what unit owners affected by subsidence - who could not get insurance and faced a possible $100,000 bill to fix the situation - should do, he offered a philosophical approach.

''Life's not perfect and sometime's you've just gotta get up, get on and fix it.'' 

Mr Thompson's theory for possible reasons of the subsidence included earthquakes.

When it was pointed out to the Christchurch resident that Queenstown had not been anywhere near as affected by earthquakes as his home city, he said even minor shakes could have a big effect on unstable ground.

Queenstown Investment Holdings was owned by Christchurch developer Dennis Thompson and his partner Sharon Bartlett.

The company also completed the Base backpackers building in Shotover St.

The company was liquidated in 2008 and struck off by the New Zealand Companies Office in 2010.

In 2009 Fairfax found 17 companies connected with Thompson had gone into liquidation in 2007 and 2008, with combined debts of about $18 million.


The Southland Times