6 Mar 2018

Fletcher's insisted EQC contract have indemnity clause

From Checkpoint, 5:09 pm on 6 March 2018

Former Fletcher Construction CEO Mark Binns told John Campbell EQC was under resourced and off-guard, and Fletcher's wouldn't have signed the Canterbury contract without an indemnity clause.

At least half of the unresolved EQC claims for the Canterbury quakes are for re-repairs. People who bought homes after the quakes, based on EQC paperwork that states they've been fixed, are now discovering huge issues with the repairs, and are facing massive repair bills their insurance companies won't always cover them for. 

Their homes were repaired as part of the Canterbury Home Repair programme. 

Checkpoint was leaked a copy of the contract between EQC and Fletcher Construction for the management of the programme, signed by by Ian Simpson, CEO of EQC, and Mark Binns, who was then Chief Executive, Infrastructure, of Fletcher Construction.

Mr Binns told Checkpoint with John Campbell EQC was under prepared to deal with such a large catastrophic earthquake. Former EQC Minister Gerry Brownlee's office or EQC asked Fletcher's to take on a higher degree of risk but the company wasn't prepared to do that. As a result, the contract has a section which indemnifies Fletcher's from any liability.

Section 23.1 states:“EQC indemnifies FCC for all costs and expenses FCC may suffer and for any claims made against FCC in connection with FCC carrying out its obligations under this agreement.”

Mr Binns said Fletcher's had to sub-contract to companies it hadn't worked with previously, so wasn't prepared to take on any risk associated with the repairs. 

“From a commercial point of view it would have been plain stupid for us to accept the liability and not have such indemnities from the government.”

National party's EQC spokesperson Stuart Smith said last night that EQC should sue Fletcher's if there's compelling evidence to do so, but Mr Binns, a former lawyer, said that would be a "very long bow to draw".

He said there were certainly "teething issues" with EQC, especially around initially getting competent people and good systems in place.

"When you resource up so quickly and have so much pressure, and you’re bringing so many people on board, you know, you just have to say statistically, yes, in all probability you’re going to get some people who are below the level required.”

There was a lot of pressure from Mr Brownlee's office to get things sorted in a "relatively short" period of time. 

“We pushed back and said, look, it is impossible to put a time frame on this, and I think if I recall correctly at the time I thought this would take five years to complete, and on hindsight I was probably a bit short.

“I would say their expectations were unrealistic, and that’s why we pushed back and said it was just impossible to do it within that time period.”