Grimshaw & Co achieved a $20.1 million win for their clients over a leaky building claim in respect of a Takapuna apartment block, but have lost a claim for negligence brought against the leaky building specialist firm.
The owners of apartments in the 23-level Spencer On Byron in Takapuna won the court case against Grimshaw & Co, who bill themselves as leading dispute resolution lawyers specialising in building defect claims. They acted for the building owners since 2008
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Justice Kiri Tahana in the High Court at Auckland found Grimshaw & Co had breached its duty of care to the owners within the body corporate represented by David Bigio KC and others in the proceedings.
The building opened in 2000 as a hotel and has 255 units. Building defects were discovered in 2002, and in 2007, the body corporate claimed repair costs from those involved in its construction, including builder Multiplex and the North Shore City Council, which subsequently merged with other councils to become Auckland Council.
The owners engaged Grimshaw to act on their behalf in 2008 and the firm drafted a conduct and distribution agreement which covered how any proceeds of the legal battle would be allocated between the owners.
That agreement provided that any settlement proceeds were to be used to fix the building. Some owners didn’t join the claim, and the judge found that the lawyers’ advice to the owners about that agreement was negligent.
In 2013, the body corporate agreed to a settlement over building defects which was for a lump sum of $20.05m, the decision said. That was a result of a deal reached with Auckland Council and builder Multiplex.
In 2011, the Unit Titles Act 2010 had come into force and changed the ownership structure of a key part of the building – common areas like the lobby and foyer.
The apartment owners claimed Grimshaw had breached its duty of care to them in failing to advise after that law change that the agreement was invalid or ineffective. That was because it deprived all current unit owners of the benefit of a share in the settlement. Second plaintiffs who had sold their units had changed the damages claimed from estimated repair costs to loss of value on the sale of their units.
After the settlement was made, a dispute ensued: non-plaintiff owners claimed they were entitled to benefit from the settlement for common area properties.
Despite the settlement, repairs did not start until early 2018. Grimshaw changed the litigation claim to reflect the new law but didn’t say changes were also necessary to the agreement, Justice Tahana said.
The body corporate under the new law owned common property within the tower but, under the agreement as it stood, the owners wouldn’t get any allocation from litigation for that area.
The case highlights the complexity of legal disputes over multi-unit developments and the importance of legal advice that fully considers changes in the law.