A bitter Auckland cross-lease property dispute saw construction of a $2000 deck escalate into what an aggrieved party says has become a $45,000 nightmare.
Phyllis Burgess, prime director of the Wilbur Trust, complained about her plight after a ruling from Royden Hindle of the New Zealand Dispute Resolution Centre demanded the deck and a fence be demolished because they were illegal and neither could be built without fellow lessees' permission.
Burgess does not live at the property, owned by the trust.
Lawyer Joanna Pidgeon, an Auckland District Law Society councillor and member of the society's property law committee, is worried about New Zealand's 216,000 cross-lease properties, half of them in Auckland, because she says disputes are not uncommon.
With buyers under pressure in the over-heated Auckland property market, she fears many people are buying cross-lease properties without appreciating how restrictive the rules are.
Pidgeon is behind a push to allow cross-lease property owners to convert their titles into the far cleaner, easier fee simple titles to avoid situations like that involving Burgess in Royal Oak, Auckland.
Hindle's decision of March 21 outlined how the trouble unfolded.
Three units stand on the section at 53 Trafalgar St. Unit one, closest to the road, is owned by the trust with which Burgess is associated.
Unit two is owned by Sandra Moxham and unit three by a family named the Hopkins.
The cross-lease document says none of those owners can make any structural alterations to their units without prior written consent of all the others, Hindle said.
Last September, Moxham noticed work at unit one, recently bought by the trust. Moxham objected because the deck was being built on common areas. A 12sq m deck was finished in October, taking up what Hindle said was 20 per cent of the common space between unit one and the road.
As well, an existing fence and the path along the side of the units were extended by about 1m so the area between unit one and the road was made more private. "This work was done without the consent of either Ms Moxham - in fact, it was done against her firm objections - or the Hopkins," Hindle said. So Moxham asked Hindle to rule that the deck and fence be demolished.
Hindle's ruling said Burgess did not agree with the arbitration, challenged his appointment as invalid, said the process was not in proportion to the matter, claimed the deck was not a structure according to the district plan and said the deck hadn't affected the value of Moxham's unit.
Hindle rejected all these points and ruled that the fence and deck come down. But Burgess did not remove them and the matter went to the High Court. The $45,000 was incurred from paying for the dispute resolution, legal and court fees. Burgess said she had not taken the structures down because she got legal advice saying she did not have to, but she said yesterday demolition had begun.
'Futile approach' cost owner $45,000
A specialist arbitrator said the aggrieved party in the Royal Oak case had no one to blame for her $45,000 costs except herself.
John Green of the New Zealand Dispute Resolution Centre, which ruled on the Phyllis Burgess case, said she was to blame.
"The respondent alone has contributed to the significant legal costs she now faces by her refusal to participate in the arbitration dealing with the merits of the claim, preferring instead to mount unsustainable jurisdictional challenges which she has pursued all the way to the High Court - and lost," he said.
Such situations were not uncommon.
"We frequently deal with cross-lease disputes using our expedited commercial arbitration procedures which provide a very quick and cost-effective procedure for resolving those disputes that the parties are unable or unwilling to resolve by negotiation," Green said.
"All such disputes are determined for a fraction of the costs the respondent has incurred in this case, only a small percentage of which actually relate to the arbitration itself."
Green also questioned why Burgess went down the path she chose in her case, adopting what he called a "futile and pointless approach to resolving the underlying dispute".
"Sadly many owners of cross-lease properties have no idea of their rights and obligations under the subject lease agreements and simply treat their properties as if they were on fee-simple titles," he said. "They are not."