The Spencer on Byron in Takapuna developed deficiencies which sparked a legal battle. Photo / Dean Purcell
This court case has since been appealed with Grimshaw & Co winning the appeal.
Owners of apartments in the 23-level Spencer On Byron in Takapuna have won a court case against their own lawyers.
Justice Kiri Tahana in the High Court at Auckland ruled in the case where owners brought proceedings against Grimshaw & Co, which acted for them from early 2008.
Justice Tahana found Grimshaw 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 and was designed to operate as a hotel, featuring a pool, tennis court and gym. Building defects were discovered in 2002.
“Despite its majestic location, it was a leaky building and has been embroiled in litigation,” the judge said.
So in 2007, the body corporate claimed repair costs to fix building defects from those involved in its construction.
The principal defendants were builder Multiplex and the North Shore City Council, which was subsequently merged with other councils to become Auckland Council.
The tower has 255 units and most owners were involved in a lawsuit over building defects which began that year.
The owners engaged Grimshaw to act on their behalf. Those lawyers 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, Justice Tahana noted.
The judge found 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 that 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 judge found a competent lawyer would have spotted the problem and changed things.
But Grimshaw didn’t do that and claimed in hearings that they had done nothing wrong.
Grimshaw, represented by Les Taylor KC and others, challenged almost all aspects of the claim brought in the proceedings against it and denied any breach of its duty of care to the body corporate.
Damages claimed did not fall within the scope of its duty of care, it said. The law firm also said the body corporate had no standing to bring the claim.
Hearings were held last July and August, the initial judgment issued on April 28 this year, then re-issued yesterday.
The judge ruled in favour of the body corporate and encouraged parties to agree on costs between themselves.