Owner of Hobson Apartments penthouse loses repair bill fight

The Hobson Apartments at 196 Hobson St in central Auckland. Photo / File

The owner of a top storey of an apartment building in central Auckland has lost a High Court fight over payments to repair the entire complex.

Manchester Securities will have to pay more than $700,000 for repairs to Hobson Apartments, after a High Court decision was upheld by the Court of Appeal of New Zealand.

Manchester, which owns the top level of the 12-storey unit title development, had opposed the building's body corporate's wishes to contribute to the cost of repair work for levels 1-11 after severe water leaks into the building.

Instead, Manchester wished to repair level 12 itself and not contribute to the cost of any other work.

After multiple contested hearings and four judgments issued by Justice Paul Heath between March 2010 and February 2011, a scheme was approved involving a single contract to repair the building as a whole and allowing Manchester to appoint a joint project manager for the level 12 work and contribute to the repairs of the common property on levels 1–11 as well as paying for all of the level 12 work. Its liability would be capped at 11.88 per cent of the total cost of repairs, which was an estimated $6.25 million.

However, because of lengthy delays, escalations and disputes between the parties, when repairs were finished at the end of 2013 the total cost had blown out to $8,131,002, a 41 per cent increase on the original estimate.

When it had become clear the costs were far greater than anticipated, the body corporate applied for an order varying the scheme approved by Justice Heath to avoid what it claimed would be an unjust outcome.

Justice John Fogarty granted the application, ruling that the cost blow-out made the logic of the scheme unjust.

As a result, Manchester had to contribute $513,247 plus GST to the repair of the common property on levels 1–11 and at least $25,882 plus GST to the uncompleted repairs to the common property on level 12, estimated at $217,865

Manchester then went the Court of Appeal but in a decision released today, the court agreed with Justice Fogarty.

"We have followed a different route from that of the High Court. However, we have reached the same conclusion," the court said.

"In our view the amount ordered to be paid by [Justice Fogarty] including GST plus interest, together with the amount of the unpaid levies together with interest, are due and payable."

Retired Wellington solicitor Bob Cummins owns the two top-floor penthouse apartments through Manchester Securities Limited.