The Belle Mer apartment building in Mount Maunganui.
The Belle Mer apartment building in Mount Maunganui.
Buyers of a $1.49 million leaky Mount Maunganui penthouse were awarded $928,000 for non-disclosure.
Justice Gregory Blanchard ordered John and Heather Hutton to pay Murray and Lorette Sole.
The Huttons breached a warranty by failing to disclose 2014 reports on the building’s defects.
Buyers of a $1.49 million leaky beachfront Mount Maunganui penthouse apartment have been awarded $928,000 after claiming the sellers did not disclose known issues with the building.
The previous owners claimed to have “forgotten” about leak problems despite one attending a meeting where these were discussed,a court found.
Justice Gregory Blanchard ordered former apartment owners John and Heather Hutton and Johnston Lawrence Trustee Services to pay $928,806, plus interest and costs, to new owners Murray and Lorette Sole.
The Soles had sought damages of more than $1.2m from the Huttons for breaching warranties in a real estate contract and for misrepresentation.
He noted he had investigated the weathertightness of the apartment building in 2014, with Wayne Pittams of Independent Property Management Services.
Probett and Pittams had found “relatively clear” issues causing water ingress, including:
The thresholds between balconies and internal areas of the apartments were too low.
The waterproof membrane on the balconies was dressed over the building cladding rather than tucked behind.
The cladding continued down to the level of the balcony floors and did not leave a space between the cladding and the floors.
Some “octagonal windows” relied on sealant to stop water ingress and were considered high risk.
Suggestions of issues within the roof that needed further investigation.
“Concerning” and “unacceptable” timber frame decay that was expected to worsen.
Pittams suggested several remedial options. One was a full re-roof, new cladding to the whole of level three and both ends of the building, and tanking to the perimeter of the basement at a cost of $1,969,099.
The report was presented at the body corporate’s 2014 annual general meeting and the minutes noted John Hutton attended and moved several resolutions.
The body corporate decided against re-roofing and recladding the building. Instead, in 2016, a new membrane was overlaid on top of the existing membrane. Individual unit owners agreed to repair leaks in their apartments as they appeared.
Probett emailed the 2014 report to the body corporate secretary after their conversation, with the comment, “unfortunately, buildings are not like wine and they don’t improve with age”.
His updated report found “widespread” issues with the balconies and cladding were likely to continue causing damage if not addressed.
The Belle Mer apartment building in Mount Maunganui.
The remedial work was done and the Soles had a $1,166,191 share of the cost.
According to the High Court judgment, the Soles sought $1,154,306 of this from the Huttons, plus $97,042 to replace their water-damaged kitchen, $50,697 for marina fees to live on their boat for two years during repair work, $460 for furniture removal, and $35,000 in general damages.
A $45,000 claim against a real estate agency was settled before trial, which made the total claim $1,292,507.
The Huttons said the claimed losses were “inflated” and damages should be, at most, $126,167 once betterment – the property value increase from repairs or upgrades – was taken into account. They denied breaching any warranties or that they were liable for misrepresentation.
Work had been carried out on the apartment to deal with water ingress issues, the Huttons said, and some deficiencies identified in the 2014 report did not relate to their apartment.
Judge Blanchard said it was “artificial” to look at the apartment in isolation.
“Water leaks have no regard for legal boundaries,” he said in his judgment.
“The apartments are all part of one building.”
The real estate agency’s contract included a warranty that “no building situated on the property is a ‘leaky building’”. The Soles alleged the Huttons knew about the property’s defects and that Belle Mer was a leaky building.
The Huttons denied they knew of any defects or leaks as they had “forgotten” about the 2014 reports.
Judge Blanchard said he found it “very improbable” the Huttons had forgotten about the reports as they “must have provoked a considerable reaction from owners”.
John Hutton joined the body corporate in 2015 and would have been involved in further discussions about the reports, Judge Blanchard said.
The Huttons were “highly critical” of the Soles’ damages claim, saying much of the work done was unnecessary to remedy defects and damage. They believed the claim should be, at most, $156,167.
Judge Blanchard said the body corporate would have wanted to minimise the costs as much as possible. There was no evidence, only “pure speculation”, that apartment owners in Belle Mer used the necessary repairs as an opportunity to improve and upgrade their apartments.
He reduced the damages claim by 30% for betterment to $808,014. The claim for the Soles’ new kitchen was reduced by 20% to $77,634.
The Soles were awarded $926,806 and the parties were asked to reach an agreement on the amount of interest and costs that should be paid.
