The Spencer on Byron Hotel in Takapuna developed deficiencies which sparked a legal battle. Photo / Dean Purcell
Law firm Grimshaw & Co has won an appeal overturning a High Court ruling that found it negligent in its advice to Takapuna’s Spencer on Byron apartment building owners.
The High Court had ordered Grimshaw & Co to pay damages of more than $3 million for delaying repairs to the leaky tower, due to a dispute over the distribution of a $20.1m settlement.
But now the Court of Appeal has overturned that High Court ruling, handing victory to Grimshaw & Co, represented by a legal team headed by Les Taylor, KC.
Justice Kiri Tahana had ruled in 2023 in favour of the body corporate.
But a decision from Justices Jillian Mallon, Francis Cook and Mark Woolford overturned that.
That decision noted how the building defects litigation was successfully settled in 2013.
Then the body corporate, represented by a legal team headed by David Bigio, KC, got $20.1m.
But the members of the body corporate were initially unable to agree on the allocation of the settlement sum between them.
This caused a delay in the undertaking of the repairs to the building.
Once that disagreement was resolved, the remedial work was undertaken.
The High Court held that the delay in undertaking those repairs increased the cost and that this delay was caused by Grimshaw & Co’s negligent advice.
The increased cost of the repairs formed the basis of the damages award.
Grimshaw & Co challenged the High Court’s findings on both negligence and causation.
Apartment owners also challenged aspects of the High Court’s findings on causation, contending that the award should have been higher.
But the Appeal Court judges have ruled that the High Court erred in concluding that the law had a significant effect on the rights of body corporate members to the fruits of the litigation.
The High Court also erred in finding that amendments to the conduct and distribution agreement would readily have been agreed in a manner that would have avoided the delays caused by the distribution arguments, the Appeal Court found.
In 2023, Justice Tahana summarised the situation at the apartment tower.
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,” she said.
In 2005, the Herald reported on planned litigation.
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 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 & Co to act on their behalf. The Appeal Court decision mentioned lawyers Matt Josephson and Gareth Lewis of that firm.
Lawyers drafted a conduct and distribution agreement that 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.
Justice Tahana ruled two years ago that the lawyers’ advice to the owners about that agreement was negligent.
In 2013, the body corporate agreed to a settlement over the building’s defects, winning $20.05m.
That was a result of a deal reached with Auckland Council and the builder, Multiplex.
In 2011, the Unit Titles Act 2010 came 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 & Co 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.
But the Court of Appeal judges said it did not accept the body corporate’s arguments on its cross-appeal.
The owners had argued that were it not for the alleged negligence of Grimshaw & Co, the remedial works would have taken place much more quickly.
The judgment was made on August 7 after hearings from March 10 to 13.
The appeal was allowed and the judgment of the High Court was set aside. The cross-appeal and the costs appeal were dismissed.
The respondents must pay the appellant costs for a complex appeal, the judges ruled.
Matt Josephson said he was retired but expressed satisfaction with the decision.
“Gareth Lewis and I both feel vindicated because we always felt we did a good job for those clients,” Josephson said.
Lewis did not want to comment. Paul Grimshaw also said he had retired from the firm but described it as a “great decision”.
Grimshaw & Co says that in 2002, Grimshaw and Josephson began acting for leaky home owners and bodies corporate at the Auckland law firm Cairns Slane, then founded Grimshaw & Co in 2005.
Anne Gibson has been the Herald‘s property editor for 25 years, written books and covered property extensively here and overseas.