Body Corporate 366567 v Auckland Council

[2024] NZHC 2089

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2014-404-000716

[2024] NZHC 2089

IN THE MATTER OF

The GORE STREET APARTMENTS also

known as “HARBOUR OAKS”

BETWEEN

BODY CORPORATE 366567

First Plaintiff

AMER LIMITED & ORS
Second Plaintiffs

AND

AUCKLAND COUNCIL

First Defendant

CLARK BROWN ARCHITECTS LIMITED

(In Liquidation)

Second Defendant

(see over for further Defendants)

Hearing:

14 June 2024

Appearances:

G Illingworth KC and G Lewis for the Plaintiffs

C Meechan KC, S Price and C Fairnie for the First Defendant

Judgment:

30 July 2024

JUDGMENT OF WALKER J

[As to quantum determination]

This judgment was delivered by me on 30 July 2024 at 2.30 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

BODY CORPORATE 366567 v AUCKLAND COUNCIL [2024] NZHC 2089 [30 July 2024]

PM DEVELOPMENTS LIMITED (STRUCK OFF)

Third Defendant

EQUUS INDUSTRIES LIMITED
Fourth Defendant

MAPEI   NEW   ZEALAND   LIMITED   (In

liquidation) Fifth Defendant

AQUASTOP LIMITED
Sixth Defendant

CHARLES NORAGER & SON LIMITED

(In Liquidation) Seventh Defendant

HOLMES FIRE & SAFETY LIMITED
Eighth Defendant

FIREPEL KIDD LIMITED
Ninth Defendant

MACDONALD BARNETT PARTNERS LIMITED

Tenth Defendant

HOLMES STRUCTURES LIMITED (DISCONTINUED)

Eleventh Defendant

CHENERY CONTRACTING LIMITED
Twelfth Defendant

ZURICH AUSTRALIAN INSURANCE LIMITED

(Claim discontinued)

BROOKFIELD MULTIPLEX CONSTRUCTIONS (NZ) LIMITED

(In Liquidation) First Third Party

DE BOER WATERPROOFING SOLUTIONS NV (DISCONTINUED)

Second Third Party

[1]    This Court’s judgment dated 30 January 2024 (re-issued on 26 March 2024) determined the plaintiffs’ claims in respect of 13 pleaded building defects and multiple sub-defects.1 It found Auckland Council liable in respect of certain specific defects and, in the case of pleaded defect 1, for only a subset of unprotected steel beams in the core of the building. The findings, in particular the findings as to partial defects only, have a consequential impact on the plaintiffs’ scope of remediation and quantum assessments.

[2]    The full background is set out in the liability judgment and need not be repeated here.

[3]The judgment records:

[1462] The tender and remedial work costs claimed by the plaintiffs are for one global remedial project rather than on a defect-by-defect remediation basis. This assumes the Council is liable for every claimed defect but also recognises overlap between claimed defects and their repair. This was pragmatic. Approaching the exercise as a single managed building contract maximises efficiency, manages costs and disruption and ensures a uniform standard of repair.

[1463] However, the Court’s findings on liability have rendered that approach inutile. The remedial costs claimed therefore need to be adjusted to reflect the plaintiffs’ partial success and consequent impact on the scope of interrelated repair work for which the defendants (or any of them) have been found liable. I require the parties to address both how this is to be approached and to substantively address quantum, informed by the findings in this judgment. I anticipate further submissions regarding quantum and a hearing, at the very least. Potentially, input will be required from the respective experts although the bounds of that input, if any, will need careful consideration.

[4]    Auckland Council is appealing the judgment.2 That appeal addresses the liability findings in relation to defects 1, 7, 8 and 13, in addition to foundational matters such as the Body Corporate standing to sue, the impact of assignments by vendors of units, the level of general damages, the loss on sale findings and the claim that the plaintiffs failed to discharge the burden of proving loss.

1      Body Corporate 366567 v Auckland Council [2024] NZHC 32.

2      Notice of appeal dated 28 February 2024.

[5] The plaintiffs have cross-appealed.3 The cross-appeal addresses the liability findings in relation to defects 1, 2, 6, 8, 12, 13 and core matters including the Building Code compliance assessment requirements, limitation defences under the Building Act 1991 and Building Act 2004 (and challenges to the findings that defects 4, 6 and 12 are time-barred), the relevant acoustic standard for the assessment of projected lost rentals, hotel management company lost profits, betterment, GST and related issues.

[6]    It is fair to say that, between the appeal and cross-appeal, the Court of Appeal will be asked to revisit many, if not most, aspects of the judgment.

[7]    The  Court  of  Appeal  has  scheduled   a  two-week  hearing  commencing   4 August 2025.

[8]    Having invited the parties to consider the process for determining quantum based on the judgment of this Court, it is readily apparent that the parties do not agree on the boundaries to that quantum exercise.4 More fundamentally, they are diametrically opposed on the question of whether the quantum determination should await the Court of Appeal’s findings.

[9]    This judgment determines that more fundamental question. It does not seek to resolve the former question although the potential ambit of that exercise has a role in informing that more fundamental question.

[10]   After receiving written submissions and hearing counsel for both Auckland Council and the plaintiffs, I have determined that the quantum process must be adjourned until the Court of Appeal determines the appeal. I set out my reasons here.

[11]   First, there is the scope of the challenges to the judgment to consider. There is a potential that the Court of Appeal’s findings will alter the landscape thereby affecting the extent of the works , potentially the methodology, and certainly the duration, with knock-on effects to both repair cost and consequential losses. The prospect of redundancy of any quantum exercise at this stage is real and material.

3      Amended notice of Cross-appeal dated 28 March 2024.

4      The exception relates to a process for finalising quantum for defects 10 and 11.

[12]   Secondly, I accept the plaintiffs’ perspective that the quantum process will likely take months of preparation and considerable resources. I do not accept as realistic that all is required is a three-day hearing on quantum based on the evidence currently before the Court. In my assessment, the Court needs to hear further from a limited number of relevant experts concurrently. There is also a need for (and I will be directing) comprehensive expert caucusing prior to resumption of a quantum hearing. That may well take in the order of five to seven days of hearing time. It is not practicable to accommodate a hearing of that length with judgment delivered before the Court of Appeal hearing.

[13]   I put to one side the tentative suggestion by Ms Meechan KC that it would be appropriate for a quantum judgment to be consolidated with the liability judgment before the Court of Appeal. While that would be a matter for the Court of Appeal, it is not inherently attractive for an appellate court to hear submissions on quantum, based on a landscape which may or may not withstand appellate scrutiny. It would also add significantly to hearing time which is not currently accommodated.

[14]   Third, the prospect of wasting the parties’ resources and Court resources in a potentially redundant quantum exercise informs the question. In this regard, the fact that the plaintiffs largely comprise individual owners of the apartment units in the building complex is a fundamental consideration, as is the prospect of some complexity in terms of revisions to scope.

[15]   Fourthly, while Auckland Council’s position that it is entitled to know the consequences of judgment against it is correct, that submission does not resonate when so much is before the Court of Appeal.

[16]   I find that these factors compellingly tell against Auckland Council’s desire to push on with the quantum exercise. Instead, I accept the plaintiffs’ position. I accept that some further input is needed in relation to defect 1 because of the finding of liability in respect of beams B4 and B5. There is some heft to the submission that there is a need to design an interface of those beams with other building elements and consequential works arising from protection to those beams. Whether that results in an updated construction programme and updated methodology (comprising a subset

of the programme in evidence), which is the plaintiffs’ contention, or whether that would constitute a second bite of the quantum cherry, (Auckland Council’s contention) is not necessary to determine at this stage. Some matters are likely to be informed by whether the plaintiffs will self-fund any element of the “remediation”. Counsel for the plaintiffs was unable to advise the Court of the plaintiffs’ intentions save for indicating that the Body Corporate will only be remediating where Building Code breaches are established and is therefore waiting for this process to “play out”.

[17]   In essence, clearly the plaintiffs will not be able to repair until a final position is reached. It must follow that Auckland Council cannot know of its actual exposure, if any, until the Court of Appeal decides the appeal and cross-appeal. While it is desirable for Auckland Council to have a finite judgment including the matter of quantum as quickly as possible, I am mindful that as an “expert” in the building space, it will at least be able to estimate the impact of the judgment in quantum terms. No doubt that will be in line with its perspective that there is no opportunity for a “do over” on quantum and the plaintiffs are primarily limited to evidence already produced with no more than narrowly confined expert assistance to address adjustment.

Result

[18]   Accordingly, I decline at this time to set the parameters of the quantum exercise. I defer the determination of quantum save in respect of defects 10 and 11, until disposal of the appeal.

[19]   I do not apprehend that the parties require directions in respect of defects 10 and 11 but I reserve leave for the parties to seek directions and/or determination in respect of defects 10 and 11 if they are unable to resolve those matters. Given the amounts which appear to be in issue, it should be unlikely that the assistance of the Court will be required.

[20]I reserve any question of costs.

............................................................

Walker J