Body corporate claims lawyers gave negligent advice

Lawyers from Grimshaw & Co gave negligent advice to a group of 200 Auckland apartment owners, a body corporate claims.

In the High Court at Auckland last week, the body corporate for Takapuna apartment building Spencer on Byron said it wants about $12.5 million compensation, arguing its lawyers messed up.

Justice Kiri Tahana was told every single element of the claim would be challenged by the firm, as the lawyer for the body corporate, David Bigio QC, set the stage for a month-long trial.

The suit is against the firm itself and not any particular lawyers. It alleges “ongoing negligent advice”.

After taking the apartment owners as a client in 2008, Grimshaw’s took their claim for poor building work through the courts, including the Supreme Court, before getting a settlement of $20.05m in 2013.

This money was to be spent on fixing the leaky apartment building.

But a dispute arose between owners on how to distribute it, which took up more time before the owners could get to repairs.

The body corporate said this was because Grimshaw’s had levied all owners for fees, but not all owners were entitled to the settlement. Not all apartment owners had joined their individual units to the claim.

As the dispute went on, different classes of owners were created, such as non-plaintiff owners and former owners, creating confusion.

Bigio said the hot construction market meant “the time and delay, as the old adage says, is money”.

“The delay in being able to distribute funds or make them available to secure a building contract would necessarily result in rising construction costs once you actually get to doing the projects,” he said.

The settlement funds were held in trust until 2016, when the construction company which tendered to do the work withdrew its pitch.

The apartment owners said Grimshaw’s should have made sure its agreement for how to distribute settlement funds was fit for purpose and remained so. The body corporate said it failed to do this.

It says this cost it more in legal fees, and also meant the costs increased because by the time the body corporate came to do repairs, there was an increase in council scrutiny over how leaky buildings should be reclad.

Grimshaw & Co’s defence opening was delivered yesterday, with witnesses to be called from today.

The law firm’s case includes arguing the body corporate caused its own loss, and that even if the law firm had been negligent, other disputes would have always arisen.

It says the body corporate was not ready to fix the building immediately anyway, and caused its own loss by deciding to rescope remedial works.

Its defence also suggests previous settlement agreements settled these claims against it.

Les Taylor, QC, is representing the law firm at the hearing, which is expected to take four weeks.