Ten years on from agreement to remediate the 12-storey Hobson Apartments in Auckland’s central business district, the job is incomplete with Robert Cummins’ Manchester Securities as owner of the top floor demanding other owners share the cost of what is heading to be a ten million dollar top floor rebuild.
This latest round of litigation is culmination of years of in-fighting over allocation of common area remediation costs. Hobson Apartments’ body corporate is still waiting for Manchester Securities Ltd to pay arrears of body corporate levies plus a $321,200 court order arising from earlier litigation.
Justice Powell ruled the top floor remediation and rebuild is Manchester’s responsibility.
Manchester Securities is in liquidation, insolvent.
In 2010, a court-approved Unit Titles Act scheme of arrangement was put in place to deal with weathertightness issues at Hobson Apartments.
The approved scheme has Manchester Securities separately responsible for remediation of its top floor apartment. Ownership of this floor includes rights to use airspace above.
Mr Cummins has proceeded to build what is in effect a thirteenth floor, with construction of two further apartments on top of the floor twelve apartment and consequential reworking of the roofline.
This redevelopment has been a financial disaster. With funding from Sage Securities, owned by Mr Cummins’ business associate Philip McGaveston, cost overruns have seen nine million dollars spent to date with at least another $1.5 million needed to make level twelve watertight and to obtain building code compliance.
Mr Cummins, in conjunction with Mr McGaveston’s Sage Securities, looked to have other apartment owners contribute to this cost.
The main legal issue was interpretation of the original 2010 scheme of arrangement and its subsequent 2017 variation.
Justice Powell ruled Manchester Securities must bear the cost of all work done on the twelfth floor, subject to other apartment owners paying 88 per cent of the cost of remediating those parts of floor twelve defined as common areas.
This 88 per cent cost has not been quantified. Any dispute goes to arbitration, as required by the scheme of arrangement.
Justice Powell amended terms of the scheme arrangement, requiring Manchester Securities to pay all its current body corporate debts before it can force arbitration.
This amendment knocked out Manchester Securities long-standing complaint that it would not pay its present body corporate debts while it was owed amounts, still disputed, by the body corporate.
Body Corporate 172108 v. Manchester Securities Ltd – High Court (23.05.24)
24.133