Archive | Leaky buildings

Published 1 March 2011

Justice Graham Lang has ordered Symphony Properties Ltd (Colin Reynolds) to pay the court costs accrued by 2 related companies, now in liquidation, in their fight against liability in the Farnham Terraces leaky homes case.

In a judgment issued last Friday, Justice Lang ordered Symphony Properties to pay the $65,430 in costs he’d ordered in August 2010 against Waimarie Investments Ltd & Pakenham Group Ltd, of which he is also sole director.

Symphony Properties had kept the other 2 companies’ defences running, paying a total $630,000 in legal fees & disbursements, although it could expect no return. Mr Reynolds put Waimarie & Pakenham Group (ex-Symphony Group Ltd) into voluntary liquidation on 28 September 2010, just before a 10-week trial over the Farnham Terraces body corporate’s multi-million-dollar claim against them & other defendants was due to start.

The body corporate had reached settlements with other defendants including 2 related to the Symphony group which had already gone into liquidation, and has since reached a settlement with Auckland City Council which will result in an independently managed restoration programme for the 41-unit block in Parnell.

The Symphony companies converted an office & warehouse building at 8 Farnham St, Parnell, in 1995 into 35 terraced houses, 5 apartments & one commercial unit, known as Farnham Terraces. The unit owners & their body corporate brought proceedings in 2005 claiming $12.9 million for remedial work or $18 million to demolish & rebuild (up to $23 million last year), plus another $20,000 general damages for each unit owner, but in 2007 Symphony applied to strike the claim out, arguing it was out of time.

The point at issue was whether the owners knew enough by 24 September 1998 to understand how wide-ranging & serious the water intrusion was. Associate Judge David Robinson decided they didn’t, and dismissed Symphony’s strikeout application in November 2007. Symphony sought a judicial review of the Robinson decision in 2008, but Justice Cooper turned that down as well, making an order for costs in favour of the unit owners.

While the case was running, counsel Sandra Grant said the Symphony group had paid for the defence by its shell companies “to defend the name & reputation of the group as a developer”.

In the latest round, Symphony Properties opposed the costs application, saying it was a “pure funder” and that it had no control over, and no interest in, the litigation or its outcome.

However, Grant Shand, counsel for the body corporate & owners, disputed that proposition, contending Symphony Properties stood to benefit from a successful outcome for these defendants in the litigation and pointing to the reputation issue.

Justice Lang said in his judgment last Friday: “It is highly significant, in my view, that Symphony Properties has been prepared to advance very substantial sums to related companies that have no means of repaying those advances. The fact that they may be recorded in the companies’ financial statements as intercompany advances does not begin to provide an explanation. There is no obvious commercial benefit to Symphony Properties in making the advances, because the prospect that it will be repaid in full, if at all, is remote.

“This means that Symphony Properties must have another motive for funding the defendants’ defence in such a substantial way. The explanation may lie in a desire, communicated apparently by its counsel to the associate judge [in an earlier appearance] to ensure that the reputation of the group as a whole is not sullied by an adverse outcome in the litigation. If that is the case, and it seems the most likely explanation, Symphony Properties has a clear interest in the outcome of the claim against the fourth defendants.

“Whatever the reason, I am satisfied that Symphony Properties made the funding available to the fourth defendants because it saw a benefit for itself, and perhaps other companies within the group, in taking whatever steps were necessary to defend the claims that the plaintiffs have made against the fourth defendants.

“It would be wrong, in my view, for Symphony Properties to be permitted to assist otherwise insolvent companies to put the plaintiffs to the significant cost of opposing the fourth defendants’ applications unless it was also prepared to assume the risk that it would be required to contribute to the plaintiffs’ costs if the applications were unsuccessful. I consider that the interests of justice therefore require Symphony Properties to contribute to the costs that its actions have forced the plaintiffs to incur.”

Earlier stories:

17 November 2010: Farnham Terraces body corporate can continue case against Symphony companies in liquidation

11 October 2010: Farnham Terraces leaky-building case off to November

4 October 2010: Reynolds puts Pakenham (ex-Symphony) & Waimarie into liquidation ahead of Farnham Terraces cases

U: The names behind the action, the week to 21 March 2010, part 7, 2 Symphony companies now face liquidation over Farnham Terraces leaks dispute 12 February 2010:Symphony companies may walk from $13-19 million leaky building case after losing strikeout applications

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Attribution: Judgment, story written by Bob Dey for the Bob Dey Property Report.

Published 17 November 2010

The body corporate of the Farnham Terraces apartments conversion in Parnell has won court approval to continue a leaky-building claim against the developers, 2 of which were placed in voluntary liquidation on 28 September.

Ordinarily an insolvent liquidation would remove them from the case. However, Justice Graham Lang gave body corporate 169791 leave to continue against them at a short hearing on Monday.

The substantive case – over the Farnham Terraces conversion in 1995 and subsequent water damage – is between owners of the 41 units & their body corporate as plaintiffs and a number of defendants, including 3 Symphony companies headed by Colin Reynolds and another owned by Kevin Lane as joint fourth defendants.

The Symphony companies converted an office & warehouse building at 8 Farnham St, Parnell, in 1995 into 35 terraced houses, 5 apartments & one commercial unit. The unit owners & their body corporate brought proceedings in 2005 claiming $12.9 million for remedial work or $18 million to demolish & rebuild (now up to $23 million), plus another $20,000 general damages for each unit owner, but in 2007 Symphony applied to strike the claim out, arguing it was out of time. Since then the case has been bogged down in preliminary disputes.

The substantive case was to have gone to a 10-week trial starting in early October, but liquidation of Mr Reynolds’ 2 main companies, Pakenham Group Ltd (ex-Symphony Group Ltd) & Waimarie Management Ltd, the previous week cut the trial length in half and also caused its deferral.

Now the case is down to 2 4-day weeks starting Monday 11 April 2011, the first week reduced by a judges’ conference and the second by Easter. Justice Lang said the trial would be before him. A half-day hearing is scheduled for the week starting 13 December to decide on Symphony counsel Sandra Grant’s application for leave to file an amended statement of defence out of time.

Earlier stories:

11 October 2010: Farnham Terraces leaky-building case off to November

4 October 2010: Reynolds puts Pakenham (ex-Symphony) & Waimarie into liquidation ahead of Farnham Terraces cases

12 February 2010: Symphony companies may walk from $13-19 million leaky building case after losing strikeout applications

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Attribution: Court hearing, story written by Bob Dey for the Bob Dey Property Report.

Published 11 October 2010

The Farnham Terraces leaky buildings court case was put off for 5 weeks today to give the liquidator of the 2 Symphony (now Pakenham) Group companies involved time to document his opposition to the case continuing against companies in liquidation.

The case had been set down for 10 weeks, starting before Justice Graham Lang in the Auckland High Court today. After various parties had been removed, it was reduced to 5 weeks, but the liquidation on 28 September of Pakenham Group Ltd & Waimarie Management Ltd (director Colin Reynolds) left only the Auckland City Council standing as a defendant in a case over sums which could exceed $23 million for demolition & redevelopment.

The body corporate of the Farnham Terraces redevelopment and the city council both sought leave last week to continue against the 2 Symphony companies and Glanville Investments Ltd (director, Kevin Lane).

In court today, Justice Lang adjourned the applications for leave to continue against the Symphony companies until Monday 15 November, but told the liquidator, Peter Jollands, he would need to be ready for argument if leave was granted. The judge allowed 2 days for the hearing.

The judge granted leave for the body corporate & council to continue against Glanville as that company, in the hands of different liquidators since July, hadn’t filed any opposition and hadn’t appeared at today’s hearing.

Against all other parties, body corporate counsel Grant Shand said notice of discontinuance would be filed – “upon the performance of certain steps” – probably by late November.

Earlier stories:

4 October 2010: Reynolds puts Pakenham (ex-Symphony) & Waimarie into liquidation ahead of Farnham Terraces cases

U: The names behind the action, the week to 21 March 2010, part 7, 2 Symphony companies now face liquidation over Farnham Terraces leaks dispute 12 February 2010:Symphony companies may walk from $13-19 million leaky building case after losing strikeout applications

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Attribution: Court hearing, story written by Bob Dey for the Bob Dey Property Report.

Published 4 October 2010

Longtime property developer Colin Reynolds put his 2 main companies, Pakenham Group Ltd (ex-Symphony Group Ltd) & Waimarie Management Ltd, into voluntary liquidation last Tuesday, 28 September, short-circuiting 2 court actions against them over the Farnham Terraces apartments conversion in Parnell.

Owners of the Farnham Terraces apartments had applied to the High Court to have the 2 companies wound up for not paying $65,000 of costs ordered by Justice Graham Lang in August. That application was set down for its first call this Wednesday, 6 October.

2 related companies – Symphony Projects Ltd & Glanville Investments Ltd (director, Kevin Lane) – had already been removed from the Farnham Terraces leaky-building liquidation, which was scheduled to go to a long trial starting next Monday, 11 October. Liquidation will take these 2 companies out of the case as well, leaving just the Auckland City Council as a defendant after claims against other parties have been either discontinued or struck out. The substantive trial had already been shortened from 10 weeks to 5.

In February, Associate Judge David Abbott dismissed the 2 Symphony companies’ applications to strike out statutory demand applications by the body corporate of Farnham Terraces, which were based on a $13,400 costs order by Justice Cooper in May 2009, following Symphony’s failed attempt to have the leaky-building claim struck out because, Symphony claimed, the application was out of time.

That bill was paid. But by 17 August, when the Farnham Terraces body corporate got a new judgment from Justice Graham Lang for the costs of a further application to strike the claim out plus production of documents, there was a new bill for $65,429.98.

The substantive case – over the Farnham Terraces conversion in 1995 and subsequent water damage – is between owners of the 41 units & their body corporate as plaintiffs and a number of defendants, including 3 Symphony companies & another owned by architect Kevin Lane as joint fourth defendants.

The Symphony companies converted an office & warehouse building at 8 Farnham St, Parnell, in 1995 into 35 terraced houses, 5 apartments & one commercial unit, known as Farnham Terraces. The unit owners & their body corporate brought proceedings in 2005 claiming $12.9 million for remedial work or $18 million to demolish & rebuild (now up to $23 million), plus another $20,000 general damages for each unit owner, but in 2007 Symphony applied to strike the claim out, arguing it was out of time.

The point at issue was whether the owners knew enough by 24 September 1998 to understand how wide-ranging & serious the water intrusion was. Associate Judge David Robinson decided they didn’t, and dismissed Symphony’s strikeout application in November 2007. Symphony sought a judicial review of the Robinson decision in 2008, but Justice Cooper turned that down as well, making an order for costs in favour of the unit owners.

While the case has been running, counsel Sandra Grant said the Symphony group had paid for the defence by its shell companies “to defend the name & reputation of the group as a developer”. But, she told Associate Judge David Abbott in February, changes were afoot within the group and that support might not continue.

Mrs Grant said in February there hadn’t been any real steps to defend the substantive case: “To date, the litigation has been funded by other parts of the group, to protect its reputation as a development company, and changes in economic circumstances have meant it isn’t justified from a commercial perspective. However, there is the possibility that position will change again. The proceeding is starting in October for 10 weeks – if they can’t find counsel to appear on their behalf there will be no alternative but to give up the defence.”

Symphony Group changed its name to Pakenham in August 2009. Mr Reynolds was executive chairman of Chase Corp Ltd, which collapsed after the 1987 sharemarket crash and had statutory managers appointed to it in 1989 after it reported an $841 million loss. These days, he’s a director of Pakenham, a number of Symphony property investment & development companies, a number of Otago vineyard companies, and several companies related to the Albany City leasehold interest which Symphony bought from Cornerstone Developments Ltd (Rick Martin) in 2004 – and which have lost heavily in the collapsing of leases this year.

Earlier stories:

12 September 2010: Albany City debacle demonstrates leasehold fragility

U: The names behind the action, the week to 21 March 2010, part 7, 2 Symphony companies now face liquidation over Farnham Terraces leaks dispute 12 February 2010:Symphony companies may walk from $13-19 million leaky building case after losing strikeout applications

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Attribution: Judgments, story written by Bob Dey for the Bob Dey Property Report.

Published 12 February 2010

3 insolvent shell companies in the Symphony property development group were in the High Court on Wednesday trying to strike out a 9-month-old order for them to pay just over $13,400 in costs from an unsuccessful attempt to escape a leaky-building case.

The substantive case – over the Farnham Terraces conversion in 1995 and subsequent water damage – is between owners of the 41 units & their body corporate as plaintiffs and a number of defendants, including 3 Symphony companies & another owned by Kevin Lane as joint fourth defendants.

The Symphony companies converted an office & warehouse building at 8 Farnham St, Parnell, in 1995 into 35 terraced houses, 5 apartments & one commercial unit, known as Farnham Terraces. The unit owners & their body corporate brought proceedings in 2005 claiming $12.9 million for remedial work or $18 million to demolish & rebuild, plus another $20,000 general damages for each unit owner, but in 2007 Symphony applied to strike the claim out, arguing it was out of time.

The point at issue was whether the owners knew enough by 24 September 1998 to understand how wide-ranging & serious the water intrusion was. Associate Judge David Robinson decided they didn’t, and dismissed Symphony’s strikeout application in November 2007. Symphony sought a judicial review of the Robinson decision in 2008, but in May 2009 Justice Mark Cooper turned that down as well, making an order for costs in favour of the unit owners.

While the case has been running, counsel Sandra Grant said the Symphony group had paid for the defence by its shell companies “to defend the name & reputation of the group as a developer”.

But, she told Associate Judge David Abbott on Wednesday, changes were afoot within the group and that support might not continue. Mrs Grant wanted to file an affidavit explaining the group’s position, but Associate Judge Abbott saw no justification for that, nor justification for not paying the costs ordered by Justice Cooper.

“After hearing from counsel, I have reached a view that nothing further will be achieved by the further affidavit that the applicants seek to file and that there is no arguable basis for the applications,” the judge said.

He dismissed the Symphony companies’ 2 applications (one to strike out the costs claim, the other concerning whether a particular document should be produced), but granted Symphony a fortnight’s grace to pay the $13,425.77.

Counsel for the plaintiffs, Geoff Beresford, said this week’s case “is actually a rather simple matter. Our client has a court judgment and there is no real dispute that the debt is due.” But he said the key point now was that the Symphony companies had given evidence that they’re insolvent.

The 4 fourth-defendant companies are Symphony Group Ltd (renamed Pakenham Group Ltd in August 2009), Symphony Projects Ltd, Waimarie Management Ltd & Glanville Investments Ltd (director, architect Kevin Lane). Former Chase Corp Ltd chairman Colin Reynolds is the sole director of Symphony Group & Waimarie; his son Adam, Gary Noland & Garry Looker are the directors of Symphony Projects.

Aside from the relative tiny costs issue, Mrs Grant indicated the Symphony companies might not be in a position to defend the substantive case when it goes to hearing in October, with a hearing schedule of 10 weeks.

She told the judge: “There are other developments that are happening within the wider group. These companies haven’t traded for years, there is no danger to the public.”

Mrs Grant said there hadn’t been any real steps to defend the substantive case: “To date, the litigation has been funded by other parts of the group, to protect its reputation as a development company, and changes in economic circumstances have meant it isn’t justified from a commercial perspective. However, there is the possibility that position will change again. The proceeding is starting in October for 10 weeks – if they can’t find counsel to appear on their behalf there will be no alternative but to give up the defence.”

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Attribution: Court hearing, judgments, story written by Bob Dey for the Bob Dey Property Report.