Grafton Road Limited v Stalker
[2015] NZHC 880
•30 April 2015
IN THE HIGH COURTOF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-002392 [2015] NZHC 880
BETWEEN GRAFTON ROAD LIMITED
Applicant
AND
MARK DONALD STALKER, CAROLINE RUTH WHITE AND CRUMMER TRUSTEES NO 82 LTD Respondents
CIV-2014-404-002838
AND BETWEEN CAROLINE RUTH WHITE Plaintiff
ANDGRAFTON ROAD LIMITED First Defendant
MICHAEL LEITH THOMPSON Second Defendant
Hearing: 12 February 2015 Appearances:
S Grant for Applicant in 2392 and defendants in 2838
C White in person as respondent in 2392 and plaintiff in 2838Judgment:
30 April 2015
JUDGMENT OF WOOLFORD J
This judgment is delivered by me on Thursday, 30 April 2015 at 4.00 pm pursuant to r 11.5 of the High Court Rules.
..................................................... Registrar / Deputy Registrar
GRAFTON ROAD LIMITED v WHITE & ORS [2015] NZHC 880 [30 April 2015]
Background
[1] The applicant in the first proceeding (CIV-2014-404-002392), Grafton Road
Limited (GRL), is the owner of a number of units in a unit title development at 160
Grafton Road, Grafton, Auckland (the Property). The respondents, Mr Stalker, Ms White and Crummer Trustees No 82 Ltd are registered as the owners of two other units in the property, as trustees of the Grafton Road Trust.1
[2] GRL says the property was not constructed in accordance with the unit title plan. In particular, the internal walls of the two units owned by the respondents were erected so that the whole of the length of those walls encroaches onto an access corridor. As a consequence, not only is the access corridor substantially narrower that was intended, but two of the units owned by GRL are smaller in floor area than was intended. GRL says that the encroachment has increased the value of the units owned by the respondents and decreased the value of its units: not only the two which are smaller than was intended, but also other units owned by it, which are also accessed by the corridor.
[3] On 11 September 2014, GRL filed an application seeking an order under s
325(e) of the Property Law Act 2007, that the respondents remove the encroaching walls and directing a scheme under s 74 of the Unit Titles Act 2010 be put in place to reinstate the walls in the correct position as per an attached draft scheme. It also sought costs against the respondents.
[4] One of the respondents, Ms White, filed a notice of opposition on 1 October
2014. One of the other respondents, Mr Stalker, filed an affidavit in support of the application on 20 January 2015.
[5] When GRL’s application was called in the High Court on 13 October 2014, various timetable orders were made to progress the matter to a hearing. The Court also directed the Registrar to allocate a one day fixture for the hearing of the application on a date after 1 December 2014. A fixture was subsequently allocated
on 12 February 2015.
1 Mr Stalker is no longer a trustee, having been removed by Ms White in her capacity as settlor of the trust on 23 July 2013.
[6] On 28 October 2014, Ms White, as plaintiff, filed a new proceeding in the form of a statement of claim (CIV-2014-404-002838) against GRL as first defendant and Michael Leith Thompson, the sole director and shareholder of GRL, as second defendant. In the statement of claim, Ms White seeks an order that all unit owners, the Body Corporate and Auckland Council be joined as party to the proceedings. She also seeks a large number of other orders and declarations relating to many other aspects of the property development, including ordering the Body Corporate “to vet and accept the amended Substituted Unit Development Plan as prepared by Cardno Limited, dated 14 July 2014,” ordering the Body Corporate “to engage an independent Licensed Cadastral Survey”, ordering the Auckland Council to issue an “amended Notice to Fix for Apartment Building Consent” and declaring that previous actions taken by the Body Corporate and the defendants impeding unit title owners’ incidental rights to property “constitute an unlawful act and Fraud on a Power”.
[7] Ms White also seeks substantial damages, including $1 million for mental and physical stress, humiliation and loss of quality of life suffered by her children, partner and herself. Finally, under a subheading “Application for Criminal Conviction”, Ms White sought an order from the Court that Mr Thompson is “to undergo a custodial sentence not to exceed 7 years”.
[8] At the same time as filing her statement of claim, Ms White filed an interlocutory application to consolidate the statement of claim with the original application filed by GRL. A notice of opposition to the application for consolidation was filed by the defendants on 5 December 2014.
[9] At the same time as filing their notice of opposition, the defendants filed a statement of defence and an appearance under protest, to object to the jurisdiction of the Court to hear the claims made by Ms White, which rely on various sections of the Crimes Act 1961 relating to conspiring to defeat justice, intentional damage and threatening to destroy property.
[10] Ms White’s application for consolidation was called in the High Court on
8 December 2014. After hearing from Ms White and counsel for the defendants,
Thomas J struck out those causes of action relating to offences under the Crimes Act
1961. Thomas J also directed that at the hearing already allocated by the Court on
12 February 2015, Ms White’s application for consolidation would be heard first. If the application was granted, then obviously the hearing of GRL’s application would not take place on 12 February 2015, but if it was not granted, then the hearing of GRL’s application would take place that day. Thomas J also directed that any further applications and affidavits in support of the applications were to be filed by 5.00 pm on 10 December 2014. That included any strike out or application for security for costs.
[11] In accordance with the directions of Thomas J, on 10 December 2014, the defendants filed an application for security for costs against Ms White and for an order that paragraphs 124, 125, 128, 129 and 131 of her statement of claim be struck out on the basis that the High Court has no jurisdiction to determine the matters pleaded in those paragraphs.
[12] On 8 January 2015, Ms White in turn applied for an order that GRL give security for costs and for an order to strike out paragraphs 1(a), 1(b) and 1(c) of GRL’s application. These applications were filed in breach of the timetable orders made by Thomas J.
Application for consolidation
[13] Ms White submits that the Court should order that the two proceedings be consolidated as the rights to relief therein are in respect of and arise out of the same series of events and transactions. She submits that common questions of law and fact arise in both proceedings and that all unit owners, the Body Corporate and Auckland Council ought to be parties to the litigation by virtue of common property ownership and the incorrect issue of the building consent.
[14] GRL opposes consolidation. It submits that the two proceedings are quite separate in nature. While there is an overlap in relation to some facts, there are many additional matters raised in Ms White’s claim. The legal issues and relief claimed are quite different. Ms White also seeks to add a significant number of other parties
to her claim. GRL’s application is ready to proceed but Ms White’s claim will be
unlikely to be ready for hearing for a long time, if ever.
[15] In this instance, I have reached the firm conclusion that the application for consolidation should be dismissed. While I can understand Ms White’s fervent desire to have all matters relating to the property development dealt with at the same time, that is just not practical or reasonable. In reaching my decision, I have been guided by r 10.12 High Court Rules and the principles set out in the cases decided thereunder. In particular, I bear in mind the comments of McGechan J in
Amalgamated Finance Limited v Wyness:2
However, as with all shortcuts, the court must take care to see that consolidation in this way will not in the end result in confusion through multiplicity of parties and issues, and will not in the end cause injustice by comparison with separate hearings.
[16] I take into account the following:
(a) Ms White seeks to join all unit owners, the Body Corporate and Auckland Council, whereas GRL’s application names just one respondent.
(b)Ms White’s action involves a large number of different aspects of the property development including the location of an air-conditioning plant, decks, skylights, ceiling penetration vents and the reinstatement of plumbing services whereas GRL’s application relates just to a corridor wall.
(c) Ms White claims monetary damages as well as various orders and declarations, whereas GRL’s application does not seek monetary damages.
(d)Ms White’s claim is not ready for hearing and will not be for a long time given the interlocutory applications already filed and the likely
2 Amalgamated Finance Limited v Wyness HC Wellington, CP156/86, 19 February 1987 at 12.
resistance by parties sought to be joined, whereas GRL’s application
can be heard now.
(e) Ms White’s claim will require at least two weeks to be heard if it develops in the way Ms White wishes it to evolve, whereas GRL’s application can be heard in less than a day.
(f) Ms White is a litigant in person and her claim is not well focused and initially sought orders that were legally unavailable, such as the imprisonment of Mr Thompson, whereas GRL’s application is well focused and grounded in legal principle.
[17] Ms White’s application for consolidation is therefore dismissed. She is still entitled to have her day in Court but it is preferable to hear what can be heard and determined now.
Application for orders under s 325 of the Property Law Act and s 74 Unit Titles
Act 2010
[18] GRL seeks orders that the respondents remove the encroaching walls and a scheme be put in place to reinstate the walls in the correct position.
Acknowledgement of encroachment
[19] Ms White acknowledges that the respondents’ units encroach on the access corridor. In her written submissions she stated that the amount of the encroachment was only 1.962 m². In her oral submissions, she amended that figure to 6.282 m².
[20] GRL has filed an affidavit from a surveyor, who attaches a plan in which he plots the position of the “as built” corridor walls as compared to the boundaries for those walls shown on the unit title plan. He does not make a calculation of the amount of the encroachment, but it is substantial and could well be more than the
6.282 m² acknowledged by Ms White.
[21] Ms White has sworn an affidavit in response to that of the surveyor in which
she “swears” that the plan neither constitutes nor can be relied upon as a “Cadastral
Survey plan”. Ms White has not filed any expert survey evidence. She herself has no professional qualifications of relevance. In those circumstances, I prefer the uncontradicted evidence of the surveyor as to the extent of the encroachment.
Cost of removal and reinstatement
[22] Ms White also submits that the corridor walls are a building element being “an internal component necessary to the structural integrity of the building in providing support to the roof trusses”. She therefore submits that the cost to relocate the walls, alter the roof structure, reinstate damage and reconfigure the respondents’ units on moving the structural walls would be grossly excessive, given the net encroachment is approximately 6.282 m². In response, GRL has filed an affidavit from the commercial manager of the Robert Cunningham Construction Group, who is also a quantity surveyor. He personally inspected the corridor walls on 21 October
2014 and confirms that they are not load bearing and are easily capable of being relocated to the correct boundary position. He quotes the sum of $8,250 plus GST to remove the corridor walls, ceilings and doors and the sum $11,104.50 plus GST to rebuild the corridor walls and ceilings.
[23] Ms White has not filed any expert evidence on the cost of removal and relocation of the corridor walls. Instead, she relies on the Auckland Council file and plans obtained under the Official Information Act. Again, she has no professional qualifications in this area. In those circumstances, I accept the uncontradicted evidence of the commercial manager for the Robert Cunningham Construction Group as to the nature of the corridor walls and the cost of their removal and reinstatement.
No encroachment on GRL’s units
[24] Ms White submits the respondents’ units do not encroach on GRL’s units. The encroachment is on the access corridor between the respondents’ and GRL’s units. However, GRL is the owner of, and has an interest in the access corridor in terms of the unit title plan. Accordingly, I am of the view that GRL qualifies as a person entitled to bring an application under s 322(1)(a) and (d) of the Property Law Act 2007. GRL also wants to expand its units to their full legal size, which it is not
able to do without the encroaching walls being removed and reinstated as the access corridor would then become far too narrow. GRL estimates that the area of their units that cannot be occupied as part of the units because of the incorrect positioning of the corridor walls is approximately 15 m² and is valued at $65,625.
Conduct of the parties
[25] Both parties make assertions about the conduct of the other party. The history of the property development is long and convoluted, but it is unnecessary for me to make any particular findings about the conduct of the parties. However, I will say that I have not seen any evidence to justify the more extreme claims, including the criminal offending, made by Ms White about the actions of Mr Thompson.
Exercise of discretion
[26] Ms White does not dispute the jurisdiction of the Court to grant the application and make the orders sought. She acknowledges that the walls of the units owned by the respondent’s encroach on the access corridor. Her preferred solution to rectify the error is, however, for the Court to order a Substituted Unit Development Plan prepared by Cardno Limited be independently reviewed and then accepted by all unit owners and by the Body Corporate. The substituted plan would let the boundaries lie where they fall. The difficulty with Ms White’s preferred solution is that it has already been rejected by all but one of the other unit owners and by the Body Corporate. Ms White does not explain how this Court can order that a substituted plan be accepted by all unit owners and by the Body Corporate in the absence of their consent. Ms White is clearly in a very small minority, consisting of herself and one other owner.
[27] The position of the Auckland Council also has some significance in the exercise of the Court’s discretion in the present case. The encroaching walls do not comply with the fire safety requirements in the Building Code, as they are not boundary walls, meaning they do not align with the property boundary. The Council issued a Notice to Fix on 26 April 2011 directing that any more work on the units cease immediately until plans were provided to the Council showing that the unit and corridor boundaries were located as per the existing unit title plan. No Code
Compliance Certificate has therefore been issued by the Council for any of the units on that level.
[28] The respondents’ refusal, for more than three years, to remove the encroaching walls and reinstate them has meant that the other owners on the same level have been unable to rent their units. Their losses have been considerable.
[29] Ms White cannot claim to be a completely innocent purchaser of the units. Ms White is the de facto partner of the project manager, John Gray. Ms White was earlier named as purchaser on two agreements for sale and purchase in relation to units on another level. These agreements were used, along with nine others to related parties, to persuade Mr Thompson to commit another company to lend the developers approximately $1.9 million. Mr Thompson has filed an affidavit stating that he did not know that the alleged pre-sales were all to related parties, nor that Ms White had entered into a written agreement with the vendor to the effect that the sales to her would be cancelled once the funding was made available. Had he known this, Mr Thompson would have been aware that these sales were not real “sales”.
[30] GRL also alleges that Ms White had knowledge of the encroachments when the respondents bought the units and that the respondents did not, in any event, pay full purchase price, which disadvantaged Mr Thompson’s company as second mortgagee. Ms White denies she had knowledge of the encroachments. She acknowledges not paying the full purchase price for the units in cash, but says that the balance of the purchase price (approximately $365,000) was paid for by various trades and credits. These factors are, in my view, also relevant to the exercise of the Court’s discretion in this case.
Result
[31] In all the circumstances, the application dated 11 September 2014 filed by
Grafton Road Limited is granted. The following orders are made:
(a) The respondents are to remove the encroaching walls as defined in paragraph 2(j)(i) of the application pursuant to s 325(e) of the Property Law Act 2007.
(b)A scheme under s 74 of the Unit Titles Act 2010 is to be put in place to reinstate the walls in the correct position as per the draft scheme Schedule D attached to the application.
(c) The respondents (excluding Mr Stalker) are to pay GRL the costs of this proceeding on a 2B basis.
………………………………….
Woolford J
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