Weil v KNC Construction Limited
[2017] NZHC 117
•9 February 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2016-404-1297 [2017] NZHC 117
BETWEEN SIMON CHARLES DAVID WEIL AND
CARL DAVID STOUGIE AS TRUSTEES OF THE TAUTOKO A ORA TRUST Plaintiffs/Applicants
AND
KNC CONSTRUCTION LIMITED Defendant/Respondent
Hearing: 11 October 2016 Appearances:
D H McLellan QC and L M Van for Plaintiffs/Applicants
A J Sherlock and HWY Yiu for Defendant/RespondentJudgment:
9 February 2017
JUDGMENT OF PETERS J
This judgment was delivered by Justice Peters on 9 February 2017 at 4.30 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date: ...................................
Solicitors: Anthony Harper, Auckland
Hesketh Henry, Auckland
Counsel: D H McLellan QC, Auckland
WEIL v KNC CONSTRUCTION LIMITED [2017] NZHC 117 [9 February 2016]
[1] The Defendant (“KNC”) seeks to discharge an ex parte injunction obtained by the Plaintiffs (“trustees”) in June 2016.
[2] KNC is the registered proprietor of 51 – 53 Albert Street, Auckland. The trustees are the registered proprietors of the adjoining property at 55 Albert Street. The buildings on the two sites share a party wall, in respect of which party wall rights were created by memorandum of transfer no. 67058 dated 31 May 1912 (“transfer”).1 The party wall is situated on the southern boundary of KNC’s site and the northern boundary of the trustees’, running between Albert Street in the east to St Patricks Square in the west.
[3] KNC has resource consent to demolish the building on its site to ground level.
[4] On 10 June 2016, the trustees commenced proceedings against KNC, they having been informed (correctly or not) that KNC intended to commence demolition the next working day, 13 June 2016. The trustees’ pleaded case is that the effect of clause 5 of the second schedule of the transfer (“clause 5”) is to require KNC to obtain the trustees’ written consent to work to the party wall; the proposed demolition was/is such work; and KNC has breached clause 5 because it has not sought, let alone obtained, the trustees’ consent.
[5] The trustees also applied, ex parte, for an interim injunction restraining KNC from demolishing all or part of KNC’s building pending further order of the Court or agreement between the parties. Brewer J made an order to that effect (“order”), determining that on the affidavit evidence before him there was a serious question to be tried and that the balance of convenience lay in granting the injunction.2 It is this order that KNC seeks to discharge or vary.
[6] Given that the trustees obtained their order ex parte, it is for them to establish afresh that there is a serious question to be tried, and that the balance of convenience
and overall justice lies in their favour.3
1 Memorandum of Transfer dated 20 June 1912.
2 Minute of Brewer J dated 10 June 2016.
3 See cases cited at High Court Rules, r 7.53.21.
Background
[7] KNC acquired its site in May 2014 by which time its predecessor in title, Sanctuary, had obtained two resource consents, one to demolish the building on the site and the other to construct a 46 storey apartment building in its place (“demolition consent” and “construction consent”).
[8] KNC is not presently entitled to demolish its building because it is not able to satisfy conditions imposed on its demolition consent. Aside from matters such as provision of agreed Demolition and Traffic Management Plans, the demolition consent provides:
(3) Any demolition of the existing building on 51-53 Albert Street shall be undertaken in conjunction with resource consent (R/LUC/2006/7101) to construct the approved building. Prior to any demolition the consent holder shall produce evidence to the satisfaction of the Council (Monitoring Advisor, Key Events & CBD) that the proposed building will proceed to completion as granted consent.
[9] This condition is to ensure that demolition is followed by construction so that the site is not left vacant for any length of time. KNC cannot comply with this condition at present because it does not propose to proceed with the 46 storey building, that being the “approved building” to which clause 3 refers. Nor has KNC produced the evidence required. An affidavit from Ms Fiona Harte of Auckland
Council confirms that the Council believes that demolition is prohibited at present.4
At the time of the hearing before me, KNC was revising the design of a modified development of fewer stories. KNC was also considering whether KNC would apply to extend the term of the existing consents (otherwise to expire this month), and/or apply for a fresh consent or consents, and/or apply to vary the construction consent.
Trustees
[10] The trustees’ building is leased to a Mr Reid and Ms Ross. Mr Reid has
previously worked in the construction industry. He and Ms Ross operate a café in the building. Two other retail businesses also trade from the building.
4 Affidavit of F C Harte sworn 12 August 2016.
[11] Mr Reid’s evidence is that KNC contacted him and Ms Ross in 2015 to seek their consent to demolition of the building on KNC’s site. KNC did not, or at least it does not now, intend to demolish the party wall. Even if the wall is left intact, however, demolition of the surrounds may affect its stability because it will no longer be braced by the KNC building. Also weathertightness must be considered because what has been an internal wall will become external.
[12] Mr Reid met representatives of KNC and their demolition contractors, Nikau, but declined to give consent. He was not satisfied that the structural integrity of the party wall would be maintained after the proposed demolition.
[13] Mr Reid did not hear anything more on the subject until 8 June 2016, two days before proceedings were issued. By chance, Mr Reid came across several Nikau employees on KNC’s site, who told him that they were preparing to demolish. Mr Reid relayed this information to a representative of the trustees.
[14] The following day a representative of another nearby building told Mr Reid there was going to be a meeting with KNC and Nikau in a matter of minutes, at St Patricks Cathedral.
[15] Mr Reid’s evidence is that representatives of KNC and its architects advised those at the meeting that demolition would begin on Monday, 13 June 2016. The trustees’ proceedings followed the next day.
[16] KNC disputes that its representative advised it intended to commence demolition on 13 June 2016. The evidence of Mr Hang Ho Lee, an executive of KNC, is that KNC did not have a fixed date to commence demolition and still had “a number of details” to resolve. Mr Lee was not employed by KNC at the time. He was not at the meeting and so does not have first-hand knowledge of what was said.
[17] In any event, whatever was or was not said, it does seem likely that KNC was intending to demolish without delay. There would be no point in installing pavement protection if demolition were not imminent. In fact, Mr Lee indicates demolition was imminent because Auckland Transport had notified KNC of a “small window”
in which KNC could have direct access to its site from Albert Street before works for the “Rail Link” commenced. In addition, at about this time KNC was seeking to sell its site by way of tender. The inference to be drawn is that KNC did intend to demolish the building on its site without delay and without consulting the trustees. I note also that Mr Lee does not address why KNC proposed to demolish, given that it had not satisfied the conditions of its consent.
Serious question to be tried
[18] Counsel for the trustees submits that there is a serious issue to be tried that KNC’s demolition is “any work” within the meaning of clause 5 and that KNC is thus required to seek their consent, such consent not to be unreasonably or arbitrarily withheld. KNC disputes this submission.
[19] For the moment, the following summary of the transfer is sufficient to put clause 5 in context.
[20] The recitals record that KNC’s predecessor in title (“Dexter”) proposed to erect a building on its site; that the trustees’ predecessor (“Cleave”) might do likewise; that the parties had agreed that Dexter would erect the southern wall of its building partly on its land and partly on Cleave’s; and that, when constructed, the wall would “become a party wall in the manner hereinafter appearing”.
[21] Pursuant to and in consideration of that agreement each party granted and transferred to the other the rights and easements described in the first schedule to the transfer, in perpetuity and to run with the land, subject to the liabilities in the second schedule.
[22] The effect of the first schedule was to fix a strip of land, 18 inches wide – nine inches on each side of the boundary – on which the wall would be built and maintained.
[23] The second schedule of the transfer makes provision for matters such as the equal sharing of the expenses of construction and repair. Clause 5, to which I have referred, provides:
5.LIABILITY of the person or persons about to effect any work to notify in writing the owner or occupiers for the time being of the adjoining premises of such intention at least seven days beforehand and to obtain the consent in writing of such owner or occupiers to the nature of the proposed work Provided that such consent shall not be unreasonably or arbitrarily withheld.
[24] The trustees submit that demolition of the building on the KNC site must fall within the meaning of “any work” as, absent safeguarding measures, the stability and weathertightness of the party wall will be threatened. In short, the trustees submit that this is precisely the type of situation in which clause 5 applies.
[25] KNC submits that demolition is not “any work” within the meaning of clause 5. KNC’s submission is that “any work” must be construed in accordance with preceding provisions of the second schedule and, as a result, KNC is only required to seek consent to works to repair or extend the wall.
[26] I do not accept KNC’s submission. It is wholly improbable that clause 5 would require consent for repair work but not for works that may undermine the very stability and weathertightness of the wall, and which might require significant repairs if not undertaken in a proper manner.
[27] I am satisfied that there is a serious issue to be tried that the demolition work
proposed is “any work” within the meaning of clause 5.
Balance of convenience
[28] I am also satisfied that the balance of convenience lies in the trustees’ favour.
[29] First, damages would not be an adequate remedy to the trustees. The consequences of instability of the party wall could be far reaching, as could weathertightness issues. The trustees have themselves given an undertaking in damages. Counsel for KNC submits that undertaking is of little value, given that there is a mortgage over the trustees’ site. Mr Weil, one of the trustees, has responded to this submission, stating that the trust is in a healthy financial position
and has other income producing property at its disposal.5
5 Affidavit of SCD Weil sworn 12 August 2016.
[30] Secondly, the fact that KNC has not yet satisfied the conditions imposed on the grant of its demolition consent means that this order is not in delaying KNC in any lawful activity.
[31] Thirdly, counsel for KNC submitted that, even if there is a serious issue to be tried, the trustees may not withhold consent unreasonably or arbitrarily, and that KNC’s plans for the proposed demolition are “safe and appropriate” in all respects.
[32] I do not know whether that is so but, in any event, it is for the parties and their experts to satisfy themselves regarding the adequacy of the measures that KNC proposes to take. As discussed with Mr Sherlock (counsel for KNC) at the hearing, KNC may seek consent in accordance with clause 5, even if it remains of the view that it is not bound to do so. On the face of their evidence, the parties’ expert engineers were close to agreement by the time of the hearing. I add that shortly after the hearing KNC’s solicitors filed an affidavit putting in evidence a letter to the
solicitors for the trustees dated 11 October 2016, seeking consent.6 None of the
subsequent correspondence is in evidence so I am not in a position to say more on that point.
[33] To conclude, I am satisfied that the balance of convenience, and the overall justice of the case, lies in preserving the status quo and continuing the injunction.
[34] I record several other matters for completeness. First, the parties will be aware that the transfer contains a “dispute resolution” provision and that clause 7 of the second schedule may bear on the construction of the transfer and the parties’ rights and obligations.7
[35] Secondly, I did not hear submissions as to the effect of the words “owner or occupiers” in clause 5. This proceeding is brought only by the trustees and so is
concerned only with their position.
6 Affidavit of R B McStay sworn 11 October 2016.
7 Clause 7 provides: SUCH further liabilities (if any) as by law or custom are incident to co- ownership of party walls.
Result
[36] I dismiss KNC’s application. The existing order continues. It is open to KNC to make a fresh application if it considers there has been a sufficiently material change in circumstances.
[37] The trustees should have costs and disbursements on this application. I do not certify for second counsel. I expect the parties will be able to agree on quantum but they may file memoranda if unable to do so.
[38] Counsel for the trustees also sought an order that the trustees should have costs on their initial ex parte application. I decline to make any award as regards that application. Those costs are reserved.
Further steps
[39] This matter is to be called in the Duty Judge List at 10 am, 23 February 2017. The parties are to file a memorandum or memoranda at least two clear working days in advance setting out the directions sought. I note the trustees’ statement of claim seeks an award of damages only. The trustees must seek a permanent injunction if they wish to sustain this interim injunction.
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Peters J
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