Suggested amendment would have reflected change to common property ownership
New Zealand’s Supreme Court did not permit a body corporate for an apartment and hotel complex to appeal against a Court of Appeal decision finding that the respondent firm of solicitors had not acted negligently or caused the losses claimed.
The case of Body Corporate 207624 v Grimshaw & Co [2026] NZSC 5 arose from building defects identified in 2006. In 2007, the applicant body corporate brought proceedings concerning the common property damage against the builder and council on behalf of all unit owners.
In 2008, the respondent began acting for the applicant and advised the unit owners to join the applicant. In 2010, the respondent urged the applicant and the owners to execute a conduct and distribution agreement (CDA) regarding the distribution of settlement proceeds.
In 2013, the proceeding settled for $20.05m. Until 2018, post‑settlement disputes delayed repairs, which raised costs. The respondent filed an interpleader proceeding.
In 2015, the applicant and the owners reached a mediated settlement, setting aside the CDA and providing that 80 percent of the settlement funds would go to the applicant to fund common property repairs. Formal orders followed in 2016.
The applicant sued the respondent for costs due to the delay. The applicant alleged that the CDA was:
According to the applicant, if the respondent had advised it to pursue an amendment of the CDA when the 2010 Act took effect, it could have preempted the issues.
The High Court ruled that the respondent had acted negligently by failing to advise the applicant to amend the CDA after the 2010 Act changed common property ownership arrangements.
New Zealand’s Court of Appeal set aside the High Court judgment. The appeal court held that the CDA remained valid and effective, as the 2010 Act did not impact accrued rights under the Unit Titles Act 1972. The applicant applied for leave to appeal.
The Supreme Court of New Zealand dismissed the application for leave to appeal and ordered the applicant to pay the respondent $2,500 in costs. The Supreme Court determined that the applicant had failed to advance sufficiently arguable points.
The Supreme Court saw no need to grant leave in the interests of justice, no matter of general or public importance, and no risk of a substantial miscarriage of justice.
The Supreme Court ruled that the only novel issue – the implications of s 227 of the 2010 Act, given the statutory change of common property ownership – was moot by operation of the longstop limitation period in s 393(2) of the Building Act 2004.
The Supreme Court held that the appeal court made apparently sound findings concerning causation.
According to the Supreme Court, even if the respondent had negligently failed to advise the applicant to seek an amendment, the applicant did not prove loss or establish that all the CDA’s signatories would have agreed to amend in the suggested manner and relinquish their superior position for the applicant’s benefit.
The Supreme Court rejected the applicant’s argument that the respondent should have given the advice suggested. The Supreme Court noted that the 2010 Act:
Moreover, the Supreme Court pointed out that advice to pursue variation by consent would have been impractical, even if the change of common property ownership by itself made the CDA ineffective.
The Supreme Court accepted that the CDA was possibly arguably unfair or unconscionable, given the change of common property ownership. However, the Supreme Court deemed it unclear whether any available alternative legal option would have meaningfully decreased delay.
