YIJU exclusive: the latest response and analysis from Richard Brabant, lawyer for the applicants who halted the 44 Ventnor Road townhouse project

Two discussion articles in particular, “Warning! Buyers face sharply increased risks as developers may use sunset clauses to cancel contracts” (click to read) and “Do you support neighbours taking legal action to oppose developments that have resource consent?” (click to read), sparked lively debate. Readers also voted in opinion polls and shared their views in the comments.

Interest in the articles continued to grow over the past week. Many developers asked, “How could we avoid the risks if we encountered similar problems?” In response, the New Zealand Chinese Building Industry Association (NZCBIA) and Shieff Angland (Shieff Angland Lawyer) worked with YIJU New Zealand to hold a free public webinar on 30 November. Leading figures from the legal and construction sectors provided in-depth case analysis of these two topical issues, seeking the best solutions for readers.

Specially invited speakers included Shieff Angland partner Richard Hatch, senior lawyer Dasha Kovalenko-Gormack and Aidan Tattley. The firm's principal, Raymond Huo, a former chair of Parliament's Justice Committee, provided commentary in Chinese throughout. New Zealand Chinese Building Industry Association president Frank Xu contributed live commentary and co-hosted the webinar with association secretary-general Dylan Huang. The webinar also welcomed a special guest from the 44 Ventnor Road Remuera case, “central figure in the news” Richard Brabant himself, who shared numerous views on the events from his perspective as someone involved.

Frank Xu：Recently, I have become aware of many disputes between developers and builders over rising building material prices and construction delays caused by material shortages. These have become common problems in the market. The Chinese Building Industry Association urges everyone, whichever side they are on, to have a comprehensive commercial agreement drawn up with a lawyer's assistance and to monitor its implementation as it happens. Many in our Chinese community think that signing a fixed-price lump-sum agreement takes care of everything. That is not the case: the fixed price is subject to conditions. There should also be robust measures to resolve disputes when completion dates need to be extended or prices changed. With its extensive pool of professional expertise, the association hopes to use this webinar to help everyone.

Dylan Huang：The Auckland Unitary Plan came into effect in 2016. As designers, we began designing homes under the Unitary Plan in 2017. Some astute designers began designing high-density housing to achieve higher returns, and market forces gradually changed our thinking. There was a certain inevitability to the case we are analysing today, so I believe that in future developments, everyone should identify a balance between development, the surrounding environment and ecology as early as possible.

This webinar's “mystery guest”Richard Brabant, one of the foremost senior lawyers specialising in “resource consent and local government law”, had declined countless media interview requests. He agreed to take part in this webinar because Richard felt it was a very worthwhile event, offering an opportunity to provide a complete and accurate professional analysis of the case's background, progress and relevant circumstances. He also said he was not “anti-development”(opposed to development). During the webinar, Richard gave a detailed account of the background to the project. Raymond Huo also summarised several key points from the case, offering valuable insights for planners, developers, builders and others in the construction industry.

1. This case concerns administrative review: a judicial review under New Zealand's Resource Management Act 1991.
2. The Auckland Unitary Plan also played an important role in the case. Different zones allow developers different scope for development. This site is in a Mixed Housing Zone, where building three homes on 1684 square metres does not require resource consent. However, the developer built 13 townhouses. Such a high-density residential project was clearly out of keeping with the area's character.
3. The original site contained trees more than a century old, and the surrounding streets had hedges rather than walls. Environmental value and visual appeal were important considerations for the neighbours.
4. Construction was contracted out to a Wellington building company.
5. All homes in the development have now been pre-sold.
6. There are potential issues with wastewater treatment, road surfaces and stormwater drainage.
7. At the initial design stage, Richard asked the council to notify neighbours so they could express their views, discuss matters with the developer and find a mutually acceptable solution. However, that did not happen.
8. Through the judicial process, the court has quashed the resource consent previously granted by the council.
9. Judicial review proceedings of this kind are expensive, generally costing NZ$60,000–100,000.
10. The preliminary design did not consider issues such as sunlight angles, boundaries, rainwater, stormwater and waste disposal.
11. In granting approval, the council did not consider the neighbourhood's consistency of character or visual appeal.
12. The developer originally had time to wait until agreement had been reached with neighbours on changes to the project before starting work. Instead, it pressed ahead, even insisting that construction continue after the case went to court.
13. The council may engage a new planner to review the project again and make further changes to resolve the dispute.
14. The developer has the right to appeal the ruling, but a hearing would take at least 6 months.

The two-and-a-half-hour webinar attracted nearly 300 online participants. Shieff Angland's legal team also answered questions of particular interest to viewers:

Q: Could the developer sue the council on the basis that errors in approving the resource consent caused this chain of consequences?

A: The council's approval errors are, in fact, also the developer's errors. If the developer's planners, designers and other relevant professionals had prepared complete and error-free project proposals, the council would not have made an incorrect decision on the basis of a correct report.

Q: How can a new development be made consistent with the visual character of its area's streets and buildings? Many older neighbourhoods have more than a century of history.

A: Three key points must be considered: neighbourhood character, residential amenity and features of the strain. While encouraging more medium- and high-density housing in the area, the council also needs to maintain consistency in neighbourhood character.

Q: How can buyers prevent a developer or builder from cancelling their purchase agreement after the sunset date?

A: Buyers need to communicate well with their lawyer when the purchase agreement is being drafted. When the other party proposes a sunset clause, buyers should not readily accept terms that disadvantage them.

Q: In the 44 Ventnor Road Remuera case, what can buyers who have signed purchase agreements with the developer and paid deposits do to minimise their losses after discovering the project has been delayed?

A: First, the specific terms of the signed agreement need to be examined to determine whether the buyer can exit the contract and have the deposit and interest returned. Second, we can look at how the real estate agent described the property and what promises were made. Agents have their own code of conduct, which provides a basis for considering what can and cannot be done.

Q: Can buyers ask for any disputes or disagreements arising during a purchase to be resolved through legal means?

A: Yes, buyers can make that request of the seller, but it depends on how the due diligence provisions are set out in the signed sale and purchase agreement. The buyer may agree or may choose to ignore it.

Raymond Huo: The case concerning number 44 that we discussed today has left many developers concerned about future projects, even where council resource consent has been obtained. The value of today's webinar lies in alerting developers and builders to these risks. When property-related legal issues arise, you can consult our bilingual Chinese–English reference book, New Zealand Investment and Business: Law and Taxation (click to read). There is a comprehensive index at the back. If you need information on resource consent (RC) or other related legal matters, including the issues discussed in today's webinar, you can find it there.

Coincidentally, just before publication, YIJU learned that Auckland Council had issued a public letter about the High Court's recent judgment in this case. It said that, when assessing future residential development in Mixed Housing, suburban, urban and THAB (Terrace Housing and Apartment Buildings) zones, it would undertake further assessment and consideration of all new environmental consent applications. This would include, but not be limited to, ensuring there was a description of the environment, neighbourhood and surrounding community characteristics, and residential amenity. The High Court has determined that assessing “building intensity” involves more than the proposed buildings' physical form, scale, location and appearance. This means the council will apply greater scrutiny when assessing applications for four or more dwellings on sites in MHS (Mixed Housing Suburban) and MHU (Mixed Housing Urban) zones.