Legal bills mount as the case enters its fifth year and spans three courts
A Nelson couple locked in a legal wrangle with the firm that built their affordable design-built home said their legal bills and expert reports could reach half what it cost to build the house.
Mark and Suzanne Chamberlain’s legal dispute against LSK Builders, the company that operates the Nelson franchise of GJ Gardner Homes, is now entering its fifth year and spans the District Court, High Court, and Court of Appeal.
The total bill for the Chamberlain home has now tipped over $1 million with more to come as the couple braces for the latest round of court action, New Zealand Herald reported.
“It’s potentially going to cost us well over $300,000 on top of what we thought we’d be paying, and it’s probably going to cost more,” the Chamberlains told Open Justice.
The dispute involved an alleged series of faults with the property, which prompted the Chamberlains to withhold some of the final payment for it. This led to the building firm locking the doors on the day they were to move in. The couple, in response, smashed into the home and, soon after, the company placed a caveat on the property, which means that although the couple can live there, they cannot sell.
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A High Court judge ruled the caveat should not remain on the property but LSK Builders appealed that decision in July 2017.
In a High Court decision released last August, Associate Judge Kenneth Johnston said differences arose “virtually from the outset.”
In 2018, the firm lodged a legal action against the Chamberlains, alleging they took possession illegally – an allegation Mark Chamberlain said was based on his forced entry to the home on possession day.
The Chamberlains said they paid the full amount on the fixed-price contract - but on legal advice withheld additional amounts, New Zealand Herald reported.
The High Court decision stated LSK claimed it was owed about $200,000. The Chamberlains told Open Justice, however, that the amount withheld – in a lawyer’s trust account – was only under $145,000.
Judge Johnston noted in his High Court decision that litigation had reached the District Court, despite the contract containing a comprehensive dispute resolution provision.
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He also said that key clauses in the contract afforded the contractor protections in the event of a dispute about costs. These protections are in the form of entitlements to lodge a caveat against and register a mortgage over the title to the property.
LSK placed a caveat against the title on the Chamberlains’ property in October 2018, and registered a mortgage against it in January 2019, to secure the amount in dispute, pending the outcome of the proceeding in the District Court.
The Chamberlains applied to the Registrar of Land for the caveat to lapse, whereas LSK sought an order that it remain.
The High Court eventually dismissed the LSK’s application with Judge Johnston concluding the firm could not justify its caveat because it had no foundation for any claim to an interest in the land that was not covered by its mortgage security, and therefore there was no longer a basis for maintaining the caveat.
LSK’s claim was also for a greater amount than it was when it registered the mortgage, essentially due to accumulating interest and escalating costs, Johnston noted.
“I do not accept that that alters the position,” he said. “LSK’s arguable interest in the land extends only to the debt due under the contract.”
LSK has now taken its bid to the Court of Appeal, which was scheduled to hear arguments this month, New Zealand Herald reported.
