New Zealand: Court digs new hole for Harcourts Building owner

Brief Counsel

Did you hear the one about the man who went to court for the right to demolish an unsafe building and walked out with two unsafe buildings?

That is essentially what happened to the owner of the heritage Harcourts Building when the Environment Court dismissed his appeal against its refusal last year to grant him a demolition consent, and raised safety concerns about a neighbouring property, also owned by him.

The background

The Harcourts Building, at the expensive end of the Wellington CBD, was built in 1928 and has Category One status under the Historic Places Act. It is between 14% and 19% of current specification for seismic code when the minimum standard is 33%.

It had been fully tenanted but, since the Christchurch earthquakes of 2010 and 2011, all but one of the tenants has left, and the remaining tenant is paying a fraction of their previous rent.

The owner – Mark Dunajtschik – was served by the Wellington City Council (WCC) in July 2012 with a notice under section 124 of the Building Act giving him 15 years to either strengthen the building or pull it down.

The notice seemed to suggest that the WCC was neutral about which option he chose so he undertook extensive investigations as to the cost and outcomes of improving the building's seismicity and made a commercial decision to replace it with a new building which would be integrated with the adjacent HSBC Tower.

Mr Dunajtschik developed and still owns the Tower, the lifts and stair structure of which are built into the Harcourts Building lightwell and airspace.

However, his development plans were brought to a shuddering halt when the WCC declined him the necessary resource consent to tear down the Harcourts Building. This was consistent with the WCC's District Plan which contains strong provisions for the protection of heritage buildings.

He appealed to the Environment Court and lost so he then appealed the Environment Court's decision to the High Court which upheld the appeal and referred the case back to the Environment Court to be reheard.

And one problem became two problems.

The Environment Court's decision

The Environment Court had to consider two matters:

  • whether there was any reasonable alternative to total demolition, and
  • the risk to public safety and to surrounding buildings if the Harcourts Building was allowed to remain as is – a consideration made relevant by the fact that Mr Dunajtschik had threatened to leave the building "to rot" if he could not pull it down.

The court was scathing of this attitude, describing it as "unreasonable", and considered it unlikely that he would carry out the threat given the prime position of the building and that to leave it empty and neglected would affect the marketability of the HSBC Tower.

More significantly, it heard new evidence, not raised at the first hearing, that the failure of the Harcourts Building in an earthquake could cause serious damage to the HSBC Tower, trapping anyone above the 8th floor.

Mr Dunajtschik had offered to pay $5 million each toward restoring two iconic Catholic buildings, St Mary of the Angels Church and St Gerard's Monastery; amounts which the court acknowledged were sufficiently generous to probably ensure that both buildings would be preserved.

But it said the primary test was not about the preservation of heritage but about whether there was no reasonable alternative to demolition of the Harcourts Building and, given its primary conclusion that this threshold was not met, "payments to other projects (no matter how meritorious) do not arise".

What happens now?

Mr Dunajtschik could try his "luck" again with the High Court. Or he could begin to develop retention and refurbishment options. Or find a buyer.

If he chooses to do none of these things, the Environment Court says that the WCC may have to act.

"The Council has clearly concluded the risk is acceptable (at least to the public) in giving the owners 15 years to comply with the notice. If the HSBC Building risk now identified is considered unacceptable, then the Council has the power to address that building's safety, to give an earlier date for repair compliance or identify a building as dangerous."

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

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