Jokim Investments Limited v Sowman [2018] NZHC 1857 (25 July 2018)

Last Updated: 1 August 2018

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2015-404-2921 CIV-2017-004-354 [2018] NZHC 1857

BETWEEN	JOKIM INVESTMENTS LIMITED Plaintiff
AND	GRANT IAN SOWMAN First Defendant ADRIENNE WILLIAMS Second Defendant

Hearing:	28, 29 May 2018 and supplementary submissions on 6 June 2018
Appearances:	R E C Coulter and E Shin for Plaintiff J S Langston and A A Alipour for the First Defendant No Appearance for the Second Defendant
Judgment:	25 July 2018

JUDGMENT OF PALMER J

This judgment is delivered by me on 25 July 2018 at 12.30 pm pursuant to r 11.5 of the High Court Rules.

.....................................................

Registrar / Deputy Registrar

Solicitors:

Castle Brown Auckland Shieff Angland. Auckland

JOKIM INVESTMENTS LTD v SOWMAN [2018] NZHC 1857 [25 July 2018]

Summary

[1] Jokim Investments Ltd (JIL) leased an apartment in Albany, Auckland, to Mr Grant Sowman. He was convicted of manufacturing methamphetamine in the apartment. His partner, Ms Williams, admitted using methamphetamine there. JIL seeks compensation for the remediation of the apartment. Mr Sowman admits liability but disputes the amount of compensation due. Ms Williams does not defend the proceeding.

[2] I find it was reasonable for JIL to get professional advice and project management from Maynard Marks to manage the remediation and most of the costs JIL now claims are reasonable. But taking three and a half years to decontaminate and remediate, while claiming for the costs of that professional advice, is not reasonable. I consider two years for decontamination and remediation would have been reasonable. In total, I set liability at $299,120.26 plus interest.

What happened?

Who’s who

[3] Mr John Rutherford, along with his wife Ms Kim Klouwens, is a director of JIL, the plaintiff. JIL owns a two-bedroom, 64 square metre apartment originally finished to a high standard. It is located in a two-storey block at Point Ridge, Albany, North Auckland, and includes an associated basement storage cupboard. From early 2013, Big Five Company Ltd was JIL’s agent in managing the apartment and entering into tenancy agreements as landlord. On 16 September 2014, Big Five entered into a tenancy agreement with Mr Sowman and Ms Williams.

Methamphetamine contamination

[4] On 3 May 2015, the Police were called to the apartment. They detected evidence of unlawful activity relating to illegal drugs. Further investigation detected traces of methamphetamine. Chemicals and drug-related paraphernalia were located in the apartment and its basement storage cupboard.
[5] Mr Sowman was arrested. He pleaded guilty to possessing cannabis for supply, possession of ephedrine for supply, manufacturing methamphetamine, possession of methamphetamine and possession of equipment for manufacturing methamphetamine. It is common ground the methamphetamine offences were committed in and about the apartment. Ms Williams subsequently admitted to the Tenancy Tribunal she consumed methamphetamine on the premises.¹

Remedying contamination

[6] The Ministry of Health produced guidelines in 2010 and 2016 that clandestine methamphetamine laboratories should be remediated to a standard of 0.5 micrograms per 100 cm² of surface area.² On the second day of the hearing, the Chief Science Adviser issued a public report which questioned the extent to which residue resulting from methamphetamine being smoked, rather than manufactured, gives rise to health risks; though he considered remediation “certainly warranted” if methamphetamine levels suggest manufacture is likely to have taken place.³ None of the parties have suggested this is relevant to the issues in dispute here.

[7] Forensic and Industrial Science Ltd (FISL) inspected the apartment on 2 June 2015 and reported levels of methamphetamine concentration of over 200 micrograms per 100 cm² on the kitchen ceiling, the top of a cabinet in the kitchen and the bathroom door. The concentration was between 70 and 200 micrograms per 100 cm² on walls of the two bedrooms and the living room. The concentration was 7.89 micrograms per 100 cm² on the bathroom floor tiles. These concentrations meant the apartment was not fit for human habitation.

[8] Decontamination works were undertaken from May 2015 to April 2016, involving cleaning down surfaces, removing furnishings and removing and demolishing wall linings, flooring and other elements that could not be cleaned. Mr Rutherford’s evidence was the Body Corporate managed decontamination of the

¹ Tenancy Tribunal Order of 10 September 2015 at [12].

2. A microgram is a millionth of a gram. It is denoted in scientific publications as µ. For ease of comprehension I use “microgram”.
3. Peter Gluckman Methamphetamine contamination in residential properties: Exposures, risk levels, and interpretation of standards (Office of the Prime Minister’s Chief Science Advisor, 29 May 2018) at 7.

complex, including the plaintiff’s apartment, until about December 2015 or January 2016, with costs incurred by the Body Corporate’s insurer. At that point, contamination was found in all but one of the other units in the block, and in the common areas. Mr Rutherford said there was concern that, if the Body Corporate continued decontamination work on the plaintiff’s apartment, insurance monies would be used up and other owners would be left out of pocket. From that point, the Body Corporate focussed on other units and common areas. JIL, or Mr Rutherford and Ms Klouwens, funded subsequent work themselves.

[9] Further testing on 6 May 2016 revealed methamphetamine contamination of
0.91 micrograms per 100 cm² on the lounge door and 0.54 micrograms per 100 cm² on the front door. These readings still exceeded the guideline of 0.5 micrograms per 100 cm² of surface area.

[10] In March 2016, Steam’N’Dry was identified as a potentially cost-effective means of decontaminating the apartment and were engaged in May 2016. Further testing was undertaken. A report of 30 May 2016 by Specialist Inspections SPPI detected no methamphetamine residue above the guideline threshold and concluded no further action was required.

[11] Mr Rutherford then approached five or six builders to carry out the repairs. They were all busy. By July or August 2016, he had found a builder who was interested, Mr O’Shaughnessy. Mr Rutherford’s evidence was Mr O’Shaugnessy raised technical issues and proposed potential solutions Mr Rutherford was not sure about. In early September 2016, Mr Rutherford decided to obtain a specialist report. Maynard Marks’ report was delivered on 5 December 2016.

[12] In December 2016 or January 2016 Mr Rutherford asked for a quote from Mr O’Shaughnessy to carry out the work specified in the Maynard Marks report. He was not available. Another builder contacted in February 2017 would not provide a quote without a building consent and plans, due to fire issues. He recommended Mr Rutherford instruct an architect to prepare a building consent application first. Mr Rutherford engaged Bays Architectural Services in February or March 2017. Building consent was granted in November 2017, but neither of the builders Mr Rutherford had
previously contacted were available to carry out the work. In February 2018, Mr Rutherford engaged Maynard Marks to undertake a tendering process and administer the contract.

Freezing order

[13] On 9 December 2015, JIL obtained a freezing order from the High Court over Mr Sowman’s property at O’Shea Road on Great Barrier Island, restraining its sale or other disposition. Without opposition from the mortgagor, that and successor orders were extended until 29 May 2018, the second day of hearing. On 29 May 2018, by consent, I further extended the freezing order until 11.59 pm 29 August 2018. That was intended to provide sufficient time for the parties to consider this judgment.

The proceedings

[14] JIL initiated legal proceedings in the Tenancy Tribunal. On 14 December 2015, they were transferred to the District Court and on 21 March 2017, they were transferred to the High Court.

[15] JIL sues Mr Sowman and Ms Williams jointly and severally under the Residential Tenancies Act 1986 and the torts of voluntary waste, equitable waste and negligence. JIL originally sought damages for the losses it has incurred and will incur, including costs of:

(a) reinstating the property, of $355,250.52,

(b) communicating with the Body Corporate and decontaminating, inspecting and testing the apartment, including interest to 10 April 2017, of $18,881.67;

(c) net lost rental income including interest, incurred from 23 May 2015 to 10 April 2017, of $37,906.08, and yet to be incurred;

(d) consent application and engineering fees and insurance for the reinstatement contract works;
(e) general or other relief as the Court finds just in the circumstances; and

(f) interest and costs.

[16] Mr Sowman admits the methamphetamine contamination and does not dispute he is liable to JIL. He does dispute the amount for which he is liable.

[17] The hearing was conducted over two days with written closing submissions filed and served after the hearing. The witnesses were:

(a) for JIL: Mr Nicholas Powell, a forensic scientist from FISL; Mr John Rutherford, director of JIL; Mr Simon Paykel, director of Maynard Marks and a building surveyor; Mr Robert Davis, a quantity surveyor from Maynard Marks at the time; and

(b) for Mr Sowman: Mr Trevor Henry, a quantity surveyor; and Mr Peter Grantham, an expert building surveyor.

Law of recovering for damage to a rental property

Liability

[18] Liability is alleged by JIL for:

(a) intentionally or carelessly damaging the apartment, or permitting it to be damaged, during the time of the tenancy (s 40(2)(a) of the Residential Tenancies Act 1986 (the RTA)); or, alternatively,

(b) using the apartment, or permitting it to be used, for an unlawful purpose (s 40(2)(b) of the RTA); or, alternatively,

(c) being responsible for anything done by any person in the apartment with their permission (s 41(1) of the RTA); or, alternatively,

(d) the torts of voluntary waste and equitable waste (s 68 of the Property Law Act 2007); and, alternatively to (a) and (b),
(e) the tort of negligence.

[19] Under the provisions of the Property Law Act 2007, residential tenants are immune from a claim where the rental property suffers loss or damage caused carelessly by the tenant but against which the lessor is insured.⁴ However, for the exoneration provisions to apply, the lessor must hold insurance cover. Here, JIL held no insurance of its own and the Body Corporate held only limited cover. Furthermore, s 269(3) provides the Act does not excuse tenants from liability to the extent the damage was caused intentionally or as the result of an act by the lessee or agent that constitutes an imprisonable offence.

[20] Mr Sowman does not dispute liability so I proceed on the assumption he is liable on some or all of these legal bases.

[21] Ms Williams has not defended or participated in the proceeding. JIL seeks judgment by formal proof against her. I am satisfied, on the balance of probabilities, she permitted or assisted Mr Sowman to manufacture methamphetamine in the apartment and that caused damage to the apartment. On the basis of the evidence at trial and the submissions of JIL, to which she did not respond, I find she is jointly and severally liable for damages to the same extent as Mr Sowman.

What is agreed and not agreed

[22] Mr Sowman and JIL agree Mr Sowman is liable for the reasonable costs of remediating the damage.⁵ The issue is whether the costs claimed by JIL are reasonable.

[23] The differences between JIL and Mr Sowman on quantum of liability narrowed before and during the hearing. Mr Paykel, from Maynard Mark for JIL, initially estimated the remediation costs in December 2016 at $355,250.02 (GST excl), which was the amount originally claimed in the statement of claim. A subsequent update of that estimate by Mr Paykel came to a total of $271,165.73 (GST incl). Mr Henry, from Alexander & Co for Mr Sowman, initially estimated total costs (on an equivalent

⁴ Holler v Osaki [2016] NZCA 130, [2016] 2 NZLR 811; Property Law Act 2007, ss 268 and 269.

⁵ Bevan Investments Ltd v Blackhall & Struthers (No 2) [1978] 2 NZLR 97 (CA).

basis) of $165,588.20 (GST incl). In reply Mr Davis, for JIL, reduced the estimated construction costs, giving a revised estimate for JIL totalling $257,181.62. That was a difference, at the start of the hearing, of $91,593.42. There is also a difference as to the period of time over which it was reasonable to claim lost rentals.

[24] During the hearing, at my direction, the experts from each side conferenced to see whether the gap between them could be closed further. They had not previously done so because Mr Sowman was not willing to commit funding for such a purpose. Some further agreement was reached, in particular about the need for fire protection to meet building code standards.

[25] The parties agree Mr Sowman is liable to JIL for $18,270.82 for the costs and expenses of JIL communicating with the Body Corporate, decontaminating, inspecting and testing the apartment and interest rate of five per cent (still) prescribed by the Judicature Act 1908. The parties disagree on the professional costs, cost of remediation and rental losses.

Professional costs

[26] The parties agree on architectural costs from Bays Architectural and fire protection advice costs from R J Nelligan & Associates. They disagree on the costs of building consents and the costs of tender process and contract administration.

[27] The difference between the parties about the cost of building consent is
$366.60. It is explained by Mr Paykel as an additional charge by the Council for the review of the fire engineering and additional time spent processing the building consent. Mr Henry objected because he could not identify where the extra cost came from. I consider Mr Paykel’s explanation is sufficient and this amount is reasonable.

[28] JIL’s experts’ revised estimate for tendering was $6,150. Mr Henry, for Mr Sowman, believed he could run the tender process at $150 per hour in less than two days: $2,900 (GST incl). But that did not include a scope of works, did not involve four tenderers, did not allocate time for tenderer queries and did not involve a tender report to JIL. Mr Henry accepted other surveyors may charge $200 per hour. I doubt
it is necessary to obtain four tenderers for this sized job. I consider JIL’s estimate is reasonable.

[29] JIL estimated $20,000 for contract administration, based on $400 or two hours per working day for eight weeks, plus an additional allowance of $4,000 for contract documentation, a pre-start meeting, inspections, snagging, and compiling documents for a completion certificate. Mr Henry’s revised estimate of $7,935 (GST incl) for contract “observation” did not include financial administration, observing the works or a project engineer role. I consider the items left out of Mr Henry’s estimates would be reasonable to include in an estimate. But I consider the overall fee estimated by Maynard Marks for this sized job is too high. Given the provision for a foreperson, and the need for travel time, I consider seven hours a week for eight weeks plus the
$4,000 allowance would be reasonable for contract administration; that is $15,200.

[30] Under this heading, Ms Langston for Mr Sowman also challenged Maynard Marks’ recommendation of a drain inspection when FISL had not recommended it. Mr Coulter, for JIL, submits there is no basis for Mr Sowman to challenge the costs of drain investigations because it was not pleaded and it was a reasonable step to take. Given the evidence from Mr Powell of FISL, about the potential effect of methamphetamine on piping,⁶ I agree it was a reasonable step to take.

[31] Accordingly, I conclude the following professional costs are reasonable:

Professional costs
Architectural costs	$11,948.50
Fire protection advice costs	$4,025.00
Auckland City Council building consents	$4,581.60
Tender process	$6,150.00
Contract administration	$15,200.00
Drain inspection	$3,030.99
Total (GST incl)	$44,936.09

⁶ Notes of Evidence at 8–9.

Cost of remediation

[32] By the hearing, JIL estimated the cost of remediation to be $176,975.55 (GST excl). Mr Sowman estimated it to be $123,532.37 (GST excl). The difference was $53,443.18. A large number of detailed items comprise that difference. I have worked through the evidence and submissions regarding each item. I briefly address the disputed items only. Under each heading I then add the effect of my conclusions to the agreed items to provide a clear indication of the costs I consider reasonable to remediate on a like for like basis. I accept this apartment was finished to a high-end standard.

[33] As a general comment, Mr Henry, Mr Sowman’s expert quantity surveyor, suggested a specialist interior fit-out contractor could undertake the works less expensively, though none was identified. While a specialist fit-out contractor could be used, I agree it is also reasonable to contract Maynard Marks to manage the whole of the works, including subcontractors, given the difficulty Mr Rutherford had in doing so. There was also a suggestion a significantly cheaper overall offer by Masalex could have been accepted. But I do not agree it would necessarily have been reasonable to accept Masalex’s quote, the scope of works for which was not defined and the quality of which was not confirmed.

Demolition and site works

[34] Mr Henry questioned Maynard Marks’ provision for site supervision and project management, in particular for a site supervisor and foreman. I agree it is reasonable to involve a 50 per cent foreman to keep an eye on the works, which will have to include a number of sub-contractors, overall.

[35] For a number of items Mr Davis, for JIL, based his calculations on an eight- week period, including two additional weeks of supervision and scaffolding delivery and collection. Mr Sowman contended the six weeks allocated for the work itself was sufficient. I consider eight weeks is reasonable because additional demands can be expected regarding the relevant items at either end of the process.
[36] Mr Davis, for JIL, provided for hoarding to secure the works and materials in the basement for health and safety reasons. Mr Henry would only place cones in the area. I agree hoarding is reasonable.

[37] There was a difference over removal and disposal of damaged framing. I agree Mr Davis’s estimate of $17.15 per square metre reasonably reflects the work involved, based on the evidence of its scope.

[38] There was a difference between Mr Davis and Mr Henry about the area of screed that would have to be taken up. I accept the reduced area of 30 square metres, now estimated by JIL, is reasonable.

[39] I consider the more detailed scope of work estimated by Mr Davis, in removing and disposing of existing damaged plumbing, electrical and AC ducting services, is reasonable.

[40] Accordingly, I accept Mr Davis’s revised costs for all the demolition and site work items. I conclude the following costs are reasonable:

Demolition and site works
1.1 Mobilise	$19,351.62
1.2 Access tower scaffolding	$1,320.00
1.3 Protect access floor finishes	$462.50
1.4 Construct temporary hoarding within garage for site security	$1,615.01
1.5 Protection of external areas e.g. footpaths and driveways	$700.00
1.6 Remove and dispose of existing damaged ceiling framing	$1,046.16
1.7 Remove and dispose of existing damaged wall framing	$874.66
1.8 Carefully take up and remove existing damaged screeds containing underfloor heating elements	$2,107.50
1.9 Carefully remove and dispose of existing damaged services.	$2,080.01
Total	$29,557.46

Envelope and finish

[41] Mr Davis and Mr Henry differed on what would be involved in the electrical works. I consider Mr Davis’s allowance for replacement rather than minor repairs, to account for potential hidden damage, is reasonable in the circumstances.
[42] I accept Mr Davis’s estimates of costs of the repair of fire sealant for service penetrations, fire sealant rate, installation of timber nogs, a new metal ceiling grid, new cavity sliding door sets, finishing walls, painting rates, a full commercial clean and replacement of the sanitary unit in the basement are reasonable. They are based on more detailed measurements, breakdowns and explanations than the more generic assumptions and provisions of Mr Henry.

[43] I consider the higher end, rather than standard, specification of the kitchen joinery, splashback and bathroom fittings is reasonable given the standard to which the apartment had been finished.

[44] It was agreed the cost of replacement blinds should be deducted from JIL’s claim, as $753.25 had been awarded for that by the Tenancy Tribunal and paid.

[45] Accordingly, I conclude the following costs are reasonable:

Envelope and finishes
2.1 Replace/repair electrical carcassing works	$4,760.00
2.2 Replace/repair waste water systems	$1,500.00
2.3 Replace/repair hot and cold water supply systems	$2,726.00
2.4 Replace passive fire sealant to all service penetrations	$6,930.00
2.5 Apply new fire seal to gib	$2,880.00
2.7 Install new fire-rated acoustic insulation to wall and ceilings	$7,715.52
2.8 Install new 90x45mm timber nogs to match	$3,400.00
2.9 New galvanised suspending ceiling grid	$2,128.00
2.10 Replace air handling ductwork	$1,020.00
2.12 New bi-fold door sets including hardware	$890.00
2.13 Replace cavity sliding door sets including door hardware	$8,250.00
2.14 Replacing skirting	$688.59
2.15 Replacing architrave	$1,627.50
2.16 Replace all electrical fittings, including fire alarm items	$6,404.00
2.17 to 2.17E Finishing internal walls	$15,756.00
2.18 New 10mm GIB w/lv 4 finish to ceilings	$2,134.72
2.19 Install underfloor heating incl new screed (bathroom)	$1,110.00
2.20 Replace timber floors	$2,730.00
2.21 Replace kitchen joinery	$6,500.00
2.22 Replace kitchen/laundry appliances	$7,000.00
2.23 Replace bathroom fittings	$9,000.00
2.24 Painting to GIB ceilings and walls	$5,824.00
2.25 Painting to skirting	$598.50
2.26 Painting to architraves	$883.50
2.27 Tile floor to bathrooms.	$1,760.00
2.28 Install new carpet	$2,860.00
2.29 Full interior and exterior clean	$1,850.00
2.30 New steel framed door to car park storage	$2,075.00
2.32 Replacing hot/cold pipe to car park storage	$765.00
2.34 Replacing sanitary unit to car park storage	$1,390.00
2.35 Selected glass splash back	$345.00
2.36 Blinds	$590.00
Minus amount already awarded by Tenancy Tribunal for blinds	-$753.25
Total	$113,338.28

Overall calculations

[46] There was a dispute between the parties over whether a contingency of 10 per cent or seven per cent should be allowed. Mr Davis’s evidence is he had reduced the original contingency from 15 per cent and Maynard Marks generally used 10 per cent. Mr Henry accepted a 10 per cent contingency “is not stupid”, but considered when the level of certainly is relatively high industry standards would suggest a contingency between five per cent and 10 per cent.⁷ Here, where the level of certainty is “quite high” he suggested seven per cent. Given the amount of additional certainty generated through the litigation process has reduced costs significantly for this relatively small project, I consider it would be reasonable to estimate a contingency of seven per cent.

[47] Accordingly, I conclude the following costs are reasonable:

Demolition and Site Works	$29,557.46
Envelope and finishes	$113,338.28
Total estimated cost	$142,895.74
Contractor’s margin at 12%	$17,147.49
Total contractor cost	$160,043.23

⁷ Notes of Evidence at 180.

Contingency at 7%	$11,203.03
Total cost (GST excl) [check none of above figures included GST!]	$171,246.26
GST	$25,686.94
Total cost (GST incl)	$196,933.19

The effects of delay on loss of rent

Submissions

[48] A plaintiff claiming loss has a duty to take reasonable steps to mitigate its losses. JIL claims net lost rental income including interest from 23 May 2015 until the end of August 2018. Mr Coulter, for JIL, submits JIL took reasonable steps to mitigate its losses. He relies on the evidence of:

(a) Mr Powell, for FISL: that there were extremely high levels of contamination; the failure of initial cleaning meant considerable work was needed; and it is usual for the involvement of body corporates to cause delay.

(b) Mr Rutherford: that the Body Corporate was, reasonably, managing decontamination to about December 2015 or January 2016; Steam’N’Dry was not identified as an option until March 2016; there were good reasons not to remove the exterior joinery and main door, including security concerns; and JIL, as a residential property-owning company, cannot reasonably be expected to be an expert in assessing and dealing with methamphetamine contamination.

(c) Mr Paykel: that the Maynard Marks remediation report was “maybe three weeks over” the time expected; the Christmas period would delay engagement of architects and engineers; and there is a shortage in the construction industry.

[49] Mr Coulter submits Mr Sowman has not discharged the evidential burden on him to prove JIL failed to take reasonable steps in mitigation. He submits Mr Sowman’s expert witness, Mr Grantham, did not know the contamination levels
but acknowledged the failure to follow FSIL’s recommendations would have contributed to delay and acknowledged Mr Rutherford, a layperson, would not know what to do when faced with a methamphetamine contaminated property. Mr Coulter submitted it was not until February 2018 that Maynard Marks, a professional firm, was engaged. The steps that could be expected of a construction professional do not set the standard for judging the actions taken until that point. He also submits the evidence is Mr Rutherford was anxious to get matters resolved, frustrated at the time taken and lacked financial means to fund remedial works.

[50] JIL claims compensation for rental from 23 May 2015 until the end of August 2018, to allow for tendering, selection of contractor and completion of works, based on the tender documentation, at two different rates:

(a) The net weekly rental amount after the property manager’s fee for the period 23 May 2015 to 18 December 2015, during which period the property manager continued to manage the apartment. The weekly rate claimed is $453.37.

(b) The full weekly rental amount, rather than the net amount after the property manager’s fee, from 19 December 2015 onwards, after the property management company terminated their services on 14 December 2015. The weekly rate claimed is $490.

[51] JIL also claims interest on that sum. However, it deducts an allowance for insurance received from the Body Corporate’s insurer of $10,880.

[52] Ms Langston, for Mr Sowman, submits a claim for the loss of rental of the apartment for three and a half years is too long and it should be limited to one year from when the damage was first discovered, on 3 May 2015. She submits this amounts to $12,675.06 (composed of $453 per week for 52 weeks minus $10,880.94 in insurance costs). She relies on expert evidence from Mr Grantham, a building surveyor. She submits:

• (a) JIL’s experts from Maynard Marks could not explain the three-month delay between being first engaged and issuing their report in December 2017. There is no evidence explaining why it took from early 2017 to November 2017 to obtain a building consent. The statutory holidays around Christmas 2017 are only a small factor.

(b) Mr Rutherford agreed under cross-examination he could have engaged a builder, architect or Maynard Marks in August 2015 but decided to wait and took seven months to arrange to clean the apartment even though all that was required was the removal of two doors and applying a sealant on the ceiling of a bedroom.

(c) From the date of survey of the apartment, which could have occurred in August 2015, it should have taken three months to deposit the building consent and six weeks for construction time. Even taking into account delay in contractor availability, the remediation time should have been less than, and certainly no more than, 12 months from first discovering the damage.

(d) Although Mr Rutherford said he could not afford the cost of remediation he gave evidence of having a loan facility in place to fund at least $350,000 of remediation costs.

Decision

[53] I doubt it is easy for a layperson to know how to decontaminate and remediate an apartment that has been used as for manufacture of methamphetamine. And I am sure it is frustrating to have to deal with a series of tradespeople who do not return calls or declare themselves unavailable. That is why I consider it was reasonable for a layperson in such a position to engage professional advice and a professional project manager, as JIL eventually did here. The corollary is the remediation should have taken less time. I do not agree it is reasonable both to incur the delays of not having a professional project manager as well as the additional cost of eventually engaging one.
[54] In assessing what time is reasonable to expect remediation here, I take into account the Body Corporate’s decisions were out of JIL’s control and the decontamination process was iterative, as testing revealed the extent of progress, or lack thereof. From May 2016, however, progress should have been faster. There was an unexplained delay in Maynard Marks being engaged and then taking three months to issue its first report. I consider Maynard Marks could reasonably have been engaged in June 2016, reported by early August 2016 and been further engaged to obtain a building consent by Christmas 2016 and to complete the works by the end of March 2017 which, given inevitable delays, would probably mean the end of May 2017.

[55] Accordingly, I consider JIL should be able to recover net lost rental income from 23 May 2015 until 23 May 2017. Two years overall would be a reasonable period to expect remediation to be complete. That is equivalent to 104 weeks. I accept JIL’s submissions about the appropriate rate. At $453.37 per week for 30 weeks, and
$490 per week for the remaining 74 weeks, that gives $49,861.10. Less the insurance payments of $10,880.94, JIL are entitled to $38,980.16 in lost rental.

Result

[56] I order Mr Sowman and Ms Williams are jointly and severally liable to JIL for the costs of:

(a) $18,270.82 for decontamination, inspections, testing of the apartment and legal fees incurred communicating with the Body Corporate plus interest on that at the prescribed rate under the Judicature Act 1908;

(b) $44,936.09 for professional costs plus interest at the prescribed rate on the costs incurred to date;

(c) $196,933.19 for costs of remediation plus interest at the prescribed rate on the costs incurred to date; and

(d) $38,980.16 for net lost rental income from 23 May 2015 to 31 March 2017, plus interest on the opportunity costs incurred to date.
[57] Counsel requested leave to file further submissions on costs given circumstances that may affect any award, depending on the judgment. If costs cannot be agreed between the parties, I grant leave for JIL to file a memorandum within ten working days of this judgment and Mr Sowman to file a memorandum in response within five working days of that.




Palmer J