Lawyers slam U-turn on Chancery Chambers building sale

by Sol Dolor30 Nov 2018

A group of lawyers is criticising the president and council of the Auckland District Law Society (ADLS) for going back on their word about the sale of the iconic Chancery Chambers building.

“The council and president are now reneging on a firm commitment given in June/July this year,” barrister Chris Eggleston said in a statement on behalf of the group.

ADLS members voted in July against a council resolution to gain permission to explore the sale of the ADLS headquarters, which the council was advocating. Eggleston said that the commitment not to sell the building was made three times in writing within a “frequently asked questions” sheet released to the society’s members. “If members do not endorse the proposal the building will not be sold by this council,” the sheet said, according to the group.

Just months after the vote, Joanna Pidgeon, president of the ADLS, has signed a $14.9m deal for the building, the New Zealand Herald reported. ADLS has also received “two unsolicited and unconditional offers,” worth $15.25m and $15.5m, the publication said.

The society has called for a second voting period lasting until 10 December for the first offer. If enough members agree, the sale becomes unconditional after two days. The other offers have not been entertained “because of contractual obligations” the ADLS has with the present buyer, Pidgeon said.

“While we do not agree with a new, hastily-arranged second postal vote on the sale of Chancery Chambers and believe its legality can be challenged, we would urge all members to strongly vote against the sale,” Eggleston said. “A council election would be a more appropriate time for members to debate the issue fully and elect a council that reflects the members’ vision for ADLS.”

In addition to the Eggleston, who has his offices within Chancery Chambers, the group opposing the sale includes barrister Helen White, who is another Chancery Chambers tenant. Gary Gotlieb, the well-known criminal defence lawyer and past president of the ADLS, is also a part of the group.

“I had thought that if the vote was in favour, there would at least be a commercially sound process. I couldn’t believe the president had done this,” White said.

The group is opposing the sale of Chancery Chambers, a 1924 heritage building bought and renovated by the society in 1989, and the second vote, because of three principles.

They said that the vote conducted in July was on the basis that the council promised in writing that it would not sell the building during their tenure if ADLS members voted against the plan.

The council also claims that the sale is urgent because the building is no longer fit for purpose. However, it has not yet fully investigated the current state of the building but has already entered into an agreement to sell the building, based principally on information that the prospective purchaser has provided, the group said.

“The council has no idea whether the current seismic safety rating of 37% is accurate or not, because it has not undertaken full and proper seismic investigations into its own building,” Eggleston said.

He said that previous ADLS councils had the prudence to establish a $3m fund for remedial works.

“The council does not know whether any remedial works are required, or, if they are, what those works might cost, because once again the council has made a conscious decision to not fully investigate this. Instead, the council has already entered into an agreement to sell the building to an undisclosed purchaser, based upon a seismic evaluation that the purchaser has itself obtained. The council is yet to explain why it permitted an unsolicited purchaser to undertake seismic investigations into the building, when it was not willing to undertake these investigations itself,” he said.

The council is also proposing to use proceeds of the sale to acquire another building worth $10m to $12m in the Auckland CBD.

“This building will be solely occupied by ADLS without any paying tenants. ADLS will accordingly be solely responsible for all outgoings associated with the new building. ADLS intends to swap occupying one floor of its current iconic eight storey building, which is expected to return $600,000 after OPEX this year, to being solely responsible for all outgoings and expenses on a new $10m to $12m building,” the group said.

The group also said that the council has no idea of the current market value of the building, since it has not taken active steps to market the building, instead solely relying on unsolicited bids for the building.

“About 13 years ago I was president of ADLS for two terms. I had been on the executive for about six years prior to that. What seems to be being ignored is the history of ADLS owning the building. This was done for the benefit of the members to give us financial security.” Gotlieb said. “I cannot see any benefit of selling the building; it is ‘the jewel in the Crown.’ I would like to see what financial investigation has been done to take such a drastic approach without open debate.”

“Whether it is viewed from the standpoint that promises are made to be kept, or from legitimate concerns as to the council’s commercial decision-making without having the full information required, the only sensible option is for members to vote against the council’s current proposal,” Eggleston said.

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