The President and Council of Auckland District Law Society (ADLS) are breaching an unequivocal assurance given to members five months ago, that the society’s Chancery Chambers building in Central Auckland “will not be sold by this Council,” say a group of lawyer members strongly opposed to the present sale of the property on moral and commercial grounds.
“The Council and President are now reneging on a firm commitment given in June/July this year,” states barrister Chris Eggleston, (pictured above) on behalf of the group.
“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,” says Mr Eggleston, who has his offices within Chancery Chambers.
“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.”
He says the commitment not to sell the building was given three times within a ‘FAQ’ sheet sent to the membership during the previous vote in June/July 2018. That FAQ sheet included the following:
“What happens if the members don’t agree to the proposal?
“We hope that our members agree that this proposal is a sound one that is in their best interests. If, however, members do not endorse the proposal the building will not be sold by this Council.
“SGM details and voting process
- The decision will be final and binding after the member vote.
- If members do not endorse the proposal, the building will not be sold by the Council”.
Mr Eggleston says the group of lawyers he represents are opposed to the sale of Chancery Chambers and a second vote on the building’s future on three principles:
1. In July 2018 the Council proposed selling the building and sought the agreement of the membership. The Council promised in writing that if ADLS members voted against this, then the Council would not sell the building during their tenure. The vote was conducted on that basis and the Council is now reneging on its promise.
2. The Council states that the building needs to be sold urgently because it is no longer fit for purpose. The truth is that the Council is yet to undertake a full investigation into the current state of the building. Instead, it has already entered into an agreement to sell the building, based principally on information that the prospective purchaser has provided.
3. The Council is proposing to use the sale proceeds to buy another building in Auckland’s CBD, for between $10M to $12M. 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.
Mr Eggleston says claims made by the President and Council about the safety of the building and a great ‘deal’ being made with an unidentified purchaser are contrary to the facts.
“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.
“Previous Councils had the foresight to build up a fund of $3 million, which has been set aside to pay 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.
Having obtained its own seismic report, the undisclosed purchaser has seen fit to make an unconditional offer that is $1 million above current valuation. The Council has no idea what current market valuation is, because it has taken no active steps to market the building. The Council is relying entirely upon unsolicited approaches from purchasers, the most recent of which the Council attributes to media attention garnered by opponents of the sale.
As the Council has already committed to the offer, members authorisation will lead to the building being sold without any prospect of it going to tender or auction. At a recent meeting with tenants, the President advised that she has already signed the sale and purchase agreement. The group is concerned that most members have not been told that this is the implication of a “yes” vote, as this was not clear from the information provided by the President to date.
“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.” says Barrister Helen White, a member of the group.
Mr Eggleston quotes the President stating that if the sale goes ahead, the Council intends to buy another office building in the CBD for between $10 to $12 million.
“From what we have been told, this new building will be solely for the use of ADLS and will not have any paying tenants. ADLS will go from occupying one floor of its iconic eight-storey heritage building that it has owned for 29 years, and which is expected to deliver an income after OPEX of $600,000 this year from existing tenants, to be solely responsible for all the OPEX on another building worth between $10 to $12M.” says Mr Eggleston
A past President of the ADLS, Gary Gotlieb, has also raised concerns.
“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. 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,” says Mr Eggleston.
FOR FURTHER INFORMATION:
Chris Eggleston 021 922 630
Helen White 027 5910 036
Gary Gotlieb 021 66 55 71