Body Corporate 154155 v Bishop - [2022] NZHC 197

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-002394

[2022] NZHC 197

UNDER The Unit Titles Act 2010

IN THE MATTER OF

an application for orders establishing a scheme under s 74 of the Unit Titles Act 2010

BETWEEN

BODY CORPORATE 154155

First Applicant

TOM ANNAN FURNISS
Second Applicant

AND

GILLIAN FRANCES BISHOP

First Respondent

MARIAM JAN BUKSH and LISTON TRUSTEE SERVICES LIMITED
Second Respondents

………………………Continued over

Hearing: On the papers

Counsel:

K L Wendt for First Applicant

No appearance for or by Respondents

Judgment:

16 February 2022

JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie
On 16 February 2022 at 3.00 pm Pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar

Date:…………………………

Solicitors/counsel:
Liza Fry-Irvine Law/K L Wendt, Auckland

BODY CORPORATE 154155 v BISHOP [2022] NZHC 197

DOUGLAS JAMES WILSON and CUSHLA MAREE BROWN
Third Respondents

LEON FRANCIS BIRT and JOANNE MEGAN SCOTT
Fourth Respondents

PERPETUAL TRUST LIMITED
Fifth Respondent

JANICE KAY GOULBOURN
Sixth Respondent

KISHOR MAGAN RANCHOD, PRAMILA KISHOR RANCHOD and CALDERA TRUSTEE NO 1 LIMITED
Seventh Respondents

JEREMIAH DAVID BOYACK
Eighth Respondent

CEME ENTERPRISES LIMITED
Ninth Respondent

ANZ BANK NEW ZEALAND LIMITED
Tenth Respondent

ASB BANK LIMITED
Eleventh Respondent

BANK OF NEW ZEALAND
Twelfth Respondent

KIWIBANK LIMITED
Thirteenth Respondent

TSB BANK LIMITED
Fourteenth Respondent

CHUBB INSURANCE NEW ZEALAND LIMITED
Fifteenth Respondent

Introduction

[1] Body Corporate 154155 (the Body Corporate) and its chairperson, Tom Furniss, seek an order settling a scheme under s 74 of the Unit Titles Act 2010.

[2] The scheme relates to a unit title development at the corner of Carlton Gore Road and Arotau Place, Grafton, Auckland. The respondents are the registered unit owners, their mortgagees and the body corporate’s insurer.

[3] The unit title development comprises two separate buildings with 10 principal units in total and 19 accessory units. There is a building known as the Townhouse Block at 11 Carlton Gore Road. It comprises three principal units. There is a second building known as the Apartment Block at 8 Arotau Place which comprises seven principal units. The order sought relates to damage to and remediation of the Apartment Block building.

Background

[4] The relevant events leading to the s 74 application are explained by Mr Furniss in an affidavit filed in support.

[5] The Apartment Block was built in 1993 and the body corporate was constituted under the Unit Titles Act on 20 September 1993 when the unit plan was deposited.

[6] The Apartment Block has monolithic claddings on its exterior. Weathertightness issues were first identified in August 2018. Since then, building consultants have investigated and identified various building defects. Water ingress has occurred leading to the deterioration of wall claddings, the roof cladding and the building fabric. This investigation has since been reviewed by different consultants, who confirmed the defects identified and also noted other areas of water ingress, the corrosion of roof sheets and non-compliant passive fire systems.

[7] The owners of the units in…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] NZHC 197
Decision Date: 16 February 2022

CaseChat Overview and Summary

The case of Body Corporate 154155 v Bishop involves an application for orders establishing a scheme under s 74 of the Unit Titles Act 2010. The applicants, Body Corporate 154155 and Tom Annan Furniss, seek the establishment of a scheme to address damage and remediation of a unit title development in Grafton, Auckland. The respondents include the registered unit owners, their mortgagees, and the body corporate’s insurer. The dispute centres on the damage to the Apartment Block building of the development, which comprises seven principal units and has been identified with significant weathertightness issues and structural defects. The body corporate proposes a scheme where only the owners of the Apartment Block units would bear the cost of remediation, with a remedial working group overseeing the process.

The primary legal issue before the court was whether the proposed scheme under s 74 of the Unit Titles Act 2010 was appropriate. The court had to determine if the building had been damaged, if settling a scheme was appropriate, and if the terms of the proposed scheme were fair and reasonable. The court applied the principles outlined in Tisch v Body Corporate 318596, focusing on fairness and ensuring the scheme achieved the fairest outcome for all unit holders.

The court found that the Apartment Block had indeed suffered damage, making it appropriate to settle a scheme. The unusual governance arrangements and cost-sharing provisions in the proposed scheme, where only the Apartment Block unit owners would bear the remediation costs, were deemed appropriate given the specific circumstances of the development. The remedial working group would be established to oversee the remediation, with decision-making and dispute resolution provisions clearly outlined. The cost-sharing arrangement based on utility interest was also considered fair, as the Townhouse Block had already undergone separate remediation and the Apartment Block units were similar in configuration. The scheme received broad support from all unit holders and adhered to the guiding principles of having broad support, being appropriately detailed, and ensuring fairness between unit holders.

Justice Wylie approved the proposed scheme, noting the extensive consultation and support from unit holders. The court concluded that the scheme was appropriately detailed and did not depart from the Act more than necessary to achieve fairness. The application was not opposed, and there was no order as to costs.

Orders