Body Corporate 162791 v Gilbert - [2014] NZHC 567

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2013-404-003833 [2014] NZHC 567

BETWEEN
BODY CORPORATE 162791

Plaintiff

AND

JOHN GILBERT First Defendant

QSM TRUSTEE LIMITED (IN RECEIVERSHIP AND LIQUIDATION) Second Defendant

Hearing: 25 November 2013

Appearances:

T J G Allan for plaintiff
D G Chisholm QC for first defendant (reciever)

Judgment:

25 March 2014

JUDGMENT OF ASSOCIATE JUDGE ABBOTT

This judgment was delivered by me 25 March 2014 at 4pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:
Grove Darlow & Partners, Auckland
Tompkins Wake, Hamilton

Counsel:
D Chisholm QC, Auckland

BODY CORPORATE 162791 v GILBERT [2014] NZHC 567 [25 March 2014]

[1] The plaintiff (the body corporate) is the body corporate established under statute1 for a unit title development at 239 Queen Street, Auckland, known as “Mid City”. The second defendant (QSMTL) is the registered proprietor of five units in
that development (the units) as trustee of the QSM Trust.

[2] The first defendant, Mr Gilbert (the receiver), was appointed receiver of

QSMTL on 25 July 2013, the day before it was placed into liquidation.

[3] Body corporate levies for the units have not been paid for a considerable time. There has been a long-running dispute between the body corporate and the owner of the units (from time to time) over a proposed redevelopment of the units (which originally comprised a cinema complex). The disputes currently before the Court in this proceeding include a claim by the body corporate for payment by the receiver of body corporate levies in respect of the units since QSMTL went into receivership.

[4] The body corporate has applied for summary judgment for a declaration that the receiver is liable for levies since his appointment, pursuant to s 32(5) of the Receiverships Act 1993 (the Act), and for judgment for so much of the levies as are outstanding as at the date of judgment, together with interest on the overdue amounts and costs.

[5] The receiver disputes that he has any obligation to pay the levies. He says that s 32(5) does not apply, but if it does the Court should exercise its power under s
32(7) of the Act to relieve him of personal liability in the circumstances of this case.

[6] The parties are agreed that the critical issue is whether on its proper construction s 32(5) imposes an obligation on the receiver to pay levies during the term of the receivership. If so, the Court must also determine whether summary judgment is appropriate given that the receiver seeks relief, in that event, under s
32(7) of the Act.

Background

[7] The strata title development known as Mid City comprises three distinct areas: a basement, a mid-level comprising two floors of a number of individually owned units used as retail or food premises, and a third level, originally developed as a movie theatre complex extending over three floors but now comprising the five principal units (3A – 3E) registered in the name of QSMTL.

[8]…

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: [2014] NZHC 567
Decision Date: 25 March 2014

CaseChat Overview and Summary

The plaintiff, Body Corporate 162791, sought summary judgment against the receiver, Mr Gilbert, for unpaid levies that had accumulated since the receivership of QSMTL, the registered proprietor of five units in the Mid City development. The plaintiff argued that the receiver was personally liable for the levies under s 32(5) of the Receiverships Act 1993, while the receiver contended that s 32(5) did not apply or, if it did, the court should exercise its discretion under s 32(7) to relieve him from liability. The court found that s 32(5) did not impose a personal liability on the receiver for levies, as levies are not payments due under an agreement but rather an incident of ownership imposed by statute. The court also held that even if "agreement" could be construed broadly, the obligation to pay levies arises from ownership rather than from an agreement relating to the use, possession, or occupation of property in receivership. The application for summary judgment was dismissed. The court directed the parties to confer on costs and file a memorandum within five working days.

Orders