Body Corporate 169774 v Weerasinghe

[2020] NZHC 3144

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2020-404-001711

[2020] NZHC 3144

UNDER

The Unit Titles Act 2010

IN THE MATTER

of an Originating Application for Orders establishing a Scheme under section 74 of the Unit Titles Act 2010

BETWEEN

BODY CORPORATE 169774

First Applicant

AND

PEARLNZ LIMITED

Second Applicant

AND

CHANNA AJITH WEERASINGHE and KESHI WEERASINGHE

First Respondents

AND

JI YOUNG BAE and YOUN SUP BAE

Second Respondents

continued overleaf…

Hearing:

18 November 2020

Appearances:

K Wendt for the Applicants

No appearance for the Respondents

Judgment:

27 November 2020

JUDGMENT OF VAN BOHEMEN J

This judgment was delivered by me on 27 November 2020 at 3.30pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

BODY CORPORATE 169774 v PEARLNZ LIMITED [2020] NZHC 3144 [27 November 2020]

AND

DAVID WILLIAM BAINBRIDGE and MING ZHU

Third Respondents

AND

JIYING DUAN

Fourth Respondent

AND

JIN ZHENG

Fifth Respondent

AND

SAJEEV CHETTACKAL KUTTAN and SHEENA THALIYAPARAMBIL

Sixth Respondents

AND

BARRY JAMES NORTHCOTT and CAROLINE ANNE NORTHCOTT

Seventh Respondents

AND

MING-HUEY CHANG

Eighth Respondent

AND

HONG YING NI

Ninth Respondent

AND

VIVIEN FAMILY CORPORATE TRUSTEE LIMITED and YIMING PENG and

YUEBIN GENG
Tenth Respondents

AND

ASCO LEGAL TRUSTEES LIMITED and RICHARD SCOTT GEARY

Eleventh Respondents

AND

DELLISSE MOLETA

Twelfth Respondent

AND

KUANG-YUEH CHENG

Thirteenth Respondent

AND

HUIYAN CHENG

Fourteenth Respondent

AND

LIN HU and TIANCHUN GAO

Fifteenth Respondents

AND

KENNETH JOHN GRAHAM and PATRICIA MARGARET GRAHAM

Sixteenth Respondents

AND

PHUOC THANH TRINH

Seventeenth Respondent

AND

RESPONDENT (MORTGAGEE)

ANZ BANK NEW ZEALAND LIMITED
Eighteenth Respondent

AND

ASB BANK LIMITED

Ninetieth Respondent

AND

BANK OF NEW ZEALAND

Twentieth Respondent

AND

WESTPAC NEW ZEALAND LIMITED

Twenty-First Respondent

AND

IAG NEW ZEALAND LIMITED

Twenty-Second Respondent

Introduction

[1]                  Body Corporate 169774 applies for an order under s 74 of the Unit Titles Act 2010 settling a scheme for the reinstatement of the building at 2 Alpers Avenue, Epsom, Auckland to repair weathertightness and other defects and damage.

[2]                  The application is  supported  by  a  comprehensive  affidavit  affirmed  on  21 September 2020 by Ravindra Sudhakar Telang, who is a director of Pearlnz Ltd, which owns one of the residential units in the property.

[3]                  Mr Telang was re-elected Chairperson of the Body Corporate at its annual general meeting held on 23 July 2020. At that meeting, Mr Telang was authorised to provide an affidavit in support of the application.

[4]                  The originating application was heard on 18 November 2020 by way of formal proof. Ms Wendt, counsel for the Body Corporate, presented submissions in support of the application. No unit owner was present at the hearing.

[5]                  The proposed scheme annexed to the application was approved unanimously by the meeting of the Body Corporate held on 23 July 2020 at which 66 per cent of owners were present in person or had provided proxies. The scheme:

(a)Authorises the Body Corporate as agent for the owners to deal with all matters relating to the repair of the building;

(b)Authorises the repairs to be undertaken by way of contracts entered into by the Body Corporate on behalf of the owners;

(c)Determines how the costs of repairs are to be shared among the owners and authorises the Body Corporate to raise levies from owners in accordance with the scheme;

(d)Allows the Body Corporate at its discretion to manage any work requested by an individual owner that is additional to the repairs; and

(e)Provides mechanisms to deal with managing funds, vacation of units, reporting to owners, the transfer of a unit, enforcement, levy recovery and disputes.

[6]                  In his affidavit of 21 September 2020, Mr Telang describes how the defects in the building were identified, the steps proposed by the Body Corporate to address the defects, and the different views among the owners as to the level of repairs needed and how those repairs should be achieved, and various extraordinary meetings of the Body Corporate that were held to consider these questions. He also describes how the agenda and papers for the annual general meeting held on 23 July 2020 were circulated to members of the Body Corporate ahead of the meeting and the decisions that were taken there by the 66 per cent of Body Corporate membership that attended or had provided proxies.

[7]                  In a further affidavit dated 12 November 2020, Mr Telang describes how notice of the present proceeding were provided to members of the Body Corporate, the response by one Body Corporate member who registered her opposition to the proposed scheme even though she was recorded as having voted in favour of the scheme at the annual general meeting, and the subsequent notice to Body Corporate members of the date of hearing of the application.

[8]As noted, no unit owner attended the court hearing on 18 November 2020.

Relevant principles

[9]                  The Court of Appeal in Tisch v Body Corporate 318596 set out a three-stage process that a court should follow when considering an application to settle a scheme:1

•     Step 1: the court must be satisfied that the building has been damaged or destroyed.

•     Step 2: if so satisfied, the court must decide whether to settle a scheme. That is, the court must decide whether a scheme is appropriate in the circumstances.

•     Step 3: if the court decides a scheme is appropriate, it must then decide what the terms of the scheme should be.

1 Tisch v Body Corporate 318596 [2011] 3 NZLR 679 (CA) at [35].

Has the building been damaged?

[10]              In his affidavit of 21 September 2020, Mr Telang says various systemic construction defects and damage arising from original design and construction details, worsened by aging and weathering have been identified, including:

(a)Roof defects and damage;

(b)Cladding defects and damage to the third level;

(c)Balcony construction defects and damage, including damage to timber framework and balcony membrane; and

(d)Deterioration to exposed central walls in north and south stairwells.

[11]I am satisfied that the building has been damaged.

Is the scheme appropriate in the circumstances?

[12]              As set out in Mr Telang’s first affidavit, repairs to the building have been discussed since an extraordinary general meeting of the Body Corporate held in November 2014. The Body Corporate progressed the design and scoping phase of the remediation project, alterative options were considered, and in 2019, the Body Corporate resolved to undertake the remediation works, following three extraordinary general meetings of the Body Corporate. As already noted, at the annual general meeting held on 23 July 2020, all the unit owners who attended voted in favour of the proposed scheme.

[13]              I am satisfied, therefore, that the proposed repair option set out in the scheme is supported by the owners who took the time to participate in the final discussions and voting process relating to the scheme. In addition, the unit owner who had expressed reservations with the scheme did not take up the opportunity open to them to record any opposition at the formal proof hearing.

[14]              I am also satisfied that the proposed scheme has an appropriate level of detail2 and is substantially similar to those approved by the Court in recent years.3 It apportions costs among owners in accordance with their utility interests on the basis that the building is fairly uniform and does not have unique design features that would result in significantly different repair costs to different units.

What should the terms of the scheme be?

[15]              I am satisfied that the terms of the scheme approved by the Body Corporate at its meeting on 23 July 2020 should be approved for the reasons set out above.

Order

[16]              In accordance with s 74 of the Unit Titles Act 2010, I make an order settling the scheme for the reinstatement of the building at 2 Alpers Avenue, Epsom, Auckland as set out in Schedule 2 to the application of the Body Corporate.

G J van Bohemen J

Solicitors/Counsel:

Pidgeon Law (L Fry-Irvine), Auckland, for the Plaintiff K Wendt, Richmond Chambers, Auckland

2      Tisch v Body Corporate 318596, above n 1, at [46].

3      See, for example, Body Corporate 371455 v ASB Bank Ltd [2019] NZHC 1606; Body Corporate 340942 v Packwood [2018] NZHC 649.