Body Corporate 172108 v Flat Bush Finance Ltd
[2021] NZHC 555
•18 March 2021
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2020-485-549
[2021] NZHC 555
UNDER the Companies Act 1993 BETWEEN
BODY CORPORATE 172108
Plaintiff
AND
FLAT BUSH FINANCE LIMITED
Defendant
Hearing: 23 February 2021 Appearances:
T Allan for plaintiff
K Sullivan for defendant
Judgment:
18 March 2021
JUDGMENT OF ASSOCIATE JUDGE JOHNSTON
Introduction and background
[1] Body Corporate 172108 (BC) has commenced winding up proceedings against Flat Bush Finance Ltd (FBF). FBF applies pursuant to r 31.11 of the High Court Rules 2016 for orders staying the proceeding and restraining advertising of the same. The question for determination is whether FBF can establish that it is entitled to such orders.
[2] The dispute that has given rise to this proceeding concerns a block of flats in Hobson Street in Auckland. It began in late 2009. This Court and the Court of Appeal have dealt with several aspects. As a result, the background has been described in
BODY CORPORATE 172108 v FLAT BUSH FINANCE LIMITED [2021] NZHC 555 [18 March 2021]
numerous judgments. Rather than offer another description, I quote from my judgment in Body Corporate 172108 v Manchester Securities Ltd:1
(a)BC 172108 is the Body Corporate for Hobson Apartments, a 12-storey apartment block in Hobson Street in Auckland;
(b)The ownership arrangements for levels 1–11 inclusive are orthodox with BC 172108 owning common areas including the external walls and the unit title holders owning their apartments;
(c)Level 12 is different. As I understand the position, other than such things as stairwells and lift shafts, Manchester owns everything above level 11. This reflects the fact that level 12 was constructed separately, after the rest of the building;
(d)By late 2009 it had become apparent that the building was not weathertight and that extensive remedial work was necessary to all levels;
(e)BC 172108 proposed a scheme for the building’s remediation pursuant to s 48 of the Unit Titles Act 1972 (repealed);
(f)Given the unusual ownership arrangements, a key issue was the contribution if any to be made by Manchester to the cost of remedial work to the common areas on levels 1–11. BC 172108 contended that Manchester should contribute 11.88 per cent of this cost, that being the percentage of the total building area reflected by level 12. Manchester contended that as it would have to shoulder full responsibility for remedial work on level 12 it should not be expected to contribute to the cost of such work on common areas below that;
(g)The parties were unable to resolve this issue, and BC 172108 commenced proceedings in this Court;
(h)There followed a series of defended hearings and Heath J issued several judgments, the last in August 2010. His Honour ultimately approved a scheme that required Manchester to carry the cost of remedial work to level 12 and contribute to the cost of remedial work on the common areas of levels 1–11. The latter obligation was capped at 11.88 per cent of the total costs of remedial work to the building;
(i)Inevitably, there were delays and substantial cost escalations;
(j)In March 2013 BC 172108 applied for an order varying the scheme;
(k)In March 2017 Fogarty J issued a judgment granting BC 172108’s application, effectively removing the cap on Manchester’s obligations to contribute to the repairs on levels 1–11;
(l)Fogarty J concluded that as at the date of his judgment Manchester was liable to pay a minimum of $321,264.79 plus GST, and ordered Manchester to pay that amount as an interim payment;
1 Body Corporate 172108 v Manchester Securities Ltd [2020] NZHC 198 at [2].
(m)Manchester appealed Fogarty J’s judgment. In November 2017 the Court of Appeal dismissed this appeal;
(n)Manchester applied for leave to appeal to the Supreme Court. In March 2018 the Supreme Court dismissed this application;
(o)BC 172108 then served statutory demands on Manchester pursuant to s 290(1) of the Companies Act. Whilst I am given to understand that a number of such demands were served, only two have featured in this litigation. In the first BC 172108 demanded payment of the judgment debt of $321,264.79 and body corporate levies then said to be payable. In the second the company demanded payment of further body corporate levies that had become payable after the date of the first demand;
(p)Manchester applied to set aside the first statutory demand. In February 2018 its application was dismissed by this Court;
(q)Manchester appealed from that decision. In June 2018 the Court of Appeal dismissed this appeal;
(r)In the meantime, Manchester had initiated an arbitration directed at quantifying claims it says it has that should be netted off against any indebtedness it has to BC 172108;
(s)Manchester then applied for a stay of BC 172108’s winding up proceeding pursuant to art 8(1) of sch 1 to the Arbitration Act 1996 on the basis that the issues in the winding up proceeding were the subject of arbitral proceedings;
(t)In December 2018 this Court dismissed that application;
(u)Manchester appealed from that judgment. In September 2019 the Court of Appeal dismissed this appeal;
(v)I heard BC 172108’s application to wind up Manchester on 10 December 2019.
[Footnotes omitted]
[3] In that judgment I concluded that the BC was entitled to the winding up order it sought in relation to Manchester Securities Ltd. I deferred the coming into force of the order for three weeks to give the company an opportunity to meet its obligations and avoid liquidation. Shortly before the hearing the company had retired as the trustee of the Manchester Trading Trust in which capacity it was the registered owner of the unit on the 12th floor (Unit 12), and its sole shareholder and director, Mr Robert Cummins, had been appointed in its place. Mr Cummins maintains that as the trustee of the Trust he is now in a position to pursue any claims that Manchester Securities Ltd has hitherto pursued in this litigation. This may or may not be correct.
His contention appears to be contradicted by the terms of the deeds of retirement and appointment. However, I need not resolve the point. Following my judgment, Manchester Securities Ltd assigned its rights and obligations under a mortgage registered over Unit 12 to FBF.
[4] All of that resulted in a messy situation. Manchester Securities Ltd remained the registered owner of Unit 12. But Mr Cummins as the trustee of the Trust might also have a claim to be the legal owner, at least if it were not for the provisions of the deeds of retirement and appointment which provide that property in Unit 12 is not to pass to him (which would make him a sole trustee without legal title to the assets of the trust — something of a contradiction in terms). In any event, indisputably, the beneficiaries of the Trust have always been and remain the equitable owners of Unit 12, and FBF holds a first ranking mortgage over the Unit. It also meant that the liquidators I appointed over Manchester Securities Ltd assumed responsibility for a shell. In his recent judgment in Body Corporate 172108 v Manchester Securities Ltd,2 decided after I heard this case but before the date of this judgment, Powell J accepted a submission made on behalf of the BC to the effect that this structure was engineered deliberately to leave Manchester Securities Ltd (in liquidation) with any liability to the BC but confer any choses in action against the BC from Manchester Securities Ltd on Mr Cummins.
[5] On 10 March 2020 FBF foreclosed on its security and entered into possession of Unit 12.
[6] On 10 June 2020 BC struck two levies. Here is how the BC’s minutes described them:
12.0 LITIGATION LEVY
The need for a litigation levy had previously been discussed.
ORDINARY RESOLUTION:
“Litigation levy of $200,000.00 be raised as a one-off due for payment on 30 July 2020 provided that the Committee may borrow to cover any defaulter on such terms and conditions as it sees fit (currently 0.5% application fee and 10% per annum interest).”
CARRIED
2 Body Corporate 172108 v Manchester Securities Ltd [2021] NZHC 365.
13.0 BUDGET AND LEVIES
A draft budget had been prepared which provided for nil increases in ordinary levies. It was noted the allowance for the building wash was probably a little high and tis [sic] was reduced to $8,000 however the owners wished to keep the budget total at the same level as last year by increasing the contingency.
ORDINARY RESOLUTION:
“That levies be raised based on the operating expense budget of
$332,500 (exclusive of GST) with payment due in four instalments, with the first instalment due on 30 June 2020, the second instalment due on 30 September 2020 and the fourth instalment due on 28 February 2021.”
CARRIED
[7]These levies were then apportioned as between unit owners.
[8]The BC rendered invoices dated 12 June 2020 to unit owners.
[9] From the outset, FBF has denied any liability in respect of these levies and has paid neither. In the course of his submissions, Mr Sullivan summarised FBF’s position as follows:
12.The relevant levy invoices are both dated 12 June 2020. The first, in an amount of $27,324 (including GST), is addressed to the liquidators of [Manchester Securities Ltd] not FBF. It purports to be a “special levy: Litigation” imposed on [Manchester Securities Ltd] for a contribution towards legal costs to be incurred by the Body Corporate in legal proceedings it has brought against [Manchester Securities Ltd]. This includes legal proceedings where the Body Corporate is acting as the agent of the other 38 owners of units in the complex under the remediation scheme. In other words, the BC has purported to levy [Manchester Securities Ltd] in part for legal costs incurred for the private benefit of the other 38 owners. To that extent the purported levy is ultra vires, regardless as to whom it is addressed.
13.In any event, the first levy invoice was never sent to [FBF].
14.The second levy invoice is addressed to [FBF] and was sent to [FBF]. This purports to levy [FBF] for the first instalment of [Manchester Security Ltd’s] 2020–2021 ordinary operating levies in an amount of
$11,356.74 (including GST). The Body Corporate has now advised that this levy invoice is ultra vires and that it too should have been addressed to [Manchester Securities Ltd].
[10] On 7 August 2020 the BC served a statutory demand for the payment of these levies. FBF did not comply with the statutory demand. On 8 October 2020 the BC commenced proceedings. On 27 October 2020 FBF made this application.
Principles governing applications
[11] Counsel were on common ground as to the principles governing FBF’s application.
[12] The leading case remains Nemesis Holdings Ltd v North Harbour Industrial Holdings Ltd, where Wallace J summarised the principles in these terms:3
The Court has inherent jurisdiction to stay winding-up proceedings where the debt upon which such proceedings are founded is the subject of a genuine dispute. In those circumstances the plaintiff cannot show that it has the status of a creditor (required by s 219 of the Companies Act 1955) or (in the case of proceedings relying upon s 218(a) — not relevant in the present case) that there has been neglect by the company to pay. The decisions make it clear that the jurisdiction to stay is an inherent one to prevent abuse of process and there is no inflexible rule. The governing consideration is whether the proceedings savour of unfairness or undue pressure. It is, however, a serious matter to stay winding-up proceedings so that the decision to do so is never made lightly. The onus is on the applicant and it is normally necessary to demonstrate “something more” than the balance of convenience considerations which it is usually appropriate to consider on an application for an interim injunction.
[13] Mr Sullivan referred me to other authorities.4 However, it does not appear to me that these depart from Nemesis Holdings Ltd v North Harbour Industrial Holdings Ltd5 or add anything new to the analysis.
[14] The primary issue then is whether Flatbush FBF can demonstrate a genuine dispute in relation to the BC’s claim, so that for the Court to allow the matter to proceed by way of a summary process would be unjust.
3 Nemesis Holdings Ltd v North Harbour Industrial Holdings Ltd (1989) 1 PRNZ 379 at p 385.
4 Yan v Mainzeal Property and Construction Ltd (in receivership and in liquidation) and Anor
[2014] NZCA 190; B Property Group Ltd v Ecotech Commercial (NZ) Ltd [2020] NZHC 2673.
5 Nemesis Holdings Ltd v North Harbour Industrial Holdings Ltd , above, n 3.
The BC’s claim
[15] The BC of course operates under the Unit Titles Act legislation (the Unit Titles Act 2010 applies) and the BC’s rules.
[16] Section 80(1)(f) of the Unit Titles Act dealing with the responsibilities of owners of units provides that owners “… must pay all rates, taxes, charges, body corporate levies, and other outgoings that are from time to time payable in respect of the unit …”.
[17] Section 105, which deals with the promulgation of rules by bodies corporate, provides, in sub-s (4), that a body corporate’s “… operational rules are binding on … any mortgagee who is in possession of a principal unit”.
[18] Sections 121-129 deal with the entitlement of bodies corporate to strike levies and levy unit owners.
[19]The BC has promulgated rules and these include the following:
(a)Rule 1(a) provides that the terms defined in the Unit Titles Act have the same meaning for the purposes of the rules.
(b)Rule 1(b) provides that the rules are “… binding on all Owners and Occupiers of units in the unit title development …” as well as others;
(c)Rule 1(c) provides specifically that the term “Owner” and “Owners” have the same meaning in the rule as in the Act “… and for the purposes of these rules it also includes occupiers of the unit in the unit title development and the employers, agents, invitees, licensees and tenants of all owners and occupiers in the unit title development, unless the context otherwise requires”;
(d)Rule 29(b) provides:
An owner must comply with all Acts, (including the noise control provisions of the Resource Management Act 1991) bylaws, and
regulations for the time being enforced in the area in which its unit is situated, as they relate to the use, occupation or enjoyment of the unit, accessory unit or common property.
[20] On the basis of those provisions of the legislation and the BC’s rules, Mr Allan submitted that because:
(a)both the Act and BC’s rule define the term owners so as to include occupiers; and
(b)under s 80 and r 29(b) owners — and therefore occupiers — are obliged to comply with all relevant legislation, perhaps most obviously the Unit Titles Act itself; and
(c)the Unit Titles Act expressly entitles Bodies Corporate to strike levies which are chargeable to owners — and therefore occupiers;
from 10 March 2020 on which date FBF foreclosed on its security and went into possession of Unit 12, it became liable for any levies struck in respect of Unit 12 from that date.
Grounds for application
[21]On behalf of FBF, Mr Sullivan developed the argument for a stay on two bases:
(a)He submitted that the BC has no legal foundation for any claim against FBF — this he referred to as his principal submission;
(b)In the alternative, he submitted that even if the Court were to accept that the BC has a claim, the Court should exercise its discretion to stay the proceeds because of the existence of a cross-claim for a greater amount.
[22] Those contentions are addressed below in the order that I have summarised them.
The principal submission
[23] Mr Sullivan submitted that the levies struck by the BC on 10 June 2020 were unlawful as being ultra vires the Unit Titles Act and the BC’s rules, and were nullities (that is my term rather than Mr Sullivan’s, but it reflects the substance of his submission).
[24]As I understood his argument, it was that:
(a)the first levy was ultra vires (the Act and the BC’s rules) because:
(i)the invoice dated 12 June 2020 was addressed by the BC to Manchester Securities Ltd instead of FBF, and never received by the latter; and
(ii)the levy was struck by the BC to enable it to recover from FBF its share of the costs incurred in litigation that pits the interests of the (38) other unit owners against FBF and “[u]nder s 121 of the UTA the Body Corporate is empowered to impose levies to establish and maintain funds for long-term maintenance (s 117) and, optionally, contingencies (s 118) or capital improvements (s 119). There is no power to impose levies on one owner for the private benefit of other owners.”;
(b)the second levy was ultra vires (the Act and the BC’s rules) because it was “addressed to [FBF] and was sent to [FBF]. This purports to levy [FBF] for the first instalment of [Manchester Securities Ltd’s] 2020-2021 ordinary operating levies in an amount $11,356.74 (incl GST). The Body Corporate has now advised that this invoice is ultra vires and that it too should have been addressed to [Manchester Securities Ltd]”. The evidence to which reference is made is paragraph 4 of Mr Leishman’s second affidavit in which he says that “[a] Body Corporate can “levy” a registered proprietor. There is no provision in the Unit Titles Act 2010 for the Body Corporate to “levy”
the registered proprietors’ mortgagee in possession. The registered proprietor is levied but the mortgagee in possession pays the levy”.
[25] It is a curious feature of FBF’s argument that the first invoice is said to have been ultra vires in part because it was rendered to Manchester Securities Ltd and not FBF, and the second invoice is said to have been ultra vires in part because it was rendered to FBF and not Manchester Securities.
[26] However, the real point is that to the extent that FBF’s vires argument is founded on the entity to which the BC addressed its invoices, it is unconvincing. If an otherwise lawfully struck levy is rendered in the form of an invoice that is incorrectly addressed, that is not something that goes to the vires of the striking of the levy in the first place. All it can ever go to is the issue of immediate recoverability. In this case, it is quite clear that any error by the BC in terms of the entity to whom its invoices were addressed was quickly cured because the evidence contains extensive communications between the BC and FBF in which the latter denies any liability for the same, well before the BC initiated any formal enforcement process.
[27] FBF contends that the levy relating to litigation costs is ultra vires because the litigation is effectively between the BC (representing the interests of the other unit holders) and FBF and, it is unlawful for the BC to charge FBF effectively with the costs of litigating against it. As Mr Allan submitted, there is no authority to support that proposition. I reject it. The issue is whether any levy is one that the body corporate in question was entitled to raise in terms of the legislation and I did not understand it to be argued that the BC was not entitled to levy owners in respect of litigation costs incurred in connection with remedial work pursuant to a court-sanctioned scheme.
[28] That brings me to what I perceive to be the primary basis upon which FBF contends that the levies are unlawful, that is to say that it is not open to a body corporate to charge a mortgagee in possession.
[29] The only source of authority in relation to this issue appears to be the litigation involving Body Corporate 162791, Mr John Gilbert and QSM Trustees Ltd in this Court, the Court of Appeal and the Supreme Court.6
[30] One question that arose in the course of that litigation was whether BC 162791 was entitled to recover body corporate levies rendered in relation to a unit owned by QSM, which was in receivership and liquidation, against Mr Gilbert in his capacity as the receiver in possession of the unit.
[31] In this Court, Associate Judge Abbot dismissed BC 16279’s summary judgment application in respect of such levies.7
[32] BC 162791 appealed. The Court of Appeal posed the issues it had to determine as:8
(a)is Mr Gilbert personally liable under s 32(5) of the Receivership’s Act 1993 (the Act) to pay body corporate levies owed by QSMTL since 9 August 2013 (being the date 14 clear days after Mr Gilbert was appointed a receiver)?; and
(b)in the event that Mr Gilbert is liable, should his liability be limited or excused under s 32(7) of the Act?
[33] Plainly the focus of those issues as they were formulated is the application of the Receiverships Act, and that is not a promising start in terms of precedential value here.
[34] However, as Mr Allan submitted it is apparent that in the course of argument in the Court of Appeal the Court gave consideration to precisely the issue that arises in this case.
[35] The Court recorded a submission made on behalf of BC 162791 (the appellant in that court) in these terms:9
6 Body Corporate 162791 v Gilbert [2014] NZHC 567; Body Corporate 162791 v Gilbert [2015] NZCA 185, [2015] 3 NZLR 601, (2015) 11 NZCLC 98-039; Gilbert v Body Corporate 162791 [2016] NZSC 61, [2018] 1 NZLR 1, (2016) 11 NZCLC 98-042, (2016) 17 NZCPR 584.
7 Body Corporate 162791 v Gilbert [2014], above n 6.
8 Body Corporate 162791 v Gilbert [2015], above n 6, at [7].
9 At [59].
[59] Mr Chisholm argued that a mortgagee in possession is not liable to pay Body Corporate levies, and that it therefore follows that a receiver of a mortgagee should be in a similar position.
[36]In the next paragraph the Court responded to that contention:10
[60] We do not consider that this submission is soundly based. There is no statutory provision to the effect that mortgagees in possession are not liable for the payment of body corporate levies. Rather pursuant to s 105(3) of the Unit Titles Act, body corporate operational rules are binding on the body corporate, the owners of principal units, any person who occupies a principal unit, and any mortgagee who is in possession of a principal unit. If the operational rules of a body corporate provide that unit holders must pay body corporate levies, then clearly there will be an obligation on a mortgagee in possession to pay those levies. If the body corporate’s operational rules require all owners to abide by Acts in force in relation to the use, occupation or possession of a unit, as they do in this case, then again a mortgagee in possession will be liable to pay levies, because the obligation to do so is contained in s 80(1)(f) of the Unit Titles Act.
[37]That statement of principle applies directly to this case.
[38] The Court of Appeal reversed this Court’s finding and entered summary judgment in favour of BC 162791 against Mr Gilbert.11
[39]Mr Gilbert appealed.
[40]The Supreme Court dismissed the appeal.12
[41] In doing so, the Court addressed the argument dealt with in paragraph 60 of the Court of Appeal’s judgment.13 It said:14
[47] We do not see this interpretation as being commercially unfair or unreasonable. A receiver who is not prepared to accept the on-going costs associated with a unit should not accept appointment. It is well as open to a mortgagee to sell a unit or to go into possession (albeit that on the approach of the Court of Appeal, the latter will of course carry an obligation to pay body corporate levies. What is not consistent with the spirit of, and thus the policy underlined, s 32(5) is for a receiver to make use of a unit but not meet the associated costs.
10 At [60].
11 At [80]-[81].
12 Gilbert v Body Corporate 162791 [2016], above n 6, at [59].
13 Body Corporate 162791 v Gilbert [2015], above n 6, at [60].
14 Gilbert v Body Corporate 162791 [2016], above n 6, at [47].
[42]Plainly, that paragraph is confirmatory of the Court of Appeal’s analysis.
[43] Thus both the Court of Appeal and the Supreme Court have said in clear terms that a mortgagee in possession of a unit which is subject to the provisions of the Unit Titles Act assumes the mortgagor’s responsibilities including the obligation to pay lawfully struck levies. I can see no other interpretation of what the Court of Appeal in particular said in the Body Corporate 162791 litigation.
[44] Mr Sullivan submitted that this Court should not regard itself as bound by those decisions to conclude that the levies rendered by the BC were payable by FBF. Rather, he submitted that this Court should regard the question of whether and in what circumstances a body corporate can recover levies against a mortgagee in possession as an open one that should be resolved at a full trial in which the BC claims for recovery in the usual way.
[45] Mr Sullivan described the observations made by the Court of Appeal and the Supreme Court as obiter dictum. Technically, that description is correct. The core issues in that case focussed on the operation of the Receivership Act, and to the extent that the Courts addressed the position as between a body corporate and a mortgagee in possession they did so in order to deal with an argument by analogy advanced on behalf of one of the parties. That said, stare decisis is a subtle principle in its application. It seems to me that a clear statement of principle made by the Court of Appeal, confirmed by the Supreme Court, which formed an important plank of the reasoning process in the Court of Appeal at least, is not something which this Court should lightly put to one side when, as it appears, it is the only authoritative statement of law on the very point at issue.
[46] I am satisfied that I am bound to apply the analysis of the Court of Appeal as confirmed by the Supreme Court, which leads me to the conclusion that the body corporate here has a legitimate claim against FBF in respect of any body corporate levies rendered since it went into possession of Unit 12.
[47] Of course, as a general rule, if a mortgagee in possession effectively stands in the shoes of the mortgagor owner of the unit then one might expect that any defence
to a claim which would have been available to the mortgagor owner will be open to the mortgagee.
[48] That brings me to the only remaining question, that is to say whether FBF as the applicant is nevertheless entitled to the order that it seeks staying this proceeding and restraining advertising because of the particular circumstances of this case.
FBF’s secondary submission
[49] FBF contends that in the event of the Court concluding — as I have — that the levies concerned, which total $39,125.32, are lawful and properly chargeable by the BC to FBF, the Court should nevertheless exercise its discretion under rule 31.11 to stay the proceeding because FBF has a substantial cross-claim against the BC (having had Manchester Securities Ltd’s rights and obligations in connection with the dispute described earlier) assigned to it.
[50]I propose to deal with this secondary submission briefly.
[51] On the facts of this case as I apprehend them to be, it is not at all obvious to me that the claim that Manchester Securities has consistently maintained that it has is now vested in FBF. It will be recalled that Manchester Securities Ltd was the trustee of Manchester Trading Trust and it was in that capacity that it asserted these claims. The trusteeship of that Trust has not been transferred to FBF but to Mr Cummins. So it is he — and only he — who may advance these claims. And indeed I understand that Mr Cummins is attempting to do just that in ongoing litigation concerning the remediation scheme by seeking an order for his joinder as a party to that litigation. It cannot be the case that both Mr Cummins and FBF enjoy those rights.
[52] However, even assuming the claims formerly made by Manchester Securities Ltd can be made by FBF, in my view the appeal to that cross-claim by FBF in this proceeding in connection with its application under r 31 of the High Court Rules raises exactly the same issues as were dealt with in this Court in Manchester Securities Ltd v Body Corporate 172108,15 by the Court of Appeal in Manchester Securities Ltd v
15 Manchester Securities Ltd v Body Corporate 172108 [2018] NZHC 169.
Body Corporate 172108,16 by this Court in Body Corporate 172108 v Manchester Securities Ltd,17 and on appeal in the Court of Appeal in Manchester Securities Ltd v Body Corporate 172108.18
[53] In that quartet of judgments this Court and the Court of Appeal were invited, in the contexts of applications to set aside the BC’s statutory demand and for a stay, to bring winding up proceedings commenced by the BC against Manchester Securities Ltd to a premature end by exercising the discretion to do so having regard to Manchester Securities Ltd’s claimed cross-claim against the BC. Although, in this proceeding, the BC pursues different levies, the cross-claim that FBF asserts is the same cross-claim as was asserted in the two earlier cases, and indeed the same cross-claim that was ultimately rejected as a barrier to the making of an order winding up Manchester Securities Ltd in Body Corporate 172108 v Manchester Securities Ltd.19
[54] Although Mr Allan did not put the argument on this basis it may well have been open to the BC, it seems to me, to contend that at least this issue was the subject of a res judicata estoppel.20
[55] In any event, for all of the reasons articulated in those four earlier judgments I reject the contention that this Court should bring the BC proceeding to a conclusion prematurely by ordering a stay of the same.
Conclusion
[56]The application is declined.
[57]Costs are reserved. If counsel are unable to settle costs — as seems likely in
16 Manchester Securities Ltd v Body Corporate 172108 [2018] NZCA 190.
17 Body Corporate 172108 v Manchester Securities Ltd [2018] NZHC 3307.
18 Manchester Securities Ltd v Body Corporate 172108 [2019] NZCA 408.
19 Body Corporate 172108 v Manchester Securities Ltd [2020] NZHC 198.
20 In that a court of competent jurisdiction has determined a cause of action or issue, and, except by the exercise of an available right to appeal, it is not open to the parties to that determination to challenge it in subsequent litigation.
this particular case — they may file memoranda in the usual way.
Associate Judge Johnston
Solicitors:
Grove Darlow & Partners, Auckland for plaintiff Core Legal Ltd, Masterton for defendant
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