Body Corporate 177820 (Ascot Villas) v Bell

[2025] NZHC 1054

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2025-404-672

[2025] NZHC 1054

UNDER

the Unit Titles Act 2010

IN THE MATTER

AND

of Ascot Villas

IN THE MATTER

of an application under s 74 of the Unit Titles Act 2010

BETWEEN

BODY CORPORATE 177820 (ASCOT VILLAS)

Applicant

AND

ROBERT EDWARD BELL AND OTHERS

Respondents

Hearing:	On the papers
Counsel:	J Wood and J Heatlie for the Applicant No appearance by the Respondents
Judgment:	6 May 2025

JUDGMENT OF ANDREW J

This judgment was delivered by me

on 6 May 2025 at 10.30 am, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

BODY CORPORATE 177820 (ASCOT VILLAS) v BELL [2025] NZHC 1054 [6 May 2025]

Introduction

[1]    The applicant, Body Corporate 177820 of the unit title complex known as Ascot Villas, seeks an order settling a scheme under s 74 of the Unit Titles Act 2010 (the Act).

[2]    All the respondents, being owners of units in the complex and lenders with registered mortgages, have been served but no opposition has been filed.

[3]The application is being determined on the papers.1

Relevant legal principles

[4]    For a scheme to be sanctioned by the Court, the applicant will need to show that:2

(a)The building has been destroyed or damaged. Here, the buildings of the complex have clearly been damaged. The Body Corporate has filed an affidavit in support by Mr Nicholas Whittaker, a building surveyor. He gives his expert opinion that the units in the complex suffer from multiple latent building defects that will require a full replacement of the cladding and roofs.

(b)A scheme is appropriate in the circumstances and the discretion to grant a scheme should be exercised. I note that, here, the defects and damage in the complex are to both unit property and common property and that the Body Corporate requires a scheme to enable it to raise monies in advance of the repairs and to undertake work to both unit property and common property at the same time and to the same standard.

(c)The terms of the scheme balance the interests of all the owners.

1      See Body Corporate 073471 v Dynasty Hotel and Investments Ltd [2013] NZHC 1127; and Body Corporate 205373 v Baltazaar [2015] NZHC 2827.

2      Tisch v Body Corporate No 318596 [2011] NZCA 420, [2011] 3 NZLR 679 at [35]–[44].

[5]    There are five factors for the Court to consider in relation to an application under s 74:3

(a)a scheme with broad support is preferred;

(b)the scheme should be appropriately detailed;

(c)the order could have retrospective effect so long as the Body Corporate has acted in accordance with the scheme prior to the Court’s approval;

(d)normally, work should be done to the same standard and at the same time; and

(e)the terms of the scheme are not to depart  from  the  Act  and  the Body Corporate rules any more than is reasonably necessary to achieve fairness between unit owners in the circumstances.

Factual background

[6]    The complex, Ascot Villas, consists of 35 units. They are a mixture of standalone houses (nine units), duplexes (18 units), and a terrace (eight units). Each unit has its own accessory unit garden.

[7]    In 2015, the Body Corporate discovered the defects in the complex coincidentally when it commissioned Maynard Marks to undertake a long-term maintenance plan. The investigations took some time to complete and to get to a point where the Body Corporate is now ready to commence work.

[8]    Due to the varied nature of the unit types in the complex, the estimated average cost to repair each unit does not reflect the utility interests of units. Due to this, the members did not consider it fair for utility interests to be used as a method of allocation.

3      Tisch v Body Corporate No 318596, above n 2, at [45]–[49].

[9]    The issue of the method of allocation was one of the matters that stalled the project. Part of the issue that needed to be resolved was that, while owners regarded the physical boundaries of the units to be “theirs”, due to the unit plan there are many instances of the external wall lying on the boundary between units, resulting in part of the exterior being owned by a neighbour.

[10]   The Body Corporate has decided the fairest way to allocate costs as between the unit owners is on the basis of the physical work to a structure being allocated to the owner of each unit, regardless of the location of the boundary.

[11]   A scheme was first mooted in  May  2024.  On  9  December  2024,  the  Body Corporate resolved to make an application for the scheme’s approval, being the application currently before the Court. Of the 35 units, the owners of 25 units were present at that meeting and all voted in favour of the scheme.

Analysis and decision

[12]   I am satisfied that the grounds for the Court approving the scheme have been made out. As noted above, the building has been destroyed or damaged, the scheme is appropriate, and it balances the interests of all the owners.

[13]   I now address the further five factors referred to by the Court of Appeal in Tisch v Body Corporate No 318596.4

[14]   I note that the scheme has broad support. 71 per cent of owners have voted positively in favour of it. No owner has taken steps to oppose the scheme.

[15]   I further find that the scheme is to be appropriately detailed. The scheme contains 28 clauses that will deal with the effects that are likely to occur during the building project. It has maps attached to assist with the allocation of the cost of repairs. I find that it is similar to schemes that have previously been sanctioned by the Court.5

4      Tisch v Body Corporate No 318596, above n 2.

5      Body Corporate 205373 v Baltazaar, above n 1; Body Corporate 202692 v Jamac Holdings Ltd

[2016] NZHC 1226; and Body Corporate 201161 v Keung [2016] NZHC 1827.

[16]   As the Body Corporate has acted in accordance with the scheme to date, the scheme will have retrospective effect in many respects. Until the scheme was sanctioned, the only way the Body Corporate could raise funds and enforce levies was by raising them by utility interest. It is envisaged that, once the scheme is sanctioned, the costs will be reallocated to conform with the scheme. I note that this is not out of line with how the levies will be raised under the scheme: levies will be raised in the first instance either by utility interest or a unit type estimate and then will be reallocated on a final account based on the actual work on particular units. In all other respects, the scheme is not retrospective.

[17]   With the proviso that the work will be approached in stages, the work will be done at the same time and to the same standard. I note:

(a)the work will be done together with one contractor after a tender and will have a single project manager and engineer to the contract;

(b)the work was designed by one consultant; and

(c)a building consent will be applied for, which will encompass all the work.

[18]   I further find that there will be the least necessary departure from the Act and the Body Corporate rules to achieve fairness between owners. As noted above, the issue of allocation, which had been a “sticking point”, was resolved by each owner being responsible for the cost to repair the physical property they regard as “theirs”.

1. I therefore conclude that in all the circumstances:

(a)the need for a scheme has been triggered;

(b)in order for the Body Corporate to be sure it can carry out the repairs in the way that best suits the owners’ wishes, the scheme needs to be granted; and

(c)the terms of the scheme are fair and balanced.

Result

[20]   I grant the application for the order settling a scheme under s 74 of the Unit Titles Act 2010.

Andrew J