Body Corporate 182563 v Hadlow - [2021] NZHC 1358

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-002228

[2021] NZHC 1358

BETWEEN
BODY CORPORATE 182563

Applicant

AND

CHARLOTTE NAJA HADLOW and JOHN WILLIAM HUMPHREY & ORS

First Respondents

ASB BANK LIMITED
Second Respondent

ANZ BANK NEW ZEALAND LIMITED
Third Respondent

BANK OF NEW ZEALAND

Fourth Respondent

WESTPAC NEW ZEALAND LIMITED
Fifth Respondent

BASECORP FINANCE LIMITED
Sixth Respondent

…/2

Hearing: 9 June 2021

Appearances:

C Baker for Applicant

No appearance for Respondents

Judgment:

9 June 2021

ORAL JUDGMENT OF VENNING J

Solicitors: Price Baker Berridge, Auckland

BODY CORPORATE 182563 v HADLOW & ORS [2021] NZHC 1358 [9 June 2021]

AND
KANLUO YU

Seventh Respondent

JOHN LAURENCE ARMSTRONG and BRIDGET GEORGINA CHRYSTALL
Eighth Respondent

NADEZHADA DUDKO
Ninth Respondent

MING SHAN HOLDINGS LIMITED

Tenth Respondent

AUCKLAND COUNCIL
Eleventh Respondent

…/2

[1] This is an originating application for an order settling a scheme under s 74 of the Unit Titles Act 2010.

Service

[2] The application has been served on the named respondents to the application save for the eighth and ninth respondents. There is affidavit evidence in relation to the attempted service on the eighth and ninth respondents. In relation to the eighth respondent Mr Baker details the attempts to serve Ms Chrystall and Mr Armstrong. Ms Chrystall has been served. In respect of Mr Armstrong I accept the evidence that Ms Chrystall is in touch with him and notwithstanding that she and he have apparently retired as trustees there has been no transfer to new trustees. Accordingly, I confirm service on Ms Chrystall as effective service on Mr Armstrong in relation to the position of the eighth respondents.

[3] In relation to the ninth respondent, Mr Bischkopf, a process server, confirms service on the ninth respondent’s daughter. The daughter advised that the ninth respondent was her mother who lives in Russia. She purported to accept service on behalf of her mother. Accordingly, I confirm substituted service on the ninth respondent in that way.

Background

[4] The applicant is the Body Corporate under the Unit Titles Act 2010 of a property at 3 Whitaker Place, Auckland. The building in issue is a 17-storey building with a total of 146 units known as Cintra. It currently suffers from a number of building defects. The building defects are summarised in an affidavit of Mark Callander, a senior partner of the architectural practice called Resolution Architecture Limited, which has been engaged by the Body Corporate to review and report on the building defects.

[5]In summary, the defects include:

(a)Light weight steel framing of the exterior walls, exterior IT walls and decorative fin structures are severely corroded in places and fibre

cement cladding which is directly affixed to the light weight steel is moisture affected such that its structural integrity is compromised in many areas.

(b)The light weight steel framing of the solid balustrades is corroded in places and the fibre cement cladding which is directly affixed to it is moisture affected such that its structural…

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: [2021] NZHC 1358
Decision Date: 9 June 2021

CaseChat Overview and Summary

Body Corporate 182563, the body corporate of a unit title property in Auckland, New Zealand, has applied to the High Court for an order approving a scheme under section 74 of the Unit Titles Act 2010. The scheme seeks to address significant building defects and to fund the necessary repairs. The application was heard by Venning J on 9 June 2021, with C Baker appearing for the applicant. There was no appearance for the respondents. The court was required to decide whether the building had been damaged or destroyed, if a scheme was appropriate in the circumstances, and if so, what the terms of the scheme should be.

The court accepted the evidence of Mark Callander, a senior partner at Resolution Architecture Limited, who had been engaged by the Body Corporate to review and report on the building defects. The building, known as Cintra, suffers from numerous defects, including severe corrosion of the light weight steel framing of the exterior walls, exterior IT walls and decorative fin structures, and moisture-affected fibre cement cladding. These defects compromise the structural integrity of the building and span both common property and unit property. The proposed scheme outlines the necessary remedial works, including a full re-clad of the northern elevation, balcony repairs, and roof replacements. The court found that the scheme was appropriate given the extensive damage and necessary repairs.

The court noted that the scheme balanced the interests of the unit holders in a fair manner, with costs to be raised by charging owners in accordance with the utility interests assigned to their respective units. The scheme also provides for additional work requested by owners to be charged separately, and for the Body Corporate to have the authority to borrow and fix a charge on all owners. The terms of the scheme follow the Unit Titles Act 1972, and there is no issue as to retrospectivity. The court was satisfied that the scheme was sufficiently detailed.

The court approved the scheme in accordance with paragraphs 1.1, 1.2, 1.3, and 1.4 of the originating application dated 13 November 2020. The court found that the evidence of Mr Callander satisfied the court that the building had been damaged or destroyed and that the scheme was appropriate in the circumstances. The terms of the scheme appropriately balance the interests of the unit holders and impose the fairest outcome on all. The court made orders approving the scheme as requested by the applicant.

Orders