Body Corporate 183930 v Chua - [2016] NZHC 3064

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-000073 [2016] NZHC 3064

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 183930
First Applicant

SYNERGISTIC INVESTMENTS LIMITED

Second Applicant

AND

MUI KEE CHUA First Respondent

AND

OTHER RESPONDENTS
As set out in Schedule One to the

Application

Hearing: 9 December 2016

Counsel:

D Bigio QC for Applicants

J Heatlie and J Wood for Fifty Sixth, Sixty Sixth, Seventy Sixth and Eighty Third Respondents

V Burns for Fiftieth Respondent
No appearance for other Respondents

Judgment:

14 December 2016

FINAL JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie
On 14 December 2016 at 4.00pm Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar

Solicitors/counsel:
D Bigio QC, Auckland
Rainey Law, Auckland
Grimshaw & Co, Auckland

Date:………………………

BODY CORPORATE 183930 v CHUA [2016] NZHC 3064 [14 December 2016]

Introduction

[1] The applicants are, respectively, the body corporate for a unit title development known as Tuscany Towers, located in Ambrico Place, New Lynn, Auckland, and the owner of one of the units in the development. They seek an order under s 74 of the Unit Titles Act 2010 approving a scheme to enable the body corporate to finally settle a repair project pursuant to which remedial works have been carried out on each of the units in the development.

[2] The development consists of 97 units constructed in 16 separate blocks. The units comprise both two and three storey town houses. They had weather tightness issues from the outset. Most unit owners confronted these issues relatively promptly. The majority commenced proceedings in the Weathertight Homes Tribunal, which ended in a settlement in their favour following mediation. Most, if not all, signed two agreements – first an agreement called the Conduct and Distribution Agreement and secondly an agreement known as the Remedial Works Agreement – in relation to the required repairs and providing how they were to be funded. Essentially they agreed to use the settlement proceeds to pay for repairs. They recognised that some owners had been guilty of contributory negligence, and they put in place a mechanism to allow for this. They also made provision for the funding of any shortfall, although this was not initially thought likely.

[3] When the matter first came before the Court, remedial works had already been completed on 68 of the units. The remedial works project had stalled because the settlement proceeds had been exhausted. There was no additional funding in place and 29 of the units in the development were still to be repaired. Unit owners could not agree on a way forward and the applicants proposed a scheme to ensure that the remedial works could be completed and to raise the moneys necessary to pay for them.

[4] The proposed scheme was supported by 47 unit owners who had voted for it at a meeting of the body…

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: [2016] NZHC 3064
Decision Date: 14 December 2016

CaseChat Overview and Summary

The case before the High Court of New Zealand was an originating application for orders establishing a scheme under Section 74 of the Unit Titles Act 2010. The applicants, Body Corporate 183930 and Synergistic Investments Limited, sought approval for a scheme to settle a repair project on the Tuscany Towers unit title development in Auckland, New Zealand. The project had stalled due to insufficient funding, with 29 of the 97 units still requiring repair. The applicants' proposed scheme was supported by 47 unit owners but opposed by five others.

The legal issues the court had to decide included whether to admit further evidence and the fairness of the cost allocation proposals in the redrafted scheme. The court had the power to permit further evidence under Section 98 of the Evidence Act 2006 but needed to ensure that admitting the evidence would not cause unfairness. The court had to determine whether the cost allocation proposals in the redrafted scheme were fair as between unit owners, considering the circumstances that had arisen.

In its final judgment, the court declined to admit certain paragraphs of Mr. Zhou's affidavit, as they sought to challenge factual findings already made in the interim judgment. The court found that the redrafted scheme proposed by the applicants was fair to all owners as a whole, taking into account common property, contributory negligence, and the realities of the situation. The court approved the redrafted scheme, finding it to be broadly consistent with the Unit Titles Act and the principles of fairness. The applicants were awarded their reasonable costs and disbursements.

Orders