Body Corporate 190053 v Ariki Limited

[2025] NZHC 1389

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-2860

[2025] NZHC 1389

UNDER

the Unit Titles Act 2010

IN THE MATTER

of an order settling scheme under s 74

BETWEEN

BODY CORPORATE 190053

Applicant

AND

ARIKI LIMITED & ORS

First Respondents

ANZ BANK OF NEW ZEALAND

Second Respondent

Hearing:	5 February 2025
Appearances:	C Baker and C MacFadyen for the Applicant No appearance by or for the Respondents
Judgment:	30 May 2025

JUDGMENT OF GAULT J

This judgment was delivered by me on 30 May 2025 at 2:00 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

Solicitors:

Mr C Baker and Mr C MacFadyen, Price Baker Berridge, Auckland

BODY CORPORATE 190053 v ARIKI LTD [2025] NZHC 1389 [30 May 2025]

[1]    This originating application seeks an order settling a repair scheme under s 74 of the Unit Titles Act 2010. The scheme relates to the large-scale remediation of building defects in both common and private property in a 15-storey, 162-unit residential complex at 1 Emily Place, Auckland  (the  Tower  Hill  Apartments).  The applicant is the Body Corporate 190053.

[2]    Following service as directed by the Court and in the absence of any opposition, the application proceeded by way of a formal proof hearing.

Factual background

[3]    The Tower Hill Apartments suffer from a number of building defects, first observed in November 2021. While overseeing maintenance, AS Jacobs Property Consultancy discovered crumbling concrete and holes on the outside edge of a deck. Spalling concrete on the deck edge and behind the glass-reinforced concrete panel directly below the deck was identified. Concrete had broken away from the structural beam.

[4]    Investigations into the damage followed in 2022. These investigations found various defects, including that waterproofing membranes for some units had failed, allowing water ingress and resulting in severe corrosion to the structural steel connecting brackets and panel fixings.

[5]    Work begun on the remediation, including recladding, retiling, installing fixtures, replacing panels and remedial work. However, defects continue to plague the building. The identified defects affect the penthouse and roof, southeast stairwell enclosure, the glass-reinforced concrete panels, external building maintenance, unit 21, bathrooms and some additional general works that are required.

[6]    The applicant seeks approval of a scheme to provide for the reinstatement of the damaged building elements resulting from the building defects.

Orders sought

[7]    The originating application dated 1 November 2024 seeks the following orders:

(a)The provisions of the scheme (the Scheme) appended to this application are settled and approved and shall be binding on each respondent (and their successors and assigns, if any) until the Scheme is completed and fully paid for.

(b)The applicant and respondents (and their successors and assigns) seek leave to apply for ancillary orders necessary to give effect to the terms of the order.

(c)The applicant shall file and serve on each respondent (or their successors and assigns, if any) by memorandum, notice when the Scheme is concluded in all respects confirming the same.

(d)The applicant shall recover the actual reasonable/solicitor costs incurred by the applicant in making this application from the registered proprietors as if it  were  an  amount  raised  under  s  121  of  the  Unit Titles Act 2010.

Applicable legal principles

[8]Section 74 of the Unit Titles Act 2010 relevantly provides:

74       Scheme following destruction or damage

(1)This section applies if any building or other improvement comprised in any unit or on the base land is damaged or destroyed, but the unit plan is not cancelled.

(2)The High Court may, by order, settle a scheme on the application of—

(a)the body corporate; or

…

(3)A scheme under subsection (2) may include provisions—

(a)for the reinstatement in whole or in part of the building or other improvement; or

…

…

(6)On any application to the High Court under subsection (2), the following persons have the right to appear and be heard:

(a)any person having or claiming to have any estate or interest in any unit or in the whole or part of the base land; or

(b)any insurer who has effected insurance on the buildings or other improvements comprised in any unit or in the whole or part of the base land.

(7)In the exercise of its powers under subsections (2)  and  (3),  the High Court may make any orders that it considers expedient or necessary for giving effect to the scheme, including orders—

(a)directing the application of any insurance money; or

(b)directing payment of money by or to the body corporate or by or to any person; or

(c)directing the deposit of an appropriate new unit plan; or

(d)imposing any terms and conditions that it thinks fit.

(8)The High Court may cancel, vary, modify, or discharge any order made by it under this section.

(9)The High Court may make any order for payment of costs that it thinks fit.

[9]    Like its predecessor, the Unit Titles Act 2010 imposes a three-step process on a court considering an application to settle a scheme under s 74:1

•     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      See Tisch v Body Corporate No 318596 [2011] 3 NZLR 679 (CA) at [35], in relation to s 48 of the Unit Titles Act 1972.

[10]There are five factors for the Court to consider:2

(a)a Scheme with broad support is preferred;

(b)the Scheme is to be appropriately detailed;

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

(d)normally work is to 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 reasonably necessary to achieve fairness between unit holders in the circumstances.

Discussion

[11]   Having reviewed the affidavits in support, I am satisfied that the requirements are met. Mr Woolgar, the applicant’s project manager, indicates the building suffers from several building defects, and as a result extensive repairs have continued to be required.  A  scheme   is   appropriate.   At   an   extraordinary   general   meeting, the Body Corporate resolved to approve the draft scheme and apply to the Court.  The Scheme is not opposed. It is sufficiently detailed. There is no difficulty with its retrospective effect. It is desirable for the work to be carried out under a single construction contract. The Scheme  departs  no  more  than  necessary  from  the  Unit Titles Act and Body Corporate Rules. All costs under the Scheme are to be raised by charging owners in accordance with the utility interest assigned to their respective units other than costs for “Additional Work”, that is work not needed for the remediation but requested by an owner which is to be charged to the relevant owner in full.

[12]For these reasons, the application is granted and the Scheme is approved.

2      Body Corporate 205373 v Baltazaar [2015] NZHC 2827 at [7], citing Tisch at [36]–[44].

Result

[13]Orders accordingly.

Gault J