Body Corporate 194769 v Wheatley - [2016] NZHC 856

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-003013 [2016] NZHC 856

BETWEEN
BODY CORPORATE 194769

First Applicant

LESLEY ANNE WHEATLEY AND GEOFF ROBERT COPSTICK Second Applicants

AND

LESLEY ANNE WHEATLEY AND GEOFF ROBERT COPSTICK

First Respondents

ANTONIO KRSTEV AND SOFIJA KRSTEVA

Second Respondents

Hearing: 28 April 2016

Appearances:

T Bates for the Applicants
No appearance by or for the Respondents

Judgment:

28 April 2016

ORAL JUDGMENT OF HINTON J

Solicitors:
T Bates, Legal Vision, Auckland

Parties:
First and Second Respondents

BODY CORPORATE 194769 v WHEATLEY AND COPSTICK [2016] NZHC 856 [28 April 2016]

Background

[1] The first applicant, Body Corporate 194769 (the Body Corporate), is the body corporate of a 14 unit residential complex situated at 15 Andersons Road at Oteha known as “the Fields” (the building). The building is damaged, suffering from various water ingress problems throughout the entire building as a result of design and construction failings.

[2] Pursuant to s 74 of the Unit Titles Act 2010, the applicants apply to settle a proposed scheme for reinstatement of the common property and all of the units (including principal and accessory units).

[3] The applicants’ originating application for orders to settle the proposed scheme has been served upon all of the respondents. The first to fourteenth respondents are the unit owners. The fifteenth to seventeenth respondents are the various trading banks that have registered mortgages as against the units of the building. The eighteenth respondent is the insurer of the building. The nineteenth respondent is the Registrar General of Land. None of the respondents has taken steps to oppose the proposed scheme. I note that the nineteenth respondent, the Registrar General of Land, has filed a memorandum noting that it would abide by the decision of this Court.

[4] I have read and considered the proposed scheme, which I do not intend to record here in detail.

Relevant law

[5] Section 74 of the Act 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

(b) if the unit title development is in a layered unit title development, the body corporate of the head unit title development or any subsidiary unit title development in that layered unit title development; or

(c) an administrator; or

(d) the owner or one of the owners of a unit; or

(e) a registered mortgagee of a unit.

(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

(b) for the transfer of units to the body corporate so as to form part of the common property.

(4) If an order is made under subsection (3)(b), sections 58(1)(c) and 59 apply to the transfer, so far as applicable, but subject…

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 856
Decision Date: 28 April 2016

CaseChat Overview and Summary

Body Corporate 194769, acting on behalf of a residential complex in Oteha, sought to settle a scheme for the reinstatement of common and unit property following substantial water ingress damage. The unit owners were largely in agreement to proceed with the repairs, but there were concerns about the ability to enforce contributions and the need to avoid complicated assessments of individual contributions. The High Court was required to determine whether it was appropriate to settle a scheme under section 74 of the Unit Titles Act 2010 and, if so, whether the terms of the proposed scheme should be approved. The Court considered the three-step process set out in Tisch v Body Corporate No 318596, including whether the building had been damaged or destroyed, whether a scheme was appropriate, and what the terms of the scheme should be. The Court was satisfied that the building was damaged, that it was appropriate to settle a scheme, and that the proposed scheme was appropriate in the circumstances. The scheme was broadly supported, detailed without being overly complex, and provided a mechanism for raising necessary funds in a coordinated manner. The Court also accepted that the scheme departed from the Act in one material respect only, which was with regard to funding, and that this departure was necessary to achieve fairness between unit owners. The Court approved the scheme as proposed by the applicants.

The Court ordered the settling of the scheme sought by the applicants, as attached to the notice of originating application.

Orders