Body Corporate 198900 v McCallion
[2018] NZHC 1831
•23 July 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-001488
[2018] NZHC 1831
IN THE MATTER of an Originating Application to Appoint an Administrator pursuant to s 141 of the Unit Titles Act 2010 BETWEEN
BODY CORPORATE 198900
Applicant
AND
BRUCE MCCALLION
First Respondent
MICHELE MCCALLION
Second RespondentVIADUCT HARBOUR RESORT LIMITED
Third RespondentMADALE DE VILLIERS
Fourth Respondent
ANNA MOENGAROA DOBBIE
Fifth RespondentJAMES EDWARD DOBBIE
Six RespondentGINO BLAGOJA GURSHIN
Seventh RespondentKIRO GURSHIN
Eighth RespondentPORTOFINO CUSTODIAN COMPANY LIMITED
Ninth Respondent
BHANA INVESTMENTS LIMITED
Tenth RespondentEDIFY LIMITED
Eleventh Respondent
BODY CORPORATE 198900 v BRUCE MCCALLION [2018] NZHC 1831 [23 July 2018]
JACQUELINE HAZEL ARCHIBALD
Twelfth Respondent
JOHN MAURICE ARCHIBALD
Thirteenth Respondent
MATTHEW JOHN MAURICE ARCHIBALRD
Fourteenth Respondent
RICHARD NORMAN MARTIN
Fifteeneth Respondent
JAMES DOUGLAS GEORGE HEATON
Sixteenth Respondent
ROSEMARY EHTEL HEATON
Seventeenth Respondent
SELWYN GEORGE HEATON
Eighteenth Respondent
KIYOKO MASUNO
Nineteenth Respondent
RIKIICHI MASUNO
Twentieth Respondent
BRIAN ERNEST THEOBALD
Twenty First Respondent
LYNNE THEOBALD
Twenty Second Respondent
VICKI SUSAN RITCHIE
Twenty Third Respondent
SUN GHIU-PAO
Twenty Fourth Respondent
BABE ENTERPRISES LIMITED
Twenty Fifth Respondent
ARMIT LAL
Twenty Sixth Respondent
HEATHER KAYE TREADAWAY
Twenty Seventh Respondent
PJ & HK TREADAWAY FAMILY TRUSTEE COMPANY LIMITED
Twenty Eighth Respondent
PAUL JOHN TREADAWAY
Twenty Ninth Respondent
COLIN ROY FRICKER
Thirtieth Respondent
AJIT HIMMATLAL SHAH
Thirty First Respondent
SURABHI SHAH
Thirty Second Respondent
GAI TUXFORD
Thirty Third Respondent
ROBER JAMES TUXFORD
Thirty Fourth Respondent
JOHN STUART DEEKS
Thirty Fifth Respondent
LEWIS ANDREW DEEKS
Thirty Sixth Respondent
POMPALLIER INVESTMENT MANAGEMENT LIMITED
Third Seventh Respondent
MICHAEL MOTTL
Thirty Eighth Resopondent
MONA MASOUMINIA
Thirty Ninth Respondent
BRUCE GEORGE PLESTED
Fourtieth Respondent
TREVOR ALEXANDER BRINE
Forty First Respondent
LINDSAY SINCLAIR FENWICK
Forty Second Respondent
CHRISTOPHER BRIAN TIMMINS
Forty Third Respondent
RSL TRUSTEE SERVICES LIMITED
Forty Fourth Respondent
SHONA JANE TIMMINS
Forty Fifth Respondent
ALAN CLIFTON PELLOWE
Forty Sixth Respondent
ANNETTE KAY PELLOWE CHILD
Forty Seventh Respondent
ILA ELSIE PELLOWE
Forty Eigth Respondent
RUSSELL LAIRD THOMSON
Forth Ninth Respondent
ALAN GRANT MCCARRISON
Fiftieth Respondent
ML TRUSTEES 2291 LIMITED
Fifty First Respondent
P & M BLACKLER HOLDINGS LIMITED
Fifty Second Respondent
DAVID SHU-HAN YU
Fifty Third Respondent
THE DES SWANN TRUSTEE COMPANY LIMITED
Fifty Fourth Respondent
DONNA MARIA SIMUNOVICH
Fifty Fifth Respondent
NIGEL PHILIP SMITH
Fifty Sixth Respondent
BARBARA ANNETTE DITMERS
Fifty Seventh Respondent
FLORIAN DITTMERS
Fifty Eighth Respondent
VICKIE JANE GLYNN
Fifty Ninth Respondent
M ROSS TRUSTEE LIMITED
Sixtieth Respondent
MAUREEN ROSS
Sixty First Respondent
HAI YOUNG GU
Sixty Second Respondent
JUDY LAGSA
Sixty Third Respondent
MARY VERONICA MCLAUGHLIN
Sixty Fourth Respondent
ROBER TRDEAN SUBBLEFIELD
Sixty Fifth Respondent
ANTONY STRATFORD NICHOLL
Sixty Sixth Respondent
NORMAN THOMAS MORGAN
Sixty Seventh Respondent
ROBIN GAILE COOPER
Sixty Eighth Respondent
D & F GREEN HOLDINGS LIMITED
Sixty Ninth Respondent
NEDA SIMUNOVICH
Seventieth Respondent
S.C. TROON PTY LIMITED Seventy First Respondent
WELLINGTON PROPERTY SOLUTIONS LIMITED
Seventy Second Respondent
PETER RICHARD BARBER
Seventy Third Respondent
AMIT LAL
Seventy Fourth Respondent
CHRISTOPHER PATRICK EISDELL MOORE
Seventy Fifth Respondent COLIN MCGLASHEN
Seventy Sixth Respondent
DAVID RICHARD HAND
Seventy Seventh Respondent
JOANNE LESLEY COUND
Seventy Eighth Respondent
PAUL HAND
Seventy Ninth Respondent
STEVEN HAILEY
Eightieth Respondent
SUSAN LYON HAILEY
Eighty First Respondent
CARL GASCOIGNE HOWARD-SMITH
Eighty Second Respondent
NANCIE MARIE PLESTED
Eighty Third Respondent
DIANA GURSHIN
Eighty Fourth Respondent
MARY MAGDALINE LIM
Eighty Fifth Respondent
YIN CHEN
Eighty Sixth Respondent
NICHOLAS WILLIAM WATT
Eighty Seventh Respondent
VIADUCT HARBOUR HOLDINGS
Eighty Eighth Respondent
WESTPAC NEW ZEALAND LIMITED
Eighty Ninth Respondent
ASB ANK LIMITED
Ninetieth Respondent
BANK OF NEW ZEALAND LIMITED
Ninety First Respondent
ANZ BANK NEW ZEALAND LIMITED
Ninety Second Respondent
HAVELOCK NORTH MOTOR LODGE 2000 LIMITED
Ninety Third Respondent
KUN LUN
Ninety Fourth Respondent
KELLY ANNE WATT
Ninety Fifth Respondent
On the papers: Counsel:
A J Lloyd and I J Stephenson for Applicant
Judgment:
23 July 2018
JUDGMENT OF CHURCHMAN J
[1] By originating application dated 17 July 2018, the applicant sought to appoint Anthony Michael Woodworth as the administrator of Body Corporate 198900. The substantive proceedings will come before the Court on 13 August 2018 at 10am.
[2] In brief, the reasons for the application are that the Body Corporate for a building situated at 99 Customs Street West, Auckland and known as “The Quays” has become dysfunctional; has made decisions which are ultra vires the Unit Titles Act 2010; has managed funds otherwise in accordance with obligations under the Act, or in a way that amounts to a breach of trust and has failed to audit the Trust’s accounts, or confirm the financial position of the Body Corporate in accordance with s 132 of the Act.
[3] Examples given of the dysfunction are that the Body Corporate has not paid operating expenses or raised levies sufficient to meet those expenses. The most significant outstanding expense is the ground rental due for payment on 1 July 2018.
Interim application
[4] On the same date that the substantive proceedings were filed, an interlocutory application without notice for interim orders appointing an administrator was also filed.
[5] This application seeks to appoint Mr Woodworth as administrator of the Body Corporate, essentially so as to pay before Friday 27 July 2018 the sum of $137,886.31 to Viaduct Harbour Holdings Ltd, being the amount of the rental due and payable in respect of the ground lease on the land occupied by the Body Corporate at 99 Customs Street West.
[6] The Body Corporate holds funds totalling $508,848.05 in various accounts. However, the total sum held in the ground rental (residential) account is $16,218.91.
[7] The sum of $120,989.85 is held in the contingency fund account. The interim application seeks authorisation for Mr Woodworth to transfer funds from the contingency fund account to the ground rental account so as to provide the Body Corporate with sufficient funds to pay the ground rent.
Analysis
[8] It is clear that the Body Corporate is dysfunctional, and is in breach of a number of its obligations under the Unit Titles Act, including the payment of the ground rent.
[9] On 2 October 2017, the Body Corporate’s prior manager, Crockers, resigned, describing the relationship as untenable.
[10] On 4 October 2017, Crowe Horwath, who had audited the accounts for the year ended 31 January 2016, resigned. In their letter of resignation, they indicated they had not been provided with sufficient records. There were also concerns that an account known as the remedial ledger was not accurate.
[11] An annual general meeting was held on 20 March 2018 but that was dysfunctional. The proposed budget was not adopted and the task of apportioning
expenses and confirming levies was deferred. There was dispute as to the basis upon which funds should be raised as to whether expenses should be attributed to units or on a Utility Interest basis.
[12] A committee meeting was held on 26 March 2018 following the AGM. However, the committee did not set a budget or apportion the levies in the way directed at the AGM.
[13] The ground leasor, to whom the ground rent is payable, is Viaduct Harbour Holdings Ltd.
[14] By email of 13 July 2018, Viaduct Harbour Holdings Ltd confirmed that they would withhold action in respect of the unpaid ground rent provided the rent was payable, in full, within two weeks from the date of that email.
[15] It is in the interests of all unit holders that the ground rent be paid now so as to avoid potential liabilities for penalties, interest, Court costs, or similar sums.
[16] There would appear to be no disadvantage to the unit title holders for funds setting in accounts other than the ground rent account being used to pay this debt.
Without notice
[17] In order for the Court to make an order on a without notice application, it must be satisfied that grounds exist. Those grounds include the situation where to proceed on notice would cause undue delay or prejudice to the applicant.
[18] Having reviewed the affidavit material filed in support of this application, I am satisfied that this is an appropriate case for a without notice order to be made, and that proceeding on notice would cause undue delay and prejudice. The unit holders are fortunate that the leasor has been prepared to extend the time for the payment of ground rent to a date nearly a month after it was due.
[19] Requiring the applicant to proceed on notice would mean that the significant advantage that this represents would be lost. There is also no question that the ground
rent is in fact payable and overdue putting the Body Corporate in significant breach of its obligations, and that such breach has potentially very serious implications for the Body Corporate and the unit title holders.
[20] I am also satisfied that the limited basis upon which it is sought to appoint Mr Woodworth in the interim for the express purpose of paying the ground rent is no more than is required to remedy the default and to inform the unit title holders of the steps taken.
Outcome
[21] Accordingly, I grant the without notice application for interim orders in accordance with the application filed.
Churchman J
Solicitors:
Minter Ellison Rudd Watts, Auckland for Applicant
0
0