Body Corporate 199380 v Cook - [2018] NZHC 1244

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2017-404-1852
[2018] NZHC 1244

UNDER the Unit Titles Act 2010
AND the Residential Tenancies Act 1986 IN THE MATTER of an appeal from the District Court BETWEEN BODY CORPORATE 199380
Appellant

AND ALISON COOK & MICHAEL VAN DEN BLINK
First Respondents

AND MARY WEBB
Second Respondent

Hearing: 30 October 2017

Appearances: S Price and I Stephenson for Appellant
J P Wood and J Heatlie for Respondents

Judgment: 30 May 2018

JUDGMENT OF VAN BOHEMEN J

This judgment was delivered by me on 30 May 2018 at 3.00pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors:
MinisterEllisonRuddWatts, Auckland Rainey Law, Auckland

BODY CORPORATE 199380 v COOK & ANOR[2018] NZHC 1244 [30 May 2018]

[1] The leaky building problem has been challenging building owners and managers for over 20 years. The challenges have been acute in the context of unit developments where the powers and responsibilities of unit owners and bodies corporate under the Unit Titles Act 1972 were not always adequate for dealing with situations that arose. The Unit Titles Act 2010 addressed some of the deficiencies of the earlier Act, notably by giving bodies corporate greater powers to repair unit property that is important to the integrity of a building. However, the new Act raises questions about responsibility for payment of repairs to unit property carried out by bodies corporate exercising these new powers because two sections, ss 126 and 138(4), provide different bases on which a body corporate can recover its costs. As demonstrated by this appeal, the two sections can produce very different results for owners of apartments in a unit development.

[2] This appeal seeks clarification of the relationship between those two sections and asks whether one section is intended to apply only when the other cannot apply, or, if they can both apply, on what basis should the body corporate decide which section to apply when it makes repairs within a unit title that have benefits for other unit titles and, possibly, for the building as a whole.

[3] Counsel for the appellant body corporate says the specific question raised on appeal is:

Does s 138(4) apply only where the repairs to an owner’s principal unit do not “substantially benefit” any other units in the circumstances provided for in s 126?

[4] The body corporate says the answer to the question is “no” and it has a choice as to whether to recover the costs of repair under s 138(4) or under s 126 in circumstances where both sections apply regardless of the question of benefit to other units. Under this interpretation, a body corporate may elect to recover under s 138(4) all the costs of repair from the owners of the principal units that were repaired even if the repairs substantially benefitted one or more other principal units. The body corporate says this interpretation is consistent with the purposes of the…

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: [2018] NZHC 1244
Decision Date: 30 May 2018

CaseChat Overview and Summary

In this appeal, Body Corporate 199380 sought clarification of the relationship between sections 126 and 138(4) of the Unit Titles Act 2010 (UTA 2010) as applied to the recovery of repair costs by bodies corporate in unit developments. The appeal was brought from decisions of the Tenancy Tribunal and the District Court which held that the body corporate was not entitled to recover the full costs of repairs to the deck of first-floor units from the owners of those units. Instead, the courts held that, under section 126, the costs should be apportioned among the unit owners on the basis of utility interest. The body corporate argued that the courts had erred in law and the appeal raises questions of statutory interpretation which are of broader significance. The central question is whether section 138(4) applies only when the repairs to an owner’s principal unit do not “substantially benefit” any other units, or, if they can both apply, on what basis a body corporate decides which section to apply when it makes repairs within a unit title that have benefits for other unit titles and, possibly, for the building as a whole. The court found that section 138(4) does not apply only when the repairs to an owner’s principal unit do not “substantially benefit” any other units. It found that section 126 can apply in circumstances where section 138(4) applies, but the body corporate does not have an unfettered discretion as to whether to apply section 126 or section 138(4). In deciding which section to apply, a body corporate must have regard to the purpose of the Act in section 3, the circumstances of the building, the benefit to other units or to the building as a whole, and other principles. The court dismissed the body corporate’s substantive appeal but upheld its appeal against the District Court’s costs decision.

Orders