Body Corporate 202692 v Jamac Holdings Ltd

[2016] NZHC 1226

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-542 [2016] NZHC 1226

UNDER

the Unit Titles Act 2010

IN THE MATTER

of an originating application under Part 19 of the High Court Rules

BETWEEN

BODY CORPORATE 202692
Applicant

AND

JAMAC HOLDINGS LIMITED First Respondent

ANTHONY WALLACE KNIGHT Second Respondent

……………………………/continued

Hearing:

On the papers

Counsel:

JP Wood for applicant

DR Brown, first-named seventeenth respondent

Judgment:

8 June 2016

JUDGMENT OF FAIRE J

This judgment was delivered by me on 8 June 2016 at 5:00 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Rainey Law, Auckland

To:  DR Brown, Auckland

Body Corporate 202692 v Jamac Holdings Limited [2016] NZHC 1226 [8 June 2016]

DAVID KEITH CARNAHAN, ROSALIE ANN DARBY and RHYS MONTAGUE DARBY as trustees

for 8 Richmond Road
Third Respondents

ASLEY RALPH DANN and SHARON JOY DANN as trustees of the Asha Trust

Fourth Respondents

GORDON JONG-HO KIM, ROY BYOUNG-HA KIM and TERRY TE- HA KIM

Fifth Respondents

DAVID ANDREW VENEBLES Sixth Respondent

JONATHAN EDWARD ROBINSON and FLORENCE MARY GRAHAM Seventh Respondents

JULIE LENORE GIRVAN; COLE Eighth Respondent

MICHAEL BRADBURN, GARY MICHAEL BRADBURN and DAWN MARIE WLSON as trustees for the CMB Trust

Ninth Respondents

FIONA GRACE CUNNINGHAN Tenth Respondent

KEVIN THOMAS LAWRENCE; MICHAEL JOHN HARLAND Eleventh Respondents

AMANDA MARGARET BUCK, SHONA MARY BUCK and DAVID MORROW BUCK

Twelfth Respondents

KATHRYN ANNE McCALLUM Thirteenth Respondent

CHRISTINE MARIE SLATER Fourteenth Respondent

NELSON CHARLES VINING Fifteenth Respondent

LYNETTE GAIL HUDSON; MATTHEW GREGORY DONALDSON

Sixteenth Respondents

DEREK ROSS BROWN; JAMES NEIL McLEAN, JOHN DANIEL BARNETT and DOUGLAS MARK BURGESS as trustees of the Ross Brown Trust

Seventeenth Respondents

CATHERINE ELLEN JOHNSTONE,  GORDON WILLIAM JOHNSTONE and EARLLY & ASSOCIATES JFT LIMITED as trustees of the Johnstone Family Trust Eighteenth Respondents

IAN JAMES ROUTLEDGE Nineteenth Respondent

DANIEL PETER HANS van der ZOUWE and STACY ANNE CORSTON as trustees of the Pest Family Trust

Twentieth Respondents

EILEEN SYDNEY SWAN Twenty-first Respondent

AUCKLAND COUNCIL Twenty-second Respondent

ANZ NATIONAL BANK LIMITED Twenty-third Respondent

BANK OF NEW ZEALAND LIMITED

Twenty-fourth Respondent

WESTPAC NEW ZEALAND LIMITED

Twenty-fifth Respondent

ASB BANK LIMITED Twenty-sixth Respondent

KIWIBANK LIMITED Twenty-seventh Respondent

AIG INSURANCE LIMITED Twenty-eighth Respondent

[1]      The  applicant  is  the  Body  Corporate  of  the  Retro  Apartments.    Retro Apartments consists of one building and contains 23 units spread over four floors above two levels of car parking.

[2]      The Body Corporate applies for an order settling a scheme for the repair of the building. The application is made in reliance on s 74 of the Unit Titles Act 2010.

[3]      All parties who have an interest in the units have been served.  Initially, the seventeenth respondent filed a notice of opposition to the application.   That has subsequently been withdrawn.

[4]      The  second-named  eleventh  respondent,  Michael  John  Harland,  was  the subject of an order for substituted service on 18 April 2016.  Service in accordance with that order has been effected on Mr Harland on 19 April 2016.  At the time of service, he was provided with a letter in accordance with the order for substituted service which provided as follows:

Tuesday, 19 April 2016 8:39 a.m. Dear Mr Harland,

As we foreshadowed we have made an application for substituted service and the High Court granted that application.  We are permitted to serve the proceedings on this email address and the body corporate’s obligation to serve you is at an end.   If you would prefer to have a paper copy of the proceedings and affidavits in support please let us know.  Although we have already emailed you copies we shall resent in emails following.  Service is todays date.  Under the relevant High Court rules, if you wish to oppose the body corporate’s scheme then you must file and serve a notice of opposition and any evidence in support within 10 working days of today.  That is by the

4th of May 2016.

You file the opposition by delivering it to the civil registry of the High Court in Auckland.  You serve the opposition by delivering it to any party that has filed an address for service.  Thus far that is just the body corporate and its address for service is this firm (see the memorandum at the bottom of the originating application for details.

This matter will be called and heard on the duty judge list at 10am on 5 May

2016 at the High Court in Auckland.  If you wish to oppose we suggest that you attend or send counsel to attend for you.  In the absence of opportunity

we  shall  request  for  the  scheme  to  be  granted  on  the  day.    If  there  is

opposition we shall organise a date for the hearing.

If you wish to oppose the application we cannot act for your nor give you advice. We recommend that you seek independent legal advice.

Yours faithfully,

[5]      No steps are recorded as having been taken by Mr Harland on the High Court file.   He did not appear on 5 May 2016 when the application was called before Wylie J.

[6]      I therefore proceed on the basis that there is no opposition to the application.

[7]      On 26 January 2016, at an extraordinary general meeting the scheme was approved by all 16 units who attended or provided postal votes or proxies.

[8]      The  court  file  reveals  that  the  scheme  is  currently unopposed.    Counsel invites the court to make orders based on the affidavits filed in support.

[9]      Before a scheme may be sanctioned by the court, the applicant must show that:

(a)      The  building  has  been  destroyed  or  damaged.    In  this  case,  the building has been investigated by the Weathertight Homes Resolution Service, which has discovered that the building is not water-tight and damage is occurring and continues to occur to the interior of it;

(b)A scheme is appropriate in the circumstances and the discretion to grant a scheme should be exercised.  Here the defects and damage are to both unit and common property and the Body Corporate requires a scheme to enable it to raise moneys in advance of the repair and to

undertake work to both unit property and common property at the same time and to the same standard; and

(c)       The terms of the scheme balance the interest of all owners.1

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

(a)       A scheme with broad support is preferred; (b)  The scheme is to be appropriately detailed;

(c)      The order can have retrospective effect, so long as the Body Corporate had 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 is reasonably necessary to achieve fairness between unit holders in the circumstances.2

[11]     Counsel for the Body Corporate has filed a helpful memorandum in support and notes from the evidence adduced as follows:

(a)      The owners have voted in favour of applying for a scheme several times and the Body Corporate voted in favour of the scheme with the apportionment on the basis of utility interest with 16 of the 23 units voting in favour and none against.   It is reasonable to conclude therefore that the scheme has broad support.

(b)      The scheme has a level of detail and is on substantially similar terms

1      Tisch v Body Corporate 318596 [2011] 3 NZLR 679 (CA) at [36]–[44].

2      At [45]–[49].

with several of those granted by this court over the previous two years.3

(c)       Two changes have been made in response to recent court judgments, namely that:

(i)       References  to  major  decisions  being  reserved  to  the  Body

Corporate at general meeting have been removed; and

(ii)In cl 8, the Body Corporate is given more flexibility to raise levies  if  exigencies  of  the  financial  assistance  package  for leaky building  owners  require  proceeding  to  levy  before  a tender can be obtained, given the pitfalls of being too prescriptive.  It is noted that a scheme with the above changes

incorporated has been approved.4

[12]     I deal with the issue of retrospective effect.   The scheme raises funds by utility interest.  That is the basis on which the Body Corporate has raised funds in the past.

[13]     The complex is one building.  What is proposed is the only sensible way that repairs can be completed and is the basis on which the repair claims have been drafted.

[14]     The terms of the scheme are similar to those in previous schemes and are consistent with the scheme of the Act generally, save that it addresses the following aspects:

(a)       They ensure that the Body Corporate has the power to complete all the repairs.  While it has wide powers to repair building elements that

serve or relate to more than one unit (s 138), building element is

3      Body Corporate 201036 v Westpac Banking Corporation [2014] NZHC 1321; Body Corporate

361945 v Westpac Banking Corporation [2014] NZHC 1336; Body Corporate 368690 v Powell, HC Auckland CIV-2014-404-2629, 24 November 2014, Brewer J; Body Corporate 208203 v ANZ Bank New Zealand [2015] NZHC 378.

4      Body Corporate 205373 v Balthazaar [2015] NZHC 2827.

inclusively defined and serve or relate is a matter of interpretation. This removes any doubt as to the scope of the Body Corporate’s powers to do all the work required;

(b)The Act contemplates repairs to building elements being made first then the cost of that repair recouped from the owners (s 126).  This scheme makes clear that the owners may be levied upfront; and

(c)      This scheme ensures that utility interest is the only measure to be used, and this is consistent with s 126 of the Act as no unit owner benefits substantially more than any other.

[15]     I am satisfied that all five requirements have been met.  I have considered the scheme and I am satisfied it has the level of detail necessary and is in substantially similar terms to schemes which have been approved by this court on prior occasions. I am also satisfied that the scheme has taken into account comments made in recent judgments of this court.5

[16]     Accordingly, I order in terms of the originating application as moved and thus approve the scheme.

[17]     As a result of the orders made in this judgment, the fixture allocated for

20 June 2016 is vacated and attendances at that time are excused.

JA Faire J

5      Body  Corporate 183930  v  Chua  [2015]  NZHC  2122;  Body  Corporate 201036  v  Westpac

Banking Corporation, above n 3.