Body Corporate 211974 v Kimba Holdings Limited

[2016] NZHC 1916

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-1494 [2016] NZHC 1916

UNDER

Section 74 of the Unit Titles Act 2010 and

Part 19 of the High Court Rules

BETWEEN

BODY CORPORATE 211974
Applicant

AND

KIMBA HOLDINGS LIMITED First Respondent

UNIT 91 LIMITED Second Respondent

Continued over

Hearing:	On the papers
Counsel:	J P Wood for the Applicant
Judgment:	17 August 2016

JUDGMENT OF MUIR J

This judgment was delivered by me on Wednesday 17 August 2016 at 4.00 pm pursuant to Rule 11.5 of the High court Rules.

Registrar/Deputy Registrar

Date:…………………………

Counsel/Solicitors:

J P Wood, Rainey Law, Auckland

J Heatlie, Rainey Law, Auckland

K J Verkerk, Westpac (23rd Respondent), Auckland

BODY CORPORATE 211974 v KIMBA HOLDINGS LIMITED [2016] NZHC 1916 [17 August 2016]

GRAEME STEPHEN CORLETT, CARYL HILDA CORLETT AND SW TRUST SERVICES (THIRTEEN) LIMITED, AS TRUSTEES FOR THE GRACAR TRUST

Third Respondents

LEE EWELL CONSTULTANCY SERVICES INTERNATIONAL LIMTIED

Fourth Respondent

GRAHAM FREDERICK BAKER Fifth Respondent

VAUGHAN MICHAEL SKIFFINGTON AND PETER RONALD HAXELL AS TRUSTEES FOR THE MANGANUKU TRUST

Sixth Respondents

THE TRUSTEES EXECUTORS AND AGENCY COMPANY OF NEW ZEALAND LIMITED, MERVYN IAN LEWIS STARK AND MARY STARK AS TRUSTEES FOR THE MIKAR TRUST Seventh Respondents

BAONEY HOLDINGS LIMITED Eighth Respondent

ROOFING ASSOCIATION OF NEW ZEALAND INCORPORATED

Ninth Respondent

ATLANTIC NEW ZEALAND LIMITED Tenth Respondent

KAI UWE PLUSCHKE Eleventh Respondent

MICHAEL ANTHONY FRASER Twelfth Respondent

MARTIN JOYCE INVESTMENTS LIMITED

Thirteenth Respondent

JOSE ALVES FERREIRA, CARA MADELAINE FERREIRA, JASON ALVES FERREIRA AND DEBORAH LORRAINE FERREIRA AS TRUSTEES OF THE FERREIRA FAMILY TRUST Fourteenth Respondent

Continued over …..

C R S HOLDINGS LIMITED Fifteenth Respondent

DEENA LEE OXENHAM and ASTON EMILY OXENHAM

Sixteenth Respondent

YUN XU, MENG WANG AND PWA TRUSTEE LIMITED AS TRUSTEES FOR THE X-W FAMILY TRUST Seventeenth Respondent

NEVILLE OSLSEN Eighteenth Respondent

XIAO JUAN LI Nineteenth Respondent

ASB BANK LIMITED Twentieth Respondent

BANK OF NEW ZEALAND Twenty-first Respondent

ANZ BANK NEW ZEALAND LIMITED Twenty-second Respondent

WESTPAC NEW ZEALAND LIMITED Twenty-third Respondent

KOOKMIN BANK

Twenty-fourth Respondent

AIG INSURANCE NEW ZEALAND LIMITED

Twenty-fifth Respondent

[1]      The plaintiff which is the Body Corporate in respect of a development comprising three blocks of units (A-C) located at 13 Lovell Court, Rosedale seeks orders pursuant to s 74 of the Unit Titles Act 2010 (UTA) to establish a scheme of repair.

[2]      The application is not opposed and in those circumstances I may deal with the application on the papers.1    For reasons which will be apparent from this judgment, I consider it appropriate that I do so.

Approach to application

[3]      The approach to applications under s 74 is well settled and discussed in the Court  of Appeal  decision  of  Tisch  v  Body  Corporate  318596.2      That  case  was decided under the now repealed 1972 Act but the relevant section of that Act, s 48, has been essentially replicated in s 74 of the 2010 Act.

[4]      Tisch establishes that for a scheme to be sanctioned by the Court the applicant needs to show that:

(a)       the building or buildings concerned have been destroyed or damaged;

(b)a scheme is appropriate in the circumstances and the discretion to order a scheme should be exercised; and

(c)       the terms of the proposed scheme are themselves appropriate and in particular they balance adequately the interests of all the owners.

[5]      In relation to the third of these considerations the Court of Appeal identified3

five relevant factors, namely that:

(a)       a scheme with broad support is to be preferred; (b)     the scheme should be appropriately detailed;

1      Body Corporate 073471 v Dynasty Hotel Investments Ltd [2013] NZHC 1127.

2      Tisch v Body Corporate 318596 [2011] NZCA 420, [2011] 3 NZLR 679 (CA) at [36] –[44].

3      At [45] – [49].

(c)       the order may have retrospective effect so long as the Body Corporate

had acted in accordance with the scheme prior to the Court’s approval;

(d)work should normally be done to the same standard and at the same time; and

(e)      the terms of the scheme should not depart from the UTA and from the relevant Body Corporate Rules any more than reasonably necessary to achieve what is fair between unit owners in the circumstances.

[6]      I address each of these requirements in terms.

Building has been damaged or destroyed

[7]      In support of its application the applicant has filed a comprehensive affidavit from a building surveyor, Mr B J Gill.   He deposes, with detailed photographic support, that there are significant defects in the external envelope of the buildings which have led to moisture ingress and, in some areas, significant decay to timber framing.  I am satisfied that the buildings are damaged for the purposes of the s 74 jurisdiction.

A scheme is appropriate in the circumstances

[8]      In this case the defects and damage are both to unit and to common property and the Body Corporate requires a scheme to enable it to raise monies in advance of the repair and to undertake the work to both units and common property at the same time and to the same standard.  I am in no doubt that the preferable course is for the work to be done as part of a common scheme with a common contractor and to common standards.  The alternative, of separate repairs by individual owners and by the Body Corporate of common property, on a basis which would necessarily be ad hoc, is in my view contrary to the interests of unit owners and the underlying purposes of the UTA.  I note in that respect similar comments by Asher J in Body

Corporate 331094 v McMillan-Rourke & Ors4

4      Body Corporate 331094 v McMillan-Rourke & Ors [2015] NZHC 3050.

The terms of the scheme are in the interests of all owners

[9]      I note in that respect that:

(a)      the scheme has broad support.  On 27 August 2015 the owners voted in favour of applying for a scheme and a scheme was then drafted that apportioned the costs of repairs by the utility interest of each unit.  On

7 March 2016 the Body Corporate voted in favour of that scheme with its proposed apportionments.   Of the 20 units, 16 of them were represented  either  in  person  or  by  postal  votes.     Barring  one abstention all voted in favour.  No notice of opposition has been filed by any party.

(b)I consider the proposed scheme appropriately detailed.  It is in terms substantially similar to those of other schemes approved by this Court over the past two years including:

(i)       Body  Corporate  201036  v  Westpac  Banking  Corporation

(‘Parnell Terraces’).5

(ii)      Body Corporate 361945 v Westpac New Zealand Ltd (‘The

Ridge’).6

(iii)     Body Corporate 368690 v Powell (‘The Masons’).7

(iv)      Body Corporate 208203 v ANZ Bank New Zealand (‘Pueblo

Apartments’).8

(c)      In light of the recent decision of Wylie J in “Tuscany Towers”,9  the proposed scheme removes reference to major decisions being reserved

5      Body Corporate 201036 v Westpac Banking Corporation [2014] NZHC 1321.

6      Body Corporate 361945 v Westpac New Zealand Ltd [2014] NZHC 1336.

7      Body Corporate 368690 v Powell HC Auckland CIV-2014-404-2629, 24 November 2014.

8      Body Corporate 208203 v ANZ Bank New Zealand [2015] NZHC 378.

9      Body Corporate 183930 v Chua [2015] NZHC 2122.

to the Body Corporate at General Meeting.  Schemes with that change incorporated in them have been approved in:

(i)       Body Corporate 205373 v Balthazaar (‘Mays Road’).10

(ii)      Body Corporate 202692  v Jamac Holdings Limited (‘Retro

Apartments’).11

(iii)     Body Corporate 201161 v Keung (‘Gladstone Apartments’).12

(d)While a s 74 scheme may have retrospective effect, the repairs in this case have yet to be commenced and the intended scheme has prospective effect only.

(e)      The scheme provides for each of the buildings in the development to be repaired at the same time and to the same standard.

(f)      The terms of the scheme do not, in my view, depart any more from the scheme of the Act or Body Corporate Rules than is reasonably necessary to achieve fairness between the unit holders.   Again, the similarity of the scheme to others approved by this Court is relevant. Moreover, the proposed scheme is consistent with that of the Act generally save in the following respects:

(i)The scheme ensures that the Body Corporate has the power to complete all the repairs, removing any doubt as to the scope of the Body Corporate’s powers under s 138 of the Act.13

(ii)The Act contemplates repairs to building elements being made first and then the costs of repairs recovered (s 126), whereas

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

11     Body Corporate 202692 v Jamac Holdings Limited [2016] NZHC 1226.

12     Body Corporate 201161 v Kueng (‘Gladstone Apartments’) [2016] NZHC 1827.

13     For a discussion of which see Wheeldon v Body Corporate 342525 [2016] NZCA 247 at [27] –

[72].

the  scheme  makes  clear  that  the  owners  may  be  levied  in advance.

(g)I note also that the scheme provides that the utility interest is to be the only measure of contribution for the repair cost which is consistent with  s 126  of  the  Act  to  the  extent  that  no  unit  owner  benefits substantially more than any other.  It is my view a fair and balanced

proposal.

Result

[10]     I make orders settling a scheme of repair for the buildings on the base land of the Body Corporate on the terms set out in the Schedule to the Body Corporate’s application.

[11]   I record my thanks to counsel for the Body Corporate for his helpful submissions.

Muir J