Body Corporate 212050 v Lee - [2016] NZHC 2526

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-1894 [2016] NZHC 2526

UNDER the Unit Titles Act 2010

IN THE MATTER

of an originating application for orders establishing a scheme under s 74 of the Unit Titles Act 2010

BETWEEN

BODY CORPORATE 212050
First Applicant

WLCK INVESTMENT LIMITED Second Applicant

AND

I-CHEN LEE & JOHANN JIA-HANN LIM

First Respondent

AND FORTY OTHER RESPONDENTS

Hearing: 20 October 2016

Appearances:

D Bigio QC for Applicants
No appearance for Respondents

Judgment:

21 October 2016

JUDGMENT OF LANG J

[on originating application for orders establishing a scheme
under s 74 of the Unit Titles Act 2010[
This judgment was delivered by me on 21 October 2016 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

BODY CORPORATE 212050 v & LIM [2016] NZHC 2526 [21 October 2016]

[1] This proceeding concerns a building development located at 134-150 Symons

Street, Auckland and known as “Glenside Terraces”. The development consists of

60 principal units divided into three distinct groups of units. One group comprises a block of three storey mixed-use townhouses and retail tenancies. The second comprises 17 principal units situated in one block of two storey townhouses. The third comprises 27 principal units in a basement carpark.

[2] The owners of the units discovered problems with the stability of the substrate and the condition of the townhouses in 2011. The body corporate responsible for conducting the affairs of the complex then filed proceedings in this Court to recover damages from parties involved in the construction of the buildings That litigation was ultimately settled in July 2013, and the body corporate is still holding the corpus of the funds received by way of settlement.

[3] The body corporate commenced remediation works in 2014. This required the occupants of the townhouses to vacate their units. Construction work ceased in March 2015, by which stage the cladding and joinery had been removed from the 33 townhouse units. At that point the body corporate decided to demolish the townhouses completely and rebuild them. It has now obtained a resource consent authorising it to construct new units on the site, and it is in the process of obtaining a demolition consent to enable the existing townhouses to be demolished. It expects to be in a position to apply for a building consent shortly.

[4] The body corporate proposes to pay for the demolition of the existing buildings and the construction of the new buildings using the settlement funds it received from the litigation, together with funds received from levies to be imposed on unit owners.

[5] The body corporate now seeks the approval of the Court for the establishment of a scheme under s 74 of the Unit Titles Act 2010 (the Act) to enable the demolition and building works to proceed.

Key aspects of the scheme

[6] As Mr Bigio for the body corporate points out, the proposed scheme largely adopts the model used in other schemes previously approved by this Court.…

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 2526
Decision Date: 21 October 2016

CaseChat Overview and Summary

The High Court of New Zealand was asked to approve a scheme under s 74 of the Unit Titles Act 2010 to enable the body corporate for Glenside Terraces to demolish and rebuild the townhouses that had been damaged. The applicants were the body corporate and WLCK Investment Limited. The respondents were the unit owners of the townhouses and carpark units, including the first respondents, I-Chen Lee and Johann Jia-Hann Lim. The body corporate had already settled litigation against the parties responsible for the construction of the buildings and was holding the settlement funds. It had decided to use those funds and impose levies on unit owners to pay for the demolition and rebuilding of the townhouses. The body corporate had obtained resource and demolition consents and was in the process of obtaining a building consent. The unit owners had unanimously agreed to the scheme and no objections had been lodged.

The court was required to decide whether the scheme was appropriate and, if so, whether it should be approved. The court considered that the scheme was appropriate and in line with the factors set out in Tisch v Body Corporate 318596, including the unanimous support of the unit owners, the detailed nature of the scheme, and the appropriate standards and timing of the work. The court also considered that the terms of the scheme were in line with the Act and the body corporate rules, except for the exception where a scheme is unanimously agreed to by all unit owners.

The court approved the scheme and made orders in terms of the originating application dated 10 August 2016. The court held that the body corporate and WLCK Investment Limited were entitled to the relief sought and the unit owners were ordered to contribute to the costs of the demolition and rebuilding of the townhouses in accordance with the scheme.

Orders