Body Corporate 308130 v Shan

[2025] NZHC 3381

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2025-404-2026

[2025] NZHC 3381

UNDER

the Unit Titles Act 2010

IN THE MATTER

of an Application for Orders Establishing a Scheme under s 74 of the Unit Titles Act 2010

BETWEEN

BODY CORPORATE 308130

First Applicant

ANDREW STEPHEN HONEYSETT and SUZANNE LOUISE PREECE
Second Applicants

AND

KAI SHAN

First Respondent

Continued…

Hearing:	22 October 2025
Appearances:	K Wendt for Applicants
Judgment:	7 November 2025

JUDGMENT OF MACGILLIVRAY J

This judgment was delivered by me on 7 November 2025 at 3.00 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

………………

Solicitors:

Lisa Fry-Irvine Law, Auckland

BODY CORPORATE 308130 v SHAN [2025] NZHC 3381 [7 November 2025]

AND  HUMBLE INVESTMENTS LIMITED

Second Respondent

KIM HAI NAM

Third Respondent

XIAO LIU
Fourth Respondent

CHRISTOPHER KARL KNIGHT- HASSELL and GEORGINA KNIGHT- HASSELL

Fifth Respondents

GK DREAM LIMITED
Sixth Respondent

FINCOOL LIMITED
Seventh Respondent

ANZ BANK NEW ZEALAND LIMITED

Eighth Respondent

BANK OF NEW ZEALAND
Nineth Respondent

WESTPAC NEW ZEALAND LIMITED

Tenth Respondent

LLOYDS BANK PLC
Eleventh Respondent

[1]                 The first applicant, Body Corporate 308130 (the Body Corporate), seeks an order settling a reinstatement scheme under s 74 of the Unit Titles Act 2010 (the Act) for a residential unit title development at 6 Scotia Place, Auckland Central.

[2]                 The application has been served on all the unit owners, as well as on the mortgagees of the units and on the Body Corporate’s insurer. The application is unopposed, and the hearing of the application proceeded by way of formal proof.

Background

[3]                 The units were built in the period from 2001 to July 2002. The units have serious weather tightness issues. A Weathertight Home Resolution Services (WHRS) report was obtained in 2010 identifying building-wide design and construction defects and damage. Since 2021, the Body Corporate has been planning remediation to reinstate the integrity of the units. Because of the substantial costs of the remedial work and the lack of owner engagement in the past, it has taken a considerable period of time to get the buy-in of owners for the building-wide remediation of the units.

[4]                 The work required to repair the units will include the demolition and removal of the existing cladding, replacement of decayed timber and treatment of sound timber, recladding, replacement of windows, reconstruction of decks and work to restore the interiors of the units consequent upon the remedial work.

Legal principles

[5]                 Under s 138 of the Act, the Body Corporate has an obligation to repair and maintain the common property and any building elements and infrastructure that relate to more than one unit. The duty to maintain and repair includes an obligation to renew the relevant property where necessary.1

[6]                 The Body Corporate is entitled to recover the costs of work relating to repairs or maintenance of building elements and infrastructure contained in a principal unit from the owner of the unit.2 The Body Corporate can also recover the cost of repair

1      Unit Titles Act 1974, s 138(5)(c).

2      Section 138(4).

work that the Act requires or authorises it to undertake from a unit holder, if the work is substantially for the benefit of one unit only, or substantially for the benefit of some of the units only, or benefits more than one of the units substantially more than the others. However, the Body Corporate can only recover costs from the unit holders under these provisions after the work has been completed.3

[7]                 Under s 74 of the Act the Court  can  settle  a  scheme  that  permits  the  Body Corporate to embark on the remediation of any building or improvement that is damaged or destroyed. Importantly, the scheme can include terms setting out how owners must share the cost of work covered by the scheme.4

[8]                 The Court of Appeal has set out a three-step process for considering the Court’s discretion as to whether to settle a scheme:5

(a)Step 1: the Court must be satisfied that the building has been damaged or destroyed.

(b)Step 2: if so satisfied, the Court must decide whether to settle a scheme. That is, the Court must decide whether a scheme is appropriate in the circumstances.

(c)Step 3: if the Court decides a scheme is appropriate, it must then decide what the terms of the scheme should be.

Step 1 – Building damage

[9]                 I am satisfied that the units suffer from widespread damage on all elevations of the building such that the building needs to be remediated as a whole. This was established by the comprehensive and detailed WHRS report.

Steps 2 and 3 – Is a scheme appropriate?

3      Body Corporate 361945 v Westpac New Zealand Ltd [2014] NZHC 1336 at [11].

4      Unit Titles Act, s 74(7). This section gives the Court a broad discretion to make “any orders that it considers expedient or necessary for giving effect to the scheme”.

5      Tisch v Body Corporate 318596 [2011] NZCA 420, 3 NZLR 679 at [35]–[49].

[10]             The Body Corporate has engaged architects, HD Design Group, and other consultants to prepare a building-wide remediation plan. The required remedial works are extensive and are likely to be expensive. While a contractor has yet to be engaged, the last quote obtained by the Body Corporate in September 2024 was for $2.7 million.

[11]             The proposal to prepare a scheme was discussed at an AGM on 17 October 2024. Four out of eight unit owners participated. They  resolved  to instruct the  Body Corporate’s lawyer to prepare a scheme. The draft scheme then received the unanimous support from the unit holders who participated6 at an EGM of unit holders held on 16 July 2025. While two of the owners did not participate in the EGM, they have raised no objection to the scheme.

[12]             Given the scope and cost of the remediation project, I am satisfied that settling a scheme is appropriate in order to put in place a legal and practical framework for implementing the scheme, as well as to give the Body Corporate certainty in relation to contributions towards the cost of the proposed work.

Are the terms of the scheme appropriate?

[13]             I am also satisfied that the terms  of the proposed scheme are appropriate.  The terms are similar to other schemes approved by the Court.7 In relation to cost sharing, the scheme adopts the utility interest-based approach using the definition of utility interest under the Act.8 This is a common approach where the buildings involved are reasonably uniform, and where the defects and damage and repair work needed for all units are reasonably uniform, as is the case here.9 The scheme provides that where an owner wants optional work done outside of the uniform remediation work, the unit holder will pay for that work themselves.

[14]             I am satisfied that a cost-sharing approach based on utility interests is appropriate and reflects the relative benefit that each unit receives. In the present case,

6      Six out of the total of eight unit owners participated, or 75 per cent.

7      See, for example, Body Corporate 169774 v Weerasinghe [2020] NZHC 3144; and Body Corporate 87945 v Marine Parade Holdings Ltd [2019] NZHC 1311 (2019) 20 NZCPR 893.

8      Section 5.

9      Body Corporate 87945 v Marine Parade Holding Ltd, above n 7, at [35].

the variance between each unit’s utility interest is within a small range between 11.5 per cent and 13.1 per cent. I am also satisfied that the scheme provides an appropriate and fair mechanism for raising funds for the work by permitting the Body Corporate to levy owners to meet expected costs.

Result

[15]I make orders:

(a)settling the scheme for the reinstatement of the buildings and the unit title development at 6 Scotia Place, Auckland Central under s 74 of the Unit Titles Act 2010 on the terms which are set out in sch 2 to the notice of originating application dated 28 July 2025; and

(b)no parties have opposed the application, therefore no order for costs is made.

MacGillivray J