Body Corporate 312431 v Auckland Council

[2015] NZHC 961

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-003186 [2015] NZHC 961

UNDER

the Unit Titles Act 2010

IN THE MATTER

of an application to settle a scheme under s 74 of the Unit Titles Act 2010

BETWEEN

BODY CORPORATE 312431
First Applicant

MURRAY ANDREW STIRLING Second Applicant

AND

AUCKLAND COUNCIL First Respondent

ANZ BANK NEW ZEALAND LIMITED Second Respondent

WESTPAC BANK Third Respondent

..../cont

Hearing:	29 April 2015
Counsel:	T Bates for Applicants No appearance for Respondents
Judgment:	7 May 2015

JUDGMENT OF ASHER J

This judgment was delivered by me on Thursday, 7 May 2015 at 3pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Legal Vision, Auckland.

BODY CORPORATE 312431 v AUCKLAND COUNCIL [2015] NZHC 961 [7 May 2015]

ASB BANK LIMITED Fourth Respondent

BANK OF NEW ZEALAND Fifth Respondent

THE HONG KONG AND SHANGHAI BANKING CORPORATION LIMITED Sixth Respondent

MORTGAGE HOLDING TRUST COMPANY LIMITED

Seventh Respondent

KIWIBANK LIMITED Eighth Respondent

VECTOR LIMITED Ninth Respondent

THE LEGAL SERVICES COMMISSIONER

Tenth Respondent

AIG INSURANCE NEW ZEALAND LIMITED

Eleventh Respondent

THE REGISTRAR GENERAL OF LAND Twelfth Respondent

Introduction

[1]      Body Corporate 312431 applies by way of an originating application for an order of this Court settling a scheme of repair under s 74 of the Unit Titles Act 2010 in respect to an apartment building known as Normanby Mews.   The proceedings were filed on 4 December 2014.   Since then the applicants’ solicitors have been involved in arranging for service of the proceedings, and there have been orders for substituted service culminating in a final order of Katz J on 30 March 2015.  There has also been various directions made as to the positions of various parties, including

the Auckland Council and various mortgagees.1

[2]      I must decide today whether a scheme of repair that has been submitted with the originating application is to be settled by this Court under s 74.  I record that I am satisfied that there has been either personal service or substituted service on the unit owners.

[3]      In Tisch v Body Corporate No 318596 the Court of Appeal considered s 48 of the Unit Titles Act 1972 (the precursor to s 72) imposed a three-step process in relation to applications to settle a scheme.2   That approach continues under s 72 of the Unit Titles Act 2010.3   I now consider the three steps.

Step 1 – is the Court satisfied that the building has been damaged or destroyed?

[4]      Normanby Mews suffered from a systemic leaky building problem which required a complete re-clad to remedy the water ingress problem.

Step 2 – should a scheme be settled and is a scheme appropriate in the circumstances?

[5]      The Body Corporate has, understandably given the number of unit owners, been unable to convene a general meeting where all unit owners were present,

whereby they could vote on the scheme.   However, a unanimous resolution was

1      Body Corporate 312431 v Auckland Council HC Auckland CIV-2014-404-3186, 11 February

2015.

2      Tisch v Body Corporate No 318596 [2011] NZCA 420, [2011] 3 NZLR 679 at [35].

3 At [26].

passed at an extraordinary general meeting dated 1 October 2014 to bring the application to settle this scheme.

[6]      Not all unit owners have formally co-operated with the form of the scheme and that is why this application has been necessary.

[7]      Normanby  Mews  clearly  requires  significant  works  which  affect  unit property and common property, and building elements that benefit more than one owner.  It seems to me that all unit owners will benefit from the remediation works proposed.  It is desirable in my view that there be a scheme.

Step 3 – what terms are appropriate?

[8]      There are five guiding principles set out in Tisch v Body Corporate 318596.4

I bear these in mind when I consider the issues.

[9]      It would appear that the scheme has the broad support of unit owners.  None have opposed it.  All levies have been paid up in accordance with the scheme, with the exception of eight units, equating to 85 per cent of the repair levies.

[10]     The scheme appears to me to be detailed in the appropriate manner.  There is little room left for misunderstanding or argument, with the various provisions being spelled  out  in  clear  language.    I  can  see  no  obstacle  to  the  scheme  having retrospective effect.  The details of the work to be done show that there will be uniformity and a standard of repair which will maintain the integrity of the buildings.

[11]     It is necessary for the terms of the scheme to not depart from the scheme of the Body Corporate Rules more than is reasonably necessary to achieve what is fair between unit owners.  There is a departure from the Unit Titles Act 2010 in relation to the funding.   There are always potential inequities brought about if the Act is directly applied. At best I can see, these are avoided by the proposed scheme.

[12]     In  terms of the litigation funding and proceeds of litigation, the method proposed is consistent with that historically used in the recovery litigation.

4      At [45]–[49].

[13]     Therefore  such  departure  from  the  Act  that  is  involved  is  reasonably necessary to achieve what is fair between the unit owners.

Conclusion

[14]     In my view this scheme should be settled as proposed.   This is a classic situation of a significant apartment building suffering from systemic leaking.  A scheme is clearly required to ensure that the repairs are administered and carried out in a fair and proper manner and to a uniform standard.

[15]     The scheme appears  to  be fair and  provides certainty both to  the  Body Corporate and unit owners. The deviations from the Unit Titles Act 2010 are limited, and the formula and method for funding the repairs is the one historically used in the litigation and seems to be accepted by the unit owners.

[16]     I therefore conclude that the application should be granted.

Result

[17]     I approve and settle the scheme for repair of the buildings that comprise the unit property and common property in Body Corporate 312431 pursuant to s 74 of the Unit Titles Act 2010, the terms of which are in the scheme document attached and marked “A” to the originating application dated 4 December 2014.

[18]     There  is  no  order  for  costs  as  there  has  been  no  party  opposing  the application.

……………………………..

Asher J