Body Corporate 31428 - [2020] NZHC 3218

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2020-441-70

[2020] NZHC 3218

IN THE MATTER OF

AND
the Unit Titles Act 2010

IN THE MATTER OF

an application by Body Corporate 31428

Hearing: On the papers

Counsel:

J C Muggeridge for Applicant

Judgment:

7 December 2020

JUDGMENT OF CLARK J

[1] Body Corporate 31428 has filed an originating application under ss 187 and 188 of the Unit Titles Act 2010 (the Act) for orders authorising and facilitating the sale of timeshare units in Taupō Ika Nui Timeshare Resort (the Resort).

[2] More particularly, the Body Corporate applies to the High Court for cancellation of Unit Plan S31428.

Background

[3] The resort is a unit-titled property consisting of 22 one-bedroom units and six two-bedroom units. Each of the 28 units has an individual unit title. Each of those titles is broken into 51 timeshare entitlements — also termed “shares” or “weeks”. Thus, the total number of shares (or weeks) available for ownership is 1,428 (28 x 51). Some owners own more than one timeshare entitlement.

An application by Body Corporate 31428 [2020] NZHC 3218 [7 December 2020]

[4] At an Extraordinary General Meeting on 23 November 2019, the Body Corporate passed with 93 per cent support a special resolution to sell the Resort and distribute the Body Corporate’s assets and sale proceeds amongst the owners.

[5] The Body Corporate has made the following applications to give effect to its special resolution:

(a)pursuant to ss 187 and 188 of the Act, an originating application for cancellation of Unit Plan S31428 together with the ancillary orders and directions that are sought;

(b)an application for an order of sale together with the ancillary orders and directions that are sought; and

(c)a without notice application to the District Court at Napier for orders regarding service.

The legal framework

[6] Sections 187 and 188 of the Act set out the process for applying for an order for cancellation of a unit plan when the application is made to the High Court as distinct from the Registrar-General of Land under s 177. Under s 188(2) the “ultimate question” is whether it is just and equitable that the Body Corporate be dissolved and that the plan be cancelled having regard to:1

(a)the rights and interests of any creditor of the Body Corporate; and

(b)the rights and interests of every person who has any interest in any unit or in the base land or in any part of the base land.

[7] Counsel cited World Vison of New Zealand Trust Board v Seal, the leading authority on the “just and equitable” test. Heath J said:2

1 Re Body Corporate 44426 [2015] NZHC 3284 at [8] summarising s 188(2).
2 World Vision of New Zealand Trust Board v Seal [2004] NZLR 673 (HC).

[62] The phrase “just and equitable” has a respectable legal pedigree. It is often used as a test to determine whether a corporate entity should be placed…

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.

Continue reading Body Corporate 31428

Details

AGLC: Body Corporate 31428 [2020] NZHC 3218
Case: [2020] NZHC 3218
Decision Date: 7 December 2020

CaseChat Overview and Summary

Body Corporate 31428 applied to the High Court for orders to facilitate the sale of timeshare units at Taupō Ika Nui Timeshare Resort. The resort consists of 28 units with a total of 1,428 timeshare entitlements. The Body Corporate sought to cancel the Unit Plan S31428 to enable the sale of the resort. This application was brought under sections 187 and 188 of the Unit Titles Act 2010. The primary legal issue before the court was whether it was just and equitable to cancel the unit plan and dissolve the Body Corporate. The court considered the “just and equitable” test, as outlined in World Vision of New Zealand Trust Board v Seal, which involves balancing the rights and interests of creditors and all persons with an interest in the units or land. The Body Corporate argued that selling the resort was the best option due to the decline in the timeshare market and difficulties in collecting levies and managing the resort. No opposition was received, and the court found that the application met the “just and equitable” threshold due to the significant majority of owners supporting the sale. The court granted the application and made orders in line with the draft orders attached to the applicant's memorandum.

Orders