Body Corporate 314745 v Warrener

[2021] NZHC 60

IN THE HIGH COURT OF NEW ZEALAND SP REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1902

[2021] NZHC 60

UNDER

the Unit Titles Act 2010

IN THE MATTER

of an order settling a scheme under s 74 Unit Titles Act 2010

BETWEEN

BODY CORPORATE 314745

Applicant

AND

PAUL THOMAS WARRENER and HENRIETTA WARRENER

PHOLLY HOLDINGS LIMITED

ONE TREE HILL PROPERTIES LIMITED

Respondents continued over

Hearing:	2 February 2021
Appearances:	C Baker for Applicant
Judgment:	3 February 2021

JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 3 February 2021 at 3 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date: ...................................

Solicitors:           Price Baker Berridge, Auckland

BODY CORPORATE 314745 v WARRENER [2021] NZHC 60 [3 February 2021]

AND

MICHAEL JEFFREY BIGNELL AND JOHN TREVOR SPARLING

DAVID ANDREW BIGNELL, MARGARET JILL BIGNELL AND MICHAEL JEFFREY BIGNELL

SITETECH SOLUTIONS LIMITED JODAN PROPERTIES LIMITED FREDERICK HOLDINGS LIMITED MALVEEN SURESH

CEDA INC LIMITED

MATTHEW DAVID WILLOUGHBY AND MIDI YUAN-SHU WILLOUGHBY

HELEN MARIE ANDERSON AND RACHAEL DOROTHY MITCHELL

RANGIPAWA PROPERTIES LIMITED

MANIK SINGH BEDI AND GURPREET KAUR

MEIYING HUANG AND YUEN KONG LEE

JOHN RICHARD POWELL, ALISON JANE POWELL, JAMES RICHARD POWELL AND LOCKHART TRUSTEE SERVICES NO. 96 LIMITED

ALLAN RAYMOND BRIDGE AND GEORGINA CAROL BRIDGE

LIONAL RODNEY BRYCE WOODALL, PAMELA RUTH WOODALL AND GRAHAM LEONARD HAWKES

CHARLES WILLIAM THOMPSON, MOIRA DAVIS THOMPSON AND WRMK TRUSTEES (2018) LIMITED

CHERYL ANNE SALTER

EMMA JANE CUSHNIE AND VIRGINIA MARGARET RADFORD

ASHWINI KIRTHI DATT AND SACHIN SANJESH SHARMA

First Respondents

BANK OF NEW ZEALAND
Second Respondent

WESTPAC NEW ZEALAND LIMITED
Third Respondent

ASB BANK LIMITED

Fourth Respondent

ANZ BANK OF NEW ZEALAND
Fifth Respondent

MORTGAGE HOLDING TRUST COMPANY LIMITED

Sixth Respondent

Introduction

[1]    By originating application dated 8 October 2020, Body Corporate 314745 (“BC 314745”) applies for an order under s 74(2) Unit Titles Act 2010 (“Act”), settling a scheme of repair following destruction or damage (“scheme”), together with various ancillary orders.

Facts

[2]    BC 314745 is the body corporate for a residential unit title development in Auckland, comprising 24 units occupying two buildings.

[3]    The respondents to the application are the unit owners, and their mortgagees. I am satisfied all the respondents have been served as required, as has the insurer of the buildings. None of these parties has expressed opposition to the scheme.

[4]    Deficiencies in the buildings’ external cladding and roof junctions have allowed moisture ingress, but not egress. This has caused corrosion and rot. The damage is extensive, and the buildings require a full re-clad and other remedial work.

[5]    In July 2018, Rawlinsons, a firm of building surveyors, estimated the total costs of the remedial work to be approximately $3,287,000 excluding GST. These costs were updated for an Extraordinary General Meeting (“EGM”) of BC 314745 on 17 September 2020, at which time the estimate was revised to $4,080,000 including GST and including the fees of various third parties listed in the minutes of the EGM.

[6]    It was resolved at the EGM that BC 314745 would apply to this Court for an order settling a scheme on the terms of a draft circulated to owners prior to the EGM.

Relevant law

[7]    The principles to be applied in determining an application under s 74 are well established by cases such as Tisch v Body Corporate No 318596.1 Although that case

1      Tisch v Body Corporate No 318596 [2011] NZCA 420, [2011] 3 NZLR 679 at [36]-[44].

was decided before the passing of the current Act, the Court of Appeal has confirmed its continued application.2

[8]    An applicant for approval of a scheme must show the building has been, or is likely to be, damaged or destroyed; that a scheme of repair is appropriate; and that the terms of the proposed scheme likewise are appropriate. As to the latter, the following matters should be considered:3

(a)A scheme with broad support is to be preferred.

(b)The scheme should be sufficiently detailed to enable unit owners and the Court to judge its effectiveness.

(c)The order may have retrospective effect, provided the body corporate has acted in accordance with the scheme prior to the Court’s approval.

(d)Remedial work is usually to be carried out to the same standard in relation to all units, and at the same time.

(e)The terms of the scheme should not depart from the Act and the rules of the body corporate any more than is reasonably necessary to achieve fairness between unit owners.

Damage or destruction

[9]The building is damaged.

Is a scheme appropriate?

[10]   The repairs effectively comprise a single large undertaking, at substantial cost. It is therefore appropriate for BC 314745 to formulate a scheme and to apply to the Court for an order under s 74(2).

2      St John’s College Trust Board v Body Corporate No 197230 [2013] NZCA 35, (2013) 14 NZCPR 56 at [34].

3      Tisch v Body Corporate No 318596, above n 1, at [45]-[49].

Terms of the scheme

Broad support

[11]   The owners of 17 of the 24 units attended the EGM, either in person, by video link, or by proxy. Those present unanimously approved the scheme and the making of the application. All unit owners and mortgagees have been served with a copy of the scheme, and none has objected. I am satisfied the scheme has broad support.

Sufficiently detailed/retrospectivity

[12]   The scheme contains a level of detail and is on similar terms to others approved by this Court in recent years.4 To the extent terms of the scheme have retrospective effect, those terms are appropriate.

Same standard etc

[13]   The scheme comprises a single repair programme. The work will be carried out to the same standard in relation to all units and at the same time. Although not all units have been affected equally by the moisture ingress, all suffer in some form from the weathertightness issues, and all will benefit from their resolution.

Fairness

[14]   All costs relating to and in the course of remediation are to be levied to unit owners in accordance with the utility interest assigned to their unit. The only exception concerns additional work carried out at the owner’s request. This system is both equitable and consistent with the scheme of the Act. To the extent the proposed scheme departs from the Act, such is necessary to ensure the repairs are fully carried out, and therefore to ensure fairness between unit owners.

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

Conclusion

[15]   BC 314745 has demonstrated a need for a scheme of repair. The scheme is appropriate, fair, and unopposed. I am satisfied it meets the requirements laid out in Tisch.5

[16]Accordingly, I make the following orders:

(a)Pursuant to s 74 Unit Titles Act 2010, an order settling the scheme of repair appended to the originating application of 8 October 2020.

(b)That the provisions of the scheme be binding on each respondent, and their successors and assigns, if any, until the scheme is completed and paid for in full.

(c)The applicant and the respondents, and their successor and assigns, if any, have leave to apply for any ancillary orders necessary to give effect to the terms of these orders.

(d)When the scheme is concluded in all respects, the applicant shall file and serve a memorandum on each respondent, or their successors and assigns, if any, giving notice of the same.

(e)The applicant may raise, from unit owners, the amount of the reasonable solicitor/client costs it incurred in making this application, as if such were an amount raised pursuant to s 121 Unit Titles Act 2010.

Peters J

5      Tisch v Body Corporate No 318596, above n 1.