Body Corporate 316651 v Tarm
[2019] NZHC 2977
•14 November 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-001698
[2019] NZHC 2977
UNDER the Unit Titles Act 2010 IN THE MATTER OF
an order settling scheme under section 74
BETWEEN
BODY CORPORATE 316651
Applicant
AND
CHUI YU TARM and ORS
First Respondent
ASB BANK LIMITED
Second RespondentANZ BANK NEW ZEALAND LIMITED
Third RespondentCHUBB INSURANCE NEW ZEALAND LIMITED
Fourth Respondent
Hearing: 14 November 2019 Counsel:
C Baker for the Applicant
Judgment:
14 November 2019
JUDGMENT OF EDWARDS J
This judgment was delivered by me on 14 November 2019 at 3.30 pm pursuant to r 11.5 of the High Court Rules.
Deputy Registrar
Solicitors: Price Baker Berridge, Auckland
BODY CORPORATE 316651 v TARM and ORS [2019] NZHC 2977 [14 November 2019]
[1] The applicant is the Body Corporate of a complex known as the Hub in Auckland. The Hub complex comprises 23 commercial/retail units contained in two large buildings, one small building, and eight single stand-alone units.
[2] The applicant applies for an order under s 74 of the Unit Titles Act 2010 (Act) to settle a scheme of repair (“Scheme”). All those with an interest in the units have been served. There is no opposition to the application.
Legal principles
[3] The approach to applications under s 74 of the Unit Titles Act 2010 was set out by the Court of Appeal in Tisch v Body Corporate 318596.1 Although that decision related to a scheme under s 48 of the Act’s predecessor, the principles continue to apply to applications under s 74.
[4]The Court of Appeal set out a three-step approach:
(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 the scheme is appropriate, it must then decide what the terms of the scheme should be.
[5] The Court of Appeal also considered five guiding principles emerged from relevant case law, namely:
(a)A scheme with broad support is to be preferred;2
(b)The scheme should be appropriately detailed;3
1 Tisch v Body Corporate 318596 [2011] NZCA 420.
2 At [45].
3 At [46].
(c)The order can have retrospective effect, as long as the Body Corporate has acted in accordance with the scheme prior to the Court’s approval;4
(d)Normally work is to be done to the same standard and at the same time;5 and
(e)The terms of the scheme are not to depart from the Act and the Body Corporate Rules any more than reasonably necessary to achieve fairness between unit holders in the circumstances.6
Has there been damage to the building?
[6] Mr Rankine, the Body Corporate’s building surveyor, has sworn an affidavit in support of the application. He deposes to the Hub suffering from a number of building defects requiring extensive repairs. These include the removal and replacement of fibre cement cladding, replacement of decayed timber, replacement of flashings, canopy replacement, and repairs to the gutters.
[7] On the basis of this evidence, I am satisfied that the building has been damaged and there is a need for a scheme of repair.
Is the Scheme appropriate in the circumstances?
[8] There are varying degrees of repair required across the complex as a whole. The Scheme provides for repairs to the common property and private property.
[9] Ms Baretto has sworn an affidavit on behalf of the Body Corporate secretary. She deposes to the Body Corporate’s view that because of the nature of the building and the extent of the remedial work required, it is not practical to design a remedial solution to only those parts of the building for which the Body Corporate is responsible.
4 At [47].
5 At [48].
6 At [49].
[10] In addition, Ms Baretto deposes that unless repairs are carried out under a single repair programme, warranty issues and arguments are likely to arise in the event of any future defect or failing.
[11] In light of that evidence, and the evidence of Mr Rankine, I am satisfied that the nature of the work required is that it is more economical to carry out the work pursuant to a single construction contract, rather than on a piecemeal basis. That addresses one of the five factors set out by the Court of Appeal in Tisch, namely that normally work is to be done to the same standard and at the same time.
[12]I am satisfied that the Scheme is appropriate in the circumstances.
Terms of the Scheme
[13] A copy of the proposed Scheme is annexed to the affidavit of Ms Baretto, and to the originating application. It is a comprehensive document which is appropriately detailed.
[14] The Scheme addresses the cost of repairs. In broad terms, the Body Corporate is to be responsible for the cost of repairs to the common property; each unit owner will be responsible for the costs of repairs to its individual unit; and the roofs and canopies are to be treated as if they are common to the group of buildings that they protect.
[15] The cost allocation is a departure from the provisions of the Act, but I consider such a departure to be a fair and reasonable way of allocating costs. I also note that this cost allocation has been unanimously endorsed by all unit owners.
[16] I am satisfied that the terms of the Scheme balance the interests of each unit holder in a way that achieves the fairest outcome to all unit holders in the circumstances.
Broad support and retrospectivity
[17] The Scheme also has broad support. At the annual general meeting held on 18 June 2019, those present resolved by way of unanimous resolution to approve the draft Scheme, subject to any committee amendments. The committee later approved minor amendments. As already noted, all respondents have been served and no notices of opposition to the application have been filed or served.
[18]I note that the issue of retrospectivity is not engaged in this case.
[19] For these reasons, I am satisfied that the application should be granted, and the Scheme approved accordingly.
Result
[20] The originating application is granted. I make the orders set out in paragraphs 1.1 to 1.5 of the originating application dated 22 August 2019 annexing the draft Scheme.
Edwards J
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