Body Corporate 341188 v District Court at Auckland

[2012] NZHC 2301

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-2931 [2012] NZHC 2301

IN THE MATTER OF     a decision made by the Auckland District

Court on 20 October 2011

BETWEEN  BODY CORPORATE 341188

First Applicant

ANDGEORGE VICTOR WILKINSON AND JEREMY K COLLINGE AND OTHERS Second - Eleventh Applicants

ANDDISTRICT COURT AT AUCKLAND First Respondent

ANDESCROW HOLDINGS FORTY-ONE LIMITED

Second Respondent

ANDKALLINA LIMITED Third Respondent

ANDAUCKLAND COUNCIL Fourth Respondent

Hearing:         3, 4 and 5 September 2012

Appearances: G J Kohler and S F Wray for Applicants

T J Herbert for Second and Third Respondents
No appearance for First and Fourth Respondents

Judgment:      7 September 2012

JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 7 September 2012 at 2 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date: ...................................

BODY CORPORATE 341188 V DISTRICT COURT AT AUCKLAND HC AK CIV-2012-404-2931 [7

September 2012]

[1]      The hearing of  this  proceeding  commenced  on  3  September  2012  and  I adjourned it part heard on the morning of 5 September 2012.  Orders as to the future conduct of the proceeding are set out at the end of this judgment.

Background

[2]      The  First  Applicant  is  the  body  corporate  of  a  residential  unit  title development (“development”) in Auckland.   The development comprises 34 units and several future development units, and is situated on what is referred to as “lot 2”. The building on lot 2 was constructed in 1989 as an office building.   In the mid

1990s, the building was altered for residential accommodation and the unit title development carried out.

[3]      The Second Applicants comprise the registered proprietors of eleven units in the development.

[4]      The Second Respondent is the registered proprietor of a half share in the fee simple of lot 4, DP 126975 (“lot 4”).

[5]      The  Third  Respondent  is  the  registered  proprietor  of  lot  3,  DP  121257

(“lot 3”) and of the other half share of lot 4.

[6]      The  principal  dispute  is  between  the  Applicants  and  Second  and  Third

Respondents.  The dispute  concerns a Memorandum of Land Covenants dated 14

August 1989 (being instrument CO79599.12) (“Memorandum”) and the extent to which, if any, the Memorandum confers on the registered proprietor from time to time of lot 2 rights in respect of lot 4.

[7]      The  Applicants’  contention,  which  the  Second  and  Third  Respondents dispute, is that the Memorandum allows the registered proprietor of lot 2 to use an area within lot 4 for car parking, and that the Memorandum allows access to the area. The matter is important because there is, and always has been, insufficient parking on lot 2.  It appears that Auckland Council may have been told differently (not by the

present Respondents), and that the Council has proceeded on the basis that there is sufficient parking on lot 2.  Regardless, the parking on lot 2 is insufficient.

[8]      The Second Applicants are the registered proprietors of units to whom the First Applicant has purported to grant a right to park in the identified area.   In passing, I note that the Memorandum includes an arbitration agreement which may be material to the future course of this proceeding.

[9]     In 2011 the Applicants and Second and Third Respondents were in communication regarding the Memorandum, the Applicants contending that it gave them a right to park on lot 4 and the Second and Third Respondents taking the position that it did not.

[10]     After those communications, the Second and Third Respondents applied to the First Respondent (“application” and “District Court” respectively) for an order extinguishing covenants contained in the Memorandum.  The application was made pursuant  to  s  316  Property Law  Act  2007  (“Act”)  and  without  notice  to  the Applicants.  The only respondent to the application was Auckland Council.  Section

316(3) of the Act requires the Applicant to serve the territorial authority.  Auckland Council consented to the application, and the District Court granted the application on the papers.

[11]     The Applicants first learnt of the order made by the District Court after the

Second and Third Respondents denied them access to lot 4.

[12]     The Applicants commenced this proceeding on 29 May 2012.   They also sought  and  obtained  interim  orders  which,  amongst  other  things,  allow  the Applicants the use of car parks on lot 4 and restrain the Second and Third Respondents from disposing of their interest in lot 4 or creating any new interest in the same.

Pleadings

[13]     In their pleading, the Applicants seek different forms of relief.   First, they seek judicial review of the order made by the District Court.  Review is sought on several grounds, but the underlying premise is that the Applicants had a right to be heard on the application and were denied that right.  As matters have developed, the applications for judicial review may be disposed of by consent.

[14]     Aside from the applications for review, the Applicants have pleaded causes of action  in  which  they  seek  declarations  and  other  orders  in  respect  of  the Memorandum   and   a   separate   Memorandum   of   Encumbrance   also   dated

14 August 1989,   the   identifier   of   which   is   CO79599.15   (“Memorandum   of Encumbrance”).  On the face of it, the Memorandum of Encumbrance was entered into at the request of Auckland Council.

[15]     The Applicants seek declarations to the effect that the Second and Third Respondents have acted in breach of the Memorandum and of the Memorandum of Encumbrance; as to terms to be implied in the Memorandum and the Memorandum of Encumbrance; as to the Second and Third Respondents being estopped from denying the Applicants access to and use of part of lot 4 for car parking and access; an order that the Second and Third Respondents execute and register such easements as might be necessary to secure the Applicants’ rights; inquiries as to losses sustained by the Applicants and gains enjoyed by the Second and Third Respondents as a consequence of an alleged breach of the Second and Third Respondents’ obligations; and costs.

[16]     Other relief sought under causes of action headed “Alternative access” and

“Landlocked land” was not to be heard at present, pursuant to directions I made on

27 August 2012.   Those causes of action were added to the pleading after setting down.

[17]     The District Court has filed an appearance abiding the decision of the Court but reserving certain rights.[1]   I am advised by counsel that, on an earlier call of this matter, Auckland Council advised the Court that it would abide the decision of the Court.  It is open to Auckland Council to reconsider its position if it sees fit.

Procedural matters

[1] Appearance for First Respondent dated 6 June 2012

[18]     The manner in which this case has been brought on has meant that it has not had the benefit of the usual case management procedures.  The case came before the Duty Judge on 21 June 2012 at which time the parties sought an urgent fixture, at least in part because the Second and Third Respondents had received an offer to purchase lot 4.  The Court allocated an urgent fixture to commence on 3 September

2012.

[19]     During the afternoon of the first day of the hearing, and without making any admission  of fault,  the Second  and Third Respondents  advised  that  they would consent to the granting of the relief the Applicants sought as regards their judicial review causes of action.  Having discussed the form of relief to be granted, I make orders on the judicial review causes of action below.

[20]     The  issue  then  became  whether  the  proceeding  should  continue.    The Applicants wished the Court to continue and determine the causes of action referred to in [15] above.   Counsel for the Second and Third Respondents agreed but said they would object to the relief sought on the basis that others who might have an interest were not before the Court.   In particular, not all registered proprietors of units in the development, existing or future, are parties to the proceeding or have been served.

[21]     The absence of interested parties raises an issue for the Court.  Aside from anything else, it is undesirable to hear and determine this proceeding in the absence

of all who ought to be bound by a judgment.

[22]     Given the above, and having heard from the parties, I make the following orders:

(a)       The  orders  of  the  District  Court  in  CIV-11-004-2002  made  on

18 October 2011 and sealed on 20 October 2011 are quashed.

(b)The Respondents are prohibited from taking any step in reliance on the said orders.

(c)      The Memorandum of Land Covenants dated 14 August 1989, being CO79599.12, between City Realities (No 6) Limited, Lakeland Properties Limited and Upland Holdings Limited, is to be restored forthwith to any Certificate of Title or Computer Register from which it has been removed in reliance on the said orders.

(d)The names of the registered proprietor(s) of each unit and each future development unit in the development are added as respondents to this proceeding (“additional respondents”), so that the registered proprietor(s) of each unit is a respondent in their own right and thus bound by any determination the Court may make in this proceeding.  I make this order pursuant to High Court Rules, r 4.56.

(e)      The Applicants are to file and serve a further amended statement of claim  showing  the  names  of  the  respondents  so  added.     The Applicants are asked to note that paragraphs 16 and 17 of the Second Amended Statement of Claim are inaccurate and should be reconsidered when completing the new pleading.

(f)      The Applicants are to file evidence of service of the proceedings on the Fourth Respondent.

(g)The Applicants  are  to  serve  copies  of  all  documents  filed  and/or served in the proceeding to date and all relevant decisions of the Court,  including  this  one,  on  each  additional  respondent.     The

Applicants are not required to serve any statement of claim prior to the one that I have ordered in (e) above.

(h)Within 25 days of service, each additional respondent is to file and serve a statement of defence or an appearance pursuant to High Court Rules, rr 5.49, 5.50 and/or 5.51.

(i)If an additional respondent fails to take a step following service, the proceeding shall continue on the basis they do not wish to participate or be heard.

(j)I direct the Registrar to convene a case management conference for further directions after the additional respondents have been served.

(k)      The proceeding is adjourned pending further order of the Court.

Additional matters

[23]     Costs to date are reserved.

[24]     For the avoidance of doubt all interim orders made by the Court to date continue pending further order of the Court.

[25]     Counsel for the Second and Third Respondents submitted that it might be appropriate to make an order that mortgagees of any unit in the development and the insurer of the development be served.   I am not satisfied that it is necessary or appropriate.  It is for each party to consider whether they should or are obliged to inform any other party of this proceeding and to act as they see fit.

[26]      I reserve leave to apply.

..................................................................

M Peters J

Solicitors:           Legal Vision, Auckland:  [email protected]

Blackwells, Auckland:  [email protected]

Counsel:            G J Kohler, Auckland:  [email protected]

T J Herbert, Auckland:  [email protected]

Copy for:           Crown Law, Wellington:

[email protected] / [email protected]

Auckland Council:  [email protected]