Body Corporate 355492 v Chief Executive of the Ministry of Business, Innovation and Employment
[2024] NZHC 1422
•31 May 2024
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2023-485-479
[2024] NZHC 1422
UNDER the Declaratory Judgments Act 1908, Judicial Review Procedure Act 2016, and Part 30 of the High Court Rules 2016 IN THE MATTER OF
Applications for declaratory orders and judicial review
BETWEEN
BODY CORPORATE 355492
Applicant
AND
THE CHIEF EXECUTIVE OF THE MINISTRY OF BUSINESS, INNOVATION, AND EMPLOYMENT
Respondent
Hearing: 15–16 April 2024 Counsel:
G B Lewis and N Prachankhet for Applicant A J Wicks and S H Eldridge for Respondent
Judgment:
31 May 2024
JUDGMENT OF O’GORMAN J
BODY CORPORATE 355492 v MBIE [2024] NZHC 1422 [31 May 2024]
Table of Contents [Para]
Overview[1]
WHRS Act — statutory scheme [5]
Legislative history[20]
Unit Titles Act 2010[30]
Factual background[33]
Interpretation principles[47]
Analysis[51]
Claim application[51]
Assessor’s report[55]
Relevancies and irrelevancies[60]
2015 correspondence[63]
Eligibility Form[66]
FAP Form[82]
Decision Notification[86]
Mandatory relevant considerations[98]
Fact evaluation and unreasonableness[107]
Failure to give reasons[111]
Block 3 accessory units[116]
Common areas[119]
Failure to exercise statutory rights of challenge [125]
Conclusion[129]
Result[132]
Overview
[1] This is an application under pt 30 of the High Court Rules 2016 seeking declaratory and judicial review relief in respect of decisions made by the Chief Executive of the Ministry of Business, Innovation and Employment (MBIE) about eligibility under s 48 of the Weathertight Homes Resolution Services Act 2006 (the WHRS Act).
[2] The subject matter of the dispute is a unit title complex at 327 Frankton Road, Queenstown, known as “Oak Shores”. That complex has 84 principal units, together with accessory units and common areas, in four blocks. The disputed issues in this proceeding concern eligibility for funding of weathertightness repairs to block 4, which has seven principal units1 and common property. Unit 311 in block 4 has descriptions on the floor plan including “function toilets”, “staff room”, “office”, “meeting room”, “bar”, “breakfast/dining room”, “lounge” and “kitchen”. The estimated repair cost for block 4 is about $12 million. An eligible person who qualifies for a financial assistance package (FAP) to fund weathertightness repairs would be entitled to a 25 per cent contribution (i.e., approximately $3 million for block 4).
[3] The applicant is the Body Corporate for Oak Shores. In February 2016, a determination was made about the eligibility of Oak Shores under s 48 of the WHRS Act. At the same time, an assessment was made about whether the applicant was a “qualifying claimant” in terms of the introductory requirements of s 125BA in pt 1A of the WHRS Act. This dispute is about the nature and scope of those decisions as notified to the applicant. In particular, the Body Corporate seeks a declaration that the s 48 decision found that all four blocks in Oak Shores are “eligible”. If not, the Body Corporate’s alternative argument is that any exclusion of block 4 was unlawful.
[4] Accordingly, the proceeding raises the following issues for the Court’s determination:
1 The principal unit numbers are 211, 212, 213, 214 (the level two units are also called C201–C204 on the plans), 311, 411 and 412.
(a)Whether the decision made in February 2016 was that the whole of the Oak Shores complex was included within an “eligible claim” under the Act, or the “eligible claim” only included blocks 1, 2 and 3 of the complex and excluded block 4. This has three aspects.
(i)First, what was the decision made by the technical services manager on 16 February 2016 as recorded in an internal document?
(ii)Second, what was the nature of the decision as communicated in the written notice provided to the Body Corporate on 18 February 2016?
(iii)If there is any discrepancy between the two, what is the significance of that?
(b)If block 4 was excluded from the “eligible claim”, whether that decision was unlawful because:
(i)s 125BA does not empower MBIE or the Chief Executive to determine that a claimant is a qualifying claimant in respect of parts of an eligible claim only;
(ii)of a failure to take into account information in the assessor’s report that the technical services manager was required to evaluate to make her eligibility decision;
(iii)reasons were not provided, in breach of s 48(3);
(iv)it purported to exclude accessory units (parking) for principal units in block 3 that were found to qualify as “dwellinghouses”; and/or
(v)it purported to exclude common areas in block 4, but there is no power to do so if two or more units within a multi-unit complex qualify as “dwellinghouses”.
WHRS Act — statutory scheme
[5]The purpose of the WHRS Act is:2
(a)to provide owners of dwellinghouses that are leaky buildings with access to speedy, flexible, and cost-effective procedures for the assessment and resolution of claims relating to those buildings; and
(b)to provide for certain matters relating to the provision of a package of financial assistance measures to facilitate the repair of those buildings.
[6] Under pt 1 of the Act, s 9 permits a person to bring a “claim” under the Act “in respect of a dwellinghouse”.
[7]Relevant definitions in s 8 include:
dwellinghouse—
(a)means a building, or an apartment, flat, or unit within a building, that is intended to have as its principal use occupation as a private residence; and
(b)in the case of a dwellinghouse that is a building, includes a gate, garage, shed, or other structure that is an integral part of the building; and
(c)in the case of a dwellinghouse that is an apartment, flat, or unit within a building, includes a door, gate, garage, shed, or other structure that—
(i) is an integral part of the building; and
(ii) is intended for the exclusive use of an owner or occupier of the dwellinghouse; but
(d)does not include a hospital, hostel, hotel, motel, rest home, or other institution
claim means a claim by the owner of a dwellinghouse that the owner believes—
2 Weathertight Homes Resolution Services Act 2006 [WHRS Act], s 3.
(a)has been penetrated by water because of some aspect of its design, construction, or alteration, or of materials used in its construction or alteration; and
(b)has suffered damage as a consequence of its penetration by water
leaky building means a dwellinghouse into which water has penetrated as a result of any aspect of the design, construction, or alteration of the dwellinghouse, or materials used in its construction or alteration.
multi-unit complex means a complex (which may, but need not, be a stand- alone complex) that—
(a)contains 2 or more dwellinghouses; and
(b)contains 1 or more, or no, common areas; and
(c)is a company-share complex, cross-lease complex, or unit title complex.
[8] On receiving a claim application, the Chief Executive of MBIE is required to assess whether it meets or is capable of meeting the “eligibility criteria”.
[9] Sections 14–18 set out the eligibility criteria for different types of claims. The type of claim depends on the nature of the affected building and where damage to it has occurred. Among those categories, a “dwellinghouse claim” is a claim in relation to a dwellinghouse that is not part of a “multi-unit complex”. Section 16 provides for a “multi-unit complex claim”, which is a claim in relation to dwellinghouses within “the multi-unit complex to which the claim relates”.
[10] The eligibility criteria for a “multi-unit complex” claim is set out in s 16. This requires that:
(a)the complex was built (or alterations giving rise to the claim were made to it) before 1 January 2012 and within the period of 10 years immediately before the day on which the claim is brought;
(b)water has penetrated the complex because of some aspect of its design, construction, or alteration, or of materials used in its construction or alteration; and
(c)the penetration of water has caused damage to the complex.
[11] Sections 19 and 30 are relevant to the procedure applicable for multi-unit complex claims.
[12] Section 19 states that representatives of the owners of dwellinghouses in a multi-unit complex may bring a claim under the Act in respect of those dwellinghouses, and any common areas, as if those dwellinghouses and areas were a single dwellinghouse, and as if the representative were its owner, provided that specified administrative requirements are met.
[13] Section 30 provides that, unless the context otherwise requires,3 for the purposes of a representative claim under s 19, the Act applies as if:
(a)every reference in it to a dwellinghouse included a reference to the multi-unit complex or stand-alone complex concerned;
(b)every reference in it to the owner of a dwellinghouse included a reference to the representative of the owners of the dwellinghouses in the multi-unit complex or stand-alone complex concerned; and
(c)every reference in it to a party or parties included a reference to the representative of the owners of the dwellinghouses in the multi-unit complex or stand-alone complex concerned.
[14] A person who wishes to bring a claim under the Act commences by applying to the Chief Executive for an assessor’s report under s 32.4 On receiving the application, the Chief Executive must make an initial assessment of whether the claim meets, or is capable of meeting, the eligibility criteria.5 If so, the Chief Executive must arrange for an assessor’s report to be prepared for the claim.6 The assessor’s reports may be “eligibility reports” or “full reports”.7 A full report in relation to a multi-unit complex must state whether, in the assessor’s opinion, the claim to which it
3 See Accident Compensation Corporation v TN [2023] NZCA 664 at [135] for the approach to the phrase “unless the context otherwise requires”.
4 WHRS Act, ss 9 and 32(1).
5 Section 32(2).
6 Section 32(3).
7 Section 38.
relates meets the eligibility criteria.8 A full report must also state the assessor’s view on why water penetrated the multi-unit complex, the nature and extent of the damage caused, the work required to repair the damage, and the estimated costs of this work and the persons who should be parties to the claim.9
[15] Once the assessor’s report is received, the Chief Executive must give a copy to the claimant.10 If the assessor’s report expresses an opinion that the claim does not meet the eligibility criteria, then the claimant has 20 working days for making a submission on that.11 The Chief Executive must then evaluate the report and any submissions made by the claimant under s 45 to decide whether the claim meets the eligibility criteria.12 Under s 48(3), the Chief Executive must give the claimant written notice of the decision as to whether the claim meets the eligibility criteria (with reasons if the decision is no).
[16] Under s 49, the applicant has 20 working days to seek a reconsideration of the eligibility decision by the Chair of the Weathertight Homes Tribunal.
[17]If the claim is determined to be “eligible”, then the claimant:
(a)can apply for the Weathertight Homes Tribunal to adjudicate the claim in accordance with subpt 5 of pt 1 of the Act;13
(b)can access the mediation services provided in accordance with subpt 6 of pt 1 of the Act;14 and
(c)is eligible for “financial assistance measures” provided in accordance with pt 1A of the Act.15
8 Section 42(1).
9 Section 42(2).
10 Section 44.
11 Section 45.
12 Section 48(1)–(2).
13 Section 60(1). This is subject to the restriction on the right to apply in s 60, including that “lower-value” claims must first proceed through a mediation process (s 60(7)).
14 Sections 77(1) and 80(1)–(2).
15 Section 125BB, but this is subject to meeting the other requirements of s 125BA.
[18]In pt 1A of the Act, s 125BA defines “qualifying claimant” as:
(a)“a claimant who has an eligible claim in respect of a dwellinghouse”; and
(b)either meets the contribution criteria in cl 1 of the specified 28 July 2011 Gazette notice or, in the respondent’s opinion, is taking all reasonable steps to meet the contribution criteria. Those gazetted criteria include that the claimant and the Crown as “contributing party” have agreed a repair plan and the claimant has demonstrated that it can pay its share of the costs of the work in the agreed repair plan. If a qualifying claimant meets these criteria, then the Crown provides a 25 per cent contribution to the approved repair cost.16
[19] Section 125D specifies a deadline for applying for financial assistance measures (five years after the commencement of that section on 23 July 2011, resulting in a deadline of 23 July 2016).
Legislative history
[20] Before the Building Act 1991, there was no national building code. Generally, builders were required to follow bylaws to achieve compliance. Those bylaws were prescriptive and regarded as rigid and unaccepting of cost-effective and innovative alternatives.17
[21] That changed with the Building Act, which introduced a national “performance-based” building code that allowed both acceptable solutions (prescribed methods) and alternative solutions (performance-based).18 These changes contributed to the leaky building problem, when combined with other factors including use of high-risk designs and building products/systems unsuited to New Zealand conditions,
16 This is recorded in a “Contribution Agreement” entered into between the qualifying claimant and the Crown.
17 Department of Building and Housing Departmental Report to the Social Services Select Committee: Additional Information requested to assist with consideration of the WHRS Amendment Bill (October 2006) at 6.
18 At 6.
poor construction practices, commercial pressures to build quickly and cheaply, and inadequate supervision and oversight.19
[22] By 2002, the leaky building crisis hit the headlines following publication of the “Hun report”.20 That identified a systematic failure of the building and construction industry and raised serious questions about performance-based controls under the Building Act. Meanwhile litigation about liability was complex, costly, and slow.
[23] One of the Government’s answers to the problem was the WHRS Act,21 which created the Weathertight Homes Resolution Service (WHRS). As stated in the explanatory note:22
The immediate needs of homeowners of leaky buildings are for independent advice on the nature of their problem, the options available for fixing leaks and consequent damage, and affordable access to fast and effective dispute resolution processes.
[24] The aim of the WHRS was that it would provide “a less formal, more accessible, and lower cost alternative to taking claims through the courts.”23 From the Bill’s first draft, an “eligible claim” was defined as a claim by the owner of a “dwellinghouse”, which in turn included the requirement of having, as its principal use, occupation as a private residence.
[25] In August 2005, a major review of the WHRS Act was announced, which found the service wanting in several areas. In a background report to the Social Services Select Committee, one of the proposed changes was to “remove barriers to the use of the WHRS by apartment dwellers”.24 The WHRS Act allowed a claim from a single
19 Parker and Rainey Leaky Buildings (NZLS seminar, August 2011) at 3–4.
20 Don Hunn Report of the Building Industry Authority Overview Group on the Weathertightness of Buildings (Building Industry Authority, Wellington, 31 August 2002).
21 The WHRS Act was originally pt 6 of the Construction Contracts Bill 2002, added by House of Representatives, Supplementary Order Paper 31, Construction Contracts Bill, 19 November 2002. From there, House of Representatives, Supplementary Order Paper 32, Construction Contracts Bill, 19 November 2002 split the Bill into two parts at the third reading, creating the Weathertight Homes Resolution Services Bill.
22 Construction Contracts Bill 2002 (128-1) (SOP 2002-31) at 28.
23 At 28.
24 Department of Building and Housing Background Report to the Social Services Select Committee on the Weathertight Homes Resolution Services Amendment Bill (September 2006) at [2].
dwellinghouse owner in a multi-unit complex. However, there were problems for resolving claims in multi-unit complexes:25
… For instance, the damage suffered by a dwellinghouse (residential unit) on the 5th floor of a 10th floor apartment building is likely to be linked to damage in other areas in the building. To fully understand and address liability issues for the dwellinghouse, it may be necessary to examine other parts of the complex and to consider factors that relate to the complex as a whole.
10 If damages were awarded for such a dwellinghouse in WHRS adjudication, the owner may encounter difficulties in repairing the dwellinghouse. It may be necessary to repair areas of the complex outside the individual dwellinghouse to prevent further damage to the dwellinghouse (eg further leaks coming from upper floors) or the claimant may be hindered from undertaking repairs if the cladding is jointly owned.
11 In practice, WHRS works hard to persuade owners of dwellinghouses within multi-unit complexes to ‘group up’ with other owners. However, the present Act still requires WHRS to accept a claim from a single dwellinghouse owner in a multi-unit complex and to process it separately where the claimant insists. This approach is unsustainable.
[26] The proposed solution was to promote a “whole of complex” approach as far as practicable:26
12 As far as practicable, claims for multi-unit complexes should promote a ‘whole of complex’ approach. Generally, damage is suffered across a complex and repairs need to be undertaken across the whole complex. Often, the same people are likely to be respondents for the whole complex (eg there was one designer for the whole complex, one developer, and one construction company involved). It is more effective, practical, and efficient for all claims relating to the same complex to be dealt with together as if they were one claim.
13 The Bill provides for a ‘whole of complex’ approach as far as practicable. With a few exceptions, single dwellinghouse (residential unit) owners will not be able to bring separate claims. Instead, a representative will bring a claim for all weathertightness damage to common areas and residential units in a multi-unit complex.
14 A multi-unit complex will be any complex that is owned under a unit title, company share, or cross-lease arrangement. The representative will be the body corporate in a unit title arrangement, the company in a company share arrangement, or a person selected by the owners in a cross-lease arrangement.
15 A representative will be able to bring a claim only where the owners in the complex agree to it. This will involve decisions being made by the body corporate, or company at a general meeting to bring a claim, or decisions by cross-lease owners to appoint a representative and bring a claim. For those
25 At [9]–[10].
26 At [12]–[17] (emphasis in original).
decisions, if a representative’s body corporate rules, constitution, or lease require more than 80% of owners to agree that a claim be brought, the Bill provides relief — no more than 80% of owners entitled to vote will need to agree. Experience has shown that in practice one or two owners may object to a claim being made, which has prevented some bodies corporate from bringing claims for common areas. In the same way, the representative will need to provide consent for invasive testing of common areas.
16 In bringing a claim, a representative will need to provide a statutory declaration that at least 75% of dwellinghouse owners in the complex have authorised the representative to bring and resolve claims in respect of the owners’ dwellinghouses. The same dwellinghouse owners must consent to invasive testing on their dwellinghouses. The 75% figure is a balance between a ‘whole of complex’ approach and allowing some leeway for the possibility that some owners may ‘hold out’ (ie not agree to a claim being brought).
17 The 75% figure also reflects the need to examine a significant proportion of the multi-unit complex for an assessor report to be effective in the resolution process. In this way, assessors will be able to look at and test most dwellinghouses in the complex.
[27] Further departmental explanations emphasised the purpose was to solve barriers of standing and authority with a class action concept:27
The main difference between the proposed WHRS class action proposals for multi-unit complexes in the Bill and the approach taken in the courts is that in WHRS the various claimants (e.g. the body corporate and the dwellinghouse owners) are required to agree to have a representative bring their various claims as one claim. This is to ensure a whole of building approach to claims and repairs, as far as possible, and a more speedy, cost-effective process.
In the courts, proceedings are often commenced and then adjourned while procedural and other matters are addressed at the outset, such as joining additional claimants and respondents. In practice, the courts will often require claimants to work together, but legally claimants will bring individual claims and have the ability to manage the claims independently. Conflicts amongst unit owners can complicate the progress of court proceedings.
[28] There is nothing to suggest that this class action solution was intended to change any underlying entitlements. Claimable damages remained a matter to be resolved during the WHRS resolution process.28 The main purpose was to enable a
27 Department of Building and Housing Departmental Report to the Social Services Select Committee: Additional Information requested to assist with consideration of the WHRS Amendment Bill, above n 17, at 1.
28 At 6.
“class action approach” as far as possible, but the assessment for each individual unit and the common areas was still to be undertaken separately.29
[29] This “whole of complex” approach has been noted in various cases30 and is reflected in the explanatory note in the report of the Select Committee on the Bill.31
The bill allows a class action to be taken for multi-unit buildings and makes the [Weathertight Homes Resolution Services] more accessible to this type of claim …
… Both provisions are a balance between a “whole of complex” approach and allowing some leeway for the possibility that some owners may “hold out”, and not agree to a claim being brought.
Unit Titles Act 2010
[30]Common property is defined in s 5(1) of the Unit Titles Act 2010:
common property means—
(a)all the land and associated fixtures that are part of the unit title development but are not contained in a principal unit, accessory unit, or future development unit; and
(b)in the case of a subsidiary unit title development, means that part of the principal unit subdivided to create the subsidiary unit title development that is not contained in a principal unit, accessory unit, or future development unit.
[31] Under the Unit Titles Act, common property is owned by the body corporate, but owners of units are beneficially entitled to it as tenants in common.32 Under s 138, the body corporate has duties to repair and maintain the common property and, among other things, any building elements and infrastructure that relate to or serve more than one unit.
29 Department of Building and Housing Departmental Report to the Social Services Select Committee on the Weathertight Homes Resolution Services Amendment Bill (November 2006) at 12–13.
30 Auckland Council v The Chief Executive of the Ministry of Business, Innovation and Employment [2013] NZHC 912 at [22]–[23]; and Auckland Council v Weathertight Homes Tribunal [2016] NZCA 256 at [14]–[15].
31 Weathertight Homes Resolution Services Amendment Bill 2006 (75-1) (explanatory note) at 4.
32 Unit Titles Act 2010, s 54.
[32] In Body Corporate 366567 v Auckland Council, concerning the Gore Street apartments, it was noted that the Court of Appeal has articulated some principles arising from the scheme of the Unit Titles Act, but has not squarely dealt with the standing issue and all its ramifications.33 After considering the relevant authorities to date, Walker J held that a body corporate has legal standing to sue in its own name and to recover damages falling within the scope of its s 138 responsibilities,34 but the underlying duty of care is owed to unit owners who ultimately bear the loss of owning or purchasing a defective building.35 This had the consequence that issues of contributory negligence and fault as between individual owners and the body corporate could apply.36
Factual background
[33] On 20 May 2013, the Body Corporate applied to the Chief Executive of MBIE for an assessor’s report to be prepared in respect of Oak Shores.
[34] On 17 June 2013, MBIE advised the applicant that its application for an assessor’s report was accepted.
[35] Following the Body Corporate’s request that a full assessor’s report be prepared, MBIE gave those instructions to an assessor on 17 August 2013. On 20 January 2015, the assessor’s report was finalised and provided to the applicant. In that report, the assessor’s opinion was that the claim met the eligibility criteria.
[36] On 18 February 2015, MBIE advised the applicant that the technical services manager, in considering the eligibility of the claim, considered that units in block 4 may not be dwellinghouses as the building consent was issued for a “commercial building”. MBIE and representatives for the applicant engaged in correspondence on that disputed issue during 2015.
33 Body Corporate 366567 v Auckland Council [2024] NZHC 32 at [122].
34 At [125]–[126].
35 At [137] and [140].
36 At [141].
[37] On 29 January 2016, the Body Corporate’s solicitors wrote to MBIE reiterating its position that all of the units should be classified as dwellinghouses.
[38] On 16 February 2016, the technical services manager made an eligibility decision under s 48 by completing a document entitled “WHRS Stand Alone Complex / Multi-Eligibility Decision Check Form” (Eligibility Form). On the same day, the technical services manager also made an assessment for the equivalent gateway requirement in s 125BA(A), completing a document entitled “Financial Assistance Package Qualification Decision Form” (FAP Form). The outcome was advised to the applicant in an email letter dated 18 February 2016 (Decision Notification). The parties are in dispute about the effect of these documents:
(a)It is common ground that that the decision determined that the claim was eligible to the extent that it related to blocks 1–3 of the Oak Shores complex.
(b)The applicant contends that this decision also determined that the block 4 units were eligible, whereas the respondent contends the opposite.
[39] On 4 March 2016, the applicant’s counsel sent an email to MBIE in response to the email of 18 February 2016 in which he stated, “I refer to the below regarding the eligibility of (some of) Oaks Shores in the WHT”.37 No application for reconsideration of that aspect was ever made under s 49 of the WHRS Act.
[40] From early 2019, the Body Corporate took steps to obtain FAP for block 1, including reaching agreement with MBIE on a repair plan. The remedial work for that block commenced from about June 2019.
[41] During correspondence between MBIE and the Body Corporate’s lawyers in November 2020, MBIE stated that FAP would be dealt with on a block-by-block basis, and that a further repair plan would not be required for block 2 if the repairs were the same as for block 1.
37 Emphasis added.
[42] On 14 May 2021, MBIE approved the repair plan for block 2 on that basis. Condition IV recorded that blocks 3 and 4 would be addressed under a single repair plan or two repair plans, and that block 4 was “mostly non-residential, excluded from contributions, except for four residential units, two each on Levels 2 & 4”.
[43] The agreement for remedial works on block 2 was entered into on 3 November 2021, and FAP payments for block 2 commenced from 14 December 2021.
[44] By 19 January 2022 the block 1 repairs had been completed, and a code compliance certificate issued. On 22 July 2022, MBIE emailed the Body Corporate with details of the final FAP payment for block 1. The attached summary of claim referred to 83 units receiving contributions.
[45] In late 2022, the Body Corporate enquired about FAP payments in respect of block 4. On 16 February 2023, MBIE advised that block 4 was not eligible for FAP payments, relying on the Decision Notification.
[46] Since that date, the parties have been in dispute about that issue. The applicant commenced this proceeding on 18 August 2023.
Interpretation principles
[47] The parties take different approaches on the principles that apply when interpreting a decision recorded in a “public document”.38 For the same reasons, the parties differ on the extent to which extrinsic material can affect meaning. The extrinsic material potentially consists of correspondence before and after the decision, and an affidavit filed by the respondent to explain the decision-making process and how the documents were prepared.
[48] The applicant relies on cases in which the interpretation of a registered instrument has been confined to that document itself.
38 By which the applicant means a document that falls with that definition in s 4 of the Evidence Act 2006.
(a)In Opua Ferries Ltd v Fullers Bay of Islands Ltd,39 the Privy Council considered the effect of a registered permit granted to Fullers to operate a ferry service. Those issues arose in two sets of proceedings. In one, Opua Ferries Ltd sought a declaration that Fullers was not permitted to operate a second ferry under the terms of that registered licence. In the second application, the Commerce Commission alleged that a lease for exclusive wharf use by Fullers was contrary to s 27 of the Commerce Act 1986 because it prevented a competitor’s intended ferry service, unless the registered licence already gave them protection. With a background of the High Court and Court of Appeal taking a different view on interpretation, the Privy Council found that the licence was for a ferry operation involving crossings leaving from each side every 10 minutes using two vessels. That contrasted with some background facts. When registering its service in 1991, Fullers stated that it was an existing service. In practice, Fullers had never operated two vessels departing from each end every 10 minutes throughout the hours shown on the timetable. This was only proposed recently in response to an initiative by Opua to register and provide fill-in services. The Privy Council did not consider that these background facts were relevant, because the registered licence rights were to be determined on the information available to members of the public who consult the register.40
(b)On questions of interpreting a building consent in Body Corporate 160361 v BC 2004 Ltd, Whata J recognised that it was appropriate to tailor the approach in Opua Ferries to the legislative context, including the nature of the persons expected to rely on it.41
39 Opua Ferries Ltd v Fullers Bay of Islands Ltd [2003] UKPC 19, [2003] 3 NZLR 740.
40 At [20].
41 Body Corporate 160361 v BC 2004 Ltd [2015] NZHC 1803 at [157].
(c)In Green Growth No 2 Ltd v Queen Elizabeth the Second National Trust, the Supreme Court reviewed numerous cases concerning the interpretation of registered land and security interests42 and articulated the underlying policy issues involved. William Young and O’Regan JJ summarised the position as follows (Glazebrook J concurring):43
[73] A very flexible approach to the admission of extrinsic evidence as bearing on the construction of registered documents will promote litigation and, as was recognised in Westfield, has the potential to undermine the policy of indefeasibility of title. On the other hand, if we were to adopt a rigid rule excluding such evidence, there will still be marginal cases which will have to be addressed and, in some instances, perverse outcomes, despite there being no good reason why, as between the parties to the dispute, the extrinsic evidence should be ignored.
[74] Against that background, we consider that:
(a)Generally, registered documents should be construed without regard to extrinsic evidence which is particular to the original parties and is not apparent on the face of the register.
(b)This does not limit rights to apply for rectification, a topic which we address in the next section of these reasons.
(c)We would not exclude reference to facts which a reasonable future reader of the document could be expected to be aware of and would recognise as relevant and which they have access to, such as the configuration of land, any physical features to which the document relates or refers and any material referred to in the document.
42 Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [62], refers to a more restrictive approach adopted for interpreting a security trust deed in Re Sigma Finance Corp (in admin rec) [2009] UKSC 2, [2010] 1 All ER 571 at [37] per Lord Collins (Lord Hope and Lord Mance concurring) – the deed protected numerous creditors who advanced funds over a long period without any knowledge of or involvement in the drafting. Cf Gibson v Mobil Oil New Zealand Ltd [2018] NZHC 41, in which the drafting process was considered when interpreting a deed of company arrangement affecting numerous creditors.
43 Green Growth No 2 Ltd v Queen Elizabeth the Second National Trust [2018] NZSC 75, [2019] 1 NZLR 161 at [73]–[74] per William Young and O’Regan JJ and [151] per Glazebrook J. Elias CJ recorded at [133]: “It is however unnecessary for me to resolve whether and to what extent resort to extrinsic evidence is appropriate in the case of instruments notified on a public register as I am of the view that the meaning of the covenant is clear in its terms as a whole.” Ellen France J recorded at [161] that she made “no comment on the approach to be taken to the use of extrinsic evidence in the construction of registered documents”.
[49] Otherwise, extrinsic evidence is generally admissible, if it is relevant and not excluded in terms of ss 7 and 8 of the Evidence Act 2006:44
(a)In administrative law, decisions should be read fairly, as a whole and in context.45
It is important to read the specific paragraphs in the final determination … carefully and in the context of the process followed as well as the final determination itself.46
(b)For ascertaining the meaning of a resource consent, the Court of Appeal has held that information provided as part of the resource consent process is relevant (whether as part of the application documents or in response to requests for further information).47
(c)In Body Corporate 85978 v Wellington City Council,48 Dobson J considered a communication of an eligibility decision. He accepted that the document could have been clearer (the reference line referred to 81 properties in respect of the eligibility decision, for a 100 unit complex), but held that correspondence prior to the decision meant that “anyone monitoring the claim on behalf of the Body Corporate would have known of the provisional views emanating from DBH that the Quest apartments were ineligible”.49 In light of those provisional views, the communication of the decision did not involve any breach of obligations of natural justice owed to the Body Corporate.
44 Bathurst Resources Ltd v L & M Coal Holdings Ltd [2021] NZSC 85; [2021] 1 NZLR 696 at [54]– [66].
45 Matthew Smith New Zealand Judicial Review Handbook (2nd ed, Thomson Reuters, Wellington, 2016) at [23.1.1]–[23.1.4], referencing (among others): Bulk Gas Users Group v Attorney-General [1983] NZLR 129 (CA) at 138; Waikato Regional Airport Ltd v Attorney-General [2002] 3 NZLR 433 (CA) at [129]; Christchurch City Council v Attorney-General [2005] NZAR 558 (CA) at 560; and Mwai v Removal Review Authority [2000] NZAR 206 (CA) at 213.
46 Chorus Ltd v Commerce Commission [2014] NZCA 440 at [136].
47 Marlborough District Council v Zindia Ltd [2019] NZHC 2765, [2020] NZRMA 216 at [89], referencing Gillies Waiheke Ltd v Auckland City Council [2004] NZRMA 385 (CA) at [22]–[23].
48 Body Corporate 85978 v Wellington City Council [2013] NZHC 2852.
49 At [74]–[75]. The decision of the Tribunal was wrong for other reasons of applying the wrong legal test: see [70].
[50] Based on these authorities, I do not accept that the narrow approach for interpreting registered documents applies for all “public documents”. There are different policy issues in play.50 In the present circumstances, the standard approach is appropriate — the decision must be construed fairly, as a whole and in context.
Analysis
Claim application
[51] The relevant decision-making process began with the application made by the Body Corporate on 20 May 2013 for an assessor’s report in respect of a multi-unit complex claim. The Body Corporate made the claim as a representative under s 19 of the WHRS Act. Section 19(a) requires that each owner represented by the claim must have given the representative a written notice authorising the representative to bring a claim and authorising invasive testing by an assessor relating to the owners’ dwellinghouse.
[52] The claim lodged by the Body Corporate was allocated a single claim number, 07193. All of the key documents for the disputed decision-making that is the subject of this proceeding has used that single claim number.
[53] The completed application form as initially submitted referred to 84 units in the complex “principally used as private residences” and stated that 75 per cent of the owners of those units had authorised invasive testing of their unit. A box was ticked to the question “Are all units claimed for used principally as private residences?”. However, the part of the form that required the applicant to list all owners of each unit involved in the claim and provide their unit numbers was not completed. The MBIE checklist dated 20 January 2015 records that fact and says that the list was subsequently supplied and confirmation received that the application was in respect of all owners. This took place over a period of time.
50 Green Growth No 2 Ltd v Queen Elizabeth II National Trust, above n 43.
[54] Initially, 65 units were included in the claim. An MBIE checklist dated 20 May 2013 records that 64 out of 85 units had provided authorisation for invasive testing, which calculated at 75.29 per cent of owners, thereby meeting the threshold requirement in s 19(b) of the WHRS Act. By the time the letter of instruction was given to the assessor on 27 August 2013, 66 properties were recorded as included in the claim. The listed properties included units in block 4 (212, 213, 214, 311, 411 and 412). Unit 211 in block 4 was added to the claim later, on 27 February 2015.
Assessor’s report
[55] The assessor’s report dated 29 August 2014 refers to the issue of eligibility in only two places. The first is within the executive summary in pt 3 of the report. It provides the following:
3.1 Assessor’s eligibility opinion
The dwellinghouse that is the subject of this report meets the criteria set out in the Weathertight Homes Resolution Services Act 2006.
[56] The second place is in pt 13 entitled “Eligibility Statement”. That section contains identical wording to para 3.1 but with the word “meets” in bold. Immediately below is a signature block with the assessor’s name.
[57] The report is conclusory on this point and does not contain any analysis of the definitional issues, namely whether the units were intended to have as their principal use occupation as a private residence. There is no dispute that the report has been written on the basis that block 4 is eligible, and a full analysis of block 4 is included in the substantive sections of the report.
[58] The assessor’s general approach in the report is described in para 2.1 under the heading “Multi-unit claims” as follows:
… This report describes the work necessary to repair all units, including those which are not in the claim. The cost estimate at appendix 18 includes an apportionment of costs for each unit. This can be used to isolate the cost of repairs for those units which have joined the claim. Cost estimates for remedial work are provided for individual units.
[59] The content of the report reflects the detail required under s 42(3), namely to state the assessor’s view on why water penetrated the multi-unit complex concerned, the nature and extent of the damage caused, the work needed to repair the damage, the work needed to make weathertight the dwellinghouses and common areas in the multi-unit complex, the estimated cost of the work, and the persons who should be parties to the claim. It is common ground that this detail should be provided if the claim to which it relates meets the eligibility criteria.51
Relevancies and irrelevancies
[60] When exercising a statutory decision-making power, potential considerations fall into one of three categories:
(a)Mandatory considerations: If the statute expressly or impliedly requires a consideration to be taken into account, then failure to do so will vitiate the decision.52
(b)Non-mandatory (permissive) considerations: Non-mandatory relevant considerations may be taken into account, but failure to do so will not vitiate the decision (subject to questions of unreasonableness).53
(c)Irrelevancies: Irrelevant considerations must be disregarded. Failure to do so may vitiate the decision (depending on materiality).54
[61] To decide on eligibility, the Chief Executive had a mandatory obligation under s 48(2) to evaluate the assessor’s report. The Chief Executive “must consider only the report itself and any submission made by the claimant under s 45”. Section 45 provides for a claimant to make submissions on an assessor’s report stating an opinion that the claim does not meet the eligibility criteria. That did not occur in this case,
51 WHRS Act, s 42(1)(b).
52 R (National Association of Health Stores) v Department of Health [2005] EWCA Civ 154 at [63], referencing CREEDNZ Inc v Governor General [1981] 1 NZLR 172 (CA), and [75] to the same effect; both quoted in New Era Energy Inc v Electricity Commission [2010] NZRMA 63 (HC) at [105].
53 CREEDNZ Inc v Governor General, above n 52, at 183; and Ashby v Minister of Immigration
[1981] 1 NZLR 222 (CA) at 225.
54 Mackenzie District Council v Electricity Corp of New Zealand [1992] 3 NZLR 41 (CA) at 44.
because the assessor expressed the opinion that the claim did meet the eligibility criteria.
[62] There is no section in the WHRS Act providing for submissions on eligibility if the Chief Executive is nevertheless considering a decision contrary to an assessor’s opinion of eligibility. Based on the significance of the word “only”, the applicant in this case suggests that there is a statutory obligation to disregard any such submissions, if made. The Body Corporate’s position is that any submissions outside the scope of s 45 are not listed as matters to be taken into account under s 48(2).
2015 correspondence
[63] Following provision of the assessor’s report to the Body Corporate it was given written notice of the technical services manager’s concern that the units in block 4 may not be dwellinghouses because the building consent was issued for a “commercial building”. The Body Corporate was invited to respond on that issue, and it did so in correspondence throughout 2015. MBIE refers to that material as background only.
[64] Neither party is alleging that the 2015 correspondence was ultimately taken into account for the challenged decision, nor that it should have been. For that reason, I do not need to determine whether s 48(2) purports to change the default position under the New Zealand Bill of Rights Act 199055 and at common law, namely there should be a natural justice right to make submissions on matters directly affecting a person’s interests, and these would be relevant considerations.56
[65] Section 48(2) cannot be interpreted as inconsistent with those rights, unless such an intended meaning is very clear. Accordingly, the issue would be whether s 48(2) was intended to be an exhaustive statement of all relevant considerations, deeming anything else irrelevant.57 In my view, that is not the case. Section 48(2) can be read consistently with natural justice entitlements, namely that the report itself and any submissions under s 45 are mandatory relevant considerations (i.e., these are the
55 New Zealand Bill of Rights Act 1990, s 27(1).
56 See Wyeth (NZ) Ltd v Ancare New Zealand Ltd [2010] 3 NZLR 569 (SC) at [40] and [48].
57 GDS Taylor Judicial Review: A New Zealand Perspective (3rd ed, LexisNexis, Wellington, 2014) at [15.32]–[15.33]. In other words, it addresses all mandatory and non-mandatory relevant considerations in the sense discussed at [60] above.
“only” two things that are express mandatory considerations). This would not require relevant material to be ignored (i.e., those would be permissive considerations). However, I need not determine that issue given that it was not argued.
Eligibility Form
[66] Under s 48, it is the Chief Executive who must evaluate the assessor’s report, make the decision as to whether the claim meets the eligibility criteria, and give written notice to the claimant of the decision (including his or her reasons if the claim is held not to meet those criteria).
[67] In this case, delegated authority for those responsibilities was provided to the technical services manager, who is the person that signed the Eligibility Form. There is no dispute about the validity of that delegation. However, the applicant contends that aspects of the correspondence do not purport to be on behalf of the Chief Executive (or her delegate), which is significant when interpreting the notified decision.
[68] The applicant’s position is that a decision must be communicated to have legal effect, especially if notice is expressly required.58 A decision is final only once it is communicated in a way that makes it clear the decision is not of a preliminary or provisional kind.59 Accordingly, the applicant takes the position that the relevant decision document is the Decision Notification provided to the applicant on 18 February 2016.
[69] The respondent acknowledges the significance of the cases referred to by the applicant but says these draw a clear distinction between the decision itself on the one hand, and notification of the decision on the other. In Anufrijeva, the Court used the concept of the decision being “provisional” until notified.60 In Goulding, the concept was one of “perfection” — there was a “valid administrative decision in the exercise of a statutory power, which is the outcome of a completed process”, but it was not
58 R (Anufrijeva) v Secretary of State for the Home Department [2003] UKHL 36, [2004] 1 AC 604 at [26].
59 Goulding v Chief Executive, Ministry of Fisheries [2004] 3 NZLR 173 (CA) at [43].
60 Anufrijeva, above n 58, at[32].
perfected until formally communicated to interested parties.61 This same distinction is drawn in other New Zealand cases.62 I accept that there is such a distinction, which may be significant in terms of substantive rights or discretionary relief if there is a mistake in communicating a decision accurately.
[70] The statutory context has been outlined above. The central requirement of an eligible claim is that it must be brought under s 9 in respect of a “dwellinghouse”. This in turn requires that a unit within a building is “intended to have as its principal use occupation as a private residence”.63 The reference to, and requirement of, the dwellinghouses is repeated in: the eligibility criteria in s 16; the stipulations of who has the ability to apply for an assessor’s report under s 32; the purpose of pt 1A being to facilitate the repair of “leaky buildings” in s 125A, which are in turn defined as a “dwellinghouse” into which water has penetrated in s 8; and in the definition of “qualifying claimant” in s 125BA. This makes it clear a claim cannot include principal units that are not dwellinghouses.
[71] The Eligibility Form begins with administrative information about the submitted claim, including the name of the claimant, the MBIE case number, and the address of the dwellinghouse (in this case with “66 Properties” listed after the address). The box under the owner details records that no units were listed in the application itself, but that information was provided subsequently.
[72]At the bottom of the first page, the Eligibility Form has the following:
To make an eligibility decision I need to know:
· which units are dwellinghouses, and
· that the dwellinghouse units in this claim represent at least 75% of the dwellinghouse owners in the complex.
100% of unit owners have joined the claim currently which therefore includes 100% of dwellinghouse owners.
61 Goulding, above n 59, at [43].
62 Hyslop v Commissioner of Inland Revenue [2001] 2 NZLR 329 (CA) at [20], stating that the statutory scheme draws a clear distinction between coming to a decision and communicating a decision; and Huang v Minister of Immigration HC Auckland CIV-2005-404-5202, 18 July 2006 at [19], Asher J said that advice of a decision is a process that takes place after the decision has been made, and it is different from the decision itself.
63 WHRS Act, s 8.
In considering the intended use at the time of building consent, the following units are not considered to be dwellinghouses:
· Units built as stage 4 of the development under building consent 040010 do not meet the definition of dwellinghouse as the building consent was issued for ‘commercial’ building. I believe these are the units called Block B4 in the documents as those documents contained in the assessment report are stamped as BC 04010.
[73] The next section is a table underneath the heading “Information from Assessor report”. The second row of that table refers to the various building consents issued, as referred to and attached to the assessor report. The details of these are listed, with the third column recording that the consents have all been “sighted”, with the intended use for two of them recorded as “residential”, and that for stage 4 (i.e., block 4) described as “commercial”. The third row of the table lists dates on which code compliance certificates were issued. It states that these were not themselves provided in the report, but best evidence is the “dates recorded by the assessor in his report”, again evidencing that the technical services manager reviewed the content of that report.
[74] The final row of the table contains a title in the first column “Comments”. The content repeats the same analysis of intended use for units built as stage 4, but also considers two other matters.
(a)It notes concerns about the eligibility of units under building consent 031427 which referred to accessible units (whereas there is no building code requirement for private residences to be accessible).
(b)It also notes a certificate for public use issued for units in block 3, levels 6, 7 and 8, and the car park.
[75] In respect of the above two issues, the technical services manager refers to further evidence in the assessor’s report about intended use at the time the building consents were issued, and records that she was satisfied that those were intended to be private residences at least at some times, “except stage 4”. The conclusion in the comments section is that “The units built as stage 4 (block B4) under a commercial building consent are not dwellinghouses”.
[76] The applicant takes the position that the analysis in the body of the Eligibility Form should be disregarded because the only relevant aspect of the document is the ultimate conclusion. This records that the claim is eligible and states that the eligibility decision relates to the “complex as a whole”. The applicant argues that a fair reading of the document is that her earlier views, as analysed in the table and in the comments section, about questions of eligibility are superseded by a decision at the end to assess eligibility “for the complex as a whole”, without any different classification for the units in block 4.
[77] I do not accept that as a fair reading of the document, particularly taking into account the statutory context. As a matter of law, it is not within the discretion of the decision maker to override the “dwellinghouse” requirements, and this is not what she purported to do. There is no overarching ability to treat non-residential principal units as dwellinghouses. For example, level 3 consists of a restaurant, a reception, staff quarters, and other conference facilities. The layout of that level is simply inconsistent with that principal unit being used for the principal use of a private residence.
[78] The reference to the concept of the “complex as a whole” is clearly to the class action policy that a representative should bring a claim on behalf of all owners in a complex.64 Once the representative requirements are satisfied (with at least 75 per cent of the residential unit owners giving authorisation), then separate owners cannot take their own separate conflicting positions. This was designed to address the problem of “holdout”.65 Accordingly, the single claim brought by the applicant in this case is properly classified as “eligible”, to the extent noted in the documents. This does not equate with all the units in the complex being classified as “eligible”. On the single application advanced by the representative, the claim is held to be eligible for the complex as a whole, but only in respect of units that are dwellinghouses. I find this is adequately clear in the Eligibility Form.
64 See [26]–[29] above.
65 See [26] and [29] above.
[79] For the same reasons, I reject the applicant’s interpretation argument in the second cause of action that s 125BA does not empower MBIE or the Chief Executive to determine that a claimant is a qualifying claimant in respect of parts of an eligible claim only.
[80] The issue of common areas is not expressly referred to in the Eligibility Form, so I consider this issue separately below.
[81] The applicant suggested that an adverse inference is available because the decision maker did not separately give evidence for the hearing. I reject that argument. While the decision maker may make an affidavit stating what was before him or her and setting out the reasons where no statement of reasons was given, the decision maker cannot go on to explain the decision made.66 In this case, I am satisfied that the decision documents have adequate detail for assessing the reasons and legality issues.
FAP Form
[82] As referred to above, on 16 February 2016 the technical services manager also decided whether the claim met the initial contribution criteria for the purposes of FAP. As set out in the FAP Form, a qualifying claimant must have an eligible claim under the WHRS Act and fulfil the contribution criteria in the Gazette notice dated 28 July 2011. The document states:
This qualification review covers the initial contribution criteria that must be met prior to the claimant confirming affordability and entering into a Homeowner Agreement.
[83] A table then sets out various elements of the “initial contribution criteria for FAP”. The relevant elements for present purposes were:
(a)whether the claim provisionally qualifies for Crown contribution (for which “yes” has been selected); and
66 GDS Taylor Judicial Review: A New Zealand Perspective, above n 57, at [10.25], referencing Abbott v Coroners Court of New Plymouth HC New Plymouth CIV-2004-443-660, 20 April 2005 at [22] and Bell v Victoria University of Wellington [2010] NZHC 2200 at [103].
(b)whether the claim is a multi with unit variations (for which “yes” has been selected, and it says “Refer to comment section below”).
[84] The “other comments” box at the bottom of the form then sets out the analysis. It repeats that “the following units are not considered to be dwellinghouses…units built as stage 4 of the development under building consent 040010”, with the balance of the comments identical to those quoted in the Eligibility Form. The final sentence states “Only dwellinghouse units can receive FAP contributions”.
[85] This contemporaneous FAP Form is entirely consistent with my analysis of the Eligibility Form discussed above.
Decision Notification
[86] The applicant contends that the Decision Notification on 18 February 2016 is the only relevant decision document for interpretation principles and a strict approach of interpretation should be adopted as it is a “public document”. For the reasons outlined above, I do not accept that the Opua principles are relevant in this case. Rather, the Decision Notification is to be read fairly, as a whole and in context.
[87] The Decision Notification is an email, with the body in the form of a letter. It begins in the reference sections with listing all units in the Oak Shores property, including all of the block 4 units. Immediately underneath is the following paragraph:
The Chief Executive has found your claim eligible to use the resolution process under the Weathertight Homes Resolution Services Act 2006. This email provides confirmation of this eligibility decision. Please keep this document safe with the rest of your claim documentation.
[88] The Body Corporate contends that this concludes the entirety of the notification of the decision made under s 48. The balance of the email addresses a quite separate issue of FAP eligibility, which the applicant seeks to categorise as “advisory only”. It says, “A summary of the initial qualifying statuses of the units is listed at the end of this email as Appendix 1”. Appendix 1 states the following:
The following units are not considered to be dwellinghouses
Units built as stage 4 of the development under building consent 040010 do not meet the definition of dwellinghouse as the building consent was issued for ‘commercial’ building. I believe these are the units called Block B4 in the documents as those documents contained in the assessment report are stamped as BC 040010.
Only dwellinghouse units can receive FAP contributions.
[89] The Body Corporate acknowledges that the balance of the emailed letter contradicts a finding of eligibility under s 48. It suggests this part of the document should be disregarded as merely containing an “initial evaluation” and commentary/advice about FAP (not yet applied for) from someone who is not the Chief Executive or her delegate. The Body Corporate says it has no relevance to the Chief Executive’s eligibility decision under s 48, set out in the earlier part of the letter.
[90] Giving the document a fair reading as a whole, I do not accept that the eligibility decision is reasonably interpreted without regard to the balance of the letter and the unequivocal statements in appendix 1. It is far-fetched to suggest that the letter would include a deliberate inconsistency. While the email did not expressly say that the claim was ineligible to the extent it included block 4, the text in appendix 1 makes it clear that the claim does not extend to block 4 because the units (and implicitly the related common areas) within it are not considered to be dwellinghouses. By definition under the Act, a claim cannot be “eligible” to the extent it purports to include units that are not dwellinghouses.
[91] There is no necessary inconsistency between the two parts of the letter, because it is reasonably interpreted as reflecting a decision that the claim is eligible for all units that constitute “dwellinghouses”, but units (and related common areas) built as stage 4 do not so qualify.
[92] For the same reason, the fact that the units are listed in the reference sections at the beginning of the email do not substantiate that they have been classified as eligible. That identifies the units that are the subject of the claim application. It does not denote the outcome of that application, if that is inconsistent with the body of the letter including the position recorded in appendix 1.
[93] In my view, the above interpretation constitutes a fair objective reading of the Decision Notification on its own. That meaning is even clearer when considered in the context of the 2015 correspondence in which the Body Corporate was given the opportunity to make submissions about the definitional issues and whether the intended use of the units in block 4 was for the principal purpose of private residential use. As in Body Corporate 85978 v Wellington City Council, anyone monitoring the claim on behalf of the Body Corporate would have known of the technical service manager’s provisional view that the units in block 4 were ineligible,67 and appendix 1 unequivocally records a position that her view did not change — they do not qualify as dwellinghouses.
[94] The affidavit of Ms Singers explains how the unit numbers in the subject lines are generated in any correspondence. The applicant contends that this extraneous evidence is irrelevant for interpretation purposes. Even disregarding Ms Singers’ evidence, I do not consider that listing all units that are the subject matter of a claim conveys a corresponding decision that all are dwellinghouses eligible under s 48. The affidavit evidence assists to confirm that this was not the actual intention either, which would have been relevant in the event of any miscommunication issues.
[95] The applicant contends that the proper form for notifying a decision of part eligibility would be to issue two different decisions, one finding eligibility (and specifying the scope), and another finding ineligibility (and specifying the scope). This would then enable the applicant to seek a reconsideration under s 49 in respect of the decision of ineligibility.
[96] In my view, it is the substance of the decision that matters rather than the particular form in which it is expressed.68 Given the “whole of complex” concept that the Body Corporate makes a single application on behalf of all owners that it represents, it would be artificial and arguably wrong to treat the application or decision as being in respect of two separate claims. The claim was successful and properly classified as “eligible” in respect of all “dwellinghouses”, and the same document
67 Body Corporate 85978 v Wellington City Council, above n 48, at [74].
68 See [49](a) above.
clearly recorded the conclusion that units (and implicitly the related common areas) in block 4 would not be treated as so qualifying.
[97] Accordingly, I find that the decision of the technical services manager (as recorded in the Eligibility Form) and the notification of it to the Body Corporate (the Decision Notification), were both consistent and lawful in terms of the statutory provisions. In terms of the issues listed in para [4](a) above:
(a)The decision made by the technical services manager on 16 February 2006 recorded in the Eligibility Form was that the units in block 4 (and corresponding common areas) were ineligible because they did not constitute dwellinghouses, given the building consent for block 4 recorded an intended use of commercial.
(b)The decision as communicated in the Decision Notification provided to the Body Corporate on 18 February 2016 was to the same effect.
(c)There was no discrepancy between the two.
Mandatory relevant considerations
[98] If the Chief Executive excluded block 4 from the eligibility decision, the Body Corporate says that this was an error of law. In particular, the Body Corporate alleges that she failed to take into account relevant factors and failed to give reasons.
[99] The Body Corporate relies on s 48(2) to argue that all elements of the assessor’s report are mandatory considerations, including the plans and diagrams within it, and the supporting and compliance documents referred to. The applicant says this material was unlawfully disregarded in breach of s 48(2).
[100] The Body Corporate says that the sole document referred to as the grounds for refusing the eligibility of block 4 was the building consent, in particular the words therein: “intended use: commercial”. The Body Corporate alleges that this improperly disregarded the plans and other documents that were included in the assessor’s report,
and that would have accompanied the building consent application.69 The applicant says these documents provided a more reliable indication of the intended use of the building than the document generated by the authority when processing the building consent application.
[101] For example, the plans for the apartments on level 2 of block 4 show that they include kitchen, dining, living, bedroom, and bathroom areas. As stated in the assessor’s report, the four large blocks all contain “apartments”. While the facilities on level 3 are different in nature, the applicant submits that these were to service the apartments and can properly be regarded as part of the residential apartment complex. Notwithstanding the word “commercial” in the intended use section of the building consent for block 4, that document also uses the word “residential” in the description. In the hearing, the applicant compared the floor plans for the apartments on level 2 of block 4 with other apartments in block 3 that were classified as dwellinghouses, contending that there can be no valid distinction on the face of those plans.
[102] The applicant referred to the decision of Heath J in Townscape Akoranga Ltd v Auckland Council.70 In that case, Heath J determined that student accommodation constituted dwellinghouses because they were in the nature of serviced apartments rather than a hostel or hotel room used for shorter periods of time.71
[103] The applicant also referred to the decision of Dobson J in Body Corporate 85978 v Wellington City Council, in which the assessment was based on the plans and accompanying details lodged with the Council for building consent purposes, rather than the subsequent use of the apartments by Quest for short or long stay occupancy.
[104] I agree that the above two decisions are important for understanding the proper approach for assessing the intended use at the time a building consent was sought. However, I do not accept that these cases establish that the technical services manager was wrong in this case. The units in block 4 on levels 2 and 4 were for apartments — that has never been disputed. But the two cases demonstrate that the configuration as
69 The underlying materials for the block 4 building consent were not in evidence.
70 Townscape Akoranga Ltd v Auckland Council [2013] NZHC 2367.
71 At [53].
apartments is not determinative. Serviced apartments can be intended for short term use in the nature of hotel accommodation, which would not fulfil the private residence requirements of a “dwellinghouse”.72
[105] As reflected in the 2015 correspondence, the technical services manager was required to assess these definitional issues concerning the intended use of the apartments. The plans themselves were not informative in that respect, nor was any other aspect of the assessor’s report, because there was simply no discussion or analysis of those issues. The assessor stated a conclusion on eligibility, and the balance of the weathertightness analysis reflects that assumption, but the statutory decision under s 48 is not made by the assessor. The Chief Executive is required to make his or her own assessment, taking into account the assessor’s report on that issue. In reality, there was nothing of substance in the assessor’s report about the intended use of the apartments in block 4 (layout alone being inconclusive).
[106] As outlined above, the Eligibility Form and the Decision Notification both reflect that the technical services manager reviewed the content of the assessor’s report. There is simply no basis for alleging that mandatory relevant considerations were disregarded. In other words, there is no basis for believing that the technical services manager was unaware that the units in level 2 and 4 were configured as apartments with bedroom, kitchen, living room and bathrooms suitable for use ranging from short term accommodation (hotel units or equivalent) through to long term residential use. The critical assessment for the technical services manager was the particular intended principal use for the block 4 units. The decision correctly notes that there was a different intended use recorded in the building consent for the apartments in block 4 compared with the apartments in the other blocks. This formed the factual basis for the decision about whether the block 4 units and common areas satisfied the “dwellinghouse” requirement.
72 A hotel is specifically excluded in (d) of the definition of “dwellinghouse”: see [7] above.
Fact evaluation and unreasonableness
[107] Factual assessments can only be challenged by way of judicial review where the decision is unreasonable in the sense it is “not supported by any evidence, or if the evidence is inconsistent with or contradictory of it, or if the only reasonable conclusion contradicts the determination”.73
[108] In Townscape Akoranga Ltd v Auckland Council, Heath J determined an application for judicial review of a decision under s 48 of the WHRS Act. The Judge asked whether, on the evidence the Chief Executive was entitled to consider, the decision was “plainly wrong” or that it was “open for the Chief Executive to find that the ‘dwellinghouse’ criterion had been met”.74 The Court held that whether a building is a “dwellinghouse” should be determined on the basis of whether the intended use of the property was disclosed as “residential” in the plans and specifications submitted with the building consent application, or “was known to the Council to be for that end purpose”.75
[109] In making a finding that the units in block 4 were not dwellinghouses, the technical services manager relied on the evidence of the building consent recording the intended purpose of the building as “commercial” as opposed to “residential”. This is not a situation where there was no evidence to support the position taken by the decision maker. The respondent says the decision maker evaluated facts, and any issues of weight are for the decision maker (including the significance of the underlying building consent application documents). Relying on the classification of the building consent was a decision open to her, following an evaluation exercise.
73 Hu v Immigration and Protection Tribunal [2017] NZHC 41, [2017] NZAR 508 at [30]–[31], referring to the circumstances in which a factual error will amount to an error of law set out in Bryson v Three Foot Six [2005] NZSC 34, [2005] 3 NZLR 721. See also Philip A Joseph Joseph on Constitutional and Administrative Law (5th ed, Thomson Reuters, Wellington, 2021) at [23.5.5].
74 Townscape Akoranga Ltd v Auckland Council, above n 70, at [57]. This follows Heath J’s approach in Body Corporate 188529 v North Shore City Council [2008] 3 NZLR 553 (HC) at [181], [189][199], [211], [213]–[220] and [345]. But see the Supreme Court decision Body Corporate No 207624 v North Shore City Council [Spencer on Byron] [2012] NZSC 83, [2013] 2 NZLR 297 subsequently recognising a potential duty of care in tort owed to commercial owners.
75 At [55].
[110] While not accepting that the evaluation of the building consent was correct, the applicant reiterated several times that this is not a challenge to the merits. The issue is not whether the Court considers that the decision was open to the Chief Executive (an issue of Wednesbury unreasonableness), but rather whether the Chief Executive took all mandatory relevant matters into account. I have already addressed that issue above.76
Failure to give reasons
[111] The applicant alleges that there was a breach of the statutory obligation in s 48(3)(b) to give reasons.
[112] Statements by a decision maker as to reasons are a starting point and are not necessarily decisive as to actual reasons. It is the realities of the actual decision-making, determined against background facts and reasonable inferences, which in the end are determinative.77 If internal notes are provided in response to a request for reasons, then they can be relied on as evidence of the reasons.78
[113] The applicant says the Chief Executive failed to give clear notice that block 4 was excluded from eligibility, and therefore she gave no reasons for such an exclusion. The observations in the balance of the letter did not purport to be findings or reasons of the Chief Executive. If a decision maker is obliged to give reasons and fails to do so, that is an error of law that needs to be corrected.79
[114] In this case, I have found that both the Eligibility Form and the Decision Notification contained reasons why the units built as stage 4 (block 4) under a commercial building consent (and implicitly the related common areas) were not considered to be “dwellinghouses”. It is artificial to read the letter in separate conflicting parts. Rather, the document must be read as a whole, with appendix 1 qualifying the nature of the eligibility determination by specifying which units are
76 At [106] above.
77 New Zealand Judicial Review Handbook, above n 45, at [62.5.1], referencing Healthcare Providers New Zealand Inc v Northland District Health Board HC Wellington, CIV-2007-485- 1814, 7 December 2007 at [170].
78 Kesonsung v Minister of Immigration HC Auckland CIV-2006-404-1597, 4 April 2006 at [33].
79 Lewis v Wilson & Horton Ltd [2000] 3 NZLR 546 (CA) at [86]–[87]; and Chan v Minister of Immigration HC Auckland CP80/89, 14 March 1989 at 16.
considered dwellinghouses. It explained (i.e., gave reasons) that the building consent was evidence that the intention of principal use for block 4 was commercial/non-residential, in contrast with the intention of residential use for the units in the other three blocks. Accordingly, I do not find any breach of the obligation to give reasons.
[115] A decision maker does not have to refer to every piece of evidence before the decision maker.80 In the wider context of the 2015 correspondence on this issue, I do not see it as necessary for the decision maker to refer to other material that was uninformative on those matters. Neither the unit plans showing apartment configurations, nor any other document in the assessor’s report other than the building consents, disclosed whether the intended use was short term accommodation or longer term private residential use.
Block 3 accessory units
[116] In the assessor’s report, one of the floor plan diagrams for block 4 shows car parks labelled as accessory units for apartments in block 3. The Body Corporate alleges that this is an error of law, if the Chief Executive has purported to exclude the entirety of block 4 from the eligible claim, whereas these accessory units for apartments in block 3 are properly classified as “dwellinghouses”.
[117] As set out above, the Eligibility Form and Decision Notification is about units or apartments built as stage 4 of the development, with a conclusion that only dwellinghouse units are eligible to receive FAP contributions.
[118] Under the Unit Titles Act, an accessory unit is defined to mean a unit that is designed for use with any principal unit and that is shown on a unit plan as an accessory unit. That definition also specifically includes car parking spaces. Accordingly, any accessory units designed for use with a principal unit in block 3 remain eligible under the wording of the Decision Notification. There is no error on this issue.
80 Shi v Chief Executive of the Ministry of Business, Innovation and Employment [2014] NZHC 1217 at [44]. See also Singh v Chief Executive, Ministry of Business, Innovation and Employment [2022] NZHC 738 at [100].
Common areas
[119] The applicant contends that the combined effect of ss 19 and 30 is that a multi-unit claim under the WHRS Act will, if the Body Corporate elects, include all common areas. Its position is that so long as two or more eligible dwellinghouses exist in a multi-unit-complex, then all common property is deemed to be eligible as if the combination were “a single dwellinghouse”, regardless of the intended use of the common areas. It says this is the consequence of a “whole of complex” approach.
[120] The term “common areas” is not defined in the WHRS Act. It differs from the term “common property” defined and used in the Unit Titles Act.81 The applicant submitted that both terms should carry the same meaning. On the other hand, the applicant also submitted that principal unit 311 should be treated as falling within the “natural” meaning of a “common area”, because that level serves the dwellinghouses with facilities such as “function toilets”, “staff room”, “office”, “meeting room”, “bar”, “breakfast/dining room”, “lounge” and “kitchen”.
[121] Adopting a purposive approach, the respondent submits that there is an implied requirement that the common areas must be associated with the eligible dwellinghouses, importing an equivalent intended use requirement. If all the principal units are eligible as dwellinghouses, then their common areas will likely be eligible. However, the WHRS and related financial assistance was not intended for commercial (non-residential) property. It would be inconsistent with the intended purpose of the WHRS Act for all common areas of a mixed use multi-unit complex to be deemed eligible, regardless of intended use. It was not the intent of the legislation to provide FAP funding for repair work on commercial/non-residential common areas.
[122] I accept that the reference to common areas in s 19 (read in conjunction with s 30) should be interpreted purposively, to focus on eligible dwellinghouses and corresponding common areas, to the extent this fairly reflects damage/repair requirements and the beneficial interests of the eligible dwellinghouse claims. This is what the context requires,82 to give effect to the purposes of the WHRS Act and the
81 Unit Titles Act, s 5.
82 See n 3 above.
fundamental nature of the dwellinghouse requirement. An expanded entitlement to funding assistance for all commercial common areas in a mixed use, multi-unit complex was never discussed in the legislative history, and I find no basis for believing it was intended by Parliament.
(a)At the time these provisions were introduced, a duty of care in tort had been held not to extend to non-residential buildings. Although the Supreme Court’s decision in 2013 later recognised that possibility as a matter of general tort law,83 the policy and express wording of the WHRS Act remains firmly focused on helping “homeowners”, rather than the funding interests of commercial operators. The financial analysis during the legislative drafting process never assessed or planned for the cost of public financial assistance for commercial repairs.84
(b)The “whole of complex” approach uses class action concepts as far as possible, to solve practical problems of co-ordination, authority and standing.85 Some complexities have not yet been determined by the Court of Appeal, but it has been recognised that the beneficial interests remain vested in the individual owners, and a “look-through” to that substantive position is appropriate in some circumstances.86
(c)Given my interpretation, these issues will inevitably involve a factual assessment in each case, and perhaps pragmatic solutions. For example, even if a commercial restaurant was intended to service a building of residential apartments, this will not make it a dwellinghouse common area, because private residences would not normally include commercial restaurants.
83 Body Corporate 207624 v North Shore City Council, above n 74.
84 See [23]–[29] above.
85 See [25]–[27] above.
86 See [32] above.
[123] The technical services manager in this case made a factual assessment, based on the building consent for block 4 recording that the building was intended to be used for commercial/non-residential purposes. On that basis, I accept that it was open to the decision maker to conclude that all of the principal units and the common areas in block 4 were principally intended for commercial/non-residential purposes and therefore ineligible. This is what was communicated to the applicant.
[124] In any event, this aspect is criticised as a failure of the decision maker to take into account common areas or give reasons for that aspect, rather than a question of factual assessment or weight. I do not accept that the technical services manager failed to consider common areas. Her assessment was that the units (and implicitly the corresponding common areas) in block 4 were for commercial purposes, given the intended purpose recorded in the building consent for block 4 as a whole. I consider that outcome and reasoning was adequately clear, even if the common areas were not expressly referred to. The construction of block 4 came after construction of the other blocks, so residents in blocks 1 to 3 were using their apartments as private residences without the block 4 amenities.
Failure to exercise statutory rights of challenge
[125] I do not see anything that would have prevented the Body Corporate from applying under s 49 in respect of the unsuccessful aspects of the claim. In the hearing before me, the applicant specifically disavowed any argument of estoppel or procedural prejudice arising from failing to appreciate that units (and corresponding common areas) in block 4 were classified as non-residential. That would have been difficult to argue anyway, given the 2015 correspondence, the Decision Notification, and the subsequent letter of 4 March 2016 from the lawyers acting for the Body Corporate referring to the eligibility of “(some of)” Oak Shores in the WHT.
[126] The respondent submitted that, whilst the right of reconsideration under s 49 of the WHRS Act does not preclude a judicial review application, the Court has a
discretion to take any delay after the appeal period into account in exercising its discretion as to whether to grant review.87
[127] The applicant gave various justifications for the delay in commencing this proceeding. The reasons included alleged ambiguity in the Decision Notification, lack of access to the internal records until April 2018, conflicting advice in 2020, 2021 and 2022 that at least some units in block 4 would be receiving contributions and attempts to resolve the dispute by way of correspondence between legal representatives.
[128] Given my decision that there were no errors of law, I do not need to consider whether relief should have been withheld as a matter of discretion on these grounds, despite reviewable error.
Conclusion
[129] Reading the documents fairly, as a whole, and in context, I find the decision in the Eligibility Form and the FAP Form and conveyed to the Body Corporate on 18 February 2016 in the Decision Notification was that:
(a)the Body Corporate had an eligible claim for dwellinghouses in the Oak Shores complex, which was for the units in blocks 1, 2 and 3 (including accessory units and common areas); and
(b)the units and common areas in block 4 were ineligible because that block was intended to be used for non-residential purposes and therefore did not meet the “dwellinghouse” requirement of having its principal use as occupation as a private residence.
[130] The decision maker’s exclusion of the block 4 units and associated common areas from the “eligible claim” was not unlawful. The decision maker properly took into account the mandatory relevant consideration of the assessor’s report, she gave reasons for her decision in respect of block 4 (the building consent), and she did not purport to exclude accessory units (parking) for principal units in block 3.
87 Relying in particular on Highgate Business Park Ltd v The Environment Court [2014] NZHC 1692, [2014] NZRMA 286.
[131] Accordingly, I find no error of law that provides any ground for making the declarations sought or granting judicial review. I do not need to consider questions of discretionary relief.
Result
[132] The Body Corporate’s application for declaratory and judicial review relief is dismissed.
[133] In the event that the parties do not agree on costs, the respondent may file a memorandum within 10 working days, and the Body Corporate may file a memorandum within a further 10 working days.
O’Gorman J
Solicitors/Counsel:
Grimshaw & Co, Auckland Crown Law Office, Wellington
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