Body Corporate 368694 - [2021] NZHC 2731

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2021-485-363

[2021] NZHC 2731

UNDER ss 187–189 of the Unit Titles Act 2010 and ss 339–343 of the Property Law Act 2007

IN THE MATTER OF

an application for an order authorising the cancellation of a unit plan and for consequential orders

BETWEEN

BODY CORPORATE 368694

Applicant

Hearing (by VMR): 11 October 2021

Counsel:

P Skelton QC and S Rankin for applicant

Judgment:

12 October 2021

JUDGMENT OF GWYN J

[1] Body Corporate 368694 is the Body Corporate of a unit titled property, located at 75 Featherston Street, Wellington (the property). The property consists of the Rydges Hotel (the Hotel), and three separate retail businesses independent of the Hotel operations.

[2] The Body Corporate has applied under s 187 of the Unit Titles Act 2010 (the Act) to cancel Unit Plan 368694 (the Unit Plan) and dissolve the Body Corporate, to extinguish the registered leases relating to the Hotel Units, and for consequential orders under the Property Law Act 2007 (the PLA). The orders are sought to enable the property to be sold, pursuant to existing conditional sale and purchase agreements. The Body Corporate says the sale is desirable because the unit owners will obtain a price significantly higher than the market value of the units if sold individually; they

BODY CORPORATE 368694 [2021] NZHC 2731 [12 October 2021]

will not have to pay the significant costs of remedial work required in relation to seismic issues with the Hotel and bathroom renovation requirements; and they will not have to bear the cost of trading losses while the Hotel is closed to enable that work to be carried out.

[3] Before I turn to the details of the property and the Body Corporate’s application I set out the legal framework relevant to the orders sought.

Legal context

Unit Titles Act 2010

[4] Under s 177 of the Act, a body corporate can resolve to cancel a unit plan and apply to the Registrar-General of Land (the Registrar) to effect cancellation. The default effect of cancelling a unit plan includes that:1

(a)the fee simple, or (as the case may be) the estate as lessee or licensee, vests in the former unit owners in shares proportional to their ownership interests;2

(b)where two or more persons were the owners of any unit, whether as joint tenants or tenants in common, the share in the unit that vests in them under ss 180 or 182, as between themselves, vests in them as joint tenants or as tenants in common as the case may be;3 and

(c)the relevant body corporate is dissolved.4

[5] In more complex cases such as the present, where additional directions are required, cancellation may first need to be authorised by the High Court. Those cases are governed by the application process under ss 187 and 188 of the Act, which in relevant part provide that:

1 Unit Titles Act 2010, ss 180 – 182…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Body Corporate 368694

Details

AGLC: Body Corporate 368694 [2021] NZHC 2731
Case: [2021] NZHC 2731
Decision Date: 12 October 2021

CaseChat Overview and Summary

Body Corporate 368694, the Body Corporate of a unit titled property located at 75 Featherston Street, Wellington, applied to the High Court for an order to cancel the Unit Plan and dissolve the Body Corporate. The property comprises the Rydges Hotel and three separate retail businesses. The Body Corporate sought to sell the property to enable the unit owners to obtain a higher price than the market value if sold individually, avoid significant costs of seismic work and bathroom renovations, and avoid trading losses while the Hotel was closed for the work. The Body Corporate needed the Court's authorisation to cancel the Unit Plan as it involved additional directions. The Unit Titles Act 2010 and the Property Law Act 2007 provided the legal framework for the orders sought. The court found that it was just and equitable to cancel the Unit Plan and sell the property, as the overwhelming majority of unit owners supported the sale, the Hotel Unit owners would be treated equally, the purchase price significantly exceeded the market value if sold individually, and the unit owners would avoid significant costs and losses. The court made orders authorising the cancellation of the Unit Plan, the surrender of the leases, the sale of the property, and the application of the proceeds of sale.

The Body Corporate 368694, which manages a unit titled property consisting of the Rydges Hotel and three retail businesses, applied to the High Court for orders to cancel the Unit Plan, dissolve the Body Corporate, and sell the property to a purchaser. The Body Corporate sought the orders to enable the unit owners to obtain a higher price than if the units were sold individually, avoid significant costs of seismic work and renovations, and avoid trading losses while the Hotel was closed for the work. The Unit Titles Act 2010 and the Property Law Act 2007 provided the legal framework for the orders sought. The court found that it was just and equitable to cancel the Unit Plan and sell the property, as the majority of unit owners supported the sale, the Hotel Unit owners would be treated equally, the purchase price significantly exceeded the market value if sold individually, and the unit owners would avoid significant costs and losses. The court made orders authorising the cancellation of the Unit Plan, the surrender of the leases, the sale of the property, and the application of the proceeds of sale.

Orders