Body Corporate 371455 v ASB Bank Limited

[2019] NZHC 1606

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1054

[2019] NZHC 1606

UNDER

The Unit Titles Act 2010 and Part 19 of the High Court Rules

IN THE MATTER

of the Stancombe Road Apartments

BETWEEN

BODY CORPORATE 371455

Applicant

AND

ASB BANK LIMITED

First Respondent

…cont

Hearing:

10 July 2019

Appearances:

B M Foster for Applicant

No appearance for Respondents

Judgment:

10 July 2019

JUDGMENT OF LANG J

[on application for approval of scheme of repairs under s 74 Unit Titles Act 2010]

This judgment was delivered by me on 10 July 2019 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

BODY CORPORATE 371455 v ASB BANK LTD [2019] NZHC 1606 [10 July 2019]

ANZ NATIONAL BANK LIMITED

Second Respondent

KIWIBANK LIMITED
Third Respondent

BANK OF NEW ZEALAND
Fourth Respondent

MORTGAGE      HOLDING      TRUST COMPANY LIMITED

Fifth Respondent

WESTPAC NEW ZEALAND LIMITED
Sixth Respondent

NEW    ZEALAND   HOME    LENDING LIMITED

Seventh Respondent

RUEFUS    FRANKLIN    JOSEPH    and SHALINI RUEFUS

Eighth Respondents

RATNESHWAR PANDIT and POONAM CHAND
Ninth Respondents

ABDUL   NASIR   AZAD   and   NAZIA SHIMNAZ BEGUM

Tenth Respondents

NISHIL     SHARMA     and     NEELMA SHARMA

Eleventh Respondents

HYDE    PROPERTY    INVESTMENTS LIMITED

Twelfth Respondent

DARSHAN KAUR
Thirteenth Respondent

MELLES PROPERTIES LIMITED
Fourteenth Respondent

ELIZABETH MABEL CHARLES
Fifteenth Respondent

WILLIAM THOMAS WILSON

Sixteenth Respondent

WILDE MARSHALL INVESTMENTS LIMITED
Seventeenth Respondent

PARAMPREET SINGH and MANMEET KAUR
Eighteenth Respondent

STRETTON PROPERTIES LIMITED
Nineteenth Respondent

DIMON HOLDINGS LIMITED
Twentieth Respondent

BOTANY NZ LIMITED
Twenty-First Respondent

NARDEEP SINGH and DOLLY MANN
Twenty-Second Respondents

BB FUTURES LIMITED
Twenty-Third Respondent

HELEN KINGI
Twenty-Fourth Respondents

LORI LIMITED
Twenty-Fifth Respondent

YIN PING PUN
Twenty-Sixth Respondent

PEI-HUA TSAI and JENN-HUEI TSAI

Twenty-Seventh Respondents

HERMANUS GERHARDUS PIETHERS (SNR) and DENIS THELMA PIETERS as

to an undivided one-third share and HERMANUS   GERHARDUS  PIETERS

(JNR) as to an undivided two-thirds share Twenty-Eighth Respondents

GIANG HUONG THI BUI
Twenty-Ninth Respondent

CAMGARKIM LIMITED
Thirtieth Respondent

P   &   S   ANDREWS   INVESTMENTS LIMITED

Thirty-Second Respondent

GARY THOMAS DELLER and KAREN MARY DELLER
Thirty-Third Respondents

YAZCHEN ZHANG
Thirty-Fourth Respondent

PAUL    FREDRICK    SOWMAN     and BELINDA MARY SOWMAN

Thirty-Fifth Respondents

ANDREW    WILLIAM    ADAMS    and BEVERLEY JANE ADAMS

Thirty-Sixth Respondents

LUKA     PETER     BRAMWELL     and JOSIAH PATRICK BRAMWELL

Thirty-Seventh Respondents

HARIKRISHNA           INVESTMENTS LIMITED

Thirty-Eighth Respondent

MY     CONVERTIBLE     PROPERTIES LIMITED

Thirty-Ninth Respondent

KEREPEHI TRUSTEE LIMITED
Fortieth Respondent

SANDHYA MALINI NAND

Forth-First Respondent

XIAOQUAN LU
Forth-Second Respondent

BRLJEVICH INVESTMENTS LIMITED
Forty-Third Respondent

AIG   INSURANCE   NEW   ZEALAND LIMITED

Forty-Fourth Respondent

[1]    This proceeding concerns an apartment complex located at 130 Stancombe Road and 11 Carlos Drive, Flat Bush and known as the “Stancombe Road Apartments”.

[2]    The development was built between 2006 and 2007. It comprises 36 residential units constructed in two separate parallel apartment blocks separated by a concrete courtyard. Each block consists of three levels of single floor apartments. A single subterranean carparking area is situated under both the residential blocks and the courtyard area.

[3]    The owners of the units discovered the buildings suffered from weathertight issues in or about 2014. They then instructed Veron Building Consultants to provide a weathertightness report regarding these issues. The resulting report identified numerous defects that had allowed water ingress and consequential damage to the complex. It also identified areas indicating the potential for water ingress in the future.

[4]    At an Extraordinary General Meeting (EGM) of the unit owners held  on     19 April 2018 the body corporate resolved to engage solicitors to prepare a scheme of repairs for approval by the Court under s 74 of the Unit Titles Act 2010 (the Act). It has now filed this proceeding in which it seeks the approval of the Court to undertake a scheme of repairs to remediate the complex to a watertight and code compliant state.

[5]    The owners, mortgagees and insurer of the building are all respondents to the present application. All have been served with notice of the application and no notices in opposition have been received.

Relevant principles

[6]    The principles relevant to the approval of schemes of arrangement under s 74 are now well-established through cases such as Tisch v Body Corporate No. 318596.1

[7]    An applicant for approval must show that a building has been, or is likely to be, damaged and that a scheme of repair is appropriate. The proposed scheme needs

1      Tisch v Body Corporate No 319596 [2011] 3 NZLR 679 (CA) at [36]-[44].

to balance the interests of all unit owners and must be sufficiently detailed to enable unit owners and the Court to judge its effectiveness. Remedial work is generally to be carried out to the same standard in relation to all units and at the same time. A scheme with broad support of unit owners is also preferable. Finally, the terms of the scheme should not depart from the Act and the relevant body corporate rules any more than is reasonably necessary to achieve fairness between unit holders.

Decision

[8]    There can be no dispute in the present case that the complex requires substantial repairs to remediate the issues with water ingress that have been identified to date.

[9]    The unit owners were provided with a copy of the draft scheme on 11 February 2019. The body corporate then considered the proposed scheme at an EGM held on 18 February 2019. Those who attended that meeting, whether in person, by proxy or through postal votes, voted unanimously in favour of the scheme. The proposed scheme therefore clearly represents the repair option favoured by those proprietors who took the time to participate in the discussions and voting process relating to the scheme.

[10]   I am also satisfied that the scheme has a level of detail and is on substantially similar terms as numerous schemes approved by the Court over the last four years.2

[11]   The draft scheme in the present case apportions the cost of repairs to all unit owners in accordance with their respective utility interests. The only exceptions relate to the cost of optional improvements or betterment that may be requested by individual unit owners. These costs are to be met by the owners of the unit that will benefit from such work being done. These arrangements appear to be sensible and broadly in accordance with the requirements of the Act and body corporate rules.

2      See eg Body Corporate 205373 v Balthazaar (Mays Road) 2015 NZHC 2827; Body Corporate 202692 v Jamac Holdings Ltd (Retro Apartments) [2016] NZHC 1226; Body Corporate 201161 v Keung (Gladstone Apartments) CIV-2016-404-1478 HC Auckland, 8 August 2016.

[12]   Furthermore, the scheme of repairs extends to any works that may be necessary to bring the complex to a code compliant state. This is required because remedial works can often reveal issues that must be rectified before a code compliance certificate will be issued. There is little point in undertaking remedial work unless the works are ultimately certified as being code compliant. If that does not occur the unit owners will be left with unsaleable assets.

[13]   Based on expert advice, the body corporate considers that there is no reason to distinguish between unit and common property when allocating the costs of repairs. Unit owners also agree that the complex needs to be repaired at the same time so that repairs are carried out to the same standard.

[14]   Finally, I am satisfied that the terms of the proposed scheme are similar to those approved by the Court in the past and are generally consistent with the scheme of the Act. In particular, it ensures the body corporate has the power to complete all necessary remedial work and to recover the cost of the work from the unit owners by means of levies. The fact that repair costs are being apportioned in accordance with the utility interests of individual units also means that the cost of repairs are being apportioned in an equitable way.

Result

[15]   The body corporate has met the threshold necessary to permit the Court to approve the draft scheme of arrangement. I make an order under s 74 of the Unit Titles Act 2010 approving the scheme accordingly.

Lang J

Solicitors: