Body Corporate 49407 v Donovan - [2024] NZHC 233

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2023-470-000011

[2024] NZHC 233

UNDER Declaratory Judgments Act 1908, s 3, Insolvency Act 2006, s 119 and Land Transfer Act 2017, s 105

IN THE MATTER OF

Unit F, 30 Willow Street, Tauranga

BETWEEN

BODY CORPORATE 49407

Plaintiff / Counterclaim Defendant

AND

MICHAEL PHILIP DONOVAN

First Defendant / Counterclaim Plaintiff

JOHN GRAHAM KENNETH BOLTON

Second Defendant

Hearing: 21 – 22 November 2024

Appearances:

G R Grant for Plaintiff / Counterclaim Defendant

D G Hayes for First Defendant / Counterclaim Plaintiff No appearance for Second Defendant

Judgment:

16 December 2024

JUDGMENT OF ANDREW J

This judgment was delivered by Justice Andrew on 16 December 2024 at 2.00 pm
pursuant to r 11.5 of the High Court Rules 2016 Registrar / Deputy Registrar
Date ………………………….

BODY CORPORATE 49407 v DONOVAN [2024] NZHC 233 [16 December 2024]

Introduction

[1] This proceeding concerns a property (Unit F) within a unit title complex in Willow Street, Tauranga, and known as Strata Views. The plaintiff is the Body Corporate for Strata Views.

[2] Unit F was previously owned by the first defendant, Mr Michael Donovan. Since his bankruptcy in 2009 he has remained living in Unit F but has paid no levies or rates.

[3] In 2011, the Official Assignee disclaimed all rights and interests in Unit F as “onerous property”. The effect of that disclaimer was to bring to an end all rights and liabilities in Unit F for both the Official Assignee and Mr Donovan. From the date of that disclaimer, now 13 years ago, Unit F has been, in effect, ownerless property and administered by the Crown.1

[4] The Body Corporate says that the effect of the disclaimer has been that for the last 13 years there has been no “owner” from whom it can collect levies. During that time, substantial weathertight remediation works have been undertaken at Strata Views.

[5]The Body Corporate seeks:

(a)a declaration that two mortgages registered against Unit F are time- barred and unenforceable (there are in fact three mortgages);

(b)an order vesting Unit F in the Body Corporate under s 119 of the Insolvency Act 2006; and

(c)an order that the two mortgages registered against Unit F are discharged under s 105 of the Land Transfer Act 2017 because they are time-barred and unenforceable.

1 Ownerless Land vests in the Crown, described as being bona vacantia or through escheat. Treasury administers ownerless property by default.

[6] If successful, the Body Corporate will become the registered proprietor of Unit F. It then intends to clean up the premises, sell it, and arrange repayment of the levies advanced by its other owners and repayment of outstanding rates to the Tauranga City Council.

[7] Mr Donovan has brought a counterclaim, contending that Unit F should be vested in him under s 119 of the Insolvency Act. He consents to the discharge of the two mortgages. He also says that a third mortgage (described…

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.

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Details

Case: [2024] NZHC 233
Decision Date: 16 December 2024

CaseChat Overview and Summary

The case of Body Corporate 49407 v Donovan involved a dispute concerning Unit F, located in a unit title complex named Strata Views in Tauranga. The plaintiff, Body Corporate 49407, sought a declaration that two mortgages registered against Unit F were time-barred and unenforceable, an order vesting Unit F in the Body Corporate under the Insolvency Act 2006, and an order discharging the mortgages under the Land Transfer Act 2017. The first defendant, Mr Michael Donovan, counterclaimed for vesting of the property in his name and consent to the discharge of all three mortgages. The central issue was the determination of the competing vesting applications under the Insolvency Act.

The court found that the two Bolton mortgages were time-barred and unenforceable under the Limitation Act 1950 and/or the Limitation Act 2010. The court rejected Mr Donovan's argument that the Body Corporate lacked standing to apply for a vesting order, holding that the Body Corporate had standing to exercise its powers and duties, including the right to seek a vesting order. The court concluded that it was fair to vest the property in the Body Corporate, considering the substantial financial loss it had suffered due to the disclaimer by the Official Assignee and the need to recover costs from a unit that had not contributed to the repair expenses. The court also ordered the discharge of all three mortgages under the Land Transfer Act, ensuring that the property would be free of encumbrances upon sale.

The final orders included declarations that the two Bolton mortgages were time-barred and unenforceable, an order vesting Unit F in Body Corporate 49407, and orders discharging all three mortgages. The court also addressed the issue of costs, indicating that the plaintiff was entitled to costs on a 2B basis plus disbursements.

Orders