Body Corporate 68792 v Memelink

[2015] NZHC 1159

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2015-485-202 [2015] NZHC 1159

IN THE MATTER

of section 141 of the Unit Titles Act 2010

IN THE MATTER

of an originating application to appoint an administrator

BETWEEN

BODY CORPORATE 68792
First Applicant

AND

SYNERGY ENTERPRISES LIMITED, JAMES AND CAROLINE MCKERNAN, STEVEN AND VALDA SCHECKTER AND GEOFFREY ARDEN

Second Applicants

AND

HARRY MEMELINK AND IAN TREVOR NEILL HAMILTON First Respondents

AND

ANTHONY HARRY DE VRIES AND GERALDINE DE VRIES

Second Respondents

AND

CUDBY & MEADE LIMITED Third Respondent

Hearing:	27 May 2015
Counsel:	J K Mahuta-Coyle for Applicants H Memelink in Person A H de Vries in Person
Judgment:	27 May 2015

JUDGMENT (NO 3) OF BROWN J

BODY CORPORATE 68792 v SYNERGY ENTERPRISES LTD & ORS [2015] NZHC 1159 [27 May 2015]

[1]      This proceeding was called this morning in accordance with the direction in para [6] of my Judgment of 20 April 2015.1     The hearing ran until shortly after midday.

[2]      In advance of the hearing the interim administrator filed a second report dated 26 May 2015 which addressed a variety of matters including the outcome of the meeting of stakeholders referred to in para [4] of my Judgment of 28 April 2015.

[3]      In brief, the interim administrator proposed as a possible way forward that the

Court make the following directions:

51.1That an independent chartered accountant be appointed to verify outstanding levies, taking into account the credibility or otherwise of the  invoices  raised  by  [Mr  de Vries]  and  [Mr Memelink].    The independent chartered accountant should not be the existing Body Corporate’s accountants.

51.2That the Body Corporate look to accept the suggestion that NZTA pay  $60,000  toward  the  disbursements  incurred  by  the  owners, noting that one or two owners still are to separately finalise their compensation packages.

51.3That $50,000 from the existing operational account of the Body Corporate with the ANZ bank be split up into a separate maintenance fund account.

51.4That negotiations continue with [Mr Memelink] concerning any settlement  proposals  concerning  the  unpaid  levies  for  Unit 14 regarding his company Cudby & Meade Limited and also through his Link Trust.

51.5That negotiations continue with [Mr de Vries] regarding any revised settlement proposals concerning his unpaid levies.

51.6That [Mr de Vries] be instructed to allow the Body Corporate to proceed with remedying the defects concerning his gutter, by employing Wellington Building Services in accordance with their quote dated 13 May 2015.  There is also the need to obtain a report on what best repairs are separately required to the roof area of Unit

14.2

51.7That suggestions of winding up the Body Corporate or selling the entire  Body  Corporate  development  as  a  development  site  be pursued with all the owners.

1      Body Corporate 68792 v Synergy Enterprises Ltd [2015] NZHC 854.

2      It appears that the correct reference should be to Unit 15.

[4]      As reflected in their memorandum dated 26 May 2015 the applicants sought a continuation of Mr Greenwood’s appointment for a further fortnight during which it was hoped that resolution might be achieved on some aspects of difference.  They indicated that if the matter was not capable of resolution, then at the next call of the matter   they   would   seek   a   hearing   for   the   permanent   appointment   of   the administrator.

[5]      Mr Memelink spoke briefly on a number of matters and advised that he had no objection to a fortnight’s adjournment.   He indicated that he did not see any downside to directions in the nature of that sought in paras 51.1 to 51.5 and 51.7 in the interim administrator’s second report.

[6]      Prior to the hearing Mr de Vries had filed:

(a)       an undated second memorandum filed on 26 May 2015; (b)    a third memorandum dated 26 May 2015; and

(c)      a  lengthy  document  (32  pages)  dated  25 May 2015  which  was described  as  “Report  by  Interim Administrator  and  responded  by Anthony de Vries”;

At the hearing this morning Mr de Vries handed up a further document (18 pages) described as “2nd  Report by Interim Administrator and response to this report by Anthony de Vries”.

[7]      It is apparent from Mr de Vries’ response to the interim administrator’s first report that Mr de Vries continues to be preoccupied with the legality of various past meetings of the Body Corporate.  This is clearly demonstrated in his response which commenced with a list of 36 questions apparently directed to the interim administrator, several of which focussed on the validity of the October 2014 EGM, the 4 December 2014 EGM and the 5 March 2015 EGM.

[8]      The flavour of Mr de Vries’ response to the first report is reflected in the first three paragraphs in the summary on the penultimate page of that response which state:

Hence  my  request  to  the  Court  is  that  the  interim  Administrator  be dismissed, the only course  of  action  is  for  the Judge As  I see  it, is to reconvene the October 2014 EGM with the same voting rights at that particular time.

Please note a new EGM and or AGM due on or before the 1st  July 2015 cannot be held because the BC is in limbo re the pending Court cases and appeal re levies, unless the levies be brought back to pre Dec 2011.

The only way to stop the impending Court cases is to dismiss Mr Dewar as BC representative, work out a settlement with Anthony and Harry and then resolve the October 2014 EGM.

[9]      The same theme was evident in his third memorandum in which he claimed to have “suffered for over 7 years with the unethical rule of the minority group” and said:

Hence I would plead with your Honour to rule re the illegal actions of the illegal BCM and disband the application of appointment of administrator, award costs to those that have suffered most.

[10]     In the course of today’s hearing I explained to Mr Memelink and Mr de Vries that if they wish to challenge the validity of past meetings of the Body Corporate or the legality of steps taken at such meetings, it will be necessary for them to bring a proceeding in the High Court setting out the allegations they make and seeking appropriate relief.  It is not appropriate to attempt to ventilate such issues by way of an objection to the appointment of an administrator under s 141 of the Unit Titles Act 2010,  unless  and  until  the form of that proceeding develops in  the manner foreshadowed in para [9](c) of my Judgment of 28 April 2015.

[11]     As I remarked at the hearing it is also inappropriate to purport to require the interim administrator to provide answers to all such questions which involve issues of law and can only be authoritively resolved by a Court.

[12]     I heard from Mr de Vries at some length on several matters including:

(a)      the issue of the 2011 reassessment of ownership interests and the extent to which that matter is engaged by Mr de Vries’ appeal to this Court   in   CIV   2015-485-295   which   is   due   to   be   heard   on

26 June 2015;

(b)the issue concerning the deficiencies in the roof of Unit 15 (in part the subject of proposed direction 51.6);

(c)      the  extent  of  the  obligations  of  NZTA  (addressed  in  proposed direction 51.2);

(d)      the question of unauthorised payments;

(e)      the issue concerning the terms of engagement of Mr Dewar on behalf of the Body Corporate.

[13]     In the event Mr de Vries also agreed to the adjournment of the proceeding for a further fortnight.

Directions

[14]     The proceeding is adjourned to 10.00 am on Friday, 12 June 2015.  Absent resolution having been achieved, at that point it is very likely that a direction will be made to the effect of that in item 51.1 above.

[15]     I make directions in terms of items 51.3, 51.4, 51.5 and 51.7 above.

[16]     So far as proposed direction 51.6 is concerned, Mr de Vries indicated that he would not resist that direction if the Body Corporate’s funds were being used to meet the cost although he would have preferred to engage his own roofer.  On my reading of the second report the interim administrator was proposing that the Body Corporate should meet the cost of the roof drainage works, the subject of Appendix 5 to the report.

[17]     However Mr de Vries indicated that it was his understanding that the interim administrator contemplated recovering that cost from Mr de Vries.   Having taken instructions  in  the  course  of  the  hearing,  Mr Mahuta-Coyle  confirmed  that  the interim administrator wished to treat that cost as an item to be resolved in the final resolution  of  the  matter.    In  those  circumstances  and  in  view  of  Mr de Vries’ objection, I do not make the proposed direction 51.6.

[18]     Similarly I defer consideration of proposed direction 51.2 until the hearing on

12 June 2015 for the reason that I wish to obtain clarity on the issue of whether an acceptance of the current NZTA proposal could impact on the ability of owners to pursue  NZTA in  their  separate  compensation  arrangements.    Mr Memelink  and Mr de Vries  agreed  to  provide  a  memorandum  within  five  working  days  which records the detail of the claims available against NZTA to which they referred in the course of the hearing today.

[19]     The appointment of the interim administrator is extended pending the further direction of the Court. The interim adminstrator’s second report concluded by noting the fee which he proposes to render.  For the avoidance of doubt I consider that it is appropriate for the interim administrator to be rendering fees on the basis outlined in

the report.

Brown J