Body Corporate 86105 v Leslie

[2019] NZHC 1853

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2018-485-483

[2019] NZHC 1853

UNDER

the Unit Titles Act 2010

IN THE MATTER OF

an Originating Application for Orders establishing a Scheme under section 74 of the Unit Titles Act 2010

BETWEEN

BODY CORPORATE 86105

First Applicant

MARTIN PHILLIP CAWLEY AND DIANE MAY CAWLEY

Second Applicants

AND

MARTIN DONALD LESLIE AND LIANG ZHONG

First Respondents

OTHER RESPONDENTS

Listed in Schedule One of the Originating Application

Hearing:	31 October 2019
Appearances:	D R Bigio QC and K L Wendt for Applicants P S J Withnall for 80th–84th Respondents
Judgment:	1 August 2019

JUDGMENT OF CLARK J

[1]                 Body Corporate 86105 (the Body Corporate) has applied for an order to settle a scheme to reinstate a unit title development located at 120 The Terrace, Wellington.

[2]                 The building was built around 1968 as a commercial premises and converted in 1997 mainly to residential apartments. At the time of the conversion, two new levels

BODY CORPORATE 86105 v LESLIE AND ZHONG [2019] NZHC 1853 [1 August 2019]

were added to the top of the building. The new levels 14 and 15 contain five double- storey apartments.  The building now comprises  121 principal units: 95 residential,  3 retail, 1 electricity substation and 22 carparks.

[3]                 The lighter penthouse structure was constructed with timber framing and a cladding/plaster system finish. Weathertightness issues became apparent around 2007 and since that time the Body Corporate has investigated the defects and damage (primarily to the penthouse units) and repair options. Construction plans were developed, building consents were sought and granted and initial remediation work commenced in October 2017. These resolutions were incorporated into a draft scheme. A motion was passed later in November to approve the draft scheme. An originating  application  to  settle  the  scheme  was  filed  in  the  High  Court  on   28 June 2018.

[4]                 The application was opposed by some owners who disagreed with the proposed apportionment of the costs.

[5]                 The differences between the parties have now been resolved. At an Annual General Meeting on 28 May 2019 (the 2019 AGM), owners of 52 units were represented either in person or by proxy or postal vote. A majority voted to accept the cost apportionment proposal which is reflected in the scheme which the Court is now asked to settle.

[6]                 Bearing in mind the process imposed on the Court when considering an application to settle a scheme under the Act, I am in no doubt that it is appropriate to exercise my discretion under s 74 and to make orders settling the proposed scheme:1

(a)The building has been damaged and requires repair to the extent that this Court’s s 74 jurisdiction to settle a scheme is engaged.

(b)The proposed scheme is required to allocate costs for the remediation

1      Tisch v Body Corporate No 318596 [2011] NZCA 420, [2011] 3 NZLR 679 at [35]. While that decision concerned s 48 of the Unit Titles Act 1972, a similar approach is to be followed when considering applications under s 74 of the Unit Titles Act 2010: see for example Body Corporate 312431 v Auckland Council [2015] NZHC 961 at [8]; and Body Corporate 201036 v Westpac Banking Corporation [2014] NZHC 1321 at [8].

project amongst owners and to set out the rights, duties and obligations of owners and the Body Corporate in relation to the remediation project.

(c)The proposed scheme sets out a clear framework for management of the remediation project and cost allocation in sufficient detail for all parties to understand who will be responsible for various aspects of the project and how costs will be allocated.

(d)The terms of the proposed scheme are appropriate, having regard to this unit title development.

(e)The Body Corporate has followed a robust two-stage consultation process, and the majority of owners who attended the 2019 AGM voted in favour of the amended cost apportionment provisions (65 per cent). There is therefore — amongst owners who have participated in the voting process — broad support for the amended cost apportionment.

(f)The proposed scheme meets the requirements for schemes developed by courts over the years.

(g)The evidence satisfies me that all owners were emailed the amended application and affidavit in support, were notified of the 12 July 2019 date for filing any opposition and were notified of the 31 July 2019 hearing date. The 31 July hearing proceeded unopposed.

[7]                 Before making final orders, I wish to record the observation I made to counsel and those attending the hearing on 31 July 2019. A large volume of evidential material is before the Court. It has not been necessary for me to discuss the evidence or the process, including the consultation process that has ultimately led to a resolution and a scheme by which a reinstatement project is to be carried out ultimately benefitting all owners, but I was struck by both the process and outcome. The process and outcome are impressive. The efforts of all who facilitated the remedial resolution are to be commended.

[8]The following orders are made:

(a)I approve the scheme attached as schedule 2 to the amended notice of originating application filed on 20 June 2019. It is hereby settled.

(b)Reflecting ownership changes in the development since party substitution orders were last made by the Court on 23 August 2018 the following further orders are made:

(i)The 62nd respondents are struck out, as they are no longer owners in the development.

(ii)As he is a new owner, David Henry Marment is joined as the new 62nd respondent.

(iii)As it is no longer an owner in the development, the 84th respondent, Tobin on the Terrace Ltd is struck out.

(iv)Helen Joy Tobin, Peter Joy Tobin and Dean Robert Tobin are joined as the new 84th respondents.

Karen Clark J

Solicitors:

Gibson Sheat, Wellington for Applicants