Crayfish Company Ltd HC Auckland CIV 2010-404-3601

[2010] NZHC 1981

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-3601

UNDER  the Unit Titles Act 1972 and the Unit Titles

Amendment Act 1979

CRAYFISH COMPANY LIMITED First Applicant

ANDTE WHAKAITI PAENGA AND DINAH REREHAU PAENGA

Second Applicant

Hearing:         11 November 2010

Counsel:         FF Nizam for the Applicants

Judgment:      11 November 2010

ORAL JUDGMENT OF RODNEY HANSEN J

Solicitors:           Bell gully, P O Box 4199, Auckland 1140 for Applicants

CRAYFISH COMPANY LIMITED AND ANOR HC AK CIV-2010-404-3601  11 November 2010

Introduction

[1]      The first and second applicants (the applicants) apply for an order for the deposit of a 9th  stage substituted proposed unit development plan (the application) under s 58 of the Unit Titles Act 1972 (the Act).

Background

[2]      The applicants own two properties, FDU 4 and FDU 1, at the residential development at 15 Harrison Road, Mt Wellington, Auckland (the development).  The first applicant is the registered proprietor of FDU 4 and the second applicants are the registered proprietors of FDU 1.  The development is a unit title development subject to the Act and the Unit Titles Amendment Act 1979.  FDU 4 and FDU 1 are each physically divided into two separate residential units, but only one certificate of title exists in respect of each of the two properties, FDU 4 and FDU 1.

[3]      The  applicants  seek  this  order  so  as  to  enable  them  to  obtain  separate certificates of title for each of the units which are located on their respective properties.  This, in turn, will make it easier for them to own and potentially sell the units which make up the development.

[4]      In order to obtain two separate certificates of title, the applicants are applying for an order for the deposit of a 9th stage substituted proposed unit development plan (SPUD).   The SPUD includes the following variations from the existing Proposed Unit Development plan:

a)        Principal  Unit  C1  (FDU  1)  will  become  Principal  Unit  C1A  and

Principal Unit C1B; and

b)        Principal  Unit  C4  (FDU  4)  will  become  Principal  Unit  C4A  and

Principal Unit C4B.

[5]      The applicants are required to deposit their SPUD, once obtained, with Land Information New Zealand.   In order to deposit their SPUD, the applicants are required, pursuant to ss 58 and 59 of the Act to obtain either:

a)       Unanimous  consent  from  all  registered  proprietors  of  units  in  the Body Corporate, including registered proprietors’ mortgagees (if any) and caveators (if any); or

b)If unanimous consent cannot be obtained, a Court order for consent on the basis that consent from a majority of the registered proprietors, mortgagees (if any) and caveators (if any), has been obtained.

Attempts to obtain consent

[6]      The  applicants  have  made  exhaustive  attempts  to  obtain  the  unanimous consent of all registered proprietors of units in the body corporate units and the mortgagees and caveators, if any.

[7]      In May 2008, registered proprietors were spoken to by a director of the first applicant.  That was followed up in June 2008 with a letter enclosing the proposed plan and consent forms.  In the letter the applicants explained the reasons for seeking consent and the advantages to the deposit of the plan.  At this stage, more than 50% of the registered proprietors of units in the development consented.

[8]      On 27 August 2008, a letter was sent to the registered proprietors of the units who had not yet consented and in September and October letters were sent to the mortgagees of units, the registered proprietors of which had consented to the deposit of the plan.

[9]      In  April  2009,  it  became  necessary  to  amend  the  plan  when  it  became apparent that the original SPUD attached to the initial consent forms needed to be updated.  The original SPUD included a subdivision of FDU 2 and the transfer of a car parking space from FDU 3 to FDU 2.  The registered proprietors of these units

wished to remove these amendments from the SPUD, as they had decided that they no longer wished to proceed with the subdivision and transfer.

[10]     In August 2009, confirmation of consent to the updated plan was sought by way  of  letter  to  the  registered  proprietors  and  mortgagees  who  had  already consented.  By the conclusion of this process, 19 out of 26 (73.1%) of the registered proprietors of the development and 13 out of 23 (56.5%) of the mortgagees of units in the development had consented to the deposit of the plan.   No objections have been received from any registered proprietor or mortgagee of units in the development.

[11]     Further letters have been sent to all registered proprietors and mortgagees who have not yet provided their consent.  This was followed up with telephone calls. A further two mortgagees consented.

[12]     All registered proprietors and mortgagees have been served with the notice of originating application and the supporting affidavits.   Proof of service of these documents has been filed.  All registered proprietors and registered mortgagees have been notified of today’s hearing.  No objections have been notified.  There has been no  appearance  on  behalf  of  any  registered  proprietor  or  mortgagee  at  today’s hearing.

Legal requirements

[13]     Section 58 of the Unit Titles Act 1972 provides:

58       Application to Court if unanimous resolution not obtained

(1)Where at any meeting held for the purpose a unanimous resolution of the members of the company or of the owners is not obtained for the purposes of section 57 of this Act, but a majority in number of the members or owners are in favour of the resolution, any member of the company or any owner may apply to the Court for an order that all necessary steps be taken in accordance with this Part of this Act by the company or the owners to subdivide, in accordance with this Act and in the manner specified in the application to the Court, the land specified in that application.

(2)       Notice of any such application shall be given to any member of the company or owner who is not a party to the application and to any other person having any registered interest in the land or shares affected by the application.

(3)Any person having or claiming to have an estate or interest in the land or in any part of the land to which the unit plan is intended to relate or in the shares affected by the application shall have the right to be heard in any proceedings before the Court in respect of any such application.

[14]     In Geddes v Devon Park Town Houses Limited[1] Barker J observed that when an application is made under s 58, as an alternative to the unanimous decision of members, it is necessary to enquire into the reasons for the dissent of the minority. He said:[2]

I think it is obvious that the order of the court is regarded by the Act as an alternative  to  the  unanimous  decision  of  the  members,  which  is  the alternative method of achieving conversion.   Accordingly, the court must inquire into the reasons for the dissent of the minority.   The court has jurisdiction only when a majority has passed the resolution, as is the case here.  I have, therefore, found it necessary to examine the reasons for dissent, even although the dissentients did not see fit to take any steps in the proceedings.  Having examined them, I find them to be without substance; I therefore see no reason why the court should refuse to approve the proposal.

[1] Geddes v Devon Park Town Houses Limited [1977] 1 NZLR 53.

[2] At 57.

[15]     As  there  has  been  no  notified  dissent  by  registered  proprietors  and mortgagees who have not consented to the proposal, I draw the obvious inference that their failure to consent to the proposal has derived from apathy rather than opposition to what is being proposed.

[16]     Having regard to the careful steps taken by the applicants to ensure that all interested parties have notice of what is proposed and of today’s hearing, I am satisfied that there is no dissent to the proposal, nor any reason why it should not be approved.

Result

[17]     Leave  is  granted  to  commence  this  proceeding  by  way  of  originating application and an order made granting consent to the deposit of a substituted proposed unit development plan in the form annexed to the application.