Douglas v Body Corporate 102029 - [2024] NZHC 3695

PUBLICATION OF UNREDACTED VERSION OF JUDGMENT OTHER THAN TO THE PARTIES/COUNSEL/COURT APPEALED FROM

PROHIBITED PENDING FURTHER ORDER OF THE COURT

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-002182

[2024] NZHC 3695

UNDER Section 141 of the Unit Titles Act 2010

IN THE MATTER

of an appointment of an administrator

BETWEEN

ANDREW ALEXANDER DOUGLAS, IAN STUART PETRY, LEONARD

ELLSWORTH KURPUIS and JOHN FRANCIS MATHER
Applicants

AND

BODY CORPORATE 102029

First Respondent

Continued overleaf

Hearing: 6 November 2024

Appearances:

I J Stephenson for Applicants J Heatlie for First Respondent

S E Wroe and T Ashley for Second, Third, Fourth and Fifth Respondents

Judgment:

6 December 2024

INTERIM JUDGMENT OF ANDERSON J

[Redacted version]

This judgment was delivered by Justice Anderson on 6 December 2024 at 4.00 pm pursuant to r 11.5 of the High Court Rules 2016.

………………………………
Registrar/Deputy Registrar

DOUGLAS v BODY CORPORATE 102029 [2024] NZHC 3695 [6 December 2024]

MAUD JOHNS LIMITED
Second Respondent

JOANNE LEE UNDERDOWN
Third Respondent

VEER CHARAN
Fourth Respondent

LE MANS PROPERTY LIMITED
Fifth Respondent

TABLE OF CONTENTS

Para No

Background[4]

Statutory context [17]

Scheme of the UTA[17]

Cancellation of a unit title plan[24]

Sale of co-owned land[30]

Scheme for repair under s 74 UTA[33]

Sequence[38]

Material in support of the applications [40]

Respective positions of unit owners[43]

Owners in favour of demolition and rebuild[44]

Owners in favour of selling[45]

Information parameters [48]

Collective sale[49]

Costs of demolition and rebuild[50]

Resale value of units following rebuild[56]

Sale of individual units prior to any rebuild[57]

Analysis of the parameters[58]

Assessment of application under s 188 [62]

What is just and equitable in the context of these circumstances?[72]

Application for sale under s 339 [83]

Result[84]

[1] The Napier Street unit title development comprises seven residential units in Freemans Bay built in 1984. Six of the seven are terraced houses. The seventh is stand-alone, except for a wall adjoining another unit’s garage. The units have significant water ingress and structural issues. Due to a combination of the building issues and ground conditions, everyone agrees it is not economically viable to repair them. The buildings are presently uninsurable and realistically untenantable to third parties.1 There are health risks to occupiers.

[2] The seven owners are deadlocked as to what step to take. Three of the unit holders want to demolish and rebuild. Four do not. They want the unit plan to be cancelled and to sell the property “as is” to a developer. By ownership interest,
41.5 per cent of owners want to demolish and rebuild (“minority”). The remaining
58.5 per cent want to sell (“majority”). The unit holders each have compelling reasons for their individual stances.

[3] This interim decision addresses the issue of whether it is just and equitable that the unit plan be cancelled2 and an order for sale made;3 or whether there should be a scheme to rebuild.4 The detail of any orders will be the subject of a final decision if the orders…

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 3695
Decision Date: 6 December 2024

CaseChat Overview and Summary

In Douglas v Body Corporate 102029, the High Court of New Zealand addressed a dispute among unit owners of a residential unit title development in Freemans Bay, Napier Street. The seven residential units, built in 1984, faced significant water ingress and structural issues, rendering the buildings uninsurable and untenantable. The unit owners were deadlocked over whether to demolish and rebuild or to sell the property "as is" to a developer. Three unit owners (the minority) wanted to demolish and rebuild, while four (the majority) preferred to sell. The minority's application for a scheme to rebuild was opposed by the majority, who applied for cancellation of the unit plan and an order for sale.

The court considered the statutory context under the Unit Titles Act 2010, focusing on the provisions for cancellation of a unit plan and the sale of co-owned land. The court assessed the applications under sections 188 and 339 of the Unit Titles Act 2010 and the Property Law Act 2007, respectively. The court examined the respective positions of the unit owners, including their personal circumstances, financial situations, and reasons for their preferences. It also evaluated the market appraisals, cost estimates, and the potential resale values of the units.

The court found it was just and equitable to cancel the unit plan and order a sale of the base land. It concluded that the rebuild scenario posed greater risks and uncertainties for all owners, and the discord among them made a rebuild unfeasible. The court acknowledged the hardships faced by both factions but determined that a collective sale was the more prudent course given the extensive damage to the buildings and the existing hostility between the owners. The court ordered the parties to propose a process and timetable for next steps to address the consequential issues arising from the interim judgment.

Orders