Forrester v Merwald
[2021] NZHC 2659
•6 October 2021
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE
CIV-2021-463-58
[2021] NZHC 2659
UNDER the Residential Tenancies Act 1986 as
incorporated by the Unit Titles Act 2010
IN THE MATTER
of an appeal from the decision of the District Court on 12 July 2021 in CIV-2021-063-82
BETWEEN
JESHEL FORRESTER
First Appellant
TALEI SHIRLEY
Second AppellantAND
VIRGINIA MERWALD
First Respondent
PETER SARGENT
Second Respondent
Hearing: 5 October 2021 Appearances:
Appellants in person Respondents in person
Judgment:
6 October 2021
JUDGMENT OF LANG J
[on appeal on questions of law]
This judgment was delivered by me on 6 October 2021 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date……………
FORRESTER v MERWALD [2021] NZHC 2659 [6 October 2021]
[1] The parties to this proceeding own two of the units in a five unit mixed residential and commercial complex situated in Rotorua. The administration of the complex is undertaken through a body corporate constituted under the Unit Titles Act 2010 (the UTA).
[2] In recent years there has been tension between some of the unit owners in the complex. This led to four of the unit owners, including the two respondents in the present appeal, filing a proceeding under the Residential Tenancies Act 1986 (the RTA) in the Tenancy Tribunal (the Tribunal). In a decision delivered on 27 January 2021 the Tribunal made factual findings and issued two declarations upholding arguments advanced by the applicants in the proceeding before it.1 The Tribunal made no order as to costs.
[3] Ms Merwald and Mr Sargent appealed to the District Court against the Tribunal’s decision. They contended they had been wholly successful in the proceeding before the Tribunal. They said this entitled them to an order under s 102(4) of the RTA requiring the appellants, Mr Forrester and Ms Shirley, to refund them the filing fee they paid when they lodged their claim with the Tribunal.
[4] In a decision delivered on 12 July 2021 Judge P W Cooper allowed the appeal.2 He ordered Mr Forrester and Ms Shirley to pay Mr Sargent and Ms Merwald the sum of $3300 to reimburse them for the filing fee they had paid.
[5]Mr Forrester and Ms Shirley appeal against the Judge’s decision.
The appeal
[6]Section 119 of the RTA provides as follows:
119 Appeal on questions of law to High Court
(1)Any party to an appeal under section 117 of this Act who is dissatisfied with the decision of the District Court Judge as being erroneous in point of law may appeal to the High Court on that question of law.
1 Merwald v Forrester [2021] NZTT Rotorua 9024102.
2 Merwald v Forrester [2021] NZDC 13704.
(2)Every appeal under this section shall be dealt with in accordance with the High Court Rules 2016.
[7] The appellants advance the following questions of law for determination by this Court:
(a)Did the Judge err in law by finding that Ms Merwald and Mr Sargent were wholly successful in the proceeding before the Tribunal when the Tribunal declined to make the declaratory orders they sought?
(b)Did the Judge err in law by making an order that exceeded the powers vested in the District Court by s 118 of the RTA?
Background
[8] The body corporate planned to hold its Annual General Meeting (AGM) of unit owners in April 2020 but this was postponed due to COVID-19 restrictions. On 1 July 2020 Mr Forrester sent the other unit owners a notice that an AGM would be held on 24 July 2020. Subsequently, on 7 July 2020, he advised the unit owners that he considered the AGM should be postponed. Three of the unit owners, Ms Merwald, Mr Liang and Ms Mo, opposed any postponement and contended the meeting should proceed as scheduled.
[9] Mr Forrester and Ms Shirley duly attended the meeting on 24 July 2020 but none of the other unit owners was present. Mr Forrester and Ms Shirley went ahead with the meeting and purported to pass several resolutions. These included a resolution appointing Mr Forrester as chairperson of the body corporate.
[10] This series of events led Mr Sargent, Ms Merwald, Mr Liang and Ms Mo to institute the proceeding before the Tribunal. They contended the meeting had not been validly convened, and that any resolutions passed at the meeting were invalid and of no legal effect.
The Judge’s decision
[11] After summarising the background and the arguments advanced by the parties the Judge reached the following conclusion:
[11]Section 102(4) of the Residential Tenancies Act is quite explicit.
(4)If the applicant –
(a)has been wholly successful in his or her claim, the Tribunal must order that the respondent pay the applicant the filing fee paid for the application: (My emphasis)
(b)has been partly successful in her or her claim, the Tribunal may order that the respondent pay the applicant the filing fee paid for the application. (My emphasis)
[12] Although the Tribunal did not think it appropriate to make any substantive orders, the appellants nevertheless were wholly successful in their application:
(a)The purported AGM was invalid.
(b) Mr Forrester was not validly nominated as chairman. (c ) None of the resolutions passed were valid.
[13] In those circumstances, the appellants can be said to have been “wholly successful in her or her claim”. That being so, the Tribunal has no discretion and must order that the respondents pay the applicants the filing fee for the application. A view that it may have been preferable for the Body Corporate to bear that cost cannot be maintained in light of the mandatory requirement that it is the respondent to the application who must pay the filing fee if the application is wholly successful.
[12] The Judge therefore allowed the appeal and directed Mr Forrester and Ms Shirley to pay Mr Sargent and Ms Merwald the sum of $3300 being the filing fee they had paid to the Tribunal.
Were Mr Sargent and Ms Merwald wholly successful in their claim before the Tribunal?
[13] The claim that Mr Sargent and Ms Merwald filed in the Tribunal sought the following relief:
“An order that … the meeting arranged by Jeshel Forrester and Talei Shirley [was] unlawful and that all Resolutions passed by themselves [were] invalid and have no legal standing.”
[14] There is no dispute that the Tribunal accepted each of the substantive arguments Mr Sargent and Ms Merwald advanced in support of their claim. These can be summarised as follows:
(a)The manner in which Mr Forrester purported to convene the AGM on
24 July 2020 was invalid because it did not comply with the requirements of the UTA and the Unit Title Regulations 2011 (the UTR).
(b)Resolutions purportedly passed at the AGM were also invalid because Mr Forrester and Ms Shirley did not comprise a quorum of 25 per cent of unit owners as required by s 95(1) of the UTA. This finding involved the Tribunal upholding an argument by Mr Sargent and Ms Merwald that two of the units, GW and GX, were separate units for voting purposes rather than a single unit as Mr Forrester and Ms Shirley had argued. Section 95(2) prohibits any business being transacted at an AGM of the body corporate unless a quorum is present at the time.
(c)The resolution purporting to appoint Mr Forrester as chairperson was also invalid because his nomination contravened reg 10(2) of the UTR. The invalidity flowed from the fact that Ms Shirley had nominated him as chairperson in circumstances where she and Mr Forrester jointly own one of the units in the complex. Regulation 10(2) requires the chairperson to be nominated by “another unit owner”.
[15] The Tribunal considered, however, that Mr Sargent and Ms Merwald ought to have named the body corporate as respondent to the proceeding rather than Mr Forrester and Ms Shirley.3 This prompted the Tribunal to conclude:
78. Because all members of the body corporate were either present or represented at the hearings, I am satisfied that it is reasonable for the Tribunal
3 Merwald v Forrester, above n 1, at 76.
to make factual findings about the matters in dispute and limited declaratory orders. There is no difficulty in making a declaration about the status of GW and GX, as this is a disputed matter between the owners that has not involved the body corporate. It is also appropriate to make a declaration about the status of the meeting.
79. However, I do not think it appropriate to make any substantive orders, such as an order setting aside the resolutions passed at an invalid meeting. For the same reason I cannot make any order about costs. Had the Body Corporate been named as a respondent, I would have ordered it to reimburse the applicants’ filing fee. In that way, all the members would have borne a share of the cost.
[16] The Tribunal gave effect to its conclusion by making the following formal declarations and order:
DECLARATION AND ORDER
1.The meeting of body corporate members held on 24 July 2020 was not a valid annual general meeting of Body Corporate 73052.
2.Units GW and GX on deposited plan South Auckland 73052 (Identifiers SA66C/3 and SA66C/4) are separate principal units.
3.There is no order as to costs.
[17] Mr Forrester contends Mr Sargent and Ms Merwald did not wholly succeed because the Tribunal declined to make the order they sought. He therefore contends the Judge had no jurisdiction to make an order under s 102(4).
[18] The issue of whether Mr Sargent and Ms Merwald wholly succeeded must be determined having regard to all relevant circumstances. The first of these is that the Tribunal accepted the arguments advanced by Mr Sargent and Ms Merwald on each of the substantive issues it needed to decide. As a result, Mr Sargent and Ms Merwald succeeded in establishing that the resolutions passed at the meeting were invalid on three separate grounds. They also obtained a formal declaration that the meeting on 24 July 2020 was not a valid AGM of the body corporate.
[19] The fact that the Tribunal did not go on to make an order setting aside the resolutions is of no moment. Mr Sargent and Ms Merwald had not sought such an order and it would not have been appropriate in any event. The fact that the resolutions were invalid means they were of no legal effect from the outset. As a result, Mr Sargent and Ms Merwald needed only the declaration that the Tribunal made.
[20] Like the Judge, I consider these factors demonstrate quite clearly that Mr Sargent and Ms Merwald were wholly successful in their claim against Mr Forrester and Ms Shirley. The Tribunal’s findings and declaration effectively determined the substantive issues raised in the proceeding. No further order was required.
[21]This ground of appeal fails as a result.
Did the Judge exceed the powers vested in the District Court by s 118 of the RTA?
[22]Section 118 of the RTA provides:
118 Powers of District Court Judge on appeal
(1)On the hearing of an appeal under section 117 of this Act, a District Court Judge may—
(a)Quash the order of the Tribunal and order a rehearing of the claim by the Tribunal on such terms as the Judge thinks fit; or
(b)Quash the order, and substitute for it any other order or orders that the Tribunal could have made in respect of the original proceedings; or
(c)Dismiss the appeal.
(2)In ordering a rehearing under subsection (1)(a) of this section, the District Court Judge may give to the Tribunal such directions as the Judge thinks fit as to the conduct of the rehearing.
(3)The procedure at an appeal under this section shall be such as the Judge may determine.
[23] Mr Forrester contends that none of the forms of relief prescribed by s 118 extends to the situation that has arisen in the present case. He points out that the Tribunal declined to make an order for costs so the Judge could not quash any order under either s 118(1)(a) or (b). The only other alternative was to dismiss the appeal under s 118(1)(c). Mr Forrester submits this means the Judge had no power to make an order under s 102(4) requiring him and Ms Shirley to reimburse Mr Sargent and Ms Merwald for the filing fee.
[24] This submission needs to be measured against the fact that s 117(1) of the RTA gives any party to proceedings before the Tribunal who is dissatisfied with the Tribunal’s decision the right to appeal to the District Court. This is a very wide right
of appeal and it would obviously extend to any decision not to make an order under s 102(4). It would be a remarkable and concerning outcome if the District Court had no power to grant relief under s 118 in circumstances where an appellant is able to establish that the Tribunal wrongly failed to make an order in the appellant’s favour.
[25] I consider the answer to this issue lies in the fact that a decision declining to make an award under s 102(4) constitutes an order that the respondent is not required to reimburse the filing fee paid by the successful applicant. This is reflected in the fact that the decision not to make an order in the present case was included in the formal orders and declarations made by the Tribunal.4
[26] It follows that s 118(1)(b) gave the Judge the power to quash the order made by the Tribunal and substitute his own order under s 102(4).
[27]This ground of appeal also fails.
Result
[28]The appeal is dismissed.
Costs
[29] The respondents are self-represented so there will be no order as to costs. If the respondents have incurred any filing fees they will be entitled to recover these from Mr Forrester and Ms Shirley.
Lang J
4 Set out above at [16].
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