Gilbert v Body Corporate 162791 - [2016] NZSC 61

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IN THE SUPREME COURT OF NEW ZEALAND

SC 59/2015
[2016] NZSC 61

BETWEEN

JOHN GILBERT
First Appellant

QSM TRUSTEES LIMITED (IN RECEIVERSHIP AND IN LIQUIDATION)
Second Appellant

AND

BODY CORPORATE 162791
Respondent

Hearing:	8 December 2015
Court:	Elias CJ, William Young, Glazebrook and OʼRegan JJ
Counsel:	D J Chisholm QC and S M Jass for First Appellant J F Anderson and T J G Allan for Respondent
Judgment:	2 June 2016

JUDGMENT OF THE COURT

AThe judgment of the Court of Appeal is affirmed.
BThere is no order for costs.

____________________________________________________________________

REASONS

William Young and Glazebrook JJ	[1]
Elias CJ and O’Regan J	[60]

WILLIAM YOUNG AND GLAZEBROOK JJ

(Given by William Young J)

Table of Contents

Para No
Introduction	[1]
The commercial background to the dispute	[3]
The general position as to the priority of body corporate fees	[12]
The basis of the claim against Mr Gilbert	[23]
Are the levies due under an agreement?	[27]
The bases upon which it might be said that the levies are due under an agreement	[27]
The approach of the High Court and Court of Appeal to the agreement issue	[34]
Our approach	[39]
Does the agreement relate to the use, possession, or occupation by QSMTL of property in receivership?	[45]
Relief under s 32(7)	[48]
Solicitor and own client costs	[55]
An equally divided Court	[59]

Introduction

QSM Trustees Ltd (in liquidation and receivership) (QSMTL) owns five units (units 3A–3E) in a building at 239 Queen Street, Auckland, known as the Mid City complex. Mr John Gilbert is its receiver. Mr Gilbert and QSMTL are the appellants. Under s 80(1)(f) of the Unit Titles Act 2010 (the 2010 Act) unit owners are required to pay body corporate levies as fixed by the body corporate. By reason of s 32(5) of the Receiverships Act 1993, receivers are personally liable:[1]
for rent and any other payments becoming due under an agreement subsisting at the date of the appointment of the receiver relating to the use, possession, or occupation by the grantor of property in receivership.

Under s 32(6) such liability does not commence until 14 days after a receiver is appointed.

[1]Emphasis added.

The respondent is the body corporate of the Mid City complex. It claims that Mr Gilbert is personally liable for body corporate levies from 9 August 2013, being 14 days after his appointment as receiver. A summary judgment application was rejected by Associate Judge Abbott in the High Court.[2] His judgment was reversed by the Court of Appeal which:[3]
(a)held that Mr Gilbert was liable for the levies and interest;
(b)rejected an application by him for relief against that liability;
(c)entered summary judgment accordingly; and
(d)ordered him to pay the body corporate “its reasonable solicitor/client” costs.

Mr Gilbert and QSMTL appeal against the Court of Appeal decision.

The commercial background to the dispute

[2]Body Corporate 162791 v Gilbert [2014] NZHC 567 (Associate Judge Abbott) [Gilbert (HC)].

[3]

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: [2016] NZSC 61
Decision Date: 2 June 2016

CaseChat Overview and Summary

The case of Gilbert v Body Corporate 162791, involves a dispute over whether a receiver, Mr John Gilbert, is personally liable for body corporate levies in relation to five units in the Mid City complex in Auckland, New Zealand. The body corporate claims that Mr Gilbert is liable under section 32(5) of the Receiverships Act 1993, which imposes personal liability on receivers for rent and other payments becoming due under an agreement relating to the use, possession, or occupation by the grantor of property in receivership. The central issue is whether the body corporate levies are payments becoming due under an agreement. The Court of Appeal held that Mr Gilbert was liable, but the Supreme Court was equally divided on the issue. As a result, the judgment of the Court of Appeal was affirmed, and there is no order for costs. The majority view, represented by Elias CJ and O’Regan J, held that the obligation to pay levies is a statutory obligation under the Unit Titles Act 2010, and not a contractual obligation arising from an agreement. The minority view, represented by William Young and Glazebrook JJ, held that there is an implied agreement to meet the costs of services provided by the body corporate.

Orders