Gu v Body Corporate 211747 - [2018] NZCA 396

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IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA639/2017
[2018] NZCA 396

BETWEEN	HAI MIN GU, JIAN HUA CHEN, QAYIUM ABDUL AND LUBNA ABDUL Appellants
AND	BODY CORPORATE 211747 Respondent

Hearing:	18 June 2018
Court:	Winkelmann, Simon France and Wylie JJ
Counsel:	J Heatlie and J M Wood for Appellants G B Lewis and B J Mills for Respondent
Judgment:	1 October 2018 at 2.30 pm

JUDGMENT OF THE COURT

AThe appeal is allowed in part. The respondent must prepare a further variation to take into account the amounts received by residential owners under the financial assistance package put in place by the Weathertight Homes Resolution Services Act 2006, and refer that varied scheme to the High Court for settlement under s 74(8) of the Unit Titles Act 2010.
BIn all other respects, the appeal is dismissed.
CThe respondent must pay the appellants one set of costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Wylie J)

Introduction

The appellants own four of five commercial units on the ground floor of the Uptown apartment complex, situated at 83–91 New North Road, Auckland. The respondent is the body corporate for the complex.
The complex comprises a four-storey building. There are 60 residential units and five commercial units. Each of the commercial units and six of the residential units are located on the ground floor. On each of levels one to three, there are 18 residential units. Car parking is located in the basement within the building envelope, and also adjoining New North Road but outside the building envelope.
The complex was completed in about 2002. It transpired that it had weathertightness issues that required substantial repair work. In October 2011, the High Court settled a scheme under s 74 of the Unit Titles Act 2010 (the 2010 Act) dealing with the reinstatement of the building to address these issues. In the course of undertaking the weathertightness work, additional defects became apparent. Additional work had to be done, significantly increasing the costs of remediating the building complex. The body corporate sought to vary the settled scheme pursuant to s 74(8) of the 2010 Act to apportion the additional costs between unit owners in accordance with their ownership interests.
In an interim judgment dated 8 September 2017,[1] and in a final judgment dated 11 October 2017,[2] Muir J varied the earlier scheme largely in accordance with the body corporate’s proposals.
[1]Body Corporate 211747 v Gu [2017] NZHC 2191, (2017) 18 NZCPR 814 [Interim judgment].
[2]Body Corporate 211747 v Gu [2017] NZHC 2488 [Final judgment].
The appellants appeal these decisions.

Background

The cost of remediating the weathertightness issues was estimated at approximately $5,000,000 and in October 2011, prior to work being commenced, the body corporate obtained an order from the High Court settling a scheme under s 74 of the 2010 Act.…

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: [2018] NZCA 396
Decision Date: 1 October 2018 at 2.30 pm

CaseChat Overview and Summary

The appeal was brought by the owners of four of the five commercial units on the ground floor of the Uptown apartment complex in Auckland, against the body corporate of the complex, which comprises 60 residential units and five commercial units. The appeal concerned the allocation of costs associated with additional remediation work that was required when the building complex was undergoing repairs to address weathertightness issues. The High Court had previously settled a scheme under s 74 of the Unit Titles Act 2010 that allocated the costs of the original remediation work. In the course of undertaking the weathertightness work, additional defects became apparent that required further work, significantly increasing the costs of remediating the building complex. The body corporate sought to vary the scheme to apportion the additional costs between unit owners in accordance with their ownership interests. The appellants appealed the decisions of the High Court varying the scheme to reflect the body corporate's proposals. The Court allowed the appeal in part, finding that the High Court had adopted the wrong presumption in apportioning the additional costs. The Court found that the additional costs should be apportioned between the owners by reference to their ownership interests, but that the residential owners should first apply the amounts they had received under the financial assistance package to the cost of the additional works necessary to repair the Uptown apartment complex, before contributing to the balance by reference to their respective ownership interests. The Court directed that an amended scheme be prepared and referred to the High Court for settlement under s 74(8) of the Unit Titles Act 2010. The Court ordered that the respondent pay the appellants one set of costs for a standard appeal on a band A basis and usual disbursements.

Orders