Hill v Body Corporate 372185
[2024] NZHC 600
•19 March 2024
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE
CIV-2023-470-111
[2024] NZHC 600
BETWEEN JENNIFER MARLENE HILL
Plaintiff
AND
BODY CORPORATE 372185
Defendant
Hearing: 27 February 2024 Counsel:
J W McDougall / M A Chester for the Plaintiff A J Lloyd / J J K Spring for the Defendant
Judgment:
19 March 2024
JUDGMENT OF ASSOCIATE JUDGE BRITTAIN
This judgment was delivered by me on 19 March 2024 at 4 pm Pursuant to Rule 11.5 of the High Court Rules.
…………………..
Registrar/Deputy Registrar
Solicitors:
Holland Beckett Law, Tauranga MinterEllisonRuddWatts, Auckland
HILL v BODY CORPORATE 372185 [2024] NZHC 600 [19 March 2024]
Introduction
[1] The plaintiff, Jennifer Hill, is one of the lessees of a registered leasehold interest in unit 12 in a unit title development in Tauranga known as Trinity Wharf. The defendant is the body corporate of Trinity Wharf.
[2] The leased unit is a stratum in leasehold under the Unit Titles Act 2010 (UTA). The registered owner of the stratum in leasehold interest, and the lessor to Ms Hill, is Trinity Wharf Limited (TWL). TWL is not a party to this proceeding.
[3] Ms Hill pleads that she is the authorised representative of seven other lessees of units, and that those lessees have the same interest as Ms Hill in the subject matter of this proceeding.
[4] Ms Hill and the other lessees that she represents take issue with resolutions purportedly passed by the body corporate at, or following, the annual general meeting held on 13 April 2023. In particular, the group of lessees seek to challenge resolutions: not to form a body corporate committee; confirming that the chairperson of the body corporate continues to be subject to the duties specified in reg 11 of the Unit Titles Regulations 2011; and approving the operating budget of the body corporate for the year ended 30 June 2024.
[5] If Ms Hill is unsuccessful in overturning the budget resolution, then Ms Hill seeks minority relief under s 210 of the UTA.
[6] The body corporate has filed a protest to jurisdiction, and now seeks an order dismissing the proceeding on the ground that the Court has no jurisdiction to hear and determine it.1
[7] The body corporate argues that the Tenancy Tribunal (the Tribunal) has exclusive jurisdiction to hear Ms Hill’s claim, and that Ms Hill and the other lessees do not have standing to apply for minority relief under s 210 of the UTA because they
1 High Court Rules 2016, r 5.49(3).
were not entitled to vote in their own right on the budget resolution. Rather, they were only able to vote as agents of TWL as the registered owner of the units.
[8] The body corporate’s application raises novel issues regarding the jurisdiction of the Tribunal and the High Court conferred by ss 171 and 173 of the UTA.
The structure of the unit titles and leases
[9] This proceeding is not the first time that a group of lessees has filed a proceeding in this Court raising issues regarding the conduct of the body corporate. In John Price Builders Ltd v Trinity Wharf Limited,2 Associate Judge Doogue declined to strike out a claim by some of the then lessees for declaratory relief in respect of body corporate issues arising under the Unit Titles Act 1972 (the 1972 Act). The 1972 Act did not contain provisions conferring jurisdiction on the Tribunal or this Court in respect of unit title disputes, and the issue of jurisdiction did not arise.
[10] I adopt Associate Judge Doogue’s summary of the development of Trinity Wharf:
[1] The substantive proceeding in this case is concerned with apartment and hotel development which was carried out by the respondents at Trinity Wharf in Tauranga. The applicants have the right to possession of some apartments which are part of the development. The development was created under the Unit Titles Act 1972 (the Act). There are 16 units — 15 apartments and a hotel being counted as 1 unit.
[2] The complex was the result of a development carried out by first respondent, Trinity Wharf Ltd (“Trinity”). Trinity owned the leasehold interest in the underlying land, pursuant to a ground lease between it and the owner (the Otamataha Trust) of the underlying land. Trinity subdivided that leasehold interest — as it is permitted to do pursuant to Part 2 of the Act — into 16 strata titles (the technical name for each being a “stratum in leasehold” estate), each being a “Unit” under the Act. It also granted, to itself, registered leases in respect of the majority of those titles (the technical name for each being a “leasehold in stratum in leasehold” estate). For convenience, the former will be referred to herein as “the Units”, and the latter as “the Leases”. Trinity owns all 16 Units. The applicants are the current owners of 11 of the Leases.
2 John Price Builders Ltd v Trinity Wharf Ltd HC Tauranga CIV-210-470-654, 24 June 2011.
[11] Section 76 of the UTA provides that the members of a body corporate are the owners of all the units in the unit plan. At present, TWL continues to own all 16 principal units. Therefore, TWL is the sole member of the body corporate.
[12] TWL is the lessor and lessee of units 9, 10, 11 and 17, which comprise the hotel and apartments that form part of the hotel business. The leasehold interests in units 1, 2, 3, 4, 5, 6, 7, 8, 12, 14, 15 and 16 (there being no unit 13) have been sold and the lessees include Ms Hill and the seven other lessees that she represents.
[13] There is no provision in the UTA enabling lessees of principal units to become members of the body corporate, although s 105(4)(c) of the UTA provides that the body corporate operational rules are binding on any person who occupies a principal unit.
[14] Under cl 8.1 of the registered leases, TWL appoints each lessee as its attorney to vote on its behalf as proprietor of the unit at all meetings of the body corporate, and to represent TWL on any committee of owners appointed by the body corporate.
[15] The parties agree that the lease of unit 12 is typical of all leases. Other relevant terms of the registered lease of unit 12 are:
(a)The term of the lease is 21 years, commencing on 16 March 2014. The commencing rent was $4,704.92 including GST, which was based on unit entitlements under the UTA.
(b)Clause 3.1 requires the lessee to pay to the lessor a unit entitlement proportion of insurance and all other expenses relating to the body corporate.
(c)Clause 5.1 requires the lessee to comply with all obligations of the lessor owed to the body corporate, including complying with the body corporate rules.
(d)In cl 5.2, the lessee acknowledges that the body corporate can enforce the body corporate rules against the lessee as if they are the registered proprietor.
The operation of the Trinity Wharf body corporate and the 2023 AGM
[16] TWL accepts that Trinity Wharf has not operated in strict accordance with the terms of the leases and the provisions of the UTA. The evidence confirms the AGM on 13 April 2023 was conducted as if the lessees were unit owners.
[17] Ms Hill’s evidence is that the body corporate’s administrator gave email notice of its 2023 AGM to the lessees, referring to them as “owners”. The email includes a form for proxy and/or postal votes on behalf of the lessees, as if they are unit owners.
[18] The agenda that was sent to the lessees for the AGM stated that all voters, which was a reference to the lessees, “must be financial s 96(3)”. This is a reference to s 96(3) of the UTA, which prescribes eligibility criteria for owners voting at a general meeting of a body corporate.
[19] Ms Hill attended the AGM together with her partner, Phillip Gregg, a co-owner of the lease of unit 12. Mr Gregg had been nominated by the lessee of unit 6 to be his proxy.
[20] It appears that the AGM proceeded smoothly through its opening and motions 1 to 8. The agenda records motion 9, requiring a special resolution, as follows:
As there have been NO nominations for the Committee the body corporate agrees to Not Form a Body corporate Committee under Section 112(2) of the Unit Title’s Act, as of the date following the date of this resolution.
[21] Ms Hill says that three lessees were nominated for the committee, but the body corporate advised the lessees that they could not be on the committee because they are not owners of a principal unit.
[22] A special resolution requires a 75% majority of votes, with one vote per unit.3 An eligible voter who votes on a motion can request a poll, which then requires a 75% majority of the ownership interests represented by those voting.4
[23] Ms Hill says that motion 9 was not passed, with 8 votes against, 7 votes for and 1 abstention, and no valid poll was called.
[24]Motion 10 was next, recorded in the agenda as requiring a special resolution:
That
i. The body corporate delegates any of its duties or powers, either generally or specifically under s 108(1) of the Unit Titles Act 2010, excluding the powers and duties set out in s 108(2) to the Committee, and
ii. where a committee is not elected, to the chairperson and one other member of the Body corporate, until otherwise revoked at a general meeting, and
iii. The Chairperson remains responsible for the powers and duties under reg 11, and where an administration company has been contracted, they will assist the Chairperson/Committee and body corporate to fulfil their duties and obligations under the Unit Titles Act 2010 and its Regulations 2011 in association with the terms and services of the Administration Agreement, and
iv. This motion serves as evidence of the body corporate Chairperson to perform these delegated duties and shall report on this delegation no less frequently than each AGM of the Body corporate.
[25] Ms Hill says that motion 10 was not passed, with 8 votes against, 7 votes for and 1 abstention. Again, she says that there was no poll called.
[26]The other motion that is in issue is motion 15, as recorded in the agenda:
Resolved that in accordance with (s 121) of the Unit Titles Act 2010, for the year ending 30 June 2024, that the [o]perating budget, set at $468,170.75
inclusive of GST, is to be raised by Utility Interest and payable in One (1) lump payment due on 30 June 2023; - OR
by four (4) Quarterly payments due on 30 June 2023, 30 September 2023, 30
December 2023, final payment 30 March 2024. And,
The chair/committee are authorised under Regulation 17 of the Unit Titles Regulation 2011, to enter into all necessary obligations to give effect to all expenditure provided for, within the budget.
3 Unit Titles Act 2010, s 98(4).
4 Section 100.
[27] Ms Hill says that the lessees did not agree with the draft budget, and motion 15 was not passed. General discussion at the AGM was that the draft budget was to be revised and voted on in accordance with the procedure under s 104 of the UTA, which prescribes criteria for the passing of a special resolution without a general meeting.
[28] On 4 May 2023, the body corporate’s administrator sent an email to the lessees attaching the draft minutes from the AGM prepared by the administrator. The draft minutes record attendees, listing those lessees that attended as “owners”.
[29] The draft minutes record that TWL’s director, Jeff Payne, had requested a poll at the AGM and that motions 9 and 10 had passed on a poll vote. Ms Hill takes issue with the draft minutes in respect of motions 9 and 10, which she describes as a “manipulation of votes and resolutions after the conclusion of the AGM”.
[30] On 21 June 2023, the body corporate invoiced the lessees directly for “Your 2023 - 2024 Annual Levy”. On 23 June 2023, the body corporate emailed the lessees a resolution proposed to be passed by postal vote without a general meeting, including the following budget resolution:
That in accordance with (s 121) of the Unit Titles Act 2010, for the year ending 30 June 2024, that the Operating budget, set at $582,088.66 inclusive of GST, is to be raised by Utility Interest and payable in One (1) lump payment due on 30 June 2023; - OR
by four (4) Quarterly payments due on 30 June 2023, 30 September 2023,
30 December 2023, final payment 30 March 2024. AND,
The chair/committee are authorised under Regulation 17 of the Unit Titles Regulation 2011, to enter into all necessary obligations to give effect to all expenditure provided for, within the budget.
[31] The accompanying email included a “Current Body Corporate Register of Owners” of the units, listing the lessee for each unit as the owner.
[32] On 17 July 2023, the body corporate notified the lessees that the budget resolution had passed. The covering email from the administrator stated:
The postal vote result was reached as follows:
From a possible sixteen votes that might be cast, one was determined as invalid as the Lessee was not financial; one lessee voted to abstain; two did not submit the voting form and were thus counted as being against the resolution; and one submitted form was not signed and could thus be determined as invalid. Of the remaining 11 votes that were received, seven voted in favour of the resolution and four against. Thus, the total votes for the resolution were 7, and 6 against.
[33] Ms Hill and the lessees that she represents seek to challenge the purported passing of resolutions 9 and 10 at the AGM, and the budget resolution, claiming that they are invalid.
Jurisdiction under the UTA
The legislation
[34]Sections 171–173 of the UTA relevantly provide:
171Jurisdiction of Tenancy Tribunals
(1)Except as provided in this section, a Tenancy Tribunal (a Tribunal) constituted under section 67 of the Residential Tenancies Act 1986 has jurisdiction to hear and determine all disputes arising between any persons of the kind listed in subsection (2) in relation to a unit title development (a unit title dispute).
…
(1A)To avoid doubt, and without limiting subsection (1), a unit title dispute may relate to a claim for unpaid levies.
(2)The persons mentioned in subsection (1) are—
(a)the owner of a principal unit or a former owner of a principal unit:
(b)a future development unit owner:
(c)an occupier of a future development unit:
(d)a body corporate:
(da) a body corporate manager:
(e)an administrator:
(f)a registered valuer:
(g)an occupier of a principal unit:
(h)a service contractor:
(ha) a party to a signage agreement:
(i)a prospective buyer of a principal unit:
(j)an original owner:
(k)a lessor of base land:
(l)the chief executive.
(3)Any person listed in subsection (2) may, by notice in writing to the Tribunal, appoint an agent to act on his or her or its behalf in relation to a dispute.
(3A) Without limiting the provisions of the Residential Tenancies Act 1986 that apply to a Tenancy Tribunal by virtue of section 176 of this Act, a Tenancy Tribunal may, in relation to a unit title dispute within its jurisdiction under this section, do any of the following:
(a)order any party to do anything necessary to remedy a breach by that party of an obligation arising under this Act, the body corporate operational rules, or any agreement that is binding on the party and relevant to the unit title dispute:
(b)order any party to refrain from doing anything that would constitute a breach of an obligation arising under this Act, the body corporate operational rules, or any agreement that is binding on the party and relevant to the unit title dispute:
(c)make any supplementary orders of a consequential or ancillary nature necessary to exercise or perfect the exercise of any of its jurisdiction.
(4)The Tribunal does not have jurisdiction—
(a)to make an order requiring any person or body to pay any sum, or to do any work to a value, or otherwise incur expenditure, in excess of $100,000; or
(b)to hear a dispute relating to the application of insurance money under section 136(4); or
(c)to hear any dispute relating to the title of land.
(5)Without limiting subsection (4)(c), a dispute relating to the title of land includes—
(a)a redevelopment:
(b)cancellation of a unit plan:
(c)conversion under subpart 3 of this Part.
(6)An order of the Tribunal that exceeds any restriction specified in subsection (4) is of no effect.
(7)Subsection (4)(a) does not prevent a party to a unit title dispute from abandoning as much of the claim as exceeds $100,000 in order to bring the claim within the jurisdiction of the Tribunal; and in any such case, an order of the Tribunal in relation to the claim operates to discharge any person against whom the claim is made and the subsequent order made from liability in respect of the amount abandoned.
(8)The Tribunal has jurisdiction to hear and determine any claim arising under any unit title dispute that is a claim for the balance, not exceeding $100,000, after a set-off or any counterclaim made by the other party to the dispute against the claimant arising out of the same dispute, being a counterclaim admitted by the claimant.
(9)A cause of action must not be divided into 2 or more claims for the purpose of bringing it within the jurisdiction of the Tribunal.
172Jurisdiction of District Court
(1)The District Court has jurisdiction to hear and determine a unit title dispute if the order sought requires any person or body to pay any sum, or to do any work to a value, or otherwise incur expenditure, in excess of $100,000 but not more than $350,000.
(2)In addition to the jurisdiction conferred under subsection (1), the District Court also has jurisdiction to hear and determine a unit title dispute relating to the application of insurance money under section 136(4) for amounts up to and including $50,000.
(3)The District Court does not have jurisdiction to hear any dispute relating to the title of land.
(4)Any provision of any agreement that purports to exclude or limit the jurisdiction of the District Court is of no effect.
173Jurisdiction of High Court
(1)The High Court has jurisdiction to hear and determine any unit title dispute if—
(a)the order sought requires any person or body to pay any sum, or to do any work to a value, or otherwise incur expenditure, in excess of $350,000; or
(b)the dispute relates to the title of land.
(1A) In addition to the jurisdiction conferred under subsection (1), the High Court also has jurisdiction to hear and determine a unit title dispute relating to the application of insurance money under section 136(4) for amounts in excess of $50,000.
(2)Any provision of any agreement that purports to exclude or limit the jurisdiction of the High Court is of no effect.
[35] For the purpose of determining jurisdiction, the parties agree that the dispute between the lessees, who are occupiers of units, and the body corporate falls within the definition of a unit title dispute in s 171(1).
[36] The 1972 Act contained no equivalent provisions, and no provisions conferring jurisdiction on any court or tribunal. The High Court regularly exercised its inherent jurisdiction to determine issues that arose under the 1972 Act.
[37] Sections 171–173 of the UTA all confer jurisdiction in respect of unit title disputes. However, the demarcation of the jurisdiction of the Tribunal and the courts are expressed in different terms. In my analysis that follows, I refer to claims for orders requiring any person or body to pay any sum, or to do any work, or otherwise incur expenditure as “money claims”.
[38] In respect of the Tribunal, s 171(1) confers jurisdiction to hear all unit title disputes, subject to s 171(4) which is expressed as a negative: the Tribunal does not have jurisdiction:
(a)to make an order requiring any person or body to pay any sum, or do any work to a value, or otherwise incur expenditure, in excess of
$100,000; or
(b)to hear a dispute relating to the application of insurance money under section 136(4); or
(c)to hear disputes regarding insurance money or title of land.
[39] Therefore, the Tribunal’s express jurisdiction necessarily includes any non- money claim that does not involve title of land. This is confirmed by the range of orders permitted under s 171(3A).
[40]In respect of the District Court:
(a)s 172(1) is expressed as a positive: the District Court has jurisdiction to hear a unit title dispute if the order sought requires any person or body to pay any sum, or do any work to a value, or otherwise incur expenditure, in excess of $100,000 but not more than $350,000;
(b)s 172(2) is expressed as a positive, conferring jurisdiction in respect of disputes about insurance money up to a value of $50,000;
(c)s 172(3) is expressed as a negative: the District Court does not have jurisdiction to hear disputes relating to the title of land; and
(d)there is no provision that expressly confers jurisdiction on the District Court to hear non-money claims.
[41]In respect of the High Court:
(a)s 173(1)(a) is expressed as a positive: the High Court has jurisdiction to hear a unit title dispute if the order sought requires any person or body to pay any sum, or do any work to a value, or otherwise incur expenditure, in excess of $350,000;
(b)s 173(1)(b) is expressed as a positive: the High Court has jurisdiction to hear disputes relating to the title of land;
(c)s 173(1A) is expressed as a positive, conferring jurisdiction in respect of disputes about insurance money exceeding a value of $50,000; and
(d)there is no provision that expressly confers jurisdiction on the High Court to hear non-money claims other than disputes relating to the title of land.
[42] The interrelationship of ss 171–173 is the nub of the jurisdiction issue in this case. When enacting the UTA, did Parliament intend to remove the High Court’s inherent jurisdiction to hear any unit title dispute, or does the High Court retain concurrent jurisdiction with the Tribunal and the District Court for unit title disputes that would otherwise come within their jurisdiction under ss 171 or 172?
The body corporate’s argument
[43] The body corporate argues that the High Court’s jurisdiction is limited to the express jurisdiction conferred by s 173. The jurisdiction is limited to money claims that exceed $350,000, disputes about insurance money exceeding $50,000 and disputes regarding the title of land. In effect, the body corporate argues that the word “only” must be read into the opening line of s 173(1), so that the High Court only has jurisdiction to hear and determine the types of claims expressly prescribed.
[44] In support of that argument, counsel submitted that the Tribunal has exclusive jurisdiction for disputes within s 171, relying on s 176(1) of the UTA and s 82 of the Residential Tenancies Act 1986 (RTA). The body corporate argues that the High Court does not retain inherent jurisdiction to hear any unit title disputes beyond those prescribed in s 173.
[45] Counsel for the body corporate submitted that the pleadings do not raise a title dispute, and the High Court does not have jurisdiction to hear:
(a)Ms Hill’s causes of action challenging resolutions 9 and 10, which do not include any money claim.
(b)The cause of action challenging the budget resolution, because the money claim falls short of the $350,000 threshold required for the High Court to have jurisdiction. Of the approved budget of $582,088, the total share of all 16 lessees’ is approximately $150,000.
The Tribunal’s jurisdiction
[46] The Tribunal’s jurisdiction can only be conferred by statute. If s 171(4)(a) is given its literal interpretation, then the Tribunal’s jurisdiction to hear a money claim depends on the substance of the order made by the Tribunal, rather than the substance of the order sought.
[47] A literal interpretation of s 171(4)(a) would require that the Tribunal’s jurisdiction is determined at the time that relief is ordered, and not by reference to orders that are declined. That would be inconsistent with s 172(1) and s 173(1), which confer jurisdiction on the courts by reference to the order sought by a party, rather than the order made by the court.
[48] In Boutique Body Corporate Ltd v J Star Property Management Ltd,5 the High Court was required to determine whether the Tribunal had jurisdiction to hear an application by a body corporate under s 140(5) of the UTA seeking an order terminating a service contract. The body corporate had commenced the claim in the Tribunal. The underlying value of the service contract and the indirect financial consequences of termination exceeded the monetary limit of the Tribunal.
[49] Wylie J held that the Tribunal must consider what is sought in an application made to it, and then determine whether it has jurisdiction. Jurisdiction was not to be
5 Boutique Body Corporate Ltd v J Star Property Management Ltd [2012] NZHC 3169, (2012) 14 NZCPR 242.
determined after the matter had been heard by the Tribunal but before compensation was ordered.6 Further, s 171(4) must be read as referring to the making of an order either granting or declining an application. It is not the form but rather the effect of an order that is critical under s 171(4).7
[50] The Judge concluded that Parliament did not intend to give the Tribunal unlimited jurisdiction where the Tribunal’s orders require, as a consequence, the payment of sums or the doing of work or the incurring of expenditure in excess of the monetary limit.8 Wylie J said:9
In my judgment, the reasonable possibility that a party may be required to pay a sum, or do work, or incur expenditure to a value of an excess of $50,000, in the sense I have discussed in [27], suffices to oust the Tribunal’s limited jurisdiction.
[51] Wylie J held that the Tribunal did not have jurisdiction to hear the claim in question. Although orders granting or declining applications to terminate a service contract under s 140(5) do not directly require a person or body to do anything, the consequences of the order could be that the body corporate or the service provider is required to pay a sum, or to do work to a value, or incur expenditure exceeding the monetary limit.10
[52] Although Wylie J’s reasoning was directed to claims under s 140 of the UTA, the reasoning applies to other claims under the UTA. The Tribunal’s jurisdiction should be assessed at the time that a claim is filed based on the relief sought, whether granted or declined, and the money value of a claim may include indirect financial consequences of the relief sought.
[53] The assessment of the value of the financial consequences of the relief sought should be based on the claim as a whole. This is supported by:
6 At [26].
7 At [27].
8 At [27]–[28].
9 At [29].
10 At [34].
(a)s 171(7), which permits a party to abandon “as much of the claim” as exceeds the limit, in order to bring “the claim” within the jurisdiction of the Tribunal;
(b)s 171(8), which provides that the Tribunal should consider the value of any set-off or counterclaim which might reduce the balance of the applicant’s “claim” so that it is within the monetary limit.
(c)s 171(9), which provides that a cause of action may not be divided into two or more claims for the purpose of bringing it within the jurisdiction of the Tribunal.
[54] To summarise, in my view the Tribunal has jurisdiction to hear a unit title dispute:
(a)if it is a money claim and it does not relate to insurance money, and there is no reasonable possibility that the consequences of the order or orders sought, whether granted or declined, could be that a person or body is required to pay a sum, or to do work to a value, or incur expenditure exceeding $100,000; or
(b)if it is a non-money claim that does not involve title of land.
The High Court’s express jurisdiction
[55] It is necessary to consider the High Court’s express jurisdiction under s 173 of the UTA. The jurisdiction in respect of insurance money in excess of $50,000 and title of land is uncontroversial. There is no express jurisdiction to hear non-money claims other than disputes relating to the title of land.
[56] The approach taken to the jurisdiction of the courts under the UTA to hear money claims should be consistent with the approach to the Tribunal’s jurisdiction. In my view, the financial consequences of an order sought, whether the order is granted or not, should be taken into account when determining the High Court’s jurisdiction under s 173(1)(a).
[57] On that basis, the High Court has express jurisdiction to determine a unit title dispute if there is a reasonable possibility that the consequences of the order or orders sought, whether granted or declined, could be that a person or body is required to pay a sum, or to do work to a value, or incur expenditure exceeding $350,000.
Does the High Court have inherent jurisdiction beyond its express jurisdiction?
[58] The issue is whether the High Court has inherent and concurrent jurisdiction to hear unit title disputes that otherwise fall within the express jurisdiction of the Tribunal or the District Court.
[59] If the High Court’s jurisdiction is limited to its express jurisdiction, the Tribunal would be left with exclusive jurisdiction to hear:
(a)all non-money claims other than disputes relating to the title of land; and
(b)money claims up to $100,000.
The Tribunal’s exclusive jurisdiction to hear residential tenancy disputes under the RTA
[60]Section 82 of the RTA relevantly provides:
82 Exclusion of other jurisdictions
(1)Notwithstanding any other enactment or rule of law to the contrary, no court or other body shall have originating jurisdiction in respect of any matter that is within the jurisdiction of the Tribunal unless—
(a)proceedings in respect of that matter were commenced before that court or other body before the commencement of this Act; or
(b)an order is made under section 83(2).
[61] The Tribunal has exclusive jurisdiction under s 82(1) of the RTA to determine matters which concern a residential tenancy, but it does not have jurisdiction to require a party to pay a sum in excess of the monetary limit.11 No other court has any
11 Cui v Shuang [2018] NZHC 2810 at [24]. See also the authorities discussed by Wylie J at [23].
originating jurisdiction in respect of those matters, subject to the provisos in s 82(1)(a) and (b).12
[62] Section 82(b) refers to s 83(2), which empowers the Tribunal to transfer a claim to the District Court. There is no power conferred on the Tribunal to transfer a proceeding to the High Court.
[63] In Boutique Body Corporate, Wylie J summarised the rights of appeal in respect of a Tribunal decision:13
… any party to any proceedings in the Tribunal who is dissatisfied with the decision of that Tribunal, may appeal to the District Court, (unless the appeal relates to an interim order, or the amount involved is less than $1,000). The District Court has jurisdiction to hear and determine appeals under s 117 notwithstanding that any limits imposed on the Court in its ordinary civil jurisdiction by ss 29 to 34 of the District Courts Act 1947. Section 118 gives the District Court Judge on appeal the power to quash the order of the Tribunal, or dismiss the appeal. Section 119 of the Residential Tenancies Act gives a further right of appeal from the District Court to the High Court, but only on a point of law. Section 120 allows a further appeal to the Court of Appeal, but only with the leave of the High Court, or special leave from the Court of Appeal. It follows that there is no general right of appeal to this Court from a Tenancy Tribunal, pursuant to the Residential Tenancies Act provisions, which are imported into the Unit Titles Act.
[64] Under s 103 of the RTA, the Tribunal may state a case for the opinion of the High Court on any question as to the jurisdiction of the Tribunal or any question of law.
Does the Tribunal’s exclusive jurisdiction extend to unit title disputes?
[65] The statutory regime of the UTA is different. Under the UTA, the Tribunal, District Court and High Court all have originating jurisdiction.
[66]Section 176 of the UTA provides:
176 Certain provisions of Residential Tenancies Act 1986 to apply
(1)Part 3 of the Residential Tenancies Act 1986 applies with all necessary modifications in respect of the hearing and determination of a unit title dispute by a Tenancy Tribunal except the following sections:
12 At [27].
13 Boutique Body Corporate Ltd v J Star Property Management Ltd, above n 5, at [33(c)].
(a)section 77 (which relates to the Tribunal’s jurisdiction):
(aa)section 78A (which relates to orders of the Tribunal relating to unlawful residential premises):
(ab) section 95A(1), (2), (3), and (6) (which relates to orders of the Tribunal for suppression of a party’s name or identifying particulars):
(b)section 106 (which relates to the enforcement of possession orders):
(ba) section 108(2B) (which relates to certain failures to comply with work orders):
(c)section 109 (which relates to unlawful acts and claims for exemplary damages):
(d)sections 109B to 109E (which relate to pecuniary penalties).
[67] Section 176 of the UTA, which applies Part 3 of the RTA to the Tribunal’s UTA jurisdiction, expressly excludes s 77 of the RTA which relates to the Tribunal’s jurisdiction to hear residential tenancy disputes. This is consistent with a parliamentary intention that the Tribunal’s jurisdiction to determine unit title disputes would be governed by ss 171–173 of the UTA, and not the jurisdiction provisions in the RTA.
[68] The Tribunal is a specialist tribunal established to deal with issues arising from residential tenancies. A tenancy adjudicator can be a lawyer, or a lay person with special knowledge or experience of performing or exercising the duties, functions and powers of a tenancy adjudicator.
[69] As Wylie J commented in Boutique Body Corporate, it seems inherently unlikely that Parliament would have entrusted decisions in relation to the determination of unit title service contracts, which could well involve many hundreds of thousands of dollars, to persons who may not have legal qualifications.14
[70] Similarly, it seems unlikely that Parliament would have entrusted decisions in non-money claims requiring the determination of difficult legal issues arising in respect of the interpretation of UTA provisions, which frequently trouble the courts, exclusively to persons who may not have legal qualifications.
14 At [33(b)].
[71] Issues regarding the interpretation of provisions in the UTA can arise in proceedings that include claims that are otherwise within the jurisdiction of the High Court. For example, it is not unusual for such issues to arise in claims involving defective unit title buildings. Parliament cannot have intended that any such issues with no monetary consequences would be carved out of the High Court’s jurisdiction to be determined solely by the Tribunal.
[72] In my view, if Parliament had intended to confer exclusive jurisdiction on the Tribunal for non-money and low value UTA claims, then express and unequivocal words would have been used in s 171.
[73] The regime of ss 171–173 is inconsistent with a conferral of exclusive jurisdiction on the Tribunal in reliance on s 176 of the UTA and s 82(1) of the RTA. I consider that s 82(1) of the RTA does not apply to the Tribunal’s jurisdiction to hear unit title disputes, as a necessary modification under s 176(1) of the UTA.
[74] The retention of the High Court’s inherent jurisdiction avoids difficult demarcation issues that would otherwise arise when it is necessary to determine the value of a claim involving indirect financial consequences.
[75] For example, in the present case, should the value of the claim in respect of the budget resolution be assessed based on:
(a)the total value of the operating budget; or
(b)the complaining lessees’ collective shares; or
(c)the share of an individual lessee?
[76] I find that the Tribunal and the High Court have concurrent jurisdiction to hear unit title disputes involving non-money claims, and claims with a value of less than
$100,000. Similarly, the High Court has concurrent jurisdiction to hear unit title disputes involving money claims of between $100,000 and $350,000, where the District Court also has originating jurisdiction.
[77] Associate Judge Bell reached a similar conclusion in Body Corporate 324525 v Stent,15 although by different reasoning.
[78] I find that this Court does have jurisdiction to hear Ms Hill’s first and second causes of action concerning the validity of resolutions 9, 10 and the budget resolution.
Jurisdiction under the Declaratory Judgments Act 1908
[79] As an alternative, Ms Hill relies on the Court’s jurisdiction under s 3 of the Declaratory Judgments Act 1908 (DJA):
3 Declaratory orders on originating summons
Where any person has done or desires to do any act the validity, legality, or effect of which depends on the construction or validity of any statute, or any regulation made by the Governor-General in Council under statutory authority, or any bylaw made by a local authority, or any deed, will, or document of title, or any agreement made or evidenced by writing, or any memorandum or articles of association of any company or body corporate, or any instrument prescribing the powers of any company or body corporate; or
Where any person claims to have acquired any right under any such statute, regulation, bylaw, deed, will, document of title, agreement, memorandum, articles, or instrument, or to be in any other manner interested in the construction or validity thereof,—
such person may apply to the High Court by originating summons for a declaratory order determining any question as to the construction or validity of such statute, regulation, bylaw, deed, will, document of title, agreement, memorandum, articles, or instrument, or of any part thereof.
[80] Given my finding of jurisdiction under the UTA, I do not need to decide whether jurisdiction exists under the DJA. Nonetheless, I record my view that jurisdiction does not exist under the DJA. I will briefly set out the reasons why.
[81] Declaratory relief intended to have substantive effect is at odds with the non-coercive nature of declaratory relief, and outside s 3 of the DJA and the Court’s inherent declaratory jurisdiction.16 The orders sought in this case are in substance that the resolutions are ultra vires the body corporate’s powers, and an order setting aside those resolutions would be coercive in nature.
15 Body Corporate 324525 v Stent [2016] NZHC 2442, (2016) 18 NZCPR 176.
16 Graham v Auckland Council [2013] NZHC 833, [2013] NZAR 696.
[82] Under s 3 of the DJA, the Court has no jurisdiction to consider whether a declaration should be granted in a case which requires the Court to deal with mixed questions of fact and law.17
[83] The lessees’ claim that resolutions 9 and 10 and the budget resolution are invalid raises issues of fact and law, including:
(a)Was the lessee of unit 6 TWL’s nominated representative for the purpose of voting?
(b)Was the proxy vote cast for unit 6 invalid due to unpaid levies for unit 6?
(c)Did motions 9 and 10 fail to pass at the AGM on an ordinary vote count?
(d)Was there a valid poll?
(e)If so, what was the outcome?
(f)Did the body corporate fail to count valid votes against the budget resolution?
(g)Was the body corporate entitled to conduct a poll vote on the budget resolution?
(h)Did the budget resolution pass?
[84] The lessees’ claims cannot be determined without wide ranging factual findings in respect of the process followed at the AGM, when the subsequent draft minutes were issued, and in respect of the budget resolution. Those matters are not appropriate for declaratory relief under the DJA.
17 Van Kessel v Human Rights Commission [1986] 1 NZLR 628 (HC) at 630–631.
Minority relief
[85] If the budget resolution is upheld, Ms Hill seeks relief under s 210(1) of the UTA, which relevantly provides:
210 General relief for minority where resolution required
(1) In any case where this Act requires a resolution and the resolution is passed, any person who voted against the resolution may apply to the appropriate decision-maker for relief on the grounds that the effect of the resolution would be unjust or inequitable for the minority.
[86] Section 80(4) of the UTA confirms the right of an owner to apply for minority relief under s 210.
[87] Section 96 of the UTA prescribes criteria for eligibility for voting at a general meeting of the body corporate, and for the passing of a resolution without a general meeting. Section 96 relevantly provides:
96 Voting: eligibility
(1)A person eligible to vote at a general meeting of the body corporate (eligible voter) is a person who is of or over the age of 16 years and—
(a)whose name is entered on the register of owners of principal units as—
(i)the owner of a principal unit; or
(ii)the representative of that owner; or
(b)who is the nominee of a company the name of which is entered on the register of owners of principal units as the representative of the owner; or
(c)who is a subsidiary body corporate representative.
…
(3)An eligible voter may not vote unless all body corporate levies and other amounts that are from time to time payable to the body corporate in respect of his or her unit have been paid.
[88]Section 85 of the UTA relevantly provides:
85 Register of unit owners
(1) A body corporate must keep and maintain a register of all owners of principal units and accessory units on the unit plan in accordance with the regulations.
[89] I accept counsel for the body corporate’s submission that the lessees cannot be validly entered on the register of unit owners as the owners of principal units. The registered owner of all units is TWL.
[90] However, s 96 of the UTA does permit a lessee to be entered on the register of owners as the representative of TWL and to exercise TWL’s vote at a meeting. Clause
8.1 of the leases confers rights on each lessee to cast TWL’s vote as the representative of TWL.
[91] The eligibility criteria in s 96(3) applies to the body corporate levies due from TWL. It is irrelevant whether a lessee, as a representative of TWL, has paid outgoings due under the lease. The issue is whether the levies due from TWL, as the owner of the principal unit, have been paid to the body corporate. There is presently no evidence on that issue.
[92] It is arguable that the lessees were entitled to vote on behalf of TWL at the AGM and on the budget resolution. The vote would remain TWL’s.
[93] Counsel for Ms Hill submitted that the words “any person who voted against the resolution” in s 210(1) should be given a broad construction, to include any representative voting on behalf of the owner of a principal unit, in this case the lessees.
[94] That interpretation is untenable with the scheme of the UTA, including s 210(1) when read as a whole. Relief is available to the minority, comprising any registered owner who voted against a resolution, whether that vote was cast by the owner or the owners’ representative.
[95] Therefore, Ms Hill and the other lessees do not have standing under s 210 of the UTA. The cause of action under s 210 of the UTA cannot proceed.
Other procedural issues
[96] Ms Hill has not applied for an order under r 4.24(b) of the High Court Rules 2016 permitting her to sue on behalf of the seven other lessees that she represents. I
have not seen any documents filed in this proceeding confirming the consent of the other lessees to an order for representation.
[97] I direct Ms Hill to file an application under r 4.24(b). The application should be supported by an affidavit from each of the lessees who Ms Hill seeks to represent, confirming that they consent. A formal interlocutory application is not required. The application can be made by a memorandum of counsel.
[98] The body corporate has not taken any issue with the standing of the lessees to seek declarations regarding the body corporate’s exercise of powers under the UTA. Ms Hill has not brought any claim against TWL for breach of the lease. Even so, in my view TWL should be a party to this proceeding.
Result and orders
[99]The defendant’s application for an order dismissing the proceeding is declined.
[100]The plaintiff’s third cause of action is struck out.
[101] The plaintiff shall file and serve an amended statement of claim by 19 April 2024 together with an application under r 4.24 of the High Court Rules 2016.
[102]The defendant shall file and serve its statement of defence by 20 May 2024.
[103] The proceeding is adjourned to the Chambers List on 20 May 2024 at 11.45 am, for review.
Costs
[104] My preliminary view is that costs should follow the event. I consider that Ms Hill is the successful party. A reduction in 2B costs is appropriate to reflect mixed success.
[105]If counsel are unable to agree on costs, then I make the following directions:
(a)the plaintiff may file and serve a memorandum on costs, of no more than four pages, by 5 April 2024;
(b)the defendant may file and serve a memorandum on costs, of no more than four pages, by 12 April 2024;
(c)I will then determine costs on the papers.
Associate Judge Brittain
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