Jackson Mews Management Ltd v Menere - [2009] NZCA 563

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IN THE COURT OF APPEAL OF NEW ZEALAND
CA690/2008
[2009] NZCA 563
BETWEENJACKSON MEWS MANAGEMENT LIMITED
Appellant

ANDJANICE MARY MENERE, RUPERT OLIVER SMITH AND KELLEE ANN MENERE
Respondents

Hearing:5 May 2009

Court:Hammond, Chambers and Baragwanath JJ
Counsel:P S J Withnall for Appellant
G W D Manktelow for Respondents

Judgment:27 November 2009 at 3 pm

JUDGMENT OF THE COURT

A        The appeal is allowed.
B        The judgment of the High Court is set aside.
CThe respondents must pay to the appellant costs for a standard appeal on a band A basis, plus usual disbursements.
D        Costs in the High Court are, in the absence of agreement between the parties, to be fixed in that Court.

REASONS

Hammond and Chambers JJ [1]
Baragwanath J [58]
HAMMOND AND CHAMBERS JJ
(Given by Chambers J)

Grumbles in a retirement village
[1]       Jackson Mews is a retirement village of 34 units in Petone. It was developed in the early 1990s by a company called Jackson Mews Limited (“JML”). JML set up the village in a way which is common in New Zealand. Each retirement unit had its own certificate of title. JML, through an associated company, Jackson Mews Management Limited (“Mews Management”), the appellant, would provide management and maintenance services for the village. Unit-owners would pay for those services by means of a fortnightly levy.
[2]       The potential problem with these legal structures does not arise with the initial unit purchasers, as their obligations to their fellow residents can be secured by appropriate contractual terms at time of purchase. But how does one ensure that subsequent unit purchasers, who will not be contractually tied to the village developer or service provider, become bound by the same arrangement? It is in everyone’s interest that they should be bound as each unit-owner wants an assurance that all the other unit-owners will pay – and continue to pay – their share of the common services provided by the village service provider. The method JML used in its attempt to tie in initial and subsequent unit-owners was a memorandum of encumbrance registered against each unit title. We shall return to the detail of that encumbrance later. The encumbrance method has been commonly used in housing developments and retirement villages in New Zealand at least since the 1970s and in England since the 19^th century.
[3]       The encumbrance JML stipulated refers to a management services agreement, which the encumbrancer (the unit-owner) is bound to sign. The agreement stipulates the services Mews Management must provide and the levies the unit-owner must pay. The encumbrancer is also bound to ensure that the person to whom in due course he or she sells his or her unit signs the services agreement.
[4]       Unfortunately, all is not well at Jackson Mews. A large number of the village residents and the village’s body corporate are dissatisfied with the quality of services provided by Mews Management. The body corporate has purported to cancel the…

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: [2009] NZCA 563
Decision Date: 27 November 2009

CaseChat Overview and Summary

Jackson Mews Management Ltd appealed a decision of the High Court that the respondents were entitled to redeem a memorandum of encumbrance by paying $9.90. The respondents sought a declaration that the memorandum of encumbrance was a mortgage and an order that it be discharged on payment of that sum. The appeal was allowed and the decision of the High Court was set aside. The respondents were not entitled to redeem the land on payment of $9.90. Nor should Jackson Mews Management Ltd have been ordered to provide a discharge of the encumbrance. The respondents must pay costs to Jackson Mews Management Ltd on the appeal. Costs in the High Court are, in the absence of agreement between the parties, to be fixed in that Court. The Court did not decide whether unit owners can cancel or apply to cancel their services agreements. Nor did it decide what the consequences would be if a court ruled that the services agreements had been validly cancelled. Those questions have not been before the Court.

Orders