Lihua Limited v Body Corporate 366611

[2015] NZHC 618

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-000937 [2015] NZHC 618

IN THE MATTER OF

Body Corporate 366611

UNDER

the Unit Titles Act 2010 and The Unit
Titles Regulations 2011

BETWEEN

LIHUA LIMITED Applicant

AND

BODY CORPORATE 366611
First Respondent

THETA MANAGEMENT LIMITED Second Respondent

BCS LIMITED Third Respondent

Hearing:	18 February 2015
Appearances:	B Rooney for the Applicant P Sills for First Respondent S Price and N Fong for John Chen
Judgment:	31 March 2015

JUDGMENT OF WOOLFORD J

This judgment was delivered by me on Tuesday, 31 March 2015 at 11.00 am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors / Counsel:

Mr B Rooney, Barrister, Auckland

Mr P Sills, Barrister, Auckland

Mr S Price, MinterEllisonRuddWatts, Auckland

Mr N Fong, MinterEllisonRuddWatts, Auckland

LIHUA LIMITED v BODY CORPORATE 366611 [2015] NZHC 618 [31 March 2015]

Introduction

[1]      The Empire apartment building in Whitaker Place, Auckland, is a large unit title complex which was built as student accommodation.  It comprises 313 units, of which 300 are residential.   Many of the unit owners are thought to live overseas. The applicant, Lihua Limited (Lihua) owns one unit and manages several.  The first respondent is the Body Corporate, which was created to operate and manage the building.    It  comprises  all  unit  owners  in  the apartment  building.    The  second respondent, Theta Management Limited (Theta) manages the building under a contract with the Body Corporate.  Theta is also the lessee and manager of 276 of the units, the large majority of which have been sub-let to tenants.  The third respondent BCS Limited (BCS) is the Body Corporate’s secretary.

[2]      There is a history of conflict between the applicant and the respondents. Lihua wants access to the Body Corporate register so that it can write to fellow owners to enlist support for a challenge to Theta, as it believes the Body Corporate is insolvent and poorly managed.

[3]      On 10 December 2013, the Court of Appeal ordered that the Body Corporate committee permit James Keat, a firm of solicitors, or Lihua, at Lihua’s option, to search the Body Corporate register.1

[4]      A copy of the Body Corporate register, as maintained by the Body Corporate committee, was sent to James Keat on 18 December 2013.  Lihua, however, believes that the Body Corporate committee has not complied with the Court of Appeal order because the register sent to James Keat set out the address and contact details for the owners of 244 units who have leased their units to Theta as follows:

C/- Theta Management Limited

PO Box 105417, Auckland 1143
New Zealand

09 973 9020 [email protected]

[5]      Lihua  has  therefore  been  unable  to  contact  the  majority  of  unit  owners directly to enlist support for a challenge to Theta.

1      Lihua Ltd v Body Corporate 366611 [2013] NZCA 630, (2013) 15 NZCPR 216.

[6]      Lihua now makes application to the High Court for an order directing the examination of John Chung Ching Chen, of Auckland, in relation to enforcement of the order made by the Court of Appeal.  Mr Chen is one of three members of the Body Corporate committee.  He is also the sole director and shareholder of Theta.

Discussion

[7]      During the course of the hearing, a number of issues were raised, including whether the Body Corporate register complied with the requirements of Regulation 4 of the Unit Titles Regulations 2011, whether the Body Corporate committee had failed to comply with the Court of Appeal’s judgment and whether Mr Chen could be required, in his capacity as a member of the Body Corporate committee, to access information in Theta’s records.

[8]      It is, however, unnecessary for the Court to address these issues as I am of the view that the Court has no jurisdiction to make the order sought by Lihua, for examination of Mr Chen, under r 17.12 of the High Court Rules.

[9]      Rule 17.12 provides:

17.12   Order for examination

(1)       Whether  or  not  a  notice  has  been  served  under  rule  17.10,  an examining party may apply for an order—

(a)      at  any time  after  the  proceeding has  commenced,  if that party seeks a charging order under subpart 5 of this Part; and

(b)      in all other cases, at any time after judgment is sealed.

(2)       An examining party may apply to the court for an order requiring the examinee to attend the court or a person whom the court appoints, and to be orally examined on oath about—

(a)      the standard issues in subclause (3); and

(b)      any additional issues suggested by the examining party that the court considers are necessary.

(3)      The standard issues are—

(a)      if judgment has been given, about the examinee's—

(i)       receipts and payments for the preceding 52 weeks;

and

(ii)      assets and liabilities; and

(iii)     income and expenditure; and

(iv)     means of satisfying the judgment:

(b)      if judgment has not been given, about any matters that are relevant to the issue of a charging order.

(4)      When granting the application, the court may order the production of

documents at the examination and may impose terms and conditions

it  thinks  just  in  respect  of  the  conduct  of  the  examination  or otherwise.

(5)      An application under this rule may be made without notice, and may be granted by a Judge without a hearing.

(6)      An order under this rule must contain a notice in the following terms:

“You must obey this order. If you do not, you may be sent to

prison for contempt of court.”

[10]     Part 17 of the High Court Rules deals with enforcing judgments.  Rule 17.3 provides that a judgment may be enforced by one or more of the following enforcement processes:

(a)       An attachment order; (b)          A charging order;

(c)       A sale order;

(d)      A possession order; (e)  An arrest order;

(f)       A sequestration order

[11]     Lihua submits that it is entitled to a possession order, which may be issued if a judgment orders a party to deliver possession of land or chattels to another party.2

The first difficulty for Lihua is that the Court of Appeal judgment does not order the Body Corporate committee to deliver possession of any chattels to Lihua.  It merely orders “that the Body Corporate Committee permit James Keat (or Lihua, at Lihua’s option) to search the body corporate register”.3  A possession order may not therefore be the appropriate avenue for enforcing the Court’s judgment.  In any event, Lihua has chosen not to apply for a possession order, presumably because the register, if

seized pursuant to a possession order, would be in exactly the same form as that already supplied to it.

[12]     Lihua instead seeks an  order under r 17.12.   Rule 17.12 is contained in

Subpart 2 of Part 17, which is headed “Obtaining information from liable party for

enforcement purposes” within the general Part 17 on enforcement.  Lihua’s second

2      Rule 17.81 High Court Rules.

3 Above n 1, at [34].

difficulty, therefore, is that it is not seeking information for enforcement purposes, such as a possession order, but rather as an end in itself.

[13]     A third difficulty for Lihua is that an order for examination under r 17.12 is only available to “an examining party”, which is defined in r 17.11 as “a party seeking the recovery or payment of money in a proceeding who applies for an order for examination under rule 17.12.”  Lihua is not seeking the recovery or payment of money in a proceeding.

[14]     Lihua submits, however, that it falls within the definition of an examining party, despite the limited definition, because of a prior clause in r 17.11 providing it only applies, “unless the context otherwise requires”.  Lihua submits that the context requires a broader interpretation because it seeks an order requiring Mr Chen to attend Court and be orally examined on oath, about his means of satisfying the judgment (Rule 17.12(3)(a)(iv)) and within the scope of “any additional issues suggested by the examining party that the Court considers are necessary” (Rule

17.12(3)(b)).   This is contrasted with an examination of Mr Chen’s receipts and payments for the proceeding 52 weeks, his assets and liabilities, or his income and expenditure (Rule 17.12(3)(a)(i)-(iii)).

[15]     In my view, the fourth difficulty for Lihua is the phrase “means of satisfying the judgment”.  Lihua submits that the phrase includes Mr Chen’s knowledge of the addresses and other contact details of the unit owners who lease their units to Theta. However, under the ejusdem generis rule, “means of satisfying the judgment” is to be interpreted in its context.  In its context, following r 17.12(3)(a)(i)-(iii), “means” refer to the examinee’s financial resources while “satisfying the judgment” refers to paying off or discharging fully a Court order relating to a debt or obligation.  “Means of satisfying the judgment” takes its meaning from the earlier specific references to receipts and payments, assets and liabilities and income and expenditure.

[16]     Rule 17.12 was derived from the English Rules of the Supreme Court 1883

Order XLII, r 32 which provided that a judgment debtor may be examined “as to any

and what debts are owing to the debtor, and whether the debtor has any and what

other property or means of satisfying the judgment.”  In Watkins v Ross, Lindley LJ

stated:4

The object of this rule is plain enough; it is to make the judgment debtor tell what assets he has got to satisfy the judgment.

Kay LJ commented to like effect.5    The Court of Appeal therefore refused to order that a debtor be examined as to the circumstances relating to a debenture bond, the validity  of  which  was  the  subject  of  legal  proceedings.    The  Court  of Appeal considered that such an examination went “beyond the limit of the rule”.6

[17]     The phrase “means of satisfying the judgment” also occurs in r 17.10, which refers to the utilisation of forms E1 and E2.  Form E1 is headed “Notice to liable party” and states that “you may be required to attend Court to be orally examined about  ...  your  means  of  satisfying  the  judgment”,  while  form  E2  is  headed “Statement of means of liable party” and requires detailed financial information to be disclosed by the liable party.

[18]     A  fifth  difficulty  for  Lihua  is  r  17.14(b),  which  requires  that,  at  the examination, the examining party must file an affidavit stating how much remains unpaid of the amount for which the examining party has obtained judgment.  Lihua has not obtained judgment for any amount.

[19]     Taken together, it is my view that these difficulties clearly demonstrate that r 17.12 is unavailable to Lihua.  To use the words of Lord Esher MR, what Lihua seeks is “beyond the limit of the rule”.  As r 17.12 itself specifies, a person who refuses to obey an order for examination may be sent to prison for contempt of Court. The scope of r 17.12 therefore has to be restricted to what is clearly within its parameters.     There  is  simply  no  jurisdiction  to  make  the  order  sought  for examination of Mr Chen. An order for examination is a means to obtain information for one or more of the six enforcement processes listed in r 17.3.  Lihua does not seek to utilise any of the enforcement processes, but rather seeks to utilise an order

for examination as an end in itself.

4      Watkins v Ross (1893) 68 LT 423 at 424.

5      At 425.

6      At 424, per Lord Esher MR.

[20]     The application is dismissed.  Lihua is to pay Mr Chen costs on a 2B basis.  If the Body Corporate seeks costs, memoranda should be filed by both parties.

……………………………….

Woolford J