May v Body Corporate 329331 - [2019] NZHC 3

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2009-404-7379

[2019] NZHC 3

BETWEEN
JENNIFER ANN MAY and ANDREW JOHN MAY

Applicants

AND

BODY CORPORATE 329331

First Respondent

REX BADDELEY
Second Respondent

…Cont

Hearing: 8 January 2019

Appearances:

A Lloyd and I J Stephenson for Applicants T J Rainey for opposing respondents

T J G Allan for Administrator

Judgment:

9 January 2019

(ORAL) JUDGMENT OF LANG J

[on applications relating to appointment of administrator]

MAY v BODY CORPORATE 329331 [2019] NZHC 3 [9 January 2019]

PATRICIA ELIZABETH HALLT
Third Respondent

RICHARD GRAHAM MOGRIDGE
Fourth Respondent

CAROL ANNE MOGRIDGE
Fifth Respondent

JACQUELINE MCDERMOTT
Sixth Respondent

ROSS WILLIAM SHENNAN
Seventh Respondent

STEPHANIE MARGARET SHENNAN
Eighth Respondent

MPH08 LIMITED
Ninth Respondent

JAMES RONALD ASHTON
Tenth Respondent

ANNETTE JEAN ASHTON
Eleventh Respondent

JUST LAW NO. 65 LIMITED
Twelfth Respondent

RODNEY CHARLES SWIFT
Thirteenth Respondent

FRANCES SWIFT
Fourteenth Respondent

MEAKINS TRUSTEE CO LIMITED
Fifteenth Respondent

207 LIMITED
Sixteenth Respondent

206 LIMITED
Seventeenth Respondent

JOHN CHARLES DEACON
Eighteenth Respondent

MARGARET MARY DEACON
Nineteenth Respondent

RAM TRUSTEE COMPANY LIMITED
Twentieth Respondent

203 LIMITED
Twenty First Respondent

202 LIMITED
Twenty Second Respondent

201 LIMITED
Twenty Third Respondent

GEORGE CHARLES HALLIDAY
Twenty Fourth Respondent

BRENDA MARY HALLIDAY
Twenty Fifth Respondent

307 LIMITED
Twenty Sixth Respondent

306 LIMITED
Twenty Seventh Respondent

JCBEEZ LIMITED
Twenty Eighth Respondent

H & P PROPERTIES LIMITED
Twenty Ninth Respondent

302 LIMITED
Thirtieth Respondent

OLEG ALEXANDROVICH ZAITSEV
Thirty First Respondent

OLGA NIKOLAYEVNA ZAITCEVA
Thirty Second Respondent

DENIS OLEGOVICH ZAITSEV
Thirty Third Respondent

PETER FRANCES ANDREWS
Thirty Fourth Respondent

LINDA ANNE ANDREWS
Thirty Fifth Respondent

ANGUS STUART OGILVIE
Thirty Six Respondent

FIONA JANE MATHIESON
Thirty Seventh Respondent

BIG PICTURE INVESTMENTS LIMITED
Thirty Eighth Respondent

405 LIMITED
Thirty Ninth Respondent

404 LIMITED
Fourtieth Respondent

403 LIMITED
Forty First Respondent

NOMACK GROUP LIMITED
Forty Second Respondent

WESTPAC NEW ZEALAND LIMITED
Forty Third Respondent

ASB BANK LIMITED
Forty Fourth Respondent

BANK OF NEW ZEALAND LIMITED
Forty Fifth Respondent

GEOFFREY PETER ROBERTON DE LATOUR
Forty Sixth Respondent

JUDITH MARGARET DE LATOUR
Forty Seventh Respondent

TIMOTHY JOHN BURCHER
Forty Eighth Respondent

ANZ BANK NEW ZEALAND LIMITED
Forty Ninth Respondent

DAVID JOHN MCFARLANE
Fiftieth Respondent

STEPHANIE ELIZABETH DOUGLAS BANKS
Fifty First Respondent

[1] This proceeding concerns an apartment complex situated in St Marys Bay and known as the Ridge Apartments (The Ridge). The complex consists of 33 residential units constructed on six levels. The affairs of the complex are conducted through a body corporate constituted under the Unit Titles Act 1972 (the Act).

[2] Like many other apartment complexes in the Auckland area, The Ridge has had longstanding weathertightness issues. Since December 2010 the body corporate has been the subject of a notice issued by the Auckland City Council under ss 164 and 165 of the Building Act 2004 requiring it to rectify these issues.

[3] On 3 February 2010, this Court granted an application by the body corporate for an order sanctioning a scheme of arrangement under s 48 of the Act.1 This…

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: [2019] NZHC 3
Decision Date: 9 January 2019

CaseChat Overview and Summary

The proceeding concerns the appointment of an administrator to carry out remedial work on an apartment complex known as The Ridge, situated in St Marys Bay. The complex comprises 33 residential units constructed on six levels. The applicants, Mr and Mrs May, own a unit in the complex and seek an order that the appointment of the administrator, Mr Anthony McCullagh, be made permanent. They contend that the administrator should be allowed to ensure the remedial work commences on 14 January 2019. The opposing respondents, who oppose the application, seek an order rescinding the orders made by Clark J. They want control of the remedial works to be restored to the body corporate. The issue for determination is whether the administrator should remain in office, or whether the body corporate should resume control of the remedial works.

The body corporate had been sanctioned by the Court to undertake remedial work required to make the complex watertight and code compliant. The body corporate entered into a contract for the repair works with Brosnan Construction Ltd in June 2018, and work was originally due to commence under this contract in September 2018. The body corporate voted at its Annual General Meeting in July 2018 to halt work under the Brosnan contract so that it could investigate other repair options. Work under the Brosnan contract is now due to commence on 14 January 2019.

The opposing respondents take issue with the Brosnan contract on several bases. They consider it provides a remedial solution that pays no realistic regard to the cost of the work and was prepared without regard for budgeting constraints. They also consider the contract contains clauses that are unduly onerous to the body corporate. The opposing respondents now want all unit owners to have an opportunity to consider the Prendos proposal in greater detail. They therefore oppose work commencing under the Brosnan contract, and seek to have control of the remedial works returned to the body corporate.

The court considered the need to ensure the body corporate meets its obligations under the scheme it asked the Court to sanction in 2010. The Court has an obvious and legitimate interest in ensuring schemes that it sanctions are implemented according to their terms. The delay that has occurred to date leads the court to conclude that any further significant delay in carrying out remedial work will result in the body corporate breaching its obligation under the scheme to complete the repairs as diligently and as expeditiously as practical. The Prendos proposal has yet to be analysed in detail, but the administrator has obtained preliminary advice to the effect that it will not result in cost savings for unit owners and will produce considerable delays. The court concluded that, on the material presently available, implementation of the Brosnan contract appears to offer the only realistic prospect of the body corporate being able to complete the repairs within a timeframe that will enable it to meet its obligation under the scheme to carry out the remedial works as expeditiously as practical.

The application for an order extending the appointment of the administrator on current terms until further order of the Court is granted. The application for an order rescinding the orders made by Clark J on 6 September 2018 is dismissed. Costs at this stage are reserved. If the parties are unable to reach agreement counsel should file concise memoranda and the issue of costs will be dealt with on the papers.

Orders