McCullagh v Khean

[2014] NZHC 1873

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-001255 [2014] NZHC 1873

UNDER

Part 19 and r 19.2(za) of the High Court

Rules

IN THE MATTER

of ss 187 and 188 of the Unit Titles Act
2010

BETWEEN

ANTHONY JOHN McCULLAGH (in his capacity as administrator of Body Corporate 193674)

Applicant

AND

UNG ENG KHEAN and LAU YU EN CORRINNE & OTHERS

Respondents

Hearing:	7 August 2014
Counsel:	TJG Allan for Applicant PV Shackleton for Respondents
Judgment:	7 August 2014

JUDGMENT OF ASHER J

Solicitors:

Grove Darlow & Partners, Auckland.

Simpson Grierson, Auckland.

McCULLAGH v KHEAN [2014] NZHC 1873 [7 August 2014]

[1]      This is a complex application for a considerable number of orders which will have the effect of cancelling an existing unit plan, vesting property temporarily in a trustee, approving the deposit of a new unit plan and the creation of a new unit title structure.     The  property  in  question  is  the  former  Railway  Station  building comprising 353 units, 230 of which are residential, two commercial, 85 carparks within the building and 38 external carparks.

[2]      Grave practical problems arose with the building when it was discovered that it  suffered  from  severe  leaking  and  required  remediation.    The  creation  of  the original Body Corporate had a complex  gestation which involved a commercial partnership with the University of Auckland.  The ownership structure in particular had a significant inherent problem in that there were accessory properties which in an orthodox unit title structure would have been common property, but which were not common property.   When it came to carrying out the repairs this gave rise to significant problems that could not be resolved by orthodox means.   There was a serious incongruity between the rules of the Body Corporate, the unit plan and the Unit Titles Act 1972.

[3]      The difficulties led to the appointment of an administrator of Body Corporate

193764 by a judgment of this Court.1    There has been a further judgment of this

Court following a defended hearing concerning the apportionment of levies.2

[4]     Mr McCullagh, a senior chartered accountant who was appointed the administrator of the Body Corporate, reached the decision that the existing structure was unworkable.  He considered that it had to effectively be brought to an end and a new orthodox structure put in place. This is what has led to this application.

[5]      Mr Allan  who  appears  as  counsel  in  support  has  explained  the  level  of preparation and consultation that has led to the present application.   The orders sought and the new proposed unit plan have been considered by the mortgagees which consist of a number of major banks, Ports of Auckland, Auckland Council

(which was represented in this hearing by Mr Shackleton) and LINZ.

1      Norman v Body Corporate 193764 HC Auckland CIV-2009-404-6570, 23 October 2009.

2      Norman v Body Corporate 193764 HC Auckland CIV-2009-404-6570, 27 June 2011.

[6]      Service  itself  has  been  a  complicated  exercise.    Service  has  now  been affected in accordance with my earlier minutes,3 although the process of service and response still has to be completed in respect of two unit owners and for that reason the order that I propose to make will lie in court.

[7]      I have considered all the material filed.   The history is complex and the orders extremely detailed.  There has been no opposition from any interested party. Significantly none of the unit owners are contesting the proposal.

[8]      I  am  satisfied  that  the  proposed  orders  should  be  made  in  all  the circumstances.  In particular, there can be no doubt that the previous structures were unworkable. As best as I can discern the new proposed structure is orthodox and fair and should work well.

[9]      The only change I have made to the proposed draft orders arises from the complexity of the issues and the fact that not all parties will necessarily have come to grips with all aspects.  That change will permit any interested party to make further application to the Court up to the point of registration of the new interests.

[10]    Accordingly I make the orders sought in paragraphs 1.1 to 1.35 of the application dated 21 May 2014.  Order 1.34 will read as follows:

1.34The applicant and any other party who the Court is satisfied has a legitimate interest in the matters at issue has leave to apply to the Court on 24 hours notice for further or other orders.  Any such application shall be served only on a party that has filed a notice of opposition and an address for service comprising an email address or fax number.  However, the Body Corporate should give notice of the application by email to all unit owners, mortgagees and other parties with whom it has corresponded concerning these orders.  This leave

expires upon registration of the new unit titles.

3      McCullagh v  Khean  HC Auckland CIV-2014-404-1255, 17 June 2014 [Minute No  1]  and

McCullagh v Khean HC Auckland CIV-2014-404-1255, 29 July 2014 [Minute No 2].

[11]     Because two of the unit owners still have time to file a response, these orders will lie in Court and not come into effect until Thursday, 21 August 2014.

……………………………..

Asher J