Roe-Shaw v Body Corporate 81340

[2021] NZHC 2114

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2016-485-220

[2021] NZHC 2114

BETWEEN

MAGGIE MARY ROE-SHAW

First Applicant

MAZGO LIMITED
Second Applicant

AND

BODY CORPORATE 81340

Respondent

Teleconference:	12 August 2021
Appearances:	J K Mahuta-Coyle for the Applicants A J Knowsley for the Respondent
Judgment:	13 August 2021

JUDGMENT OF COOKE J

(Leave to appeal, stay, adjournment and timetable orders)

[1]    These proceedings originally involved an application under s 74 of the Unit Titles Act 2010 for a scheme. The scheme concerned a proposal for remedial works for an apartment complex at Paraparaumu Beach known as “the Lynx” which had suffered from weathertightness issues. By judgment dated 14 November 2018 Thomas J approved the scheme.1

[2]    As part of the proceeding the current applicants were served as unit holders. They appeared at the hearing before Thomas J after filing a notice of appearance for ancillary purposes. They sought compensation for loss arising from the use of their unit whilst the repairs contemplated by the scheme were undertaken. Compensation can be awarded as part of a scheme under s 74(7). On that matter Thomas J held:

1      Body Corporate 81340 v Knight [2018] NZHC 2953.

ROE-SHAW v BODY CORPORATE 81340 [2021] NZHC 2114 [13 August 2021]

[7] A preliminary issue arose in respect of a notice of appearance for ancillary purpose by an interested party, being the owner of unit 1A. While the owner supported the Application, she sought to be heard in relation to claimed compensation for loss of use of her unit while it underwent repair. Although not conceding the dispute, the unit owner and the Body Corporate have agreed to attempt to settle it.

[3]An associated footnote recorded:

The scheme may require some amendment to reflect any settlement reached, which would require a further application to the Court pursuant to s 74(8) of the Unit Titles Act 2010.

[4]    The attempted settlement was unsuccessful, and the current applicants now seek compensation as a variation of the approved scheme under s 74(8).

[5]    The application for variation was filed in the existing proceeding in which the scheme was originally approved. It was filed on 24 May 2021 and served on the address for service of the respondent (the Body Corporate), being the address for service given by the current solicitors for the Body Corporate. The application is supported by two affidavits.

[6]    When the application was called before Grice J there was no appearance by the Body Corporate. No notice of opposition was filed in accordance with the rules. Grice J accordingly set the application down for hearing on an unopposed basis. The hearing was to proceed before me on Monday 12 July. The applicants subsequently filed a synopsis of submission in support of its application dated 29 June 2021 in anticipation of the hearing.

[7]    On Thursday 8 July, two working days before the hearing, the Body Corporate filed an application for an extension of time to file a notice of opposition supported by an affidavit from the Chairman of the Body Corporate of the same date. The suggested ground of opposition was that the application should have been advanced by a fresh originating application, rather than an application filed in the existing proceeding. No explanation was provided as to why no steps had been taken by the respondent before that point as would be expected for an application to extend the time to oppose the application in these circumstances.

[8]    I heard from Mr Knowsley for the Body Corporate at the scheduled hearing on 12 July and addressed the matters that he then raised, which included the technical point that the application should have been made by fresh originating application rather than by application in the existing proceedings. The technical points he raised and my reasons for rejecting them are set out in my minute of 12 July 2021.

[9]    I nevertheless granted the application to file a notice of opposition out of time, and gave procedural directions for the furtherance of the proceeding. I directed that the respondent’s affidavits in opposition be filed and served by Monday 2 August, that reply evidence should be filed and served by 16 August, and that the matter be set down for a half day hearing. That hearing was scheduled for 30 August. I granted the applicants costs of the wasted hearing.

[10]   The respondent did not comply with this timetable, however. Rather on Thursday 29 July, again two working days before the directed date for filing and serving its affidavits in opposition, it filed an interlocutory application for leave to appeal the decision I made on 12 July to the Court of Appeal, and for a stay of the proceeding again supported by a further affidavit from the Chairman. The key point raised was, again, that the application was filed in the existing proceeding rather than in a fresh proceeding.

[11]   I convened a telephone conference to discuss the applications on Wednesday 11 August. I suggested to Mr Knowsley at that stage that there was no substantive difference between the powers of the Court when dealing with the application in the existing proceeding or a fresh proceeding under Part 19, and that the real focus should be on whether the timetable needed to be amended because of the suggestion that the respondent, and the members of the Body Corporate, could not fairly respond to the application given the timetable I had earlier set. I suggested that the position be further discussed between counsel, and directed that I would hear the applications themselves at 3.30 pm on Thursday 12 August, hopefully to deal with an application to amend the timetable, but if necessary to deal with the applications for leave to appeal and for a stay. I gave directions for the filing and service of submissions. The parties agreed that that hearing would proceed by way of telephone.

[12]   There was originally some hope that there would be an agreed revised timetable, but that did not emerge, and the parties filed submissions directed to the stay and leave to appeal matters. But they also directed submissions to an amended timetable.

Application for leave to appeal and a stay

[13]   An application for leave to appeal under s 56(3) of the Senior Courts Act 2016 involves consideration of the following factors:2

(a)a high threshold exists;

(b)the applicant must identify an arguable error of law or fact;

(c)the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;

(d)the circumstances must warrant incurring further delay;

(e)the ultimate question is whether the interests of justice are served by granting leave.

[14]   I have little hesitation in declining leave applying that approach. The Body Corporate is taking the technical point that the application should be by way of fresh originating application under Part 19, rather than by filing a further application in the existing Part 19 proceeding. I am not convinced that it is necessarily technically wrong for the applicants to have proceeded in that way. They originally raised the matter they seek to have determined in this proceeding, and filed the notice of appearance for ancillary purposes and appeared at the hearing to advance it. Thomas J deferred the determination of this issue to allow the parties to discuss settlement, noting that further application would be necessary if the matter was not settled. Whilst she did not expressly reserve leave for that further application to be filed in this proceeding, it might be said that this was implicit, particularly as it was a matter that had been raised but not determined in the proceeding. There would also be practical benefit in the outstanding matter being dealt with in the same proceedings. Had settlement been

2      Greendrake v District Court of New Zealand [2020] NZCA 122 at [6]; citing Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [9]–[14].

reached I have little doubt that the amendments to the scheme would simply have been sought by consent from Thomas J in this proceeding.

[15]   But even if I am wrong about that the objective of the High Court Rules in     r 1.2, and the approach set out in r 1.5, particularly that in r 1.5(2) and (3) would apply. Most importantly there is no prejudice to the respondent in having the application dealt with in the existing proceeding. For example the procedural directions for the hearing of the application can, and should be exactly the same whether or not this is a fresh originating application. I see no benefit in requiring the application to be re-filed as a new originating application. Indeed r 1.5(3) provides:

(3) The court must not wholly set aside any proceeding or the originating process by which the proceeding was begun on the ground that the proceeding was required by the rules to be begun by an originating process other than the one employed.

[16]   And r 1.5(2)(b) contemplates the Court making orders that it thinks just if there is any procedural irregularity.

[17]   In furtherance of the technical point Mr Knowsley argued that the applicants are not a party to this proceeding, and that as a non-party they cannot make an application in this proceeding. Given that the applicants were originally served with the proceeding and the definitions of “party” and “defendant” in r 1.3, I do not think this is technically correct. But even if it is, the time has long gone where procedural points of this kind are allowed to interfere with the efficient disposal of proceedings before the Court.  It is the substance of fair procedure that matters, and that is what   r 1.5(2) contemplates.

[18]   The Body Corporate now seeks leave to appeal the decision that I made on  12 July. But the only decisions that I made at that time were to grant the Body Corporate leave to file its notice of opposition out of time, to grant its application to adjourn the fixture scheduled to be heard that day, and to set a timetable for the Body Corporate’s opposition. It is true that in the course of that decision I rejected the Body Corporate’s argument that the matter needed to proceed by way of a fresh originating application. But given that I granted the applications that the Body Corporate asked

for as an indulgence it is somewhat difficult to see why it should be given leave to appeal those decisions.

[19]   In any event, even if there was some arguable point of substance available to the Body Corporate arising from these arguments, they are well short of something that could justify leave to appeal to the Court of Appeal given the approach to the grant of leave. That application will be declined.

[20]It follows that the associated application for a stay is also declined.

Adjournment of hearing and amended timetable

[21]   I see a little more substance to the Body Corporate’s request for an adjournment of the scheduled hearing, and its request for an amended timetable. As I indicated to counsel, in assessing the procedural directions for determining the application I proceed in exactly the same way as I would have had this been a freshly filed originating application.

[22]   Mr Knowsley made the point that there are 21 members of the Body Corporate who needed to be engaged with, and that there was some difficulty at present in getting assistance from parties such as valuers. I accept that point, and am prepared to consider alterations to the timetable as a consequence. But at the same time the Body Corporate originally took no action when served with the proceedings, it then only filed something with the Court the Thursday before the Monday hearing scheduled to deal with the substantive application, and the Body Corporate then did not comply with the timetable I set on 12 July. The Thursday before the Monday date when it was obliged to file its affidavits in opposition it filed its applications for leave to appeal and a stay. There is an element of obstructiveness in this overall approach.

[23]   As I observed to Mr Knowsley at the hearing, it also seems to me that the procedures proposed by the Body Corporate for addressing the application are not consistent with applications of this kind being dealt with in Part 19, and with the more streamlined processes Part 19 contemplates. Rule 19.2(za) mandates that applications under s 74 of the Unit Titles Act 2010 are to proceed under Part 19. The proposals

that the Body Corporate are making seemed more consistent with a type of interlocutory procedures one might expect for an ordinary proceeding.

[24]   Proportionality is also a guiding principle when applying the High Court Rules. Whilst the applicants may be contending their claim is larger, it might be thought that their claim is for  approximately  $100,000.  Some  of  the  procedural  steps  that  Mr Knowsley is suggesting are not appropriate for a claim for that amount, which is well within the jurisdiction normally exercised by the District Court.

[25]I address the various procedural steps suggested against that background.

Discovery

[26]   Discovery in Part 19 proceedings is discretionary. In Manchester Securities Ltd v Body Corporate 172108 the Court of Appeal dealt with the question of discovery in relation to proceedings involving an application for a scheme under s 74.3 The Court held:4

[15] We accept that the court generally adopts a conservative approach towards discovery in originating applications brought under Pt 19 of the High Court Rules. That is because the originating procedure was designed, as was its predecessor in Pt 4A, to provide a relatively speedy and inexpensive mechanism for a number of applications which need to be made to the Court under specific statutory provisions. …

[27]   The Court of Appeal nevertheless upheld an order for discovery of specific documents. In Commissioner of Inland Revenue v Elementary Solutions Ltd the Court reviewed the position concerning discovery under Part 19 more broadly and held:5

[36]      I respectfully decline to follow any formulation based on the proposition that orders for discovery should be made in proceedings under Part 19 only in exceptional or the rarest of cases.

[37]I adopt these principles in relation to discovery in Part 19 proceedings:

(a)The Court has a discretion to order discovery.

(b)The document sought must be capable of supporting the applicant’s case or adversely affecting the opponent’s case.

3      Manchester Securities Ltd v Body Corporate 172108 [2015] NZCA 29.

4      Footnote omitted.

5      Commissioner of Inland Revenue v Elementary Solutions Ltd [2017] NZHC 2411.

(c)Any orders for discovery should be subject to the proportionality and practicality requirement s identified in r 8.2 of the Rules and should accord with the objective of “just, speedy, and inexpensive determination” under r 1.2 of the Rules.

(d)The approach to discovery in originating applications should be conservative.

(e)Discovery will be appropriate in marginal cases where the party makes out an outline case but the Court encounters genuine difficulty in determining, without documentary evidence which is likely to assist, whether the threshold test is satisfied.

[28]   In the present case the need for discovery appears only to be marginal. The kind of documents that have been referred to are likely to be known to the parties already as the applicants are members of the Body Corporate, and the underlying events triggering the claim are events which the Body Corporate and the applicants have been involved in.

[29]   I am nevertheless prepared to make an adjustment to the timetable to make some specific discovery orders. In particular the applicants are to give discovery of documents in its possession or control concerning:

(a)access provided to the applicants’ unit to contractors for the purpose of carrying out works, the use of the applicants’ unit for storage of contractors materials and equipment; and

(b)documents relating to the applicants’ attempts to mitigate any losses for example by repairing its unit and renting it out during the period in dispute.

[30]   The respondent is to give discovery of all documents in its possession or control of the communications between it and its contractors in relation to the applicants’ unit.

[31]   The applicants and  respondents  are  to  serve  their  lists  of  documents  by 3 September and inspection is to take place within five working days after the list is served by the other party.

Interrogatories

[32]   The respondent sought directions that it be able to issue interrogatories to be answered by the applicants.

[33]   I was provided with no authority for the proposition that interrogatories can, or should be ordered in Part 19 proceedings. I accept that the High Court can direct that interrogatories be administered if that is perceived as necessary to fairly dispose of the proceeding. That arises  because  of  the  general  procedural  powers  arising  from rr 19.11 and 7.43A. But the process of administering interrogatories does not appear consistent with the normal procedures contemplated by Part 19. Not only are the procedures designed to be more streamlined, but evidence proceeds by way of affidavit, albeit with a potential for cross-examination. Nevertheless the test set out in Commissioner of Inland Revenue v Elementary Solutions Ltd can be applied by analogy to an application that a party answer interrogatories if there is potential for them to facilitate the just determination of a proceeding in the manner referred to in  r 1.2.

[34]   I see no point in ordering that interrogatories be administered here, however. Requiring such answers would not be proportionate to the steps that are necessary for the fair disposition of this proceeding. No real need for them has been outlined. The issues in question can be expected to be explored in affidavits. I decline to order that interrogatories be answered.

Leave to file further applications

[35]   Mr Knowsley’s timetable then suggested there be a two week period in which leave would be granted to allow further interlocutory applications to be filed.

[36]   Again I decline to do so as this appears inconsistent with the procedures contemplated for originating applications under Part 19. The Body Corporate can always make application to vary the timetable if there is something that emerges that warrants further interlocutory steps. But given the background for this matter the Court may not be receptive to such an application, and making provision for this, or granting leave for this to happen, is the type of direction that is more appropriate for

ordinary  proceedings,  and  not  usually  appropriate  for originating applications.    I decline to include that in the directions.

Timing for filing affidavit evidence

[37]   The Body Corporate then sought a further eight weeks for the filing of its evidence.

[38]   That request needs to be considered in the context of the timeframes contemplated by the rules. Under r 19.10(f) and (g) rules 7.24 and 7.25 apply. Under r 7.24 the respondent is obliged to file its notice of opposition before the end of the tenth working day after being served with the application, and not less than three working days before the hearing date, and under r 7.25 any affidavits must be served at the same time as the notice of opposition.

[39]   The Court has a discretion to extend the timeframes involved under rr 19.11 and 7.43A. But the Body Corporate’s proposals are well outside the normal timeframes.

[40]   I accept that in the present case more time may be needed for the Body Corporate to prepare its opposition, particularly given it has several members. On the other hand this application was filed and served in May, and the Body Corporate has had the two affidavits filed, the notice of application, and potentially also the applicants’ written synopsis of submissions for some time. Through the various procedural manoeuvres it has taken it has avoided responding substantively to the application. Moreover the applicants’ issue was raised some time ago. The judgment of Thomas J records that its position was raised in the hearing before her in October 2018, and the parties have also apparently been in settlement discussions since that time. Against that background the Body Corporate’s plea for more time can be regarded with some scepticism.

[41]   I am not prepared to grant the Body Corporate a further eight weeks for the filing and service of evidence. The respondent’s evidence must be provided within 20 working days following the completion of inspection. In particular the respondent’s evidence is to be filed and served by Friday 8 October.

[42]   The applicants’ evidence in reply is to filed 10 working days thereafter, that is by Friday 22 October.

Hearing

[43]   It follows from the above that I grant the Body Corporate’s implicit application for adjournment of the fixture set for 30 August.

[44]   The parties are agreed that two days should now be scheduled for the hearing, with the hope that it may be completed within one day. The prospect for cross- examination, which arises under r 19.14 apparently creates the uncertainty.

[45]   Accordingly the substantive application should be set down for hearing, after consultation with counsel for the parties, with two days allowed. I record that it is not necessary that I hear the substantive application.

[46]   The applicants submissions are to be filed and served 10 working days before the hearing, and the respondents five working days before the hearing.

[47]   I record that I do not expect the Body Corporate will be granted any further indulgences.

[48]   The applicants are entitled to the costs of the Body Corporate’s application for leave to appeal, for a stay, to adjourn the fixture and alter the timetable. I record that the time required to deal with the applications — both the initial telephone conference and the subsequent telephone hearing was less than one hour.

Cooke J

Solicitors:

Greenwood Roche, Wellington for the Applicants Rainey Collins, Wellington for the Respondent