Sharma v Body Corporate No 205539

[2014] NZHC 152

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-004560 [2014] NZHC 152

BETWEEN  ANIL SHARMA and SHWETA SHARMA

Appellants

AND  BODY CORPORATE NO 205539

Respondent

Hearing:                   13 February 2014

Appearances:           No appearance for Appellants

P Muir for Respondent

Judgment:                13 February 2014

ORAL JUDGMENT OF VENNING J

Solicitors:           Price Baker Berridge, Auckland

Copy to:            Appellants

SHARMA v BODY CORPORATE NO 205539 [2014] NZHC 152 [13 February 2014]

Introduction

[1]      This is an appeal from a decision of Judge Cunningham in the District Court at Manukau.  Judge Cunningham entered summary judgment against the appellants in the sum of $163,488 together with interest and costs.

Appellants’ non-appearance

[2]      The appellants filed an appeal to this Court against the judgment.  The first issue is that the appellants have not appeared to support the appeal.

[3]      A review of the file discloses that on 5 November 2013 when the matter was first  called  before  the  Court  the  appellants  did  not  appear  but  instead  a  Mr Kumandan appeared on their behalf.  He was apparently a friend of the appellants. The matter was adjourned through to 19 November 2013.   The appellants were directed to appear in person or to be represented.

[4]      On 19 November 2013 when the matter was called again Mr Kumandan is again recorded as appearing on behalf of the appellants.   On that day the Judge confirmed the appeal was to be heard at 10.00 am today.  The Judge also ordered the appellants to pay security for costs for the appeal.  The appellants were clearly aware of the orders because they paid security for costs of the appeal as directed.  Notices were also sent by the Registry to their email address.

[5]      Despite being aware the appeal was for hearing this morning the appellants have failed to appear to support it.   However, rather than simply dismissing the appeal for the appellants’ non-appearance, I propose to briefly deal with the matters raised in the notice of appeal.

Background

[6]      The unit the appellants own is one of 20 in a property development.   The original owner of the unit was a Mr Shi Hong Feng.  In the exercise of the power of sale under a mortgage the unit was sold to Delza Property Holdings Limited on 16

March 2011.   On the same day it was on-sold to Khalsa Group of Companies

Limited.  The Khalsa Group of Companies Limited then subsequently transferred the unit to the appellants on 3 February 2012.

[7]      The background to the Body Corporate’s claim against the appellants lies in related litigation.  The building in which this unit is one of 20 was a leaky building. Prior  to  the  appellant’s  purchase  of  it  the  then  owners  of  the  20  units  took proceedings against the Council and others to recover the costs of repairs to the building.   Those proceedings were ultimately settled, but after the appellants had purchased their unit. The appellants were never, however, a party to the proceedings. The Body Corporate has been involved in managing the proceedings, although I understand from counsel that the proceedings were also in the name of the individual relevant unit owners at the time.  The Body Corporate has also been involved in the management of the repairs to the units in the building.

[8]      There was a shortfall between the moneys recovered in the settlement of the litigation and the cost of repairs.  At an Extraordinary General Meeting of the body Corporate on 5 September 2012 it was resolved:

3(i)      ... that the Body Corporate raises a levy by ownership interest for the amount of $3,200,00.00, being a sum sufficient to undertake the remedial repairs, pursuant to the settlement agreement reached at the judicial settlement conference of the High Court of New Zealand at Auckland on 29 May 2012, to be paid in four equal instalments with due dates 12 DECEMBER 2012, 13 FEBRUARY 2013, 10 APRIL

2013, and 12 JUNE 2013.

...

3(ii)     It was resolved the Body Corporate raises a levy of $163,488.00 for the owners of Unit 15, for the full cost of remedial works for their unit as they were not part of the legal proceedings, to be paid in four equal  instalments  with  due  dates  12  DECEMBER  2012,  13

FEBRUARY 2013, 10 APRIL 2013, and 12 JUNE 2013.

...

[9]      The appellants failed to make the payment of the levies that were fixed in accordance with that resolution.  The Body Corporate then took summary judgment proceedings against them in the District Court which ultimately led to the judgment against them.

The appellants’ position

[10]     The gist of the appellants’ complaint is that they are entitled to a share equal to  their unit  entitlement  of the money recovered in  the settlement.   The Judge rejected that submission.

The appeal grounds

[11]     In their notice of appeal the appellants raise a number of issues.

[12]     First, they say the Body Corporate was litigating for the benefit of all the owners of the properties under its management and care.   There is no evidence before  the  Court  of  the  documents  filed  with  the  Court  in  the  leaky  home proceedings but I understand from Mr Muir that the individual owners of the units were parties to the proceeding as well as the Body Corporate.  The Body Corporate’s entitlement could only have been in relation to the common property in any event. The claim on behalf of the owners of the units would have been in the name of individual owners who were plaintiffs to the proceedings.  Their claims and rights in the proceeding are personal to them.  Any such claims or rights are personal.  They are not property rights that attach to the unit.

[13]     Next, the appellants say the original owner Mr Shi Hong Feng (who was apparently a party to the leaky building proceedings) lost his rights in favour of the mortgagee who had on-sold the property.  The answer to that proposition is that, as noted, the rights were personal and were not property rights.  To the extent that it appears the Body Corporate in managing the matters on behalf of the unit owners and the unit owners generally have agreed that Mr Shi Hong Feng’s share of the settlement proceeds should be applied for the benefit of the other 19 owners, that is a matter that Mr Shi Hong Feng could take up, but in the absence of an assignment from Mr Shi Hong Feng as a party to the leaky home proceedings, it is not a matter that the appellants can raise.

[14]     Next, the appellants note the litigation was not complete at the time the Khalsa Group of Companies Limited purchased the property.   They go on to note that that company paid moneys to enable the litigation to continue.  However, in the

absence of evidence that the Khalsa Group of Companies Limited was substituted as plaintiff to the leaky property proceedings that does not advance the appellants’ case for the same reason referred to above, namely that the rights in relation to the litigation were personal rather than property rights.   Unless the Khalsa Group of Companies Limited was a party to those proceedings or had an assignment from Mr Shi Hong Feng then the purported assignment from that company to the appellants, which the appellants rely on, is valueless.

[15]     Next, the appellants say that at no material time during the proceedings did the Body Corporate raise any issue relating to the sum of money it received from the Council.   I am not sure what the significance of that matter is.   There can be no suggestion of estoppel.

[16]     The appellants then refer to an invoice in relation to moneys owing by Mr Shi Hong Feng, which on their submission somehow conferred upon the Khalsa Group of Companies Limited the original rights belonging to Mr Shi Hong Feng.  There is no evidence of that in the material that was before the District Court Judge.  In the absence of any such evidence the Court cannot take that matter any further.

[17]     Next, the appellants submit that the District Court Judge did not recognise the legal position of the Deed of Assignment.   Whatever the legal effect of the Assignment between the Khalsa Group of Companies Limited and the appellants, for the reasons given above, the short point is that even if there was a valid assignment between those parties, in the absence of any evidence of a formal assignment from Mr Shi Hong Feng to the Khalsa Group of Companies Limited the assignment by the Khalsa Group of Companies Limited to the appellants does not entitle them to share in the settlement proceeds.

[18]     Next, the appellants submit the Judge failed to take cognisance of the context of the Deed.  For the reasons above that matter does not take the appellants’ case any further.

[19]    The appellants then complained the Judge failed to take account of the relationship between Queen City Law and the plaintiff and the conflict of interest

issue raised by the appellants.   As the Judge noted and Mr Muir submits, that is

irrelevant to the Body Corporate’s claim for summary judgment.

[20]     The appellants then submit that the Judge erred in her conclusion that the appellants received the relevant notices of the September 2012 special  meeting. There was affidavit evidence before the Court by Michael Williams, the general manager of the Body Corporate’s secretary that the appellants were given notice of the meeting.  It was open to the Judge to accept that evidence.

[21]     Further, as the Judge also noted, even if the appellants had attended the September 2012 meeting their attendance would, in practical terms, have had no bearing on the resolutions passed and the levies struck, bearing in mind the interests of the other parties attending the meeting.

[22]     Finally, the appellants complain about the order for costs.  The costs order is unexceptional.  It followed the outcome of the proceedings.

Result

[23]     For those reasons the appeal against the decision of Judge Cunningham must be dismissed, not only because the appellants have failed to appear to support it, but also on the basis of the lack of merits of the grounds of the appeal as raised in the notice of appeal.

[24]     The appeal is dismissed.

Costs

[25]     Costs to the respondent on a 2B basis together with disbursements as fixed by the Registrar.

Venning J