Singh v Body Corporate 207650
[2018] NZHC 1932
•31 July 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-000099
[2018] NZHC 1932
BETWEEN CHERYL SITARA SINGH
Appellant
AND
BODY CORPORATE 207650
Respondent
Hearing: 19 June 2018 Appearances:
The Appellant in Person
S Powrie for the Respondent
Judgment:
31 July 2018
JUDGMENT OF HINTON J
This judgment was delivered by me on 31 July 2018 at 3.30 pm pursuant to Rule 11.5 of the High Court Rules
…………………………………………………………………… Registrar/Deputy Registrar
Solicitors:
Grove Darlow & Partners, Auckland
Party:
C Singh
CHERYL SITARA SINGH v BODY CORPORATE 207650 [2018] NZHC 1932 [31 July 2018]
[1] This is an appeal against a judgment of Judge G M Harrison in the District Court at Auckland on 20 December 2017.1
[2] Judge Harrison granted summary judgment against the present appellant and also against a Mr and Mrs Simpson for unpaid body corporate levies and for costs. The body corporate levies relate to construction work undertaken to repair and maintain a building known as “Richmond Terraces”.
[3] Ms Singh is the sole appellant. The Simpsons have not appealed the District Court judgment.
[4] The quantum of the judgment against Ms Singh is $181,561.03, plus a sum of costs of $22,633.83 for which orders were made jointly and severally against her and the Simpsons.2
Background
[5] For a fuller background, I refer to the earlier judgment of Lang J in this Court which is directly related to this proceeding,3 and the judgment of Judge Harrison.
[6] On 8 August 2016, this Court approved a scheme to carry out necessary repairs at Richmond Terraces.
[7] The body corporate had received settlement monies from litigation against those responsible for construction failures, but as is common, the actual cost of repairs was well in excess of the settlement monies.
[8]The body corporate made a first top-up levy, which was met by all unit owners.
[9] In December 2016, the body corporate resolved to issue a second levy in respect of all units. That levy was contested by the appellant and the Simpsons as being unlawful. Their primary argument was that much of the work resulting in
1 Body Corporate 207650 v Singh [2017] NZDC 29041.
2 Mr Powrie understands the Simpsons have either paid or are paying 50 per cent of the costs.
3 Body Corporate 207650 v Speck [2017] NZHC 966.
increased costs was not authorised by the scheme approved by the Court. They also raised many of the points, or similar points, to those raised in this summary judgment proceeding.
[10]On 12 May 2017, Lang J held with respect to the challenge to the second levy:
(a)All of the work the body corporate has carried out has been directed towards the objective of ensuring that the remediated complex is constructed to a standard that will result in code compliance. As a result, it falls within the rubric of the scheme approved by the Court, and the body corporate is entitled to levy unit owners to meet the cost of the work.4
(b)The second top-up levy was (therefore) lawfully raised by the body corporate.5
[11] In the hearing before Lang J, the appellant and the Simpsons were represented by experienced and competent counsel.
[12]The appellant and the Simpsons did not appeal the judgment of Lang J.
[13] A resolution was passed for a third levy, which Ms Singh sought to challenge before Lang J. This was rejected by Lang J, being after the hearing had concluded.
[14] On 24 May 2017, the body corporate made a new resolution at an Extraordinary General Meeting to issue a third levy in respect of all units.
[15] There has been no challenge by Ms Singh (or any other unit owner) to the 24 May 2017 EGM resolution declaring the third levy.
[16] Back on 12 March 2017, the body corporate resolved to enter a term loan agreement to cover the shortfall of defaulting proprietors.
4 At [56].
5 At [57].
[17] In June 2017, this proceeding seeking summary judgment for the unpaid second and third levies and related costs, was filed in the District Court. Ms Singh filed a notice of opposition and statement of defence and counter-claim on 19 July 2017.
[18] In about September 2017, Ms Singh received a code of compliance certificate for her unit.
[19]On 20 December 2017, Judge Harrison issued the judgment under appeal.
[20] In about December 2017, Ms Singh filed separate proceedings in this Court against a number of parties, not including the body corporate itself, but including Boutique Body Corporates Ltd (the present body corporate manager), and a number of unit owners who are or were members of the body corporate committee. 6 The statement of claim is similar to the document filed in the District Court labelled as a “statement of claim by the defendant against third parties” which Judge Harrison seems to have treated as a counter-claim. The separate High Court proceeding, and the statement of claim in the District Court, raise a number of allegations, including allegations of gross negligence and abuse of powers on the part of the third parties.
[21] All of the Richmond Terraces units now have code of compliance. The scheme provides that it terminates 25 working days after all code of compliance certificates have issued. However, the body corporate has sought an extension of time under the scheme as it is still in dispute with the contractor over the balance claimed as due.
Judgment of Judge Harrison
[22]The Judge said as follows:
(a)The essence of the defendants’ case was that the remediation costs determined by the second and third levies were excessive and should not be paid by them until they were satisfied that all costs had been
6 This proceeding is filed under CIV-2018-404-317.
properly incurred. That approach has been rejected by the High Court, for example in Wheeldon v Body Corporate 342525.7
(b)The defendants are attempting to have a second challenge at the validity of the levies when the High Court has already held that the second levy was imposed validly, and there was no challenge to the third levy.
(c)That can only mean there is now no defence to the claims by the body corporate.
(d)While there are proceedings against third parties, there is no sufficient nexus between those proceedings and the application for summary judgment.
(e)Ms Singh also raises a counter-claim against the body corporate alleging “abuse of powers and not exercising powers in accordance with the law and causing unnecessary embarrassment and strain on the defendants”. The counter-claim concerns disputes that are not interdependent with the claim for levies.
(f)Further, both the allegations made against third parties in the separate proceedings and the counter-claims in this proceeding essentially repeat issues raised before Lang J, and relate to the scope and amounts of cost increases; unit owners not being served with the s 74 scheme application; owners not being notified of costs increases; the wrongful decision of the body corporate to wait until completion of the remediation before considering possible liability of consultants to the project; and loan funding. All of these matters were dealt with by Lang J and the attempt of the defendants to raise the same issues again by way of counter-claim may amount to an abuse of process, but in any
7 Wheeldon v Body Corporate 342525 [2015] NZHC 884.
event, these issues do not go to the validity of the two levies in question and therefore do not provide a basis for declining summary judgment.
(g)It is unjust vis-à-vis the other members of the body corporate, that those members have paid, or accept liability for, their respective shares of all levies, whereas Ms Singh has not. The regime under the Act is essentially a pay now/argue later regime.
[23] The Judge was therefore satisfied that there was no arguable defence to the claim, and summary judgment was entered.
Analysis of the argument on appeal
[24] Ms Singh raises a large number of points that, on her own submissions, relate primarily to her separate proceeding in this Court against the body corporate manager and former and current committee members. In oral argument, Ms Singh expressly disavowed any claim against the body corporate itself. This is probably the correct approach as a matter of law, but I proceed on the basis which is more favourable to her on this appeal (and which seems to have been the basis of the judgment on appeal), that a number of her points might also raise potential claims against the body corporate.
[25]Ms Singh submits inter alia:
(a)The body corporate committee and others had failed to manage the project in accordance with s 74.
(b)The body corporate committee and body corporate manager are harassing [her]8 for their own poor and careless decisions.
(c)The current body corporate manager is not validly appointed.
8 Frequently during the submissions Ms Singh referred to allegations against the body corporate by “the owners”, which I have reworded as reference to her specifically, as she cannot make allegations on behalf of people who are not parties to the proceeding, let alone the appeal.
(d)The body corporate manager neglected cost controls and over-committed costs putting [her] under financial strain.
(e)The body corporate manager had a conflict of interest with regard to the lending facility.
(f)The body corporate had not provided sufficient accounting or other information, and an audit or at least full details had to be provided before payment was due.
(g)The body corporate has failed to properly dispute claims made by the contractor.
[26] Lang J has ruled that the works were carried out pursuant to the scheme and the second levy was lawful for that reason.
[27] The third levy must likewise be lawful by logical implication from the judgment of Lang J, being a levy for the same works, and there was no challenge to it.
[28] A lawful levy has to be paid by those against whom it is properly issued. There is no suggestion that Ms Singh was not a unit owner at the relevant time, nor does she say that the levy has not been issued in accordance with the resolution.
[29] Relief for issues such as Ms Singh raises (if available at all) would have to be sought by way of separate proceedings, such as she has in fact brought in this Court under CIV-2018-404-317.
[30] Many of the submissions made in this Court on appeal against the summary judgment were made before Lang J.9 He refers to wide-ranging submissions made by Mr McBride for the applicants, designed to persuade him that the Court needs to intervene to protect the interests of unit owners as a whole. Mr McBride submitted that the body corporate committee responsible for overseeing the repair work had failed miserably in its responsibility to ensure the repair work was undertaken in a
9 At [27]-[29].
cost-effective and economical manner. In particular, he submitted that the committee failed to impose adequate cost controls and failed to adequately challenge or dispute claims for extra payment made by the contractor.
[31] Lang J recorded that it was neither necessary, nor appropriate, for him to reach any conclusion in relation to those issues because they are not relevant to the question of whether the levy was valid. He pointed to the fact that the committee members would hardly be motivated to act in a profligate manner, as they are all unit owners themselves and stand to lose, but in any event, clause 14.1 of the scheme leaves open the prospect that members of the committee may be liable to unit owners for wilful misconduct or gross negligence. Lang J said that the manner in which the committee has carried out its task may therefore yet need to be tested in another forum. Ms Singh clearly responded to that with her December 2017 High Court action.
[32] Any residual claims that Ms Singh might have, for example under clause 14.1 of the scheme against committee members for wilful misconduct or against third parties for breach of such duty as they might owe her, or perhaps as otherwise incorporated in her December 2017 proceeding, are clearly, as Judge Harrison said, not a defence. They do not even amount to counterclaims to the extent they are not against the body corporate itself. Even to the extent there may be issues amounting to counter-claims against the body corporate, these would not justify equitable set-off as in NZME v Grant, preventing issue of summary judgment.10 These issues are not interdependent with payment of a lawful levy, but rather, clearly intended under the scheme and the legislation to be issues that are separate from that payment. As Judge Harrison said, it would be unjust for other unit owners to be left carrying the cost. I note also that, given the “counter-claims” are all, or for the most part, against parties other than the body corporate, this also answers Ms Singh’s submission that if she has to pay the levies while the December 2017 proceeding is still extant, she will not be able to recover her money if she is ultimately successful. Any recovery will be from Boutique or individual owners on her current pleading.
10 NZME v Grant [1989] 1 NZLR 8 at 12.
[33] The above disposes of the appeal. I refer to some points in a little more detail below.
[34] Ms Singh submits that the second levy, when approved by Lang J, included disputed items which Lang J contemplated would be “properly resolved” (Ms Singh’s language) by the body corporate and which have not been, but rather simply paid. Lang J found that the second levy imposed by the body corporate was not ultra vires. If that levy was for work which included disputed items, then I take it that Lang J considered it was a matter for the body corporate to decide how those disputes would be resolved. It is not for one individual unit owner to decide how they should be resolved, or what amounts to a “proper” resolution. These schemes would be unworkable if that were the case.
[35] Ms Singh also submitted on this appeal that there had not been full disclosure of financial statements and other material by the body corporate. This is a point that might go to the validity of a resolution, but as I have said, the levies (and accompanying resolutions) at issue here have to be taken as valid. I note further that Lang J found that the unit owners had been provided with full information leading up to the issue of the second levy. (I also note for completeness only that Ms Singh does not point to any proper basis for her assertion regarding lack of full disclosure, and nor is this a point that appears to have been raised before Judge Harrison.)
[36] Ms Singh disputes the validity of that part of the levies that relates to funding of the loan taken out by the body corporate. (This again is a point apparently not raised before the District Court Judge.) Lang J referred specifically to the issue of borrowing by the body corporate and their ability to do so, before ruling that the second levy was valid. As this matter has been considered by a competent Court, exercising the same jurisdiction, it cannot be raised for determination in this proceeding. But, in any event, the levies have to be taken as valid.
[37] Ms Singh made much of her argument that the current body corporate manager was not validly appointed. As I understand it, this is a reference to the appointment of Boutique in March 2017, as they had been in and out as managers. She submits both that the levies include payments that should therefore not have been made to the body
corporate manager, and a large question is raised as to whom she should make payment of levies, as payment to the body corporate manager would in her view be clearly unsafe. To the extent this is a reference to payments included in the levies, it does not affect liability because the levies themselves are valid. The allegation that payment of the judgment sum to the body corporate manager would be unsafe is irrelevant because Ms Singh will nonetheless have discharged her liability by making that payment. (I note further that the current body corporate manager was appointed prior to the judgment issued by Lang J. Ms Singh advised me that she took no issue at that time regarding the authority of the body corporate manager, but that she did raise this issue in the District Court.)
[38] Ms Singh argues also that Lang J was misled in a number of respects as to the correct facts. For example, she says that Lang J was led to believe that the costs were genuine costs due to unknowns discovered during the project which were required for a code of compliance certificate, when in fact according to Ms Singh, they arose as a result of misconduct from the consultants, the committee, the body corporate manager and contractors during the course of the project. However, no appeal was filed against Lang J’s judgment and no points can be taken on this appeal that criticise or undermine the findings made by Lang J. These are points that, if they have any validity may be able to be addressed in Ms Singh’s separate proceeding against other parties.
[39] Ms Singh also submits that she was badly advised in a number of respects by her legal counsel in and leading up to the hearing before Lang J. Those sorts of matters would need to be raised in claims against her counsel and cannot be raised on this appeal.
[40] Ms Singh says that her unit is defective in a number of respects and she is wrongly being asked to pay for defective work. I question this as a matter of fact and substance, given the issue of a code of compliance certificate and the fact that evidence she filed in the District Court in this regard seems to consist of allegations by her, as opposed to expert or even third-party evidence. In any event, any defects clearly do not invalidate or make unpayable the levies made by the body corporate.
[41] Ms Singh also raises issues regarding a further levy (or possible further levies) following the judgment of Judge Harrison. This appeal relates only to the claim for which summary judgment was given.
[42] In her submissions in reply, Ms Singh submits that the quantum of the summary judgment ordered by Judge Harrison includes costs ordered by Lang J in the High Court, which were the subject of an appeal to the Court of Appeal, were compromised, and the compromised sum was paid by her. Mr Powrie says it is incorrect that High Court costs are included in the judgment sum, but in any event, I ruled against this issue being arguable by Ms Singh as it was not raised at all in her written submissions on the appeal. I am sure if there is anything in it, Mr Powrie will see to an adjustment as he has an ethical duty to do.
Conclusion
[43] I agree with Judge Harrison for the reasons stated above and for the reasons recorded by the Judge, that summary judgment was properly entered. The appeal is dismissed.
[44] I record that Ms Singh says that one of her main issues with the judgment of Judge Harrison is that, as owner of her unit, she should have had a say. Instead, in her view other owners are making decisions regarding her unit. Unfortunately for Ms Singh, that is of the essence of unit title ownership. (Ms Singh must be familiar with this, as I note she was earlier on the committee for some time.) Unfortunately also, the cost of remedying watertightness issues for owners of any kind is (or was) very difficult to assess and typically escalates well beyond any estimate. But, for one or a few unit owners to not then pay, only further escalates the cost for others.
Costs
[45] The respondent seeks indemnity costs. An affidavit was tendered at the hearing of the appeal providing a breakdown of actual costs incurred on the appeal totalling
$7,285.41, including disbursements. As Mr Powrie pointed out, this amount is less than scale costs. There can be no issue in those circumstances with the amount sought.
[46] I therefore make an order for costs on the appeal in favour of the respondent in the sum of $7,285.41.
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Hinton J
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