Singh v Boutique Body Corporates Ltd
[2018] NZHC 3233
•10 December 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-000317
[2018] NZHC 3233
BETWEEN CHERYL SITARA SINGH
Plaintiff
AND
BOUTIQUE BODY CORPORATES LIMITED
First Defendant
KATHERINE ANNE SPECK and RYAN ANTHONY SPECK
Second DefendantsJENNIFER GRACE RADONICH
Third DefendantBING LIANG
Fourth DefendantSAMIR CHAWLA
Fifth DefendantGURBACHAN SINGH
Sixth DefendantMARK IJSSELDJIK
Seventh Defendant
Hearing: 14 September 2018 Appearances:
Plaintiff in person
V S Wethey and E J McDonald for First Defendant T J G Allan for Second to Seventh Defendants
Judgment:
10 December 2018
JUDGMENT OF COURTNEY J
This judgment was delivered by Justice Courtney on 10 December 2018 at 4.00 pm pursuant to R 11.5 of the High Court Rules – Registrar/Deputy Registrar …………………… Date ……………………..
SINGH v BOUTIQUE BODY CORPORATES LTD & ORS [2018] NZHC 3233 [10 December 2018]
Introduction
[1] Cheryl Singh owns one of the 30 units in the “Richmond Terraces” development in Flat Bush, Manukau. Richmond Terraces has had longstanding and serious water-tightness problems. The unit owners have been levied substantial amounts to cover remediation work. Ms Singh is aggrieved because she feels that the remediation has not been well managed and she has had to pay more than is fair in levies. In previous proceedings she has resisted the validity of the levies and her liability for them and has made allegations of wrongdoing against the Body Corporate. In this proceeding, she makes allegations of wrongdoing against the Body Corporate’s manager, Boutique Body Corporates Ltd (BBCL) (the first defendant) and individual members of the Body Corporate Committee (the second to seventh defendants).
[2]The defendants have applied for orders:
(a)restraining Ms Singh from continuing this proceeding, her counterclaim against the Body Corporate in District Court proceedings CIV 2017- 404-1132 (the District Court proceeding) and any counterclaim or third-party claim in the District Court proceedings against the members of the Body Corporate Committee who are the second to seventh defendants in the current proceedings;1
(b)striking out the statement of claim in the current proceeding;2 or
(c)requiring Ms Singh to provide security for costs, with a stay of the proceedings pending payment.3
[3] Ms Singh is unrepresented. She filed written submissions and appeared in person to oppose the applications. However, her submissions mostly repeated the factual assertions contained in the statement of claim and failed to deal with the relevant legal issues. I have endeavoured to identify the arguments that might be relevant to Ms Singh’s position.
1 Senior Courts Act 2016, s 166(2)(a).
2 High Court Rules 2016, r 15.1.
3 High Court Rules 2016, r 45.
Application to restrain the proceeding: s 166(2)(a) Senior Courts Act 2016
Relevant principles
[4] Sections 166 – 169 of the Senior Courts Act 2016 (SCA) replace s 88B of the Judicature Act 1908 which was directed towards litigants who had “persistently and without any reasonable ground instituted vexatious legal proceedings”. The new provisions provide a broader regime, intended to respond to the increasing number of vexatious litigants who “use up valuable Court resources to pursue meritless proceedings time and time again”.4
[5] Section 166 of the SCA empowers a High Court Judge to make an order restricting a litigant from commencing or continuing a civil proceeding in that Court or in any other court or tribunal. There are three type of orders that can be made, each progressively more restrictive. Section 166 provides as follows:
(1)A Judge of the High Court may make an order restricting a person from commencing or continuing a civil proceeding.
(2)The order may have –
(a)A limited effect (a limited order); or
(b)An extended effect (an extended order); or
(c)A general effect (a general order).
(3)A limited order restrains a party from commencing or continuing civil proceedings on a particular matter in a senior court, another court, or a tribunal.
(4)An extended order restrains a party from commencing or continuing civil proceedings on a particular or related matter in a senior court, another court, or a tribunal.
(5)A general order restrains a party from commencing or continuing civil proceedings in a senior court, another court, or a tribunal.
(6)Nothing in this section limits the court’s inherent power to control its own proceedings.
[6] The order sought by the defendants in this case is a limited order, to restrain Ms Singh from continuing this proceeding and also from advancing the counter claim
4 Andrew Beck and others McGechan on Procedure (loose-leaf ed, Thomson Reuters) at [SC166.01], citing the Minister of Justice’s introduction to the Bill.
she has brought in District Court proceedings and the third-party claims that she has indicated she will bring in the District Court proceedings. All relate to the management of the remediation work by BBCL and the Body Corporate Committee.
[7] Section 167 of the SCA sets out the grounds for making a limited order. Relevantly:
(1)A Judge may make a limited order under s 166 if, in civil proceedings about the same matter in any court or tribunal, the Judge considers that at least two or more of the proceedings are or were totally without merit
…
(4)In determining whether proceedings are or were totally without merit, the Judge may take into account the nature of any interlocutory applications, appeals, or criminal prosecutions involving the party to be restrained but is not limited to those considerations.
(5)The proceedings concerned must be proceedings commenced or continued by the party to be restrained whether against the same person or different persons.
[8] The threshold standard of “totally without merit” is not defined but is now generally accepted to require an objective determination in relation to the nature and substance of the claim.5 In previous cases, some assistance has been obtained from the report prepared by the Ministry of Justice to the Justice and Electoral Committee, which identified the following factors as relevant to determining whether a proceeding can be regarded as totally without merit:6
(a)there are no prospects whatsoever for success;
(b)exposure of defendants to inconvenience, harassment and expense out of all proportion to the gain a plaintiff is likely to receive;
(c)actions are brought at the drop of a hat despite the lack of merit;
(d)no regard is paid to merit, proportionality or cost by a litigant,
(e)the statement of claim or defence discloses no reasonable grounds of bringing or defending the claim;
5 Meenken v The Family Court at Masterton [2017] NZHC 2103 at [28]; and Genge v Visiting Justice Christchurch Mens Prison [2018] NZHC 1457 at [29].
6 Judicature Modernisation Bill: Report of the Ministry of Justice to the Justice and Electoral Committee (Ministery of Justice, Departmental Report CRT-09-04-07, April 2014) at [292] – [293], cited in, for example, Genge v Visiting Justice Christchurch Mens Prison, above n 5, at [29].
(f)the statement of claim is an abuse of the Court’s process or is otherwise likely to obstruct the just disposal of the proceeding; and
(g)there has been a failure to comply with a rule, practice direction or Court order.
The various proceedings
[9] The weathertightness problems in Richmond Terraces were discovered in 2009. At that stage, the cost of remediation was estimated at approximately $5 million. Work began in 2015 and the Body Corporate applied for approval of a scheme under s 74 of the Unit Titles Act 2010 under CIV 2015-404-003079 (the 3079 proceedings).
Gilbert J approved the scheme in August 2016.7
[10] The Body Corporate used settlement monies obtained in other litigation to fund the repairs and then, as costs rose, began to levy owners for the balance. It became obvious that the repairs would cost much more than had been obtained in the settlement of the proceedings. The total cost of repairs is now expected to exceed $13 million.
[11] In June 2015, the Body Corporate Committee appointed to oversee the repair work purported to impose a first levy. It did not have the power to do so and that levy was ultra vires. But the Body Corporate approved the levy at an Extraordinary General Meeting on 25 October 2016. In November 2016, Ms Singh and the owners of another unit (the Simpsons) brought proceedings under CIV-2016-404-2950 (the 2950 proceeding) seeking declarations that the levy was invalid because it was ultra vires and because they had been excluded from voting for failure to pay previous levies.
[12] The substantive proceeding was resolved without a hearing but the parties could not agree on costs. Lang J fixed costs in favour of Ms Singh and the Simpsons but reduced them by 50 per cent. This was on the basis that, although their claims stood a good chance of success, the Court still may not have granted substantive relief because the resolution confirming the levy had passed by a wide margin. The outcome
7 Body Corporate 207650 v Speck [2016] NZHC 1826.
would have been the same even if Ms Singh and the Simpsons had been entitled to vote against it.8
[13] On 5 December 2016, the Body Corporate held another Extraordinary General Meeting at which Ms Singh and the Simpsons voted. The imposition of levies was again approved. In the 3079 proceeding Ms Singh and the Simpsons applied for orders that the levies were ultra vires, seeking declarations of invalidity in relation to levies imposed at the Extraordinary General Meetings on 25 October and 5 December 2016. They argued that the remedial works being undertaken went beyond the scope of the s 74 Scheme. They also made assertions that the Committee had failed in its responsibilities to undertake the repair work in a cost-effective and economic manner.
[14] Lang J held that the levies had been properly imposed and dismissed the application.9 He found it unnecessary to reach a conclusion on the allegations that the Committee had failed to control the cost of the repairs, but did comment that he could not see “what motive the Committee would have had to spend the unit owners’ money in a profligate manner” given that they were all unit owners themselves. He also noted that: 10
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. The manner in which the Committee has carried out its task may therefore yet need to be tested in another forum.
[15] Lang J imposed indemnity costs on the applicants.11 Ms Singh and the Simpsons appealed the costs award but the appeal was withdrawn following a settlement with the Body Corporate.
[16] The Body Corporate imposed a further levy on 24 May 2017. In June 2017, it began proceedings against Ms Singh in the District Court (CIV-2017-404-1132) (the District Court proceeding), seeking summary judgment in respect of Ms Singh’s unpaid levies, which, by then, totalled $166,573.27. Ms Singh filed a statement of defence and counterclaim. She asserted that the costs of remediation on which the
8 Singh v Body Corporate 207650 [2017] NZHC 2031.
9 Body Corporate 207650 v Speck [2017] NZHC 966, (2017) 18 NZCPR 742.
10 At [29].
11 Body Corporate 207650 v Speck [2017] NZHC 1636.
levies were based were caused by inexperience and errors on the part of the construction company engaged to do the work, and that the costs had been approved by voting at meetings rather than by individual owners. She claimed that in those circumstances she was not liable for the levies. On the basis of the same assertions, she counterclaimed for unspecified “damages (including exemplary) for abuse of powers and not exercising powers in accordance with the law and causing unnecessary embarrassment and strain on the defendant”.
[17] In addition to the counterclaim, Ms Singh filed an application seeking to join as third parties, BBCL and those members of the Body Corporate Committee who are named as second to seventh defendants in the present proceeding. That application was still extant by the time the summary judgment came to be dealt with.
[18] Judge G M Harrison granted the summary judgment application.12 Commenting on Ms Singh’s allegations, he said:13
The essence of the case for the defendants 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 properly incurred. That approach has been rejected the High Court in the past, see in particular Wheeldon v Body Corporate 342525 [2015] NZHC 884.
What effectively the defendants are attempting to do is have a second attempt at challenging the validity of the levies, when the High Court has already held that the second levy was imposed validly, and there is no challenge to the third levy.
That can only mean that there is now no defence to the claims by the body corporate.
[19]In relation to the application to join the third parties, he said that:14
Those proceedings are not sufficient to decline to grant summary judgment in favour of the body corporate. If indeed those proceedings are intended seriously, they can proceed independently of the necessity for the defendants to pay their respective shares of the levies.
12 Body Corporate v Singh [2017] NZDC 29041.
13 At [21]–[23]
.14 At [25].
[20] In relation to the counterclaim, the Judge noted that a counterclaim is not a defence to a summary judgment application and, in any event:15
The allegations in the counterclaims essentially repeat issues raised before Lang J and relate to the scope and amounts of costs increases … 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 their counterclaim may amount to an abuse of the process of the court. I make no specific finding in that regard. It is clear, however, that the counterclaim does not challenge directly the validity of the two levies in question and consequently does not provide a basis for declining summary judgment.
[21] Ms Singh has neither pursued the counterclaim and application to join third parties to the District Court proceedings, nor abandoned them. She indicated in submissions that she had not pursued the counterclaim because she perceived that Judge Harrison would rule against her. I infer that she does not intend to take steps to advance either the counterclaim or the third-party application in the District Court.
[22] Ms Singh filed an appeal against the summary judgment decision. Before that could be heard the Body Corporate issued bankruptcy notices in relation to the amounts owed by Ms Singh from the summary judgment. Ms Singh applied to stay the execution of the summary judgment pending determination of the appeal (CIV- 2017-404-001132) and applied to set aside the bankruptcy notice (CIV-2018-404-116). Both proceedings were withdrawn later in the year following Ms Singh’s payment of the outstanding costs.
[23] By the time the appeal against Judge Harrison’s decision was heard, Ms Singh had commenced the present proceedings (CIV-2018-404-317). Hinton J considered that Judge Harrison was correct to conclude that there was no defence in respect of the levies which had been lawfully imposed and that the counterclaims did not provide any defence. Dismissing the appeal, the Judge noted that a number of Ms Singh’s submissions related to the allegations made in the present proceedings, including alleged failure by the Body Corporate Committee to manage the project in accordance with s 74, harassment by the Body Corporate Committee and BBCL, negligence by BBCL in relation to cost controls, BBCL having a conflict of interest in relation to the lending facility and the Body Corporate not providing sufficient accounting and other
15 At [32].
information. The Judge commented that relief for the issues that Ms Singh was raising needed to be dealt with in the separate proceedings.16
[24] The Body Corporate applied to vary the s 74 Scheme (CIV-2018-404-000326) to permit the Body Corporate to impose a final levy. The owners of three units, one of which was Ms Singh, opposed the application, including on the grounds that BBCL and the Body Corporate Committee were guilty of misconduct and negligence in the general and financial management of the project, and that BBCL had a conflict of interest with the lender. However, these issues were acknowledged to be the subject of the present proceedings. Downs J accordingly granted the application to vary the Scheme, without determining those allegations.17
[25] I come, finally, to the present proceedings. I discuss the statement of claim in detail later, in relation to the strike-out application. At this stage, it is sufficient to note the following: the statement of claim makes numerous wide-ranging allegations of both intentional and negligent conduct. They include allegations of dishonesty and carelessness in the management of the remediation work, abuse of statutory powers, harassment, theft and misleading trade practices. Almost none are particularised and in most cases, it is impossible to know precisely what specific incidents the allegations relate to.
The s 166(2) application
[26] Ms Singh has persisted in her opposition to the Scheme and the levies for years, with no success. Her position has been a burden on those members of the Body Corporate Committee charged with the responsibility of overseeing implementation of the Scheme. It is notable that for some of the relevant period Ms Singh herself was a member of the Committee. It is clear that Ms Singh has brought at least two sets of proceedings/applications that were totally without merit; the interlocutory application in the 3079 proceedings and the appeal against Judge Harrison’s decision were both doomed to fail.
16 Singh v Body Corporate 207650 [2018] NZHC 1932 at [29].
17 Body Corporate 207650 v Speck [2018] NZHC 1952.
[27] Mr Allan, for the second to seventh defendants, argued that that there have been eight judicial decisions affecting Ms Singh’s positions, all of which have concluded that the s 74 Scheme was valid and the levies imposed by the Body Corporate are payable. He made extensive submissions aimed at showing that the allegations being made now essentially seek to re-litigate matters that have already been determined in the previous proceedings, and that they have no merit. He characterised “matters” for this purpose as the consequences of the Body Corporate undertaking the remediation work pursuant to the Scheme.
[28] It is clear from the outcome of the earlier proceedings that the scope of the s 74 Scheme and the validity of the levies is now beyond argument. As a result, any collateral attack on the scope of the work done or the amount of the levies will inevitably fail. It is evident, even from the current pleading, that some aspects of Ms Singh’s claim offend in this way. For example, the allegations at paragraphs 7–9, 14–15, 17, 21–23, 37, 39–40 all plainly amount to a collateral attack on the scope of the Scheme or validity of the levies.
[29] However, not all the allegations being made in the current proceeding fall into this category. Moreover, although many of the same allegations have been made in previous proceedings, they have generally not been decided, with the presiding judges identifying them as matters that ought to be determined in a different forum. In the 3079 proceeding, Lang J declined to determine allegations of negligence and misconduct in relation to the Body Corporate’s management of the remedial work. In the District Court proceeding Judge Harrison, having rejected the counterclaim and third-party claims as a defence to the summary judgment application, was not required to consider the allegations against the Body Corporate and BBCL. Hinton J was not required to deal with the allegations in the appeal against Judge Harrison’s decision and noted that relief (if any were available) would have to be sought in separate proceedings. Downs J was not required to consider the allegations and recorded Ms Singh’s acknowledgement that they were to be dealt with in the present proceedings.
[30] Had these allegations been determined, I would take a different view. But despite Ms Singh’s efforts to have allegations considered and determined, the Judges
in previous proceedings have declined to do so, considering that they are properly dealt with in another forum. This is that forum. I therefore decline to make an order under s 166(2) in relation to this proceeding.
[31] However, the still extant counterclaim and application to join third parties in the District Court proceeding are incompatible with the present proceeding. Even though the counterclaim is expressed in very brief and vague terms, it obviously overlaps with the current allegations. Likewise, the proposed third-party claims against those who are parties in this proceeding clearly anticipates claims of the same nature as are presently being brought, which would be an abuse of process.
[32] I consider that it is appropriate to make a limited order under s 166(2) that Ms Singh be restrained from continuing the counterclaim and the third-party application in the District Court proceedings.
Application to strike out
Relevant principles
[33] Statements of claim must inform defendants in sufficient detail of the facts being alleged, to enable the defendants to identify the causes of action being asserted and allow the defendants to understand and respond to the case against them. To this end the High Court Rules require pleadings to comply with rr 5.17 and 5.26. Rule
5.17 requires that:
(1)Distinct causes of action … founded on separate and distinct facts, must if possible be stated separately and clearly.
(2)If a party alleges a state of mind of a person, that party must give particulars of the facts relied on in alleging that state of mind.
(3)A state of mind includes … malice or fraudulent intention …
[34]Rule 5.26 relevantly requires that the statement of claim:
(a)must show the general nature of the plaintiff’s claim to the relief sought; and
(b)must give sufficient particulars of time, place, amounts, names of persons, nature and dates of instruments, and other circumstances to
inform the court and the party or parties against whom relief is sought of the plaintiff’s cause of action
…
[35] Rule 15.1 of the High Court Rules permits the court to strike out all or part of a pleading if it:
(a)discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b)is likely to cause prejudice or delay; or
(c)is frivolous or vexatious; or
(d)is otherwise an abuse of the process of the court.
[36] The recognised approach on a strike-out application is to assume that pleaded facts are true, provided they are not speculative or without foundation. The fact that difficult questions of law may need to be decided in order to determine a strike-out application does not preclude striking out. But the power to strike out a statement of claim is sparingly exercised; the court is reluctant to strike out a claim unless it is clearly untenable. There is a special need for care in areas where the law is uncertain or still developing.18
[37] Attempts to re-litigate matters that are the subject of other proceedings or have already been determined by the court will be regarded as an abuse of the process.19
[38] If defects in the pleading are capable of being remedied by amendment, the court is likely to allow that rather than strike out the pleading altogether.20
18 AG v Prince [1998] 1 NZLR 262 (CA) at 267; and Couch v A-G [2008] NZSC 45, [2008] 3 NZLR 725 at [33].
19 Collier v Butterworths of New Zealand Ltd (1997) 11 PRNZ 581 (HC)at 586; Otis Elevator Co Ltd v Linnell Builders Ltd (1991) 5 PRNZ 72 (HC); and Cowley v Shortland Publications Ltd (1991) 5 PRNZ 76 (HC).
20 Marshall Futures Ltd v Marshall [1992] 1 NZLR 316 (HC).
The statement of claim
[39] The defendants say that it is impossible to know from the current statement of claim what causes of action are being alleged, what allegations of wrongdoing are related to which cause of action and what the particulars of the various allegations are. As a result, the statement of claim does not comply with rr 5.17 and 5.26 in that it does not disclose a cause of action or is otherwise an abuse of the court process.
[40] On behalf of BBCL, Ms Wethey, pointed to the fact that, although Ms Singh alleges negligence against the defendants, in the same cause of action she also makes allegations that BBCL abused its powers under s 74 of the Unit Titles Act 2010, harassed and bullied her, acted misleadingly and deceptively and discriminated against her. There are virtually no particulars of these allegations.
[41] Mr Allan, for the second to seventh defendants, made similar points; the pleadings are generalised and contain non-specific allegations of loss with no proper pleading to show what acts caused what loss or damage; it is not clear whether the claims are made against some or all of the Body Corporate Committee members named in the proceedings (the composition of the Body Corporate Committee changed over the relevant period and, as noted earlier, Ms Singh herself was a member at times); some of the allegations are scandalous and exaggerated (including for misrepresentation, misfeasance, conspiracy, harassment and abuse of powers); there is a complete lack of particulars.
[42] Ms Singh barely responded to these complaints in either her written or oral submissions. In her written submissions, she merely said that the defendants “have all the evidences (sic) and are fully aware of the reasons for the allegations”. This response was hopelessly inadequate.
[43] The defendants’ complaints are, plainly, justified. The statement of claim contains a section headed “Claim” in which Ms Singh sets out a variety of allegations, most of which are entirely without particulars. Paragraph 4(a)–(cc) contains 29 discrete allegations, which I set out in full:
4.The claim against the Committee and BBCL are due to:
(a)Misfeasance arising from conflict of interest with BBCL’s affiliated lending facility, BCLS Nominees Ltd (BCLS);
(b)Conspiring to obtain extra funds from plaintiff by abusing court process;
(c)Breaching Court of Appeal Settlement Deed;
(d)Misrepresenting facts in Court documents and proceedings;
(e)Harassing confession of debt by bankruptcy proceedings;
(f)Abuse of powers to harass the owners, bankrupt the owners to stop them from proceeding further in their proceedings;
(g)Abuse of powers to remove Body Corporates lawyer and hiring Grove Darlaw a non-construction lawyer to protect self-interests;
(h)Refusing to provide BBCL’s contract and service agreement with Richmond Terraces causing losses in unsolicited professional fees;
(i)Refusing to provide Legal Vision’s, legal advice on conflict of interest between BBCL and BBCL’s affiliated lending facility, BCLS Nominees Limited (BCLS);
(j)BBCL and the Committee violating my ownership rights by interfering with the quiet enjoyment of the unit, causing embarrassment and breaching personal privacy by unauthorised entry to my tenanted unit without permission or notice;
(k)Exposing the occupants of my unit to health and safety risks;
(l)Allowing misconduct from the body corporate manager during meetings, not maintain proper financial accounts and mismanagement of project;
(m)Providing a defective house despite Code of Compliance Certificate;
(n)Stealing my garage door during construction;
(o)Deceiving the owners section 74 was not being implemented;
(p)Carelessly settling unjustified claims with the contractors and misleading High Court that construction issues would be solved;
(q)BBCL and the Committee’s abuse and misuse of powers delegated under the Unit Titles Act 2010 and the Section 74 Scheme, incurring loss;
(r)Negligent spending and overcommitting costs instead of managing and controlling costs;
(s)Not exercising responsible borrowing and lending and carelessly overcommitting costs and continuing to overcommit costs negligently;
(t)Committee and BBCL harassing owners of unit 30 (parties who withdrew proceedings due to harassments) and I with bankruptcy and misleading, issues would be resolved at the end of the project to recover losses and costs;
(u)Acting in self-interest and not in the interest of all owners;
(v)Not holding contractors and consultants to contract;
(w)Not exercising duty of care to protect owners interest;
(x)Negligently and carelessly incurring costs on behalf of the owners;
(y)Deceptive trading practices to pass body corporate resolutions;
(z)BBCL and committee not finalising the accounts in order to obtain extra funds;
(aa) Not complying with UTA general meeting rules; (bb) Not complying with UTA and Section 74 Scheme;
(cc) Providing false information to owners to start the repairs.
[44] Paragraphs 5 to 41 are a collection of assertions and allegations with a general underlying theme but no coherent form. They contain assertions regarding the scope and cost of the remedial work, which I have already held amount to a collateral attack on previous decisions of this Court. There are allegations against BBCL which might be regarded as particulars, but they are not tied to any of the specific allegations in paragraph 4. Some of them repeat allegations made in paragraph 4 (for example, at paragraph 27 it is alleged that BBCL had a conflict of interest with the lending facility). Some allege loss as a result of misconduct by the Body Corporate Committee and/or BBCL (for example, it is alleged that their harassment has forced Ms Singh to rent her unit).
[45] Ms Singh then pleads a specific cause of action in negligence, in which she repeats the earlier paragraphs and asserts:
43.The Committee and BBCL have a duty of care to the owners to act in their best interest.
44.The Committee and BBCL have not acted in the best interest of the unit owners by:
(a)acting negligently;
(b)acting in their self-interests;
(c)Abusing the powers under section 74 Scheme and UTA 2010;
(d)Harassing and bullying the plaintiff,
(e)Misleading and deceptive trading practices
(f)Overcommitted costs although there were cost effective options,
(g)Mismanaging the Body Corporate; and
(h)Is discriminating the plaintiff
45.The Committee and BBCL have caused loss, being:
(a)The cost savings with a “walk away” option of a demolition and rebuild or a sale of the land;
(b)The cost of installing defective items to the plaintiffs units;
(c)The cost of replacing the defective and stolen items to the units; and
(d)Rental loss.
(e)Losses in unnecessary legal proceedings instead of resolving contract issues.
[46] Barely any analysis is required to see that the statement of claim in its current form fails to comply with rr 5.17 and 5.26, fails to disclose a tenable cause of action and is, in some respects, an abuse of process. First, most of the allegations, including those of serious misconduct, are completely unparticularised. There are, for example, no particulars given of the alleged harassment, abuse or misleading conduct. The defendants cannot possibly be expected to know what incidents these allegations are said to relate to. It is no answer for Ms Singh to assert that the defendants themselves know what she is alleging. It is for her to lay out in particularised form exactly what she is alleging and the factual basis for each allegation.
[47] Secondly, the allegations in the first “Claim” set out at paragraph 4 and the cause of action later described as one in negligence cover are hopelessly confused,
combining allegations of intentional conduct and negligence. They are not capable of grounding specific causes of action.
[48] Thirdly, the allegations of intentional conduct are incapable of grounding a specific cause of action. They include, for example, such diverse complaints as breach of contract,21 abuse of court process,22 theft,23 deceit,24 and “deceptive trading practices” (presumably, intended to refer to the Fair Trading Act 1986).25 It is impossible for the defendants to plead to these allegations.
[49] Fourthly, the allegations of misuse of statutory powers under the UTA are not particularised so it is impossible to know exactly what statutory powers or obligations are in issue.26
[50] Fifthly, paragraphs 5 to 41 comprise a mishmash of allegations and narrative too general to plead to.
[51] Sixthly, the claim for relief is defective. It claims as damages “All the legal costs of $168,830 incurred in the proceedings till the end of the proceedings”. But it is settled that legal costs cannot form the basis for a damages claim.27 It seeks a discharge of the s 74 Scheme, even though there is no application under s 74 of the UTA and the Body Corporate is not named as a party. It seeks “Assignment of the Body Corporate to Administration” (presumably under s 114 of the UTA), although no such application has been made and the Body Corporate is not a party to the proceeding.
[52] Some of the allegations may be capable of being pleaded in a form that will satisfy the High Court Rules, but to do so will require a proper understanding of the available causes of action and their requisite elements. Allegations must be properly particularised so that the defendants can appreciate the specific complaints that are
21 Paragraph 4(c).
22 Paragraph 4(d) and (e).
23 Paragraph 4(n).
24 Paragraph 4(o).
25 Paragraph 4(y).
26 Paragraph 4(q).
27 Chick v Blackwell [2013] NZHC 1525 at [152]–[153]; Carr v Gallaway Cook Allan [2016] NZHC 2065 at [731]; and Simpson v Walker [2012] NZCA 191, (2012) 28 FRNZ 815 at [75].
being made against them. Allegations of misconduct, especially in the form of dishonesty, carry a heavy responsibility to ensure that there is a justifiable basis for such allegations.
[53] However, some of the allegations will not support a cause of action either at common law or for breach of a statutory obligation. There must, for example, be doubt over whether the allegation at paragraph 4(k) of “exposing the occupants of my unit to health and safety risks” is capable of grounding any cause of action. And, as I have already explained, any allegations that are essentially an attempt to re-litigate the scope of the Scheme or the validity of the levies amount to an abuse of the court process.
[54] Finally, I deal with the assertion of a duty of care owed by BBCL to Ms Singh as a unit owner. Ms Wethey, for BBCL, argued that, no such duty exists so the allegations of negligence against it must fail and should be struck out. Neither counsel nor I have been able to identify any authority in which there has been found to be a duty on a body corporate manager to a unit owner. On the approach of Couch, however, I ought not strike out the pleading unless I am certain it could not succeed. Ms Wethey invited me to treat BBCL’s position as analogous to a lawyer who might owe a duty of care to a third party, but only where the lawyer had assumed an obligation to the third party and the interests of that party and the lawyer’s client are aligned.28 She argued that BBCL’s contractual obligations to the Body Corporate were incompatible with a duty of care to individual unit owners because the interests of the Body Corporate and the unit owners are not aligned; that Ms Singh has other remedies, notably her rights against the Body Corporate itself, and that any loss is economic only.
[55] Ms Wethey also relied on Thomas J’s decision in Tao v Strata Title Administration Ltd, which held that a unit owner must challenge their Body Corporate, not the manager, if they wished to challenge the validity of the formation and constitution of a body corporate committee or levies imposed by a body corporate.29 On this basis, Ms Wethey argued that Ms Singh’s proper remedy was against the Body
28 E.g. Gartside v Sheffield Young & Ellis [1983] NZLR 37 (CA) and Connell v Odlum [1993] 2 NZLR 257 (CA).
29 Tao v Strata Title Administration Ltd, [2016] NZHC 814, (2016) 17 NZCPR 312.
Corporate but pointed out that such a claim would inevitably fail in any event. That is on the basis that the previous decisions of this Court found that the levies imposed were lawful and the work was undertaken in the context of an approved s 74 scheme and had been carried out to Code Compliance standard or for the purposes of achieving Code Compliance.
[56] I am not convinced that either of these arguments preclude a duty of care. BBCL is an agent of the Body Corporate. The Body Corporate’s interests are aligned with those of the unit holders (subject, of course, to unit holders failing to comply with their own obligations to the Body Corporate, such as to pay properly imposed levies). If Ms Singh could sue the Body Corporate in negligence then, in the usual course, one would expect the Body Corporate’s agent to be in no better position. However, the current state of the pleadings makes it impossible to know exactly what the scope of the alleged duty or the alleged breach is. At this stage I am not prepared to strike out the negligence allegations, though that is not to be taken as indicating a view that such a cause of action is tenable. It is no more than an acknowledgement that the pleadings are in such a parlous state that I am unable to do justice to the question.
[57] In these circumstances, I am satisfied that the right course is to allow Ms Singh the opportunity to amend the statement of claim. Ms Singh is, of course, at a serious disadvantage because she drafted the pleading herself without legal advice and an effective repleading will need the input of a lawyer. I urge Ms Singh to engage a lawyer for this purpose.
[58] Although I will allow Ms Singh to amend her pleading, I have serious reservations about what form an amended pleading will take, especially if she does not obtain legal advice. I am conscious that for the individual Committee members dealing with the proceedings in its current form, the proceedings have been a significant source of expense and stress. Litigants are entitled to know the case against them. It is unacceptable that individuals should be faced with a pleading that makes serious allegations in such a hopelessly muddled form. Therefore, to do justice to all the parties, I intend to adjourn the strike-out application to allow Ms Singh one opportunity to file a draft proposed amended statement of claim that complies with the High Court Rules. If that document does not fully comply I will grant the application
to strike out the statement of claim. Ms Singh must understand that, regardless of her subjective views as to the merits of her claim, the kind of scatter-gun approach that she has adopted imposes an unfair burden on defendants that will not be permitted.
Security for costs
[59] The defendant seeks security for costs of $54,500 pursuant to r 5.45 of the High Court Rules. Rule 5.45 allows a Judge to order the giving of security for costs in certain circumstances including where there is reason to believe that a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful.30 If that ground is made out, the making of the order is nevertheless discretionary, turning on whether the Judge “thinks it is just in all the circumstances” to require security to be given.31 The exercise of the discretion requires consideration of the competing interests, the defendants’ interest in being protected from a barren costs order and the plaintiff’s right of access to the court.32 Factors relevant to the exercise of the discretion include the merits of the claim, whether the plaintiff’s impecuniosity results from the defendant’s actions, whether there has been unreasonable delay by the defendants in seeking security and whether requiring security would prejudice the plaintiff and bring an end to the claim.33 If security would have the effect of bringing the plaintiff’s claim to a halt, security should only be required if a clear impression can be formed that the plaintiff’s claim is altogether without merit.34
[60] It is apparent that the threshold test under r 5.45(1)(b) is met in this case. One of the second defendants, Ms Speck, has said in her affidavit in support of the applications that Ms Singh still owes a total of $210,012.59 from the District Court judgment. That has been outstanding since 27 March 2018. Further, based on Ms Speck’s own unit value, it is reasonable to expect that Ms Singh’s property has a value of about $600,000. There is a mortgage registered against the title, though the amount of that mortgage is unknown. Further, Ms Singh has made statements in
30 Rule 5.45(1)(b).
31 Rule 5.45(2).
32 Clear White Investments Ltd v Otis Trustee Ltd [2016] NZHC 2837 at [4].
33 Highgate on Broadway Ltd v Devine [2012] NZHC 2288, [2013] NZAR 1017 at [22]–[24].
34 At [23(b)].
correspondence with the Body Corporate to the effect that she is unable to pay the overdue levies without selling her property.
[61] This, however, seems to me to be the effective answer to the problem. Ms Singh does own a property in which it can reasonably be assumed she has some equity. On the other hand, she clearly has cashflow problems given that she has been unable to meet the levies and, apparently, is unable to afford legal advice. In these circumstances, I do not see it as appropriate to require security for costs to be given. The answer in this case is to have the sprawling mess that is currently Ms Singh’s statement of claim re-formulated into proceedings that are capable of being pleaded to, and for the matter to come to a hearing as promptly and expeditiously as possible.
Result
[62] The application to restrain Ms Singh from continuing the proceeding under s 166(2) is allowed in part. There is a limited order under s 166(2) that Ms Singh is restrained from continuing the counterclaim and third-party application in the District Court proceedings.
[63] The application to strike out is adjourned to enable Ms Singh to amend her statement of claim on the following conditions:
(a)Ms Singh is to file a draft proposed amended statement of claim by 1 February 2019 that complies fully with the High Court Rules;
(b)By 15 February 2019 the defendants are to file and serve a memorandum confirming whether they are able to plead to the draft proposed amended statement of claim;
(c)There is to be telephone conference before me as soon as possible after 15 February 2019 to consider the next steps.
[64]The application for security for costs is refused.
[65] I direct that the issue of costs be left until the strike-out application has finally been determined.
P Courtney J
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