Small v Body Corporate 324525 - [2018] NZHC 19

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI TERENGA PARĀOA ROHE

Access to Court file restricted, pending further order of a Judge
(see paragraph [56][c])

CIV-2017-488-82 [2018] NZHC 19

IN THE MATTER OF
BRIDGEWATER BAY APARTMENTS,

PAIHIA

BETWEEN

CLARRIE LAWRENCE SMALL and KM TRUSTEE SERVICES LIMITED First Plaintiff

ROBYN KATHLEEN STENT Second Plaintiff

NEVILLE JOHN EADE Third Plaintiff

IVOR MILLINGTON Fourth Plaintiff

ANTHONY JOHN BUTCHER and RUTH BARBARA BUTCHER Fifth Plaintiffs

AND

BODY CORPORATE 324525
First Defendant

VIVIENNE ANNE BATH,
PHILIP LEONARD ANDREWS and

JOHN NIMMO Second Defendants

Hearing: 29 and 30 November 2017

Appearances:

B E Brill for the Plaintiffs
T J G Allan for the Defendants
No appearance for the Far North District Council

Judgment:

30 January 2018

CLARRIE LAWRENCE SMALL and KM TRUSTEE SERVICES LIMITED v BODY CORPORATE 324525 [2018] NZHC 19 [30 January 2018]

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 30 January 2018 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules

………………………………………………….
Registrar/Deputy Registrar

Solicitors:
Barry E Brill, Paihia, for the Plaintiffs
Grove Darlow, Auckland, for the Defendants

[1] CIV-2013-488-434 Body Corporate 324525 v Far North District Council was a leaky building proceeding brought by the body corporate and owners of the Bridgewater Bay Apartments at Paihia against the local authority and other defendants for damage to common and unit property. While I case-managed the proceeding, it seemed that the substantive hearing would be challenging for all. In addition to the usual complexity of a negligence claim for numerous building defects to be heard over eight weeks, the plaintiffs were divided. There were two groups with separate representation: a majority of seventeen owners and the body corporate, and a smaller group of five owners, the plaintiffs in this case. They had quite different views as to the extent of defects, damage to the apartments and required remedial work. The majority considered that the damage was so serious that far-reaching repairs were required. The minority believed that the defects could be remedied with less extensive work. The groups did not resolve their differences. They had gone to court over the dispute. The minority contended that the course taken by the body corporate and the majority was invalid under the Unit Titles Act 2010.1 They also refused to pay levies for the repairs. The body corporate sued to recover them.2 The prospect of any co- ordinated or agreed approach by all the plaintiffs in the leaky building proceeding did not look good.

[2] I was therefore pleasantly surprised to learn that the case settled after a mediation in April 2017. The local authority made payments in full settlement and a discontinuance was filed. That did not however bring differences between the groups to an end. It started a fresh dispute. The minority says that some of the settlement funds paid to the majority owners properly belong to the body corporate. While they say that the body corporate has…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] NZHC 19
Decision Date: 30 January 2018

CaseChat Overview and Summary

The case of Small v Body Corporate 324525 involved a dispute between the plaintiffs, a group of five unit owners, and the body corporate of the Bridgewater Bay Apartments, regarding the allocation of settlement funds obtained from the Far North District Council for damage to the apartments. The plaintiffs alleged that the body corporate had underpaid itself and overpaid the majority of unit owners, and sought a share of the settlement funds for themselves. The defendants argued that the body corporate had received its rightful share of the settlement funds, and that the plaintiffs had no legal or equitable interest in the funds. The court considered the legal issues of whether the body corporate acted as an agent or trustee for the plaintiffs in suing for damages, and whether the plaintiffs had standing to sue the body corporate for the alleged misallocation of funds. The court found that the body corporate had acted in its own right as the legal owner of the common property, and that the plaintiffs had no legal or equitable interest in the settlement funds. The court also found that the plaintiffs' causes of action were not suitable for summary judgment, and that there were proper triable issues to be decided at a substantive hearing. The court dismissed the application for summary judgment and ordered the plaintiffs to pay the defendants' costs on the application. The court also made directions for access to the court file, destruction of a settlement agreement, and a case management conference.

The case highlights the complex legal issues that can arise in disputes between unit owners and body corporates, particularly in the context of litigation for building defects. The court's decision emphasises the importance of understanding the legal framework governing unit title ownership and the role of body corporates in suing for damages to common property. The case also underscores the need for careful consideration of the allocation of settlement funds in negotiations with third parties, and the potential consequences of misallocation for both the body corporate and unit owners.

Orders