Tang v Body Corporate 155936
[2020] NZHC 2813
•28 October 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-794
[2020] NZHC 2813
UNDER Subpart 3 of Part 5 of the Unit Titles Act 2010 IN THE MATTER
of Body Corporate 155936
BETWEEN
KIM CHOO TANG and MUN HO TANG
First applicants
LANDCORP LIMITED
Second applicantAND
BODY CORPORATE 155936
First respondent
THREE LAMPS LIMITED
Second respondent
Hearing: 15 October 2020 Appearances:
T M Kelly for the applicants
V J Toan for the first respondent, granted leave to withdraw D R Bigio QC and K L Wendt for the second respondent
Judgment:
28 October 2020
JUDGMENT OF JAGOSE J
This judgment was delivered by me on 28 October 2020 at 3.00pm.
Pursuant to Rule 11.5 of the High Court Rules.
…………………………
Registrar/Deputy Registrar
Counsel/Solicitors:
D R Bigio QC, Auckland
K L Wendt, Barrister, Auckland Martelli McKegg, Auckland Glaister Ennor, Auckland
TANG v BODY CORPORATE 155936 [2020] NZHC 2813 [28 October 2020]
[1] By originating application, the applicants – having respectively voted against ordinary and special resolutions passed by the body corporate, and made timely objection to the body corporate’s notified passage of a designated resolution relating to a qualifying redevelopment – seek my order all the resolutions be overturned.
Background
[2] The body corporate comprises owners of 18 principal (and their accessory) units comprising a commercial building on Jervois Road in Auckland’s Ponsonby. Its unit plan illustrates the two-story building’s arrangement. Ground-floor retail units surround a common property internal courtyard, with access to common property washroom facilities in the building’s north-west corner overlooking an external publicly-accessible carpark; first-floor office units (with separate washroom facilities) surrounding the courtyard’s atrium are above, and internal private carparks below.
[3] The first and second applicants (the “Tangs”, and “Landcorp”, respectively) own one unit each, and Robert Earl Payne and Grace Lucy Payne (the “Paynes”) a third. The other 15 units progressively have been acquired by interests aligned with a property developer, Cameron Wilson. The body corporate’s committee comprises Mr Payne, Mr Wilson, and Stuart Norman Galloway (a Landcorp director).
[4] The body corporate was provided with a proposed long-term maintenance plan dated 17 October 2016, anticipating staged expenditure on forecast maintenance to be covered by targeted levies over a 15-year period to 2031. Its financial statement for the year to 31 January 2020 records net assets of nearly $314,000, in a series of funds held on bank deposit. Notes to the statement record the body corporate has no specific long-term maintenance fund but “instead [has] opted for contingency funds for this purpose”.1 At its 16 March 2020 annual general meeting, the body corporate confirmed an annual budget of $146,364, including $60,000 for repairs and maintenance, for the year to 31 January 2021.
1 It is unclear if the body corporate’s ‘option’ is by required passage of a special resolution not to establish a long-term maintenance fund: Unit Titles Act 2010, 2 117(1).
[5] By the time of the annual general meeting, Mr Wilson substantially had developed a plan to consolidate three ground-floor units owned by his interests on the north and west sides of the building, and to enlarge the consolidation by taking in the north-western corner common property washroom, to relocate those facilities to a smaller fourth unit also owned by his interests on the west side of the building for transfer to common property. He contemplated conversion of the north-western corner into a café, extending onto a covered deck to be constructed above a portion of the external carpark, although those works are not included in the project. In doing the works, he also would bring forward substantial amounts of the proposed long-term maintenance plan’s programme. Through one of his entities, in February 2020, he sought some regulatory approvals required for the project.
[6] The enlargement and transfer each constitute a “redevelopment” in terms of the Unit Titles Act 2010.2 Because the redevelopment would adjust the boundary between units as shown on the existing unit plan and affects common property, the body corporate must apply to the Registrar for deposit of a new unit plan in substitution for the existing unit plan.3
[7] The application for deposit must be accompanied by a registered valuer’s certificate reassessing ownership interests in terms of the value of each unit relative to each other, which the body corporate must assign to the relevant units.4 Here, registered valuer Ian Ralph Colcord certified minor changes to the units’ ownership interests. The consolidated and enlarged unit’s ownership interest increased by 0.45 per cent over its constituent units. The Tangs’ unit ownership interest increased by 0.05 per cent; Landcorp’s by 0.10 per cent; and their accessory units’ ownership interest each by 0.08 per cent.
[8] Before making the application, the body corporate must obtain the written consent of all owners of units materially affected by the redevelopment and agree by special resolution to the new unit plan.5 By notice dated 21 April 2020, the body corporate called a postal ballot to be conducted without a general meeting on a variety
2 Unit Titles Act 2010, s 8(1).
3 Sections 65(1) and 68(2).
4 Section 69.
5 Section 68(3).
of ordinary, special and designated resolutions to enable the project.6 (Presumably Mr Wilson’s interests provided their written consent to their materially affected units; similarly, presumably no written consent was required from the Tangs and Landcorp on grounds their units were not materially affected.)7
[9] The resolutions provided for the $1.107 million (plus GST) cost of the project on common property works, after allocation of $250,000 from the body corporate’s contingency fund, to be raised by way of a special levy on all owners, as calculated on their utility interests. For the Tangs, that is some $63,000; for Landcorp, it is some
$74,000. (Mr Wilson’s subsequent open offer his interests would bear the whole of the project cost, after contribution of $300,000 from the body corporate’s contingency fund, was not accepted by the Tangs or Landcorp.)
[10] Each resolution was carried by its requisite majority, obtaining one dissenting vote from each the Tangs and Landcorp, the Paynes abstaining. The text of the resolutions is set out at the Schedule to this judgment.
[11] The Tangs and Landcorp objected to the body corporate’s subsequent notice of the redevelopment, on grounds including:
(a)the new unit plan makes no provision for the proposed deck, or compensation to the body corporate for its erection;
(b)conversion of the common property washroom to unit property is unnecessary, and solely to benefit Mr Wilson’s interests;
(c)the changes in ownership interests are “unfair, unreasonable and inexplicable” in failing to reflect the significant benefit obtained by Mr Wilson’s interests; and
(d)the project’s improvements, rather than repairs and maintenance, to the common property are “ultra vires” (beyond the body corporate’s power to decide).
6 Section 104.
7 See [29] below.
They generally complain of the project’s unscheduled increased repairs and maintenance expenses, unequal ultimate exchange of common property washroom areas, unnecessary disruption to tenants and their trading in the precarious economic environment caused by measures to manage COVID-19 in the community, and the ‘procedurally unfair’ manner in which the project was foist on them: without consultation, on limited information, and in a summary manner.
The law
[12]As will be appreciated, the purpose of the Unit Titles Act 2010 relevantly is:8
… to provide a legal framework for the ownership and management of land and associated buildings and facilities on a socially and economically sustainable basis by communities of individual owners and, in particular … to protect the integrity of the development as a whole —
with emphasis “on the management of buildings on a socially and economically sustainable basis, and for a flexible and responsive regime”.9
[13] There is a fundamental distinction between individual proprietors dealing with their own units, and the body corporate managing common property “for the common good”.10 That is accommodated by the “democratic framework” for the unit title development’s management by proprietors’ resolution.11 Proprietors’ rights to alter, add to, or improve their units – either without their unit boundary or where materially affecting other units or common property – require body corporate authorisation.12 And proprietors are taken to have purchased their units knowing of their obligations to contribute to the body corporate.13
[14]In circumstances of ordinary and special resolutions, s 210 provides:
8 Unit Titles Act 2010, s 3.
9 LV Trust Holdings Ltd v Body Corporate 114424 [2012] NZHC 3578, (2012) 14 NZCPR 344 at [57].
10 Tisch v Body Corporate No 318596 [2011] NZCA 420, [2011] 3 NZLR 679 at [29], approving
Fraser v Body Corporate S63621 (2009) 10 NZCPR 674 (HC) at [34(b)].
11 Fraser v Body Corporate S63621, above n 10, at [34(e)].
12 Wheeldon v Body Corporate 342525 [2016] NZCA 247, (2016) 17 NZCPR 353 at [37], cited in
Body Corporate S73368 v Otway [2018] NZCA 612, [2019] 3 NZLR 759 at [38].
13 Tisch v Body Corporate No 318596, above n 10, at [65], with [64] cited in Body Corporate S73368 v Otway, above n 12, at [37].
210 General relief for minority where resolution required
(1) In any case where this Act requires a resolution and the resolution is passed, any person who voted against the resolution may apply to the appropriate decision-maker for relief on the grounds that the effect of the resolution would be unjust or inequitable for the minority.
(1A) Subsection (1) does not apply if the resolution is a designated resolution.
(2) An application for relief under subsection (1) must be made within 28 days of the passing of the resolution.
[15] Relevantly here, resolutions relating to redevelopments requiring deposit of a new unit plan under s 68 are “designated resolutions”. In circumstances of objection to designated resolutions, s 215 provides:
215 Hearing if objection made
(1) The appropriate decision-maker must hear the objection as soon as practicable and may make any order it thinks fit, including without limitation any of the following orders:
(a)confirming the resolution:
(b)overturning the resolution:
(c)requiring the body corporate to pay compensation to the person making the objection:
(d)requiring the person making the objection to pay compensation to the body corporate:
(e)a work order:
(f)granting an injunction.
(2) The appropriate decision-maker must not make an order under subsection
(1) unless it is satisfied that it is just and equitable to do so.
(3) An order may be subject to any terms or conditions that the appropriate decision-maker thinks fit.
(4) If the appropriate decision-maker—
(a)makes an order overturning the resolution, then the resolution is to be treated as not having been passed; or
(b)makes an order confirming the resolution, then the body corporate may proceed to carry out the resolution subject to any terms and conditions imposed by the appropriate decision-maker under subsection (3).
(5) In this section, a work order means an order to carry out any repairs to the unit title development or to rectify any deficiency in the performance of any services by doing the work or attending to the matters specified in the order.
[16]Commentary observes:14
In terms of s 215(2), one may speculate on the difference in evidential burden of having to show that the order is “just and equitable” before an order can be made, as opposed to the grounds under s 210(1) where the appropriate decision-maker must be satisfied that the proposed resolution would be “unjust or inequitable” for the minority. Logic indicates that the evidential burden of having to prove that something is “just and equitable” is considerably higher than negating the negative in the latter section.
[17] Be that as it may, under s 210, “a high threshold of material unfairness or injustice [is] to be met by the minority”.15 By ‘minority’ is meant all those voting against the resolution.16 The test is objective, and requires all relevant circumstances be taken into account. Those include the position of both the minority (including as a minority) and the majority. I have a residual discretion not to order relief, even if the ordinary or special resolution has qualifying effect. When s 215 is engaged, s 210 has no application.17
Discussion
[18]I address the issues arising by examining:
(a)if the body corporate’s accumulated levies are available for application to improvements;
(b)if the effect of the resolutions is materially unfair or unjust to the minority; and
(c)if justice and equity require the making of any order under s 215.
14 Toomey, New Zealand Land Law (3rd ed, Thomson Reuters, Wellington, 2017) at 12.4.03.
15 Tremont Holdings Ltd v Body Corporate 401803 [2015] NZCA 314, (2015) 16 NZCPR 509 at [19], citing as exemplified by Young v Body Corporate 120066 (2007) 8 NZCPR 932 (HC) at [43] and [49]; Hart v Body Corporate No 180455 (2005) 5 NZ ConvC [194,147] (HC) at [8]; World Vision of New Zealand Trust Board v Seal [2004] 1 NZLR 673 (HC) at [45]; Spencer-Inight v Johnston [1999] 3 NZLR 103 (HC) at 106.
16 Unit Titles Act 2010, s 4(1)(l); Tremont Holdings Ltd v Body Corporate 401803, above n 15, at [16].
17 Unit Titles Act 2010, s 210(1A).
—are accumulated levies available for application to improvements?
[19] It is most convenient substantively to begin with the applicants’ contention, so far as the proposed works seek to apply levies obtained for ‘repairs and maintenance’ to improvements (such as relocation and upgrading of the ground floor washroom may be), the resolutions are beyond the power of the body corporate to pass.
[20] The Act requires the body corporate to establish an operating account to meet specified expenses,18 and by default a long-term maintenance fund “only [to] be applied towards spending relating to [any] long-term maintenance plan”.19 It additionally allows a body corporate may establish contingency funds “to provide for unbudgeted expenditure” (by reason of the next, inferentially of a maintenance nature),20 and a capital improvement fund “to provide for spending that adds to or upgrades the unit title development if that spending is not provided for in the long- term maintenance plan”.21
[21]Section 121 then requires levies to be calculated:
(a) in the case of the operating account, long-term maintenance fund, and any contingency fund, in proportion to each unit owner’s utility interest; and
(b) in the case of any capital improvement fund, in proportion to each unit owner’s ownership interest.
The distinction between utility and ownership interests is illustrated at ss 38 and 39. The former broadly is used to address issues arising from the unit title development’s operation and management; the latter to address issues arising from the owner’s interest in the principal unit’s title, extending to the owner’s “beneficial interest … in the common property”.22 By default, their value is the same – “that assessed by a registered valuer on the basis of the value of the unit relative to each other unit” – unless the latter is assigned a different value as “fair and equitable … having regard to the relevant benefits and the costs to units”.23 Here, no different value is assessed.
18 Section 115.
19 Section 117.
20 Section 118.
21 Section 119.
22 Sections 38 and 39.
23 Sections 38(2), 39(2), 39(2A), and 41(5A).
[22] This body corporate’s operation and management diverges from the Act’s default positions. I assume the body corporate has an operating account. I am unclear if the body corporate adopted the proposed long-term maintenance plan. If it did, by its own acknowledgment (whether or not by special resolution), it lacks a long-term maintenance fund.24 Instead it has a series of funds on bank deposit, identified as “Accumulated Fund”, “Building Fund”, “Repairs & Maintenance”, “Painting and Sinking”, occasionally referred to in the financial statement as “contingency” funds.
[23] If without a long-term maintenance plan, those funds necessarily are for “unbudgeted expenditure”, or “to provide for spending that adds to or upgrades the unit title development”.25 If with the proposed long-term maintenance plan, but without the special resolution deciding not to establish a long-term maintenance fund, I cannot identify which fund may “only be applied” to spending under the plan.26 At least to 31 January 2020, only a little in excess of $112,000 was identified as required for anticipated expenditure under the proposed long-term maintenance plan; only another $14,000 was anticipated for expenditure in the present financial year.
[24] Thus it is plain any funds not earmarked for spending under any long-term maintenance plan may be applied either to “unbudgeted expenditure” or to “spending that adds to or upgrades the unit title development”. Conversely, no funds earmarked for spending under a long-term maintenance plan may be applied to either unbudgeted or upgrading spending, but only to planned long-term maintenance. Levies for spending on improvements should be raised in proportion to ownership interests; levies for spending on unbudgeted expenditure in proportion to utility interests. Given there is no value difference between owners’ ownership and utility interests here, no practical consequence flows if levies were raised on one or other interest.
[25] In a better world, the resolutions may have identified so much of the project as fell within each of the available three heads of expenditure, and distinguished improvement from maintenance expenditure for payment by levies raised respectively
24 Section 117: “A body corporate must establish and maintain a long-term maintenance fund unless the body corporate, by special resolution, decides not to establish a long-term maintenance fund”.
25 Section 119. See also Wheeldon v Body Corporate 342525 [2018] NZCA 20 at [7] and [19]; Body Corporate 81340 v Knight [2018] NZHC 2143 at [27].
26 Section 117(2).
on ownership and utility interests. But flexibility and responsiveness are the desired motivating factors in governance of unit title developments,27 rather than any technical precision in works’ or funds’ identities.
[26] The evidence does not establish the proposed long-term maintenance plan has been adopted by the body corporate. Therefore no funds can be found allocated for spending only under the plan. Thus nothing here turns on application of the body corporate’s funds for either unbudgeted expenditure or capital improvement. The resolutions are not beyond the body corporate’s power to pass.
—is the effect of the resolutions materially unfair or unjust to the minority?
[27] Counsel for the applicants, Telise Kelly, placed significant weight on the procedural unfairness contended to be endemic in the way in which the ordinary and special resolutions were sought and obtained, and therefore were unjust or inequitable to the minority.28 She relied heavily on this Court’s endorsement of Re Bell as authority for the propositions:29
The merits of the matter are best determined by those who are affected by it and have personal knowledge of it and after the matter has been considered by them with the opportunity for debate at a properly convened meeting of the Body Corporate. It should not be for the Court to substitute its view on the merits of the proposal and this Court is not persuaded that the reasons for opposing the motions must be examined with a view to considering whether the minority view on the merits of the proposal should be upheld with the result that the wishes of the majority could not be given effect to.
This Court’s attention should be directed towards the procedures that led to the passing of the resolutions rather than the merits of them and a consideration of whether there was some material that could justify the decision, even though a contrary view was tenable. If there was an irregularity or impropriety in the procedures followed or it was apparent that there was no information upon which any reasonable person could reach the decision contained in the resolutions, then this Court may consider refusing an order sought under s 42 even though the required majority was obtained.
…
Section 42 covers management decisions, and the view is repeated that with a general provision of this nature the merits of the matter are best determined by those who are affected by it.
27 Wheeldon v Body Corporate 342525, above n 25, at [26].
28 See [11] above.
29 World Vision of New Zealand Trust Board v Seal [2004] 1 NZLR 673 (HC) at [46], citing Re Bell
HC Wellington M243/92, 22 October 1992 at 5–7.
If the Court was required to go further and inquire into the reasons for dissent then it could be expected that the section would say so. Such a direction is contained in the section which follows. Section 43 provides opportunity for relief for a minority affected by a decision of a specified majority. The Court is given power to declare a majority decision of no effect on the grounds that “the effect of the act would be inequitable for the minority”. There is no similar direction in s 42 to consider the effect of a decision on a dissenting minority.
[28] Judgments arising under predecessor legislation must carefully be considered before their general principles necessarily are to be adopted under the present Act. There are difficulties with application of those propositions here. Re Bell was addressing s 42 of the present Act’s predecessor, which provided for relief for an 80 per cent or more majority in circumstances in which unanimous resolution was required, without consideration of the merits. As can be seen, Re Bell considered s 43, which provides correlative relief for a minority, entitled the Court to consider the merits on the basis of the resolution’s “effect”, and thus precisely not on the procedures by which it was passed. At least so far as s 210 is concerned, the threshold for relief similarly is “the effect of the resolution would be unjust or inequitable for the minority”.
[29] The applicants are not owners materially affected by the redevelopment such that their consent in writing to the new unit plan was required under s 68(3)(a). Section 68 “applies to any redevelopment other than one to which section 65 applies”.30 Section 65 “applies if a redevelopment consists solely of the adjustment of the boundary between 1 or more units shown on a unit plan”, without: affecting the common property; materially affecting “the use, enjoyment, or ownership interest of any unit the boundary of which is not being adjusted”; or changing the number of units.31 Thus ‘material effect’ for the purpose of s 68 may only be in use, enjoyment, or ownership interest in the unadjusted units (which includes their beneficial interest in common property). That the common property may itself be affected, or number of units changed, would be immaterial in determining if consent in writing was required.
[30] Whatever material effect the resolutions have on the minority then is other than that which would have engaged a requirement for s 68’s written consent. Nothing in the resolutions materially affects the minority’s use, enjoyment or ownership interest
30 Unit Titles Act 2010, s 68(1).
31 Section 65(1).
in their own units, or their beneficial interest in common property. The applicants’ own units are unaffected by the project, the small increase in their ownership interests (and therefore the increase in the proportion of their levied contributions) arising from the required revaluation “on the basis of the value of the unit relative to each other unit”.32 That common property is affected, or the number of units changed, is not alone a threshold for minority relief.
[31] I cannot identify any material unfairness or injustice to the minority arising from the effect of the resolutions, let alone to a high level. The effects claimed all have precisely the same proportionate impact on the majority. There is no foundation for relief under s 210.
—does justice and equity require the making of any order under s 215?
[32] Under s 215, I must hear the applicants’ objection. It is necessarily an “objection to the designated resolution”;33 here, any resolution relating to redevelopments requiring a new unit plan under s 68.34 That redevelopment is the proposed enlargement and transfer by which one or more unit boundaries adjust, affecting the common property.35
[33] Section 68(3)(a) requires “all of the owners of the units materially affected by the redevelopment [to] have consented in writing to the new unit plan”. Without such consent, no resolution could be effective. Section 65(1)(b) implies that material effect is not in “the use, enjoyment, or ownership interest of any unit the boundary of which is not being adjusted”. Only s 65(1)(a), (b), and (c)’s exclusions offer constructive grounds for objection otherwise to the resolution relating to the redevelopment. Objections should engage that effect to common property, material effect to unadjusted units, and/or change in number.
[34]The sole identified designated resolution resolves:
32 Section 38(2).
33 Section 213(3).
34 Section 212(h).
35 Sections 8(1)(b), (c), and 68 (with reference to s 65(1)(a)).
the redevelopment plan … be approved and [be given effect] by completing the necessary legal documentation to transfer various areas of unit property to common property and common property to unit property”.
[35] Landmark’s formal notice of objection does not appear to be in evidence (but no point is taken as to its absence). Mr Lockwood says the objection is the project’s common property works are not all presently required, but are for the ultimate benefit of the enlarged consolidation of units in the ground-floor’s north-west corner. I do not understand the latter contention, when Mr Lockwood also describes the works as “a wholesale upgrade of the building …, for little to no benefit for all Owners” (emphasis added). Whether beneficial or not, I already have found the works have the same proportionate impact on all proprietors.
[36] Landmark’s objection distils to an objection to unnecessary works. The Tangs also object the washroom’s relocation is unnecessary. I do not see how the work can be argued unnecessary when it is supported by the requisite majorities of each resolution, including for this designated resolution. The point of democratic decision- making is the majority perspective generally is to hold sway.
[37] The Tangs’ notice of objection additionally claims their consent was required under s 68(3)(a). If so, determination of their objection would be meaningless as s 68 requires both their written consent and the resolution. So too is their objection their consent was not sought prior to the resolution and they voted against it. Neither is material to objection under s 215, which turns only on their timely response to receipt of the body corporate’s notice of the designated resolution.
[38] As I have held there is no ground for relief under s 210, their objections the resolution relates to those other ordinary and special resolutions are not sustainable. Concerns about the proposed deck, which is not part of the plan sought to be approved, are premature. The registered valuer’s ownership interest reassessment does not provide any foundation for objection: it is a mandatory and mechanical process to accompany the application to deposit the new unit plan.36
36 Section 69(3)(b).
[39] Last, the Tangs object compensation should be payable for the consolidated unit’s expansion to the larger common property in exchange for the smaller unit. I do not intuitively see why that should be so, when the common property is reflected in all principal units’ utility interests. The consolidated unit’s 0.45 per cent increased amalgamated ownership and utility interest means it will bear a materially larger proportion of common property expenses than does the current four units.
[40] Ultimately I conclude the applicants’ objections to the designated resolution are not made out. The redevelopment’s effects on the common property do not affect its utility; it has no material effect on the Tangs’ or Landcorp’s units; and the change in the number of units involves no material reallocation of ownership or utility interests. I therefore would dismiss the s 215 objections.
Orders under s 215
[41] However, notwithstanding s 215(1) allows I may make any order I think fit, it specifies I also may confirm the resolution. That has some resonance in s 216, which provides:
216 Certificate required
(1) If no objection is made, or if after hearing any objection the appropriate decision-maker confirms the designated resolution, the body corporate must lodge a certificate (together with the other documents required to be lodged with the Registrar) that certifies—
(a)that the designated resolution of the body corporate relating to the matter has been passed; and
(b)that every person required to be served with the notice has been served; and
(c)that—
(i) no objection has been made; or
(ii) an objection was made but the person making the objection did not file the objection in court within the time prescribed in section 214(2); or
(iii) an objection was made but the appropriate decision-maker confirmed the resolution or confirmed the resolution subject to terms and conditions; and
(d)any other matter required to be certified under this Act or prescribed by regulation.
(2) The certificate referred to in subsection (1) may be relied on by the Registrar as sufficient evidence of compliance with the matters set out in the certificate.
[42] On its face, s 216 does not require an unsuccessful objection to be met with confirmation of the resolution; only, if confirmed, confirmation must be certified. But no compliant certification could be supplied if an objection only was dismissed, without confirmation. The certificate appears material to the body corporate’s s 68 application, which requires, “[b]efore making the application to deposit the new unit plan, the body corporate must … agree, by special resolution, to the new unit plan”. The certificate would certify that under s 216(1)(a), and s 216(2) entitles the Registrar to rely on it. Presumably the body corporate alternatively could advise it had agreed to the new unit plan, and objections to the designated resolution were dismissed, and the Registrar could determine if to rely on that. However, the legislative expectation appears to be, if an objection is not upheld, the subject resolution should be confirmed.
Confirmation entitles the body corporate to carry out the resolution.37
[43] Ms Kelly proposed a shifting onus onto the majority if I was to confirm the resolution: they should satisfy me confirmation is just and equitable in terms of s 215(2). But s 215(2) just echoes the residual discretionary nature of the s 210 jurisdiction. Any order I make under s 215 can only be made because I am satisfied that it is just and equitable so to order. Justice and equity inform my s 215 discretion: to be ‘satisfied’ means only I should make up my mind that is so;38 it does not connote any burden of proof. If there is a burden of proof under s 215, it can only be the objection to the designated resolution is sustainable; after all, that is what is heard.
[44] I cannot identify any reason not to confirm the resolution. I cannot identify any effect on common property, material effect on unaltered units, or change in the number of units as may make deposit of the new unit plan unfair or inequitable. The resolution reflects the democratic decision of the body corporate.
[45] I am satisfied it is just and equitable to dismiss the objections and confirm the designated resolution, and will do so.
37 Section 215(4)(b).
38 Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1 at [96].
Evidentiary objections
[46] The respondents object to aspects of the applicants’ evidence as inadmissible on a variety of grounds. Counsel commendably largely have resolved those objections between themselves. Although I have not needed to consider the unresolved rump, nonetheless I must address the remaining objections.39
[47]Mr Galloway’s reply affidavit includes the assertion:
Mr Wilson appears to want the body corporate to spend hundreds of thousands of dollars on lighting for the common area (courtyard and carpark) and facade so that the building can better suit night-time restaurant trade. This benefits no-one except him and his proposed new tenant of PU1 R.
The objection is the assertion is exaggeratedly prejudicial, and inadmissible opinion evidence.40 Nonetheless a witness may state an opinion if necessary to communicate what s/he perceived.41 By ‘perception’ is meant what factually was experienced, rather than any conclusion built on the perception. Mr Galloway’s opinion the lighting is to benefit night-trade may be his admissible perception, but his attribution of that to Mr Wilson and his subsequent conclusion are inadmissible. I would have been more likely to disregard the entire passage as submission.
[48] Mr Galloway’s reply evidence also asserted, at a body corporate committee meeting on 8 June 2020 “[w]e discussed and agreed that the project would be downsized to true and agreed maintenance and repairs and I was to obtain some alternative quotes”, from which Mr Wilson is alleged “almost immediately [to have] backtracked”. The respondents contend that is inadmissible evidence of settlement negotiations,42 as illustrated by the meeting minutes’ heading “Without prejudice to current proceeding around resolutions and objections”.
[49] The 8 June 2020 meeting was called “to discuss … items of building maintenance and agree on a plan to action”. The contended agreement is not sought to
39 High Court Rules 2016, r 9.5(2).
40 Evidence Act 2006, s 23.
41 Section 24.
42 Section 57(1).
be enforced. Contended discussion then the project “would be downsized to true and agreed maintenance and repairs” plainly only is made in connection with an attempt to resolve the dispute. I apprehend the discussion was intended to be confidential to the body corporate committee. I uphold the claim to privilege.
Result
[50]I order:
(a)the applicants’ objections to the designated resolution are dismissed;
(b)the designated resolution is confirmed; and
(c)the originating application is dismissed.
Costs
[51] In my preliminary view, as the successful parties, the respondents are entitled to 2B costs and disbursements on steps taken in the application. That is because, so far as I can tell, no step on this averagely complex application required other than a normal amount of time. If that is not accepted by the parties, or they cannot otherwise agree, I reserve costs for determination on short memoranda of no more than five pages – annexing a single-page table setting out any contended allowable steps, time allocation, and daily recovery rate – to be filed and served by the respondents within ten working days of the date of this judgment, with any response and reply to be filed within five working day intervals after service.
—Jagose J
Schedule: text of resolutions
Resolution
1.1
The Body Corporate resolves by ordinary resolution to carry out the deferred maintenance and refurbishment of the Body Corporate buildings in accordance with the outline plans and specifications attached as attachment 1 and in accordance with the outline explanation of the details and scope of the work to be carried out (“the Deferred Maintenance and Refurbishment Project”) which are attached as attachment 2.
2.1
That the Body Corporate resolve by special resolution that the budgeted contracted cost as provided by the Early Contract Engagement with Envoy Construction Limited for the Deferred Maintenance and Refurbishment Project is a budgeted contract cost of
$1,106,699 plus GST.
2.2
That the Body Corporate resolve by special resolution that the budgeted contract cost for the Deferred Maintenance and Refurbishment Project as set out in motion 2.1 and in accordance with the details set out in 1.1 above is approved.
3.1
That the Body Corporate resolves by special resolution that $250,000.00 of the existing amount held in the Body Corporate’s Contingency Fund be allocated towards the budgeted contract price of the Deferred Maintenance and Refurbishment Project as set out in motions 2.1, 2.2 and 2.3 above.
3.2
That the Body Corporate resolve by special resolution that the balance of the budgeted contract price of the Deferred Maintenance and Refurbishment Project less the allocation of funds from the Contingency Fund as set out in 3.1 being an amount of $856,699 plus GST is raised by way of a special levy on all owners.
3.3
That the Body Corporate resolve by a special resolution that the special levy be raised from each owner on a utility interest basis.
3.4
That the Body Corporate resolve by special resolution that the special levy referred to in motion 3.2 and 3.3 above be due by the owner in two equal instalments payable on 1st August 2020 and 1st November 2020.
4.1
That the Body Corporate resolve by ordinary resolution that Cameron Wilson be appointed as the owners’ representative to oversee the Deferred Maintenance and Refurbishment Project, to approve the contracts for the Deferred Maintenance and Refurbishment Project and contract with a project manager to oversee the project.
4.2
That the Body Corporate resolve by ordinary resolution that Cameron Wilson should select and secure the services of a project manager to carry out the following tasks on behalf of the Body Corporate in regard to the Deferred Maintenance and Refurbishment Project: -
a) To carry out general project management role in regard to the maintenance and refurbishment work;
b) To ensure that the work being carried out by the contractor is carried out in accordance with the terms of the contract, plans and specifications and any variations thereto;
c) To make sure that all variations and extras required by the contractor are formally approved and agreed to by the Body Corporate or its refurbishment sub- committee;
d) To ensure that the refurbishment work is carried out in accordance with the
estimated budget or any variation to that budget agreed by the Body Corporate from time to time or the Body Corporate’s refurbishment sub-committee;
e) To ensure that the provisions of the Health and Safety and Work Act 2015 are complied with at all times which may include the closing off of parts of the common property to owners and their invitees from time to time as necessary;
f) To complete the application to Auckland Council for a resource consent for the refurbishment work and to obtain the resource consent prior to lodging the application for the building consent together with the consultant architects, Assemble Architects.
g) To ensure that the contractor completes all the work in accordance with the terms of the contract, the Building Consent, the Building Act 2004 and the Building Code;
h) To ensure that the work is completed and that on completion a Practical Completion Certificate and Code Compliance Certificate is obtained for the refurbishment work and submitted to the Body Corporate; and
i) To carry out any other general project management responsibilities that Cameron
Wilson and the selected project manager consider are necessary during the course of the project.
4.3
That the Body Corporate resolve by ordinary resolution that the project management fees are met as part of the Deferred Maintenance and Refurbishment Project budget and that the appropriate allowances are made in the budget accordingly.
4.4
The Body Corporate resolve by ordinary resolution that Cameron Wilson enter into negotiations with Envoy Construction Limited for the construction of the Deferred Maintenance and Refurbishment Project work in accordance with the outlined plans and specifications and the scope as identified in motion 1.1 above and further that Cameron Wilson is authorised to execute the appropriate construction contract using a form of construction contract issued by either the NZIA or the NZ Standard as appropriate on the basis that the existing negotiations with Envoy Construction Limited have been carried out on an Early Contractor Engagement basis.
5.1
The Body Corporate resolve by ordinary resolution to purchase a parking machine and install signage for the implementation of a “pay by plate” parking system in the common parking area, to be known as Three Lamps Carpark, in accordance with the explanation of the project as attachment 3.
6.1
The Body Corporate resolves by special designated resolution that the redevelopment plan prepared by Yeoman Survey Solutions Limited attached hereto as attachment 4 entitled “Redevelopment of Units on Lot 1 DP 101345” (six sheets) be approved and the Body Corporate further resolve to give effect to the redevelopment plan by completing the necessary legal documentation to transfer various areas of unit property to common property and common property to unit property.
6.2
The Body Corporate resolves by ordinary resolution that Three Lamps Holdings Limited will be responsible to ensure that new titles are issued for all of the units on the redevelopment plan and that the necessary forms are completed by the Body Corporate for the deposit of the redevelopment plan and the issue of new titles entirely at the cost of Three Lamps Holdings Limited in all respects.
6.3
The Body Corporate resolves by special resolution that the Ownership Interests for each unit in the Body Corporate are in accordance with the valuer’s certificate of reassessment that has been completed as required by section 69 (4) of the Unit Titles Act 2010 as attached in attachment 5.
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