Tao v Strata Title Administration

[2015] NZHC 2215

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-817 [2015] NZHC 2215

IN THE MATTER

of the Unit Titles Act 2010

BETWEEN

AN LI TAO Plaintiff

AND

STRATA TITLE ADMINISTRATION LTD

First Defendant

JIGAR PANDYA Second Defendant

Hearing:	14 September 2015
Appearances:	Plaintiff in person E St John for the First and Second Defendant
Judgment:	14 September 2015

(ORAL) JUDGMENT OF WOODHOUSE J

Parties/Solicitors/Counsel: Ms A L Tao, Auckland

Mr E St John, Barrister, Auckland

Price Baker Berridge (First and Second Defendants’ solicitor), Solicitors, Auckland

TAO v STRATA TITLE ADMINISTRATION LTD [2015] NZHC 2215 [14 September 2015]

[1]      Ms Tao has applied for an interim injunction.  She seeks what amount to four mandatory orders.  I will come to the particular orders in a moment.

[2]      The general principles that apply on an application for an interim injunction are well established but it may assist Ms Tao, in particular, as she is appearing on her own behalf, briefly to note the principles in broad outline.

[3]      The first matter the Court has to consider on an interim injunction application is whether the person applying has established a serious question to be tried.  That means a serious question which would be dealt with not on the hearing of the interim application but when the main case comes to trial.  In other words, should an interim order be made at this stage because at a later date, when all the evidence is before the Court, there will be a serious question to be determined.

[4]      The other general matter that applies is usually referred to as the ‘balance of convenience’.   That requires an assessment of factors on both sides – factors that may support the making of the order and those that are against the making of the order.  And the Court is then required to assess, in a broad way, the overall justice of the case.

[5]      What is pivotal on this application is the first matter – whether there is a serious question to be tried.  It is clear from the submissions fully put forward by Ms Tao that she has real concerns about the way in which Body Corporate No. 198693 is being managed.  In her affidavit, and more fully in her submissions to me, she has outlined a range of matters.  These are the underlying concerns that have led to Ms Tao seeking the interim orders she now seeks. As I made clear to Ms Tao, a Court on an application for an interim injunction is not in a position to reach conclusions on the underlying dispute.  For example, Ms Tao contends that the first defendant was not validly appointed as a body corporate manager.  She has made allegations about the way in which body corporate funds have been managed.   Whether Ms Tao is correct in these contentions or not is not something that I can determine on this application.  What I have to determine is whether the particular orders sought give rise  to  a  serious  question  to  be  tried  in  a  substantive  hearing.    Against  that background I come to the four orders that are sought.

[6]      The first order is recorded in the application as follows:

Allow the applicant to convene an extraordinary general meeting for all the body corporate members to sit together and vote for the important matters, in order to re-start the bodycorp normal operations.   The meeting shall be scheduled  within  ten  working  days.    My  “statement  of  claim”  will  be amended accordingly after the meeting.

[7]      This Court does not have power to “allow the applicant to convene an extraordinary general meeting”.  The way in which an extraordinary general meeting is convened is stipulated in the Unit Titles Act 2010 (the Act).  There is no power for the Court somehow to override those provisions.  These are the provisions contained in particular in ss 88 to 104 of the Act.  And the Unit Titles Regulations 2011 (the Regulations) contain further provisions.  The order sought cannot be made because there is no power in the Court to make the order.

[8]      I do note that Ms Tao appears to have a reasonably good knowledge of the provisions of the Act and of the Regulations and I commend her for the attention she has given to these things.  But it is important to emphasise that the particular orders she is seeking is something which is governed by the Act.  The Court does not have any power to override these provisions because the person applying for the order has serious concerns about the way matters are being managed.  The primary means of sorting out problems in the running of a body corporate, if there are problems, is through the procedures laid down by the Act itself.   The appropriate means for dealing with this is either pursuant to s 90 or pursuant to s 104.  Section 104 makes provision for the passing of resolutions without a general meeting.

[9]      Ms Tao in fact gave notice to the chairperson of the body corporate for a meeting.   There were some issues raised in the evidence as to the timing of the meeting, but on the basis of the evidence presently before me it seems reasonably clear that it was, in the end, convened for 16 April 2015 and Ms Tao attended. However, the evidence of the second defendant is that she was not able to vote because she had not paid a current levy.  This is the consequence of s 96(3).  That subsection provides:

An eligible voter may not vote unless all body corporate levies and other amounts that are from time to time payable to the body corporate in respect of his or her unit have been paid.

[10]     Ms Tao submitted to me that the word “may” in subsection (3) introduces an element of discretion – it is not mandatory that the levy has been paid.  As I said to Ms Tao, that is an argument which is often enough advanced by well  qualified lawyers, with two lawyers arguing different ways – one saying it is discretionary and one saying it is mandatory.  But as I also said, I am in no doubt that, in the context of this  provision,  and  the  relevant  parts  of  the Act  as  a  whole,  the  provision  is mandatory. A person who has not paid a levy is not entitled to vote.

[11]     Ms Tao raised concerns based on her proposition that the levy currently said to be due is for an unreasonable amount.   The Act in fact makes provision for a contention of that sort, or other arguments of unit owners to the effect that the levy should not be paid. This is s 96(6) which provides as follows:

The payment of any body corporate levies and other amounts that are from time to time payable to the body corporate by the owner of a principal unit and that are disputed by the owner does not affect the right of that owner to dispute the payment if the sole purpose of making the payment was to exercise that owner's entitlement to vote.

[12]     Ms Tao submitted that there is no intention not to pay the levy, although she also said that she and numbers of the other owners do not have significant incomes and the amount of the levy may cause difficulty.   What she did submit is that, because of the argument over the amount, the Court should make a direction that a new account be opened, effectively by the owners who object to the amount of the levy, and that until matters are sorted out the levy should be paid into this special account and, I assume, held pending a decision of the Court.  The Court, certainly on the present application, has no power to make any order to that effect.  This, again, is a matter that is, at least in very large measure, governed by detailed provisions of the Act stipulating how body corporate funds and, therefore, moneys required to be paid by individual owners, are to be handled. The Court has no general power to override these provisions.  They are set out in detail in Subpart 13 of Part 2 of the Act.  I do note  that  these  detailed  provisions  about  the  handling  of  money  have  been introduced by Parliament to address the sorts of concerns that Ms Tao has raised.  It is not for the Court to make assumptions on the merits of the matters raised by Ms Tao, and then to override the provisions that have been carefully worked out by

Parliament, and which are not only binding on all body corporates and individual owners making up a body corporate, but also binding on the Court.

[13]     I would note one other matter raised by Ms Tao.  That concerned the amount of the current levy.  This is a levy fixed at a meeting which, on the face of it, was properly convened and held on 12 March 2015.  Ms Tao has raised concerns as to whether or not that meeting was properly convened and whether decisions made at that meeting were properly made.  This is again an example of a contention of fact which I am not in a position to resolve on a hearing of this nature.  And I should say in relation to many of the contentions advanced by Ms Tao that they are firmly rejected by the defendants.   The defendants also say – and this is not something which I am making any decision on either – that Ms Tao has misunderstood a number of matters in respect of which she makes contentions.  Just as I am not going to make decisions on the merits of matters raised by Ms Tao, I am not going to make decisions on the merits in favour of the defendants.  This simply illustrates the nature of an application of this sort.  It is interlocutory and I have to determine the matters raised by the applicant, firstly, by considering whether there is a serious question to be tried.

[14]     I have gone into quite a bit of detail on the first application because, at least in a broad way, a number of the matters I have addressed apply in respect of the other orders sought.

[15]     The second order sought is as follows:

Allow to re-assess the 2015 levy and all the owners’ voting eligibility will not be affected until the levy is re-assessed and agreed by all the body corporate members of 8 Margan Avenue.

[16]     There are two parts to this.   The first is an order of this Court effectively giving some sort of power for reassessment of the 2015 levy.  On this application the Court has no power to make an order to achieve that objective.  The means by which unit  owners  can  seek  to  revisit  the  amount  of  the  levy  is  by  requiring  an extraordinary general meeting to be convened.  That simply goes back to the matters I have just dealt with.

[17]     The second part of the second order is, in effect, an order overriding the provisions of the Act.  The Court does not have power to enable an owner to vote on the terms proposed in this order.   The reason for this has been addressed in the discussion of the first order.  But provision in respect of the concern raised by the order sought is contained in the other provision already referred to – s 96(6).

[18]     The third order sought is as follows:

Allow the applicant to issue the meeting notice, agenda, proxy forms, voting forms and meeting minutes, send them to all the members’ email addresses, since all the members have the access to the email.

[19]     As with the preceding orders sought, it is plain from the Act that the Court does not have any power to make this order.  The provisions for meetings and, more broadly, for resolutions, are those contained in the Act.  I have already touched on the most relevant provisions.  As also mentioned, there are the further provisions in the Regulations.

[20]     The fourth order sought by Ms Tao is as follows:

Allow the applicant to issue “A notice of a resolution to be passed without a general meeting” in accordance with section 16 Unit Titles Regulation 2011, and send it to all the members’ email addresses.  Since more than half of the owners themselves do not live in the development.

[21]     I apprehend that this may be based on s 104 of the Act which  I briefly mentioned before.  This is the provision for passing a resolution without a general meeting.   As with the other relief sought by Ms Tao, this is something which is governed by the Act in very clear terms and there is no power for the Court to modify this on an application of this nature.  In other words, there is no power for the Court to give Ms Tao a power to issue the notice.

[22]     Having considered the four particular orders Ms Tao seeks it is clear in my judgment, to use the standard expression, that there is not a serious question to be tried.    I  do  emphasise  that  that  is  not  a  conclusion  directed  to  the  underlying concerns Ms Tao has raised.  I repeat that I express no judgment one way or the other on the merit of those concerns.  This is directed, in this case having regard to the particular orders sought, to the question whether the Court has any power. The Court

in my judgment does not have power to make any of the orders sought for the reasons I have now outlined reasonably fully.

[23]     In case it may assist I will make some further observations.  Ms Tao, in the course of my discussions with her in which I indicated my assessment of the legal position, asked that I nevertheless provide advice to assist her in advancing these matters.   As I indicated to Ms Tao the Court, or an individual Judge, is not in a position to give assistance to a party of the nature she was implicitly referring to – that is, advice about the law.  The Court is bound to reach conclusions on the law in respect of matters put before it.   But it would be wrong for a Judge to give more general legal advice to one of the parties to the dispute.   The other parties could reasonably complain if a Judge appears to be taking sides in that sense.

[24]     In this context, in a much broader way, I do repeat the advice, or at least suggestion, I made to Ms Tao in the course of her submissions: that is, that it would be a good idea if she gets not just legal advice, but a lawyer to act for her if the proceedings are to continue.  I do appreciate that that involves costs, but in the long run the cost may be less by getting good legal advice and representation than if Ms Tao continues with the proceedings on her own behalf through to a full hearing.  If, in the end, the Court reaches a conclusion against Ms Tao it is likely she will have to pay costs to the other parties.

[25]     It is not just the question of costs.  It is the need, or the desirability, of getting good legal advice and representation in Court.   Ms Tao has demonstrated a good understanding of some of the legal aspects arising under the Act but, with all respect to her, I think there is a significant misunderstanding of other aspects.  I realise I am repeating myself to an extent, but it is important to make clear that in this area of the law, at least in relation to the matters that Ms Tao has raised, Parliament has laid down the procedures and the remedies and the ways in which things are meant to be dealt with.   Ms Tao referred to matters of a fundamental nature, such as human rights.  Human rights are fundamental, but a general plea to human rights does not enable the Court simply to override clear directions from Parliament as to how things are to be managed.

[26]     The Court always has to bear in mind, on an application of this sort, that there are always two sides to an argument. A Court cannot reach a conclusion on the merit of an argument until it has heard all the evidence in a full hearing.  Usually that will mean that witnesses will need to come to Court and they will need to be cross- examined so that the merit of the arguments can be tested.  That has simply not been possible on this hearing and nor would it be appropriate on a hearing of this nature.

[27]     Another broad observation flows to an extent from what I have just said.  Ms Tao did make some particularly serious allegations against both of the defendants.  I do caution Ms Tao in that regard. The Courts have said for a very long time – and by that I mean over the past 150 years or more – that allegations of fraud should not be made unless there is a strong evidential foundation for those allegations.  I am not saying that allegations of fraud cannot be made in court cases.  They are made often enough.  The point I am making is that they should not be made unless there is a clear evidential foundation for the allegation.  I repeat myself in saying that I do not make those observations as an indication of any determination on the merit.  What I am referring to here is a statement of basic principle laid down by the Courts and applying to anybody who comes to Court.  It is something that applies to all people who make allegations, including lawyers.  Lawyers are not permitted to make those sorts of allegations in Court, directly or through a statement of claim on behalf of a client, unless they are fully satisfied that there is some good evidence to support them.

[28]     The only other general observation I will make is directed to the possibility that the proceedings will continue through to a hearing.  This is that Ms Tao needs to make sure that the people or parties who are defendants to the proceeding are all of the parties who should be defendants.  It would seem, but I am not expressing any conclusion, that the body corporate itself should probably be a defendant if Ms Tao wishes to advance some of the claims she is advancing.  The concept of suing a body corporate  may or  may  not  be  easy to  comprehend,  but  it  is  a  fairly  important consideration in a case of this nature.  And that perhaps illustrates another reason why full legal advice and representation may be of assistance.

[29]     Three matters remain.  The first is an application Mr St John made on behalf of the defendants for costs.  The general rule is that costs follow the event; that is to say, costs should go to the successful party and be paid by the unsuccessful party. Ms Tao has not succeeded.  However, the substantive claim remains on foot and will have to be disposed of.  It may be, if the substantive claim goes to a hearing, or there is substantially more evidence before the Court, that Ms Tao will be able to establish some of her complaints, even though the nature of the relief she sought today is not relief the Court can give on this sort of application.   For that reason, but solely within that context, I consider that the appropriate course here is to reserve costs.  I might add that this decision involves exercise of a discretion significantly in favour of Ms Tao.  Ms Tao should nevertheless bear in mind that at the end of the day the costs on this application may very well have to be paid by her.

[30]     The second matter concerns further directions in respect of the substantive proceeding.   In case there is any uncertainty as to what I mean by the substantive proceeding, this is a reference to the main claims contained in the statement of claim as they are presently before the Court, or as they may be amended in due course.

[31]     As already noted, there may be need for amendments to the claim and the addition of other parties.  I do note that these are matters that have also been referred to in earlier minutes in the course of the callover for this application.  I apprehend that Ms Tao may be of the view that the statement of claim in its current form is sufficient, but I would urge her to take further legal advice on that.  I suggested to Ms Tao that the appropriate course would be to direct her to file any amended pleadings within three weeks and that there be a case management conference on the first available date after six weeks.  She advised that that was acceptable to her.  Mr St John also indicated that that was acceptable to the defendants.  In the course of my discussion with Mr St John he quite properly did refer to the fact that I am the third Judge to indicate that there would seem to be need for some reasonably substantial amendment of the pleadings.

[32]     Against that background I make the following directions:

(a)      Any amendment of the statement of claim, including addition of any parties, is to be dealt with within three weeks.   That will therefore require any amended statement of claim and application to add a party if required to be filed and served within three weeks.

(b)Any necessary response  for  the  defendants  can  then  be  filed  and served within the next two weeks.

(c)      The substantive proceeding is to be referred to an Associate Judge for a case management conference on a date and time to be allocated not less than six weeks from today.

[33]     The third matter concerns the intituling of the proceeding.    The original documents filed by Ms Tao had a lot of detail in the heading.  This is unnecessary.  I

order that the hearing be amended as recorded on the cover sheet of this judgment.

Woodhouse J