White v VXJ Holdings Limited - [2019] NZHC 3095

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-409-000157

[2019] NZHC 3095

BETWEEN MICHAEL LESLIE WHITE AND BODY CORPORATE 78462
Applicants

AND

VXJ HOLDINGS LIMITED

Respondent

CIV-2019-409-000221

IN THE MATTER OF

AN APPLICATION MADE RELATING TO BODY CORPORATE 78462 (CAVE ROCK)

AND

S 141 UNIT TITLES ACT 2010

AND

VXJ HOLDINGS LIMITED

Applicant

Hearing: 21 and 22 October 2019

Appearances:

H C Matthews for Applicants in CIV-2019-000157

V A Nichols for Respondent in CIV-2019-409-000157 and for Applicant in CIV-2019-409-000221

Judgment:

26 November 2019

JUDGMENT OF GENDALL J

This judgment was delivered by me on 26 November 2019 at 2:30 p.m. pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

WHITE v VXJ HOLDINGS LTD [2019] NZHC 3095 [26 November 2019]

Introduction

[1] The Cave Rock Apartments complex (the complex) is a residential and commercial building complex in Sumner, Christchurch. The complex was built in 1997/1998 and sits at the intersection of Marriner Street and the Esplanade, Sumner. It comprises 49 residential units, a Tavern and a large basement carpark underneath. It is a unit title development in terms of the Unit Titles Act 2010 (UTA 2010) for which the second-named applicant, Body Corporate 78462 (the Body Corporate) was established.

[2] The developer of the complex was Esplanade Investments Limited (Esplanade). The director of Esplanade is Mr Peter Foster (Mr Foster). Mr Foster is also the director of VXJ Holdings Limited (VXJ) which owns Unit 50 in the complex (the Tavern). His wife Mrs Celia Foster (Mrs Foster) owns Unit 39 (a residential apartment). In recent times Mr Foster has transacted the business of Unit 39 under a power of attorney.

[3] In the 2010 and 2011 Canterbury earthquake sequence, the complex was severely damaged. Units 1 to 30 have since been demolished. Units 31 to 45 remain standing but are seriously compromised due to water damage. Units 46 to 49 are occupiable (units 46 and 49 are occupied). Unit 50, which is the Tavern, is occupiable.

[4] The basement carpark underneath the complex was damaged beyond repair. The insurer of the complex deemed it uneconomic to reinstate the apartments, so a sum of around $21 million in settlement of the overall insurance claims was paid out to the Body Corporate for the owners.

[5] At that time there emerged an acrimonious dispute between a few of the unit owners, being particularly Mr and Mrs Foster and possibly two other owners on the one hand, and the remaining majority of the unit owners and the Body Corporate committee on the other. Agreement could not be reached as to how the settlement money should be distributed. As an interim payment, approximately $17 million was distributed to the majority who were those 46 of the 50 owners prepared to accept the arrangements. There is still disagreement between some of the owners as to how the remainder should be distributed.

[6] The Body Corporate has also on behalf of all owners received…

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: [2019] NZHC 3095
Decision Date: 26 November 2019

CaseChat Overview and Summary

In White v VXJ Holdings Limited, the High Court of New Zealand was asked to decide how to distribute insurance proceeds and other property from a severely damaged residential and commercial building complex in Sumner, Christchurch, following a series of earthquakes. The applicants, Mr Michael White and the Body Corporate 78462, sought a scheme under the Unit Titles Act 2010 to distribute the funds, and also sought an order for the cancellation of the Unit Plan and for the four unit-owners who had not agreed to sell their units to the purchaser, Peterborough 15 Ltd (P15), to do so. VXJ Holdings Limited opposed these applications but did not oppose the sale order. VXJ also sought an order for the appointment of an administrator to conduct an audit and take over the affairs of the Body Corporate. The central legal issues were whether a scheme under s 74 of the Unit Titles Act should be introduced and, if so, how it should distribute the insurance proceeds and remaining property; and whether an administrator should be appointed. The Court found that the Body Corporate was not compelled to reassess the ownership interests before filing an application to cancel the unit plan, but it was not undertaking in bad faith or ultimately unfair. The Court also found that the recent valuations and reports were more likely to reflect the true current market value of the properties and should be used for distribution of the funds. The Court granted the orders sought by the applicants, including the cancellation of the unit plan, the sale of the property to P15, and the distribution of funds according to the currently registered ownership interests. The Court rejected VXJ's application to appoint an administrator, finding that there was no evidence supporting the assertions that it would result in either increased complexity or cost.

Orders