B.E.M.A. Property Investments Ltd v Body Corporate 366611

JurisdictionNew Zealand
CourtHigh Court
JudgeWylie J
Judgment Date29 June 2016
Neutral Citation[2016] NZHC 1434
Docket NumberCIV-2015-004-000437

[2016] NZHC 1434

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-004-000437

BETWEEN
B.E.M.A. Property Investments Limited
Plaintiff
and
BODY CORPORATE 366611
First Defendant
Theta Management Limited
Second Defendant
Appearances:

B P Rooney for Plaintiff

S C Price and R W Harris for Defendants

Claim for damages for loss of rent of $89,026, by the plaintiff unit holder, on the basis of breach by the defendants of a natural right of access, trespass and nuisance — counter-claim by the defendants to recover costs they say were incurred in collecting body corportate levies owed by the plaintiff - the plaintiff owned a unit in an apartment complex – the first defendant was the body corporate — the second defendant was building manager — the complex operated as a student hostel — the plaintiff had purchased its unit through Blue Chip New Zealand Group which then leased it to a related company which sublet it out to students — when Blue Chip collapsed in 2007, the plaintiff stopped receiving rental payments — the plaintiff did not let out its unit again, or receive any income from it and claimed it was locked out of the apartment complex, and its unit, by the defendants because it refused to agree to certain terms – application of SC decision involving other unit owners Wu v Body Corporate 366611 — whether the plaintiff had a natural right of access to its unit — whether the plaintiff had causes of action in trespass and nuisance.

The issues were: whether BEMA had a natural right of access to its unit; and whether BEMA had a cause of action in trespass and nuisance.

Held: There were significant factual differences between the current case and Wu. As a result, a number of findings of fact made by the Courts in the Wu proceedings were not supported by similar evidence in the present proceedings. The Court declined to treat the facts found in Wu as facts in the present case. Evidence of a finding of fact in a civil proceeding was not admissible in another civil proceeding to prove the existence of a fact that was in issue in the proceedings in which the judgment was given.

The phrase “natural right to access its units” had been taken by BEMA from the SC's judgment in Wu. The Court did say that the right to use common property in a unit title development, as a thoroughfare for access to individual units, was a right so basic and fundamental to the UTA that it went without saying, but the SC had not intended to create a new cause of action, not otherwise known at law. Rather it held that trespass was the most appropriate cause of action on the facts before it. There was no independent tort of breach of a natural right of access.

For BEMA to succeed on the trespass cause of action, it was required to show that it had possession of its unit. When BEMA purchased the unit, it was subject to the lease to ART. During the term of the lease, ART had possession and the right to sue for trespass committed in respect of the land. BEMA, being out of possession, could not sue, unless the damage was permanent physical damage to its reversionary interest in the land. The onus of proof was on BEMA to show that it had possession of its unit at the time it was locked out in May 2009. It had failed to do so. It followed that the cause of action based in trespass must fail.

Although nuisance was the cause of action favoured by both the HC and the Court of Appeal in Wu, it did not find favour with the SC. However, the SC did make obiter comment on it observing that the tort of nuisance protected two types of right from unreasonable interference: the use or enjoyment of a plaintif's land and rights over or in connection with a plaintiff's land.

The SC noted that, for an action in private nuisance to be sustained on the basis of interference with the use or enjoyment of land, “some emanation of the effect of the nuisance from the defendant's land to the plaintiff's land was usually required”. The BC and Theta had refused BEMA access unless their demands were met. Nothing had emanated from their property.

In Wu, the SC considered that there was an implied and fundamental right to access one's unit under the UTA, and that it was arguable that that right could be seen as a natural right that was an incident of ownership under the UTA. It considered that, if there was a right to bring an action in private nuisance, then Mr Wu would have succeeded, because there had been a substantial interference with his natural right of access to his individual unit. That required no emanation.

Private nuisance was a wrong against land and the action could be brought only by a person with sufficient interest in the land affected. BEMA had failed to prove that it was in possession of the unit. It could not show that it had sufficient interest to bring a cause of action based in nuisance. On the evidence BEMA's access rights were not affected. There was no evidence that BEMA ever had any access cards permitting it to go into the common areas, or cards or keys permitting it to access its unit. Nor had BEMA challenged the letter refusing it access. The cause of action in nuisance had not been made out.

There were difficulties with causation. BEMA claimed rental had stopped in late 2007. There was nothing in the evidence that suggested BEMA had access to its units from that date through until May 2009. The causal effect of Theta's actions in May 2009 came to an end in November 2009, when the HC issued its decision declaring rule 3.10 invalid.

It was not appropriate to make an order in the BC's favour for payment of the balance of the costs the BC said it had incurred. The BC had previously failed to recover the balance of the costs it now claimed. A claim for “reasonable costs” incurred in collecting unpaid levies under the UTA fell within the jurisdiction of the Tenancy Tribunal. As between the BC and BEMA the matter was res judicata. It was an abuse of process to try and reopen it. There was an option available to the BC, to apply to the Tenancy Tribunal. It had not done so. Rather it had sought to short circuit the HC's direction by bringing its counterclaim which was inappropriate.

BEMA's claim and the BC's counterclaim failed.

JUDGMENT OF Wylie J

Introduction
1

The plaintiff company (“BEMA”) owns a unit in the Empire apartment complex in Whitaker Place, Auckland. The first defendant is the body corporate comprising the proprietors of all units in the apartment complex. The body corporate has appointed the second defendant, Theta Management Ltd (“Theta”) as its building manager.

2

The complex comprises over 300 units. It was purpose built, and it has been run, as a student hostel.

3

BEMA purchased its unit in 2006, through an investment scheme operated by the Blue Chip New Zealand Group, which had purchased 119 units in the complex. As part of the Blue Chip scheme, the unit purchased by BEMA had been leased to a company which was part of the Blue Chip Group – Auckland Residential Tenancies Ltd. It paid a base rental for the unit and sublet it out to students. The lease was managed by another company within the Blue Chip Group – Bribanc Property Group Ltd.

4

The directors of and shareholders in BEMA - Berkie Kapa and his partner, Aneta Heke - did not intend to live in the unit. Rather it was purchased as an investment. BEMA borrowed money to buy the unit. Mr Kapa and Ms Heke intended to use the rental income BEMA would receive from Auckland Residential Tenancies to meet the mortgage repayments and other outgoings.

5

Initially all went well. Auckland Residential Tenancies paid the rental received by it from tenants to Bribanc. Bribanc deducted body corporate fees and other outgoings, and paid the balance to BEMA on a monthly basis. BEMA paid the mortgage repayments direct to its mortgagee.

6

Ultimately the Blue Chip Group collapsed. Rental payments to BEMA under the lease ceased from late 2007 and Auckland Residential Tenancies was placed into liquidation in February 2008.

7

BEMA did not let out its unit again, or receive any income from it, until January 2015. It claims that from May 2009 to January 2015 it was locked out of the apartment complex, and its unit, by the body corporate and Theta. It seeks to recover the rental it says it has lost.

The pleadings
8

BEMA alleges that the body corporate and Theta controlled access to its unit, and that by letter dated 11 May 2009, Theta, on behalf of the body corporate, advised that BEMA would be denied access, unless it agreed to terms which, BEMA says, Theta and the body corporate had no right to impose.

9

BEMA says that it did not agree to these terms and that, as a result, from May 2009 until January 2015, it was denied access to its unit by the body corporate and Theta. It says they refused to provide it with electronic cards to operate the lifts, physical keys to the stairwells, electronic cards to operate the door to its unit, or physical keys to the doors within its unit.

10

Three causes of action are alleged:

  • (a) breach of a natural right of access. BEMA says that, as the registered proprietor, it had a natural right of access to its unit, and that the body corporate and Theta impeded it from exercising that right;

  • (b) trespass; and

  • (c) nuisance.

11

Damages for loss of rent are sought in the sum of $89,026.96, being rental BEMA says it would have received for the unit from May 2009 to January 2015 – a total of 68 months. In addition, it seeks reimbursement of $625.00, being an amount it says it was overcharged to ultimately obtain access cards. An additional claim for the costs involved in changing door locks was abandoned at trial.

12

Quantum is not in issue. Liability is in dispute.

13

There is a counterclaim. The body corporate and Theta...

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