Body Corporate 366611 v Wu Coa

JurisdictionNew Zealand
JudgeHeath
Judgment Date12 December 2012
Neutral Citation[2012] NZCA 614
Docket NumberCA402/2011
CourtCourt of Appeal
Date12 December 2012
Between
Body Corporate 366611
First Appellant
Theta Management Limited
Second Appellant
and
Chuan Wu
Respondent

[2012] NZCA 614

court:

Hammond, Arnold and Heath JJ

CA402/2011

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal against High Court judgment awarding damages against appellants in a private nuisance action — respondent owned a unit in a building providing student accommodation — new building manager was appointed — owners it was managing units for were required to enter into Security and Access Protocols (“the Protocols”) (designed to address safety and insurance problems) — respondent was not prepared to enter into the Protocols and decided to rent out his unit independently without binding himself to building manager's terms — manager subsequently denied respondent access to his unit unless he agreed to abide by the terms of the Protocols and pay the manager a “refundable deposit” — whether respondent had to establish that the nuisance emanated from other land (given that respondent had an interest in the common property) — whether appellants had committed a private nuisance actionable at the suit of respondent — whether unreasonable interference with right to use or enjoy proprietary interest in unit.

counsel

N R W Davidson QC and G R Burgess for Appellants B P Rooney for Respondent

JUDGMENT OF THE COURT
  • A The appeal is allowed in part.

  • B The judgment entered in the High Court in favour of Mr Wu against Body Corporate 366611 and Theta Management Ltd is set aside.

  • C In substitution:

    • (i) Judgment is entered for liability in favour of Mr Wu against Body Corporate 366611 and Theta Management Ltd.

    • (ii) All questions of damages are remitted to the High Court for reconsideration in light of this judgment.

  • D No order as to costs in this Court.

  • E Orders for costs made in the High Court are set aside. All questions of costs in relation to the proceeding in that Court shall be determined following the completion of any quantum trial.

REASONS

Arnold and Heath J

[1]

Hammond J

Hammond J

Arnold AND Heath JJ

(Given by Heath J)

Table of Contents

Para No

The appeal

[1]

The facts in outline

[3]

Competing submissions

[20]

The nuisance claim

(a)Asher J's reasoning

[25

(b)The Body Corporate's rules

(i)Rule 3.10 of the Body Corporate's rules

[33]

(ii)Mr Chen's evidence

[36]

(iii)The contemporary documents

[45]

(c)Analysis

(i)Unreasonable interference

[52]

(ii)The “emanation” point

[90]

Agency

[100]

Damages

[104]

Result

[116]

The appeal
1

Body Corporate 366611 (the Body Corporate) and Theta Management Ltd (Theta) each appeal against a judgment of Asher J, delivered in the High Court at Auckland on 30 May 2011. 1 On a cause of action brought in private nuisance, the

Judge awarded damages against those parties, in favour of Mr Wu, 2 in the sum of $283,663.64. Asher J also made declarations to reflect his view that certain rules of the Body Corporate were ultra vires the powers conferred by the Unit Titles Act 1972 (the Act). 3
2

Although the appeal was argued in March, it became necessary for us to seek further submissions from counsel in light of this Court's decision in Berachan Investments Ltd v Body Corporate 164205, which was delivered after the hearing in this case. 4 We received those further submissions promptly in late August.

The facts in outline
3

The Act creates the framework for a model of property ownership known as a unit title development. 5 It deals with both individual units and common property. Each individual owner obtains a stratum title for his or her unit. Common property is held by the proprietors of all units as tenants in common in unequal shares, proportional to the unit entitlement of their respective units. 6 It is managed by a body corporate that is made up of all of the proprietors. 7

4

Mr Wu owns Unit 810 (on the eighth floor) of the Empire Building, which is located in Whitaker Place, in central Auckland. Completed in March 2006, it provides student accommodation in close proximity to the main campus of the University of Auckland. The building is 19 storeys high and consists of 313 individual units. When fully occupied, about 800 students can be accommodated.

[2004] 1 NZLR 673 (HC) at [21]–[52] and Body Corporate 188529 v North Shore City Council [2008] 3 NZLR 479 (HC) at [83]–[102]. In relation to the need to take account of the particular characteristics of the development in issue, see Berachan Investments Ltd at [37].

5

The development was undertaken by Sanctuary Developments Empire Ltd (Sanctuary). That company owned the land on which the Empire was built. On 29 March 2006 it deposited a unit plan, which had the effect of creating a stratum estate in freehold for each individual unit. 8 After deposit, Sanctuary acquired each of the strata titles that were created and became (as the sole owner) the Body Corporate. 9 The number of proprietors who made up the Body Corporate grew as the individual units were sold.

6

The units were marketed in New Zealand and overseas, on the basis that each investor would receive a fixed rent amounting to eight per cent of the purchase price of each unit, for the first two years. Before selling any of the units, Sanctuary entered into a lease of each unit to an associated company, Academic Accommodation Management (3) Ltd (Academic). Individual units were sold subject to that lease. Academic contracted to pay the fixed rent to each purchaser. In effect, Academic assumed an obligation to seek out students with whom it could enter into licences to occupy the units and obtain funds to meet its rental obligations to the owners. On 8 June 2006, understanding that basic business structure, Mr Wu acquired Unit 810.

7

On 1 August 2006, Academic was appointed as the building manager. Its tenure lasted just over one year. On 22 August 2007, Academic sent a letter to all owners advising that it was unable to continue its role in dealing with student occupiers. It resigned, effective from 31 August 2007. Academic also made it clear that it could not perform its obligations under the leases. Notwithstanding that advice, by letter from his solicitors dated 30 August 2007, Mr Wu affirmed the lease. 10

8

Following Academic's resignation as building manager, Theta was appointed in its place. After writing to individual owners, Theta entered into arrangements

with a majority of them by which it agreed to lease their units and to pay the fixed returns. As part of this arrangement, Theta required the owners to enter into Security and Access Protocols (the Protocols). The Protocols were rules designed to address safety and insurance problems that had emerged while Academic had been managing the building. Mr Wu was not prepared to enter into an agreement of that type. He and a minority of other owners decided to make arrangements to rent out their units independently without binding themselves to Theta's terms
9

On 31 August 2007, Academic terminated the licences to occupy that it had entered into with each of the students. Around the same time, Academic reprogrammed the electronic locks so that the existing access cards no longer provided access to common property or units. Theta provided new access cards to the unit owners who had agreed to the Protocols and signed leases with it, but not to the owners (including Mr Wu) who had declined to do so.

10

On 18 October 2007, Mr Wu's solicitors wrote to Theta to obtain an access card that would allow him to access his unit. 11 In an email dated 22 October 2007, Theta offered to provide an access card only if Mr Wu agreed to abide by the terms of the Protocols and to pay to Theta a “refundable deposit” of $2,575. 12 Mr Wu did not agree to those terms.

11

Disputes arose about Theta's legal ability to deny owners access to their individual units in that way. Some owners issued proceedings in the District Court at Auckland. On 16 January 2008, the District Court issued an injunction directing the Body Corporate to take all practicable steps necessary to provide electronic key cards that gave access both to an individual proprietor's unit and the common areas. 13 The order was directed to the Body Corporate as it has the statutory obligation to manage the common property. 14 While Theta was not joined as a party

to this proceeding, there is no doubt that the Body Corporate could have directed Theta, as its agent, to comply with the Court's order. 15
12

The Body Corporate ignored the order. Instead, an Extraordinary General Meeting was called on 8 February 2008, for the purpose of amending r 3.10 of the Body Corporate's rules to enable the Body Corporate to require owners to enter into the Protocols and to pay the refundable deposit. 16

13

On 14 February 2008, another hearing took place in the District Court. Judge Hole observed that the 8 February 2008 resolution had been passed in defiance of his earlier order. He directed the Body Corporate to deliver keys to owners by midday on 25 February 2008. 17 Rather than complying with the order, the Body Corporate elected to appeal to the High Court against the District Court judgment.

14

On 6 March 2008, the Body Corporate's appeal was dismissed by Lang J. 18 The Judge expressed an expectation that, by the time of the next District Court hearing on 12 March 2008, the Body Corporate would have required Theta to hand over keys as directed by the District Court. Alternatively, if Theta refused, the Body Corporate would have sought leave to issue third party proceedings against Theta, including an application for an interim injunction. 19 The Body Corporate did neither of those things.

15

On 25 March 2008, Theta made a without prejudice offer 20 to accept $1000 as the refundable deposit, as long as the Protocols were signed...

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10 cases
  • Chuan Wu v Body Corporate 366611
    • New Zealand
    • Supreme Court
    • October 9, 2014
    ...given by the other owners to Theta. He succeeded on his challenges of the rules and resolutions but not on the issue of proxies. 3 Body Corporate 366611 v Wu [2012] NZCA 614, [2013] 3 NZLR 522 (Hammond, Arnold and Heath JJ) [Wu (CA)]. Hammond J delivered a separate concurring judgment. Whi......
  • Chen v Carter Hc Ak
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    ...366611 HC Auckland CIV-2009-404-5756, 30 July 2010. 15 Wu v Body Corporate 366611 HC Auckland CIV-2009-404-5756, 30 May 2011. 16 Body Corporate 366611 v Wu [2012] NZCA 17 At [11]-[19]. 18 At [53]. 19 Lihua Ltd v Body Corporate 366611 [2012] NZHC 19750. 20 Barry Blake Associates Ltd v Consu......
  • Chan v Body Corporate
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    • October 12, 2015
    ...366611 [2011] 2 NZLR 837 (HC) at [118]-[119]. Subsequently varied on appeal but not in relation to the declaratory judgment points: Body Corporate 366611 v Wu [2012] NZCA 614, [2013] 3 NZLR 522, Wu v Body Corporate 366611 [2014] NZSC 137, [2015] 1 NZLR 215. 4 Mandic v The Cornwall Park Tr......
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    ...767. 4 Unit Titles Act 2010, s 102 [2010 Act]. 5 One example involves a claim for private nuisance considered by this Court in Body Corporate 366611 v Wu [2012] NZCA 614, [2013] 3 NZLR 6 The former rules spoke of accounts, while the 2010 Act speaks of financial statements. 7 2010 Act, ss 8......
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