Chan v Body Corporate
| Jurisdiction | New Zealand |
| Judge | Edwards J |
| Judgment Date | 12 October 2015 |
| Neutral Citation | [2015] NZHC 2491 |
| Docket Number | CIV-2014-404-003347 |
| Court | High Court |
| Date | 12 October 2015 |
IN THE MATTER OF the Eden Heights Apartments 94 Dominion Road, Mt Eden
And
IN THE MATTER OF the Declaratory Judgments Act 1908 and the Unit Titles Act 2010
CIV-2014-404-003347
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
Application under s3 Declaratory Judgments Act 1908 (“DJA”) (declaratory orders) for a declaration that the defendant had breached various provisions of the Unit Titles Act 2010 (UTA) and/or the Unit Titles Act Regulations 2011 (“Regulations”)— the plaintiff alleged that the affairs of the defendant body corporate had not been managed in a transparent way and were not in accordance with the legislative framework — the body corporate had not complied with the notice provisions when calling the 2014 AGM — the 2015 AGM then ratified the resolutions that had been passed but the ratifying resolution was not specific — whether the declarations were mandatory in nature so there was no jurisdiction under s3 DJA to make them — whether the declarations should be refused in the court's discretion as serving no utility — whether the 2015 resolution was effective to ratify the 2014 resolutions — whether the right to inspect the Body Corporate register included a right to obtain a copy of it.
P H Johnson for the Plaintiff
J G H Hannan for the Defendant
JUDGMENT OF Edwards J
The plaintiff owns a unit in the Eden Heights apartment complex at 94 Dominion Road, Mt Eden. She applies for eight separate declarations pursuant to s 3 of the Declaratory Judgments Act 1908 (Act) concerning the alleged infringement of the Unit Titles Act 2010 (UTA) by the defendant Body Corporate.
The defendant defends the claims on the basis that there is no jurisdiction to grant many of the orders sought, or that the Court should otherwise decline to grant the declarations in the exercise of its discretion.
The Eden Heights apartment complex comprises 67 units and has a mixture of both residential and retail uses. The plaintiff has owned a unit in the apartment complex since 2004.
Until very recently, the defendant's affairs were managed by Body Corporate Solutions NZ Limited (BCS). Mr Cotton is the sole director of BCS and has been the chairman of the Body Corporate for the last 20 years.
At an extraordinary general meeting held on 27 July 2015, the defendant passed a resolution appointing Crockers Property Managers Ltd (Crockers) as the defendant's property managers. The defendant says this appointment will relieve any concerns that the plaintiff has about the future management of body corporate affairs.
Proceedings were commenced on 23 December 2014 pursuant to Part 18 of the High Court Rules. Affidavit evidence was filed by the plaintiff, and by Mr Cotton on behalf of the defendant. Mr Mahmood Dean, an accountant, also provided an affidavit on behalf of the defendant. As explained below, the plaintiff was cross-examined on her affidavit evidence at the hearing.
The plaintiff alleges that the defendant has breached the UTA and/or the Unit Titles Act Regulations 2011 (Regulations) in relation to the following:
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(a) the notices sent for the 2014 AGM;
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(b) the audit of the financial accounts for year ending March 2014;
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(c) the method of contracting with BCS;
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(d) the delegation of powers and duties to the Body Corporate Committee;
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(e) the long term maintenance plan and long term maintenance fund;
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(f) the defendant's bank accounts;
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(g) the Register of Owners;
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(h) the levies raised for earthquake strengthening.
The plaintiff is concerned that the affairs of the defendant have not been managed in a transparent way and are not in accordance with the legislative framework.
The defendant challenges the jurisdiction of this Court to make some of the declarations sought on the basis that they are really mandatory orders “dressed up” as declarations. It says that other declarations sought raise issues of mixed fact and law which are not suitable for resolution by way of declaration.
It says further that the Court should not exercise its discretion to grant the declarations sought because of the trifling nature of some of the issues; the fact that many have been resolved; and the fact that none of the other 66 unit owners have joined in the plaintiff's proceeding. The defendant stresses that the plaintiff could have pursued her complaints in the Tenancy Tribunal which has express jurisdiction to deal with unit title disputes.
Overall, the defendant accepts that in some respects the management of its affairs has been “rough-hewn”. But, it says that most issues have now been resolved and any concerns for the future will be met by the appointment of Crockers as Body Corporate manager.
The defendant sought leave to adduce the further affidavit of Michael James Cotton dated 11 August 2015 at the commencement of the hearing. This was not opposed by the plaintiff and leave was granted accordingly.
Prior to the hearing, the defendant served a notice pursuant to r 9.74 requiring the plaintiff to be produced for the purposes of cross-examination on her affidavits. Rule 9.74(3) provides that an affidavit of a person who is not produced must not be used as evidence unless the evidence is routine, or there are exceptional circumstances, and in either case the Court grants leave. I heard argument regarding this application at the commencement of the hearing.
For the plaintiff, Mr Johnson submitted that cross-examination was not appropriate as the claim had been commenced pursuant to Part 18 of the High Court Rules which was the process designed for the expedient resolution of issues. He referred to r 18.15 in particular which provides for evidence to be by way of an agreed statement of facts or affidavit. He submitted that cross-examination was not necessary to explore allegations made by the plaintiff of bad faith because those allegations were made in submission, not in the affidavit evidence.
I considered cross-examination was appropriate in this case and accordingly declined to grant leave under r 9.74(3). I did so because a central plank of the defendant's defence was that the declarations should not be made because they involved issues of disputed fact making the declaratory jurisdiction inappropriate. I also accepted that the plaintiff's own conduct and motives in bringing the claim were relevant to the exercise of the Court's discretion 1 and it was these matters which the defendant wished to explore through cross-examination. The plaintiff was present in Court and made herself available for cross-examination purposes.
Finally, on the morning of the hearing there was an application by the plaintiff to amend the prayer for relief in the statement of claim in respect of five of the eight declarations sought. The defendant opposed all but one of the proposed amendments. My rulings on each of the proposed amendments are set out below.
Proceedings under the Act require the Court to determine first, whether the Court has jurisdiction to make a declaration and, second, whether it is appropriate for the Court to exercise its discretion to make a declaration. 2
The statement of claim is silent on the section of the Act relied upon but Mr Johnson confirmed in oral submissions that declarations are sought pursuant to s 3 rather than s 2. Section 3 provides:
3 Declaratory orders on originating summons
Where any person has done or desires to do any act the validity, legality, or effect of which depends on the construction or validity of any statute, or any regulation made by the Governor-General in Council under statutory authority, or anybylaw made by a local authority, or any deed, will, or document of title, or any agreement made or evidenced by writing, or any memorandum or articles of association of any company or body corporate, or any instrument prescribing the powers of any company or body corporate; or
Where any person claims to have acquired any right under any such statute, regulation, bylaw, deed, will, document of title, agreement, memorandum, articles, or instrument, or to be in any other manner interested in the construction or validity thereof,-
such person may apply to the High Court by originating summons for a declaratory order determining any question as to the construction or validity of such statute, regulation, bylaw, deed, will, document of title, agreement, memorandum, articles, or instrument, or of any part thereof.
The jurisdiction under s 3 is therefore concerned with the interpretation or validity of written documents.3 Elias CJ confirmed the wide scope of the s 3 jurisdiction in Mandic v The Cornwall Park Trust Board (Inc) describing it as follows: 4
[9] The jurisdiction under the Declaratory Judgments Act enables anyone whose conduct or rights depend on the effect or meaning of an instrument, including an agreement, to obtain an authoritative ruling. In New Zealand, questions concerning the interpretation of rental review provisions of leases have often been addressed under the provisions of the Declaratory Judgments Act, as is illustrated by The Drapery and General Importing Co of New Zealand (Ltd) v The Mayor of Wellington. Access to the jurisdiction does not depend on there being an existing dispute. Nor is it necessary that there be a lis. It is desirable to express this disagreement with the reasons of the Court of Appeal although, in the event, the approach it adopted is not material to the determination of the appeal.
(footnote omitted)
In this case, jurisdiction under s 3 requires the...
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