Newhaven Waldorf Management Ltd v Allen

JurisdictionNew Zealand
CourtHigh Court
JudgeWoodhouse J
Judgment Date09 November 2015
Neutral Citation[2015] NZHC 2770
Date09 November 2015
Docket NumberCIV-2014-404-678

[2015] NZHC 2770

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-678

IN THE MATTER OF the Declaratory Judgments Act 1908

And

IN THE MATTER OF “Newhaven”

Body Corporate 355923 (Kauri), Body Corporate 342656 (Parkside), Body Corporate 346225 (Rimu), and Body Corporate 352635 (Waterview)

BETWEEN
Newhaven Waldorf Management Limited
Plaintiff
and
Geoffrey Robert Allen
First Defendant
Appearances:

N Campbell QC, M O'Brien, H Macfarlane for the Plaintiff

T Rainey and J Wood for the Defendants

Applications for declarations under the Declaratory Judgments Act 1908 as to the meaning of the encumbrances which were registered over residential properties in an estate known as “Newhaven” — several of the properties were unit tile complexes — said to form part of the “Newhaven Community”, the encumbrances were related to the appearance and upkeep of the units, the ability to call meetings, and a requirement that all owners had to pay for the common facilities and managing — the plaintiff also had the exclusive right to provide the business of renting the owner's property — the definition of “Newhaven” in all of the encumbrances, referred to the units on an attached plan — the plan showed three sections of housing were shaded but one tot the complexes was not shaded — whether, the fourth defendant body corporate was not part of the encumbrance because the complex was not shaded on the plan whereas the others were — whether some provisions in the encumbrances were restraints of trade and unenforceable — whether the covenants in the encumbrances were invalid because they were in conflict with the Unit Titles Act 2010 — whether the body corporate committees were required to provide an up-to-date list of members to the plaintiff at periods of not less than six months

The issues were: whether Jarrah was part of the encumbrance given it was not shaded on the plan whereas the others were; whether some provisions in the encumbrances were a restraint of trade and unenforceable (the requirement that all owners pay for the common facilities and managing Newhaven and the exclusive power to provide a letting service for Newhaven properties) — whether the covenants in the encumbrances were invalid because they were in conflict with the Unit Titles Act 2010 (UTA) which imposed a statutory scheme that supplanted the rights under the encumbrance. and whether the committee was required to provide an up-to-date list of members to Waldorf at periods of not less than six months.

Held: Instruments that created encumbrances (or covenants or easements) were interpreted in the same way as any contract. A restrictive approach to the use of background information was appropriate when dealing with formal commercial contracts. Historical matters could not be brought into account for the purposes of interpreting the encumbrances. The meaning of the provisions by reference to the text was clear. The provisions should not be interpreted having regard to the background matters. Even if some might be regarded as matters of context, they were matters probably unknown to most of the 176 owners and probably unavailable for consideration by any person contemplating purchasing any of the properties.

The definition of Newhaven simply referred to an “attached plan”. It did not refer to “the shaded areas on the attached plan”. In the absence of explanatory words in the encumbrances, or a clear implication from words that were used, the meaning of the words in the definition could not be altered by the shading of part of the plan. Any residual doubt that might reasonably have arisen because of the shading was removed by the definition of Newhaven Community which referred to “the owners and occupiers from time to time of Newhaven to whom the covenants contained in this Encumbrance, or any other document containing the same or similar covenants registered against a Newhaven title, apply.” As a matter of straightforward interpretation, the Newhaven Community included Jarrah, notwithstanding the fact that the Jarrah section was unshaded. This was because the Jarrah units were subject to “the same or similar covenants”. If the owners and occupiers of Jarrah units were not part of the Newhaven Community, and not part of “Newhaven” for the purpose of the encumbrances, then the Jarrah encumbrances were meaningless.

The defendants' restraint of trade contentions, even if correct, could not provide a defence to the relief sought by Waldorf. The relief sought by Waldorf — the declarations — amounted to a claim that the covenants had particular meanings, and that would not turn on whether a particular provision was an unenforceable restraint of trade. Further, the restraint of trade argument in relation to the letting service could not have a bearing on any of the declarations sought by Waldorf because it did not seek a declaration relating to the letting service.

It was strictly unnecessary to consider whether the provisions in issue did constitute restraints of trade and, if so, whether they could be justified as reasonable. However, it could be concluded there were not restraint of trade provisions. The provisions relating to the common facilities did not in any way interfere with any “trade” that any owner might wish to enter into.

For the provision relating to the encumbrancee's power to provide a letting service for Newhaven properties to constitute a restraint of trade, it would have to prevent an owner from letting that owner's property, or prevent that owner from running a letting business. Owners were entitled to organise the letting of their own properties. An owner could set up a letting business. However, another owner wishing to rent a property could not engage the services of the letting owner. That did not arise from any restraint of trade on the letting owner. It arose because the provisions binding on the second owner required use a letting service provided by the encumbrancee. That restriction did not constitute a restraint of trade imposed on owner B.

The owners contended that the covenants in the encumbrances relating to Waldorf's right to manage and charge for management were in conflict with the UTA. Under s77 UTA (core things body corporate may do) each body corporate had the power to employ a manager to carry out various obligations, including those under s138 UTA (Body corporate duties of repair and maintenance).

The encumbrance did not state that the bodies corporate could not do the things that bodies corporate were statutorily required to do under s138 UTA. If there were covenants in the encumbrances binding on the bodies corporate, and those covenants purported to alter the statutory obligations of bodies corporate, those covenants would be likely to be unenforceable. But that did not arise because the bodies corporate were not bound by the encumbrances.

The particular provision relating to meetings was a mandatory provision. The obligation imposed on the committee to call a meeting did not have any bearing on the question whether the encumbrancee had power to call a meeting if it decided that a meeting was required.

Waldorf was entitled to a declaration that it was entitled to call a meeting of members of the Newhaven Community by giving written notice to the members and that it was not required to make a request to the committee in order to call a meeting of members of the Newhaven Community.

JUDGMENT OF Woodhouse J

Introduction
1

The plaintiff (Waldorf) is the encumbrancee under encumbrances that are registered over 176 residential properties in an estate known as “Newhaven”. The material terms of the encumbrances are identical.

2

The encumbrances include provisions which, amongst other things: create covenants designed to maintain the appearance and condition of each property, with aspects of this subject to direction or approval of Waldorf as encumbrancee; entitle the owners to use recreational facilities owned by Waldorf; entitle Waldorf to levy the owners for the costs of the operating expenses of the recreational facilities and “managing Newhaven”; make provisions for meetings of owners and occupiers of the residential properties, referred to as the “Newhaven Community”; and require establishment of a committee of the members of the Newhaven Community to liaise with the encumbrancee and to attend to other matters.

3

The first defendant, Mr Allen, is one of the owners and is the chairperson of the committee.

4

Disputes have arisen between Waldorf and the committee, and some other owners, as to the meaning of the encumbrances. Waldorf brought this proceeding against Mr Allen seeking declarations under the Declaratory Judgments Act 1908 as to the meaning of the encumbrances.

5

The four second defendants are four Newhaven bodies corporate. The second defendants were joined on an application of Mr Allen.

The issues
6

Waldorf seeks five declarations related to three main issues, all of which concern interpretation of the encumbrances. These issues, in summary, and in the order I will address them, are as follows:

  • (a) The scope of clause 7(i) in relation to the committee's obligations to supply Waldorf with an up-to-date list of members. This issue was

    resolved by agreement reached towards the end of the hearing. The terms of the agreement are recorded below.
  • (b) The scope of Waldorf's power to levy for “managing Newhaven” under clause 7(h).

  • (c) The scope of Waldorf's powers or rights under clause 7(c) of the encumbrance to call a meeting of property owners.

7

The defendants pleaded what are described as five affirmative defences, but only three in the end were advanced. These are as follows:

  • (a) What properties are included in “Newhaven”, and who are the owners and occupiers included in the “Newhaven...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT