IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2009-404-6868

BETWEEN	BODY CORPORATE 172108
Applicant

AND	JOANNE MONICA MEADER AND ORS Respondents

Hearing:	2 July 2010

Counsel:	T J G Allan for Applicant
N Khouri for Manchester Securities Ltd (37th Respondent) No appearance by, or on behalf of remaining 47 Respondents

Judgment:	19 August 2010

JUDGMENT (NO. 2) OF HEATH J

This judgment was delivered by me on 19 August 2010 at 4.00pm pursuant to Rule 11.5 of the High
Court Rules

Registrar/Deputy Registrar

Solicitors:
Grove Darlow & Partners, PO Box 2882, Auckland
Gilbert Walker, PO Box 1595, Auckland

BODY CORPORATE 172108 V MEADER AND ORS HC AK CIV 2009-404-6868  19 August 2010

Introduction

[1]       Body Corporate 172108 (the Body Corporate) seeks an order under s 48 of the Unit Titles Act 1972 (the Act) sanctioning a scheme.  The purpose of the scheme is to enable remedial work to be carried out on a high-rise building, situated at 187
Hobson Street, Auckland (Hobson Apartments).  Remediation is required because of damage caused to the complex by severe water ingress.

[2]       In an interim judgment given on 3 March 2010,  I provided guidance to the parties on the form of scheme that I was prepared to approve.   In providing those indications I outlined three “obvious requirements” for any scheme:

a)	There must be a single contractor appointed to undertake all work;

b)        There must be a single work programme; all work to both common and private areas, must be carried out as part of the same work programme and to the same standard; and

c)	If feasible, a single building consent should cover all work.

[3]       A particular problem in  this case stems  from the fact that  an individual proprietor, Manchester Securities Ltd (MSL), owns not only the penthouse unit, known as Unit 12A, but also the whole exterior of the building on Level 12.  The Body Corporate owns the exterior of Levels 1-11 of the building, as common property.  This unusual situation arises out of the fact that Level 12 was constructed after completion of the balance of the building.

[4]       Having identified a particular basis on which I was prepared to approve a scheme, I adjourned the hearing until 2 July 2010 for counsel to confer and to submit an amended scheme for my consideration.

[5]       On 30 March 2010, at their request, I saw Mr Allan, for the Body Corporate and Ms Khouri, for MSL, in chambers to clarify some aspects of my judgment. There were two decisions of relevance to the way in which the scheme would be drafted which had to be made.   One related to the Body Corporate’s proceedings against the Auckland City Council (the Council) to recover losses caused by water ingress.  The second related to the possibility that MSL might proceed with its own
work, independently of the Body Corporate.  I said, in a Minute issued that day:

[6]      ..., there are some obvious points that require to be addressed immediately.

[7]        The first is the need for the Body Corporate to decide whether, in light of its failed mediation with the Auckland City Council, to defer repair work pending trial of those proceedings.  If a decision along those lines were made, that could have an impact on the way in which the scheme is drafted because of the need to approve a scheme that enables MSL to proceed with its work on its own property first.

[8]        The second issue is for MSL to determine whether it wishes to proceed  with  the  “half-way  house”  option  or  work  on  the  basis  of  the original building consent obtained by the Body Corporate.   If the latter, it will be necessary for the Body Corporate and MSL to agree a common contractor, building programme and joint or individual manager to undertake work of the type agreed.  If the “half-way house” option were chosen, the building consent will need to be subject of an application to vary, which hopefully can be resolved before the hearing on 2 July 2010.

[9]        I urge both the Body Corporate and MSL to resolve those issues promptly.  Resolution of those primary issues will enable counsel for both parties to focus on the precise wording required to give effect to their respective contentions as to the way in which payments to enable work to be undertaken are made and provided for in the future.

[6]       By the time of the resumed hearing, each party had made a decision on those two questions.   Unfortunately, the choices they have made have changed the dynamics of the case considerably.  The Body Corporate has elected to defer repair work pending trial (or earlier settlement) of its proceedings against the Council. MSL has decided to undertake work on Level 12 before the result of the Body Corporate’s proceeding is known.   Therefore, the first two of the foundations on
which my earlier judgment was built are no longer available options.   Nevertheless,

it may be possible for an existing building consent obtained by the Body Corporate to be used by MSL in respect of proposed work on level 12.

[7]       Specific problems arise in relation to protection of individual owners, other than MSL, as a result of the need to ensure that remedial work carried out at the junction of Levels 11 and 12 is done in a manner that will not cause further water ingress problems to those owners.  Other issues arise in relation to the allocation of cost of any work undertaken by MSL in advance of that required to remediate common property and individual units below Level 12; in particular to avoid any perception of the possibility of any betterment to MSL’s unit being subsidised by other owners.

[8]       There remain other issues in relation to the wording of the proposed scheme, but those are relatively minor and can be addressed after determination of the more fundamental issues arising out of the change in circumstances since my judgment of
3 March 2020.

The 3 March 2010 framework for the scheme

[9]       In my judgment of 3 March 2010, I set out a framework for remedial work that I indicated I would be prepared to approve as part of a s 48 scheme:

[28]      It  is  clear  that  some  form  of  scheme  is  needed  to  enable  the necessary remedial work to be undertaken.  The way in which that work is carried out and the proportions in which particular proprietors bear the cost of undertaking it must be considered by reference to the “expedient or necessary” test.

[29]      Plainly, the apartment complex must be repaired.  To ensure proper co-ordination of work and a consistent quality of finish, repairs must be carried out under a common work programme.  Someone must have control of the works.  The individual proprietors who make up the body corporate must pay for the work to be undertaken.  Even though Level 12 is in private ownership, inadequate works undertaken on that level will affect other owners, as any leaking will occur from above.

[30]      To meet the competing needs of common and individual ownership, there are some obvious requirements for any scheme.  In the context of the need to remediate Hobson Apartments:

a)         There must be a single contractor appointed to undertake all work.

b)         There must be a single work programme; all work, to both common and private areas, must be carried out as part of the same work programme, and to the same standard.
c)	If feasible, a single building consent should cover all work. [31]	Subject to approval from the Council, I am attracted to the notion
that joint project managers be appointed, one by the Body Corporate and one
by MSL.   My view is that the project manager appointed by the Body
Corporate should have responsibility for supervising work on Levels 1 to 11, while the manager appointed by MSL would be responsible for Level 12. MSL should bear the costs of engaging its own appointee as joint project manager, while the Body Corporate shall do likewise in respect of its.  Costs will be saved if, on further reflection, the Body Corporate and MSL can agree upon a single project manager.

[32]      Subject to any subsequent agreement, I find that approach attractive because it provides MSL with a degree of autonomy, not presently found in the proposed scheme, over work undertaken on its property.   A potential difficulty  arises  in  relation  to  work  that  is  required  at  the  inter-storey junction of Levels 11 and 12.  As I see it, the project managers will need to reach joint decisions on how that work should proceed.

[33]      A scheme based on those principles will enable an application to be made to amend the present building consent.  If granted, the whole building may be remediated at the same time.   No more work than is reasonably necessary will be carried out on MSL’s private property.

[34]      My approach also  ensures that  decisions that  affect both private property of MSL and the units on Level 11 will be protected by the need for joint decisions.   On the assumption that the Body Corporate is likely to engage Messrs Morrison and Templeman and MSL is likely to engage Mr Alvey (through their respective companies), I have confidence that they could work together as joint project managers, having regard to the natural division  of functions.    I am also  confident that  appropriate  professional indemnity arrangements can be made to govern work on Level 12, for which Mr Alvey’s company is likely to have primary responsibility.

[35]      It  is  possible  that  the  Council  will  not  be  prepared  to  issue  an amended consent in respect of the whole building on the basis of (either) work on Level 12,  or the provision for joint project managers.  Subject to hearing argument on any matters of detail, I indicate that, if an amended consent were not granted, I would be prepared to approve a scheme of the type suggested by the Body Corporate.

[36]  I have reached that view because there is work that needs to be done, and it is expedient, from the perspective of all proprietors, for the work to be carried out immediately.   If it were necessary to revert to the Body Corporate’s existing proposal, I would need to hear argument on whether the existing dispute resolution clause is adequate and whether any other consultation provisions could be inserted.  Both of those considerations are relevant to protection of MSL’s individual interests.

[10]     My approach to the Court’s jurisdiction and discretion to approve a scheme was fully considered and articulated in my earlier judgment.  I incorporate what was said on that topic by reference.

[11]     So far as apportionment of cost was concerned, after reviewing the applicable principles, I said:

[44]      In my view, MSL, in addition to meeting all costs associated with repairs on Level 12 (whether pertaining to private or common property), ought to make a contribution to the balance of repairs to be undertaken to common property.

[45]      I have no doubt that MSL will gain significant advantages from the balance of the common property being repaired at the same time as work is undertaken on Level 12.   Economically, if the building were to retain the stigma of a “leaky building”, there would be real difficulties for MSL in developing (eg adding another floor) or selling the penthouse apartment. That should be reflected in the apportionment of cost.

[46]      It is only possible to give an indicative view of the amount that should  be  paid  by  MSL  by  way  of  contribution  to  repairs  to  common property,  other  than  on  Level  12.     The  figures  are  far  from  clear. Adjustments will be required in time or, alternatively, a formula will need to be set out in the redrafted scheme.

[47]      I work out my figures on the following assumptions:

a)	The cost of repairs for Levels 1 to 11 is (say) $5,750,000.

b)	The cost of repairs for Level 12 (individual and common property) is (say) $500,000.

c)	The total cost of repairs is, therefore, (say) $6,250,000.

[48]      MSL’s unit entitlement is 11.88%.  Applying that percentage to the total estimated costs of repairs (whether individual or common property) of
$6,250,000, amounts to a contribution of $742,500.

[49]      The indicative amount of $500,000 to be paid in respect of Level 12 work amounts to 8% of the estimated total repair cost of the building.  In my view, that needs to be topped-up to equate to the sum of $742,500, which would have been the cost, based on 11.88% of the total cost of repair for the building.   On that basis, in respect of common property (other than that situated on Level 12), MSL’s contribution would be $242,500.

[50]      For the purpose of drafting the scheme it may be better for MSL’s apportionment to reflect 11.88% of the total cost of remediating the building,

so that the amounts involved can be fixed by reference to higher or lower costs of remediation, both in respect of Levels 1 to 11 and Level 12.

The effect of the change in circumstances

[12]	The decisions made by the Body Corporate and MSL result in the following changes to that framework:

a)        Contemporaneous  repair  work,  properly  co-ordinated  and  of   a consistent quality of finish, is no longer possible.

b)        The use of joint project managers, is no longer feasible.  Rather, the focus must be on finding a method by which owners of units below Level 12 can be protected from the possibility of continued leaking from Level 12.

c)        There is no amended building consent in respect of the whole building on the basis of the work intended (at the time of my earlier judgment) on Level 12; though work could be carried out on the basis of the Body Corporate’s existing consent if the Council were prepared to sever the two aspects of it.

[13]     Helpfully, on 30 June 2010, counsel for the Body Corporate and MSL filed a joint memorandum to which they attached a proposed scheme.  They indicated that there remained disagreement in relation to clauses 1.4, 10.3, 15.1 and 21 of the draft. One other area of dispute emerged; in relation to the reimbursement of consultancy costs incurred by both the Body Corporate and MSL prior to approval of a scheme.

Resolution of particular disputes about terms of the scheme

(a)  An overview

[14]     On 2 July 2010, I heard argument from Mr Allan and Ms Khouri on the areas of difference.   I accepted that a scheme would need to be approved.   I indicated I would use the draft scheme submitted as the basic template, incorporating my own views on the questions in dispute.

[15]     The points in dispute may be summarised as follows:

a)        MSL object to the inclusion of clause 1.4 in an approved scheme.  The question is one of cost and can be dealt with either in the approved scheme or on division of costs in the present proceeding.

b)        A question arises as to whether clause 10.3 of the scheme should remain, either in its present or some modified form.  It deals with cost allocations.

c)        Clause 15.1 indemnifies the Secretary of the Body Corporate for any steps taken by it to implement the scheme.  The only exceptions from the indemnity are fraud and wilful misconduct.   MSL contends that the Body Corporate should not be protected from negligence, whereas the Body Corporate submits it should.

d)        Clause 21 contains provisions fixing MSL’s overall contribution to the repairs authorised by the scheme and identifies the work for MSL to undertake independently.   Aspects of the incidence of cost are in dispute.

[16]     In addition, the Body Corporate contends that consultancy costs incurred by MSL should be excluded from the calculation of its 11.88% share of the work to be undertaken.    In other words, the Body Corporate wants to see MSL meet its own consultancy costs out of its own money, in addition to the funds MSL is contributing to  the  remedial  work  for  the  building  as  a  whole.    MSL  submit  there  is  no justification for treating its costs any differently from consultancy costs incurred by the Body Corporate.

(b)   The clause 1.4 issue

[17]     Clause 1.4 of the proposed scheme reads:

1.4       The work undertaken prior to the date of this scheme, in identifying the initial damage to the Building and the Repairs required, and any initial reports, and their costs to date, are deemed part of this scheme and the costs payable for such work shall be deemed Costs within the meaning of this scheme.

[18]     Mr Allan submits that this provision is required to ensure that no point is taken in the future about any alleged trespass on the part of the Body Corporate (or its agents) in relation to tests carried out on the property.  He submits that something akin to clause 1.4 is customarily included in an approved scheme and its presence prevents the possibility of an “unnecessarily distracting argument”.

[19]     Ms  Khouri’s  client  does  not  oppose  the  inclusion  of  clause  1.4  for  the purpose identified by Mr Allan.   But Ms Khouri did express concern about the possible consequence of excluding MSL’s investigation costs, to the benefit of other proprietors.  MSL’s position is that all members of the Body Corporate were levied for these costs before commencement of the proceeding.

[20]     In my view, clause 1.4 may deal properly with the exclusion of any perceived claim based on trespass.   It should also include all levied costs in relation to the application for the scheme to be approved.  I do not consider the scope of clause 1.4 need go further.

[21]	I approve the insertion of clause 1.4 into the proposed scheme on the basis of the following wording:

1.4       All costs incurred in identifying the initial damage to the Building and the Repairs required in respect of which individual proprietors have been levied shall be deemed part of this scheme and the cost of such work shall be deemed to be Costs within the meaning of this scheme.

(c)  The clause 10.3 issue

[22]     Clause 10.3 of the proposed scheme provides:

10.3     Where Repairs involve both Units and Common Property, the Cost of such Repairs shall to the extent possible be apportioned to each Owner on the basis of that Owner’s legal title to part of the Building.

[23]	Clause 10.3 seeks to allocate costs as among individual proprietors where necessary repairs are done to both individual and common property.

[24]     Nothing I heard from counsel suggested a need to delete this clause, but I do consider that it ought to be subject to any specific provisions relating to the apportionment of costs for the remedial work.  Therefore, cl 10.3 will be amended to read:

10.3     Subject to any specific provision to the contrary in this scheme, where repairs involve both Units and Common Property, the Cost of such Repairs shall to the extent possible be apportioned to each Owner on the basis of that owner’s legal title to part of the Building.

(d)   The clause 15.1 issue

[25]     Clause 15.1 of the proposed scheme reads:

15.1     The Owners jointly and severally indemnify and hold harmless the Body Corporate, its members (jointly and severally) against all costs, expenses, claims and proceedings and any other liability of any sort incurred by them in the exercise or attempted exercise of the powers granted to the Body Corporate under this scheme but not against any act or omission done fraudulently or with wilful misconduct.

[26]     Clause 15.1 is controversial.  On the one hand, Mr Allan expresses concern at the ability for the Body Corporate to attract experienced and capable providers of secretarial services if liability were not excluded for anything other than fraud or wilful misconduct.   On the other hand, Ms Khouri contends that a competent professional secretary, such as the one employed by the Body Corporate in this case, should be liable for any negligence on its part in the “exercise or attempted exercise of the powers granted to the Body Corporate” under the scheme.

[27]     Mr  Allan  relied  on Body  Corporate  193764  v  Antioch   in  support  of  a submission that liability of the secretary for other than fraud or wilful misconduct should be excluded.  However, that authority is not on point.  The objection which Harrison J dealt with in that case was a concern expressed by a lay litigant that the indemnity clause would  absolve those who had done work on his unit prior to approval  of  the  scheme  from  any  liability  to  him.      As  I  read  the  judgment, Harrison J did not articulate or approve any general principle requiring the limitation of liability of an agent to the Body Corporate in the manner set out in the proposed cl 15.1.

[28]     A body corporate is made up of all individual proprietors.   The question is whether a person appointed by the body corporate should be absolved from negligent acts or omissions carried out within the authority granted to them by the Body Corporate to exercise powers under the scheme.

[29]     I am not persuaded that a general limitation of liability is required.  But given the complex structure and dynamics of a body corporate, I consider that only gross negligence should give rise to a cause of action.  Being used in other areas of the law, “gross negligence” is a well understood term.  It requires a “major departure” from the standard of care expected.   I also consider that any limitation of liability on the part of the agent should relate only to acts or omissions carried out within the scope of the authority conferred by the agency.

[30]	I am prepared to approve clause 15.1 in the following form:

15.1     The Owners jointly and severally indemnify and hold harmless the Body Corporate, its agents and members (jointly and severally) against all costs, expenses, claims and proceedings and any other liability of any sort incurred by them within the scope of any authority given by the Body Corporate in the exercise or attempted exercise of the powers granted to the Body Corporate under this scheme, but not any wilful misconduct or any act or omission that is carried out with gross negligence or with fraudulent intent.

(e)  The clause 21 issue

[31]	Clause 21 of the proposed scheme reads:

21.       Specific arrangement with Manchester Securities Ltd in respect of level 12

21.1     Manchester Securities Limited (“Manchester”) is the Owner of the penthouse on level 12 of the Building.   This clause of the scheme provides for:

(a)	the carrying out of Repairs to level 12 as contemplated by the Building Consent by Manchester; and

(b)	Manchester’s share of the total Cost of the Repairs of the entire Building.

21.2	Manchester shall not be liable to pay more than 11.88% of the total
Cost of the  Repairs carried out pursuant to this Scheme.

21.3     The cost of Repairs to the Units and Common Property situated at level 12 of the Building shall be separately assessed and paid by Manchester, provided that Manchester shall supply to the Body Corporate all documents and or information in connection with any design  element,  pricing,  quantity  surveyor’s  or  other  review  of prices, contracts and or sub-contracts with the intent that any works undertaken and to be paid by Manchester shall be transparent from the outset.

21.4	The amount payable by Manchester on account of Repairs to levels
1-11 of the Building shall be calculated by deducting the Cost of
Repairs to level 12 from the amount that is 11.88% of the total Cost of the Repairs carried out pursuant to this Scheme.

21.5     Manchester may appoint, at its own cost, a suitably qualified project manager to manage that part of the work required for level 12 that can reasonably be carried out separately from the Repairs carried out to the rest of the Building.

21.6     The work that is separable from the main building contract includes the  work  described  in  the  Building  Consent  that  relates  to  the

replacement or repair of the level 12 decks, balustrades, stone veneer cladding and roof (the “Manchester Work”).

21.7     The Manchester Work shall be carried out under a separate building consent  to  be  obtained  by  Manchester  utilising  as  far  as  is practicable the existing plans, details and specifications from the Building Consent  and shall include:

(a)	Removal of the existing planters;

(b)        Removal of the existing handrail system and installation of a new  handrail  system in  accordance  with  the  construction details approved in the Building Consent;

(c)        Uplifting of the existing deck tiles and membrane, with the substrate to be prepared and a new screed laid to achieve 1 degree fall to sumps;

(d)	Removal of existing tiled landing;

(e)        Provision of a 100mm step down from the door threshold to structural  heritage  tiles  RAK220  stone  grey  600x900  on chair system

(f)        Removal  of  existing  joinery,  tightening  and  resealing  of mitre corners, installation of new rubber seals and reinstatement to suit new cladding;

(g)        Inspection of existing framing decay and replacement of any framing   in   accordance   with   Drawing   WD-27   and   a maximum stud height of 3.2 metres as provided for in the Building Consent;

(h)        Installation of new stone cladding on ventclad drained cavity cladding system stone to be secured with Flexco “flexi-wall” two  part  system  with  additional  stone  clip  mechanical fixings;

(i)	Removal of existing tiled landing;

(j)         Lifting of existing door to provide 100mm threshold at door sill   with   structural   heritage   tiles   RAK220   stone   grey
600x900 on chair system to be level with door sill;

(k)        Replication   of   corner   details   where   new   stone   abuts proposed “alucobond” so far as is practicable;

(l)         Construction  of  all  inter-storey  junctions  so  far  as  is practicable in accordance with existing details with due allowance for following work in consultation with the Body Corporate’s architects;

(m)       Alteration of existing copper parapet cappings to penthouse to  be  altered  to  suit  new construction  (Building  Consent detail 4.68 on Drawing DT-4.2);

(n)        Retention of existing internal gutters to be retained subject to inspection of substrate for degradation;

(o)        Installation of new membrane to moisture affected area of the roof and reformation of the substrate to provide new falls;

(p)       Inspection of existing roof substrate signs of decay and replacement as appropriate to CD grade H3.1 plywood (thickness to match existing);

(q)     Preparation of substrate in accordance with Ardex recommendations and specifications;

(r)	Reinstatement of existing air conditioning systems on new
H3.2 tapered battens with membrane saddle;

(s)        Air  conditioning  unit  fixings  to  have  neoprene  washers between bolt head & fixing point and between fixing point and membrane (Building Consent Detail 4.10 on drawing DT-4.3);

(t)         Replacement of existing parapet cappings and installation of new aluminium cappings with 10 degree fall;

(u)	Re-covering of existing roof hatch with new membrane; (v)	Butynol roofing to be patched and repaired as appropriate;
(w)       Upstands, penetrations, parapets and the like to be reformed in accordance with the details provided for in the Building Consent;

(x)        Existing  pipe  penetrations  to  have  2  layer  membrane bandage flashings welded to pipe, and reinforcement of junction between pipe and roof (Detail 4.2 on Drawing DT-
4.1);

(y)        All work incidental to the foregoing in accordance with the definition of Repairs herein

21.8     The remaining work required for the level 12 remediation should be confined so far as is practicable to the “Dimondek 400” and “Alucomat” re-cladding to be carried out at the time of the principal building work to the rest of the Building is carried out by the Body Corporate.

21.9     The interaction between the level 12 work and the Repairs to the rest of the Building contemplates full co-operation between Manchester and the Body Corporate and any respective consultants.

[32]	Clause 21 is the lynchpin of the scheme.  It defines the relationship between the Body Corporate and MSL in respect of the work to be carried out around the

junction of Levels 11 and 12.  As presently drafted, MSL’s liability to contribute to the repairs authorised by the scheme is based on its 11.88% contribution.

[33]     The first issue concerns the extent of MSL’s liability, in terms of cl 21.2. Should  this  include  or  exclude  consultancy  and  other  costs  incurred  by  MSL? MSL’s position is that my earlier judgment envisaged MSL meeting only any costs of an additional project manager if a single project manager were not engaged.  Mr Allan contends that the cost of engaging architects, building surveyors, quantity surveyors, structural or other engineers, waterproofing or membrane advisers, in relation to the work on level 12, should be borne by MSL and be outside the 11.88% cap.

[34]     This problem emerges because the basis on which my previous judgment proceeded is no longer sustainable.

[35]     While costs incurred by MSL will be largely for its own benefit, some will undoubtedly address the junction with common property above Level 11.  On that basis, there will be some benefits to individual proprietors (for waterproofing) from costs likely to be incurred by MSL.  In my view, the appropriate way  to deal with this issue is to bring those costs within the cap on the basis that only those costs that can be shown to add benefit to owners of other individual units shall be borne by all proprietors.  There will need to be a basis on which costs incurred can be disclosed to other owners with any disputes about the level (or whether) any benefit exists to be determined under cl 13 of the scheme, the dispute resolution clause.

[36]     On that basis cl 21.2 shall be amended to read:

21.2     Manchester shall not be liable to pay more than 11.88% of the total Cost of the Repairs carried out pursuant to this Scheme provided however that any Costs of Repairs that do not provide benefit to all other individual proprietors or the body corporate shall be borne solely by Manchester.  The costs that Manchester contends provide a benefit to all individual proprietors (other than Manchester) or the body corporate shall be made available in writing, together with supporting documentation to the secretary of the body corporate. Any  dispute  about  whether  benefit  is  provided  to  all  individual

proprietors (other than Manchester) or the body corporate shall be determined under the dispute resolution provisions of this Scheme.

[37]     The thrust of the approved version of cl 21.2 will be reinforced by cl 21.3 which I approve in a form modified in Mr Allan’s submissions:

21.3     Provided that Manchester shall give to and consult with the Body Corporate all documents and or information in connection with any design  element,  pricing,  quantity  surveyor’s  or  other  review  of prices, contracts and or sub-contracts with the intent that any works undertaken and to be paid by Manchester shall be transparent from the outset.

[38]     It is agreed that there is a drafting error in cl 21.4.  That clause shall read:

21.4     Subject to clauses 21.1 and 21.2, the amount payable by Manchester on account of Repairs to the building other than the works to level
12 listed in clause 21.7 shall be 11.88% of the total Cost of Repairs less the cost of repairs assessed paid for in accordance with clause
21.3.

[39]     Mr Allan submits that the definition of work in cl 21.7 should be amended to alter  the  description  of  work  to  be  undertaken  by  MSL.    Ms  Khouri  submits, however, that the description comes from consented plans and specifications.  While consenting to an amendment to cl 21.7(k), she opposes variations to clauses 21.7(e) and (j) on the grounds of potential for “very significant cost consequences” for her client.

[40]     I agree with Ms Khouri’s submission.   The only amendment that will be made to cl 21.7 relates to (k), so it will now read:

(k)        Replication  of  corner  details  where  existing  or  new  stone  abuts proposed “alucobond” so far as is practicable;

[41]     Mr Allan suggests that MSL should bear the cost of flashing junctures at the intersection of levels 11 and 12 between repairs and non-repaired parts of the structure.  He submits that should be done outside the 11.88% cap, on the basis that such costs “would never exist if [MSL] fell in with all other proprietors and had this unit been repaired under a single, overall contract managed under the auspices of Mr Morrison’s team”.

[42]     The problem with that submission is that the Body Corporate can be regarded just as much at fault for declining to embark upon joint work until after resolution of the proceedings with the Council.  I am not prepared to penalise MSL for deciding to proceed alone, when the inability to pursue joint remedial work is as much due to the Body Corporate’s decision as it is to MSL’s.

Conclusions

[43]     In summary, my decisions in respect of amendments to the draft scheme are set out in paras [21], [25], [30], [36], [37], [38] and [40] above.  Those amendments are reflected in the draft scheme, annexed as Schedule A, with the changes to the draft submitted by counsel shown in both bold and italics.

Costs

[44]     Both counsel indicate there are aspects of the background to this dispute which are required to be canvassed fully in any determination of costs.

[45]   On that basis, costs are reserved.   The Registrar shall convene a case management telephone conference before me at 9am on the first available date after
6 September 2010, so that I can hear from counsel as to whether costs have been agreed or timetabling directions are required.

Result

[46]     I make an order, under s 48(1) of the Act in terms of Schedule A to this judgment.  That order shall lie in Court unsealed until midday on 27 August 2010.  If counsel believe there are any issues with which I have (inadvertently) not dealt in this judgment or any errors in the way in which clauses have been amended in the Scheme to reflect my findings, they have leave to request an urgent conference in my chambers so that those issues can be addressed.  Any questions of that type shall be raised by memorandum on behalf of one of the parties to which counsel for the other has time to respond before the conference.  If a conference were allocated, the order

may not be sealed until that conference has been held and I have ruled on any issues raised.

[47]	Costs are reserved and remain to be addressed in terms of para [45] above.

P R Heath J

Delivered at 4.00pm on 19 August 2010

SCHEDULE A

SCHEME UNDER SECTION 48 OF UNIT TITLES ACT 1972

In regard to Body Corporate 172108, North Auckland Land Registry
(the “Body Corporate”)

And the property situated at 196 Hobson Street, Auckland

Preamble

A.	This scheme governs repairs to a building situated at 196 Hobson Street, Auckland
(the “Building”), which is part of a unit title development under the Unit Titles Act
1972 (the “Act”).

B.        The Building consists of 39 apartments on 12 levels.   There are three levels of carparks, six levels of five units, two levels of four units and a penthouse that occupies the whole of level 12.

C.        The scheme binds the Body Corporate, any person who owns a Unit (an “Owner” or “Owners”),  including any transferees  and  assigns of  an  Owner,  and any other person who is bound by the scheme pursuant to the Act.

D.        The scheme authorises the repair of the Building generally in accordance with the building   work   approved   by   Auckland   City   Council   in   building   consent B/2008/28758 dated 23 July 2009 (the “Building Consent”), subject to the terms of the scheme.

E.       The scheme governs repairs to the Common Property held by the Body Corporate and to the Owners’ Units for the purpose of ensuring that damage caused to the Building by water ingress is repaired in an integrated manner.

F.        The repairs to the Building shall be carried out pursuant to one construction contract managed by the Body Corporate other than as provided below in respect of level 12.

G.       The full extent of the work required to repair damage to the Building will not be known until work begins and the exterior cladding has been removed.  Any further damage to the Building that is identified during the course of the works will be governed by the terms of this scheme.

H.       The scheme fixes and apportions responsibility for the costs incurred in carrying out the Repairs and any other costs approved under the scheme.

To achieve the objectives outlined above, this Scheme therefore orders:

1.	Appointment

1.1        Subject to the arrangements described below concerning the work to level 12 of the Building  and  the  other  terms  of  this  scheme,  the  Body  Corporate  is  hereby appointed the agent of each Owner, severally, with authority, from time to time, to authorise, undertake,  covenant, and agree on behalf of each  Owner all  matters concerning and incidental to the Repairs, including the costs of Repairs for which each Owner is responsible.

1.4       All costs incurred in identifying the initial damage to the Building and the Repairs  required  in  respect  of  which  individual proprietors  have  been levied shall be deemed part of this scheme and the cost of such work shall be deemed to be Costs within the meaning of this scheme.

2.	Repairs

2.1        The scheme authorises the repair of the Building in accordance with the building work approved in the Building Consent and any other work as the Body Corporate determines in necessary or appropriate to complete the Repairs.

2.2        In order to give effect to paragraph 2.1, the term “Repairs” is to be given the widest possible meaning.   “Repairs” shall include the redesign, alteration, demolition, reconstruction,  restoration,  reinstatement  or  modification  to  any  part  of  the Common Property or a Unit, or such related work as the Body Corporate considers necessary or advisable, to:

(a)         Repair or remedy the damage to the Building to the standard whereby all building consents and certificates of compliance with the New Zealand Building  Code  are  issued  by  the  authorities  when  the  Repairs  are completed; and

(b)	Gain one or more Code Compliance Certificates in respect of the Repairs;
and,

(c)         Comply with all safety, engineering, earthquake, fire and other standards, and technical compliance work necessary to facilitate the undertaking and completion of the Repairs and to ensure the Building is sound and complies with all statutory and regulatory requirements (including the New Zealand Building Code); and,

(d)        Take such steps, and carry out such works, as are practicable in the opinion of the Body Corporate to ensure that the integrity of the Building can be maintained into the future and that water damage to the Building does not recur in the foreseeable future; and,

(e)	Maintain  consistency  of  the  standard  of  the  Repairs  to  the  Units  and
Common Property.

For the sake of clarity, “Repairs” shall include but not be limited to:

(a)         Repair  of  the  exterior  cladding  of  the  Building,  including  by  way  of removal and replacement;

(b)        Repair of structural elements, internal linings, decorative and other parts of the Building, whether exterior or interior parts of the Building and whether to Common Property or Units;

(c)	Repair to services and amenities provided to the Building and/or a Unit or
Units;

(d)        All building work required under current legislation and regulations, even if the standard now required is different from the standard required when the Building was first completed;

(e)         All investigatory work into the scope of Repairs, or the process or work required to remedy any damage to the Building or to effect any Repairs carried out at any time;

(f)         All plans, drawings, diagrams, specifications, and other detail developed or prepared for the repair of any part of the Building.

3.	Costs

3.1        The term “Costs” shall have the widest possible meaning and shall include all costs involved  in  assessing  and  carrying  out  the  Repairs  and  in  obtaining  Code Compliance Certificates for the Building once the Repairs are complete.  Without limiting the foregoing, Costs shall include:
(a)	The cost of investigating and assessing damage and repairs required; and, (b)	The cost of commissioning of advice or reports on all matters relating to
the Repairs; and,

(c)          The  contracting  out  of  the  building  work  and  other  all  contracts  that support or facilitate the Repairs; and,

(d)         From time to time the cost of reassessing the Repairs required or still outstanding and the cost of any Repairs carried out as a result of such reassessment; and,

(e)          The  cost  of  all  work  required  to  meet  Building  Code  compliance, engineering and other building regulation standards; and

(f)	The cost of specific repairs to individual Units; and,

(g)         The cost of repairs to all parts of the Building structural or otherwise, external or internal;

(h)         The cost of assessments, interim estimates, or provisions for anticipated costs, or increases or variations to Costs from time to time; and

(i)	The cost of obtaining Code Compliance Certificates for the Building once
Repairs are complete.

3.2        Except in the case of manifest error, and subject to the arrangements described below concerning the work to level 12 of the Building, the decision of the Body Corporate as to what constitutes Costs shall be final and binding on all Owners.

4.	Powers

4.1        The Body Corporate, for itself and on behalf of each Owner, is hereby granted the general power to ensure that the Repairs are identified and the work required is undertaken and completed in a good and workmanlike fashion and that the money required to meet the Costs of the Repairs is collected from each Owner.

4.2        The Body Corporate is further granted such other powers and authority as may be necessary to enable it to fully and properly carry out this scheme, including the power:

(a)         To engage suitably qualified persons, from time to time, to identify and quantify  the  damage  and  the  form  of  Repairs  necessary  to  ensure  the damage is remedied professionally and in a good and workmanlike fashion and so that certification that the works comply with the Building Code can be obtained upon completion;

(b)        To instruct suitably qualified advisors to develop plans and specifications for the work required to effect the Repairs, together with such variations or additions as from time to time may be determined;

(c)         To instruct suitably qualified advisors to manage the tender process and recommend the contractors and/or tradespersons to be involved in the Repairs;

(d)       To engage such contractor/s and tradespersons as the Body Corporate determines and to sign all necessary contracts and other documents as may be necessary to carry out this scheme;

(e)         To employ suitably qualified project manager/s to oversee the carrying out of the Repairs, to certify progress payments and to attend to payments of Costs as required;

(f)         To authorise or commission such reports as the Body Corporate deems necessary or advisable, and to obtain such consents, approvals and certificates of compliance as the law requires and to carry out such work as may be necessary to meet those requirements;

(g)        To authorise advisors to inspect and re-evaluate the Repairs from time to time, and to alter or vary the scope of the Repairs to accommodate further work or to modify existing work as the Body Corporate thinks fit;

(h)	To levy and charge Owners for the Cost of Repairs;

(i)         To employ suitably qualified advisors to assess and determine interim and final Costs and to determine the allocation of those Costs between Owners;

(j)         To  employ  such  advisors,  managers,  agents  or  assistants  as  the  Body Corporate thinks fit for carrying out and completing the Repairs, collecting Levies, prosecuting or defending claims, and all matters incidental thereto;

(k)        To delegate to advisors or individuals such powers and authorities hereby given the Body Corporate as it from time to time, and for such period of time, determines;

(l)         To pay the secretary to the Body Corporate such remuneration as the Body Corporate  determines  for the  secretary’s  involvement  in the  scheme  as agent of the Body Corporate; and

(m)	To carry out all ancillary matters and things necessary to enable the Body
Corporate to progress and properly finalise the Repairs.

4.3        Except as specifically varied by this scheme, the Body Corporate shall have all of the powers granted to the Body Corporate under the Unit Titles Act 1972.   The Rules of the Body Corporate shall be deemed to be powers granted to the Body Corporate in relation to this scheme.

5.	Body Corporate Duties

5.1	Subject to the arrangements described below concerning the work to level 12 of the
Building, the Body Corporate must, in a proper and professional manner:

(a)	Identify  the  extent  to  which  Costs  relate  to  Repairs  to  the  Common
Property and to any Unit or Units.

(b)	Negotiate all contracts and other arrangements for the carrying out of the
Repairs;

(c)      Proceed to have the Repairs carried out diligently and completed as expeditiously as practical;

(d)	Apply due care and attention to the making of all decisions of the Body
Corporate on matters relating to this scheme;

(e)        Seek   advice   from   suitably   qualified   advisors   where   necessary   or appropriate in carrying out or managing the Repairs.

(f)        Manage and assess the progress, extent and cost of Repairs at all stages as the work progresses to ensure the appropriateness, quality of workmanship, and compliance with the contract documents;

(g)        Properly call and hold meetings of the Body Corporate as appropriate to keep all Owners advised of progress in undertaking the Repairs;

(h)       Keep  minutes  of  all  meetings  and  decisions  of  the  Body  Corporate  in connection with this scheme;

(i)        In the calling and holding of meetings of the Body Corporate to observe the procedures laid down in the Body Corporate Rules;

(j)        Advise Owners on a regular basis of the decisions of the Body Corporate and progress of Repairs, and make available to Owners minutes of meetings of the Body Corporate on request by an Owner;

(k)        Account to the Owners for all money that the Body Corporate or its agent receives and expends on behalf of the Owners under this scheme;

(l)        Ensure that all moneys received from each Owner for Repairs are only allocated and paid out for the Repairs;

(m)      Upon receipt of notice from any Owner, supply to that Owner within a reasonable time such oral or written information relating to funds received for Repairs and costs both for Common Property repairs and repairs to Units.  If an Owner requests information other than the records the Body Corporate has readily available, the Owner shall pay the reasonable cost of the Body Corporate gathering such additional information; and

(n)       Where repairs to private property involves finishing work or accessories to the interior of a Unit, the Body Corporate shall if practicable accommodate the wishes of the Owner of that Unit as to the standard and finish required by that Owner as advised to the Body Corporate in writing prior to any such work being undertaken.

5.2         While  the  Body  Corporate  is  hereby  charged  with  making  the  final  decisions concerning the implementation of this scheme, it shall have regard to professional advice and consult with its advisors and record the reasoning by which its decisions were reached.

6.	Levies

6.1         The Body Corporate is hereby authorised to levy (“Levy”), and collect from each Owner from time to time such money as the Body Corporate deems necessary for undertaking, progressing or completing the Repairs. For clarity the right to levy includes levies based on reasonable interim or estimated costings, the issue of several  progressive  levies,  or  to  reassess  and  vary levies  in  light  of  changing circumstances, and may include reasonable estimates and allowances or provisions for then unknown factors or anticipated Costs.

6.2         Without limiting the generality of the above, the Body Corporate has the authority to:

(a)        Seek advice from suitably qualified advisors on the basis to be adopted for any apportionment of Costs;

(b)        To demand payment of such Levies from each Owner in amounts and at times that the Body Corporate may from time to time determine .

(c)        To sue for and take such other steps as the Body Corporate deems advisable to recover from any Owner who fails to pay their Levies in the amount and at the time determined by the Body Corporate.

(d)        Where possible to attach the amount due under any such Levy to the Unit of which the Owner is the Registered Proprietor, to the intent that such Levy, shall until satisfied in full, remain a charge against such Unit notwithstanding that a change of Owner or charge holder may subsequently occur.

(e)        To generally have the same powers with regard the collection and recovery of Levies in respect of each Unit, including the right to charge interest and any collection costs (including legal costs), from each Owner that the Body Corporate has under the Act for the recovery of levies for repairs and maintenance to common property.

(f)        To determine any refunds that may be payable to an Owner or Owners and to determine when such refunds should be made.

6.3         Any levy raised under this Scheme shall have the same legal status as a levy validly raised under s15 of the Act.

7.	Levy defaults and refunds

7.1         If, for whatever reason, insufficient funds are received to make the Repairs within the time planned, then the Body Corporate may Levy each Owner in order to meet the shortfall, in such proportions as are determined from time to time by the Body Corporate.
Levies can involve short term advances by Owners to cover cash flow requirements as the Repairs progress.
Such a situation could arise when there is a need to provide funds that a defaulting
Owner has failed to make.
A Levy on other Owners to cover unpaid Levies of a defaulting Owner will be calculated pro rata on the basis of excluding that defaulting Owner from calculation
of the apportionment.

7.2         If any Owners have been required to pay a Levy to cover the amount of a Levy that defaulting Owner has failed to pay, the Body Corporate shall apply any funds received from the defaulting Owner first towards refund the non-defaulting Owners their proportionate share either by paying the funds to the Owner or by transferring the funds into the account of that non-defaulting Owner to set off against all or part of Levies made on that non-defaulting Owner.

7.3         If an Owner fails to pay a Levy in the amount and at the time required by the Body Corporate, that Owner shall be liable for any losses and for all associated and additional  costs,  expenses and  disbursements  resulting from such  non-payment (including all costs incurred by the Body Corporate in attempting to recover the outstanding Levy and associated costs.

8.	Financing

The Body Corporate is authorised to borrow money from third parties to enable it to fund Repairs on such terms as the Body Corporate determines.   If the Body Corporate does borrow money, the interest and any other fees and expenses whatsoever payable pursuant to any loan or security document for such borrowing shall be treated as a Cost of the Repairs and as such will be included in and form part of any Levy.  If a reason for the Body Corporate borrowing money is to cover a defaulting Owner’s unpaid Levy, then so much of the principal, fees, interest, costs  and  expenses  as  relate  to  that  defaulting  Owner’s  unpaid  Levy  may  be charged to that Owner.

9.	Use of Funds

9.1	Any funds received pursuant to Levies for Repairs shall be used to pay for Costs of
Repairs, including:

(a)	Payment  of  fees,  charges,  costs  and  expenses  in  respect  of  advice undertaken from time to time to progress the Repairs and this scheme;

(b)        Payment  of  all  contractors,  tradespersons  and  others  engaged  in  the
Repairs;

(c)	Payment  for  all  reports,  consents,  permits  insurance  and  other  matters required by local government and other authorities;

(d)	Payment of such other fees and charges interest or other outgoing incurred in operating this scheme.

For clarity, while all moneys received shall be used to pay the Costs of Repair, the moneys received pursuant to a particular Levy need not be disbursed in payment of the Costs on which that Levy was assessed.

10.	Allocation of Costs

10.1      Where Repairs can be identified with a specific Unit, the Cost of such Repairs shall be borne by the Owner or Owners of that Unit.

10.2      Where Repairs are carried out to Common Property, the provisions of the Act shall apply.

10.3      Subject to any specific provision to the contrary in this scheme, where repairs involve both Units and Common Property, the Cost of such Repairs shall to the extent possible be apportioned to each Owner on the basis of that owner’s legal title to part of the Building.

11.	Accounting

11.1       The Body Corporate shall keep all funds paid by an Owner under this scheme in a separate named account identifiable to the Owner until such time as the funds are paid out by the Body Corporate pursuant to this scheme.  An Owner shall have no right to demand a return of any funds credited to that Owner’s account until such time as the Repairs are completed in full.

11.2       The Body Corporate will keep a permanent and up to date record of payments made and received pursuant to this scheme and in relation to Repairs to both the Common Property and the Units.

11.3       The Body Corporate is authorised to pay from an Owner’s account that Owner’s proportion of any moneys payable pursuant to this scheme from time to time as determined by the Body Corporate.

11.4       The Body Corporate is authorised to adjust the various Owner accounts from time to time in the case of corrections or reassessments to payments made.

12.	Reporting

12.1       The Body Corporate will keep each Owner fully appraised of details of the Repairs and progress of same over the period of the scheme by reporting not less than every two months.

12.2	Reports to the individual account holder shall include:

(a)	A report on the overall position both in progress of Repairs and financial terms, details of costs and apportionments;

(b)	A statement of the position of each Owner’s account detailing any arrears, money received and money paid out;

(c)	A final report on the Repairs eventually undertaken as part of the scheme, the Costs incurred and how they were apportioned.

The Body Corporate is empowered to disclose to all Owners information regarding the proportion of Costs payable and the Levies paid by each Owner.

13.	Dispute resolution

13.1       The Body Corporate’s decision shall be final in all respect all matters arising under this scheme, except where 5 or more Owners whose objection in monetary value cumulatively exceeds $30,000, or where one Unit Owner has an objection which in monetary terms exceeds $10,000.  Upon receiving notice of such an objection, the Body Corporate shall refer the matter to arbitration.

13.2       The objecting Owners must give notice to the Body Corporate of their objection within 15 working days of receiving an assessment as to Costs or other notice from the Body Corporate which is the subject of the objection outlining the grounds on which such objection is made.  On receipt of the notice the Body Corporate will refer the matter to an arbitrator (to be appointed by the President of the Quantity Surveyors Association) and the arbitrator shall determine the issue under the provisions of the Arbitration Act 1996.  The arbitrator’s decision shall be final and the costs of the arbitration shall be borne as between the objecting Owners and the other members of the Body Corporate generally as the arbitrator shall decide.

13.3       No Owner shall be entitled to withhold payment of a Levy on the basis that the matter is in the process of dispute resolution.

14.	Insurance

14.1       The Body Corporate will ensure that its interest as agent for the Owners is noted on the contractors all risk insurance policy and that the Body Corporate insurers are properly advised of the Repairs, and noted on the Body Corporate policies of insurance and will ensure the premiums are paid appropriately.

15.	Indemnity

15.1       The Owners jointly and severally indemnify and hold harmless the Body Corporate, its agents and members (jointly and severally) against all costs, expenses, claims and proceedings and any other liability of any sort incurred by them within the scope of any authority given by the Body Corporate in the exercise or attempted exercise of the powers granted to the Body Corporate under this scheme, but not any wilful misconduct or any act or  omission that is carried out with  gross negligence or with fraudulent intent.

15.2       The Body Corporate and its members shall have no liability to any Owner or other party for the standard or extent of the Repairs or for any action they take, or any omission  to  take  any  action,  in  any  work  associated  with  the  Repairs  or  this scheme.  Nor shall they be liable for any claim as to the level, extent, or necessity of any Repair or the Cost incurred for any Repair.

16.	Owner’s Transfer of Property

16.1       If an Owner sells or transfers his or her interest in a Unit before the Repairs are completed and paid for, the vendor Owner shall remain bound by the terms of this scheme and shall remain liable to pay the Levies on that Unit, (being both current and future Levies), including without limitations the requirement to contribute to

any shortfall in funds necessary to remedy the Repairs, to the extent that any purchaser Owner of that Unit fails to pay such Levies.

16.2       Any purchaser of a Unit shall be bound by the terms of this scheme on being registered as the Owner of that Unit, and obliged to pay all then outstanding and future Levies.

16.3       Any agreement to sell a Unit to a third party must disclose the existence of this scheme and the Repairs being undertaken pursuant to the scheme, and inform an intending purchaser of their liability under the scheme.

16.4       The Body Corporate is authorised to disclose to persons interested in purchasing a Unit such details of the Repairs, Costs and Levies in relation to the scheme as a whole as well as it relates to the Unit being offered for sale.

17.	Joint and Several Ownership

17.1	Where an Owner comprises more than one person and/or entities then: (a)	All such persons are deemed one Owner; but
(b)	The  provisions  of  this  scheme  shall  jointly  and  severally  bind  the individual persons comprising any such Owner.

18.	Owner Obligations

18.1        Each Owner shall ensure access to their particular Unit as required, by any person in the process of assessing damage or in implementing or inspecting Repairs from time to time

18.2        Each Owner is responsible for protecting their contents, pets and other personal belongings within their Unit from any harm or damage that may occur as a result of the Repairs being carried out, other than harm or damage arising as a result of any reckless or negligent act of any contractor or any authorised person carrying out the Repairs.  Each Owner will comply with any reasonable request from any contractor to remove contents, pets and other personal belongings to allow the contractor to undertake any Repairs in their Unit in a timely manner.

19.	Authority

19.1       No third person dealing with the Body Corporate in relation to this scheme will be obliged to verify the Body Corporate’s authority hereunder.

20.	Interpretation

20.1	In this scheme, except to the extent that the context otherwise specifies:

Defined Terms

(a)	“Body Corporate Committee” means the committee from time to time appointed by the Body Corporate;

(b)	“Common Property” means the common property comprised in the Unit
Plan;

(c)       “Owner” means a person or persons registered as a proprietor of a stratum estate in a Unit or Units on the Unit Plan and includes any administrator, executor, successor, permitted assign or transferee of an owner;

(d)       “Unit” means a principal unit as defined by the Unit Plan and unless the context otherwise requires includes all accessory units attached to that unit;

(e)	“Unit  Plan”  means  unit  plan  number  203267  (North  Auckland  Land
Registry);

General

(f)	Words denoting the singular include the plural and vice versa;

(g)        Reference to an Owner or Owners shall include their successors, executors, administrators and permitted assigns (as the case may be);

(h)        Words   denoting   individuals   or   persons   include   bodies   corporate, partnerships, trusts and other recognised legal entities and vice versa;

(i)	Words denoting any gender include all genders;

(j)	Headings are for convenience only and do not affect interpretation;

(k)        References  to  any documents  or  agreements  include  references  to  that document or agreement as amended novated, supplemented, varied or replaced from time to time;

(l)         Anything which may be done at any time may also be done from time to time;

(m)       Any action taken may be reviewed and varied or amended from time to time;

(n)        Terms defined in the body of this scheme shall bear the defined meaning throughout this scheme;

(o)        Any obligation not to do anything includes an obligation not to suffer, permit or cause that thing to be done;

(p)	“Including” and similar words do not imply any limitation;

(q)        Any covenant that binds any two or more persons or parties will bind each of them jointly and severally;

(r)         Any  obligation  or  deemed  authority  by  an  Owner,  which  is  properly something to be carried out wholly or in part by a company, shall be deemed  to  include  a  covenant  on  the  part  of  the  shareholder  of  that company to procure that the company carry out its activities in accordance with such obligation or deemed authority.

21.	Specific arrangement with Manchester Securities Ltd in respect of level 12

21.1	Manchester Securities Limited (“Manchester”) is the Owner of the penthouse on level 12 of the Building.  This clause of the scheme provides for:

(a)	the carrying out of Repairs to level 12 as contemplated by the Building
Consent by Manchester; and

(b)	Manchester’s share of the total Cost of the Repairs of the entire Building.

21.2     Manchester shall not be liable to pay more than 11.88% of the total Cost of the Repairs carried out pursuant to this Scheme provided however that any Costs of Repairs that do not provide benefit to all other individual proprietors or the body corporate shall be borne solely by Manchester. The costs that Manchester contends provide a benefit to all individual proprietors (other than Manchester) or the body corporate shall be made available in writing, together with supporting documentation to the secretary of the body corporate.   Any dispute about whether benefit is provided to all individual proprietors (other than Manchester) or the body corporate shall be determined under the dispute resolution provisions of this Scheme.

21.3     Provided  that  Manchester  shall  give  to  and  consult  with  the  Body Corporate all documents and or information in connection with any design element, pricing, quantity surveyor’s or other review of prices, contracts and or sub-contracts with the intent that any works undertaken and to be paid by Manchester shall be transparent from the outset.

21.4     Subject to clauses 21.1 and 21.2, the amount payable by Manchester on account of Repairs to the building other than the works to level 12 listed in clause 21.7 shall be 11.88% of the total Cost of Repairs less the cost of repairs assessed paid for in accordance with clause 21.3.

21.5     Manchester  may  appoint,  at  its  own  cost,  a  suitably  qualified  project manager to manage that part of the work required for level 12 that can reasonably be carried out separately from the Repairs carried out to the rest of the Building.

21.6     The work that is separable from the main building contract includes the work described in the Building Consent that relates to the replacement or repair of the level 12 decks, balustrades, stone veneer cladding and roof (the “Manchester Work”).

21.7     The Manchester Work shall be carried out under a separate building consent to be obtained by Manchester utilising as far as is practicable the existing plans, details and specifications from the Building Consent and shall include:

(a)	Removal of the existing planters;

(b)        Removal of the existing handrail system and installation of a new handrail system in accordance with the construction details approved in the Building Consent;

(c)       Uplifting of the existing deck tiles and membrane, with the substrate to be prepared and a new screed laid to achieve 1 degree fall to sumps;

(d)	Removal of existing tiled landing;

(e)       Provision of a 100mm step down from the door threshold to structural heritage tiles RAK220 stone grey 600x900 on chair system

(f)      Removal of existing joinery, tightening and resealing of mitre corners, installation of new rubber seals and reinstatement to suit new cladding;

(g)       Inspection of existing framing decay and replacement of any framing in accordance with Drawing WD-27 and a maximum stud height of 3.2 metres as provided for in the Building Consent;

(h)       Installation  of  new  stone  cladding  on  ventclad  drained  cavity  cladding system stone to be secured with Flexco “flexi-wall” two part system with additional stone clip mechanical fixings;

(i)	Removal of existing tiled landing;

(j)       Lifting  of  existing  door  to  provide  100mm  threshold  at  door  sill  with structural heritage tiles RAK220 stone grey 600x900 on chair system to be level with door sill;

(k)       Replication  of  corner details  where  existing  or  new  stone  abuts proposed “alucobond” so far as is practicable;

(l)       Construction  of  all  inter-storey  junctions  so  far  as  is  practicable  in accordance with existing details with due allowance for following work in consultation with the Body Corporate’s architects;

(m)     Alteration of existing copper parapet cappings to penthouse to be altered to suit new construction (Building Consent detail 4.68 on Drawing DT-4.2);

(n)       Retention of existing internal gutters to be retained subject to inspection of substrate for degradation;

(o)       Installation of new membrane to moisture affected area of the roof and reformation of the substrate to provide new falls;

(p)       Inspection of existing roof substrate signs of decay and replacement as appropriate to CD grade H3.1 plywood (thickness to match existing);

(q)       Preparation of substrate in accordance with Ardex recommendations and specifications;

(r)       Reinstatement of existing air conditioning systems on new H3.2 tapered battens with membrane saddle;

(s)       Air conditioning unit fixings to have neoprene washers between bolt head & fixing point and between fixing point and membrane (Building Consent Detail 4.10 on drawing DT-4.3);

(t)	Replacement of existing parapet cappings and installation of new aluminium cappings with 10 degree fall;

(u)	Re-covering of existing roof hatch with new membrane; (v)	Butynol roofing to be patched and repaired as appropriate;
(w)	Upstands, penetrations, parapets and the like to be reformed in accordance with the details provided for in the Building Consent;

(x)	Existing pipe penetrations to have 2 layer  membrane bandage flashings welded to pipe, and reinforcement of junction between pipe and roof (Detail
4.2 on Drawing DT-4.1);

(y)	All work incidental to the foregoing in accordance with the definition of
Repairs herein

21.2       The remaining work required for the level 12 remediation should be confined so far as is practicable to the “Dimondek 400” and “Alucomat” re-cladding to be carried out at the time of the principal building work to the rest of the Building is carried out by the Body Corporate.

21.3       The interaction between  the  level  12  work and  the Repairs  to  the rest  of  the Building contemplates full co-operation between Manchester and the Body Corporate and any respective consultants.