IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-20130409-001236 [2013] NZHC 1854

BETWEEN	KEITH STUART MILLS Applicant	

AND	
BODY CORPORATE 47522
Respondent	

Hearing:	24 July 2013	

Appearances:	
K N Williams for Applicant
No Appearance for Respondent	

Judgment:	
24 July 2013	

Reasons:	
30 July 2013	

REASONS FOR DECISION OF JUSTICE D GENDALL J

[1]      On 24 July last an application was before the Court seeking orders for cancellation of Unit Plan 47522 for a five unit development to which that Plan related, together with certain other directions.

[2]       The application was successful and at paragraph 10 of my decision dated

24 July 2013 I made the following orders.

(a)	An order is now made for the cancellation of Unit Plan 47522 for the
Unit Title development to which that Unit Plan relates.

(b)        An order is made directing the payment of monies from the sale of the land in question and from insurance settlement proceeds to be applied in terms of the ownership interests as fixed by the Unit Entitlements on Deposited Plan 47522.

(c)        These orders are to lie in Court until the affidavit of service from Mr Williams referred to at paragraph [8] above is filed in this Court and I have had an opportunity to consider the matters outlined in that affidavit.

MILLS v BODY CORPORATE 47522 [2013] NZHC 1854 [24 July 2013]

[3]       An affidavit dated 25 July 2013 from Mr Williams, counsel acting for the applicant, has now been filed in this matter which confirms that the proceedings and advice of the 24 July 2013 date of hearing of this matter were served properly on all parties, including the registered proprietors of each of the units in question.

[4]       My oral judgment of 24 July 2013 on this application making the orders outlined at [2] above confirmed that my detailed reasons for that decision would be provided. I now give those reasons.

[5]       That application, which was brought by one of the unit owners, as noted in the oral judgment, was not opposed by the respondent, nor any of the other unit owners.  The application was made in reliance on s 187 of the Unit Titles Act 2010 which states in part:

187	Application to High Court for order of cancellation of unit plan

(1)	Any 1 or more of the following persons may apply to the High Court for the cancellation of the unit plan:

(a)        the body corporate for the unit title development to which the unit plan relates, after a special resolution to do so; or

(b)	an administrator; or

(c)	1 or more unit owners.

(2)	The applicant must serve a notice of any application made under subsection (1) on—

(a)	every unit owner; and

(b)        if a principal unit in the unit title development is a subsidiary unit title development, the body corporate of that subsidiary unit title development; and

(c)      if the unit title development is a subsidiary unit title development, the body corporate of its parent unit title development; and

(d)        any person having an interest in any easement or covenant of a kind referred to in section 60 or 62; and

(e)        every other person who has a registered interest in, or caveat or notice of claim entered on the register over, any unit, the common property, or the base land; and

(f)	any insurer who has effected insurance on the buildings or other improvements comprised in any unit or on the base land or any part of the base land; and

(g)	the Registrar.

...

[6]	In addition, s 188 of the Unit Titles Act 2010 states in part:

188	Cancellation of unit plan by High Court

(1)        The persons described in paragraphs (a) to (f) of section 187(2) have the right to appear and be heard.

(2)	The High Court may authorise that the unit plan be cancelled if—

(a)        the High Court is satisfied that it is just and equitable that the  body  corporate  be  dissolved  and  the  plan  cancelled having regard to—

(i)	the rights and interests of any creditor of the body corporate; and

(ii)       the rights and interests of every person who has any interest in any unit or in the base land or in any part of the base land; and

(b)        no principal unit in the unit title development to which the plan relates contains a subsidiary unit title development.

(3)        If the High Court makes a declaration authorising the cancellation of a  unit  plan  under  subsection  (2),  the  High  Court  may  by  order impose any conditions and give any directions as it thinks fit, for the purpose of giving effect to the declaration, including—

(a)	directions  for  the  payment  of  money  by  or  to  the  body corporate; or

(b)	the distribution of the assets of the body corporate; or

(c)        a direction to modify or extinguish, in whole or in part, any registered interest or caveat or notice of claim entered on the register in relation to any unit, the common property, or the base land.

(4)        The High Court may, at any time before the unit plan is cancelled under section 189, vary or modify the terms of any declaration or order made by it under this section.

(5)        The High Court may make any order for payment of costs as it thinks fit.

[7]       As I have noted above, Mr Williams, counsel for the applicant, has provided an affidavit of service dated 25 July 2013 confirming that the applicant has complied with the provisions of s 187(2) of the Unit Titles Act 2010.   Parties including the registered proprietors of each of the units in question were aware in advance of the hearing date for this application.  There was no appearance by or on behalf of, nor any opposition to the present application by, any of those registered proprietors or any other affected party.

[8]       As I have noted above, there are five units in this development comprising the body corporate in question. These units are units A – E on Unit Plan 47522.  It is only unit B which had a registered mortgage affecting its title, all the other titles to the remaining units being unencumbered.  The units were significantly affected by the recent earthquakes in Christchurch and all the buildings on the land were demolished.  The present application was made, therefore, in terms of s 187 of the Unit Titles Act 2010 rather than by way of an application to the Registrar-General of Land pursuant to s 177.

[9]       The Body Corporate held insurance over the units with Vero New Zealand Limited and has settled its insurance claim with the insurer and a payment has been made.

[10]     By resolution dated 20 June 2013 four of the unit proprietors, A, C, D and E (who hold in excess of 75% of the unit entitlement in the Body Corporate and Unit Plan) resolved to have the Unit Plan cancelled and, further, that the insurance monies would not be used in replacement of the buildings.

[11]     The proprietors of Unit B had apparently advised that, although the buildings had been appropriately demolished, they did not agree simply that the insurance proceeds should be divided in terms of the unit entitlements under the Plan but suggested instead they should be divided in the proportions insurance premiums were levied as between the proprietors.

[12]     In the meantime, a contract for the sale of the vacant land has been entered into, conditional upon this application succeeding and the Unit Plan being cancelled.

It is not known what the views of the proprietor of Unit B may be in relation to the net sale proceeds from that sale of the land, whether it is in terms of the unit entitlement or insurance proportion as levied.

[13]	The unit entitlements here are: Unit A	37.56%
Unit B             15.55% Unit C             15.55% Unit D             15.67% Unit E             15.67%
[14]     The insurance for the units which comprised the development had premiums which were levied as follows:

Unit A             35.08% Unit B             21.81% Unit C             14.35% Unit D             14.35% Unit E             14.35%
[15]   The balance levies for the development (maintenance, sinking fund, management, valuation, etc) were all levied equally as between the proprietors. They had been were levied in this manner since the inception of the Body Corporate.

[16]     The applicant here and, as I understand it, the Body Corporate and all other unit owners now agree and seek orders cancelling the Unit Plan.  All those parties,

with the possible exception of the owner of Unit B, also seek an order in terms of s

188(3) of the Unit Titles Act 2010 for the payment of monies (being the insurance payout and net sale proceeds of the land) by or to the Body Corporate in terms of the unit entitlements under Unit Plan 47522.

[17]     As the proprietors of Unit B have not filed any opposition to that aspect of the present application, nor made any appearance at the hearing of this matter on
24 July 2013, it is not known whether they wish to maintain their original view that the insurance proceeds should be divided in terms of the proportions the insurance premium was levied as between the proprietors, rather than in terms of the unit entitlements, or otherwise.

[18]    Notwithstanding this, I turn to consider the present application and that particular aspect.

[19]     The application before the Court is made in terms of s 187 of the Unit Titles Act 2010 for a “just and equitable” cancellation of the Unit Plan.  Here, the units in question being severely affected by the earthquake have been demolished and the insurance  proceeds  paid.    There  appears  to  be  no  objection  from  any  of  the proprietors of the units, any mortgagees or any other affected parties in terms of the Act to the cancellation of the plan.

[20]     There can be no doubt, in my view, that it is just and equitable here that the Body Corporate be dissolved and the plan cancelled.  I reach this conclusion having regard to the rights and interests of all parties, including the unit proprietors, any creditors of those proprietors, the Body Corporate or any other parties who may have rights or interests in any of the units.  I am satisfied also that this is not a case where the plan contains a subsidiary Unit Title development in any form.  It was for this reason that the order cancelling Unit Plan 47522 for the Unit Title development to which that Unit Plan related was made on 24 July 2013.

[21]     I turn now to the orders sought under s 188(3) of the Unit Titles Act 2010 for division of the insurance and land sale proceeds amongst the proprietors in terms of

their ownership interests as fixed by the unit entitlements under the Plan.   In my view this matter is also quickly disposed of.

[22]     Here, the unit entitlement interests of the proprietors of each of the five units were set originally in terms of s 38 of the Unit Titles Act 2010 or its predecessor. That required those ownership interests to be fixed by a registered valuer and this occurred.   Those unit entitlements were set as outlined at [13] above.   Although s 177 of the Unit Titles Act 2010 (which provides for an application to the Registrar- General of Land for the cancellation of a Unit Plan) does provide for a revaluation of ownership interests in the various units, this is an entirely separate process from that which applies here on an application to this Court under s 187.  In a situation like the present where, of necessity, all the units have been demolished, it would appear to be effectively impossible for any reassessment of individual unit values to be made.

[23]     That said, the original unit entitlement values for each of these units as outlined at [13] above must remain in place.

[24]     Section 201 of the Unit Titles Act 2010 does provide for general relief for disaffected minorities to apply to set aside a resolution of other owners for cancellation of a Unit Plan on the grounds that this resolution “would be unjust or inequitable”.  In this case, it is not clear whether or not the owner of Unit B, who did not join in the 20 June 2013 resolution passed by the other owners, may have voted against that resolution.  It would appear however that this was not the case.  The owner of Unit B originally contended only that the division of insurance proceeds should be in accordance with the proportions levied for insurance premiums paid.

[25]     This suggestion does not appear to have been maintained in any substantial way by the owner of Unit B, given particularly that this party has filed no opposition to the present application, has not appeared at the hearing of this matter and has made no further communication to the Court or otherwise.

[26]     On this basis, and given also that all other levies made on the unit owners by the Body Corporate over the years for maintenance, sinking fund, management, valuation and other matters have been levied equally, I am satisfied that it is just and

equitable here for the division of the insurance payout and land sale proceeds to be made in accordance with the original unit entitlements set out at [13] above.

[27]     It is for these reasons that the order noted at [2](b) above, directing the payment of monies from the sale of the land in question and from insurance settlement proceeds to be applied in terms of the ownership interests as fixed by unit entitlements on Deposited Plan 47522, was made.

[28]     As to costs on the present application, the application itself did not seek costs, nor were any submissions advanced to me at the hearing by Mr Williams, for the applicant, with respect to costs.

[29]     No order is made as to costs.  I note, however, that if costs were in issue here, it is likely, under all the circumstances and given that this decision cancelling the Unit Plan is for the general benefit of all unit owners and the Body Corporate, that an order would have been made for payment of these costs from the Body Corporate’s funds.

...................................................
D Gendall J

Solicitors:
Williams & Co, Christchurch
Copy to Respondent