What was the outcome of Tenancy Tribunal case 9044684?

The tribunal order states: All applications are dismissed.

How much money was awarded in case 9044684?

Verified claim lines are listed on this page.

What type of tenancy dispute was case 9044684?

The primary dispute was Unit Titles.

Where can I read the official tribunal order for case 9044684?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/9955366-Tribunal_Order.pdf.

What was the outcome of Tenancy Tribunal case 9044684?

The tribunal order states: All applications are dismissed.

How much money was awarded in case 9044684?

Verified claim lines are listed on this page.

What type of tenancy dispute was case 9044684?

The primary dispute was Unit Titles.

Where can I read the official tribunal order for case 9044684?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/9955366-Tribunal_Order.pdf.

Rosedale, Auckland Tenancy Tribunal Case 9044684 — Unit Titles

Order

All applications are dismissed.

Reasons

The Tribunal must consider an application filed by a unit owner. The application was originally against the chair of the Body Corporate, but following an earlier hearing, the Body Corporate was joined as a party, and it is the Body Corporate that is the appropriate respondent. The dispute centres around whether the Body Corporate was correct in paying a project management fee to Marjorie Werner, who is also the body corporate chair.

BACKGROUND

The unit titled complex in this case comprise 3 separate blocks of commercial buildings, of 2 floors in each building. All tenants are commercial businesses, and there are 11 unit owners.
Newbuild Holdings Limited (NHL) is one of the unit owners, and the applicant in this case. Newbuild is represented in this proceeding by Mr Webb, its director.
Marjorie Werner is the body corporate chair and a unit owner, although I am not certain whether she owns her unit in her name, or via some other legal entity, but nothing turns on that. As far as this dispute is concerned, at all relevant times Ms Werner has been the chair.
The premises required recladding.
I can see from the file that Ms Werner undertook considerable work in assessing options for the recladding and putting that to the Body Corporate for a decision on how to proceed. That included a ‘chairpersons report’ (undated), which included the option of proceeding with the work via by a company, ACMF. In the report Ms Werner says: ACMF Architectural Cladding / Maintenance / Fabrication, will be the main contractor for the job quoted to you. They will control the whole project. The subsidiary contractors, scaffolders, builders and others will be programmed by the Project Site person of ACMF.
An AGM was convened on 9 June 2020. Mr Webb was in attendance. The minutes record that the Body Corporate agreed to proceed with the works, and to raise $987,000 to fund that by way of a special levy, and also to raise $150,000 plus GST “for Contract Works Insurance and any other unforeseen expenses is raised by way of a special levy on all owners.”. Importantly, the minutes record that the committee was delegated to oversee the contracts and to contract with a project manager if required: That the Body Corporate resolve that the elected committee be appointed to oversee the Refurbishment Project, to approve the contracts for the Refurbishment Project and contract with a project manager to oversee the project if required
The Committee comprised three members, Ms Werner and Ms Lyanguzova and Turnock.
On 30 July 2020, the Body Corporate Manager (Scope Strata Management Ltd) emailed all or some of the unit owners (the head of the email is cut off, but it does include Mr Webb and Mr Lincoln) stating in part: Marjorie will also attend each site meeting with dean for clarification of work done, and approval of payments of which she will invoice the body corporate for.
This email should have put the unit owners on notice that an invoice may be submitted for Ms Werner’s work.
Ultimately the works then progressed from ACMF, and the evidence is that Ms Werner co-ordinated or project managed that work.
The AGM for the following year was held on 9 June 2021. The minutes record the minutes from the 2020 AGM were confirmed as true and correct and that: Maintenance Project Marjorie advised that the project is set to complete by the end of June 2021 and once completed, Marjorie will send out an update to all owners. Marjorie was thanked by all present for the considerable amount of work and time she has committed to the project, and it was agreed that Marjorie should put in an invoice to the body corporate for her time for the project management and overseeing.
Ms Werner then submitted two invoices to the Body Corporate the first on 16 August 2021 for $54,961.26. The invoices included detailed time recordings for work Ms Werner undertook.
By email on 13 September Ms Lyanguzova and Turnock (the two other committee members) record that they approved the payment – which was then released to Ms Werner.
Ms Werner submitted the second invoice dated 22 October 2021 for $65,411.48.
Again that was approved for payment. I note the emails from Mr Turnock records: I absolutely approve invoice 036. We can not thank you enough Marjorie for all the effort you put into the project...
I cannot find the approval from Ms Lyanguzova, but based on other documentation on file, accept it was approved.
In an email from 18 January 2022 Ms Werner confirmed that the works had been completed, and was underbudget.
A “Remedial Financial Statement” was provided for the period 1 April 2021 and 31 March 2022. The document on file records that it was printed on 18 May 2022. This set out the final accounts in relation to the recladding works, and records two payments to Ms Werner, being the payments of $47,792.40 and 56,879.55.
An AGM was then convened on 9 June 2022. As is normally the case the agenda was provided to the unit owners in advance. NHL was not in attendance, but a proxy was provided to Ms Werner in order to vote on NHL’s behalf. The proxy has been provided, including NHL confirming that it was voting to confirm the previous AGM minutes as true and correct, and for the previous financial records to be accepted as true and accurate. However hand written at the bottom of the proxy is that: I want an audit on the contingencies set aside for the reclad.
On 4 July 2023 NHL filed this application with the Tribunal, disputing the project management payments.
The Tribunal convened an initial hearing on the matter, and I note an order from Adjudicator Kee. Mr Kee noted that the correct respondent would be the Body Corporate, not Ms Werner, and the Body Corporate were joined as a party.
I convened the hearing today on 14 February 2023 to hear from NHL and the Body Corporate on the substance of the dispute. Mr Webb attended for the applicant, and Ms Werner for the Body Corporate.

APPLICANTS CASE

Mr Webb attended the hearing on behalf of the applicant company.
Mr Webb advised that at the 2020 AGM it was agreed that the building would be reclad. At that meeting Ms Werner agreed that she would do the co- ordination work which Ms Webb states was on the basis it would be voluntary. Mr Webb advised that he was insistent that a written contract be put in place, and it was agreed that there would be a contingency fund established. The minutes record that ACMF were to undertake the project itself.
Mr Webb considers that there would be a conflict of interest with the Chair also acting as a project manager, and further she did not have the necessary qualifications or insurance for that role. There was no communication to the body corporate that Ms Werner would be acting as a project manager in a paid capacity.
At the end of the day, Mr Webb advised that he believes Ms Werner did a good job with what she did around the recladding.
In relation to the AGM of 2021, Mr Webb states that his understanding was that that what Ms Werner was to charge would be modest costs such as disbursements, not a sum over $100,000.
Mr Webb’s position is the contingency fund was not raised for the payment of project management services to Ms Werner.
In his concluding submissions, Mr Webb confirmed that he attended all of the initial meetings about the recladding, but accepts he could not attend some of the more recent meetings because of health. Mr Webb considers that Ms Werner had a duty to disclose that she had an intention to charge for her services.

BODY CORPORATES CASE

Ms Werner attended the hearing, and confirmed that she was attending on behalf of the body corporate.
Ms Werner advised that the project ran over some 2 ½ years, noting that she has had previous experience with co-ordinating building works. Further it was noted that the quotation provided by ACMF was for the ‘basics’ and did not include project management work. Ms Werner disputes that she had agreed to take this work in a voluntary capacity.
As it relates to approving charges, that was undertaken by the committee appointed by the Body Corporate.
Ms Werner states that no other unit owners have complained about her fee.

ANALYSIS

There are two important facts which Mr Webb agrees, that is that there was a significant recladding project undertaken which Ms Werner oversaw, and secondly that Ms Werner did a good job in that. It is also fair to note that in my reading of the documentation available, that the remediation project went well, and I have seen no criticism or concern raised in relation to how Ms Werner managed that project – other than from NHL.
What the dispute boils down to, is the project management fee charged by Ms Werner, and whether that fee was properly raised and paid. For the reasons that follow, I find it was.
Firstly, in the 2020 AGM minutes it is recorded that the Body Corporate had approved the resolution that “the Body Corporate resolve that the elected committee be appointed to oversee the Refurbishment Project, ... and contract with a project manager to oversee the project if required”. As can be seen from that resolution, the Body Corporate did anticipate a project manager may be appointed within the context of the remediation scheme. Having considered the activities that Ms Werner undertook, it could be accepted that those activities would be project management activities, or to put that another way, she acted as the project manager for the works.
Secondly, the evidence is squarely that the Body Corporate invited Ms Werner to file an invoice for her work in the project management capacity. That can be seen in the minutes from the 2021 AGM where the Body Corporate “agreed that Marjorie should put in an invoice to the body corporate for her time for the project management and overseeing.” Plainly that is what Ms Werner did, she filed two invoices for her project management work.
Of course the Body Corporate in these minutes did not limit the amount that could be charged, but it could be accepted that it would be implicit that any invoice be reasonable. In fact that is required in law, as set out in section 31 of the Consumer Grantees Act 1993: 31 Guarantee as to price (1) Subject to section 41, where services are supplied to a consumer there is a guarantee that the consumer is not liable to pay to the supplier more than a reasonable price for the service in any case where the price for the service is not— (a) determined by the contract; nor (b) left to be determined in a manner agreed by the contract; nor (c) left to be determined by the course of dealing between the parties. (2) Where there is a failure to comply with the guarantee in this section, the consumer’s right of redress is to refuse to pay more than a reasonable price.
It can be accepted that a reasonable price would take into account the time Ms Werner spent on the project management, and the rate that a project manager would normally charge. In my view, the amounts invoiced have not been shown to be unreasonable. The work appears to have been extensive over a long period of time, and is supported by time keeping records. There is nothing in the hourly rate which would surprise me.
I am fortified in that view given there is no evidence that any of the other Body Corporate members have taken issued with the rate or amount charged, in fact there is evidence that the Body Corporate considered the charges were reasonable, such as the email from Ms Turnock noted above when approving an invoice.
While I would conclude the charges were reasonable, the question then becomes whether the invoices were correctly authorised, and I find they were. At the AGM in 2020 the committee was given delegated authority from the Body Corporate to approve invoices for payment, and that is precisely what the committee did. While Ms Werner was on the committee, I do not see any conflict of interest here, because there is no evidence that Ms Werner took any part in approving the invoices for payment. There were three members on the committee, and the invoices were approved by the two other members. Decision making in a body corporate committee is done by simple majority (50% of the votes), and in this case the decision to pay the invoices was in effect passed by more than 50% of the committee, so the authorisation was lawful.
Mr Webb posed the question of whether there was any authority for funds to be used to pay Ms Werner, from the levies raised for the remediation project. I find there was. I consider that it would be reasonable to conclude that the funds to pay Ms Werner were within the scope of the reason for raising the funds in the first place. But even if that were not the case, for the reasons set out above, clearly there was authority for the payment to be made, by way of the non-limited invitation for Ms Werner to file an invoice to be paid.
Mr Webb confirmed that he would have been accepting of a modest payment being made to Ms Werner for her work, but he did not agree with the payment of the amount invoiced, as he considered that too great. I make the observation that whether the amount of the invoices were modest, or as claimed, the funds would have still come out of the same pot of money – that is the fund raised via the special levy.
Mr Webb was also concerned that he had requested an audit of the contingency fund in his proxy for the 2022 AGM which was not actioned. I agree it was not actioned, but the problem for Mr Webb, is that he has not followed the necessary process. If Mr Webb wanted the Body Corporate to vote on whether an audit be undertaken, then he needed to get that formally on the agenda as an item that required a vote, and he did not do that. Rather, contrary to the request for an audit, Mr Webb also voted to accept the financials as correct. In any event an audit would only be necessary if there was a valid resolution passed for an audit, and in this case there was not.
For the reasons set out above, I find the fee was correctly raised and paid by the Body Corporate, so NHL’s application must be dismissed.
I conclude by making the following observation. I can understand the surprise the NHL directors would have had, on learning that there were charges for project management work in the vicinity of $100,000.00. I accept they were not expecting that, and there is no indication early in the works or prior, that charges of this level may be raised. With the benefit of hindsight, this should have been raised in 2020 and addressed at the AGM then. If it had been, I am sure this dispute would not have arisen. But for the reasons as I have explained above, I accept that the Body Corporate had approved the project management work, invited an invoice from Ms Werner, that the level of charges are reasonable, and the approval for payment within the delegation of the committee.

Tenancy Tribunal case 9044684 — Unit Titles in Rosedale, Auckland

At a glance

Tenancy Tribunal case 9044684 — Unit Titles in Rosedale, Auckland

At a glance

Claims & awards

Order

Reasons

BACKGROUND

APPLICANTS CASE

BODY CORPORATES CASE

ANALYSIS

Topics & place

Residential Tenancies Act sections

Key findings

Property management

Frequently asked questions

Claims & awards

Order

Reasons

BACKGROUND

APPLICANTS CASE

BODY CORPORATES CASE

ANALYSIS

Topics & place

Residential Tenancies Act sections

Key findings

Property management

Frequently asked questions