What was the outcome of Tenancy Tribunal case 9047584?

The tribunal order states: The application is dismissed.

How much money was awarded in case 9047584?

Verified claim lines are listed on this page.

What type of tenancy dispute was case 9047584?

The primary dispute was Mould & damp. Related themes: Leaks, Unit Titles.

Where can I read the official tribunal order for case 9047584?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/10883308-Tribunal_Order.pdf.

What was the outcome of Tenancy Tribunal case 9047584?

The tribunal order states: The application is dismissed.

How much money was awarded in case 9047584?

Verified claim lines are listed on this page.

What type of tenancy dispute was case 9047584?

The primary dispute was Mould & damp. Related themes: Leaks, Unit Titles.

Where can I read the official tribunal order for case 9047584?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/10883308-Tribunal_Order.pdf.

Wellington Central, Wellington Tenancy Tribunal Case 9047584 — Mould & damp

Tenantcheck Insights

Loading insights…

Pulling tribunal records

Loading insights…

Pulling tribunal records

Reasons

Both parties attended the hearing held over two days in Wellington on 24 May and 10 June 2024. I then received further written submissions from counsel for each party.

My decision has been delayed due to the complexities of the application; my desire to fully consider the issues raised; and the Tribunal’s workload. I apologise to the parties for that.

I note here that I heard a lot of evidence from the witnesses who attended the hearing and was assisted by the thorough submissions by counsel for both parties, for which I am grateful. Though I will not detail all the evidence and submissions and the several cases to which counsel referred me, I can assure the parties that I have carefully considered everything placed before the Tribunal. Background

Dominion Seven Limited owns unit 30 within body corporate 82981 a building known as Dominion Building in Wellington. Mr Dannatt and Ms Wickham own unit 29.

Repairs were undertaken to decks within the building paid for by the body corporate. However, the decks for these two units are different from the other decks in the building because they cantilever out from the building.

The cantilevered portion comprises about one third of the total deck area; the remainder is within the building boundary.

A dispute has arisen about the funding of repairs to the two decks. The body corporate says that the unit owners contractually agreed to fund the repairs to the decks themselves and are bound by that contract. In the alternative, the body corporate (having now paid for the work) says that the repairs are a substantial benefit to the two units only and on that basis the body corporate can recover the repair costs from the owners.

The body corporate seeks $29,553.45 from each unit owner together with interest at 10% of $4,041.67 and on-going interest of $8.10 per day. Each unit owner has to date paid about one half of what the body corporate is claiming from them. The issue

Simply put, the issue before the Tribunal is this: who should bear the cost of the repairs to the decks of Units 29 and 30 owned by these unit owners, the body corporate, or the unit owners themselves? The relevant statutory provisions

Section 80 of the Unit Titles Act 2010 (UTA) provides in part:

Responsibilities of owners of principal units (1) An owner of a principal unit— (a) must permit the body corporate (or its agents) to enter the unit at any time in an emergency and at all reasonable hours, and after giving reasonable notice, for any of the following purposes: (i) to view the condition of the unit for the purpose of ascertaining compliance with the principal unit owners’ or occupiers’ obligations under this Act: (ii) to maintain, repair, or renew any infrastructure for services and utilities that serve more than 1 unit and any building elements that affect more than 1 unit or the common property, or both: (iii) to maintain, repair, or renew any common property: (iv) to ensure the body corporate operational rules are being complied with: (b) must do all things necessary to give effect to decisions of the body corporate: (c) must consult with his or her mortgagee, if required to do so, before exercising a vote under section 97 or 98: (d) must comply with all laws and legal requirements relating to the use, occupation, or enjoyment of the unit: (e) must carry out, without delay, all work that may be ordered by a territorial authority or public body in respect of the unit to the satisfaction of that authority or body: (f) must pay all rates, taxes, charges, body corporate levies, and other outgoings that are from time to time payable in respect of the unit: (g) must repair and maintain the unit and keep it in good order to ensure that no damage or harm, whether physical, economic, or otherwise, is, or has the potential to be, caused to the common property, any building element, any infrastructure, or any other unit in the building: (h) must notify the body corporate of his or her intention to carry out any additions or structural alterations before the commencement of any work: (i) must not make any additions or structural alterations to the unit that materially affect the use, enjoyment, or ownership interest of any other unit or the common property without the written consent of the body corporate: (j) must comply with the body corporate operational rules: (k) must not do anything that breaches or in any way undermines any policy of insurance in the name of the body corporate.

Section 138 UTA provides:

Body corporate duties of repair and maintenance (1) The body corporate must repair and maintain— (a) the common property; and (b) any assets designed for use in connection with the common property; and (c) any other assets owned by the body corporate; and (d) any building elements and infrastructure that relate to or serve more than 1 unit. (2) ... (3) The body corporate may access at all reasonable hours any unit to enable it to carry out repairs and maintenance under this section. (4) Any costs incurred by the body corporate that relate to repairs to or maintenance of building elements and infrastructure contained in a principal unit are recoverable by the body corporate from the owner of that unit as a debt due to the body corporate (less any amount already paid) by the person who was the unit owner at the time the expense was incurred or by the person who is the unit owner at the time the proceedings are instituted. (5) For the purposes of this section,— (a) a subsidiary body corporate is to be treated as the unit owner of the principal unit that was subdivided to create the subsidiary unit title development; and (b) a reference in subsection (4) to a principal unit includes the common property and units of that subsidiary unit title development; and (c) the duty to repair and maintain includes (without limitation) a duty to manage (for the purpose of repair and maintenance), to keep in a good state of repair, and to renew where necessary.

The term ‘building elements’ is defined in section 5 UTA, the interpretation section, as: Building elements includes the external and internal components of any part of a building or land on a unit plan that are necessary to the structural integrity of the building, the exterior aesthetics of the building, or the health and safety of persons who occupy or use the building and including, without limitation, the roof, balconies, decks, cladding systems, foundation systems (including all horizontal slab structures between adjoining units or underneath the lowest level of the building), retaining walls, and any other walls or other features for the support of the building.

Section 126 UTA provides:

Recovery of money expended for repairs and other work (1) This section applies where the body corporate does any repair, work, or act that it is required or authorised to do, by or under this Act, or by or under any other Act, but the repair, work, or act— (a) is substantially for the benefit of 1 unit only; or (b) is substantially for the benefit of some of the units only; or (c) benefits 1 or more of the units substantially more than it benefits the others or other of them. (2) Any expense incurred by the body corporate in doing the repair, work, or act is recoverable by it as a debt in any court of competent jurisdiction (less any amount already paid) in accordance with the following: (a) so far as the repair, work, or act benefits any unit by a distinct and ascertainable amount, the owner at the time when the expense was incurred and the owner at the time when the action is instituted are jointly and severally liable for the debt; or (b) so far as the amount of the debt is not met in accordance with the provisions of paragraph (a), it must be apportioned among the units that derive a substantial benefit from the repair, work, or act rateably according to the utility interest of those units, and in the case of each of those units, the owner at the time when the expense was incurred and the owner at the time when the action is instituted are jointly and severally liable for the amount apportioned to that unit. (3) Despite subsection (2)(b), if the court considers that it would be inequitable to apportion the amount of the debt in proportion to the utility interest of the unit owners referred to in that paragraph, it may apportion that amount in relation to those units in the shares as it thinks fit, having regard to the relative benefits to those units. Case law

Recently, the High Court considered issues relevant to this application in its decision in Lora Trading Limited v Stirling Investment Properties Limited [2024] NZHC 2532. That was a weathertightness case. The Court said: [48]Until now, cases concerning s 80(1)(g) of the Unit Titles Act have dealt with physical harm. Sections 80 and 138 impose complementary repair and maintenance obligations upon unit owners and the Body Corporate. As the Court of Appeal observed in Wheeldon v Body Corporate 342525 ([2015] NZHC 884; [2016] NZCA 247): [29] ...if a building element or infrastructure serves more than one unit the body corporate has the obligation to repair it, if it is part of a unit but does not serve more than one unit then it is the owner’s responsibility to repair, and if it is common property, it is the body corporate’s responsibility. [49]It is easy to envisage situations, if units share a wall or are part of a block, where defects in the repair or maintenance of one unit cause actual or potential physical harm to others. Economic harm – at least in the absence of concurrent physical damage – is harder to prove. Nonetheless, s 80(1)(g) requires unit owners to ensure their properties are kept in sufficiently good order that they cause neither physical damage nor economic harm to their neighbours. Economic harm may be harder to identify and prove, but a unit owner who suffers economic loss because of the actions of a neighbour is no less entitled to s 80(1)(g)’s protection than one facing physical damage. [50]In addition, as Lora emphasises, s 80(1)(g)’s protection extends to ensuring owners do not expose their neighbours to actual or potential harm, whether physical, economic or otherwise. If a unit falls into disrepair, it is sufficient for the owner to say it is, at present, causing no actual harm. Section 80(1)(g) is breached if the state of a unit creates a real risk of harm or damage to its neighbours, even if that risk remains unrealised at the time of the plaintiff’s claim.

In Body Corporate 1198245 v Wong [2012] NZHC 2676 Justice Ellis confirmed that weathertightness issues are interrelated for the entire building, noting at paragraph 70: (a) the weathertightness of the entire building is interlinked and indivisible; (b) the proprietors all have a mutual interest in ensuring that the building as a whole is weathertight and kept in good repair. In the absence of expert evidence on the point, it can reasonably be assumed that if part of the building is not weathertight then that would adversely affect the saleability and value of all units, regardless of whether they themselves are in fact leaky; (c) each of the owners bought into the building as a whole, not just their individual unit; (d) each owner must be taken to have bought into the building knowing, and on the basis, of the division between common and private property in the unit plan and knowing of their responsibility to contribute to the maintenance and repair of the common property as so defined; (e) the sharing of common property repair costs on a unit entitlement basis necessarily contemplates that there may be an element of disproportionality and that prospect must also be taken to have been accepted when each owner bought into the complex.

In Tisch v Body Corporate 318596 [2011] NZCA 420 the Court said (in relation to the 1972 Act section 126 equivalent), that the section: Provides a mechanism to reallocate repair costs after they have bee incurred and are thus known. It contemplates i) a levy; ii) repairs; iii) reallocation of the cost of those repairs ...if the repairs substantially benefit some units(s) more than other(s). Discussion

The body corporate considers that the respondent unit owners are responsible for the cost of repairs to their decks because the two decks in question are distinct from the other decks in the building (repairs to which the body corporate has funded); the unit owners obtain the sole benefit from their cantilevered decks; and the decks have no weathertightness role and therefore do not benefit the building in any way. As counsel submitted, the purpose of the decks is to provide amenity and value to units 29 and 30 through a bespoke engineered feature. They serve one purpose only: to provide exclusive use, value, and enjoyment to the unit owners.

The two decks at issue here are distinctive because they are cantilevered out from the building edge, unlike all the other decks that remain within the building’s envelope.

The unit owners pay a ‘use of airspace’ levy to the local authority, a kind of separate rate, which none of the other units owners has to pay.

The photos produced in evidence show that the decks form part of the exterior aesthetic of the building and are an original feature of the development. They were not added by the owners. They form part of the fabric of the building and have been present when every owner acquired an interest in the building.

The body corporate considers that this feature of the decks, the cantilever, distinguishes them from the other decks contained within the building envelope, and for that reason the unit owners are responsible for funding the repairs to the decks.

The body corporate denies that the decks provide any weathertightness function. The argument in contract

There are two aspects to the body corporate’s argument. First, the unit owners agreed to fund the repairs. The body corporate made available its contractors to minimise the cost of the repairs and to avoid the unit owners having to arrange and separately deal with contactors from the various trades required for the work.

There is clear evidence of that agreement, and of its breach. But the contractual argument cannot succeed. It was the body corporate’s responsibility to fund the repairs because, as least for part of the deck repairs, the part within the building envelope, it has funded the repairs to the other unit owners’ decks as part of accepted repairs and maintenance.

The repairs to the respondents’ decks were also necessary repairs and maintenance and, despite the body corporate’s view, probably necessary for weathertightness as well. I accept that the decks form part of the cladding/weather tightness system for the building. The part of the deck within the building structure protects the membrane located immediately below which serves as a weathertight barrier.

As well, the decks capture and divert stormwater to the common drainage system. In that sense they provide a weathertightness protection as well. The design of the downpipe from the roof, a feature added during the repairs, means that stormwater is now discharged onto, across, and down through the decks. That benefits the building as a whole. It could have been designed differently, but it was not.

I find that the inclusion of the downpipe from the roof through the decks amounts to the maintenance of a building element or part of the infrastructure that serves more than one unit. It is a necessary part of the removal of water from the roof of the building that benefits the building and therefore the unit owners generally.

Had these units had the same decks as the other units, that is, contained within the building envelope, there would be no dispute about the liability for the repair cost. The body corporate, having funded the deck repairs of the other units would have funded these as well.

The repairs were required to repair and maintain the membrane and stormwater infrastructure found immediately beneath the decks. To do so, the decks had to be completely replaced.

Because the responsibility lay with the body corporate to fund the repairs, it cannot rely on an agreement with the building owners – a contract which it says has now been breached – to avoid liability for the repairs. The work was always a body corporate responsibility under section 138 UTA, and as confirmed by Wong. The body corporate cannot rely on a contract with the unit owners to avoid its statutory responsibility. Section 126 UTA recovery

The second aspect of the enquiry is whether the body corporate can invoke section 126 UTA. In other words, can the body corporate say that the repairs it funded were substantially for the benefit of some of the units only, the two respondent unit owners?

There are two reasons why I answer that question in the negative. First, I have already found that the work generally was a body corporate responsibility because it was part of general repair and maintenance work to the building as a whole. The body corporate funded the other unit owners’ deck repairs. It needs to fund the repairs to the decks of these two units as well. Even if not explicit, the work is probably necessary for weathertightness reasons, but even if not, was part of a larger repair and maintenance work programme.

Second, why would a cantilevered deck be considered a substantial benefit to these owners? And when does that substantial benefit come into play? If the deck extended 10 cm out from the building would that be a substantial benefit? Or 30cm? Or 50cm?

The two unit owners derive some additional benefit from having a larger deck, although the presence of the downpipe running from the roof through the decks is probably a detraction visually and audibly. They pay a higher utility levy based on the additional deck size as well as a use of space rate to the Council.

The UTA does not define the word substantial or substantially. A usual dictionary definition of substantially is ‘to a great extent’ or ‘of real worth and importance’.

I find that it was artificial for the body corporate to consider that the two decks in question provided the unit owners with a substantial benefit and that the repairs it funded were substantially for the benefit of those owners only.

Rather, I find that the repairs were, like the repairs to the other decks in the building, a necessary part of the maintenance and repair of the building overall, just somewhat different due to the distinct nature of the design and appearance of those decks. To refer again to Wong; there may be an element of disproportionality, but that prospect must be taken to have been accepted when each owner bought into the complex.

I accept and adopt counsel for the unit owners’ submission that Parliament’s intent when creating the mandatory repair and maintenance regime of the UTA was to create certainty and equality for owners. The starting point is that owners must adhere to the statutory scheme they bought into which provides for the sharing of maintenance costs on a utility basis. Parliament expressly did not want there to be never ending legal arguments around implied contracts, estoppel, and contractual mistake when a body corporate undertakes maintenance work to a building. As a result, a clear code to be followed was created. Result

The application is dismissed. The body corporate has not proved that the work to the unit owners’ decks benefited them substantially in the overall context of the repair work undertaken and paid for by the body corporate to the decks at the development generally. Nor can its argument in contract succeed.

The cost of the repair work is a cost properly borne by the body corporate to be levied against all owners. Costs

The unit owners, being successful, will be entitled to costs. I invite memoranda as to costs from counsel, not to exceed 4 pages, on the following timeframe: • Counsel for the unit owners by 18 October 2024 • Counsel for the body corporate by 8 November 2024 • Counsel for the unit owners in reply by 22 November 2024

I will then issue a separate decision on costs.

Reasons

Both parties attended the hearing held over two days in Wellington on 24 May and 10 June 2024. I then received further written submissions from counsel for each party.

My decision has been delayed due to the complexities of the application; my desire to fully consider the issues raised; and the Tribunal’s workload. I apologise to the parties for that.

Dominion Seven Limited owns unit 30 within body corporate 82981 a building known as Dominion Building in Wellington. Mr Dannatt and Ms Wickham own unit 29.

The cantilevered portion comprises about one third of the total deck area; the remainder is within the building boundary.

Section 80 of the Unit Titles Act 2010 (UTA) provides in part:

Section 138 UTA provides:

Section 126 UTA provides:

The two decks at issue here are distinctive because they are cantilevered out from the building edge, unlike all the other decks that remain within the building’s envelope.

The unit owners pay a ‘use of airspace’ levy to the local authority, a kind of separate rate, which none of the other units owners has to pay.

The body corporate denies that the decks provide any weathertightness function. The argument in contract

The repairs were required to repair and maintain the membrane and stormwater infrastructure found immediately beneath the decks. To do so, the decks had to be completely replaced.

The UTA does not define the word substantial or substantially. A usual dictionary definition of substantially is ‘to a great extent’ or ‘of real worth and importance’.

The cost of the repair work is a cost properly borne by the body corporate to be levied against all owners. Costs

I will then issue a separate decision on costs.

Tenancy Tribunal case 9047584 — Mould & damp in Wellington Central, Wellington

At a glance

Tenancy Tribunal case 9047584 — Mould & damp in Wellington Central, Wellington

At a glance

Claims & awards

Order

Reasons

Topics & place

Residential Tenancies Act sections

Key findings

Property management

Frequently asked questions

Claims & awards

Order

Reasons

Topics & place

Residential Tenancies Act sections

Key findings

Property management

Frequently asked questions