What was the outcome of Tenancy Tribunal case 9050444?

The tribunal order states: Body Corporate 126001’s claim is allowed to the following extent: Patricia Joy

How much money was awarded in case 9050444?

Individual award amounts are in the official MoJ PDF. Claim amounts appear on this page when claims and net totals reconcile.

What type of tenancy dispute was case 9050444?

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

Where can I read the official tribunal order for case 9050444?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/10616463-Tribunal_Order.pdf.

What was the outcome of Tenancy Tribunal case 9050444?

The tribunal order states: Body Corporate 126001’s claim is allowed to the following extent: Patricia Joy

How much money was awarded in case 9050444?

Individual award amounts are in the official MoJ PDF. Claim amounts appear on this page when claims and net totals reconcile.

What type of tenancy dispute was case 9050444?

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

Where can I read the official tribunal order for case 9050444?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/10616463-Tribunal_Order.pdf.

Freemans Bay, Auckland Tenancy Tribunal Case 9050444 — Mould & damp

Order

Body Corporate 126001’s claim is allowed to the following extent: Patricia Joy Draper and Gary Keith Hannam must pay Body Corporate 126001 $26,940.32 immediately, calculated as follows: DescriptionsApplicant Operating levies to 1 July 2024$14,321.84 Interest on the unpaid levies$2,266.84 Costs under UTA, s 124$10,351.64 Total award$26,940.32
All other claims are dismissed.

Reasons

Craig Leishman attended for Boutique Body Corporates Limited, the body corporate’s manager.
Sarah Zellman, counsel from Grimshaw & Co, appeared for the unit owners. 1 I heard this matter on 31 July 2024. _90504442
The body corporate has applied for the recovery of unpaid operating levies, unpaid special levies for litigation under s 74 of the Unit Titles Act 2010 (UTA), interest, and costs including the filing fee from the unit owners.
The unit owners dispute the levies for various reasons including that they derived no substantial benefit from the levies, the body corporate evicted them from their unit, the special levies were not properly struck, and require them to double-pay for the body corporate’s litigation costs.
The unit owners counterclaim for most of the operational levies they have paid since April 2021 when their unit was indefinitely mothballed. Background
The unit owners own a two-storey penthouse unit located on the roof of the apartment complex.
Regrettably, some years ago, the unit owners’ apartment and its decks began leaking into the units below. That led to a s 74 scheme being approved by consent in the High Court in November of 2019.
The unit owners had supported the scheme in 2019, but then opposed it sometime in the early-2020s’. They argued that they should not have to fund the remediation of their unit entirely themselves under the s 74 scheme. Other unit owners would benefit from the remediation and should also contribute to the cost. The unit owners’ opposition led to litigation between them and the body corporate.
A contested two-week trial in the High Court in 2023 followed. In her decision dated 12 December 2023, Gordon J found against the unit owners and approved the scheme fundamentally as it had been originally agreed. 2 She ordered costs against the unit owners.
The unit owners appealed Gordon J’s decision. The Court of Appeal dismissed the appeal on 27 June 2024. 3 That court also ordered costs against the unit owners.
The unit owners had already chosen to mothball their unit rather than have it repaired; an option available to them under the s 74 scheme. However, because their unit was uninhabitable, the unit owners could not use it or rent it out. Any benefit they got from owning the unit is drastically reduced. The unit owners believe their contribution to the operational levies should be much reduced because of this situation. 2 Body Corporate 126001 v Hannam & Draper & Ors [2023] NZHC 3604. 3 Hannam & Draper v Body Corporate 126001 & Ors [2024] NZCA 274. _90504443
The unit owners challenge the operating levies under s 126 of the Unit Titles Act 2010 (UTA) because they receive no substantial benefit from most of the things the levies fund, bar insurance.
The unit owners are aggrieved that the body corporate expects them to contribute equally with the other unit owners to the body corporate’s special levies for the s 74 litigation. The courts have ordered the unit owners to reasonably contribute to the body corporate’s costs. The unit owners say consequently they are double-paying for the body corporate’s costs. The unit owners submit s 126 applies because they did not substantially benefit from the body corporate’s litigation. In addition, the unit owners submit that the second and third special levies for the litigation were not properly struck. The issues for determination
The issues that the Tribunal must decide are: a.Must the unit owners pay the operating levies, and interest? b.Must the unit owners pay the special levies, and interest? c.Must the body corporate repay any of the unit owners’ operating levies from April 2021, onwards after their unit was mothballed?

Do the unit owners owe the general levies claimed?

Unit owners must pay all body corporate levies and outgoings payable for the unit. 4
The body corporate has determined the operational levies payable, and the unit owners’ share has been calculated according to their utility interest.
The body corporate has fixed the due dates for the levies to be paid, and the unit owners have not paid the levies by those dates. 5
The body corporate provided records to prove the amounts claimed for operational levies.
Ms Zellman submitted that under s 126 of the Unit Titles Act 2010 (UTA), the unit owners should not be required to pay the greater part of the operating levies because the unit does not substantially benefit from many of the things the levies are used for due to the unit being mothballed. They do not use the lift, power, rubbish removal, or benefit from cleaning of the common areas for instance because their unit is vacant. 4 Unit Titles Act 2010 (UTA), ss 80(1)(f) and 121(1). 5 UTA, s 124(1). _90504444
Section 126 provides: 126 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.
I take Ms Zellman’s point that the unit may not derive substantial benefit from many things for which the operating levies are used for. However, I do not consider the Tribunal can entertain the unit owners’ application for reduction of the levies under s 126.
Section 126 is a “recovery mechanism”. 6 The body corporate is not seeking to recover anything under s 126. It is seeking levies under s 124.
It is possible that a body corporate’s failure to apply s 126 is reviewable. 7 However, in that case judicial review proceedings would be required. 6 See Thomas Gibbons Unit Titles Law and Practice (2nd ed, LexisNexis, Wellington, 2015) at 79. 7 Ibid at 80. _90504445
Ms Zellman submitted the body corporate had evicted the unit owners. However, the unit owners mothballed the unit in accordance with the s 74 scheme. I do not accept the body corporate “evicted” the unit owners. That narrative was before the High Court and Court of Appeal but not adopted there. The fact the unit owners could not access their unit was due to its weathertightness problems and the s 74 scheme.
Moreover, while s 126 is not to be interpreted ejusdem generis to include only things in the nature of repair or work, 8 challenges to operational levies do not obviously fit within the section. A more direct way the unit owners could pursue an equitable reallocation of general levies, would be to ask the body corporate to reassess the unit’s utility interest under s 41 while the unit mothballed.
The body corporate’s claim for operating levies is allowed.

Are the unit owners liable for interest on the operating levies?

If a unit owner fails to pay levies by the due date, interest accrues on the unpaid balance. A body corporate may charge interest up to 10 per cent per annum. 9
The interest claimed is proved and is allowed as set out in the table above.

Are the unit owners liable for the special levies for the s 74 costs?

Can s 126 be applied to the special levies?

The unit owners disputed the special levies pursuant to s 126. I do not consider s 126 applies because (as discussed above) the body corporate’s claim is under s 124. The unit owners cannot rely on s 126 in this forum when the body corporate has not used s 126.

Is the special levies claim a duplicated claim or subject to estoppel?

The unit owners submit that the High Court and Court of Appeal have ordered the unit owners to pay only a reasonable contribution to costs and not indemnity costs as the body corporate sought, so the unit owners should not have to pay the special levies due to the claim already being decided or contrary to the principle of issue estoppel. 8 See ibid; Hart v Body Corporate 198245 HC Auckland CIV CIV-2005-404-1429, 23 June 2005. Costs could be the subject of s 126. 9 UTA, s 128. _90504446
However, the fact the body corporate levied the unit owners for the body corporate’s s 74 litigation costs was because they were members of the body corporate community. The unit owners were wearing two “different hats” in the s 74 litigation as members of the body corporate community and as unit owners in their individual capacity. There is no duplication of claims because each claim involves the unit owners in a separate capacity.
Nor can the body corporate’s claim for the special levies be characterised as re- litigating for the same thing the body corporate has already claimed for when it sought indemnity costs in the courts. The special levies date from 2023, well before the body corporate advanced its costs arguments in the High Court and Court of Appeal. The issue of the unit owners having to contribute to the body corporate’s costs by way of the special levies should have been raised in the High Court and the Court of Appeal as an argument to reduce those costs orders, rather than being raised before the Tribunal after the event.
Nor does it appear the unit owners have to double pay in the sense of having to overpay, or that they are victims of inequity. Just as all of the community unit owners had to contribute to the body corporate’s costs, so all of the community of unit owners’ costs for the s 74 litigation will be decreased by the courts’ costs orders against the unit owners in their individual capacity once the unit owners pay those costs. The unit owners will benefit from the reduction like all of the other unit owners.
It has not been proved that the unit owners will in toto pay more than the body corporate’s actual costs. It is unlikely the unit owners would pay more than the body corporate’s actual costs because their share of the special levies is moderate.
If the unit owners were paying over and above the body corporate’s actual costs, there would be inequity, but that is not the case here.

Were the second and third levies properly struck?

The unit owners challenge the second and third levies for legal costs for the High Court, s 74 proceedings because “[t]here was no lawful process which authorised these levies”.
In response, the body corporate relied on the evidence of the chairperson of the body corporate committee, Anthony McCullagh whose affidavit states: In this instance...the committee exchanged emails and met following the meeting and resolved to raise the levies
The body corporate also submitted a memorandum stating: _90504447 RESOLVED FOLLOWING EMAIL EXCHANGES: “That a special levy of $345,000 (inclusive of GST) be raised for payment in two equal instalments, the first due on 20 June 2023 and the second on 20 October 2023.”

CARRIED UNOPPOSED

The unit owners raised their challenge to the striking of the levy on procedural grounds at an early stage. However, at the hearing, the body corporate when invited to, could not produce contemporaneous notes of the meeting recording such basic matters as the date the committee met, at what place it met or otherwise in what fashion it met, which committee members were present, that a quorum was achieved, and that the issue of the special levies was an agenda item at the meeting.
Mr Leishman submitted that it was the substance that mattered, not that procedural niceties may not have been pedantically followed. He submitted the Tribunal should be guided by the High Court’s comments in Wheeldon, in which Muir J said: 10 In my view it is not the role of the Court to submit the Body Corporate's resolutions to a pedantic or overly critical analysis. Albeit that often, as in this case, body corporates will engage the services of a professional secretary, allowance should, in my assessment, be made for the fact that they are often comprised of non-professional people, and committees of volunteers. To expect the same precision of language as one might, for example, in a commercial contract is in my view unrealistic. In my assessment, the test should be whether, having regard to the full context in which resolutions occur, it can be safely concluded that the Body Corporate has indeed committed itself to the original Repair Plan.
In Wheeldon 2, Muir J allowed a resolution by email after reviewing evidence of a discussion over two days between committee members who recorded a decision by email: 11 I am satisfied that a consensus was ultimately reached which would mean that any intervention on the Court's part could be on technical, rather than substantive grounds.
I fully accept Muir J’s comments. 12 I am bound by them. However, the current situation is different to the kind that Muir J was dealing with. 10 Wheeldon & Ors v Body Corporate 342525 [2015] NZHC 884, per Muir J at [170] 11 Wheeldon & Ors v Body Corporate 342525 [2017] NZHC 87, per Muir J at [38]. 12 See also Body Corporate 346799 v Kang [2022] NZDC 19736: Date for payment of levy was not recorded in resolution. The District Court accepted that a resolution which did not include the date for payment of the levy, could be enforced based on wider evidence that a date had been agreed, just not recorded in the written record for the resolution _90504448
If there was a meeting to pass an important resolution like this there would surely have been minutes or contemporaneous notes made. Later, if a question arose (as it has here) a year or so later as to the details of the meeting, the first port of call would be the minutes or other documents that recorded what took place. It does not make sense to rely on a committee members memory in the first instance. You would search out your records, piece together what happened, and go from there. Here, the body corporate simply relied on Mr McCullagh’s memory that a meeting occurred, and the Committee made a proper resolution.
The failure to keep contemporaneous records casts doubt in my mind that there ever was a meeting. I do not doubt the genuineness of Mr McCullagh’s evidence, but I do doubt its accuracy. I do not find my concerns alleviated by the incomplete note of a resolution “following email exchanges”.
The non-existent records cast doubt even in the absence of a clear duty to keep records. But further compounding the problem, the Committee did have a clear duty to keep such records. Under s UTA, s 113 the body corporate committee’s record-creating and reporting duties included: 113 Decision-making of body corporate committee (1) A body corporate committee must produce an agenda for each body corporate committee meeting. (2) A body corporate committee must keep written records of its meetings. (3) Matters must be decided by a simple majority of votes and each resolution must be recorded and included in the written records for the meeting. (4) The committee must promptly report to the body corporate on the meetings it holds in the manner prescribed in the regulations
Adequate records as required by s 113(1)-(3) have not been provided.
This is not just a technical oversight such as the omission of the date resolved for payment that is of concern, it is a concern about whether a meeting ever happened.
I do not consider having had regard to the full context in which the purported resolution occurred that “it can be safely concluded that the Body Corporate” properly resolved the special levies. I doubt there was even a meeting as claimed. Nor has it been shown there was a substantially analogous process adopted for passing the purported resolution. The probable defect here is substantive rather than technical.
It follows, I do not allow the body corporate’s claims for the second and third special levies because I am not satisfied the body corporate committee properly resolved them. _90504449

Must the body corporate repay operational levies from April 2021 onwards?

The unit owners submit they should not have to pay the bulk of the operational levies they have been charged since their unit was mothballed.
The Tribunal has already dealt with the unit owners’ main arguments for being refunded its historical operational levies above. It is not necessary to repeat them in detail here.
The unit owners submit further that the body corporate failed to repair and maintain the building under s 138 of the UTA. However, the High Court and the Court of Appeal had carriage of the same matters in the s 74 proceedings. Mr Hannam’s affidavit filed in the Tribunal is dated 28 July 2023 is the same affidavit that was filed in the High Court in support of the unit owners’ opposition to the 74 scheme.
The unit owners specifically argued s 138 before the courts. For example, the Court of Appeal of recorded: 13 [95] The trustees’ argument can be summarised as follows: (a) Unit 900, including the large roof deck, forms a roof over much of the Western Park apartment complex. (b) The remediation of the watertightness issues with unit 900 is in the interests of all owners. (c) The Body Corporate’s obligations under s 138 of the UTA 2010 prevail over the unit owners’ obligations to repair and maintain. (d) Fairness requires that the costs of remedying the watertightness issues be shared between all owners according to ownership interest. (Emphasis added)
It is not appropriate for the Tribunal to revisit the same matters that were before the courts in a slightly different guise.
The unit owners wish to rely on s 126, but they cannot for the reasons discussed above.
The unit owners’ set off/counterclaim is dismissed.
The body corporate does not have to repay any of this unit owners’ operational levies. 13 Hannam & Draper v Body Corporate 126001 & Ors [2024] NZCA 274 at [95]. _905044410 Costs
The Body Corporate is entitled to recover any reasonable costs incurred by it in collecting unpaid levies as a debt due by the owner to the Body Corporate. 14
The unit owners do not dispute the body corporate’s costs. An order is made accordingly.

Tenancy Tribunal case 9050444 — Mould & damp in Freemans Bay, Auckland

Tenancy Tribunal case 9050444 — Mould & damp in Freemans Bay, Auckland

Order

Reasons

Do the unit owners owe the general levies claimed?

Are the unit owners liable for interest on the operating levies?

Are the unit owners liable for the special levies for the s 74 costs?

Can s 126 be applied to the special levies?

Is the special levies claim a duplicated claim or subject to estoppel?

Were the second and third levies properly struck?

CARRIED UNOPPOSED

Must the body corporate repay operational levies from April 2021 onwards?

Order

Reasons

Do the unit owners owe the general levies claimed?

Are the unit owners liable for interest on the operating levies?

Are the unit owners liable for the special levies for the s 74 costs?

Can s 126 be applied to the special levies?

Is the special levies claim a duplicated claim or subject to estoppel?

Were the second and third levies properly struck?

CARRIED UNOPPOSED

Must the body corporate repay operational levies from April 2021 onwards?