Published tribunal order
Tenancy Tribunal case 9055324 — Tenancy dispute in Grenada North, Wellington
Decided 29 Nov 2024 · Published 29 Nov 2024 · Application 9055324
Landlord favoured
- Mould & damp
- Property damage
- Unit Titles
Order
- McMorran Properties Limited must pay Bryan Leslie Pool $5,422.83 immediately, calculated as follows: DescriptionsApplicantRespondent Balance of recladding costs$4,922.83 Filing Fee$500.00 Total award$5,422.83 Total payable by Respondent to Applicant $5,422.83
- This order replaces and incorporates the Tribunal’s order dated 26 November 2024.
Reasons
- Both parties attended the hearing I held in Porirua on 13 November 2024. Mr McMorran represented the respondent company.
- Mr Pool, the owner of Units A and C in this unit title development, has claimed the balance ($4,922.83) of an invoice he paid for recladding work and the filing fee. 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: ... (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:
- Section 138 UTA provides in part:
- 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.
- 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 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 issued 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.
- 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 been 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).
What happened here?
- 10.The Body Corporate is run informally. Following a meeting at Unit B on 7 January 2024 the unit owners agreed (and the Tribunal understands that a resolution was passed) to undertake repairs necessary to all 3 units – roof repairs and replacement of the exterior cladding.
- Mr Pool obtained quotes for the work and engaged Steel Structures Wellington Limited trading as Kiwispan to undertake the recladding work. The work was completed. There is no dispute about the roof repairs undertaken separately. But MPL claims that Kiwispan, when it did the cladding repairs, caused damage to the electrical board which affected all units, with consequential damage to its unit.
- There is no dispute that the work had to be done and it is accepted that it was the Body Corporate’s statutory responsibility to do it as it was for the benefit of all the units.
- Mr Pool paid the invoice for the recladding work, effectively on behalf of the Body Corporate. That is not how the UTA contemplates repair issues being dealt with – see Tisch. But not all bodies corporate (especially small ones such as this) follow the statutory process to the letter.
- Mr Pool has claimed reimbursement of MPL’s share of the Kiwispan invoice. MPL paid part of the amount claimed ($10,000.00) but withheld $4,922.83 because it considered that Kiwispan had caused damage to MPL’s unit which it could not recover from Kiwispan because Mr Pool had paid the account in full.
- At the hearing, Mr Pool said he was so impressed with Kiwispan’s work, he wrote to them congratulating them on a ‘fabulous and professional job’.
- MPL’s case is that the contract for the work was between the Body Corporate and Kiwispan, not between Mr Pool and Kiwispan. Therefore, it was for the Body Corporate to decide whether Kiwispan’s invoice should be paid in full.
- While technically correct, the work was agreed on and it was a pragmatic decision for Mr Pool to arrange it and pay the invoice given Mr McMorran was overseas. There is nothing to be gained by the Tribunal dismissing the application and requiring it to be made by the Body Corporate.
- This case illustrates what can happen with a small body corporate where one person owns a majority of the units, the other owner is a minority, and decisions are made informally and in good faith. Bodies corporate such as this one benefit from having a professional manager. The parties should consider that.
- 19.MPL cannot reasonably withhold the payment Mr Pool incurred for the repair cost to all the units and at the same time claim the repairs costs he seeks. Even if the Tribunal were to award him the repair costs, that would still leave Mr Pool out of pocket, having paid the Kiwispan invoice on behalf of the Body Corporate for the work the 2 owners agreed was the Body Corporate’s responsibility.
- MPL is correct that the contract with Kiwispan was between the company and the Body Corporate, not between the company and Mr Pool, but in the informal way this Body Corporate appears to run, Mr Pool was acting on behalf of the Body Corporate following the agreement that the work had to be done.
- The Body Corporate of which MPL is part cannot act in a manner contrary to the UTA and then claim strict compliance when it suits.
- So, MPL is liable for its share of the work completed. Recovery of MPL’s repair costs
- How then can MPL recover the costs it incurred for damage to the electrical fittings in Unit B? That will depend on several things. First, how did the damage occur? Was the repair cost of the damage something that affected the common property or did the repair only relate to MPL’s unit? If the repair is to common property (MPL says the electrical failure affected all 3 units) then the repair cost will be borne by the owners according to their ownership interest.
- If the damage it just to MPL’s unit the dispute will be between MPL and whoever it believes caused the damage. The fact that the invoice has been paid is irrelevant. The recladding work was done, successfully.
- The claim for damage is separate. That the Body Corporate (Mr Pool on its behalf) paid Kiwispan’s invoice in full should not preclude MPL as an individual unit owner suing for its losses, but it cannot recover those losses from Mr Pool when he did not cause the damage.
- The issues before the Tribunal are not complex: MPL must pay its full share of the recladding work required to repair and therefore benefit all the units. While Mr Pool paid the invoice for the work, he did so on behalf on the Body Corporate, a pragmatic approach when there are so few unit owners.
- For the repair of damage that MPL claims, how it proceeds will depend on the factors I have mentioned above. The repair cost might be a Body Corporate responsibility in the first instance, or it might not. MPL can take advice on that.
- Mr Pool’s claim (on behalf of the Body Corporate) must succeed. The Body Corporate would be entitled to claim the cost of the recladding work from all owners. Mr Pool effectively paid the invoice on behalf of the Body Corporate following the agreement to have the work done. MPL must pay its share. Result
- MPL must pay Mr Pool $4,922.83 for the balance of recladding costs together with the filing fee on the successful application, a total of $5,422.83. Clarification
- When I issued my order on 26 November 2024, I understood that MPL had filed a cross application against Mr Pool. Mr McMorran made submissions as though there was a live application.
- On that basis, I adjourned MPL’s application with a suggestion about how matters might proceed.
- I have since been advised that no filing fee was paid by MPL, and Tenancy Services did not register the application.
- The Tribunal therefore had no jurisdiction to make any order on the application. For that reason, I have issued this order which incorporates and replaces the order dated 26 November 2024.