Singh v Body Corporate 207650 [2018] NZHC 2872 (6 November 2018)

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This judgment was delivered by me on 6 November 2018 at 1.00 pm pursuant to Rule 11.5 of the High Court Rules

.............................................................................. Registrar/Deputy Registrar

[1] On 31 July 2018, I delivered judgment against Ms Singh dismissing an appeal from the District Court relating to enforcement of body corporate levies.¹Ms Singh now seeks leave to appeal to the Court of Appeal. She also seeks a stay of my judgment pending hearing of that appeal, if leave is granted. Mr Bryers, for Ms Singh, accepts that if I decline leave to appeal, the stay application falls away.

[2] There is also a bankruptcy proceeding brought against Ms Singh by the Body Corporate.²Ms Singh applies to set aside a bankruptcy notice issued against her on 19 March 2018. That application was withdrawn by Mr Bryers at the outset of this hearing, on the basis that alternative steps will be considered.

[3] Mr Bryers’ appearance at the commencement of this hearing was his first involvement on the record. He advised at the outset that he had been instructed one week before, and that he was seeking an adjournment on the basis that there had been insufficient time for him to do the matter justice. He sought a short adjournment of two weeks and submitted that there was no particular prejudice to the respondent on that basis.

[4] Unsurprisingly, the adjournment application was opposed. Ms Singh has sought adjournments at many points throughout these proceedings, including two in respect of this application for leave to appeal. The first of these was declined by Muir J on 3 September 2018. That adjournment was sought on the basis that Ms Singh wished to adduce new evidence; have video media made available for the presentation of evidence, (which she contended was not clear from printed hard copies); and call the Body Corporate’s solicitor for cross-examination. The second request by Ms Singh for an adjournment of this hearing, was referred to Venning J. That request was based on her intended filing of an application for leave to appeal to the Court of Appeal, which was difficult to follow, as such an application can only follow an unsuccessful application for leave in this Court. Venning J declined the adjournment.

[5] I should note in fairness to Mr Bryers that he was unaware of the two previous requests by Ms Singh for an adjournment of this hearing.

[6] In addition, it would not be possible to adjourn the matter for two weeks, or even two months. In all likelihood, the next available hearing date would be six months away or more. The result would be clear prejudice to the Body Corporate.

[7] I declined the adjournment, but offered Mr Bryers the opportunity to further consider his submissions and to resume at 2.15 pm. He declined that opportunity and then handed up a fresh synopsis of submissions described as “supplementary submissions for Ms Singh”. These had been provided to counsel for the Body Corporate the day before.

[8] The levies at issue in my 31 July 2018 judgment are the second and third levies issued by the Body Corporate, and relate to construction work undertaken to repair and maintain a building known as “Richmond Terraces”.

[9] Ms Singh sought to attack the lawfulness of the levies imposed upon her. However, Lang J, in an earlier judgment, dated 12 May 2017, had held that the second levy was lawfully imposed, as the work had been carried out within the terms of the Scheme.³The issues raised in this proceeding had all essentially been raised before Lang J. That judgment had not been appealed. I agreed with the findings of Lang J and held that, by logical implication, the third levy was also lawful.

[10] Ms Singh also argued on the appeal before me that the members of the Body Corporate committee and its manager had failed to manage the project properly, and had as a result, incurred excessive costs or failed to take appropriate action against the contractors. This point again had been argued before Lang J, or similar.⁴I held that this was not a defence to payment of a lawfully-imposed levy. I held that this was also no basis for a counter-claim against the Body Corporate, and in fact Ms Singh expressly disavowed such. Nor did I consider there was any basis for equitable set-off.

If Ms Singh wished to obtain relief for those claims, that needed to be by way of the separate proceeding, which had already been filed by her, against the committee members and the Body Corporate manager.

[11] I therefore upheld the decision of the District Court Judge to enter summary judgment against Ms Singh.

[12] Section 60(1) of the Senior Courts Act 2016 provides for second appeals as follows:

(1) The decision of the High Court on appeal from the District Court, the Family Court, or the Youth Court is final unless a party, on application, obtains leave to appeal against the decision to the Court of Appeal.

(2) An application under subsection (1) for leave to appeal to the Court of Appeal must be made to the High Court or, if the High Court refuses leave, to the Court of Appeal.

[13] The test for whether leave should be granted for a second appeal was considered by the Court of Appeal in Waller v Hider,⁵which held:

(a) The appeal must raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the costs and delay of the further appeal;

(b) It is not every alleged error of law that is of such importance as to justify further pursuit of litigation which has already been twice considered; and

(c) The scarce time and resources of the Court of Appeal are not to be wasted, nor should additional expense for an unsuccessful client be incurred without reasonable hope of success.

[14] It was unclear from Ms Singh’s application and the submissions she had filed what points of appeal she was seeking to pursue in the Court of Appeal. The key issues, as best I could discern from her original written submissions on the leave application were:

	(a)	The Body Corporate or its members and manager were negligent in overseeing the repair project. They were misled by the contractors and consultants and as a result, the costs of repair have increased considerably. The Body Corporate or its members and manager had a responsibility to ensure that the owners of the units were not being overcharged. As such, Ms Singh has a claim against the members and managers of the body corporate.
	(b)	The second and third levies are invalid.
	(c)	Ms Singh is entitled to quiet and peaceful enjoyment of her unit, without interference from the rest of the owners.
[15] submi	Ms ssion	Singh’s original submissions were replaced by the supplementary s filed by Mr Bryers. He clearly articulates the following points of appeal:
	(a)	The costs relating to Levies 2 and 3 have not been properly incurred because there were serious errors on the part of the project manager in awarding, and administration of, the repair contract and the reporting of costs to the building owners. In addition, there was a refusal by the Body Corporate committee, including the Body Corporate manager, to properly deal with those errors, which amounted to gross negligence or wilful misconduct. (This was similar to, but a re-casting of (a) above.)
	(b)	Levy 3 was unlawful because the resolution to make that levy was unlawful, there not having been the appropriate quorum to exercise the

(c) The apportionment of the levies has not been properly carried out, in respect of which he relies upon affidavit evidence of Mr Hanrahan, a quantity surveyor engaged by Ms Singh. Mr Hanrahan’s affidavit is intituled under CIV-2015-404-003079, being the High Court proceeding heard by Lang J. (A new point.)

[16] The hearing proceeded on the basis of Mr Bryers’ supplementary submissions, despite the fact that the second two grounds could fairly be described as new.

[17] The respondent was disadvantaged by late notice of the two arguments in respect of quorum and apportionment of levies. As a result, following the hearing, on

15 October 2018, I issued a Minute requesting that Ms Wakelin, for the respondent, file a submission in reply to the new point concerning the quorum for Levy 3.

In particular, I asked that Ms Wakelin address the question of the number of debtors and voters at the passing of the resolutions on 29 April 2017 and 24 May 2017, both resolutions purporting to pass Levy 3.

[18] A memorandum was received from Ms Wakelin on 16 October 2018, together with an affidavit from Mr Leishman, the managing director of Boutique Body Corporates Limited, a company providing body corporate management services to the respondent. Mr Leishman’s affidavit is reasonably uncontentious and in circum- stances where the point is new, I admit it. Ms Singh objects to this in her post-hearing memorandum, but in the alternative, I would have refused to allow the quorum ground to be advanced.

[19] As I was seeking to provide the respondent with the opportunity to provide submissions on the quorum point of appeal, which had not been clearly raised prior to the day before the hearing, I did not request any further submissions from Ms Singh.⁶

_{All the same, on 17 October 2018, she filed her own memorandum in
response, which}

⁶There are references to this point in Ms Singh’s original submissions on the leave application, but

I had not identified it as a point of appeal, and clearly, nor had the respondent.

I have taken into account, but only to the limited extent that it raised something new regarding the quorum point, and not in any other respect. Parties cannot file memoranda not requested by the Court, or change position after a hearing.

[20] Although this point has been slightly re-cast by Mr Bryers, for the reasons already set out in my 31 July 2018 judgment, no serious argument can be raised that this issue justifies a second appeal. If a levy is lawful (which Levies 2 and 3 have been found to be), it is not open to a unitholder to go beyond that and argue, as a defence to paying the levy, that the costs were too high because of contractor errors, and/or because of errors on the part of the Body Corporate committee or Body Corporate manager. The first are matters that have to be dealt with by the Body Corporate committee in managing the contract work in accordance with the contracts it has entered into. There is no relationship between each individual unitholder and the project manager and quantity surveyor. The second is a matter for which the Body Corporate committee can be liable to an individual unitholder if there is gross negligence, and that is the subject of separate suit by Ms Singh.

[21] The separate proceeding brought by Ms Singh against the committee and the Body Corporate manager does not amount to a counterclaim against the Body Corporate (as acknowledged by Ms Singh) and nor can it be said that there is a case for equitable set-off. Mr Bryers did not argue that a counterclaim and/or equitable

[24] Mr Bryers submits that the resolution passed at the extraordinary general meeting (EGM) on 24 May 2017, to issue the third levy, was invalid. He relies on

s 95(1) of the Act, (which requires a quorum of persons entitled to exercise the voting power of not less than 25 per cent of the principal units in the development) and in addition on s 96(3) of the Act, (which provides that a voter may not vote unless all Body Corporate levies have been paid by that voter). There are 30 units, so Mr Bryers submits that a quorum of eight out of 30, being 25 per cent, was required for a general meeting to approve a levy. There were 11 votes in favour of the levy, but he argues that four of those votes were not legitimate because the voters were in default of levy payments. Mr Bryers says there was therefore no quorum.⁷

[25] In oral submissions, Ms Wakelin said that this is an incorrect interpretation of s 95(1). She says that the 25 per cent calculation is applied to the total number of eligible voters who do not have outstanding levies. On that basis, she says a quorum would be only six persons, being 25 per cent of the 24 persons not disentitled to vote by reason of their outstanding levies.

[26] In her updating memorandum of 16 October 2017, Ms Wakelin refers to Body Corporate 348047 v Strata Title Administration Ltd, another decision of Lang J, where it appears to have been held that, for the purposes of determining the necessary quorum under similar provisions in the Unit Titles Act 1972, only eligible voters with no outstanding levies could be included in the 25 per cent calculation. This is consistent with Ms Wakelin’s submission.⁸However, the interpretation advanced by Mr Bryers in this case does not appear to have been argued in the Strata Title case.

[27] The EGM on 24 May 2017 was a “general meeting”.⁹In order for business to be conducted at that meeting a quorum was required.¹⁰

(1) At a general meeting of a body corporate, the persons entitled to exercise the voting power in respect of not less than 25% of the principal units or their

⁸Body Corporate 348047 v Strata Title Administration Ltd HC Auckland CIV-2011-404-3581,

proxies constitute a quorum, provided that if the body corporate contains 2 or more members a quorum must be at least 2 members.

(2) Except as otherwise provided for in this Act and the regulations, no business may be transacted at a general meeting of the body corporate unless a quorum is present at the time.

(c) is entitled as a body corporate member to exercise a vote in respect of his or her unit, subject to section 96 and any other requirements in the regulations:

(b) who is the nominee of a company the name of which is entered on the register of owners of principal units as the representative of the owner;

(3) An eligible voter may not vote unless all body corporate levies and other amounts that are from time to time payable to the body corporate in respect of his or her unit have been paid.

[30] Regulation 13 of the Unit Titles Regulations 2011 (the Regulations), is also relevant to interpreting s 95(1). That regulation provides as follows:

(1) A general meeting of a body corporate may proceed without a quorum if the persons who have cast postal votes together with those present are entitled to exercise the voting power in respect of not less than 25% of the principal units

(2) If a quorum is not reached at a general meeting of a body corporate, and subclause (1) does not apply, the following procedure applies:

(b) the reconvened meeting must be held at the same time and place, unless the chairperson has notified all unit owners of a change to the time or place (or both) at least 3 days before the reconvened meeting is due to take place; and

[32] I consider that Mr Bryers’ interpretation is likely to be correct. In my view, s 95(1) requires a quorum of persons who have voting power (that is, those who are paid up), and who number not less than 25 per cent of the principal units, or their proxies. The matter becomes a little clearer if the actual number of principal units (instead of 25 per cent) is inserted into s 95(1). Hence:

At a general meeting of a body corporate, the persons entitled to exercise the voting power in respect of not less than [eight] principal units ...

[33] While arguably the word “and” needs to be added after the words “voting power” in s 95(1) for purposes of Mr Bryers’ interpretation, the respondent’s interpretation requires more to be inserted. On the respondent’s interpretation, the section would have to be read as follows:

[34] That is a qualification on the percentage of the principal units that I do not consider can be read into the section. If such a qualification were read in, and there were a number of principal unitholders who were debtors, taking 25 per cent of that number could lead to a minute number being required for a quorum. By requiring at least 25 per cent of the total principal units to be present (and for that 25 per cent to have voting power), the Act ensures that a motion cannot be passed by an extremely small number of voters, at least without delaying the meeting in accordance with

reg 13(2) in order to give other potential voters the opportunity to correct their disentitlement to vote.¹¹

[35] In her 16 October 2018 memorandum, Ms Wakelin argues that, regardless of whether the Court adopts her interpretation, or Mr Bryers’ interpretation, the resolutions in respect of the third levy on either 29 April 2017 or 24 May 2017 were passed with the necessary quorum, as at least eight persons entitled to vote did in fact vote on both dates.

[36] Having considered the material put forward by Ms Singh and the Body Corporate, both on the appeal and in the 16 October 2018 memorandum and memorandum in response, I agree that there was a quorum at one or other meeting.

[37] With respect to the EGM on 29 April 2017, the evidence relied on by Mr Bryers to say the quorum for the resolution was not met, was an aged arrears list dated

24 April 2017. On the basis of that list, it appeared that the quorum was not met as it appeared that only five persons were entitled to vote in respect of that resolution.

2017, two of the unit-owners recorded in the list as having amounts outstanding had paid their levies to the Body Corporate. This is confirmed by the owners’ ledger recording that one unit-owner paid their arrears on 26 April 2017, while the other made a bank transfer on 29 April, just prior to the EGM being held. This payment is not recorded as having been received until 1 May 2017, but that is because the payment was made from a bank other than that used by the Body Corporate. The day of payment was a Saturday, so the payment was not processed until the next working day. Having reviewed the evidence contained in the affidavit of Mr Leishman, I am satisfied that the unit-owner had paid her arrears by the time of the EGM on 29 April

[39] As a result of Ms Singh’s memorandum dated 17 October 2018, I have some queries around whether amounts were outstanding or not in respect of two other voters.

¹¹As cited above, reg 13(2) provides that if a quorum is not reached at a general meeting, the meeting must be adjourned for one week and the reconvened meeting must then proceed whether a quorum exists or not.

For one of the voters, as the unit was that of a deceased estate and the trustees administering that estate were unable to secure finance for an impaired unit, the Body Corporate itself arranged finance, with all interest and charges forwarded to and paid for by the estate. In respect of the other voter, the Body Corporate and that unit-owner had entered into an agreement whereby the amount outstanding was to be paid in instalments.

[40] I consider that I do not have to resolve those concerns, because even if the

29 April 2017 resolution was not validly passed, I have little difficulty concluding that, in that event, the 24 May 2017 resolution was validly passed. That is because, although the owners’ ledger showed that some of the unit-owners as at 24 May 2017 had outstanding debts, for most of those unit-owners the debts arose from the third levy following the resolution on 29 April 2017. If that resolution were defective through lack of quorum, then those amounts were not owing, and therefore those unit-owners were entitled to vote. I consider on the evidence advanced, that eight of those who voted would have been able to vote, were the 29 April 2017 resolution held to have not been validly passed.

[41] I therefore agree with Mr Bryers that the quorum necessary to pass the resolution for the third levy was eight persons entitled to vote, but I agree with

Ms Wakelin that such a quorum did exist either at the EGM on 29 April 2017 or the EGM on 24 May 2017. I therefore do not consider Ms Singh has a seriously arguable case in this regard.

[42] If I am wrong, I agree with Ms Wakelin that, in any event, this point would not justify a second appeal. There is insufficient private or public importance in the outcome of the particular vote. To the contrary, the other unitholders have already paid their share of the levies pursuant to that vote and would be put to significant further expense and delay by a second appeal.¹²The benefit of a further appeal would appear to be for Ms Singh only, and I do not consider that such a benefit would outweigh the costs and delay to the Body Corporate.

¹²The fact that the unitholders stand by that vote is illustrated by a further without-prejudice ratifying vote passed at yet another EGM on 25 October 2018. As will be apparent, I consider that EGM was unnecessary and I do not rely on that resolution.

17 October 2018, that this issue was raised in the District Court. That is not apparent from the District Court judgment. Significantly, I have reviewed Ms Singh’s submissions and find no clear reference to it on the appeal before me. As Ms Singh pointed out in her 17 October 2018 memorandum, her written submissions on appeal recorded that “... the third levy was not approved by body corporate approval”. But she also unequivocally stated just before that: “The quorum in [the 24 May 2017] EGM was met...” and that, “The following resolutions were again put up for voting and were passed in [the 24 May 2017] EGM: the resolution to raise a 3^rdlevy...”. Her submissions on the appeal made no reference to the number of entitled voters required to be present in order for the resolution to be passed at the 24 May 2017 EGM, nor to the number actually present. However, all of this takes the matter nowhere because I have fully considered the argument raised by Mr Bryers in any event, despite this being only a leave application.¹³

[44] For the reasons recorded above, I do not consider this point is capable of serious argument or otherwise merits leave to appeal to the Court of Appeal.

[45] This point again was not raised before me on the appeal, or not such that I identified it, and it does not seem to have been raised before Judge Harrison. Again, I consider it nonetheless.

[46] The Scheme provides in clause 1.12 that each owner’s share of levies is to reflect the assessed actual unit cost of repairs to each owner’s unit. Mr Bryers, relying on the evidence of Mr Hanrahan, says that the apportionment of the second and third levies for Ms Singh’s unit is not correct because:

(a) There are double-ups in the claimed amounts, due to incorrect interpretation of the basis of payment for the provisional sums.

		applied costs against the incorrect unit and the costs of the item should be $3,688.33, as compared to the claim of $10,782.58 (that is an overcharge of approximately $7,000).
	(b)	Mr Hanrahan also says there appear to be large over-measures of quantities against some of the provisional sums when compared to the quantities included in the notice.
	(c)	Mr Hanrahan further says there appear to be a number of variations claimed against “Extra” over items which could be expected to be included in the tender rates.
	(d)	Mr Bryers says that the costs of claims relating to Levies 2 and 3 are understood to include roof repair issues for blocks 1 and 2, but Ms Singh’s unit is not within either of those blocks.
[47]	Mr	Bryers said he was unable to point to any actual figures from

Mr Hanrahan’s evidence beyond the suggested $7,000 overcharge in (a) above, nor did he point to anything more concrete than the generalised extracts above.

[48] Mr Bryers seeks to carve this argument out from the finding by Lang J that the second levy was lawful, which in turn led to my finding that the third levy was lawful. He says Lang J’s finding was on the basis that the work carried out was in accordance with the Scheme, whereas this is an argument about the apportionment of costs for the levy made against Ms Singh.

[49] I do not accept that the point can be legitimately carved out, at least in terms of the second levy. The issue Lang J was considering was the lawfulness of the

If she were arguing incorrect apportionment of costs, then that should have been argued before him. Either it was argued and did not gain traction,¹⁴or it was not argued and cannot be raised now.

¹⁴There is no reference to this particular argument in the judgment of Lang J.

[50] The position may be a little different regarding the third levy, where Lang J’s finding may not be conclusive in terms of apportionment between units, as opposed to lawfulness of the works and of the levy overall. However, I consider the evidence of Mr Hanrahan is too vague to support the argument in any event, such that it cannot be taken as seriously arguable. The only figure that Mr Bryers could direct my attention to was the alleged $7,000 overcharge referred to above. If a serious argument were to be raised regarding overcharging, such that leave would be granted to appeal to the Court of Appeal, it would have required materially more.

[51] I am also not satisfied that this is a point of sufficient importance to justify the expense and delay associated with a further appeal.

[52] Ms Singh has failed to convince me that there is a question of law or fact involving some interest, either public or private, that is capable of bona fide and serious argument and is of sufficient importance to outweigh the costs and delay of the further appeal. The application for leave is therefore dismissed.

[53] As noted above, Mr Bryers accepted that if the leave application were unsuccessful, the stay application would fall away.

[54] I have already noted that the application to set aside the bankruptcy notice has been withdrawn.

(2) The amount of any unpaid levy, together with any reasonable costs incurred in collecting the levy, is recoverable as a debt due to the body corporate by the person who was the unit owner at the time the levy

became payable or by the person who is the unit owner at the time the proceedings are instituted.

[57] Muir J, in Butcher v Body Corporate 324525, considered that s 124(2) provided “statutory authority for the recovery of reasonable costs on an indemnity basis for collecting any unpaid levy”.¹⁵

[58] I agree. This matter started out as a summary judgment application by the Body Corporate, for levies which were unpaid by Ms Singh. The costs associated with the appeal and this application for leave have been incurred by the Body Corporate in collecting those levies.

[59] The Body Corporate is entitled to costs on an indemnity basis, providing they are reasonable, and is to submit a memorandum setting out those costs within 14 days.

BETWEEN	CHERYL SITARA SINGH Applicant
AND	BODY CORPORATE 207650 _Respondent

Hearing:	10 October 2018
Appearances:	S Bryers for the Applicant/Debtor K Wakelin for the Respondent/Creditor
_Judgment:	_{6 November 2018}

High Court of New Zealand Decisions

Singh v Body Corporate 207650 [2018] NZHC 2872 (6 November 2018)