AFFORDABLE HOUSING LTD v BODY CORPORATE 396511 [2021] NZHC 3149

AFFORDABLE HOUSING LTD v BODY CORPORATE 396511 [2021] NZHC 3149 [23 November 2021]IN THE HIGH COURT OF NEW ZEALANDTAURANGA REGISTRYI TE KŌTI MATUA O AOTEAROATAURANGA MOANA ROHECIV-2019-470-000135[2021] NZHC 3149BETWEEN AFFORDABLE HOUSING LIMITEDPlaintiffAND BODY CORPORATE 396511DefendantHearing: 30 June 2021Appearances: A K Hough for the Plaintiff J Heatlie and J P Wood for the DefendantJudgment: 23 November 2021JUDGMENT OF ASSOCIATE JUDGE GARDINERThis judgment was delivered by me on 23 November 2021 at 11.30 a.m.pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate.......................................Solicitors:Grimshaw & Co, AucklandCourt One, AucklandIntroduction[1] The Cayman Apartments overlook Mount Maunganui beach. They comprise a six-floor residential apartment complex which has 48 principal units, owned as stratum estates under the Unit Titles Act 2010 (UTA 2010).1[2] In August 2016, Body Corporate 396511 (the Body Corporate) and 47 unit owners brought a proceeding in the High Court against the Tauranga City Council (the Council) and others, alleging design and construction defects within the units and the common property (the collective claim). The 48th unit owner, not named a plaintiff in the collective claim, is Affordable Housing Ltd (AHL). AHL had already brought and settled its own proceeding against the Council and others in June 2016.[3] The Body Corporate levied all unit owners, including AHL, to investigate the defects, prepare a remedial design, make interim repairs and to fund the collective claim.[4] Ultimately, it was uneconomic to repair the apartment complex. The collective claim was settled in May 2020 for $45 million, based on loss in value of the 47 units and associated common property. The settlement funds were released to the 47 unit owners.[5] AHL now says that when bringing the collective claim, levying AHL and denying AHL a share of the settlement proceeds, the Body Corporate breached the fiduciary duties and duty of care it owed to AHL, and acted outside the scope of its statutory powers under the UTA 2010.[6] The Body Corporate has applied for strike-out and/or summary judgment of AHL's statement of claim. To succeed, the Body Corporate must satisfy the Court none of AHL's causes of action can succeed.1 Unit Plan 396511.[7] The Body Corporate contends that:(a) AHL's claim is based on a wrong assumption – that only a body corporate can bring a claim against a third party for damage to common property;(b) there is no established fiduciary duty, duty of care or statutory duty on a body corporate to bring a claim for its members for damage to common property;(c) AHL has not suffered any loss;(d) if AHL has suffered loss, it caused the loss itself by:(i) failing to sell its unit after its individual settlement; and/or(ii) electing not to participate in the collective claim as an individual unit owner; and(e) the Body Corporate acted within its powers by issuing levies on all owners.[8] I will consider each of these arguments in turn and decide whether any or all of them mean that AHL's claim or any cause of action has no chance of success. But first I will briefly discuss the legal principles concerning strike-out and summary judgment, set out the chronology of events, and describe AHL's claim against the Body Corporate.Legal PrinciplesApplication for strike-out[9] The court may strike out all or part of a pleading if it discloses no reasonably arguable cause of action, defence or case appropriate to the nature of the pleading.22 High Court Rules 2016, r 15.1(1)(a).The Court of Appeal summarised the principles applicable to the exercise of this discretion in Attorney-General v Prince: 3A striking-out application proceeds on the assumption that the facts pleaded in the statement of claim are true. That is so even although they are not or may not be admitted. It is well settled that before the Court may strike out proceedings the causes of action must be so clearly untenable that they cannot possibly succeed; the jurisdiction is one to be exercised sparingly, and only in a clear case where the Court is satisfied it has the requisite material; but the fact that applications to strike out raise difficult questions of law, and require extensive argument, does not exclude jurisdiction.Defendant application for summary judgment[10] The court may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff's statement of claim can succeed. 4 Master Venning summarised the effect of the rule in Ferrymead Tavern Ltd v Christchurch Press Co Ltd:5an application for summary judgment by a defendant is similar to a striking- out application except the defendant has to show that all of the plaintiff's causes of action cannot succeed. The major difference between an application for summary judgment and a strike-out application is, of course, that a defendant making an application for summary judgment may put evidence before the Court by way of affidavit. If that evidence is disputed or is insufficient to satisfy the Court then the matter will have to proceed to a full hearing. The onus is on the defendant to satisfy the Court the plaintiff has no arguable answer to the defence raised.[11] More recently, the Supreme Court has emphasised that this is a heavy onus on the defendant, observing that a defendant should apply for summary judgment only "where there is a complete and incontrovertible answer on the facts (in which case summary judgment can be entered for the defendant)". 63 Attorney-General v Prince [1998] 1 NZLR 262 (CA) at 264; endorsed by the Supreme Court inCouch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].4 High Court Rules 2016, r 12.2(2).5 Ferrymead Tavern Ltd v Christchurch Press Co Ltd (1999) 13 PRNZ 616, [1999] NZAR 529 (HC) at [11], drawing upon the commentary in McGechan on Procedure. See also Webster Farm Management Ltd v Dargaville Farms Ltd (in liq) [2020] NZHC 1477 at [32]–[35].6 Body Corporate 207624 v North Shore City Council [2012] NZSC 83 at [4], as cited in Webster Farm Management, above n 5, at [32].[12] However, as with plaintiff applications for summary judgment,7 this Court:8will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable[13] Finally, summary judgment may be inappropriate for claims in a developing area of the law. The procedure may stultify the development of the law as it prevents a more informed assessment at trial. In Westpac Banking Corp v M M Kembla New Zealand Ltd, the Court of Appeal said: 9Although a legal point may be as well decided on summary judgment application as at trial if sufficiently clear, novel or developing points of law may require the context provided by trial to provide the Court with sufficient perspective.Except in clear casesit will not be appropriate to decide by summary procedure the sufficiency of the proof of the plaintiff's claim. That would permit a defendant, perhaps more in possession of the facts than the plaintiff to force on the plaintiff's case prematurely before completion of discovery or other interlocutory steps and before the plaintiff's evidence can be reasonably assembled. The assessment made by the Court on the interlocutory application is not one to be arrived at on a fine balance of the available evidence, such as is appropriate at trial.Chronology of events[14] I now set out the chronology of events in some detail, because the way events unfolded, especially the way the collective claim evolved, is relevant.2015 – AHL commences proceedings[15] In 2015, AHL commenced proceedings against the Council and others involved in constructing the Cayman Apartments. AHL claimed its unit was built with defects within the walls, balcony and the tiling on the deck. The unit had consequently suffered moisture ingress and damage, requiring remedial work estimated to cost7 Webster Farm Management, above n 5, at [35].8 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].9 Westpac Banking Corp v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA) at [62]–[64]; affirmed in James Hardie Industries Plc v White [2018] NZCA 580, [2019] 2 NZLR 49 at [123].$328,403. Alternatively, AHL claimed that the defects diminished the value of the unit by $440,000.[16] On 27 June 2016, AHL settled its litigation for a sum of $440,000.10August 2016 – the Body Corporate commences proceedings[17] On 26 August 2016, the Body Corporate and 45 unit owners filed proceedings against the Council and others responsible for the construction of the Cayman Apartments, alleging defects in the units and the common property.[18] The first amended statement of claim, dated 30 August 2016, is in evidence. The law firm Whitfield Braun, who acted for the Body Corporate at the time, drafted the statement of claim. The Body Corporate is named as the first plaintiff. The 45 individual unit owners are the second plaintiffs.11[19] The defendants are named as:(a) Tauranga City Council;(b) Avery Team Architects Ltd;(c) Redco H R Ltd (who completed engineering design work);(d) Beca Carter Hollings & Ferner Ltd (which undertook a review of the design documents);(e) S&L Consultants Ltd (responsible for the stormwater disposal system);(f) Armstrong Plumbing (BOP) Ltd (responsible for plumbing and drainage works);(g) Randall Beatson (manufacturer, supplier and installer of the wall system);(h) Ark Blue Pty Ltd (who designed the wall system);(i) Aquatight Roofing Services Ltd (who installed the butanol roof);(j) Harkin Roofing BOP Ltd (who installed the cap flashings) and Rex Harkin, director;10 Settlement Agreement, payment schedule.11 Identified in sch 1 to the amended statement of claim.(k) NZ Windows Tauranga Ltd12 (responsible for manufacturing and installing the joinery);(l) Hamilton Street Investments Ltd (in liq) (the developer) and directors Robert Turner and Peter Cooney;13(m) CBC Construction 2010 Ltd (head contractor) and directors Drew Beekie and Matthew Lagerberg;(n) Murray King (site manager);(o) XMP&D Ltd (in liq).14[20] The statement sets out the "Defects" in the construction works, 15 and states that "the Body Corporate has undertaken and will need to undertake remedial works ('Repairs') to both common property and to individual unit title properties". 16[21] The statement defines the Body Corporate's loss as follows: 17As a result of the various Defects, and the need for the Repairs, the Body Corporate will suffer the following losses:(a) Costs in respect of investigating and reporting on the Defects, and providing a remedial solution;(b) Costs to remediate the Defects;(c) Building Consent fees;(d) Contract Works Insurance Cover;(e) Design and Project Management Costs;(f) Increased secretarial and administrative costs arising from the Defects, including preparation for meetings, collection of information, follow up work and ancillary services, preparation and distribution of information to Body Corporate members;(g) Diminution in value of the principal units due to stigma factors, even after the Remedial Works have been completed("Loss")12 Subsequently known as Inspecies Ltd.13 Mr Cooney was also director of XMP&D Ltd.14 Also named CBC Construction Ltd (2005–2012).15 At sch 2. Not in evidence.16 At [46].17 At [47].[22] The statement also claims that the unit owners have suffered stress and inconvenience, 18 and will suffer consequential losses as a result of remediation of the defects. 19[23] The plaintiffs then plead a cause of action in negligence against each defendant:[T]he Council owed to the Body Corporate and the unit owners the following duties of care As a result of the Council's breaches of duties of care, the Body Corporate has suffered the Loss. As a further consequence of the Council's breaches of duties of care, the Unit Owners have suffered the Stress and Inconvenience, the right to claim for such has been assigned to the Body Corporate. As a further consequence of the Council's breaches of duties of care, the Body Corporate has suffered the Consequential Losses.Alternative to the pleadingabove, as a further consequence of the Council's breaches of duties of care the unit owners have suffered the Stress and Inconvenience.(Emphasis added).[24] The Body Corporate sought judgment for "the Loss" (estimated to be in the vicinity of $13 million)20 , for the consequential losses (to be quantified prior to trial), for the loss of value after repairs due to stigma (to be quantified prior to trial) and general damages. In the alternative, the unit owners sought judgment for loss of value due to stigma.[25] The plaintiffs pleaded a second cause of action, in estoppel, against the twelfth defendant (Mr Cooney) and the twentieth defendant (CBC Construction 2010 Ltd). They pleaded the Body Corporate and unit owners suffered detriment by relying on representations those defendants made about tiling.[26] Therefore, when the collective claim was filed: 21(a) the Body Corporate (not individual unit owners) was said to have suffered "the Loss", including the estimated cost of remediation work18 At [48] and specified in sch 2.19 At [49]: alternative accommodation costs; lost rental costs; packing, removal of furniture, and storage costs; and cleaning costs20 Affidavit of Paul Douglas Clark sworn 4 March 2021, at [19] and exhibit F.21 This is consistent with Mr Shea's explanation to AHL in his letter of 30 November 2016.to unit and common property, with no distinction made between the two;(b) the Body Corporate brought the claim for damages for that head of loss, on the basis that, as well as being legal owner of the common property 22 , it had statutory responsibility for the repair and maintenance of common property and building elements and infrastructure relating to or serving more than one unit; 23 and if the Body Corporate was obliged to repair and maintain building elements and infrastructure relating to or serving more than one unit, it had standing to claim for the cost of those repairs from third parties; 24(c) if wrong on that, such that the Body Corporate could only claim in relation to common property, assignments from individual owners were in place; 25(d) the Body Corporate also brought the claim for consequential losses, and for general damages for stress and inconvenience to individual owners under assignment from owners;(e) the unit owners were only named as second plaintiffs to claim general damages for stress and inconvenience if the Body Corporate was found to be unable to claim those losses under assignment; 26(f) any recovery from the litigation was to be received by the Body Corporate; 2722 Unit Titles Act 2010, s 54(1).23 Unit Titles Act 2010, s 138(1)(d).24 This rationale is not apparent from the pleading itself but was explained in this way by Ms Heatlie and is consistent with the explanation given by Mr Shea in his letter to AHL on 30 November 2016.25 Pursuant to Deeds of Assignment of Claim forms, the crux of which is contained in cl D: "In return for the Assignee assuming the risk of the Claims and any potential return therein, the Assignor wishes to assign their right, title and interest in the Claims to the Assignee in full, including (without limitation) any right, title and interest in any claim for general damages."26 Letter of Mr Shea dated 30 November 2016.27 Above.(g) the intention was to fully remediate the apartment complex.October to November 2016 – AHL enquires about the collective claim[27] On 20 October 2016, Mr Naismith, of AHL, 28 wrote to Mr Shea, director of Quay Property Management Ltd, body corporate manager for the Cayman Apartments. Mr Naismith stated, amongst other things, that he had fully funded his own litigation against the Council and others in relation to the "defects with my apartment". He recorded that his claim had been resolved. He asked:Could you please advise what financial benefit (if any) [AHL] would derive from the current claim being handled by Whitfield Braun? I would not want to be levied for legal fees or expert fees related to the litigation if I did not stand to gain any financial benefit from that proceeding.[28] In a follow-up email, sent on 17 November 2016, he stated:Could you please advise whether there are any other Unit Owners who have chosen not to be part of the litigation that Whitfield Braun is running? I have not seen the statement of claim, so don't know how the claim has been structured. However, I imagine that Whitfield Braun are claiming for the costs to repair common property as well as Unit property. I would expect that I would benefit from the compensation received for remedial work to common property, since common property is effectively owned by all Unit Owners. However, I would like that assurance please.[29] Mr Shea responded on 30 November 2016: Whitfield Braun is bringing proceedings on behalf of the Body Corporate. The claim extends to both common property and unit property and proceeds on the basis that if the Body Corporate has an obligation to repair, then it also has an entitlement to sue to recover the costs of remediation. As an alternative, the Body Corporate has sought assignments of available claims by the unit owners to ensure that the claim cannot be defeated by an argument that the Body Corporate's ability to sue and recover is limited to damage to common property.Some unit owners have also elected to instruct Whitfield Braun on a limited basis only, and as set out in Whitfield Braun's letter dated 17 August 2016. The limited retainer is to bring an alternative claim for general damages in the event that there is a finding that the Body Corporate cannot receive an assignment of the claims for general damages.The consequence of the above is that any recovery achieved in the High Court proceedings is likely to be received by the Body Corporate, certainly in respect of the costs of repair, expert costs and disbursements.28 Sole director and shareholder.We also understand that the defects which are pleadedextend significantly further than the defects which were the subject of the claim brought by [AHL].(Emphasis added).1 November 2016 – the statement of claim is amended[30] The second amended statement of claim, dated 1 November 2016, is in evidence. It does not appear to significantly differ from the first amended statement of claim. It identifies an additional individual unit owner as another second plaintiff and it names an additional (the twenty first) defendant – Gibson Consultant Engineers Ltd (in liq), who designed and supervised construction of the fire safety system. The same cause of action in negligence is pleaded against Gibson.9 December 2016 – Body Corporate agrees extraordinary levy[31] Mr Shea deposes that up to 2015 the majority, if not all, of the costs incurred to investigate the defects were paid out of existing Body Corporate funds. However, it became plain that substantial additional funds were required to prepare a remedial scope and design, obtain a cost estimate, and take court action. To that end, the Body Corporate established a separate contingency fund (the "remediation fund") for both the remediation costs and litigation expenses.[32] The Body Corporate met on 9 December 2016. Mr Naismith is recorded as having sent his apologies for not attending. The following ordinary resolution was passed:1) The Body Corporate in accordance with its responsibility under the Unit Titles Act 2010 must carry out necessary repairs2) The Body Corporate has instructed Whitfield Braun Lawyers to issue proceedings in the High Court against a number of defendants;3) In order to obtain initial legal and consultancy advice, the Body Corporate agrees to levy all unit owners for their utility/ ownership interest share of $500,000 plus GST;4) Accordingly, the Body Corporate instructs Quay Property Management Limited (Body Corporate Administrator) to collect the extraordinary levy in two instalments[33] AHL thereafter received two invoices for the "Extraordinary Building Consultancy Levy", each for $10,764. 29 It paid. In an email to Mr Shea on 18 May 2017, Mr Naismith wrote that he had made the payment of the first instalment on a "without prejudice" basis.6 May 2017 – Body Corporate raises further extraordinary levy[34] The Body Corporate met again on 6 May 2017. Mr Naismith is recorded as present. The Body Corporate resolved, by unanimous ordinary resolution that:1) The Body Corporate has instructed Rainey Law to engage appropriate experts to gather evidence to substantiate a claim against a number of parties;2) The Body Corporate has also instructed Quantum Limited to engage appropriate experts to prepare a remedial design and quantify the cost to repair by way of tender process;3) In order to pay for the cost to engage such experts, the Body Corporate must levy all owners;4) it is estimated that the amount required to prepare for a mediation is $3.3 million inclusive;6) By passing this resolution, the Body Corporate agrees to levy owners in the amount of $2,725,000.00 (inclusive) to be paid in seven equal quarterly instalments;7) If the final cost is less than the amount collected, any surplus will be refunded to owners on a utility interest apportionment[35] Mr Naismith continued to pay this "Extraordinary Building Consultancy Levy" until 31 August 2018. He was invoiced for seven instalments of $14,574.86,30however the invoices in evidence for the last three instalments are recorded as overdue.29 Invoices dated 14 December 2016 and 26 May 2017.30 Invoices dated 1 September 2017, 30 November 2017, 1 March 2018, 1 June 2018, 31 August 2018, 30 November 2018 and 28 February 2019.October 2017 – AHL enquires again[36] On 17 August 2017, Grimshaw & Co, acting for AHL, requested from Mr Shea a copy of the statement of claim. Mr Shea deposes that he provided it. This must have been the second amended statement of claim.[37] On 9 October 2017, Grimshaw & Co wrote to Mr Shea asking for clarification as to how litigation proceeds would be distributed between unit owners. Grimshaw & Co noted that, while AHL was not a plaintiff, it had been levied for legal and experts' costs on the same basis as all other unit owners. They stated:The legal claim appears to relate to both common property and unit property ... Can you please advise what, if any, steps the Body Corporate is taking to isolate the experts' costs that relate to investigating unit property, and the expert costs that relate to investigating common property.[38] On 21 November 2017, Tim Rainey, of Rainey Law responded: The Body Corporate has resolved to bring proceedings against various parties to recover the anticipated costs of repairs to the units and common property in the Body Corporate. In that context the Body Corporate has also resolved to raise levies on its members to pay for the investigation into the building and the costs associated with the litigation. Your client, as a member of the Body Corporate, is obliged to pay those levies, which have all been lawfully raised under the Unit Titles Act 2010.Your client has, however, elected not to be a party to the proceeding (we understand because it has already negotiated a separate settlement with the City Council, which precludes it from doing so) and as such will not directly benefit from the litigation. The Body Corporate and owners who are parties to that litigation are suing for their share of the costs of any remedial work required to rectify defects and damage to the units and common areas. Because your client is not a party to the litigation, there is no claim relating to your client's share of those costs.The proceeds of the litigation will be distributed among those owners who are plaintiffs We anticipate that this will be offset against future levies raised on all unit owners (including your client) for the cost of the remedial work which the Body Corporate will ultimately undertake to rectify defects in the building. To be clear, we anticipate your client will have to meet its allocated share of the cost of the repairs in full, without any offset from money obtained from the litigation.You will appreciate that the Body Corporate has an obligation under the Unit Titles Act to investigate the extent of defects affecting building elements, and to carry out whatever repairs are required to rectify any defects or resultant damage discovered. All unit owners, including your client, are obliged tocontribute to the costs of that investigation and any subsequent repairs on a utility interest basis.That matter is separate from the litigation which is being conducted for the benefit of those unit owners who are participating as plaintiffs.(Emphasis added).[39] In a response dated 27 February 2018, Grimshaw & Co said:We do not understand why you say that because [AHL] has chosen not to be a plaintiff the Body Corporate is not seeking to recover the total cost of repairing the defective property...The Body Corporate is entitled to claim the full cost of repairing the common property, irrespective of whether all Unit Owners are plaintiffs or not.In contrast to the position under the Unit Titles Act 1972, the Body Corporate is the legal owner of common property under s 54(1) of the Unit Titles Act 2010. It is the party which is entitled to sue for the cost of repairing common property. That is so irrespective of the circumstances of individual Unit Owners. There is support for this view in the recent High Court decision ofSmall v Body Corporate 324525 [2018] NZHC 19, where His Honour Associate Judge Bell stated:[38] In short while a body corporate acts in the interests of unit owners generally in suing a third party in tort for damages to common property, it does so in its own right as legal owner, not as trustee for unit owners or as their agent...[44] In short the body corporate as legal owner of the common property received the settlement funds in its own right, not as trustee or agent for any of the unit owners, including the minority[40] Grimshaw & Co argued that the Body Corporate should be claiming for the total cost of repairing the common property. It also alleged an inequity involved in the Body Corporate not claiming the proportion of the cost of repairing common property which AHL would ultimately be levied to pay, while levying AHL to support the second plaintiffs' claim. It sought an assurance that the Body Corporate would pursue a claim for the total cost of repairing common property, that AHL would share in the compensation recovered relating to common property, and that AHL would be compensated for the litigation costs it had been levied on the same basis as other unit owners.[41] On 17 April 2018, 31 Rainey Law replied:The idea that the Body Corporate could somehow recover your client's share of the cost of repairing common property in the building, notwithstanding the fact that it is not a plaintiff, is based on a fallacy. As long ago as Invercargill City Council v Hamlin the nature of a claim for the cost of recovering damages for the cost of repairing building defects was described as economic loss.Although under the Unit Titles Act 2010, the Body Corporate is the legal owner of the common property, that ownership is subject to what might be described as a statutory trust under which all the owners of the units are beneficially entitled to the common property as tenants-in-common in shares proportional to the ownership interest of their respective units.The Body Corporate has a legal obligation to repair and maintain the common property, with the cost of those repairs being passed to the individual owners by levies raised on all owners in proportion to each unit owner's utility interest. In this way, the cost of repairing and maintaining common property is passed on to the individual unit owners.Properly analysed, the economic loss, which occurs when building defects affecting a unit title development are discovered, is suffered by the individual unit owners, and there is no economic loss to the Body Corporate. The measure of that loss will be the unit owner's share of the cost of repairing the building as a whole including the repairs to unit property owned by that unit and that unit owner's share of the cost of repairing the common property.[42] Rainey Law reiterated that the Body Corporate would not be seeking to recover AHL's share of the cost of repairing common property, and that any attempt to do so would be a waste of time and money. However, they indicated that they agreed in principle that AHL should not be contributing to the costs incurred by the Body Corporate in the litigation, because AHL would not benefit. They did not agree that there was no lawful basis for the Body Corporate to levy AHL to meet those costs. They maintained those costs were properly paid out of the Body Corporate's operating account, and the Body Corporate was required to raise levies for those costs on all unit owners based on utility interest. Mr Rainey said that they were working with the Body Corporate to put in place a conduct and distribution agreement which would remove the problem as it would take the funding of the litigation outside of the levy regime under the UTA 2010. However, he stated, AHL would still be required to pay levies associated with investigating and remediating the building. It would only be exempted from pure litigation costs incurred by the Body Corporate and other unit owners31 Letter dated 2 March 2018.pursuant to a claim to which it was not a party and from which it would not receive any benefit.July 2018 – claim reformulated as a claim by unit owners for their repair contributions[43] On 12 July 2018, the Body Corporate filed its third amended statement of claim. This was the first pleading drafted by Rainey Law. With this, the claim was reformulated, consistent with Mr Rainey's April 2018 letter.[44] In this statement, the first plaintiff remains the Body Corporate and the second plaintiffs the unit owners (now numbering 47). At [2] it records the unit owners' assignment of their claims to the Body Corporate: 32The second plaintiffs assigned their claims against the defendants to the first plaintiff, except for the general damages claims, which are personal to the second plaintiffs and remain with them.[45] The construction "Defects" said to have caused "the Damage" are particularised at sch 3, and "Repairs" at sch 4. The claim explains: 33The Defects and Damage 34 require extensive repairs to the Cayman apartments The Repairs affect building elements which the Body Corporate has a legal duty to undertake pursuant to the Unit Titles Act 2010, and to which all members of the Body Corporate will be required to contribute based on their respective utility interests[46] The percentage utility interest of each Body Corporate member was specified, 35 and the corresponding share of repair cost "TBA". AHL's utility interest of 3.744 per cent is recorded but noted as falling outside the claim.[47] The losses, which "the Body Corporate and/or second plaintiffs have suffered and/or continue to suffer", are pleaded as: 3632 Schedule 1 records, for each owner, the date they purchased their unit and the date of their assignment of claims to the Body Corporate. It is clear from this that the assignments referred to were those prepared by Whitfield Braun33 At [81]–[82].34 Particularised in sch 3.35 At sch 5.36 At [83].(a) The cost of the Repairs and Owners' Repair Contributions;(b) The further consequential losses, including interim repair costs, loss of rental, alternative accommodation costs, removal and storage costs, increased secretarial and administrative costs and diminution in value of the units due to the ongoing stigma factors even after Repairs have been completed; and(c) Distress and other non-pecuniary harm for which they seek an award of general damages[48] In relation to each cause of action for negligence, the claim says:As a consequence of the negligence as aforesaid, the plaintiffs have suffered loss as follows:(a) Economic loss being the diminution in the value of their units as measured by their respective shares of the cost of the Repairs associated with the Defects being that amount particularised in Schedule 5 for those defects;(b) The consequential loss to be particularised.As a further consequencethe second plaintiffshave suffered distress and inconvenience(Emphasis added).[49] In the prayer for relief, the plaintiffs claim:(a) Judgment for the plaintiffs for the Second Plaintiffs' shares of the cost of the Repairs;(b) Judgment for each of the second plaintiffs for all consequential losses suffered by the second plaintiffs;(c) general damages for each of the second plaintiffs(Emphasis added).[50] Thus, with this third amended statement of claim, the collective claim was materially reframed. Now:(a) the main head of loss is described as the economic loss of unit owners,being the diminution in the value of their units as measured by their respective shares of the cost of the Repairs;(b) as before, the cost of Repairs makes no distinction between unit and common property, or building elements and infrastructure relating to or serving more than one unit – it embodies repairs to all;(c) the Body Corporate and unit owners jointly claim relief from the defendants for that head of loss;(d) it appears that the Body Corporate sued not in its own right pursuant to its legal ownership of common property and its statutory power to sue to recover costs incurred discharging its statutory responsibility to repair and maintain (as before), but under the assignments previously given by unit owners; 37(e) in contrast, the second plaintiff owners advance the claim for general damages, on the basis that these claims could not be assigned.29 November 2018 – Body Corporate and owners agree Conduct of Litigation Agreement[51] The Body Corporate and the second plaintiff unit owners then entered into an "Agreement as to the Conduct of Litigation by owners and the Body Corporate". 38[52] The agreement included the following provisions.(a) An acknowledgment that the collective claim related to:the recovery of economic loss suffered by the Owners following the discovery of defects and damage to their units and the common property The economic loss includes the cost of repair work outlined in reports obtained by the Body Corporate It is intended that the Body Corporate will undertake the remedial works and the owners will be levied for their share of the cost of the remedial works in accordance with the proportion of utility interest, or pursuant to37 See Body Corporate's application for summary judgment/strike-out at (f) "47 members of the body corporate elected to have their individual claims prosecuted by the body corporate and to that end assigned their claims to the body corporate" and (h) "the body corporate prosecuted individual owners' claims for both unit and common property, it did not make a separate claim in its own name for damage to common property." Consistent with the application, the Body Corporate's submission was that the Body Corporate did not bring a claim for compensation at all; the claim was brought by individual unit owners.38 The final signature was given on 31 May 2019.ss 138 and 121, or pursuant to a scheme under s 74 of the Unit Titles Act 2010, and that any monies obtained through or in settlement of the proceeding will either be applied to pay for the remedial works or distributed to the Owners in accordance with the terms of this agreement.(b) Confirmation that Rainey Law was instructed to act for the Body Corporate as first plaintiff, and personally for the second plaintiffs.(c) Appointing a committee of up to six owners with authority to represent the owners and the Body Corporate in final and binding decisions on behalf of the plaintiffs in all matters relating to the proceeding through to final judgment, including the power to negotiate a full and final settlement.(d) Agreement that all legal and experts' costs incurred in the conduct of the proceeding were be paid to the Body Corporate manager by the owners, with each unit participating in the claim paying levies raised by the owners committee from time to time to meet the costs(e) All levies raised by the owners committee would be raised on the basis of the unit owners' utility interest in the Body Corporate but adjusted on a pro rata basis to reflect the fact that not all units in the Body Corporate were participating in the litigation.(f) Any funds received in settlement or as a result of the proceeding would be used firstly to pay outstanding fees and charges in respect of professional advice. The balance would be deposited into the trust account of the Body Corporate manager in the name of the owners, or with a law firm selected by the owners' committee.(g) After settlement of the proceeding or entry of judgment, the committee would call a meeting of owners to advise the outcome and determine the process for having the development repaired or repairs completed.(h) Any settlement monies or judgment proceeds would be applied as follows:(i) to pay for the costs of any repairs not covered by monies previously raised from owners pursuant to repair levies, or otherwise, with the intention that each owner (or subsequent purchasers of the owner's unit) benefits from such repairs in proportion to their utility interest;(ii) any balance remaining after completion of the repairs, to be reimbursed to owners (or subsequent purchasers) for their share of the repair levies (or monies otherwise advanced to the Body Corporate for the purpose of repair) in proportion to their actual contribution;(iii) once those obligations were met, firstly utilised to reimburse owners for all legal and expert costs paid by them in the conduct of the proceeding, such reimbursement being in proportion to the owners' actual contributions, and then any balance to be paid to owners in shares proportionate to the utility interest in the Body Corporate.December 2018 – Body Corporate pursues AHL for unpaid extraordinary levies[53] In early December 2018, the Body Corporate threatened to take legal action against AHL for levies said to be due and owing.[54] On 6 December 2018, Grimshaw & Co wrote to Rainey Law reiterating that it considered the Body Corporate's action of purporting to levy all unit owners for the cost of the Body Corporate and second plaintiffs' building defects litigation, including legal costs for the second plaintiffs, was unlawful. Grimshaw & Co observed that nine months had passed since Mr Rainey's letter of 2 March 2018, in which he agreed AHL should not be contributing to the litigation costs.[55] There is no response from Rainey Law to this letter in evidence.September 2019 – AHL follows up again[56] On 23 September 2019, Grimshaw & Co wrote to Rainey Law, stating: [AHL]'s view is that the Body Corporate should be claiming for the total cost of remediating the common propertyand that [AHL] is entitled to a share of the proceeds of the litigation whether resolved by settlement or JudgmentThere is no good reason for the Body Corporate refusing to claim the total cost of remediating the common property. In Body Corporate 189855 v North Shore City Council Venning J confirmed that a Body Corporate is entitled to claim the total cost of repairing common property:"the Body Corporate has perpetual succession and is made up of the owners of the units from time to time. It may pursue claims in relation to common property for remedial costs, even where owners of individual units do not pursue a claim. The claim will only be defeated if it is able to make a positive defence against the owner at the relevant time."The above judgment was determined under the Unit Titles Act 1972. Bodies corporate are in an even stronger position under the Unit Titles Act 2010 to claim the total cost of repairing common property by virtue of their ownership of common property under s 54(1) of that Act.There are no facts or circumstances, that are peculiar to or relate to [AHL], which would prevent the Body Corporate from recovering the total cost of remediating common property. Further, as the High Court held in Small, under the Unit Titles Act 2010 the Body Corporate owns common property in its own right, not as agent or trustee for the individual unit owners. Therefore, the particular circumstances of individual unit owners are irrelevant to the Body Corporate's claim for the cost to repair common property.[57] It put the members of the owners' committee and the Body Corporate on notice that if it continued to refuse to claim the total cost of repairing common property and/or to confirm that AHL would share in the proceeds of the litigation, AHL stood to lose in the order of $900,000.2 October 2019 – Body Corporate agrees further extraordinary levy[58] On 7 October 2019, AHL was invoiced for a further $14,574.86 for the "Extraordinary Building Consultancy Levyas passed by resolution at the Committee Meeting held 02 October 2019". The invoice in evidence is marked as overdue. The minutes of the Committee Meeting on 2 October are not in evidence.October 2019 – Body Corporate considers including AHL[59] In a letter of 18 October 2019, Rainey Law appeared to entertain the idea of including AHL in the proceeding and the Body Corporate claiming its share of the common property costs. However, that was said to be on the condition that AHL would fund the costs of doing so, and further indemnify the Body Corporate for any opposition or any other cost implications that such an amendment to the claim might cause.[60] Rainey Law stated that the claim had been formulated on the basis of losses assessed by attributing to the participating parties the amounts they would need to contribute to the costs of repair in accordance with their respective utility interest share. There had been no need to differentiate between the cost of repairs to unit and common property, nor was there any intention to do so in the evidence. Therefore, if AHL's loss was to be included in the claim, it would require an amendment to the claim and additional evidence to deal with the distinction between common property and unit property repairs, and associated cost allocations. The Body Corporate required AHL to indemnify the Body Corporate for such expenses.[61] By letter dated 23 October 2019, Grimshaw & Co suggested that disagreement over the conditions be reserved, and the Body Corporate proceed to prepare the additional evidence necessary to support AHL's share of the common property cost.November 2019 – too late to include AHL[62] On 19 November 2019 Mr Rainey replied:Because [AHL] elected not to participate in the proceeding as a plaintiff, the Body Corporate has made no claim on behalf of [AHL] for its share of repairing building elements or infrastructure in the building, including the building elements or infrastructure in the common property. It had no obligation to do so.I note your comment that [AHL] cannot be a party to the legal proceeding, as they relate to the common property. I beg to differ.While the Body Corporate can sue to recover the cost of repairing damage caused to the common property39 it does so on behalf of the unit owners39 In my view the claim by the Body Corporate is not limited to the common property but includes all repairs to building elements and infrastructure which the Body Corporate is required to repair.beneficially entitled to the common property as tenants in common in shares proportionate to the ownership interest of their respective units.As the Court of Appeal explained in O'Hagan:40[104] the fate of the share of the Body Corporate proportionate to the interests of each unit proprietor is dictated by the fate of the proprietor. If an individual proprietor has the right to sue for damages to his or her individual unit, the Body Corporate may pro tanto sue for that proportion of damage to the common property; if there is contributory negligence by the individual proprietor, the claim for that proportion of damage to the common property is diminished accordingly; and if the individual proprietor is unable to sue, the claim for their proportion of damage to the common property is extinguished.The Body Corporate does not have a standalone claim for the costs it will incur in repairing the common property, which stands separate from the position of the individual proprietors. If the individual proprietor cannot sue (or elects not to sue), then the claim for that proportion of damage to the common property which relates to that unit is extinguished.The Body Corporate has followed the approach required by the decision inO'Hagan in its claim. It has brought a claim on behalf of all participating second plaintiff owners for their proportionate share of the cost of repairing all building elements and infrastructure, including building elements and infrastructure within the common areas.I enclose a copy of the most recent statement of claim filed by the Body Corporate You will see from schedule 5that the Body Corporate does not bring a claim for your client['s] share of the cost of repairing building elements and infrastructure in the building, including building elements and infrastructure within the common areas.The Body Corporate had been prepared to consider amending the claim to include a claim on behalf of [AHL], providing that conditions set out in my instructing solicitor's letter to you dated 18 October 2019 were met.However, upon further review, I do not consider that it would be possible for the Body Corporate to amend its claim in that way. To do so, [AHL] would have to become a plaintiff. Even if that were possible at this late stage of the proceeding, the additional claim would be time-barred.I note your comments about the levies paid by [AHL]. [AHL] will have to contribute towards the cost of repairing building elements and of the structure in the building in the same way as all other unit owners: that is by levies raised based on utility interest.However, [AHL] does not have to contribute to the cost of the litigation being conducted by the Body Corporate to benefit the second plaintiffs, who have elected to participate in the claim.40 O'Hagan v Body Corporate 189855 (Byron Avenue) [2010] 3 NZLR 455 (CA).We have recommended that the Body Corporate refund to your client the levies that relate to litigation costs, including expert costs where they relate to litigation support functions as opposed to building remediation. The Body Corporate will not charge [AHL] for litigation costs moving forward.(Emphasis added).20 November 2019 – Body Corporate agrees further extraordinary levy[63] AHL received three further invoices, 41 each for $14,574.86, for the "Extraordinary Building Consultancy Levy as passed by resolution without a meeting 20 November 2019". The invoices in evidence are each marked as overdue.December 2019 – AHL commences proceedings[64] In 19 December 2019, AHL filed this claim against the Body Corporate.May 2020 – the collective claim settles[65] Mr Clark, chairman of the Body Corporate, deposes that the final repair scope and estimated cost of repair prepared for the trial was completed in December 2019. Repair costs were assessed at $73,876,822. This is the figure included in the final, seventh amended statement of claim (in evidence). 42 This was a considerable increase from the previous estimate of the cost of repair at the time the sixth amended statement of claim was filed, on 8 November 2019, of $38,990,000.[66] The collective claim was mediated over two days from 19–20 May 2020. The settlement committee accepted an offer of $45 million in full and final settlement of the plaintiffs' claims. The rationale for this settlement is discussed further below.[67] I will now describe the basis for AHL's claim against the Body Corporate.41 Invoices dated 20 November 2019, 3 December 2019 and 28 January 2020.42 The fourth, fifth and sixth amended statements of claim are not in evidence.AHL's claim against the Body CorporateBreach of fiduciary duty[68] In its first cause of action, AHL claims that the Body Corporate owed AHL fiduciary duties to act with openness and fairness in relation to the collective claim; and not to prefer some unit owners over others in relation to that litigation or when imposing levies for litigation costs.[69] AHL claims that in breach of those duties, the Body Corporate:(a) failed to claim the full cost of repairing the common property in the collective claim;(b) neglected or refused to assert a claim for AHL's share of any relief related to the common property;(c) will deny or has denied AHL its proportionate share of any judgment or settlement monies relating to the common property; and(d) has levied AHL for litigation costs unrelated to AHL's unit or the common property.[70] AHL claims that it has suffered loss, being its proportionate share of any judgment or settlement received relating to the common property, and levies paid for litigation costs unrelated to AHL's unit or the common property. It seeks orders for equitable compensation.Breach of a duty of care[71] In its second cause of action, AHL claims that the Body Corporate owns the common property, has a duty to repair and maintain the common property, and to raise levies from owners for repair costs to common property and for litigation costs in relation to common property or unit property.[72] It contends that as legal owner of the common property, only the Body Corporate may sue to recover loss negligently caused to the common property.[73] Thus, the Body Corporate owed AHL a duty to exercise reasonable care when formulating and prosecuting the collective claim, and when imposing levies for litigation costs.[74] AHL pleads the same breaches of duty and losses as with the fiduciary duty cause of action. It claims for damages for its proportionate share of any judgment sum or settlement monies received, and for the levies imposed on it unrelated to its unit or common property.Ultra vires[75] This third cause of action reflects the previous two. AHL claims that the Body Corporate acted outside its statutory powers by refusing to assert a claim for AHL's share in any relief relating to the common property, denying AHL its share of any judgment sum or settlement proceeds, and imposing levies for litigation costs unrelated to AHL's unit or the common property. It seeks declarations that these acts were ultra vires; and damages in line with the previous cause of action.[76] I will now consider each of the arguments made by the Body Corporate for why AHL's claim cannot succeed.AHL wrong that only a body corporate can sue for damage to common property[77] The Body Corporate's first argument is that AHL's claim is based on a flawed premise: that only a Body Corporate can pursue claims against third parties for damage to common property. And that when it pursues claims for damage to common property, it must sue for compensation for all owners in the Body Corporate. Further, when it receives funds pursuant to such a claim, all owners are entitled to the funds.[78] The Body Corporate maintains that that assumption is wrong. It contends that Body Corporate members who are beneficially entitled to common property are entitled to sue in their own name for damage to the common property where they suffereconomic loss as a result. That loss is represented by their share of the levy raised by the Body Corporate to repair the common property. Furthermore, where such a claim is made against a third party and compensation is paid, that compensation belongs to the owners who brought the action.[79] Ms Heatlie explains that this is the kind of claim that was made here. The collective claim was a claim by the 47 unit owners for their economic loss, being their projected contribution to levies that had and would be raised to repair the whole Cayman Apartment complex, both unit and common property. The 47 members each assigned their claims to the Body Corporate, and the Body Corporate prosecuted the individual owners' claims relating to both unit and common property. Ms Heatlie emphasises that the Body Corporate did not make a separate claim in its own name for damage to the common property. Therefore, the Body Corporate had no entitlement to any of the judgment or proceeds of any settlement, for any of the claims made.[80] The Body Corporate relies on the Court of Appeal decision of Jewett Investments Ltd v Body Corporate 204096.43 I will set out this decision in some detail, as it is central to the Body Corporate's case.[81] Jewett concerned the validity of a $4.3 million levy made by a body corporate on the owners of a 72-unit complex in Birkenhead, Auckland. The purpose of the levy was to complete remedial work to the exterior of the complex. The works had already cost at least $17.4 million. One member of the body corporate, Jewett Investments Ltd, which owned two units, and which had accepted the validity of earlier levies, denied liability to pay its share of the final levy. It sought in the High Court a declaration that the resolution authorising the levy, passed at an extraordinary general meeting, at which it was not present and of which it said it had no notice, was unlawful.[82] The body corporate, Jewett contended, could only levy under s 15 of the UTA 1972, to the extent that it needed funds to discharge its duty to repair the common property. Jewett accepted that the defective exterior of the complex was common property that the body corporate was under a duty to repair completely. But by the date the final levy was resolved, the body corporate no longer had any need to levy.43 Jewett Investments Ltd v Body Corporate 204096 [2011] NZCA 232.The body corporate and the majority of owners had just settled a High Court claim against several parties involved in the construction of the complex (including Jewett) to recover the past and anticipated costs of repair. At the date of the levy, the body corporate's solicitors held in their trust account $9.8 million of settlement proceeds.[83] The body corporate opposed the declaration. It said that the remedial work had been and was always to be met by levying all owners. The sum in trust belonged not to it, but to all owners, except Jewett. The loss the owners claimed, primarily comprising the levies they had become liable to meet, had been to meet the cost of remedial work to the common property. The cost, all of which was passed on by levy, eventually came to $11.7 million. On settlement the claimant owners, and with them the body corporate, had compromised a larger claim that included other losses they claimed to have suffered, for $17.7 million.[84] The body corporate contended that, if the sum in trust had been drawn down, and the levy not made, Jewett would have benefitted without any right. A term of the settlement (to which Jewett was a defendant) was that Jewett was not to benefit. Jewett was said to have sold eight units, after leaks became evident, warranting that it was unaware of any impending costs or liabilities. It contributed $425,000 to the settlement.[85] The Court of Appeal, upholding the decision of Ellis J, 44 concluded that whether any non-claimant owners could benefit from the fruits of the litigation held in trust, depended on whether the sum in trust belonged to the body corporate or to the claimant owners. 45 That, it held, depended on the effect of the conduct and distribution agreement the body corporate and unit owners had agreed.[86] The Court carefully examined the conduct and distribution agreement, an agreement remarkably like the Conduct and Litigation Agreement in this case. The recitals recorded that the plaintiffs, albeit both the body corporate and owners, sued44 Jewett Investments Ltd v Body Corporate 204096 HC Auckland CIV-2010-404-4236, 1 December 2010.45 The Court of Appeal does not explicitly consider the statement of claim, but it appears that the body corporate was the first plaintiff and the individual owners were the second plaintiffs. Refer [62]. In the High Court, Ellis J recorded that "Legal action was initiated and funded by the Castle Glade Body Corporate and most of the proprietors of the Castle Glade units."for economic loss suffered by the owners. The litigation was to be managed by a committee of owner parties to the claim, who would have full authority to settle the claim. The body corporate was not represented on the committee. The settlement funds were to be held on behalf of owners, not the body corporate, and credited to owners to set off any repair levies.[87] The Court concluded: 46The settlement sum held in trust by the body corporate's solicitors, $9.8 million, was not an asset of the body corporate. It was the fruit of the claim brought by the claimant owners (all the owners except Jewett) to pursue their economic losses, the levies for remedial work, past and anticipated, the loss of value to their unit as a result of stigma, and consequential costs. It was not a claim that the body corporate brought, or needed to bring, to recover the past and future costs of repair. It was entitled to, and had, passed those costs immediately to the owners by levy. It was only a party to the claim because, to recover their economic losses, the claimant owners had first to establish the costs to the body corporate from which their levies derived.[88] The Court of Appeal also said: 47The most that Jewett can say is that the claim settled was not just to recoup the individual unit liabilities of the claimant owners, it was for the full cost of the remedial work, and would have included the cost of repairs made to the two Jewett apartments reflected in Jewett's own past and future levy liabilities. But that would only have been reflected in the settlement if the claimant owners had recovered the full cost of the remedial work, and it is not suggested that they did so. The full claim was for $17.7 million, and it was compromised for $10.5 million. The portion of the unit liability the claimant owners actually recovered is not in evidence.[89] Fogarty J dissented. The second of three reasons he gave was that "the proceedings being taken by the body corporate were necessarily for the benefit of Jewett as a proprietor, even though Jewett was also a defendant". 48 After considering the statutory framework governing bodies corporate, he stated that: 49it would have been a breach of the above provisions of the Act for the owners' committee or the Body Corporate committee to pass proceeds obtained from a claim for the repair of the common property to a subset of proprietors carrying the cost of the litigation, in derogation of all the registered proprietors who 'be' the Body Corporate.46 At [50].47 At [54].48 At [57].49 At [64].[90] Ms Heatlie submits that Jewett is on all fours with this case and destroys the foundation of AHL's claim against the Body Corporate, which she says is based on an obligation on the Body Corporate to make a claim for compensation for all owners; and an entitlement of all owners to compensation paid.[91] I agree that Jewett has important implications for AHL's claim. But they are more nuanced than those asserted by the Body Corporate.[92] I accept that AHL's statement at [28] of the claim that "only the Body Corporate may sue to recover loss negligently caused to the Common Property" is unsustainable, if AHL means that unit owners cannot claim for the economic loss they suffer as a result of damage to common property. Certainly, a body corporate may bring a claim directly, as owner of the common property and pursuant to its statutory power to sue to recover costs arising out of its statutory responsibility to repair and maintain common property. I was referred to several cases which embody this approach. 50 But it is clear from Jewett that equally, a claim may be brought by individual unit owners for their economic loss in the form of repair levies they have paid or will be required to pay to the body corporate to remediate the common property.[93] However, AHL's claim does not depend on the proposition that only a body corporate can claim against a third party for damage to common property. Returning to AHL's statement of claim, it does not plead that a body corporate has a fiduciary duty or duty of care that compels it to bring a claim for unit owners for damage to common property. Rather, it contends that the Body Corporate owed it fiduciary duties "toact with openness and fairness in relation to the Body Corporate Claim; andnot prefer some unit owners to others whenformulating and prosecuting the Body Corporate Claim; [and] imposing levies for legal and expert costs for the Body Corporate Claim."50 Small v Body Corporate 324525 [2018] NZHC 19; Stent v Body Corporate 324525 [2020] NZHC 3007; Body Corporate 172108 v Gundry [2014] NZHC 954.[94] Similarly, it pleads that the Body Corporate owed it "a duty to exercise reasonable care when: formulating and prosecuting the Body Corporate Claim; [and] imposing levies for the legal and expert costs of the Body Corporate Claim."[95] I do not see Jewett as ruling out that such duties might exist.[96] Next, AHL pleads that the Body Corporate breached those duties, and its statutory duties by:(a) excluding from the collective claim AHL's proportionate share of the estimated repair costs relating to common property;(b) denying AHL its proportionate share of the settlement monies; and(c) levying AHL for litigation costs unrelated to AHL's unit or the common property.[97] I do not consider that Jewett means that AHL cannot succeed at establishing the breach described at [96](a), if indeed the Body Corporate owed it the duties pleaded. Or, that Jewett precludes a claim by AHL for equitable compensation or damages for economic loss it sustained by being excluded from the collective claim.[98] In contrast, AHL's claim that the Body Corporate was in breach of duties it owed AHL by refusing to share with it the settlement proceeds derived from the collective claim, cannot be maintained considering Jewett. The third amended statement of claim (and the Conduct of Litigation Agreement) formulated the collective claim along Jewett lines. Following Jewett, the fruits of the collective claim were owned by the claimant owners, not the Body Corporate, and not any other non-claimant unit owners. The settlement sum was to be distributed according to the Conduct of Litigation Agreement.[99] Finally, there is nothing in Jewett that suggests that AHL's claim with respect to the setting of levies cannot succeed. I return to the levies in the final section of this judgment.[100] Thus, while the claim requires amendment to reflect Jewett, the case is not fatal to AHL's claim or any cause of action.No duty to bring claims regarding common property[101] Next, the Body Corporate submits that there is no established fiduciary duty or duty of care compelling a body corporate to undertake litigation on behalf of a body corporate member who is not a party to the proceeding, or to claim for the cost of repairs to common property for the share a body corporate member who is not a party to the proceeding will be required to contribute.[102] More generally, there is no established duty on a body corporate to prosecute claims in respect of common property in its own name and independently of members. The Body Corporate submits that no duty should be recognised, as it would cut across defences available to defendants (for example, contributory negligence) and provide a windfall benefit to non-party owners.[103] I do not disagree with these submissions, but again, they do not respond to the claim as pleaded by AHL. AHL does not plead that a body corporate has a fiduciary duty, duty of care or statutory duty to pursue claims for its members. It pleads that the Body Corporate owed AHL fiduciary duties to act openly, fairly, and even-handedly when formulating and advancing the collective claim; and with reasonable care.[104] Moreover, AHL frames the Body Corporate's neglect or refusal to claim the full cost of repairing the common property, and to assert a claim for AHL's share of any relief related to the common property, as breaches of those pleaded duties (rather than features of the duty).[105] Thus, the correct question is: could AHL succeed in establishing that the Body Corporate owed it a fiduciary duty to act with openness, fairness and in an even-handed way when formulating and prosecuting the collective claim; or a duty to exercise reasonable care when formulating and prosecuting the claim? To determine that question, I return to the chronology of events.[106] As described, when the collective claim was filed in August 2016, and up until the third amended statement of claim was filed in July 2018, it was formulated as a claim by the Body Corporate for the estimated remediation costs to the complex, with no distinction drawn between unit and common property. The Body Corporate was said to be the entity that had or would suffer these losses, and the Body Corporate brought the claim as legal owner of the common property and pursuant to its statutory responsibility to repair and maintain the common property. Any recovery was expected to be received by the Body Corporate and applied to the remediation costs. The individual unit owners were only named as second plaintiffs to guard against the possibility that the Body Corporate could not claim general damages on their behalf.[107] Thus, the collective claim was not a Jewett-style claim when it was filed, or for the first two years of its existence. It was formulated as a claim brought by the Body Corporate with respect to the common property, consistent with seminal cases such as Sunset Terraces51 and more recent cases to which I was referred such as Small v Body Corporate 324525,52 Stent v Body Corporate 324525, 53 Body Corporate 172108 v Gundry. 54[108] In Sunset Terraces, decided under the Unit Titles Act 1974, the Supreme Court confirmed that a body corporate, which is made up of individual unit owners from time to time, had standing to sue for damage to common property on behalf of unit owners who (under the old legislation) owned the common property as tenants in common. The Court explicitly rejected the submission that the body corporate was unable to sue because it did not itself suffer any economic loss (which was sustained by unit owners in the form of loss in value or repair costs). Furthermore, the fact that some unit owners do not sue in their individual capacity does not affect a body corporate's claim in relation to common property, even as to their undivided share in it. 55 However, a body corporate's ability to recover for damage to common property is subject to the principle that if a defendant has a defence with respect to an individual51 North Shore City Council v Body Corporate 188529 [2010] NZSC 158, [2011] 2 NZLR 289[Sunset Terraces] at [11], [58]–[59].52 Small, above n 50.53 Stent and Small, above n 50.54 Gundry, above n 50.55 Body Corporate No 189855 v North Shore City Council [2008] BCL 800 (HC) [Byron AvenueHigh Court] at [369].owner (such as contributory negligence), the body corporate's claim with respect to the common property must be reduced accordingly. 56[109] More recent decisions have recognised that under the UTA 2010, a body corporate's standing to sue for damage to common property derives from its ownership of the common property. 57 And that it has standing to sue for damage to those parts of a unit title development for which it has responsibility to repair and maintain, including not just common property but also building elements and infrastructure serving more than one unit.58[110] Consistent with this approach, AHL's solicitors made repeated enquiries with the Body Corporate's solicitors, stating AHL's expectation that, as a member of the Body Corporate, and as a unit owner with a beneficial interest in the common property, its share of the anticipated repair cost to common property would be included in the collective claim, and it would receive a share of any settlement proceeds or judgment sum commensurate with its interest. That expectation was not without foundation - the second amended statement of claim sent to Grimshaw & Co in August 2017 formulated the collective claim in this way.[111] Then, in July 2018, the claim was reformulated. From a claim by the Body Corporate for estimated repair costs (and consequential losses and general damages suffered by unit owners), with recovery to be made by the Body Corporate; to a claim by the existing second plaintiff unit owners for their economic loss, being the loss in value of their units, represented by the levies they had and would pay to repair the complex (both unit and common property).[112] This redefinition of the claim took place in the context of clear indications from AHL through its solicitors that it wanted and expected to be part of the collective claim insofar as it related to common property. But it did not consider that it needed to be named as a second plaintiff in order to do so, because it was part of the Body56 Byron Avenue High Court, above n 55, at [67].57 Small, above n 50, at [36] and [38].58 Stent, above n 50, at [137]–[150]. In Wheeldon v Body Corporate 342525 [2016] NZCA 247, (2016) 17 NZCPR 353 at [47], the Court of Appeal held that those responsibilities extend to work on individual units.Corporate. The fact that AHL was being levied by the Body Corporate to pay for the litigation might have contributed this expectation.59[113] That reformulation of the claim was cemented with the Conduct of Litigation Agreement prepared in around November 2018. Consistently, the Body Corporate and second plaintiff unit owners resolved that the fruits of the litigation would be distributed to claimant owners only.[114] Thus, the collective claim went from a claim brought by the Body Corporate, which AHL might have benefitted from as regards its proportionate share of common property, subject to any impairment due to its individual settlement; to a Jewett-style claim by the existing second plaintiff unit owners for their economic losses, excluding AHL.[115] The Body Corporate submits that it was justified in taking the stance it did because, per Byron Avenue, a body corporate's ability to recover for damage to common property is predicated on the ability of individual unit owners to recover costs in their own right. The implication is that because AHL's right to sue was extinguished by its individual settlement, the Body Corporate's ability to sue for AHL's share of the common property was similarly extinguished. But there is no evidence that AHL ever told the Body Corporate that it could not participate in the collective claim with respect to its proportionate share of common property because of its earlier settlement, or that the Body Corporate could not claim for its share. It is reasonably obvious from Grimshaw & Co's correspondence that AHL did not consider that its individual settlement precluded the Body Corporate from claiming its share of repair costs relating to common property, or AHL benefitting from the claim as a member of the Body Corporate. 60[116] In my view, these events illustrate that there could be a case for recognising that a body corporate has a duty to its members to exercise reasonable care when formulating and prosecuting a claim relating to common property, when all members59 December 2016 – levy of $500,000 to pay for legal and consultancy advice; May 2017 – levy of $3.3 million to pay for legal and expert expenses.60 See also the discussion at [156].have a beneficial interest in the common property. There are alternative ways that claims of this kind can be framed and pursued, and the decisions and actions of a body corporate will determine whether and to what extent an individual member benefits from the litigation.[117] Indeed, in Gundry, also a summary judgment decision, Andrews J accepted that it was arguable that a body corporate owed the defendants in that case a duty of care to inform them that it intended to issue proceedings, and to invite the defendants to join in the proceedings. Her Honour said: 61The plaintiff is in a proximate relationship with its members, and a reasonable person would foresee that members might suffer harm if not informed of the pending litigation and their right to join it.[118] Ms Heatlie sought to distinguish Gundry on the basis that the kind of fiduciary duty referred to in Gundry arises where a body corporate does not pay out a share to which an individual is entitled under s 131. I reject that submission. The comments of Andrews J related to the body corporate's actions when initiating the litigation, not when distributing the fruits of that litigation.[119] Similarly, in my view the sequence of events in this case illustrates that there could be a case for recognising that a body corporate owes a fiduciary duty to its members to be open, fair and even-handed towards them when pursuing a claim relating to the common property.[120] The notion of a body corporate owing a fiduciary duty to its members has received some judicial recognition. In Jewett, the Court of Appeal said: 62The Body Corporate, it goes without saying, had to be even-handed. It could not prefer some owners to others, unless that was what the Act or the Rules called for. In that sense the Body Corporate was under a fiduciary duty. What that called for was to be assessed against the rights given, the duties imposed, and the prescribed processes by which decisions are to be taken.61 Gundry, above n 52, at [48].62 Jewett, above n 45, at [15]. Applied in Landmark Property Holdings Ltd v Shen Empire Ltd [2020] NZHC 893 at [8] and [15].[121] The Body Corporate made several further submissions against the imposition of a fiduciary duty or duty of care. These included that a body corporate cannot be obliged to bring a claim on behalf of members where an owner does not wish to be part of the claim or there are other impediments to pursuing a claim on their behalf. And that there is no need to impose such a duty as owners have the ability and legal standing to prosecute their own claims or apply to be joined to a claim. These objections are directed at the notion of a body corporate having a fiduciary duty or duty of care compelling it to undertake litigation for members. As discussed, I think that mischaracterises the nature of the duties pleaded by AHL.[122] The Body Corporate also referred to Small v Body Corporate 324525, where Associate Judge Bell rejected the minority owners' claim that they were entitled to settlement funds received by the body corporate on the basis that the body corporate was their trustee or agent. The Judge said that a body corporate's conduct of litigation was ultimately under the control of all unit owners and there is no need or ground for a body corporate to be accountable to unit owners under trust law. In my view that comment needs to be seen in its context: responding to the suggestion that a body corporate received settlement funds as a trustee or agent for unit owners, including the minority. It was not a finding that a body corporate does not owe fiduciary duties to its members when formulating or prosecuting claims relating to common property.[123] As the Supreme Court emphasised in Westpac, a summary hearing is no place to develop new areas of law, such as whether fiduciary duties or common law duties of care are owed by a body corporate to members. However, nor should the development of such areas be suppressed at the summary stage, especially where there is some precedent for the duties contended. I consider that the question of whether a body corporate owes a fiduciary duty (and/ or a duty of care) towards its members when formulating and pursuing a claim regarding common property requires the full examination and context that a full trial will provide.[124] I have not yet addressed the statutory duty pleaded in the ultra vires cause of action. The ultra vires cause of action is undeniably poorly pleaded. At [34] of the statement of claim AHL says that "the body corporate never had the duty, power orright to refuse to assert a claim for Affordable's Proportionate Share [or] deny Affordable its Proportionate Share [or] impose levies on Affordable"[125] I have already accepted that, based on Jewett, AHL does not have a credible claim to any share of the settlement sum received by the second plaintiffs in the collective claim. It follows that AHL's claim that the Body Corporate's refusal to share the sum with AHL is ultra vires, cannot succeed. I address the legality of the levies later in this judgment. That leaves the assertion of the absence of a statutory duty, power or right entitling the Body Corporate to refuse to make a claim for AHL.[126] A body corporate's power to sue is derived from s 77 of the UTA 2010, which provides that a body corporate may do anything that a natural person of full age and capacity can do. Section 78 limits that power, stating that a body corporate may do any act under s 77 only for the purpose of performing its duties or exercising its powers. Finally, a body corporate's powers and duties are set out in s 84 and include duties under s 138(1) to repair and maintain common property, assets connected to common property, and building elements and infrastructure relating to and serving more than one unit.[127] So, a body corporate has a duty to repair and maintain common property; and the power to sue third parties in its own name, which may include taking action to recover the cost of repairing damage to common property. However, there is no explicit statutory duty requiring a body corporate to sue third parties responsible for damage to common property. Against that backdrop, I am unable to discern from AHL's pleading its basis for claiming that a body corporate acts outside its statutory powers if it decides not to bring proceedings to recover for damage to common property.[128] However, bearing in mind the clumsy pleading, the fact that I received very little in the way of submission on this point, and my conclusion that the other part of the cause of action has some merit (concerning levies), I will not strike out this part of the cause of action. Instead, I direct AHL to reconsider and replead the ultra vires cause of action.AHL has not suffered any loss[129] Next, the Body Corporate submits that AHL's claim must fail because AHL has not suffered any loss. It makes three points.No intention to remediate[130] First, that AHL will not be levied for its share of the cost of repairing the common property in the complex. That is because the Body Corporate no longer intends to remediate the complex, beyond essential repairs.[131] Mr Clark, chairman of the Body Corporate, has deposed that the Body Corporate now has no plans to fully remediate the complex. He states that it would be foolhardy to do so, as owners would need to come up with collectively around $24 million more than was received on settlement. The only work the Body Corporate envisages doing, to meet its ordinary repair and maintenance obligations, will cost $1,145,000, an average of $24,000 per unit.[132] I find that this submission does not respond to the relief claimed by AHL. AHL claims equitable compensation or damages for its proportionate share in any judgment sum or settlement monies relating to the common property; and for the levies it has paid for the collective claim unrelated to its unit or the common property. The fact that AHL will not be levied for remediation costs has no bearing on its claim to this relief.AHL already compensated for common property[133] Second, the Body Corporate asserts that AHL has already been compensated for the loss in value of its unit and its proportionate share of the common property, through its individual settlement.[134] To assess whether that is correct, it is necessary to consider closely the basis for AHL's individual claim and settlement. Further, because AHL's complaint is with the Body Corporate's refusal to pursue a claim for its proportionate share of the common property, it is necessary to consider what AHL would have recovered had the Body Corporate made such a claim.[135] AHL sued the Council, the developer Hamilton Street Investments Ltd (in liq) and the construction company that built the apartments, XMP&D Ltd (in liq). The Council joined Avery Team Architects Ltd, Mr Beatson (who manufactured, supplied and installed the wall system) and Mr King (site manager during construction) to the claim as third parties. The Council also brought cross-claims against the companies in liquidation and claims in the liquidations.[136] In AHL's first amended statement of claim, dated 11 March 2016, it claimed that its unit was constructed with defects. The claim identifies defects with the walls and balcony, and the tiling on the unit's deck. 63 AHL claimed that as a result of those defects, the unit had suffered moisture ingress and damage, requiring remedial work. 64The scope of repair work relates to the walls, balcony and deck tiling.[137] Steven Ford, building surveyor, investigated the defects and filed a brief of evidence in support of AHL's claim. He describes the main defects "affecting the Unit":(a) lack of relief or control joints to fibre cement walls;(b) lack of flashings to junctions in cladding;(c) cap flashing to parapets installed without sufficient cover;(d) several defects in the deck.[138] Mr Ford sets out the repairs he considered necessary to address the defects. A tiling specialist, Brent Worthington provided a detailed scope of works for the tiling repairs. Heidi Van Eeden, quantity surveyor, estimated the cost of repairs to the unit to be $327,781. This was comprised of:(a) preliminary and general $28,300;(b) scaffolding and covers $37,654;(c) cladding remediation $56,787;(d) steel remediation $3,567;(e) deck remediation $54,723;63 At sch 2.64 At sch 3.(f) roof $3,300;(g) sundry external works $11,200;(h) contingency, consent fees, design and project administration$89,496.(i) GST $42,754[139] AHL claimed for its loss on two different bases: the cost of repair work, estimated to be $328,403, and consequential losses; or loss in value of $440,000, being the difference in the value of the unit if it had been built without the defects and its current market value, with the defects.[140] In support of the claimed loss in value, AHL provided a brief of evidence from Roger Hills, registered valuer. Mr Hills took a three-step approach to assessing the loss in value attributable to the defects. He assessed the market value of the property as at June 2008 (when AHL bought it) if it had been built without the defects, at $1,516,000. Next, he deducted the likely cost of remediation in June 2008. As Ms Van Eeden's evidence was that the repairs would cost about $327,781 at current prices, he adopted a repair cost of $300,000 to reflect the fact that the repairs would have cost less in 2008. Finally, he deducted an allowance for "profit and risk" of $151,600, being 10 per cent of the value of the property assuming it had no defects. Thus, he assessed the market value of the unit at June 2008 with the defects as $1,064,000.[141] In Mr Naismith's brief of evidence, he deposed that AHL purchased the unit on 4 June 2008 at a price of $1.5 million. From that, he deduced that the unit's value had been reduced by $436,000 on account of the unit defects.[142] Mr Naismith further stated that, aside from the defects within the unit, he also had to contend with several issues with "the rest of the complex" that had remained unresolved since the complex was built. These included water flooding some of the residents' basement lockups; water coming through basement ceilings; flooding of podium areas on the ground floor due to the stormwater system failing; and tiles on allbalconies leeching and staining balcony faces. 65 It is clear that these issues fell outside the scope of AHL's claim. He stated that he intended to sell the unit after the litigation was resolved.[143] On 27 June 2016, AHL settled its litigation for $440,000: $230,000 from the Council; $85,000 from Avery Team Architects Ltd; and $125,000 from Mr Beatson.66AHL agreed to withdraw its claims in the liquidations, leaving the Council to continue to pursue its cross-claims against those companies in liquidation and its claims in the liquidations. The Settlement Agreement describes the settlement as relating to the plaintiff's allegation that the property, being Unit 5B4, was built with design and construction defects and its claim against the council for compensation. There is no reference in the agreement to common property, or AHL's proportionate share of the common property of the apartment complex.[144] The agreement records that the Council and third parties made the payments in full and final settlement of the claim. However, cl 5 has been struck out and initialled by all parties:The plaintiff agrees it will not make any claim in the future relating to, or in any way arising directly out of the claim.[145] Based on this evidence, it is not clear to me that AHL was compensated for loss in value attributable to defects and damage beyond its own unit, through its individual settlement. Critically, it is not clear that AHL was compensated for loss in value attributable to defects and damage beyond its own unit in the way it would have been had it been included in the collective claim. I will set out my reasons.[146] The scope of AHL's individual claim was narrowly focused on defects and damage to AHL's unit and its deck. The most substantial part of the estimated repair cost related to cladding remediation ($56,000) and the deck ($54,000). There was only $3,000 allowed for steel remediation and $3,000 for the roof, suggesting minor repair works. It is not clear if any of this estimated repair cost covered defects or damage beyond what would be considered AHL's unit property.65 At [14].66 Settlement Agreement, payment schedule.[147] In contrast, the collective claim obviously concerned defects and damage beyond individual units. The defects, not categorised as relating to unit or common property, attached to the roof, walls, balustrades, balconies, joinery, podiums, basement, carpark ramp, stormwater drainage, fire safety, structure, internal features and the design.[148] The scope of repairs, again for the whole complex without differentiation between unit or common property, and with a final project budget of $73,876,822, included:(a) reconstruction of the basement;(b) demolition and reconstruction of the roofs;(c) demolition and reconstruction of external joinery and external cladding;(d) demolition and reconstruction of the structure of all levels above the basement;(e) demolition and reconstruction of the podium and entrance walkways;(f) reconstruction of the apartments and decks;(g) demolition and reconstruction of the stormwater system;(h) installation of a new fire safety system;(i) painting and finishing.[149] The contrast between the scope of the two claims is stark.[150] Relatedly, the parties to AHL's litigation were a subset of those involved in the collective claim. There were seven additional defendants in the collective claim, including the head contractor company and two of its directors, the company that installed the stormwater system, the engineering company that completed the design work, the site manager and the former director of the development company. 67[151] Ultimately, AHL settled based diminution in value, not repair costs. But its valuation expert calculated its diminution in value with reference to the repair67 With 10 defendants ultimately reaching a settlement.estimate. So, the narrow scope of the repair estimate was carried through to the valuation, and AHL's eventual recovery.[152] Furthermore, I reject the Body Corporate's submission that Mr Hills' reference to "common areas" in his valuation report 68 establishes that his valuation encompassed loss in value attributable to AHL's share of common property. Mr Hills referred to the "common areas" of the basement car park, security doors, letterboxes and lift in the context of describing the unit improvements and its associated amenities. There is no evidence to suggest that his valuation took into account damage or loss in value to these areas.[153] Thus, it is not clear that the estimated diminution in value of $440,000, and AHL's recovery of $436,000, reflected diminution in value of AHL's share of the common property of the apartment complex. The dramatic difference between the loss in value assessed by AHL's expert of $440,000, and the loss in value attributed to AHL's unit and proportionate share of the common property in the collective claim of $2,869,579.6, even allowing for the different dates, suggests that it did not.[154] Of course, the plaintiffs in the collective claim ultimately settled on a different basis, after the Council took the position that it was impractical and uneconomical to remediate the complex. The Council valuers concluded that the appropriate measure of each unit owner's loss was the current loss in value of each owner's unit, calculated to be the difference between the residual value of the vacant land and the total aggregate current value of the apartment complex (excluding AHL's apartment) in an unaffected state. It is plain from this methodology that unit owners were compensated for loss in value to their units and the complex beyond their unit.[155] Finally, it is not clear that AHL was prevented from participating in the collective claim because of its settlement with the Council, Avery Architects and Mr Beatson. The deletion of the clause in the agreement by which AHL agreed not to make any future claims is curious. Was this an acknowledgement that AHL would have, as part of the Body Corporate, a claim against those and other parties in relation68 At [33].to defects and damage beyond its own unit? AHL's evidence is silent on the point. This is an issue that needs to be explored at trial.[156] Therefore, I am not persuaded that AHL's claim to have sustained loss by not being part of the collective claim has no chance of success, because it was already compensated for any loss in value of its proportionate share of the common property through its individual settlement.AHL has been reimbursed all litigation costs[157] The third limb to the Body Corporate's submission is that AHL has been reimbursed for all legal and expert costs relating to the collective claim. It is not necessary for me to decide this point, because I have concluded that AHL has an arguable claim to equitable compensation or damages arising out of the way the Body Corporate formulated and prosecuted the collective claim. However, in recognition of the submissions of counsel, I will comment on the arguments made.[158] It is not disputed by the Body Corporate that all unit owners were levied equally for the extraordinary levies, including AHL. Mr Shea deposes that it was not until the Conduct of Litigation Agreement was executed in around November 2018 that the Body Corporate stopped raising funds for the litigation from all owners by way of extraordinary levy. Mr Naismith has annexed to his affidavit 13 invoices AHL received for instalments of the "Extraordinary Building Consultancy Levy", between 14 December 2016 and 28 January 2020, for a total of $181,851.46.[159] However, Mr Shea deposes that after Rainey Law's concession in its letter of 15 April 2019 that AHL should not contribute to the cost of the litigation, but should remain liable for other costs, Rainey Law investigated all the invoices rendered to the Body Corporate and paid out of the remediation funds. The result, Mr Shea says, is that $2,694,374.17 was properly incurred by the Body Corporate in the investigation and design of the complex, and the remainder raised by way of extraordinary levies related to legal and expert expenses incurred in prosecuting the claim. Mr Shea has annexed to his affidavit a schedule said to have been created by Rainey Law that identifies each invoice, its date, a description of the service, the amount, and identifies whether it was related to the litigation or not.[160] Mr Shea concludes that as AHL's utility interest is 3.774 per cent, its share of the costs unrelated to the litigation, that it should rightly pay, is $101,685.64. He states that because AHL stopped paying the extraordinary levies some time ago, the Body Corporate has only received $81,613.44 from AHL for extraordinary levies. As a result, Mr Shea contends that AHL in fact owes the Body Corporate $20,072.20 in extraordinary levies unrelated to the litigation.[161] To this, Mr Hough submits that AHL has been unable to verify this reconciliation because it has not seen the underlying records. It would therefore be premature to summarily dismiss AHL's claim based on this reconciliation. Mr Hough refers to the Court of Appeal's comments in Westpac as to the limitations of the summary procedure. 69[162] It does appear from the Body Corporate's reconciliation that because AHL stopped paying the extraordinary levies, it has not paid costs associated with the collective claim. However, I accept Mr Hough's submission that it would be wrong to reach that conclusion in this summary context, without AHL having access to the underlying records and the opportunity to test the analysis. I am mindful that AHL has an outstanding request for discovery of the underlying records that it wanted heard before the Body Corporate's application for summary judgment. The Body Corporate argued that the summary judgment should be determined first. I am also conscious of the Court of Appeal's warning in Westpac, that it is not appropriate to "permit a defendant, perhaps more in possession of the facts than the plaintiff to force on the plaintiff's case prematurely before completion of discovery or other interlocutory steps and before the plaintiff's evidence can be reasonably assembled." 70The Body Corporate did not cause AHL's loss[163] Alternatively, the Body Corporate submits that if AHL suffered loss, it caused the loss itself. The Body Corporate advanced two arguments here.69 Quoted above at [13].70 Above n 9.[164] First, Ms Heatlie contends that AHL elected not to participate in the collective claim. On one level that is correct. Initially AHL executed the deed of assignment along with other unit owners and sent it to Whitfield Braun. 71 However, subsequently it appears to have been advised that it could not assign its claim to the Body Corporate and it withdrew the assignment.[165] However, through the correspondence over the following two years it was clear that AHL wanted to participate in the collective claim as it related to common property, and in fact considered that it already was part of that claim by its membership of the Body Corporate. Thus, I do not think it can be said that AHL elected not to be part of the collective claim. At most, it elected not to take part as an individual plaintiff. But it did not elect to not be part of the claim as a member of the Body Corporate.[166] Ms Heatlie submitted that Rainey Law's letter of 21 November 2017 made the basis upon which the claim was to be reformulated and pursued clear to AHL. Had AHL changed its mind at that point in time, it could have joined the claim as a second plaintiff. Apparently, the Code Compliance Certificate in relation to the building work in issue was issued in May 2008, which meant that AHL could have joined the claim up until 27 May 2018, within the 10 year limitation period under the Building Act 2004. AHL elected not to join as a second plaintiff, and that, the Body Corporate submits, caused its loss.[167] I do not agree that it is that clear-cut. In the November 2017 letter, Rainey Law refers on two occasions to the Body Corporate bringing the claim: The Body Corporate has resolved to bring proceedings to recover the anticipated costs of repairs to the units and common property in the Body Corporate.The Body Corporate and owners who are parties to that litigation are suing for their share of the costs of any remedial work required to rectify defects and damage to the units and common areas71 Deed dated 18 August 2016.[168] Admittedly, elsewhere the letter stated that AHL would not benefit from any recovery made in the litigation, but that statement is somewhat at odds with the statement of claim as it then stood, and the letter extracts highlighted. The statement of claim was not amended until July 2018. The Conduct of Litigation Agreement was not prepared until November 2018. By then, it was too late for AHL to join as a second plaintiff, had it wanted to.[169] Second, the Body Corporate submits that quite apart from choosing not to join the collective claim, AHL had the opportunity to avoid further risk or loss by selling its unit after settlement as it said it planned to do. Ms Heatlie says that AHL's intention to sell its unit post-settlement "evidently influenced the characterisation of the loss" for which it was compensated in settlement.[170] This submission must be directed at AHL's claim for equitable compensation/damages for the levies it paid for legal and expert costs associated with the collective claim. While not entirely clear, perhaps the argument is that, if AHL had sold its unit between July and December 2016 (post-settlement, but before the 9 December 2016 decision to raise levies) then it would not have been levied for these costs.[171] I accept that AHL would have avoided the levies at issue had it sold its unit before 2016. But it does not follow that AHL "caused" this loss by not selling. In any case, this is only one head of the loss it claims to have sustained, the more significant loss being that which it claims to have sustained by not being included in the collective claim.The Body Corporate acted within its powers by raising levies[172] This argument responds to the part of AHL's ultra vires cause of action concerning the Body Corporate's levying of AHL for legal and expert costs associated with the collective claim.[173] The Body Corporate submits that this part of AHL's claim cannot succeed, because the Body Corporate was acting within its statutory powers (and furthermore was not in breach of any fiduciary duty or duty of care) when it set these levies. TheBody Corporate says that bodies corporate are entitled to raise funds by levying owners for any costs incurred when exercising their powers under the UTA 2010. That includes raising funds to prosecute claims even if not all owners would benefit from such claims. The UTA 2010 anticipates this situation and provides a mechanism that allows the body corporate to recoup costs from those owners who have substantially benefited from work done.72[174] I accept that submission. Section 118 of the UTA 2010 states that a body corporate may establish and maintain one or more contingency funds for unbudgeted expenditure. A body corporate is authorised to raise levies under s 121 on all unit owners for contributions to its contingency fund. Levies must be calculated in proportion to each unit owner's utility interest. The Act does not permit a body corporate to levy some and not all unit owners. Any inequities can be cured by the power under s 126 to recoup costs from owners who have substantially benefited from work done or any act.[175] The Body Corporate has sought to address the inequity of AHL being levied for the costs of the collective claim utilising s 126. It says that it correctly recognised that AHL would not benefit from the litigation and rectified the position by recouping the costs AHL paid from only those owners who were a party to the collective claim. Whether AHL has in fact paid any of the collective claim costs following this exercise is a question of fact to be resolved at trial. The issue here is whether the Body Corporate acted lawfully when it set the levies in the first place.[176] A Body Corporate is empowered to take legal action by its general power to do anything a natural person can do. 73 However, it may only exercise its powers for the purpose of performing its duties or exercising its powers.74 It powers and duties include its duty to repair and maintain common property, assets designed for use in connection with common property, infrastructure and building elements relating to or serving more than one unit.75 Thus, when a body corporate takes legal action pursuant to its statutory power, and its duty to repair and maintain common property, associated72 Unit Titles Act 2010, s 126.73 Unit Titles Act 2010, s 77.74 Unit Titles Act 2010, s 78.75 Unit Titles Act 2010, ss 84(1)(p) and 138(1).assets and infrastructure and building elements relating to more than one unit, there can be no doubt that it is entitled to raise funds to cover its costs under s 121.[177] The wrinkle that arises in this case is that, according to the Body Corporate, it did not prosecute the collective claim in its own right. It maintains that the collective claim was a claim brought by the individual unit owners for their economic losses. The Body Corporate, at least from the point in time that the collective claim was reformulated, appears to have prosecuted the individual unit owners' claims relating to both unit and common property under assignment. It follows that the Body Corporate was not entitled to and did not receive any of the proceeds of the litigation, as reflected in the Conduct of Litigation Agreement.[178] I consider that this feature of the case raises a question that requires full consideration at trial. That is: was the Body Corporate exercising statutory powers when it prosecuted the collective claim such that it was lawful for it to raise levies to fund the litigation costs?Result[179] I am not satisfied that AHL's claim has no chance of success. Accordingly, I dismiss the Body Corporate's application for strike-out or summary judgment of the statement of claim.[180] Further, I am not satisfied that any of the causes of action have no prospect of success in their entirety. However, there are parts of each cause of action that are, as presently pleaded, unsustainable. AHL is directed to reconsider these parts and either remove or replead them. They are:(a) The claim that only a body corporate can bring legal action for damage to common property.(b) The claim (in all three causes of action) that the Body Corporate was in breach of a fiduciary duty, duty of care and acted ultra vires by refusing AHL a share of the settlement monies.(c) The claim in the ultra vires cause of action that "the body corporate never had the duty, power or right to refuse to assert a claim for Affordable Proportionate Share"[181] I invite submissions of not more than five pages on costs. AHL is to make any submission within 15 working days and the Body Corporate within 15 working days after that._____________________Associate Judge Gardiner