BODY CORPORATE 68792 v SYNERGY ENTERPRISES LTD & ORS [2015] NZHC 1159

BODY CORPORATE 68792 v SYNERGY ENTERPRISES LTD & ORS [2015] NZHC 1159 [27 May 2015]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV 2015-485-202[2015] NZHC 1159IN THE MATTER of section 141 of the Unit Titles Act 2010IN THE MATTER of an originating application to appoint anadministratorBETWEEN BODY CORPORATE 68792First ApplicantAND SYNERGY ENTERPRISES LIMITED,JAMES AND CAROLINE MCKERNAN,STEVEN AND VALDA SCHECKTERAND GEOFFREY ARDENSecond ApplicantsAND HARRY MEMELINK AND IANTREVOR NEILL HAMILTONFirst RespondentsAND ANTHONY HARRY DE VRIES ANDGERALDINE DE VRIESSecond RespondentsAND CUDBY & MEADE LIMITEDThird RespondentHearing: 27 May 2015Counsel: J K Mahuta-Coyle for ApplicantsH Memelink in PersonA H de Vries in PersonJudgment: 27 May 2015JUDGMENT (NO 3) OF BROWN J[1] This proceeding was called this morning in accordance with the direction in para [6] of my Judgment of 20 April 2015.1 The hearing ran until shortly after midday.[2] In advance of the hearing the interim administrator filed a second report dated 26 May 2015 which addressed a variety of matters including the outcome of the meeting of stakeholders referred to in para [4] of my Judgment of 28 April 2015.[3] In brief, the interim administrator proposed as a possible way forward that the Court make the following directions:51.1 That an independent chartered accountant be appointed to verify outstanding levies, taking into account the credibility or otherwise of the invoices raised by [Mr de Vries] and [Mr Memelink]. The independent chartered accountant should not be the existing BodyCorporate's accountants.51.2 That the Body Corporate look to accept the suggestion that NZTA pay $60,000 toward the disbursements incurred by the owners, noting that one or two owners still are to separately finalise their compensation packages.51.3 That $50,000 from the existing operational account of the Body Corporate with the ANZ bank be split up into a separate maintenance fund account.51.4 That negotiations continue with [Mr Memelink] concerning any settlement proposals concerning the unpaid levies for Unit 14 regarding his company Cudby & Meade Limited and also through his Link Trust.51.5 That negotiations continue with [Mr de Vries] regarding any revised settlement proposals concerning his unpaid levies.51.6 That [Mr de Vries] be instructed to allow the Body Corporate to proceed with remedying the defects concerning his gutter, by employing Wellington Building Services in accordance with their quote dated 13 May 2015. There is also the need to obtain a report on what best repairs are separately required to the roof area of Unit 14.251.7 That suggestions of winding up the Body Corporate or selling the entire Body Corporate development as a development site be pursued with all the owners.1 Body Corporate 68792 v Synergy Enterprises Ltd [2015] NZHC 854.2 It appears that the correct reference should be to Unit 15.[4] As reflected in their memorandum dated 26 May 2015 the applicants sought a continuation of Mr Greenwood's appointment for a further fortnight during which itwas hoped that resolution might be achieved on some aspects of difference. They indicated that if the matter was not capable of resolution, then at the next call of the matter they would seek a hearing for the permanent appointment of the administrator.[5] Mr Memelink spoke briefly on a number of matters and advised that he hadno objection to a fortnight's adjournment. He indicated that he did not see any downside to directions in the nature of that sought in paras 51.1 to 51.5 and 51.7 inthe interim administrator's second report.[6] Prior to the hearing Mr de Vries had filed:(a) an undated second memorandum filed on 26 May 2015;(b) a third memorandum dated 26 May 2015; and(c) a lengthy document (32 pages) dated 25 May 2015 which wasdescribed as "Report by Interim Administrator and responded by Anthony de Vries";At the hearing this morning Mr de Vries handed up a further document (18 pages)described as "2nd Report by Interim Administrator and response to this report by Anthony de Vries".[7] It is apparent from Mr de Vries' response to the interim administrator's first report that Mr de Vries continues to be preoccupied with the legality of various past meetings of the Body Corporate. This is clearly demonstrated in his response which commenced with a list of 36 questions apparently directed to the interim administrator, several of which focussed on the validity of the October 2014 EGM, the 4 December 2014 EGM and the 5 March 2015 EGM.[8] The flavour of Mr de Vries' response to the first report is reflected in the first three paragraphs in the summary on the penultimate page of that response which state:Hence my request to the Court is that the interim Administrator be dismissed, the only course of action is for the Judge As I see it, is to reconvene the October 2014 EGM with the same voting rights at that particular time.Please note a new EGM and or AGM due on or before the 1st July 2015 cannot be held because the BC is in limbo re the pending Court cases and appeal re levies, unless the levies be brought back to pre Dec 2011.The only way to stop the impending Court cases is to dismiss Mr Dewar as BC representative, work out a settlement with Anthony and Harry and then resolve the October 2014 EGM.[9] The same theme was evident in his third memorandum in which he claimedto have "suffered for over 7 years with the unethical rule of the minority group" andsaid:Hence I would plead with your Honour to rule re the illegal actions of the illegal BCM and disband the application of appointment of administrator, award costs to those that have suffered most.[10] In the course of today's hearing I explained to Mr Memelink and Mr de Vries that if they wish to challenge the validity of past meetings of the Body Corporate or the legality of steps taken at such meetings, it will be necessary for them to bring a proceeding in the High Court setting out the allegations they make and seeking appropriate relief. It is not appropriate to attempt to ventilate such issues by way of an objection to the appointment of an administrator under s 141 of the Unit Titles Act 2010, unless and until the form of that proceeding develops in the manner foreshadowed in para [9](c) of my Judgment of 28 April 2015.[11] As I remarked at the hearing it is also inappropriate to purport to require the interim administrator to provide answers to all such questions which involve issues of law and can only be authoritively resolved by a Court.[12] I heard from Mr de Vries at some length on several matters including:(a) the issue of the 2011 reassessment of ownership interests and the extent to which that matter is engaged by Mr de Vries' appeal to this Court in CIV 2015-485-295 which is due to be heard on 26 June 2015;(b) the issue concerning the deficiencies in the roof of Unit 15 (in part the subject of proposed direction 51.6);(c) the extent of the obligations of NZTA (addressed in proposed direction 51.2);(d) the question of unauthorised payments;(e) the issue concerning the terms of engagement of Mr Dewar on behalf of the Body Corporate.[13] In the event Mr de Vries also agreed to the adjournment of the proceeding for a further fortnight.Directions[14] The proceeding is adjourned to 10.00 am on Friday, 12 June 2015. Absent resolution having been achieved, at that point it is very likely that a direction will be made to the effect of that in item 51.1 above.[15] I make directions in terms of items 51.3, 51.4, 51.5 and 51.7 above.[16] So far as proposed direction 51.6 is concerned, Mr de Vries indicated that hewould not resist that direction if the Body Corporate's funds were being used to meetthe cost although he would have preferred to engage his own roofer. On my reading of the second report the interim administrator was proposing that the Body Corporate should meet the cost of the roof drainage works, the subject of Appendix 5 to the report.[17] However Mr de Vries indicated that it was his understanding that the interim administrator contemplated recovering that cost from Mr de Vries. Having taken instructions in the course of the hearing, Mr Mahuta-Coyle confirmed that the interim administrator wished to treat that cost as an item to be resolved in the final resolution of the matter. In those circumstances and in view of Mr de Vries'objection, I do not make the proposed direction 51.6.[18] Similarly I defer consideration of proposed direction 51.2 until the hearing on 12 June 2015 for the reason that I wish to obtain clarity on the issue of whether an acceptance of the current NZTA proposal could impact on the ability of owners to pursue NZTA in their separate compensation arrangements. Mr Memelink and Mr de Vries agreed to provide a memorandum within five working days which records the detail of the claims available against NZTA to which they referred in the course of the hearing today.[19] The appointment of the interim administrator is extended pending the further direction of the Court. The interim adminstrator's second report concluded by noting the fee which he proposes to render. For the avoidance of doubt I consider that it is appropriate for the interim administrator to be rendering fees on the basis outlined in the report.____________________Brown J