BODY CORPORATE 392619 v YEE GOOD FORTUNE INVESTMENTS LIMITED [2018] NZHC 214_x000b_

BODY CORPORATE 392619 v YEE GOOD FORTUNE INVESTMENTS LIMITED [2018] NZHC 214[21 February 2018]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-Ā-TARA ROHECIV-2016-485-823[2018] NZHC 214UNDER Section 289 of the Companies Act 1993IN THE MATTER of an application for putting a companyinto liquidationBETWEEN BODY CORPORATE 392619PlaintiffAND YEE GOOD FORTUNE INVESTMENTSLIMITEDDefendantHearing: 31 July 2017Counsel: J A Dean for the plaintiffN B Dunning for the defendantD H Hunt for Body Corporate 81340, a supporting creditorJudgment: 21 February 2018JUDGMENT OF ASSOCIATE JUDGE SMITHTABLE OF CONTENTSBackground ........................................................................................................................................... 3Yee's amended statement of defence ................................................................................................... 6The issues .............................................................................................................................................. 7The documents relied upon by the Body Corporate.......................................................................... 8The judgment of Gordon J on Yee's appeal ..................................................................................... 13The parties' submissions .................................................................................................................... 15The Body Corporate ........................................................................................................................ 15Yee ................................................................................................................................................... 17Discussion and conclusions ................................................................................................................ 19The laws relating to liquidation claims and stay applications ........................................................ 19Relevant sections of the UTA dealing with decision making, including delegation to a bodycorporate committee ........................................................................................................................ 21UTA provisions relating to the establishment of bank accounts ...................................................... 22UTA provisions relating to the raising and recovery of levies ......................................................... 24Section 138 of the UTA – the Body Corporate's duty to repair and maintain.................................. 25The application of the law in this case ............................................................................................ 26Result ................................................................................................................................................... 32[1] Body Corporate 392619 (the Body Corporate) applies for an order putting thedefendant, Yee Good Fortune Investments Limited (Yee), into liquidation. Yee appliesfor an order permanently staying the liquidation proceeding.Background[2] The background of the dispute is substantially set out in two judgments of theCourt. First, I gave an oral judgment in this proceeding on 15 December 20161 on anapplication by Yee for an order summarily dismissing the liquidation claim, or in thealternative restraining publication of the advertising which is required by r 31.9 of theHigh Court Rules, and staying further proceedings in relation to the liquidation. Thesecond judgment is a judgment given by Gordon J on 12 April 2017,2 in a separateproceeding between the parties.[3] The Body Corporate's liquidation claim is based on Yee's failure to complywith a statutory demand served on it on 24 August 2016 (the demand). In the demand,the Body Corporate demanded payment of the sum of $25,497.01, which wassubstantially comprised of five unpaid instalments of special building levies raised bythe Body Corporate in respect of a unit owned by Yee in a Unit Title development onAuckland's Te Atatu Peninsula known as the Bella Vista Apartments. The demandalso sought interest on the unpaid levies at 10 per cent per annum. The levies, raisedfor the purpose of carrying out substantial repair work on the apartments, were to bepaid as follows:(a) $2,235.60 on 10 February 2013;(b) $2,235.60, on 10 May 2013;(c) $3,079.64 on 20 October 2014;1 Body Corporate 392619 v Yee Good Fortune Investments Ltd [2016] NZHC 3091.2 Yee Good Fortune Investments Ltd v Body Corporate 392619 [2017] NZHC 723.(d) $3,079.64 on 13 November 2015; and(e) $3,079.64, on 18 December 2015.[4] I will refer in this judgment to the first two of these unpaid instalments as "the2013 levies", and the last three of them as the "2014 and 2015 levies".[5] In addition to the special levies and the interest accrued on them, theBody Corporate claimed various other costs in the demand, and an adjustment of$441.60 to reflect a new utility interest said to have been adopted by theBody Corporate at its AGM on 27 August 2014.[6] At the time it issued the demand the Body Corporate held a judgment for the2013 levies. On 25 November 2014 the Tenancy Tribunal (the Tribunal) had held thatthe 2013 levies, totalling $4,471.20, were payable by Yee to the Body Corporate. TheTribunal also made an award of $745.11 for interest and $850 for the filing fee. Thetotal amount awarded in the Tenancy Tribunal was therefore $6,066.31.[7] Yee filed an appeal to the District Court against the Tenancy Tribunal decision,and that appeal was heard on 25 July 2016. The Court reserved its decision.[8] On 26 July 2016 Mr Leishman, a director of Boutique Body Corporate Limited(BBCL), a body corporate services company representing the Body Corporate, sent toYee a copy of the Body Corporate's ledger, showing additional amounts said to be dueand payable by Yee, including $9,238.92 for the 2014 and 2015 levies. An undertakingwas sought from Yee by 1 August 2016 that, if it was unsuccessful with its appeal tothe District Court, the arrears would be paid in full within five working days of thejudgment being given on the appeal. If that undertaking was not provided,Mr Leishman indicated that the Body Corporate would issue further proceedings.[9] On 5 August 2016 Judge Harrison gave a reserved judgment in the DistrictCourt, dismissing Yee's appeal from the decision of the Tribunal.33 Yee Good Fortune Investments Ltd v Body Corporate 392619 [2016] NZDC 14692.[10] On 11 August 2016 Mr Leishman wrote to Yee's solicitor advising that unlesspayment of the Tribunal award was made in full within three working days, a statutorydemand would be issued for both the award and for levies and costs incurredsubsequently.[11] When Yee did not give that undertaking, and did not make any payment, theBody Corporate issued the demand.[12] Yee did not apply to set aside the demand. Instead, on 6 September 2016, itlodged an appeal to this Court against the District Court decision, on a number ofpoints of law.[13] Yee did not take any steps to obtain a stay of proceedings pending the hearingof its appeal, and the Body Corporate commenced the present liquidation proceedingon 20 October 2016.[14] Yee then filed an application to have the liquidation claim summarilydismissed. It contended that the amounts claimed in the demand were genuinelydisputed, and that that fact was well known to the Body Corporate. It contended thatthe issue of the demand, and the subsequent filing of the liquidation claim, were abusesof process, justifying the summary dismissal of the liquidation claim.[15] In my judgment of 15 December 2016 I dismissed Yee's application forsummary dismissal of the liquidation claim. However I continued an interim orderwhich had earlier been made restraining publication of the liquidation claim,conditional upon Yee paying into Court the sum of $15,305.23 by 20 January 2017.The sum of $15,305.23 was the amount of the Tribunal award, together with the totalof the 2014 and 2015 levies. I noted in my judgment Mr Dunning's acknowledgmentthat the 2014 and 2015 levies were in the same category as the 2013 levies, and if the2013 levies were validly raised it appeared that the Body Corporate should also beentitled to recover the 2014 and 2015 levies.[16] Yee did not pay the $15,305.23 into Court, and the restraint onadvertising/publication was lifted with effect from 14 February 2017. TheBody Corporate proceeded to advertise the liquidation claim in accordance with therules.[17] Following the advertisement, Body Corporate 81340 filed a notice of intentionto appear in support of the liquidation claim, under r 31.18 of the High Court Rules.Body Corporate 81340 claimed to be a creditor of Yee for the sum of $151,688.27.[18] Yee's appeal from the District Court judgment duly came on for hearing beforeGordon J on 15 February 2017. Her Honour reserved her decision.[19] The Body Corporate's liquidation claim was called again in the liquidation liston 23 May 2017. By then, Gordon J had given her judgment on Yee's appeal, and theresult was that three of six questions of law raised by Yee in its Notice of Appeal werereferred back to the Tribunal for determination of various questions of fact. MrDunning then renewed his application for a stay of the liquidation proceeding. In lightof the judgment of Gordon J on the appeal, he contended that the liquidation claimcould not possibly succeed. I gave directions for the filing of submissions and anyfurther affidavits, and set Yee's renewed stay application down for a defended hearing,with the Body Corporate's liquidation claim.Yee's amended statement of defence[20] Yee admits that it was served with the demand on 24 August 2016, and that itdid not comply with the demand. However, it denies that it is indebted at all to theBody Corporate. It says that the Body Corporate did not enter into an agreement withYee for payment of the sums in the demand, and it did not have power or authorityunder the Unit Titles Act 2010 (the UTA) to claim the special levies. In the alternative,it asserts that, if the Body Corporate did have the authority or power under the UTA toclaim the special levies, they were not lawfully imposed on Yee.[21] Yee further claims that the Body Corporate may only recover reasonable costsin collecting the relevant levies, and aside from the interest charges, the chargesclaimed by the Body Corporate in the demand are not costs reasonably incurred incollecting the special levies. Yee's liability is disputed, and it asserts that the BodyCorporate was at all material times aware of the dispute. It contends that the BodyCorporate has abused the process of the Court in issuing the demand and subsequentlypursuing the liquidation claim.[22] Yee's other defence is that the demand was in any event defective, as itpurported to claim as debts payable to the Body Corporate sums not previouslybrought to Yee's attention.The issues[23] The judgments of Judge Harrison in the District Court and Gordon J in theHigh Court were concerned only with the 2013 levies. As the result of the judgmentof Gordon J was that Yee might have a defence or defences to the demand for the 2013levies (depending on the further findings of fact to be made by the Tribunal on thethree issues remitted to it by Gordon J for further consideration), Mr Dean did not seekto support the demand and the liquidation claim by relying on the 2013 levies. As thematter was argued, the issues were limited to the following:(a) Does Yee have a genuine and substantial argument that theBody Corporate did not validly delegate to the Body CorporateCommittee (the Committee) the power to raise the 2014 and 2015levies?(b) If the answer to issue (a) is "yes", does Yee have a genuine andsubstantial argument that decisions of the Committee raising the 2014and 2015 levies were never validly ratified by the members of the BodyCorporate?(c) Does s 121(1) of the UTA require that levies raised by a body corporatecan be raised only for the purpose of payment into one or more of thefunds described at ss 115, 117, 118 or 119 of the UTA? If so, did theBody Corporate establish and maintain one or more of those funds (a)into which the 2014 and 2015 levies were to be paid and (b) from whichthe Body Corporate was entitled to pay for the repair work?(d) Is the Body Corporate entitled to a liquidation order because Yee hasfailed to produce sufficient evidence rebutting the presumption ofinsolvency created by its failure to comply with the demand?The documents relied upon by the Body Corporate[24] The Body Corporate relies in particular on an agenda for its AGM of 27 August2014, the list of resolutions sent to members in advance of that AGM, and the AGMminutes themselves.[25] The agenda for the 27 August 2014 AGM contained the following:4) FinancialA copy of the financial accounts and notes for the year will bedistributed with the agenda.b. Long Term Maintenance FundThe needs of the building remediation have exhausted the funds in theLong Term Maintenance (LTM) Fund. Until such time as the buildingremediation is complete, it is suggested funds first be applied to thebuilding repairs with the LTM fund to be re-established once repairsare completed.Special Motion:"The expenditure of LTM funds on building remediation costs to datebe approved and ratified and the LTM fund be disestablished untilsuch time as the building remediation is complete when an updatedLTM Plan can be developed recognising the impact of the remediationon future LTM requirements, and the LTM fund be re-established atthat point."7) CommitteeSpecial Motion:"The Committee is delegated the full powers and authority of the BodyCorporate, subject to any prior direction given at anyGeneral Meeting of the Body Corporate or prohibition as containedin Section 108(2) of the Act."10) Building Remediation Cost ApportionmentBuilding LevyPrior to the meeting owners will be provided with spreadsheetscontaining:a) All building and litigation related expenses to dateb) A cashflow forecast covering forecast BC building costs to thepoint of commencement of the physical stage one remedial worksOrdinary Motion:"The meeting raise a building remediation levy of such amount andfor payment at such time(s) as it deems necessary to take the BodyCorporate through to when the remedial works are anticipated tocommence."[26] The form sent out to members in advance of the 27 August 2014 AGM set outthe text of each resolution which would be put to the meeting. Beside each resolution,the form stated whether the required resolution was an ordinary resolution (whichcould be carried by a simple majority of those members present and voting), or aspecial resolution (which would require the votes of 75 per cent of those memberspresent and voting). A column on the right hand side of the form provided for amember giving a proxy direction or making a postal vote to check whether the memberwas "for" or "against" the motion.[27] The proxy direction/postal vote form for the 27 August 2014 AGM includedthe following resolutions:"The meeting agrees all building remedial costs(excluding soft furnishings, window dressings andfloor coverings) are to be apportioned on the basisof the QS forecast of each units share of privateproperty costs and their percentage of commonproperty costs to create a % forecast formula, whichformula shall be adopted as a utility interest to beSpecialDesignatedapplied to all building remedial costs and levies beraised based upon the utility interest.""In the event the preceding motion is passed and thenecessary designated resolution process is notsuccessfully challenged then the Secretary willcarry out a reconciliation of all buildingremediation costs incurred to date and anadjustment shall be made in regards to each unitsshare of building remediation costs incurred to dateto reflect the new utility interest."SpecialDesignated"The meeting raise a building remediation levy ofsuch amount and for payment at such time(s) as itdeems necessary to take the Body Corporatethrough to when the remedial works are anticipatedto commence."Ordinary[28] The minutes of the 27 August 2014 AGM included the following:6.0 LONG TERM MAINTENANCE FUNDAs the funds had been exhausted it was resolved to disestablish thefund in the meantime and to re-establish this upon completion of thebuilding works.RESOLVED (SPECIAL):"The expenditure of LTM funds on building remediation costs to datebe approved and ratified and the LTM fund be disestablished untilsuch time as the building remediation is complete when an updatedLTM Plan can be developed recognising the impact of the remediationon future LTM requirements, and the LTM fund be re-established atthat point."Moved: S SandersOpposed:4 S BrewerCARRIED UNANIMOUSLY9.0 COMMITTEE4 Mr Dean noted in his submissions that there is a typographical error here: as the resolution wascarried unanimously, the person named immediately after the proposer of the resolution shouldhave been described as having "seconded", rather than "opposed", the resolution.Committee PowersRESOLVED (SPECIAL)"The Committee is delegated the full powers and authority of theBody Corporate, subject to any prior direction given at any GeneralMeeting of the Body Corporate or prohibition as contained in Section108(2) of the Act"Moved: G CleaveOpposed: J RiddellCARRIED UNANIMOUSLY12.0 BUILDING REMEDIATON COSTSRESOLVED (SPECIAL):a) "The meeting agrees all building remedial costs (excluding softfurnishings, window dressings and floor coverings) are to beapportioned on the basis of the QS forecast of each units share ofprivate property costs and their percentage of common propertycosts to create a % forecast formula, which formula shall beadopted as a utility interest to be applied to all building remedialcosts and levies be raised based upon the utility interest.b) In the event the preceding motion is passed and the necessarydesignated resolution process is not successfully challenged thenthe Secretary will carry out a reconciliation of all buildingremediation costs incurred to date and an adjustment shall bemade in regards to each units share of building remediation costsincurred to date to reflect the new utility interest."Moved: D GreigOpposed: C RiddellCARRIED (without opposition)13.0 BUILDING LEVYRESOLVED (ORDINARY):"The Committee be authorised to review the building remediationcashflow needs after adjustment for the cost apportionment as referredto in Motion 12 and be authorised to raise such further levies as itdeems necessary to take the Body Corporate through to when theremedial works are anticipated to be commenced."Moved: D GreigOpposed: B BrewerCARRIED[29] The minutes of a Committee meeting held on 2 September 2014 record thefollowing:With works now scheduled for the New Year the BC will need to raise a levyfor the building account before the main levy will be due. Currently we havecreditors of $52k CK, $11.5K, Quantum, $3.5K BBCL, $6.5K BCA, 50% ofCK will need to be paid once documents are approved and presented forbuilding consent and the balance falling due once consent is achieved. It wasagreed to adopt [BBCL's] recommendation to raise a levy in the region of$100K for payment in October. [BBCL] have suggested the legal account willrequire a levy to be raised for payment of Grimshaw and litigation consultantsin January 2015 Suggested levy $1 – 2K per owner. We do sympathize withowners that another levy is needed, but at the same time we are trying to giveowners as much notice as possible. [BBCL] to raise levy invoices.[30] In an affidavit sworn for the Body Corporate in support of the liquidationclaim, Mr Leishman stated that the committee did in fact raise the $100,000 levy asreferred to in the minutes of its 2 September 2014 meeting, and included within that$100,000 was the first of the levies of $3,079.64 which is claimed from Yee in thestatutory demand.[31] The Body Corporate's 2015 AGM was held on 1 September 2015. The minutesof the meeting record that the following special resolution was carried unopposed:The Committee is delegated the full powers and authority of theBody Corporate subject to any prior direction given at any General Meetingof the Body Corporate or prohibition as contained in Section 108(2) of theAct.[32] The Committee then met on 8 September 2015. The minutes of this meetingrecord the following:4. A special building levy (approximately $5500 per unit) will need tobe raised to fund consultants, engineers, etc. through to the end of2015. Suggest we split this into two payments. [BBCL] will sendnotices out next week to give owners as much notice as possible. Ascheme needs to be developed for this, based on unit title percentagesas agreed on previously.[33] Mr Leishman says in his affidavit that the levies referred to in this part of theminutes of the 8 September 2015 Committee meeting correspond with the second andthird of the 2014 and 2015 levies of $3,079.64 raised in respect of Yee's unit.The judgment of Gordon J on Yee's appeal[34] The right of appeal from the decision of the District Court was limited toquestions of law only,5 so Gordon J was not able to consider issues of disputed fact onthe appeal.[35] The questions of law which Gordon J dealt with by remitting the case back tothe Tribunal for various factual determination, all of them concerned with the validityof the February 2013 levies, were:(a) Did the Judge err in finding that the power to impose the levy hadbeen properly delegated to the Body Corporate Committee?(c) Did the Judge err in finding that the Committee had the power toimpose the levy that it did, for the purpose that it did?(e) Did the Judge err in finding that the Body Corporate was able, as amatter of law, to ratify and confirm the contested resolutions?[36] On question (a), Gordon J determined that the Tribunal's original finding offact that the resolution delegating powers to the Committee had "probably been passedas a special resolution" was not a finding available to it on the evidence, and hadwrongly been upheld by the District Court Judge. In referring this issue back to theTribunal, Gordon J said the Tribunal should reconsider whether the delegation wasmade in accordance with s 108(1) of the UTA, and that in doing so it should considerany fresh evidence from those present at the meeting who may attest to whether thedelegation resolution was passed by special resolution.65 Residential Tenancies Act 1986, s 119.6 Yee Good Fortune Investments Ltd v Body Corporate 392619, above n 2, at [27]–[38].[37] On question (c), Gordon J noted that the effect of s 121(1) of the UTA is that abody corporate that wishes to raise levies in order to fund repairs and maintenancework must ensure the levies are raised in respect of one of the funds described inss 115, 117, 118 or 119 of the UTA. Her Honour considered the Committee wasentitled to establish a contingency fund pursuant to s 118 for the purposes of carryingout remediation works, and to impose levies for that fund. However, her Honourconsidered the District Court Judge erred in law when he held that the coding ofpayments to a building ledger was sufficient to establish a contingency fund pursuantto s 118. The establishment of a fund requires a "deliberate decision, made inaccordance with standard decision-making procedures".7 Thus, the District CourtJudge erred in finding the Committee had the power to impose the levy that it did, forthe purpose that it did.[38] On question (e), Her Honour determined that the District Court Judge wascorrect to find that the Body Corporate could ratify the Committee's resolutionimposing a special levy on the members of the Body Corporate. However, the DistrictCourt Judge erred in not turning his mind to the question of whether the ratificationresolution had been passed by appropriate means, pursuant to the proceduralrequirements of s 108 of the UTA. As that determination turned on a question of fact,it was necessary to remit the matter back to the Tribunal for further consideration.8[39] Yee now contends that her Honour's judgment of 12 April 2017 on three of thesix questions of law which were put to her makes it clear that the resolutions relevantto all of the levies claimed in the demand were not validly raised.[40] The Body Corporate disagrees. It does not seek to rely on the February 2013levies which were the subject of the proceeding in the Tribunal (and the appeals to theDistrict Court and then to this Court), but says that there is nothing in the judgment ofGordon J which called into question the validity of the resolutions which raised the2014 and 2015 levies. The demand and the subsequent liquidation claim can besupported on the basis that the 2014 and 2015 levies have not been paid. Yee has failed7 At [94].8 At [100]–[110].to rebut the presumption of insolvency arising from its failure to comply with thedemand.The parties' submissionsThe Body Corporate[41] Mr Dean submits that Yee has failed to provide any evidence proving that it issolvent. Therefore, it has failed to rebut the presumption created by s 287(a) of theAct that it is unable to pay its debts.[42] Any "misgivings" expressed by Gordon J in respect of the Tenancy Tribunaldeterminations do not apply to the 2014 and 2015 levies. Accordingly Mr Deansubmits that Yee has failed to raise a genuine and substantial dispute in respect of partof the demand, being a claim for levies exceeding $9,000.[43] In respect of the 2014 and 2015 levies, Mr Dean submits that the evidenceshows that there was an appropriate special resolution delegating to the Committee thepower to raise levies from members for the repair work. As a consequence, Yee canhave no reasonable argument over the 2014 and 2015 levies, and its failure to paythose sums, coupled with its failure to comply with the demand and the absence of anysignificant evidence from Yee that it is solvent, justify the making of the liquidationorder sought.[44] Mr Dean submits that the Committee was fully authorised by the resolutionscarried at the 27 August 2014 AGM to raise the 2014 and 2015 levies. The subsequentminutes of committee meetings, with Mr Leishman's evidence, show that the 2014and 2015 levies were validly raised by the Committee, acting under the authoritydelegated to the Committee at the August 2014 AGM.[45] Mr Dean addressed in his submissions an issue raised by Gordon J in herjudgment of 12 April 2017 relating to the provision in s 121(1) of the UTA that a bodycorporate may impose levies to "establish and maintain a fund". Gordon J noted inher judgment that:99 At [62].The effect of this provision is that a body corporate that wishes to raise leviesin order to fund repairs and maintenance work must ensure the levy is raisedin respect of one of the funds set out in ss 115, 117, 118 or 119 of the UTA.[46] Gordon J concluded that the District Court Judge erred in finding on theevidence before him that the Committee had the power to impose the levy that it did,for the purpose that it did. Her Honour stated:10The Committee was in theory entitled to establish a contingency fund for thepurposes of carrying out the repairs and to impose levies for that fund.However, in order to establish such a fund, the Body Corporate was requiredto make a deliberate decision in accordance with standard decision-makingprocedures. It was not sufficient, as Judge Harrison held, for the BodyCorporate manager to simply code payments to a building ledger.[47] Mr Dean submits that the agenda and the minutes of the AGM of 27 August2014 dealt with the disestablishment of the long term maintenance fund, and implicitlyauthorised proceeding with a contingency fund (complying with s 118 of the UTA),by way of special resolution. The long term maintenance fund then became acontingency fund, available for payment of the cost of repairs.[48] Mr Dean submits that, in the case of the 2014 and 2015 levies, there issufficient evidence that a new fund was "established". There was more than mere"coding payments to a building ledger" (to adopt the wording used by Gordon J in herjudgment). The 27 August 2014 special resolution disestablishing the long termmaintenance fund, together with the "recommissioning" of that fund as a contingencyfund, and the references to a long term maintenance fund in the Body Corporate'sstatements of financial position for the year ended 30 June 2013 (and the reference toa "contingency fund" in the 30 June 2016 financial statements), were togethersufficient to "establish" any new contingency fund which may have been required byss 121 and 118 of the UTA. The statements of financial position make it clear that theBody Corporate has been keeping the contributions to this "contingency fund"separate, with each contribution identified as having been made by a particular unitowner. The position in respect of the 2014 and 2015 levies can therefore bedistinguished from the facts with which Gordon J was concerned in giving herjudgment on 12 April 2017.10 At [94].[49] In his oral submissions, Mr Dean made the alternative submission that s 138of the UTA provided sufficient authority itself for the Body Corporate to levy itsmembers (through the Committee) for the funds necessary to carry out the repairs. Hesubmitted that s 115 of the UTA, while stipulating that a body corporate's operatingaccount may be used to meet the expenses described in s 115(2), contains nothing toprevent the operating account being used for payment of other expenses which havebeen approved for payment by the Body Corporate or the Committee.Yee[50] For Yee, Mr Dunning submits that the Body Corporate has commenced theliquidation claim for the purpose of gaining procedural advantages over Yee, insteadof pursuing a dispute which it knew would have to be resolved elsewhere in anappropriate forum (Tenancy Tribunal or District Court). He submits that the decisionof Gordon J has caught the Body Corporate out: at best, the demand and the liquidationclaim have been exposed as premature. He submits that the Body Corporate's purposein issuing the statutory demand, and then the litigation claim, was to intimidate Yee.[51] Mr Dunning refers to Nikau Enterprises Ltd v R,11 a case in which a statutorydemand was set aside and it was suggested that a fresh notice should be given, whereliability was being litigated in another case. He submits that something akin to thatsituation is happening in this case, but it is too late to set the demand aside.[52] Mr Dunning submits that the onus is on Body Corporate to prove that Yee isunable to pay its debts, and that it has failed to do so. In the light of the judgment ofGordon J given on 12 April 2017, the Body Corporate may no longer rely on thepresumption in s 287.[53] Mr Dunning refers to Yan,12 and to South Waikato Precision Engineering Ltd vAhu Developments Ltd, in support of the following proposition:1311 Nikau Enterprises Ltd v R HC Tauranga M40/906, M42/96, 17 September 1996.12 Yan v Mainzeal Property and Construction Ltd (in receivership and in liquidation [2014]NZCA 190.13 South Waikato Precision Engineering Ltd v Ahu Development Ltd HC Auckland CIV-2008-404-970, 10 December 2008 at [22].(a) A winding up order will not be made where there is a genuine andsubstantial dispute as to the existence of a debt such that it would bean abuse of the process of the court to order a winding up;(b) In such circumstances, the dispute, if genuine and substantiallydisputed, should be resolved through action commenced in theordinary way and not in the Companies Court....[54] In this case matters have gone well beyond the kinds of situations with whichthe Court was concerned in South Waikato Precision Engineering Ltd, Grant v LotusGardens Ltd, and Yan.14[55] Mr Dunning submits that the decision of Gordon J, while not necessarily final,has essentially resolved the question of "genuine and substantial dispute" in Yee'sfavour. Yee was awarded costs on the appeal in a subsequent judgment delivered byGordon J, and Mr Dunning notes that the effect of her judgment on the appeal is thatthe Tenancy Tribunal order, originally made on 25 November 2014, has now been setaside. It cannot be resurrected in its original form.[56] Further, Mr Dunning refers to written submissions which Mr Leishman madeon the appeal to the District Court, in which Mr Leishman said:[23] It is [the Body Corporate's] view the "building levies" were raisedwithin the operating account under s 115(2)(a) and (b) to meet the costs agreedto be incurred at its 2012 AGM [24] A professional investigation of the maintenance needs of a BodyCorporate clearly relates to the fulfilment of the management and governanceobligations under s 115(2)(a) and the engagement of Covekinloch to deliverprofessional services for the benefit of the unit title development fits squarelywithin s 115(2)(b).[25] Yee's contention that a separate fund needs to be established toraise a levy is, it is submitted, both illogical and contrary to [the UTA].[57] Mr Dunning rejects any contention that s 138 of the UTA provides sufficientauthority for a body corporate to establish a new fund for repair work. Sections 115to 119 clearly set out the different funds a body corporate may establish and maintain,14 South Waikato Precision Engineering Ltd v Ahu Development Ltd, above n 13; Grant v LotusGardens Ltd [2013] NZHC 135, [2013] NZCCLR 16; Yan v Mainzeal Property and ConstructionLtd (in receivership and in liquidation), above n 12.and s 121(1) then provides that a body corporate may "determine from time to timethe amounts to be raised for each fund and impose levies on the owners of principalunits to establish and maintain each fund" (emphasis added). The levy-raisingfunction, then, is governed by s 121(1), and it is expressly linked to each particularfund.[58] In this case, Mr Dunning submits that it is clear that the Body Corporate neverproperly established an optional contingency fund under s 118 (in accordance with thedecision-making requirements of UTA for so doing), and the submissions made byMr Leishman on the appeal to the District Court confirm that that is so. Thosesubmissions made it clear that no such fund was ever established – the Body Corporatesimply paid the amounts received on the levies into its operating account, andpurported to apply them to the purposes identified at s 115(2)(a) and (b) of the UTA(which Gordon J held do not include payment of repair work of the kind for which allof the special levies were raised). The Body Corporate failed to make a deliberatedecision, in accordance with standard decision-making procedures, to establish theonly kind of fund which Gordon J considered would be available to meet repair costsof the kind the Body Corporate had to pay in this case.15[59] Mr Dunning also challenges the validity of the 2012 resolution of the BodyCorporate which delegated levying powers to the Committee. He referred to thejudgment of Gordon J, where the Judge found that there was no evidential basis uponwhich a decision-maker could conclude that the delegation resolution was passed inaccordance with the UTA. In those circumstances, the resolution was presumed to beinvalid and, as at 28 November 2012, the Committee did not have authority to imposea special levy upon the members of the Body Corporate.16Discussion and conclusionsThe laws relating to liquidation claims and stay applications[60] The Body Corporate's liquidation claim is made pursuant to s 241 of theCompanies Act 1993 (the Act) and r 31.3 of the High Court Rules. A liquidation order15 Yee Good Fortune Investments Ltd v Body Corporate 392619, above n 2, at [94].16 At [102].may be made if the Court is satisfied that the defendant company is unable to pay itsdebts. Pursuant to s 287 of the Act, a company will be presumed to be unable to payits debts if "the company has failed to comply with a statutory demand", unless thecontrary is proved.[61] If (as in this case) the company does not comply with a statutory demandserved on it by a creditor, and does not apply to set aside the statutory demand unders 290 of the Act, the onus falls on the company to establish that there is a genuine andsubstantial dispute as to liability to pay. "Cogent evidence, short of actual proof thatthe debt is not payable, is required".17[62] The fact that the debtor may not have applied to set aside the creditor'sstatutory demand is not determinative. In Yan v Mainzeal Property and ConstructionLtd (in receivership and in liquidation) the Court of Appeal said:18A company is not prevented from showing that indebtedness is disputed, evenif it has failed to apply to set aside a statutory demand under s 290. In such ifa case, the failure of the debtor to apply to set aside a statutory demand thecreditor is entitled to rely on the presumption of insolvency under s 287(a) ofthe Act and the onus falls on the debtor to establish that there is a genuine andsubstantial dispute as to its liability to pay Cogent evidence, short of actualproof that the debt is not payable, is required.It must also be kept firmly in mind that the Court will not generally make aliquidation order if the debts relied upon are found to be in substantial disputeand not suitable for resolution in the liquidation list. That is so whether or notthe disputed debts are the subject of the statutory demand.[63] The jurisdiction to stay a liquidation proceeding is to be found in r 31.11 of theHigh Court Rules and in the Court's inherent jurisdiction. Rule 31.11 materiallyprovides:31.11 Power to stay liquidation proceedings(1) If an application for putting a company into liquidation is made underrule 31.3, the defendant company, or, with the leave of the court, anycreditor or shareholder of that company or the Registrar ofCompanies, may, within 5 working days after the date of the service17 Duffill Watts Ltd v Mogans Homes Ltd [2010] NZCCLR 1 (HC) at [28].18 Yan v Mainzeal Property and Construction Ltd (In Receivership and In Liquidation), above n 12,at [63] and [74].of the statement of claim on the defendant company, apply to the court–(b) for an order staying any further proceedings in relation to theliquidation.(2) The court must treat an application under subclause (1) as if it werean application for an interim injunction and, if it makes the orderssought, it may do so on whatever terms the court thinks just.(3) The inherent jurisdiction of the court is not limited by this rule.[64] In Nemisis Holdings Ltd v North Harbour Industrial Holdings Ltd, Wallace Jprovided the following summary of the relevant principles:19It is a serious matter to stay winding-up proceedings, so the decision to do sois never made lightly. The onus is on the applicant and it is normally necessaryto demonstrate "something more" than the balance of convenienceconsiderations which are usually considered on an application for interiminjunction. If the defendant company has had an opportunity to fileappropriate affidavits, such defendant is required to establish a strong primafacie case of the existence of a genuine dispute on substantial grounds, or showthat there are clear and persuasive grounds for a stay.Relevant sections of the UTA dealing with decision making, including delegation to abody corporate committee[65] The UTA provides:101 How matters at general meeting of body corporate decided(1) Any matters at a general meeting of a body corporate relating to anexercise of a duty or power that may not be delegated under section108(2), or that have not been delegated to the body corporatecommittee, must be decided by special resolution.(2) Except as otherwise provided in this Act, all other matters to bedecided by the body corporate at a general meeting must be decidedby ordinary resolution.(3) Any matter that is not on the agenda for a general meeting may bediscussed at the meeting but, unless all the eligible voters are presentat the meeting, no resolution may be voted on and made in respect ofthat matter except to include that matter on the agenda for asubsequent general meeting.(4) Every resolution must be recorded in writing.19 Nemisis Holdings Ltd v North Harbour Industrial Holdings Ltd (1989) 1 PRNZ 379 at 385.108 Delegation of duties and powers(1) Except as provided in subsection (2), a body corporate may delegateany of its duties or powers, either generally or specifically, to the bodycorporate committee by special resolution and written notice.(2) The body corporate must not delegate any of the powers or duties setout in—(a) subsection (1) (which is the general power of delegation):(b) section 41 (which provides for the reassessment of ownershipinterests and utility interests):(c) section 105(4) (which requires the body corporate to complywith the body corporate operational rules):(d) section 136(4) (which relates to the application of insurancemonies in or towards reinstatement of the development).109 Delegated duties and powers of body corporate committee(1) A body corporate committee to which any duties or powers aredelegated under section 108(1) may, unless the delegation providesotherwise, perform the duties and exercise the powers in the samemanner, subject to the same restrictions, and with the same effect asif it were the body corporate.(2) The body corporate committee must not delegate any of its delegatedduties or powers.(3) The body corporate committee, when purporting to perform a duty orexercise a power under a delegation,—(a) is, in the absence of proof to the contrary, presumed to do soin accordance with the terms of that delegation; and(b) must produce evidence of the body corporate committee'sauthority to do so, if reasonably requested.113 Decision-making of body corporate committeeAny matters at a meeting of a body corporate committee must bedecided by a simple majority of votes.UTA provisions relating to the establishment of bank accounts[66] The UTA provides:115 Operating account(1) A body corporate must establish and maintain an operating accountfor the purpose of meeting the expenses described in subsection (2).(2) The expenses are—(a) those relating to the management and governance of a unittitle development:(b) those relating to provision of services and amenities for thebenefit of the unit title development:(c) costs associated with statutory or regulatory compliance:(d) any ground rental or licence fees relating to the base land:(e) those incurred at least once a year relating to the maintenanceof the unit title development.(3) The body corporate must establish a current account at a bank andmay, by special resolution, nominate a person or persons who mayoperate the account and specify the manner in which it may beoperated.116 Long-term maintenance plan(1) A body corporate must establish and regularly maintain a long-termmaintenance plan.(2) A long-term maintenance plan must cover a period of at least 10 yearsfrom the date of the plan or the last review of the plan.(3) The purpose of a long-term maintenance plan is to—(a) identify future maintenance requirements and estimate thecosts involved; and(b) support the establishment and management of the funds; and(c) provide a basis for the levying of owners of principal units;and(d) provide ongoing guidance to the body corporate to assist it inmaking its annual maintenance decisions.117 Long-term maintenance fund(1) A body corporate must establish and maintain a long-termmaintenance fund unless the body corporate, by special resolution,decides not to establish a long-term maintenance fund.(2) The fund may only be applied towards spending relating to the long-term maintenance plan.(3) The body corporate must, by special resolution, approve any amountto be spent on any 1 maintenance item if the amount exceeds theamount specified for that item in the long-term maintenance plan bymore than 10%.118 Optional contingency fundA body corporate may establish and maintain 1 or more contingency funds toprovide for unbudgeted expenditure.119 Optional capital improvement fundA body corporate may establish and maintain a capital improvement fund toprovide for spending that adds to or upgrades the unit title development ifthat spending is not provided for in the long-term maintenance plan.120 Separate bank accounts for each fundThe body corporate must establish, in accordance with any regulations,either—(a) separate bank accounts for each of the funds; or(b) a single bank account in which the respective funds are keptentirely separate and are able to be identified.UTA provisions relating to the raising and recovery of levies[67] The UTA provides:121 Contributions to be levied on unit owners(1) A body corporate may determine from time to time the amounts to beraised for each fund and impose levies on the owners of principal unitsto establish and maintain each fund.(2) The levies must be calculated as follows:(a) in the case of the operating account, long-term maintenancefund, and any contingency fund, in proportion to each unitowner's utility interest; and(b) in the case of any capital improvement fund, in proportion toeach unit owner's ownership interest.(3) The owner of a future development unit is liable to pay contributionslevied by the body corporate under this section from the date that thefuture development unit is first in use as a place of residence orbusiness or otherwise and from that date that future development unitis to be treated as a principal unit for the purposes of this section.(4) Any levies imposed by a subsidiary body corporate must be sufficientto pay any levies raised under subsection (1) by the head bodycorporate, its parent body corporate, or any other parent bodycorporate located between the subsidiary body corporate and its headbody corporate.124 Recovery of levy(1) A body corporate must fix the date on or before which payments oflevies are due.(2) The amount of any unpaid levy, together with any reasonable costsincurred in collecting the levy, is recoverable as a debt due to the bodycorporate by the person who was the unit owner at the time the levybecame payable or by the person who is the unit owner at the time theproceedings are instituted.Section 138 of the UTA – the Body Corporate's duty to repair and maintain[68] The section provides:138 Body corporate duties of repair and maintenance(1) The body corporate must repair and maintain—(a) the common property; and(b) any assets designed for use in connection with the commonproperty; and(c) any other assets owned by the body corporate; and(d) any building elements and infrastructure that relate to or servemore than 1 unit.(3) The body corporate may access at all reasonable hours any unit toenable it to carry out repairs and maintenance under this section.(4) Any costs incurred by the body corporate that relate to repairs to ormaintenance of building elements and infrastructure contained in aprincipal unit are recoverable by the body corporate from the ownerof that unit as a debt due to the body corporate (less any amountalready paid) by the person who was the unit owner at the time theexpense was incurred or by the person who is the unit owner at thetime the proceedings are instituted.(5) For the purposes of this section,—(a) a subsidiary body corporate is to be treated as the unit ownerof the principal unit that was subdivided to create thesubsidiary unit title development; and(b) a reference in subsection (4) to a principal unit includes thecommon property and units of that subsidiary unit titledevelopment; and(c) the duty to repair and maintain includes (without limitation) aduty to manage (for the purpose of repair and maintenance),to keep in a good state of repair, and to renew wherenecessary.The application of the law in this case[69] Mr Dean made two submissions that I can address quite shortly. First, I do notthink Yee's failure to respond to the Body Corporate's statutory demand, or its failureto corroborate "by appropriate supporting documents" Ms Yee's assertion that Yee issolvent, whether considered separately or together, are enough to justify the makingof a liquidation order. (This was issue (d) at para [23] of this judgment.)[70] Even if a company has failed to apply to set aside a statutory demand it is notprevented from showing in a subsequent liquidation claim that the indebtedness isdisputed.20 While the creditor in such case is entitled to rely on the presumption ofinsolvency created by s 287(a) of the Act, it will be sufficient to defeat the liquidationclaim if the debtor establishes by cogent evidence, short of actual proof, that the debtis not payable. If there is a genuine and substantial dispute as to the defendant's abilityto pay, the matter is not likely to be suitable for resolution in the liquidation list.21[71] The question on the liquidation claim, then, is whether Yee has shown thatthere is genuine and substantial dispute over its liability to pay the 2014 and 2015levies.22 If Yee satisfies that evidential threshold, the liquidation claim should bestayed or dismissed.[72] The second submission for the Body Corporate that I can put on one side is MrDean's alternative submission that s 138 of the UTA provided sufficient authority itselffor the Body Corporate to levy its members (through the Committee) for the fundsnecessary to carry out the repairs. I do not think this submission assists the BodyCorporate. In her judgment on the appeal from the District Court, Gordon J concludedthat, while large scale repairs such as those to which the Body Corporate has20 Yan v Mainzeal Property & Construction Limited (in receivership and in liquidation), above n 12.21 See Yan, South Waikato Precision Engineering Ltd v Ahu Developments Ltd, above n 13, andEzipaint Ltd (in liquidation) v Peters Holdings Trustee Ltd [2017] NZHC 3139.22 The balance of the items claimed in the Body Corporate's liquidation claim have either not beenrelied upon by the Body Corporate (the February 2013 levies), or consist substantially of items(eg the claims for interest and costs) which will stand or fall with the Body Corporate's entitlementto the 2014 and 2015 levies.committed in this case are within the scope of s 138 of the UTA, if a body corporatewishes to raise levies to fund works under s 138 it may do so, but the levies must beraised in accordance with s 121 of the UTA.23[73] That is what the Body Corporate has done in this case — it has elected to payfor the relevant works by raising levies. Having made that election, the issue iswhether the levies have been validly raised.[74] The first issue raised by Mr Dunning in his challenge to the validity of the 2014and 2015 levies is that the Body Corporate did not validly delegate to the BodyCorporate Committee the power to raise the 2014 and 2015 levies. If Mr Dunningsucceeds with that argument, there is a further question as to whether the raising of the2014 and 2015 levies by the Committee was validly ratified by members of theBody Corporate.24[75] The issue over the validity of the 2012 resolution, with which Gordon J wasconcerned in her decision, was whether or not the resolution had been passed as aspecial resolution, as required by s 108(1) of the UTA, or whether the resolution wasonly passed as an ordinary resolution (which would have been ineffective to validlydelegate the Body Corporate's powers to the Committee). There appears to be nosimilar issue in respect of the 2014 and 2015 levies. At the 27 August 2014 AGM themembers of the Body Corporate resolved, as a special resolution, that the "full powersand authority of the Body Corporate" be delegated to the Committee, subject to anyprior direction given at any General Meeting of the Body Corporate or prohibition ascontained in s 108(2) of the UTA.25[76] A further special resolution, passed at the same AGM, resolved that all buildingremedial costs (with certain exceptions) were to be apportioned on the basis of thequantity surveyors' forecast of each unit's share of private property costs, to create apercentage forecast formula. That formula would be adopted as a utility interest to be23 Yee Good Fortune Investments Ltd v Body Corporate 392619, above n 2, at [59], referring to thedecision to the Court of Appeal in Body Corporate 162791 v Gilbert [2015] NZCA 185, [2015] 3NZLR 601 at 57.24 These are the issues at [23] (a) and (b) of this judgment.25 Minutes of 27 August 2018 AGM, para 9, at [28] of this judgment.applied to all building remedial costs, with levies to be raised based upon the utilityinterest.26 The members at the 27 August 2014 AGM went on to authorise theCommittee to "review the building remediation cashflow needs after adjustment forthe cost apportionment as referred to in [the motion which resulted in the resolutionjust referred to]."27 The Committee was then authorised to raise such further levies asit deemed necessary to take the Body Corporate through to when the remedial workswere anticipated to be commenced.[77] It appears that the Committee was sufficiently authorised to raise levies for thefirst part of the repair work, by the resolutions passed at the 27 August 2014 AGM.The minutes of the Committee meeting held on 2 September 2014 show that theCommittee agreed to raise a levy in the region of $100,000 for payment in October2014, and Mr Leishman stated in his evidence that the first of the 2014 and 2015 leviescharged to Yee (that is, the first of the tranches of $3,079.64 set out at [3] above) wasincluded within the $100,000 referred to in the minutes of the Committee meeting of2 September 2014.[78] A further special resolution delegating the full powers and authority of theBody Corporate to the Committee, subject to the same provisos as the correspondingspecial resolution passed at the August 2014 AGM, was passed at the AGM of1 September 2015. The minutes of the Committee meeting held on 8 September 2015show that the Committee acted on that delegated authority, agreeing upon a furtherlevy of approximately $5,500 per unit, to be split into two payments. Mr Leishmansays that these two payments, as charged to Yee, are the second and third of the 2014and 2015 levies set out at [3] above.[79] Before I leave the question of the validity of the Body Corporate's delegationof the power to levy to the Committee, I mention one further argument raised (faintly)by Mr Dunning in his submissions. The argument was that the raising of the levies bythe Committee required a special resolution (presumably passed by the members ofthe Committee). I do not think that argument could be correct, as s 113 of the UTA26 At para 12.27 At para 13.expressly provides that any matters at a meeting of a body corporate committee are tobe decided by a simple majority of votes.[80] In my view there is no genuine and substantial issue over the validity of theBody Corporate's special resolutions delegating all powers and authority to theCommittee (subject only to the qualification that the Body Corporate could notdelegate to the Committee powers that it did not have itself).[81] It follows that, with that same qualification, there is no need to consider theissue of ratification referred to at [23](b) above.[82] Mr Dunning is on stronger ground on the third of the issues listed at [23] above.Gordon J considered that the levies for the repair work could only be raised for theexpress purpose of payment into an optional contingency fund established under s 118of the UTA. The learned judge expressed the view that a body corporate must establishsuch a fund to pay for major repairs such as those with which I am concerned in thiscase. Her Honour considered that the s 115 operating account could not be used forsuch a purpose, and nor could the long term maintenance fund provided for by s 117,or the optional capital improvement fund provided for by s 119. Levies raised by abody corporate had to be raised for one or more of the particular funds described at ss115–119: it was not open to a body corporate to raise funds for some other fund oraccount.[83] Gordon J considered that the "establishment of a fund" under s 121 of the UTArequires a deliberate decision by the body corporate, made in accordance with thedecision-making procedures set out in the UTA, or otherwise in accordance with thebody corporate's operational rules. Her Honour referred in particular to reg 31 of theUnit Titles Regulations 2011, which provides that a body corporate must resolve byordinary resolution any matter relating to:(a) the establishment of a bank account; or(b) the addition of a fund to an existing bank account.[84] Her Honour considered that the "establishment" of a fund requires somethingmore than merely coding payments to a building ledger;28 there must be a "deliberatedecision" by a body corporate to establish any new fund (in this case an optionalcontingency fund). Her Honour concluded that if the Body Corporate or theCommittee did not establish an optional contingency fund under s 118, the raising ofthe levies would have been ultra vires. If that was so, any later purported ratificationwould have been ineffective.29[85] Turning to issue (c) at [23], it appears that, at least up until the time of the AGMin August 2014, the Body Corporate had been using the long term maintenance fundto meet the repair costs. By 27 August 2014 that fund had been exhausted. Therelevant resolution30 passed at the August 2014 AGM provided that the long termmaintenance fund would be disestablished until such time as the building remediationwas complete, when an updated LTM Plan could be developed, recognising the impactof the remediation on future LTM requirements. The LTM fund would be re-established at that point.[86] In my view there was nothing in that special resolution which could haveamounted to a deliberate decision by the Body Corporate to establish an optionalcontingency fund. Consistent with that view, Mr Leishman stated in a memorandumdated 4 May 2016 filed in the District Court that the "building levies" were raisedwithin the operating account under s 115(2)(a)(b) to meet the costs agreed to beincurred at the 2012 AGM. In that memorandum, Mr Leishman rejected Yee'scontention that a separate fund needed to be established to raise a levy for the buildingwork.[87] The financial statements for the Body Corporate as at 31 July 2013 did notshow any funds in an optional contingency fund. The 2013 financial statements didshow the existence of an "administrative fund", which contained $9,479.91 in"receivables" – proprietor, debtor levies (special). The Body Corporate's statement offinancial position as at 31 July 2016 also showed no funds in a "contingency fund",28 Yee Good Fortune Ltd v Body Corporate 392619, above n 2, at [91].29 At [107].30 See [28] above.but the long term maintenance fund was now described as a "contingency fund" (witha zero balance). The same zero balance was shown in the comparative figures for theJuly 2015 year end.[88] I consider it arguable for Yee that the resolution passed at the 27 August 2014AGM to "disestablish" the long term maintenance fund did not, implicitly orotherwise, "establish" an optional contingency fund under s 118 of the UTA. Inreaching that view I have in mind particularly the requirement of reg 31 of the UnitTitles Regulations 2011 that the establishment of any new bank account or fundrequires an ordinary resolution of a body corporate. There appears to have been nosuch ordinary resolution in this case,31 and Mr Leishman's submissions to the DistrictCourt tend to confirm that special building levies paid by other unit owners were paidinto the Body Corporate's operating account, established under s 115 of the UTA.While the long term maintenance fund was "re-labelled" as a "contingency fund" inthe Body Corporate's July 2016 financial statements, it is not clear that such a fundexisted when the 2014 and 2015 levies were raised.[89] In the absence of any ordinary resolution for the establishment of a new fund,I think there must be a substantial and genuine dispute over whether any optionalcontingency fund was ever established. If it was not, the effect of the judgment ofGordon J would be that the 2014 and 2015 levies were invalid, and the resolutions onwhich those levies were based could not be saved by any form of ratification.[90] It may be that there are arguments for the Body Corporate that Gordon J wasincorrect in her view that the costs of repairs effected by a body corporate under s 138can only be paid from a s 118 optional contingency fund. There appears to be verylittle authority on the point, and I note that under the Unit Titles Act 1972 a bodycorporate was entitled to pay for necessary repairs from the same fund that it wasrequired to establish for the purpose of paying general administrative expenses.32 Ifrepairs could be met from the general operating account under the 1972 Act, there is a31 Unlike the situation in Butcher v Body Corporate 342525 [2016] NZHC 3128, where one of therelevant resolutions confirmed "that the fund styled "long term maintenance fund" is and alwayshas been an optional contingency fund for the purposes of s 118 of the UTA" (see [99] (8) of thejudgment).32 Unit Titles Act 1972, s 15(2)(a).question as to why a separate fund would have been considered necessary for thepayment of repair costs under the UTA.[91] There might also be arguments for the Body Corporate that the distinctionbetween very minor repairs carried out by a body corporate under s 138 (which wouldarguably qualify as "the provision of services" under s 115(2)(b) of the UTA) andmajor repair work of the kind with which this case is concerned, is difficult to justify.At what point would a repair job carried out by a body corporate under s 138 becomesufficiently "serious", or "substantial", that it could no longer be regarded as as115(2)(b) "service"?[92] Those may be arguable matters for the Body Corporate, but they do not in myview diminish the fact that Yee's position on this point is supported by the authorityof Gordon J's judgment. I note also that in Butcher v Body Corporate 342525, thebody corporate used a contingency fund to pay expenses associated with large scaleremediation works.33 In those circumstances I am satisfied that this is not an issuewhich is suitable for resolution in the context of a liquidation proceeding. On anyview of it, Yee has raised a genuine and substantial dispute over the validity of thelevies, based on the apparent failure of the Body Corporate to establish a relevant fundinto which the relevant levies were to be paid.[93] The finding that there is a genuine and substantial dispute over liability for the2014 and 2015 levies effectively means that the liquidation claim must be stayed ordismissed. The Body Corporate disclaimed any reliance on the 2013 levies in thisliquidation proceeding, and the remaining claims made by the Body Corporate in itsstatutory demand and subsequent liquidation proceeding are very substantially"parasitic" on the claims for the levies.Result[94] But for the position of the supporting creditor, the appropriate course would beto dismiss the liquidation claim. There may well be further appeals from the Tribunal'sdecision on the issues that have been referred back to it, and there could be substantial33 Butcher v Body Corporate 342525, above n 31.further delays before all issues over the 2013 levies have been resolved. It is betterthat the Body Corporate's liquidation claim be brought to an end now. Against that,the right of the supporting creditor to make any application it might wish to make tobe substituted as a plaintiff in the proceeding, needs to be considered. There will needto be a valid liquidation claim still on foot when any such substitution application ismade (if it is made).[95] In those circumstances the appropriate course is to order, as I do, that the BodyCorporate's liquidation claim is stayed, with the proceeding adjourned to the list on20 March 2018 to deal with any application by the Body Corporate 81340 forsubstitution as a plaintiff.[96] Counsel may file memoranda on costs if they cannot agree. Any memorandumfor Yee is to be filed and served within 20 working days. Any reply memorandum bythe Body Corporate is to be filed within 15 workings days of its receipt of the BodyCorporate's memorandum.Associate Judge SmithSolicitors:John Dean Law Office, Wellington for the plaintiffNat Dunning Law, Wellington for the defendantRainey Collins, Wellington for Body Corporate 81340, a supporting creditor