CUMMINS v BODY CORPORATE 172108 [2022] NZSC 95

CUMMINS v BODY CORPORATE 172108 [2022] NZSC 95 [10 August 2022]IN THE SUPREME COURT OF NEW ZEALANDI TE KŌTI MANA NUI O AOTEAROASC 49/2022[2022] NZSC 95BETWEEN ROBERT JAMES CUMMINSApplicantAND BODY CORPORATE 172108RespondentCourt: Ellen France, Williams and Kós JJCounsel: K P Sullivan for ApplicantJ B Orpin-Dowell and T J G Allan for RespondentJudgment: 10 August 2022JUDGMENT OF THE COURTA The application for an extension of time is granted.B The application for leave to appeal is dismissed.C The applicant must pay the respondent costs of $2,500.____________________________________________________________________REASONSIntroduction[1] The applicant, Mr Cummins, is the sole director and shareholder ofManchester Securities Ltd (Manchester). Manchester is the registered proprietor ofUnit 12A of the Hobson Apartments. In that capacity, Manchester has been involvedin a long-running dispute with the respondent, Body Corporate 172108, the bodycorporate of the Apartments, over the responsibility for repairs to make the Apartmentsweathertight. Manchester has not paid body corporate levies for some time or its shareof the costs of repairs undertaken by the Body Corporate. The Body Corporate soughtto enforce payment by statutory demand. After Manchester did not pay, it was placedinto liquidation on the application of the Body Corporate in February 2020.1[2] After Manchester was placed into liquidation, the applicant sought joinder totwo proceedings in the High Court relating to Manchester's obligation to pay its shareof the repair costs for common property.2 The applicant says Manchester holdsUnit 12A as trustee of Manchester Securities Trading Trust and he is now the successortrustee.3 Mr Cummins said in his evidence that he did not intend to call for the title tobe transferred to him at this stage because he would be potentially liable to theBody Corporate for payment of the levies. Both the High Court4 and theCourt of Appeal5 found that joinder would only be appropriate if the applicant tookthe following steps:(a) registered a transfer or transmission of the title to Unit 12A to himself;and(b) paid the Body Corporate all of the amounts owed by Manchester to theBody Corporate at the time of liquidation.[3] The proposed appeal to this Court would challenge these conditions on joinder.Background[4] To put the present application in context, we need to make brief reference tothe events leading up to the joinder decisions. The narrative begins in 2010 when theBody Corporate obtained the Court's approval for a scheme for integrated repairs to1 Body Corporate 172108 v Manchester Securities Ltd [2020] NZHC 198.2 The Court of Appeal in Cummins v Body Corporate 172108 [2022] NZCA 68 (Goddard, Woolfordand Mander JJ) [CA joinder decision] at [34] described the two proceedings as first, an applicationby the Body Corporate for orders under s 48(6) of the Unit Titles Act 1972 varying a remediationscheme approved by the High Court. Manchester in its cross-application also sought to vary thescheme. The second proceeding is an appeal by the Body Corporate against an arbitral awarddetermining a preliminary question as to jurisdiction. This relates to an arbitration Manchestersought to commence under the remediation scheme.3 We understand that the deed providing for Manchester's retirement and removal as trusteerecorded Manchester would continue to hold the trust property as a bare trustee to the order ofMr Cummins.4 Body Corporate 172108 v Manchester Securities Ltd [2021] NZHC 365 (Powell J) [HC joinderdecision].5 CA joinder decision, above n 2.all levels of the building including level 12.6 Under the approved scheme Manchesterwas able to carry out the repairs to level 12 itself and its liability was capped.However, by 2017 Manchester had done little, if anything, to repair level 12 and theBody Corporate had completed the repair of common property on levels one to 11.Manchester had not paid any amount levied by the Body Corporate for the latterrepairs reflecting its view it was in fact owed money by the Body Corporate.[5] In 2017 the Body Corporate successfully sought a variation of the scheme.7 Aspart of that change, the cap on Manchester's liability was removed. Fogarty J orderedManchester to pay a provisional sum to the Body Corporate with that sum to beadjusted on completion of remediation.8 Manchester's failure to pay gave rise tostatutory demands and an unsuccessful application by Manchester to set this aside inthe High Court.9 The applicant appealed to the Court of Appeal against this on thebasis Manchester had a set-off and so the statutory demands should have been setaside.[6] The claimed set-off relates to sums Manchester says it is owed by theBody Corporate for costs incurred in repairs. In dismissing the appeal, theCourt of Appeal declined to exercise the discretion against setting aside a statutorydemand.10 That was because the applicant was effectively seeking to relitigate theearlier order, upheld by the Court of Appeal, to pay the sums owing. Manchester wassubsequently placed in liquidation not having paid the amount ordered to be paid.116 Body Corporate 172108 v Meader (Nos 2 & 3) (2010) 12 NZCPR 181 (HC). See alsoBody Corporate 172108 v Meader (2010) 12 NZCPR 101 (HC). The scheme was necessarybecause otherwise the Body Corporate could only carry out repairs to common property. Unit 12Aoccupies most of the area on the top floor of the building. The remaining areas on that floor arecommon property.7 Body Corporate 172108 v Manchester Securities Ltd [2017] NZHC 329.8 Manchester appealed unsuccessfully from this decision: Manchester Securities Ltd v BodyCorporate 172108 [2017] NZCA 527, (2017) 19 NZCPR 65. This Court declined leave to appeal:Manchester Securities Ltd v Body Corporate 172108 [2018] NZSC 19.9 Manchester Securities Ltd v Body Corporate 172108 [2018] NZHC 169. Levies were alsooutstanding.10 Manchester Securities Ltd v Body Corporate 172108 [2018] NZCA 190, [2018] 3 NZLR 455 at[49]. The Court did not consider the claimed set-off necessarily strong and was not able to fullyevaluate it given the lack of detail.11 Body Corporate 172108 v Manchester Securities Ltd, above n 1; and Cummins v Body Corporate172108 [2021] NZCA 145, [2021] 3 NZLR 17.[7] In the decision to which the present application relates, the Court of Appealsaid that even if Mr Cummins had acquired some equitable interest in respect of theunit as a result of his arrangements with Manchester that fell "well short of being achange or transmission that would make it necessary or desirable" for him to be madea party in place of Manchester.12 The Court continued that:13Consistent with the scheme of the Unit Titles Act, it is necessary for the legalowner of each unit to be a party to proceedings concerning a scheme. For solong as it continues to hold legal title, Manchester must remain as a party inthe relevant proceedings. Nor do we consider that the arrangementsMr Cummins has brought about between himself and Manchester make itnecessary or desirable that he be added as a party, in addition to Manchester.[8] The Court considered it would be unjust to permit a person claiming underManchester to defer the payment obligation while pursuing their cross-claims. In all,the Court considered that the application and the appeal were an abuse of the Court'sprocesses given the repeated Court rulings that Manchester and those claiming underit must pay the sums owing to the Body Corporate. The Court of Appeal subsequentlydismissed an application for recall of that judgment.14The proposed appeal[9] The applicant says he meets the, low, threshold for joinder. He wishes to arguethat the Court of Appeal was wrong because the Body Corporate will not be unfairlyprejudiced by joinder; he is not obliged to take legal title before the set-off is resolved;and joinder will not bring the administration of justice into disrepute. In addition, hesays that under s 47 of the Trustee Act 1956 the rights in the proceedings vested in himwhen he became a trustee or were otherwise assigned to him.15 He also relies ons 48(4) of the Unit Titles Act 1972 which gives a right to be heard on schemeapplications to persons having or claiming any estate or interest in any unit. Finally,the applicant challenges the decision to award indemnity costs against him.12 CA joinder decision, above n 2, at [59].13 At [59].14 Cummins v Body Corporate 172108 [2022] NZCA 153.15 That section deals with the vesting of trust property in new trustees.[10] We accept the respondent's submission that the criteria for leave to appeal arenot met in relation to the proposed appeal.16 In terms of the approach to joinder andabuse of process, the applicant does not challenge the legal principles applicable.Rather, resolution of the proposed appeal would ultimately require the Court to revisitthe concurrent factual findings of the Courts below which are specific to this case. Noquestion of general or public importance or of general commercial significance arisesfrom these matters.17[11] In any event, we are satisfied that the arguments the applicant wishes to raise,including those based on s 47 of the Trustee Act18 and s 48(4) of the Unit Titles Act,have insufficient prospects of success to warrant a further appeal. We add in relationto the argument concerning s 48(4) of the Unit Titles Act that there is merit in therespondent's submission that, assuming the provision applied, it would be unjust toallow unconditional joinder as that would defeat the Courts' earlier rulings.[12] At the time the application for joinder was before the Court of Appeal, itappeared the Trust would not take an active part in the proceedings. We understandfrom the respondent that is no longer the case. The liquidator is taking an active role.In all the circumstances, nothing raised by the applicant gives rise to the appearanceof a miscarriage of justice in the Court of Appeal's assessment of the case.19[13] The application for leave to appeal was filed out of time. The delay isexplained and the respondents do not oppose an extension of time. We accordinglygrant an extension of time.Result[14] The application for an extension of time to apply for leave to appeal is granted.The application for leave to appeal is dismissed.16 Senior Courts Act 2016, s 74(2).17 Section 74(2)(a) and (c).18 The High Court dismissed the argument based on s 47 on the basis that s 47 did not apply to landsubject to trust if, as here, the land comes under the Land Transfer Act 2017: HC joinder decision,above n 4, at [13]. But, in any event, the trust deeds made it clear the trust property remained withManchester absent transfer of title.19 Senior Courts Act, s 74(2)(b). See also Junior Farms Ltd v Hampton Securities Ltd (in liq)[2006] NZSC 60, (2006) 18 PRNZ 369.[15] The applicant must pay the respondent costs of $2,500.Solicitors:Core Legal Ltd, Masterton for ApplicantGrove Darlow & Partners, Auckland for Respondent