UNIT OWNERS v BODY CORPORATE 346799 [2023] NZHC 1497

UNIT OWNERS v BODY CORPORATE 346799 [2023] NZHC 1497 [16 June 2023]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2022-404-1178[2023] NZHC 1497UNDER The Arbitration Act 1996IN THE MATTER OF Arbitration of Objecting Unit Owners ofVictopia ApartmentsBETWEEN UNIT OWNERS as set out in Schedule ofUnit OwnersPlaintiffsAND BODY CORPORATE 346799 being theBody Corporate for Victopia Apartmentslocated at 135 Victoria Street West, CentralAucklandDefendantHearing: 20 October 2023Appearances: T M Bates for the plaintiffsE St John and C Baker for the defendantJudgment: 16 June 2023JUDGMENT OF ROBINSON JThis judgment was delivered by me on 16 June 2023 at 11:00 ampursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors/counsel:TM Bates & Co, AucklandPrice Baker Berridge, AucklandE St John, AucklandIntroduction[1] The plaintiffs own some of the apartments in a unit title development at 135Victoria Street West, Auckland (Victopia). Victopia has suffered damage as a result ofbuilding defects and requires significant repairs. In 2013 this Court settled a schemepursuant to s 74 of the Unit Titles Act 2010 (UTA) authorising the defendant BodyCorporate to manage those repairs and to raise levies to pay for them (Scheme).1[2] On 25 June 2021 the Body Corporate passed three resolutions under theScheme to raise repair levies from the unit owners. The owners were notified by letterdated 5 July 2021. The plaintiffs have objected. Their objections have been referredto arbitration in accordance with the terms of the Scheme. Mr Paul David KC is theappointed arbitrator.[3] This judgment concerns two of the arbitrator's preliminary decisions:(a) dated 2 March 2022, declining most of an application by the plaintiffsfor further discovery (discovery decision); and(b) dated 14 June 2022, relating to an Amended Notice of Objection theplaintiffs purported to file in response to the discovery decision (scopeof arbitration decision). In that decision the arbitrator determined thatsome of the plaintiffs' allegations that the defendant had breached theScheme and its statutory duties were outside the scope of the disputeproperly before the arbitrator.[4] In this proceeding the plaintiffs initially sought:(a) leave to appeal the discovery decision;(b) leave to appeal the scope of arbitration decision; and1 Re Body Corporate 346799 [2013] NZHC 3335.(c) a ruling on the arbitral tribunal's jurisdiction under art 16(3) of sch 1 tothe Arbitration Act 1996 (Schedule 1) (Act).[5] In written submissions filed in advance of the hearing, counsel for the plaintiffsadvised the plaintiffs no longer sought leave to appeal the discovery decision becausethe documents in question had since been provided by way of discovery in separateHigh Court proceedings. Instead, in the course of submissions counsel for theplaintiffs sought a ruling that these documents are admissible in the arbitration.[6] The Body Corporate opposes all applications.BackgroundThe Scheme[7] The building defects in Victopia require significant repair. The defects include,but are not limited to, cracking in the cladding system; failure of the waterproofmembrane to the concrete balconies on levels 13 and 14; and moisture leaking into thebasement carpark.[8] The Scheme was settled in 2013 to enable the Body Corporate to manageremedial work to rectify those defects on behalf of the unit owners. The Scheme alsoapplies to any other defects or repairs the Body Corporate identifies throughout therepair process.[9] The Scheme provides that the Body Corporate is appointed to act as agent foreach owner with full and irrevocable authority to authorise, commit and undertake therepairs on their behalf. The Body Corporate has a broad range of powers to undertakethe repairs. The Scheme also imposes duties with which the Body Corporate mustcomply, including: to seek advice from suitably qualified advisers; to have the repairsundertaken as diligently and as expeditiously as is practical; to keep minutes of all itsmeetings and decisions in connection with the Scheme, and to make those available toowners upon request; and to advise owners on a regular basis of its decisions and theprogress of repairs.[10] The Body Corporate is to levy and collect from the owners such money as itconsiders necessary in order to undertake the repairs. The owners are to pay for repairsto the exterior cladding and the basement leaks in accordance with their ownershipinterests, while the owners of units on level 13 and 14 are to pay for the costs ofrepairing their balconies. The Body Corporate is to determine how any remainingcosts are to be levied and paid. The Body Corporate may demand payment of leviesin such amounts and at such times as it may determine.[11] Clause 15 of the Scheme provides that the Body Corporate must:(a) Account to the Owners for all money that the Body Corporate or itsagent(s) receives and expends on behalf of the Owners under thisScheme;(b) Ensure that all the monies received from the Owners are onlyallocated and paid out for purposes authorised by this Scheme;(c) Upon receipt of reasonable notice from any Owner supplied to thatOwner oral and written information relating to the funds received andexpended for the Repairs and associated costs;[12] Clauses 17 – 21 of the Scheme set out a dispute resolution process and definethat process' scope. The Body Corporate's decisions on matters arising under theScheme are final in all respects; except where an owner raises an objection exceeding$30,000 in monetary terms or more than one owner raises objections exceeding$60,000 in total. Objections must be by written notice to the Body Corporate within10 days of notice of the decision objected to, and must outline the grounds on whichthe objection is made. On receipt of a qualifying objection notice the Body Corporatewill refer the matter to an arbitrator, who shall determine the matter in accordance withthe provisions of the Act. Clause 20 of the Scheme provides that the arbitrator'sdecision shall be final.The Resolutions[13] The background to the arbitration is accurately described in the arbitrator'sdiscovery decision. The Body Corporate recovered a fund of approximately $26.5million in settlement of proceedings against various parties involved in Victopia'sconstruction.2 Remediation works under the Scheme began in 2019. However, itbecame apparent that the funds recovered would be insufficient to complete theworks.3 As a result, at a committee meeting on 25 June 2021 the Body Corporatepassed three resolutions for further repair work under the Scheme and to levy theowners for that further work. In his discovery decision the arbitrator summarised theresolutions as follows:4Resolution 1 – costs of repairs to mechanical ventilation – the Body Corporateresolved to undertake the work to the mechanical ventilation as recommendedby consultants. The Body corporate resolved that the affected owners wouldbe levied the sum of $1,609,953.00 (including GST) to be paid in two equalinstalments as per Schedule [sic].Resolution 2 – costs of repairs to balconies – the Body Corporate resolved tocarry out work as recommended by Babbage Consultants to reconstructpodium balconies on the eastern elevation and curved balconies from groundto level 12 of the building. The Body Corporate resolved to levy the individualaffected unit owners the sum of $857,343.00 (including GST) to be paid intwo equal instalments as set out in the Schedule.Resolution 3 – cost to complete repairs to external cladding – the BodyCorporate resolved that the work of recladding would now include therecladding of the recessed section of the eastern lobby side elevation and thatall owners would be levied the sum of $15,237,500 (including GST) tocomplete the recladding based on their ownership interests, including the workto the eastern elevation with this levy to be paid in three equal instalments.[14] The Body Corporate advised the owners of the resolutions by letter of 5 July2021. Various apartment owners objected to the Body Corporate's resolutions.5 Theobjections were received by email. There does not appear to be any issue that theywere received within the 10-working day period provided for in cl 18 of the Scheme.Those emails are not before the Court but were summarised by the arbitrator asfollows:6a. the mechanical ventilation levy under Resolution 1 was unrelated to theweather-tightness remediation and lacked detailed information.2 Unit Owners v Body Corporate 346799 (Decision on Application for Discovery by Applicants)Paul David KC 2 March 2022 at [6].3 At [6].4 At [7].5 The discovery decision records (at [12]) that objections were received from 39 owners. A scheduleto the plaintiffs' application to this Court lists the owners of 37 units as plaintiffs represented byMr Bates in this proceeding. However, counsel advises that the owners of two of the 37 unitsreferred to in the schedule to the plaintiffs' application no longer wish to remain part of thearbitration or this proceeding. I use the term "plaintiffs" to refer to whichever owners formed partof the objecting group at the relevant time.6 Discovery decision, above n 2, at [9] (emphasis added).b. the deck repair levy under Resolution 2 was for repairs that were notnecessary and/or there was insufficient information to show that theywere necessary.c. in respect of Resolution 3, it was not clear why the original $26.5 millionfunds would run out with this work not completed and there wasinsufficient material to support aspects of the work and to check theprevious expenditure of funds.Arbitration[15] The dispute arising out of the objections to the resolutions was referred toarbitration. On 19 August 2021 Mr David was appointed as arbitrator. On 8 October2021 Mr David sent out his terms of appointment, which recorded that:2. The dispute concerns the liability of the respondents to pay levies for thecost of remedial works at an apartment building at 135 Victoria Street West,Auckland ("Victopia Apartments"). The claimant has issued the levies forthe costs of repair to the building under a scheme approved by the HighCourt under s 74 Unit Titles Act 2010. Proprietors of apartments atVictopia Apartments have objected to the levies. The objections raised bythe proprietors as to the liability to pay the levies have been referred toarbitration under the provisions of the approved scheme.[16] On 26 November 2021 the plaintiffs filed a Notice of Objection setting outtheir objections to the resolutions. At paras [1] – [9] the plaintiffs alleged the BodyCorporate had breached various powers, duties and obligations under the Scheme. Atparas [10] – [20] the plaintiffs set out the particulars of the breaches. The particularsfocused on the levies raised in the resolutions and contained the following.[17] Regarding all three resolutions, the plaintiffs alleged that they were passedwithout proper consultation and without providing adequate supportingdocumentation.[18] Concerning resolution 1, the plaintiffs allege that the determination to imposethe levy for further work on the building and ventilation systems was unreasonableand/or improper and/or negligent given that the projected cost of the further workswas $1,399,595 (exclusive of GST) when that cost should have been $748,405(exclusive of GST).[19] Concerning resolution 2, the plaintiffs allege the decision to impose the levyfor further work on balconies was unreasonable and/or improper and/or negligentgiven that the projected costs of the works was $745,516 (exclusive of GST) whenthat cost should have been only $450,710 (exclusive of GST). The plaintiffs alsoobjected to a determination the Body Corporate had made in June 2020 to carry outwork on other balconies.[20] Concerning resolution 3, the plaintiffs allege that the Body Corporate'sdetermination to impose levies for $15,237,000 for the recladding work was madewithout proper consultation and without providing the plaintiffs with supportingdocumentation.Discovery decision[21] In early December 2021 the plaintiffs applied for discovery of documentsrelevant to their objections. A hearing was held (remotely) on 16 February 2022. Inthe discovery decision that followed, the arbitrator declined most of the plaintiffs'application. Although the plaintiffs no longer seek leave to appeal the discoverydecision, it is procedurally relevant to their remaining applications.[22] The plaintiffs sought discovery of various documents including all accountingrecords for the repair works carried out under the scheme since the inception of therepair contract. These documents were sought in relation to a general but seriousallegation that the Body Corporate and its committee have mismanaged the repaircontract throughout the period of the works.7 The arbitrator noted there was noparticularised allegation of mismanagement in the Notice of Objection. Instead, itappeared in the grounds put forward in support of the discovery application.8[23] Essentially, the plaintiffs sought to challenge the levy imposed in resolution 3on the basis that the Body Corporate had mismanaged the $26.5 million fund thatwould otherwise have been available to pay for those works. To support that allegation7 At [30].8 At [30].the plaintiffs sought discovery of accounting records for the whole project from itsinception to enable an expert accountant they had instructed to undertake an audit.[24] In declining this aspect of the discovery application, the arbitrator held:32. The objection regime is concerned with objections to decisions tocarry out repairs and works to bring about the remediation of thebuilding (and the consequential levies for the intended works). Evenif there was a proper basis for the allegation of previousmismanagement (as opposed to general assertion of this), I do notconsider that an objection to the decisions of June 25, 2021, can bemade on this basis on the proper construction of the Scheme. This isbecause the objection regime provided in the Scheme is aboutdeciding on specific objections to decisions to carry out future workand the levies to do that work. Allegations of previousmismanagement on earlier decisions cannot in my view be broughtwithin the objections made.[25] The arbitrator then made timetable orders including for the filing of evidenceso the arbitration could proceed to a hearing.9Amended Notice of Objection[26] On 4 April 2022 the plaintiffs filed their evidence. They also filed anAmended Notice of Objection. The Amended Notice included allegations that theBody Corporate had breached various obligations imposed by the Scheme, the UTAand the Unit Titles Regulations 2011 "by failing to account to the owners for all moneythat the Body Corporate had received and expended on behalf of the owners under theScheme".[27] By memorandum of counsel, the Body Corporate objected to the AmendedNotice on the basis it was wide-ranging, out of time and "relate[d] to topics which[were] incapable of meeting the requirements of an arbitration available under theScheme". The Body Corporate objected to aspects of the plaintiffs' evidence on thesame basis.[28] Following a hearing with counsel the arbitrator sought further submissionsconcerning the scope of the Scheme and its objection regime so that he could9 At [38] and [40].determine which allegations were properly within the scope of the arbitration.Otherwise he granted the plaintiffs leave to file the Amended Notice.The scope of arbitration decision[29] The arbitrator recorded counsel for the owners' submission that the challengeto the Body Corporate's decision would be "multi layered", and that the notifiedobjections to the decisions could involve consideration of previous decisions onconstruction works. The owners submitted (as they had in relation to their discoveryapplication) that they could object to a levy on the basis that funds available to theBody Corporate to pay for the repairs had been wrongly diminished by the BodyCorporate's previous incorrect decisions.10[30] The Arbitrator did not accept that submission. He ruled that:18. The Arbitrator does not consider that this form of objection thatimpugns earlier decisions that have become final under the Scheme isavailable. Such an approach to objections is contrary to previousdecisions being final in all respects and not consistent with the overallpurpose of the Scheme – the completion of the repairs to remedy thedefects by a committed project of work.19. Similarly, while those objecting to a decision to impose a levy forrepair works are entitled to be provided with the information thatsupports the decision to undertake the repair works and the financialand accounting information relevant to the estimated cost of the workand the calculation of the levy for the works (and may raise the absenceof such information as part of an objection), an objection does notentitle those objecting to call for an audit of the entire project to dateon the basis of allegations that the Body Corporate has failed generallyin its duties as regards previous expenses. A party objecting to a levyfor intended works is entitled to receive and scrutinise the financialinformation and accounts that support the levy imposed by the decisionobjected to, but that exercise must be relevant to the calculation of thelevy imposed for the decision under objection. It cannot be concernedwith allegations that previous decisions have been wrongly made sothat the costs have been wrongly expended (thereby wrongly reducingthe funds held by the Body Corporate).[31] On that basis, the arbitrator ruled:1110 Unit Owners v Body Corporate 346799 (Decision Relating to Amended Notice of Objection onScope of Arbitration) Paul David KC 14 June 2022 at [17].11 At [20].• Paragraphs 3 – 6 of the Amended Notice dealing with alleged breachesof the Scheme and of statutory duties to keep accounts, and failing toaccount for all money received and expended under the Scheme, werenot properly within the scope of the dispute raised by the objectionsto the decision.• Paragraph 7, alleging breaches of clause 15(b) of the Scheme, was notwithin the scope of the dispute raised by the objections.• Paragraph 8 was within scope of the dispute raised by the objectionsto the extent it related to the provision of construction information thatwas relevant to the decisions to carry out works and to the calculationof levies. However, it was not within the scope of the dispute raisedby the objections to the extent it related to construction and financialinformation concerning previous decisions and the accounting forthem.• Paragraphs 9 and 10(a) were within the scope of the dispute raised bythe objections. Paragraph 10(b), alleging failure to account for allmoney received under the Scheme for the entire project, was not.• Paragraphs 11 and 12, relating to previous decisions and their allegedeffect on costs, were not within the scope of the dispute.[32] The plaintiffs seek leave to appeal this decision.Arbitration Act 2006 – Relevant legal principles[33] The rules set out in schs 1 and 2 to the Act apply.12 The plaintiffs rely on arts5(1)(c) and 5(2) of sch 2 to the Act in support of their application for leave to appeal.In support of their request for a ruling on the arbitral tribunal's jurisdiction theplaintiffs rely on art 16(3) of sch 1 to the Act. They also refer to rr 26.1 – 26.4 of theHigh Court Rules 2016.[34] The arbitral tribunal may conduct the arbitration in such manner as it considersappropriate, subject to the provisions of sch 1.13 Amongst other things, the arbitraltribunal has the power to determine the admissibility and relevance of any evidence.14In the absence of agreement the arbitrator has the power to order discovery andproduction of documents.1512 Arbitration Act 1996, s 6.13 Schedule 1, art 19(2).14 Schedule 1, art 19(2).15 Schedule 2, art 3(1)(f).Appeals[35] The Court is not to intervene in matters governed by sch 1, except as sch 1provides.16 However, any party may (with the other parties' consent or with thisCourt's leave) appeal to the High Court on any question of law arising out of anaward.17 An award is a decision of the arbitral tribunal on the substance of the dispute,and includes any interim, interlocutory or partial award. The High Court shall notgrant leave unless it considers that the determination of the question of law concernedcould substantially affect the rights of one or more of the parties.18[36] This Court may also determine challenges to jurisdiction. While an arbitraltribunal may rule on its own jurisdiction,19 a party may plead that the tribunal does nothave jurisdiction.20 The arbitral tribunal may rule on any such plea either as apreliminary question or in an award on the merits.21 If it rules on the plea as apreliminary question, any party may within 30 days request that this Court decide thematter.22 This Court's decision shall not be subject to an appeal.23Leave to appeal the discovery decision[37] The plaintiffs do not pursue their application for leave to appeal the discoverydecision. If they had, I would not have granted it.[38] I do not consider the arbitrator's discovery decision to be an "award", namelya decision on the substance of the dispute.[39] The term "substance of the dispute" distinguishes between those matters whichare procedural and practical; and those substantive matters which affect the rights ofthe parties. Substantive law defines, creates or confers legal rights or status; or definesand imposes the nature and extent of legal duties. The function of practice and16 Schedule 1, art 5.17 Schedule 2, art 5(1).18 Schedule 2, art 5(2).19 Schedule 1, art 16(1).20 Schedule 1, art 16(2).21 Schedule 1, art 16(3).22 Schedule 1, art 16(3).23 Schedule 1, art 16(3).procedure is to provide the machinery by which those legal rights and duties arerecognised and enforced.24[40] The arbitrator's discovery decision is not a decision on the substance of thedispute. It concerns purely procedural matters that fall to be determined by thearbitrator. I do not consider these are matters upon which the Court can intervene.[41] In any event, I agree with the arbitrator's discovery decision. On a properinterpretation of the Scheme I do not consider the Body Corporate should be obligedto provide discovery of historic financial material to enable an independent audit ofthe entire Remediation project. This would be contrary to the nature and purpose ofthe Scheme, including the finality provision. In my view the objection regime isintended to deal with particular objections to specific decisions, rather than to broadand general allegations of mismanagement.Admissibility[42] In submissions counsel for the plaintiffs sought an order that financial materialthe plaintiffs have received by way of discovery in separate proceedings are admissiblein the arbitration. I do not consider the Court has jurisdiction to make such an order.If it does, I would not. It is for the arbitrator to determine the admissibility of anyevidence in the arbitration before him.25 I also note that a party who obtains adocument by way of inspection in High Court proceedings may only use that documentfor the purposes of that proceeding and must not make it available to any other personexcept for the purposes of the proceeding,26Application for leave to appeal scope of arbitration decision[43] The arbitrator ruled that certain parts of the plaintiffs' Amended Notice ofClaim were outside the scope of the dispute raised by their objections to the BodyCorporate's resolutions. The arbitrator did not consider it was open to the plaintiffs to24 McConnell Dowell Constructors Ltd v Pipeflow Technology Ltd HC Auckland M2029/98, 25March 1999 per Paterson J; General Distributors Ltd v Melanesian Mission Trust Board [2008] 3NZLR 718 (HC).25 Arbitration Act 1996, sch 1, cl 19.26 High Court Rules 2016, r 8.30.4.object to the decisions made on 25 June 2021 by impugning earlier decisions by theBody Corporate that had become final under the Scheme. This was contrary to thefinality provisions within the Scheme and the overall purpose of the Scheme toimplement a project to complete the repairs and remedy the defects.[44] The plaintiffs complain that in this way the arbitrator misinterpreted cls 17 –21 which set up the dispute resolution mechanism at cls 17 – 21 of the Scheme. Theysay the arbitrator's interpretation is too narrow. Counsel submits that disputesconcerning the calculation of levies are squarely within the scope of the Scheme'sdispute resolution mechanism, and that the quantum of levies required to complete therepairs will be directly affected by the Body Corporate's (alleged) previous misuse offunds.[45] Counsel submits that the arbitrator's ruling concerning the scope of arbitrationraises question of law about the proper interpretation of cls 17 – 21 of the Scheme.These questions are set out in counsel's supplementary submissions as follows:(a) Is the Arbitrator's interpretation of the Dispute Resolution mechanismin the Section 74 Scheme (Clauses 17 – 21) correct when he rulesfinancial decisions made outside of the 10-working day timeframefrom when the 25 June 2021 shortfall levy was raised, fall outside thejurisdiction of the arbitration when considering the plaintiffs'objection to the shortfall levy?(b) Has the Arbitrator correctly applied the law as stated in [Westen vAbdoelrahman]27 that says where a party files a defence to allegationsmade in the form of a pleading, it has submitted the dispute to thejurisdiction of the Tribunal. Furthermore, has the Arbitrator correctlyapplied article 16(2) of schedule 1 to the Arbitration Act 1996 whichsays that a plea of no jurisdiction has to be raised on submission ofthe statement of defence. In particular breaches of 15(a) and 15(c) ofthe Section 74 [sic] were not objected to as being outside thejurisdiction of the Arbitration, when the defendant filed its Responseto the Notice of Objection.[46] In terms of what amounts to a question of law, counsel refers to art 5(10) ofsch 1 to the Act which provides that a question of law includes an error of law thatinvolves an incorrect interpretation of the applicable law. Counsel also refers me to27 Westen v Abdoelrahman HC Auckland CIV-2010-404-2998, 11 October 2010.this Court's earlier decisions in Gee v Scheurich,28 Nixon v Walker29 and Millar vFletcher.30[47] In terms of art 5(2) of sch 2, counsel for the plaintiffs submits that thearbitrator's narrow interpretation of the Scheme will effectively leave unit owners withno realistic mechanism to protect themselves against having to meet levies where therehas been a misuse of project funds. Counsel says it is only when the plaintiffs receivednotice of resolution 3 that they became aware there was shortfall arising out of theBody Corporate's earlier decisions. On the arbitrator's narrow interpretation of cls 17– 21 of the Scheme, it is now too late for the plaintiffs to challenge the decisions thatgave rise to the alleged shortfall.Discussion[48] Once again, I do not consider that the scope of arbitration decision is an award.The decision defines the scope of the dispute but it does not decide the substance ofthe dispute. It is an interlocutory procedural decision and I do not consider the Courthas jurisdiction to grant leave to appeal it.[49] Nor does the scope of the arbitration decision raise any questions of law thatwill substantially affect rights.31 In this regard counsel for the plaintiffs submits theyhave gone to significant trouble to identify the alleged misuse of project funds, onlyto have the allegations ruled out of the arbitration. He says that the costs of repairs atVictopia have more than doubled, and "the plaintiffs are entitled to answers".[50] It is impossible from the material before the Court to form even a preliminaryview as to whether these serious allegations have merit. But even if they do, thearbitrator's decision does not deprive the plaintiffs of a remedy. There are otheravenues available to the plaintiffs if they wish to pursue their allegations. Thearbitrator has simply ruled that these allegations are not to be determined in the course28 Gee v Scheurich HC Hamilton M313/98, 20 January 1999.29 Nixon v Walker HC Auckland CIV-2007-404-1372, 13 July 2007.30 Millar v Fletcher HC Invercargill AP2/02, 16 July 2002.31 Arbitration Act 1996, sch 2, art 5(2).of the current arbitration. Article 5(2) of sch 2 precludes the Court from granting leaveto appeal that ruling.[51] Even if I am wrong on that, I would not exercise the Court's discretion to grantleave. To the extent that the considerations identified in Gold & ResourceDevelopments (New Zealand) Ltd v Doug Hood Ltd might apply they tell stronglyagainst granting leave.32 I do not consider the plaintiffs' case that the Arbitrator haserred is strong. On the contrary, I agree with him. The scope of the dispute resolutionprocess within the scheme is narrow. The Scheme emphasises finality and efficiency.The expanded allegations contained in the plaintiffs' Amended Notice were raised forthe first time much more than 10 working days after the decisions to which they relate.The fresh allegations are potentially much more serious and complex than the issuespresently before the arbitrator. If the plaintiffs wish to pursue those allegations theyshould be dealt with in separate proceedings, rather than shoehorned into the currentarbitration.[52] For all these reasons the plaintiffs' application for leave to appeal the scope ofarbitration award is declined.Ruling as to jurisdiction[53] In the alternative, the plaintiffs submit that the decision as to the scope ofarbitration amounts to a decision by the arbitrator as to his own jurisdiction. In essencethey submit that decision was made as a preliminary ruling in respect of a plea by theBody Corporate that the arbitral tribunal did not have jurisdiction. On that basis theplaintiffs ask the Court to rule pursuant to art 16(3) of sch 1 on the scope of the arbitraltribunal's authority.[54] Counsel refers to the learned authors of Williams and Kawharu onArbitration,33 and to Downer Construction (New Zealand) Ltd v SilverfieldDevelopments Ltd34 for the proposition that a High Court hearing under art 16(3) is32 Gold & Resource Developments (New Zealand) Ltd v Doug Hood Ltd [2000] 3 NZLR 318 (CA).33 David AR Williams and others Williams and Kawharu on Arbitration (2nd ed, LexisNexis,Wellington, 2017) at [7.4].34 Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd HC Auckland CIV-2004-404-4488, 26 October 2004 at [56].not an appeal and must proceed as a de novo hearing. As such, counsel submits thatnone of the constraints that apply in respect of applications for leave to appeal pursuantto art 5(1)(c) of sch 2 apply to hearings under art 16(3) of sch 1. The plaintiffs do notneed to establish there is a question of law; nor that the determination will substantiallyaffect the rights of one or more of the parties. The overall discretion of the Court doesnot apply.[55] I agree with counsel for the Body Corporate that the arbitrator's scope ofarbitration decision was a perfectly conventional decision as to what can and cannotbe included within the arbitration. To the extent this decision amounts to a ruling bythe arbitrator on the limits of his own jurisdiction it is a ruling he was entitled to make.Moreover, it will be apparent from my reasons declining leave to appeal that I agreewith the arbitrator. The dispute resolution mechanism contained within the Scheme isnarrow and emphasises finality. The plaintiffs' fresh allegations either fall outside thescope of the Scheme's dispute resolution mechanism, or relate to Body Corporatedecisions that have become final. This is not to say that the plaintiffs are necessarilydeprived of a remedy, but I agree with the arbitrator that certain allegations in theAmended Notice are not properly within the scope of the dispute before him.Result[56] The plaintiffs' application for leave to appeal is dismissed.[57] To the extent that the arbitrator has ruled on a matter referred to in art 16(3) ofsch 1 of the Act, the arbitrator's ruling is confirmed.[58] The Body Corporate is entitled to costs. My preliminary view is that 2B isappropriate. If the parties cannot agree, the Body Corporate should file amemorandum within 15 working days, and the plaintiffs five working days after that.Memoranda should be no more than five pages in length (excluding attachments).Unless I require assistance I will deal with costs on the papers.____________________Robinson J