What was the outcome of Tenancy Tribunal case 9046365?

The tribunal order states: The applications are dismissed.

How much money was awarded in case 9046365?

Verified claim lines are listed on this page.

What type of tenancy dispute was case 9046365?

The primary dispute was Leaks. Related themes: Property damage, Unit Titles.

Where can I read the official tribunal order for case 9046365?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/10157774-UTA_Tribunal_Order.pdf.

What was the outcome of Tenancy Tribunal case 9046365?

The tribunal order states: The applications are dismissed.

How much money was awarded in case 9046365?

Verified claim lines are listed on this page.

What type of tenancy dispute was case 9046365?

The primary dispute was Leaks. Related themes: Property damage, Unit Titles.

Where can I read the official tribunal order for case 9046365?

The official Ministry of Justice published order is available at https://forms.justice.govt.nz/search/Documents/TTV2/PDF/10157774-UTA_Tribunal_Order.pdf.

Dunedin Central, Dunedin Tenancy Tribunal Case 9046365 — Leaks

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Reasons

The Parties

The applicant is owner of Unit 6 in a Unit Title development known as Cargill Court.

The applicant represented herself at the hearing.

The Body Corporate was represented by David O'Shea, the Body Corporate chair.

Several of the other unit owners also attended the hearing. As well as hearing from the applicant and Mr O’Shea, evidence was given by Mr Duder the Treasurer, by Ms Wilkins, who was one of the movers of the window replacement resolution discussed below and by Dr McDrury, a former chair of the Body Corporate management committee.

I express my respect for the way in which the participants approached the hearing. There are heartfelt and differing views on what has been a difficult issue for the unit owners to resolve. They engaged with the process and with each other constructively and considerately. Background

Cargill Court was built in the 1970s to design by a well known architect Mr. McCoy. It is something of a Dunedin landmark. All the unit owners are conscious of that and feel a resulting sense of civic responsibility in making decisions about the building.

The building contains 13 units comprising 8 x 2 and 5 x 1 bedroom units, with differing orientations, giving the units differing levels exposure to the elements. That is reflected in different degrees of deterioration in the windows this case is about.

The building has a number of distinctive design elements. The feature with which this hearing was concerned, is the use of large crittal steel windows, which rotate from a central hinge.

For over a decade the Body Corporate, through its management committee, has been grappling with the question of how best to respond to the deterioration of the windows, which is more marked in some units than in others.

In her submissions the applicant says that, “From 2012 various management committees agreed that it had to be a special resolution (75% in favour) to replace all the steel windows with double glazed aluminium windows.”

I was not able to find a record of any such resolution in the evidence and I would question in any event, whether the management committee could stipulate voting requirements that might restrict the exercise of powers conferred on the Body Corporate, by the Unit Titles Act 2010 (“UTA”).

In March 2022 a motion, put as a special resolution, that the windows be replaced with double glazed aluminium windows, was lost by failing to reach 75% majority support (7 unit owners were in favour, 5 were against and there was 1 abstention). It is unclear to me on what basis it was felt that a special resolution was required to pass that resolution.

It does appear to be the case, as confirmed in the evidence of Dr Janice McDrury, management committee chair at the time, that the Body Corporate resolved to support individual unit owners if they wanted, at their own expense, to internally retrofit double glazing in the interior of the windows in their units for increased warmth and comfort. Some others installed thermally robust drapes.

Reports on the state of the windows were obtained over an extended period. Flanders Marlow provided a report in 2016 as part of the development of an asset maintenance plan and again in May 2022 provided a window condition report. PRENDOS assessed the windows as part of their consultation to review the Body Corporate's Long Term Management Plan ("LTMP").

Because a separate plan for dealing with the windows was in progress, that work was specifically excluded from the LTMP. The Body Corporate resolved that, "The following is specifically excluded from the Long-Term Management Plan by majority decision of the Body Corporate Management Committee pending professional review of the LTMP and professional advice on a programme of window works:-Maintenance or replacement costs of windows, awaiting professional input into a suitable works programme beyond FY24. Some placeholder budget has been allowed for in FY23."

The PRENDOS report notes. "In 2016 Local surveyors Flanders Marlow were retained to prepare an asset maintenance plan for the body corporate. More recently in 2022, they were further retained to prepare a specific condition report on the window (a ‘remediation’ report). Prendos have reviewed both reports and have considered the content during our site assessment and preparation of our LTMP”

For the annual general meeting held in December 2022, some unit owners tabled a motion, "That the body corporate replace all windows in the Cargill Court apartments unit title development (Cargill Court Apartments) with thermally broken double glazed aluminium framed windows within four years of this resolution being passed.”

That motion was passed by simple majority but with less than 75% support (“the window replacement resolution").

Concern about the costs involved to replace the windows, added to the amount of the levies approved to fund the LTMP, which all parties agree includes significant “catch up” from previously deferred maintenance costs, led to the applicant bringing this application. Claims

The applicant seeks: a. a declaration that the window replacement resolution is ineffective as it was not passed with the 75% majority required for a special resolution; or b. minority relief from the effect of that resolution on her, as a minority interest voting against the resolution.

Was a special resolution required to pass the window replacement resolution?

The relevant parts of s.101 UTA are as follows: “How matters at general meeting of body corporate decided (1) A matter to be decided by a body corporate must be decided by ordinary resolution at a general meeting. (2) Subsection (1) applies unless— (a) the Act provides for the matter to be decided by the body corporate by special resolution; or (b) the body corporate committee exercises a delegated authority to decide the matter. (2A) A body corporate may decide matters within its functions and powers regardless of whether they have been delegated to the body corporate committee ......”

The applicant was not able to identify a provision in the UTA requiring that a resolution to replace the windows be decided by the Body Corporate by special resolution. She has consulted with tenancy services who she says expressed the view that a special resolution was required.

The Body Corporate management committee may previously have followed a practice of requiring a mandate confirmed by special resolution, for such decisions. Even so however, s.101(2A) UTA (above), inserted by the Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act 2022, makes it clear that a body corporate is able to exercise its statutory functions, (to decide matters by majority vote), despite any delegation to a body corporate committee.

On example of where the UTA requires a special resolution is s.117(3) which provides that: “(3) The body corporate must, by special resolution, approve any amount to be spent on any 1 maintenance item if the amount exceeds the amount specified for that item in the long-term maintenance plan by more than 10%.”

Here, the plan for maintenance/ replacement of the windows falls within the defined purpose of an LTMP to, “(a) identify future maintenance requirements and estimate the costs involved; and (b) support the establishment and management of the funds; and (c) provide a basis for the levying of owners of principal unts; and (d) provide ongoing guidance to the body corporate to assist it in making its annual maintenance decisions.” (s.116(3))

However, as recorded by resolution, the Body Corporate, though the management committee, has resolved to exclude the windows from the LTMP for the reason that separate consultation on an appropriate plan for the widows and scoping of associated costs, is being separately developed.

There is no amount specified for window maintenance/ replacement in the LTMP and I therefore find that the window replacement resolution does not need to be passed as a special resolution to be effective under s.117(3) UTA.

Is minority relief available?

Section 210 UTA provides: “General relief for minority where resolution required (1) In any case where this Act requires a resolution and the resolution is passed, any person who voted against the resolution may apply to the appropriate decision-maker for relief on the grounds that the effect of the resolution would be unjust or inequitable for the minority.” 29 Section 210(3) specifies that an application for minority relief must be made within 28 days of the passing of the relevant resolution. In this case, the ratification of levies to fund the LTMP was the catalyst for the applicant to bring this application, as in her view those levies, on top of the costs to replace the windows, would be unaffordable for her.

In those circumstances I consider it just to consider the substantive merits of the applicant’s request for minority relief.

The applicant’s position is that having been well maintained over many years the windows in her unit are sound and do not need to be replaced. She says there are other measures she is able to take to improve the warmth of the unit such as retrofitted double glazing or effective thermal drapes, that would be adequate.

Essentially, she says that it is unfair for her to incur the financial burden of having to replace the windows in her unit with double glazed thermally broken aluminium windows, when she neither wants nor needs them. She believes that replacement of other windows in the building is also unnecessary and undesirable. In her view continuation of the ongoing maintenance policy is the better approach.

The Court of Appeal has considered application of s.210 in Tremont Holdings Ltd v Body Corporate 401803 [2015] NZCA 314, and Wong Sun Een and Ors v Body Corporate 384911 [2021] NZCA 665.

In Tremont, the Court found that an applicant for minority relief under s.210 must show that the effect of the resolution would be unjust or inequitable for all of the unit owners voting against the resolution. I could not find that proved on the evidence presented. However, in its later decision in Wong Sun Een the Court expressed the view that in Tremont, the Court did not intend to add a “gloss” to the statutory test and that [para 16] “The test should be applied on its face, having regard to the ordinary meanings of the terms “unjust” and “inequitable”, and to the phrase as a whole.”

The applicant does not need to prove that all the unit holders voting against the resolution are similarly affected.

The Court in Wong Sun Een noted without qualification its statement in Tremont [para 19] that, “the statutory test under the UTA 2010 is plain, requiring a high threshold of material unfairness or injustice to be met by the minority.”

At face value, the window replacement resolution does appear to potentially impose a significant and unnecessary financial burden on the applicant.

However, the position must be that ensuring the safety, functionality and suitability of the windows in the building is part of the Body Corporate’s statutory duty under s.138(1), to, “.... repair and maintain—(a) the common property; and (b) any assets designed for use in connection with the common property; and (c) any other assets owned by the body corporate; and (d) any building elements and infrastructure that relate to or serve more than 1unit”

That is the approach taken by the Body Corporate to date. Steps taken to improve the heat and comfort of the units such as by retrofitting interior double glazing or installing drapes, that would uniquely benefit individual unit owners, were for the cost of those owners. Dealing with the windows themselves, where there are structural and safety considerations, potential for the impact of leaks and deterioration to affect other units or the building as a whole and so forth, means that they have been regarded as a Body Corporate responsibility to be funded through levies in proportion to unit owners’ utility interests, in terms of section 121.

Consequently, even if the resolution were to have allowed the applicant to elect not to replace the windows in her unit, the Body Corporate was bound to impose levies for the cost of replacing the rest of the windows, in proportion to each unit owner’s utility interest. The reduction in the total levies payable if the cost of replacing the applicant’s windows were not included in the exercise, seems unlikely to be so material as to warrant application of s.210.

Even if it were, evidence provided by the Body Corporate through the reports it has commissioned, shows that there are significant immediate and longer term tissues about the integrity, longevity and water tightness of the current steel windows.

Mr. O'Shea's evidence was clear that in the view of the management committee intrusive and expensive structural investigation would be required to assess the viability and safety of any particular existing windows remaining in situ.

The applicant has firm views about the longer term safety and suitability of hers and other existing windows in the building. She highlights different comments in the reports. The applicant too has experience of living with and maintaining such windows, from properties lived in by her in the United Kingdom, where use of critten steel windows is more prevalent than New Zealand.

It is well established that such decisions are for the Unit Owners to make, acting by majority through the Body Corporate. The role of the Tribunal is not to second guess those decisions or express views about whether or not it agrees with Body Corporate decisions, lawfully made.

For that reason, I would not have felt able to find that Unit 6 should be exempted from the decision that all windows in the building should be replaced, even if that decision would have adverse implications for the applicant, greater than I have assessed them to be (paragraph 40). Costs

Neither party is represented by counsel. The application was properly brought and pursued. I find no basis for an award of costs (s.102 RTA).

No order is made with respect to the filing fee.

Reasons

The Parties

The applicant is owner of Unit 6 in a Unit Title development known as Cargill Court.

The applicant represented herself at the hearing.

The Body Corporate was represented by David O'Shea, the Body Corporate chair.

The building has a number of distinctive design elements. The feature with which this hearing was concerned, is the use of large crittal steel windows, which rotate from a central hinge.

That motion was passed by simple majority but with less than 75% support (“the window replacement resolution").

Was a special resolution required to pass the window replacement resolution?

Is minority relief available?

In those circumstances I consider it just to consider the substantive merits of the applicant’s request for minority relief.

The Court of Appeal has considered application of s.210 in Tremont Holdings Ltd v Body Corporate 401803 [2015] NZCA 314, and Wong Sun Een and Ors v Body Corporate 384911 [2021] NZCA 665.

The applicant does not need to prove that all the unit holders voting against the resolution are similarly affected.

At face value, the window replacement resolution does appear to potentially impose a significant and unnecessary financial burden on the applicant.

Neither party is represented by counsel. The application was properly brought and pursued. I find no basis for an award of costs (s.102 RTA).

No order is made with respect to the filing fee.

Tenancy Tribunal case 9046365 — Leaks in Dunedin Central, Dunedin

At a glance

Tenancy Tribunal case 9046365 — Leaks in Dunedin Central, Dunedin

At a glance

Claims & awards

Order

Reasons

Was a special resolution required to pass the window replacement resolution?

Is minority relief available?

Topics & place

Residential Tenancies Act sections

Key findings

Frequently asked questions

Claims & awards

Order

Reasons

Was a special resolution required to pass the window replacement resolution?

Is minority relief available?

Topics & place

Residential Tenancies Act sections

Key findings

Frequently asked questions