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Body Corporate Business Update February 2017

2 February 2017

UTA Review

The Ministry of Business, Innovation and Employment’s review of the Unit Titles Act is now underway. MBIE is holding a series of workshops on the changes proposed in its discussion document in Christchurch, Wellington and Auckland in February. The workshop schedule and discussion document can be found here.

Pay Now Argue Later

A recent decision of Muir J in Butcher v Body Corporate 342525 [2016] NZHC 3128, a decision in the long-running Bridgewater Apartments dispute, confirms that owners who do not pay their levies on time are denied voting rights until such time as all outstanding levies are paid.

In Butcher, the plaintiffs challenged various resolutions passed by the Body Corporate claiming that they had been unlawfully disenfranchised. The plaintiffs were denied voting rights at three general meetings because of non-payment of levies. There was no dispute that the plaintiffs were in default on their levies. The issue was whether section 96(3) and (6) of the Unit Titles Act 2010 created a “pay now, argue later” regime or whether an owner could challenge a levy and withhold payment and maintain his or her right to vote.

Justice Muir considered the wording of section 96(3) and (6) and that of section 210 as well as the legislative history of the Unit Titles Act 2010 and Woodhouse J’s decision in Tao v Strata Title Administration Limited [2015] NZHC 2215. He confirmed that the scheme of section 96 is to deny voting rights to owners who are in default while providing the opportunity to make a without prejudice payment. Section 210 works in conjunction with section 96 to provide relief for oppressed minority interests. Summarising his position in paragraph [84], he held that:

“[84] Having regard to both context and history, I reject the plaintiffs’ argument that s 93(3) should be read down to exclude unit holders who have withheld levies on the grounds that the levies were purportedly ultra vires. Such an approach would introduce a two tier system in respect of disputes for which there is simply no support in the Act…Whatever the nature of the dispute, the approach mandated by the Act is to quarantine it form the day to day cash requirements of the body corporate so that it can be resolved without the implicit pressures that would otherwise arise. “Pay now, argue later” conveniently captures that concept. Alternatively and so far as an entitlement to vote is concerned, the Act can be regarded as establishing a presumption of validity in respect of levies raised pending any determination to the contrary.

Matters advised on

We have recently advised bodies corporate, unit owners and body corporate managers on:

  • Operational rules
  • Designated resolutions
  • Easements
  • Disputes with third parties
  • Property management agreements

Source: Body Corporate Update February 2017

Body Corporate Business Update February 2017

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