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Body Corporate Business Update August 2018

31 July 2018

Form Matters

The importance of the proper use of statutory forms should not be underestimated.

Schedule 2 of the Unit Titles Regulations 2011 sets out 33 statutory forms. These forms are described in regulation 37 as “…prescribed as the forms to be used for the general matters to which the forms relate.”

In Body Corporate 81026 v Jezma Pty Limited (TT, Appln No. 9006464, 14 May 2018) – a claim relating to unpaid levies a notice of resolution to be passed without general meeting under section 104 of the Unit Titles Act 2010 was sent out by Body Corporate 81026. The resolution(s) in the notice included a resolution to raise levies. This resolution was intended to ratify an earlier decision on the Body Corporate.

Section 104(2) of the Unit Titles Act 2010 provides that the notice of resolution(s) must be given “…in accordance with the regulations.” Regulation 16(1) of the Unit Titles Regulations 2011 sets out the information that the notice must contain. Regulation 16(1)(e) refers to: “instructions on how to vote in favour of, or against, the resolution”.

The voting instructions in the notice stated that: “You are entitled to vote in favour of or against, the resolutions. Please complete and sign the Resolution Return Form to Body Corporate 81026. C/- Colliers International, PO Box 19093, Hamilton 3244 by 29/12/2017.”

The voting instructions in the statutory form (form 13), however, state that: “You are entitled to vote in favour of, or against, the resolution. If you are in favour, you should sign the resolution and return it to [full name, address] so that it is received by [date]. If you are against the resolution, you should not sign it or return it.”

The Tenancy Tribunal found that the differences between the notice sent by Body Corporate 81026 and the statutory form means that unit owners receiving the notice were not instructed they could vote against the resolution(s) by not returning the form. At paragraph [28], the Adjudicator held that: “I find that the instructions given to unit owners in notices as to voting on resolutions to be decided without a general meeting are not a trifling or insignificant matter within the wider scheme of the [Unit Titles Act 2010]. There is an obvious risk of prejudice arising in the event that the requirements of the Unit Titles Regulations 2011 are not met …”.

The Tribunal found that non-compliance with the statutory form (that is, non-compliance with the Unit Titles Regulations 2011) rendered the resolutions purported to have been passed under section 104 of the Unit Titles Act 2010 invalid and of no effect. As a result, the Body Corporate’s claim against Jezma Pty Limited failed.

This decision is a useful reminder that:
• the statutory forms in the Unit Titles Regulations 2011 are “prescribed forms”;
• compliance with the statutory forms is necessary, and non-compliance may make a decision vulnerable to challenge;
• an argument that no prejudice arises as a result of non-compliance may not be successful (that is, the Tribunal or Courts may not accept a substance over form argument) – especially where an earlier decision is being ratified; and
• these principles apply to all statutory forms, not just form 13.

If you regularly use your own precedent documents for the statutory forms, and would like them checked for compliance with the Unit Titles Regulations 2011, please contact Vicki Toan at v.........@glaister.co.nz.

Matters Advised On

We have recently advised bodies corporate, unit owners, and body corporate managers on the following matters:
• service contracts, including building management agreements;
• compliance with the Resource Management Act 1991 and Building Act 2004;
• easements over common property;
• the adoption and enforcement of body corporate operational rules; and
• issues arising on the completion of remedial works.

Source: Body Corporate Business Update August 2018

Body Corporate Business Update August 2018

For specialist legal advice, please contact Vicki or Paul