Apartment sector chiefs say a Court of Appeal decision about who pays for repairs to a Mount Maunganui apartment block on Marine Pde has far-reaching implications.
The Body Corporate Chairs Group, representing those on owners' committees of apartment buildings, said the decision on one of the twin-tower 12-level Oceanside Tower apartment blocks "sets a precedent for future decisions and is therefore of interest to all members."
The blocks are a prominent feature on the town centre's landscape, opposite the beach, a hub of dining and entertainment.
On December 19 last year, the court ruled in the case brought by Body Corporate S73368 against the owners of two units on the first floor of Oceanside Tower Two. Just over $841,000 had been spent in 2014 when the body corporate fixed defects which caused leaks.
The body corporate wanted to overturn decisions in the High Court cases.
But it failed in its appeal action against apartment tower owners Rosalind Kay Otway (now Wright), Olphert Sandford Trustee Service, Philip Herbert Dorr, Sharon Lesley Dorr and Donald Raymond Pilbrow.
The Appeal Court said the parties owned units with decks which sit above ground-floor shops and the footpath. But those decks had been leaking since at least 2009 so the body corporate asked the owners to fix them.
The owners refused, saying the decks were not their personal responsibility because they were in the common area of the block, not within the boundaries of their own properties. The two owners were therefore not personally liable to fix them, they said.
"They argue that the repair work substantially benefitted all of the units by making the development as a whole, including the roof of the ground-floor units, watertight and ensuring that the stormwater drainage sysem for the entire apartment tower complied with the Building Code," the latest decision said of the respondents' case.
The decks continued to leak into the ground-floor shop units which include food outlets, so the body corporate paid to have those decks and other aspects of the block fixed, the decision said.
Those repairs were carried out in 2014 and to recoup the $841,000 spent, the body corporate levied owners of all units in the tower.
But it sought $290,000 from the owners of the two apartments whose decks leaked into the shops. The appeal court rejected the body corporate's call to overturn two High Court decisions from 2017 and 2018.
One person who knew about the case said the three legal cases had been extremely stressful, causing financial, emotional, relationship and health issues. The owners of the two apartments had effectively won three times against their own body corporate.
But life within the building was difficult, divided into two camps who were pitted against each other over the issues and money.
"There are the outters and inners", the person said, explaining how some residents backed the body corporate in the legal fights while others backed the two apatment's owners.
On February 14, the Body Corporate Chairs Group will talk about the decision's legal impact.
Robert Boyd-Bell, a group co-chair, said the apartment sector needed to consider how the ruling might affect other apartment owners.
"Our over-riding concern is for our body corporate members, the financial welfare of their apartment owners and the sanity of chair people and committees, faced with trying to manage the diversity of interest between owners over cost responsibility.
"The practical task of sorting out the physical problems is bad enough, but it is complicated by the use of the court system to resolve disputes, resulting in escalation of the total project costs and making cost sharing arguments even harder," Boyd-Bell said.
One distressed apartment owner was unable to use her apartment for a year because the windows had been removed temporarily and replaced with plywood so her place was not weathertight, he said.
"This elderly person contacted us in some distress seeking help and we provided her with some guidance. Subsequently, we have had enquiries from the chair and committee about managing their way through the financial mire resulting from the protracted remediation and cost-sharing arguments," he said.
As a voluntary organisation, the group relied on pro bono support from its law sector members, he said.
"We are seeking expert opinion on the likely impact of the recent case," Boyd-Bell said.