The Quays Body Corporate in Auckland (Body Corporate 198900) was recently before the High Court trying to get a declaration that the awnings erected by various bars that occupied the ground floor units should be removed at the cost of those owners.

As the Court noted in its judgment dated 10 July 2015 “This issue is underpinned by a tension between the proprietors of the commercial units and the residential proprietors.  Many of the residential proprietors would prefer that the commercial units are not operated as bars because those operations tend to impact upon the quiet enjoyment of their residential units.” 

The awnings were fixed by a few bolts underneath the verandas and the body corporate argued they were therefore attached to the common property.  It was agreed that at the northern side of the building the veranda was common property but it was disputed at the western side.  The veranda was not shown on the unit plans.  The Court decided the veranda at the western side was also common property.  It was part and parcel of the land, either as a fixture or as an intrinsic part of the building.  The exterior of The Quays building was determined to be common property based upon the surveyor’s evidence, so the verandas were also.   As the verandas were common property the body corporate’s consent was required before an awning could be attached to it.

Written consent from the body corporate was required under the rules at the relevant time in order for the awnings to be erected and attached to the common property.  That meant evidence of written consent, not a formal consent in writing.  The awnings were held to have been consented to. In one case the consent is recorded in writing in a committee minute.  Committee minutes were also read in the context of discussions with the representative of the committee who had been appointed to deal with the question of awnings.  As decision making had been properly delegated by the body corporate to the committee, then to the representative, consent from that committee or committee representative will be sufficient provided there is some writing to show the consent. 

There was discussion about how to interpret body corporate rules.  The Court said that body corporate rules should be viewed and interpreted in a similar manner to a contract, not as if they are statutory provisions (by extension from the Unit Titles Act).  There are different principles that apply to statutory interpretation and contract interpretation.  With statutory interpretation rules are interpreted in light of the statutory purpose.  Contractual interpretation focuses on construing the words in the light of the background to understand objectively the meaning. 

In particular a rule included wording that the grant of such rights as were discussed here would be determinable by special resolution of the body corporate.  That did not apply to the original grant, so there was no need to show a special resolution in order for the awnings to be permitted, but it was a possible avenue for the body corporate allowing them to determine or cancel the rights granted to owners to use common property subsequently.  I have not reviewed the voting rights for this body corporate, but I imagine there are not the numbers to get the required special resolution to remove the awnings, otherwise this would have been the track taken by the body corporate.

Bodies corporate are held to tough standards as to their governance.  This is not a place for amateurs and very real property rights are at stake.  Democratic decision making will always be problematic, especially for mixed use developments, but also where owners simply want to achieve different things.  A pathway through the maze to deliver owners objectives might be found, but it will always be slow and complex where the necessary voting support cannot be obtained.

 By Denise Marsden