Appeal court decision deems it just and equitable to dissolve body corporate
New Zealand’s Supreme Court refused permission to appeal a decision denying a challenge against a judgment that favoured cancelling a unit plan and issuing a sale order, like the respondents wanted, rather than ordering a rebuilding, like the applicants wanted.
In Douglas v Body Corporate 102029 [2025] NZSC 172, the dispute involved a unit title development constructed in 1984. The units were essentially uninhabitable and irreparable.
The applicants, resident owners, held the stratum estate for three units. The applicants preferred a rebuilding of the development.
The second to fifth respondents, owners of the other four units, held their units as investments. The respondents favoured cancelling the unit plan and making a sale order. The respondents alleged that:
In a March 2024 report, a court-appointed administrator recommended demolishing and rebuilding the development. The respondents commissioned another report, which considered a collective sale the better option.
The applicants applied for the unit plan’s cancellation under s 188 of the Unit Titles Act 2010 and a sale order under s 339 of the Property Law Act 2007. On the other hand, the respondents applied for an order approving a reinstatement scheme under s 74 of the Unit Titles Act.
In an interim judgment dated 6 December 2024, Anderson J of New Zealand’s High Court issued an order cancelling the unit plan under s 188 of the Unit Titles Act and a sale order under s 339 of the Property Law Act.
The judge found that the rebuild scenario involved a greater risk of a worse outcome and that cancelling the unit plan would be just and equitable, given that the buildings were no longer fit for purpose, significant hostility existed among the owners, and four of the seven owners preferred a collective sale.
New Zealand’s Court of Appeal dismissed the appeal against the interim decision. The appeal court saw no error by the judge and no reason to differ from the High Court’s finding that a sale would be the most just and practical way to address the impasse.
The appeal court determined that the development could not abide by the Unit Titles Act’s express legislative purpose and that dissolving the body corporate and cancelling the unit title plan would be just and equitable.
The applicants requested leave to appeal the appeal court judgment. The applicants alleged that the judge:
The Supreme Court of New Zealand dismissed the application for leave to appeal and ordered the applicants to pay the second to fifth respondents one set of costs of $2,500.
The Supreme Court saw no issue of general or public importance and no potential miscarriage of justice in the civil context.
The Supreme Court held that the decision concerned the particular facts and that the applicants failed to show that any of the alleged legal errors might have altered the result.
