Unproven consultant fees for repairs fail to offset costs debt owed to body corporate: court
The Court of Appeal has upheld a former company director’s bankruptcy, finding his $2 million-plus cross-claims against a body corporate were unsupported assertions.
In Cummins v Body Corporate 172108 [2026] NZCA 515, released 27 October 2026, the court dismissed his appeal against a High Court order adjudicating him bankrupt under the Insolvency Act 2006.
The case grew out of a long-running fight over repairs to Hobson Apartments, a 12-storey central Auckland building found to be leaky. Manchester Securities, which is the registered owner of the penthouse and of which the appellant was sole director and shareholder, refused from 2012 to contribute to repair costs on the lower levels. The High Court later placed the company into liquidation. The body corporate then sought the appellant’s bankruptcy over costs orders against him totalling $167,552.41, or about $190,000 with interest.
Without disputing the debt, the appellant argued that two claims under the building’s repair scheme offset it: more than $1.9 million in consultants’ fees for work on the top floor, and a credit of about $165,000 tied to the penthouse’s share of common property repair costs.
The court said that a cross-claim relied on to resist bankruptcy must be “genuinely triable”, meaning it must be legally arguable and have a real evidential basis.
The court accepted that the scheme left it open, in principle, to claim consultants’ costs to the extent they significantly benefited the other unit owners. Consultants’ reports that led to the whole building becoming weathertight would logically deliver that benefit. However, the appellant had not produced documents showing why the costs were necessary or how they benefited all other owners.
“Accordingly, the claims remain only assertions and are not ‘genuinely triable’,” the court said. The same analysis applied to the $165,000 credit claim.
The court added that a further High Court ruling, issued in July 2026 and not appealed, had effectively eliminated both claims. That ruling varied the repair scheme to bar Manchester, the appellant or anyone claiming through them from bringing any claim against the body corporate or other owners over the cost of remediating the top floors.
The court also found no error in the High Court’s alternative finding that, even if triable cross-claims existed, special circumstances made it inappropriate to refuse bankruptcy.
On costs, the court noted that the appellant or his interests had come before it unsuccessfully 10 previous times in the matter. It found that “a further unmeritorious appeal” and the wider litigation context favoured indemnity costs. The court ordered the appellant to pay the body corporate’s actual and reasonable costs for the appeal, plus usual disbursements.
