Unit Titles Act 2010 – Declaratory Judgments Act 1908 – application for orders that deed of indemnity and resolutions ultra vires – application for minority relief under s 210 of the Unit Title Act 2010 (UTA) – applicable principles – liability based on the doctrine of ultra vires – whether the body corporate resolutions to fund defence of its committee members and the indemnity in their favour were ultra vires – powers of body corporate – s 104 UTA postal vote procedure
Kennedy v Body Corporate 82981 [2023] NZHC 1377
The plaintiffs, Cy Kennedy and Kajsa Bjors, owned a unit in the Dominion Building in Wellington, which, according to the body corporate’s minutes, has suffered from a leaking roof since 2004.
By the time the roof was replaced, Kennedy and Bjor’s unit had been badly damaged by the leaking. In 2021, they commenced proceedings for negligence, breach of statutory duty and nuisance against the body corporate, and breach of statutory duty against the second defendant (Neil Cooper) and third defendant (Anthony Volpicelli). They alleged Cooper and Volpicelli suppressed reports that indicated the building’s roof needed replacing and undertook unsatisfactory patching.
Cooper chaired the body corporate and Volpicelli was a committee member when the alleged breaches took place.
The body corporate’s insurer covered costs for defending initial threats of litigation but refused to cover the substantive proceeding. In March 2022, the body corporate resolved at a general meeting to meet the costs of the proceedings. By postal resolution, the body corporate agreed to indemnify Cooper and Volipicelli. Kennedy and Bjors lodged an objection to the deed of indemnity resolution within 28 days of their receiving notification that the resolution had been passed.
Applicable principles: whether the body corporate resolutions to fund defence of its committee members and the indemnity in their favour were ultra vires – discussion of Guardian Retail Holdings Ltd v Buddle Findlay [2013] NZHC 1582 – discussion regarding general exposure of committee members to liability in carrying out their duties – High Court found a body corporate indemnifying its committee members on reasonable terms was within the plain meaning of the UTA – whether 28-day notice requirement ran from the date following notification of the postal vote result or the date upon which postal votes closed – High Court found objections required within 28 days from voting closing, therefore Kennedy and Bjor’s objection was out-of-time – whether resolution to enter the indemnity unjust or inequitable for the minority – discussion of principles in Tremont Holdings Ltd v Body Corporate 401803 [2015] NZCA 314 – High Court found Kennedy and Bjor’s position as plaintiffs did not result in injustice or inequity – High Court noted anything preventing a body corporate insuring or indemnifying committee members from third party claims arising from their duties was inconsistent with the democratic communal decision-making framework provided in the UTA.
Held: Applications dismissed. Resolutions and deed of indemnity not ultra vires. Section 210 objection was brought out-of-time and relief would not have been available in any case.
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