In Newland v Body Corporate No. 81340  NZHC 1190 (PDF), a recent appeal from the District Court, the High Court has confirmed that unit-owners in Body Corporates cannot refuse to pay portions of the levies because they do not agree with the purpose for which levies have been struck.
The body corporate of a leaky complex levied for operating costs as well as remedial works cost which it (perhaps wrongly) termed part of a long term maintenance plan (s 116 Unit Titles Act 2010). The court saw the use of that term as somewhat of a red herring; and once it held that the levies had been properly struck and approved at AGMs, they could be covered as a debt due to the body corporate. The Judge said that she shared:
“…what appears to have been Judge Walker’s view that it is not open to a unit holder to dispute a levy on the basis that she does not agree with one or more of the individual uses to which the levy will be put for the following reason.
If it were open to individual unit holders to dispute individual expenses underlying an operating levy, administrative chaos would result. The evidence makes it clear that the budgets here (and their component parts) were approved at the Body Corporate’s AGMs. There no arithmetic quibble with the proportion of the levies charged to (the owner). In my view the levies were validly struck and may be recovered as a debt due to the body corporate.”
The judge did find that a very small proportion of the operating expenses was part of the remediation work but, as it was too small a sum to form the basis of a reasonable claim not to enforce the balance of the levies. To allow this to occur would cause the “administrative chaos” referred to by the court earlier.
The decision may provide some comfort to body corporate managers dealing with recalcitrant owners.