More than two dozen apartment owners at The CAB, a heritage-listed Auckland tower, have won over $40,000 in a Tenancy Tribunal ruling against their own body corporate after it raised a special levy to fight them in court.
The case involved 26 owners from the 118-unit apartment complex, who challenged a resolution passed by the body corporate committee to raise a $150,000 special levy. The tribunal found the resolution was invalid due to a conflict of interest and ordered the body corporate to refund the owners' share of the levy, amounting to $40,392.95.
The dispute stems from a broader, ongoing legal battle in the High Court over hefty annual fees charged for the use of shared facilities, including a gym, cinema, and swimming pool. The $150,000 levy was raised specifically to hire lawyers to defend the body corporate and the developer, Civic Lane Limited (CLL), in those same High Court proceedings brought by the apartment owners.
Conflict of interest at heart of dispute
The group of owners, led by Matthew Hall, argued that the resolution to raise the legal fund was improperly passed and therefore invalid. Their case centred on a conflict of interest, a breach of the Unit Titles Act 2010.
According to the tribunal's decision, two of the three committee members who voted on the resolution, developer John Love and Conrad Joblin-Hall, had a direct financial interest in the outcome of the High Court litigation the levy was intended to fund. Mr Love is the director of Love & Co, the developer behind The CAB project, and his company, CLL, is a defendant in the High Court case.
The tribunal decision stated the resolution in question was to have the body corporate fund legal expenses where Mr Love and CLL’s lawyers were also acting for the body corporate. Furthermore, the body corporate was opposing the orders sought by the applicants, a position that financially benefited Mr Love and CLL.
The Unit Titles Act is designed to ensure fairness and transparency in apartment management, with specific rules to prevent committee members from voting on matters where they have a personal or financial stake. The tribunal's decision reaffirms that body corporates cannot use owner funds to support the financial interests of conflicted committee members, a ruling that has implications for the thousands of Aucklanders living in strata-titled properties who may be concerned about how their body corporate levies are spent.
A landmark building's new chapter
The CAB building, located in Auckland's central business district, is the city's former Civic Administration Building, once owned by Auckland Council. Its conversion into 118 luxury apartments was the country’s largest-ever office-to-residential conversion project, undertaken by construction firm Naylor Love and developer Love & Co.
The 18-level building's transformation was a high-profile project, preserving a piece of Auckland's architectural history while adding much-needed housing stock to the city centre. However, the dispute over fees and governance has cast a shadow over the development, highlighting the complex issues that can arise in mixed-use buildings with extensive shared amenities.
Some owners who spoke to reporters last year said they had not anticipated such substantial annual fees for amenities when they purchased their apartments. This misunderstanding forms the basis of the High Court case, which is yet to be heard.
The developer has previously refuted the owners' claims. Legal representatives for the successful group of 26 owners and for the body corporate declined to comment on the tribunal's decision. John Love did not respond to a request for comment on the ruling.
Broader battle over fees continues
While the Tenancy Tribunal has resolved the issue of the improperly passed levy, the core dispute over the facility fees remains unresolved. In July last year, Mr Love commented on the High Court case, describing it as an unfortunate situation based on a misunderstanding.
This is an unfortunate situation where a minority of unit holders have misunderstood aspects of their agreements and body corporate administration, and have then brought court proceedings.
In addition to ordering the refund, the tribunal awarded the 26 applicants 90 per cent of their costs and reimbursed their $500 filing fee, marking a significant victory for the owners and raising questions about the body corporate's governance.
The High Court case, which was originally scheduled for a hearing last October, is understood to have not yet proceeded, leaving the fundamental disagreement over the 'use it or lose it' style amenity fees in limbo. The outcome of that future hearing will be closely watched by developers, apartment owners, and body corporate managers across New Zealand.
