Townscape Akoranga Limited and others v Auckland Council and another. Auckland Council v MBIE and others.

(High Court, 11 September 2013, Heath J, [2013] NZHC 2367)

These three judicial review proceedings were heard together and involve questions regarding eligibility under the Weathertight Homes Resolution Services Act 2006 (the Act), access under the Financial Assistance scheme (FAP) and who the “decision maker” is in regard to that scheme. Adina Thorn Lawyers acts for the applicants in the main proceeding and the respondents in the Auckland Council’s (the Council) proceedings.

 

Background

The first applicant, Townscape Akoranga Limited, and the second applicants, Body Corporate 212138 and the respective unit owners, (the Townscape entities) applied for relief in relation to the decisions made by the Chief Executive of the Ministry of Business, Innovation and Employment (MBIE) that the Townscape entities did not qualify for the Council contribution under the government’s FAP scheme under the Act.

Townscape Akoranga Limited is the owner of a number of buildings located near the Auckland University of Technology campus on the North Shore. Body Corporate 212138 and the respective unit owners are the owners of a multi-unit complex located near the UNITEC campus at Mt Albert. These buildings are designed and used for student accommodation. The buildings have water ingress issues.

The Townscape entities each applied for the FAP under the Act. The MBIE considered the buildings to be eligible as “dwellinghouses” under the Act. They then assessed whether the Townscape entities were qualifying claimants under the FAP contribution criteria. The MBIE determined that they were eligible for the Crown contribution, however, they then decided that there was a reasonable basis for the Council to decline to contribute under the FAP in that the Council considered them to be “hostels” or “other institutions” rather than dwellinghouses, and did not owe a duty of care to the Townscape entities.

 

Issues

The issues identified in the proceedings were:

  • Whether the student accommodation units fall within the definition of a “dwellinghouse” for the purposes of the FAP.
    –  The Council contended in proceedings 4258 and 4260, that the accommodation units are excluded from the scheme because they are either part of a “hostel” or an “other institution.”
  • Whether the MBIE has decision-making capacity for both the Crown and the Council.
    – The Council contended that the MBIE cannot compel it to contribute in any given case.
  • Whether the Court should use its discretion to grant a remedy.
    – Any remedy was disputed by the MBIE and the Council as other civil proceedings were on foot with respect to the Townscape Akoranga Limited property.

 

Conclusion

The dwellinghouse issue

The Court concluded that the units more closely resembled a serviced apartment than that of a “hostel” or “other institution.” The Court was of the opinion that a serviced apartment, designed for longer-term accommodation, was more analogous to a dwellinghouse. The MBIE was entitled to determine that the Townscape entities were “dwellinghouses” under the Act. The eligibility point was resolved in favour of the Townscape entities.

Contribution criteria: Who is the “decision maker”?

The Court concluded that election by the Council to participate in the FAP did not constitute a decision to make a contribution in the context of any particular claim. The Court went further in that it determined that it was for the Council to decide whether it was to contribute under the FAP. The MBIE had no power to compel the Council to contribute.

In coming to the above decision, the Court questioned whether the Relationship Agreement, entered into between the Crown and participating councils, which recorded the way in which the MBIE and Council believed the FAP would be administered, altered the above position. The Court’s tentative view was that the Relationship Agreement may fetter the Council’s general discretion to refuse to contribute in any particular case and that the Council should not be able to resile from the Relationship Agreement.

 

Remedy

The Court identified further matters to be determined prior to considering whether relief would be appropriate. These further matters were:

  • Whether the Council owed a duty of care to the Townscape entities.
  • To what extent should the Council be entitled to refuse to make a contribution when to do so might be inconsistent with obligations it has assumed to the Crown under the Relationship Agreement?
  • Whether the repair of blocks A, B and C of the Townscape Akoranga Limited buildings has disentitled the Townscape entities from receiving a Crown contribution.
  • What is the impact of the existing civil proceedings for Townscape Akoranga Limited?

 

Comments

The issues raised in these judicial review proceedings are significant. Many leaky home owners, who wish to obtain contributions, will be seeking clarity and consistency under the FAP scheme.

What is clear from this decision is that student accommodation constitutes a “dwellinghouse” under the Act and will be eligible to be subject to a claim in the Weathertight Homes Tribunal and potentially to the FAP scheme.

It is yet unclear whether the Council has the ability to decline its contribution to the FAP given the Relationship Agreement it has entered into with the Crown. The determination of this point will have significant impact on the FAP scheme as a whole.

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