Soul Bar not required to pay for repair to leaky building: High Court

Big changes are likely in the apartment sector after a High Court ruling over who should pay what for repairs to decks above upmarket Auckland restaurant Soul Bar.

"This potentially changes the landscape for recovering costs from apartment owners," Lyn Gillingham, national president of Body Corporate Chairs' Group, said of the decision.

Bodies corporate would not now be automatically entitled to charge owners for work done to repair their units, she said.

"A Body Corporate will have to determine if there is a benefit to all owners, even if repairs are to only a number of units and not all; i.e. having the ability to sell and general weathertightness of the whole complex," she said.

"If that is the case then costs would be apportioned across the owners but not necessarily on a utility interest basis. Every Body Corporate will need to look at its own circumstances to ensure that a fair outcome is achieved on the recovery of costs to repair unit property."

Auckland has more than 50,000 residential multi-unit apartments, home to more than 100,000 people, according to David Watt, an Auckland-based body corporate chairman and retired accountant.

Jonathan Wood - who with Jeanne Heatlie acted for the owners of two units in the Sebel apartment/hotel/restaurant block where Soul is based in Auckland's Viaduct Basin - also said the ruling had big implications for other bodies corporate in New Zealand.

Repair costs would not automatically be paid for by unit owners, he said.

Sebel's body corporate lost the case, meaning it could not force the owners of two units upstairs from Soul to pay for full deck repairs, carried out in 2015 for $100,000-plus.

Justice Gerard van Bohemen emphasised the fixed decks which formed part of Soul's ceiling were "wholly within the titles of the first-floor units".

The deck tiling and the membrane underneath the deck needed repairs and if it was not fixed "there was a risk of water getting underneath the decks and into the ceiling cavity of [the unit where Soul bar operated]," the judge wrote, referring to the potential for problems at Soul Bar.

The eatery has not been required to contribute to any of the repair cost.

The owners of the two units believed it was unfair for them to bear the full cost of the repair to the large outdoor deck along with two of their neighbours, while Soul Bar beneath them, which also benefited from the repairs, was not required to pay at all.

The High Court appeal, which Justice van Bohemen rejected, was the third time the body corporate was told that it was unfair to make owners of the two units pay the whole cost of the repair after it earlier failed in the Tenancy Tribunal and District Court.

The Tenancy Tribunal had earlier ruled that the owners of one of the units in the dispute should contribute $10,623 and the other $8213.

Two other owners of the four first floor units had already each paid $27,187 – the full amount the Body Corporate had demanded.