Complex Communities
Unit title developments are, by their very nature, complex communities.
In a unit title development, the community is made up of the unit owners, and also the unit occupiers. All sit alongside and under the body corporate. This disparate group of individuals is a community because they have all chosen to live, work, or invest in the same unit title development.
Within the community of a unit title development, there are any number of interest groups (they are sometimes referred to as sub-communities). These interest groups are likely to be familiar to anyone who has lived in or worked in or worked with a unit title development, because these groups are often the source of friction leading to conflict and disputes. Some typical interest groups are listed here, but this list is not exhaustive:
- majority – minority
- owner-occupier – investor-owner
- residential – non-residential
- owner – occupier
- pro-pet – anti-pet
- smoker – non-smoker
One of the primary drivers of conflict and disputes within a unit title development is the dynamic between majority and minority. That dynamic comes into play throughout every facet of body corporate decision-making and has particular implications for the operational rules that are imposed and how they are enforced, and for the levies that are raised. Disputes that arise in this context can be difficult to resolve because the decision-making framework in the Unit Titles Act 2010 provides for all decisions to be based on a majority vote (whether a simple majority or at least 75%). But, the guidance provided by the High Court in Landmark Property Holdings Ltd v Shen Empire Ltd [2020] NZHC 893 is instructive: “…Subject to any permitted discrimination, the body corporate is required in…[the] performance or exercise [of its powers and duties] “ to be even-handed. It could not prefer some owners to owners. In that sense the body corporate [is] under a fiduciary duty.””
The relationship between unit owners or the body corporate and unit occupiers can give rise to a complicated series of issues. Unit occupiers have a direct relationship with their unit owner landlord under a lease or tenancy agreement, but they are also (independent of the lease or tenancy agreement) obliged to comply with the operational rules. Let’s not forget the unit occupiers can be a plaintiff or a defendant in unit title disputes just like a unit owner but without the benefit of voting rights. This is another example of the different property rights attached to ownership compared to other lesser bundles of rights.
How operational rules are framed and enforced can influence how cohesive a unit title development community is. Where operational rules are clearly drafted, the expected conduct and behaviour can be readily ascertained and frequently communicated; therefore, the risk of repeated non-compliance is reduced. Difficulties can arise where operational rules rely on subjective standards or interpretation. For example, different people have different ideas about what an unreasonable noise is, and behaviour that causes annoyance to one person is normal but acceptable to their neighbour.
Further, the one thing all members of a unit title development community have in common (or should have in common) is a strong interest in the integrity of the physical structures and infrastructure in the development, because all owners and all occupiers benefit from a building that is in a good state of repair – whether it contributes to the value of an investment, the amenity, or the comfort of a home or a business premises.
Once these and other common interests can be identified and articulated, it may be possible for long-term sustainable arrangements for the governance and management of a unit title development to be implemented; therefore, parties avoid the need for the intervention of the Tenancy Tribunal or courts.
For advice on body corporate governance, operational rules, and unit title disputes please contact Vicki Toan.