Wellington body corporate allowed to reapportion cost of balcony repairs

An issue bodies corporate often face is how to apportion repair costs between the owners.

If repair work falls within the body corporate’s obligations under section 138 of the Unit Titles Act 2010 (“the Act”) a body corporate will raise funds to pay for those repairs from all owners under section 121 of the Act.

But when can the body corporate recover those costs from owners who benefit from the work more than others? 

A recent High Court decision, Dominion Seven Ltd v Body Corporate 82981, provides guidance:

• The body corporate for the Dominion Building in Wellington repaired cantilevered balconies in two apartments on the top floor of the building.

• The cost of the work was $69,086 per unit.

• After the work the body corporate sought recovery of these costs from the two apartment owners under section 126 of the Act.

The Court held that section 138 is about who does the work, but section 126 is about who pays for the work. Being responsible for repairs does not mean the body corporate ultimately pays. The point of section 126 is that although the body corporate initially bears the cost, it may later recover it from certain owners where the statutory thresholds are met.

Section 126 states a body corporate may reapportion costs to owners who ‘substantially benefit’ from the work. The High Court says this involves an assessment of whether there is disproportionality of benefit to those owners.

In the case of the Dominionbuilding:

• The two apartment owners had unsafe balconies which they could not use.

• After the work they had newly constructed balconies they could safely use.

• The repairs caused a dramatic difference which substantially benefitted them.

• The work was not part of a wider weathertightness system and did not benefit other owners.

In these circumstances the body corporate was entitled to reapportion the repair costs to the two owners under section 126 of the Act.

This decision will be welcome news to many bodies corporate who have grappled with cost reapportionment issues. It has been difficult for bodies corporate to successfully reapportion costs under section 126. The Dominion Seven decision shows it can be done in the right circumstances. 

The lawyers at Grimshaw & Co are available to assist your body corporate with any cost reapportionment issues.