Most Read Contributor in New Zealand, September 2016
Receivers can take comfort from a recent High Court decision
confirming that they are not personally liable to pay body
In Body Corporate 162791 v Gilbert, the body corporate of
a unit title development pursued personally the receiver of a unit
owner for unpaid levies incurred post-receivership.
Unsurprisingly, the Court declined to impose personal liability
on the receiver for the levies under section 32(5) of the
Receiverships Act 1993.
It's unsurprising because a receiver's personal
liability under section 32(5) for "rent and other
payments" only exists where such payments are
"due under an agreement", and relate to
"the use, possession or occupation by the grantor of the
property in receivership".
The levies in question did not fit within either requirement
the obligation to pay was imposed on owners by the Unit Titles
Act 2010, rather than by agreement, and
the levies arose as an incident of ownership, rather than as a
result of use, possession or occupation. An owner is liable to pay
levies regardless of whether it uses, possesses or occupies the
unit. In addition, receivers are not generally liable for rates,
which are also an incident of ownership.
Accordingly, the decision confirms what has been widely
understood by insolvency practitioners and lawyers. However,
although receivers are not personally liable, such charges will
usually be paid for practical reasons. The purchaser of a body
corporate unit will be liable for any levies outstanding at the
time of sale, so if the vendor does not pay, the purchaser will
generally take into account such unpaid levies in agreeing the
purchase price and pay the levies following settlement. Levies and
rates can therefore be contrasted with other unsecured obligations
that tend to be 'left behind' in, and unpaid by, an
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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As a demonstration of India's combined political will, the much awaited and debated Insolvency and Bankruptcy Code, 2016 was passed by the Upper House of the Parliament on 11 May 2016 (shortly after being passed by the Lower House on 5 May 2016).
The Code envisages that the insolvency resolution processes will be conducted by insolvency professionals.
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