New Zealand: Receivers may be personally liable for body corporate levies – Appeal Court

Brief Counsel
Last Updated: 29 June 2015
Article by Michael Arthur, Michael Harper, Hamish Foote, Daniel Kalderimis, Matthew Carroll and James McMillan
Most Read Contributor in New Zealand, September 2016

The Court of Appeal has found that receivers can be personally liable for body corporate levies accrued during a receivership.

The judgment is based on a broader interpretation of the relevant provisions in the Receiverships Act 1993 than applied by the High Court in Body Corporate 162791 v Gilbert, and reverses that decision.1

Receivers should be wary of the broad reach of section 32(5) of the Receiverships Act, which creates personal liability for rent and other payments due under agreements relating to the use, possession or occupation of property in receivership.


The body corporate was chasing John Gilbert, the receiver of QSM Trustee Limited (also in liquidation), for payment of outstanding body corporate levies, along with interest and costs, for the five units owned by QSM in the Mid City complex in central Auckland. The Court of Appeal was presented with two issues:

  • whether Mr Gilbert was personally liable under s 32(5) of the Receiverships Act 1993 (the Act) to pay the body corporate fees and, if so
  • whether his liability should be limited or excused under s 32(7) of the Act?

Liability for body corporate fees

The section makes receivers liable for rent and other payments that accrue under pre-receivership leases or rental contracts. Section 32(5) of the Act provides that a receiver is personally liable for "rent and any other payments becoming due under an agreement" subsisting at receivership "relating to the use, possession, or occupation by the grantor of property in receivership." The purpose of these provisions, the Court noted, is to ensure that receivers do not obtain benefits for the debtor company or the secured creditor without paying for them.

Due under an "agreement"?

At the High Court, Associate Judge Abbott considered that the word "agreement" could be defined as "a negotiated and typically legally binding arrangement."2 He did not consider that body corporate levies, payable under the Unit Titles Act 2010, fell within the statutory definition. While acknowledging that the wording of the statute is "rather awkward", the Court of Appeal rejected the High Court's "narrow and legalistic construction" of "agreement",3 saying that the ordinary meaning of the word, as well as the drafting of s 32, indicated that it was intended to be of "wide import". In any event, on the facts of the case, the Court noted that a legally binding agreement existed between QSM and the other unit owners at the property that created a debt in favour of the body corporate.4 When a person buys a unit in a unit title development, he or she implicitly agrees to accept the obligations imposed on unit owners by the Unit Titles Act, including the obligation to pay body corporate levies.

Relating to the use, possession or occupation of the property?

The High Court's interpretation of this aspect of the section was to limit it to third party agreements which related to the use, possession or occupation of a third party's property.5 While the Court of Appeal noted that normally, rental and other payments would fall within the parameters of the High Court's definition, the section did not require this narrow interpretation, and it could see no reason to confine it that way.6 After reversing Associate Judge Abbott's narrow interpretation of the wording of the section, the Court of Appeal ultimately held that Mr Gilbert was personally liable for the body corporate levies payable. Mr Gilbert's liability was for levies accrued in the period beginning 14 days following the commencement of receivership to the date of judgment (with interest additional).

Receiver not saved by s 32(7)

Although Mr Gilbert had not applied for relief under s 32(7), the Court considered the point, and found that he would not have had an arguable case. As QSM was in a broader dispute with the body corporate outside these proceedings, and had a claim that exceeded the unpaid levies, Mr Gilbert argued for set off. The Court of Appeal rejected this argument on the basis that, as Mr Gilbert was personally liable for the levies, there could be no set off at common law. Also, the parties lacked mutuality as Mr Gilbert was at one remove from the body corporate.7

Ultimately, no factors were disclosed that could lead the Court to exercise its discretion to limit or excuse Mr Gilbert's liability under s 32(7). The obligation to pay the levies was "clearly due" and Mr Gilbert had been aware of that obligation from the outset.8

The Court also specifically mentioned the liability of new unit owners for outstanding levies incurred by previous owners under the Unit Titles Act 2010. Any unpaid levies become recoverable as due debts to the body corporate.9

Chapman Tripp comments

It is unclear just how far s 32(5) extends. However, the Court of Appeal's decision does not change the position that costs arising from outstanding local body rates and body corporate levies do not rank ahead of money secured under a registered mortgage, and so do not need to be cleared before a property is sold. But, given that the purchaser will inherit these liabilities, the usual practice of mortgagees and receivers clearing such arrears on settlement is likely to continue (or that such arrears will be factored into the price obtained).

A copy of the judgment is available here.

Our thanks to Natasha Kusel for writing this Brief Counsel.


1[2015] NZCA 185; Body Corporate 162791 v Gilbert [2014] NZHC 567
2 [41]
3 [42]
4 [43]
5 [50]
6 [51]
7 [69]-[70]
8 [72]
9 Unit Titles Act 2010, s 124(2), discussed at [48]

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Michael Arthur
James McMillan
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.