College Property Holdings NZ Limited Partnership v Estate of Whittle
[2019] NZHC 1968
•14 August 2019
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2019-409-000366
[2019] NZHC 1968
BETWEEN COLLEGE PROPERTY HOLDINGS NZ LIMITED PARTNERSHIP
ApplicantAND
ESTATE OF MICHAEL NASH WHITTLE
First Respondent
AND
ESTATE OF DIANNE LYNDSEY WHITTLE
Second Respondent
AND
MATTHEW SCOTT WHITTLE
Third Respondent
Hearing: 5 August 2019 Appearances:
H McIntosh for the Applicant Third Respondent in person
Judgment:
14 August 2019
JUDGMENT OF NATION J
[1] By way of originating application, the applicant (CPH) has applied for orders cancelling a lease for a property at 30 Charles Upham Avenue, Christchurch (the property) and granting CPH possession of the property, pursuant to ss 244 and 251 Property Law Act 2007 (PLA).
[2]Affidavits filed in support of the application establish:
(a) CPH is the duly registered owner of the freehold title to the property;
COLLEGE PROPERTY HOLDINGS NZ LTD PARTNERSHIP v WHITTLE [2019] NZHC 1968 [14 August 2019]
(b) the property is the subject of a long term lease that was not due to expire until 30 November 2029. The original lessees, as described on the lease instrument, were Michael Nash Whittle and Dianne Lyndsey Whittle, and their heirs, executors, administrators and assigns;
(c) Mr and Mrs Whittle are both now deceased and died intestate. Mrs Whittle died on 31 December 2014, aged 73. Mr Whittle died on 12 October 2017, aged 78. No person has been appointed administrator of their estates. Mr and Mrs Whittle had six children;
(d) a transfer to CPH of the fee simple interest in the title to the property was registered on 1 April 2019;
(e) at some point after his father died, Matthew Whittle, who is named as third respondent in these proceedings, took possession of the property by taking the keys and carrying out some upkeep. He later left the property at a date unknown and the property was vacant when CPH acquired it in April 2019. It has been vacant since then;
(f) no rental has been paid for the property since 1 June 2017. Rates have not been paid for several years;
(g) on or about 4 April 2019, CPH sent a letter to the estate of Michael Whittle, addressed to the property. The letter informed the recipient of CPH’s purchase of the property, gave notice of the dates when rent had to be paid under the lease and also said that all arrears had to be paid within seven days of the letter. Matthew Whittle contacted the representative from CPH who had written to the estate asking what was going to happen to the property. CPH’s manager said she could not discuss the matter with him further because he was not executor of the estate or named on the lease;
(h) on 16 May 2019, CPH sent notices under s 245 PLA to the estate of Mr and Mrs Whittle at the property. The notices were dated 14 May 2019. They advised that:
i. $22,721.94 was then due for outstanding rent;
ii. CPH required remedy of that breach within 10 working days;
iii. without payment CPH might seek to cancel the lease in accordance with s 244 PLA; and
iv. there was a right to apply to the Court for relief against cancellation and CPH recommended they seek legal advice;
(i) a similar notice was issued and sent to the estate as to outstanding rates of
$5,477;
(j) notices of the same date were sent to Matthew Whittle at the address CPH understood he was residing at. Copies of the notices addressed to the estates and to Matthew Whittle were also sent on 16 May 2019 to the deceased’s five other children, who would all have been adult. Two of the children responded indicating they had no involvement with the property and had no wish to be involved in any issues relating to their parents’ estates. None of the deceased’s children indicated they wished to take any steps in the proceedings or to engage with CPH over the arrears of rent and rates;
(k) CPH filed proceedings to cancel the lease. A copy of the proceedings was served on Matthew Whittle at Christchurch on 16 July 2019. On the same day, a copy of the application and accompanying documents was affixed to the house at the property; and
(l) on 26 June 2019, the solicitors for CPH received a courier package containing a letter from Matthew Whittle with what appeared to be door keys to the property. In the package was a letter from Matthew Whittle saying he would not be having anything to do with the property anymore because a sister was saying he owed $22,000 to his father’s estate. In the letter he said he gave permission for the property to be sold.
[3] When the application was called before me, Mr McIntosh for CPH urged me to make the orders sought. In doing so, he submitted:
(a) since the death of their father in 2017, the family have had the opportunity to engage with the owners of the property to deal with the lease obligations and to indicate they wished to take an assignment of the leasehold interest in the property. They have had further opportunity to do so since being notified of CPH’s interest in the property on 4 April 2019. No one in the family has taken advantage of those opportunities;
(b) Matthew Whittle, who was taking some responsibility for the property, appeared to have abandoned it once he was on notice that CPH was pursuing arrears of rent;
(c) notice of the proceedings had been given to Matthew Whittle and also to those interested in the estate through the affixing of the proceedings to a building at the property, service in a manner that was provided for by the lease;
(d) CPH would be agreeable to the family taking over the lease if they agreed to pay the outstanding rent and were going to meet the lessee’s obligations to pay the rent and rates as they would be required to do as lessee;
(e) if the lease is cancelled and CPH takes possession of the property, pursuant to cl 24 of the lease, CPH would be required to offer up the lease of the property for sale by public auction. Pursuant to cl 24, CPH would be entitled to half the price that a purchaser would pay for the lease. The lessees (here, the estates of the deceased) would be entitled to half of the purchase price, less all monies that were due under the lease by Mr and Mrs Whittle or their estates;
(f) on all the evidence, CPH would have been entitled to cancel the lease and take possession of the property without obtaining the approval of the Court because of the established breaches of the lease and the failure to remedy those breaches after the required notices had been served.
[4] Although he had not filed any documents in advance of the hearing, Matthew Whittle was in Court and appeared when the proceedings were called.
[5] Matthew Whittle said he understood that, if the lease was put up for sale, because of the terms of the lease and the arrears of rent that were owing, there might be little available to the estates of his parents. There may be no bids for the leasehold interest in the property.
[6] Matthew Whittle still considered the most practical way of dealing with the situation would be for possession of the property to be taken over by CPH and for the lease to be put up for auction, as required in terms of the lease.
[7] From statements made by Matthew Whittle and through other information made available to the Court, it seems:
(a) there is significant friction between various of the deceased’s children, as a result of which at least some of the children do not want to have anything to do with the property;
(b) Matthew Whittle has continued to provide some ongoing care of the property;
(c) one of Matthew Whittle’s sisters believes he should have been paying rent or rates for the property for some of the time since the death of Mr Whittle. She is in the process of obtaining letters from family members to support an application to appoint an administrator of the estates of either one or both parents; and
(d) one or other of the deceased’s children could be in a position where they could afford to pay the arrears and take over the lease if they wished to.
[8] There was no application before the Court for directions as to service, as is normally required with the filing of an originating application, but the Court has an inherent jurisdiction to deal with the situation. In exercising that jurisdiction, I could have dispensed with the need for service of the proceedings on further parties, taking into account that anyone interested in the property was likely to have received notice
of the proceedings through seeing documents affixed to the building. In exercising the jurisdiction to dispense with further service of the proceedings, s 245(2) PLA would have been relevant. Pursuant to s 245(2), a lessor does not need to serve a notice of intention to cancel a lease where the lessor believes on reasonable grounds that the lessee has given up possession of the leased premises. It would also have been relevant that the lease itself allowed for service of the proceedings to be effected by the affixing of documents to the leased premises.
[9] The evidence before the Court does establish that there have been serious and ongoing breaches of the lease through the non-payment of rates and rent due under the lease. Members of the family, who might have been interested in seeing the lease continue and taking an assignment of it, have had the opportunity to deal with those arrears but have not done so. CPH may need to be able to take control of the premises without further unnecessary delay and without the costs and delays of ongoing Court proceedings.
[10] It does appear however that there may be some within the family who might be able to take responsibility for the problem that exists and who might wish to retain whatever value there might be in a continuing lease of the property. The only family member who was directly served with the proceedings was Matthew Whittle. On the information provided to me, it was not clear that service of the proceedings on him would necessarily have ensured there was similar communication to other family members about what was happening. The estates, named as first and second respondents, are not people or legal entities that can be named as parties to the proceeding.
[11] There is potential for the lessees’ family to benefit from their parents’ leasehold interest in the property. There are extensive rights of renewal under the lease. On the expiry of the lease, the lessees may well be entitled to retain the value of buildings or improvements on the property.
[12] To retain any such benefits, it is likely the family would need to obtain legal advice and representation. They would also likely need to find some way of dealing with the arrears of rent and rates. They would properly have to cooperate or allow someone to represent all of them in dealing with the current Court proceedings or in seeking to negotiate with CPH. If the family do nothing along those lines, CPH might well end up owning the property without having to recognise any obligations to anyone under the lease. In that way, there could be a loss to the children of the deceased lessees and a windfall to CPH.
[13] Section 251 permits the Court to make orders for possession and cancellation of a lease on any conditions that it thinks fit.
[14]In these circumstances, I make orders pursuant to ss 244 and 251 PLA that:
(a) L773216.1 dated 21 November 1987 (as varied) relating to 30 Charles Upham Avenue, Christchurch (the property) is cancelled; and
(b) the applicant is granted possession of the property.
[15]These orders are made on the following conditions:
(a) the orders are suspended and are not to be given effect until 1 October 2019;
(b) these proceedings are to be called again in the High Court at Christchurch at 11.45 am on 30 September 2019;
(c) the applicant is to serve a copy of this judgment by email or by post to the last known postal or email address on all the children of the two deceased lessees;
(d) the applicant is to serve copies of the documents filed with the proceedings by email or by post on the following children of the deceased at their last known address:1
1 I have not directed that there be service of the proceedings on […] or […] because of their strongly expressed desire not to be involved in any issues relating to the property or the estates of their parents. I make an order for the suppression of these parties’ names which will be deleted from
(i) […];
(ii)[…]; and
(iii)[…].
(e) service of the documents as directed is to be effected no later than 28 August 2019;
(f) leave is reserved to any party served with the proceedings to seek a variation of the orders for cancellation and possession but only on the basis that:
i.such a person file with the High Court at Christchurch and send to Van Aart Sycamore Lawyers of Dunedin, no later than 5.00 pm on 26 September 2019, a notice that they intend to apply to the High Court for variation of the orders as to cancellation and possession referred to in [14]. Such notices must specify reasons why that person says the orders made should not come into effect; and
ii.the person filing such notice must also file with the Court and send a copy to the applicant’s solicitors, Van Aart Sycamore Lawyers, by
5.00 pm on 26 September 2019, an affidavit setting out the evidence they will rely on in support of their application, including the proposals they wish to make as to how the arrears of rent and rates will be paid and as to who it might be that wishes to take an assignment of the lease; and
(g) any person so served with the proceedings and wishing to seek a variation of the orders made must appear either personally or as represented by a solicitor at Court when the matter is next called at 11.45 am on 30 September 2019.
the publicly available version of this judgment. I also redact the names of the three parties who are to have documents served on them.
I do not require further service of the proceedings on Matthew Whittle because he was previously served with the proceedings as third respondent and because he attended at Court and indicated he supported the making of the orders referred to.
[16] If the steps required to seek a variation of the orders are not taken as directed, unless the Court orders otherwise, the orders made for cancellation of the lease and possession of the property to be given up to CPH will take full effect on 1 October 2019.
[17] These proceedings are adjourned for call in the list at 11.45 am on 30 September 2019.
Solicitors:
Van Aart Sycamore Lawyers, Dunedin
This judgment was delivered by me on 14 August 2019 at 11.00 am pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar: Date: 14 August 2019.
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