Cornwall Park Trust Board Inc v Chen - [2013] NZHC 1067

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-8 [2013] NZHC 1067

BETWEEN THE CORNWALL PARK TRUST BOARD INC
Plaintiff

ANDYONG XIN CHEN Defendant

Hearing: 2 and 7 May 2013

Counsel: JGH Hannan and LBC Simpson for plaintiff
JA Wickes for defendant

Judgment: 13 May 2013

JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application for summary judgment]

Solicitors: DLA Phillips Fox, PO Box, Auckland 1140
Loo & Koo, PO Box 99 687, Auckland 1140

THE CORNWALL PARK TRUST BOARD INC V CHEN HC AK CIV-2013-404-8 [13 May 2013]

Introduction

[1] This case involves the termination of a lease which is perpetually renewable and which is part of the endowment lands held by the plaintiff charitable trust.

[2] The plaintiff is a charitable trust that was incorporated under the Charitable

Trusts Act 1957. It acquired the properties of earlier trusts.

[3] The historical position relating to the plaintiff’s land owning was briefly summarised by the Supreme Court as follows:1

[24] In 1901, Cornwall Park in Auckland was gifted by Sir John Logan Campbell to the Cornwall Park Trust Board. With a view to providing endowment income for the Trust Board, Sir John later transferred an additional 58 hectares of adjoining land to the Board. This land was subdivided and, between 1910 and 1923, the Board leased (for perpetually renewable terms of 21 years) 115 residential sections to individual lessees at agreed ground rentals. In due course the lessees constructed homes on, and made associated improvements to, the sections. The leases provide a formula for calculating the rent on renewal.

[4] The nature of these leases was also summarised by the Supreme Court as follows:

[25] Long-term ground leases (usually of 14 or 21 years) renewable in perpetuity with rent calculated either by an assessment of fair or market rent (or some similar concept) or, as in this case, as a percentage of a sum established pursuant to stipulated valuation exercises, are referred to as Glasgow leases. They were mainly put in place in the 19th and early 20th centuries. A Glasgow lease is, in economic substance, a bond which is revalorised every 14 or 21 years and secured against the demised land. The income generated, while usually a modest return on the value of the land, is very secure and can be expected to increase over time, at each renewal date, as land increases in value. For these reasons, Glasgow leases were seen as providing secure endowment income for charities (such as schools) and public bodies (such as harbour boards). They also facilitated development, enabling those who wished to develop land (and were willing to take the associated risks) to do so without incurring the capital costs of land acquisition.

[26] Glasgow leases proceed on the basis that:

(a) increases in the value of the land due to extrinsic factors are for the lessor’s benefit; but

1 Cornwall Park Trust Board v Mandic [2011] NZSC 135, [2012] 2 NZLR 194.

(b) the rent should not be fixed in relation…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2013] NZHC 1067
Decision Date: 13 May 2013

CaseChat Overview and Summary

In Cornwall Park Trust Board Inc v Chen, the Cornwall Park Trust Board, a charitable trust, brought an application for summary judgment against Andyong Xin Chen, the former lessee of a property leased under perpetually renewable terms. The dispute arose from the termination of the lease and the subsequent forfeiture of the lease, which was the first such instance in relation to the Cornwall Park leases. The Trust Board sought judgment for back rent, auction and marketing costs, and the cost of repairs to reinstate the property. Chen raised defences including estoppel and misrepresentation, claiming she was misled by the Trust Board's conduct and invoices. The Associate Judge, JA Faire, declined the Trust Board's application for summary judgment on the first and third causes of action, allowing them to proceed to trial. The court found that there were arguable defences to the claim for back rent based on estoppel and potential breaches of the Fair Trading Act 1986. Regarding the claim for repairs, the court held that the Trust Board had not satisfied the onus of showing there was no defence, as there was insufficient evidence to determine the state of repair of the property at the end of the lease and during Chen's occupancy. However, the court entered summary judgment in favour of the Trust Board for the auction and marketing costs, as there was no defence to that claim. The case was referred to a case management conference to address issues such as trial duration, discovery orders, and potential expert orders. Costs in relation to the summary judgment application were reserved.

Orders