Dilworth Trust v Paton

[2025] NZHC 1565

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2025-404-000994

[2025] NZHC 1565

UNDER

the Property Law Act 2007

IN THE MATTER

an application under section 244(1)(a) for an order of possession of the land for the purpose of cancelling a lease

BETWEEN

DILWORTH TRUST a registered Charitable Trust having its registered office at 2 Erin

Street, Epsom, Auckland Applicant

AND

LAURENCE ALAN PATON of 248 Great

South Road, Auckland, Retired Respondent

Hearing:	12 June 2025
Appearances:	C Harris and A Davidson for Applicant Respondent in person
Judgment:	13 June 2025

JUDGMENT OF MOUNT J

This judgment was delivered by me on 13 June 2025 at 12 pm, Pursuant to Rule 11.5 of the High Court rules.

Registrar/Deputy Registrar Date: ……………………………

Solicitors:
Jackson Russell Solicitors

DILWORTH TRUST v LAURENCE ALAN PATON [2025] NZHC 1565 [13 June 2025]

Introduction

[1]                 The applicant, Dilworth Trust, is the registered owner of a fee simple title over the property at 248 Great South Road, Greenlane, Auckland. On 30 November 2012, the respondent, Mr Paton, took over a lease of that property and became the registered owner of the leasehold title over the property.

[2]                 The lease was for a term that expired on 31 January 2025, with a right of renewal for a further 21 years subject to a renewal and rent review process. In accordance with that process, on 1 October 2024 Dilworth wrote to Mr Paton and said that a registered valuer had assessed fair annual rent at $202,921 plus GST (if any), which would apply from 1 February 2025.   That was a substantial increase from   Mr Paton’s existing rental of $45,000 per year.

[3]                 Under cls 27 and 31 of the lease, Mr Paton had two months in which to give notice in writing that he accepted the new rent amount, or wished to trigger a rent determination process, or did not wish to renew the lease. A rent determination process would involve two registered valuers trying to agree, or, failing that, an arbitration process.

[4]                 Mr Paton did not give notice to Dilworth within the required timeframe and was deemed under the lease to have accepted the rent specified by Dilworth pursuant to cls 27 and 31.   He therefore became liable to pay the new higher rent from          1 February 2025.

[5]                 Under cl 31(h), Mr Paton’s deemed acceptance of the increased rent constituted a contract for the granting and acceptance of a renewal lease. Mr Paton was however required to sign/execute the renewal lease documentation so it could be filed with Land Information New Zealand. Under cl 31(i) of the lease, failure by Mr Paton to sign/execute the renewal lease within two months of being given notice it was available for execution constituted a breach of his obligation and entitled Dilworth to serve a default notice under s 246 of the Property Law Act 2007 (the Act).

[6]                 On 17 January 2025, Dilworth sent a letter to Mr Paton enclosing the lease renewal documents for him to sign and advising him that if he did not execute the

renewal lease within two months of receipt, that would be a breach of his obligation to renew the lease.

[7]                 Mr Paton did not return signed/executed lease renewal documents. Nor did he respond to the letter of 17 January 2025 or related correspondence.

Lease default notices

[8]                 On 20 March 2025, Dilworth served Mr Paton with a notice of intention to cancel the lease under s 246 of the Act for his failure to execute a renewal lease. The notice gave Mr Paton 15 working days after the date of service, or no later than 14 April 2025, to execute the lease renewal documents as required. Dilworth again attached the lease renewal documents for Mr Paton to sign.

[9]                 Mr Paton failed to sign and return the lease renewal documents to Dilworth. That entitled Dilworth to cancel the lease in accordance with s 244 of the Act and re-enter the property.

[10]As at 17 March 2025 Mr Paton was in rental arrears in the amount of

$38,893.18, made up of overdue rent payments for February and March 2025.

[11]             At the same time as serving the default notice for failure to execute the renewal lease, Dilworth served Mr Paton with a notice of intention to cancel the lease under  s 245 of the Act for unpaid rent. Dilworth gave Mr Paton 10 working days (that is until 4 April 2025) to pay the sum of $40,393.18, namely the unpaid rent plus recovery costs of $1,500.

[12]             An affidavit of service  confirms those notices  were personally served  on  Mr Paton on 20 March 2025.

[13]             On or about 1 April 2025, Mr Paton made a payment of $3,750 towards the outstanding rent. That was the amount of his previous rent and fell well short of the amount owed. The remainder of the rent remained unpaid on 4 April 2025, and the breach was therefore not remedied at the expiry of the notice period. This breach

further entitled Dilworth to apply to the Court for an order for possession of the land in accordance with s 244 of the Act.

High Court proceedings

[14]             On 24 April 2025 Dilworth filed an application in this Court seeking possession of the land and cancellation of the lease under s 244 of the Act. An affidavit of service confirms that Mr Paton received and accepted service of the application and supporting evidence on 5 May 2025. The documents advised Mr Paton of the hearing date of 28 May 2025.

[15]             Mr Paton took no steps in response to the application and did not appear on 28 May 2025. Brewer J directed that the matter should proceed by way of formal proof on 12 June 2025, and noted that the matter might be determined on the papers.

[16]             On 10 June 2025 I issued a minute asking counsel for the applicant to update the Court as to the steps taken to notify Mr Paton that the matter would be called on 12 June 2025. Counsel provided an affidavit on 12 June 2025 stating that Dilworth’s solicitors couriered Mr Paton a letter, delivered on 11 June 2025, advising him of the hearing date and enclosing the notice of hearing, the affidavit with updated quantum of rent arrears, the memorandum of counsel for the hearing, and the minute of        10 June 2025. The affidavit annexed confirmation of delivery from the courier. The solicitors also emailed Mr Paton and attempted to call his mobile number three times without connecting. Three further attempts were made to contact Mr Paton’s ex-wife by telephone, also without success. The Registry had also notified Mr Paton of the hearing date in the usual way.

[17]             Mr Paton did not appear on 12 June 2025, and I have considered the matter by way of formal proof.

Assessment

[18]             I have reviewed the material filed and I am satisfied that the respondent has breached the terms of his lease in two respects:

(a)by failing to remedy rental arrears as required by 4 April 2025; and

(b)by  failing  to  sign  and  return  the  lease  renewal  documents  by   14 April 2025.

Result

[19]             I am satisfied that the relevant documents were served on Mr Paton, and I cannot identify any reasonable prospect of a defence to the breaches. Dilworth gave Mr Paton the necessary notice under ss 245 and 246 of the Act, and is entitled to cancellation of the lease and an order for possession under s 244.

[20]I make orders:

(a)cancelling Registered Lease 9247832.3; and

(b)granting the applicant possession of the land described as 248 Great South Road, Auckland as recorded in the Leasehold Record of Title 603226 and Fee Simple Record of Title NA513/235.

[21]             To give Mr Paton time to arrange his affairs, these orders will take effect from 5pm on Friday 11 July 2025.

[22]             Under s 251 of the Act the court, having cancelled a lease, may order the lessee to pay the rent due up to the date of cancellation or any later date on which the lessee yields up possession. Dilworth has filed an affidavit stating that the total amount of rent owing as at 6 June 2025 is $89,732.95.

[23]Accordingly, I order that the respondent is to pay the applicant:

(a)$89,732.95 being the rent due as at today’s date, or such further sum reflecting the rent due at the date on which the respondent yields up possession;

(b)interest in accordance with s 10 of the Interest on Money Claims Act 2016; and

(c)       costs of $7,370.05.

Mount J