E & E Developments Ltd v Housing New Zealand Ltd - [2012] NZCA 7

IN THE COURT OF APPEAL OF NEW ZEALAND

CA820/2010
[2012] NZCA 7

BETWEEN E & E DEVELOPMENTS LTD
Appellant

AND HOUSING NEW ZEALAND LTD
First Respondent

AND HOUSING NEW ZEALAND CORPORATION
Second Respondent

Hearing: 10 October 2011

Court: Chambers, Ronald Young and Andrews JJ

Counsel: P F Chambers for Appellant
M C Smith for First Respondent

Judgment: 9 February 2012 at 10 am

JUDGMENT OF THE COURT

A The appeal is allowed.

B The judgment entered in the High Court in favour of the first respondent is set aside.

C The proceeding is remitted to the High Court to continue to trial.

DThe appellant is entitled to costs in the High Court. In the absence of agreement, these costs are to be fixed in the High Court.
E The first respondent must pay the appellant costs in this Court for a standard appeal on a band A basis and usual disbursements.

REASONS OF THE COURT

(Given by Chambers J)

Low-cost housing contract

In May 2002 E & E Developments Ltd, the appellant, and Housing New Zealand Ltd (HNZ), the first respondent, entered into an agreement under which E & E agreed to subdivide land it owned at Swanson, Auckland and to build on it 38 units. Each unit was to be on its own title. Under the agreement, HNZ was to pay progress payments as the units were constructed. Once completed, HNZ was to take title to the units.
In early 2003 the parties decided to change course. The parties agreed that, instead of HNZ buying the units, it would lease them once the development was complete. It agreed to pay $245 a week for each two-bedroom unit. HNZ was to continue making progress payments but, on settlement, E & E would repay what HNZ had paid by way of progress payments. E & E seems to have made clear at this stage that it did not want to be a long-term landlord; it would be looking to sell on its interest in the land. All of this was recorded in a written agreement dated 28 February 2003.
By about 26 November 2003 the 38 units had achieved “practical completion”. HNZ’s tenants began occupying the units from about 8 December 2003. At this stage, however, some things remained to be done in order for 38 individual titles to issue.
On 20 January 2004 E & E and HNZ signed a lease to regularise their relationship now that the units were occupied. The January 2004 lease, as we shall call it, had a Commencement Date of 8 December 2003. Presumably that date was chosen because that was the date on which HNZ had allowed its tenants to commence occupation. The January 2004 lease provided for a monthly rent at a rate of approximately $40,000. Although the lease had a potential term of 10 years, it was anticipated it would survive only until settlement, as the February 2003 agreement envisaged there would be 38 individual leases, one for each individual title and…

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: [2012] NZCA 7
Decision Date: 9 February 2012

CaseChat Overview and Summary

E & E Developments Ltd appealed a decision of the High Court that dismissed its claim for rent against Housing New Zealand Ltd (HNZ). The Court of Appeal allowed the appeal and set aside the High Court judgment. The Court held that the High Court was wrong to enter summary judgment in favour of HNZ. The Court found that it was reasonably arguable that rent was payable for the period from 8 December 2003 to 9 June 2004 under the January 2004 lease. The Court held that a different interpretation of clause 1.1 of the lease was preferable, which would mean that rent was payable from 8 December 2003 but not due to be paid until the settlement date.

The Court of Appeal allowed the appeal, set aside the High Court judgment and remitted the proceeding to the High Court to continue to trial. The appellant was entitled to costs in the High Court. In the absence of agreement, these costs were to be fixed in the High Court. The first respondent must pay the appellant costs in this Court for a standard appeal on a band A basis and usual disbursements.

Orders