Grey District Council v Banks - [2013] NZHC 1485

IN THE HIGH COURT OF NEW ZEALAND GREYMOUTH REGISTRY

CIV-2012-418-000005 [2013] NZHC 1485

UNDER the Property Law Act 2007

BETWEEN GREY DISTRICT COUNCIL Applicant

ANDDOUGLAS BANKS First Respondent

CHRISTINE SANDRA BANKS Second Respondent

Hearing: 11-12 March and 14 May 2013

Appearances: J Shackleton and D M Miller for the Applicant
C S Banks in Person on behalf of Respondents

Judgment: 19 June 2013

JUDGMENT OF FOGARTY J

Introduction

[1] This litigation concerns a ground lease for a property in Blaketown, Greymouth. Blaketown is a subdivision immediately adjacent to the Harbour Board works at the mouth of the Grey River. The land occupied by the subdivision was originally settled on the Greymouth Harbour Board by grant of the Crown as an
endowment.1 It was accompanied by a plan of residential subdivision,2 and was built
as a working class suburb, with the householders being lessees on 21 year term leases from the Harbour Board.

1 Reserves and Other Lands Disposal and Public Bodies Empowering Act 1911, s 24 (the empowering provision). That endowment was the consequence of an agreement between the Borough and the Harbour Board, see Hansard (28 October 1911) 156 NZPD 1283.
2 All the land coloured yellow on the plan marked M D 3775 deposited in the office of the
Minister of Marine at Wellington. Section 24(2).

GREY DISTRICT COUNCIL v BANKS [2013] NZHC 1485 [19 June 2013]

[2] Long term renewable leases on land owned by public bodies but leased in residential titles to lessees have always been specifically provided for since the Public Bodies’ Leases Act 1908, s 5(e):

A tenancy for any term not exceeding twenty-one years, with a perpetual right of renewal for the same or any shorter term, at a rent to be determined by valuation, in accordance with the provisions of the First Schedule hereto:

The First Schedule then sets out the terms of the lease. These leases are commonly known as Glasgow leases.3 The terms in the First Schedule make it clear that they are renewable by the lessee, not by the lessor.

[3] The leases the subject of this litigation which draw on some of the terms of the First Schedule, are for 21 year terms, but the decision as to renewal is in the first instance by the lessor.

[4] For many years, from 1911 down to 1979, these leases were always renewed by the lessor and lessees on 21 year terms. From 1979 onwards, the lessor took advantage of the fact that, with the right to renew or not, the lessor could technically decide not to renew on the same terms, but to offer alternative terms in a new lease. This the lessor did in 1979, providing for the rents to be reviewed every seven years instead of every 21 years. This had a significant increase in the level of rent payable by the lessees. Then from 2000 on the lessor offered Glasgow leases, ie, renewable at the option of the lessee.

[5] The Grey District Council is now…

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 1485
Decision Date: 19 June 2013

CaseChat Overview and Summary

In the High Court of New Zealand, Grey District Council v Banks, the applicant, Grey District Council, sought to cancel the lease of a property in Blaketown, Greymouth, and obtain possession of the property due to the respondents, Douglas and Christine Banks, failing to pay their rent in full. The Council also sought an order for payment of the arrears, which totaled $17,032. The Banks opposed the application, arguing that the lease should not provide for rent reviews every seven years and that the rent review mechanism was incorrect. The court had to decide on two main issues: whether there was a unilateral amendment of the leases, rendering the seven-year rent reviews invalid or unenforceable, and whether the Grey Harbour Board or the Grey District Council had the power to enter into the leases in the first place.

The court found that there was no obligation on the lessor to give informal notice of any amendment of a lease being submitted for lessees to cover the renewal period, unless the changes were so subtle that they would not be noticed unless pointed out. The court was satisfied that the Banks had not discharged the evidential burden of proving any misrepresentation or deceit, and therefore, the unilateral amendment arguments to the deed failed. The court also found that the Grey Harbour Board and the Grey District Council had the power to enter into the leases under the Public Bodies Leases Act 1908 and 1969. The court concluded that it was not in the public interest to resolve the issue raised by the respondents as to whether or not the leases prior to 2000 can be justified by reference to the empowering provisions of the Public Bodies' Leases Act 1908 and 1969.

As a result, the court ordered that the Banks were liable for the payment of the arrears, reserving leave for the Council to pursue the remedies of cancellation and possession if they could not reach satisfactory arrangements with the respondents for collection of the arrears of rent. The court also reserved costs.

Orders