Harvey v Beveridge

[2014] NZHC 947

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2013-409-000371 [2014] NZHC 947

BETWEEN

MEGAN ANN HARVEY

Plaintiff

AND

IJAN BEVERIDGE Defendant

Hearing:	7 May 2014
Appearances:	A R Armstong for Plaintiff No Appearance for Respondent
Judgment:	7 May 2014

ORAL JUDGMENT OF GENDALL J

Introduction and factual background

[1]      The matter before me involves a formal proof by the plaintiff of a claim for mesne profits against the defendant.

[2]      The plaintiff is the administrator of the estate of the late Dr Mark Byrd. Dr Byrd owned a two bedroom unit at Unit 4, 35 Division Street, Christchurch, (the unit) at the date of his death.  Between 2000 and 2008 the defendant Mr Beveridge was in prison.  Mr Beveridge and Dr Byrd it seems were friends and work colleagues when Mr Beveridge went to prison.

[3]      When Mr Beveridge came out of prison in 2008, Dr Byrd allowed him to live in the unit rent free.  He remained in occupation of the unit until 17 April 2014 when he vacated it in accordance with a possession order made by the Court of Appeal in proceedings before it.  That Court of Appeal judgment which contained the orders in

question was dated 20 March 2014.

HARVEY v BEVERIDGE [2014] NZHC 947 [7 May 2014]

[4]      Mr Beveridge has confirmed that he paid no rent or any outgoings on the unit during his time of occupation.  Dr Byrd died on 24 January 2012 leaving a will in which Mr Beveridge was not named as a beneficiary.  Following Dr Byrd’s death the plaintiff asked Mr Beveridge to vacate the unit but he refused to do so.  The plaintiff issued proceedings against Mr Beveridge seeking possession of the unit and mesne profits.    The  plaintiff  alleged  that  Mr  Beveridge’s  occupation  of  the  unit  until Dr Byrd died was as a bare licensee of the property and the licence automatically terminated upon Dr Byrd’s death.   Since then the plaintiff says Mr Beveridge has been an unlawful occupier of the unit.

[5]      Mr Beveridge’s case originally was that he became the beneficial owner of the unit by virtue of a constructive trust.   This claim however was dismissed in particular by the Court of Appeal in its 20 March 2014 judgment where it rejected this constructive trust claim as a defence advanced by Mr Beveridge to the plaintiff’s summary judgment action for possession.   The Court of Appeal accordingly gave summary judgment to the plaintiff requiring Mr Beveridge to give up possession of the unit.  In particular, it concluded at paragraph D and made an order at paragraph [50](b) of the Court of Appeal judgment as follows:

DThe appellant is entitled to mesne profits from the respondent in respect of the Unit from 24 January 2012 to the date on which possession of the Unit is given to the appellant.

And

[50]     We also make the following orders:

…(b)       The  Reverend  Harvey  is  entitled  to  mesne  profits  from Mr Beveridge in respect of the Unit from 24 January 2012 to the date on which possession of the unit is given to the Reverend Harvey.

(c)      The quantum of the mesne profits is to be determined, if necessary, by the High Court.

…

Chronology

[6]      It is useful here to provide a brief chronology of events in this case which I

now do:

(a)       July 2008 to 17 April 2014 – Mr Beveridge occupies the unit. (b)      24 January 2012 – Dr Byrd dies.

(c)       30 May 2012 – Grant of probate to the plaintiff.

(d)22 July 2012 – Plaintiff gives Mr Beveridge notice to vacate the unit by 7 October 2012.

(e)      20 December 2012 – Plaintiff gives Mr Beveridge further notice to vacate the unit by 20 January 2013.

(f)      22 February 2013 – Plaintiff commences proceedings for possession of the unit.

(g)      7 June 2013 – Hearing of plaintiff’s summary judgment application

before the High Court.

(h)8 July 2013 – Judgment of Associate Judge Osborne in this Court dismissing the summary judgment application.

(i)25 February 2014 – Hearing in the Court of Appeal of the appellant’s appeal against the High Court refusal of her summary judgment application.

(j)20  March  2014  –  Judgment  of  the  Court  of Appeal  granting  the appellant summary judgment and ordering Mr Beveridge to give up possession of the unit.

(k)      17 April 2014 - Mr Beveridge vacates the unit.

[7]      In accordance with paragraph [50](c) of the 20 March 2014 Court of Appeal judgment,  the  issue  of  mesne  profits  and  their  quantum  is  before  me  to  be determined by this Court.

The claim and my decision

[8]      So far as that claim is concerned the plaintiff here seeks mesne profits for the unit at the rate of $350 per week from the date of Dr Byrd’s death 24 January 2012 until the date Mr Beveridge gave up possession being 17 April 2014.   That is a period of 814 days.

[9]      Mesne profits sought at the rate of $350 per week equate to $50 per day for that period.   The plaintiff maintains that $350 per week represents a reasonable market rental for the unit over that period.  The unit in question as I understand it is a reasonably new two bedroom unit in Division Street, Christchurch, regarded as a good location.  I am told the unit is in reasonable condition and that a rental rate of

$350 per week for the period in question is entirely appropriate.

[10]     As to that rental rate, and the formal proof today, counsel previously acting for Mr Beveridge has confirmed that no issue is taken with the $350 per week amount sought for the unit.  Further, Mr Beveridge has indicated he does not seek to be heard today on the plaintiff’s claim for mesne profits and is presumably content to simply abide this Court’s decision.

[11]     Further,  counsel  for  Mr  Beveridge  has  confirmed  earlier  that  it  is  not necessary here for the plaintiff to file expert evidence to confirm that the $350 per week in question did represent a reasonable market rental rate for the unit over the period in question.   Whilst that concession was made as  I understand it before Associate Judge Osborne in the hearing of the plaintiff’s unsuccessful summary judgment action for possession which took place on 7 June 2013, (later reversed on appeal to the Court of Appeal on 25 February 2014) as I see it, given there has been no reneging from that position on behalf of the defendant, it continues to apply here. To do otherwise in my view would mean that the plaintiff was misled to a significant point with regard to what might be required by way of proof before this Court.

[12]     In any event, from all matters which are before this Court, I am satisfied that a rental rate of $350 per week for the unit for this period from 24 January 2012 was appropriate, given market rental rates and the circumstances prevailing in the city of Christchurch during this time.

[13]     I conclude therefore that if mesne profits are to be awarded in this case, a rate of $350 per week or $50 per day for the period in question is appropriate.

[14]     Turning now to issues as to whether it is appropriate here for an order for mesne profits to be imposed at all, and if so for what period, I note at the outset that this was in fact ordered by the Court of Appeal (and for the period from 24 January

2012) in its judgment, and I am bound by that decision.

[15]     Notwithstanding that, and addressing this issue now, so far as mesne profits or damages are concerned, the position in this country is well established and encapsulated in a statement in the Law of Torts in New Zealand1 as follows:

Where  the  defendant  wrongfully  makes  use  of  the  plaintiff’s  land,  the plaintiff is entitled to recover by way of damages (generally called “mesne profits”) a reasonable rate of remuneration for the full period of use, regardless of any actual loss suffered by the plaintiff or any actual benefit derived by the trespasser.  This strict “user principle” is justified by the need to remove any financial incentive to interfere with the possessory rights of others.

[16]     In addition, The Law of Real Property2 dealing with mesne profits states:

4-029   (2)   MESNE PROFITS.   As against a trespasser, the owner, or a person in possession or having a contractual or statutory right to possession, may claim damages for the trespass.  In making such a claim for “mesne profits”, as it is traditionally called, the owner may elect to seek either restitution of the benefit which the defendant has received or damages for the loss he has suffered.

(i)        Usually the owner will claim compensation for having been deprived of the use and occupation of the land.   This is assessed according to the current open market value of the land, normally the ordinary letting value.  The landowner is entitled to the sum “whether or not he can show that he would have let the property to anybody else, and whether or not he would have used the property himself”.

…

[17]     In the present case, there can be no doubt in my view that from the outset the defendant was a bare licensee of the unit under a licence revocable at will.  Insofar as

the defendant’s original claim to a constructive trust was concerned, he stated in an

1      Law of Torts in New Zealand, Todd, Ch 9 at para 9.2.07(4)

2      The Law of Real Property, Megarry & Wade, 8th ed at para 4-029.

affidavit  he  provided  in  support  of  his  notice  of  opposition  to  the  claim  for possession against him, (at para [11] on page 50 of the common bundle):

The plaintiff claims that I occupied as a bare licensee of the property.   I disagree with this statement.   While I initially lived at the property as a guest, it became evident within a few weeks that Mark had formed the intention that the property was held on trust by him for me…

[18]     It can be seen from this acknowledgment therefore that the defendant clearly accepts that when he took up occupation of the unit he did so as a guest and therefore as a bare licensee.  His defence to the possession claim was that he had become the beneficiary under a constructive trust with respect to the unit but that defence failed and was dismissed before the Court of Appeal.

[19]     I am satisfied it must follow therefore that the defendant at all times during his occupation of the unit remained a mere guest of the late Dr Byrd and therefore a bare licensee.  The defendant states also that Dr Byrd did allow him to occupy the unit without payment of any rent.  Therefore, he was not a tenant and could only have been seen as a bare licensee.   Nothing is before the Court to show that this licence may have been in any way a formal contractual licence.  Thus I am satisfied here it was a licence revocable at will.

[20]     The  legal  position  is  clear  that  the  death  of  a  licensor  automatically terminates a revocable licence – Terunnanse v Terunnanse.3   Accordingly, from the date of Dr Byrd’s death on 24 January 2012 the bare licence here was revoked and Mr Beveridge became an unlawful occupier.  As such I am satisfied that the plaintiff is entitled to recover mesne profits from him from that 24 January 2012 date until the final date he vacated the unit being 17 April 2014.   This represents a period of

814 days and, at the rate of $50 per day ($350 per week), the total mesne profits due amount to $40,700.

[21]     A possible issue does arise here concerning entitlement to mesne profits when in fact the defendant it seems did not receive notice to vacate the unit from the plaintiff until 22 July 2012 (and that notice gave him until 7 October 2012 to vacate). As I see the position however, entitlement to mesne profits in this case and the right

to eject the defendant as a former licensee from the unit are two entirely different things.   From the date that the late Dr  Byrd died, being 24  January 2012, the defendant would have known at least that from this point he had no right to remain in the property and his licence had been terminated.  If as occurred here he chose to stay on in the property, then as I see it clearly he should be held liable for mesne profits.  From 24 January 2012 the defendant became a trespasser and in terms of the “user principle” referred to above at paragraph [15] in Todd on Torts and also in the

judgment  of the Privy Council  in  Inverugie Investments  Limited  v Hackett4   the

defendant under this principle is obliged to pay a reasonable rent for the unit for the use which he has enjoyed.

Result

[22]     For all the reasons outlined above I conclude that the plaintiff here is entitled to mesne profits from the defendant for his occupation of the unit at the rate of $350 per week ($50 per day) from 24 January 2012 the date of Dr Byrd’s death until 17

April 2014 the date the unit was vacated.  This amounts to a period of 814 days and at the rate of $50 per day I confirm mesne profits totalling $40,700 are to be paid by the defendant to the plaintiff.

[23]     An order to this effect is made.

[24]     As to costs, the plaintiff has effectively succeeded in this present application which has not been opposed by the defendant.   I see no reason why the plaintiff should not be entitled to an award of costs in the usual way. Costs are therefore awarded to the plaintiff on this application on a category 2B basis together with disbursements if any as approved by the Registrar.

...................................................

Gendall J

Solicitors:

Young Hunter, Christchurch

Copy to Defendant