Horton v Te Puru Management Company Limited
[2019] NZHC 339
•5 March 2019
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2018-419-000086
[2019] NZHC 339
UNDER the Declaratory Judgments Act 1908 BETWEEN
PETER HORTON, PAULINE LOCKETT, ALLAN THOMSON, ALLISTER COOMBE, BRUCE and TINA LINDOP, DAVID TREBILCOCK, FRANK and JEAN JONES, GAEL McINNES, GARY and VERONICA LISTER, GRANT and MARILYN HOPKINS, IAN and LORRAINE CHANDLER, KEVIN and RONNY JORDAN, LORNA and BRYAN HAMBLETON, PETER and CHERYL MAHON, RAEWYN FERGUSSON, ROGER GORDON, TOM and CAROLYN ROBERTSON, TREVOR and DOT
DAVIES, TREVOR and SHIRLEY BROWN, JUNE BATTEN and TONY LEADER, TIM PLUIJMER and BEN THEUNISSEN, MELISA TUPUHI and
THOMAS TAOHO, CAROL and CHRIS STONE, DEREK and MARJORIE SAYLE
ApplicantsAND
TE PURU MANAGEMENT COMPANY LIMITED
Respondent
Hearing: 13 December 2018 Appearances:
S W Hughes QC for Applicants I R Millard QC for Respondent
Judgment:
5 March 2019
JUDGMENT OF COURTNEY J
This judgment was delivered by Justice Courtney on Tuesday 5 March 2019 .at 12.30 pm pursuant to r 11.5 of the High Court Rules – Registrar / Deputy Registrar – Date……………………
HORTON v TE PURU MANAGEMENT COMPANY LIMITED [2019] NZHC 339 [5 March 2019]
Introduction
[1] The applicants each own a 1/135th undivided share in the Te Puru Holiday Park on the Thames Coast. Prior to 2005 the site was on a single title and had been operated as a campground for some 50 years. Te Puru Holiday Park Ltd (HPL) purchased the site and obtained resource consent to divide it into 135 lots, each with associated exclusive use areas and the right to use common facilities. Sixty-eight of the lots were sold to individual purchasers. All but two of the remainder are owned by HPL and are operated as a campground, including accommodation for the holiday park manager.1
[2] The manager of the holiday park is the respondent, Te Puru Management Company Ltd (MCL). It manages the park in accordance with the Deed of Covenant between it and each lot owner. The Deed of Covenant records the basis on which the park is run. It includes restrictions on the use of the lots and provision for the lot owners to be levied for the running costs of the holiday park.
[3] There are disputes between the applicants and MCL as to the way levies are being struck and the period for which lot owners are entitled to occupy their lots. The applicants seek declaratory relief as to the interpretation of the Deeds of Covenant.
Interpreting the Deeds of Covenant
[4] As noted, the rights and obligations of both lot owners and MCL are governed by terms of the Deeds of Covenant. Compliance with the Deed of Covenant by the lot owners is assured through a Memorandum of Encumbrance that each lot owner must grant. An encumbrance instrument is a recognised means of ensuring compliance with covenants in gross – that is, personal covenants binding on landowners but not attaching to the land.2 The encumbrance operates by securing a rent charge, so that the rent charge does not become payable provided the encumbrancor does not breach the terms of the Covenant. Clause 10 of the Deed of Covenant requires:
The Covenantor will enter into and execute a registerable memorandum of encumbrance in the form attached in favour of the Manager to secure the
1 Two lots were taken by the Waikato Regional Council for flood protection work and are not relevant to this case.
2 Escrow Holdings Forty-One Ltd v District Court at Auckland [2016] NZSC 167, [2017] 1 NZLR 374.
Covenantor’s observance and performance of all of its obligations and responsibilities under this agreement; and the Manager will enter into and execute a registerable memorandum of encumbrance in the form attached in favour of the Covenantor to secure the Manager’s observance and performance of all its obligations and responsibilities under this agreement.
[5] Pursuant to that obligation, each lot owner executed a Memorandum of Encumbrance which was registered against the title.
[6] Against that background, the Deed of Covenant falls to be interpreted in accordance with the recognised principles of contractual interpretation. The question is what the document would convey to a reasonable person having all the background knowledge which would have been reasonably available to the parties.3 This objective meaning is taken to be that which the parties intended.4 There is some debate about the extent to which extrinsic evidence can be used in the interpretation of an instrument that binds successive owners of land, but in this case I am satisfied that the Deed of Covenant can be interpreted by reference to the text of the Deed itself and the material referred to in it.
Dispute over levies
The issue and the declarations sought
[7] Under the Deed of Covenant lot owners were to be levied annually to cover the costs of running and maintaining the holiday park. The Deed of Covenant provides for a “Manager Levy” to cover the cost of running the holiday park and a “Building Levy” to provide a fund for building work required. Schedule C sets out specific items for which the levies can be used, one of which is rates, which are to be paid out of the Manager’s Levy. Levies could increase by no more than 10 per cent each year.
[8] When the titles were first issued, rates were charged on the entire site and represented a very modest proportion of the Manager’s Levy. Problems arose in 2007 when the Thames Coromandel District Council (TCDC) changed the basis on which
3 Firm PI1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60], citing Lord Hoffmann’s principle from Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 (HL) at 912. See also, Big River Paradise Ltd v Congreve [2008] NZCA 78, [2008] 2 NZLR 402.
4 Firm PI1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60].
rates were struck and rated each individually owned lot as a single unit inhabited parts (SUIPs). This had the effect of increasing rates from $2,741.08 in the 2006/07 year to
$64,488.08 for the following year.
[9] Litigation ensued between HPL and the TCDC. During this period, MCL never increased levies to accommodate the rates increase, mistakenly believing TCDC did not have a legitimate basis for changing the rates. Eventually, the issue was resolved with TCDC on the basis that charges would be levied for the individual lot owners as SUIPs, except for the sites owned by HPL and run as a camping ground, which would be charged one SUIP rate as a single site.
[10] A dispute arose between MCL and the lot owners when MCL sought to levy lot owners for the arrears of rates due in respect of their individual lots. Most lot owners paid the arrears. Some paid without prejudice. Some did not pay. In an arbitration between HPL/MCL and the lot owners who had not paid the arrears, the Arbitrator found that under the terms of the Deed of Covenant no liability for rates could be imposed on the lot owners without amendment or variation of the Deed of Covenant. However, the Arbitrator also held that HPL/MCL could impose a surcharge on the lot owners to recover the difference between the actual levies charged and the total levy imposed, subject to the 10 per cent annual cap provided for in the Deed of Covenant.5
[11] In a second award, dated 13 March 2017, the Arbitrator confirmed the effect of his previous decision:
At [89] of the [first] Award I determined that the sum that could be charged each year would be the difference between the amount charged in the previous year, and an amount based on a 10 per cent increase on the previous year’s amount, less the actual increase between the previous year and the current financial year …
In terms of the commencement date for the recovery, the first year will be the 2007/2008 year as that was the first year TCDC imposed SUIP charges. [HPL] and [MCL] would have been entitled to recover the SUIPs in this year subject to the 10 per cent cap from what was charged in 2006/2007. Therefore I confirm they are now entitled to recover the SUIPs from the 2007/2008 year based on the above formula …
5 Award of DJ Clark as Arbitrator, 31 August 2016.
For the years post-2014/2015 [HPL] and [MCL] are entitled to recover the rate arrears until the sum in the Deed of Settlement sum is paid in full (calculated on a 1/68th or 1/69th basis). The amount recoverable will be based on the above formula in that a budget for the entire campground will be struck, a levy created and an increase (or not) would occur for that budgeted year for all Lot Owners. Any difference in the actual increase and a 10 per cent cap will be the amount recoverable against the Respondents.
[12] The applicants say that since the arbitration MCL has adopted practices that are contrary to the terms of the Deed of Covenant in an effort to circumvent the effect of the award and obtain payment of the arrears. Specifically, it is said that MCL has: charged a 10 per cent increase in the Manager’s Levy without providing accounts to justify the increases; reduced the Building Levy to zero so as to artificially increase the Manager’s Levy; purported to include in the calculation of levies costs such as legal costs that are not provided for in the Deed of Covenant; offered a rebate to lot holders who have paid the arrears.
[13] The applicants say, essentially, that Schedule C is prescriptive so that no additional items can be charged for. The declarations sought in relation to this issue are:
(a)When fixing the Manager Levy can Te Puru Management include costs not specifically listed in Schedule C?
(b)When fixing the Building Levy can Te Puru Management include costs not specifically listed in Schedule C?
(c)Can Te Puru Management decline to provide unredacted Yearly Accounts and an Annual Report and Reconciliation requested by the Applicant Covenantors for the Manager’s Levy?6
(d)Can Te Puru Management decline to provide an Annual Reconciliation of the Building Levy?
6 This question is in the form as amended during argument; the original form included reference to Daily Accounts and omitted “unredacted”.
(e)Is the Manager’s Levy intended to be cost recovery only or can Te Puru Management retain a margin or carry a loss or a surplus as the case may be?
(f)Is the Building Levy intended to be cost recovery only or can Te Puru Management retain a margin or carry a loss or a surplus as the case may be?
(g)Are the applicants entitled to ask these questions in light of the arbitration before Mr Clarke?
(h)Can Te Puru Management offer a rebate to those who are not part of the applicant group?
Provision for levies under the Deed of Covenant
[14] Clause 5.2 and Schedule C provide for the imposition of levies. Clause 5.2 provides that:
The Covenantor will pay a levy (the Levy) as detailed below by such payment option as agreed to by the Manager provided that all payments are fully made by 31 March in each year. The Levy is divided into:
(a)The Manager Levy, which is to be paid direct to the Manager to cover the costs of the Manager maintaining and operating the Campground and its amenities and utilities; and
(b)The Building Levy, which is to be paid by each Covenantor annually into a solicitor’s trust account nominated by the Manager and is to be used by the Manager as a reserve fund for future maintenance, building works and other capital projects. This Building Levy may only be disbursed to the Manager on production of invoices for actual costs incurred.
The Manager Levy and the Building Levy are as set out in Schedule C. The Levy may vary provided that the total Levy must not in any year, from the second year that the Levy applies, be more than 10% higher than the Levy of the previous year. This proviso is subject to the provisions of clause 6.2.
[15]Schedule C provides:
Te Puru Holiday Park Site Owner’s Annual Costs – Refer to clauses 5.2(a) and (b).
Manager’s Levy: $1,200/annum in advance. If paid by instalments add
10%.
1Licencing fees
2ACC levies
3Accounting fees
4Insurances – common buildings
5Telephone – office
6Rates
Thames Coromandel District Council Environment Waikato
7Energy – Common facilities only (site owners pay own electricity) Electricity
Diesel
8Rubbish Collection and Removal
9Grounds Maintenance Lawns Mowing Edge Spraying
Pruning and Weeding Common areas
10Roads Maintenance
Re-metal and Grade annually (3000m²)
11Cleaning
Daily toilets, showers & kitchen Bi-annual external washdown
12Repairs and Maintenance
Common area buildings Manager’s Office Services infrastructure
13Camp Manager’s Salary
Building Levy $300/annum in advance. If paid by instalments add
10%.
14Building Replacement / New Buildings Fund
Secure Boat Parking & Washdown (per boat) by separate and individual arrangement
Manager’s Duties – to ‘Run’ the camp
Ensure camp maintains level of quality in all respects Manager in a financially sustainable manner Administer rules of the camp
Monitor properties & visitors Security
Compliance – licences, consents, ACC
Manager Health & Safety and Fire Protection protocols Read electricity meters – invoice power
Manager ‘service’ contracts – cleaning, mowing, rubbish, etc (if not by self)
Maintain roads, buildings and utilities Manage casual stayers
Daily accounts Yearly accounts
Annual report and reconciliation
Interpretation of cl 5.2 and Schedule C – what can be included in the levies?
[16] Broadly, the applicants say that Schedule C of the Deed of Covenant is prescriptive in the sense that if any cost item is not specifically mentioned then it cannot be recovered by way of the Manager’s Levy or Building Levy. MCL says that Schedule C is not prescriptive and can accommodate costs not specified in the schedule. In any event, it argues that the applicants are now estopped from raising this argument because it was already determined in a previous arbitration between the parties.
[17] Ms Hughes, for the applicants, argued that the plain and ordinary meaning of the words in Schedule C was that the items identified were the only items in respect of which costs could be levied. Moreover, because cl 5.2(a) refers to the purpose of the Manager’s Levy as being “to cover the costs of the Manager maintaining and operating the campground”, the Levy is limited to costs actually incurred by the Manager so that the Manager cannot add expenses to the items in Schedule C and must be able to show the income received and the expenses met to justify the levy.
[18] Mr Millard QC, for MCL, argued that Schedule C does not specify that it is prescriptive but, rather, that read in conjunction with the Manager’s duties, can be seen as an indicator of the minimum things that the Levy is to cover. The Manager’s duties are said in Schedule C to be to “run” the camp. Given that the covenant has an indefinite life, it is said that it cannot have been intended that the items identified in it were to be a strict list. Mr Millard also pointed to the fact that cl 5.2(a) provides for the Manager’s Levy as being “to cover the costs of the Manager maintaining and operating the campground and its amenities and utilities”. If Schedule C were read prescriptively then it would conflict with cl 5.2(a) because, self-evidently, any additional costs for the Manager could not be recovered.
[19] In my view, the Deed of Covenant, read as a whole, contemplates that additional costs connected with running the campground can be included in the levies even if not specified in Schedule C. First, cl 5.2 uses “levy” to refer to both the type of levy (Manager’s Levy and Building Levy) as well as to the amount to be levied. The distinction between “levy” and “total levy” in the statement “the Levy may vary
provided that the total Levy must not in any year, from the second year that the Levy applies, be more than 10 per cent higher than the Levy of the previous year” suggests a distinction between the overall nature of the Manager’s Levy (i.e. what it may contain) and the monetary amount of the Levy (total levy). If the provision for the Levy to vary was intended to mean only the amount of the levy it would have been unnecessary to refer to the “total levy”; it would have been sufficient to have said that “the Levy must not … be more than 10% higher that the Levy of the previous year”. Schedule C must be read against the provision in cl 5.2 for the Levy to vary.
[20] Secondly, the interpretation just described makes commercial sense and the interpretation contended for the applicants does not. It is a settled principle of contractual interpretation that a covenant should be interpreted with regard to its commercial purpose and general business common-sense.7 It is common knowledge that the costs associated with land rise over time. If there were no provision for additional costs to be recovered, there would be a serious risk that the Manager would be unable to provide the services that are required by cl 5.7, which would be to the disadvantage of the lot owners.
[21] Thirdly, there are costs contemplated by the Deed of Covenant as being able to be levied for that are not provided for in Schedule C. “Services” is defined as “power water and other utilities provided to an exclusive use area” and cl 5.7(d) requires the Manager to use the Manager’s Levy to pay “all rates, insurance, electricity and water charges relating to the land”. However, Schedule C does not provide for water. Likewise, the Manager’s duties set out at Schedule C include “security” but there is no provision for the cost of security to be recovered. This strongly suggests that Schedule C was not regarded as exhaustive, even at the outset.
[22]The same conclusion applies to the Building Levy.
[23] The answers to the questions posed at paragraphs 23 and 24 of the statement of claim are therefore:
7 Escrow Holdings Forty-One Ltd v District Court Auckland [2016] NZSC 167 at [58]. See also Matt Barber, Jeremy Finn and Stephen Todd Burrows, Finn and Todd on the Law of Contract in New Zealand (6th ed, LexisNexis, Wellington, 2018) at 200.
(a)When fixing the Manager’s Levy, Te Puru Management can include costs not specifically listed in Schedule C;
(b)When fixing the Building Levy, Te Puru Management can include costs not specifically listed in Schedule C.
Provision of accounts and annual report and reconciliation
[24] The applicants ask whether MCL can decline to provide unredacted yearly accounts and an annual report and reconciliation. MCL is required to produce these documents as part of the “Manager’s Duties” specified in Schedule C. MCL had argued that there is no specific requirement in the Covenant to provide yearly accounts and an annual report and reconciliation to the lot owners (though, in fact, an annual report and reconciliation is said to have been made available to those lot owners who wished to see it). During argument, however, Mr Millard conceded that MCL was obliged under the Deed of Covenant to provide unredacted Yearly Accounts and an unredacted Annual Report and reconciliation and agreed to a declaration being made to that effect.
[25] For completeness, I record my view that this was a proper concession to make. MCL contracted with each lot owner to undertake the duties specified in Schedule C. The only explanation for MCL being required to produce such accounts and reports can be to benefit of the lot owner. But the lot owner cannot benefit from the production of such reports if they are not made available, and in an unredacted form.
[26] The answers to the questions posed at paragraphs 25 and 26 in the statement of claim are therefore:
(a)Te Puru Management cannot decline to provide unredacted Yearly Accounts and an Annual Report and Reconciliation requested by the Applicant Covenantors for the Manager’s Levy;
(b)Te Puru Management cannot decline to provide an Annual Reconciliation of the Building Levy.
Retaining a margin or carry a loss or surplus
[27] The applicants ask whether MCL can retain a margin or carry a loss or surplus forward from year to year. I consider that the latter two were effectively dealt with in the arbitration. In respect of the rates, the Arbitrator decided that rate arrears could be recovered over subsequent years until it was fully paid. The inevitable effect of that finding was to allow MCL to carry forward a loss. It is not open to the applicants now to advance a different interpretation that would have the effect of defeating the Arbitrator’s finding.
[28] In any event, I do not consider that the Covenant ought to be interpreted as precluding MCL from carrying forward a loss or surplus. This is because management of a large site such as this is quite likely to produce expenses that exceed or fall short of the amount eventually required. Not all of the items contemplated by Schedule C can be easily identified and/or accommodated within a single year. For example, repairs and maintenance programme, particularly of services infrastructure (item 12) could easily cost more or less than the Levy struck at the outset of the year and paid in advance. It would be impractical to manage the camp on this basis.
[29] I take a different view regarding whether MCL is entitled to take a margin on the costs of running the holiday park. Mr Millard argued that the parties must have expected and intended that the manager would make a profit. I see no basis in the documents on which to base such an assertion. The lot owners have agreed to be levied for an amount sufficient to “cover the cost” of running the holiday park. That includes a salary for the manager which, presumably, is set at a level that allows the manager a reasonable return on the effort required to undertake this role. But there is no basis on which to conclude that the manager might also take a margin on any other expenses incurred in the running of the holiday park. The position is the same in relation to the Building Levy. There is no basis on which to conclude that the parties intended that the manager would take a margin on the cost of building works.
[30]The answers to questions posed at paragraphs 27 and 28 are therefore that:
(a)The Manager’s Levy can result in the manager carrying a loss or a surplus forward, but is not intended to allow the manager to retain a margin on expenses;
(b)The Building Levy can result in the manager carrying a loss or a surplus forward, but it is not intended that the Manager be able to retain a margin on expenses;
(c)Insofar as the items for which a levy can be struck and the ability to carry forward a loss or surplus are concerned such questions are precluded by the outcome of the arbitration.
Rebate
[31] In order to recover rates arrears from those who did not pay prior to the arbitration MCL has, in recent years, increased levies up to the 10 per cent cap for all lot owners and offered a rebate to those who have paid their SUIP levies and continue to do so. Mr Julian described this as a balancing tool so that those who have paid rates arrears are not levied a second time. The applicants argue that the rebates offered are an improper penalty on them. I cannot accept this. It is clear from the arbitration award that MCL is entitled to take steps by way of the Levy to impose a surcharge in order to recover rates arrears. Since not all lot owners were in arrears of rates it must have been contemplated that there would be a differentiation in the Levy struck in respect of lot owners who had paid their rates arrears and those who had not.
[32] The answer to the question at paragraph 30 of the statement of claim is, therefore, that Te Puru Management can offer a rebate to those who are not part of the applicant group.
Occupation on a permanent basis
[33] The second area of dispute concerns the clause in the Deed of Covenant that prohibits owners from residing in their exclusive areas on a permanent basis. MCL has sought to levy an additional charge to those whose main residence is the
campground and to impose an additional levy for such owners for the use of the sewage system.
Background
[34]Clause 5.1 of the Covenant provides that:
… The Covenantor must at all times comply with the Rules and Management Plan and in particular must not:
(a)reside in the Exclusive Use Area on a permanent basis.
[35] In May 2017, MCL endeavoured to charge a further levy of $30 per week for those lot owners that it considered were residing at the holiday park on a permanent basis. The applicants accept that permanent occupation is not permitted under the Deed of Covenant. But they say that “permanent”, on the plain wording of cl 5.3, defined as not occupying the site continually for more than 50 days. They rely on Camping Grounds Regulations 1995, the Camp Management Plan and the TCDC’s Operative District Plan, all of which define temporary occupancy as being no more than 50 days of continuous occupancy. As a result, they argue that the prohibition on permanent residency is satisfied by their leaving on day 49 or 50 and returning shortly thereafter.
[36]The applicants seek declarations in answer to the following questions:
(a)Is a Covenantor in compliance with the Deed of Covenant if they (or their tenant) vacate their exclusive use area after 49 days of continuous occupation and return after one night away to repeat the pattern?
(b)In order to comply with the provision in the Deed of Covenant, do the Covenantors need to have a place of permanent residency outside of the campground where they do reside?
[37] When HPL applied for resource consent to develop the site it did so on the basis of a management plan that detailed, among other things, the use to which the site would be put. When TCDC granted the resource consent it imposed certain conditions, including:
That the development proceeds in accordance with the plans and information provided with the application, namely: – proposed management plan entitled “Te Puru Holiday Park Management Plan 2005”, version dated 13 December 2005 … stamped and signed by council on 14 December 2005.
[38] The Camp Management Plan included the following provision regarding usage:
The property is primarily a holiday accommodation facility associated recreation facilities and amenities. The buildings and structures are a mixture of mobile and permanent structures. All of these provide temporary living spaces (as defined by the Thames Coromandel District Plan). These are best defined as three separate “character areas”, which this Management Plan seeks to maintain:
Character area 1: Tram cars
Character area 2: Cabins/caravans with permanent awnings Character area 3: Casual sites – tents/non-powered sites
…
NO permanent occupation is permitted on any campsite (excluding Manager’s residence). Temporary occupancy is defined by the Thames Coromandel District Council as being no more than 50 days in any continuous period of occupancy.
[39]Later the plan also provided that:
The proprietor ensures all activities and buildings on the property comply with all regulations of the Thames Coromandel District Council and Waikato Regional Council (EW).
[40] The applicants’ argument on this issue rests on the definition in the TCDC’s Operative District Plan which provides that:
Temporary living places
means a location where any type of structure or building … are placed for the intended purpose of camping for periods not exceeding 50 days in any continuous term of occupancy. Note – Where the caravan etc remains on site longer than 50 days, it is still within the definition of temporary living place if it is not occupied for more than 50 days continuously.
[41] This argument is, essentially, that if occupancy is less than 50 days then it must be temporary by virtue of the definition and if it is temporary then it cannot be permanent.
[42] I consider this approach overly narrow. The phrase “reside … on a permanent basis” in cl 5.1 is to be interpreted against the purpose of the Deed of Covenant which, on this issue, is discernible from the Management Plan and the resource consent decision.
[43] I start by looking broadly at the purpose of the holiday park as that can be discerned from the Management Plan. The Management Plan canvassed the history of the park, which is relevant because the overall tenor of the Management Plan was that the historical use of the park was intended to continue under the new format. The Management Plan noted that the camp property had “provided traditional Kiwi-style holiday accommodation to New Zealand families and overseas visitors” and that tramcars were brought to the site in 1956 “to provide a more permanent form of holiday accommodation”. The objectives of the Management Plan and the proprietor were stated to include:
To continue to provide holiday accommodation and recreation in such a way that the nature and character of this coastal holiday Park are protected.
[44] Later, the section on usage from which I have previously quoted stated that the property “is primarily a holiday accommodation facility with associated recreational facilities and amenities.”
[45] It seems to me that the overriding intention of all those involved in Te Puru Holiday Park (based on the fact that all lot owners have committed themselves to the Deed of Covenant which incorporates by reference the Management Plan) was that the holiday park would be used for holiday accommodation. It is evident from the Management Plan and the resource consent decision that a significant consideration was the retention of the character of this site as a holiday park/camping ground because of the broader implications for the surrounding area. This is an area intended to be used on a part-time basis for holidays. It is clearly not an area intended to be used for permanent residence.
[46] I consider that it takes too narrow a view of the meaning of “permanent occupation” to say simply that one’s presence for no more than 50 days at a stretch is sufficient to comply with cl 5.3. “Permanent residence” in cl 5.3 is not to be judged
mechanically by the number of days a lot owner spends at the site continuously but also by the nature and purpose of his or her occupation. Interestingly, although the definition of “temporary occupancy” is a helpful indicator, the source of that timeframe itself suggests that the nature and purpose of the occupancy was a relevant consideration. Counsel relied, in part, on the Camping Grounds Regulations 1985, under which the holiday park was registered, and which also defined “temporary living space” as one “intended for human habitation for periods not exceeding 50 days in any continuous term of occupancy.” But the explanatory commentary to those regulations includes the following explanation for the choice of 50 days as being the relevant period:
The 50 days allows the campers’ accommodation to be occupied full-time for at least the Christmas school holidays. Many people park their caravan at a camping ground for the summer and visit at weekends and holidays. This does not contravene the 50 day limitation because the temporary living place is not occupied continuously.
[47] Finally, I note the arguments advanced for the applicants that it would be possible to rent out one’s lot to a number of tenants over the course of a year with the result that the lot could be continuously occupied. That submission was a response to the evidence of HPL’s director, Mr Julian, about the extra stress on service facilities continual occupation would have. Whilst true in a theoretical sense, if one takes the view that the purpose of the limitation on occupancy was to preserve the character of the site as holiday accommodation then that would not matter. Moreover, it seems very unlikely that the site would be regarded as desirable for holiday accommodation, in the middle of winter, for example.
[48] It follows that the lot owner who has no other residence must be residing permanently at the park. Absenting oneself for a day or so every 50 days does not alter that fact. I accordingly answer the declaration sought at paragraph 37 of the statement of claim “no” and the declaration sought at paragraph 38 of the statement of claim as “yes”.
Costs
[49] If costs cannot be agreed, counsel may address the question by memoranda filed on behalf of the respondents within 14 days, the applicants within a further seven days and the respondent by way of reply within seven days after that.
P Courtney J
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