Levett v Village Accommodation Group Limited

[2012] NZHC 3356

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2012-485-1692 [2012] NZHC 3356

BETWEEN  MW LEVETT AND RNM

INDEPENDENT TRUSTEE CO LIMITED AS TRUSTEES OF GARVEY'S CREEK WORKERS PENSION FUND

Plaintiffs

ANDVILLAGE ACCOMMODATION GROUP LIMITED

Defendant

Hearing:         12 December 2012 (Heard at Wellington)

Counsel:         M.W. Levett - First-named Plaintiff in Person for the plaintiffs

M. Freeman and C. Rieger - Counsel for Defendant

Judgment:      14 December 2012

JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

Under r 11.5 of the High Court Rules I direct the Registrar to deliver this judgment at 3.30 pm on 14 December 2012.

Solicitors:           Thomas Dewar Sziranyi Letts, Solicitors, PO Box 31-240, Wellington

MW LEVETT AND RNM INDEPENDENT TRUSTEE CO LIMITED AS TRUSTEES OF GARVEY'S CREEK WORKERS PENSION FUND V VILLAGE ACCOMMODATION GROUP LIMITED HC WN  CIV-2012-485-

1692 [14 December 2012]

Introduction

[1]      Before the Court is an application for summary judgment by the plaintiffs seeking orders against the defendant for payment of a total sum of $93,690.33 for what are said to be rent arrears owing under a lease of serviced apartments, and claims for allegedly damaged, destroyed or lost chattels, lost keys and general apartment repairs.

[2]      The application is opposed by the defendant.

Background

[3]      On 12 October 2005 the plaintiff as lessor and the defendant as lessee entered into a Heads of Agreement and Lease (the contract) whereby the plaintiffs as owners leased to the defendant nine apartments being Apartments 1, 2, 3, 4, 5, 6 and 7 at 130

Willis Street, Wellington and Apartments A and B at 140 Willis Street, Wellington together with 12 indoor carparks at 130 Willis Street, Wellington.

[4]      The lease was for a term of 6 years and 4 months which expired on 31

January 2012.  On expiry of the lease of the various apartments, the plaintiffs claim that $68,074.32 as rent was outstanding and there were also other monies due to it from the defendant under the contract for missing chattels, repairs and the like, to make up the total claim of $93,690.33.

[5]      In response, the defendant advances a number of defences and contentions which it says relate first, to the untenantability of certain apartments due to a leaking roof, secondly, to rent adjustments which are due when the landlord took over one apartment  and  a  car  park,  thirdly,  issues  over  reinstatement  and  repairs  on termination of the lease and, fourthly, a counterclaim whereby the defendant claims by agreement it took over the landlord’s maintenance obligations for apartments subsequent to expiry of the lease on the basis it would charge the plaintiffs as landlord for those services, but under this arrangement payments still remain outstanding from the plaintiff.   All this, according to the defendant, means that virtually all the plaintiffs’ $93,690.33 claim against it is effectively offset (other than a small balance which has now been settled) and therefore no moneys are due to the

plaintiffs.   This is outlined in a rental reconciliation schedule prepared by the defendant attached as exhibit “L2” to the 31 August 2012 affidavit of Adam Cunningham filed in this proceeding.

[6]      At  the outset,  however,  one  preliminary matter  in  my view  needs  to  be addressed.  This relates to the impact of the Residential Tenancies Act 1986 on the present proceeding.

Residential Tenancies Act 1986

[7]      At para 5.2 of the contract the parties specifically agreed:

5.2       That if any dispute between the parties to this agreement should arise and if such dispute cannot be settled between the parties, the parties agree to be bound by the provisions of the Residential Tenancies Act and to proceed to mediation.

[8]      Notwithstanding this provision, at the hearing of this matter before me on 12

December 2012, counsel for both parties confirmed that the present dispute between the parties had not been referred to mediation, despite the fact that it seems unquestionable that this dispute had not been able to be “settled between the parties”. Nor, despite the fact that the parties agreed in the contract that they would be “bound by the provisions of the Residential Tenancies Act 1986”, have any proceedings been brought in the Tenancy Tribunal.  Instead the plaintiffs have commenced the present recovery action in this Court, they say because s 77(5) Residential Tenancies Act

1986 precludes the Tenancy Tribunal from having jurisdiction in a claim (such as the present one) where the amount at issue on a tenancy exceeds $50,000.00.

[9]      On this aspect, it is useful as a starting point to consider s 82(1) Residential Tenancies Act 1986 which provides that, with some minor exceptions, “no Court or other body shall have originating jurisdiction in respect of any matter that is within the jurisdiction of the (Tenancy) Tribunal.”  It is clear too that the Tribunal itself has the  jurisdiction  to  determine  whether  a  tenancy  is  subject  to  the  Residential Tenancies Act 1986 and in the past it has been noted that this would seem to be the case, even where a claim might exceed the monetary limit of $50,000.00 provided

for in s 77(5).  As to this aspect, see Residential Tenancies: The Law in Practice

Fourth Edition D Grinlinton at para 8.3.1.

[10]     And, by way of example, it is significant as I see the position to note the comments of Randerson J in Auckland City Apartments Limited v Stars & Stripes

2000 Limited HC, Auckland, 9 November 1999 CP429/99 where he held at [15]:

Having considered the relevant provisions of the Act, I am of the view that the Tribunal does have jurisdiction to determine the identified issues although it does not have jurisdiction to require a tenant to pay a sum in excess of $12,000.00 (the earlier monetary limit which is now $50,000.00).   Mr Gilbert does not seek that relief and accepts that this Court would continue to have jurisdiction in respect of the money claim.  I reach this conclusion because the Act does not provide that the Tribunal’s jurisdiction is to be excluded altogether where there is a claim in excess of $12,000.00.   It remains open to the Tribunal to determine the discrete issues raised by the defendant while leaving to one side the money claimed for which jurisdiction is excluded by virtue of s 77(5). This may be considered to be an untidy state of affairs but in my view it is dictated by the provisions of the Act.

[11]     It needs to be noted too that s 78(1A) Residential Tenancies Act 1986 also provides that a person who has an interest in premises that are not the subject of a Tenancy  Agreement  may  apply  to  the  Tribunal  for  an  order  under  s  78(1)(a) declaring the status of the premises for the purposes of the Act.  Such an order is then binding on all parties to any subsequent proceeding before the Tribunal which in turn can rescind such an order if it decides later the order was wrongly made or is no longer applicable.

[12]     In  the  present  case  as  I  record  at  para  [7]  above,  the  plaintiffs  and  the defendant have specifically agreed that in the event of a dispute arising between them which they are unable to settle they will “be bound by the provisions of the Residential Tenancies Act and to proceed to mediation”.  By this, it may be safely presumed that the parties chose to direct a reference to the provisions of the Residential Tenancies Act 1986 and the specialist expertise of the Tenancy Tribunal to address any disputes that arose under the contract between them.  That said, in my view, there is a possible argument open here that, notwithstanding the fact that the plaintiffs’ claim on its face does exceed the $50,000.00 monetary limit  specified  in s 77(5), the present difficulty between the plaintiffs and the defendant is just such a dispute which the parties when entering into the contract contemplated would be

subject to the dispute procedures in the Residential Tenancies Act 1986 and would be the subject of a referral to the Tenancy Tribunal if mediation proved unsuccessful.

[13]     Given this, and in light of the decision in Auckland City Apartments Limited v Stars & Stripes 2000 Limited noted above, there is in my view a reasonable argument open here that the Tenancy Tribunal does have jurisdiction to determine the issues in dispute between the plaintiffs and the defendant, even though when it reaches a final conclusion   on   those   issues   it   may   not   have   jurisdiction   to   require   the defendant/tenant to pay to the plaintiffs a sum in excess of $50,000.00.

[14]     And, in any event there is also a possible argument that may require some exploration at a full hearing that, as the Tenancy Tribunal under s 77(1)(b) has jurisdiction to determine any dispute that relates to “any tenancy” (singular), the present proceeding is in reality not 1 but 9 individual tenancy claims, for 9 separately rented  apartments  with  different  commencement  dates  averaging  for  example

$10,000.00 each, this falling well within the $50,000.00 cap.

[15]     Two other issues under the Residential Tenancies Act 1986 arise here.  The first relates to the term of the tenancies, some 6 years 4 months or thereabouts, when fixed-term tenancies of 5 years or more may or may not be caught by the Act, depending  upon  when  they  were  granted.     But,  on  this  Grinlinton  notes  in Residential Tenancies:  The Law and Practice at 2.7.1(a) that a fixed term tenancy of at least 5 years granted between 1 December 1996 and 1 January 2008 where the tenancy does not state that the Residential Tenancies Act 2006 will not apply (which is the case with the contract here) would appear to be subject to the Act unless some other exclusion applies.

[16]    The second issue concerns the provision excluding the operation of the Residential Tenancies Act 2006 in s 5(1)(S).  This excludes from the Act residential premises that are leased and with a landlord’s agreement are to be sub-let by the tenant for commercial gain.  But for s 5(1)(S) to apply, the tenancy agreement as a prerequisite must expressly provide “that the sub-landlord will not personally occupy the premises”.  No such provision is included in the contract.  The provisions of s

5(1)(S) therefore do not apply here.

[17]     At this point I need to remind myself that the application before me is one for summary judgment.  That summary judgment application has been brought pursuant to r 12.2(1) of the High Court Rules which provides:

12.2      Judgment when there is no defence or when no cause of action can succeed

(1)       The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.

[18]     The principles of summary judgment have been recently summarised by the Court of Appeal in Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26]:

The principles are  well  settled. The question on a  summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1

NZLR 1; (1986) 1 PRNZ 183 (CA), at p 3; p 185. The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material

conflicts of evidence or assess the credibility of deponents. But it need not

accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or  other statements by the  same deponent, or  is  inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331; [1979] 3 WLR

373 (PC), at p 341; p 381. In the end the Court's assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ

84 (CA).

[19]     It follows therefore that if the plaintiffs’ present application for summary judgment  is  to  succeed,  I must  be  satisfied  that  the defendant  has  no  arguable defence to the claim against it on the basis of the plaintiffs’ statement of claim and supporting evidence.

[20]     Given the fact that I have concluded above at para [13] that there is a possible argument open here in terms of s 82 Residential Tenancies Act 1986 that this Court does not have jurisdiction to consider the present proceeding as it is one that should be brought in the Tenancy Tribunal, for this reason alone the plaintiffs’ summary judgment application must be dismissed. An order to this effect is to follow.

[21]     Although   this   effectively   deals   with   the   application   before   me,   for completeness I will turn briefly to consider the other arguments advanced by the parties at the hearing of this matter.

Substantive Arguments

[22]     In doing so, however, I need to say at the outset that in my view this is not an appropriate case for summary judgment.  On all the material before the Court there are a number of quite detailed factual disputes between the parties which as I see it would require full exploration and testing at substantive trial.  To succeed in their present application the plaintiffs need to establish that there is effectively no real question to be tried and in my view the plaintiffs’ evidence before the Court does not overcome that onus upon it.

[23]     I  reach  these  conclusions  bearing  in  mind  the  various  defences  to  the plaintiffs’ claim which the defendant has advanced here. As I understand it these fall into four main categories.

[24]     The first relates to issues of untenantability of certain of the apartments in question and rent reductions in excess of $41,000.00.   The contract between the parties, provides for a right of monetary set off against rent owing if apartments are rendered untenantable through no fault of the lessee or its tenants – clause 3.1.  Part of the plaintiffs’ rental claim arises here in a situation where four apartments (being Apartments 4, 5, 6 and 7) it is said were determined to be untenantable for various periods as a result of a breach by the plaintiff of its repair obligation, in that there were significant roof leaks detrimentally affecting each of those apartments. There is some argument over that issue, as I understand it, but this in turn raises a potential factual dispute which is quite unable to be resolved at this early summary judgment stage.

[25]     Secondly, the defendant contends that rent adjustments were required when the plaintiffs as landlord took over an apartment and car park and thus varied the existing contract. There is apparently a factual dispute about any rent reduction here, whether or not the plaintiffs were entitled to a rent free period of occupancy, and

further whether the plaintiffs also took over a car park previously subject to the lease.  Again those are factual matters which require proper testing at substantive trial.

[26]     Thirdly, the defendant contends that in endeavouring to meet its obligations at the end of the lease contract to replace linen (which obligation in any event does not at this point arise, until 31 January 2013 in terms of clause 10 of the contract), broken and damaged chattels and to make good damage caused by its tenants to the apartments (given a fair wear and tear exception) the defendant says it has been repeatedly frustrated by the actions of the plaintiffs.  Again this is a factual matter which is in dispute between the parties and it also raises issues of assessment of damages if indeed the defendant is found to be in breach of its obligations. Although affidavit evidence has been presented concerning these aspects, as I understand the position, corroboration of these aspects is lacking.

[27]     Finally,   the   defendant   argues   that   subsequent   to   the   lease   contract terminating, other arrangements were entered into between the parties.  These meant apparently that by agreement the defendant took over the landlord’s maintenance obligations for apartments and it is said now that many of the on-charged costs for this work still remain outstanding from the defendants.

[28]     It is acknowledged that clause 3.1 of the lease arguably precludes a direct right of set-off against any outstanding rent.  Notwithstanding this aspect, before me Mr Freeman counsel for the defendant did raise certain arguments involving estoppel by acquiescence to support its defence that what it contends are its valid claims against the plaintiffs here should be properly off-set and taken into account at a full substantive hearing.

[29]     It is my view that these defences advanced by the defendant, which before me were not in any substantial or absolute way refuted by the plaintiffs, must mean that this is a matter which should proceed to full trial with all the disputed evidence properly tested by way of cross-examination.

[30]     For these reasons also I find that the plaintiffs’ present summary judgment

application must fail.

Conclusion

[31]     The  plaintiffs’  application  for  summary  judgment  before  the  Court  is

dismissed.

[32]     Before me, Mr Freeman counsel for the defendant requested that the Court might consider making an order of its own volition transferring this matter to the District Court in light of the amount which has been claimed by the plaintiff.  I agree that this is a matter which should be the subject of a transfer to the District Court. An order to this effect is to follow.  I do this however noting the comments earlier in this judgment as to the appropriateness of an application being made to the Tenancy Tribunal here.  Nevertheless, I leave that aspect with the parties.

[33]     As this disposes of the actions of the High Court in this proceeding, in my view it  is  appropriate for an  order for  costs  to  be made here in  favour of the successful defendant.

Orders

[34]     Orders are now made in this proceeding as follows:

(a)       An order is now made dismissing the plaintiffs’ present summary

judgment application;

(b)       A further  order  is  now  made  transferring  this  proceeding  to  the

District Court;

(c)      Costs are ordered on the summary judgment application against the plaintiffs in favour of the defendant on a category 2B basis together with disbursements as fixed by the Registrar.  I certify for only one counsel however.

‘Associate Judge D.I. Gendall’