Lowry Bay Section One Limited v Pukeatua Kohanga Reo Charitable Trust

[2012] NZHC 1498

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2012-485-709 [2012] NZHC 1498

BETWEEN  LOWRY BAY SECTION ONE LIMITED Plaintiff

ANDPUKEATUA KOHANGA REO CHARITABLE TRUST Defendant

Hearing:         18 June 2012

(Heard at Wellington)

Counsel:         G. Dewar - Counsel for Plaintiff

B.J.J. Sheehan - Counsel for Defendant

Judgment:      10 July 2012

JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This judgment was delivered by Associate Judge Gendall on 10 July 2012 at 3.30 pm under r 11.5 of the High Court Rules.

Solicitors:           Thomas Dewar, Solicitors, PO Box 31-240, Lower Hutt

ARL Lawyers, Solicitors, PO Box 30-430, Lower Hutt

LOWRY BAY SECTION ONE LIMITED V PUKEATUA KOHANGA REO CHARITABLE TRUST HC WN CIV-2012-485-709 [10 July 2012]

Introduction

[1]      For some time, the defendant which is an incorporated Charitable Trust has occupied land and buildings at 82 Moohan St, Wainuiomata (the property) for the purposes of operating a Kohanga Reo immersion school. In this action, the plaintiff, Lowry Bay Section One Limited, which is the registered proprietor and legal owner of the property, in its capacity as landlord applies for summary judgment seeking certain orders relating to what it says is a lease of the property to the defendant.  In particular, it seeks first, specific performance of an Agreement to Lease dated 21

October 2009 made with the defendant requiring it to enter into a formal Deed of Lease of the property, and secondly, to recover from the defendant what it says is outstanding rent calculated at the rate of $156,105 per annum owing under the lease from an occupancy date suggested as 1 July 2010.

[2]      That summary judgment application is opposed by the defendant.

Background

[3]      The property at issue here was once the Wainuiomata Intermediate School and part of its grounds.  The property forms part of a total site that contains an area of 4.0288 hectares and constitutes Lots 28-38 Deposited Plan 21094.   Initially in

2006 it was leased by Te Runanganui O Taranaki Whanui ki Te Upoko O Te Ika A Maui Associated Incorporated (the Runanga) as tenant from its then owner, the Crown. That lease was for a term of three years commencing on 1 January 2006 with one right of renewal for a further three years from 1 January 2009.   The right of renewal was exercised by the Runanga. Subsequently, the Runanga and the Crown through the Ministry of Education agreed that the Ministry would provide funding to build and/or renovate the school administration block on the property to provide upgraded facilities for  a Kohanga Reo school to be operated on the site. The role of establishing on the property and then operating the proposed Kohanga Reo school was eventually fulfilled by the defendant, which for some time now has operated this Kohanga Reo facility together with one other facility run elsewhere in Wainuiomata.

[4]      Previously,  the  property  was  the  subject  of  a  Treaty  of  Waitangi  land settlement between the Crown and Taranaki Whanui Ki Te Upoko o Te Ika.  As part

of this settlement, on 3 September 2009 ownership was vested in the Trustees of the Port Nicholson Block Settlement Trust (the PNBST) under the Port Nicholson Block (Taranaki Whanui Ki Te Upoko o Te Ika) Claims Settlement Act 2009.

[5] Then, on 21 October 2009, the Agreement to Lease relating to the property mentioned at [1] above was signed. This took the form of a Deed made between PNBST, the Runanga and the defendant. The Deed (the “Agreement to Lease”) purported to terminate the original lease of the property with the Runanga and to create a new lease between the PNBST as land owner and the defendant as tenant for the establishment and operation on the property of the Kohanga Reo early childhood facility. The Agreement to Lease included plans to subdivide the site so that the land upon which the Kohanga Reo facility was situated would have a separate title. And, under the Agreement to Lease, the Runanga would continue initially to oversee and manage the construction and renovation of the new facility on the property around the existing school administration block with funding from the Ministry of Education.

[6]      The Agreement to Lease included in its background recitals, the following:

E.          The  Parties  wish  to  record  certain  arrangements  made  between  them, including:

The Original Lease (with the Runanga) shall be terminated.

The land  upon which the  school administration block is  sited building shall be subdivided from the School Site to provide a discrete computer freehold register for the site (“Lot”).

The PNBST and Trust (the defendant) shall enter into a new lease agreement in relation to the Trust’s occupation of the New Building (“New Lease”).

The Parties agree that they shall have no claim or cause of action or right of any kind whatsoever either alone or together with any other person, against each other in connection with the School Site, the New Building or the Original Lease.

[7]      As to the provisions relating to the new lease of the Kohanga Reo facility, the

Agreement to Lease provided specifically:

3.          The New Lease

3.1       The PNBST and the Trust (the defendant) shall enter into a deed of lease for a period of no more than three years plus two further right of renewal of  three  years  each  in  order  to  formalise  the  Trust’s  tenancy  of  the Kohanga Reo site.

3.2       The terms and conditions of such tenancy shall be negotiated between PNBST and the Trust but shall generally be in the same form as the Auckland District Law Society (5th Edition 2008) deed of lease.

3.3        The rental and outgoings shall be negotiated between the PNBST and the

Trust but shall reflect market levels.

3.4       The PNBST and the Trust acknowledge that the building works may be completed before the completion of the subdivision, notwithstanding this the Trust may commence its tenancy prior to the subdivision being completed, once agreement has been reached as to the level of rental and outgoings and a deed of lease has been executed by both the Trust and the PNBST.

[8]      Important aspects of the lease arrangements in this Agreement to Lease thus included  the  statement  that  this  would  “formalise  the  Trust’s  [the  defendant’s] tenancy of the Kohanga Reo site”.  The lease was specified to be for a period of no more than three years with two further rights of renewal each of three years. Rental and outgoings were to be negotiated by the defendant and PNBST, but set at a rate that reflected market levels.  As noted above, the Agreement to Lease stated further that the tenancy could commence prior to the completion of the property subdivision, once agreement had been reached as to the level of rental and outgoings and a formal

Deed of Lease (the terms of which were generally to follow the ADLS 5th  Edition

form) had been executed.

[9]      On 7 September 2010, a formal detailed valuation report was finally prepared for PNBST by Colliers International.  This valued the annual market lease rental for the property at $165,774.00. The 7 September 2010 valuation report had followed an earlier preliminary rent assessment “estimate” received on 28 May 2010 by the PNBST from Colliers International of $156,105.00 per annum.  The evidence before me shows that on 30 June 2010 the PNBST prepared an amendment to an earlier

draft Deed of Lease of the premises.  The amended document was on the ADLS 5th

Edition Deed of Lease form and provided for a lease commencement date of 1 July

2010 and an annual rental at the lesser rate of $156,105.00 per year, consistent with the  28  May  2010  estimate.      On  30  June  2010  this  draft  Deed  of  Lease  was forwarded to an officer of the defendant, Mr Toa Pomare.   The uncontradicted evidence of the Office Solicitor of the PNBST, Mr Bruce John David Farquhar (Mr Farquhar), in his affidavit of 18 May 2012 filed in this proceeding, is that first, he was directed by officers of the defendant throughout to deal with Mr Toa Pomare on lease matters as Mr Pomare was acting on behalf of the defendant, secondly, he sent

the further draft Deed of Lease to Mr Pomare under cover of an email on 30 June

2010, (he having been involved from the outset in meetings between the parties over use and development of the property including for the defendant’s Kohanga Reo school), and thirdly:

4.        I  dealt exclusively with  Mr  Toa Pomare on issues relating to  this.    I discussed it  with him on occasions.   He had confirmed receipt of the document to me.   I also recall handing Mr Pomare a hard copy of the document after sending the email although I cannot recall the exact date but it would have been soon after.   I know that this matter was discussed between Mr Toa Pomare and Dr Kara Puketapu as this was acknowledged at a meeting with Mr Toa Pomare and Neville Baker dated 22 July 2010 recording that Dr Puketapu was intending subleasing the premises.

At that time we had received a preliminary “desktop” estimate of rental valuation from Colliers, a copy of which is annexed and marked “BJDF2”. I clearly understood that the issue was simply negotiating and finalising an appropriate rental level.

[10]     Ms Kuini Arohanui Awhina Puketapu (Ms Puketapu), the Chairperson of the defendant has completed and filed the only affidavit advanced for the defendant in opposition to the present application.  In this affidavit she deposes that she (and by implication the defendant) had not seen any Deed of Lease from the plaintiff until these proceedings were commenced.  The plaintiff strongly questions how this could be the case,  however,  given the uncontradicted  evidence of Mr  Farquhar noted above.  More on this aspect later.

[11]     The Kohanga Reo school on the property was officially opened on 10th September 2010.  Ms Puketapu for the defendant states that it only started operating from  the  property however  on  17  January 2011.  On  22  July 2011  the  PNBST transferred title to the premises to the plaintiff. The plaintiff is a holding company whose shares are wholly owned by Independent Professional Trustees Limited in trust for the benefit of PNBST.  A declaration of trust to this effect has been signed. In the meantime, the defendant remains in occupation of the property and continues to operate the Kohanga Reo school from there. Meanwhile, there has been a substantial breakdown in the relationship between the parties.   According to the plaintiff, the defendant is yet to pay any rent, operating expenses, insurance, rates or even for electricity it has consumed at the property. The plaintiff therefore seeks an order from this Court by way of summary judgment requiring the defendant to execute the formal Deed of Lease and to pay the outstanding rent.

Summary Judgment Principles

[12]     Rule 12.2(1) of the High Court Rules applies here and 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.

[13]     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).

[14]     Therefore, the present application for summary judgment can only succeed if I am satisfied that the defendant trust has no arguable defence to the claims against it for specific performance of the Agreement to Lease and to recover the outstanding rent.

[15]     The plaintiff’s position here is that the defendant has no defence to the claims made in its statement of claim and that summary judgment should be entered requiring the defendant to execute the Deed of Lease which it covenanted to do, but which it has not signed.  On this, as noted above, the plaintiff points out again that the defendant as tenant has been in possession of and has enjoyed the use of the property for some time to the full extent provided in the Agreement to Lease without making any rent, outgoings or other payments of any kind to the defendant over this period.  This appears to be acknowledged here by the defendant, along with the fact that  it  has  actually  been  the  plaintiff  who  was  paid  and  continues  to  pay  for

electricity consumed by the defendant and utility use on the property.    And before me, the plaintiff noted that, although the defendant appears now to adopt a variety of positions in opposition to the present summary judgment application, essentially at one point its defence appeared to be a denial of the existence of a lease of any kind. On this, Ms Puketapu as recently as 19 January 2012 in a letter to the plaintiff on behalf of the defendant, (this letter noted later in this judgment at [36]) stated “we are not tenants or occupiers” of the property.

[16]     The  specific  grounds  of  opposition  advanced  on  15  May  2012  by  the defendant in its Notice of Opposition to the present summary judgment application however are:

3.          The defendant opposes the making of the Order on the following grounds:

(i)         The defendant has a defence to the plaintiff’s claim in that:

(a)       There are material facts in dispute as (to) the existence of an agreement between the parties, and (if so) what the terms of that agreement are.

(b)       The defendant has no obligation to the plaintiff pursuant to the Deed of Agreement dated 21 October 2009, upon which the plaintiff relies, as the plaintiff was not a party to that agreement and the agreement specifically provides that the rights and obligations under that Deed of Agreement may not be transferred.

(c)       Even if the plaintiff was entitled to rely upon the Deed of Agreement dated 21 October 2009, that agreement specifically provides that the parties would enter into a Deed of Lease in the ADLS Standard Form (5th Edition). The ADLS Deed of Lease (5th Edition) provides for mediation and (failing that) arbitration of disputes, and accordingly the defendant should not be entitled to bring this matter to the High Court for resolution.

(d)       There are material facts in dispute as to the period of time during which the defendant has been in occupation of the premises.

(ii)        Accordingly, summary judgment should not be entered against the defendant.

[17]     And,  in  submissions  advanced  before  me  on  its  behalf,  the  defendant amplified certain of its grounds of opposition, “having now seen the draft Deed of

Lease”, by contending that its terms are inconsistent with the Agreement to Lease in four material respects:

(a)       The draft Deed of Lease states the commencement date as 1 July

2010,   which   the   defendant   says   predates   the   actual   date   of occupation.

(b)The draft Deed of Lease provides for an annual rent of $156,105.00, and assumes this is based on the Colliers International valuation estimate or report (which report incidentally is at a higher figure as noted above). The defendant contests the accuracy of this report.  It says that the report assumes that the defendant’s business is a commercial child care centre rather than a Kohanga Reo run by a not- for-profit organisation. As an aside, it needs to be noted at this point however that the defendant has not sought to provide its own market rental valuation. The defendant nevertheless says it is not in a position to pay the level of rent claimed, and in any event such a rental is not appropriate here given first, that the land was part of a Treaty of Waitangi settlement, and secondly, that education in Te Reo Maori was part of the cultural redress provided for in that settlement.

(c)       The outgoings and expenses in the draft Deed of Lease are too high.

The defendant maintains that a letter dated 19th January 2012 from it to  the  plaintiff  asked  for  particularisation  of  the  total  expenses claimed but that this had not been provided. The defendant also contests that it should have to pay backdated outgoings for periods before it says it began occupation.

(d)The  defendant  also  maintains  that  it  has  expended  considerable resources  in  improving  the  property,  in  the  form  of  an  access driveway,  playground  and  carpark.  Although  these  improvements have  been  partially  funded  by  the  Ministry  of  Education,  the defendant seeks at least acknowledgement of the benefit of this to the plaintiff in the lease.

[18] The defendant says that these discrepancies alone amount to an arguable defence to the claim for specific performance. More on that aspect later. The defendant’s principal defence, however, is its contention that any lease it might have in respect of the property is not with the plaintiff, but rather with the PNBST, the legal owner of the site when the Agreement to Lease was signed. Therefore, it maintains that the plaintiff lacks standing in this proceeding and for this reason alone summary judgment should not be awarded in its favour. But first, I need to turn to consider the initial part of the defendant’s first ground of opposition to the present application set out at para [3](i)(a) of its Notice of Opposition and referred to at [16] above.

Is there a Valid Agreement to Lease?

[19]     This first matter to be addressed is the defendant’s initial contention that a dispute exists as to the existence of an agreement or contract on the part of the defendant requiring it to take a lease of the property.   Notwithstanding this, and to an extent rather confusingly, at the outset of the hearing of this application before me, Mr Sheehan counsel for the defendant informed the Court that the defendant did not wish now to resile from the Agreement to Lease and its obligations under that agreement but rather it was the minutiae of matters under the Deed of Lease which remained to be settled.  This, he said, included questions as to the commencement date of the lease, the annual rental payable, the level of outgoings and expenses to be met by the tenant, and lastly how the defendant tenant’s fit-out of the property was to be dealt with.

[20]     Notwithstanding this significant change in the defendant’s position, for the sake of completeness here I will quickly address this first initial argument that no agreement or contract exists which requires the defendant to take a lease of the property.  On this aspect, it is clear that there are four essential items for the creation of a valid and enforceable lease:1

a.      A fixed or periodic term, where the commencement date and time of expiry must be expressed or implicit;

b.      Certain premises;

c.      The grant to the lessee of the legal right of exclusive possession; and d.          Proper creation.

[21]     It  is  clear  that,  while  payment  of  rent  is  indicative  of  a  lease  being  in existence, it is not an essential element.

[22]     The  fact  that  a  formal  Deed  of  Lease  was  never  entered  into  does  not preclude a finding that a binding lease exists in the form of an equitable lease.  In this case, it is clear in my view that the Agreement to Lease does constitute a binding agreement to lease within the terms of the rule in Walsh v Lonsdale (1882) 21 Ch D

9:

The tenant holds under an agreement for a lease. He holds, therefore, under the same terms in equity as if a lease had been granted...that being so, he cannot complain of the exercise by the landlord of the same rights as the landlord would have had if a lease had been granted. On the other hand, he is protected in the same way as if a lease had been granted.

[23]    As to the term of the lease, this is specified and, although there is no commencement date specified in the Agreement to Lease here, it can be inferred that the lease commenced on the date at which the defendant took possession of the premises and began operating the Kohanga Reo.

[24]     If an essential term is absent or uncertain, an agreement to lease can be void for uncertainty. Terms that are left to be included subsequently or a reference to “usual” covenants are to be taken as  references  to  covenants  implied in  leases by ss 218, 219 and 220 Property Law Act 2007.2   In my view, the Agreement to Lease in this case has sufficient certainty to be properly enforceable.   As I have noted above, the term of this lease and renewals were clearly stated.  Commencement date

was easily ascertainable, and rental and outgoings were to reflect market levels.  The other lease terms described by the parties  as  generally to follow the ADLS 5th Edition 2008 form are clear and easily ascertained.   And it seems in any event that it is now appropriate for the Courts to provide certainty by supplementing inadequate machinery provisions in contracts to give effect to the parties’ contractual intentions

– Electricity Corporation of NZ Ltd v Fletcher Challenge Energy Ltd [2002] 2NZLR

433 (Court of Appeal).   In Liebherr Export – AG v Ellison Trading Ltd Court of Appeal, CA 174/03, 29/6/2004 the Court also held that the absence of any machinery provisions was not fatal as the parties had intended a market or objectively fixed price which was a matter the Court could determine if necessary.

[25]     Therefore, as I see it there can be no doubt here that the Agreement to Lease constitutes a proper and enforceable agreement to take a lease which equity regards as sufficient for a lease to exist between the defendant and (at least) PNBST.  I reject the earlier arguments endeavoured to be advanced for the defendant to the contrary, which in any event from Mr Sheehan’s oral submissions at the hearing on 18 June

2012 appear to have been withdrawn.

Did Assignment Occur?

[26]     Next, and as what I see as its major opposition argument here, the defendant alleges that, even if an agreement to take a lease did exist (and, as I have noted above the defendant has now acknowledged that this is the case), it was with the PNBST, and the defendant has no obligations to the plaintiff under that contract.   On this challenge to the plaintiff’s standing here, the defendant says that any lease was not validly assigned to the plaintiff, who has no right to enforce the Agreement to Lease, any terms of a lease arising out of that agreement, or to recover any rent owing.

[27]     An agreement for a lease may be assigned unless this is expressly prohibited by the parties’ contract. In De Luxe Confectionary v Waddington [1958] NZLR 272, the Court held that where a equitable lease exists and it is assigned, there is privity of equitable estate between the lessor and assignee. Moreover, s 4 of the Property Law Act 2007treats agreements to lease as leases for the purposes of the Act, and therefore the provisions dealing with assignments in ss 230-242 apply equally to agreements to lease.

[28]     Section 233 of the Property Law Act 2007 specifies that upon assignment, the rights of the lessor outlined in  s  232  run with the reversion,  unless  a  contrary intention appears from the lease or from another circumstance. Section 232 includes the right to receive rent, to enforce the lessee’s covenenants, and all other rights and remedies  of  the  lessor.  Therefore,  unless  a  contrary intention  appears  from  the

Agreement to Lease here, PNBST’s right to receive rent and to enforce the original agreement  by way of  specific  performance  would  transfer  to  the  plaintiff  upon assignment through the 22 July 2011 transfer to it of title to the property. However, there is a possible argument here that a “contrary intention” is expressed by the parties in the Agreement to Lease itself.  As to this, at clause 5.3 of this document the parties specifically provided that:

No Assignment: Rights or obligations under this deed may not be transferred.

[29]     Accordingly, at first glance it would seem that ss 230-234 of the Property Law Act might not assist the plaintiff in this proceeding in relying on the terms and covenants of the Agreement for Lease between PNBST and the defendant, as it was not an initial party to that agreement and the rights arising out of it cannot be assigned.

[30]      On this, the plaintiff initially contended before me that the transfer of land to a wholly owned subsidiary does not constitute an assignment for the purposes of the Property Law Act 2007.  As the shares in the plaintiff are wholly owned by a trustee company for the benefit of the PNBST, and the plaintiff company was set up to administer the property on behalf of the PNBST, the plaintiff contended the transfer of land does not involve an assignment of the  Agreement to Lease held by its “parent” trust. On its face, however, in my view this argument is suspect. Where an original lessor, in this case PNBST, assigns its whole interest in land subject to a lease, the transferee of the land (in this case the plaintiff, a separate company and legal entity) becomes the new lessor. The reversion is effectively assigned to the new lessor, who becomes the holder of that interest in the land. Where title to a freehold estate passes to a new party under the terms of the Land Transfer Act 1952, as has occurred in this case, the reversion is assigned to the transferee, regardless of the nature of that entity and its ownership structure.

[31]     That is not the end of this matter as I see it, however.  Whilst the para 5.3 “No-Assignment” provision is clear on its face in so far as it provides that no rights or obligations under the Agreement to Lease may be transferred, it is important, as I see it, to look here at all the background facts which arose once this contract was entered into.

[32]     In this regard, the effectively uncontradicted evidence before this Court (in particular, that of Mr Farquhar in his affidavit sworn 18 May 2012) is that around June 2010, once the rental valuation indication had been obtained by the PNBST from Collier International, a draft Deed of Lease including this rental figure was forwarded to the defendant and further lease discussions ensued.  It does seem this was the second occasion on which a formal Deed of Lease had been provided to the defendant.

[33]     These draft Deeds of Lease were all properly in the name of PNBST as registered owner of the property and lessor at the time.

[34]     What is clear from all the evidence before the Court is that at no time did the defendant take steps in terms of clause 3 of the Agreement to Lease to negotiate in a real way the level of market rental and outgoings, a commencement date or other terms for the lease.  This is despite the clear obligation on both parties contained in clause 5.7 of the Agreement to Lease that:

The parties agree to co-operate and do all things reasonably necessary to give effect to the Terms of this Deed.

Instead, it is difficult to escape the conclusion from all the material before the Court here, that the defendant has simply obfuscated the fundamental issues concerning the lease for purposes of delay, whilst all the time occupying and operating the Kohanga Reo school from the property rent free.  This has occurred despite the fact that the evidence before me indicates that throughout this time the Ministry of Education has been making payments to the defendant towards the occupancy costs of the Kohanga Reo school, but none of this has found its way in any form to either the plaintiff or the PNBST as landlord.  And indeed the uncontradicted evidence before me is that the plaintiff even went so far here as to meet the defendant’s own electricity costs for running the Kohanga Reo school on the property as well as itself paying all rates, insurance premiums and other outgoings normally attributable to a tenant, without contribution from the defendant.

[35]     Further, it is significant in my view that, in the only evidence provided to this Court by the defendant in opposition to the present application, being the affidavit of Ms Puketapu sworn 15 May 2012, she deposes:

5.        Having read para 5 of Mr Love’s affidavit I am now aware that the title to

82 Moohan Street, Wainuiomata is currently owned by the plaintiff and not by the Trust.  This came as a surprise to me, as I had always understood that the land was transferred to the Trust pursuant to the treaty settlement and that the Trust did (and would) continue to hold it.  I did not know that the Trust had (following its receipt of the land following settlement of the treaty claim) transferred the title to the plaintiff ....

and

11.       ... It is not accepted that the defendant has declined to sign the draft Deed of Lease annexed to Mr Love’s affidavit – the defendant has never been provided with a copy of that document before now. ....

and

... Furthermore, the defendant denies failing to negotiate the terms of its occupation of the former Wainuiomata Intermediate School site with the plaintiff and/or the Trust.

[36]     With regard to the last matters outlined above, Ms Puketapu annexed to her affidavit  a  letter  under  her  signature  dated  19  January  2012  on  behalf  of  the defendant, which noticeably was addressed not to the PNBST but to the directors of the plaintiff, Lowry Bay Section One Limited, and which somewhat confusingly at para 4 on page 2 stated in part:

.... We are not tenants or occupiers.

This paragraph then went on to state:

We have made considerable financial and personal contributions in kind along with other community and whanau based commitments in our own right that would match the $1.6 million financial injection provided by the Ministry of Education from their Capital Grants Fund.  We continue to look after the facility every day. We expect our interest to be acknowledged.

[37]     What is also clear from the evidence before the Court is that, as early as 16

November 2011 the defendant was advised that the property had been transferred from the PNBST to the plaintiff as the new registered proprietor of the land, and it was the plaintiff which was to be the defendant’s landlord under the lease.

[38]     This had also followed a considerable number of meetings over a long period of time between representatives of both the plaintiff and the defendant.  At no time until relatively recently was any issue raised concerning the assignment of the lease to the plaintiff, or the standing of the plaintiff as landlord.

[39]     It was in fact Ms Puketapu herself in her 15 May 2012 affidavit, who as I

have noted at para [35] above claimed to have no knowledge of the transfer to the

plaintiff until she read Mr Love’s affidavit (filed in this Court only on 5 April 2012). This is despite the fact that Ms Puketapu’s letter of 19 January 2012 without more was specifically addressed to the directors of the plaintiff company and referred directly to lease matters and the Agreement to Lease.

[40]     It is difficult to escape the conclusion in this case therefore that the defendant through its actions has accepted and consented to the assignment by PNBST of its reversion interest in the Agreement to Lease to the plaintiff, notwithstanding clause

5.3.  I am of the clear view that strict adherence to that clause was either waived by the defendant here or clear approval given by the defendant to the assignment of the lessor’s reversion to the plaintiff, such that the plaintiff now effectively stands in the shoes of the PNBST as landowner and lessor under the Agreement to Lease.  Any “tactical” attempts by the defendant to withdraw that consent or approval at the last minute must be seen for what they are and simply rejected.  A robust and realistic approach to the actual situation that prevails is required in this case – Bilbie Dymock Corporation Ltd v Patel (1987) 1 PRNZ 84 at 86.

[41]     In addition, it seems to me that issues of estoppel or even part performance might well arise here such that the defendant is in any event prevented from pursuing its eleventh-hour argument over the plaintiff’s standing.    But I need say nothing more on those aspects at this point.

[42]     Overall, the defendant has occupied the property even on its own admission from January 2011.  It has made no payment to the landowner of any kind, and as I see the position it has neglected or refused to take proper steps required of it under clause 5.7 to “co-operate and do all things reasonably necessary to give effect to the terms of the” Agreement to Lease, including entry into the final Deed of Lease.  This is despite the fact, as I have noted above, that at the outset of his submissions advanced before me at the hearing of this matter, Mr Sheehan for the defendant confirmed that the defendant was not now wishing to resile from its obligations under the Agreement to Lease.  That said, I regard this plaintiff “standing” defence advanced here by the defendant as an entirely technical one contrary to the events which have occurred recently, and as such, is a defence entirely lacking in merit.

[43]     For all these reasons I dismiss this defence advanced for the defendant.

Requirement for Mediation or Arbitration

[44]     Next, the defendant endeavoured to argue that this is a matter not suitable for summary  judgment  as  it  should  be  referred  to  mediation  and  arbitration  in accordance with the standard provision in the ADLS Standard Form 5th  Edition (Deed of Lease form).

[45]     In my view this argument is quickly disposed of.

[46]    The application before me seeks by way of summary judgment specific performance of the Agreement  to  Lease.    That  document  does  not  contain  any mediation or arbitration provision.

[47]     For the defendant to suggest that this matter must be referred to mediation or arbitration simply because such a provision exists in the standard form Deed of Lease in my view misses the mark.   Although, it is the Deed of Lease document which the plaintiff seeks the defendant to enter into as tenant, so far the defendant has failed or refused to do so.  For the defendant to now suggest that its provisions regarding mediation and arbitration should prevail in my judgment is quite inconsistent and wrong.

[48]     The dispute between the parties here relates to the Agreement to Lease and I repeat that there is no mediation or arbitration provision in this contract.  The present matter therefore in my view is properly before this Court.

[49]     For these reasons I reject this defence advanced for the defendants.

Material Facts in Dispute – As to the Terms of the Lease

[50]     Finally,  the  defendant  endeavours  to  argue  here  that  there  still  remain significant issues between the parties in that there are a number of critical aspects to the lease arrangements that have not been agreed between the parties.

[51]     One aspect of this seems to be the long running dispute between the parties as to what might constitute “market level rental and outgoings” for the property under the Agreement to Lease.   On this, Ms Puketapu at para 12 of her 15 May 2012

affidavit states that she was “shocked by the amount of rental claimed on the basis of that (Colliers Independent Valuation) Report”.

[52]     Notwithstanding this, it appears from all the material before the Court that the defendant itself has simply taken no steps of any kind to obtain its own assessment or independent valuation report to assess a fair market level of rental and outgoings for the property.  This is despite the fact as I have noted above that it has occupied the property rent and outgoings free for a considerable time.  As to other aspects, the term of the lease at three years plus two further rights of renewal for three years each was clearly agreed.   Rental and outgoings as I have noted were to be agreed by negotiation and to reflect market levels.  Implicit in this must be a process by which, in the absence of agreement, each party was to obtain an independent assessment of a fair level of market rental and outgoings and in the event of final dispute, this was to be determined by the Court.

[53]     The other terms of the lease were “generally to be in the same form as the Auckland District Law Society 5th  Edition 2008 Deed of Lease form” with some room for minor negotiation between the parties.  Again, in my view, this is clear and if a dispute did arise it could be determined by the Court.   This is precisely the position reached in a case decided in the Court of Appeal Robertson Enterprises Ltd v Cope [1989] 3NZLR 391, where, in not entirely dissimilar circumstances to the present case, the Court said at [393]:

So too the plain purpose of the agreement would be defeated if either party were free to withdraw because agreement on the terms of the lease had not been reached by the named settlement date.   The terms would have to be settled by the Court if necessary on evidence of Manawatu practice.  That would take time but the parties would remain contractually bound to grant and accept a lease as from the settlement date. No other interpretation of the agreement seems to us workable or tenable.

(emphasis added)

[54]     Finally,  the  commencement  date  of  the  lease  would  be  a  matter  for negotiation but, even on the defendant’s own evidence here, it accepts that its occupation of the property commenced on 17 January 2011.  For the purposes of this summary judgment application therefore a lease commencement date of 17 January

2011 is undisputed (despite clause 3(i)(d) of the defendant’s Notice of Opposition noted at [16] above), and can be ordered. If the plaintiff is of the view later that an earlier commencement date is appropriate, and provides new evidence in support of

that, then there would seem to me to be no reason why that aspect could not be the subject of further  substantive proceedings here and the matter pursued further.

[55]     But, overall, I am of the clear view in this case that there can be no doubt what the terms of the Agreement to Lease are and that as a bare minimum for summary judgment purposes, the date of occupation of the property by the defendant and thus the commencement date for the lease would be at the latest 17 January

2011.

[56]     For all the reasons outlined above it will be clear that the plaintiff’s summary judgment application here succeeds at least in part.  And where a lessee such as the defendant has been let into possession of premises which has occurred here, specific performance will normally be granted – Upper Hutt Arcade Ltd v Burrell [1973] 2

NZLR 699 and Rosinis Restaurant Ltd v Goldcorp Properties Ltd (1989) 1 NZ Conv. C. 190,114.

[57]     An order is to follow as to liability requiring the defendant to specifically perform the Agreement for Sale and Purchase with certain attendant directions.

[58]     As to the plaintiff’s second cause of action seeking judgment for outstanding rental and outgoings, again given that the present application is one for summary judgment, an order will follow granting summary judgment to the plaintiff against the defendant as to liability only for rental and other appropriate outgoings under the new lease to be concluded between the parties for a period from, at the latest, 17

January  2011.    The  defendant  acknowledged  before  me  finally  that  it  was  not resiling from the Agreement to Lease, and it must follow therefore that it is liable for a final rental and outgoings (when determined) from the lease commencement date.

[59]     Orders are to follow shortly as outlined above.  If, however, I may be wrong in the conclusions I have reached above, in my view it is appropriate here to consider one last matter.  This is the question over whether, even if the defendant had been successful in opposing the plaintiff’s action to have it specifically perform the Agreement to Lease, would it nevertheless be bound by the terms of a statutory tenancy for the property?

Does a statutory tenancy avail the plaintiff?

[60]     Although it was not pleaded by either party, in the event the Agreement to Lease was shown to be unenforceable, (and I have found otherwise here) what must otherwise exist between the plaintiff and defendant is a statutory tenancy of the property within the terms of s 210 of the Property Law Act 2007 which states.

(1)      This section applies to a lease if—

(a)       the lessee is in possession of the land, although the lessor and the lessee have not agreed, expressly or by implication, on the duration of the term of the lease; or

(b)       the lessee remains in possession of the land with the lessor's consent, although the term of the lease has expired and the lessor and the lessee have not agreed, expressly or by implication, that the lessee may continue in possession for some other period.

[61]      The first of the two situations contemplated by this section can avail a tenant where no formal lease has been agreed, or where an attempt to create a lease is found to be invalid. In Prudential Assurance Co Ltd v London Residuary Body [1992] 2

A.C.  386,  the  lease  agreement  was  found  to  be  invalid  due  to  uncertainty and therefore incapable of creating a leasehold estate. However, as the tenant was in possession and had been for some years, and consistently paid a yearly rent, their Lordships found a year to year periodic tenancy existed, terminable at six months notice, by virtue of the conduct of the parties. The same statutory tenancy can be implied from the conduct of the parties in the present case: namely the possession by the defendant of the land for over 18 months, and the plaintiff’s implied consent to that occupation. Section 210(2) Property Law Act 2007 dictates that such tenancies are terminable at will by either party giving 20 days notice.

[62]     The consequence of a statutory tenancy is that the implied obligations of lessor and lessee set out in Part 2 of Schedule 3 of the Property Law Act 2007 apply to the defendant. Clause 4 of the Schedule is the obligation to pay rent when it falls due. The amount of rent must be certain.  Although no amount was ever agreed in the present case, it is sufficient in my view for the amount to be ascertained by reference to the external standard set out in the Agreement to Lease, that is an amount to reflect the market rate. No payment of rent of any kind has occurred to date.

[63]     In any event here, I would see the defendant as having no arguable defence to the existence of a statutory tenancy of the property at least and the attendant obligations and covenants it owes to the plaintiff thereunder. But, given my conclusions outlined above, I need not go that far here.

Conclusion

[64]     As I have noted before, counsel for the defendant, for the first time at the outset of the hearing of this matter, confirmed that the defendant does not wish to resile from the provisions of the Agreement to Lease.  His submission was simply that it is the minutiae of the final Deed of Lease provisions which need to be settled.

[65]     These are all matters which in my view can properly be accommodated in the summary judgment orders I am about to make.

[66]     It  will be apparent for all the reasons outlined above that the plaintiff’s summary judgment application here essentially succeeds.  The general object of the summary judgment rules is clearly to enable a plaintiff to obtain judgment where there is really no defence to the claim made and so put an end to the spectacle of a worthless defence being raised and pursued for the purposes of delay.  In my view there is a strong argument here that this is precisely the situation faced by the Court with the present application.   Summary judgment is designed for the speedy resolution of meritorious claims and the present claim is one in my view where, in balancing the need for judicial caution in such applications with the appropriateness of taking a robust and realistic approach when that is called for by the particular facts of a case, a robust attitude is required.

[67]     The plaintiff in my view has clearly met the evidentiary burden on it to satisfy this Court that the defendant has no defence to the claims made against it, at least as to liability.

[68]     Rule 12.3 High Court Rules gives the Court the power to order summary judgment on liability only with questions of quantum to be determined later at trial or otherwise.   On the plaintiff’s second claim in its statement of claim seeking payment of outstanding rent, quantum is still in issue.  A summary judgment order relating to liability only is to be made.

[69]     Finally, I need again to draw attention to clause 5.7 of the Agreement to

Lease which provides:

5.7The parties agree to co-operate and do all things reasonably necessary to give effect to the terms of this Deed.

[70]     Here it is arguable that up to the present time, this provision has not been complied with on the part of all parties to this proceeding.

[71]     Bearing in mind this clause 5.7, I am satisfied also that it is appropriate here in finding that the present summary judgment application is to succeed, for certain additional directions to be made to deal with this matter as appropriate orders of this Court.

Orders

[72]     There are two sets of orders to be made now consequent upon the plaintiff’s

successful summary judgment application.

A.      Specific Performance

[73]     First, an order is made by way of summary judgment in favour of the plaintiff against the defendant requiring the defendant forthwith to execute and perform the Agreement to Lease.

[74]     With regard to this order for specific performance, the following directions are now made:

(a)      Within 10 working days of the date of this judgment, the plaintiff is to serve upon the defendant first, a Deed of Lease of the property in the ADLS (5th  Edition 2008) form from the plaintiff as lessor including an agreed commencement date of 17 January 2011, and the proposed annual rental, outgoings and other terms that are suggested by the plaintiff, and secondly, a further copy of the Colliers International

Valuation  and  any  other  evidence  it  might  have  supporting  the plaintiff’s suggested annual market rental and outgoings.

(b)Within 30 working days of the date of this judgment, the defendant as lessee is to respond in writing to the plaintiff to advise if it accepts the terms of the proposed Deed of Lease and the proposed annual rental and outgoings and if so, within that time, it is to properly execute and return to the plaintiff the Deed of Lease document.  In the event that the defendant disputes the annual rental and outgoings proposed or any other terms of the Deed of Lease, the defendant is within that 30 working day period to give proper written notice to the plaintiff of this together with its evidence supporting the dispute.  If an element of that dispute is the defendant’s non-acceptance of the plaintiff’s proposed annual rental and/or outgoings under the Deed of Lease, then the defendant is directed within that 30 working day period to obtain its own independent expert valuation report as to the “market level” of the annual rental and outgoings to be paid under the Deed of Lease and within that period to provide a copy of this valuation report and any other evidence it may have to the plaintiff.

(c)      In the event of disagreement between the parties as to any of the terms of the Deed of Lease, a direction is made that this aspect is to be referred to this Court for appropriate resolution.

B.       Outstanding Rental

[75]     An order is now made by way of summary judgment pursuant to r 12.3 High Court Rules in  favour of  the plaintiff against  the defendant  as  to  liability only whereby the defendant is to pay to the plaintiff rental for the property from the commencement date of the lease being 17 January 2011, the quantum of this amount to be subsequently determined.

Costs

[76]     So far as costs are concerned, the plaintiff has effectively succeeded in its present application and I see no reason why costs should not follow the event in the normal way.  Costs on this summary judgment application are therefore awarded to the   plaintiff   against   the   defendant   on   a   category   2B   basis   together   with disbursements as fixed by the Registrar.

Next Event

[77]     As a next event in this proceeding, and to determine whether the Deed of Lease terms and quantum of outstanding rental pursuant to the summary judgment orders above are finalised, this matter is listed for call in the Associate Judge’s List at 11.00 am on 8 October 2012.

‘Associate Judge D.I. Gendall’