Mykonos Property Limited v Bird - [2017] NZHC 173

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-3042 [2016] NZHC 173

BETWEEN
MYKONOS PROPERTY TRUST

LIMITED Plaintiff

AND

CHRISTOPHER HALTON BIRD Defendant

Hearing:
15 February, 22 February, 23 March, 20 April, 22 April and 21

September 2016 and 9 February 2017

Counsel:

D J Chisholm QC and M Lenihan for Plaintiff
C H Bird in Person

Judgment:

16 February 2017

JUDGMENT OF FOGARTY J

This judgment was delivered by Justice Fogarty on
16 February 2017 at 3.30 p.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Solicitors:
Brown Partners, Auckland

MYKONOS PROPERTY TRUST LIMITED v BIRD [2016] NZHC 173 [16 February 2017]

Introduction

[1] Mykonos Property Trust Limited (Mykonos) and Christopher Halton Bird (Mr Bird) are parties to a ground lease of a residential section in South Auckland, within the Lynfield Residential Estate on the southern shores of the Auckland isthmus. The lease is a perpetual lease, renewable terms of 21 years, with rent reviews every 7 years.1 The lessee, Mr Bird, does not agree with the uplift of the rent sought by the lessor for the next seven years. The lessor, Mykonos, has commenced proceedings for an order for possession of the land and cancellation of the lease.

[2] Mr Bird has failed to obtain legal aid and has been ineffectual in defending the application. He faced two “unless” orders before appearing in the High Court before me on 22 April 2016. Since that time I have been actively pursuing some potential deficiencies in the application for formal proof, without any assistance from Mr Bird, until today, which is no criticism of him as the point is sophisticated.

[3] As the judgment will go on to explain, supplementary evidence has been filed and the case was set down for hearing on 21 September 2016. Mr Bird did not appear. He was called twice. There are affidavits proving he has been personally served the latest evidence (of experts). I elected to continue for two reasons. First, there is no doubt in my mind that he had ample notice of the hearing. Secondly, he was unable to contribute, in any event. Rather, he was reliant on this Court requiring the lessor to prove for its remedy in accordance with the law.

[4] Mr Bird has refused to pay the new rental and has not taken advantage of the entitlement under the lease to arbitrate the new rental. I do not use the phrase “not take advantage” in any ultimately critical sense. It is more probable than not that Mr Bird simply does not have the financial resources to engage in the dispute resolution process provided by the lease. To be effective, he would have to retain a
valuer and a solicitor.

1 Also known as a Glasgow lease.

[5] Given the position of Mr Bird, I have scrutinised critically the application for formal proof and, along the way, issued various minutes calling for further information. As a result of this process, the point potentially advantageous…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NZHC 173
Decision Date: 16 February 2017

CaseChat Overview and Summary

Mykonos Property Trust Limited (Mykonos) sought an order for possession of land and the cancellation of a ground lease from Christopher Halton Bird (Mr Bird). Mykonos argued that the ground lease's terms permitted an uplift in rent, which Mr Bird had refused to pay. Mr Bird contended that the proposed uplift in rent was unfair and that he could not afford it. The court had to determine whether the uplift in rent was justified under the terms of the lease and whether it was fair and reasonable. The court examined the lease terms, which required the ground rental to be assessed without regard to the value of improvements on the property. The court also considered the traditional approach to assessing ground rental, which involved applying a percentage rate to the assessed land value. The court found that the proposed uplift in rent was justified under the lease terms and that the percentage rate applied by the valuer was within acceptable rates for long-term leases. The court also found that the proposed rent was fair and reasonable, as it was supported by expert opinions and was within the range of rental rates agreed in comparable properties. The court granted Mykonos' application for an order for possession of the land and the cancellation of the lease. The court also ordered Mr Bird to pay outstanding rental, interest, costs, and outgoings, as well as compensation to Mykonos. The court further ordered Mr Bird to pay Mykonos' costs and disbursements.

The court's decision was based on a thorough analysis of the lease terms, the traditional approach to assessing ground rental, and expert opinions on rental rates in the area. The court found that the proposed uplift in rent was justified under the lease terms and that the percentage rate applied by the valuer was reasonable. The court also found that the proposed rent was fair and reasonable, as it was within the range of rental rates agreed in comparable properties. The court's decision was consistent with established legal principles on ground rental assessments and the interpretation of lease terms.

Orders