New Zealand Sunshine International Company Limited

[2013] NZHC 939

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2013-404-1064 [2013] NZHC 939

UNDER  the Property Law Act 2007, sections 210 and 244

IN THE MATTER OF     an application for Orders for possession of land and cancellation of leases

BETWEEN  NEW ZEALAND SUNSHINE INTERNATIONAL COMPANY LIMITED Applicant

ANDBOYCE COAD Respondent

Hearing:         On the papers

Counsel:         M Kan for Applicant

P F Chambers for Respondent

Judgment:      1 May 2013

JUDGMENT OF KEANE J

This judgment was delivered by  on 1 May 2013 at 12pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Date:

Solicitors:

Yang Lawyers, Epsom, Auckland for Applicant

J Bioletti, Auckland for Respondent

NEW ZEALAND SUNSHINE INTERNATIONAL COMPANY LIMITED V BOYCE COAD HC AK CIV

2013-404-1064 [1 May 2013]

[1]      On 14 March 2013 New Zealand Sunshine International Company Limited, which owns a property in Mt Roskill, Auckland, then leased to a network engineer, Boyce Coad, discontinued this application, filed just two weeks before, for orders enabling  it  to  cancel  the  lease,  to  resume  possession,  and  to  obtain  rent  and outgoings due.

[2]      This notice of discontinuance was filed just one day after the first call of the application in the duty judge list on 13 March 2013, when Collins J authorised a half day fixture, made timetabling directions, and recorded, as Mr Coad's counsel asked him to, that 'if the application went to hearing and the Court found in his favour he would be seeking indemnity costs'.

[3]      Mr Coad now seeks an order for scale costs on the discontinuance, $2,189, to which he contends he is presumptively entitled.1  Sunshine contends that such an order would be unjust and that costs lie should lie where they fall. I must assess this issue on Sunshine's two undisputed affidavits, one supporting the application, the other as to costs. There is none in response from Mr Coad.

Applicant's case

[4]      On 1 April 2012, according to Sunshine's undisputed affidavit evidence, Mr

Coad took possession of the leased premises under an oral lease and on 1 September

2012 ceased to pay any rent or outgoings.

[5]      On 27 November 2012 Sunshine served on Mr Coad a demand and on 19

September 2012 a notice to quit. On 24 December 2012 Mr Coad was served by courier post with a property law notice, which he accepted on 4 January 2013. On 25

January Sunshine's solicitors wrote to Mr Coad advising him that Sunshine wished to resume possession on 29 January 2013. The day after that Sunshine attempted to re-enter.

[6]      On 27 February 2012 Sunshine made the application it has now discontinued. At that date, it contended, rent arrears came to $12,649.98 and outgoings, extending

1      HCR 15.23.

back to the date Mr Coad took possession, came to $5,324.48. Sunshine also sought

$3,738.85 legal costs incurred for the drafting and serving of the s 245 property notice, and $6,656 further legal costs.

[7]      This application was served on Mr Coad on 1 March 2013 and that day he wrote to Sunshine stating that he would seek to renew the lease, would vacate possession on 1 April 2013 and would pay the 'outgoing charges' outstanding by bank cheque, as long as Sunshine did not pursue possession; and subject also to this.

[8]      Mr  Coad  added  that  the  amounts  that  each  then  disputed  were  to  be adjudicated at the earliest opportunity, in the 'appropriate venue'. By that I take him to have meant the District Court where he had on 23 January 2013 applied for relief from repossession and an order that Sunshine sign a lease, to which it appears Sunshine might since have responded by counterclaim for unpaid rent and outgoings.

[9]      On 14 March 2013, the day after the first call, Sunshine discontinued, relying on the 1 March 2013 letter. The Sunshine director, whose decision it was, says that before the first call he sent a text to Mr Coad urging him vacate and to pay all arrears. After the first call, however, he decided that, if Mr Coad held to his undertaking to vacate and to pay, there was no need to pursue the application.

[10]     On 2 April 2013 Mr Coad did vacate possession. He did not pay the rent or outgoings outstanding. Sunshine contends that he caused significant damage before he left and stole property. It has complained to the police. The District Court proceedings presumably remain in some sense extant.

Right to costs

[11]     The issue that remains, now that the discontinuance has been filed and served and has taken effect,2  is whether Mr Coad is now entitled to costs under r 15.23, which says this:

Unless  the  defendant  otherwise  agrees  or  the  court  otherwise  orders,  a plaintiff who discontinues a proceeding against a defendant must pay costs

2      Rule 15.21.

to the defendant of and incidental to the proceeding up to and including the discontinuance.

[12]     Under r 15.23 Mr Coad is presumptively entitled to costs, but that is subject to this Court's general discretion.3 Such an order must be just and equitable; and, in this instance that depends on whether Sunshine acted reasonably or abusively in first bringing and then discontinuing its application.4

Nature of proceeding

[13]     Whether, as Mr Coad appears to contend, Sunshine ought to have applied for cancellation in the District Court instead of pursuing that order in this Court turns on the rules governing the cancellation of leases and relief from cancellation in the Property Law Act 2007.

[14]     The right to cancel a lease, and to relief against cancellation, is governed by ss 244 - 264 of the Property Law Act 2007, which constitutes a code.5  To exercise the right to cancel for breach a lessor may re-enter peaceably, or may apply to a Court for an order for possession, as Sunshine did here, seeking rent and outgoings outstanding and reasonable compensation.

[15]     Conversely, a lessee may apply for relief against cancellation, or proposed cancellation,   either   in   response   to   a   lessor's   application   for   possession   or pre-emptively, as Mr Coad seemingly did here, by his proceeding in the District Court.6

[16]     The 2007 Act defines 'Court' as 'the Court before which the matter falls to be determined'.7 The code is silent as to whether this Court and the District Court share

jurisdiction concurrently. Section 362 states the jurisdiction of District Courts to hear

3      Rule 14.1.

4      Kroma Colour Prints Ltd v Tridonicatco NZ Ltd [2008] NZCA 150, (2008) 18 PRNZ 973.

5      Property Law Act 2007, s 243.

6      Sections 253, 255 - 257.

7      Section 4.

and determine six matters, none concerning leases.8  The District Court could then only have jurisdiction if that is conferred by the District Courts Act 1947.9

[17]     Section 31 of that Act gives the District Court jurisdiction in four cases to hear and determine a proceeding for recovery of land, where the rent does not exceed

$62,500 and the value of the land does not exceed $500,000; and most obviously here, where:10

Where any tenant holding any land under any demise or agreement, either written or verbal, is in arrear in payment of rent for such period that the landlord is entitled to exercise a right of re-entry under the terms of the demise or agreement.

[18]     Section   31(1)(c)   extends   to   the   District   Court's   jurisdiction   to   the

'circumstances  referred  to  in  the  next  succeeding  section',  section  32.  But  that section, which dealt with the termination of tenancies, was repealed on 31 December

2007 when the Property Law Act 2007 came into force and neither s 31 nor 32 explicitly confers power to grant relief from cancellation of a lease.

[19]     In this decision on the papers I am unable to do more than to raise this issue. It will be one to pursue perhaps in the District Court if that proceeding continues. It does  mean  that  on  the  costs  issue  I  am  to  decide  I  am  unable  to  say  what significance, if any, the District Court proceeding deserves.

Conclusions

[20]     On  the  face  of  these  papers  as  they  are,  bereft  as  they are  of  anything explaining the District Court proceeding, I am satisfied that Sunshine was fully entitled to bring and to discontinue its application.

[21]     There is no issue that at the date Sunshine applied Mr Coad was in complete arrears and that he had failed to respond to any notice or letter until the application

was served on him, when he gave his 1 March 2013 undertaking to vacate possession

8      Section 362(1), (2).

9      Section 362(3), (4).

10     District Courts Act 1947, s 31(1)(b).

and to and pay all that he owed, subject only to his asserted but unexplained claim in the District Court.

[22]     On the papers as they are I conclude also that, having reasonably brought its application, Sunshine was equally entitled to discontinue on the faith of Mr Coad's letter; and I note that when he vacated Mr Coad did not adhere to his undertaking. Subject to his asserted but unexplained District Court claim, to which I can give no account, he remains completely in arrears.

[23]     I am satisfied, therefore, that despite the presumption that when a proceeding is discontinued the one proceeded against has a right to costs, it would not be just to

award Mr Coad the costs he claims. Costs will lie where they fall.

P.J. Keane J