Northland Regional Council v Giles

[2013] NZHC 3396

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2013-488-000368 [2013] NZHC 3396

BETWEEN

NORTHLAND REGIONAL COUNCIL

Applicant

AND

STANLEY ROY WILFRED GILES First Respondent

RUSSELL TURNER TRUSTEES LIMITED

Second Respondent

intituling cont'd over

Hearing:

12 December 2013

Appearances:

P Magee for Applicant/Second Respondent (Northland Regional
Council)

S R W Giles and P W J Paalvast (Trustees of Magna Trust) in person

Judgment:

16 December 2013

JUDGMENT OF ELLIS J

This judgment was delivered by Justice Ellis on 16 December 2013 at 4.30 pm

pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:………………………….

NORTHLAND REGIONAL COUNCIL v GILES [2013] NZHC 3396 [16 December 2013]

CIV-2013-488-000358

BETWEEN  THE MAGNA TRUST First Applicant

STANLEY ROY WILFRED GILES Second Applicant

RUSELL TURNER TRUSTEES LIMITED Third Applicant

ANDWHANGAREI DISTRICT COUNCIL First Respondent

NORTHLAND REGIONAL COUNCIL Second Respondent

[1]      The Northland Regional Council (the NRC) is the registered proprietor of the fee simple estate in land comprising Lots 15 and 16, DP43791.  The physical address of the property is 46 Hannah St, Whangarei.

[2]      The leasehold estate is held by the trustees of the Magna Trust (the Trust). One of the terms of the lease between NRC and the Trust is that the Trust is obliged to pay the rates on the property to the Whangarei District Council (the WDC).

[3]      It is not in dispute that the Trust has not paid the rates relating to the property for some time.

[4]      The NRC accordingly now applies for orders under s 244 Property Law Act

2007 (the PLA) for orders cancelling the lease and granting it possession of the land. The Trust has made a mirror application for an injunction preventing NRC from re- entering the property and terminating the lease.

[5]      The Trust’s position is that although it has the funds to pay the rates, it does not need to do so because it has “negotiated” a position with the NRC and/or the WDC whereby it is required only to pay $1 each month.

[6]      The way in which the Trust has been able to arrive at this position is through a complex legal analysis of the Bills of Exchange Act 1908 (the BoEA) and the taking of various steps that the trustees believe conform with that Act and discharge their liability to meet the full cost of the rates.

[7]      In essence, as I understand it, the trustees regard the standard form rates demands sent to them as “inchoate instruments” under s 20 of the BoEA which they have “negotiated” by crossing out material parts of it and substituting the sum of “one  dollar”  for  the  amount  that  is  actually owing.    Rather  than  attempting  to describe what the trustees have done with any more precision than that I merely attach a copy of one such “negotiated” instrument, by way of example, to this judgment.

[8]      Having done that the Trust has then created what they allege are separate bills of exchange whereby Mr Giles (one of the trustees) authorises the Trust to pay to the WDC the “one dollar” amount in the form of a $1 postage stamp, which is affixed to the document.   Again, for convenience, I attach an example to this judgment.   It seems that these bills of exchange have been forwarded to the WDC as payment for the rates owed by the Trust.

[9]      The trustees then say that because the WDC has not responded or sought to

“negotiate” the matter further it must be taken as having accepted the payment of the

$1 postage stamp in satisfaction of the whole amount owing.

[10]     I acknowledge the considerable work, and detailed analysis of the somewhat arcane concepts and wording of the BoEA, that lies behind the trustees’ position on these matters.  But it is clear to me that their analysis is simply untenable.  A rates demand is not an inchoate instrument and cannot be negotiated.   The WDC is, as Mr Magee submitted,  required  by law  to  strike rates  and  to  recover them  from ratepayers.  There is nothing in the BoEA that permits a ratepayer to debate or alter the  amount  owing.    There  are  quite  separate  statutory  procedures  whereby  the striking of rates may be challenged but none of these have been invoked in the present case.   Nor has it been suggested that there are any grounds on which the Trust might do so.

[11]     Even if I am wrong in that I also do not accept that the WDC’s silence constitutes acceptance of anything.  As the learned authors of the Law of Contract in New Zealand have noted, the proposition that the banking of a cheque for less than

the amount claimed constitutes settlement of the larger (disputed) debt is no longer

good law.1

For accord and satisfaction to exist there needs to be a meeting of minds

or, at the very least, some action on the part of the creditor that induces the debtor to think that the payment has been accepted in satisfaction of the claim.  That is quite plainly not the case here. Any submission to the contrary is wholly inconsistent with (inter alia) the fact that the WDC continues regularly to send the Trust rates demands

for an ever increasing amount.

1      Burrows, Finn and Todd Law of Contract in New Zealand (4th  ed, Lexis Nexis, Wellington,

2012) at 769. See the discussion of the cases at 19.2.3.

[12]     I therefore grant the orders sought by the NRC.  The lease is cancelled and possession is granted to the NRC.  There is necessarily no possible basis upon which the Trust  could obtain  injunctive relief against  cancellation and possession.   Its application in that respect is therefore dismissed.

[13]     The NRC is entitled to its costs on a 2B basis.

Rebecca Ellis J