Oakwood Properties Limited v The Dunedin Heritage Restoration Company Limited

[2019] NZHC 2442

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2019-412-000058

[2019] NZHC 2442

BETWEEN

OAKWOOD PROPERTIES LIMITED

Applicant

AND

THE DUNEDIN HERITAGE

RESTORATION COMPANY LIMITED

Respondent

Hearing:	24 September 2019
Appearances:	S R Wells and J E Riddell for the Applicant No appearance for the Respondent
Judgment:	26 September 2019

JUDGMENT OF NATION J

[1]By way of originating application, the applicant (Oakwood) seeks:

(a)        an order cancelling its lease with the respondent (DHR) of a property at 75 Crawford Street/33 Jetty Street, Dunedin (the property);

(b)        an order that DHR provide vacant possession of the land to Oakwood; and

(c)        orders that DHR pay outstanding rent and costs due in terms of the lease and interest on monies owing under the Interest on Money Claims Act 2016.

[2]        Evidence in support of the application was provided by affidavit. Hearing of the application proceeded effectively by way of formal proof on 24 September 2019.

OAKWOOD PROPERTIES LTD v DUNEDIN HERITAGE RESTORATION CO LTD [2019] NZHC 2442 [26

September 2019]

[3]        The evidence satisfies me that Oakwood holds the freehold title to the property subject to the lease of the property to DHR pursuant to a lease dated 29 November 1995.

[4]        In terms of its lease, DHR is bound to pay rent of $11,850 plus GST per annum. DHR failed to make payment of rent and GST in full as rent fell due and was owed on the first day of January 2018, April 2018, July 2018, September 2018, January 2019, April 2019 and July 2019. Over that period, DHR made sporadic payments of rent. As at 18 September 2019, DHR’s rental arrears totalled $21,898.16.

Cancellation of the lease, possession of the property

[5]        The provisions in Part 4, Property Law Act 2007 (PLA) relate to the cancellation of this lease. The lease may only be cancelled in accordance with the provisions of ss 244-252 PLA. Pursuant to those provisions, Oakwood was entitled to cancel the lease where rent was unpaid for 15 working days after the due date for payment.

[6]Section 245(1) PLA provides:

245 Cancellation of lease for breach of covenant to pay rent

(1)A lessor may exercise a right to cancel a lease because of a breach of the covenant to pay rent under the lease only if—

(a)the rent has been in arrears for not less than 10 working days; and

(b)the lessor has served on the lessee a notice of intention to cancel the lease; and

(c)at the expiry of the period specified in the notice, the breach has not been remedied.

[7]        Section 245(3) sets out the matters which the lessee must be informed of in the notice which is required under s 245(1).

[8]        If the lessee does not remedy the breach within the period required by the PLA notice, the lessor may exercise its right to cancel the lease by either:1

(a)        applying to a court for an order for possession of the land; or

(b)        re-entering the land peaceably.

[9]        From 1 January 2018, DHR was in breach of its obligations under the lease to make payment of rent and GST to Oakwood.

[10]      In compliance with s 245(1) PLA, on 13 November 2018, Oakwood served notice (the PLA notice) on DHR that it intended to cancel the lease if the breaches of covenant were not remedied on or before 4 December 2018.

[11]      The PLA notice gave DHR fifteen working days to remedy the breach and comply with s 245(3) of the PLA in all other respects. DHR did not remedy the breaches outlined in the PLA notice on or before 4 December 2019.

[12]      The evidence establishes that Oakwood has complied with the preliminary requirements contained in the PLA. It is therefore entitled to exercise its right to cancel the lease.

[13]      Oakwood attempted to exercise the right to cancel on 6 December 2019. However, its agent unsuccessfully attempted to re-enter the property peaceably.

[14]      Because DHR has not been willing to voluntarily yield up possession of the property, it is appropriate for the Court to make orders that will ensure it does so.

[15]The Court accordingly makes orders:

(a)        that the memorandum of lease dated 29 November 1995, which binds Oakwood and DHR relating to the land situated at 75 Crawford Street and 33 Jetty Street, Dunedin with the leasehold estate identifier 508894 and the legal description Section 19 Block LVI DP 854, be cancelled;

1      Property Law Act, s 244(1).

(b)        DHR are to forthwith deliver up possession of that property to Oakwood; and

(c)        leave is reserved to Oakwood to seek any further directions that may be required to ensure DHR complies with these orders.

Rent

[16]      Pursuant to s 251(2)(a) PLA, on making an order for possession of land comprised in a lease and cancellation of the lease, the Court may make an order that the lessee pay the rent up to the date of cancellation or any later date on which the lessee yields up possession.

[17]      I am satisfied on the evidence that, as at 18 September 2019, the rental arrears due under the lease totalled $21,898.16.

[18]I make orders:

(a)        that DHR pay to Oakwood $21,898.16 for arrears of rent due to 18 September 2019; and

(b)        reserving leave to seek an order for rent that would be due for the period from the date DHR is served with notice of the orders now made and any period between that date and the date on which DHR deliver up possession of the property to Oakwood as required by the orders made by this Court.

Costs

[19]      DHR, through service of the proceedings, was on notice that Oakwood was seeking an order that DHR pay Oakwood’s actual costs incurred in obtaining enforcement or attempted enforcement of DHR’s obligations under the lease.

[20]      I am satisfied that, pursuant to cl 19 of the lease, DHR was legally obligated to pay such costs.

[21]      I accept, on the evidence provided to me, that the actual legal costs Oakwood have incurred in seeking to obtain payment of rent due under the lease, possession of the property following the failure to pay rent due under the lease and orders from the Court as to cancellation of the lease and possession of the property total $27,052 for the period to 24 September 2019 and disbursements (excluding GST) of $774.57.

[22]      I accordingly make an order that DHR pay to Oakwood costs, including disbursements, in the total sum of $27,826.57 for costs incurred for the period through to 24 September 2019.

Interest

[23]      Section 10 Interest on Money Claims Act provides that, in every money judgment, a Court must award interest under that section as compensation for a delay in payment of money.

[24]      Oakwood seeks interest, pursuant to s 10, in the sum of $678.43 as per calculations set out in an affidavit of David Marsh presented to the Court. That interest has been calculated at the appropriate rate on the amount due as from the time there was a default in respect of each monthly amount. I am satisfied, on that basis, Oakwood are entitled to the order they seek.

[25]      I accordingly further order that DHR pay to Oakwood the sum of $678.43 for interest due as at 24 September 2019.

Solicitors:
Gallaway Cook Allan, Dunedin

Copy to:
Dunedin Heritage Restoration Company Limited.

This judgment was delivered by me on 26 September 2019 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date: 26 September 2019.