Paros Property Trust Limited v Faith

[2015] NZHC 649

IN THE HIGH COURTOF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-001906 [2015] NZHC 649

BETWEEN

PAROS PROPERTY TRUST LIMITED

Applicant

AND

PAUL MICHAEL FAITH Respondent

Hearing:	31 March and 1 April 2015
Counsel:	D R Bigio and A J Steel for Applicant E G Grove for Respondent
Judgment:	1 April 2015

ORAL JUDGMENT OF FOGARTY J

Counsel:       D R Bigio, Auckland

A J Steel, Auckland

E J Grove, Auckland

Solicitors:    Brown Partners, Auckland

Stewart and Associates, Alexandra

PAROS PROPERTY TRUST LIMITED v PAUL MICHAEL FAITH [2015] NZHC 649 [1 April 2015]

[1]      This Court is sitting this morning after an adjournment of one day. Yesterday, I sat with counsel, but in the absence of Mr Faith, the respondent, the purpose being to consider further relief sought by the applicant upon the failure of the respondent to adhere to the conditions of the Court’s judgment on 13 November 2014.1

[2]      By  that  judgment,  the  Court  granted  relief  to  Mr  Faith  against  the cancellation of his lease for non-payment of rent and provided him the option of electing to arbitrate the rent.  The second judgment of 10 December 2014 enabled Mr Faith to pay rent at his valuer’s new rental value, but if arbitration was not elected, the lessor’s rental rate would apply from 25 January 2014.  The lessee to pay the difference between the old rent (of the preceding rental period) and the new, pro

tem, lessee’s rent, ten working days after invoices are issued2.

[3]      There was significant difference between the rent calculated assessed by his

expert valuer at $16,350 per year, and the rent assessed by the landlord’s valuer at

$34,450 per year.

[4]      The  position  as  at  yesterday  was  that  Mr  Faith  has  not  progressed  the arbitration.  He has made no payment of backdated rental, other than one payment made of $870 on 29 December 2014.   Consequently, the lessor has applied for cancellation  of  the  lease,  pursuant  to  s  251(1)  of  the  Property  Law Act  which provides:

251 Powers of court in making order for possession

1On an application to a court for an order for possession of the land comprised in a lease, the court may make the order and cancel the lease.

[5]      His  counsel,  Mr  Grove,  advised  me  yesterday  that  Mr  Faith’s  preferred

position  was  to  bring  a  further  court  proceeding  in  which  he  would  sue  Paros

Property Trust Ltd (“Paros”) on an issue that he raised in the trial before me, namely

1      Paros Property Trust Ltd v Paul Michael Faith ]2014] NZHC 2826.

2      Paros Property Trust Ltd v Faith [2014] NZHC 3155.

that Paros had shopped around for valuations and there had been an earlier valuation by Prendos.

[6]      I issued a minute yesterday recording what I had said orally in Court, that Mr Faith may be at risk of being faced with a plea of issue estoppel per rem judicatum, relying on the decision of Henderson v Henderson.3

[7]      I adjourned the hearing against the protest of Mr Bigio, though quite properly taken, to give Mr Faith a further opportunity to resist the application before me, which would essentially bring an end to this litigation and an end to the lease, and which  requires  Mr  Faith  to  surrender  possession  of  his  home  on  9 April  2015 peacefully, and will leave Mr Faith with a significant debt for arrears of rent at the landlord’s expert’s rate assessment.

[8]      This morning, Mr Grove appeared again, for which the Court is grateful. Mr Faith did not appear, but he read a statement from Mr Faith.  Before he read the statement, Mr Grove was questioned by me, just to check whether he had put all the implications of this to his client.  Mr Grove advised me that he had advised his client of the inevitable grant of the orders that he, his client, was taking a position on principle, which overrode logic and legal advice.  The email that Mr Grove handed in at my request sets out Mr Faith’s reasons, in his own words, relevant parts of which I now set out in this judgment:

If at all possible, I wish to submit to the court my position.

This is not about a financial transaction for me.  This is about a family home that I have a financial investment in.

My claim is: If the directors of Paros had chosen to give notice of the upcoming  expiration  of  the  Lease  at  an  appropriate  date,  the  sale  and purchase of the land would have been completed and settled on or before the expiry date of the Lease.

I am willing to have the back rent paid immediately and continue to pay at that rate upon notice provided that, I have no obligation to seek arbitration.

This  will  allow  me  to  seek  justice  through  a  civil  case  against  Paros, focusing on the real issue, which has always been the sale and purchase of the land at 12 Commodore Drive.  I am also willing to place a time limit of two years by which time the matter must be before the court.

3      Henderson v Henderson

Then there follows a contentious passage against which Mr Faith may be issue estopped from saying, so I do not set it out.

[9]      This reasoning of Mr Faith overlooks that he has had a trial in the High Court at which he has had every opportunity to dispute the actions taken by the landlord, Paros, which he did take and in respect of which he obtained a judgment in the High Court significantly in his favour, but not wholly.   He also had a right of appeal against that decision.  That was not taken.  Mr Faith may not understand, but this Court is now, we say in Latin, functus officio.  It has completed its task.  It is beyond the jurisdiction of this Court to reopen the issues that were canvassed at the trial or could have been canvassed at the trial, and in any way set aside the judgment.

[10]     The position now is that Mr Faith has not complied with the two judgments and has exposed himself to an application for cancellation of the lease, which was reserved in the judgment of this Court on 13 November 2014.4     He, through his counsel,  has  notice  of  the  orders  that  the  applicant  has  been  seeking.    This application is now being heard on 1 April 2015.  It reflects non-compliance with the High Court order some significant time ago.

[11]     The non-compliant conduct of the applicant commenced on or about the end of December 2014, being 10 working days after the provision of the invoices on

16 December 2014.

[12]     His counsel, Mr Grove has not been able to offer any argument in opposition to the making of the orders, other than to put before the Court Mr Faith’s position yesterday and now recorded in his letter by email, which  I have read into this judgment.

[13]     The applicant seeks the following orders:

(a)       The    orders   granting    relief    against    cancellation    in    favour   of

Paul Michael Faith, and made by this Court on 13 November 2014

4      At [64](d) of the 13 November judgment..

and 10 December 2014, and Paros Property Ltd against Faith [2014] NZCH 26 are rescinded;

(b)The lease between  Paros  Property Ltd  and  Paul  Michael  Faith  in respect of the property known as 12 Commodore Drive, Lynfield, Auckland, being all the land comprised and described in computer freehold register NA14C/1193 (“property”) is cancelled as of the making of this order;

(c)      Paros  Property  Trust  Ltd  has  possession  of  the  property,  and Paul Michael  Faith  is  to  deliver  up  possession  of  the  property peaceably to Paros Property Trust Ltd and its agents no later than

9 April 2015, and all things necessary to give effect to Paros Property

Trust Ltd’s possession;

(d)Reserving leave for Paros Property Trust to apply to the Court by way of memorandum for any further orders regarding possession.

[14]     This order is made in reliance upon s 251(1) (set out above) and (2)(a) of the

Property Law Act 2007, which provides:

251     Powers of court in making order for possession

...

(2)      If the court makes the order and cancels the lease under subsection

(1), it may also do all or any of the following:

(a)      order the lessee to pay the rent up to the date of cancellation or any later date on which the lessee yields up possession:

(b)      order  the  lessee  to  pay  reasonable  compensation  for  the breach:

(c)      impose on the lessee or the lessor any other conditions that it thinks fit.

[15]     Given that the lessee has failed to progress the arbitration, or comply with the conditions of relief, the applicant submits that it should be entitled to cover the rent at  the  amount  notified  by  its  expert  valuer  of  $34,450  per  annum  and  this  is calculated as due and owing in the sum of $36,558.14 as follows:

Lessee’s Rent ($16,360)	Lessor’s Rent ($34,450)
Opening Balance	3,480.00	3,480.00
Rental: 1 Jan to 24 Jan 2014	228.82	228.82
Rental: 25 Jan to 31 Mar 2014	2,956.44	6,229.32
Rental: 1 April to 30 Jun 2014	4,087.50	8,612.50
Rental: 1 Jul to 30 Sept 2014	4,087.50	8,612.50
Rental: 1 Oct to 31 Dec 2014	4,087.50	8,612.50
Invoiced 16 December 2014	11,967.76	28,815.64
Payment received 29 December 2014	870.00	870.00
Rental: 1 Jan to 31 Mar 2015	4,087.50	8,612.50
Arrears as at 26 March 2015	15,185.26	36,558.14

[16]     I have perused that calculation and am satisfied that it complies with the judgments, taking into account the breach, and accepting that the lessor’s rent must now apply as from 24 January 2014, commencing therefore on 25 January 2014.

[17]     For these reasons, I am satisfied that it is appropriate to make the orders as sought by the lessor5.  As to order (d), application has been made that Mr Faith be ordered to pay Paros Property Trust Ltd outstanding rent of $36,558.14, plus rent in the amount of $94.38 per day from 1 April 2015 to 9 April 2015 (or such later date as possession is in fact delivered up).  That order is made.  Mr Faith is further ordered to pay costs, being:

(i)       $800, being Paros Property Ltd’s reasonable expenses incurred

in giving notice of intention to cancel the lease;

(ii)Indemnity   costs   incurred   by   the   landlord   in   the   extra attendance of Mr Bigio and Mr Steel at the hearing today of

$530.43.

(iii)In addition, costs on a 2B basis, other than (i) and (ii) above.  I certify for second counsel; and the usual order for disbursements.

[18]     I have received the draft judgment for sealing, a copy of which is attached.

5      At [13] above.

[19]     I approve the draft as being in accordance with this judgment, except for para 5(d). That paragraph should read:

Costs on a 2B basis, together with disbursements.  The costs to be fixed by agreement between counsel or, failing which, I will receive submissions of no more than two pages each, circulated in advance to settle the sums.