Paros Property Trust Limited v Smith - [2023] NZHC 1873

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-002593

[2023] NZHC 1873

BETWEEN
PAROS PROPERTY TRUST LIMITED

Plaintiff

AND

TIMOTHY SMITH

First Defendant

TONI SHAW

Second Defendant

Hearing: 10 July 2023

Appearances:

L McEntegart and A J Steel for Plaintiff First Defendant self-represented

No appearance for Second Defendant

Judgment:

18 July 2023

JUDGMENT OF VAN BOHEMEN J

This judgment was delivered by me on 18 July 2023 at 3:30 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………..

Counsel/Solicitors:
L McEntegart, Auckland A J Steel, Auckland Brown Partners, Auckland

PAROS PROPERTY TRUST LIMITED v SMITH [2023] NZHC 1873 [18 July 2023]

[1] In a judgment dated 21 September 2022, the Court of Appeal remitted to this Court the claim by the plaintiff, Paros Property Trust Ltd (Paros), for the rental payable by the defendant, Timothy Smith, under a memorandum of lease (the lease) for a townhouse at 54 Napier Street, Freemans Bay, Auckland (the property).1 The purpose of the remittal is to determine the amount of rental payable by Mr Smith to Paros.2

[2] Paros submits that the Court should supervise the implementation of the rent review process provided for in the lease and, for that purpose, should set a timetable for the appointment of:

(a)independent valuers by each of Paros and Mr Smith; and

(b)a third valuer by the two independent valuers appointed by Paros and Mr Smith.

[3] Mr Smith submits that there should be no review of the rent. In summary, Mr Smith’s reasons are that:

(a)under the lease, the rent had to be reviewed on 14 November 2018;

(b)Paros has already conducted a rent review, albeit one that has been set aside by the Court of Appeal, and there is no right under the lease to conduct a further rent review;

(c)time was of the essence for the completion of the rent review;

(d)it is not reasonable for Paros to review the rent more than five years after the commencement of the rental term; and

(e)Paros is estopped from undertaking a further review.

1 Smith v Paros Property Trust Ltd [2022] NZCA 447.
2 At [174].

Relevant background

[4] The property is one of 30 terraced townhouses built by the Auckland City Council in the early 1970s in a development known as “Freemans Close”. The development was part of an urban renewal scheme in the area carried out under the Urban Renewal and Housing Improvement Act 1945 (URHI Act).

[5] Under the initial arrangements for the development, Auckland City Council retained freehold title to the land and leased out the townhouses and shares of a common area under 99 year leases commencing on 14 November 1972. The leases set an annual rental for the first 21 years of the lease commencing 14 November 1972 and provided that the rental for the subsequent 21 year periods commencing 14 November 1993, 14 November 2014 and 14 November 2035 and for the final…

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: [2023] NZHC 1873
Decision Date: 18 July 2023

CaseChat Overview and Summary

The case of Paros Property Trust Limited v Smith before the High Court of New Zealand concerns a dispute over the rental payable by Timothy Smith under a lease for a property at 54 Napier Street, Freemans Bay, Auckland. The Court of Appeal had previously remitted the case back to the High Court to determine the amount of rent payable, finding that the earlier rent review was ineffective. Paros Property Trust Limited seeks to have the rent reviewed according to the lease's provisions, while Smith argues against any rent review, contending that the review had to occur on a specific date and that any delay is unreasonable. The court examines the lease terms and relevant legal principles, concluding that time was not of the essence for the rent review, and the review can proceed according to the lease's provisions. The court orders a rent review process to be initiated, with Paros and Smith each appointing independent valuers and jointly appointing a third valuer, in accordance with the Municipal Corporations Act. The court also directs the parties to submit memoranda on the costs of the hearing and the earlier High Court stage.

Orders