Paros Property Trust Limited v Smith - [2019] NZHC 1657

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-2527

[2019] NZHC 1657

BETWEEN
PAROS PROPERTY TRUST LIMITED

Applicant

AND

TIMOTHY SMITH

Respondent

Hearing: 22 February 2019

Appearances:

D R Bigio QC and L E Mannis for Applicant Respondent in person

Judgment:

16 July 2019

JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 16 July 2019 at 5 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date: ...................................

Solicitors: Brown Partners, Auckland Counsel: D R Bigio QC, Auckland
L R Mannis, Auckland

Copy for: Respondent

PAROS PROPERTY TRUST LTD v TIMOTHY [2019] NZHC 1657 [16 July 2019]

Introduction

[1] The applicant, Paros Property Trust Limited (“Paros”), is the lessor of land in Freemans Bay, Auckland. The respondent, Mr Timothy Smith, is the, or one of the, assignee(s) of the leasehold interest in the land.

[2] By its amended originating application of 15 February 2019, Paros seeks two declarations:

(a)that the lease, being Memorandum of Lease L243503.01 as varied by instrument VL6240784.1, “remains on foot”; and

(b)that Mr Smith’s cancellation or purported cancellation of the lease on 30 August 2018 was invalid.

[3] On the face of the relevant certificate of title, Mr Smith acquired the leasehold interest with Ms Toni Shaw in August 2015, they being joint tenants of that interest.1 At all times material to this dispute, Mr Smith and Ms Shaw were separated, and Mr Smith’s unsworn evidence is that he purchased Ms Shaw’s interest in the lease after the separation. Despite that, at least on the certificate of title Ms Shaw continues to be a joint tenant of the leasehold estate. Ms Shaw is not a party to this application, and she has not been served. This is doubly surprising because one of Paros’s submissions is that Mr Smith’s cancellation of the lease on 30 August 2018 was invalid because, amongst other reasons, it was unilateral. I shall come back to this point below.

Background

[4] Auckland City Council granted the lease on 22 January 1973 for a term of 99 years commencing 14 November 1972, with rent reviews every 21 years, and a final rent review in about 2056. The lease is a ground lease.

[5]The lease was varied in December 2004, this being the variation referred to in

[2] above. Mr Evan Christian and Mr Martin Brown owned the fee simple at that time. The effect of the variation was to substitute perpetually renewable terms of 21 years

1 Land Transfer Act 2017, s 47; and Land Transfer Act 1952, s 61.

with rent reviews every seven years. Also, by a new cl 23, the lessee was to have the option of acquiring the fee simple, this option exercisable within the year preceding the next, and each subsequent, rent review date.

[6] Paros acquired the fee simple in December 2006. Mr Neil Christian is the principal of Paros.

[7] On acquiring the leasehold interest in August 2015, Mr…

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: [2019] NZHC 1657
Decision Date: 16 July 2019

CaseChat Overview and Summary

The High Court of New Zealand heard a case between Paros Property Trust Limited and Timothy Smith regarding a lease dispute over land in Freemans Bay, Auckland. Paros, the lessor, sought declarations that the lease remained valid and that Smith’s cancellation of the lease was invalid. Smith, the lessee, had attempted to cancel the lease, claiming that Paros repudiated its obligations under the lease, specifically clause 23, which grants the lessee an option to purchase the fee simple. The central legal issue was the interpretation of clause 23 and whether Smith’s unilateral cancellation of the lease was valid.

Justice Peters found that the interpretation of clause 23 was highly contentious. Clause 23 specifies the lessee’s option to purchase the fee simple, requiring the lessee to remit the cost of a valuation and for the lessor to commission and supply the valuation. Smith argued that he should select the valuer and determine the cost, while Paros contended that it should select the valuer. The court noted that the matter required further evidence and argument, particularly from Ms. Shaw, who was a joint tenant of the leasehold interest but not a party to the proceedings. Justice Peters declined to make the declarations sought by Paros, stating that the issues required further clarification and evidence. The court also highlighted the importance of resolving such disputes by agreement and, if necessary, proceeding through proper pleadings and trial. The application was dismissed, with costs likely to be borne by the respective parties.

Orders