Patels Superette 2000 Limited v Patel

[2015] NZHC 1538

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2015-485-497 [2015] NZHC 1538

BETWEEN

PATELS SUPERETTE 2000 LIMITED

Plaintiff

AND

HASMUKH DULLABH PATEL and JASVANT DULLABH PATEL Defendant

Hearing:	1 July 2015
Counsel:	G L Turkington for plaintiff J C Corry for defendant
Judgment:	1 July 2015

ORAL JUDGMENT OF DOBSON J

[1]      Obviously this matter is urgent and although I would have preferred to give it more consideration, an oral judgment now indicating the outcome is required.   I reserve  my  entitlement  to  revisit  the  hurried  analysis  without  changing  the substantive reasons.

[2]      Proceedings were commenced on 30 June 2015 claiming a declaration that the  plaintiff  is  entitled  to  a  further  lease  for  another  15  years  for  commercial premises in Aro Valley, from the date of current expiry on 2 July 2015.  The plaintiff has sought an interim injunction to preserve its position pending trial and the alter ego of the plaintiff, Mrs Manjulaben Patel (Mrs Patel), has sworn an affidavit.  The documents were served on the landlords’ solicitors and Mr Corry has appeared this afternoon, having taken detailed instructions this morning but quite understandably without the opportunity of filing any affidavits in reply.

[3]      In  terms  of  the  background,  the  particular  Patel  family  linked  with  the plaintiff  company has  operated  the  Four Square  supermarket  at  103 Aro  Street,

PATELS SUPERETTE 2000 LTD v PATEL [2015] NZHC 1538 [1 July 2015]

Wellington for the last 15 years.   For the majority of that period, the relationship between the plaintiff and the other Patel family that is the beneficial owner of the premises has been harmonious and, perhaps unusually informal for leasehold arrangements of commercial premises in Wellington.

[4]      Mrs Patel’s husband died some years ago and in his period of ill health before his death, and since then, Mrs Patel claims that she and her late husband were given numerous assurances that they would be given a renewal of the lease.   Mrs Patel took that to mean that she would get a maximum of another 15 years with three yearly renewals, subject to review of the rental, which has occurred on two occasions in the last 15 years and has been done quite informally between the parties.

[5]      In March this year, Mrs Patel learned that the landlord was not inclined to give her a renewal of the lease.  On 6 March 2015, she wrote a personal letter to the landlords referring to a discussion they had had the previous night and offering two options.  First, that she would take a fresh lease, paying a further $200,000 for the goodwill running with the lease, or alternatively that she would buy the property for

$1.5 million.   That communication was answered by the landlords on 10 March

2015, in which they declined her offers and notified her that they would require vacant possession of the premises on or before the expiry date on 2 July 2015.  That letter was unqualified in its terms.

[6]      The landlords followed their own communication with a letter from their solicitors on 15 April 2015.   That confirmed the final expiry date of the lease as

2 July 2015.   The letter advised that the landlords required vacant possession and furthermore required the tenant to remove all fixtures and fittings, and make good all resulting damage, on or before 2 July 2015.

[7]      On   29 May   2015,   solicitors   instructed   by   the   plaintiff   disputed   the termination of the lease, citing earlier assurances given to Mrs Patel and her late husband, and warned that an interim injunction would be sought to preserve her entitlement to remain in the premises until the matter was resolved.

[8]      That was responded to by a further letter from the landlords’ solicitors dated

8 June 2015.  It treated Mrs Patel’s solicitors’ letter as acknowledging that there was no agreement for a new lease and reinforced that point by referring to the offer she had made in March to either pay for a new lease or buy the premises.

[9]      Then on 29 June 2015, Mrs Patel’s solicitors wrote again warning of these

proceedings, which were duly commenced the following day.

[10]     In meeting the predictable criticisms of delay, Mr Turkington has explained Mrs Patel’s position as her being struck with indecision and not knowing what to do. The change of events had taken her by surprise and he accepted that she had dallied when she ought to have acted promptly.

[11]     Notwithstanding that, Mr Turkington has argued that the circumstances of the arrangements are sufficient to demonstrate partial performance of an agreement to lease.  He relied in particular on Mrs Patel’s reliance on earlier assurances that a new lease would be granted to invest money on improvements at the property that she would not have made if she knew that the lease was coming to an end,

[12]     Mr Turkington cited the decision in Fleming v Beevers as to the enquiry required under s 24 of the Property Law Act 2007 if part performance is asserted in respect of an oral agreement to lease, when the law otherwise requires the contract to be in writing.1

[13]     In this case, he asserts that the essential terms can be discerned in that:

·    the parties to the lease are known, remaining the same as in the previous lease except for one of the individuals having died in each of the tenant and the landlord parties;

·    the term would be for another 15 years in three yearly rests with the landlord having the right to review the rent at each renewal.

1      Fleming v Beevers [1994] 1 NZLR 385 (CA).

[14]     It is clear that that level of detail has never been asserted by Mrs Patel.

[15]     I am satisfied, as much as one can be from considering an affidavit of her type in light of the documents she has annexed, that she has truthfully recorded what she believed to have been the extent of the representations.  I accept Mr Turkington’s submission that there has certainly been no attempt by her to guild the lily.

[16]     However, for the landlords, Mr Corry disputes that there were assurances that entitled Mrs Patel to rely on a renewal of lease.  He points to the paper trail from March this year and the lapse until June in Mrs Patel making any specific reference to the representations she now claims she has relied on for a period of time.

[17]     On the initial issue for an interim injunction as to whether there is a serious question to be tried, I am of the view that the existence of such is marginal.   If Mrs Patel wishes to proceed with the claim, then it may well be that further evidence would provide a more sound footing for partial performance.  However, on the state of the evidence as it is before me now, I have concerns that she would not be able to make out sufficient commitments to establish part performance of a 15 year lease from the beginning of July 2015.

[18]    The factors against her on this are the consistent content of all written communications from and on behalf of the landlords since March this year, and the delay, which has been substantial in relative terms, in her challenging the denial of any new lease.   A commitment to a 15 year lease for commercial premises is a reasonably significant business transaction.  Despite the claimed informality of the prior relationship, some written reference to such a commitment could reasonably be expected.   There  is  nothing of  that  sort  with  all  written communications  being directly to the contrary.

[19]     However, assuming that a serious question to be tried could be made out, it is also  appropriate  to  consider  the  balance  of  convenience.    Again,  the  fact  that Mrs Patel was so tardy in moving to seek equitable relief has to count against the tenant here.

[20]     Mr Corry submitted that from the landlords’ own letter on 10 March 2015, and certainly from their solicitors’ letter on 15 April 2015, the plaintiff was told in absolutely clear terms that there would be no renewal.  There had been no challenge to those statements when the landlords committed to a new lease on 6 May 2015. Mr Corry argued that they did so assuming that they were free to because there had been no challenge to the letters notifying Mrs Patel that her lease was coming to an end.  Having signed a lease with a new lessee, the landlords also co-operated with the new lessee in contractual commitments for significant upgrades to occur at the premises, commencing immediately after the expiry of the current lease.

[21]     Because  of  those  circumstances,  Mr Corry  argued  that  the  balance  of convenience weighed heavily against granting any injunction that would put the landlords in breach of those significant new obligations.

[22]     It is certainly the case that Mrs Patel sat on any rights she now seeks to assert through that important period.   The landlords are entitled to point to her conduct inconsistent with any such contract in her March offer to either pay for the goodwill of a new lease or buy the freehold of the premises.

[23]     As to the adequacy of damages as a remedy, generally the losses that the plaintiff would suffer are quantifiable on conventional terms.  The one aspect that troubles me in this regard is Mr Turkington’s characterisation of Mrs Patel having personal goodwill invested in the Four Square business.   I am prepared to take judicial notice that she is known as something of an identity and is looked on fondly by many in the Aro Valley community.  Although she has attempted to protect her position by buying another commercial property in the area, I accept the reality that that is no good to her if she is excluded from the existing premises.

[24]     That is because the Four Square franchise will stay with the premises and it appears virtually inevitable that so, too, will the Lotto franchise that her business has had.   The commercial reality is that there would not be scope for another viable grocery business in the immediate area if the Four Square identity and the Lotto presence remain where they are.  It may well be that that aggravates the extent of the damages that she would suffer, but in terms of discerning the quantifiability of

damages that she would suffer, I am not persuaded that it adds a dimension that is so material as to render damages unquantifiable.

[25]     Assessing the matter in the round, as I am required to do at short notice, I am not persuaded that a case has been brought for interim relief.  I accordingly dismiss the plaintiff’s application.

[26]     It is premature to chart the future course for these proceedings, but I am certainly not, at the moment, prepared to order costs against the plaintiff on the present application.   As was apparent during argument, I have sympathy for the position Mrs Patel finds herself in, and there is justification for her resorting to the application for injunction given the personal trauma I perfectly understand that the matter will be causing for her.

[27]     I am grateful to counsel for marshalling the arguments promptly and for presenting them efficiently.

[28]     The fact that I have not ordered costs at this stage may be a factor that may be taken into account, depending on the subsequent steps taken and who wins those. On the way it has fallen, I do not think the landlord should be adding to her misery.

Dobson J

Solicitors:

W L C Brierley, Wellington for plaintiff

Foot Law, Wellington for defendant