Pinny v Pinny
[2016] NZHC 2805
•28 November 2016
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV-2016-419-000319 [2016] NZHC 2805
BETWEEN BRENT KENNETH PINNY
Plaintiff
AND
NOLA JOAN PINNY FIRST DEFENDANT
NOLA JOAN PINNY, PAUL GRANT ELLICE AND GRANT JAMES PINNY Second Defendants
Hearing: 17 November 2016 Appearances:
D M O'Neill for Plaintiff
K I Bond for DefendantsJudgment:
28 November 2016
JUDGMENT OF COURTNEY J
This judgment was delivered by Justice Courtney on 28 November 2016 at 3.30 pm
pursuant to R 11.5 of the High Court Rules
Registrar / Deputy Registrar
Date……………………….
PINNY v PINNY [2016] NZHC 2805 [28 November 2016]
Introduction
[1] Brent Pinny occupies a farm at Maisey Road, Hamilton and claims that he holds a lease of the farm until 1 May 2018 pursuant to an oral agreement. The farm is owned by Brent’s mother, Nola Pinny, as to one half and the trustees of the estate of Keith Pinny (Brent’s father and Nola’s husband) as to one half. Nola and the trustees1 have served notices under ss 210 and 245 of the Property Law Act 2007 (PLA) advising of their intention to terminate the lease on 1 October 2016.
[2] Brent has applied for interim relief in the form of orders restraining the owners from acting on the notices of intention to cancel lease and restraining them from terminating or cancelling the lease except pursuant to the terms of the lease in the substantive proceedings. In the substantive proceeding Brent seeks a declaration that the notices are unlawful and an injunction restraining the defendants from acting on the notices. He also seeks damages of $124,800 for rental he claims to be owed by Nola for her occupation of a house on the property.
[3] Nola has cross-applied for a mandatory injunction requiring Brent to vacate the property by 31 January 2017 or within such time as the Court thinks fit on the ground that the lease has been validly terminated, that there are no grounds for interim relief and that the parties would benefit from the certainty of a court order.
[4] An applicant for interim relief must ordinarily show that there is a serious question to be tried and that the balance of convenience favours him or her.2 The exercise is not, however, a mechanical one; it is for the Court to step back and consider where the overall justice lies.3 Occasionally, the circumstances of the cases are such that, even though there is no apparent question between the parties that is seriously arguable, the overall justice of the case may require interim relief. Of this possibility, the Court of Appeal made the following observation in Roseneath
Holdings Ltd v Grieve:4
1 The trustees are Nola Joan Pinny, Grant James Pinny and a solicitor, Paul Grant Ellice.
2 American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL).
3 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 at 142.
4 Roseneath Holdings Ltd v Grieve [2004] 2 NZLR 168 at [41].
In the great majority of cases, however, showing that there is a serious question to be tried on the material before the Court will remain a threshold requirement. If the plaintiff cannot meet that standard in relation to a particular defendant, it will be rare that the overall justice of the case requires interim restraint of that person … The law will not, in general, intervene to prevent a person exercising rights unless it is claimed that they have personally acted wrongly and are liable.
[5] The approach to the application for mandatory injunction is slightly different. A mandatory injunction will only be granted in special circumstances where the matter ought to be decided immediately. Such injunctions will frequently determine the issue between the parties and in Soft-Tech International Pty Ltd v Ball Eichelbaum CJ described them as “relatively uncommon” and interim mandatory
injunctions as “rare indeed”.5
The circumstances giving rise to the applications
[6] Brent’s father, Keith Pinny, died in 1998. He had run the farm himself for many years; Nola had always worked off the farm. While his father was ill Nola’s younger son, and Brent’s brother, Craig, worked on the farm and helped care for Keith. In 2000 Brent moved onto the farm. In 2001, at Brent’s instigation, Nola and the trustees purchased an adjoining 30 acres. That purchase, together with the additional Fonterra shares it entailed, required Nola and the trustees to borrow
$360,000.
[7] In 2008 Brent leased the farm for a period of two years and also purchased the herd. He borrowed $250,000 to do this and Nola guaranteed his borrowing. The lease ran for two years from 1 June 2008 until 31 May 2010. The rental was $65,000 per annum payable monthly at $5,416.67 plus GST or $6,093.75 including GST. Overdue rental attracted interest at 14 per cent per annum.
[8] Clause 1.3 provided for a right of renewal:
The parties shall by the 31st January 2010 confirm to each other their willingness to renew the term of the lease. If either party is silent there shall be no right of renewal.
5 Soft-Tech International Pty Ltd v Ball (1990) 3 PRNZ 683 (HC) at 684.
[9] Clause 5.2 provided for continued occupation as a monthly tenant in the event of the lease not being renewed:
Should the Lessee with the consent of the Lessor continue to occupy the Land beyond the Expiration Date (otherwise than pursuant to the grant of a renewed lease) the Lessee shall do so as a monthly tenant at a rental to be determined as provided in clause 6.3 and determinable by one month’s notice in writing given at any time by either party to the other and otherwise on the terms of this deed but applicable to a monthly tenancy.
[10] There is no written record of any renewal of the lease, though Brent continued to occupy the farm and manage his herd. At some point, probably during
2011, Brent began to default on rental payments. On Nola’s evidence some payments were missed altogether and when he did resume paying rent he did not pay the rent in accordance with the lease but a figure of about $4,000 per month excluding GST. Brent acknowledges that he has underpaid the rent and attributes that to farm conditions such as drought which have affected the performance of the farm.
[11] Nola wants to retire and needs to sell either some or part of the farm to do so. She has raised the idea of selling the 30 acre block; she says that discussions over the sale of the 30 acre block have been on foot since late 2012. Brent is opposed to that because it would put too much pressure on the remaining block in terms of production.
[12] In February 2016 Nola and Grant Pinny (also Brent’s brother and a trustee of the estate) told Brent that they would not be leasing the farm to him for the coming year. Brent says he does not recall this meeting and, in any event, he and Nola had agreed orally in December 2015 that the lease would be renewed until 31 May 2018.
A serious question to be tried?
[13] Brent says that the PLA notices are not valid because he has an oral agreement with Nola to lease the farm until 31 May 2018. As a result, s 210 of the PLA does not apply.
[14] Nola and the trustees deny any such oral agreement and say that Brent is now occupying the property on a monthly tenancy pursuant to either clause 5.2 of the lease or s 210 PLA. Moreover, even if there was an oral agreement of the kind described by Brent, it would be unenforceable by virtue of s 24 of the PLA which requires any contract for the disposition of land to be recorded in writing and signed by the party against whom it is sought to be enforced. This requirement is subject to the doctrine of part performance but Nola and the trustees say that there is no evidence of steps taken in part performance of the lease.
Relevant principles: enforcement of an oral lease and the doctrine of part performance
[15] The existence of an oral agreement as described by Brent is a matter that I cannot resolve on the evidence before me. Brent’s evidence was inadequate on this point; there was virtually no detail as to when the meeting took place and exactly what was said. He does not identify any specific terms, from which I infer that he asserts that the terms are those in the original lease. Moreover, the existence of such an agreement is inconsistent with the evidence from Grant Pinny of family discussions dating back to 2011/2012 about selling the 30 acre block so that Nola could retire. For present purposes, however, I proceed on the basis that there is a serious question as to the existence of the asserted oral agreement.
[16] But even if Brent were to prove the existence of that agreement, s 24 of the PLA creates a serious difficulty for him. The requirement for contracts relating to land to be evidenced by writing has always been part of New Zealand law by virtue of the Statute of Fraud 1677 (UK), which was superseded by s 2 of the Contracts Enforcement Act 1956 and now s 24 of the PLA. The rationale for the requirement of writing was explained by Lord Hoffman in ActionStrength Ltd (T/A Vital Resources) (formerly T/A Morson Alltrades)) v International Glass Engineering by
N.Gl.En.SpA & Ors:6
It is … important to bear in mind that the purpose of the statute was precisely to avoid the need to decide which side was telling the truth about whether or not an oral promise had been made and exactly what had been
6 Action Strength Ltd (T/A Vital Resources) (formerly T/A Morson Alltrades)) v International Glass Engineering by N.GL.EN.SBA & Ors [2003] UKHL 17 at [19] in the context of the Law Reform (Enforcement of Contracts) Act 1954.
promised. Parliament decided that there had been too many cases in which
the wrong side had been believed …
The terms of the statute therefore show that Parliament, although obviously conscious that it would allow some people to break their promises, thought that this injustice was outweighed by the need to protect people from being held liable on the basis of oral utterances which were ill-considered, ambiguous or completely fictitious. This means that while normally one would approach the construction of a statute on the basis that Parliament was unlikely to have intended to cause injustice by allowing people to break promises which had been relied upon, no such assumption can be made about the statute. Although the scope of the statute must be tested on the assumption that the facts alleged … are true, it must not be construed in a way which would undermine its purpose.
[17] The potential unfairness of the requirement was addressed by the equitable doctrine of part performance, which is specifically preserved by s 26 of the PLA. In T A Dellaca Ltd v PDL Industries Ltd Tipping J undertook an extensive analysis of the rationale and pre-requisites of part performance as a means of enforcing an oral
contract relating to land.7 That analysis and the conclusions that Tipping J reached
were referred to with approval by the Court of Appeal in Mahoe Buildings Ltd v Fair
Investments Ltd.8
[18] Tipping J described the tension between the purpose of the Statute of Frauds and the risk of the statute becoming an instrument of fraud itself:9
It was to avoid that consequence that equity developed the doctrine of part performance. It was thought in the Courts of Chancery that if a party to a contract had stood by while the other party took steps in the performance of the otherwise unenforceable but not void contract, it would be a fraud in equity for him later to shelter behind the statute to avoid performing reciprocal obligations. At no stage however has it been held that equity will relieve against the consequences of the statute on general principles of estoppel. The doctrine of part performance has been much more tightly framed and controlled than that. This must be right because equity has never claimed any general power to dispense with the observation of statutes on the basis that a party is estopped from relying upon a right which Parliament has for better or worse given.
[19] Tipping J then identified the following approach for determining whether an oral agreement should be enforceable by reason of part performance:10
7 T A Dellaca Ltd v PDL Industries Ltd [1992] 3 NZLR 113.
8 Mahoe Buildings Ltd v Fair Investments Ltd [1994] 1 NZLR 281.
9 T A Dellaca Ltd v PDL Industries Ltd, above n 7, at 108.
10 At 109.
1. Was there a sufficient oral agreement such as would have been enforceable but for the Act?
2. Has there been part performance of that oral agreement by the doing of something which:
a. clearly amounts to a step in the performance of a contractual obligation or the exercise of a contractual right under the oral contract; and
b. when viewed independently of the oral contract was, on the probabilities, done on the footing that a contract relating to the land and such as that alleged was in existence.
3. Do the circumstances in which that part performance took place make it unconscionable (fraudulent in equity) for the defendant to rely on the Act?
A serious question as to part performance by Brent?
[20] Mr O’Neill, for Brent, relied on improvements that Brent had made to the farm as part performance of the lease said to have been renewed in December 2015. The schedule that Brent provided of that work, however, all related to work said to have been undertaken prior to 2015. Assertions that he made of lawn mowing, repairs and maintenance do not contain sufficient detail to know when they were undertaken or exactly what was involved. There is no evidence of him undertaking any of the other work that is required by the lease since December 2015. It is, of course, true that Brent is still actively managing his herd on the farm. But that is equally consistent with a monthly tenancy. What is known, and is not disputed, is that the payments Brent has made by way of rent do not comply with the terms of the lease.
[21] On the evidence before me it seems highly unlikely that Brent could prove an oral agreement (assuming one exists) enforceable as a result of part performance. I am therefore not satisfied that he has shown that there is a serious question on this issue.
[22] For the purposes of the injunction application I do not consider that Brent’s claim against Nola for occupation rent is relevant. That is a matter that, even if there were a serious question, could not justify interim relief since it is clearly compensable by money.
Balance of convenience
[23] Nola is now 77 years old. She is still working full-time and has no other source of income. She has substantial debts connected with the farm, including the balance of the original borrowing for the 30 acre block. Nola wants to access the capital that the farm represents so that she can repay these debts and retire. She has a holiday house at Mt Maunganui but wishes to retain that for her own and her family’s benefit. I accept that she should not be forced to sell this property in order to address what both parties know to be a temporary situation; even on Brent’s best case he would only have a right to occupy the farm until 2018. Given her age, Nola has a strong claim to the balance of convenience.
[24] Brent is in the middle of the milking season and says it would be nearly impossible to move the cows now. The period between October and December is when the cows produce the most milk and are milked twice daily. The calves require a significant amount of attention. It is not until January – March that things will slow down and not until April – May that the herd will be dry. There are 427 head of cattle. Even allowing for the difficulties in moving the cows now, Brent has nowhere to take them. He does have another leased block but it is unsuitable.
[25] The losses associated with moving the herd now were the subject of evidence from Robert McNab, a farm consultant of many years’ experience. He has estimated the cost of moving the cows from the farm to be at least $20,947. In addition, he puts the net loss of income at $52,821 for every 100 cows. The total net cost/loss of having to move the cows now would therefore be $73,768 per 100 cows. The quantifiable loss would therefore be well over $300,000. He considers that moving Brent from the farm mid-season would be disastrous for him, his herd and his financial viability. Evidence adduced by Nola addressed the value of the herd but was very limited, not directed towards the specific herd and did not address the issues raised by Mr McNab.
[26] I do not accept that, if forced to move now, Brent’s losses would be unquantifiable, as he asserts. But because of the effect on the herd itself and the
difficulties that Brent would face in trying to dispose of the herd mid-season, I am satisfied that the balance of convenience favours him, at least until early 2017.
The overall justice of the case
[27] This case is particularly difficult because it falls into the category discussed in Roseneath; in my view, the serious question threshold is not met. On the other hand the consequences of forcing Brent to move now would clearly be out of proportion to the disadvantages to Nola. This is because, even if Brent were to move immediately, it is virtually certain that Nola would not be able to settle any sale of the farm until 1 June 2017, in accordance with industry practice. As a result, provided that Brent were to co-operate in the marketing of the farm, I cannot see that Nola would be any or significantly worse off by him remaining.
[28] In these circumstances I find that the most just course is to allow Brent to remain on the farm until 1 April 2017 (to allow for enforcement of the PLA notice, if necessary) provided that he pays the proper rental due under the lease and cooperates fully in the marketing of the property.
Result
[29] I am not satisfied that there is a serious question regarding part performance of the alleged oral agreement. But the balance of convenience strongly favours Brent and I am satisfied that the overall justice of the case requires that he be permitted to remain on the farm until 1 April 2017, by which time the herd should be in a state where it can be moved and Brent will have the time to find an alternative farm for it.
[30] Therefore, the application for interim relief is granted on the following conditions:
(a) the defendants are restrained from taking any steps to enforce the PLA notices until 1 February 2017 provided that from the date of this judgment Brent (1) pays the monthly rental specified under the terms of the 2008 lease and (2) cooperates fully in Nola’s efforts to market and sell the farm;
(b)leave is reserved to the defendants to bring the matter back before the Court on seven days notice in the event of any breach by Brent of these conditions.
[31] My decision means that the cross-application for mandatory injunction is unnecessary. That application is dismissed.
[32] In the circumstances, costs are reserved and should follow the outcome of the substantive proceeding.
P Courtney J
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