Prestige Motors Limited v My Trustee Company (Nikolas and Petra) Limited
[2021] NZHC 237
•22 February 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-80
[2021] NZHC 237
IN THE MATTER of Articles 9, 17A and 17B of Schedule 1 to the Arbitration Act 1996 and s 253 of the Property Law Act 2007 BETWEEN
PRESTIGE MOTORS LIMITED
Applicant
AND
MY TRUSTEE COMPANY (NIKOLAS AND PETRA) LIMITED
Respondent
Hearing: 16 February 2021 Appearances:
G Morrison for the Applicant D Purusram for the Respondent
Judgment:
22 February 2021
JUDGMENT OF GORDON J
This judgment was delivered by me on 22 February 2021 at 3 pm, pursuant to
r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Solicitors: DK Law, Auckland
Victorian Lawyers, Papakura, Auckland
Counsel: G Morrison, Auckland
PRESTIGE MOTORS LTD v MY TRUSTEE CO LIMITED [2021] NZHC 237 [22 February 2021]
Introduction
[1] The applicant, Prestige Motors Limited (Prestige) applies for urgent interim measures and relief regarding its tenancy of premises at 14–16 Dryden Place, Mt Wellington (the premises). Until it was locked out, Prestige ran its automotive services and repair business from the premises.
[2] Prestige claims the respondent, My Trustee Company (Nikolas and Petra) Limited (MTC) has unlawfully purported to terminate its 1 May 2018 lease (the lease),1 evict it from the premises and deny it access to the premises on a number of occasions. Prestige claims it has suffered considerable losses because of MTC’s actions as it is unable to conduct its business.
[3] The lease contains an arbitration clause. Pending any arbitration, Prestige seeks interim measures under arts 9, 17, 17A and 17B of Schedule 1 of the Arbitration Act 1996. Prestige seeks these measures to restore the status quo under the lease and to ensure that the MTC is prevented from taking action that is likely to cause harm or prejudice to the arbitral proceedings.
[4] As an alternative, Prestige seeks orders under ss 253 and 256 of the Property Law Act 2007 (PLA) on the grounds that it is in the overall interests of justice that the Court grants relief and orders injunctive relief. This alternative was not pursued at the hearing.
[5]MTC opposes the application.
Background
[6] Each party has filed affidavits. The evidence, in particular of Uditha Pallewatte, the founder and sole director of Prestige, and Stephen Penney, a director of MTC, is detailed and extensive. Prestige and MTC disagree on most factual matters. Decisions on those disputed facts will be for any arbitration. It is not possible to resolve those issues on untested affidavit evidence. And, in any event, it is not necessary to do so in order to determine the application.
1 The lease is in the standard Law Society Sixth Edition form.
[7] An undisputed fact is that Prestige and MTC signed the lease on 1 May 2018. Prestige is the lessee under the lease. MTC is the lessor.
[8] MTC says Prestige breached the payment of rent covenant in the lease and owes it rent together with rates and insurance outgoings totalling $37,216.67, which includes 15 per cent interest. The amount without interest was said to be $32,362.32. (Prestige disputes this and says it is up to date with its payments of rent and outgoings).
[9] On 14 October 2020, MTC served Prestige with a notice which purported to be under ss 245(1)(b) and 245(3) of the PLA requiring Prestige to pay the outstanding amount of $37,216.67 in eight working days. (Prestige claims the notice is inadequate and does not comply with the cancellation code in the PLA).
[10]MTC purported to cancel the lease on 14 January 2021.
Prestige’s submissions
[11] Mr Morrison for Prestige submits Prestige satisfies the test in the Arbitration Act. First, Mr Morrison submits there is a “reasonable possibility that Prestige will succeed on the merits of the case”2 because:
(a)the purported notice (the notice) from MTC did not comply with the requirements of s 245 PLA. In particular:
(i)there was no supporting evidence (such as invoices) for the amount claimed;
(ii)there was no explanation of Prestige’s rights; and
(iii)the period contained in the notice (eight working days) to remedy the breaches was less than the 30-day requirement in the PLA.
2 Arbitration Act 1996, art 17B(1)(c).
(b)it has proprietary rights in the premises, including rights of renewal until 2036;
(c)it did not breach any of the covenants outlined in MTC’s claim;
(d)MTC has not issued breach or cancellation notices for the new breaches now alleged by MTC in its affidavits for the hearing, for damage to the property; and
(e)MTC’s conduct following the notice has breached Prestige’s property rights, such as the right to quiet enjoyment (under s 218 PLA and cl 31.1 of the lease).
[12]Second, Prestige submits that the balance of convenience is in its favour3 as:
(a)harm, irreparable by damages, will occur if the Court does not grant the orders sought. In particular, Prestige points to its proprietary rights being infringed and claims it would be difficult and expensive for its business to move premises;
(b)Prestige will lose staff and customers if the Court does not grant the order, which is a consequence that cannot easily be compensated by way of damages; and
(c)MTC may not be in a financial position to meet an award of damages if that was the outcome of the proceeding or arbitration;
[13] Third, Prestige submits the harm it will suffer outweighs the harm likely to result to MTC, if the Court grants the measures4 because:
(a)MTC will maintain its contractual protections under the lease. Prestige claims it will adhere to its obligations under the lease;
3 Arbitration Act, art 17B(1)(a)).
4 Article 17B(1)(b)).
(b)Prestige has provided an undertaking as to damages dated 27 January 2021; and
(c)MTC has a prospective tenant for the premises. Prestige has attempted to notify the third party of this application through MTC, but MTC has not responded to its correspondence.
MTC’s submissions
[14] MTC’s submissions are not focused on the test to be applied by the Court. Rather Mr Purusram for MTC addresses what he submits are four core issues. I mention three:5
(a)Whether MTC issued a valid notice of intention to cancel the lease. MTC accepts the notice “lacked some elements” but Mr Purusram submits the circumstances make terminating the lease justified;
(b)Whether Prestige’s acts and activities in the premises have rendered the premises dangerous, unsafe and illegal and thus the lease has been terminated under cl 26.1 of the lease; and
(c)Whether the lease has been frustrated because of Prestige’s acts and activities.
[15] As to those issues, first, MTC submits that the circumstances surrounding the notice served on 14 October 2020 make it valid. The notice annexed a spreadsheet containing information about the rent and outgoings it says were owed by Prestige. MTC claims Prestige acknowledged receipt of the notice.
[16] While MTC accepts the notice may have “lacked some elements”, Mr Purusram cites Kent Sing Trading Co Ltd v JNJ Holdings Ltd for the proposition that if the error is minor, a lessee cannot claim they have not been sufficiently informed
5 Both parties referred to matters relating to the use of the part of the premises on the first floor as a residential tenancy. This formed the basis of MTC’s fourth “core issue”. The facts are disputed and I put the issue aside in determining the application. I will however address the issue in relation to a condition. Refer [62] to [64] below.
of the nature and extent of the breach.6 MTC also refers to Kent Sing Trading Co Ltd to support his submission that the underlying purpose of ss 245 and 246 of the PLA is that the notice should allow the recipient to understand with reasonable certainty what they are required to do.7 MTC submits that its notice to Prestige enabled it to understand their requirements with reasonable certainty, and thus, the notice was valid.
[17] Second, MTC submits Prestige’s actions have resulted in the premises becoming untenantable and therefore the lease has been terminated. The lease stipulates at clause 26.1:
Total Destruction
26.1If the premises or any portion of the building of which the premises may form part shall be destroyed or so damaged
(a)As to render the premises untenantable then the term shall at once terminate.
[18] MTC refers to DFC NZ Ltd (in statutory management) v Samson Corporation Ltd in providing a definition of “untenantable”8 as a substantial interference with the tenant’s ability to enjoy, use and operate out of the premises that is more than a temporary disruption.9
[19] In reliance on a report from Sheffield Fox International (insurance engineers and loss adjusters) dated 7 February 2012, MTC submits it would take approximately four months to repair the damage to the premises. The lease is due to end on 30 April 2024. MTC submits that taking these factors into account, the premises meet the definition of “untenantable”. This is because the interference with the tenant’s ability to enjoy, use and operate out of the premises is not a temporary disruption.
[20] MTC adds that the premises are a “dangerous building” under s 124 Building Act 2004.
6 Kent Sing Trading Co Ltd v JNJ Holdings Ltd [2019] NZCA 388 at [109]–[111].
7 Kent Sing Trading Co Ltd, above n 6, at [111].
8 DFC NZ Ltd (in statutory management) v Samson Corporation Ltd (1993) ANZ ConvR 481 (HC).
9 At 483.
[21] Third, MTC submits the lease has been frustrated because a supervening event has occurred that makes performance of the contractual obligations impossible or different from what parties intended when they entered into the contract.
Relevant law
[22] Article 9 in Schedule 1 of the Arbitration Act empowers the Court to grant interim measures before or during an arbitration. The Court is restricted to the same powers as those of the arbitral tribunal (under arts 17A and 17B). The Court’s jurisdiction is therefore auxiliary to, and complements and facilitates, the arbitral process. The ordinary jurisdiction for interim injunctions does not apply.10
[23] Interim measures for restoring the “status quo” are flexible and can apply to restore the position prior to the conduct complained of and/or to relieve the effect of any wrongdoing.11 In this case the interim measures sought are of a kind as defined in art 17 as being a temporary measure to:
(a)maintain or restore the status quo pending the determination of the dispute; and
(b)take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral proceedings.
[24] The Court will likely confine itself to consideration of the three criteria in art 17B(1)(a)–(c):12
(a)Harm not adequately reparable by an award of damages is likely to result if the measure is not granted;
(b)The harm substantially outweighs the harm that is likely to result to the respondent if the measure is granted; and
10 Safe Kids in Daily Supervision Ltd v McNeill [2012] 1 NZLR 714 (HC) at [18].
11 At [23]–[27].
12 At [30]–[31].
(c)There is a reasonable possibility that the applicant will succeed on the merits of the claim.
[25] The “reasonable possibility” test is applied the same way as the “serious question to be tried” test in interim injunctions.13 The tests above are applied in reverse: first the Court asks whether there is a serious question to be tried, and then the first two factors are applied in a balance of convenience analysis.
[26] In the arbitration context, it is less likely that public interest, third party considerations or overall justice factors will be considered.
[27] The continued infringement of proprietary rights can entitle the applicant to injunctive relief, unless damages are an adequate remedy.14 Long-term rights of occupation (including rights of renewal) are valuable property rights concerning land that are not readily compensable by damages, supporting the award of interim measures under the Arbitration Act.15
[28] There is no specific reference to the provision of an undertaking as to damages in art 17B(1). However, it can be assumed that if an applicant for interim measures does not provide an adequate undertaking as to damages, then it will be much more difficult for that party to satisfy a court or a tribunal under art 17B(1)(b) that, if the relief is not granted, harm to the applicant will outweigh the harm that is likely to result to the other party.16
Is there a reasonable possibility Prestige will succeed on the merits? (Art 17B(1)(c))
[29] Prestige submits that MTC’s cancellation of the lease is unlawful. That is because, Prestige says, the notice does not comply with the code for cancellation of leases under the PLA.
13 Safe Kids in Daily Supervision Ltd, above n 10, at [36]–[38].
14 Kalmac Property Consultants Ltd v Delicious Foods Ltd [1974] 2 NZLR 631 (CA) at 637.
15 Green Road Cattle Co Ltd v Southhead Holdings Ltd [2017] NZAR 714 (HC) at [36]–[37].
16 DAR Williams et al (eds) Williams & Kawharu on Arbitration – Part II the Arbitration Act and its Amendments (2nd ed, online ed, LexisNexis) at 253.
[30] The notice contains MTC’s company name in full at the top, its address and GST number. It then states the notice is to “Udith Ravindra” (Mr Pallewatte’s first and middle names, although the first name is misspelled). Below that it says “(Prestige Motors Ltd) Here after called the tenant”. It then reads as follows:
The Nikolas and Petra trust
HERE BY SERVE THE TENANT
Udith Ravindra (Prestige Motors Ltd)
That the land lord is intending to terminating the lease on the 26/October/2020 for outstanding monies owed
The total is $37216.67 This now includes the 15% interest. Please refer to spread sheet.
Regards Stephen 14/October/2020
[31] Annexed to the notice is a schedule setting out payments said to be due for rent, GST on the rental amount and insurance and rates. There are then columns for the total due, total paid and the alleged short payment. The dates in the schedule run from 1 May 2018 to 10 September 2020. The alleged outstanding payment is said to be $32,362.32.
[32] Section 243 of the PLA provides that a lease may be cancelled only in accordance with ss 244 to 252 of the PLA. Sections 244 and 245 provide that notice must be given by the lessor to the lessee prior to cancellation. The remaining provisions relating to cancellation are contingent on valid notice under those sections.17
[33] If there has been arguable non-compliance, there will be a serious issue to be tried (as to whether or not the notice was valid) and this provides support for the awarding of injunctive relief.18
17 For example, the lessor’s right to peaceably re-enter the property or apply for an order for possession (ss 245(1) and 248–251 Property Law Act 2007).
18 Leeann Yare Ltd v Carlton Gore Road Ltd [2019] NZHC 613 at [6]–[7].
[34] A notice served under s 245 (breach of covenant to pay rent) must adequately inform the recipient of all of the following matters:19
(a)The nature and extent of the breach complained about. This requires the alleged breach(es) to be clearly specified, by reference to specific covenant(s) in the lease;20
(b)The amount that must be paid to remedy the breach;
(c)The period within which the breach must be remedied (which must not be less than 10 working days after the date of service of the notice). In this case s 245C applied (COVID-19 outbreak extension of applicable periods) so that the minimum time was extended to 30 working days;
(d)The consequence that, if the breach is not remedied at the expiry of the period specified in the notice, the lessor may seek to cancel the lease in accordance with s 244; and
(e)The right, under s 253, to apply to a court for relief against cancellation of the lease, and the advisability of seeking legal advice on the exercise of that right.
[35] Prestige says that the notice took it by surprise. It says it had not been invoiced or otherwise charged for outgoings before and no source documents were provided in support of the amounts claimed. Prestige claims it requested these invoices and source documents on multiple occasions without success (after service of the notice) and it was up-to-date on rent, except for two months of COVID lockdown which it was withholding in reliance on cl 27.5 of the lease. It ultimately paid those two months under protest. I put all those matters to one side given that they are disputed by MTC.
19 Section 245(3) Property Law Act.
20 McConnell v McCormick [1929] NZLR 560 (SC) at 565–568. Also see Kent Sing Trading Co Ltd, above n 6, at [96] and [108]–[112] for discussion of a notice that the Court of Appeal held adequately specified the nature and extent of breaches relating to rent and outgoings.
[36] However, I accept Mr Morrison’s submission that Prestige has an arguable case that the notice was not valid.
[37] The description of the nature and extent of the breach is inadequate. The notice does not specify any clauses of the lease nor sections of the PLA in reference to Prestige’s alleged breaches. Although a spreadsheet was attached, no underlying invoices or calculations were provided for the outgoings. Mr Purusram points to cl 3.6 of the lease (relating to outgoings) and submits that the details of outgoings were not required to be provided until after 31 March in each year of the term or other date in each year as the landlord may specify. He submits details were therefore not due until 31 March 2021. However, the schedule alleges outgoings for insurance and rates had been outstanding since 1 October 2018.
[38] The notice period for Prestige to remedy the alleged breaches by paying the amount said to be outstanding was only eight working days (taking into account Labour Day). This period was significantly less than the 30 working days required.
[39] There was no statement to the effect that if the breach was not remedied at the expiry of the period specified in the notice the lessor may seek to cancel the lease in accordance with s 244.21 The notice simply said the landlord is “intending to terminating the lease”.
[40] There is also no explanation of the right under s 253 to apply to a court for relief against cancellation of the lease, nor does the notice inform Prestige of the advisability of seeking legal advice on the exercise of that right.
[41] I do not accept Mr Purusram’s submission that the defects in the notice amounted to minor non-compliance. There was non-compliance with four out of the five statutory requirements. I also do not accept Mr Purusram’s submission that the statements of the Court of Appeal in Kent Sing Trading Co Ltd can be used in a broad brush way in relation to all of the statutory requirements in making an assessment as to whether or not a deficiency or error in the notice is sufficiently minor. In that case,
21 Section 244 provides the lessor may apply to a court for an order for possession of the land or re-enter the land peaceably.
the Court of Appeal was considering only the requirement in s 245(3)(a) that the notice must adequately inform the recipient of “the nature and extent of the breach complained about”. The Court’s considerations did not extend to the other requirements in s 245.22
[42] Nor do I accept Mr Purusram’s submission that the fact Prestige instructed its solicitor after receiving the notice or that the actual date of the purported cancellation by MTC on 14 January 2020 excused non-compliance with the requirement to inform of the advisability of seeking legal advice or the notice period respectively. As to the latter, between the date of the notice on 26 October 2020 and purported cancellation on 14 January 2021, MTC took steps to forcibly evict Prestige. Those steps, which arguably breached MTC’s right to quiet enjoyment, were: forcibly re-entering the premises; changing the locks to the premises; switching off all mains power to the premises including phone and internet lines; putting up notices and removing Prestige signage at the premises; and removing Prestige’s property from the premises. Mr Penney does not deny that these steps occurred.
[43] Nor do I accept Mr Purusram’s submission that damage allegedly caused by Prestige to the premises and now detailed in Mr Penney’s affidavit in opposition to the application justifies a deficient and thus invalid notice.
[44] I also do not accept that cl 26.1 of the lease is engaged. Mr Purusram relies on two reports obtained by Mr Penney. One of the reports is from an electrical inspector who refers to what he describes as many unsafe issues which he noted on his inspection of the premises on 5 February 2021 (in his affidavit in reply Mr Pallewatte denies causing those issues). The second report is from Sheffield Fox International. They refer to damage to the premises allegedly caused by Prestige (Mr Pallewatte denies causing the damage). Sheffield Fox says the works specified could take up to four months to return the premises to their original condition. Apart from electrical issues, none of the works in the Sheffield Fox report appears to be in the nature of health and safety matters.
22 Kent Sing Trading Co Ltd v JNJ Holdings Ltd, above n 6, at [95]–[111].
[45] There are two difficulties Mr Purusram faces with his submission that cl 26.1 applies. First, this provision in the lease is a separate provision from cl 8.1 which places an obligation on the tenant to, among other things, maintain the premises. Clause 26.1 appears to relate to matters such as damage from fire or earthquake as opposed to a tenant’s failure to maintain the premises, which is a separate obligation.
[46] Second, I do not consider the work required to be done renders the premises “untenantable”.23 The alleged damage lacks any degree of permanence. It is merely transitory or temporary. In my view, the four months to repair the “damage” (some of which in my view does not impact on tenantability e.g. replacing skylight panels, repairing damage to internal walls, cleaning surfaces) in the context of a lease which will not end until 30 April 2024, does not make the premises untenantable. I further note that MTC has apparently arranged to re-tenant the premises. It is difficult to see how the premises may be untenantable so far as Prestige is concerned but tenantable for a new tenant.
[47] I also note, for completeness, the inspection reports relied on by MTC were obtained following service of the notice. This is despite MTC having had the opportunity since 2012, when Prestige first began its occupancy of the premises and also contractual rights under the lease, to inspect the premises at any time with prior notice. The evidence was that Mr Penney and the other director, Ms Keast, visited the premises and used Prestige’s services without raising any issues.
[48] Finally, there is Mr Purusram’s “frustration” submission. He submits the common law doctrine applies. He submits a supervening event makes further performance of contractual obligations impossible or significantly different from what the parties intended when they entered the contract. He submits that the doctrine was created to address the hardship caused to the parties when the contract had not provided for the event that affected it. In this case, he says, the supervening event is the unsafe state of the premises.
23 See generally DFC NZ Ltd (in statutory management), above n 8, and GP 96 Ltd v FN Custodians Ltd [2011] 12 NZCPR 489 (HC).
[49] I do not consider that is an argument that is likely to succeed. All of the safety issues referred to by the electrical inspector engaged by MTC are capable of either upgrading or repair, according to the report of the electrical inspector. Further, it seems that MTC acknowledges that the identified issues can be remedied given that it is proposing to re-tenant the premises.
[50] For all the above reasons I consider there is a reasonable possibility that Prestige will succeed on the merits.
Is harm, not adequately reparable by an award of damages, likely to result if the application is not granted?
[51] I have accepted Prestige’s submission that there is a reasonable possibility that its claim will succeed on the merits. It is arguable that Prestige’s proprietary rights have been and are being infringed. Long-term rights of occupation, including through rights of renewal, are valuable property rights concerning land that are not readily able to be compensated by damages, supporting the award of interim measures under the Arbitration Act.24
[52] I accept that Prestige will not be able to work, at least from the premises, and will not be able to pay its staff. I accept that, in the circumstances, those staff may find alternative employment. I also accept Prestige may well lose customers, at least in the short-term, as the removal of the signage from the premises makes it look as though Prestige has ceased trading. I accept that these are losses that are not readily assessable by way of damages.25
[53] There is also some evidence from both Ms Keast and Mr Penney as to financial stresses with MTC’s mortgage lender. This is relevant in considering whether if Prestige was left to pursue a remedy of damages whether MTC would be in a financial position to meet an award.
[54] Finally, on this factor, I note that Prestige has attempted to submit the dispute to arbitration. MTC has not responded to Prestige’s notice submitting the dispute to
24 Green Road Cattle Co Ltd, above n 15, at[20]–[21] and [27].
25 Fujiama Tepanyaki Japanese Restaurant Ltd v Morgan [2003] 5 NZCPR 369 (HC) at [42].
arbitration despite several follow up communications. At the hearing I asked Mr Purusram about MTC’s position on arbitration. His response was that he did not have instructions on that issue.
[55] Taking all of the above into account, I accept that Prestige is likely to suffer harm that would not be adequately remedied by an award of damages if the application were not granted.
Will the harm suffered by Prestige substantially outweigh the harm that is likely to result to MTC if the measure is granted?
[56] MTC submits the undertaking as to damages given by Prestige is inadequate and submits that Prestige will not be able to pay the sum of $200,000, being the estimated cost to remedy the damage to the premises allegedly caused by Prestige. (As noted above, Prestige denies causing the damage). But in any event, the undertaking is only relevant to harm that would be caused by the making of the order now sought. There would need to be a causal connection between harm caused to MTC by Prestige moving back to the premises. The undertaking is not for the purpose of remedying other breaches, being damage to the premises now alleged in MTC’s affidavits.
[57] In this case, if the measures are granted MTC will still have all of its contractual protection under the lease.26
[58] To the extent that MTC’s prospective new tenant is relevant to the relief sought, I note that Prestige has asked MTC on three occasions to notify that third party of the relief sought. MTC has not responded to Prestige. Nor was the Court provided with any information regarding the prospective new tenant.
[59] In conclusion on this factor, I consider that the harm I have found that will be suffered by Prestige substantially outweighs any harm that is likely to result to MTC if I were to grant the measures sought.
26 This was a relevant factor weighing the harm in Green Road Cattle Co Ltd v South Head Holdings Ltd, above n 15, at [27] where the Court ordered interim measures to prevent an attempted eviction under a lease.
Three further matters
[60] There are three further matters which need to be discussed. The first two can be addressed by the imposition of conditions. I have already mentioned safety issues arising out of the electrical report of 5 February 2021 obtained by MTC. Without accepting that it was responsible for the issues identified by the electrical inspector, Prestige accepts that it should not re-enter the premises until those safety issues have been addressed by a qualified electrical worker and the issuing, by that worker, of a certificate of compliance; and that it will meet the cost of this work, subject to any later apportionment. I will impose a condition to that effect.
[61] The second issue relates to the alarm system. MTC’s position is that Prestige has removed the smoke detectors on the premises and that the wiring in the alarm system has been cut. That puts MTC at risk in relation to insurance. Again, without accepting that it caused the damage, Prestige acknowledges that the absence of a working alarm system and smoke detectors is an issue that the Court would consider. Mr Penney exhibits to his affidavit a report from “Kiwi Alarms” (undated) to install an alarm system including smoke detectors. The quoted price is $2,710 plus GST. Mr Morrison did not have instructions on whether Prestige would agree to a condition directing that an alarm system be installed by Kiwi Alarms in accordance with their quote. However, he was content to abide my decision on that issue and a direction that Prestige is to pay for this work, subject to any apportionment as a result of arbitration.
[62] The third issue relates to the occupation of the first floor of the premises by Mr Wimalawardana, a close family friend of Mr Pallewatte and business partner in another venture. Mr Pallewatte says that Mr Wimalawardana uses the first floor as a residence under an informal sub-lease arrangement from Prestige. Mr Pallewatte says that MTC and Mr Penney consented to this arrangement and they charge Mr Wimalawardana $50 a week for water usage.
[63] Mr Penney adamantly denies that the lease of the commercial premises included the use of the upstairs as residential premises. He says Prestige was only
supposed to use the bathroom and kitchen for commercial purposes (i.e. related to the business but not as part of a residential use).
[64] Given this dispute and also given the obligations now imposed on landlords under the 2020 amendments to the Residential Tenancies Act 1986, I consider that the re-entry I will order should exclude the use of the premises as a residence.
Result
[65] Until further order of an arbitrator or this Court, I make orders that MTC, including its directors, agents and contractors (specifically Stephen Charles Penney) are:
(a)not to hinder, prevent or otherwise interfere with Prestige’s peaceable re-entry to its premises at 14–16 Dryden Place, Mt Wellington (the premises) under its lease from MTC dated 1 May 2018 (the lease);
(b)to reinstate and provide all utilities to Prestige at the premises and under the lease, including but not limited to turning on and leaving on the mains power supply to the premises and providing new keys to any locks that MTC has changed (or otherwise not hinder, prevent or interfere with Prestige’s replacement of, or key-cutting for, any such changed locks by a professional locksmith and turn on all utilities to the premises, whether or not the sources of such utilities are located on the premises);
(c)not to enter the premises except with notice and for a proper purpose in accordance with the lease;
(d)not to interfere with any property, persons or business on the premises in any way;
(e)not to make or publish any statements that the lease has been terminated or that are otherwise detrimental to Prestige’s business, and take down or retract any existing publications or notices to that effect; and
(f)to reinstate all property moved from or around the premises by MTC, including but not limited to signage, the emergency power generator and televisions belonging to Prestige.
[66]The orders in [65](a)-(f) above are subject to:
(a)the prior inspection and certification of all electrical works at the premises by an independent electrical inspector, to be appointed by agreement between the parties’ solicitors. The costs of that inspection, any remedial works and certification will be met by Prestige, subject to any order of this Court or the arbitral tribunal apportioning such costs (if any);
(b)The completion of the installation of an alarm system by Kiwi Alarms in accordance with its (undated) quote annexed as Exhibit F to the affidavit of Stephen Penney, dated 12 February 2021. The costs of the installation will be met by Prestige subject to any order of this Court or the arbitral tribunal apportioning such costs (if any); and
(c)A condition that the premises or any part of the premises are not to be used as a residence.
[67] I grant leave to Prestige to apply for further orders from this Court as are required to facilitate its peaceable re-entry to the premises and resumption of its occupancy and business under the lease without interference from MTC (and specifically Mr Penney).
Costs
[68] Prestige, as the successful party is prima facie entitled to costs. As I did not hear submissions on costs, costs are reserved. In the first instance, if the parties are able to agree costs, a joint memorandum should be filed within 15 working days of the date of this judgment. In the event that the parties cannot agree, Prestige is to file and serve its memorandum within five working days of the date for the joint memorandum. MTC is to file and serve its memorandum within a further five working days. Costs
memoranda should not exceed four pages excluding any attachments. I will determine costs on the papers.
Gordon J
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