VIOLICH v BYCO LTD [2016] NZHC 927

VIOLICH v BYCO LTD [2016] NZHC 927 [9 May 2016]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2016-404-000606[2016] NZHC 927BETWEEN DARRYL RAY VIOLICH AND EVELYNBUAN VIOLICH AS TRUSTEES OFTHE DR & EB VIOLICH FAMILYTRUSTApplicantsAND BYCO LIMITEDRespondentHearing: 5 May 2016Appearances: O J Ward for ApplicantNo appearance for RespondentJudgment: 9 May 2016JUDGMENT OF WYLIE JThis judgment was delivered by Justice Wylieon 9 May 2016 at 3.30pmPursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitor:Harkness Henry, HamiltonIntroduction[1] The applicants have filed an originating application seeking an order for possession of premises known as Unit D, 12 Tironui Road, Takanini. They also seek to cancel an agreement to lease between the parties dated 27 June 2013, and orders requiring the respondent to pay rent and outgoings down to the date on which it yields up possession of the premises, and to pay their solicitor/ client costs.[2] The application, together with a supporting affidavit from Ms Violich on behalf of the applicants, was served on the respondent on 12 April 2016. Pursuant to r 19.10 of the High Court Rules, which applies to originating applications, r 7.24 applies. It requires that a respondent who intends to oppose an application must file and serve a notice of opposition within a period of ten working days after being served. That period has expired. The respondent has taken no steps.[3] The applicants seek to proceed by way of formal proof.[4] The application was initially called before Hinton J on 28 April 2016. She declined to deal with it, because no affidavit of service had then been filed. She also requested counsel to consider whether it was appropriate for the order to be made for the payment of rent and outgoings on an originating application.[5] The applicants have since filed an affidavit of service and a memorandum addressing the latter issue. The matter was called before me again in the duty Judge list this morning. I heard from Mr Ward on behalf of the applicants.Factual Background[6] The background is relatively straightforward. The property the subject of the application is owned by the applicants, and on 27 June 2013, they entered into an agreement to lease it to the respondent.[7] The agreement to lease has been exhibited by Ms Violich to her affidavit. It provided that the lease commenced on 1 August 2013, at an annual rental of $22,329.74 plus GST. It also provided that the lessee was to pay 20.96 per cent ofbody corporate expenses and 100 per cent of the rates payable in respect of the property. The default interest rate was fixed at 12 per cent. The agreement to lease envisaged that the parties would enter into a deed of lease using the sixth edition ofthe Auckland District Law Society Inc's Deed of Lease form. It provided that, eventhough the deed had not been executed by the parties, the parties were nevertheless bound by the terms contained in the deed of lease as if it had been duly executed.[8] Ms Violich has deposed that the respondent failed to make rental payments as they fell due, and that on 30 November 2015 the respondent was served with a notice of intention to cancel the lease given by the applicants. She says that the respondent subsequently made some payments, but they were insufficient to cover the arrears and further rental accruing due. The applicants' solicitors corresponded with therespondent, but the position was not remedied.[9] On 3 February 2016 the applicants instructed an agent to attempt to peaceably re-enter the premises and change the locks. An employee of the respondent was present at the premises when the agent endeavoured to comply with those instructions, and the respondent refused to leave. The respondent has remained in possession of the premises since.[10] Notice pursuant to s 210 of the Property Law Act 2007 has been served on the respondent. Service of that notice occurred on 16 March 2016.Analysis[11] Section 251 of the Property Law Act applies. It provides as follows:251 Powers of court in making order for possession(1) On an application to a court for an order for possession of the land comprised in a lease, the court may make the order and cancel the lease.(2) If the court makes the order and cancels the lease under subsection (1), it may also do all or any of the following:(a) order the lessee to pay the rent up to the date of cancellation or any later date on which the lessee yields up possession:(b) order the lessee to pay reasonable compensation for the breach:(c) impose on the lessee or the lessor any other conditions that it thinks fit.(3) For the purposes of this section, reasonable compensation for thebreach of a lease may include reimbursement of the lessor'sreasonable expenses—(a) in giving notice of intention to cancel the lease under section 245 or 246; and(b) in doing anything else that the lessor has reasonably done in relation to the breach.[12] I am satisfied that it is appropriate to make an order for possession of the premises in favour of the applicants, and to cancel the agreement to lease between the parties dated 27 June 2013. The respondent is in possession but is failing to comply with its obligations under the agreement to lease.[13] Section 251(2) provides that if the Court makes an order for possession and cancels the lease, it may also order the lessee to pay the rent due up to the date of cancellation, or any later date on which the lessee yields up possession. Further the Court can order a lessee to pay reasonable compensation for any breach. Reasonablecompensation for breach of a lease can include reimbursement of the lessor'sreasonable expenses in giving notice, and in doing anything else that the lessor has reasonably done in relation to the breach.[14] Ms Violich has deposed that, as at 17 March 2016, rental and outgoings outstanding amounted to $12,877.75 (inclusive of penalty interest). I am satisfied that the respondent should be required to pay the rental and outgoings owing up to that date and also to pay rental and outgoings from 17 March 2016 until the date that the applicants take possession of the property. In addition the respondent should pay interest on these sums at the default rate specified in the lease, namely 12 per cent. The respondent covenanted with the applicant to do so in the agreement to lease.[15] The deed of lease, which is binding pursuant to the agreement to lease, required the respondent to pay the applicants' legal costs, as between lawyer andclient, of and incidental to the enforcement of the applicants' rights, remedies andpowers under the lease. The applicants seek to recover those costs.[16] I have not been provided with copies of the invoices rendered by theapplicants' solicitors. An annexure to Ms Violich's affidavit asserts that, as at 29February 2016, legal fees have been rendered in the sum of $2,437.05. Mr Ward however sought an award of costs on a 2B basis, in the sum of $5,798. I am not prepared to make an order for costs in this sum on the information available to me.It appears that the applicants' actual costs may have been less than costs assessed ona 2B basis. The onus was on the applicants to place sufficient material before the Court on which it could be satisfied as to the actual costs and disbursements incurred. The applicants have failed to do so.[17] I am however satisfied that it is appropriate to make an order to compensate the applicants for the direct out of pocket costs they have been put to in giving notice of intention to cancel the lease on two occasions, for the filing fees on the originating application, and for the costs of serving the application. Invoices have been provided. Those costs total $954.[18] Accordingly I make orders in the applicants' favour as follows:(a) For possession of Unit D, 12 Tironui Road, Takanini;(b) Cancelling the lease between the parties dated 27 June 2013;(c) Requiring the respondent to pay rental and outgoings of $12,877.75 owing to the applicants as at 17 March 2016, together with unpaid rental, outgoings, and interest thereon calculated at the rate of 12 per cent, from 17 March 2016 to the date upon which the respondent yields up and the applicants take possession of the property;(d) Requiring the respondent to pay to the applicants the sum of $954 to compensate the applicants for their out of pocket expenses in relationto the respondent's breach of the lease.[19] I reserve to the applicants the right to seek further orders in relation to their costs.________________________________Wylie J