ECO AUTO RECYCLERS LTD v KAIKORAI PROPERTY INVESTMENTS LTD [2016] NZHC 2362

ECO AUTO RECYCLERS LTD v KAIKORAI PROPERTY INVESTMENTS LTD [2016] NZHC 2362 [4 October 2016]IN THE HIGH COURT OF NEW ZEALANDDUNEDIN REGISTRYCIV-2016-412-000124[2016] NZHC 2362IN THE MATTER OF an application for specific performanceBETWEEN ECO AUTO RECYCLERS LIMITEDPlaintiffAND KAIKORAI PROPERTYINVESTMENTS LIMITEDDefendantHearing: 4 October 2016 (by telephone)Counsel: A W Belcher for PlaintiffNo appearance for DefendantJudgment: 4 October 2016Reasons: 5 October 2016REASONS FOR JUDGMENT OF VENNING JThis judgment was delivered by me on 5 October 2016 at 11.30 am, pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateSolicitors: Nik Nicolson Lawyer, DunedinSteindle Williams Legal, AucklandCopy to: A W Belcher, Dunedin[1] Eco Auto Recyclers Limited (Eco) sought an interim injunction against Kaikorai Property Investments Limited (Kaikorai).[2] After hearing from counsel on an ex parte basis the Court made orders with reasons to follow. The orders included a reservation of leave to the defendant to apply to vary or set aside the injunction on 24 hours notice.[3] These are the reasons for the injunction. They are necessarily brief. Eco is in possession of premises at the Burnside industrial complex in Kaikorai, Dunedin. The premises are owned by Kaikorai. The evidence before the Court discloses that the director of Eco, Mr Robinson, dealt with a Mr Eini, the sole shareholder in a shareholding company of Kaikorai.[4] Mr Robinson's evidence is that it was agreed Kaikorai would grant a lease of part of the Burnside premises to Eco. Eco moved in and took possession. A lease was completed by Eco. For reasons for which it is unnecessary to go into, it was then decided a different part of the premises would be occupied by Eco. A lease for those second premises was prepared and submitted to Eco for execution in May2016. Mr Robinson's evidence is that the lease did not record the agreement he hadwith Mr Eini. He amended the provisions of the lease to record that agreement and returned it for execution. Eco has remained in possession of the premises. It uses them for the business of an auto wrecker and scrap metal merchant. On MrRobinson's evidence Eco has carried out a number of improvements to the premisesit occupies. He says it was agreed that no rental would be paid until those matters were completed and the lease signed by Kaikorai. However the lease signed by Eco records rental due from 1 June.[5] Recently, on 8 September 2016 Eco received a letter dated 29 July 2016 fromKaikorai's solicitors demanding that Eco vacate the premises. That was responded to by the solicitors then acting for Eco on 13 September. Eco's position was set outin full in that letter. Subsequently (on 23 September 2016) Kaikorai arranged for the power to be disconnected to the premises on the basis power bills had not been paid.[6] Mr Robinson has provided evidence of the power bills being paid, at least up until the end of June. His evidence is that no further accounts have been received for payment.[7] Against that background Eco sought the injunction inter alia preventing the defendant or its agents from requiring the plaintiff to vacate the premises and requiring the defendant to take necessary steps to reconnect or allow the power to be reconnected.[8] On the basis of Mr Robinson's evidence there was an agreement to lease,albeit that it remains unexecuted. Whilst s 24 of the Property Law Act 2007 requires a written agreement for lease the lack of a written agreement is not necessarily fatal.[9] Section 26 of the Property Law Act maintains the common law position and provides that s 24 of the Act does not affect the operation of the law relating to part performance and the equitable doctrine of part performance. It confirms that it applies to agreements to lease.[10] The matters the Court must consider on such an application for part performance are:1(a) Was there a sufficient oral agreement such as would have been enforceable but for s 24 of the Property Law Act?(b) Has there been part performance of that oral agreement by the doing of something which:[i] clearly amounts to a step in the performance of a contractual obligation or the exercise of a contractual right under the oral contract; and1 T A Dellaca Ltd v PDL Industries Ltd [1992] 3 NZLR 88; Mahoe Buildings Ltd v Fair Investments Ltd [1994] 1 NZLR 281 (CA); and Fleming v Beevers [1994] 1 NZLR 385.[ii] when viewed independently of the oral contract was, on the probabilities, done on the footing that a contract relating to the land consistent with that alleged was in existence;(c) Do the circumstances in which the part performance took place make it unconscionable for the defendant to rely on the provisions of the Property Law Act?[11] On the basis of Mr Robinson's evidence, which is untested at present, theabove requirements are met sufficiently to establish a reasonably arguable case.[12] The balance of convenience favours the grant of the injunction sought at present. The plaintiff is in possession of the premises and has a substantial amount of stock on the premises. The stock is worth a reasonable amount of money and the plaintiff is able to pay damages.[13] For those reasons the interim injunction was granted on the terms sought together with the additional condition that the order was to lie in Court pending payment of the lease payments at $1,500 a month (plus GST) in total $6,000 (plus GST) as was agreed by the plaintiff. The Court directed that four months rental be paid into Court. It is intended that that money be released to the defendant once thedefendant's solicitors enter on record in this proceeding.__________________________ Venning J