MICHAEL RAYMOND MAIN V KEVIN EVAN MAIN CA CA196/06

MICHAEL RAYMOND MAIN V KEVIN EVAN MAIN CA CA196/06 12 December 2006IN THE COURT OF APPEAL OF NEW ZEALAND CA196/06BETWEEN MICHAEL RAYMOND MAIN Applicant AND KEVIN EVAN MAIN Respondent Hearing: 4 December 2006 Court: William Young P, Glazebrook and Arnold JJ Counsel: Applicant in Person P Moodley for Respondent Judgment: 12 December 2006 at 2.30 pmJUDGMENT OF THE COURT A Leave to appeal is granted. B The applicant is granted leave to file and serve any additional evidence concerning his use of the premises for residential purposes by 5 pm on Friday 19 January 2007. The respondent is to file any evidence in response within 21 days of the date of filing and service of the applicant's additional evidence. REASONS OF THE COURT(Given by Arnold J)[1] The respondent, Mr K E Main sued the applicant, Mr M R Main, to recover arrears of rent and outgoings in relation to a property occupied by the applicant under a periodic tenancy. Judge Maze entered summary judgment against the applicant. [2] At the hearing before Judge Maze the applicant, who has acted for himself throughout, did not deny that there was an oral lease. Rather he argued that the respondent had acted unlawfully in evicting him and seizing and selling his property. He argued that the lease related to residential premises, so that the Residential Tenancies Act 1986 applied. [3] For his part, the respondent said that the premises were commercial premises, so that the Residential Tenancies Act did not apply. He said that the premises were originally leased to a company, Main Bros Holdings Ltd. It ceased operating and was removed from the Companies Register. The applicant, who was the sole director and sole shareholder of Main Bros Holdings Ltd, continued to occupy the premises and to carry on business from them. He failed to pay rent and outgoings, however. [4] The Judge concluded that this was not a residential tenancy. She said that she was satisfied that the terms of the lease established a monthly tenancy of commercial premises. On that basis she concluded that there was no arguable defence in respect of the determination of the implied monthly tenancy and granted the respondent's application for summary judgment. [5] The applicant appealed to the High Court and also applied for leave to adduce further evidence. Cooper J refused the application to call further evidence, on the ground that the applicant had not persuaded him that the evidence could not reasonably have been discovered at an earlier stage. The Judge noted that at the various preliminary procedural stages the applicant had not complained of an inability to adduce relevant evidence. Cooper J also rejected the applicant's appeal: CIV 2006-419-000387 19 July 2006. In rejecting the appeal Cooper J noted that Judge Maze had found as a fact that the tenancy was not a residential tenancy. He said:[9] She was entitled to come to that conclusion on the basis of the evidence that was before her, including the affidavit of the respondent, who stated that the company had leased the premises pursuant to an oral agreement for a monthly tenancy, and had carried on business at the premises as a storage company and second-hand dealer. When the company was struck off the register the appellant had simply continued to occupy the premises. The appellant had referred in his own affidavit to property including "stainless steel tanks, shipping containers, privately owned and stored goods, machinery and plant" that were stored on the site. There was in the circumstances ample justification for the Judge's conclusion that the tenancy was one of a commercial nature, even if the appellant also resided there.[6] The applicant then applied to the High Court for leave to appeal from both decisions of Cooper J. Those applications were refused by Rodney Hansen J: CIV 2006-419-387 16 August 2006. The applicant now seeks leave from this Court under s 67 of the Judicature Act 1908.Discussion[7] The test to be applied on this type of application was reiterated by this Court in Waller v Hider [1998] 1 NZLR 412 at 413:The appeal must raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the further appeal.[8] The Residential Tenancies Act 1986 applies to tenancies of residential premises, but not to commercial premises (s 5(a)). Section 2 contains the following definitions:Commercial premises means premises that are not residential premises:. Residential premises means any premises used or intended for occupation by any person as a place of residence: .Tenancy, in relation to any residential premises, means the right to occupy the premises (whether exclusively or otherwise) in consideration for rent; and includes any tenancy of residential premises implied or created by any enactment; and, where appropriate, also includes a former tenancy:Tenancy agreement, in relation to any residential premises, means any express or implied agreement under which any person, for rent, grants oragrees to grant to any other person a tenancy of the premises; and, where appropriate, includes a former tenancy agreement and any variation of a tenancy agreement: .Tenant in relation to any residential premises that are the subject of a tenancy agreement, means the grantee of a tenancy of the premises under the agreement.[9] In addition, s 2(3) provides that where there is a lease of premises which are used for both commercial and residential purposes the premises will be deemed to be residential premises unless it is proved that the premises were let "principally for purposes other than residential purposes". Also relevant is the decision of Anderson J in Kahi v Lucas AK HC81/96 23 September 1996, in which the Judge accepted that different parts of a building may constitute residential or commercial premises depending upon their use. The Judge held that an upper floor of a building, the ground floor of which contained a business (a garage and workshop), was "residential premises" for the purposes of the Act. [10] In his written submissions before Judge Maze the respondent's counsel said that the leased premises were never intended to be for residential use and that there was no evidence that the plaintiff had consented to their use as a residence. However, as can be seen from the definitions noted above, this does not accurately reflect the test for residential premises in the Act, which incorporates "use" as well as "intention". [11] The applicant told us that he lived in the premises from 1996. Furthermore, in his affidavit in support of the application for summary judgment, the respondent claimed for, among other things, the insurance premium in relation to the premises. He exhibited the relevant account from his insurance broker. That account refers to the premises as "Building of Workshop/Offices & Flat". [12] As there is limited material before us, we draw no conclusions. However, on the face of it, it seems likely that part of the premises was used for residential purposes and therefore meets the description of "residential premises" in the Act. If the lease at issue covered all of the premises (ie, the part used for residential purposes and the part used for commercial purposes), the respondent may have beenentitled to take advantage of s 2(3) of the Act, by establishing that the premises were leased predominantly for a commercial purpose. On the other hand, if the flat was treated as a separate part of the premises for leasing purposes, it may have fallen within the principle in Kahi v Lucas. [13] The difficulty for this Court is that it is not clear from the decision of the District Court whether these factors were taken into account, or precisely why the Judge reached the view that she did. We appreciate the difficulties facing the Judge given that the applicant was unrepresented and did not provide her with the assistance that she was entitled to expect. But on the face of it the applicant was entitled to the benefit of a presumption which the respondent carried the burden of negativing. While the Judge's analysis is consistent with a finding that the respondent had negatived the presumption, it is not clear whether the Judge was aware of the effect of s 2(3) or even whether she applied the correct test of "residential premises" (which, as we note above, was not correctly stated in the respondent's written submissions). Nor is it clear to us whether the Judge appreciated that there was, arguably at least, an alternative line of analysis of the type accepted by Anderson J in Kahi v Lucas. [14] In these very unusual circumstances we consider that leave to appeal should be granted.Decision[15] We grant leave to appeal. The applicant may file additional evidence going to his use of the premises for residential purposes. This is to be filed and served before 5 pm on Friday 19 January 2007. The respondent may file and serve evidence in reply 21 days after filing and service of the applicant's additional evidence. We make no order as to costs.Solicitors: Brookfields, Auckland for Respondent