NEW ZEALAND SUNSHINE INTERNATIONAL COMPANY LIMITED V BOYCE COAD HC AK CIV 2013-404-1064

NEW ZEALAND SUNSHINE INTERNATIONAL COMPANY LIMITED V BOYCE COAD HC AK CIV 2013-404-1064 [1 May 2013]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV 2013-404-1064[2013] NZHC 939UNDER the Property Law Act 2007, sections 210and 244IN THE MATTER OF an application for Orders for possession ofland and cancellation of leasesBETWEEN NEW ZEALAND SUNSHINEINTERNATIONAL COMPANY LIMITEDApplicantAND BOYCE COADRespondentHearing: On the papersCounsel: M Kan for ApplicantP F Chambers for RespondentJudgment: 1 May 2013JUDGMENT OF KEANE JThis judgment was delivered by on 1 May 2013 at 12pmpursuant to Rule 11.5 of the High Court Rules.Registrar/ Deputy RegistrarDate:Solicitors:Yang Lawyers, Epsom, Auckland for ApplicantJ Bioletti, Auckland for Respondent[1] On 14 March 2013 New Zealand Sunshine International Company Limited, which owns a property in Mt Roskill, Auckland, then leased to a network engineer, Boyce Coad, discontinued this application, filed just two weeks before, for orders enabling it to cancel the lease, to resume possession, and to obtain rent and outgoings due.[2] This notice of discontinuance was filed just one day after the first call of the application in the duty judge list on 13 March 2013, when Collins J authorised a half day fixture, made timetabling directions, and recorded, as Mr Coad's counsel asked him to, that 'if the application went to hearing and the Court found in his favour he would be seeking indemnity costs'.[3] Mr Coad now seeks an order for scale costs on the discontinuance, $2,189, to which he contends he is presumptively entitled.1 Sunshine contends that such an order would be unjust and that costs lie should lie where they fall. I must assess this issue on Sunshine's two undisputed affidavits, one supporting the application, the other as to costs. There is none in response from Mr Coad.Applicant's case[4] On 1 April 2012, according to Sunshine's undisputed affidavit evidence, Mr Coad took possession of the leased premises under an oral lease and on 1 September 2012 ceased to pay any rent or outgoings.[5] On 27 November 2012 Sunshine served on Mr Coad a demand and on 19 September 2012 a notice to quit. On 24 December 2012 Mr Coad was served by courier post with a property law notice, which he accepted on 4 January 2013. On 25 January Sunshine's solicitors wrote to Mr Coad advising him that Sunshine wished to resume possession on 29 January 2013. The day after that Sunshine attempted to re-enter.[6] On 27 February 2012 Sunshine made the application it has now discontinued. At that date, it contended, rent arrears came to $12,649.98 and outgoings, extending1 HCR 15.23.back to the date Mr Coad took possession, came to $5,324.48. Sunshine also sought $3,738.85 legal costs incurred for the drafting and serving of the s 245 property notice, and $6,656 further legal costs.[7] This application was served on Mr Coad on 1 March 2013 and that day he wrote to Sunshine stating that he would seek to renew the lease, would vacate possession on 1 April 2013 and would pay the 'outgoing charges' outstanding by bank cheque, as long as Sunshine did not pursue possession; and subject also to this.[8] Mr Coad added that the amounts that each then disputed were to be adjudicated at the earliest opportunity, in the 'appropriate venue'. By that I take him to have meant the District Court where he had on 23 January 2013 applied for relief from repossession and an order that Sunshine sign a lease, to which it appears Sunshine might since have responded by counterclaim for unpaid rent and outgoings.[9] On 14 March 2013, the day after the first call, Sunshine discontinued, relying on the 1 March 2013 letter. The Sunshine director, whose decision it was, says that before the first call he sent a text to Mr Coad urging him vacate and to pay allarrears. After the first call, however, he decided that, if Mr Coad held to hisundertaking to vacate and to pay, there was no need to pursue the application.[10] On 2 April 2013 Mr Coad did vacate possession. He did not pay the rent oroutgoings outstanding. Sunshine contends that he caused significant damage beforehe left and stole property. It has complained to the police. The District Courtproceedings presumably remain in some sense extant.Right to costs[11] The issue that remains, now that the discontinuance has been filed and served and has taken effect,2 is whether Mr Coad is now entitled to costs under r 15.23, which says this:Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs2 Rule 15.21.to the defendant of and incidental to the proceeding up to and including the discontinuance.[12] Under r 15.23 Mr Coad is presumptively entitled to costs, but that is subject to this Court's general discretion.3 Such an order must be just and equitable; and, in this instance that depends on whether Sunshine acted reasonably or abusively in first bringing and then discontinuing its application.4Nature of proceeding[13] Whether, as Mr Coad appears to contend, Sunshine ought to have applied for cancellation in the District Court instead of pursuing that order in this Court turns on the rules governing the cancellation of leases and relief from cancellation in the Property Law Act 2007.[14] The right to cancel a lease, and to relief against cancellation, is governed by ss 244 - 264 of the Property Law Act 2007, which constitutes a code.5 To exercise the right to cancel for breach a lessor may re-enter peaceably, or may apply to a Court for an order for possession, as Sunshine did here, seeking rent and outgoings outstanding and reasonable compensation.[15] Conversely, a lessee may apply for relief against cancellation, or proposed cancellation, either in response to a lessor's application for possession or pre-emptively, as Mr Coad seemingly did here, by his proceeding in the District Court.6[16] The 2007 Act defines 'Court' as 'the Court before which the matter falls to be determined'.7 The code is silent as to whether this Court and the District Court share jurisdiction concurrently. Section 362 states the jurisdiction of District Courts to hear3 Rule 14.1.4 Kroma Colour Prints Ltd v Tridonicatco NZ Ltd [2008] NZCA 150, (2008) 18 PRNZ 973.5 Property Law Act 2007, s 243.6 Sections 253, 255 - 257.7 Section 4.and determine six matters, none concerning leases.8 The District Court could then only have jurisdiction if that is conferred by the District Courts Act 1947.9[17] Section 31 of that Act gives the District Court jurisdiction in four cases to hear and determine a proceeding for recovery of land, where the rent does not exceed $62,500 and the value of the land does not exceed $500,000; and most obviously here, where:10Where any tenant holding any land under any demise or agreement, either written or verbal, is in arrear in payment of rent for such period that the landlord is entitled to exercise a right of re-entry under the terms of the demise or agreement.[18] Section 31(1)(c) extends to the District Court's jurisdiction to the 'circumstances referred to in the next succeeding section', section 32. But that section, which dealt with the termination of tenancies, was repealed on 31 December 2007 when the Property Law Act 2007 came into force and neither s 31 nor 32 explicitly confers power to grant relief from cancellation of a lease.[19] In this decision on the papers I am unable to do more than to raise this issue. It will be one to pursue perhaps in the District Court if that proceeding continues. It does mean that on the costs issue I am to decide I am unable to say what significance, if any, the District Court proceeding deserves.Conclusions[20] On the face of these papers as they are, bereft as they are of anything explaining the District Court proceeding, I am satisfied that Sunshine was fully entitled to bring and to discontinue its application.[21] There is no issue that at the date Sunshine applied Mr Coad was in complete arrears and that he had failed to respond to any notice or letter until the application was served on him, when he gave his 1 March 2013 undertaking to vacate possession8 Section 362(1), (2).9 Section 362(3), (4).10 District Courts Act 1947, s 31(1)(b).and to and pay all that he owed, subject only to his asserted but unexplained claim in the District Court.[22] On the papers as they are I conclude also that, having reasonably brought its application, Sunshine was equally entitled to discontinue on the faith of Mr Coad's letter; and I note that when he vacated Mr Coad did not adhere to his undertaking. Subject to his asserted but unexplained District Court claim, to which I can give no account, he remains completely in arrears.[23] I am satisfied, therefore, that despite the presumption that when a proceeding is discontinued the one proceeded against has a right to costs, it would not be just to award Mr Coad the costs he claims. Costs will lie where they fall._____________P.J. Keane J