HORTON v TE PURU MANAGEMENT COMPANY LIMITED [2019] NZHC 339

HORTON v TE PURU MANAGEMENT COMPANY LIMITED [2019] NZHC 339 [5 March 2019]IN THE HIGH COURT OF NEW ZEALANDHAMILTON REGISTRYI TE KŌTI MATUA O AOTEAROAKIRIKIRIROA ROHECIV-2018-419-000086[2019] NZHC 339UNDER the Declaratory Judgments Act 1908BETWEEN PETER HORTON, PAULINE LOCKETT,ALLAN THOMSON, ALLISTERCOOMBE, BRUCE and TINA LINDOP,DAVID TREBILCOCK, FRANK and JEANJONES, GAEL McINNES, GARY andVERONICA LISTER, GRANT andMARILYN HOPKINS, IAN andLORRAINE CHANDLER, KEVIN andRONNY JORDAN, LORNA and BRYANHAMBLETON, PETER and CHERYLMAHON, RAEWYN FERGUSSON,ROGER GORDON, TOM and CAROLYNROBERTSON, TREVOR and DOTDAVIES, TREVOR and SHIRLEYBROWN, JUNE BATTEN and TONYLEADER, TIM PLUIJMER and BENTHEUNISSEN, MELISA TUPUHI andTHOMAS TAOHO, CAROL and CHRISSTONE, DEREK and MARJORIE SAYLEApplicantsAND TE PURU MANAGEMENT COMPANYLIMITEDRespondentHearing: 13 December 2018Appearances: S W Hughes QC for ApplicantsI R Millard QC for RespondentJudgment: 5 March 2019JUDGMENT OF COURTNEY JThis judgment was delivered by Justice Courtney on Tuesday 5 March 2019 .at 12.30 pm pursuant to r 11.5 of the High CourtRules – Registrar / Deputy Registrar – DateIntroduction[1] The applicants each own a 1/135th undivided share in the Te Puru Holiday Parkon the Thames Coast. Prior to 2005 the site was on a single title and had been operatedas a campground for some 50 years. Te Puru Holiday Park Ltd (HPL) purchased thesite and obtained resource consent to divide it into 135 lots, each with associatedexclusive use areas and the right to use common facilities. Sixty-eight of the lots weresold to individual purchasers. All but two of the remainder are owned by HPL and areoperated as a campground, including accommodation for the holiday park manager.1[2] The manager of the holiday park is the respondent, Te Puru ManagementCompany Ltd (MCL). It manages the park in accordance with the Deed of Covenantbetween it and each lot owner. The Deed of Covenant records the basis on which thepark is run. It includes restrictions on the use of the lots and provision for the lotowners to be levied for the running costs of the holiday park.[3] There are disputes between the applicants and MCL as to the way levies arebeing struck and the period for which lot owners are entitled to occupy their lots. Theapplicants seek declaratory relief as to the interpretation of the Deeds of Covenant.Interpreting the Deeds of Covenant[4] As noted, the rights and obligations of both lot owners and MCL are governedby terms of the Deeds of Covenant. Compliance with the Deed of Covenant by the lotowners is assured through a Memorandum of Encumbrance that each lot owner mustgrant. An encumbrance instrument is a recognised means of ensuring compliance withcovenants in gross – that is, personal covenants binding on landowners but notattaching to the land.2 The encumbrance operates by securing a rent charge, so thatthe rent charge does not become payable provided the encumbrancor does not breachthe terms of the Covenant. Clause 10 of the Deed of Covenant requires:The Covenantor will enter into and execute a registerable memorandum ofencumbrance in the form attached in favour of the Manager to secure the1 Two lots were taken by the Waikato Regional Council for flood protection work and are notrelevant to this case.2 Escrow Holdings Forty-One Ltd v District Court at Auckland [2016] NZSC 167, [2017] 1 NZLR374.Covenantor's observance and performance of all of its obligations andresponsibilities under this agreement; and the Manager will enter into andexecute a registerable memorandum of encumbrance in the form attached infavour of the Covenantor to secure the Manager's observance andperformance of all its obligations and responsibilities under this agreement.[5] Pursuant to that obligation, each lot owner executed a Memorandum ofEncumbrance which was registered against the title.[6] Against that background, the Deed of Covenant falls to be interpreted inaccordance with the recognised principles of contractual interpretation. The questionis what the document would convey to a reasonable person having all the backgroundknowledge which would have been reasonably available to the parties.3 This objectivemeaning is taken to be that which the parties intended.4 There is some debate aboutthe extent to which extrinsic evidence can be used in the interpretation of an instrumentthat binds successive owners of land, but in this case I am satisfied that the Deed ofCovenant can be interpreted by reference to the text of the Deed itself and the materialreferred to in it.Dispute over leviesThe issue and the declarations sought[7] Under the Deed of Covenant lot owners were to be levied annually to cover thecosts of running and maintaining the holiday park. The Deed of Covenant providesfor a "Manager Levy" to cover the cost of running the holiday park and a "BuildingLevy" to provide a fund for building work required. Schedule C sets out specific itemsfor which the levies can be used, one of which is rates, which are to be paid out of theManager's Levy. Levies could increase by no more than 10 per cent each year.[8] When the titles were first issued, rates were charged on the entire site andrepresented a very modest proportion of the Manager's Levy. Problems arose in 2007when the Thames Coromandel District Council (TCDC) changed the basis on which3 Firm PI1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60],citing Lord Hoffmann's principle from Investors Compensation Scheme Ltd v West BromwichBuilding Society [1998] 1 WLR 896 (HL) at 912. See also, Big River Paradise Ltd v Congreve[2008] NZCA 78, [2008] 2 NZLR 402.4 Firm PI1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60].rates were struck and rated each individually owned lot as a single unit inhabited parts(SUIPs). This had the effect of increasing rates from $2,741.08 in the 2006/07 year to$64,488.08 for the following year.[9] Litigation ensued between HPL and the TCDC. During this period, MCL neverincreased levies to accommodate the rates increase, mistakenly believing TCDC didnot have a legitimate basis for changing the rates. Eventually, the issue was resolvedwith TCDC on the basis that charges would be levied for the individual lot owners asSUIPs, except for the sites owned by HPL and run as a camping ground, which wouldbe charged one SUIP rate as a single site.[10] A dispute arose between MCL and the lot owners when MCL sought to levylot owners for the arrears of rates due in respect of their individual lots. Most lotowners paid the arrears. Some paid without prejudice. Some did not pay. In anarbitration between HPL/MCL and the lot owners who had not paid the arrears, theArbitrator found that under the terms of the Deed of Covenant no liability for ratescould be imposed on the lot owners without amendment or variation of the Deed ofCovenant. However, the Arbitrator also held that HPL/MCL could impose a surchargeon the lot owners to recover the difference between the actual levies charged and thetotal levy imposed, subject to the 10 per cent annual cap provided for in the Deed ofCovenant.5[11] In a second award, dated 13 March 2017, the Arbitrator confirmed the effectof his previous decision:At [89] of the [first] Award I determined that the sum that could be chargedeach year would be the difference between the amount charged in the previousyear, and an amount based on a 10 per cent increase on the previous year'samount, less the actual increase between the previous year and the currentfinancial year In terms of the commencement date for the recovery, the first year will be the2007/2008 year as that was the first year TCDC imposed SUIP charges. [HPL]and [MCL] would have been entitled to recover the SUIPs in this year subjectto the 10 per cent cap from what was charged in 2006/2007. Therefore Iconfirm they are now entitled to recover the SUIPs from the 2007/2008 yearbased on the above formula 5 Award of DJ Clark as Arbitrator, 31 August 2016.For the years post-2014/2015 [HPL] and [MCL] are entitled to recover therate arrears until the sum in the Deed of Settlement sum is paid in full(calculated on a 1/68th or 1/69th basis). The amount recoverable will be basedon the above formula in that a budget for the entire campground will be struck,a levy created and an increase (or not) would occur for that budgeted year forall Lot Owners. Any difference in the actual increase and a 10 per cent capwill be the amount recoverable against the Respondents.[12] The applicants say that since the arbitration MCL has adopted practices thatare contrary to the terms of the Deed of Covenant in an effort to circumvent the effectof the award and obtain payment of the arrears. Specifically, it is said that MCL has:charged a 10 per cent increase in the Manager's Levy without providing accounts tojustify the increases; reduced the Building Levy to zero so as to artificially increasethe Manager's Levy; purported to include in the calculation of levies costs such aslegal costs that are not provided for in the Deed of Covenant; offered a rebate to lotholders who have paid the arrears.[13] The applicants say, essentially, that Schedule C is prescriptive so that noadditional items can be charged for. The declarations sought in relation to this issueare:(a) When fixing the Manager Levy can Te Puru Management include costsnot specifically listed in Schedule C?(b) When fixing the Building Levy can Te Puru Management include costsnot specifically listed in Schedule C?(c) Can Te Puru Management decline to provide unredacted YearlyAccounts and an Annual Report and Reconciliation requested by theApplicant Covenantors for the Manager's Levy?6(d) Can Te Puru Management decline to provide an Annual Reconciliationof the Building Levy?6 This question is in the form as amended during argument; the original form included reference toDaily Accounts and omitted "unredacted".(e) Is the Manager's Levy intended to be cost recovery only or can Te PuruManagement retain a margin or carry a loss or a surplus as the case maybe?(f) Is the Building Levy intended to be cost recovery only or can Te PuruManagement retain a margin or carry a loss or a surplus as the case maybe?(g) Are the applicants entitled to ask these questions in light of thearbitration before Mr Clarke?(h) Can Te Puru Management offer a rebate to those who are not part of theapplicant group?Provision for levies under the Deed of Covenant[14] Clause 5.2 and Schedule C provide for the imposition of levies. Clause 5.2provides that:The Covenantor will pay a levy (the Levy) as detailed below by such paymentoption as agreed to by the Manager provided that all payments are fully madeby 31 March in each year. The Levy is divided into:(a) The Manager Levy, which is to be paid direct to the Manager tocover the costs of the Manager maintaining and operating theCampground and its amenities and utilities; and(b) The Building Levy, which is to be paid by each Covenantor annuallyinto a solicitor's trust account nominated by the Manager and is to beused by the Manager as a reserve fund for future maintenance,building works and other capital projects. This Building Levy mayonly be disbursed to the Manager on production of invoices for actualcosts incurred.The Manager Levy and the Building Levy are as set out in Schedule C. TheLevy may vary provided that the total Levy must not in any year, from thesecond year that the Levy applies, be more than 10% higher than the Levy ofthe previous year. This proviso is subject to the provisions of clause 6.2.[15] Schedule C provides:Te Puru Holiday Park Site Owner's Annual Costs – Refer to clauses 5.2(a) and(b).Manager's Levy: $1,200/annum in advance. If paid by instalments add10%.1 Licencing fees2 ACC levies3 Accounting fees4 Insurances – common buildings5 Telephone – office6 RatesThames Coromandel District CouncilEnvironment Waikato7 Energy – Common facilities only (site owners pay own electricity)ElectricityDiesel8 Rubbish Collection and Removal9 Grounds MaintenanceLawns MowingEdge SprayingPruning and Weeding Common areas10 Roads MaintenanceRe-metal and Grade annually (3000m²)11 CleaningDaily toilets, showers & kitchenBi-annual external washdown12 Repairs and MaintenanceCommon area buildingsManager's OfficeServices infrastructure13 Camp Manager's SalaryBuilding Levy $300/annum in advance. If paid by instalments add10%.14 Building Replacement / New Buildings FundSecure Boat Parking & Washdown (per boat) by separate andindividual arrangementManager's Duties – to 'Run' the campEnsure camp maintains level of quality in all respectsManager in a financially sustainable mannerAdminister rules of the campMonitor properties & visitorsSecurityCompliance – licences, consents, ACCManager Health & Safety and Fire Protection protocolsRead electricity meters – invoice powerManager 'service' contracts – cleaning, mowing, rubbish, etc(if not by self)Maintain roads, buildings and utilitiesManage casual stayersDaily accountsYearly accountsAnnual report and reconciliationInterpretation of cl 5.2 and Schedule C – what can be included in the levies?[16] Broadly, the applicants say that Schedule C of the Deed of Covenant isprescriptive in the sense that if any cost item is not specifically mentioned then itcannot be recovered by way of the Manager's Levy or Building Levy. MCL says thatSchedule C is not prescriptive and can accommodate costs not specified in theschedule. In any event, it argues that the applicants are now estopped from raising thisargument because it was already determined in a previous arbitration between theparties.[17] Ms Hughes, for the applicants, argued that the plain and ordinary meaning ofthe words in Schedule C was that the items identified were the only items in respectof which costs could be levied. Moreover, because cl 5.2(a) refers to the purpose ofthe Manager's Levy as being "to cover the costs of the Manager maintaining andoperating the campground", the Levy is limited to costs actually incurred by theManager so that the Manager cannot add expenses to the items in Schedule C and mustbe able to show the income received and the expenses met to justify the levy.[18] Mr Millard QC, for MCL, argued that Schedule C does not specify that it isprescriptive but, rather, that read in conjunction with the Manager's duties, can be seenas an indicator of the minimum things that the Levy is to cover. The Manager's dutiesare said in Schedule C to be to "run" the camp. Given that the covenant has anindefinite life, it is said that it cannot have been intended that the items identified in itwere to be a strict list. Mr Millard also pointed to the fact that cl 5.2(a) provides forthe Manager's Levy as being "to cover the costs of the Manager maintaining andoperating the campground and its amenities and utilities". If Schedule C were readprescriptively then it would conflict with cl 5.2(a) because, self-evidently, anyadditional costs for the Manager could not be recovered.[19] In my view, the Deed of Covenant, read as a whole, contemplates thatadditional costs connected with running the campground can be included in the levieseven if not specified in Schedule C. First, cl 5.2 uses "levy" to refer to both the typeof levy (Manager's Levy and Building Levy) as well as to the amount to be levied.The distinction between "levy" and "total levy" in the statement "the Levy may varyprovided that the total Levy must not in any year, from the second year that the Levyapplies, be more than 10 per cent higher than the Levy of the previous year" suggestsa distinction between the overall nature of the Manager's Levy (i.e. what it maycontain) and the monetary amount of the Levy (total levy). If the provision for theLevy to vary was intended to mean only the amount of the levy it would have beenunnecessary to refer to the "total levy"; it would have been sufficient to have said that"the Levy must not be more than 10% higher that the Levy of the previous year".Schedule C must be read against the provision in cl 5.2 for the Levy to vary.[20] Secondly, the interpretation just described makes commercial sense and theinterpretation contended for the applicants does not. It is a settled principle ofcontractual interpretation that a covenant should be interpreted with regard to itscommercial purpose and general business common-sense.7 It is common knowledgethat the costs associated with land rise over time. If there were no provision foradditional costs to be recovered, there would be a serious risk that the Manager wouldbe unable to provide the services that are required by cl 5.7, which would be to thedisadvantage of the lot owners.[21] Thirdly, there are costs contemplated by the Deed of Covenant as being able tobe levied for that are not provided for in Schedule C. "Services" is defined as "powerwater and other utilities provided to an exclusive use area" and cl 5.7(d) requires theManager to use the Manager's Levy to pay "all rates, insurance, electricity and watercharges relating to the land". However, Schedule C does not provide for water.Likewise, the Manager's duties set out at Schedule C include "security" but there isno provision for the cost of security to be recovered. This strongly suggests thatSchedule C was not regarded as exhaustive, even at the outset.[22] The same conclusion applies to the Building Levy.[23] The answers to the questions posed at paragraphs 23 and 24 of the statementof claim are therefore:7 Escrow Holdings Forty-One Ltd v District Court Auckland [2016] NZSC 167 at [58]. See alsoMatt Barber, Jeremy Finn and Stephen Todd Burrows, Finn and Todd on the Law of Contract inNew Zealand (6th ed, LexisNexis, Wellington, 2018) at 200.(a) When fixing the Manager's Levy, Te Puru Management can includecosts not specifically listed in Schedule C;(b) When fixing the Building Levy, Te Puru Management can include costsnot specifically listed in Schedule C.Provision of accounts and annual report and reconciliation[24] The applicants ask whether MCL can decline to provide unredacted yearlyaccounts and an annual report and reconciliation. MCL is required to produce thesedocuments as part of the "Manager's Duties" specified in Schedule C. MCL hadargued that there is no specific requirement in the Covenant to provide yearly accountsand an annual report and reconciliation to the lot owners (though, in fact, an annualreport and reconciliation is said to have been made available to those lot owners whowished to see it). During argument, however, Mr Millard conceded that MCL wasobliged under the Deed of Covenant to provide unredacted Yearly Accounts and anunredacted Annual Report and reconciliation and agreed to a declaration being madeto that effect.[25] For completeness, I record my view that this was a proper concession to make.MCL contracted with each lot owner to undertake the duties specified in Schedule C.The only explanation for MCL being required to produce such accounts and reportscan be to benefit of the lot owner. But the lot owner cannot benefit from the productionof such reports if they are not made available, and in an unredacted form.[26] The answers to the questions posed at paragraphs 25 and 26 in the statementof claim are therefore:(a) Te Puru Management cannot decline to provide unredacted YearlyAccounts and an Annual Report and Reconciliation requested by theApplicant Covenantors for the Manager's Levy;(b) Te Puru Management cannot decline to provide an AnnualReconciliation of the Building Levy.Retaining a margin or carry a loss or surplus[27] The applicants ask whether MCL can retain a margin or carry a loss or surplusforward from year to year. I consider that the latter two were effectively dealt with inthe arbitration. In respect of the rates, the Arbitrator decided that rate arrears could berecovered over subsequent years until it was fully paid. The inevitable effect of thatfinding was to allow MCL to carry forward a loss. It is not open to the applicants nowto advance a different interpretation that would have the effect of defeating theArbitrator's finding.[28] In any event, I do not consider that the Covenant ought to be interpreted asprecluding MCL from carrying forward a loss or surplus. This is because managementof a large site such as this is quite likely to produce expenses that exceed or fall shortof the amount eventually required. Not all of the items contemplated by Schedule Ccan be easily identified and/or accommodated within a single year. For example,repairs and maintenance programme, particularly of services infrastructure (item 12)could easily cost more or less than the Levy struck at the outset of the year and paidin advance. It would be impractical to manage the camp on this basis.[29] I take a different view regarding whether MCL is entitled to take a margin onthe costs of running the holiday park. Mr Millard argued that the parties must haveexpected and intended that the manager would make a profit. I see no basis in thedocuments on which to base such an assertion. The lot owners have agreed to belevied for an amount sufficient to "cover the cost" of running the holiday park. Thatincludes a salary for the manager which, presumably, is set at a level that allows themanager a reasonable return on the effort required to undertake this role. But there isno basis on which to conclude that the manager might also take a margin on any otherexpenses incurred in the running of the holiday park. The position is the same inrelation to the Building Levy. There is no basis on which to conclude that the partiesintended that the manager would take a margin on the cost of building works.[30] The answers to questions posed at paragraphs 27 and 28 are therefore that:(a) The Manager's Levy can result in the manager carrying a loss or asurplus forward, but is not intended to allow the manager to retain amargin on expenses;(b) The Building Levy can result in the manager carrying a loss or a surplusforward, but it is not intended that the Manager be able to retain amargin on expenses;(c) Insofar as the items for which a levy can be struck and the ability tocarry forward a loss or surplus are concerned such questions areprecluded by the outcome of the arbitration.Rebate[31] In order to recover rates arrears from those who did not pay prior to thearbitration MCL has, in recent years, increased levies up to the 10 per cent cap for alllot owners and offered a rebate to those who have paid their SUIP levies and continueto do so. Mr Julian described this as a balancing tool so that those who have paid ratesarrears are not levied a second time. The applicants argue that the rebates offered arean improper penalty on them. I cannot accept this. It is clear from the arbitrationaward that MCL is entitled to take steps by way of the Levy to impose a surcharge inorder to recover rates arrears. Since not all lot owners were in arrears of rates it musthave been contemplated that there would be a differentiation in the Levy struck inrespect of lot owners who had paid their rates arrears and those who had not.[32] The answer to the question at paragraph 30 of the statement of claim is,therefore, that Te Puru Management can offer a rebate to those who are not part of theapplicant group.Occupation on a permanent basis[33] The second area of dispute concerns the clause in the Deed of Covenant thatprohibits owners from residing in their exclusive areas on a permanent basis. MCLhas sought to levy an additional charge to those whose main residence is thecampground and to impose an additional levy for such owners for the use of thesewage system.Background[34] Clause 5.1 of the Covenant provides that: The Covenantor must at all times comply with the Rules and ManagementPlan and in particular must not:(a) reside in the Exclusive Use Area on a permanent basis.[35] In May 2017, MCL endeavoured to charge a further levy of $30 per week forthose lot owners that it considered were residing at the holiday park on a permanentbasis. The applicants accept that permanent occupation is not permitted under theDeed of Covenant. But they say that "permanent", on the plain wording of cl 5.3,defined as not occupying the site continually for more than 50 days. They rely onCamping Grounds Regulations 1995, the Camp Management Plan and the TCDC'sOperative District Plan, all of which define temporary occupancy as being no morethan 50 days of continuous occupancy. As a result, they argue that the prohibition onpermanent residency is satisfied by their leaving on day 49 or 50 and returning shortlythereafter.[36] The applicants seek declarations in answer to the following questions:(a) Is a Covenantor in compliance with the Deed of Covenant if they (ortheir tenant) vacate their exclusive use area after 49 days of continuousoccupation and return after one night away to repeat the pattern?(b) In order to comply with the provision in the Deed of Covenant, do theCovenantors need to have a place of permanent residency outside of thecampground where they do reside?[37] When HPL applied for resource consent to develop the site it did so on thebasis of a management plan that detailed, among other things, the use to which the sitewould be put. When TCDC granted the resource consent it imposed certainconditions, including:That the development proceeds in accordance with the plans and informationprovided with the application, namely: – proposed management plan entitled"Te Puru Holiday Park Management Plan 2005", version dated 13 December2005 stamped and signed by council on 14 December 2005.[38] The Camp Management Plan included the following provision regardingusage:The property is primarily a holiday accommodation facility associatedrecreation facilities and amenities. The buildings and structures are a mixtureof mobile and permanent structures. All of these provide temporary livingspaces (as defined by the Thames Coromandel District Plan). These are bestdefined as three separate "character areas", which this Management Plan seeksto maintain:Character area 1: Tram carsCharacter area 2: Cabins/caravans with permanent awningsCharacter area 3: Casual sites – tents/non-powered sitesNO permanent occupation is permitted on any campsite (excluding Manager'sresidence). Temporary occupancy is defined by the Thames CoromandelDistrict Council as being no more than 50 days in any continuous period ofoccupancy.[39] Later the plan also provided that:The proprietor ensures all activities and buildings on the property comply withall regulations of the Thames Coromandel District Council and WaikatoRegional Council (EW).[40] The applicants' argument on this issue rests on the definition in the TCDC'sOperative District Plan which provides that:Temporary living placesmeans a location where any type of structure or building are placed for theintended purpose of camping for periods not exceeding 50 days in anycontinuous term of occupancy. Note – Where the caravan etc remains on sitelonger than 50 days, it is still within the definition of temporary living placeif it is not occupied for more than 50 days continuously.[41] This argument is, essentially, that if occupancy is less than 50 days then it mustbe temporary by virtue of the definition and if it is temporary then it cannot bepermanent.[42] I consider this approach overly narrow. The phrase "reside on a permanentbasis" in cl 5.1 is to be interpreted against the purpose of the Deed of Covenant which,on this issue, is discernible from the Management Plan and the resource consentdecision.[43] I start by looking broadly at the purpose of the holiday park as that can bediscerned from the Management Plan. The Management Plan canvassed the historyof the park, which is relevant because the overall tenor of the Management Plan wasthat the historical use of the park was intended to continue under the new format. TheManagement Plan noted that the camp property had "provided traditional Kiwi-styleholiday accommodation to New Zealand families and overseas visitors" and thattramcars were brought to the site in 1956 "to provide a more permanent form ofholiday accommodation". The objectives of the Management Plan and the proprietorwere stated to include:To continue to provide holiday accommodation and recreation in such a waythat the nature and character of this coastal holiday Park are protected.[44] Later, the section on usage from which I have previously quoted stated that theproperty "is primarily a holiday accommodation facility with associated recreationalfacilities and amenities."[45] It seems to me that the overriding intention of all those involved in Te PuruHoliday Park (based on the fact that all lot owners have committed themselves to theDeed of Covenant which incorporates by reference the Management Plan) was thatthe holiday park would be used for holiday accommodation. It is evident from theManagement Plan and the resource consent decision that a significant considerationwas the retention of the character of this site as a holiday park/camping ground becauseof the broader implications for the surrounding area. This is an area intended to beused on a part-time basis for holidays. It is clearly not an area intended to be used forpermanent residence.[46] I consider that it takes too narrow a view of the meaning of "permanentoccupation" to say simply that one's presence for no more than 50 days at a stretch issufficient to comply with cl 5.3. "Permanent residence" in cl 5.3 is not to be judgedmechanically by the number of days a lot owner spends at the site continuously butalso by the nature and purpose of his or her occupation. Interestingly, although thedefinition of "temporary occupancy" is a helpful indicator, the source of thattimeframe itself suggests that the nature and purpose of the occupancy was a relevantconsideration. Counsel relied, in part, on the Camping Grounds Regulations 1985,under which the holiday park was registered, and which also defined "temporary livingspace" as one "intended for human habitation for periods not exceeding 50 days in anycontinuous term of occupancy." But the explanatory commentary to those regulationsincludes the following explanation for the choice of 50 days as being the relevantperiod:The 50 days allows the campers' accommodation to be occupied full-time forat least the Christmas school holidays. Many people park their caravan at acamping ground for the summer and visit at weekends and holidays. This doesnot contravene the 50 day limitation because the temporary living place is notoccupied continuously.[47] Finally, I note the arguments advanced for the applicants that it would bepossible to rent out one's lot to a number of tenants over the course of a year with theresult that the lot could be continuously occupied. That submission was a response tothe evidence of HPL's director, Mr Julian, about the extra stress on service facilitiescontinual occupation would have. Whilst true in a theoretical sense, if one takes theview that the purpose of the limitation on occupancy was to preserve the character ofthe site as holiday accommodation then that would not matter. Moreover, it seemsvery unlikely that the site would be regarded as desirable for holiday accommodation,in the middle of winter, for example.[48] It follows that the lot owner who has no other residence must be residingpermanently at the park. Absenting oneself for a day or so every 50 days does notalter that fact. I accordingly answer the declaration sought at paragraph 37 of thestatement of claim "no" and the declaration sought at paragraph 38 of the statement ofclaim as "yes".Costs[49] If costs cannot be agreed, counsel may address the question by memorandafiled on behalf of the respondents within 14 days, the applicants within a further sevendays and the respondent by way of reply within seven days after that.____________________P Courtney J