CANDLER v RAND SAVER AUTOMOBILES LTD [2019] NZHC 2179

CANDLER v RAND SAVER AUTOMOBILES LTD [2019] NZHC 2179 [2 September 2019]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-680[2019] NZHC 2179UNDER Section 244 of the Property Law Act 2007IN THE MATTER OF 5/26 Hillside Road, Wairau Valley, AucklandBETWEEN TREVOR DOUGLAS CANDLERApplicantAND RAND SAVER AUTOMOBILES LIMITEDRespondentHearing: 27 June 2019Appearances: S E Wroe & E Karamchandani for ApplicantJ P Hickey for RespondentJudgment: 2 September 2019JUDGMENT OF PAUL DAVISON JThis judgment was delivered by me on 2 September 2019 at 4:30 pmPursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors:Pidgeon Law, AucklandHickey Law, AucklandIntroduction[1] In this proceeding the applicant originally sought an order for possession ofleased commercial premises. Since the hearing the respondent has vacated thepremises, and the applicant now seeks an order pursuant to s 251(2) of the PropertyLaw Act 2007 (the Act) directing the respondent to pay the outstanding rent up to thedate it vacated the premises together with reasonable compensation for breach of thelease.Background[2] By originating application dated 16 April 2019 Trevor Douglas Candler (theapplicant) applied for an order for possession of the premises situated at 5/26 HillsideRoad, Wairau Valley, Auckland, that he had leased to Rand Saver Automobiles Limited(the respondent) by agreement to lease dated 16 May 2017 (the lease agreement). MrEugene Van Rooyen (Mr Van Rooyen), who is a director and shareholder of therespondent, executed the lease agreement as sole guarantor of the respondent'sobligations under the agreement.[3] On 27 December 2018 the applicant, by his solicitor Joanna Pidgeon, gavenotice to the respondent and Mr Van Rooyen of his intention to cancel the lease fornon-payment of rent and operating expenses totalling $16,883.71. On 4 March 2019the applicant gave notice to the respondent of cancellation of the lease, stating that thetotal amount due for unpaid rent, operating expenses and solicitor client costs incurredby the applicant was $19,048.91. On 16 April 2019 the applicant filed the presentapplication seeking an order for possession of the premises and ancillary orders forthe payment by the respondent of outstanding rent, operating expenses, interest andlegal costs.[4] Following service of the application, and there being no notice of oppositionfiled, the application was set down as a formal proof hearing on 27 June 2019. On themorning of the hearing the respondent filed a notice of opposition and appeared bycounsel at the hearing. Mr Hickey, appearing for the respondent, sought anadjournment of the matter. In support of the application for an adjournment Mr Hickeysaid that the respondent acknowledged that rental and operating expenses wereoutstanding, but said that his client disputed the outstanding amount. He said thatnevertheless the respondent would be in a position to pay $9,439 towards the arrearsearly the following week. Ms Wroe for the applicant opposed the adjournment. MsWroe submitted that the respondent had ignored the notice given in December 2018of intention to cancel the lease, and had similarly ignored the notice of cancellation ofthe lease and had failed to file a notice of opposition until the morning of the hearing.[5] After hearing submissions from both counsel, I declined the respondent'sapplication to adjourn the hearing.[6] Having dismissed the application for an adjournment of the hearing, the matterproceeded with Ms Wroe for the applicant making submissions in support of theapplication for an order for possession and detailing the composition of the arrears ofrent, operating expenses, the basis of the calculation of interest charges and the claimfor solicitor-client legal costs, as set out in the applicant's supporting affidavits.[7] In his submissions, Mr Hickey made an oral application for relief againstforfeiture principally on the basis that the applicant had not notified the respondent ofthe outstanding operating expenses sum for a period of time, resulting in therespondent being prejudiced by being unable to pay the significant sum at short notice.Mr Hickey also submitted that certain rental payments made by the respondent hadnot been credited promptly although he accepted that they were subsequently takeninto account by the applicant.[8] At the conclusion of the hearing I reserved judgment and directed the applicantto file a detailed schedule setting out dates when rent and operating expense paymentshad fallen due, and when any payments were made including any credits given to therespondent. On 2 July 2019 counsel for the applicant filed a memorandum attachingone schedule listing the unpaid rent, operating expenses and legal costs, and a secondschedule covering the period 23 October 2018 to 27 June 2019, detailing theinformation.[9] By further memorandum dated 25 July 2019 Ms Wroe advised that therespondent had vacated the premises on 22 July 2019. Accordingly, the applicant nolonger pursues his application for an order for possession of the premises, butmaintains his application for ancillary orders to be made against the respondent foroutstanding rental, outgoings, interest and costs.[10] The application is supported by affidavits sworn by the applicant himself andseveral additional affidavits, including affidavits by the property manager, MsCatherine Goodwin of Goodwin Realty Ltd, and the applicant's solicitor Ms JoannaPidgeon. In his affidavit the applicant states that he entered into an agreement to leasewith the respondent dated 16 May 2017 which he has exhibited as an attachment tohis affidavit. The agreement to lease is for a term of two years commencing 15 May2017 and expiring 14 May 2019 with one right of renewal for a further period of twoyears provided that the lessee had made less than one late payment and that any suchdefault was less than 30 days outstanding during the initial two year term of the lease.[11] The annual rental for the first two year term of the lease is $34,800 per annum(excluding GST) payable monthly in advance.[12] The agreement to lease further provided:7) The tenant shall enter into a formal Deed of Lease with the Landlordto be prepared by the Landlord's solicitor at the cost of the Tenant,using the 6th edition Auckland District Law Society Deed of Leaseform amended in accordance with the provisions of this Agreement("Lease") and its annexures including the appended standardLandlord variations.8) Notwithstanding that the Deed of Lease may not have been executed,the parties shall be bound by the terms, covenants and provisionscontained in this agreement and in the Lease as if the lease is dulyexecuted.[13] Pursuant to paragraph 5.1 of the Second Schedule of the Auckland District LawSociety Deed of Lease 6th edition (ADLS Lease), interest on unpaid rental is payableon demand in the event of default continuing for 10 days following due date. TheSecond Schedule provides for a default interest rate unless a contrary intention appearsin the lease or elsewhere. In the agreement to lease the default interest rate is specifiedas being "5% above the Landlord's bank overdraft rate at the time of default".11 Agreement to Lease, para 13.[14] Two affidavits in support of the application were sworn by Ms Goodwin..[15] In Ms Goodwin's first affidavit sworn on 15 April 2019, she explains that hercompany took over management of the Hillside Road property in October 2018 at atime when the respondent was already in arrears. She says that following an initialtelephone conversation between herself and Mr Van Rooyen, he proposed to reducethe outstanding arrears by payments of $1,000 a month to be applied towards arrearsof operating expenses and rent. In a letter dated 23 November 2018, sent by MsGoodwin to the respondent and Mr Van Rooyen, Goodwin Realty advised thatpayment of the November rent invoice was due on 15 November 2018, and said thatif it remained unpaid as at 27 November, the applicant would exercise enforcementremedies under the lease.[16] In her second affidavit sworn on 20 June 2019, Ms Goodwin updated theposition as regards outstanding rent and operating expenses under the lease agreement.Attached to Ms Goodwin's affidavit is a statement detailing the rental and operatingexpenses and the payments received.[17] Ms Goodwin attached a schedule to her second affidavit detailing thecomposition of a total sum claimed of $43,291.30. The single credit recorded in theschedule is for $500 received on 15 March 2019 which was credited against the rentdue that month. The updated schedule prepared by Ms Goodwin attached to MsWroe's memorandum of 2 July 2019, details the composition of a total sum of$46,949.58 claimed as outstanding for rent, operating expenses, and the applicant'ssolicitor-client legal fees.[18] The total of rental claimed in the schedule is $11,600, the operating expensesclaimed total $14,088.87 and the solicitors' fees claimed are $21,260.70.[19] Clause 6.1 of the ADLS Lease provides:CostsThe Tenant shall pay the Landlord's legal costs (as between lawyer andclient) of and incidental to the enforcement of the Landlord's rights remediesand powers under this lease.[20] The solicitors' costs detailed in the updating schedule prepared by MsGoodwin correspond to fee invoices issued by the applicant's solicitors Pidgeon Law.The fee invoices are for professional attendances in connection with enforcement ofthe applicant's rights, remedies and powers under the lease in relation to thecancellation of the lease, attempts at peaceable re-entry of the premises and engagingcounsel in relation to the application for the order for possession and relatedattendances. The fee invoices are annexed to the affidavit by Ms Joanna Pidgeon filedin support of the application. I am satisfied that the amounts claimed in the scheduleand the solicitors' fees do relate to costs incurred in connection with the enforcementof the applicant's rights, remedies and powers under the lease pursuant to cl 6.1.Section 251 of the Act provides:251 Powers of court in making order for possession(1) On an application to a court for an order for possession of the landcomprised in a lease, the court may make the order and cancel thelease.(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 cancellationor any later date on which the lessee yields up possession:(b) order the lessee to pay reasonable compensation for thebreach:(c) impose on the lessee or the lessor any other conditions that itthinks 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 section245 or 246; and(b) in doing anything else that the lessor has reasonably done inrelation to the breach.[21] I am satisfied that the solicitors' fees as detailed in the schedule annexed to MsGoodwin's second affidavit, and as updated by the schedule attached to Ms Wroe'smemorandum of 2 July 2019, relate to steps that were reasonable for the applicant tohave taken in relation to the respondent's breaches of the lease agreement.[22] I am also satisfied by the evidence of Ms Goodwin as contained in heraffidavits that the schedule annexed to her second affidavit and subsequently updated,correctly sets out the amount of unpaid rent and the amount of unpaid operatingexpenses relating to the premises.[23] Accordingly, I find that under the terms of the lease agreement into which theterms of the ADLS Lease are incorporated, the respondent is liable to pay the applicantthe total sum of $46,949.58 and I enter judgment for the applicant against therespondent for that sum.[24] The applicant also claims interest totalling $1,369.10 as calculated in aschedule annexed to Ms Pidgeon's affidavit. The interest rate applied to theoutstanding amounts due under the lease agreement is 24.5 percent, being 5 percentabove the applicant's bank overdraft interest rate at the time of the default pursuant toclause 13 of the lease agreement. Apart from the use of that interest rate for the purposeof the interest calculation, the only evidence of the applicant's bank overdraft interestrate is his statement in his affidavit that his overdraft rate is 19.5 percent. I do notconsider that the applicant has discharged the onus of proving his overdraft interestrate. The applicant has failed to support his evidence with any documentary materialand in my view more than a mere assertion of his overdraft interest rate is required. Iaccordingly disallow that part of the applicant's claim.Result[25] I enter judgment for the applicant against the respondent in the sum of$46,949.58.[26] The applicant is entitled to costs and I direct the applicant to file and serve acosts memorandum (not exceeding three pages in length) within 10 working days fromthe date delivery of this judgment. The respondent is to file and serve a costsmemorandum within 7 working days from receipt of service of the applicant's costsmemorandum. Following filing of the costs memoranda, I shall determine costs on thepapers._____________Paul Davison J