E & E Developments Ltd v Housing NZ

Summary judgment

E & E Developments Ltd v Housing New Zealand Ltd and Anor – 9 February 2012 – CA 820-2010 – Chambers, Ronald Young and Andrews JJ

Successful appeal against summary judgment granted on defendant’s application – in May 2002 appellant and Housing New Zealand Ltd (HNZ), the first respondent, entered into an agreement under which appellant agreed to subdivide land it owned at Swanson, Auckland and to build on it 38 units – each unit was to be on its own title – under agreement HNZ was to pay progress payments as the units were constructed – once completed, HNZ was to take title to the units – in early 2003 parties instead decided that HNZ would lease the units once the development was complete – HNZ agreed to pay $245 a week for a two-bedroom unit – HNZ was to continue making progress payments but, on settlement, appellant would repay what HNZ had paid by way of progress payments – appellant seemed to have made clear, at this stage, that it did not want to be a long-term landlord: it would be looking to sell on its interest in land – all of this was recorded in a written agreement dated 23 Feb 2003 – by Nov 2—3 2003, 38 units had achieved “practical completion” – HNZ’s tenants began occupying the units from 8 Dec 2003 – at this stage some things remained to be done, in order for 38 individual titles to issue – on 20 Jan 2004 appellant and HNZ signed a lease to regularise their relationship, now units were occupied – commencement date was recorded as 8 December 2003 – Jan 2004 lease provided for a monthly tent at a rate of approximately $40,000 – although lease had a potential term of 10 years, it was anticipated it would survive only until settlement, as Feb 2003 agreement envisaged there would be 38 individual leases, one for each individual title and unit, following settlement – at some stage appellant sold its interest in the land to All About Finance Ltd (AFL)– individual titles for the 38 units became available in June 2004 – settlement took place on 21 June 2004 – at that time, appellant paid back all of HNZ’s progress payments, and individual leases with respect to the 38 units were entered into, with the individual investors becoming the respective landlords, in place of appellant and AFL – in each case, the tenant was HNZ – the Jan 2004 lease was also surrendered (the surrender date was specified to be 9 June 2004) – following settlement, HNZ paid the respective landlords rent at the agreed amounts – dispute concerned whether HNZ was liable for rent from 8 Dec 2003 to 9 June 2004, under the January 2004 lease – appellant sued HNZ for rent in the disputed period and sought summary judgment – HNZ retaliated by itself seeking summary judgment – applications were not heard together – appellant’s application failed – HNZ’s application succeeded – appellant appealed in relation to HNZ’s successful application – whether AJ was right to be satisfied that appellant’s claim could not succeed – whether it was reasonably arguable rent was payable for period 8 Dec 2003 to 9 June 2004 – HELD: tentative view expressed that, under lease, rent was payable from 8 Dec 2003, but was not due until settlement date – whilst Judge correctly drew a distinction between money being “payable” and money being “due”, he ended up with an interpretation which meant rent never became payable prior to the settlement date, notwithstanding clause providing for rent to be payable from the Commencement date – since it was always envisaged that lease would be replaced by individual leases on settlement, the entire rent clause became, on the Judge’s interpretation, effectively a sham – nothing was ever going to be payable – however it was possible tentative view might be shown to be wrong, once the agreement was placed in its overall factual matrix – it was inappropriate to be definitive in the context of a summary judgment application – summary judgment was wrongly entered in HNZ’s favour – appeal allowed – proceeding must continue to trial. 

 

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