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Jansen Limited & Others v/s Petra Holdings Limited

    CA No. 501 of 2013

    Decided On, 12 November 2013

    At, Court of Appeal of New Zealand


    For the Applicant: S P Bryers, Advocate. For the Respondent: P J Shamy, Advocate.

Judgment Text

Harrison, J.

[1] Jansen Ltd leased commercial premises in St Asaph Street, Christchurch from the former owners, the Wareings. The lease took effect for a term of three years from 1 March 2001 and was renewed on 1 March 2004, before expiring on 1 March 2007. Jansen’s directors, Simon Adams and Brent Eady (the guarantors), guaranteed payment of rent and performance of all other covenants.

[2] On 2 March 2007 Petra Holdings Ltd bought the property. Jansen was allowed to remain in occupation until 4 November 2007. Petra subsequently reentered.

[3] Petra issued proceedings against Jansen and the guarantors in the District Court at Christchurch claiming damages for Jansen’s breach of its contractual obligation to reinstate the premises at the expiry of the lease and for outstanding rent. Judge Kellar found Jansen and the guarantors liable to Petra for damages of $85,000 plus costs and disbursements of $120,383.[1] He later awarded Petra interest on the judgment debt at the contractual rate of 15 per cent per annum from 19 December 2007 until the date of judgment.[2]

[4] Panckhurst J allowed Jansen’s appeal to the extent that he reduced the damages award from $85,000 to $72,500.[3] However, in all other respects, particularly on findings of fact, he concurred with Judge Kellar’s decision.

[5] Jansen applied to the High Court for leave to appeal to this Court under s 67 of the Judicature Act 1908. Panckhurst J granted the application in part, allowing Jansen leave to appeal on the question of the appropriate interest rate payable on the judgment debt.[4] Jansen and the guarantors now seek special leave to appeal to this Court on additional grounds.

[6] Mr Bryers, who did not appear in the lower courts, submits that leave to appeal should be granted on two additional grounds. First, he submits that Panckhurst J erred in finding that Mr Wareing allowed Jansen to remain in occupation for the reason that he took no steps to secure its departure from the premises when the lease expired on 1 March 2007.[5] Clause 38 of the lease materially provided:

IF the Landlord permits the Tenant to remain in occupation of the premises after the expiration or sooner determination of the term, such occupation shall be a monthly tenancy only terminable by one month’s written notice at the rent then payable and otherwise on the same covenants and agreements (so far as applicable to a monthly tenancy) as herein expressed or implied.

[7] Mr Bryers submits that the Judge applied the wrong test. He says that in order to constitute a holding over for the purposes of cl 38 the lessor must positively consent to the lessee’s continued occupation; and that merely not objecting is insufficient to constitute the requisite permission.[6]

[8] We are not satisfied that this ground is arguable. As Panckhurst J properly noted, the inquiry is fact specific.[7] It was common ground that Jansen wished to remain in occupation after the lease expired in order to negotiate a new lease with Petra. The Wareings and Petra expressly provided for this event in their agreement of sale and purchase of the property. Accordingly the Judge had a proper basis for finding, concurrently with Judge Kellar, as follows:

Like Judge Kellar I am satisfied that Jansen held-over in the present case. The word ‘permits’ in clause 38 means no more than that the landlord allows the tenant to remain in occupation. Here, all parties knew that the lease was about to expire. Petra was to purchase the reversion and Jansen wished to remain in occupation, indeed to negotiate a new lease if terms could be agreed. In the meantime, Mr Wareing by taking no steps to secure Jansen’s departure from the premises, allowed the company to remain in occupation.

[9] In our judgment Panckhurst J applied the correct legal test in reaching this conclusion. The law does not require an affirmative act by the lessor of the type postulated by Mr Bryers. The verb 'permits' connotes acquiescence or passive acceptance; in this case allowing a state of affairs – physical occupation of premises – to continue was sufficient to satisfy the requirements of cl 38.

[10] Second, or alternatively if Jansen was permitted to remain in occupation under cl 38, Mr Bryers submits that the Judge erred in failing to find that Petra had failed to give notice to re-enter in accordance with the lease. That was because Jansen was in occupation of the premises under a contractual licence to make good the remedial works.

[11] However, as Mr Bryers acknowledges, this defence was never pleaded or argued in the lower courts. Consequently no finding was made upon it. It is too late to attempt to introduce the defence in this Court.

[12] The application for leave to appeal is dismissed. Jansen and Messrs Adams and Eady jointly and severally are to pay Petra costs as on a standard application for leave to appeal on a band A basis an

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d usual disbursements. 1. Petra Holdings Ltd v Jansen Ltd DC Christchurch CIV-2008-009-3552, 13 January 2012. 2. Petra Holdings Ltd v Jansen Ltd DC Christchurch CIV-2008-009-3552, 23 April 2012. 3. Jansen Ltd v Petra Holdings Ltd [2013] NZHC 30 [High Court decision]. 4. Jansen Ltd v Petra Holdings Ltd [2013] NZHC 1621. 5. High Court decision at [24]-[31]. 6. Cigna Life Insurance New Zealand Ltd v The New Zealand Counties Investment Co Ltd (1997) 3 NZConv C 192,540 (HC). 7 At [25].