Māori land owner hits back at complaint over land lease increase

A Māori entity has hit back at a group of Auckland townhouse owners who are dissatisfied with leasehold land payments, complaining the $1.3 million being sought annually was “harsh and unconscionable” because it cost each owner around $16,000.

Whai Rawa Rail Lands LP has won the latest in a series of court hearings involving Body Corporate 201036, representing owners of the 81-unit Parnell Terraces on the corner of The Strand and Ronayne St beside the railway line, near the waterfront.

The Parnell Terraces’ owners have homes on Whai Rawa land leased on a 150-year term, starting in 1996.

Whai Rawa Railway Lands LP is part of Ngāti Whātua Orākei Whai Rawa, the financial entity of Tamaki Makaurau which bought many hectares of Quay Park and Parnell land as part of its Treaty of Waitangi settlement last decade.

Ngāti Whātua Orākei Whai Rawa is the commercial investment arm of Ngāti Whātua Orākei Trust.

The ground rent beneath Parnell Terraces is calculated at 6 per cent of the unimproved land value annually but the body corporate has challenged that, wanting to vary the amount, saying it’s too high.

The ground rent had been $740,000/year, shared amongst the 81 owners, but in August 2018 that nearly doubled, hitting $1,375,530/year. The average annual ground rent per unit is now $16,982, owners complained in a previous court case.

Whai Rawa sought to strike out the body corporate claim against it and sought summary judgment against the townhouse owners.

Last April, the High Court heard that case where Whai Rawa responded to the body corporate by applying for summary judgment against the townhouse owners but it lost.

That decision ruled Whai Rawa had not established the body corporate’s claims were speculative and without foundation, nor that they were utterly baseless on the evidence.

Dissatisfied with the decision, Whai Rawa this year sought leave to appeal, its legal team headed by Davy Salmon KC.

Justice Brendan Brown and Justice Edwin Wylie’s decision in the Appeal Court has just been released, granting Whai Rawa’s application to appeal last year’s High Court decision.

But the substantive hearing is yet to occur so matters are far from finished. Nor did a full hearing take place last year in the High Court. The judge there said the issue needed to be dealt with through discovery as part of a more substantive proceeding.

This year, Whai Rawa argued in the Appeal Court that there was no clear statute in law to rule on the interpretation of the body corporate’s claims. Arguments were put about whether the Residential Tenancies Act or the Unit Titles Act applied.

Whai Rawa also submitted that findings on the scope and meanings of the relevant provisions of those two laws were likely to have “significant ramifications for ground lessors and lessees connected with unit title developments throughout New Zealand”, the Appeal Court judges ruled.

They therefore allowed Whai Rawa’s appeal in their October 11 decision.

This is just the latest in a number of moves in the fight which dates back some years.

In 2020, body corporate chairman Michael Rehm said owners decided they would empower the committee of the body corporate to suspend the ground rental levy and for those owners who could pay it, to make payment to Whai Rawa directly.

Rehm said then the primary purpose

Whai Rawa says [the] body corporate is . . . no longer operating as intended by the act. From 2021 decision of Justice Christine Gordon

of this was to protect the owners who were paying their proportion of the ground rental in full and on time.

The owners hoped they would not need to take that action but believed if Whai Rawa understood their predicament and how onerous it had become for the body corporate to continue collecting from defaulting owners, many of whom had little left to offer, Whai Rawa might be willing to reconsider its position.

His comments were in a 2021 decision of Justice Christine Gordon in the High Court at Auckland. She ruled in favour of the Māori entity.

“Whai Rawa says not only has the rental been in arrears for 10 months, but the body corporate, as lessee, is dysfunctional and no longer operating as intended by the act and is in breach of its obligations under the lease,” that October 12, 2021 decision said.

“Whai Rawa says the dysfunction arises because of the body corporate’s conscious and tactical decision to suspend levying and collecting ground rental from unit owners and paying it to Whai Rawa. Instead, the body corporate has directed owners to make payment of their share of the ground rental directly to Whai Rawa.

“Whai Rawa says the body corporate’s decision was made for the tactical and improper purpose of putting pressure on Whai Rawa to renegotiate the terms of the lease,” Justice Gordon said.