Tenant knew of big leasehold hike: park board

The property at 21 Maungakiekie Ave. Photo / Greg Bowker

Leasehold land prices around Auckland's Cornwall Park go up about ten-fold when prices are reset every 21 years, the High Court at Auckland was told yesterday.

Matt Casey QC, for the Cornwall Park Trust Board, said this caused "a lot of angst" when prices shot up but at the end of those 21-year terms, the prices were relatively cheap.

The board is seeking $348,284 from Yong Xin Chen in unpaid leasehold fees, renovation costs and expenses after she "handed back the keys" to 21 Maungakiekie Ave on November 16, 2011.

She bought the house on leasehold land and in 2010 her rent increased from an annual $8300 to $73,750. Chen asked that the land be freeholded, seeking to buy it and saying she could not afford the annual rent, said Mr Casey.

She claimed she had not received some letters, so continued to pay the old rent. The board wrote to Chen and her daughter Shanshan Lin, saying the property would be auctioned on April 1, 2011, Mr Casey said.

"The defendant was less than forthcoming in relation to providing access for marketing, etcetera, to carry out the auction but ultimately this did take place," Mr Casey said, although the place did not sell.

Justice Rebecca Ellis asked if bidders might have been put off by aspects of the property, to which Mr Casey agreed, saying this would have included the condition of the house.

The board spent more than $100,000 fixing it after Chen left, deeming it not in a good state of repair. The house is now tenanted.

Chen claimed she was misled by the board issuing invoices at the old rent rate. She therefore thought only the old rent applied, Mr Casey said. She also claimed she did not understand the lease terms and conditions.

But Mr Casey said she had understood her obligations under the lease "at all material times" and her claim about believing she only had to pay rent at the old rate was not credible.

"If the defendant did believe what she claims, her legal advisers failed her. It is quite unrealistic for her to expect to continue to occupy the property ... at a rental grossly below current value," Mr Casey said.

"Yet the price she paid in 2005 was based on three and a half years to run at a rental based on 1988 value, since when values had increased substantially, so [she] must have anticipated a substantial rise in 2009. Her claim to have been misled into believing she only had to pay rent at the old rate must be assessed against the fact that she fully understood her obligations under the lease at all material times," Mr Casey said.

The board's property manager, Martina Llewellyn, also gave evidence on the poor state of the house when Chen left. The case continues.

Cornwall Park history

1901: Sir John Logan Campbell gifts park land to trust board.
1910 and 1923: Land subdivided.
2005: Yong Xin Chen buys house on leasehold section.
March 2009: 21-year-lease comes up for new ground rent.
Dec 2010: $73,750 annual ground rent set, up from $8300.
Dec 2010, Jan 2011: Board says auction will follow if Chen doesn't renew, refuses request to freehold.
Feb 2011: 6 months invoice sent.
April 2011: Board informs of auction.
Sept 2011: Auction unsuccessful.
Nov 2011: Chen relinquishes possession, hands keys to board.
May 2014: High Court case opens.

Source: Matt Casey QC