Residents of a Petone retirement village failed in their attempt to escape a 99 year service agreement. A charge registered against their property titles meant the service agreement had to run its course, even though some residents were dissatisfied with the quality of the services provided.
The Court of Appeal was told that disgruntled residents of the Jackson Mews retirement village wanted to replace the village manager, Jackson Mews Management Ltd. Residents hold freehold title to their village units. But a charge is registered against each title, binding the individual owners to a 99 year contract of services provided by Mews Management. The registered charge requires payment of a nominal annual sum of ten cents. A separate fortnightly levy is charged for services actually provided.
To get rid of Mews Management, legal action was taken to remove the 99 year charge from the titles. It was argued that the charge operated like a mortgage; by paying the sum of $9.90 dollars each, being the total fixed payment due over the 99 year term of the contract, residents would be entitled to have the charge removed from their titles as if they had paid off a mortgage. This would leave residents free to appoint a new management company.
The Court of Appeal agreed that the charge operated like a mortgage, but the law governing mortgages states that a mortgage remains in place until not only all money due is paid, but also the debtor has “performed all other obligations secured by the mortgage”. In this case, the obligation to allow Mews Management to continue as manager for the balance of the 99 year term still remained after any payment of the $9.90 nominal sum as being the money due.
Jackson Mews Management Ltd v. Menere – Court of Appeal (27.11.09)
12.09.004