Potentially liable for fire damage to a rented Auckland property, tenant Kevin Patterson claims his landlord agreed that his money as tenant spent restoring the damage entitled him to part-ownership. The fact repair costs were funded through a jointly controlled bank account raises a strong presumption there was an agreement, Associate judge Smith ruled.
Rafad Alsaloom owned a property on Sommerville Road, in Howick. Kevin Patterson was tenant for over five years. It was badly damaged in a September 2018 fire. Unbeknown to the landlord, Mr Patterson shared the house with a number of flatmates paying him rent. One flatmate set fire to the property after an argument with Mr Patterson. The property was uninsured; the landlord had let cover lapse.
Mr Alsaloom told Mr Patterson he had legal advice that Mr Patterson as tenant on the tenancy agreement was liable. This led to discussions, later disputed.
The High Court was told Mr Patterson’s version was that they both agreed it was a ‘waste of time and money’ to get lawyers involved; Mr Patterson would make good the loss, plus paying Mr Alsaloom whatever extra amount was needed to equate with half the pre-fire property value with Mr Patterson then credited with a half interest in the property. In the months prior to the fire, Mr Patterson had made a $1.15 million offer to buy the property outright, but had got no response.
Mr Alsaloom denied there was any agreement. Mr Patterson was paying for the repair because otherwise he was going to be sued, he said. After contributing about $180,000 towards repair costs, Mr Patterson became concerned that there was trouble ahead; Mr Alsaloom was refusing to sign any paperwork documenting Mr Patterson’s understanding of the deal and waved away his concerns indicating it was best to wait until the job was finished. Mr Patterson lodged a caveat against title to the Howick property, claiming an interest under a constructive trust; Mr Alsaloom had title, but Mr Patterson claimed to be part-owner.
Associate judge Smith ruled against removal of the caveat. Mr Patterson has an arguable case that a constructive trust exists, he said. The fact the two of them opened a joint bank account to manage the repair with each having signing authority indicated agreement on something had been reached, Judge Smith said. A full trial is needed to determine what was agreed.
Patterson v. Rafad Alsaloom & RMC Trust Co Ltd – High Court (4.09.20)
20.151