Lessors refusing without proper grounds to sign off on transfer of their lessee’s interest are liable for damages, the High Court ruled in a dispute over a Northland rural property held on a 999 year lease.
In 1957, owners of rural land near Moerewa restructured their legal ownership, retaining the freehold interest while selling off a 999 year leasehold. Any transfer of the leasehold interest required consent of the freehold owner. Annual rent payable by the leaseholders was ten dollars per year; for all practicable purposes, ownership of the leasehold interest was like being the freehold owner.
By 2021, Stephen Noel Estreich was in sole control of the freehold interest. The then leaseholders, Geraldine and Brandon Reid, were looking to sell on to their son Elias and wife Heeni. The necessary legal documents were sent to Mr Estreich asking him to sign off on the transfer. He refused, saying he wanted to build a retirement house on what he described as ‘my land.’ Changing tack, he said they could buy the freehold of him for $100,000; the Reids were not interested. Threatened with court action for his refusal to give consent, Mr Estreich claimed the Reids were in breach of the lease. They had not kept the rural property in proper condition as required by the lease, he claimed. A subsequent court hearing decided the Reids had kept the property in good condition. When forced into court, Mr Estreich said he would sign the necessary documents, but then failed to do so. Justice Toogood ruled Mr Estreich had unreasonably refused consent to transfer of the leasehold interest. He was held liable for losses suffered by Elias and Heeni; increased mortgage interest of $5920 they were forced to pay on a two year bank loan because his delays resulted in a better mortgage offer lapsing.
Reid v. Estreich – High Court (20.06.22)
22.108