The Court of Appeal in Justitiae Trustee Company Ltd – cross-leases further confused

Abstract

Justitiae Trustee Company Ltd v AAL Holdings Limited [2021] NZCA 281; CA 137/2020, is a Court of Appeal judgment delivered on 29 June 2021. It concerns a developing owner’s ability to force existing cross-lease owners (composite title owners) to sign leases for new flats, yet to be built on the staged development area. The Court had little difficulty in upholding the High Court judgment AAL Holdings Ltd v Dai [2020] NZHC 211, despite academic criticism of that decision, which was apparently before the Court: see further Rod Thomas “Cross leases confused and confounded - AAL Holdings Ltd v Dai” (2020) New Zealand Conveyancing Law and Practice Bulletin 1; and DW McMorland “Cross leases and staged developments” (2020) Butterworths Conveyancing Bulletin 57. This article continues that criticism, arguing that the Court’s reasoning does not accord with existing legal principles. It remains to be seen whether, and how, this judgment will affect future understanding and appreciation of the operation and enforcement of cross-lease obligations.