The Grey District Council is threatening to bankrupt a Blaketown couple who cost it more than $1 million in a fight over leasehold rent.

Doug and Christine Banks face an $81,000 debt for legal costs after losing court action taken by the council that ended in the Supreme Court.

The council says the fight, over disputed rent increases, cost more than $1m in legal costs plus staff time.



The Banks have owned a house in Blaketown on council land since 1981.

JOANNE CARROLL/FAIRFAX NZ Doug and Christine Banks owe the Grey District Council almost $81,000.

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Christine Banks said problems with the lease came to light after the council put up the rents by more than 400 per cent in 2007.

"A group of lessees came together asking the council for relief. In 2009 I got a copy of the old lease and realised there was a problem.

JOANNE CARROLL/FAIRFAX NZ Doug and Christine Banks' Blaketown house which is on Grey District Council leasehold land

"They had changed the lease without being legally entitled to do that. When the Harbour Board changed Doug's grandfather's lease in 1979 to include seven year rent reviews, he was not informed he was entitled to renew his old lease which had 21 year rent reviews. The old lease was a renewal lease and should have been renewed," she said.

She stopped paying the full rent and billed council for what she believed they had overpaid.

"I told them we would pay up if we were wrong and didn't want to go to court but they filed against us and we lost," she said.

In 2013, five days after the High Court decision, the couple paid up about $17,000 owing.

However, the couple then went to the Court of Appeal and lost again. They were ordered to pay the council's legal fees of $80,750.22.

The council told the court the leases were non renewable and the judge found in its favour. The judge also said the Public Body Leases Act did not apply, that the leases came under the Local Government Act.

"All the paperwork we had since 1937 showed the leases were renewable and under the Public Body Leases Act. We believed in our case. That's what we relied on. We put up a really good argument. It's a shocker. I can't believe it," she said.

The couple were not happy with the decision and applied to the Supreme Court for an appeal but was rejected.

"I'm not happy about it but we've accepted the decision and are prepared to pay. We want to move on. We set up an automatic payment in November but the council sent us the money back in cheques," said Christine Banks.

The couple asked the council if they could pay $50 a week until 2019, and then pay the balance, which would be about $75,000.

Doug Banks, a painter and decorator, said he didn't want to sell the house.

"If we have to we would but four generations of my family have lived in this house. My grandfather owned it since 1929. It is a sentimental place, we love living here and Christine has put a lot of work into the garden," he said.

The couple's proposal was rejected by the councillors. They asked for 5 per cent interest and repayments of $80 a week to increase by $5 per week annually.

"This is council's full and final offer and is not up for further negotiations and if not accepted or if any breach occurs, council will without any further notice proceed with a bankruptcy application," a letter to the couple from council's corporate services manager Ian Young says.

The couple then asked if councillors would consider allowing them to pay $70 per week.

"What they came back with was unmanageable. It would cripple us. We wouldn't be able to pay it and we wouldn't be able to work on the house to make it worth more if we end up having to sell it," said Christine Banks.

Grey mayor Tony Kokshoorn said the councillors had made a final unanimous decision on what payment plan was acceptable.

"It is entirely up to the Banks to either accept that or suffer the consequences. The council will have to take action to recover the debt. Council has spent over $1 million in 10 years of wrangling. The courts have ruled in our favour and we are being fair and reasonable under the circumstances," he said.

"The only winners are the lawyers. We spent $1 million not through choice. We have got lots of lease holders and this is setting a precedent. You can't allow people to decide what they are going to pay in rent," he said.