AAA Storage Limited v Onehunga Primesite Limited - [2015] NZHC 3028

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-3197 [2015] NZHC 3028

BETWEEN
AAA STORAGE LIMITED

Applicant

AND

ONEHUNGA PRIMESITE LIMITED Respondent

Hearing: (on the papers)

Appearances:

T Bowler for the Applicant
P D Sills for the Respondent

Judgment:

2 December 2015

JUDGMENT OF WOODHOUSE J (Costs)

This judgment was delivered by me on 2 December 2015 at 3:00 p.m. pursuant to r 11.5 of the High Court Rules 1985.

Registrar/Deputy Registrar
……………………………………

Solicitors / Counsel:
Mr T Bowler, Neilsons Lawyers, Onehunga, Auckland
Mr P D Sills, Barrister, Auckland
Mr P Sargent, (Respondent’s instructing solicitor), Sargent Lawyers, Auckland

AAA STORAGE LTD v ONEHUNGA PRIMESITE LTD [2015] NZHC 3028 [2 December 2015]

[1] The applicant was the tenant and the respondent the landlord of premises under a deed of lease. On 14 November 2014 the landlord served a notice under ss 245 and 246 of the Property Law Act 2007 of intention to cancel for arrears of rent and other sums alleged to be due under the lease (the notice). On 5 December 2014 the tenant filed an application under s 253 of the Property Law Act for relief against cancellation. On 8 December 2014 the landlord consented to an interim order restraining cancellation. The proceeding was subsequently adjourned. On 18
February 2015 there were final orders in favour of the tenant restraining the landlord from re-entering the premises in reliance on the notice.

[2] Both parties then sought costs. The tenant sought, in the alternative, indemnity, increased or scale costs. The landlord sought solicitor/client costs pursuant to a provision in the lease.

[3] The tenant contended, first, that the landlord issued the notice for an ulterior and improper purpose – to place the tenant under duress to enter into a new lease on terms more favourable to the landlord. It was submitted that this was an abuse of process, bringing into play High Court r 14.6(4)(a). The tenant submitted, in the alternative, that it was entitled to increased costs under various provisions of r 14.6(3) on three grounds: failure to file a notice of opposition and affidavits by particular dates; refusing to provide an undertaking not to re-enter the premises after the outstanding rent had been paid, so that the tenant was bound to apply to the Court for relief; and refusing an offer of settlement, being an offer to pay the arrears if an undertaking not to re-enter was provided. Costs on a 2B basis, together with disbursements, were sought in the further alternative in a sum of $7,854.

[4] The landlord sought indemnity costs on the following grounds: the tenant’s default and subsequent actions led to the proceeding being issued; the landlord acted reasonably by providing undertakings to the Court that it would not cancel the lease or re-enter the premises, and this minimised costs; and the landlord is entitled to indemnity costs under r 14.6(4)(e) because of clause 6.1 of the lease which provides:

The Tenant shall pay the Landlord’s solicitors costs of and incidental to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] NZHC 3028
Decision Date: 2 December 2015

CaseChat Overview and Summary

The applicant, AAA Storage Limited, was the tenant, and the respondent, Onehunga Primesite Limited, was the landlord of premises under a deed of lease. The landlord served a notice of cancellation under s 245 and 246 of the Property Law Act 2007 for arrears of rent and other sums. The tenant applied for relief against the cancellation. The court granted an interim order restraining cancellation, and later, final orders in favour of the tenant. Both parties sought costs, with the tenant seeking indemnity, increased, or scale costs, and the landlord seeking solicitor/client costs. The court found that the landlord was not entitled to recover its solicitor's costs for action taken after service of the notice, as the steps were not for the enforcement of rights, remedies, or powers under the lease. The court also found that the landlord's refusal to provide an unconditional undertaking not to re-enter after receiving payment of $8,042.71, and its offer in the letter of 4 December, provided ample grounds for an order for increased costs in terms of r 14.6(3) and could justify an order for indemnity costs in terms of r 14.6(4)(a). The tenant's solicitor's costs totalled $15,575.23, and the landlord's solicitor's costs, including costs for issuing the notice, totalled $8,813.75. The court ordered that the respondent pay the applicant legal costs in a sum of $10,000, together with reasonable disbursements to be fixed, if need be, by the Registrar.

The case involved a dispute between a tenant, AAA Storage Limited, and a landlord, Onehunga Primesite Limited, over a lease of premises. The landlord served a notice of cancellation for arrears of rent and other sums, and the tenant applied for relief against the cancellation. The court granted an interim order restraining cancellation and later, final orders in favour of the tenant. Both parties sought costs, with the tenant seeking indemnity, increased, or scale costs, and the landlord seeking solicitor/client costs. The court found that the landlord was not entitled to recover its solicitor's costs for action taken after service of the notice, as the steps were not for the enforcement of rights, remedies, or powers under the lease. The court also found that the landlord's refusal to provide an unconditional undertaking not to re-enter after receiving payment of $8,042.71, and its offer in the letter of 4 December, provided ample grounds for an order for increased costs in terms of r 14.6(3) and could justify an order for indemnity costs in terms of r 14.6(4)(a). The tenant's solicitor's costs totalled $15,575.23, and the landlord's solicitor's costs, including costs for issuing the notice, totalled $8,813.75. The court ordered that the respondent pay the applicant legal costs in a sum of $10,000, together with reasonable disbursements to be fixed, if need be, by the Registrar.

Orders