Acernus Aero Ltd v Vincent Aviation Ltd
[2012] NZHC 295
•29 February 2012
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2012-485-113 [2012] NZHC 295
BETWEEN ACERNUS AERO LIMITED Plaintiff
ANDVINCENT AVIATION LIMITED Defendant
Hearing: 27 February 2012
Appearances: J Toebes for the plaintiff
J Scragg and P Higbee for the defendant
Judgment: 29 February 2012
JUDGMENT OF CLIFFORD J
Introduction
[1] The plaintiff, Acernus Aero Limited (“Acernus”), owns a Cessna Mustang corporate jet (“the Mustang”). Since early 2008 the defendant, Vincent Aviation Limited (“Vincent”), has hangared the Mustang, or a predecessor, at Wellington Airport for Acernus. Vincent has also provided other services to Acernus so that Acernus can both use and charter the Mustang.
[2] On 19 January this year Vincent wrote to Acernus purporting to terminate those arrangements for hangaring and other services (“the Arrangements”), with immediate effect, for non-payment of outstanding fees. Acernus disputes that termination.
[3] Matters were brought to a head when, on 20 January 2012, Vincent prevented
Acernus from having access to the Mustang, claiming a workman‟s lien. On
25 January Acernus issued proceedings to specifically enforce the Arrangements and
ACERNUS AERO LIMITED V VINCENT AVIATION LIMITED HC WN CIV-2012-485-113 [29 February
2012]
for damages. It claims, amongst other things, that it has a sublease of, or a licence to occupy, hangar space from Vincent on back-to-back terms with Vincent‟s five year head lease. At the same time Acernus applied for interim injunctive relief, in effect asking for a mandatory injunction requiring Vincent to specifically perform the Arrangements pending the hearing of its substantive claim.
[4] The matter first came before me in the Judge‟s Chambers List on Monday
13 February 2012. At that time I made timetabling orders for the hearing of Acernus‟ interim relief application, and set down a hearing for Thursday 16 February on the question of the claimed workman‟s lien in the event such a hearing proved to be necessary.
[5] As recorded in my minute of 16 February, I held a further hearing that day. In circumstances which I recorded in that minute, and which need not be repeated, I heard an application from Mr Toebes for what I described as “interim interim” relief, pending the hearing of Acernus‟ original application for interim relief. At that hearing, and very much in terms of an offer Vincent had made to Acernus, I ordered that Vincent was to continue to hangar the Mustang pending the hearing of Acernus‟ interim relief application, subject to Acernus paying in advance the sum of $3,000 plus GST per month for those hangaring services. At that time, I set down a hearing of Acernus‟ application for interim relief on 27 February 2012. I indicated that subject to possible interim relief as regards hangaring, I was not at all persuaded that interim relief requiring specific performance of the Arrangements more generally would be appropriate.
[6] Against that background, on 27 February I heard Acernus‟ application for interim relief, which Mr Toebes very sensibly limited to the question of Vincent being ordered to provide hangaring facilities to Acernus for the Mustang pending the hearing of Acernus‟ substantive claims. I also note that, equally sensibly in my view, Vincent had withdrawn its claim to a workman‟s lien over the Mustang.
Legal principles
[7] As Mr Scragg succinctly submitted, the grant of an interim injunction requires the Court to assess three key factors:[1]
[1] American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL); Klissers Farmhouse Bakeries Ltd v
Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA).
(a) whether there is a serious question to be tried;
(b) the balance of convenience between the parties; and
(c) the overall justice of the case.
There is an extra threshold for the grant of mandatory interim injunctive relief as opposed to prohibitory interim injunctive relief.
[8] Whether there is a serious question to be tried will depend on whether there is a tenable resolution of issues of law and of issues fact on which the plaintiff could succeed. It is insufficient for a plaintiff to say there is a tenable cause of action from a legal point of view, and a conflict of evidence on the facts.[2] The case, as a whole, must be seriously arguable.
[2] Cunningham v Butterfield HC Timaru CIV-2011-476-400, 7 October 2011; Ansell v New
Zealand Insurance Finance Ltd HC Wellington A 434/83, 30 November 1983.
[9] Where a plaintiff seeks a mandatory interim injunction the Court will usually require the plaintiff to establish a „powerfully arguable‟[3] or „strong case‟.[4] This is because an interim mandatory injunction creates a greater potential for injustice to a defendant than an interim prohibitory injunction,[5] and as such the Courts are
reluctant to issue them.[6]
Analysis
[3] Oggi Advertising Ltd v McKenzie [1999] 1 NZLR 631 (HC) at 638.
[4] Weddel NZ Ltd v Taylor Preston Ltd [1993] 2 NZLR 104 (HC) at 9.
[5] See Andrew Barker „Interim Injunctions” Civil Remedies in New Zealand, (2nd ed, Thomson
Reuters, Wellington, 2011) at 294.
[6] UMCP Ltd v Pope HC Nelson CIV-2007-442-553, 3 December 2007 at [79].
[10] I am prepared to accept that there is a serious question to be tried as whether or not Acernus does have a lease or licence which entitles it to hangar its Mustang at Vincent‟s premises at Wellington Airport.
[11] The Arrangements are not generally well recorded. Both Acernus and Vincent, at the outset, were content to rely on very informal understandings. Those understandings, by my preliminary assessment, would appear to have involved something more like a bailment by Vincent of the Mustang than a lease or licence. In an early email Acernus put its position, as regards hangaring, in this way:
We would like to hangar the aircraft in your facility and care, and I understand that a rate of $2,000 is agreeable.
[12] Having said that, at a later point in time Vincent contemplated formally documenting that part of the Arrangements as a sublease.
[13] Against that background, Acernus argues that a lease or licence was what was agreed. Vincent says that whilst a lease was offered at one point in time, that arrangement was never put in place and no lease or licence was every granted to Acernus.
[14] Given that factual matrix, in which the uncertainties surrounding the Arrangements in effect cut both ways, I do not think that I am in a position to conclude that there is no tenable resolution of issues of law and fact which could result in the Court concluding that Acernus does have rights in the nature of a lease or licence to occupy.
[15] In arguing that part of the case, Mr Toebes relied on the provisions of the Property Law Act 2007, applicable to both leases and licences, as regards cancellation now found in subpart 6 of Part 4 and in particular ss 245, 246 and 253. Mr Toebes argued that because Acernus had a lease or licence, Vincent must necessarily comply with the written notice provisions of ss 246 and 247, at which point Acernus could then dispute that notice of cancellation pursuant to s 253. But
the very issue raised by the substantive proceedings is whether or not Acernus does indeed hold a lease or licence. The determination of that issue will also determine whether those sections apply. I have accepted the proposition that it is arguable that Acernus is currently entitled to a lease or licence, and on that basis that it is arguable that those sections apply. In my view, however, that in and of itself does not determine the Court‟s approach to this application. Rather, it forms part of the “serious question to be tried” analysis.
[16] In my view, therefore, the question is very much one of the balance of convenience and the overall justice of the case, and it is to those issues that I now turn.
[17] In terms of the balance of convenience, I also concluded (as a matter of commonsense) that it is not convenient (in a more technical, legal, sense) that the Mustang be stored in the open air at Wellington Airport. That would, I think it was accepted by Vincent, risk damage to the aircraft from the elements. I was also not persuaded that damages would necessarily be an adequate remedy for such damage as there could be considerable uncertainty as to how and over what timeframe such damage might manifest itself. I was also not persuaded by Mr Scragg‟s submission that Acernus could equally well store the aircraft at another airport, whether in the Wellington region or elsewhere.
[18] Therefore, and as I indicated at the hearing on 27 February, the issue I must decide is whether or not Acernus has established that it cannot reasonably procure alternative hangaring arrangements at Wellington Airport.
[19] For Vincent, Mr Scragg responsibly accepted that he could not point to any particular disadvantage for Vincent in continuing to hangar the aircraft provided Acernus paid hangaring fees. He submitted that to do so might conceivably limit Vincent‟s commercial options, but acknowledged that there was no particular or immediate opportunity that would be so affected. On that basis, if Acernus establishes on the balance of probabilities that it cannot procure alternative hangaring arrangements on reasonable terms, given that failure to do so would – as I have accepted – be likely to cause further damage to the aircraft for which damages
would not be an adequate remedy, the legal balance of convenience would favour an order being made for continued hangaring as sought by Acernus. All other matters between the parties can, after all, be addressed by damages.
[20] Acernus provided little or no evidence on that point, other than references in affidavits from Mr Garnham, Vincent‟s sole director, relating to the situation that existed when the Arrangements were entered into.
[21] For Vincent, Mr Vincent, the company‟s founder and managing director, had made some enquiries and appended to his affidavit a faxed copy of hangarage rates charged by Execujet for storage at Wellington Airport. It was acknowledged before me that Execujet runs the new hangar recently constructed on the western side of Wellington Airport, adjacent to The Warehouse (etc) business park. Mr Vincent had not gone further, and actually established whether or not Execujet could and would provide hangaring facilities to Acernus. But, of course, Mr Vincent did not have that obligation. Rather, it was Acernus‟ task, in this interlocutory application, to establish that the balance of convenience favoured the grant of the mandatory injunction it seeks. What I think Mr Vincent‟s evidence did establish, however, is that there is a reasonable inference the Execujet does provide such facilities. If it did not, it seems unlikely it would have a schedule of rates for such facilities. In my view, therefore, Acernus did not establish that it could not procure alternative hangaring on reasonable terms.
[22] I also note here that Vincent has offered, in an open letter, to continue to hangar the Mustang for three months at the rate of $3,000 (GST exclusive) per month. I think the fact of that offer, which in terms of general principles of mitigation of damages Acernus should now seriously consider, also affects my assessment of the overall justice of this matter. So does the fact that Acernus, even by its own accounting, owes and has owed outstanding fees under the Arrangements for some time now.
[23] Considering all those matters, Acernus has not satisfied me that the balance of convenience favours the mandatory injunction it seeks. Its application is declined accordingly. Given that Acernus has paid $3,000 (plus GST) in advance for one
month‟s hangaring in terms of my order of 16 February 2012, and although this point was not explicitly addressed, my expectation is Vincent will – even without further agreement – continue to hangar the Mustang for the balance of that period of one month which began on 16 February.
[24] Costs are reserved, but I see no reason why they would not follow the event.
[25] On the basis of a working assumption that Acernus may now be likely to accept Vincent‟s offer, I anticipate that a substantive hearing will be available within the three month period of Vincent‟s offer. There should, therefore, be an early conference to set a fixture date within that period and to timetable matters accordingly. In the meantime, and given the uncertainties that both Acernus and Vincent face because of the nature of the Arrangements, I strongly encourage them to settle this matter.
“Clifford J”
Solicitors:
JT Law, P O Box 25443, Wellington for the plaintiff ([email protected]) Duncan Cotterill, Wellington for the defendant ([email protected])
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