Bartercard New Zealand LP Ltd v Lunn
[2018] NZHC 1029
•11 May 2018
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE
CIV-2018-441-21
[2018] NZHC 1029
BETWEEN BARTERCARD NEW ZEALAND LP LTD
Plaintiff
AND
STEPHEN PETER LUNN AND STEPHEN HUGH ORR REANEY
Defendants
Hearing: Submissions: 18 April 2018
30 April 2018
1 May 2018Appearances:
R Parmenter for plaintiff
D O’Connor for defendants
Judgment:
11 May 2018
JUDGMENT OF GRICE J
(Application for an interim measure)
Table of Contents
Introduction........................................................................................................... [1]
Background........................................................................................................... [4]
The effect of the arbitration clause: what test applies here?................................ [12]
Serious question to be tried................................................................................. [23]The interpretation of cl 15............................................................................... [26]
Covenant of quiet enjoyment and derogation from the grant.......................... [35]
Permanent loss of occupation.......................................................................... [42]The balance of convenience................................................................................. [48]
Oppressive conduct and property rights.......................................................... [50]
Are damages adequate compensation?............................................................ [60]Costs.................................................................................................................... [66]
Conclusion........................................................................................................... [67]
BARTERCARD NEW ZEALAND LP LTD v LUNN & ANOR [2018] NZHC 1029 [11 May 2018]
Introduction
[1] This is an application for interim relief by Bartercard NZ LP (Bartercard). The application seeks two interim orders restraining Mr Lunn and Mr Reaney as trustees of Thackeray Trust (Thackeray Trust) from:
(a)retaking possession of the premises pursuant to the notice to vacate served on Bartercard by Thackeray Trust; and
(b)from carrying out works in the PwC building “which works impede Bartercard’s reasonable use of the premises pursuant to the lease”.
[2]Bartercard also proposed an amended wording in place of (b) as follows:
Carrying out works in or on the PwC Building, which works prevent Bartercard’s [reasonable] access to and use of Tenancy 2.1 and car parks AU 27 and AU 30 pursuant to the lease.
[3] Thackeray Trust has filed a notice of opposition to this application, but has not filed a statement of defence in the substantive proceedings.
Background
[4] Bartercard leases an office in a building in Napier known as the PwC building. The building is owned by Thackeray Trust.
[5] The anchor tenant in the PwC building has now moved out, and a new anchor tenant, Sarin Group Ltd (Sarin), has agreed to lease the majority of the building. It intends to operate a high-quality apartment/hotel complex, and therefore the building is to be refurbished.
[6] Other tenants have moved out for the refurbishment works. Some will return to their offices on the ground floor in due course. Others, including those on the same level of the building as Bartercard, have taken up new premises made available to them through Thackeray Trust.
[7] Bartercard’s office is on level 2 (floor 1) of the building. The lease between Thackeray Trust and Bartercard is dated 11 July 2014, and provides for a term of four years with three rights of renewal of two years each. The final expiry date of the lease is 30 June 2024. The first term of the lease expires on 1 July 2018. The lease also includes an arbitration clause.
[8] There is a dispute as to whether Bartercard is entitled to renew the lease due to non-payment of sums that the landlord says were due. That matter is now before the High Court.
[9] On 23 February 2018 Thackeray Trust served Bartercard with a notice to vacate the office and possession was sought by 1 May 2018. Bartercard says it cannot be forced out and is seeking interim orders to enable it to stay in the building and quietly enjoy its leased premises.
[10] Thackeray Trust now has obligations under a lease agreement with Sarin and under the construction contracts for the refurbishment works. Thackeray Trust has agreed not to take steps under the notice to vacate Bartercard from their office until this judgment has been delivered.
[11] Bartercard and Thackeray Trust are at odds as to whether Bartercard can be legally required to leave the building while Thackeray Trust undertakes the works. Nothing is standing in the way of the works being commenced other than Bartercard’s refusal to leave its office.
The effect of the arbitration clause: what test applies here?
[12]The relevant arbitration clause in the lease says:
Arbitration
43.1The parties shall first endeavour to resolve any dispute or difference by agreement and if they agree by mediation.
43.2Unless any dispute or difference is resolved by mediation or other agreement within 30 days of the dispute or difference arising, the same shall be submitted to the arbitration of one arbitrator who shall conduct the arbitral proceedings in accordance with the Arbitration Act 1996 or any other statutory provision then relating to arbitration.
43.3If the parties are unable to agree on the arbitrator, an arbitrator shall be appointed, upon request of any party. By the president or vice president of the New Zealand Law Society. That appointment shall be binding on all parties to the arbitration and shall be subject to no appeal. The provisions of Article 11 of the First Schedule of the Arbitration Act 1996 are to be read subject to this and varied accordingly.
43.4The procedures prescribed in this clause shall not prevent the Landlord from taking proceedings for the recovery of any rent or other monies payable under this lease which remain unpaid or from exercising the rights and remedies in the event of the default prescribed in sub clause 28.1.
[13] In the course of exchanges through email between the parties, Bartercard suggested that an arbitrator be appointed to obtain a decision resolving this dispute. Thackeray Trust responded that there was insufficient time to set up and engage with an arbitrator, as there were only three weeks available until possession was required on 1 May 2018.
[14] The parties may well go to arbitration to deal with the substantive dispute. Here, the fact that the plaintiff has filed the application for interim relief and the defendant has responded with a notice of opposition does not preclude arbitration. The Arbitration Act 1996 contemplates an application to this court for urgent interim relief.1
[15] The decision in Greenacres Franchise Group v Ruebe supports the view that the courts will issue an interim measure in cases of urgency which will not violate the right of a party to arbitrate the substantive matter.2 This was not in issue before me.
[16] Under art 9 of sch 1 of the Arbitration Act, the High Court has the same powers as an arbitral tribunal to grant interim measures.
[17]Under art 17, interim measures are defined as:3
…
1 Arbitration Act 1996, art 9 of sch 1.
2 Greenacres Franchise Group v Reube [2014] NZHC 402 (7 March 2014) at [39]; Arbitration Act 1996, sch 1 at art 9.
3 Schedule 1.
interim measure means a temporary measure (whether or not in the form of an award) by which a party is required, at any time before an award is made in relation to a dispute, to do all or any of the following:
(a)maintain or restore the status quo pending the determination of the dispute:
(b)take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral proceedings:
(c)provide a means of preserving assets out of which a subsequent award may be satisfied:
(d)preserve evidence that may be relevant and material to the resolution of the dispute:
(e)give security for costs
…
[18] The powers of the High Court are restricted to those that an arbitral tribunal has to grant an interim measure under art 17A of sch 1.4 Further, the Court must follow the test for granting an interim measure set out in art 17B of sch 1 as follows:
(1) If an interim measure of a kind described in subparagraph (a), (b), or
(c) of the definition of that term in article 17 is requested, the applicant must satisfy the arbitral tribunal that—
(a)harm not adequately reparable by an award of damages is likely to result if the measure is not granted; and
(b)the harm substantially outweighs the harm that is likely to result to the respondent if the measure is granted; and
(c)there is a reasonable possibility that the applicant will succeed on the merits of the claim.
…
(4) A determination by the arbitral tribunal on the matter specified in paragraph (1)(c) does not affect its discretion to make any subsequent determination.
[19] In Greenacres Franchise Group Ltd v Ruebe Lang J held the test under art 17B was the same as the common law injunction test, with removal of the “overall justice
4 Article 9 of sch 1.
test” and the narrowing of the considerations under balance of convenience to exclude third party and public policy considerations.5
[20] As in Greenacres Franchises Group Ltd, the wider interests that sometimes inform the balance of convenience test do not apply here to any great extent. The result in this case does not turn on this difference.
[21] The traditional test for the granting of interim injunctions is well established. In Internet Traders Ltd v Williams, Heath J set out the test as a three-part question, of which only the first two limbs are relevant here:6
(a)First, was there a serious question to be tried or an arguable case?
(b)Second, where does the balance of convenience lie?
[22] Further considerations apply in relation to property rights which I deal with below.
Serious question to be tried
[23] This limb addresses the first step contained in art 17B of sch 1 of the Arbitration Act. Specifically, that the applicant must show “there is a reasonable possibility that the applicant will succeed on the merits of the claim.”7 In other terms, that there is a serious question to be tried.
[24] A serious question to be tried imports a test lower than a ‘prima facie’ case.8 The applicant must advance a sufficiently precise factual basis that satisfies the Court that they have a real prospect of succeeding on the claim for a permanent injunction in the substantive action.9
5 Greenacres Franchise Group Ltd v Ruebe, above n 2 at [6] – [7].
6 Internet Traders Ltd v Williams [2014] NZHC 3407 at [16].
7 Arbitration Act 1996, art 17B(1)(c) of sch 1.
8 Harvest Bakeries Ltd v Klissers Farmhouse Bakeries Ltd, CA120/85, 8 August 1985 at 4 (per Cooke J).
9 Sutton v House of Running Ltd [1979] 2 NZLR 750 at 753.
[25] Mr Parmenter says this is a case where the defendant has destroyed Bartercard’s tenancy. In support of this submission he says:
(a)Clause 15 does not allow access for the extensive type of refurbishment contemplated here;
(b)The works and the length of time the tenant is required to vacate breaches its right to quiet enjoyment and derogates from the grant;
(c)The length of the term proposed for the works of eight months is tantamount to a permanent loss of occupation by the tenant.
The interpretation of cl 15
[26] Thackeray Trust relies on cl 15 of the lease agreement with Bartercard as the authority to issue the notice to vacate dated 23 February 2018. Clause 15 reads:
Access for works
15.1 The Tenant shall permit the Landlord and the Landlord’s employees and contractors at all reasonable times and on reasonable written notice (except in the case of emergencies) to enter the premises for a reasonable period to inspect and carry out works to the premises or adjacent premises and to install inspect repair renew or replace any services where they are not the responsibility of the Tenant or are required to comply with the requirements of any statutes, regulations, by-law or requirement of any competent authority. All repairs inspections and works shall be carried out with the least possible inconvenience to the Tenant subject to subclauses 15.3 and 15.4.
15.2 If the Tenant’s business use of the premises is materially disrupted because of the Landlord’s works provided for in subclause 15.1, then during the period the works are being carried out a fair proportion of the rent and outgoings shall cease to be payable but without prejudice to the Tenant’s rights if the disruption is due to a breach by the Landlord of the Landlord’s obligation, under subclause 15.1, to cause the least possible inconvenience to the Tenant.
15.3 If in the Landlord’s reasonable opinion, the Landlord requires the Tenant to vacate the whole or part of the premises to enable the works referred to in subclause 15.1 to be carried out, the Landlord may give the Tenant reasonable written notice requiring the Tenant to vacate the whole or part of the premises and specifying a reasonable period for which the Landlord requires possession. On the expiry of the notice the Landlord may take possession of the premises or the part specified in the notice. A fair proportion of the rent and outgoings shall cease to be payable during the period the Tenant vacates the premises as required by the Landlord.
15.4 The Landlord shall act in good faith and have regard to the nature, extent and urgency of the works when exercising the Landlord’s right of access or possession in accordance with subclauses 15.1 and 15.3.
[27] Mr O’Connor, for Thackeray Trust, submits that cl 15 uses different wording to that used in the other repair and maintenance clauses in the lease. It specifically refers to the landlord’s entitlement to “… carry out works to the premises or adjacent premises… and to install … renew or replace any services where they are not the responsibility of the tenant”.10 Mr O’Connor submits that cl 15 is intended to have a wide ambit, should not be read down and that the words should be given their plain meaning. He says the building is not being demolished but rather Thackeray Trust is installing, renewing or replacing services. These works will be carried out above and around Bartercard’s office.
[28] Mr Parmenter, for Bartercard, focused on the argument that the “works” contemplated by cl 15 of the lease do not include the significant refurbishment that Thackeray Trust proposes. Mr Parmenter says this conclusion follows as a matter of interpretation of the lease in the context of the covenants under the lease as a whole.
[29] Mr Parmenter pointed to the use of the word “works” in other clauses in the lease to illustrate why this term should be interpreted as extending to only maintenance and repairs. For instance, cl 8.2 states that if the tenant is leasing the whole property, they are obliged to carry out “those works maintenance and repairs … as the Landlord may require in respect of which outgoings are payable by the Tenant.” Mr Parmenter submits that a number of references to “works” were limited in similar terms in the lease agreement.
[30] In addition, cl 15 is in the part of the lease headed “Maintenance and Care of Premises”. Mr Parmenter further argued that the “works” contemplated by cl 15 were the repairs and maintenance the landlord is allowed to carry out under cl 11 of the lease agreement. In essence, his argument was cl 15 relates to the obligation of the landlord to keep and maintain the building, building services and car parks in good order and repair. He says there is no right of access granted to the landlord under cl 11 and therefore cl 15 is filling that gap.
10 Emphasis added.
[31] Mr Parmenter said if there was a right to refurbish the building to the extent proposed by the landlord it should be specific. He said that this would usually be achieved by inserting a demolition clause in the lease. He referred to a decision that dealt with clauses that provided for the landlord to demolish and rebuild the building and which gave the landlord the right to terminate the lease upon notice.11 He also provided a further decision containing an example of a clause which allowed the termination of the lease on six months’ notice if the property was required to be redeveloped.12
[32] Bartercard placed weight on the decision in Vasile v Perpetual Trustees WA Limited.13 In that case, the landlord was to undertake substantial alterations to the tenant’s premises including the removal of a side doorway from the tenant’s coffee shop into the main lobby. The trade through the lobby from workers buying takeaway food was a large part of the tenant’s business. The lease agreement contained a specific clause that gave the landlord the ability to improve, extend, add to or reduce the building or any common areas in any manner whatsoever as long as little inconvenience was caused to the lessee as practicable. The Court was of the view that the work was physically invasive and interfered substantially with the tenant’s business. The Judge found that this would breach the covenant of quiet enjoyment and would constitute an invasion of the plaintiffs’ property rights. He said that the powers in the lease which the landlord pointed to as allowing the work were ancillary in nature. Those powers must be interpreted in a way that the demise itself was not rendered less effective. Mr Parmenter also submits the provision in the Vasile lease that allowed the landlord to undertake works while the tenant was in residence and so was much more permissive than cl 15 of the present lease.
[33] The difficulties that the tenants faced in being able to run their business due to the works in Vasile are not problems which will be encountered by Bartercard in this case if the landlord is entitled to require the tenant to vacate under cl 15. Nor is Bartercard required to vacate the building permanently. The decision is therefore less helpful in that regard.
11 Rosini’s Restaurant v Goldcorp Properties (1989) 1 NZConC 190, 114 (to demolish and rebuild).
12 Hoa Nga Tu v Land Enterprises Ltd CP70/92, 26 May 1992.
13 Vasile v Perpetual Trustees WA Limited (1987) 10 BPR 18,091.
[34] Nevertheless, on the basis of the submissions outlined above Bartercard has a seriously arguable case in relation to the interpretation of cl 15.
Covenant of quiet enjoyment and derogation from the grant
[35] Mr Parmenter argues the renovations of the building will breach the covenant of quiet enjoyment. That covenant is set out in cl 31.1 of the lease agreement as follows:
QUIET ENJOYMENT
31.1 The Tenant paying the rent and performing and observing all the covenants and agreements expressed and implied in this lease shall quietly hold and enjoy the premises throughout the term without any interruption by the Landlord or any person claiming under the Landlord.
[36] A breach of that provision may occur by substantial interference with the tenants’ possession or by unlawful re-entry.14
[37] In this case, the works will take eight months and will require Bartercard to move out for that period. Thackeray Trust say the works being carried out in the building make it dangerous for Bartercard staff to stay and work in a construction site. The work will include services being installed on level 3, the level above Bartercard’s office, for sprinkler systems, plumbing and drainage. These would present health and safety risks to Bartercard’s staff working below. I accept that the works, as described, are such that Bartercard staff could not continue to occupy the office during construction.
[38] Eight months is a prolonged period of time for the tenant to be out of the building. I am of the view that Bartercard has raised a seriously arguably matter in that their covenant of quiet enjoyment might be breached by the renovation and the requirement to vacate.
[39] Mr Parmenter also claims the proposed works will constitute a derogation from the grant, in that they will prevent Bartercard from using the premises. Acts in
14 Owen v Gadd [1956] 2 QB 99; Spathis v Hanave Investment Co Pty Ltd (2002) NSW SC 304;
Norden v Blue Port Enterprises Ltd [1996] 3 NZLR 450.
derogation from the grant are the acts of the landlord which prejudice the successful fulfilment of the purpose of the lease.15
[40] Mr Parmenter also submitted that the claim of the derogation from the grant is also arguable on the basis that the landlord had an obligation under the lease not to allow any other tenant to carry on a business in the building that detracted from “the general character of the building as a good quality premises for professional firms and institutions”.16 This was also put forward as a separate reason that Sarin should not be permitted to take up the lease.
[41] I am of the view that this issue is also arguable and constitutes a serious question to be tried. While the proposed new tenant intends to operate a high-quality hotel/apartment business, which may well be in keeping with the professional character of the other tenants such as Bartercard, it will be a matter of evidence as to whether its operations offend against the prohibition in the lease.
Permanent loss of occupation
[42] Toward the end of the hearing, the lease agreement between Thackeray Trust and Sarin was not produced, but it was shown to Mr Parmenter. This led to a submission by him that the lease did not accommodate Bartercard’s offices should it wish to return to the building for the period left on its lease. This was not contradicted by Mr O’Connor. However, he submitted that an arrangement with Sarin did allow Bartercard’s office to be retained for reoccupation when the works were completed.
[43] Bartercard sought leave to adduce further evidence on this matter. It was the party which was affected most by the delay entailed. In order to ensure this matter was fairly dealt with, given the late introduction of the issue, I granted leave for further evidence and submissions by Thackeray Trust Limited to whether Sarin (the prospective tenant of most of the building) would agree to the floor plan being changed in the Sarin lease to accommodate Bartercard’s present offices. Bartercard was given a right of reply.
15 National Park Board v Mount Cook Motels Ltd [1972] NZLR 481 (CA) at 496.
16 Clause 47.1(c) of the lease.
[44] Further evidence was filed by way of affidavit by Andrew Herbert. He is the building practitioner involved in the matter for the landlords. He had filed two earlier affidavits in the proceeding. In the further affidavit of 30 April 2018, he says:
4. On 29 March 2018, the defendants signed the lease with Sarin Group to lease residential apartments in the PwC building (“Sebel Lease”).
5. On 18 April 2018, during the hearing on the plaintiff’s injunction application, counsel for Bartercard reviewed the Sebel Lease and raised concerns that the floor plan for level 2 did not include Bartercard’s office.
6. The floor plan in the Sebel lease is easily changed to accommodate Bartercard. This could have been done if Bartercard had confirmed that it was returning to the office instead of saying that it was not. Bartercard has a small office. The office is only 185m2. The PwC building is 5,500m2.
7. An amended floor plan has been completed by Pacific Architects (the architects to the project) which shows that Bartercard’s office (184m2) will remain exactly the same on level 2. The amended floor plan is annexed and marked “A”.
8. Sarin Group agrees to the amended floor plan. This agreement is annexed and marked “B”.
9. Consent is not required for Bartercard to return after the works are completed. The Council has granted consent for a mixed use of both commercial and residential. After the works are completed, the commercial tenants in the building will also include Fairbrother Law, Caci Clinic and Fiji Xerox.
The agreement by Sarin is attached as an exhibit to the affidavit and is signed for and on behalf of the lessee.
[45] In response, Mr Parmenter notes that the document produced is not in the form of the type of formal variation document that would be expected for a lease of the nature of the present lease. He submits that the document should be viewed with considerable scepticism as it did not have the “gravitas of a multi-million dollar commercial document”. No issue is taken with the amended floor plan indicating the area of Bartercard’s office.
[46] Despite Mr Parmenter’s criticisms of the form of agreement with Sarin, I can see no reason to discount it. It accords with Mr O’Connor’s assurance to the Court on behalf of Thackeray Trust that Bartercard’s offices would be available to it to return to when the works are completed. This assurance was given after consultation with a
representative of his client who was present at the hearing. Mr O’Connor will be aware of the serious nature of assurances by officers of the Court. It is important they are able to be relied upon by the Court. That assurance has now been now confirmed by the agreement produced.
The balance of convenience
[47] This limb focuses on who is more likely to suffer harm, first, if the interim measure is granted and, secondly, if it is not.17 If damages would be an adequate remedy and the respondent is able to pay them, then no interlocutory measure will be granted.18 If damages would not be an adequate compensation for the prospective injury to either party then “preserving the status quo” is of particular relevance.19 This is the position as it stands immediately before the claim is issued.20
[48] The relative strength of the parties’ cases should only be taken into account if the disadvantage to each party cannot be compensated by way of damages or their respective positions do not differ widely in that regard. Consideration of the strength of the respective parties’ cases should only be undertaken if there is no real dispute that the strength of one party’s case is disproportionate to that of the other.21 This is due to the limitations of doing so without all the evidence before the court.
[49] There is no exhaustive list of the factors which can play a part in assessing the balance of convenience. The Court must take an objective view in weighing up all the factors and take the course which involves the least risk of injustice at the end of the day. The answer does not depend on the rigid application of a formula.22
17 Arbitration Act 1996, art 17B(b) of sch 1.
18 Article 17B(c) of sch1.
19 Article 17 of sch 1.
20 Garden Cottage Food Ltd v Milk Marketing Board (1984) AC 130 at 140.
21 American Cyanamid Co v Ethicon Ltd (1975) AC 396 at 409.
22 McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR7.53.04].
Oppressive conduct and property rights
[50] Shelfer v City of London Electric Lighting Co put forward a fourfold test governing the granting of injunctions to protect property rights in land.23 That test was:24
… it may be stated as a good working rule that –
(1)If the injury to the plaintiff’s legal rights is small,
(2)And is one which is capable of being estimated in money,
(3)And is one which can be adequately compensated by a small money payment,
(4)And the case is one in which it would oppressive to the defendant to grant an injunction:
Damages in substitution of an injunction may be given.
[51] Mr Parmenter submits that Thackeray Trust has acted with reckless disregard of the tenant’s rights and in that respect, is guilty of the conduct disapproved of by AL Smith LJ in Shelfer:25
“There may also be cases in which, though the four abovementioned requirements exist, the defendant by his conduct, as, for instance, hurrying up his buildings so as if possible to avoid an injunction or otherwise acting with reckless disregard to the plaintiff’s rights, has disentitled himself from asking that damages may be assessed in substitution for an injunction.”
[52] Mr Parmenter also referred to the following paragraph of the decision in Day v Black to support his position:26
[34] I approach the issue in the manner suggested in Spry on Equitable Remedies (5th ed) at p 640, namely that the matters mentioned in the “working rule” should be regarded as relevant but not decisive. The overarching principle is that damages will be substituted for an injunction:
“… only when the hardship caused to the defendant through specific enforcement would so far outweigh the hardship caused to the plaintiff if specific enforcement were denied that it would be unjust in all the circumstances to do more than to award damages.”
23 Shelfer v City of London Electric Lighting Co (1895) 1 ch 287.
24 Per AL Smith LJ at 288.
25 Per AL Smith LJ at 288.
26 Day v Black CIV-2004-463-179, 1 July 2004, as per Rodney Hansen J.
[53] Bartercard further referred to the English Supreme Court decision of Lawrence v Fen Tigers Ltd in which the mechanical application of the Shelfer test was rejected.27 The true approach is “a classic case of discretion” and each case being “so fact sensitive that any firm guidance is likely to do more harm than good”.28
[54] On the basis of the case law outlined above, Mr Parmenter submits that in this case the test of oppression as it was put in Shelfer is met,29 and therefore damages cannot be an adequate remedy for the harm caused to Bartercard’s property rights.30
[55] Mr Parmenter says that the landlord should never be “permitted to tear up the lease document and pay damages”. It says that Thackeray Trust has presented the court with a fait accompli, to the effect that while the tenant is not in agreement, Thackeray Trust has entered into a multi-million dollar contract and in Mr Parmenter’s words “to grant the injunction would be to make them suffer from [their] own arrogance”.
[56] For the reasons set out below, I am unable to accept Bartercard’s submission that Thackeray Trust acted in bad faith or with reckless disregard to Bartercard’s rights. In that respect, I note Thackeray Trust:
(a)arranged for new high quality and conveniently located substitute premises to be made available to Bartercard while work is undertaken. The office available for Bartercard it is approximately the same size as its present offices;
(b)offered compensation, but required invoices or some evidence as to the expenditure by Bartercard;
(c)obtained legal advice on its rights under the lease on which it was acting;
27 Lawrence v Fen Tigers Ltd (2014) AC 822 at [119].
28 At [120].
29 Shelfer v City of London Electric Lighting Co, above n 19, at 288.
30 Shelfer v City of London Electric Lighting Co, above n 19.
(d)attempted to negotiate an agreed exit with Bartercard. This is illustrated in the exchange of emails between the parties. On 16 February 2018 Mr Goubitz (the Chief Operating Officer of Bartercard) sent an email stating that Bartercard would consider alternative offices “however they would need to be at the same lease rate or less and same size and facilities we currently have and exit cost and new office move cost will also need to be covered”. By email of 27 February 2018 Mr Goubitz said he would be seeking damages of more than “$200,000”. Bartercard subsequently demanded an unspecified sum of about
$100,000 plus damages for inconvenience. No invoices were provided;
(e)refrained from acting on the notice to vacate during the discussions and subsequently pending this decision;
(f)has produced an agreement signed on behalf of Sarin that the offices of Bartercard will be available for Bartercard to return to after the works are completed, if Bartercard wishes to return.
[57] This case is different from cases dealing with residential property rights. The property rights are no less important here, but in here the tenant is open to negotiating a price for them on a casual basis. This is in contrast to people’s residential homes where an encroachment blocking a view or otherwise detracting from the property is less amenable to a conversion to a dollar amount. Nor is the deprivation permanent in this case. Bartercard may return to the premises when the works are completed. While not relevant to this proceeding, it appears from the evidence available at this stage that the building as refurbished will have better quality services than at present.
[58] This proceeding also differs from Vasile in that this is not a case where the tenant’s business is being significantly interfered with on both an interim and permanent basis. Thackeray Trust could be criticised for the short time frame involved in trying to arrange the removal of the tenants (particularly Bartercard). For the reasons outlined I do not regard this as oppressive behaviour that renders damages an inadequate remedy in the circumstances. Thackeray Trust has not acted in a high-
handed way, but has acted according to advice on its legal position. The ultimate determination of that issue will be a matter for the substantive hearing.
Are damages adequate compensation?
[59] In the course of negotiations with Thackeray Trust to leave the building Mr Goubitz has sought compensatory payments of $200,000 and subsequently
$100,000. While he is entitled to pursue negotiations, these requests for payment do indicate that damages are a potentially adequate remedy for the harm Bartercard might suffer from vacating the premises.
[60] It is also relevant that Bartercard has looked at other premises. This shows it is interested in moving from the PwC building in any case, making it less likely the harm is irreparable.
[61] On the other hand, the granting of interim relief would cause substantial harm to Thackeray Trust. Its losses, if the works were stopped, would be significant. Thackeray Trust has entered agreements with Sarin for the lease of levels one to three. The main use will be hotel/apartments. It estimates an income stream of $22 million for the completed building. It has also entered a construction contract with MAH Enterprises Fiji Ltd. That company has employment contracts with more than 30 builders and trades persons. Thackeray Trust have indicated that if the works are stopped, damages of up to $20 million could be sought against them by Sarin.
[62] Thackeray Trust pays more than $70,000 each year in outgoings on the building (rates, insurance, building warrant of fitness) and $50,000 each year for management fees. The mortgage repayments for the building are more than $700,000 per year. The failure of the deal with Sarin would likely lead to a mortgagee sale of the building. In comparison, Bartercard pays $25,000 plus GST per annum for its leased office.
[63] It is also unlikely Bartercard will be in a position to pay substantial damages. I reach this conclusion in light of Mr Goubitz statements in his affidavit that Bartercard have unspecified net assets in excess of $6 million and an annual turnover of
$10 million. As illustrated above, significantly more money than that may be at stake if the interim measure is granted.
[64] I am of the view the balance of convenience favours Thackeray Trust for the reasons outlined above. I do not propose to cover those matters in detail again, but the essential points are:
(a)Damages would be an adequate remedy for Bartercard. There is nothing that it has pointed to in relation to its tenancy in the PwC building which would make damages difficult to assess or inadequate in this case. This is supported by its willingness to move for a price.
(b)Damages would not be an adequate remedy for the Thackeray Trust. Thackeray Trust would face substantial costs if the works were stopped. It is likely it would be the subject of a mortgagee sale (on its evidence) if this interim measure is granted.
(c)The harm Thackeray Trust will suffer if the interim measure is granted is greater than the harm Bartercard will suffer if it is not.
(d)The arguments on substantive issues, are a matter for the trial. However, each party has an arguable case on the material before me.
[65]I am satisfied that the balance of convenience factors favour Thackeray Trust.
Costs
[66] Counsel agreed costs should be awarded on a 2B basis together with travel costs and disbursements as fixed by the Registrar. Costs would usually be awarded in favour of the successful party in the interim application. In this case that is the defendant. However, there was a suggestion that costs be reserved on this application. If this is not the case and costs are sought by either party that application together with submissions must be filed within seven days of the date of this decision. The other party must respond within a further seven days of service of those submissions. In the absence of such an application costs are reserved.
Conclusion
[67]The application for an interim measure is declined.
Grice J
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