Body Corporate 406198 v Property Opportunities Limited

[2024] NZHC 945

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2019-404-818

[2024] NZHC 945

UNDER

The Declaratory Judgments Act 1908 and Part 18 of the High Court Rules 2016

IN THE MATTER OF

Bianco and the Unit Titles Act 1972

BETWEEN

BODY CORPORATE 406198

Plaintiff

AND

PROPERTY OPPORTUNITIES LIMITED

First Defendant

SHIRAZ HOLIDAY LIMITED
Second Defendant

BIANCO LIMITED

Third Defendant

AVONDALE PROPERTIES LIMITED

Fourth Defendant

On the papers
Counsel:	D Bigio KC and I J Stephenson for the plaintiff T J Rainey for the second defendant
Judgment:	26 April 2024

JUDGMENT OF CAMPBELL J

(Costs and interest)

This judgment was delivered by me on 26 April 2024 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

BODY CORPORATE 406198 v PROPERTY OPPORTUNITIES LIMITED [2024] NZHC 945 [26 April 2024]

[1]                 In a judgment dated 10 March 2022,1 I allowed the Body Corporate’s unjust enrichment claim against the second defendant, Shiraz, in respect of outgoings in the sum of $64,400.22. I dismissed the Body Corporate’s unjust enrichment claim against Shiraz in respect of rent, having rejected the Body Corporate’s argument that cl 5.6.6 of a management agreement (which obliged it to reimburse Shiraz for rent payments) was ultra vires.

[2]                 The Body Corporate had made a bare claim for “interest”, without pleading the Interest on Money Claims Act 2016. At [185] of the judgment, I recorded that I had received no submissions on the interest that might be payable by Shiraz. I said that if the parties were unable to agree, they could file and serve memoranda: the Body Corporate by 6 April 2022, Shiraz by 4 May 2022. I reserved costs and invited the parties to file memoranda if they could not agree.

[3]                 The parties reached agreement that Shiraz was entitled to costs in the sum    of $41,361. They also agreed that Shiraz’s costs entitlement could be set off against the $64,400.22 owing by Shiraz under the judgment. Shiraz paid the difference. The Body Corporate did not seek to pursue or quantify any interest to which it might be entitled.

[4]                 In the meantime, the Body Corporate had appealed my decision. Its appeal succeeded in part, the Court of Appeal finding that cl 5.6.6 was ultra vires.2 The Court of Appeal referred the matter back to this court for reconsideration of the Body Corporate’s unjust enrichment claim in respect of rent in light of that court’s finding.

[5]                 In a further judgment dated 19 December 2023,3 I found for the Body Corporate on  its  unjust  enrichment  claim  in  respect  of  rent.  I  ordered  Shiraz  to reimburse the Body Corporate in the amount of $407,757.11. At [21] of that judgment, I recorded that I had received no submissions on the interest that might be

1      Body Corporate 406198 v Property Opportunities Ltd [2022] NZHC 418, [2022] 23 NZCPR 1.

2      Body Corporate 406198 v Property Opportunities Ltd [2023] NZCA 302, [2023] 3 NZLR 140, [2023] 24 NZCPR 286. The Supreme Court declined leave to appeal from the Court of Appeal’s decision: Shiraz Holiday Ltd v Body Corporate 406198 [2023] NZSC 157.

3      Body Corporate 406198 v Property Opportunities Ltd [2023] NZHC 3795.

payable by Shiraz. I said that if the parties were unable to agree, they could file and serve memoranda. I did not make any decision on costs.

Costs

[6]                 The parties have reached an agreed position on costs. This is that Shiraz will repay to the Body Corporate the $41,361 that the Body Corporate paid (by set-off) after my first judgment and will pay to the Body Corporate $52,150.75 in respect of costs and disbursements in this proceeding. I do not need to make any orders in that regard.

Interest

[7]                 The Body Corporate seeks interest in respect of both the outgoings and the rent that Shiraz was ordered to repay. It acknowledges that it did not comply with  the pleading requirements of the Interest on Money Claims Act (the Act). It therefore applies, under r 1.9 of the High Court Rules 2016, to amend its pleading to make a compliant claim for interest under the Act.

[8]                 Shiraz says any  amendment  at  this  late  stage  would  cause  it  prejudice.  It therefore says the Body Corporate should not be given leave to amend. In respect of the Body Corporate’s claim for interest on outgoings, Shiraz also says it is far too late to make such a claim, given that the parties reached an agreed position after my first judgment, with the Body Corporate having not pursued its claim for interest on the outgoings.

Relevant legal principles

[9]                 The effect of s 25(1) of the Act is that this Court cannot award interest under a section of the Act unless the Body Corporate pleads (i) the section under which interest is sought and (ii) as far as possible, the period for which interest is sought. The Body Corporate’s current pleading does not plead either of these things. For both rent and outgoings, the Body Corporate simply claims “interest”.

[10]              The apparent strictness of s 25(1) is ameliorated by s 25(4). This provides that nothing in s 25 prevents a court from making an award of interest where the court has

“at any time” accepted an amendment to a statement of claim “in accordance with the rules of court” and the amended claim complies with the requirements of s 25.

[11]              The approach to an application for leave to amend a pleading to accommodate the requirements of s 25(1) was considered by Osborne J in Davern v QBE Insurance (Australia) Ltd.4 His Honour was concerned, as I am here, with an application made after judgment. The Judge noted that s 25(4) allows an amendment “at any time”, which contemplated the  possibility  of  a  very  late  amendment,  and  that  issues  in relation to an interest claim were most likely to arise after a substantive judgment.5 He held that the relevant rule of court was r 1.9 of the High Court Rules. Where an application was made late (such as after judgment), the applicant had to clear the “three formidable hurdles” set by the Court of Appeal in Elders Pastoral Ltd v Marr.6

[12]              The Court of Appeal recently approved Osborne J’s approach, in Chen v Huang.7 The Court characterised the Elders Pastoral hurdles as:8

(a)The amendment is in the interests of justice.

(b)It will not significantly prejudice the other party.

(c)It will not cause significant delay.

[13]              Amendments were allowed in both Davern (after substantive judgment) and Chen v Huang (on an appeal from a substantive judgment). In each case this was because, in essence, the plaintiffs had always made it clear that they were claiming interest, there was no suggestion the defendants would have responded any differently had the claim for interest been correctly pleaded, and the amendment would not cause any delay.

4      Davern v QBE Insurance (Australia) Ltd [2023] NZHC 3543.

5 At [16].

6      Elders Pastoral Ltd v Marr (1987) 1 NZPC 91, (1987) 2 PRNZ 383 (CA).

7      Chen v Huang [2024] NZCA 38 at [244].

8 At [242].

Interest on outgoings

[14]              In respect of outgoings, the Body Corporate is seeking an amendment not only after judgment but about two years after the judgment was satisfied. People should be able to move on after a judgment, and even more so after a judgment is satisfied.     It would not be in the interests of justice to allow (in the absence of some misconduct by a defendant) an amendment in such circumstances.

[15]              Further, it appears well arguable that the parties reached a compromise after my first judgment: the Body Corporate did not pursue its claim for interest and at the same time the parties agreed costs. If I were to allow the amendment, I would have to allow Shiraz the opportunity to plead that the Body Corporate abandoned any claim for interest as part of that compromise. Resolving that matter would cause delay.

[16]For these reasons, I decline the Body Corporate’s application for leave

to amend to plead a claim for interest in respect of outgoings.

Interest on rent

[17]              The position is different in respect of interest on rent, where there is no suggestion of a compromise. From well before the substantive hearing, it was clear to Shiraz that the Body Corporate was claiming interest. Shiraz had the opportunity to offer evidence and advance arguments at the hearing in response to the claim.

[18]              Shiraz says a late amendment would prejudice arguments that it would have made in relation to a claim for interest. Shiraz does not identify any such arguments. It says this does not matter, as the Court should not speculate on how the trial might have run had the claim for interest been properly pleaded. I do not accept this. If there were arguments that Shiraz could have run, it would not be difficult to identify them now. Moreover, Shiraz did advance a change of position defence (which might often be relevant to a claim for interest). I rejected the defence in my first judgment.9

9      Body Corporate 406198 v Property Opportunities Ltd [2022] NZHC 418, [2022] 23 NZCPR 1 at [182].

[19]              I therefore grant leave to the Body Corporate to amend its pleading in respect of its claim for interest on rent.

Result

[20]              The Body Corporate is granted leave to amend its amended statement of claim dated 28 July 2019 by amending its prayer for relief at paragraph 25D to claim interest, on the rent payments for which it has obtained judgment, under s 10 of the Interest on Money Claims Act 2016 from the date of each rent payment to the date of repayment by Shiraz. I award interest to the Body Corporate in accordance with that amendment.

Campbell J