Caisteal an Ime Limited v Mount Cass Holdings Limited

[2023] NZHC 2298

IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY

I TE KŌTI MATUA O AOTEAROA TE TIHI-O-MARU ROHE

CIV-2023-476-017

[2023] NZHC 2298

BETWEEN

CAISTEAL AN IME LIMITED

Applicant

AND

MOUNT CASS HOLDINGS LIMITED

Defendant

On the papers:
Counsel:	K W Clay for Applicant
Judgment:	22 August 2023

JUDGMENT OF CHURCHMAN J

[1]                 By application dated 22 August 2023, the applicant has made application on a without notice basis for an interim injunction restraining the defendant from cancelling a lease, the provisions of which are set out in a Deed of Lease dated 26 June 2023.

[2]                 Accompanying the application was an undertaking as to damages and an affidavit of Darren Raymond John Angus in support.

[3]                 Mr Angus deposed that he was a director of the applicant; the applicant is the lessee of premises being part of a property at 75 Beach Road, Akaroa, the applicant is the tenant and he and his wife, Lyndal Theresa Angus, are guarantors under the lease.

[4]                 Attached to the affidavit was a Property Law Act notice dated 8 August 2023 served by the respondent on the applicant (the PLA notice).

[5]                 The PLA notice says that if payment of the new rental in the sum of $4,956.29 including GST per month was not made within 10 working days of receipt of the

CAISTEAL AN IME LIMITED v MOUNT CASS HOLDINGS LIMITED [2023] NZHC 2298 [22 August 2023]

notice, along with specified rental arrears, interest and costs the landlord may cancel the lease.

[6]                 The applicant says that the agreement to lease contained no specific date nor a reference to a formula in relation to an increase in rental.

[7]                 Mr Angus deposed that on 6 April 2023 he received a message from the respondent’s accountant saying that they were applying a rent increase. He responded challenging the right to impose a rent increase.

[8]Subsequent correspondence failed to resolve the issue.

[9]                 On 22 August 2023, the applicant received an email from the solicitor for the respondent reiterating that the PLA notice would not be withdrawn. This has led to the current application. The urgency is that the notice expires today and the applicant is at risk of having the lease cancelled by the respondent tomorrow.

Legal principles applicable to interim injunctions

[10]              The principles applying to the grant of an interim injunction are well-settled. It requires the Court to find that: (a) there is a serious question to be tried; (b) the balance of convenience favours the granting of the injunction; and (c) the overall justice of the case requires it.1

[11]              The purpose of an interim injunction is to improve the chance of the court being able to do justice after a determination of the merits at trial.2 The basic principle is for a court to take whichever course seems likely to cause the least irremediable prejudice to one party or another.3

1      NZ Tax Refunds Ltd v Brooks Homes Ltd [2013] NZCA 90, (2013) 13 TCLR 531 at [12]; Intellihub v Genesis Energy Ltd [2020] NZCA 344 at [23]; Klissers Farmhouse Bakeries v Harvest Bakeries Ltd [1985] 2 NZLR 129 at 142; and American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL).

2      Commerce Commission v Viagogo AG [2019] NZCA 472, [2019] 3 NZLR 559 at [31], citing National Commercial Bank Jamaica Ltd v Olint Corp Ltd [2009] UKPC 16, [2009] 1 WLR 1405 at [16]–[17].

3      At [31], citing National Commercial Bank Jamaica Ltd v Olint Corp Ltd, above n 2, at [16]–[17].

[12]              A serious question is one that is not frivolous or vexatious, and one where the plaintiff is able to satisfy the court that it has a real prospect of succeeding at trial.4

[13]              The essence of the latter two stages is whether the effect of refusing the injunction would be harder on a plaintiff who succeeds at trial than granting it would be on an ultimately successful defendant.5 In making this assessment, the Court should consider what is in the overall interests of justice by reference to the relative strengths of the cases, the preservation of the status quo, the uncompensable disadvantages to either party, and the adequacy of damages as a remedy.6

[14]              The second stage, assessing the balance of convenience, involves balancing the risk of doing an injustice. 7 It is a broad and flexible inquiry.8 The Court must decide whether granting or refusing an injunction would, after the action itself has been tried and the issues between the parties determined, fairly allow the adjustment of the rights of the parties in a way that accords with fairness and justice.9 The question of balance of convenience arises generally only where there is doubt as to the adequacy of damages.10

[15]              The third stage is the overall justice assessment. The Court of Appeal has emphasised that in every case the Judge has to stand back and ask where overall justice lies.11 Marshalling considerations under the non-exhaustive heads of serious question to be tried and balance of convenience is an aid to determining this ultimate question.12 It is essentially a check on the position that has been reached following analysis of the first two stages.13 It may involve considerations such as the public interest and the connection of the defendant to New Zealand.

4      Re Lord Cable (dec’d) [1976] 3 All ER 417 (Ch) at 431; and Hannon v Senior Trust Capital Ltd

[2023] NZHC 16 at [40].

5      Roman Catholic Bishop of the Diocese of Auckland v Boynton [2018] NZHC 2636 at [14].

6      Jacanna Holdings Ltd v Pacific Auto Carrier (NZ) Ltd [2019] NZHC 931 at [92]; and Wellington International Airport Ltd v Air New Zealand HC Wellington CIV-2007-485-1756, 30 July 2008 at [6]–[14].

7      McLaughlin v McLaughlin [2019] NZHC 2597 at [37], citing Cayne v Global Natural Resources Plc [1984] 1 All ER 225 (CA) at 237.

8 At [38].

9      Congoleum Corp Ltd v Poly-Flor Products (NZ) Ltd [1979] 2 NZLR 560 (CA) at 571.

10     American Cyanamid Co v Ethicon Ltd, above n 1, at 408–409 and 510–511.

11     Klissers Farmhouse Bakeries v Harvest Bakeries Ltd, above n 1, at 142.

12     At 142; and see NZ Baking Trades Employees’ Industrial Union v General Foods Corp (NZ) Ltd

[1985] 2 NZLR 110 (CA).

13     NZ Tax Refunds Ltd v Brooks Homes Ltd, above n 1, at [47].

[16]              The overall grant of an interim injunction involves the exercise of a discretion, which is amenable to appeal on the basis that the judge has erred in law, taken account of an irrelevant matter, failed to take account of a relevant matter or is plainly wrong.14 However, the individual stages of the court’s consideration involve judicial evaluation rather than the exercise of a discretion.

Analysis

[17]              I accept that there is justification for proceeding on a without notice basis. The fact that the PLA notice expires today and the respondent will not agree to withdraw it means that the situation is urgent from the applicant’s perspective, and the risk of cancellation can only be averted by proceeding without notice.

[18]              As to whether there is a serious question upon which the applicant has a real prospect of succeeding at trial, the documentation appended to the affidavit of Darren Angus indicates that there is a credible argument that the terms of the lease do not adequately set out an entitlement to review the rent.

[19]              In terms of balancing the effect of granting the injunction on the respondent and the effect of refusing the injunction on the applicant, on the information available to me, it seems that the potential risk for the applicant if the I refuse the injunction is significant in that the lease could be cancelled. Whereas, if I do not issue the injunction, there will be no irrecoverable loss for the respondent and damages will be an adequate remedy for the respondent.

[20]              At this point, it is not possible to analyse the strength of the applicant’s case beyond being satisfied that the position it contends for is arguable.

[21]              For the applicant, damages would not be an adequate remedy should the injunction be refused and the lease be cancelled.

[22]              Standing back and asking where the overall justice of the matter lies, I conclude that justice favours the grant of an interim injunction on a without notice basis.

14 At [13].

[23]I therefore make an order in the following terms:

(a)pending further order of the Court, an interim injunction will issue prohibiting the defendant from cancelling the lease between the parties, the provisions of which are set out in the Deed of Lease dated 26 June 2023;

(b)the originating application filed by the applicant together with the interim injunction application will be listed for call in the next available Judge’s Chambers List 10 working days from today;

(c)leave is granted to the respondent to move to set aside this interim injunction on three working days’ notice; and

(d)costs are reserved.

Churchman J

Solicitors:

Layburn Hodgins, Christchurch for Applicant