Crown Park Commercial Limited v Limelight 2012 Limited

[2019] NZHC 350

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2019-412-7

[2019] NZHC 350

BETWEEN

CROWN PARK COMMERCIAL LIMITED

Plaintiff

AND

LIMELIGHT 2012 LIMITED

First Defendant

AND

JENNIFER ANN WALL

Second Defendant

Hearing:	(Determined on the Papers)
Counsel:	L A Andersen for Plaintiff
Judgment:	5 March 2019

JUDGMENT OF ASSOCIATE JUDGE LESTER

(in respect of application for substituted service and for interim charging order)

[1]    The plaintiff, Crown Park Commercial Ltd (“Crown Park”) has sought two orders on a without notice basis. The first is an order for substituted service, and the second is an interim charging order over a property owned by the second defendant, Jennifer Ann Wall.

[2]    Crown Park is the owner of a movie theatre in Oamaru, which is subject to    a registered lease dated  January  2012.  By  Deed  of Assignment  of  Lease  dated 22 November 2012, which is produced to the Court, the lease was assigned to the first defendant, Limelight 2012 Ltd (“Limelight”). Ms Wall and another individual became guarantors of the first defendant’s obligations under the lease. The third party

CROWN PARK COMMERCIAL LTD v LIMELIGHT 2012 LTD & WALL [2019] NZHC 350 [5 March 2019]

guarantor was released by an agreement dated 26 January 2016 which recorded that the release did not alter Ms Wall’s liability as guarantor under the lease.

[3]    The registered lease expired on 19 January 2018 and it is Crown Park’s case that Limelight remained in occupation pursuant to the “holding over” clause under the registered lease. That clause provides:

38.1 IF the Landlord permits the Tenant to remain in occupation of the premises after the expiration or sooner determination of the term, such occupation shall be a monthly tenancy only terminable by one month’s written notice at the rent then payable and otherwise on the same covenants and agreements (so far as applicable to a monthly tenancy) as herein expressed or implied.

[4]    The Third Schedule to the registered lease creates the guarantee given by   Ms Wall and it provides that “THE Guarantee shall extend to any holding over by the Tenant”.

[5]    The without notice applications are made in a proceeding in which summary judgment for the arrears is sought against both Limelight and Ms Wall.

[6]    Crown Park has produced a schedule of unpaid rental and outgoings incorporated into a notice of intention to cancel the lease. That schedule calculated, after allowances for various items, that $83,701.88 was payable by the tenant as at the date of the notice dated 21 January 2019.

[7]    Limelight’s solicitor accepted service of the notice of intention to cancel. There is no suggestion that the figure claimed in the notice was disputed by either Limelight or Ms Wall.

[8]    The lease was cancelled on 14 February 2019 as a result of the default set out in the notice not being rectified. Crown Park calculates a further sum of $4,312.50 due for unpaid rental between the date of the issue of the notice and the date of cancellation.

Application for substituted service

[9]    In the affidavit in support of the application for summary judgment it is said that:

The First Defendant breached its obligations under the lease in 2018 by non-payment of money owing and in November 2018 the premises were vacated and the fixtures and fittings were removed and the Second Defendant went to Australia.

[10]   In a further affidavit  filed in support  of the  orders sought without notice,  Mr Auckram, the director of Crown Park, goes into more detail about attempting to locate Ms Wall. Mr Auckram explains speaking to Ms Wall’s brother who lives in Australia. Ms Wall’s brother refused to provide him with Ms Wall’s address or allow him to speak to Ms Wall which is some confirmation that Ms Wall is in Australia. Crown Park was directed to Limelight’s lawyer, Mr Nation in Timaru.

[11]   Crown Park can do no more in respect of service of Ms Wall given it has no address for her.

Application for issue of charging order

[12]Rule 17.41 of the High Court Rules provides that:

Leave to issue a charging order before judgment may be granted only on proof that the liable party, with intent to defeat either his or her creditors or the entitled party or both,—

(a)is removing, concealing, or disposing of the liable party’s property; or

(b)is absent from or about to leave New Zealand.

[13]In McKay v 314 Maunganui Road Ltd, Keane J said:1

To obtain the benefit of the rule a claimant need not show a serious question to be tried or that he or she is favoured by the balance of convenience and justice overall, but must satisfy a test that is equally stringent.

[14]   Proof of either a party removing, concealing or disposing of assets or that they are absent from New Zealand is sufficient.  The liable party must be absent from

1      McKay v 314 Maunganui Road Ltd, HC Auckland CIV-2007-404-7434, 30 April 2008 at [24].

New Zealand with intent to defeat his or her creditors or removing, concealing or disposing of their assets with the same intent.

[15]   To obtain a charging order, the claimant must prove that the party who controls the asset has an intent to act “illegitimately”.2 A high standard of proof is required.3 Concrete evidence establishing one of the grounds is required. Conjecture or opinion, however reasonable and positive, will not suffice.4

[16]   In the affidavit in support of the orders sought, Mr Auckram refers to Ms Wall owning a property at 78 Eden Street, Oamaru. He records that the property has been put on the market for sale. He produces an email from a Ms Meredith-Cullen who is the conveyancer acting for Ms Wall on the sale of the house and that email identifies a conditional agreement for the sale of the house. The conditional dates are referred to in Ms Meredith-Cullen’s email as being 26 February 2019 and 5 March 2019. Settlement is said to be 15 working days from confirmation.

[17]The application is summed up in Mr Auckram’s affidavit:

I am seeking an interim charging order on the Second Defendant’s house as it seems clear that the actions of the Defendants in removing the fixtures from the property, moving to Australia, not disclosing the Second Defendant’s address in Australia and placing the house for sale mean that the Second Defendant is attempting to avoid her liability to the Plaintiff as guarantor.

[18]   That the monthly tenancy was not formally brought to an end through the issue of a written notice and that fixtures and fittings were removed without any notice to Crown Park is consistent with Mr Auckram’s concerns, as is the (apparent) absence of any reply to the notice of cancellation.

Order sought

[19]   The order sought is the granting of leave to issue a charging order in the sum of $101,000 against the estate of Ms Wall’s property as detailed in the application dated 1 March 2019. The application for substituted service seeks an order that

2      McKay v 314 Maunganui Road Ltd, above n1, at [25].

3      Joseph Lynch Land Co v Lynch (1992) 6 PRNZ 37, at 44.

4      D F Hammond Land Holdings Ltd v Elders Pastoral Ltd (HC) (1989) 2 PRNZ 232 (CA).

personal service be dispensed with and that service be deemed to be completed through personal service being completed on Limelight and/or Ms Wall’s solicitor, Thomas Nation and personal service on Ms Wall’s licenced conveyancer Ann Meredith-Cullen. Given Ms Meredith-Cullen confirmed she is acting for Ms Wall on the sale of her property, and Mr Nation confirmed in an email of 30 January 2019 he was able to accept service on behalf of Ms Wall of the notice of intention to cancel the lease, there can be confidence the papers will be brought to Ms Wall’s attention.

[20]   I am satisfied that an order for substituted service in the terms sought is appropriate and an order accordingly is made. Service will be deemed to be completed upon service in terms of para 1(b) of the application being completed.

[21]   The amount for which the charging order is sought is calculated by reference to the amount due under the lease and costs on a 2B basis with disbursements.

[22]   Given the lease at cl 6.1 entitles Crown Park to its solicitor and client costs of enforcement, there should be little complaint with a costs calculation based on scale.

[23]I also note that under cl 1.1:

All rent shall be paid without any deductions or set-off by direct payment to the Landlord or as the Landlord may direct.

[24]   Ms Wall as guarantor of Limelight’s obligations under the lease is the “liable party” in terms of r 17.41. Given the no set off clause in relation to the rent, that being an obligation guaranteed by Ms Wall, the plaintiff has at the very least a reasonably arguable case against her.

[25]   In my opinion, the circumstances point to Ms Wall in practical terms “quitting New Zealand”. The circumstances in which the tenancy was abandoned without the requisite notice being given, the removal of the fixtures and fittings from the property again without notice to Crown Park, and Ms Wall leaving the country without providing any forward address, withholding a new address, not changing her address details on the Companies Office  when it appears she is  in Australia, all point to   Ms Wall wanting to defeat Crown Park’s claim by selling up in New Zealand and moving to Australia.

[26]   Accordingly, leave is granted for the issue of a charging order in terms of para 1(a) of the application dated 1 March 2019.

[27]   The order is not to be sealed until the original documents are filed in the Court and the necessary filing fees paid.

[28]   The order is to be served forthwith in accordance with the order for substituted service.

[29]   Leave is reserved to the second defendant to set aside the charging order and I will deal with that application in the first instance by telephone conference should the circumstances require the charging order to be addressed as a matter of urgency.

Associate Judge Lester

Solicitors:

Albert Alloo & Sons, Dunedin
Copy to counsel: L A Andersen, Barrister, Dunedin