Drake City Limited v Tasman-Jones

[2017] NZHC 968

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-002810 [2017] NZHC 968

BETWEEN

DRAKE CITY LIMITED

Plaintiff

AND

DAVID JONATHAN TASMAN-JONES First Defendant

OMAR JOVANNY BARRAGAN MERCHAN

Second Defendant

Hearing:	8 May 2017
Appearances:	A J Steel for the Plaintiff No appearance by or for the First and Second Defendants
Judgment:	12 May 2017

JUDGMENT OF HINTON J

This judgment was delivered by me on 12 May 2017 at 12.30 pm pursuant to Rule 11.5 of the High Court Rules

……………………………………………………………………

Registrar/Deputy Registrar

Counsel:

Alec Steel, Barrister, Auckland

DRAKE CITY LIMITED v TASMAN-JONES [2017] NZHC 968 [12 May 2017]

[1]      The  plaintiff  claimed  unpaid  rent,  outgoings  and  interest  against  the defendants as guarantors of a lease dated 21 September 2011.

[2]      On  20  December  2016,  Associate  Judge  Sargisson  entered  summary judgment (the judgment) for the claimed rent of $143,717.16, being for the period from 1 January 2014 to 31 December 2014.   She stated in the judgment that the defendants had provided a written guarantee for the performance of the lease, including payment of rent and outgoings, and that the defendants remained bound by their covenants under the lease.  The Judge declined to enter summary judgment for the 2014 unpaid outgoings of $56,544.25 for the reason that the defendants’ notice of opposition raised an arguable defence of set-off for breach of the covenant of quiet enjoyment.

Procedure

[3]      It seems from the judgment that counsel for the defendants was given leave to withdraw   at   the   commencement   of   the   summary   judgment   hearing.      The first defendant,  Mr  Tasman-Jones,  appeared  in  person  at  the  hearing.     The second defendant did not appear.

[4]      In the judgment, the defendants were directed to file and serve a statement of

defence “not later than February 2017”, pleading the alleged set-off.

[5]      No defence having been filed, on 3 March 2017, the plaintiff requested that the residual outgoings claim be set down for entry of judgment by default.

[6]      Nicholls   Law   (Ms   Nelson)   was   then   instructed   to   act   for   the second defendant.

[7]      The matter was called  in chambers before Associate Judge Sargisson  on

29 March 2017.  Mr Steel and Ms Nelson appeared.  Mr Tasman-Jones appeared in person.   The proceeding was adjourned to 28 April 2017, with the following directions:

…

(b) Counsel for the plaintiff and the second defendant are to file and serve a joint memorandum setting out proposed directions not later than 21 April

2017.

(c) Mr Tasman-Jones is to file and serve:  a statement of defence if he wishes to raise a defence to those aspects of the plaintiff’s claim that have not yet been determined, by 21 April 2017.

…

[8]      A joint memorandum dated 21 April 2017 was filed.   It recorded only that Ms Nelson for the second defendant had been instructed to file a formal insolvency proposal, but that she had not been instructed as to any detail, and that the plaintiff wished to proceed to seek judgment by default.

[9]      On 27 April  2017,  the plaintiff filed a memorandum  confirming that  no statement of defence had been filed; restated the amount of outgoings for which judgment  was  sought  and  attached  a  schedule  of  interest  on  the  outstanding outgoings.

[10]     The matter was called again before Associate Judge Sargisson on 28 April

2017.   Ms Nicholls was granted leave to withdraw as counsel for the second defendant.  The application for judgment by default was directed to the Duty Judge List on 8 May 2017.

[11]     The first defendant did not appear at the last mention and did not appear on

8 May 2017.

[12]     There was also no appearance by or for the second defendant on 8 May 2017. Nicholls Legal remain on the record as solicitors for the second defendant, but apparently for purposes of service only.

[13]     Neither defendant has filed any statement of defence.

[14]     The plaintiff has filed and served an affidavit of Shahin Kermani, sworn

5 May 2017, confirming the quantum of the outgoings and annexing all relevant invoices.   This affidavit has been filed to cover the possibility the Court does not

consider the outgoings fall within liquidated damages, in which event Mr Steel seeks judgment by way of formal proof.

Discussion

[15]     Although the rules are silent, or not clear, as to whether a plaintiff may obtain judgment  by  default,  or  by  formal  proof,  where  an  application  for  summary judgment has been dismissed (in whole or in part) and the defendant has not filed a statement of defence, I am satisfied the Court must have jurisdiction to do either.1

[16]     The plaintiff submits that the amounts claimed for outgoings are liquidated demands within r 15.7 of the High Court Rules 2016 and that it can obtain judgment by default.   I question whether that is correct.   The quantum cannot be precisely calculated on the basis of the lease as Mr Steel submits. The relevant invoices would also be required.

[17]     I do not need to determine the point as, in any event, I have affidavit evidence which satisfies me as  to the quantum of the unpaid outgoings, in  terms of the affidavit of Shahin Kermani, sworn 5 May 2017.   The question of liability has already been covered in the summary judgment decision.

[18]     The plaintiff also seeks interest at 14 per cent per annum on the unpaid outgoings pursuant to the First Schedule and clause 5.1 of the lease.  That calculation is set out in Schedule 2 to the plaintiff ’s memorandum dated 8 May 2017.  It covers interest from the date each of the outgoings fell due during 2014, down to 7 May

2017, the total amounting to $23,120.52.

[19]     I am satisfied that the defendants have had ample notice of the judgment sought against them and of the quantum, albeit that the detailed proof of the quantum was only provided today.  There has been no indication that quantum was disputed, rather the dispute, which was never converted into a statement of defence, was over a

set-off.

1      See Andrew Beck and others McGechan on Procedure (looseleaf ed, Thomson Reuters) at

[HR 12.10.02]; McLellan v Springvale Central Water Co Ltd [2016] NZHC 1128 at [3].

Judgment

[20]     I  enter  judgment  by  way  of  formal  proof  against  the  first  and  second defendants for outgoings due under the deed of lease and guarantee in the amount of

$56,544.24, plus interest on those outgoings in the sum of $23,120.52.

Costs

[21]     The plaintiff seeks costs in the sum of $8,474 and disbursements of $1,661. [22]     I raised with Mr Steel my concern that the plaintiff’s calculation, at least to

some  extent,  may  double-up  with  the  costs  already  granted  on  the  summary judgment application, which I was informed amount to $7,136, less 30 per cent.

[23]     The matter was left on the basis that if the plaintiff is to seek further costs, it will file a memorandum within five working days and will ensure there is no double recovery in the costs sought.

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Hinton J