Faltaus v Kim & Co Limited

[2012] NZHC 895

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-002401 [2012] NZHC 895

BETWEEN  NAGI FALTAUS Plaintiff

ANDKIM & CO LIMITED Defendant

Hearing:         On the papers

Judgment:      3 May 2012

JUDGMENT OF COURTNEY J

This judgment was delivered by Justice Courtney on 3 May 2012 at 3:30 pm

pursuant to R 11.5 of the High Court Rules

Registrar / Deputy Registrar

Date………………………….

Solicitors:           Robb & Brown, P O Box 2699 Shortland Street, Auckland 1140

Fax: [phone]

Counsel:             S W M Piggin, P O Box 6456 Wellesley Street, Auckland 1141

Fax: [phone] – Email: [email protected]

FALTAUS V KIM & CO LTD HC AK CIV-2012-404-002401 [3 May 2012]

[1]      The applicant, Nagi Faltaus, is the sub-lessee of office space in Takapuna. The respondent, Kim & Co Ltd, is the sub-lessor. Kim & Co has served notice purporting to cancel the sub-lease and requiring Mr Faltaus to relocate his offices by midday tomorrow. Mr Faltaus asserts that the notice is invalid and has filed proceedings seeking a declaration to that effect or, alternatively, relief under the Property Law Act 2007. He has also applied for interim relief in the form of an injunction preventing Kim & Co from acting on the notice pending determination of the substantive proceeding.

[2]      Because of the time constraints the application has been made without notice. A memorandum of counsel has been filed with the papers together with an affidavit and undertaking as to damages by Mr Faltaus.

[3]      The term of the sub-lease is 16 May 2011 – 4 February 2014. The sub-let space comprises a single office within a larger office, with access to a common reception and meeting room areas.  Mr Faltaus, a solicitor, runs his practice from this office. The rest of the office space is occupied by Kim & Co Limited, which operates as chartered accountants. Christopher Kim controls Kim & Co and he, his wife and adult son all work in the office, together with other staff.

[4]      The relationship between Mr Faltaus and the Kim family has not been harmonious and over the last several months the level of conflict has been escalating. In  essence,  Mr  Faltaus  asserts  that  Mr  Kim  and  his  family  act  in  a  generally disruptive and discourteous manner which impacts on Mr Faltaus’ practice.   The head lessor became involved earlier this year and it appears from his correspondence that an agreement was reached that Mr Faltaus would move out of the premises once he had found suitable alternative accommodation and that Kim & Co would meet his costs of relocating. In his affidavit Mr Faltaus confirms this.

[5]      On 1 May 2012 Kim & Co Ltd, by its solicitor, served Mr Faltaus with notice under s 246 of the Property Law Act 2007 of its intention to cancel the sub-lease for breaches that were not capable of being remedied. The breaches referred to very much reflected  the kind  of  complaints  that  Mr  Faltaus  had  been  making  about behaviour of the Kim family. The terms of the notice are described by Mr Faltaus in

his affidavit but, in error, not actually annexed. Mr Faltaus’ counsel, Mr Piggin, subsequently  advised  the  Court  of  the  error  and  provided  a  copy  of  the  letter, advising that a further affidavit would be filed on this point. Notwithstanding the omission, I am satisfied from the terms of Mr Faltaus’ affidavit that notice was given in the terms he describes.  Not only does he describe the notice but he does exhibit subsequent correspondence between, Mr Piggin and Kim & Co’s solicitor, Mr Cox, in which Mr Piggin demands that the notice be withdrawn and Mr Cox refuses.

[6]      Mr Faltaus asserts that the breaches alleged in the notice as grounds for the cancellation of the sub-lease are untrue and that he has not engaged in any of the conduct that is said to constitute the breaches.   However, Mr Faltaus’ immediate concern is that it requires him to vacate the premises by midday tomorrow, 4 May

2012.  This, he says, is unreasonable because he has ongoing client commitments, including conveyancing settlements to complete tomorrow.  He has fixed telephone and fax connections which will be lost or interrupted if his lease is terminated on such short notice.   He also has access to the ASB Bank internet system through a card installed in his computer.   This arrangement is site specific and cannot be moved without an ASB technician.

[7]      The correspondence between the parties does suggest that there is a serious issue regarding the validity of the notice.  Mr Faltaus’ claim that it was Mr Kim’s conduct that has caused the problems tends to be borne out by the correspondence between the parties, including correspondence from the head lessor, Mr Burton, over the last few months.  But even if I were to put aside the issue of whether there had been a breach of the terms of the sub-lease I am satisfied that giving notice of less than a week to re-locate a legal practice is unreasonable.   I accept the difficulties described by Mr Faltaus in his affidavit.

[8]      I also consider that the level of disruption that would result from relocation at such short notice is likely impact on Mr Faltaus’ practice with potentially detrimental effects on clients’ affairs as well as to Mr Faltaus personally.  For these reasons, I am not satisfied that damages would be an adequate remedy.

[9]      Nor is there any real prejudice to the defendant in the status quo being preserved.   Mr Faltaus has deposed that he has been actively looking for suitable office space but has so far been unsuccessful.  Clearly, the relations between these parties are such that Mr Faltaus has no interest in remaining longer than necessary. Nor does it appear generally from the evidence that his ongoing presence pending his re-location is having a detrimental effect to the defendant’s business to any or any significant extent.

[10]     In the circumstances I make orders:

(a)       In the terms of the draft orders filed;

(b)That Mr Faltaus file and serve an affidavit annexing the Property Law Act notice and explaining the reason that it was not annexed to his original affidavit

[11]     The matter is to be listed in the duty judge list on 10 May 2012 for review.

P Courtney J