Fernyhough v The Freight People Ltd - [2012] NZHC 2638

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-3553

CIV-2012-404-5015 [2012] NZHC 2638

UNDER Section 72 of the District Courts Act 1947

IN THE MATTER OF an appeal against a decision of the District
Court at Auckland

BETWEEN EDWARD JOHN FERNYHOUGH, JUDITH DIANNE HONEYWELL AND ANNE ELIZABETH HERBERT Appellants

ANDTHE FREIGHT PEOPLE LIMITED Respondent

Hearing: 9 October 2012

Appearances: S H N Chan for Appellants
No appearance for Respondent

Judgment: 10 October 2012

JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 10 October 2012 at 5 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date: ...................................

Solicitors: McVeagh Fleming, Auckland: schan@mcveaghfleming.co.nz
Vallant Hooker & Partners, Auckland: bmurray@vhp.co.nz

Copy for: Mr J Price: jprice@hplpartners.co.nz

FERNYHOUGH V THE FREIGHT PEOPLE LIMITED HC AK CIV-2012-404-3553 [10 October 2012]

[1] This is an appeal from decisions of Judge Bouchier in the District Court at Auckland on 23 May 2012 (“decision on the merits”) and 31 July 2012 (“decision on costs”).1

[2] In the decision on the merits, the Judge determined proceedings brought by the trustees of the Classic Car Museum Trust, to whom I shall refer as “the trustees”. The trustees brought proceedings in the District Court as the lessor of premises situated in Auckland, the premises having been leased to the Respondent (“Freight People”).

[3] The trustees appeal against aspects of her Honour’s decision on the merits. Although Freight People cross appealed, a liquidator has now been appointed to that company and the liquidator has advised the Court that he will abide the Court’s decision. There was no appearance for the liquidator when this matter was heard and I dismiss the cross appeal accordingly.

[4] The trustees also appeal against the Judge’s decision on costs.

Grounds of appeal

[5] The grounds of the appeal on the merits are:

(a) did the Judge err in finding that the term of the lease between the parties expired on 1 April 2011, rather than on 1 June 2011; and

(b)did the Judge err in law and in fact in finding that the trustees had failed to mitigate their loss and in reducing by 25 per cent the damages recoverable by the trustees.

[6] As to the appeal on costs, the issue which arises is whether the Judge erred in awarding costs of $28,000 plus standard disbursements to the trustees, rather than a

1 Fernyhough v The Freight People Limited DC Auckland CIV-2010-004-2513, 23 May 2012; and
Determination of Judge Bouchier on costs dated 31 July 2012.

greater sum to which the trustees contend that they are entitled pursuant to the terms of the lease.

Background

[7] By (undated) Deed of Lease (“lease”) the trustees leased to Freight People the premises described in the lease. The lease was on the ADLS Fourth Edition 2002 (3) form, but as varied by the parties.

[8] The lease was expressed to be for a term of three years, with three rights of renewal of three years each. The Renewal Dates were…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2012] NZHC 2638
Decision Date: 10 October 2012

CaseChat Overview and Summary

This appeal concerns the interpretation of the term of a lease and the duty to mitigate damages in a lease dispute. The trustees of the Classic Car Museum Trust brought proceedings against The Freight People Limited in the District Court at Auckland, seeking damages for breach of lease. The appeal was heard by Justice Peters on 10 October 2012, with the appeal on the merits and the appeal on costs considered separately.

The trustees' appeal against the merits decision primarily questioned whether the term of the lease expired on 31 March 2011, as determined by the Judge, or on 31 May 2011. The trustees argued that the amendment to the Commencement Date did not alter the three-year term of the lease. However, Justice Peters found that the Judge's interpretation was correct, as the term of the lease could not vary depending on whether or not the tenant gave notice of their wish to renew. The appeal on this point was dismissed.

The second ground of appeal addressed the duty to mitigate damages. The trustees argued that they breached their duty to mitigate, but they disputed the extent of the reduction in damages. Justice Peters found that the trustees were entitled to a period to decide on their actions, but the delays in listing the premises and the excessive asking rent were unreasonable. The Judge's decision to reduce the damages by 25 per cent was upheld.

Regarding the appeal on costs, the trustees argued that they were entitled to "solicitor client" costs of $60,162 plus disbursements of $6,168.71, as per the terms of the lease. Justice Peters agreed that the trustees were entitled to costs under the lease, but the entire sum claimed by the trustees could not be determined. The matter was referred to the Registrar for taxation, with costs awarded to the trustees in respect of the appeal.

In summary, the appeal on the merits was dismissed, while the appeal on costs resulted in a declaration that the trustees are entitled to costs and disbursements in accordance with the lease, subject to taxation by the Registrar. The appeal on costs was successful for the trustees, but the extent of the costs awarded was to be determined through the taxation process.

Orders