Freight Direct (NZ) Limited v Unity One Limited - [2024] NZHC 59

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-2007

[2024] NZHC 59

UNDER Part 19 of the High Court Rules and Part 4, subpart 6 of the Property Law Act 2007

IN THE MATTER

of a notice of intention to cancel lease, refusal to renew lease and forceable re-entry in breach of s 91 of the Crimes Act 1961

BETWEEN

FREIGHT DIRECT (NZ) LIMITED

Plaintiff

AND

UNITY ONE LIMITED

Defendant

Hearing: On the papers

Counsel:

DG Collecutt for the Plaintiff T Johnson for the Defendant

Judgment:

2 February 2024

COSTS JUDGMENT OF BECROFT J

This judgment was delivered by me on 2 February 2024 at 11am pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
Patel Nand Legal, Auckland Martelli McKegg, Auckland

DG Collecutt, Auckland

FREIGHT DIRECT (NZ) LTD v UNITY ONE LTD [2024] NZHC 59 [2 February 2024]

What this application is all about

[1] This is a civil costs application. The substantive issues between the parties arose in the context of an agreement by Unity One Limited (the landlord) to lease to Freight Direct (NZ) Limited (the tenant) a commercial property at 89A Station Road, Penrose (the premises). The tenant stored goods at the premises in connection with its freight transport business.

[2] In mid-2022, some months before the lease expiry date of 15 October 2022, significant differences emerged between the parties. The tenant said it attempted to renew its lease. The landlord said the renewal was not carried out correctly and repudiated it. The tenant says that in response to that repudiation, it cancelled the lease. Thereafter allegations and counter-allegations continued.

[3] The tenant issued proceedings by way of originating application on 18 October 2022.

[4] On 13 June 2023, the tenant and landlord filed a joint memorandum confirming that a substantive hearing was not required. The plaintiff/tenant claimed it had obtained what it sought in issuing the proceedings without having to proceed to a hearing. The only outstanding issue was said to be costs.

[5]The costs application came before me on the papers on 13 June 2023.

[6]In a minute, of same date, I noted:

[1]        This matter and the issue of costs came before me today as Duty Judge.
[2]        The costs issue cannot be considered until the plaintiff reduces its costs submissions to a succinct three-page argument, as directed by Moore J, in his Minute of 16 November 2022, at paragraph [6(c)].
[3]        The plaintiff should at least provide a schedule of costs sought with a proposed final amount, showing both costs and disbursements.
[4]        This is to be done within 10 working days from the date of this Minute.
[5]        Much of the self-evident disagreement as to costs is caused by a sharp disagreement as to the facts and circumstances: e.g. alleged cancellation of lease by the plaintiff versus alleged repudiation of renewal by the defendant;

whether the defendant’s re-entry of the property constituted an offence under s 91 of…

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: [2024] NZHC 59
Decision Date: 2 February 2024

CaseChat Overview and Summary

Freight Direct (NZ) Limited initiated proceedings against Unity One Limited, alleging a refusal to renew a lease, wrongful re-entry, and a breach of the Crimes Act 1961. The dispute originated from an agreement for a commercial property lease at 89A Station Road, Penrose, which was set to expire on 15 October 2022. The tenant, Freight Direct, stored goods at the premises for its freight transport business. Disputes arose in mid-2022, with Freight Direct claiming to have attempted to renew the lease, while Unity One argued that the renewal was improperly executed and subsequently repudiated it. Freight Direct asserted that it cancelled the lease in response to the landlord's repudiation. The matter proceeded to a costs application on the papers, with both parties unable to agree on the facts or the costs.

The court faced the challenge of deciding the appropriate costs without a hearing on the facts, as the parties had already reached a pragmatic resolution without needing a substantive hearing. The court had to decide whether to make substantive findings on the disputed facts to determine the costs or to conclude that costs should lie where they fell, given the unresolved factual disputes and the parties' agreement that a hearing was unnecessary. The court considered the precedent set in Conqra Asbestos Solutions Ltd v Warehouse World Ltd, which suggested that a costs proceeding should not be used as a platform for ventilating substantive arguments.

The court concluded that any substantive findings on the facts would be artificial and unsatisfactory, given that the parties had reached a pragmatic solution without requiring a hearing. The court decided that justice was served by declining to make a ruling on costs, as both parties had effectively achieved their desired outcomes: the tenant maintained occupation until 31 January 2023, and the landlord secured a new tenant. The court thus declined to further the matter regarding costs.

This decision underscores the importance of factual resolution in determining costs and highlights the principle that courts should avoid making substantive findings in costs proceedings when a pragmatic resolution has already been achieved by the parties. The court's decision to leave costs where they fell was based on the impracticality of making substantive findings without a hearing and the parties' agreement that such a hearing was unnecessary.

Orders