Harbour City Construction 2012 Limited v Link Technology 2000 Limited
[2017] NZHC 2480
•10 October 2017
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE WHANGANUI-Ā-TARA ROHE
CIV-2016-485-000782 [2017] NZHC 2480
BETWEEN HARBOUR CITY CONSTRUCTION
2012 LIMITED Plaintiff
AND
LINK TECHNOLOGY 2000 LIMITED First Defendant
HARRY MEMELINK and IAN TREVOR NEILL HAMILTON as trustees of LINK TRUST NO. 1
Second Defendants
Hearing: 5 October 2017 Appearances:
M Freeman for Plaintiff
C Nicholls for DefendantsJudgment:
10 October 2017
JUDGMENT OF VENNING J
QUANTIFICATION OF PLAINTIFFʼS LOSS
This judgment was delivered by me on 10 October 2017 at 4.00 pm, pursuant to Rule 11.5 of the High
Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Thomas Dewar Sziranyi Letts, Lower Hutt
Chris Nicholls, Lower Hutt
HARBOUR CITY CONSTRUCTION 2012 LTD v LINK TECHNOLOGY 2000 LTD [2017] NZHC 2480 [10
October 2017]
[1] Harbour City Construction 2012 Limited (Harbour City) seeks to quantify its claim for damages against Link Technology 2000 Limited (Link Technology) and Harry Memelink and Ian Hamilton as trustees of Link Trust No. 1 (Link Trust).
Harbour City’s purchase of 18 Victoria Street
[2] Harbour City bought a property known as 18 Victoria Street, Lower Hutt at mortgagee sale. Prior to Harbour City’s purchase, the second defendants as trustees of Link Trust, were the registered proprietors of the estate and fee simple in the land. Following Harbour City’s purchase Mr Memelink claimed to hold a lease of the premises granted by the then trustees of Link Trust in favour of Link Technology. As well as being a trustee of Link Trust, Mr Memelink was the sole director and shareholder of Link Technology. A significant number of items belonging to the defendants were scattered about the property when Harbour City bought it.
[3] Harbour City issued proceedings against Link Technology and Link Trust to determine the status of the lease. Harbour City sought a declaration by summary judgment that it was not bound by the terms of any lease between the trustees of Link Trust and Link Technology. It also sought damages in respect of trespass.
[4] In a judgment delivered on 16 March 2017 Associate Judge Smith entered summary judgment for Harbour City. He made the following orders:1
(a) a declaration that Harbour City was not bound by the terms of the lease;
(b)a declaration that the continued occupancy of the property by Link and Link Trust No. 1 or either of them, whether through the storage of chattels or materials on the property or otherwise constituted a trespass on the property;
(c) Harbour City’s claims for damages were to proceed to trial. The defendants were directed to file any statement of defence on that issue
within 14 days of the date of the judgment; and
1 Harbour City Construction 2012 Ltd v Link Technology 2000 Ltd & Ors [2017] NZHC 451.
(d) costs.
Harbour City’s quantum claim
[5] Harbour City then sought to quantify its damages. Mr Bradley Callis, a director of Harbour City, swore an affidavit on 28 April 2017 in support of Harbour City’s claim for damages.
[6] On 19 June 2017 Thomas J directed that Harbour City’s claim for damages for trespass was to be determined. She directed the defendants to file any evidence in opposition to Harbour City’s evidence on quantification of damages by 23 June
2017, with Harbour City to file any reply evidence by 30 June 2017.
[7] The Judge also directed that if any deponent was required for cross- examination the parties were to advise each other and the Court 14 days thereafter. The Judge set the matter down for a half day hearing.
[8] Mr Memelink filed an affidavit in opposition by 23 June as directed. Mr
Callis responded on 28 June.
[9] The quantum hearing was originally scheduled for 26 September 2017. At Mr Nicholls’ request based on his other professional commitments the hearing was vacated and rescheduled to 5 October 2017.
Adjournment application
[10] At the outset of the hearing before the Court on 5 October 2017 Mr Nicholls again sought an adjournment. He raised a number of grounds in support of the request for adjournment:
(a) first, that he was counsel in a jury trial in the District Court. The jury were out;
(b) he had overlooked giving notice for cross-examination; and
(c) the appeal from Associate Judge Smith’s decision was yet to be heard.
[11] I declined the application for adjournment. I granted leave to Mr Nicholls to have his cell phone available so that if he received a message from the District Court he could attend that Court to respond to any jury questions. I confirmed this Court would adjourn to enable him to do so.
[12] Thomas J’s directions were clear as to the notice required for cross- examination. There was no proper explanation for the failure to comply with that direction or to comply with r 9.74. But in any event, the matters at issue on Harbour City’s claim for damages for trespass to property are confined and can, in the circumstances of this case, be resolved on the basis of the affidavit evidence.
[13] Finally, the defendant’s appeal from Associate Judge Smith’s decision was
deemed to be abandoned on 14 July 2017.
The defendant’s counterclaim
[14] There is one other procedural issue. The defendants wish to pursue a counterclaim for damages or loss to their goods they had left on Harbour City’s premises.
[15] Mr Nicholls is correct that the defendants had filed a statement of defence which included a counterclaim. It would have been more efficient for all parties and the Court if that counterclaim had been able to be dealt with at the same hearing.2
However, the pleading in the counterclaim in particular is confused and defective as it stands. The pleading appears to conflate two potentially separate causes of action. The counterclaim by Link Technology repeats a claim to an interest in the property based on the existence of a lease which was dismissed by Associate Judge Smith. The counterclaim then carries on to plead:
36.That at various times since purchasing the land [Harbour City] has removed chattels, building materials and miscellaneous items (“the items”) either belonging to or under the control of the first defendant.
37. That Mr Memelink on behalf of the first defendant has asked
[Harbour City] to sight the items so removed by [Harbour City].
2 Roberts Family Investments Ltd v Total Fitness Centre (Wellington) Ltd (1998) 1 PRNZ 88, [1989] 1 NZLR 15.
38.[Harbour City] has declined to inform the first defendant where the items are.
39.[Harbour City] has either destroyed the items or converted them to its own use.
[16] Link Technology then seeks an order for return of its items or an order requiring Harbour City to pay damages.
[17] The pleading is deficient. It fails to comply with several High Court Rules. A counterclaim must comply with rules applying to statements of claim.3 Although several causes of action may be included in the same statement of claim, each cause of action must be pleaded separately.4 As noted, the defendants have conflated the claim in relation to the alleged trespass to their goods in a pleading based on the existence of a lease which was rejected by the Judge.
[18] The claim must also give sufficient particulars of time, place, amounts and other circumstances to inform the Court and the party or parties against whom relief is sought of Harbour City’s cause of action.5 Where damages are sought a statement of claim seeking recovery of a sum of money must state the amount as precisely as possible,6 and a plaintiff seeking to recover special damages must state their nature, particulars and amount in the claim. The defendants’ purported counterclaim in relation to trespass fails to comply with all the above rules.
[19] The case sought to be pursued by the defendants for their goods faces legal and factual issues, in addition to the defective pleading which, as I have noted, is in no state to be determined by the Court at the present time. The position is stated by the following passage:7
At common law, the person who is in possession of land, or is entitled to immediate possession, is entitled to enter or re-enter the land and forcibly remove a trespasser and his or her goods. Provided no more force than is reasonably necessary is used, the evictor will have a good defence to civil actions for trespass to the person or to chattels.
3 High Court Rules 2016, r 5.54.
4 High Court Rules, r 5.28.
5 High Court Rules, r 5.26(b).
6 High Court Rules, r 5.32.
7 Stephen Todd and others (eds) The Law of Torts in New Zealand (6th ed, Brookers, Wellington,
2013) at 492.
[20] And as noted by Scrutton LJ in Hemmings v Stoke Poges Golf Club:8
It will still remain the law that a person who replies to a claim for trespass and assault that he ejected a trespasser on his property with no more force than was necessary may be successfully met by the reply that he used more force than was necessary … But I see no reason to add to the existing privileges of trespassers on property which does not belong to them by allowing them to recover damages against the true owner entitled to possession who uses a reasonable amount of force to turn them out.
[21] The evidence Mr Memelink seeks to advance to support the defendants’ counterclaim is similarly unsatisfactory. Mr Memelink’s affidavit of 23 June refers to matters of law and submission. Mr Memelink also sought to file a recent affidavit dated 29 September. The explanation for seeking to file that affidavit is not acceptable. Mr Memelink simply says that his email system crashed about the same time his lawyer sent him Mr Callis’ affidavit of 28 June in response, so that he only saw the affidavit on 28 September. But there was no provision or basis for a reply to Harbour City’s reply affidavit. The affidavit seeks to raise new matters. I decline to take it into account.
[22] To the extent Mr Memelink’s affidavit of 23 June purports to raise evidence concerning the proposed counterclaim it is vague and general in the extreme. As an example Mr Memelink had said in his affidavit in opposition to the summary judgment application that Link Trust had a building kit to build a building on site. But the claim for that item is made by Link Technology, not Link Trust. Mr Memelink then seeks to address that by suggesting vaguely, and without corroborative documents, that the items on site, including the building kit were owned or “under the control of Link Trust pursuant to an agreement between Link Tech”.
[23] Finally, the defendants’ counterclaim has not been allocated for determination. Harbour City has not had a full opportunity to respond to it. In the circumstances I propose to deal with the matter which is properly before the Court, namely Harbour City’s claim for quantification of damages. It is unfortunate all
matters cannot be finalised, but the principal reason the defendants’ purported
8 Hemmings v Stoke Poges Golf Club [1920] 1 KB 720 (HL) at 747.
counterclaim is in no position to be dealt with before the Court at present is primarily
because of the defendants’ own deficient pleading.
Harbour City’s claim for damages
[24] I return to the issue of Harbour City’s claim for damages in trespass.
[25] In Roberts v Rodney District Council the Court reviewed the measure of compensatory damages for trespass to land.9 At [11]–[13] Barker J summarised the law as follows:
[11] In broad terms, damages for trespass to land may be nominal, exemplary or compensatory: [1987] 1 NZLR 459 (CA) at p 465. This case is concerned with compensatory damages, Harbour City's claim for exemplary damages having been rejected in my earlier judgment. There are two possible measures of compensatory damages. The first is, where there has been actual damage to Harbour City's land or the chattels thereon; the measure of damages is the cost of reinstatement: Mayfair Ltd v Pears at p
465. In some circumstances, where reinstatement is not possible for example, the diminution in the value of the land may be awarded in lieu thereof. See Lockwood Buildings Ltd v Trust Bank Canterbury Ltd [1995] 1
NZLR 22 (CA).
[12] The second measure of damages usually applies where there has been some wrongful use made of Harbour City's land. Where a trespasser has wrongfully made use of Harbour City's land, Harbour City is entitled to receive by way of damages such sum as should reasonably be paid for that use: Laws NZ, Tort para 218. That this measure of damages is available to a victim of trespass to land is well established by English authority. See Penarth Dock Engineering Co Ltd v Pounds [1963] 1 Lloyd's Rep 359; Bracewell v Appleby [1975] Ch 408; Swordheath Properties Ltd v Tabet [1979] 1 All ER 240; Ministry of [2001] 2 NZLR 402 page 406 Defence v Ashman [1993] 2 EGLR 102; Jaggard v Sawyer [1995] 2 All ER 189; Inverugie Investments Ltd v Hackett [1995] 3 All ER 841 (PC). There is no New Zealand authority directly in point. Nonetheless, I have found the decision of Gault J in Knowles v Henderson (No 2) (1992) 2 NZ ConvC
191,355, to be of assistance. In that case, the defendant's renovations to his garage violated a light-and-air easement in favour of Harbour Citys. Gault J awarded Harbour Citys wrongful use damages because the easement's violation had “no immediate and measurable impact on the sale value of Harbour Citys' property”. On the basis of this case and the cited English authorities, I hold that damages for wrongful use are available to a victim of trespass to land in New Zealand.
[13] The distinction between these two measures of damages is to be found in the different form of injury to the victim's land. The former measure applies where there is damage to Harbour City's land. The latter applies where there is wrongful use made of Harbour City's land.
9 Roberts v Rodney District Council [2001] 2 NZLR 402.
[26] The present case involves the wrongful use of Harbour City’s land by the
defendants.
[27] Mr Freeman submitted that the Court should ascertain the notional sum the defendants would have been prepared to pay to purchase a right to allow them to commit the act of trespass on which Harbour City relies. It is to an extent artificial as Harbour City had no intention of leasing the land to the defendants. Ultimately the aim must be to arrive at an assessment of damages which reflects the overall justice of the case. This involves the Court exercising a discretion in a principled way.
[28] Harbour City took title to the property following the mortgagee sale on 23
July 2015. On the same day its lawyers wrote to Mr Memelink who effectively controls the first and second defendants, asking for the materials, equipment, rubbish and other items on the property to be removed by 12.00 pm, 3 August 2015.
[29] The response to that was that the defendants, through Mr Memelink, asserted a right to occupy under a lease.
[30] Following the delivery of Associate Judge Smith’s decision Harbour City’s solicitors again wrote to the defendants’ solicitors. On 17 March the solicitors wrote to Mr Nicholls inviting his client to engage a transport company and to notify in advance who was to oversee the removal of the defendants’ goods stored on the property. The solicitors noted that Mr Memelink was currently subject to a trespass notice by reason of past conduct and was not to enter the land. No response was received.
[31] The solicitors wrote again on 28 March 2017. Harbour City’s solicitors advised that they proposed to arrange for disposal to dispose of the materials and equipment and the cost of disposal together with the mesne profits up to that date would quantify their damages. The defendants were put on notice that if they did not want the materials and equipment disposed of they were to remove the materials and equipment immediately.
[32] On 30 March Mr Nicholls sent an email to Harbour City’s solicitors in which he advised that he had only been able to draw the matter to Mr Memelink’s attention that day. He said that Mr Memelink “instructs he will make the necessary arrangements to have the property removed from the land”. Harbour City’s solicitors wrote on 31 March 2017 noting that their clients had agreed to delay the removal, disposal of materials and equipment on the property until Wednesday, 5 April 2017.
[33] On 4 April Mr Nicholls sent an email to Harbour City’s solicitors on Mr Memelink’s behalf requesting that he have until Monday, 10 April to remove the property from the land and advising the person he was getting to do it was called “George”. The solicitors responded that Harbour City was prepared to consider delaying the disposal of the property until Monday, 10 April provided that George’s full name, details etc were provided and a day or time was specified for removal. Further exchanges between the solicitors followed without any satisfactory response. Then on Monday 10 April at 9.19 pm in the evening Mr Memelink sent an email to Harbour City’s solicitor directly. On 20 April 2017 given the unsatisfactory responses from the defendants, Harbour City arranged a transport company to deliver the materials and the property on the land to a site owned by Mr Memelink at Petone.
[34] Harbour City’s solicitor also sent an email to the defendants’ solicitors confirming that it had instructed them they had had the materials etc on site delivered to Mr Memelink’s other property. The email advised the cost of delivery together with the mesne profits would make up the damages for the trespass.
[35] In response Mr Memelink says there was nothing legally stopping Harbour City using its land and developing it so the defendants should not be required to pay any damages. He says that he did not consider there was any bar to Harbour City removing the defendant’s materials from the land. Mr Memelink also says that in fact Harbour City was able to take charge of the land and start work to carry out its development.
[36] Alternatively Mr Memelink says even if the defendants are liable for using the land it did not use all of the land and should not be liable for the land it did not
use. The site was 850 m² but the building materials as stacked and sorted only took up approximately 65 m².
[37] The suggestion that there was nothing stopping Harbour City from using its land or that it could have removed the materials at an earlier stage is completely contrary to the defence run by the defendants before Associate Judge Smith that there was a lease which entitled them to possession of the property. Prior to that, Harbour City’s demand that goods be removed was met by the assertion of the existence of an unregistered lease. Even following the judgment Mr Memelink and the defendants maintained that argument by filing the appeal.
[38] Harbour City says it has not been able to utilise its own land for the purpose it was acquired for from the date it acquired the land on 23 July 2015 until 20 April
2017 when the property was removed and delivered to Mr Memelink’s other site. On the evidence I accept that to be the case, and I accept that Harbour City has acted reasonably in seeking to resolve the issue.
[39] I also reject the suggestion that the defendants’ goods and materials on site did not prevent Harbour City from dealing with and developing the land. The photographs attached to Mr Callis’ evidence confirmed the state of the property when Harbour City took possession. The gear belonging to the defendants was scattered over the property in an uncared for way, as the series of photographs show. Harbour City went to some considerable efforts to resolve the issue after inviting Mr Memelink to remove the goods. In addition to the defendants’ gear there was a van on site which Harbour City arranged for the owner of to collect. There was also a Mercedes Benz on site. Harbour City with the assistance of the Police, traced the owner who removed it. Harbour City acted in a reasonable and responsible way. It documented and photographed the work done to tidy the site. I accept Mr Callis’ evidence that the only items that were removed and disposed of were rubbish or scrappy bits of timber and other scrap, rusty and bent metal. By contrast there had been no attempt by the defendants to maintain or care for the items that were left outside. The steel framing was in water and rusting. The honeysuckle timber framing was infested with ants. The steel framing was corroded. All of these were delivered back.
[40] I accept Mr Callis’ evidence that although the stacked materials and equipment did not physically take up the whole site (it did take up about half of it), it prevented it from using the whole of the land for the purpose that Harbour City bought it. Harbour City intended to build a commercial premises. There was no realistic ability to do the preparatory work needed to do the rebuild while the defendants’ gear remained on site. Harbour City needed a reasonably clear site to undertake the necessary earthworks and also need free access for contractors’ trucks and machinery to access and manoeuvre on site. That was prevented by the defendants’ materials and equipment.
[41] I also accept the validity of Mr Freeman’s argument that there is no reality in the suggestion that the lesser size would have been available to the defendants on a square metres used basis. The defendants would effectively obtain a commercial advantage by effectively forcing Harbour City to rent a limited square area to them, despite the fact Harbour City did not intend to lease the land at all.
[42] Mr Memelink says that only part of the site was occupied by the defendants’ goods. But the defendants should not have the benefit of the work Harbour City was put to in order to tidy up the site.
[43] The material was only able to be stored in that more confined area because of the work Harbour City had carried out to sort and stack it. The extent of the work required is set out in the account for labour from a related company Harbour City Ceilings 2012 Ltd for $19,937. The invoice records the number of hours involved in clearing and removing the rubbish and restacking the timber and freighting initially to storage and then on site. The total number of hours involved was over 300.
[44] The submission on behalf of the defendants that Harbour City could use the site is answered by Mr Callis’ evidence and the photographic evidence.
[45] Further, it was not Harbour City that had the obligation to remove the defendants’ property. If the defendants wished to cease the trespass damages running against them they could have at any time removed the property. The reason they did not do so before March 2017 was because of their asserted right to a lease.
Even following the judgment in March 2017 they continued to assert a right to the property.
[46] Importantly Harbour City effectively seeks damages which are calculated on a mesne profits basis for the wrongful use of its land by the defendants’ trespass. The trespass was substantial and ongoing.
[47] Harbour City has obtained appraisals for the rental of 18 Victoria Street. The three appraisals are from commercial real estate agents advising that a reasonable rental of the site is between $30 and $40 plus GST per square metre per year. The midpoint in the range of $35 amounts to a rental for the period of $59,331.09. The period claimed for allowed a week to remove the property after the purchase. Harbour City seeks that sum together with the $1,012 for the cost of removal of the defendants’ items and delivery. Harbour City has provided a copy of the invoice from Croft Combined Carriers Ltd confirming the removal costs.
[48] Although the rental assessments are only that, assessments rather than full reports, the case requires the Court to do justice in the circumstances. In Puhinui Farms Ltd v IH Wedding & Sons Ltd while there was a rental assessment report the Court acted on other documents relating to rent.10 In Harvey v Beveridge the parties had agreed that expert evidence was not required; and in Matthews v Memelink the Court evaluated a reasonable rental as a rent fixed in a lease agreement between the defendant and a third party company controlled by Mr Memelink.11
[49] For the above reasons I am satisfied that Harbour City is entitled to the judgment it seeks. There will be judgment against both defendants jointly and severally in the sum of $59,686.98 together with the cost of removing the materials
of $1,012.00.
10 Puhinui Farms Ltd v IH Wedding & Sons Ltd HC Auckland CIV-2006-404-771, 15 February
2008.
11 Harvey v Beveridge [2014] NZHC 947; and Matthews v Memelink [2012] NZHC 2284.
Costs
[50] Harbour City is also entitled to costs. It is to have costs on a 2B basis together with disbursements.
Defendants’ counterclaim
[51] The defendants are to file and serve a fully particularised amended counterclaim that complies with rules of Court by 24 October 2017.
[52] If the defendants fail to file such counterclaim by that date the existing counterclaim will be struck out.
[53] If the defendants file such counterclaim the file is to be allocated a case management conference to ready that counterclaim for hearing.
Venning J
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