Herbert v USAR Napier Limited - [2022] NZHC 655

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2021-441-8

[2022] NZHC 655

BETWEEN
MALCOLM ANDREW HERBERT

First Applicant

ANTHONY JAMES HERBERT
Second Applicant

ANTHONY JAMES HERBERT,

STEPHEN PETER LUNN as trustees of the Thackeray Trust

Third Applicants

ANTHONY JAMES HERBERT,

STEPHEN PETER LUNN as trustees of the Charles Street Trust

Fourth Applicants

AND

USAR NAPIER LIMITED

Respondent

Hearing: 31 March 2022

Appearances:

J K Mahuta-Coyle for Applicants

S M Lowery and J Suyker for Respondent

Judgment:

1 April 2022

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[1] The applicant parties (the Herbert group) are developers. They were involved in the development of a hotel in Munroe Street in Napier. They entered into an agreement to lease the hotel to the respondent (USAR) which was proposing to operate the hotel as one of the Hilton chain of hotels. The Herbert group cancelled the agreement. There followed litigation including an application by USAR for injunctive

HERBERT v USAR NAPIER LIMITED [2022] NZHC 655 [1 April 2022]

relief. However, common sense prevailed. The parties resolved their differences in a settlement agreement dated 10 December 2020 (apparently, the day that USAR’s application for interim injunctive relief was to be heard). The terms of this settlement agreement required the Herbert group to make certain payments to USAR:

(a) $115,000 by 17 December 2020;

(b) $145,000 by 24 March 2021; and

(c)$250,000 plus interest in equal monthly payments commencing on 5 April 2021 and ending on 5 December 2021.

[2] It also required the Herbert group to provide security pending payment of those sums.

[3] The applicants’ made the first payment, but have not made any of the others, and the security has not been provided.

[4] USAR commenced this proceeding on 12 February 2021 and applied for summary judgment.

[5] The application came on for hearing on 20 September 2021. In a judgment dated 5 October 2021 Associate Judge Lester entered summary judgment for the amount due to USAR as at that date against the first, second and third defendants, and ordered the fourth defendants to provide the mortgage security. In a supplementary judgment dated 4 February 2022, the Judge entered judgment against the first, second and third defendants for the balance of the monies which by then were due.

[6] In doing so, the Judge concluded, as of course he needed to be able to do in order to enter summary judgment, that USAR had discharged the onus of demonstrating that the Herbert group had no arguable defence to the claim.

[7] Ultimately, judgment was entered in USAR’s favour for a total of $580,980.76, inclusive of costs and disbursements (plus interest).

[8]By notice of appeal dated 21 October 2021, the Herbert group has appealed.

[9] The group now applies for a stay of execution of the judgment. Its notice of application says that it does so pursuant to r 17.29 of the High Court Rules and r 12 of the Court of Appeal (Civil) Rules.

[10]Rule 17.29…

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: [2022] NZHC 655
Decision Date: 1 April 2022

CaseChat Overview and Summary

The case of Herbert v USAR Napier Limited involves a dispute between the Herbert group, developers, and USAR Napier Limited, a company intending to operate a hotel under the Hilton chain. The developers had entered into a lease agreement with USAR, which they subsequently cancelled. USAR applied for injunctive relief, but the parties ultimately reached a settlement on 10 December 2020. The settlement required the Herbert group to make payments to USAR and provide security. They made the first payment but failed to make the others and provide the security. USAR commenced proceedings for summary judgment, which was granted in its favour. The Herbert group appealed and applied for a stay of execution of the judgment.

The legal issues in this case revolve around the principles governing the granting of stays of execution pending appeal. The key question is whether the Court should grant the Herbert group's application for a stay of execution, considering factors such as the balance of convenience, the strength of the appeal, and the potential injury to third parties.

The Court considered the arguments presented by both parties and found that the Herbert group's appeal did not appear to have strong prospects of success. The Court was particularly focused on the issue of whether the Judge had erred in concluding that the Herbert group did not have an arguable cross-claim based on alleged pre-contractual misrepresentations. The Court found no obvious error in the Judge's reasoning and concluded that USAR's prospects on appeal were not good.

The Court also considered the effect of enforcement on third parties, the balance of convenience, and the inability of the Herbert group to provide security. Ultimately, the Court was not satisfied that the case fell within the category of cases where a stay of execution should be granted pending appeal. The Court dismissed the application for a stay of execution and reserved costs.

In summary, the Court found that the Herbert group's appeal did not have strong prospects of success, and the application for a stay of execution was dismissed. The Court highlighted that the Herbert group had not fulfilled their obligations under the settlement agreement and that their inability to provide security was a relevant consideration. The Court also noted that USAR would not proceed with enforcement if its position was properly protected pending appeal.

Orders