HJS AG Limited v Tumatatoro Limited - [2021] NZHC 717

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-67

[2021] NZHC 717

BETWEEN
HJS AG LIMITED

Applicant

AND

TUMATATORO LIMITED

First Respondent

MATILDA ORA THOMPSON, MOANA VICKI THOMPSON, SAM THOMPSON

and RIPEKA PATENE-STOUT as trustees of THE KAHUPEKA TE WAERO WHANAU TRUST

Second Respondent

Hearing: 31 March 2021

Appearances:

H Thompson for Applicant

K Naidu and S Loa for First Respondent

Judgment:

31 March 2021

JUDGMENT OF LANG J

[on costs]

This judgment was delivered by me on 31 March 2021 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

Solicitors:
McMahon Butterworth Thompson, Auckland

HJS AG LTD v TUMATATORO LTD [2021] NZHC 717 [31 March 2021]

[1] HJS AG Limited (HJS AG) and Tumatatoro Limited (Tumatatoro ) are parties to the lease of rural land situated on East Coast Road near Kaiaua. Tumatatoro is the owner of the land and the lessor whilst HJS A is the lessee.

[2] The relationship between the parties has not always been harmonious, and this has led to previous litigation between them. HJS AG refused to pay rental between September 2020 and January 2021 because Tumatatoro had failed to pay costs awarded against it in an arbitration. This led to Tumatatoro purporting to cancel the lease and re-take possession of the land on 25 January 2021.

[3] In this proceeding HJS AG sought an order under s 253 of the Property Law Act 2007 granting it relief against cancellation of the lease. Tumatatoro subsequently returned possession of the land to HJS AG and withdrew the notices it had issued purporting to terminate the lease. It is therefore no longer necessary for HJS AG to pursue the proceeding but it seeks costs against Tumatatoro to reflect the fact that it was required to issue it.

[4] Tumatatoro opposes any award of costs being made. It contends the parties entered into a settlement other than in relation to the issue of costs, and that the Court has no means of assessing which party would have succeeded if the proceeding had gone to trial. It therefore says the Court should make no award of costs.

Background

[5] One of the disputes that led to an arbitration during 2020 resulted in the arbitrator, Mr Ben Vanderkolk, finding in favour of HJS AG. In a written award delivered subsequently on 16 October 2020, the arbitrator awarded costs in favour of HJS AG. HJS AG then registered the award of costs in this Court as a judgment.1 It therefore has a judgment debt in its favour in the sum of $219,019.80.

1 Under Article 35(1)(b) in Schedule 1 to the Arbitration Act 1996.

[6] Tumatatoro did not respond to requests for payment of the judgment sum. HJS AG then stopped paying the monthly instalments of rent under the lease. It did not pay rent between September 2020 and January 2021.

[7] This prompted Tumatatoro to give notice of its intention to cancel the…

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: [2021] NZHC 717
Decision Date: 31 March 2021

CaseChat Overview and Summary

HJS AG Limited and Tumatatoro Limited, parties to a lease for rural land on East Coast Road near Kaiaua, found themselves in dispute over rental payments and the enforcement of an arbitration award. Tumatatoro, the landowner and lessor, failed to pay costs awarded to HJS AG, the lessee, in an arbitration conducted in 2020. In response, HJS AG ceased paying rent from September 2020 to January 2021, leading Tumatatoro to cancel the lease and reclaim possession of the land on 25 January 2021. HJS AG then sought relief against the cancellation under section 253 of the Property Law Act 2007, and Tumatatoro later returned possession of the land, rendering the relief unnecessary. However, HJS AG pursued costs against Tumatatoro, arguing it was the successful party.

The primary legal issue before the Court was whether the parties had reached a settlement excluding the issue of costs. Tumatatoro argued that such a settlement had occurred, citing email communications between the parties' solicitors. The Court, however, found that these communications did not evidence a comprehensive settlement, as they only indicated a willingness to negotiate the outstanding debt. Consequently, the Court was required to determine the costs according to conventional principles.

The Court determined that HJS AG was the successful party in the proceeding, as it achieved its objective of regaining possession of the land and having the lease cancellation withdrawn. The Court also concluded that HJS AG would have succeeded at trial, given its entitlement to set off rental payments against the judgment debt once it obtained a charging order on 27 January 2021. Therefore, the Court ruled that Tumatatoro should pay costs to HJS AG, calculated on a Category 2B basis, including disbursements and costs for the hearing, which was treated as an interlocutory issue. The parties were granted leave to file concise memoranda if they could not agree on the quantum of costs.

Orders