Honey Bees Preschool Limited v 127 Hobson Street Limited

[2018] NZHC 629

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2016-404-2940

[2018] NZHC 629

BETWEEN

HONEY BEES PRESCHOOL LIMITED

First Plaintiff

JASON JAMES
Second Plaintiff

AND

127 HOBSON STREET LIMITED

First Defendant

SUNIL GOVIND PARBHU ALSO KNOWN AS DENNIS PARBHU

Second Defendant

Hearing:	On the papers
Counsel	S Khan, M Orange and C M Fisher for Plaintiffs R M Dillon for Defendants
Judgment:	10 April 2018

JUDGMENT (NO 2) OF WHATA J

This judgment was delivered by me on 10 April 2018 at 3.00 pm, pursuant to Rule 11.5 of the High Court Rules.

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

Solicitors:           Fortune Manning, Auckland

Queen City Law, Auckland

HONEY BEES PRESCHOOL LIMITED v 127 HOBSON STREET LIMITED [2018] NZHC 629 [10 April 2018]

[1]    In my judgment of 31 January 2018, I made an order in favour of the plaintiffs, granting specific performance of cl 2 of the collateral deed to the date of installation of the second lift. I invited submissions on whether equitable relief from forfeiture might then be available post that date. It transpires that:

(a)the plaintiffs do not accept that the second lift has in fact been installed in accordance with cl 2;

(b)the plaintiffs did not cross-examine on matters relating to equitable relief, because equitable relief had not been sought prior to trial; and

(c)an appeal against my judgment was lodged by the defendants to the Court of Appeal.

[2]    It follows I could not fairly or sensibly rule on the availability of equitable relief and the best I could do is make a final order for specific performance to the date of judgment.

[3]    I indicated to the parties this is the approach that I proposed to take and invited submissions on costs from the defendants (the plaintiffs having provided submissions). Initially, Mr Khan notified the Court that the proposed outcome, namely, specific performance to the date of judgment, was unacceptable to the plaintiffs based on my primary findings in my judgment that the indemnity was lawful and enforceable. Mr Khan, however, accepted at a hearing convened before me that the proper outcome was an order for specific performance to the date of judgment, leaving it to the plaintiffs to enforce the indemnity should it be necessary to do so after judgment.

[4]    Accordingly, I make a final order for specific performance of cl 2 of the collateral deed to the date of this judgment.

[5]    As to costs, I invited the parties to reach agreement on costs, given that the plaintiffs must be entitled to costs as the successful party and would have been entitled

to costs even if equitable relief had been granted. Agreement was not reached. The plaintiffs seek costs on a 2B basis, except in relation to preparation for hearing. It seeks an uplift to 3C because of the complexity of the issues that needed to be addressed at trial. Increased costs are also sought, in the alternative, to reflect Calderbank offers made on 17 July 2017, 4 September 2017 and 18 September 2017. These offers had four key parts:

(a)Payment of a sum representing the rent and other payments under the lease up to and including a specified date.

(b)An amendment to the collateral deed so that it continues to apply.

(c)The defendants will not challenge the terms of the collateral deed on that basis that it is illegal, invalid or ineffective for any reason.

(d)The proceedings are withdrawn with no issue as to costs.

[6]The proposed settlement sums were less than the proposed the judgment sum.

[7]    Mr Dillon for the defendants also claims costs because of an offer made by Mr Parbhu prior to the proceedings to indemnify the plaintiffs until the lift is installed.

Assessment

[8]    The plaintiffs plainly succeeded in their primary claim. The defendants’ pre- litigation offer, while reasonable, is not coextensive with the outcome. The plaintiffs have an enforceable right to the end of the first lease period. Equally, the plaintiffs’ Calderbank offers sought more than they achieved by my judgment, namely a judgment sum and an undertaking not to challenge the effectiveness of the collateral deed. Neither position therefore warrants adjustment to the usual rules. This should have been obvious to the parties.

[9]    Turning to the plaintiffs’ request for increased costs. While this matter raised some issues of complexity as to the law, the factual component of the proceedings was not unduly complex and, overall, does not warrant an uplift at any stage to 3C.

[10]   Therefore, there shall be an order for costs on a 2B basis, together with disbursements, in favour of the plaintiffs up to and including the attendance before me on 21 March 2018. If necessary, quantum is to be fixed by the registrar. For avoidance of doubt, this includes costs on the cost memoranda. This aspect should have been agreed. However, as I was unable to resolve the issues as to equitable relief because of the factual lacuna and procedural matters raised by the plaintiffs, I prefer to let costs of submissions on that aspect of the proceeding lie where they fall. In this regard, I acknowledge the parties’ diligence in respect of those submissions and nothing in this judgment should be seen to be a criticism of the approach taken by them. But, given this aspect of the matter is unresolved, the proper course is for costs to lie where they fall in relation to it.