Lawrence Riverside Limited v C P Holdings Limited HC Auckland CIV-2006-404-4739

[2011] NZHC 1784

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2006-404-4739

BETWEEN  LAWRENCE RIVERSIDE LIMITED First Plaintiff

ANDB R LAWRENCE AND B H LAWRENCE Second Plaintiffs

ANDC P HOLDINGS LIMITED First Defendant

ANDCAPITAL HOSPITALITY HOLDINGS LIMITED

Second Defendant

ANDB R LAWRENCE AND B H LAWRENCE Counterclaim Defendants

Hearing:         23 November 2011

Counsel:         G A Keene for the Plaintiff

No appearance for the Defendant

Judgment:      15 December 2011 at 5:00 PM

JUDGMENT OF WOODHOUSE J

This judgment was delivered by me on 15 December 2011 at 5:00 p.m. pursuant to r 11.5 of the High Court Rules 1985.

Registrar/Deputy Registrar

……………………………………

Solicitors / Counsel:

Mr G A Keene, Barrister, Auckland

Mr G R Simpson, Simpson Dowsett Mackie, Solicitors, Auckland (for the plaintiffs) Mr I Williams, Barrister, Auckland

LAWRENCE RIVERSIDE LIMITED V C P HOLDINGS LIMITED HC AK CIV-2006-404-4739 15 December

2011

[1]      Between 2003 and 2008 the first plaintiff (Lawrence Riverside) owned and operated the Lakewood Motel business in Rotorua.  The second plaintiffs, Mr and Mrs Lawrence, own the shares in Lawrence Riverside and ran the motel business.

[2]      The first defendant owned the motel property and leased it to  Lawrence Riverside.  In 2006 the first defendant transferred ownership of the property to the second defendant.

[3]      On 51 occasions between 2003 and 2008 there was flooding at the motel caused by defective plumbing.  The plaintiffs claimed that the motel business was disrupted by the flooding and that losses resulted.  Proceedings were issued against both  defendants  alleging breach  of  lessor’s  covenants  in  the  lease  to  Lawrence Riverside.

[4]      Mr and Mrs Lawrence are plaintiffs with Lawrence Riverside because of an assignment of interests of Lawrence Riverside to them.  For convenience I will refer to “the plaintiffs”, and not distinguish between the first and second plaintiffs except where necessary.

[5]      The defendants admitted breach of lessor’s covenants, but denied liability for damages to the extent claimed by the plaintiffs.

[6]      The proceeding was set down for an eight day hearing commencing on 21

November 2011.  On 7 November counsel for the defendants advised that the claim would  not  be  defended.    The  claim  proceeded  by  way  of  formal  proof  on  23

November. This judgment records the decision on damages.

Preliminary matter : amendment of the statement of claim

[7]      The  plaintiff  sought  leave  to  file  and  proceed  on  the  basis  of  a  second amended statement of claim.  They were granted leave to do so.  My reasons are as follows.

[8]      The amended pleadings the plaintiffs seek to rely on are concerned solely with the plaintiffs’ claim.  I record this at the outset because the plaintiffs on three earlier occasions sought leave to file an amended statement of defence to a counterclaim by the defendants for rent claimed to be outstanding.  The amendments are unrelated to those matters.

[9]      The amendments were contained in a draft which was filed on 3 September

2010 and served on the defendants for the purposes of an application that was heard by Associate Judge Doogue on 17 November 2010, with judgment delivered on 13

December 2010.  That judgment deals with the plaintiffs’ third application to amend its defence to the counterclaim.  The plaintiffs also sought leave to file the amended claim, but it appears that this was overlooked.  In any event, leave was not refused in respect of the proposed amendment to the statement of claim and the defendants did have notice of the amendments for which leave has now been granted.

[10]     In addition, one of the proposed amendments is to add particulars of a claim for penalties incurred on debts that the plaintiffs contend they were unable to pay as a consequence of the defendants’ defaults.   This had been noted in a minute of Courtney  J  of  26  April  2010  dealing  with  an  earlier  application  to  amend. Courtney J recorded at [4] that Mr Williams, counsel for the defendants, did not indicate any objection  to the proposed  amendment  and  the Judge recorded  that “those figures may also be included in an amended statement of claim”.  This head of damages was, in any event, contained in the previous statement of claim for an unparticularised sum of $75,000. The particularised claim is for $59,181.

[11]     Although the defendants have chosen not to defend the claim, the formal proof  must  be  on  the  basis  of  claims  (as  opposed  to  evidence)  of  which  the defendants have notice.   I am satisfied that the defendants have had notice of the further claims contained in the second amended statement of claim for which leave has been granted.

[12]     To avoid any uncertainty I record that the leave to amend has been granted in respect of the following:

(a)       An increase in the particulars of the occasions on which the premises were flooded from 44 to 51.  This is in the draft filed on 3 September

2010 at paragraph 21.

(b)The claim for losses because penalties were paid on debts owed by the plaintiffs, being the matter noted by Courtney J.  The sum claimed is

$59,181.  This is in the 3 September 2010 draft at paragraphs 49-52 and 55(vii).

(c)       A claim for the costs of receivership of Lawrence Riverside in the sum of $52,119  This in the 3 September 2010 draft at paragraphs 53-

54 and 55 (viii).

[13]     The draft second amended statement of claim also includes a claim that the lease of the premises was cancelled.  The plaintiffs did not pursue the application to add this claim, contained in paragraph 48 of the second amended statement of claim. This paragraph should therefore be treated as deleted.

Discussion

[14]     Except in one respect, as noted below, all of the evidence is contained in affidavits.  There are ten affidavits on matters of fact relating to the damage caused by  the  flooding  and,  for  the  purposes  of  quantification  of  some  of  the  losses, testifying to Mr and Mrs Lawrence’s competence and success in the management of motels. [1]   The evidence establishes that Mrs Lawrence, in particular, had successfully managed businesses in the past, and that Mr and Mrs Lawrence had been directly involved in the motel industry for approximately five years before the Lakewood Motel business was purchased.  They owned and operated a motel business in Taupo

with success, including good profit.   In addition to the purchase price of the Lakewood Motel business, the plaintiffs invested money as well as time and effort in improvements.    There  are  further  affidavits  of  fact  detailing  the  extent  of  the

problems with the flooding and, as a result, the extent of the disruption of business.

[1] There are three affidavits from Mrs Lawrence, sworn on 18, 23 and 24 November. The last affidavit was filed with leave following the hearing.

[15]     There is expert evidence from Mr John Leonard, a chartered accountant with extensive experience in litigation support and forensic accounting, as well as other fields of accounting.

[16]     Mr Leonard provided a detailed assessment of the loss of income.  There was one aspect of Mr Leonard’s affidavit evidence which I considered could be helpfully clarified. As a consequence Mr Leonard attended Court at short notice and provided some additional evidence orally.

[17]     There  is  expert  evidence  from  Mr  Grant  Utteridge.    Mr  Utteridge  is  a registered valuer based in Rotorua with extensive experience.  He provided expert evidence on, in particular, a claim by the plaintiffs for the loss of value of the business.

[18]     I am satisfied that Mr Leonard and Mr Utteridge are well qualified to provide the expert evidence they provided and which is taken into account in the assessment below.

Trading losses

[19]     Mr Leonard calculated trading losses for the years ending March 2004 to March 2008 by comparing the actual results for the plaintiffs with a projected result for the Lakewood Motel business on three alternative assumptions – that, but for the flooding, the plaintiffs would have achieved (1) the Rotorua average for motel occupancy,  (2)  5%  below  the  Rotorua  average,  and  (3)  5%  above  the  Rotorua average.

[20]     The  second  amended  statement  of  claim  records  a  figure  which  is  the difference between the actual result and a projection based on the Rotorua average for occupancy.   Mr Leonard’s detailed calculations using the Rotorua average produces  a  loss  of  $609,781.    Mrs  Lawrence’s  affidavit  of  24  November  2011 records:

In all our previous motel trading we had been well above average operating levels and we are very confident that we would have continued this trend at Lakewood but for the constant flooding.

[21]     The plaintiffs now claim for this loss based on projected occupancy of 5% above the Rotorua average for the whole of the period. The affidavit evidence earlier filed, including independent evidence, supports a finding that, but for the flooding, the plaintiffs would have achieved the Rotorua average in the first year and 5% above the Rotorua average for the following years.  This produces an overall loss through to the year ending March 2008 of $722,456.

[22]     This figure needs to be adjusted to take account of two matters.  These reduce the quantum.  The first arises from the fact that the annual financial statements for Lawrence Riverside, which Mr Leonard used to establish the actual results, record payment of rent in full, at a rate of $150,000 per annum (averaged over the five year

period).[2]    However, the actual payments for rent over the whole of the period were

less than the total recorded in the financial statements. The financial statements presumably record the higher figures because there was the liability. The table at [25] below records the adjustments for the relevant financial years ending on 31

March.   The plaintiffs had taken the need for an adjustment into account in their statement of claim, by recording a figure of $142,273.50 for “rent arrears”, with this figure deducted from the total of all losses claimed.  I have recalculated the figures by reference to the actual payments on a month by month basis, and for the purposes of making the adjustment against the trading loss figure, rather than the total of all losses.  The total for the adjusting figure by my calculation is $121,696.  I also note that, at my request, Mr Keene provided a further schedule which has a total rent adjusting figure of $236,840.  This, however, compares actual rent paid against total rent payable following a rent increase in April 2005 from $150,000 per annum to

$194,750 per annum.   The impact of this rent increase is discussed in the next paragraphs, and under other headings below where it has relevance.  However, it is not a figure that needs to be brought into account in the manner Mr Keene brought it

into account in his further memorandum.

[2] The total for five years is in fact $2,167 less than $750,000, being $150,000 x 5. This minor discrepancy does not affect the result.

[23]     The second adjustment in relation to the trading losses claim does relate to the rent increase in April 2005.  The first defendant gave notice of a rent increase in April 2005 from $150,000 per annum to $194,750 per annum.  (These, and all other figures,  exclude GST.)   The plaintiffs did  not contest  the notice in  the manner required by the lease.   The result was that the proposed annual rent of $194,750 became the contractual rent.   The defendants’ counterclaim in this proceeding for rent arrears was, naturally enough, based on the rent of $194,750 per annum.  The plaintiffs’ defence  to  this  counterclaim  was  the  subject  of  the  plaintiffs’ three unsuccessful applications to amend their statement of defence.  The plaintiffs were seeking to contest the rent increase on a range of grounds.  It is clear from the earlier decisions of this Court on the applications to amend, concluding with the decision of Associate Judge Doogue of 13 December 2010, that the contract rent from April

2005 was $194,750 per annum.

[24]     This  contract  rent  does  need  to  be  brought  into  account  as  the  second adjustment to Mr Leonard’s calculations of trading losses.  As Mr Leonard noted in his evidence, his calculations for the projected results for each of the financial years did not include the rent increase of $44,750 that commenced in April 2005.   He noted an adjusting figure if the projected results were to include rent at $194,750 per annum.  An aspect of this was one of the matters I discussed with Mr Leonard when he provided the further oral evidence.  I am satisfied that the figures for the projected result for each of the financial years ending 31 March 2006, 2007 and 2008 should be adjusted by fixing the projected expense for rent at an additional $44,750 for each of those years.  This conclusion takes account of the fact that, as noted later in this judgment, the defendants’ counterclaim is to be dismissed, as well as taking account of Mr Leonard’s affidavit evidence at paragraph 17.1-17.3 in conjunction with his oral evidence.

[25]     A summary of the trading losses for the years ending March 2004 to March

2008, with the two categories of adjustment referred to, is as follows:

2004         Leonard loss calculation:  (57,370)

2005         Leonard loss calculation:  (56,948)

2006         Leonard loss calculation:

Adjusted for actual rent paid -

$135,431 (allowed) less

$114,284 (actual)

(141,119)

21,147

(119,972)

Adjusted for rent increase  44,750

Adjusted loss:  (75,222)

2007         Leonard loss calculation:

Adjusted for actual rent paid -

$164,569 (allowed) less

$93,333 (actual)

(177,876)

71,236

(106,640)

Adjusted for rent increase  44,750

Adjusted loss:  (61,890)

2008         Leonard loss calculation:

Adjusted for actual rent paid -

$150,000 (allowed) less

$120,687 (actual)

(289,143)

29,313

(259,830)

Adjusted for rent increase  44,750

Adjusted loss:  (215,080)

Adjusted trading loss overall  $466,510

[26]     The plaintiffs claim interest on the trading losses, as well as on other losses to be discussed.  They are entitled to interest.  In respect of trading losses, the summary above provides the commencement date for the calculation of interest for each of the financial years.   In other words, and for the avoidance of doubt, the plaintiffs are entitled to interest at the prevailing rates under the Judicature Act 1908 on the trading loss for each financial year, with that interest to be calculated from 1 April immediately following the relevant year end.

Loss of capital

[27]     There is a claim for $550,000 for the total loss of the value of the business. The  total  loss  of  the  business  flowing  from  the  breaches  of  contract  by  the defendants is established on the unchallenged evidence. The issue is quantum.

[28]     A figure of $550,000, at the date of loss in March 2008, is established by Mr Utteridge’s evidence.  This assessment of the value of the business is on the basis that the rent in March 2008 would be no more than $165,000 per annum, if assessed independently as a market rent.   Rent of $165,000 per annum is, in effect, Mr Utteridge’s assessment, as an expert, of what the market rent would have been fixed at had the plaintiffs followed the procedure under the lease to challenge the first defendant’s rent review notice.  There is an alternative calculation by Mr Utteridge on the basis that the rent at the date of valuation, in March 2008, was $194,750 per annum.  Mr Utteridge’s assessment of the value on this basis is between $375,000 and $425,000.

[29]     For reasons already discussed, the assessment must be made on the basis that the  contract  rent  in  March  2008  was  $194,750  per  annum.    In  the  absence  of evidence to the contrary I can see no reason not to take the upper figure in Mr Utteridge’s range between $375,000 and $425,000.

[30]     This loss is accordingly fixed at $425,000.   The plaintiffs are entitled to interest on this sum at the prevailing Judicature Act rates from 1 April 2008.

Non-litigation legal expenses

[31]     There is a claim for legal costs incurred before litigation costs were incurred. The sum claimed is $37,852.  These costs are costs incurred by Lawrence Riverside with its solicitors before proceedings were issued in order to obtain advice on, in broad terms, the problems experienced from the flooding and negotiations that then followed in an endeavour to avoid the need to issue legal proceedings.  I am satisfied the plaintiffs are entitled to recover this sum by way of damages.

[32]     The plaintiffs are entitled to interest in respect of these costs.   The total is made up of three invoices, with the total of the third invoice reduced substantially to exclude litigation costs.   The invoices  are dated June and September 2005 and October 2006.   However, it is unclear when all of the costs were paid, apart from sums totalling $11,912 paid between October 2005 and August 2006.  In respect of the plaintiffs’ interest claim I consider it appropriate to allow interest as follows:

(a)       On $11,912, at the prevailing Judicature Act rates, from 1 August

2006.

(b)      On the balance of $25,940, at the prevailing Judicature Act rates, from

1 January 2007 (approximately two months after the final account was rendered).

Penalty interest

[33]     The plaintiffs claim $59,181 for penalty interest paid on loans to Lawrence Riverside.  The principal loan was from Auckland Finance which, at 8 March 2008, totalled just under $160,000.  The other loan was for a business car.  At 8 March

2008 this loan was just over $27,000.  The plaintiffs claim that they were unable to service the loans because of the loss of income arising from the defendants’ breaches of contract and, as a result, interest had to be paid at a penalty rate. And they did not have the resources, in the end, to repay the loans.

[34]     There is  a question  whether this  head  of damages  is  too  remote.    I am satisfied that losses of this sort are not too remote, when assessed on the basis explained in the leading cases.[3]   In addition, when Lawrence Riverside acquired the business and took an assignment of the lease, as part of the necessary arrangements between the parties the first defendant was given express notice of the fact that there was a loan from Auckland Finance Limited to Lawrence Riverside.  The plaintiffs

are entitled to judgment for $59,181.

[3] See the discussion in Burrows, Finn & Todd, Law of Contract in New Zealand, 3rd ed, LexisNexis NZ,

2007, para 21.2.3.

[35]     The  figure  of  $59,181  is  calculated  down  to  the  date  of  hearing.    The plaintiffs are entitled to interest on this sum at the appropriate Judicature Act rate from 24 November 2011.

Receivership costs

[36]     The final head of damages is for the costs of the receivership of Lawrence Riverside in the sum of $52,119.   I consider that this head of damages is not too remote. The plaintiffs are accordingly also entitled to this sum.

[37]     The plaintiffs are entitled to interest on this sum at the Judicature Act rates

from the date of the receiver’s final report, 12 August 2008.

The extent of the liability as between the first and second defendants

[38]     On 29 May 2006 the first defendant transferred title to the Lakewood Motel property to the second defendant.  Notwithstanding that transfer, the first defendant is liable for all losses. The losses arise from breach of the lessor’s covenants.[4]

[4] See Hinde on Commercial Leases (LexisNexis, 2001) at para 9.6.1 and 9.7.6(d).

[39]     The second defendant was bound by the lessor’s covenants from the date of the  assignment  by  the  first  defendant  to  the  second  defendant.[5]    The  second defendant is, in consequence, liable for losses arising from breaches of covenants

from 29 May 2006.

[5] Property Law Act 2007, s 231(1). This provision, which replaced s 113 of the Property Law Act

1995, applies to the lease in this case in accordance with s 231(3) of the 2007 Act.

[40]     The plaintiffs also seek judgment against the second defendant for losses arising from breaches before the assignment.  The losses in question in this regard are trading losses up to 29 May 2006.  There is persuasive English authority against the plaintiffs’ claim in this regard: Dunncliffe v Caerfelin Properties Ltd.[6]   Mr Keene, for the plaintiffs, did not seek to argue that Dunncliffe should not be followed in New Zealand.  In effect, Mr Keene proceeded on the basis that Dunncliffe is applicable in New Zealand under the Property Law Act 2007.[7]    In these circumstances, and in particular as there has been no argument on the point, I proceed on the basis adopted by Mr Keene without expressing any opinion on Dunncliffe.

[6] Dunncliffe v Caerfelin Properties Ltd [1989] 2 EGLR 38, judgment of Garland J in the Queen’s Bench Division on 7 September 1987. Dunncliffe was approved in Edlington Properties Ltd v J H Fenner & Co Ltd [2006] EWCA Civ 403; [2006] 1 WLR 1583; [2006] 3 All ER 1200, at [18] per Neuberger LJ, with whom Pill and Scott Baker LJJ agreed. Dunncliffe and other authorities are noted in Hinde on Commercial Leases at para 9.7.6(d), footnote 11.

[7] Professor Hinde notes at para 9.7.6(b), footnote 11, that “the reasoning in Dunncliffe may be applicable to the Property Law Act 2007, s 231.

[41]     Mr Keene’s argument, that the second defendant should nevertheless be liable for breaches that occurred, and losses that accrued, before the assignment, was based on the fact that the notice to the plaintiffs of the assignment stated that arrears of rent arising before the assignment were recoverable by the second defendant.  Mr Keene submitted that on this basis “the second defendant would then have received the land and the right to take action against [Lawrence Riverside] to recover the arrears of rent, subject to all of the equities running with the land in favour of the lessee”, and that in consequence the second defendant has liability for the losses arising before the date of the assignment.

[42]    This argument is contrary to good authority.[8]    It may be that, in some circumstances, a lessee who is sued for assigned arrears of rent by the assignee of the reversion may cross-claim for an equitable set-off for damages arising out of the former lessor’s breaches.[9]   Mr Keene referred to this possibility, although without discussing the authorities.   This does not provide a foundation for considering whether a right of set-off does arise for the simple reason that there is no claim for

[8] See Edlington Properties Ltd v J H Fenner & Co Ltd [2006] EWCA Civ 403; [2006] 1 WLR 1583; [2006] 3 All ER 1200.

[9] See Muscat v Smith [2003] EWCA Civ 962; [2003] 1 WLR 2853; noted in Hinde on Commercial

Leases at para 9.7.6(c) and footnote 12 with further authorities referred to

arrears  of  rent  now  being  advanced  by  the  second  defendant.    There  was  a

.

counterclaim for arrears of rent, but it has not been pursued.  Because it has not been pursued the counterclaim will be dismissed.   If at a future date either of the defendants, or any person claiming in right of either defendant, is able to advance a claim for arrears of rent, whether those arrears were accrued before or after the assignment to the second defendant, the question of set-off, and any other form of relief to which the plaintiffs may be entitled, can be assessed.   At that point the plaintiffs would also be entitled to advance any arguments founded on the extent of the second defendant’s knowledge of the prior breaches and questions relating to the degree of association between the first and second defendants.  There may also be a question as to when a cause of action accrues when the claim is founded on a

continuing breach of contract.[10]    In order to preserve the plaintiffs’ right to argue

these matters, should they ever arise, the plaintiffs’ claim against the second defendant for trading losses that arose prior to 29 May 2006 is treated at this point as having been discontinued, rather than dismissed.

[10] See Midland Bank Trust Co Ltd v Hett, Stubbs and Kemp [1979] Ch 384, [1978] 3 All ER 571; Halsbury’s Laws of England, 5th ed, Limitation Periods, volume 68, para 959; The Laws of New Zealand, Limitation of Civil Proceedings, para 60.  In the present case liability for damages for breach of the covenant to repair could not arise until the landlord had received notice and then failed “within

a reasonable time” to take “appropriate steps” to remedy the breach: clause 13.1(d) of the lease. In this case notice was given by Lawrence Riverside to the first defendant long before the assignment to the second defendant, and it was not argued that the accrual of the cause of action was in consequence deferred until some date after the assignment.

[43]     The  plaintiffs  are  entitled  to  judgment  against  the  second  defendant  for trading losses calculated as follows:

(a) For the 10 month period from 1 June 2006 to 31 March 2007 in a sum of $44,576. This figure is less than 10/12ths of the 12 months’ figure, as recorded in the table at [25]. This is because the actual monthly rental payments in the full year to 31 March 2007 varied considerably, including three months (July to September 2006) when no rent was paid.

(b)For the 12 months to March 2008 the second defendant is liable for the full sum of $215,080.

(c)      The plaintiffs are entitled to interest at the appropriate Judicature Act rates on $44,576 from 1 April 2007 and on $215,080 from 1 April

2008.

[44]     The plaintiffs are entitled to judgment against the second defendant for all other losses, including interest on those sums as earlier indicated.

Assignment of claims by Lawrence Riverside to Mr and Mrs Lawrence

[45]     On 4 September 2007 Lawrence Riverside assigned to Mr and Mrs Lawrence its claims against the defendants.   The second plaintiffs are entitled to judgment against each of the defendants in the sums indicated.

Costs

[46]     The plaintiffs are entitled to costs on a 2B basis except as follows:

(a)      The plaintiffs are not entitled to costs on (1) their applications for leave to amend their statement of defence to the counterclaim; (2) the defendants’ application to discharge the interim injunction; (3) applications by the plaintiffs to adjourn fixtures.

(b)The  plaintiffs  are  entitled  to  preparation  costs  at  $1,180  per  day (category 2) for 12 days.  This compares with the standard allowance under band B of two days related to the formal proof hearing.  The plaintiffs claim for 19 days preparation.  For reasons noted in the next paragraph I am not prepared to allow preparation costs to that extent.

[47]     The plaintiffs claim for 19 days preparation was the total of a claim of 12 days  preparation  for  a  fixture  in  April  2010  and  seven  days  preparation  in anticipation of the defended hearing scheduled to commence on 21 November 2011.

12 days were claimed in respect of a proposed six day fixture which commenced on

26 April 2010.  The fixture was adjourned on the plaintiffs’ application.  This was as a consequence of a separate application by the plaintiffs, at the commencement of

the  trial,  to  amend  the statement  of  claim  and  the  statement  of  defence  to  the counterclaim.  This is the matter dealt with in Courtney J’s minute of 26 April 2010. The plaintiffs are not entitled to costs against the defendants for preparation for a hearing which was adjourned on the plaintiffs’ application because of steps the plaintiffs wished to take and should have taken earlier.

[48]     There was an application for an allowance of seven days for preparation for the present hearing.  As earlier noted, the proceeding was set down for an eight day defended hearing.  Had it proceeded for eight days and the plaintiffs got judgment they would have been entitled, in the normal course, to an allowance of 16 days for preparation.  Very belatedly the defendants advised that they would not be defending the proceeding.  There is a memorandum on file from Mr Keene, dated 16 November

2011, outlining the preparation that had been undertaken before notice was received from the defendants.   The purpose of this memorandum was to request a formal proof hearing on 23 November or later, rather than the scheduled commencement date of 21 November, because of further steps that then had to be taken to prepare for hearing by way of formal proof as opposed to a defended hearing with oral evidence. It is apparent that an allowance for seven days was sought because 12 days was sought for the April 2010 fixture, but I have rejected that claim.  A proper allowance for preparation for the eight day defended hearing, and further work for formal proof, needs to be made.   In addition, Mr Keene undertook some further work following the hearing, in response to requests from me, and two memoranda were filed.   This has been of assistance.   I am satisfied that an allowance of 12 days overall is reasonable.

Counterclaim

[49]     The defendants having advised the Court that they did not intend to prosecute their counterclaims, and having failed to appear, the counterclaims are dismissed.

Result

[50]     There will be judgment for the second plaintiffs against the first defendant for a total of $1,040,662, together with interest and costs calculated as specified.

[51]     There will be judgment for the second plaintiffs against the second defendant

in a sum of $803,808, together with interest and costs as specified.

Woodhouse J