Leeann Yare Limited v Carlton Gore Road Limited

[2019] NZHC 613

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-329

[2019] NZHC 613

BETWEEN

LEEANN YARE LIMITED

Applicant

AND

CARLTON GORE ROAD LIMITED

Respondent

Hearing:

27 March 2019

Appearances:

S A Grant for Applicant

H L Thompson for Respondent

Judgment:

28 March 2019

JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 28 March 2019 at 10.30 am pursuant to r 11.5 of the High Court Rules

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

Solicitors:           Daniel Overton Goulding, Auckland

McMahon Butterworth Thompson, Auckland

Counsel:            S A Grant, Auckland

LEEANN YARE LTD v CARLTON GORE ROAD LTD [2019] NZHC 613 [28 March 2019]

Introduction

[1]    The applicant company, LeeAnn Yare Ltd (“LYL”), is the lessee of premises in Newmarket, Auckland. The respondent, Carlton Gore Road Limited, is the lessor (“CGRL”).

[2]    By notice dated and served 13 February 2019, CGRL purported to cancel LYL’s lease on the ground that LYL was in breach of its covenant to pay rent and that it has been since June 2018.

[3]    On 26 February 2019, LYL filed an originating application seeking relief against cancellation and it now also seeks an interim injunction preventing CGRL from re-entering the premises. It is that application that I am required to determine.1

[4]    To succeed in its application, LYL must show a good arguable case and that the balance of convenience lies in its favour.

[5]I am satisfied as to both matters.

Good arguable case

[6]    First, and this is a point I raised with counsel when I heard the application, I have reservations about the validity of CGRL’s notice of default. This was required under s 245 Property Law Act 2007 before CGRL could cancel. Amongst other things, a notice given under s 245(3)(c) must give the recipient “no less than ten working days after the date of service of the notice” to rectify the breach complained of.2 CGRL’s notice, served on 13 February 2019, provided for the breach to be rectified “within ten working days of the date of service of this notice”. CGRL needed to give at least 10, and quite possibly 11, or more working days, with time running from 14 February 2019.

[7]    Given this, I am not persuaded that CGRL’s notice meets the requirements of s 245(3)(c). If not, the right to cancel is in issue.

1      Property Law Act 2007, ss 253(1)(a), 253(3)(b) and 253(4)(b).

2      Sections 245(3)(a)-(c).

[8]    Secondly,  LYL  alleges that, as a result of an agreement reached between   Ms Yare and Mr Dargaville of CGRL in February 2017, there was to be a reduction or hiatus in rent payments from then on, until CGRL fixed acknowledged weathertightness issues with the building.

[9]    The existence of any such agreement and, if so, its terms, is in considerable dispute. Plainly that is not a matter I am able to resolve on affidavit evidence. However, given the acknowledged weathertightness issues, and the parties’ correspondence after the meeting, it is possible that LYL may be able to make out the agreement it alleges.

Balance of convenience

[10]   CGRL has sold its interest in the building, with settlement to occur on 16 April 2019. LYL is a going concern, employs staff and has filed evidence stating it has reached agreement with the purchaser to remain in occupation after settlement. On the other hand, CGRL does not require possession of LYL’s premises for any particular reason. Accordingly, there is no prejudice to CGRL by LYL remaining in possession until 16 April 2019.

[11]   Taking these matters into account, I am satisfied the balance of convenience lies with LYL.

[12]   CGRL is not opposed to LYL remaining in occupation provided LYL pays at least what CGRL contends are the undisputed arrears of rent (some $34,000 plus GST) plus rent for March 2019 and up to 16 April 2019.

[13]   LYL has paid the rent for the latter period to its solicitors, Daniel Overton Goulding. They are holding the funds in trust. Counsel for CGRL, Mr Thompson, urged me to also require LYL to pay the undisputed arrears into trust. The difficulty with that, however, is that I  am not  satisfied  that  those  arrears  are  undisputed. Ms Grant, counsel for LYL, submitted that in fact the arrears are disputed and that I cannot place reliance on the isolated correspondence to which Mr Thompson referred me.

[14]   In the circumstances, I do not propose to make it a condition of the grant of the injunction that the alleged undisputed arrears are paid into trust. However, the funds presently held by Daniel Overton Goulding are to remain in trust, pending agreement of the parties, or further of the Court or arbitrator, as the case may be.

Result

[15] I grant the interim injunction sought on the condition set out in [13]. This order subsists pending further order of the Court or agreement of the parties. I reserve leave to apply. Costs are reserved.

Peters J