McEwan v Curtis

[2015] NZHC 2258

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2015-409-000581 [2015] NZHC 2258

IN THE MATTER OF

THE ESTATE OF BETTY BELL

KIRKLAND

BETWEEN

CATHRYN ANNE MCEWAN AND CLARISSA JANE JEFFERIES Applicants

AND

AVERILL CURTIS Respondent

Hearing:	15 September 2015 (Held in Chambers)
Appearances:	M J Wallace for Applicants
Minute:	15 September 2015
Reasons:	18 September 2015

"REASONS" JUDGMENT OF GENDALL J (As to granting of interim injunction)

[1]      In the late afternoon on 15 September 2015 there was an urgent without notice application for an interim injunction brought in this Court by the applicants, Ms McEwan and Ms Jefferies.  A hearing of that urgent application took place at about 4:30 p.m. on 15 September 2015 and then at about 5:15 p.m. that day the interim injunction was granted and the following orders made:

(a)       The respondent is restrained from selling Unit 1, 59 Landsdowne

Terrace, until further order of this Court. (b)        Costs are reserved.

(c)       Within five working days of today the applicants are to bring, file and serve an on-notice application for an injunction to make this interim injunction permanent, together with a statement of claim and supporting affidavit/s.

MCEWAN v CURTIS [2015] NZHC 2258 [15 September 2015]

(d)      The Registrar is to have that application called in this Court by

5 p.m. on 23 September 2015.

[2]      I now set out my reasons for that decision given on 15 September 2015.

Background

[3]      The   applicants   are   the   owners   of   a   cross-lease   townhouse   unit   at

59B Lansdowne Terrace, Cashmere, Christchurch.  The respondent is the owner of the neighbouring cross-lease townhouse at 59A Lansdowne Terrace, Cashmere Christchurch, this property sharing a party wall with 59B Lansdowne Terrace.  Both properties suffered some damage in the series of earthquakes which took place in Christchurch in 2010 and 2011.

[4]      As I understand the position, a payment of insurance monies for the damage

to the respondent’s townhouse unit at 59A Lansdowne Terrace has been made to her.

[5]      Over  a  reasonably  lengthy  period  of  time  discussions  have  taken  place between the applicants and the respondent regarding repairs to their respective townhouses and, in particular, relating to repair of the party wall between both of the properties.  It has been suggested, as I understand it, that the repair cost to this party wall between the properties may well be something in the vicinity of $70,000.

[6]      The understanding between the applicants and the respondent, it is said, was that the insurance monies received were to be applied in repairing the properties and making good the party wall damage.

[7]      Very recently, however, the applicants have learned  that the respondent does not intend to utilise the insurance money she has received in repair of her townhouse and fixing of the common party wall but, instead, she has placed 59A Lansdowne Terrace on the market for sale in an “as is, where is” condition.   I understand the respondent intends to sell 59A Lansdowne Terrace, which has a rateable valuation of

$260,000, on an “as is” basis for an expectation price of around $155,000, and to take this money and the insurance proceeds and buy herself a property elsewhere.

[8]      The land transfer  titles  to  the properties at  59A Lansdowne Terrace and

59B Lansdowne  Terrace,  being  standard  cross-lease  titles,  are  each  subject  to identical leases.  The leases contain at para [17] the following covenant obligation as between each of the neighbours (as Lessors and lessee).

AND IT IS HEREBY COVENANTED AND AGREED by and between the

Lessors and the Lessee:

…

17.      That in the event of the said building or the Flat being partially or wholly damaged or destroyed by fire or earthquake during the term hereby created all monies received under and by virtue of any policy or policies of insurance shall thereupon be expended with all possible expedition in reinstatement of the said building or the Flat in making good the loss or damage in respect of which the said insurance money shall have become payable and in the event of the monies received under and by virtue of the said policy of insurance being insufficient to reinstate the said building or the Flat so damaged or destroyed such insufficiency shall be borne by the Lessee of the Flat so damaged or destroyed.

[9]      Understandably in  the  circumstances  as  I have  outlined them  above,  the applicants have concerns that, in endeavouring to sell 59A Lansdowne Terrace in an “as is” condition and not to apply any of the insurance monies the respondent has received with respect to damage to her property, she will be in clear breach of clause 17 of the lease of her flat.

[10]     And, with regard to the urgency in this matter, the applicants state that they have just now learned that any purchase offers for the 59A Lansdowne Terrace property were to be considered at 7 p.m. on 15 September 2015.   The possibility arose therefore that, unless the interim injunction sought was granted, even on a temporary basis, then the respondent might, in the meantime, enter into an agreement to sell her townhouse to a third party and to dissipate the insurance monies in breach of clause 17 of the cross-lease and despite the earlier understanding between all parties that the insurance proceeds would be applied to carry out mutual repairs.

[11]     In considering the principles to be applied on interim injunction applications as outlined in American Cyanamid Co v Ethicon Ltd the Court is required to decide:1

1      American Cyanamid Co v Ethicon Limited [1975] AC 396.

(a)       Whether there is a serious question to be tried in the proceeding; and

(b)      Where the balance of convenience lies.

Questions as to the relative strengths of each party’s case are to be weighed in the

balance.

[12]     Here, given all the matters I have outlined above, I am satisfied there is a serious question to be tried in this proceeding, and this is a situation where preservation of the status quo, even for a short period of time, is required.  On its face, the threats from the respondent not to apply insurance proceeds towards repair of 59A Lansdowne Terrance and its party wall in breach of her cross-lease, to sell the property “as is” to unnamed third parties immediately and “disappear”, require an urgent interim response.

[13]     I am satisfied that, under all the circumstances prevailing in this case, the balance of convenience lies with the applicants, and the orders sought should be made.

[14]     Mr Wallace, counsel for the applicants, confirmed that a signed undertaking as to damages would be available from the applicants in terms of r 7.54 High Court Rules.      As   the   owners   of   the   adjoining   townhouse   (they   have   inherited

59B Lansdowne Terrace, as I understand it, from their mother) the applicants have a reasonable financial position to support their undertaking.

[15]     Of necessity the present injunction application has been made and dealt with without notice to the respondent.  Nor has there been time for it to be brought on a pickwick  basis.    The  order  made  granting  the  interim  injunction  therefore  has required that a formal on notice application to make the injunction permanent is to be brought, with supporting material, within one week.   This matter is then to be called by 5 p.m. on 23 September 2015.   This is to enable consideration of some sensible way forward in this matter.

...................................................

Gendall J

Solicitors:

M J Wallace, Christchurch
Copy to Respondent