MZ Ventures Limited v Milbank
[2021] NZHC 2896
•29 October 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-566
[2021] NZHC 2896
UNER the Property Law Act 2007 IN THE MATTER
of an application for possession of property after cancellation of lease
BETWEEN
MZ VENTURES LIMITED
Applicant
AND
NEIL RICHARD MILBANK
Respondent
Hearing: On the papers Appearances:
R J Hollyman QC and N G Lawrence for the Applicant M Keall for the Respondent
Judgment:
29 October 2021
JUDGMENT OF GAULT J
(Stay application)
This judgment was delivered by me on 29 October 2021 at 2:00 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………
Solicitors / Counsel:
Mr R J Hollyman QC and Mr N G Lawrence, Barristers, Auckland Mr V Naidu (applicant’s instructing solicitor), Newton Law, Auckland Mr M Keall, Barrister, Auckland
Mr C McGill (respondent’s instructing solicitor), Duncan King, Auckland
MZ VENTURES LTD v MILBANK [2021] NZHC 2896 [29 October 2021]
[1] Mr Milbank urgently seeks a stay pending appeal of the order in my judgment dated 2 August 2021 that MZ Ventures Ltd (MZ) is entitled to vacant possession of an industrial/commercial site of just over 1.3 hectares (the property) by 31 October 2021.1
[2] The stay application was only filed on 18 October 2021 and, following a telephone conference on 20 October 2021, I indicated that if it were to be determined this week I would need to determine it on the papers, and made timetable directions accordingly. The parties have been unable to secure an intermediate position by conditions or undertakings, and affidavit evidence and submissions have now been filed.
Factual background
[3] The factual background is set out in my judgment dated 2 August 2021. In brief, Mr Milbank has leased the property since November 2018.
[4] On 11 August 2020 MZ settled its purchase of the property from the former owner.
[5] On 9 September 2020 MZ gave Mr Milbank notice requiring compliance with his obligations under the lease to keep the property in good and proper repair and remove all rubbish, and advising him of its intention to inspect the property on 21 September 2020 in accordance with its rights under the lease.
[6] On 21 September 2020 Mr Farishta of MZ attended the property to inspect. Mr Milbank denied him entry. On the same day Mr Milbank served a trespass notice on Mr Farishta.
[7] On 25 September 2020 MZ served notice on Mr Milbank of its intention to cancel the lease under s 246 of the Property Law Act 2007 (PLA) in the event that Mr Milbank failed to remedy specified breaches by 15 October 2020. The specified breaches were:
1 MZ Ventures Ltd v Millbank [2021] NZHC 1964. I note the correct spelling is “Milbank”.
(a)failure to permit inspection;
(b)failure to keep and maintain grounds, lawns and yards in a clean and tidy condition, including to cut the grass and care for and maintain trees and gardens; and
(c)failure to remove rubbish.
[8]Mr Milbank did not respond to the notice.
[9] On 21 October 2020 MZ sought to cancel the lease and re-enter the property. Notice of cancellation was subsequently served.
[10] On 26 October 2020 Mr Milbank forcibly entered the property by breaking the locks on the front gate. He was removed by Police.
[11] On 27 October 2020 Mr Milbank again forcibly entered the property by breaking another set of locks on the front gate. He has continued to occupy the property since that date.
Judgment dated 2 August 2021
[12]Relevantly, my judgment concluded that:
(a)Mr Milbank was in breach of the lease by failing to permit inspection and to keep the property in a clean and tidy condition.
(b)By peaceably re-entering on 21 October 2021, MZ exercised its right to cancel the lease.
(c)Mr Milbank had to apply for relief against cancellation within three months of 21 October 2020 and therefore his application for relief against cancellation was out of time.
(d)MZ was therefore entitled to vacant possession of the property.
(e)Mr Milbank had three months as a reasonable period to vacate.
Appeal and stay application
[13] Mr Milbank filed a notice of appeal on 30 August 2021. MZ subsequently filed a notice of cross-appeal.
[14] Mr Milbank filed his application for a stay pending appeal in this Court on 18 October 2021.
Applicable legal principles
[15]Rule 12 of the Court of Appeal (Civil) Rules 2005 provides:
12 Stay of proceedings and execution
(1)None of the matters referred to in subclause (2) operate as—
(a)a stay of a proceeding in which a decision was given; or
(b)a stay of execution of that decision.
(2)The matters are—
(a)an application for leave to appeal; or
(b)the giving of that leave; or
(c)an appeal.
(3)Pending the determination of an application for leave to appeal or an appeal, the court appealed from or the Court may, on an interlocutory application,—
(a)order a stay of the proceeding in which the decision was given or a stay of the execution of the decision; or
(b)grant any interim relief.
(4)An order or a grant under subclause (3) may—
(a)relate to execution of the whole or part of the decision or to a particular form of execution:
(b)be subject to any conditions that the court appealed from or the Court thinks fit, including conditions relating to security for costs.
(5)If the court appealed from refuses to make an order under subclause (3), the Court may, on an interlocutory application, make an order under that subclause.
(6)If the court appealed from makes an order under subclause (3), the Court may, on an interlocutory application, vary or rescind that order.
(7)The Court may, at any time, vary or rescind an order made by it under this rule.
[16] In the absence of an order from the Court, the successful party in the Court appealed from is entitled to enforce the judgment given. The general rule is that a party is entitled to the benefit of a judgment in its favour. In determining whether or not to grant a stay, the Court must weigh the factors in the balance between the successful litigant’s rights to the fruits of a judgment and the need to preserve the position in case the appeal is successful.2 Put another way, the object, where it can be fairly achieved, is to arrange matters so that, when the appeal comes to be heard, the appellate court may be able to do justice between the parties, whatever the outcome of the appeal may be.3 Relevant factors include:4
(a)whether appeal rights would be rendered nugatory if the stay were not granted;
(b)the bona fides of the applicant;
(c)whether the respondent or third parties will be injuriously affected;
(d)the novelty and importance of the question;
(e)the public interest in the proceeding;
(f)the apparent strength of the appeal; and
(g)the overall balance of convenience.
2 Duncan v Osborne Building Ltd (1992) 6 PRNZ 85 (CA) at 87; and Keung v GBR Investment Ltd
[2010] NZCA 396 at [11].
3 Minnesota Mining & Manufacturing Co v Johnson & Johnson Ltd [1976] FSR 139; [1976] RPC 671 (CA) at 144-145 and 676, as cited in New Zealand Insulators Ltd v ABB Ltd (2006) 18 PRNZ 459 (CA) at [13].
4 Keung at [11].
Grounds for stay
[17] Mr Milbank seeks a stay on the basis that he has a significant amount of material on site. Removing and storing it pending the outcome of the appeal would be very disruptive and expensive. He has not been able to find similar premises, let alone on a short term basis. His greatest concern is that without a stay MZ will soon be able to re-let or change the property, and a successful appeal after that would be too late.
MZ’s opposition
[18]MZ strongly opposes a stay on the grounds that:
(a)requiring Mr Milbank to vacate will not render the appeal nugatory since damages are a sufficient remedy for this purely commercial lease and MZ will undertake to ensure that Mr Milbank can move back onto the property should his appeal succeed;
(b)MZ also alleges further breaches of the lease by Mr Milbank since the judgment of 2 August 2021;
(c)Mr Milbank has failed to advance his appeal;
(d)Mr Milbank has shown no sign of leaving or tidying the property;
(e)MZ has organised concreting of the main driveway from 3 November 2021 onwards, which will remove vehicular access for a number of days;
(f)the prospects of Mr Milbank’s appeal are weak; and
(g)Mr Milbank has been a trespasser on the property for more than a year and should not be rewarded.
Discussion
Will the appeal be rendered nugatory?
[19] I first consider whether the appeal will be rendered nugatory if a stay is not granted. The order is to vacate a property, not a money judgment. Mr Keall emphasises that it relates to an estate in land, which is unique and for which damages are not an adequate remedy. But, as Mr Hollyman QC submits, that applies in the sale and purchase context rather than to a purely commercial leasehold interest. In any event, MZ will also undertake to ensure that Mr Milbank can move back onto the property should his appeal succeed. I accept the cost of alternative short term premises will likely be more expensive than the economically advantageous terms of the November 2018 lease (as Mr Keall described them), but that does not render the appeal nugatory. Insofar as that increased cost (and the cost of moving twice) could be the responsibility of MZ if the appeal succeeds, it may be remedied in damages. I do not consider the appeal will be rendered nugatory if a stay is not granted.
Bona fides of applicant
[20] Mr Hollyman submits that Mr Milbank’s behaviour as lessee has been obstructive and that he has delayed at each turn. I leave to one side Mr Milbank’s headstrong forced re-entry back in October 2020, and I am not in a position to make a determination on further breaches of the lease since judgment. Mr Keall defends Mr Milbank’s progress of the appeal. Mr Milbank has not proactively progressed the appeal and has failed to provide security for costs well after the due date (this week seeking a reduction on the basis he is struggling to pay),5 but I do not consider he has been obstructive. He now supports the appeal being heard on the fast track.6 But his delay in applying for a stay was discourteous at best. His conduct does not weigh in favour of a stay.
5 Mr Keall advised this morning that the Court of Appeal has indicated that it is minded to extend time to apply for a reduction of security, but seeks detailed financial information. He also advised that Mr Milbank is arranging to lodge $3,530 with the Court of Appeal in the meantime. MZ has not yet provided security either. Mr Keall confirmed payment of $3,530 this afternoon.
6 Mr Keall advised this morning that the Court of Appeal has indicated that the scheduling fee must be paid to progress that application. He also advised that Mr Milbank is making arrangements for that fee to be paid today or Monday. Mr Keall confirmed payment of $2,700 this afternoon.
Effect of stay on MZ
[21] A stay will mean MZ suffers delay in obtaining vacant possession. MZ has also organised some work on the property after 31 October 2021 but has not suggested that would involve irrecoverable cost if a stay were granted.
Novelty and importance of the question and strength of the appeal
[22] Mr Keall submits the limitation issue under s 253 of the PLA is a novel point of law, which appears correct. He submits the appeal has a reasonable prospect of success. Mr Hollyman submits the strength of the appeal is dubious. I have seen the brief notice of appeal but am not in a position to assess the prospects on this application. I consider this is a neutral factor.
Overall balance of convenience
[23] Mr Keall submits that, provided suitable conditions are imposed ensuring the prompt disposal of the appeal, the overall balance favours preservation of the status quo. This Court is not well placed to impose conditions ensuring the prompt disposal of the appeal, and where such conditions are necessary it can be appropriate to grant only a limited stay, to enable the applicant to apply to the Court of Appeal.7 Currently, security for costs and hearing date remain unknown. Mr Hollyman advises me that the Court of Appeal registry has indicated that even urgent appeals are not being set down until February/March 2022.
[24] The application also proposes a condition of continued compliance with the terms of the lease, but this is of little utility in relation to the breaches found in the judgment under appeal.
[25] I step back to balance MZ’s rights to the benefit of the judgment and the need to preserve Mr Milbank’s position in case the appeal is successful. Having concluded that the appeal will not be rendered nugatory if a stay is declined, particularly on the basis of MZ’s undertaking to ensure that Mr Milbank can move back onto the property should his appeal succeed, I consider the Court can do justice between the parties
7 Brake v Boote (1991) 4 PRNZ 86 (HC).
without a stay, whatever the outcome of the appeal. I consider the overall balance weighs against a stay.
Result
[26]The application for stay is declined.
Gault J
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