New Zealand Institute of Sport Limited v Majestic Investments Limited

[2013] NZHC 3542

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2012-485-1407 [2013] NZHC 3542

UNDER  section 253 of the Property Law Act 2007

BETWEEN  NEW ZEALAND INSTITUTE OF SPORT LIMITED

Plaintiff

ANDMAJESTIC INVESTMENTS LIMITED Defendant

Hearing:                   12 December 2013

Counsel:                  R J Gordon for Plaintiff

P J Woods for Defendant

Judgment:                20 December 2013

JUDGMENT OF WILLIAMS J

[1]      The background to this matter is set out in my judgment of 9 May 2013 and need not be repeated here.1

[2] The issue that now arises between the parties results from a memorandum filed by New Zealand Institute of Sport Limited (NZIS) seeking final resolution of Majestic Investments Limited’s (MIL) set-off claims and its claim to damages under s 228 of the Property Law Act 2007 (PLA). This memorandum was filed pursuant to leave I reserved in the judgment at [122]. That paragraph provided:

Leave is reserved for counsel to seek further directions in respect of such remaining matters as must then be addressed.   These will include, if the parties wish it, any further steps in respect of the s 228 application, set-off calculation resolution of the remaining opex dispute or other matters.

1 New Zealand Institute of Sport Ltd v Majestic Investments Ltd [2013] NZHC 2327.

NEW ZEALAND INSTITUTE OF SPORT LIMITED v MAJESTIC INVESTMENTS LIMITED [2013] NZHC

3542 [20 December 2013]

[3]      I note for completeness that MIL has appealed the judgment and NZIS has cross-appealed on the question of costs.  The case on appeal is to be filed early next year.

[4]      MIL accepts that its set-off claims for enforcement costs under the lease and operating expenses must now be heard, and NZIS accepts that MIL’s claim for $200 per week in office rent for Mr Beaven must also be heard.   But MIL says NZIS’ claim for damages under s 228 of the PLA can go no further despite the terms of [122] of my judgment.  That Mr Woods says is because prior to that at [84], I found that:

… it cannot be said that MIL has unreasonably withheld its consent [to

NZIS’s sub-tenants] in light of the subsisting breaches.

[5]      At [85] I made the point that, whatever the situation with subsisting breaches, NZIS had not, in any event, proved any loss at that stage.  I said as follows:

It is not clear to me whether existing tenants, all of them still in occupation as far as I am aware, have been paying rent or withholding it pending final resolution of the matter.  In any event, I have received no indication that the tenants have not or alternatively cannot pay rent to NZIS.  On the contrary, counsel submitted that each of the new sub-tenants was “ready, willing and able to pay the agreed rental”.  It would therefore be quite inappropriate for me to make an order for the payment of damages in compensation for loss of rent, when I do not know the extent to which rent has either been paid or can be  readily  paid  once  the  position  is  regularised  through  the  landlord’s consent.  In short, putting to one side of the question of breach, NZIS has not yet proved loss.

[6]      So the decision in essence was that I had found MIL had proved a small rental arrears and that, at that stage, MIL had arguable but unproved claims against NZIS for around $35,000 in opex for the year ending 31 March 2012,2 and for legal fees of $5,750.3    The finding in respect of actual rental arrears related to a small implement shed attached to the old bowling club.

[7]      I accept that [84] and [122] cannot stand together insofar as they relate to

NZIS’s s 228 claim.  The finding at [84] that MIL had not unreasonably withheld its

2  There was no dispute that the money had in fact been paid to the previous head tenant, now in liquidation. NZIS says it was told by MIL to pay this way, and MIL denies it.

3   The dispute here being over  whether enforcement costs under the  lease  were reasonable and claimable under the lease.

consent to the sub-tenants (because NZIS still owed it rent), put paid to any claim by NZIS under s 228.   That is because a s 228 claim is predicated on the landlord unreasonably withholding consent.   It follows that [84] was dispositive of NZIS’s claim in that respect, and the reference to s 228 at [122] was a mistake on my part. NZIS cannot now therefore further pursue its claim under s 228 in this proceeding.

[8]      As to the remaining NZIS heads of claim, Mr Gordon now, as I have said, has filed an amended statement of claim – not the usual process under Part 19 under which leave was initially granted, as he knows.  Nonetheless, I am satisfied that it is an efficient way of articulating the particulars of the claim, and that a statement of defence  will  suffice  as  a  means  by  which  MIL  can  articulate  its  response. Mr Gordon proposes a timetable as follows:

(a)       Any statement of defence by MIL should be filed and served by

15 February 2014.

(b)       Within  a  further  15  working  days  thereafter,  MIL  must  provide informal particular discovery of:

(i)        Castle   Law’s   invoice(s),   time   records,   and   the   like evidencing the make-up of the $5,745 that MIL claims for “enforcement costs”;

(ii)      MIL’s bank records relevant to and evidencing all payments made by the Riccarton Club Inc to it for operating expenses over the period from 1 January 2011 to 31 December 2012.

(c)       As soon as practicable after the completion of discovery, the matter can then be convened for a first case management teleconference before the Associate Judge, to enable expedited progress of all remaining matters.

[9]      There will be timetabling directions accordingly.

[10]     Mr Woods also applies for recall of the judgment to facilitate the making of an order setting aside the statutory demand served by NZIS in respect of MIL’s fit- out contribution of $200,000 (+ GST).   Paragraphs [97] and [98] of the judgment show that the primary reason for rejecting the proposition that fit-out costs were due and owing was that NZIS had failed to provide MIL all invoices for fit-out work under cover of NZIS’s own invoice for the agreed contribution sum.   I found that MIL was not liable “at this point because the tenant remains in breach, albeit in

relatively minor ways, but if it was so liable, some limited set-off would be available.”4    I am satisfied that it is appropriate to recall the judgment to make that final order to which MIL was technically entitled.

[11]     It is another matter entirely as to whether MIL is entitled to costs.

[12]     This is not a case where costs should be payable to MIL.   In the overall context of this litigation, NZIS achieved much of what it set out to achieve (with the single exception of damages under s 228).   That cannot be ignored in relation to costs on the application to set aside the statutory demand.  In the circumstances, I consider that on that application, it is appropriate that no award of costs be made.

[13]     I have, of course, yet to resolve costs in relation to the other applications that were before me at the time.

[14]     Mr Woods reminded me that in fact there were two sets of proceedings before me:  the first, the application by NZIS for relief against forfeiture; and the second, with its own proceeding number in relation to MIL’s application to set aside the statutory demand.    I have nonetheless  resolved  to  leave the intitulement  of the original judgment in place but have added the formal order setting aside the statutory

demand at the end of the judgment with no award of costs on that count.

Williams J

Solicitors:

Minter Ellison Rudd Watts, Wellington

Anthony Harper, Christchurch

4 At [118].