Olma Investments Limited v Butters

[2025] NZHC 716

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2024-409-10

CIV-2024-409-579 [2025] NZHC 716

BETWEEN

OLMA INVESTMENTS LIMITED

Plaintiff / Applicant

AND

ROBYN IRIS BUTTERS

First Defendant / First Respondent

ANDREW MYERS AUTON

Second Defendant / Second Respondent

Hearing:

17 March 2025

Appearances:

D J Ballantyne for Plaintiff

R I Butters in-person First Defendant
A M Auton in-person Second Defendant

Judgment:

31 March 2025

JUDGMENT OF ASSOCIATE JUDGE LESTER

OLMA INVESTMENTS LIMITED v BUTTERS [2025] NZHC 716 [31 March 2025]

[1]    On 23 August 2022, Olma Investments Limited (Olma) entered a Deed of Lease (the Lease) with R & A Auton Limited (R & A). The first and second defendants, Ms Butters and Mr Auton, were the directors and shareholders R & A and gave a joint and several guarantee to Olma in respect of R & A’s obligations under the Lease. The initial term of the Lease was three years. However, on 27 January 2023, R & A was removed from the Companies Register for failing to file its annual return.

[2]    The leased premises were a newly built warehouse with attached accommodation. Ms Butters and Mr Auton resided at the leased premises until an order for possession by consent was made by Dunningham J on 9 September 2024 which came into effect on 27 September 2024.1 Dunningham J also made an order by consent cancelling the Lease. Cancellation was expressed to be without prejudice to any accrued or continuing rights Olma had against the tenant or guarantors.

[3]    Olma seeks summary judgment against the guarantors for rent in arrears that have accrued since the start of 2023. The monthly rental was $2,875 including GST. The rent was short paid, but only by $375.00, on 28 December 2022—being the rent for January 2023. However, from the rental paid on 25 January 2023 (and all subsequent rental payments were on or about the 25th of the month), the rental paid by Ms Butters and Mr Auton was $1,500. No rental was paid  for April,  May or  June 2024. The last rental payment was made on 27 June 2024 for July 2024’s rent.

[4]    Calculating rental through to the end of the term, Olma says the total amount that should have been paid was $116,453.35 including GST of $15,189.57. However, only $37,953.53 including GST of $4,950.46 was ever paid which left a shortfall of

$78,499.82 with a GST content of $10,239.11.

[5]    With the Lease coming to an end on 9 September 2024, albeit Ms Butters and Mr Auton remained in occupation until 27 September 2024, at the latest rental ceased to accrue when Ms Butters and Mr Auton yielded possession.

[6]    Any claim Olma has thereafter is for damages, not accrued rental, and I address this point in due course.

1      Olma Investments Ltd v R A Auton Ltd [2024] NZHC 2580 at [7(b)].

[7]    The Lease is on the New Zealand Law Society 6th edition printed form and was appropriately executed by all parties. The  signatures on behalf of  the tenant  and the guarantors are witnessed by their then counsel.

[8]The Guarantee provides:

IN CONSIDERATION of the Landlord entering into the lease at the Guarantor’s request the Guarantor:

(a)Guarantees payment of the rent and the performance by the Tenant of the covenants in the lease.

(b)Indemnifies the Landlord against any loss the Landlord might suffer should the Lease be lawfully disclaimed or abandoned by any liquidator, receiver or other person.

[9]    The Guarantee also provides that as between the Guarantor and the Landlord, the Guarantor may for all purposes be treated as the Tenant. It further provides:

No release delay or other indulgence given by the Landlord to the Tenant …or any other thing by which the Guarantor would have been released had the Guarantor been merely a surety shall prejudice ‘or  affect  the liability  of  the Guarantor or as indemnifier.

[10]   Accordingly, from Olma’s point of view, this is a straightforward summary judgment claim against Guarantors under a formal Deed of Lease. Olma says on the face of the Lease, the full rental has not been paid at least up until the date Mr Auton and Ms Butters vacated the premises.

Summary judgment principles

[11]   The starting point for a plaintiff’s summary judgment application is r 12.2(1) of the High Court Rules 2016, which requires that the plaintiff satisfy the Court that the defendant has no defence to any cause of action in the statement of claim or to    a particular cause of action.

[12]I summarise the general principles which I adopt in relation to this application:

(a)Commonsense, flexibility and a sense of justice are required.2

2      Haines v Carter [2001] 2 NZLR 167 (CA) at [97(1)].

(b)The onus is on the plaintiff seeking summary judgment to show that there is no arguable defence. The Court must be left without any real doubt or uncertainty on the matter.3

(c)The Court will not hesitate to decide questions of law where appropriate.4

(d)The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements in affidavits.5

(e)In determining whether there is a genuine and relevant conflict of facts, the Court is entitled to examine and reject spurious defences or plainly contrived factual conflicts. It is not required to accept uncritically every statement put before it, however equivocal, imprecise, inconsistent with undisputed contemporary documents or other statements, or inherently improbable.6

(f)In assessing a defence the Court will look for appropriate particulars and a reasonable level of detailed substantiation — the defendant is under an obligation to lay a proper foundation for the defence in the affidavits filed in support of the notice of opposition.7

(g)In weighing these matters, the Court will take a robust approach and enter judgment even where there may be differences on certain factual matters if the lack of a tenable defence is plain on the material before the Court.8

(h)The need for judicial caution in summary judgment applications has to be balanced with the appropriateness of a robust and realistic judicial attitude when that is called for by the particular facts of the case. Where

3      Pemberton v Chappell [1987] 1 NZLR 1 (CA) (No. 2) at 3.

4      European Asian Bank AG v Punjab & Sind Bank [1983] 2 All ER 508 (CA) at 516.

5      Harry Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21 (SC).

6      Attorney-General v Rakiura Holdings Ltd (1986) 1 PRNZ 12 (HC).

7      Middleditch v NZ Hotel Investments Ltd (1992) 5 PRNZ 392 (CA).

8      Jowada Holdings Ltd v Cullen Investments Ltd CA248/02, 5 June 2003 at [28].

a last-minute, unsubstantiated defence is raised and an adjournment would be required, a robust approach may be required for the protection of the integrity of the summary judgment process.9

(i)Once the Court is satisfied  that there is no defence, the Court retains  a discretion to refuse summary judgment but does so in the context of the general purpose of the High Court Rules which provide for the just, speedy and inexpensive determination of proceedings.10

Notice of opposition

[13]   Ms Butters and Mr Auton are representing  themselves.   They have raised     a number of issues in respect of this application and the earlier application in which Olma sought cancellation of the Lease.

[14]In broad terms, the issues raised by Ms Butters and Mr Auton are:

(a)what is the effect of R & A being removed from the Companies Register on their obligations as Guarantors?

(b)did cracks in the concrete floor of the warehouse part of the tenancy prevent Ms Butters and Mr Auton through their company establishing the business they intended to operate from the premises?

(c)did Mr Alexander, the director of Olma, in any way mislead Ms Butters and Mr Auton as to their entitlement to have pets in the residential part of the tenancy?

(d)did (b) and/or (c) above lead Mr Alexander to agree that reduced rent could be paid from January 2023?

(e)the effect of cancellation on the quantum of damages claimed.

9      Bilbie Dymock Corporation Ltd v Patel & Bajaj (1987) 1 PRNZ 84 (CA).

10     Pemberton v Chappell, above n 3.

The status of the Guarantee

[15]   The obligation on Ms Butters and Mr Auton to meet their Guarantee arises when rent is unpaid. Why rent is unpaid is immaterial to their obligation to pay, save perhaps in circumstances where Olma’s actions might have prevented the rent being paid (but  even  then  the  presence  of  a  no  set-off  clause  in  the  Lease  means  the obligation is to pay rent first and argue later). Olma had nothing to do with the de-registration of R & A from the Companies Register and any assertion by Ms Butters and Mr Auton that Olma bore any  responsibility  for  that  cannot  be  sustained.  The company’s annual return was due October 2021, ten months before the Lease. The company’s directors elected to allow it to be removed from the Register.

[16]   In any event, the Guarantors as the directors and shareholders of R & A can not through their own actions or inaction negate the value of Olma’s Guarantee.

[17]   I find the removal of R & A from the Companies Register does not invalidate the Guarantee.

The state of the concrete floor

[18]   The property had been newly constructed and there is evidence of hairline cracks  in  the  concrete  floor.   Ms Butters  and  Mr Auton  intended  to  commence a business in the warehouse that involved propagating tropical plants and growing corals in large tanks. The complaint seems to be that the state of the floor may have frustrated their plans.

[19]Clause 38.1 of the Lease headed “Suitability” provides:

Suitability

38.1 No warranty or representation expressed or implied has been or is  made by the Landlord that the premises are now suitable or will remain suitable or adequate for use by the Tenant or that any use of the premises by the Tenant will comply with the by-laws or ordinances or other requirements of any authority having jurisdiction.

[20]   There is no real evidence that the cracks in the floor would have prevented the installation of water tanks or the conducting of a plant business.

[21]   Nor is there any suggestion that the cracks were not present at the time of the Lease. Clause 38.1 is clear that the obligation is on the tenant to satisfy themselves that the premises are suitable for their intended  use.   This  issue does not  provide   a defence and as will be discussed below, does not seem to be the reason why rent was not paid.

The keeping of pets

[22]Clause 48 of the Lease headed “Residents Association” provides:

Residents Association

48.1The Tenant acknowledges that the use and occupation of the premise is subject to the attached rules. This includes any altered rules by the residents association from time to time. The Tenant will abide by and not breach any of the rules (or later altered rules).

[23]   The rules attached to the Lease provide that  an Owner must not without     the prior written consent of the Residents Association keep pets on their property. The consent of the Residents Association shall not be unreasonably or arbitrarily withheld, per the Rules. Further, the Residents Association may revoke its consent essentially if an animal is disruptive and in particular: “... if the Residents Association receives  3 or more complaints regarding a particular animal or pet”.

[24]   Ms Butters and Mr Auton, through their company, first expressed interest in the property in April 2022. Mr Auton responded to the property being listed for lease on TradeMe asking if the unit was still available and asked: “… are pets ok? (2 mini schnauzers) we are very interested, …” .

[25]   Mr Alexander replied saying that he had located the Residents Association’s Rules which stated that the Association had to approve pets on site and said: “So two options really either we seek permission from residents association or say nothing and see if anyone complains and deal with it from there”.

[26]On 26 April 2022, Mr Auton replied:

We definitely would like to apply to the tenants association for the doggies, we’ve discussed it and if they didn’t allow pets they wouldn’t say you can apply, and I’m not sure how much better you can get that two pure bred miniature schnauzers Giles and Riley, who are now 7 months old and two of the best behaved little doggies one could imagine.”

[27]   Mr Auton finished the email by enquiring about how the build was looking and commenting that they were keen to move out of their existing premises.

[28]   Mr Alexander’s evidence is that after Mr Auton’s email of 26 April 2022, he did not hear anything further from Ms Butters and Mr Auton for a couple of months. Given there was no further contact, Mr Alexander had started looking for alternative tenants and kept the property advertised on TradeMe.

[29]   The next contact from Mr Auton was on 27 June 2022 essentially saying they were desperately trying to secure a unit. Mr Auton asked Mr Alexander to agree to the earlier lesser advertised rental of $30,000 per annum plus GST and OPEX from the advertised price of $35,000 per annum plus GST and OPEX. Mr Alexander, on behalf of Olma, agreed to that request.

[30]   There was no further reference to pets at any time until after the Lease was signed and Mr Auton and Ms Butters took possession.

[31]   The  completion  of  the   Lease  involved  a  number  of  emails  between   Mr Alexander, Mr Auton and the barrister acting for R & A,  and Ms Butters  and  Mr Auton. The emails do not mention pets. There is no request recorded in any of the material that Olma obtain approval for pets.

[32]   While Mr Auton said in his oral submissions that he was not provided with the rules of the Residents Association, the copy of the Lease in evidence has the rules attached. Had the rules not been provided I would have expected the lawyer who acted for R & A on the Lease negotiations to have requested a copy.

[33]   Ultimately, the Lease was signed and Ms Butters and Mr Auton took possession of the property with their two dogs.

[34]   In early September 2022, Mr Alexander received an email from the manager of the Residents Association advising that they had learnt that there were two dogs at Olma’s unit. Reference was made to the need to obtain Residents Association approval and:

In order to seek permission a resolution without a general meeting needs to be held  the  cost  of  this  is  $250+GST.  The  attached   form  will  need  to   be completed for the resolution.

If the resolution does not pass, unfortunately the animals will no longer be allowed onsite.

[35]   Mr Alexander forwarded the email and  the  consent  application  form  to  Mr Auton on 10 September 2022.

[36]   Mr Auton’s reply of 20 September 2022 is significant. Mr Auton returned the requested forms, one for each of the two dogs. He suggested that the complaint may have come from the neighbouring tenant. There is no suggestion by Mr Auton in the email that Mr Alexander had committed to obtain Residents Association approval for the dogs and had failed to do so, or that it was somehow Mr Alexander’s responsibility to sort out the issue with the dogs.

[37]   On 7 October 2022, Mr Auton sent a further email to Mr Alexander asking where to pay the application fee and noted that the relationship with the neighbour had improved. He asked when the meeting to obtain the dog approval would be and when they would know if the dogs had been approved or not. Mr Alexander replied a few days later saying he had sent the information through to the Residents Association and was waiting for its reply. He noted he had not received an invoice yet and commenting that it was positive that progress was being made with the neighbour.

[38]Unfortunately, the Resolution did not pass.

[39]   Mr Alexander took issue with the procedure adopted at the meeting, but the Residents Association advised that the issue was no longer about obtaining

permission. Due to the number of complaints the Residents Association had received about the dogs, even if there had been approval for the dogs in the first place, under the Rules permission would have been revoked because three more complaints had been received.

[40]   On 24 November 2022, Mr Auton sent an email to Mr Alexander recording his disappointment at where things had got to, but advising:

The bottom line [M]att is when you asked us if we wanted to move in and apply later we wrote back no, we didn’t want to move in unless they were approved and we don’t believe we would of had any issues with the neighbour had we the same pre approval as number five with two cats and a German shepherd”.

[41]   This is a reference to the email  exchange referred to at  [25]—[27] above.  Mr Auton in his email of 24 November 2022 did not accurately summarise the email exchange. Again, that email contact was four months before the Lease was signed which was two months before Mr Auton resumed contact about the tenancy. There is no communication from Mr Alexander on behalf of Olma agreeing to obtain the consent of the Residents Association and again, it is significant that when the issue is first raised, Mr Auton does not say that he had understood that consent had already been obtained by Mr Alexander and that it was Mr Alexander’s responsibility to sort the matter out.

Why is the pet dispute significant?

[42]   Mr Auton says Mr Alexander verbally told him and Ms Butters that if he could not get the dogs approved, he would release them from the Lease. Mr Auton further alleges that Mr Alexander agreed to them paying only 50 per cent of the rent until a solution was reached. Mr Auton says he believes this was on 25 January 2023 either in person or over the telephone.

[43]   The first half-rent payment, that is the first reduced rental payment of $1,500 was paid 25 January 2023.

[44]   However, on 26 January 2023, Mr Alexander sent an email to Mr Auton saying:

I am getting [a lot] of pressure from them to provide a date when the dogs will be removed and it is causing me a lot of stress as well, and now that you are short paying on rent this is affecting me financially also, as I already have to top up the repayments by $1500 every month and only receiving part payments from you is making things hard for me and my family.

I have someone that is wanting to take over your unit and they are wanting to take over the building on the 11th of Feb, I really need to have someone that can make full rent payments so would like to try to get something sorted so this can happen.

[45]   Mr Auton on 23 January 2023 had emailed Mr Alexander which, amongst other things said:

We’re going to struggle to pay all of this months’ rent, I’m meeting with my lawyer this week but we’re not sure how we’ve been able to use the premises for a business considering that we were planning on opening a tropical fish/corals and plant shop (basically a pet shop).

[46]   Accordingly, on 23 January 2023, Mr Auton’s position was that they were going to struggle to pay rent. The tenants then paid $1,500 prompting Mr Alexander’s reply of 26 January 2023. At no time when Mr Alexander complained about the shortfall of rent did Mr Auton assert that Mr Alexander had agreed to the rent reduction.

[47]   On 30 March 2023, Mr Alexander emailed Mr Auton. The parties had been discussing the possibility of the tenant relocating — something Mr Alexander had agreed to. Mr Alexander’s email concluded: “Just having a work out of the expenses that we are still owed, both the shortfall in rent and the other expenses …”. The other expenses referred to being outgoings for which the tenant was responsible.

[48]   Mr Auton replied on 11 April 2023 asking for copies of the invoices for the expenses claimed by Olma. Mr Auton did not reply to the reference to “the shortfall in rent” when, on Mr Auton’s case, there was no shortfall, he had been paying the rental that had been agreed.

[49]   In an email of 20 April 2023, Mr Auton referred to the costs of potential litigation between the parties and said that: “… will be considerably more than the not even 50% rent we’ve begun to withhold.”

[50]   Mr Auton’s reference to rent being withheld is inconsistent with there being an agreement to pay a reduced rental. In the same email Mr Auton said:

Unfortunately I knew that you were up to something when you didn’t argue with me when we first told you that we were not going to keep paying full rent.

[51]   Mr Alexander denies the above discussion took place but even on Mr Auton’s email, Mr Alexander did not agree to the rent reduction.

[52]   On 13 September 2023, Olma served notices of demand under s 245 of the Property Law Act 2007 on the tenant and guarantors, demanding arrears. Ms Butters and Mr Auton did not reply. An obvious response to the demand for arrears would have been that they were not in arrears because they had been paying the rental as agreed with Mr Alexander on 25 January 2023.

[53]   Mr Auton’s claim that there was an agreement to reduce rent is inherently incredible and inconsistent with the contemporary documents. What makes it all the more incredible is the alleged justification for the reduction in rent being the issue over the pets. Mr Alexander never considered the issue over the pets his responsibility — why he would agree  to  a  reduction  in  rent  to  that  regard  is  unclear.  Further, Mr Alexander was prepared to cancel the Lease so that Ms Butters and Mr Auton could  find  new  premises.    In  those  circumstances,  it  is  inherently  unlikely    Mr Alexander would have granted an open-ended concession to pay reduced rent.  Mr Auton’s own email of 20 April 2023 set out at [49] and [50] above puts an end to any suggestion of an  agreed  rent  reduction.  But  in  any  event,  Ms Butters  and Mr Auton and their two dogs remained in occupation of the premises through to the Order for Possession taking effect.

[54]   This is one of those rare situations in a summary judgment application that     I am satisfied that Mr Auton’s evidence of an agreement that only half-rent was

payable is so inconsistent with contemporary documents, his own contemporary actions and commercial commonsense, that I can dismiss his evidence.

Decision

[55]   Accordingly, I find that there was no agreement to pay half-rent and the Guarantors, Ms Butters and Mr Auton, are liable to pay full rental and outgoings up to the date of cancellation.

[56]   The other way of analysing the complaint about the cracks in the concrete floor and/or the pets issue is to treat them as either a pre-contractual misrepresentation or  a breach of the Lease agreement. If the tenant (or the Guarantors who for all purposes were in the same position as the tenant) considered either issue warranted cancellation once it came to their attention, then they were put to their election whether to cancel the Lease or not. They did not purport to cancel the Lease. Nor have they attempted to identify a claim for damages arising from the concrete floor or pets issue. If those claims were approached on this basis, then they would run into the no set-off clause as the Lease requires that “All rent shall be paid without any deduction or set-off by direct payment to the Landlord...”.11

Olma’s claim post cancellation

[57]   Mr Ballantyne accepted that for the purposes of summary judgment, Olma’s claim should be restricted to the period that Ms Butters and Mr Auton were in occupation, that is up to 27 September 2024. That unpaid rent totals $41,268.65. That is an appropriate approach to adopt given Mr Ballantyne advised the premises had been re-let.

[58]   That means that Olma’s claim for damages after 27 September 2024 remains unresolved. Mr Ballantyne is to file a memorandum within 20 working days advising what Olma intends to do with the balance of its claim.

11     See Browns Real Estate Ltd v Grand Lakes Properties Ltd [2010] NZCA 425.

Interest

[59]Interest on the arrears figure in [57] is $4,442.52.

[60]   I am satisfied that Olma is entitled to judgment against each of the defendants in the sum of $41,268.65 together with interest to 27 September 2024 of $4,442.52.

Outgoings

[61]   Other than the claim that the outgoings included in the half-rental be paid, no defence to the outgoings claim was raised. Given I have dismissed the claim that there was an agreement to pay half-rental, I find that the defendants are, pursuant to their Guarantee which extends to all obligations of the tenant, obliged to pay outgoings.

[62]   I raised with Mr Ballantyne that the invoices payable to the Residents Association included a reference to “Long term maintenance fund” which is outside the definition of Outgoings the tenant was liable for pursuant to cl 18 to the First Schedule of the Lease. Given that issue was raised by me, Mr Ballantyne had leave to file a further memorandum clarifying that point. Mr Ballantyne’s memorandum has deducted the long-term maintenance fund component from the Residents Association costs making the claim for outgoings $14,149.43. Judgment is entered in Olma’s favour for that amount. Interest is sought on that sum at the contractual rate from the date of judgment until the date of payment. There is an order accordingly.

Claim for solicitor-client costs

[63]   Olma is entitled to recover its costs on a solicitor-client basis under the terms of the Lease. The costs cover all steps in this proceeding including Ms Butters and Mr Auton challenging the jurisdiction of the Court, initially opposing the order for cancellation and possession sought by Olma, and opposing the claim for summary judgment. Mr Ballantyne notes that costs on a 2B basis for all steps are in fact less

than indemnity costs and Olma is content to deal with costs on a scale basis. Given that scale costs are less than the amount to which Olma is entitled, I fix costs on a 2B basis in the sum of $43,976 together with disbursements as fixed by the Registrar.

Associate Judge Lester

Solicitors:
James Cambridge Law, Auckland (for Plaintiff/Applicant)

Copy to counsel:
D J Ballantyne, Barrister, Christchurch (for Plaintiff/Applicant)

Copy to:

R I Butters – self-represented (First Defendant/First Respondent)

A M Auton - self-represented (Second Defendant/Second Respondent)