Overton Holdings Limited v APN New Zealand Limited

[2013] NZHC 754

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2012-485-2702 [2013] NZHC 754

BETWEEN  OVERTON HOLDINGS LIMITED Plaintiff

ANDAPN NEW ZEALAND LIMITED Defendant

Hearing:         8 April 2013

(Heard at Wellington)

Counsel:         No appearance for Plaintiff but written submissions filed.

K.M. Quinn - Counsel for Defendant and written submissions filed. Judgment:  15 April 2013

JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This judgment was delivered by me on 15 April 2013 at 3.30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:   ....................................................................

Solicitors:           Brandons, Solicitors, PO Box 36, Wellington

Rogers & Rutherford, Lawyers, PO Box 2330, Auckland 1140

OVERTON HOLDINGS LIMITED V APN NEW ZEALAND LIMITED HC WN CIV-2012-485-2702 [15 April

2013]

Introduction

[1]      Before me is an application by the defendant (APN) for an order transferring these proceedings to the Auckland Registry of this Court pursuant to r 5.1(4) and (5) of the High Court Rules.  The application is opposed by the plaintiff (Overton) who contends that the proceedings should properly remain in the Wellington Registry.

[2]      As to this, it needs to be noted here at the outset that the plaintiff accepts that the defendant’s principal place of business and residence is Auckland, but it has filed this proceeding in the Wellington Registry because it believes some material part of the cause of action arose nearer to the plaintiff’s residence and place of business which is in Wellington.

Preliminary Matter

[3]      First, a preliminary matter arose at the hearing of this application which I

now mention.

[4]      This was the fact that at the hearing before me at 2.15 pm on 8 April 2013, Mr K Quinn was present and appeared as counsel for the defendant, but there was no appearance by counsel for the plaintiff.  Shortly after 2.15 pm on 8 April 2013 the Registrar did endeavour on several occasions to telephone Mr G Harley, counsel for the plaintiff to remind him of the hearing which was about to take place, but she was unable to make contact with him.

[5]      It  did  transpire  after  additional  telephone  calls  to  Mr  Harley’s  secretary, however, that he was in Auckland at the time and it seems he may well have simply forgotten that the hearing of this matter was to take place that afternoon.

[6]      That hearing date and time of 2.15 pm on 8 April 2013 had been set in a direction  I gave in a Minute  issued on 19 March 2013.   This Minute included directions for the filing of submissions by APN as the applicant by 3 April 2013 and submissions by Overton as the respondent by 5 April 2013.

[7]      Mr  Quinn,  counsel  for APN,  did  provide  submissions  on  behalf  of  the applicant dated 3 April 2013 which appear to have been filed on 4 April 2013.  Mr Harley counsel  for Overton provided his submissions in reply on  behalf of the respondent dated 5 April 2013 (totalling some 5 pages in all) together with an addendum to those reply submissions dated 7 April 2013 filed on that date.

[8]      At  about  2.35  pm  on  8  April  2013,  I  advised  that  the  hearing  of  this application which had been scheduled for some time to take place then, was to proceed notwithstanding the absence of Mr Harley for Overton.   In doing so, I indicated that I would carefully consider and take into account the detailed written submissions which had been provided both for APN and for Overton, together with any oral submissions advanced to me by Mr Quinn who was present as counsel for APN.   The hearing then proceeded on that basis. I now give my decision on the application.

[9]      As  a  post  script  to  these  matters,  however,  I  do  note  and  simply  for completeness record that, midway through the hearing on 8 April 2013, the Registrar of this Court did receive a telephoned apology I understand from Mr Harley in Auckland, for his non-attendance at the hearing. That is acknowledged.

Background Facts

[10]     Overton brings the substantive action in this proceeding against APN alleging breach of contract, wrongful repudiation, misrepresentation and misleading and deceptive conduct under the Fair Trading Act 1986. The dispute arises from a sale and leaseback contract the parties entered into.

[11]     APN owned a property situated at 113 Karamu Road, Hastings (the property). It used the building on the property for part of its newspaper publishing business. In

2007, APN  offered  the  property for sale. An  Information  Memorandum  for the property and the sale was prepared by Bayleys Real Estate Ltd (based in Auckland), stipulating that any purchaser would enter into a lease back arrangement with APN as a tenant to enable it to carry on part of its business from the property.

[12]     Soon  after,  Bayleys  Real  Estate  Ltd  introduced  to  APN  a  Mr  Herman

Rockefeller (Mr Rockefeller) as a potential purchaser.  This occurred in mid August

2007.  At the time, Mr Rockefeller was one of three directors of Overton. Overton’s residence and principal place of business is Wellington, but Mr Rockefeller was based in Melbourne throughout.  On 24 August 2007 a sale and purchase (at a price of $4 million) and leaseback agreement for the property (the Agreement) was signed on  behalf  of  Overton  by  Mr  Rockefeller.     Stephen  Derek  Rutherford  (Mr Rutherford), a lawyer acting for APN in the transaction, deposes that prior to the time the Agreement  was signed,  no lawyer for Mr Rockefeller or Overton was involved. Only when Mr Rutherford enquired, after the Agreement was entered into, did Brandons (the Wellington lawyers acting for Overton) become involved. Settlement under the Agreement occurred on 15 October 2007.

[13]     The Deed of Lease (the Lease) recorded in the leaseback arrangement and provided for in the Agreement was for a period of 8 years from settlement date.  The Lease was entered into around 2 November 2007. It provides for Overton as landlord and APN as tenant and was signed at the time it seems by Overton’s two other directors, who were both based in Wellington. The Lease allows APN as tenant to use the premises for “the business use” which is defined as “commercial offices (including newspaper and media administration) and any other uses necessary to carry on  the Tenant’s  business...”. The  Lease  also  provides  that  the  tenant  will comply with  the Health  and  Safety in  Employment Act  1992  in  respect  of the premises.

[14]     Following settlement of the property sale and purchase and commencement of the Lease, matters appeared to run quite smoothly until about 2011.   Then, in

2011, the Hawkes Bay District Council notified Overton that the property was potentially earthquake prone and required earthquake-strengthening work. This led to APN advising that it wanted to end the Lease, although it has since continued to pay rent. APN now advises that the premises are not fit for their business use. Communications between the parties’ lawyers in Auckland and Wellington are to this effect.

[15]     Subsequently on 19 December 2012, Overton filed its present statement of claim in this proceeding in the Wellington High Court Registry claiming:

(a)      Breach of contract through a contractual misrepresentation essentially in the Information Memorandum that the premises were suitable for APN’s business use (when APN now claim that because of the recent earthquake-strengthening requirement they are not so suitable) and through APN’s failure as tenant to comply with its Health and Safety in Employment Act 1992 obligations under the Lease;

(b)      Wrongful repudiation of the Lease; and

(c)      Misrepresentation under the Fair Trading Act 1986.

Law

[16]     Rule 5.1(1)(a) of the High Court Rules provides that the proper Registry of this Court for filing the present proceeding in the first instance is to be that Registry which is nearest to the residence or principal place of business of the defendant APN, which is accepted by the parties here as Auckland.   Rule 5.1(2) however, gives Overton the plaintiff an election between the Wellington or the Auckland Registries of this Court if:

..... the place where the cause of action sued on, or some material part of it, arose is nearer to the place where the plaintiff ...... resides (Wellington) than the place where the defendant resides (Auckland) .....

[17]     When filing in Wellington the plaintiff considered it had the benefit of this election because it says the material cause of action arose in Wellington. What the Court is required to do here is to determine whether or not the Plaintiff can satisfy it that some “material part of the cause of action” arose in Wellington.[1]

[1] New Zealand Home Bonds Ltd v Sovereign Financial Services Ltd and Sovereign Assurance

Company Ltd HC Christchurch CP 59/00, 22 August 2000 at [22].

[18]     A “cause of action” means every fact which it would be necessary for the plaintiff to prove if traversed, in order to support the plaintiff’s right to the judgment

of the court[2]; and a material part of a cause of action must be more than just a part of the cause of action.  As such, it needs to be “pertinent, germane or essential to” the cause of action, dependent on the particular circumstances of the case – see Colman v Attorney General (1978) 3 PRNZ 577 (SC).

Waiver

[2] Read v Brown (1889) 22 QBD 128; Anderson v Tuapeka County (1890) 18 NZLR 509

[19]     Although it was not argued before me here, at the outset for completeness I

will deal with possible issues of waiver on the part of APN in this case.

[20]     On this, McGechan on Procedure first, at HR 5.1.17 notes:

HR5.1.17         Considering correct registry in summary judgment cases

Application for transfer under r 5.1(4) or (5) must be made either before, or at the same  time  as,  other  steps,  including  filing  a  statement  of  defence.  Otherwise, deemed waiver of the irregularity will take effect under r 1.5(4): Inder v Commissioner of Crown Lands HC Christchurch CIV-2009-409-1219, 27 November

2009; Cadbury Confectionery Ltd v Regina (1988) Ltd (1992) 6 PRNZ 47 (HC);

Madden Drilling Ltd v Fenwick Enterprises Ltd HC Dunedin CP128/89, 17 May

1990; Richards v New Zealand Newspapers [1931] NZLR 623 (SC).

and secondly, at HR 5.1.16 notes:

HR5.1.16 Challenge to registry chosen by plaintiff — waiver by statement of defence

A defendant who wishes to challenge the registry nominated must apply for transfer under r 5.1(4) or (5) either before, or contemporaneously with, taking any other steps: Inder v Commissioner of Crown Lands HC Christchurch CIV-2009-409-1219,

27 November 2009. Otherwise, the statutory waiver of the irregularity, as provided in r 5.1(4), will take effect.

Filing a statement of defence will amount to a waiver of any irregularity in place of commencement: Richards v  New Zealand Newspapers [1931] NZLR 623 (SC); Inder v Commissioner of Crown Lands.

[21]     In the present case, APN filed its present transfer application on 1 March

2013.  The application was dated 28 February 2013.  Previously it had filed in the

Wellington Registry a statement of defence about one week earlier on 22 February

2013.   Although this earlier step was not made contemporaneously with APN’s challenge  to  Overton’s  nominated  registry  for  this  proceeding,  Overton  has  not argued here that the filing of the statement of defence amounts to a waiver of any irregularity that might exist in the place of commencement of this proceeding.  That said, and given all the circumstances prevailing in this case, I am satisfied that the

present transfer application was filed close to and nearly contemporaneously with APN’s statement of defence, and thus a deemed waiver of the registry irregularity has not occurred here.

Parties’ submissions and my decision

[22]     In its present transfer application, APN submits no material part of the cause of action in this case arises in Wellington. As to the repudiation cause of action, it argues this arises as a result of correspondence between the parties’ solicitors in Auckland and Wellington. Any repudiation comes from actions to be attributed to APN, and must be considered to take place in Auckland. Evidence of repudiation may be received in Wellington, but this is irrelevant. For this counsel for APN cites Concorde  Enterprises  Ltd  v Anthony  Motors  (Hutt) Ltd,  where  it  was  held  the repudiation of a contract by letter or telegram takes place where the letter was posted

or telegram sent, and not where it was received.[3]    For present purposes, Mr Harley

for Overton appeared to accept this argument, as he agreed to put the repudiation cause of action aside for the purposes of this application.

[3] Concorde Enterprises Ltd v Anthony Motors (Hutt) Ltd [1976] 1 NZLR 741 at p 747.

[23]     APN then went on to argue that the true focus of the dispute here is the allegation that APN misrepresented the condition of the property and its fitness for use. Any misrepresentation it says must have been made at the time of entering into the contract by or on behalf of APN in Auckland to Mr Rockefeller in Melbourne. Thus the cause of action (for both contractual misrepresentation and conduct under the Fair Trading Act 1986) it is said arose in either Auckland or Melbourne but not in Wellington.

[24]     Overton replies that although Mr Rockefeller signed the contract, he did not do so personally. He acted for Overton, and was carrying into effect the decisions of Overton.   Again  it  is  noted  that  Overton  resides  in Wellington.  Furthermore,  a material part of the cause of action it is said is the part performance of the contract by Overton.   Overton maintains that settlement and performance of the sale and leaseback agreements by it was effected through the offices of its solicitors Brandons in Wellington.

[25]     In McArdle v BNZ Finance Ltd, Master Hansen considered an allegation of breach of the Fair Trading Act 1986 by reason of misleading or deceptive conduct, and accepted that:[4]

...the cause of action by someone who has been misled will arise both where the conduct occurred and where the plaintiff was, in fact, misled or deceived.

[4] McArdle v BNZ Finance Ltd 4 PRNZ 653 at 655.

[26]     This was applied in New Zealand Home Bonds Ltd v Sovereign Financial Services Ltd and Sovereign Assurance Company Ltd where pleadings properly raised the allegation that representations were received in a particular city and had their effect there.[5]

[5] New Zealand Home Bonds Ltd v Sovereign Financial Services Ltd and Sovereign Assurance

Company Ltd HC Christchurch CP 59/00, 22 August 2000.

[27]     Thus,   in   the   present   case,   Overton   needs   to   show   the   alleged misrepresentation  was  received, in  fact,  in Wellington. And this  would seem  to depend on whether the Information Memorandum and negotiations surrounding the contract formation were received:

(a)       in Melbourne, by Mr Rockefeller, or

(b)actually in Wellington, by virtue of Mr Rockefeller acting on behalf of Overton.

[28] On this aspect, I prefer the former view noted at [27](a) above. Otherwise, misrepresentations received by agents anywhere would always be considered to be received in a plaintiff company’s place of residence. And, in the present case, it is clear from the material before the Court that, if any misrepresentation or misleading behaviour did occur it must have been Mr Rockefeller who was misled or deceived. Neither of the other directors of Overton nor the company’s Wellington Solicitor, nor any party other than Mr Rockefeller it seems knew anything about the purchase of the property until after the Agreement had been signed.

[29]     I disagree that under the circumstances prevailing in this case it could be said that a material part of the cause of action is the part performance by Overton and

settlement. Misrepresentation involves conduct before the Agreement was entered

into. No material part of the misrepresentation cause of action in my view arose in

Wellington.

[30]     Finally, there is here a possible cause of action in breach of contract through the alleged failure of APN to perform its obligations under the lease in terms of the Health and Safety in Employment Act 1992. I received little argument on this point. The parties seem to have assumed here that the same arguments relating to repudiation would apply, and Overton appears to have accepted this in its reply. Effectively  Overton  has  relied  only  on  contractual  misrepresentation  and  Fair Trading Act 1986 breaches for the purposes of this application.

[31]     For all these reasons, under r 5.1(4) High Court Rules I would accordingly grant the application to transfer this proceeding to the Auckland Registry as the proper registry of this Court.

The question of convenience

[32]     Rule 5.1(5) High Court Rules, however, goes on to provide that if it appears to the Court that a different registry would be more convenient for the parties, it can direct proceedings be transferred to that registry.

[33]     Here, the parties agree however that convenience does not favour either the Wellington or the Auckland Registry conclusively.  APN does note that it will lead evidence from four individuals who were involved in the negotiations between the parties, who it says are all in Auckland. It contends that the only party involved from Overton’s side was Mr Rockefeller, who has since passed away. The original documentation it says is also held in Auckland.

[34]     In response, Overton argues that the defendants do not need to lead evidence from such individuals, as the contractual documents and Information Memorandum speak for themselves. One director of Overton and perhaps its solicitor Mr O’Regan it says will give evidence, those parties residing in Wellington.

[35]     Given my findings at para [31] above, my view on this aspect is that I would not have found in favour of Overton on this “convenience” aspect.  There is nothing to show here that the Wellington Registry would be more convenient overall.

Conclusion

[36]     Accordingly, for the reasons outlined above, APN’s application before me succeeds.   I now order  that this proceeding and all documents filed to date be transferred to the Auckland Registry of this Court.

[37]     Costs on these matters are reserved to be dealt with on ultimate disposal of the proceeding.

‘Associate Judge D.I. Gendall’