Pearce v Makakaho Land Company Limited

[2020] NZHC 3464

IN THE HIGH COURT OF NEW ZEALAND WHANGANUI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGANUI ROHE

CIV-2020-483-000030

[2020] NZHC 3464

BETWEEN

GERALD PEARCE AND PHILIPPA WILLIAMS AS TRUSTEES OF THE TOTARANUI TRUST
Applicants

AND

MAKAKAHO LAND COMPANY LIMITED

First Respondent

ROGER KENNETH RODERICK PEARCE

Second Respondent

Teleconference:	18 December 2020
Counsel:	K P Sullivan and J H Porter for the Applicants J Mahuta-Coyle for the Respondents
Judgment:	18 December 2020

JUDGMENT OF DOOGUE J

Introduction

[1]    The applicants are the trustees of the Totaranui Trust. The Totaranui Trust owns the property off Makakaho Road, Waitotara Valley, Taranaki (Totaranui), which is a neighbour of the respondent’s property to the north.

[2]    Access to the Totaranui property has always been over the Makakaho property currently owned by the first respondent.

PEARCE & WILLIAMS v MAKAKAHO LAND COMPANY LIMITED [2020] NZHC 3464 [18 December 2020]

[3]    The second respondent, Mr Pearce, is the sole director of the first respondent, and is a farmer and beekeeper who lives on the Makakaho property and has day to day control of it.

[4]    In substantive proceedings, the applicants seek various orders enabling access to Totaranui.

[5]    In the present application, the applicants seek an interim injunction to enable the first applicant and his family to have access over the respondents’ land to tend to their stock and beehives that are located on Totaranui.

[6]    The respondents oppose the granting of such an injunction. The second respondent has made some very helpful concessions as to limited access that may be granted subject to certain terms.

[7]    There has been no opportunity for the respondents to file a fulsome response, nor submissions. This is the final sitting day of the High Court this year and there is therefore no opportunity for them to do so.

Background

[8]    The track into Totaranui crosses over the Makakaho property. There has been access over the respondent’s land into Totaranui for over 100 years. That access has never been legally formalised.

[9]    The first applicant’s entitlement to use the access has been questioned and limited by the second respondent in the last couple of years.

[10]   The first applicant and his family run a beekeeping operation on Totaranui. They also run some stock units (being about 85 cows and at least 40 sheep).

[11]   The second respondent started in the mānuka industry in about 2016. He has begun to place more beehives on the Makakaho property, and more on the boundaries of Totaranui and other neighbouring properties. This has led to proceedings being filed by the applicants in February 2020, along with two of the other neighbours,

against the respondents (the Beehive proceedings). Last week the applicants obtained an injunction in the Beehive proceedings preventing the second respondent from placing any more hives on his property, other than one hive per hectare of manuka resource available.

Track history and maintenance

[12]   The second respondent’s father and the first applicant built a new bridge in 1989 on the track to replace an existing swing bridge that was in need of repair. It was paid for with a contribution from the Roads Board, and the other costs were split equally between the second respondent and the first applicant.

[13]   Unfortunately the bridge was washed out in floods in 1990, and rebuilt the same year. It was then rebuilt again in 2004, after another major flood.

[14]   The bridge, as it currently stands, was built using many of the same materials from the bridge built in 1990, but was built 20 metres further downstream from the original site.

[15]   The new bridge was built by Emmett’s (a long standing civil construction company in the Taranaki which specialised in bridges). The bridge was paid for by a 90 per cent subsidy received from the local Council following the flood. The balance of 10 per cent was paid for by the second respondent’s father, and in return the first applicant agreed to rebuild the track, so that there were no complications over the subsidy (the bridge being built on the Makakaho property).

[16]   From 2004–2018, the first applicant maintained the Totaranui track to a sufficient standard so as to get an eight wheel heavy truck right up to the cattle yards onto Totaranui (so they could cart cattle out), and also various smaller trucks for the purpose of deploying bees for the honey season as they had done without incident until the 2017/2018 season.

[17]   The first applicant says the second respondent had always reassured him that the right-of-way issue would be resolved. He says it was simply not an issue of concern to him until the last two mānuka honey seasons, when the second respondent

gave limited permission to use and then refused the first applicants’ access along the track.

Blocking of access to Totaranui

[18]   On 26 December 2017, the second respondent sent the applicants a letter banning their subcontractor Settlers Honey from using the track to put hives on Totaranui.

[19]   The 2017/2018 mānuka season was not a very good one. Production was low. The first applicant wrote to the second respondent on 4 February 2018, telling him that if he had to incur the additional costs of helicopters to remove and replace the hives he would not make much money. He therefore asked for permission for Settlers Honey to be able to transport the hives out through the track. The dispute between the two escalated from there.

[20]   There has been very limited use of the track  by the first  applicant  since  June 2019.

[21]   The  first  applicant  received  a  letter  from  the  second  respondent   on    14 October 2019, raising an issue about people using the track unannounced and without his permission. He closed off all access to outsiders. In the letter he also proposed a “sign in, sign out” system to record people’s movements. He also talked about a rules document, but predominantly he wished to limit the use of the track only to people staying in a hut on Totaranui who would have to pay $200 to pass over the track.

[22]   Since this time, the second respondent has padlocked the gate and refused to allow the first applicant or any of his subcontractors or guests access to the track.

[23]   The first applicant had hives placed on the Totaranui property last season by Settlers Honey. All of the hives placed on the 2019/2020 mānuka season had to be helicoptered in and out. Because it was so expensive to monitor what was happening with the hives during the season, this reduced both the production and payout from the manuka honey produced on the property.

[24]   A few weeks ago, the first applicants says the second respondent destroyed part of the track just over the boundary of Totaranui and built a barricade. The first applicant says the second respondent caused damage to the track on Totaranui, which has been confirmed by a surveyor.

[25]   There is in addition now a fencing dispute between the parties relating to fencing on the track.

Requirement for access

[26]   The first applicant says that he and his family are now facing significant increased costs in this coming mānuka season if they have to use helicopters to deal with their beehives.

[27]   They also say they have stock on their property that needs some attention: about 80 cattle and at least 40 sheep. The first applicant has not been able to properly check on the stock for nearly a year. Disease and difficulties will arise for the stock if the first applicant is unable to check on the animals’ welfare.

[28]   The sheep need to be drenched. They now have had over one year with no treatment. The first applicant has a woolshed and stock yards on site that they need to operate to have their sheep attended to. There will be a number of young lambs which need to be tailed. If this does not occur while the lambs are young, it is apparently a very uncomfortable process to remove their tails later.

[29]   Under animal welfare legislation the stock are the first applicant’s responsibility and need to be regularly checked. Cows are usually moved regularly – they need to be kept out of water ways while also having regular access to water. Managing stock cannot be left to chance, as there are any number of animal welfare issues that need to be monitored and addressed. There will be new calves and it is necessary for the first applicant to administer vaccinations and treatment for the cows and calves.

[30]   Another important issue is the general maintenance and upkeep of the property. There is a hut that needs to be maintained, checked, and generally looked after. The

summer period is the usual time in which people stay in the hut and carry out critical maintenance. This usually involves running repairs, checking the water supplies, doing painting and other maintenance.

[31]   Another major issue at this time of year is rodent control. There are possums and rats in particular which need to be controlled and culled around the property. If this possum control does not take place soon, the pests will cause major damage (if they have not already done so).

[32]   In addition the next mānuka season starts just after Christmas. Hives need to be placed. It is not only the transporting in and out of the hives that needs to be attended to but also the maintenance of them to maximise production. The first applicant submitted that the second respondent’s plan, by not allowing access, is to sabotage the first applicant’s honey production so that he can poach their mānuka resource.

[33]   The mānuka honey season takes place for about 6–8 weeks, depending on the weather and other seasonal factors. Maximising honey production involves having strong hives. The first applicant’s beekeepers need access to ensure that the bee colonies remain healthy, are producing good quantities of mānuka honey, are regularly checked in keeping with good beekeeping practices for disease.

[34]   The first applicant wishes to attend the property to work out, in consultation with the beekeepers, the best location for the hives in order to maximise honey production.

[35]   The first applicant needs to review the current fences on the boundary to assess what the impact and cost of a new fence would be, particularly if a deer fence is to be placed between the two properties as the second applicant proposes.

The law: interim injunctions

[36]   Consideration of an application for an interim injunction focuses on three matters:1

(a)whether there is a serious question to be tried;

(b)the balance of convenience between the parties; and

(c)an assessment of the overall justice of the case.

Serious question to be tried

[37]   In determining whether there is a serious question to be tried, the New Zealand courts often follow the approach set out by Lush J in the Australian case Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd.2 That approach is to consider the applicable law, the facts put forward by each side and where the issues lie, and to assess whether there is a tenable resolution of the issues of law and fact on which the applicant could succeed.

Balance of convenience

[38]   The balance of convenience can also be described as “the balance of the risk of doing an injustice”.3 It is the “guiding principle” in granting an interim injunction.4 This stage requires the Court to balance the injustice or harm that may be caused to the applicant if an interim injunction is not granted and the applicant ultimately succeeds in gaining a permanent injunction, against the injustice or harm that may be caused to the respondents if an interim injunction is granted and the applicant ultimately fails to gain a permanent injunction. Although this inquiry is “broad and flexible”,5 the Courts usually consider factors such as:

1      Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA).

2      Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd [1976] VR 309 at 31; Development Consultants Ltd v Lion Breweries Ltd [1981] 2 NZLR 258 (HC).

3      Cayne v Global Natural Resources plc [1984] 1 All ER 225 (CA) at 237; McLaughlin v McLaughlin [2019] NZHC 2597 at [37].

4      Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 337.

5      McLaughlin v McLaughlin, above n 3, at [38].

(a)the adequacy of damages to both parties;

(b)preservation of the status quo;

(c)the relative strength of each parties’ case;

(d)the conduct of the parties; and

(e)the effect on innocent third parties.

Adequacy of damages for both parties

[39]In relation to the adequacy of damages, the House of Lords in

American Cyanamid held:6

… the court should first consider whether, if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction, he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant’s continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff’s claim appeared to be at that stage. If, on the other hand, damages would not provide an adequate remedy for the plaintiff in the event of his succeeding at the trial, the court should then consider whether, on the contrary hypothesis that the defendant were to succeed at the trial in establishing his right to do that which was sought to be enjoined, he would be adequately compensated under the plaintiff’s undertaking as to damages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the plaintiff would be in a financial position to pay them, there would be no reason upon this ground to refuse an interlocutory injunction.

[40]   Adequate compensation in this context is what is fair and just in the circumstances of the case, including consideration of intangible harm and the difficulty of assessing damages.7

6      American Cyanamid Co v Ethicon Ltd [1975] AC 396, [1975] 1 All ER 504 (HL) at 408.

7      Gilks v Marsh (1982) 1 NZCLC 95-063 at 6.

[41]   In relation to whether damages are an adequate remedy in cases involving a breach of a restraint of trade, I note Gault J’s comment in Mad Butcher Holdings Ltd v Standard 730 Ltd:8

Damages based on the defendants’ trading may be reasonably easily calculated, but that does not necessarily mean that damages would be an adequate remedy. As Holland J said in Linde Aktiengesellschaft v C W F Hamilton & Co Ltd, in normal events a party to a contract with a valid restraint of trade clause is entitled to have the clause enforced and damages would not often be regarded as an adequate remedy for loss of the plaintiff’s contractual rights.9

[42]   However, the difficulty in calculating damages must be considered both ways. In Western Work Boats Ltd v Kelly, in relation to the enforceability of a restraint of trade clause, the Court found it would be easier to calculate damages for the breach of the clause, than it would be to quantify the loss caused by an unjustified interim injunction.10 Damages were therefore considered an adequate remedy for the applicant, but less so for the respondent.

[43]   The House of Lords in American Cyanamid held that whether either party is in a position to pay damages is a factor to be considered when assessing the adequacy of damages.11 New Zealand courts have also considered the ability of parties to pay damages. Although ultimately declining to grant an interim injunction, the Court in Anvil Jewellery Ltd v Riva Ridge Holdings Ltd considered the ability of the parties to pay damages, in assessing the adequacy of damages.12 The Court had a “reservation” as to the adequacy of damages for the applicant, due to the potential inability of the respondents to pay an award of damages, in contrast with the applicant’s ability to pay damages.13 Had there been sufficient evidence of the respondents’ financial position, the Court  may  have  been  satisfied  damages  were  an  adequate  remedy.14  In  Vero Insurance New Zealand Ltd v Fleet Insurance & Risk Management Ltd, in finding the balance of convenience favoured the granting of an interim injunction, the Court

8      Mad Butcher Holdings Ltd v Standard 730 Ltd [2019] NZHC 589 at [40].

9      Linde Aktiengesellschaft v C W F Hamilton & Co Ltd (1988) 3 TCLR 216 (HC) at 222. See also John Burrows, Jeremy Finn and Stephen Todd The Law of Contract in New Zealand (6th ed, LexisNexis, Wellington, 2018) at 512.

10     Western Work Boats Ltd v Kelly [2016] NZHC 2577 at [28].

11     American Cyanamid Co v Ethicon Ltd, above n 6, at 408.

12     Anvil Jewellery Ltd v Riva Ridge Holdings Ltd [1987] 1 NZLR 35 at 42.

13     At 42.

14     At 42.

found it was “significant” that the applicant was in a position pay substantial damages, while there was doubt about whether the respondent would be able to do so.15

Relative strength of each party’s case

[44]   In finding where the balance of convenience lies, the strength of the plaintiff’s case is another factor to be considered. However, where a plaintiff has established there is a serious question to be tried, “the relative merits of the parties’ cases ought not to assume prominence in a consideration of where the balance of convenience lies.”16

[45]   There is an intrinsic limit to the examination of the merits of the argument based on affidavit evidence provided and the interlocutory nature of the application. As Lord Diplock observed:17

The extent to which the disadvantages to each party would be incapable of being compensated in damages in the event of his succeeding at the trial is always a significant factor in assessing where the balance of convenience lies; and if the extent of the uncompensatable disadvantage to each party would not differ widely, it may not be improper to take into account in tipping the balance the relative strength of each party's case as revealed by the affidavit evidence adduced on the hearing of the application. This, however, should be done only where it is apparent upon the facts disclosed by evidence as to which there is no credible dispute that the strength of one party's case is disproportionate to that of the other party. The court is not justified in embarking upon anything resembling a trial of the action upon conflicting affidavits in order to evaluate the strength of either party’s case.

The conduct of the parties

[46]   The applicant’s conduct can be relevant, as an injunction may be refused if the applicant does not come to the Court with clean hands, in such a way that would make the granting of an injunction unconscionable.18

[47]   A respondent’s conduct can also be an important consideration when assessing the balance of convenience, notably where a respondent has acted with its “eyes wide

15     Vero Insurance New Zealand Ltd v Fleet Insurance & Risk Management Ltd HC Auckland CIV-2007-404-001438, 21 May 2007 at [86].

16     Shotover Gorge Jet Boats Ltd v Marine Enterprises Ltd [1984] 2 NZLR 154 (HC) at 157.

17     American Cyanamid Co v Ethicon Ltd, above n 6, at 409.

18     Media Works NZ Ltd v Sky Television Network Ltd (2007) 74 IPR 205 (HC) at [106].

open”; in other words, while aware of the applicant’s right.19 In finding that the balance of convenience favoured the preservation of the status quo in New Zealand Farmers' Co-operative Association of Canterbury Ltd v Farmers Trading Co Ltd, Chilwell J held:20

A defendant cannot create his own inconvenience and then have it taken into account in balancing the scales of convenience – at least not when he embarks upon questionable conduct with his eyes open.

Preservation of the status quo

[48]   A useful description of the approach to this consideration was provided by Lord Diplock in American Cyanamid:21

Where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo. If the defendant is enjoined temporarily from doing something that he has not done before, the only effect of the interlocutory injunction in the event of his succeeding at the trial is to postpone the date at which he is able to embark upon a course of action which he has not previously found it necessary to undertake; whereas to interrupt him in the conduct of an established enterprise would cause much greater inconvenience to him since he would have to start again to establish it in the event of his succeeding at the trial.

[49]   The status quo has been referred to as “the last peaceable state between the parties”.22 However, I note there is some disagreement over when the status quo is to be assessed: before the alleged wrongdoing; or immediately before the commencement of proceedings.

Overall justice

[50]   This final stage requires the Court to “stand back from the case and consider where the overall justice of the case lies.”23 Although the balance of convenience will normally determine whether the Court should grant an interim injunction, a consideration of the overall justice may mean this is not so.24

19     New Zealand Farmers' Co-operative Association of Canterbury Ltd v Farmers Trading Co Ltd

(1979) 1 TCLR 18 at 28.

20     At 28.

21     American Cyanamid Co v Ethicon Ltd, above n 6, at 408-409.

22     R & M Wright Ltd v Ellerslie Gateway Motels Ltd HC Wellington CP188-90, 11 July 1990 at 8.

23     Vero Insurance New Zealand Ltd v Fleet Insurance & Risk Management Ltd, above n 15, at [90].

24     McLaughlin v McLaughlin, above n 3, at [67].

Analysis

[51]I find there is a serious question to be tried.

[52]   However, on the material available to me, I am not satisfied that the balance of convenience favours the granting of an interim injunction. The applicants have not shown that damages would be an inadequate remedy, nor that the respondents would be unable to pay damages if ordered.

[53]   Although there is a serious question to be tried, I am not satisfied that the strength of the applicants’ case is so obvious as to tip the balance in their favour.

[54]   I note the applicants have had plenty of opportunity to establish their legal rights and have not done so. This dispute has been ongoing for at least two years. This counts against granting an interim injunction at this stage. This is particularly so given the time available for the respondents to respond to the present application has been curtailed by the time of year, and given the respondents have attempted some negotiation with the applicants.

[55]   Given the development of the dispute over the last two years, as outlined above, it is difficult to establish what the status quo actually is. As such, this factor is of limited use in determining whether or not to grant an interim injunction.

[56]   I also note the applicants have an alternative method of accessing the Totaranui property, by helicopter to tend to their stock and to their hives.

[57]   I do not find that the overall justice of the case favours the granting of an interim injunction.

Conclusion

[58]The application for an interim injunction is declined.

Orders

[59]The respondents shall file a statement of defence and affidavits in support by

no later than 28 January 2021.

[60]   Counsel shall file memoranda, or preferably a joint memorandum, addressing timetabling, witnesses, duration, and all pre-trial issues,  no later than 4.00 pm on     4 February 2021.

[61]   The matter is to be listed in the judges’ case management list in the week of  8 February 2021 for further directions to be made as to timetabling and hearing.

Doogue J