Storageone Metro Limited v Tempja (NZ) Limited
[2025] NZHC 1025
•1 May 2025
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2023-485-547
[2025] NZHC 1025
BETWEEN STORAGEONE METRO LIMITED
First Plaintiff
STORAGEONE LIMITED
Second PlaintiffAND
TEMPJA (NZ) LIMITED
First Defendant
STORESTUFF (NZ) LIMITED
Second DefendantPETER MICHAEL SOUTHGATE
Third Defendant
THOMAS EDWARD SOUTHGATE
Fourth Defendant
Hearing: 11 and 27 March 2025 Appearances:
C Chapman for Plaintiffs
S Bisley and D Ballinger for Defendants
Judgment:
1 May 2025
JUDGMENT OF ASSOCIATE JUDGE SKELTON
[Reasons]
[1] Storageone Metro Ltd (Storageone Metro) and Storageone Ltd (Storageone) (the plaintiffs) were respectively the lessee of commercial premises in Nevis Street, Petone (premises) and the operator of a storage business from the premises as sublessee.
STORAGEONE METRO LIMITED v TEMPJA (NZ) LIMITED [2025] NZHC 1025 [1 May 2025]
[2] Tempja (NZ) Ltd (Tempja) is the owner of the premises and Storestuff (NZ) Ltd (Storestuff) now operates a storage business from the premises. Peter Southgate is a shareholder and director of Tempja and a director of Storestuff. His son, Thomas Southgate is also a shareholder and director of Storestuff.
What happened?
[3] The Storageone Metro lease commenced on 3 October 2016 and had a five-year, six-month term which expired on 31 March 2022. The lease also provided four rights of renewal each of six years with a final expiry of 31 March 2046. No formal notice of renewal was given by Storageone Metro to Tempja for renewal from 1 April 2022, but Storageone Metro and Storageone continued to occupy the premises. There is an issue between the parties as to whether Tempja represented that the lease had been renewed and is now estopped from denying it was renewed.
[4] The plaintiffs claim that between June 2022 and 26 January 2023, Peter and Thomas Southgate sought to remove Storageone Metro and Storageone as tenants and operators of the Petone self-storage facility, to enable themselves to take over the operation and its customers. This is denied by the defendants.
[5] On 5 January 2023, Tempja gave written notice to Storageone Metro of its intention to cancel the lease for non-payment of rent and requiring payment of arrears of $102,801.08 by 19 January 2023.
[6] On 26 January 2023, Tempja gave written notice purporting to cancel the lease for non-payment of rent. Tempja took possession of the premises and served a trespass notice purporting to exclude “any principal, employee or contractor to any Storageone entity”. However, COVID-19 legislation remained in effect extending the relevant notice period for cancelling a lease based on rental arrears. Tempja says it was not aware of this at the time and has since admitted that it gave notice prematurely.
[7] That same day, Peter and/or Thomas Southgate are alleged to have gained access to one of the Storageone work computers and changed the passwords to prevent Storageone accessing its Petone customer records remotely. This is denied by the defendants.
[8] Between 26 January 2023 and 24 March 2023, it is alleged that Storageone staff were not permitted by the defendants to secure or remove Storageone’s records or to remove equipment and items that were the property of Storageone. This is denied by the defendants.
[9] On or about 7 February 2023, Thomas Southgate (on behalf of Storestuff) emailed customers renting units at Storageone Petone. He advised that the business had changed hands, that the new name of the business was “StoreStuff Self Storage – Lower Hutt”, and that the new business was family owned. It is contended by the plaintiffs that the emails offered customers two weeks free storage (in addition to the period that customers had already paid for) on the basis that they cancel their automatic payments with Storageone as soon as possible and update their automatic payment details. It is further contended that the emails stated that Storestuff would recognise and honour payments and prepayments made into the Storageone bank account up to and including Friday, 10 February 2023, but payments made after that date would not be recognised by Storestuff.
[10] On 16 February 2023, Storageone Metro gave notice of cancellation of the lease on the ground that Tempja repudiated the lease by wrongly purporting to cancel it and by entering the premises.
[11] It is alleged by the plaintiffs that on 24 March 2023, in the presence of Peter and Thomas Southgate, Storageone recovered some of its property that had remained in the premises since 26 January 2023, including most but not all hard copy files. The defendants say that Storageone retrieved all its hard copy files on 24 March 2023.
The proceedings
[12]The plaintiffs allege that:
(a)Tempja wrongfully terminated the lease with Storageone Metro;
(b)Tempja refused to allow the plaintiffs to remove their fixtures from the leased premises;
(c)all defendants converted computers and hard copy records in the premises belonging to the plaintiffs;
(d)Peter Southgate and Thomas Southgate infringed the plaintiffs’ trademark, misused confidential information, induced breach of contract, and converted money paid by Storageone customers for rental arears due to Storageone.
[13] The defendants deny these allegations, and counterclaim in their third amended counterclaim (with further amendments proposed at the hearing) that:
(a)the plaintiffs failed to remove signage from the premises (first counterclaim);
(b)the plaintiffs are required to reinstate the premises at their expense if the injunction sought by the plaintiffs is granted requiring Tempja to allow the plaintiffs to remove their fixtures (second counterclaim); and
(c)the plaintiffs have refused or failed to account to the defendants for rental payments which the plaintiffs (or one of them) were entitled to receive from customers (as an involuntary bailee or by way of quantum meruit based on free acceptance), but which the customers incorrectly or mistakenly paid to Storageone, and the Court should either:
(i)by way of a claim for money had and received, order the plaintiffs to pay Tempja or Storestuff the fair and reasonable value of storing the customer chattels in the sum of the amount of rental collected by the plaintiffs for the period after the lease had terminated and which has not been reimbursed to customers (third counterclaim); or
(ii)declare that the plaintiffs hold the amount of the rental they have collected for the period after the lease had terminated, and have
not reimbursed to customers, on constructive trust for Tempja or Storestuff (fourth counterclaim).
[14] Regarding the cause of action for money had and received, the defendants rely on the following passage from Official Custodian for Charities v Mackey (No 2):1
In Goff and Jones, Law of Restitution, 2nd ed (1978), p. 447, the case of a person who wrongly collects another’s rent is treated as an example of a wider class of case where the defendant, intervening without right between the plaintiff and a third party, renders himself accountable to the plaintiff for the sum which he receives from the third party. It seems to me that it is of the essence of all those cases both that there is a contract or some other current obligation between the third party and the plaintiff on which the defendant intervenes and that the third party is indebted to the plaintiff in the precise amount of the sum which he pays to the defendant, so that he cannot claim repayment from the defendant in the face of a claim made against the defendant by the plaintiff. It is that which enables the plaintiff to sue the defendant without joining the third party, who no longer has any interest in the subject matter of the suit. It would be a waste of time and money if the plaintiff had to sue the third party and the latter had to sue the defendant. The suit for money had and received avoids circuity of the action.
[15] On 18 October 2024, the defendants filed an interlocutory application under r 8.19 of the High Court Rules 2016 (HCR) seeking particular discovery of the following documents:
(a)Records of payments by customers of the Petone storage facility relating to storage unit rent for the period beginning 26 January 2023, including bank statements and correspondence with those customers about payments (the Payment Records); and
(b)Affidavit evidence filed with the High Court in proceeding CIV-2022- 485-149 between Storageone Kapiti (2012) Ltd and Sharja Ltd (the Storageone Kapiti evidence).
1 Official Custodian for Charities v Mackey (No.2) [1985] 1 WLR 1308 at 1314-1315; and Charles Mitchell, Paul Mitchell and Stephen Watterson (eds) Goff and Jones on Unjust Enrichment (10th ed, Thomson Reuters, London, 2022) at [6-124] (commentary on “interceptive subtractions”).
[16] The 18 October 2024 application is opposed by the plaintiffs. The application also sought cell phone inspection and testing orders, but I understand this has largely been resolved between the parties and no orders are currently sought.
[17] On 7 November 2024, the plaintiffs filed an interlocutory application to strike out all causes of action in the defendants’ second (now third) amended counterclaims on the basis they disclose no cause of action and/or are frivolous, vexatious and an abuse of process. This application is opposed by the defendants.
Strike out application
Legal principles
[18]Rules 15.1 of the High Court Rules 2016 relevantly provides:
(1)The court may strike out all or part of a pleading if it—
(a)discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b)is likely to cause prejudice or delay; or
(c)is frivolous or vexatious; or
(d)is otherwise an abuse of the process of the court.
…
[19] The principles pertaining to whether a pleading discloses no reasonably arguable cause of action are well-established. They were summarised by the Court of Appeal in Attorney-General v Prince, which has been most recently endorsed by the Supreme Court in Smith v Fonterra Co-operative Group Ltd:2
[38] We [address each cause of action] through the lens of well-established strike out principles. That is to say, we assume the pleaded material facts are true save for those that are entirely speculative and without foundation and we also bear in mind that the strike out jurisdiction is to be exercised sparingly and only in clear cases. We must be certain the claim is so untenable it cannot succeed and slow to strike out claims in any developing area of law. The fact a claim involves a complex question of law which requires extensive argument
2 Attorney-General v Prince [1998] 1 NZLR 262 (CA) at [38] as cited in Smith v Fonterra Co-Operative Group Ltd [2024] NZSC 5, [2024] 1 NZLR 134 [Smith v Fonterra] at [74]–[75]. See also Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33] per Elias CJ and Anderson J.
should be no bar provided we have the requisite materials and assistance to determine the matter. We must also be mindful of the well-established principle that if any deficiencies can be cured by an amendment to the pleadings, allowing the claim to proceed on condition the necessary amendments are made, is preferable to strike out.
[20] As the Supreme Court in Smith v Fonterra emphasised, a measured approach is appropriate. The Court held that:3
[84] Such an approach is consistent with fully informed access to civil justice by those who have a tenable case that they have been harmed, and who will otherwise go without remedy based on a pre-emptive evaluation only. And, as was observed in Couch, a refusal to strike out a cause of action “says little about its eventual merit”. That is to say, it is not a commentary on whether or not the claim will ultimately succeed.
[85] Pre-emptive elimination is only appropriate where it can be said that whatever the facts proved, or arguments and policy considerations advanced at trial, a case is bound to fail.
[21] A pleading is frivolous or vexatious if it lacks the seriousness required of matters for the court’s determination4 or has an element of procedural impropriety. 5
First counterclaim cause of action - signage
[22] Clause 19.1 of the lease provided that Storageone Metro “shall at the end or sooner determination of the term remove the signage and make good any damage occasioned thereby”. The defendants allege that Storageone Metro failed to comply with this obligation because it failed to remove the signage within a reasonable time and, when the signage was removed, caused damage that was not rectified.
[23] Mr Chapman, for the plaintiffs, submits that any claim by Storestuff and any claim against Storageone must be struck out, as they are not parties to the lease. However, this is not a basis for striking out the cause of action because the pleading can be amended. Mr Bisley, for the defendants, accepts that although the claim is pleaded as a claim by both defendants against both plaintiffs, this is a claim by Tempja against Storageone Metro. The defendants should amend their pleading accordingly.
3 Smith v Fonterra, above n 2, at [84]–[85] citing Couch v Attorney-General, above n 7, at [37] per Elias CJ and Anderson J (footnotes omitted).
4 Deliu v Hong [2011] NZAR 681 (HC) at [22].
5 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53 at [89].
[24] Mr Chapman also submits that the defendants’ counterclaim fails to plead that Tempja suffered any loss by reason of Storestuff’s alleged inability to erect its own signage. He submits that this means the claim is not maintainable and must be struck out. Again, this is not a basis for striking out the claim. The claim pleads that Tempja has lost revenue in an amount to be particularised before trial. The trial commences on 30 June 2025. The defendants are currently required to serve their statements of proposed evidence by 14 April 2025 (with forensic accountant expert evidence due on 1 May 2025). I assume the defendants’ evidence will address the alleged lost revenue. The defendants are required to amend their pleading to provide the foreshadowed particulars.
[25] Mr Chapman also submits that the cancellation of the lease means that Storageone Metro was relieved of any future obligations under the lease pursuant to s 42(1)(a) of the Contract and Commercial Law Act 2017 (CCLA). He submits that the reinstatement obligation under cl 19.1 was a future obligation that Storageone Metro was no longer required to perform. However, it seems to me to be reasonably arguable that the lessee’s obligation to remove signage and make good any damage and the correlative right of the lessor survives cancellation.6 It is arguable, for example, that the obligation to remove signage and make good unconditionally accrued at the point of cancellation and therefore must be performed.7 Another argument is that the relevant part of cl 19.1 is an express provision under s 34 of the CCLA which provides that the obligation to remove signage arises on cancellation and necessarily continues after cancellation and s 42 has to be read subject to it.8
[26] Alternatively, the defendants contend that the Court would be able to exercise its discretion under s 43(1) of the CCLA to grant relief to the defendants for the plaintiffs’ failure to remove the signage within a reasonable time and make good damage. Mr Chapman appears to acknowledge in his submissions that it is reasonably arguable that s 43 could apply but argues that the defendants are required to plead the factual matters justifying relief. I consider that the defendants’ pleading should address the factual matters that it is alleged justify discretionary relief under s 43 to
6 See the discussion in Stephen Todd and Matthew Barber (eds) Burrows, Fin and Todd on the Law of Contract in New Zealand (7th ed, LexisNexis, Wellington, 2022) at 18.4.
7 Garratt v Ikeda [2002] 1 NZLR 577 at [20].
8 See Broadcasting Corp of New Zealand v Nielsen (1988) 2 NZELC 96,040.
give the plaintiffs fair notice of the case they will have to meet, including addressing the relevant matters in s 45 to which the Court must have regard. The defendants should amend their pleading accordingly.
[27] Mr Chapman further submits that the position is governed by s 267 of the Property Law Act 2007 (PLA) which provides:
267 Effect of unlawful eviction on lessee’s obligations
(1)This section applies to a lessee under a lease who, contrary to the express or implied terms of the lease, is evicted from the whole or any part of the premises comprised in the lease.
(2)A lessee to whom this section applies,—
(a)if evicted from the whole of those premises, is not required to do the following in respect of the period of eviction:
(i)pay the rent or any other amounts payable under the lease; and
(ii)perform any other covenant of the lessee; and
…
(5)This section does not limit the right of a lessee to whom this section applies to—
(a)cancel the lease in accordance with any right—
(i)expressed or implied in the lease; or
(ii)provided for in subpart 3 of Part 2 of the Contract and Commercial Law Act 2017; and
(b)claim damages for breach of the lease.
(6)Any assessment of damages under a claim referred to in subsection (5)(b) must take into account the value of any release, in whole or in part, from the obligation to—
(a)pay the rent or other amounts payable under the lease; or
(b)observe or perform any other covenant on the part of the lessee.
[28] Mr Chapman relies on SHK Trustee Company Ltd v NZDMG.9 That case involved a summary judgment application by SHK Trustee Company Ltd, the landlord
9 SHK Trustee Company Ltd v NZDMG [2021] NZHC 1895.
of industrial premises, against its tenant, NZDMG Ltd. As in this case, the landlord purportedly cancelled the lease and re-entered the premises. Part of its claim was for the costs of removing the tenant’s chattels and making good damages after the re-entry under cl 20.4 which provided:
The cost of making good resulting damage and the cost of removal of the Tenant’s chattels shall be recoverable from the Tenant and the Landlord shall not be liable to pay any compensation and shall not be liable for any loss suffered by the Tenant.
[29] The Court found that it was arguable that the purported cancellation was invalid and therefore a wrongful repudiation of the lease. Further, even if the purported cancellation was invalid it was still effective as the tenant had treated the re-entry as bringing the lease to an end.10 The Court stated:
[50] SHK Trustee Company Ltd’s claim for removal of equipment and making good the premises is based on cl 20.4 of the lease. But, having been evicted from the premises, under s 267 of the Property Law Act 2007, NZDMG Ltd is no longer required to perform obligations under the lease, including paying clean-up costs and the like.
[51] Similarly, having wrongly cancelled the lease, SHK Trustee Company Ltd is not entitled to claim damages for loss of rent after cancellation. It cannot claim that it has suffered loss when its invalid acts have released the defendants from paying rent and outgoings.
[30] Mr Bisley submits that s 267(2)(a) does not apply to covenants that arise at or after the point a lease is determined or cancelled. He argues that s 267 reduces a lessor’s common law rights and should be construed narrowly. Mr Bisley contends that “eviction” is an act to deprive the tenant of its right to exclusive possession. After determination/cancellation a tenant’s right to exclusive possession is forfeited, so the “period of eviction” can only include the period before determination/cancellation. 11 He submits that obligations that arise or continue after the point of determination/cancellation are not obligations “in respect of the period of eviction”. It is apparent that the defendants are contending that, in this case, the “period of eviction” was the period between 26 January 2023 and 16 February 2023 and that,
10 At [49].
11 The defendants submit that their interpretation of s 267 is supported by Drama Unit Pty Ltd v Fearndale Holdings Pty Ltd (Admin Apptd) [2019] NSWCA 312 at [12]–[19] and [73] per Meagher JA and Brereton JA; Oliphant v NJG Holdings Ltd HC Auckland CIV-2007-404-002856, 16 October 2007 at [36]; and Law Commission The Property Law Act 1952 (NZLC PP16, 1991) at [598]–[601].
because it arises at the point of cancellation, the covenant to remove signage and make good was not a covenant “in respect of the period of eviction”.
[31] Mr Chapman submits that the defendants’ argument is contrary to SHK Trustee Company Ltd, and there is no suggestion in the judgment that s 267 only applies between unlawful eviction and cancellation. However, this issue was not raised or considered in SHK Trustee Company Ltd, and it was not necessary for the issue to be considered because the Court found that the tenant treated the re-entry as bringing the lease to an end. Unlawful eviction and cancellation occurred at the same time.12
[32] Mr Chapman also argues that the defendants’ argument would encourage “gaming of the system” because lessees would want to take advantage of the release under s 267(2) and avoid obligations to perform covenants (such as the covenant in cl 19.1) either arising or reviving on cancellation. However, a lessee who has been wrongfully evicted, and does not seek relief against the purported cancellation under s 253 of the PLA, is likely to have to cancel the lease at some point, or if the lessee takes no steps, then a court may ultimately determine if and when the lease has been cancelled.13 And the lessee would take a risk in attempting to “game the system” because any subsequent claim by the lessee for damages for breach of the lease must take into account the value of any release under s 267(2) (for example, the payment of rent) which would arguably increase over time.14
[33] Mr Chapman argues that there is no scope for interpreting s 267 except as being applicable to all times after wrongful eviction (unless the lessee resumes occupation) and there is no reason why cancellation of the lease contract should affect that. He argues that s 267(5), which provides that s 267 does not limit the right of a lessee to cancel a lease, implies that s 267(2)(a)(ii) and cancellation can coexist. However, it seems to me to be arguable that cancellation of the lease contract does affect the “period of eviction” and that ss 267(5) and (6) recognise that subsequent cancellation by the lessee brings the “period of eviction” to an end.
12 SHK Trustee Company Ltd, above n 9, at [49].
13 Contract and Commercial Law Act 2017, s 41. See SHK Trustee Company Ltd, above n 9.
14 Property Law Act 2007, s 267(6).
[34] For the purposes of the current application, I consider that it is reasonably arguable that s 267 does not preclude the defendants’ cause of action for breach of cl 19.1. However, if it is ultimately found that it does, the defendants contend that they could still seek discretionary relief under s 43 of the CCLA. Mr Chapman disagrees. He submits that, on ordinary principles of statutory interpretation, s 43 has to be read subject to s 267 because s 43 is of general application whereas s 267 applies to the specific circumstances. In my view, if the defendants’ claim was found to be precluded by s 267, it is doubtful that s 43 could still be invoked. Subsections 267(5) and (6) expressly contemplate cancellation of the lease by the lessee and that any claim for damages for breach of the lease by the lessee must take into account the value of any release. In this case, the plaintiffs have claimed damages, and the assessment of damages must take into account the value of any release. Given the relief specifically provided for in s 267(6) of the PLA, it is difficult to see why the defendants should be able to ask the Court to provide further discretionary relief under s 43 of the CCLA.
[35] It is also apparent that the issues discussed above in terms of the effect of cancellation on the covenant in cl 19.1 of the lease and the relationship between the relevant provisions of the CCLA and PLA are a developing area of law. For the reasons set out above, I am not satisfied that the defendants’ first counterclaim cause of action is so untenable it cannot succeed or that it is frivolous or vexatious. However, the defendants are required to amend their pleading to provide the further particulars referred to above at [23], [24] and [26].
Second counterclaim cause of action – reinstatement costs
[36] After discussion with counsel, the application for strike out in respect of this cause of action is resolved by consent as follows.
[37] The defendants maintain their position that this cause of action should not be struck out. However, without prejudice to this position, the defendants will amend their current pleading to replead the second counterclaim as an affirmative defence to the plaintiffs’ second and third causes of action seeking an injunction requiring the defendants to allow Storageone Metro and/or Storageone access to remove and uplift items at the premises.
Third and fourth counterclaim causes of action – money had and received and remedial constructive trust
[38]Mr Chapman raises three principal objections to these causes of action.
[39] First, the defendants contend that they were involuntary bailees of the customers’ chattels and had a right to payment for taking reasonable care of the goods in their possession.15 However, Mr Chapman argues that neither Tempja nor Storestuff were involuntary bailees. He refers to Cribb v FM Custodians, relied on by the defendants, which confirms an involuntary bailee:16
as a person whose possession of a chattel, although known to him and the result of circumstances of which he is aware, occurs through events over which he has no proper control and to which he has given no effective prior consent.
[40] Mr Chapman submits, on the basis of his analysis of the pleadings, that there cannot be any dispute that before 26 January 2023:
(a)the Southgates were setting up Storestuff for the purpose of using it to take over Storageone’s Petone business; from 26 January 2023 Storestuff had taken over the business and was a lessee from Tempja; and
(b)on 26 January 2023 Thomas Southgate got access to the Storageone work computer containing all Storageone’s customer records, and the defendants extracted Storageone’s customer records and set up Storestuff’s own customer database.
[41] Mr Chapman says that Storestuff was well aware of the business being conducted in the premises because Tempja was the lessor and Peter Southgate was a director of both Tempja and Storestuff. Mr Chapman argues that it is “necessarily implicit” that the defendants consented to possessing the customers’ chattels.
15 The defendants rely on Great Northern Railway Co v Swaffield (1874) LR 9 Exch 132 at 136; and
China Pacific SA v Food Corporation of India [1982] AC 939 at 964.
16 Cribb v FM Custodians [2018] NZCA 183, [2018] NZAR 1055 at [26] and [31] citing Norman Palmer Palmer on Bailment (3rd ed, Thomson Reuters, London, 2009) at [13-001].
[42] Mr Chapman further submits that there is evidence that on or about 7 February 2023, the defendants offered customers a period of free storage and advised customers they would honour payments and prepayments made to Storageone prior to 10 February 2023. He says this is the “antithesis of voluntary bailment”.
[43] Mr Chapman also argues that Storestuff could not have been an involuntary bailee as it could have asked Storageone to remove its storage units, lighting and security systems, and relocate its customers, and Storeagone was in a position to do so. Mr Chapman argues this would have avoided the defendants having to worry about accommodating Storageone’s customers after re-entry. Instead, the defendants refused to allow Storageone access to the premises.
[44] Finally, Mr Chapman argues that since Tempja was the lessor to Storestuff from 26 January 2023, it was not an occupier of the premises and therefore could not have been a bailee, involuntary or otherwise.
[45] I am not satisfied that the involuntary bailee issue can be properly determined on the basis of analysis of the pleadings without full examination of the evidence at trial. The issue is clearly in dispute between the parties. In particular, it is disputed that between June 2022 and 26 January 2023, Peter and Thomas Southgate were planning to establish their own self-storage business in the premises and set about implementing a plan to achieve that. The alternative scenario put forward by the defendants is that they took steps to repossess the premises (due to the arrears of rent owed by the plaintiffs) and this cannot be equated with “proper control” or “prior consent” to hold and store the customers’ chattels; rather the defendants had no choice other than to acquire possession of the customer’s chattels in the premises.17 Whether the defendants could and should have asked Storageone to relocate customers’ property and whether Storageone was actually in a position to do so are issues that can only be properly determined at trial. Further, the defendants do not admit that all customers were given a period of free storage or began paying the defendants before any period of free storage or prepaid storage ended. These are also factual issues for trial.
17 The defendants rely on cases relating to mortgagees in possession such as Cribb v FM Custodians Ltd, above n 16.
[46] On the basis of the material before me, it would not be appropriate to find that the defendants had “proper control” over the events or that it is “necessarily implicit” there was consent to possessing the customers’ chattels without allowing for examination of the witnesses at trial. Further, whether Tempja and/or Storestuff had possession of the customers’ goods after 26 January 2023 is also an issue that can only be properly determined at trial.
[47] Mr Bisley submits that, in any event, involuntary bailment is not the only basis for the defendants’ claim that the customers had a legal obligation to pay them. He submits that another basis is non-contractual quantum meruit based on free acceptance.18 The defendants have, with their supplementary submissions, provided a draft amended pleading of their third counterclaim cause of action alleging quantum meruit as between the relevant customers and the defendants. This seems to me to be reasonably arguable.
[48] Secondly, Mr Chapman submits there was no debt or current obligation owed by the relevant customers to the plaintiffs as required in Official Custodian for Charities v Mackey.19 Mr Chapman argues that, in that case, the Court found that although the sub-tenants were liable to pay mesne profits to the plaintiff, they were not owed until sued for and judgment entered, and therefore there was no “contractual or other current obligation” between the sub-tenants and the plaintiff and no intervention by the defendant receivers. Mr Chapman says that is the position in this case as between the relevant customers and the defendants.
[49] However, as noted above, the courts should be slow to strike out claims in any developing area of law. The law in the area of unjust enrichment and “interceptive subtractions” is clearly developing.20 It is reasonably arguable, for example, that an involuntary bailment gives rise to an obligation at law prior to any claim being made
18 See, for example, Villages of New Zealand (Pakuranga) Ltd v Ministry of Heath 8 NZBLC 101,739 (HC) at [74] and [76]; and Electrix Ltd v The Fletcher Construction Company Ltd (No 2) [2020] NZHC 918 at [73]–[87].
19 Official Custodian for Charities v Mackey, above n 1, at 1314-1315.
20 See Phil & Teds Most Excellent Buggy Company Ltd v Out ‘N’ About ATP Ltd [2016] NZHC 71 at [144]; Electrix Ltd v The Fletcher Construction Company Ltd (No 2), above n 18, at [73]-[87]; Goff and Jones on Unjust Enrichment, above n 1, at [6-124] (commentary on “interceptive subtractions”).
or a judgment entered, in that it gives rise to a “a right …against the defendant to be reimbursed”21 and “a correlative obligation to reimburse expenses”.22 It is also reasonably arguable that an obligation to pay reasonable remuneration on a quantum meruit arises by operation of law when services are freely accepted, prior to any claim being made or a judgment entered.
[50] Mr Chapman also submits that if the claim fails as a claim for money had and received (third counterclaim cause of action) then it cannot succeed as a claim for constructive trust (fourth counterclaim cause of action). I consider that the claim for money had and received is a reasonably arguable cause of action. But even if it was not, it is not clear why the separate cause of action for a remedial constructive trust must necessarily fail. It seems to me that that it is reasonably arguable that a remedial constructive trust could be imposed where payments have been incorrectly or mistakenly made to Storageone by customers, in circumstances where Storageone knew or ought to have known that the monies should have been paid to the defendants who were continuing to provide storage services for those customers, and no consideration was provided by Storageone for the payments, and no refunds have been made. It is reasonably arguable that it would be unconscionable for the monies to be retained by Storageone.23
[51] Thirdly, Mr Chapman argues that there is no pleading by the defendants that any payments by customers to Storageone were “at the expense of” Storestuff. It seems to me it is implicit from the defendants’ pleading that they allege the payments made by customers to Storageone in the relevant period were at their expense. However, Mr Chapman raises a number of issues and factual scenarios which culminate in his submission that the money received by Storageone does not have a sufficient nexus with the storage services provided by the defendants. He says it cannot be assumed or established that the amounts that the customers may have been required to pay the defendants was the precise equivalent of the sums paid to Storageone,24 so the defendants cannot prove the payments were necessarily at their expense. For example, issues arise as to:
21 Great Northern Railway Co v Swaffield, above n 15, at [136].
22 China Pacific SA v Food Corporation of India, above n 15, at 964.
23 The defendants rely on Wambo Coal Pty Ltd v Ariff [2007] NSWSC 589 at [43].
24 Mr Chapman relies on Official Custodian for Charities v Mackey, above n 1, at 1315.
(a)which customers made payments to Storageone after 26 January 2023;
(b)which customers had prepayments made to Storageone recognised or honoured by the defendants;
(c)which customers received a period of free storage from the defendants;
(d)which customers removed their goods from the premises (and when);
(e)which customers entered into storage contracts with the defendants and/or made payments to defendants; and
(f)which customers have received refunds from Storageone.
[52] In my view these issues are ultimately matters of fact and evidence for trial. However, I consider the defendants are required to amend their pleading to provide further particulars as follows (possibly in the form of a schedule):
(a)identify the relevant customers and the dates and details of the relevant payments made by those customers to Storageone;
(b)in respect of each of the relevant customers, identify whether any prepayments made by a customer to Storageone were recognised by the defendants and/or whether the customer received a free period of storage, and provide details of any prepaid storage period or free storage period;
(c)in respect of each of the relevant customers, identify whether and, if so, when the customer removed their goods from the premises;
(d)in respect of each of the relevant customers, identify whether the customer entered into a storage contract with the defendants and/or made payments to the defendants for storage and provide details of the dates and amounts of those payments; and
(e)in respect of each customer, identify the amount of the payment(s) made by that customer to Storageone which it is alleged was “at the expense of” the defendants.
[53] I acknowledge that the pleading of these particulars has been to some extent dependent on the further discovery of Payment Records sought from the plaintiffs, which is addressed below.
[54] In summary, I am not satisfied that the defendants’ third and fourth counterclaim causes of action are so untenable they cannot succeed or that they are frivolous or vexatious. However, the defendants are required to amend their pleading to provide the further particulars referred to above at [51].
Application for particular discovery
Legal principles
[55] Rule 8.19 of the HCR provides that an order for particular discovery can be made if it appears to a judge that there are grounds for believing that a party has not discovered documents that should have been discovered, based on the evidence, the nature and circumstances of the case, or from any document filed in the proceeding.
[56] The Court has typically followed a four-stage approach when considering orders under r 8.19 of the HCR, namely:25
(a)Are the documents sought relevant, and if so how important will they be?
(b)What are the grounds, and what is the probative value of those grounds, for the belief that the documents sought exist?
(c)Is discovery proportionate?
25 Lighter Quay Residents’ Society Inc v Waterfront Properties (2009) Ltd [2017] NZHC 818 at [16(d)] citing Assa Abloy New Zealand Ltd v Allegion (New Zeland) Ltd [2015] NZHC 2760, [2018] NZAR 600 at [14].
(d)Weighing and balancing these matters, is an order appropriate?
[57] Each of the first three these stages is necessary but not of themselves sufficient conditions of jurisdiction, as they are still subject to the weighing and balancing exercise. The onus rests on the applicant to establish that the relevant grounds exist.26
Payment records
[58] Mr Chapman argues that even if the third and fourth causes of action are not struck out the Payment Records are not relevant. However, his arguments then purport to assess relevance based on the merits of the causes of action. Unless and until a cause of action is struck out as untenable, a party is entitled to pursue documents relevant to their claim within the framework for discovery as defined by the pleadings. Further, Mr Chapman acknowledges that at least documents relating to the payments made to Storageone by customers who have been “given credit” by Storestuff are arguably relevant.
[59] Mr Chapman also seeks to argue that the defendants already have the documents sought. However, Mr Bisley says that the defendants do not have records of payments that continued to be received by Storageone Metro and Storageone after 26 January 2023 and correspondence between the plaintiffs and customers regarding such payments.
[60] I consider that the Payment Records are relevant and important to the determination of the issues arising from the pleadings and to be determined at trial. There are grounds for belief that the documents sought exist, and indeed some records have already been informally provided by the plaintiffs to counsel for the defendants pending the outcome of this application.
[61] Mr Chapman argues that discovery is not proportionate because the defendants already have the records. But as noted above, Mr Bisley advises that the defendants do not have relevant records after 26 January 2023. I consider that discovery is proportionate on the basis that it is confined to:
26 Lighter Quay Residents’ Society Inc, above n 25, at [17] citing Plumpton v Terry [2016] NZHC 988 at [26].
(a)records of payments made by customers of the Petone storage facility to Storageone between 26 January 2023 and 26 January 2024, including bank statements and correspondence with those customers relating to the payments or refunds of the payments; and
(b)any internal documents recording oral communications with those customers relating to the payments, or refunds of the payments, or relevant to any defences raised by the plaintiffs.
[62] Weighing and balancing these matters, it is appropriate to order discovery by the plaintiffs of the Payment Records.
Storageone Kapiti evidence
[63] Mr Ballinger, for the defendants, submits that the Storageone Kapiti evidence is relevant to the defendants’ response to the plaintiffs’ assertion that Tempja is estopped from denying the lease was renewed for a further five years from 1 April 2022. Mr Ballinger says whether the lease was renewed for a further five years or was converted into a periodic tenancy is relevant to the quantum of damages sought by plaintiffs for the defendants’ wrongful termination of the lease, which they admit to. This is because it means the unexpired term was either only 20 working days, or a number of years.
[64] Mr Ballinger says the Storageone Kapiti evidence is relevant to whether Storageone Metro’s director, Mr Molenaar, was induced by Tempja’s conduct into actual belief that the lease had been renewed, and whether that belief was reasonable in the circumstances. He says that the evidence includes affidavits from Mr Molenaar and other affidavits in the proceeding from Philip McConchie of Spencer Holmes Ltd and Sharon Beer, director and shareholder of Sharja Ltd. The defendants expect the evidence to address why Storageone Kapiti, also controlled by Mr Molenaar, did not give timely notice to renew its lease. They also expect it will address Mr Molenaar’s awareness of the requirements concerning the renewal of ADLS leases. Mr Ballinger submits the timing of Mr Molenaar’s evidence in the Storageone Kapiti proceeding is significant, being prepared shortly before Storageone Metro’s lease in Petone was
(according to the defendants) converted to a periodic tenancy on 1 April 2022. It is therefore relevant to the plausibility of Mr Molenaar’s evidence that he overlooked giving the required notice to renew the Petone lease.
[65] Mr Ballinger submits the documents exist as they are referred to in the High Court judgment in that proceeding. He further states the time and cost of discovering these documents are proportionate to their potential significance to the merits of the plaintiffs’ pleaded estoppel claim.
Discussion
[66] It seems to me that the main issue regarding estoppel is the nature of any representation made on behalf of Tempja that the lease was continuing notwithstanding the failure to renew and whether that was reasonably relied on by Storageone Metro. The Storageone Kapiti evidence relates to a lease between different parties, the factual circumstances around failure to renew that lease, and whether there was an estoppel or waiver regarding continuation of that lease. It is difficult to see how the Storageone Kapiti evidence is necessarily relevant and important to the determination of the issues in this case. Further, any issues that the defendants wish to raise regarding why Storageone Kapiti did not give timely notice to renew its lease,27 and as to Mr Molenaar’s awareness of the requirements concerning the renewal of ADLS leases in early 2022, can be raised in cross examination of Mr Molenaar at trial.
[67] I am also concerned that ordering discovery of the Storageone Kapiti evidence would cut across the requirements of the Senior Courts (Access to Court Documents) Rules 2017. The discovery regime under the High Court Rules and the access to court documents regime are separate regimes but, in this case, the defendants are seeking discovery of affidavit evidence adduced in a separate proceeding with no common parties.28 Under the Access to Court Documents Rules, the parties to CIV-2022-485- 149 would usually have the opportunity to object to any request made under r 11 to
27 I note that Cooke J found on the facts that Storageone Kapiti “overlooked giving a renewal notice”
– Storageone Kapiti (2012) Ltd v Sharja Ltd [2022] NZHC 2252 at [13].
28 The application for discovery should, arguably, have been an application for non-party discovery against Storage Kapiti (2012) Ltd, under r 8.21 of the High Court Rules.
access the affidavit evidence in the proceeding. However, the defendants’ application requires that the affidavit evidence be discovered for use in this proceeding without the parties to CIV-2022-485-149 having any opportunity to object or to be heard. This is particularly problematic in respect of the affidavit evidence of Mr McConchie and Ms Beer who are not involved in the current proceeding and have no opportunity to object through the relevant parties to CIV-2022-485-149. If the application was granted, Mr McConchie and Ms Beer would have no knowledge that their sworn evidence for the purposes of CIV-2022-485-149 had been provided to the parties for use in this proceeding.
[68] For these reasons, the defendants’ application for discovery of the Storageone Kapiti evidence is declined. However, that does not mean the defendants are precluded from requesting access to the affidavit evidence under r 11 of the Senior Courts (Access to Court Documents) Rules 2017.
Result
[69] My formal orders are set out in the results judgment dated 7 April 2025 at [6]-[10].29
[70] As to costs, my preliminary view is that there has been a measure of success for both sides and that costs should lie where they fall, avoiding a further skirmish around costs at this stage when the focus should be on preparation for trial. The parties should endeavour to agree costs. However, if agreement is not possible then memoranda may be filed (not exceeding three pages including costs schedules) and I will determine costs on the papers.
Associate Judge Skelton
Solicitors:
Brandons, Wellington for Plaintiffs Gibson Sheat, Lower Hutt for Defendants
29 Storageone Metro Ltd v Tempja (NZ) Ltd [2025] NZHC 803 at [6]-[10].
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