Stylo Medical Services Limited v Hum Hospitality Limited

[2022] NZHC 2446

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-365

[2022] NZHC 2446

UNDER

Section 244 of the Property Law Act 2007

IN THE MATTER OF

an application for cancellation of deed of

lease dated 22 January 2011 and possession

BETWEEN

STYLO MEDICAL SERVICES LIMITED

Applicant

AND

HUM HOSPITALITY LIMITED

Respondent

Hearing:

On the papers

Counsel:

Appearance:

RO Parmenter for the Applicant

RO Armitage, Director of Respondent

Judgment:

23 September 2022

JUDGMENT OF FITZGERALD J

[As to costs]

This judgment was delivered by me on 23 September 2022 at 3.00pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:        Winston Wang & Associates, Auckland To:       R Parmenter, Auckland

And to:           R Armitage, Auckland

STYLO MEDICAL SERVICES LTD v HUM HOSPITALITY LTDD [2022] NZHC 2446

Introduction

[1]    Earlier this year, I presided over the (potential) enforcement of an order to arrest Hum Hospitality Limited’s (Hum’s) director, Ms Armitage. Downs J made the arrest order on 26 November 2021 in light of Hum’s continuing failure to comply with orders of this Court to vacate premises which it had leased from Stylo Medical Services Limited (Stylo).1

[2]    To give Hum some further time to vacate the premises following the making of the arrest order, the arrest order lay in Court until 8 February 2022. Hum had not vacated the premises by that time. In the event, it was agreed that Ms Armitage would make a voluntary appearance before the Court on 24 February 2022, rather than being arrested and brought before the Court.  I (in my  role as scheduled  Duty Judge on  24 February) endorsed that approach, though noted that this was only on the basis that Hum vacate the premises prior to Ms Armitage’s voluntary appearance and that if it had not done so, the arrest order would be enforced forthwith.

[3]    Ms Armitage duly appeared before the Court on 24 February 2022. At the hearing, Mr Parmenter, counsel for Stylo, confirmed that Hum had vacated the premises shortly before the hearing. In those circumstances, it was no longer necessary to enforce the arrest order and I made an order quashing it.

[4]    Given I apprehended that this would be the final substantive step in the proceeding, I proposed that I deal with costs in the proceeding to that point which had not already been determined and fixed by the Court. I made (extended) timetable orders for the parties to file submissions on costs.

[5]    Stylo duly filed a memorandum on costs. Neither Hum nor Ms Armitage filed any costs memorandum in response, either by the timetabled date or otherwise. Nor was there any application for an extension of time. I accordingly proceed to determine costs based on Stylo’s submissions, my review of the file and my own knowledge of the proceeding.

1      Stylo Medical Services Ltd v Hum Hospitality Ltd [2021] NZHC 3191.

[6]    Finally by way of introduction, I note that my assumption that Hum’s vacation of the premises and the quashing of the arrest order would be the final substantive steps in this proceeding was incorrect. Since the hearing before me on 24 February 2022, there have been further steps taken in the proceeding. This judgment does not purport to determine the costs of any of those subsequent steps.

Factual background

[7]    Downs J’s judgment granting Stylo’s application for an arrest order contains a helpful summary of the key steps in the proceeding to that point.2 I gratefully adopt his Honour’s summary:

[2]      The lease began 2011 and was subject to two, eight-year rights of renewal. Stylo gave Hum a rental holiday but required it to renovate the property. Things did not go well.

[3]      On 5 March 2019, Stylo applied to cancel the lease, take possession, and  be  paid  arrears.   Brewer  J  heard  the  application  4  October  and    12 December 2019, then 24 August 2020.

[4]      On 11 November 2020, Brewer J found largely for Stylo. He concluded Hum owed Stylo at least $150,000 in arrears of rent. He ordered the lease be cancelled if Hum failed to pay this amount “no later than one calendar month from the date of delivery of this judgment”. He also ordered the lease be cancelled if Hum defaulted on the payment of future rent, unless Hum could show non-payment had been remedied within 10 working days.

[5]      On 7 December 2020 Hum applied for a stay. It said it could not pay the arrears. Edwards J dismissed the application.

[6]      Hum later paid the arrears. But, it was late in paying the GST component of the December 2020 rent. It remedied this within the (10- working day) grace period after Stylo said it would seal Brewer J’s orders cancelling the lease. Hum then failed to pay the GST component of its January 2021 rent.

[7]      On 2 February 2021, Stylo applied to Brewer J to seal orders cancelling the lease on the basis of the January default. Brewer J granted the application 11 February 2021.

[8]      Hum swiftly sought a stay of cancellation, arguing it had paid the GST component within the grace period. On 12 February 2021, Brewer J granted a stay until he had determined what had happened.

[9]      On 24 February 2021, Brewer J lifted the stay. He found Hum had not paid the January GST component within the grace period; rather, the payment Hum made concerned rates.

2      Stylo Medical Services Ltd v Hum Hospitality Ltd, above n 1.

[10]   Hum continued to file papers prepared by Ms Armitage. On 9 March 2021, Brewer J issued a Minute noting any challenge to his orders should be made to the Court of Appeal.

[11]   The next day, Hum sought another stay. On 11 March 2021, Brewer J issued a Minute noting “Ms Armitage is deeply unhappy with the orders I have made”  but  he  had  “no  further  jurisdiction”.    The  Judge  also  noted    Ms Armitage could not act for Hum.

[12]Edwards J dismissed yet another stay application 15 March 2021.

[13]   On 16 March 2021, Stylo attempted to take possession with the help of the Sheriff and Police. Ms Armitage was at the property. So too between 10 and 15 supporters. Police concluded it would be better if they tried another day.

[14]   On 12 April 2021, Stylo and the Sheriff contemplated another attempt at possession. Again, Police elected not to force the issue.

[15]   On 13 April 2021, Brewer J granted a stay because Hum had applied to the  Court of Appeal  for  permission  to  appeal  out  of  time  the  Judge’s  11 November 2020 decision. The Judge said the stay endured “pending the determination by the Court of Appeal of Hum’s application for extension of time to appeal”. He added if the application were granted, “it will be up to the Court of Appeal to decide whether the stay should continue”.

[16]   On 13 August 2021, the Court of Appeal granted Hum permission for an out of time appeal. However, that Court made permission conditional on:

(a)      Hum paying Stylo, within 14 days, $92,925.24 in arrears.

(b)      Hum prosecuting its appeal with expedition. It had to file the appeal within 14 days. The appeal would then be placed on the fast track.

[17]   Hum did not comply with either condition. Instead,  it  asked  the Court of Appeal to recall its 13 August decision. The Court of Appeal dismissed the application 9 September 2021.

[18]   On 17 September 2021, Brewer J dismissed, as an abuse of process, a further application for a stay prepared by Ms Armitage. On 21 September 2021, the Judge dismissed an application by Ms Armitage “to rescind” that ruling. And, on 24 September 2021, the Judge directed the Registry not to accept yet more documents from Ms Armitage seeking a stay.

[19]   On 29 October 2021, Stylo filed this application. As observed, it seeks an order for Ms Armitage’s arrest as Hum’s director.

[8]    As noted earlier, the arrest order made by Downs J in November 2021 lay in Court until February 2022. As also noted earlier, Hum finally yielded possession of the premises to Stylo shortly before the 24 February 2022 hearing before me.

Earlier decisions on costs

[9]    A number of the earlier steps in this proceeding have already been the subject of costs judgments. I refer in particular to:

(a)Brewer J’s determination on 30 March 2021 of costs in the proceeding to 11 November 2020, in which he made a costs award in Stylo’s favour of approximately $22,582 plus disbursements.3

(b)Brewer J’s determination on 30 March 2021 of costs payable on Hum’s unsuccessful application for a stay of his judgment on liability, in which he made a costs award in Stylo’s favour of $3,346 plus disbursements.4

(c)Brewer J’s determination of costs in relation to his judgment on quantum (in which he fixed the quantum of rent then due and owing by Hum under the lease), making a costs award in Stylo’s favour of scale costs of $14,579, plus increased costs of 50 per cent (being a further

$7,289.50), plus disbursements.5

[10]   In his judgment of 26 November 2021, Downs J made timetable orders for the parties to file submissions on the costs of the arrest order. In the event, and at Stylo’s request, that timetable was “paused” in light of the forthcoming hearing before me and the potential enforcement of the arrest  order.  At  the conclusion of the hearing on  24 February 2022, it was agreed that I would deal with all costs relating to the arrest order, and any other residual costs of the proceeding to that point.

Stylo’s costs submissions

[11]   Stylo seeks costs in relation to two substantive steps in the proceedings for which costs have not yet been determined.

3      Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 30 March 2021 (Minute No 1 of Brewer J).

4      Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 30 March 2021 (Minute No 2 of Brewer J).

5      Stylo Medical Services Ltd v Hum Hospitality Ltd [2022] NZHC 1237.

[12]   The first is costs in relation to Stylo’s application for the arrest order, including related attendances responding to Hum’s attempt to recall Downs J’s judgment, together with subsequent Duty Judge  appearances,  including  that  before  me  on 24 February 2022. Stylo claims the following:

Step No	Description	Days	Rate	Amount
62	Application to arrest 29.10.21	0.5	$2,390	$1,195
24	Stylo submissions re arrest 23.11.21	1.5	$2,390	$3,585
26	Appearance 24.11.21 re arrest	0.25	$2,390	$597.50
11	Memo 24.1.22 responding to Hum’s recall memo	0.4	$2,390	$956
11	Memo 03.02.22 for Duty Judge list	0.4	$2,390	$956
62	Arrest order and supporting affidavit	0.5	$2,390	$1,195
24	Stylo submissions for arrest appearance 24.02.22	1.5	$2,390	$3,585
26	Appearance 24.02.22 re arrest	0.25	$2,390	$597.50
$12,667

[13]   Anticipating a potential submission on behalf of Hum that there should be no costs relating to the appearance on 24 February 2022 given Hum had vacated the premises prior to that appearance, Mr Parmenter submits that given Hum had vacated the premises only an hour or so before the appearance, Stylo’s appearance was a necessary step in the recovery of the premises.

[14]   Stylo also seeks a disbursement of $1,500, being a filing fee on the application for a writ of arrest.

[15]   The second substantive step for which Stylo seeks costs is in relation to the possession order itself, the costs of which have not yet been fixed. Stylo seeks the following:

Step No	Description	Days	Rate	Amount
62	Request for possession order 05.03.21	0.5	$2,390	$1,195
24	Stylo submissions re application for stay	1.5	$2,390	$3,585
26	Appearance 15.03.21 re stay	0.75	$2,390	$1,792.50
$6,572.50

[16]   Stylo also seeks as a disbursement the filing fee of $1,500 on the application for a writ of possession.

[17]   Mr Parmenter notes that the application was put into the Duty Judge list on 15 March 2021, the day before the planned execution of the writ of possession, which he submits necessitated the filing of a 10 page memorandum (which is claimed by way of “submissions” in the above table). Mr Parmenter also notes that on the day of the appearance, he delivered to Peters J (Duty Judge on 15 March 2021)6 a two-page handwritten memorandum in response to a memorandum filed on behalf of Hum, culminating in her Honour declining Hum’s application for an “interim interim” stay of Brewer J’s earlier judgments and minutes. Mr Parmenter submits that he did not finish at Court “until just before 3.00pm”, hence the 0.75 of a day claimed in the above table.

Discussion

Costs of arrest order

[18]Stylo is entitled to:

(a)costs on its application for an arrest order (being the successful party on that application);

(b)costs for steps taken in response to Hum’s application that Downs J recall his arrest order judgment (Hum being unsuccessful in that regard); and

6      The reference to Peters J is incorrect. Edwards J presided over the Duty Judge hearing.

(c)costs of steps taken in the lead-up to and for the appearance before me on 24 February 2022.

[19]   In relation to the appearance on 24 February 2022, it is appropriate for Stylo to be awarded costs of that appearance despite Hum having vacated the premises shortly beforehand. The appearance was a scheduled appearance at which both parties were expected to and did appear. The fact that Hum had vacated the premises shortly before the hearing makes no difference. Ultimately, if Hum had vacated the premises in accordance with the Court’s earlier orders, neither the arrest order nor the steps taken to enforce it would have been required, and the costs associated with those steps would have been avoided.

[20]   In terms of the particular steps claimed by Stylo, Stylo was required to apply to this Court for leave to issue an arrest order, pursuant to r 17.9 of the High Court Rules 2016. Step 62 is correctly claimed in relation to “other enforcement process”.

[21]   It is appropriate that Stylo recover costs in relation to its submissions filed in support of the application for an arrest order, by analogy with step 24, being the preparation of written submissions on an interlocutory application. However, I do not consider that an allowance of 1.5 days is appropriate. The application was heard and determined by Downs J, as Duty Judge, on 24 November 2021. In advance of that appearance, Mr Parmenter filed a brief memorandum (dated 23 November 2021) which extended to six paragraphs and attached a small number of documents. Given the brevity of the submissions, step 24 is awarded on a band A basis, such that there is an allowance of 0.5 of a day rather than 1.5 days. The allowance for submissions accordingly reduces to $1,195.

[22]   It is also appropriate that Stylo receive costs on Hum’s (unsuccessful) attempt to recall Downs J’s judgment. On 24 January 2022, Stylo filed a substantive memorandum responding to Hum’s attempts in this regard.

[23]   I am also satisfied as to the remaining steps for which Stylo claims costs, all of which were steps reasonably taken in connection with the arrest order and its enforcement.

[24] With that minor adjustment noted at [21] above in relation to submissions, there is a costs award against Hum and in Stylo’s favour in an amount of $10,277. The costs award is also to include the disbursement of $1,500 for the filing fee on the writ of arrest.

Costs in relation to the possession order

[25]   I am satisfied that Stylo should receive costs in relation to the application for a possession order (and associated steps). In light of the history of this proceeding, it was reasonable and appropriate for Stylo to seek such an order.

[26]   However, having reviewed the application and affidavit in support, I do not consider it appropriate to award costs on a 2B basis. The application itself was extremely brief and straightforward, and the affidavit in support equally brief, extending to seven short paragraphs. Costs on that step are appropriately awarded on a scale 2A basis. In the event, however, this makes no numerical difference, given the allowance for an enforcement step on a band A basis is also 0.5 of a day.

[27]   I am satisfied that it is appropriate to make an award of costs for steps taken by Stylo in response to Hum’s attempt to obtain a stay of enforcement of the possession order. Hum’s application for a stay dated 10 March 2021 was put into the Duty Judge list on 15 March 2021. Edwards J presided and declined the application. In advance of the hearing, Mr Parmenter had filed a substantive memorandum, dated 14 March 2022. While it is correct that that was a 10 page memorandum, the memorandum noted at the outset that Mr Parmenter had only become aware of the call of the matter scheduled for (Monday) 15 March 2021 late in the day on (Saturday) 13 March 2021, with the memorandum being filed on 14 March 2021. Given that timeframe, it is unlikely that it took a full 1.5 days to prepare the memorandum, and scale costs are to reflect a contribution only to actual costs in any event. Accordingly, the allowance for step 24 is 0.5 of a day only.

[28]   I also do not agree that it is appropriate to allow 0.75 of a day for the appearance on 15 March 2021. The application was called in the Duty Judge list in the morning, but immediately after counsel had made their appearances, Campbell J (the scheduled Duty Judge) informed the parties that he had to recuse himself from the

matter. The proceeding was accordingly adjourned to 2.15 pm that afternoon. On the basis of Mr Parmenter’s submission that he did not finish  at  Court  until  just  before 3 pm, the total time for the appearance, including the brief appearance in the morning, would have been no more than about one hour. The appropriate costs allowance for this step is an appearance at a case management conference (step 13, by analogy), being 0.3 of a day. The costs for the appearance on 15 March 2021 are therefore $717.

[29]   There is accordingly a costs award against Hum and in Stylo’s favour in relation to the possession order in an amount of $3,107. Stylo is also awarded a disbursement of $1,500, being the filing fee for a writ of possession.

Fitzgerald J