Stylo Medical Services Limited v Hum Hospitality Limited
[2021] NZHC 3191
•26 November 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-000365
[2021] NZHC 3191
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
ApplicantAND
HUM HOSPITALITY LIMITED
Respondent
Hearing: 24 November 2021 Appearances:
RO Parmenter for Applicant RO Armitage in person
Judgment:
26 November 2021
JUDGMENT OF DOWNS J
This judgment was delivered by me on Friday, 26 November 2021 at 4 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors/Counsel:
Winston Wang & Associates, Auckland. James Burt, Auckland.
RO Parmenter, Auckland. Copy to: RO Armitage.
STYLO MEDICAL SERVICES LTD v HUM HOSPITALITY LTD [2021] NZHC 3191 [26 November 2021]
Should Roseanne Armitage be arrested?
[1] Stylo Medical Services Ltd1 seeks an order for the arrest of Roseanne Armitage. Ms Armitage is the director of Hum Hospitality Ltd.2 Stylo leased its Grafton Road, Auckland, property to Hum. Brewer J cancelled the lease and granted Stylo possession. Stylo has attempted to retake possession, but there, Hum remains. Stylo says Ms Armitage’s arrest, as Hum’s director, is now necessary. The application, which I heard two days ago as Duty Judge, has some history.
Background
[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”.3 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.4
[5] On 7 December 2020 Hum applied for a stay. It said it could not pay the arrears. Edwards J dismissed the application.5
[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
1 Stylo.
2 Hum.
3 Stylo Medical Services Ltd v Hum Hospitality Ltd [2020] NZHC 2969 at [44].
4 At [48].
5 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 11 December 2020.
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 2021.6
[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.7
[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.8
[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.9
[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”10 but he had “no further jurisdiction”.11 The Judge also noted Ms Armitage could not act for Hum.
[12]Edwards J dismissed yet another stay application 15 March 2021.12
6 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 11 February 2021.
7 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 12 February 2021.
8 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 24 February 2021.
9 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 9 March 2021.
10 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 11 March 2021 at [4].
11 At [5].
12 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 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.13 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.14
[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.15 The Judge said the stay endured “pending the determination by the Court of Appeal of Hum’s application for extension of time to appeal”.16 He added if the application were granted, “it will be up to the Court of Appeal to decide whether the stay should continue”.17
[16] On 13 August 2021, the Court of Appeal granted Hum permission for an out of time appeal.18 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 2021.19
[18] On 17 September 2021, Brewer J dismissed, as an abuse of process, a further application for a stay prepared by Ms Armitage.20 On 21 September 2021, the Judge
13 Affidavit of Shen Tat Ooi, dated 26 October 2021.
14 Affidavit of Shen Tat Ooi, dated 26 October 2021.
15 Stylo Medical Services Ltd v Hum Hospitality Ltd [2021] NZHC 772.
16 At [4].
17 At [4].
18 Hum Hospitality Ltd v Stylo Medical Services Ltd [2021] NZCA 377.
19 Hum Hospitality Ltd v Stylo Medical Services Ltd [2021] NZCA 457.
20 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 17 September 2021.
dismissed an application by Ms Armitage “to rescind” that ruling.21 And, on 24 September 2021, the Judge directed the Registry not to accept yet more documents from Ms Armitage seeking a stay.22
[19] On 29 October 2021, Stylo filed this application. As observed, it seeks an order for Ms Armitage’s arrest as Hum’s director.
Principle
[20] An arrest order is an amalgam of the High Court Rules 2016, statute, and common law.
[21]Rules 17.83 and 17.84 of the High Court Rules provide:
17.83Effect of arrest order
(1) An arrest order authorises and requires an enforcing officer to arrest any person named in the order and to bring that person before the court at the time and place specified in the order, and until then, to keep the person in safe custody.
(2) An arrest order may be in form E 9.
17.84Power to issue arrest order
(1) In this subpart,—
enforceable undertaking means an undertaking described in subpart 4 of Part 2 of the Contempt of Court Act 2019
original court order has the same meaning as court order in subpart 4 of Part 2 of the Contempt of Court Act 2019.
(2) If a person has applied to the court to enforce an original court order or an enforceable undertaking and that person is entitled to make an application under section 16(2) of the Contempt of Court Act 2019, a Judge may issue an order arresting the non-complying party if,—
(a)in the case of an application to enforce an original court order, the Judge is satisfied that the non-complying party has been served with the order and has not complied with it; or
(b)in the case of an application to enforce an undertaking, the Judge is satisfied that the non-complying party had knowledge or proper
21 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 21 September 2021 at [2].
22 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 24 September 2021.
notice of the terms of the enforceable undertaking and has not complied with it.
[22] As to statute, r 17.84(2) requires the applicant be “entitled to make the application under s 16(2) of the Contempt of Court Act 2019”. Section 16(2)(a) of that Act provides, “A court may enforce the court order … on application by—the party who sought the order”, here Stylo. The same Act defines “court order”, by s 16(1)(a), as “any interim or final order, decision, decree, direction, or judgment of a court”, save for one concerning a sum of money.23
[23] The common law has similar elements.24 An applicant for an arrest order must establish, beyond reasonable doubt:25
(a)The original Court order (binding the party) was clear in its terms.
(b)The party was served with, or given, that order.
(c)The party has shown the order “wilful and inexcusable disregard”.26 Or, to use more modern language, knowingly failed to comply with the order, without reasonable excuse.
[24] Even then, a discretion remains. This follows from the language of r 17.84; “a Judge may issue an order …”.27
[25] It is not clear the common law remains applicable. I say this because the key rule, r 17.84, was recast from 26 August 2020 by the High Court (Contempt of Court) Amendment Rules 2020, and astute readers will note the recast rule is a little less exacting than the common law. This is not the occasion to test boundaries. I assume (more exacting) common law remains applicable.
23 In turn subject to an exception that need not be explored here.
24 See, for example, Official Assignee v Mathiesen [2018] NZHC 843 at [14].
25 These requirements, in turn, are similar (but not quite identical) to those in ss 16(3) and (4) of the Contempt of Court Act, which apply when an applicant seeks to enforce a Court order by having the party imprisoned for up to six months, fined, or required to do community work.
26 Horowhenua 11 (Lake) Part Reservation Trust v Taueki [2017] NZHC 4, [2017] NZAR 221 at [3].
27 Emphasis added.
Are the criteria established beyond reasonable doubt?
[26] The application is based on Brewer J’s judgment of 11 November 2020 (see [4]),28 and the orders sealed by the Judge 11 February 2021 (see [7]).29 The former read:30
Pending resolution of any dispute as to quantum, the lease will remain in force provided rental payments are paid on time. If Hum defaults on the payment of any rental due, then unless Hum can show the non-payment was remedied within 10 working days of being due, the lease is cancelled and Hum must forthwith give possession of the premises to Stylo.
[27]This determination is clear.
[28]The sealed orders read:
... the following orders were made by the Honourable Justice Brewer on the papers:
a. The Deed of Lease dated 22 January 2011 is cancelled as at the date hereof;
b. immediate possession of the demised premises, viz 123 Grafton Road, Grafton, Auckland is granted to the applicant;
c. Costs are reserved.
Date: 11/2/21
[29]These too are clear. Both concern, and bind, Hum.
[30]The original judgment and sealed orders were (quickly) given to Hum.
[31] It is beyond argument Hum remains in possession of the property, despite its knowledge of the original judgment and sealed orders. Ms Armitage accepted as much at the hearing (in response to my question). Like Brewer J, I do not doubt Ms Armitage is very unhappy the lease was cancelled, but this does not constitute a reasonable excuse for Hum’s failure to vacate the property, let alone Ms Armitage’s apparent frustration of at least one attempt by Stylo to retake possession (see [13]).
28 The original judgment.
29 The sealed orders.
30 Stylo Medical Services Ltd v Hum Hospitality Ltd [2020] NZHC 2969 at [48].
[32] The criteria are established beyond reasonable doubt. I did not understand Ms Armitage to contend otherwise. Rather, she raised a series of points under the banner, “process”.
The process points
Non-service of the application?
[33] Ms Armitage said the application was defective because it was not “formally” served on Hum.
[34] Stylo filed the application 29 October 2021 by email (with an affidavit in support and memorandum of counsel). Auckland was then—and remains—at Alert Level 3 because of the COVID-19 pandemic. Stylo copied Ms Armitage, using the email address she uses when she corresponds with the Court. The application did not identify the hearing date, for, it was not then known.
[35] On 19 November 2021, the Registrar emailed Stylo and Ms Armitage, saying Brewer J had directed the application be called in the Duty Judge list 24 November at 10 am. The email provided information about the virtual meeting room system (being used at Alert Level 3).
[36] Ms Armitage appeared (remotely) when the application was called that morning. She had, earlier in the day, emailed the Court with an extensive document entitled, “Memorandum from respondent in reply – under urgency”.31 The memorandum said Hum had not been “formally” served. The 243-page document attached many aspects of the record, including the application. Ms Armitage appended it as exhibit “OO”.
[37] Ms Armitage did not elaborate why service was defective. Her point was not that she or Hum had not been given the application—it could not be. There might be an argument Ms Armitage had not been given three clear working days’ notice of the hearing.32 There might also be an argument some form of personal service was
31 Ms Armitage used the same email address to which Stylo copied her its arrest order application.
32 High Court Rules 2016, r 7.24(1)(b).
necessary, either on Ms Armitage or Hum (by its registered office). However, these would be quibbles only. Ms Armitage has had the application since 29 October. She was present at the hearing (remotely of course). She was heard. All this happened while Auckland was at Alert Level 3, hence while there are restrictions on movement and interaction. There is nothing of substance to this complaint.
Process complaints about the sealed orders
[38]Ms Armitage contends the sealed orders cannot lead to an arrest order because
(a) when Stylo sought permission of Brewer J to seal them, that constituted an interlocutory application, and (b) r 17.2 of the High Court Rules provides: “A Court order, except an order made on an interlocutory application, may be enforced in the same way as a judgment in the proceeding to the same effect”. Ms Armitage says r 17.2 means an interlocutory application cannot be enforced, hence the sealed orders cannot result in an arrest order.
[39] The difficulty with this analysis—apart from the awkward characterisation of the application as interlocutory—is that r 7.48 provides interlocutory applications can be enforced. Indeed, such enforcement can lead to imprisonment.
[40] Ms Armitage next contends the process that resulted in the sealed orders was unfair, for, Stylo did not serve Hum with its application to Brewer J. It follows the sealed orders were obtained without notice.
[41] There are two answers to this point. The first is that Brewer J stayed the sealed orders as soon as Hum argued it had paid the GST component of the January rental within the grace period. The Judge then directed Stylo to serve Hum everything it had filed, and invited Hum to respond. Hum did. Stylo replied. Brewer J then concluded Hum had not paid the GST component within the grace period. He lifted the stay accordingly. So, while the sealed orders were obtained without notice, subsequent events quickly remedied any possible prejudice.
[42] The second and much more important answer is this. It is not open to me to question, let alone “unpick”, what Brewer J did. I am not here to decide if the lease should have been cancelled. That was Brewer J’s task, and one he completed some
time ago. My task is to determine whether Stylo has established, beyond reasonable doubt, the criteria for an arrest order, and having found them established to that standard, to decide whether I should make an order. These observations deserve emphasis, for, Ms Armitage appears to believe my task is otherwise.
[43] Ms Armitage’s final point is that her arrest would be premature as the Court of Appeal is still seized of the case. Ms Armitage said she had sent documents to that Court seeking, essentially, a stay of the original judgment and sealed orders, and an appeal of both.
[44] I do not doubt Ms Armitage is an enthusiastic correspondent with the Court of Appeal. The 243-page document she filed on the morning of the hearing appears primarily intended for that Court. However, it is a matter of record the case is no longer live in that Court. The sequence at [16]–[17] speaks for itself. That a litigant believes a case remains live in a court based on their own, unsolicited correspondence is not a principle known to law.
Should I make an arrest order?
[45] Hum in the person of Ms Armitage will not accept this Court has cancelled the lease and ordered it to vacate the property. Hum should have done so long before now. An order is required. The background reveals no other, realistic alternative.
[46] On behalf of Stylo, Mr Parmenter suggested the arrest order lie in Court, thereby providing Hum a final opportunity to vacate. The suggestion is sensible, and consistent with authority.33
[47] As observed, Auckland remains at Alert Level 3. Ms Armitage is currently in Tauranga. Auckland travel restrictions are scheduled to end 15 December 2021 or thereabouts. This Court last sits (for other than urgent matters) 17 December 2021. It reconvenes 1 February 2022. I am the Duty Judge from 8 February 2022. Given this mix, the order should lie in Court until 8 February 2022. If Hum vacates the property before then—as it should have already—the order will be quashed.
33 See McGechan on Procedure (looseleaf ed, Thomson Reuters, Wellington) at [17.84.08].
Result
[48] The application is granted. An order is made for Ms Armitage’s arrest. The order is to lie in Court until 8 February 2022. It will be quashed if Hum vacates the property before 8 February 2022.
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Downs J
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