USAR Napier Ltd v Herbert - [2021] NZHC 2638

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2021-441-8

[2021] NZHC 2638

BETWEEN
USAR NAPIER LIMITED

Plaintiff

AND

MALCOLM ANDREW HERBERT

First Defendant

AND

ANTHONY JAMES HERBERT

Second Defendant

AND

ANTHONY JAMES HERBERT and

STEPHEN PETER LUNN, as trustees of the THACKERAY TRUST

Third Defendants

AND

ANTHONY JAMES HERBERT and

STEPHEN PETER LUNN, as trustees of the CHARLES STREET TRUST

Fourth Defendants

Hearing: 20 September 2021

Appearances:

S M Lowery and J C Suyker for Plaintiff J K Mahuta-Coyle for Defendants

Judgment:

5 October 2021

JUDGMENT OF ASSOCIATE JUDGE LESTER

USAR NAPIER LIMITED v HERBERT [2021] NZHC 2638 [5 October 2021]

[1] The plaintiff hotelier, USAR Napier Ltd, seeks summary judgment for amounts payable under an agreement that settled its rights under an agreement to lease a building at Munroe Street, Napier, which the defendants were converting into a hotel (the Hotel). The third defendant owns the Munroe Street building; the first defendant, Malcolm Herbert (Malcolm), undertook the conversion; the second defendant, Anthony Herbert (Anthony), is Malcolm’s brother and a trustee of the third and fourth defendant, the latter of which is the Charles Street Trust (the Trust), which agreed as part of the settlement to provide a mortgage. While the settlement agreement (the Agreement) is silent as to what the mortgage was to relate to, in context it can only have been security for the amounts payable under the Agreement and the defendants do not suggest otherwise. Mr Lunn, a trustee of the third and fourth defendant, is a solicitor who acted for Malcolm and Anthony.

[2] It is not necessary to go into detail of the plaintiff’s claimed agreement to lease with the third defendant. On 4 December 2020, the plaintiff applied for an interim injunction to prevent the Hotel being leased to another operator, Swiss-Belhotel. On the morning the application was due to be heard (10 December 2020), the parties met with counsel and the Agreement – recorded in a handwritten document – was reached and signed by all parties.

[3] Under the Agreement, the defendants bought out the plaintiff’s rights (if any) under its agreement to lease. The deposit the plaintiff had paid was to be immediately returned, which occurred as it had been held in trust. The following further payments (totalling $510,000) are the subject of this application:

(a) $115,000 by 17 December 2020 (cl 2(b)); (b) $145,000 by 24 March 2021 (cl 2(c)); and
(c) $250,000 plus interest at 8.25 per cent from 10 December 2020 in equal monthly payments commencing 5 April 2021 and ending 5 December 2021 (cl 2(d)).

[4] The plaintiff relies on the written obligation to pay which has not been honoured. The proceedings were issued on 12 February 2021, before the instalment obligations referred to in [3](c) were due to commence. An amended application for summary judgment was filed at the end of June 2021 seeking judgment for the instalments that had fallen due by the date of hearing.

[5]…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading USAR Napier Ltd v Herbert

Details

AGLC: USAR Napier Ltd v Herbert [2021] NZHC 2638
Case: [2021] NZHC 2638
Decision Date: 5 October 2021

CaseChat Overview and Summary

USAR Napier Limited, the plaintiff, brought an action against the first and second defendants, Malcolm Andrew Herbert and Anthony James Herbert, and the third and fourth defendants, Anthony James Herbert and Stephen Peter Lunn, as trustees of the Thackeray Trust and the Charles Street Trust, for amounts payable under a settlement agreement that settled the plaintiff's rights under a lease agreement for a building at Munroe Street, Napier. The third defendant owns the Munroe Street building, and the first and second defendants were responsible for converting it into a hotel. The agreement, referred to as the Agreement, was reached and signed by all parties on 10 December 2020, the morning the plaintiff's application for an interim injunction to prevent the hotel being leased to another operator, Swiss-Belhotel, was due to be heard. The plaintiff seeks summary judgment for the amounts payable under the Agreement, which total $510,000. The defendants oppose the application on three grounds. Firstly, the defendants argue that the plaintiff failed to promptly discontinue the injunction proceedings upon receiving back its deposit, as required by clause 10 of the Agreement. The court found that even if the plaintiff breached this obligation, such caused the defendants no loss. Secondly, the defendants argue that the plaintiff made pre-contractual misrepresentations about withdrawing marketing of the hotel under the Hilton brand, which led to a delay in Swiss-Belhotel's ability to take advance bookings. The court found that the defendants' calculation of loss based on income that the hotel would have generated in the first six months of 2021 was flawed, as the hotel had been unable to operate from December 2020. Thirdly, the defendants argue that the remedies expressly limited in clause 10 of the Agreement mean that the plaintiff's remedy in the event of a material breach is limited to the resumption of the injunction proceedings. The court found that this interpretation of the clause was commercially untenable. The court found in favour of the plaintiff and ordered that the first and second defendants pay $115,000 and $145,000, respectively, that the third defendant pay the same amounts, and that the fourth defendant grant a second mortgage in favour of the plaintiff. The court declined to make an order that the company incorporated to operate the hotel business be required to give a General Security Agreement to secure the amounts due as it was not a party to the proceeding. The court also declined to exercise the residual discretion to refuse judgment and ordered that costs follow the event on a 2B basis plus disbursements as fixed by the Registrar.

Orders