Watkins v Samson Corporation Limited

[2024] NZHC 2416

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-332

[2024] NZHC 2416

BETWEEN

NICOLA MAREE WATKINS

Appellant

AND

SAMSON CORPORATION LIMITED

Respondent

Hearing:

20 August 2024

Appearances:

Appellant in person

B Martelli for the Respondent

Judgment:

27 August 2024

JUDGMENT OF BLANCHARD J

This judgment was delivered by me on Tuesday, 27 August 2024 at 3:00 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

Solicitors:           Martelli Yaqub Lawyers, Auckland Copy to:  Appellant

WATKINS v SAMSON CORPORATION LIMITED [2024] NZHC 2416 [27 August 2024]

[1]    Ms Watkins appeals against a decision of Judge K Davenport in the District Court at Auckland dated 13 November 2023.1 The Judge granted summary judgment in favour of Samson Corporation Ltd (Samson) for $23,319, plus costs of $3,382 and disbursements of $1,361.15, and declined an application for summary judgment in relation to a counterclaim by Ms Watkins against Samson.

Lease

[2]    On 2 July 2020, Samson and Red Stag Metal Fabrication Ltd (Red Stag) executed a deed of lease in relation to premises in Ponsonby, Auckland. The lease was for a term of two years, commencing on 1 July 2020. The annual rent was $52,000 plus GST. The rent was payable in instalments of $4,333.34 plus GST on the first day of every month starting on 1 July 2020. Interest was payable at 15 per cent in the event of default and costs of recovery were payable on an indemnity basis.

[3]    Ms Watkins executed the deed of lease as guarantor. She is the sole director and shareholder of Red Stag.

Operation of business

[4]    Red Stag began using the premises in July 2020. It operated a store selling metal gates and garden products trading under the name “Gate & Garden”.

[5]    During the 16 months that Red Stag occupied the premises, Ms Watkins raised various maintenance issues. The business was also affected by COVID lockdowns. Ms Watkins asked for, and Red Stag received, some rent relief because of COVID. Ms Watkins also asked for rent reductions, and Samson agreed to reduce the rent.

Surrender of premises and payment agreement

[6]    Red Stag operated from the premises until November 2021.   On Monday     1 November 2021, Ms Watkins advised Daniel Friedlander, CEO of Samson, that Red Stag was unable to continue at the premises. She told him that she would surrender

1      Samson Corp Ltd v Watkins [2023] NZDC 25303.

the keys at the end of the week once the premises had been vacated and cleaned. Red Stag moved out of the premises completely on 8 November 2021.

[7]    On 29 November 2021, Samson advised Ms Watkins that a conditional agreement to re-lease had been executed and, once the assignment of lease was completed, Red Stag would cease to be liable for the rent and it would receive a final invoice.

[8]On 13 December 2021, Samson sent Ms Watkins a final invoice for

$39,785.68.

[9]    On the same date, Ms Watkins and Mr Friedlander spoke and agreed payment terms. On 14 December 2021, Samson sent a letter to Red Stag confirming the terms of the payment agreement. It was signed by both parties. Ms Watkins’s name was mistakenly recorded as “Nicola Gates”, but she does not dispute she signed the letter. She alleges she signed the payment agreement under duress.

[10]   Under the payment agreement the full amount outstanding was $39,785.68. That amount was to be paid by fortnightly instalments of $500 commencing on        1 February 2022. If the payments were made, the debt would be reduced to $29,819 and no interest would be charged on the debt. Any failure to make the payments would make the agreement “nil and void” and the full amount plus interest would become due immediately.

[11]   Red Stag did not comply with the payment agreement. Between 31 January and 21 October 2022, it made intermittent payments of $250 and $500. The payments, which totalled $6,000, stopped completely on 21 October 2022.

Demands for payment

[12]   On 30 November 2022, Samson’s credit controller emailed Ms Watkins saying that no  payments  had  been  received  from  Red  Stag  since  21  October  2022.  Ms Watkins was advised that payments of $500 per fortnight must restart on 1 December 2022 and, if they did not, Samson would send the file to a debt collector.

[13]Red Stag paid $500 on 1 December 2022, but no further payments were made.

[14]   The $500 payment on 1 December 2022 seems to have been overlooked. Shortly after that date, Samson handed the file to a debt collector.

[15]   On 8 December 2022, the debt collector prepared a notice of demand to     Ms Watkins under her guarantee and issued an invoice to Samson for debt recovery costs in the sum of $6,706.36. The demand treated the full amount outstanding as being payable due to failure by Red Stag to make the agreed payments. It claimed

$41,167.10, which was said to be made up as follows:

$
Outstanding balance repayment plan as at 1 December 2021	33,785.68
Outstanding interest from 2 December 2022 to 8 December 2022 at 15 per cent — six days at $13.88 per day	83.28
Accrued   Default   Interest   from    21    October    2022    to 1 December 2022 charged by client as at 1 December 2022	591.78
Recovery costs	6,706.36
Total claimed	$41,167.10

[16]   The figure of $33,785.68 was  the  $39,785.68  in  the  final  invoice  dated 13 December 2022 less the $6,000 paid between 31 January and 21 October 2022.

[17]   On 18 or 19 December 2022, Samson advised Ms Watkins that the matter had been referred to the debt collector.

[18]   On 20 December 2022, the debt collector emailed Ms Watkins to advise that the matter had been referred for collection and all communications must be with the debt collector and not with Samson. Ms Watkins responded the same day pointing out that she had paid $500 on 1 December 2022.

[19]   On 21 December 2022 the debt collector emailed Ms Watkins the notice of demand.

Issue of legal proceedings

[20]On 14 March 2023, Samson issued proceedings in the District Court seeking

$41,816.30. It applied for summary judgment in relation to the claim, which was said to be made up of:

$
Outstanding balance repayment plan as at 1 December 2021	33,785.68
Outstanding interest from 2 December 2022 to 8 March 2023 at 15 per cent — 96 days at $13.88 per day	1,332.48
Accrued   Default   Interest   from    21    October    2022    to 1 December 2022 charged by client as at 1 December 2022	591.78
Recovery costs pursuant to Samson’s Terms and Conditions	6,706.36
Less payments made or credits passed to date	-600.00
Total claimed	$41,816.30

[21]Red Stag is not in liquidation, but the claim was against Ms Watkins only.

[22]   Ms Watkins made a counterclaim for “in the vicinity” of $100,000 to recover amounts paid for rent, wages, stock, building improvements and advertising, plus interest and costs. She too sought summary judgment.

District Court decision

Samson’s summary judgment application.

[23]   The District Court Judge concluded that Samson is entitled to summary judgment against Ms Watkins for $23,319, plus costs of $3,382 and disbursements of

$1,361.15.

[24]   The Judge rejected Ms Watkins’s argument that she had entered the payment agreement under duress. She held that while Ms Watkins felt under pressure when the payment agreement was made on 14 December 2021, this did not constitute duress.

[25]   The Judge also rejected Ms Watkins’s argument that the figure of $39,785.68 in the final invoice of 13 December 2021 was incorrect. There was no evidence of overcharging of rent or of failure to pass on COVID credits that Red Stag was entitled to. The Judge did not accept that Mr Friedlander had represented to Ms Watkins that if the keys were handed back the obligations under the lease would stop. Under the terms of the lease, Red Stag continued to be liable to pay the rent while the new tenant was secured and commenced paying rent and Samson was entitled to charge default interest and recovery costs on an indemnity basis. The Judge was satisfied that a statement produced by Samson showed that the $39,785.68 figure was correct.

[26]   However, the Judge also considered that, although it was agreed under the payment agreement that the full amount outstanding of $39,785.68 would become immediately due in the event of default, Samson was estopped from claiming the full amount outstanding. This was because of the advice from Samson’s credit controller on 30 November 2022 that Ms Watkins could continue with the payment agreement if

$500 per week was paid starting on 1 December 2022 and, if it was not, Samson would send the file to a debt collector.   The Judge concluded that, as $500 was paid on      1 December 2022, there was an estoppel. This was so even though no payments were made after 1 December 2022. The Judge was influenced in her conclusion on this by the fact that Samson overlooked the 1 December 2022 payment and referred the matter to the debt collector before the failure to make the next payment on 15 December 2022.

[27]   As a result of the estoppel, the Judge concluded that the amount recoverable by Samson was limited to $23,319. This sum is the discounted amount of $29,819 that was payable under the payment agreement if there was no default, less the $6,000 paid between 31 January and 21 October 2022, and the $500 paid on 1 December 2022.

[28]   The Judge also concluded that the estoppel prevented Samson from recovering any of the default interest claimed or the debt collector’s costs. Samson was limited to being able to recover costs of $3,382 and disbursements of $1,361.15.

Ms Watkins’s summary judgment application

[29]The Judge declined Ms Watkins’s application for summary judgment.

[30]   Her counterclaim was made on a number of “grounds”. Some of the grounds related to matters that are in the nature of defences to Samson’s claim, rather than a basis for a counterclaim. These are the matters discussed above concerning the payment agreement and the dispute over the amount owed under the lease.

[31]   Other grounds related to the condition and features of the building. Specifically, it was alleged that the building did not have a warrant of fitness, was not maintained properly, and did not have adequate signage or lighting. It was alleged that these issues delayed the opening of the store and otherwise negatively impacted on the business.

[32]The Judge’s conclusions in relation to these matters were:

(a)There is no evidence that the building was required to have a warrant of fitness or that it did not have one.

(b)While there is some evidence that maintenance issues were raised, they were fixed in sufficient time.

(c)The lease provided that Samson had to approve the signage used on the building and could withhold its approval unless it was unreasonable to do so2 and there is insufficient evidence to establish that the refusal was unreasonable.

(d)There is no evidence that Samson had any obligation in relation to the lighting.

(e)There is no evidence that any of the above matters delayed opening or otherwise impacted on the business.

2      Clause 4.4.3.

[33]   Finally, it was alleged that Mr Friedlander and Samson’s letting agent represented that the premises around the shop would be leased and this was a misrepresentation because the surrounding premises remained vacant. The Judge rejected this claim. She accepted Mr Friedlander’s evidence that, while he may well have said that Samson would try hard to fill all the tenancies around the premises, he did not make any representations to Ms Watkins about occupancy around the premises and he would never have promised a prospective tenant that Samson would lease a neighbouring tenancy by a particular date (or at all) because Samson does not have control over what potential tenants do. There was no evidence to suggest this was not the correct position. Samson could not force tenants to take leases.

Scope of appeal

[34]   Ms Watkins appeals both the Judge’s decision to grant Samson summary judgment and the decision to refuse her application for summary judgment against Samson. She challenges all the Judge’s conclusions.

[35]   Ms Watkins raised some new matters on appeal that were not part of the hearing in the District Court or were not dealt with in the decision. These were that Samson’s claim is an abuse of process and vexatious, that Mr Friedlander perjured himself in his affidavit, and that Samson’s re-entry was in breach of s 245 of the Property Law Act 2007. However, I do not address these matters because Samson’s claim is plainly not an abuse of process or vexatious, during the hearing Ms Watkins abandoned her perjury allegation, and s 245 concerns cancellation of leases for non-payment of rent, but here the lease came to an end by agreement.

[36]   There is no cross-appeal by Samson. Accordingly, there is no challenge to the finding of estoppel and therefore that Samson’s claim is limited to $23,319, plus costs of $3,382 and disbursements of $1,361.15.

[37]   This appeal proceeds by way of rehearing.3 The appeal court must come to its own view on the merits.4 To succeed on appeal, the appellant must satisfy the appeal court that the decision on appeal was wrong.5

Appeal against grant of Samson’s summary judgment application

[38]   Ms Watkins submits the Judge was wrong to conclude that Samson was entitled to summary judgment under the payment agreement. She submits that she signed the agreement under duress and therefore the agreement is void.

[39]   For there to be duress there must be a threat against, or illegitimate pressure on, the victim and that threat must have resulted in the victim being coerced into entering the agreement.6

[40]   A difficulty for Ms Watkins is that a threat to carry out a lawful act does not normally result in duress. Only in exceptional circumstances will a threat to do something lawful constitute duress.7 Here the threat was that Samson would bankrupt Ms Watkins if she did not sign the payment agreement. Ms Watkins clearly felt under considerable pressure when she signed the payment agreement, including because it was made clear to her that she needed to sign quickly, but the nature of the threat makes establishing duress difficult.

[41]   An even greater difficulty for Ms Watkins is that she affirmed the agreement. If the victim of duress affirms the agreement, they are precluded from insisting the agreement is void on the basis of duress.8 As I have explained, payments totalling

$6,000 were made between 31 January and 21 October 2022. These payments were made under the payment agreement. The agreement was affirmed and any right to raise duress was lost.

3      District Court Act 2016, s 127.

4      Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [4].

5 At [13].

6      McIntyre v Nemesis DBK Ltd [2009] NZCA 329, [2010] 1 NZLR 463 at [25] citing: Attorney-General for England and Wales v R [2003] UKPC 22, [2004] 2 NZLR 577; and Pharmacy Care Systems Ltd v Attorney-General (2004) 2 NZCCLR 187 (CA).

7      Dold v Murphy [2020] NZCA 313, [2021] 2 NZLR 834 at [68]–[69] and [73].

8      McIntyre v Nemesis DBK Ltd, above n 6, at [25].

[42]   For this reason and because Samson is not seeking to challenge the Judge’s finding of estoppel, I do not need to decide whether the Judge was correct that the full amount of $39,785.68 was payable at the time the payment agreement was entered. The amount that is payable by Ms Watkins does not depend on how much was actually owed under the lease. It does not depend on whether $39,785.68 was owed or whether, as Ms Watkins contends, some lower figure was owed. The amount that is payable is the agreed amount of $29,819 less the payments made of $6,500, that is, $23,319.

[43]   I have explained above that Ms Watkins makes a counterclaim for $100,000. Ms Watkins also advanced her counterclaim as a basis of opposition to Samson’s summary judgment application. However, her counterclaim cannot provide her with a defence to Samson’s claim because the lease requires rent payments to be made “without any deductions whatsoever including set off or counterclaims”.9 A similar exclusion for set off and counterclaims is also included with respect to payments for outgoings.10

[44]   I conclude that Ms Watkins has no defence to the claim. There is no real question to be tried. I am left without any real doubt or uncertainty that this is the case.11 I therefore uphold the Judge’s decision that Samson is entitled to summary judgment for $23,319.

[45]   There is no specific challenge to the amounts of costs and disbursements awarded to Samson. I therefore also confirm that Samson is entitled to recover costs of $3,382 and disbursements of $1,361.15.

Appeal against refusal to grant Ms Watkins’s summary judgment application

[46]   As explained above, some of the matters raised by Ms Watkins in her counterclaim are really in the nature of defences to Samson’s claim. These matters relate to the payment agreement and the dispute over the amount owed under the lease. I have dealt with these matters above and do not need to address them again here.

9      Clause 1.1.

10     Clause 2.2.

11     Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].

[47]   I do need to discuss the matters raised by Ms Watkins relating to the condition of the building and the alleged misrepresentation concerning the vacant surrounding premises. Before I do this, though, there is one important preliminary point I need to address.

[48]   Red Stag is not a party to the proceedings. The counterclaim is not made by Red Stag. It is made by Ms Watkins. But the counterclaim belongs to Red Stag as the lessee rather than to Ms Watkins as the guarantor. For this reason alone, the counterclaim  cannot  succeed.   Notwithstanding   this,   I   will   briefly   address Ms Watkins’s allegations.

The condition and features of the building

[49]   During the hearing Ms Watkins abandoned her argument about the lighting. She also accepted that the opening of the store was not delayed.

[50]   The Judge’s conclusions regarding the other matters Ms Watkins raised are all correct:

(a)There is no evidence that the building was required to have a warrant of fitness or that it did not have one.

(b)It is clear that Ms Watkins raised a number of maintenance issues. This can be seen from her emails. However, the issues appear to have been resolved, albeit not as quickly as Ms Watkins wanted.

(c)The lease provided that Samson had to approve the signage used on the building and could withhold its approval unless it was unreasonable to do so.12 Ms Watkins did not say what signage she wanted to put up or why it was unreasonable for Samson to decline. Accordingly, there is insufficient evidence to show that Samson unreasonably withheld its approval.

12     Clause 4.4.3.

(d)Importantly, there is also no evidence to connect the above issues with the loss claimed. Ms Watkins explained that the loss figure of $100,000 simply represents the total of amounts in a Xero print out that she said shows payments made by Red Stag in relation to Gate & Garden between 1 May 2021 and 31 March 2022. The figure of $100,000 does not represent the loss that would be claimable by Red Stag if it could show that Samson breached the lease as a result of the matters raised by Ms Watkins. In order to calculate the claimable loss, it would be necessary to assess income that was lost or additional expense that was incurred as a result of the issues raised. This assessment has not been carried out.

Vacant neighbouring tenancies

[51]   Finally, Ms Watkins alleges that Mr Friedlander and the agent represented that the premises around the shop would be leased, and this was a misrepresentation because the surrounding premises remained vacant. Specifically, she said that “the misleading pitch we were given [was] that the adjacent tenancies were going to be filled up so that it would be a vibrant foot traffic area” but the “[a]djacent tenancies remained empty for the entire time we were at the premises”.

[52]   As I have said, Mr Friedlander’s evidence was that, while he may well have said that Samson would try hard to fill all the tenancies around the premises, he did not make any representations to Ms Watkins about occupancy around the premises. He said he would never have promised a prospective tenant that Samson would lease a neighbouring tenancy by a particular date (or at all) because Samson does not have control over what potential tenants do.

[53]   Determining what Mr Friedlander and the agent said and whether it was misleading involves resolving material conflicts of evidence and the assessment of credibility. Accordingly, this claim is not suitable for summary judgment.13

13     Krukziener v Hanover Finance Ltd, above n 11, at [26].

[54]   A further problem is that, again, there is no link between the alleged misrepresentation and the loss of $100,000 claimed. In order to establish the necessary connection, there would need to be an assessment of the impact that the vacant surrounding premises had on the income of the business. Again, this has not been assessed.

Result

[55]   The appeal in relation to the summary judgment entered in favour of Samson is dismissed.

[56]   The appeal in relation to the refusal to grant summary judgment in favour of Ms Watkins is dismissed.

[57]If the parties cannot agree on costs, then I direct that:

(a)Samson should file and serve  a  memorandum  of  no  more  than  two pages within 10 working days; and

(b)Ms Watkins should file and serve a memorandum of no more than  two pages within a further 10 working days.

[58]I will then determine costs on the papers.

Blanchard J