Wong v Selfe
[2017] NZHC 610
•30 March 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2016-404-000600 [2017] NZHC 610
BETWEEN SHUN LEE RONNIE WONG
First Plaintiff
AND
SUET LIN SHIRLEY TANG Second Plaintiff
AND
DAVID LEEROY SELFE First Defendant
AND
KIRSTEN LEONIE SELFE Second Defendant
Hearing: 16 November 2016 Appearances:
S Chan for the Plaintiffs
Defendants in PersonJudgment:
30 March 2017
JUDGMENT OF ASSOCIATE JUDGE SARGISSON
This judgment was delivered by me on 30 March 2017 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date.......................................
Solicitors:
Forest Harrison, Auckland
WONG & Anor v SELFE & Anor [2017] NZHC 610 [30 March 2017]
Introduction
[1] The applicants, David and Kirsten Selfe, apply to set aside a summary judgment entered against them on 17 May 2016 for $213,575 for unpaid rent and outgoings, following a hearing at which they did not appear.
[2] The respondents, Shun Lee Ronnie Wong and his wife, Suet Lin Shirley Tang, oppose the application. They say the judgment, which was made on their claim against the applicants, should stand.
[3] The application to set aside the summary judgment is declined. For reasons that are set out in this judgment I am satisfied that the summary judgment was not irregularly obtained, and that there is no tenable defence to the claim for unpaid rent and outgoings. There has been no miscarriage of justice.
Background
[4] The respondents are the registered proprietors of premises located in Browns Bay on Auckland’s North Shore. They bought the premises in 2012 from the previous owner. They also acquired the reversion of a lease of the premises that the former owner had granted in 2009 to Ardern Holdings Limited in December 2009.
[5] Ardern Holdings is now in liquidation, but before its demise it operated the Corelli Performing Arts School at the premises. The applicants were the directors of Ardern Holdings and the principals of the school. They provided a written guarantee for a year’s rent and outgoings payable under Ardern Holdings’ lease; and under this guarantee they are treated as the principal debtors.
[6] In May 2015, Ardern Holdings defaulted on its payment obligations under the lease. Eventually, the unpaid rent and outgoings formed the basis for different but related proceedings: liquidation proceedings against Ardern Holdings; the summary judgment proceedings against Mr and Mrs Selfe as guarantors to which the present application relates; and bankruptcy proceedings against Mr and Mrs Selfe. I pause to refer to each set of proceedings.
[7] On 9 December 2015, the respondents served Ardern Holdings with a statutory demand for $118,138.48 for the shortfall in rent and outgoings for the period from 1 June to 8 December 2015. Ardern Holdings failed to comply with the demand, and on 29 January 2016 the respondents commenced proceedings to have it placed into liquidation.
[8] On 29 January 2016 Ardern Holdings sought an adjournment of the liquidation proceedings on the grounds that the applicants had arrangements for a third party to meet the statutory demand. The matter was adjourned to a half day fixture on 19 April 2016 to allow Ardern Holdings to make payments by
1 April 2016 and to file a statement of defence by 29 February 2016.
[9] By 2 April 2016 Ardern Holdings had neither made payment nor filed a statement of defence. On this date, the respondents effected re-entry of the premise.
[10] On 9 April 2016 the respondents served the applicants with summary judgment proceedings for the unpaid rent and outgoings, which they had filed on
30 March 2016.
[11] On 19 April 2016, the Court made an order placing Ardern Holdings into liquidation. The application was undefended and counsel for Ardern Holdings accepted the quantum claimed by the respondents.
[12] On 17 May 2016 the summary judgment proceeding came before the Court. The applicants filed no statement of defence and no documents in opposition to the interlocutory application for summary judgment. Nor did they appear at the hearing. Judgment was entered for the respondents and orders made against Mr and Mrs Selfe to the tune of $213,575, this being:
(a) $187,158.21 for the outstanding rent and outgoings as at
15 March 2016;
(b) Interest at the rate of 8.5% per annum on the above amount as from
16 March until the date of judgment calculated to be $43.58 per day;
(c) $12,054.18 for legal costs incurred from August 2015 to
15 March 2016; and
(d) An award of costs on a 2B basis and disbursements in the sum of
$11,617.07.
[13] In reliance on this summary judgment, the respondents served Mr and Mrs Selfe with bankruptcy notices. In separate proceedings, Mr and Mrs Selfe have applied to have these bankruptcy notices set aside.
[14] On 21 July 2016 Mr and Mrs Selfe filed the present application to set aside the summary judgment. Their principal ground relies on a claim to have a counterclaim or set-off for $90,000 worth of expenditure on repair and maintenance works and damages for the respondents’ illegal re-entry of the premises. It is common ground that the applications to set aside the bankruptcy notices will turn on the outcome of the present application.
Legal framework
[15] The application is made pursuant to High Court Rule 12.14 which relevantly provides:
12.14 Setting aside judgment
A judgment given against a party who does not appear at the hearing of an application for judgment under rule 12.2 or 12.3 may be set aside or varied by the court on any terms it thinks just if it appears to the court that there has been or may have been a miscarriage of justice.
[16] The guiding authority for applications to set aside judgment is Russell v Cox.1
McMullin J emphasised that the discretion vested in the Court must be regarded as unfettered, but three considerations are commonly regarded as being of central importance, namely that:
(a) The defendant has a substantial ground of defence; (b) The delay is reasonably explained; and
1 Russell v Cox [1983] NZLR 654 (CA) at 659.
(c) The plaintiff will not suffer irreparable injury if the judgment is set aside.
[17] Both parties structure their submissions around these three considerations. I stress that such considerations do not exhaust the Court’s discretion, and are ultimately secondary to the preeminent question of where the overall justice of the case lies.
[18] A summary judgment can also be set aside on the ground that is has been irregularly obtained.2
[19] Whether there is a procedural irregularity is a prior question, and if a Court is satisfied that such an irregularity exists there is no need to look further into the merits of the case.3 The applicants raise such an argument, and I address this before turning to the three factors specified in Russell v Cox.
Was the summary judgment irregularly obtained?
[20] Mr and Mrs Selfe submit the summary judgment was irregularly obtained for two reasons:
(a) There was a defect in the service of the proceedings;
(b)Mr Wong did not lay out the grounds on which he deposed to the belief that the applicants had no defence to the allegation as required under High Court Rule 12.4(5)(b).
Was there a defect in the service?
[21] The applicants depose that they mistakenly assumed when they were served with the proceedings that the respondents would also send a copy to their solicitors, Glaister Ennor. The applications considered this quite reasonable given that the
respondents’ solicitors had been in correspondence with Glaister Ennor over many years.
[22] As it turned out, Glaister Ennor only found out about the proceedings after judgment was entered against the applicants. The applicants infer that the decision not to send it to their solicitors was intentional.
[23] This issue can be disposed of quickly. Personal service constitutes legitimate service under High Court Rule 6.1(a). The documents served gave requisite notice in accordance with r 12.4(4)(c)(i).
[24] The respondents’ solicitors, Forest Harrison, also acted courteously and professionally in contacting Glaister Ennor on three separate occasions in March 2016 to confirm whether Glaister Ennor was authorised to accept service. No confirmation was received before the summary judgment proceedings were served on the applicants personally in accordance with the High Court Rules.
Did the respondents fail to lay out the relevant grounds under r 12.4(5)(b)?
[25] Mr and Mrs Selfe rely on r 12.4(5)(b) which relevantly provides:
(5) The affidavit—
(b) if given by or on behalf of the plaintiff, must verify the allegations in the statement of claim to which it is alleged that the defendant has no defence, and must depose to the belief of the person making the affidavit that the defendant has no defence to the allegations and set out the grounds of that belief:
(Emphasis added).
[26] In the summary judgment context, the onus is on the plaintiff to establish that the defendants have no defence, but there is also a duty on the plaintiff to disclose in its affidavit any facts of which it is aware that could amount to a defence.4
A reasonably strict approach to this rule is justified by the limitations intrinsic to the
summary judgment procedure on the defendant’s ordinary right to defend.5
[27] It is apparent that Mr Wong’s affirmation dated 29 March 2016 does not mention the issues concerning the applicants’ potential counterclaim or set-off. This is a “serious concern”.6
[28] Mr Wong and Mrs Tang submit that they did not have any material evidence in their possession that might support a defence for the applicants. In essence, the respondents contend they were not aware of the relevant issues prior to the proceedings.
[29] This issue turns on the effect of certain correspondence between Glaister Ennor, solicitors for Ardern Holdings, and Forest Harrison, solicitors for the respondents.
[30] The details of the correspondence are not in dispute:
(a) Glaister Ennor first raised the question of a potential set-off by letter dated 21 December 2015.
(b)The next day Forest Harrison responded asking for evidence and drawing attention to the terms of the lease which disentitled Ardern Holdings from set-offs or deductions in respect of rent payments. Glaister Ennor did not respond to this point.
(c) Then by a letter dated 11 February 2016, Glaister Ennor referred in general terms to “landlord maintenance which our client has had to undertake”.
(d)Forest Harrison replied the next day, advising that the respondents had never received instructions about landlord maintenance issues. Forest Harrison alleged the claims were “unsubstantiated”, and asked for
documentary evidence.
6 Canning v Lucas Industries NZ Ltd CA24/89, 22 March 1990 at 5.
(e) Glaister Ennor replied on 15 February 2016 stating that “we will address [the various maintenance issues] more fully with you in due course” and then providing five photos of damaged areas of the school as examples of such issues. The photos did not show the ‘repaired’ items.
(f) There is no evidence that the issue of landlord maintenance failures was raised again until this present application was served on the applicants.
[31] From this correspondence, I consider that the applicants did not do nearly enough to put the respondents on notice that they had a legitimately arguable counterclaim or set-off that the respondents were duty-bound to disclose in their affidavit evidence.
[32] It is not sufficient for the applicants to claim, without any corroborating documentary evidence, that Ardern Holdings had spent some $90,000 on repairs and maintenance and was consequently entitled to a set-off. At no point did the applicants supply a single invoice, quote, or notice to support their assertions. The applicants also failed to challenge the respondents’ assertion that the terms of the lease prohibited set-offs against the rent.
[33] In sum, I find no issue with the manner in which the summary judgment was obtained. I turn now to the three considerations outlined in Russell v Cox. I put aside momentarily the key question of whether the applicants have a substantial ground of defence, and deal first with the other two considerations which can be disposed of briefly.
Was the applicants’ delay reasonable?
[34] The summary judgment proceedings were served on the applicants on
9 April 2016. Judgment was entered on 17 May 2016 when the applicants had failed to file a notice of opposition or a statement of defence, or to appear at the hearing. The applicants delayed further until late July 2016 before filing this application presently before me.
[35] The applicants rely on two grounds to explain their delay, namely an alleged defect of service and personal circumstances.
[36] I do not need to revisit the former matter. There was no defect of in the respondents’ service of the proceedings to justify the applicants’ delay in bringing the application.
[37] The applicants also submit that their delay was excusable in light of various personal circumstances faced by the applicants during the period leading up the hearing. Mr Selfe describes these circumstances as follows:
… there were financial strains on the school, my father’s partner died suddenly, and my father suffering dementia and had to come and live with us. During this time my father even got into a car and drove over the harbour bridge and got disoriented. We had to liaise with the Police to recover him. Amongst all this stress I did not appreciate what had to be done with the proceedings.
[38] The respondents rely on the analogous case of Smith v Penny.7 In that case, Mr Penny was spending most of his non-working hours at the hospital bedside of his sick son at the time the notice of proceedings was served. Mr Penny did not deny receiving the documents, but he was simply preoccupied with his son’s illness. In these circumstances, the Court observes that:
Notwithstanding his son's illness, it would have been open to him to file a proforma notice of opposition, and sought an extension of time within which to file a notice of opposition, and an adjournment of any hearing. It is likely that the Court (and perhaps Mr Smith) would have been sympathetic to an extension of time. Alternatively, his solicitors could have contacted the plaintiff's solicitors. No steps were taken by Mr Penney, and his explanations, while perhaps understandable at a personal level, do not, in my view, excuse his failure to take any steps at all.
[39] The same could be said in this context. I accept that Mr and Mrs Selfe were weighed down by many other concerns, but this on its own is not sufficient to set aside the summary judgment awarded in the favour or Mr Wong and Mrs Tang.
Will the respondents suffer irreparable harm if the summary judgment is set aside?
7 Smith v Penny [2013] NZHC 2988 at [57]-[59].
[40] The applicants submit that if the judgment is not set aside, they will suffer irreparable injury. However, as the respondents point out, the Russell v Cox test is concerned with the potential injury to the respondents not the applicants.
[41] If the judgment was set aside, I accept that the respondents would be required to incur further costs and delay in obtaining judgment once again, on top of the costs already expended opposing this application. I also acknowledge that these costs would not be easily recoverable from the applicants.8
[42] However, legal expenses and delay are always part and parcel of engaging with the judicial process. If there is good reason to set aside judgment I do not consider that the time and costs associated with seeking a new judgment should weigh heavily in the Court’s analysis. I therefore consider this Russell v Cox consideration of little moment to the present application.
Do the applicants have a substantial ground of defence?
[43] The applicants submit that they have a substantial ground of defence in the form of a counterclaim-claim or set-off for:
(a) Expenditure on repair and maintenance work amounting to approximately $90,000; and
(b) Loss caused by the respondents’ illegal re-entry of the premises. [44] These two submissions are addressed in turn.
Repair and maintenance works
[45] The applicants submit that Ardern Holdings had to incur costs for repair and maintenance works that were the landlord’s responsibility under the lease agreement. They depose that the maintenance and repair issues were brought to Mr Wong’s
attention but “[o]n all occasions he just wouldn’t do it”. Consequently, Ardern
Holdings had to use its limited cash flows to pay for the work itself.
[46] The applicants’ “rough and ready estimate” is that such costs summed to
around $90,000, and this amount plus interest represents the counterclaim or set-off.
[47] The respondents contend the applicants’ set-off claim is barred by clause 1.1 of the lease which relevantly provides:
THE Tenant shall pay the annual rent by equal monthly payments in advance (or as varied pursuant to any rent review) on the rent payment dates. The first monthly payment (together with rent calculated on a daily basis for any period from the commencement date of the term to the first rent payment date) shall be payable on the first rent payment date. All rent shall be paid without any deductions or set-off by direct payment to the Landlord or as the Landlord may direct.
(Emphasis added).
[48] There is no question that this clause applies to the debt relating to the rent in arrears; the more complicated question is whether it equally applies to the outgoings. In Drake City Ltd v Tasman-Jones, I held that an identical clause did not exclude set- off claims against outgoings.9 Without conclusively deciding the matter, I consider it likely the same would apply in this case, and I proceed on that basis.
[49] The works allegedly undertaken by Ardern Holdings are as follows:
(a) Repainting the building – $24,000. (The applicants allege that the respondents agreed to undertake this work before renewing the lease, but this is denied by the respondents.)
(b) Replacing doors after the hinges rusted and double glass fell off –
$12,5000.
(c) Purchasing three heat pumps due to air conditioning issues – $10,000.
(d)Plumbing works on boys’ toilets because of a crumbling sewer connection – $1,500.
(e) Repainting walls and aluminium windows after vandalism – $11,500. (f) Repairing false ceilings after leakage – $3,500.
(g) Replacing flooring since it had not been maintained over four years –
$26,000.
[50] Mr Wong’s affirmation of 27 September 2016 gives a comprehensive
reply to each of these maintenance and repair works:
Paragraph 28: David has listed various maintenance and repair works that he alleges we were required to do, and which AHL [Ardern Holdings] has purportedly paid for. Many of these works were never brought to my attention. I also note the following:
a. Painting: At no time did AHL ask us to paint the building. We bought the building in 2012 and AHL did not renew the lease as at 1 October 2015. It was in default in terms of payment of rent and outgoings at that stage. Further, under the Lease the tenant is responsible for the costs of painting.
b. Hinges on front door: I received an email from AHL in regards to this on 8 April 2013. The Lease states that repairs of all glass breakages and breakage or damage to doors are the tenant’s obligation. Accordingly, AHL’s email stated that any contribution from us towards the repair invoice of $8,500 would be appreciated. I replied that if overdue rent and outgoings were paid I would consider this. I did not receive any further response from AHL. The relevant emails are annexed and marked as exhibit GG.
c. Air Conditioning: Repairs to any air-conditioning were the tenant’s responsibility. Further, when AHL raised this issue the rent and outgoings were seriously in arrears.
d. Broken toilet: From 1 March 2015, payments for rent and outgoings became very delayed. I received an email from AHL in regards to the boys’ toilets on 9 March 2015. I asked if repairing the toilet is the landlord’s responsibility, and asked for the quote from AHL’s plumber. I also reminded AHL that rent for March was 10 days overdue. AHL replied that the rent payment was coming, and that it was still waiting for the quote. AHL never contacted me again about the matter. The relevant emails are annexed and marked as exhibit HH.
e. Vandalism to exterior of buildings: This is not the landlords’
responsibility.
f. Electricity feed: This was also referred to in paragraph 29 ie I have “outrageously” repaired the power cable under the bridge by attaching some string. Our other tenant, KBL Joinery, informed us that some children had been playing on the bridge and had tried to pull the cable down. In the interests of safety, I supported the cable with some string immediately after I became aware of the issue. Within the same week I engaged a contractor to properly fasten the cable back in place. I also emailed KBL Joinery requesting that they help keep an eye on the cable. My email to KBL Joinery and a photo of the repaired cable are annexed and marked as exhibit II.
g. Leaking roof: On 3 August 2015, I received an email from AHL about two leaks in the building. I understand this to be a minor roof repair and therefore the tenant’s obligation. At this point, 3 months’ rent and outgoings ($73,407.53) were overdue. I replied on the same day stating that if rent and outgoings were paid we were happy to address the issues. I did not receive any further response from AHL. The relevant emails are annexed and marked as exhibit JJ.
h. Flooring: Again, this is the tenant’s responsibility to repair and
maintain.
[51] The applicants depose there is a fundamental disagreement of both fact and law that needs to be worked through in a full hearing. It is quite apparent that the accounts differ factually, on whether the repairs were brought to the landlord’s attention or even undertaken at all; and legally, as to who had responsibility to undertake the specified work. But this is not enough to persuade me that the judgment should be set aside.
[52] In the context of an application for summary judgment, the principle is well-settled that even though the onus is on the plaintiff, the defendant must provide some evidential foundation for its defences, including adducing documentary evidence where such is available.10 In particular, the Court of Appeal has observed
in Haines v Carter that:11
10 Treeways 2000 Ltd v Ryan (1995) 8 PRNZ 398 at 400; Australian Guarantee Corporation (NZ) Ltd v McBeth (1992) 4 PRNZ 544 (CA) at 548; Cheah v Equiticorp Finance Group Ltd [1989] 3
NZLR 1 (PC) at 2.
11 Haines v Carter [2001] 2 NZLR 167 (CA) at [90].
A simple assertion by the defendant that he believes he has an arguable defence on a particular ground is unlikely to cut much ice unless the defendant provides a reasonable level of detail in support of that defence.
[53] It is sensible to apply this minimal standard to applications to set aside summary judgment as well.
[54] It is telling then that beyond asserting their version of events, the applicants have done nothing of significance to challenge the respondents’ competing account. Given that a key contention on which they rely is that they incurred significant expenditure, it is to be expected that they would produce documentary evidence to demonstrate that this claim is more than mere assertion. They have not produced any such evidence. There is not a single invoice, bank statement, or even name of any contractor or contractors, to lay a foundation for the claim that the work was undertaken or that the amounts claimed are accurate.
[55] The applicants submit they are unable to access these documents as they are now with the liquidator. However, as Ardern Holdings’ directors, they had full access to such documents when the issue was raised prior to the commencement of, and during the course of, the liquidation proceedings. The very claims they make now are claims that would surely have been made by the company if this expenditure had been incurred. Moreover, there is also no evidence the applicants have made legitimate attempts to obtain these documents from the liquidator for the purpose of this preceding.
[56] There is no evidence indicating that that the issues were satisfactorily brought to the landlord’s attention. On a number of occasions, the respondents reasonably asked for more evidence before taking the matter further, but the applicants failed to supply any such evidence.
[57] While the applicants supplied the respondents and the Court with photographs of the roof damage, there were no corresponding photographs showing the completed work, and no photographs adduced for the other work.
[58] Additionally, the applicants have not challenged the submission that the specified work was the tenants’ responsibility. This is despite the fact that the lease agreement gives the tenant responsibility for repairing broken doors,12 and interior painting;13 and also to “keep and maintain the interior of the premises including the Landlord’s fixtures and fittings”, which likely covers updating air-conditioning units, repairing minor ceiling damage, and replacing flooring.14
[59] Where the position was less clear, Ardern Holdings failed to clarify matters with the respondents. Ardern Holdings did not respond to the respondents’ inquiry as to whether the plumbing was the landlord’s responsibility, or challenge the respondents’ view that the roofing damage was minor and therefore the tenant’s responsibility.
[60] Finally, I note that this ground of defence was not raised in the application to put Ardern Holdings into liquidation and the quantum sought by the respondents was left unchallenged. While this is not of itself determinative, it is a further factor that points strongly to the applicant’s concerns being nothing more than unsubstantiated assertion. It also calls for something more than they have presently produced to provide a reasonable foundation for their claims.
[61] In short, I am not persuaded that this counterclaim or set-off constitutes a substantial ground of defence.
Illegal re-entry
[62] The respondents sent agents to re-enter the premises on 2 April 2016. The applicants submit that the respondents had no legal right to re-enter the premises
at this time.
12 Clause 8.1(b) provides that the tenant is responsible to “pay for the repair of all glass breakages
and breakage or damage to all doors”.
13 Clause 8.1(c) provides that the tenant is responsible to “paint and decorate those parts of the
interior of the premises which have previously been painted and decorated when the same reasonably requires repainting and redecoration to a specification as approved by the Landlord”. Admittedly, it is not clear whether the painting work was internal or external, and the legal position of external painting is less clear.
14 There is also cl 8.1(d) which provides that the tenant is responsible to “replace all floor coverings worn or damaged other than by fair wear and tear with floor coverings of a similar quality when reasonably required by the Landlord”.
[63] The rent had been in arrears well longer than 10 working days after rent payments dates, and on 27 January 2016 the respondents accordingly served Ardern Holdings with a notice pursuant to s 245 of the Property Law Act 2007.
[64] The breach was not remedied within the statutory timeframe of 10 days following the service of the PLA notice. After this period elapsed, the respondents had the right to cancel the lease and peacefully re-enter the premises pursuant to the
27 January PLA notice. This is not disputed.
[65] What is disputed is whether the PLA notice still governed the contractual relationship between the parties at the time the respondents effected re-entry.
[66] It is common ground that subsequent to serving the 27 January PLA notice, the respondents communicated to Ardern Holdings on a number of occasions that they were now on a month to month tenancy expiring 7 April 2016 and that vacant possession was required on 8 April. The question is whether the respondents implicitly waived the right to re-enter the premises at an earlier date as a result of these communications.
[67] The key correspondence was on 7 March 2016, when the respondents served a notice under the lease which reads as follows:
You are now occupying the premises on a monthly basis. The landlord hereby gives you one month’s notice to terminate the lease. Your lease shall terminate on 7 April 2016. Our client requires vacant possession of the Property on 8 April 2016.
[68] The respondents highlight that they served the 7 March notice while still the under the impression that Ardern Holdings would make partial payment of $125,000 towards the debt on 1 April 2016. Mr Wong’s affidavit records that the 7 March notice was therefore “a courtesy notice in view of [Ardern Holdings] intention to make partial payment”.
[69] The respondents submit that later in March they became aware that Ardern Holdings had no intention to repay the debt, despite earlier indications to the contrary. On 17 March, Forest Harrison accordingly sent a letter to Glaister Ennor
referring to the 27 January notice purporting to terminate the lease and asserting that the respondents reserved the right “to re-enter premises prior to 7 April 2016 pursuant to the Property Law Act notice dated 27 January 2016”.
[70] The applicants did not accept this. On the same day Glaister Ennor replied by email advising that Forest Harrison’s letter of 7 March giving one month’s notice to terminate the deed of lease was now the operative document superseding the PLA notice.
[71] The applicants did not make the partial payment of $125,000 on 1 April, and the respondents effected re-entry the next day.
[72] I accept that the respondents acted in good faith in giving Ardern Holdings time to make the partial repayment. But the contractual effects of the 7 March correspondence are quite clear. A new contractual arrangement was created upon which the applicants were entitled to rely. If the respondents had wanted to avoid this interpretation of events, they should have more carefully and explicitly preserved its rights under the earlier PLA notice.
[73] It follows that the respondents were not legally entitled to re-enter earlier than 8 April 2016, and that the applicants could therefore sue for damages.
[74] I do not, however, think this qualifies as a substantial ground of defence for the simple reason that there is nothing to indicate that any loss was suffered.
[75] Ardern Holdings was in the process of relocating the school to new premises when the respondents’ agents arrived. The applicants claim that they and the school lost face, causing parents to remove their children from the school, ultimately leading to the school’s final collapse.
[76] This is simply farfetched. Regardless of the re-entry, Ardern Holdings would have been placed into liquidation on 19 April 2016. The school had already communicated to parents that the school was considering downsizing to 100 students as well as relocating twice over the next year. Every curious-minded parent would
have realised that the school was in financial trouble, and it is simply to claim that the arrival of the agents substantially contributed to the school’s reputational or financial problems.
[77] I also note that while the respondents acted illegally in effecting re-entry on
2 April, there is nothing to suggest they did so vindictively or high-handedly, rather than on the basis of a genuine misinterpretation of their contractual rights.
[78] For these reasons, I conclude that the applicants do not have any substantial ground of defence that would have justify setting aside the summary judgment entered against them.
Result
[79] The application is dismissed.
[80] As costs follow the event, the applicants are ordered to pay costs on their failed application on a 2B basis plus disbursements as fixed by the Registrar.
Associate Judge Sargisson
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