Zhang v Marsh
[2016] NZHC 289
•26 February 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-2230 [2016] NZHC 289
UNDER Part 32 of the High Court Rules 2009 BETWEEN
MING LI ZHANG Applicant
AND
CHARLOTTE HARETA MARSH First Respondent
THE REGISTRAR, High Court of
AucklandSecond Respondent
Hearing: 15 February 2016 Counsel:
J E M Lethbridge for Applicant
No appearance by or on behalf of First RespondentJudgment:
26 February 2016
JUDGMENT OF DAVISON J
This judgment was delivered by me on 26 February 2016 at 3:30 pm pursuant to Rule 11.5 High Court Rules.
Registrar/Deputy Registrar
Solicitors: Grove Darlow & Partners (Auckland) for Plaintiff
(Copy to First Respondent in person)
ZHANG v MARSH [2016] NZHC 289 [26 February 2016]
Introduction
[1] The respondent, Ms Marsh, was the registered proprietor of the property situated at 16 Rogers Road in Manurewa (the Property). She either failed or refused to pay rates to the Auckland Council under the Local Government (Rating) Act
2002.1 Auckland Council took steps under the Act for the sale of the property by the
Registrar of the High Court to recover rate arrears which were of $12,000.
[2] On or about 7 July 2015, an order was made for the sale of the Property. Sale through the Registrar took place at an auction conducted by Barfoot & Thompson Ltd on or about 12 August 2015. The plaintiff, Ms Zhang, was the purchaser.
[3] Settlement was due to take place on 9 September 2015 but, by agreement between Ms Zhang and the Registrar, this was extended to 24 September 2015.
[4] On settlement, Ms Marsh refused to vacate the Property. She maintained that she was its rightful owner.
[5] On 25 September 2015, a freezing order was granted over a portion of the proceeds of sale of the Property, being $100,000.2
[6] On 4 November 2015, Wylie J granted an order by way of summary judgment for possession of the Property. In his oral judgment, he held:3
2. The defendant is ordered to pay the plaintiff’s costs of and incidental to the Possession Order quantum to be fixed once the plaintiff has obtained possession;
3. The balance of the orders sought by the plaintiff are adjourned as amounts sought cannot be quantified until after the plaintiff has obtained possession. The balance of the orders comprise of:-
(a) An order that all costs associated with requiring the defendant to vacate the property, be paid by the defendant;
1 Instead, she says that she paid a sum, purportedly on account of rates, to an individual named
Ariki’nui o Tuhoe.
2 By a Minute of Duffy J dated 16 December 2015, that order was extended until 16 February
2016.
3 Zhang v Marsh HC Auckland CIV 2015-404-2230, 9 November 2015.
(b) An order that all rental and associated costs, and legal fees be deducted from the funds held by the Court;
[7] On 12 November 2015, a Mr Leith entered the Property, having been engaged and authorised by the plaintiff, to take possession on behalf of Ms Zhang. The belongings of Ms Marsh were removed from the Property and placed in storage. Ms Zhang is presently incurring costs for the storage of Ms Marsh’s possessions
[8] On 10 February 2016, new tenants moved into the Property.
[9] The matter came before me for determination of quantum following Wylie J’s decision that Ms Marsh is to pay Ms Zhang costs of and incidental to the Possession Order.
[10] Ms Marsh has taken no steps to oppose the making of the orders sought by
Ms Zhang. She did not appear before me at the hearing.
Submissions
[11] Ms Zhang seeks judgment in the sum of $27,692.50 against Ms Marsh for costs associated with obtaining possession of, and vacating Ms Marsh from, the Property.
[12] The amount sought is calculated as follows:
Expenses Cost (GST inclusive) Operation commander (17/11/15)
Two guards (from 17/11/15 to 24/11/15) Change of locks
$1581.25
$13,800.00
$449.10
Initial packing and removal, and one month’s storage of contents of
Property from 13/11/15
$6,711.00 Storage of contents (from 11/12/15 to 31/12/15) $495.00 Home cleaning, carpet cleaning, lawn mowing and rubbish removal $1000.00 Storage of contents (from 01/01/16 to 28/01/2016) $660.00 Estimated four weeks’ storage of contents (from 28/01/16 to
25/02/16)
$759.00 Associated disbursements $431.25
[13] The sum of $3,150.00 is sought to account for the total loss of market rent for the seven week period between settlement on 24 September 2015 and the date at
which Ms Marsh vacated the Property (being 12 November 2015). Though Ms Lethbridge, for Ms Zhang, submitted that, realistically, the loss of market rent should extend beyond the date at which Ms Marsh vacated the Property since any potential tenants would not have moved in at that date given the state of the Property at that time.
[14] Lastly, Ms Zhang seeks judgment against Ms Marsh for the sum of
$47,548.31 for solicitor-client costs.
[15] The total amount for which judgment is sought is therefore $76,584.91 (GST
inclusive).
[16] Ms Lethbridge submitted there are two options available in dealing with Ms Marsh’s contents in storage. The first option is to dispose of the contents altogether and the second option is to relocate the contents held in storage to a South Auckland storage facility. Obviously, the latter option means that storage costs will continue to be incurred though Ms Marsh will be directly responsible for them.
[17] The costs for these options are as follows:
Option 1: dispose $2904.90 Option 2: relocate to South Auckland $2990.00
[18] Ms Lethbridge also noted that there would be further costs incurred to account for the unwrapping of the cartons and furniture that is in the possession of the storage company, World Moving & Storage Ltd, but this amount has not been quantified by her.
Analysis
[19] I deal, first, with the issue of service of documents. It appears that the documents have been served upon Ms Marsh via an email address, being
[email protected]. In his affidavit of service,4 dated 12 February
2016, Mr Leith said that he sent the following emails to Ms Marsh:
(a) On 15 December 2015 at 1.50 pm, he attached by way of service the Minute of Brewer J dated 10 December. In the body of his email, he noted that the matter was set to be heard for review at the High Court at Auckland on 16 December 2016.
(b)On 10 February 2016 at 6.16 pm, he attached by way of service the following documents:
(i) Minute of Duffy J dated 16 December 2016; (ii) Email from Lena Wong;
(iii) Email from Samuel Mills.
He also advised in his email that the matter was set to be heard at the High Court at Auckland on 15 February 2016 at 11.45 am “for the plaintiff to present its case for final orders”. He added:
These documents are being served on you by email because we do not have a current physical address for you where we could give you a copy of the documents.
[20] Attached to Mr Leith’s affidavit is what appears to be a screenshot showing that the email of 10 February sent to Ms Marsh’s email address was opened using a mobile device. The screenshot shows that, on 10 February 2016, someone, presumably Ms Marsh, viewed the email at 7.05 pm, then again at 7.13 pm and
8.56 pm.
[21] There is also another screenshot of the same, showing that the email of
15 December 2015 was opened by Ms Marsh on 15 December 2015 at 7.13 pm and
7.20 pm and, again, at 9.24 am the following day.
4 A Principal at Discover Defend – Investigative Lawyers, and a barrister and solicitor of the High
Court of New Zealand.
[22] I am therefore satisfied that Ms Marsh was on notice. The difficulty, however, is that the method of service elected by counsel for Ms Zhang was not in accordance with the prescribed method of service under r 6.1 of the High Court Rules (Rules). The rules which permit service of documents on a party by email do not apply in the circumstances because Ms Marsh did not specify an email address for that purpose. Rather, the email address was obtained by Mr Leith from the premises.
[23] Rule 6.8 allows for substituted service. It provides:
6.8 Substituted service
If reasonable efforts have been made to serve a document by a method permitted or required under these rules, and either the document has come to the knowledge of the person to be served or it cannot be promptly served, the court may—
(a) direct—
(i) that instead of service, specified steps be taken that are likely to bring the document to the notice of the person to be served; and
(ii) that the document be treated as served on the happening of a specified event, or on the expiry of a specified time:
(b) when steps have been taken for the purpose of bringing, or which have a tendency to bring, the document to the notice of the person on whom it is required to be served, direct that the document be treated as served on that person on a specified date:
(c) subject to any conditions that the court thinks just to impose, dispense with service of a document on a person and give to the party by whom the document is required to be served leave to proceed as if the document had been served.
[24] No direction was sought or given as to substituted service.
[25] During the course of oral submissions, Ms Lethbridge accepted that the method of service was not in accordance with the Rules. She said that prior efforts had been made to serve documents by a method prescribed under r 6.1 but that Ms Marsh had sought to frustrate the process. For example, she referred me to the affidavit of Mr Harry Redwood who is a process server. He said that on
25 September 2015, he served Ms Marsh a set of documents by delivering them personally to her residence at 16 Rogers Road Manurewa (the Property). He said:
Ms Marsh would not take the Documents when I tried to hand them to her, so I placed them on a table next to her and told her she had been legally served with the Documents.
[26] She also referred me to the affidavit of Mr Leith dated 12 February 2016. He said that when he entered the Property for the purposes of obtaining possession, he had trespass notices for service on Ms Marsh but no one was home at the time. He described the events that followed:
8. Ms Marsh did not return although a male was present who identified himself as Ms Marsh’s de facto partner by the name of “Mac Te Reama”. We explained the situation to Mr Te Reama and offered him the use of my telephone to advise Ms Marsh what was occurring at the property. Initially Mr Te Reama spoke to Ms Marsh in private but then he passed the phone to me and I put the phone on speaker so that Mr Te Reama could hear both sides of the conversation. I advised Mr Marsh that we had taken possession of the Property on behalf of the new owners pursuant to the judgment of Justice Wylie. I also told her there were copies of the orders and associated court documents available for her at the property and that her partner had been shown these documents.
9. Ms Marsh advised me that she was on a work trip out of Auckland and was about 25 minutes away from her accommodation for the night. She confirmed that my telephone number had come up on her caller ID. She said that she would telephone me immediately upon researching her accommodation… I did not receive a telephone call back from Ms Marsh.
10. Given that Ms Marsh did not return to the property I affixed copies of the sealed order and a trespass notice inside the front windows with each separate page of the full sealed order visible… In addition I served a trespass notice on Mr Te Reama and then on each subsequent occasion he re-entered the property with a fresh notice.
11. I obtained Ms Marsh’s mobile number and work email address which was on a typed list in plain view inside the sitting room…
[27] In the circumstances, I accept that the methods of service permitted under r 6.1 could not have reasonably been used to bring the documents to the knowledge of Ms Marsh and I also accept that service by way of email was an appropriate means to bring the documents to the notice of Ms Marsh. The fact that the process for substituted service was not properly adhered to is to be treated as an irregularity within the meaning of r 1.5. I grant leave to proceed with the application for final orders and direct that the documents be treated as served on Ms Marsh on
10 February 2016. First, because counsel for Ms Zhang was not aware of any physical address for service from the point at which Ms Marsh vacated the Property and, secondly, because it is clear from Ms Marsh’s reaction to the steps already taken by counsel for Ms Zhang that she is attempting, or at least has attempted, to frustrate the service process. Thirdly, I am satisfied from the affidavit evidence that the documents attached to the email of 10 February 2016 will have come to the knowledge of Ms Marsh.
Quantum of judgment
[28] The circumstances giving rise to the claim and evidence as to quantum are set
out in Mr Leith’s affidavit.
[29] I accept Ms Zhang is entitled to reasonable and justifiable costs associated with obtaining possession and vacating Ms Marsh from the Property. However, having decided to change the locks, and thereby preventing Ms Marsh from regaining access to the Property, I consider it was thereafter unnecessary or unjustified to continue to have security guards in place for a period of days because, from that point, the premises could not be regarded as insecure. It is worth noting that it is unlikely that Ms Marsh could have done any more than re-enter the Property to recover her own chattels and personal belongings. Doing so, albeit without authority, would likely not have caused damage or otherwise interfered with the plaintiff’s right of possession. Even if Ms Marsh had attempted to reclaim possession of the Property, I cannot agree that the use of security guards would have been necessary in the circumstances since the plaintiff had an order for possession of the Property which was enforceable against Ms Marsh, and Mr Leith on behalf of Ms Zhang, was able and ready to serve a trespass notice on her.
[30] Turning to the costs of packaging and removal. I accept Ms Lethbridge’s submission that the costs claimed in relation to the time spent on packaging, and the materials used to package the contents of the Property, were reasonable given Mr Leith’s comment that “[t]he house was very full almost akin to a “hoarder” situation although tidier”. I have examined the photographs exhibited to his affidavit showing the state of the Property at the time Mr Leith effected possession on behalf
of Ms Zhang, which clearly show the large quantity of personal possessions located in the house and on the premises.
[31] I accept that it is also reasonable for the plaintiff to recover the ongoing costs of storage that Ms Zhang has incurred which extends over a period of four months. The contents of the Property owned by Ms Marsh has taken up two 20 foot containers, together weighing seven tonnes, with a separate 10 cubic metre consignment for Mr Te Reama.
[32] I decline to make any award in respect of the claim relating to “home cleaning, carpet cleaning, lawn mowing, and rubbish removal”. In oral submissions, Ms Lethbridge accepted that the obligation to leave the premises in a reasonably clean and reasonably tidy condition, and to remove or arrange for the removal from the premises of all rubbish is not included in the terms for a Registrar’s sale.
[33] In the memorandum of quantum, the sum of $431.245 is sought under what is titled “associated disbursements”. The description beneath it states:
Administration of stored property / liaising with storage providers
Drafting of affidavit and related documents for hearing 15 February 2016
[34] I am not satisfied the administration process regarding storage justifies an award of costs beyond what is already encompassed by the sum awarded for storage costs. Furthermore, I decline to award Mr Leith costs for drafting his affidavit. That is inherent within the claim for legal costs, which I will discuss below.
[35] I turn to consider the loss of market rent. The plaintiff seeks the sum of
$3,150.00 (weekly rent at $450.00) to recover the seven week period between settlement on 24 September 2015 and 12 November 2015 when possession of the Property was taken. Ms Lethbridge referred me to the affidavit of Ms Alana Harmon dated 12 February 2016, a business development manager hired by Ms Zhang to manage the Property. Attached to her affidavit is a print out of the market rent for the area of the Property as at 1 August 2015 to 31 January 2016. It shows the market rent for a three bedroom house is in the range of $420 to $480 per week. The tenants at the Property are currently paying $450.00 per week. Ms Harmon said there has
been a commercial clean and removal of rubbish but the only renovations known to her and her colleague, Mr Oscar Bi, has been some interior painting of the three rooms. I accept the basis on which Ms Zhang seeks the total loss of market rent and the amount specified therein.
[36] Finally, Ms Lethbridge’s memorandum of quantum seeks solicitor-client costs in the sum of $47,548.31. The general principles applying to the award of legal costs are well settled and are set out at rules 14.1 to 14.7 of the Rules. While the court has the power to award solicitor-client costs in certain circumstances, there is no sufficient basis for adopting that approach here. In my view, the issue of costs falls within the framework of scale costs as provided for in the Rules. I award costs on a 2B basis together with reasonable disbursements to be fixed by the Registrar. The schedule of attendances attached to the affidavit as to solicitor-client costs is incomplete. Counsel for the plaintiff is to file a memorandum within 10 working days setting out the costs or steps taken in accordance with Schedule 3 of the Rules.
Disposal or sale of items in storage
[37] The plaintiff shall make a final reasonable effort to contact Ms Marsh to request the collection of her goods currently held in storage. The goods in storage shall be secured for one month from the date of Ms Marsh having received notice of this Judgment in order to await any claims by her. In the event she fails to collect her belongings, the plaintiff shall either dispose or sell those goods by public auction at a reasonable market price. The plaintiff is to pay the full proceeds of sale thereof to the Public Trust Office, providing an itemised list of the goods sold. Any personal papers and/or documents apparently belonging to Ms Marsh shall be delivered to the Public Trust Office.
[38] Any and all further storage costs incurred pending either recovery of the goods by Ms Marsh or their sale by auction shall be at the cost of Ms Marsh.
Summary
[39] The amount of costs hereby awarded to Ms Zhang is $12,224.10, calculated as follows:
Expense Amount (GST incl) Change of locks $449.10 Initial packing, removal and four weeks’ storage of
contents of property from 17 November 2015 to
15 December 2015
$6,711.00 Three weeks storage of contents from 11 December 2015 to
31 December 2015
$495.00 Four weeks’ storage of contents from 1 January 2016 to
28 January 2016
$660.00 Four weeks’ storage of contents from 28 January 2016 to
25 February 2016
$759.00 Four weeks’ storage of contents from 26 February 2016 to
25 March 2016
*To be quantified by
counsel
Loss of market rent from 24 September 2015 to
12 November 2015
$3,150.00 Costs on a 2B basis *To be quantified by
counsel (in accordance with the Rules)
[40] The total amount of costs is to be determined following the filing of a further memorandum.
[41] Counsel for the plaintiff is to file a memorandum within 10 working days setting out the costs or steps taken in accordance with Schedule 3 of the Rules. The
estimated costs of storage for a further four week period is also to be specified.
Davison J
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