Zheng Li Trustee Limited v Henderson

[2015] NZHC 2222

IN THE HIGH COURT OF NEW ZEALAND WELLLINGTON REGISTRY

CIV 2015-485-000193

CIV 2015-485-000198 [2015] NZHC 2222

BETWEEN

ZHENG LI TRUSTEE LIMITED AND

MK TRUSTEE 2013 LIMITED Plaintiffs

AND

EWAN STUART HENDERSON Defendant

Hearing:	On the papers
Counsel:	C Heaton for the Plaintiffs E S Henderson the Defendant in person
Judgment:	15 September 2015

JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

This judgment was delivered by me on

15.09.09 at 2:30pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

ZHENG LI TRUSTEE LIMITED AND MK TRUSTEE 2013 LIMITED v E S HENDERSON [2015] NZHC

2222 [15 September 2015]

[1]      On  7  July  2015  the  Court  heard  the  plaintiffs’ two  summary  judgment applications against the defendant Mr Henderson who had guaranteed lessee obligations under separate leases (the Victoria Street lease and the Courtney Place lease) of commercial properties in Wellington.  Mr Henderson personally guaranteed those lessee obligations.  He was a director of and shareholder in those companies that leased those properties.  The companies were placed into voluntary liquidation. Rent arrears were owing.

[2]      The plaintiffs entered into possession of both properties.   They sued  Mr Henderson for rental arrears.  They claimed interest under a default interest clause at a rate of 14 per cent per annum and they sought an order that Mr Henderson was liable  to  indemnify  them  for  all  losses  incurred  as  a  result  of  the  company liquidator’s disclaimer of the leases.  Also they asked for costs on a solicitor/client basis pursuant to a lease clause which provided for the recovery of the landlord’s enforcement costs on that basis.

[3]      Mr Henderson’s defence raised issues of possible set-off/counterclaims.   In the result the Court held:

(a)      Judgment be entered for the sum of $3,191.65 for interest in respect of rental arrears of the Victoria Street lease.

(b)The application for summary judgment upon the plaintiffs’ claim that the defendant was liable to indemnify all losses incurred as a result of the liquidator’s claim of the Victoria Street lease was dismissed.

(c)      In respect of the Courtney Place lease judgment was entered for the plaintiffs in a total sum of $124,822.29 for rental arrears together with interest in the sum of $8,775.16.

(d)That  the  application  for  summary judgment  for  an  order  that  the defendant indemnify the plaintiffs for all losses incurred as a result of the declaimer of the Courtney Place lease, was dismissed.

[4]      The plaintiffs have applied for orders fixing costs.  Counsel’s memorandum in that regard notes that whilst the Court’s judgment dismissed applications claiming liability in relation to losses arising from lease disclaimers, that the plaintiffs have decided not to pursue those claims any further.

[5]      In requesting the Court to fix costs the plaintiffs submit they are entitled to indemnity costs either pursuant to the contractual terms of the leases guaranteed by the defendant on their own, or in conjunction with 14.6(c)(a) of the High Court Rules.

[6]      The plaintiffs claim costs of $31,198 plus GST together with $4,679 plus disbursements of $2,876.20, in total a sum of $38,754.20.

[7]      In his submissions in response the defendant asserts the plaintiffs pleadings were undertaken “in the jurisdiction of the wrong Court”.  He says the proceeding should have been filed in the District Court.  Further, he claims the partners of the law firm representing the plaintiffs were co-directors of business entities operated by the plaintiffs and therefore he submits it is entirely inappropriate “that the two largest billers in the plaintiff’s application for costs are both partners in the law firm acting for the plaintiff as well as being business associates…”.

[8]      The  defendant  also  provides  submissions  regarding  his  poor  health  and makes allegations of oppressive behavior by the actions of counsel for the plaintiffs.

Considerations

[9]      The  defendant’s  guarantee  obligations  put  him  at  risk  of  an  order  for indemnity costs  in  the  event  of  any default  by  the  lessees  whose  liabilities  he indemnified.

[10]     In the outcome of the summary judgment applications the plaintiffs were successful in claims for unpaid rent but they were unsuccessful in claims for an indemnity for other losses arising out of the lease.

[11]     It appears the indemnity terms of leases engaged the defendant’s liability for indemnity costs.  However, the summary judgment claims were successful only in relation to unpaid rental.

[12]     The plaintiffs’ claims for indemnity costs, even for that part of their claim which did not succeed, is claimed on the basis that the wording of both leases provides the costs may be recovered on a solicitor client basis in respect of the enforcement or attempted enforcement of the landlord’s rights, remedies and powers under the leases.

[13]   In the alternative the plaintiffs seek costs on a 2B basis which, with disbursements, are calculated to amount to $18,152.

Conclusion

[14]     In the Court’s view costs should be calculated on an indemnity basis in half

the amount sought by the plaintiffs to be paid.

[15]     There is no question but that the proceeding was properly brought before the High Court.  The plaintiffs succeeded in part by their claims for unpaid rental which liability arose  due  to  the  terms  of  leases  which  enabled  indemnity  costs  to  be recoverable.

[16]     No challenge has been taken to the plaintiffs’ solicitor’s calculation of costs. This notwithstanding the Court considers that only half that claim ought to be met on a  summary  judgment  basis  because  in  effect  only  half  of  those  claims  were

successful.

Associate Judge Christiansen