HERZHOFF v M F TURNBULL LIMITED [2021] NZHC 3358

HERZHOFF v M F TURNBULL LIMITED [2021] NZHC 3358 [8 December 2021]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2021-409-000554[2021] NZHC 3358BETWEEN MANFRED EUGEN HUGO KARLHERZHOFFFirst PlaintiffAND MARTINA ULRIKE HERZHOFFSecond PlaintiffAND M F TURNBULL LIMITEDFirst DefendantAND MURRAY FREDRICK TURNBULLSecond DefendantAND PERSONS UNKNOWNThird DefendantAND DUNBAR SLOANE LIMITEDFourth DefendantHearing: On the papersAppearances: A M S Williams for PlaintiffsJudgment: 8 December 2021JUDGMENT OF DUNNINGHAM JThis judgment was delivered by me on 8 December 2021 at 3.50 pm, pursuant tor 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:[1] This is an interlocutory application for interim injunction brought by the firstand second plaintiffs, Mr and Mrs Herzhoff, to restrain the fourth defendant, DunbarSloane, which runs an auction house, from disposing of a Piero Fornasetti and GioPonti Architettura Trumeau Cabinet (the Cabinet) for sale at an auction which isadvertised to commence at 5 pm tonight.[2] The events which have prompted this application can be summarised briefly.The plaintiffs purchased the Cabinet in 1998 for the equivalent of about NZ $85,000.When they were living in Christchurch, the Cabinet was damaged as a consequenceof the earthquakes. In due course, the Cabinet and some other items were deliveredto the first defendant, M F Turnbull Ltd, a company run by the second defendant,Murray Turnbull, for repair and restoration. It was indicated that restoration of theCabinet would cost between $3,000 and $5,000.[3] Mr Herzhoff travelled to Germany in 2013 and became unwell. He returnedto New Zealand the following year to his home in Stewart Island but did not recoveruntil 2018. In 2018 he met with Mr Turnbull again at a dinner party in his StewartIsland home. They discussed the items which were being held by Mr Turnbull'scompany for repair and restoration. Mr Herzhoff told Mr Turnbull that he had been inGermany and was unwell. He advised Mr Turnbull he was happy to pay any invoicefor work done to the Cabinet, and for any storage costs. He was told by Mr Turnbullthat the Cabinet had been restored, but that he would continue to store the Cabinet forthe Herzhoffs until they could get to Christchurch to collect it. Mr Herzhoff says hewas never told that storing the Cabinet was an issue, nor was he ever provided byMr Turnbull, or his company, with an invoice for the restoration work or for thestorage of the Cabinet, even though Mr Turnbull knew where he lived and how to gethold of him.[4] In December 2021, Mr Herzhoff visited Mr Turnbull and spoke aboutcollecting the items he held and paying any money he was owed for the repair,restoration and storage. Mr Turnbull told Mr Herzhoff that he had sold the Cabinetand other items to cover his costs.[5] Mr Herzhoff then learned that the Cabinet was listed for auction by DunbarSloane for sale at an auction commencing on 8 December 2021 at 5 pm. Although theplaintiffs wrote, through their lawyer, to Dunbar Sloane advising that the Cabinetbelonged to the plaintiffs and that no-one had been given permission to sell it, DunbarSloane would not agree to remove the Cabinet from the auction, although the companydid say it would be willing to hold any funds realised from the sale of the Cabinet.[6] Mr Herzhoff says the Cabinet is very important to him and his wife and wouldbe very difficult to replace. If the Cabinet is sold at auction then it is likely to be lost.In his affidavit he provides an undertaking to comply with any order for the paymentof damages to compensate any other party for damage sustained through the grantingof the injunction.[7] Given the short timeframe in which a decision needs to be made on theapplication, I made enquiries as to whether the application had been served on theparties on a "Pickwick basis". I was advised by counsel for the plaintiffs thatdocuments were served by email on the first and second defendants, and on the fourthdefendant, at around midday today, contemporaneously with filing these proceedingsin the High Court.[8] At 12.57 pm a director of Dunbar Sloane telephoned counsel for the plaintiffsand confirmed that he had received the documents. He indicated that Dunbar Sloanewould abide the decision of the Court and did not intend to appear or be representedat any hearing in relation to the application for an interim injunction. He also advisedthat he had provided the documents to the third defendant, whose identity remainsunknown to the plaintiffs, and who said that they intended to seek advice. At thispoint, no further correspondence has been received by counsel for the plaintiffs.[9] At 1.29 pm Mr Murray Turnbull emailed counsel for the plaintiffs, on behalfof the first and second defendants. He confirmed receipt of the documents andindicated that he did not intend to appear or be represented at any hearing in relationto the application for an interim injunction.[10] In those circumstances, I am satisfied it is appropriate to determine theapplication on the papers without hearing from the parties. As the identity of the thirddefendant is unknown, it is impracticable to defer dealing with this application untilthat defendant can be identified. The only difficulty this raises is that I do not knowthe circumstances in which the third defendant acquired the Cabinet. That person maybe a bone fide purchaser for value which could be an impediment to ordering the returnof the Cabinet as sought in the substantive statement of claim.[11] However, in the circumstances the application for an interim injunction mustbe determined on the facts. In doing so, I have considered the accepted test of whether:(a) there is a serious question to be tried;(b) where the balance of convenience lies; and(c) an assessment of the overall justice of the position.1[12] It is clear from the statement of claim that there is a serious question to be triedon the facts as presented by the plaintiffs. They allege that the first and seconddefendants had no authority to dispose of the Cabinet and had not made the Herzhoffsaware that they were planning to do so, in order to recover costs, or for any otherreasons.[13] In terms of the balance of convenience, if the auction proceeds, the Herzhoffswill almost certainly lose the opportunity to argue the Cabinet should be returned tothem. It is, on their evidence, a rare piece and one which they are attached to. This isnot a case where damages would suffice because a replacement could readily bepurchased. Set against that is the position of the unknown third defendant and DunbarSloane. There is nothing to suggest that if that transaction is deferred, while theplaintiffs' claims are tested, that they will be detrimentally affected. Both appear tohave only a financial interest in the auction proceeding. If they suffer a financial loss,then the plaintiffs have given an undertaking as to damages. In my view, the balanceof convenience favours the granting of an injunction.1 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 140 (CA).[14] The last consideration is whether, standing back and making an assessment ofthe overall justice of the case, it is proper to make the injunction. I consider it is. Thefactors I have considered in weighing the balance of convenience also suggest that theoverall justice is supported by the making of the orders sought.[15] Accordingly, I make the following orders:(a) That until further order an interim injunction is issued against the thirdand fourth defendants to restrain them, their servants or agents, or anyof them either alone or in conjunction with anyone else from selling orotherwise disposing of the item described as a Piero Fornasetti and GioPonti Architettura Trumeau Cabinet ("the Cabinet") currently forauction as Lot 0059 in the fourth defendants upcoming "ModernDesign" auction which is to be held on 8 December 2021 at 5pm.(b) The Cabinet is to remain in the possession the fourth defendant untilfurther order of the court.(c) The costs of the plaintiffs of and incidental to this application and orderare reserved.(d) Leave is reserved to any party to apply to amend or set aside the orderfor interim injunction on notice to the other parties.[16] I also direct that:(a) the plaintiffs are to promptly serve this judgment on the first, secondand fourth defendants;(b) the fourth defendant is to provide the plaintiffs' lawyers with the nameand contact details of the third defendant or of that person's legalrepresentatives. As soon as that has been supplied, the third defendantis to be served with these proceedings and this judgment.[17] If any party applies to set aside the interim injunction, a telephone conferenceis to be convened with the parties to timetable that application to hearing.Solicitors:Cruickshank Pryde Lawyers, InvercargillCopy To:A M S Williams, Barrister, Christchurch