LEEANN YARE LTD v CARLTON GORE ROAD LTD [2019] NZHC 613

LEEANN YARE LTD v CARLTON GORE ROAD LTD [2019] NZHC 613 [28 March 2019]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-329[2019] NZHC 613BETWEEN LEEANN YARE LIMITEDApplicantAND CARLTON GORE ROAD LIMITEDRespondentHearing: 27 March 2019Appearances: S A Grant for ApplicantH L Thompson for RespondentJudgment: 28 March 2019JUDGMENT OF PETERS JThis judgment was delivered by Justice Peters on 28 March 2019 at 10.30 ampursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate: ...................................Solicitors: Daniel Overton Goulding, AucklandMcMahon Butterworth Thompson, AucklandCounsel: S A Grant, AucklandIntroduction[1] The applicant company, LeeAnn Yare Ltd ("LYL"), is the lessee of premisesin Newmarket, Auckland. The respondent, Carlton Gore Road Limited, is the lessor("CGRL").[2] By notice dated and served 13 February 2019, CGRL purported to cancelLYL's lease on the ground that LYL was in breach of its covenant to pay rent and thatit has been since June 2018.[3] On 26 February 2019, LYL filed an originating application seeking reliefagainst cancellation and it now also seeks an interim injunction preventing CGRL fromre-entering the premises. It is that application that I am required to determine.1[4] To succeed in its application, LYL must show a good arguable case and thatthe balance of convenience lies in its favour.[5] I am satisfied as to both matters.Good arguable case[6] First, and this is a point I raised with counsel when I heard the application, Ihave reservations about the validity of CGRL's notice of default. This was requiredunder s 245 Property Law Act 2007 before CGRL could cancel. Amongst other things,a notice given under s 245(3)(c) must give the recipient "no less than ten working daysafter the date of service of the notice" to rectify the breach complained of.2 CGRL'snotice, served on 13 February 2019, provided for the breach to be rectified "within tenworking days of the date of service of this notice". CGRL needed to give at least 10,and quite possibly 11, or more working days, with time running from 14 February2019.[7] Given this, I am not persuaded that CGRL's notice meets the requirements ofs 245(3)(c). If not, the right to cancel is in issue.1 Property Law Act 2007, ss 253(1)(a), 253(3)(b) and 253(4)(b).2 Sections 245(3)(a)-(c).[8] Secondly, LYL alleges that, as a result of an agreement reached betweenMs Yare and Mr Dargaville of CGRL in February 2017, there was to be a reduction orhiatus in rent payments from then on, until CGRL fixed acknowledgedweathertightness issues with the building.[9] The existence of any such agreement and, if so, its terms, is in considerabledispute. Plainly that is not a matter I am able to resolve on affidavit evidence.However, given the acknowledged weathertightness issues, and the parties'correspondence after the meeting, it is possible that LYL may be able to make out theagreement it alleges.Balance of convenience[10] CGRL has sold its interest in the building, with settlement to occur on 16 April2019. LYL is a going concern, employs staff and has filed evidence stating it hasreached agreement with the purchaser to remain in occupation after settlement. Onthe other hand, CGRL does not require possession of LYL's premises for any particularreason. Accordingly, there is no prejudice to CGRL by LYL remaining in possessionuntil 16 April 2019.[11] Taking these matters into account, I am satisfied the balance of conveniencelies with LYL.[12] CGRL is not opposed to LYL remaining in occupation provided LYL pays atleast what CGRL contends are the undisputed arrears of rent (some $34,000 plus GST)plus rent for March 2019 and up to 16 April 2019.[13] LYL has paid the rent for the latter period to its solicitors, Daniel OvertonGoulding. They are holding the funds in trust. Counsel for CGRL, Mr Thompson,urged me to also require LYL to pay the undisputed arrears into trust. The difficultywith that, however, is that I am not satisfied that those arrears are undisputed.Ms Grant, counsel for LYL, submitted that in fact the arrears are disputed and that Icannot place reliance on the isolated correspondence to which Mr Thompson referredme.[14] In the circumstances, I do not propose to make it a condition of the grant of theinjunction that the alleged undisputed arrears are paid into trust. However, the fundspresently held by Daniel Overton Goulding are to remain in trust, pending agreementof the parties, or further of the Court or arbitrator, as the case may be.Result[15] I grant the interim injunction sought on the condition set out in [13]. This ordersubsists pending further order of the Court or agreement of the parties. I reserve leaveto apply. Costs are reserved.Peters J