RICCARTON CLUB INCORPORATED V MAJESTIC INVESTMENTS LIMITED HC CHCH CIV-2011-409-001553

RICCARTON CLUB INCORPORATED V MAJESTIC INVESTMENTS LIMITED HC CHCH CIV-2011-409- 001553 16 August 2011IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV-2011-409-001553BETWEEN RICCARTON CLUB INCORPORATEDPlaintiffAND MAJESTIC INVESTMENTS LIMITEDDefendantHearing: 16 August 2011 (by way of telephone conference)Appearances: D Russ for PlaintiffW Palmer for DefendantJudgment: 16 August 2011ORAL JUDGMENT OF CHISHOLM J[1] On 12 August 2011 I made various interim orders in relation to the plaintiff'sex parte application for an interim injunction. I also directed that the application was to be served and that there was to be a telephone conference this morning: seeminute of 12 August 2011. Today the matter has been considered on a "pickwick"basis. I am grateful to Mr Russ and Mr Palmer for their constructive submissions.[2] The plaintiff leases commercial premises from the defendant. Following the issue of several notices under the Property Law Act 2007 the defendant purported to cancel the lease. The plaintiff seeks relief against cancellation pursuant to ss 253 and 256 and an order restraining the defendant from taking any further steps to cancel on the strength of the Property Law Act notices until final determination of the matters in dispute through arbitration.[3] It is common ground that the lease will terminate at the beginning of April next year (my understanding is that this will be on 3 April 2012) and that there is no outstanding rental (although there were rental issues earlier on). It is also commonground that on the expiry of the lease the sum of approximately $630,000 will become payable to the plaintiff by the defendant.[4] Under clause 44 of the lease there is provision for disputes or differences between the parties to be referred to arbitration. The plaintiff has taken steps to have that power exercised and has suggested possible arbitrators to the defendant. Arbitration is being resisted by the defendant because it considers that the plaintiff has adopted a cavalier approach to the lease. In short the defendant has had enough. The defendant is particularly concerned about unpaid outgoings and, on its calculation, there is $47,903.06 owing for insurance premiums alone. It rejects theplaintiff's argument that there has been a longstanding arrangement for insurance to be paid by monthly instalments.[5] Having heard counsel I am satisfied that this is an appropriate case for interim orders to be made. On the information currently available I am prepared to accept that the plaintiff has an arguable case in relation to the matters in dispute and that it is appropriate for these matters to be resolved by arbitration (if they cannot be resolved by agreement) as contemplated by the lease.[6] I am also satisfied that so long as the plaintiff pays current rental and the amount that I will refer to shortly towards outgoings, the balance of convenience strongly favours the plaintiff. Cancellation of the lease is likely to destroy the Club which is currently looking for other premises. If the Club is destroyed there will be a significant impact on its employees and members. On the other hand, given the amount that will become payable by the defendant to the plaintiff in April next year there is no possibility of the defendant missing out financially. At worst it might be delayed in receiving any amounts that are found to be due to it.[7] There will therefore be an interim order pursuant to ss 253 and 256 of theProperty Law Act granting the plaintiff relief against the defendant's cancellation ofthe lease. In other words, the defendant is to immediately allow the plaintiff to resume occupancy of the leased premises. Unless authorised by the Court the defendant is not to take any further steps to cancel the lease on the strength of the notices that have already been issued.[8] The following conditions will apply:(a) Until expiry of the lease in April 2012 the plaintiff is to pay rental under the lease as and when it falls due.(b) It is also to pay the sum of $3000 per month towards any insurance premiums (or other outgoings) that might ultimately be found to be outstanding. The first of such payments is to be made on 3 September 2011 and the last is to be made on 3 April 2012.(c) Upon giving five working days' prior notice the defendant can applyto rescind these interim orders.(d) Leave will also be generally reserved to either party to apply further.(e) Costs will be reserved.[9] As requested I record that these orders reflect (amongst other things) that:(a) This matter has been dealt with on a "pickwick" basis without theparties having had an opportunity to bring before the Court all the evidence that might be available.(b) My decision reflects that:(i) The lease will terminate in early April 2012.(ii) A set off for any amount that might be found to be owing by the plaintiff to the defendant as a result of arbitration (or agreement) will arise on termination of the lease.(iii) On the information currently available the payments by the Club towards the insurance premiums appear to have fallen well behind reimbursing the defendant for the premiums as and when they fall due.Solicitors:Fletcher Vautier Moore, P O Box 90, Nelson 7040 druss@fvm.co.nzBudle Findlay, P O Box 322, Christchurch, willie.palmer@buddlefindlay.com