SAHAR EHSANI INVESTMENT LIMITED v RETYRED (2020) LIMITED [2023] NZHC 2258

SAHAR EHSANI INVESTMENT LIMITED v RETYRED (2020) LIMITED [2023] NZHC 2258 [21 August2023]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV 2022-404-2080[2023] NZHC 2258UNDER The Contempt of Court Act 2019BETWEEN SAHAR EHSANI INVESTMENTLIMITEDPlaintiffAND RETYRED (2020) LIMITEDFirst DefendantWARREN GRAEME SINCLAIRSecond DefendantOn the papersCounsel: S Wroe and T Ashley for the plaintiffR Lane and W Williams for the defendantsJudgment: 21 August 2023JUDGMENT OF CAMPBELL J[Formal proof]This judgment was delivered by me on 21 August 2023 at 11.00 am pursuant to Rule 11.5of the High Court RulesRegistrar/Deputy Registrar[1] The plaintiff, Sahar Ehsani Investment Ltd (SEIL), commenced thisproceeding on 27 October 2022. At that time, it applied for interim injunctions againstthe defendants. The defendants took no steps to oppose the application. The Courtgranted interim injunctions on 2 December 2022.[2] On 21 December 2022, SEIL filed an application seeking orders for contemptof court, alleging the defendants had failed to comply with the interim injunctions.The defendants filed a notice of opposition to the contempt application on 27 January2023. That was the defendants' first step in the proceeding. Directions were made forthe contempt application to be heard on 1 May 2023.[3] In March 2023, the defendants not having filed a defence, SEIL requested, andthe Court directed, that the proceeding be listed for formal proof at the same timeas the hearing of the contempt application.[4] SEIL filed affidavits and synopses for the hearing. Then, on 28 April 2023(the working day before the hearing), the defendants applied for an adjournment of theformal proof hearing, a stay of the proceeding, leave to file a statement of defence anda variation of the terms of the interim injunctions.[5] At the hearing on 1 May 2023, it was agreed I should determine the defendants'application to stay the proceeding and their application for leave to file a defence. IfI granted either application, I would not proceed to consider formal proof. If I declinedboth their applications, I would proceed to deal with formal proof (in a separatejudgment, most likely on the papers).[6] In a judgment dated 16 June 2023, I declined the defendants' applications fora stay of the proceeding and for leave to file a statement of defence.1[7] This judgment deals with formal proof of SEIL's claim. I have decided I candeal with that on the papers.1 Sahar Ehsani Investment Ltd v Sinclair [2023] NZHC 1515.SEIL's substantive claims[8] The background to the proceeding, and SEIL's claims, are described in myjudgment of 16 June 2023. I do not repeat that here, other than to summarise SEIL'ssubstantive claims, of which there are two:(a) SEIL's main claim, against both defendants, is that the first defendant,Retyred (2020) Ltd (Retyred) has dumped and stored large quantitiesof used tyres at the leased premises. SEIL says Retyred did this withoutSEIL's consent (in breach of cl 16.1 of the deed of lease) and that it hascovered almost the whole of the premises with piles of tyres that area fire risk and nuisance (in breach of cl 22.1). SEIL says the quantityof tyres exceeds 100 cubic metres without a resource consent (in breachof cl 21.1). Finally, SEIL says the storing of the tyres means Retyredhas not kept the grounds clean and tidy (in breach of cl 8.2). SEIL sayssecond defendant, Mr Sinclair is liable as guarantor for Retyred'sbreaches.(b) SEIL's second claim is against Retyred alone, in trespass. SEIL pleadsthat Retyred's agents have, at various times since the commencementof the lease, used a driveway that is part of SEIL's neighbouringproperty (at 179 Dominion Road) to access the premises. SEIL saysit has informed both defendants on many occasions that Retyred hasno right to use the driveway to access the premises and that in October2022 it served a trespass notice on Retyred warning that further useof the driveway would be a trespass. SEIL alleges that Retyred'semployees and agents have continued to use the driveway.The defendants are liable on these claims[9] In my earlier judgment, I found that the defendants had no grounds of defenceto SEIL's claims.2 They are therefore liable on the claims. The only remaining issuesare remedies and costs.2 At [58].Remedy against defendants for breaches of the lease[10] The primary remedy that SEIL sought in its statement of claim was aninjunction requiring the defendants to remove almost all of the tyres from the premises.As an alternative, SEIL sought damages in an amount to cover SEIL for the costof removing the tyres.[11] By the time of the formal proof hearing, SEIL was of the view that thedefendants were unlikely to comply with any injunction to remove the tyres. SEILtherefore said it preferred an award of damages. That remains its position.[12] SEIL filed an affidavit from an expert, Ms van Eeden, assessing the cost ofrepair (to remove the tyres and to remediate the premises) as $1,731,855.15.[13] Shortly after my earlier judgment, I issued a minute on 29 June 2023. I said:[14] Having considered the plaintiff's submissions for formal proof dated28 April 2023, I need to hear further from the plaintiff on the damages soughtfor the breaches of the lease (as an alternative to an injunction). The usualmeasure of damages for such breaches during the currency of the lease is thediminution in value of the reversion: Hinde, McMorland and Sim 11.126 and11.223; McGregor on Damages 28-049 and 28-086. Damages assessed by thecost of repair (or in this case removal) are not usually available except wherethe lessor has actually done that work: McGregor on Damages 28-052. In thiscase the plaintiff has not removed the tyres.[14] In response, SEIL filed further expert evidence in the form of an affidavit froman expert valuer, Mr Davidson. Mr Davidson opined that the value of the landis diminished by $2,700,000 by the presence of the tyres.[15] I find Mr Davidson's affidavit to be of limited assistance. This is not becauseof any issue with his qualifications or methodology. Rather, it is because he appearsto have been asked the wrong question. The relevant question is the loss in valueof the reversion. The reversion is the lessor's interest in the land subject to the lease.Mr Davidson has valued the land (both on "as is" and "clean" assumptions) on thebasis of vacant possession.[16] This does not mean that I ignore his evidence altogether. I acknowledge it issome evidence of the diminution in value of the reversion.[17] In any event, SEIL seeks only the lower amount of the estimated cost of repair,rather than the diminution in value of the reversion.[18] Mr Ashley, counsel for SEIL, has filed brief written submissions in supportof an award of damages for the cost of repair. He submits that there is authority thata court can award damages calculated by reference to the cost of repair where thatis the relief sought by the plaintiff and it is less than the diminution in value of thereversion, citing Culworth Estates Ltd v Society of Licensed Victuallers.3 Mr Ashleyacknowledges that that was a case where the lease had come to an end, but submitsthe principles are the same.[19] It usually does make a difference that the lease has not yet come to an end.Among other things, this is because of increased uncertainty as to whether the repairswill ever be effected and because of the time value of money. Coleridge J pointed thisout some time ago:4In estimating the damages in cases where the lease has a long time to run, it isnot fair to take the amount that would be necessary to put the premises intorepair as the measure of damages; for in such cases, when the damages areawarded to the landlord he is not bound to expend them on repairs, neither canhe do so without the tenant's permission to enter on the premises. The truequestion therefore is – to what extent is the reversion injured by the non-repairof the premises? If the lease had ninety-nine years to run it could not makemuch difference in the value of the reversion whether the premises were nowin repair or not. This lease, however, will expire in about six years.[20] In the present case, the lease has less than four years to run. Unlike the leasebefore Coleridge J, SEIL does have the right to enter the premises and carry out repairs.If SEIL does so, the cost of repair is recoverable under the lease (that is, as a debtrather than damages). It also appears that SEIL could take action to bring the leaseto an early end, there being evidence that Retyred has not paid rent for some time.[21] Mr Ashley also submits that loss and assessment of damages are questions offact. I accept that. Diminution in the value of the reversion is merely the usualmeasure of loss during the currency of the lease. The learned author of McGregor onDamages suggests that, where the end of the term is very near, the diminution in value3 Culworth Estates Ltd v Society of Licensed Victuallers (1991) 62 P & CR 211 (EWCA).4 Doe d Worcester School Trustees v Rowlands (1841) 9 C & P 734 at 739.of the reversion may well be calculated by the cost of repairs, so that the cost of repairs,with a discount for immediate payment, may be the appropriate measure.5[22] I intend to follow that course here. I consider it likely, notwithstanding thatSEIL has not as yet either effected the repairs itself or brought the lease to an earlyend, that these things are likely to happen well before the full term expires. I discountthe estimated cost of repairs by five per cent to allow for the fact that repairs will notbe effected immediately. I will therefore award damages of $1,645,262.39.Remedies against first defendant for trespass[23] SEIL seeks several remedies for the trespass. First, it seeks an injunctionrestraining any agent or employee of Retyred from entering onto a driveway that ispart of SEIL's neighbouring property (at 179 Dominion Road) or any part of thatproperty. I agree with Mr Ashley, there is no reason why such an injunction shouldnot be granted.[24] SEIL seeks general damages in the sum of $10,000. Mr Ashley acknowledgesthere is no evidence of specific loss. Although vehicles were damaged in one of thetrespasses, SEIL is not the owner of those vehicles.[25] Here, the trespass was repeated. It is clear from the evidence that, althoughit did not cause direct pecuniary loss, it caused disruption to SEIL's business, includingin the form of lost management time. I consider an award of general damages of$5,000 is appropriate to reflect this.[26] SEIL also seeks exemplary damages. There is a high bar for such damages.I am satisfied that Retyred cleared that bar by some margin. In late September 2022,Retyred started to use the driveway on SEIL's neighbouring property to access the rearof the premises with trucks carrying tyres. Mr Sahar (of SEIL) asked Retyred'semployees to stop. They refused. On 11 October 2022, SEIL served a trespass noticeon Retyred warning Retyred to stay off the driveway. The next day, Retyred'semployees used the driveway again. SEIL then chained the access from that driveway5 James Edelman McGregor on Damages (21st ed, Sweet & Maxwell, London, 2021) at [28-51].Damages on that basis were awarded in Conquest v Ebbetts [1896] AC 490.to the premises. Three days later, Retyred's employees used the driveway again andcut the chain to gain access to the premises. In the process, they moved and damagedone of his vehicles. For the most part, the behaviour of Retyred's employees in thecourse of the trespass was threatening.[27] Given the repeated and high-handed manner of the trespasses, an award ofexemplary damages of $20,000 is appropriate.Costs[28] SEIL is entitled to costs. It seeks costs on a solicitor-client basis, relying oncl 6.1 of the lease. I award solicitor-client costs. I do not require any apportionmentfor the trespass claim. The costs are to include those on the interlocutory applicationsthat were determined by Wylie J on 2 December 2022.Result[29] On SEIL's first cause of action, I award damages against the first and seconddefendants in the sum of $1,645,262.39.[30] On SEIL's second cause of action:(a) I grant an injunction restraining any agent or employee of the firstdefendant from entering onto a driveway that is part of SEIL'sneighbouring property (at 179 Dominion Road) or any part of thatproperty.(b) Against the first defendant, I award general damages of $5,000 andexemplary damages of $20,000.[31] SEIL is entitled to costs from the first and second defendants on a solicitor-client basis, including for the interlocutory applications that were determined byWylie J on 2 December 2022.______________________Campbell J