STYLO MEDICAL SERVICES LTD v HUM HOSPITALITY LTD [2021] NZHC 3191

STYLO MEDICAL SERVICES LTD v HUM HOSPITALITY LTD [2021] NZHC 3191 [26 November 2021]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-000365[2021] NZHC 3191UNDER Section 244 of the Property Law Act 2007IN THE MATTER OF an application for cancellation of deed oflease dated 22 January 2011 and possessionBETWEEN STYLO MEDICAL SERVICES LIMITEDApplicantAND HUM HOSPITALITY LIMITEDRespondentHearing: 24 November 2021Appearances: RO Parmenter for ApplicantRO Armitage in personJudgment: 26 November 2021JUDGMENT OF DOWNS JThis judgment was delivered by me on Friday, 26 November 2021 at 4 pmpursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors/Counsel:Winston Wang & Associates, Auckland.James Burt, Auckland.RO Parmenter, Auckland.Copy to: RO Armitage.Should Roseanne Armitage be arrested?[1] Stylo Medical Services Ltd1 seeks an order for the arrest ofRoseanne Armitage. Ms Armitage is the director of Hum Hospitality Ltd.2 Styloleased its Grafton Road, Auckland, property to Hum. Brewer J cancelled the lease andgranted Stylo possession. Stylo has attempted to retake possession, but there, Humremains. Stylo says Ms Armitage's arrest, as Hum's director, is now necessary.The application, which I heard two days ago as Duty Judge, has some history.Background[2] The lease began 2011 and was subject to two, eight-year rights of renewal.Stylo gave Hum a rental holiday but required it to renovate the property. Things didnot go well.[3] On 5 March 2019, Stylo applied to cancel the lease, take possession, and bepaid arrears. Brewer J heard the application 4 October and 12 December 2019, then24 August 2020.[4] On 11 November 2020, Brewer J found largely for Stylo. He concluded Humowed Stylo at least $150,000 in arrears of rent. He ordered the lease be cancelled ifHum failed to pay this amount "no later than one calendar month from the date ofdelivery of this judgment".3 He also ordered the lease be cancelled if Hum defaultedon the payment of future rent, unless Hum could show non-payment had beenremedied within 10 working days.4[5] On 7 December 2020 Hum applied for a stay. It said it could not pay thearrears. Edwards J dismissed the application.5[6] Hum later paid the arrears. But, it was late in paying the GST component ofthe December 2020 rent. It remedied this within the (10-working day) grace period1 Stylo.2 Hum.3 Stylo Medical Services Ltd v Hum Hospitality Ltd [2020] NZHC 2969 at [44].4 At [48].5 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 11 December2020.after Stylo said it would seal Brewer J's orders cancelling the lease. Hum then failedto pay the GST component of its January 2021 rent.[7] On 2 February 2021, Stylo applied to Brewer J to seal orders cancelling thelease on the basis of the January default. Brewer J granted the application 11 February2021.6[8] Hum swiftly sought a stay of cancellation, arguing it had paid the GSTcomponent within the grace period. On 12 February 2021, Brewer J granted a stayuntil he had determined what had happened.7[9] On 24 February 2021, Brewer J lifted the stay. He found Hum had not paid theJanuary GST component within the grace period; rather, the payment Hum madeconcerned rates.8[10] Hum continued to file papers prepared by Ms Armitage. On 9 March 2021,Brewer J issued a Minute noting any challenge to his orders should be made to theCourt of Appeal.9[11] The next day, Hum sought another stay. On 11 March 2021, Brewer J issued aMinute noting "Ms Armitage is deeply unhappy with the orders I have made"10 but hehad "no further jurisdiction".11 The Judge also noted Ms Armitage could not act forHum.[12] Edwards J dismissed yet another stay application 15 March 2021.126 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 11 February2021.7 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 12 February2021.8 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 24 February2021.9 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 9 March2021.10 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 11 March2021 at [4].11 At [5].12 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 15 March2021.[13] On 16 March 2021, Stylo attempted to take possession with the help of theSheriff and Police. Ms Armitage was at the property. So too between 10 and 15supporters.13 Police concluded it would be better if they tried another day.[14] On 12 April 2021, Stylo and the Sheriff contemplated another attempt atpossession. Again, Police elected not to force the issue.14[15] On 13 April 2021, Brewer J granted a stay because Hum had applied to theCourt of Appeal for permission to appeal out of time the Judge's 11 November 2020decision.15 The Judge said the stay endured "pending the determination by the Courtof Appeal of Hum's application for extension of time to appeal".16 He added if theapplication were granted, "it will be up to the Court of Appeal to decide whether thestay should continue".17[16] On 13 August 2021, the Court of Appeal granted Hum permission for an out oftime appeal.18 However, that Court made permission conditional on:(a) Hum paying Stylo, within 14 days, $92,925.24 in arrears.(b) Hum prosecuting its appeal with expedition. It had to file the appealwithin 14 days. The appeal would then be placed on the fast track.[17] Hum did not comply with either condition. Instead, it asked theCourt of Appeal to recall its 13 August decision. The Court of Appeal dismissed theapplication 9 September 2021.19[18] On 17 September 2021, Brewer J dismissed, as an abuse of process, a furtherapplication for a stay prepared by Ms Armitage.20 On 21 September 2021, the Judge13 Affidavit of Shen Tat Ooi, dated 26 October 2021.14 Affidavit of Shen Tat Ooi, dated 26 October 2021.15 Stylo Medical Services Ltd v Hum Hospitality Ltd [2021] NZHC 772.16 At [4].17 At [4].18 Hum Hospitality Ltd v Stylo Medical Services Ltd [2021] NZCA 377.19 Hum Hospitality Ltd v Stylo Medical Services Ltd [2021] NZCA 457.20 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 17 September2021.dismissed an application by Ms Armitage "to rescind" that ruling.21 And, on24 September 2021, the Judge directed the Registry not to accept yet more documentsfrom Ms Armitage seeking a stay.22[19] On 29 October 2021, Stylo filed this application. As observed, it seeks an orderfor Ms Armitage's arrest as Hum's director.Principle[20] An arrest order is an amalgam of the High Court Rules 2016, statute, andcommon law.[21] Rules 17.83 and 17.84 of the High Court Rules provide:17.83 Effect of arrest order(1) An arrest order authorises and requires an enforcing officer to arrest anyperson named in the order and to bring that person before the court at thetime and place specified in the order, and until then, to keep the person insafe custody.(2) An arrest order may be in form E 9.17.84 Power to issue arrest order(1) In this subpart,—enforceable undertaking means an undertaking described in subpart 4of Part 2 of the Contempt of Court Act 2019original court order has the same meaning as court order in subpart 4 ofPart 2 of the Contempt of Court Act 2019.(2) If a person has applied to the court to enforce an original court order oran enforceable undertaking and that person is entitled to make anapplication under section 16(2) of the Contempt of Court Act 2019, aJudge may issue an order arresting the non-complying party if,—(a) in the case of an application to enforce an original court order, theJudge is satisfied that the non-complying party has been served withthe order and has not complied with it; or(b) in the case of an application to enforce an undertaking, the Judge issatisfied that the non-complying party had knowledge or proper21 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 21 September2021 at [2].22 Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 24 September2021.notice of the terms of the enforceable undertaking and has notcomplied with it.[22] As to statute, r 17.84(2) requires the applicant be "entitled to make theapplication under s 16(2) of the Contempt of Court Act 2019". Section 16(2)(a) ofthat Act provides, "A court may enforce the court order on application by—theparty who sought the order", here Stylo. The same Act defines "court order", bys 16(1)(a), as "any interim or final order, decision, decree, direction, or judgment of acourt", save for one concerning a sum of money.23[23] The common law has similar elements.24 An applicant for an arrest order mustestablish, beyond reasonable doubt:25(a) The original Court order (binding the party) was clear in its terms.(b) The party was served with, or given, that order.(c) The party has shown the order "wilful and inexcusable disregard".26Or, to use more modern language, knowingly failed to comply with theorder, without reasonable excuse.[24] Even then, a discretion remains. This follows from the language of r 17.84;"a Judge may issue an order ".27[25] It is not clear the common law remains applicable. I say this because the keyrule, r 17.84, was recast from 26 August 2020 by the High Court (Contempt of Court)Amendment Rules 2020, and astute readers will note the recast rule is a little lessexacting than the common law. This is not the occasion to test boundaries. I assume(more exacting) common law remains applicable.23 In turn subject to an exception that need not be explored here.24 See, for example, Official Assignee v Mathiesen [2018] NZHC 843 at [14].25 These requirements, in turn, are similar (but not quite identical) to those in ss 16(3) and (4) of theContempt of Court Act, which apply when an applicant seeks to enforce a Court order by havingthe party imprisoned for up to six months, fined, or required to do community work.26 Horowhenua 11 (Lake) Part Reservation Trust v Taueki [2017] NZHC 4, [2017] NZAR 221 at [3].27 Emphasis added.Are the criteria established beyond reasonable doubt?[26] The application is based on Brewer J's judgment of 11 November 2020(see [4]),28 and the orders sealed by the Judge 11 February 2021 (see [7]).29 Theformer read:30Pending resolution of any dispute as to quantum, the lease will remain in forceprovided rental payments are paid on time. If Hum defaults on the paymentof any rental due, then unless Hum can show the non-payment was remediedwithin 10 working days of being due, the lease is cancelled and Hum mustforthwith give possession of the premises to Stylo.[27] This determination is clear.[28] The sealed orders read:... the following orders were made by the Honourable Justice Brewer on thepapers:a. The Deed of Lease dated 22 January 2011 is cancelled as at the datehereof;b. immediate possession of the demised premises, viz 123 Grafton Road,Grafton, Auckland is granted to the applicant;c. Costs are reserved.Date: 11/2/21[29] These too are clear. Both concern, and bind, Hum.[30] The original judgment and sealed orders were (quickly) given to Hum.[31] It is beyond argument Hum remains in possession of the property, despite itsknowledge of the original judgment and sealed orders. Ms Armitage accepted as muchat the hearing (in response to my question). Like Brewer J, I do not doubt Ms Armitageis very unhappy the lease was cancelled, but this does not constitute a reasonableexcuse for Hum's failure to vacate the property, let alone Ms Armitage's apparentfrustration of at least one attempt by Stylo to retake possession (see [13]).28 The original judgment.29 The sealed orders.30 Stylo Medical Services Ltd v Hum Hospitality Ltd [2020] NZHC 2969 at [48].[32] The criteria are established beyond reasonable doubt. I did not understandMs Armitage to contend otherwise. Rather, she raised a series of points under thebanner, "process".The process pointsNon-service of the application?[33] Ms Armitage said the application was defective because it was not "formally"served on Hum.[34] Stylo filed the application 29 October 2021 by email (with an affidavit insupport and memorandum of counsel). Auckland was then—and remains—atAlert Level 3 because of the COVID-19 pandemic. Stylo copied Ms Armitage, usingthe email address she uses when she corresponds with the Court. The application didnot identify the hearing date, for, it was not then known.[35] On 19 November 2021, the Registrar emailed Stylo and Ms Armitage, sayingBrewer J had directed the application be called in the Duty Judge list 24 November at10 am. The email provided information about the virtual meeting room system (beingused at Alert Level 3).[36] Ms Armitage appeared (remotely) when the application was called thatmorning. She had, earlier in the day, emailed the Court with an extensive documententitled, "Memorandum from respondent in reply – under urgency".31 Thememorandum said Hum had not been "formally" served. The 243-page documentattached many aspects of the record, including the application. Ms Armitage appendedit as exhibit "OO".[37] Ms Armitage did not elaborate why service was defective. Her point was notthat she or Hum had not been given the application—it could not be. There might bean argument Ms Armitage had not been given three clear working days' notice of thehearing.32 There might also be an argument some form of personal service was31 Ms Armitage used the same email address to which Stylo copied her its arrest order application.32 High Court Rules 2016, r 7.24(1)(b).necessary, either on Ms Armitage or Hum (by its registered office). However, thesewould be quibbles only. Ms Armitage has had the application since 29 October.She was present at the hearing (remotely of course). She was heard. All this happenedwhile Auckland was at Alert Level 3, hence while there are restrictions on movementand interaction. There is nothing of substance to this complaint.Process complaints about the sealed orders[38] Ms Armitage contends the sealed orders cannot lead to an arrest order because(a) when Stylo sought permission of Brewer J to seal them, that constituted aninterlocutory application, and (b) r 17.2 of the High Court Rules provides: "A Courtorder, except an order made on an interlocutory application, may be enforced in thesame way as a judgment in the proceeding to the same effect". Ms Armitage saysr 17.2 means an interlocutory application cannot be enforced, hence the sealed orderscannot result in an arrest order.[39] The difficulty with this analysis—apart from the awkward characterisation ofthe application as interlocutory—is that r 7.48 provides interlocutory applications canbe enforced. Indeed, such enforcement can lead to imprisonment.[40] Ms Armitage next contends the process that resulted in the sealed orders wasunfair, for, Stylo did not serve Hum with its application to Brewer J. It follows thesealed orders were obtained without notice.[41] There are two answers to this point. The first is that Brewer J stayed the sealedorders as soon as Hum argued it had paid the GST component of the January rentalwithin the grace period. The Judge then directed Stylo to serve Hum everything it hadfiled, and invited Hum to respond. Hum did. Stylo replied. Brewer J then concludedHum had not paid the GST component within the grace period. He lifted the stayaccordingly. So, while the sealed orders were obtained without notice, subsequentevents quickly remedied any possible prejudice.[42] The second and much more important answer is this. It is not open to me toquestion, let alone "unpick", what Brewer J did. I am not here to decide if the leaseshould have been cancelled. That was Brewer J's task, and one he completed sometime ago. My task is to determine whether Stylo has established, beyond reasonabledoubt, the criteria for an arrest order, and having found them established to thatstandard, to decide whether I should make an order. These observations deserveemphasis, for, Ms Armitage appears to believe my task is otherwise.[43] Ms Armitage's final point is that her arrest would be premature as theCourt of Appeal is still seized of the case. Ms Armitage said she had sent documentsto that Court seeking, essentially, a stay of the original judgment and sealed orders,and an appeal of both.[44] I do not doubt Ms Armitage is an enthusiastic correspondent with theCourt of Appeal. The 243-page document she filed on the morning of the hearingappears primarily intended for that Court. However, it is a matter of record the caseis no longer live in that Court. The sequence at [16]–[17] speaks for itself. That alitigant believes a case remains live in a court based on their own, unsolicitedcorrespondence is not a principle known to law.Should I make an arrest order?[45] Hum in the person of Ms Armitage will not accept this Court has cancelled thelease and ordered it to vacate the property. Hum should have done so long before now.An order is required. The background reveals no other, realistic alternative.[46] On behalf of Stylo, Mr Parmenter suggested the arrest order lie in Court,thereby providing Hum a final opportunity to vacate. The suggestion is sensible, andconsistent with authority.33[47] As observed, Auckland remains at Alert Level 3. Ms Armitage is currently inTauranga. Auckland travel restrictions are scheduled to end 15 December 2021 orthereabouts. This Court last sits (for other than urgent matters) 17 December 2021. Itreconvenes 1 February 2022. I am the Duty Judge from 8 February 2022. Given thismix, the order should lie in Court until 8 February 2022. If Hum vacates the propertybefore then—as it should have already—the order will be quashed.33 See McGechan on Procedure (looseleaf ed, Thomson Reuters, Wellington) at [17.84.08].Result[48] The application is granted. An order is made for Ms Armitage's arrest.The order is to lie in Court until 8 February 2022. It will be quashed if Hum vacatesthe property before 8 February 2022...Downs J