WILSON PARKING NEW ZEALAND (1992) LIMITED V FIDK TRUSTCO LIMITED HC AK CIV 2005-404-5597

WILSON PARKING NEW ZEALAND (1992) LIMITED V FIDK TRUSTCO LIMITED HC AK CIV 2005- 404-5597 7 April 2006IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2005-404-5597BETWEEN WILSON PARKING NEW ZEALAND (1992) LIMITED Plaintiff AND FIDK TRUSTCO LIMITED Defendant Hearing: 7 April 2006 Counsel: B O'Callahan for the Plaintiff AS Ross for the Defendant Judgment: 7 April 2006ORAL JUDGMENT OF RODNEY HANSEN JSolicitors: Carter & Partners, P O Box 2137, Auckland for the Plaintiff Chapman Tripp, P O Box 2206, Auckland for the DefendantIntroduction[1] The plaintiff (Wilson Parking) applies for leave to join as a second defendant to the proceeding NZGP (Northern Region) Limited (NZGP). In the alternative, it seeks leave to amend its existing statement of claim against the defendant (FIDK). Leave is required under r 438AA of the High Court Rules as the proceeding has been set down for hearing. There is a fixture for the substantive hearing during the week beginning 29 May. [2] The application for leave was first called in the Commercial List today. As it is important that the parties know the outcome of the application sooner rather than later, I have heard the application as a matter of urgency.Factual background[3] The litigation concerns the right to occupy a carpark in a building in Durham Street, Auckland, known as the Finance Centre. In June 2000 Wilson Parking entered into a contract with the then owner of the building, NZGP. The agreement was entitled "Carpark Management and Licence Agreement" (CMLA). It was for a term of ten years and six months, expiring on 31 May 2002. It provided for 77 carpark spaces to be allocated to Wilson Parking together with management rights to the remaining 200 carparks in the building. [4] In December 2004 NZGP agreed to sell the building to FIDK. The sale was settled in April 2005 and FIDK became the registered proprietor of the building. In August 2005 FIDK purported to terminate the management and licence agreement, relying on alleged defaults by Wilson Parking of its obligations under the agreement. Wilson Parking promptly issued this proceeding in the Commercial List, seeking a declaration that the notice of termination was ineffective or unlawful, an order for relief against forfeiture and an injunction to prevent FIDK from taking steps to interfere with Wilson Parking's rights under the agreement.[5] The issues in the proceeding as presently constituted are: a) Whether the CLMA agreement is a lease or a licence. If it is a lease, it would run with the land, FIDK would be bound by it and Wilson Parking, if in breach, would be entitled to seek relief against forfeiture. b) If the CLMA agreement is a licence, whether FIDK is bound by it. c) If FIDK is bound by the licence, whether it was entitled to terminate. [6] Interlocutory steps have been expeditiously disposed of and on 3 February the proceeding was set down for trial. Pretrial directions were made then and the Registrar directed to allocate a two-day trial at the earliest convenient date. A hearing was fixed for the week beginning 27 March. As the hearing approached, the parties recognised that the heavily truncated timetable adopted for the exchange of evidence exposed them to the risk that there would be insufficient preparation time for the trial. There were also difficulties with the availability of witnesses. By consent, the parties sought and obtained an order vacating the fixture. The trial date was then set for the week beginning 29 May.Joinder application[7] In support of the application for joinder, Mr O'Callahan submits that it is desirable that NZGP be joined as a party. He said if the CLMA agreement is a licence and does not bind FIDK, then Wilson Parking would claim against NZGP for its failure to ensure the continued availability of carparks. While accepting that such an action could be pursued separately, Mr O'Callahan argues that is undesirable because it would result in the duplication of process, evidence and hearing time. He maintains further that as NZGP would not be bound by any ruling in this proceeding, there is a risk of relitigation and of conflicting outcomes. He submits that in terms of r 97 the presence of NZGP may be necessary to enable the Court effectually and completely to adjudicate upon and settle all questions involved in the proceeding.[8] I am content to proceed on the basis that the requirements of r 97 have been made out and that if the application had been brought at an earlier stage, without any issue of prejudice arising, the application would in all likelihood have been granted. The real issue is whether the proceeding having been set down for hearing, leave should be granted. That requires a consideration of where the interests of justice lie. [9] Mr O'Callahan's first submission was that if strict timetabling directions are made, the hearing need not be delayed at all and no prejudice would flow from joinder. The proposed timetable assumes that NZGP could finalise pleadings and discovery and complete necessary preparation for the hearing within a period of eight weeks. I do not think that I can properly proceed on that assumption. Were I to make the directions sought by Mr O'Callahan, NZGP would have a right to seek a review and, in my view, would be likely to do so. Realistically, I must proceed on the assumption that joinder of NZGP would require the adjournment of the main fixture. I am advised that would in all likelihood mean that the trial would not take place until October. [10] Mr O'Callahan next submits that a delay of that order would not prejudice FIDK. He said it would not be financially disadvantaged. It is receiving the rent provided by the agreement. There would simply be a delay in the final determination of the proceeding which would be outweighed by the benefits of having all issues disposed of at the same time. [11] I do not accept that no prejudice to the plaintiff will result. Although there is no evidence of uncompensatable financial loss, I consider FIDK is entitled to complain that delay affects its rights as owner. Furthermore, it has elected not to seek to repossess the carparks (and to resist any consequential application for interim relief) because of the expectation of the prompt disposal of the proceeding following filing on the Commercial List. That expectation had substantially been realised until this late application. [12] In considering the interests of justice, it is also necessary to consider the reasons for the late application. Mr O'Callahan frankly acknowledged that the belated decision to seek joinder was simply the result of Wilson Parking repenting itsoriginal decision to sue FIDK only. He submits that this is not a factor that should weigh against Wilson Parking in assessing where the interests of justice lie, pointing to the observations of Master Williams QC (as he then was) in Knight v Attorney- General (High Court, Wellington, CP566/92, 29 October 1992), quoted in Paccar Inc v Four Ways Trucking Inc [1995] 2 NZLR 492 at 495. The Master said at pp 8- 9:The Court, however, has an overarching interest in the efficient despatch of litigation. The Court has an interest in the efficient despatch of its business by avoiding duplication of trials. It is in the interests of litigation that no action fail for want of parties. The Court therefore is entitled, within the rules, to ensure that plaintiffs who might repent of their original decision to sue one possible defendant alone are not deprived of their right to judgment simply by reason of a decision earlier taken but unsupported at trial as to which of two or several defendants might be liable.[13] In the context of an application brought in the course of proceedings under r 97, I accept that as the proper approach. However, I am considering here whether to grant an indulgence in circumstances where the balance of justice must be weighed and the existence of prejudice has been demonstrated. In those circumstances, the reason for the delay in applying will be accorded greater weight. [14] Wilson Parking made a deliberate decision not to make NZGP a party when the proceeding was issued or to apply to join it at an earlier stage. It had advised NZGP in a letter written following the sale of the building that, if NZGP had disposed of the building without protecting Wilson Parking's legal rights, it would hold NZGP liable for any future losses under the agreement. The decision not to join NZGP earlier was made with full knowledge of all relevant considerations. Against this background it seems to me that the consequences to Wilson Parking of a second round of litigation can count for little in weighing the balance of justice. [15] It is, of course, by no means a foregone conclusion that a claim against NZGP would be required in any event. It would require that Wilson Parking fail on all three key issues in the present proceeding. Mr O'Callahan was inclined to paint a gloomy picture of the likely course of a second round of litigation. He foresaw the need to relitigate key issues and the possibility of different findings in relation to the same issue. I acknowledge that those outcomes are theoretically possible but Iregard them as practically unlikely. Much would depend on the matters that are put in issue by NZGP. [16] I acknowledge there is a risk of prejudice to Wilson Parking if joinder does not occur. However, for the reasons I have given, that carries little weight. It is outweighed by the prejudice to FIDK if the hearing is delayed and, arguably, some further disadvantage by virtue of the introduction into the litigation of issues which do not directly concern it. [17] Weighing as best I can these considerations, I have come to the view that the interests of justice do not warrant granting leave to join the additional defendant. That part of the application is accordingly refused.Application to amend claim[18] The alternative application to amend the statement of claim is directed to the addition of a third alternative cause of action. It seeks to have determined whether, in the event that the agreement is held to be a licence, NZGP's obligations under the agreement were assigned to FIDK. The key passage of the draft amended statement of claim reads:NZGP has by express or implied representations and through its conduct assigned its obligations under the agreement to the defendant.[19] Mr Ross argued that FIDK could not be expected to plead to an allegation which focused on the conduct of NZGP. He accepted, however, that he could not object to the addition of a cause of action which asserted in neutral terms that NZGP had assigned its obligations under the agreement to FIDK. He acknowledged that it was appropriate that the issue be determined in the context of the present litigation and that no prejudice would arise from its being pleaded at this stage. [20] On that basis, I am satisfied that it is in the interests of justice to grant leave to Wilson Parking to file and serve an amended statement of claim which in substance pleads as a third alternative cause of action that there was an assignment of NZGP's obligations under the agreement to FIDK.Costs[21] The defendant is entitled to the costs of the application and this hearing on a 2B basis.