Top of Tory Limited v Sammons DC Wellington CIV-2009-085-1072 [2012] NZDC 1920 (16 November 2012)

Last Updated: 27 September 2016

IN THE DISTRICT COURT AT WELLINGTON

_{CIV-2009-085-1074}

BETWEEN TOP OF TORY LIMITED, A DULY INCORPORATED COMPANY HAVING ITS REGISTERED OFFICE AT LEVEL 1,

147 TORY STREET, WELLINGTON AND CARRYING ON BUSINESS AS A COMMERCIAL PROPERTY OWNER First Plaintiff

AND V S LIMITED, A DULY INCORPORATED COMPANY HAVING ITS REGISTERED OFFICE AT LEVEL 1,

147 TORY STREET, WELLINGTON AND CARRYING ON BUSINESS AS A COMMERCIAL PROPERTY LESSEE Second Plaintiff

AND LEIGH ANNE SAMMONS OF 11

SOUTHERN CROSS CRESCENT, ISLAND BAY, WELLINGTON, BUSINESS WOMAN

First Defendant

AND COLIN BRUCE SIVYER AND NATASHA ELENI KOTSAPAS, BOTH OF 48 FROBISHER STREET, ISLAND BAY, WELLINGTON

Second Defendants

Hearing: 2 November 2012

Appearances: Mr J D Haig and Mr D M Tait for the Plaintiffs

The First Defendant in person

No appearance by or on behalf of the Second Defendants

Judgment: 16 November 2012

RESERVED JUDGMENT OF JUDGE S M HARROP

_{[As to plaintiffs’ claim against first defendant]}

TOP OF TORY LIMITED & V S LIMITED V SAMMONS, SIVYER AND KOTSAPAS DC WN CIV-2009-

085-1074 [16 November 2012]

Introduction

[1] The plaintiffs claim from the first defendant unpaid rental and related “make-good” costs, interest and costs arising from the termination of a lease of commercial premises at 133-139 Tory Street, Wellington. The claim is for a total of

$259,887.55 but the plaintiffs accept that any District Court judgment is limited to

$200,000 and abandon the excess.

[2] This claim has a lengthy and somewhat complex history. It began life under the District Courts Rules 1992 as a proceeding in which summary judgment was sought. Ultimately a second amended statement of claim was filed in June 2011. The second defendants as I understand it have not been served and judgment against them is not currently sought by the plaintiffs. However the first defendant Ms Sammons filed a statement of defence to the second amended statement of claim. Her then solicitor Mr Hughes was subsequently given leave to withdraw. In his affidavit in support of the necessary application Mr Hughes advised the Court that Ms Sammons was no longer in a position to meet his costs and disbursements and that she anticipated she would be filing in bankruptcy.

[3] The proceeding was set down for what was described as “a formal proof hearing” before me on 2 November. The plaintiffs assumed that Ms Sammons would take no steps to oppose and would not appear. However she was advised of the hearing date and did appear. Ms Sammons told me that she was proceeding with her proposed bankruptcy application. She said that she could not afford to fight the plaintiffs’ claim further and indeed it was not sensible to argue because she accepted that she was likely to owe them far more than she can pay, she estimated liability for

$180,000 to $200,000, although with a possible set-off for chattels that she considered had been improperly appropriated by the plaintiffs, that sum might be reduced to $120,000 to $130,000.

[4] Ms Sammons said that she was prepared to accept the decision of the Court after consideration of the file and when I gave her the opportunity to remain or to leave the hearing , she chose to leave.

Discussion

[5] I proceed on the basis that as a result of what Ms Sammons told me on

2 November, her liability to the plaintiffs is not disputed, only the extent of that liability.

[6] Against that background, I now set out the key aspects of the factual background. The first plaintiff is the former registered proprietor of the relevant premises and the second plaintiff is the current proprietor. They claim damages jointly and since there is no longer an issue as to their right to do so, I proceed on the basis they are entitled to do so.

[7] Ms Sammons is the sole director and shareholder of the former (but not the original) tenant Cheeky Rascals Limited and she guaranteed that company’s obligations under the lease in question. The lease was terminated in June 2009 by re-entry following unmet demands for unpaid rental. However at the time of re- entry the first plaintiff says it reasonably believed that the tenant had already vacated the premises.

[8] In her statement of defence Ms Sammons made three main points:

(a) The original tenant was in arrears and the plaintiffs were under a duty to disclose that to her. Their failure to do so she contended voided her guarantee. As this is a question of liability rather than quantum I need not discuss it further except to say that there is in law no basis for such a contention, as Mr Haig pointed out in his synopsis of submissions.

(b) The first plaintiff did not have the right to instigate a rent review, those rents having been assigned to the second plaintiff, but if it did, then the due process is to proceed to arbitration. Again the right of the first plaintiff to instigate a rent review being a matter of liability is no longer an issue but for completion I will address the point arising

from this because it bears on the appropriate level of award for unpaid rental.

(c) The tenant did not abandon the premises and the agent of the plaintiffs refused Ms Sammons access to uplift chattels and other significant items which were appropriated by the plaintiffs, such chattels having the value of about $60,000. This issue will also be discussed below.

Rent Review

[9] I accept the submissions of Mr Haig on this issue. There is no doubt that the lessor was entitled to instigate a rent review as it purported to do on about

1 October 2008. The arrangements between the plaintiffs permitted the first plaintiff to do this even though there had earlier been an assignment of rights to the second plaintiff. That is because there was a reservation of rights retained by the first plaintiff.

[10] The first plaintiff provided Ms Sammons with a proposed rental (supported by a valuation certificate) of $139,576 plus GST per annum, i.e. $13,085.25 (including GST) per month. This compared with the prior rental of $9,375 including GST per month or $100,000 per annum plus GST.

[11] In response, on about 20 November 2008, Ms Sammons wrote to the plaintiffs’ property manager proposing a new rent which was as I understand it effectively the old rent of $100,000 per annum plus GST. No valuer’s certificate was provided.

[12] In December 2008 however Ms Sammons obtained a valuation assessment for rental for the premises for $111,633 plus GST.

[13] The next stage of the process ought to have been arbitration but despite this being offered in June 2009 Ms Sammons did not take up the offer or do anything to address the question of determining the correct rent.

[14] In these circumstances, I accept Mr Haig’s submission that clause 2.3 of the lease provides expressly for the midpoint of the two disputed rental figures to be used pending the final determination of the disputed rent process. Although one would expect in the normal course such interim rental would apply only for a short time until final determination was made, there is no limit on how long this might apply. It is on this basis that the plaintiffs claim that the appropriate unpaid rental claim is to be calculated on the basis of the rate of $125,604.50 per annum. In the alternative the plaintiffs sought rental at the original rate but I accept that the terms of the lease justify the claim for the greater, or “half-way”, rental. It is appropriate that this interim rental rate apply from 1 October 2008, being the rent review date.

Abandonment of the premises/set-off for chattels?

[15] Although Ms Sammons denies abandoning the premises in her statement of defence (paragraph 18), there can be no doubt that the plaintiffs’ termination of the lease and re-entry was justified because of the substantial arrears of rental and a Property Law Act Notice had been served as required. It is not strictly necessary to consider whether in addition to this the tenant had abandoned the premises. What matters in relation to her argument about the chattels is the application of clause 32.1 of the lease to the facts. That clause provides:

The Tenant may at any time before and will if required by the Landlord at the end or earlier termination of the term removal (sic) all the Tenants’ fixtures and fittings and chattels and make good at the Tenants own expense all resulting damage and if not removed within seven days after the date of termination ownership of the fixtures, fittings and chattels may at the Landlord’s election pass to the Landlord or the Landlord may in a proper and workmanlike manner remove the same from the premises and forward them to a refuse collection centre.

[16] As Mr Haig acknowledged during the hearing, this is quite a Draconian provision but of course it is one which the tenant accepted when signing the lease and which Ms Sammons company accepted on taking it over.

[17] On the evidence (that is affidavit evidence rather than pleadings) before me, there is no suggestion that either Ms Sammons or anyone else acting on behalf of the tenant ever made a request to remove any chattels or other items within or after the seven day period, let alone that any such request as was made was denied.

Accordingly, assuming for present purposes that various chattels were taken to a refuse collection centre, that is something which the plaintiffs were entitled to do and which the tenant ,and effectively Ms Sammons too, had agreed they could do if she did not remove them within that seven-day period. In any event the plaintiffs deny that they have obtained a substantial benefit from those chattels which were abandoned at the property. I therefore decline to reduce the amount of the plaintiffs’ claim for this reason.

[18] Having considered Mr Tait’s affidavit in support of the claim for quantum I accept that were it not for the limit to the District Court jurisdiction the plaintiffs would be entitled to judgment for $259,887.55 being made up of $157,628.67 for unpaid rental, $46,692.10 for interest and costs of $55,566.78. However because of the civil jurisdiction of the District Court I can only, and do, enter judgment in favour of the plaintiffs jointly against the first defendant Ms Sammons in the sum of

$200,000.00. In passing I note that even if Ms Sammons’ set- off claim in relation to the chattels had been upheld in full at the figure she mentioned ($60,000) , the plaintiffs would still have been entitled to judgment for $199,887,55.

S M Harrop

_{District Court Judge}

Signed at am/pm on 16 November 2012