Acernus Aero Limited v Capital Finance New Zealand Limited [2012] NZHC 1403 (20 June 2012)

Last Updated: 26 June 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-002422 [2012] NZHC 1403

BETWEEN ACERNUS AERO LIMITED Plaintiff

AND CAPITAL FINANCE NEW ZEALAND LIMITED

First Defendant

AND OCEANIA AVIATION LIMITED Second Defendant

Hearing: 18 June 2012

Appearances: M Heard for Plaintiff

A J Horne and M D Pascariu for First Defendant

No appearance for Second Defendant

Judgment: 20 June 2012

_{JUDGMENT OF COURTNEY J}

This judgment was delivered by Justice Courtney on 20 June 2012 at 11:30 am

pursuant to R 11.5 of the High Court Rules

Registrar / Deputy Registrar

Date........................................

Solicitors: J T Law, P O Box 25443 Panama Street, Wellington 6146

Fax: [phone]

Minter Ellison Rudd Watts, P O Box 3798, Auckland 1140

Fax: [phone] – A Horne / M Pascariu

Counsel: M Heard, C/- Lee Salmon Long, P O Box 2026 Shortland Street, Auckland 1140

_{Fax: [phone]}

ACERNUS AERO LTD V CAPITAL FINANCE NZ LTD HC AK CIV-2012-404-002422 [20 June 2012]

Application for interim injunction

[1] This matter originally came before the Court in the form of the plaintiff’s application for an interim injunction in relation to a dispute between it and the first defendant over the release of security held by the first defendant over a helicopter under a loan agreement between the parties. The parties eventually resolved the matters of immediate concern by entry into a deed of agreement and the application for interim injunction was not pursued.

[2] Under the deed it was agreed, amongst other things, that the proceeds of sale would be paid in part to the offices of Minter Ellison, who act for the first defendant, and in part to the plaintiff’s agent, Greenwood Roche Chisnall (GRC). The amount to be held by Minter Ellison was US$1.35m and this was defined in the deed as the Agreed Amount. The amount to be held by GRC was US$160,095.27 and that was referred to as the Held Amount.

[3] There were specific provisions as to the way that those funds were to be disbursed. In particular, and relevant to today’s hearing, cl 4 required the first defendant to apply the Agreed Amount to various categories of items. The fourth of these categories was described as “an amount to cover 12 months premium on the insurance on the terms to be effected in accordance with the Cessna agreement estimated at US$35,000”. The Cessna agreement related to the aircraft described in argument as ZK-MUS.

[4] The matter has come back before the Court today because the plaintiff asserts that the outstanding premium on the aircraft had not been paid and as a result this aircraft is uninsured. The plaintiff claims that it is the first defendant’s responsibility to meet the cost of the premium out of the Agreed Amount. The first defendant, however, has already disbursed the entire of the Agreed Amount in reduction of the amount owing under the loan agreement which was the first category identified under cl 4. There is a shortfall of about US$5,000.

[5] The plaintiff sought interim orders from this Court requiring the first defendant to meet the premium costs for ZK-MUS. The first defendant resisted this

obligation, saying that it was simply required to apply the amounts in accordance with the categories identified in cl 4 in that order. Further, Mr Horne, for the first defendant, pointed out that the premium described in cl 4 in fact related to both ZK- MUS and an entirely different aircraft which was not the subject of any loan by the first defendand and over which the first defendant had no security. Further, it was the plaintiff’s own obligation under the Cessna agreement to insure the aircraft.

[6] As the argument developed it was obvious that cl 4 was ill-conceived and no doubt the product of the rush in which it was agreed. There is a faint argument about the correct interpretation of it, but on balance I am satisfied that it does not have the meaning that the plaintiff ascribes to it. In any event, even if such an argument were seriously possible I am satisfied that the balance of convenience did not lie with the plaintiff. The only prejudice that the plaintiff could point to was that if it met the cost of the insurance it would then be put to the cost and trouble of pursuing the first defendant.

[7] I accept Mr Horne’s submission that the plaintiff is able to meet the insurance premium. I am strongly influenced by the fact that the plaintiff is responsible to do so and that the insurance arrangements cover not only the subject aircraft but also an unrelated aircraft. For those reasons I refused the plaintiff’s application.

Further directions

[8] Counsel conferred regarding the further steps that were required in this matter. They have agreed on orders regarding the payment of the insurance premium and I make the following consent orders:

(a) That GRC is to pay forthwith out of the held amount, as defined in the deed between the parties entered into on or about 7 May 2012;

(i) To QBE Insurance Australia the sum of US$18,000

(ii) Forthwith, on receipt from AON New Zealand of details of the premium for 12 months insurance for ZK-MUS effected in

accordance with the Cessna agreement as that is defined in the deed, that premium.

(b) The parties expressly reserve all rights against one another on all issues.

[9] I agreed with counsel the following timetable orders:

(a) The first defendant is to file a statement of defence by 6 July 2012. I do not make any order regarding the second defendant, who has no active part in the proceedings at this stage and has indicated it does not need or wish to take steps;

(b) Any further interlocutory application by either party is to be made by

20 July 2012;

(c) Notices of opposition to be filed by 3 August 2012; (d) Any reply affidavits to be filed by 10 August 2012;

(e) A case management conference is to be allocated as soon as possible

_{after 10 August 2012.}

P Courtney J