Glucina v Murray [2014] NZHC 1529 (2 July 2014)

Last Updated: 7 August 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2014-404-907 [2014] NZHC 1529

BETWEEN	GORAN STIPE GLUCINA Plaintiff
AND	JOHN LUTHER MURRAY First Defendant B VAN DELDEN AND T MAGINNESS Second Defendants

Hearing:	25 June 2014
Appearances:	M G Locke for Plaintiff C S Henry for First Defendant
Judgment:	2 July 2014

_{JUDGMENT OF MANDER J}

Introduction

[1] The plaintiff, Mr Goran Glucina, has commenced proceedings seeking declaratory relief regarding the appointment of receivers by the first defendant, Mr John Murray, under a General Security Agreement (“GSA”). The GSA granted a security interest in favour of Mr Murray in respect of a motor vessel, the Kotare (“Kotare”) which was purchased by Mr Glucina with the assistance of vendor finance provided by Mr Murray in June 2010. Mr Glucina contends there is no lawful basis for the appointment of a receiver and that the subsequent seizure by the receiver of the Kotare was unlawful and invalid. He seeks a declaration that the vessel be returned to him and damages paid in compensation of the costs he has incurred and the loss suffered as a result of damage or deterioration to the Kotare.

[2] As an interim measure, Mr Glucina made ex parte application for interim relief in the form of an injunction to restrain the sale or other disposition of the

GLUCINA v MURRAY & ORS [2014] NZHC 1529 [2 July 2014]

Kotare pending the hearing of the substantive proceeding. An interim injunction was granted by Faire J on 17 April 2014 to continue in place until further order of the Court. Subsequently, the first defendant made application for the interim order to be rescinded. Having heard full oral argument the issue before the Court is whether the interim relief in favour of the plaintiff should be maintained and, if so, on what basis.

Background

[3] Mr Glucina and Mr Murray are associates who over some 10 years have shared an interest in trading antiques and boating. Over the course of their association they have interacted on these subjects and entered into various transactions. The present proceeding arises out of the sale of the Kotare which was purchased by Mr Glucina from Mr Murray for the sum of $400,000 in June 2010.

[4] The Kotare was the subject of a deed of sale and purchase and a GSA to secure vendor finance. The sale was funded by Mr Glucina supplying Mr Murray with antiques to an agreed value of $200,000. These items were provided at the time of sale. The remaining $200,000 was to be paid from the proceeds of the sale of Mr Glucina’s previous boat, Smooth Operator, once a buyer could be found. Mr Murray extended a finance facility for the balance of the purchase price. The initial term of the loan was for one year and was interest free. Mr Glucina had the option of renewing the vendor’s finance for a further year. The second year however would be subject to the charge of interest at the rate of 10% per annum payable monthly. The finance provided by Mr Murray was also subject to the granting of a security interest by Mr Glucina in favour of Mr Murray in the Kotare and the power launch, Smooth Operator.

[5] After the sale of Smooth Operator the proceeds, $170,000, were paid to Mr Murray on 26 October 2012. It appears that by the end of October 2012 there remained a balance of some $30,000 owed to Mr Murray, together with any outstanding interest that had been incurred from the renewal of the vendor’s finance from 26 June 2011. From this point however the respective accounts of the parties diverge.

Alleged sale of antiques

[6] Mr Glucina has deposed that during the two year period between 2010 and

2012 he provided to Mr Murray some $75,900 worth of various antiques which were accepted by Mr Murray in payment of the outstanding purchase price for the Kotare. These items included antique firearms, jewellery, and paintings. Mr Murray in his affidavit disputes that these items were provided to him, either in payment of the outstanding monies owed in respect of the Kotare, or indeed in some cases that he purchased the items at all.

[7] It is not necessary for me to go into detail regarding these items or their status as between the parties. It is sufficient to note that the circumstances of these transactions or whether such transactions occurred at all is the subject of dispute.

Alleged defects in the Kotare

[8] A further source of dispute between the parties are alleged defects in the vessel which Mr Glucina claims he was required to fix at his cost. Mr Glucina alleges that Mr Murray is in breach of his warranty as to the condition of the vessel at the time of sale. This allegation is disputed by Mr Murray who points to the terms of the deed of sale and purchase that any warranty as to defects was limited to the representation that to the best of his knowledge there were no problems with the vessel which was in good working order. In particular, Mr Murray relies upon a clause in the deed where the parties disavow reliance upon any representations made, and that the parties shall not attribute blame or make any future claims against the other in reliance on such representations which are to be treated as mere opinions and not facts. In response, Mr Glucina maintains that the defects in the Kotare were ones which Mr Murray would or ought to have been aware of and that he cannot deny that he knowingly breached the warranty as to the condition of the vessel.

The competing claims of the parties

[9] By April 2013 matters had deteriorated between the parties and they were in dispute as to monies owed between them. On 19 March 2013, Mr Glucina instructed his then solicitor to formally advise Mr Murray that he had spent $24,590 to remedy

problems with the Kotare, in respect of which Mr Murray was in breach of the vendor’s warranty under the deed of sale and purchase. Reference was also made to a number of the antiques which were said to have been provided to Mr Murray but not paid for. The items listed in the letter include some of the antiques which Mr Glucina claims were provided to Mr Murray in payment of the balance owed on the purchase of the Kotare. The cost of the repairs and the value of the antiques supplied but not paid for, together with interest of 10%, was said to total some $55,676. The solicitor’s letter concluded with the offer to pay the sum of $4,000 in settlement of the disputed monies owed on the balance of the purchase price of the Kotare.

[10] On 22 April 2013, Mr Murray’s solicitor served formal notice demanding

Mr Glucina repay to Mr Murray the balance of the vendor loan, being principal of

$30,000 and accrued interest of $20,000 due on 28 June 2012, plus additional interest and costs. Mr Glucina has deposed that in addition to this demand some

$56,318.08 was also claimed in respect of Mr Murray’s legal costs. Mr Murray has

confirmed in his affidavit in opposition to the application that he claims in excess of

$100,000 for the balance of the purchase price, accumulated interest, legal fees and costs.

[11] On 24 May 2013, Mr Glucina commenced proceedings in the Manukau District Court seeking recovery of the costs of the repairs to the Kotare and monies claimed to be owed in respect of antiques supplied to Mr Murray, as previously detailed in correspondence. On 14 April 2014, judgment was entered in the sum of

$59,085.20 in favour of Mr Glucina by way of formal proof. Mr Murray has since applied to have this default judgment set aside on the basis that the proceedings were not properly served on him and he was not given notice of the formal proof hearing.

Involvement of receivers

[12] On 28 March 2014, the second defendants accepted appointment as receivers of the Kotare. Mr Van Delden, one of the receivers, has deposed that at the time of his appointment advice was received that the debt secured over the vessel was

$106,318.08 as at 18 March 2014. The receivers are presently in possession of the

Kotare, having seized the vessel from its berth in the Westhaven Marina, and are

storing it on the hard at Half Moon Bay Marina, East Auckland. The receivers advise that as at 15 April 2014 the amount now said to be due is $120,820.40.

[13] The appointment of the receivers comes in the wake of an ill-fated proceeding commenced by Mr Glucina by his former solicitor by way of an originating application to restrain the appointment of receivers pursuant to the GSA. Those proceedings were filed in May 2013. The proceeding was the subject of a number of adjournments and delays said to be caused either by the failure of Mr Glucina’s former solicitor to reply to correspondence or, at least on one occasion, to appear on the matter. The proceeding was the subject of further adjournment on

19 February 2014 to 29 May of this year, at which time on the recommendation of

Mr Glucina’s present counsel the proceeding was discontinued.

[14] The receivers have advised of their intention to sell the Kotare in order to pay the secured creditor, Mr Murray. By letter of 10 April 2014, the receivers advised that they were not prepared to desist from taking any further steps to recover the debt. The receivers further advised Mr Glucina that in order to entertain any delay in the sale of the Kotare, he would need to lodge the sum of $43,000 with them as a contribution towards ongoing storage and other costs currently being incurred. Mr Glucina disputes the amount of these costs.

[15] On 17 April 2014, Faire J granted Mr Glucina’s ex parte application for interim relief and restrained the sale of the Kotare until further order of the Court. The issue before me is whether the injunction should continue and, if so, on what terms pending the hearing of the substantive proceeding. The receivers have formally advised that they will abide the decision of the Court. Mr Van Delden however in his affidavit has expressed concern regarding the associated costs of a delayed sale and possible removal if it is returned to the water as requested by the plaintiff. The receivers suggest that as part of any interim order the plaintiff should be required to provide funds to meet ongoing moorage, insurance and security costs.

The application

[16] Mr Glucina’s position is that he is not and never has been in breach of the

GSA. Indeed, in his submission it is Mr Murray who owes him money. He relies

upon the judgment he has obtained in the Manukau District Court. The substantial legal costs incurred by Mr Murray and the receivers, in Mr Glucina’s submission, are not able to be claimed under the GSA and the amounts now being demanded are exorbitant, if not extortionate.

[17] Mr Glucina submits that until his declaratory proceedings have been resolved and the legal and factual issues decided as between the parties, he will suffer serious and irreparable damage if in the meantime the Kotare is either sold and not returned to the water. That submission is based on the following propositions.

[18] Firstly, it is Mr Glucina’s position that the Kotare is a unique vessel which he has spent considerable effort in improving since its acquisition. He is concerned that disposal of the vessel by the receivers will likely result in a “fire sale” price, and that an item of such value requires careful marketing and will take some time to sell in order to realise its potential value. In Mr Glucina’s submission the Kotare cannot simply be replaced with a vessel of a similar kind and that damages would be an inadequate remedy should he be successful in his substantive proceeding.

[19] Secondly, Mr Glucina submits that a kauri-hulled vessel like the Kotare should not be out of the water for any longer than is absolutely necessary. In that regard he relies upon the evidence of Mr Stephen Vegar, a boat builder, who has deposed of potential shrinkage of the timber planking which would be detrimental to the water-tightness of the vessel and require repair. The cost of such remedial work could potentially be considerable having regard to the size of the vessel and the time that the Kotare could potentially be out of the water. Consequential damage as a result of water entry to the boat’s interior and damage to the boat’s engines, electrical wiring and mechanical devices would be a source of further cost. Mr Vegar deposes that such damage and potential repair costs could be avoided by returning the vessel to the water at the earliest possible time. Mr Glucina has also deposed that in order to avoid further deleterious effects on expensive batteries, engines and electrical components, the vessel should be started up and preferably used. Mr Glucina owns a berth at Westhaven Marina where the Kotare was seized from. If it was returned to the marina and into his care this potential source of damage and loss he says could be avoided.

[20] In terms of the balance of convenience, Mr Locke on behalf of the plaintiff submits that Mr Glucina has sufficient equity in the vessel to cover Mr Murray’s claim and associated costs should Mr Glucina be unsuccessful in his proceeding. Mr Glucina paid $400,000 for the vessel, and it is understood that Mr Murray originally purchased the vessel for $300,000. It is submitted on behalf of Mr Glucina that he has spent significant sums on the Kotare and that the receivers themselves have obtained a valuation providing a range of $275,000-$300,000. A current market value for the vessel provided by NZ Marine Valuations Ltd, dated 24 May 2014, is

$345,000 excluding GST.

[21] Mr Locke submitted that his client would be willing to seek a speedy determination of the substantive proceeding and is amenable to either a direction that the parties attend a judicial settlement conference or, in the alternative, that the matter be referred by the parties to a senior commercial arbitrator. It is submitted on behalf of Mr Glucina that he is anxious to avoid incurring unnecessary costs associated with any delay in obtaining a resolution.

[22] Mr Glucina is said to have comprehensively insured the vessel and is willing to undertake to continue to do so. He owns the marina berth at Westhaven and submits there is no need for the receivers to incur hard stand fees when his berth is available to moor the vessel in a manner most conducive to maintaining its condition. Mr Locke submitted that Mr Glucina is the obvious choice of person to take possession of the vessel pending the outcome of the substantive proceeding and that he would be highly motivated to take the best possible care of the vessel. Mr Locke submitted there is no reason to suppose that Mr Glucina would take steps to secrete or dispose of the Kotare in the interim.

[23] Finally, if need be, it is submitted that in addition to the undertaking as to damages which has been provided, Mr Glucina is willing to pay, if ordered to do so, the $43,000 demanded by the receivers as a contribution towards ongoing storage and other costs currently being incurred. Further, he is willing to provide a personal undertaking with regard to any and all continuing costs beyond the $43,000 required. It is however submitted that in the circumstances such terms would be unduly burdensome as there is adequate security in the Kotare as matters stand, and that

ongoing holding costs are being unnecessarily incurred by the receivers which can be avoided by the vessel being returned to its original berth.

First defendant’s opposition

[24] Mr Murray opposes the continuation of the interlocutory injunction and seeks to have it rescinded. Mr Henry who appeared on behalf of the first defendant submitted that his client has acted in accordance with the terms of the GSA in appointing receivers to take possession of and sell the Kotare in the event that the plaintiff defaulted in making payment or in observing the other provisions of the deed of sale. A prepossession notice had been served on Mr Glucina on 3 March

2014 providing three weeks notice before possession was taken of the vessel.

[25] Mr Henry submitted that the plaintiff was in default of the deed of sale from as early as the first anniversary of his purchase, when Mr Glucina failed to provide an up-to-date certificate of currency of insurance. While Mr Murray took no issue with this at the time and the claimed default was not relied upon in argument before me, reliance was placed on Mr Glucina’s failure to make any of the monthly interest payments required under the provisions of the vendor finance agreement. Mr Henry submitted that this failure constituted an event of default. In like manner, Mr Glucina also committed at least one further act of default by failing to make immediate payment to Mr Murray of the full purchase price for the Kotare plus accrued interest, when the motor vessel, Smooth Operator, which also formed part of the vendor finance security, was sold.

[26] The first defendant relied on a judgment of Holland J, Linde Aktiengesellschaft v CWF Hamilton & Co Ltd,¹ where the Court was influenced by the lack of apparent importance shown by the plaintiff in that case to the precise terms of the contract as telling strongly against it in the decision whether or not to grant an interlocutory injunction. Mr Henry submitted the present plaintiff’s past approach can be similarly characterised as having shown little respect for the words

_{of the deed of sale and his contractual obligations.}

¹ Linde Aktiengesellschaft v CWF Hamilton & Co Ltd [1988] NZHC 532; (1988) 3 TCLR 216 (HC).

[27] Mr Henry submitted that Mr Glucina’s claim that the balance owed on the sale of the Kotare had been extinguished by the provision of various antiques lacks credibility and is contrived. He submitted that such claims are not seriously arguable in the circumstances. Similarly, the alleged breaches of warranty as to the condition of the vessel are submitted as not being seriously arguable when considered against the terms of the deed of sale. It was submitted no weight should be placed on the default judgment obtained by Mr Glucina in the District Court as application has been made to set that judgment aside on the basis there had been a failure to provide notice of those proceedings to Mr Murray.

[28] The first defendant’s position was that the balance of convenience could be most easily maintained by Mr Glucina putting in escrow the sum of $43,000. It was submitted that the sum proposed by the receivers is reasonable and that the payment of such a sum would more fairly achieve the objective of maintaining the status quo. Mr Henry sought to emphasise by reference to this proposal that the plaintiff has a remedy in his own hands. Further, the Court should not look favourably on the plaintiff’s application having regard to the manner in which Mr Glucina has approached the matter to date. Mr Henry highlighted the delay in progressing the plaintiff’s previous action to restrain the appointment of receivers in May 2013 which a year later was discontinued for no result. It was submitted that Mr Glucina’s failure to expedite that matter and his languor and dilatory approach to that proceeding does not merit him now receiving the benefit of interim relief. It is only when Mr Murray has finally resorted to the enforcement of his rights under the GSA to appoint receivers that Mr Glucina has acted with any despatch.

[29] In response to Mr Glucina’s submission that the Kotare’s uniqueness renders damages an inadequate remedy, Mr Henry referred the Court to the course proposed by the receivers. A concern is expressed as to the substance of Mr Glucina’s undertaking as to damages by reference to previous correspondence which referred to fiscal pressures the plaintiff was experiencing and the lack of evidence provided to support his claim that he has some $50,000 in a savings account to support the present application.

[30] In summary, Mr Henry submitted that the plaintiff had no arguable cause of action, having been in breach of the terms of the deed from an early stage. That Mr Glucina had “in his own hands” a means of maintaining the balance of convenience without the aid of an injunction; that his conduct to date did not merit affording him interim relief, and the undertaking provided by Mr Glucina cannot provide confidence that any damages arising from the maintenance of the injunction can ultimately be paid. In Mr Henry’s submission, the overall justice of the case warranted the recision of the injunction.

Analysis

[31] In determining whether there is a serious question to be tried, the Court must consider whether there are arguable differences between the parties and whether there is a tenable outcome which could result in the plaintiff succeeding on the substantive proceeding and obtaining the relief sought.² On the plaintiff’s case, he owes nothing under the GSA, and indeed claims that it is the first defendant who is indebted to him. Mr Glucina’s position is that there is no legitimate basis upon

which the receivers may act.

[32] The parties’ respective accounts of the factual background to the dispute diverge in critical respects. The first relates to the question of the payment of interest which Mr Glucina became liable upon the first anniversary of the purchase of the Kotare in the event that he had not paid the full purchase price. That event came to pass, and it is indisputable that he became liable to pay Mr Murray interest on the vendor finance provided from that date. That interest was to be paid on a regular monthly basis but was not. Mr Glucina’s position is that the various agreements and transactions entered into between the parties after the sale of the Kotare covered these interest payments albeit that payment was periodic rather than on the strict monthly basis provided for in the formal terms of the deed of sale.

[33] Secondly, whether the balance of the purchase price still outstanding after the payment of the proceeds of the sale of Smooth Operator, some $30,000, was

² Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (HC & CA); Ezypay New Zealand Ltd v YKC Ltd HC Wellington CIV-2007-485-1496, 23 July 2007; Cunningham v Butterfield HC Timaru CIV-2011-476-400, 7 October 2011.

subsumed by these transactions. Some of these dealings are now the subject of the default judgment obtained from the Manukau District Court by Mr Glucina. They have also been supplemented by claims relating to the recovery of costs for remedial work required to be carried out, as asserted by Mr Glucina, in breach of the warranty of sale and which are also the subject of the District Court default judgment. These transactions, as with the sale of the Kotare itself, are set against a longstanding relationship between the parties whereby they traded antiques and other valuable items. Mr Murray denies there were any agreements referable to these particular deals whereby the purchase prices were to offset the amount owed by Mr Glucina in respect of the purchase of the Kotare. Further, Mr Murray in his affidavit disputes the existence and circumstances relating to a number of these claimed transactions.

[34] It is apparent that, in contradistinction to the formality of the sale of the Kotare, the parties association over very many years was marked by a pattern of informal trading in antiques and items in which they shared a mutual interest. It is not possible on the information presently available to unpick the circumstances of those transactions and make determinations as to the basis upon which this trade was entered into, nor whether during the course of communications between the two men, clearly well-known to each other, variations to the formal agreement relating to the terms of the sale of Kotare were entered into. Mr Henry sought to rely on the content of particular communications to suggest that, even accepting the plaintiff’s evidence at face value, no arguable cause of action which required the maintenance of the status quo was apparent. I however am unable to draw any reliable conclusions as to the states of mind of the parties and their intentions regarding arrangements in respect of the balance of monies owed without greater analysis and testing of the type of evidence which would only be available on the hearing of the substantive proceeding.

[35] I am satisfied there is a sufficiently serious question arising on the known facts to pass the first threshold of an entitlement to interim relief. There are a number of issues, largely of a factual nature which require to be tried and determined before the outstanding matters between the parties can be resolved. The more critical considerations however arise out of questions relevant to the assessment of the balance of convenience and considerations of overall justice to avoid irreparable

harm likely to be suffered by one or other of the parties in the interim.³ In Wellington International Airport Ltd v Air New Zealand Ltd,⁴ Wild J adopted a four step approach. The task involves balancing the injustice that will be caused to the applicant should an interim injunction be refused, and the applicant’s case ultimately

succeeds, against the injustice to the respondent that will result if the injunction is made, but then discharged in the substantive judgment.⁵

[36] The first consideration is whether damages would adequately compensate the plaintiff if an interim injunction were denied to him but he succeeded at trial, or whether damages would adequately compensate the defendant if an interim injunction were granted and the plaintiff failed at trial.⁶ Mr Glucina argues that the Kotare is a unique vessel which will be lost to him if the receivers are allowed to proceed to sell the vessel notwithstanding the present dispute as to whether they are

entitled to do so under the terms of the deed of sale.

[37] The first defendant on the other hand has a monetary claim which can adequately be met by an award of damages. As was responsibly acknowledged by Mr Henry in argument, the plaintiff’s interest is particular to the Kotare which would not easily be replaced by a like vessel. In the event of a sale and subsequent success by the plaintiff difficult issues would arise regarding the assessment of loss and the calculation of adequate compensation.

[38] The second consideration is the preservation of the status quo which is of considerable importance.⁷ In assessing this issue, a determination must be made as to what is the status quo. The plaintiff argues that the status quo has him in possession of the Kotare, berthed at the Westhaven Marina, paying the associated costs and other overheads such as insurance and maintenance. Mr Murray however

_{would argue that the retention of the vessel in the possession of the receivers on the}

³ Cost Club Ltd v Acer Computer New Zealand Ltd HC Auckland CP350/95, 8 August 1995;

Telecom Corporation of New Zealand Ltd v Colour Pages Ltd HC Wellington CP142/97, 14

_{August 1997.}

⁴ Wellington International Airport Ltd v Air New Zealand Ltd HC Wellington CIV-2007-485-1756,

30 July 2008, at [5]-[14], adopting the approach adumbrated in the leading decision of Lord

_{Diplock in American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396.}

⁵ Cayne v Global Natural Resources Plc [1984] 1 All ER 225 (CA) at 237; Congoleum

_{Corporation Ltd v Poly-Flor Products (NZ) Ltd [1979] 2 NZLR 560 at 571.}

⁶ _{American Cyanamid Co, above n 4, at 408C-E.}

⁷ At 408G; Fletcher v McMillan [1996] 2 NZLR 491 (HC).

“hard” with accumulating quantifiable associated costs able to be assigned to a particular party upon the ultimate determination of the merits of the dispute, represents the current position.

[39] Whatever the perceived status quo, it is clear that if the receivers are allowed to proceed to sale and the Kotare is sold, then the plaintiff has lost the benefit of this unique vessel. Mr Henry on behalf of the first defendant did not argue otherwise. Rather, he emphasised the failure by the plaintiff to abide by the terms of the deed of sale and his delay in seeking a resolution of the dispute between the parties in the face of the rights available to Mr Murray under the GSA which should render Mr Glucina ineligible for interim relief.

[40] The third consideration is the uncompensatable disadvantages to each party, depending on whether an interim injunction is granted or refused. In the context of this case, this devolves to a factor which has already been reviewed, namely the unique nature of the Kotare and the significance of the loss to the plaintiff as a result of the receivers proceeding to a sale pursuant to the GSA.

[41] A fourth consideration is the relative strength of each party’s case, as revealed in the affidavit evidence.⁸ As I have already concluded, in the absence of the matter proceeding to trial, factual disputes as they exist between the parties cannot presently be satisfactorily assessed. I am however bound to observe that Mr Glucina’s claim in relation to the work which he undertook on the vessel, said now to be required as a result of breaches of the warranty as to its seaworthiness and which are also the subject of the default judgment in the District Court, appear to be a belated claim made only as a consequence of Mr Murray seeking to enforce the terms of the deed

of sale. It does not appear on the face of the record that it is a claim with which Mr Glucina is likely to have proceeded with but for the dispute which arose between the parties as to whether Mr Glucina has paid the full purchase price for the Kotare and the associated interest arising out of the vendor finance which accrued upon the anniversary of the sale transaction. The claimed breach of warranty appears to serve more as additional ballast in support of Mr Glucina’s defence of Mr Murray’s claim,

rather than a discrete source of grievance which would have been pursued in the absence of the other contractual difficulties between the parties.

[42] I also note the apparently post facto nature of some of the claims made by Mr Glucina in relation to the sale of antiques. In particular, Mr Glucina deposes to Mr Murray owing him from “previous trade and sales” of various antiques which it is contended there was agreement would be paid by reduction of the balance owing in respect of the Kotare. It is not clear from the wording of Mr Glucina’s affidavit of

17 April 2014 whether these claimed debts existed at the time of his purchase of the Kotare or related to subsequent transactions. If those debts were owed at the time of the sale of the Kotare, it is unusual they were not included in the record of the sale, as the $200,000 worth of antiques delivered contemporaneously with settlement were documented.

[43] In determining where the overall justice of the situation lies, the Court is entitled to take into account the conduct of the parties to date, and any unnecessary delay caused by the parties that has contributed to the present situation faced by the Court.⁹

[44] Mr Henry emphasised that Mr Murray has been owed monies at least since June 2012, if not before, and the appointment of receivers in March 2014 demonstrates a level of patience on his part which should not result in him being estopped, albeit on an interim basis, from proceeding to enforce his rights under the GSA. In that regard, the failure by the plaintiff to prosecute his initial proceeding to restrain the appointment of receivers and which raised the same issues to be argued on the current substantive proceeding tells heavily against the exercise of interim relief. During this period, Mr Glucina has effectively retained the benefit of the Kotare which he has enjoyed for some four years now, notwithstanding the dispute relating to the original sale.

[45] The receiver, Mr Van Delden, observes that the debt owed in respect of the vessel is said to be now in excess of $100,000 and growing. He notes the wide gap

⁹ Bates v Lord Hailsham of St Marylebone [1972] 3 All ER 1019 (Ch); South Pacific Tyres New

Zealand Ltd v David Craw Cars Ltd (1989) 3 TCLR 155.

between the two parties’ respective positions. As a receiver, he would be duty bound to consider the respective positions of the parties if he was to continue with the process in the absence of an application for an injunction. Mr Van Delden in his affidavit reviews the information provided by the respective parties, in particular Mr Glucina’s contentions as to how the loan has been repaid, and concludes that in the absence of documentation, he would treat them with “considerable scepticism”. Mr Van Delden has expressed concern regarding the effect of an injunction which can significantly delay the sale of the asset and the associated costs that will be incurred and which will need to be funded. As previously noted, the receivers while abiding the Court’s decision take the view that the plaintiff should pay sufficient funds to meet the holding costs for the likely duration of the proceeding in the event of the plaintiff’s injunction halting the sale.

Decision

[46] At the end of the day, the Court is required to make an overall assessment as to whether or not to intervene on an interim basis.¹⁰ I have concerns that resolution of this dispute has largely been delayed as a result of Mr Glucina failing to prosecute the previous High Court proceeding which was initiated but not expedited by his former solicitor, and that in the meantime Mr Murray has also had a default judgment entered against him in respect of matters which were clearly in contest

between the parties. Against that, it is apparent that the Kotare is a unique item of property which the plaintiff ought not lose the opportunity of retaining until the issue of whether the enforcement provisions of the GSA have been legitimately triggered and the validity of the respective claims of the parties finally determined.

[47] The parties at least are in agreement that resolution of this matter needs to be progressed and that it is costing both parties money. The amount at stake continues to rise at an alarming rate as time elapses.

[48] Both parties have made submissions regarding the financial position of the other and their ability to either support an undertaking as to damages, or, in the case of the plaintiff being successful, the first defendant being able to pay any award in

compensation of Mr Glucina. Neither party has placed before me any source documentation to support the assertions and claims made in their respective affidavits. It has however been submitted on behalf of Mr Glucina that he is willing to pay, if ordered to do so, the $43,000 demanded by the receivers as a contribution towards ongoing storage and other costs currently being incurred. I am also satisfied that there presently remains sufficient equity in the vessel to cover any award that may be made to Mr Murray in the event that he is successful and the vessel able to be sold.

[49] Considering all these matters, I have concluded that the overall justice is in favour of maintaining the status quo by the continuation of the order made by Faire J on 17 April 2014, restraining the sale or other disposition of the Kotare. As Lord Diplock observed in American Cyanamid Co v Ethicon Ltd, when the factors are evenly balanced:¹¹

... it is a counsel of prudence to take such measures as are calculated to

preserve the status quo.

[50] I am concerned however with the delays associated with resolution of this dispute. Accordingly, the injunction will lapse after six months from the date of this judgment unless renewed by further order of the Court. I impose that limitation without prejudice to the merits of the order being extended. Rather, it reflects my concern that the parties take active and constructive steps to have these issues resolved with some urgency. If the matter has not been finalised within the six months and there is application for an extension of the injunction, no doubt a reviewing Court will be influenced in its assessment of the merits of any such application by the steps taken by the respective parties to progress the litigation.

[51] While I am satisfied that the merits of the application favour restraining any sale of the Kotare, I am concerned with accumulating costs of its storage and the need to maintain its condition and value and to avoid further unnecessary expenditure. Until the issues relating to the Kotare have been determined it is appropriate that the vessel remain in the possession and control of the receivers and potential costs to all parties mitigated as best they can be.

[52] I therefore make the following directions:

(a) The Kotare is to remain in the possession and control of the second defendants.

(b) Upon production of proof of insurance to the satisfaction of the receivers, the Kotare is to be returned by the receivers to its berth at Westhaven. The second defendants may take reasonable steps necessary to secure the vessel at this location.

(c) The costs of insurance and the berth at Westhaven Marina and other costs relating to the proper storage and maintenance of the vessel is to be borne by Mr Glucina. He is to undertake to pay such costs, keep the insurance current and the receivers informed that such costs are paid and up-to-date.

(d) Access to the Kotare by Mr Glucina is to be at the discretion of the receivers and subject to their supervision. Access is only to be for the purpose of maintenance and only with the permission of the receivers.

(e) The Kotare is not to leave the marina berth, other than pursuant to the permission of the receivers and only for the purpose of maintenance under their supervision or that of their duly authorised agent.

[53] The amended undertaking as to damages provided by Mr Glucina of 17 June

2014 continues to have application. The first defendant’s application to have the interim injunction rescinded is dismissed.

[54] Leave is granted to the parties to apply to settle the terms of the order, and to revert to the Court should any difficulty arise regarding the implementation of these arrangements. It is the expectation of the Court however that the parties will consult and use best endeavours to reach practical and cost efficient solutions to issues that may arise from time to time.

Costs

[55] While the plaintiff has succeeded in obtaining an interim injunction to restrain the sale of the vessel, it is to remain in the possession and control of the receivers pending determination of the substantive proceeding. Having regard to the mixed outcome for the parties on the plaintiff’s application for interim relief, costs are reserved pending the ultimate determination of the substantive proceeding.

Solicitors:

Herne Bay Law, Auckland

B G Hong, Auckland

Craig Griffin & Lord, Auckland