Monaco Management Limited v Handy 4 Limited [2014] NZHC 3187 (12 December 2014)

Last Updated: 17 December 2014

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

CIV-2014-442-28 [2014] NZHC 3187

BETWEEN

MONACO MANAGEMENT LIMITED Plaintiff

AND

HANDY 4 LIMITED First Defendant MARGARET BARTLETT and ALAN BARTLETT Second Defendants 2210 DEVELOPMENTS LIMITED Third Defendant MICHAEL EDMONDS and ANGELA WINTER Fourth Defendants VAUGHAN WORKMAN Fifth Defendant MARIANO BOFFA Sixth Defendant ZEZORA HOLDINGS LIMITED Seventh Defendant PETER and AUDREY HEAVEN Eighth Defendants MICHAEL BOUTLE and ROBIN WHALLEY Ninth Defendants MICHAEL and INGA COTTON Tenth Defendants ALROD LIMITED Eleventh Defendant DAVID SCOTT Twelfth Defendant BODY CORPORATE 334302 Thirteenth Defendant

Hearing:	On the papers
Judgment:	12 December 2014

MONACO MANAGEMENT LTD v HANDY 4 LTD [2014] NZHC 3187 [12 December 2014]

_{COSTS JUDGMENT OF CLIFFORD J}

Introduction

[1] The plaintiff, Monaco Management Ltd (Monaco), seeks costs against each of the first thirteen defendants, on a joint and several basis, with respect to a without notice interlocutory injunction granted to it restraining the defendants from re- entering possession of the units at 6 Point Road, Nelson, pending orders for specific performance or under s 261 of the Property Law Act 2007 providing for renewal.

[2] Each of the defendants objects.

[3] As Monaco submitted, it is appropriate to deal with this matter on the papers. [4] Monaco is the lessee of the Grand Mercure Monaco Hotel at 6 Point Road

Nelson. Each of the defendants is either, as an investor, the owner of units comprising the hotel or in the case of the third and thirteenth defendants, a body corporate which owns common areas and whose members are, I assume, investors. Monaco’s lease was for an original period of ten years, ending 26 May 2014, with two rights of renewal of ten years each. Provided Monaco was not in breach of the lease, it was entitled to renew the lease by giving at least three calendar months’ written notice before the end of the first term of the lease to the lessors: that is, written notice was required by 27 February 2014.

[5] Monaco did not give written notice by the time required. Rather, on 17 April

2014, almost two months late, it gave notice to the lessors of the hotel units, including each of the defendants, in the following terms:

NOTICE OF RENEWAL

A By lease (“the lease”) dated 27^th April 2004 comprised in unique identifier 162353 Unit [ ] Deposited Plan 334302 (“premises”) was leased on the terms and conditions contained in the lease.

B The lessee and the lessor are currently the respective lessee and lessor under the lease.

C The term of the lease expires on 26 May 2014 with two rights to renewed terms of the lease for ten (10) years each, the first being exercisable on the renewal date of 27 May 2014.

NOW TAKE NOTICE:

1. The lessee hereby gives you written notice to renew the lease for a further term of ten (10 years from the renewal date of 27 May 2014.

DATED 17^th day of April 2014.

[6] On 22 May, not having received it says responses to its late notice of renewal, Monaco sent each of the defendants the following email:

Dear [ ]

On 17 April 2014 we sent you a Notice of Renewal in relation to your lease of Hotel unit [ ]. You have not responded to this Notice.

Your failure to respond is a breach of the Property Law Act 2007. Unless we receive a response from you by 3.00 pm Saturday 24 May 2014 we will take your failure to respond as a refusal to renew the lease and we will instruct our solicitors to apply to the Court for a renewal of the lease. If that is required, we will be seeking legal costs against you as well due to your breach of the Property Law Act.

We look forward to hearing from you. pp Scott Sanders

^{Monaco Management Limited}

[7] As I understand matters, the other lessors of hotel units had responded to the late notice to renew, indicating their agreement.

[8] The defendants replied to that email in a variety of ways, or not at all.

[9] On 26 May 2014, just two days later, the plaintiff applied without notice for its interim injunction. That injunction was granted by this Court. Subsequently agreement has been reached between the plaintiff and the defendants for renewal of the leases.

[10] These matters occurred against the background of ongoing disputes between the defendants and Monaco relating to the operation of the hotel. Whilst of contextual significance, that is not directly relevant to the question I must decide.

[11] Monaco says that it was, in effect, forced to take legal action to protect its position given the responses or lack of responses from the defendants to its notice of renewal and later email.

[12] The defendants, the minority of whom were represented by solicitors for this purpose, the majority of whom wrote directly to the Court, have responded in a variety of ways, generally to the effect that it was Monaco’s actions in giving notice of renewal late that occasioned these circumstances and that the legal action taken by Monaco was, in reality, unnecessary or precipitate.

[13] Having considered those submissions, and the circumstances more generally, I am clear that an award of costs to Monaco is not appropriate. My reasons are:

(a) Monaco was late in giving notice to renew.

(b) On that basis, Monaco’s remedy was an application under s 261 of the

Property Law Act.

(c) In the circumstances, Monaco’s “Notice of Renewal” did not, as might have helped matters, refer to the fact that it was out of time, nor that – provided there was no breach of the lease –Monaco would generally be entitled to renew were it to apply under s 261 to be relieved from the consequence of failure to give notice in time.

(d) Responses are not required to a notice to renew a lease. Rather, ss 261 - 264 of the Property Law Act reflects the requirement that a lessee who does not consent to a renewal must give notice of that fact to Monaco, who must then, in turn, give a notice under s 262.

(e) Monaco’s email of 22 May 2014 wrongly stated that the defendants’ “failure” to respond to the late notice of 17 April 2014 was a breach of the Property Law Act 2007. It was not.

(f) Given the short period of time that expired between the despatch of that email, and the application for an interim injunction, it is not surprising that, facing a threat of legal action, the defendants did not immediately co-operate with Monaco.

[14] Thus, and as defendants generally submitted, it was the way Monaco conducted itself that has resulted in it taking legal action. Moreover, the email of

22 May was legally wrong and verged on intimidation.

[15] In this, I acknowledge that the position of the tenth defendants, Michael and

Inga Cotton, might be seen as being somewhat different, in that they replied on

10 May 2014 to the plaintiff, declining to agree to the renewal and giving notice of an exercise of their rights under the Property Law Act. But, by the time Monaco came to apply without notice for its interim injunction, Mr and Mrs Cotton had agreed not to re-enter their unit pending resolution of the issue of the renewal of the lease. In their case, that is, in fact, an additional and conclusive reason why Monaco is not entitled to costs.

[16] Monaco’s application for costs is declined accordingly.

“Clifford J”

Solicitors:

Saunders Robinson Brown, Christchurch for plaintiff. Pitt & Moore, Nelson for eleventh defendant.

Morgan Coakle, Auckland for twelfth and thirteenth defendants.

Copy to all other defendants.