Alarm New Zealand Ltd v 15 Hopetoun Limited [2016] NZHC 813 (27 April 2016)

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BETWEEN	ALARM NEW ZEALAND LTD Plaintiff
AND	15 HOPETOUN LIMITED Defendant

Hearing:	21 April 2016
Appearances:	B M Stainton for the Plaintiff/Applicant R Butler for the Defendant/Respondent
_Judgment:	_{27 April 2016}

This judgment was delivered by me on 27 April 2016 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules.

[1] The plaintiff, Alarm New Zealand (Alarm NZ), leases level 3 and 10 carpark spaces (leased carparks), at 15 Hopetoun St, Freemans Bay, Auckland, a building owned by the defendant, 15 Hopetoun Limited (Hopetoun).

[1] Alarm NZ applies for an order, by way of interim injunction, restraining Hopetoun from selling, transferring, or providing exclusive possession (other than to Alarm NZ) of four accessory units of the building, which is now a unit titled development, comprising four carparks numbered 73 to 76 (inclusive) situated under the building (carparks 73 to 76).

1 October 2013 (the lease). The lease is for 10 years from 21 September 2012, with a right of renewal for five years.

[4]	The lease provides:
	THE LANDLORD leases to the Tenant and the Tenant takes on lease the premises and the carparks (if any) described in the First Schedule...
[5]	The First Schedule describes the carparks as: Ten (10) covered.
[6]	The leased carparks were not specifically identified in the lease.	The

affidavit evidence is that, almost from the outset, Alarm NZ used carparks 13-16 (inclusive), 31-36 (inclusive), 90, 103 and 104. Hopetoun maintains that, at times in the past, there has been a change in the allocation of the leased carparks.

[7] Hopetoun acquired ownership of the building in December 2013, and obtained resource consent for change of use of the building from commercial offices

to 91 residential apartments. An application for building consent was made in December 2013 for the addition of a further three levels to the building and to convert each tower level to six self-contained residential apartments, including Alarm NZ's leased premises on level 3. The building was changed from freehold to a unit title development comprising principal units and accessory units which were sold to third parties.

[8] The application for building consent included seismic structural strengthening. Alarm NZ alleges that Hopetoun’s consultant engineers wrote to the Auckland Council's building consent division advising they had carried out a review of the building and identified critical structural weaknesses. Alarm NZ says this and other communications on behalf of Hopetoun amounted to a request by Hopetoun for the Council to issue an earthquake prone notice when Hopetoun and its agents knew or ought to have known that the building did not meet the criteria.

[9] This lead to the Council issuing an earthquake prone notice (Council Notice) in respect of the building. The Council Notice was later set aside by the Chief Executive, Ministry of Business, Innovation and Employment in a determination under s 188 of the Building Act 2004. It appears the decision is under appeal to the District Court.

[10] On 11 March 2014, Hopetoun forwarded the Council Notice with its own notice as lessor citing clause 21.1 of the lease and requiring Alarm NZ to give full and uninterrupted access to the leased premises to carry out the structural strengthening work as described in the Council Notice.

[11] On 21 March 2014, Hopetoun’s solicitor wrote to Alarm NZ stating that, due to the Council Notice and advice from engineers stating the building could not be occupied while the Council Notice work was carried out, it would have to vacate the premises until that work was completed. Hopetoun indicated work would be completed by 30 September 2014. It purported to rely on a right to terminate the lease if the Council Notice works were too expensive to remedy, and refused to offer any compensation to Alarm NZ for moving.

[12] Alarm NZ had begun discussions with Hopetoun in February 2013 as to the options around dealing with the possible disruption caused to Alarm NZ by the, at that stage proposed, renovations. It is conceded by Hopetoun that no reply was sent to Alarm NZ’s proposals for terms and conditions for relocation sent on 23 February

2013. Following the emails from Hopetoun in March 2014, stating that the Council Notice required them to relocate, Alarm NZ again sought compensation for any proposed relocation and sought alternatives to relocation.

[13] Alarm NZ rejected the view that there was any possibility of cancelling the lease. However, Alarm NZ says that it moved out of the building temporarily without prejudice to its rights from 31 May 2014 until 15 December 2015.

[14] Alarm NZ’s relocation on 31 May 2014 was precipitated by interim court orders made on 29 May 2014, which were replaced by undertakings from Hopetoun on 19 June 2014. Those undertakings entitled Alarm NZ to reoccupy level 3 in terms of its lease, for any work undertaken additionally to the strengthening to be subject to prior consultation with Alarm NZ, for no conversion of level 3 to apartments while the lease was on foot, and for the change of status from freehold to unit title to be without prejudice to Alarm NZ’s rights.

[15] Alarm NZ claims that, in the process of the development and the sale of the units and accessory units to third parties, Hopetoun sold the leased carparks. However, Alarm NZ cooperated with Hopetoun and now uses carparks 73 to 76 which were not amongst the leased carparks.

74, which are located under the building, Hopetoun is now trying to procure Alarm NZ’s acceptance of two carparks (111 and 112) which are not under the building but are under the tennis court and therefore still covered, in Hopetoun’s opinion. Hopetoun has agreed to transfer carparks 73 and 74 to a purchaser of one of the new residential units (the 2B purchaser).

[17] Alarm NZ’s position is that it accepted carparks 73 to 76 in substitution for four of the leased carparks and it has accepted the allocation of the other carparks without prejudice to its claim for compensation in respect of an alleged breach of lease.

[18] Alarm NZ maintains that it is critical to its business that it retains exclusive possession of at least carparks 73 to 76 and that carparks 73 and 74 cannot be sold as it is inconsistent with the terms of its lease. Hopetoun says that the lease does not guarantee any specific carparks so there is no obligation to retain carparks under the building for Alarm NZ. It maintains it has the right to vary the carparks as it wishes. At present it has no intention to transfer carparks 75 and 76 to any other entity. It has, however, agreed that carparks 73 and 74 are to be allocated to the 2B purchaser and it intends to comply with that allocation.

[19] Alarm NZ claims that the effect of Hopetoun’s actions was to mislead it into moving out when it was not necessary to do so, causing it extensive losses. Its underlying claims are for breach of the lease and derogation from grant by breach of the covenant for quiet enjoyment, trespass, and misrepresentation under the Contractual Remedies Act.

[20] Alarm NZ claims special damages of $486,769.68 in temporary relocation costs, loss of business profit, and general damages of $50,000. The remedy sought for breach of lease and for trespass includes a permanent injunction preventing the sale of carparks 73 to 76 for the term of the lease.

[21] There are also claims for breach of the Fair Trading Act, bailment and conversion. Neither these nor the claim for misrepresentation are said to justify a permanent injunction.

[22] Hopetoun claims against Auckland Council for failing to exercise reasonable care in issuing the earthquake notice in the event that it is found liable to Alarm NZ based on the earthquake notice.

[23] On 4 March 2016, the plaintiff sought an urgent interim injunction seeking to restrain Hopetoun from selling carpark 73 and 74. Whata J, with agreement from counsel, granted an interim injunction pending a hearing of the application proper.¹

Whata J recorded in summary form only that he was satisfied that carparks 73 and 74 were subject to a sale and purchase agreement, that there was in a preliminary way a seriously arguable case that the plaintiff enjoyed proprietary interests in them and that the transfer of carparks would defeat the plaintiff’s substantive application for an injunction.

[24] Alarm NZ seeks the interim injunction in relation to carparks 73 to 76 on the basis that Hopetoun is seeking to transfer the title to carparks 73 and 74 in breach of express undertakings and has already transferred eight of the leased carparks. Alarm NZ says this means, if an order is given only in respect of carparks 73 and 74, there is a clear risk of carparks 75 and 76 being sold.

[25] Alarm NZ says that the lease guarantees exclusive possession of the leased carparks and that Hopetoun gave an undertaking to the Court that any changes of status from freehold to unit title would be without prejudice to Alarm NZ’s rights. Alarm NZ says that, because trespass is actionable per se, there is clearly a serious question to be tried, as the 2B purchaser expects to receive possession of carparks 73 and 74, which she cannot do because Alarm NZ has exclusive possession of them. It is also clearly a breach of the covenant of quiet enjoyment.

[26] Hopetoun opposes the application on the basis that there is no serious question to be tried, the balance of convenience favours Hopetoun being able to transfer carparks 73 and 74 to the 2B purchaser, who is a bona fide purchaser for value without notice of the dispute, and the overall interests of justice favour allowing the transfer as Alarm NZ’s loss can be compensated by damages.

[27] Hopetoun says that there is no arguable breach of undertaking or the lease, as the lease does not provide for any specific carparks for Alarm NZ’s exclusive use. It provides only that all 10 parks are to be covered and all the alternative carparks provided are covered, despite the references to them being “outside”. Hopetoun says that there is no legal interest in specific carparks as a result. Similarly, the undertaking only required that there be no prejudice to Alarm NZ’s rights, which there is not, because there was no right to specific carparks.

[28] Hopetoun maintains there is no serious case to be tried in trespass, because Alarm NZ needs to show lawful possession of carparks 73 and 74. However the lease does not allocate those carparks at all, carparks 73 and 74 were not even occupied previously by Alarm NZ, and any communication from the building manager that those carparks would be given to Alarm NZ was mistaken. The 2B purchaser’s equitable interest, arising from 11 November 2015, predates Alarm NZ’s occupation of carparks 73 and 74.

[29] Furthermore, says Hopetoun, the balance of convenience favours allowing Alarm NZ to use the 10 substitute covered parks which have been provided to them rather than disrupting the ability of Hopetoun to honour its obligations to the 2B purchaser. Hopetoun could face a damages claim from the 2B purchaser, whereas Hopetoun says that any damages suffered by Alarm NZ are quantifiable and will be minimal.

[30] The standard accepted test for granting an interim injunction is as set out by the House of Lords in American Cyanamid Co v Ethicon Ltd:²

[31] In the New Zealand context, the Court of Appeal in Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd confirmed that, while those two broad questions in American Cyanamid are the accepted framework for approaching interim injunction applications in New Zealand, they are merely guidelines towards ascertaining the overall justice of the issue, which is the key focus.³The assessment is a balance between protecting plaintiffs against injury by violation of their rights, which would not be adequately compensated for later in damages, against the potential injury to the defendant from being prevented from exercising their legal rights, for which damages would equally be inadequate.⁴

[32] Whether there is a serious question to be tried will turn on whether any of the causes of action relied on by the plaintiff has a real prospect of success in obtaining a permanent injunction.⁵The onus is on the applicant to “adduce sufficiently precise factual evidence to satisfy the court that he or she has a real prospect of succeeding in his claim for a permanent injunction at the trial”.⁶

[33] The relevant causes of action are therefore the claim for trespass and the claim for breach of the lease, as the only claims which give rise to the possibility of permanent injunctions.

[34] The lease dispute turns on the interpretation of the lease, whether it grants exclusive rights over particular carpark spaces, and whether Alarm NZ has rights

³_{Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd
[1985] 2 NZLR 140 (CA) at 142.}

⁴Andrew Beck and others McGechan on Procedure (online looseleaf ed, Westlaw NZ) at

[35] The lease provides for a lease of “10 covered” carparks, for a term of 10 years with one right of renewal for five years. Nothing further is specified about the leased carparks. Clause 36 provides:

36.1 THE Tenant shall have the right to exclusive possession of the leased carparks, but when any carpark is not being used by the Tenant other persons shall be entitled to pass over the same.

36.2 THE Landlord may carry out repairs to the carparks and no abatement of rent or other compensation shall be claimed by the Tenant except pursuant to clauses 26.1 or 27.

36.3 THE Tenant shall comply with the Landlord’s reasonable requirements relating to the use of the carparks and access thereto and in particular shall only use the carparks for the parking of one car per parking space.

36.4 THE provisions of the Second Schedule shall apply to the car aprks as appropriate.

[36] Hopetoun seeks to rely on the fact that no specific carparks were identified in the lease as meaning that any substitute carpark, as long as it was covered, could be provided to Alarm NZ without breaching the lease. Hopetoun does not appear to challenge the argument that the substitution of carparks would, if Alarm NZ were entitled to specific carparks, be breaches of the covenant of quiet enjoyment.

[37] What a “covered” carpark entails is contested by the parties. Hopetoun suggests that it is covered as long as it has a roof of some description, whereas Alarm NZ says that, since when the lease was signed the only “covered” carparks were in the secure enclosed basement of the building, those are the only carparks that it was envisaged would be considered “covered”.

[38] Alarm NZ points to the contrast between a licence and a lease, in that a lease grants exclusive possession as opposed to a licence. Typically, the ability to reallocate or substitute a space would be associated with a licence not a lease. A lessee is granted an estate in land, rather than merely a personal right of occupation.⁷

It would be inconsistent with the premise of a lease to have a lease of undefined

_{property since the fundamental distinction between a lease and a licence
is a right to}

exclusive possession.⁸It would be difficult to sustain exclusive possession rights, which are even to the detriment of the owner, if the subject of those rights were able to be changed by the owner.

[39] Hopetoun may seek, at the substantive hearing, to argue that the provision of the 10 covered carpark spaces was only a licence, or there was an implied right to vary the location of the leased carparks. That will turn on the interpretation of the lease:⁹

Whether the occupier has the right to exclusive possession turns on the effect of the contract or grant. The effect of the contract or grant is a matter of interpretation. Interpretation is the search for the intention of the parties. The query is intention as to exclusive possession.

[40] The need for that inquiry and what was intended by the words “10 covered carparks” shows there is a serious question to be tried about the nature of the lease, and Alarm NZ’s rights under the lease.

[41] More to the point as far as the application for an interim injunction is concerned, is the relationship between the lease and carparks 73 to 76 which are the subject of the application.

[42] The starting point, in the submission of Mr Stainton appearing for Alarm NZ, is that Alarm NZ had a lease of the leased carparks. When Alarm NZ was required to vacate the premises so the works could be carried out, Hopetoun unilaterally renumbered and reallocated the leased carparks without any discussion with Alarm NZ.

[43] In April 2015, Mr Neville Clifton, director of Alarm NZ, was informed by Mr Michael Mahoney, on behalf of Hopetoun, by an email dated 1 April 2015 following a meeting between the two of them, that carparking would “be allocated by landlord as per lease”. Mr Clifton replied seeking confirmation that 10 covered carparks would be in the same location in the building basement against the back

_{wall, noting the need for secure parking for staff to enter the building
after hours.}

⁸_{Fatac Ltd (in liquidation) v Commissioner of Inland
Revenue [2002] NZCA 269; [2002] 3 NZLR 648 (CA) at [66].}

⁹Fatac Ltd (in liquidation) v Commissioner of Inland Revenue [2002] NZCA 269; [2002] 3 NZLR 648 (CA) at [61].

There is no evidence of a response to that email although the same two parties attended a meeting on 28 July 2015 where there was a further discussion as to carparks. A record of the meeting, apparently prepared by Mr Clifton, notes:

Hopetoun Ltd wished to move Alarm NZ parking to another building next door. Alarm NZ states it needs at least four spaces in the building as a minimum perhaps more. Hopetoun Ltd to provide details of their Change proposal to Alarm NZ.

[45] Of the leased carparks, eight were in a cluster. They were known to be in the exclusive possession of Alarm NZ; they were signposted. When Alarm NZ returned to the building in December 2015, it found the leased carparks no longer signposted to them. Hopetoun effectively informed Alarm NZ it could not use the leased carparks and Alarm NZ says it had no practical option other than to accept the position. It accepted it was unrealistic to try and insist on the return of the leased carparks in circumstances where Alarm NZ understood that Hopetoun had sold them to third parties. By December 2015, there were only four carparks in the same general location as the original eight, being in Alarm NZ’s opinion covered and therefore secure, which were carparks 73 to 76.

[46] Alarm NZ’s cooperation with Hopetoun, and acceptance of the reality forced on it by Hopetoun’s having changed the leased carparks, has put it in the difficult position of insisting on rights in relation to carparks 73 to 76 although they were not included in the original leased carparks. It relies on the email dated

15 December 2015 from a representative of Hopetoun as in effect varying the lease by replacing the leased carparks with carparks 73 to 76. It is fair to observe that Alarm NZ would have had a reasonable prospect of obtaining an injunction had the subject of the application been their previously leased carparks.

[47] In any event, Alarm NZ had a lease of carparks under the building. It can mount a case that it was always made plain to Hopetoun that, even adopting a conciliatory approach to the development, Alarm NZ required a minimum of four carparks under the building. There was nothing to indicate that would not be the case and carparks 73 to 76 were the only ones available. Therefore at that stage and

prior to the email of December 2015, arguably there was an agreement between Alarm NZ and Hopetoun that the lease was varied by the inclusion of four carparks under the building which could only have been carparks 73 to 76.

[48] There is therefore a serious question to be tried in relation to the breach of the lease.

(a) The plaintiff to be the occupier of the land on which the trespass occurs; and

(b) The defendant to have consciously and directly interfered with the land, including any buildings or structures fixed to the land.

[50] A plaintiff is an “occupier” of land, entitled to sue for trespass, if it actually has possession of the land at the time of the trespass. During the term of a lease, the tenant has possession and can sue for trespass, normally to the exclusion of even an owner.¹¹If the owner of land purported to take over land, the subject of a lease, an action in trespass by the lessee would be successful.

[51] It appears that the trespass action is based on an anticipated trespass by the landlord interfering with possession by selling carparks 73 and 74 resulting in the

2B purchaser attempting to use them. If the pleadings only evince an anticipated trespass, Todd on Torts suggests that an injunction can still be issued: “the court may issue a quia timet injunction to prevent a trespass which is threatened but not

_{committed, where it appears that the defendant is likely to carry out
the threat and}

¹⁰_{Attorney-General v Leason HC Wellington
CIV-2010-485-1940, 31 August 2010.}

¹¹Bill Atkin “Trespassing on land” in Stephen Todd and others (eds) Law of Torts in New Zealand

the plaintiff will suffer irreparable harm if he or she does so.”¹²A similarly “pre-

emptive” injunction was granted in Trust Porirua v Jackson Holdings (2005) Ltd.¹³

[52] The cause of action in trespass, so far as carparks 73 to 76 is concerned, relates to carparks 73 and 74. Alarm NZ says it has exclusive possession of them since they were allocated to Alarm NZ on 15 December 2015 and that the sale of them is a trespass upon its right to exclusive possession pursuant to the lease and in breach of the undertaking.

[53] Trespass is typically used for physical trespasses onto land. The act of selling the land itself is not a trespass but, as it is clear that the sale is not subject to Alarm NZ’s rights, the sale will result in Alarm NZ losing possession of carparks 73 and 74. There is a serious question to be tried as to whether Hopetoun “consciously or directly interfered with land” by agreeing to transfer carparks 73 and 74.

[54] There is no doubt there are serious questions to be tried regarding breach of the lease and trespass so far as the leased carparks are concerned. The difficulty is that the subject of the injunction application, carparks 73 to 76, were not part of the original leased carparks. Arguably, while Alarm NZ had a legitimate expectation of four covered carparks, they were not identified and the allocation of carparks 73 to

[55] However, on balance, I conclude that there is a serious question to be tried in relation to breach of lease and trespass in respect of carparks 73 to 76. Although there is some force in the suggestion that only carparks 73 and 74 have an immediate risk of dissipating, in my view there is a serious question to be tried concerning all

¹²Bill Atkin “Trespassing on land” in Stephen Todd and others (eds) Law of Torts in New Zealand

[56] The next question is where the balance of convenience lies. This is essentially a question for my discretion, as to which party would suffer a greater injustice by the grant of an injunction or “which would best allow the adjustment of the rights of the parties in a way that accords with fairness and justice.”¹⁴

[57] This involves a consideration of the status quo, the effect of the injunction on any third party, and the overall interests of justice. Whether one party’s harm is compensable by damages will be a significant factor.

[58] It is well recognised that if refusal of an interim injunction in a situation where a plaintiff has a reasonably arguable case might lead to any ultimate remedy for the plaintiff being rendered nugatory, then the balance of justice may well justify an interim injunction.¹⁵

[59] Alarm NZ’s position is that the injunction is required because, if carparks 73 and 74 are transferred to the 2B purchaser, then Alarm NZ’s application for a permanent injunction will be thwarted. Therefore the status quo whereby Alarm NZ has use of carparks 73 to 76 should be preserved.

[60] If the application is not granted, carparks 73 and 74 will not be available to Alarm NZ as part of any permanent solution. However, and I accept this is speculation, Alarm NZ might be able to lease or licence other carparks in the same general location. I do not understand Alarm NZ to say it must have carparks 73 to 76 and no others would do.

[61] Carparks 111 and 112 are the carparks registered as auxiliary units on the title for unit 2B. They remain available for use by either the 2B purchaser or Alarm NZ

¹⁴_{Congoleum Corporation v Poly-Flor Products (NZ) Ltd
[1979] NZCA 25; [1979] 2 NZLR 560 (CA).}

¹⁵Dunes Cafe and Bar Ltd v 623 Rocks Road Ltd HC Nelson CIV-2006-442-481, 6 November

as part of any permanent solution. Use of them could be an interim solution for the

[62] While the status quo favours Alarm NZ, the two real issues which could preclude granting the application are the impact on the 2B purchaser and whether damages would be an adequate remedy.

[63] It is well understood that, if innocent third parties might be detrimentally affected by the granting of an interim injunction, then this may be a factor to which significant weight is given against the granting of interim relief.

[64] Hopetoun places significant emphasis on the rights of the 2B purchaser to carparks 73 and 74. Although her solicitor has provided affidavits, she has taken no steps to be joined as an intervener or a party to these proceedings.

[65] The agreement for sale and purchase of unit 2B with the 2B purchaser was entered into in November 2013. It simply provided for the sale of unit 2B and “two covered carparks”.

[66] The title to unit 2B issued in October 2015. The title included two carparks being accessory units 111 and 112.

[67] The evidence is that the allocation of accessory units 111 and 112 to unit 2B was in error and this was appreciated by both Hopetoun and the 2B purchaser on March 2013. The evidence from the solicitors for both parties was that the parties agreed allocations would be finalised when titles were issued, on the basis that the carpark allocation would be in the approximate position of carparks 73 and 74.

[68] The need for correction of the allocation was overlooked by Hopetoun and, when it was raised by the 2B purchaser’s solicitor, Hopetoun provided an undertaking to rectify the oversight and transfer the correct auxiliary units to the 2B purchaser as soon as possible following settlement. On 12 November 2015, the solicitors agreed to the allocation of carparks 73 and 74 to unit 2B. Settlement of the

sale took place on 18 November 2015 on the basis that the reallocation would occur post-settlement. The mortgagee agreed to that position.

[69] The issue then raised by Hopetoun is that this agreement took place before Alarm NZ was given any rights in connection with carparks 73 and 74. The right to use those carparks was not given until December 2015 when Alarm NZ returned to the building. That being the case, Hopetoun’s position is that the 2B purchaser has an equitable interest in carparks 73 and 74. She obtained that interest with no knowledge of the lease or any dispute concerning carparks 73 and 74. At the time she acquired her interest, Alarm NZ had no rights whatsoever over carparks 73 and

[70] In those circumstances it is, in Mr Butler’s submission, not in the interests of justice to grant the application which would in reality result in what he described as a permanent injunction sine die against a third party against whom there is no cause of action.

[71] Mr Stainton’s response was to say that Alarm NZ is just as innocent as the 2B purchaser. Furthermore, in his submission, Alarm NZ had rights of exclusive possession from the date of commencement of the lease and rights over carparks 73 and 74 were in substitution for the original lease rights. Therefore, in Mr Stainton’s submission, Alarm NZ’s equity predated that of the 2B purchaser. Furthermore, he said, the interests of a third party cannot be determinative of the application.

[72] Arguably, given Hopetoun has already varied its agreement with the 2B purchaser, it is well able to do so again and any compensation required is a matter for Hopetoun who gave valuation evidence in relation to these proceedings that there is little, if any, difference in value between carparks in the location of carparks 73 and

74 in comparison with carparks 111 and 112. It can be considered somewhat ironic that Hopetoun is concerned about what it describes as the “equitable” right of the 2B purchaser whereas it has arguably acted with complete disregard for the leasehold interest of Alarm NZ.

[73] Whether Alarm NZ or the 2B purchaser has the stronger claim to carparks 73 and 74 is not the test. It is, however, a relevant consideration. Hopetoun maintains that the 2B purchaser acquired an equitable interest in carparks 73 and 74 before Alarm NZ did so. However, I consider it is at least arguable, given the context of the lease and the exchanges between Alarm NZ and Hopetoun in mid-2015, that Alarm NZ could reasonably be considered to have an interest in carparks 73 and 74 before the 2B purchaser did so.

[74] Mr Butler relies on Dunes Cafe as analogous.¹⁶In that case, an injunction was sought against the landlord who had an agreement for lease with one party, Dunes, which it maintained it was entitled to cancel and did cancel. The landlord then entered into an agreement to lease with another party who expended money on fitting out the leased premises before the application for the injunction was lodged.

[75] Similar to this case, Gendall J identified that the decision turned on two issues, being whether damages would be an adequate remedy to the plaintiff and whether the Court should grant interim relief to the plaintiff which would in a practical way interfere with the rights of a third party under its lease.¹⁷His Honour recognised that the dispute was not between the plaintiff and the third party as to who should have the lease but whether the cancellation of the plaintiff’s agreement to lease was valid.¹⁸Gendall J described the need to balance the risk of doing injustice to one or other of the parties viewed broadly, added to which was the interests and rights (if any) of the third party.¹⁹

[76] The distinguishing features of that case in comparison to the one before me are that the plaintiff had not acted with urgency and that the granting of the injunction would risk a substantial injustice being caused to the third party. This is not the case here where the 2B purchaser could have, as an alternative, rights to use carparks 111 and 112, only some 15 metres away, Mr Butler says, from carparks 73

[77] The decision is a finely balanced one. On one analysis Hopetoun reached an agreement with the 2B purchaser which, on the evidence provided, it had no legal compulsion to do and consequently favoured its own interest as developer and the interests of the incoming purchaser over that of Alarm NZ, notwithstanding the lease and its undertaking to Alarm NZ and to the Court. That, however, is not the point. It may be that the 2B purchaser is easily compensated, but again, which of the two parties is more easily compensated is not the test.

[78] The arrangement between Hopetoun and the 2B purchaser is an important consideration. The rights of the innocent 2B purchaser, and perhaps more importantly those of her mortgagee whose security cannot be perfected while the injunction is in place, must be given weight.

[79] The importance of an assessment of the adequacy or otherwise of damages was described in the leading judgment in American Cyanamid, per Lord Diplock:²⁰

As to that [the balance of convenience], the governing principle is that the court should first consider whether, if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction, he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant's continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff's claim appeared to be at that stage. If, on the other hand, damages would not provide an adequate remedy for the plaintiff in the event of his succeeding at the trial, the court should then consider whether, on the contrary hypothesis that the defendant were to succeed at the trial in establishing his right to do that which was sought to be enjoined, he would be adequately compensated under the plaintiff's undertaking as to damages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the plaintiff would be in a financial position to pay them, there would be no reason upon this ground to refuse an interlocutory injunction.

It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or to both, that the question of balance of convenience arises.

Diplock’s comments, Somers J (concurring with Richards and Cooke JJ) said:²¹

Stress was laid in that speech on the importance in this context of the adequacy of damages as a remedy available to a plaintiff or payable by a plaintiff on an undertaking and then to other factors. I do not understand the case to suggest any rigid or mechanical rules by which the Court must abide in deciding whether the flexible and discretionary remedy of injunction should go in interlocutory matters.

[81] Somers J went on to say that the adequacy of damages was clearly of great importance, and used that factor as the determining factor in the case.

[82] This approach can be seen reflected in Peter v Collinge, in which Fisher J summarised the approach to assessing the balance of convenience in interim injunctions as requiring “particular reference to the adequacy of damages to either party if ultimately successful at trial”.²²

[83] In Finnigan v New Zealand Rugby Union, Casey J, balancing the fact that damages would not be adequate for the plaintiffs against the wider public interests, said:²³

The basic rule is that plaintiffs able to show an injury which cannot be compensated by damages are entitled to the relief unless the inconvenience or hardship it would cause require a weighing up of "the balance of justice and injustice" (Spry, Equitable Remedies (3rd ed, 1984) p 453). It is also accepted that inconvenience and hardship to third parties can be put in the balance. In NWL Ltd v Woods [1979] 3 All ER 614 Lord Diplock referred at p 626 to consequences to third parties, the public and perhaps the nation at large as being relevant. He also made it plain that nothing was said in the American Cyanamid case to suggest that in considering whether to grant the injunction the Judge ought not to give full weight to all the practical realities of the situation to which the injunction will apply.

[49] There is no doubt that the adequacy of damages as a remedy for a successful defendant for being prevented from doing what he was, with

²¹_{Congoleum Corporation v Poly-Flor Products (NZ) Ltd
[1979] NZCA 25; [1979] 2 NZLR 560 (CA) at 572.}

²³_{Finnigan v New Zealand Rugby Football Union Inc (No 2)
[1985] 2 NZLR 181 (HC) at 187.}

hindsight, entitled to do is also an important countervailing factor in considering whether to grant an interim injunction.²⁵

[85] Alarm NZ claims that damages will not be an adequate remedy because of its special needs. It maintains that the loss of the carparks will result in disadvantages which are not capable of being compensated. It is not a question of whether damages are quantifiable but rather, whether they would be an adequate remedy. In this regard, Alarm NZ relies on a letter from NZSA Security. NZSA says that Alarm NZ is a “graded” monitoring centre and maintenance of that grading will be a key consideration for customers and, where security measures are downgraded, this could potentially lead to a lower grading and therefore impact on the business operations. NZSA concludes that the removal of staff secure parking creates additional risk for the safety and security of Alarm NZ’s employees and may be noted as a detrimental factor of future grading reviews.

[86] Mr Stainton rejects the criticism that the comments in that letter are simply speculative, noting that NZSA Security could not be expected to take the matter any further than it did. The issue is the effect on Alarm NZ’s business which is not capable of compensation, he says.

[87] In Mr Butler’s submission, the evidence in support of the unquantifiable nature of damages is purely speculative and I acknowledge that difficulty. He points out that Hopetoun has made it clear that it would include carparks 111 and 112 in the lease. These are only some 15 metres away from carparks 73 to 76 and, although they are not under the building, they are covered.

[88] Mr Butler submits that the evidence shows nothing more than a preference for internal carparks. He relies on the Dunes case in which Gendall J pointed out that, although in assessment of damages might not be easily undertaken, that is not an unusual situation in cases where claims involved damages for loss of chance.²⁶

It is implicit that the Court considers what is adequate compensation in this part of the enquiry on the basis of what is fair and just in all the

²⁵_{American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396
(HL) at 408.}

circumstances of the case. This means necessarily looking at what intangible harm may occur and that possibility should be taken into account, so, the difficulty of assessing damages may also be a factor.

11 March 2016 was filed 10 days after the application for the interim injunction meaning, he says, that at the time of the amended statement of claim, the question of damages was squarely issue. He says the amended statement of claim makes it clear in the prayer for relief for damages that damages are quantifiable and would be an adequate remedy.

[91] The first cause of action is for breach of the lease and derogation from grant of the lease. This includes the claim in respect of carparks 73 to 76. The prayer for relief is for permanent injunction covering carparks 73 to 76 as well as special damages and general damages. The fourth cause of action is in trespass including on the basis that the sale and transfer of carparks 73 and 74 is a trespass on the plaintiff’s right to exclusive possession pursuant to the lease. The prayer for relief again is for permanent injunction covering carparks 73 to 76 as well as special damages and general damages.

[92] Alarm NZ’s claim is therefore not limited to damages but includes the seeking of a permanent injunction in the same terms as the interim injunction sought in these proceedings. However, the prayer for relief in respect of trespass includes special damages for the difference in value between four secure carparks (which I infer must be carparks 73 to 76) and four unsecured carparks.

[93] There is no suggestion from Alarm NZ that Hopetoun would not be able to meet any award of damages which might be made against it. Equally, it has not been suggested that Alarm NZ would be unable to recompense Hopetoun for any damages it might be liable to pay the 2B purchaser, which would appear to be the only loss Hopetoun could sustain by being prevented from completing the transfer of carparks

73 and 74 to the 2B purchaser between the time of the application and the time of the trial.

[94] This is an unusual situation. In many ways the practical result is simply whether Hopetoun has to compensate the 2B purchaser or Alarm NZ, and in this regard Hopetoun’s valuation evidence suggests the damages would be minor in any event. Furthermore, although Hopetoun maintains it has no liability to Alarm NZ but may well be liable to the 2B purchaser, the evidence before me does not persuade me that the position is clear cut.

[95] On the other hand, even if Alarm NZ can sustain its position that it is in effect crucial to its business to have carparks under the building, it might be able to lease or licence others in a similar location and the associated costs could be sought in a damages claim. By its pleadings, Alarm NZ acknowledges that damages are quantifiable.

[96] Overall, I am satisfied that damage are quantifiable and an adequate remedy.

[97] The final step in this assessment is to step back and assess the overall interests of justice.

[98] The behaviour of the parties is a relevant consideration. Mr Stainton emphasised that Alarm NZ had done its best to fit in with the new arrangements which had been put into effect unilaterally by Hopetoun.

[99] I take note of the evidence on behalf of Alarm NZ as to the undertaking previously given by Hopetoun. Alarm NZ believes it has good reason not to trust Hopetoun given the history. It is fair to say that these concerns are not without some justification.

[100] Overall however, and although it is finely balanced, the interests of the 2B

purchaser and in particular her mortgagee together with my being satisfied damages

would be an adequate remedy, lead me to dismiss the application in respect of carparks 73 and 74.

[101] On behalf of his clients, Mr Butler confirmed that Hopetoun would have no objection to an interim order being granted in respect of carparks 75 and 76 on the basis that Hopetoun has always made it clear it has no intention to deal with those carparks other than in favour of Alarm NZ. Mr Butler did question whether the injunction should be granted on a principled basis bearing in mind there is, he says, no risk of any action adverse to Alarm NZ.

[102] Mr Stainton points out that Hopetoun had previously given an undertaking to the plaintiffs and to the Court dated 19 June 2014 saying:

[103] Given that the material before the Court suggests that Hopetoun has had scant regard to Alarm NZ’s rights as a lessee, including in circumstances where it has given an undertaken not only to Alarm NZ but to the Court, it is hardly a surprise that Alarm NZ regards Hopetoun’s assurances with a jaundiced eye. I share that concern.

[104] In all the circumstances of the case, including the apparent unavailability of any other carparks, and bearing in mind Hopetoun’s actions to date, I am satisfied that an interim order in respect of carparks 75 and 76 is justified and I so order.

[105] For the reasons given, the application is dismissed in respect of carparks 73 and 74 and granted in respect of carparks 75 and 76.

[106] In the usual course, costs should be awarded now. However, in the circumstances of this case, there would seem to be good reason to reserve costs pending the outcome of the substantive hearing. If the parties wish to dispute that

High Court of New Zealand Decisions

Alarm New Zealand Ltd v 15 Hopetoun Limited [2016] NZHC 813 (27 April 2016)