Annie Enterprises Limited v Cho - [2018] NZHC 2962

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-001378

[2018] NZHC 2962

UNDER the Property Law Act 2007

IN THE MATTER

of an application under s 253 of the Property Law Act 2007 for relief against cancellation of a lease

BETWEEN

ANNIE ENTERPRISES LIMITED
Plaintiff

AND

HYUN SOOK CHO

Defendant

Hearing: 12 November 2018

Counsel:

PL Rice for Plaintiff

JB Murray for Defendant

Judgment:

16 November 2018

JUDGMENT OF DOWNS J

This judgment was delivered by me on Friday, 16 November 2018 at 3 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:
Shehan Ebenezer, Auckland.
Vallant Hooker & Partners, Auckland. PL Rice, Auckland.

ANNIE ENTERPRISES LTD v CHO [2018] NZHC 2962 [16 November 2018]

When is a motel not a motel?

[1] Ms Hyun Cho owns 24 Walmsley Road, Mangere, on which she built a motel. Annie Enterprises Ltd1 leases the property. The lease requires the property be used as a motel (and bed and breakfast business). On 8 June 2018, Ms Cho gave Annie Enterprises notice of her intention to cancel the lease. The notice alleges Annie Enterprises has used the property other than as required, by devoting its use to Work and Income New Zealand2 for emergency accommodation for its clients. Annie Enterprises accepts it allows WINZ to use the property this way, but says the arrangement does not constitute a change of use as a motel. All of which raises the headlined issue. Others arise too, but can be swiftly addressed.

Some observations about the application and hearing

[2] The case lies under s 253 of the Property Law Act 2007. This section permits the holder of a lease to apply for relief against its proposed cancellation. Annie Enterprises applies for relief—the quashing of Ms Cho’s notice—on the basis the property’s use has not changed. It is common ground Ms Cho must prove it has.

[3] Substantial affidavits were filed. Core facts are not in dispute, but other things are. For example, Annie Enterprises contends this case is really about Ms Cho’s desire to increase the rent now the property is profitable. Hence her insistence for substantial compensation for the alleged change of use. Ms Cho contends Mr Rajesh Sachdeva, the director of Annie Enterprises, has been less than candid with her about the property’s use, and something other than “an excellent tenant”.

[4] All witnesses were present at the hearing—as observers. Neither party wished to cross-examine despite my encouragement and signalled concern fact-finding may be imperilled. Which is exactly what happened. Absent cross-examination—and the protection for a witness in having the case put to them3—I am unable to divine the often-elusive question of motive or determine other factual disputes. And, I am unprepared to do so. Annie Enterprises alleges Ms Cho is using the notice of

1      Annie Enterprises.
2      WINZ.
3      Evidence Act 2006, s 92.

cancellation as a blunt bargaining tool for a share of the pie; she that…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] NZHC 2962
Decision Date: 16 November 2018

CaseChat Overview and Summary

Annie Enterprises Limited sought to quash a notice given by its landlord, Ms Hyun Cho, to cancel their lease. The primary issue was whether Annie Enterprises had changed the use of the property in breach of the lease. The High Court of New Zealand, Auckland Registry, held the notice to be without merit and quashed it. The court found that Annie Enterprises had not changed the use of the property, despite using it to accommodate clients of Work and Income New Zealand on a temporary basis. The court rejected Ms Cho's argument that the property was now being used more like a boarding house, or that its use had otherwise changed in a way that constituted a breach of the lease. The court held that the property continued to be used as a motel and bed and breakfast business, albeit with some unique features. The court found that Annie Enterprises' arrangement with Work and Income New Zealand did not amount to a change of use, as the property was still used as a motel and bed and breakfast business, albeit with some unique features. The court held that Ms Cho had failed to provide sufficient evidence to support her claims of a change of use. The court quashed Ms Cho's notice of 8 June 2018 and ordered her to pay Annie Enterprises' costs.

Orders