Chan v Boston Trustees 6037 Limited - [2021] NZHC 1694

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-002422

[2021] NZHC 1694

BETWEEN
EVELYN DREAMI CHAN, as trustee of the DREAMI TRUST
First Plaintiff

EVELYN DREAMI CHAN
Second Plaintiff

AND

BOSTON TRUSTEES 6037 LIMITED and

KWOK PING WINNIE CHAN, as trustees of the KP CHAN FAMILY TRUST

First Defendants

KWOK PING WINNIE CHAN

Second Defendant

Hearing: 21 June 2021

Appearances:

H L R McDermott for Plaintiffs S C I Jeffs for Defendants

Judgment:

8 July 2021

JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

This judgment was delivered by Associate Judge Andrew on 8 July 2021 at 1.00 pm
pursuant to r 11.5 of the High Court Rules Registrar / Deputy Registrar

Date ………………………

CHAN & OR v BOSTON TRUSTEES 6037 LTD & ORS [2021] NZHC 1694 [8 July 2021]

Introduction

[1] In May 2020, the parties entered into an agreement for the sale and purchase of the entire shareholding (1,000 shares) in Eastern Dragon Sushi Ltd (the Company). The Company operates a franchise network selling sushi and other food products from kiosks in Countdown supermarkets in the North Island.

[2] The defendants were the vendors. The plaintiffs were the purchasers. The defendants agreed to sell the Company’s shares to the plaintiffs for $1m.

[3] The agreement for sale and purchase (ASP) did not settle. The plaintiffs have paid no part of the purchase price. The defendants claim to have lawfully cancelled the ASP.

[4] In the substantive proceedings, the plaintiffs sue the defendants for specific performance requiring the defendants to settle under the ASP with undertakings provided in accordance with the vendors’ warranties.

[5] In the present interlocutory proceeding, the defendants seek to strike out the whole of the plaintiffs’ amended statement of claim. The defendants say that the pleadings, containing a sole cause of action for breach of contract, is incapable of success; there is no tenable claim of a breach of obligations under the ASP and no tenable claim that the failure to complete the settlement was in any way caused by a breach of the defendants’ contractual obligations.

[6] The critical issue I must determine is whether the amended statement of claim discloses no reasonably arguable cause of action because there is no tenable claim for breach of contract or any other basis for the order of specific performance sought.

Factual background

[7] The parties had initially agreed to an agreement for the sale and purchase of the sushi business of the Company. However, the ASP subsequently entered into was for the sale and purchase of the shares in the Company.

[8] The ASP defined “completion” to mean “performance by the vendors and the purchaser of their respective obligations under cl 4.2 - 4.5 (inclusive)”. It also defined the completion date.

[9]By consent, the completion date was extended until 1 October 2020.

[10] Clause 4.2 of the ASP contained the vendor’s pre-completion period obligations and included at 4.2(a)(xvi) the following:

In the event that the vendor becomes…

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.

Keep reading for free

Create a free CaseChat account to read Chan v Boston Trustees 6037 Limited and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2021] NZHC 1694
Decision Date: 8 July 2021

CaseChat Overview and Summary

In Chan v Boston Trustees 6037 Limited, the plaintiffs sought specific performance of a sale and purchase agreement for the shares of Eastern Dragon Sushi Ltd. The defendants, as vendors, sought to strike out the plaintiffs' amended statement of claim, arguing that it disclosed no reasonably arguable cause of action for breach of contract or any other basis for specific performance. The critical issue before the court was whether the plaintiffs' claim was tenable.

The court examined the contract's terms and the plaintiffs' allegations of breach. The plaintiffs claimed the defendants breached the agreement by failing to settle on the settlement date and by not providing warranties as required by the agreement. The plaintiffs sought specific performance of the agreement with the warranties as a condition. However, the court found that the plaintiffs had not established a breach of any contractual obligation by the defendants. The defendants had met their obligations under the agreement, including providing warranties and being ready, willing, and able to settle. The plaintiffs' failure to pay the purchase price justified the defendants' right to cancel the agreement.

The court concluded that the plaintiffs' allegations of breach were not reasonably arguable. The defendants had discharged their obligations, and the plaintiffs' claim for specific performance was without merit. The court granted the defendants' application to strike out the plaintiffs' amended statement of claim, finding that the claim was incapable of success.

The court struck out the proceedings, holding that the defendants were entitled to costs on a 2B basis plus disbursements. The defendants were to file and serve memoranda within 14 days if costs could not be agreed.

Orders