Hopu Holding Limited v Chopra
[2025] NZHC 2751
•19 September 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-003235
[2025] NZHC 2751
UNDER Part 12 of the High Court Rules BETWEEN
HOPU HOLDING LIMITED
Plaintiff
AND
VYAS RISHI CHOPRA
First Defendant
BEOM JIN KIM
Second Defendant
Hearing: 1 September 2025 Appearances:
T Hu for the Plaintiff / Applicant
N Malarao / L Lin for the First Defendant No appearance for the Second Defendant
Judgment:
19 September 2025
JUDGMENT OF ASSOCIATE JUDGE GELLERT
This judgment was delivered by me on 19 September 2025 at 4:00pm.
Pursuant to Rule 11.5 of the High Court Rules.
…………………..
Registrar/Deputy Registrar
Date ………………….
Solicitors:
Shortland Chambers, Auckland City Chambers, Auckland
Zhang Law Limited, Auckland Richmond Chambers, Auckland
Sandran Balan & Associates, Auckland
HOPU HOLDING LIMITED v CHOPRA [2025] NZHC 2751 [19 September 2025]
Introduction
[1] The plaintiff, Hopu Holding Ltd (HHL), applies for summary judgment against the defendants, Vyas Chopra and Beom Jin Kim, in relation to their guarantee of the obligations of New Zealand Hotel Management Ltd (in liquidation) (NZHML). The obligations arise in relation to a lease agreement between HHL and NZHML.
[2] NZHML was in breach of the terms of the lease, both for non-payment of rent and as a consequence of being placed into liquidation. It is undisputed that HHL re- entered the leased premises earlier than permitted under the Property Law Act 2007 (PLA) after issuing a notice under s 245 of the PLA for non-payment of rent. HHL (via the liquidator), purported to cancel the lease for repudiation, relying on HHL’s premature re-entry.
[3] The key issue in this proceeding is whether it is arguable that the prior actions of NZHML mean that HHL’s breach of the mandatory notice provisions of the PLA could not be relied on by NZHML in cancelling the lease. A secondary issue is whether the defendants are estopped from saying the lease is cancelled because the liquidator subsequently acted consistently with the lease being on foot.
Background
[4] HHL owns a commercial property at 12 Tidal Road, Māngere, Auckland (Property). On 1 July 2018, HHL entered into a Deed of Lease (Lease) with NZHML in relation to the Property. Mr Chopra and Mr Kim were the directors and shareholders of NZHML. They jointly and severally guaranteed NZHML’s obligations to HHL under the Lease.
Key terms in Lease agreement
[5]In summary, the key terms in the Lease provided that:
(a)The Lease was to commence on 1 July 2018 for a term of 15 years, with the final termination date being 30 June 2033.
(b)The annual rental was $650,000 plus GST, until the first rent review date.
(c)The business use was “[t]he operation and management of a motel accommodation with a Qualmark accommodation rating of not less than 3.5 stars”.
(d)NZHML was to pay the operating expenses when they fell due for payment and was to indemnify HHL against any liability in respect of operating expenses.
(e)HHL was entitled to cancel the Lease by re-entering the Property at any time or any time thereafter if, among other things:
(i)rent was in arrears 10 working days after the date for payment of rent and NZHML had failed to remedy that breach within 10 working days after service on it of a notice in accordance with s 245 of the PLA; or
(ii)NZHML became insolvent or entered into bankruptcy or liquidation.
(f)Failure to pay rent or other payables on the due date was a breach going to the essence of NZHML’s obligations.
Issues with monthly rental payments
[6] On 2 August 2024, HHL and NZHML agreed that the annual rent payable from 1 July 2024 was to be $812,610.80 plus GST per annum. Accordingly, the monthly payment of rental required from 1 July 2024 was $67,717.57 plus GST.
[7] NZHML had difficulties meeting its rent obligations. On 1 August 2024 and 1 September 2024, NZHML did not pay its monthly rental payments. Consequently, HHL served on NZHML a notice of intention to cancel the lease pursuant to ss 244 and 245 of the PLA. Those arrears were eventually cleared.
[8] On 24 September 2024, Mr Chopra and Mr Kim met with Pritesth Patel, a licensed insolvency practitioner. On 25 September 2024, Mr Patel consented to take appointment as a liquidator, although NZHML was not placed into liquidation at that time.
[9] On 1 October 2024, NZHML again failed to pay its monthly rental payment. On 2 October 2024, HHL served on NZHML a second notice of intention to cancel the lease pursuant to s 245 of the PLA. The notice required payment of the monthly rental payment within 10 working days. That 10 working day period was set to expire at the end of 16 October 2024. This is not in dispute.
HHL’s re-entry into the Property
[10] On 15 October 2024, the day before the second notice was set to expire, the defendants placed NZHML into liquidation by a special resolution of shareholders. Mr Patel was appointed as liquidator. Mr Chopra provided Mr Patel with the keys to the Property. Mr Patel subsequently drove to the Property, secured the premises, and placed new locks on the entrance to the Property.
[11] On the evening of 15 October 2024, HHL’s director, Mr Zhou, visited the Property and placed a lock on the door to the main accommodation block. Mr Zhou placed the lock above the locks which Mr Patel had placed earlier that day.
[12] On the morning of 16 October 2024, Mr Chopra called Mr Patel to inform him that people from HHL had entered the Property the previous evening. Mr Patel immediately drove to the Property. When Mr Patel arrived, he saw Mr Zhou, who had arranged for a locksmith to change the locks. Mr Patel says that there was a forceful verbal disagreement between him and Mr Zhou as to the legality and commerciality of HHL’s actions.
[13] Later that day, HHL and Mr Patel exchanged a series of correspondence. First, HHL (via its solicitors) gave notice to Mr Patel of cancellation of the Lease on the basis that NZHML was in liquidation.
[14] Mr Patel responded to HHL that same day, saying that: HHL had purported to terminate the Lease at least one day before the right to terminate the Lease could have accrued; that premature re-entry was a repudiation which NZHML was entitled to accept by giving notice of cancellation; and then gave NZHML’s notice of cancellation of the Lease.
[15] HHL and Mr Patel continued to discuss the matter over the following days. On 22 October 2024, HHL and Mr Patel executed a Deed of Settlement. Under this deed, HHL agreed to pay $40,000 plus GST for the chattels at the Property, and Mr Patel agreed to disclaim the lease under s 269 of the Companies Act 1993. Notice of this disclaimer was given on 24 October 2024.
[16] On 1 March 2025, the Property was re-leased by HHL for a term of eight years at $720,000 per annum (excluding GST).
First cause of action: rectification
[17] As a preliminary matter, HHL seeks to have cl 19(1)(b) of the Lease rectified. Clause 19 contains the guarantee terms. The written terms of the clause are that the defendants agree to “indemnify the lessor against any loss the lessee might suffer should the lease be unlawfully disclaimed by any liquidator” (emphasis added).
[18] Ms Hu, counsel for HHL, says that the term “lessee” in the clause is an obvious mistake, and should have read “lessor”. She says that this intention is obvious from the surrounding clauses in the Lease as well as commercial commonsense.
[19] Mr Malarao, counsel for Mr Chopra, says that the first defendant does not consent to judgment being entered to rectify the clause, but equally does not oppose it.
[20] I accept Ms Hu’s submission. Accordingly, cl 19.(1)(b) is to be rectified by replacing the word “lessee” with the word “lessor”.
Submissions
Applicant’s submissions
[21] Ms Hu made appropriate concessions when presenting the plaintiff’s arguments. She acknowledged that Mr Zhou’s act of re-entering the Property on either 15 or 16 October 2024 was premature and in breach of the PLA requirements. That is because 10 working days had not passed, and the notice served on HHL was in respect of non-payment of rent.
[22] Ms Hu also accepts that even if HHL did have grounds to cancel the Lease on the basis of NZHML’s liquidation, it failed to comply with the necessary notice requirements under the PLA. That is because HHL was required to issue a notice under s 246 of the PLA (being the notice required for re-entry for breach other than non-payment of rent), and for a reasonable period of time to have passed, in order to cancel the Lease following HHL’s liquidation. No notice was issued by HHL under s 246.
[23] However, Ms Hu submits that notwithstanding HHL’s conduct in failing to comply with PLA notice requirements, NZHML was not entitled to cancel the Lease on 16 October 2024 after it was placed into liquidation on 15 October 2024. In advancing the submission that NZHML’s purported cancellation was invalid, Ms Hu says that:
(a)the parties intended that the act of NZHML going into liquidation amounted to a repudiation of the Lease;
(b)by going into liquidation, NZHML was unable or unwilling to perform its obligations under the Lease;
(c)NZHML’s liquidation intimated that HHL’s performance of its obligations under the Lease would be futile; and
(d)given NZHML’s representation, it cannot now try to hold HHL to the performance of its re-entry obligations under the PLA, or to cancel the Lease for HHL’s early re-entry.
[24] The corollary of Ms Hu’s submission that NZHML’s cancellation was invalid is that the defendants’ obligations under the Lease continued, and so they are liable as guarantors for the loss suffered by HHL. Mr Patel’s disclaimer of the Lease on 24 October 2024 ended NZHML’s obligations, but not the guarantors.1 Accordingly, Ms Hu submits that the defendants are jointly and severally liable for:
(a)$155,040.82, comprising present and unpaid obligations of NZHML under the Lease (and associated interest); and
(b)$1,025,419.96, comprising the net present value of the lost future rental stream under the Lease (and associated interest), after taking into account rent being received from the re-lease of the Property.
Respondent’s submissions
[25] Mr Malarao submits that this case is not suitable for summary judgment, and that HHL’s application should therefore be declined. Mr Malarao submitted that:
(a)HHL’s act of re-entering the Property on either 15 or 16 October was unlawful and amounted to a repudiatory breach of the Lease, which was subsequently accepted by NZHML on 16 October 2024. He submitted that the later steps taken by HHL and Mr Patel cannot retrospectively cure or validate HHL’s unlawful re-entry.
(b)When HHL repudiated the Lease by unlawful re-entry, that repudiation prevented it from enforcing the obligations under the Lease. Mr Malarao acknowledges that a personal guarantee is a separate personal obligation but says that the scope of the guarantee is conditional on the existence of the principal debt.
1 Companies Act 1993, s 269(3)(b).
(c)HHL’s assertion that NZHML being placed into liquidation amounted to a repudiation, which disentitled it from cancelling the Lease for HHL’s repudiation, was disputed both factually and legally. Factually, he says that the affidavit evidence indicates that the liquidation of NZHML did not, in and of itself, render NZHML incapable of performing the Lease. Legally, he said that NZHML’s liquidation was not irreversible as the court still has the power to terminate a liquidation under s 250 of the Companies Act 1993. Mr Malarao further notes that HHL never gave sufficient notice in accordance with the PLA’s notice requirements.
(d)Although the court can determine complex legal issues in the summary judgment context, the legal issues in this case are intertwined with contested factual issues, including: the timing and effect of HHL’s re- entry; Mr Chopra’s and Mr Patel’s affidavit evidence as to what they were trying to achieve before HHL’s re-entry; and what the parties intended by the subsequent dealings with HHL and Mr Patel.
Legal principles governing applications for summary judgment
[26]Rule 12.2(1) of the High Court Rules 2016 provides that:
The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
[27] The principles governing a plaintiff’s application for summary judgment are well established.2 Broadly, these principles can be summarised as follows:
(a)The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried.3
2 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26]–[27].
3 Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.
(b)The onus is on the plaintiff seeking summary judgment to show that there is no arguable defence, and the court must be left without any real doubt or uncertainty on the matter.4
(c)The court will decide questions of law where appropriate and should be prepared, after adequate argument, to determine difficult legal questions.5
(d)A defendant is under an obligation to lay a proper foundation for their defence in the affidavits filed in support of the notice of opposition.6
(e)Summary judgment will not be appropriate where there are genuine conflicts of fact and, in particular, credibility issues that cannot be resolved on the basis of affidavit evidence.7
(f)In determining whether there is a genuine and relevant conflict of facts, the court is entitled to examine and reject spurious defences or plainly contrived factual conflicts. The court is not required to accept uncritically evidence that is equivocal, imprecise, inconsistent with undisputed contemporary documents or other statements, or inherently improbable.8
(g)Where discovery or interrogatories may be needed to establish facts to support a defence, the court must be alert to the possibility of injustice but should not speculate on possible defences.9
(h)The court’s overall assessment of the evidence is a matter of judgment, and the court may take a robust and realistic approach where the facts warrant it.10
4 At 3–4.
5 Zurich Australian Insurance Ltd v Cognition Education Ltd [2014] NZSC 188, [2015] 1 NZLR 383.
6 Middleditch v New Zealand Hotel Investments Ltd (1992) 5 PRNZ 392 (CA) at 394.
7 Sandman v McKay [2019] NZSC 41, [2019] 1 NZLR 519.
8 Attorney-General v Rakiura Holdings Ltd (1986) 1 PRNZ 12 (HC).
9 Tilialo v Contractors Bond Ltd CA 50/93, 15 April 1994.
10 Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
(i)If the Court is satisfied that there is no defence, the court retains a discretion to refuse summary judgment but does so in the context of the general purpose of the High Court Rules which provide for the just, speedy, and inexpensive determination of proceedings.11
Discussion
[28]There are two issues I must consider:
(a)First, whether there was a repudiatory breach of the Lease by HHL. If there was no such breach, the defendants’ obligations as guarantors remain on foot.
(b)Alternatively, if there was a repudiatory breach by HHL, whether NZHML was not ready, willing, and able to perform its obligations on 16 October 2024, meaning that it was not able to cancel the Lease.
Was there a repudiatory breach of the Lease by HHL?
[29]It was common ground between the parties that:
(a)No notice had been issued under s 246 of the PLA, which was necessary if HHL wished to cancel the lease on the basis that NZHML had become insolvent, or entered bankruptcy or liquidation. That was a notice that would have required HHL to include a reasonable period for compliance with the notice.
(b)The PLA notice that was served on NZHML was under s 245 of the PLA, and therefore the notice did not expire for 10 working days, which was no earlier than 17 October 2024.
(c)NZHML’s re-entry into the Property was in breach of the requirements of the PLA because that occurred on 15 or 16 October 2024 (it being
11 Partners Finance and Lease Ltd v Richmond [2019] NZHC 34, [2019] NZAR 168 at [62]; and High Court Rules 2016, r 1.2.
immaterial which day re-entry occurred, because both days were before 17 October 2024).
[30] The plain language of the PLA prescribes that a lease may only be cancelled in accordance with ss 244 to 252. Section 243 of the PLA states:
243 Section 244 to 264 to be code
(1)A lease may be cancelled only in accordance with sections 244 to 252.
(2)Any relief against any of the following things may be given only in exercise of the powers conferred by sections 253 to 264:
(a)the actual or proposed cancellation of a lease; or
(b)the refusal to extend or renew a lease; or
(c)the refusal to enter into a new lease; or
(d)the refusal to transfer or assign the reversion expectant on a lease.
(3)Any term expressed or implied in a lease or in any other instrument has no effect if it—
(a)provides that the lease is automatically cancelled by breach of a covenant or condition of the lease; or
(b)is otherwise inconsistent with this section or with sections 244 to 264; or
(c)has the purpose or effect of avoiding the need for compliance with this section or with sections 244 to 264.
[31] This means that a party cannot contract out of the PLA notice provisions, irrespective of the circumstances. HHL was in breach of cl 15.2(a) of the Lease by re- entering the Premises prior to expiry of the notice. The fact that it could have issued another notice with a shorter period of time relying on NZHML’s liquidation is irrelevant; it did not.
[32] Ingram v Patcroft Properties Limited12 is clear authority that HHL’s unlawful early re-entry, even by one day, was a repudiatory breach entitling NZHML to cancel. As a result, HHL repudiated the Lease by re-entering the Premises on 15 or 16 October 2024 rather than on 17 October 2024 (when it was entitled to do so).
12 Ingram v Patcroft Properties Ltd [2011] NZSC 49, [2011] 3 NZLR 433.
Was NZHML’s liquidation a repudiation meaning it could not cancel the lease?
[33] Ms Hu said that I could nevertheless feel confident entering summary judgment because the plaintiff’s position did not mean that the PLA notice requirements did not apply. Rather, in certain specific circumstances, even if a party has breached the requirements of the PLA, another party cannot rely on that breach.
[34] Ms Hu submitted that the specific circumstances in this case were that the parties intended that the act of liquidation by NZHML meant that NZHML was unable or unwilling to perform its obligations. Because NZHML was unable or unwilling to perform its obligations under the lease, she says that it was not entitled to rely on its own repudiation to cancel the Lease on 16 October 2025. In support of this proposition, Ms Hu relies on Noble Investments Ltd v Keenan13 and Lynch v FCL CL Ltd.14
[35] Mr Malarao submitted that reliance on the above two cases was misplaced. Regarding Noble Investments Ltd, Mr Malarao says that it is not a case relating to a lease, but rather a contract for the sale of land. He further says that because the code as to cancellation of leases under the PLA had not been enacted when that case was heard, it would be dangerous and against Parliament’s intention to transpose the principles from that case into the present one. Mr Malarao similarly submits that Lynch can be distinguished on the basis that it is not a case relating to a lease.
[36] In making the submission as to the parties’ intention that NZHML’s liquidation meant that NZHML was unable or unwilling to perform its obligations, Ms Hu relied on cl 15.2 of the Lease (that liquidation was a breach of the lease justifying re-entry), the prescribed business use of the property (that NZHML operate a motel accommodation), the notice of liquidation dated 15 October 2024, and the commentary in the Liquidator’s First Report dated 21 October 2024 in which the directors’ advice to the liquidator was that they had “tried to continue operating the business against the mounting accumulated losses but simply cannot inject any additional working capital to continue with the business.”
13 Noble Investments Ltd v Keenan (2005) 6 NZCPR 433.
14 Lynch v FCL CL Ltd [2024] NZHC 700.
[37] In relation to these factors, Mr Malarao’s submission was that NZHML’s liquidation did not, in of itself, amount to repudiation or mean it could not perform the Lease. As a matter of law, liquidations can be brought to an end. Mr Malarao says that Mr Chopra accepts that NZHML had been placed in liquidation and was in arrears at the time HHL re-entered the Property. But he says that the evidence discloses that Mr Chopra was earnestly trying to salvage NZHML’s position, and that HHL was not co-operating.
[38] As for the disclaimer of the Lease executed by Mr Patel and HHL on 24 October 2024, Mr Malarao says that this was a pragmatic step to realise value for creditors, not an unwinding of the events that had already taken place.
[39] I am not persuaded that the factors relied on by HHL establish that the parties’ intention was that NZHML’s liquidation would be a repudiation of the Lease, with the consequence that it was not able to rely on HHL’s breach to cancel the Lease.
[40] A useful starting point is that the liquidation of a lessee company, with nothing more, could not be considered a repudiation. That is because a company in liquidation can sometimes continue to trade, will require its premises, and earn the income to meet the rental payments. This conclusion does not mean that liquidation is not typically a standard term breach of a lease agreement. However, that breach merely creates a right of cancellation, provided that the statutory requirements of the PLA are met.
[41] Therefore, HHL needs something more than the fact of NZHML’s liquidation to establish a repudiatory breach. I consider each of the three factors relied on by HHL.
[42] First, as I have noted, a clause providing that liquidation of the lessee is a breach entitling cancellation of a lease is a standard term. I am not prepared to conclude, based on a standard term, that it was the intention of the parties that upon liquidation HHL was not ready, willing, and able to perform its obligations. In a liquidation of a trading entity with leased premises, the liquidator assesses the particular circumstances, including, for example, whether to continue trading, seek to sell the business, or disclaim the lease. If it is inferred into the standard term that a
lessee is not ready, willing, and able to perform immediately upon liquidation, that would predetermine the outcome of a situation that has not yet been properly considered.
[43] In my view, it is equally the case in relation to the clause stating the business use of the premises. The ongoing use of the business will depend on the decisions made in the liquidation. Bearing in mind that liquidation in and of itself is not a repudiatory breach, it is not logical that standard terms which are entered into at the time of entry into the lease evidence an intention that a subsequent liquidation would be a repudiatory breach.
[44] The remaining question is then whether HHL can establish that the defendants have no defence to its claim for losses, because the letter from the liquidator dated 15 October 2024 and the Liquidator’s First Report dated 21 October 2024 establish that NZHML was not ready, willing, and able to perform its obligations.
[45] The letter was issued on the date of liquidation and notified HHL of the liquidation. That letter said, “Moving forward, I have considered all the factors and believe that its best that I get the [co-operation] of the landlord.” It then lists best and worst case scenarios as to treatment of plant and equipment, including reference to the landlord purchasing that plant and equipment, and the possibility of the landlord continuing the business or finding a new tenant.
[46]Mr Patel’s affidavit evidence elaborated further:
HHL’s actions in re-entering the Hotel (and refusal to back-down) took away my ability to deal with the major asset in NZHML’s liquidation. Had HHL not been so hasty, I would have looked at a number of options that could have yielded a much better result for HHL (a creditor), other creditors (which included staff at the Hotel) and Mr Chopra and Mr Kim as shareholders. I could have looked to continue the Hotel operation with a view to selling the Hotel business. I knew that before I was appointed, there were interested parties. I could also have looked to engage with Crown agencies and explored the idea of using the Hotel to provide Community Housing. I knew that during the COVID-19 outbreak, the Hotel was used in this way and there was an ongoing need for such housing in South Auckland.
…
I also note that had HHL served a Property Law Act notice where they made it clear that they were intending to exercise a right of re-entry based due to NZHML having gone [into] liquidation, I would have used the time given in such a notice to try and convince HHL to withdraw the notice so as to allow me to get a better commercial outcome for HHL and others affected by NZHML’s liquidation. If HHL would not agree, I would have informed Mr. Chopra of the situation and discussed with him his options – including the option to pay the outstanding rent from his personal resources and apply urgently to the High Court to terminate NZHML’s liquidation. I would likely have supported such an application [if] it resulted in a better overall outcome for creditors of NZHML.
[47] Ms Hu submits that this evidence is fanciful and entirely speculative. Among other things, she refers to the number of other creditors in the liquidation, the various meetings between the directors of NZHML and HHL where options regarding the motel had been discussed, and that prior attempts to sell the property were unsuccessful. She says that NZHML’s cancellation was opportunistic and intended to minimise liability for repudiating the lease, and that Mr Patel could instead have elected to affirm the Lease and have taken steps to take NZHML out of liquidation, as described in his evidence.
[48] I do not accept that the letter amounts to a clear statement that NZHML is not ready, willing, and able to perform its obligations under the Lease. Irrespective of subsequent evidence given by both parties (to which I am entitled to take a robust view), and the likelihood or not of the proposed outcomes, that letter (sent on the date of appointment) was written at a time when there had not been a final determination as to the outcome for NZHML’s business, and the liquidator had a further 48 hours to consider his options before the landlord was entitled to re-entry for non-payment of rent.
[49] The Liquidator’s First Report does not assist further. That sets out the directors’ advice as to the reasons for placing NZHML into liquidation . It does not evidence that the Liquidator was not ready, willing, and able to meet the company’s obligations under the lease. As explained above, that was a matter for the liquidator to address following appointment.
[50] There is nothing particularly unique about the facts of this liquidation. I do not find it material that this might have been a liquidation where the business was wound
up in comparison to a liquidation where the business was able to be sold, or the liquidation was able to be brought to an end. In any event, the landlord’s re-entry prevented any ability to test whether there was an alternative outcome.
[51] Regardless, it would be inconsistent with the intention of the PLA to take a different approach. The PLA expressly provides that any term express or implied in a lease has no effect if it has the purpose or effect of avoiding the need for compliance with ss 243 to 264.15 HHL’s interpretation, if adopted, would have the effect of it avoiding the need for compliance with the PLA. The Law Commission Report said:16
Breaches which are incapable of being remedied
627 Even though the breach may be incapable of being remedied, the lessee must still be given a reasonable period in which to try to remedy it. The purpose of this requirement is to prevent a preemptory cancellation in any circumstances, and to give the lessee an opportunity of considering whether to admit the breach, whether it may in fact be capable of remedy, whether to make an offer of compensation, whether to try to make terms with the lessor and whether to apply for relief.
628 Much time has been devoted by the court in the United Kingdom to the question of whether a breach is or is not capable of being remedied. In this context, fine distinctions have been drawn between positive and negative covenants: for example see, Expert Clothing Service and Sales Limited v Hillgate House Limited [1986] Ch 340. [Sections 246, 247, 253 and 255 of the PLA] make some attempt to limit the situations which there will be a need to enter upon this ground. Some breaches which are incapable of being remedied by the doing or omission of any act may nevertheless be capable of being remedied by payment of compensation; and relief may be granted in respect of them: [s 256].
…
[52] The notice provisions in the PLA provide a statutory framework for balancing the parties’ respective interests: the lessor is entitled to cancel under s 246 of the PLA following the liquidation of the lessee (if that is a breach of the lease agreement) after the expiry of a period that is reasonable in the circumstances. What is reasonable may alter depending on the facts and circumstances of the liquidation, including any information provided by the liquidator. However, that does not mean that the prescribed notice requirements can be avoided. As submitted by Mr Malarao, the imperative language of the PLA is deliberate. Parliament intended to foreclose
15 PLA, s 243(3)(c).
16 Law Commission A New Property law Act (NZLC R29, 1994).
arguments that premature or informal action might nevertheless achieve a lawful cancellation. In my view, it is more than arguable that the PLA notice provisions were intended to avoid precisely the arguments brought in this application.
[53] The argument that the liquidator’s actions were opportunistic does not add further weight. Both parties can criticise the other. NZHML can criticise the early re- entry by HHL. HHL can criticise the liquidator’s actions in cancelling the Lease. However, HHL had no objection to (and in fact requested) the liquidator issuing a notice of disclaimer of the Lease; rather HHL’s concern is that the cancellation of the Lease prevents recovery from the guarantors. However, that may be the inevitable legal consequence of early re-entry. In need, these matters can be considered at trial.
[54] For reasons I have set out, I am persuaded that the defendants have an arguable defence that the Lease was validly cancelled, and so they are not liable for HHL’s losses.
Estoppel
[55] HHL’s second argument was that NZHML and the guarantors are not entitled to say that NZHML cancelled the lease on 16 October 2024, when the liquidator subsequently represented that the lease remained on foot. In support of this submission, Ms Hu relied on the terms of the settlement agreement between the parties dated 22 October 2024 and the liquidator’s subsequent disclaimer of the lease.
[56]The key clauses of the settlement agreement were:
(a)HHL agreed to purchase all the chattels at the Premises for $40,000 plus GST, described as the Settlement Sum.
(b)The liquidator would issue a written disclaimer in respect of the lease under s 269 of the Companies Act 1993.
(c)Clause 3.1 stated that “in consideration of payment of the settlement sum, this Deed constitutes full and final settlement of all present and future claims, demands and causes of action … arising directly and
indirectly out of the Lease, or the Company’s liquidation that the Company and/or the liquidator may have against the landlord …”17
[57] She says that these documents, together, are a clear representation that the Lease remained on foot. The fact that those documents exist means that they have to have some legal effect. Both the settlement agreement and disclaimer assumed that there was property to be disclaimed; if the Lease had been cancelled on 16 October 2024 then the disclaimer would have been redundant. Ms Hu says that the liquidator and guarantors cannot now resile from this.
[58] Mr Malarao, by contrast, says that there is nothing inconsistent with these documents and NZHML’s position that the lease was cancelled on 16 October 2024. That is because:
(a)In relation to the settlement agreement, the fact that there has been a settlement of claims by the liquidator against HHL in that agreement means that there must have been something to settle. The only issue that was raised as between the liquidator and HHL was the claim as to damages arising from HHL’s premature re-entry into the Property. This means that it was clearly contemplated between the parties that the Lease had been validly cancelled by the liquidator. Mr Malarao observed that the settlement was one way; in other words, there was no claim alleged by HHL against the liquidator or NZHML that required settlement.
(b)In relation to the notice to disclaimer, it was carefully drafted. The disclaimer is stated to disclaim NZHML’s “interest as lessee”. Mr Malarao says that if there was no such interest, then nothing was disclaimed. To the extent that the notice stated that the liquidator’s reasons for disclaiming the Lease included that the Lease created liabilities to the landlord, those were described as “if any”. In other words, there may be no such liability.
17 HHL’s emphasis.
(c)Mr Patel gave evidence regarding the disclaimer. He said “… I did not envisage or intend the disclaimer notice to somehow be viewed as an indication that the lease was still in place. I simply issued the disclaimer notice because HHL wanted it as part of the settlement.”
(d)Even if the above was incorrect, HHL’s claim is brought against the defendants as guarantors, not the company. This is not a case where the defendants are resiling from a position that they previously took. The defendants were not involved in the settlement agreement or disclaimer. Accordingly, there is no estoppel argument to be raised against them in these circumstances.
[59] I agree with Mr Malarao’s submissions. The documents do not, for the reasons he submitted, contain representations which would give rise to an estoppel. More importantly, the documents were entered into by the liquidator and so could not constitute conduct or assurances given by the defendants.
[60]I am not prepared to enter summary judgment.
Result
[61]Summary judgment is granted in relation to the first cause of action.
[62]Summary judgment is declined in relation to the second cause of action.
[63] Costs were reserved. Both Mr Malarao and Ms Hu referred to “the usual position” that costs on a plaintiff’s declined summary judgment application would follow the outcome at trial.
[64] If the parties no longer take the position described at the hearing, the first defendant’s memorandum as to costs is to be filed within 5 working days. The plaintiff’s memorandum in response is to be filed within 3 working days thereafter. Memoranda are not to exceed 5 pages excluding schedules.
Associate Judge Gellert
0
4
1