Hyde Park Trustee Ltd v Zuo
[2023] NZHC 3116
•3 November 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-1337
[2023] NZHC 3116
BETWEEN HYDE PARK TRUSTEE LTD
Plaintiff
AND
XUELAI ZUO
Defendant
Hearing: On the papers Counsel:
P J K Spring for Plaintiff N King for Defendant
Judgment:
3 November 2023
JUDGMENT OF ASSOCIATE JUDGE BRITTAIN
This judgment was delivered by me on 3 November 2023 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules 2016.
………………………………
Registrar/Deputy Registrar
Solicitors: Keegan Alexander, Auckland
Sinisa Law, Auckland
HYDE PARK TRUSTEE LTD v ZUO [2023] NZHC 3116 [3 November 2023]
Introduction
[1] The plaintiff, Hyde Park Trustee Ltd (Hyde Park), has applied for summary judgment against the defendant, Xuelai Zuo, for specific performance of an agreement for sale and purchase of real estate dated 6 November 2020 (the agreement).
[2] Mr Zuo is the purchaser named in the agreement, and he nominated Hongzhen Tang to complete the purchase and take title. Mr Zuo has applied for leave to issue a third party notice to Ms Tang. Hyde Park opposes a grant of leave. The parties agreed that the issue of joinder be resolved based on memoranda from counsel, which have now been filed.
[3] The agreement became unconditional by 23 February 2023. Settlement was triggered by practical completion of construction of a building on the property. Settlement was due on 13 June 2023.
[4] Ms Tang was appointed Mr Zuo’s nominee by a deed dated 13 June 2023. Neither Mr Zuo nor Ms Tang tendered settlement on the settlement day. Consequently, Hyde Park served a settlement notice on Mr Zuo requiring settlement on or before 21 June 2023. Mr Zuo failed to comply with the settlement notice.
[5] Hyde Park filed this proceeding, including the application for summary judgment, on 22 June 2023.
Legal principles
[6] The criteria for issuing a third party notice are set out in r 4.4(1) of the High Court Rules 2016 (HCR):
4.4 Third parties
(1)A defendant may issue a third party notice if the defendant claims any or all of the following:
(a)that the defendant is entitled to a contribution or an indemnity from a person who is not a party to the proceeding (a third party):
(b)that the defendant is entitled to relief or a remedy relating to, or connected with, the subject matter of the proceeding from a third party
and the relief or remedy is substantially the same as that claimed by the plaintiff against the defendant:
(c)that a question or issue in the proceeding ought to be determined not only between the plaintiff and the defendant but also between—
(i)the plaintiff, the defendant, and the third party; or
(ii)the defendant and the third party; or
(iii)the plaintiff and the third party:
(d)that there is a question or an issue between the defendant and the third party relating to, or connected with, the subject matter of the proceeding that is substantially the same as a question or an issue arising between the plaintiff and the defendant.
[7] Under r 4.4(3), leave of the court is required to issue a third party notice if an application for summary judgment is pending.
[8] The principles applicable to third party notices generally were summarised by Associate Judge Osborne in Walter Peak Corporate Trustee Ltd v Anderson Lloyd:1
(a)The defendant’s claim against the third party must be covered by one of the four grounds set out in r 4.4(1) …
(b)Where leave is sought, the Court must consider firstly whether one of the grounds in r 4.4(1) exists and secondly whether to exercise its discretion to join the third party: ANZ Banking Group (NZ) Ltd v Dairy Containers Ltd CA156/92, 17 December 1992.
(c)In exercising its discretion, the Court must have regard to all relevant circumstances, including delay to the plaintiff (r 4.8).
(d)The interest of justice between all parties, however, is paramount. While any delay to the plaintiff is regrettable, the attainment of justice by the most efficient means is an overriding consideration: KPMG Peat Marwick v Cory-Wright & Salmon Ltd (in rec and liq) CA77/94, 20 May 1994.
(e)Where the defendant has not been guilty of unreasonable delay, a factor in favour of exercising the discretion will be whether the defendant could have joined the third party as of right if it had applied within the time limit: ANZ Banking Group (NZ) Ltd v Dairy Containers Ltd CA156/92, 17 December 1992.
(f)Equally, unexplained or unacceptable delay by the defendant may result in leave being refused: Meroiti v National Australia Finance Ltd CA128/90, 6 December 1990.
1 Walter Peak Corporate Trustee Ltd v Anderson Lloyd HC Dunedin CIV-2009-412-389, 9 December 2011 at [8].
(g)In cases of serious delay that risk prejudicing the plaintiff, the Court may be prepared to make an order for joinder on conditions designed to preserve the hearing date for the plaintiff’s claim against the defendant: Total Air Supply Company Ltd v Total Air Supply Company (2007) Ltd HC Auckland CIV-2008-404-7627, 10 January 2011.
(h)Avoiding duplicity of proceedings and preventing the same question being tried with different results militate in favour of allowing the application. The overriding purpose of the third party rules is to enable all the issues to be dealt with in one action: Turpin v Direct Transport Ltd [1975] 2 NZLR 172.
(i)There is, however, a need to strike a balance between all the parties’ interests. The extent to which the plaintiff is necessarily involved in the issues between the defendant and the third party is a consideration. Equally, it can be oppressive and unjust to involve a third party in a proceeding where much of the proceeding will not involve that third party.
(j)The Court may have regard to the relevant strengths and weaknesses of the parties’ cases, including the case against the proposed third party and the likelihood of recovery: Dairy Containers Ltd v NZI Bank Ltd [1993] 1 NZLR 160 at 167.
[9] These principles are applied cautiously in the summary judgment context. Leave will not lightly be granted when an application for summary judgment is pending.2 Exceptional circumstances are required.3
[10] If the plaintiff has a clear case to obtain summary judgment, the defendant should not be permitted to join a third party simply to obtain indemnity with a view to putting off the day that the defendant must meet their obligations to the plaintiff.4
[11] However, a grant of leave may be justified where a third party claim puts in issue the primary liability of the defendant that is the subject of the application for summary judgment.5 Ultimately, the court must balance the interests of the parties.
2 See Bank of New Zealand v Hunt (1990) 3 PRNZ 656 (HC) at 658.
3 Gough Finance Ltd v C & J Harvesting Ltd HC Rotorua CIV-2006-463-914, 6 September 2007 at [44].
4 Druids Friendly Society v Westpac Merchant Finance Ltd (1996) 9 PRNZ 644 (HC) at 647.
5 See Marac Finance Services Ltd v Hill HC Auckland CP467/87, 13 August 1987 at 3; and
Thomson v Woolford [1987] 1 NZLR 604 (HC) at 608.
Discussion
[12] Mr Zuo raises three grounds in opposition to Hyde Park’s application for summary judgment:
(a)The settlement statement and settlement notice incorrectly called for payment of the purchase price on a GST inclusive basis. The amount required to settle the agreement should have been calculated on a zero- rated basis, because Ms Tang as nominee was registered for GST.
(b)Hyde Park altered the floor plan of the building during construction by changing the location of the balcony, giving rise to a pre-contractual misrepresentation.
(c)Hyde Park refused to communicate directly with the nominee. This ground is related to the first ground.
[13] Mr Zuo’s grounds for issuing a third party notice to Ms Tang can be reduced to two essential propositions:
(a)Mr Zuo is entitled to an indemnity from Ms Tang pursuant to the deed of nomination.
(b)Liability under the agreement ought to be determined between Hyde Park, Mr Zuo and Ms Tang in one proceeding.
[14] There can be no dispute that the criteria in r 4.4(1) are met. The issue is whether the Court should exercise its discretion and permit a third party notice.
[15] I accept Hyde Park’s submission that the addition of Ms Tang as a third party will make the proceedings more complicated and cause delay. The issue is whether Ms Tang’s absence from the proceeding as a party will cause prejudice to Mr Zuo which outweighs the prejudice to Hyde Park if Ms Tang is joined.
[16] Mr King, counsel for Mr Zuo, submits that leave should be granted because otherwise there may be multiple separate proceedings, and Hyde Park may be joined to a claim by Mr Zuo against Ms Tang.
[17] Mr King submits that Mr Zuo’s defences are arguable, and necessarily involve Ms Tang. Mr Zuo says that there are relevant communications between Hyde Park and the nominee which Mr Zuo is not privy to.
[18] He further contends that ss 12 and 17 of the Contract and Commercial Law Act 2017 apply, and that Ms Tang is a beneficiary entitled to enforce the contract against Hyde Park, relying on Laidlaw v Parsonage.6
[19] Laidlaw confirms that a purchaser’s nominee can enforce the vendor’s promises in an agreement for sale and purchase of real estate. The case is not authority for the proposition that prior to settlement a vendor is obliged to deal with a purchaser’s nominee.
[20] Clause 16.7 of the agreement provides that where the purchaser executes the agreement with provision for a nominee, the purchaser shall at all times remain liable for all obligations on the part of the purchaser.
[21] The correspondence between the parties’ solicitors leading up to the settlement date unequivocally establishes that Hyde Park maintained its contractual rights against Mr Zuo. Hyde Park was under no obligation to deal with Mr Zuo’s nominee, and chose not to. This was clearly communicated to Mr Zuo’s solicitor. Hyde Park says that it was entitled to call for settlement on a GST inclusive basis because Mr Zuo did not provide the particulars required by sch 2 of the agreement to trigger a zero-rated transaction.
[22] It is difficult to envisage how this conduct by Hyde Park, which was consistent with its contractual rights, might give rise to an arguable defence for Mr Zuo. It is equally difficult to envisage how Ms Tang’s absence as a party can prejudice Mr Zuo on these issues.
6 Laidlaw v Parsonage [2009] NZCA 291, [2010] 1 NZLR 286.
[23] In response to the balcony alteration issue, Hyde Park says that the alteration was permitted by an express term of the agreement. Whether an arguable defence exists in respect of this issue can be determined without Ms Tang’s participation in the proceeding as a party.
[24] If Mr Zuo considers that Ms Tang has relevant evidence to give to support the defences, then he may procure an affidavit from Ms Tang. If Ms Tang will not cooperate as a deponent, then Mr Zuo can apply under rr 7.29 and 9.75 of the HCR for an order that Ms Tang be examined on oath before the Court.
[25] It is premature for the Court to issue a third party notice in this case. Hyde Park should first be given the opportunity of discharging the onus on it to establish that the defences raised by Mr Zuo are not arguable, and that Hyde Park is entitled to summary judgment.
[26] My preliminary view is that costs should be reserved until determination of the application for summary judgment.
Result
[27]The application for leave to issue a third party notice is dismissed.
[28] Leave is reserved to Mr Zuo to bring a further application for leave to issue a third party notice if the plaintiff’s application for summary judgment is unsuccessful.
[29] The application for summary judgment is adjourned to the summary judgment list on 14 November 2023 at 9:00 am for further directions, including in respect of any application for costs.
Associate Judge Brittain
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