IBuy Property Limited v He
[2023] NZHC 2847
•11 October 2023
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2023-409-181
[2023] NZHC 2847
BETWEEN IBUY PROPERTY LIMITED
Plaintiff
AND
XIAOMING HE
First Defendant
CHUNYUE YE
Second Defendant
SAYED MOHSEN MOSADI
Third Defendant
GT CAR DETAILING LIMITED
Fourth Defendant
Hearing: 14 September 2023 Appearances:
A N Riches for Plaintiff
S D McIntyre and P-Y Liu for Second Defendant
Judgment:
11 October 2023
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 11 October 2023 at 11.45 am pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:
IBUY PROPERTY LIMITED v HE [2023] NZHC 2847
[1] IBuy Property Ltd (IBuy) brings this proceeding for summary judgment to obtain possession of a property at 377 Selwyn Street, Christchurch that it acquired at auction by the Sheriff pursuant to a sale order.1
[2] The former owner of the property, Xiaoming He (Mr Xiaoming), and the third and fourth defendants are occupying the property but it is only the second defendant, Chunyue Ye (Ms Chunyue), who opposes summary judgment.
[3] Ms Chunyue says she loaned Mr Xiaoming a large sum of money and, as security for repayment of the loan, he granted her an (unregistered) lease of the property that she now sublets to Mr Xiaoming and the third and fourth defendants. Ms Chunyue says IBuy is not entitled to an order for possession of the property as it acquired it subject to existing tenancies, and it would be fraudulent or unconscionable if it did not recognise her lease.
[4] IBuy says Ms Chunyue does not have a valid lease and that it is simply a device to keep Mr Xiaoming in possession of the property. In any event, it says it acquired the property free of any interest Ms Chunyue may have under the lease.
[5]The issues that arise are:
(a)Is the lease a sham?
(b)Has IBuy acquired its title through fraud within the meaning of ss 6 and 52 of the Land Transfer Act 2017?
(c)Is the lease enforceable against IBuy in the court’s in personam jurisdiction?
1 High Court Rules 2016, pt 17 sub-pt 6.
What happened
[6] Mr Xiaoming and Ms Chunyue were formerly married, and it appears they are on good terms.
[7] For many years Mr Xiaoming was the sole registered owner of 377 Selwyn Street. He still lives at the property and runs a dairy business from it.
[8] The third and fourth defendants presently run a carwash business from the rear of the property.
[9] Following the Canterbury earthquakes, Mr Xiaoming pursued litigation against the Earthquake Commission and insurers in the High Court, the Court of Appeal and Supreme Court in respect to damage he claimed had been suffered by the property.2 He was largely unsuccessful. The litigation was brought to an end when he was refused leave to appeal by the Supreme Court. Large costs awards were made against him in those proceedings, which he did not pay.3
[10] Ms Chunyue says she loaned Mr Xiaoming about $300,000 to pay for his earthquake claim (but not the costs awards) and that on 20 February 2020 he granted her a lease of the property. She says the lease was security for the loan and ensured that Mr Xiaoming was able to repay her from the business he ran from the property.
[11] The lease is a two-page handwritten document. I set it out in full as an appendix to this judgment.
[12] On 19 July 2022, the High Court issued a sale order directing the Sheriff to sell the property pursuant to pt 17 sub-pt 6 of the High Court Rules 2016. This was to recover amounts owed by Mr Xiaoming to the parties against whom he had pursued his litigation. The amounts he owed were $550,494 for costs, $122,219 for interest, and subsequent costs of $2,695 in respect of the sale order.
2 He v Earthquake Commission [2017] NZHC 2136; He v Earthquake Commission [2019] NZCA 373; and He v Earthquake Commission [2019] NZSC 149.
3 He v Earthquake Commission [2018] NZHC 67 at [74]–[75]; He v Earthquake Commission [2017] NZHC 839 at [8]; He v Earthquake Commission (CA), above n 2, at [57]–[58]; and He v Earthquake Commission (SC), above n 2, at [9].
[13] The Sheriff approved the sale of the property by auction, and the particulars and conditions of sale included, as cl 14, the following: “THE property is sold subject to the existing tenancies and occupation and to all easements (if any) affecting the same”.
[14] The property was marketed for sale by Christian Harcourt of Grenadier Real Estate Ltd. Mr Xiaoming did not cooperate with Mr Harcourt. Mr Harcourt was not given access to the property. He has produced text messages where Mr Xiaoming told him there was a lease of the property but refused to provide that lease to Mr Harcourt despite several requests. Mr Xiaoming’s texts were obtuse, stating that Mr Harcourt should put the lease on the website, while at the same time refusing to provide a copy of it, and suggesting that if the lease was made available to buyers no one would buy the property.
[15] The property was auctioned on 21 December 2022. It was announced at the auction that the property was to be at the sole risk of the purchaser and was sold subject to any existing tenancies, occupations and easements affecting the same. The highest bid was made by IBuy. After the close of bids there was a period of negotiation before the property was sold to IBuy for $512,000.
[16] IBuy settled the purchase of the property on 10 February 2023 and obtained title. Mr Xiaoming has remained in occupation of the property.
[17] Jeffrey Hale, a director of IBuy, visited the property on or around 2 March 2023 to inform Mr Xiaoming that he was required to vacate. Mr Xiaoming refused to do so and claimed he had an agreement to lease the property to his daughter. Mr Xiaoming refused to provide a copy of the lease. On the same visit, Mr Hale spoke to the operators of the carwash business and was told they had a verbal arrangement with Mr Xiaoming to occupy the property.
[18] IBuy commenced this proceeding against Mr Xiaoming on 28 April 2023 for possession of the property. Mr Xiaoming was served on 5 May 2023. From 9 May 2023 Mr Xiaoming corresponded with IBuy’s solicitor, Mr Riches of Saunders & Co, initially by email and then by text message.
[19] In an email of 9 May 2023, Mr Xiaoming said that “Miss Ye” was the existing lessor of the property, had held a lease for many years, and her solicitor would contact Mr Riches regarding the lease and the duties of the new owner. He also asserted the sale of the property was subject to existing leases and “It looks your client, [IBuy], had missed to check the existing lease before buying”. Mr Riches requested a copy of the lease, but Mr Xiaoming did not provide it. Mr Xiaoming then sent a number of text messages to Mr Riches similar in tone to those he had sent earlier to Mr Harcourt. In them, Mr Xiaoming maintained his refusal to provide the lease.
[20] On 6 June 2023, Mr Xiaoming’s solicitors, Duncan Cotterill (who are now acting for Ms Chunyue), wrote to IBuy’s solicitors in response to IBuy’s summary judgment application. They identified as a “fundamental problem” with the application that there was an existing lease in place in favour of Ms Chunyue. The lease agreement was provided for the first time. They said:
Practically, our client is irrelevant in the process of your client obtaining possession of the Property. He occupies the Property as required by the lessee, who has asked him to reside there and work in the business that operates from the Property. Even if your claim is successful against [Mr Xiaoming], which seems unlikely in light of clause 14, that still does not remove the Lease, which remains on foot in accordance with clause 14 of the Conditions of Sale.
[21] Saunders & Co responded to Duncan Cotterill on 13 June 2023 questioning the validity of the lease. They asked for some documents that might assist to assess its validity and asserted on behalf of IBuy that the lease, if genuine, would not be binding upon IBuy. The documents requested were not provided.
[22] Mr Xiaoming did not oppose the summary judgment application and it came before the court on 22 June 2023. Mr McIntyre appeared at the hearing on behalf of Mr Xiaoming, but only to oppose costs. Having been made aware that it was alleged there was a lease of the property, I adjourned the summary judgment application for IBuy’s counsel to provide further submissions, anticipating that I would then issue a decision on the application.
[23] Before a decision was issued, Ms Chunyue applied to be joined as a defendant in the proceeding. I made an order under r 4.56(1)(b) of the High Court Rules joining
her as a second defendant and setting down a telephone conference to amend timetable directions to advance IBuy’s application for summary judgment to a hearing.4
[24] Subsequently, the third and fourth defendants were joined as parties also.5 They were served but have taken no steps. However, in Ms Chunyue’s third and latest affidavit she states that on 1 June 2023 she entered into a sublease with the third and fourth defendants for a three-year term with automatic renewals for two additional periods of three years each. She says that she was not aware of IBuy’s attempts to obtain possession of the property at the time she granted the sublease.
Summary judgment principles
[25] IBuy’s application for summary judgment is made under r 12.2(1) of the High Court Rules which reads as follows:
12.2 Judgment when there is no defence or when no cause of action can succeed
(1) 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.
…
[26] The principles that apply to a plaintiff’s summary judgment applications are well known and summarised by Associate Judge Osborne in Mount Grey Downs Ltd v Pinot Properties Ltd as follows:6
(a)Commonsense, flexibility and a sense of justice are required.
(b)The onus is on the plaintiff seeking summary judgment to show that there is no arguable defence. The Court must be left without any real doubt or uncertainty on the matter.
(c)The Court will not hesitate to decide questions of law where appropriate.
(d)The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements in affidavits.
4 IBuy Property Ltd v He [2023] NZHC 1757.
5 IBuy Property Ltd v He HC Christchurch CIV-2023-409-181, 10 August 2023.
6 Mount Grey Downs Ltd v Pinot Properties Ltd [2018] NZHC 3094 at [12] (footnotes omitted).
(e)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. It is not required to accept uncritically every statement put before it, however equivocal, imprecise, inconsistent with undisputed contemporary documents or other statements, or inherently improbable.
(f)In assessing a defence the Court will look for appropriate particulars and a reasonable level of detailed substantiation – the defendant is under an obligation to lay a proper foundation for the defence in the affidavits filed in support of the Notice of Opposition.
(g)In weighing these matters, the Court will take a robust approach and enter judgment even where there may be differences on certain factual matters if the lack of a tenable defence is plain on the material before the Court.
(h)The need for judicial caution in summary judgment applications has to be balanced with the appropriateness of a robust and realistic judicial attitude when that is called for by the particular facts of the case. Where a last-minute, unsubstantiated defence is raised and an adjournment would be required, a robust approach may be required for the protection of the integrity of the summary judgment process.
(i)Once 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.
Is the lease a sham?
The law
[27] A document executed by parties to give the appearance of creating between them legal rights and obligations different from the actual legal rights and obligations which they intended to create, or not intending to create any legal rights or obligations at all, is a sham.7 The onus to prove a document is a sham will be upon the party asserting the existence of the sham.8
[28] The test of intention is subjective in that the parties must have intended to create different rights and obligations from those appearing from the relevant
7 Snook v London and West Riding Investments Ltd [1967] 2 QB 786 (CA) at 802; and Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2008] NZSC 115, [2009] 2 NZLR 289 at [33].
8 Official Assignee v Wilson [2007] NZCA 122, [2008] NZLR 45 at [111].
document, and in addition they must have intended to give a false impression of those rights and obligations to third parties.9
[29] A sham document will not, as between the parties to it, achieve the object for which the sham is intended.10
[30] The court will be slow to find that what appears to be a proper agreement between parties is a sham. In National Westminster Bank plc v Jones Neuberger J said:11
46. … one should not lose sight of the fact that there is obviously a strong presumption, even in the case of an artificial transaction, that the parties to what appear to be perfectly proper agreements on their face, intend them to be effective, and that they intend to honour and enjoy their respective obligations and rights. That that is so is supported by the fact that an allegation of sham carries with it a degree of dishonesty, and the court should be slow (but not naively or unrealistically slow) to find dishonesty.
…
59. … A sham provision or agreement is simply a provision or agreement which the parties do not really intend to be effective, but have merely entered into for the purpose of leading the court or a third party to believe that it is to be effective. Because a finding of sham carries with it a finding of dishonesty, because innocent third parties may often rely upon the genuineness of a provision or an agreement, and because the court places great weight on the existence and provisions of a formally signed document, there is a strong and natural presumption against holding a provision or a document a sham. …
…
68. … Both principle and the authorities indicate that the court is slow to find that an agreement is a sham, and that, before the court can reach such a conclusion, it must be satisfied that the purported agreement is no more than a piece of paper which the parties have signed with no intention of it having any effect, save that of deceiving a third party and/or the court into believing that the purported agreement is genuine. …
[31] An enquiry into whether a document is a sham requires careful analysis of the facts. The court may examine the content of the document and also external evidence such as the parties’ explanations and conduct of those parties, including conduct
9 Hitch v Stone [2001] EWCA Civ 63, [2001] STC 214 at [66].
10 Gerard McMeel, McMeel on the Construction of Contracts (3rd ed, Oxford University Press, Oxford, 2017) at [27.43].
11 National Westminster Bank plc v Jones [2001] 1 BCLC 98 (Ch) at [59] and [46].
subsequent to the execution of the document.12 Neither the fact a document is uncommercial nor that the parties subsequently depart from its terms necessarily mean they never intended the agreement to be effective and binding.13
[32] I am particularly mindful that in a summary judgment context it will be rare for the court to make a finding that a written agreement relied upon by a party is in fact a sham. This is because such a finding requires a careful analysis of the facts (which is usually best undertaken at a full trial), may require the court to resolve a disputed question of fact concerning the intentions of the parties and, as noted by Neuberger J in National Westminster Bank plc v Jones, the “finding of sham carries with it a finding of dishonesty”.14
[33] Despite those considerations, there will be cases where the evidence will be sufficient so that a finding a document is a sham can be confidently made. As has been noted many times, the court is not bound:15
… to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be.
[34] This is a case where the evidence satisfies me that a finding that the lease is a sham can safely be made. The starting point is Ms Chunyue’s evidence.
Ms Chunyue’s evidence
[35] Ms Chunyue says she and Mr Xiaoming were married but divorced in 1999. They have one child. Following separation, Mr Xiaoming became the owner of the property and lives and operates the dairy business from it. Ms Chunyue says she visits the property at least once a week.
[36] Ms Chunyue says she leases the property from Mr Xiaoming under the lease of 20 February 2020 which she signed at 8 pm on 20 February 2020 at her home.
12 McMeel, above n 10, at [27.41]; and Official Assignee v Wilson, above n 8, at [110].
13 Hitch v Stone, above n 9, at [67]–[68].
14 National Westminster Bank plc v Jones, above n 11, at [59].
15 Attorney-General v Rakiura Holdings Ltd (1986) 1 PRNZ 12 (HC) at 14, citing Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341.
Mr Xiaoming also signed it at that time, and Ms Chunyue later asked Chunshui Hu (who has sworn an affidavit) to sign it as an independent person.
[37] Mr Xiaoming owes her about $300,000 which he borrowed to pay for his earthquake claims. The lease was entered into effectively as security for the loan as Mr Xiaoming pays her from the profits of the dairy business. She provides money to help run the business, such as to buy stock.
[38] Under cl 8 of the lease she does not have to pay rent until maintenance on the property has been carried out. The lease allows for subleasing and she subleases the property to Mr Xiaoming, but the arrangement is not recorded in writing. About 17 square metres of the property has been subleased to the third and fourth defendants since about the end of 2021, but no sublease was documented at the time. On 1 June 2023, a written sublease was entered into with the third and fourth defendants. When she entered into that sublease she was not aware IBuy was seeking possession of the property.
[39] Ms Chunyue says that both EQC and the real estate agent (presumably Mr Harcourt) were aware there was a lease and there are businesses visible from the street. She also says she has “regularly exercised [her] rights as lessee and [intends] to continue exercising those rights”.
The absence of documents
[40] Ms Chunyue’s evidence is notable for its brevity and lack of detail. There is also a startling absence of documents to support it.
[41] Whereas Ms Chunyue says the lease was security for the loan, the lease says it was entered into to replace an earlier lease dated 20 August 2012. Ms Chunyue makes no mention of her having a prior lease, and does not produce the earlier lease.
[42] There are no documents that evidence a loan by Ms Chunyue to Mr Xiaoming. The existence of a loan (or even a debt) is not referred to in the lease.
[43] Ms Chunyue does not mention any terms upon which the loan was made. In circumstances where Ms Chunyue says the loan was for a large sum of “about
$300,000” one would expect there to be a loan agreement, or at least something in writing (even if just texts or emails), confirming the existence of a loan and referring to such basic matters as whether interest was to be paid, the term of the loan, and if security was to be provided.
[44] The absence of such documents is particularly surprising when Mr Xiaoming and Ms Chunyue apparently considered it was necessary to create and sign a lease agreement, and have their signatures formally witnessed by a third party. If the lease was security for a loan, one would expect them first to document the loan before the security provided for its repayment.
[45] Even if one were prepared to accept that the absence of a loan agreement might be explained on the basis that this was an arrangement between friends, Ms Chunyue could be expected to produce some evidence of the advances being made to Mr Xiaoming, such as bank statements or an acknowledgment of receipt of payment. There is no such evidence.
[46] Ms Chunyue does not state what is presently owed to her and does not produce evidence that Mr Xiaoming has made any repayments of the loan. It can be expected that repayments would have been made, as Ms Chunyue says that Mr Xiaoming pays her “from the profits”. There is, in fact, nothing to evidence that Mr Xiaoming has paid her anything, from the profits of his business or otherwise, in repayment of a loan.
[47] There are also no documents evidencing the existence of a sublease between Ms Chunyue and Mr Xiaoming. That is particularly surprising. If the purpose of the lease was to ensure Mr Xiaoming could pay her from the profits of the business, then presumably Mr Xiaoming and Ms Chunyue entered into the sublease at the same time as they made the written lease.
[48] There is no evidence of the terms of the sublease or that Mr Xiaoming has paid Ms Chunyue rent in respect of his occupation under the sublease.
[49] There is nothing to evidence that Ms Chunyue has paid for stock for Mr Xiaoming’s business, although she claims to have done so.
[50] Similarly, while Ms Chunyue says she subleases part of the property to the third and fourth defendants, there is no evidence they have made rent payments to her.
[51] Ms Chunyue has belatedly produced a copy of a sublease between her and the third and fourth defendants entered a month after this proceeding was commenced. Her evidence that she did not know that IBuy was seeking possession of the property when she entered into the sublease is implausible. It requires the Court to accept that neither Mr Xiaoming nor the third defendant advised her that the property had been sold despite subleasing the premises from her, her visiting the property at least once a week, and Mr Xiaoming being the witness to the sublease.
The terms of the lease
[52] Obviously, the circumstances under which the lease is said to have been given are immediately suspicious. It was entered into shortly after Mr Xiaoming exhausted his rights of appeal in his litigation and when his obligation to pay the costs to the successful parties was beyond challenge. Counsel recognised that the terms of the lease were bizarre. I agree with that description. While headed “Commercial Lease Agreement”, the lease is not on anything that resembles commercial terms. Clauses to the effect that the lease cannot be terminated by the landlord for any reason, and that any dispute between the landlord and the tenant will be determined by the view of the tenant are commercially absurd.
[53] Ms Chunyue’s evidence that the lease is security for a loan is artificial and implausible when considered against the terms of the lease. If the lease was security for a loan then it would be expected it would continue only while the loan was outstanding, but the lease has no such provision and is for a term of up to 25 years and cannot be terminated by the landlord under any circumstances.
[54] Further, the terms that Ms Chunyue will pay Mr Xiaoming rental and that Mr Xiaoming will pay penalties if he does not complete major repairs, as well as pay
Ms Chunyue’s costs for moving, storage and accommodation while repairs were carried out, make no sense in the context of the arrangement Ms Chunyue describes.
No evidence from other defendants
[55] Given IBuy’s direct challenge to the validity of the lease, it is surprising there is no evidence from either Mr Xiaoming or the third and fourth defendants to confirm Ms Chunyue’s evidence and respond to IBuy’s case that the lease is not valid. Ms Chunyue is clearly on good terms with Mr Xiaoming, and his evidence is so fundamental to Ms Chunyue’s defence I can see no reason why it has not been given.
No other evidence of a lease
[56] While Ms Chunyue says that she regularly exercised her rights under the lease, there is in fact nothing (other than her bare assertion) to suggest she ever did so prior to the sale of the property to IBuy.
My conclusion on the sham issue
[57] While it is IBuy that has the burden of establishing that Ms Chunyue does not have a defence, I am satisfied it has done so in circumstances where she has failed to provide a reasonable foundation or substantiation for her defence that she is the holder of a valid lease.
[58] I am satisfied the lease was a sham and a device to ensure that Mr Xiaoming retained possession of the property as against his creditors. I am satisfied Mr Xiaoming and Ms Chunyue had no intention of creating a valid lease, and they have not acted in a manner consistent with there being a valid lease.
[59] It follows the lease does not provide Ms Chunyue with a defence to IBuy’s claim, and IBuy is entitled to summary judgment for an order for possession of the property as against Ms Chunyue and the other defendants.
[60] For completeness, I will also consider the other defences raised by Ms Chunyue, which I also reject.
Did IBuy acquire its title through fraud?
The statutory context
[61] Under r 17.79(3) of the High Court Rules, an instrument of transfer of the right, title or interest of the liable party in any land sold pursuant to a sale order is “equally effective for all purposes as if it had been executed by the liable party”.
[62] Section 51 of the Land Transfer Act protects the title of the registered owner of land against certain adverse claims. However, it also provides for exceptions and limitations to a registered owner’s “indefeasible title” and reads as follows:
51Title by registration
(1)On registration under this Act of a person as the owner of an estate or interest in land, the person obtains a title to the estate or interest that cannot be set aside.
(2)The title of the registered owner is free from estates and interests in the land that—
(a) are not registered or noted on the register; or
(b) are not capable of being registered or noted on the register.
(3)Despite subsections (1) and (2), the title of the person registered as owner of the estate or interest is subject to—
(a) the exceptions and limitations in sections 52 to 56, subparts 1 and 3 of Part 4, and section 204; and
(b) any enactment other than this Act that overrides or limits the title.
(4)Subsections (1) and (2) apply whether or not the registered owner acquired the estate or interest—
(a) for valuable consideration; or
(b) from a fictitious person.
(5)Nothing in this section affects the in personam jurisdiction of the court.
[63] For present purposes, the relevant exception to the general principle in s 51(1) is contained in s 52(1)(a) as follows:
52Exceptions and limitations
(1)The title of the registered owner to an estate or interest in land is subject to the following exceptions and limitations:
(a)in a case where the title of the estate or interest of the registered owner is acquired through fraud on the part of the registered owner or the registered owner’s agent:
[64] The term “fraud” as used in s 52(1)(a) is defined in s 6 of the Act which provides:
6 Meaning of fraud
(1)For the purpose of this Act, other than subpart 3 of Part 2, fraud means forgery or other dishonest conduct by the registered owner or the registered owner’s agent in acquiring a registered estate or interest in land.
(2)For the purposes of subsection (1), the fraud must be against—
(a) the registered owner of an estate or interest in land; or
(b) the owner of an unregistered interest, if the registered owner or registered owner’s agent,—
(i)in acquiring the estate or interest had actual knowledge of, or was wilfully blind to, the existence of the unregistered interest; and
(ii)intended at the time of registration of the estate or interest that the registration would defeat the unregistered interest.
…
(4) The equitable doctrine of constructive notice does not apply for the purposes of deciding whether conduct is fraudulent.
Ms Chunyue’s allegation of fraud
[65] Ms Chunyue’s allegation that IBuy is guilty of fraud was approached from two perspectives. First, that IBuy had knowledge of the lease at the time it acquired the property. Second, that IBuy was fraudulent in seeking to repudiate cl 14 of the conditions of sale or, as Mr McIntyre put it, to disregard the contractual promise to take the property subject to existing tenancies.
[66] However, in his oral submissions Mr McIntyre conceded that Ms Chunyue’s case is firmly founded upon cl 14, without which the allegation of fraud could not be made out on the facts of this case.
Knowledge
[67] Mr McIntrye correctly submits that IBuy did not need actual knowledge or complete information regarding the existence of the lease to be guilty of fraud. He refers to Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd where Salmond J said:16
The true test of fraud is not whether the purchaser actually knew for a certainty of the existence of the adverse right, but whether he knew enough to make it his duty as an honest man to hold his hand, and either to make further inquiries before purchasing, or to abstain from the purchase, or to purchase subject to the claimant’s rights rather than in defiance of them. If, knowing as much as this, he proceeds without further inquiry or delay to purchase an unencumbered title with intent to disregard the claimant’s rights, if they exist, he is guilty of that wilful blindness or voluntary ignorance which, according to the authorities, is equivalent to actual knowledge, and therefore amounts to fraud.
[68] IBuy’s knowledge of the lease can, he submits, be inferred from several matters. These are that Mr Xiaoming told Mr Harcourt there was a lease, which is referred to in Mr Harcourt’s marketing reports. Mr Harcourt was also contacted by the “tenant who does the car grooming on site” who gave him “very little information” but wanted to be sure he was not going to lose the building if the property was sold.
[69] Mr McIntyre submits Mr Harcourt was required to pass this information on to IBuy as a potential buyer of the property and can be presumed to have done so.17 In addition, Mr Hale, who is an experienced property investor, says he made enquiries of Mr Harcourt but that he did not have proof that a lease existed.
[70] Mr McIntyre argues that driving by the property, or a review of the real estate agent’s website, would suggest there were two separate businesses operating from the property which is significant, he submits, because IBuy could not safely assume there were no tenancies or other rights of occupation in place.
16 Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd [1923] NZLR 1137 (CA) at 1175.
17 Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012, r 6.4.
[71] Mr McIntyre refers to the transcript of the auction where it was stated the property was sold subject to tenancies and existing occupation.
[72] He also refers to the fact that the property was sold at below market value as suggestive of the existence of a lease.
[73] Mr McIntyre submits that in these circumstances it is arguable IBuy was wilfully blind as to the existence of the lease, and that IBuy should have made further enquiries. However, he did not suggest what other enquires might have been made, and responsibly acknowledged that given Mr Xiaoming’s conduct it is not clear what might have been achieved by them.
Clause 14
[74] Ms Chunyue argues that because of cl 14 IBuy acquired the property subject to existing tenancies and occupations, and that to now deny the existence of the lease is fraud for the purposes of the Land Transfer Act.
[75] Mr McIntyre submits the facts of Merrie v McKay are similar to this case where the registered proprietor refused to honour an unregistered agreement to lease.18 The case concerned a parcel of land at Hunterville, where the plaintiff had agreed with a former registered proprietor to take a lease of part of the land with an option to purchase the part agreed to be leased and an adjoining piece, and a right to be paid for improvements made during the lease. The defendant purchased the land and became the registered proprietor with full knowledge of the agreement and the plaintiff’s expenditure. After the defendant became registered proprietor, he threatened to evict the plaintiff from the land and the plaintiff lodged a caveat which the defendant brought an application to remove. The defendant argued that all that was alleged was that he had knowledge of the existence of the plaintiff’s unregistered interest, which knowledge, by the terms of the then Land Transfer Act 1885, could not of itself be imputed as fraud.
18 Merrie v McKay (1897) 16 NZLR 124.
[76] The Court did not agree and required the plaintiff to grant the defendant a lease on the terms (except one) contained in the agreement. It held that the plaintiff had much more knowledge than just the existence of an unregistered interest. He had knowledge of both the plaintiff’s possession of the land and of the outlay of money under the agreement, and whilst the defendant said he had been told by the previous vendor that the lease agreement was not binding, it was clear that negotiations between the defendant and his vendor showed they did not believe absolutely of the invalidity of the plaintiff’s agreement.
[77]In delivering judgment, Prendergast CJ said:19
… If the defendant acquired the title intending to carry out the agreement with the plaintiff, there was no fraud then; the fraud is in now repudiating the agreement, and in endeavouring to make use of the position he has obtained to deprive the plaintiff of his rights, under the agreement. If the defendant acquired his registered title with a view to depriving the plaintiff of those rights, then the fraud was in acquiring the registered title. Whichever view is accepted, he must be held to hold the land subject to the plaintiff's rights under the agreement, and must perform the contract entered into by the plaintiff's vendor.
[78] Mr McIntyre submits that, given cl 14, IBuy’s choices at the auction were to abstain from buying the property or to purchase it subject to unregistered interests creating tenancies or rights of occupation, including the lease.
[79] He also argues that there was a further course open to IBuy, which was to acquire the property by private treaty, omitting cl 14 from the agreed terms of sale. He submits this was possible under r 17.74 of the High Court Rules, which provides that all sales under a sale order shall be by auction, or by private treaty with the parties’ consent or order of the Court.
IBuy’s submissions
[80] IBuy submits it is not arguable that it was guilty of fraud, even if the lease was valid. Mr Riches argues that s 6 and the authorities relating to land transfer fraud make clear that, in this context, fraud means dishonesty.20
19 At 127–128.
20 Bunt v Hallinan [1985] 1 NZLR 450 (CA) at 458, citing Assets Co Ltd v Mere Roihi [1905] AC 176 (PC) at 210; and Harris v Fitzmaurice [1956] NZLR 975 (SC) at 977–978.
[81] Mr Riches also referred me to several authorities including Salmond J’s judgment in Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd, where Salmond J said:21
One of the main objects of the Land Transfer Act is to facilitate the alienation of land by eliminating the encumbering influence of unregistered interests, and by relieving purchasers from the necessity of inquiring into the existence and validity of adverse equitable claims and interests. Moreover, a proper standard of honesty and good faith regards the interests of the owner no less than those of the adverse claimants. An owner of land is not necessarily bound to abstain from alienating his property because of the existence of some adverse claim which he does not know or believe to be well founded, and because he knows that the effect of such alienation under the Land Transfer Act will be to destroy that claim. Nor is a purchaser necessarily bound to abstain from acquiring the property for the same reason. Good faith requires that due consideration be given to the conflicting interests both of the owner and of the claimant in such a case, and not that exclusive consideration be given to the interests of one of them only. Knowledge, therefore, that an adverse claim exists, that it may possibly be well founded, and that it will be destroyed by an alienation of the property, is not in itself sufficient to stamp the transaction as fraudulent as within the meaning of the Land Transfer Act.
[82] Mr Riches emphasises that s 6(2) of the Land Transfer Act differentiates between fraud against the registered owner of an estate or interest in land and the owner of an unregistered interest. In the latter case, which is what is relevant here, the person against whom fraud is alleged must be shown to have had actual knowledge of, or have been wilfully blind to, the existence of the unregistered interest. He argues there is no evidence IBuy had actual knowledge of the lease or that it was wilfully blind, let alone that there was any dishonesty or wrongdoing on its part of any kind.
[83] Mr Riches then argues, consistently with Mr McIntyre’s submissions, that the high point of Ms Chunyue’s case is that cl 14 referred to the purchaser taking the property subject to tenancies and occupations. However, he submits cl 14 does not apply unless a purchaser has actual knowledge of an unregistered lease and acknowledges that it will acquire the land subject to it.
[84] IBuy relies upon Son v Ko, which concerned an application for possession of a property purchased at mortgagee sale where the defendants claimed the land was
21 Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd, above n 16 at 1174–1175; and see
Bunt v Hallinan, above n 20.
subject to an unregistered long-term lease.22 The sale agreement by the mortgagee contained, as cl 20, “The Property is sold subject to existing tenancies or occupancies (if any) including holding over by the mortgagor”.23 In addition, the information memorandum prepared for the mortgagee sale contained the statement:24
Occupancy Arrangements …
· In recent years the property has been operated as a homestay for a Korean Bible College (New Vision Mission Centre) and therefore is not operating as a typical motel.
· The property is offered for sale subject to any existing leases and/or occupancy arrangements …
[85] The plaintiffs argued that, as a result of their purchase at mortgagee sale, s 105 of the Land Transfer Act 1952 was determinative in their favour insofar as it provided that the estate or interest of the mortgagor would pass to and vest in the purchaser:25
… freed and discharged from all liability on account of the mortgage, or of any estate or interest except an estate or interest created by any instrument which has priority over the mortgage or which by reason of the consent of the mortgagee is binding on him.
[86] The High Court rejected the argument that an unregistered and unknown lease took priority over the purchaser’s interest.
[87] IBuy relies upon Son v Ko particularly because of what the Judge said about the meaning of cl 20, which bears obvious similarities with cl 14 in this case, as follows:26
… It would be commercially unreal to construe the general language of the information memorandum and of cl 20.0 of the agreement for sale as an implicit consent of the mortgagee, with its superior rights, to subordinate the priority it could confer on a purchaser at mortgagee sale to an unspecified third-party claimant to some kind of unregistered tenancy. Any such construction would tend to diminish the value of the interest the mortgagee was seeking to sell: the very last thing it would be likely to intend. Rather the clause is to be construed as having the opposite effect: of strengthening rather than weakening the mortgagee’s position, by adding a contractual belt to the s 105 statutory braces.
22 Son v Ko (2006) 7 NZCPR 649 (HC).
23 At [13].
24 At [12].
25 At [5].
26 At [34].
My analysis
[88] The learned authors of Principles of Land Law in New Zealand note that whether a registered owner has acquired title in circumstances that amount to fraud as against unregistered interests will depend upon the circumstances of the particular case and in respect of which opinions may well differ.27
[89] They note it is not necessarily useful and may be “little short of dangerous” to compare facts with those in decided cases because the issue of fraud “is a pure question of fact, the answer to which must depend upon the peculiar circumstances of the individual case”.28
[90] They also draw several conclusions from the case law and statutory provisions on the concept of fraud within the meaning of the Land Transfer Act 2017 which I adopt. Relevantly, for present purposes these are:29
…
(2)Fraud means dishonesty of some sort. The test of dishonesty is a moral test: there must be something in the nature of moral turpitude. Whether conduct is dishonest does not always depend upon whether it is made legitimate by the law. Dishonest conduct is expressly included as part of the statutory definition of fraud.
(3)Fraud must be brought home to the person whose registered title is impeached or to that person’s agents. That the forgery or dishonest conduct constituting the fraud must be conduct of the registered owner or the registered owner’s agent is expressly provided for as part of the statutory definition of fraud. …
(4)If the designed object of a transfer be to cheat a person of a known existing right, that is fraudulent. This is now expressed in the statutory definition of fraud in relation to fraud against an unregistered interest.
(5)Dishonesty must not be assumed solely by reason of knowledge of an unregistered interest. Actual knowledge or [wilful] blindness combined with an intention to defeat the unregistered interest is now expressly provided for in the statutory definition of fraud.
(6)Wilful blindness or voluntary ignorance may amount to fraud. Wilful blindness combined with an intention to defeat the unregistered
27 Neil Campbell and others Principles of Land Law in New Zealand (3rd ed, LexisNexis, Wellington, 2020) vol 1 at 349.
28 At 349, citing Harris v Fitzmaurice, above n 20, at 978.
29 At 359–360 (footnotes omitted).
interest is now expressly provided for in the statutory definition of fraud.
(7)In the present state of the authorities, the crucial date for determining whether a person has sufficient information about an unregistered interest to render it fraudulent to repudiate that equitable interest is the date of registration of that person’s instrument of acquisition. The statutory definition of fraud provides that the intention to defeat an unregistered interest is at the time of registration.
…
(9)The issue of fraud or not is a question of fact, the answer to which must depend upon the particular circumstances of the individual case.
[91] In my view, Ms Chunyue’s reliance upon cl 14 as the foundation for her allegation that IBuy is guilty of fraud is misplaced. Clause 14 is not a contractual promise to take the property subject to existing tenancies and occupations. While I accept that Son v Ko concerned a mortgagee sale, the comments of Baragwanath J on the nature and effect of what was cl 20 in that case are apposite here.
[92] Clause 14 is a standard condition of sale used by the Registrar of the High Court under the sale order process. The purpose of the clause is to avoid disputes and provide protection from claims that may be made in the event that a property is found to be subject to existing tenancies or occupations. It cannot possibly have been intended to subordinate the rights of a bona fide purchaser of the property to claims of unspecified third parties with any kind of unregistered tenancy, or who just happen to be in occupation of the property. Such an interpretation is, as Baragwanath J said, unreal. It would also diminish the usefulness of conducting sales through the court and the value of such properties at sale.
[93] Mr McIntyre referred me to HSC Holdings Ltd v Tomu, which concerned a mortgagee sale where it was argued that the plaintiff purchaser had notice of a residential tenancy affecting the property because the agreement, signed following the auction, provided that the property was sold subject to existing tenancies (if any) including holding over by the mortgagor.30 Associate Judge Abbott held that the clause
30 HSC Holdings Ltd v Tomu [2012] NZHC 1769 at [25].
did not assist the tenant who was opposing an application for summary judgment for possession other than:31
… to put a purchaser on notice in a very general way that if a tenancy exists it will be bound by that. It does not help a decision as to whether there was sufficient knowledge in this case.
[94] Mr McIntyre submits this decision supports the contention that IBuy was contractually bound to accept Ms Chunyue’s lease, but that overlooks the last sentence of the quote I have set out above. The point Associate Judge Abbott was making was that the clause said nothing about whether the purchaser had sufficient knowledge so as to be bound by the residential tenancy. This was made clear in the following paragraph of the judgment where he referred to the evidence that led him to conclude the plaintiff ought to have made further enquires.
[95] This point is further supported by the judgment of Cooke J in Harris v Fitzmaurice.32 There, the plaintiff purchased a property “subject to the existing tenancies (if any)”. The property contained two buildings, one of which was a shop and the other a house. The plaintiff was aware the operator of the shop, the defendant, had a tenancy and was told twice that the existing tenancy was a weekly tenancy. This proved not to be the case, with the tenancy lasting for five years with an option to renew it for another term of five years “at the same rental”.33 Cooke J held that:34
… it appears to me to be impossible to regard him as fraudulent because he seeks to insist or maintain that he should not be called upon to recognize the existence of a tenancy of a very different nature of which he was unaware before registration.
The plaintiff’s knowledge was insufficient for him to be acting fraudulently in denying the defendant’s interest. The clause in the sale and purchase agreement did not cure insufficiencies in the plaintiff’s knowledge such that, if there was a lease, he would be guilty of fraud not to recognise it.
31 At [25].
32 Harris v Fitzmaurice, above n 20.
33 At 976.
34 At 978.
[96] The evidence satisfies me that IBuy was not in any way dishonest in the manner in which it acquired the property. IBuy did not have actual knowledge of the lease. There was nothing on the title suggesting the existence of a lease. While I accept that IBuy was aware that Mr Xiaoming had asserted there was a lease, he had refused to provide a copy of it despite many requests and had every reason to lie about that.
[97] I do not accept, either, that it is arguable that IBuy was wilfully blind as to the existence of the lease. Mr McIntyre submits that IBuy could have made further enquiries, but on the evidence before me the only enquires that could have been made were of Mr Xiaoming and he had no intention of providing the lease. There can be no suggestion that Mr Xiaoming might have provided the lease if IBuy had asked for it. While Ms Chunyue does say that EQC and the real estate agent “knew that there was a lease”, Mr Harcourt did not know that but only knew Mr Xiaoming asserted there was a lease. Ms Chunyue has produced no evidence that EQC or anyone else knew of a lease either.
[98] Mr McIntyre submits that driving by the property would have revealed the existence of two businesses being run from the property, but I do not see how that advances matters. It was known the owner of the property lived on site and ran a business there.
[99] I do not accept Mr McIntyre’s submission that on what was no more than an assertion there was a lease from a disgruntled owner, unsupported by any other evidence, IBuy, or indeed any other prospective purchaser, should have abstained from acquiring the property at auction. That submission would, if accepted, undermine the purposes of s 51 of the Act.
[100] I also do not accept Mr McIntyre’s submission that IBuy had the option of negotiating the sale by private treaty and thereby excluding cl 14 from the sale contract. That submission assumes that cl 14 has a meaning which I have rejected. But I would also have thought a purchaser who negotiated to purchase the property on that basis so as to defeat a prospective unregistered interest would be in a far weaker position than IBuy presently enjoys.
[101] It also takes the matter no further that the property was sold at auction at below market value. That is only to be expected in a forced sale situation.
[102] Finally, as I have noted above, the definition of fraud under s 6 as it applies to an unregistered interest requires actual knowledge or wilful blindness combined with an intention to defeat the unregistered interest. I do not see how it can be alleged that IBuy intended to defeat Ms Chunyue’s unregistered interest when it had no actual knowledge of the lease and no way to acquire such knowledge.
The in personam claim
[103] The fact that Ms Chunyue does not have an arguable claim that IBuy was guilty of fraud does not prevent her making a claim in personam, if she can establish she has a valid claim against IBuy in law or in equity which involves unconscionable conduct.35
[104] In Regal Castings Ltd v Lightbody, Tipping J explained an in personam claim as follows: 36
An in personam claim against a registered proprietor looks to the state of the registered proprietor’s conscience and denies him the right to rely on the fact he has an indefeasible title if he has so conducted himself that it would be unconscionable for him to rely on the register. Such a claim is concerned with the personal obligations of the registered proprietor rather than with the sanctity of their title. A successful in personam claimed directly affects the registered proprietor’s title …
[105]Tipping J said at [154]:
All that said, it is important to recognise, as the in personam jurisdiction does, that the registered proprietor does not take free of interests (whether registrable or not) which his own conduct binds him to acknowledge. That conduct may give rise to contractual obligations or to obligations which equity requires the registered proprietor to observe. Those obligations create interests in other parties over which s 62 does not give paramountcy. The classic example of such an interest is that of a beneficiary where the registered proprietor holds the land as trustee. A trustee’s indefeasible title does not prevent the enforcement of trust obligations, they being an obvious case when the registered proprietor’s conscience is engaged.
35 Principles of Land Law in New Zealand, above n 27, at 424 and 426.
36 Regal Castings Ltd v Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 at [148].
[106] Tipping J identified that in considering whether to grant an in personam remedy the Court had to consider three factors, namely:
(a)that the claimant had a cause of action entitling it to the assistance of the Court, indefeasibility issues aside — the claimant must show that it has a legal or equitable basis for attacking the registered proprietor’s title which is otherwise available to it;37
(b)it must be unconscionable (contrary to good conscience) for the proprietor to rely on their indefeasible title;38 and
(c)whether depriving the defendant as registered proprietor of the protection of indefeasibility would be contrary to the policy and purposes of the Torrens system.39
[107] As to the first requirement, Ms Chunyue’s argument is that she has a cause of action at law to enforce cl 14 of the conditions of sale under ss 12 and 17 of the Contract and Commercial Law Act 2017 (CCLA). It is necessary to set out the relevant provisions of the CCLA, which are ss 12, 13 and 17.
[108]Section 12 of the CCLA provides as follows:
12Deed or contract for benefit of person who is not party to deed or contract
(1)This section applies to a promise contained in a deed or contract that confers, or purports to confer, a benefit on a person, designated by name, description, or reference to a class, who is not a party to the deed or contract.
(2)The promisor is under an obligation, enforceable by the beneficiary, to perform the promise.
(3)This section applies whether or not the person referred to in subsection
(1) is in existence when the deed or contract is made.
37 At [157].
38 At [158].
39 At [160].
[109]Section 13 provides:
13Section 12 does not apply if no intention to create obligation enforceable by beneficiary
Section 12 does not apply to a promise that, on the proper construction of the deed or contract, is not intended to create, in respect of the benefit, an obligation enforceable by the beneficiary.
[110]Section 17 provides:
17 Enforcement by beneficiary
(1)The obligation imposed on a promisor by section 12 may be enforced by the beneficiary as if the beneficiary were a party to the deed or contract.
(2)Relief in respect of the promise may not be refused on the ground—
(a) that the beneficiary is not a party to the deed or contract in which the promise is contained; or
(b) that, as against the promisor, the beneficiary is a volunteer.
(3)In subsection (2), relief includes damages, specific performance, or an injunction.
[111] Ms Chunyue argues that the term “benefit” is given a wide interpretation under s 11 of the CCLA and includes “any advantage” or “any extension or other improvement of a right or rights to which a person [other than a party to the deed or contract] is or may be entitled”. She submits cl 14 confers a benefit upon her as a person with a leasehold interest in the property (and therefore a tenancy or occupancy) designated by description or by reference to a class. She says she is entitled under s 12(2) of the CCLA to enforce the obligation imposed on IBuy under cl 14 to take the property subject to her lease, and that IBuy’s refusal to honour cl 14 is plainly unconscionable. Finally, she submits requiring IBuy to honour its contractual promise is not inconsistent with the objects of the Torrens system.
[112] IBuy argues cl 14 is not a contractual promise to take the property subject to an unregistered interest about which it did not have knowledge. Further, it says that Ms Chunyue is not a person “designated” by name, description, or reference to a class
for the purposes of s 12. Mr Riches referred to Cross v Aurora Group Ltd where Wylie J has said, in relation to the predecessor of s 12, “Designation is a strong word, a positive word and means something more than a mere contemplation of possibility”.40
[113] Mr Riches also submits that there was no unconscionable conduct on IBuy’s part sufficient to give rise to an in personam claim in circumstances where it had no knowledge of the existence of the lease prior to auction, the proprietor actively refused to provide a copy of the lease to the real estate agent, there was no suggestion that the purchaser ever met, interacted with or had any knowledge of the proprietor or Ms Chunyue prior to the auction, and Ms Chunyue took no steps to protect any interest she might have had by way of a caveat.
My analysis
[114] While somewhat ingenious, Ms Chunyue’s submission there is an arguable case she has an in personam claim cannot succeed for the reason I have already given, namely that cl 14 was not intended to create a contractual promise to take the property subject to existing tenancies. For that reason, it was also not intended, on its proper construction, to create any benefit that was enforceable by Ms Chunyue.
[115] While I do not need to decide the point, I also consider there is considerable force in Mr Riches’ submission that Ms Chunyue was not “designated by name, description or reference to a class” for the purposes of s 12.
Result
[116] IBuy is successful and is entitled to summary judgment as against all defendants.
[117] There shall be an order that the defendants forthwith deliver up possession of the property at 377 Selwyn Street, Christchurch to IBuy.
[118]IBuy is entitled to costs against the defendants.
40 Cross v Aurora Group Ltd (1989) 4 NZCLC 64,909 (HC) at 96–290.
[119] In respect to the quantum of such costs, in the event there is any disagreement I reserve leave to IBuy to make submissions by memorandum within 21 days and the defendants shall have seven days thereafter to reply. Submissions shall be no longer than six pages.
O G Paulsen Associate Judge
Solicitors:
Saunders & Co, Christchurch Duncan Cotterill, Christchurch
Appendix Commercial Lease Agreement
This lease date 20th Feb 2020 And replace the one signed on 20 Aug 2012
1. Term : 5x5x5x5x5 years. The extension of the lease or term is at tenant’s sole descreption [sic] without notice automatically take place without landlord consent. Landlord could not reject the extention [sic] of the lease or term.
2. Rent : $800.00 monthly. The increasing of the rent is not over 2% and at the
tenant’s sole descreption [sic] when review.
3. Maitenence [sic] and outgoing : The landlord pay insurance, rate, maintenance [sic], repair, rebuild, lawn, OPEX etc.
4. Sub lease or sublet : The tenant can sublease or sublet this property without landlord consent or opinion.
5. The property : 377 Selwyn street [sic], Addington, Christchurch 911m2, CB 30F/1057, in part rural section 72.
6. This lease agreement could not be ended by the landlord by any reason, such as fire, natura [sic] disaster, war, repair or rebuild, etc.
7. This lease agreement must continue when major repair or rebuild completed in the same conditions or clauses
8. No rent to pay the landlord before the landlord complete All the duties, such as insurance, relevel the floor, stop all leaking, replace whole carpet and rotten panels rebuild, maitence [sic], re-wiring power cable, etc.
9. Landlord consent the tenant can repair, rebuild, make changes, build new buildings and change the size and shape at tenant’s own cost, for both business and living.
10. When major repair or rebuild, the plan or schedule must be agreed by the tenant in advance. Landlord pay the tenant for moving, instal, removal, storage, accommodation and $500.00 per week for living, cover the period in advance.
11. Any major repair or rebuild must be completed within two years. Landlord pay the tenant $500.00 per week for delaying and the penalty will be double every two years.
12. Any major repair or rebuild must start within two years on the request of the tenant, landlord pay tenant $500.00 per week for delaying to start to rebuild or repair.
13. Landlord pay the lawn once a month. Landlord pay the painting once 5 years.
14. Any dispute to this lease agreement or clauses, take tenants decision to end the dispute.
15. The Penalty for the delaying to major repair or rebuild is $1,000.00 per week for the moment. Double every 2 years.
Mr Xiaoming He Landlord Ms Chunyue Ye Tenant Witness: Tony
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