Kinleith Continuation LP v Robert Jones 151 Limited - [2021] NZHC 2206

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-000498

[2021] NZHC 2206

BETWEEN
KINLEITH CONTINUATION LP

Plaintiff

AND

ROBERT JONES 151 LIMITED

Defendant

Hearing: 14 June 2021

Appearances:

B Henry for the Plaintiff

K Francis and S McNae for the Defendant

Judgment:

27 August 2021

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 27 August 2021 at 9.00 a.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Shanahans Law Limited, Auckland Lindsay & Francis, Auckland

KINLEITH CONTINUATION LP v ROBERT JONES 151 LTD [2021] NZHC 2206 [27 August 2021]

Introduction

[1] This case is about whether the parties to a Deed of Assignment of Lease intended to assign the lease; or whether they intended something else.

[2] Robert Jones 151 Ltd (Robert Jones) owns an office building at 151 Queen St, Tāmaki Makaurau. A law firm, Thompson Blackie Biddles (TBB) leased the 29th floor of that building (the premises). TBB decided to move to Commercial Bay. Kinleith Continuation LP (Kinleith), with whom TBB had a professional relationship, agreed to move into the premises TBB was vacating. Kinleith, TBB and Robert Jones signed a Deed of Assignment of Lease for the premises, by which Kinleith assumed TBB’s obligations as lessee to Robert Jones. Then, the relationship between Kinleith and TBB soured. Kinleith sought to terminate the assignment. Robert Jones rejected that termination. Robert Jones then served on Kinleith a statutory demand for two months’ rent it said was due and owing by Kinleith under the Lease and Deed of Assignment of Lease.

[3] Kinleith applies to set aside that statutory demand, as it claims there is a substantial dispute as to whether the sum claimed is due and owing. It claims that the Deed of Assignment does not reflect the common intention of Kinleith and TBB, which was for Kinleith to occupy the premises, with TBB remaining liable to Robert Jones as lessee. It also claims that TBB had a conflict of interest, as the firm was Kinleith’s solicitors. Kinleith says that the Deed should be rectified to reflect what Kinleith and TBB intended. It says that whether Robert Jones shared that intention is irrelevant, as the agreement was between Kinleith and TBB.

[4] To set aside the statutory demand, Kinleith needs to establish that there is arguably a genuine and substantial dispute as to whether the amount claimed in the statutory demand is due and owing. To decide whether Kinleith has done that, I need to consider four issues.

(a)Did Kinleith and TBB share a different intention to that recorded in the Deed of Assignment of Lease?

(b)Is it necessary for Robert Jones to have shared that intention and if so, did it?

(c)Was the arrangement conditional on Kinleith and TBB having an ongoing commercial relationship?

(d)Is a conflict of interest by TBB relevant to the statutory demand and if so, did TBB…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2021] NZHC 2206
Decision Date: 27 August 2021

CaseChat Overview and Summary

In the High Court of New Zealand, Kinleith Continuation LP sought to set aside a statutory demand issued by Robert Jones 151 Limited. The demand was for two months' rent, which Kinleith claimed was not due and owing. Kinleith argued that the Deed of Assignment of Lease, which it signed with Thompson Blackie Biddles (TBB) and Robert Jones, did not reflect the parties' true intention, which was for TBB to sublease the premises to Kinleith while remaining liable to Robert Jones. The court had to determine if there was a substantial dispute over the debt claimed in the statutory demand. Four issues were identified: whether Kinleith and TBB shared an intention different from that recorded in the Deed of Assignment; whether Robert Jones needed to share that intention; if the arrangement was conditional on Kinleith and TBB maintaining their commercial relationship; and whether a conflict of interest by TBB was relevant to the statutory demand. The court found that Kinleith and TBB did not share a different intention from that recorded in the Deed of Assignment. The court also found that it was not necessary for Robert Jones to share the common intention for rectification to be available, as all parties were involved in the agreement. Moreover, the arrangement was not conditional on Kinleith and TBB having an ongoing commercial relationship, and any conflict of interest by TBB was irrelevant to the statutory demand. The court concluded that Kinleith had not established a reasonably arguable case that there was a genuine and substantial dispute about whether the sum claimed in the statutory demand was due and owing. Consequently, the court dismissed Kinleith's application to set aside the statutory demand, extended the time for compliance with the demand, and ordered Kinleith to pay Robert Jones' costs and disbursements.

Orders