Pacific Pearl Accommodation Limited v Zhou - [2021] NZHC 2187

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2230

[2021] NZHC 2187

BETWEEN
PACIFIC PEARL ACCOMMODATION LIMITED

Plaintiff

AND

KENING ZHOU and NAIYUAN SANG

as Trustees of the ZHOU AND SANG FAMILY TRUST

Defendants

Hearing: 14 July 2021

Appearances:

Cathy Murphy for the Plaintiff

Rodney E Harrison QC and D L C Liu for the Defendants

Judgment:

27 August 2021

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 27 August 2021 at 11:00am
pursuant to Rule 11.5 of the High Court Rules

………………………….
Registrar/Deputy Registrar

Solicitors:
Gregory Simon Law, Auckland, for the Plaintiff
Heritage Law (DLC Liu), Auckland, for the Defendants

Copy for:
Cathy Murphy, Barrister, Auckland, for the Plaintiff Rodney E Harrison QC, Auckland, for the Defendants

PACIFIC PEARL ACCOMMODATION LIMITED v KENING ZHOU and NAIYUAN SANG [2021] NZHC 2187 [27 August 2021]

[1] The defendants apply to strike out three of the plaintiff’s five causes of action and for further discovery, but I have to decide the strike-out application only on the first cause of action. The plaintiff withdrew the second and third causes of action. The strike-out application is on both substantive and procedural grounds. The pleading is procedurally defective and should be amended, but it shows triable issues of fact which cannot be decided summarily. I give directions for further discovery.

[2] In the first cause of action Pacific Pearl Accommodation Ltd, as lessee, sues Mr Zhou and Ms Sang, as lessors, for damages under s 228(1)(b) of the Property Law Act 2007 for unreasonably withholding consent, or for not consenting within a reasonable time, under s 226(2) of the Property Law Act to an assignment of its lease. The statement of claim has other causes of action, but they are not relevant to the strike-out application or the discovery application.

[3] The lease is for a boarding house at 9 Bicknell Road, Favona, Auckland. The term is 10 years from 15 May 2013 with two rights of renewal of five years each. Hargian Enterprises Ltd was the original lessor but it assigned the reversion to Mr Zhou and Ms Sang in February 2015. Pacific Pearl is the original lessee.

[4] The lease uses the Auckland District Law Society Deed of Lease (6th edition, 2012) and includes this provision as to assignment:

ASSIGNMENT OR SUBLETTING

33.1The Tenant shall not assign, sublet or otherwise part with the possession of the premises, the carparks (if any) or any part of them without first obtaining the written consent of the Landlord which the Landlord shall not unreasonably withhold or delay if the following conditions are fulfilled:

(a)The Tenant proves to the reasonable satisfaction of the Landlord that the proposed assignee or subtenant is (and in the case of a company that the shareholders of the proposed assignee or subtenant are) respectable, responsible and has the financial resources to meet the Tenant’s commitments under this lease and in the case of the subtenant, the…

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 2187
Decision Date: 27 August 2021

CaseChat Overview and Summary

The defendants, Kening Zhou and Naiyuan Sang, applied to strike out three of the plaintiff, Pacific Pearl Accommodation Limited's, five causes of action and for further discovery. The court had to decide the strike-out application only on the first cause of action, as the plaintiff had withdrawn the second and third causes of action. The strike-out application was on both substantive and procedural grounds. The substantive application failed because the lessors accepted that the questions of liability under s 226 of the Property Law Act 2007 were for trial and could not be decided summarily. The court also held that the procedural application failed because the pleading was not properly particularised, but the defects could be cured by amendment. The court gave directions for further discovery and ordered the plaintiff to file and serve an amended statement of claim by 23 September 2021, giving proper particulars of the lessors' alleged breaches of s 226 of the Property Law Act 2007. The court also ordered the plaintiff to file and serve by 8 October 2021 a further affidavit of documents stating whether certain documents were or had been in its control and whether it knew of relevant documents in the control of third parties. The court reserved leave to apply for further directions and asked counsel to confer on costs.

Orders