Tu v Zhang

[2021] NZHC 3053

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2021-425-000099

[2021] NZHC 3053

UNDER

the Property Law Act 2007

IN THE MATTER OF

an application under section 261 for relief against refusal to renew a lease and related claims

BETWEEN

WANLIN TU

Applicant

AND

SONGWEN ZHANG and XIYUAN WU

Respondent

Hearing:	On the papers
Judgment:	11 November 2021

JUDGMENT OF NATION J

[1]    The applicant has sought, without notice, an interim injunction restraining the respondent from selling the applicant’s business of Brown Street Discount Invercargill and restraining the respondent from evicting the applicant or from re-entering or taking possession of the applicant’s business premises situated at 70 Brown Street, Invercargill.

[2]Through an affidavit from the applicant, there is evidence that:

(a)        The applicant has been running the subject business since purchasing it in 2017 for $405,000.

WANLIN TU v SONGWEN ZHANG [2021] NZHC 3053 [11 November 2021]

(b)       The applicant had the benefit of a lease which was for five years beginning 15 March 1994, with three rights of renewal of five years each. Through a deed of assignment of lease dated 11 July 2017, the applicant and respondent agreed there were four rights of renewal of five years each, with the final expiry for the lease of 13 March 2039 and an annual rent of

$17,114.96 plus GST. The deed of assignment of lease is consistent with it having been due for renewal on 13 March 2019.

(c)        The applicant says he was not aware he needed to give formal notice to renew the lease on or before 13 March 2019 and presumed it would run through to 13 March 2039 by default.

(d)       On 14 March 2019, the respondent sent a written notice informing the applicant the rent would be increased to $1,689.39 per month inclusive of GST. The respondent said nothing about needing to renew the lease at that time. The applicant has paid rent accordingly.

(e)        On 4 September 2021, the respondent advised the applicant that there was no lease because it had not been renewed in 2019. The respondent gave the applicant three choices:

i.to sign a new deed of lease with the rent increased to $52,000 inclusive of GST per annum, $4,333.33 per month inclusive of GST;

ii.to terminate the lease as from 1 December 2021; or

iii.to purchase the business premises at the price of $600,000.

(f)         The applicant has obtained a valuation showing a fair current market rental to be $23,850 per annum and the market value of the premises to be

$350,000. The applicant is not prepared to accept any of the options put to him by the respondent.

[3]    The applicant says he wishes to renew his lease and to exercise rights of renewal. He does not wish to lose his business and his livelihood.

[4]    The evidence from the applicant indicates there is a real risk the respondent will seek to evict the applicant from the premises and/or seek to sell the premises on the basis they are not currently subject to a lease, and there is a risk of this happening as from 1 December 2021.

[5]    With the respondent having advised what a new rental would be on 14 March 2019, the applicant having paid rent at that rate since then, and the respondent having accepted that rent, the applicant has a seriously arguable case that the respondent accepted in March 2019 that the rent lease was being renewed for a further five years and is now estopped from contending that the lease was brought to an end through the applicant not giving formal notice that he was renewing the lease in 2019. The applicant is also able to make an application for relief against forfeiture of the lease under the Property Law Act 2007. In such proceedings, he will have a seriously arguable case that he is entitled to such relief. His counsel has also indicated that he intends to make an application for relief under s 261 of the Property Law Act.

[6]    The applicant has given an undertaking that he will meet any damages that the Court might ultimately order him to pay if he has any liability to the respondent for such damages.

[7]    I am satisfied there is a serious question to be tried and that the applicant’s claim is not frivolous or vexatious. I consider a refusal to grant the order sought would put the applicant at risk of losing the value of his business which he paid a significant sum for in 2017. The grant of an interim injunction as sought will simply require the respondent to continue with the arrangements that have been in place since 2017. I am satisfied the overall justice of the situation as has been presented to the Court requires the Court to grant the interim injunction sought on the terms set out below. I am satisfied the urgency of the situation justifies the granting of an interim injunction on a without notice basis.

[8]I accordingly make an order granting an interim injunction as sought, namely:

(a)         restraining the respondent from selling the applicant’s business of Brown Street Discount Invercargill; and

(b)        restraining the respondent from evicting the applicant, or from re- entering or taking possession of the applicant’s business premises situated at 70 Brown Street, Invercargill.

[9]    That order is to continue until the further order of the Court and is made on the following further terms:

(a)        the order is made with the applicant having undertaken that he will comply with any order for the payment of damages to compensate the respondent for any damage sustained through the interim injunction;

(b)       the applicant must file a statement of claim or such other proceedings as he deems necessary to obtain relief under the Property Law Act and to otherwise seek an injunction restraining the respondent from terminating the lease or in any other way proceeding as if the lease had not been renewed for five years in 2019. Those proceedings must be filed by 26 November 2021;

(c)        the applicant, through his solicitor, is to email forthwith to the respondent in Australia a copy of this judgment and all documents filed in this Court with the application for an interim injunction; and

(d)       the respondent may file an application with the Court to set aside the interim injunction. As to such an application, I direct:

i.any such application should set out the grounds on which that application is made and must be accompanied by an affidavit setting out the evidence which the respondent relies on in making the application;

ii.in any such application, the respondent must provide an address for service in New Zealand for documents that have to be sent to him connected with the proceedings;

iii.the respondent must provide all the information required by the High Court Rules as to any lawyer who will be representing him in these proceedings, including the lawyer’s address, email and telephone contact details. If he has no lawyer, he must provide full details of his

business and residential address, phone and email contact details in Australia; and

iv.any such application to set aside the interim injunction will be initially set down for a hearing to proceed by way of a telephone conference on two days’ notice.

[10]   Subject to any earlier hearing that may be required to respond to the respondent’s application to set aside the interim injunction, the proceedings to be filed by the applicant are set down for a first call in the Judge’s list on 29 November 2021 at 11.45 am.

Solicitors:

Leslie Hills Law, Christchurch.