Zhang v Zhai - [2015] NZHC 1080

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-6491 [2015] NZHC 1080

BETWEEN
SHAOHE ZHANG

Plaintiff

AND

XIAOJUN ZHAI AND AIDONG ZHONG Defendants

Hearing: 20 May 2015 (by telephone conference)

Appearances:

E St John and D Liu for Plaintiff
CS Henry for Defendants

Judgment:

20 May 2015

JUDGMENT (NO. 4) OF TOOGOOD J

[Re-imposition of stay of execution pending appeal]

This judgment was delivered by me on 20 May 2015 at 3:30 pm
Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

ZHANG v ZHAI [2015] NZHC 1080 [20 May 2015]

[1] On 8 September 2014, I issued a judgment in this proceeding (“the second judgment”) directing the defendants to transfer a property at 24A Margan Avenue, New Lynn, Auckland (“the New Lynn property”) to the plaintiff.1 The orders required the defendants, within seven days of the judgment, to settle the transfer of title to the property to the plaintiff whom I had held, in a judgment delivered on
16 May 2014 (“the principal judgment”), to have equitable title.2

Appeal and stay

[2] In the second judgment, I held that it was appropriate to grant a stay of execution of the orders requiring settlement of the transaction on the condition that the defendants would maintain the momentum in prosecution of an appeal against the principal judgment which had been commenced in the Court of Appeal in June
2014. The conditions of the stay were that the case on appeal should be filed within one month of the date of the second judgment and that the defendants would seek a hearing of the appeal at the earliest date available. I have since been informed by counsel that the appeal is due to be heard on 9 July 2015.

Plaintiff ’s application to lift the stay

[3] The plaintiff applied subsequently for an order setting aside the stay, principally on the ground that the defendants were in serious default of their obligations to the ANZ Bank New Zealand Limited (“the Bank”) which holds a registered mortgage security over the New Lynn property. On 19 March 2015, the Bank had issued notices to the defendants under s 119 of the Property Law Act 2007, which notices provided that if each default had not been, or could not be, remedied on or before 8 May 2015, all amounts secured by the mortgage would become
payable and that the Bank’s power of sale would be exercisable.

1 Zhang v Zhai [2014] NZHC 2156.
2 Zhang v Zhai [2014] NZHC 1026, [2014] 3 NZLR 69.

[4] I determined that I should allow the defendants an opportunity to remedy their default under the mortgage so as to ensure that the Bank would not be in a position to exercise its power of sale. That would require the defendants not only to remedy the present defaults but to give an appropriate undertaking to the Court that they would not default on any obligations pending the disposition of the appeal.

[5] I accepted an undertaking…

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: [2015] NZHC 1080
Decision Date: 20 May 2015

CaseChat Overview and Summary

In the case of Zhang v Zhai, the plaintiff, Shaohe Zhang, sought to enforce a prior judgment which required the defendants, Xiaojun Zhai and Aidong Zhong, to transfer a property located at 24A Margan Avenue, New Lynn, Auckland, to the plaintiff. The defendants had appealed the original judgment, and the court had issued a stay of execution pending the outcome of the appeal. The plaintiff subsequently applied to lift the stay, arguing that the defendants were in default in their obligations to the ANZ Bank, which held a registered mortgage over the property. The defendants had filed an undertaking to pay the arrears and had made the required payments, but they did not comply with the time limits set by the court. Consequently, the stay was lifted, but the court decided to re-impose the stay on certain conditions.

The primary legal issue the court had to address was whether the stay should be re-imposed given that the defendants had taken steps to remedy their default but had not complied with the time limits set by the court. The court also needed to consider the implications for the plaintiff if the stay was re-imposed and whether the defendants would continue to prosecute their appeal diligently and comply with their obligations under the mortgage. Additionally, the court had to address the issue of costs, including whether the costs order made on 8 September 2014 should be stayed.

The court reasoned that even though the defendants had taken steps to remove the threat of a mortgagee sale, it would be unjust to allow the plaintiff to execute the second judgment at that time. However, the court acknowledged that the plaintiff was legally entitled to enforce the judgment. The court decided to re-impose the stay on the condition that the defendants continue to prosecute their appeal diligently and comply fully with their obligations under the mortgage. The court also reserved questions of costs for the exchange of memoranda between the parties, to be filed and served by specific deadlines, and directed that the costs and related stay issue would be determined on the papers unless the court directed otherwise.

In summary, the court re-imposed the stay of execution pending the disposition of the defendants’ appeal on the conditions that they continue to prosecute the appeal diligently and comply fully with their obligations under the mortgage. The court also reserved questions of costs for further submissions by the parties.

Orders