Zhang v Zhai - [2015] NZHC 836

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-6491 [2015] NZHC 836

BETWEEN
SHAOHE ZHANG

Plaintiff

AND

XIAOJUN ZHAI AND AIDONG ZHONG Defendants

Hearing: 24 April 2015

Appearances:

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

Judgment:

24 April 2015

JUDGMENT (NO. 3) OF TOOGOOD J [Plaintiff's application to lift stay of execution]

This judgment was delivered by me on 24 April 2015 at 4:45 pm
Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

ZHANG v ZHAI [2015] NZHC 836 [24 April 2015]

Introduction

[1] On 16 May 2014, I delivered a judgment in this proceeding (“the principal judgment”) in which I granted the plaintiff’s application for specific performance of a sale and purchase agreement for a property at 24A Margan Avenue, New Lynn Auckland (“the New Lynn property”).1 I reserved leave to the parties to apply for any further orders that were necessary or desirable to give effect to the order for specific performance.2

[2] The parties were unable to agree on precisely what the order for specific performance required the defendants to do and, on 8 September 2014, I issued a further judgment (“the second judgment”) directing the defendants to transfer the New Lynn property to the plaintiff according to the terms of the sale and purchase
agreement, including the parties’ respective liabilities for interest under clause 3.10.3

I also ordered that the agreement should be modified to accommodate a settlement many years after the date originally contemplated, adopting terms from the plaintiff’s pleadings. 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 to have equitable title.

Appeal and stay

[3] 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.

[4] Counsel have informed me that the appeal is due to be heard on 9 July 2015. Although the respondent has objected to the form of the case on appeal proposed by

1 Zhang v Zhai [2014] NZHC 1026, [2014] 3 NZLR 69.
2 At [71].
3 Zhang v Zhai [2014] NZHC 2156.

the defendants, Mr Henry has indicated to me that a supplementary case on appeal meeting the plaintiff’s requirements will be filed in due time.

Plaintiff ’s application to lift the stay

[5] The plaintiff has now applied for an order setting aside the stay, principally on the ground that the defendants are in serious default of their obligations to the ANZ Bank…

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 836
Decision Date: 24 April 2015

CaseChat Overview and Summary

The case of Zhang v Zhai is a matter before the High Court of New Zealand, specifically the Auckland Registry. The dispute concerns a sale and purchase agreement for a property at 24A Margan Avenue, New Lynn, Auckland. The plaintiff, Shaohe Zhang, sought specific performance of the agreement, which was granted by the court. The defendants, Xiaojun Zhai and Aidong Zhong, have appealed the decision, leading to a stay of execution pending the outcome of the appeal. The plaintiff now applies to lift the stay, arguing that the defendants' default on their mortgage obligations threatens his equitable interest in the property.

The central legal issues in this case are whether the stay should be lifted to allow for the specific performance of the sale and purchase agreement, and if so, under what conditions. The court must consider the balance between the plaintiff's equitable interest in the property and the defendants' right to appeal, as well as the potential impact of the mortgagee's rights on the plaintiff's interests.

The court, Toogood J, decided to set aside the stay on certain conditions to protect the plaintiff's equitable interest. The court noted that the Bank, which holds a registered mortgage over the property, could exercise its power of sale if the defendants did not remedy their defaults by a specified date. This could render the court's orders for specific performance unenforceable. The court required the defendants to remedy their defaults and provide an undertaking to avoid future defaults. If the defendants failed to meet these conditions, the plaintiff could apply to restrain the Bank from exercising its power of sale. The court also extended the stay to include the defendants' obligation to pay costs pending the outcome of the appeal.

The final orders of the court included setting aside the stay if the plaintiff confirmed certain undertakings, such as not disposing of the property until the appeal was determined. The court also ordered that if the defendants did not meet their obligations under the mortgage, the plaintiff could apply to restrain the Bank from exercising its power of sale. Additionally, the court extended the stay to include the defendants' obligation to pay costs. Costs on the application to set aside the stay were reserved for further consideration.

Orders