Zhou v Pacific Pearl Accommodation Limited - [2021] NZHC 969

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2020-404-000113

[2021] NZHC 969

UNDER Sections 244 and 251 of the Property Law Act 2007

IN THE MATTER OF

of a lease dated 15 May 2013 in respect of the premises at 9 Bicknell Road, Favona, Auckland

BETWEEN

KENING ZHOU and NAIYUAN SANG

Applicants

AND

PACIFIC PEARL ACCOMMODATION LIMITED

Respondent

Hearing: On the papers

Appearances:

D L C Liu for the Applicants

C A Murphy for the Respondent

Judgment:

4 May 2021

JUDGMENT OF VAN BOHEMEN J

[Costs]

This judgment was delivered by me on 4 May 2021 at 11.30am Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel:
Heritage Law Ltd, Auckland High St Chambers

ZHOU v PACIFIC PEARL ACCOMMODATION LIMITED [2021] NZHC 969 [4 May 2021]

Introduction

[1] By judgment dated 26 November 2020, I dismissed the application by Kening Zhou and Naiyuan Sang (the Trustees), as trustees of the Zhou & Sang Family Trust (the Trust), for orders cancelling a lease over the property at 9 Bicknell Road, Favona, Auckland that was leased to Pacific Pearl Accommodation Ltd (Pacific Pearl).1 I found that, except in one respect which I did not consider sufficiently serious to justify cancellation of the lease, the Trustees had not made out the grounds for cancellation set out in their notice dated 27 September 2019 made under s 246 of the Property Law Act 2007. The exception was Pacific Pearl’s failure to pay the trustees’ legal costs of approximately $5,747.00 incurred in considering Pacific Pearl’s request to assign the lease.2

[2] I held that Pacific Pearl was entitled to costs on a 2B basis and gave leave to the parties to file memoranda if they could not agree costs.

Memorandum by counsel for Pacific Pearl

[3] By memorandum dated 17 December 2020, Ms Murphy, counsel for Pacific Pearl, sought costs of $11,472.00 plus disbursements of $21,844.91, making a total claim of $33,316.91. Ms Murphy also sought costs of $956.00 for preparation of her memorandum.

Memorandum by counsel for the Trustees

[4] By memorandum dated 26 January 2021, Mr Liu, counsel for the Trustees, submitted that I should recall my judgment pursuant to r 11.9 of the High Court Rules 2016 because I had determined costs without inviting submissions from the parties. Mr Liu also submitted that I should not have awarded costs against the Trustees because, according to Mr Liu, I had granted an indulgence to Pacific Pearl by holding that its non-payment of legal costs was insufficiently serious to justify cancellation of the lease, even though cl 29.1 of the lease provides that:

1 Zhou v Pacific Pearl Accommodation Ltd [2020] NZHC 3133.
2 At [109].

Failure to pay rent or other moneys payable under this lease on the due date shall be a breach going to the essence of the Tenant’s obligations under the lease.

[5] Mr Liu also referred to s 37(2)(a) of the Contract and…

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 969
Decision Date: 4 May 2021

CaseChat Overview and Summary

In the High Court of New Zealand, the case of Zhou v Pacific Pearl Accommodation Limited was heard by Justice van Bohemen. The applicants, Kening Zhou and Naiyuan Sang, trustees of the Zhou & Sang Family Trust, sought to cancel a lease over a property at 9 Bicknell Road, Favona, Auckland, which was leased to Pacific Pearl Accommodation Limited. The respondents, Pacific Pearl Accommodation Limited, defended against the application for cancellation. The central legal issue revolved around whether Pacific Pearl's failure to pay the trustees' legal costs of approximately $5,747.00 justified the cancellation of the lease. The court also had to determine the appropriate amount of costs and disbursements that the applicants should pay to Pacific Pearl as the successful party.

The court found that the Trustees' failure to pay the legal costs was not sufficiently serious to warrant the cancellation of the lease. It further examined the submissions made by counsel for both parties regarding the costs incurred. The court rejected the argument that it had determined the costs without inviting submissions from the parties, stating that as the successful party, Pacific Pearl was entitled to costs. The court also dismissed the claim for costs on costs, noting that the Trustees' failure to confer on costs did not warrant such an award. Regarding the disbursements, the court disallowed certain claims due to insufficient information but allowed others, including the costs of obtaining building and fire safety reports. The court concluded that the Goods and Services Tax (GST) issue should be resolved according to the Goods and Services Tax Act 1985 and that an award of disbursements would not include GST where the successful party is GST registered.

The court ordered the Trustees to pay Pacific Pearl costs of $11,472.00 and disbursements of $17,179.34. These disbursements included fees for filing, building consultants, and other expenses. The total amount due by the Trustees to Pacific Pearl was expressed in figures exclusive of GST.

Orders