Te Wairua O Te Ora Limited v Tuhoe Waikaremoana Maori Trust Board [2014] NZHC 1627 (14 July 2014)

Last Updated: 30 September 2014

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

CIV 2013-463-000340 [2014] NZHC 1627

BETWEEN	TE WAIRUA O TE ORA LIMITED Plaintiff
AND	TUHOE WAIKAREMOANA MAORI TRUST BOARD First Defendant
	RAKEIWHENUA TRUST Second Defendant
	WAYLYN TAHURI-WHAIPAKANGA Third Defendant

Hearing:	8 July 2014
Appearances:	A Cook and S Barker for the Plaintiff/Respondent J P Temm for the First Defendant/Applicant
Judgment:	14 July 2014

_{JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN}

This judgment was delivered by me on

14.07.14 at 4:30pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

_{Date...............}

TE WAIRUA O TE ORA LIMITED v TUHOE WAIKAREMOANA MAORI TRUST BOARD & ORS [2014] NZHC 1627 [14 July 2014]

The application

[1] The strike out application by the first defendant (the Board) challenges the existence of the sublease upon which the plaintiff’s claims rely. The Board says its tenant in possession at time of sale was the Tuhoe Services Trust (the Trust) and therefore there was no basis for any privity of contract between the plaintiff and the Board such that the plaintiff has any cause of action against the Board. The Board says it had no knowledge of any conduct or breaches by the second defendant and third defendants whereby possession was seized and property was taken. In short, it says it has no connection with the events which occurred on 15 June 2010.

Statement of claim

[2] The plaintiff pleads, inter alia:

(a) It is one of about 48 whanau/hapu service organisations responsible to the Trust for the delivery of health, social services, training and other programmes on behalf of the Board.

(b) The Board had owned the former tavern and motel complex in Taneatua. It had owned the property since about 1990. There are three buildings on the property, a hotel, a separate manager’s house, and a separate block of three units.

(c) By deed of lease dated 13 February 2009 the Board leased the property to the Trust for four years from 19 January 2009 with three rights of renewal, each of four years. The lease was on the standard Auckland District Law Society form of lease.

(d) By deed of sub-lease dated 14 February 2009 the Trust subleased the property to the plaintiff on the same terms and conditions as the head- lease. It contained an express covenant for the plaintiff’s quiet enjoyment.

(e) From 14 February 2009 to June 2012 the plaintiff was in occupation of the three buildings on the property and, it says, was providing services to the Trust.

(f) As at mid-June 2010 the plaintiff had 36 employees and a number of clients and people it was looking after living at the property.

(g) In or about November 2009 the Board decided it wished to sell the property. The Board had discussions with the plaintiff concerning the plaintiff’s potential purchase of the property.

(h) In or about June 2010 the Board and the second and third defendants entered into negotiations for the sale of the property by the Board to the second defendant and at about that time an agreement for sale and purchase agreement was entered into.

(i) The agreement for sale and purchase provided for the sale to the second defendant to be given with vacant possession even though the third defendants were then aware of the plaintiff ’s sub-lease.

(j) The sale settled in June 2010 and on 29 June 2010 the second defendant became the registered owner of the property.

(k) On or about 15 June 2010 the second and third defendants together with a number of individuals entered the property, removed the plaintiff’s chattels, changed locks, erected temporary fencing, and thereafter refused the plaintiff access to the property. Thereafter the plaintiff’s property and chattels were removed on behalf of the second defendant and were disposed of.

(l) The plaintiff says that as a consequence its entire business was destroyed.

(m) In support of claims for damages the plaintiff says the Board and second and third defendants were aware that the plaintiff had a valid

sublease; that the Board was not entitled to sell the property with vacant possession; that the Board was directly involved in the actions and events which occurred on 15 June 2010 and subsequently; and thereby the Board’s actions were a breach of the covenant of quiet enjoyment, a derogation from the sub-lease grant, and a trespass.

Statement of defence

[3] In its statement of defence the Board:

(a) Denies there is any hotel building at the property. It admits there was a deed of lease of the property to the Trust and says there was a deed of sublease which was undated and which did not contain the same terms and conditions as the head-lease as was required.

(b) Says it has no knowledge of the plaintiff ’s occupation of the property.

It acknowledges there were discussions with the plaintiff for the sale of the property and that it sold the property to the second defendant. It acknowledged that the agreement for sale and purchase provided for vacant possession and it admits that it knew of the alleged sub-lease by the plaintiff.

(c) Says it has knowledge of the events which occurred on 15 June 2010 but denies any responsibility for those. It does not accept any responsibility for any conduct undertaken by others giving rise to a breach of the covenant of quiet enjoyment.

(d) Acknowledges it consented to an undated sublease of the head-lease provided that it was on the same terms and conditions as the head- lease.

(e) Alleges that the undated sublease was not on those same terms and was therefore invalid but if it is held to be valid then it is the second

and third defendants who have interfered with the contractual relations of the Board and the plaintiff.

Strike out application

[4] The Board claims the plaintiff’s statement of claim does not disclose a

reasonably arguable case against it, because:

(a) There is no valid sub-lease agreement between the plaintiff and the

Board.

(b) The Board and its directors cannot rely on equity to establish an equitable cause of action given the involvement of the plaintiff”s director, Ms Marie Stewart, in the affairs and resolutions of the Board.

(c) The Board settled the sale of the premises with a tenant in possession

(Tuhoe Services Trust) and not with vacant possession.

(d) There is no privity of contract between the plaintiff and the Board such that the plaintiff has any cause of action against the Board.

(e) The Board has been improperly joined to the proceeding because it did not act in the way the plaintiff alleges and there is no evidence to substantiate the plaintiff’s claim (of wrongful eviction).

(f) That the first defendant had no knowledge of any conduct or breaches by the second and third defendants and was not an accessory to any such breaches the plaintiff alleges.

The Board’s case

[5] The Board says on 14 November 2008 it resolved in principle to enter into a deed of lease with the Trust in order to deliver community social services, and the provision of health and communication services from the property. A first draft of the lease was circulated at a Board meeting of the first defendant on 27 February

2009. It says that unknown to it and on a date prior to 27 February 2009 the plaintiff entered into an agreement with the outgoing lessee of the property and purchased the chattels and licence of the tavern and thereafter continued to operate the tavern and sell liquor without, the Board says, its knowledge consent or approval. It says it was not aware of the plaintiff having entered into a memorandum of understanding with the Trust nor, that in February 2009 that the plaintiff entered into a deed of sub-lease with the Trust.

[6] The Board says that on a date which must have been after 27 February 2009 it entered into a deed of lease with the Trust which was to provide “Community Social Services including offices and the provision of health and communication services”. It denies that any valid deed of sub-lease could have existed from its purported date of 14 February 2009. In any event it says the deed of sub-lease is in significant material terms different from the deed of lease from which it purports to originate.

[7] Addressing the pleaded allegations of the plaintiff:

(a) The Board says that even if the sublease was valid the covenant alleged does not exist between the plaintiff and the Board because the parties to the agreement are the sub-lessor and the sub-lessee and do not involve the Board and there is no evidence the Board undertook any of those actions by the second and third defendants on 15 June

2010.

(b) The Board is entitled to plead non est factum to the purported deed of sublease dated 14 February 2009, if it is considered that may be valid, because any deed of sub-lease is not in identical terms to the head lease; the business use is significantly different; and clause 46 of the head-lease which provides an agreement in principle to permit the establishment of a radio station from a suitable part of the old tavern in due course, is not reproduced in the deed of sub-lease. The Board submits that on the facts available the Court can conclude that the

Board would not permit a trading tavern as the deed of sub-lease suggests.

(c) That the involvement of Ms Stewart as a director of the plaintiff and as a member of the Board indicates she participated in all relevant decisions of the Board and that the plaintiff has taken and made commercial decisions based on information and knowledge she acquired in her capacity as a board member, and therefore the equitable doctrine of “clean hands” operates to bar the plaintiff from a claim against the Board.

(d) There was a settlement by the Board of the sale of the property to the second defendant with the tenant (Tuhoe Services Trust) in possession, and not with vacant possession. Therefore there is no basis for the plaintiff to assert the property was settled with vacant possession although the Board does not accept that it was the plaintiff that was lawfully the tenant in possession.

(e) There was no privity between the plaintiff and the Board and therefore there can be no breaches of contract clauses of action because there is no agreement binding the parties.

(f) That the Board had no knowledge of any conduct or breaches by others and the plaintiff cannot succeed with speculation and unfounded assertion that the Board was responsible for the conduct of others.

[8] In support of the Board’s strike out application Mr Temara, the chairman of the Board swore an affidavit. Mr Temara deposes that for many years the subject property was leased to an independent third party, Awatapu Investments Limited which operated a tavern from the premises. He said over the years the trustees took the view it was inappropriate for the board to be involved in the sale of liquor; that Awatapu Investments Limited was advised in mid-2008 that its lease, due to expire on 30 June 2009, would not be renewed.

[9] Mr Temara annexed a copy of the minutes of the Board’s meeting on 3 April

2009. Those note the attendance of Mr Temara and Ms Stewart and others. The minute records:

...

The Secretary explained that the lease was awarded to the Tuhoe Services Trust for health and social welfare purposes. L Ruiterman’s (Awatapu Investments) lease due to expire 30.6.2009 was not going to be renewed because the Board did not want to be further involved in the sale of liquor with its adverse social consequences. Ruiterman’s staff got wind of this and handed in their resignations. So he advised us of his desire to vacate at the earlier date of 18.1.2009. Tenders for the lease was advertised from

22.12.2009 and the two tenders apart from M Stewart’s clearly indicated they wanted to operate it as a tavern and was rejected on those grounds.

The lease awarded to the Tuhoe Services Trust included a provision for space for Hemara Waaka to set up a Tuhoe radio station when he was ready.

In the meantime M Stewart had entered into a separate agreement with L Ruiterman to purchase his chattels and licences and was continuing to sell liquor without the landlord’s permission and this matter was being addressed.

...

A Tamera said there were a lot of complaints coming in of Te Puna Wai continuing to sell liquor.

M Stewart said that they purchased some chattels and took over various licences from L Ruiterman. They need to sell food and liquor in order to pay the bills. They have sent their people for training. They had a good open day. They will be progressively phasing out the liquor. They need to approach Whakatane District Council for a change of use and release from some licences.

Resolved that the general manager looking to the implications of change of use and that the Secretary released the Tuhoe Services Trust funds to the new trust.

...

Resolved that the sublease to [the plaintiff] be approved subject to compliance with the conditions of the head-lease.

...

A Temara dissenting on granting of sublease.

[10] Mr Temara deposes that the Board had resolved in principle on 14 November

2008 to enter into a lease with the Trust. He says a copy of the draft lease was circulated on 27 February 2009 at a Board meeting; that it had become apparent that

Ms Stewart had entered into an arrangement with the outgoing lessee to purchase chattels and licences to continue to sell liquor from the premises.

[11] Mr Temara acknowledges the Board has a lease with the Trust. Regarding that he says:

(a) Although it is dated 13 February 2009 it cannot possibly have been then but must have been signed off at a much later date.

(b) The signatures on behalf of the Board were from members who were present on 27 February 2009 when the draft deed of lease to the Tuhoe Services Trust was circulated, that one of those persons is now deceased.

(c) Whilst the other board member did have authority to enter into the deed of lease the first schedule of that notes that business uses are “Community Social Services including offices and provisions of health and communication services”.

[12] Mr Temara then deposes:

[23] What happened beyond this is extremely unclear to me, and the trust board. Having entered into a Deed of Lease with trustees of the Tuhoe Services Trust, it appears that the Deed of Sublease on which the present plaintiff wishes to advance its claims was also created and proffered for signature. I note the similarities between the documents.

[13] Then, and referring to the deed of sublease Mr Temara noted, inter alia:

(a) It was dated 14 February 2009 on the plaintiff ’s copy; that this could not be so because the discussion about entering into the sublease did not happen until 3 April 2009, according to the Trust Board Minutes. The signatures on the sub-lease on behalf of the Board are those of Mr Rakuraku and Mr Mclean and both were members of the Board and were present on 27 February.

(b) It appeared that the same Board members who signed the lease have signed the sublease document as the head-lessors, namely Mr Rakuraku and Mr McLean.

(c) That their signatures have been witnessed by the same person who witnessed their signatures at the time the Deed of Lease was entered into.

(d) Mr McLean is Ms Stewart’s brother.

(e) Most importantly to the Board, he says, was that the business use now provided for in the Deed of Sublease is “community social services including offices in the provision of health and communication services together with offering existing tavern facilities”. [underlining added]

(f) The deed of sublease was “absolutely contrary” to the Board’s unanimous and express resolutions about the continued sale of liquor in Taneatua from the board’s premises.

(g) The sublease is not consistent with the board resolution of 3 April

2009 that required any sublease to comply with the conditions of the

Head-lease.

(h) It is absolutely inconsistent with the Board’s clearly expressed

intentions for the premises.

(i) The circumstances in which the Deed of Lease came to be signed are unclear to the Board and him as chairman.

[14] Mr Temara deposed that Ms Stewart was present at all the meetings when these matters were discussed; that there could be no basis for the plaintiff asserting that the sub-lease is genuine or reflects something the Board as head lessor would consent to. The fact is, he said, the Board did not consent to a Deed of Sublease in these terms and its execution in the manner described could not have been correct.

[15] He said Ms Stewart and the plaintiff were aware and cannot deny that the circumstances of the sub-lease and the manner in which the document came to be signed did not reflect the Board’s intention. Mr Temara believes the sub-lease was misrepresented to the Board because it is at odds with what the Board’s repeatedly expressed intentions for the property were.

[16] Mr Temara states that at the time of the settlement of the sale it was not undertaken with vacant possession but rather with the tenant in possession namely the Tuhoe Services Trust.

[17] Mr Temara deposes that the Board denies any involvement by itself or any member or agent in re-entering the premises prior to settlement. He says that after those events he received an email from the third defendant advising what had been done by her.

The plaintiff ’s opposition

[18] Ms Stewart deposes she is a director of the plaintiff, that she was formerly a board member of the Board, and she is a trustee of the Tuhoe Services Trust. She notes that the Board has a conflict of interest register for all board members to sign.

[19] Ms Stewart annexes a copy of a November 2008 news article quoting public statements given by Mr Temara that indicated the current lease would be brought to an end at its conclusion in 2009. Ms Stewart says there was then discussion over the lease and it was offered to the Trust; that it was initially agreed the Trust would take over the lease on 30 June 2009. She recalled that Mr Ruiterman of Awatapu Investments had called her to say it was aware the Trust would be taking over the lease in June 2009 and was considering taking legal action against the Board. Ms Stewart annexes a copy of a letter from the Board to Mr Ruiterman dated 27

November 2008 advising the Board would not be continuing the lease after 30 June

2009.

[20] Ms Stewart exhibits a copy of a letter dated 15 December 2008 signed by Mr

Ruiterman on behalf of Awatapu Investments and addressed to the Board requesting

the Board to agree to terminate their lease with effect from 18 January 2008. It warned that if the Trust refused to accept the early termination of the lease then Awatapu Investments would “have no option but to seek an urgent legal resolution. This will include our seeking damages and recovery of consequential losses, the considerable financial loss your chairman’s [Mr Temara] comments have so far caused to us”.

[21] Ms Stewart deposes that on 17 December 2008 Mr Ruiterman contacted her as a trustee of the Trust to discuss the issues he had with the Board. She said she met with the Board’s secretary in regard to the lease. She said on 15 December 2008 “there was confirmation between Tuhoe Services Trust and the Board’s secretary to take over the lease agreement by 18 January 2009”.

[22] She deposes further:

[13] On 7 January 2009 the Board secretary advised that there was a decision that the lease property had to be tendered because other Tuhoe whanau had heard the pub doors were closing and wished to lease the buildings. I discussed this with the Board secretary and was of the view that there was already an agreement for our organisation to take over on 18

January 2009. I was advised to send my proposal anyway and that we would still be awarded the lease but the Board was just following the process of transparency. I did not agree to this because in my view the agreement was already reached.

[14] On 18 January 2009 I was notified that by the Board secretary the

Tuhoe Services Trust was to be the lessee.

[15] It was part of the negotiations with Awatapu Investments Limited that they would surrender their lease on the basis of our organisation buying them out including the tavern facilities.

[16] Tuhoe Services Trust mandated [the plaintiff] to become the lead operations manager that the company would also be responsible and be guarantor for carrying out and fulfilling all lease obligations including guarantor to the company as well. I followed all legal requirements as directed by the Board secretary who was tasked to work alongside myself.

[17] The head-lease and sub-lease documents were all signed on 14

February 2009. The documents were put together by the Board secretary and then transferred to our Lawyers to ensure that they were satisfied before

heading back to the Board.

...

[19] Payments of the lease were made from 20 February 2009. These payments were accepted by the Board.

[23] Ms Stewart notes that the Board minutes confirm the sub-lease was approved. She states:

[23] The Board was advised clearly on our purpose and how we intended to demonstrate the management of alcohol and the management of gambling and all forms of harm and how the rehabilitation programmes would support those who were addicted.

[24] As far as I am aware the Tuhoe Services Trust never received any notice to cancel the lease on the basis that the Board not consenting to the sub-lease.

[24] Responding to other statements by Mr Temara, Ms Stewart deposes:

[26] The November 2008 minutes discussed the intention of Tuhoe Services Trust to take over the lease and to have phasing out periods of alcohol. There was agreement to address this request. The proposal was given on behalf of the Tuhoe Services Trust Board whanau services.

[27] The majority of board members supported the phasing out proposal regarding alcohol. Only the Board chair [Mr Temara] dissented.

[28] Tuhoe Services Trust presented its case to phase out liquor within two – five years, which was supported by whanau organisations including Ministry of Social Development.

[29] The Board members agreed on net management of liquor. [30] The Board had no policy in place to the contrary.

[31] The Board gave their confidence that a phasing period was necessary.

[32] The sub-lease was accepted by the Board.

[33] The Board was aware that the premises would be turned into a hospitality enterprise and there would be a phasing out period of change of business.

[36] On 14 November 2008 the Board resolved in principle that a lease between the Board and Tuhoe Services Trust would be entered into after 30

June 2009.

[37] The Deed of Lease and Deed of Sub-lease was put together by the Board secretary and then transferred to our lawyers to ensure that we were satisfied before heading back to the Board.

[38] The documents were circulated at the Board meeting and given endorsements. Te Wairua was also required to give an assurance that the Board would not be liable for any action taken by Awatapu Investments Limited.

[41] The Board accepted the proposal of Tuhoe Service Trust to have the phasing out period of two – five years in regard to the sale of alcohol.

Strike out principles

[25] Counsel are agreed concerning these. For present purposes they include:

(a) Pleaded facts, whether or not admitted, are assumed to be true. This does not extend to pleaded allegations which are entirely speculative and without foundation.

(b) The cause of action must be so clearly untenable that it cannot possibly succeed.

(c) The jurisdiction is to be exercised sparingly and only where the Court is satisfied that it is a clear case for the exercise of discretion.¹

Considerations

[26] Despite Mr Temara’s challenge to the veracity of claims that the lease and sub-lease documents were executed on 13 February 2009 there is evidence that those documents were, by a solicitor’s letter, sent to the Board on 10 February 2009 with a request that the Board’s solicitors should reply if they had any concerns with the arrangement by which the Trust took a lease and the plaintiff a sub-lease over the property.

[27] Mr Temara’s evidence does not refer to that detail of events provided by Ms

Stewart of:

(a) Mr Ruiterman’s contact and communication with the Board;

(b) The Board’s secretary’s phone call on 15 December 2008 regarding

_{the Trust taking an early lease;}

¹ Attorney-General v Prince (1988) 1 NZLR, 262 (CA).

(c) Confirmation that the Trust would take the lease over by 18 January

2009.

(d) Confirmation from the Board secretary on 18 January 2009 that the

Trust was to be the lessee.

(e) Lease payments beginning on 20 February 2009.

[28] Mr Temara presents as if he speaks for the Board but it is not clear always from his affidavit that he can purport to do this. He has his own clear vision regarding the extent of the activities permitted by the terms of the deed of lease with the Trust. As that document notes the business use authorised was community social services including offices and the provision of health and communication services. Clearly those words were before the Board when the lease terms were considered at the Board meeting on 27 February 2009. It is not clear whether the terms of the sublease were before the Board at its meeting on 3 April 2009. The minutes of that meeting recorded that Ms Stewart had entered into a separate agreement with Mr Ruiterman “to purchase his chattels and licences and was continuing to sell liquor without the landlord’s permission when this matter was being addressed”.

[29] In response to a comment by Mr Temara regarding complaints coming in about liquor still being sold, the minutes record Ms Stewart as explaining that the Trust people were being sent for training and that they would be progressively phasing out the liquor. The meeting then resolved that the general manager would look into the implications of change of use. The meeting further resolved that the sub-lease to the plaintiff would be approved subject to compliance with the conditions of the head-lease. Only Mr Temara dissented.

[30] It appears that the balance of the Board were content with the report and assurances provided by Ms Stewart. Arguably it may be read into this that the somewhat general terms of business use contained in the lease were meant to accommodate the phasing out of alcohol sale in conjunction with the provision of social services for alcohol abuse and gambling.

[31] At best the Court considers, for present purposes upon this application, that the matter remains unclear.

[32] It is Mr Temara’s evidence that the lease and sub-lease could not have been signed on the dates they bear. Mr Temara’s view that those documents must have been signed at a much later date is no doubt supported by the fact that it was not until 3 April that the Board approved the issue of a sub-lease.

[33] Evidence to the contrary suggests the lease and sublease were executed at about the time of those dates they bear. Whilst the sub-lease is not dated it is clear from its terms it was expected to take effect from about the time of the head-lease. Also those documents have been signed by board members. There is evidence from Ms Stewart of discussions with the Board secretary beforehand. And, perhaps most significantly, there is an email from the sub-lessee’s solicitor to the Board’s solicitor some three or four days beforehand enclosing copies of the documents with an invitation that they should respond if there were any concerns regarding those. There was no evidence of any response having been made. To the contrary they have been signed by two Board members.

[34] The Board denies any connection for the actions of second and third defendants in entering the premises on or about 15 June 2009 to evict the occupants and to seize that property. The Court infers from the evidence of Mr Temara that he was advised the following day by the third defendant of what had happened. The circumstances of that communication will undoubtedly be a matter for further enquiry in due course, as will the reason why the Board sold the property and premises with vacant possession when there was in place a lease of those to the Trust for a term of four years with rights of renewal thereafter.

[35] The evidence of the Board is that whilst the property was subject to an agreement to provide vacant possession, the settlement of that property towards the end of June provided for an apportionment of rent. This evidence is offered to endorse the claim the property had been sold subject to the tenancy. However, settlement occurred about two weeks after the property had been retrieved by the apparent actions of the second and third defendants.

[36] The strike out claim suggests there was no privity of contract between the plaintiff and the first defendant. That may be so but may not nevertheless resolve issues of responsibility arising in the circumstances of this case.

[37] Mr Temm submits that equity will not assist the plaintiff because of Ms Stewart’s actions as a member of the plaintiff and of the Trust and of the Board at relevant times. That submission may suggest underhand behaviour by Ms Stewart. Any such suggestion would need to be examined at a trial.

[38] It is a well understood principle that a lessor may not voluntarily prejudice the right it has created by its lease and should not permit anything to occur which is inconsistent with the purpose for which the premises are let.²

[39] Also a head-lessor will be bound by any lawfully created sub-leases. As

Blanchard noted in Robert Bryce Co Limited v Stowehill Investments Limited³:

A head-lessee who has created a sub-lease may not by voluntarily doing some act, such as surrendering the head-lease, destroy the sub-lease. Consequently the sub-lease will continue notwithstanding a surrender or other act of the head-lessee... a sufficiency of the reversion, known as a continuance, continues to exist to support the sub-lessee’s title.

[40] It is the claim of the Board it had nothing to do with any trespass or eviction. Indeed, pleadings apart, there is little of available evidence to support those claims.

[41] However, the starting point is that the Court ought to approach the matter as if all of the plaintiff’s claims can be proved. Although Mr Temm argues strongly that this approach ought to be applied cautiously when there seems not a skerrick of evidence to support any question of collusion by the Board in those 15 June events, the Court resists the temptation to adopt that approach. Besides, there appears much more to the circumstances of the second and third defendants’ involvement such that the opportunity for a full enquiry ought to be provided. The plain fact is that two members of the Board with the authority of the Board approved the lease and sub- lease by their terms created. Mr Temm’s non est factum argument is based on the

_{proposition that the signatory board members should not have approved the sub-}

² _{Mount Cook National Park Board v Mount Cook Motels Limited [1972] NZLR 481 (CA).}

³ [2000] 3 NZLR 535 at para 33.

lease which by its terms included the offering of the existing tavern facilities whereas the head-lease did not. In that frame of things but also in the full detail of the competing evidence that this Court has recorded earlier in this judgment, it is clear there is a significant need for further enquiry.

[42] There is no reason why a sub-lessee whose occupation of premises is subject to a covenant for quiet enjoyment should be refused access to a form of relief from a head-lessor who it might be discovered may have acted in a manner to dispossess that sub-lessee of its occupation rights.

Conclusions

[43] It is appropriate that the Court upon this application assumes the plaintiff’s pleaded facts to be capable of proof, and that the plaintiff’s allegations do not appear entirely speculative or without foundation.

[44] A right of action for a sub-lessee can exist against a head-lessor but whether that occurs in this case will require a full factual enquiry.

Result

[45] The application for strike out is dismissed.

[46] Costs are reserved but with the observation that there appears nothing in this case to suggest an award on other than a 2B basis. Any submissions to the contrary are to be filed and exchanged within 10 and 20 working days respectively. The

_{matter will then be dealt with by the Court on the papers.}

Associate Judge Christiansen