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High Court of New Zealand Decisions |
Last Updated: 28 July 2023
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IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
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CIV-2023-409-181
[2023] NZHC 1757 |
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BETWEEN
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IBUY PROPERTY LIMITED
Plaintiff
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AND
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XIAOMING HE
Defendant
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Hearing:
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30 June 2023
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Appearances:
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A N Riches for Plaintiff
No appearance for or on behalf of the Defendant S D McIntyre for Chunyue
Ye
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Judgment:
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6 July 2023
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JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 6 July 2023 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
IBUY PROPERTY LTD v HE [2023] NZHC 1757 [6 July 2023]
[1] IBuy Property Ltd (IBuy) has applied for summary judgment against Xiaoming He (Mr He) seeking possession of a property at 377 Selwyn Street, Christchurch. Mr He has taken no steps to defend the claim other than in respect to costs.
[2] Chunyue Ye is seeking an order pursuant to r 4.56 of the High Court Rules 2016 joining her as a defendant to this proceeding. She claims to have a lease of the Selwyn Street property. She says she ought to have been joined as a defendant and that her presence is necessary to adjudicate all questions arising in the proceeding.
[3] IBuy opposes Ms Ye’s application.
Background
[4] Mr He was the registered owner of the Selwyn Street property. Following the Christchurch earthquakes, Mr He brought proceedings against the Earthquake Commission (EQC) and others in the High Court. He was largely unsuccessful in the High Court.1 He appealed to the Court of Appeal, and his appeal was dismissed.2 He sought leave to appeal to the Supreme Court, and leave was refused.3 Mr He was left with large judgment debts in respect to costs and interest of those proceedings.
[5] Ms Ye is Mr He’s former wife. She says that in February 2020 she took a long lease of the Selwyn Street property from Mr He to ensure payment of sums she had lent to him to pursue his earthquake claim against EQC. She also says that she sublets the property to Mr He, from which he operates a dairy business (in respect of which she also claims an interest), and to a carwash business.
[6] The terms of the lease are most unusual, but I do not have to set them out in this judgment for the purposes of this application. Ms Ye has not produced any subleases.
[7] Mr He’s judgment creditors enforced payment of what they were owed by way of a sale order under pt 17 of the High Court Rules. Pursuant to the sale order, on
1 He v Earthquake Commission [2017] NZHC 2136.
2 He v Earthquake Commission [2019] NZCA 373.
3 He v Earthquake Commission [2019] NZSC 149.
21 December 2022, the Selwyn Street property was sold to IBuy by public auction under the instructions of the Sheriff at Christchurch.
[8] The Selwyn Street property was marketed for sale by Grenadier Real Estate Ltd (Harcourts). Mr He advised Harcourts that the property was subject to a lease but he refused to provide a copy or any details of it, including the identity of the tenant.
[9] IBuy settled the purchase on 10 February 2023, and is now the registered owner. IBuy was not provided with a copy of any lease between Mr He and Ms Ye before settlement, nor does it appear that it was advised that Mr He had asserted that such a lease existed. However, Ms Ye places reliance upon a term in the Sheriff’s terms and particulars of sale to support a contention that IBuy is bound by the lease. It provides as follows:
THE property is sold subject to the existing tenancies and occupation and to all easements (if any) affecting the same.
[10] The director of IBuy, Mr Jeffrey Hale, went to the Selwyn Street property in early March 2023. He spoke to Mr He and required him to vacate. Mr He has not done so.
[11] IBuy brought this proceeding against Mr He for summary judgment seeking possession of the property. IBuy’s application came before me on 22 June 2023. Mr He did not oppose summary judgment, but Mr McIntyre appeared on his behalf. Mr McIntyre advised that Mr He wished to oppose any order for costs being made against him and that the property was subject to a lease in favour of Ms Ye.
[12] Shortly after the hearing, and before any judgment was entered, the Court received an email from a solicitor acting for Ms Ye, Colleen Hooi, advising Ms Ye wished to be heard on IBuy’s application. I issued a minute in which I directed that:
(a) Ms Ye was to file any application that she wished to make in the proceeding with an affidavit in support; and
(b) I would convene a telephone conference to hear from counsel in respect to any application that was filed and the need for a hearing.
[13] Ms Ye subsequently filed what purported to be a notice and affidavits in opposition to IBuy’s summary judgment application. Mr McIntyre, who as I noted was acting for Mr He, is now acting for Ms Ye.
[14] At the telephone conference, I raised with Mr McIntyre that it was not clear on what basis Ms Ye was entitled to be heard if she was not a party to the proceeding and the prospect she might wish to apply to be joined as a defendant. Mr McIntyre took instructions and later advised the Court that Ms Ye wished to be joined as a defendant and that the papers filed should be treated as an application for joinder. I heard Ms Ye’s application on that basis.
High Court Rules
[15] The relevant rule is r 4.56. Rule 4.56 provides:
4.56 Striking out and adding parties
(a) the name of a party be struck out as a plaintiff or defendant because the party was improperly or mistakenly joined; or
(b) the name of a person be added as a plaintiff or defendant because
(i) the person ought to have been joined;
(ii) the person’s presence before the court may be necessary to adjudicate on and settle all questions involved in the proceeding.
...
[16] Mr McIntyre submits that r 4.56 imposes a fairly low threshold and that a cause of action need not necessarily be advanced or lie against a defendant to be added, albeit the case for joinder may be stronger in such a case.4
[17] He argues the purpose of the joinder rules is to secure the determination of all disputes relating to the same subject-matter without the delay and expense of a separate proceeding, and the courts have taken a liberal approach to joinder applications.
4 Newhaven Waldorf Management Ltd v Allen [2015] NZCA 204 at [46].
[18] Mr McIntyre submits Ms Ye ought to have been joined as a plaintiff because her interests are directly affected by IBuy’s claim. This is because, it is said, IBuy purchased the property subject to Ms Ye’s lease and she intends to challenge IBuy’s assertions it is not required to recognise the lease. He argues that Ms Ye presently exercises her rights under the lease and has an interest in the dairy business. If an order is made granting possession of the property to IBuy, her rights under the lease will be effectively extinguished.
[19] Mr McIntyre also contends the interests of justice require that Ms Ye be joined as a defendant so that all issues can be resolved in one proceeding and this will provide finality to the parties without the need for multiple proceedings.
[20] For IBuy, Mr Riches argues this is not an appropriate case to join Ms Ye as a defendant. He referred me to Capital & Merchant Finance Ltd (in rec and in liq) v Perpetual Trust Ltd where Thomas J reviewed authorities concerning the intervention in proceedings by non-parties.5 He submitted that several of the principles that Thomas J distilled from the authorities,6 should be applied in this case.
[21] First, Thomas J considered an applicant must show that its legal rights or liabilities in relation to the subject matter will be directly affected.7 Mr Riches submitted that Ms Ye has not shown she has any legal rights against or liabilities in relation to the Selwyn Street property that will be affected. He said she is not in physical occupation of the property and the order sought, granting possession of the property to IBuy, would not directly affect her, only Mr He.
[22] Second, Thomas J noted a relevant consideration is the extent to which the party wishing to intervene in a proceeding can rely on other parties to protect their rights and interests.8 Mr Riches submits that it is a relevant consideration that Mr He has not taken any steps to protect Ms Ye’s interests, although it appears to me this is a factor that supports Ms Ye’s case to be joined so that her interests are protected.
6 At [41].
7 At [41(a)].
8 At [41(c)].
[23] Third, Thomas J noted the underlying issue is whether it would be unjust to adjudicate on the matter in dispute without the intervenor being heard.9 Mr Riches submits it would not be unjust to proceed without Ms Ye being heard because it is not arguable that she has an unregistered interest that prevails over IBuy’s interest as registered owner.
My assessment
[24] The issues that arise on this application are:
(a) does the Court have jurisdiction to join Ms Ye as a party under either r 4.56(1)(b)(i) or (ii); and
(b) whether the Court should exercise its discretion to do so.
[25] It has been noted that in such applications the questions of jurisdiction and discretion often overlap.10
[26] I consider there is jurisdiction to make the order sought under both limbs of r 4.56(1)(b). Ms Ye is a person who ought to be joined to the proceeding, and whose presence is necessary to adjudicate upon the issues that arise in the proceeding so as to settle all questions arising between the parties.
[27] In Newhaven Waldorf Management Ltd v Allen the Court of Appeal observed in relation to r 4.56(1)(b)(i):11
We note that the first limb of r 4.56(1)(b) – “person ought to have been joined”
– addresses persons whose presence is necessary for the Court to adjudicate the exact issues arising on the pleadings. The second limb, with which are concerned here, has other and more extensive work to do.
[28] As far as r 4.56(1)(b)(ii) is concerned, in Brooker v IAG New Zealand Ltd
Osborne J adopted the then commentary in McGechan on Procedure as follows:12
9 At [41(f)].
10 Bridgeway Projects Ltd v Webb HC Auckland CIV 2003-404-1965, 7 July 2003 at [9].
11 Newhaven Waldorf Management Ltd v Allen, above n 4, at [42].
The scope of the phrase “the person’s presence before the court may be necessary to adjudicate on and settle all questions involved in the proceeding” raises some difficulties. First, there is a jurisdictional question, whether the application concerned is made by plaintiff, defendant, or otherwise. It is an objective question, which does not depend upon the identity of the applicant. If jurisdiction exists, there is secondly a discretionary question as to whether joinder should be ordered. However, the jurisdictional question has tended to become intertwined with the discretionary questions, particularly the different approaches as to the exercise of discretion depending upon whether application is made by plaintiff, defendant, or otherwise.
[29] Osborne J also adopted what Master Williams said in Knight v Attorney- General in relation to what is now r 4.56(1)(b)(ii) as follows:13
That criterion is broader than the wishes or the interests of any existing party. It permits joinder if such may be necessary to enable complete and effectual adjudication upon not just the issues raised in the pleadings at the date of joinder but all questions involved in the case. That broad phrasing must be assumed to be intentional.
[30] Here, IBuy’s case is that as the registered owner it is entitled to immediate possession of the Selwyn Street property. It has sued only Mr He because it says it had no knowledge of a lease in favour of Ms Ye when it commenced the proceeding. However, IBuy is now aware of the allegation there is a valid unregistered lease and that Ms Ye does not accept IBuy’s registered title prevails over it. It is also on notice that Ms Ye claims she has sublet the property to Mr He and a carwash business.
[31] There can be no doubt that if one accepts Ms Ye’s evidence as to the existence of the lease, the relief that IBuy seeks will affect her rights. She will not be able to occupy the property. It will result in the removal of Mr He from the property, who she says is her subtenant. It will result in the closure of the dairy business operated from the premises, in which Ms Ye claims to have an interest. IBuy might also seek to evict the carwash business to whom Ms Ye says she sublets part of the property.
[32] IBuy does not accept that Ms Ye has a valid lease or that, if she does, it is arguable the lease could, as a matter of law, prevail over its registered title. It says, therefore, she has no rights that will be directly affected by any order that may be made in the proceeding. In response, Mr McIntyre says Ms Ye intends to argue that by the terms of sale of the property IBuy accepted the lease, that it is estopped from denying
13 At [29] citing Knight v Attorney-General HC Wellington CP566/92, 29 October 1992 at 9.
the existence of the lease and, possibly, that IBuy was wilfully blind as to the existence of the lease and therefore acquired its title by fraud.14
[33] I will not embark upon an assessment of the merits of Ms Ye’s arguments. This is because IBuy is seeking summary judgment and, I understand, will pursue summary judgment whether Ms Ye is joined as a defendant or not. It appears to me that it is desirable for Ms Ye’s defence to be considered in that summary judgment context once all the relevant evidence is before the Court and the matter is properly argued.
[34] If Ms Ye is not joined as a party she will likely commence separate proceedings asserting her interest in the property. The interests of justice are best served if all issues as between IBuy, Mr He and Ms Ye (and possibly any other party occupying the property) be determined in this one proceeding.
[35] Turning to the discretion, there are several factors that might tell against the making of an order joining Ms Ye as a defendant. First, IBuy opposes the application and the wishes of the plaintiff are relevant, albeit they may be overridden where that best serves the interests of justice.15 Here, I consider the interests of all parties will be served by the making of an order for joinder.
[36] While the Court will consider prejudice arising from additional costs and delays resulting from the making of an order, I do not see how that is a significant issue in a case which was only recently commenced and where IBuy will be seeking summary judgment.
[37] Another issue is whether there will be an expansion of issues because the issues as between the plaintiff and the proposed defendant are different from those that are already identified in the claim. There is no expansion of issues in this case. The issues that arise as between IBuy and Mr He, whether there is in fact a lease and if so whether it prevails over IBuy’s interests, are the same issues that arise between IBuy and Ms Ye.
14 Land Transfer Act 2017, s 52.
15 Brooker v IAG New Zealand Ltd, above n 12, at [34].
[38] I therefore consider that there is jurisdiction to make an order joining Ms Ye as a party to this proceeding and that in the exercise of my discretion it is appropriate that she be joined.
Result
[39] There shall be an order under r 4.56(1)(b) of the High Court Rules joining Ms Ye as second defendant.
[40] I understand that IBuy will now wish to pursue its application for summary judgment against both Mr He and Ms Ye. It should consider if anyone else should be joined. Timetable directions will need to be made. I expect that the steps to be taken will involve the:
(a) filing by IBuy of an amended statement of claim, application for summary judgment and any affidavits in support;
(b) filing by Ms Ye of an amended notice of opposition and affidavits in opposition to summary judgment;
(c) filing of synopses of argument and a common bundle for the hearing; and
(d) setting the application down for a hearing.
[41] To make timetable directions in respect of these and any other matters raised by counsel, the Registrar is to convene a telephone conference on 7 July 2023 at a time suitable to counsel.
[42] I direct that Ms Ye shall, through her solicitors, forthwith provide IBuy with the full contact details of the owner of the carwash business so that IBuy may, if it wishes, apply to join it as a third defendant.
[43] Counsel should note that I could hear IBuy’s summary judgment application on 31 August 2023 and I suggest they discuss a timetable that works towards that date.
[44] I reserve costs.
O G Paulsen Associate Judge
Solicitors:
Saunders & Co, Christchurch Duncan Cotterill, Christchurch
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