CHEN XI ENTERPRISES LTD v TRIPLE UNION LTD [2023] NZHC 94

CHEN XI ENTERPRISES LTD v TRIPLE UNION LTD [2023] NZHC 94 [3 February 2023]IN THE HIGH COURT OF NEW ZEALANDINVERCARGILL REGISTRYI TE KŌTI MATUA O AOTEAROAWAIHŌPAI ROHECIV-2022-425-000014[2023] NZHC 94BETWEEN CHEN XI ENTERPRISES LIMITEDAppellantAND TRIPLE UNION LIMITEDRespondentHearing: 17 November 2022Appearances: K L E Coote for the AppellantC M Ruane for the RespondentJudgment: 3 February 2023JUDGMENT OF NATION J[1] When parties to a commercial contract are in dispute, the challenges for judgesare not necessarily determined by the monetary value of what is at issue.Background[2] The appellant (Chen Xi), pursuant to a lease dated 29 June 2018, leasedpremises they owned at Unit 9 Shotover Ridge, 193 Glenda Drive, Frankton (theleased premises) to the respondent (Triple Union). The lease was for five yearsbeginning 29 June 2018, with rights of renewal. The lease required Triple Union topay an annual rental of $26,000 plus GST and rates or levies payable to theQueenstown Lakes District Council.[3] Triple Union fell into arrears in payment of both rental and rates. By notice ofbreach of lease served on Triple Union on 18 December 2018, Chen Xi required TripleUnion to pay rental arrears and rates.[4] On 16 January 2019, Chen Xi filed a statement of claim seeking an order forcancellation of the lease, judgment for rent and rates arrears, the further instalmentsdue when the proceedings were heard, and compensation of $1,308.60 plus GST forlegal costs Chen Xi had incurred.[5] An interlocutory order was made by consent on 9 April 2019 formallyterminating the lease with effect from 9 April 2019.[6] On 6 May 2019, Chen Xi applied to have Zheng Shi and Linna Jia, both thendirectors of Triple Union, joined as second defendants to the proceedings on theground they had guaranteed Triple Union's performance of the agreement to lease.[7] On 27 May 2019, Chen Xi filed an amended statement of claim against TripleUnion and the second defendants. In that amended statement of claim, Chen Xi soughtjudgment for arrears of rent and rates for the period through to 9 April 2019. Theyalso claimed that, while Triple Union was in occupation of the leased premises, theyinterrupted the supply of electric power to the upstairs apartment in the building. Thetenant consequently vacated the upstairs apartment. Chen Xi claimed judgmentagainst Triple Union for:(a) arrears of rent and rates;(b) rental lost from the upstairs apartment;(c) costs incurred in making electrical repairs;(d) costs of repairing door and locks after Chen Xi had to gain entry to theleased premises;(e) travel and accommodation costs for a Chen Xi director to travel fromInvercargill to Queenstown to visit the premises and arrange for repairs;(f) costs incurred for cleaning;(g) costs connected with real estate agents for the re-letting of the upstairsapartment; and(h) interest on overdue payments at the rate of 14 per cent per annum andinterest on the balance of the claim.[8] A statement of defence and counterclaim was filed for both Triple Union andthe second defendants. In their statement of defence, they made certain allegations indefence to the claim for rental and rates. They pleaded the electrical supply to theupstairs apartment in the building was routed, at least in part, through the leasedpremises, the supply of electricity to that apartment failed from time to time due tooverloading, the defendants had not interrupted the power supply to the upstairsapartment and, if that power supply was interrupted, it was due to the inadequacies ofthe electrical supply to that apartment and not to any action taken by the defendants.[9] The defendants pleaded they had been entitled to change the locks to the leasedpremises to prevent unauthorised access by Chen Xi and the tenants of the upstairsapartment. The defendants pleaded they had been willing to meet with Chen Xi orChen Xi's representatives to hand over keys, but Chen Xi's representatives wereunwilling to meet. They denied any liability for costs claimed in the amendedstatement of claim and said, if the claimed expenses were incurred, those costs were aresult of deficiencies or failures in the electrical supply to the leased premises andshould thus be borne by Chen Xi.[10] The defendants claimed that, in the expectation they would be able to operatethe leased premises as a Chinese fast food business, they had travelled to China tosource plant and equipment and, in doing so, had incurred wasted travel andaccommodation costs. They counterclaimed for $5,519 on account of such costs. Thatcounterclaim was not pursued at trial.District Court decision[11] At the outset of the hearing scheduled for 12 November 2021, the defendantssought leave to amend the statement of defence to add an affirmative defence of accordand satisfaction. They wished to plead that, through correspondence betweensolicitors, there had been an agreement in late 2018 that Triple Union would surrenderthe lease so no payments would be due under the lease from then until April 2019, thedate to which rental had been claimed.[12] Judge Tuohy said there had been no real controversy over the date of thetermination of the tenancy in a legal sense until the issue was raised with theapplication for leave to amend. An amendment would raise a number of new legalissues: whether there was an accord and satisfaction through the exchange of emails;and whether the respondents had, themselves, reaffirmed the lease by agreeing to aconsent order in April 2019 that the lease then be terminated. The Judge, in theinterests of justice, refused the application.1[13] In the substantive judgment, the Judge set out the factual background to thedispute between the parties.2 He said the Frankton premises owned by Chen Xi wason two storeys. Triple Union intended to use the ground floor leased premises as arestaurant. The upstairs apartment was rented by a family. At the root of the disputewas that the hot water cylinders for both the upstairs apartment and the leased premiseswere on the ground floor. The power supply to both hot water cylinders was meteredthrough the switchboard for the ground floor leased premises and charged to the tenantof those premises. The switchboard was situated inside a small room only accessiblefrom inside the leased premises.[14] On 21 August 2018, Triple Union received their first power bill for the leasedpremises from Meridian Energy. It was for a substantial sum even though therestaurant had not opened.[15] On two occasions, 29 and 30 August 2018, the upstairs tenant found there wasno hot water in their apartment. They contacted Chen Xi's director, Carman Feng. MsFeng then contacted Triple Union. On both occasions, the water heating to the upstairsapartment resumed.[16] On 7 September 2018, the upstairs tenant contacted Ms Feng to complain therewas again no hot water in the upstairs apartment. Ms Feng contacted Mr Shi one ofthe directors of Triple Union. The next day the upstairs tenant contacted Ms Fengcomplaining they still had no hot water. Ms Feng contacted the other director of TripleUnion, Ms Jia, who said she had engaged an electrician.1 Chen Xi Enterprises Ltd v Triple Union Ltd [2021] NZDC 22337.2 Chen Xi Enterprises Ltd v Triple Union Ltd [2022] NZDC 1275.[17] On 9 September 2018, the upstairs tenant contacted Ms Feng and said he stillhad no hot water. Ms Feng contacted Ms Jia who said she would contact the upstairstenant after work and they would sort it out.[18] On 11 September 2018, the hot water supply to the upstairs apartment hadresumed.[19] The Judge referred to a report from the electrician which said he attended theleased premises at the request of Ms Jia (it appears there was a slip in the Judge'sdecision where he referred to that attendance having been on 7 August 2018). TheJudge referred to the electrician's statement that he had established and advised TripleUnion that the upstairs apartment's hot water cylinder was fed from the ground floorswitchboard and was being charged to the ground floor meter holder.[20] On 14 September 2018, Triple Union put a notice on the upstairs tenant's dooradvising that the power switch for the upstairs apartment from downstairs would, fromthen, be turned off and the upstairs tenant should contact the landlord. The upstairstenant telephoned Ms Feng and advised her of this. Ms Feng spoke to one of thedirectors, Mr Shi, and said she would engage an electrician to rectify the problem withthe connection of the upstairs hot water cylinder to the downstairs switchboard thenext day.[21] On 17 September 2018, Ms Feng drove to Queenstown to meet with Ms Jia,together with the electrician. The electrician found the switchboard fault but was notpermitted by Triple Union to correct it.[22] On 25 September 2018, there was an informal mediation between the partiesbut nothing was resolved.[23] On 31 October 2018, Chen Xi asked Triple Union, through Triple Union'slawyer, for permission to enter the leased premises and engage an electrician to remedythe fault at Chen Xi's cost. Triple Union did not give permission to do so.[24] On 23 November 2018, the upstairs tenant contacted Ms Feng to advise thepower upstairs had been turned off.[25] Ms Feng travelled to Queenstown on 23 November 2018. She was unable tocontact the second defendant directors of Triple Union but found the leased premiseslocks had been changed. Ms Feng arranged for a workman to force entry the followingday and arranged for an electrician to be present to ensure power was supplied to theupstairs apartment. One of the second defendant directors, Ms Jia, arrived with herhusband, Mr Wen, and told the electrician he had to stop work. Ms Jia and her husbandcontinued to refuse entry to Ms Feng. It was not possible for power to be restored tothe upstairs apartment that day. The upstairs tenant had had enough and terminatedhis tenancy.[26] Chen Xi was unable to gain access to the leased premises to have powerrestored to the upstairs apartment or to have the switchboard problem rectified untilafter Triple Union's tenancy was terminated on 9 April 2019.[27] After the termination of the downstairs lease, an electrician found there was adisconnect switch on the downstairs switchboard which enabled power to the upstairsapartment to be turned off totally by a single movement of that switch. He carried outthe necessary electrical work to ensure the power usage for the upstairs hot watercylinder was metered henceforth to the upstairs switchboard.[28] The Judge found Triple Union had possession of the leased premises, to theexclusion of Chen Xi, until 9 April 2019, the date of termination. He found TripleUnion was obliged to pay rent and rates during that term, whether they wished tooccupy the premises or not. He found the amount due for rates had not beenestablished, but found Triple Union was liable for rent of $13,039.54.[29] The Judge held Chen Xi should be responsible for all electricians bills forinvestigations except for those that were related to power to the upstairs apartmentbeing turned off. He awarded Chen Xi $750 towards electricians' costs. He awardedChen Xi $1,114.78 for the cost of fixing a door and repairing locks, on the basis TripleUnion had been in breach of an obligation under the lease to yield up the premises inan appropriate condition with regard to the condition of the premises at the beginningof the lease.[30] The Judge allowed a sum of $420 for cleaning costs, and interest on unpaidrent at 14 per cent. He declined travel expenses incurred by Chen Xi on the basis itwas Ms Feng's choice to run her Queenstown business from Invercargill.[31] There was no appeal or cross-appeal as to the Judge's decision as to thosematters.[32] As to Chen Xi's claim for loss of rental from the upstairs tenant, the Judge saidthe amended statement of claim clearly pleaded the essential facts underlying thisclaim. They included specifically that, as a result of the interruption to his powersupply by one or other of the defendants, the upstairs tenant quit the premises causingloss of rent to the landlord. The Judge said the legal basis for the claim had not beenpleaded and did not have to be, but it had to be established for adjudication. Counselhad said the primary legal basis for the claim was the tort of unlawfully inducing theupstairs tenant to breach his contract with the landlord.[33] Counsel had also submitted that, alternatively, the defendants had breached aduty of care not to interfere with the current tenancy associated with the building. TheJudge said Chen Xi had not provided authority for the recognition of a tortious dutyof care in those circumstances. The Judge reached his decision on the basis there wasno such duty of care.[34] The Judge said he was satisfied on the facts that power to the upstairs apartmentwas cut off on 23 November 2018 by turning off the switch on the downstairsswitchboard. He said that action must have been carried out by one of the two directorsof Triple Union or someone permitted by them to enter the leased premises. It wasalso very likely done with the knowledge and intent that power to the upstairsapartment would be turned off.[35] The Judge was however not satisfied that it was sufficiently proven the actionwas carried out by either of the second defendant directors of Triple Union. One hadnot given evidence. The other had denied in evidence carrying out the action orknowing it had been done. The Judge said there was another possible perpetrator whohe considered more likely than either of the directors. That being, Mr Wen, thehusband of Ms Jia. The Judge said, if it was Mr Wen, he could not be sure Mr Wenacted with Ms Jia's knowledge and approval.[36] The Judge said it had also not been proved that the upstairs tenant had breachedhis contract with Chen Xi by quitting the upstairs apartment during the fixed term ofthe tenancy. That had not been alleged by Chen Xi. The Judge doubted the upstairstenant was in breach of the fixed term of his tenancy given his leaving the premiseswould likely have been found to be justified by the Tenancy Tribunal.[37] The Judge said it was also highly arguable that the loss of rental was not theconsequence of the upstairs tenant quitting the premises but the consequence of ChenXi being prevented from re-letting it. Ms Feng's evidence was that she had found anew tenant, one willing to pay a higher rent than the upstairs tenant had been paying,but could not let the upstairs apartment because she was unable to gain entry to theleased premises and the switchboard room to turn on the upstairs power and separatethe meter for the upstairs hot water cylinder.[38] The Judge said Triple Union had stopped Chen Xi from doing so by changingthe locks and refusing entry to the leased premises and therefore the switchboard room.He said that may have been a breach of cl 15.1 of the lease (access for works), entitlingChen Xi to loss of rental for the relevant period. That had not however been the casepleaded on behalf of Chen Xi. The Judge said it would be unfair to the defendants todecide this part of the case on a legal basis which had not been pleaded.[39] It was for those reasons the Judge declined the claim for loss of rental for theupstairs apartment. It was that part of the decision which Chen Xi appealed.SubmissionsSubmissions for appellant[40] The written submissions of Mr Eagles for Chen Xi were relied on by Ms Cooteat the hearing of the appeal.[41] Chen Xi accepted there had been no error in the Judge rejecting the claim basedon breach of a duty of care. Chen Xi accepted there could be no claim for damagesfor economic loss based on such a potential duty.[42] Chen Xi noted the key factual findings made by the Judge. Chen Xi referredto the Judge's finding that the person more likely to have turned off the switch on thedownstairs switchboard on 23 November 2018 was Mr Wen. In initial submissions,Chen Xi said, with regard to a company search in the agreed bundle of documents, theJudge had been mistaken in considering Mr Wen was not a director of Triple Union on23 November 2018. In reply submissions, Chen Xi accepted there had been no suchmistake by the Judge.[43] Chen Xi submitted Mr Wen must have been acting with the consent andapproval of Triple Union because Triple Union had put up the 14 September noticeabout turning off the power. The essence of that submission was that the Judge shouldhave been satisfied on the evidence potentially, if necessary, through drawing logicaland reasonable inferences on undisputed evidence, that on 23 November 2018,through the actions of Mr Wen, Triple Union had turned off power to the upstairsapartment. Further, Chen Xi argued the Judge should have concluded that, on 24November 2018, Triple Union had obstructed Chen Xi and their electrician fromremedying the problem with the downstairs switchboard so power to the upstairsapartment could be restored.[44] Chen Xi submitted the Judge erred in holding they had not been proved theupstairs tenant had, in quitting the upstairs apartment, breached his contract with ChenXi. Chen Xi submitted the lease agreement they had with the upstairs tenant did notcreate any obligation on the part of Chen Xi to supply electricity to the apartment.They submitted the Judge's assumption was contrary to s 39(4)(a) of the ResidentialTenancies Act 1986, which provided that a tenant is responsible for charges in respectof electricity and gas.[45] Chen Xi submitted the Judge had also been in error in saying Chen Xi's lossresulted not from the tenant quitting the upstairs apartment but from the fact Chen Xi,as landlord, was prevented from re-letting the premises. They said it was clear on theevidence that the interference with the power supply had caused the claimed lostrental. That claim had been clearly set out in the amended statement of claim. ChenXi submitted direct interference by unlawful means had been established. Chen Xisubmitted the agreement to lease had incorporated the tenant's obligation to allowaccess for works. Although the specific clause of the agreement had not been referredto in pleadings, the facts for a claim based on interruption to the power supply hadbeen pleaded, and the changing of locks was "part and parcel" of that. Chen Xisubmitted the claim as to that should not have been disallowed on the basis this wasnot the way the case had been pleaded.Submissions for respondent[46] Mr Ruane noted Chen Xi's pleading had been that Triple Union interfered withthe power supply to the upstairs apartment. Triple Union submitted there had been noobligation on Triple Union as the downstairs tenant, whether in contract or in tort, tosupply power to the upstairs apartment, and it had been for Chen Xi to ensure theupstairs apartment had a secure power supply.[47] Triple Union submitted there had been no evidence from the upstairs tenant asto what interference there had been to the power supply. They submitted there hadbeen no direct evidence of the upstairs tenant complaining of the loss of any otherelectrical supply but acknowledged there was evidence that the upstairs tenantcomplained from time to time of a lack of hot water.[48] Triple Union accepted there was evidence on which the Judge could reasonablyconclude that the action of turning off power to the upstairs hot water cylinder musthave been carried out by one of the two directors of Triple Union or someone permittedby them to enter the downstairs premises. Triple Union also acknowledged there wasno error in the Judge concluding that the more likely perpetrator was Mr Wen but, withreference to Companies Office records, they submitted the Judge could not haveconcluded that, at the time of the incident on 23 November 2018, Mr Wen was adirector of Triple Union.[49] Triple Union submitted, on the evidence, the Judge was entitled to concludethat, if Mr Wen had cut off the power, it had not been proved he did so with Ms Jia'sknowledge and approval. Triple Union submitted an appellate court should bereluctant to interfere with the Judge's finding as it involved an assessment of Ms Jia'scredibility as a witness. It could not be inferred from Triple Union's notice that theywere terminating the power supply to the upstairs apartment, or that the later actionsof Mr Wen could be attributed to his wife as a director and thus to the company.[50] Triple Union referred to s 45(2) of the Residential Tenancy Act 1986 whichlimits the circumstances in which a landlord can interfere with the supply of electricityor other services to leased premises.[51] Triple Union also submitted Chen Xi had effectively not mitigated their lossthrough failing to pursue a claim against the upstairs tenant, if his departure had beenunjustified as Chen Xi claimed. Triple Union also submitted Chen Xi had notmitigated their loss through unreasonably not taking advantage of the opportunity toconclude an agreement as to the surrender of the lease during negotiations that tookplace between the parties' solicitors between 29 November 2018 and 3 December2018. Triple Union also criticised Chen Xi for filing an application on notice forsummary judgment on 25 January 2019 in breach of clauses in the agreement to leasewhich called for the appointment of a mediator before legal proceedings were issued.Analysis[52] Chen Xi's notice of appeal was lodged somewhat beyond the time for the filingof an appeal as referred to in the District Court Rules. That was because there was adelay between the date the Judge completed and signed his judgment and the date itwas released to the parties. Chen Xi thus sought leave extending the time to lodgetheir appeal. That was not opposed. Leave is granted accordingly.[53] Chen Xi's notice of appeal named only Triple Union as a respondent, with noreference to the directors as second defendants. That may have been a slip but isultimately of no consequence. The directors had been joined as defendants based ontheir alleged liability as guarantors of the lease. The appeal relates to the Judge'sdecision on Triple Union's liability in tort for inducement to breach contract, not TripleUnion's liability as lessee.[54] In their amended statement of claim of 23 May 2019, Chen Xi pleaded, as aresult of Triple Union interrupting the power supply to the upstairs apartment, ChenXi lost rental from that apartment as follows:23 November 2018 to 17 January 20198 weeks at $650.00 per week: $5,200.0018 January 2019 to 26 April 201915 weeks at $725.00 per week: $10,875.00$16,075.00[55] Ms Feng's evidence as briefed was consistent with that pleading.[56] Ms Feng was not challenged as to that evidence but the lease agreement withthe upstairs tenant was in the bundle of documents before the Court. It showed therent for the upstairs apartment was $550 per week from 15 January 2018 and $600 perweek from 15 July 2018. In oral evidence, Ms Feng said the upstairs tenant had beenpaying $600 per week.[57] I find, on the evidence, the rent payable by the upstairs tenant was $600 weekly.[58] The lease with the upstairs tenant was for a fixed term ending on 15 January2019. There was also reference in the agreement to the provision under the ResidentialTenancies Act that a fixed term contract would automatically become periodic unlesseither party to the contract gave the required notice not to continue with the tenancy.It was not a term of the Residential Tenancies Act that the landlord would ensure therewas a secure electricity supply to leased premises. Section 45(2) of the ResidentialTenancies Act limited the circumstances in which a landlord could interfere with thesupply of electricity to leased premises.[59] The Judge had reasonably found that the supply of electricity to the upstairsapartment had been interfered with by someone associated with Triple Unionswitching off the power supply to the upstairs apartment. That was not the action ofChen Xi. Ms Feng and Chen Xi were wanting to ensure there was a secure powersupply to the upstairs apartment and were doing all they reasonably could to fix theproblem that had arisen as to this. Chen Xi had thus not repudiated any generalobligation they had to provide the upstairs tenant with premises suitable for use as aresidence. The difficulties the upstairs tenant faced through what was happening withthe power supply may have made it difficult for Chen Xi to obtain an order from theTenancy Tribunal that the upstairs tenant should pay the rent due under the lease forthe period after 23 November 2018. The evidence was nevertheless sufficient toestablish that the upstairs tenant was in breach of his lease in abandoning the upstairsapartment on 23 November 2018 and refusing to pay rent under the agreement for theagreed term of the lease.[60] There was no challenge to Chen Xi's claim that the upstairs tenant had not paidrent for eight weeks from 23 November 2018. The evidence therefore establishes thatthe upstairs tenant had not paid rent of $4,800 for the eight weeks from 23 November2018 which he was required to pay in terms of his lease of the upstairs apartment.[61] For Chen Xi to have succeeded on their claim against Triple Union for inducinga breach of contract, Chen Xi had to prove, firstly, that Triple Union must haveengaged in the conduct which induced a breach of the contract between the upstairstenant and Chen Xi. The conduct Chen Xi relied on was the way in which TripleUnion had interrupted the supply of electricity and thus hot water to the upstairsapartment.[62] Through Mr Ruane's submissions, Triple Union accepted the Judge wasentitled to find that power to the upstairs apartment was turned off, at least to the hotwater cylinder, by one of the two directors of Triple Union or someone permitted bythem to enter the leased downstairs premises. Triple Union also accepted that theJudge was entitled to reach the conclusion that the more likely perpetrator was MrWen. In the circumstances of this case, that concession is important.[63] As established, Mr Wen's wife, Ms Jia, was one of the directors of Triple Unionand gave evidence at the trial. In her evidence as briefed, Ms Jia said she and Mr Wen,and the other director and second defendant Mr Shi, met with Ms Feng of Chen Xi on13 June 2018. Triple Union offered to enter into a lease with Chen Xi for the premises.In oral evidence, she said Mr Wen was her husband and "support me with the businessand because I am less of experience of doing the business so he just back off me".[64] In her evidence, Ms Jia traversed the various occasions on which there wereissues over the power supply to the upstairs apartment, as well as dealings she said shehad with Ms Feng and electricians over the matter. She referred to Ms Feng visitingthe premises on 17 September 2018 with an electrician, she alleged, without notice toTriple Union directors. Ms Jia said "we" stopped the landlord's attempts to have theelectrician modify the cable connection to the premises. In her brief, Ms Jia said "Wewere not happy with the way in which this was being done and we stopped the landlordfrom doing this".[65] Ms Feng's evidence was that, after the upstairs tenant had told her of the noteleft on the door to the upstairs apartment and that power had been turned off, she toldboth Triple Union directors she would engage an electrician to sort out the problem.On 17 September 2018, she travelled from Invercargill to Queenstown and went to theleased premises. She called Ms Jia and arranged for her to be at the leased premises.She also contacted an electrician to be there. Ms Feng said Zheng Shi was not there.Mr Wen and Ms Jia opened the leased premises. The electrician found the problem.Ms Feng said she asked for it to be fixed but Mr Wen refused to have the fault correctedand told the electrician to stop.[66] In oral evidence, Ms Jia said, of herself and Mr Wen: "We allowed a person tocheck the board but we didn't let him to change anything ".[67] In her evidence as to what happened at that time, Ms Jia talked about "we"agreeing to meet the landlord on site, "we" not knowing exactly what the electricianproposed to do, and "we" not being prepared to agree to make any changes withoutconsulting our overseas investor. In her evidence as briefed, Ms Jia went on to talkabout how "we" asked the landlord's friend to help with the communication and how,because of this, "we" had a meeting in Invercargill with the person who they wantedthere with the landlord. It was Ms Feng's evidence, not contested by Ms Jia, that thisled to Ms Feng, Mr Shi, Ms Jia and Mr Wen all meeting in Invercargill to discuss thesituation.[68] In her evidence as briefed, Ms Jia said "we" did not know anything about thedisruption to the power supply to the apartment on 23 November 2018, but said "we"had already changed the locks because we were concerned the landlord was gettingaccess to the premises without our permission and we wanted to secure the property"we" had stored at the premises. Ms Jia talked about their being shocked at findingChen Xi had entered the leased premises on 24 November 2018 and the front door hadbeen broken and the lock damaged. She said "we" called the Police. She said "we"discovered this when Mr Wen found the landlord had brought electricians into theleased premises and he called the Police.[69] Ms Feng's evidence was that she contacted Mr Shi and Ms Jia to arrange forthem to meet her at the leased premises on 24 November 2018. Mr Wen and Ms Jiaarrived at the premises at 11.30 am and stopped the electricians from doing the work.After the Police arrived, Ms Jia and Mr Wen refused to let Ms Feng enter the premises.Ms Feng's evidence as to how this happened and who was there was not contested.[70] The Judge was satisfied on the evidence, as was reasonable, that it must havebeen one of the two directors, or someone permitted by them to enter the leasedpremises, who turned off the switch on the downstairs switchboard so as to cut offpower to the upstairs apartment.[71] The Judge considered the person who did this was likely Mr Wen but said hecould not be sure Mr Wen acted with Ms Jia's knowledge and approval. The Judge'suse of the term "sure" suggests he required Chen Xi to prove beyond reasonable doubt,rather than on the balance of probabilities, that Mr Wen would have done this with theknowledge and approval of his wife, a director of Triple Union.[72] I find that, on the evidence I have referred to which was not in dispute, thelogical and sensible inference which the Judge should have drawn was that Mr Wenwas likely to have changed the locks and switched off the power supply to the upstairsapartment with the knowledge and approval of the director, his wife, Ms Jia.[73] It was argued for Triple Union that for me to draw that conclusion wouldinvolve reversing the trial Judge's finding as to the credibility of Ms Jia with theadvantages he had in seeing her give evidence. I consider the Judge had already madefindings which reflected adversely on Ms Jia's credibility. Under cross-examination,at a number of points in her evidence, Ms Jia had been adamant that neither she norMr Wen did anything to the power supply to the upstairs apartment. At least by thetime of the trial, in the context of the allegations Triple Union was facing, it defiescommon sense to believe that, when Ms Jia gave evidence, she would not have knownthat Mr Wen had interfered with the power supply on 23 November 2018, if he had infact done so as the Judge considered was likely. With the Judge finding it likely thatMr Wen had interfered with the power supply, he had therefore made a determinationwhich reflected adversely on Ms Jia's credibility, in the same way as my judgmentdoes.[74] I thus conclude, on the evidence, the Judge should have found that on 23November 2018 Triple Union did interfere with the power supply to the upstairsapartment by switching off the power supply, and by obstructing Chen Xi in theirattempts to have an electrician identify and fix the problem on 24 November 2018.They did that, firstly, by changing the locks to the premises and then by insisting thatthe electrician cease what he was doing.[75] It was suggested there was no evidence from the upstairs tenant that they hadabandoned the premises because of the interruptions to his apartment's power supplyon 23 November 2018 and on earlier occasions. It is however clear from the notes ofevidence that the evidence of certain witnesses was, by consent, presented by way ofaffidavit. The tenant's sworn affidavit of 20 February 2020 was before the Judge. Inthat affidavit, the tenant detailed the occasions on which the supply of power to theupstairs apartment had been disrupted. He referred to the occasion on 23 November2018 when he said, again, the power was turned off. He arranged for an electrician,Mr Coleman, to come and check the upstairs apartment. He also phoned Ms Feng.He said, by that stage, he had had enough. He, his wife and son could not managewithout regular power, and he vacated the upstairs apartment.[76] Even without evidence from the upstairs tenant that he vacated those premisesbecause of problems with the power supply, with the evidence the Judge received fromMs Feng and the Triple Union director, Ms Jia, the Judge could have reasonably drawnthe inference that the upstairs tenant did vacate the upstairs apartment because of thedisrupted power supply to that apartment.[77] Chen Xi had thus proved that Triple Union engaged in conduct which in factcaused the upstairs tenant to abandon the upstairs apartment and stop paying rent, inbreach of his lease agreement with Chen Xi.[78] To succeed in their claim, Chen Xi also had to prove that Triple Union musthave known their conduct would induce the breach and have intended that. Just whathas to be proved to establish this element of the tort is discussed carefully andextensively in Todd on Torts.3[79] Although the tort of inducing breach of contract requires causation to beshown, the causative link between a defendant's conduct and the breach is not, of itself,sufficient. A plaintiff must establish the defendant's requisite state of mind. Thedefendant must have intended to induce or persuade the contracting party to break thecontract.4 The defendant's conduct may thus not merely be inconsistent with acontract between others, it must have been targeted or aimed at the plaintiff. If thebreach was not the defendant's very purpose but was merely a foreseeableconsequence of his or her conduct, the requisite intention for the tort is notestablished.53 Stephen Rodd (ed) Todd on Torts (8th ed, Thomson Reuters, Wellington, 2019) at [13.2.04].4 Todd on Torts, above n 3, at 205-206, citing Allen v Flood [1898] AC 1 (HL); Chaplin v Young(1911) 31 NZLR 214 (SC); Blanche v McGinley (1912) 31 NZLR 807 (SC); Hughes v NorthernCoal-Mine Workers' Industrial Union of Workers [1936] NZLR 781 (SC); Jaddcal Pty Ltd vMinson (No 3) [2011] WASC 362 at [198].5 Todd on Torts, above n 3, citing OBG Ltd v Allan [2007] UKHL 21, [2008] AC 1 at [62]; Correiav Canac Kitchens 2008 ONCA 506, (2008) 91 OR (3d) 353, at [99]; Barrick Gold Corp v GoldcorpInc 2011 ONSC 3725; Maxam Opportunities Fund Ltd Partnership v 729171 Alberta Inc 2015BCSC 271; Water Guard NZ Ltd v Midgen Enterprises Ltd [2015] NZHC 2227.[80] Relevantly, as stated in Todd on Torts, intentional interference presupposesknowledge of the contract that is being interfered with.6 Although the defendant mustknow of the existence of the contract it has breached, it is not necessary that he or sheknow the precise terms of it.7[81] It was clear from the evidence that Triple Union knew of the upstairs tenant'slease of the upstairs apartment, not least because of the notice Triple Union put on thedoor of those premises advising the tenant power would be turned off and the tenantshould contact the landlord.[82] The Judge did not expressly consider whether Triple Union had intended toinduce or persuade the tenant to break the lease with Chen Xi. The Judge did howeverfind that the action of cutting off the power on 23 November 2018 was very likelydone with the knowledge and intent that the upstairs power would be turned off. TheJudge said there was a strong inference, from the nature of the required action and thetiming in terms of negotiations for a settlement between the parties, that the motivefor the action was likely to put pressure on the landlord in those negotiations or merespite.[83] On the evidence, Chen Xi had established that Triple Union knew tenants wereresident in the upstairs apartment. Triple Union must have known that the upstairstenant was there pursuant to a lease with Chen Xi and that such lease would not haveallowed the upstairs tenant to simply abandon the premises and stop paying rentwithout a period of notice to the landlord. Through their directors, Triple Union musthave known that, after earlier occasions when there had been a disruption to the powersupply to the upstairs apartment and, in particular, the loss of a hot water supply tothat apartment, what they did on 23 November 2018 was inevitably going to causeextreme discomfort for the upstairs tenant. The upstairs tenant had made this clearthrough his dealings directly with people associated with Triple Union and to Ms Fengof Chen Xi. There is ample evidence that Ms Feng had recognised those concerns andbrought them to the attention of Triple Union and their directors.6 Above n 3, citing OBG Ltd v Allan, above n 5, at [192] per Lord Nicholls. Thus, allegations ofinducing breach of contract need to be adequately particularised in pleadings: Internet Traders Ltdv Williams [2015] NZHC 1809 at [42].7 Above n 3, at 707, citing Greig v Insole [1978] 1 WLR 302 (Ch).[84] Despite Ms Jia's denial of Triple Union's involvement, it was highly likelyTriple Union had been responsible for putting the notice dated 14 September 2018 onthe door to the upstairs apartment. The notice stated:NoticeAfter the decision of the shareholders meeting of TRIPLE UNION LTD, thePower switch of unit 9 [unit 9 refers to the premises containing both the leasedpremises and the upstairs apartment] the downstairs will be turned off fromnow on. If there is any objection from other people, please contact thelandlord.Triple union Ltd14/09/2018[85] Triple Union's motive or desired result may have been to improve their ownposition in the negotiations then taking place with Chen Xi. As acknowledged by MsJia in her evidence, in November 2018, the directors of Triple Union and their overseasinvestor did not want to continue with Triple Union's lease of the premises.[86] As stated in Todd on Torts:8Although the defendant must know of the existence of the contract, activelyor constructively, and intend to procure the breach of it, it is not necessary thatthe breach be the defendant's desired end in itself. It is sufficient that it is ameans to achieve some other end.[87] The authors also noted: it is generally unlikely that interference with contracts will be motivatedby mere malice. Rather, it is more probable that those who intend to bringabout breaches of the contracts of others do so with the aim of enrichingthemselves, or improving their own position some way. The necessaryintention for the tort of inducing breach of contract will be established if thedefendant aims to procure the breach, regardless of whether the breach is ofhis or her desired or only end, or whether it is a means to obtain some otherbenefit.(footnote omitted)[88] I find the evidence was sufficient to prove, on the balance of probabilities, thatTriple Union did intend to induce the upstairs tenant to walk away from his lease of8 Above n 3, at 708.the upstairs apartment through making it intolerable for him and his family to livethere due to irregular power supply.[89] The Judge held there was also a difficulty with Chen Xi's claim in that ChenXi had not pleaded the factual basis on which it could be asserted Triple Union'sconduct was unlawful. The Judge said, at least potentially, Triple Union's conductwas in breach of cl 15.1 of the Auckland District Law Society lease which Triple Unionhad, in the agreement to lease, agreed to complete. This clause required Triple Unionto allow access by the landlord or their employees and contractors to carry out workson certain services.[90] A defendant's actions do not however have to be in breach of contract or insome other way unlawful if they are tortious through being an inducement to breachcontract with all the elements necessary for such a tort to be established.[91] The authors in Todd on Torts say the judgments of the House of Lords in OBGLtd v Allen provide the starting point today for any consideration of the tort of inducinga breach of contract. As a result, they say essential to the tort are the followingingredients:9(1) There must be a legally enforceable contract in existence.(2) The defendant must have engaged in conduct which in fact induced abreach of the contract.(3) The defendant must have known that his or her conduct would induce thebreach.(4) The defendant's conduct inducing the breach must have caused loss ordamage to the plaintiff.(5) The defence of justification may arise.[92] It was not an element of any of those ingredients that the defendant's conductmust have been unlawful in some way other than as a tort. As the authors of Todd onTorts pointed out, with the judgment of Lord Hoffman in OGB Ltd v Allen10, with9 Above n 3, at 701.10 OBE Ltd v Allan, above n 5, at [38].which the Judges unanimously agreed, inducing a breach of contract and causing lossby unlawful means are two separate torts.11[93] It was accordingly not necessary for Chen Xi to prove that Triple Union'sinterference with the power supply to the upstairs apartment was in breach of theirlease agreement, or for that to have been pleaded in their amended statement of claim.The Judge was thus in error in referring to this as a difficulty for Chen Xi inestablishing their claim against Triple Union, at least as to Triple Union's liability fordamages based on the tort of inducement to breach contract.[94] Triple Union did not contend that their actions in switching off the powersupply to the upstairs apartment were justified and there was no evidential basis forthem to suggest this was so. Switching off the power supply to the upstairs apartmentwas not required to maintain the power supply to Triple Union's leased premises. Itwas not required to protect the premises or to prevent their right to use and enjoy thepremises they were leasing. While they might have been concerned they werepotentially incurring additional power supply charges for electricity used by theupstairs apartment, there was no evidence that they cut off the power supply on 23November 2018 to avoid incurring any such expenses, and it would not have been areasonable way of doing so.[95] The Judge also suggested there was another difficulty for Chen Xi's claim asthere was evidence that Chen Xi's loss resulted not from the upstairs tenant movingout of the property but Chen Xi's inability to lease the upstairs apartment to a newtenant. There was some evidence that, after the tenant had abandoned the upstairsapartment, Chen Xi did have a tenant that might have been willing to take over theupstairs apartment, at potentially a higher rent than the previous tenant had beenpaying, had there not been a problem with the power supply.[96] I find the Judge was in error in adopting that approach. Triple Union was liablein tort for inducing a breach of contract once all the elements of the tort had beenproven and the upstairs tenant had abandoned that contract.11 At 699-701.[97] Chen Xi could however recover damages only for the loss suffered by reasonof the inducement for the upstairs tenant to breach his contract.[98] The starting point was the loss Chen Xi suffered by reason of not receiving therent which the tenant would have been required to pay for the balance of the leasethrough to 15 January 2019. Chen Xi did have a duty to take reasonable steps tomitigate their loss. However, it was Triple Union who had the burden of proving, onthe balance of probabilities, what those steps should have been and how they wouldhave reduced the loss Chen Xi suffered. As stated in Todd on Torts:12The plaintiff is not required to do anything more than is "reasonable" in thecircumstances and the onus rests on the defendant to show that reasonablesteps have not been taken. The question whether the plaintiff has actedreasonably is one of fact to which all the circumstances of the case arerelevant.(footnotes omitted)[99] It was submitted for Triple Union that Chen Xi could have sought to hold theupstairs tenant to the lease and could have issued proceedings to recover from thattenant the unpaid rent for the balance of the lease. The Judge referred to the possibilitythat Chen Xi could have found another tenant for the upstairs apartment who wouldhave paid the same or more than the rent that had been lost.[100] I do not consider, on the evidence, that Chen Xi's claim should have beenreduced on account of the potential for Chen Xi to have recovered their loss throughseeking recovery of the rent from the upstairs tenant. Chen Xi would have faceddifficulty in obtaining a remedy for such a claim against the upstairs tenant when ChenXi were being denied access to the leased premises and thus were unable to have workdone with the switchboard and power supply to assure the upstairs tenant that, in theperiod through to 15 January 2019, there would be an uninterrupted power supply tothe upstairs apartment.[101] On the evidence, Triple Union has not established that Chen Xi should havereduced their loss by finding another tenant for the upstairs apartment for the periodfrom 23 November 2018 to 15 January 2019. It would not have been possible to find12 Above n 3, at 1317.a new tenant willing to move into those premises when Chen Xi could not assure anyprospective tenant there would be an uninterrupted power supply to the upstairsapartment. Chen Xi would not have been able to provide such an assurance becauseTriple Union was denying Chen Xi access to the leased premises for an electrician todo the necessary work. Further, there was evidence indicating Chen Xi made effortsto re-let the apartment.[102] Triple Union has also not established that Chen Xi acted unreasonably in notagreeing to the surrender of Triple Union's lease before 12 April 2019. There was nodispute Triple Union had contracted to lease the premises for five years from 29 June2018. Any issue over the metering for the supply of electricity to the upstairsapartment could have been remedied simply by an electrician making appropriaterepairs or changes to the switchboard arrangement downstairs, as happened whenChen Xi was ultimately able to obtain access to the leased premises. There was nochallenge to the Judge's determination that Triple Union remained liable for rent forthe leased premises until the agreed cancellation of the lease on 9 April 2019.[103] Chen Xi thus established that the loss they incurred from Triple Union'stortious liability in tort for inducement of a breach of contract was the rent of $4,800they lost through the upstairs tenant abandoning that lease. Further, this loss shouldnot be reduced to reflect a lack of reasonable mitigating action by Chen Xi.[104] Chen Xi had also claimed for a loss of anticipated rental at $725 per week for15 weeks from 18 January 2019 to 26 April 2019.[105] I concluded from Ms Feng's evidence that she had discussions with the upstairstenant as to what the rent for him would be in 2019. Because she wanted to keep himas a tenant, the rent for him would have been $600 per week, although tenants in otherapartments were paying $700 per week. She said, after the Court order of 9 April 2019terminating the lease had been made, it took some time to make the necessary changesto the electrical system and get the upstairs apartment ready for new tenants. This didnot happen until August 2019. The new tenants then agreed to pay $720 per week.[106] On Ms Feng's evidence, if Triple Union had not disrupted the power supply tothe upstairs apartment, it is likely the existing tenant would have renewed the lease ata rental of $600 per week. Accordingly, if Triple Union was liable for damages equalto the rent that could have been obtained for the upstairs apartment after 15 January2019, the damages would have had to be based on a rental of $600 weekly.[107] Ms Feng said in evidence that it took several days after 9 April 2019 for her toobtain access to the leased premises and some further time for her to have anelectrician make the changes necessary to ensure the power supply to the upstairsapartment was independent of the supply to the leased premises.[108] It was understandable for Chen Xi to consider they had suffered a loss of rentalfor the period from 24 November 2018 to 26 April 2019 by reason of Triple Union'sdisruption of the power supply to the upstairs apartment. Chen Xi's claim washowever based on a tortious inducement to the upstairs tenant to breach its contractwith Chen Xi. There was no lease in place for the period after 15 January 2019.Chen Xi's claim for damages for loss of rental for the period after 15 January 2019could not be based on the tort of inducement to breach a contract, the legal basis onwhich the claim had been presented in the District Court.[109] Chen Xi might well have claimed that amount by way of damages for TripleUnion's breach of cl 15.1 of the lease agreement which the parties had agreed wouldapply with the signed agreement to lease. But, Chen Xi had not pleaded that TripleUnion was liable for such damages on such a basis. In the relevant amended statementof claim, Chen Xi had not referred to the terms of the deed of lease which Triple Unionhad agreed to enter into when signing the agreement to lease. Clause 15.1 of that leaserequired the tenant to permit Chen Xi and their employees and contractors to haveaccess to the premises "to install inspect repair renew or replace any services" whichwere not the responsibility of the tenant. There was no reference in the pleadings tothat clause.[110] There was no evidence from Ms Feng that, after 15 January 2019, Chen Xi hadput Triple Union on notice that, in terms of cl 15.1 of the lease, they were required toallow Chen Xi and an electrician they had engaged to enter the premises to do thework required to provide a secure power supply to the upstairs apartment, and thatTriple Union would be liable for any loss Chen Xi might suffer by reason of not beingable to do this. In cross-examination of Ms Jia, it was not suggested that, in continuingto deny Chen Xi access to the leased premises to fix the switchboard problem, TripleUnion was in breach of cl 15.1 of the lease.[111] The inference I draw from the evidence is that, after 15 January 2019, Chen Xiknew Triple Union was denying Chen Xi and their electricians access to the leasedpremises to do the work necessary to secure the electrical supply to the upstairsapartment. On 16 January 2019, Chen Xi filed proceedings seeking only an order forcancellation of the lease and judgment for rent and rates arrears. Chen Xi thus putTriple Union on notice that they would be held liable for rent and rates for the leasedpremises while the lease continued. It was only after the agreed cancellation of thelease in April 2019, with the filing of the amended statement of claim on 23 May 2019,that it was suggested Triple Union would or could be liable for rent that Chen Xi wasunable to obtain from the upstairs apartment through the continuing disruption to thepower supply.[112] The Judge noted that, at the outset of the hearing, he had refused Triple Unionleave to amend their pleading so as to allege the defence of "accord and satisfaction".[113] The Judge decided in the circumstances of this case that it would be unfair toallow Chen Xi to pursue a claim for a loss suffered by reason of a breach of cl 15.1 ofthe lease. I do not consider there was any error in that regard. Chen Xi's entitlementwas to the damages suffered by reason of Triple Union's tort in inducing the upstairstenant to breach his agreement and abandon the upstairs apartment. The loss for whichTriple Union was liable was thus the sum of $4,800.Conclusion[114] For all the above reasons, I have concluded that the Judge in the District Courtwas in error in dismissing the part of Chen Xi's claim that was for Chen Xi's loss ofrental from the upstairs apartment. The judgment in the District Court for Triple Unionas to that part of Chen Xi's claim is quashed. Judgment is now given for Chen Xi inthe sum of $4,800.[115] Chen Xi is also entitled to interest on the $4,800 under the Interest on MoneyClaims Act 2016 from the date Chen Xi's amended statement of claim was filed on 23May 2019 to the date of payment in respect of this judgment. That interest is to becalculated at the relevant rate using the online calculator in accordance with theInterest on Money Claims Act.13[116] As the successful party on this appeal, Chen Xi are entitled to costs on a 2Bbasis. Chen Xi are also entitled to an order that the amount paid into Court as securityfor costs on the appeal is to be released to Chen Xi. If there is any dispute as to thecosts which Triple Union are to pay, Chen Xi is to file a memorandum as to the amountthey seek within four weeks of this judgment. Triple Union is to file a memorandumin reply within two weeks of receiving Chen Xi's memorandum. Any reply by ChenXi is to be filed within one week of receiving Triple Union's memorandum. Thememoranda are to be no longer than three pages. Any costs issue will be determinedon the papers.[117] As an order for costs was made in the District Court for Chen Xi as thesuccessful party in the proceedings there, there is no need for either this Court or theDistrict Court to reconsider the costs order made in the District Court in light of ChenXi's success on this appeal.Solicitors:Eagles Eagles & Redpath, InvercargillC M Ruane, Barrister, Christchurch.13 "Civil Debt Interest Calculator" Ministry of Justice: https://www.justice.govt.nz/fines/civil-debt-interest-calculator/