ASB Bank Limited v Lau

[2024] NZHC 1854

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-1556

[2024] NZHC 1854

UNDER THE

Land Transfer Act 2017

BETWEEN

ASB BANK LIMITED

Applicant

AND

EE KUOH LAU

Respondent

Hearing:	on the papers
Counsel:	B J Upton for Applicant
Judgment:	8 July 2024

JUDGMENT OF MOORE J

[Order that caveat be removed]

This judgment was delivered by me on 08 July 2024 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date: ………………………….

Solicitors:

Simpson Grierson, Auckland

ASB BANK LIMITED v EE KUOH LAU [2024] NZHC 1854 [8 July 2024]

[1]    ASB Bank Limited (ASB) seeks an order against the respondent, Ee Kuoh Lau (Mr Lau) that a caveat lodged by him against the title to a property located at 256 Oteha Valley Road, Albany, Auckland (certificate of title 692414) be removed.

[2]    The ASB also seeks orders that Mr Lau be permanently restrained from lodging, attempting to lodge or instructing any other person or entity to lodge any caveats against the title to the above property, including by his agents or otherwise.

[3]Costs relating to the application are also sought to be fixed in ASB’s favour.

Background

[4]    The property in question is, as noted, situated at 256 Oteha Valley Road, Albany.

[5]    In 2015, ASB agreed to advance funds to the registered proprietor, Ms Junge Xu secured over the property by a mortgage in its favour. The funds were advanced to Ms Xu on three separation occasions:

(a)on or around 12 June 2015, under a Revolving Credit Facility;

(b)on or around 1 September 2015, under a Revolving Credit Facility and Term Loan; and

(c)on or about 29 September 2015, under a Term Loan.

[6]    ASB’s mortgage warranted that there was no interest or agreement to give an interest in the property and prohibited Ms Xu from doing anything, without the consent of ASB, which might adversely affect the security interest of ASB under the mortgage. When ASB registered the mortgage on 3 September 2015, ASB was not aware of any other interest in the property. At no time was ASB’s consent sought in relation to the giving of a beneficial interest pursuant to a constructive trust, or indeed, any other interest. ASB has not consented to any party having an interest in the property in priority to its registered mortgage.

[7]    Mr Lau lodged his caveat on 10 October 2023, just over eight years after the mortgage was registered.

[8]    The caveat states that the following interest in the property is claimed by Mr Lau and:

The above named caveator claims a beneficial interest in the land contained in the CT 692414 pursuant to a constructive trust of which the registered owner Junge XU as trustee.

[9]    Ms Xu defaulted on her obligations under the mortgage by failing to pay debts when they fell due. As a consequence, on 15 February 2024, ASB issued a notice under s 119 of the Property Law Act 2007 (PLA notice). ASB’s solicitors served the PLA notice on Ms Xu pursuant to a substituted service order, dated 15 February 2024.

[10]   On 6 May 2024, ASB’s solicitors sent a letter to Mr Lau notifying him, as caveator on the title, of Ms Xu’s default under the mortgage and the service of the PLA notice.

[11]   The PLA notice expired unremedied on 15 March 2024. From that point, ASB as a mortgagee became entitled to exercise its power of sale over the property.

[12]   On 6 June 2024, ASB’s solicitors sent Mr Lau a letter requesting that he remove the caveat. No response was received.

[13]   On 11 June 2024, ASB’s solicitors received Court documents from Ben Han of Essence Law Limited (Essence Law) via email. Mr Han said that he had been instructed by Mr Lau to send the documents. The documents included the following:

(a)notice of proceeding – interlocutory application by plaintiff for summary judgment dated 19 October 2023;

(b)interlocutory application by plaintiff for order for summary judgment, dated 19 October 2023;

(c)statement of claim, dated 19 October 2023; and

(d)affidavit in support of interlocutory application by plaintiff for order of summary judgment, dated 19 October 2023.

[14]   On 14 June 2024, ASB’s solicitors received correspondence from Mr Lau via the Department of Corrections. In that correspondence Mr Lau indicated that he was in Rimutaka Prison. He stated that he would voluntarily withdraw the caveat if there was no equity remaining after the mortgagee sale.

[15]   On 17 June 2024, ASB’s solicitors responded to Mr Lau by email through Essence Law. In that correspondence the solicitors stated that:

(a)Mr Lau’s proposition was unacceptable to ASB;

(b)Mr Lau did not have a caveatable interest in the mortgaged property;

(c)even if Mr Lau did have an interest in the property, it would be subordinate to ASB’s mortgage; and

(d)ASB maintains its requirement that the caveat be removed.

[16]   On 19 June 2024, ASB’s solicitors emailed Essence Law to ask whether they had been instructed by Mr Lau. Mr Han responded by saying “I don’t have clear instructions yet. I was told that he had sent something through prison yesterday, but I have not received anything since yesterday.”

Procedural background

[17]   On 2 July 2024, ASB’s application was called before Associate Judge Brittain. The Judge’s minute of that date records that ASB’s application had been served on Mr Lau on 1 July 2024 and that he had filed no notice of opposition. There was no appearance on his behalf when the matter was called in Court.

[18]   The Judge noted that Mr Lau had no arguable basis for a caveat, adding that any interest asserted by Mr Lau was subsequent to the registered mortgage and subject to it.

[19]   The Judge then referred to the application to restrain Mr Lau from lodging, attempting to lodge or instructing any other person or entity to lodge any caveat against the title. He noted that an Associate Judge does not have the jurisdiction to make such an order. Only a High Court Judge has that power. The Judge noted that the applicant had filed a memorandum requesting that the matter be dealt with urgently by the Duty Judge because the applicant has entered into an agreement to sell the subject property.

[20]   It is against that background that the matter has been referred  to  me  as  Duty Judge.

Decision

[21]This application may be dealt with in short order.

[22]   It is plain on the material before me that there is no merit to Mr Lau’s limited/conditional opposition to this application.

[23]   This is not the first time Mr Lau has lodged a caveat alleging the existence of a constructive trust. This Court has held such grounds to be incapable of supporting a caveat.

[24]   Furthermore, despite knowing that this application has been filed, Mr Lau has made no attempt to oppose it, despite instructing legal advisors.

[25]Accordingly, I grant the application to remove the caveat.

[26]   The next question is whether restraining orders are appropriate. I am satisfied that they are. I am satisfied that an injunction expressed in the terms of the application, is appropriate because the potential injury should restraining orders not be made cannot be adequately compensated in damages and is reasonably necessary to preserve the position of ASB. I agree with the applicant that it is entirely likely that the respondent could lodge further caveats on the property citing other false interests as he has done so frequently in the past. I am also concerned there is a chance that the current sale process will not deliver a willing buyer and that further sale steps will be

required between today and the close of the tender date. Preventing further steps by Mr Lau is important and accordingly I make orders in terms of the application filed.

[27]   This leaves the question of costs. While any order is unlikely to yield any effective satisfaction for the applicant, I am prepared to make orders if counsel still considers this course appropriate although I would invite ASB to consider the utility of such a course. In the event that ASB, notwithstanding my observations, elects to pursue costs I direct it to file a memorandum not exceeding three pages. In that event I shall deal with costs on the papers.

[28]   Accordingly, orders are made in terms of ASB’s originating application dated 24 June 2024.

Moore J