Golden Touch Investment v Zhu
[2025] NZHC 1150
•5 June 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-003008
[2025] NZHC 1150
BETWEEN GOLDEN TOUCH INVESTMENT AND TRADE COMPANY LIMITED
First PlaintiffJIAN TAN
Second PlaintiffAND
JIANZHONG ZHU
First Defendant
CYPRESS INVESTMENT HOLDING LIMITED
Second DefendantLINSHENG HUO
Third Defendant
GOLDENLINKS REAL ESTATE LIMITED
Fourth Defendantcont. over
Hearing: 25 March 2025 Appearances:
Plaintiff in Person
M Singh / P S Kim for the First, Second and Third Defendants K Perry for the Fourth Defendant
Judgment:
5 June 2025
JUDGMENT OF ASSOCIATE JUDGE COGSWELL
This judgment was delivered by me on 5 June 2025 at 11.30 a.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date.......................................
GOLDEN TOUCH INVESTMENT AND TRADE COMPANY LTD v ZHU [2025] NZHC 1150 [5 June 2025]
CIV-2024-404-001651
UNDER Part 12 of the High Court Rules
IN THE MATTER of a summary judgment application for
breach of contract
BETWEEN JIANZHONG ZHU
Plaintiff
JIAN TAN
Defendant
CIV-2024-404-002517
IN THE MATTER of a summary judgment application for
possession and ancillary orders
BETWEENCYPRESS INVESTMENT HOLDING LIMITED
Plaintiff
YONGQIN LIU
First Defendant
JIAN TAN
Second Defendant
Introduction
[1] These three related proceedings concern the mortgagee sale of a property at 309 Don Buck Road, Massey, Auckland (the property). The property is a five-unit development.
[2] The property was owned by Golden Touch Investment and Trade Company Limited (Golden Touch). Golden Touch was in breach of its funding arrangements and its mortgagee sold the property. The development was incomplete at the date of sale. A shortfall resulted.
[3] From that seemingly uncomplicated fact scenario three separate High Court proceedings have resulted.
[4]This judgment determines applications filed under all three proceedings.
The parties
[5]The parties involved in the three proceedings are:
Party name Reference used in this decision
Description
Golden Touch Investment and Trade Company Limited
Golden Touch
Previous registered proprietor of the property
Jian Tan
Ms Tan
Director of Golden Touch, and
guarantor under mortgage granted to Jianzhong Zhu
Jianzhong Zhu
Ms Zhu
Lender to Golden Touch
Cypress Investment Holding Limited
Cypress
Purchaser of the property at mortgagee sale
Yongqin Liu
Ms Liu
Alleged lessee under lease granted by Golden Touch
Linsheng Huo
Mr Huo
A consultant engaged by Ms Zhu who Golden Touch
allege is her husband
Golden Links Real Estate Limited
Harcourts
A real estate agency, trading as Harcourts Three Kings, which is the real estate agency effecting the mortgagee sale of
the property to Cypress
Applications before the Court
[6] There are three proceedings in this Court arising out of the mortgagee sale of the property:
(a)CIV-2024-404-1651—a claim by Ms Zhu for the loan shortfall (the
shortfall claim);
(b)CIV-2024-404-2517—a claim by Cypress for possession of land and for mesne rent against Ms Liu, Ms Tan and Golden Touch (the possession claim); and
(c)CIV-2024-404-3008—a claim by Golden Touch and Ms Tan for orders cancelling the registration of the mortgagee sale, and/or damages (the cancellation claim).
[7]The applications for hearing are:
(a)Ms Zhu’s application for summary judgment against Ms Tan under the shortfall claim;
(b)Cypress’ application for summary judgment for possession of land and mesne rent on the possession claim against Ms Liu, Golden Touch and Ms Tan;
(c)an application for summary judgment by Ms Zhu, Cypress and Mr Huo on the cancellation claim; and
(d)an application for summary judgment or strike-out by Harcourts on the cancellation claim.
Approach to summary judgment
Summary judgment for plaintiff
[8]Rule 12.2(1) of the High Court Rules 2016 provides:
The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
[9] The relevant principles governing a summary judgment application are well-established:1
(a)The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried. The Court must be left without any real doubt or uncertainty.
(b)The onus is on the plaintiff, but where the evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated.
(c)The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable.
[10] A defendant is under an obligation to lay a proper foundation for their defence in the affidavits filed in support of the notice of opposition.2
Summary judgment for defendant
[11] Rule 12.2 permits a defendant who has a clear answer to the plaintiff which cannot be contradicted to put up the evidence which constitutes the answer so that the proceedings can be summarily dismissed.3
[12] Rule 12.2(2) permits the Court to give judgment against the plaintiff “if the defendant satisfies the Court that none of the causes of action in the plaintiff’s
1 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].
2 Middleditch v NZ Hotel Investments Ltd (1992) 5 PRNZ 392 (CA) at 394.
3 Westpac Banking Corp v M M Kembla NZ Ltd [2001] 2 NZLR 298 (CA) at [60].
statement of claim can succeed”. Usually summary judgment for a defendant will arise where the defendant can offer evidence which is a complete defence to the plaintiff’s claim.
Overall approach to summary judgment applications
[13] In relation to both the applications for summary judgment by the plaintiffs (Ms Zhu in the shortfall claim and Cypress in the possession claim), and the applications for summary judgment by the defendants in the cancellation claim (Ms Zhu, Cypress, Mr Huo and Harcourts) the Court is not required to resolve material conflicts of evidence or assess the credibility of deponents at the summary stage.
[14] Nonetheless, it need not accept uncritically evidence that is inherently lacking in credibility, as noted earlier, where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable. In the end, the Court’s assessment of the evidence is a matter of judgment.
The Court may take a robust and realistic approach where the facts warrant it.4
[15] In this case, that guidance is of particular moment because ultimately all the applications boil down to resolving one single proposition: did Ms Zhu discharge her duties of care when selling the property by mortgagee sale? The answer to that proposition determines each of the applications.
Background
[16] Golden Touch was the former owner and developer of the property. The property comprises five townhouse units on one site.
[17] In January 2023, Golden Touch encountered financial difficulties. Ms Tan explained that Golden Touch ran into difficulties due to the impact of Covid and the resulting cost increases and scarcities in both labour and materials occurring. As a result, Golden Touch sought to refinance the company’s existing lending.
4 See Krukziener v Hanover Finance Ltd, above n 1.
[18]Ms Tan was introduced to Ms Zhu, who agreed to provide funding of
$3,800,000.00 secured by way of a first-ranking mortgage and a guarantee from Ms Tan. The terms of the documents are not relevant to the present determination of the applications. Repayment was due in July 2023.
[19] Golden Touch was unable to repay the loan on its due date for repayment. The property was not completed, and Code Compliance Certificates were not issued.
[20] Ms Zhu agreed to provide further time to repay and made a further small loan available to Golden Touch of $50,000. The new date for repayment was 30 November 2023.
[21] Despite the extension to the repayment date and the further funds made available to it, Golden Touch defaulted again in November 2023.
[22] In February 2024, Ms Zhu commenced steps to sell the property by way of mortgagee sale.
[23] She issued a notice under s 119 of the Property Law Act 2007. The notice was not complied with.
[24] She enlisted the services of Harcourts to market the property for sale by way of tender.
[25] I pause here to note that Golden Touch and Ms Tan do not challenge Ms Zhu’s entitlement to conduct a mortgagee sale. Rather, they take issue with the discharge of Ms Zhu’s duties when undertaking the mortgagee sale.
[26] The marketing of the property was orthodox. It consisted of an information pack, signage at the front of the property, website listings, and engagement with interested parties. The listing period was extended from four to eight weeks in an attempt to attract more interest in the property. No internal inspections were available during the mortgagee sale campaign.
[27] Ultimately Ms Zhu received two tender offers, one from Cypress and another from Navpreet Singh.
[28] Negotiations took place and Ms Zhu ultimately accepted Cypress’ tender. As detailed below, there is an issue about the GST treatment of the offer, and what Golden Touch and Ms Tan say is a significant difference between the offers, and hence a breach of her duties as mortgagee.
[29] The mortgagee sale settled on 19 August 2024 with registration occurring on 26 August 2024.
[30] The delay was due to an unsuccessful attempt by Ms Tan to lodge a caveat on the title of the property (which registration was rejected by LINZ).
[31] Following settlement of the transaction, Cypress inspected the property and discovered that Golden Touch and Ms Tan had allegedly granted a previously undisclosed long-term lease over the property to Ms Liu.
[32] On being served with possession proceedings commenced by Cypress, Ms Liu disclaimed any rights under the purported lease. Golden Touch and Ms Tan remain in possession of the property based on their claims of Land Transfer Act fraud.
[33] The property has tenants in place and Golden Touch or Ms Tan are retaining the rental income received from those tenants.
[34] That has deprived Cypress of actual possession of the property and the rental being earnt from it and led to Cypress’ possession proceedings.
[35] Golden Touch and Ms Tan’s focus is now on an argument in the cancellation claim that the sale transaction was procured by fraud and hence was Land Transfer Act fraud. If successful, that proceeding would result in title to the property revesting in Golden Touch.
[36] I note here that Golden Touch originally filed an “interlocutory application on notice for an order cancelling the registration [of the transfer to Cypress]”. That interlocutory application was struck out on procedural grounds by the Court on 10 February 2025. The Court held that the interlocutory application did not concern a matter of procedure or some ancillary relief to that claimed in the statement of claim, but rather that it sought the final relief in the cancellation proceeding.
[37] The progress of the mortgagee sale to settlement was bedevilled by attempts to clog the title by the registration of caveats. Three caveats were registered, and a fourth was attempted by Golden Touch and Ms Tan or parties who were allegedly associates of them. All three caveats were removed by the Court and the fourth attempt was rejected by Land Information New Zealand. Costs were ordered in favour of Ms Zhu as a result.
[38] For completeness I also note that Golden Touch and Ms Tan attempted to injunct the sale to Cypress, but that application was discontinued following comments by the Duty Judge at the injunction application’s first call.
[39]As matters stand currently:
(a)the property is owned by Cypress, but it is unable to derive the rental income from the properties as a result of the diversion of the rental income stream under apparent tenancy agreements that Golden Touch and Ms Tan hold with tenants of those properties. Cypress seeks orders for possession against Golden Touch and Ms Tan.
(b)Ms Zhu seeks judgment against Ms Tan for the shortfall following the mortgagee sale.
(c)Golden Touch and Ms Tan have filed the cancellation claim and all of the defendants seek summary judgment against that claim.
Timeline of events
Date Event 13/01/2023 Term Loan Agreement 06/07/2023 Caveat (Lau) registered 17/07/2023 Loan repayable (first default) 02/09/2023 Deed of Loan Extension and Variation 30/11/2023 Loan repayable (second default) 27/02/2024 Agency Agreement with Harcourts 15/03/2024 PLA Notice served on Golden Touch 20/04/2024 PLA Notice expires 20/04/2024 Tender deadline / offers from Cypress and Singh / sold to Cypress 16/05/2024 Caveat (First Development) registered 17/05/2024 Sale to Cypress unconditional 22/05/2024 Caveat (JSE) registered 11/06/2024 Golden Touch/Tan apply for interim injunction 18/06/2024 Caveat (Lau) removed 25/06/2024 Caveat (First Development) removed 28/06/2024 Original settlement date for sale to Cypress 04/07/2024 Golden Touch/Tan discontinue application for interim injunction 08/07/2024 Jianzhong Zhu files summary judgment application against Jian
Tan
31/07/2024 Tan attempt to register caveat 08/08/2024 Caveat (JSE) remove 19/08/2024 Sale to Cypress settled 27/08/2024 Cypress discovers property occupied and tenanted 05/09/2024 Cypress writes to all occupants at the Property advising it is new owner and seeking details of occupants’ legal rights to reside 17/09/2024 Yongqin Liu asserts 12 year lease over the Property 11/10/2024 Cypress files summary judgment application against Yongqin Liu 14/11/2024 Yongqin Liu disavows lease over the Property and requests to be removed as party 15/11/2024 Golden Touch/Tan file cancellation claim 19/11/2024 Golden Touch and Jian Tan joined as defendants in Possession Claim 10/02/2025 Golden Touch/Tan interlocutory application for cancellation struck out
Golden Touch and Ms Tan’s position
[40]Ms Tan is self-represented.
[41]I granted leave, by consent, for her to represent Golden Touch at the hearing.
[42] Both Golden Touch and Ms Tan filed detailed submissions responding to the applications. They filed voluminous affidavit evidence.
[43] I invited Ms Tan at the conclusion of the hearing to reiterate the points she wished to make regarding the key issues. I advised her that this was her opportunity to bring anything to my attention that was relevant to the issues I was to determine.
[44]She expressed her complaints with the mortgagee sale process as follows:
(a)the marketing of the property for the mortgagee sale was poor;
(b)Ms Zhu’s refusal to accept an offer from Golden Touch of repayment of $3,000,000 with the balance being secured by a second mortgage was a breach of her duties as mortgagee;
(c)the Cypress offer accepted by Ms Zhu was less than the offer from Mr Singh when GST is taken into account and was also a breach of her duties as mortgagee;
(d)Ms Zhu’s secrecy regarding Cypress and its director;
(e)an inability to locate Cypress’ director, Ruoyu Wang;
(f)a suggestion that Cypress was connected or associated with Ms Zhu, which she alleged to be Land Transfer Act fraud; and
(g)a suggestion that the GST “mistake” by Ms Zhu was evidence of some improper dealing with Cypress.
Structure of this judgment
[45] As stated above, the key proposition for determination is whether Ms Zhu discharged her obligations as mortgagee in accordance with the law. Associated with that are the complaints raised by Golden Touch and Ms Tan of collusion or improper dealing with Cypress and the current impasse regarding the occupation of the property by tenants installed by Golden Touch and Ms Tan.
[46] I intend to deal with each of the complaints raised by Golden Touch first, then apply my factual findings to the causes of action in the cancellation proceeding.
[47] That will then inform each of the defendants’ applications for summary judgment or strike out.
[48] I will then deal with Cypress’ possession proceedings and finally, Ms Zhu’s shortfall proceeding.
[49] The defendant group in the cancellation proceedings say that the factual allegations made by Golden Touch and Ms Tan against them can be grouped as follows:
Against Ms Zhu
(a)Ms Zhu wrongly clogged Golden Touch and Ms Tan’s right of redemption of the mortgage.
(b)The marketing of the mortgagee sale was inadequate and/or defective and so breached s 176 of the Property Law Act 2007:
(i)There was incorrect and misleading information in the listing to discourage potential purchasers.
(ii)Secrecy over the mortgagee’s actions.
(iii)One of the listing agents was unlicensed for a period of time during the marketing process.
(c)Ms Zhu should have accepted a request by Ms Tan to restructure the loan.
(d)Ms Zhu should have accepted an offer from Ms Tan's associate JSE Investment Ltd (JSE) to purchase the property.
(e)Ms Zhu should not have accepted Cypress’ offer which was ultimately lower than the other tender.
Against Cypress
(f)By virtue of Ms Zhu's 'suspicious actions', there are issues about the bona fides and identity of Cypress’ director, Ruoyu Wang. They say that the 'only appropriate and reasonable inference' is that Cypress is an associate or under the control of Ms Zhu, which impugns the mortgagee sale.
Against Mr Huo
(g)It is alleged that he is Ms Zhu's husband and therefore complicit in matters, thus he must account for damages. This is despite (a) that not being true; and (b) Mr Huo having no contractual or other duty towards Golden Touch and Ms Tan.
Did Ms Zhu and Mr Huo clog Golden Touch’s right of redemption?
[50] The first ground of complaint is that Golden Touch sought information from Ms Zhu and Mr Huo "to allow [Golden Touch] to secure an offer from other financiers to discharge [Ms Zhu’s] mortgage". As a result of their refusal to do so, Golden Touch was unable secure a new loan and therefore unable to redeem the mortgage. However, there is no evidence of the information sought being a requirement for any refinancing, nor any evidence of attempts to refinance. As Ms Zhu states in her affidavit of 31 January 2025:
Ms Tan says that [Golden Touch]'s ability to refinance the loan was hindered because Clover Law did not provide her with my FSP number and FMA registration. That is also nonsense. Ms Tan's email was sent to Clover Law only one working day before the loan was due to expire (17 July 2023). Anyway, the information Ms Tan was asking about could easily have been checked on the Financial Services Provider Register which is accessible online.
[51] Ms Zhu submits that Golden Touch’s response to this is unclear; Ms Tan's affidavit suggests that this may not be true, but fails to explain how. There is also no
evidence supplied of further requests for information between the first and second default.
[52] Even assuming this allegation to be true, there is no evidence of any causative link between any failure by Ms Zhu to provide her FSP number and any inability of Golden Touch to refinance. It was incumbent on Golden Touch to meet its obligations to Ms Zhu under the loan and to take such steps as it needed to achieve that in time. Seeking information on the last day for refinancing and then complaining about a delay in providing information publicly available is a makeweight complaint.
[53] Second, Golden Touch says that Ms Tan asked Ms Zhu to compromise on the sums owed to her:
I told [Mr Huo] that [Golden Touch] could borrow $3,000,000 against the Property to partially repay the loan if Ms Zhou (sic) is agreeable to become the second priority mortgagee of the Property, but all of my proposals and suggestions were rejected by Mr Huo.
[54] There is no obligation on Ms Zhu to agree to accept anything other than full repayment given the outstanding Property Law Act notice and no obligation to cede priority on her security by accepting part payment only and the security of a second mortgage.
[55] Third, Golden Touch complains about Ms Zhu’s refusal to negotiate with JSE. JSE was one of the parties that lodged a caveat on the title of the property. The Court removed that caveat and granted costs to Ms Zhu.
[56] Golden Touch relies on an affidavit from Yunqian Zhang on behalf of JSE, where she says they made an offer to purchase the property for $3,000,000 plus GST. She exhibits a without prejudice letter dated 16 July 2024 where Ms Zhu said she had no further interest in negotiating.
[57] However, that was in the context of JSE having wrongly registered a caveat against the property, which it was refusing to remove unless Ms Zhu supplied her with details about the mortgagee sale purchaser.
[58] Ms Zhang also annexes an email between herself and JSE's counsel dated 24 July 2024 with details of her intended proposal:
I agree on withdraw the caveat if Ms Zhu reach agreement of selling the whole property with 3M to me…
If they want and would like to give a reasonable loan offer to me, I can borrower from them for settling the project as well. So they could put First Mortgage on this project, and also have the interest gain in the following 6 months.
If they hold this property on hand, they have no way to get CCC and title and need time to sell. The holding cost also a big number and lots of annoy things to worry about. I wish they could think it on over all situation and benefits for both.
[59] This offer was not in fact conveyed to Ms Zhu, although there were without prejudice discussions between counsel for Ms Zhu and counsel for JSE about 'exiting' the agreement with Cypress and dealing with JSE instead.
[60]In response, on 25 July 2024, Ms Zhu said:
As indicated earlier, and now with client instructions, if JSE is genuine about purchasing the property it should negotiate with Golden Touch and exercise the right to redeem the mortgage.
[61] Nonetheless, Ms Zhu was under no obligation to worsen or jeopardise her position. As the Court discussed in Dorchester Finance Ltd v Tee-Wang, a mortgagee is under no obligation to take steps that would prejudice its security.5
[62] On the facts set out above, Ms Zhu was faced with a choice: either she negotiate with Golden Touch/JSE and take security that may prove to be worthless or continue with the mortgagee sale process that she was entitled to advance.
[63] The defendants say that the following are relevant factors showing why Ms Zhu did not clog Golden Touch’s right to redeem the mortgage:
(a)Ms Zhu's s 119 PLA notice dated 13 March 2024 sought payment of the sum of $4,263,495.89. Golden Touch’s proposal would require Ms Zhu to receive a part-payment only of the due debt (assuming
5 Dorchester Finance Ltd v Tee-Wang HC Christchurch CIV-2008-409-814, 21 August 2008 at [27].
Golden Touch could fund that amount) and accept a second ranking security for the balance.
(b)On 20 April 2024, Ms Zhu accepted an offer following an eight week- marketing process undertaken by a licensed professional real estate agency.
(c)From 12 June 2024, Ms Zhu was resisting Golden Touch and other parties' attempts to derail the mortgagee sale. She had to make three applications to this Court (and began a fourth) to have caveats removed.
(d)Ms Zhu was unwilling to share Cypress' details with Golden Touch because she was suspicious of their intentions and concerned that they would continue in their attempts to derail the sale as they had already done when they, for example, sent a private investigator to track down the director of Cypress upon learning it was the purchaser of the property.
(e)Another property owned by Golden Touch at 305 Don Buck Road had also been sold by way of mortgagee sale. Ms Zhu says that Golden Touch would not have had the resources to complete the development (and thus Ms Zhu was correct to be wary about entering into any further lending with these parties).
(f)Further, Golden Touch had also applied, unsuccessfully, to injunct the mortgagee sale.6
(g)Neither Golden Touch nor Ms Tan ever attempted to redeem the mortgage by offering full repayment of the outstanding loan. Golden Touch and its associates could have engaged with the mortgagee sale tender process itself, but they did not. Rather, their energies were focussed on impeding the sale.
6 Tan v Golden Touch Investment and Trade Company Ltd HC Auckland CIV-2024-404-1397, 1 July 2024 (Minute of Moore J).
[64] It is clear that in the context of the meritless caveats, the failed injunction attempt, the offers to accept part payments and inferior security, the apparent offer from JSE (made in the context of its wrongful caveat) and the mortgagee sale of another of Golden Touch’s properties, that Ms Zhu had good grounds to treat any proposal by Golden Touch or its associates with real caution.
[65] Ms Zhu had a clear legal right to sell the property. That is not disputed by Golden Touch and Ms Tan. Ms Zhu was not obliged to enter into arrangements that increased the risk of further losses. That is, in effect, what Golden Touch and its associates offered.
[66] It has been suggested that Ms Zhu could have 'exited' the agreement with Cypress and instead sold the property to JSE. However, it is well-settled that the existence of any such clauses do not place an obligation on Ms Zhu to terminate the agreement. As the Court in Davison v Westpac said:7
…Westpac as vendor retains the right, but not the obligation, if certain events should intervene… to rescind the contract for sale. In my view, the reservation of the right of rescission under this clause does not derogate from its binding nature. In particular, it does not cause it to become a conditional contract and the agreement for sale remains binding upon both parties unless and until the vendor exercises the right of rescission. The clause is primarily intended as a protection to the vendor in case it becomes difficult or impossible to achieve the sale…
[67] Accordingly, on the evidence before the Court, I find that Ms Zhu and Mr Huo did not clog Golden Touch’s right of redemption.
Was the marketing campaign flawed?
[68] Golden Touch says that the marketing process was flawed because it was carried out by an unlicensed agent, the material contained errors, and these errors “put the property down” so that a reasonable price was not achieved for the property.
[69]The facts are that:
7 Davison v Westpac Banking Corporation HC Auckland CP490/98, 5 November 1998 at 13. See also Bhana v Westpac Banking Corporation (2003) 4 NZ ConvC 193,794; British Mercantile & Loan Trust Co Ltd v Trustees Executors Ltd (2006) 7 NZCPR 738 (HC); Horne v Westpac Banking Corporation HC Wellington CP207/97, 26 August 1997.
(a)Ms Zhu engaged a reputable real estate agency (Harcourts) to undertake the mortgagee sale process;
(b)Mr Wang, for Harcourts, has given details of the process in an affidavit dated 29 January 2025:
(i)The Property was marketed for sale by tender, on TradeMe, Realestate.co.nz, and the Harcourts' website. A sign of the advertising was erected at the front of the property.
(ii)Harcourts produced a lengthy information pack for prospective purchasers. That information pack included photographs, a valuation (supplied by Golden Touch when first obtaining the loan), an inspection report demonstrating progress of the development, and the consented plans.
(iii)Mr Wang engaged with various interested parties during the marketing period (and gives evidence of those efforts). He even engaged with a competing real estate agency and supplied all relevant information.
(iv)Although no internal inspection occurred, he took Cypress’ director for a roadside inspection of the property on 27 March 2024.
(v)The tender deadline was extended from 5 April 2024 to 20 April 2024. On 15 April 2024, Mr Wang sent all interested parties a reminder of the tender deadline date.
[70] For Golden Touch, it suggested that Harcourt’s marketing drove down the price achievable for the property and so that was a breach of Ms Zhu’s duties to them. However, when pressed on why the marketing campaign was defective, Ms Tan on behalf of Golden Touch could only point to:
(a)the use of photographs of the property from an earlier stage of construction; and
(b)an image on a webpage showing the number “2” alongside an image of a bath which she said was a wrongful representation that the units had two bathrooms and not two and a half bathrooms as was the case.
[71] Golden Touch and Ms Tan attempted to impeach the mortgagee sale marketing by annexing a statement by Mr Qian, an individual who held a real estate salesperson's license for four years. This person does not supply sworn evidence, does not qualify himself as an expert, and appears to repeat many of the same assertions as advanced by Golden Touch. It does not assist the Court.
[72] At best, the statements of Mr Qian simply say that he would have advertised the property differently, with more detail. That is not a breach of the mortgagee’s duties, it is just reflecting that a different approach may have been taken.
[73] On the issue of the photographs, he comments that the photographs were of poor quality and taken from poor positions. That reflects the fact that Ms Tan was in occupation of the property and was “causing difficulties” according to Mr Ruoyu Wang. It appears that the agents could not obtain access to take better quality photographs. Hence, any failures here are attributable to the mortgagor’s conduct.
[74] In relation to the use of the photographs, I find that nothing in the photographs supports the argument that there was a breach of the mortgagee’s duties. This was an incomplete development. Purchasers would know that work was required to complete the development.
[75] In relation to the reference to two instead of two and a half to describe the number of bathrooms, again, I find nothing in that image that could support an argument that the mortgagee’s duties were breached. The information pack clearly and correctly set out the number of bathrooms each unit had. Any person interested and reading the information pack would know exactly how many bathrooms the units each had.
[76] The evidence does not address the use of the photographs and how that impacted the marketing campaign, nor does it address the impact of the reference to two bathrooms and not two and a half.
[77] There is no expert valuation evidence opining to what effect, if any, the photographs complained of and the apparent reference to two instead of two and a half bathrooms had on the sale price of an uncompleted property being sold by mortgagee sale.
[78] The evidence does show that Harcourts went ahead with following up any interested party and taking reasonable steps to sell the property for the best price achievable.
[79] I do not find that there was a breach of the mortgagee’s duties arising from the marketing of the property.
Was Ms Xie an unlicensed agent?
[80] Ms Tan submitted that Ms Xie, who was one of the two agents listed in the marketing material was unlicensed during the marketing campaign.
[81] This is denied by Ms Xie. Mr Ko and Ms Xie both gave evidence about Ms Xie's registration. The evidence shows that she was licensed by Harcourts at the relevant times.
[82] There is no merit to what Golden Touch says about her being unregistered. It is wrong, Ms Xie was licensed when the property was sold, she has been licensed since 2021.
[83] I find that she was licensed but even if she had not been licensed, there would be no causative link between that fact and any loss supposedly attributable to it. Ms Tan was unable to point to any loss arising from the fact that Ms Xie was unlicensed other than that the marketing campaign was “poor”. That has been addressed above.
[84] I find that Ms Xie was licensed at the relevant times and that there would be no causative link between that fact (if I am wrong and she was unlicensed) and any loss attributable to that.
Was the best price obtained?
[85]At the close of the tender period, Ms Zhu received two offers for the property:
(a)$3,300,000 (incl GST) from Cypress; and
(b)$3,200,000 (plus GST) from Navpreet Singh.
[86] Ms Zhu attempted to negotiate with both. She made a counter-offer to Cypress for $3,800,000 (incl GST), and Cypress counter-offered at $3,330,000 (incl GST). She was told that Mr Singh would not be interested in increasing his offer.
[87] JSE, for its part and assuming for a moment that its offer was genuine, was only offering $3,050,000 plus GST. That was less than both the Cypress and Singh offers (putting aside the GST issue discussed below).
[88] Ms Tan valued the property at $3,000,000 hence her attempts to negotiate with Mr Huo on this basis; she also said "[i]f you were to sell at auction right now, you probably wouldn’t be able to recover all the loans". Communications between Mr Wang and interested parties during the marketing period demonstrate a range of appraised values, ranging between $2,000,000–3,000,000. Such a divergence is unsurprising on the mortgagee sale of an uncompleted development.
[89] A valuation included in the marketing material appraised the total gross realisation “As if Complete” at $5,040,000 (incl GST) and noted that this value assumed individual sale of each house and did not represent a 'sale in one line' where a discount would be expected.
[90] At the time of marketing, the property did not have either Code Compliance Certificates or titles issued. Thus, discounts would be expected for its state of partial- completion, for the 'sale in one line' and for the forced sale circumstances.
[91] There is no evidence to establish that Ms Zhu did not obtain the best price reasonably obtainable.
Was Cypress was somehow connected or associated with Ms Zhu?
[92] Golden Touch and Ms Tan complain that Ms Zhu has been secretive about Cypress and its director, they have been unable to locate Cypress’ director Ruoyu Wang and Cypress was somehow connected or associated with Ms Zhu. I deal with these three complaints together, as they are effectively the same complaint.
[93] The background is that, on discovering that Ms Zhu had accepted a tender, Golden Touch insisted on being told the identity of the purchaser. It was not entitled to that information. Ms Zhu, legitimately, had concerns that Golden Touch would attempt to interfere with that sale.
[94] This was in the context of the ongoing lodging and challenging of caveats registered by parties allegedly related to Golden Touch and attempts to stop the mortgagee sale from proceeding or settling.
[95] The defendants say that if the sale to Cypress was indeed a stratagem to defraud Golden Touch and Ms Tan and obtain control of the development, then it was a very thinly veiled one (and for that reason cannot be the case). Any such conspiracy would also need the involvement of Harcourts in undertaking a sham marketing process over almost eight weeks, involving the market at large, with great risk to its reputation and license; that is not proven.
[96] Golden Touch hired private investigators and a signature analyst to try and establish a link between Ms Zhu and Cypress; the best they have been able to come up with is speculation about Mr Wang's identity.
[97] Mr Ruoyu Wang gave an affidavit directly responding to the speculative suggestions made by Golden Touch. He confirms that he is independent of Ms Zhu and did not know her or Mr Huo before being introduced to the property. I accept his evidence. Cypress is independent of Ms Zhu. There was no collusion.
[98] Mr Wang goes on to deal with the other allegations made by Ms Tan about his dealings with Mr Hou, who assisted him in finalising the Code Compliance Certificates for the property and the issue of separate titles. There is no legitimate ground of complaint about his dealings with Mr Huo. He was engaged as a consultant to assist Ms Zhu achieve Code Compliance and, therefore, to complete the development.
[99] I do not consider that any issue raised by Golden Touch and Ms Tan about Cypress’ bona fides has any merit. It was, on the evidence, an arms-length purchaser.
[100]There is no evidence to suggest that the sale to Cypress was fraudulent.
What is the effect of the GST “mistake” and is it somehow evidence of some improper dealing with Cypress
[101] The tender offer accepted by Ms Zhu from Cypress was for $3,300,000 (incl GST). The tender offer from Mr Singh was for $3,200,000 (plus GST).
[102]The net difference between Cypress' offer and the Singh offer is $304,347.83.
[103] Ms Zhu concedes that her acceptance of the Cypress offer as inclusive of GST was a mistake and that that mistake meant that in fact Mr Singh’s offer was higher.
[104] Ms Zhu has acknowledged, as part of her shortfall claim, that she may have made an error in relation to the GST treatment of Cypress’ offer. While it remains unclear whether she must account for GST, she has agreed to reduce her claim to account for that potential error (i.e. the difference between Cypress’ offer and the Singh offer).
[105] Ms Zhu's actions in reducing her claim have now ameliorated any grievance that Golden Touch and Ms Tan may have about Ms Zhu not accepting the Singh offer. Effectively, that means that Golden Touch is not adversely affected by her acceptance of the Cypress offer, as she is giving the benefit of that error to Golden Touch.
[106] It is also the case that there is no absolute rule against a mortgagee selling to a related party, but in those situations, there is an onus on the mortgagee to demonstrate that reasonable steps were taken to obtain the best price reasonably obtainable.8 However, Ms Zhu does not resort to that; both she, and Mr Wang for Cypress, were not known to one another prior to this transaction. This was not a related party transaction.
[107] As set out above, both Ms Zhu and Mr Ruoyu Wang have given evidence that they were not known to each other and are independent parties. Golden Touch was unable to provide any evidential support for a submission that this GST error somehow showed that the sale to Cypress was improper.
[108] As Ms Zhu has acknowledged and provided for that error, and there were no other like offers, there is nothing in this issue that assists Golden Touch and Ms Tan.
Cancellation claim
[109] The cancellation claim by Golden Touch and Ms Tan pleads four causes of action as against Ms Zhu, Cypress and Mr Huo:
(a)First cause of action: that Ms Zhu and Mr Huo clogged the first plaintiff's right to redeem the mortgage under s 97 of the Property Law Act 2007. A declaration is sought under this heading.
(b)Second cause of action: that Ms Zhu breached her duty of care under s 176 of the Property Law Act 2007 when exercising her power of sale. Damages are sought against her and Mr Huo.
(c)Third cause of action: that Ms Zhu breached her equitable duty to act in good faith when exercising her power of sale. Damages are sought against her and Mr Huo.
8 Tse Kwong Lam v Wong Chit Sen [1983] 1 WLR 1349 (PC).
(d)Fourth cause of action: the alleged circumstances of the mortgagee sale were manifestly unjust and render the sale to Cypress void or voidable. An order cancelling registration of the transaction under ss 54–57 of the Land Transfer Act 2017 is sought.
First cause of action: entitlement to redeem
[110]Section 97 of the Property Law Act 2007 provides:
(1) The current mortgagor or any other person entitled to redeem mortgaged property may redeem it in accordance with this subpart at any time before it has been sold, under a power of sale, by the mortgagee or a receiver.
(2) The mortgagee must, on payment to the mortgagee of all amounts and the performance of all other obligations secured by the mortgage, at the expense of the current mortgagor or other person seeking to redeem the mortgaged property, discharge the property from the mortgage in accordance with section 83.
[111] I have already found that at no time did Golden Touch or Ms Tan offer full repayment of the outstanding loan to Ms Zhu. At best, Golden Touch and Ms Tan offered a part repayment and an inferior second mortgage.
[112] There is no evidence of any attempt to redeem the mortgage in accordance with s 97 of the Property Law Act 2007 and no evidence of any wrongdoing on the part of Ms Zhu that prevented Golden Touch and Ms Tan from redeeming the mortgage. Overall no offer was received from any party that would have fully repaid Ms Zhu.
[113] Whilst Ms Zhu had the right to cancel the agreement to Cypress on receipt of an offer to redeem from Golden Touch, no such offer was received. The ability of the mortgagee to cancel the agreement to Cypress was a right, not an obligation and Ms Zhu never received an offer of full redemption from Golden Touch or Ms Tan, or from JSE.
Second and third causes of action: breach of s 176 of the Property Law Act 2007 and equitable duty of good faith
[114] These two causes of action are based on similar grounds, but it is settled that both duties coexist.
[115] The obligation to take reasonable care to obtain the best price reasonably obtainable was discussed in Westpac New Zealand Ltd v Lamb.9 In that case Wylie J expanded on the analysis of Asher J in Public Trust v Ottow to make the following points:10
(a)The statutory obligation is not to obtain the best price reasonably obtainable, but to take reasonable care to obtain the best price reasonably obtainable;
(b)A property is only worth what somebody is prepared to pay for it at the time of sale;
(c)Valuations lose much of their significance if reasonable care is taken, there has been a properly advertised and conducted auction, and the property has been sold at auction or by negotiation after the auction;
(d)If reasonable care is taken, it does not necessarily follow that the best price reasonably obtainable will, in fact, be achieved;
(e)What constitutes reasonable care will always turn on the facts of the case. The steps taken by the mortgagee in fulfilling the statutory duty have to be looked at in the round;
(f)In considering the reasonableness of the care taken, the courts should be slow to second-guess the actions of a mortgagee acting on apparently sound professional advice.
(footnotes omitted)
[116]It has also been recognised by the Court that:11
… when a property is sold in "forced sale" circumstances, such as a mortgagee sale, it is likely to sell at a substantial discount from the market value that the property would achieve in a sale undertaken by an owner not under pressure to sell. A mortgagee sale is not a willing buyer/willing seller situation. Lower prices are simply an unremarkable consequence of mortgagee sales.
(footnotes omitted)
[117]The purpose of s 176 is:12
…to protect the vulnerability of those to whom the duty is owed, arising from the absence of any incentive for a mortgagee to obtain the full value of the property over and above the sum needed to clear the mortgage debt.
9 Westpac New Zealand Ltd v Lamb [2012] NZHC 319.
10 At [34]. Citing Public Trust v Ottow (2009) 10 NZCPR 879 (HC) at [17].
11 Small (2005) Ltd v Mahon [2024] NZHC 3251 at [91].
12 Apple Fields Ltd v Damesh Holdings Ltd [2001] 2 NZLR 586 (CA) at [56] (referring to the former s 103A).
[118] The various complaints raised by Golden Touch and Ms Tan about the process of the mortgagee sale have all been discussed above. I conclude that there is no legitimate or established complaint they have about the mortgagee sale process. I note in particular the comment of Wylie J in Westpac New Zealand v Lamb, that the Court should be slow to second-guess the actions of a mortgagee acting on apparently sound professional advice.13
[119] Ms Zhu was acting on the advice of a reputable real estate agency at all times. The price achieved was within the bounds of the valuations held, the marketing campaign was adequate given the constraints of a mortgagee sale, Ms Xie was a licensed agent at all relevant times, there was no collusion or manipulation of the sale with Cypress and the error with GST has been resolved to Golden Touch and Ms Tan’s benefit. Overall, the many allegations made by Golden Touch and Ms Tan can be viewed as nothing more than a further part of their attempts to prevent the legitimate exercise of the mortgagee’s rights by Ms Zhu. The allegations are either not supported by probative evidence or directly contradicted by evidence provided by other witnesses, whose evidence I accept.
Fourth cause of action: manifestly unjust
[120] The defendants say that this cause of action is essentially the crux of what Golden Touch and Ms Tan intend to achieve as their actions thus far have all been designed to regain ownership and control of the property.
[121] Section 55 of the Land Transfer Act 2017 empowers the Court to make an order cancelling the registration of a title to land if it is satisfied that it would be manifestly unjust for the purchaser to remain the registered owner of the estate or interest.
[122] Though there is no fraud in this instance, s 55(2) provides that the existence of forgery or other dishonest conduct does not, of itself, constitute manifest injustice.
[123] In addition, under s 55(3), an order may only be made if the Court is satisfied that in the circumstances the injustice could not properly be addressed by
13 Above n 9. See also Taylor v Westpac Banking Corporation Ltd (1996) 7 TCLR 177 (CA).
compensation or damages, whether under subpart 3 or otherwise. This is settled law.14 This is also why Moore J expressed doubt over Golden Touch's attempt to injunct the mortgagee sale:
I pointed out to Mr Tan the various inadequacies associated with the pleadings in this manner and also questioned whether injunctive relief was an appropriate remedy, rather than a claim in damages.
[124] The defendants say that there are no grounds to cancel the registration of the sale to Cypress; it was an arms-length bona fide purchaser for value. I agree. There is an acknowledged high standard of evidence required to establish fraud. That is to prevent parties raising such serious allegations without strong proof.
[125] In this case, for the reasons set out above, there is no evidence getting anywhere close to establishing fraud on the part of Ms Zhu in the conduct of the mortgagee sale.
[126] It follows from this, that there are no grounds at all to establish Land Transfer Act fraud or a claim to damages for anything Ms Zhu did in attempting to realise the outstanding loan owing to her by Golden Touch.
[127] Ms Zhu had an interest in obtaining the best possible price for the property. She was trying to recoup her significant advances in the face of the value in the property falling short of the outstanding amounts due. She also knew of Golden Touch and Ms Tan's impecuniosity, and hence was alive to the fact that recovery of any shortfall would be complicated, if not impossible.
[128] There has been ample evidence filed in the various proceedings. None of it demonstrates any underhanded or fraudulent behaviour by Ms Zhu, Mr Huo or Cypress.
[129] The best that Golden Touch can do is raise vague, unsubstantiated allegations about the sale process, and point towards Ms Zhu's GST error as evidence that this
14 Even if the mortgagor has an arguable case for alleging a sale at an undervalue, this does not support an injunction to prevent the sale. Any failure to obtain a higher price can be easily compensated in damages: Bevin v Public Service Investment Society Ltd (1994) 2 NZ ConvC 191,821 (CA); Bhana v Westpac Banking Corporation, above n 7; Crisford v Bank of New Zealand [2012] NZHC 3290, (2012) 14 NZCPR 1.
was all part of a broader stratagem, in collusion with Cypress and Harcourts to deprive Golden Touch and Ms Tan of their ownership of the property. That has been addressed above. The key point is this: Golden Touch was in breach of the loan with Ms Zhu. Ms Zhu was entitled to assert her rights as mortgagee. She did that.
[130] I agree with the defendants that the claims against Ms Zhu, Mr Huo and Cypress in the cancellation proceeding cannot succeed and should be dismissed.
First, second and third defendants’ summary judgment applications
[131] Ms Zhu, Cypress and Mr Huo apply for summary judgment against Golden Touch and Ms Tan on their claims against them in the cancellation claim.
[132] Rule 12.2 permits the Court to give judgment against the plaintiff if the defendants satisfy the Court that none of the causes of action in the plaintiffs’ statement of claim can succeed.
[133] The grounds on which Ms Zhu, Cypress and Mr Huo seek summary judgment are:
(a) Ms Zhu gave notice of her intention to exercise her power of sale under s 119 of the Property Law Act 2007 as a result of Golden Touch’s breach of the loan agreement.
(b) Ms Zhu engaged Harcourts to market the property and Harcourts carried out a full and proper marketing campaign.
(c) The tender period closed without Golden Touch remedying Ms Zhu’s notice.
(d) Golden Touch and Ms Tan failed to participate in the tender process or redeem the mortgage, instead embarking on a series of caveats and an injunction application.
(e) Cypress and its director were independent of and not colluding with Ms Zhu in the conduct of the mortgagee sale.
(f) There is no basis for impugning the mortgagee sale process. There are no circumstances giving rise to any impression of fraud and no manifest injustice.
[134] They argue that the claims against them in the cancellation proceeding are without merit and the evidence and legal merits are completely in their favour so the Court can safely enter summary judgment against the claims of Golden Touch and Ms Tan in the cancellation proceedings.
[135] For the reasons that are set out above, there is neither a factual dispute meriting investigation at a substantive hearing, nor has Golden Touch and Ms Tan laid an evidential foundation by way of opposition to the defendants’ summary judgment application that warrants further investigation by way of a substantive hearing. There is no credibility contest, the evidence put forward by Golden Touch and Ms Tan gets nowhere near the standard required to raise an arguable opposition to the various defendants’ summary judgment applications.
[136] It is accepted that the Court will not normally resolve material conflicts of evidence or assess the credibility of deponents at the summary stage. Equally, it need not accept uncritically evidence what is inherently lacking in credibility, for example, where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable.
[137] Much of the evidence advanced by Golden Touch and Ms Tan is either inconsistent with undisputed contemporary documents, is lacking in credibility or inherently improbable. It is difficult not to see much of Golden Touch and Ms Tan’s evidence as nothing more than an attempt to try to avoid the inevitable consequences of their own default under the loan from Ms Zhu.
[138] The Court is entitled to take a robust view on the evidence before it and, when appropriate, make findings on a summary judgment application even where there is contrary evidence, if that evidence fails the robust examination test.
[139] As I said at the outset of this judgment, the applications by Ms Zhu, Cypress and Mr Huo boil down to resolving one single proposition: did Ms Zhu discharge her mortgagee’s duties when selling the property by mortgagee sale? The answer to that proposition is yes, Ms Zhu discharged the duties she bore on the mortgagee sale of Golden Touch’s property. There is no credible evidence to support any suggestion that the mortgagee sale and subsequent transfer to Cypress was “manifestly unjust”.
Result
[140] I find that the summary judgment application by Ms Zhu, Cypress and Mr Huo succeeds. They are entitled to judgment against Golden Touch and Ms Tan on all of the causes of action pleaded against them.
Fourth defendant’s summary judgment application
[141] The fourth defendant, Harcourts, applies for summary judgment or strike out against the claims of Golden Touch and Ms Tan against it. The background to Harcourts’ involvement has been set out above, but can be briefly summarised as follows.
[142] Following Golden Touch’s default under the loan agreement, Ms Zhu exercised her right as mortgagee to sell the property. She engaged Harcourts to market and sell the property by mortgagee tender sale.
[143] Harcourts and Ms Zhu entered into a standard form agency agreement under which Ms Zhu became Harcourts’ client. This had the effect that Harcourts owed duties of care in contract and tort and a fiduciary duty to discharge their duties and obligations to Ms Zhu, not Golden Touch or Ms Tan.
[144] Harcourts did not owe a duty of care or fiduciary duty to Golden Touch or Ms Tan in the discharge of its duties on sale of the property. They were not clients of Harcourts.
[145] Notwithstanding the lack of any contractual or other duty owed to them, Golden Touch and Ms Tan have sued Harcourts in the cancellation claim.
[146]The claim against Harcourts is expressed as follows:
FIFTH CAUSE OF ACTION: BREACH OF DUTY OF CARE AND FIDUCIARY DUTY
The plaintiffs repeat paragraphs 1 to 22 above and say further that the fourth defendant has breached its duty of care to the first plaintiff as the Property owner in its marketing of the Property under mortgagee sale.
Particulars
c. The fourth defendant listed an agent who was not licensed at the time of the listing to act on the mortgagee sale;
d. The fourth defendant’s marketing material contains fundamental and substantial errors and misinformation that it is reasonable to conclude that such errors and misinformation impacted the marketing of the Property negatively. The lack of contact and visitation to the Property for viewing further supports such negative impact; and
e. The conduct of the above by the fourth defendant falls short of the requirement for the fiduciary duty to act in the best interests of the first plaintiff.
[147] Before examining the legal impediment to the claim against Harcourts continuing, I note that I have already considered and rejected each of the particulars above as set out by Golden Touch and Ms Tan in the course of considering the applications for summary judgment filed by Ms Zhu, Cypress and Mr Huo. That is sufficient to dispose of the elements of the claim relied on by Golden Touch and Ms Tan in their claim against Harcourts.
[148] But there is a legal defence to the claim that also defeats Golden Touch and Ms Tan’s claim against Harcourts.
[149] Harcourts says that the claim against it is entirely lacking in detail and specificity as to how or why, in the context of the issues giving rise to the claim, the
claimed duty of care and fiduciary duty exists. It is submitted that the claim cannot be cured by amendment or the addition of particulars as the claim against Harcourts is hopeless and incapable of success.
[150] Counsel for Harcourts submitted that where a defendant can provide evidence which, on the balance of probabilities provides a complete defence to the plaintiff’s claim, then it will be appropriate to award summary judgment in favour of the defendant.
[151] As noted earlier and by the Court in Westpac Banking Corporation v M M Kembla New Zealand Limited,15 a defendant, who has a clear answer to a plaintiff which cannot be contradicted, is able to put up the evidence which constitutes the answer so the proceedings can be summarily dismissed.
[152] The type of claims being advanced by Golden Touch and Ms Tan were considered and rejected by the Court in Mao v Hesketh Henry & Ors.16 In Mao the Court determined a summary judgment and/or strike out application filed by the real estate agent. The agent had been sued by a mortgagor/director of a mortgagor company for, among other things, negligence and a breach of fiduciary duty arising out of a mortgagee sale. The facts are similar to this case.
[153] In Mao, the Court explained why a real estate agent could not, at law, owe a duty in negligence or a fiduciary duty to a mortgagor/director of a mortgagor company. The Court placed emphasis, and reliance, on the proximity arguments and policy submissions that point against the imposition of a duty of care and a fiduciary duty or relationship, between a real estate agent and a mortgagor/director of the mortgagor company.17
[154] Critically, in Mao, the Court dismissed the cause of action in negligence and the cause of action for breach of fiduciary duty. In dismissing the negligence and breach of fiduciary duty causes of action Davison J made the following findings.
15 Above n 3, at [60].
16 Mao v Hesketh Henry & Ors [2022] NZHC 2084.
17 At [48]–[52].
(a)With respect to the negligence cause of action:
(i)An agent only owes contractual and fiduciary duties to their client (and for the purposes of a mortgagee sale a real estate agent’s client is the mortgagee);18
(ii)There is clearly no contractual or other relationship between the real estate agent and a mortgagor, or even the director of the mortgagor company because the duty of care is owed to the mortgagee as the real estate agent’s client;
(iii)The claim in negligence could not possibly succeed and was therefore struck out.19
(b)With respect to the fiduciary duty cause of action:
(i)The same factual allegations pleaded in relation to the negligence cause of action are repeated as the basis of the breach of fiduciary duty cause of action against the real estate agent.
(ii)The pleaded claim did not allege facts, which if true, would have given rise to a fiduciary duty owed by the real estate agent. The “nature of the relationship between the real estate agent and their client meant that the agent owed fiduciary duties to [their client (i.e. the mortgagee)]” and not the mortgagor.20
(iii)The breach of fiduciary duty cause of action could not possibly succeed and was therefore struck out.21
18 At [98].
19 At [100].
20 At [101].
21 At [101].
[155] Counsel for Harcourts traversed the similarities between the facts in Mao and the facts in this case. I will not repeat them here other than to record that the facts of both cases are much the same and the case is not distinguishable on the facts.
[156] I find that Mao provides clear and indistinguishable authority for the Court to find that:
(a)In mortgagee sale scenarios, the client is the mortgagee; not the mortgagor or, much less, the director of a mortgagor company. Harcourts’ client in this case was Ms Zhu, not Golden Touch or Ms Tan; and
(b)Harcourts does not owe and cannot owe a co-existing duty of care or fiduciary duty to someone other than its client (meaning it cannot and does not owe a duty of care or fiduciary duty to Golden Touch and Ms Tan at the same time it owes duties to its client).
[157] Ms Tan’s opposition to Harcourts’ application goes no further than to repeat the allegations she and Golden Touch make in challenging the mortgagee sale. Nothing in their evidence rebuts the finding that Harcourts did not and could not owe them duties of care in the conduct of the mortgagee sale. There is no evidence of any voluntary assumption of a duty of care, rather, the relationship was circumscribed by the agency agreement which was with Ms Zhu.
[158] Perhaps recognising this, in their notice of opposition to Harcourt’s application, Golden Touch and Ms Tan say:
…there is not a separate claim against [Harcourts], as it would have been acting as agent for Ms Zhu …and it will be for Ms Zhu to add [Harcourts] as a party, unless its wrongdoings were such that a separate claim against [Harcourts] is deemed necessary.
[159] There is, as a matter of law, no separate claim available to Golden Touch and Ms Tan against Harcourts. They were not Harcourts’ client. Harcourts did not owe them any duty.
Result
[160] I find that the summary judgment application by Harcourts succeeds. It did not owe a duty of care or fiduciary duty to the mortgagor or its director.
[161] Harcourts is entitled to judgment against Golden Touch and Ms Tan on the cause of action pleaded against it.
Result of defendants’ summary judgment applications
[162] All of the first to fourth defendants’ applications for summary judgment against Golden Touch and Ms Tan succeed. They are entitled to judgment against the plaintiffs in the cancellation claim.
Possession claim
[163] Cypress seeks an order for possession. The application was originally only against Yongqin Liu, who asserted exclusive possession of the property by virtue of a previously undisclosed lease.
[164] On being served with the application, Ms Liu filed an affidavit dated 14 November 2024, disavowing any reliance on the purported lease or any interest in the property.
[165] On 19 November 2024, this Court made orders joining Golden Touch and Ms Tan to the possession claim as they were and continue to assert possessory rights. It is appropriate that any orders affect Golden Touch and Ms Tan.
[166] On 28 November 2024, Golden Touch and Ms Tan filed a notice of opposition to Cypress' claim together with an affidavit. Their grounds for opposing Cypress' application are:
Evidence leads to a conclusion that the Applicant's purchase of a mortgaged property at 309 Don Buck Road, Massey, Auckland, via a mortgagee sale, was irregular and fraudulent and the Applicant's purchase of the property should be cancelled.
[167] Golden Touch and Ms Tan continue to assert a right to possession and continue to collect the rent on the property. This must be on the basis of their claim for Land Transfer Act fraud.
[168] Cypress has acknowledged that it will need to seek the termination of the residential tenancies in the Tenancy Tribunal following an order for possession made in this Court, in recognition of its exclusive jurisdiction over those tenancies. It may decide to retain the tenancies.
[169] Cypress’ application for summary judgment is brought under Parts 12 and 13 of the High Court Rules. In accordance with Fox v Fox,22 the usual way to obtain an order for possession of land against occupiers without right is by summary judgment under Part 12. The alternative procedure under Part 13 applies when the land is occupied by one or more “unlawful occupiers”, even if the plaintiff makes an application for summary judgment under Part 12.
[170]High Court Rule 13.1 defines "unlawful occupier" as a person who:
(a)occupies or continues to occupy the land of the plaintiff without the license or consent of the plaintiff or the plaintiff's predecessor in title; and
(b)is not a tenant or subtenant holding over after the termination of a tenancy or subtenancy.
[171]Golden Touch and Ms Tan are not tenants or subtenants who are holding over.
[172]They do not have Cypress’ consent to occupy the property.
[173] Golden Touch and Ms Tan are unlawful occupiers and I find that the order for possession ought to be made. There are no grounds to claim possession given that I have struck out their Land Transfer Act fraud claim.
22 Fox v Fox [2018] NZHC 1021 at [8]–[11].
[174] For Golden Touch and Ms Tan to defeat Cypress' claim, it must show that Cypress was a party to the alleged fraud. I have already found that it was not. I have struck out that claim. It is without merit.
[175] I find that there is no evidence that Golden Touch or Ms Tan can point to that taints Cypress' acquisition of the property such that it should not be entitled to the order for possession it sues for.
[176] Given my finding above, Cypress is entitled to an order that Golden Touch and Ms Tan give possession of the property to Cypress and account to it for their unlawful occupation and deprivation of property, as mesne profits.
[177] Counsel for Cypress notes the comment of the Court in Wakefield v Wakefield:23
[12] The Laws of New Zealand state:
…a proceeding for mesne profits is a claim for damages for trespass. The damages may either be for the loss the lessor has suffered through being out of possession of the land or, if no actual damage caused by the defendant's trespass can be proved, for the value of the premises to the defendant for the period of the defendant's wrongful occupation … Mesne profits, being a type of damages for trespass, may be recovered in respect of the defendant's continued occupation only after expiry of the legal right to occupy the premises.
[178] The rental for the three three-bedroom units was appraised at between $670– 720 at the time of the mortgagee sale. The rental for the two four-bedroom units was appraised at between $780–830 at the same time. This evidence was unchallenged.
[179] The rental amount is corroborated by documentation prepared by Golden Touch and/or its agent in the form of a residential tenancy agreement to a third party, for the sum of $800 per week for one of the four-bedroom units.
[180]Cypress seeks the midpoint of these two assessments, as follows:
23 Wakefield (as executor of Estate of Wakefield) v Wakefield [2021] NZHC 1664.
(a)$695 per week for the three three-bedroom units ($2,085 per week); and
(b)$805 per week for the two four-bedroom units ($1,610 per week);
This results in a total of $3,695 per week from 26 August 2024 (the date that registration of the transaction occurred) to the date that possession is in fact handed back to Cypress.
[181]By the time of the hearing on 25 March 2025, this was 30.29 weeks, a total of
$111,921.55.
Result on Possession Claim
[182]Golden Touch and Ms Tan are unlawful occupiers of the property.
[183] Cypress is entitled to an order for possession of the property against both Golden Touch and Ms Tan.
[184] Cypress is entitled to mesne profits from 26 August 2024 to the date of hearing of 25 March 2025 in the amount of $111,921.55 against both Golden Touch and Ms Tan.
Shortfall claim
[185] Ms Zhu seeks summary judgment against Ms Tan for the shortfall arising following the mortgagee sale.
[186] For the reasons set out above, I have found that Ms Zhu was entitled to conduct a mortgagee sale (Golden Touch and Ms Tan do not challenge Ms Zhu’s right to do so) and that there are no arguable grounds on which to impugn the mortgagee sale process.
[187] Ms Zhu’s claim for judgment for the shortfall is orthodox. She seeks the difference between the outstanding amount of the loan with costs and the amount recovered on the sale to Cypress. Ms Zhu says that if the Court accepts that no
arguable defence exists, then summary judgment should be entered for the loan shortfall.
[188] The claim against Ms Tan is as a guarantor of the loan. There is no opposition to the existence or effect of the guarantee. Nor could there be, the guarantee is properly executed and in orthodox terms.
[189] Ms Tan agreed to guarantee the performance of Golden Touch to Ms Zhu. She agreed to meet Ms Zhu’s actual costs in enforcing her rights.
[190] Ms Zhu's rights and powers of recovery on default are set out at cls 7 and 12 of the loan agreement:
7. RIGHTS AND POWERS OF LENDER ON DEFAULT
…
(f)Costs of default are payable: All sums expended by the lender in the exercise of the lender's rights and powers following a default or in exercising or enforcing or attempting to exercise or enforce any power, right or remedy contained or implied in this contract are payable by you to the lender upon demand. This clause does not limit any other term of this contract relating to costs; nor is it limited by any other such term.
…
12. COSTS
(a) Costs payable by you: You must pay to the lender upon demand, the lender's legal costs (as between solicitor and client) for:
…
(ii) costs on default: legal services arising from or relating to any default under this contract or the enforcement or exercise or attempted enforcement or exercise of any of the lender's rights, remedies and powers under this contract…
[191]Clause 30 (annexure schedule) of the loan agreement also provides:
The Borrower and Guarantor acknowledge and accept that any failures, delays, or breaches by them may result in the Lender's legal costs arising as a result of the failure/delay/breach and as such the Borrower/Guarantor shall be liable for any additional Lender's costs (on a solicitor-client basis which shall be billed on a time and attendance basis) accordingly.
[192] As the Court of Appeal noted in Beecher v Mills about the entitlement to indemnity costs under a contract:24
In principle, anything less than a full indemnity for costs properly incurred must leave the indemnitee with part of the liability for which the indemnifier is prima facie responsible. In the absence of a contrary indication it is not to be assumed that the parties intended such a result.
[193] Ms Tan advances the following grounds to oppose Ms Zhu's claim for the shortfall:
(a)She has not been furnished with any information about the mortgagee sale or how the sale was carried out.
(b)The marketing of the sale was "put-down" to discourage and shut out potential buyers.
(c)Ms Zhu's decision to reject purported offers to purchase the Property was "unthinkable".
(d)Cypress is either associated with, or under the control of, Ms Zhu.
(e)Ms Zhu has failed to discharge her duty under section 176 of the Property Law Act 2007.
(f)The mortgagee sale should be cancelled as it was "irregular and fraudulent".
[194] I have already considered and rejected each of these grounds. There is either no evidence to support Ms Tan’s grounds of opposition or direct evidence contradicting it. There is no evidence before the Court that would justify proceeding to a substantive hearing of the shortfall claim.
[195] As the GST status remains uncertain, Ms Zhu has agreed to forego the potential difference between the two tender offers irrespective of the actual GST position on the
24 Beecher v Mills [1993] MCLR 19 (CA) at 7–8.
sale once that is accounted for by Ms Zhu and determined (the burden of the GST liability (if any) will fall on her as mortgagee).
[196] As has already been found, this answers any complaint Ms Tan or Golden Touch may have about Mr Singh’s offer actually being higher as it was “plus GST”. That makes the actual GST position on the sale irrelevant.
[197] It follows that, on the pleaded shortfall claim, I do not consider that Ms Tan has any arguable defence to that claim. Ms Zhu has provided cogent evidence in support of the amounts claimed. She is entitled to summary judgment for her shortfall claim against Ms Tan.
[198] Following the settlement of the mortgagee sale on 19 August 2024, Ms Zhu received the sum of $3,263,000.03 (including GST, if any). This leaves the following amounts outstanding (as at 25 March 2025):
(a)$666,999.97 (unpaid balance of principal with $304,347.83 conceded).
(b)$198,224.66 (unpaid interest at 14 per cent per annum from 17 July 2023 to 30 November 2023 (136 days, $1,457.53 per day)).
(c)$766,645.00 (unpaid interest at 28 per cent per annum from 1 December 2023 to 19 August 2024 (263 days, $2,915 per day)).
(d)$111,544.06 (further interest on unpaid principal of $666,999.97 at
28 per cent per annum from 20 August 2024 to 25 March 2025 (218 days, $511.67 per day)).
[199] In addition, Ms Zhu's seeks the following sums expended in undertaking the mortgagee sale:
(a)Harcourts’ commission of $67,462.50 (including GST).
(b)Auckland Council rates of $7,986.50.
(c)Water rates of $600.
They are recoverable amounts payable by Ms Tan.
[200] Ms Zhu also claims the legal costs (on a solicitor/client basis) incurred between 26 February 2024 and 26 August 2024 in undertaking the mortgagee sale. The legal costs incurred and paid by Ms Zhu on a time and attendance basis total $129,020.51 and are comprised of the following invoices (including GST and disbursements):
(a)Invoice 92847 dated 28 March 2024 for $10,773;
(b) Invoice 93690 dated 31 May 2024 for $7,064.75;
(c) Invoice 94153 dated 27 June 2024 for $40,875.82;
(d) Invoice 94588 dated 31 July 2024 for $35,980.29;
(e)Invoice 94787 dated 27 August 2024 for $22,688.65; and
(f)Invoice 2166 dated 27 August 2024 for $11,638.
[201] Assessing whether indemnity costs claimed under a contract are reasonable involves the Court assessing whether the tasks undertaken were reasonably necessary and were covered by the contract, whether the charge rate(s) was reasonable, and whether any other general contract law principles deny the claimant its prima facie right to judgment.25
[202] Here, in exercising her rights as mortgagee, Ms Zhu faced difficulties and impediments because of the conduct of Ms Tan and her associates to derail the mortgagee sale or prevent its settlement. Ms Zhu had to challenge four sets of caveat proceedings in this Court.
25 Watson & Son Ltd v Active Manuka Honey Association [2009] NZCA 595 at [20].
[203] At the conclusion of the caveat proceedings, costs on a 2B scale together with disbursements totalling $39,415.31 were awarded in Ms Zhu's favour:
(a)$6,326 (against Augustine Lau in CIV-2024-404-1392).
(b)$6,326 (against First Development Limited in CIV-2024-404-1500).
(c)$26,763.31 (against JSE Investment Holding Limited in CIV-2024- 404-1502).26
[204] The Court is advised that Ms Zhu is yet to recover any costs against these parties.
[205] Ms Tan makes the point that any recovery of these costs against her by Ms Zhu would represent a double recovery if the unsuccessful caveat parties met the costs awards ordered against them. That is correct and is acknowledged by Ms Zhu. To the extent any costs are actually recovered by Ms Zhu, these sums will be set off from the shortfall.
[206] However, until such time as such a recovery is made, the Court is entitled to give effect to the parties’ agreement by ordering costs in Ms Zhu’s favour for all of these other proceedings.
Summary of shortfall claimed
[207] In summary, as at 25 March 2025, the loan shortfall claimed by Ms Zhu against Ms Tan is $1,948,483.20 comprised of:
(a)$666,999.97 (unpaid balance of principal with $304,347.83 conceded).
(b)$198,224.66 (unpaid interest at 14 per cent per annum from 17 July 2023 to 30 November 2023 (136 days, $1,457.53 per day)).
26 Zhu v JSE Investment Holding Limited [2025] NZHC 344.
(c)$766,645 (unpaid interest at 28 per cent per annum from 1 December 2023 to 19 August 2024 (263 days, $2,915 per day)).
(d)$111,544.06 (further interest on unpaid principal of $666,999.97 at 28% per annum from 20 August 2024 to 25 March 2025 (218 days,
$511.67 per day).
(e)$76,049 (expenses of mortgagee sale).
(f)$129,020.51 (legal costs and disbursements of mortgagee sale).
[208] There being no arguable defence available to Ms Tan opposing Ms Zhu’s claim for summary judgment against her for the shortfall and costs following the mortgagee sale, I grant judgment to Ms Zhu in the amounts set out above.
Result of Ms Zhu’s shortfall claim summary judgment application
[209] For the reasons set out above, I find that Ms Zhu is entitled to summary judgment against Ms Tan in the shortfall claim.
[210]The amounts for which judgment are granted are set out above.
Overall result of all applications
[211] All of the first to fourth defendants’ applications for summary judgment against Golden Touch and Ms Tan succeed. They are entitled to judgment against the plaintiffs in the cancellation claim. There being no surviving claims, I strike out the cancellation claim.
[212] Ms Zhu is entitled to summary judgment against Ms Tan in the shortfall claim in an amount of $1,948,483.20.
[213] Cypress is entitled to an order for possession of the property against both Golden Touch and Ms Tan.
[214] Cypress is entitled to mesne profits against both Golden Touch and Ms Tan from 26 August 2024 to the date of hearing of 25 March 2025 in the amount of
$111,921.55.
Costs
[215] Ms Zhu, Cypress Investment Holding Limited, Mr Huo and Golden Links Real Estate Limited are entitled to costs against Golden Touch Investment and Trade Company Limited and Ms Tan on their respective applications or claims against them.
[216]If the parties cannot agree on costs, then the following timetable is to apply:
(a)Any party claiming costs is to file and serve a memorandum not exceeding five pages in length within 20 working days of this judgment.
(b)Any party resisting a costs claim is to file and serve a memorandum not exceeding five pages in length within 30 working days of this judgment.
[217]The Court will determine costs claims on the papers.
Associate Judge Cogswell
Solicitors:
Glaister, Auckland
Heaney & Partners, Auckland Righteous Law, Auckland
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