Green Land Investment Limited v Mao

[2020] NZHC 1000

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-606

[2020] NZHC 1000

IN THE MATTER

of s 142 of the Land Transfer Act 2017

AND

IN THE MATTER

of an application for the removal of certain caveats

BETWEEN

GREEN LAND INVESTMENT LIMITED

Applicant

AND

JIAWEN MAO

Respondent

Hearing:	13 May 2020
Appearances:	G M Illingworth QC and D Liu for the applicant Respondent in person, assisted by E Lau
Judgment:	14 May 2020

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 14 May 2020 at 4.00pm.

Pursuant to Rule 11.5 of the High Court Rules

………………………… Registrar/Deputy Registrar

Counsel/Solicitors:

Grant Illingworth QC, Auckland Heritage Lawyers, Auckland

GREEN LAND INVESTMENT LIMITED v MAO [2020] NZHC 1000 [14 May 2020]

[1]        By the present application, given priority for urgent hearing, the applicant (Green Land) seeks to remove a caveat lodged against property at 387 Ormiston Road in Auckland’s Flat Bush by the respondent (Ms Mao), and to prevent her from lodging further caveats without this Court’s permission.

[2]        In the urgent circumstances by which the application was argued against an unrepresented Ms Mao, operating in other than her original language, and in the course of a highly-compressed 90-minute hearing, I am not prepared to address the injunction sought. The present interim injunction ordered without notice by Downs J on 29 April 2020 continues to have effect in its terms. Neither do I address Ms Mao’s application for third-party discovery.

Background

[3]        The property’s registered proprietor is Liansen Mao, Ms Mao’s father. The property is next to Green Land’s intended subdivision. Green Land and Mr Mao are parties to a Landowner Agreement dated 1 April 2015, by which land forming the property’s driveway was to be transferred to Green Land, for vesting in Auckland Council as a road (as is a condition of the subdivision’s consent). There are disputes arising. The background is explained in greater detail in other Green Land proceedings.1

[4]        Ms Mao’s caveat, in its terms, prevents that transfer (although she nonetheless would consent on stipulated conditions), risking purchasers rescinding (under s 225(2)(b) of the Resource Management Act 1991) or terminating (in reliance on a ‘sunset’ clause in) their agreements for sale and purchase in the subdivision. Development loans to Green Land soon also are to expire. It previously has been held Green Land has standing to seek such caveats’ removal.2

[5]        The interest Ms Mao claims under the caveat is as guarantor to a $1.675m loan provided to a family trust of which she and her children are among discretionary and constitute final beneficiaries. The loan is claimed to have been raised to set off debt, and to pay regulatory fines and reparations to which Ms Mao is liable. Until his retirement on 16 January 2016, Mr Mao was settlor and trustee of the family trust. Ms Mao’s substitution for him as trustee is recorded in a deed dated 8 May 2018.

1      Mao v Mao [2020] NZHC 738.

2      Li v Green Land Investments Ltd [2019] NZHC 2991 at [29].

Relevant law

[6]       Section 142 of the Land Transfer Act 2017 economically provides “[t]he court may, on application by a person who has an estate or interest affected by a caveat against dealings, order that the caveat is removed”. It is accepted the new formulation made no change to the position formerly under s 143 of the Land Transfer Act 1952, in which the court “may make such order in the premises, either ex parte or otherwise, as to the court seems meet”.

[7]       On challenge, it is for the caveator to establish an arguable case of a caveatable interest in the land:3 at its broadest, “an estate or interest in the land, whether capable of registration or not”.4 Caveats against dealings must describe “the nature of the estate or interest claimed by the caveator (which must be stated with sufficient certainty)” and detail “how the estate or interest claimed is derived from the registered owner”.5

[8]       Once the arguable case is established, justice ordinarily requires the caveat’s maintenance.6 Nonetheless, there is a residual discretion to remove it, to be exercised “cautiously”.7 Such discretion may be exercised:8

… only where the Court is completely satisfied that the legitimate interests of the caveator will not thereby be prejudiced. If, on the facts of a case, it can be seen that the caveator can have no reasonable expectation of obtaining benefit from continuance of the caveat in the form of the recovery of money secured over the land or specific performance of an agreement or if the caveator’s interests can be reasonably accommodated in some other way, such as by substituting a fund of money under the control of the Court, then it may be appropriate for the caveat to be removed notwithstanding that the right to the claimed interest is undoubted.

An example of the necessary caution is “where the Court finds there is no practical advantage to maintaining a caveat and the caveator will not be prejudiced”.9

3      New Zealand Limousin Cattle Breeders Society Inc v Robertson [1984] 1 NZLR 41 (CA) at 43; Castle Hill Run Ltd v NZI Finance Ltd [1985] 2 NZLR 104 (CA) at 108; Holt v Anchorage Management Ltd [1987] 1 NZLR 108 (CA) at 115; Sims v Lowe [1988] 1 NZLR 656 (CA) at 660.

4      Land Transfer Act 2017, s 138(1).

5      Land Transfer Regulations 2018, r 5 and Sch 2.

6      Orams Marine (Auckland) Ltd v Ports of Auckland Ltd (1994) 6 TCLR 88 (CA) at 92.

7      Botany Land Development Ltd v Auckland Council [2014] NZCA 61, (2014) 14 NZCPR 813 at [24].

8      Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656.

9      Botany Land Development Ltd v Auckland Council, above n 7, at [24].

Discussion

[9]Ms Mao described her caveatable interest as:

… an equitable mortgagee as at 15.8.2018, 31.8.2018, 10.12.2019 persuasion an equitable mortgagee grant by Liansen MAO (Trillion, Brillion and others family trust), the registered proprietor over all its right title and interest in all of its properties described and comprised under CT 482726 under term loan agreements/debt set-off declarations/Deed of assignment dated 15.8.2018, 31.8.2018, 10.12.2019, between Liansen MAO (Trillion, Brillion and others family trust), the register proprietor and Jiawen MAO the caveator.

On Green Land’s subsequent enquiry as to those “term loan agreements/debt set-off declarations/Deed of assignment”, Ms Mao’s solicitors only responded:

Under the agreement dated 20 December 2015 between the Registered owner, Green Land Investment Limited and the owner of 423 Ormiston Road, Flat Bush (later subdivided and known as 387 Ormiston Road), the Trillion Billion and other Family Trust, the caveator as a trustee of the aforesaid Trust has a cavetable interest in part (lot 129 as referred to the aforesaid Agreement and as per shaded area of the enclosed plan) of its property described and comprised number CT 690701.

[10]     None of that describes the nature of the claimed interest with anything like the requisite certainty. Neither does it detail the derivation from Mr Mao. Instead the evidence is of Ms Mao’s January 2016 substitution for Mr Mao as trustee for her family trust. The property at issue in this proceeding is not included in the May 2018 record of the property affected by the substitution. The instruments relied on all post- date Ms Mao’s substitution.

[11]     In submissions, Ms Mao relied only on the term loan agreement dated 10 December 2019, identifying her as having loaned $1.675 million to the family trust. The standard form document is partially completed in her handwriting, and signed only by her, expressly as “trustee”. It purports to secure $15 million by a fourth mortgage over the property.

[12]     There are multiple difficulties with the contended agreement. First, there is nothing to link it with Mr Mao as registered proprietor of the property. Ms Mao’s contention he only held the land as trustee for the family trust is not evidenced, and Ms Mao’s substitution does not expressly extend to this property.

[13]     Neither is there any evidence Ms Mao advanced any money to the trust. Pressed with that omission, she pointed to her regulatory liabilities, but without any explanation as to why the trust is liable for them. The authenticity of the $850,000 debt claimed already has been doubted.10 No attempt was made to evidence the balance of liability, let alone that Ms Mao provided funds for any of its satisfaction.

[14]     Under questioning from me, Ms Mao asserted her interest now was as guarantor of a loan to the trust from someone else. Pressed again to substantiate her guarantee, Ms Mao could only return to her regulatory liabilities. Nor is there any explanation for how Ms Mao could exercise any power as trustee to benefit herself.11

[15]     Far from an arguable case for her caveatable interest in the land, Ms Mao points to no interest at all. In that circumstance, I have no reason to posit if I might exercise my residual discretion, which would have to postulate the existence of Ms Mao’s legitimate interest in the land. I therefore will order the caveat’s removal.

Result

[16]I order caveat 11699979.1 be removed.

Costs

[17]     In my preliminary view, as the successful party, Green Land is entitled to indemnity costs and disbursements on their application. That is because, from what I presently know of it, Ms Mao’s conduct may meet the requisite level of impropriety:12 an attempt to obtain judgment in her favour by conscious and deliberate dishonesty; by fraud.13 If that is not accepted by the parties, and they cannot otherwise agree, costs are reserved for determination on short memoranda of no more than five pages – annexing a single-page table setting out any contended allowable steps, time allocation, and daily recovery rate – to be filed and served by the plaintiffs within ten

10 Li v Green Land Investment Ltd, above n 2, at [42]–[47].

11 Fenwick v Naera [2015] NZSC 68, [2016] 1 NZLR 354 at [69]–[74].

12 HCR 14.6(4)(a) and/or (f); Prebble v Awatere Huata (No 2) [2005] NZSC 18; 2 NZLR 467 at [6]; Bradbury v Westpac Banking Corporation [2009] NZCA 234; [2009] 3 NZLR 400 at [6] and [28]; Flujo Holdings Pty Ltd v Merisant Company Inc [2018] NZCA 226 at [34]–[35].

13 Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94, [2013] 1 NZLR 804 at [29].

working days of the date of this judgment, with any response and reply to be filed within five working day intervals after service.

—Jagose J