Hu v Helio Investment and Holdings Limited
[2025] NZHC 1814
•4 July 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-3221
CIV-2025-404-507 [2025] NZHC 1814
UNDER The Land Transfer Act 2017 IN THE MATTER OF
AND OF
an application that caveats 13142543.1 and 13142543.2 lodged against records of title 1130540 and 1130541 respective (North Auckland) being the properties at Lot 1 and Lot 2, 135 Taniwha Street, Glen Innes,
Auckland, not lapse
an application that caveats 13161948.1 and 13161948.2 lodged against records of title 1130545 and 1130547 respective (North Auckland) being the properties at Lot 6 and Lot 8, 135 Taniwha Street, Glen Innes Auckland, not lapse
BETWEEN
ZHENGXI HU
Applicant AND
HELIO INVESTMENT AND HOLDINGS LIMITED
Respondent
Hearing: 13 June 2025 Appearances:
Philippa Daniels for the Applicant Trent J P Bowler for the Respondent
Judgment:
4 July 2025
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
[Application for order that caveats do not lapse]
This judgment was delivered by me on 4 July 2025 at 3:00pm pursuant to Rule 11.5 of the High Court Rules
………………………….
Registrar/Deputy Registrar
ZHENGXI HU v HELIO INVESMENT AND HOLDINGS LIMITED [2025] NZHC 1814 [4 July 2025]
Introduction
[1] The applicant, Mr Zhengxi Hu (Mr Hu), made applications for orders sustaining caveats over Lots 1, 2 and 8, 135 Taniwha Street, Glenn Innes, Auckland (the Property) against Helio Investment and Holdings Limited (Helio) (collectively, the Caveats).
Background
[2] Mr Hu alleges that a joint venture began in 2021 between two couples: Mr Hu and his wife, Ms Wei (Ms Wei) and Mr Brian Feng (Mr Feng) and Ms Limei Lin (Ms Lin). Helio is a company of which Ms Lin is the sole director and shareholder. In 2023 a third couple, Mr Jacky Zhao (Mr Zhao) and Ms Yinki Liu (Ms Liu), joined specifically in relation to the Property.
[3] Mr Hu alleges that the agreement between the parties with regard to the joint venture was oral and characterised by relative informality. Mr Hu describes the arrangement between the parties as follows: Mr Hu would provide funding, generally at Mr Feng’s request, for the purchase of properties, their development, and eventual sale; funds were typically transferred between personal bank accounts; no separate bank accounts were operated for the joint venture.
[4] The parties agreed to subdivide the Property. The registered owner of the undivided freehold title is Helio.
[5] It is common ground that between July and October 2024 Mr Hu and Ms Wei, and Mr Zhao and Ms Liu, attempted to bring the alleged joint venture to a close. An arrangement was reached by which the parties would instruct an accountant to perform an audit which would enable a process of netting off contributions by the parties to take place.1 The arrangement was recorded in a Deed of Settlement dated
1 According to Mr Hu’s submissions, it was established that Mr Zhao wanted to receive a property at 53 Diamond Lane, Riverhead, and Mr Hu and Ms Wei would receive Lots 1 and 2 of the Property.
6 October 2024 (the Deed). Mr Hu alleges the following entitlements were acknowledged as recorded in the Deed:
(a)title to Lots 1 and 2 would be transferred to Mr Hu following the audit and netting off;
(b)once title to Lot 1 had been transferred to Mr Hu, he would transfer his interest in 53 Diamond Lane, Riverhead, to Mr Zhao;
(c)after Lots 1 and 2 were transferred to Mr Hu, his interest in the Property would be concluded;
(d)the audit and netting off would need to take account of funds invested in other properties; and
(e)at clause E of the Deed, a reference to the sum of $870,000 transferred between the parties in respect of Lots 1, 2 and 8 as a “business arrangement among parties” indicates there is further accounting between the parties to be completed.
[6] Mr Hu has lodged the Caveats against the records of title over Lots 1, 2, 6 and 8 of the Property. Lot 6 has since been sold so the application is now only in relation to Lots 1, 2 and 8 of the Property.
Legal principles
[7]Section 138 of the Land Transfer Act 2017 provides, relevantly:
138 Caveats against dealings with land
(1)A person may lodge a caveat against dealings with an estate or interest in land (a caveat against dealings) on the basis that the person—
(a)claims an estate or interest in the land, whether capable of registration or not; or
(b)has a beneficial estate or interest in land under an express, implied, resulting or constructive trust
…
[8] Schedule 2 of the Land Transfer Regulations 2018 provides that a caveat against dealings document, pursuant to s 138 of the Act, is:
A description of the nature of the estate or interest claimed by the caveator (which must be stated with sufficient certainty) or, for a caveat under section 138(1)(d)(ii) of the Act, the matters that establish that there is a risk that the estate or interest may be lost through fraud.
Details of how the estate or interest claimed is derived from the registered owner.
[9] The principles governing the determination of applications to sustain caveats are well-established.2 The onus is on the caveator to demonstrate an interest in the land that suffices to support the caveat, and the caveator must demonstrate a reasonably arguable case to support the claimed interest.3 This means the caveator need not definitively establish his or her right to the interest.
[10] The process by which applications to sustain a caveat are determined is ill- suited to resolving disputed factual questions. An order for removal will only be made if it is clear the caveat cannot be maintained—either because there was no valid ground for its lodging in the first place, or because the ground on which it was lodged has now ceased to exist.
[11] Although the onus of proof lies with the caveator, any conflict between affidavits will generally be resolved in the caveator’s favour.4 This is not to say that the Court is bound to accept uncritically statements in an affidavit that lack precision, are equivocal, inconsistent with the documentary evidence or other statements of the same deponent, or inherently improbable.5
2 See generally Philpott v Noble Investments Ltd [2015] NZCA 342 at [26]. For a statement of the principles, see Wallace v Studio New Zealand Ltd [2021] NZCA 392 at [39]–[41].
3 Botany Land Development Ltd v Auckland Council [2014] NZCA 61 at [24]–[25].
4 Bethell v Rickard [2013] NZCA 68 at [22]. See also MacRae v Rapana HC Auckland M633/94, 17 June 1994.
5 Barrett v IBC International Ltd [1995] 3 NZLR 170 (CA) at 175, citing Eng Mee Yong v Letchumanan s/o Velayutham [1980] AC 331 (PC) at 341; and Xie v 126 Waimumu Ltd [2020] NZHC 1109 at [8].
[12] While the Court retains a residual discretion to remove a caveat or allow it to lapse even if the caveator has a legitimate and caveatable interest, that discretion is to be exercised cautiously. The Court must be completely satisfied removal would not prejudice the caveator’s legitimate interests.6
Mr Hu’s application
Caveats
[13] The caveats over Lots 1 and 2 (Caveats 13142543.1 and 13142543.2 respectively) were lodged on 24 October 2024 and provide for the following interest:
The caveator is the beneficiary of a constructive trust. The caveator claims interests under the constructive trust whereas the registered owner of this property with certificate of title 1130540 [for Lot 1; 1130541 for Lot 2] as the constructive trustee holds this interest on behalf of the caveator.
[14] The caveat over Lot 8 (Caveat 13161948.2) lodged on 14 November 2024 provides for:
As beneficial and/or equitable owner as to the joint investor by virtue of agreements in writing dated 6 October 2024 between the caveator and the land owner inter alia to purchase and develop the property together and for the property to be registered in the name of the registered owner who is holding the property pursuant to the said agreements and/or on trust and/or on resulting trust for the caveator.
[15] Ms Daniels, for Mr Hu, submits that he has a caveatable interest in Lots 1, 2 and 8 due to an institutional constructive trust arising out of the joint venture. She submits the evidence indicates that there is a complex web of transactions that need to be unravelled to establish the rights of each party. She submits it is at least reasonably arguable that Mr Hu made the payments to secure an interest in the land, although the purpose of these payments is disputed.
[16] Ms Daniels submits that the arrangement between the parties was a joint venture for the purpose of the commercial development of the Property and, in addition to the caveated properties, they bought, developed and sold a number of other properties. She refers to paragraph 2 of the Background to the Deed and submits that
6 Pacific Homes Limited (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656.
was the parties’ view of the arrangement and the assumption upon which the Deed was drafted.
[17] As to whether fiduciary obligations arose in respect of the joint venture, Ms Daniels acknowledges that since the decision in Paper Reclaim Limited v Aotearoa International Ltd,7 a fiduciary obligation will not automatically arise in joint venture situations. She submits that in the present case the relationship was one involving a high degree of trust and confidence. She points to the fact that very little was written down by the parties in advance of the purchase of the Property or any of the other properties, and money was transferred through multiple bank accounts at the request of Mr Feng.
[18] Ms Daniels refers to the decision in Dold v Murphy8 and submits that when the parties relationship is tested against the indicia in that decision, the relationship fits within the category of when fiduciary obligations should be implied into a joint venture.
[19] Ms Daniels submits that the rights of the parties ought not to be determined on a summary basis as the evidence is clear that the underlying transactions involve a level of complexity which requires the assistance of an independent accountant. She submits that detailed evidence would be needed and a full hearing required to enable the parties to test the various positions, and the matter is further complicated by Mr Feng’s bankruptcy on 24 October 2024.
[20] As to establishing that Mr Hu has an arguable case that a constructive trust exists in respect of Lots 1, 2 and 8 of the Property, Ms Daniels points to the following:
(a)Lots 1 and 2 are specifically referred to in the Deed. Clause A on page 3 provides that Lot 1 is to be transferred to Mr Hu’s family within 10 working days after the signing of the Deed and in clause B it is agreed that Mr Hu has a caveatable interest in Lot 2 and title will be transferred to his family subject to a netting off process; and
7 Paper Reclaim Limited v Aotearoa International Limited [2007] NZSC 26.
8 Dold v Murphy [2020] NZCA 313 at [55].
(b)at clause E of the Deed it is confirmed that the amount of $870,000 was transferred in respect of Lots 1, 2 and 8 and represents a “business arrangement among the parties”. The payment is therefore best interpreted as a consideration and not a debt.
[21] In conclusion, Ms Daniels submits that the communications between the parties are contested and the positions as to their agreements at various stages are unclear, but the current position ought to be preserved pending the unwinding of the various inter-related transactions, and an inquiry being undertaken into the full factual matrix, the agreements that were made at each stage, and an account taken of who paid what to whom and with what expectation.
Helio’s opposition
[22] Mr Bowler, for Helio, submits that Mr Hu has no caveatable interest in the Properties. He submits Helio disputes that a joint venture ever existed between the parties, and that no financial contributions were made from Mr Hu in relation to the Property.
[23] Mr Bowler submits that Helio disputes the facts as asserted by Mr Hu and asserts the following factual position:
(a)Lots 1 and 2 of the Property would be purchased by Mr Hu and his family (subject to sufficient investment of funds) at the cost price, (being $530,000);
(b)the $530,000 settlement for Lot 1 represents some of the “total net balance” due from Helio to Mr Hu;
(c)before settlement could occur, an emergency arose in respect of the property at 53 Diamond Lane, Riverhead (53 Diamond Lane), which was held in Ms Wei’s name. The property was subject to a mortgage which was due for repayment at the beginning of October 2024;
(d)to prevent 53 Diamond Lane from being sold at a mortgagee’s sale, all the parties agreed that Ms Lin would advance $440,000 to Mr Hu and Ms Wei to settle 53 Diamond Lane and, following the settlement of the sale of 53 Diamond Lane, Ms Lin had an expectation that Mr Hu would proceed with the purchase of Lot 1 in the Deed in accordance with a further sale and purchase agreement;
(e)on 28 October 2024 all parties agreed to vary the Deed to a cash settlement of Lot 1 of the Property;
(f)Mr Hu failed to use the cash sum of $440,000 advanced to him by Helio to purchase Lot 1 and he is therefore in breach of the Deed and Ms Lin accordingly cancelled the Deed and the proposed sale.
[24] As to the issue of fiduciary obligations arising under the alleged joint venture, Mr Bowler submits that the Deed was not an agreement to commence or continue the joint investment, but to bring the joint dealings to an end, by calculating the outstanding balance between the parties and allocating assets to finalise those balances. He cites Green & McCahill Holdings Ltd v Ara Weiti Development Ltd as authority for the fact that an arrangement of joint venture does not itself create fiduciary obligations.9 He submits that it is Helio’s position that the Deed was intended to dissolve the investment relationship and allocate final entitlements. In his submission, there was no continuing purpose and the parties were not reliant on each other to progress a shared commercial objective. He submits that the arrangement was mutually agreed by all parties to the Deed to be a set-off to cancel out mutual obligations to each other.
[25] Mr Bowler submits that Mr Hu’s reliance on the Deed is misplaced because it was signed by Ms Lin in her personal capacity and there is no evidence that Helio authorised the Deed or that Helio was bound by it. In response to this assertion, Ms Daniels points out that Helio was described as a party to the Deed, and the only reasonable inference is that Ms Lin, as director of Helio, intended to sign on Helio’s behalf.
9 Green & McCahill Holdings Ltd v Ara Weiti Development Ltd [2022] NZCA 218 at [89].
[26] Mr Bowler submits that even if the Court finds the Deed did create some fiduciary obligations, Mr Hu failed to perform his obligations under it in that:
(a)Mr Hu did not use the full $440,000 advanced by Helio to purchase Lot 1 as contemplated; and
(b)the parties subsequently varied the Deed to provide for a cash settlement instead. He submits that Mr Hu’s failure to fulfil his side of the settlement undermines his ability to now claim an equitable interest in the properties.
[27] Finally, Mr Bowler submits that reliance cannot be placed by Mr Hu on the sale and purchase agreement for Lot 1 of the Property as it was signed by Ms Wei and not by Mr Hu.
Result
[28]I am of the view that the Caveats should be sustained for the following reasons:
(a)I am satisfied that there is a reasonable inference that Ms Lin signed the Deed on behalf of Helio and accordingly that Helio is bound by the Deed.
(b)It is reasonably arguable that Mr Hu made payments in relation to the joint property development investments with the expectation of securing an interest in the properties. Accordingly, it is arguable a constructive trust has arisen applying to Helio in respect of Lots 1, 2 and 8 of the Property.
(c)It is reasonably arguable that the Deed acknowledges a caveatable interest held by Mr Hu over Lots 1 and 2 and that they were intended to be transferred to him in satisfaction of his investments into the joint development arrangement.
(d)It is reasonably arguable that the intention of the parties was that Mr Hu would have some interest in Lot 8 to the extent it was needed to satisfy the return of his investment if Lots 1 and 2 were insufficient to do so. There is reference to $870,000 being transferred in respect of Lots 1, 2 and 8 at paragraph E of the Deed, described as a “business arrangement among the parties” which, while unclear, indicates that Mr Hu was intended to have some form of interest in Lot 8. Accordingly, it is reasonably arguable that Lot 8 is held on a constructive trust by Helio, at least in part, and this gives Mr Hu a caveatable interest in Lot 8.
(e)There is clearly a complex web of transactions between the parties, with disputed facts, and the Caveats should be maintained to preserve the status quo so the parties’ interests can be finally determined by evidence at a hearing.
(f)It is reasonably arguable that a joint venture arrangement existed between the parties in relation to the property investments and that fiduciary obligations arose between the parties in respect of those joint venture arrangements due to the level of trust and confidence between the parties. There was little recorded in writing in relation to the investment in the Property and the transfer of funds between the parties’ various individual bank accounts, this could be indicative of an arrangement based on trust and confidence between the parties.
(g)As to the Court’s discretion to lapse the Caveat, notwithstanding that I have determined Mr Hu has a caveatable interest, as noted at [12], the Court must exercise that discretion cautiously and the caveat should only be removed if removal would not prejudice the caveator’s legitimate interest. In the present case I am of the view that the Court should not exercise its discretion to remove the Caveats as that would allow Lots 1, 2 and 8 of the Property to be sold and the proceeds potentially dissipated by Helio prior to the complex position between the parties, and the correct entitlement of Mr Hu and his family arising
from his investments in the Property, being properly determined after a hearing. This is clearly prejudicial to Mr Hu.
Orders
[29]I make the following orders:
(a)Mr Hu’s application that the following Caveats not lapse is granted:
(i)Caveats 13142543.1 and 13142543.2 lodged against records of title 1130540 and 1130541 respectively (North Auckland) being properties at Lot 1 and Lot 2, 135 Taniwha Street, Glen Innes,
Auckland; and
(ii)Caveat 13161948.2 lodged against record of title 1130547 (North Auckland) being the property at Lot 8, 135 Taniwha Street, Glen Innes, Auckland.
(b)As Mr Hu is the successful party, costs should follow the event. Counsel are directed to endeavour to agree costs and, failing agreement being reached within a period of 20 working days from the date of this judgment, counsel for Mr Hu will file a memorandum as to costs (not to exceed five pages) within 5 working days after the expiry of the 20 working day period, and counsel for Helio will file a memorandum (not to exceed five pages) in response within 5 working days of receipt of counsel for Mr Hu’s memorandum. A decision as to cost will then be made on the papers.
…………………………….. Associate Judge Taylor
Solicitors:
Northern Legal (Ms Puhan Deng), Silverdale, for the ApplicantNeilsons Lawyers (T J P Bowler), Onehunga, Auckland, for the Respondent
Counsel:
Philippa Daniels, Akarana Chambers, Auckland, for the Applicant
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