KBS Capital Limited v Gao

[2024] NZHC 3403

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-2881

[2024] NZHC 3403

UNDER

Section 142 of the Land Transfer Act 2017

IN THE MATTER OF

an application for removal of caveat

BETWEEN

KBS CAPITAL LIMITED

Applicant

AND

YUAN (ANSON) GAO

Respondent

CLEARWATER CAPITAL PARTNERS DIRECT LENDING OPPORTUNITIES FUND, L.P

Non-Party

Hearing:

15 November 2024

Counsel:

M W Swan for the Applicant The Respondent in person

D T Broadmore / C Tataru for the Non-Party

Judgment:

15 November 2024

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 15 November 2024 at 10 am Pursuant to r 11.5 of the High Court Rules.

…………………..

Registrar/Deputy Registrar

Solicitors:

Molloy Hucker, Auckland Buddle Findlay, Auckland

KBS CAPITAL LTD v GAO [2024] NZHC [3403] [15 November 2024]

[1]                  The applicant, KBS Capital Limited (KBS), is the registered owner of 48 Esmonde Road, Takapuna (the property). KBS is undertaking a substantial unit title development on the property.

[2]                  The respondent, Yuan Gao (Mr Gao), has lodged a caveat against the title to the property. KBS has applied without notice, and on an urgent basis, for an order removing the caveat. The non-party, Clearwater Capital Partners Direct Lending Opportunities Fund, L.P (Clearwater) is the first mortgagee. Clearwater supports the application and is given leave to intervene.

[3]                  KBS understands that Mr Gao is a real estate agent based in Auckland, however KBS was unable to locate an address for service on him. The address for service stated in the caveat is not his address.

[4]                  On 14 November 2024, I directed that the application would be heard in a telephone conference convened this morning at 9 am. I directed that the application be brought to the attention of Mr Gao, and two related parties, Mr Ao and Jie Zhao. KBS has complied with that direction, and Mr Gao received the documents in support of the application late yesterday. Mr Gao appeared in the telephone conference.

[5]In the caveat, Mr Gao claims:

… a beneficial interest in the land contained in the above title as beneficiary of a constructive trust of which the Registered Proprietor is a trustee. The registered proprietor borrowed money from Mr Zhao who had borrowed the said money from Mr Ao to develop the property. Mr Ao authorizes me to act for him…

[6]                  Xu Xin, a director of KBS, has provided an affidavit in support of the application. Mr Xin has confirmed that Ms Jie Zhao advanced funds to KBS pursuant to a deed of acknowledgement of debt dated 11 January 2021, which has been produced in evidence. KBS is not aware of any arrangements between Ms Zhao and Mr Ao, or Mr Ao and Mr Gao.

[7]                  The deed of acknowledgement of debt confirms a loan advance of approximately $2.7 million by Ms Zhao to KBS. During the telephone conference,

Mr Gao advised the Court that there is a second loan advance of approximately

$4 million. There is no evidence of that advance before the Court.

[8]                  The deed of acknowledgement of debt does not create any form of security interest in favour of Ms Zhao. There does not appear to be any basis for Ms Zhao to claim a caveatable interest in the property. Similarly, there is no basis for Mr Ao to claim a caveatable interest, and Mr Gao cannot have any interest in the property as an agent of Mr Ao.

[9]                  I asked Mr Gao whether there was any other basis for a claim to an interest in the property. He confirmed that the loans are unsecured.

[10]I am satisfied that Mr Gao does not have a caveatable interest in the property.

[11]              KBS’s application is also supported by an affidavit from Melvine Easton, a solicitor from Buddle Findlay, presently undertaking work to create the subdivision. Having reviewed Mr Easton’s evidence, I am satisfied that there is urgency. If the caveat is not removed immediately there is a substantial risk that KBS will be unable to obtain titles on time to meet its contractual obligations to purchasers of apartments in the development.

[12]Accordingly, I make the following orders:

(a)caveat 13098333.1 lodged against Record of Title Identifier 888401 shall be removed;

(b)the applicant shall serve a copy of this order on the respondent;

(c)within 10 working days of service of this order on the respondent, the applicant may make an application for costs by memorandum of no more than three pages;

(d)the respondent may file a memorandum in reply, of no more than three pages, within five working days of service of the applicant’s memorandum as to costs on him;

(e)I will then determine costs on the papers.

Associate Judge Brittain