Keemati Ltd v QNZ Ltd - [2020] NZHC 299

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-002341

[2020] NZHC 299

UNDER Sections 138 and 143 of the Land Transfer Act 2017 and Part 19 of the High Court Rules 2016

BETWEEN

KEEMATI LIMITED

Applicant

AND

QNZ LIMITED

Respondent

Hearing: 11 February 2020

Appearances:

S R Carey for Applicant

L L Fraser and W M Cheyne for Respondent

Judgment:

27 February 2020

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 27 February 2020 at 11.00 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

KEEMATI LTD v QNZ LTD [2020] NZHC 299 [27 February 2020]

The application

[1] This dispute concerns properties known as 33 Rashni Road, and 3 Skanda Crescent at Flat Bush (the properties). They are owned by QNZ Ltd (QNZ). Keemati Ltd (Keemati) seeks orders under s 143 Land Transfer Act 2017 that caveats it lodged against the properties not lapse. It claims a caveatable interest in the properties arising from an agreement between it and QNZ of 3 September 2018 by which QNZ was to transfer the properties to Keemati.

[2]QNZ opposes the application arguing:

(a)Keemati’s caveats inadequately describe its interest in the properties;

(b)Keemati has no interest in the properties that can support the caveats; and

(c)the Court should not sustain the caveats in the exercise of its discretion.

Background

[3] QNZ is a property development company. QNZ has a wholly owned subsidiary called MR Civil Ltd (MR Civil). Mr Civil is a construction contractor. QNZ has engaged MR Civil on construction projects both on its own land and as a subcontractor. Tingsong Qiu (Mr Qiu) is the Chief Executive of QNZ and MR Civil.

[4] Keemati is a project management company. Keemati Angurala (Mr Angurala) is its sole director and shareholder. Mr Angurala has a background in construction project management and civil engineering.

[5] In August 2016, QNZ, then called Chimbusco International Ltd, employed Mr Angurala. Soon after Mr Angurala was made a director of MR Civil and he managed it construction projects.

[6] In November 2017, 40% of the shares in MR Civil were transferred to Keemati. There is a dispute about whether the shares were given to Mr Angurala or were “on loan” to enhance his credibility with suppliers and subcontractors.

[7] Under Mr Angurala’s management MR Civil was engaged on several construction projects including large developments at 114 and 217 Matua Road (the Matua Road projects).

[8] Bad relations developed between Mr Angurala and Mr Qiu. Each attributes fault to the other. Mr Angurala and Mr Qiu had a meeting on 3 September 2018. The discussion concerned the basis upon which Mr Angurala would exit the business of MR Civil. Mr Angurala wrote down matters that had been agreed. I refer to these as the minutes. Mr Qiu was shown the minutes and he signed them. The minutes read as follows:

MEETING WITH TIM

Restructure of Mr Civil Ltd

Take our workers…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] NZHC 299
Decision Date: 27 February 2020

CaseChat Overview and Summary

Keemati Ltd (Keemati) applied to the High Court to prevent caveats it lodged against two properties from lapsing. QNZ Ltd (QNZ) opposed the application. The properties in question were owned by QNZ and were the subject of an agreement between QNZ and Keemati dated 3 September 2018. The agreement was to see Keemati take over certain construction projects from QNZ and in return, QNZ would transfer the properties to Keemati. Keemati lodged caveats over the properties on 31 July 2019, which QNZ sought to have removed. The Court had to decide whether the caveats were validly lodged and, if so, whether it should exercise its discretion to remove them.

The Court found that Keemati had established a reasonably arguable case that it had an interest in the properties under the 3 September 2018 agreement. The caveats adequately described the nature of Keemati's interest and how it was derived from QNZ. The Court rejected QNZ's argument that the transfer of the properties was conditional upon Keemati completing the construction projects, a condition that had not been met. The Court also found that there were no exceptional circumstances justifying the exercise of its discretion to refuse to sustain the caveats.

The Court ordered that the caveats lodged by Keemati should not lapse. The order was conditional upon Keemati commencing proceedings to uphold the interest claimed by its caveats within 21 days of the date of the judgment. The Court reserved leave for QNZ to apply further if Keemati failed to comply with this condition.

Orders