Kuang v Cai

[2020] NZHC 1255

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-40

[2020] NZHC 1255

UNDER

the Land Transfer Act 2017

IN THE MATTER OF

Caveat 11325730.1 lodged against Record of Title NA18A/470.

BETWEEN

CONNIE KUANG

Applicant

AND

YALI CAI

Respondent

Hearing:	3 June 2020
Appearances:	Paul Pang for the Applicant Chen Jiang for the Respondent
Judgment:	8 June 2020

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 8 June 2020 at 3:00pm

pursuant to Rule 11.5 of the High Court Rules

…………………………. Registrar/Deputy Registrar

Solicitors:

Integritas Law Firm (M S P Pang), Auckland, for the Applicant Glaister (Chen Jiang), Auckland, for the Respondent

KUANG v CAI [2020] NZHC 1255 [8 June 2020]

[1]    Connie Kuang applies to sustain caveat 11325730.1 lodged against the record of title to the residential property at 64 Juniper Road, Sunnynook, Auckland. The caveat says:

Connie Kuang claims a beneficial estate or interest in 64 Juniper Road, Sunnynook, Auckland, in all of the land in NA18A/479 under a resulting trust or a constructive trust of which Yali Cai is trustee and Connie Kuang is the beneficiary.

[2]    Yali Cai, the registered proprietor of 64 Juniper Road, also owns a commercial property at 26 Uxbridge Road, Howick, Auckland. Ms Kuang has lodged a caveat against the record of title for that property too, alleging a constructive or implied trust. This case is concerned only with the caveat over the Juniper Road property.

[3]    Ms Kuang’s claim to an interest in the Juniper Road property is based on two payments. The first is $57,500 she paid in October 2018. That was the deposit under an agreement Mr Cai had made to buy Juniper Road. The price was $1.15m. Mr Cai paid $364,750. He financed the rest of the purchase price, $747,000, with a loan from Cressida Capital One Ltd, secured by a first mortgage. The deposit paid by Ms Kuang was five per cent of the price.

[4]    The second payment was for $155,000 to Mr Cai on 15 November 2018. That was for a transaction involving the property at 26 Uxbridge Road, Howick. Ms Kuang was not the payer.

[5]    Mr Cai denies that Ms Kuang has an interest in the Juniper Road property. Alternatively, he says that if she does have a claim to an interest in the property, it can be adequately protected by removing the caveat and substituting a fund to be held until there is a final decision on her claim to an interest.

[6]    As background to the present application, Mr Cai needs to refinance his loan from Cressida Capital One Ltd. The loan was initially for one year. It has been

extended until later this month. Mr Cai has paid all the interest under the loan and has repaid some of the principal, which now stands at $440,000. Cressida says that if the loan is not refinanced, it will look to its remedies under the loan and the mortgage. Mr Cai’s and Ms Kuang’s lawyers have corresponded with a view to working out arrangements under which Ms Kuang’s claim can be protected while the loan is refinanced, but so far they have not reached any firm agreement.

General principles on caveat applications

[7]    In Holt v Anchorage Management Ltd, McMullin J stated the purpose of the caveat against dealings under the Land Transfer Act 1952:1

Once lodged, a caveat is notice to all who search the title to the land against which it is registered and to the registered proprietor of the land (to whom notice of its receipt is given pursuant to s 142) that the caveator claims the estate or interest the subject of the caveat. It is both a warning to the persons mentioned that the caveator asserts rights against the land and a protection of those rights. (Section 143(1) uses the phrase "protected by the caveat"). Once the caveat is lodged the Registrar is prohibited from making any entry on the register which has the effect of charging or transferring or otherwise affecting the estate or interest protected by the caveat (s 141).

Although that case was decided under the Land Transfer Act 1952, his statement equally applies to caveats under the Land Transfer Act 2017. The 2017 Act, which repealed the 1952 Act, applies here. The 2017 Act came into force in November 2018, before Ms Xie lodged her caveat and filed her application (11 March 2020). The jurisdiction of associate judges to decide caveat cases has been continued under the 2017 Act.2

[8]    In caveat applications under ss 142 and 143 of the 2017 Act, the caveator generally has the onus of showing a reasonably arguable case for the interest claimed. The interest must come within s 138(1):

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—

1      Holt v Anchorage Management Ltd [1987] 1 NZLR 108 (CA) at 10–11.

2      Land Transfer Act 2017, s 250 and Schedule 2, amending s 20(1)(e) of the Senior Courts Act 2016 to refer to the 2017 Act.

(a)claims an estate or interest in the land, whether capable of registration or not; or

(b)has a beneficial estate or interest in the land under an express, implied, resulting, or constructive trust; or

(c)is transferring the estate or interest in the land to another person to be held on trust; or

(d)is the registered owner of the estate or interest in the land and—

(i)has an interest that is distinct from that of registered owner; or

(ii)establishes to the satisfaction of the Registrar that at the time the caveat is lodged there is a risk that the estate or interest may be lost through fraud.

[9]    The interest does not have to be registerable, but a personal or contractual right is not enough. Something more than a potential or future interest is required. An interest in the proceeds of sale of a property is not an interest in the property itself and cannot be protected by a caveat.3

[10]A caveat must contain the “prescribed information” which includes: 4

a description of the nature of the estate or interest claimed by the caveator (which must be stated with sufficient certainty) …

Details of how the estate or interest claimed is derived from the registered owner.

Caveat applications are summary and are therefore not suitable for deciding disputed questions of fact. On the other hand, a court is not required to accept uncritically as raising a dispute of fact which calls for further investigation every statement in an affidavit, however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent or inherently improbable it may be. To establish a reasonably arguable case, there must be some evidence tending to prove the facts relied on. Assertion, whether in pleadings or affidavits, is not enough. The evidence need not be as extensive as that given in a hearing on the substantive merits. It may be circumstantial. But if there is no evidence

3      Castle Hill Run Ltd v NZI Finance Ltd [1985] 2 NZLR 104 (CA).

4      Land Transfer Act 2017, s 138(3) and Land Transfer Regulations 2018, Schedule 2.

to prove the facts contended for, the caveator will not have made out a reasonably arguable case for those facts.

Background facts

[11]   Mr Cai lives in Guangzhou, China. His affidavits in Mandarin have been translated into English. Ms Kuang, who lives in Auckland, has made her affidavits in English but does not speak the language. A legal assistant with her lawyers – fluent in Mandarin and Cantonese as  well  as English  – says that  she  orally translated  Ms Kuang’s affidavit written in English for Ms Kuang, who signed the affidavit appearing to understand it. That is not entirely satisfactory. It would have been better if Ms Kuang had made an affidavit in her own language and that had been translated into English by an appropriately qualified interpreter. That would give greater confidence that she properly understands and affirms the matters to which she has deposed.

[12]   They have known each other for many years. Mr Cai claims that they had a 25-year de facto relationship. On the other hand, while Ms Kuang says that while they were intimate and in a relationship for many years, she denies that it was a de facto relationship under the Property (Relationships) Act 1976.

[13]   Mr Cai began a proceeding in the Family Court under the Property (Relationships) Act 1976, seeking orders in respect of properties in Auckland owned by Ms Kuang and by The Kuang (No 2) Trustee Ltd, the trustee of the CK No 2 Trust associated with Ms Kuang. He claims that properties were bought with relationship funds. His affidavit in the Family Court proceeding refers to a number of properties, including 26 Uxbridge Road, Howick and 64 Juniper Road, Sunnynook. The proceeding has been transferred to this court.

[14]   In her narrative affidavit in the relationship property proceeding, Ms Kuang says that in 2014 The Kuang (No.2) Trustee Ltd sold a property it owned at Bucklands Beach, Auckland. At the same time, there was an agreement to buy the property at 26 Uxbridge Road, Howick. While Mr Cai was named as the purchaser in that agreement, Ms Kuang says that he held title as a bare trustee for The Kuang (No 2)

Trustee Ltd. The proceeds of sale of the Bucklands Beach property were transferred to Mr Cai for the purchase as were other funds. He also took out a bank loan but contributed nothing personally to the purchase of Uxbridge Road. He gave her a power of attorney to manage the property.

[15]   On 6 October 2018, Yali Cai agreed to sell the Uxbridge Road property to Xiao Lam Kuang, Ms Kuang’s sister. They used the Real Estate Institute of New Zealand/Auckland District Law Society form for an agreement for sale and purchase of real estate. The purchaser is “Xiao Lan Kuang and/or nominee”. The agreement named different lawyers to act for the vendor and the purchaser. The price was

$1.55m. Ms Kuang says, however, that this was a “pretend” agreement for sale and purchase. In her affidavit in support of the caveat application, she says:

[26] … the $57,500 was supposed to be part of an out-of-court settlement arrangement with respect to the other property under the name of Yali Cai, namely 26 Uxbridge Road, Howick, a conditional gift to Yali Cai, the condition being:

26.126 Uxbridge Road, Howick was purchased with source of funds that originated from Connie Kuang and/or The Kuang (No.2) Trustee Ltd;

26.2Yali Cai, who is the registered proprietor of 26 Uxbridge Road, Howick, was to “sell” 26 Uxbridge Road to Xiao Lan Kuang under a sale and purchase agreement dated 26 October 2018, but in reality, the “sale” will not result in a monetary transaction and would simply result in a title transfer only; and

26.3As a bona fide gesture and conditional of the above happening in full and final settlement, $57,500 deposit previously paid on behalf of Yali Cai for the purchase of 64 Juniper Road, would be deemed as a gift to Yali Cai to facilitate his purchase of the property.

[16]   While Ms Kuang’s sister and Mr Cai went through formalities associated with an arm’s length sale and purchase of Uxbridge road, she says that in reality this was a sham. The agreement for sale and purchase was meant to be no more than a mechanism under which title would pass to her sister, or herself as nominee, without any payments under the agreement.

[17]   On 12 November 2018, lawyers acting for Mr Cai wrote to the lawyers acting for Xiao Lan Kuang, demanding the deposit of $155,000. It was paid on 15 November 2018 from ANZ Bank account 06-0193-0522541-10.

[18]   The transfer of the title to 26 Uxbridge Road did not proceed. Mr Cai remains registered proprietor of the property. While Ms Kuang has lodged a caveat against the title to  the property,  she has not  claimed as a purchaser under the agreement of      6 October 2018. Because the transaction did not  proceed, Ms  Kuang alleges that  Mr Cai breached the “out-of-court settlement arrangement” described in her affidavit in the caveat application.

[19]The “out-of-court settlement arrangement” is also said to be the basis for the

$57,500 she contributed to Mr Cai’s purchase of 64 Juniper Road. She says that this was a sweetener to make the Uxbridge Road transaction go ahead. Her case is that the

$155,000 payment for Uxbridge Road and the $57,500 payment for 64 Juniper Road give her an unregistered interest in 64 Juniper Road.

[20]   Ms Kuang’s evidence is light on detail about the “out-of-court settlement”. She says that nothing about how it was negotiated, when it was entered into and anything more about its terms. Her evidence as to such an agreement is little more than assertion. That said, a letter of 12 December 2018 from the lawyer acting on the purchase of Uxbridge Road to Mr Cai’s conveyancing lawyers refers to the arrangement.

[21]   Mr Cai is even more sparse in his response. He does not take issue with her evidence that he held 26 Uxbridge Road as a bare trustee for her or her trustee company. While he acknowledges that she paid $57,500 for the deposit for 64 Juniper Road, he does not say in evidence on what basis she paid. He says now that it was in part repayment of a debt, but his evidence as to her indebtedness is slight. For his case, he treats the agreement to sell Uxbridge Road as genuine, but he does not otherwise directly address her assertion that the Uxbridge Road agreement was to be no more than a charade. In short, the evidence on both sides is scant.

Does Ms Kuang have a caveatable interest?

[22]   While the arrangements Ms Kuang describes are unusual, for caveat purposes I assume that the transactions were what she says they were, improbable as they sound. It is arguable for Ms Kuang that Mr Cai owned Uxbridge Road as a bare trustee. There

is no evidence suggesting otherwise. The trust is a conventional resulting trust, one of the sorts recognised by Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington London Borough Council:5

Under existing law a resulting trust arises in two sets of circumstances;

(A)  where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money or property is held in trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B in shares proportionate to their contributions. It is important to stress that this is only a presumption, which presumption can be easily rebutted either by the counter presumption of advancement or by direct evidence of A’s intention to make an outright transfer …

[23]   As the Bucklands Beach property had been owned by The Kuang (No 2) Trustee Ltd and the proceeds of its sale went into Mr Cai’s purchase of 26 Uxbridge Road, the resulting trust was  in  favour  of  The  Kuang  (No.2)  Trustee  Ltd,  not Ms Kuang. Ms Kuang also asserts that Mr Cai held as trustee for herself also, but her evidence does not show that her own funds went into that purchase.

[24]   Assuming that Mr Cai did own Uxbridge Road as a bare trustee for interests associated with Ms Kuang, it is arguable for her that there could not be a genuine arm’s length sale of the property to her sister or herself as nominee. Accordingly, there may be a basis for the claim that the agreement was only a vehicle through which title could be made over to those associated with her without any money changing hands.

The claim based on the payment of $57,500

[25]   While her case is that the transaction was a sham and money was not intended to pass, there were nevertheless payments – the $155,000 for Uxbridge Road and the

$57,500 for Juniper Road. Ms Kuang’s evidence is that she paid $57,500 herself as the deposit for the purchase of 64 Juniper Road by Mr Cai. As to the second, ordinarily such a contribution to the purchase of a property by another might give rise to a resulting trust, as contemplated by Lord Browne-Wilkinson’s dictum in

5      Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 (HL) at 708.

Westdeutsche Landesbank  Girozentrale  v  Islington  London Borough Council.    In support, Mr Pang cited the Court of Appeal’s decision in Chang v Lee:6

All that is required, where the terms of the advance are not agreed, is to apply the presumption, of equitable ownership in the acquired property. The settled principle applies that where the money to purchase a property has been provided by two persons for that very purpose, the property is held in proportion to the funds provided. The principle does not require further gloss in the circumstances of this cases by refining the purpose of advancing the money to acquisition of a proprietorial interest. We repeat that a resulting trust takes effect once it is established that the settlor did not intend to part with the beneficial ownership of the contribution. By using as his reference point the property acquired with that contribution (to which the funds can be traced directly and without controversy) equity recognises that any benefits attaching to its acquisition should be shared according to the parties’ respective contributions. Whether conceptualised as a presumption of non-beneficial transfer or as a response to an absence of consideration, the law of resulting trusts provides an equitable remedy for where an injustice would otherwise result.

(emphasis added)

[26]   But that does not support Ms Kuang’s claim in this case. She says that she paid $57,500 as a sweetener to secure the transfer of title in the Uxbridge Road property. That means that if Mr Cai had kept to the “out-of-court settlement arrangement”, she could have no claim for the money she had paid for the purchase of 64 Juniper Road. Mr Cai could do with the property what he wished. Instead, Ms Kuang says that a claim to an interest arises only because he did not keep to the deal. In that situation, her remedy may be to have the money repaid. That is a restitutionary “failure of basis” claim. There is a convenient statement of the principle in Pure Elite Holdings v Bodco Ltd:7

Such claims are known as “failure of basis” claims. They are based on the principle that, where one party has conferred a benefit on another, that other party’s right to retain the benefit is conditional, and if the condition is not fulfilled, the recipient must return the benefit. They are a well recognised ground for the remedy of restitution. They can arise where a party has conferred a benefit on another in anticipation of a contract that never eventuates. Such a claim can also be brought where the benefit has been conferred in the expectation of an event which fails to occur. Such claims are based not in contract, but on the principle of restitution – the premise underlying the right of restitution being that the entire basis of the arrangement which led to the payment being conferred by one party upon another has

6      Chang v Lee [2017] NZCA 308, (2017) 4 NZTR 27-011.

7      Pure Elite Holdings v Bodco Ltd [2019] NZHC 2191 at [188].

failed. The claimant’s intention was to confer the benefit, but it was in effect conditional on the occurrence of an event.

[27]   Mr Pang recognised this when he called the payment a  “conditional gift”.  Ms Kuang may have an in personam claim for money had and received, but such a personal claim does not give her an interest in the property partly bought with her money.

[28]   Instead, to see whether the payment of $57,500 gives Ms Kuang a property interest, it is necessary to see whether another sort of resulting trust arises, the second sort identified by Lord Browne-Wilkinson in the Westdeutsche Landesbank Girozentrale v Islington London Borough Council case:

[B] Where A transfers property to B on express trusts, but the trusts declared do not exhaust the whole beneficial interest.

One sub-group of this class is the Quistclose trust.8 Lord Millett discussed such trusts in Twinsectra Ltd v Yardley:9

A Quistclose trust does not necessarily arise merely because money is paid for a particular purpose. A lender will often inquire into the purpose for which a loan is sought in order to decide whether he would be justified in making it. He may be said to lend the money for the purpose in question. But that is not enough to create a trust; once lent the money is at the free disposal of the borrower. Similarly payments in advance for goods or services are paid for a particular purpose, but such payments do not ordinarily create a trust. The money is intended to be at the free disposal of the supplier and may be used as part of his cash flow. Commercial life would be impossible if this were not the case.

The question in every case is whether the parties intended the money to be at the free disposal of the recipient; In Re Goldcorp Exchange Ltd10 per Lord Mustill. His freedom to dispose of the money is necessarily excluded by an arrangement that the money should be used exclusively for the stated purpose.

…

[29]   When she paid $57,500 towards the purchase of 64 Juniper Road, Ms Kuang intended that Mr Cai would be free to deal with the property as he wished. He had free disposal. He would not hold an interest in the property on her behalf. A Quistclose trust could not have arisen. The resulting trust claim accordingly fails.

8      Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 (HL).

9      Twinsectra Ltd v Yardley [2002] 2 AC 164 (HL) at [73]-[74].

10     In Re Goldcorp Exchange Ltd [1995] 1 AC 74 (PC) at 100.

[30]   Ms Kuang’s caveat also refers to a constructive trust. Mr Pang did not develop any arguments on constructive trust that diverged from his resulting trust arguments. If the court were to impose a trust as a mechanism for enforcing a restitutionary claim, that trust would arise only by court order. That would not be an institutional constructive trust that arose independently of a court order. Any such constructive trust would only be remedial and would not support a caveat.11

[31]   Ms Kuang may have a claim against Mr Cai to recover the $57,500 she paid to help him buy 64 Juniper Road, but it does not give her an interest in the property and she cannot lodge a caveat to support such a claim.

The claim based on the payment of $155,000

[32]   Ms Kuang says that the $155,000 paid for the deposit on the agreement by  Mr Cai to sell to Ms Kuang’s sister also gives her a caveatable interest in 64 Juniper Road. Ms Kuang’s original application and affidavit in support of her application did not place much reliance on this payment although she did not leave it out altogether. Paragraph 31 of her affidavit of 10 February 2020 suggests that she is claiming an interest in 64 Juniper Road because of the payment of 155,000. She says that the payment was made to prevent the sale falling over. Even though she contends that there was to be no consideration for the transfer, again this appears to be a “failure of basis” claim. That title was to transfer in return for the payment, notwithstanding that the entire transaction was a charade. Her case is that the $155,000 went into the purchase of Juniper Road.

[33]   I put to one side Mr Cai’s defence that the payment was really no more than payment of a deposit under the agreement to sell the property to Ms Kuang’s sister. It is not conclusive that the sale was not a sham.

[34]   For Mr Cai, Mr Jiang challenged Ms Kuang’s claim that the $155,000 was spent on the purchase of 64 Juniper Road. Mr Cai knows better than Ms Kuang what he did with the money. In Blatch v Archer Lord Mansfield said:12

11     Three Chicks Ltd v NZ Building and Projects Ltd (2011) 12 NZCPR 799 (HC).

12     Blatch v Archer (1774) 1 Cowp 63 at 65.

It is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted.

Mr Cai has not offered any evidence that he did not use the $155,000 to buy Juniper Road. The payment of $155,000 on 15 November 2018 was followed not long after, on 14 December 2019, with settlement of the purchase of Juniper Road where Mr Cai contributed $364,000 of his own funds. For the caveat application, in the absence of any contrary evidence from Mr Cai, that is circumstantial evidence for Ms Kuang that Mr Cai used the $155,000 to buy Juniper Road.

[35]   A difficulty for Ms Kuang’s claim of a caveatable interest is that the $155,000 came from The Kuang (No 2) Trustee Ltd, not from herself. Exhibit NR1 of her narrative affidavit in the relationship property proceeding shows that the payment came from ANZ account 06-0193-0522541-10. That is The Kuang (No 2) Trustee Ltd’s bank account, not Ms Kuang’s. Accordingly, any claim is the company’s, not hers.

[36]   In any event, the payment does not give rise to any property interest. The same analysis applies as for the $57,500 payment. It was made as part of the “out-of-court settlement arrangement”. At its best, Ms Kuang may have a claim to be repaid because of the failure of the basis for the payment. But when Mr Cai received the payment, he could do with it what he wished. He had free disposal of the money. No Quistclose trust arose. It did not give her a claim to an interest in either the Uxbridge Road property or 64 Juniper Road. Any claim is no more than a personal one to recover the

$155,000. The claim cannot be protected by a caveat.

[37]   Accordingly, for both the payments I am satisfied that Ms Kuang does not have a caveatable interest in 64 Juniper Road. That means that her application to sustain the caveat must be dismissed.

The residual discretion

[38]   That is enough to deal with the case, but I address Mr Cai’s alternative submission in case this matter goes further. Mr Jiang submitted that if I did find a

caveatable interest, I should make an order removing the caveat, but on terms requiring Mr Cai to put funds into trust to be held pending agreement of the parties or an order of a court of competent jurisdiction. For this part of his case, Mr Jiang relied on the court’s residual discretion to remove a caveat even if a caveatable interest has been established.

[39]   Ms Kuang’s claim is at best an economic one only. If she has an interest, it arises only because of the failure of the purpose for which she paid the $57,500. She did not pay to invest in the property itself. There is no reason why that interest cannot be adequately recognised and protected by substituting a fund for an interest in the land. That is in keeping with the approach in Stewart v Kaipara Consultants Ltd:13

The grant of a specific remedy to a person claiming an interest in the land lies in the discretion of the court. It is a discretion to be exercised in accordance with settled principles But where the particular piece of land does not have attributes giving it a personal value to the claimant, unable easily to be measured and substituted in economic terms, then the court in balancing the interests of the defendant and other affected parties (especially those who have entered into independent commitments which will be affected by the delay in establishing the claim) will properly lean in favour of freeing the title from the claim if a fund can be created which suffices to protect the claimant’s legitimate interest. This interest is to be measured by valuation evidence rather than mere speculation about possible advantages to be gained by leaving a caveat in place.

[40]   The $57,500 was five per cent of the purchase price of the property. Even if Ms Kuang did have a twentieth interest in the property, it is undesirable that she should use her power as a caveator to stymie reasonable dealings by Mr Cai with the property.

[41]   The evidence shows that when the loan from Cressida Capital One was coming up for repayment, Mr Cai’s lawyers sought Ms Kuang’s consent to allow the refinancing. There is considerable evidence of correspondence between the lawyers. For this judgment it is not necessary to examine that correspondence in depth or to pin blame. Despite the correspondence and effort on both sides, and Mr Cai’s approaches to a number of banks and financiers for funds, there was no agreement with Ms Kuang to allow refinancing while protecting her interest. That does not give confidence that if Ms Kuang’s caveat were left in place, even subject to conditions that she should not

13     Stewart v Kaipara Consultants Ltd [2000] 3 NZLR 55 (CA) at [27].

unreasonably object to dealings in the property (by way of refinancing or sale), similar difficulties would not come up again. There ought to be a more efficient way to deal with the matter.

[42]   Accordingly, this is an appropriate case to replace the caveat with a fund, to be held while her substantive claim is decided. I assume an arguable caveatable interest for $57,500. I do not make any similar assumption for the $155,000 paid on the Uxbridge Road transaction, because The Kuang (No 2) Trustee Ltd paid and only it could claim an interest, not Ms Kuang. To establish the amount of the fund,  I allow  a margin for potential movements in the market value of the property since then. There is no direct evidence on value and no suggestion that the purchase price of the property was not the current market value. Mr Cai bought the property at auction. Some buffer ought to be added out of prudence. It is unlikely that the value of the property would have moved upwards by more than 10 per cent since the initial purchase. Any movement above that seems extremely improbable, given the current economic downturn with the COVID-19 pandemic. I add 10 per cent to Ms Kuang’s notional five per cent interest and round it out to give $63,500.  If I were to substitute a fund,  I would fix the amount at $63,500 and direct that it be held in court or in the trust account of independent solicitors subject to undertakings pending further order of the court or agreement of the parties. Ms Kuang would also be required to prosecute her claim to the interest with due diligence. As to that, I note that in the proceeding transferred to this court she has counterclaimed seeking recognition of the interest she claims.

Outcome

[43]I make these orders:

(a)Caveat 11325730.1 lodged against record of title NA18A/470 lapses.

(b)Ms Kuang’s application under s 143 of the Land Transfer Act 2017 is dismissed.

(c)Mr Cai has costs on the application on a category 2 basis. If the parties cannot agree costs, memoranda may be filed.

…………………………………

Associate Judge R M Bell