Kwok v HND Holding Limited - [2024] NZHC 1153

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-001504

[2024] NZHC 1153

BETWEEN
DANIEL SHING CHUNG KWOK

First Plaintiff

DANIEL KWOK PROPERTIES LIMITED
Second Plaintiff

DASP PROPERTIES LIMITED
Third Plaintiff

DKBY PROPERTY LIMITED

Fourth Plaintiff

AND

HND HOLDING LIMITED

Defendant

Hearing: 11 April 2024

Appearances:

R E Harrison KC for Plaintiffs R O Parmenter for Defendant

Judgment:

14 May 2024

JUDGMENT OF ANDERSON J

This judgment was delivered by me on 14 May 2024 at 3.30 pm pursuant to r 11.5 of the High Court Rules 2016.

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

Solicitors: Chen Sandhu Lawyers, Auckland

KWOK v HND HOLDING LIMITED [2024] NZHC 1153 [14 May 2024]

Table of Contents

Para No

Interim injunction principles[7]

Factual background[10]

Serious question to be tried[25]

First claim - Illegal contract [27]

Plaintiffs’ case[27]

Discussion[30]

Second claim - Unfair, harsh or oppressive conduct by HND’s exercise

of power of sale[35]

Plaintiffs’ case[35]

Discussion[41]

Breach of loan agreement[45]

Harsh and oppressive conduct in light of the above breach[58]

Breach of s 176 of the Property Law Act 2007[69]

Summary[80]

Third claim — Relief under ss 93 and 94 of the CCCFA [82]

Fourth claim – Fair Trading Act 1986[84]

Summary on whether there is a serious question to be tried[90]

Balance of convenience[91]

Adequacy of damages[92]

Plaintiffs’ undertaking as to damages[100]

Joe Holdings[106]

Strength of case[111]

Delay[112]

Assessment of above factors and overall justice [120]

Result[130]

Costs[131]

[1] The plaintiffs are Mr Daniel Kwok and companies associated with him.1 The plaintiffs are in default under the terms of a loan agreement with the defendant (HND). The outstanding loan principal is around $11 million. Penalty interest has been accruing at 26 per cent which HND calculates as interest at about $7,835 a day. As at mid-November 2023, the sum outstanding was in excess of $19.5 million.

[2] HND has been seeking to exercise its powers of sale over the plaintiffs’ properties that are subject to mortgages securing the sums owed. Property Law Notices expired on 31 March 2023. HND started the sale process in around June 2023.

[3] The plaintiffs seek interim relief restraining the defendant (HND) from completing the mortgagee sale of three of the plaintiffs’ properties at 205 Sutton Road, 419 Bremner Road (previously known as 420 Bremner Road) and 111 Waitakere Road, which are already under contract to Joe Holdings Ltd (Joe Holdings). The outstanding loan principal is approximately the same amount as the aggregate sale prices of the three properties subject to the contracts to Joe Holdings.

[4] The plaintiffs also seek to restrain HND from exercising its power of sale over a fourth property at 58 Greenpark Road, Lincoln. HND has already completed a mortgagee sale of a fifth property.

[5] The plaintiffs’ amended statement of claim seeks a permanent injunction restraining the sales on several alternative bases. In submissions, two arguments were given the most attention. The first is that the loan agreement under which HND is exercising its rights is…

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: [2024] NZHC 1153
Decision Date: 14 May 2024

CaseChat Overview and Summary

The case of Kwok v HND Holding Limited, heard by Anderson J in the High Court of New Zealand, involves a dispute between Mr Daniel Kwok and associated companies (the plaintiffs) and HND Holding Limited (the defendant). The plaintiffs are in default under a loan agreement with HND, owing approximately $11 million in principal and accruing penalty interest at a rate of 26%, resulting in a total debt of over $19.5 million. HND is seeking to exercise its power of sale over the plaintiffs' properties securing the loan. The plaintiffs seek interim relief to restrain HND from completing the mortgagee sale of three properties and from exercising its power of sale over a fourth property.

The court assessed the application for interim relief based on three factors: whether there is a serious question to be tried, the balance of convenience, and the adequacy of damages. The court found that there was a serious question to be tried regarding the oppressive exercise of powers of sale by HND, but the case was not strong. The balance of convenience favored the defendant, as the plaintiffs' undertaking as to damages was not sufficient, and the defendant had provided a guarantee from HND Upland Limited, although its efficacy was questionable. The presence of a bona fide purchaser, Joe Holdings, who had entered into contracts for the sale of the properties, further tipped the balance against granting an injunction. The court concluded that justice was best served by refusing the interim injunction for the properties already under contract, but granted the injunction for the property at 58 Greenpark Road, Lincoln, which was not yet sold.

In summary, the court granted an injunction restraining the sale of the Lincoln property but denied the injunction for the other properties, finding the case finely balanced with the defendant's position being slightly stronger. The court ordered that costs be submitted for determination if not agreed upon.

Orders