Li v 110 Formosa (NZ) Limited - [2018] NZHC 2529

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2016-404-001650

[2018] NZHC 2529

UNDER Section 145A of the Land Transfer Act

IN THE MATTER OF

An application that caveat 10209375.1 not lapse

BETWEEN

JUN LI

Applicant

AND

110 FORMOSA (NZ) LIMITED

Respondent

Hearing: 21 September 2018

Appearances:

D Connor/J Heaney for the Applicant D W Grove for the Respondent

Judgment:

27 September 2018

JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

This judgment was delivered by me on
27.09.18 at 10:30am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:
Carson Fox Bradley Ltd, Auckland D Connor Barrister, Auckland

LI v 110 FORMOSA (NZ) LIMITED [2018] NZHC 2529 [27 September 2018]

Introduction

[1] The respondent, 110 Formosa (NZ) Limited (Formosa), is the owner of a golf resort valued at approximately $51 million. The resort is said to be in urgent need of capital expenditure for maintenance and a new waste water treatment system.

[2] In June 2016 the parties agreed to the making of an order by this Court that a caveat lodged against the property by the applicant, Mr Jun Li, should not lapse pending the filing and determination of substantive proceedings determining Mr Li’s interest in the property.

[3] The substantive proceedings were heard before Fitzgerald J in June and July 2018. Judgment remains reserved. In those substantive proceedings Mr Li contends that he contributed funds of $4.8m to purchase the land but these funds were misappropriated and Formosa obtained complete ownership of the land without Mr Li being either an owner or shareholder. The primary cause of action is knowing receipt, and Mr Li seeks equitable and tracing remedies. A central issue in the case is the existence and extent of any proprietary interest held by Mr Li.

[4] Formosa now seeks to vary the consent order made on 26 June 2016 by discharging the caveat so as to allow it to obtain secured funding in the sum of $3 million and thereafter allowing the applicant, Mr Li, to re-register the caveat. Formosa says that this is the only way that the necessary finance can be raised to address the outstanding maintenance and works required on the property. It is contended that these matters need to be addressed as a matter of priority, otherwise there is a real risk that the operations of the resort will be shut down.

[5] Formosa says that the current title has no registered security, and the substantial net equity, after allowing for a $3 million mortgage, is more than adequate to protect any interest that Mr Li might establish in the property.

[6] Mr Li opposes the application. He says that Formosa has failed to provide evidence on critical issues such as the financial performance of Formosa and whether and why alternative sources of finance are not available to it. Formosa, he says, has

not met the threshold of establishing that the removal of the caveat on the terms…

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.

Keep reading for free

Create a free CaseChat account to read Li v 110 Formosa (NZ) Limited and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2018] NZHC 2529
Decision Date: 27 September 2018

CaseChat Overview and Summary

The High Court of New Zealand considered an application by 110 Formosa (NZ) Limited (Formosa) to discharge a caveat lodged by Mr Jun Li, who claimed a beneficial interest in a golf resort property. The resort is in need of capital expenditure for maintenance and a new waste water treatment system. Formosa sought to discharge the caveat to obtain secured funding of $3 million, which it claimed was necessary to address urgent maintenance and works on the property. Mr Li opposed the application, arguing that Formosa had not provided sufficient evidence to demonstrate that removing the caveat would not prejudice his interests.

The court needed to determine whether Formosa had discharged the onus of proving that removing the caveat on the terms proposed would not prejudice Mr Li's interests. The court had to consider the evidence provided by Formosa regarding its financial position, performance, and the relationship with its principal shareholder, Ms Gui Wen, who holds 75.25 percent of the company. The court also had to assess the urgency of Formosa's need for finance and whether alternative sources of funding were available.

The court found that Formosa had not provided sufficient evidence to meet the threshold of establishing that removing the caveat on the terms proposed would not prejudice Mr Li’s interests. Formosa had failed to produce sufficient evidence on its financial position and performance, the relationship with Pine Harbour Ltd, and the exact financial position of Ms Wen. The court was not "completely satisfied" that Mr Li's interests were adequately protected, particularly given the mistrust between the parties and the incomplete disclosure of critical information. The court also noted that Formosa had not paid the outstanding costs order of $12,380.00, although it had agreed to make payment from the finance facility.

The court concluded that the application by Formosa to discharge the caveat on the terms proposed was dismissed. The caveat would remain in place, and the court found that Mr Li would be entitled to costs on a 2B basis if the parties could not agree on the costs.

Orders