Li v Green Land Investment Limited
[2023] NZHC 595
•23 March 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2021-404-1511
[2023] NZHC 595
BETWEEN JICAI LI and FAN YU
First Plaintiffs
Continued…
AND
GREEN LAND INVESTMENT LIMITED
First DefendantContinued…
Hearing: 21 March 2023 Appearances:
R Parmenter for the first to seventeenth and nineteenth plaintiffs J Yao for the eighteenth plaintiffs
Third defendant in person
Judgment:
23 March 2023
JUDGMENT OF CAMPBELL J
This judgment was delivered by me on 23 March 2023 at 10 am pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
LI AND OTHERS v GREEN LAND INVESTMENT LIMITED AND OTHERS [2023] NZHC 595 [23 March 2023]
YUN ZHENG
Second Plaintiff
WEN CHEN
Third Plaintiff
ZHONG WEI ZHOU
Fourth Plaintiff
BO LIN
Fifth Plaintiff
JIYUAN WU
Sixth Plaintiff
FANG YU
Seventh Plaintiff
WMW TRUSTEE LIMITED
Eighth Plaintiff
YANGZUAN WANG AND MENGQUI WANG
Ninth Plaintiffs
XIN ZHAO
Tenth Plaintiff
ZELIX TRADING LIMITED
Eleventh Plaintiff
QIN ZIN ZENG & AIXUAN GUO
Twelfth Plaintiff
JCM NZ LIMITED
Thirteenth Plaintiff
YIKAI CHEN
Fourteenth Plaintiff
CHEN FINGLIANG & DING MING
Fifteenth Plaintiff
ZHIREN ZHANG
Sixteenth Plaintiff
LOVE HOMES LIMITED
Seventeenth Plaintiff
ER XIA CAO AND ER SHENG CAO (AS TRUSTEES OF THE ZION TRUST) AND ER SHENG CAO AND ER XIA CAO (AS TRUSTEES OF CAO TRUST)
Eighteenth Plaintiffs
AND Defendants Continued….
REGISTRAR-GENERAL OF LAND
Second Defendant
ZHONG XING
Third Defendant
LEQUN ZHAO
Fourth Defendant
XING ENTERPRISES LIMITED
Fifth Defendant
TRINITY HOPE INVESTMENT LIMITED
Sixth Defendant
FLATBUSH LAND LIMITED
Seventh Defendant
HIU CHING CHAN
Eighth Defendant
[1] Mr Xing, the third defendant, applies for an order that the plaintiffs provide security to support undertakings as to damages that the plaintiffs gave when successfully applying for an interim injunction. The plaintiffs oppose Mr Xing’s application.
Background
[2] On 18 July 2021, the plaintiffs obtained an interim injunction from this Court. The injunction prevented the second defendant, the Registrar-General of Land, from registering certain dealings over a number of lots in a development at 411–413 Ormiston Road, Auckland. The plaintiffs claimed to be purchasers of some of the lots under agreements for sale and purchase with the first defendant, Green Land Investment Ltd (Green Land). Green Land is the registered owner of the lots.
[3] The interim injunction prevented the Registrar-General from registering, among other things, a transfer of a mortgage over the lots from the ANZ to the third defendant, Mr Xing, and any transfers connected to that mortgage.
[4] On 27 January 2022, Mr Xing applied for an order requiring the plaintiffs to provide security to support the undertakings as to damages they gave in support of their application for the interim injunction. On 9 March 2022, Duffy J delivered a results judgment declining Mr Xing’s application.
[5] On 15 February 2022, Paul Davison J varied the interim injunction to allow registration of the transfer of the mortgage from the ANZ to Mr Xing and to exclude eight lots from the injunction.
[6] On 4 August 2022, Jagose J delivered a liability judgment in the substantive proceeding. He held that purported mortgagee sales of the lots were void and that Green Land remained liable on its agreements for sale and purchase with the plaintiffs.1 His Honour said he was inclined to order specific performance but reserved the question of relief.2 His Honour also held that he would award damages on Green Land’s counterclaim against the plaintiffs for trespass (the plaintiffs having
1 Li v Green Land Investment Ltd [2022] NZHC 1906 at [61].
2 At [67] and [71].
commenced building on “their” lots prior to settlement of their purchases).3 His Honour continued the interim injunction.4 A hearing to determine final relief is scheduled before Jagose J on 1 May 2023.
[7] Mr Xing appealed Jagose J’s decision to the Court of Appeal. The plaintiffs (other than the eighteenth plaintiffs, who are now separately represented) cross- appealed. A hearing has yet to be scheduled for the appeal.
[8] On 19 August 2022, Jagose J extended the scope of the interim injunction. His Honour did so on a without notice application by the plaintiffs. In a minute explaining his decision, his Honour said the merits of the plaintiffs’ case were “very clear”.5
[9] On 30 August 2022, Mr Xing applied to vary the interim injunction, seeking orders that he be free to exercise any power of sale under the mortgage that had been transferred from the ANZ or under any mortgage in favour of Mr Xing in respect of the lots. Venning J dismissed that application in a judgment dated 9 December 2022.6 His Honour said that varying the interim injunction in the way Mr Xing sought would render the plaintiffs’ cross-appeal and the potential relief indicated by Jagose J nugatory.7 The balance of convenience therefore favoured maintenance of the injunction pending the Court of Appeal hearing or at least the relief hearing before Jagose J.8
Mr Xing’s application
[10] Mr Xing represents himself. He has limited English. He appeared at the hearing with an interpreter, Mr Chang.
3 At [65].
4 At [74].
5 Li v Green Land Investment Ltd HC Auckland CIV-2021-404-1511, 23 August 2022 (Minute of Jagose J) at [9].
6 Li v Green Land Investment Ltd [2022] NZHC 3321.
7 At [38].
8 At [42].
[11] Mr Xing’s application and submissions in support are difficult to follow. I expect this is partly because he is a layperson and partly because of language difficulties.
[12] In his application, dated 16 November 2022, Mr Xing applies for an order requiring “all plaintiffs to provide security of injunction of say 5 million”. I understand it to be, and treat it as, an application for an order that the plaintiffs provide security to support their undertakings as to damages.
Grounds of application
[13] Mr Xing filed an affidavit in support dated 16 November 2022. The affidavit consisted primarily of a series of assertions without any evidential basis. In particular, Mr Xing asserted that the plaintiffs’ sale and purchase agreements were all “voidable” as of 29 September 2022, but he did not provide any evidence to support that assertion. Mr Xing also deposed that he had filed a separate proceeding against the plaintiffs and other persons (including lawyers acting for the plaintiffs in this proceeding) in which he made a claim based on the undertakings as to damages.
[14] Mr Xing filed a further affidavit in support dated 23 November 2022. In this affidavit, Mr Xing deposed that the interim injunction had caused him damages of “say” $5 million. He deposed that he had asked the plaintiffs to provide evidence that they could meet an order that they pay damages in such an amount. He said that none of the plaintiffs had responded.
[15] Mr Xing filed yet another affidavit, well out of time, dated 14 March 2023 (a week prior to the hearing). He deposed that he now claimed $27 million against the plaintiffs. He exhibited an email in which he had claimed this amount. He asserted that under Jagose J’s liability judgment the plaintiffs needed to show that they had funds to settle their agreements for sale and purchase. He said the plaintiffs had never provided “the funding that show plaintiffs ready, able and willing to settle”.
[16] Finally, after the hearing, Mr Xing filed an affidavit dated 29 November 2022. He had previously filed this affidavit in support of his application to vary the interim
injunction (dismissed by Venning J on 9 December 2022).9 In this affidavit, Mr Xing exhibited a letter from counsel acting for the plaintiffs (other than the eighteenth plaintiffs) which Mr Xing said showed some of the plaintiffs were experiencing financial hardship.
Submissions by Mr Xing
[17] Mr Xing filed written submissions dated 19 March 2023. His submissions are difficult to follow. Mr Xing does not make any attempt to set out the legal principles governing his application. However, the general theme of his submissions is that the plaintiffs do not have the financial means to settle their purchases from Green Land or to pay damages pursuant to the undertakings they gave to the Court.
[18] Mr Xing filed a memorandum dated 20 March 2023, in which he summarised his position. He submitted:
(a)Under the liability judgment of Jagose J the plaintiffs needed to provide proof of clear funds to show they were ready, able and willing to settle their purchases of the lots. Mr Xing said the total funds the plaintiffs required to settle was about $10.7 million.
(b)The plaintiffs were in breach of their obligation to pay trespass damages, as referred to in the liability judgment of Jagose J. Mr Xing said the damages amounted to some $450,000.
(c)The plaintiffs were in breach of their undertakings as to damages by not paying damages in respect of the eight lots that were initially subject to the injunction, prior to their release by Paul Davison J on 15 February 2022. Mr Xing submits that he lost some $2.5 million as a result of the injunction over those eight lots.
(d)He was entitled to indemnity costs of about $154,000 for his successful application before Paul Davison J to vary the injunction.
9 See Li v Green Land Investment Ltd [2022] NZHC 3321 at [30].
(e)The plaintiffs should therefore be ordered to pay security in the sum of the amounts set out in the preceding paragraphs, namely a sum of about $13.8 million.
[19] At the hearing of the application, Mr Xing’s oral submissions focused on what he said was the plaintiffs’ inability to pay the funds to settle their purchases from Green Land and to pay the trespass damages ordered by Jagose J. When I suggested to him that the plaintiffs’ ability to settle was a matter still to be determined at the upcoming relief hearing before Jagose J, Mr Xing’s response was that that hearing would be a “waste of time” if the plaintiffs were unable to prove (by paying security of $13.8 million) that they were in a position to settle.
Decision
[20] Mr Xing is applying to vary the terms and conditions of the interim injunction. Under r 7.49 of the High Court Rules 2016, a party affected by an interlocutory order (such as an interim injunction) may apply to vary the order. Such an application must be filed within five working days of receipt of notice of the order: r 7.49(3)(b). The interim injunction was first made in July 2021. Mr Xing does not say when he received notice of it, but a memorandum filed by the plaintiffs on 16 September 2021 records that Mr Xing was given notice of the order in August 2021. He did not file this application until 16 November 2022. He has not sought an extension of time.
[21] The Court also has inherent jurisdiction, outside r 7.49, to order the giving of security to support an undertaking as to damages in respect of an interim injunction that has already been granted. Such jurisdiction is to be exercised only in exceptional circumstances.10 Exceptional circumstances may be found where there was originally no issue as to the plaintiff’s ability to meet the undertaking, but there is now evidence to the contrary. Even then, an application for security might be declined if it is made close to trial for apparently tactical reasons.
10 Shell (Petroleum Mining) Ltd v Kapuni Gas Contracts Ltd CL 5/94, HC Auckland, 8 December 1995.
[22] Mr Xing has previously made an interlocutory application for an order that the plaintiffs provide security to support the undertakings. That application, as I have noted, was declined by Duffy J on 9 March 2022. The effect of r 7.52 of the High Court Rules is that Mr Xing may not apply again for the same order without leave of a Judge. A Judge may grant leave only in special circumstances: r 7.52(2). Mr Xing has not applied for or obtained leave.
[23] The plaintiffs did not take any point under rr 7.49 and 7.52. Mr Xing is a layperson. I therefore prefer to deal with his application on the merits rather than dismissing it on the basis his application was out of time or made without leave.
[24] Nonetheless, in considering the merits of Mr Xing’s application, it is relevant that he is seeking to vary the terms of an existing interim injunction and to make a second application for an order he has already failed to obtain. In such a situation, a court should grant an application only in exceptional circumstances. Typically, such circumstances would arise where there is evidence, materially different from the evidence available when the first unsuccessful application was made, that clearly shows that an order should be made that the plaintiffs provide security for the undertakings.
[25] Mr Xing has not persuaded me that there are exceptional circumstances of that sort. Since the interim injunction was first granted, and since Duffy J’s judgment of 9 March 2022, the position of the plaintiffs has improved markedly, particularly as a result of Jagose J’s liability judgment. His Honour said he was inclined to order specific performance. His Honour continued the interim injunction. Further, when his Honour extended the scope of the interim injunction on 19 August 2022, his Honour said the merits of the plaintiffs’ case were “very clear”.11 The plaintiffs’ improved position means it is less likely now (than in March 2022) that security would be ordered.
11 Li v Green Land Investment Ltd HC Auckland CIV-2021-404-1511, 23 August 2022 (Minute of Jagose J) at [9].
[26] Mr Xing’s reference to alleged financial issues faced by the plaintiffs do not advance his case. I comment on the matters he raised (in his memorandum dated 20 March 2023) as follows:
(a)Under the liability judgment of Jagose J the plaintiffs needed to provide proof of clear funds to show they were ready, able and willing to settle their purchases of the lots. Mr Xing said the total funds the plaintiffs required to settle was about $10.7 million. This misstates the effect of Jagose J’s judgment. His Honour did not direct that the plaintiffs had to provide this proof. He was merely observing that the absence of evidence (at that time) from the plaintiffs as to whether they were ready, willing and able to settle made it complicated to order specific performance.12
(b)The plaintiffs were in breach of their obligation to pay trespass damages, as referred to in the liability judgment of Jagose J. Mr Xing said the damages amounted to some $450,000. These are payable to Green Land, not to Mr Xing. Further, it appears the plaintiffs will be able to set-off against these damages the penalty interest for which Green Land will be liable for delayed settlement.
(c)The plaintiffs were in breach of their undertakings as to damages by not paying damages in respect of the eight lots that were initially subject to the injunction, prior to their release by Paul Davison J on 15 February 2022. Mr Xing submits that he lost some $2.5 million as a result of the injunction over those eight lots. Mr Xing is merely claiming this amount as damages. He does not have any judgment for this amount. He has not provided any admissible evidence in support of his claim.
(d)He was entitled to indemnity costs of about $154,000 for his successful application before Paul Davison J to vary the injunction. Paul Davison J directed that costs on that application are to be determined by the Judge hearing the substantive trial. In his liability judgment,
12 Li v Green Land Investment Ltd [2022] NZHC 1906 at [68].
Jagose J reserved costs pending his ultimate determination. Even if Mr Xing is awarded costs in relation to his application to vary the injunction, that award is likely to be outweighed by the costs award in favour of the plaintiffs against Mr Xing on their substantive claim.
[27] Mr Xing also submits, in his written submissions, that he served a notice under the Property Law Act 2007 on the plaintiffs and that, after the notice expired unremedied, he cancelled the plaintiffs’ agreements for sale and purchase under s 178(2) of the Property Law Act. Mr Xing did not file any admissible evidence to support this submission. Further, it appears to me that the effect of Jagose J’s liability judgment is that any such notices would have been invalid.
[28] For these reasons, there are no exceptional circumstances that would justify ordering the plaintiffs to provide security to support their undertakings. I decline Mr Xing’s application.
Costs
[29]The plaintiffs are entitled to costs from Mr Xing on the application.
[30] The plaintiffs represented by Mr Parmenter (all plaintiffs other than the eighteenth plaintiffs) simply seek an order for 2B costs. I agree that is the correct cost category and band.
[31] The eighteenth plaintiffs seek indemnity costs under r 14.6(4)(a) of the High Court Rules. They say Mr Xing has advanced the same allegations that have been dealt with and dismissed by this Court and has therefore acted improperly and/or unnecessarily. I agree with that characterisation. Mr Xing brought the same application that he unsuccessfully brought before Duffy J. He did not seek leave to do so. Although Mr Xing acts for himself and is entitled to do so, he must comply with the rules of Court.13 I therefore award indemnity costs against Mr Xing in favour of the eighteenth plaintiffs.
13 Mr Xing was reminded of this in the judgment of Venning J in Li v Green Land Investment Ltd
[2022] NZHC 3321 at [21].
Result
[32]I dismiss Mr Xing’s application.
[33] In respect of the application, Mr Xing is to pay costs on a 2B basis and reasonable disbursements to the plaintiffs represented by Mr Parmenter, and is to pay indemnity costs to the eighteenth plaintiffs.
Campbell J
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