Li v Green Land Investment Limited
[2022] NZHC 187
•15 February 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-1511
[2022] NZHC 187
BETWEEN JICAL LI AND FAN YU
First Plaintiffs/Counterclaim Defendant
AND
YUN ZHENG
Second Plaintiff
AND
WEN CHEN
Third Plaintiff
AND
ZHONG WEI ZHOU
Fourth Plaintiff
AND
BO LIN
Fifth Plaintiff
Cont:/
Hearing: 14 February 2022 Appearances:
R O Parmenter for Plaintiffs Third Defendant in person
S M Lowery & J C Suyker for First Defendant A J Casey for Eighth Defendant
Judgment:
15 February 2022
JUDGMENT OF PAUL DAVISON J
This judgment was delivered by me on 15 February 2022 at 3pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
LI & ORS v GREEN LAND & ORS [2022] NZHC 187 [15 February 2022]
AND Cont:/
JIYUAN WU
Sixth PlaintiffAND
FANG YU
Seventh Plaintiff
AND
WMW TRUSTEE LIMITED
Eighth Plaintiff
AND
YANGZUAN WANG AND MENGQUI WANG
Ninth Plaintiffs
AND
XIN ZHAO
Tenth Plaintiff
AND
ZELIX TRADING LIMITED
Eleventh Plaintiff
AND
QIN ZIN ZENG & AIXUAN GUO
Twelfth Plaintiff
AND
JCM NZ LIMITED
Thirteenth Plaintiff
AND
YIKAI CHEN
Fourteenth Plaintiff
AND
CHEN FINGLIANG & DING MING
Fifteenth Plaintiff
AND ZHIREN ZHANG
Sixteenth Plaintiff
AND
LOVE HOMES LIMITED
Seventeenth Plaintiff
AND 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 GREEN LAND INVESTMENT
LIMITED
First DefendantAND
REGISTRAR-GENERAL OF LAND
Second Defendant
AND
ZHONG XING
Third Defendant
AND
LEQUN ZHAO
Fourth Defendant
AND
XING ENTERPRISES LIMITED
Fifth Defendant
AND
TRINITY HOPE INVESTMENT LIMITED
Sixth Defendant
AND FLATBUSH LAND LIMITED
Seventh Defendant
AND
HIU CHING CHAN
Eighth Defendant
The application to vary interim injunction orders
[1] By application dated 13 December 2021, the third defendant, Mr Zhong Xing1 applies for orders to vary the terms of the interim injunction orders made by the Court on 28 July 2021 (the interim injunction). The third defendant seeks orders varying the terms of the interim injunction to:
(a)allow registration of instrument 12130437.2 being the transfer of the ANZ mortgage to the third defendant on 16 July 2021; and
(b)excluding from the scope of the interim injunction: titles 812195 (Lot 116), 690695 (Lot 107), 812190 (Lot 111), 812193 (Lot 114), 871068 (Lot 137), 812209 (Lot 130), 812210 (Lot 131) and 690646 (Lot 50) (the unclaimed lots).
[2] The third defendant’s application is supported by the first defendant Green Land Investment Limited (Green Land) and by the eight defendant Hiu Ching Chan.
[3]The application is opposed by the plaintiffs.
Background
[4] This proceeding relates to a residential subdivision by Green Land of property situated in Ormiston Road, East Tamaki in Auckland. The part of the subdivision relevant to this proceeding comprises 30 lots. In their statement of claim the 18 plaintiffs claim that pursuant to unconditional agreements for sale and purchase which they entered into with Green Land they each have an interest as either purchasers themselves or as nominees of purchasers, in specified lots in the subdivision.
[5] On 25 September 2020 the ANZ Bank New Zealand Limited (the ANZ bank) registered a mortgage over inter alia the lots in the Green Land subdivision which the
1 Although the order of his names is presented differently in this proceeding and documents produced, Mr Xing confirms that his first name is Zhong and his surname is Xing.
plaintiffs had entered into agreements to purchase.2 On 16 July 2021 the ANZ bank transferred its interests under the mortgage to the third defendant.
[6] In broad summary the plaintiffs allege that the third defendant thereafter exercised the mortgagee power of sale and purported to sell the titles of the lots which were the subject of the plaintiffs’ agreements for sale and purchase to Xing Enterprises Limited (the fifth defendant) which is a company he controlled. The plaintiffs allege that the fifth defendant thereafter proceeded to sell and transfer the properties that they had either agreed to purchase or acquire by way of a property swap, to third parties including the sixth, seventh, and eighth defendants.
[7] The without notice interim injunction orders granted by Powell J on 28 July 2021 prevent the Registrar-General of Land from registering the following instruments:
(a) 12130437.2;
(b) 12198016.1;
(c) 12198016.2; and
(d)Any transfers connected to the mortgage purporting to be transferred under instrument 12130437.2.
[8] However, the effect of the interim injunction is to prevent the Registrar-General registering any instruments transferring mortgages or transfers in respect of sales of eight lots in the subdivision in which the plaintiffs do not assert or claim to have any legal or beneficial interest.
[9] In his affidavit in support of the application, the third defendant says that each of the unclaimed lots were initially sold to third parties pursuant to agreements entered into with settlement dates originally scheduled for 24 May 2021 but later extended to 21 July 2021. Because of the terms of the interim injunction the settlements of these
2 Mortgage 11279352.37.
sales could not be effected and the agreements were cancelled. The third defendant says that he subsequently entered into further agreements for the sale of these lots but has been unable to settle the sales by reason of the terms of the interim injunction. The third defendant says that he has suffered loss by being unable to carry out and complete sales of the unclaimed lots and as a result has also incurred ongoing interest including penalty interest of around $12,000 per day which has accrued on the debt owed to Green Land.
[10] The first and third defendants say that although the plaintiffs make no claim to any interest in the unclaimed lots, the plaintiffs have refused to agree to vary the terms of the interim injunction so as to exclude the unclaimed lots from its scope.
[11] In the course of the hearing Mr Parmenter acknowledged that the plaintiffs do not claim to have any interest in the unclaimed lots. He says however that the plaintiffs say that the third defendant’s actions as regards the ANZ bank mortgage which was novated to him and which he sold to his company involved illegality on his part, and if he is able to deal with the unclaimed properties following their release from the scope of the interim injunction, there is a real possibility that he will act in a similar manner.
[12] The purpose and justification for the interim injunction is to protect the interests of the plaintiffs pending determination of their claim to have an interest in the lots in the subdivision in which they have an interest as either the original purchasers, the nominated purchasers or in one case pursuant to a property swap. They have no claim to have any interest in the unclaimed lots and accordingly there can be no serious question to be tried in relation to the unclaimed lots upon which an interim injunction could be based or justified.3 The mere possibility of illegality occurring in the course of the third defendant selling the unclaimed lots is speculative, and in any event entirely unrelated to the issues concerning the plaintiffs’ claims to having an interest in the lots they agreed to purchase.
[13] I accordingly grant the third defendant’s application and make orders in terms of his application dated 13 December 2012, paragraphs 1.1(a)(i) and (ii).
3 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA) at 142.
[14] The third defendant with support from the first defendant has been successful and is entitled to an award of costs. I direct counsel to confer regarding costs and in the event that the parties are unable to agree costs, I direct that they file memoranda in accordance with the timetable set out at the conclusion of this judgment.
The application for security as regards the plaintiffs’ undertaking as to damages
[15] By interlocutory application dated 27 January 2022 the third defendant applies for orders that the plaintiffs provide security in respect of the undertaking as to damages they have given in support of the interim injunction. The third defendant seeks an order that security in the sum of $3 million be ordered, with an order that the plaintiffs’ claim be stayed pending the provision of the security ordered by the Court.
[16] The plaintiffs have been served but have not filed a notice of opposition to the application. Mr Parmenter says that he has approached the matter of the third defendant’s application for security as being effectively an alternative to his application for variation of the interim injunction on the basis that it would be pursued if that application was unsuccessful. Although Mr Parmenter has said in his written submissions that the plaintiffs are not in a financial position to provide the security sought by the third defendant, there is no evidence from the plaintiffs as to their financial positions and abilities to meet an order for security. Mr Lowery says that until Mr Parmenter recently disclosed that the plaintiffs were not in a financial position to provide the security sought by the third defendant, there had been no indication to that effect or suggestion that their original undertaking may not be capable of being enforced.
[17] This is the first call of the application and I consider that the Court should have some evidence and more detailed information regarding the plaintiffs’ financial positions before determining the third defendant’s application. I note that the substantive trial of the proceeding is scheduled to commence on 21 March 2022, and with that in mind I consider that a short time should be afforded to the plaintiffs to file evidence regarding their financial positions and ability to satisfy their undertaking as to damages.
[18] I direct that the third defendant’s application that the plaintiffs provide security for their undertaking as to damages be heard in the Duty Judge list at 10.00 am on Tuesday 8 March 2022.4 The third defendant has already filed a synopsis of submissions in support of his application.5 I direct the plaintiffs to file and serve a notice of opposition to the application and any affidavits as to their financial positions and ability to satisfy their undertaking as to damages by 5.00 pm on 25 February 2022, together with a written synopsis of submissions. I direct the third defendant to file and serve his written synopsis of submissions in reply by 5.00 pm on 4 March 2022. The hearing time allocated for this matter is one hour.
Plaintiffs’ notice under s 130 of the Evidence Act 2006
[19] In a memorandum dealing with timetabling issues, Mr Parmenter says that although counsel are endeavouring to finalise a memorandum of agreed facts by the end of this week, there are nevertheless a number of documents which the plaintiffs wish to produce at trial which could conveniently be produced pursuant to a notice given by the plaintiffs to the defendants pursuant to s 130 of the Evidence Act 2006.
[20] Without identifying the documents individually the plaintiffs describe the documents they wish to produce as follows:
(a)17 plaintiffs’ agreements for sale and purchase—about 25 nominations by a purchaser.
(b)Various correspondence involving Green Land’s solicitors, Loo & Koo, and the plaintiffs’ solicitors concerning Green Land’s non-settlement with the plaintiffs.
(c)Documents from Land Information New Zealand (LINZ), including LINZ letters of requisition or rejection.
4 The 21 February 2022 date discussed with counsel during the course of the hearing is unavailable for a one hour hearing.
5 Third defendant’s submissions dated 11 February 2022.
[21] The third defendant, Mr Lowery and Ms Casey have no objection to the documents referred to in (a) and (c) being produced pursuant to s 130. However they reserve their position as regards documents failing within category (b) until they have seen a list of the documents or a copy of them. I accordingly direct the plaintiffs to provide the defendants with a list of the documents falling within category (b) by
5.00 pm on 18 February 2022.
[22] As regards the documents referred to in the plaintiffs’ categories (a) and (c), I make an order pursuant to s 130(3) of the Evidence Act 2006 that they be admitted in evidence at the trial, and that the documents are to be presumed, in the absence of evidence to the contrary, that their nature, origin and contents are as shown on the face of the documents.
[23] Mr Parmenter says that as there was some delay in receiving the third defendant’s discovery, the process of the parties reaching agreement regarding an agreed statement of facts and the close of pleadings which were timetabled for 10 February 2022 was affected. Mr Parmenter accordingly seeks an amendment to the timetable to change the close of pleadings date and the date for completion and filing of a memorandum of agreed facts (if agreement can be reached), to Friday 18 February 2022. There is no objection from the defendants and I make an order amending the timetable in those terms.
Orders and directions
[24] For the reasons set out above I grant the third defendant’s application to vary the terms of the interim injunction orders made on 28 July 2021, and make orders in terms of his application dated 13 December 2012, paragraphs 1.1(a)(i) and (ii).
[25] I direct counsel to confer regarding costs in relation to the third defendant’s application to vary the terms of the interim injunction, and in the event that the parties are unable to agree costs, I direct that they file costs memoranda in accordance with the following timetable:
(a)The third and first defendants are to file and serve their costs memoranda by 5.00 pm on Friday 1 April 2022.
(b)The plaintiffs are to file and serve their costs memorandum in reply by
5.00 pm on Friday 8 April 2022.
(c)The costs memoranda of the parties are not to exceed three pages in length apart from annexures or schedules.
[26] Upon receipt of the costs memoranda the costs will be determined on the papers by the Judge hearing the substantive trial of the proceeding.
[27]I also make orders and directions in terms of paragraphs [18], [21], [22] and
[23] above.
[28] Finally, I direct that the matter be called in the Duty Judge List on Monday 28 February 2022 to enable the Court to review progress and compliance with the timetable and any matters relating to the orders and directions herein.
Paul Davison J
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