Li v Green Land Investment Ltd
[2022] NZHC 3321
•9 December 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-001511
[2022] NZHC 3321
BETWEEN JICAI LI and FANG YU
First Plaintiffs
Continued…
AND
GREEN LAND INVESTMENT LIMITED
First Defendant
Continued…
Hearing: (On the papers) Judgment:
9 December 2022
JUDGMENT OF VENNING J
Application to vary injunction
This judgment was delivered by me on 9 December 2022 at 3.00 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Carson Fox Bradley Ltd, Auckland
Duthie Whyte, Auckland Zhang Law, Auckland Meredith Connell, Auckland
Counsel:M E Casey KC, Auckland R O Parmenter, Auckland S M Lowery, Auckland
Copy to: Third defendant
LI v GREEN LAND INVESTMENT LIMITED [2022] NZHC 3321 [9 December 2022]
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
YANGXUAN WANG and MENGQUI WANG
Ninth plaintiffs
XIN ZHAO
Tenth plaintiff
ZELIX TRADING LIMITED
Eleventh plaintiff
QIN XIN ZENG and AIXUAN GUO
Twelfth plaintiffs
JCM NZ LIMITED
Thirteenth plaintiff
YIKAI CHEN
Fourteenth plaintiff
CHEN FENGLIANG and DING MING MING
Fifteenth plaintiffs
ZHIREN ZHANG
Sixteenth plaintiff
LOVE HOMES LIMITED
Seventeenth plaintiff
ER XIA CAO and ER SHENG CAO (as
trustees of ZION Trust) and ER SHENG CAO and ER XIA CAO (as trustees of CAO Trust) together with JUN WU
Eighteenth plaintiffs
JASVINDER SINGH and TINA SINGH
Nineteenth plaintiffs
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
Application
[1] The third defendant Zhong Xing (Mr Xing) applies to vary an interim injunction.1
The terms of the injunction
[2] The interim injunction was initially made on 28 July 2021 in the following terms in relation to a number of identified lots:
a.That, until further order or other order of the Court, the second defendant, the Registrar-General of Land, be prevented from registering the following instruments:
i.12130437.2 – a transfer of mortgage
ii.12198016.1 – a transfer in exercise of power of sale; and
iii.12198016.2 – a transfer;
iv.Any transfers connected to the mortgage purported to be transferred under instrument 12130437.2.
[3] The injunction was then varied by the judgment of Paul Davison J delivered on 15 February 20222 to:
i.Allow registration of instrument 12130437.2, being the transfer of the ANZ mortgage to the third defendant on 16 July 2021; and
Exclude 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) from any restrictions under the Interim Injunction.
[4] In his judgment delivered on 4 August 2022 Jagose J confirmed the interim injunction as varied by Davison J.3 He then further varied it on 19 August 2022 by extending it:
aa. That until further or other order of the Court:
i.The third defendant, Zhong Xing and the fourth defendant, Lequn Zhao, be restrained from exercising any power of sale
1 Application dated 30 August 2022.
2 Li & Ors v Green Land Investment Ltd & Ors [2022] NZHC 187.
3 Li & Ors v Green Land Investment Ltd & Ors [2022] NZHC 1906.
under mortgages 11279352.37 (in favour of Xing) or 12052781.1 (in favour of Zhao or Xing) in respect of the following land titles:4
ii.In respect of the above titles, that the second defendant, the Registrar-General of Land, be restrained from registering any instrument which purports to be in exercise of a power of sale under the said mortgages 11279352.37 or 12052781.1 or is in any way related to a power of sale.
[5] By his application Mr Xing seeks orders that he be free from exercising any power of sale under mortgages numbered 11279352.37 (the ANZ mortgage) or 12052781.1 in respect of the 19 lots, and an order that, in respect of the titles, the second defendant, the Registrar-General of Land be free from registering any instrument which purports to be in exercise of a power of sale under the said mortgages or in any way related to the power of sale.
[6] The application is opposed by the first to seventeenth and nineteenth plaintiffs (represented by Mr Parmenter) and by the eighteenth plaintiff trustees.
[7] The eighth defendant, Hiu Ching Chan, supports Mr Xing’s application to the extent the eighth defendant says there is no basis upon which Mr Xing should be prevented from exercising his rights as mortgagee under what is referred to as the ANZ mortgage.
Hearing issues
[8] The application was allocated a fixture on 1 December 2022 to be heard together with three applications by Mr Xing to remove caveats in relation to three of the titles. A separate decision is delivered in relation to those three caveat applications.
[9] Mr Xing represents himself. On 30 November 2022, the day before the scheduled hearing, Mr Xing advised the Court that he had tested positive for Covid and was unable to attend the hearing. The Court advised Mr Xing and counsel for the parties who have taken steps in the proceeding that, given the parties had already exchanged submissions the Court would be prepared to deal with the matter on the
4 The titles identified were known as Lots 119, 31, 32, 64, 65, 95, 93, 94, 96, 113, 115, 118, 126,
128, 132, 62, 127, 63 and 112.
basis of the papers if the parties agreed. The parties, including Mr Xing, confirmed their agreement to that process.
[10]The Court has received extensive written submissions on the issues.5
Factual and procedural background
[11] The background to the dispute between the parties and the interim injunction is complicated to say the least. It is set out in considerable detail in the judgment of Jagose J. For present purposes the following summary will suffice.
[12] In short, the substantive proceeding relates to a residential subdivision by Green Land Investment Limited (Green Land) of property situated in Ormiston Road, East Tamaki, in Auckland. The part of the subdivision relevant to the proceeding and affected by the judgment comprises 22 lots. In their statement of claim the first to seventeenth and nineteenth plaintiffs claimed that, pursuant to unconditional agreements for sale and purchase with Green Land they each have an interest as either purchasers themselves or as nominees of purchasers in specified lots in the subdivision. The eighteenth plaintiffs are interested in three lots which they say Green Land was to transfer to them in exchange for their transfer of a driveway at 443 Ormiston Road to Green Land.
[13] On 25 September 2020, the ANZ Bank New Zealand Limited, (ANZ) registered a mortgage over, inter alia, the lots in the Green Land subdivision which the plaintiffs had entered into agreements to purchase. On 16 July 2021, ANZ transferred its interests under the mortgage to Mr Xing.
[14] As Jagose J noted in his judgment, the plaintiffs alleged Green Land “schemed” to avoid settling the titles on the plaintiffs, first by capitulating to caveats lodged over various of the titles by a third party, Yutian Li, and second, by contriving mortgagee
5 Third Defendant’s submissions, dated 17 November 2022, 29 November 2022, and Third Defendant’s submission in reply, dated 1 December 2022; Submissions of First to Seventeenth and Nineteenth Plaintiffs, dated 22 November 2022, and submissions in reply, dated 30 November 2022; Memorandum of Eighth Defendant, dated 30 November 2022; and Memorandum of Eighteenth Plaintiffs, dated 30 November 2022.
sales of the land to Mr Xing and the fourth and fifth defendants, and through them, to the sixth to eighth defendants.
[15] The plaintiffs sought, in essence, specific performance of the agreements for sale and purchase (or in relation to the eighteenth plaintiffs, the agreement to transfer land) with Green Land or damages in lieu. The plaintiffs relied on the validity of the agreements underlying the mortgagee sales and good faith in the relationship.6
[16]Ultimately the Judge concluded:7
Result on plaintiffs’ claims
[61] Not being satisfied either Green Land gave Mr Zhao security over all the plaintiffs’ lots, or Mr Zhao (or Mr Xing) gave compliant notice of default to Green Land, I hold the mortgagee sales of each of the plaintiffs’ lots to be void, of no effect. Green Land remains liable on its agreements with the plaintiffs.
…
[65] Last, on Green Land's claim for trespass damages, necessarily founded on Green Land’s continued possession of the lots, the parties have agreed an annual $19,500 rate per lot. Mr Lowery has specified the periods for which such rates should apply to the trespassed lots; Mr Parmenter said in closing he accepted those calculations. I would award damages on this third counterclaim accordingly.
Remedy
[66] Absent indefeasibility of title conferred by registration, the appropriate remedy starts with rescission of the offending transactions. That is consistent with the essentially restitutionary nature of the relief sought here, “to correct normatively defective transfers of value, usually by restoring parties to their pre-transfer positions”. Given neither Mr Zhao nor Xing Enterprises filed any defence, I might infer they accept it would be manifestly unjust for Xing Enterprises to remain registered owner of the titles at issue. I heard no substantial argument on how any remedy might be ordered.
[67] My inclination is to order Green Land’s specific performance of the plaintiffs’ agreements, and the trespassing plaintiffs pay the agreed damages to Green Land.
[68] The former further is complicated by the absence of evidence from any of the plaintiffs if they are ready, willing and able to settle, and possibly bedevilled by application of proceeds of sale to the sixth, seventh and eighth defendants to reimburse Mr Xing for his discharge of the amount of ANZ’s mortgage.
6 Li & Ors v Green Land Investment Ltd & Ors, above n 3, at [2].
7 (footnotes omitted).
[69] On the latter, under cross-examination, Mr Xing agreed he “paid off all of the debt owing to ANZ Bank” when he “received the money from Xing Enterprises in respect of the lots sold to [the sixth, seventh and eighth defendants]” on 27 July 2021. The precise calculation of those numbers was contested in cross-examination by Mr Parmenter and Mr Lowery, if the ANZ debt was fully repaid (or, at least, if Mr Xing was made whole for meeting it, to the extent repayment included the sixth and seventh defendants’ loans to him).
[70]In closing, Mr Parmenter proposed:
… it would be reasonable to order that the total sum required to discharge the novated mortgage, on the basis that the moneys paid into the mortgage are refundable (somehow), would be (say)
$4m over the 19 lots where payments are to be made on settlement”.
I cannot possibly assess that from the state of the evidence. And I am unclear of the basis on which such may be ordered in relief in this proceeding, in which no claim is raised between Green Land and Mr Xing, or between Xing Enterprises and the sixth to eighth defendants. But the ANZ mortgage novated to Mr Xing remains on the titles.
[71] Instead, I direct counsel jointly to draft orders for relief reflecting my determinations at [61] and [65] above, taking into account the issues identified at [66] and [68] above and including provision for costs. If such orders are agreed, the draft and any explanatory memorandum is to be filed within 20 working days of the date of this judgment for my approval for sealing.
[72] If such orders are not agreed, the plaintiffs’ proposal and any explanatory memorandum instead is to be filed and served within 20 working days of the date of this judgment, responses (to include counter-proposal(s)) and reply respectively to be filed and served within 10 working days after service. The Registry then is to fix a date convenient to counsel for argument before me on relief. From what I presently know of my calendar, that is unlikely to be later this or early next year.
[17] Jagose J then confirmed the application of the varied interim injunction pending his ultimate determination of the proceeding. As noted, the Judge then subsequently varied the injunction on 19 August 2022, expressly restraining Mr Xing (and Mr Zhao) from exercising any power of sale in mortgages 11279352.37 (the ANZ mortgage) or 12052781.1 in relation to the identified lots.
[18] Both Mr Xing and the plaintiffs represented by Mr Parmenter have appealed Jagose J’s decision to the Court of Appeal. Mr Parmenter takes the point that the judgment seems to have been on the basis the mortgagee sales were conducted under a mortgage in favour of Mr Zhao, the fourth defendant, whereas, in Mr Parmenter’s
submission, the sales were conducted under the ANZ mortgage which had been novated in favour of Mr Xing which, he argues, was supported by the transfer documents lodged with Land Information New Zealand (LINZ). Those documents make it clear that Mr Xing was proceeding under the ANZ mortgage. If that were the case he argues the plaintiffs’ second cause of action would become important because the plaintiffs have an interest in the equity of redemption. They would argue one consequence of Mr Xing’s actions is that the novated ANZ mortgage should cede priority to the plaintiffs’ claims to the land, which would again affect the power of sale.
[19] Perhaps unsurprisingly, the parties were not able to agree orders as directed by the Judge. The ultimate determination of the proceeding has been allocated a fixture before Jagose J on 1 May 2023.
[20] There is another application before the Court. Mr Xing has very recently made a further application seeking security to support the injunction. On 24 November 2022 Muir J directed that application is to be heard on 21 March 2023.
Procedural failings
[21] The Court’s ability to deal with Mr Xing’s application is somewhat hampered by the way the application and supporting papers have been presented to the Court. Mr Xing represents himself and has filed his own papers. Mr Xing is of course entitled to act on his own behalf. However, if he does so, he must comply with the rules of the Court. That is particularly important in a case such as the present where real property rights and interests and, potentially, substantial sums of money are involved.
[22] The gist of Mr Xing’s application to vary the injunction and the various material he has filed seems to be two-fold. First, that a Property Law Act (PLA) notice issued on 11 March 2022 has expired unremedied and so the injunction should be lifted to enable him to proceed with the mortgagee sales. Second, that the financial position of the plaintiffs, particularly those represented by Mr Parmenter, and the financial position of Green Land, is such that they cannot settle the purchases so that there is no point in maintaining the injunction. In his application, Mr Xing refers to the following grounds:
(1)1st defendant has been served property law act notice dated 11.3.2022 and later 1st defendant served the property law act notice to plaintiffs at the same time.
(2)The property law act notice expired at 7.5.2022 unremedied and un- oppose by plaintiffs.
(3)Plaintiffs’ sales and purchase agreements with 1st defendant had been cancelled by 3rd defendant under section 178(2) property law act at 15.8.2022.
(4)3rd defendant adopted 6th, 7th, 8th defendants’ agreement under section 179 property law at 2007.
(5)3rd defendant instructed Loo and Koo to release the deposit paid by plaintiffs together with interest at 18.8.2022.
(6)This application in support by affidavit by attorney of Mr Zhao filed herein.
(7)This application reliance upon HCr 7.49.
[23] Mr Xing did not provide any affidavit evidence of his own with the application to vary the injunction. When filed, the application was supported by an affidavit of Dolly Chau. Ms Chau says she is an attorney of Mr Zhao. Ms Chau’s affidavit primarily consists of inadmissible hearsay and submission.
[24] Ms Chau does not produce evidence of her authority as “attorney” of Mr Zhao. She then purports to depose matters on Mr Zhao’s behalf and as to his knowledge. The affidavit also contains submissions as to the law and conclusory statements as to legal issues, such as:
From the land owner agreements between the neighbouring properties, the project supposed to be completed by [March] 2017, later August 2018 and full completion with titles at February 2021. The additional a year litigation in this matter increased the interest payment by firs defendant to Mr Xing that later transfer to Mr Zhao that not possible to meet the full repayment as the prices plaintiffs paid with plaintiffs required 15% penalty interest from first defendant from 2021 just not possible for first defendant to pay off the amount owed under property law act notice dated 13.3.2022 that un-remedied at 7.5.2022.
[25] When the application was before the Court in the duty Judge list on 6 October 2022, the Court set it down for hearing and directed Mr Xing to file and serve any further affidavit in support of the application by 11 October 2022 with any opposition
and further affidavits in opposition by 25 October 2022 and any affidavit in reply by Mr Xing by 1 November 2022.
[26] Mr Xing did not file any further affidavit evidence in compliance with the directions. Instead, he filed a series of memoranda with the Court to which he attached various documents. The memoranda are dated 4 September 2022, 9 September 2022, 13 September 2022, 19 September 2022, and 5 October 2022. The common theme of the memoranda is that they contain Mr Xing’s calculations as to the financial consequences of the present situation, and repeat his position that he was entitled to cancel the sale and purchase agreements between the first and seventeenth and nineteenth plaintiffs with Green Land under s 178(2), Property Law Act 2007. He also attached correspondence between himself and Mr Parmenter following delivery of Jagose J’s judgment.
[27]For example, Mr Xing argues in the memorandum of 13 September 2022:
3.3rd defendant [thru] section 119 PLA 2007 notified Green land at 11.3.2022 by hard copy to Green Land and email at 13.3.2022 to Green Land and later Green Land’s Counsel Mr Sam Lowery notified at 13.3.2002 to plaintiffs [thru] the ongoing discovery process via email and the PLA notice expired at 7.5.2022 unremedied by Green Land and un-opposed by plaintiffs. The property law act notice included the mortgage no 12052781.1.
4.3rd defendant under power of sales under section 178(2) cancelled plaintiffs’ agreements with Green Land at 15.8.2022 as the amount received from plaintiffs’ proposal to this Court cannot repay the amount owed by Green Land to 3rd defendant and Mr Zhao as per spread sheet at memorandum dated 4.9.2022.
[28] The memorandum is not, however, supported by admissible affidavit evidence to support the submissions Mr Xing purports to make.
[29] In his memorandum of 19 September 2022, Mr Xing makes the argument the judgment did not affect the ANZ mortgage. Then in his memorandum of 5 October 2022, Mr Xing copies correspondence from counsel for Green Land which he relies on to support his submission that Green Land is insolvent.
[30] Finally, albeit out of time, Mr Xing did file a document purporting to be an “Affidavit in support 3rd defendant’s further Submissions” on 29 November 2022. In it he deposed:
(1)I am the 3rd defendant of this matter.
(2)3rd defendant received financial hardship information from plaintiffs as per email correspondent as per document marked “Wl” “No Money which to pay rent”
(3)3rd defendant served letters of demand for the damages of the vexatious injunction of 8 unclaimed lots that determined by Justice Davison at 14.2.2022 to plaintiffs as per documents marked "W2"
(4)3rd defendant served letters of demand for the trespass damages that determined by Justice Jagose [65] dated 4.8.2022 as per documents marked "W3"
(5)3rd defendant served emails to plaintiffs for the outstanding rates, water bills, and notification from Auckland Councils that the properties that built by plaintiffs had no Code of Compliance certificates that need them to vacate the properties immediately as not to health and safety standard as per documents marked "W4".
[31] That affidavit and attachments do not advance the matter in any meaningful way.
[32] The Court is left in a very unsatisfactory position from an evidentiary point of view on Mr Xing’s application to vary the injunction. There remains no admissible evidence before the Court from Mr Xing as to the service of the 11 March 2022 PLA notices on the relevant parties to support the current application. Mr Xing has to bear the consequences of his failure to comply with the rules and directions of the Court and his failure to put factual matters he may wish to rely on before the court in a proper form.
The position of the parties
[33] The eighth defendant, Hiu Ching Chan, has paid over $1 million to Mr Xing in settlement of the mortgagee sales which Jagose J found to be invalid. The eighth defendant seeks return of the money and supports Mr Xing’s application to vary the injunction, at least in relation to the ANZ mortgage security. Ms Casey suggests the
11 March 2022 PLA notice was not at issue in the hearing before Jagose J nor was it addressed in his judgment.
[34] Against that, the eighteenth plaintiffs submit that, read as a whole Jagose J’s liability judgment of 4 August 2022 dealt with the issue of the 11 March 2022 PLA issued in reliance in part on the ANZ mortgage. Jagose J noted the 11 March 2022 PLA notice was a third notice to Green Land following on from notices of default issued by Mr Zhao to Green Land dated 12 April 2021 and 21 May 2021.8 Jagose J had rejected the validity of those earlier notices issued by Mr Zhao (the 1205278.1 mortgage), and went on to note that:9
[w]ithout default, there is no basis for Mr Xing to claim Green Land’s consequent default under the ANZ facility in respect of which no s 119 notice was in any event in evidence.
[35]As noted, the Judge then concluded that:
[61] Not being satisfied either Green Land gave Mr Zhao security over all the plaintiffs’ lots, or Mr Zhao (or Mr Xing) gave compliant notice of default to Green Land, I hold the mortgagee sales of each of the plaintiffs’ lots to be void, of no effect. Green Land remains liable on its agreements with the plaintiffs.
Analysis
[36] The short point is that at the present time the Court does not have sufficient admissible evidence before it to support Mr Xing’s argument that a proper and effective PLA notice has been served and has expired unremedied. To the extent Mr Xing’s application relies on the 11 March 2022 PLA notice it cannot succeed.
[37] Further, the practical position is this, however unsatisfactory the position may be from Mr Xing’s point of view, pending any stay of Jagose J’s judgment, Green Land and Mr Xing remain bound by the agreements with the first to the seventeenth and the nineteenth plaintiffs (Mr Parmenter’s clients) and the eighteenth plaintiffs.
8 Li & Ors v Green Land Investment Ltd & Ors, above n 3, at [25], fn 12.
9 At [51].
[38] To the extent Mr Xing seeks to rely on his rights under the ANZ mortgage and seeks leave to vary the injunction to allow him to issue fresh PLA notices, in the present circumstances and at this point in time the Court would not be minded to exercise its discretion to lift the present injunction to enable Mr Xing to exercise the powers of sale under the ANZ mortgage. To do so would effectively frustrate and determine the parties’ rights which are currently for substantive resolution before the Court of Appeal and this Court. It would render the plaintiffs’ cross-appeal and potential relief indicated by Jagose J nugatory.
[39] To the extent Mr Xing relies on his rights under the ANZ mortgage, it remains a live issue before the Court of Appeal, whether and to what extent, Mr Xing can rely on the novated ANZ mortgage. In their statement of claim the plaintiffs pleaded:
16.The novation of ANZ’s rights and obligations:
a.Novated the ANZ mortgage over, inter alia, all the plaintiffs’ properties.
b.Was to Xing and not to Zhao – particulars: cov. 2.1(a), for example, provides: “ANZ assigns absolutely to [Xing] all its right, title and interest in the Novated Property and [Xing] agrees to accept the novated property.”
c.Contained, at cov.2.5(d)(ii), this acknowledgement by Xing:
it is aware of the existence of the existing interests registered in respect of the property described and comprised in records of title set out in Schedule 1 as at the Settlement Date (including, without limitation, the existence of mortgages, caveats and a LINZ departmental dealing).
d.Contained, at cov.7, this acknowledgement by Xing:
ZX acknowledges that any pre-sale agreements entered into before the date of this deed in respect of a Property are legally binding on him.
17.As at the date of the novation, 16 July 2021:
a.All of the pre-sale agreements on which the purchasing plaintiffs rely were in existence;
b.All of the purchasing plaintiffs had lodged, at least, one caveat protecting their interests in respect of the purchasing plaintiffs’ properties.
[40] In his statement of defence, Mr Xing admitted paras [16] and [17] of the plaintiffs’ statement of claim so it is at least arguable, that to the extent Mr Xing seeks to rely on default under the ANZ mortgage that he should cede priority to the plaintiffs’ interests in the land.
[41] Mr Xing relies on s 178(2), Property Law Act 2007. However, the mortgagee’s rights under that provision are premised on the basis the mortgagee has the right to sell the property. That is very much still in issue in the present case.
[42] The balance of convenience favours maintenance of the injunction pending the Court of Appeal hearing and/or at least the final hearing before Jagose J.
Result
[43]For the above reasons the application to vary the injunction is dismissed.
Costs
[44] The plaintiffs are to have costs on a 2B basis plus disbursements as fixed by the Registrar.
Venning J
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