Li v Green Land Investment Ltd
[2019] NZHC 2991
•15 November 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-002171
[2019] NZHC 2991
BETWEEN YUTIAN LI
Applicant
AND
GREEN LAND INVESTMENT LIMITED
First Respondent
LIANSEN MAO
Second Respondent
Hearing: 8 November 2019 Appearances:
No appearance for Applicant
G M Illingworth QC and D Liu for First Respondent No appearance for Second Respondent
Judgment:
15 November 2019
JUDGMENT OF ASSOCIATE JUDGE P J ANDREW
LI v GREEN LAND INVESTMENT LTD [2019] NZHC 2991 [15 November 2019]
Introduction
[1] The applicant, Yutian Li (Ms Li), described as a “businesswoman C/o 387 Ormiston Road”, has filed an originating application pursuant to s 143 of the Land Transfer Act 2017 (the LTA) that Caveat No. 11086665.1 registered against the title of 387 Ormiston Road, South Auckland, not lapse. The land is owned by the second respondent, Liansen Mao (Mr Mao).
[2]The basis for the caveat is said to be an equitable mortgage.
[3] The first respondent, Green Land Investment Ltd, was formed in 2002 for the sole purpose of acquiring and subdividing adjacent land at Ormiston Road. As part of subdivision consent conditions for its project, Green Land is required to acquire the area of land forming the driveway of 387 Ormiston Road and to have the same piece of land vested in the Auckland Council as a road. The caveat prevents any part of Mr Mao’s land being transferred to Green Land and to be vested in Auckland Council as a road.
[4] Green Land contends that there is no arguable basis that the applicant has an interest in the land sufficient to sustain a caveat. It further says that, to the extent the Court is prepared to read affidavit evidence filed out of time, there are serious reasons for doubting the credibility and authenticity of that evidence, and the evidential threshold needed to justify the making of an order to prevent a caveat from lapsing has not been made out.
[5] As documented below, there have been multiple procedural irregularities in this proceeding, including the filing of documents and appearances on behalf of the applicant by Jiawen Mao (Ms J Mao), claiming to hold a power of attorney for Ms Li. At no time has the Court received an original signed document from the applicant, and at no time in the proceedings has she been represented by a barrister or solicitor.1
[6] Ms J Mao, who is the daughter of the second respondent, Mr Mao, appeared, together with her colleague, Augustine Lau, at the hearing. However, after hearing briefly from Ms J Mao (who sought to speak to a further memorandum she filed
1 A memorandum (dated 6 November 2019), filed by Ms J Mao, has attached to it what appears to be a photographed copy (blurred) of a document signed by the applicant with an unreadable date of 2019.
allegedly on behalf of the applicant, dated 6 November 2019), I determined and informed Ms J Mao that she could not represent the applicant and that the hearing would proceed on the basis that there was no appearance by or on the applicant’s behalf.
The position of the applicant
[7] The lack of representation and the inability of Ms J Mao to represent the applicant has been the subject of previous directions by Gault J.
[8]In his minute of 15 October 2019, Gault J held:2
[1] This matter was called in the caveat list this morning. It is an originating application by Yutian Li for an order that a caveat not lapse. Ms Jiawen Mao sought to appear on behalf of the applicant pursuant to a power of attorney. She sought a timetable and an interim order that the caveat not lapse. I explained to Ms Mao that a party in court proceedings should appear in person or represented by a lawyer. A power of attorney is insufficient.
[9] In his minute of 29 October 2019, Gault J noted that a revised originating application for an order that the caveat not lapse has been filed.3 His Honour held:
[2] Since that call as well [when the matter was called in the Caveat List on 15 October 2019], Mr Mao, the second respondent, has filed a memorandum and this morning, at the list, Ms Mao who I explained at the last call is not entitled to appear on behalf of the applicant, handed up a further memorandum which I have read. Apart from addressing the underlying dispute between the first and second respondents, it seeks to explain that the applicant is in China and has insufficient time to appoint a lawyer, referring to the need for a visa which will take at least three months on the basis, as I understand it, that AML requirements and the need to pay a lawyer will require the applicant to visit New Zealand. There is also reference to a discovery issue in related proceedings where discovery is sought of lawyers involved in that matter for the purposing of identifying a lawyer that is unconflicted.
[10]His Honour further held:
[5] I stress that the applicant will need to appear at the hearing on 8 November 2019 in person or represented by a lawyer. It will not be satisfactory for a non-lawyer to seek to appear on the applicant’s behalf.
2 Li v Green Land Investment Ltd HC Auckland CIV-2019-404-2171, 15 October 2019 (Minute No 1 of Gault J).
3 Li v Green Land Investment Ltd HC Auckland CIV-2019-404-2171, 29 October 2019 (Minute No 2 of Gault J).
[11] In my minute of 4 November 2019, I repeated the conclusion of Gault J in [5] of his minute of 29 October 2019 that the applicant would need to make arrangements for legal representation for the hearing on 8 November 2019.
[12] Despite the clear directions from Gault J, Ms J Mao attempted, yet again, at the hearing on 8 November 2019, to represent the applicant.
[13] I would also note that the fact that the applicant is in China does not preclude her from arranging legal representation in New Zealand. She clearly has had ample opportunity to do so.
Relevant legal principles
[14] A caveator, in response to the caveat lapsing procedure under the LTA, may apply for an order that the caveat not lapse.4
[15] I adopt the following principles in relation to Ms Li’s application to sustain a caveat over the property at issue:5
(a)The burden of establishing that the applicant has a reasonably arguable case for the interest claimed is upon the caveator;6
(b)The caveator must show an entitlement to, or beneficial interest in, the estate referred to in the caveat by virtue of an unregistered agreement or an instrument or transmission, or of any trust expressed or implied;7
(c)The summary procedure involved in an application of this nature is wholly unsuitable for the determination of disputed questions of fact —8 an order for removal of the caveat will not be made unless it is clear that the caveat cannot be maintained either because there was no valid ground for lodging it or that such valid ground as then existed no longer does so;9
(d)When an applicant has discharged the burden upon the applicant, there remains a discretion as to whether to remove the caveat, which will be exercised cautiously;10
4 Land Transfer Act 2017, s 143.
5 Cube Building Solutions Ltd v Kingloch Holdings Ltd HC Christchurch CIV-2009-409-935, 15 October 2010 at [13].
6 New Zealand Limousin Cattle Breeders Society Inc v Robertson [1984] 1 NZLR 41 (CA) at 43; and Coltart v Lepionka & Co Investments Ltd [2016] NZCA 102, [2016] 3 NZLR 36 at [30].
7 Land Transfer Act 2017, s 138.
8 New Zealand Limousin Cattle Breeders Society Inc v Robertson, above n 6, at 43.
9 Sims v Lowe [1988] 1 NZLR 656 (CA) at 659–660.
10 Stewart v Kaipara Consultants Ltd [2000] 3 NZLR 55 (CA); and Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA).
(e) The Court has jurisdiction to impose conditions when making orders. (citations omitted) (footnotes added)
[16] As noted in Hinde McMorland & Sims Land Law in New Zealand, there are four essential requirements for an equitable mortgage:11
(a)The right to be granted must possess the essential characteristics of a mortgage;
(b)Valuable consideration (if made by contract) or a deed;
(c)Either sufficient writing to satisfy s 24 of the Property Law Act 2007, or a sufficient act of part performance; and
(d) The availability of specific performance. (footnotes omitted)
The issues
[17] The critical issue to address is whether the applicant has established an arguable basis that she has an interest in the land sufficient to sustain the caveat. In addressing that principal issue, it is necessary to resolve two related issues:
(a)Should the Court read the further affidavit evidence filed by Ms J Mao, dated 4 November 2019, which purports to exhibit a loan agreement said to be relied upon by the applicant to support an equitable mortgage?
(b)If so, are there serious reasons for doubting the credibility and authenticity of that affidavit (particularly when considered together with the affidavit in reply of Hao Yuan Lu (Mr Lu), a manager employed by Green Land, dated 7 November 2019), such that the applicant has failed to establish the necessary evidential foundation to justify the making of an order to prevent the caveat from lapsing?
[18] In addressing the issue of whether I should read the further affidavit of Ms J Mao, dated 4 November 2019, it is necessary to traverse some of the procedural history.
11 DW Hinde and others Hinde McMorland & Sim Land Law in New Zealand (online looseleaf ed, LexisNexis) at [15.008].
Gault J’s minute of 15 October 2019
[19]By minute dated 15 October 2019, Gault J:12
(a)Identified various deficiencies in the original application dated 9 October 2019, including:
(i)the application and affidavit in support failed to show that the applicant had any caveatable interest in the land;13
(ii)the caveat itself, and the Registrar’s notice under s 143(2) of the LTA, were not included in the affidavit in support;14 and
(iii)the application was not signed by the applicant but by Ms J Mao, as her attorney;15
(b)Noted that the applicant did not appear in person or via counsel, and that appearance by a power of attorney is insufficient;
(c)Adjourned the application “to give the applicant an opportunity to address the deficiencies and be heard in person or by legal counsel”;16 and
(d)Directed the applicant to file and serve an amended application and further affidavit in support.
The amended application dated 23 October 2019
[20] An amended application and a further supporting affidavit were later filed on behalf of the applicant by Ms J Mao. Again, the amended application was not signed by the applicant and did not comply with the rules.
[21] The further supporting affidavit sworn by Ms J Mao, and containing some 100 pages of exhibits, did not cure the deficiencies in Gault J’s minute of 15 October 2019.
12 Minute No 1 of Gault J, above n 2.
13 At [3].
14 At [8].
15 At [1].
16 At [10] and [12(a)].
[22] Paragraph [1] of the affidavit asserted that there is a term loan agreement dated 1 April 2018 between the applicant and Mr Mao, the second respondent, as registered proprietor.
[23] Other than that bare assertion, there was no evidence of the alleged term loan agreement and/or the alleged mortgage.
[24]The documents produced in support of that assertion were:
(a)A copy of the caveat (produced for the first time); and
(b)Gault J’s minute dated 15 October 2019 attached as exhibit YC1a.
[25] The affidavit still did not establish any arguable case for the interest that the applicant claims, namely an equitable mortgage over the subject property. There was no evidence that the second respondent, Mr Mao, had agreed to secure a term loan by way of a mortgage.
[26]Paragraph [2] of the affidavit stated that:
The term loan agreement had been explained in the paragraph 6 of the plaintiff’s memorandum dated 21 October 2019 as per document marked “YC1b” as aware by first respondent.
[27] Document “YC1b” was a memorandum filed by Ms J Mao in a separate proceeding and was not, of itself, evidence of anything relevant and not evidence of the alleged term loan.
[28] Even if I were to accept that memorandum as evidence, [6] of the memorandum does not actually explain anything. It read:
DEFENDANT’S APPLICATION BY DEFENDANT FOR STRIKE OUT OR DISMISSAL ORDERS CONCERNING REPRESENTATION OF THE
PLAINTIFF DATED 16 August 2019 mainly asking Amicus Law to be the witness between the transaction of 41 Candia Road where Ms Li acquired eight units of houses say worth $800,000 plus interest from plaintiff that had been demolished by Auckland Council which required sewer pipes that promised my defendant under agreement dated 1 August 2015 between plaintiff and defendant, document marked “J5” affidavit of J Mao dated 6 September 2019.
[29] Paragraphs [3]–[7] of the affidavit challenged Green Land’s standing to lapse the caveat. However, Gault J had already ruled against the applicant and Ms J Mao on that issue at [5] and [6] of his minute dated 15 October 2019.
[30] Paragraphs [8] and [9] of the affidavit claimed that the applicant is in China and needed at least three months to engage counsel. However, I note that Gault J had already granted the applicant an indulgence by adjourning the application by 14 days to allow her the opportunity to engage counsel.
[31] The affidavit contained further matters not relevant to the proceedings, including reference to an application for particular discovery filed by the second respondent in separate proceedings and a claim by the first respondent’s solicitor who previously acted for the second respondent.
[32] Despite the express directions given by Gault J in his minute of 15 October 2019, the applicant:
(a)Failed to produce a copy of the Registrar’s notice under s 143(2) of the LTA;
(b)Did not provide any evidence in support of the interest claimed or, in particular, any evidence of the alleged term loan agreement and/or the alleged mortgage (beyond a bare assertion); and
(c)Even though the registered proprietor (Mr Mao) had been named as the second respondent, there was no evidence that he had been served with a copy of the application.
The further affidavit dated 4 November 2019
[33] On 4 November 2019, Ms J Mao filed a further affidavit which purports to exhibit a loan agreement and said to be relied upon by the applicant to establish the equitable mortgage.
[34] This affidavit was filed out of time.17 It was not served on Green Land until after hours on 4 November 2019 (by email at 5.16 pm). It was not copied to counsel, and the solicitors for Green Land did not have the opportunity to respond to it until at least 6 November 2019.
[35] I accept the submission of Mr Illingworth QC, for Green Land, that the evidence contained in the November affidavit is not limited to new matters raised in the Notice of Opposition or in an affidavit filed by the respondent. It thus breaches rr 7.26(2) and 19.10(h) of the High Court Rules 2016.
Issue 1: Should the Court read the further affidavit of Ms J Mao dated 4 November 2019?
[36] Against the procedural background outlined above, I accept that there is substantial force in the submission of Mr Illingworth that the affidavit of 4 November 2019 should not be read. That would be consistent with the approach adopted by this Court in Newstoon NZ Ltd v Horton Media Ltd.18
[37] If I were to adopt that approach and to make such a direction, then of course no further submission from Green Land would be necessary as there would be no evidence before the Court of the applicant having any caveatable interest in the subject land. However, and despite my reservations, I am prepared to grant a further indulgence to the applicant and to accept and to read the affidavit of 4 November 2019.
[38] Having decided to adopt that approach, namely to read the affidavit of 4 November 2019, I also conclude that I should accept and read the affidavit in reply from Mr Lu, on behalf of Green Land, dated 7 November 2019. As a matter of natural justice, I am obliged to do so. Both affidavits directly engage with the issue of whether there is an equitable mortgage in the land and with a view to ensuring some finality in this matter, the better approach, in my view, is for me to engage with the merits and to address the substantive issue of whether, on all of the evidence adduced, the applicant has established a beneficial interest in the land.
17 See Minute No 1 of Gault J, above n 2, at [12(b)], where his Honour directed the applicant to file and serve any further affidavit in support by 23 October 2019, and [12(c)], where his Honour directed: “The respondent is to file any further affidavit in response by 28 October 2019”.
18 Newstoon NZ Ltd v Horton Media Ltd [2015] NZHC 2925 at [28].
[39] I thus turn to address the second issue, namely whether there are serious reasons for doubting the credibility and authenticity of the evidence contained in the 4 November 2019 affidavit. That is the affidavit the applicant relies upon to establish the alleged equitable mortgage.
Issue 2: The credibility and authenticity of the applicant’s evidence filed in support of the alleged equitable mortgage
[40] It is clear that the caveator (here, the applicant) has an onus to make out a reasonably arguable case.19 In Eng Mee Yong v Letchumanan s/o Velayutham, the Privy Council treated the process for interlocutory consideration of the justification for a caveat as being similar to the analysis in cases of interlocutory injunction.20 That analysis involves, first, the assessment of whether the evidence presented in support of the claim to an interest in the property raises a serious question to be tried.
[41] In determining the question of whether there is a serious question to be tried, the Court is not required to take affidavit evidence at face value when there are serious reasons for doubting credibility and authenticity:21
Although in the normal way it is not appropriate for a judge to attempt to resolve conflicts of evidence on affidavit, this does not mean that he is bound to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be. In making such order on the application as he “may think just” the judge is vested with a discretion which he must exercise judicially. It is for him to determine in the first instance whether statements contained in affidavits that are relied upon as raising a conflict of evidence upon a relevant fact have sufficient prima facie plausibility to merit further investigation as to their truth.
[42] For reasons set out below, I find that there are serious reasons for doubting the credibility and authenticity of the 4 November 2019 affidavit (sworn by Ms J Mao and not by the applicant), particularly in relation to the alleged term loan agreement (said to be the equitable mortgage) that is attached to Ms J Mao’s affidavit as an exhibit. There is also good reason to question the role of Ms J Mao in these proceedings, and her apparent conflict of interest provides further reason for concluding that the
19 McLennan v Livaja [2017] NZCA 446, [2018] NZAR 405.
20 Eng Mee Yong v Letchumanan s/o Velayutham [1980] AC 331 (PC) at 335–337.
21 At 341.
4 November affidavit is wholly unreliable and falls well short of providing a proper evidential foundation for an arguable beneficial interest in the land.
Authenticity and credibility
[43] In his affidavit in reply, dated 7 November 2019, Mr Lu, on behalf of Green Land, has identified a number of fundamental difficulties with the 4 November affidavit of Ms J Mao. Annexed to Mr Lu’s affidavit, as exhibit A, is a copy of a document entitled “Term Loan Agreement” which was provided to Green Land by the second respondent, Mr Mao, in discovery in the related High Court proceedings CIV- 2016-404-1241 on 28 June 2019. Mr Lu says that exhibit B to Ms J Mao’s affidavit of 4 November (that is, the alleged term loan agreement) is identical to his exhibit A. Mr Lu says that the only difference between Ms J Mao’s exhibit B and the original document that Green Land received through discovery is that:
(a)Exhibit B has been signed by Mr Mao, whereas the original document is unsigned.
(b)The email addresses of the lender and the borrower had been redacted from the original document. Both of those email addresses, namely
[email protected] and [email protected] are known to be the email address of Ms J Mao.
[44] Mr Lu further states that Green Land has learned from inspecting the Environment Court file under EV-2017-AKL-00067/71 and 117, that Mr Mao is a Chinese citizen who has not been in New Zealand since 26 March 2016 as there is an outstanding warrant for his arrest and that he has been conducting all of his personal affairs, including his High Court litigation against Green Land in the proceeding CIV- 2016-404-1241, through his daughter, Ms J Mao. Mr Lu says therefore that, if exhibit B to Ms J Mao’s affidavit had been in her possession prior to June 2019, it is surprising that it was not discovered by her on behalf of her father, Mr Mao, in the other proceeding.
[45] Mr Lu further says that exhibit B in the original document are one and the same because they bear the same printer mark. Attached to Mr Lu’s affidavit is a further copy of the original document circled with the printer marks.
[46] I accept the submission of Mr Illingworth that exhibit B to Ms J Mao’s affidavit appears very much to be a combination of two documents that have been stitched together electronically. The first two pages are photographs and the rest of the document is a group of pages pasted in from another document. In these circumstances, there is good reason for suspecting that Ms J Mao’s exhibit B is a concoction rather than a single authentic document. In the circumstances, I accept that there is no valid basis for treating exhibit B “as a genuine document or one that I could place any reliance upon”.
[47] I turn now to address further evidential deficiencies that case doubt on the integrity and reliability of the documentation provided by Ms J Mao, and on which the applicant relies. All of these factors suggest that there is substantial merit to Mr Lu’s contention that exhibit B to Ms J Mao’s affidavit is in fact an ex post facto creation that was created after the commencement of the present proceedings.
Further evidential deficiencies
[48] According to the purported term loan agreement (Ms J Mao’s exhibit B), Ms J Mao is herself a principal debtor to Ms Li, the applicant, in her capacity as a trustee of the “Trillion Brillion & Ors Family Trust”. That is apparent from the first page of the term loan agreement. There is, however, no evidence before the Court of the deed of trust and there is no other evidence about the “Trillion Brillion & Ors Family Trust” or its requirement. It follows, on that basis, that there is no link or nexus between the term loan agreement and the title to the subject property.
[49] In any event, there was only one signature on the purported loan agreement (exhibit B) which appears to be that of Mr Mao (although the signature is in Chinese and there is no evidence or translation to identify the signature). Furthermore, no agreement has been produced with all necessary signatures to bind the trust and there is no way of knowing (absent the Trust Deed) how many trustees are required to sign.
[50] Furthermore, it seems clear that Ms J Mao, as one of the borrower/trustees, has not signed the agreement so that it has therefore never come into effect.
[51] There are further reasons why the evidential support for the application remains seriously deficient. This is because:
(a)There is no evidence that the conditions precedent on page two of the term loan agreement were ever fulfilled before the caveat was lodged, including:
(i)the signing of the agreement “together with all of the securities”; and
(ii)completion of the conditions set out in the annexure schedule.
(b)If a term loan agreement is subject to conditions precedent which have not been fulfilled, it has of course never come into effect and cannot operate as an equitable mortgage.
(c)In any event, there was no evidence that any funds were ever advanced under the loan agreement.
(d)Even if funds were advanced, there is no evidence that any debt owed under the loan agreement is still outstanding. Under cl 1 of the annexure schedule, the debt was to be repaid on the expiry of the term, the repayment date being 1 April 2019. There is therefore no evidence that any debt is outstanding under the loan agreement.
[52] I now turn to address the issue of the role of Ms J Mao in these proceedings which, for reasons set out below, cast further doubt on the integrity and reliability of the evidence that she has filed.
Ms J Mao’s conflict of interest
[53] As Mr Illingworth submitted, Ms J Mao is in a very unusual position. She says that she holds power of attorney for her father, Mr Mao, the second respondent, and also for his purported creditor, Ms Li, the applicant. Ms J Mao is also purporting to act in both of their interests in certain respects:
(a)It is in Mr Mao’s apparent interest to clog the title to the subject property in order to frustrate the agreement with Green Land concerning the transfer of part of his land to the Auckland Council; and
(b)It is (purportedly) in Ms Li’s interest to maintain the caveat, contrary to the apparent interest of Mr Mao and also to that of Ms J Mao in her capacity as trustee (a borrower);
[54] Ms J Mao is thus inherently in a position of conflict of interest in relation to her powers of attorney. She cannot advance the interests of Mr Mao without prejudicing the interests of Ms Li, the applicant, and vice versa.
Conclusion – No caveatable interest
[55] I conclude that the applicant has failed to establish that she has an arguable beneficial interest in the land.
[56] The only evidence filed by the applicant that might provide some basis for the claim of an equitable mortgage is the affidavit evidence of Ms J Mao of 4 November 2019. However, there are serious reasons for doubting the credibility, authenticity and reliability of that evidence and, in my view, it fails to establish a sufficiently reliable evidential foundation for me to conclude that there is an arguable equitable mortgage.
[57] It follows that the application should be dismissed, and the caveat allowed to lapse.
Result
[58] The application pursuant to s 143 of the Land Transfer Act 2017 to sustain Caveat No. 11086665.1 in relation to 387 Ormiston Road, Flat Bush, Auckland, is dismissed.
[59] Having succeeded, the first respondent, Green Land Investment Ltd, is entitled to costs. At the very least, the first respondent is entitled to costs on a 2B basis. Having said that, in the circumstances here, there may be good reason for an increased costs award and an issue as to whether the Court should make a costs award against Ms J Mao, as a non-party.
[60] If the first respondent wishes to pursue those issues, then a memorandum is to be filed and served by 29 November 2019. If costs are sought against Ms J Mao, then she would obviously need the opportunity to respond.
[61] In any event, the first respondent should advise of its position on costs by 29 November 2019.
Associate Judge P J Andrew
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