Norx Building Limited v Golden Harbor Development Limited

[2024] NZHC 1180

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-1078

[2024] NZHC 1180

IN THE MATTER OF

a breach of contract

BETWEEN

NORX BUILDING LIMITED with KACELY INVESTMENT LIMITED and WANJIE XIE

Plaintiffs

AND

GOLDEN HARBOR DEVELOPMENT LIMITED

First Defendant

TIGRIS HOLDINGS LIMITED

Second Defendant

Hearing:	On the papers
Counsel:	E St John for Plaintiffs
Judgment:	13 May 2024

JUDGMENT OF O’GORMAN J

[Interim injunction orders]

This judgment was delivered by me on 13 May 2024 at 12.30 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

…………………………………

Solicitors/Counsel:

Heritage Law, Auckland Eugene St John, Auckland

NORX BUILDING LIMITED v GOLDEN HARBOR DEVELOPMENT LIMITED [2024] NZHC 1180 [13 May 2024]

[1]                 The plaintiffs, Norx Building Limited, Kacely Investment Limited, and Wanjie Xie, apply for without notice interim injunction orders:

(a)that until further order of the Court, the defendants not sell, dispose of, encumber, or otherwise deal with the property at 35 Hayfield, Karaka, Auckland contained in certificate of title NA136B/392 (the Property); and

(b)to restrain the second defendant proceeding to mortgagee sale of the Property.

[2]This matter has been referred to me for determination as Duty Judge.

Facts

[3]                 The plaintiffs are purchasers (for $400,000 each) of titles to be issued and sold by the first defendant pursuant to sale and purchase agreements, as detailed in the affidavit of Yan Shen dated 9 May 2024 (the Agreements).

[4]The plaintiffs have paid the deposits due under the Agreements, totalling

$341,000.

[5]The plaintiffs say that the titles, when issued, are now worth approximately

$700,000.

[6]                 The first defendant is the vendor under the Agreements and is the registered owner of the Property. The second defendant purports to be a mortgagee of the first defendant and purports to be an assignee of the Agreements. The Companies Office records the defendants as having 50 per cent common ownership.

[7]                 On or about 17 April 2024, Queen City Law wrote to the plaintiffs on behalf of the defendants alleging that the first defendant had mortgaged the Property to the second defendant, there had been a default, and the second defendant was giving notice that the Agreements were no longer financially viable and were therefore cancelled.

In response to the plaintiffs’ letter rejecting that purported cancellation, Queen City Law gave a further purported notice of cancellation on 22 April 2024.

[8]                 For the reasons explained in their memorandum and supporting evidence, the plaintiffs’ position is that the defendants have no right to cancel in the present circumstances, and no clause of the Agreements permits them to do so. Accordingly, the purposed notices of cancellation are unlawful. A purchaser would normally be in a position to protect its interests by lodging a caveat, but the plaintiffs cannot do so because of a “no caveat clause”. Accordingly, they seek an interim injunction to preserve the status quo and protect their interests as purchasers on the grounds that:

(a)there is a serious issue to be tried: the clauses referred to in the notices of cancellation do not confer any right on the vendor or the second defendant (a related party) to purport to cancel and, at the very least, there is a serious question that the notices are unlawful;

(b)the balance of convenience and an overall justice assessment both support granting the interim orders:

(i)these orders preserve the status quo pending resolution of their substantive claim for specific performance;

(ii)if the injunction is not granted, the properties will be sold and put beyond reach of the plaintiffs. It has been recognised that the loss of the ability to purchase specific land, particularly residential land, is a category where damages may be inadequate as compensation;1

(iii)the defendants are limited liability companies and, given indications from Queen City Law about the first defendant’s financial situation, there is no guarantee that any damages awarded to the plaintiffs will be recoverable; and

1      Tong v ANZ Bank New Zealand Ltd [2015] NZHC 2056 at [14]; Waimor Holdings Ltd v Dean [1981] 2 NZLR 416 (HC); Upper Hutt Arcade Ltd v Burrell [1973] 2 NZLR 699 (SC); and Napier v Waimana Investments Ltd [2017] NZHC 265 at [35].

(iv)the defendants can be adequately compensated by damages if the injunction is granted, and the defendants are successful at trial. The plaintiffs have filed an undertaking as to damages and the defendants already hold the plaintiffs’ deposits totalling

$341,000.

[9]                 The application has been made without notice. Therefore, the Court must apply more scrutiny when assessing the overall risk of injustice.2 The plaintiffs are concerned that providing advance notice may lead to steps to defeat the plaintiffs’ interest. This could be protected by a caveat lodged as of right, but the plaintiffs cannot take that step without risking an extinguishment of their interests and loss of their deposits under the “no caveat” clause.

[10]              In the circumstances, I accept that the grounds for an interim injunction are made out. I grant the following orders:

(a)Until further order of the Court, the defendants are not to sell, dispose of, encumber, or otherwise deal with the property at 35 Hayfield, Karaka, Auckland contained in certificate of title NA136B/392 (the Property).

(b)Restraining the second defendant proceeding to a mortgagee sale of the Property.

[11]I reserve costs.

[12]              I also ask Registry to place this matter on the Duty Judge’s list on 16 May 2024 at 10 am for case management.

O’Gorman J

2      McGechan on Procedure (online ed, Thomson Reuters) at [HR7.53.16] and [HR7.53.16](2).