Peaktop Developments (Auckland) Limited v Du - [2024] NZHC 3164

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-285

[2024] NZHC 3164

UNDER Part 19 of the High Court Rules

IN THE MATTER OF

An application for orders pursuant to section 143 of the Land Transfer Act 2017 in respect of caveat 10710081.1

BETWEEN

PEAKTOP DEVELOPMENTS (AUCKLAND) LIMITED

Applicant

AND

ZIYUN DU and Z Y DU TRUSTEE LIMITED

First Respondents

ZHIXIANG LI and HAOQUAN LU

Second Respondents

Hearing: 21 October 2024

Counsel:

R J Thompson for the Applicant

J Wickes for the First and Second Respondents

Judgment:

30 October 2024

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 30 October 2024 at 12 Midday.
Pursuant to Rule 11.5 of the High Court Rules.

…………………..
Registrar/Deputy Registrar

Solicitors/Counsel:
Mark Lee Lawyers, Auckland Park Chambers, Auckland Loo & Koo, Auckland

PEAKTOP DEVELOPMENTS (AUCKLAND) LTD v DU TRUSTEE LTD [2024] NZHC 3164
[30 October 2024]

Introduction

[1] In 2015, eight owners of separate properties in West Auckland entered into an unincorporated joint venture pursuant to a written agreement (the agreement). The purpose of the joint venture was to obtain a resource consent for rezoning of the land of the eight owners.

[2] The applicant, Peaktop Developments (Auckland) Ltd (Peaktop), and the first and second respondents (the respondents) are three of the participating owners.

[3] The agreement included rights of first refusal conferred on the owners should any one of them wish to sell. The agreement provided for those rights for a period of five years commencing on the issue of a resource consent for the rezoning.

[4] The application for a resource consent for rezoning did not proceed. In 2017, Auckland Council designated a special housing area (SHA) which included the eight properties. It was no longer necessary for the eight owners to obtain a resource consent for rezoning.

[5] On 21 February 2017, a caveat was registered against the titles to each of the eight properties subject to the joint venture. The caveat states that the caveator is “Fred Taylor Group Joint Venture”, notwithstanding that the joint venture was not a legal entity.

[6] In 2024, the respondents commenced the lapsing procedure under the Land Transfer Act 2017. Peaktop now applies for an order sustaining the caveat against the respondents’ properties.

[7]The application can be resolved by considering the following issues:

(a)Is the agreement extant?

(b)If so, does the agreement confer on Peaktop an equitable interest capable of supporting a caveat?

Sustaining caveats — the legal principles

[8] The legal principles applicable to applications to sustain caveats were confirmed by the Court of Appeal in Philpott v Noble Investments Ltd:1

[26] The applicable legal principles which governed the application to sustain the caveats, and which now govern this appeal, are as follows:

(a)The onus is on the applicants to demonstrate that they hold an interest in the land that is sufficient to support the caveat, but they need not establish that definitively;

(b)It is enough if the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NZHC 3164
Decision Date: 30 October 2024

CaseChat Overview and Summary

Peaktop Developments (Auckland) Limited, an applicant, sought to sustain a caveat against properties owned by Ziyun Du and ZY Du Trustee Limited, and Zhxihang Li and Haoquan Lu, the respondents, under section 143 of the Land Transfer Act 2017. The application arose from an unincorporated joint venture formed in 2015 by eight property owners to obtain a resource consent for the rezoning of their land. Peaktop, the applicant, and the respondents were three of the participating owners. The joint venture agreement included rights of first refusal, exercisable for five years following the issue of a resource consent for rezoning. In 2017, the Auckland Council designated the land as a special housing area, rendering the resource consent unnecessary. In 2024, the respondents commenced the lapsing procedure under the Land Transfer Act 2017, and Peaktop applied to sustain the caveat against the respondents' properties.

The court had to decide two main issues: whether the joint venture agreement was still in effect, and if so, whether it conferred on Peaktop an equitable interest capable of supporting the caveat. The applicant argued that the agreement remained in effect and that the right of first refusal created an equitable interest. The respondents contended that the agreement was frustrated when the land was designated as a special housing area, making the common object of the joint venture unattainable. They further argued that even if the agreement was still in effect, it did not confer on Peaktop an equitable interest capable of supporting the caveat.

The court found that the joint venture agreement was discharged by frustration when the land was designated as a special housing area in 2017, as the common object of the joint venture became unattainable. Therefore, the agreement could not confer on Peaktop an equitable interest capable of supporting the caveat. Even if the agreement was still in effect, clause 7.7 of the agreement, which provided that the rights contained in the agreement represented caveatable interest, was not sufficient to confer an equitable interest in the respondents' land. The court concluded that it was not reasonably arguable that Peaktop had an equitable interest in the respondents' land capable of supporting the caveat.

The applicant's application to sustain the caveat against the respondents' properties was declined. The applicant was ordered to pay the respondents' costs on a 2B basis together with disbursements as fixed by the Court.

Orders