Shi v Pacific Construction Group Ltd

[2023] NZHC 1657

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-1309

[2023] NZHC 1657

UNDER

Rules 7.19(4), 7.23(1), 7.53 and 7.54 of the High Court Rules 2016

IN THEMATTER

of an interlocutory application without notice for injunction and interim relief under urgency

BETWEEN

YANG SHI

Applicant

AND

PACIFIC CONSTRUCTION GROUP LTD

Respondent

Hearing:	29 June 2023 (by telephone)
Appearances:	S M Dalgleish for Applicant M S P Pang for Respondent
Judgment:	29 June 2023

RESULTS JUDGMENT OF PAUL DAVISON J

This judgment was delivered by me on 29 June 2023 at 4pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Solicitors:

Affordable Law Ltd (Auckland) for Applicant Integritas Law (Auckland) for Respondent

SHI v PACIFIC CONSTRUCTION GROUP LTD [2023] NZHC 1657 [29 June 203]

[1]    This is a results judgment delivered in respect of an interlocutory without notice application by Yang Shi dated 27 June 2023 for an injunction and interim relief by way of an order for the removal of a caveat. I nevertheless set out this brief background.

[2]    On 27 June 2023 Yang Shi (the applicant) by interlocutory without notice application, applied for an injunction and interim relief in respect of a caveat lodged by Pacific Construction Group Limited (the respondent) against the title of the applicant’s property at 545A Beach Road, Murray’s Bay, Auckland (the property).1 The respondent lodged the caveat on 13 June 2023 and it is noted on the title as Caveat 12756148.2.

[3]    The respondent undertook the construction of a dwelling on the property pursuant to a construction contract dated 22 September 2020, and has claimed a sum of approximately $265,000 as being the amount payable by the applicant under the construction contract. The applicant also owns the property at 545 Beach Road (the second property), which is bare land. The respondent has also lodged a caveat against the title of the second property.2

[4]    The applicant says that he disputes the respondent’s claim under the construction contract, and disputes that he signed the construction contract requiring him to grant the respondent a registerable mortgage on the title of the property.

[5]    By Agreement for Sale and purchase dated 10 March 2023 (the sale Agreement)  the  applicant  agreed  to  sell  the  property  to  Yu   Du  for  the  sum of

$1,960,000. The settlement of the sale was scheduled to proceed on 15 June 2023, but following the respondent lodging the caveat the settlement did not proceed on that date. The applicant says that as a result of the delay in settlement being effected, the purchaser is claiming damages amounting to $800 per day under the terms of the sale Agreement. The applicant says that the property is subject to two registered mortgages which secure a total sum in excess of the net proceeds of the sale, so that irrespective of the merit of the respondent’s claim which it has sought to secure by the caveat, the

1      Record of Title 1107432, North Auckland Land Registration District.

2      Caveat 12756148.1.

prior interests of the two secured creditors will have the effect of rendering the caveat nugatory as a means of securing the respondent’s claimed interest.

[6]    When the file was referred to me on 28 June 2023 I directed the applicant’s solicitors to effect service of the application on the respondent’s solicitors on a Pickwick basis, and directed a telephone conference with counsel to take place at

9.00 am this morning to hear submissions of counsel. Prior the telephone conference Mr Pang for the respondent filed a Memorandum of submissions in which he advises that the respondent has no intention of delaying settlement of the property provided that the interests of the respondent are protected.

[7]    The respondent further says that while it is accepted that the net sale proceeds of the property may not cover the amounts owed to the secured creditors, the applicant has already dissipated the net proceeds from the sale, by applying part of the purchaser’s deposit two days after the respondent had notified the applicant of its claim in a letter of 6 June 2023. The respondent says that as a result of the applicant’s application of part of the purchaser’s deposit, the net proceeds from the sale following settlement have been reduced by the sum of $62,702. The respondent submits that the applicant should be ordered to pay that sum into his solicitor’s trust account to be held pending determination of the respondent’s claim.

[8]    The respondent further says that although its claim against the applicant is also secured by its caveat on the title of the second property, because of the prior interest of a secured creditor in the second property, the full amount of the respondent’s claim may not be recovered upon sale of that property. To reduce the risk of that occurring the respondent says that the $62,702 sum should be required to be retained in the applicant’s solicitors’ trust account pending determination of its claim.

[9]    Having read the application and affidavit of the applicant, I am satisfied that the applicant has shown that even if the respondent succeeds in its claim under the construction contract, the caveatable interest in the property that it is seeking to protect would not secure any funds, as the whole of the net proceeds from the sale of the property will be applied to satisfying the interests of the two secured creditors. I am also satisfied that the balance of convenience clearly favours the granting of the

interim relief sought by the applicant to enable the sale of the property to proceed without further delay. As the secured creditors’ debts secured by their mortgages registered on the title of the property exceed the net proceeds of sale to be received by the applicant on settlement, the respondent’s interests pending determination of its claim under the construction contract would not be protected by the caveat. On the other hand, if the caveat remains on the title and prevents the applicant from settling the sale, the applicant will suffer a significant financial loss in terms of liability to the purchaser under the sale agreement and by incurring interest charges for the borrowings secured by the mortgages registered on the title.

[10]   I also note that the applicant seeks an order directing the respondent not to attempt to register or re-register a caveat on the title of the property for a period of one month from the date of the order of the Court. However, the order I shall make directing the removal of the respondent’s caveat is for the purpose of enabling the applicant to proceed to settle the sale of the property, and thereafter the property will be held by the purchaser.

[11]   As I noted at the commencement this is a “results” judgment which I have delivered because of the urgency of the matter. I shall deliver a further judgment with my reasons for this more fully expressed.

Result

[12]   I make an order granting the applicant’s interlocutory application, and I direct the Registrar-General of Land to forthwith remove caveat 12756148.2 from Record of Title 1107432, North Auckland Land Registration District in respect of the property at 545A Beach Road, Murrays Bay, Auckland.

[13]I make an order reserving the issue of costs.

Davison J