Silver Harbour Capital Trustee Limited v Lau

[2024] NZHC 6

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2023-404-2892

[2024] NZHC 6

BETWEEN

SILVER HARBOUR CAPITAL TRUSTEE LIMITED

Applicant

AND

EE KUOH LAU also known as AUGUSTINE LAU

Respondent

Hearing:

10 January 2024

Appearances:

A L Kerr for the Applicant

No appearance for Respondent

Judgment:

10 January 2024

REASONS JUDGMENT OF HARVEY J

[On application for interim injunction]

This reasons for judgment was delivered by me on 10 January 2024 at 3.45 pm pursuant to

Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Solicitors:

Sanderson Weir Ltd, Auckland

SILVER HARBOUR CAPITAL TRUSTEE LIMITED v EE KUOH LAU also known as AUGUSTINE LAU [2024] NZHC 6 [10 January 2024]

Introduction

[1]    Silver Harbour Capital Trustee Ltd is a finance company that offers commercial bridging loans. On 8 November 2021, Silver Harbour loaned One on One Property Development Ltd and Jiankang Li in excess of $25 million secured by first mortgage over the borrowers’ property at 51A Murphys Road, Flatbush. The principal purpose of the loan was to enable the borrowers to develop their land. Eventually, Silver Harbour exercised its power of sale as mortgagee. A third party purchaser, Apec Equity Ltd, agreed to buy the property for $12.8 million with a settlement date of   16 January 2024. Silver Harbour is owed some $19 million so will be left with a significant shortfall from the funds originally loaned.

[2]    On 7 February 2023, Ee Lau, also known as Augustine Lau, registered a caveat against the property, Record of Title Identifier 759183. Then on 18 December 2023, Associate Judge Brittain ordered that Mr Lau’s caveat be removed.1 The Judge held that Mr Lau’s beneficial interest, if there was one, could not prevent the mortgagee sale of the property by Silver Harbour.2 He further held that Mr Lau’s caveat was lodged in bad faith and was an abuse of process, and ordered indemnity costs.3

[3]    Silver Harbour also filed an application for an injunction restraining Mr Lau from lodging any further caveat against the property without leave of the Court. Associate Judge Brittain noted that Mr Lau was prevented by s 146 of the Land Transfer Act 2017 from lodging a second caveat purporting to protect the same interest. Beyond that, the Associate Judge was unable to deal with the application.4 He granted leave to Silver Harbour to seek a listing of the application for injunction before the Duty Judge if necessary.

[4]    The injunction is sought on a Pickwick basis given the settlement  date  is    16 January 2024. It was filed on 22 December 2023 but owing to the Court holidays it was only brought to my attention as Duty Judge yesterday. I then directed the case officer to confer with counsel to have the matter set down for hearing today at midday.

1      Lau v Silver Harbour Capital Trustee [2023] NZHC 3745.

2 At [15].

3 At [19].

4      Senior Courts Act 2016, s 22(4)(g).

[5]    After hearing from counsel, I granted the application with immediate effect with reasons to follow. I now provide those reasons.

Affidavit of Peter Brooke

[6]    In his affidavit filed in support of the application, Mr Brooke confirmed that he is the general manager of the applicant with knowledge of its application and loan files including that involving the respondent. He referred to the judgment of Associate Judge Brittain which included an order that Mr Lau’s caveat be removed and that the applicant was entitled to indemnity costs given that the caveat was lodged in bad faith and was an abuse of process. The Judge also concluded that the respondent’s caveat was an attempt to frustrate the applicant’s mortgagee sale process. He adjourned the application for injunction to restrain the respondent from lodging further caveats.

[7]    According to Mr Brooke, Mr Lau is well known for attempting to compromise mortgagee sale processes citing HND Holding Ltd v Lau5 and HND Holding Ltd v Lau.6 In addition, Mr Brooke noted the Judge’s comments that this was at least the fifth attempt by Mr Lau to obstruct a financier exercising a mortgagee’s power of sale. Mr Brooke also mentioned Goodmore Investments (New Zealand) Ltd v Lau7 where Lang J ordered the removal of a notice of claim lodged by Mr Lau that had been registered soon after his judgment ordering removal of his caveats.8

[8]    Mr Brooke then referred to a conversion he had with a Phillip Davis of Barfoot & Thompson who told him that Mr Lau was well known as a vexatious litigant who lodged spurious caveats.

[9]    Regarding the application for injunction, Mr Brooke then set out the reasons for his concerns that Mr Lau may attempt to lodge a further caveat or interest against the property as set out in the affidavit of Roger Su dated 14 December 2023 and the latest email to Mr Brooke following a call from Mr Lau on 14 December 2023. As a result, Mr Brooke reiterates his concern that Mr Lau will lodge further caveats or

5      HND Holding Ltd v Lau [2023] NZHC 3663.

6      HND Holding Ltd v Lau [2023] NZHC 1194.

7      Goodmore Investments (New Zealand) Ltd v Lau [2023] NZHC 2214.

8      Goodmore Investments (New Zealand) Ltd v Lau [2023] NZHC 1983.

interests to frustrate the applicant’s mortgagee sale process. As settlement is set for 16 January 2024, Mr Brooke comments that delays in securing an interim injunction restraining Mr Lau to further impede the legitimate sale of the property will cause undue delay and prejudice to both the applicant and the proposed purchaser.

Submissions

[10]   Mr Kerr submitted that the application dated 22 December 2023 set out the grounds for the injunction.9 By notice of default dated 26 June 2023 the applicant holds power of sale as mortgagee over the property in question and the applicant duly exercised that power and entered into an agreement for sale and purchase dated 30 November 2023 settling on 16 January 2024.

[11]   Counsel contended that the respondent registered a caveat on 7 February 2023 describing his claimed interest as a beneficial interest under a constructive trust. In his application to sustain the caveat, Mr Lau submitted that his interest in the property had four elements as set out in [2](c)(iv) of the applications.

[12]   As foreshadowed, Associate Judge Brittain ordered the removal of the caveats and noted that the application to sustain the caveat was an abuse of process. Mr Lau’s history of lodging caveats without foundation is well known. After offering some

$8 million as part of the tender process, which was rejected, Mr Lau then confirmed his intention to improperly impede the applicant’s rights. Mr Kerr argued that the evidence of Mr Su and Mr Brooke highlight Mr Lau’s threat to lodge another caveat or lease to obstruct the mortgagee sale process.

[13]   Counsel underscored that whatever interests the respondent may have, they are subordinate to the applicant’s prior indefeasible interest as mortgagee. The applicant’s first mortgage was registered on 8 November 2021 without any knowledge of the respondent’s claimed interest in the property. Permitting further caveats or interests from the respondent would cause detriment to the applicant and any purchaser of the

9     The background to this matter is summarised in Associate Judge Brittain’s decision at [6] to [15] and need not be repeated here.

property. The applicant’s mortgage secures a significant loan which remains in default continuing to accrue interest.

[14]   Mr Kerr argued that requiring the respondent to seek leave before lodging further interests or caveats on the property does not prejudice the respondent. Any purported interest he claims are against the property owner, One On One Property Development Ltd, not the applicant as first mortgagee.

[15]   In addition, counsel submitted that the reasons for the application being made on a Pickwick basis as set out in the application are that requiring it to proceed on notice would cause undue delay, prejudice or detriment to the applicant given that the settlement is on 16 January 2024. An on notice application would allow the respondent to lodge further interests as he has threatened delaying or preventing settlement of the applicant’s sale to its detriment and that of the purchaser.

[16]   Mr Kerr also confirmed that as solicitor on the record he certified that the grounds on which the application rests have been out and that all reasonable enquires or steps have been made or taken to ensure the application consists of all relevant information – including any opposition or defence that could be relied on – or any facts that might support the position of any other party.

[17]There was no appearance from Mr Lau who I was told is out of the country.

Discussion

[18]   The purpose of an interlocutory injunction is to protect the party seeking an injunction from injury that cannot be adequately compensated in damages.10 The Court will consider whether there is a serious question to be tried and the balance of convenience between the parties.11 The general aim when assessing the balance of convenience is to determine where the overall justice lies. The Court must be satisfied

10     American Cyanamid v Ethicon Ltd [1975] AC 396, 407, [1975] 2 WLR 316, 321, [1975] 1 All ER504 (HL).

11     Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA).

that the orders sought are reasonably necessary to preserve the position of the applicant.12 The applicant must give an undertaking as to damages.13

[19]   In summary, having heard from Mr Kerr earlier today, and after considering the evidence and related documentation on the file, along with Associate Judge Britain’s recent decision, including his conclusions on bad faith and abuse of process, I am satisfied that the injunction application should be granted.

[20]   Its purpose is to ensure that the applicant’s rights as mortgagee are protected by settling the sale of the Murphy Road property to the purchaser next Tuesday without the spectre of Mr Lau attempting to obstruct that sale by trying to lodge a caveat or other interest as he had intimated, according to the applicant’s evidence. In this context, I also take account of the cases cited by counsel where Mr Lau has previously, and invariably unsuccessfully, attempted the same strategy.

[21]   I also agree that damages are unlikely to compensate the applicant in the circumstances of this case, that the issue raised by the applicant – the risk of derailing the mortgagee sale settlement next week – is serious and that the balance of convenience favours the applicant. Moreover, I am also satisfied that the overall justice favours the applicant and that the orders sought are reasonably necessary to ensure that its rights as mortgagee, that have been properly and lawfully exercised, are not interfered with by the respondent.

Decision

[22]   The application for an injunction against Ee Lau or Augustine Lau was granted at 12.10 pm today.

[23]Counsel may submit a memorandum of up to three pages on costs.

Harvey J

12     Carlton & United Breweries Ltd v Minister of Customs [1986] 1 NZLR 423.

13     High Court Rules 2016, r 7.54. The applicant has provided the undertaking as to damages with its application, along with evidence in support.