Wei v Chin Yun Holdings Limited

[2024] NZHC 1602

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-001131

[2024] NZHC 1602

BETWEEN

KAI WEI

Applicant

AND

CHIN YUN HOLDINGS LIMITED

First Respondent

DAQIN HOLDING LIMITED

Second Respondent

CIV-2023-404-002944

BETWEEN

GUOLONG OU

Applicant

AND

CHIN YUN HOLDINGS LIMITED

First Respondent

DAQIN HOLDING LIMITED

Second Respondent

Hearing:

26 February 2024

Appearances:

G Blanchard KC for the Applicants

R J Hollyman KC / R K P Stewart for the Respondents

Judgment:

20 June 2024

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 20 June 2024 at 10.30 a.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

WEI & OU v CHIN YUN HOLDINGS LTD [2024] NZHC 1602 [20 June 2024]

Introduction

[1]    The applicants (Mr Wei and Mr Ou) are Chinese residents who wanted to invest in property in New  Zealand.  They  arranged  for  an  associate  based  in  New Zealand who had New Zealand residency, Xing Guo (Mr Guo), to assist them. They claim that between September 2020 and August 2022 they advanced approximately $14.3 million to Mr Guo to buy New Zealand properties with their money and to hold the properties on their behalf.

[2]    Messrs Wei and Ou claim that unbeknownst to them, Mr Guo used their money for other purposes, including buying different properties to those agreed and funding a new company to buy one of the agreed properties (a hotel in Paihia). Then, also unbeknownst to them, Mr Guo transferred legal ownership in several of the properties to the respondent companies (Chin Yun Holdings and Daqin Holding), owned and controlled by his father-in-law, Heping Yang (Mr Yang), who was also based in China. Mr Guo is now bankrupt.

[3]    Messrs Wei and Ou lodged caveats over four properties owned by the respondents, said to have been bought with their money.1 The respondents applied to Land Information New Zealand (LINZ) for the caveats to lapse. Mr Wei now applies to this Court for an order that the caveats not lapse. Mr Ou’s caveats lapsed due to an oversight of his solicitors. He applies for leave to lodge second caveats.

[4]    Messrs Wei and Ou claim to have beneficial interests in the four properties in the following way. They claim that Mr Guo (or associated entities) purchased the properties with their money and held the properties on bare or constructive trust for them. They claim that Mr Guo (or associated entities) wrongfully, in breach of trust, transferred the properties to the respondents, that those companies were aware of their

1	Caveats 12709086.1 and 12765310.1, lodged against Records of Title					NA120B/601,
NA120B/602,		NA120B/603,	NA120B/604,	NZ120B/605,	NA120B/606,	NA120B/607,
NA120B/608,		NA120B/609,	NA120B/610,	NA120B/611,	NA120B/612,	NA120B/613,
NA120B/614,		NA120B/615,	NA120B/616,	NA120B/617,	NA120B/618,	NA120B/619,
NA120B/620,		NA120B/621,	NA120B/622,	NA120B/623,	NA120B/624,	NA120B/625,

NA120B/626, NA120B/627, and NA120B/628; Caveats 12709014.1 and 12772004.1, lodged

against Records of Title 453158 and NA19B/652; and Caveats 12729752.1 and 12772004.1, lodged against Record of Title 453157.

beneficial interests, and those companies therefore hold the properties on constructive trust for them.

[5]    The respondents say that there is no documentary evidence of Messrs Wei and Ou’s money being used to purchase the caveated properties. In relation to the hotel property, they say the evidence shows only that the applicants invested in a company which purchased the property through a nominee company. Further, they say that there is no evidence that they were aware of Messrs Wei and Ou’s alleged beneficial interests.

[6]    To have the caveats sustained, Messrs Wei and Ou must establish that it is reasonably arguable that:

(a)they contributed money towards the  purchase  of the properties by  Mr Guo or associated entities;

(b)Mr Guo (or associated entities) held the properties on bare or constructive trust for the applicants;

(c)the properties were transferred to the respondents in breach of the bare or constructive trust;

(d)the respondents received the properties knowing of the applicants’ beneficial interests; and

(e)the respondents’ knowing receipt of the trust property provides a basis for the caveats.

[7]    The parties’ submissions were materially focused on [6(a)–(d)]. With no disrespect to those submissions, this judgment begins with [6(e)] because that issue is determinative for three of the four properties concerned.

Background facts

Parties

[8]    Mr Wei is from Xi'an, China. Mr Wei met Mr Guo at primary school in Xi'an. They kept in touch after Mr Guo moved to New Zealand for high school in or around 2005.2

[9]    Mr Guo met Mr Yang in 2014 in Auckland.3 Mr Yang  is  also  from  Xi'an. Mr Yang has two adult children, Yuhan Yang (Yuhan) and Yuqi Yang (Yuqi).

[10]   Mr Yang, Yuqi and Yuhan are the shareholders of Daqin Holding. The directors of Daqin Holding are Mr Yang and Yuqi. 4 Mr Yang is the sole shareholder of Chin Yun Holdings.5 The directors  of  Chin Yun  Holdings  at  all  relevant  times  were Mr Yang and a Haotian Liu.

Messrs Wei, Ou and Qiao decide to invest in New Zealand

[11]   Messrs Wei and Ou’s evidence is that in July 2020, they became interested in investing in properties in New Zealand through Mr Guo as a way of migrating to New Zealand.

[12]   Messrs Wei and Ou claim that between 16 September 2020 and 23 August 2022, they advanced a total of $14.3 million to Mr Guo in New Zealand to purchase property. Schedule 1 to Mr Wei’s affidavit purports to show the transfer of about

$14.3 million to Mr Guo. Schedule 2 to Mr Wei’s affidavit purports to provide a breakdown of how the $14.3 million was applied by Mr Guo.

2      Affidavit of Kai Wei in support of Originating Application that Caveat 12709086.1 and Caveat 12709014.1 Not Lapse, affirmed 6 June 2023 [Wei Affidavit], at [3].

3      Affidavit of Xing Guo in Reply, affirmed 24 January 2024 [Guo Affidavit], at [15(a)].

4      Wei Affidavit, above n 2, at exhibit WK537.

5      In July 2002 Chin Yun Holdings had three shareholders – Mr Yang 40 per cent, Dianying Chen 40 per cent and Ming Zhao 20 per cent. Mr Yang acquired Mr Chen’s shares in November 2020. Mr Yang acquired Mrs Zhao’s shares in October 2022.

130 Marsden Road and hotel business

[13]   Mr Wei says that in July 2020 Mr Guo advised him of the opportunity to purchase a hotel business and land at 130 Marsden Road, Paihia. The vendor was Chin Yun Holdings. Mr Wei says that he shared  this information with his friends,  Mr Ou and Sonny Shun Qiao (Mr Qiao).

[14]   A translated WeChat message between Mr Guo and Mr Wei records Mr Guo saying that Mr Yang wanted $6.5 million for the hotel property and business, that  Mr Guo wanted to buy it but could not afford to, that Mr Wei could make a deposit of about 17 million CNY ($3.7 million) and that net profit from the hotel was in the vicinity of around 3–3.5 million RMB ($650,000 to $760,000) per year.

[15]   Mr Wei and Mr Ou’s evidence is that to meet the purchase price of $6.5 million, it was agreed that Messrs Wei, Ou and Qiao would contribute $4.06 million of the cash portion of $5.2 million; Mr Guo would contribute $1.14 million; and Mr Guo would borrow the balance of $1.3 million from a New Zealand bank.

[16]Messrs Wei and Ou claim that they, along with Mr Qiao, advanced around

$4.1 million to Mr Guo for the purchase of the 130 Marsden Road land and business between 16 September 2020 and 4 August 2021.

[17]   Messrs Wei  and Ou’s  evidence is that as they could not own property in  New Zealand because they did not have New Zealand residency, Mr Guo established a company to buy the hotel property for them. Mr Wei's evidence sets this out:6

Mr Guo said that because Mr Ou, Mr Qiao and I did not have New Zealand residency, we could not own property in New Zealand. He told us that he would set up a company called Titan Investment NZ Limited (Titan Investment) … to purchase the property and hotel business at 130 Marsden Road. He said he would hold our shares in Titan Investment for us until we get residency.

[18]Mr Ou’s evidence confirms this:7

6      Wei affidavit, above n 2, at [15]..

7      Affidavit of Guolong Ou in support of Originating Application that Caveat 12765310.1 and Caveat 12772004.1 Not Lapse, dated 17 August 2023 [Ou Affidavit], at [13].

[Mr Guo] told us that he would set up a company called Titan Investment NZ Limited (Titan Investment) to purchase the property and hotel business at 130 Marsden Road. He said he would hold our shares in Titan Investment for us until we get residency. The share agreement we signed at the time is annexed …

[19]   Mr Guo prepared a share subscription and restructuring agreement which provided that shares in Titan Investment would be issued to Messrs Ou (and his wife), Qiao and Wei in consideration for advances to Titan Investment. Mr Guo's evidence is that Messrs Wei, Ou (and his wife), Qiao and Guo signed the share subscription agreement in January 2021.8

[20]   Mr Guo incorporated Titan Investment on 29 January 2021. He was the sole shareholder and director of the company on incorporation.

[21]   On 16 March 2021, Titan Investment entered into an agreement to purchase 130 Marsden Road from Chin Yun Holdings for $6.61 million. On the same day, Titan Investment entered into an agreement to purchase the hotel business from Chin Yun Management Ltd (Chin Yun Management) for $310,000.

[22]   Mr Guo did not have Titan Investment settle the purchase of 130 Marsden Road. On 5 April 2022, Titan Investment nominated another company — Tango Investments NZ Limited (Tango Investments) — to settle the purchase. The sole director and shareholder of Tango Investments was Mr Guo's friend, Jiali Ji (Ms Ji).9 Messrs Wei, Ou and Guo’s evidence is that Mr Guo did not tell Messrs Wei and Ou about Tango Investments at this stage.10

[23]   On 12 April 2022, Ms Ji as director of Tango Investments and Mr Guo as director of Titan Investment entered into a Deed of Declaration of Trust and Indemnity which declared that Tango Investments would hold 130 Marsden Road on trust for Titan Investment as beneficiary.

[24]   The purchase of 130 Marsden Road and the hotel business from Chin Yun Holdings and Chin Yun Management settled on 26 April 2022. Tango Investments

8      Guo Affidavit, above n 3, at [20(d)].

9      Wei Affidavit, above n 2, at at exhibit WK513.

10     Guo Affidavit, above n 3, at [25].

purchased the land.11 A company called Tango Management Ltd (Tango Management) purchased the hotel business. The sole director and shareholder of Tango Management was also Ms Ji. The total settlement paid was $7,184,038.43, which included $6.61 million for the land at 130 Marsden Road, $310,000 for the hotel business, and late settlement interest. Tango Investments also took out a loan from DBR Ltd (DBR) to help finance the purchase. The loan facility was for $3,326,530, but it is unclear how much was drawn down for the purchase.

[25]Mr Wei’s evidence is that in 2022, he assumed Mr Qiao’s interest in

130 Marsden Road and the hotel business. Mr Qiao is not involved in these proceedings.

8 Trinidad Road and 10 Trinidad Road

[26]   Mr Wei’s evidence is that in around mid-2021, Mr Guo advised him that he had purchased 8 Trinidad Road, Sunnynook, Auckland, and asked Mr Wei to invest in its development. Mr Wei  says that he agreed to invest $1,000,000 and  agreed for  Mr Guo to hold his beneficial interest on trust for him.12 He says he advanced

$1,000,000 to Mr Guo between June and August 2021.

[27]   Mr Wei’s evidence is that in around September 2021, Mr Guo advised him that the neighbouring property at 10 Trinidad Road was for sale and that developing 8 and 10 Trinidad Road together would be more profitable. Mr Wei says that Mr Ou agreed to invest $1,000,000 towards the purchase of 10 Trinidad Road, and that Mr Guo agreed to hold Mr Ou’s beneficial interest on trust for him. Messrs Wei and Ou say that on 6 and 7 October 2021, Mr Ou advanced $999,491 to Mr Guo for the purchase of 10 Trinidad Road.

[28]   Messrs Wei and Ou claim that unbeknownst to them, Mr Guo did not purchase 10 Trinidad Road and instead purchased 14 Trinidad Road. They further claim that Mr Guo used around $906,946 of their money to develop 8 Trinidad Road; and around

11     Copies of titles are at Wei Affidavit, above n 2, at exhibits WK378–WK489.

12     Wei Affidavit, above n 2, at [18].

$931,000 of their money to purchase 14 Trinidad Road and 14 Welland Place (with the split between the properties being unclear).

7 Sudeley Street and 9 Sudeley Street

[29]   Messrs Wei  and Ou claim that in September 2021, Mr Guo suggested that  Mr Ou purchase 7 and 9 Sudeley Street, Orakei, Auckland. They say that Mr Ou agreed to pay most of the purchase price in cash with Mr Guo to take a loan to cover the balance. Their evidence is that Mr Guo agreed to hold the properties on Mr Ou’s behalf.13

[30]   Messrs Wei and Ou claim that from 29 November 2021 to 23 August 2022, Mr Ou transferred $9,403,991 to Mr Guo to purchase 7 and 9 Sudeley Street.

[31]   Messrs Wei and Ou further claim that Mr Guo said that they could use the profit from developing 8 Trinidad Road and 10 Trinidad Road to purchase 5 and 5A Sudeley Street; and that they could then develop 5, 5A, 7 and 9 Sudeley Street together.

[32]   Mr Guo did not purchase 7 and 9 Sudeley Street. However, on 23 December 2021 he entered into agreements to purchase 5 and 5A Sudeley Street.14 The settlement dates for these properties were to be 3 May 2023 and 31 March 2023, respectively.

[33]Messrs Wei and Oui claim that unbeknownst to them, Mr Guo applied around

$1,550,000 of their funds towards the deposits paid for 5 and 5A Sudeley Street.

[34]   Mr Yang says that Mr Guo paid deposits of $1.2 million for these properties, with the balance of the purchase price ($6.3 million for both) to be paid on settlement.15

13 Wei Affidavit, above n 2, at [22] and [24]; Ou Affidavit, above n 7, at [15].

14 Affidavit of Heping Yang in Support of Notice of Opposition by Respondents to Originating Applications dated 6 June 2023 & 11 August 2023, affirmed 31 October 2023 [Yang Affidavit], at exhibits HY-264 and HY-284.

15 It is unclear from the Agreements for Sale and Purchase what the exact deposit amounts were.

14 Welland Place

[35]   Mr Yang’s undisputed evidence is that this property was intended to be a home for Yuqi and his wife, Jiahua Peng (Ms Peng). Yuqi and Ms Peng have lived at this property since it was acquired in July 2021.

[36]   Mr Yang’s evidence, again undisputed, is that he transferred $200,000 to Yuqi on 25 May 2021 as an interest-free loan to assist Yuqi and Ms Peng to purchase the house. Yuqi and Ms Peng were the successful bidders for the property at an auction on 30 May 2021, for a price of $1,855,000. They signed an agreement for sale and purchase that day.16 Settlement was to occur on 12 July 2021. It is undisputed that they used $185,000 of the $200,000 from Mr Yang to pay the deposit.

[37]   Mr Yang’s evidence is that on 7 July 2021, he transferred another $786,500 to Yuqi. In total, Mr Yang claims that he advanced $986,500 to Yuqi for the purchase of 14 Welland Place.

[38]   Mr Guo’s evidence is that Yuqi and Ms Peng obtained a loan pre-approval from Kookmin Bank to complete the purchase, but the week prior to settlement on 12 July 2021, Yuqi was charged with a criminal offence (drug dealing). As a result, Mr Guo says, Yuqi and Ms Peng could not proceed with the Kookmin Bank loan or the settlement of 14 Welland Place. Mr Guo claims that he stepped in to help Yuqi and Ms Peng avoid default in relation to settlement. As a result, Mr Guo was nominated as purchaser and took a loan out from NZ Provident Corp Ltd to settle the purchase on 12 July 2021.

[39]    Messrs Wei and Ou allege that Mr Guo applied around $931,000 of their funds towards the purchase of 14 Trinidad Road and 14 Welland Place (it is unclear how much was applied on each).

[40]   Mr Yang disputes this, claiming that on 7, 8 and 9 July 2021, Yuqi and Ms Peng transferred $750,000 from their bank account to Mr Guo to pay for the property. Yuqi confirms this in his affidavit.

16     Yang affidavit, above n 14, at [37] and exhibit HY 153.

[41]   Mr Guo’s evidence is unclear as to whether he applied Messrs Wei and Ou’s money towards the purchase price of 14 Welland Place. He deposes that he used their funds to make the mortgage repayments.17

[42]   Later, Mr Guo (and Yuhan) refinanced the loan over 14 Welland Place at the same time as loans over 8 Trinidad Road and 84 Admirals Court Drive, Greenhithe, Auckland.

Other properties and spending

[43]   Messrs Wei and Oui claim that unbeknownst to them, Mr Guo also applied their funds to purchase 10A Rukutai Street, Orakei, Auckland, and his own family home (with Yuhan) at 84 Admirals Court Drive.

[44]   They also allege that Mr Guo applied around $148,321 of their funds towards legal fees for the various property transactions.

[45]   Moreover, Messrs Wei and Ou claim that Mr Guo advanced a significant portion of their funds to Yuqi and Yuhan for unknown purposes; to Mr Yang, Chin Yun Holdings and Daqin Holding; and to Mr Yang's projects, including 28 Sudeley Street.

[46]   They claim that Mr Guo spent around $889,109 of their money on his personal expenses; and that there is around $158,896 of unexplained spending by Mr Guo.

Mr Guo’s transfer of properties to Mr Yang

[47]   Between August 2017 and May 2022, Yuqi took out loans using two properties, each of which was owned by Mr Yang or a company part owned by Mr Yang, Datang Investment Ltd (28 Sudeley Street and 7 Hayfield Way, Karaka, Papakura) as security. In October 2022, Mr Yang discovered the loans. He saw Mr Guo as responsible and required Mr Guo to compensate him.

[48]   Mr Guo agreed to transfer properties and funds to Mr Yang. The agreement was set out in two letters: the “Sudeley Commitment Letter” and the “Hayfield

17     Guo affidavit, above n 3, at [28(d)].

Commitment Letter”. Mr Guo says that he signed these letters and transferred the properties and funds under duress from Mr Yang. Mr Yang denies this.

[49]   In the “Sudeley Commitment Letter”, Mr Guo stated that he had repaid part of the $4.497 million loan secured over 28 Sudeley Street by paying $1.192 million to Mr Yang; and agreed to repay the balance for which he was responsible by transferring 8 Trinidad Road, 84 Admirals Court Drive, 14 Welland Place, 5 and 5A Sudeley Street, and 10A Rukutai Street to Mr Yang.

[50]Under the “Hayfield Commitment Letter”, Mr Guo agreed to repay the

$4 million loan secured over 7 Hayfield Way by transferring the 130 Marsden Road land and the hotel business to Mr Yang and paying him $900,000.

[51]On 14 November 2022, Mr Guo caused Tango Investments to transfer

130 Marsden Road to Chin Yun Holdings and the hotel business to Chin Yun Management.18 Chin Yun Holdings repaid the DBR Loan of $3,389.540.69.

[52]   On 16 November 2022, Mr Guo sold 8 Trinidad Road to a third party. Mr Guo says  that  the net  sale proceeds  were used  to  reduce the mortgage secured  over    8 Trinidad Road, 84 Admirals Court Drive and 14 Welland Place.

[53]   On 9 December 2022,  Mr Guo transferred  84 Admirals Court Drive  and   14 Welland Place to Daqin Holding. Daqin Holding discharged the mortgage of

$2.9 million registered over both properties. Daqin Holding then sold 84 Admirals Court Drive to third parties for $1.73 million in February 2023.

[54]   In January and March 2023 Mr Guo novated Daqin Holding as purchaser of  5 and 5A Sudeley Street. Daqin Holding settled the purchase of 5 Sudeley Street on 31 January 2023 and of 5A Sudeley Street on 31 March 2023.

[55]   Mr  Guo  forfeited  the  deposits  in  relation  to  10A  Rukutai  Street19  and 14 Trinidad Road,20 as he had no means to settle them.

18     Copies of titles are at Wei Affidavit, above n 2, at exhibits WK378-489.

19     Wei Affidavit, above n 2, at [31(d)].

20     Wei Affidavit, above n 2, at [31(c)].

[56]Additionally, Mr Guo paid $1.192 million to Mr Yang.

Caveats are lodged

[57]   Mr Wei  returned to New Zealand in February 2023.   He discovered that    Mr Guo had transferred properties into Mr Yang's control. Mr Guo provided a written explanation to Mr Wei on 24 March 2023.21

[58]   Mr Wei lodged caveats over the four remaining properties that Mr Yang had not disposed of:

(a)caveat 12709086.1 over 130 Marsden Road;22

(b)caveat 12709014.1 over 5 Sudeley Street23 and 14 Welland Place;24 and

(c)caveat 12729752.1 over 5A Sudeley Street.

[59]   Mr  Wei  made  an  originating   application   to  sustain   those   caveats   on 6 June 2023.

[60]On 30 June 2023, Mr Ou lodged:

(a)caveat 12765310.1 over 130 Marsden Road;25

(b)caveat 12772004.1 over 5 Sudeley Street,26 5A Sudeley Street27 and  14 Welland Place.28

[61]   Mr Ou made an originating application to sustain his caveats on 11 August 2023.

21     Wei Affidavit, above n 2, at exhibit WK577 (translation at exhibit WK579).

22     Copies of titles are at Wei Affidavit, above n 2, at exhibits WK378–WK489.

23     Wei Affidavit, above n 2, at exhibit WK521.

24     Wei Affidavit, above n 2, at exhibit WK526.

25     Copies of titles are at Ou Affidavit, above n 7, at exhibits GO-001– GO-030.

26     Ou Affidavit, above n 7, at exhibit GO-032

27     Ou Affidavit, above n 7, at exhibit GO-031.

28     Ou Affidavit, above n 7, at exhibit GO-033.

[62]   Due to an oversight of the solicitors acting for Mr Ou, LINZ was not advised of the interim orders made by Gault J in relation to Mr Ou’s application.29 As result, Mr Ou's caveats lapsed on 11 September 2023 by operation of section 143(3)(b) of the Land Transfer Act 2017 (LTA).30 On 24 November 2023, Mr Ou applied to the Court for leave to lodge second caveats.31

Legal principles

Applications to sustain caveats

[63]   An application to sustain a caveat is determined on a summary basis in which the Court has regard to the following principles:32

(a)The applicant caveator bears the onus of demonstrating that they have an interest in the land sufficient to support a caveat. However, they need not establish that definitively. It is enough if they present a reasonably arguable case.

(b)The process by which these applications are determined is ill-suited to resolving disputed questions of fact. An order for a caveat’s lapse will only be made if it is patently clear it cannot be maintained — either because there was no valid ground for lodging it in the first place or, alternatively, because such ground has now ceased to exist. A conflict between affidavits will generally be resolved in the caveator’s favour.33 However, the Court is not bound to accept uncritically statements in an affidavit that are equivocal, lacking in

29     Affidavit of Xiao Huang in support of Application by Guolong Ou for Leave to Lodge Second Caveats, sworn 24 November 2023 [Huang Affidavit].

30     Huang Affidavit, above n 29, at exhibit D.

31     Application by Guolong Ou for Leave to Lodge Second Caveats, dated 24 November 2023.

32 Green & McCahill Holdings Ltd v Ara Weiti Development Ltd [2022] NZCA 218, (2022) 23 NZCPR 259 at [80], citing Philpott v Noble Investments Ltd [2015] NZCA 342 at [26]. See also Sims v Lowe [1988] 1 NZLR 656 (CA) at 659-–660.

33    Bethell v Rickard [2013] NZCA 68 at [22]. See also MacRae v Rapana HC Auckland M633/94,  17 June 1994 at 3–4.

precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable.34

(c)Where the applicant has discharged its burden, the Court retains a residual discretion to remove the caveat. The Court will exercise this discretion cautiously and must be satisfied removal would not prejudice the caveator’s legitimate interest.³⁵

[64]   To establish a reasonably arguable case, there must be evidence tending to prove the facts relied on. Assertion is not enough. If there is no evidence to prove the facts, the caveator will not have made out a reasonably arguable case for those facts.36

[65]   In determining an application for leave to lodge a second caveat, one factor the Court will consider is whether there is a good explanation for the failure to apply to sustain on time, including matters outside the applicant's control..37

Bare trust and constructive trust

[66]   Messrs Wei and Ou claim that Mr Guo or associated entities held the properties on a bare trust, or an institutional constructive trust of the kind recognised in the case of Lankow v Rose.38

[67]   A bare trust is a trust under which the trustee holds property without any interest in the property other than that existing by reason of the office and their legal title as trustee, and without any duty or further duty to perform, except to convey the property upon demand to the beneficiaries or as directed by them.39 A bare trust is usually created by an express declaration of trust.40

34 Barrett v IBC International Ltd [1995] 3 NZLR 170 (CA) at 175, citing Eng Mee Yong v Letchumanan s/o Velayutham [1980] AC 331 (PC) at 341; and Xie v 126 Waimumu Ltd [2020] NZHC 1109 at [8].

35 Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656.

36 Body Corporate 329331 v Escrow Holdings Forty-One Ltd [2017] NZHC 754, (2017) 18 NZCPR 466 at [9].

37 Lowther v Kim [2003] 1 NZLR 327 (HC) at [18].

38     Lankow v Rose [1995] 1 NZLR 277, (1994) 12 FRNZ 682 at 294.

39 Burns v Steel [2006] 1 NZLR 559 at [43] per Randerson J, citing Herdegen v Federal  Commissioner of Taxation (1988) 84 ALR 271 (FCA) at 281.

40 Burns v Steel, above n 39, at [43], citing Herdegen v Federal Commissioner of Taxation, above n 39, at 281.

[68]   To establish that the legal owner holds the property on constructive trust for them, a person must show that:41

(a)they made direct or indirect contributions to the property in question;

(b)they expected to obtain an interest in the property;

(c)it was reasonable in the circumstances for the claimant to expect an interest; and

(d)the defendant should reasonably expect to yield the claimant an interest.

Does a claim for knowing receipt provide a basis for a caveat?

[69]   The parties’ submissions were mainly focussed on whether it is reasonably arguable that Mr Guo or entities associated with him held the properties on bare or constructive trust for Messrs Wei and/or Ou, and whether Chin Yun Holdings or Daqin Holding took legal ownership of the properties knowing of their alleged beneficial interest in the properties (meaning these companies are liable in knowing receipt).

[70]   As noted earlier, I prefer to begin by considering whether Messrs Wei and Ou’s claim against the respondents for knowing receipt provides a basis for the caveats.

Who may lodge a caveat

[71]   A caveat is a creature of statute and may be lodged only by a person upon whom a right to lodge a caveat has been conferred by statute.42

[72]   Section 138 of the LTA confers the right to lodge a caveat against dealings with an estate or interest in land under the LTA. Section 138 relevantly provides:

41     Lankow v Rose, above n 38, at 289 per McKay J and 294 per Tipping J.

42     Guardian Trust & Executors Co of New Zealand Ltd v Hall [1938] NZLR 1020 (CA) at 1025 per Callan J.

138 Caveats against dealings with land

(1)A person may lodge a caveat against dealings with an estate or interest in land (a caveat against dealings) on the basis that the person—

(a)     claims an estate or interest in the land, whether capable of registration or not; or

(b)   has a beneficial estate or interest in the land under an express, implied, resulting, or constructive trust; or

…

[73]   Thus, only a person with a claim to a present and vested legal or beneficial interest in the land may lodge a caveat. A claim or right against the registered owner is not a claim to an interest in the land and will not support a caveat.

The beneficial interest claimed by the respondents

[74]   A caveator is obliged to identify in the caveat against dealings document the basis upon which they claim an interest in the land concerned.43

[75]   Mr Wei identified the basis for his claimed interest in the caveat against dealings documents in these terms:44

The above named caveator, Kai Wei, claims a beneficial interest in the land contained in [the relevant records of title] as cestui que trust of which the registered proprietor, [Chin Yun Holdings Limited/Daqin Holding Limited], is a trustee by virtue of a commercial arrangement and corresponding financial dealings creating an implied trust between the registered proprietor, [Chin Yun Holdings Limited/Daqin Holding Limited], and the caveator, Kai Wei, in which the caveator, Kai Wei, has equitable interest in the land contained in [the relevant records of title], and the registered proprietor, [Chin Yun Holdings Limited/Daqin Holding Limited], is holding the land contained in [the relevant records of title] for the benefit of the caveator, Kai Wei, as trustee.

[76]   The claimed interest is stated in broad terms in Messrs Wei and Ou’s originating applications:

[The applicant] has a reasonably arguable case that he has an equitable interest in the caveated properties and that [the respondents] hold the caveated properties on trust subject to his equitable interest.

43 Land Transfer Act 2017, s 138(3); and Land Transfer Regulations 2018, sch 2.

44 The caveat against dealings documents lodged by Mr Ou are not in evidence but as he has  expressed his interests in his originating application in the same terms as Mr Wei, it is assumed that his caveat against dealings documents expressed his interests in similar terms.

[77]    Messrs Wei and Ou refined their claimed interests in written and oral submissions. They claim to have beneficial interests in the properties because:45

(a)they funded their purchase and Mr Guo (or entities associated with  Mr Guo) held the properties on bare or constructive trust;

(b)Mr Guo wrongfully (in breach of trust) transferred the properties to Mr Yang’s companies, Chin Yun Holdings and Daqin Holding; and

(c)Chin Yun Holdings and Daqin Holding knowingly received the properties and therefore hold the properties on constructive trust for Messrs Wei and Ou.

[78]   That expression of the claimed interest is consistent with the applicants’ draft statement of claim against the respondents, which the applicants propose to file in this Court. They ask the Court to sustain the caveats to protect their interests while they prosecute this claim.

[79]   In the draft claim, the applicants advance two causes of action against each of Chin Yun Holdings and Daqin Holding.46 The first and second causes of action against Chin Yun Holdings are for knowing receipt and dishonest assistance in relation to 130 Marsden Road and the hotel business. The third and fourth causes of action are against Daqin Holding for knowing receipt and dishonest assistance in relation to 84 Admirals Court Drive, 14 Welland Place and 5 and 5A Sudeley Street. Relevantly, the relief sought for the knowing receipt causes of action includes declarations that the respondents knowingly received the properties and that they hold the properties (or the net sale proceeds, in relation to 84 Admirals Court Drive) on constructive trust for Messrs Wei and Ou; and an order that the respondents transfer the properties (or net sale proceeds) to Messrs Wei and Ou.

45 Applicants’ Synopsis of Submissions, dated 19 February 2024, at [6].

46 The claim also includes causes of action against Mr Yang for dishonest assistance, against Chin  Yun Holdings, Daqin Holding and Mr Yang for money had and received; against Yuhan for breach of constructive trust and money had and received; and against Yuqi for money had and received.

Indefeasibility of title

[80]   The principle of indefeasibility of title under the Torrens system is enshrined in s 51 of the LTA. When a person is registered as the owner of an estate or interest in land under the LTA, that person obtains a title to the estate or interest free of interests that are not registered or noted on the register of land, unless one of the recognised exceptions or limitations applies. The exceptions are contained in ss 52– 56 and 204 of the LTA. One exception is if the estate or interest is acquired by the registered owner through fraud.47

[81]   This means that unless one of the exceptions applies, on Chin Yun Holdings and Daqin Holding becoming registered owners of the properties, they obtained their legal interests unencumbered by any unregistered beneficial interests Messrs Wei and/or Ou may have had in the properties by virtue of Mr Guo or associated entities holding the properties on bare or constructive trust for them.

Claim for knowing receipt not an interest in land

[82]   Messrs Wei and Ou do not plead fraud or any of the statutory exceptions. Rather, their claimed interest rests on the notion that the respondents knowingly received the trust property and consequently hold the properties on constructive trust for them.

[83]   However, a claim against a registered owner of land for knowing receipt of land in breach of trust is a personal claim against the owner and not a claim to an interest in the land itself.

[84]   As Professor Jessica Palmer explains, the remedy for knowing receipt is not a constructive trust in the sense of a proprietary interest in land:48

While it is clear that courts have described the remedy for knowing receipt as a constructive trust, interestingly, all three conceptual approaches to knowing receipt suggest that it gives rise to a personal remedy and not a proprietary remedy such as a constructive trust. Defendants are required to hold property

47 Land Transfer Act, s 52(1)(a).

48 Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at [26.13.4] (footnotes omitted).. See also Mau Whenua Inc v Shelly Bay Investments Ltd [2019] NZHC 3222, (2019) 20 NZCPR 923 at [46]–[53].

as if they were constructive trustees and not actually as constructive trustees

– the point being merely that they are personally liable to account for the value of the receipt and make good any loss suffered by the beneficiaries; not that the property received is held on trust by the defendant for the plaintiff. The remedy is personal, not proprietary. As such, constructive trust is not an accurate descriptor of liability for knowing receipt…

[85]   In McLennan (as liquidators of Neil Timber Ltd (in liq)) v Livaja the Court of Appeal clarified:49

We consider that the correct basis for knowing receipt is unconscionability. We prefer to characterise the liability incurred on a finding of knowing receipt as a personal liability to account in equity to the beneficiaries by restoring the property lost by the unconscionable receipt. The core duty of that liability is to restore misapplied assets, or their equivalent, to the beneficiaries.

[86]   The Court’s jurisdiction to provide relief for an in personam claim such as a claim for knowing receipt is explicitly recognised by s 51(5) of the LTA. As the Supreme Court stated in Regal Castings Ltd v Lightbody:50

An in personam claim against a registered proprietor looks to the state of the registered proprietor’s conscience and denies him the right to rely on the fact he has an indefeasible title if he has so conducted himself that it would be unconscionable for him to rely on the register. Such a claim is concerned with the personal obligations of the registered proprietor rather than with the sanctity of their title. A successful in personam claim indirectly affects the registered proprietor’s title, such as when a decree of specific performance is made; but the claim is not a claim to the land as such…

(emphasis added)

[87]   Thus, if the applicants can prove knowing receipt, the respondents will be personally liable to account to them in equity. They may be required to restore property so received to the applicants. But such a claim is an in personam claim against the respondents. It is not a claim to an estate or interest in the land itself and it does not therefore provide a basis for a caveat.

49     McLennan (as liquidators of Neil Timber Ltd (in liq)) v Livaja [2017] NZCA 446, (2017) 18 NZCPR 776 at [40] (footnotes omitted).

50     Regal Castings Ltd v Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 at [148] (footnotes omitted).

Land transfer fraud?

130 Marsden Road

[88]   The applicants have not explicitly pleaded “land transfer fraud”, but the circumstances around the transfer of 130 Marsden Road to Chin Yun Holdings arguably suggest fraud.

[89]Fraud is defined in the LTA as follows:

6 Meaning of fraud

(1)For the purpose of this Act, other than subpart 3 of Part 2, fraud means forgery or other dishonest conduct by the registered owner or the registered owner’s agent in acquiring a registered estate or interest in land.

(2)For the purposes of subsection (1), the fraud must be against—

(a)  the registered owner of an estate or interest in land; or

(b)   the owner of an unregistered interest, if the registered owner or registered owner’s agent,—

(i)in acquiring the estate or interest had actual knowledge of, or was wilfully blind to, the existence of the unregistered interest; and

(ii)intended at the time of registration of the estate or interest that the registration would defeat the unregistered interest.

(3)For the purpose of subpart 3 of Part 2, fraud means forgery or other dishonest conduct by any person.

(4)The equitable doctrine of constructive notice does not apply for the purposes of deciding whether conduct is fraudulent.

[90]   Arguably s 6(2)(b) is engaged. There is evidence that Mr Yang, as director of Chin Yun Holdings, had actual knowledge of or was wilfully blind to Messrs Wei and Ou having a beneficial interest in 130 Marsden Road when Chin Yun became the registered owner.

[91]   This is because Mr Guo advised Mr Yang in writing on 26 April 2022 that 130 Marsden Road was beneficially owned by Messrs Wei and Ou.51 This report was

51     Wei Affidavit, above n 2, at exhibit WK546 (translation at exhibit WK555) .

given on the day Tango Investments and Tango Management settled the purchase of the property and business from Chin Yun Holdings and Chin Yun Management. Relevant extracts include:

The purchasers of the hotel are composed of 4 shareholders, the names of the 4 shareholders are Kai Wei, Guolong Ou, Tian Du and Sonny Shun, of whom Kai Wei is a good friend of mine, (Guolong Ou and Tian Du) are husband and wife, Sonny Shun is a Philippines citizen of Chinese ethnicity. The above 4 shareholders contributed the funds for the hotel. There is also another person named Jiali Ji (female) who is their appointed legal person and holder on trust. She does not own any shares, and the nature of her work is similar to that of Yuhan.

In addition, these four individuals are business partners who were previously involved in real estate industry in Dubai and Thailand and also own a hotel in Thailand. Among these people, I know that the majority shareholders are Guolong Ou and Tian Du. The two of them are preparing $10 million for investor/resident immigration in future, so the majority of the funds for the hotel transaction was paid by them, Kai Wei and another person hold 25% shares each.

I do not own any shares, and nor do I receive any wages, my promise to them is that after they purchase the hotel and before New Zealand borders are reopen, I would help them to look after the hotel for some time until the borders are open. They will manage the hotel on their own after they arrive in New Zealand. All I am doing is to help them. When I promised them this, I didn't think it is something difficult considering that Haotian Liu was at the hotel.

…

By around mid-year of 2020, our shareholders decided to sell the hotel as quickly possible, but there were no buyers during this period of time. It was at this moment I mentioned to Kai Wei that we wanted to sell the hotel, and I asked him tentatively whether he was willing to buy this hotel jointly with his friends as this hotel is quite a good platform to help with the immigration on the grounds that the hotel could provide different job positions, it could also help to get extra points for immigration given that the hotel was located outside Auckland.

…

In comparison, the price of 6.6 million offered by Kai Wei and his friends were slightly better, and it was unconditional. As a result, I chose to sign the contract with them. It is a net price of 6.6 million which shall be obtained in hand, as it wouldn't be subject to the agent's commissions or some fees rewarded to me. Initially I told Kai Wei and his friends that the price for the hotel was 6.5 million, later, it was owing to the competition from Senior Hu's contract, I asked them to increase the price to 6.6 million. I also tried to ask Senior Hu to continue to increase his price, but Senior Hu gave up at the end, so the final price offered by Kai Wei and his friends was 6.6 million.

…

The signatory for the purchaser was Xing Guo, the company that signed the contract was the one under Xing Guo's name, called [TITAN] INVESTMENT NZ LTD. The signatory for the vendor was Yuhan Yang, the company that signed the contract was CHIN YUN HOLDINGS LTD.

The reason as to why I chose to help them sign it was because before the contract was done and after I had consulted with the accountant and the lawyer, I came to a conclusion that none of the 4 of them was able to purchase the hotel in light of the fact that they were all outside New Zealand, they did not have the New Zealand residency and were only holding visitor's visas to New Zealand. The only alternative was to get a local friend to sign it on their behalf, and I happened to be the one that met the condition. Kai Wei could guarantee that their funds would be in place and I wouldn't be abandoned half way on my own. I therefore made the decision to help them to sign it.

…

The final settlement date is (Tuesday) 26 April 2022.

Currently, the money from the purchase is in place already and the documents related to the settlement has been signed completely.

Now the sale and purchase contract has been taken over formally by the purchasers' new company TANGO MANAGEMENT LTD.

I personally or my company no longer has anything to do with this transaction. This can be confirmed with the lawyer directly.

As to the purchasers' settlement company TANGO MANAGEMENT LTD, currently, this company is acting as the holding company for the 4 purchasers as they still haven't arrived in New Zealand yet. As to how they will operate it, it will have nothing to do with me. All I need to do now is to coordinate with both parties to complete the settlement.

[92]   Mr Yang admits that Mr Guo disclosed the involvement of Mr Wei and his business associates with the purchase of the hotel in the April 2022 report.52

[93]   Furthermore, Mr Yang acknowledges that in October 2022, he became aware of the Deed of Declaration of Trust and Indemnity by which Tango Investments agreed to hold 130 Marsden Road on trust for Titan Investment.53 Moreover, Mr Guo has put in evidence a message from Mr Guo to Mr Yang dated 13 October 2022 attaching the Titan Investment share subscription agreement.54 Mr Yang has put in evidence a Deed dated 1 November 2022, signed by himself and Mr Guo, which acknowledged that

52     Yang Affidavit, above n 14, at [31].

53     Yang Affidavit, above n 14, at [32].

54     Guo Affidavit, above n 3, at exhibit XG237.

Tango Investments held the property on bare trust for Titan Investment, and Tango Management held the business on bare trust for Titan Investment.55

[94]   Tango Investments subsequently transferred legal title in 130 Marsden Road to Chin Yun Holdings on 14 November 2022.56

[95]   Therefore, it is at least reasonably arguable that Chin Yun Holdings received 130 Marsden Road with actual knowledge that the applicants had contributed to the purchase of the property and had a beneficial interest in the property, and that Chin Yun Holdings intended to defeat that interest by becoming the registered owner. It is therefore reasonably arguable that any beneficial interest was not extinguished on the registration of Chin Yun Holdings as the owner of the land, and the company holds the property subject to any beneficial interest that existed prior to registration.

[96]   Having reached this conclusion, it is necessary to consider whether it is reasonably arguable that Messrs Wei and Ou had a beneficial interest in 130 Marsden Road prior to the transfer to Chin Yun Holdings. I do that now.

[97]   The applicants have sought to demonstrate that they advanced money for    Mr Guo (or an associated entity) to purchase 130 Marsden Road, and that Mr Guo used that money to purchase 130 Marsden Road, through two schedules prepared by Mr Wei and a selection of underlying records such as exchange company records of transfer, phone screenshots, and Mr Guo’s bank statements.

[98]   Schedule 1 purportedly shows inward transfers made by Messrs Wei, Ou and Qiao to Mr Guo through third parties and exchange companies between 16 September 2020 and 4 August 2021 for 130 Marsden Road, totalling $1,502,114.64. The difficulty with this evidence, acknowledged by the applicants, is that there is no evidence of the claimed transactions between Messrs Wei, Ou and Qiao, and the exchange companies or third-party individuals.

55     Yang Affidavit, above n 14, at [61] and exhibit HY 357.

56     Yang Affidavit, above n 14, at [63].

[99]   Schedule 2 purports to show outgoing payments by Mr Guo based on Mr Wei’s discussions with Mr Guo and Mr Guo’s bank statements. Mr Guo deposes that he agrees with this schedule in his affidavit in reply.

[100]   The applicants’ solicitor has provided a further schedule reorganising all the entries into three categories: those said by Mr Guo to relate to 130 Marsden Road, those relating to 5 and 5A Sudeley Street, and those relating to 14 Welland Place. This schedule records the actual transaction description from the bank statement, alongside Mr Guo’s explanation, the date, the amount, and the exhibit reference.

[101]   There are 28 payments totalling $5,023,000 said to be for 130 Marsden Road dating between 9 July 2020 and 2 November 2022. Most are to unidentifiable bank accounts.

[102]   The first five payments recorded, totalling $177,000, were to individuals or to Eagles Nest, a luxury accommodation resort in the Bay of Islands. They pre-date Titan Investment signing the agreement for sale and purchase on 16 March 2021, and it seems unlikely that these payments went to the purchase of 130 Marsden Road.

[103]   There are three payments between 9 July 2020 and 11 November 2021 totalling more than $1 million to Domain Legal, a law firm Mr Guo says Yuqi engaged to defend the criminal charge laid against him.

[104]   Only four of the entries refer to 130 Marsden Road in any way; however, these date from 3 June 2022, after settlement of the purchase on 26 April 2022. Furthermore, Mr Guo’s explanation is that the payments were for the Marsden hotel cashflow, not its purchase. In total, 13 payments post-date the transaction settling on 26 April 2022. Contributions to the hotel business are irrelevant to the claimed beneficial interest in the land.

[105]However, there are two payments to Loo & Koo (the vendor’s solicitors) of

$510,000 on 18 March 2021 and $250,000 on 2 December 2021.     These could conceivably relate to the purchase of 130 Marsden Road.

[106]   Plainly, there are serious issues with this evidence. The applicants concede that the information is incomplete. They say they simply want the opportunity to engage a forensic accountant to trace their funds, and to obtain third-party discovery from the other individuals and entities involved.

[107]   If the schedules were the only evidence for the claimed beneficial interest in 130 Marsden Road prior to transfer to Chin Yun Holdings, it might not be enough. But there is other evidence that provides support for the applicants’ claims.

[108] First, there are records of WeChat messages between Mr Guo and Mr Wei about the Marsden Road property, described earlier at [14]. A further conversation in September 2020 involves Mr Guo sending Mr Wei account information. In a message dated June 2021 Mr Guo appears to send Mr Wei a file of all the title deed numbers for the hotel land. There is also evidence of communications in March and June 2022 between Mr Guo and Mr Ou about the hotel’s financial performance and tax position.

[109]   Second, there are the circumstances around the establishment of Titan Investment, Tango Investments, and the purchase 130 Marsden Road from Chin Yun Holdings. The Titan Investment share subscription agreement, whether valid and implemented or not, is evidence of an intention that Messrs Wei, Ou (and his wife), and Qiao would take shares in Titan Investment in consideration for advances to the company. Titan Investment was the original purchaser of the Marsden Road property and hotel business, later nominating Tango Investments to complete the purchase by Deed of Nomination. The Deed of Declaration of Trust and Indemnity records that Titan Investment was to make the cash contributions to the purchase price (with Tango Investments taking a loan from DBR), and that Tango Investments would hold the property on trust for Titan Investment as beneficiary. There is no evidence or suggestion that Titan Investment had its own funds to contribute to the purchase.

[110]   Third, there is the April 2022 report prepared by Mr Guo for Mr Yang, which is explicit that 130 Marsden Road was bought using Messrs Wei and Ou’s money, and that the arrangement was that the property and business would be held on trust for them until they obtained residency.

[111]   Overall, I consider that the applicants have laid a sufficient evidential foundation for their claimed beneficial interest in 130 Marsden Road which arguably was not extinguished on transfer to Chin Yun Holdings due to Mr Yang’s arguable knowledge of their interest.

[112]   On that basis, I am satisfied that the caveat over 130 Marsden Road should be sustained pending the applicants advancing substantive proceedings.

14 Welland Place

[113]I do not reach the same conclusion with respect to 14 Welland Place.

[114]   The only evidence that Mr Yang knew of an alleged beneficial interest in these properties is a statement by Mr Guo in his affidavit. Mr Guo deposes:57

In the course of interrogating me, Mr Yang also asked specific questions about matters relating to Mr Wei and Mr Ou. I told him about using Mr Ou and Mr Wei’s money to purchase assets in New Zealand, including 130 Marsden Road, 5 & 5A Sudeley, and 14 Welland.

[115]   Mr Yang denies that he was aware of any alleged interest of Messrs Wei and Ou in 5 and 5A Sudeley Street or 14 Welland Place.

[116]   Fraud involves a person acquiring legal ownership of the land with actual knowledge of, or wilful blindness to, the existence of an unregistered interest in the land, and intending to defeat that interest. Mr Guo’s bare assertion set out above does not lay a sufficient evidential foundation for a claim that Mr Yang knew or was wilfully blind to the existence of beneficial interests of Messrs Wei and Ou in 5 and 5A Sudeley Street or 14 Welland Place.

[117]   Furthermore, it seems doubtful that Mr Guo would have informed Mr Yang that Messrs Wei and Ou had beneficial interests in 14 Welland Place because neither Mr Wei nor Mr Ou claim to have agreed with Mr Guo that they would contribute to the purchase of the property, or that he or associated entities would hold 14 Welland Place on trust for them. 14 Welland Place was not one of the properties the applicants

57     Guo Affidavit, above n 3, at [39(c)].

say they advanced money to Mr Guo to purchase. To the contrary, their evidence is that they were unaware of 14 Welland Place or that Mr Guo had (allegedly) applied some of their funds to purchase this property until Mr Wei visited New Zealand at the end of 2022.58 Mr Yang’s evidence is that 14 Welland was always intended to be Yuqi and Ms Peng’s home. Mr Guo does not dispute that.59

[118]   As a matter of law, a claimant to a constructive trust through contributions to a property must establish that they expected to have an interest in the property.60 As Tipping J said in Lankow v Rose, it they had no such expectation, a constructive trust cannot be imposed in their favour.61

[119]   As there is no evidence tending to show that Messrs Wei and Ou contributed to the purchase of 14 Welland Place reasonably expecting to have an interest in the property, the claim to a bare or constructive trust falls at the first hurdle. It follows also that it is not arguable that Mr Yang had actual knowledge of any such beneficial interest.

5 and 5A Sudeley Street

[120]   Similarly, Messrs Wei and Ou’s evidence is that they did not expect their funds to be used to acquire 5 or 5A Sudeley Street and they did not expect to obtain an interest in those properties. Their evidence is that Mr Ou forwarded funds to Mr Guo to be used to purchase 7 and 9 Sudeley Street. Mr Wei’s evidence is that it was not until his visit in late 2022 that he learned that Mr Guo had not purchased 7 and 9 Sudeley Street for Mr Ou as agreed, but had allegedly used Mr Ou and Mr Wei’s money to pay deposits to purchase 5 and 5A Sudeley Street.62 Therefore there is no basis for a claim that any (temporary) beneficial interest Mr Guo had as purchaser of these properties was held for Messrs Wei and Ou pursuant to a bare or constructive trust, and no basis for a claim that Mr Yang had actual knowledge of such an interest.

58     Wei Affidavit, above n 2, at [28(g)].

59     Guo Affidavit, above n 3, at [28].

60     Lankow v Rose, above n 38, at 289 per McKay J and 294 per Tipping J. .

61     At 295.

62     Wei affidavit, above n 2, at [28(d)].

Result

[121]   I order that caveat 12709086.1 lodged against 130 Marsden Road, Paihia (Records of Title NA120B/601, NA120B/602, NA120B/603, NA120B/604, NZ120B/605, NA120B/606, NA120B/607, NA120B/608, NA120B/609, NA120B/610, NA120B/611, NA120B/612, NA120B/613, NA120B/614, NA120B/615, NA120B/616, NA120B/617, NA120B/618, NA120B/619, NA120B/620, NA120B/621, NA120B/622, NA120B/623, NA120B/624, NA120B/625, NA120B/626, NA120B/627, and NA120B/628) is sustained until further order of the Court.

[122]Mr Ou has leave to file a second caveat against 130 Marsden Road.

[123]   These orders are made on the condition that Messrs Wei and Ou commence proceedings to determine their rights with respect to 130 Marsden Road within      20 working days.

[124]   The application to sustain caveat 12709014.1 lodged against 5 Sudeley Street, Orakei, Auckland (Record of Title 453158) and 14 Welland Place, Hillcrest, Auckland (Record of Title NA19B/652) is dismissed.

[125]   The application to sustain caveat 12729752.1 lodged against 5A Sudeley Street Orakei, Auckland (Record of Title 453157), is dismissed.

[126]   As both parties have had a measure of success, my preliminary view is that costs should lie where they fall. If either party wishes to claim costs, and agreement is not possible, they may  file  submissions  of  not  more  than  four  pages  within 15 working days.

Associate Judge Gardiner

Solicitors:

Heritage Law, Auckland Tompkins Wake, Auckland G Blanchard KC, Auckland R J Hollyman KC, Auckland