Wu v Young
[2024] NZHC 3776
•11 December 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-3073
[2024] NZHC 3776
UNDER Sections 142 and 148 of the Land Transfer Act 2017 BETWEEN
SHUANG WU
Applicant
AND
JINYUE YOUNG
Respondent
Hearing: 6 December 2024 Appearances:
EC Gellert and Z Zhao for the Applicant J Young, Respondent in Person
Judgment:
11 December 2024
JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
This judgment was delivered by me on 11 December 2024 at 4 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Lowndes Jordan, Auckland
WU v YOUNG [2024] NZHC 3776 [11 December 2024]
Introduction
[1] The applicant, Shuang Wu, was granted a priority fixture to determine his application to remove the caveat lodged against two properties he owns in Mangere Bridge, Auckland.
[2] The caveator, Jinyue (Paul) Young, opposes the removal of the caveat and sought the adjournment of the priority fixture as he was travelling in China and may not have been able to attend the hearing.
[3] Sale and purchase agreements in respect of both properties were originally due to settle on 5 December 2024. Following negotiations, the settlement date has been varied to 12 December 2024.
[4] The hearing of the removal application needed to proceed on 6 December 2024, as directed, to ensure the matter could be determined in advance of 12 December 2024. Mr Young is representing himself and attended remotely.
[5] I issue this judgment urgently and order the removal of the caveat to allow the settlements to proceed on 12 December 2024. I set out my reasons for removing the caveat below and for awarding compensation to Mr Wu for the loss suffered as a result of the lodging of the caveats.
Background
[6]The caveat in issue records Mr Young’s interest as caveator as follows:
Under s138(1)(b) the caveator claims a beneficial interest in the land contained in the above title as beneficiary of a constructive trust of which the Registered Proprietor is a trustee.
On 21/5/2024, the registered proprietor engaged me to deal with his legal dispute with the New Zealand Custom and promised to transfer the property to me.
[7] There is no dispute that the reference to 21 May 2024 in the interest described is a reference to a handwritten document in Chinese signed on that date by the applicant, Mr Wu. Mr Wu provides a translation of that document as follows:
Power of Attorney
I hereby agrees, appoints and fully authorises the China-New Zealand- Australia Legal Affairs Office to appoint a New Zealand lawyer to handle the sale and transfer of my property, which located at 11, 11A Church Road, Mangere Bridge, Auckland. After deducting the approximate NZ$1.2 million owed to ANZ Bank and the legal fees, all remaining funds shall be deposited into the designated account of the China-New Zealand-Australia Legal Affairs Office.
[8] Mr Young’s translation of the agreement differs slightly, translating the reference to the entity as the “China & AUS/NZ Law Office.” I will refer to it by that name in this judgment.
[9] Both Mr Wu and his wife, Dan Su, have sworn affidavits in support of Mr Wu’s application to remove the caveat with Mr Wu confirming the accuracy of the facts narrated in Ms Su’s evidence. Their evidence is that Mr Wu initially engaged Hao Shen of the “China & NZ/AUS Law Office” to assist with a legal issue between his company, Homer Construction Ltd, trading as Homer Homes, and the New Zealand Customs Service (Customs).
[10] After meeting with Mr Shen in person, Mr Wu’s evidence is that he engaged Mr Shen to assist with the Customs matter and paid RMB 11,440 (equivalent to approximately NZD 2,600) as a retainer to “China & NZ/ AUS Law Office” over WeChat. After discovering that there was no such entity, Mr Wu’s evidence is that he contacted Mr Shen, and terminated the arrangement.
[11] Mr Young’s evidence in response is that “China & NZ/AUS Law Office,” is his personal business and his trading name; and that the arrangement was with him and was not terminated. I discuss Mr Young’s evidence in more detail below.
[12]The issues are therefore:
(a)Did the agreement signed on 21 May 2024 give Mr Young personally a caveatable interest in the land as claimed in the caveat?
(b)If not, should compensation be awarded to Mr Wu pursuant to s 148 of the Land Transfer Act 2017 (LTA)?
Relevant principles
[13]Section 142 of the LTA provides:
142 Removal of caveat against dealings
The court may, on application by a person who has an estate or interest affected by a caveat against dealings, order that the caveat is removed.
[14] The Supreme Court confirmed in Cowan v Cowan that to sustain a caveat, whether under s 142 or s 143 of the Land Transfer Act, a caveator must show that there is a reasonably arguable case for the claimed interest.1
[15] The legal principles relating to sustaining a caveat were summarised by the Court of Appeal in Green & McCahill Holdings Ltd v Ara Weiti Development Ltd:2
[80]The core principles covering applications to sustain caveats under s 143 of the LTA are those set out in this Court’s decision in Philpott v Noble Investments Ltd (drawing in turn on our earlier decision in Sims v Lowe): 3
(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 applicants put forward a reasonably arguable case to support the interest they claim;
(c)The summary procedures involved in applications of this nature are not suited to the determination of disputed questions of fact. An order for the removal of a caveat will only be made if it is patently clear that the caveat cannot be maintained — either because there is no valid ground for lodging it in the first place, or because such a ground no longer exists; and
(d)Where an applicant has discharged the burden upon it, the Court retains discretion to remove the caveat which it exercises on a cautious basis. Before it does so the Court must be satisfied that the caveator’s legitimate interest would not be prejudiced by removal.
…
[83] Although summary process does not permit close engagement with contested facts, the court must still assess the arguability of the asserted case of a proprietary right realistically and interrogate the
1 Cowan v Cowan [2022] NZSC 43 at [22].
2 Green & McCahill Holdings Ltd v Ara Weiti Development Ltd [2022] NZCA 218, (2022) 23 NZCPR.
3 Philpott v Noble Investments Ltd [2015] NZCA 342 at [26]; and Sims v Lowe [1988] 1 NZLR 656 (CA) at 659–660. Philpott was referred to with approval by the Supreme Court in Melco Property Holdings (NZ) 2012 Ltd v Hall [2022] NZSC 60, [2022] 1 NZLR 59 at [56].
documentary record. As the Privy Council said in Eng Mee Yong v Letchumanan, a court is not required:4
… to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement in an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be.
Does Mr Young have a reasonably arguable caveatable interest in the land?
[16] As set out above, the purported power of attorney entered into was for the “China & NZ/AUS Law Office” to appoint a New Zealand lawyer to handle the sale and transfer of Mr Wu’s properties; and for the proceeds after repayment of the mortgage and legal fees to be deposited into the designated account of the “China & NZ/AUS Law Office”.
[17] In his submissions filed in response, Mr Young seeks to rely on estoppel, submitting that “Wu promised me in writing to engage a lawyer to sell the two properties on 21/5/24. Under the doctrine of estoppel, I have a caveatable interest.” The difficulty with this submission is that Mr Young relies on the 21 May agreement as evidencing the promise but the agreement (even if valid) is not with Mr Young – it is with the “China & NZ/AUS Law Office”.
[18] In Mr Young’s affidavit he deposes that the “China & NZ/AUS Law Office” is in fact him saying:5
8. Who is CHINA in the Full Power Authority to act (Exhibit A) dated 21/5/24? As shown in the wechat message on 24/5/24, Wu asked: Lawyer Shen, when will you go back to Auckland? Or when will your colleague in Auckland start the work? My family are ready to come back to China. Can we return the rented property in Auckland? Mr Shen replied: I have started cooperation with him (ie Dr Young). Monday morning we will start our 2nd discussion. Apparently though Wu and I did not see each other face to face, but we know each other through Mr Shen who forwarded Wu’s documents to me. Apparently, CHINA in the document meant me who is not fictious (sic). I tried to contact Wu by wechat, but could not go through.
(Italics in original)
4 Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341.
5 I note that Mr Wu disputes the accuracy of Mr Young’s translation of the WeChat messages.
[19] In his memorandum dated 2 December 2024, after setting out a translation of the 21 May agreement, Mr Young explains further:
I am the person who will receive the balance of the proceeds after deducting ANZ loan and lawyers’ fee. Under s138 of LTA 2017, I may lodge caveat with interest in land.
[20] No affidavit has been filed by Mr Shen. In submissions filed for the hearing, Mr Young says that he has asked Mr Shen to urgently email his affidavit to the Court. He continues that Mr Shen rang him and said “he is suffering a minor stroke and may lose the ability to talk in the future” before recounting what Mr Shen apparently told him in relation to the Customs issue.
[21] For Mr Young to have a caveatable interest, he must have a personal interest in the land. Considering both the affidavits and memoranda filed,6 there is no evidence of a promise to Mr Young personally. So even if the agreement was sufficient evidence of a promise that had not subsequently been terminated, Mr Young’s opposition fails at the first hurdle because it is not arguable that it was a promise to him.
[22] Furthermore, even if Mr Young could establish that he arguably had a right to the proceeds of sale, this would not provide Mr Young with a caveatable interest in land. In Castle Hill Run Ltd v NZI Finance Ltd, the Court of Appeal considered an agreement including a term “to pay the balance to the Vendor”.7 The Court held that such an agreement in respect of the proceeds of sale did not indicate any intention to create or impose a trust in respect of the land and that it was common ground that an agreement in respect of the surplus proceeds of sale would not create any interest in land.8
[23] At the hearing, Mr Young submitted that Mr Wu knew that “China & NZ/AUS Law Office” was a reference to him and that Mr Wu had signed other authorities to act where Mr Young had filled in his own personal name. Those other authorities do not
6 As Mr Young is acting for himself and appears to intend some of the statements made in the memoranda to be treated as evidence.
7 Castle Hill Run Ltd v NZI Finance Ltd [1985] 2 NZLR 104 (CA) at 107.
8 At 108–109.
assist Mr Young as he relies on the 21 May agreement for his caveatable interest and that agreement does not refer to him.
[24] Furthermore, Mr Wu’s evidence and the evidence of his wife, Ms Su, is that they had no dealings with Mr Young prior to correspondence about the removal of the caveats. This is not contradicted by the contemporaneous documents annexed to their affidavits or those annexed to Mr Young’s affidavit. Nor does Mr Young in his evidence say that he had any direct contact with Mr Wu.
[25] In addition, there is clear evidence annexed to the affidavits filed on behalf of Mr Wu recording that any agreement between the parties was terminated at the latest by 19 July 2024. This predates the lodging of the caveat which occurred on 30 August 2024.
[26] There are a number of other communications through WeChat annexed to the affidavits confirming termination of the agreement. All of the communications are between Mr Shen and Mr Wu — not Mr Young. Mr Shen does refer to a colleague, but never by name.
[27] For completeness I note that the entity “China & NZ/AUS Law Office” does not appear to be exist, with searches undertaken by Mr Wu and his wife revealing no such law firm or company in New Zealand. Ms Su attaches correspondence to her supplementary affidavit showing that Mr Young refers to this entity by various names in his correspondence, including in his sign off. Mr Young does not directly dispute this, instead saying that it is his trading name.
[28] I have no hesitation in finding that the caveat ought to lapse as there is no reasonably arguable basis for Mr Young personally having a caveatable interest in the properties.
Should compensation be ordered for lodging the caveat without reasonable cause?
[29]Section 148 of the LTA provides:
148 Compensation for lodging of improper caveat against dealings
(1)A person, including the agent of a person, who lodges a caveat against dealings without reasonable cause is liable to pay compensation to a person who suffers loss or damage as a result.
(2)A claim for compensation must be heard and determined by the court.
…
[30] In Green & McCahill Holdings Ltd v Ara Weiti Development Ltd, the Court of Appeal held that s 148 requires the applicant to prove a lack of honest belief, based on reasonable grounds, in a proprietary right.9 The first part of this test has been held to be subjective, but the second part, reasonable grounds, is objective.10
[31] In Hinde McMorland and Sim, the authors record that the qualification that any honest belief is based on reasonable grounds, refers to the possibility of the caveator having lodged the caveat with an ulterior motive.11
[32] Considering the circumstances leading up to the lodging of the caveat in this case, after Mr Wu sent his WeChat message on 19 July 2024 confirming termination of the agreement, Mr Shen replied saying the initial payment had long been exceeded and that “our estimates put it at a minimum of 100 hours”. Mr Shen then continued:
Your agency agreement is legally binding. If you choose to cancel it voluntarily, a compensation of NZ$ 100,000 would be reasonable. However, since you now claim the agreement no longer exists, the matter will have to be resolved in court, which is beyond my control.
For any further cooperation, a payment of NZ$ 30,000 is required before discussions can continue. Without this, the foundation of trust no longer exists.
[33] Mr Shen sent further messages that same day saying if payment is not made now (without referring to a payment amount) it was likely that a request would be made to enforce the original agreement.
9 Green & McCahill Holdings Ltd v Ara Weiti Development Ltd, above n 2, at [85].
10 DW McMorland and others Hinde McMorland and Sim Land Law in New Zealand (online ed, Lexis Nexis) at [10.022], n 2 citing “Excell v Bolton (1993) ANZ ConvR 29 at 30-31 (SC of WA) per Murray J, approved in Bolton v Excell (1993) ANZ ConvR 563 at 564 (FC of WA) per Owen J (with whom lpp J agreed).”
11 Hinde McMorland and Sim Land Law in New Zealand, above n 10, at [10.022(c)].
[34]On 8 August 2024 Mr Wu then sent a WeChat message saying:
…please refrain from taking any further action. If customs reaches out to you again, clearly inform them that you are no longer my appointed lawyer and have no authority to act on my behalf. Thank you!
[35]The response to that message by Mr Shen on 8 August 2024 was:
Even if you say that, other colleagues may push to settle the accounts. I believe it’s better to wait until the final outcome is determined.
[36] After a further message from Mr Shen, Mr Wu responded still on 8 August 2024:
I no longer require any action from you. If your colleagues wish to settle the so-called accounts, they must provide evidence and pursue it through any appropriate means that they see fit. Let me be clear: until we reach a new agreement, you are not to be involved in this matter in any way.
[37] There are no documents in evidence showing that either Mr Shen or Mr Young provided the evidence requested. The caveat was then lodged by Mr Young on 30 August 2024.
[38] I record for completeness that if there was any amount owing in respect of the earlier work, then absent a valid agreement otherwise, the parties who completed that work may be an unsecured creditor but would then only have personal rights against Mr Wu as a debtor. There would be no right as a debtor in those circumstances to lodge a caveat against Mr Wu’s land.
[39] An unusual feature of this case is that the caveat lodged by Mr Young records the address for service of the caveator as the address of the registered owner, Mr Wu, whereas the address for service of the registered owner is recorded as Mr Young’s address. As a result, the notice sent by Land Information New Zealand (LINZ) to inform the registered owner of the lodging of the caveat would have been sent to Mr Young’s address rather than Mr Wu’s address. I am unable to conclude in the context of this caveat hearing whether Mr Young did this by mistake, so I do not take this into consideration in determining whether compensation ought to be ordered but it assists in explaining the delay in applying to remove the caveat.
[40] When asked at the hearing for his response to Mr Wu’s application for compensation pursuant to s 148, Mr Young referred to what he called the “smuggling issue” with Customs and submitted that it would be a miscarriage of justice for him to be required to pay compensation in the circumstances.
[41] As Mr Young appeared to accept earlier in the caveat hearing, any issue in respect of Mr Wu’s dealings with Customs is not relevant to this caveat application. Individuals are not able to lodge caveats to somehow protect Customs.
[42] Mr Young attempted to argue that the termination by Mr Wu had been in respect of other authorities to act but that the 21 May power of attorney in issue could not be withdrawn without his permission due to doctrines of estoppel and Mr Young having an option to purchase.
[43] As discussed above, Mr Young cannot rely on the doctrine of estoppel as there was no promise made to him personally and the agreement entered into, even if valid, does not amount to an option to purchase. Furthermore, there can be no question that the correspondence terminating the arrangements includes the 21 May agreement in issue as it clearly related to any work being done in respect of the Customs issue and that is the arrangement that Mr Wu terminated. Mr Young describes the agreement in his 2 December 2024 memorandum as “Exhibit A is Authority to act (to solve smuggling issue)” so he cannot then say it does not relate to the Customs issue.
[44] Whether Mr Young had an honest belief on reasonable grounds that he had a caveatable interest is measured at the time the caveat is lodged. However the steps taken by Mr Young after he had lodged the caveat and leading up to the filing of the application to remove, support a finding that he did not have an honest belief on reasonable grounds at the time he lodged the caveat.
[45] In her supplementary affidavit, Ms Su attaches correspondence from Mr Young to the solicitors acting for Mr Wu recording that Mr Young was happy to withdraw the caveats if Mr Wu complies with the agreement reached in May 2024, that under that agreement he had engaged a lawyer, Andrew Hou, to transfer the properties in
December 2024 and that Mr Hou would send the “residuals” to Mr Young’s account. Furthermore, Mr Young records that:
It seems that Mr Wu has informed the agent Sally Wong of his approval. Thus, could Sally urgently email the agreements to Mr Hou? After both Mr Hou and Zhou undertake the residual will be sent to the abovesaid account, I will urgently go to LINZ in Hamilton to withdraw the caveats manually. Please be aware that I am leaving N.Z. next Monday and will be back after Christmas. Thus you two lawyers must undertake to transfer the left-over to me urgently. I wish to protest that Mr Zhou should not receive the deposit of $300,000.
[46] Mr Wu denies that he informed the agent of his approval. Significantly, however, the lawyer who Mr Young said he had engaged, Mr Hou, also denied any involvement. The morning after Mr Young’s email was copied to the lawyer, Mr Hou sent an email to Mr Young, copied to the solicitors for Mr Wu, recording:
Mr Paul Young,
We contacted Mr. Shuang Wu in China through the WeChat connection you provided yesterday. Mr. Wu completely denied your claim and stated that you have no authority to act on his behalf. Neither James Donovan Solicitors nor I are personally involved in this matter.
We request that you stop using our names in any communication regarding this issue.
[47] Mr Young’s evidence and submissions have a number of other inconsistencies. In his 2 December 2024 memorandum, Mr Young says “I never describe myself to be a law firm”. This follows his translation several paragraphs earlier of the entity referred to in the 21 May agreement as the “China & NZ/AUS Law Office”. In my view there is no real difference between a “law office” and a “law firm” and so this evidence appears inconsistent with Mr Young’s earlier evidence that the “China & NZ/AUS Law Office” is actually him and that Mr Wu understood that.
[48] Although legally trained, Mr Young was suspended from practicing law in New Zealand by the Lawyers and Conveyancers Disciplinary Tribunal in September 2020 for 30 months. The suspension has now lifted but Mr Young does not currently have a practising certificate.
[49] In Ms Su’s supplementary affidavit, she annexes a copy of the LawPoints Newsletter, dated 28 November 2024, that records that Mr Young has recently been charged for providing legal services without a practicing certificate.
[50] In his affidavit in response, Mr Young records that this has resulted from a beneficiary under a will complaining after Mr Young introduced himself as “an enrolled lawyer of the High Court”. Mr Young says that the beneficiary “truncated the wording before ‘lawyer of High Court’ and complained to NZLS that I committed offence for using the word of ‘lawyer’”. In any event, Mr Young’s legal training is relevant when considering the application of s 148.
[51] Where a lawyer lodges a caveat for a client without an honest belief on reasonable grounds then the Court has held that a compensation order may be made against the lawyer under s 148. The standards applying in those circumstances are to judge the matter by the standards of a reasonable conveyancing solicitor.12 Counsel submits that these standards ought to apply here because Mr Young is a trained lawyer. I accept that the fact that he is legally trained is relevant to whether Mr Young had an honest belief on reasonable grounds. However I consider that even if the matter is judged on the basis of a normal person with some background legal knowledge Mr Wu can still establish that Mr Young did not have an honest belief on reasonable grounds of a proprietary interest in the Property.
[52] Following the hearing, Mr Young has sent several emails to the Registry submitting that he was justified in lodging the caveat because he has received new evidence of wrongdoing by Mr Wu in relation to the Customs issue. Mr Young says in one of the emails “Even if I do not have [a caveatable interest], for the public interest, the caveats of two properties should sustain until the Customs service finished the investigation.”
[53] As discussed in the hearing and above, a caveat in Mr Young’s name does not protect Customs or the public and there is clearly no right to lodge a caveat for such a purpose.
12 Gordon v Treadwell Stacey Smith [1996] 3 NZLR 281 at 289.
[54] For the above reasons, I consider that Mr Wu has established that Mr Young did not have an honest belief on reasonable grounds that he personally had a proprietary right in the property pursuant to the 21 May 2024 agreement when he lodged the caveat on 30 August 2024. I therefore award compensation under s 148 of the LTA.
Measure of compensation
[55]Mr Wu seeks compensation for:
(a)expenses including:
(i)airfares in the sum of RMB 700 (equivalent to NZD 163.38) for the airfare for Mr Wu to travel to Beijing to have his affidavit sworn at the New Zealand Embassy as required;
(ii)Ms Su’s airfare to fly to New Zealand to complete her affidavit;
(b)legal fees incurred on a solicitor-client basis for all matters relating to the caveat and this application to remove it, including preliminary advice; and
(c)disbursements including title search costs, process server costs and filing fees.
[56] In addition, Mr Wu seeks any losses suffered if the caveat is not removed by the revised settlement date of 12 December 2024 to enable settlement of the sale and purchase agreements.
[57] I am issuing this decision in advance of that date and so those further losses are unlikely to be incurred.
[58] As the application was heard urgently, counsel for Mr Wu asked if a direction could be made for a memorandum to be filed setting out the losses for which compensation is sought for determination on the papers. I make this direction below
as I consider it is appropriate. I allow Mr Young to file a memorandum in response to the losses claimed before determination of the quantum.
Result
[59] I grant Mr Wu’s application to remove the caveat against dealings lodged by Mr Young on 30 August 2024 under instrument no 13098361.1 against the property described as:
(a)Flat 1 Deposited Plan 168234 and Carport 1 Deposited Plan 168234 and a half share in Lot 29 Deposited Plan 39509, commonly known as 1/11 Church Road, Mangere Bridge, Auckland (Record of Title Identifier NA102B/553, North Auckland); and
(b)Flat 2 Deposited Plan 168234 and a half share in Lot 29 Deposited Plan 39509, commonly known as 2/11 Church Road, Mangere Bridge, Auckland (Record of Title Identifier NA102B/554, North Auckland).
[60] I grant Mr Wu’s application for compensation pursuant to s 148 of the Land Transfer Act 2017 for losses arising from the lodging of the caveat and direct:
(a)Mr Wu is to file a memorandum by 24 January 2025 setting out the losses claimed by way of compensation, attaching relevant invoices;
(b)Mr Young is to file and serve any memorandum addressing why any of these losses are not to be ordered by 7 February 2025; and
(c)the quantum for compensation under s 148 will then be determined on the papers.
Associate Judge Sussock
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