Xiangtan County Xintian Micro Mortgage Company Limited v Narea Investments Limited

[2021] NZHC 1970

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-256

[2021] NZHC 1970

IN THE MATTER

of an application to sustain Caveat No. 11891412.1

BETWEEN

XIANGTAN COUNTY XINTIAN MICRO MORTGAGE COMPANY LIMITED

Applicant

AND

NAREA INVESTMENTS LIMITED

Respondent

CIV-2021-404-254

BETWEEN

XIANGTAN COUNTY XINTIAN MICRO MORTGAGE COMPANY LIMITED
Applicant

AND

VATAR INVESTMENTS LIMITED

Respondent

Hearing:

28 May 2021

Appearances:

A Yang for the Applicant

H McDermott for the Respondents

Judgment:

30 July 2021

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 30 July 2021 at 4.30pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

JC Legal, Auckland

Righteous Law, Auckland

XIANGTAN COUNTY XINTIAN MICRO MORTGAGE COMPANY LIMITED v NAREA INVESTMENTS LIMITED [2021] NZHC 1970 [30 July 2021]

Introduction

[1]    The applicant, Xiangtan County Xintian Micro Mortgage Co Ltd, has filed two separate applications that caveats lodged over properties owned by Narea Investments Ltd and Vatar Investments Ltd not lapse.

[2]    The matters pleaded were relatively difficult to follow but the caveats are said to be based on interests in the properties arising under a loan agreement allegedly between the applicant (the lender in the loan agreement has a different name) and Mr Wenbing Tang. The loan agreement was entered into in 2016 and relates to approximately $7.5 million that had previously been advanced. Under the loan agreement Mr Tang agreed to arrange for “BCH Limited” to provide certain properties as security.

[3]    The amounts owing under the loan agreement were due to be repaid in December 2017, but the applicant submits that they were not and so proceedings were brought in China to recover the amounts owed. The Chinese court found that amounts were owing by Mr Tang and his former wife and ordered them to be paid. There was no evidence, however, that these were the same amounts referred to in the loan agreement, or that the amounts ordered by the Chinese court remained unpaid.

[4]The applicant then says that:

(a)the amounts loaned to Mr Tang have been used to fund the purchase of properties by BCH Investments;

(b)that the properties over which the caveats have been lodged have been transferred from BCH Investments to the respondents for no payment; and

(c)it must be implied that they are being held on a bare trust for BCH Investments.

[5]    Any caveatable interest that the applicant has in the properties now owned by Vatar and Narea appears to rely therefore on the applicant having had a caveatable interest in the properties when they were owned by BCH Investments.

[6]    When the properties were in BCH Investment’s name, a company associated with the applicant, Hunan Hengyu Investment Guarantee Corp Ltd (“Hunan”), registered caveats against them which this court has already lapsed.1

[7]    Counsel for the applicant submits that the caveats lodged then were based on the failure to repay money from another development and that this time, by contrast, the interests are based on the loan agreement entered in 2016. It is not quite as simple as that, however, because counsel for the applicant also submitted that the loan agreement in 2016 is in respect of moneys loaned earlier which may then relate to the earlier failure to repay.

[8]    The respondents in each proceeding, Narea and Vatar, have filed strike out applications together with notices of opposition. Counsel for the respondents, Ms McDermott, confirmed at the hearing that the respondents still wished to proceed with the strike out applications despite the substantive applications to sustain the caveats being heard at the same time. To avoid confusion, I refer to Xiangtan County Xintian Micro Mortgage Co Ltd as the applicant throughout this judgment and Vatar and Narea as the respondents, even though for the purposes of the strike out application their roles are reversed.

Issues

[9]The issues are:

(a)Should the applications to sustain the caveats be struck out?

1       Hunan Hengyu Investment Guarantee Corp Ltd v BCH Investments Ltd [2020] NZHC 650.

(b)If not, has the applicant established that it has a reasonable arguable case for sustaining its caveats?

Judgment in two proceedings

[10]   I record at the outset that this judgment determines the applications that caveats not lapse in two separate proceedings: in respect of the caveat lodged over four properties owned by Vatar Investments Ltd (“Vatar”), CIV 2021-404-254; and the caveat lodged over four properties owned by Narea Investments Ltd (“Narea”), CIV 2021-404-256.

[11]   Although separate documents were filed in each proceeding, they are largely mirror images of each other, with only the details such as the caveat numbers and descriptions of the properties owned by each respondent being distinct.

[12]   The applications are able to be considered together in one judgment as the details relevant to whether the applications ought to be struck out, or the caveats to lapse or not, are the same.

Background

[13]   On 27 August 2020 Vatar and Narea each purchased four properties from BCH Investments. The properties purchased by Vatar were:

(a)13 Silver Moon Road, Albany Heights;

(b)15 Silver Moon Road, Albany Heights;

(c)2 Waka Street, Albany Heights; and

(d)24 Waihou Crescent, Albany Heights.

[14]The properties purchased by Narea were:

(a)4 Waka Street, Albany Heights;

(b)6 Waka Street, Albany Heights;

(c)6 Aoraki Crescent, Albany Heights; and

(d)8 Aoraki Crescent, Albany Heights.

[15]   No deposit was paid and settlement proceeded shortly after the sale and purchase agreement was entered into with the transfers to Vatar and Narea registered on 7 September 2020 together with mortgages to Onelend Trustee Ltd.

[16]   Caveats were registered on the properties in favour of Xiangtan County Xintian Micro Mortgage Co Ltd (“Xiangtan”) on 13 October 2020.

[17]   The description of the nature of the estate or interest given on the Caveat by Xiangtan was a “beneficial interest (as funder) pursuant to a constructive trust of which the registered owner as trustee” (sic).

[18]   Applications to lapse the caveats were made by Vatar and Narea on 29 January 2021.

[19]   On 16 February 2021 applications that the caveats not lapse were filed by Mr Liyen Yin on behalf of Xiangtan. As set out in Gault J’s Minute dated 23 February 2021, a company can only present a case in court through a legal representative except with leave. The matter was therefore adjourned to allow Xiangtan to obtain legal representation.

[20]   Notices of opposition together with applications to strike out were filed on behalf of Vatar and Narea on 19 March 2021, before amended applications were filed by a legal representative for the applicant.

[21]   Finally, on 1 April 2021, amended applications that the caveats not lapse were filed by Ms Yang of JC Legal, still relying incorrectly on s 145 rather than s 143 of the Land Transfer Act 2017.

[22]   The amended application pleaded that Mr Tang, Xianhua Huang (Mr Tang’s former wife) and/or BCH had failed to repay the loan in 2017 and failed to register securities as promised in the loan agreement. The application then pleaded that following the order made by this Court for BCH to divest its entire interest in the

properties at 79-95 Gills Road, Albany,2 BCH transferred the properties to the respondents for no payment and that it must therefore be implied that the respondents are holding them on a bare trust for BCH. No affidavits in support were filed. Furthermore, the amended applications no longer relied on affidavits filed in other proceedings, as the original applications had, although without seeking leave.3

[23]   Updating affidavits by Ms Li were filed on behalf of Vatar and Narea on 20 April 2021 responding to the amended applications and denying that the properties were being held on a bare trust.

[24]   The first affidavits in support of Xiangtan’s applications that the caveats not lapse were finally filed on 5 May 2021, annexing copies of the loan agreement and the Chinese judgment relied on and continuing to assert that a bare trust must be implied, without responding to the evidence of Ms Li filed for Vatar and Narea.

Should the applications to sustain the caveats be struck out?

Legal principles applying to strike out

[25]   Under r 15.1 of the High Court Rules 2016, the Court may strike out all or part of the pleading if it:

(a)discloses no reasonably arguable cause of action, defence or case appropriate to the nature of the pleadings; or

(b)is likely to cause prejudice or delay; or

(c)is frivolous or vexatious; or

(d)is otherwise an abuse of process of the Court.

[26]   The definition of “pleading” in r 1.3 includes statements of claim, defence, reply and counterclaim but does not refer to originating applications.4 However, it has been held that the definition is inclusive and that originating applications should also

2      The Chief Executive of Land Information New Zealand v BCH Investments Ltd [2019] NZHC 1630 (noting the judgment records its date as 12 July 2018 in error).

3      There is a question whether the amended application should be treated as a new application, but I do not need to resolve that for the purposes of this decision.

4      High Court Rules 2006, r 1.3.

come  within  the term pleading.5     Rule 15.1 can therefore be relied on in caveat proceedings.

[27]   The principles governing strike out applications are well settled and are as follows:6

(a)the facts pleaded in the statement of claim are assumed to be true, but this does not extend to pleaded allegations which are entirely speculative and without foundation;

(b)the causes of action must be so clearly untenable that they cannot possibly succeed;

(c)the jurisdiction is to be exercised sparingly and only in clear cases;

(d)the jurisdiction is not excluded by difficult questions of law requiring extensive argument; and

(e)the court should be particularly slow to strike out a claim in any developing area of the law.

[28]   If the pleadings do not disclose a reasonably arguable cause of action but could be amended so that they do, the application will not be struck out.7

[29]In relation to evidence on strike out applications, the Court of Appeal in

Attorney-General v McVeagh held that:8

The Court is entitled to receive affidavit evidence on a striking-out application, and will do so in a proper case. It will not attempt to resolve genuinely disputed issues of fact and therefore will generally limit evidence to that which is undisputed. Normally it will not consider evidence inconsistent with the pleading, for a striking-out application is dealt with on the footing that the pleaded facts can be proved. But there may be a case where

5      Group Rentals NZ Ltd v Pramb Wong Enterprises Ltd [1995] 1 NZLR 763, (1994) 8 PRNZ 113 as referred to recently by the Court of Appeal in 100 Investments Ltd v PVG Securities Trustees Ltd [2020] NZCA 458 at [17].

6      Attorney-General v Prince and Gardner [1998] 1 NZLR 262 at 267; endorsed by the Supreme Court in Couch v Attorney-General [2008] NZSC 45 at [33].

7      Marshall Futures Ltd v Marshall [1992] 1 NZLR 316.

8      Attorney-General v McVeagh [1995] 1 NZLR 558 (CA) at 566.

an essential factual allegation is so demonstrably contrary to indisputable fact that the matter ought not to be allowed to proceed further.

(citations omitted)

Grounds for strike out

[30]The grounds on which the strike out applications are brought are that:

(a)the pleadings do not disclose a caveatable interest in the properties;

(b)the applicant is closely connected to Hunan Hengyu Investment Guarantee Corp Ltd and the Court has already determined that Hunan does not have a caveatable interest in properties owned by BCH Ltd;9

(c)there is no debt owing between the parties; and

(d)the proceedings are vexatious.

Do the pleadings disclose a caveatable interest?

[31]   The amended application pleads that the applicants’ caveatable interests arise from a loan agreement entered into in 2016, with the application pleading in the first paragraph:

In 2017 a dispute arose between the Applicant and Applicant’s debtor, Wenbing Tang flowing from a commercial loan agreement (attached and marked “A”). In this loan agreement, the debtor, together with his ex-wife, Xianhua Huang who was 100% shareholder and sole-director of BCH Investments Limited (“BCH”), provided properties at 79-95 Gills Road, Albany, Auckland as securities for the loan.

[32]   The amended application then goes on to plead that “Wenbing Tang, Xianhua Huang and/or BCH had failed to repay the loan in 2017 and failed to register securities as promised and noted in the loan agreement.”

[33]   As well as being attached to the amended application, a copy of the loan agreement is annexed to the affidavit of Ms Xirong Zhou filed in support of the amended application.

9      Hunan Hengyu Investment Guarantee Corp Ltd v BCH Investments Ltd, above n 1.

[34]   The loan agreement is only two pages long with three operative clauses. The agreement is between China Hunan Province Xiangtan County Xintian Micro Mortgage Ltd as lender and Mr Wenbing Tang as the borrower. The lender does not, therefore, have the same name as the applicant in these proceedings.

[35]   The loan agreement records in cl 1 that the lender has advanced “around RMB$38,000,000,000.00” with the actual amount to be certified by both parties’ accountants. In cl 2 Mr Tang agrees to repay the loan sum no later than 31 December 2017. In the final clause, cl 3, the agreement provides:

The Borrower will arrange for BCH Limited to provide the following properties situated at 79-95 Gills Road Albany Auckland as collateral securities to the Loan Sum.

[36]   The loan agreement then has a table listing the relevant properties, described as lots 15, 16, 21, 22 and 23 at 79-95 Gills Road.

[37]The entity referred to as BCH Ltd is not a party to the loan agreement.

[38]   From the wording of cl 3 quoted above, the loan agreement clearly does not provide that BCH agrees to provide the properties as security for the loan, as is pleaded. The loan agreement only states that Mr Tang will arrange for BCH to do so. Nor is there any pleading alleging that BCH Ltd or BCH Investments entered into a separate agreement to provide security. The only basis for the applicant’s pleading that BCH failed to register securities as promised is the loan agreement itself.

[39]   Mr Tang was not a director of BCH in 2016 and nor is there an allegation (and nor could there be on the face of the loan agreement) that he was acting as an agent of BCH in signing the agreement.

[40]   Nor does any caveatable interest arise from the loan to Mr Tang itself. Money advanced by way of a loan normally becomes the property of the borrower except where the loan is advanced for a specific purpose, in which case fiduciary obligations may arise on the part of the borrower which courts of equity will enforce.10

10     Li v 110 Formosa (NZ) Ltd [2020] NZCA 492 at [110] referring to Twinsectra Ltd v Yardley [2002] UKHL 12, [2002] 2 AC 164 at [68].

[41]   There is no allegation that the loan was advanced for a specific purpose here and the loan agreement does not record any such limits.

[42]   As the pleading that BCH failed “to provide security as promised and noted in the loan agreement” is clearly contrary to the terms of the loan agreement itself, it is therefore struck out.

[43]   I have not relied solely on the pleadings in reaching the view above, as is usual in strike out applications. Where the pleading relies on a document, the authenticity of which is not disputed, and that pleading clearly cannot stand in the face of that document, then there is still a proper basis for strike out, as held in Attorney-General v McVeagh referred to above.11

[44]   If the pleading that BCH agreed to provide security is struck out as being contrary to the loan agreement on which it relies, there is no longer any basis for claiming a caveatable interest. The whole of the application can therefore be struck out on this basis alone.

[45]   For completeness, I record that in addition there are difficulties with the pleading that the properties are held on a bare trust for BCH Investments.

[46]   For the purposes of its allegation that the properties are being held on a bare trust, the applicant alleges that BCH Investments has transferred the properties to the respondents for “no actual payment of purchase price”.

[47]   The basis for the applicant’s allegation that no payment was made for the properties are the settlement statements attached to Ms Li’s affidavits. These say that the sum of $1,025,017.06 for Narea and $1,029,829.35 for Vatar are “Payment by Purchaser which Vendor directed be applied to the full repayment of the loan owed by the Vendor to Onelend Trustee Limited”, with the remainder of the purchase price of

$1,040,000, amounting to $14,982.94 for Narea and $10,170.65 for Vatar, being paid in cash.

11     Attorney-General v McVeagh, above n 8, at 566.

[48]   This means that the bulk of the purchase price is being paid by Vatar and Narea repaying BCH Investments’ loans from Onelend Trustee Ltd. The allegation that “no actual purchase price was paid” is again so demonstrably contrary to the facts that this allegation ought to be struck out as well. The allegation that a bare trust must be implied then becomes mere speculation.

[49]   Finally, there does not appear to be any pleading (or evidence) confirming that the properties over which caveats have been lodged derive from lots 15, 16, 21, 22 and 23 at 79-95 Gills Road, Albany, as is the security referred to in the loan agreement.

[50]   Having found that the applicant’s claim to a caveatable interest is clearly untenable, it is unnecessary to go on to consider the other grounds for strike out. I do so however for completeness.

What is the connection to Hunan’s claim to a caveatable interest?

[51]   The second ground for strike out is that the applicant is closely connected with Hunan and the Court has already determined that Hunan does not have a caveatable interest in the properties owned by BCH Investments Ltd.

[52]   There has been a previous application to sustain a caveat heard in respect of the properties that are the subject of this application.12 The properties at that time were owned by BCH Investments Ltd. The application to sustain was unsuccessful as Associate Judge Andrew considered that there was insufficient evidence to establish the facts relied on and a great deal of uncertainty about necessary aspects of the claim.

[53]    The application in that case was brought by Hunan Hengyu Investments Guarantee Corp Ltd and not the current applicant and, in counsel for the applicant’s submission, does not relate to the loan agreement that is in issue in this proceeding. Hunan instead alleged that it had advanced funds to NZ Rose Garden Development Ltd (“RDL”) for a development near the Westfield Mall in Albany known as the Albany Rose Development. It was originally a joint development between the Zhou (represented  by  Hunan)  and Tang  (represented  by  BCH)  families  until  Mr Zhou

12     Hunan Hengyu Investment Guarantee Corp Ltd v BCH Investments Ltd, above n 1.

withdrew in 2014. When that happened, Hunan submitted that RDL returned the advances made by Hunan to Mr Tang, who was then required to pass them on to Hunan. Hunan alleged that instead of returning the funds as required, Mr Tang instead advanced them to BCH, who then used them to develop the Gills Road properties.

[54]   Associate Judge Andrew held that the evidential basis for Hunan’s claim was tenuous. In his Honour’s view there was a great deal of uncertainty about key aspects of Hunan’s claim, including how much BCH had borrowed for the Gills Road property development, where the funds came from and why the Zhou family is still in dispute with the Tang family over these funds where the evidence (although disputed) suggests that the matter has been settled pursuant to the second settlement agreement.13 Associate Judge Andrew found that it had been established that the funds at issue had been paid by RDL to Mr Tang, but not that the funds were then diverted to BCH.

[55]   As referred to in the introduction, counsel for Xiangtan submitted that the loan agreement in 2016 is in respect of amounts loaned earlier. The loan agreement itself is very short and does not set this out and nor did Ms Zhou in the affidavit filed. If this is the case, however, the amount to which the loan agreement relates may include the money paid by RDL to Mr Tang. I would not strike out the pleading, however, on this basis because this is too uncertain.

Is there a debt owing?

[56]   The third ground for strike out is that there is no debt owing between the applicant and the respondents. There is in fact no pleading that the amount set out in the loan agreement is still outstanding because there is no pleading that the judgment sum ordered by the Chinese court remains unpaid. This is a matter that could be amended if the pleading had not already been struck out on the first ground. It is not a separate basis for strike out.

13 At [25].

Are the proceedings vexatious?

[57]   As discussed above, the applicant says the caveats lodged by Hunan and lapsed by this Court were lodged on a different basis to the caveats against the respondents’ properties. It is difficult to say whether that is the case because the loan agreement apparently relates to earlier amounts loaned to Mr Tang and this may include the amounts in issue in the Hunan proceedings.

[58]   However, there are considerable difficulties with the applications made. Such difficulties include the procedural steps taken, with the initial application filed by Mr Yin on behalf of the applicant, when a company needs to be represented by a lawyer, and with no affidavits in support. Serious issues remained even after lawyers were instructed. It is not clear whether the applicant was aware of these difficulties when the caveats were lodged and so I do not consider that I am able to find that the proceedings are vexatious.

Conclusion on strike out

[59]   There is no question that the application that the caveat not lapse should be struck out. Even if the applicant’s claimed basis for the caveat could be made out, it would not establish a caveatable interest in the properties owned by Vatar and Narea. The loan agreement relied on to show BCH Investments agreed to provide security clearly does not show agreement by BCH Investments or BCH Ltd, if that company even exists, I record that for the purposes of the strike out application I have ignored all issues with parties’ names.).

Has the applicant established that it has an arguable case for sustaining its caveats?

[60]   In case I am wrong in respect of the strike out application, I go on to consider the applications on a substantive basis.

Legal principles for applications to sustain caveats

[61]   The legal principles relating to upholding a caveat are well settled.14 A party seeking to sustain a caveat must demonstrate that it has a reasonably arguable case showing an entitlement to a beneficial interest in the land subject to the caveat. Such proceedings are considered unsuitable for the determination of the rights of the parties. This is particularly so if there are disputed questions of fact. The onus is on the caveator, however, to establish by affidavit and documentary evidence a reasonably arguable basis for the claim. Mere assertion will not be enough.15

[62]   When one considers the above against the test for strike out in r 15.1 of the High Court Rules, there is considerable overlap in respect of r 15.1(a). A pleading may be struck out where the pleading discloses no reasonably arguable cause of action. Similarly, an application that a caveat not lapse will be dismissed if it discloses no reasonably arguable case for the interest claimed.

[63]   Whilst a strike out application is based on the pleadings, in the substantive caveat application the applicant must discharge the onus of establishing a reasonably arguable case, including by providing sufficient evidence in support of its pleading.

If the applications are not struck out, should the caveats be sustained?

[64]   As discussed above in relation to the strike out, the applicant is not able to establish that it has a reasonably arguable case for the caveats to be maintained, as BCH Investments was not a party to the loan agreement relied upon. Nor is there any evidence of a separate agreement between the applicant and BCH Investments to provide security.

[65]   Even if the applicant could establish that the respondents are holding the properties on a bare trust for BCH, there is therefore no basis for sustaining the caveats against Narea and Vatar because Xiangtan, as the caveator, has not established that it has a reasonably arguable case for the interest it is claiming.

14     Bishop Warden Property Holdings Ltd v Autumn Tree Ltd [2018] NZCA 285 at [22]–[25].

15     See for example Virtual Spectator Ltd v Rothlander [2016] NZHC 499 at [9].

[66]   Furthermore, Ms Rongzhen Li, the sole director and shareholder of Vatar and Narea, strongly denies the claim that the properties are being held on a bare trust for BCH Investments.

[67]   Ms Li deposes that the properties purchased by Vatar and Narea were for sale on the open market, attaching copies of photos of billboards advertising the properties; and that both BCH Investments as the vendor and Vatar and Narea as the purchasers were legally represented in the transaction, annexing an invoice issued by the vendors’ solicitor. Both Vatar and Narea took out mortgages with Onelend Trustee Ltd, with a solicitor involved acting for the mortgagee. A copy of the mortgage registration details across the titles purchased is annexed to the affidavit and copies of the titles annexed refer to these mortgages.

[68]   In Ms Li’s affidavit she confirms that Vatar and Narea are not related to BCH and that neither Vatar nor Narea were parties to the loan agreement relied upon; nor have they had any dealings with the applicant; nor do they owe the applicant money.

[69]   The original director and shareholder of Vatar and Narea was Ms Qian Yu Bu, the daughter-in-law (or perhaps daughter) of Mr Tang. Ms Li, however, deposes that Ms Bu was at all times holding the shares in Vatar as a bare trustee for Ms Li and was required to act at Ms Li’s direction in Ms Bu’s role as director. A copy of the bare trust deed between Ms Bu and Ms Li is annexed to Ms Li’s affidavit.

[70]   The applicant’s allegation that the properties are being held on a bare trust relies on “no actual purchase price being paid” and the involvement of Ms Bu as the original director and shareholder of the respondents.

[71]   The settlement statements relied on by the applicant as showing that no actual purchase price was paid do not in fact do so, for the reasons discussed above. Furthermore, Ms Bu’s involvement has been explained by Ms Yi in her affidavit and that evidence has not been disputed.

[72]   Even if the applicant had established that it has a reasonably arguable claim to a caveatable interest in the properties when owned by BCH Investments, I would not have found that the applicant had established that it had a reasonably arguable claim that the properties were held on a bare trust. The applications that the caveats not lapse would still have been dismissed.

[73]   Counsel for the applicant sought to rely on WNY Group Ltd v Crown Range Holdings Ltd16 to submit that an order to remove a caveat can only be made when the Court is completely satisfied that the legitimate interests of the caveator will not be prejudiced. But the paragraph referred to in WNY Group Ltd17 refers to the Court’s discretion to remove a caveat even though the Court has found that the caveator has established that there is an arguable basis for a caveatable interest. In very rare cases the court might still remove a caveat, but only where there is no prejudice to the caveator.18

[74]   In these proceedings the applicant/caveator has not established that it has a reasonably arguable claim to a caveatable interest in the first place. There is therefore no need to consider, as the court did in WNY Group Ltd, whether the caveat should be removed despite a reasonably arguable case being established.

Result

[75]   On the application to strike out, I find in favour of Vatar and Narea and strike out Xiangtan’s applications that the caveats not lapse.

[76]   In case I am wrong in my decision to strike out the applications, I have considered Xiangtan’s applications that the caveats not lapse substantively. I have determined that Xiangtan has not established that it has a reasonably arguable case for an interest in Vatar and Narea’s land sufficient to support the caveats. If Xiangtan’s applications that the caveats not lapse had not already been struck out, the applications would therefore have been dismissed.

16     WNY Group Ltd v Crown Range Holdings Ltd [2020] NZHC 1585.

17 At [54].

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

Costs

[77]   Narea and Vatar are entitled to costs. Counsel for the respondents assert that an uplift of 20 per cent is fair and reasonable in this matter largely because the applicant has, through a related company, already had a caveat lapsed on the same factual basis. As discussed above, the basis for the claim in this case, although misguided, may be different from the basis in Hunan Hengyu Investment Guarantee Corp Ltd v BCH Investments Ltd.19

[78]   In my view, whilst this application was not properly brought, 2B costs would be appropriate given the similar applications brought against Vatar and Narea. The parties are to confer on quantum and try to reach agreement. If agreement cannot be reached, brief memoranda may be filed by the respondents within 15 working days of this judgment and by the applicant within 20 working days. If memoranda are required to be filed, evidence of actual costs is to be provided by the respondents, as actual costs may not exceed scale costs with the mirror proceedings.

Associate Judge Sussock

19     Hunan Hengyu Investment Guarantee Corporation Limited v  BCH  Investments Limited, above n 1.