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Xie v 126 Waimumu Ltd

Xie v 126 Waimumu Ltd

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-449

[2020] NZHC 1109

UNDER the Land Transfer Act 2017, Section 143

IN THE MATTER OF

an application that a caveat 11675350.1 do not lapse

BETWEEN

CHUNHONG XIE

Applicant

AND

126 WAIMUMU LIMITED

Respondent

Hearing: 25 May 2020

Appearances:

J Moss for the Applicant

T J Herbert for the Respondent

Judgment:

25 May 2020

ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL

Solicitors:
Righteous Law (Jared R Moss), Greenlane, Auckland, for the Applicant Forest Harrison Lawyers (Joy Luo), Auckland, for the Respondent Copy for:
T J Herbert, Auckland, for the Respondent

XIE v 126 WAIMUMU LIMITED [2020] NZHC 1109 [25 May 2020]

[1] Chunhong Xie, a businesswoman, applies under s 143 of the Land Transfer Act 2017 for an order that caveat 11675350.1 registered against the title to the land at 126 Waimumu Road, Massey, Auckland, not lapse. The respondent, 126 Waimumu Ltd, is the registered proprietor. The caveat says:

The caveator claims an estate or interest in the land herein by virtue of a beneficial interest as a beneficiary under an implied trust, whereby the registered proprietor has agreed to, in exchange of (sic) investments by the caveator in the registered proprietor, develop the land herein for the mutual benefit of the registered proprietor and the caveator and as a fiduciary of the caveator.

The basis for her claim is that she contributed funds towards the purchase of the property at 126 Waimumu Road and made later payments. The payments were not a loan but a capital contribution in that she was to have a property interest in return for her investment.

[2] In opposition, 126 Waimumu Ltd accepts that she did contribute funds to buy the property, but it denies that she was to have a direct interest in the land itself. It says that her interest was a shareholding in the company, 126 Waimumu Ltd. While an interest in land may be protected by a caveat, a shareholding in a company which owns land does not give a caveator an interest in the land itself. Amongst the authorities it relies on are Ten Pin Properties Ltd v Bowlarama (New Zealand) Ltd1 and Mahon v The Station at Waitiri Ltd.2

[3] This is another case in which one person has provided funds to another to invest in property where clear arrangements have not been recorded in writing as to the basis on which the investment was made. The evidence suggests that the parties may not have clearly turned their minds as to the nature of the claimant. Instead, the job of the court is to look at the arrangements and characterise the legal effect of what the parties did.

1 Ten Pin Properties Ltd v Bowlarama (New Zealand) Ltd HC Christchurch, M655/89, 18 December 1989.
2 Mahon v The Station at Waitiri Ltd [2017] NZCA 387, (2017) 18 NZCPR 760.

General principles on caveat applications

[4]…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] NZHC 1109
Decision Date: 25 May 2020

CaseChat Overview and Summary

Chunhong Xie, the applicant, filed an application under s 143 of the Land Transfer Act 2017 to prevent the lapse of a caveat she had lodged against a property at 126 Waimumu Road, Massey, Auckland. The registered proprietor, 126 Waimumu Ltd, the respondent, opposed the application. The crux of the dispute is whether Ms Xie has a caveatable interest in the land. The central legal issues were whether Ms Xie had made a capital contribution to the purchase of the property, and if so, whether this contribution was for an equity interest in the land or in shares in the company owning the land. The court had to determine if Ms Xie's interest was clearly arguable and sufficient to warrant the continuation of the caveat.

The court found that Ms Xie did contribute funds towards the purchase of the property and subsequent payments were consistent with an equity interest rather than a loan. The court was cautious in its approach, recognising the informality of the arrangements and the lack of detailed documentation. The court held that it was arguable that Ms Xie had an interest in the property itself, rather than merely an interest in the company owning the land. The court ordered that the caveat be sustained on the condition that Ms Xie commence proceedings to determine her interest in the property by 22 June 2020 and that she consent to reasonable third-party transactions with the property, including sales and refinancing, with her interest in the proceeds protected.

Ms Xie was granted costs of the application.

Orders