Yu v Whitford Properties Ltd - [2013] NZHC 3162

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-004464 [2013] NZHC 3162

BETWEEN
WANG PEI YU

Plaintiff

AND

WHITFORD PROPERTIES LIMITED Defendant

Hearing: 28 November 2013

Appearances:

M Lenihan for Plaintiff
TJG Allan and AL Credin for Mr Robert Bruce, Director of the
Defendant (and purporting to represent Defendant)

Judgment:

29 November 2013 at 4pm

INTERLOCUTORY JUDGMENT OF TOOGOOD J [Standing of director/shareholder to represent defendant]

This judgment was delivered by me on 29 November 2013 at 4pm
Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

WANG PEI YU v WHITFORD PROPERTIES LTD [2013] NZHC 3162 [29 November 2013]

[1] This proceeding is an originating application that a caveat over properties owned by the defendant should not lapse. A preliminary issue has arisen over whether a notice of opposition and amended notice of opposition filed ostensibly on behalf of the defendant was properly authorised by the defendant and whether the defendant should be heard in opposition to the application.

Background facts

[2] On 9 December 2012, the plaintiff, who is not a New Zealand resident, lodged Caveat 9238350.1 over properties at 40 Whitford Park Road, Auckland, and
18 Saleyard Road, Whitford, owned by the defendant. The plaintiff seeks to maintain the caveat on the basis that she made voluntary payments totalling
$528,000 to the defendant to enable it to meet mortgage interest payments due under registered mortgages over the land in favour of the ANZ Bank. The plaintiff asserts that she is entitled to an interest in the land by virtue of her being the beneficiary of a resulting trust arising from the making of the voluntary payments.

[3] Following an objection to the caveat, the plaintiff made the application presently before the Court. On 25 October 2013, a notice of opposition was filed by Mr RI Bruce, a 50 percent shareholder in and a director of the defendant, who was purporting to act on behalf of the defendant. An amended notice of opposition in the name of the defendant was filed on 15 November 2013. In an affidavit also filed then, Mr Bruce denies the existence of the resulting trust claimed by the plaintiff. He says that the plaintiff is not entitled to hold any interest in the land until she receives approval from the Overseas Investment Office. He also asserts that the payments the plaintiff made, if proved, were made in fact to an associated company, Whitford Green Limited, pursuant to a joint venture agreement to develop the land. For present purposes, it is unnecessary to inquire further into the nature of the joint venture arrangements.

[4] It is not disputed that the defendant is in financial difficulty and unable to meet its obligations under the borrowing arrangements with the ANZ. An affidavit of Mr MJ Greer, also purportedly filed on behalf of the defendant, indicates the interest of two possible financiers in restructuring the defendant’s borrowing. In

initiating the refinancing discussions referred to by Mr Greer, and in filing the notices of opposition on behalf…

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: [2013] NZHC 3162
Decision Date: 29 November 2013 at 4pm

CaseChat Overview and Summary

This case involved Wang Pei Yu, a non-resident plaintiff, who had lodged a caveat over certain properties owned by Whitford Properties Limited (the defendant). The plaintiff sought to maintain the caveat, claiming an interest in the land due to voluntary payments made to the defendant to cover mortgage interest. The defendant, represented by Robert Bruce, a director and shareholder, opposed the application, asserting that the plaintiff's claim was not valid until approved by the Overseas Investment Office. The case raised a preliminary issue regarding Bruce's authority to represent the defendant in opposition to the application. The Court had to decide whether Bruce's notice of opposition was validly filed on behalf of the defendant and if the defendant should be heard in opposition to the application. The Court found that Bruce did not have the proper authority to represent the defendant, as his co-director, WR Allen, had deposed that Bruce lacked the authority. The Court also determined that there was no provision in the defendant's constitution or applicable law that allowed a sole director to bind the company without a board resolution. Consequently, the Court struck out the notice of opposition and directed Bruce to commence a derivative action under the Companies Act to seek leave to intervene on behalf of the company. The Court made a timetable order by consent, setting deadlines for the derivative action and scheduling the proceedings to be heard together. The interim order preventing the caveat from lapsing remained in force, protecting the plaintiff's interest but highlighting the urgency of resolving the issue to facilitate potential refinancing of the company's debt.

Orders