Zhao v Zheng
[2023] NZHC 983
•28 April 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-463-71
[2023] NZHC 983
UNDER the Land Transfer Act 2017 IN THE MATTER
of an application under s 143 of the Land Transfer Act 2017
BETWEEN
TENG ZHAO
Applicant
AND
JING ZHENG
Respondent
Hearing: 23 February 2023 Appearances:
K Sun for the Applicant D Liu for the Respondent
Judgment:
28 April 2023
JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
This judgment was delivered by me on 28 April 2023 at 4.30pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Capstone Law, Auckland Heritage Law, Auckland
ZHAO v ZHENG [2023] NZHC 983 [28 April 2023]
Introduction
[1] This is an application by Ms Teng Zhao that a caveat she has lodged over a property owned by Mr Jing Zheng not lapse. Ms Zhao and Mr Zheng are parties to an agreement dated 17 January 2018 (Agreement) which states:
I, Jing Zheng, (7 Harrowglen Drive, Auckland) promise to pay Teng Zhao the sum of NZD$200,000 within 5 years time from today’s date.
If payment has failed within this range of time, Jing should sell the property of 198 Taharepa Road, Taupo. Certificate of title as attached.
[2] Ms Zhao lodged the caveat over the property at Taharepa Road, Taupo (Property) on 31 May 2022.
[3] The interest claimed on the caveat is “an equitable mortgage … pursuant to a loan agreement dated 17 January 2018”. The description continues:
Under the Agreement, if the loan is not repaid to the Caveator within 5 years from 17 January 2018, the Registered Owner must sell the property … to repay the loan.
[4] Shortly after the caveat was lodged, Mr Zheng applied for its removal. Mr Zheng says the Agreement is not enforceable as it was signed under duress. In any event, Mr Zheng strongly disputes Ms Zhao’s assertion that the Agreement amounted to an equitable mortgage over the Property.
[5] Counsel for Ms Zhao submits that if the Court does not accept that it is arguable that there is an equitable mortgage, Ms Zhao instead relies on there being an equitable charge over the Property. An issue would then arise as to whether the caveat is defective by describing the interest as an equitable mortgage rather than an equitable charge.
[6] Counsel for Ms Zhao submits that if the Court finds that the caveat is defective, one option would be for the Court to permit a second caveat to be lodged on the basis of the equitable charge.
Issues
[7]The issues are therefore as follows:
(a)Is there an arguable case for an equitable mortgage?
(b)If not, is there an arguable case for an equitable charge?
(c)If so, is the caveat description defective because it refers to an equitable mortgage instead of an equitable charge?
(d)If the caveat is defective, should leave be granted to lodge a second caveat?
(e)If leave is granted for a second caveat, should any conditions be imposed?
Legal principles – application that caveat not lapse
[8] The right to lodge a caveat is provided by s 138 of the Land Transfer Act 2017 (LTA), with the interest claimed required to fall within the interests described in that section. Section 138 provides:
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
(c)is transferring the estate or interest in the land to another person to be held on trust; or
(d)is the registered owner of the estate or interest in the land and—
(i)has an interest that is distinct from that of registered owner; or
(ii)establishes to the satisfaction of the Registrar that at the time the caveat is lodged there is a risk that the estate or interest may be lost through fraud.
…
(3) A caveat against dealings document must contain the prescribed information.
[9] As s 138(1)(a) makes clear, the interest does not have to be a registerable interest, but a personal or contractual right is not enough. The caveator must show an entitlement to a beneficial interest in the land under the caveat.1
[10] The prescribed information referred to at s 138(3) is set out in schedule 2 of the Land Transfer Regulations 2018. The caveat must, relevantly, include:
A description of the nature of the estate or interest claimed by the caveator (which must be stated with sufficient certainty) …
Details of how the estate or interest claimed is derived from the registered owner.
[11] The legal principles relating to sustaining a caveat are well settled and were recently 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 Guardian Trust & Executors New Zealand Ltd v Hall (No.2) [1938] NZLR 1020 (CA) at 1025;
Philpott v NZI Bank Ltd (1989) 1 NZConvC 190,246 (CA) at 246.
2 Green & McCahill Holdings Ltd v Ara Weiti Development Ltd [2022] NZCA 218.
3 Philpott v Noble Investments Ltd [2015] NZCA 342 at [26]; 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 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.
[12] In this case the factual background set out by the applicant in her affidavit is strongly disputed by the respondent. However, unless clearly contradicted usually on the basis of contemporaneous documentary evidence, these factual disputes are not matters that can be resolved in the context of this caveat application.
[13] The Court of Appeal in Green & McCahill Holdings Ltd set out further matters for consideration:5
[84]Four further points might usefully be noted here. First, balance of convenience considerations do not ordinarily enter the picture with caveats, save that the court has a residual discretion not to uphold a caveat where it could serve no useful purpose or alternative protection is available. We return to that subject later in the judgment.
[85]Secondly, nor is there any requirement for an undertaking as to damages. Rather, s 148 of the LTA provides a statutory basis for a claim for compensation where a caveat has been imposed “without reasonable cause”. It does not follow that a failed application to sustain will result in a right to compensation: s 148 requires the claimant to prove a lack of honest belief, based on reasonable grounds, in a proprietary right.
[86]Thirdly, a s 143 order sustaining a caveat may be made subject to conditions as to the caveator initiating and prosecuting with diligence substantive proceedings to sustain its alleged proprietary rights to the land concerned. That would plainly be necessary here. Moreover, it was accepted by Mr Johnson, in the event the appeal was allowed. We will return to this topic later in the judgment also.
[87]Fourthly, although the normal course is that costs in an originating application to sustain a caveat are resolved according to success or failure in that proceeding, costs remain discretionary. Where the caveat is sustained only on condition that the claimed proprietary right must be the subject of resolution by substantive proceedings, the s 143 court may instead order costs be reserved to be resolved when the substantive proceeding itself is determined. Whether that course should be taken may also depend on whether the s 143 claim to right is demonstrably strong (in which case it may be more appropriate to order costs on the application) or weak (in which case costs might better be determined in the round). We will return to this also.
4 Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 335–337.
5 Green & McCahill Holdings Ltd v Ara Weiti Development Ltd, above n 2 (footnotes omitted).
Factual background
[14] The applicant says she met the respondent in 2014 and in mid-2015 she and the respondent decided to start a business importing food products from Thailand. The applicant says the respondent was responsible for travelling to Thailand and working with suppliers and that the applicant would advance funds to him to pay for business expenses.
[15] A table is set out in the applicant’s affidavit dated 3 August 2022 recording amounts electronically transferred to the respondent by the applicant between May 2015 and January 2018 totalling $112,067.93. In addition, the applicant deposes that she advanced $16,784.00 to the respondent by way of cash and attaches cash receipts from the bank for these payments. The applicant further says that the respondent has received the benefit of goods from the business with a total value of $72,000. No further detail is given in respect of these goods.
[16] The applicant’s evidence is that in January 2018 she discovered that the respondent had deceived her about the money she had advanced to him and that the funds had been used for his personal benefit rather than for business expenses. The applicant says that when she confronted the respondent about the money, he agreed to pay her back a lump sum of $200,000 which the applicant says included repayment of the money and value of the stock the respondent took from her “as well as compensation for the losses [her] business suffered as a result of [the respondent’s] actions”.
[17]The applicant’s evidence in relation to entry into the Agreement is as follows:
11. On 17 January 2018, the respondent signed a handwritten repayment agreement (Agreement), under which the respondent acknowledged that he must repay an aggregate sum of $200,000 (Debt) to me within 5 years from the date of the Agreement. Attached to my affidavit and marked “B” is a copy of the Agreement.
[18]The applicant then records:
(a) the respondent’s signature was witnessed by a Justice of the Peace;
(b) the respondent is the registered owner of the Property; and
(c) that under the Agreement, if the respondent fails to pay the Debt to her on or before 17 January 2023, “then the respondent must sell the Property to repay the Debt”.
[19] The respondent claims that the Agreement was entered into under duress after serious threats were made against him and his family and other acts had allegedly been carried out. including the applicant smashing the windows of the Property. In addition, the respondent disputes that he owes the amount stated saying that the amounts paid were wages or reimbursement of business expenses.
[20]In respect of the Agreement itself the respondent’s evidence is that:
[23]… The agreement says:
(a)I would pay the applicant $200,000 (NZD) within five years from 17 January 2018; and
(b)If payment was not made within five years, that I would sell the Taharepa Property.
[24]I do not even understand how the applicant had reached the sum of
$200,000. The money I received were all due and owing to me at the time. However, I felt like I had no other choice but to enter into this Agreement if I wanted to protect my family. I also knew what the applicant was capable of, especially after the incident at the Taharepa Property. My daughter was only 3 years old at the time and I was worried that the applicant may try to harm her.
[25]I did not believe the agreement was enforceable because it was incorrect and wrong. The amounts referred to in paragraph 5 of the applicant’s affidavit were wage payments and business expense reimbursement payments. In any event, these amounts were paid by the Corner Cone and upon a few occasions by Xinran Chen but never from the applicant personally. Despite this, I signed the agreement anyway, to appease the applicant and to stop her from harassing me and my family. I just wanted the threats and harassment to stop.
[26]If I had a choice, I would never agree to pay such a large sum of money that I can’t even afford. The applicant states that the total sum is inclusive of amounts that I received and compensation for the losses to Corner Cone from my actions. However, I have not taken any actions that would incur a loss to Corner Cone and do not understand why I should pay compensation. Further, I would also never use the house that my elder parents are residing in as security over the amount due.
[21] The affidavit filed by the applicant in reply, dated 27 August 2022, appears to adjust her original evidence, stating that the respondent asked her to lend him money in January 2018 as he owed a significant amount to his landlord. The applicant says she was already suspicious about the respondent’s use of funds but still wanted to help him so visited the landlord to pay directly. According to the applicant’s evidence, the landlord however told her that there were no rental arrears. The applicant deposes she then realised the respondent had been lying about the use of the funds advanced to him and so demanded repayment. The applicant attaches copies of WeChat messages on 16 January 2018 from the respondent that she says show the respondent apologising.
[22] The respondent disputes the authenticity of the WeChat messages. In any event, the messages are relatively vague and so it is not clear the respondent is apologising in respect of the alleged $200,000 loan.
[23] As set out above, these factual disputes are not matters that can be resolved in the context of this application. The parties’ evidence assists however in determining whether there is a reasonably arguable case for the interest claimed.
Is there an equitable mortgage?
[24] Hinde McMorland & Sim Land Law in New Zealand defines an equitable mortgage as follows:6
… an equitable mortgage … is created by a specifically enforceable promise to grant a mortgage. That promise may be part of a contract or (since 1 January 2008) may be a voluntary promise made by deed. It is not necessary that the contract or deed be accompanied by the execution of documents in registerable form, though sometimes that does occur.
[25] The learned author continues that an equitable mortgage must satisfy the following four requirements:7
(a)the right to be granted must possess the essential characteristics of a mortgage;
6 Neil Campbell Hinde McMorland & Sim Land Law in New Zealand (online ed, LexisNexis) at [15.008].
7 At [15.008].
(b)valuable consideration (if made by contract) or a deed;
(c)either sufficient writing to satisfy s 24 of the Property Law Act 2007, or a sufficient act of part performance; and
(d)the availability of specific performance.
[26]The essential characteristics of a mortgage are described as follows:8
(a)the descriptive part, which contains the legal description of the mortgaged property, names the parties to the mortgage, and describes the estate or interest that is to be mortgaged;
(b)the contractual part, which sets out what is to be paid and the terms that are to govern the relations of the parties; and
(c)the operative clause, by which the charge is created for securing the payment in the manner set out. By virtue of the definition of mortgage in s 5 of the LTA the charge is an essential part of a mortgage.
[27] The applicant says characteristics (a) and (b) are clearly complied with. Counsel submits the third characteristic, the requirement for an operative clause, is also met because the Agreement records that the Property must be sold to repay the Debt if the borrower defaults. The applicant submits that there is therefore an arguable case for an equitable mortgage.
[28] The Agreement says the respondent “should” sell the Property, not “must” sell the Property. The applicant’s affidavit evidence is that under the Agreement, if the respondent fails to pay the Debt, then the respondent “must” sell the Property. Counsel for the applicant submits that the parties were not lawyers and obviously meant “must sell” by the use of the words “should sell”.
8 Neil Campbell Hinde McMorland & Sim Land Law in New Zealand (online ed, LexisNexis) at [15.023].
[29] Although counsel for the respondent relied on the use of the word “should” rather than “must” in opposing the caveat being sustained, the respondent arguably appears from his evidence to accept that “should” means “must”, as the respondent describes the Agreement as recording that he “would sell” the Property if payment was not made in five years.
[30] However, even if the Agreement is interpreted as meaning “must sell” the Property, this would not mean an equitable mortgage had been agreed.
[31] The key factor for an equitable mortgage is that the caveator must be entitled to sue for specific performance of the mortgage, compelling the mortgagor to execute a registerable mortgage in accordance with the contract. It is not reasonably arguable that the terms of the Agreement would support such a claim for specific performance. The Agreement simply says that the respondent, not the applicant, should (or must) sell the Property if the alleged loan is not paid.
[32] In my view, it is not reasonably arguable that an equitable mortgage was agreed between the parties.
[33] The applicant sought to rely on Nie v Guan9 but the agreement reached and the circumstances in that case are readily distinguishable from those here. The agreement in Nie v Guan recorded that the respondent had agreed to place the properties “as securities against [her] debt” and that the respondent agreed that the applicant could lodge a caveat against the interests in the properties. A caveat had immediately been lodged referring to an “agreement to mortgage” and no steps had been taken to remove it for more than a year-and-a-half.10 I held that it was at least arguable that an equitable mortgage was agreed and sustained the caveat on that basis.
[34] Here, there is no reference in the Agreement itself to the Property being security for the Debt and the Agreement refers to the respondent selling it, not the applicant. In addition, shortly after the caveat was lodged referring to the equitable
9 Nie v Guan [2021] NZHC 2058.
10 At [12]–[13].
mortgage, the respondent took steps to remove it. This is not sufficient to support a claim to an equitable mortgage.
Is there an equitable charge?
[35] An equitable charge is different to an equitable mortgage. They are separate and distinct interests in land. It is accepted that an equitable charge is however sufficient to support a caveat.11
[36] In Hinde McMorland & Sim Land Law in New Zealand an equitable charge is described as follows:12
Under the general law of securities an equitable charge is a security whereby property is appropriated for the payment of a debt without transfer of ownership or possession to the chargee. An equitable charge is distinguishable from a mortgage, which at common law involves a transfer of ownership. Moreover, the remedies available to an equitable chargee are not as extensive as those available to a mortgagee.
[37] And in Land Law the distinction between an equitable mortgage and an equitable charge is set out:13
For land under the Land Transfer Act the distinction between an equitable mortgage and an equitable charge is that an equitable mortgage has the right to compel the mortgagor to execute a registrable mortgage in accordance with the contract, but under an equitable charge, the charge cannot require registration of a legal interest. That said, an equitable charge may still be protected by caveat.
[38] The terms of the Agreement arguably meet the requirements for an equitable charge. The requirement for the agreement to be in writing in s 25 of the Property Law Act 2007 is satisfied. The Property is clearly referred to in the Agreement and a copy of the certificate of title is attached. The land which it is submitted is appropriated for the payment of the Debt is therefore adequately identified.
11 Neil Campbell, above n 6, at [15.010].
12 At [15.010].
13 John Burrows (ed) Land Law (online ed, Thomson Reuters) at [MG1.04].
[39] There is a question as to whether the land rather than the proceeds of sale is to be the security. But unlike in Hannon v Somervell where the prospect of lodging a caveat had been raised and rejected,14 here the Agreement is silent on whether a caveat may be lodged. In these circumstances it remains arguable that the Agreement may be sufficient for an equitable charge.
[40] Counsel for the respondent submits that there is nothing in the Agreement which suggests, or from which it could be inferred, that the Property is being appropriated for the payment of the Debt, relying on the fact that the words used are “should sell the Property” not “will” or “must”. However as discussed above, the respondent’s own evidence is that the Agreement was that if the payment was not made within five years, then he “would sell” the Property.
[41] I am therefore satisfied that it is arguable that the Agreement amounts to an equitable charge.
If so, is the caveat description defective because it refers to an equitable mortgage instead of equitable charge?
[42] The caveat described the interest claimed in the Property as “an equitable mortgage” rather than an equitable charge. As I have found above that it is not reasonably arguable that there is an equitable mortgage, the caveat is defective in its description of the alleged interest in the Property.
[43] A caveat that does not correctly identify the interest claimed, will not be upheld.15 The applicant seeks to rely on Nie v Guan for the proposition that a caveat is not defective as long as the underlying document that the caveator refers to is correct, submitting that in this case the caveat correctly refers to the 17 January 2018 Agreement.16
14 Hannon v Somervell HC Hamilton M226/97, 12 November 1997.
15 Neil Campbell, above n 6, at [10.013(a)], citing Francis v Taradale West End Ltd (1998) 3 NZConvC 192,762 and New Zealand Lightharness Ltd v Linn (1985) 2 NZCPR 374.
16 Nie v Guan, above n 9, at [38]–[41].
[44] However, in Nie v Guan it was reasonably arguable that there was an equitable mortgage as already discussed above. Whether the description was defective was therefore a matter still to be determined. Here, I have concluded that it is not reasonably arguable that there is an equitable mortgage. As the caveat refers to an equitable mortgage and not an equitable charge, it is therefore defective despite referring to the January 2018 Agreement.
If the caveat is defective, should leave be granted to lodge a second caveat?
[45] While the Court has no power to amend a caveat, a caveator with an otherwise proper case for a caveatable interest can apply for relief pursuant to s 146 of the LTA.
[46]Section 146 provides:
146 Second caveat against dealings may not be lodged
Unless the court orders otherwise, a caveat against dealings must not be lodged by or on behalf of the same person to protect the same estate or interest as a caveat against dealings that has been removed under section 142 or lapsed under section 141(2)(a) or 143.
[47] The application to sustain the caveat did not seek an order for leave to lodge a second caveat if the original caveat was held to be defective. However a flow chart was filed prior to the hearing on behalf of the applicant setting out the applicant’s theory of the case. This included at “Issue 4” the question of whether if the caveat was found to be defective, leave ought to be granted for a second caveat to be lodged. This was followed by an oral application for leave at the hearing.
[48] A memorandum was filed on behalf of the respondent in response to the applicant’s flow chart in which counsel for the respondent submitted that, if the Court were to find that the applicant had an arguable case for an equitable charge (which the respondent denied), it would not be necessary to grant leave pursuant to s 146 of the LTA for the lodging of a second caveat as the interest being claimed would be different from that claimed under the original caveat.
[49] I consider that the respondent has had sufficient opportunity to be heard on the application for leave. I further consider that to avoid issues arising, it is appropriate to consider whether leave ought to be granted for a second caveat to be lodged on the basis of the equitable charge.
[50] The principles applying to an application to lodge a second caveat pursuant to s 146 are settled:17
(a)A second caveat is an indulgence and an application for such an order will be carefully scrutinised.
(b)The Court has an unfettered discretion, but will generally have regard to:
(i)the strength of the applicant’s case for the claimed interest in the land;
(ii)any explanation for failing to exercise the caveator’s rights; and
(iii)whether unavoidable prejudice will be suffered by those who have acted in reliance on the register in the belief that the caveator was not pursuing the claim.
(c)In considering the strengths of the applicant’s claim to an interest in the land, the appropriate standard to adopt is that of a reasonably arguable case, with the proviso that careful scrutiny is required when leave to lodge a second caveat is sought.
[51] Here the claim to an equitable charge is not necessarily a strong claim given the wording of the Agreement (although the respondent’s affidavit evidence appears to support the interpretation put forward by the applicant) and the evidence including in relation to the circumstances in which it was entered into. However, the evidence is untested and the test for sustaining a caveat is not whether the applicant’s case is weak, but whether the claim is reasonably arguable.
17 Lowther v Kim [2003] 1 NZLR 327 (HC) at [18]–[19]; also Hua Xiang Homes Ltd v Val Residential Ltd [2022] NZHC 313 at [26].
[52] In Green & McCahill Holdings Ltd v Ara Weiti Developments Ltd, the Court of Appeal confirmed that an order for the removal of a caveat will only be made if it is patently clear that the caveat cannot be maintained, so that while a case might appear to be weak, the proper test is whether it is arguable or not.18
[53] The remaining factors, the reason for the need to lodge a second caveat and any prejudice, are difficult to assess in the circumstances of this case. The mis- description of the interest in the Property may not be the fault of the applicant and whether there will be any prejudice will depend on whether the applicant properly has a claim to an equitable charge over the Property.
[54] The respondent does not challenge the authenticity of the Agreement itself and his evidence is essentially that the Agreement means what the applicant says it does.
[55] In these circumstances I consider leave ought to be granted to lodge a second caveat.
If leave is granted for a second caveat, should any conditions be imposed?
[56] In caveat applications, the caveator may be required to file a proceeding seeking a determination on the merits of the interest claimed in the caveat where it is disputed, as it is here.19
[57] As the party asserting the interest in the land, the applicant should be required to file substantive proceedings and to continue them with due diligence. It may be that, given the amount alleged to be owing is $200,000, it would be appropriate for the claim to be brought in the District Court. However, this may depend on the relief sought and the value of the Property.20
[58] Finally, I record that the caveat is to protect the applicant’s position. If the respondent were able to pay the amount of the alleged debt into Court or to an agreed stakeholder pending the decision of the Court or resolution of the issues between the
18 Green & McCahill Holdings Ltd v Ara Weiti Developments Ltd, above n 2, at [98].
19 At [86].
20 District Court Act 2016, s 76.
parties, then that would be an adequate substitute for the applicant’s caveat. I have therefore reserved leave to apply for variation of the conditions if alternative arrangements can be made or if other issues arise.
Orders
[59]I order:
(a)Caveat 12469217.1 lodged against 198 Taharepa Road, Tauhara, Taupo, 3330, Record of Title SA5A/151 will be removed, with effect from 12 May 2023.
(b)Notwithstanding that removal, Teng Zhao is granted leave pursuant to s 146 of the LTA to lodge a second caveat, relying on an arguable equitable charge under the Loan Agreement dated 17 January 2018.
(c)It is a condition of the order set out at paragraph 59(b) that Teng Zhao file and serve a proceeding in a court of competent jurisdiction seeking repayment of the NZD$200,000 loan alleged in the Agreement dated 17 January 2018 and enforcement of its equitable charge by 31 May 2023 and must pursue it with due diligence.
(d)Leave is reserved to apply for variation of these conditions or for the caveat to lapse if proceedings are not filed within time or the proceedings are not pursued with due diligence.
Costs
[60] Where the caveat is sustained on the condition that the applicant files substantive proceedings to establish its claim to an interest in the property, then the Court may order that costs are reserved for resolution when the substantive proceeding itself is determined.21
21 Green & McCahill Holdings Ltd v Ara Weiti Developments Ltd, above n 2, at [87].
[61] As the Court of Appeal held in Green & McCahill Holdings, whether costs ought to be reserved may depend on whether the interest claimed is demonstrably strong, in which case it may be more appropriate to order costs on the application, or weak, in which case costs might better be determined in the round.22 In the end, the Court of Appeal concluded that Green & McCahill Holdings Ltd was one of the rare cases where the merits were sufficiently balanced for costs to “neither be awarded now nor lie where they fall, but rather be reserved for determination once the substantive outcome is known”.23
[62] In my view this is a similar situation given the basis for disputing the interest claimed appears to be that the Agreement was entered into under duress and that the amounts allegedly sought to be recovered were in fact wages or reimbursement of business expenses paid to the respondent. I therefore reserve costs for determination once the substantive outcome is known.
Associate Judge Sussock
22 At [87].
23 Green & McCahill Holdings Ltd v Ara Weiti Developments Ltd, above n 2, at [133].
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