GREEN LAND INVESTMENT LIMITED v MAO [2020] NZHC 1000

GREEN LAND INVESTMENT LIMITED v MAO [2020] NZHC 1000 [14 May 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2020-404-606[2020] NZHC 1000IN THE MATTER of s 142 of the Land Transfer Act 2017ANDIN THE MATTER of an application for the removal of certaincaveatsBETWEEN GREEN LAND INVESTMENT LIMITEDApplicantAND JIAWEN MAORespondentHearing: 13 May 2020Appearances: G M Illingworth QC and D Liu for the applicantRespondent in person, assisted by E LauJudgment: 14 May 2020JUDGMENT OF JAGOSE JThis judgment was delivered by me on 14 May 2020 at 4.00pm.Pursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarCounsel/Solicitors:Grant Illingworth QC, AucklandHeritage Lawyers, Auckland[1] By the present application, given priority for urgent hearing, the applicant (GreenLand) seeks to remove a caveat lodged against property at 387 Ormiston Road in Auckland'sFlat Bush by the respondent (Ms Mao), and to prevent her from lodging further caveatswithout this Court's permission.[2] In the urgent circumstances by which the application was argued against anunrepresented Ms Mao, operating in other than her original language, and in the course of ahighly-compressed 90-minute hearing, I am not prepared to address the injunction sought. Thepresent interim injunction ordered without notice by Downs J on 29 April 2020 continues tohave effect in its terms. Neither do I address Ms Mao's application for third-party discovery.Background[3] The property's registered proprietor is Liansen Mao, Ms Mao's father. The propertyis next to Green Land's intended subdivision. Green Land and Mr Mao are parties to aLandowner Agreement dated 1 April 2015, by which land forming the property's drivewaywas to be transferred to Green Land, for vesting in Auckland Council as a road (as is acondition of the subdivision's consent). There are disputes arising. The background isexplained in greater detail in other Green Land proceedings.1[4] Ms Mao's caveat, in its terms, prevents that transfer (although she nonetheless wouldconsent on stipulated conditions), risking purchasers rescinding (under s 225(2)(b) of theResource Management Act 1991) or terminating (in reliance on a 'sunset' clause in) theiragreements for sale and purchase in the subdivision. Development loans to Green Land soonalso are to expire. It previously has been held Green Land has standing to seek such caveats'removal.2[5] The interest Ms Mao claims under the caveat is as guarantor to a $1.675m loanprovided to a family trust of which she and her children are among discretionary and constitutefinal beneficiaries. The loan is claimed to have been raised to set off debt, and to pay regulatoryfines and reparations to which Ms Mao is liable. Until his retirement on 16 January 2016, MrMao was settlor and trustee of the family trust. Ms Mao's substitution for him as trustee isrecorded in a deed dated 8 May 2018.1 Mao v Mao [2020] NZHC 738.2 Li v Green Land Investments Ltd [2019] NZHC 2991 at [29].Relevant law[6] Section 142 of the Land Transfer Act 2017 economically provides "[t]he courtmay, on application by a person who has an estate or interest affected by a caveatagainst dealings, order that the caveat is removed". It is accepted the new formulationmade no change to the position formerly under s 143 of the Land Transfer Act 1952,in which the court "may make such order in the premises, either ex parte or otherwise,as to the court seems meet".[7] On challenge, it is for the caveator to establish an arguable case of a caveatableinterest in the land:3 at its broadest, "an estate or interest in the land, whether capableof registration or not".4 Caveats against dealings must describe "the nature of the estateor interest claimed by the caveator (which must be stated with sufficient certainty)"and detail "how the estate or interest claimed is derived from the registered owner".5[8] Once the arguable case is established, justice ordinarily requires the caveat'smaintenance.6 Nonetheless, there is a residual discretion to remove it, to be exercised"cautiously".7 Such discretion may be exercised:8 only where the Court is completely satisfied that the legitimate interests ofthe caveator will not thereby be prejudiced. If, on the facts of a case, it can beseen that the caveator can have no reasonable expectation of obtaining benefitfrom continuance of the caveat in the form of the recovery of money securedover the land or specific performance of an agreement or if the caveator'sinterests can be reasonably accommodated in some other way, such as bysubstituting a fund of money under the control of the Court, then it may beappropriate for the caveat to be removed notwithstanding that the right to theclaimed interest is undoubted.An example of the necessary caution is "where the Court finds there is no practicaladvantage to maintaining a caveat and the caveator will not be prejudiced".93 New Zealand Limousin Cattle Breeders Society Inc v Robertson [1984] 1 NZLR 41 (CA) at 43;Castle Hill Run Ltd v NZI Finance Ltd [1985] 2 NZLR 104 (CA) at 108; Holt v AnchorageManagement Ltd [1987] 1 NZLR 108 (CA) at 115; Sims v Lowe [1988] 1 NZLR 656 (CA) at 660.4 Land Transfer Act 2017, s 138(1).5 Land Transfer Regulations 2018, r 5 and Sch 2.6 Orams Marine (Auckland) Ltd v Ports of Auckland Ltd (1994) 6 TCLR 88 (CA) at 92.7 Botany Land Development Ltd v Auckland Council [2014] NZCA 61, (2014) 14 NZCPR 813 at[24].8 Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656.9 Botany Land Development Ltd v Auckland Council, above n 7, at [24].Discussion[9] Ms Mao described her caveatable interest as: an equitable mortgagee as at 15.8.2018, 31.8.2018, 10.12.2019 persuasionan equitable mortgagee grant by Liansen MAO (Trillion, Brillion and othersfamily trust), the registered proprietor over all its right title and interest in allof its properties described and comprised under CT 482726 under term loanagreements/debt set-off declarations/Deed of assignment dated 15.8.2018,31.8.2018, 10.12.2019, between Liansen MAO (Trillion, Brillion and othersfamily trust), the register proprietor and Jiawen MAO the caveator.On Green Land's subsequent enquiry as to those "term loan agreements/debt set-offdeclarations/Deed of assignment", Ms Mao's solicitors only responded:Under the agreement dated 20 December 2015 between the Registered owner,Green Land Investment Limited and the owner of 423 Ormiston Road, FlatBush (later subdivided and known as 387 Ormiston Road), the Trillion Billionand other Family Trust, the caveator as a trustee of the aforesaid Trust has acavetable interest in part (lot 129 as referred to the aforesaid Agreement andas per shaded area of the enclosed plan) of its property described andcomprised number CT 690701.[10] None of that describes the nature of the claimed interest with anything like therequisite certainty. Neither does it detail the derivation from Mr Mao. Instead theevidence is of Ms Mao's January 2016 substitution for Mr Mao as trustee for herfamily trust. The property at issue in this proceeding is not included in the May 2018record of the property affected by the substitution. The instruments relied on all post-date Ms Mao's substitution.[11] In submissions, Ms Mao relied only on the term loan agreement dated 10December 2019, identifying her as having loaned $1.675 million to the family trust.The standard form document is partially completed in her handwriting, and signedonly by her, expressly as "trustee". It purports to secure $15 million by a fourthmortgage over the property.[12] There are multiple difficulties with the contended agreement. First, there isnothing to link it with Mr Mao as registered proprietor of the property. Ms Mao'scontention he only held the land as trustee for the family trust is not evidenced, andMs Mao's substitution does not expressly extend to this property.[13] Neither is there any evidence Ms Mao advanced any money to the trust.Pressed with that omission, she pointed to her regulatory liabilities, but without anyexplanation as to why the trust is liable for them. The authenticity of the $850,000 debtclaimed already has been doubted.10 No attempt was made to evidence the balance ofliability, let alone that Ms Mao provided funds for any of its satisfaction.[14] Under questioning from me, Ms Mao asserted her interest now was asguarantor of a loan to the trust from someone else. Pressed again to substantiate herguarantee, Ms Mao could only return to her regulatory liabilities. Nor is there anyexplanation for how Ms Mao could exercise any power as trustee to benefit herself.11[15] Far from an arguable case for her caveatable interest in the land, Ms Mao pointsto no interest at all. In that circumstance, I have no reason to posit if I might exercisemy residual discretion, which would have to postulate the existence of Ms Mao'slegitimate interest in the land. I therefore will order the caveat's removal.Result[16] I order caveat 11699979.1 be removed.Costs[17] In my preliminary view, as the successful party, Green Land is entitled toindemnity costs and disbursements on their application. That is because, from what Ipresently know of it, Ms Mao's conduct may meet the requisite level of impropriety:12an attempt to obtain judgment in her favour by conscious and deliberate dishonesty;by fraud.13 If that is not accepted by the parties, and they cannot otherwise agree, costsare reserved for determination on short memoranda of no more than five pages –annexing a single-page table setting out any contended allowable steps, timeallocation, and daily recovery rate – to be filed and served by the plaintiffs within ten10 Li v Green Land Investment Ltd, above n 2, at [42]–[47].11 Fenwick v Naera [2015] NZSC 68, [2016] 1 NZLR 354 at [69]–[74].12 HCR 14.6(4)(a) and/or (f); Prebble v Awatere Huata (No 2) [2005] NZSC 18; 2 NZLR 467 at [6];Bradbury v Westpac Banking Corporation [2009] NZCA 234; [2009] 3 NZLR 400 at [6] and [28];Flujo Holdings Pty Ltd v Merisant Company Inc [2018] NZCA 226 at [34]–[35].13 Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94, [2013] 1NZLR 804 at [29].working days of the date of this judgment, with any response and reply to be filedwithin five working day intervals after service.—Jagose J