GREEN LAND INVESTMENT LIMITED v MAO [2020] NZHC 2017

GREEN LAND INVESTMENT LIMITED v MAO [2020] NZHC 2017 [11 August 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-2080[2020] NZHC 2017UNDER S 143 of the Land Transfer Act 2017IN THE MATTER of a caveat 11536496.1BETWEEN GREEN LAND INVESTMENT LIMITEDApplicantAND LIANSEN MAORespondentOn the papers: At AucklandJudgment: 11 August 2020JUDGMENT (No. 2) OF POWELL JThis judgment was delivered by me on 11 August 2020 at 3.30 pm pursuant toR 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitors/Counsel: Heritage Law, Balmoral, AucklandG M Illingworth QC, AucklandMr L Mao, via email.[1] The applicant, Green Land Investment Limited, has filed an originatingapplication for an order that a caveat not lapse. The application is opposed by therespondent, Liansen Mao, the owner of the 423 Ormiston Road, Flat Bush propertyover which the caveat has been lodged.1[2] In my first judgment in these proceedings issued on 23 October 20192 I madean interim order that caveat 11536496.1 not lapse pending further order of this Court.3[3] Although the intention was the application would then be set down to be arguedat the first available date before me, events have conspired to prevent this fromoccurring. After a number of false starts, complicated by the fact that Mr Mao becameself-represented, the application was finally set down to be heard on 31 July 2020.However, the inability for Mr Mao (resident in the People's Republic of China) toattend in person, or to make an application for the hearing to proceed by way of AVL,ultimately led to the parties agreeing the substantive application should be dealt withon the papers. As a result the fixture was vacated and my decision reserved on 29 July2020.[4] The principles for sustaining caveats are not in dispute and were summarisedby the Court of Appeal in Philpott v Noble Investments Ltd in the following terms:4(a) The onus is on the applicants to demonstrate that they hold an interestin the land that is sufficient to support the caveat, but they need notestablish that definitively;(b) It is enough if the applicants put forward a reasonably arguable caseto support the interest they claim;(c) The summary procedures involved with applications of this nature arenot suited to the determination of disputed questions of fact. An orderfor the removal of a caveat will only be made if it is patently clear thatthe caveat cannot be maintained – either because there is no validground for lodging it in the first place, or because such a ground nolonger exists; and1 This property is referred to in other proceedings as 387 Ormiston Road.2 Green Land Investment Ltd v Mao [2019] NZHC 2715.3 At [4].4 Philpott v Noble Investments Ltd [2015] NZCA 342 at [26] (footnotes omitted). See also Sims vLowe [1988] 1 NZLR 656 (CA); Orams Marine (Auckland) Ltd v Ports of Auckland Ltd (1994)6 TCLR 88 (CA) at 92; Geneva Healthcare Ltd v Essential Assets Ltd [2014] NZHC 3236,(2014) 15 NZCPR 826 at [27]-[28].(d) When an applicant has discharged the burden upon it, the Court retainsdiscretion to remove the caveat which it exercises on a cautious basis.Before it does so the Court must be satisfied that the caveator'slegitimate interest would not be prejudiced by removal.The interest claimed by Green Land[5] Green Land claims a caveatable interest in Mr Mao's property at 423 OrmistonRoad, Flat Bush, by virtue of the terms of a document entitled "Green LandInvestments/the owners of 423 Ormiston Road – Land Owner Agreement" ("the LandOwner Agreement").[6] This document, dated 25 March 2015, and signed on behalf of Green Land andMr Mao was negotiated to enable Green Land to facilitate the subdivision anddevelopment of its land at 411, 425, 425A and 431 Ormiston Road ("the Green Landproject"). Specifically, to effect the Green Land project Green Land needed to acquirepart of 423 Ormiston Road from Mr Mao ("the driveway area"). The Land OwnerAgreement provided in broad terms that in exchange for Green Land providingMr Mao with two lots to be sub-divided and to undertake various works in accordancewith approved plans Mr Mao would:(a) transfer the driveway area to Green Land;5(b) obtain the written consents of mortgagees, charge-holders and/or otherparties with an interest in 423 Ormiston Road;6 and(c) sign all forms, plans and provide all necessary consents as may berequired.7[7] Of particular relevance to the matters at issue in the present application, thesection of the Land Owner Agreement specifying Green Land's obligations concludedwith a hand-written notation stating "no caveat on 423 Ormiston Road" ("the no caveatclause").5 Land Owner Agreement clause 11.6 Land Owner Agreement clause 16.7 Land Owner Agreement clauses 12 and 13.[8] Since the Land Owner Agreement was signed things have not run smoothly.Disputes over the removal of a covenant on Green Land's properties, and caveats filedby Mr Mao resulted in two further agreements being negotiated between Mr Mao andGreen Land, resulting in the transfer of the two lots referred to in the Land OwnerAgreement, as well as the agreement to transfer a further lot from Green Land toMr Mao. More broadly, proceedings have been issued in this Court in which bothGreen Land and Mr Mao have accused the other of being in breach of the Land OwnerAgreement and the subsequent agreements and consequent responsibility for thesignificant delays in completing the Green Land project ("the 1241 proceedings").8 Inaddition, a number of caveats filed over 423 Ormiston Road have been the subject ofa series of applications by Green Land against various respondents.[9] In the course of these developments Mr Mao gave notice in April 2018 that hewas purporting to terminate the Land Owner Agreement, to the effect that he was nolonger required to transfer the driveway area to Green Land. Green Land dispute thatMr Mao is entitled to or even can terminate the Land Owner Agreement with the issueapparently standing to be determined in the course of the 1241 proceedings.[10] It is Green Land's position that it clearly has an arguable interest in thedriveway area of 423 Ormiston Road and that the caveat should therefore continueuntil at least the 1241 proceedings have been determined.Mr Mao's response[11] From the notice of opposition filed on behalf of Mr Mao and numeroussubmissions filed subsequently it appears Mr Mao opposes the application on threeprincipal grounds:(a) the caveat is defective as the interest claimed by Green Land relates toonly a small part of 423 Ormiston Road;(b) Green Land has no right to lodge a caveat under the Land OwnerAgreement by virtue of the no caveat clause; and8 Mao v Green Land Investment Ltd, CIV-2016-404-1241.(c) as the Land Owner Agreement has been terminated legitimately byMr Mao as a result of numerous breaches by Green Land, Green Landcan in any event no longer claim any substantive interest in thedriveway area.Discussion[12] I commence my analysis by observing that the caveat is not defective. Wherea caveator claims an interest in part of the land comprised in a certificate of title, thecaveat should typically relate to only that part, leaving the registered proprietor free todeal with the remaining interest in the land.9 Here, Green Land's interest relates onlyto the driveway area and the caveat purports to relate to the entirety of the landcomprising the title. However, as the title remains unsubdivided it is not possible, atthis stage, to identify Green Land's interest with any greater particularity than it has.10In these circumstances, the failure to particularise the land over which Green Land'sinterest is claimed, is not fatal to the maintenance of the caveat.[13] Likewise, as Mr Illingworth noted on behalf of Green Land the no caveatclause does not expressly provide that Green Land is not to lodge a caveat, let alonein any circumstances. It is however not necessary to reach a final conclusion as to themeaning of the clause. This is because the case law is clear that even where explicit ano caveat clause does not provide an absolute barrier to the lodgement of a caveat inappropriate circumstances. On the contrary, as in Landco Albany Ltd v Fu HaoConstruction Ltd11 while the Court of Appeal determined that "no caveat" clauses willnot be void or unenforceable for reasons of public policy, it nonetheless confirmed thatthere remained a "judicial discretion whether or not to order the removal of a caveat,or to make or decline an order preventing lapsing",12 albeit recognising:13And depending on the nature of competing interests, the discretion may beinformed by an agreement by the parties against the lodging of a caveat.9 Taylor v Couchman [1995] 3 NZLR 336.10 See Parklane Infrastructure Ltd v Lu Trustee Ltd [2020] NZHC 1182 where Moore J, in similarcircumstances, was satisfied that as further particularising of the caveatable interest was notpossible, the failure to particularise did not render the caveat defective.11 Landco Albany Ltd v Fu Hao Construction Ltd [2006] 2 NZLR 174 (CA).12 At [52].13 At [52].[14] In this case it is clear that the whole purpose of the Land Owner Agreementwas to give Green Land not only an interest in the driveway area of423 Ormiston Road, but ultimately legal title to either itself or its nominee. As a result,in the absence of a no caveat clause, the Land Owner Agreement and the subsequentagreements entered into by Green Land and Mr Mao clearly provide a more thansufficient basis to argue a caveatable interest in 423 Ormiston Road.[15] Given that position it can be seen that Mr Mao's assertion that the Land OwnerAgreement was terminated directly threatens the rights acquired by Green Land. Insuch circumstances I am satisfied that it would be manifestly inappropriate to exercisemy discretion to allow the caveat to lapse before the respective interests of Green Landand Mr Mao have been finally determined through the 1241 proceedings. I thereforeconclude there should be an order that the caveat not lapse.Decision[16] There is an order that caveat 11536496.1 in respect of 423 Ormiston Road,Flat Bush as comprised of Record of Title 482726 not lapse.[17] Costs on the present application are to be fixed on a 2B basis and are to be paidto the successful party at the conclusion of the 1241 proceedings._______________________________Powell J