GRP Holdings Ltd v VP Nominees Ltd
| Jurisdiction | New Zealand |
| Judge | Sussock |
| Judgment Date | 17 March 2021 |
| Neutral Citation | [2021] NZHC 545 |
| Date | 17 March 2021 |
| Docket Number | CIV-2020-404-1403 |
| Court | High Court |
IN THE MATTER OF an application to sustain Caveat 11816775.1 against Record of Title NZ12C/168
IN THE MATTER OF an application to sustain Caveat 11816775.1 lodged against Record of Title NZ12C/168
[2021] NZHC 545
JUDGE Sussock
CIV-2020-404-1403
CIV-2020-404-1994
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA
TĀMAKI MAKAURAU ROHE
Contract, Property — application to sustain a caveat by the nominated purchaser under the sale agreement — the applicant alleged the respondent had wrongfully cancelled the contract — a caveat lodged by the original signee to the sale agreement had lapsed — whether the caveat was in respect of the same interest lodged by the same person — whether a nominee under a sale agreement has a caveatable interest — privity of contract — misrepresentation — Contract and Commercial Law Act 2017 — Fair Trading Act 1986
G Blanchard QC, C Jiang and GSA Morrison for the Applicants
MD O'Brien QC and KL Chiu for the Respondent
This judgment was delivered by me on 17 March 2021 at 4.30pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
GRP Holdings Limited (“GRP Holdings”), applies for an order to sustain a caveat over 14 Sinton Road, Hobsonville (“Property”). The Property is currently owned by the respondent, VP Nominees Limited (“VP Nominees”).
GRP Management Ltd (“GRP Management”) “and/or nominee” and VP Nominees entered into a sale and purchase agreement on 10 October 2018 (“Agreement”). The purchase price agreed following an early variation, was $8,750,000, $1,500,000 of which was paid as a deposit, and with a settlement date of 31 March 2020.
GRP Holdings was nominated as the purchaser by Deed of Nomination dated 19 December 2018.
Settlement did not take place and VP Nominees purported to cancel the Agreement on 14 May 2020.
GRP Holdings says VP Nominees wrongfully and invalidly cancelled because the Agreement included a right to a pre-settlement inspection which was not honoured, and because the main dwelling on the Property was found to be contaminated with methamphetamine prior to settlement and possession by GRP Holdings.
If the Agreement has been wrongfully or invalidly cancelled, then GRP Holdings maintains a caveatable interest as nominated purchaser. If the cancellation was lawful, however, then GRP Holdings has no such interest.
The issue I need to resolve is whether GRP Holdings has a reasonably arguable case that the cancellation by VP Nominees was wrongful or invalid or whether VP Nominees has validly cancelled the Agreement ending GRP Holdings' interest as purchaser.
GRP Holdings and GRP Management have filed substantive proceedings against VP Nominees seeking specific performance of the Agreement.
VP Nominees accepts that there are several disputed factual issues but submits that the case turns on legal issues, whether the claimed right of pre-settlement inspection and the alleged contamination of the property, displaced GRP Management's obligation to settle or VP Nominees' right of cancellation.
VP Nominees submits that these legal questions can be determined in these caveat proceedings finally determining the parties' rights.
A significant volume of affidavit evidence has been filed from both of the key individuals associated with the parties, Ms Liu (of GRP Holdings and Management) and Mr Ma (of VP Nominees) as well as from experts in methamphetamine contamination and decontamination. Prior to the hearing, VP Nominees objected to the admissibility of some of the reply evidence filed for GRP Holdings, on the basis that it was late, contained hearsay, submission and scandalous allegation, was from experts who had not filed affidavits in support of the application (so was not in reply), and that much of Ms Liu's reply affidavit was repetitive or expansive of the evidence contained in her first affidavit.
VP Nominees then filed further evidence in reply to the reply evidence. GRP Holdings objected to this evidence on the basis that it was repetitive, irrelevant, new evidence not in reply, or of purely subjective intent, thought or hearsay.
The objections were heard at the beginning of the caveat hearing. As caveat proceedings do not usually determine the parties' final rights, a strict approach to the admissibility of evidence is not usually taken. Here, however, where VP Nominees submits that the question of valid cancellation can be finally determined, I have taken a more conservative approach.
Before considering admissibility, I consider GRP Management's application for leave to lodge a second caveat and set out a brief summary of the factual background and relevant legal principles to provide context.
Just prior to the hearing, GRP Management filed a separate application seeking leave to lodge a second caveat.
The application was heard together with the application by GRP Holdings by consent as GRP Management's application was filed in response to the ground of opposition raised by VP Nominees in its amended notice of opposition, that the caveat lodged by GRP Holdings was in respect of the same interest as claimed in the caveat lodged by GRP Management which had lapsed. The lodging of second caveats is prohibited except with leave. 1
The first caveat lodged by GRP Management lapsed automatically, pursuant to s 142 of the Land Transfer Act 2017 (“LTA”), as 10 working days passed from confirmed delivery of the notice without GRP Management filing a notice to sustain.
In calculating the 10 working day period, LINZ relied on courier tracking records which showed actual delivery to GRP's Management's solicitors' postal address on 9 July 2020. GRP Management filed an application to sustain the caveat on the same day as the caveat lapsed, but too late.
GRP Management, in its calculation of the deadline, relied on the guidelines on the LINZ website that provided for a deemed delivery period of two working days by post. If that deemed delivery period had applied, the application by GRP Management would have been within time.
To avoid needing to seek leave to lodge a second caveat as required by s 146 of the LTA, GRP Holdings, the nominated purchaser and assignee, filed the second caveat. VP Nominees submits that this caveat is in respect of the same interest and that leave should not be granted.
The prohibition against lodging second caveats in s 146 applies where it is being lodged “by or on behalf of the same person”. Here, the second caveat was lodged by GRP Holdings, which had been nominated as purchaser prior to the lapsing of the caveat lodged by GRP Management. GRP Holdings is a different entity to GRP Management and lodged the caveat on its own behalf, not on behalf of GRP Management. As a result, it did not need leave to lodge the caveat. It does not fall within the prohibition set out in s 146.
As I have found that GRP Holdings did not need leave to lodge its caveat, it is not necessary to determine whether GRP Management should be granted leave. I record, however, that I would have granted leave to GRP Management to register a second caveat, as no prejudice has been suffered by anyone acting in reliance on the register in the belief that the GRP Management was not pursuing its claim. 2
For the remainder of the judgment I refer to GRP Holdings and GRP Management as GRP, unless it is necessary to distinguish between them.
GRP Management and GRP Holdings are property development companies. Ms Lian (Lillian) Liu is the sole director of both. She is the sole shareholder of GRP Holdings, and the majority shareholder of GRP Management.
GRP Holdings purchased 12 Sinton Road, the neighbouring property to the property in dispute, in November 2018 with the intention of developing it if zoning changes occurred. Ms Liu confirms in her evidence that GRP Holdings rented out the two dwellings on 12 Sinton Road to cover holding costs in the interim.
The property at the centre of this dispute, 14 Sinton Road, is owned by the family trust of Mr Ming Ma and Ms Danqiong Zhang.
Ms Liu and Mr Ma first met around the time of the purchase of 12 Sinton Road to discuss issues in relation to a boundary creek between 12 and 14 Sinton Road. Ms Liu deposes that at that meeting Mr Ma advised her that his family trust owned 14 Sinton Road and that Mr Guan (Bruce) Wang was the family trust's accountant, trustee and authorised representative. Ms Liu says that she later discovered that VP Nominees was the sole trustee of the family trust and Mr Wang was the sole director of VP Nominees.
Ms Liu saw potential in developing 12 and 14 Sinton Road together and so told Mr Ma and Mr Wang to contact her if they were ever interested in selling 14 Sinton Road.
Mr Wang first approached Ms Liu in July 2018 to sell 14 Sinton Road but agreement was not reached. In September 2018 Mr Wang again advised that 14 Sinton Road was for sale. Ms Liu and Mr Wang reached agreement on a purchase price of $8,600,000 million with an extended settlement date of 28 November 2019, conditional on receiving a satisfactory geotechnical report.
On 5 November 2018 GRP confirmed the geotechnical report condition had been satisfied and that the Agreement was unconditional. It was also agreed that settlement would be deferred to 31 March 2020, with an increase to the purchase price to $8,750,000 million (including GST if any).
I set out further details of the Agreement and its purported cancellation below, after determining the parties' objections to the admissibility of reply evidence filed.
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GRP Management Ltd v VP Nominees Ltd
...3 Determined by reference to the issues arising on the pleadings. 4 Evidence Act 2006, s 7(3). 5 GRP Holdings Ltd v VP Nominees Ltd [2021] NZHC 545, (2021) 21 NZCPR 915 at [138]. Any such evidence of Mr Wang would, of course, have to be given and tested at the substantive 6 It is alleged t......
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...to 31 March 2020, consideration for which was an increase in the purchase price to $8.75 million. 5 GRP Holdings Ltd v VP Nominees Ltd [2021] NZHC 545, (2021) 21 NZCPR 915 at [138]. Any such evidence of Mr Wang would, of course, have to be given and tested at the substantive On 19 December ......