IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE	
CIV-2021-404-2375
[2022] NZHC 931	

UNDER	the Land Transfer Act 2017, section 143	
BETWEEN	DEVESH KUMAR PATEL
Applicant	
AND	GBCD PROPERTY LIMITED
Respondent	

Hearing:	29 March 2022 at 10:00am (VMR)	
Appearances:	Lawrence Ponniah for the Applicant
Mihai D Pascariu and Kate M Hursthouse for the Respondent	
Judgment:	6 May 2022	

JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR

This judgment was delivered by me on 6 May 2022 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules

…………………………. Registrar/Deputy Registrar

Solicitors:
Patel Nand Legal (Umar Kuddus), Auckland, for the Applicant Anderson Creagh Lai (Mihai Pascariu), Auckland, for the Respondent Copy for:
Lawrence Ponniah, Barrister, Auckland, for the Applicant

PATEL v GBCD PROPERTY LIMITED [2022] NZHC 931 [6 May 2022]

Introduction

[1]	Mr Devesh Patel applies for an order sustaining caveat number 12271535.1 (the Caveat).

[2]	The Caveat relates to the freehold titles of six properties owned by the respondent, GBCD Property Ltd (GBCD), at Harbour Village Drive, Gulf Harbour, Auckland, details of which are set out at [19] below (the caveated properties).

Background

[3]	In 2012, Mr Patel, Mr Sivamani Krishnamurthi  (Mr  Krishnamurthi) and Mr Aaron Colthurst (Mr Colthurst) entered a joint venture to pool resources, collectively finance, acquire and develop a number of commercial properties. The intention was that the partners would jointly own and benefit from the properties, and share equally in any profits from those properties.

[4]	The partners incorporated special purpose companies to purchase and hold the joint venture properties. GBCD is one of those companies. It was incorporated to complete the purchase of the properties now the subject of the Caveat, and to hold them on behalf of the joint venture.

[5]	In August 2012, Mr Patel, through his company Purchasing Management International Ltd (PMI), acquired 16 commercial units at Gulf Harbour. PMI then nominated GBCD to purchase nine of the units (six of which now comprise the caveated properties). Another joint venture company, Gaij Investments Ltd (Gaij) purchased the remaining seven units.

[6]	A further joint venture company, GKLMNO Holdings Ltd, then purchased two of units from GBCD. In September 2013, to effect a refinance and borrowing arrangement from a bank, all the units held by GKLMNO and Gaij were transferred to GBCD. A convoluted GBCD share transfer and re-transfer between the joint venture partners was effected.

[7]	The joint venture eventually ran into difficulties. The business relationship between the three joint venture partners deteriorated. As a result, the partners entered into a JV Agreement on 12 September 2013 (the JV Agreement). It formalised the terms of their arrangement and provided a pathway for resolving differences, distribution of the properties and for a parting of ways.

[8]	The JV Agreement recorded that, while Mr Patel was not a shareholder or director of GBCD, any cheque to be issued by GBCD was to be jointly signed by him and Mr Krishnamurthi. Mr Patel would indemnify Mr Colthurst, who was to be the sole director of GBCD. Mr Patel would also have access to all of GBCD’s bank accounts.

[9]	The JV Agreement contained an exit clause, cl 26. It provided that, should difficulties arise between the parties, Mr Patel was entitled to purchase four specified units, Mr Krishnamurthi was entitled to purchase five specified units and Mr Colthurst was entitled to purchase seven specified units.

[10]	On 3 July 2015, Mr Patel exercised his exit option and purchased the four specified units to which he was entitled. That same day, Mr Krishnamurthi likewise exercised his exit option and purchased the five specified units to which he was entitled. Seven units therefore remained in GBCD.

[11]	Mr Colthurst requested Mr Krishnamurthi transfer those seven units to him. Mr Krishnamurthi refused. In early 2016, Mr Colthurst issued a proceeding in the High Court against Mr Krishnamurthi, Mr Patel and GBCD in respect of the seven units.   He alleged breach of the JV Agreement; breach of fiduciary duty; breach of   s 134 of the Companies Act 1993; and that Mr Krishnamurthi had exercised his director powers for an improper purpose.

[12]	The proceeding was settled by the parties, as recorded in a deed of settlement dated 21 September 2019 (the deed of settlement). They agreed that Mr Patel and Mr Krishnamurthi would purchase from Mr Colthurst his interest in the joint venture for $800,000. Mr Colthurst would transfer his shares in GBCD to the other two joint venture partners. In reality, all the shares vested in Mr Krishnamurthi. There is now

dispute whether Mr Krishnamurthi and Mr Patel agreed that the former would hold 50 per cent of the shares in GBCD on trust for the latter.

[13]	GBCD was and remains the owner of the units. In December 2019, it sold one of the units to reduce its bank debt. The six remaining units are the caveated properties.

[14]	On 15 October 2021, Mr Patel lodged the Caveat over the six remaining units. The Caveat records that Mr Patel has a beneficial interest in the units by way of the JV Agreement, and as further affirmed by the deed of settlement.

[15]	In November 2021, GBCD began procedures to remove the Caveat. In response, Mr Patel applied to the Court for an order that the Caveat be sustained. Due to time constraints, Venning J made an interim order that the Caveat not lapse.

[16]	The Court is now to determine whether the sought order should be made.

Originating application for order to sustain a caveat

Application

[17]	Mr Patel applies for orders:1

1.	… that the Caveat dealing No.12271535.1 (“caveat ”) registered on the freehold titles of properties owned by GBCD Property Ltd (“the Respondent”) … not lapse.

…

2.	And for the costs of this application.

[18]	The grounds on which the orders are sought are:2

(a)	there is a reasonable arguable case for the applicant’s interest in the caveated properties

(b)	the applicant claims an interest in the 6 caveated properties by virtue of a joint venture agreement dated 12 September 2013 relevant to the caveated properties and further affirmed by a deed of settlement dated 21 February 2019.

1	Originating application for order to sustain a caveated dated 8 December 2021.
2	At [3].

(c)	Initially, as set out in the JV Agreement Aaron Mark Colthurst (“Aaron”), Sivamani Krishnamurthi aka Siva Krishnamurthi (“Siva”), and the Applicant agreed to combine their resources to acquire the caveated properties located in Gulf Harbour, Whangaparaoa.

(d)	GBCD initially purchased and owned 7 properties, but one unit A was sold by GBCD without the Applicants knowledge and there has been no accounting for the proceeds of sale. The legitimate interests of the applicant will be seriously prejudiced if the caveat is allowed to lapse.

(e)	the facts in support of the applicant’s caveatable interest will be in dispute and credibility will need to be assessed by the Court after hearing and observing witnesses. As such, this dispute is wholly unsuitable for resolution by the summary nature of the caveat application. The caveat should remain on the title to protect the applicant’s interests in the properties pending resolution of the claim at a substantive hearing.

(f)	Appearing in the affidavit of Devesh Kumar Patel filed in support.

Affidavit of Devesh Kumar Patel dated 8 December 2021

[19]	Mr Patel has made two affidavits in support of his originating application. In the first, dated 8 December 2021, he deposes that on the advice of his solicitors, he lodged the Caveat on the caveated properties owned by GBCD with the following legal descriptions/records of title:3
Identifier	Deposited Plan	Land registry
District	Legal description	Address	
76151	319327	North Auckland	Unit B and Accessory
Unit 8 and ½ share of Accessory Unit 2	2/154 Harbour Village Dr, Hobbs Bay 0930	
76152	319327	North
Auckland	Unit C and Accessory
Unit 3	1/156 Harbour Village
Dr, Hobbs Bay 0930	
76153	319327	North
Auckland	Unit D and
Accessory Unit 4	2/156 Harbour Village
Dr, Hobbs Bay 0930	
76154	319327	North
Auckland	Unit E	1/158 Harbour Village
Dr, Hobbs Bay 0930	

3	Affidavit of Devesh Kumar Patel in support of Originating application for order to sustain a caveat dated 8 December 2021 at [1]–[2].

76155	319327	North
Auckland	Unit F and ½ share of
Accessory Unit 5	2/158 Harbour Village
Dr, Hobbs Bay 0930	
76156	319327	North
Auckland	Unit G and ½ share
of Accessory Unit 5	3/158 Harbour Village
Dr, Hobbs Bay 0930	

[20]	Mr Patel deposes he believes he has a reasonably arguable case for an interest in the caveated properties.   He says his interest in the properties arises out of the   JV Agreement. Under the JV Agreement, he, Mr Colthurst and Mr Krishnamurthi agreed to combine resources to tender and acquire the Gulf Harbour properties.
Mr Patel says he invested funds as required.4

[21]	Mr Patel deposes that as part of the joint venture, GBCD purchased the properties over which the Caveat is lodged and GBCD remains the registered owner. He says Mr Colthurst was initially the sole director of GBCD, but was later removed by Mr Krishnamurthi, who then appointed himself as sole director.  Mr Patel says  Mr Krishnamurthi now holds 50 per cent of the shares in GBCD on trust for him.5

[22]	Next, Mr Patel deposes that there was a problem within the joint venture and Mr Colthurst issued a proceeding against Mr Krishnamurthi, GBCD and him in respect of Mr Colthurst’s ownership interests in the properties. The proceeding was settled, with Mr Krishnamurthi and Mr Patel agreeing to pay Mr Colthurst $800,000 in full and final settlement of his ownership interest in the caveated properties. On payment of  that  sum,  he  says,   Mr   Colthurst   transferred   his   shares   in   GBCD   to   Mr Krishnamurthi, who holds them on trust for Mr Patel. Mr Patel says he contributed approximately $250,000 to the settlement payment.6

[23]	Mr Patel deposes that GBCD has now sold one of the seven commercial units it owned, with Mr Krishnamurthi failing to advise Mr Patel of the sale or what occurred with the proceeds of sale. He says he fears that if the Caveat is not sustained, GBCD could sell further units and prejudice his legitimate ownership interest in the

4	At [5]–[7].
5	At [8].
6	At [9]–[10].

caveated properties. The Caveat should remain on the title to protect his interest in the caveated properties pending resolution of the substantive claim.7

Affidavit of Devesh Kumar Patel dated 4 February 2022

[24]	Mr  Patel  made  a  further  supplementary  affidavit  to  his  affidavit  dated  8 December 2021. He states that the affidavit of 8 December 2021 was prepared under urgency, and the supplementary affidavit is to provide more detail to support his application.

[25]	He deposes that some time in 2012 Mr Krishnamurthi, Mr Colthurst and himself commenced a joint business relationship to pool resources, collectively finance and acquire and develop a number of commercial properties with the intention of joint ownership and benefit in the properties acquired, and equal sharing of any profits resulting from these properties. Following some difficulties, the joint venture partners entered into the JV Agreement which recorded the joint venture arrangement and provided a pathway to try and resolve the differences, the distribution of properties held in GBCD, and for a parting of the ways.8

[26]	He deposes that on 22 August 2012 he caused Purchasing Management International Ltd (PMI), a company which was owned and controlled by him, to enter into an agreement to purchase the 16 Gulf Harbour units. The purchase agreement allowed PMI to nominate the different entities to settle the purchase. PMI nominated:

(a)	GBCD to purchase nine Gulf Harbour units (units B, C, D, E,F, G, H, I and J);

(b)	Gaij Investments Ltd (Gaij) to purchase the remaining seven Gulf Harbour units (units A, K,L, LA, M, N and O).9

7	At [11]–[12].
8	Affidavit of Devesh Kumar Patel in support of originating application for order to sustain a caveat dated 4 February 2022 at [4]-[5].
9	At [9].

[27]	He deposes that GKLMNO Holdings Ltd (GKLMNO), a company owned and controlled by Mr Colthurst, purchased two Gulf Harbour units from GBCD (units I and J).10

[28]	He deposes that on or about 23 September 2013, the loans taken out by GBCD, Gaij and GKLMNO were refinanced by an ASB bank loan advanced to GBCD and secured by a mortgage over all 16 Gulf Harbour units which were transferred to GBCD as a condition of the ASB loan.11

[29]	He deposes that the ownership and control of GBCD was as follows:

(a)	At incorporation, Mr Krishnamurthi was the sole director;

(b)	Between 23 July 2013 and `19 May 2014, Mr Colthurst was the sole director and in total control of GBCD.

(c)	On or about 17 May 2014, Mr Krishnamurthi as a 67 per cent shareholder passed a resolution removing Mr Colthurst and appointing himself as sole director  of  GBCD.  From  17  May  2014  onwards Mr Krishnamurthi was the sole director and in total control of GBCD.12

[30]	As to the shareholding in GBCD, Mr Patel deposes:

(a)	As at the date of incorporation the shareholding was: Mr Colthurst 33 per cent, Mr Krishnamurthi 34 per cent and Mr Patel 33 per cent.

(b)	On or about 21 September 2013, Mr Patel transferred his shares to   Mr Krishnamurthi, giving Mr Krishnamurthi 67 per cent of the shares (of which Mr Patel says 33 per cent were held in trust for him).

(c)	On or about 14 August 2013, Mr Krishnamurthi transferred 67 per cent of the shares in GBCD to Mr Colthurst, who then held 100 per cent of

10	At [10].
11	At [12].
12	At [13].

the shares in GBCD of which 67 per cent were held as bare trustee for Mr Krishnamurthi and Mr Patel.

(d)	Following the settlement in 2019 with Mr Colthurst, Mr Krishnamurthi became a 100 per cent holder of GBCD.13

[31]	Mr Patel deposes that in anticipation of differences between the joint venture partners not being able to be resolved, leading to a parting of the ways, cl 26 of the JV Agreement was inserted, which provided for a division between the three partners of the properties held in trust by GBCD within two years of the date of the JV Agreement as follows:

(a)	Mr Patel or his nominee was entitled to purchase units H, I, J and K for
$575,000;

(b)	Mr Krishnamurthi or his nominee was entitled to purchase units L, LA, M, N and O for $450,000;

(c)	Mr Colthurst or his nominee was entitled to purchase and/or finance and keep units A, B, C, D, E, F and G.14

[32]	He deposes that on or about 3 July 2015, GBCD sold and transferred:

(a)	Units H, I, J, K, L and LA to Mr Patel’s nominee while units L and LA were held in trust for Mr Krishnamurthi, and were later transferred to GH Foods Ltd, Mr Krishnamurthi’s company.

(b)	Units M, N and  O  were  sold  to  GH  Foods  Ltd  as  nominee  of  Mr Krishnamurthi. Therefore as at 3 July 2015, seven units remained in GBCD namely units A, B, C, D, E, F and G.15

13	At [14].
14	At [16].
15	At [17]-[18].

[33]	Mr Patel further deposes that Mr Colthurst, in December 2016, issued proceedings in the High Court against Mr Krishnamurthi, GBCD and Mr Patel in respect of units A, B, C, D, E, F and G, alleging various causes of action including breach of the JV Agreement, breach of fiduciary duty, breach of s 134 of the Companies   Act   1993,   and   improper   exercise    of    director’s    powers    by Mr Krishnamurthi.16

[34]	He deposes that the proceedings were settled by Mr Krishnamurthi, GBCD and Mr Patel agreeing to purchase from Mr Colthurst his interest in the joint venture including units A to G, for $800,000. There was accordingly a deed of settlement pursuant  to  which  Mr   Colthurst   transferred   all   his   shares   in   GBCD   to   Mr Krishnamurthi and Mr Patel and/or their nominees.17

[35]	Mr Patel then deposes that he contributed $245,000 towards the $800,000 settlement paid to Mr Colthurst and Mr Krishnamurthi was to contribute the same amount with the balance being funded by a loan.18

[36]	Finally, Mr Patel deposes that he had previously transferred his 33 per cent shareholding  in  GBCD  to  Mr Krishnamurthi   to   be   held   in   trust   because   Mr Krishnamurthi was experienced in commercial matters while Mr Patel was involved in running a superette in Mangawhai.   He deposes that he agreed that      Mr Cotlhurst’s shares were to be transferred to Mr Krishnamurthi and were also to be held on trust for him. This gave Mr Krishnamurthi 100 per cent of the shareholding in GBCD, of which he holds 50 per cent on trust for Mr Patel.19

Notice of opposition to originating application to sustain caveat

[37]	GBCD opposes the application on the grounds that Mr Patel does not have a reasonably arguable case to demonstrate that he holds an interest in the caveated properties sufficient to support the Caveat:20

16	At [21].
17	At [22].
18	At [23].
19	At [27].
20	Notice of opposition to originating application to sustain caveat dated 2 February 2022 at [3].

(a)	The Joint Venture Agreement dated 12 September 2013, provided that:

(i)	the respondent would purchase and hold the caveated properties in its own name; and

(ii)	Aaron Colthurst rather than the applicant, would have a first option to purchase the caveated properties from the respondent.

(b)	The Joint Venture Agreement was terminated and superseded by the Deed of Settlement dated 21 February 2019.

(c)	The Deed of Settlement:

(i)	provided that in consideration for the payment of the Settlement Sum (as defined in the Deed of Settlement), Aaron Colthurst would:

(aa)	transfer the shares in the respondent to Sivamani Krishnamurthi and the applicant;

(bb)	discharge his own caveat over the properties recorded in the Deed of Settlement;

(ii)	did not confer to the applicant any contractual, or any other interest in the caveated properties.

(d)	In any event, the applicant is estopped from claiming any interest in the respondent and its assets, including the caveated properties.

(e)	Accordingly, it is clear that there was no valid ground for the applicant lodging the Caveat.

(f)	The applicant would not be prejudiced by the removal of the Caveat and there is no practical advantage to maintaining the caveat.

Affidavit of Sivamani Krishnamurthi dated 2 February 2022

[38]	Mr Krishnamurthi has sworn two affidavits in support of the notice of opposition. In the first, dated 2 February 2022, he deposes he is the sole shareholder and director of GBCD, which owns the Gulf Harbour properties that are the subject of the Caveat.21

[39]	Mr Krishnamurthi deposes that GBCD was incorporated for the purpose of purchasing and holding the Gulf Harbour units in furtherance of the joint venture. But, he says, a dispute arose between the parties in late 2016. Mr Colthurst claimed against

21	Affidavit of Sivamani Krishnamurthi in support of notice of opposition dated 2 February 2022 at [1]–[5].

GBCD, Mr Patel and Mr Krishnamurthi. The dispute settled in February 2019, on terms that GBCD and Mr Patel pay Mr Colthurst $800,000, and Mr Colthurst transfer all shares in GBCD to Mr Patel and Mr Krishnamurthi. Mr Krishnamurthi says cl 4 of the settlement agreement provided that the settlement was a complete bar to, and defence against, any and all claims by any party against any other party. He says he understood this to mean the joint venture was no longer effective and enforceable.22

[40]	Mr Krishnamurthi deposes that he and Mr Patel paid Mr Colthurst in accordance  with   the   terms   of   settlement.   Mr   Patel   paid   $242,000,   with Mr Krishnamurthi contributing the balance. Mr Krishnamurthi says the shares were in turn transferred into his name only, at Mr Patel’s request. The reason for this arrangement was that Mr Patel did not want to provide a personal guarantee for a general security agreement to GBCD’s bank, as it would stop him borrowing for his other ventures.23

[41]	Mr Krishnamurthi says that, following this period of legal challenge and expense, Mr Patel expressed he wanted to be released from the company. He says that in 2017 he agreed to pay Mr Patel $170,000, and authorised GBCD to make that payment later in 2018. He deposes the reason this sum was less than Mr Patel’s contribution to the settlement with Mr Colthurst was that Mr Patel had benefited from earlier works carried out on other properties he purchased in accordance with the joint venture.24

[42]	Next, Mr Krishnamurthi deposes that Mr Patel subsequently took no interest, and had no input, into the management and operations of GBCD. But with property valuations having appreciated and some of GBCD’s debt having been paid down,  Mr Patel lodged the Caveat on 15 October 2021.25

22	At [6]–[12].
23	At [13]–[14].
24	At [15].
25	At [16].

[43]	Mr Krishnamurthi disputes that he holds shares in GBCD on trust for Mr Patel. He says this arrangement was never agreed. Instead, Mr Patel wanted to be released from the business and paid out. That is what happened.26

[44]	Mr Krishnamurthi deposes that on 26 November 2021 he instructed his solicitors to apply for the Caveat to lapse. The following month, he was served with Mr Patel’s application for the Caveat to be sustained. Responding to Mr Patel’s concern that GBCD sold one of the units without informing him, Mr Krishnamurthi explains that the sale was required to service debt owed to ANZ bank as mortgagee of the properties. He explains that he, as sole shareholder, received no money from that sale.27

[45]	Concluding, Mr Krishnamurthi deposes that GBCD is and always has been the owner of the Gulf Harbour units.  Mr Patel has no ownership interest in the units.  Mr Krishnamurthi does not hold shares in GBCD on trust for Mr Patel — instead, Mr Patel was paid out at the time he exited the business venture.28

Affidavit of Sivamani Krishnamurthi dated 11 February 2022

[46]	In his second affidavit, dated 11 February 2022, Mr Krishnamurthi deposes that the information in his earlier affidavit, that Mr Patel was paid $170,000 after settlement of Mr Colthurst’s claim, was incorrect. What had happened was Mr Patel borrowed $170,000 from GBCD in 2017 in order to fund another deal in China.      At the time, Mr Krishnamurthi requested repayment of that sum, which Mr Patel promised to do. However, after settlement of Mr Colthurst’s claim, when Mr Patel asked for his capital contribution to GBCD be returned, Mr Krishnamurthi reminded him of the debt he owed to GBCD. He says the two agreed to set off the amounts.29

[47]	Replying to Mr Patel’s second affidavit, Mr Krishnamurthi  reiterates  that  Mr Patel had no involvement in GBCD after the settlement of Mr Colthurst’s claim. He says he did not inform Mr Patel about the decision to sell the unit because, as far

26	At [17].
27	At [18]–[22].
28	At [23]–[24].
29	Supplementary affidavit of Sivamani Krishnamurthi in support of notice  of opposition dated    11 February 2022 at [5]–[9].

as he was aware, Mr Patel had relinquished his shareholding and wanted nothing more to do with the company. He says he thinks it is unfair for Mr Patel to claim that he failed to provide him with financial information when Mr Patel had not requested any.30

[48]	The clear arrangement that the two had reached was that Mr Patel would exit the company, with all shares being transferred to Mr Krishnamurthi. No shares were to be held on trust for Mr Patel —  it  would have  made no  commercial sense for Mr Krishnamurthi to solely manage GBCD and guarantee all its obligations if he were not the sole shareholder.31

Affidavit in reply of Mr Patel dated 24 February 2022

[49]	Mr Patel has made an affidavit in reply to Mr Krishnamurthi’s two affidavits. He deposes that the settlement agreement was intended to settle Mr Colthurst’s proceeding and end any agreements between Mr Colthurst and the three defendants (being GBCD, Mr Patel and Mr Krishnamurthi). He says that prior to the settlement he, Mr Krishnamurthi and Mr Colthurst each held 33 per cent shareholdings, with his shares being held on trust for him by Mr Krishnamurthi. Mr Patel deposes that this arrangement did not change after settlement.32

[50]	Mr Patel says that after the  settlement,  he  agreed  to  his  50  per  cent  of Mr Colthurst’s shareholding (that is, 16.5 per cent of the shares in GBCD) being transferred to Mr Krishnamurthi and to be held on trust. That meant Mr Krishnamurthi held 50 per cent of the GBCD shares on trust for Mr Patel. Mr Patel disputes that he instructed the shares be transferred to Mr Krishnamurthi because he did not want to provide a personal guarantee to GBCD’s bank — in fact, he has offered and been willing to provide such guarantees. Mr Patel says it is Mr Krishnamurthi who declined that arrangement.33

30	At [11]–[12].
31	At [13]–[16].
32	Reply Affidavit of Devesh Kumar Patel in support of originating application for order to sustain a caveat dated 24 February 2022 at [6].
33	At [7]–[9].

[51]	Next, Mr Patel deposes that it is untrue that he agreed to a complete release from GBCD in return for payment of $170,000. He says there was no conversation or agreement to that effect. He says that, had he wanted a complete release, it would not make logical sense that he would pay $257,000 into GBCD for the purpose of making the settlement payment to Mr Colthurst.34

[52]	Mr Patel says that at no time has he borrowed money from GBCD. To the contrary, he says he has loaned the company around $350,000. He says there is a balance of approximately $180,000 still due from GBCD to him. Mr Patel deposes he believes the GBCD balance sheets that Mr Krishnamurthi has put in in evidence are false, and that he will engage a forensic auditor in the substantive proceeding to investigate discrepancies.35

[53]	Mr Patel says he never relinquished his shareholding in GBCD and never said to Mr Krishnamurthi that he did not want anything more to do with the company. He says Mr Krishnamurthi never communicated with him about the company’s financial stresses brought on by COVID-19, and there was never any discussion or agreement that Mr Patel would exit GBCD.36

[54]	Finally, Mr Patel reiterates that he fears that unless the Caveat is sustained, Mr Krishnamurthi will further dissipate the properties held on trust by GBCD.37

Mr Patel’s submissions

[55]	Mr Lawrence Ponniah, for Mr Patel, submits that it is reasonably arguable that Mr Patel has a beneficial or equitable proprietary interest in the caveated properties pursuant to the JV Agreement.38

[56]	Mr Ponniah submits that a fiduciary relationship exists between joint venturers such that even in the absence of an express agreement, one joint venturer has a

34	At [10]–[12].
35	At [13]–[17].
36	At [18]–[25].
37	At [26] (excluding 26(a), (b) and (c)).
38	Applicant Counsel’s Submissions in support of Originating application for order to sustain a caveat dated 18 March 2022 at [4]–[5].

caveatable interest in land held for purposes of the joint venture by another joint venturer, or by the entity incorporated by the joint venture for the purpose of acquiring and holding property for the joint venture. He submits that the intention of the joint venture is that each partner would have an equal beneficial interest in the properties by way of a  resulting  trust  or  constructive  trust  arising  in  the  context  of  the  JV Agreement.39

[57]	Mr Ponniah says each of the joint venture partners invested expertise, time and money into the development and maintenance of the caveated properties. For his part, Mr Patel has invested approximately $724,307.31 into the joint venture and GBCD. In  Mr  Ponniah’s  submission,  the   current   shareholding   arrangement   is   that Mr Krishnamurthi is the sole shareholder of GBCD, but 50 per cent of the shares are held on trust for Mr Patel.40

[58]	Mr Ponniah says that, at the time of settlement, Mr Colthurst retained his same beneficial and equitable interest in the caveated  properties  as  did Mr  Patel  and  Mr Krishnamurthi. Upon settlement, his beneficial interest in the caveated properties and his 33 per cent shareholding passed equally to Mr Patel and Mr Krishnamurthi. Mr Patel and Mr Krishnamurthi continued the joint venture as equal parties, with GBCD continuing to hold the caveated properties for the two as equal beneficiaries under an implied, resulting or constructive trust.41

[59]	As to Mr Krishnamurthi’s sale of  the  unit  without  informing  Mr  Patel,  Mr Ponniah says there is a risk that if the Caveat lapses Mr Krishnamurthi would cause GBCD to sell further units and dissipate the proceeds without Mr Patel’s knowledge. This would seriously prejudice Mr Patel’s legitimate beneficial or equitable ownership interest in the caveated properties owned by GBCD. For that reason, the Caveat should remain on the titles of the caveated properties to protect Mr Patel’s interest in the properties pending resolution of the substantive claim.42

39	At [15]–[16], citing Luo v Jin [2021] NZHC 709 at [60]–[64].
40	At [17]–[19].
41	At [20]–[28].
42	At [29]–[31].

[60]	Mr Ponniah submits that the settlement arrangement did not interfere with the joint venture relationship between Mr Patel and Mr Krishnamurthi. The affidavit evidence supports Mr Patel’s position that the joint venture continues and that 50 per cent of the shareholding in GBCD is held on trust for Mr Patel.43

[61]	Concluding, Mr Ponniah submits that it is apparent from the affidavit evidence that Mr Patel has established an arguable case for a beneficial equitable ownership interest in the caveatable properties held by GBCD. Accordingly, there should be an order to sustain the Caveat until the merits of the entire dispute can be determined at a substantive hearing. Mr Patel should be awarded costs.44

GBCD’s submissions

[62]	Mr Mihai Pascariu, for GBCD, objects to certain passages in Mr Patel’s affidavits. He says affidavits must not contain any material in the nature of a submission. He says the Court should refuse to read the impugned paragraphs, being
[24] and [25] of Mr Patel’s first affidavit and [5], [7], and [26(a)–(c)] of Mr Patel’s second affidavit.45

[63]	Mr Pascariu says the Caveat does not comply with the statutory requirements in that the interest Mr Patel claims is insufficiently certain. While the Caveat asserts a “beneficial interest in the properties … pursuant to the said Joint Venture Agreement between the Caveator and GBCD Property Ltd”, Mr Patel’s written submissions seek to set up an implied or constructive trust arising out of the joint venture relationship between the three partners. In Mr Pascariu’s submission, those are distinct claims and Mr Patel cannot rely on the latter assertion to support the Caveat. Further, the Caveat does not state the exact share of the units it seeks to protect. On that basis, the Caveat should lapse.46

[64]	Next, Mr Pascariu submits that Mr Patel has not established a beneficial interest in the units capable of supporting the Caveat. The JV Agreement has been

43	At [32]–[38].
44	At [39]–[41].
45	Synopsis of arguments for the respondent dated 24 March 2022 at [2.1]–[2.3].
46	At [6.1]–[6.10], referring to the Land Transfer Regulations 2018, sch 2.

terminated and superseded by the deed of settlement. In any event, none of the terms of the JV Agreement indicate that the parties would have a beneficial interest in the assets acquired by the special purpose companies. A joint venture party’s interest is in the nature of a future interest in the distribution of potential proceeds of sale of partnership land and is therefore not capable of being caveated.47

[65]	Mr Pascariu says the provisions of the deed of settlement are unequivocal, having the effect that the JV Agreement was cancelled and superseded by the deed of settlement. The effect of the deed was to fully and finally settle the claims and the proceeding between the parties.48

[66]	In Mr Pascariu’s submission, Mr Patel’s claim to a beneficial or equitable interest in the caveated properties is mistaken in at least three respects. First, as already addressed, the parties to the JV Agreement had no beneficial interest in the venture’s assets. Second, while an option to purchase land gives rise to a caveatable interest, such option must be given by the registered proprietor of the land. GBCD was not a party to the JV Agreement. Third, the ordinary meaning of the deed of settlement  is  that  Mr  Colthurst’s  shares  in  GBCD  would  be  transferred  to    Mr Krishnamurthi and Mr Patel and all his other claims under the JV Agreement would be brought to an end. There was no provision for the transfer of Mr Colthurst’s option to purchase or for any other interests in the units.49

[67]	Mr Pascariu submits that, even if Mr Patel can establish a beneficial interest of 50 per cent of GBCD’s shares, it does not follow that he has a proprietary interest in the company’s assets. There are no express terms in the deed of settlement or factual circumstances that Mr Patel can point to in support of his claim for an implied, resulting or constructive trust in respect of the units.50

[68]	Concluding, Mr Pascariu says the Caveat claims a beneficial interest in the units pursuant to the JV Agreement between Mr Patel and GBCD. But GBCD was

47	At [7.1]–[7.11].
48	At [7.12]–[8.3].
49	At [8.4]–[8.7].
50	At [8.8]–[8.11], citing Ten Pin Properties Ltd v Bowlarama (NZ) Ltd HC Christchurch M655/89, 18 December 1989 at 2–3.

not a party to that agreement. He says the Caveat is deficient because it does not state on its face what share of the units it is designed to protect. It is unclear what species of trust Mr Patel claims arises in the proceeding. In any event, he says, Mr Patel must show how the claimed interest is derived from GBCD. He has not done so. He can show no more than a beneficial interest in GBCD’s shares. For those reasons, the Caveat cannot be sustained. Costs should be awarded to GBCD.51

Legal principles

[69]	Section 138 of the Land Transfer Act 2017 (LTA) provides, relevantly:

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 land under an express, implied, resulting or constructive trust[.]

…

[70]	The principles governing the determination of applications to sustain caveats are well-established.52 The onus is on the caveator to demonstrate an interest in the land that suffices to support the caveat, and the caveator must demonstrate a reasonably arguable case to support the claimed interest.53 This means the caveator need not definitively establish his or her right to the interest.

[71]	The process by which applications to sustain a caveat are determined is ill- suited to resolving disputed factual questions. An order for removal will only be made if it is clear the caveat cannot be maintained — either because there was no valid ground for its lodging in the first place, or because the ground on which it was lodged has now ceased to exist.

51	At [9.1]–[9.7].
52	See generally Philpott v Noble Investments Ltd [2015] NZCA 342 at [26].
53	Botany Land Development Ltd v Auckland Council [2014] NZCA 61 at [24]–[25].

[72]	Although the onus of proof lies with the caveator, any conflict between affidavits will generally be resolved in the caveator’s favour.54 This is not to say that the Court is bound to accept uncritically statements in an affidavit that lack precision, are equivocal, inconsistent with the documentary evidence or other statements of the same deponent, or inherently improbable.55

[73]	While the Court retains a residual discretion to remove a caveat or allow it to lapse even if the caveator has a legitimate and caveatable interest, that discretion is to be exercised cautiously. The Court of Appeal in Pacific Homes Limited (In Rec) v Consolidated Joineries Ltd56 said that the discretion would only be exercised if:

(a)	the Court is completely satisfied that the legitimate interests of the caveator will not be prejudiced by removal of the caveat;

(b)	the caveator can have no reasonable expectation of obtaining a benefit from the continuance of the caveat in the form of recovery of money secured over the land or specific performance of an agreement;

(c)	the caveator’s interest can be reasonably accommodated in some other way, such as by substituting a fund of money under the control of the Court.

Analysis

Issues to be determined

[74]	The issues that fall for determination are:

(a)	Is the drafting of the Caveat defective in that the interest in the caveated properties which Mr Patel claims is insufficiently certain?

54    Bethell v Rickard [2013] NZCA 68 at [22].  See also MacRae v Rapana HC Auckland M633/94, 17 June 1994.
55 Barrett v IBC International Ltd [1995] 3 NZLR 170 (CA) at 175, citing Eng Mee Yong v Letchumanan s/o Velayutham [1980] AC 331 (PC) at 341; and Xie v 126 Waimumu Ltd [2020] NZHC 1109 at [8].
56 Pacific Homes Limited (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656.

(b)	Has Mr Patel established a reasonably arguable case that he holds a caveatable interest in the caveated properties?

(c)	If Mr Patel does have a caveatable interest in the caveated properties, should the Court nevertheless exercise its residual discretion to remove the Caveat?

Is the drafting of the Caveat defective in that the interest in the caveated properties which Mr Patel claims is insufficiently certain?

[75]	The prescribed information referred to at s 138(3) of the LTA is set out in schedule 2 of the Land Transfer Regulations 2018 (the Regulations). 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.

[76]	There is a divergence of opinion in the authorities as to what amounts to the “sufficient certainty” required by the Regulations in the description of the interest claimed in a caveat. On the one hand, it has been held that a caveator cannot argue or claim to retain the caveat on some ground other than that set out in the caveat itself.57

[77]	On the other hand, a more flexible approach is said to better serve the simplicity and speedy protection afforded by the caveat procedure.58

[78]	The Caveat records the following description of the interest claimed:

The Caveator in his capacity as a contracting party to the Joint Venture Agreement dated 12/09/2013 relating to the properties with records of title 76151-76156, has a beneficial interest in the properties with Records of titles 76151-76156 pursuant to the said Joint Venture Agreement between the Caveator and GBCD Property Limited which is further affirmed through Deed of Settlement dated 21 February 2019.

57	New Zealand Mortgage Guarantee Ltd v Pye [1979] 2 NZLR 188 (SC) at 197; and Ball v Fawcett
[1997] 1 NZLR 743 (HC) at 746.
58	Buddle v Russell [1984] 1 NZLR 537 (HC); and Norrie v The Registrar-General of Land (2005) 6 NZCPR 94 (HC).

[79]	Mr Pascariu submits that Mr Patel’s claimed interest in the caveated properties in the applicant’s submissions is different from the interest described in the Caveat. In the submissions the interest is described as being “by way of an implied trust, best described as a resulting trust or constructive trust arising in the context of a joint venture agreement pursuant to which [Mr Patel] made financial and other contributions to the acquisition, development, the leasing of and the sustenance of the caveated JV property owned by GBCD.” Mr Pascariu submits the interest claimed in the submissions is materially different from that claimed in the Caveat and the Caveat should not be sustained for that reason.

[80]	Mr Pascariu also submits the Caveat is defective because it does not establish a proper link to GBCD, the registered owner of the caveated properties. The Caveat records the beneficial interest held by Mr Patel by virtue of the JV Agreement between himself and GBCD. However, GBCD was not a party to the JV Agreement.

[81]	Mr Pascariu further submits the Caveat is also defective as it did not state what share of the caveated properties it is designed to protect. He says that to comply with the Regulations the Caveat ought to clearly record the exact share claimed.

[82]	Mr Ponniah on the other hand submits that following Buddle v Russell,59 it is sufficient that the Caveat shows a link to the registered proprietor, the nature of the interest claimed under the Caveat is self-evident, and an equitable interest created relating to the joint venture not inconsistent with a resulting or constructive trust put forward during his submissions. Mr Ponniah also relies on the decision in Zhong v Wang and the decision in Luo v Jin.60 In the Zhong v Wang decision, the Court of Appeal cautioned against too strict an approach, saying:

[53] What is important is that the registered proprietor and the Court understand the nature of the interest claimed and the basis of that claim.

…

[58] The purpose of the caveat procedure is to enable those with proper claims to proprietary interests to protect themselves against loss by forbidding dealing with the land pending resolution of substantive claims. The underlying purpose of the caveat régime could be undermined if too strict an

59	Buddle v Russell, above n 58.
60	Zhong v Wang (2006) NZCPR 488 (CA) at [53]; and Luo v Jin, above n 39.

approach were taken to the detail required to describe the interest claimed and its derivation from the registered proprietor.

[83]	In this instance, I prefer the approach in Buddle v Russell and Zhong v Wang, as followed by Associate Judge Gardiner in Luo v Jin. It would have been self-evident to Mr Krishnamurthi from the Caveat that the beneficial interest claimed by Mr Patel arose out of the allegation that GBCD held properties as trustee for the joint venture parties. While the Caveat did not state the share of the caveated properties claimed, it would have also been self-evident to Mr Krishnamurthi that the interest claimed would be a half share. All Mr Patel’s allegations relating to the shareholding in GBCD held on trust and the interest in the caveated properties related to a 50 per cent interest following the exit of Mr Colthurst from the joint venture.

[84]	Mr Pascariu is correct that the interest claimed under the Caveat must derive from the registered owner and GBCD is not a party to the JV Agreement and hence could not directly grant an equitable interest in the caveated properties to Mr Patel under the JV Agreement. However, in my view there is a sufficient link to GBCD as registered owner by reason of the claim by Mr Patel that GBCD is holding the caveated properties as trustee for the joint venture parties, and the equitable interest Mr Patel alleges he has in the caveated properties arises under the joint venture which existed before the JV Agreement was entered into and under the terms of the JV Agreement of which GBCD is part.

[85]	I therefore am of the view that the Caveat sufficiently describes the caveatable interest Mr Patel now claims in the caveated properties.

Has Mr Patel established a reasonably arguable case that he holds a caveatable interest in the caveated properties?

[86]	This issue separates into two further issues:

(i)	Have the JV Agreement and related arrangements between the joint venture parties been terminated and superseded by the deed of settlement? If so, does Mr Patel have a reasonably arguable caveatable interest in the caveated properties under the deed of settlement?

(ii)	If the JV Agreement has not been terminated, does Mr Patel have a reasonably arguable caveatable interest under the JV Agreement and related arrangements between the joint venture parties?

Have the JV Agreement and related arrangements between the joint venture parties been terminated and superseded by the deed of settlement?

[87]	By way of background to this issue, in late 2016 a dispute arose between Messrs Colthurst, Krishnamurthi and Patel. Mr Colthurst issued proceedings against Mr Krishnamurthi, Mr Patel and GBCD in respect of his option to purchase the caveated properties (except Unit G) under the JV Agreement and the management of GBCD. The proceedings were settled and the parties entered into a deed of settlement. The parties to the deed of settlement were Messrs Colthurst, Patel, Krishnamurthi and GBCD.

[88]	Mr Pascariu submits that the terms of the deed of settlement are unequivocal and the JV Agreement was cancelled and superseded by the deed of settlement.

[89]	In particular, he relies on the following clauses from the deed of settlement:

Claims means any claim for any remedy whether known or unknown as at the date of the Agreement which a Party has made or could make (now and in the future) against any other Party … in any way relating to the [Joint Venture Agreement]… (cl 1.1)

…

The terms of this Agreement may be relied upon as a complete bar to and defence against any and all Claims by any Party against any other Party. For the avoidance of doubt nothing in this clause releases any of the Parties from any of their obligations under this Agreement. (cl 4)

This Agreement contains the entire agreement understanding and arrangement (express and implied) between the Parties dealing with the subject matter of the Proceedings and supersedes and cancels any previous agreement understanding and arrangement relating thereto,  whether  written  or  oral. (cl 9.1)

[90]	Mr Pascariu submits that the JV Agreement was terminated and cl 4 bars any claim under the JV Agreement.

[91]	Mr Ponniah, on the other hand, submits that the deed of settlement only settled matters between Mr Colthurst on the one hand, and Mr Krishnamurthi, Mr Patel and GBCD on the other hand. He submits that the deed of settlement had no effect on the ongoing arrangements between Mr Krishnamurthi and Mr Patel in relation to the joint venture. Mr Ponniah submits that under the deed of settlement the following occurred:

(a)	Mr Colthurst was paid $800,000 in full and final settlement of his claims;

(b)	In consideration of the payment of $800,000 to Mr Colthurst:

(i)	All Mr Colthurst’s equitable or legal interest in the caveated properties passed to Mr Krishnamurthi and Mr Patel equally;

(ii)	GBCD as trustee held Mr Colthurst’s Gulf Harbour units A B C D F and G in trust for Mr Krishnamurthi and Mr Patel as equal beneficiaries pursuant to an implied, resulting or constructive trust.

(iii)	Mr Colthurst’s interest in one-third shares in GBCD passed to Mr Krishnamurthi and Mr Patel equally.  At  the  request  of Mr Patel, Mr Colthurst’s one-third share in GBCD was transferred to Mr Krishnamurthi with 50 per cent of that one- third shares being held  on  trust  by  Mr Krishnamurthi  for  Mr Patel. The result being that, overall, Mr Krishnamurthi holds 100 per cent of the shares in GBCD, with 50 per cent held on trust for Mr Patel.

[92]	In my view, it is reasonably arguable that the interpretation of the deed of settlement put forward by Mr Ponniah is correct. The deed of settlement was focused on settling the proceedings between Mr Colthurst on the one hand as plaintiff, and Mr Krishnamurthi, Mr Patel and GBCD as defendants on the other hand. While the wording of the definition of “Claims” and cls 4 and 9.1 of the deed of settlement relied on by Mr Pascariu are indeed widely drafted to encompass all claims between the

parties, those provisions must be read in the context of the purpose of the deed of settlement being to settle Mr Colthurst’s claims. There is a reasonable argument that the provisions were not intended to end the JV Agreement and related arrangements and any and all claims between Mr Patel and Mr Krishnamurthi relating to the joint venture which were not in issue in the proceedings brought by Mr Colthurst that the deed of settlement disposed of.

[93]	There is conflicting evidence as to whether, following the deed of settlement being executed and Mr Colthurst leaving the joint venture, Mr Patel withdrew from involvement with GBCD. Mr Krishnamurthi says that Mr Patel was paid approximately $170,000 to exit GBCD because he did not wish to give personal guarantees for GBCD’s obligations, whereas Mr Krishnamurthi was prepared to do so. Mr Patel deposes that no such arrangement was entered into and he was prepared to give the necessary personal guarantee, but that this was declined by Mr Krishnamurthi.

[94]	In conclusion, I am of the view that it is reasonably arguable that a deed of settlement did not terminate the JV Agreement and related joint venture arrangements as  between Mr Krishnamurthi  and Mr  Patel.  It is  also reasonably arguable that  Mr Patel’s assertion that on Mr Colthurst departing the joint venture, his equitable interests in the caveated properties were transferred to Mr Krishnamurthi and Mr Patel equally is also correct.

[95]	Consequently, it is necessary to review the joint venture and related arrangements to determine whether Mr Patel has a reasonably arguable caveatable interest in the caveated properties.

Does Mr Patel have a caveatable interest in the caveated properties arising under the joint venture agreement and related arrangements?

[96]	Mr Ponniah submits that the caveated properties were acquired as part of a joint  venture  investment  arrangement  between  Mr   Patel,   Mr   Colthurst   and Mr Krishnamurthi combining their resources to jointly acquire equal interests in properties located in Gulf Harbour, Whangaparaoa, and to equally share costs and profits.

[97]	Mr Ponniah submits that Mr Patel, along with the two other joint venturers, invested funds in the joint venture and incorporated special purpose companies to purchase and hold joint venture properties. For the purposes of the joint venture, GBCD was incorporated to complete the purchase of the caveated properties and hold them on behalf of the joint venture. He submits the joint venture arrangements existed before the incorporation of the special purpose companies, including GBCD. He submits that it was not an arrangement where the parties were contributing funds and acquiring shares in the companies holding the properties. The joint venture partners had invested in the properties and then these were transferred to the special purpose companies to hold as trustees.

[98]	Mr Ponniah submits that the JV Agreement is evidence of the existence of the joint venture and records the implementation of the joint venture and the initial funding, and how GBCD came to own the caveated properties. Mr Ponniah submits that a fiduciary relationship exists between the joint venturers such that even in the absence of an express agreement, one joint venturer has a caveatable interest in the land held for the purpose of the joint venture by another joint venturer, or by the entity incorporated for the specific purpose of acquiring and holding property for the joint venture. He submits that from the outset the intention of the joint venture was that each joint venture partner would have an equal beneficial interest in the properties acquired by the joint venture, including those held by GBCD as trustee for the joint venture. This interest is by way of an implied trust, being a resulting or constructive trust arising in the context of the joint venture arrangements, in which Mr Patel made financial and other contributions to the acquisition, development and leasing, and sustenance of the caveated properties owned by GBCD.

[99]	To support his contention that each of the joint venture partners were intended to hold an equitable interest in the joint venture properties held by the special purpose companies set up to hold them as trustees, Mr Ponniah relies on cl 15.10 of the       JV Agreement. Clause 15.10 provides:

GBCD agrees that Siva or his nominee shall be entitled to lodge a caveat against all units then owned by GBCD following completion of refinance. The accepted consideration for the caveat is the equity of Siva and Devesh through the various companies in and all the units calculated in reference to the valuation relied upon by the Bank over the said units.

[100]	Mr Ponniah submits that this clause makes it clear that the units were only held by GBCD as trustee, with the fiduciary arrangement between the joint venturers resulting from the contributions made to acquiring the investment properties in the joint venture even before they were held by GBCD as trustee. Mr Ponniah submits that the joint venture arrangement was never one where the joint venture parties invested in shares in corporate entities which owned the relevant properties.

[101]	Mr Pascariu, on the other hand, submits that following the refinancing facilities taken out by various special purpose companies pursuant to the joint venture arrangements set out in the JV Agreement, GBCD became the registered owner of the caveated properties. He submits that the ordinary meaning of a JV Agreement is that in return for their contribution of funds the joint venture parties would receive a commensurate shareholding interest in the companies used to borrow the funds, purchase and hold the joint venture assets. He submits that none of the terms of the JV Agreement indicate that the parties would have a beneficial interest in the assets acquired, except for the exit clause (cl 26).

[102]	Mr Pascariu submits that generally a joint venture party will not have a beneficial interest in land simply because of the existence of a joint venture. Something more is required. He relies on the cases of Simperingham v Martin and Aegean Developments Ltd v Love.61 These cases suggest that a joint venture party’s interest is merely in the nature of a future interest in the distribution of potential proceeds of the sale of partnership land and therefore cannot be caveated, unless there is an agreement between the parties that will each have an interest in the land itself.

[103]	Mr Pascariu submits there is no provision in the JV Agreement that Mr Patel would have a beneficial interest in the caveated properties. In relation to cl 15.10 of the JV Agreement relied on by Mr Ponniah as supporting the proposition that the joint venture parties were intended to have an equitable interest in the joint venture properties, Mr Pascariu submits any such equitable interest was extinguished when the properties were owned by GBCD and debt in respect of them was refinanced by GBCD using bank financing.

61	Simperingham v Martin CA5/95, 2 June 1995; and Aegean Developments Ltd v Love HC Auckland M1620-IM99, 17 March 2000.

[104]	Mr Pascariu submits that the caveator’s interest must be derived from the registered proprietor, GBCD. The registered proprietor of the caveated properties is not a party to the JV Agreement and accordingly could not be bound by its terms. Neither could Mr Patel derive an interest from GBCD in the circumstances.

[105]	Furthermore, he submits that the parties to the JV Agreement chose to hold the land through companies — a choice by which they must be bound. To hold otherwise would undermine the basis concept of the incorporation and limited liability, and run counter to the doctrine of a separate legal personality recognised in s 15 of the Companies Act 1993.

[106]	Finally, Mr Pascariu distinguishes the decision of Luo v Jin.62 He says that in that case the parties did not agree for the property to be owned by a corporate vehicle. The property in issue was purchased by Mr Jin and remained in his name at the time of the proceeding. Ms Luo successfully established that she had made contributions pursuant to a JV Agreement between her and Mr Jin, the registered proprietor of the property. There was no need for Ms Luo to get around the corporate structure deliberately put in place by the parties. Neither did she try to circumvent the doctrine of separate legal personality as the applicant is seeking to do here.

[107]	I am of the view that it is reasonably arguable that Mr Patel holds a caveatable interest in the caveated properties by virtue of an equitable interest he has retained in the caveated properties which were not extinguished when the caveated properties were acquired by GBCD. As has been noted above, a joint venture party will not have a beneficial interest in the land simply because of the existence of a joint venture. Something more is required. In this instance, distinguishing the present case from Simperingham v Martin, there is something more present. It is the fact that the joint venture was in existence before the properties were acquired by GBCD and under the joint venture arrangements the joint venture parties held an equitable interest in the properties acquired for the joint venture by virtue of their contributions to the acquisitions. It is reasonably arguable that this equitable interest was not extinguished when the caveated properties were acquired by GBCD but preserved by an implied

62	Luo v Jin, above n 39.

trust, being a resulting or constructive trust impressed upon GBCD. The arrangement was not a contribution of funds for purchase of a shareholding in GBCD. This is reinforced by cl 15.10 of the JV Agreement which, in my view, creates a reasonable argument that the parties maintained an equitable interest in the caveated properties held as trustee by GBCD.

Should the Court exercise its discretion to remove the Caveat?

[108]	As I have determined that it is reasonably arguable that Mr Patel has a caveatable interest in the caveated properties, the final question to be determined is whether, notwithstanding that caveatable interest, the Court should exercise its discretion to remove the Caveat. The principles which the Court should exercise its residual discretion have been set out at [73]above.

[109]	I am of the view that in this instance the Court should not exercise its discretion to remove the Caveat. The practical benefits to Mr Patel of retaining the caveat are prevention of Mr Krishnamurthi being able to deal with any of the caveated properties until the substantive proceedings are resolved. One of the units owned by GBCD has already been sold, and Mr Patel has in his affidavit evidence expressed concern that further units could be sold and the proceeds dissipated if the Caveat is removed. It must be borne in mind that Mr Krishnamurthi is in complete control of GBCD, being the sole shareholder and director and that he denies Mr Patel’s allegation that he holds 50 per cent of the shares in GBCD on trust for Mr Patel.

[110]	There has been no alternative means to the Caveat by which Mr Patel’s interest could be protected put before the Court.

[111]	Under the principles upon which the Court should exercise its discretion as set out at [73], I am of the view that the circumstances where the Court should exercise its residual discretion to remove a caveat are not established in this case and the Caveat should be sustained.

Objection to affidavit evidence

[112]	Mr Pascariu, on behalf of GBCD, objects to certain passages of Mr Patel’s affidavits dated 4 February 2022 and 24 February 2022 respectively on the grounds that the offending passages are in the nature of submissions and accordingly should not be read by the Court.

[113]	I have reviewed the relevant passages of Mr Patel’s affidavits referred to at [2.1] to [2.3] of Mr Pascariu’s synopsis, and agree that these paragraphs are in the nature of submissions and accordingly shall not be read by the Court.

Result

[114]	I make the following orders:

(a)	Caveat no.12271535.1 registered on the caveated properties owned by GBCD Property Ltd shall be sustained.

(b)	Costs are awarded to the applicant on a 2B basis.

…………………………….. Associate Judge Taylor