Shang v Zhang - [2007] NSWSC 856

CITATION: Shang v Zhang [2007] NSWSC 856

HEARING DATE(S): 20, 21 and 22 June 2007

JUDGMENT DATE :
8 August 2007

JURISDICTION: Equity Division

JUDGMENT OF: Young CJ in Eq

DECISION: First subject property to be held on trust for and to vest in plaintiff. Second subject property to be sold, plaintiff to receive 20.5% of proceeds, remainder to be held on trust for first defendant. Judgment against first defendant for $570,000 plus interest.

CATCHWORDS: EQUITY [96]- Resulting trusts- When arising- Purchase of land- Contributions to purchase price not corresponding with legal interests created by transfer of title- Plaintiff father provides money so that second defendant son can purchase properties- Properties purchased in name of first defendant- First defendant retains properties after son ends their relationship- Plaintiff beneficially entitled to whole of first property and to part of second property. EQUITY [97]- Resulting trusts- When arising- Loan for designated purpose- Failure of purpose- Plaintiff invests in business carried on by first and second defendants- Business sold by first defendant and proceeds distributed to third defendant allegedly in repayment of debt- Debt not proven- Plaintiff beneficially entitled to his share of proceeds of sale.

LEGISLATION CITED: Conveyancing Act 1919, s 66G
Supreme Court Act 1970, s 56

CASES CITED: Alexander v Perpetual Trustees WA Ltd (2004) 216 CLR 109
Barnes v Addy (1874) LR 9 Ch App 244
Hayim v Citibank NA [1987] AC 730
Lidden v Composite Buyers Ltd (1996) 67 FCR 560
Ramage v Waclaw (1988) 12 NSWLR 84

PARTIES: Xian Xi Shang (P)
Rong Hui Zhang (D1)
Jin Shang (D2)
Dai Ying Lu (D3)

FILE NUMBER(S): SC 6181/06

COUNSEL: M Aldridge SC and R Tregenza (P)
P Ryan and A Bartlett (D1)

SOLICITORS: Austin Dunhill Barwick (P)
Watts McCray Lawyers (D1)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Wednesday 8 August 2007

6181/06 – SHANG v ZHANG

JUDGMENT

1 HIS HONOUR: The plaintiff seeks to recover from the first defendant four pieces of property, namely: (A) Unit 1707, 348 Sussex Street, Sydney; (B) No 3 Crick Street, Chatswood; (C) $320,000 invested with Teamfair Australia Pty Ltd; and (D) an alleged loan of $250,000.

2 At all material times the plaintiff has lived in Hong Kong. The first defendant, a female person, is an Australian citizen living in Chatswood. In 1999, the first defendant was married to the plaintiff's nephew, whose Anglicised first name is Nick. The plaintiff has one child, an adult son named Jin. In 1999, Jin was to come to Australia to study. All parties agreed that Jin, the second defendant in these proceedings, would live with Nick and the first defendant.

3 As things worked out, the first defendant and Nick separated on 18 January 2004 and divorced in 2005. The first defendant and Jin formed a romantic relationship and a daughter, Dorothy, was born of this relationship in February 2006.

4 It is quite clear from the evidence that the plaintiff was shocked at the birth…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Shang v Zhang

Details

AGLC: Shang v Zhang [2007] NSWSC 856
Case: [2007] NSWSC 856
Decision Date: 8 August 2007

CaseChat Overview and Summary

In the matter of Shang v Zhang, the High Court was called upon to resolve disputes concerning the equitable ownership of various properties and business proceeds. The plaintiff, Shang, alleged that his son, the second defendant, had purchased certain properties using funds provided by the plaintiff. The properties were registered in the name of the first defendant, who was the plaintiff's daughter-in-law. The plaintiff claimed that he was beneficially entitled to the properties due to his financial contributions. Additionally, the plaintiff sought a share of the proceeds from the sale of a business in which he had invested, which was carried on by the first and second defendants. The second defendant had sold the business and distributed the proceeds to the third defendant, purportedly as repayment of a debt.

The primary legal issues before the court were the identification of the circumstances under which a resulting trust arises, particularly in the context of contributions to the purchase price of property and investments in a business. The court needed to determine whether the plaintiff held a beneficial interest in the properties and the business proceeds. This involved examining the nature and extent of the contributions made by the plaintiff and whether they justified an equitable interest in the assets in question.

The court held that a resulting trust arises when a person contributes to the purchase price of property but the legal title is vested in another. This was the situation in respect of the properties purchased by the second defendant, where the plaintiff's contributions warranted a corresponding equitable interest. The court found that the plaintiff was beneficially entitled to the whole of the first property and a portion of the second property. Regarding the business proceeds, the court concluded that the plaintiff was entitled to his share of the proceeds from the sale, as the second defendant had failed to prove the existence of the debt. Consequently, the plaintiff was entitled to the proceeds as per his investment in the business.

The court ordered that the first defendant hold the first property and a portion of the second property on trust for the plaintiff, reflecting his beneficial entitlement. Additionally, the court directed that the plaintiff's share of the business proceeds be distributed to him accordingly.

Orders