Chang v Lee - [2016] NZHC 1040

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-1425 [2016] NZHC 1040

BETWEEN
CHIN-FU CHANG

Plaintiff

AND

HSING-EN LEE Defendant

Hearing: 2, 3, 4, 5, 6 and 9 May 2016

Appearances:

R Reed and A Manuson for Plaintiff
G D Wiles for Defendant

Judgment:

19 May 2016

JUDGMENT OF FOGARTY J

This judgment was delivered by Justice Fogarty on
19 May 2016 at 3.30 p.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Solicitors/Counsel:
Prestige Lawyers Ltd, Auckland
Murdoch Price, Manukau

CHANG v LEE [2016] NZHC 1040 [19 May 2016]

Introduction

[1] In 2011 the plaintiff, Mr Chang, contributed $275,000 to the purchase of a house in Auckland known as Sunnynook. The house was purchased for $566,000. The registered proprietor was his niece, Ms Lee. Mr Chang contributed $275,000 at the request of his sister in law, Ms Wang, the mother of his niece. No receipt was given for the payment of $275,000 let alone any written agreement recording any proprietary interest in Sunnynook.

[2] In this proceeding Mr Chang comes to equity and invites this Court to find that Ms Lee is obliged by her conscience to hold the Sunnynook property on trust for him, to the extent that his contribution bore to the total price. He seeks a sale of the property and an apportionment of the proceeds in the proportion of his contribution to the total price.

[3] In reply the defendant, Ms Lee, contends two alternative propositions:

(a) That the payment of $275,000 was a gift to her by Mr Chang in order to satisfy a debt owed by him to her mother.

(b)Alternatively she contends that she and her mother are entitled to set- off against the $275,000 the numerous payments her mother made to Mr Chang to reduce his debts, for some considerable time, prior to the payment.

This is an equity case

[4] Where a person pays over a large sum of money towards the purchase of land without getting his or her name recorded on the title as one of the owners, equity presumes that the registered owner holds the money or the property in trust for the person who provided the money, subject to evidence to the contrary. Equity has this presumption because it perceives that, if the facts are that simple, the person holding the money or the property would be obliged by his or her conscience to acknowledge that the person who paid part of the purchase price is the beneficial owner of, part of

the property. The dictum most frequently cited is that of Lord Browne-Wilkinson in

Westdeutsche Landes Bank Girozentrale v Islington London Borough Council:1

(i) Equity operates on the conscience of the owner of the legal interest.
In the case of a trust, the conscience of the legal owner requires him to carry out the purposes for which the property was vested in him
(express or implied trust) or which the law imposes on him by
reason of his unconscionable…

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 Chang v Lee

Details

AGLC: Chang v Lee [2016] NZHC 1040
Case: [2016] NZHC 1040
Decision Date: 19 May 2016

CaseChat Overview and Summary

In the High Court of New Zealand, Chin-Fu Chang initiated proceedings against Hsing-En Lee to establish that she held the property Sunnynook on trust for him to the extent of his contribution to the total purchase price. Chang contributed $275,000 to the property's purchase, but the title was registered in Lee's name alone. Lee argued either that Chang's payment was a gift to repay a debt owed to her mother or that Chang should offset his debt against payments made by her mother to Chang. The court examined the relationship between the parties, focusing on whether a resulting trust was established and if Lee could set off Chang's debt against her mother's payments. The court concluded that Chang's contribution was intended as a loan for ten years, and Lee and her mother had a fiduciary obligation to repay the balance to Chang. The court rejected Lee's set-off claim, finding no obligation on Chang to repay her mother. The court ordered that Lee pay the balance of the ANZ Bank loan to Chang on 16 May 2021 and recognized an equitable charge over Sunnynook in Chang's favor. Costs were awarded to Chang on a 2B basis.

Orders