Cheung v Tam
[2018] NZHC 3214
•7 December 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-001907
[2018] NZHC 3214
UNDER the Trustee Act 1956 BETWEEN
SEE MAN CHEUNG
First Plaintiff
LOUIS KIN YIP CHAN
Second PlaintiffAND
VINCENT CHI YIN TAM
Defendant
Hearing: 6 December 2018 Appearances:
H M Lim and K L Chiu for Plaintiffs No appearance for or by Defendant
Judgment:
7 December 2018
RESERVED JUDGMENT OF WYLIE J
This judgment was delivered by Justice Wylie On 7 December 2018 at 11.00am
Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar
Date:…………………………
Solicitors/counsel:
Forest Harrison, Lawyers, Auckland
CHEUNG v TAM [2018] NZHC 3214 [7 December 2018]
Introduction
[1] On 5 September 2018, the plaintiffs commenced this proceeding. They sought orders under s 52(3) of the Trustee Act 1956, vesting a property situated in Portland Road, Remuera in the names of the first plaintiff and Botany Trustees (2012) Limited and a half-share in a further property in Customs Street East, central Auckland in the names of the second plaintiff and Botany Trustees (2012) Limited.
[2] The defendant was unable to be found, and on 6 September 2018, Johnson AJ made an order dispensing with service on him.
[3] The plaintiffs sought to advance matters by way of formal proof, and their application for the allocation of a fixture in this regard was granted by Lang J on 5 October 2018.
[4]I heard the matter on 6 December 2018.
Background
[5]The first plaintiff, Ms Cheung, is married to the second plaintiff, Mr Chan.
[6] Ms Cheung is the settlor, appointor and trustee of the See Man Cheung Family Trust (the SMC Trust). The SMC Trust was created by a deed of trust dated 30 July 1993. The initial trustees were Ms Cheung and the defendant, Mr Tam, an accountant who formerly practised in Auckland.
[7] The second plaintiff – Mr Chan – was also the settlor, appointor and trustee of a trust – the Louis Kin Yip Chan Family Trust (the LKYC Trust). The LKYC Trust was also established pursuant to a deed of trust dated 30 July 1993, and Mr Chan and Mr Tam were the initial trustees.
[8] The SMC Trust owns a property in Portland Road, Remuera. Further, the SMC Trust and the LKYC Trust jointly own a property in Customs Street East, central Auckland. Ms Cheung and Mr Tam are the registered proprietors of the Portland Road property. Ms Cheung and Mr Tam are also the registered proprietors of a half-share in the Customs Street East property, and Mr Chan and Mr Tam are the registered proprietors of the other half-share in that property.
[9] On 31 May 2012, Mr Tam retired as a trustee of both the SMC Trust and the LKYC Trust. He signed deeds of retirement and appointment of trustee of each trust. Those deeds recorded Mr Tam’s retirement as a trustee and appointed a company, RSM Prince Nominees (2012) Limited, as a new trustee of each trust in Mr Tam’s place.
[10] RSM Prince Nominees (2012) Limited is now known as Botany Trustees (2012) Limited.
[11] Both Ms Cheung and Mr Chan have deposed that after the deeds of retirement and appointment of trustee were signed, they instructed their solicitors to prepare the documents necessary to transfer Mr Tam’s interests in the properties into the name of the new trustee company.
[12] The solicitors prepared the requisite documentation, and on 22 October 2012, Mr Tam signed individual client authorities and instructions for an electronic transaction so that the interests he held in the properties as trustee could be transferred to RSM Prince Nominees (2012) Limited as the new trustee. Ms Cheung and Mr Chan signed similar authorities on 30 January 2013.
[13] Even though the requisite authorities had been signed, Mr Tam’s interests in the properties were not promptly transferred to the new trustee company. This is because the Portland Road property was placed on the market for sale. Both Ms Cheung and Mr Chan decided that it would be preferable to transfer both the Portland Road and the Customs Street East properties into the name of the new trustee company at the same time, when a transfer of the Portland Road property could also be made to any purchaser.
[14] The Portland Road property did not sell, and the transfer of Mr Tam’s interests as trustee to the new trustee company was not carried out. As a result, Mr Tam’s name remains on the titles to both properties.
[15] The difficulty from the plaintiffs’ perspective is that the law has changed. At the time the individual client authorities and instructions for electronic transactions were signed, transferors did not have to sign and produce a land transfer tax statement. A requirement that such a statement be signed and produced was introduced by s 5 of
the Land Transfer Amendment Act 2015. The requirement is now found in s 78 of the Land Transfer Act 2017.
[16] In an endeavour to regularise the situation and obtain the requisite land transfer tax statements, Ms Cheung and Mr Chan instructed their solicitors to try and locate Mr Tam. The solicitors contacted his previous firm. They also sent emails to him at what was thought to be his personal email address. Despite numerous attempts, the solicitors have not been able to locate Mr Tam. It seems that he has left New Zealand. At one stage, he may have been in Hong Kong. It is now possible that he is in Canada.
[17]As noted above, service on Mr Tam has been dispensed with.
Orders sought
[18]Relevantly, s 52 of the Trustee Act provides as follows:
(1)Subject to the provisions of subsections (2) and (3), in any of the following cases, namely—
…
(b)where a trustee entitled to or possessed of any land or interest therein, whether by way of mortgage or otherwise, or entitled to a contingent right therein, either solely or jointly with any other person—
…
(iii) cannot be found; or
…
the court may make an order (in this Act called a vesting order) vesting the land or interest therein in any such person in any such manner and for any such estate or interest as the court may direct, or releasing or disposing of the contingent right to such person as the court may direct.
(2)Where any such order is consequential on the appointment of a trustee, the land or interest therein shall be vested for such estate as the court may direct in the persons who on the appointment are the trustees.
(3)Where any such order relates to a trustee entitled or formerly entitled jointly with another person, and that trustee … cannot be found … the land, interest, or right shall be vested in the other person who remains entitled, either alone or with any other person that the court may appoint.
[19] The provisions of this section are engaged. The current registered proprietors are holding the respective properties in their capacity as trustees for the SMC Trust and the LKYC Trust respectively. Mr Tam was removed as a trustee by deeds dated 31 May 2012. A new trustee company was appointed in his stead. Mr Tam has consented to the transfer of the properties to the new trustee company. He signed the requisite authorities in this regard on 27 October 2012 in compliance with the legislative requirements then in place. The present application is necessary only because of a change in the legislative requirements. There is no prejudice to Mr Tam. He has no beneficial interest in the properties.
[20]Accordingly, I make orders under s 52 of the Trustee Act as follows:
(a)vesting the property at 48 Portland Road, Remuera, Auckland being the land comprised in Certificate of Title NA468/287, Lot 4 DP19085 jointly in the current trustees of the See Man Cheung Family Trust, being the first plaintiff and Botany Trustees (2012) Limited; and
(b)vesting the property at 15 Customs Street East, Auckland Central being the land comprised in Certificate of Title NA94B/275, Unit A DP 156889 jointly in:
(i)the current trustees of the See Man Cheung Family Trust, being the first plaintiff and Botany Trustees (2012) Limited; and
(ii)the current trustees of the Louis Kin Yip Chan Family Trust, being the second plaintiff and Botany Trustees (2012) Limited.
Wylie J
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