Hinds v Song
[2023] NZHC 3285
•20 November 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-1226
[2023] NZHC 3285
UNDER The equitable jurisdiction of the High Court IN THE MATTER OF
A constructive trust claim
BETWEEN
JAMES DANIEL HINDS
Plaintiff
AND
XIULING SONG and YING DONG
First Defendants
XIULING SONG
Second DefendantXIULING TRUSTEE LIMITED
Third Defendant
YING DONG
Fourth Defendant
Hearing: 16 November 2023 Appearances:
V A Crawshaw KC and S P Chandra for Plaintiff
D A T Chambers KC and D C-J Oh for respondents
Judgment:
20 November 2023
JUDGMENT OF O’GORMAN J
Solicitors / Counsel:
Martelli McKegg, Auckland Meredith Connell, Auckland
D Chambers, KC, Auckland S Chandra, Auckland
V Crawshaw KC, Auckland
HINDS v SONG and DONG [2023] NZHC 3285 [20 November 2023]
[1] This is a determination of an interlocutory application by the plaintiff under ss 74 and 94 of the District Court Act 2016 seeking to transfer this proceeding from this Court to the District Court. The plaintiff makes the application on the grounds that a quantity surveyor expert has recently undertaken a quantum analysis and the amount to be pursued in the institutional constructive trust claims will now be less than $350,000. Accordingly, the plaintiff’s position is that claims currently pursued in this proceeding will now fall within the jurisdiction of the District Court.
[2] The respondents oppose the interlocutory application. This constructive trust proceeding is related to other proceedings presently before the Family Court involving common parties, properties and factual events. The plaintiff had previously expressed his intention to apply to transfer the Family Court proceedings to the High Court, then apply for all related claims to be consolidated. The respondents have consented to that approach in memoranda filed in the Family Court. Furthermore, the respondents say that the amounts claimed in this proceeding exceed the jurisdiction of the District Court, and in any event the complexities and nature of the claims make this proceeding unsuitable for transfer.
Procedural background
[3] This proceeding was commenced on 20 July 2022 with a statement of claim that asserts an institutional constructive trust in respect of nine properties. Five of those properties have been sold, and the relief sought is “a sum equivalent to 50% of the proceeds of sale” of those properties, being $3,103,000. For the remaining four properties still owned by the respondents, the relief sought is “a sum equivalent to 50% of the current market value (less borrowings)” of those properties. The pleaded market value of those four remaining properties totals $11,160,000, and they are all located in Auckland:
(a)8 Francis Street, registered in Ms Song’s name;
(b)10 Quebec Road, registered in Ms Song’s name;
(c)26 Spencer Terrace, registered in Ms Song’s name; and
(d)44 Channel View Road, registered in XTL’s name.
[4] On 20 July 2022 the plaintiff also filed an originating application that the plaintiff’s caveats not lapse over the four properties listed above.1 Notwithstanding that application, the caveats did lapse, for failure to notify the Registrar General of Lands that the application had been made. Accordingly, on 1 August 2022 the plaintiff filed a without notice originating application under s 146 of the Land Transfer Act 2017 seeking the Court’s permission to lodge second caveats over the same four properties. That application was heard on 2 November 2022. Associate Judge Andrew (as his Honour then was) issued a judgment on 17 November 2022 granting the plaintiff leave for second caveats to be lodged.2
[5] Directions were then made to set the proceeding down for a first case management conference on the first available date after 5 December 2022. For reasons that are unclear, that did not occur and the oversight was only recently addressed when this proceeding was eventually listed in the Duty Judge list for 2 October 2023. At that appearance, counsel explained that they had not sought to progress case management because the focus in the intervening period has been on the Family Court proceedings.
[6] The present application to transfer proceedings to the District Court is dated 9 October 2023.
Nature of substantive claim
[7] The plaintiff, Mr Hinds, was in a de facto relationship with the fourth defendant, Ms Dong, from approximately May 2007 to 2013. In 2013 Mr Hinds and Ms Dong married in China and their only child was born. They separated in 2018, and their marriage was dissolved in July 2022.
[8] The second respondent, Ms Song, is Ms Dong’s mother. Both Ms Song and Ms Dong are residents in New Zealand. The mother and daughter are both sued together as the first defendant, ostensibly in their capacity as trustees of the Song
1 The caveats were initially lodged in August 2019.
2 Hinds v Song [2022] NZHC 3017.
Family Trust, a trust established by Ms Song. The third respondent, Xuiling Trustee Ltd (XTL), is a trustee company. The respondents say XTL is the sole trustee of the Song Family Trust.
[9] The legal nature of the claim was examined in the judgment determining whether Mr Hinds should be permitted to lodge second caveats. Mr Hinds contends that he has a reasonably arguable case for an institutional constructive trust, based on the principles in Lankow v Rose.3 That case requires that he prove:
(a)contributions, direct or indirect, to the property in question;
(b)the expectation of an interest in the property;
(c)that such expectation is a reasonable one; and
(d)that the defendant(s) should reasonably expect to yield to the claimant an interest in the property.
[10] The quantification of the claimant’s contribution is a matter for the Court based on evidence presented. This is assessed based on the claimant’s contribution relative to the contributions of the other party. The contributions made are then assessed against the benefits that the person in question has received.4 To sustain an institutional constructive trust interest, the person claiming it must establish “more than a minor contribution” and that both parties must be taken reasonably to have accepted that the claimant would share in the assets as a result.5
[11] Attached to Associate Judge Andrew’s judgment is a table setting out the position taken by Mr Hinds about the purchase price of each of the nine properties, totalling a sum of $10,967,250. It also sets out his position on the actual or potential profit made on the nine properties, totalling a sum of $6,388,750.6
3 Lankow v Rose [1995] 1 NZLR 277 (CA) at 294.
4 Hinds v Song, above n 2, at [21].
5 At [22].
6 At [8] and Appendix A.
[12] Mr Hinds claims that his contributions to the properties were not simply maintenance and landscaping.7 Mr Hinds contends that he was a project manager, an integral part and the essential New Zealand connection for the development and enhancement of the property portfolio.8 He says that the respondents were reliant on his knowledge of the local property market, particularly given that he had building and electrical experience.9 Mr Hinds says that he was given oral assurances by Ms Song that he would share in and benefit from the joint family enterprise,10 and that he gave up his previous employment to work full-time for the family enterprise.11
[13] Considering these disputed issues, Associate Judge Andrew found it arguable that “the contributions were more than minor and not outweighed by the significant benefits he did receive”.12 Accordingly, the application was granted allowing Mr Hinds to lodge second caveats against each of the four properties.
[14]Those caveats are still in place.
Legal test
[15] The transfer of proceedings from the High Court to the District Court is governed by s 94 of the District Court Act. That provision empowers a judge of the High Court to transfer the proceeding to the District Court if (among other things) the subject matter of the proceeding is within the jurisdiction of the District Court.13
[16] Section 74(1)(a) of the District Court Act states that the Court has jurisdiction to hear and determine a proceeding in which the amount claimed or the value of the property in dispute does not exceed $350,000.
7 At [26].
8 At [26].
9 At [26].
10 At [33].
11 At [33].
12 At [27].
13 District Court Act 2016, s 94(1)(b).
[17] In Moodie v Lane,14 this Court set out the factors to consider when deciding whether to transfer proceedings from the High Court to the District Court. The relevant factors to consider include the:
(a)nature of the case;
(b)complexity of the case;
(c)general public importance;
(d)amount in issue;
(e)likely length of hearing; and
(f)financial resources of the parties.
Analysis
[18] In this case, the jurisdiction requirement is not presently satisfied. As referred to above, the pleaded claim is for well in excess of $3 million. The plaintiff says that, now the plaintiff has the benefit of the quantity surveyor advice, the claim will be freshly pleaded to seek relief within the District Court jurisdiction amount of
$350,000. The transfer application should not require the costs of an amended pleading to be filed in this Court before the transfer may take place, so long as the plaintiff gives the assurance that the new claim to be filed in the District Court will satisfy that jurisdictional requirement.
[19] The affidavit on which the plaintiff relies in support of the transfer application is by a quantity surveyor named Patrick Hanlon, a quantity surveyor specialising in building construction economics, costs planning and control. Mr Hanlon’s instructions were quite narrow. He was asked to review documents listed in appendix A of his evidence (pages 2 to 11), along with various notes and assumptions made (page 12). He endorses a “quantum value of property repairs” totalling a sum of
$237,383.32. These relate to certain building work or management time involved in property repairs undertaken in respect of the nine listed properties.
14 Moodie v Lane HC Auckland CP 1484/87, 18 September 1990 at 4.
[20] As noted by the respondents, the quantification undertaken by Mr Hanlon does not cover the totality of contributions pleaded by the plaintiff, nor the relief sought in the statement of claim. It merely covers the alleged time and costs related to activities of construction, such as maintenance and landscaping.
[21] While the respondents would no doubt benefit from a $350,000 cap to the relief sought from the plaintiff, they make the point that they are entitled to know the substantive intended amendments to assess the full implications, including for other factors relevant to the proposed transfer. For example, a significant reduction in the claimed value of the plaintiff’s pleaded contributions may bring back into question whether there is a sufficient basis to sustain the four caveats. The balancing exercise referred to in para [11] above may well be materially impacted by the changes. The District Court does not have jurisdiction in respect of the caveats.
[22] In the hearing before me, the plaintiff’s position was that the pleaded contributions would likely not change, only the quantum of relief sought. Even if that is the case, it still means that the claim involves pleaded contributions that seem to be well beyond the value of the District Court’s jurisdiction, with related evidential burdens higher than would be usual for District Court claims.
[23] Apart from the jurisdictional requirement, the respondents submit that any discretion to order a transfer should not be exercised on the facts of this case. The High Court is the appropriate venue for a combined hearing of the constructive trust claim and all other current Family Court proceedings. This was a position that both parties agreed on prior to the plaintiff changing his position when the present application was made.
[24] If the constructive trust claim were transferred to the District Court, then a further application would be required to transfer it to the Family Court and consolidate it with existing proceedings in that specialist jurisdiction. It is not certain those orders would be made or would be preferable to the combined claims being heard in the High Court, given that the Family Court’s specialist jurisdiction is not directly engaged for determining a constructive trust claim against third party assets (those of the mother-in-law and the trusts). The respondents submit that the High Court is a
more suitable forum, with more experience with civil constructive trust claims of this type, jurisdiction to hear the combined claims, and it is more suited to deal with the complexities. These disputes involve actions, intentions and expectations concerning nine properties over a period exceeding 10 years. Determination of the claims will also require consideration of cultural aspects,15 and some witnesses will need the assistance of an interpreter for the oral evidence. Although the plaintiff has claimed that this proceeding would require only a three-day hearing, the respondents estimate that a minimum of one week is required.16
[25] Analysing the present case against the relevant criteria, I decline the application to transfer the proceeding to the District Court:
(a)The case is not straightforward. The nature of this institutional constructive trust claim against the plaintiff’s former mother-in-law and trusts goes well beyond the relationship property issues normally dealt with by the Family Court.
(b)I accept this has greater complexity than would normally be the case for a District Court matter, given the pleaded values of the properties, the caveats currently still lodged against those properties, the relevant time period and number of projects that will need to be traversed in evidence, and the cultural and translation aspects.
(c)The case involves cultural considerations, which may be of general and public significance.17
(d)The currently pleaded amounts in issue and relief sought greatly exceed the District Court’s jurisdiction. Even if the plaintiff were to cap the relief sought to bring it within the District Court’s jurisdiction, the pleaded contributions are likely well beyond the value of the District Court’s jurisdiction, with related evidential burdens higher than would
15 See Deng v Zheng [2022] NZSC 76, [2022] 1 NZLR 151.
16 This contrasts with one of the factors in Ford v Ensor [2018] NZHC 2903 at [36], where the anticipated hearing time was less than a week.
17 As discussed in Deng v Zheng, above n 15.
be usual for District Court claims. If that is not the case, then that raises related issues about the appropriateness of the caveats, for which only the High Court has jurisdiction.
(e)I agree with the respondents’ estimate that a hearing of at least one week will be required.
(f)I accept the respondents’ submissions that the solicitor and client costs are unlikely to differ very much, whichever forum hears the combined claims. I understand that discovery and interrogatory processes in the Family Court are near completion, and I would not envisage any need to duplicate disclosure that has already occurred between the parties. Although the court fees in the District Court and Family Court are lower than the High Court, that is countered by the fact that the High Court is more suited to deal of with cases of this nature and complexity.
[26] Overall, I am not satisfied that the District Court is more appropriate than the High Court to hear this proceeding, even if relief were capped to the amount of
$350,000.
Result
[27] Accordingly, I dismiss the plaintiff’s application to transfer this proceeding to the District Court pursuant to s 94 of the District Court Act.
[28] The respondents are entitled to costs on this interlocutory application unless there are special reasons to the contrary.18 I direct that this matter is allocated a case management conference to timetable for further steps, including the filing of memoranda on costs in the event the parties cannot agree.
O’Gorman J
18 High Court Rules 2016, r 14.8.
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