Lai v Huang
[2017] NZCA 499
•3 November 2017 at 11.30 am
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA642/2016 [2017] NZCA 499 |
| BETWEEN | SOPHIE LAI RICHARD HUANG |
| AND | LIU SHUN-MEI HUANG AS EXECUTRIX OF THE ESTATE OF HSIU-LIN HUANG CHUN-CHING HUANG CHUN TA-HUANG |
| Hearing: | 31 August 2017 |
Court: | Miller, Courtney and Gendall JJ |
Counsel: | R Reed and A Manuson for Appellants |
Judgment: | 3 November 2017 at 11.30 am |
JUDGMENT OF THE COURT
A The appeal is dismissed.
BThe appellants are jointly and severally liable to pay the respondents one set of costs for a standard appeal on a band A basis and usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Gendall J)
Introduction
Hsui-Lin Huang (the deceased) died on 24 August 2012. He left a will relating to his New Zealand assets under which, after forgiving a debt owing to him by a trust, he gave all his estate to his widow, the first respondent, Liu Shun-Mei Huang (Mrs Huang), and appointed her executrix of his estate. The deceased and Mrs Huang had five children, two of whom are their sons: the second respondent Chun-Ching Huang (Chun-Ching) and the third respondent Chun-Ta Huang (Chun‑Ta). The first appellant, Sophie Lai (Sophie), is the estranged wife of Chun‑Ta. The second appellant is their son, Richard Huang (Richard).
In July 2016 Sophie and Richard brought claims involving seven different causes of action against the deceased’s estate. These included claims under the Law Reform (Testamentary Promises) Act 1949 (TPA), the Family Protection Act 1955 (FPA) and the Property (Relationships) Act 1976 (PRA). Sophie and Richard claimed in part that they had worked at a family farm at Coatesville, acquired essentially by the deceased’s interests, in the expectation and belief they would become owners of the property and Richard the manager of it.
The respondents applied to strike out the appellants’ claims and sought an order for security for costs. In a judgment of the High Court dated 28 November 2016 Thomas J struck out the appellants' FPA and TPA claims but not Sophie’s PRA claim. She also made an order for $10,000 security for costs relating to their other five causes of action which remained.[1]
[1]Lai v Huang [2016] NZHC 2828.
The appellants appeal the strike out aspect of that decision. The security for costs order is not appealed.
As to the TPA and FPA claims, limitation periods apply in s 6 of the TPA and s 9 of the FPA. These require claims under those Acts to be brought within one (or sometimes two) years from the date probate is granted (here 19 November 2012). There is however a proviso that time for commencing such an action may be extended by the Court for a further period, providing any such extension application is brought before the “final distribution of the estate of the deceased”.[2] This latter time-bar is absolute.
[2]Law Reform (Testamentary Promises) Act 1949, s 6; and Family Protection Act 1955, s 9(1).
Here, the appellants, in filing their claims under the TPA and FPA on
1 July 2016, were out of time, but they sought an extension on the basis they alleged final distribution of the deceased’s estate had not occurred.In striking out those TPA and FPA claims, Thomas J determined that the deceased’s estate had been distributed well before the appellants’ claims were brought and therefore, given the absolute time-bar, strike out of the TPA and FPA claims was inevitable.[3] She indicated too that the respondents, having been generally successful in their application, were entitled to costs.[4]
Background
The parties
[3]Lai v Huang, above n 1, at [74]–[76].
[4]At [95].
Of the five children of the deceased and Mrs Huang, Chun-Ching is their oldest and Chun-Ta is their second oldest child. The remaining three children live in Taiwan and are not parties to these proceedings.
Sophie and Chun-Ta began their relationship in 1994, were married in 1999 and separated recently.
Richard, born in 1997, is the son of Sophie and Chun-Ta, and is a grandson of the deceased and Mrs Huang. He lives with his mother, Sophie.
Facts
The deceased and Mrs Huang were married in Taiwan in 1963. They had been married for 49 years when the deceased died in 2012.
The deceased had moved to New Zealand in 1994. Soon after, he purchased residential properties at 6 and 6A Bracken Avenue, Epsom, Auckland. Between 1994 and 2002, the deceased split his time between New Zealand and Taiwan. During this period Mrs Huang stayed in Taiwan to look after her elderly mother.
In 1996, the deceased and Mrs Huang formed a trust in New Zealand known as the Song Lim Family Trust (the Trust) which purchased a farm in Coatesville in 1997.
In 2000, the deceased sold 6A Bracken Avenue and purchased a farm property at Petrie Road, Whangapiro (the Wellsford Farm). The deceased began living at the Wellsford Farm. Mrs Huang came to New Zealand to live with the deceased at the Wellsford Farm in 2003 after her own mother passed away in Taiwan.
Some years prior, Chun-Ta and his family had moved to New Zealand to be closer to the deceased.
In 2003, the deceased sold 6 Bracken Avenue. Sophie and Chun-Ta moved out of this property at that time (having lived there rent free for some years). They moved to live with the deceased at the Wellsford Farm. Later they moved to the Coatesville Farm, living with the deceased again.
In 2008, Sophie and her young children, Richard and her daughter Gini, moved out of the Coatesville Farm to a property in Albany/Greenhithe. Chun-Ta says that he and Sophie separated on this date, but we understand there may be some dispute, not over the fact of separation but over the date it occurred.
Mrs Huang as the sole executrix of the deceased’s estate obtained probate of his will on 19 November 2012. The Wellsford farm and a range of accompanying farm equipment and vehicles were sold in August 2014 with settlement of this sale occurring on 31 October 2014. Final distribution of the deceased’s estate, it is said, was complete by this date. This is set out in the estate’s distribution statements.
As to the assets of the estate, these did not include the assets of the Trust. The Trust held as its principal asset the Coatesville Farm which was transferred to Mrs Huang as surviving trustee on 20 December 2012. Chun-Ta was appointed as an additional trustee of the Trust on 7 March 2013.
The New Zealand estate assets also did not include the deceased’s overseas assets. The deceased owned land in Taiwan which all the parties agree was left to his third son pursuant to an “Agreement for Heritage Division” implemented in Taiwan.
The High Court decision
In her judgment, Thomas J struck out the appellants’ FPA and TPA claims on the grounds that:[5]
(a)the Coatesville farm did not form part of the deceased’s estate — it was either owned by the Trust or by the deceased and Mrs Huang as joint tenants (and therefore passed to Mrs Huang by survivorship); and
(b)the deceased’s estate was wholly distributed on or about 31 October 2014 — evidence to the contrary raised by the appellants was speculative and without foundation. The FPA and the TPA claims were therefore time-barred.
[5]At [72]–[74].
In addition, Thomas J awarded costs on the strike-out application to the respondents.[6]
The law
[6]At [95].
Striking out all or part of a pleading is provided for in r 15.1 of the High Court Rules which states:
15.1 Dismissing or staying all or part of proceeding
(1) The court may strike out all or part of a pleading if it—
(a) discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b) is likely to cause prejudice or delay; or
(c) is frivolous or vexatious; or
(d) is otherwise an abuse of the process of the court.
…
The criteria for striking out is well established. As McGechan on Procedure notes, the principles involved are:[7]
[7]Andrew Beck (ed) McGechan on Procedure (online looseleaf edition, ThomsonReuters) at [HR15.1.02] (citations omitted).
HR15.1.02 No reasonably arguable cause of action or defence
(1) Principles
The established criteria for striking out… [are]:
(a) Pleaded facts, whether or not admitted, are assumed to be true. This does not extend to pleaded allegations which are entirely speculative and without foundation.
(b) The cause of action or defence must be clearly untenable. In Couch Elias CJ and Anderson J, at [33], said: “It is inappropriate to strike out a claim summarily unless the court can be certain that it cannot succeed.”
(c) The jurisdiction is to be exercised sparingly, and only in clear cases. This reflects the Court’s reluctance to terminate a claim or defence short of trial.
(d) The jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument.
(e) The Court should be particularly slow to strike out a claim in any developing area of the law, perhaps particularly where a duty of care is alleged in a new situation. In Couch, at [33], Elias CJ and Anderson J said: “Particular care is required in areas where the law is confused or developing.” There is considerable authority that developments in negligence need to be based on proved rather than hypothetical facts.
…
So far as evidence on a strike out application is concerned, however, in Attorney-General v McVeagh this Court stated:[8]
The Court is entitled to receive affidavit evidence on a striking out application, and will do so in a proper case. It will not attempt to resolve genuinely disputed issues of fact and therefore will generally limit evidence to that which is undisputed. Normally it will not consider evidence inconsistent with the pleading, for a striking out application is dealt with on the footing that the pleaded facts can be proved … But there may be a case where an essential factual allegation is so demonstrably contrary to indisputable fact that the matter ought not to be allowed to proceed further.
Issues
[8]Attorney-General v McVeagh [1995] 1 NZLR 558 (CA) at 566 (emphasis added).
The issues on this appeal are:
(a)Were the essential factual allegations made by the appellants so demonstrably contrary to indisputable facts such that strike out of the FPA and TPA claims was appropriate and these particular matters ought not to proceed further?
(b)Did Thomas J err in making findings in relation to what are said to be disputed facts in this summary strike out proceeding?
(c)Did Thomas J err in awarding costs in favour of the respondents?
Appellants’ arguments
The appellants’ argument here is that Thomas J erred in her decision in striking out the FPA and TPA claims. In making the finding that “the [appellants’] essential factual allegations that the estate has not been distributed [at the time these proceedings were brought] are so demonstrably contrary to indisputable fact that this matter should not be allowed to proceed further”, the appellants maintain Thomas J was wrong.[9] They say there is a genuine factual dispute here.
[9]Lai v Huang, above n 1, at [74].
The appellants contend that the deceased’s estate has not been fully identified or distributed. Issues arise over the Coatesville farm and other assets, the deceased’s property in Taiwan and a suggestion from the appellants that the deceased may have had other bank accounts in his name which have not been accounted for. Further issues are raised as to whether Mrs Huang as the executrix has fully given effect to the distribution of the deceased’s estate in accordance with her legal obligations. So far as the award of costs to the respondents on this strike out application is concerned, the appellants say that the application itself was not largely successful as only two of the seven causes of action were struck out, and therefore it is illogical for an award of costs to be made in favour of the respondents here.
Respondents’ arguments
The position of the respondents is that Thomas J in her decision applied the proper criteria and made no error in determining that there could be no dispute that the deceased’s estate had been wholly distributed by October 2014. Therefore, the TPA and FPA claims are time-barred and were appropriately struck out. The respondents contend, too, that the Coatesville farm was always an asset of the Trust and did not form part of the deceased’s estate. In maintaining that the deceased’s estate was wholly distributed by 31 October 2014, well before this proceeding was commenced, the respondents say suggested evidence to the contrary, which the appellants have endeavoured to raise, is speculative and entirely without foundation. Lastly, the respondents contend that, as they were generally successful in both their strike-out application and the security for costs application, they were entitled to costs in the High Court and these were properly awarded.
Analysis
The key issue on this appeal is whether Thomas J was correct in deciding there was no genuine factual dispute here as to the final distribution of the deceased’s estate, such that the limitation periods in both the TPA and the FPA are activated.[10] It is not questioned that this statutory time-bar is an absolute one.
[10]Although for strike out purposes pleaded facts are taken to be true, the Court need not do so in situations where they are demonstrably incorrect: Attorney-General v McVeagh, above n 8; Pharmacy Care Systems Ltd v Attorney-General (2001) 15 PRNZ 465 (CA); and Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725.
Whether the final distribution of an estate has occurred is always a question of fact. In Sullivan v Brett this Court noted:[11]
The words “the final distribution of the estate of the deceased” refer to the point of time at which the administrator having completed the administration of the estate becomes a trustee for the beneficiaries of those assets not already actually distributed … So much is not in doubt.
[11]Sullivan v Brett [1981] 2 NZLR 202 (CA) at 206.
The issue here comes down to, what does it mean to complete administration of the deceased’s estate in terms of the accepted test outlined in Sullivan v Brett? This does not mean that the estate assets need to be fully distributed, it suffices that the executrix has allocated them under the deceased’s will.
The deceased’s will provided for Mrs Huang to be the sole beneficiary, once the debt owing to the estate by the Trust was forgiven.
The question is whether Mrs Huang as executrix and sole beneficiary of the estate assented to the transfer of the deceased’s property and treated it as if it were her own — see Re Annett (deceased), Annett v Taylor[12] and Davidson v Clark.[13]
[12]Re Annett (deceased), Annett v Taylor [1956] NZLR 929 (HC).
[13]Davidson v Clark (2008) 27 FRNZ 45 (HC).
We agree with Thomas J that the evidence clearly indicates the estate was distributed and its books closed as at 31 October 2014. The evidence set out in the various estate winding up and distribution statements noted at para [40] of the 8 August 2016 affidavit of Chun-Ching and in the Exhibits Volume at Exhibit 177 and following, confirms that distribution of the estate had occurred by
31 October 2014. Mrs Huang had completed her functions as executrix of the deceased’s estate. From the evidence, it is also apparent that Mrs Huang treated the various assets from this time as her own. Registered transmissions to her of the property assets in terms of the land transfer requirements had occurred. And, given that Mrs Huang as executrix of the estate was also effectively the sole beneficiary, it would be expected necessarily to see such formal transfers to her only of assets that did not pass to her by operation of law.In this case, we have no doubt that Thomas J was right to find that the appellants’ essential factual contention — that the estate had not been distributed as at 31 October 2014 — was entirely contrary to the indisputable facts.
To suggest, too, that the Coatesville farm was an asset of the estate is simply wrong. It was an asset of the Trust. The estate did have as an asset a debt of $613,000 due from the Trust, but this was forgiven by specific provision in the deceased’s will. The estate distribution statements before the Court confirmed that this had occurred. Similarly, the Taiwanese property, being both outside New Zealand and in any event accepted as distributed to another member of the family in Taiwan, must be beyond consideration for estate matters here. Lastly, speculation from the appellants that there might be some other bank account in the deceased’s name, which has not yet been dealt with by Mrs Huang as executrix of the estate, is both purely speculative and highly unlikely. The deceased died in 2012. To suggest that now, some five years later, bank accounts have not been dealt with is completely unsupported by any evidence before the Court.
Dealing with other specific assets which counsel for the appellants endeavoured to argue were estate assets which had not been properly disposed of, for completeness we note:
(a)Before 31 October 2014, the Wellsford farm, as the estate property, was sold to a third party, settlement had occurred, and the proceeds were paid to Mrs Huang and treated as her sole property.
(b)Farm machinery, including what are described in the chattels sale list as “tractors, catapilar [sic] loader 902, Same Solaris 45, Same Argori 60, Komatsu D21, mulcher, harrow, spray unit”, was specifically included in the sale of the Wellsford farm to the third party. No evidence of any kind was provided to suggest other diggers, tractors or equipment remained as assets of the estate.
(c)Remaining motor vehicles appear to be included in the $5000 estate valuation of other assets and there is no evidence before the Court to suggest otherwise.
(d)Similarly, it is conjecture only to suggest that the estate had some beneficial right to Chun-Ching’s 2C Bracken Avenue property. There is no dispute as to the gift of some funds by the deceased well prior to his death to contribute towards a prior house purchase by Chun‑Ching. But 2C Bracken Avenue was purchased by Chun-Ching, with the purchase price financed using his own funds from Taiwan and nothing from the deceased. It cannot be questioned here that the estate had no interest in 2C Bracken Avenue.
(e)Lastly, returning to the Taiwanese assets, the evidence before the Court, which is accepted by all parties, is that the Taiwanese farmland was by agreement transferred under an “Agreement for Heritage Division” to the deceased’s third son and a sum of NZ$6000 resulting was divided by consent amongst family members. We accept the conclusion that as a matter of fact the assets in Taiwan were distributed well before 31 October 2014.
Finally, as to the finding by Thomas J that costs should follow the event and be awarded to the respondents, we see no error here. The respondents were largely successful in their strike-out application with the TPA and FPA causes of action now struck-out, and security for costs ordered in respect of the remaining causes of action.
For all these reasons, we conclude that Thomas J did not err in any respect in her decision, and this appeal must be dismissed.
Result
The appeal is dismissed.
The appellants are jointly and severally liable to pay the respondents one set of costs for a standard appeal on a band A basis and usual disbursements.
Solicitors:
Prestige Lawyers Ltd, Auckland for Appellants
Glaister Ennor, Auckland for Respondents
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