[1] The principal issue I have to resolve is whether Associate Judge Christiansen erred when he struck out the plaintiffs’ claim on the basis that it was barred by the time limits contained in s 4 of the Limitation Act 1950 (the Act).

Summary of case

[2] The plaintiffs and defendant are siblings. They also have another brother, Melvin Lee, who is not a party to this proceeding. Their parents, Ray and Joyce Lee, owned a plastic manufacturing business in Rotorua called High Duty Plastics Ltd
(HDP).

LEE V LEE HC ROT CIV-2010-463-000430 [13 May 2013]

[3] At the material time HDP had 1,000 shares. On 6 October 1997 Ray and Joyce Lee signed a deed in which they agreed to transfer 900 “B” shares in HDP to Greg Lee. Those shares had no voting rights attached to them under the deed. The remaining A shares, which had full voting rights, were to be placed in trust until the death of Ray and Joyce Lee. Greg Lee was the sole beneficiary of that trust. At the same time Greg Lee:

(1) acknowledged a debt of $200,724 to Ray and Joyce Lee. That debt was to be forgiven on the death of Ray and Joyce Lee; and

(2) a further debt of $132,174 which would be repaid to the estate of Ray and Joyce Lee within seven years of their death.

[4] On 4 August 2000 Ray and Joyce Lee executed another deed under which

Greg Lee immediately received the 100 A shares in HDP. At the same time: (1) Ray and Joyce Lee forgave Greg Lee’s debt of $132,174;
(2) Greg Lee paid Ray and Joyce Lee $200,000.

[5] Ray Lee passed away on 31 January 2003. Joyce Lee passed away on

20 June 2004. Robert Lee and Helen Heard are the executors of Joyce Lee’s estate.

[6] On 29 September 2011 Robert Lee and Helen Heard commenced their proceeding in which they asked the High Court to set aside the transfer of the shares in HDP to Greg Lee. They allege that Greg Lee:

(1) asserted undue influence over Ray and Joyce Lee; (2) gained an unconscionable bargain; and/or
(3) breached his duties as a fiduciary

when Ray and Joyce Lee executed both the 1997 and 2000 deeds.

[7] Greg Lee filed a strike-out application in which he claims that the proceeding is frivolous, vexatious or is an abuse of the process of the Court because it is barred by s 4(3) of the Act.

[8] Section 4(3) of the…

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 Lee v Lee

Details

AGLC: Lee v Lee [2013] NZHC 1069
Case: [2013] NZHC 1069
Decision Date: 13 May 2013

CaseChat Overview and Summary

The case of Lee v Lee involved a challenge to a transfer of shares in a plastic manufacturing business, High Duty Plastics Ltd (HDP), from the parents of the parties, Ray and Joyce Lee, to their son Greg Lee. Robert Lee and Helen Heard, executors of Joyce Lee's estate, brought the proceeding against Greg Lee, seeking to set aside the transfer of shares on the grounds of undue influence, unconscionable bargain, or breach of fiduciary duty. The key legal issue was whether the proceeding was barred by the 12-year limitation period under the Limitation Act 1950, or whether it was frivolous, vexatious, or an abuse of process. Associate Judge Christiansen had previously struck out the proceeding, finding it was barred by the limitation period and was frivolous, vexatious, or an abuse of process. Robert Lee and Helen Heard appealed that decision.

The Court found that the 4 August 2000 deed was a variation of the 6 October 1997 deed, and so the 12-year limitation period began on 6 October 1997. The Court also found that the limitation period in the Limitation Act 1950 could be applied by analogy to the equitable claims made by Robert Lee and Helen Heard, which parallelled claims in contract or tort. Because the proceeding was commenced seven years and three months after Robert Lee and Helen Heard became executors of their mother's estate, the proceeding was not brought within the time limits. The Court concluded that the proceeding was clearly time barred, and there was no fairly arguable claim for extension or postponement. The proceeding was therefore struck out as frivolous, vexatious, and an abuse of process. The appeal was dismissed.

Orders