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Lee v Lee

Lee v Lee

Case [2015] NZCA 514 4 November 2015

Unconscionable Bargain

Breach of Fiduciary Duty

Undue Influence

Limitation Periods

Property Law

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IN THE COURT OF APPEAL OF NEW ZEALAND

CA546/2013
[2015] NZCA 514

BETWEEN	ROBERT LEE AND HELEN HEARD Appellants
AND	GREGORY LEE Respondent

Hearing:	10 August 2015
Court:	Miller, Courtney and Clifford JJ
Counsel:	Appellant Mr R Lee in person M S McKechnie for Respondent
Judgment:	4 November 2015 at 11.00 am

JUDGMENT OF THE COURT

AThe appeal is allowed and the High Court decision is quashed.
BThe underlying proceedings are referred to the High Court for case management.

____________________________________________________________________

REASONS OF THE COURT

(Given by Clifford J)

Introduction

The appellants, Mr R Lee and Ms Heard, filed proceedings in the High Court in September 2011 (the High Court proceedings) challenging transactions pursuant to which their parents transferred shares in a family plastic manufacturing business, High Duty Plastics Ltd (HDP), to the respondent, their brother Mr G Lee.[1] In the High Court proceedings Mr R Lee and Ms Heard claim that Mr G Lee improperly benefited from those transactions, which he procured by exercising undue influence over their parents and in breach of fiduciary duties. In doing so, he gained an unconscionable bargain.
[1]Mr R Lee, Ms Heard and Mr G Lee have a fourth sibling, Melvyn Lee, who is not involved in the High Court proceedings.
Mr G Lee applied to strike out the High Court proceedings on the basis they were statute-barred under the Limitation Act 1950 (the 1950 Act) as they had been commenced out of time. Associate Judge Christiansen granted that application.[2]
[2]Lee v Lee [2012] NZHC 3283 [strike-out judgment].
[3]Under s 26P of the Judicature Act 1908.
[4]Lee v Lee [2013] NZHC 1069 [High Court review].
[5]Lee v Lee [2013] NZHC 1820.
Mr R Lee and Ms Heard challenged that decision in review proceedings.[3] Justice Collins dismissed that challenge,[4] and subsequently declined Mr R Lee and Ms Heard’s application for leave to appeal.[5]
Mr R Lee and Ms Heard applied for and were granted special leave by this Court for a second appeal.[6] This is that appeal.

Background

A claim is made

[6]Lee v Lee [2014] NZCA 403 [Court of Appeal leave judgment].

Mr R Lee and Ms Heard brought the High Court proceedings in their capacity as executors of the estate of their mother, Joyce Lee. Joyce Lee died on
20 June 2004. She was predeceased by their father, her husband, Raymond Lee. Raymond Lee died on 31 January 2003. Mr R Lee and Ms Heard are beneficiaries of their mother’s estate; Mr G Lee is not.
The core of Mr R Lee and Ms Heard’s claim is pleaded in the following terms.

High Duty Plastics Limited
4.High Duty Plastics Limited (“HDPL”) is a limited liability company incorporated on 7 July 1983, with its registered office at Reeder Smith & Co, 1350 Hinemoa Street, Rotorua and carrying on business there as a plastics manufacturer.
5.For the period 16 May 1985 to 30 September 1997 Ray and Joyce were the sole directors and shareholders of HDPL.
6.Greg was employed…

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 [2015] NZCA 514
Case: [2015] NZCA 514
Decision Date: 4 November 2015 at 11.00 am

CaseChat Overview and Summary

In the Court of Appeal, the appellants, Robert Lee and Helen Heard, challenged a decision of the High Court to strike out their proceedings against their brother, Gregory Lee. The appellants had brought proceedings in the High Court on behalf of their mother's estate. They sought to set aside transactions pursuant to which their parents transferred shares in a family business, High Duty Plastics Ltd (HDP), to the respondent. They claimed that Mr G Lee had improperly benefited from those transactions, which he procured by exercising undue influence over their parents and in breach of fiduciary duties. In doing so, he gained an unconscionable bargain. Mr G Lee applied to strike out the High Court proceedings on the basis they were statute-barred under the Limitation Act 1950 as they had been commenced out of time. Associate Judge Christiansen granted that application. The appellants challenged that decision in review proceedings. Justice Collins dismissed that challenge, and subsequently declined the appellants’ application for leave to appeal. The appellants applied for and were granted special leave by this Court for a second appeal. This is that appeal. The Court concluded that the claims in the High Court proceeding are not claims “upon a deed”. Rather, they challenge the deeds, and the substantive transactions they reflect. Their challenge is essentially equitable in nature: they argue that those transactions reflected an unconscionable bargain, one obtained by Mr G Lee through the exercise of undue influence over his parents and in breach of fiduciary duties owed by him in some way. In the Court's view, in terms of s 4(9) of the 1950 Act, the time limits provided for by s 4(1) or (3) do not apply “except in so far as any provision thereof may be applied by the Court by analogy in like manner as the corresponding enactment repealed or amended by this Act, or ceasing to have effect by virtue of this Act, as heretofore been applied”. The claims brought by Mr R Lee and Ms Heard, being essentially equitable in nature and not being subject to limitation by analogy as provided for in s 4(9) of the 1950 Act, are not statute-barred. That conclusion is sufficient to dispose of this appeal. The appeal is therefore allowed, and the decision of the High Court striking out the High Court proceedings is quashed. The High Court proceedings remain on foot and are subject to the case management procedures found in the High Court Rules, so that a first case management conference should now be convened. Having said that, the Court commented that it thought the disputes that underlie the High Court proceedings are eminently suitable for an alternative dispute resolution process.

Orders