Li v Liu

Case [2018] NZCA 528 26 November 2018

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IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA588/2017
[2018] NZCA 528

BETWEEN	YUE LI First Appellant JING CHEN Second Appellant YUHUA LU Third Appellant XIAOAN CHEN Fourth Appellant
AND	PING LIU First Respondent XING LI Second Respondent

Hearing:	12 September 2018 (further submissions received 17 and 18 September 2018)
Court:	Kós P, Asher and Williams JJ
Counsel:	W G C Templeton and J M Matheson for First, Second, Third and Fourth Appellant N J Scampion for First and Second Respondent
Judgment:	26 November 2018 at 3.00 pm

JUDGMENT OF THE COURT

AThe appeal is allowed.
BMs Reed and Prestige Lawyers Ltd are disqualified from continuing to act in this proceeding.
CThere is no order for costs.

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REASONS OF THE COURT

(Given by Williams J)

Introduction

[1]       The first and second appellants (Yue Li and Jing Chen) are married and are living in Auckland. Yue Li’s mother, Ping Liu, and stepfather, Xing Li, (the Lis) are the first and second respondents. They paid for the house in which Yue and Jing reside but formal ownership is in the names of Yue and Jing. The Lis have fallen out with Yue and Jing over beneficial ownership of the house, and over certain household goods and personal items, all of which are in the possession of Yue and Jing. For their part, the Lis say Yue and Jing were only ever intended to be trustees over the house. They say beneficial ownership is with the stepfather, Xing Li. And they say the household and personal items in the possession of the young couple in fact belong to the Lis. The Lis have issued proceedings seeking declarations of constructive or resulting trust, breach of trust/fiduciary duties, unjust enrichment and deceit in relation to the house, and relief for conversion and detinue in relation to the household and personal goods.
[2]       Yue and Jing respond that the house, household goods and personal items were all gifts given to assist them in setting themselves up and that the Lis were never intended to retain any rights in them.
[3]       It is in the context of that litigation that Yue and Jing applied to the High Court to disqualify the Lis’ counsel, Ms Reed and her firm, Prestige Lawyers Ltd (Prestige Law), from continuing to act in the matter, and to prevent Ms Reed from giving evidence. Muir J declined the application. Muir J’s decision was appealed to this Court.

Relevant factual background

[4] Although the Lis are resident overseas, they purchased a home in Christchurch to provide accommodation for Yue while he was a student there. After the Christchurch earthquakes, they received a substantial insurance pay out in relation to the home. They resolved to use the proceeds to purchase a new home in Auckland for their son and Jing to live in (the Auckland house). As noted, there is a dispute over the terms of that arrangement.
[5] After the Auckland house was purchased there were…

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 Li v Liu

Details

AGLC: Li v Liu [2018] NZCA 528
Case: [2018] NZCA 528
Decision Date: 26 November 2018 at 3.00 pm

CaseChat Overview and Summary

The appeal in Li v Liu centred on the disqualification of counsel, Ms Reed and her firm, Prestige Lawyers Ltd, from acting for the respondents, Ping Liu and Xing Li. The respondents had funded the purchase of a house in Auckland for their son, Yue Li, and daughter-in-law, Jing Chen. There was a dispute over whether the respondents intended the house to be a gift or if they expected Yue and Jing to hold it in trust for them. Yue and Jing sought to disqualify Ms Reed, who they claimed had acted for them without consent, possessed confidential information, and engaged in misleading conduct. The High Court dismissed the application, finding that Ms Reed had not acted for Yue and Jing, she did not possess confidential information, and there was no appearance of injustice. On appeal to the Court of Appeal, the focus shifted to whether Ms Reed's involvement could impair the integrity of the judicial process. The Court of Appeal found that there was a real threat to the integrity of the process given Ms Reed's involvement in creating the trust documents and her potential need to give evidence. The Court of Appeal also disqualified Prestige Law from acting for the respondents due to potential conflicts of interest arising from Ms Reed's involvement. The appeal was allowed and Ms Reed and Prestige Law were disqualified from continuing to act for the respondents. No order for costs was made.

Orders