Li v Wu

[2022] NZHC 333

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-409-612

[2022] NZHC 333

BETWEEN

ZHAOHUA LI

Plaintiff

AND

YI HENG (HENRY) WU

First Defendant

AND

ZHONGXIU FAN

Second Defendant

CIV-2018-409-238

BETWEEN

ZHONGXIU FAN

Plaintiff

AND

YI HENG (HENRY) WU

First Defendant

AND

ZHAOHUA LI

Second Defendant

Hearing (by telephone):

22 February 2022

Appearances:

A M Corry for Z H Li (Plaintiff/Second Defendant/Respondent) Z X Fan (Second Defendant/Plaintiff/Applicant) in person, with Y H Wu as Mackenzie friend

D Fan — Interpreter (Chinese/English)

Judgment:

1 March 2022

JUDGMENT OF OSBORNE J

This judgment was delivered by me on 1 March 2022 at 4.30 pm pursuant to Rule 11.5

of the High Court Rules

Registrar/Deputy Registrar Date:

LI v WU [2022] NZHC 333 [1 March 2022]

[1]    This judgment is on an application of Zhongxiu Fan for a stay of enforcement in these proceedings. In particular, Ms Fan seeks a stay of an order dated 24 September 2021 ordering that a property at 15 Blarney Place, Christchurch (the property) formerly the matrimonial home of Ms Fan’s son, Yi Heng Wu, and Ms Zhaohua Li be sold by auction (now scheduled for 3 March 2022).

Background

[2]    Before I address Ms Fan’s current stay application, some background is necessary. I take it first from the judgment of the Supreme Court dated 21 June 2021 relating to these parties.1 By that judgment, the Court dismissed applications for leave to appeal brought by both Mr Wu and Ms Fan relating to a Court of Appeal judgment. The Court of Appeal had dismissed their appeals from earlier decisions of this Court. The Supreme Court recorded:

[2]        After almost four years of marriage, Mr Wu and Ms Li separated in May 2013.2 They have one child who is in the primary care of Ms Li. In June 2014, Ms Li brought a claim for division of relationship property in the Family Court. Ms Fan was subsequently joined as a second respondent to those proceedings.3 Then, in April 2018, Ms Fan filed proceedings in the High Court. Her claim was that the property and assets the subject of Ms Li’s claim, including the family home, were the subject of a constructive, resulting, implied and/or express trust in her favour. Ms Li’s proceedings in the Family Court were ultimately transferred to the High Court and consolidated with those filed by Ms Fan.

[3]        The consolidated proceedings went to a nine-day hearing in the High Court in mid-2019. At the hearing, Mr Wu and Ms Fan relied on a written agreement they said showed that the family home and other assets were not relationship property as the property was owned on trust solely for Ms Fan.

[4]        In a judgment delivered on 27 September 2019, Gendall J largely upheld Ms Li’s claim (substantive High Court judgment). Relevantly, the Judge found that the family home (registered in Mr Wu’s name) was relationship property in which Ms Li was entitled to a half share at present value. That half share was subject to a relationship debt of $522,800 owed to Ms Fan. This meant that Ms Li’s half share was worth $218,600 (on the basis of the current rateable value of the family home). In getting to that point, the Judge rejected arguments that the written agreement between Ms Fan and Mr Wu showed that Mr Wu held the property on trust for Ms Fan. But the Court found that some of the funds used to buy the relationship property were loans from Ms Fan to Mr Wu as provided for in their written agreement and this constituted relationship debt.

1      Fan v Wu [2021] NZSC 67.

2      Their marriage was dissolved on 3 October 2015.

3      Li v Wu [2019] NZHC 2461 [Substantive judgment] at [19]–[20].

[5]        There was an issue about the exact value of the family home because of possible weathertightness issues. The Judge ordered the parties to liaise to enable experts to access the house to assess for weathertightness. Mr Wu would not allow access to the home for this purpose. Ultimately, on 23 July 2020, the Judge made orders to facilitate access to the property to enable an independent expert to carry out the weathertightness assessment (the facilitation order). The inspection took place on 18 August 2020.

[6]        Mr Wu’s subsequent application for a stay of the facilitation order was declined. In the same judgment, delivered on 18 February 2021, the Judge also ordered Mr Wu and/or Ms Fan to pay the updated amount outstanding owed to Ms Li into the High Court to be held until the Court of Appeal dealt with Ms Fan’s application for leave to appeal the substantive High Court judgment out of time. We will call this the enforcement judgment.

(some footnotes omitted)

[3]    In the High Court’s judgment of 27 September 2019, (the “substantive judgment”), Gendall J had determined the substantive issues between the parties.4 At the High Court trial both Ms Fan and Mr Wu were separately represented in relation to their respective claims. As indicated in the Supreme Court judgment, what had initially been two separate proceedings had been consolidated before trial.

[4]    Following the substantive judgment, Ms Li was awarded costs against Mr Wu and Ms Fan jointly and severally amounting to $146,823.05 (the “costs judgment”).5 Mr Wu had also been ordered to pay an occupational rent for the property and to pay child support into a trust for the child.6

[5]    There were later more costs orders made against both Ms Fan and Mr Wu on interlocutory applications.

[6]    No payments of any kind have been made to Ms Li by either Ms Fan or Mr Wu.

[7]    On 18 February 2021, Gendall J on the application of Mr Li made orders as to payment of the updated outstanding amount and orders as to the sale of the property if that amount was not paid (the “enforcement judgment”).7

4      Substantive judgment, above n 3.

5      Li v Wu [2020] NZHC 289 [Costs judgment].

6      Substantive judgment, above n 3, at [167].

7      Li v Wu [2021] NZHC 209 [Enforcement judgment].

[8]    In September 2021, Gendall J dealt with three stay applications filed variously by Mr Wu and Ms Fan (the “earlier stay judgment”).8

[9]    Gendall J in the earlier stay judgment, recorded the history of appeals and applications for leave to appeal in the proceeding:

[11]              A number of appeals and applications for leave to appeal have been filed by Mr Wu and Ms Fan. When Ms Li’s application for enforcement orders was heard in this Court on 11 February 2021, Mr Wu and Ms Fan brought applications for leave to commence appeals out of time in the Court of Appeal against the substantive judgment and the watertightness inspection order that had been made. These applications were declined by the Court of Appeal on 27 April 2021 and a further application by Mr Wu and Ms Fan to the Court of Appeal to recall this judgment was declined on 18 August 2021. Significantly, in the 27 April 2021 judgment the Court of Appeal in commenting that the applications before it were “devoid of merit” said at para [13]:

…we are left with the uneasy feeling that Mr Wu and Ms Fan have pursued a long running strategy of ensuring, as far as possible, Ms Li receives nothing, not even child support.

[12]              On 19 March 2021, Ms Fan purported to commence an appeal against this court’s enforcement judgment and sought a waiver of security for costs. That waiver was declined and on 30 May 2021 Ms Fan sought a review of the waiver decision. On 16 July 2021, Collins J in the Court of Appeal issued a minute questioning jurisdiction for Ms Fan’s appeal against the enforcement judgment. Then on 17 August 2021 the Court of Appeal struck out this purported appeal by Ms Fan for want of jurisdiction.

[13]              On 9 May 2021, Mr Wu commenced a new application for leave to appeal the substantive judgment of this Court. He did this even though he was a party to the earlier application for leave to appeal the substantive judgment by Ms Fan which had been declined. Nevertheless, the Registrar on this application for leave refused to waive the Court of Appeal filing fee and Mr Wu then applied for a review of this decision. Miller J in the Court of Appeal declined this review application on 16 June 2021 and Mr Wu thereafter paid the filing fee. A decision declining that application for leave to appeal was then made by the Court of Appeal yesterday, 27 September 2021. I will say more on that decision later in this judgment.

[14]              And, earlier this month, on 3 September 2021, Ms Fan it seems endeavoured to commence a new appeal against the decision of the Court of Appeal (Collins J) striking out Ms Fan’s earlier purported appeal for want of jurisdiction.

[10]Gendall J then recorded Ms Fan’s and Mr Wu’s Supreme Court dealings:

[15]      Earlier this year both Mr Wu and Ms Fan had commenced in the Supreme Court applications for leave to appeal to that Court the earlier Court

8      Li v Wu [2021] NZHC 2552 [Earlier stay judgment].

of  Appeal  judgment  of  27  April  2021  declining  leave.    Both of those applications were dismissed by the Supreme Court on 21 June 2021.

…

[16]      In every case I have outlined above, costs have been ordered against Mr Wu and Ms Fan by both the Court of Appeal and the Supreme Court in all concluded appeal proceedings. Nothing has been paid by way of costs as yet.

(emphasis in original)

[11]   In the same judgment, Gendall J found that it was appropriate to dismiss the applications in circumstances where neither Mr Wu nor Ms Fan had supplied any material of any kind to discuss or support their stay applications or attended the hearing — that was sufficient to dispose of the applications.9

[12]   His Honour found that the stay applications should also be dismissed, in the Court’s discretion, pursuant to the principle that a party is entitled to enjoy the fruits of a judgment in its favour.10 He noted, by reference to the various Court of Appeal and Supreme Court judgments to which he had referred, that it was difficult to escape the conclusion that all the appeals pursued by Mr Wu and Ms Fan merely constituted ploys on their part to delay and obstruct Ms Li from properly obtaining the fruits of the judgments in her favour.11

[13]   Gendall J dismissed the three stay applications, made new orders to deal with the sale of the property and once again ordered Ms Fan and Mr Wu to pay the costs and disbursements of the application (none of which have since been paid).

The -238 and the -612 proceedings

[14]   There was first Ms Fan’s proceeding against her son (Mr Wu) and Ms Li upon the basis that the property was held in trust for Ms Fan (the “-238 proceeding”). Secondly, there was Ms Li’s relationship proceeding against Mr Wu, to which Ms Fan was joined as a party (the “-612 proceeding”). As the Supreme Court observed (above at [2]) the two proceedings were consolidated and tried together in 2019.12 For the

9      Earlier stay judgment, above n 8, at [17]–[18].

10     At [19]–[29], citing Andrew Beck and others (eds) McGechan on Procedure (looseleaf ed, Thomson Reuters) at [HR20.10.01].

11 At [28].

12     Fan v Wu, above n 1, at [2]–[3].

purposes of the present stay application, Ms Fan (notwithstanding the earlier consolidation of the two proceedings, as referred to in the heading of this judgment) draws a distinction between the two.

This application

[15]   Ms Fan here invites this Court to view the substantive judgment as determining substantive issues only in the -612 proceeding (the heading to the substantive judgment referring only to the -612 proceeding). Ms Fan contends that the High Court has not delivered a judgment in the -238 proceeding.

[16]   The consequence of this contention, if correct, would be that this Court has yet to rule upon the claim Ms Fan made in the -238 proceeding (that she is the beneficial owner of the property).

[17]   These contentions require a determination as to the scope of the rulings in the 27 September 2019 judgment (undertaken below at [20]–[25]).

[18]   For the procedural basis of her stay application, Ms Fan invokes r 20.10 High Court Rules 2016. Part 20 of the Rules is concerned with appeals. Rule 20.10 provides that an appeal does not operate as a stay of enforcement of any judgment but that the Court may make an order staying enforcement of any judgment pending determination of an appeal.

[19]   Ms Fan purported to support this application by attaching a copy of a notice of appeal dated 13 October 2021 and a judgment of the Court of Appeal dated 3 November 2021.13 I deal with that ground of application below (at [26]–[28]).

13     Fan v Li [2021] NZCA 575.

Discussion

The scope of the 27 September 2019 judgment

[20]   The Court ordered the consolidation of the -238 and -612 proceedings in a Minute dated 15 April 2019. In ordering consolidation (by consent), Gendall J recorded:

I am told that the Constructive Trust … claim [of Ms Fan] involves similar issues which will form part of the [Property (Relationships) Act] claim hearing and it is appropriate for both matters to be consolidated.

[21]   The trial of the consolidated proceedings took place over nine days between June and August 2019. The issues before the Court in the trial were summarised by Gendall J early in the substantive judgment:

[3] The initial claim in this proceeding, being one brought by the plaintiff (Ms Li), is made under the Property (Relationships) Act 1976 (the PRA). She maintains the former family home and certain other assets owned pre- marriage by her husband, the first defendant (Mr Wu), are relationship property and she has a proper claim to share in these. In response, Mr Wu and his mother, the second defendant (Mrs Fan), argue that these assets are not relationship property as they are owned solely by Mrs Fan. They say it was Mrs Fan who provided from her own resources all the money required for their purchase. A written “Agreement” between mother and son which was purportedly signed pre-marriage is produced to confirm this. Ms Li says the first time she [saw] this document was some three months after her separation from Mr Wu.

(emphasis added)

[22]   Subsequently in the judgment, Gendall J set out the orders which Ms Fan sought “in her proceeding” as to her beneficial and legal entitlement to all the property.14 This was followed by Gendall J’s analysis of the parties’ arguments both in relation to factual matters and in relation to Ms Fan’s contentions of constructive trust15 and resulting trust.16 His Honour concluded that no trust arose.17

14     Substantive judgment, above n 3, at [29].

15     At [115]–[122].

16     At [123]–[127].

17     At [121] and [127].

[23]Before making his orders, Gendall J explained them:

[160] Given my findings outlined above, effectively Mrs Fan has largely failed in her proceeding against the disputed relationship property assets and Ms Li has largely succeeded in a range of her claims under the PRA. Ms Li and Mr Wu are, therefore, entitled to orders in this proceeding …

[24]   When the Court of Appeal subsequently determined numerous leave applications filed by Ms Fan and Mr Wu, Gilbert J (delivering the judgment of the Court) was in no doubt that the 27 September 2019 judgment had determined the substantive claims in both the -238 and the -612 proceedings.18 He recorded:

[3] In April 2018, Ms Fan filed an application in the High Court claiming that the relevant assets were held by Mr Wu on trust for her. As a result, the Family Court proceedings were transferred to the High Court. The two sets of proceedings were heard together before Gendall J over nine days between 10 June and 20 August 2019. In a judgment delivered on 27 September 2019 (the substantive judgment), the Judge dismissed Ms Fan’s claim and largely upheld Ms Li’s claims …

(footnotes omitted)

[25]    Accordingly, Ms Fan’s assertion here that her claim in the -238 proceeding has yet to be determined is entirely misconceived. Her claim was heard in 2019 and determined by the 27 September 2019 judgment. Her claim was rejected. She has been found not to be a beneficial (or legal) owner of the property. Her sole interest is as a creditor pursuant to the relationship property debt which Gendall J found is owed to her (and is the subject of existing orders as to how it is to be accounted for).

Stay pending appeal?

[26]   This central ground of Ms Fan’s application, as to a pending appeal, is also misconceived.

[27]   The very documents Ms Fan has produced in support of this aspect of her application indicate there is no pending appeal. The most recent judgment of the Court of Appeal dated 3 November 2021 confirms that.19 The power to order a stay of enforcement under r 20.10 therefore does not arise.

18     Wu v Li [2021] NZCA 137.

19     Fan v Li, above n 13, at [11]–[12].

[28]That on its own constitutes sufficient reason to dismiss the present application.

Abuse of process

[29]   The Court of Appeal in Faloon v Planning Tribunal at Wellington upheld a High Court judgment by which a proceeding was struck out as being plainly an abuse of the process of the Court.20 Kόs P, in delivering the reasons of the Court, explained the considerations which underpin the courts’ approach to issues of abuse of process:

[2]Civil justice has some simple basic rules to maintain order. First, proceedings must involve claims by persons with a legitimate interest in the subject of the dispute (standing). Secondly, all persons likely to be affected directly by a judgment should be joined in the proceeding (joinder). Thirdly, claims cannot be undertaken by instalment: the claimant must bring all his or her claims on a subject together in the one claim (the rule in Henderson v Henderson). Fourthly, claimants who fail usually must pay a substantial contribution to the other side's costs (costs). Fifthly, the judgment is determinative of all issues in the proceeding and must be implemented unless stayed pending an appeal (execution). Sixthly, generally there is only one right of appeal, but a right to seek leave to bring a second appeal (appeal). Seventhly, once those rights are exhausted, that is that and the final judicial determination is not to be subverted by collateral challenge through further proceedings on the same subject matter (finality).

(footnote omitted)

[30]   The record of Ms Fan’s (and Mr Wu’s) repeated, unsuccessful applications to this Court and the other senior courts is one of determined resistance to the implementation of orders made in September 2019.

[31]   Collins J referred to the issue of relitigation in November 2021 when the Court of Appeal upheld the Deputy Registrar’s rejection of Ms Fan’s notice of appeal at that time:21

In any event, the High Court’s additional orders are not new. They reflect orders made in a previous High Court decision, and Mrs Fan’s attempted appeal against that decision was struck out.

(footnotes omitted)

20     Faloon v Planning Tribunal at Wellington [2020] NZCA 170 (an appeal in relation to an order made under r 5.35B of the High Court Rules).

21     Fan v Li, above n 13, at [10](b).

[32]   Earlier that year, the Supreme Court in dismissing Ms Fan’s (and Mr Wu’s) application for leave to appeal had explained the range of arguments which Ms Fan was seeking to pursue (but on which leave was refused):22

[12]  Ms Fan seeks leave to appeal against the Court of Appeal judgment,  the substantive High Court judgment, and the High Court costs judgment. She says that the delay in filing the appeal in the Court of Appeal is explained because they thought that the High Court judgment was not binding until it had been signed or sealed. She also submits that the parties are wrongly described by the High Court as a defendant when she was a plaintiff and, as a result, treated as liable for payment of costs. Next, in terms of the merits of the proposed appeal, her case is that the High Court was wrong to treat the agreement between her and Mr Wu as a loan agreement. She relies on the text of the agreement in support of her argument on this point. She also says the High Court erred in finding that the proceeds from the sale of another property were gifted by her to Mr Wu.

(footnote omitted)

[33]   The three stay applications which Gendall J considered in September 2021 related to the substantive judgment, the costs judgment, and the enforcement judgment. It was by the last of those three that the property was ordered to be sold by auction.

[34]   The present application falls within the seventh category identified by the Court of Appeal in Faloon (above at [29]) — all rights have been exhausted and there is a final judicial determination that is not to be subverted by collateral challenge through further applications on the same subject matter.

[35]   While Ms Fan’s present focus on a distinction between the -238 and the -612 proceedings has been presented in slightly different terms to the grounds she has advanced on previous applications, the present application represents a successive attempt to block implementation of the substantive judgment and the enforcement judgments.

[36]   In the circumstances, I am satisfied that the present application is plainly an abuse of the process of the court. The application will be dismissed on that basis also.

22     Fan v Wu, above n 1.

Costs

[37]   At the hearing, I explained to Ms Fan that, should the application fail, there would likely be an order of costs against her. I invited Ms Fan to indicate whether there was any reason an order should not be made. Ms Fan stated that she has no money from which to make payment of costs.

[38]   Ms Fan’s liability for costs should be determined on usual principles. Those do not generally involve consideration of a party’s inability to make payment of the appropriately ordered sum. That must apply particularly here when Ms Fan has repeatedly been unsuccessful in interlocutory proceedings, without subsequently making payment of the costs ordered.

[39]   There is, in any event, a clear path in this case to potential recovery of any award for Ms Li in that the relationship property debt of Ms Li and Mr Wu owed to Ms Fan has been recognised in the substantive judgment and is the subject of an order.23 Ms Li can have any unpaid costs offset against her share of responsibility for the relationship property debt.

[40]   As I have made a finding that the present application constitutes an abuse of the process of the Court, it plainly falls within the category of cases in which a party has acted improperly or unnecessarily in pursuing an application (within the terms of r 14.6(4)(a) High Court Rules). Such justifies an award of indemnity costs. An order is appropriate in the circumstances of this case, with recovery to be made from any payment able to made from the sale of the property to Ms Fan (in the event Ms Fan does not earlier pay the ordered costs).

Orders

[41]I order:

(a)the (amended) application for a stay of enforcement is dismissed;

23     Substantive judgment, above n 3, at [166].

(b)Ms Fan shall pay to Ms Li the costs and disbursements of the application on an indemnity basis as follows:

(i)costs and disbursements will be determined on the papers, Ms Corry first filing a memorandum with full details and explanation of the lawyer/client costs incurred in relation to this application (four page limit) to be filed and served within three working days, and Ms Fan to file and serve a reply memorandum within three working days thereafter (four page limit); and

(ii)when the amount of indemnity costs and disbursements are fixed, they are to be paid in any event by Ms Fan, and, failing payment by Ms Fan, to be paid directly to Ms Li out of such sum as may be available to Ms Fan on account of the relationship property debt of Ms Li and Mr Wu (and before any balance of such debt is paid to Ms Fan).

Osborne J

Barrister:
A M Corry Barrister, Christchurch

Copy to: Ms Fan