Liu v Jiang

[2018] NZHC 1897

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA
KIRIKIRIROA ROHE

CIV-2018-419-69 [2018] NZHC 1897

UNDER

The Land Transfer Act 1952 and Property (Relationships) Act 1976

IN THE MATTER

of originating application by Ning Liu to sustain a caveat

BETWEEN

NING LIU

Applicant

AND

JIUBO JIANG

Respondent

Hearing:	6 July 2018
Appearances:	S Y Lu and A Teow for the Applicant M T Milroy for the Respondent
Judgment:	24 August 2018

JUDGMENT OF POWELL J

This judgment was delivered by me on 24 August 2018 4 pm pursuant to R 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors/Counsel: Nolan & Lu, Hamilton

Foster & Milroy, Hamilton

LIU v JIANG [2018] NZHC 1897 [24 August 2018]

[1]    The applicant Ning Liu (“Kitty”) married Shuai Jiang (“Michael”) in April 2008. The couple were together for some nine years and had one child before splitting up in February 2017.

[2]    Following unsuccessful attempts to resolve relationship property issues between them, Kitty has filed a notice of interest pursuant to s 42 of the Property (Relationships) Act 1976 over a property located at 479 Tauwhare Road, RD 4, Hamilton (“the Tauwhare Road property”). The Tauwhare Road property is owned by Michael’s father, the respondent Jiubo Jiang, and used as a berry farm by Matangi Berry Farms Ltd (“the Company”). Mr Jiang is the sole shareholder and director.

[3]    Despite Mr Jiang’s legal ownership over both the Tauwhare Road property and the Company, Kitty claims that Michael has a beneficial interest in the Tauwhare Road property “by virtue of a constructive/resulting trust”.

The Application

[4]    The s 42 notice is opposed by Mr Jiang and he has applied for the notice to lapse. This has resulted in the present application made by Kitty to sustain the s 42 notice.

[5]    The principles for sustaining s 42 notices are not in dispute.  A notice under   s 42 has the same effect as a caveat against dealings with the property. In the caveat context those principles were summarised by the Court of Appeal in Philpott v Noble Investments Ltd in the following terms:1

(a)The onus is on the applicants to demonstrate that they hold an interest in the land that is sufficient to support the caveat, but they need not establish that definitively;

(b)It is enough if the applicants put forward a reasonably arguable case to support the interest they claim;

(c)The summary procedures involved with applications of this nature are not suited to the determination of disputed

questions of fact. An order for removal of a caveat will only

1 At 660 [2015] NZCA 342 at [26] (footnotes omitted). See also Sims v Lowe [1988] 1 NZLR 656 (CA); Orams Marine (Auckland) Ltd v Ports of Auckland Ltd (1994) 6 TCLR 88 (CA) at 92; Geneva Healthcare Ltd v Essential Assets Ltd [2014] NZHC 3236, (2014) 15 NZCPR 826 at [27]- [28].

be made if it is patently clear that the caveat cannot be maintained – either because there is no valid ground for lodging it in the first place, or because such a ground no longer exists; and

(d)When an applicant has discharged the burden upon it, the Court retains a discretion to remove the caveat which it

exercises on a cautious basis. Before it does so the Court must be satisfied that the caveator’s legitimate interest would not be prejudiced by removal.

The Nature of the Interest Claimed by Kitty

[6]    Kitty has given evidence that since she and Michael were first married Michael was careful to avoid owning property or other assets.

[7]    Although Kitty acknowledges she does not have a complete picture of Michael’s financial activities she has assembled a variety of material with regard to a range of transactions to support her contention that Michael has a beneficial interest in the Tauwhare Road property and the Company, and that:

(a)since about 2008 Michael has operated and structured his affairs through the Company, Mr Jiang and Kitty’s names;

(b)Michael has treated the assets of the Mr Jiang, Kitty and the Company as his personal assets and he has immediate control over those assets; and

(c)Michael is the alter ego of the assets owned and the affairs operated by him through the names of Mr Jiang, Kitty and the Company.

[8]    The evidence relied upon by Kitty includes a number of “WeChat” social media postings made by Michael which refer to the Tauwhare Road property and the Company as his own, and Kitty has also detailed how much of the couple’s personal possessions have over the years been put through the Company. Of particular significance to the interest claimed is a transaction Kitty has detailed that occurred in 2016 (“the 2016 transaction”), where at the request of Michael, Kitty arranged to borrow $293,000 from the Bank of New Zealand. The loan was secured against other relationship property held in Kitty’s name and after it had been drawn down was

transferred by Michael out of Kitty’s bank account to other accounts controlled by him before being transferred to Mr Jiang to enable him to acquire additional land, which has subsequently been incorporated in to the present certificates of title over the Tauwhare Road property.

Mr Jiang’s response

[9]    Opposing Kitty’s application Mr Jiang claims to be the beneficial owner of the Tauwhare Road property as well as the Company. Despite that he acknowledges:

The relationship between my son and his family and myself and my wife had been one of active family support. This support often takes the form of financial assistance involving a free flow of monies between mine and my wife’s joint bank account and my son’s or daughter-in-law’s bank accounts.

[10]   According to Mr Jiang this flow of money was mostly in the direction of Michael and Kitty, to the extent that between 11 December 2011 and 2 February 2017 he and his wife had advanced Michael and Kitty a total sum of $968,764. Significantly however Mr Jiang substantially corroborated much of Kitty’s contentions with regard to the 2016 transaction:

In November 2015, an opportunity arose to acquire further farmland adjoining my property. I was cash strapped at the time so I called upon my son to repay monies I had previously advanced to assist with the purchase of the additional land. Michael did reciprocate by transferring $293,000.00 to me on 12 April 2016 to enable the purchase to proceed. For my part, I was unaware how Michael had raised the funds to pay me but I was grateful that he had honoured his familial obligation to some degree although the ledger still remains heavily weighted in my favour.

Kitty’s response

[11]   In a reply affidavit Kitty undertook an analysis of the bank statements by which she has calculated that even allowing for the $968,764 that Mr Jiang says has been transferred to her and Michael, a significantly greater amount has actually been transferred to Mr Jiang, and his wife, with Kitty alleging a net transfer of funds to  Mr Jiang from Michael and Kitty of at least $290,868.86.

Discussion

[12]   While it is clear that numerous questions exist with regard to the financial arrangements utilised by Michael with regard both to money and assets held by Kitty, Mr Jiang and the Company I am satisfied that Kitty has provided sufficient detail to establish an arguable case that the Tauwhare Road property is in fact beneficially owned by Michael, and therefore relationship property in which Kitty can claim an interest. At the very least it is clear and indeed not disputed by Mr Jiang that money borrowed by Kitty at the request of Michael was used to buy a significant and identifiable, albeit effectively indivisible portion, of which now constitutes the Tauwhare Road property, consistent with which Michael has subsequently acted as though the Tauwhare Road property was his land.

[13]   In those circumstances, and noting that it is otherwise inappropriate to determine issues of credibility on affidavit evidence,2 I am satisfied it is appropriate for Kitty’s claim to be explored in more detail in substantive proceedings, and the s 42 notice to be sustained in the meantime.

Decision

[14]   There is an order that caveat/notice of interest Instrument Number 10868011.1 in respect of Certificates of Title 711257 and 711258 of the South Auckland Land District not lapse.

[15]   Kitty will have one month from the date of this judgment to file substantive proceedings in relation to Michael’s beneficial interest in the Tauwhare Road property.

[16]Kitty is entitled to costs on a 2B basis.

Powell J

2      Attorney-General v Rakiura Holdings Ltd (1986) 1 PRNZ 12 (HC) at 14 and Inner City Properties Ltd v Mercury Energy Ltd (1998) 12 PRNZ 490 (HC) at 492.