Liu v Qian
[2023] NZHC 2653
•22 September 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2022-404-756
[2023] NZHC 2653
UNDER The Trusts Act 2019
The Property (Relationships) Act 1976
IN THE MATTER OF
An application for the removal and replacement of a trustee
BETWEEN
JINGWEN LIU
Plaintiff
AND
HAO QIAN
Defendant
Hearing: 11 September 2023 Appearances:
No appearance for the plaintiff E Hong for the defendant
Judgment:
22 September 2023
JUDGMENT OF CAMPBELL J
This judgment was delivered by me on 22 September 2023 at [Time] pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
LIU v QIAN [2023] NZHC 2653 [22 September 2023]
[1] The parties married in October 2013 and separated in November 2019. In the course of their marriage, the Qian Duo Duo Family Trust (the Trust) was settled. The parties are the two trustees of the Trust.
[2] This proceeding began in March 2022 as one by the plaintiff, Ms Liu, seeking orders under the Trusts Act 2019 against the defendant, Mr Qian, as trustee of the Trust (the Trust Proceeding). In February 2023, Mr Qian brought his own proceeding against Ms Liu in the Family Court, applying for division of relationship property (the Relationship Property Proceeding). In that proceeding, Mr Qian made an interlocutory application for orders for sale of the parties’ home and for interim distribution of the proceeds (the Sale and Interim Distribution Application).
[3] The Relationship Property Proceeding was subsequently transferred (by consent) to this Court. The two proceedings were consolidated on 3 August 2023.
[4]This judgment determines the Sale and Interim Distribution Application.
Factual background
[5] The parties began dating in 2008. In October 2012, before their marriage, they purchased a family home in Fairview Heights, Auckland, for $835,000 (the Family Home). About $210,000 of the purchase price was paid using funds gifted from Mr Qian’s family. The balance was funded by a loan from the Bank of New Zealand.
[6] In November 2013 (shortly after their marriage), the parties refinanced the Bank of New Zealand loan with a loan from the ANZ Bank. That loan is secured by a mortgage registered against the Family Home.
[7] In February 2015, the parties’ daughter was born. Mr Qian says that in September 2015 he and Ms Liu agreed to set up a family trust in which they would be the trustees and beneficiaries and their daughter would be the final beneficiary. The Trust was settled that month. However, Mr Qian says that Ms Liu gave instructions to the law firm that drafted the Trust documents that were contrary to the agreement the parties had reached. Under the Trust, Ms Liu and Mr Qian are the trustees, the daughter is the final beneficiary, but Ms Liu’s parents are discretionary beneficiaries.
[8] Currently, the Trust owns three Auckland properties: a rental property in Te Atatu South, a rental property in Belmont, and a piece of bare land in Long Bay.
[9]In February 2016, Mr Qian became a part-owner of a souvenir business.
[10] The parties separated on 26 November 2019. Since separation, Ms Liu has been residing at the Family Home with the daughter.
[11] In December 2020 and in August 2021, Mr Qian (through his lawyer) wrote to Ms Liu to try to negotiate a division of relationship property. Ms Liu did not respond.
[12] Mr Qian’s souvenir business failed as a result of the COVID-19 pandemic. He tried to earn sufficient income as an Uber driver in New Zealand, but was unable to do so. In December 2021, he went to China to receive support from his family and to try to earn an income. Mr Qian is still residing in China.
The two proceedings
[13] The Trust Proceeding was served on Mr Qian (by substituted service) on 30 June 2022. He filed a statement of defence and counterclaim on 21 October 2022.
[14] As noted, Mr Qian commenced the Relationship Property Proceeding in February 2023. When doing so, he brought the Sale and Interim Distribution Application and also applied for his proceeding to be transferred to the High Court.
[15] On 24 March 2023, while the Relationship Property Proceeding was still in the Family Court, Ms Liu filed a notice of opposition to the Sale and Interim Distribution Application. She did not file any affidavit in support of her opposition.
[16] On 11 May 2023, the Relationship Property Proceeding was transferred to the High Court by consent.
[17] On 24 May 2023, Associate Judge Brittain made a direction in the Trust Proceeding that the parties provide discovery by 28 June 2023. Mr Qian complied with that direction. Ms Liu did not.
[18] Associate Judge Brittain made further directions on 7 July 2023. His Honour gave Ms Liu further time, until 21 July 2023, to provide discovery. In relation to the Sale and Interim Distribution Application, his Honour directed, among other things, that Ms Liu was to file any amended notice of opposition, and supporting affidavits, by 21 July 2023 and her written submissions by 4 September 2023.
[19] Ms Liu did not comply with any of those directions. She has still not provided discovery. She did not file any supporting affidavits. She did not file any written submissions for this hearing.
The hearing
[20] Mr Qian filed, as directed, his written submissions, authorities and a bundle of documents for the hearing. As noted, Ms Liu did not.
[21] Mr Pang appeared, with Ms Lin, on behalf of Ms Liu at the commencement of the hearing. He told me he had been unable to communicate with Ms Liu until speaking with her that morning. Despite speaking with her, he had been unable to obtain clear instructions as to her position with respect to the Sale and Interim Distribution Application.
[22] In those circumstances, Mr Pang suggested I adjourn the application to allow him to obtain clear instructions. If I did not grant an adjournment, he said it was likely he would apply for leave to withdraw as solicitor on the record for Ms Liu, and in the meantime he would seek to be excused from appearing as counsel for Ms Liu on the application.
[23] I declined to adjourn the application. Any adjournment would have been for at least two months. I was not given any satisfactory reasons for Ms Liu’s non- compliance. It was not clear to me what the basis of Ms Liu’s grounds of opposition to the application would be. Mr Pang had suggested some grounds but candidly
acknowledged they were not supported by any affidavit evidence. The application had been on foot for just over seven months. There was an associated lack of compliance by Ms Liu with discovery orders.
[24] Having adjourned the application, I excused Mr Pang and Ms Lin from appearing as counsel. Ms Lin remained in the courtroom merely to observe the hearing.
The Sale and Interim Distribution Application
[25]Mr Qian applies for orders that:
(a)The Family Home be sold.
(b)After repayment of the ANZ Bank loan and deducting any reasonable costs of the sale, the balance of the sale proceeds of the Family Home be divided equally between Mr Qian and Ms Liu.
(c)Leave is reserved for the parties to seek further directions from the Court to implement the orders.
[26] Mr Qian says the orders should be made because the parties have been separated for almost four years and Ms Liu has ignored his attempts to discuss or reach an agreement on the division of their relationship property. Since separation, Ms Liu has had sole occupancy of the Family Home whereas Mr Qian has had to find alternative accommodation elsewhere. He says Ms Liu has expressed no interest in buying out Mr Qian’s interest and in any event does not have the means to do so. He says he is experiencing hardship as Ms Liu has control of all the relationship property. He says delay in realising and accessing his share of the equity in the Family Home is causing him prejudice. In contrast, he says Ms Liu will not be unfairly prejudiced, as she will be able to reside in one of the Trust’s rental properties (something Mr Qian does not oppose) or will be able to use her share of the sale proceeds to pay rent for another property.
[27]Ms Liu’s notice of opposition states the following grounds on which she
opposes the application:
(a)The Family Home is her only home, and its sale would cause her undue or extreme hardship.
(b)The beneficiaries of the Trust provided significant monetary contribution to the Family Home.
(c)It is in the interests of justice not to grant the orders.
[28] There is no evidence to support Ms Liu’s contention that the beneficiaries of the Trust provided significant monetary contribution to the Family Home. I put that contention to one side. I accept that the Family Home is Ms Liu’s only current home. I address the relevance of that in my analysis below.
Governing legal principles
[29] Under s 25(3) and (4) of the Property (Relationships) Act 1976, the Court may at any time make any order for the sale of any relationship property and interim distribution of the sale proceeds “as it considers just”.
[30] A Court should only make an interim order for sale and distribution if first satisfied that the amount sought by way of interim distribution is no more than the applicant’s ultimate share of relationship property.1 If that threshold is passed, the Court has a broad discretion to make any order it considers just. In determining where the interests of justice lie, the Court should balance any prejudice to the respondent of making the order against any prejudice to the applicant of not making the order.2 Relevant considerations include:3
(a)The needs and circumstances of the applicant.
1 SM v LFDB [2013] NZHC 1056 at [29].
2 Murray v Murray (1989) 5 FRNZ 177 (CA) at 179.
3 SM v LFDB [2013] NZHC 1056 at [30].
(b)Any possible prejudice to the respondent or others that might arise from making the proposed order.
(c)Any delays in the proceeding so far and whether those delays are attributable to either of the parties.
(d)Whether an interim distribution will cause further delays in finally determining the relationship property proceeding.
Should the orders be made?
[31] As well as the Family Home, the relationship property pool includes chattels and motor vehicles.4 There is nothing to suggest that pool would be shared other than equally. I am therefore satisfied that the amount that would be paid as an interim distribution under the orders sought by Mr Qian would be no more than his ultimate share of the relationship property pool.
[32] Mr Qian’s unchallenged evidence is that he presently does not have the financial means or resources to maintain his reasonable expenses. His financial situation has seen him move to China, where he can have family support (at the expense of seeing his daughter). It is clear he is prejudiced by the delay that has occurred in dividing the relationship property. He will continue to suffer that prejudice if the orders are not made.
[33] Ms Liu will likely suffer prejudice if the orders are made, as it is likely that she (and the daughter) will have to move out of the Family Home (though I acknowledge there is a possibility that Ms Liu, with the support of her family, might purchase the Family Home if the orders are made). However, I do not consider this prejudice will be as extensive as that which Mr Qian is likely to continue to suffer if the orders are not made. First, it is likely that Ms Liu will be able to either use her share of the net proceeds to rent another property or live in one of the Trust’s rental properties. Secondly, this is a consequence that Ms Liu is likely to face in any event, upon determination of the Relationship Property Proceeding.
4 I understand that Mr Qian also claims that some of the Trust’s assets are relationship property. I put that claim to one side for present purposes.
[34] I consider it is relevant that, on Mr Qian’s unchallenged evidence, Ms Liu did not respond to his invitations to resolve their property relationship matters. In the meantime, she has had sole occupation of the Family Home and there is no financial pressure on her to advance matters towards a resolution. Consistently with that, Ms Liu has failed to comply with several directions made in these consolidated proceedings. Her non-compliance risks delaying the proceedings.
[35] There is no reason to think that making the orders sought by Mr Qian would cause further delays in finally determining the Relationship Property Proceeding.
[36]All these factors favour exercising my discretion to grant the orders.
Result
[37]I order that:
(a)The Family Home (as described in the application dated 8 February 2023) be sold.
(b)After repayment of the ANZ Bank loan and deducting any reasonable costs of the sale, the balance of the sale proceeds of the Family Home be divided equally between Mr Qian and Ms Liu.
(c)Leave is reserved for the parties to seek further directions from the Court to implement the orders.
[38]If any costs issues arise, the parties may file brief memoranda.
Campbell J