Lung v Liu

[2021] NZHC 1810

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2021-404-001268

[2021] NZHC 1810

UNDER

the Property Law Act 2007

IN THE MATTER OF

An application under section 339 of the Property law Act 2007

BETWEEN

JU-TING LUNG

Applicant

AND

YU-CHEN LIU

Respondent

Hearing:	On the papers
Counsel:	K Sun for the Applicant
Judgment:	16 July 2021

JUDGMENT OF VAN BOHEMEN J

[For leave to commence proceeding by originating application]

This judgment was delivered by me on 16 July 2021 at 3.30pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors

Capstone Law Ltd, Auckland

LUNG v LIU [2021] NZHC 1810 [16 July 2021]

Introduction

[1]    The applicant, Ju-Ting Lung, applies without notice for permission to commence a proceeding by originating application. As required by r 19.5(3) of the High Court Rules 2016, the proposed originating application is filed with the application for permission.

[2]    Ms Lung seeks an order under s 339 of the Property Law Act 2007 (PLA) for the sale of a property at 27 Studfall Street, Pakuranga Heights (NA20A186) (the Property) that she and the respondent, Yu-Chen Liu, own as tenants in common, and for a division of the proceeds of sale.

[3]    The application for permission states that the proceeding is a straightforward application of the test and considerations in s 342 of the PLA to which the Court must have regard to when considering whether to make an order under s 339 of the PLA. It also states that the use of the originating application procedure will not cause unfairness or prejudice to Mr Liu, would be in the interests of justice, and would better achieve the just speedy and inexpensive determination of the dispute between the parties.

Relevant background

[4]    As explained in an affidavit by Ms Lung, Ms Lung and Mr Liu were previously married. They separated in June 2019. In October 2019, their former matrimonial home at 336 Bucklands Beach Road, Pakuranga was sold and the net proceeds of sale ($1,095,412) were deposited into their joint bank account.  Ms Lung says she and  Mr Liu divided the net proceeds of the sale equally in accordance with s 11 of the Property (Relationships) Act 1976.

[5]    In February 2020, Mr Liu entered into an agreement to purchase the Property for $990,000. Ms Lung says that Mr Liu used $560,000 from his separate property to fund the purchase but was unable to borrow $430,000, the sum he needed to complete the purchase. Ms Lung says she and Mr Li made a verbal agreement under which she would support Mr Liu’s application to borrow $430,000 by becoming a joint borrower and taking on associated risks. In return, Ms Lung became the legal and beneficial

owner of a half  share  in  the property.    Under the verbal agreement, Mr Liu was responsible for interest on the loan and outgoings associated with the Property.

[6]    Ms Lung says the loan was secured and the purchase of the Property completed on the above basis. The only documentary evidence provided of the asserted agreement and the purchase are copies of the agreement for sale and purchase of the Property, the certificate of title to the Property showing Ms Lung and Mr Liu each as owners as to a half share of the Property and registration of a mortgage to the ANZ Bank Ltd, and extracts of the joint bank account showing payments to Barfoot and Thompson, receipt and payment of $430,000 and other transactions said to be related to the purchase.

[7]    Ms Lung says that Mr Liu has taken sole possession of the Property, has rented out three rooms and is the sole recipient of the rental income.

[8]    Ms Lung says she is suffering hardship because she is unable to exercise her equal rights to occupy and use the house and is a joint-borrower but is not receiving any rental income.

Discussion

[9]    While the originating application procedure has become more widely used than was originally envisaged, it remains the case that, in relation to contested proceedings not listed in r 19.2 of the High Court Rules, it is an exceptional procedure.1 As Asher J said in Hong Kong & Shanghai Banking Corporation v Erceg after reviewing relevant decisions:2

[25] These cases show that the type of proceeding suited to the originating application procedure is a straightforward application, not requiring detailed pleadings or interlocutory orders for its fair resolution. Such a type of proceeding tends to be an application under a specific statutory provision, where the issue that arises can be clearly defined, and the issues confined. The procedure is not well suited to the determination of substantive rights

1      Cunningham v Cunningham [2016] NZHC 1075 at 10; Wason v Wason [2017] NZHC 1453 at [10]; McKean v McKean [2017] NZHC 2212 at [9]; and Solar Bright Ltd v Martin [2019] NZHC 300 at [18] in which Osborne J recognised that “resort to r 19.5 is to be exceptional rather than so common place that it becomes the rule that leave is granted.”

2      Hong Kong & Shanghai Banking Corporation v Erceg (2010) 20 PRNZ 652 (HC). See also Solar Bright Ltd v Martin, above n 1, at [20] – [24].

involving the application of common law doctrines as distinct from statutory tests. It is not well suited to cases involving multiple parties, and cases where there is the possibility of cross-claims or counterclaims.

[10]   While the current application concerns a specific statutory provision, s 339 of the PLA, the cursory information provided about the agreement said to have been concluded between Ms Lung and Mr Liu, the absence of any documentary evidence of the agreement itself and the absence of any information of communications between Ms Lung and Mr Liu about the use of the Property and its possible sale all suggest there is ample scope for disagreement about the underlying factual bases for the dispute and for cross-claims by Mr Liu.

[11]   According to Ms Lung’s account, she has obtained a half-share of the Property based solely on her willingness to be a co-borrower of the loan and not because she has put up any of her own money, met the loan repayment obligations or paid for other outgoings for the Property. Whether Mr Liu accepts that account is unknown. At the very least, there must be a real possibility that he has a very different appreciation of the facts. These are matters that may have to be tested, including by cross- examination.

[12]   Moreover, it has been recognised that proceedings under s 339 of the PLA, which do not follow a routine format and are often complex, are generally unsuited to pt 19 of the High Court Rules.3 While leave has been granted in such cases, this has been confined to cases where the issues are few and straightforward,4 and where evidence for areas of contestation is able to be effectively presented by affidavits.5

[13]   In these circumstances, where contest on a range of issues appears likely if not inevitable, I do not consider that it is in the interests of justice for the proposed proceeding to commence by way of originating application, or without notice to    Mr Liu.

3      See Paulsen AJ’s comments in Casbolt v Harman [2020] NZHC 1354 at [13] – [18].

4      See McGregor v McGregor [2019] NZHC 2827 where the single issue for determination was the price for which the property should be sold.

5      Chiswell v Cunynghame [2020] NZHC 1651 at [19] where, although a counterclaim was threatened, the evidence was able to be effectively presented by affidavits and there was no issue as to the applicant’s qualification to bring such an application.

Result

[14]   I decline Ms Lung’s application for permission to commence the proposed proceeding by originating application.

G J van Bohemen J