Lyo v Lu
[2022] NZHC 1796
•26 July 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-2399
[2022] NZHC 1796
BETWEEN SIBO LYU
Applicant
AND
HAN LU
First Respondent
TCYHL TRUSTEE LIMITED
Second Respondent
Hearing: 21 July 2022 Appearances:
Eva Kuo for the Applicant
Peter Spring for the Respondents
Judgment:
26 July 2022
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
This judgment was delivered by me on 26 July 2022 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules
………………………….
Registrar/Deputy Registrar
Solicitors:
Psalms Law Office (Eva Kuo), Ellerslie Auckland, for the Applicant Keegan Alexander (Peter Spring), Auckland, for the Respondents
LYU v LU [2022] NZHC 1796 [26 July 2022]
Introduction
[1] Mr Sibo Lyu applies for an order sustaining notice of claim 12269500.1.1 (the Notice of Claim).
[2] The Notice of Claim relates to two Auckland properties, the first being at 1/30 Cockayne Crescent, Auckland (described as Lot 1 on DP500455), and the second being at 22 Maungakiekie Avenue, Auckland (described as Lot 107 on DP70086) (the Properties).
[3] The Properties are held by the second respondent, TCYHL Trustee Ltd as sole trustee of the TCYHL Trust. The first respondent, Ms Han Lu, is the sole director and shareholder of that company. The respondents oppose Mr Lyu’s application.
Background
[4] Mr Lyu and Ms Lu are former domestic partners. They have known one another since the 1970s, when they were classmates in middle school in China.
[5] In 2013, Mr Lyu and Ms Lu reconnected via social media. Mr Lyu claims that this was when the two formally established their relationship. Ms Lu disputes that claim. She says she and Mr Lyu first became a couple in August or September of 2016.
[6] Mr Lyu came to New Zealand in February 2016. He stayed with Ms Lu at a Henderson address. The two did some travelling around the country. Mr Lyu left the country at the end of the month. He returned to New Zealand in April 2016. He and Ms Lu then opened a joint bank account with ANZ. He also purchased Ms Lu an expensive Rolex watch.
[7] Ms Lu set up the TCYHL Trust in late 2018. Its sole trustee is TCYHL Trustee Ltd. The Properties were transferred to TCYHL Trustee Ltd on 28 February 2019.
[8] Mr Lyu claims to have made extensive contributions to the Properties while he was in a relationship with Ms Lu. Those contributions are said to include washing, repairs, installation, painting, carpentry, carpeting, electrical work and supervision of renovations. He says he was unaware Ms Lu had taken steps to move the Properties to TCYHL Trustee Ltd.
[9] The couple’s relationship ended on 11 May 2019, when Mr Lyu assaulted Ms Lu. He pleaded guilty to two assault charges and was discharged without conviction.1
[10] On 19 October 2021, Mr Lyu lodged the Notice of Claim. In response, Ms Lu wrote to the Registrar-General of Land to request that the Notice of Claim be removed.
[11] On 15 December 2021, Mr Lyu applied for an order sustaining the Notice of Claim. The respondents oppose that application.
[12] Due to delays in hearing the application and the strict timeframe required by Land Information New Zealand (LINZ), Mr Lyu sought an interlocutory order that the Notice of Claim not lapse. On 14 January 2022, Lang J granted that application.2
[13] Mr Lyu has now commenced proceedings in the Family Court for division of relationship property.
Mr Lyu’s application to sustain the Notice of Claim
[14]Mr Lyu seeks an order:3
1.… sustaining Notice of Claim 12269500.1.1 registered against the parcel of land containing 497 square metres more or less being Lot 1 Deposited Plan 500455 contained in Record of Title 744633 (Auckland Registry) and against the parcel of land containing 1/2 share of 1112 square metres more or less of Lot 107 Deposited Plan 70086 being Flat 1 of Deposited Plan 181581 contained in Record of Title NA112C/845 (“the properties”)
1 Police v Lyu [2020] NZDC 17879.
2 Lyu v Lu HC Auckland CIV-2021-404-2399, 14 January 2022 (Minute of Lang J).
3 Originating application for order to sustain caveat/notice of claim dated 15 December 2021.
[15]The grounds on which the orders are sought are:4
a.The Applicant and the Respondent were in a de facto relationship. The Applicant says that the de facto relationship was more than 3 years.
b.The Applicant had made substantial contributions towards the properties.
c.The Order sought would preserve the Applicant’s interests in the properties.
d.Upon an application made by the Respondent, Land Information New Zealand intends to remove the Applicant’s Notice of Claim on 17 December 2021
e.The overall justice of the case favours such Order being granted.
f.Upon further grounds in the Affidavit of the Applicant filed in support of application together with the Affidavit of Translation.
Mr Lyu’s affidavit
[16] Mr Lyu has made an affidavit in support of his application. He deposes that he and Ms Lu separated on 11 May 2019 after a family violence incident. He says he later became aware that Ms Lu had set up a family trust in December 2018 or early 2019. He says TCYHL Trustee Ltd is the trustee of that family trust. He says he filed the Notice of Claim on 2 November 2021, and that Ms Lu filed an application with LINZ on 3 December 2021 to lapse the Notice of Claim.5
[17] Mr Lyu says he and Ms Lu have known each other since childhood. He says they formally established their relationship in 2013. He refers to various items of documentary evidence from between 2014 and early 2016 that he says show, among other things, the two travelling to meet one another, purchasing a car together and setting up a joint bank account.6
[18] Mr Lyu says that before he came to New Zealand, he transferred his savings of more than 100,000 NZD to a bank account Ms Lu nominated. He says Ms Lu operated the account as her own, and that he trusted her to do so. He said he contributed to the
4 At [2].
5 Affidavit of applicant in support of originating application for order to sustain caveat/notice of claim dated 10 December 2021 at [3]–[6].
6 At [7]–[18].
property at Cockayne Crescent by washing the exterior walls, tidying the gardens, cleaning the rooms, installing the windows and painting the walls, doors and windows. He says further that he repaired and repainted the downstairs kitchen ceiling two or three times after water leakage caused it to rot away. And he says that after the Maungakiekie Avenue property was settled, it required a full-scale renovation that took close to three months of constant work. He says Ms Lu asked him to be at the site every day to supervise the work, purchase materials and work as a labourer.7
[19] Mr Lyu says he began to feel quite unwell, tired and stressed. He was prescribed anti-depressants. As a result, he says he and Ms Lu had frequent altercations in the time leading up to the 11 May 2019 incident. He says he has made significant contributions to the Properties and that he wants to know what Ms Lu did with the money under her control. He says he will seek a court order in relation to his relationship with Ms Lu and the division of property.8
Respondents’ notice of opposition
[20]The respondents oppose Mr Lyu’s application:9
(a)Although the first respondent is not the registered proprietor of Lot 1 DP 500455 (22 Maungakiekie Avenue, Auckland) and Lot 107 DP 70086 (1/30 Cockayne Crescent, Auckland) (together, the Properties), she is the sole director and shareholder of TCYHL Trustee Ltd, which, as sole trustee of the TCHYHL Trust, is the registered proprietor.
(b)22 Maungakiekie Avenue has, at all relevant times, been owned by the trustee of the TCYHL Trust – the applicant has no arguable interest in that property pursuant to any section of the Property (Relationships) Act 1976.
(c)1/30 Cockayne Crescent was acquired by Ms Lu on 2 November 2015 (prior to the relationship and in any case from separate property). It was settled on the TCYHL Trust on 28 February 2019 and, immediately prior to that settlement, was the first respondent’s separate property.
(d)The applicant does not have an arguable case that he and Ms Lu were in a de facto relationship lasting longer than three years. The Family Court therefore has no jurisdiction to make orders and the applicant
7 At [19]–[21].
8 At [22]–[24].
9 Notice of opposition by respondents to application for order that notices of claim not lapse dated 8 February 2022 at [3].
therefore has no interest under the Property (Relationships) Act 1976 to preserve. None of the exceptions in sections 14 and 14A of the Property (Relationships) Act 1976 apply.
(e)The properties are held in trust, meaning the applicant can have no interest in the properties as relationship property under the Property (Relationships) Act 1976.
(f)None of sections 44A, 44B, or 44C (which the notices of claim record as giving rise to the applicant’s asserted interest in the Properties) can, as a matter of law, give rise to an interest in the Properties in terms of section 42 of the Property (Relationships) Act 1976.
(g)Even if it is true that the applicant made “contributions” (in terms of the Property (Relationships) Act 1976) to the Properties (which is denied), it is not reasonably arguable, on the evidence before the Court, that such contributions:
(i)Were “substantial”;
(ii)outweighed the benefits received by the applicant during the relationship;
(iii)gave rise to any interest in the Properties; or
(iv)were made at a time when the Properties were owned by the respondent (meaning sections 44, 44A, 44B, and 44C do not apply).
(h)Such grounds as appear in the affidavit of Han Lu dated 8 February 2022 filed in support of this opposition.
Ms Lu’s affidavit
[21] Ms Lu has made an affidavit in support of the respondents’ notice of opposition. She deposes she is the sole director and shareholder of TCYHL Trustee Ltd, which is the sole trustee of the TCYHL Trust and the registered proprietor of the Properties. She says Mr Lyu’s affidavit contains many exaggerations and untruths. She says their relationship started in August or September of 2016 and ended on 11 May 2019, after Mr Lyu assaulted her for a third time.10
[22] Ms Lu says she knew Mr Lyu when they were both children in China in the 1970s. She deposes they reconnected in June 2013 as part of a group set up by former classmates on the messaging app WeChat. She offers alternative explanations for her
10 Affidavit of Han Lu in support of opposition to application for order that notices of claim not lapse dated 8 February 2022 at [2]–[5].
various travel arrangements from 2013 onwards, including that she was visiting her sister in China. She says her trips to China were brief and that she doubts she and Mr Lyu had any sort of relationship at that time. She states, however, that as the trips occurred nearly a decade ago, she cannot be certain. But she is clear that the purpose of her visits to China at that time was to visit her family, not to visit Mr Lyu.11
[23] Ms Lu characterises Mr Lyu’s 2015 transfer of funds into her bank account as a favour. She says Mr Lyu contacted her, wanting to transfer money to her account because he did not, at that time, have a New Zealand bank account. His stated reason for transferring the money was that the conversion rate was favourable and he could take advantage of the interest rate fluctuation. She says other people had asked her to do the same thing, including a colleague and her sister. And she says Mr Lyu later disclosed he had another motive for transferring the money: he was trying to hide it from his ex-wife in China.12
[24] Of Mr Lyu’s February 2016 migration to New Zealand, Ms Lu says he stayed with her in a house owned by her sister. She says she and Mr Lyu stayed in separate rooms. She disputes that she bought a car with Mr Lyu, and that it was purchased in February 2016. She says she bought the car at the end of March, at which time Mr Lyu was not in New Zealand. She deposes that Mr Lyu persuaded her to open the joint bank account, saying having a joint account would make it easier for him to speculate in foreign exchange. She says she never used Mr Lyu’s money or believed it to be available for her to use.13
[25] Ms Lu admits that Mr Lyu purchased an expensive watch for her. She explains that Mr Lyu insisted at the time that he do so, the watch being an expression of his gratitude for her being his guide when he was travelling in New Zealand. The other reason for the gift was that Mr Lyu had stayed with Ms Lu in her sister’s house and she had not charged him rent or other expenses during that time. She deposes that it was not until Mr Lyu decided in September 2016 that he wanted to remain in New Zealand indefinitely that the two decided to commit to each other as a couple.14
11 At [6]–[15].
12 At [16]–[17].
13 At [19]–[26].
14 At [27]–[32].
[26] Ms Lu denies that she has any of Mr Lyu’s money. She says the money he transferred to her was kept separate and eventually returned to him. She refers to Mr Lyu’s bank statements as showing that he had, at their separation, almost $110,000
— funds that only could have been derived from the savings he brought to New Zealand.15
[27] Ms Lu deposes that from March 2019, Mr Lyu began to assault her. She says he did so three times. On the second occasion, she moved into a separate bedroom and decided she needed to separate from Mr Lyu. She made plans to do so but did not disclose them to him at this time. On the final occasion, in May 2019, Ms Lu called the Police. Mr Lyu was then arrested. Ms Lu says the two have not lived together since.16
[28] Turning to the Properties, Ms Lu says she settled the purchase of 1/30 Cockayne Crescent on 2 November 2015, before Mr Lyu came to New Zealand. She says the property was settled on the TCYHL Trust on 28 February 2019. 22 Maungakiekie Avenue, meanwhile, was acquired by TCYHL Trustee Ltd on 28 February 2019. She says Mr Lyu never had an interest in the Properties. She disputes his assertion that he made real financial and other contributions to them. She says he only assisted with some small painting and repair tasks.17
[29] Ms Lu says she was the one to engage the various workers and contractors involved in the renovation of the Maungakiekie Avenue property. She denies that Mr Lyu was involved in any of the painting and maintenance work there. She further denies that he in any meaningful way supervised the work. She says the renovations had only been underway for about a month before the 11 May 2019 incident, and that after she separated with Mr Lyu she continued to attend to the renovations for more than a month and a half.18
15 At [39]–[40].
16 At [41]–[43].
17 At [44]–[52].
18 At [54]–[57].
Mr Lyu’s affidavit in reply
[30] In reply, Mr Lyu reasserts that his relationship with Ms Lu started much earlier than August 2016. He maintains that she flew to China to see him in July 2013. He denies that he has ever speculated in the financial markets and says he would not have transferred money to Ms Lu had he not been in a developed relationship with her. He says he is not in any of his old classmates’ WeChat groups. He disputes Ms Lu’s claim that the two lived in separate bedrooms when he came to New Zealand in 2016.19
[31] Mr Lyu reiterates that the car was bought for he and Ms Lu jointly, and that he contributed to $10,000 to its purchase. He says they used the car jointly. He says Ms Lu had control of the couple’s financial affairs, and that he trusted her to do so. He deposes that she often made deposits into, and withdrawals from, the joint account. She would sometimes transfer money from Mr Lyu’s personal bank account to the joint account to pay for their living expenses. Further, he says the plan that he would come to live with Ms Lyu in New Zealand was hatched after the two established their relationship in 2013.20
[32] Mr Lyu rejects Ms Lu’s allegations that he assaulted her three times, and particularly her assertion that he used a knife to do so on the last occasion. He admits that the two had some disagreements and altercations over the renovations to the Maungakiekie Avenue property. He says he regarded the Properties as his own when he worked on them, and that he believes the contributions he made should be recognised by the law. He says Ms Lu has sought to downplay those contributions and claim them as her own.21
Cross-examination
[33] It was contemplated by the minute issued by Robinson J on 4 February 2022 that witnesses for both parties would be available for cross-examination. However, Mr Peter Spring, for Ms Lu, chose not to cross-examine any of Mr Lyu’s witnesses. Ms Eva Kuo, for Mr Lyu, sought to cross-examine Ms Lu’s witnesses. Mr Spring
19 Affidavit of application in reply to the affidavit of Han Lu dated 8 February 2022 dated 21 February 2022 at [3]–[9].
20 At [12]–[16].
21 At [25]–[38].
opposed allowing cross-examination on the basis that no special reason had been articulated as to why cross-examination might assist the Court in its determination of this application.
[34] Ms Kuo submitted that, given the particular weight that had been placed by Ms Lu on particular pieces of evidence relating to the date of commencement of the de facto relationship, such as the letter from Mr Lyu to the Immigration Service and the visits by Ms Lu to China, she wished to cross-examine on these points.
[35] I declined to allow the cross-examination as I am of the view that it would not have assisted the Court to determine the application. There is obviously conflicting affidavit evidence between the parties and to have parts of one party’s affidavit evidence tested in isolation would not assist the Court in determining the overall credibility of the parties’ affidavit evidence.
[36]The minute of Robinson J of 4 February 2022 is accordingly varied.
Applicant’s submissions
[37] Ms Kuo submits that the issue to be determined is whether Mr Lyu has an arguable case for his claim to an interest in the Properties under the Property (Relationships) Act 1976.22 She says the removal of a notice of claim is subject to similar controlling principles to those that apply to caveats.23 The difference lies in the exercise of the Court’s discretion. If a person who has lodged a notice of claim establishes an arguable interest in the property, the Court has adopted a flexible “reasonable requirement” approach to the exercise of the discretion.24
[38] Mr Kuo submits that to sustain a notice of claim under s 42 of the Property (Relationships) Act, an applicant must show that the property could be the subject of
22 Synopsis of submissions in support of the applicant’s application to sustain notice of claim dated 14 June 2022 at [7].
23 At [11], citing Liu v Jiang [2018] NZHC 1897 and Philpott v Noble Investments Ltd [2015] NZCA 342 at [26].
24 At 12], citing Selak v Smith [2019] NZHC 1487.
a relationship property claim. That entails showing a qualifying relationship and that the applicant can arguably claim an interest in the property.25
[39] In cases of de facto relationships, Ms Kuo submits, an applicant must demonstrate the existence of the relationship is at least arguable. Even if that onus is satisfied, the Court retains a discretion to remove the notice of claim. That discretion, however, is to be exercised parsimoniously.26 She submits further that the relevant relationship need not have lasted for three or more years, provided it is at least arguable that an order could nonetheless be made under s 14A of the Act. That might be the case where, for example, the applicant had arguably made substantial contributions to the relationship.27
[40] Ms Kuo submits that Mr Lyu has arguable relationship property interests and claims under ss 44 and 44C of the Act for the Properties. She says that, at a minimum, Ms Lu will need to provide full disclosure because the TCYHL Trust was set up during the parties’ de facto relationship and the Properties were settled to the Trust in the same period. And she says Mr Lyu has further arguable claims for sustenance of separate property under s 17A, and for contributions to property acquired for common use and benefit under s 8(1)(d).28
[41] Next, Ms Kuo submits there is an arguable case the de facto relationship was for more than three years. Pointing to the criteria is in s 2D(2) of the Act, she says that Mr Lyu’s evidence is the parties formalised their relationship in June 2013; had a common residence; had a sexual relationship from August 2013; had a degree of financial interdependence; held joint bank accounts and a car purchased for joint use; had a high degree of mutual commitment to a shared life; shared household duties; and publicly presented to others as being a couple.29
[42] Apart from the non-financial contributions to the relationship, Ms Kuo submits, Mr Lyu made substantial contributions to the Properties by providing free
25 At [13]–[16], citing Bourne v Baker [2016] NZFC 2668.
26 At [17], citing Ngavaevae v Harrison [2017] NZHC 2788 at [9]–[10].
27 At [19]–[20], citing SO v BES FC Christchurch FAM-2009-009-1305, 30 April 2009.
28 At [26]–[27].
29 At [28]–[30].
labour and repairs. She says he made these contributions on the basis that the Properties were his and Ms Lu’s common enterprises. He was unaware that the Properties had been moved to the Trust. She says it is unjust for Ms Lu to take advantage of Mr Lyu and the Notice of Claim is reasonably required to protect Mr Lyu’s interests. That Mr Lyu did not receive any just return for his contributions goes to the Court’s assessment as to whether a failure to make the sought order would result in serious injustice.30
[43] Concluding, Ms Kuo says she seeks an order that the Notice of Claim not lapse until the conclusion of the Family Court proceeding. She seeks a further direction that the files from this proceeding, including this judgment, be forwarded to the Family Court. Finally, she seeks costs.31
Respondents’ submissions
[44] Mr Spring submits that to sustain a notice of claim under s 42 of the Property (Relationships) Act, an applicant must show that the property against which the claim is registered could be the subject of a relationship property claim. The applicant must demonstrate a qualifying relationship and an arguable interest in the property under the Act. He submits there must be a sound evidential foundation for the asserted interest. A mere right to compensation (for example, under s 17) will not suffice.32
[45] Mr Spring says that a de facto relationship of short duration may not necessarily bar sustaining a notice of claim, but the applicant must be able to show, under s 14A, that it is reasonably arguable that he or she made substantial contributions to the relationship and that it would be seriously unjust for the court to decline to make orders.33
[46] Mr Spring says there was no de facto relationship until September 2016. It ended, at the latest, on 11 May 2019. Ms Lu’s evidence is therefore that the relationship was one of short duration in terms of s 2E of the Act. Mr Spring says
30 At [31]–[32].
31 At [38]–[40].
32 Synopsis of submissions of respondents in opposition to application to sustain notice of claim dated 22 June 2022 at [1]–[6].
33 At [7].
Ms Lu’s evidence has been entirely consistent on this key point, and that it tallies with Mr Lyu’s contemporaneous visa documentation. He submits that s 2D of the Act does not require treating the criteria as a checklist to be applied, and that the correct approach is instead to look at the concept of “living together” as being at the heart of the de facto relationship. He says it is plain Mr Lyu and Ms Lu were not living together before August 2016, even on Mr Lyu’s version of events.34
[47] Mr Spring points to a further host of factors that he submits militates against finding the existence of a de facto relationship. They include that Mr Lyu and Ms Lu were only briefly together in China on two occasions in 2014 and not at all in 2015. It was not until early 2016 that Mr Lyu came to New Zealand. There is no evidence as to the nature and quality of the relationship when Mr Lyu and Ms Lu were apart from each other. Mr Lyu’s letter to the Immigration Service says that he and Ms Lu agreed to live together as a couple in August or September of 2016. And the sentencing notes of Judge Tremewan also record the relationship as beginning in 2016.35
[48] Mr Spring submits that the pivotal question is when the relationship began. He says both Mr Lyu and Ms Lu’s evidence indicates that, until September 2016, the relationship was more accurately characterised as “lovers living apart and without any special bond or affiliation or emotional association which would place their relationship into the category of a de facto relationship”. Therefore, Mr Lyu’s evidence falls short of establishing that the relationship was one of more than three years. Section 2E of the Act therefore applies, providing that a relationship of short duration is one in which the de facto partners have lived together as de facto partners for a period of less than three years. Accordingly, Mr Lyu is not entitled to assert an interest or ask the Court to make order under the Act unless he satisfies the Court that the circumstances in s 14A exist.36
[49] Mr Spring says no reasonably arguable interest in the Properties arises under s 14A. He says Mr Lyu’s evidence that he made substantial contributions is lacking.
34 At [10]–[14], citing L v P (2007) 26 FRNZ 946 (HC).
35 At [15].
36 At [17]–[21], citing Scragg v Scott (2006) 25 FRNZ 942 (HC) and L v P, above n 34, at [32]–[42].
First, Mr Lyu’s claims that he contributed more than $100,000 to the relationship as “plainly mischievous” because Ms Lu has provided uncontroverted evidence that these amounts were in Mr Lyu’s account at the date of separation. Secondly, Mr Lyu’s claims to have done cooking, cleaning, gardening, maintenance and repairs at the Cockayne Crescent property are met by Mr Lu’s evidence that he was remunerated for those tasks. Thirdly, Mr Lyu’s claims to have supervised the renovations of the Maungakiekie Avenue property are unexplained, and Ms Lu has adduced evidence that she paid a contractor to do the relevant work. Mr Spring says Mr Lyu’s contributions to the Properties can in no sense be regarded as “substantial”, especially considering he was unemployed throughout the relationship and contributed no capital to it.37
[50] Next, Mr Spring submits that even if there was a qualifying de facto relationship, the Notice of Claim discloses no reasonably arguable interest. The two Properties are owned by a trust — they are not relationship property, but trust property. A discretionary interest in a trust is not property. Mr Spring says the Notice of Claim asserts an interest pursuant to ss 44A, 44B and 44C of the Property (Relationships) Act, and that none of those sections empower the Court to award an interest in the Properties. He says the Notice of Claim is therefore deficient on its face and should be removed.38
[51] Mr Spring says there is no other interest that can sustain the Notice of Claim. He says there is no evidence Ms Lu has disposed of the Properties to the trust with the intention of defeating Mr Lyu’s interest. Section 8(1)(d) cannot assist Mr Lyu because it concerns property owned prior to the relationship — on Mr Lyu’s case, neither of the Properties falls into that category. And even if s 17 applies to give Mr Lyu a right to compensation in respect of either or both of the Properties, it does not confer on Mr Lyu an interest in the land.39
[52] Finally, Mr Spring submits that even if it can be shown that Mr Lyu has a reasonably arguable interest in the Properties, the Court should exercise its residual discretion to remove the Notice of Claim. He says if a person who has lodged a notice
37 At [22]–[25].
38 At [26]–[30] , citing Nation v Nation [2005] 3 NZLR 46, (2004) 23 FRNZ 783 (CA).
39 At [31]–[37].
of claim establishes an arguable interest under the Property (Relationships Act), the Court has tended to adopt a flexible “reasonable requirement” approach to the exercise of the discretion. Under this approach, the test is whether the continuance of the registration of the notice of claim is reasonably required to protect the claimant’s rights.40
[53] Mr Spring submits that a blanket restriction on TCYHL Trustee Ltd’s ability to deal with the Properties is a disproportionate means of protecting whatever interest Mr Lyu might have in the Properties. He points to the brevity of the relationship; Mr Lyu’s minimal contributions; the absence of any capital contributions by Mr Lyu; the apparent weakness and highly contingent nature of Mr Lyu’s claim; the lack of evidence that the respondents have concealed property; that Mr Lyu’s alleged interest could be protected by an application under s 43 restraining disposition of the Properties or their proceeds of sale; and that the Court should hesitate to impose a blanket restriction where less restrictive measures are available.41
Legal principles
Notices of claim
[54]Section 42 of the Property (Relationships) Act (the Act) provides, relevantly:
42 Notice of interest against title
(1)A claim to an interest, pursuant to this Act, in any land subject to the Land Transfer Act 2017 shall be deemed to be a registrable interest for the purposes of that Act.
(2)Notice of a claim under subsection (1) shall be effected by lodging a duly completed notice in the prescribed form with the Registrar- General of Land.
(3)Every notice so lodged shall have effect as if it were a caveat lodged pursuant to section 138 of the Land Transfer Act 2017 and the provisions of that Act, except section 141, shall apply subject to the following modifications:
(a)any application under section 142 or 143 of that Act in respect of any notice under this section may be made to the Family Court or the District Court or the High Court; and
40 At [38]–[41], citing Selak v Smith, above n 24; Bennett v Blackley [2015] NZHC 1322; and Rusden v Rusden (1980) 3 MPC 157 (HC).
41 At [42].
(b)an order under section 146 of that Act authorising the receipt of a second notice under this section may be made by the Family Court or the District Court or the High Court.
…
[55] The principles governing the determination of caveats can be applied analogically to the determination of notices of claim. Those principles are well- established.42 The onus is on the caveator to demonstrate an interest in the land that suffices to support the caveat, and the caveator must demonstrate a reasonably arguable case to support the claimed interest.43 This means the caveator need not definitively establish his or her right to the interest.
[56] The process by which applications to sustain a caveat are determined is ill- suited to resolving disputed factual questions. An order for removal will only be made if it is clear the caveat cannot be maintained — either because there was no valid ground for its lodging in the first place, or because the ground on which it was lodged has now ceased to exist.
[57] Although the onus of proof lies with the caveator, any conflict between affidavits will generally be resolved in the caveator’s favour.44 This is not to say that the Court is bound to accept uncritically statements in an affidavit that lack precision, are equivocal, inconsistent with the documentary evidence or other statements of the same deponent, or inherently improbable.45
[58] While the Court retains a residual discretion to remove a caveat or allow it to lapse even if the caveator has a legitimate and caveatable interest, that discretion is to be exercised cautiously. The Court must be completely satisfied removal would not prejudice the caveator’s legitimate interests.46 But the position as regards notices of
42 See generally Philpott v Noble Investments Ltd, above n 23, at [26]. And, for a general statement of the principles, see Wallace v Studio New Zealand Ltd [2021] NZCA 392 at [39]–[41].
43 Botany Land Development Ltd v Auckland Council [2014] NZCA 61 at [24]–[25].
44 Bethell v Rickard [2013] NZCA 68 at [22]. See also MacRae v Rapana HC Auckland M633/94, 17 June 1994.
45 Barrett v IBC International Ltd [1995] 3 NZLR 170 (CA) at 175, citing Eng Mee Yong v Letchumanan s/o Velayutham [1980] AC 331 (PC) at 341; and Xie v 126 Waimumu Ltd [2020] NZHC 1109 at [8].
46 Pacific Homes Limited (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656.
claim is more liberal. In exercising its residual discretion, the Court will ask whether sustaining the notice of claim is reasonably required to protect the claimant’s rights.47
Relationship property
[59]Section 2D of the Act provides:
2D Meaning of de facto relationship
(1)For the purposes of this Act, a de facto relationship is a relationship between 2 persons (regardless of their sex, sexual orientation, or gender identity)—
(a)who are both aged 18 years or older; and
(b)who live together as a couple; and
(c)who are not married to, or in a civil union with, one another.
(2)In determining whether 2 persons live together as a couple, all the circumstances of the relationship are to be taken into account, including any of the following matters that are relevant in a particular case:
(a)the duration of the relationship:
(b)the nature and extent of common residence:
(c)whether or not a sexual relationship exists:
(d)the degree of financial dependence or interdependence, and any arrangements for financial support, between the parties:
(e)the ownership, use, and acquisition of property:
(f)the degree of mutual commitment to a shared life:
(g)the care and support of children:
(h)the performance of household duties:
(i)the reputation and public aspects of the relationship.
(3)In determining whether 2 persons live together as a couple,—
(a)no finding in respect of any of the matters stated in subsection (2), or in respect of any combination of them, is to be regarded as necessary; and
47 Selak v Smith, above n 24, at [3].
(b)a court is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate to the court in the circumstances of the case.
(4)For the purposes of this Act, a de facto relationship ends if—
(a)the de facto partners cease to live together as a couple; or
(b)one of the de facto partners dies.
[60]Section 2E, meanwhile, states in relevant part:
2E Meaning of relationship of short duration
(1)In this Act, relationship of short duration means,—
…
(b)in relation to a de facto relationship, a de facto relationship in which the de facto partners have lived together as de facto partners—
(i)for a period of less than 3 years; or
(ii)for a period of 3 years or longer, if the court, having regard to all the circumstances of the de facto relationship, considers it just to treat the de facto relationship as a relationship of short duration.
…
[61] If the de facto relationship is a relationship of short duration within the meaning of s 2E, s 14A applies. It provides, relevantly:
14A De facto relationships of short duration
…
(2)If this section applies, an order cannot be made under this Act for the division of relationship property unless—
(a)the court is satisfied—
(i)that there is a child of the de facto relationship; or
(ii)that the applicant has made a substantial contribution to the de facto relationship; and
(b)the court is satisfied that failure to make the order would result in serious injustice.
(3)If this section applies, and the court is satisfied that the grounds specified in subsection (2) for making an order on an application
under this Act are made out, the share of each de facto partner in the relationship property is to be determined in accordance with the contribution of each de facto partner to the de facto relationship.
…
[62] “Substantial” here means “of real importance or value”. “Serious injustice”, meanwhile, may invoke the concept of a party getting a just return or his or her contributions. If the status quo after separation without the Court’s intervention results in a return less than the entitlement under s 13A(3), there will be a serious injustice.48
[63] Mr Lyu also refers to ss 8(1)(d) and 17 as possible bases for his interests in, or claims to, the Properties. Section 8(1)(d) of the Act defines “relationship property” as including all property owned by either spouse or partner immediately before their de facto relationship began, if the property was acquired in contemplation of the relationship and was intended for the common use or benefit of both spouses or partners.
[64]Section 17 provides:
17 Sustenance of separate property
(1)This section applies if the separate property of one spouse or partner (party A) has been sustained by—
(a)the application of relationship property; or
(b)the actions of the other spouse or partner (party B).
(2)If this section applies, the court may—
(a)increase the share to which party B would otherwise be entitled in the relationship property; or
(b)order party A to pay party B a sum of money as compensation.
…
Analysis
[65]The questions which fall for determination in this proceeding are:
48 L v P, above n 34, at [70] and [75].
(a)Has Mr Lyu established a reasonably arguable case that the de facto relationship with Ms Lu was not a de facto relationship of “short duration” within the meaning of s 2E of the Act, but existed for three years or more?
(b)If the answer to the question at [65](a) is “No”, then has Mr Lyu established a reasonably arguable case that an order could be made in his favour under s 14A of the Act, the Court needing to be satisfied that:
(i)Mr Lyu has made a substantial contribution to the de facto relationship; and
(ii)that failure to make an order would result in a serious injustice?
(c)If the answer to the question at [65](b) is “No”, does Mr Lyu have a reasonably arguable basis for any claim under ss 44A, 44B or 44C of the Act?
(d)If the answer to the question at [65](c) is “No”, does Mr Lyu have a reasonably arguable basis for any claim under ss 8(1)(d) or 17 of the Act?
(e)If Mr Lyu has established a reasonably arguable interest in the Properties, should the Court nevertheless exercise its residual discretion to remove the Notice of Claim?
[66]I deal with each of these questions in turn.
Has Mr Lyu established a reasonably arguable case that the de facto relationship with Ms Lu was not a de facto relationship of “short duration” within the meaning of s 2E of the Act, but existed for three years or more?
[67] To establish the de facto relationship existed for three years or more, Ms Kuo relies on an analysis of the factors set out in s 2D(2) of the Act. I set out these factors below, with Ms Lu’s relevant affidavit evidence set alongside each of the factors:
(a)The duration of the relationship: Mr Lyu’s evidence is that the parties formalised their relationship in June 2013.
[68] Ms Lu deposes that because her trips to China in 2013 were so brief, she doubts she had any sort of relationship with Mr Lyu at that time.
(b)The nature and extent of common residence: The parties had a long- distance relationship until Mr Lyu came to live in New Zealand. Mr Lyu detailed Ms Lu’s three trips to China to spend time with him. At the time Mr Lyu came to New Zealand he stayed with Ms Lu and deposed they slept in Ms Lu’s room.
[69] Ms Lu deposes that her trip to China in June 2014 was to visit her sister’s family and her son in her home town of Harbin. The sightseeing trip to Xi’an was only arranged with Mr Lyu after she arrived in China and she did not fly to China to be with Mr Lyu. She acknowledges she and Mr Lyu stayed in a hotel together a couple of nights in Xi’an.
[70] In October 2014, Ms Lu deposes her trip to Harbin, China, was to visit her sister who was ill. She deposes that Mr Lyu came to Harbin when he discovered she was there and they occasionally saw each other and stayed together during her 19 day visit.
(c)Whether a sexual relationship exists: Mr Lyu’s evidence is that the parties started a sexual relationship from August 2013.
[71] Ms Lu’s evidence indicates that she and Mr Lyu “stayed together” on various occasions during 2013 and 2014.
(d)Was there financial dependence, or inter-dependence, in any arrangement for financial support between the parties: Mr Lyu’s evidence is that he transferred money to Ms Lu from the year 2014 to the year 2016.
[72] Ms Lu deposes that she never used any of the funds Mr Lyu transferred, and when the relationship ended the funds were in his personal account.
(e)The ownership, use and acquisition of property: the parties had joint accounts since April 2016. In the year 2016 a Volkswagen Golf was purchased for their joint use.
[73] Ms Lu deposes that while the joint account existed, only Mr Lyu drew on it and the deposits into the account were Airbnb payments from Ms Lu’s other property. Regular deposits made into this account by Mr Lyu were money from the Airbnb payments as Ms Lu says she gave Mr Lyu the job of managing the Airbnb property.
[74] Ms Lu denies the vehicle was purchased together and she says it was purchased while Mr Lyu was out of New Zealand.
(f)The degree of commitment to the shared life: Mr Lyu’s evidence is that the parties wanted a shared life and their relationship developed very fast.
(g)The care and support of children: there was no child to their relationship.
(h)The performance of household duties: Mr Lyu’s evidence is that he fully handled all household duties including laundry, cleaning, cooking and gardening.
[75] Ms Lu deposes that Mr Lyu was remunerated for work on the Cockayne Crescent property by receiving the Airbnb payments from it.
(i)The reputation and public aspects of the relationship: Mr Lyu’s evidence is that when he arrived in New Zealand he:
(i)met Ms Lu’s son and Ms Lu’s son’s girlfriend as early as February 2016;
(ii)had lunch with Ms Lu’s brother in February 2016;
(iii)met Ms Lu’s close friends in February 2016;
(iv)went to pay tribute to Ms Lu’s deceased parents in February 2016;
(v)travelled with Ms Lu’s friends and family and he was staying in the same room as Ms Lu during the travel in April 2016; and
(vi)was being introduced by Ms Lu as her husband.
[76] Mr Spring submits that while Ms Lu admits a de facto relationship from September 2016 to “at the latest, May 2019”, her evidence leads to the conclusion that the relationship was one of short duration under s 2E of the Act. He submits that Ms Kuo misinterprets s 2D of the Act by treating the criteria as a checklist to be applied. He submits that in fact the correct approach is that set out by Asher J in L v P:49
It is the concept of “living together” that is at the heart of the de facto relationship. The adjunct “as a couple” only reinforces the focus on the two persons living together. The phrase “as a couple” provides a distinction from parties living together as friends or flatmates. It does not dilute the primacy of living together.
[77] Mr Spring submits that if the question is asked, “were the applicant and Ms Lu living together before August 2016?” it is clear, even on Mr Lyu’s own evidence, that they were not. In support of this submission, Mr Spring points to the following:
(a)Mr Lyu never says in his evidence that the de facto relationship began in 2013 — he merely opines that he and Ms Lu established their relationship “formally” in June 2013 and began a sexual relationship in August 2013. Mr Spring submits that that was not the point of the commencement of a qualifying de facto relationship because for the great majority of 2013 they lived apart — Mr Lyu in China and Ms Lu in New Zealand.
(b)In 2014, the parties were together only briefly in China on two occasions.
(c)In 2015, the parties did not see each other at all and it was not until early 2016 that Mr Lyu came to New Zealand. Mr Spring points out that there is no evidence of the nature and quality of the relationship when the parties were apart from each other.
49 L v P above n 34, at [34].
(d)On his own evidence, Mr Lyu seemed to be simply touring New Zealand (and on one occasion holidaying in Fiji) and visiting Ms Lu, with whom he has established a sexual liaison. That is not “living together” as a couple.
(e)Mr Lyu left New Zealand in April or May 2016 and did not return until August 2016.
(f)Mr Lyu’s letter to the Immigration Service in support of his application for residency is consistent with the above. He says upon his return to New Zealand in August/September 2016 he and Ms Lu agreed to live together as a couple and did so.
Mr Lyu has explained the date referred to in the letter on the basis that he did not really read it but relied on the immigration consultant and Ms Lu, and did not write the letter. I accept the date in the immigration letter is not determinative as to the date of commencement of the de facto relationship.
(g)The sentencing notes of Judge Tremewan in 2019 in relation to Mr Lyu’s criminal conviction, refers to the relationship beginning in 2016. Mr Spring submits that Mr Lyu has confirmed Judge Tremewan’s decision contains a definitive accounts of events.
[78] Mr Spring submits that the decision of Scragg v Scott50 is of assistance, as Simon France and Gendall JJ there observed:
… Parliament has made it clear that all the circumstances are to be taken into account including some factors which may or may not exist in any particular case … Some associations will clearly be de facto relationships such as w[h]ere partners are living in the same accommodation, perhaps sharing sexual conduct and proclaiming that they are a de facto couple sharing their lives. At the other end of the scale two persons may simply be lovers living apart and without any special bond or affiliation or emotional association which would place the relationship into the category of a de facto relationship.
50 Scragg v Scott, above n 36, at [31].
[79] Mr Spring submits that on the evidence of both parties, until September 2016 their relationship was more accurately characterised as: “lovers living apart, without any special bond or affiliation or emotional association which would place the relationship into the category of a de facto relationship”. He therefore submits the relationship was of “short duration”.
[80] In my view, looking at all the evidence from Mr Lyu and Ms Lu, the de facto relationship did not commence until August/September 2016. Before that time, they could not be described as “living together” as a couple and sharing their lives. Consequently, I find that the de facto relationship was one of short duration and accordingly the next question must be considered as to whether Mr Lyu established a reasonably arguable case that an order could be made in his favour under s 14A of the Act.
If the answer to the question at [65](a) is “No” then has Mr Lyu established a reasonably arguable case that an order could be made in his favour under s 14A of the Act, the Court needing to be satisfied that:
(i)Mr Lyu has made a substantial contribution to the de facto relationship; and
(ii)that failure to make an order would result in a serious injustice?
[81] Ms Kuo submits that Mr Lyu made contributions to the Properties on the basis that the Properties were his and Ms Lu’s common enterprises. She submits Mr Lyu was unaware she was unaware that Ms Lu had taken steps to move the Properties to a trust. He was also unaware that the property which was meant to be the family home was held by Ms Lu’s trust.
[82]Ms Kuo points to Mr Lyu’s evidence of substantial contribution as follows:
(a)His contributions to the Property situated at 1/30 Cockayne Crescent were:
“I washed the exterior walls, tidied up the gardens, cleaned the rooms and the bathroom downstairs, installed windows, painted the interior walls and doors and windows. Water leaked through the ceiling of the downstairs kitchen of this Property two or three times and the ceiling
rotted away two or three times. I was the one who bought the materials to do repairs and repainting”.
(b)In relation to the 22 Maungakiekie Avenue Property, Mr Lyu deposes that he supervised the renovation work (which was extensive), organised the purchase of materials, co-ordinated the work with different trades and worked as a labourer. He deposes that he was responsible for all the site work, communications, buying different types of materials, and working as a labourer for the renovation companies.
[83] Ms Kuo submits that Mr Lyu had made substantial contributions towards the Properties that had brought real value to the Properties.
[84] Lastly, she submits that Mr Lyu did not receive any just return for his contributions. If the Court fails to make an order, that would result in a serious injustice to Mr Lyu.
[85] Mr Spring submits that Mr Lyu did not make the substantial contributions to the relationship. In this respect he points to the following:
(a)In relation to the alleged contribution of $100,000 to the relationship, Ms Lu’s evidence (which has not been controverted) is that these amounts were in Mr Lyu’s account at the date of separation and he took those with him when he left the relationship. He contributed no capital to the relationship.
(b)In relation to Mr Lyu’s contributions of cooking, cleaning, laundry, gardening and repairs at the Cockayne Crescent property, Mr Spring submits that Mr Lyu received the Airbnb payments made in respect of this Property and therefore was remunerated for his contributions.
(c)In relation to the contribution relating to supervising of the renovation work at the Maungakiekie Property, Mr Spring submits that Mr Lyu gives the misleading impression that he had done work with the
photographs presented in evidence, although Ms Lu has adduced evidence that she paid a contractor to do precisely that work.
[86] Lastly, Mr Spring submits that while it is accepted that non-financial contributions are nevertheless “contributions” in terms of s 18 of the Act, in no sense can Mr Lyu’s contributions be regarded as “significant” or “substantial” as Mr Lyu was unemployed throughout the relationship and appears to have contributed no capital to the relationship. Mr Spring submits he was also remunerated for his work in relation to the Cockayne Crescent property by receiving the Airbnb payments made available to him by funds being deposited in the joint account (on which he appears to be the only person to have withdrawn amounts).
[87] In conclusion on this point, I am of the view that there is insufficient evidence to establish that Mr Lyu’s contributions were “substantial” and that failure to make an order would result in a serious injustice to Mr Lyu. Accordingly, there is no arguable basis established for a claim by Mr Lyu under s 14A of the Act.
If the answer to the question at [65](b) is “No”, does Mr Lyu have a reasonably arguable basis for any claim under s 44A, 44B or 44C of the Act?
[88] The notice of claim seeks an interest pursuant to ss 44A, 44B and 44C of the Act on the basis that Ms Lu is the sole director and shareholder of TCYHL Trustee Ltd, the registered owner of the Properties and the disposition to the TCYHL Trust occurred during the de facto relationship.
[89] Mr Spring submits that as both Properties are owned by a trust as opposed to Ms Lu personally, and a discretionary interest is not sufficient to support any of those claims, then the Properties are not relationship property but trust property. He submits that none of ss 44A, 44B or 44C can assist Mr Lyu’s claim as none of these sections empower the Court to award an interest in the property against which the Notice of Claim has been registered.
[90] I am of the view that Mr Spring is correct in this submission and these sections do not assist Mr Lyu in his application to sustain the Notice of Claim.
If the answer to the question at [65](c) is “No”, does Mr Lyu have a reasonably arguable basis for any claim under ss 8(1)(d) or 17 of the Act?
[91] Mr Spring submits that s 8(1)(d) does not assist Mr Lyu in relation to his sustaining the Notice of Claim because it concerns property owned prior to the relationship, and on Mr Lyu’s argument, neither of the Properties falls into that category. The Cockayne Crescent property was acquired on 2 November 2015 which, as a result of my conclusion at [80] above, was before the de facto relationship began. However, there is no evidence that the Property was acquired in contemplation of the de facto relationship or intended for the common use or common benefit of both partners within the meaning of s 8(1)(d)(i) and (ii) of the Act. The Maungakiekie Avenue Property was acquired on 28 February 2019, clearly within the period of the de facto relationship.
[92] In relation to s 17, Mr Spring submits that this section does not assist Mr Lyu in his claim to maintain the Notice of Claim. That section entitles the Court to increase the share of one party, or to order one party to pay to the other party a sum of money as compensation where the separate property of one spouse or partner has been sustained by:
(a)the application of relationship property; or
(b)the actions of the other spouse or partner.
[93] Mr Spring submits that this could not assist Mr Lyu because even if it were found that he was entitled to an increased share in the relationship property or to an order requiring Ms Lu to pay money to Mr Lyu, this would not confer an interest in the land and therefore cannot sustain the caveat.
[94] I am of the view that Mr Spring is correct in his submissions on both s 8(1)(d) and s 17 of the Act, and these do not assist the applicant’s argument to sustain the Notice of Claim.
If Mr Lyu has established a reasonably arguable interest in the Properties, should the Court nevertheless exercise its residual discretion to remove the Notice of Claim?
[95] As the findings I have made above indicate the view that Mr Lyu has not established a reasonable interest in the property, accordingly the issue of exercising the discretion to remove the Notice of Claim does not arise.
Exercise of the Court’s discretion to remove the Notice of Claim
[96] In light of the conclusions I have reached above, I consider that Mr Lyu has not established a reasonably arguable basis on which the Notice of Claim can be sustained.
[97] If, however, I am wrong in the above conclusions, then I am of the view that the Court should nevertheless exercise its discretion to remove the Notice of Claim.
[98]From the decisions of Selak v Smith, Bennett v Blackley and Ruston v Ruston,51
the test is:
whether or not the continuance of the registration of the Notice in question is reasonably required to protect the rights of the claimant under the [Property (Relationships)] Act 1976.
[99] Mr Spring has submitted that a blanket restriction on Ms Lu’s ability to deal with the Properties is a disproportionate means of protecting whatever interest Mr Lyu might have in respect of the Properties. He points to a number of factors at [42] of his submissions including, among others, the following:
(a)the brevity of the relationship;
(b)minimal contributions made by Mr Lyu;
(c)absence of any capital contributions by Mr Lyu;
(d)weakness of Mr Lyu’s claim of any interest in the Properties;
51 Selak v Smith, above n 24; Bennett v Blackley [2015] NZHC 1322; and Ruston v Ruston [1980] 3 MPC 157.
(e)the highly contingent nature of Mr Lyu’s claim to the Properties — he must not only demonstrate that he would have had an interest in the Properties, but that the transfer (in the case of the Cockayne Crescent property) was made with the intention of defeating that interest;
(f)there is no evidence that Ms Lu has concealed any property or any evidence she is attempting to sell either of the Properties; and
(g)there are ways of protecting any interest Mr Lyu may have in the Properties which are less restrictive to Ms Lu than maintaining the Notice of Claim — for example, if Mr Lyu became concerned that either Property may be about to be sold, he could apply for an order under s 43 of the Act restraining either the disposition of the relevant Property or the proceeds of sale.
[100] I accept that these factors indicate that the Court should exercise its discretion to remove the Notice of Claim. Accordingly, I exercise the Court’s discretion for the Notice of Claim to be removed.
Orders
[101]I make the following orders:
(a)The Notice of Claim lodged by Mr Lyu is to be removed.
(b)Costs are awarded in favour of Ms Lu on a 2B basis.
…………………………….. Associate Judge Taylor
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