Sheng v Zhan - [2018] NZHC 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2018-404-1669

[2018] NZHC 2012

UNDER Part 19 of the High Court Rules

IN THE MATTER

of an application under Section 51 of the Trustee Act 1956

BETWEEN

HAILONG SHENG as trustee of the SHENG FAMILY TRUST

Applicant

AND

HONG ZHAN as trustee of the SHENG FAMILY TRUST

Respondent

Hearing: On the papers

Appearances:

A F Grant for the Applicant

Judgment:

8 August 2018

JUDGMENT OF JAGOSE J

This judgment is delivered by me on 8 August 2018 at 4.00pm pursuant to r 11.5 of the High Court Rules.

.....................................................
Registrar / Deputy Registrar

Counsel/Solicitor:
A Grant, Barrister, Auckland Ross Holmes, Albany

SHENG v ZHAN [2018] NZHC 2012 [8 August 2018]

[1] As a trustee of the Sheng Family Trust (the ‘Trust’), Mr Sheng brings without notice an application for permission to commence a proceeding by originating application. As required by HCR 19.5(3), the proposed originating application is filed with the application for permission.1

Background

[2] The proposed originating application seeks an order removing and replacing Ms Zhan – Mr Sheng’s wife, from whom he is separated – as the other trustee of the Trust. The Trust owns property at 8a Jeanette Place in Auckland’s Mairangi Bay. The property was used by Mr Sheng and Ms Zhan as their family home.

[3] Mr Sheng and Ms Zhan are parties to a 1 November 2017 Separation and Relationship Property Agreement, by which they agreed simultaneously to enter into a Trust Agreement to put the property on the market and sell it. The proceeds, after payment of specified liabilities, were to be paid equally to each Mr Sheng and Ms Zhan. Pending the sale, Ms Zhan was entitled to exclusive possession of the property.

[4] The parties were to “act expeditiously and in good faith” to those ends. Mr Sheng complains Ms Zhan has acted otherwise to thwart the sale process. He says the property’s due mortgage and rates payments are not being made, attracting rates penalties and risking the bank’s mortgagee sale of the property (although there is no evidence such mortgagee sale is imminent, or contemplated).

[5] Nonetheless, the application for permission contends the proposed originating application “needs to be determined urgently”, “undue delay or prejudice” would be caused to Mr Sheng if he was required to proceed on notice, and “the interests of justice require the application to be determined without serving notice”. Mr Sheng’s counsel, Anthony Grant, certifies the latter grounds are made out.

1 Although the bulk of the documents was filed on 27 July 2018, the application for permission was not filed until 7 August 2018.

Originating application procedure

[6] The originating application procedure is “generally used for cases where it is not necessary to have full pleadings and interlocutory steps such as discovery for the proper determination of the issues”.2 “[A]ppropriate case management directions” can address such interlocutory issues as may arise,3 but the truncated procedure is…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Sheng v Zhan

Details

AGLC: Sheng v Zhan [2018] NZHC 2012
Case: [2018] NZHC 2012
Decision Date: 8 August 2018

CaseChat Overview and Summary

In Sheng v Zhan, Hailong Sheng, as trustee of the Sheng Family Trust, applied for permission to commence a proceeding against Hong Zhan, also a trustee of the Sheng Family Trust, to remove and replace her as trustee. The Trust owns property at 8a Jeanette Place in Auckland’s Mairangi Bay, which was used as the family home of Sheng and Zhan. The application sought to remove Zhan as trustee and replace her, following a Separation and Relationship Property Agreement. Sheng claimed Zhan had acted contrary to the agreement by not making mortgage and rates payments, risking mortgagee sale of the property. The application was brought without notice, and Sheng sought permission to proceed by originating application.

The court considered whether the application could properly be dealt with without notice, and if the proposed proceeding should commence by originating application. The court noted that the High Court Rules expressly allow for permission to be sought without notice, and the issue is whether it is in the interests of justice for the proposed proceeding to be commenced by originating application. The court found that while the originating application procedure may be appropriate for removing and replacing trustees, the proposed proceeding sought more than that, including requiring Zhan to vacate the property and account for its use by others. The court held that it was not in the interests of justice for the proposed proceeding to commence by way of originating application.

The court declined Sheng’s application for permission to commence the proposed proceeding by originating application. The court found that ordinary proceedings’ procedures would be necessary to fairly and justly determine Sheng’s claims. The court did not make any orders, as the application for permission was declined.

Orders