So v Shi

[2022] NZHC 214

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-000926

[2022] NZHC 214

BETWEEN

BIU TAO SO

Plaintiff

AND

YAN SHI

First Defendant

HIN SING SO

Second Defendant

Hearing:

8 September 2021

Appearances:

C P Browne and C J L Martin for Plaintiff

K G Davenport QC and A E Isaacs for First Defendant No appearance by or on behalf of the Second Defendant

Judgment:

18 February 2022

Reissued:

11 May 2022

JUDGMENT OF PAUL DAVISON J

This judgment was delivered by me on 18 February 2022 at 12pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Wilson Harle, Auckland Corban Revell, Auckland

SO v SHI [2022] NZHC 214 [18 February 2022]

Introduction

[1]    Biu Tao So (the plaintiff) applies for the entry of summary judgment against Yan Shi (known as “Maggie”) who is his daughter-in-law (the first defendant), and also against Hin Sing So (known as “Esmond”) who is his son (the second defendant).

[2]    The plaintiff claims to be the beneficial owner of a two-thirds interest in an investment property situated at 3/27 Victoria Street West in Auckland (the property), which was purchased by the defendants in 2012 in the name of a company in which they held the shares, and at a time when the plaintiff’s late wife, Chui Wa Cheung (Chui Wa) was alive, and when Maggie and Esmond were married and living together. Since the property was purchased Maggie and Esmond have separated and Chui Wa died on 19 December 2018.

[3]    Following their separation in early 2016 both Maggie and Esmond commenced relationship property proceedings in the Family Court at Manukau, and in 2017 the Family Court made an order joining the plaintiff and Chui Wa as second respondents.

[4]    The first defendant, Maggie, opposes the plaintiff’s application for summary judgment and also applies for an order striking out the summary judgment application. She says that the Family Court is already seized of the dispute over the ownership of the property and contends that the plaintiff’s application for summary judgment is consequently an abuse of process. In response to the summary judgment application, she says that it was her understanding that the financial contributions made by the plaintiff and Chui Wa to assist Esmond and herself to purchase the Victoria Street property were by way of gifts and that by reason of language difficulties she did not understand or appreciate that the documents she had signed when the property was purchased, included a bare deed of trust or what its effect was.

[5]    Esmond, as second defendant, has taken no steps in the proceeding and does not oppose the plaintiff’s application for summary judgment.1

1      Woolford J noted in his minute of 6 July 2021 that Esmond has advised the plaintiff’s counsel that he does not intend to oppose the plaintiff’s application for summary judgment.

Background

[6]    The plaintiff and Chui Wa moved to New Zealand from Hong Kong in 1998. They have four sons. Esmond is the youngest. Esmond and Maggie were married in 2003.

[7]    In October 2012 Maggie and Esmond became interested in purchasing the property in Victoria Street as an investment. They did not have sufficient funds to purchase it themselves, but following discussions with the plaintiff and Chui Wa, the plaintiff and Chui Wa proposed that they would use their savings and contribute two- thirds of the total purchase price with Maggie and Esmond contributing the other one- third. The plaintiff says that the proposal was that he and Chui Wa would own two- thirds of the property and Maggie and Esmond, one-third. However, as Maggie and Esmond did not have any money to meet their one-third it was agreed that they would need to obtain a bank loan in order to do so.

[8]    The plaintiff says that these discussions resulted in agreement being reached that he and Chui Wa would contribute their two-thirds of the purchase price by paying half of the purchase price, including the deposit, up front, with the balance of the purchase price to be financed by means of a loan secured by a mortgage. The plaintiff says that it was agreed that he and Chui Wa would be liable to meet one-third of the mortgage repayments and Maggie and Esmond would meet two-thirds of the mortgage payments. Esmond and Maggie suggested that the property should be owned by a company in order to obtain tax related advantages.

[9]    On 7 November 2012 Esmond and Maggie entered into a written agreement to purchase the Victoria Street  property for $735,000,  with settlement  scheduled for  7 December 2012.

[10]   On 8 November 2012 the plaintiff and Chui Wa paid the deposit of $73,500 from funds held in Chui Wa’s ANZ bank account into the trust account of the vendor’s agent, City Sales.2 Also on 8 November 2012 Tim Tim Company Limited (TT Co Ltd) was incorporated with Maggie and Esmond each holding 50 shares of the total

2      Affidavit of Biu Tao So October 2020, exhibits “B” and “C”.

100 shares issued by the company. Maggie and Esmond were the directors of the company.

[11]   On 27 November 2012 Chui Wa transferred $297,000 from her ANZ bank account into the bank account of TT Co Ltd to be applied to the settlement of the purchase by the company on 7 December 2012.

The deed of bare trust

[12]   The plaintiff says that he and Chui Wa were not told that Maggie and Esmond were the sole shareholders of the company. However when they subsequently learned that they were not named as shareholders on the Companies Office Register, they approached their solicitor, Mr Arthur Loo, for advice regarding recording and protecting their interest in the property. In his affidavit Mr Loo refers to his file note dated 28 November 2012 and describes what occurred:3

[The plaintiff] and Chui Wa Cheung (“Mr and Mrs So”) approached me on 28 November 2012. They explained that they had an arrangement with Esmond and Maggie whereby, because Esmond and Maggie lacked cash for the purchase, Mr and Mrs So would contribute [two-thirds] of the purchase of the Property by paying for half of the purchase price upfront, including the deposit. The balance would be borrowed on mortgage and Mr and Mrs So be liable for one third of the mortgage repayments while Esmond and Maggie would be liable for two thirds of the mortgage payments.

Mr and Mrs So had already paid money towards the purchase of the Property, but were concerned that the company which was to own the Property, Tim Tim Limited (“the Company”), only had Maggie and Esmond as shareholders holding 100 shares. They wanted their contribution to the purchase to be recorded somehow. They did not want their contribution to be seen as a gift.

…

I suggested to Mr and Mrs So that the entry into a deed of bare trust would adequately record their contributions and interest in the Property. I explained that their ownership would be in the form of a beneficial interest in two thirds of the shares of the Company. I also explained that this meant Mr and Mrs So could demand to have those shares transferred whenever they wanted.

[13]   On 29 November 2012 Ms Anita Fong who is a legal executive employed by Mr Loo’s law firm sent an email to Maggie in which she said:4

3      Affidavit of Arthur Loo (sworn 28 April 2021) at [7]–[10].

4      Affidavit of Arthur Loo (sworn 28 April 2021) exhibit “B”.

Hi Maggie

Would Esmond be available sometime this afternoon or tomorrow to sign the transfer document for settlement on Monday?

However I only received the vendor’s amended Settlement Statement last night so still need to calculate how much you will need to pay in, this should be ready tomorrow.

In regard to Tim Tim Company Limited purchase of FD3 settling on Friday  7 December, Mrs So came to see Arthur Loo yesterday to discuss the financing of the property.

We are advised that Mr and Mrs So have provided 2/3 of the purchase price and that you and Esmond have provided the balance of the 1/3. We understand that Mr and Mrs So’s names are not to be noted on the records for the company as directors or shareholders for reasons you are aware of. We have been asked to draft a document to record that the company will solely be a single asset company (used for this purchase only), that Mr and Mrs So hold a 2/3 interest in the company shares jointly held by you and Esmond, and that they are to be consulted with all matters concerning the company and require their express consent and direction.

To enable us to prepare the documents, the number of shares and shareholding will need to be changed. Currently there are 100 shares with you and Esmond each holding 50 each. The shares need to:

1)Be held jointly between you and Esmond;

2)The number of shares need to be increased to a number that is divisible by 3 such as 300 or 600 shares.

If you agree to the above, could you please instruct your accountant to change the company details as per points 1 and 2 above?

[14]   On Friday 30 November 2012 Ms Fong acting on behalf of Maggie and Esmond, sent an email to Mr David Xu of Business and Investment Taxation Limited, Chartered Accountants, Hamilton, in which she asked him to increase the shares of TT Co Ltd to either 300 or 600 shares to be jointly held by Maggie and Esmond. Ms Fong forwarded a copy of her email to Maggie. Mr Xu responded and asked for the name and IRD number of any person who was to become a shareholder of the company. In a further sent email to Mr Xu that afternoon Ms Fong explained:

Yes, please proceed to increase the shares of the company to 300 to be jointly held. There are no other shareholders.

The company will be used to purchase a property settling on 7 December. We need the shares as requested on the basis of a private agreement between Maggie and Esmond and a 3rd party, a document we are yet to draft.

[15]   Later that evening Mr Xu registered a Particulars of Shareholding in the Companies Office Register to amend the share allocation and increase the number of shares held by Esmond and Maggie from 100 shares to 300 shares.

[16]   Also on 30 November 2012 Maggie and Esmond signed a Deed of Nomination which had been prepared by Loo and Koo Solicitors, by which as the purchasers of the property they nominated TT Co Ltd to complete the agreement to purchase the property.

[17]   On a date prior to 7 December 2012, Maggie and Esmond also met with Mr Fui Loong Chan, who is a Mandarin speaking lawyer at Mr Loo’s law firm, to discuss the proposed purchase. This attendance is referred to in the Loo and Koo fee account for attendances in connection with the purchase by TT Co Ltd.

Terms of the deed

[18]   On 7 December 2012 a Deed of Bare Trust which had been prepared by Loo and Koo, was executed by the defendants at Mr Loo’s office.5

[19]   The recitals to the deed state that it was entered into to record the contributions made and other matters affecting the running and operation of the company.6 The deed names Esmond and Maggie as trustees and the plaintiff and Chui Wa as beneficiaries. It records that the plaintiff and Chui Wa had contributed two-thirds of the purchase price of the property and Maggie and Esmond had contributed one-third. The deed further records that the parties acknowledge that the plaintiff and Chui Wa are the beneficial owners of 200 of the 300 shares held by Esmond and Maggie in the company, and that Esmond and Maggie hold those shares as bare trustees only. The deed also records that the parties had agreed that the company’s liability for mortgage repayments would be borne as to two-thirds by Maggie and Esmond and as to one- third by the plaintiff and Chui Wa, and the company was to be a single asset company

5      The full terms of the deed are set out in Appendix A attached to this judgment.

6      Deed of Bare Trust in respect of shares in Tim Tim Company Limited, dated 7 December 2012.

that had been incorporated solely for the purposes of owning and managing the property unless otherwise agreed by the parties in writing.

[20]Clause 6 of the deed provides:

The parties acknowledge that the Company shall not engage in any other business and that any dealings of the Company of whatsoever nature must be made in consultation and with the express written consent of the Beneficiaries.

Dispute as to the legal advice received regarding the deed

[21]   There is a dispute between the parties as to the circumstances in which the deed was executed. The plaintiff says that he and Chui Wa had an appointment with Mr Loo at his office on the morning of 7 December 2012 at which Mr Loo and his assistant explained the provisions of the deed to them in detail before they signed it and their signatures were witnessed by Mr Loo’s legal executive, Ms Anita Fong. The plaintiff says that Mr Loo had arranged a separate appointment in the afternoon to meet with Maggie and Esmond, and that Esmond subsequently told him that he and Maggie had met with Mr Loo and had signed the deed. Mr Loo says that at his meeting with Maggie and Esmond on 7 December 2012, he advised them about the effect of the deed and he was satisfied that they understood its effect, and that they signed the deed in front of him.7

[22]   In her affidavit in opposition to the plaintiff’s application for summary judgment, Maggie says that the legal advice she and Esmond received at their meeting with Mr Loo was in Cantonese which she did “not really understand”.8 Maggie says that she understood the meeting with Mr Loo which she attended with Esmond was for the purpose of signing the documents required for the settlement of the purchase of the property. She says that she was told to sign the documents next to where Esmond signed, and that there were a lot of documents to sign. Maggie also says that at a meeting with Mr Loo on 30 November 2012 he spoke in Cantonese and did go through the documents with Esmond and herself, although he spoke faster than she was able to understand and spoke to Esmond rather than to her.

7      Affidavit of Arthur Loo (28 April 2021) at [15]–[16].

8      Affidavit of Yan Shi in Opposition to Summary Judgment (sworn 27 July 2021) at [38] and [47]–[50].

[23]Describing the execution of the deed and other documents Maggie says:9

As I said, I am native in Mandarin (I was born in Northeast China and lived there before coming to New Zealand), not Cantonese, which is vastly different from Mandarin. I am okay with simple day-to day Cantonese to communicate with [the plaintiff] and Chui Wa like whether they would like food or shopping, or where they would like to go, but not good in legal situations. I spoke Mandarin to Esmond. Arthur Loo did not go through the documents thoroughly as I recall. He spoke directly to Esmond, and not at all to me. I would have recalled signing the deed of bare trust and would have queried it if I had been told what I was signing. I assumed that these documents were all related to the settlement as everything was signed at once on 30 November. I am not sure why the Deed of Trust is dated 7 December as I think I only attended Arthur Loo’s office once on 30 November 2012. [The plaintiff] and Chui Wa were not present on 30 November 2012 so perhaps they signed later on 7 December.

I have no idea what Esmond discussed with his parents because as I said I was mostly excluded from their family talk as is common in our culture. Also, I have very young children to look after.

[24]Mr Loo says in response:10

I do not speak Mandarin. However, Loo and Koo has, and had at the relevant time, a number of Mandarin speaking lawyers.

…

At no time while advising Esmond and Maggie about the effect of the deed of bare trust in December 2012 did Maggie indicate to me that she did not understand what was being said or what she was signing. If Maggie had required or requested it, Mr Chan, or any one of the number of other Mandarin speaking lawyers at the firm, could have explained the document to her in Mandarin.

[25]   Settlement of the purchase of the property took place on 7 December 2012 with the purchase price being met by the funds contributed by the plaintiff and Chui Wa, and $367,000 borrowed by TT Co Ltd from the ANZ Bank and secured by registered mortgage.11

Events following settlement of the purchase of Victoria Street

[26]   Following settlement on 7 December 2012 the property was rented out. Maggie was responsible for administering the company and the property including the

9      At [49]–[50].

10 Affidavit of Arthur Loo (sworn 11 August 2021) at [6].

11     Affidavit of Kit Sum So (27 April 2021) Exhibit “C”.

receipt, application and distribution of the rental income to reflect the parties’ contributions to the purchase price and in accordance with the terms of the deed of bare trust. The plaintiff says that Maggie assumed these responsibilities as her English was better than Esmond’s. Maggie apportioned the rental income on that basis from December 2012 to March 2016. The receipt and application of the property rental income is recorded and set out in a series of documents prepared in a spread sheet like format prepared by Maggie.12 They show that two-thirds of the rental income was allocated to the plaintiff and Chui Wa, and one-third to Maggie and Esmond. The records also show that the mortgage payments for the property were also made on the two-thirds/one-third basis in accordance with the deed and deducted from the respective shares of the plaintiff and Chui Wa as to one-third, and Maggie and Esmond as to two-thirds.

[27]   Chui Wa included the rental income received from the property in her IRD tax returns for the financial years 2014, 2015 and 2016.

[28]   On 17 March 2015 Esmond and Maggie as the directors and shareholders of TT Co Ltd executed an “All Obligations” guarantee in favour of ANZ Bank New Zealand Limited.13

The Family Court proceedings

[29]   In early 2016 Maggie and Esmond separated. Shortly thereafter, on 13 June 2016, Esmond commenced proceedings in the Family Court at Manukau under the Property (Relationships) Act 1976 naming Maggie as respondent. On 24 June 2016 the Family Court made an interim preservation order, restraining the disposition of all relationship property of the parties pending further order of the court. On 30 October 2016 the restraining order was varied by further order to enable funds held in TT Co

12   Affidavit of Biu Tao So (5 October 2020) Exhibit “F”. Mr Albert Deng (Chinese translator) states in appendix “B” to his affidavit (5 October 2020) that Exhibit F consists of 38 accounting statements spanning the period December 2012 to March 2016. He states: “The statements are written in Simplified Chinese and include headings and subheadings such as Income, Outgoings, Rent, Bank Mortgage Repayment, Management Fee. On each statement, two parties of individuals are included: either “Mum & Dad” and “Esmond” or “Mum & Dad” and “Child”. The relationship between “Mum & Dad” and “Esmond” is apparently that of parents and son. Hence the alternative appellation of “Child” in place of “Esmond”.

13 Affidavit of Kit Sum So (27 April 2021) Exhibit “A”.

Ltd’s bank account to be applied to meeting payments in respect of its mortgage liabilities, and to enable funds held in the parties’ joint bank accounts to be applied to meeting the payments due on the mortgage over the family home. These orders were not brought to the notice of the plaintiff and Chui Wa.

[30]   On 1 July 2016 Maggie entered into a Residential Property Management agreement authorising McGill Solutions Limited to arrange tenancies of the Victoria Street property. This arrangement was made without the knowledge of the plaintiff and Chui Wa.

[31]   Following the making of the 30 October 2016 variation order, the funds in the TT Co Ltd bank account were applied to meeting payments to service the mortgage over Maggie and Esmond’s family home at Reno Way, Flat Bush, Auckland and all payments of rental income received by the plaintiff and Chui Wa thereupon ceased.

Plaintiff and Chui Wa request shares be transferred to them

[32]   By written instructions dated 14 December 2016 and 19 December 2016 the plaintiff and Chui Wa requested Maggie and Esmond to transfer to them the 200 shares in TT Co Ltd they were holding as bare trustees.14

[33]   On 22 December 2016 Business and Investment Taxation Limited, as the company’s accountants, registered a change of share allocation of TT Co Ltd in the Companies Office Register which cancelled the then existing share allocation pursuant to which Maggie and Esmond were named as the joint holders of 300 shares, and replaced it with new share allocations which allocated 100 shares to Maggie and Esmond to be held jointly and allocated 200 shares to the plaintiff and Chui Wa to be held jointly.15

[34]   On 3 April 2017 the plaintiff and Chui Wa each signed a consent to appointment as a director of the company and their consents and appointments as

14     Affidavit of Biu Tao So (5 October 2020) Exhibit “K”.

15     Affidavit of Biu Tao So (5 October 2020) Exhibit “L”.

directors were registered by the company’s accountants in the Companies Office Register of TT Co Ltd.16

The plaintiff and Chui Wa are joined as respondents in the Family Court proceedings

[35]   On 26 September 2017 following a judicial conference in the Family Court relationship property proceedings between Esmond and Maggie, Family Court Judge Southwick QC issued a minute. The Judge noted that the preservation order made by the Family Court on 24 June 2016 had resulted in some confusion as it referred to funds held in a “joint bank account” rather than to the bank account of TT Co Ltd. The Judge noted that despite Esmond’s request to his parents to agree to the release of a sum of $30,000 held in the company’s bank account so that it could be applied to paying arrears of mortgage payments in relation to his and Maggie’s family home, his parents had declined to agree. Judge Southwick observed that it appeared obvious that the funds held by the company should be released and applied towards the sum of

$61,000 which was claimed as due by the bank, and she noted that Esmond had himself endeavoured to raise the necessary money required to ensure that the bank did not take action to the disadvantage of all parties concerned. She then said:

[8]        I note that [Esmond] has previously sought that the family home occupied by [Maggie] is sold and [that she] has sought that the investment properties owned by [Tim Tim Company Limited] are sold. [Esmond] does run the risk of being accused of lowering the value of property which is the subject of claim and he may wish to think very carefully about this if indeed he has any ability to persuade his parents to assist by allowing the release of the $30,000.

[9]        Furthermore, if the former family home has a reasonable net equity any argument that his parents have that they are owed money can be met at a substantive hearing in the sense that they can be paid any proven loan out of the net equity of the property.

[10]      What is clear to me is that [Esmond’s] parents should be joined as parties at this point given that they are co-directors of [Tim Tim Company Limited], and given their claim that they have lent money and are, perhaps, in a constructive trust position.

[36]   Judge Southwick accordingly made orders which included directing that the plaintiff and Chui Wa were to be joined as second respondents in the Family Court proceedings. She further directed that they were to be served with all documentation

16     Affidavit of Biu Tao So (5 October 2020) Exhibits “M” and “N”.

filed by the parties, and that they were to file any affidavits within 14 days of receipt of service of the documents already filed. Judge Southwick also directed that a pre- trial conference was to be allocated as soon as a date was available.

[37]   Although Maggie states in her affidavit that the plaintiff was served with the Family Court proceedings in 2017, there is no proof of service having been effected at that time and no affidavit of service is recorded on the list of documents on the Family Court file produced by Maggie as an exhibit to her affidavit dated 27 July 2021.17

[38]   When she died on 19 December 2018 Chui Wa did not leave a will. The plaintiff was subsequently appointed by the High Court as the administrator of her estate on 22 November 2019.18 On 23 January 2020 the plaintiff, as a shareholder of the company and as the administrator of Chui Wa’s estate, resolved that Chui Wa “resigns deceased” as a director of the company, and also that Maggie be removed from her position as a director of the company.19 On 12 March 2020 the 200 shares held by Chui Wa in the company were transferred by survivorship to the plaintiff.20

[39]   On 7 May 2020 the plaintiff’s solicitors, Wilson Harle, filed a notice in the Family Court at Manukau advising that they were acting for the plaintiff and provided an address for service. In a subsequent memorandum filed in the Family Court by the plaintiff’s counsel on 3 July 2020 he advised that for reasons outside the plaintiff’s control the plaintiff had not been served with the proceedings, and noted that it appeared that Esmond’s counsel did not have a complete set of the proceedings to enable service on the plaintiff to be effected. The issue regarding service on the plaintiff was again addressed in the Family Court by Judge Wagner on 19 August 2020 when dealing with an application by Esmond for an order for non-party discovery against his former solicitors. In his minute dealing with that matter, the Judge commented that while the Court was seized of the matter he also wished to progress the substantive proceedings as best he could. He noted:21

17     Affidavit of Yan Shi (sworn 27 July 2021) Exhibit “C”.

18     Affidavit of Biu Tao So (5 October 2020) Exhibit “R”.

19     Affidavit of Biu Tao So (5 October 2020) Exhibits “Y” and “Z”.

20     Affidavit of Biu Tao So (5 October 2020) Exhibit “Q”.

21     So v Shi FC Manukau FAM-2016-092-628, 19 August 2020 at [16].

There has been a significant difficulty with service on the second respondent, Mr So Snr, largely as a result of [Esmond] saying that he does not have copies of the pleadings because they are held on [his former solicitor’s] file.

[40]   Having ascertained that Maggie’s counsel was understood to have a complete set of the proceedings, Judge Wagner suggested that Maggie’s counsel, whose attendance at the judicial conference had been excused, be asked to assist and provide a full set of the proceedings to the plaintiff’s counsel by way of service of the proceedings on the plaintiff. The plaintiff was subsequently served with the Family Court proceedings in September 2020.

[41]   On 5 October 2020 Mr Albert Deng who is a professional translator and interpreter of the Chinese and English languages swore an affidavit to which he attached his English translation of an affidavit written in Chinese, sworn by the plaintiff on 5 October 2020, and filed in the Family Court under proceeding FAM- 2016-092-628.22 In his affidavit the plaintiff details the background to the purchase of the Victoria Street property and the establishment of the bare trust recording his and Chui Wa’s beneficial ownership of 200 of the 300 shares in TT Co Ltd. At the conclusion of his affidavit the plaintiff states:

[58]      I would like the court to recognise my beneficial interest in the Company, which has been treated so far as if it were only the relationship property of Maggie and Esmond. I wish to retain my 200 shares of the Company and have future rental income apportioned to reflect my contribution to the investment.

[59]      I wish to be repaid the income from the Company which I was owed but never paid, which Maggie had stopped apportioning to me in May 2016.

[60]      I would also like Esmond and Maggie to pay back what they have overdrawn from the Company.

[42]   To date Maggie has not filed an affidavit in the Family Court in response to the plaintiff’s affidavit.

The High Court Proceedings commenced by Maggie

[43]   On 13 August 2020 as a litigant in person, Maggie commenced a proceeding in the High Court against Esmond in which she sought without notice interim

22     Affidavit of Yan Shi (sworn 27 July 2021) Exhibit A.

injunctive relief by way of orders reinstating her as a director of the company, transferring the shares in the company to herself and removing the plaintiff and Chui Wa as  directors  and  shareholders  of  TT  Co  Ltd  (the  ‘1632’  proceeding).  On  29 September 2020 Campbell J issued a minute directing that the plaintiff and Chui Wa were to be added as defendants to the proceeding, and as Chui Wa had died, the plaintiff was to be added as her personal representative. Justice Campbell also directed Maggie to file an amended statement of claim naming the plaintiff and Chui Wa as additional defendants. No interim orders were made, and Maggie was directed to effect service of the proceeding on the defendants.

[44]   In response to the claim on 15 October 2020 the plaintiff filed a notice of opposition and affidavit comprising 49 paragraphs. The plaintiff’s affidavit was written in Chinese characters and was accompanied by an affidavit by Mr Albert Deng exhibiting  his  English  translation  of  the  plaintiff’s  affidavit.   The  plaintiff’s    49 paragraph affidavit is in substantially the same terms as his 60 paragraph affidavit filed in the Family Court proceedings, apart from the omission of a section entitled “Other advancements” in which he details 14 separate gifts of cash sums provided by Chui Wa and himself to Esmond and Maggie between 13 September 2010 and 21 May 2013 totalling $835,000. At the conclusion of his affidavit filed in the 1632 proceeding the plaintiff said:

[45]   I ask that the Court recognise my interest in the Company, which has been treated to date by the Family Court as if it were only relationship property of Maggie and Esmond. In light of past events, I wish to remain registered as the holder of 200 shares in the Company, to have other shareholders account for the Company income which they have used for their benefit and to have future rental income apportioned to reflect my contribution to the investment.

[46]   The Affidavit of Yan (Maggie Shi) records a number of matters which are generally factually correct, but the affidavit has important omissions relating to the contribution that Chui Wa and I made to the property and to the execution of the deed of bare trust prior to the increase in the number of shares.

[47]   Ms Shi failed to inform the Family Court of our interest in the Company in the relationship property proceedings in that Court.

[48]   With reference to paragraph 8, I understand that Esmond carried out a transfer of shares to Chui Wa and me in accordance with our rights under the deed of bare trust, and that the shares transferred did not belong beneficially to Maggie.

[49]   I have filed an affidavit in the Family Court so that the Family Court is aware of the matters set out in this affidavit.

[45]   On 12 February 2021 Maggie discontinued the 1632 proceeding.23 In her affidavit filed in the present proceeding she explains that she commenced that proceeding after she had been removed as a director of TT Co Limited which owns the property, and because she was trying to comply with an order of the Family Court about what should happen to the shares. She says that she discontinued the proceeding because she wanted everything to be dealt with by the Family Court, and because she had been advised that it would not be possible to have proceedings dealing with the same matter in two courts at the same time. She says that she also wanted to keep her legal costs down.

The present proceeding

[46]   On 11 May 2021 the plaintiff filed this present proceeding in the High Court seeking a declaration that Maggie and Esmond hold 200 of the 300 shares in TT Co Ltd on trust for him, together with an application for summary judgment.

[47]   By memorandum of counsel dated 11 May 2021 the plaintiff applied for leave to rely on his and Mr Deng’s previous affidavits filed in response to Maggie’s 1632 High Court proceeding. This unopposed application was granted by Woolford J in his Minute of 6 July 2021.24

Maggie’s application to stay the plaintiff’s claim.

[48]   By application dated 28 July 2021, Maggie applies for an order staying all of the plaintiff’s claims in the present proceeding pending resolution of the Family Court proceedings, on the principal grounds that the present proceeding is an abuse of the process of this Court as the matter is already before the Family Court in proceedings to which the plaintiff has been joined as a respondent.

23 Shi v So [2021] NZHC 879.

24 In a memorandum dated 27 July 2021, counsel for the plaintiff advised that as a result of an oversight, the English translation of the plaintiff’s affidavit had not been annexed to the 11 May application, and counsel accordingly annexed a copy of the English translation of the plaintiff’s 49 paragraph affidavit.

[49]   Counsel for Maggie, Ms Isaacs, submits that the issues in question in the present proceeding have already been raised by the plaintiff in the affidavit he filed in the Family Court proceedings. She says that by filing an affidavit the plaintiff has already elected to participate in the Family Court proceedings and has raised the issue of his claim to be the beneficial owner of 200 of the 300 shares in TT Co Ltd which owns the Victoria Street property, which is a matter that will necessarily be considered by the Family Court in the course of determining whether or not that property is relationship property in the dispute between Maggie and Esmond.

[50]   Ms Isaacs further submits that the Family Court already has the conduct of this dispute between the parties, including the plaintiff having been joined as a respondent, and the Family Court has jurisdiction to determine whether the Victoria Street property is relationship property of Maggie and Esmond or not. She submits that the Family Court has jurisdiction to determine the issue and that to avoid unnecessary duplication, cost and resulting prejudice to Maggie by having to dispute the same issue in two courts, this Court should make an order pursuant to r 15.1(d) and r 15(3) of the High Court Rules 2016 staying this proceeding pending determination of the Family Court proceedings.

[51]   Ms Isaacs further says that as Maggie and Esmond have given their personal guarantees to the ANZ bank mortgage registered over the family home, and which is also secured against the Victoria Street West property owned by the company (TT Co Ltd) which the plaintiff claims to be the beneficial owner of, it is preferable for all the issues to be dealt with by the Family Court. She further submits that the summary judgment outcome sought by the plaintiff is not practically possible unless made contemporaneously with orders for division of Maggie and Esmond’s relationship property because having been removed as a director of TT Co Ltd, Maggie has no ability to control its actions despite being held liable for its debt under the guarantee to the ANZ bank. Ms Isaacs submits that by reason of the personal guarantee Maggie gave to the ANZ bank, the outcome of the plaintiff’s claim in this proceeding could result in her and the two children of the marriage being forced out of the family home in the event that the bank proceeds with a mortgagee sale. Ms Isaacs says that because of the interrelated nature of these issues, they are best determined in the context of the

Family Court proceedings rather than in the context of a half-day summary judgment application.

[52]   Ms Davenport QC further submits that pursuant to s 4(1)(b)(i), the Property (Relationships) Act is a code which applies to disputes between both spouses or partners and third parties, which is the situation here. She submits that once the Family Court is seized of a dispute, it is an abuse of process to seek to have the dispute adjudicated in another proceeding in another court.

The plaintiff’s submissions in opposition to the application for stay

[53]   The plaintiff opposes the application for a stay of the present proceeding. He says that the extent to which his claim in this proceeding and the issues in the Family Court proceedings are interrelated is limited to the issues related to the guarantee given by Maggie and Esmond to the ANZ bank in their capacity as directors of TT Co Ltd, in respect of their personal liabilities to the bank which include their liability to the bank in respect of the mortgage over their family home.

[54]   Mr Browne for the plaintiff says that the plaintiff filed his affidavit in the Family Court to ensure that his claim to have an interest in the Victoria Street property was registered and that he was not seeking a determination by the Family Court to recognise his beneficial interest in the property.

[55]   Mr Browne says that in this proceeding the plaintiff is also seeking an order that Maggie and Esmond either obtain a release of the company’s guarantee for their personal liabilities to the ANZ bank or that they discharge all liabilities of the company without using the property of the company to do so. The plaintiff says that if Maggie and Esmond are unable to discharge their personal obligations other than by using the property of the company, they may default on their obligations to the bank. However, if the plaintiff’s claim in this proceeding is successful and he establishes that Maggie and Esmond as trustees, were not in a position to provide the bank with a valid security over the Victoria Street property by way of security over their personal borrowing from the bank, it is in the interests of justice for that issue to be determined discretely, and allowing the matter to remain unresolved is to the plaintiff’s detriment.

[56]   Mr Browne notes that although the ANZ bank has not taken any steps to enforce its mortgage security to date, the matter should not be allowed to drift and the present unsatisfactory situation allowed to continue. As the loans from the bank are presently in default and the parties as directors of the company are unable to resolve their dispute over who is entitled to control it, the present proceeding in which the issue of whether or not the plaintiff is the beneficial owner of 200 of the shares in the company will provide an early determination as opposed to the likely delay involved in a determination of that issue as part of the wider relationship property dispute between Maggie and Esmond. He submits that the issue of whether the plaintiff is the beneficial owner of two-thirds of the shares of TT Co Ltd must necessarily be determined before the relationship property issues in dispute between Maggie and Esmond can be determined.

[57]   Mr Browne notes that as yet, no affidavits have been filed by Maggie in reply to the plaintiff’s affidavit filed in the Family Court, and consequently it is likely the determination of the Family Court proceedings will be considerably delayed compared to the timely determination of the issue in the High Court that would be possible with the present proceeding. He notes that on 9 November 2020 Judge Wagner issued a minute following a directions conference that day in which he noted that the plaintiff had been served and the non-party discovery material had been obtained. The Judge noted that Esmond required time to complete inspection of the discovery, to update his own evidence and to respond to the affidavit filed by the plaintiff. No directions were made requiring Maggie to respond to the plaintiff’s affidavit. Mr Browne says that despite the Family Court proceedings having been commenced in June 2016 they are not well advanced and with outstanding issues relating to discovery yet to be addressed there is presently no substantive hearing date in sight.

[58]   Counsel says that the plaintiff elected to commence this present proceeding in May 2021 when parties to the Family Court proceedings appeared uninterested in progressing that proceeding with any urgency. The plaintiff, meanwhile, had been left waiting for determination of his issue regarding his ownership of two-thirds of the shares of TT Co Ltd along with the ever present risk of the ANZ taking action to enforce its security.

[59]   Mr Browne submits that this present proceeding is not an abuse of process of the Court. He submits that there is no risk of unfairness or oppression to Maggie by the Court allowing the plaintiff’s claim to proceed and be determined, and he says that considerations of cost, convenience, and the interests of justice weigh strongly against the granting of a stay.

[60]   Mr Browne notes that the plaintiff’s claim is an action on a deed, while Maggie’s defence appears to be based on the common law plea of non est factum. He submits that although the Family Court clearly has jurisdiction to determine the extent of the plaintiff’s interest in the TT Co Ltd shareholding as part of the inventory-taking stage of its determination pursuant to the Property (Relationships) Act, an action on a deed and consequent relief is more conventionally within the High Court’s jurisdiction. Furthermore, in the present case the plaintiff’s claims for relief by mandatory injunctions and the alternative relief of equitable damages for breach of trust are outside the Family Court jurisdiction.

[61]   He submits that the issues arising in this present proceeding are entirely discrete and severable from the Family Court’s function of determining and dividing Maggie and Esmond’s relationship property interests. While accepting that the issue of whether or not the plaintiff has a beneficial interest in the 200 shares in TT Co Ltd must necessarily be determined before the Family Court can proceed to decide upon a division of relationship property as regards their interests in the company, Mr Browne submits that a separate and discrete determination of the issue by the High Court without delay will clear the way for the Family Court determination of the real issues in the dispute between Maggie and Esmond. He submits that progress in this Court on the issue is already well ahead of the Family Court. He accordingly submits that determination of the issue by this Court is the quickest and least expensive means of resolving the issue and that it is in the interests of justice for all parties that it be done.

[62]   Mr Browne further submits that determination of this issue in the present proceeding would not be prejudicial or oppressive so far as Maggie and Esmond are concerned. He notes that since the Family Court proceedings were commenced over five years ago, Maggie and Esmond have not progressed their relationship property dispute  with  any urgency  while taking advantage of  the interim orders made by the

Family Court enabling the rental income from the Victoria Street property to be applied to meet their personal mortgage liabilities. He submits that the delay is significantly prejudicial to the plaintiff who awaits determination of his claim as part of the wider range of disputed issues between Maggie and Esmond. Mr Browne submits that as the timeframe to a substantive hearing before the Family Court is effectively controlled by Maggie and Esmond, it is clearly in the interests of justice that the plaintiff’s claim be dealt with and determined independently of their proceedings.

[63]He accordingly submits that the application for a stay should be declined.

Applicable legal principles

[64]Rule 15.1 of the High Court Rules provides:

(1)The court may strike out all or part of a pleading if it—

(a)    discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or

(b)    is likely to cause prejudice or delay; or

(c)    is frivolous or vexatious; or

(d)    is otherwise an abuse of the process of the court.

(2)If the court strikes out a statement of claim or a counterclaim under subclause (1), it may by the same or a subsequent order dismiss the proceeding or the counterclaim.

(3)Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.

(4)This rule does not affect the court’s inherent jurisdiction.

[65]In Danone Asia Pacific Holdings Pte Ltd v Fonterra Co-operative Group Ltd,

Venning J described the scope of the rule:25

[37] If r 15.1(3) applies [in this case], it must be on the basis the  proceedings are otherwise an abuse of process under [r 15.1(1)(d)]. Abuse of process in this context is not limited to the rather narrow tort of abuse of process but can apply to proceedings which, although not inconsistent with

25     Danone Asia Pacific Holdings Pte Ltd v Fonterra Co-operative Group Ltd [2014] NZHC 1681 (footnotes omitted).

the literal application of procedural rules, are nevertheless “manifestly” or “seriously” unfair to a party. It will, for example, be an abuse of process to issue duplicate proceedings involving the same parties.

…

[54]      … Parties do not enjoy an unfettered right to access to the Courts; rather, the Court is entitled to impose procedures that are appropriate in the circumstances having regard to the nature and content of the litigation as a whole.

[55]      The jurisdiction to do so, however, should only be exercised in rare and compelling circumstances. There must be a real risk of unfairness or oppression to the defendant if the proceedings were allowed to continue. Considerations of cost, convenience and the interests of justice must weigh in favour of a stay. The onus is on the applicant to satisfy the Court that such circumstances exist.

[66]   Counsel for both parties referred me to two cases with similar facts to the present in which a stay of proceedings was granted. Maggie’s counsel submit that the circumstances of the two cases are analogous to hers and they provide strong support for her application for a stay on the grounds of an abuse of process. Counsel for the plaintiff submits that while the cases do have obvious factual similarities, they are nevertheless distinguishable and when closely examined can be shown to provide no support for Maggie’s application for a stay of proceedings.

[67]   In Yeoman v Public Trust Ltd, following the death Mr Yeoman, three separate proceedings were commenced in the Family Court.26 Two of the Family Court proceedings were commenced by the deceased’s widow who brought separate claims against her late husband’s estate under the Family Protection Act 1955 and Property (Relationships) Act 1976. Three years after her husband’s death she commenced a further proceeding in the High Court in which she alleged that there were assets held by a family trust that could not be the subject of division orders made under the Property (Relationships) Act or the subject of maintenance and support orders under the Family Protection Act. She claimed that the Family Court could not determine ownership of assets held by the family trust, and the Family Court proceedings were then put on hold pending determination of the High Court proceeding.

26     Yeoman v Public Trust Ltd [2011] NZFLR 753 (HC).

[68]   The Public Trust as defendant elected not to file a statement of defence, but instead entered an appearance in which it protested the jurisdiction of the High Court to hear the widow’s claim and also filed an application to dismiss or strike out the claim under r 15.1. The defendant contended that by reason of s 4 of the Property (Relationships) Act the High Court did not have jurisdiction to hear and determine the matter and also that the proceeding was an abuse of process because there were already proceedings in the Family Court in which the same issues had been raised for determination by that Court.

[69]   Associate Judge Bell noted that if the widow’s claim in the High Court proceeding was successful, certain property assets would not form part of the deceased’s estate and would not be available for orders to be made under the Family Protection Act or available for division between the widow and her late husband’s estate in her claims under the Property (Relationships) Act. He found that the Family Court has jurisdiction to determine the issue of a third party’s claim to an interest in an asset owned by one or both relationship parties:

[43]      However, where an asset is owned by one or both the parties to the relationship, and a third party contends that he or she has an interest in that asset, the Family Court can decide the extent of the third party’s interest as part of the inventory stage. …

[44]      The increased use of family trusts today will give rise to questions in identifying relationship property. These can include whether assets are held in a trust or by the parties, whether the relationship property includes debts back from the trustees, whether beneficial interests in property held under trusts are relationship property. These questions are determined as between the parties to the relationship. The Family Court will apply general property law. It will declare the extent of rights held; it will not create new rights. In cases where the trustees are not the relationship partners and the trustees do not accept that a relationship partner has a relevant beneficial interest in a trust asset, the Family Court cannot make determinations at the inventory stage that will bind the trustees. Proceedings in another court are required. However, where the legal owner of an asset said to be subject to a trust is one of the relationship partners, there can be no jurisdictional objection to the Family Court deciding whether the asset is held on trust. In doing so, the Family Court is undertaking its normal function of identifying relationship property for applications under s 25(1) and (3) of the Property (Relationships) Act. It is exercising powers inherent in its jurisdiction to decide applications under that Act.

(footnotes omitted)

[70]   Associate Judge Bell further found that the High Court also has jurisdiction to consider the ownership of assets that may fall within the scope of the Family Court’s determination of relationship property. He said:

[61] While the Family Court can decide the matters in this proceeding as  part of its inventory-taking function under the Property (Relationships) Act and the Family Protection Act, those matters also fall within the general jurisdiction of this Court under s 16 of the Judicature Act 1908. There is overlapping jurisdiction. So long as this Court does not decide the division of relationship property, but decides ownership of assets under general property rules, it will not encroach on the exclusive jurisdiction of the Family Court under the Property (Relationships) Act.

[71]   Associate Judge Bell nevertheless concluded that the widow’s High Court proceeding was an abuse of process and ordered a stay. He said:

[73]      The defendant says that the widow is suing in both this Court and the Family Court over the same matter. In her Family Court applications she has put the ownership of the Balboa Drive proceeds and the Mayfield property in issue. Her affidavit of 16 November 2007 in the property relationship proceedings alleges that these assets belong to the Knapp Family Trust. Her assets and liabilities affidavit makes the same claim. In a family protection affidavit she gives evidence about the ownership of the properties. She began the applications in the Family Court before starting the proceeding in this Court. There is duplication of proceedings in the Family Court and this Court. The parties are the same and the subject matter of this proceeding is part of the subject matter of the applications in the Family Court. There is well- established authority against concurrent proceedings on the same subject matter being run in different or the same courts … Such double proceedings are an abuse of process under r 15.1(1)(d).

[74]      The widow’s argument to avoid this is to say that the Family Court cannot decide these ownership questions, but that argument has been addressed on the jurisdiction ruling above. … Here the defendant is faced with the same issue in two courts. Not only is the defendant inconvenienced, but also the double proceedings have delayed the resolution of matters requiring the courts’ decision. This proceeding is an abuse of process.

…

[78] The widow’s application for a declaration is an abuse of procedure because it seeks relief which is part of the relief she seeks against the same defendant in other proceedings in the Family Court. This proceeding has contributed to unnecessary delays in finalising the distribution of the estate. It is far preferable that one court hear cases of relationship property division and estate distribution. Splitting matters between courts adds expense, delay and complexity and should be avoided if possible. For some time now the Family Court proceedings have been ready for adjudication. This proceeding should no longer stand in the way of the Family Court now deciding the distribution of [the] estate.

[72]   In Zhou v Yue, Mr Zhou commenced proceedings in the High Court claiming that his son-in-law (Mr Yue) held his one-half share in a property on trust for Mr Zhou, or alternatively, that the terms of an oral contract between them required Mr Yue to transfer his one-half share to him.27 Mr Yue opposed the claim saying that he was the beneficial owner of the half-share of the property which was registered in his name, subject only to the relationship property claims being made in a Family Court proceeding between him and his estranged wife,  who  was  Mr  Zhou’s  daughter. Mr Yue applied to the High Court for an order to stay Mr Zhou’s proceeding on the grounds that it was an abuse of process as the matters in dispute were already in issue in the Family Court proceedings between him and Mr Zhou’s daughter.

[73]   Following her separation from Mr Yue, in May 2017 Mr Zhou’s daughter commenced proceedings in the Family Court at Auckland seeking a division of relationship property. The question of ownership of the half-share in the property registered in Mr Yue’s name was in  dispute between  Mr Yue  and  his  wife,  with Mr Zhou’s daughter claiming that her father was the beneficial owner. At an issues conference on 4 May 2018 the Family Court issued a direction pursuant to s 37 of the Property (Relationships) Act that all interested parties, including Mr Zhou, were to be served with the proceedings.

[74]   After Mr Zhou had been served with the Family Court proceedings he filed an affidavit in that Court claiming to be the beneficial owner of the property, and detailing his financial contribution to the property. He also refereed to and relied on an affidavit sworn by his niece and filed in the Family Court in which she generally confirmed that Mr Zhou was the owner of the property. Thereafter the Family Court proceedings continued with an application for discovery against Mr Yue being made.

[75]   In December 2018 Mr Zhou commenced his proceeding in the High Court pleading alternative causes of action of resulting trust, constructive trust and breach of contract, seeking an order that Mr Yue be directed to transfer the half-share registered in his name to Mr Zhou. Mr Yue filed a statement of defence on 1 March 2019 and on 26 July 2019 he applied for orders dismissing or staying the proceeding.

27     Zhou v Yue [2019] NZHC 2167.

[76]   In reply, Mr Zhou argued that the Family Court did not have jurisdiction to make an order requiring Mr Yue to transfer the half-share of the property to him. The High Court rejected that submission, saying that having been served with the Family Court proceedings, Mr Zhou had elected to participate in them by filing affidavits and by doing so had become a party to the proceeding. The High Court held that in those circumstances the Family Court if it found Mr Zhou to be the true owner of the half- share of the property, has jurisdiction under s 33(3)(e) or (j) to give effect to its finding by vesting the half-share of the property in Mr Zhou or directing the transfer of the half-share of the property to him.

[77]   The High Court granted Mr Yue’s application for stay of Mr Zhou’s proceeding. Associate Judge Smith noted that there was no dispute between the parties that the central issue in Mr Zhou’s High Court proceeding as to who was the true owner of the half-share in the property, was also in issue in the Family Court proceedings and that a significant part of the evidence filed in the Family Court, including two affidavits by Mr Zhou, were directed to that issue, and he said:

[70]      … [Counsel for Mr Zhou] endeavoured to distinguish a number of the authorities referred to by [counsel for Mr Yue], but in my view the essential point remains that the same (substantial) issue has been raised in two courts in circumstances where I have found that Mr Zhou has elected to participate in the Family Court proceeding and the Family Court does have jurisdiction to make the orders for vesting or transfer of Lot C that he seeks. Some authorities with additional or different facts might be distinguished, but I think the abuse of process is sufficiently established where a duplicate proceeding has been filed unnecessarily, putting [Mr Yue] to the expense of filing documents and presenting arguments on the same issue in both courts.

[71]      In saying that, I accept that Mr Zhou's intention was not to subject [Mr Yue] to the extra costs of running two separate proceedings covering the same issues. Mr Zhou commenced the proceeding in this Court in the belief that it was necessary for him to do so, to secure an order vesting Lot C in him. And he did invite [Mr Yue] to agree to a stay of the Family Court proceeding pending the determination of this proceeding. The issue of delay, on the other hand, is in a different category. It appears that Mr Zhou has been aware of [Mr Yue’s] claims from at least mid-late 2017, but he effectively stood on the side lines, apparently allowing his daughter to run his arguments in the Family Court on the issue of the ownership of Lot C, for roughly a year. In the meantime, all parties would have been running up costs in the Family Court that might perhaps have been avoided if Mr Zhou had filed his claim immediately he became aware of [Mr Yue’s] claims.

Discussion

[78]I agree with the plaintiff’s submissions that these two cases, Yeoman and Zhou

are distinguishable from the present, for the following reasons:

(a)The plaintiff did not initiate the proceedings in the Family Court which is a relationship property dispute between his son and daughter-in-law. Unlike the widow plaintiff in the Yeoman case, the plaintiff here is a third party who is not directly involved in the dispute between Maggie and Esmond over their relationship property. Furthermore, and again unlike the plaintiff in Yeoman, the plaintiff in this case did not commence the proceeding in this Court seeking a determination of issues he had already sought to be determined by proceedings commenced in the Family Court.

(b)Although the plaintiff was joined as a respondent to the Family Court proceedings in circumstances similar to the joinder of Mr Zhou, despite being joined in September 2017 he was not served with the proceedings for three years until September 2020. The lengthy delay has not been adequately explained and is consistent with Maggie being content to progress the Family Court proceedings without any urgency. Thus it is apparent that the plaintiff has not caused or contributed to the significant delay that has arisen in resolving the Family Court proceedings.

(c)Unlike the cases of Yeoman and Zhou, one of the parties to the Family Court proceedings also commenced a High Court proceeding seeking orders in connection with property in dispute in the Family Court proceedings. Almost a year after the order joining the plaintiff as a respondent to the Family Court proceedings, and prior to service of those proceedings on the plaintiff, in August 2020 Maggie commenced a proceeding in the High Court seeking orders to remove the plaintiff as a director and shareholder of TT Co Ltd and reinstate herself as a director of the company. That proceeding resulted in the plaintiff once

again filing an affidavit setting out the basis of his claim to be the beneficial owner of 200 shares in TT Co Ltd and by discontinuing the proceeding Maggie deferred and delayed any judicial consideration of the merit of the plaintiff’s claim.

(d)While the plaintiff filed a lengthy affidavit in the Family Court in October 2020 setting out the basis of his claim to be the beneficial owner of two-thirds of the shares in TT Co Ltd, and asking the Family Court to recognise his beneficial ownership, by doing so he did not seek relief from that Court by way of ownership of the shares. Had the Family Court found that he was the beneficial owner of the shares it would be in the nature of a recognition of his beneficial ownership, rather than determining his legal ownership of the shares.

(e)Unlike the plaintiff in Yeoman or Zhou the plaintiff in this case has not engaged in the Family Court proceedings to anything like the same degree or extent as they both did. Since the plaintiff filed his affidavit in the Family Court proceedings on or around 15 October 2020, neither Maggie nor Esmond have filed any affidavits in reply, and little progress has been made towards getting the proceedings ready for hearing. Whereas in Yeoman the Family Court proceedings were ready for hearing and their resolution was being held up by the High Court proceeding, that is not the case here, and resolution of the plaintiff’s claim to be the beneficial owner of the shares can be determined more rapidly and efficiently in the context of the present proceeding rather than leaving it to be determined in the context of the Family Court proceedings.

(f)Unlike the plaintiff’s claims in Yeoman and Zhou, here the plaintiff’s claim to be the beneficial owner of the shares is based on the provisions of a deed signed by Maggie, and therefore apart from being relevant to a determination of what assets comprise the relationship property, the plaintiff’s claim and its legal basis is discrete and wholly unrelated to the relationship property dispute between Maggie and Esmond.

Furthermore, while the plaintiff’s claim to be the beneficial owner of the shares must necessarily be determined before the Family Court can proceed to determine the division of Maggie and Esmond’s relationship property, as it involves a discrete legal issue and a third party to that dispute, there are no compelling reasons why the plaintiff’s claim should be determined by the same court as will determine the relationship property dispute presently before the Family Court.

[79]   Comparing the circumstances of the three cases, it is clear that the plaintiff’s action in commencing his proceeding in the High Court has not interfered with or delayed the progress of the Family Court proceedings as was the case in both Yeoman and Zhou. Indeed and to the contrary the plaintiff’s High Court proceeding, should it proceed, will enable the issue of ownership of the shares to be determined sooner than would be likely if it is left for determination in the context of the Family Court proceedings. The costs incurred by Maggie in defending the plaintiff’s claim in the High Court will not be duplicated by the need to address the same issue in the Family Court as this Court’s decision will have determined the matter.

[80]   I find that considerations of costs, inconvenience and the interests of justice, do not weigh in favour of staying the plaintiff’s proceeding in this Court. In my view the interests of justice clearly favour the plaintiff’s claim to be the beneficial owner of the shares in TT Co Ltd being determined as early and efficiently as possible, and that objective can be achieved without imposing unnecessary cost or duplicated efforts, or causing undue delay by enabling his claim to proceed in this Court. This Court’s determination of this discrete issue will inform the Family Court’s consideration of the relationship property issues in dispute between Maggie and Esmond and enable that Court and those parties to concentrate on their dispute without the distraction of also addressing and determining the plaintiff’s claim to be the beneficial owner of 200 of the 300 shares in TT Co Ltd as a prerequisite to determining what comprises the relationship property of the parties to be divided.

[81]   For these reasons, I find that the plaintiff’s action of commencing this proceeding to seek determination of his claim to be the beneficial owner of 200 of the 300 shares in TT Co Ltd is not an abuse of process within the scope of r 15.1, and also

find that none of the other grounds for staying a proceeding as set out in r 15.1 exist. It is clear that the plaintiff has a reasonably arguable cause of action; his claim will not cause prejudice to the first defendant or delay resolution of the Family Court proceeding; and his claim is clearly not frivolous or vexatious.

[82]   I accordingly dismiss Maggie’s interlocutory application dated 28 July 2021 seeking an order staying the proceeding pending resolution of the Family Court proceedings.

Summary judgment

[83]   Having declined Maggie’s application for an order staying the plaintiff’s claim, I turn to consider the plaintiff’s application for summary judgment. By interlocutory application dated 11 May 2021 the plaintiff applies for summary judgment to be entered against both defendants on the grounds that they have no defence to his claim.

[84]By way of summary judgment the plaintiff seeks:

(a)A declaration that pursuant to the deed of bare trust dated 7 December 2012, Maggie and Esmond hold 200 of 300 shares in TT Co Ltd on trust for the plaintiff as bare trustees.

(b)An order that Maggie and Esmond transfer 200 shares in the company to the plaintiff.

(c)An order requiring Maggie and Esmond, for as long as they are directors of the company, to ensure that the plaintiff receives the proportion of the company’s income required by the deed.

(d)An order requiring Maggie and Esmond either to obtain a release of the company’s guarantee of their indebtedness to the ANZ bank or to discharge all debts guaranteed by the company without recourse to the property of the company.

(e)An order for production of the records of the company since 2016, an accounting of the income of the company since January 2016, and for an order that the amount diverted for the benefit of Maggie and Esmond in breach of the deed, as determined by the accounting, be paid by Maggie and Esmond to the plaintiff.

(f)In the alternative to (e), equitable damages in an amount to be particularised prior to trial.

[85]   Maggie opposes that application on the principal ground that the proceeding is an abuse of process and the issues in the plaintiff’s claim should properly be determined in the Family Court, and also upon the grounds that she has an arguable defence to the plaintiff’s claim because the plaintiff’s financial contribution to the purchase of the Victoria Street property was a gift; she did not receive independent legal advice on the deed of bare trust; she did not understand the meaning and implications of the deed of bare trust, and had no knowledge what she was signing when she executed the deed.28

[86]   Esmond has taken no steps in the proceeding or to oppose the plaintiff’s application.

Submissions

The plaintiff

[87]   The plaintiff submits that based on the existence of the deed of bare trust he has demonstrated a prima facie case for the relief he is seeking. Mr Browne notes that there is no dispute that a document was signed by the parties and executed as a binding deed. He submits that the undisputed circumstances leading to the preparation and execution of the deed whereby the plaintiff and Chui Wa contributed two-thirds of the money required for the purchase of the Victoria Street property, and the subsequent division and distribution of the rental income following the purchase on a two-thirds, one-third basis in accordance with the deed for several years until Maggie and Esmond

28     Notice of Opposition of First Defendant, Yan (Maggie) Shi, 28 July 2021.

separated in early 2016 all provides support for the validity of the deed and also demonstrates that Maggie understood the requirements of the deed as she was responsible for managing the process by which rental was received, applied and distributed in accordance with the terms of the deed.

[88]   Mr Browne submits that the plaintiff’s claim should therefore be accepted and summary judgment entered in his favour against Maggie as first defendant, unless she produces evidence that provides a basis to support a bona fide defence.

[89]   Mr Browne says that Maggie has failed to produce any evidence to support her claim that the financial contributions made by the plaintiff and Chui Wa for the purchase of the property was provided as a gift to her and Esmond. He submits that it is clear from the admissible evidence, including Maggie’s own evidence, that the funds contributed by the plaintiff and Chui Wa were never intended to be a gift to the defendants. He submits however, that even if the Court were to find Maggie’s claim that the money was a gift to be reasonably arguable, it would still not provide her with the basis for an arguable defence to the plaintiff’s claim because of the existence of the deed which she executed. Mr Browne says that confronted with the deed the only possible defence available to Maggie would be a plea of non est factum, however the defence she proposes to advance does not satisfy the elements of that doctrine.

[90]   As regards Maggie’s claim that the money was a gift, Mr Browne says that it is wholly inconsistent with the terms of the deed itself which clearly show that the plaintiff and Chui Wa did not intend their contribution to the purchase to be a gift. They made their intention clear to Mr Loo who proceeded to draft the deed to record that their contribution was not a gift and to document their ownership of 200 of the 300 shares of the company and for the defendants to be liable to meet two-thirds of the mortgage payments on the loan from the ANZ bank of the remaining one-third of the purchase price. Mr Browne notes that the plaintiff’s case  is also supported by  Mr Loo’s affidavit in which he confirms the plaintiff’s instructions asking that Chui Wa and his two-thirds contribution to the purchase price for the property be protected, and that they be the owners of a two-thirds share of the property to be held by the company which he recorded in his contemporaneous file note.

[91]   Mr Browne also notes that Ms Anita Fong’s email to Maggie on 29 November 2012 noted that the plaintiff and Chui Wa had contributed two-thirds of the purchase price of the property and said that although their names were not to be noted in the company’s records a document would be prepared to record that the company would own the property as its sole asset and that the plaintiff and Chui Wa would hold a two- thirds interest in the company shares which were to be held by Maggie and Esmond jointly. He submits that Maggie’s management and distribution of the rental income from the property is consistent with her having fully understood the terms and implications of the deed.

[92]   As regards the defence advanced by Maggie on the basis of her claim not to have received independent legal advice before signing the deed, Mr Browne submits that does not afford her a defence. And in order to make out a defence of non est factum she would need to show that she signed the deed solely on the basis of a fundamentally incorrect explanation by someone as to the contents and purpose of the deed, and that she was not careless as to its contents when signing it. Mr Browne submits that Maggie has not produced any evidence to show that Mr Loo’s explanation of the deed to her and Esmond was incorrect in any way. He notes that her sole complaint is that she did not understand the explanation Mr Loo provided because he spoke in Cantonese when she did not fully understand, and that she does not allege that the advice and explanation of the deed he gave was inaccurate. On that basis and accepting the accuracy of her evidence, Maggie has failed to establish the first requisite element of a plea of non est factum.

[93]   Mr Browne further submits that it is significant in this context that although Maggie claims not to have understood Mr Loo’s explanation of the deed, she did not advise Mr Loo that she did not understand him or seek an explanation from anyone else either before or after signing the deed. He notes that Maggie had recently attended meetings with Mandarin speaking lawyers at Mr Loo’s office, and she could easily have requested that she be given an explanation of the deed in Mandarin. Mr Browne submits that Maggie’s failure to pursue a readily available means of clarifying any uncertainty she may have had regarding the deed shows her to have been careless as to the contents of the deed she signed and consequently she cannot satisfy the second requirement of a plea of non est factum.

[94]   Finally, Mr Browne notes that although the Family Court has an overlapping jurisdiction enabling it to determine the legal ownership of property falling within the scope of the Family Court’s inventory-taking function when deciding whether or not property is relationship property, this Court also has jurisdiction to determine the plaintiff’s claim and application for summary judgment. There being no reasonably arguable defence available to Maggie, Mr Browne seeks the entry of summary judgment against both her and Esmond and the relief sought as detailed in the plaintiff’s statement of claim, together with an award of costs.

The first defendant

[95]   Ms Davenport QC for Maggie submits that she has three arguable defences which should be heard at a substantive hearing of the plaintiff’s claim, and lead the Court to decline the plaintiff’s application for summary judgment. They are: a defence of non est factum as regards the deed of bare trust; promissory estoppel advanced on the basis that the plaintiff by his words and conduct prior to settlement of the purchase and execution of the deed, conveyed his intention to make a financial contribution as a gift to the defendants and convey beneficial ownership of the property to them; and the equitable defence of laches.

[96]   As to the non est factum defence, Ms Davenport refers to Maggie’s affidavit evidence in which she says that when signing the deed of bare trust, she thought that it was another document necessary for the purchase of the property and that she did not understand what she was signing.   She notes that Maggie says that although    Mr Loo went through the documents at a meeting with her and Esmond at his office on 30 November 2012, when doing so he spoke in Cantonese which is a language she does not speak herself and of which she has only a limited understanding. Moreover, the deed of bare trust is written in English and her knowledge of English is limited.

[97]   Ms Davenport submits that because Maggie does not speak Cantonese and because in 2012 her English ability was limited, particularly with the contents of legal documents, she should be considered to have been effectively illiterate for the purposes of the non est factum doctrine. She says that from the explanation she was given by Mr Loo, Maggie says that she understood that the deed was part of the

paperwork necessary to effect settlement that day. Ms Davenport says that Maggie and Esmond and their bank relied on the absence of a deed of bare trust when proceeding to lend them money to finance the purchase of their family home which was secured by them giving personal guarantees on the basis of TT Co Ltd’s ownership of the Victoria Street property and all of the shares in the company being in their names as shown in the Companies Office register.

[98]   Ms Davenport says that having led Maggie and Esmond to believe that the financial contribution they were making to the purchase was a gift, at a late stage and only after the agreement to purchase the property was unconditional, the plaintiff and Chui Wa instructed Mr Loo to take steps to protect their financial contribution and to prepare a deed of bare trust to give them two-thirds of the shares in the company and thereby an equivalent beneficial ownership interest the property itself. Ms Davenport says that the deed of bare trust was only signed on the day of settlement and at a time when the mortgage finance for half of the purchase price had already been arranged. She submits that it is at least arguable that a plea of non est factum will apply in such circumstances, and further submits that as the ANZ bank is not on notice as to the deed of bare trust, the interests of justice will be served by holding that the deed is void and leaving the plaintiff to seek recourse for his loss by bringing a claim against Mr Loo.

[99]   As regards the issue of whether Maggie had been careless by signing the deed without having a clear and correct understanding of  its purpose and implications,  Ms Davenport submits that there is no evidence that Maggie knew that she could obtain legal advice from a Mandarin speaking lawyer in Mr Loo’s firm. She says that Mr Loo’s account of having provided advice to Esmond and Maggie regarding the deed and its effect and that he was satisfied that they both understood his explanation, should be treated with caution by the Court, as the effect of his evidence is to favour the plaintiff as his longstanding client, over the interests of Maggie. She says that there is no evidence before the Court as to what Mr Loo’s advice actually was or whether it was correct. In relation to the email written in English and sent by Ms Fong to Maggie on 29 November 2012, Ms Davenport says it was not an explanation of the deed, which was not drafted until a week later. She says Ms Fong’s email was a poorly written request for instructions which was not understood by Maggie or responded to.

[100]   In relation to an arguable defence of promissory estoppel, Ms Davenport says that there is conflicting evidence as to if and when the plaintiff informed Maggie and Esmond that Chui Wa and his financial contribution to the purchase was a gift or not. She notes that Mr Loo says that he was only advised by the plaintiff that he and Chui Wa wanted him to protect their financial contribution to the purchase price a week prior to settlement. Ms Davenport says that if prior to that the plaintiff had made a clear and unequivocal promise or given an assurance to Esmond and Maggie that his financial contribution was to be a gift and they had acted on that advice, as promisor of the gift, the plaintiff was thereafter bound by it. She submits that on the basis that the plaintiff had made a clear and unequivocal verbal promise of gifting Esmond and Maggie one-half of the purchase price, and thereafter contributed one-half of the purchase price without requiring any deed to be signed to confirm that arrangement, the defendants were thereby led to enter into an unconditional agreement to purchase the Victoria Street property and the equitable doctrine of promissory estoppel means that the plaintiff should be bound by his promise that it was a gift.

[101]   As regards the defence of laches, Ms Davenport says that by failing to take any steps to enforce the terms of the deed of bare trust over the period between December 2012 until he filed an affidavit in the Family Court in 2020, the plaintiff caused the defendants and the ANZ bank to alter their position by giving guarantees and securing the bank lending by a mortgage over the family home, on the basis of their reasonable reliance on the plaintiff’s acceptance of the status quo. She submits that by his delay or inaction, the plaintiff has permitted a situation to arise in which the equity of the Victoria Street property secures the personal borrowings of the defendants and their borrowings used for the purchase of their family home. It would now be unjust to disturb that situation if the relief the plaintiff is seeking would result in Maggie and her two children being forced out of the family home by the bank proceeding with a mortgagee sale of the family home if the plaintiff is found to be the beneficial owner of two-thirds of the shares in TT Co Ltd and Maggie and Esmond are required and unable to discharge their liabilities to the bank under their personal guarantees.

Applicable legal principles

Summary Judgment

[102]Rule 12.2(1) of the High Court Rules relevantly provides:

The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.

[103]   The Court of Appeal in Krukziener v Hanover Finance Ltd described the approach to be taken by the Court:29

The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3. The court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as, for example, where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341. In the end the court’s assessment of the evidence is a matter of judgment. The court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).

Non est factum

[104]The requirements for a successful plea of non est factum were identified in

Bradley West Solicitors Nominee Co Ltd v Keeman in which Tipping J said:30

Although mindful of Lord Reid’s point in Saunders that it is not the function of a Court to frame definitions because some latitude should be left for future developments, it is, I think, helpful to endeavour to isolate the essential ingredients of the plea of non est factum if only as a method of organising one’s thoughts and analysing the case in hand. What follows is therefore not a definition but an attempt to identify the essential points. The authorities which I have cited seem to me to justify the following analysis of what a person relying on a plea of non est factum must establish. Point 5 indicates a factual situation relevant to the present case in which the plea cannot be raised.

29     Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].

30     Bradley West Solicitors Nominee Co Ltd v Keeman [1994] 2 NZLR 111 (HC) at 120–121 (citations omitted).

1.  The person raising the plea (the proponent) must have signed the document believing it to have a particular character or effect.

2.  The document must in reality have a radically different character or effect thus creating a wholly different result from that which was understood by the proponent.

3.    The proponent’s mistaken belief must have resulted from an erroneous explanation or description of the document given to him by someone else.

4.   The proponent must be able to show that, notwithstanding his error, he acted with all reasonable care in the circumstances.

5.   If the proponent’s mistaken belief arises because, acting in reliance upon a trusted adviser such as a solicitor, he did not take steps to read and understand the document prior to signing it, the plea is not available.

In the foregoing analysis I have assumed that the proponent is male and of full age and contractual capacity. As earlier stated it may be relevant whether the transaction remains between the original parties. For in that case the other party’s knowledge or suspicion that the proponent held a mistaken belief about the character or effect of the document can be a relevant consideration.

Discussion

[105]   The terms of the deed record that the plaintiff and Chui Wa had contributed two-thirds of the purchase price of the property and Maggie and Esmond had contributed one-third, and that the plaintiff and Chui Wa were to be the beneficial owners of 200 of the 300 shares in the company, and that Maggie and Esmond hold those shares as bare trustees only. The deed also records that the parties had agreed that the company’s liability for mortgage repayments would be borne as to two-thirds by Maggie and Esmond and as to one-third by the plaintiff and Chui Wa, and the company was to be a single asset company that had been incorporated solely for the purposes of owning and managing the property unless otherwise agreed by the parties in writing.

[106]   Maggie does not dispute executing the deed and the plaintiff will be entitled to summary judgment unless Maggie can show that she has an arguable defence to the plaintiff’s claim to be the beneficial owner of the shares.

[107]   In my view the background circumstances leading up to the preparation and execution of the deed of bare trust; the circumstances in which it was executed by

Maggie and Esmond; and Maggie’s actions immediately thereafter of implementing the terms of the deed by administering the receipt, application, and distribution of the rental income, all demonstrate that despite her claim not to have understood the deed and its implications she in fact well understood the purpose and implications of the deed at the time she executed it on 7 December 2012. There can be no other explanation for her actions following her execution of the deed. Her management and distribution of the rental income with two-thirds of the net amount being allocated to the plaintiff and Chui Wa was wholly inconsistent with her claim to have understood that the money the plaintiff and Chui Wa had contributed to the purchase was to be treated as being gift to Esmond and herself. If it was a gift there would be no reason to allocate and distribute a share rental income to them as if they were the owners of a two-thirds interest in the property.

[108]   Other evidence also supports the finding that Maggie’s claim not to have understood the contents and implications of the deed is inherently lacking in credibility. In her affidavit Maggie supports her claim that the plaintiff’s contribution to the purchase of the property was a gift, by saying that the plaintiff had previously told Esmond and his brothers that they would each receive $600,000 from the proceeds of sale of the service station he had sold and she therefore understood that the financial contribution being made by the plaintiff and Chui Wa towards the purchase of the Victoria Street property was being gifted to Esmond and herself. However Maggie has not addressed or disputed the plaintiff’s evidence in the affidavit he filed in the Family Court proceedings in which he set out details of amounts of money totalling over $800,000 that he and Chui Wa gifted to Esmond during the period between September 2010 and May 2013.

[109]   I find this to be an example of the sort of case referred to in Krukziener in which Maggie’s claim not to have understood the contents and implications of the deed is inherently lacking in credibility and is inconsistent with contemporaneous documents being not only the deed itself, but the written schedules she produced to record the receipt and distribution of the rental income received for the property.

[110]   I also find that Maggie has not shown that she has an arguable case in support of her claim of non est factum in relation to the deed. Even if her claim to have

misunderstood the meaning and implications of the deed was accepted, it is clear that she has not produced any evidence to show that Mr Loo’s explanation of the deed was other than wholly correct and accurate. Mr Loo’s affidavits in which he states that he advised Esmond and Maggie about the effect of the deed when he met with them on 7 December 2012, and that at no time when advising them about the effect of the deed, did Maggie indicate that she did not understand what was being said or what she was signing, are not disputed. Furthermore she cannot show that she took all reasonable care as regards the contents of the deed and its implications as on her own account she took no steps to advise Mr Loo or Esmond that she did not understand Mr Loo’s explanation of the deed, or request that an explanation be given to her in Mandarin which could have been arranged had she done so.

[111]   Accordingly, even accepting Maggie’s claim not to have understood the deed when she signed it on 7 December 2012, she has not shown that she has an arguable defence based on a plea of non est factum.

Promissory estoppel

[112]   I also reject Maggie’s submission that she has an arguable defence on the basis of promissory estoppel. Although Maggie claims that she understood the plaintiff’s financial contribution was a gift, there is no evidence of either the plaintiff or Chui Wa ever making a clear and unequivocal promise to Maggie or giving her an assurance either by words or conduct that they intended their contribution to be a gift.31 The undisputed evidence is all to the contrary, and Mr Loo says in his affidavit that when the plaintiff and Chui Wa approached him on 28 November 2012, they explained that they had an arrangement with Esmond and Maggie whereby, because they did not have the money to purchase the property themselves, the plaintiff and Chui Wa would contribute two-thirds of the purchase price of the property by paying the deposit and half of the purchase price up front, and being responsible to meet the repayments on one-third of the mortgage borrowings required to complete the purchase. Such an arrangement is wholly inconsistent with Maggie’s claim that she and Esmond had ever

31     Burbery Mortgage Finance & Savings Ltd v Hindsbank Holdings Ltd [1989] 1 NZLR 356 (CA) at 359, 361 and 364.

been given a promise or assurance that the plaintiff’s and Chui Wa’s contribution was to be a gift to them.

Laches

[113]   Finally, I also reject Maggie’s submission that she has an arguable defence based on the equitable defence of laches. Relief in equity will be denied to a plaintiff who by their inaction or standing-by has placed the defendant in a situation in which it would be inequitable and unreasonable to place the defendant if the claim were subsequently to be asserted. A defendant will be able to successfully resist an equitable claim if they can demonstrate that the plaintiff, by delaying the institution or prosecution of their case, has either acquiesced in the defendant’s conduct, has caused the defendant to alter their position in reasonable reliance on the plaintiff’s acceptance of the status quo, or has otherwise permitted a situation to arise which it would be unjust to disturb.32

[114]The Court of Appeal in No 68 Ltd v Eastern Services Ltd said:33

[55] A notable feature of the present case is the delay of the appellant in enforcing its contractual rights. Snell’s Equity (31st ed, 2005), para 5-19, says of delay in relation to laches:

“Laches essentially consists of a substantial lapse of time coupled with the existence of circumstances which make it inequitable to enforce the claim. Delay will accordingly be fatal to a claim for equitable relief if it is evidence of an agreement by the claimant to abandon or release his right, … or if the claimant has so acted as to induce the defendant to alter his position on the reasonable faith that the claim has been released or abandoned. But apart from such circumstances delay will be immaterial. There can be no abandonment of a right without full knowledge, legal capacity and free will, so that ignorance or disability or undue influence will be a satisfactory explanation of delay. …”

[115]   As I have earlier noted, Ms Davenport submits that the plaintiff by his inaction or standing-by caused Esmond and Maggie and the ANZ bank to alter their respective positions by giving guarantees and securing the bank mortgage lending advanced for

32     Charles Rickett Laws of New Zealand Equity: Equitable Defences, Laches and Acquiescence (online ed) at [275]. See No 68 Ltd v Eastern Services Ltd [2006] 2 NZLR 43 (CA) at [45]–[56].

33     No 68 Ltd, above n 32, at [55].

their purchase of a family home, over the Victoria Street property, in reasonable reliance on the plaintiff’s acceptance of the status quo.

[116]   However, Maggie has not presented any evidence to support the claim that the plaintiff ever accepted or stood-by to allow or enable Esmond and Maggie to use the Victoria Street property as security for borrowing from the ANZ bank to purchase their family home. The plaintiff says in his affidavit that he and Chui Wa were not told by Esmond and Maggie that they had given the bank guarantees for and on behalf of TT Co Ltd, or that they had used the Victoria Street property as security for borrowing from the bank for the purchase of their family home and to secure their bank overdrafts. Ms Davenport submits that in 2016 when Maggie and Esmond separated and the distribution of rental payments to the plaintiff and Chui Wa ceased, the plaintiff nevertheless failed to take any steps to prosecute his claim to be entitled to 200 of the 300 shares in TT Co Ltd. However the undisputed evidence shows that in 2016, following Esmond and Maggie’s separation and cessation of the rental payments, the plaintiff took steps to request Esmond to transfer 200 shares in TT Co Ltd to him in accordance with the deed, and a transfer of the shares was effected and registered in the Companies Office Register. This was followed by the plaintiff and Chui Wa being appointed directors of the company in April 2017 and the removal of Maggie as a director in January 2020.

[117]   It is therefore clear that until sometime after Maggie and Esmond separated in 2016, the plaintiff had no knowledge of the fact that Esmond and Maggie had disregarded his beneficial interest in the TT Co Ltd shares when giving the company’s guarantee to the ANZ bank and using the Victoria Street property as security for their personal borrowings contrary to the terms of the deed, and that when the plaintiff discovered what they had done, he took timely and reasonable steps to assert his beneficial interest.

[118]   I therefore find that there is no credible basis upon which Maggie can advance the equitable defence of laches, and I find that she has failed to show that she has an arguable defence to the plaintiff’s claim on that basis.

Conclusion

[119]   For these reasons, I find that the plaintiff has established his claim against the first and second defendants and that Maggie has no arguable defence to his claim against her and Esmond, and that he is accordingly entitled to summary judgment against them both, and for orders for the relief sought in the statement of claim. However, as the quantum of misapplied rental income that ought to have been paid to the plaintiff cannot be ascertained until after the relevant company records have been obtained, I decline to make the order in the full terms sought by the plaintiff in paragraph (e) of the statement of claim, as recovery of the misapplied sum will necessarily await the outcome of the plaintiff’s examination of the relevant company records and may require a further and separate demand for payment of such sum as is determined to have been misapplied by the defendants either together or separately.

Result

[120]   The first defendant’s application for an order staying the plaintiff’s claim is declined.

[121]   The plaintiff’s application for the entry of summary judgment against the first and second defendants is granted. I accordingly enter judgment for the plaintiff against the first and second defendants and make the following orders for the relief sought by the plaintiff:

(a)An order by way of a declaration that Yan Shi and Hin Sing So, jointly hold 200 of the 300 shares in Tim Tim Company Limited as bare trustees for the plaintiff.

(b)An order directing Yan Shi and Hin Sing So to forthwith transfer 200 shares in Tim Tim Company Limited to the plaintiff, Biu Tao So.

(c)An order directing Yan Shi and Hin Sing So, so long as they are and remain directors of Tim Tim Company Limited, to procure the company to pay the plaintiff the share of the company’s rental income as provided for in the deed of bare trust.

(d)An order that Yan Shi and Hin Sing So forthwith take all necessary steps to obtain a release of all and any liability of Tim Tim Company Limited to the ANZ bank pursuant to the guarantees they entered into, or alternatively to repay and discharge all debts guaranteed by the company without recourse to the assets of the company.

(e)An order directing Yan Shi and Hin Sing So to forthwith produce and deliver to the plaintiff, all and any records of the company relating to its receipt of rental income from the Victoria Street property relating to the period commencing January 2016 and continuing to the present.

Costs

[122]   The plaintiff having been successful in resisting the first defendant’s application for stay of his claim and successful in his application for entry of summary judgment, is entitled to an award of costs on both. In the absence of agreement between the parties as to costs I make the following directions regarding the filing of costs memoranda.

[123]   I direct the plaintiff to file and serve a costs memorandum by 5.00 pm on Friday 8 April 2022, and the first defendant to file and serve a reply costs memorandum by

5.00 pm Wednesday 20 April 2022. The costs memoranda are not to exceed three pages in length apart from the title page and annexures or schedules.

[124]   Following the filing of the costs memoranda by the parties I shall determine costs on the papers.

Paul Davison J

ANNEXURE A

DPED OP BAItE TB J$

M5Œ TD]COMŒANY LD4UTD

T  ØS  DEED  İs date    t  8   °   dùŞ Of December 2012

Øf  S   fG  •O   YAN  MAGGlE SiØ ("t ,eDir„‹p„›.)

ŒNSING SO  ß YW  MAGG1   £Bi  ("the Trustee )

the Trustees are the

Its Icgłsżered oÏžfce at Aucldanğ

41 0595s) ofwiilch 3 ß0 Shares are isiued rind which

I0CO£d5d gQÍ3RȚØh

b)

ers ochre said shares oıntly held..

Itis&cknovüedged b*^'aen tl'e p*rti s that the beneficiaries l a,.e

COn t ributed “’ t lİ dG Of t*• P °h8s4 prİce md the fusteps have jointly

contributed one third øf the purcłinse urine.

d)

 

made end    to mter into this agreement to record the contribuõons

COmp«ny. other mattef8 sffectinq• tllC runnipg aød operatinn of rhe

1. ltb’aWcnowIgdged betweoNlhe 9drfîes that BW   TAO 80 and C¡-i£¡tjy‹3

T

 

Rfl WA SO afO thG beøeficixl 8^8er8 üt200 o/the 3OO sh•r s held by

the   rustees.

2)

3)   The parties anknØ';Vled$e Set the Company had °o°'8 to borrow tb‹s sum

o£g367,S0O.00 flora

xnd for such purpose have

P +ßbfise Of the Prope¡j;y

first registered mÓrtgilge over

ef the ball and to erlter ady documØats çg m¡ y Ęg fl6onabły required by the b ¢,

°)  It is acitnowie4ged and agreed between the Trustees and Beneficiaries that

be borne two thirds by the Trustees and one third by ihe Benofici0rins. Tho parties understand that the Company is liable fOr payment of the loan endtbeaoromepGonedisa private arrangement b0tW80n tile Trustees and Bene5•iaries.

*)  Ifi I8 3gFted between

company and has been incorporated solely for the purposes Of owning ;tljd managing the Prnperty and unless othemise agreed ir1 writing between the parties shall not own any other property.

d)    The parties acknowledge that the Company shall n°t engege in any other business and that any deg{ipy q( t]jq Company ofwhatsonver suture must be made in consu1t• tion and with the express written consent of the Benm5cinries.

7)    ThiS It cment is binding on all ponies.

EX ECUTED »s» docd

bIG Q BE the Directors

HINSNGSO

YAN MAGGIE SJ(