Son v Le

[2023] NZHC 3429

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2022-404-002103

[2023] NZHC 3429

BETWEEN

HIEP XUAN SON

Plaintiff

AND

HAI DAN LE

Defendant

Hearing:	28 September 2023
Appearances:	I M Hutcheson for the Plaintiff No appearance for the Defendant
Judgment:	29 November 2023

JUDGMENT OF TAHANA J

(Formal proof)

This judgment was delivered by me on 29 November 2023 at 2.30pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel:

Murdoch Price Ltd, Auckland

SON v LE (Formal proof) [2023] NZHC 3429 [29 November 2023]

Introduction

[1]    In 2003 Hiep Xuan Son wanted to buy a home. Hai Dan Le, his work colleague and then daughter’s partner, agreed to assist. They borrowed funds in both of their names, and purchased a property at 40 Glenveagh Park Drive, Manurewa (the Property), registering their ownership as a half share each.

[2]    Hiep Xuan Son says that he paid all outgoings and expenses related to the Property and Hai Dan Le lived with him and his family rent free. Hiep Xuan Son also says that Hai Dan Le agreed to transfer him his half share, but that Hai Dan Le has not done so in breach of their agreement.

[3]    Despite being served with the claim, Hai Dan Le has not taken any steps to defend it. Hiep Xuan Son now applies for his claim to be determined on a formal proof basis.

[4]    I therefore need to consider the following issues in determining Hiep Xuan Son’s claim:

(a)Did Hai Dan Le agree to transfer his half share to Hiep Xuan Son?

(b)If yes, is that agreement enforceable?

Background

Purchase of the Property

[5]    When Hiep Xuan Son was looking for a home, a real estate agent told him that his income was insufficient to obtain a mortgage and that he would need another income earner to help him obtain a loan. Hai Dan Le is said to have been present during this conversation and offered to help.

[6]    Hiep Xuan Son says that he told Hai Dan Le that if he helped him to get a loan then he (Hiep Xuan Son) would pay for everything. Hiep Xuan Son says that Hai Dan Le agreed and confirmed that when Hiep Xuan Son wanted to transfer ownership into his own name (Hiep Xuan Son’s name), Hai Dan Le would do so.

[7]    Hiep Xuan Son says that he told Hai Dan Le that he did not need to pay for anything and that he could live in the Property rent free. In return, he says Hai Dan Le agreed he would transfer his share to Hiep Xuan Son when Hiep Xuan Son was in a position for this to occur.

[8]Hiep Xuan Son says he agreed the following with Hai Dan Le:

(a)Hai Dan Le would be a co-borrower to assist Hiep Xuan Son to obtain a bank loan;

(b)Hai Dan Le would be registered as a joint legal owner on the title with Hiep Xuan Son, due to bank requirements;

(c)All responsibilities regarding the Property would be Hiep Xuan Son’s, despite Hai Dan Le’s joint and several liability;

(d)Hiep Xuan Son would make all payments required to complete the purchase (deposit, legal costs of purchase, mortgage repayments, and outgoings);

(e)Hai Dan Le would execute the necessary documents to have his name removed from the title at Hiep Xuan Son’s request; and

(f)Hai Dan Le would not seek any compensation from Hiep Xuan Son.

[9]They purchased the Property in 2004.

[10]   A lawyer made arrangements, Hiep Xuan Son paid the deposit, the Property was purchased, and Hiep Xuan Son, his family and Hai Dan Le moved into the Property.

[11]   While Hai Dan Le lived at the Property, Hiep Xuan Son continued to pay for all living costs, including food, power and all outgoings. After two years, Hai Dan Le and Hiep Xuan Son’s daughter voluntarily contributed $100 per week towards living costs.

Hai Dan Le moves to Australia

[12]In 2007, Hai Dan Le moved to Australia.

[13]   In October 2016, Hiep Xuan Son received a letter from a lawyer acting for Hai Dan Le requesting that that the Property be sold, and the proceeds divided equally between Hiep Xuan Son and Hai Dan Le. Alternatively, he requested that Hiep Xuan Son buy out Hai Dan Le’s share.

[14]   Hiep Xuan Son instructed a lawyer who responded in a letter dated 18 October 2016 rejecting Hai Dan Le’s request and stating that Hai Dan Le had not contributed to the purchase price, nor to any mortgage payments or other outgoings. Hiep Xuan Son requested that Hai Dan Le transfer his half share to Hiep Xuan Son. Hai Dan Le did not agree.

[15]   In the absence of Hai Dan Le agreeing to take steps to transfer his interest, Hiep Xuan Son’s lawyer notified Hai Dan Le’s lawyer in a letter dated 25 June 2018 that Hiep Xuan Son would issue proceedings to compel Hai Dan Le to transfer his share.

[16]   In an email dated 3 July 2018, Hai Dan Le’s Perth-based solicitor advised that they had been unable to contact Hai Dan Le, that his mobile number had been disconnected and that they did not have any other contact details for him.

Proceedings issued

[17]   The matter was originally filed as an originating application. The Court directed Hiep Xuan Son to issue an ordinary proceeding under Part 5 of the High Court Rules 2016.1

[18]   On 25 October 2022, Hiep Xuan Son filed a statement of claim and notice of proceeding. While the statement of claim includes a claim under s 339 of the Property Law Act 2007, counsel for Hiep Xuan Son acknowledges that he is only relying on the claim for specific performance of his oral agreement with Hai Dan Le.

1      Son v Le HC Auckland CIV-2022-404-1599, 23 September 2022 (Minute of Robinson J).

[19]   On 22 November 2022 a process server served the claim on a person understood to be Hai Dan Le and took a photo of him. Hiep Xuan Son deposes that although it is blurry the person pictured looks very much like Hai Dan Le.

[20]   A statement of defence was due to be filed by 17 January 2023.2 None has been received and no steps have been taken by Hai Dan Le.

Legal principles: formal proof

[21]   Rule 15.9 of the High Court Rules 2016 (HCR) provides for judgment by way of formal proof if the defendant does not file a statement of defence. I must be satisfied that Hiep Xuan Son’s evidence establishes his claim against Hai Dan Le.3

[22]   Duffy J has held that “the level at which a Judge is required to satisfy herself regarding the plaintiff’s evidence is much the same as it would be if the proceeding had gone to trial.”4 I therefore consider whether the evidence filed proves the existence of an oral agreement and then whether that oral agreement is enforceable so that Hiep Xuan Son is able to obtain sole ownership of the Property.

Service on Hai Dan Le

[23]   I accept that service of the proceedings on Hai Dan Le was valid. The Court’s leave is not required under r 6.27(2)(b) where the contract sought to be enforced was made or entered into in New Zealand.

Did Hai Dan Le agree to transfer his half share to Hiep Xuan Son?

Evidence of Hiep Xuan Son

[24]   Hiep Xuan Son was born in Vietnam. He cannot read or write in English so provided his affidavit evidence in Vietnamese, which was then translated. The Court relies on the English translation.

2      25 working days after 22 November 2022, taking into account the excluded period of 25 December to 15 January.

3      High Court Rules 2016, r 15.9(4).

4      Ferreira v Stockinger [2015] NZHC 2916 at [35].

[25]Hiep Xuan Son deposes (as translated) that:

I said to Hai Dan Le that if he could help me to get the bank loan I would pay for everything. He agreed and he said that when I wanted to transfer the house ownership to my name he would help me to do that.

There was never any discussion of payment of any money to Hai Dan Le for helping me to buy the property.

The clear agreement and understanding was that Hai Dan Le would pay nothing, he could live in the property with my daughter (which he did), that he did not have any expectation of any payment of any kind and he would help me to transfer the property to my name when I wanted.

…

Hai Dan Le and my daughter moved into the property. For the first two years I paid for everything (including food, power and all outgoings for the family). After about two years Hai Dan Le and my daughter contributed $100 a week towards the living costs (food, power, rates and insurance). I did not ask them to do that. They just offered and did.

[26]   I am satisfied that the evidence of Hiep Xuan Son establishes that Hai Dan Le agreed that he would transfer his share of the property to Hiep Xuan Son. There is no evidence to the contrary and such an agreement is consistent with Hiep Xuan Son taking responsibility for everything, including repayments for the home loan and payment of all Property expenses.

Was there sufficient consideration?

[27]   Generally, a contractual promise to do something is not binding unless there is valuable consideration.5 If Hai Dan Le did not receive a half share of the Property, what then did he get in return for putting his name on the loan application? Legally, he was responsible for repaying the home loan and half of all the Property expenses so was exposed to potential liability.

[28]   Hai Dan Le was able to stay at the property without payment. Hai Dan Le did not pay anything towards the purchase price, nor contribute to any outgoings or mortgage payments, making only a small weekly contribution ($100 per week) two years after moving into the Property. That contribution was made voluntarily and not

5      See for example Martin v Short [2012] NZHC 2664 at [6]; and Fuel Espresso Ltd v Hsieh [2007] NZCA 58 at [18].

on the insistence of Hiep Xuan Son. While Hai Dan Le assumed the risk of liability for the borrowings to purchase the Property, he has not to date incurred any liability. I am satisfied that there was consideration in circumstances where Hai Dan Le was able to live with Hiep Xuan Son and his family rent free. Since moving to Australia, Hai Dan Le has paid nothing.

[29]   In the circumstances, I am satisfied that Hai Dan Le received consideration for agreeing to borrow the funds with Hiep Xuan Son and therefore there was an agreement.

Is the agreement enforceable?

Legal requirements

[30]   In 2003 when Hai Dan Le agreed that he would transfer his half share to Hiep Xuan Son, the Contracts Enforcement Act 1956 was in force. Section 2 of the Contracts Enforcement Act required that, in order to be enforceable, contracts for the disposition of land had to be in writing. However, the doctrine of part performance was unaffected:6

2        Proof of contracts relating to land and to guarantees

(1)This section applies to—

(a)Every contract for the sale of land:

(b)Every contract to enter into any disposition of land, being a disposition that is required by any enactment to be made by deed or instrument or in writing or to be proved by writing:

(c)Every contract to enter into any mortgage or charge on land:

(d)Every contract by any person to answer to another person for the debt, default, or liability of a third person.

(2)No contract to which this section applies shall be enforceable by action unless the contract or some memorandum or note thereof is in writing and is signed by the party to be charged therewith or by some other person lawfully authorised by him.

(3)Nothing in this section shall—

6      Contracts Enforcement Act 1956.

(a)Apply to any sale of land by order of the High Court or through the Registrar of that Court:

(b)Apply to any alienation of Maori land by a Maori, being an alienation that is required by the Maori Affairs Act 1953 to be confirmed by the Maori Land Court, or to any sale of Maori land by order of that Court:

(c)Affect the operation of the law relating to part performance.

(4)For the purposes of this section,—

Disposition includes any conveyance, transfer, grant, partition, exchange, lease, assignment, surrender, disclaimer, appointment, settlement, or other assurance; and any declaration or creation of a trust; and any devise, bequest, or appointment by a will

Land means any estate or interest, whether freehold or chattel, in real property.

(5)The foregoing provisions of this section apply only to contracts made after the passing of this Act.

(6)This section is in substitution for section 4 of the Statute of Frauds 1677 of the Parliament of England, and that section shall cease to be in force in New Zealand, except in respect of contracts made before the passing of this Act.

[31]   The Contracts Enforcement Act was repealed by s 366(a) of the Property Law Act 2007 (PLA). The PLA came into force on 1 January 2008. Section 367(3) of the PLA provides that no alteration in the law made by the PLA affects the validity, invalidity, effect, or consequences of anything done before 1 January 2008.

[32]   The requirement that contracts for the disposition of land be in writing in order to be enforceable nevertheless survives in s 24 of the PLA. As with s 2(3)(c) of the Contracts Enforcement Act, s 26 of the PLA provides that the doctrine of part performance is not affected by s 24 of the PLA. The doctrine of part performance continues to apply.

[33]   The test for establishing part performance remains that as outlined by Tipping J in T A Dellaca Ltd v PDL Industries Ltd:7

7      T A Dellaca Ltd v PDL Industries Ltd [1992] 3 NZLR 88 (HC) at 109. Subsequently approved by the Court of Appeal in Mahoe Buildings Ltd v Fair Investments Ltd [1994] 1 NZLR 281 (CA) at

287. See also Fleming v Beevers [1994] 1 NZLR 385 (CA); Street v Fountaine [2018] NZCA 55 at [92]; Tempest Litigation Funders Ltd v Zhang [2022] NZHC 3183; and Hemara v Lowe [2023] NZHC 1253 at [6].

1.Was there a sufficient oral agreement such as would have been enforceable but for the [Contracts Enforcement] Act?

2.Has there been part performance of that oral agreement by the doing of something that:

(a)clearly amounts to a step in the performance of a contractual obligation or the exercise of a contractual right under the oral contract; and

(b)when viewed independently of the oral contract was, on the probabilities, done on the footing that a contract relating to the land and such as that alleged was in existence.

3.Do the circumstances in which that part performance took place make it unconscionable (fraudulent in equity) for the defendant to rely on the [Contracts Enforcement] Act?

[34]   Having recited this test, Fitzgerald J in Tempest Litigation Funders Ltd v Zhang, continued, adding:8

[33]  Regarding the second element, the act in question must be performed by the party seeking to rely on part performance.9 Where part performance is established, the Court may order specific performance of the contract despite the non-compliance with the formal requirements.10

[35]   I now consider whether Hiep Xuan Son can satisfy the test for part performance as set out at [33] and [34] above.

Are there sufficient acts of part performance?

[36]   Hiep Xuan Son has paid all of the mortgage payments and maintained the Property without any contribution from Hai Dan Le. I am satisfied that Hiep Xuan Son took full responsibility for the mortgage payments and related outgoings in performance of the oral contract, and in the expectation that Hai Dan Le would transfer his share of the Property to Hiep Xuan Son when asked. Hiep Xuan Son’s conduct supports the existence of the oral contract and is consistent with the narrative of events as deposed in Hiep Xuan Son’s affidavit. When viewed independently, assuming sole financial responsibility for the Property was, on the balance of probabilities, done on the footing that the oral contract was in existence.

8      Tempest Litigation Funders Ltd v Zhang [2022] NZHC 3183.

9      Mahoe Buildings Ltd v Fair Investments Ltd [1994] 1 NZLR 281 (CA) at 287 as cited in Nguyen v SM & T Homes Ltd [2016] NZCA 581 at [34].

10     Gault on Commercial Law (online ed, Thomson Reuters) at [CC3.04(1)].

Do the circumstances make it unconscionable for the defendant to rely on the Contracts Enforcement Act?

[37]   Although Hai Dan Le assumed risk under the loan agreements, he made no financial contribution towards the Property, he lived in the Property for two years for free, and then made only a modest weekly contribution. Since moving to Australia in 2007, he has made no contribution to the Property. Hiep Xuan Son has acted as though he is the sole owner. He is now in the situation where he cannot sell or refinance because Hai Dan Le remains on the title and refuses to respond or take action. In the circumstances it would be unconscionable for Hai Dan Le to retain his half share.

[38]   I am satisfied that an oral contract exists between the parties and that Hiep Xuan Son has established part performance of that oral contract so that the remedy of specific performance is available.

[39]   I note that the statement of claim pleads breach of contract and seeks by way of relief the transfer of Hai Dan Le’s share to Hiep Xuan Son pursuant to ss 339 and 343 of the PLA. Counsel for Hiep Xuan Son acknowledges that the reference to ss 339 and 343 was unnecessary, and those provisions do not apply. I agree. I do not consider that this pleading error precludes the Court from granting specific performance of the oral contract as relief. This is consistent with the court’s discretion to, if it thinks just, grant any other relief to which the plaintiff is entitled even though that specific relief has not been specifically claimed.11

Result

[40]   I  order  that  the  half  share  interest  of  Hai  Dan  Le  in  the  property  at  40 Glenveagh Park Drive, Manurewa (identifier NA 119A/341 North Auckland Land Registration District) be vested in Hiep Xuan Son.

Costs

[41]Hiep Xuan Son does not seek costs if successful. I therefore do not make any

11     High Court Rules 2016, r 5.31(2).

orders as to costs.

Tahana J