Wang v Wang

[2025] NZHC 951

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2023-404-1908

[2025] NZHC 951

IN THE MATTER OF

A claim under resulting trust

BETWEEN

GONGZHAO WANG

First Plaintiff

MANLING XU
Second Plaintiff

AND

XIN WANG

Defendant

Hearing:

31 March, 1 and 2 April 2025

Appearances:

K Sun for the plaintiffs

P Pang and B Feng for the defendant

Judgment:

17 April 2025

JUDGMENT OF BLANCHARD J

This judgment was delivered by me on 17 April 2025 at 2.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

Capstone Law Ltd, Auckland Integritas Law, Auckland

WANG v WANG [2025] NZHC 951 [17 April 2025]

[1]    Xin Wang is the registered proprietor of a property in Te Atatu Peninsula, Auckland. His parents, Gongzhao Wang and Manling Xu, claim that they are the beneficial owners of the property.  They seek an order that Xin1  must transfer title   to the property to them, together with an order that he pays them rental income he has received from the property.

The parties

[2]    The plaintiffs live in Auckland, having first moved here in 2018, but they are originally from Harbin City, Heilongjiang Province, China. Gongzhao is 78 years’ old. Prior to his retirement, he was an IT engineer. Manling is 75 years’ old. Prior to her retirement, she was a judge in China.

[3]    Xin is 46 years old. He is the plaintiffs’ only child. He moved to Auckland from China in 2000. After completing his studies, Xin remained in New Zealand and married his first wife, Peimiao Li, in 2006.

Purchase and sale of the Te Atatu property

[4]On 24 February 2009, Xin and Peimiao purchased the Te Atatu property for

$420,000.  Peimiao contributed $85,000 towards the purchase price.  The balance   of the purchase price was financed with a loan of $336,000 from ASB Bank.

[5]    In June 2010, Xin and Peimiao separated. After they separated, they began negotiating the division of their relationship property, including the Te Atatu property. Peimiao wanted to be paid back the $85,000 that she had contributed to the purchase of the property in return for giving up in interest in the property.

[6]    The plaintiffs say that, in 2011, they expressed an interest in purchasing the Te Atatu property. They say that, as a result, they and Xin entered into a verbal agreement under which Xin agreed to sell the Te Atatu property to them on the following terms:

1      To avoid confusion and meaning no disrespect, I use first names in this judgment.

(a)the plaintiffs would purchase the Te Atatu property from Xin by paying back  Peimiao’s  contribution  of  $85,000  and  paying  off   the   ASB mortgage;

(b)the Te Atatu property would initially be registered under Xin’s name (because the plaintiffs thought that they could not be registered owners without New Zealand permanent resident visas); and

(c)Xin would transfer the Te Atatu property to them after they obtained their New Zealand permanent resident visas.

[7]    Xin denies that this agreement occurred. He says that there was never any discussion, let alone agreement, regarding his parents purchasing the property.

[8]    Between 10 June 2011 and 28 April 2014, the plaintiffs transferred funds totalling $447,361.05 to Xin from China, as follows:

Date	Amount (NZD)
10 June 2011	$3,725.00
4 August 2011	$7,145.00
26 April 2012	$3,787.05
15 May 2012	$7,230.00
20 July 2012	$2,025.00
28 August 2012	$46,325.00
11 January 2013	$9,499.00
21 May 2013	$17,975.00
28 May 2013	$58,575.00
22 April 2014	$58,575.00
22 April 2014	$58,575.00
24 April 2014	$57,975.00
28 April 2014	$57,975.00
28 April 2014	$57,975.00
Total	$447,361.05

[9]    On 5 June 2015, Xin used $411,759.19 of the $447,361.05 to settle a transfer of the legal title of the Te Atatu property to himself, as follows:

(a)$85,000 was paid to Peimiao in accordance with a contracting out agreement dated 12 September 2012 between the two of them, pursuant to s 21 of the Property (Relationships) Act 1976;

(b)$324,714.19 was paid to ASB to discharge the bank’s existing mortgage on the property; and

(c)$2,045 was paid for conveyancing fees.

[10]Xin retained the balance $35,601.86 of the $447,361.05.

Source of the $447,361.05

[11]The $447,361.05 came from three sources:

(a)the net proceeds of sale of a property in Sanya City, Hainan Province, China which was sold for RMB 1,100,000;

(b)the net proceeds of sale of a property in Harbin City, Heilongjiang Province, China which was sold for RMB 440,000; and

(c)RMB 410,000 from the plaintiffs’ retirement savings.

[12]   It is not in dispute that the Harbin property belonged to the plaintiffs and that Xin had no interest in that property or the plaintiffs’ retirement savings. However, the beneficial ownership of the net proceeds of sale from the Sanya property is in dispute.

[13]   The Sanya property was purchased in 2008. It was purchased using funds belonging to the plaintiffs, but it was registered in Xin’s name. The plaintiffs say that their intention was for Xin to inherit the Sanya property when they passed away. They say that they registered the property under his name to make the inheritance process

easier. However, they never intended to gift the property to Xin while they were still alive.

[14]   This is all disputed by Xin. He says that the plaintiffs intended to gift the Sanya property to him. That is why it was registered in his name.

Loans secured over the Te Atatu property

[15]   On 5 June 2015, Xin obtained a new $34,000 loan from ASB secured over the Te Atatu property. Further, on 22 August 2018, Xin refinanced the ASB loan with ANZ Bank using the Te Atatu property as security. The new ANZ loan was for

$81,000 (which included the initial $34,000 loan).

[16]   The plaintiffs say that they did not know about these loans and did not give Xin permission to use the Te Atatu property as security. Xin says that, as he is the owner of the property, he was not required to seek his parents’ permission to obtain the loans.

WeChat messages regarding the Te Atatu property

[17]   Xin married his second wife, Xiaoyu Wen, in 2016. Xin and Xiaoyu, through a family trust, own a property in Flat Bush, Auckland, which is their family home.

[18]   In or about January 2018, the plaintiffs first moved to New Zealand to trigger the commencement of their residential visas. When they arrived in the country, rather than move into the Te Atatu property, which was rented out, the plaintiffs lived with Xin and Xiaoyu in Flat Bush. My understanding is that from this time the plaintiffs lived part of the time in Flat Bush and part of the time back in Harbin.

[19]   In 2020, Manling sent two WeChat messages to Xin that the plaintiffs say are important because they support their contention that they are the beneficial owners  of the Te Atatu property. The plaintiffs were in Harbin at the time the messages were sent.

[20]   Manling sent the first WeChat message on 19 May 2020. The translation of the message is as follows:

Xin, it’s gratifying to hear about your arrangements for the residence obligations, which are very mature and rational, and I am very happy. I used to worry the most about having the four elderly live together or having the two families take turns every six months. [But I feel] at ease now, you are thoughtful children. I really love our house in the West, as the rustic and pastoral style is my ideal place to live. I’ve been fond of this type of houses since my childhood, and, and you’ve helped me materialise it. Thank you, Xin!

[21]   The mention  of “residence obligations” at  the beginning of the message  is  a reference to the requirement that the plaintiffs spend a certain amount of time      in New Zealand each year for a period of years in order to obtain permanent residency.

[22]   The “four elderly” referred to in the message were the plaintiffs, and Xiaoyu’s parents. Manling’s concern was that she and Gongzhao, and Xiaoyu’s parents might need to live together with Xin and Xiaoyu at their family home in Flat Bush.

[23]   In response to this message, Xin said, “Rest assured, the four elderly will definitely not be living together”.

[24]   Manling sent the second WeChat message on 25 July 2020. The background to this message was that Xin had recently told his parents that they could not live at the Te Atatu property because it needed to continue to be rented out because he needed the rental income in order to meet expenses of his family. The translation of the message is as follows:

Xin, I am sure you didn’t come up with this idea. So heartless! It’s like shutting off our retreat. If we comply with you guys and use all our already meagre pension to pay rent, we will be in a constant state of anxiety for the days ahead, unsure of where to find money if we fall ill. Will you provide it? You certainly won’t. At this age, one bound to get ill, and then they can only wait to die! Is this what you wish for? Most importantly, for this house, we’ve given you our lifelong hard-earned money, and you’ve benefited from the rent for years. Yet now, we have a house but can’t live in it and still have to pay rent elsewhere. This wouldn’t make sense to anyone! If I had money, nothing needs to be said - I have given everything to you my entire life, and you know that, and you also know that now [we end up being] poor. Your dad has cancer and in case he gets worse someday, will you pay for him? For 1.5-year of residence obligations, we are expected to pay such a high price. Do you feel it is fair? To push the problems that need to be faced together entirely onto us and us alone is not reasonable! You might say “you guys still have the Harbin

property”, but isn’t that ultimately meant for you? Beside, is it realisable right now? Where would we live if we returned to Harbin? I understand you have difficulties too, but it requires all of us to pull our weight to overcome the difficulties and get through the hardship.

[25]   As discussed above, the plaintiffs sold the Sanya property and a property in Harbin, and used their retirement savings to fund the $447,361.05 that was used to purchase the Te Atatu property. The plaintiffs retained a further property as their home in Harbin.   However, their position is that all their other assets were put into the     Te Atatu property. They say that, as a result, they were very concerned about how they would fund their retirement, and that this can be seen from the above WeChat message. As discussed below, this is significant because Xin disputes that his parents have put all their assets (other than their home in Harbin) into the Te Atatu property.

Breakdown of the parties’ relationship

[26]   Xin says that, in May 2021, Manling had an argument with Xiaoyu regarding a meal at a family dinner. He says that, because of this argument, he asked his parents to move out of his family home in Flat Bush and to rent alternative accommodation. It is common ground that the plaintiffs left the family home at this time.

[27]   The plaintiffs say that, also in May 2021, they asked Xin to transfer the      Te Atatu property to them, but he refused and claimed that the property belonged to him. This came as a “tremendous shock” to them.

[28]   Xin says that, in January 2022, his parents shamed him by giving his children what he considered to be very small amounts of cash as red envelope gifts for Chinese New Year. He says that the plaintiffs became angry when he confronted them about the envelopes.

[29]   Xin says that it was after these incidents that the plaintiffs first alleged that the Te Atatu property belonged to  them.  He  claims  that  the  plaintiffs  did  so  to  “take revenge” for him siding with his wife.

[30]   On 8 March 2022, Xin engaged a real estate agent to sell the Te Atatu property. He did so without the plaintiffs’ permission. He of course says that their permission was not required.

[31]   On 31 March 2022, the plaintiffs lodged a caveat over the Te Atatu property asserting a beneficial interest.

Rental income from the Te Atatu property

[32]   The Te Atatu property has been rented out for the whole of the period since   5 June 2015. The current rental income for the property is $630 per week. Xin has never paid any of the rental income to the plaintiffs. He says that, as the owner of the property, he is not required to do so.

The claims, counterclaim and defences

[33]   The plaintiffs make two alternative claims that they are the beneficial owners of the Te Atatu property. First, they say that they are the beneficial owners of the property because there is  an  agreement  between  them  and  Xin  under  which  he is required to sell the property to them. The plaintiffs say that the agreement, although not written, is enforceable because the payment of $447,361.05 to Xin amounts to part performance under the agreement.2

[34]   Second, if the Court finds that there was no such agreement, the plaintiffs say that, in the alternative, Xin holds the property on resulting trust for them.

[35]   Xin denies there was any agreement regarding the property. He says there was no discussion regarding purchase of the property by his parents. He says that the

$447,361.05 paid to him by the plaintiffs was a gift. He also says that, in the alternative, there was no intention to create legal relations. However, if the Court finds that there is an agreement, Xin accepts that it is enforceable by reason of part performance.

2      Property Law Act 2007, s 26.

[36]   If the Court finds that there was an agreement, Xin says that, in the alternative, it was not intended to be legally binding. He also denies that there is a resulting trust. He relies on the presumption of advancement.

[37]   Xin makes a counterclaim in relation to the net proceeds  of sale of  the  Sanya property. This counterclaim only comes into play if the plaintiffs’ claims succeed. In that event, Xin says that he was the beneficial owner of those funds, and the plaintiffs must account to him in relation to them.

[38]Accordingly, the Court must determine the following issues:

(a)Who was the beneficial owner of the net proceeds of sale of the Sanya property?

(b)Is there an agreement in relation to the Te Atatu property?

(c)Is there a resulting trust in relation to the Te Atatu property?

(d)Who is responsible for repaying the loan secured over the Te Atatu property?

(e)Who is entitled to the rental income from the Te Atatu property?

Who was the beneficial owner of the net proceeds of sale of the Sanya property?

[39]   An important preliminary issue is determining the beneficial owner of the net proceeds of sale of the Sanya property. As discussed above, these funds were to pay part of the $447,361.05 that was used to purchase the Te Atatu property. It is not in dispute that all the other funds used came from the plaintiffs, but the parties disagree on whether the net proceeds of sale of the Sanya property were beneficially owned by the plaintiffs or Xin.

[40]   As discussed above, the Sanya property was purchased in 2008. It was purchased using funds belonging to the plaintiffs, but it was registered in Xin’s name. The plaintiffs say that their intention was for Xin to inherit the Sanya property when

they passed away. They say that they registered the property under his name to make the inheritance process easier.   However, they never intended to gift the property    to Xin while they were still alive. Accordingly, they say the net proceeds from the sale of the Sanya property belong to them.

[41]   In contrast, Xin denies that the property was registered in his name merely   to make the inheritance process easier. He says that his parents’ claim that the property was registered in his name for this reason is not credible. He asserts that he was the legal and beneficial owner of the Sanya property because the plaintiffs purchased the property for him as a gift in recognition of Peimiao becoming pregnant with his first child. Therefore, the net proceeds of sale belonged to him.

[42]   The plaintiffs say that they selected the Sanya property because it was beneficial for their health. It provided a way for them to escape from the harsh winter in Harbin. Harbin is in the north of China and the winter is extremely cold. In contrast, Sanya is in the south of China and has warm temperatures. The plaintiffs say they purchased the property to provide them with a warm place to go when it got very cold in Harbin during the winter months.

[43]   Xin acknowledges that one of the reasons that his parents purchased the property was so that they could go there to avoid the cold of Harbin. However, he says that it was also purchased so that, when it got cold in New Zealand, he, Peimiao and their child could go there to avoid the cold.

[44]   The plaintiffs say that various factors support their contention that the Sanya property was beneficially owned by them. First, it was purchased entirely using their funds. Second, the plaintiffs lived at the property in the winters between 2008 and 2014 (when it was sold). On the other hand, Xin never visited the property. Third, when the Sanya property was sold in February 2014, all the net proceeds were transferred to Manling’s bank account. Fourth, the plaintiffs’ position is supported by a traditional Chinese value, the name of which translates as “filial piety”. As Manling explained in evidence that was not challenged in cross-examination, this is the cultural understanding that adult children have a moral obligation to care for their ageing

parents. The plaintiffs say that this concept reinforces their position that Xin held the Sanya property beneficially for them.

[45]   Xin says in response that the only reason he did not use the Sanya property was because of family and work commitments, and that the proceeds of sale were transferred to Manling because he did not have a bank account in China.

[46]   There is no documentary evidence (such as WeChat messages) to support the contention that Xin was holding the property on behalf of the plaintiffs or, alternatively, that the plaintiffs intended to gift the funds used to purchase the property to him. Both sides stuck firmly to their positions in cross-examination. Accordingly, I must decide which narrative I find inherently more likely.

[47]   Overall, I find the plaintiffs’ version of events more believable. I say this essentially for the reasons advanced by the plaintiffs.

[48]   However, in my view, the legal answer does not turn on what the parties intended. It is common ground that there is no Chinese equivalent to the concept of  a trust that would apply in a case like this one. Thus, as the registered owner of the property, whatever the parties may have intended, under Chinese law, Xin was also the beneficial owner of the Sanya property. But, for the same reason, when the net proceeds of sale of the property were paid into Manling’s bank account, she became the beneficial owner of the funds. On this basis, my conclusion is that Manling was the beneficial owner of the net proceeds of sale of the Sanya property.

Is there an agreement in relation to the Te Atatu property?

[49]   As I have said, the plaintiffs say they and Xin entered into a verbal agreement under which Xin agreed to sell the Te Atatu property to them on the following terms:

(a)the plaintiffs would purchase the Te Atatu property from Xin by paying back  Peimiao’s  contribution  of  $85,000  and  paying  off   the   ASB mortgage;

(b)the Te Atatu property would initially be registered under Xin’s name (because the plaintiffs thought that they could not be registered owners without New Zealand permanent resident visas); and

(c)Xin would transfer the Te Atatu property to them after they obtained their New Zealand permanent resident visas.

[50]   The plaintiffs say these terms were discussed and agreed in a series of discussions starting in 2011 after Xin and Peimiao separated. They say that, with the passage of time, they are unable to say exactly when the discussions occurred, but they are adamant that the three terms were discussed and agreed.

[51]   In contrast, Xin denies that there was any discussion, let alone agreement, regarding his parents purchasing the property. He says the payments totalling

$447,361.05 were paid to him as a gift.

[52]   Xin submits that the plaintiffs’ claim that there was an agreement is not credible for the following reasons. First, the plaintiffs’ evidence regarding the agreement has changed in several ways. Initially, it was the plaintiffs’ position that they had made payments to Xin totalling $367,625, but after they received his brief of evidence on 24 March 2025, they filed further evidence which identified further payments which increased the amount that they claim that they have paid to $453,173.05. During trial, however, they identified two duplicate payments, and the removal of those payments reduced the figure that they claim that they have paid to Xin to the final figure of

$447,361.05.

[53]   Second, the plaintiffs’ position in their statement of claim and briefs of evidence was that the oral agreement relating to the purchase of the property was made in 2013.  However, when they gave evidence, they altered their position and said   (as discussed above) that the agreement was made in discussions that began in 2011.

[54]   Third, in their briefs of evidence, the plaintiffs say that the third term of the of the alleged agreement was that Xin would hold and manage the Te Atatu property “on trust” for them until their New Zealand residence visas were approved. However,

under cross-examination, it became apparent that they did not know what a trust was until 2021.  As they did not know what a trust was, they clearly could not have had   a discussion with Xin in which they agreed that he would hold the property “on trust” for them. Manling was the main witness for the plaintiffs at trial. I asked her some questions to clarify the plaintiffs’ position. She eventually confirmed that there had never been any discussion of the property being held “on trust” by Xin. She said that the term that was discussed and agreed was that Xin would hold and manage the     Te Atatu property until their New Zealand residence visas were approved, at which point it would be transferred to them.

[55]   I agree that the fact that witnesses have changed their story can be an indicator that their evidence is not credible. However, that is not always the case. Sometimes, there are reasonable explanations as to why evidence was initially wrong and needed to be corrected. In my view, that is the case here.

[56]   The alleged agreement was made a long time ago, and it was made orally. Similarly, the payments occurred a long time ago. In the circumstances, it is understandable that the plaintiffs were initially mistaken about when the agreement must have been made and exactly which payments went towards the purchase of the property.

[57]   I can also see how the words “on trust” came to appear in Manling’s brief.    It was drafted several years after the plaintiffs learnt what a trust is. By the time her brief was drafted, she had therefore had time to form a clear understanding of the concept of a trust. She had been advised by her lawyers that the legal effect of what was discussed and agreed was the creation of the trust. In the circumstances, I can see how what was actually discussed and agreed at the time and the legal effect of the agreement could have been merged together in her mind and thus in the words of her brief of evidence. Further, Manling did not hesitate to say in cross-examination that she did not know what a trust was until 2021, and, when she understood that what I wanted to know was what words were actually used in the discussions at the time the agreement was reached, she immediately confirmed that the words “on trust” had not been used.

[58]   The plaintiffs place particular emphasis on the two WeChat messages discussed above. They say these messages strongly support their version of events.

[59]   In the first message of 19 May 2020, Manling described the Te Atatu property as “our house”, and she thanked Xin for helping her to “materialise it”.3 The plaintiffs say that it is clear from this message that Manling considered the property to be owned by the plaintiffs. The plaintiffs also point out that Xin did not send a message in response to contradict the suggestion that they were the owners of the property.

[60]   Xin submits that the words “our house” in the message are ambiguous. Manling’s use of the words does not necessarily mean that she was saying the property was owned by the plaintiffs. However, when Xin was cross-examined about this message, he did not deny that Manling was saying that the property was owned by the plaintiffs. He simply said that he did not know why she said the property was owned by them when she was aware that he was the owner. He said that he was on very good terms with Manling at the time and he did not see the need to correct her.

[61]   In the second WeChat  message of 25 July 2020, Manling said, “we have      a house but can’t live in it and still have to pay rent elsewhere.”4 The plaintiffs say that, again, these words indicate that Manling considered that the property belonged to them.

[62]   There are three further factors that the plaintiffs say support their version     of events. First, they say they purchased the Sanya property to escape the Harbin winter. They say that they would not have sold the Sanya property if they did not expect to exchange it with the Te Atatu property. It makes sense that they sold the Sanya property because they expected to move to the Te Atatu property.

[63]   Second, the plaintiffs  say  all  reasonable  people  want  financial  stability  in retirement. Accordingly, they say it is implausible that they would gift all their retirement savings to their son. Especially one who acknowledges he has never supported his parents financially in his life. The plaintiffs say that to do so would be

3 The full text of the message is set out at [21] above.

4 The full text of the message is set out at [25] above.

committing financial suicide. Therefore, the more likely explanation is that they transferred the $447,361.05 because they relied on the agreement they allege.

[64]   Third, the plaintiffs rely again on the concept of “filial piety”. They say that, in light of this concept,  it is inconceivable they would have made a significant gift  to an adult child with no strings attached.

[65]   Xin does not accept that the plaintiffs put all their retirement savings (other than their home in Harbin) into the Te Atatu property. He says that the idea that the plaintiffs had put all their retirement savings into the Te Atatu property is a recent invention. He says that the first time the plaintiffs suggested this was the case was when they gave evidence orally at trial. They did not plead in their statement of claim that they had put all their retirement savings into the property. Nor did they say in their briefs of evidence that this was the case. It was suggested to me that, had this matter been pleaded, Xin would have ensured that his parents provided discovery regarding their financial position.

[66]   It is true that this point is not pleaded. However, I do not think it needed to be. Further, it is not correct that the first time that the plaintiffs suggested that they had put all their funds into the Te Atatu property was when they gave oral evidence.     As discussed above, the point was made in Manling’s second WeChat message back in 2020. Further, in Manling’s brief of evidence, in the course of discussing events  of 2021, she said, “Xin and his wife knew that we didn’t have any money”.

[67]   The second WeChat message shows that the plaintiffs were saying in 2020 that they had put all their retirement savings into the Te Atatu property, and they were very concerned about how they would fund their retirement. I think it is unlikely that Manling would have said this if it was not true.

[68]   Xin submits that one further factor makes his position more likely to be true. At the time of the alleged agreement, he was unemployed and in financial difficulty. In the circumstances, he says his parents would have wanted to help him by gifting the funds to him.

[69]   I agree with  the  plaintiffs  that  their  version  of  events  is  more  likely.  The WeChat messages show that the plaintiffs considered they were the owners of the property. As I have said, Xin accepted in cross-examination that the messages show that Manling considered that the property belonged to the plaintiffs, and he did not contradict her at the time. Further, I have found that the plaintiffs put all their retirement savings into the Te Atatu property. I do not think they would have done this had there not been an agreement with Xin that, in due course, he would transfer the property to them. Finally, I do not think that the plaintiffs would have sold the Sanya property if they did not expect to exchange it with the Te Atatu property.

[70]   There is a final point I need to deal with. Xin also argues that, even if there had been an agreement, it would not have been legally binding. The parties would not have intended to create a binding contract between them.

[71]   This time, it is Xin who relies on “filial piety”. He says that the plaintiffs would have considered that he had a moral obligation to look after their interests because  of filial piety. They would have considered that this obligation was sufficient to protect them and would not have intended that the agreement would impose any legal obligation on him.

[72]   If a business transaction is undertaken by strangers, it will almost always be  a reasonable inference that they were intending to create a legally enforceable relationship. However, if a transaction is undertaken between family members, it will not necessarily be so. Each case will turn on its own facts.5

[73]   I do not accept Xin’s argument. $447,361.05 is a very substantial sum of money. I do not think that the plaintiffs would have reached an agreement with Xin that involved them parting with a sum of money of this order without having the intention that it would be legally enforceable in the event that enforcement became necessary, even if that event was unlikely to arise. This is particularly when the sum of money was all their retirement savings.

5      Fleming v Beevers [1994] 1 NZLR 385 (CA) at 389–390.

[74]   For these reasons, my conclusion is that there is a legally enforceable agreement in relation to the Te Atatu property. Accordingly, the plaintiffs are entitled to have the property transferred to them by Xin.

Is there a resulting trust in relation to the Te Atatu property?

[75]   If their argument that there is an agreement fails, the plaintiffs say, in the alternative, that Xin holds the Te Atatu property on resulting trust for them. I have concluded there is an agreement, but I will discuss what I would have held had it been necessary for me to determine whether there was resulting trust.

[76]   In Westdeutsche Landesbank Girozentrale v Islington London Borough Council, Lord Browne-Wilkinson discussed the circumstance in which a resulting trust will arise:6

... where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B:   the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B in shares proportionate to their contributions. It is important to stress that this is only a presumption, which presumption is easily rebutted either by the counter-presumption of advancement or by direct evidence of A’s intention to make an outright transfer ...

[77]   In Potter v Potter, the Court of Appeal said that the presumption in favour of a resulting trust means that a trust will arise if there is nothing to indicate that the transferor intended to confer the beneficial interest on the transferee. To fill the vacuum, the law presumes an intention by the transferor to retain the beneficial interest.7

[78]   Both the weight of the presumption and the nature of any evidence required to displace it will depend on the circumstances of the case.8 In most cases, the presumption alone will not determine the case and evidence of the parties’ intention will be highly relevant.9

6      Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 (HL) at 708.

7      Potter v Potter [2003] 3 NZLR 145 (CA) at [13].

8      Crampton-Smith v Crampton-Smith [2011] NZCA 308, [2012] 1 NZLR 5 at [41].

9 At [43].

[79]   Xin relies upon the counter-presumption of advancement. This arises where there is a transfer from a transferor who has a natural obligation to provide for the transferee. The law presumes the transferor intended to relinquish his or her beneficial interest in the property.10

[80]   In Pecore v Pecore, the majority of the Supreme Court of Canada held the counter-presumption of advancement does not apply to adult children, whether or not they are dependent.11 The Court held that, given the principal justification for the presumption of advancement is parental obligation to support dependent children, the presumption does not apply in respect of independent adult children. Further, since  it is common for ageing parents to transfer assets into joint accounts with their adult children in order to have the children assist them in managing their financial affairs, there should be a rebuttable presumption that the adult child is holding the property in trust for the ageing parent to facilitate the free and efficient management of that parent’s affairs.12 The presumption should also not be applicable to dependent adult children because it is impossible to list the wide variety of circumstances that would make someone dependent for the purpose of applying the presumption.13 Rather, evidence as to the degree of dependency of an adult transferee may provide strong evidence to rebut the presumption of a resulting trust.14

[81]   In Woolf v Kaye, Gordon J was not persuaded by the view of the majority in Pecore and adopted the minority judgment of Abella J in Pecore.15 She considered that parental affection for a child, no matter the child’s age, justifies the counter- presumption of advancement.

[82]   On the other  hand,  when  the  Court  of  Appeal  considered  Pecore  in  Reid v Castleton-Reid, it did not reach a conclusion on whether the presumption of advancement applies to adult children. But, the Court said that, as the presumption is based on the concept of a parental obligation to support children, it is difficult to see

10     Woolf v Kaye [2018] NZHC 2191, [2019] 3 NZLR 93 at [157].

11     Pecore v Pecore [2007] SCC 17, [2007] 1 SCR 795.

12 At [36].

13 At [40].

14 At [41].

15     Woolf v Kaye, above n 10, at [188]–[192].

any rationale for the operation of the presumption where an adult child is well established in life.16

[83]   The plaintiffs urge me to adopt the reasoning of the majority in Pecore. They argue that the reasoning is highly persuasive. If I am not persuaded that Pecore should be followed in  New Zealand, the plaintiffs argue that, if the counter-presumption    of advancement applies to adult children, it must be a very weak presumption.

[84]   In contrast, Xin argues  that  I  should  follow  the  approach  taken  in  Woolfe v Kaye. If I am not persuaded by that approach, Xin argues that the normal presumption of a resulting trust is rebutted in this case. This is because he has always relied on his parents financially and they have made various gifts of money to him as an adult (and he has never reciprocated with gifts of money in return). However, this argument is weak because the other gifts of money the plaintiffs have made to Xin were much smaller than the payments totalling $447,361.05.

[85]   The position I have reached is that I do not need to decide whether the presumption of advancement should apply to an independent adult child like Xin. This is because, in my view, the presumption is rebutted in this case. The factors that persuaded me that there was an agreement are, in my view, also sufficient to rebut any presumption of advancement. I note that the WeChat messages may carry less probative weight in this context because they are an act or declaration subsequent to the plaintiffs making the payments to Xin.17 However, I am satisfied that the presumption of advancement is rebutted because the plaintiffs would not have put all their retirement savings into the Te Atatu property without an intention to be the beneficial owners of the property, and they would not have sold the Sanya property if they did not expect to exchange it with the Te Atatu property. The subsequent WeChat messages corroborate that they intended to be the beneficial owners of the property.

[86]   For these reasons, had it been necessary for me to do so, I would have concluded that there was a resulting trust.

16     Reid v Castleton-Reid [2019] NZCA 372, [2019] NZAR 1655 at [85].

17     At [50], citing Narayan v Narayan [2010] NZFLR 161 (HC)  at  [47].  But  see  Comins  v Public Trust [2021] NZHC 1172 at [25]–[26].

Who is responsible for repaying the loan secured over the Te Atatu property?

[87]   As discussed above, on 5 June 2015, Xin obtained a new $34,000 loan from ASB secured over the Te Atatu property. Further, on 22 August 2018, Xin refinanced the ASB loan with ANZ using the Te Atatu property as security. The new ANZ loan was for $81,000 (which included the initial $34,000 loan).

[88]   The ANZ mortgage remains on the title to the property. No information has been provided to me regarding the current balance of the loan.

[89]   The plaintiffs’ position is that, as Xin was required to but did not obtain their permission to use the Te Atatu property as security, he must repay the loan. On the other hand, Xin’s position is that he was not required to obtain their permission.

[90]   It follows from what I have said above that the plaintiffs’ approval was required. Accordingly, Xin must repay the loan.

Who is entitled to the rental income from the Te Atatu property?

[91]   As discussed above, the Te Atatu property has been rented out for the whole of the period since 5 June 2015. The current rental income for the property is

$630 per week. Xin has never paid any of the rental income to the plaintiffs. He says that he is not required to do so.

[92]   As the beneficial owners of the Te Atatu property, the plaintiffs would normally be entitled to receive the rental income from the property. However, this would not be the case if the plaintiffs agreed to Xin keeping the rental income even though he did not own it.

[93]   When this came up in cross-examination of Manling, she said that, at the time the plaintiffs purchased the Te Atatu property, as Xin was recently divorced and unemployed, they told him he could use the rental income from the property to pay his expenses. However, when he was “over the hurdle”, they expected him to repay the rental income because they had used all their retirement savings to purchase the

property and they needed the rental income to pay for their retirement and future medical expenses.

[94]   Despite Manling’s evidence on this point, the impression I am left with is that, for most of the time that Xin had received the rental income, the plaintiffs agreed    to him keeping it. Although her evidence was that the plaintiffs expected Xin to repay the rental income after he was “over the hurdle”, there is no evidence of them ever asking him to repay the income. Even in their original statement of claim in these proceedings filed in June 2023, the plaintiffs did not seek to recover any of the rental income. It was not until they filed  their  amended  statement  of  claim  in  November 2024 that they first sought to recover the rental income.

[95]   For these reasons, my conclusion is that Xin must pay the rental income from the property received by him from 1 December 2024 onwards.

Result

[96]I declare that the plaintiffs are the beneficial owners of the Te Atatu property.

[97]I order Xin to:

(a)repay the loan secured over the property in full and to obtain a discharge of the mortgage registered over the title;

(b)transfer legal ownership of the property to the plaintiffs;

(c)pay the plaintiffs an amount equivalent to the net rental income received from the property since 1 December 2024; and

(d)pay interest to the plaintiffs under s 10 of the Interest on Money Claims Act 2016 on the net rental income.

[98]I encourage the parties to agree on the interest that is payable, and on costs.

[99]If the parties cannot agree on interest and costs, I direct that:

(a)the plaintiffs file a memorandum of no more than three pages within 20 working days of the date of this judgment; and

(b)Xin file a memorandum in response of no more than three pages within a further 10 working days.

[100]I will then resolve matters on the papers.

Blanchard J