Yang v Chen HC Auckland CIV 2008-404-4287
[2011] NZHC 198
•10 March 2011
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2008-404-4287
BETWEEN LIMIN YANG AND LIU (JASMINE) YANG
Plaintiffs
ANDPAUL (YU PO) CHEN Defendant
CIV-2008-404-4287
AND BETWEEN DACHA INTERNATIONAL LIMITED First Plaintiff
ANDROTORUA INTERNATIONAL VILLAS LIMITED
Second Plaintiff
ANDTOP INTERNATIONAL LIMITED Third Plaintiff
ANDPAUL (YU PO) CHEN First Defendant
ANDHEARD PARK LIMITED Second Defendant
ANDCHOON KHIAW CHIN Third Defendant
Hearing: 8 March 2011
Appearances: P. J McPherson and G J Luen for plaintiffs R B Hucker for first and second defendants No appearance for third defendant
Judgment: 10 March 2011
JUDGMENT NO.4 of ALLAN J
In accordance with r 11.5 I direct that the Registrar endorse this judgment with the delivery time of 4.30 pm on Thursday 10 March 2011
LIMIN YANG AND LIU (JASMINE) YANG V PAUL (YU PO) CHEN HC AK CIV 2008-404-4287 10 March
2011
Solicitors:
Hesketh Henry [email protected]
Paul Chen [email protected]
Queen City Law, Auckland [email protected] [email protected]
R B Hucker [email protected]
[1] In a judgment delivered on 17 February 2011 (Judgment No.3), I held that, no step having been taken in the present proceeding by the third defendant, I was satisfied that it was appropriate to make an order granting possession of three Rotorua properties to Rotorua International Villas Ltd (Rotorua International). I accordingly gave judgment for possession in terms of the judgment by default document already lodged in court by the plaintiffs.
[2] The second plaintiff, Rotorua International, also sought an order vesting title in the properties concerned in the second plaintiff to the exclusion of the third defendant. I held that on the basis of the evidence heard during the long trial of this proceeding, the third defendant is not entitled to maintain an interest in the properties concerned, and that it was accordingly appropriate to vest the properties in the second plaintiff. I made an order accordingly.
[3] I then considered the position of Mr Chen. Noting (incorrectly) that he had not filed a statement of defence to the amended statement of claim, I said that he had no proprietary or beneficial interest in the three Rotorua properties, so his position was accordingly not prejudiced by the making of the possession and vesting orders.
[4] It has since emerged that, prior to my judgment of 17 February 2011, Mr Chen had in fact filed a statement of defence. Regrettably, it was not on the file when I prepared my judgment. In his statement of defence he pleads a general denial of the plaintiffs’ allegations of entitlement to both the legal and beneficial interests in the three Rotorua properties, but there are no supporting particulars.
[5] When I became aware of the existence of Mr Chen’s statement of defence, I heard from counsel by telephone, and then set the case down for a face to face conference. Mr Chen’s statement of defence has now been located. I am satisfied that at the time of my judgment of 17 February 2011, the statement of defence had been duly filed.
[6] Mr Hucker now submits that the judgment of 17 February 2011 was irregularly obtained, at least as regards the making of the vesting order (there appears
to be no opposition to the possession orders). On that footing, he argues, the only course open to the Court is to set aside the vesting orders.
[7] I accept that there will be cases in which it will be appropriate for the Court to recall its earlier judgment, having overlooked the taking of a relevant procedural step by a party. A recent example is the judgment of McKenzie J in Greymouth Petroleum Ltd v the Solicitor General.[1] There, the Judge had delivered an interlocutory judgment in ignorance of an application for recusal in respect of the substantive trial, made between the hearing of the interlocutory application and the
delivery of the judgment. His Honour made an order for interim recall, heard from counsel, and then reconfirmed the order for recall.
[1] Greymouth Petroleum Ltd v the Solicitor General HC Wellington CIV-2009-485-1425, judgment 3
February 2010. See also, in a slightly different context McDonald v Simmons (1994) 8 PRNZ 12 (HC).
[8] But this case is quite different. While registered as the sole director and shareholder of Rotorua International, Mr Chen procured the transfer of the properties concerned from the company to the third defendant, his mother in law. His position is that the transactions were conducted at arm’s length, and on a proper commercial basis. In judgment No.2 (5 October 2010) I held that the plaintiffs in that proceeding (as then constituted), and not Mr Chen, were entitled to be registered as shareholders at the time of the transaction.
[9] I asked Mr Hucker at the conference to outline the basis upon which Mr Chen now claims to have a sufficient interest in the properties to justify recalling my earlier judgment. (It is to be noted that there is an element of urgency about the matter; the mortgagee is moving towards conducting a mortgagee sale of the properties and the second plaintiff wishes to be able to negotiate with the bank. It can do this only if it becomes the registered proprietor).
[10] Mr Hucker explained that Mr Chen does not now claim to have either a beneficial or proprietary interest in the properties. Rather, (although this is not pleaded) he says that he has an equitable lien over the assets of the company, by
reason of his entitlement to claim his costs and expenses while acting as a trustee and
as a director and shareholder of the second plaintiff, pursuant to the terms of a declaration of trust which was the focus of my Judgment No.2.
[11] Assuming for present purposes that Mr Chen does indeed have a lien over the assets of the company to secure his entitlement to reimbursement of costs and expenses, I am unable to see how the making of a vesting order would prejudice Mr Chen’s position. To the contrary, he would benefit from it. Any equitable lien would be unenforceable in respect of the properties themselves or their proceeds of sale, while the properties remain in the hands of the third defendant. But the vesting order has the effect of restoring the properties to the second plaintiff, one of the companies which was the subject of the declaration of trust. In other words, the order enlarges the range of assets to which Mr Chen’s lien may attach.
[12] Accordingly, Mr Chen’s equitable lien becomes enforceable against the properties in the hands of the second plaintiff, where formerly it was not enforceable against these properties at all.
[13] Having now heard from Mr Hucker, I am satisfied that it was proper to make the order at the time, although I would of course have heard from him before making the order had I known that Mr Chen had filed a statement of defence. Had that occurred, Mr Hucker would have advanced the same argument as is now relied upon, and I would have rejected it.
[14] In my view, Mr Chen is not prejudiced by the vesting orders made in my judgment of 17 February 2011. In those circumstances, and given the urgency of the matter, it would in my opinion be wrong to recall my earlier judgment.
[15] The vesting order made in my earlier judgment will stand. The plaintiffs are now at liberty to seal judgment.
[16] I turn to timetabling issues related to the further conduct of the proceeding. The parties have a one day fixture for Friday 8 April 2011 at 10 am for the hearing of two applications by the plaintiff for the imposition of sanctions arising out of alleged contempts committed by Mr Chen. The first of those applications is concerned also
with the Rotorua properties, and with the circumstances in which they were transferred by or on behalf of Mr Chen to the third defendant at about the time of the making of a consent freezing order. That application was part heard by Hugh Williams J, and is for ultimate resolution on 8 April.
[17] The second application was filed by the plaintiffs on 21 December 2010 and concerns the alleged failure of Mr Chen to make proper discovery of certain bank accounts under his control, prior to the trial which was the subject of my Judgment No.2.
[18] As to the first of these applications, the plaintiffs rely on the notice of application and affidavits already filed, together with certain limited passages from the transcript of evidence given at the substantive trial. Mr McPherson is to provide to Mr Hucker by Friday next, 11 March, references to the passages in the transcript to be relied upon. Mr Chen has already filed a notice of defence and affidavits in opposition to the first application. If, in the light of Mr McPherson’s identification of the passages in the transcript of evidence to be relied upon on 8 April, Mr Chen wishes to amend his notice of opposition or file any further affidavits, he is to do so by filing and serving the relevant documents on or before Friday 18 March 2011. Any reply documents by the plaintiffs are to be filed and served by Monday 4 April
2011.
[19] In respect of the more recent contempt application, Mr Chen is to file and serve a notice of opposition and any affidavits in support by 18 March 2011. The plaintiffs are to file any documents in reply by Monday 4 April 2011.
[20] In respect of both applications, the plaintiffs are to file and serve a case book, a binder of key documents, and a synopsis of submissions, on or before 4 April 2011.
[21] Mr Hucker is to file and serve his synopsis of submissions by 1 pm on
Thursday 7 April 2011.
[22] The final application for determination on 8 April is the plaintiffs’ application
for an order for security for costs against Mr Chen in respect of his counterclaim.
The plaintiffs have filed all of the documents to be relied upon by them. Mr Hucker is to file and serve any notice of opposition and supporting affidavits by Friday 18
March 2011. Any documents in reply are to be filed and served by the plaintiffs on or before 4 April 2011.
[23] Finally, Mr Hucker seeks an extension of time for the filing of a further list of documents by Mr Chen in the substantive proceeding. In terms of an earlier timetable direction, the first and second defendants were to file and serve their verified lists by 28 February 2011. Mr Hucker seeks an extension to 24 March 2011. There is no objection to that. There will be an order accordingly.
C J Allan J
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