Yeh v Hsiao

[2023] NZHC 2729

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2023-409-392

[2023] NZHC 2729

IN THE MATTER

of an application under section 143 of the Land Transfer Act 2017

BETWEEN

YUN-PING YEH

Applicant

AND

LAN-HSIANG HSIAO

Respondent

Hearing:

(Determined on the papers)

Counsel:

K H Sun for Applicant

K L Maclean for Respondent

Judgment:

29 September 2023

JUDGMENT OF ASSOCIATE JUDGE LESTER

(costs)

YEH v HSIAO [2023] NZHC 2729 [29 September 2023]

[1]    On 1 August 2023, Ms Yeh, represented by Mr Sun, served an application on the respondent (Ms Hsiao) to sustain notices of claim lodged by Ms Yeh over three properties in which Ms Yeh’s ex-husband, Mr Ching, had an interest. Mr Ching and Ms Yeh were divorced in Taiwan in 1985. Mr Ching died on 27 August 2022, leaving a second wife (Ms Hsiao) who he had married in 1987. Ms Hsiao is the respondent in this proceeding.

[2]    Ms Yeh lodged her notice of claim on 30 November 2022 over the three properties; two of which were rental properties owned by Ms Hsiao and Mr Ching as joint tenants, the third  property  being  their  matrimonial  home  they  owned  by  Mr Ching. Ms Hsiao is the sole beneficiary in Mr Ching’s estate.

[3]    Ms Yeh claims an interest in the properties based on what she says are unresolved relationship property issues between her and Mr Ching.

[4]    Associate Judge Paulsen, in a Minute dated 14 August 2023, said that he had “grave reservations whether the evidence that has been filed to date justifies the making of ….” interim orders sustaining the notices of claim.

[5]    Despite having filed her notices of claim on 30 November 2022, Ms Yeh had taken no steps  to  issue  proceedings  to  have  that  interest  recognised.  Ms Yeh  had lodged a caveat in respect of Probate in November 2022 which was determined against Ms Yeh in March 2023. In the Probate proceeding, Ms Yeh provided assurances to the Court that her substantive proceedings would be filed imminently in the Family Court.

[6]    Associate Judge Paulsen, in his Minute of  14 August 2023, directed that    Ms Yeh file and serve a substantive affidavit in support of her application to sustain the notices of claim, no later than 28 August 2023. That affidavit was never filed.

[7]    Mr Sun, counsel for Ms Yeh, said to me in Court on 14 September 2023 that an affidavit in support of Ms Yeh’s claim had been filed in the Family Court. That was not the direction made by Associate Judge Paulsen. I was told that attempts to file proceedings in the Family Court had been unsuccessful with papers being rejected.

Mr Sun advises a  substantive  application  was  filed  with  the  Family  Court  on  13 September 2023. I am not told whether that application has been accepted for filing, but I assume it was.

[8]The application to sustain the notices of claim was filed on 2 August 2023.

[9]    Ms Hsiao, through counsel, immediately upon being sent the application to sustain, that is on 1 August 2023 (the day before the application was filed), emailed Mr Sun and offered to resolve the application and indicated a willingness to provide undertakings.

[10]   Ms Maclean, counsel for Ms Hsiao, recorded that given the executors had received notice of a potential claim, the estate could not be distributed until such time as 12 months had passed since Probate was granted and, as the claim was filed within that 12 months, the estate could not be distributed until the claim was resolved.

[11]   Ms Maclean advised that at no time had Mr Sun sought an undertaking reflecting the reality that the estate could not be distributed outside of the above rules. Ms Maclean said: “Had you sought such an undertaking before issuing this proposed application, we would have immediately provided the same.”

[12]   Ms Maclean noted that given undertakings were available, the application was a waste of time and resources. She said: “We therefore seek that you immediately withdraw the application, on the basis that we will provide the above formal undertaking.” The email was sent on the basis that, if the undertaking option was not accepted, indemnity costs would be sought “from both your clients and your firm”.

[13]Ms Maclean’s next letter on 8 August 2023 begins:

Our client is disappointed to know that your client is not prepared to accept an undertaking from our firm, that we will not distribute the estate until either the expiry of the date 12 months from the date of Probate  or until order of     the court, if your client files substantive proceedings.

[14]   Ms Maclean noted again that the best Ms Yeh  could claim was a share of   Mr Ching’s interest in the properties. Ms Hsiao also has her own relationship property rights as well as becoming owner of the two rental properties by survivorship.

[15]   Ms Maclean again offered an undertaking. Mr Sun focuses on the following from the undertaking: “We will also undertake to immediately notify you if the administrator of the Estate withdraws instructions to our firm”.

[16]   Mr Sun seeks to rely on the above paragraph as justification for not accepting Ms Maclean’s undertaking. I do not accept that was a valid basis for this matter not being resolved on the basis of undertakings. Mr Sun refers to this as the “initial proposed undertaking”. That is not correct. An initial undertaking was contained in the email of 1 August 2023, or at least the offer of an undertaking.   In any event,     a disagreement over the wording of an undertaking is not justification for declining to accept an undertaking from Ms Maclean.

[17]   When this matter was called on 14 September 2023, I emphasised to Mr Sun that this Court accepts the undertakings of counsel.

[18]   On 1 September 2023, Ms Maclean repeated the undertaking that 50 per cent of the net sale proceeds of both the rental properties (Ms Hsiao wanting to sell those properties to reduce mortgage commitments) would be held undistributed, essentially on the terms offered on 1 August 2023.

[19]   It will be recalled the rented properties were jointly owned. They became the property of Ms Hsiao on Mr Ching’s death. The best Ms Yeh could challenge is the late Mr Ching’s share in those properties.

[20]   Mr Sun, however, wanted 100 per cent of the net sale proceeds to be held on trust. The basis upon which such a claim could be made has not been articulated in this Court as, again, the substantive affidavit was never filed.1

1      In an email to Ms Maclean of 11 September, Mr Sun recorded this position and indicated a possible claim by Mr Ching’s daughters under the Family Protection Act 1955 as the basis for holding 100 per cent of the proceeds. However, such a claim is not relevant to the notice of claim.

[21]   Mr Sun also wanted the notice of claim over the family home to remain. However, Mr Sun did not seem to recognise that a claim having been made against the estate of Mr Ching, the estate could not be distributed. When this matter was called in Court on 14 September 2023, Ms Maclean had no concern about the notice of claim remaining on the family home until 5 May 2024, that is one year from the date of Probate, unless there is a further order of the Court that the notice of claim be sustained beyond that date. Ms Maclean pragmatically recognised that, as the home could not be sold in any event, there was no prejudice to her client in leaving the notice of claim in place for a year from Probate.

Ms Yeh’s application for costs

[22]   I do not consider Ms Yeh has any entitlement to costs in respect of her application. Mr Sun claims that Ms Yeh was the successful party as she achieved the preservation of 50 per cent of the net proceeds from the rental properties, and the notice of claim on the family home remains in place.

[23]   That, however, was the practical position offered on 1 and 8 August 2023. Had Mr Sun engaged in negotiations  and  been  prepared  to  be  realistic  and  accept  Ms Maclean’s undertaking, the proceeding would not have continued as long as it did.

[24]   Mr Sun is critical of Ms Hsiao not negotiating prior to the filing of the notice to lapse the notices of claim. However, notwithstanding the notice of claims being lodged on 30 November 2022, it was not until September 2023 that proceedings were issued by Ms Yeh, and even then, that appears to have been a response to the challenge to the notices of claim.2   Having lodged notices of claim preventing the estate of    Mr Ching being dealt with, the onus was on Ms Yeh to file her proceedings promptly. Mr Sun asserts that before attempting to lapse the notice of claim, Ms Hsiao should have negotiated with Ms Yeh to allow the sale of the rental properties. That is the very thing Ms Maclean attempted to do with Mr Sun upon receiving the application to sustain the notices of claim, yet Mr Sun would not accept Ms Maclean’s undertaking

2      Again, Ms Yeh said in the Probate proceedings that her Family Court proceeding would be filed in short order.

or adopt a realistic position in respect of the rental properties which, again, as jointly owned property, were owned by Ms Hsiao outright.

[25]   I do not accept Mr Sun’s submission that Ms Yeh has acted fairly and reasonably in these circumstances. It was only with the Court telling Mr Sun that this Court accepts counsel’s undertaking, that he was prepared to have this matter resolved by way of undertakings. That should not have been necessary, counsel are expected to accept undertakings from other counsel unless there is a compelling reason not to do so.

[26]   Nor do I accept Mr Sun’s assertion that Ms Yeh acted reasonably in the negotiations over the undertaking. Mr Sun’s position that 100 per cent of the net sale proceeds of the rental properties be held on trust was simply unrealistic. Ms Hsiao and Mr Ching had been married since 1987. The rental properties were jointly owned. On what possible basis Ms Hsiao could have no interest in properties of which she has become the sole owner by  survivorship is unexplained, yet Mr Sun insisted that   100 per cent of the net proceeds be held on trust. In my view, that was an unreasonable position.

[27]   Accordingly, I do not accept that Ms Hsiao had to negotiate with Ms Yeh prior to lapsing the notice of claim – Ms Yeh had taken no steps to pursue her claim since November 2022.

[28]   Mr Sun says Ms Yeh was forced to file the originating application to prevent the notice of claim from lapsing.  That is true, but again, that  is a consequence of  Ms Yeh not having filed her proceeding, despite saying in the Probate proceedings she was ready to do so.

[29]   Mr Sun says if Ms Hsiao had “reached out” to Ms Yeh prior to lapsing the notices of claim, the parties could have avoided incurring the costs of the originating application. That claim rings hollow given Mr Sun’s unreasonable position over the undertakings offered by Ms Maclean. Mr Sun says the initial draft undertakings did not protect Ms Yeh’s position. Whether that is the case or not, I need not decide, but in any event, that is not a justification for rejecting undertakings outright.

[30]   In all the circumstances, I am satisfied Ms Hsiao is entitled to an order for costs on a 2B basis against Ms Yeh. I do not consider any uplift is appropriate.

[31]   Accordingly, the order of the Court is that Ms Yeh will pay to Ms Hsiao costs on a 2B basis together with disbursements as fixed by the Registrar.

[32]   Ms Maclean did not make an application for costs against Mr Sun as foreshadowed in her first email.

Associate Judge Lester

Solicitors:

D’Arcy Thomson Law, Christchurch (for Applicant) Capstone Law Limited, Auckland (for Respondent)

Copy to counsel:
M Wallace, Barrister, Christchurch (for Applicant)