Zhan v Su
[2016] NZHC 1890
•16 August 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2016-404-1395 [2016] NZHC 1890
IN THE MATTER of the Land Transfer Act 1952, s 145A BETWEEN
ZUFENG ZHAN Applicant
AND
HUITANG SU Respondent
Hearing: 15 August 2016 Counsel:
R Reed for applicant
FC Deliu and D Zhang for respondentJudgment:
16 August 2016
JUDGMENT OF FAIRE J
This judgment was delivered by me on 16 August 2016 at 11:45 am pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Prestige Lawyers Ltd, Auckland
Amicus Law, Auckland (R Zhao)
Zhan v Su [2016] NZHC 1890 [16 August 2016]
Contents
The application .......................................................................................................[1] Disposal of the application in the High Court........................................................[2] Background ............................................................................................................[3] The facts .................................................................................................................[7] The dispute ...........................................................................................................[15] The legislation ......................................................................................................[18] The appropriate court to have brought the application ........................................[25] The appropriate court to determine the application .............................................[26] Orders ...................................................................................................................[33]
The application
[1] The applicant applies for orders pursuant to s 145A of the Land Transfer Act
1952 sustaining the notices of claim 10432583.1 and 10432598.1.
Disposal of the application in the High Court
[2] Counsel filed written submissions. I indicated my view and invited submissions. Counsel were not asked to consent to the order I proposed. Instead, they were invited to comment on the form of the orders, which they did and for which I am grateful.
Background
[3] In June 2016, the applicant filed applications in the Family Court seeking orders:
(a) That he be allowed to make an application under the Property
(Relationships) Act 1976 out of time; and
(b)Various other orders regarding the relationship property of himself and the respondent.
[4] Copies of the applications filed in the Family Court were provided.
[5] The applicant lodged notices of claim on two properties under s 42 of the Property (Relationships) Act on 13 May 2016. His claim relates to two Auckland properties owned by the respondent which, he says, were brought with relationship property money. On 3 June 2016, the respondent applied to lapse the notices of claim. On 16 June 2016, the applicant filed this originating application. The application is opposed by the respondent.
[6] On 4 July 2016, Peters J made an interim order preserving the notices of claim pending further orders of the court. In addition, her Honour made various orders and directions for the disposal of the application in the High Court.
The facts
[7] The applicant and respondent were married in the Peoples Republic of China in 1999. In 1999 they had a daughter. In 2000 the applicant had a daughter with another woman. The respondent was initially unaware of this and understood that the baby had been adopted. The respondent cared for her not realising she was the applicant’s biological daughter. Reference is made to this on many occasions in the affidavits, although I fail to see its relevance to the current proceedings.
[8] In 2001, the applicant and respondent and their daughter obtained New Zealand residency. In September 2001, the applicant deposited NZ$1,000,000 into a HSBC bank account opened in New Zealand.
[9] In 2006, the applicant was arrested in China and convicted on a charge of corruption and was sentenced to 12 years’ imprisonment in China. This was later substituted for a conviction of fraud and 10 years’ imprisonment. In April 2006, the couple’s HSBC account had NZ$1,138,000. By August 2009, the term deposit had been withdrawn.
[10] The respondent applied for a divorce in 2009 and in 2010 the Chinese Court granted the divorce. The Chinese Court also partially resolved a relationship dispute between the parties. The Chinese Court did not determine the question of relationship property which existed in New Zealand.
[11] In 2010, the respondent’s mother bought a property in Auckland. [12] In 2011, the respondent married her current husband.
[13] In 2012, the respondent’s mother transferred the property to the respondent and her husband. A mortgage was taken out over the property. Shortly after the respondent, her mother and her husband purchased another Auckland property. In
2015, the respondent’s mother transferred her share in the second property to the
respondent and the respondent’s husband.
[14] In 2013, the applicant was released on parole. During this time, he said he was forbidden from having contact with foreigners or leaving China without consent. His sentence was finally completed in 2016.
The dispute
[15] The applicant alleges that the respondent used money in the HSBC term deposit to enable her mother to purchase the first Auckland property, which was then transferred to the respondent and her husband which was mortgaged to enable the purchase of the second property.
[16] The respondent denies this account and sets out a summary of areas where the funds in the HSBC term deposit were applied. She says that she is unable to obtain bank statements or transfer records from HSBC as the account was closed in
2009. She also says that she cannot obtain records in relation to a Chinese bank account for the same reason.
[17] Her account of the utilisation of the HSBC money is denied by the applicant.
The legislation
[18] Section 42 of the Property (Relationships) Act 1976 provides:
42 Notice of interest against title
(1) A claim to an interest, pursuant to this Act, in any land subject to the Land Transfer Act 1952 shall be deemed to be a registrable interest for the purposes of that Act.
(2) Notice of a claim under subsection (1) of this section shall be effected by lodging a duly completed notice in the prescribed form with the District Land Registrar.
(3) Every notice so lodged shall have effect as if it were a caveat … lodged pursuant to section 137 of that Act and the provisions of that Act except subsections (3) and (4) of section 141, shall apply subject to the following modifications—
(a) Any application under section 143 or section 145 or section
145A of that Act in respect of any notice under this section may be made to a Family Court or a District Court or the
High Court; and
(b) An order under section 148 of that Act authorising the receipt of a second notice under this section may be made by a Family Court or a District Court or the High Court.
(4) In the case of land that is not subject to the Land Transfer Act 1952, notice of a claim to an interest pursuant to this Act may be registered in the manner in which deeds and other instruments affecting the land may be registered.
(5) A notice under subsection (2) or subsection (4) of this section may be registered notwithstanding that no proceedings under this Act are pending or in contemplation, and notwithstanding that there is no dispute between the parties.
[19] Section 24 of the Property (Relationships) Act 1976 provides:
24 Time limits for making applications
(1) The following time limits apply in relation to applications made under this Act:
(a) an application made after a marriage or civil union has been dissolved by an order dissolving the marriage or civil union must be made before the expiry of the period of 12 months after the date on which that order takes effect as a final order:
(b) an application made after an order has been made declaring a marriage or civil union to be void ab initio must be made
before the expiry of the period of 12 months after the date of the making of the order:
(c) an application made after a de facto relationship has ended must be made no later than 3 years after the de facto relationship ended.
(2) Regardless of subsection (1), the Court may extend the time for making an application after hearing—
(a) the applicant; and
(b) any other persons who would have an interest in the property that would be affected by the order sought and who the Court considers should be heard.
(3) The Court's power under this section extends to cases where the time for applying has already expired.
(4) If 1 of the spouses or partners has died, the application of this section is modified by section 89 (except in a situation described in section 10D(1)).
[20] In Mayes v Southern Cross Finance Ltd I summarised the applicable principles which apply when considering applications pursuant to 143, 145 and 145A of the Land Transfer Act 1952 as follows:1
a)Ss 143 , 145 and 145A of the Land Transfer Act 1952 give no guide as to the circumstances in which the court may make an order that a caveat be removed:2 Catchpole v Burke;
b)If it is clear that there was no valid ground for the lodging of a caveat, or that the interest which in the first place justified the lodging of the caveat no longer exists, such a caveat should be removed:3 Sims v Lowe;
c)The onus under s 143 of the Land Transfer Act 1952 lies on the caveator to show that he has a reasonably arguable case for the interest he claims:4 Castle Hill Run Ltd v NZI Finance Ltd;
d)The caveat, being a creature of statute, may be lodged only by a person upon whom a right to lodge it has been conferred by statute. It is not enough to show that the lodging and continued existence of the caveat would be in some way advantageous to the caveator:5
Guardian Trust & Executor Co of New Zealand Ltd v Hall;
1 Mayes v Southern Cross Finance Ltd [2013] NZHC 972.
2 Catchpole v Burke [1974] 1 NZLR 620 (CA) at 623.
3 Sims v Lowe [1988] 1 NZLR 656 (CA) at 659.
4 Castle Hill Run Ltd v NZI Finance Ltd [1985] 2 NZLR 104–106 (CA).
5 Guardian Trust & Executor Co of New Zealand Ltd v Hall [1938] NZLR 1020 (CA) at 1025.
e)What the caveator must establish is an arguable case for claiming an interest of the kind referred to in s 137 of the Land Transfer Act
1952.
[21] Even if a caveator establishes an arguable case for an interest in land the court retains a discretion to make an order removing the caveat although it would be exercised cautiously.6 Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd.
[22] The court has a discretion to impose conditions in respect of any order made sustaining a caveat.7 Raiser Developments Ltd v Trefoil Properties Ltd.
[23] In addition to considering the general principles applicable to the making of an order sustaining a caveat, it is appropriate to consider, in a general way, matters that have been regarded as important when considering applications to extend time to bring a claim under the Property (Relationships) Act pursuant to s 24. Those matters, in summary are:
(a) The length of the delay;
(b) The adequacy of the explanation for the delay;
(c) The substantive merits of the applicant’s claim; and
(d) Prejudice which the delay may have caused to the opposing party. Other factors may apply, but the above are generally the important matters to be
considered.8
[24] An important and dual consideration in both the application to sustain the caveat and the application for leave to extend time to bring the claim are the issues of
reasonable arguability of the case and the merits of the claim.
6 Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 at 656.
7 Raiser Developments Ltd v Trefoil Properties Ltd [2008] NZCA 73.
8 RL Fisher (ed) Fisher on Matrimonial Relationship Property (looseleaf ed, LexisNexis) at
[18.17].
The appropriate court to have brought the application
[25] It is unfortunate that this application was not made in the first instance to the Family Court having regard to s 42(3)(a). Clearly, the issues raised in the current applications should appropriately be determined in the Family Court. I can see, from the material that has been placed before me, no special reason or circumstance that justifies the matter being initiated in the High Court. Indeed, it understandably left the respondent to take the position:
(a) The applicant does not have a reasonably arguable case because he has not yet obtained an order granting leave to apply out of time; and
(b)Because if the High Court were to determine this application, it might in some way pre-empt the Family Court’s decision on the application for leave.
The appropriate court to determine the application
[26] Section 46(2) of the District Court’s Act 1947 provides:
46 Transfer of proceeding from High Court to District Court
…
(2) Where the subject-matter of a proceeding that has been commenced in the High Court is within the jurisdiction of District Courts, the High Court or a Judge of that Court may, of its or the Judge's own motion, order that the proceeding be transferred to a District Court unless, in the opinion of the High Court or the Judge, some important question of law or fact is likely to arise in the proceeding.
[27] Section 4 of the Family Courts Act 1980 provides:
4 Establishment of Family Courts
Every District Court shall have a division, to be known as the Family Court.
[28] I can find, in this case, no important question of law or fact that is likely to arise in the caveat and extension of time applications that would justify retaining the caveat application in the High Court and having it determined independently of the leave application. For that reason, I consider it appropriate that this application
should be transferred to the Family Court at Auckland to be determined with the leave application.
[29] Whilst it will often be appropriate to hear the leave application with the substantive application that is not always necessarily the case. In my view, the comments of Barker J in Fursdon v Fursdon apply particularly to this case.9 His Honour there said:
This is one occasion when I consider it proper to deal with the limitation point first before embarking on a detailed consideration of the merits under the new Act. I think that had the limitation situation been less clear I might have allowed a more detailed discussion of the merits under the Act.
[30] My view is that both the application to sustain the caveat and the application for leave should be determined as a matter of priority and as a first major step in the disposal of this litigation. Obviously, if the leave application is refused there would be no basis for continuing any caveat against the two titles concerned.
[31] Because I consider that the matter is more appropriately dealt with in the Family Court, it is necessary that the order that I now make to further sustain the caveat makes it clear that it is to be sustained pending further order of the Family Court. The Family Court can then make whatever order it considers necessary, which may include an order pursuant to s 143 of the Land Transfer Act 1952 to remove the caveat.
[32] The matter requires priority and clearly will not be assisted by any further delay. Indeed, the time that has already occurred since the expiry of the time limit under s 24 of the Property (Relationships) Act will cause evidential difficulties. I do not intend to embark on them any further, because my view is that both the caveat application and the leave application should be heard together. All that is necessary, at this stage, is an order that protects the position in the meantime, pending the
allocation of a fixture for the hearing of these two applications.
9 Fursdon v Fursdon (1978) 1 MPC 89.
Orders
[33] I now set out the orders which I discussed with counsel in court. Accordingly, I order:
(a) The notices of claim are sustained pending further order of the Family
Court at Auckland;
(b)This application, and the documents filed in respect of it, are transferred to the Family Court at Auckland for disposal by hearing, together with the hearing of the applicant’s application for an order extending time to bring an application under the Property (Relationships) Act 1976. This order is made on the basis that the application is to be determined before disposal of the substantive application; and that such priority as the Family Court is able to accord the matter is in fact accorded to it for the purposes of the granting of a fixture in respect of these two applications;
(c) This order sustaining the notices of claim pending further order of the Family Court is made subject to the condition that the applicant prosecute this application and the application to extend time diligently; and
(d) Costs are reserved on the basis that they are to be determined in the
Family Court with the disposal of this application and the application to extend time.
JA Faire J
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