Zhang v Li - [2017] NZHC 129

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2015-485-998 [2017] NZHC 129

BETWEEN
ZHANSHU ZHANG AND

RONGSHENG LI Plaintiffs

AND

MENG LI
First Defendant

AND

YI MING ZHAO Second Defendant

CIV 2015-485-1077

BETWEEN MENG LI Applicant

ANDYI MING ZHAO Respondent

Hearing: 7-8 February 2017

Counsel:

F M Gush for Plaintiffs and first defendant in proceeding 998 and for Applicant in proceeding 1077

P Chan for second defendant in proceeding 998 and respondent in proceeding 1077

Judgment:

10 February 2017

JUDGMENT OF SIMON FRANCE J

[1] Ms Li came to New Zealand in 2001 to study. She was supported by her parents. In 2007 she married and later that year became pregnant. In 2008 she and her husband purchased a home for $427,500. The money came from the following
sources:

ZHANG AND LI v LI [2017] NZHC 129 [10 February 2017]

(a) $52,500 from their savings; (b) $40,000 by way of bank loan; (c) $335,500 from Ms Li’s parents.

[2] In February 2012 the couple separated. It is now agreed the family home is to be sold. At issue in these proceedings is the character of the $335,500 from the parents – was it a gift or a loan? If neither is established, did the couple hold the money on trust for the parents?

[3] Each of the four participants gave evidence along with an expert on Chinese culture. The evidence left me sure that the parents, at the time of advancement, never intended to confer the beneficial interest on the couple. The money was not a gift. On balance I conclude it was a loan, although if not satisfied as to that I would have found a resulting trust.

[4] The important facts are narrow in scope. It is accepted the parents transferred the money to an account in their daughter’s name in the period prior to the purchase. The reason for these transfers was mixed.

[5] Ms Meng Li is the only daughter of Mr Li and Madame Zhang. When Meng Li married in New Zealand and then became pregnant, it became obvious to the parents that New Zealand would be her permanent home. They decided they would need to emigrate to New Zealand, in the expectation they would live with the couple who would care for them as they aged. It was also clear that the couple would need a home, and arguably one big enough for the parents.

[6] Mr Li and Madame Zhang have savings they intended to use to assist in their retirement. It was this money they transferred to New Zealand both before and after the couple purchased their home. The money, other than that used to help buy the house, was placed on term deposit for them by their daughter. The evidence suggested the available interest rate was somewhat better than that which could be had in China.

[7] There is no doubt that Mr Li and Madame Zhang saw it as their obligation to assist their daughter and her husband…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NZHC 129
Decision Date: 10 February 2017

CaseChat Overview and Summary

Zhang and Li v Li [2017] NZHC 129 involved a dispute over the nature of a $335,500 contribution made by the plaintiffs' parents towards the purchase of a family home. The plaintiffs, Zhang and Li, sought to determine whether the contribution was a gift or a loan, and if neither, whether the plaintiffs held the money on trust for their parents. The first defendant, Meng Li, and the second defendant, Yi Ming Zhao, were also parties to the case. The central issue before the court was to ascertain the true character of the $335,500 contribution from the plaintiffs' parents. The plaintiffs argued that the money was a gift, while the parents claimed it was a loan. The court examined the circumstances surrounding the transfer of funds and the intentions of the parents at the time of the transfer.

The court found that the parents never intended to confer the beneficial interest on the plaintiffs and concluded that the money was a loan rather than a gift. The evidence indicated that the parents intended the money to be used temporarily to help the plaintiffs purchase a home, with the expectation of future repayment. The court rejected the argument that the money was a gift based on the lack of explicit statements of such intent and the parents' financial circumstances, which made it unlikely that they would give away such a significant portion of their retirement savings. The court also considered the possibility of a resulting trust but found it unnecessary given the clear evidence of the parents' intention for a loan.

The court ordered that the family home be sold and that the parents be repaid their capital advance from the proceeds, without interest. The remaining balance was to be split equally between the plaintiffs. The court also ordered that Yi Ming Zhao account for half of the balance in the ANZ account and that Meng Li account for half of the balance in the National Bank account. The plaintiffs were each to retain the chattels and furniture they presently possessed. The court reserved the right to return for orders concerning the house sale if necessary and directed that costs should follow the event in the normal way.

Orders