Zhou v Lassnig
[2023] NZHC 714
•3 April 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-000738
[2023] NZHC 714
BETWEEN QIAN ZHOU
Applicant
AND
BARTHOLOMAEUS ROLAND LASSNIG
First Respondent
QIAN ZHOU and BARTHOLOMAEUS
ROLAND LASSNIG as trustees of the Lassnig Family Trust
Second Respondent
Hearing: 28 March 2023 (by telephone) Appearances:
S Wilson for Applicant P Chan for Respondent
Judgment:
3 April 2023
JUDGMENT OF VENNING J
Re Stay
This judgment was delivered by me on 3 April 2023 at 12.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Ayres Legal, Auckland
Affordable Law Ltd, Auckland
Counsel:V Crawshaw KC/L La Mantia/S Wilson, Auckland P Chan, Auckland
ZHOU v LASSNIG [2023] NZHC 714 [3 April 2023]
[1] In a judgment delivered on 30 September 20221 the Court allowed Qian Zhou’s appeal against the decision of Judge Maude in the Family Court.2 The Family Court had directed that the Lassnig Family Trust net assets were to be resettled on a 50/50 division between the parties. This Court replaced that decision determining instead that division was to occur on a 60/40 basis in favour of Ms Zhou.
[2] Ms Zhou sought leave to appeal to the Court of Appeal. Rather than the 60/40 division of the Trust assets ordered by the Court she seeks a 90/10 division in her favour. In the event Ms Zhou’s application for leave was granted, Mr Lassnig sought leave to cross-appeal.
[3]The Court of Appeal recently granted leave on both applications.
[4] Pending determination of the substantive appeal Ms Zhou seeks a stay of execution of this Court’s decision. The Court had allocated 9.00 am, 28 March 2023 to hear her application for stay. On 27 March 2023 counsel for Ms Zhou sought an adjournment of that hearing to enable her to take further instructions from Ms Zhou. Ms Wilson repeated that application at the outset of the teleconference hearing. Mr Chan opposed it. I declined the application for adjournment. The Court had allocated the hearing on the basis the Court of Appeal decision on the leave application would be available, which it was. It is Ms Zhou’s application and she should have been in a position to advance it. The Court could not accommodate another hearing until the end of April. Mr Lassnig is entitled to some certainty on the application. For those reasons I declined the application for stay but delayed delivery of this judgment to give Ms Zhou and her advisers time to try and resolve a consent position with Mr Lassnig’s advisers as Ms Wilson suggested.
[5] The application for stay is made under r 12 of the Court of Appeal (Civil) Rules 2005. Pending determination of the application for leave to appeal or appeal this Court (or the Court of Appeal) may order a stay of the proceeding or otherwise grant any interim relief. In New Zealand Insulators Ltd v ABB Ltd the Court of Appeal approved
1 Zhou v Lassnig [2022] NZHC 2475.
2 Zhou v Lassnig [2022] NZFC 2747.
the following statement of Buckley LJ in Minnesota Mining and Manufacturing Co v Johnson & Johnson:3
The object, where it can be fairly achieved, must surely be so to arrange matters that, when the appeal comes to be heard, the appellate court may be able to do justice between the parties, whatever the outcome of the appeal may be.
[6] The factors generally taken into account in the exercise of the discretion as to stay are:
(a)whether the appeal may be rendered nugatory;
(b)the bona fides of the applicant as to the prosecution of the appeal;
(c)whether the successful party will be injuriously affected;
(d)the effect on third parties;
(e)the novelty and importance of questions involved;
(f)public interest;
(g)the overall balance of convenience; and
(h)the apparent strength of the appeal.
Will the appeal be rendered nugatory?
[7] Ms Zhou’s position on the stay is set out in full in the detailed application and her accompanying affidavit. She wishes to retain both properties currently held by the Trust, namely 16 Jack Barry Road, and 61 Young Access. 61 Young Access has been Ms Zhou’s home for a number of years. She seeks to retain it as her home. If the judgment was executed now so the Trust’s equity was divided on a 60/40 basis both Trust properties would need to be sold. The value of Jack Barry is estimated at
3 New Zealand Insulators Ltd v ABB Ltd [2006] 18 RNZ 459 at [13] citing Minnesota Mining and Manufacturing Co v Johnson & Johnson [1976] RPC 671 (CA).
approximately $1.7 million which is less than Mr Lassnig’s entitlement under the decision of the Court which is approximately $1.9 million.
[8] Ms Zhou’s position is that she may not be able to raise further bank finance to meet the shortfall and even if the net sale proceeds from the sale of the Jack Barry were sufficient to meet Mr Lassnig’s entitlement, Young Access may also need to be sold as she would struggle to meet the mortgage repayments of Young Access.
[9] Next, if Mr Lassnig was paid 40 per cent of the net equity of the Trust before the leave application and appeal were determined and the applicant was ultimately successful, there was no evidence Mr Lassnig could provide adequate surety to repay any distribution.
[10] Mr Lassnig’s position is that, even if Ms Zhou was entirely successful on appeal and succeeded in a division of 90/10 in her favour, his 10 per cent would still be over $400,000. That sum, together with repayment of his capital contribution of
$290,000 would still be less than the estimated net sale proceeds of Jack Barry after payment of the mortgage. The balance, together with the Young Access property could be retained pending the outcome of the appeal. The sale of the Jack Barry property in the meantime would not affect Ms Zhou’s ability to retain the Young Access property.
[11] The Court notes that in her affidavit of 31 October 2022 Ms Zhou had initially indicated her consent to the sale of the Jack Barry property, if the mortgage lending secured against the Young Access property was fully repaid and the balance paid into a solicitor’s trust account, so she was at least at that time open to the sale of that property.
[12]The position appears to be as follows:
Young Access (estimated value) $4,625,000
Jack Barry (estimated value) $1,700,000
$6,325,000
Less mortgage (approximately) $640,000
$5,685,000
Less contributions (approximately)
Ms Zhou $1,250,000 Mr Lassnig $290,000 Ms Zhou’s son $85,000 $1,625,000
$1,625,000
Net Trust Equity (approx.) $4,060,000
[13] On Ms Zhou’s best position on appeal (a 90/10) split in her favour, Mr Lassnig would receive 10 per cent of the $4,060,000 or $406,000 together with his initial contribution of $290,000, in total $696,000. There would be ample equity in the net proceeds of sale of Jack Barry (even after payment of the mortgage in full) for Mr Lassnig to be paid an on account payment of $696,000 with the balance being held, together with Young Access to be determined following the appeal.
[14] Ms Wilson emphasised the figures were estimates only, which I accept. Nevertheless, the above would leave a substantial surplus of in excess of $300,000.
[15] The judgment of this Court (like the Family Court judgment) contemplated that the details of the resettlement of the Trust would be resolved and implemented by the Family Court. The practical position is that, absent agreement, any implementation of the judgment of this Court would require further directions from the Family Court.
[16] I do not accept that if the Family Court was to make orders to advance the sale of the Jack Barry property in the interim the appeal would be rendered nugatory if a stay is not granted.
The bona fides of Ms Zhou to the prosecution of the appeal
[17] The Court accepts Ms Zhou intends to pursue the appeal and Mr Lassnig intends to pursue his cross-appeal. However, any hearing is likely to be towards the end of this year at the earliest.
Would Mr Lassnig be affected by a stay?
[18] Mr Lassnig would be affected by a stay. I accept the submission from Mr Lassnig that he is significantly prejudiced. He has been paying rent since separation in 2016 while the Trust has retained significant assets. He has not received any benefit from the Trust since separation.
The effect on third parties
[19] There are no other beneficiaries of the Trust who are potentially affected. While there are other beneficiaries both this Court and the Family Court have acknowledged that the principal beneficiaries of the Trust for practical purposes are Ms Zhou and Mr Lassnig.
Novelty and importance of the questions involved
[20] While it is suggested the appeal potentially involves issues of importance in terms of the application of the tests under s 182, Family Proceedings Act 1990, with respect to that submission the Supreme Court has recently in Preston v Preston clarified the approach.4 It is a matter of application of the approach.
Public interest
[21]There is no public interest in the particular proceeding.
Overall balance of convenience
[22] The overall balance of convenience favours Mr Lassnig receiving at least part of the Trust assets which it is acknowledged by both parties is to be resettled.
Result
[23] The judgment of this Court directing a resettlement of the Trust on a 60/40 basis in favour of Ms Zhou is stayed subject only to:
4 Preston v Preston [2021] NZSC 154, [2021] 1 NZLR 651.
(a)Mr Lassnig being able to pursue orders for sale of the Jack Barry Road property in the Family Court; and
(b)from the net proceeds of sale of the Jack Barry Road property Mr Lassnig is to be paid the sum of $406,000 together with his capital contribution of $290,000;
(c)any balance of the net proceeds of sale after the payments at (b) above is to be held in a solicitor’s account pending further order of the Court.
Costs
[24] Although a stay has been granted it has been granted on terms. I consider costs should lie where they fall on the application.
Venning J
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