Liu v Yang [2015] NZHC 2965 (25 November 2015)

Last Updated: 7 December 2015

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-000563 [2015] NZHC 2965

BETWEEN	YING LIU Plaintiff
AND	KUN YANG Defendant

Hearing:	15 September 2015
Appearances:	L Kearns for the Plaintiff R Reed for the Defendant
Judgment:	25 November 2015

_{JUDGMENT OF ASSOCIATE JUDGE SARGISSON}

This judgment was delivered by me on 25 November 2015 at 4.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

_{Date.......................................}

Solicitors:

Philip Lee Law, Auckland

Prestige Lawyers Limited, Auckland

_{L Kearns, Auckland}

LIU v YANG [2015] NZHC 2965 [25 November 2015]

[1] This is an application for an order to dispose of a protest to jurisdiction in respect of a proceeding under the Property (Relationships) Act 1976 that was transferred to the High Court from the Family Court earlier this year.

[2] The application is opposed.

Background

[3] The plaintiff commenced the relationship property proceeding on

9 December 2014 in the District Court at North Shore. She seeks orders determining the respective shares of the parties in relationship property, including two properties situated in New Zealand, and seeks leave for that application to be heard out of time. The first is a property at 25 Ravenwood Drive, Forrest Hill, where the parties lived together for several years, and the second is a property at 9B Fontenoy Street, Mount Albert. Both properties were registered in the name of the respondent.

[4] In her claim the plaintiff describes herself as an international student, and as being of Forrest Hill, Auckland. The respondent is described as being an international student of unknown address in Australia. However, it is common ground that the respondent intends to live in China, the home of both parties before they came to New Zealand as students, though his present address is apparently somewhere in Australia.

[5] An order allowing substituted service of the proceeding on the respondent was made on 3 February 2015. The order transferring the proceeding to the High Court at Auckland was made by consent on 16 March 2015, at which time counsel for the respondent advised that he would be filing a formal protest to jurisdiction.

[6] On 25 March 2015 the respondent filed and served his protest to jurisdiction. The plaintiff’s application to set aside the protest was filed on 17 June 2015.

[7] While these proceedings have been ongoing, the respondent’s parents have filed a proceeding against the plaintiff¹. In that proceeding they allege a beneficial interest in the two properties. The respondent has since been joined in that proceeding as second defendant, since he is the registered owner of both properties.

The protest to jurisdiction

[8] The protest to jurisdiction listed the following grounds as the basis for the objection to jurisdiction:

(a) The parties married on 31 December 2009 in China, and on

10 September 2013 they dissolved their marriage in China following the process applicable there. They entered into an agreement, recording the dissolution of their marriage and division of their relationship property.

(b) The plaintiff prepared the agreement.

(c) The parties are citizens of China, and the defendant resides there. The plaintiff was residing in New Zealand on a temporary visa. The witnesses are in China.

(d) The parties’ decision to dissolve their marriage in China and divide their relationship property in China indicates a clear intention to be bound by Chinese law in relation to the dissolution of marriage and division of relationship property. Because the division of property is provided for in the divorce paperwork, questioning the validity of the Chinese relationship property agreement questions the validity of the dissolution of the parties’ marriage. That is said to be unreasonable because the plaintiff accepts the validity of the divorce; delayed by almost a year after the divorce to bring this action, making it out of time; and there is no injustice to the plaintiff in questioning the agreement in China, rather than New Zealand.

[9] At a conference held on 2 July 2015, Associate Judge Bell gave specific directions for the disposal of the application to set aside the protest. He invited the parties to refer to the Supreme Court’s decision in Commissioner of Inland Revenue v Redcliffe Forest Ventures Limited.² Affidavits have been filed in accordance with those directions.

Issues for determination

[10] The respondent’s case contests the Court’s jurisdiction to hear claims for division of property under the Property (Relationships) Act, on the ground that the parties have already submitted themselves to the law of the People’s Republic of China by reaching and registering a concluded divorce settlement. The first issue is therefore whether the New Zealand Court has jurisdiction to hear and decide this proceeding.

[11] Additionally, the respondent submits that if the People’s Republic of China does not have exclusive jurisdiction over the parties’ relationship property matters, the circumstances are such that the protest should stand on the grounds of forum non conveniens – that is, the second issue is whether, if the New Zealand Court has jurisdiction, it should decline to exercise that jurisdiction because China is a more appropriate forum for the proceeding.

[12] There are also minor issues as to whether I should grant leave to hear the plaintiff’s relationship property application out of time, and whether this proceeding should be consolidated with the trust proceeding involving the respondent’s parents.

The jurisdiction issue

[13] Section 7 of the Property (Relationships) Act relevantly states:

7 Application to movable or immovable property

(1) This Act applies to immovable property that is situated in New Zealand. (2)This Act applies to movable property that is situated in New Zealand or elsewhere, if one of the spouses or partners is domiciled in New Zealand—

(a) at the date of an application made under this Act; or

(b) at the date of any agreement between the spouses or partners relating to the division of their property; or

(c) at the date of his or her death.

(3) Despite subsection (2), if any order under this Act is sought against a person who is neither domiciled nor resident in New Zealand, the court may decline to make an order in respect of any movable property that is situated outside New Zealand.

[14] I am satisfied that the Court has jurisdiction to deal with the proceeding. The law in New Zealand is that the New Zealand Court has jurisdiction to determine issues relating to immovable property that is situated in New Zealand, irrespective of the domicile of the parties. That is the case whether or not the parties have entered into an agreement in China; the existence of an agreement will be a factor going to whether this Court should decline to make an order under subsection (3), rather than to whether it actually has jurisdiction. Likewise, this Court has jurisdiction over movable property where one of the spouses is domiciled in New Zealand. I am satisfied that Ms Liu is domiciled in New Zealand.

The forum conveniens issue

[15] Given that this Court has jurisdiction, the question arises whether it should choose not to exercise that jurisdiction as a response to complications caused by the interaction of New Zealand and Chinese law. As the Supreme Court stated in Commissioner of Inland Revenue v Redcliffe Forest Ventures Limited, the case that Bell AJ directed the parties to consider:³

The principal instance of a reason established by judicial authority for why a court should not exercise jurisdiction which, strictly it possesses, is the doctrine of forum non conveniens.

[16] As noted by Master Faire (as he then was) in Howson v Howson,⁴ the approach in New Zealand on forum non conveniens arguments has been to follow the approach set out in Spiliada Maritime Corporation v Cansulex.⁵ In that case,

_{Lord Goff of Chieveley summarised the law as follows. I omit the lengthy discussion}

³ _{Above n 1, at [27].}

⁴ _{Howson v Howson HC Hamilton CP52/01, 2 May 2002.}

⁵ Spiliada Maritime Corporation v Cansulex Ltd [1986] 3 WLR 972, [1987] AC 460 (HL)

of the shifting onus of proof, as that is a consideration which does not arise in this case:⁶

The basic principle is that a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice.

[...]

Since the question is whether there exists some other forum which is clearly more appropriate for the trial of the action, the court will look first to see what factors there are which point in the direction of another forum. These are the factors which Lord Diplock described, in MacShannon's case [1978] A.C. 795, 812, as indicating that justice can be done in the other forum at "substantially less inconvenience or expense." Having regard to the anxiety expressed in your Lordships' House in the Société du Gaz case, 1926 S.C. (H.L.) 13 concerning the use of the word "convenience" in this context, I respectfully consider that it may be more desirable, now that the English and Scottish principles are regarded as being the same, to adopt the expression used by my noble and learned friend, Lord Keith of Kinkel, in The Abidin Daver [1984] A.C. 398, 415, when he referred to the "natural forum" as being "that with which the action had the most real and substantial connection." So it is for connecting factors in this sense that the court must first look; and these will include not only factors affecting convenience or expense (such as availability of witnesses), but also other factors such as the law governing the relevant transaction (as to which see Crédit Chimique v. James Scott Engineering Group Ltd., 1982

S.L.T. 131), and the places where the parties respectively reside or carry on business.

If the court concludes at that stage that there is no other available forum which is clearly more appropriate for the trial of the action, it will ordinarily refuse a stay; see, e.g., the decision of the Court of Appeal in European Asian Bank A.G. v. Punjab and Sind Bank [1981] 2 Lloyd's Rep. 651. It is difficult to imagine circumstances when, in such a case, a stay may be granted.

If however the court concludes at that stage that there is some other available forum which prima facie is clearly more appropriate for the trial of the action, it will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted.

[17] That authority was approved by McGechan J in Gilmore v Gilmore, among other cases. McGechan J summarised the test for whether a foreign forum might be

_{more appropriate as follows:}⁷

⁶ _{At 476.}

⁷ [1993] NZFLR 561 at 564. Though Harrison J questioned the exact formulation of this test in Wang v Yin [2008] 3 NZLR 136 (HC), his doubts were based on whether, as expressed, it overcomplicated the relevant considerations. In this case, I consider that any potential

(a) Stay will be granted only where there is a foreign forum which is the appropriate forum in the sense that the case will be more suitably tried there in the interests of all parties and the interests of justice.

(b) The burden of proof rests on the defendant seeking a stay and foreign adjudication. The approach is objective.

(c) The burden of showing greater suitability is not merely to show New Zealand is not the natural or appropriate forum but to establish the foreign forum is clearly or distinctly more appropriate.

(d) In assessing that question, the Court looks to factors which show up the most real and substantial connection with the respective forums. These include, although not exclusively, such matters as convenience, expense and witness availability, all three of which are really matters of trial mechanics, but also include such matters as national law governing transactions or subject matter, respective residences and place of business, and indeed all other connections. An overall view is warranted.

(e) Even if it then appears the foreign forum is clearly more appropriate, the New Zealand Court may elect not to stay the New Zealand proceeding if there are circumstances by reason of which justice so requires. The burden of proof rests on the plaintiff so seeking to establish an exception. It appears to have been designed to deal with the possibility that a plaintiff might not obtain justice elsewhere, perhaps because of uncivilised or suspect judicial systems.

I add the following further observations.

(f) The fact proceedings are in train in the foreign forum, a so-called lis alibi pendens, is relevant but not decisive.

(g) The fact that a plaintiff may obtain legitimate personal or juridical advantage through proceeding in New Zealand is likewise relevant but not decisive. The appropriate forum must be determined on an objective basis serving the interests of both sides and the general interests of justice. Factors such as less adequate discovery abroad, or less generous awards, will not necessarily mean New Zealand Courts should hold the case back in New Zealand. A New Zealand plaintiff can find himself relegated to a forum in which the substantive law applied is for him relatively less satisfactory.

(h) Potential enforceability of the judgment obtained abroad has been regarded as relevant.

[18] The onus therefore is clearly upon the respondent to demonstrate that

New Zealand is the forum non conveniens.

[19] At the hearing, I asked the parties to provide me with any similar cases involving protest to jurisdiction in the context of relationship property in New Zealand and foreign resident owners where the foreign jurisdiction has been

_{held to be the forum conveniens. The only directly relevant authority I have been}

overcomplication makes no difference to the outcome, and the additional detail provided in the

Gilmore formulation is illustrative.

presented with is Wang v Yin.⁸ In that case, as in this, the parties were originally from a foreign country. They moved to New Zealand where they bought property, then divorced, and the husband moved back to his country of origin, Taiwan. Jurisdiction was not in issue; the case was argued on the basis of forum conveniens, as this application must be.⁹

[20] However, in that case there was an explicit agreement in Taiwan that the property was to be divided according to Taiwanese law. That agreement was made after the plaintiff (who was seeking relief in New Zealand) had been advised of her rights under New Zealand law, and that submitting to foreign authority might deprive her of those rights. The parties’ conscious choice was a key indication of submission to foreign jurisdiction, and that was a powerful factor in determining the appropriate forum. The agreement was not compliant with the formal requirements of

New Zealand relationship property agreements,¹⁰ but both parties had been fully

advised, and there was no real suggestion of duress. The plaintiff had had the benefit of the Taiwanese settlement before attempting to assert New Zealand jurisdiction over the land. Further factors pointing to Taiwan as the forum conveniens were that evidence on Taiwanese law would be required in order to determine the appropriate shares in the family home.

[21] Upon reflection, there are salient differences between that case and this. First, in Wang v Yin the only part of the marriage which had taken part in New Zealand was the purchase of property before separation. The parties had had children in Taiwan and purchased land there before moving to New Zealand and purchasing property. Though the wife remained living in New Zealand, the husband moved back to Taiwan five years before the divorce occurred. Here, the parties spent most of their married lives in New Zealand, and the vast majority of property is in New Zealand. The plaintiff says, in fact, that there is no property in China, movable or immovable. Second, the agreement in this case China was apparently signed before the plaintiff received any legal advice. It was not a separate

_{agreement, but an addendum to the petition for divorce. Further, there are}

⁸ _{Wang v Yin, above n 6.}

⁹ _{See at [22].}

¹⁰ Property (Relationships) Act 1976, s 21F.

allegations both of duress and of domestic violence in this case. That, in my view, rather undermines the force of the respondent’s submission that the parties freely submitted themselves to Chinese jurisdiction.

[22] Taking these factors into account, I am satisfied that the situation is not so similar to Wang v Yin that it is useful to apply that case directly. Rather, I prefer to conduct an entirely new analysis. The position can be stated briefly as follows:

(a) There are two immovable pieces of property in New Zealand. They are registered in the name of the respondent. A Court order is required for the disposition of those properties, as the Property (Relationships) Act makes it plain that the New Zealand Court has jurisdiction to determine the issue of disposition.

(b) There are also various movable pieces of property in New Zealand which need not necessarily be disposed of by a New Zealand Court order, but over which this Court has jurisdiction if one of the parties to the marriage is domiciled in New Zealand.

(c) The plaintiff alleges that she has a New Zealand domicile, and regards New Zealand as her permanent home. She has obtained a PhD qualification in New Zealand and employment in a senior professional position.

(d) Though the parties were born and married in China, they both resided in New Zealand when the property was acquired, and were in New Zealand for the vast majority of their relationship and marriage.

(e) The parties dissolved the divorce in China; an agreement for the division of property is apparently a standard part of that process, but it does not have the same checks and balances that are available in New Zealand. The parties’ signatures were not witnessed and there was no official confirmation that they each received any advice, much less independent advice. There is no determination and identification of

the status of property (relationship property or separate property). The plaintiff alleges she signed the agreement without advice and under duress.

(f) The respondent’s parents are engaged in a separate proceeding in which they allege that the properties were held for them on constructive trust. It does not appear to be disputed that the New Zealand Courts have jurisdiction to determine that issue. The ability to hear both the relationship property and the trust proceedings in the same country must be a factor in favour of New Zealand as the appropriate forum to determine this matter.

[23] I am not satisfied that the Chinese agreement, on the evidence I have received on this application, evidences an intention to be bound by Chinese law that outweighs those factors in making New Zealand the most suitable venue to decide the matter in the interests of all parties and the interests of justice, as the test is expressed in Gilmore. On the contrary, in relation to the land, the fact that it is situated in New Zealand is a powerful factor in favour of New Zealand as the forum conveniens. That is particularly so considering that there is concurrent litigation as to the beneficial ownership of the land ongoing in the New Zealand Courts. Further, it seems to me that all, or almost all, of the relationship assets are in this country; the evidence can be easily obtained; and hearing the relationship property proceeding here will allow all matters to be disposed of in the same jurisdiction. That is the opposite of what would have occurred in Wang v Yin, where taking jurisdiction would have seriously complicated the Taiwanese relationship property proceedings. The result of the application is likewise opposite.

[24] I consider that the respondent has not discharged the onus of proof that a stay should be granted in respect of this proceeding on the grounds of forum non conveniens, in respect either of the land or the immovable property. His protest to jurisdiction therefore must fail.

Application to be heard out of time

[25] Taking 10 September 2013 as the date of dissolution, and considering the fact that although she engaged in other litigation Ms Liu did not commence relationship property proceedings until 8 December 2014, Ms Liu is out of time for making an application for division of relationship property under the Property (Relationships)

Act 1976.¹¹

[26] A guide to factors governing the grant of an extension of time under this section was outlined by McMullin J in Beuker v Beuker.¹² Those factors are still relevant to applications, though more recent precedent states that they should not be taken as a comprehensive code, and undue weight should not be placed on the length of time between the expiry of the time limit and the bringing of the application, though a long delay increased the likelihood of an injustice arising to a respondent.¹³

The factors are:

(a) The length of time between the expiry of the statutory time limit and the bringing of the application;

(b) The adequacy of the explanation offered for the delay; (c) The merits of the case; and

(d) Prejudice to the respondent.

[27] In this case, the length of time between the expiry of the statutory time limit is not short, three months.¹⁴ The merits of Ms Liu’s case must surely be strong, as the division of property in New Zealand is likely to be very different to the division of property in China, and there is substantial property. As to prejudice to the

_{respondent, that is limited by the relatively short delay and by the fact that, due to his}

¹¹ _{Property (Relationships) Act 1976, s 24: the time limit is 12 months after final dissolution.}

¹² _{(1977) 1 MPC 20 (SC).}

¹³ _{Ritchie v Ritchie (1991) 8 FRNZ 197, [1992] NZFLR 266 (HC).}

14. Compare Jurgens v Ruhe FC Manukau FAM-2009-092-2233, 26 April 2010 where a delay of five months was considered short.

absence from New Zealand and the ongoing litigation involving his parents, his ability to deal with the alleged relationship property has been limited.

[28] I therefore consider that this is a clear case for a grant of leave.

Whether the two proceedings should be heard together

[29] The parties have filed a joint memorandum seeking consolidation of this proceeding and the trust claim by the respondent’s parents, CIV-2014-404-2156. Transfer of the relationship property proceedings from the Family Court to this Court was sought on that basis. I consider that the two matters are inextricably intertwined

and it is clearly in the interests of justice to resolve both at once.¹⁵

Result

[30] The protest to jurisdiction is set aside pursuant to High Court Rule 5.49. This

Court has jurisdiction to hear the application, and is the forum conveniens.

[31] I grant leave to hear Ms Liu’s application out of time pursuant to s 24 of the

Property (Relationships) Act 1976.

[32] I order that this proceeding and the proceeding in CIV-2014-404-2156 be consolidated under High Court Rule 10.12.

[33] I extend the time for the respondent to file a statement of defence to

20 working days after the date of this judgment.

[34] Once the statement of defence is filed, the Registrar is to allocate a case management conference.

¹⁵ See High Court Rule 10.12.

[35] As costs follow the event under the statutory costs regime, the plaintiff is entitled to costs. The defendant is to pay to the plaintiff 2B costs plus disbursements

_{as fixed by the Registrar.}

Associate Judge Sargisson