Lu v Huang [2016] NZHC 2311 (28 September 2016)

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NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO 11D OF THE FAMILY COURTS ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE

BETWEEN	LU Appellant
AND	HUANG First Respondent
AND	FEN _{Second Respondent}

Hearing:	9, 10, 11, 13 & 19 May 2016
Appearances:	S J Fairclough for the Appellant First Respondent in person No appearance for the Second Respondent A Watkins as Counsel assisting the Court
_Judgment:	_{28 September 2016}

[1] A couple marry in China. A few years later they buy a home jointly in New Zealand with a mortgage. Some years later the couple separate. Most of the proceeds of sale from their home are used to buy another residential property in the name of the husband’s first wife. The underlying issue in this case is whether the first wife was the true owner of the first home and thus entitled to the proceeds of

[2] The first respondent (Ms Huang) and second respondent (Mr Fen) were married in China in December 1997. They moved to New Zealand in 2001 and jointly purchased a home there (the Auckland property). In 2005 they separated. In November 2005 they sold the Auckland property. (By ss 11B to 11D Family Courts Act 1980 and s 35A of the Property (Relationships) Act 1976, all details that might lead to the identification of the parties to these proceedings are suppressed. This judgment has been anonymised. The names used for the parties and all witnesses are fictitious.)

[4] Neither Ms Huang nor Mr Fen was legally represented in those proceedings. The Court appointed Mr O’Donnell as counsel to assist the Court.

[5] Mr Fen told the Family Court that the Auckland property had been bought with funds advanced from families in China. He told the Family Court the proceeds of sale from the Auckland property were used to repay those families and business debts he had in China. Those proceeds were, in fact, used to buy a property at [...], Christchurch (the Christchurch property) in the name of Mr Fen’s former wife, the appellant (Ms Lu).

[6] Ms Huang said the money from China used to pay for their Auckland property was theirs and Mr Fen was not telling the truth.

[7] In an initial judgment of the Family Court on 25 January 2013 (the first judgment), the Family Court Judge found that Mr Fen’s evidence as to where the proceeds from the sale of the Auckland property had gone was a fabrication.¹Those proceeds were relationship property and had been used to purchase the Christchurch

_{property in the name of Ms Lu. $22,569.65 held in an account in the
name of Mr}

Fen’s son, Tim Fen, at the date of separation was also relationship property. Those funds had also been used in the purchase of the Christchurch property after separation.

[8] The Judge held they would each keep the motor vehicle they had retained on separation without the need for any further accounting. Ms Huang and Mr Fen were entitled to share equally in any further reparation obtained by the District Court in connection with a burglary which they had suffered. The Judge ordered Mr Fen to pay costs of $8,047, a substantial portion of costs which the Court had incurred in appointing Mr O’Donnell as counsel to assist.

[9] The Judge considered it could be appropriate for the Court to make an order setting aside the transfer of the Christchurch property to Ms Lu but this should be the subject of a formal application. The Judge adjourned the proceedings to allow Ms Huang to make an application under s 44 of the Property (Relationships) Act 1976 (the PRA). The Judge noted that an application under s 44 would have to be served on Ms Lu in China as she had a right to be heard.

[11] On 3 May 2013, Mr O’Donnell filed an application (the s 44 application) to set aside Ms Lu’s purchase of the Christchurch property on the grounds that relationship property had been used to acquire the property and Mr Fen had made relationship property available for that purchase in order to defeat the rights of Ms Huang.

[12] The same day, there was a conference before the Family Court Judge. Her Honour directed that an order for substituted service and the memorandum of counsel was to be served on Mr Fen and on Ms Lu by ordinary post at the Christchurch property.²Mr O’Donnell’s memorandum summarised the background to the situation and had attached to it a copy of the first judgment and a Judge’s

[13] Mr Fen filed a notice of defence to the s 44 application. Also filed with the Court at that time was a statement from Ms Lu in Mandarin together with an English translation made by her son, Tim Fen.

[14] On 8 July 2013, a Judge directed that Ms Lu’s statement needed to be in affidavit form.³The Judge’s minute recorded that Tim Fen was to assist her with this. On 27 August 2013, the Family Court received an affidavit sworn by Ms Lu in Zhengzhou, China on 14 August 2013. The document she signed was the English translation of her earlier statement.

[15] The hearing of the s 44 application took place on 27 May 2014. Mr O’Donnell appeared as counsel to assist. The Family Court Judge presiding at this hearing noted that the registered proprietor of the Christchurch property, Ms Lu, “was not present at the hearing nor was she represented by counsel”.⁴The Judge said he had nevertheless carefully read the document prepared and filed by her. He summarised that statement.

[16] The Judge noted this evidence had not been before the Family Court before the final judgment. He said that, if true, the statement contradicted the evidence of Mr Fen. The Judge said he was not going to attempt to determine the truth or otherwise of information which had now been put before the Court by Mr Fen in an attempt to show the conclusion in the first judgment was wrong. He said, regardless of that, the truth was that the Auckland property was relationship property and the net proceeds should have been available for division between Ms Huang and Mr Fen. The Judge remained satisfied that proceeds of sale and other relationship property funds from the son’s bank account had been used to purchase the Christchurch property in the name of Ms Lu. He said he was expressing no opinion on whether Ms Lu might have had, or might still have, some claim in contract or in equity against Ms Huang and Mr Fen. He said that, even if that was so, it would not change the fact relationship property had been used to acquire the Christchurch property. The Judge was satisfied that this had happened with the deliberate purpose

_{of defeating Ms Huang’s claim. He said he was not in a position
to determine the}

extent of such a claim but was in no doubt that Ms Huang had the right to make a claim.

• vesting title of the property in the Registrar of the District Court for the purpose of sale;

• that the Registrar should have any and all powers required to effect the sale of the property, including the eviction of any people living in the property; and

• for the proceeds of sale to be held in an interest-bearing account pending further order of the Court.

[18] He directed that Mr O’Donnell’s costs, as counsel to assist the Court, should be fixed on a category 2 basis in accordance with the District Courts Rules and should be paid from the net proceeds of sale of the Christchurch property.

[19] On 30 October 2014, Ms Lu applied for leave to appeal the orders made in the first and second judgments.

[20] The application was made on the grounds that she had never been served with or had brought properly to her attention the proceedings that had resulted in the orders made. With the application was an affidavit from Tim Fen, the son of Mr Fen and Ms Lu. He said he had made a mistake in translating his mother’s first statement. Instead of commencing with “I have heard and got relative documents from my son [Tim Fen] regarding the Family Court case of my Christchurch property”, the statement should have begun “I have heard from my son about my property matter. I appreciate the Court for giving me a chance to make my statement”.

[21] In her affidavit, Ms Lu said she had known nothing about the proceedings as at 25 January 2013 when the first judgment was delivered. She said the first she

knew about the proceedings was in June 2013 when her son told her the Court had asked her to make a statement of what had happened over the purchase of the Auckland and Christchurch properties, which she did. She said she “was not aware the Court was determining, or could determine, [her] interest in [the Christchurch property]”.

[22] In her affidavit, she described how she and three families had provided funds from China for the purchase of the Auckland property on the basis they were to own that property.

December 2014. That interim order has been extended until the hearing of the leave and stay application.⁶

[24] It was apparent from the Family Court judgments that, if Ms Lu’s affidavit was true, Mr Fen had not told the Family Court the whole truth of how and from what source he had obtained funds for the purchase of the Auckland property. It was also apparent that he had given false evidence to the Court as to where the sale proceeds had gone.

[25] Against that background, the Court had to be concerned that the application

[26] On 1 May 2015, I issued a minute directing Ms Lu to obtain sworn statements from any witness whose evidence she wished to rely upon in support of her application and any business records, bank accounts or other documents which were relevant to her claims as to how she provided the funds for the purchase of the Auckland property, the dealings she had with any other families who had contributed

funds and her purchase of the Christchurch property.⁷I also directed counsel should

be appointed to assist the Court. With Mr O’Donnell being unavailable, Mr Watkins

[27] I recorded in a minute that, given the unusual circumstances of this particular case, it was unlikely leave to appeal would be granted solely on the basis Ms Lu was not served with the proceedings.⁸I recorded that the Court had to concern itself with the possibility that the purchase of the property and the basis on which she claimed the proceeds of sale from the Auckland property were hers could be part of a dishonest plan to deprive Ms Huang of her relationship property. I indicated that the Court needed to have an opportunity to assess whether the evidence was of sufficient credibility to require either the High Court or the Family Court to revisit the

[28] In a conference of 8 October 2015, Mr Fairclough, counsel for Ms Lu, told me he had filed all the evidence he wished to put before the Court. Mr Watkins advised me that he had been able to independently confirm that Ms Lu’s son had made a mistake in translating a statement she had provided so as to misinform the Family Court by indicating that she had received the Family Court documents that had to be served on her. Mr Watkins also said it appeared the Family Court had not sent copies of documents to Ms Lu in the manner directed by the Family Court Judge on 3 May 2013.

[29] Both Mr Watkins and Mr Fairclough considered it would be in the interests of justice and appropriate for the High Court to hear evidence from those witnesses who had filed affidavits in relation to the application for leave. It was also agreed that such evidence, with cross-examination, could go a long way towards resolving the extent of Ms Lu’s interest, if any, in respect of the Christchurch property.

[30] Against that background, I directed the application for leave should be set down for hearing with witnesses to be available for cross-examination and a Court approved interpreter to be available in the High Court to assist with the translation of evidence.

1. whether leave should be granted to Ms Lu extending the time for her to appeal both the first and second judgments of the Family Court;

3. if the judgments are set aside, what, if any, further orders should be made to allow any of the parties to realise any interest they might have in the Christchurch property.

[32] Before the first hearing, the Court had a report from a Court-appointed forensic accountant, which showed most of the proceeds of sale from the Auckland property, after repayment of a mortgage, had been used to acquire the Christchurch property in Ms Lu’s name without ever having been transferred to China. Ms Lu was not given notice of the proceedings at that point. This was probably because the main issue then was whether the funds from the sale of the Auckland property had been used to acquire the Christchurch property or whether, as Mr Fen claimed, the monies had been sent to China to repay debt. The Judge was also careful not to determine just what Ms Huang’s interest might be in the Christchurch property.

[33] Nevertheless, the Family Court’s determination, that funds from the Auckland property were relationship property and had been used to acquire the Christchurch property, had the potential to affect Ms Lu’s interest in the Christchurch property. With her being the apparent owner and holding title to the Christchurch property, once there was evidence before the Family Court that the sale proceeds from the Auckland property had been used to buy the Christchurch property, Ms Lu could have been joined as a party to the proceedings. She could have been given the opportunity to participate before the Court determined that funds from the sale of the Auckland property were relationship property so as to make it likely Ms Huang would have a relationship property interest in the Christchurch property.

[34] In the particular circumstances of this case, it is in the interests of justice for leave to be granted to Ms Lu to appeal the first judgment except to the extent of those matters over which there is no dispute. Through granting such leave, I will be

able to deal with all issues between the parties comprehensively, taking into account the additional evidence which I have heard in this Court.

[36] It is in the interests of justice that Ms Lu be given leave to appeal those parts of the Family Court judgment other than the orders that:⁹

(a) Ms Huang and Mr Fen share equally in any further reparation obtained by the District Court in connection with a burglary which they had suffered;

(b) they each keep the motor vehicle they had retained on separation without the need for any further accounting; and

(c) they each retain the other family chattels in accordance with the way they were divided between them following separation.

[37] Regardless of what rights, if any, Ms Lu had to some or all of the proceeds of sale from the Auckland property, after the first judgment, she had an interest in the continuing proceedings and the s 44 application as the registered owner of the Christchurch property. It is not clear that she had adequate notice of the continuing proceedings, the extent to which the Court might interfere with her ownership of that property or the steps that she had to take to ensure she was involved as a party to the proceedings. If she did receive any documents, they had not been translated into Mandarin so that she would be able to understand them. There is no record on the Family Court file that the Family Court sent the stipulated documents to her at the address of the Christchurch property as a Judge had directed.

[38] As required, Ms Lu did provide her statement to the Family Court as an affidavit on 27 August 2013. At the end of that statement, she said she would do her

_{best to cooperate in providing further evidence and would like to
participate in a}

conference with the assistance of an interpreter. With her statement, she provided full contact details. Despite that, the Court took no steps to ensure she was aware of what was happening in the proceedings.

[39] On that basis, it is appropriate to grant leave to Ms Lu to file an appeal against the second judgment. This is also in the interests of justice in that it enables me to deal substantively with the issues between all three parties on the basis of all evidence which was given in the Family Court and the further evidence I heard in this Court. I grant leave accordingly.

[40] The hearing proceeded on the record of proceedings in the Family Court and the further affidavits filed for Ms Lu and Ms Huang. Mr Watkins had also arranged for Mr Fen to be cross-examined. I permitted Ms Huang to give some further evidence in relation to issues which had arisen during the hearing. She was also cross-examined by Mr Fairclough and questioned by Mr Watkins. There was extensive cross-examination by Mr Watkins of Ms Lu, Mr Fen and Tim Fen. Two witnesses, who had sworn affidavits in support of Ms Lu’s application, gave evidence by audiovisual link from China and were also cross-examined. The evidence of all witnesses, other than Ms Huang and Tim Fen, was taken with the aid of an interpreter.

[41] In her notice of appeal, Ms Lu sought to set aside the orders that had been made in the second judgment. The relief she sought was the ability to have her former legal and beneficial interest in the Auckland property and in the Christchurch property determined in separate proceedings she wished to commence in the High Court.

[42] With the way the case has proceeded, subject to one reservation, Ms Lu has accepted through her counsel that she has now been able to put before the High Court on the appeal all evidence she wishes to in relation to her claimed beneficial interest in the Auckland property and her claimed legal and beneficial interest in the Christchurch property.

[43] Ms Lu’s position, through the evidence she provided by affidavits in the High Court from both herself and witnesses, was that she and three other families provided the funds from China required for the purchase of the Auckland property. They achieved this through a written agreement with both Mr Fen and Ms Huang that Ms Lu and the three families in China would be entitled to all the proceeds of sale from the Auckland property. Ms Lu says that she reimbursed the three other Chinese families for the amounts they contributed and accordingly acquired their rights under the agreement; she was thus entitled to the proceeds of sale from the Auckland property to the extent they were invested in the Christchurch property. The balance of the Christchurch property was acquired with a loan which she obtained in her name. Ms Lu says she has been responsible for all the payments on that loan and accordingly she is the owner of the Christchurch property, both legally and beneficially.

[44] Through his evidence in the Family Court, Mr Fen denied he had any interest in the Christchurch property. He took no steps in relation to the appeal but did make himself available for cross-examination. He has not withdrawn any of the evidence he gave in the Family Court. He did not argue before me that he sought to benefit from the Christchurch property. After he had finished giving evidence, he told me that he understood I may have to decide how the Christchurch property should be dealt with. He accepted that it would be appropriate for me to do this. I confirmed this with the assistance of the interpreter.

[45] Ms Huang says that the funds from China she and Mr Fen put towards the purchase of the Auckland property were funds that belonged to each of them. She denies that Ms Lu contributed any funds towards the purchase of the Auckland property. She denies there was any agreement with Ms Lu that either Ms Lu or other Chinese families would be entitled to all the proceeds of sale from the Auckland property. She says the Auckland property was a family home, it was relationship property and thus they should have shared equally in the proceeds. She thus says the Family Court Judge was right to conclude, after the first hearing, that relationship property had been used to acquire the Christchurch property. She says the conclusions the Judge came to in relation to the status of the Auckland property and the application of the proceeds of sale from that property in the purchase of the

Christchurch property were justified. Ms Huang wants the Court to recognise her interest in the Christchurch property and to do what is required to enable her to realise her interest in that property.

[46] Mr Watkins, as counsel to assist the Court, has ensured that the evidence of the various witnesses was tested through cross-examination to the extent required for the Court to make the assessments of credibility which, in all the circumstances of this case, are crucial in determining the parties’ respective interests in the Christchurch property and if and how they should be realised.

[47] He submitted there is no need for Ms Lu’s claims in this regard to be the subject of separate proceedings. He submits that, pursuant to s 39 PRA, this Court can determine the legal and beneficial interests of Ms Lu and the relationship property interests of Mr Fen and Ms Huang in both the Auckland and Christchurch properties and make any orders that may be required to allow the parties to realise their respective interests, if any, in the Christchurch property.

[48] With all the further evidence I have heard, I can determine what, if any, legal and beneficial interest Ms Lu had in the Auckland property and in the proceeds of sale of that property, and the legal and beneficial interest she has in the Christchurch property.¹⁰

[49] Ms Huang’s evidence, as given in the Family Court and in further affidavits

filed in the High Court, has not been discredited in any significant or relevant way.

[50] Ms Huang said she and Mr Fen were married in China on 2 December 1997. They moved from China to New Zealand in March 2001. They each had a son from

_{earlier marriages who came to New Zealand to live with them. In June
2001, they}

¹⁰Property (Relationships) Act 1976, s 39(3); District Courts Act 1947, ss 75-76.

bought the Auckland property for $205,000. This property was purchased with an ASB bank loan of $120,000. She and Mr Fen provided a further $85,000. She said she provided $35,000 from her bank account in China. Mr Fen provided the remaining funds.

[51] She said they separated in August 2005. They sold the Auckland property in an agreement dated 5 October 2005 for $360,000. On settlement, on 10 November

[52] Mr Fen let her have $30,000 from the sale which she deposited into her son’s bank account. She annexed to her affidavit bank statements for the joint account showing that, after she had received $30,000, $244,869 had been paid from their joint bank account into another account.

[53] Ms Huang said that following the sale of the home Mr Fen wanted a reconciliation but also threatened her that, if she did not return to him, he would kill her and also get back the $30,000 she had initially been paid. She and her son were moved into a safe house with the help of the police. She obtained a protection order on 21 December 2005. Ms Huang said it took her time to obtain the strength to issue proceedings but she did file proceedings in August 2007 because she wanted to receive her one-half share of relationship property. She said, at that time, Mr Fen was living with his parents and his son at the Christchurch property. This property was registered in the name of Ms Lu from whom he divorced in 1997. Ms Huang believed this had been done in order to defeat her claims.

[54] After Mr Fen had made claims that money for the purchase of the Auckland property had been provided by families in China, Ms Huang said she had no knowledge of this, that they had pooled their financial resources before and after coming to New Zealand and used those funds to pay $85,000 towards the purchase of the Auckland property. She said they had both contributed to paying off the mortgage.

nothing to do with his ex-wife. In that affidavit and in oral evidence before me, she made it clear she would not have wanted Mr Fen’s ex-wife to have an investment in his new married life. She knew that, with his work in China in an import and export business, Mr Fen knew how to transfer money in and out of China. She did not know how he had arranged the transfer. She said he had not told her of arranging to obtain money from anyone else and that she believed they were using their own money when buying the Auckland house. After Ms Lu had claimed she had a written agreement with Mr Fen and Ms Huang over the Auckland property, Ms Huang denied there was any such agreement.

2001. It had not been produced or referred to in the Family Court proceedings. The note referred to various sums including, in Ms Huang’s handwriting, a reference to USD 11,899. I accept her evidence that this was a note as to cash and other funds they had available to them in New Zealand at that time. The note is not inconsistent in any way with Ms Huang’s evidence as to the way she and Mr Fen used the funds available to them from China to pay for the Auckland property.

[57] Ms Huang was also cross-examined as to transactions that had taken place on a bank account she had in China before she and Mr Fen came to New Zealand. Ms Huang accepted that significant sums had gone into a bank account in China after it was opened on 21 January 2001. She accepted that CNY 130,000¹¹had been paid into that account and on the same day CNY 74,000 was taken out, CNY 152,000 had been deposited on 14 February 2001 and on 16 February 2001 CNY 208,000 had

[58] Ms Huang said the deposits involved payments from her first husband and a payment for long service leave. She said there were a number of major transactions in the period just before she came to New Zealand and that there were deposits of around CNY 200,000 in cash. She said she could specifically remember giving Mr Fen CNY 100,000 for him “specially to transfer to New Zealand for our new life”. Mr Fairclough suggested to her that CNY 100,000 would have translated to

¹¹Chinese Yuan. In the evidence, the currency was often referred to as Renminbi.

when she first explained what she had put towards the purchase of the Auckland property. Ms Huang said she had based her figure of NZ$35,000 on what, at the time of her affidavit in 2007, she had thought CNY 100,000 would have been. She said she had given him this sum in cash and readily acknowledged she did not have any documentary record of this. She said such cash transactions were common in China at the time. She said they did not bring this CNY 100,000 to New Zealand when they first came but that it was part of what they had put together and what was used to pay the deposit on the home.

[59] The precise amount Ms Huang and Mr Fen contributed from their separate funds that had remained in China when they came to New Zealand is immaterial. Her explanation as to why she thought the contribution from her Chinese funds was NZ$35,000 is reasonable. She did not have documents recording the amount she had handed over to Mr Fen. Her affidavit was sworn some six years after they had bought the Auckland property. At the time she swore that first affidavit, the precise amount she had contributed to the purchase personally was immaterial. The discrepancy between the NZ$35,000 and what may have been more correctly NZ$30,000 does not cause me to question her honesty with regard to her stated belief that the balance of the purchase price for the Auckland property was paid with funds that they both had available to them from China. The bank statement she provided is documentary evidence that around the time of the purchase she had funds sufficient to contribute either $30,000 or $35,000 to the purchase of the Auckland property.

[60] Ms Huang’s credibility was attacked on the basis that in the Family Court she had not explained where the funds from China had come from, even after Mr Fen had claimed in documents filed in the Family Court that this would provide the truth as to what happened. Ms Huang said that she had not understood this was something she needed to do because she had always understood that it was their money which was transferred to New Zealand and how it was transferred and who helped had nothing to do with the claims which she was making in the Family Court.

[61] It was also suggested that when the Auckland property was sold she had been willing to accept NZ$30,000 for her entitlement. She explained that this was all Mr

Fen was prepared to let her have at that time; he had told her she did not deserve any more. Given the threats he had made against her (as referred to in the affidavit she had filed in support of her application for a protection order), she felt she had no option but to initially accept that sum. Mr Fairclough suggested she would not have had any ongoing fear of Mr Fen because she had obtained a protection order in December 2005.

[62] I accept Ms Huang’s explanation as to why she did not insist on getting a greater sum immediately following the sale. She and her son were in a precarious position financially. Given the threats she had been subjected to, and Mr Fen’s subsequent conduct throughout the course of the relationship property proceedings in the Family Court, I accept she was genuinely fearful for her safety, and with good reason.

[63] The fact she accepted a payment of NZ$30,000 initially is not inconsistent with the evidence she has given throughout the history of these proceedings as to how the purchase of the Auckland property was funded and her complete ignorance of any involvement of Ms Lu in that purchase.

[64] In a report following his interview of Mr Fen on 30 May 2008, Mr O’Donnell said Mr Fen had told him NZ$85,000 for the purchase of the Auckland property had been provided by three Chinese families on the basis they would be entitled to any profit from the sale of the Auckland property. Mr Fen said these families were funding the purchase of the Auckland property so their children could attend Avondale College. Mr Fen had told him Ms Huang had no money in China to contribute to the purchase.

[65] In response to that report, Ms Huang swore an affidavit stating that much of this information was a lie. She said, in applying for immigration to New Zealand, they had shown they had sufficient funds to support themselves for two years living in New Zealand. Although they had made some enquiries as to the possibility of friends sending children to Avondale College, she said those people had decided not to send children and that was all there was to it. She said the whole account as to how those people had provided funds for the purchase was “a twisted story and full

of lies”. As to Mr Fen’s assertion that she did not have any funds to contribute

towards the purchase, she produced the bank statement showing the deposits of CNY

130,000 and CNY 152,000 made into her account in January and February 2001 and the withdrawal of CNY 188,700 (approximately NZ$55,500) on 19 February 2001.

[66] As to Mr Fen’s claim that she had refused to put funds towards the purchase of the Auckland property, she said their money had been paid into a joint ASB bank account from which a bank cheque was drawn to put towards the purchase.

[67] Ms Huang said when she and Mr Fen first came to New Zealand in 2001 they lived in Royal Oak, far from Avondale College and had nothing to do with that college. Tim Fen was enrolled at a different high school. Ms Huang said Tim Fen changed schools and they learned about Avondale College only after they had purchased the Auckland property. She was not challenged as to that evidence in the hearing before me.

[68] Consistent with Ms Huang’s evidence, I note that Ms Lu’s counsel provided to Mr Watkins a statement of 2 July 2001 for the joint ASB account of Ms Huang and Mr Fen. It shows that on 5 June 2001 there was a credit in that account of

$70,000 described as “cashflow deposit [Ms Huang], Royal Oak”. On 14 June 2001, there was a withdrawal from that account of $75,783. Those transactions are consistent with other evidence of payments from Hong Kong into Ms Huang’s account. The notation is also consistent with their residing in Royal Oak before the purchase of the Auckland property.

[69] As to the disposition of the sale proceeds, she said that Mr Fen had told her that she would only get $30,000. She had found out from the ASB bank manager that Mr Fen had a personal ASB bank account that the $244,869 had been paid into. She said Mr Fen was the only person able to tell the Court where the $244,869 had gone. She roundly denied that there was any agreement that they would not share in property which they acquired during their marriage.

[70] In his evidence in the Family Court, Mr Fen said Ms Huang was not telling the truth about contributing funds from China for the purchase because she could not have brought the amount she said to New Zealand. I attach no weight to that argument. Ms Huang did not claim to have brought with her from China when she immigrated to New Zealand all the funds she used for the purchase. She claimed she gave those funds to Mr Fen and that he ultimately arranged for them to come from China to New Zealand. I accept there were restrictions on the transfer of funds from mainland China to overseas countries but there were obviously ways of getting around those restrictions. That is what happened when, on her evidence, Ms Lu was able to arrange for the transfer of funds to the bank account of a company based in Hong Kong from where it was possible to transfer funds to New Zealand. If Mr Fen’s evidence was true, he must have thought it was possible to arrange for the transfer of significant funds from China to New Zealand. He said that he had asked Ms Huang to obtain funds from her parents in China for them to use in purchasing a property in Auckland.

[71] I have heard what Mr Fen had to say in response to the detailed cross- examination of him by Mr Watkins. I have read all the documents he filed with the Family Court, to the extent they are part of the record that has been put before me. I accept that Mr O’Donnell’s record of the detailed information provided to him by Mr Fen through an interpreter is generally an accurate record of the information and assertions which were made by Mr Fen as to the matters that were at issue between him and Ms Huang, although there may have been some misunderstanding over matters of detail because of the somewhat confusing explanations Mr Fen gave Mr O’Donnell.

[72] If Mr Fen had arranged for Ms Lu to use the proceeds of sale from the Auckland property to buy the Christchurch property in her name to defeat Ms Huang’s relationship property claims, he would have to have been misguided, irrational, dishonest, and determined that Ms Huang would not receive what might be due to her. The evidence establishes that, throughout the relevant period, Mr Fen displayed all those characteristics.

[73] Around the time of the separation and at various times afterwards, Mr Fen was, perhaps as a result of all the stresses associated with the separation, unwell, irrational and unstable in the way he was dealing with the whole situation he faced. He said he was suicidal on returning from Australia in late 2005 and that it was because of his mental illness that Ms Lu had offered to buy the Christchurch property for him. Tim Fen said his father had suffered a breakdown and was having treatment when Tim Fen returned from China and Japan after the second judgment.

[74] Because he was so determined to prevent Ms Huang pursuing her relationship property claims, as she stated in affidavits, he threatened to kill her if she continued to pursue her claims. He also used other people to threaten both her and members of her family in China with violence. Consistent with that, he also responded to the proceedings in the Family Court in a way which was at times irrational and obstructive, but consistently with the intention of making it very difficult for Ms

Huang to receive what she was entitled to under the PRA.¹²At times, Mr Fen dealt

[75] Mr Fen was determined that Ms Huang should not receive a half share of the assets they had acquired during the relationship. Consistent with that, on 10

November 2005, he paid $22,569.65 from savings which had been in their joint account and $244,869 from the sale of the Auckland property into an account in the name of his son over which he had signing authority. He also claimed that the motor vehicle which he had kept on separation belonged to his son and had been paid for indirectly with funds provided by the son’s grandfather from China. He did not disclose how the funds from the sale of the Auckland property had been dealt with.

[76] Mr Fen obstructed his wife’s relationship property claims in misguided and unjustified ways.¹³He claimed that he and Ms Huang had agreed they would not share in assets they acquired during their marriage. She denied this. They did not arrange their ownership of property on that basis. Mr Fen did not suggest there was

¹²The Family Court Judge had accepted Ms Huang’s statement that she could not pursue a s 44 application herself partly because of the cost involved but also because of her fears connected with threats that had been made against people connected with her in China.

¹³See para [103] below, which outlines the obstructive documents he repeatedly filed.

[77] Mr Fen did not file the required affidavit as to assets and liabilities or provide any narrative affidavit in response to Ms Huang’s initial application. As noted above, Mr O’Donnell met with Mr Fen on 30 May 2008. He was assisted by a Mandarin speaking interpreter. According to Mr O’Donnell’s report of that interview, Mr Fen told him that when he and Ms Huang immigrated to New Zealand they had no money. Mr Fen approached three friends living in China who wanted their children to study in Auckland. Mr O’Donnell wrote that the approach seems to have been “through a professional businessman such as an accountant”. The surnames of the three families were Lan Mai (the name Mr Fen referred to was slightly different but I have proceeded in this judgment on the basis it was a reference to the person who provided a statement in support of Ms Lu), Sun and Lin. The children were all to attend Avondale College. Mr Fen knew all parents well. They trusted him to care for the children in New Zealand. Ms Huang had herself appointed as an “agent” for the purpose of introducing the children to Avondale College as future students, from which a commission was payable.

[78] Mr Fen agreed with the three Chinese families (through the professional agent) for them to pay a total of NZ$85,000 on the basis they would not have to pay any rent to the couple while their children lived in Mr Fen and Ms Huang’s home in Auckland. It was further agreed that, when the children completed their studies and the house was no longer needed for student accommodation, the couple would sell it. They would repay the NZ$85,000 and the net profit on the sale to the three Chinese families to be divided equally between them.

[79] Mr Fen said Ms Huang had not provided $35,000 from her personal bank account in China towards the purchase as she did not have any funds available to her. He said it would have been impossible for her to have funds forwarded from China to New Zealand because Chinese laws prevented this. Ms Huang had refused to contribute to the house purchase.

[80] Mr Fen told Mr O’Donnell that he and Ms Huang reduced the mortgage principal by between $50,000-60,000. Exhibits adduced with one of Ms Huang’s affidavits confirm the reduction of the principal by some $50,000. He agreed to Ms Huang getting $30,000 from the sale, representing $5,000 more than half the

principal reduction. Mr O’Donnell reported that it was not easy to get a picture from Mr Fen as to what happened to the net sale proceeds but Mr O’Donnell understood that Mr Fen had paid a $20,000 debt to his parents in China. The balance was forwarded to the professional person in China for the appropriate distribution to the three families who had provided the $85,000 cash contribution for the purchase of the Auckland property. Mr Fen told Mr O’Donnell that he knew the Chinese accountant had received and distributed that money to the three families involved, even though it was Ms Huang who handled the transactions.

[81] Mr Fen told Mr O’Donnell that the Christchurch property was genuinely and solely owned by his first wife, Ms Lu, that he had not made any contributions whatsoever to its purchase or otherwise. He had been very upset following his separation from Ms Huang and was admitted to hospital following an attempted suicide or because of suicidal thoughts. Ms Lu had become aware of his mental health problems. She arranged for him to have treatment in China. She had bought the Christchurch property so their son would have accommodation while attending university in Christchurch. She had agreed to Mr Fen staying there until she decided to come out to New Zealand.

[82] Mr Fen also told Mr O’Donnell that, throughout their relationship, he and Ms Huang had a “personal/private agreement” that, notwithstanding their marriage, each would continue to own as effective separate property what each had brought into and acquired during the marriage.

[83] Mr O’Donnell had a second interview with Mr Fen on 26 June 2008. In his report he said Mr Fen had requested the interview because he did not consider Mr O’Donnell’s report as to the first interview was accurate. He also asked for a different interpreter which was arranged through the Family Court. He also required that Mr O’Donnell allow him to videotape the interview which Mr O’Donnell agreed to.

[84] Mr O’Donnell reported that in this interview Mr Fen said that, when he and Ms Huang immigrated to New Zealand from China, he had brought with him “a little bit of money” which he quantified at about USD 6,000. Ms Huang had brought no

money at all. He stressed that the three friends from China who had made cash available to him for the house purchase were his friends, not friends of both of them. All funds for the purchase were provided through him and none were provided by Ms Huang. The title to the Auckland property had been put in his and Ms Huang’s joint names because the real estate agent had told them this was necessary but he had not paid much attention to this. He confirmed that none of the children who were to have gone to Avondale College had come to New Zealand. He said that Chinese law permitted each individual to take only USD 2,000 from China on departure. He had brought out USD 6,000 which he was able to do because he was travelling with Ms Huang and his son Tim Fen. He told Mr O’Donnell that it was possible to “get around” the USD 2,000 limit and bring out more. He said he knew Ms Huang’s parents had savings of approximately NZ$25,000 in China, that he had asked Ms Huang to borrow funds from them to help them buy the Auckland property but she had refused.

[85] Mr Fen told Mr O’Donnell in this interview that, of the sale proceeds from the Auckland property, $20,000 had not been paid to his parents. Rather, Mr Fen had got a few thousand dollars for his own use. The balance was paid to a Chinese agent (the same agent to whom the bulk of the net sale proceeds were paid for distribution to the three Chinese families), to repay a number of Mr Fen’s outstanding business debts in China. Mr O’Donnell reported him as being clear that, after approximately

$50,000 of the sale proceeds were distributed to Ms Huang and Mr Fen, the balance of about $222,000 was paid to the Chinese agent for distribution to the three Chinese families, and Ms Huang handled the transfer of those funds.

[86] Mr Fen swore an affidavit on 23 December 2008. It is in English. In that affidavit he wrote:

$120,000.00, Cash contribution paid NZ$ 85783.32 come from USD35000 exchange to NZ dollar. Thereinto USD30, 000.00 come from Hong Kong by telegraphic money order to ASB bank, Auckland City Branch, payee is [Ms Huang]. Other USD5, 000.00 cash carried by my friends come from China. You can check [Ms Huang’s] USD account in ASB bank 2001, confirm it.

[87] Mr Fen denied that $35,000 had been paid from his bank account in China. He said that, before coming to New Zealand, he had worked as a physics lecturer and

had no savings. He denied they had put money together to buy the Auckland property. He said that, when he had bought the Auckland property, three Chinese families had contributed cash of about $85,000, that he had not wanted to own a house because in China he had not been used to owning property. He did not want to take any chances with house depreciation. That is why he had agreed that when the house was sold all net sale proceeds would belong to the three families but they would not pay rent for their three children who would be staying with him in New Zealand. He repeated that, when the house was sold, he and Ms Huang had taken

$50,000 and the total balance over that had been repaid proportionately to the three

[88] In a minute of 23 December 2008, after a conference at which Ms Huang and Mr Fen had both appeared in person, a Family Court Judge noted that Mr Fen had failed to comply with directions for the filing of an affidavit of assets and liabilities and an affidavit.¹⁴The Judge also noted there had been inadequate disclosure of what had happened to the $244,869 from the proceeds of sale that had been paid into Mr Fen’s account. Another Judge subsequently directed the Registrar to obtain a report under s 38 PRA as to these issues.¹⁵

[89] The accountant appointed by the Family Court to investigate what happened to the proceeds from the sale of the Auckland property was Lynda Smart of HFK Limited, Chartered Accountants.

2009. Those reports detailed the bank statements she had access to and the information she obtained from them. I do not need to go through the information she provided to the Court in detail. The conclusions Ms Smart reached have not been challenged in the proceedings before me.

_{balance of the proceeds of sale, $242,643.74, was paid into the
parties’ joint account.}

On the same day, $244,869 from the joint account was paid into an account opened in Mr Fen’s sole name. A further $22,569, which had been in an account under Tim Fen’s name, was paid into the account in Mr Fen’s sole name. Some of those combined funds were then invested for a short time but were later returned to Mr Fen’s personal account. From those combined moneys, $280,000 was transferred from Mr Fen’s account on 20 December 2005 to the account in his son’s name. Of that sum, $20,000 was used to pay the deposit on Ms Lu’s purchase of the Christchurch property. On 2 June 2006, a further $250,725.97 was paid to the solicitors acting for Ms Lu on the purchase of the Christchurch property. Ms Smart concluded that $270,725 from the joint accounts had been used to purchase the Christchurch property in the name of Ms Lu. She found no evidence of funds being paid to three Chinese families as Mr Fen had claimed.

[92] There was a conference with a Family Court Judge on 1 December 2009. Ms Huang, Mr Fen and Mr O’Donnell all appeared. In a minute, the Judge referred to the conclusions which the accountant had reached and Ms Huang’s apparent entitlement to half the funds that were used to purchase the Christchurch property.¹⁶

The minute records Mr Fen’s denial this was the case and his reiteration that the funds were owed to three Chinese families and were used in some way to repay that debt. The Judge directed that Mr Fen was to file and serve all further affidavits within 28 days, respond to the matters contained in the report from the accountant, detail people to whom money was owed and obtain affidavits from those people. She also directed that he must detail all transactions as to monies from the sale of the Auckland property through to the purchase of the Christchurch property and said Ms Lu should also file an affidavit particularising her interest in the property.

[93] Following Mr Fen’s non-compliance with these directions, his non- appearance at a subsequent judicial conference, allegations of embezzlement against Ms Huang and refusal to engage with Mr O’Donnell, a formal proof hearing began on 29 September 2010. The Judge, having considered the evidence, decided there was a need for further evidence and the matter should be treated as part-heard. She

_{directed the Registrar to obtain further information relating to the
purchase and}

ownership of the Christchurch property and said there was an issue as to whether the purchase of that property was a fraudulent transaction.¹⁷

[94] As a result, the accountant, Ms Smart, provided further information to the Court in a report of 17 February 2011. The information confirmed that Ms Lu had signed the contract for the purchase of the Christchurch property and had applied for the loan from ASB Bank that was used to make that purchase. The accountant also obtained other information from ASB relating to that loan account. I will refer to that information later when considering the evidence of Ms Lu.

[95] No further affidavits were filed. Perhaps because of problems associated with the Canterbury earthquakes of 4 September 2010 and 22 February 2011, the case on appeal does not include any documents on the Court file between the date of that report and the first judgment of 25 January 2013. In that judgment, the Judge said she had heard evidence from both parties and from the accountant but there is no transcript of that evidence. The judgment indicates there were appearances by both Mr Fen and Ms Huang in person and by Mr O’Donnell as the lawyer to assist the Court.

[96] Following the first judgment and the s 44 application to set aside the purchase of the Christchurch property, Mr Fen swore a lengthy affidavit on 1 July 2013. Much of that affidavit comprised argument as to why the Judge’s conclusions were unjustified.

[97] Mr Fen said funds from the sale were supposed to be wired to China to repay Ms Lu but, because money would be lost in the exchange process, Ms Lu told him to put the money into their son’s account. Mr Fen said he had explained this to Mr O’Donnell in two interviews.

[98] In accusing Ms Huang of perjury and fraud, he went into considerable detail in stating she could not have contributed $35,000 towards the purchase of the Auckland property. He referred mainly to the restriction in China on citizens being

[99] For the first time in all the documents he provided to the Family Court, Mr Fen referred to Ms Lu’s involvement in the transfer of funds from China to New Zealand for the purchase of the Auckland property. He stated:

Branch Auckland (Address: Ground Floor, Chorus House) US Dollar Account. Taking out the transaction fee of $4.4 USD by ASB bank, gives a remaining balance of $29,995.60 USD. I exchanged this fund to $72,857.90

NZD, plus [Ms Lu’s] colleagues who came to NZ around that time and brought us cash and cheques from China.

[100] Despite detailed and extensive allegations as to why Ms Huang had been dishonest in her affidavit, Mr Fen said nothing more in that affidavit as to the claimed agreement that had been made between Ms Lu, Ms Huang and Mr Fen as to the terms on which she had made funds available for the purchase of the Auckland property.

[101] On 26 June 2013, around the same time as Tim Fen delivered to the Court Ms Lu’s translated statement, Mr Fen filed a first notice of defence to the s 44 application.

[102] Mr Fen attempted to use the rules of procedure to file various documents which, in the circumstances, served no purpose other than to be obstructive. Given Mr Fen’s then relatively limited command of English, the documents were presented in a way which would suggest he must have had assistance with them. Tim Fen did ultimately acknowledge the assistance he provided to his father in helping him with a notice of defence to the s 44 application. Despite Tim Fen’s denial of this, I consider it likely that it was Tim Fen who helped his father with these obstructive documents.

[103] At a conference, Mr Fen agreed to withdraw those documents on the basis they were largely irrelevant but later re-filed them. One of these re-filed documents appeared to be a detailed submission. Again, it included arguments about many aspects of the first judgment, irrelevant to the s 44 application. Mr Fen again set out reasons why Ms Huang could not have brought $35,000 to New Zealand to contribute towards the purchase. He argued that the Christchurch property had been purchased by Ms Lu, not by him, because her contracts had “legal effect”.

[104] Again, he made no reference to any contributions made by Chinese families, no mention of any agreement between those families and Ms Lu, and no mention of any agreement between Ms Lu, himself and Ms Huang. All he said was that the funds for the Auckland property “were actually from my son’s mum [Ms Lu]”.

[106] In the second judgment, the Judge noted that Mr Fen had not produced any evidence from the people in China or from his former wife that moneys from the sale of the Auckland property had been used to pay debts to people in China.¹⁸He recorded that Ms Lu had acknowledged receipt of the s 44 application in a deposition signed before a notary in China. The evidence showed that Mr Fen had attempted to deceive the Court as to what he had done with the net proceeds of sale of the Auckland property (after payment of $30,000 to Ms Huang).¹⁹

[107] Even if Ms Lu had some claim in contract or in equity against Ms Huang and Mr Fen, the Judge said this would not change the fact the sale proceeds were relationship property and they had been used to acquire the Christchurch property. He was satisfied that this disposition was intended to defeat the claim or rights of Ms Huang. He thus held that the $280,000 used to acquire the Christchurch property was relationship property, that Mr Fen could not be relied on to take any steps to resolve Ms Huang’s claim and the Court should intervene to bring the proceedings to an end. It was on that basis he made the orders already referred to.

[108] Mr Fen did not appeal either of the Family Court judgments. He did not take any steps in relation to Ms Lu’s application for leave to appeal. As counsel to assist the Court, Mr Watkins did arrange for him to be available for cross-examination at the hearing in the High Court.

[109] Under cross-examination in the High Court, when asked as to the money he retained in bank accounts in China when he came to New Zealand, Mr Fen said he

¹⁸_{The second judgment, above n 4, at [6]-[7] and
[16]. See paras [15]-[18] above.}

could not remember, that money meant nothing to him and he did not “really care that much”. He said he had lived at the Christchurch property after Ms Lu purchased it and that it was his home until his son finished university in 2010 but that he was away from it a lot in his job as a tour bus driver. He said the contact he had with Ms Lu was rare and the relationship with her was just average. He said, in relation to Ms Lu’s evidence, that she and three other families in China had signed an agreement to provide finance for a house in Auckland. He said that this had been his idea, that he knew she was trying to raise funds to purchase her property but he did not know how she communicated with the other three families and what she talked to them about. He said the agreement had nothing to do with him; he did not care about the details as long as the money was transferred into New Zealand. He did not recall seeing a copy of any agreement between Ms Lu and the three other families. He said he did not know how much each family was meant to contribute but that he knew the terms of their agreement because he had proposed them.

[110] In relation to Ms Lu’s evidence that there was agreement between her, Mr Fen and Ms Huang as to the basis on which she was providing money for the purchase of the Auckland property, he said he did not still have a copy of the agreement but he remembered signing it, that he had received it via computer, he and Ms Huang had signed it and faxed it back so they could get the money. He could not remember where they had sent the fax from although he could remember that it cost

[111] Mr Fen agreed he had never previously mentioned during the Family Court proceedings that there was such an agreement. His explanation was that, because he did not have the agreement in his possession, if he had mentioned it, no one was going to believe him. He agreed he had not mentioned Ms Lu’s name as the person in China involved with the Auckland property purchase, having instead referred to this person as an accountant. He said he did this because it would be easier for other people to understand and that, if he had mentioned her name, it would remind him of very unhappy memories.

Court the truth, he referred to his actions over the past few years as “really stupid”.

He also told Mr Watkins that he knew his behaviour in the Family Court was horrible but he did not tell the Court the full story because he thought, with the money belonging to Ms Lu, she could do what she liked with the money and it was no one else’s business. Mr Fen believed he only needed to provide evidence or documents that were related to the case. He agreed he did not have any statement or other document to disprove Ms Huang’s denial as to there ever being such an agreement or her even knowing of such an arrangement.

[113] Mr Watkins queried whether, if Ms Lu had provided $85,000, this was something which only he and Ms Lu knew about. Mr Fen said it was impossible that Ms Huang had known nothing of it, as she was the recipient of the money. When they went around looking for a house, she knew it was going to be used as accommodation for students. He said that, although Ms Lu had said she had no contact with Ms Huang about what was happening, Mr Fen had thought they were in touch with each other quite a few times.

[114] Mr Fen said that, from memory, when he came to New Zealand he had savings in a bank account of around CNY 70,000 or 80,000. When I asked what discussions he had with Ms Huang as to the savings they both had for the purpose of completing immigration papers, he said they never discussed each other’s financial situation and that they knew only what they earned each month.

[115] Mr Fen was deliberately dishonest in saying that Ms Huang had arranged for most of the proceeds of sale from the Auckland property to go back to China to repay Chinese families.

[116] He was also dishonest in claims he made over the vehicle which he had retained after separation. The first judgment recorded that Ms Huang had retained a Toyota Prius vehicle on separation and Mr Fen a Mitsubishi Mirage.²⁰Ms Huang had not sought any adjustment but the judgment recorded that Mr Fen had contended

[117] In his first interview with Mr O’Donnell and in subsequent affidavit evidence, Mr Fen said the Mitsubishi Mirage vehicle was paid for entirely by his parents and was purchased on their behalf for his son. He told Mr O’Donnell it was purchased about three months after they arrived in New Zealand, and that the only family member who ever drove the car was his son.

[118] Mr Fen’s statements about the car were lies. Tim Fen said in evidence in the High Court that he did not have a car when he was in Auckland and that he did not have a car until around 2008/2009 when he was living in Christchurch.

[119] In summary, my conclusion is that Mr Fen was dishonest in much of the evidence he gave as to crucial issues when proceedings were before the Family Court. In his conduct around the time of the separation and afterwards, he showed that he was willing to be dishonestly manipulative so as to avoid having to account to Ms Huang for her relationship property entitlement.²¹

[120] Tim Fen came to live in Auckland in 2001 when he was 14. He lived there with Mr Fen and Ms Huang until the end of 2004, when he returned to China. He has lived in the Christchurch property since he returned to New Zealand around February 2007.

[121] It appeared from his evidence under cross-examination that Tim Fen was and had been emotionally closer to his mother than his father but he did not have much to do with either of his parents while living in Auckland. During that time, his father was often working away from home and he did not have a lot of contact with his mother who was living in China.

[122] He said that, up until 2006, neither of his parents had discussed any property arrangements with him. However, he then said that he knew his mother owned the

_{house in Auckland. He could not however say how he knew this. He had
not seen}

²¹In giving evidence before me, Mr Fen was calmer and polite. He also apologised for things he had done during the Family Court proceedings and said he had been stupid. He must be careful not to make the same mistakes again.

any documents which showed this and after modest pressing accepted he did not know anything about the house in Auckland or about how the house in Auckland was owned.

[123] From the time he began living at the Christchurch property, he had paid his mother whatever he could from his student loan and income to help her pay off the mortgage. He said he either gave his mother money or paid money into her bank account. He had an authority for that account. He said that he paid amounts on a regular basis into that account but, when he had accumulated savings, he would also give her cash.

[124] Tim Fen said there had been a series of tenants in the Christchurch property from 2006 to 2011. He said the mortgage over the property had been $60,000 or

$70,000. He said the mortgage was discharged around 2010 or 2011 through the money which he gave to his mother. That money included rent payments from these tenants, and from his father when he lived there from 2008 to 2010. Most payments were made in cash.

[125] Tim Fen swore an affidavit on 16 October 2014, in support of his mother’s application for leave to appeal. He said he needed to explain his knowledge of the proceedings and the extent to which he had been involved. He said he knew his father was involved in Court proceedings but “he did not share with me any detail”. He said his father did not show him letters or documents that had arrived. It was not until June 2013 that his father requested his assistance, asking Tim Fen to tell his mother that the Court had asked her to write a statement to explain the purchase of the Auckland property.

[126] Tim Fen said he had provided his mother’s statement to the Court. After that,

[127] Under cross-examination, he was asked what discussions he had with his mother before she provided her initial statement. In that regard, his answers were initially equivocal and qualified in a way that was not typical of the rest of his evidence. He said, “I think I only explained to her what she needs to do and that was

it”. When asked specifically what he asked her to do in providing a statement, he said he thought he asked her “to explain what happened from Auckland to Christchurch, about the house and ... in general what happened from there, from then to now”. Upon being asked whether he simply received the Mandarin translation and faithfully translated it without further discussion, his answer was “yes I think so”.

[128] Tim Fen had translated his mother’s statement in Mandarin as beginning “I have heard and got relative documents”.²²That translation has been confirmed by an interpreter as being incorrect. He could not explain why, in his translation, he would have had his mother say that she had received documents if he had not thought that was true. In response to my question as to whether it was possible he had told her about some documents, Tim Fen said he helped his father translate a document which was later filed in Court. Having learnt something from this translation, he

[129] He then said that, after his discussion with his mother, she would have understood the claim could potentially extend to the Christchurch property and that he told her “this case might affect your house here”. Later, he said that he told his mother what he had learned from the translated file. He said this had included the list of Ms Huang’s lies that his father had gathered. He confirmed that, at the time he talked to his mother, he knew his father was saying that money had come from China to pay for the house in Auckland and Ms Huang was saying that was not true. He said he thought he would have told his mother this. He said that he thought he had explained to his mother how she needed to provide a statement as to how she provided money for the house in Auckland and how she came to have the money for the Christchurch property. He said it did seem, from the document he had seen, that he did tell her what his father was saying about the Auckland property.

[130] Tim Fen was cross-examined about Mr Fen’s notice of defence dated 25 June

2013 and Ms Lu’s statement dated 26 June 2013. He said he had read that notice of

defence and helped his father draft and translate it into English. He then shared this information with his mother and she prepared her statement.

[131] Tim Fen swore an affidavit on 28 May 2015 for the proceedings in this Court. With that affidavit he annexed an English translation of the Mandarin affirmation provided by his mother. In that statement, he commented on part of his mother’s statement where she said:

From [Ms Huang's] litigation documents, I see that [Ms Huang] denies this money transfer ... is lying to the Court in the litigation documents, saying that the house deposit was cash that she brought herself to New Zealand.

I did not provide my mother with written copies of any of Ms [Huang’s] court documents. This is because she cannot read English. Instead, I told her over the telephone what Ms [Huang] was telling the Court.

[132] Tim Fen helped his mother with the proceedings in the High Court. In his initial affidavit in support of his mother’s application for leave to appeal he said he travelled to China and Japan between 6 May and 1 July 2013. Shortly before he left, his father sent him a copy of the second judgment which he discussed with his mother. On his return, he found his father had had a nervous breakdown and was under medical treatment. He said he then got all the papers from him and, as a result, appreciated for the first time all that had happened. He then liaised with his mother and they decided to consult a lawyer for advice as to the steps they could take.

[133] In an affidavit of 26 March 2015, Tim Fen produced statements in Mandarin with English translations from Bai Sun and Lan Mai in which each said they had contributed CNY 70,000 to purchase a house in Auckland through Ms Lu and Mr Fen.

[134] With his affidavit of 28 May 2015, Tim Fen provided a diagram showing the source and flow of funds from China to New Zealand. Tim Fen calculated the contribution of the three other families was CNY 70,000 each, which meant his mother contributed slightly more, being CNY 92,000. He said Mr Michael Yee physically brought CNY 50,000 into New Zealand, which converted to USD 6,000 in China and eventually about NZ$14,181. He said Mr Yee arranged “for his client to transfer through Hong Kong the majority of the funds as outlined in the diagram”.

He said enquiries had been made with the banks in China which his mother and some of the families dealt with. He said none of the banks had records going that far back.

[135] Tim Fen said he had not continued to help his father translating documents after helping with his mother’s statement. He said in evidence that he told Mr Fen he “didn’t want to deal with this thing anymore”. He said it was his father’s problem and he did not want to discuss or talk about it.

[136] Tim Fen was asked what he had to say to his mother after he had filed her first statement. His initial response was “I think I told her I filed the document and that was it”. He said she had not asked him to go to the Court and follow up on her interests. He said he had not understood from reading the Court documents there could be a hearing but after it was pointed out that his mother had said in her statement that she wanted to be involved in any future hearing, he agreed he might have told her there would be a hearing and that he understood there would be one.

[137] Tim Fen was questioned extensively as to requests Mr Watkins had made for documents that might be relevant. He said he had told his parents of the importance of obtaining any computer records, telephone records and the like which might assist in working out what happened when the Auckland property was purchased and just what contact there had been with Ms Lu before she provided her initial statement. They were unable to find any such documents.

[138] Later on, I asked Tim Fen whether, when he was in New Zealand, he had known that some other Chinese boys might be coming to live with them. He said he had known of this and one of them was someone he grew up with. When asked when he was told of this, he said “Sorry I am not really sure but I think after I arrived in New Zealand”. He said he thought this was before they had moved into their house.

[139] Tim Fen said he did remember that his father had authority to access his bank account when Tim Fen was in China. He was asked whether he knew at that stage his account had the proceeds of sale of the Auckland property. He responded that his

mother said she needed to transfer money to his account and he “just didn’t really care about it”.

[140] On a careful consideration of Tim Fen’s evidence, I conclude that he understood that Ms Huang was claiming that money she was entitled to had been used to buy the Christchurch property. Having spoken to his father about documents he was preparing for the Court (and in particular having helped “tidy up” and translate the notice of defence to the s 44 application), he knew Mr Fen was saying that the money used to buy the Auckland property had come from three families in China and not from money provided by either him or Ms Huang. I am satisfied that Tim Fen made it clear to his mother that an application had been made to force a sale of the Christchurch property so Ms Huang could get money from it.

[141] Tim Fen showed himself to be an advocate for his mother in making it clear that he wanted her to be the owner of the property. Tim Fen did genuinely want to help his mother. He had a financial interest in doing so in that the s 44 application put at risk not only his mother’s apparent ownership of that property but also his ability to keep using it as his home.

[142] In his affidavit in support for her application for leave to appeal, Tim Fen significantly understated the extent of his knowledge at relevant times of what was happening in the Court proceedings and the information he provided to his mother before she provided her initial statement to the Court. I believe he was not entirely comfortable with what he was doing, hence his deciding not to continue helping his father deal with the Court proceedings and the hesitation he exhibited in answering questions which he knew were important. He wanted to answer questions in ways which he knew would be helpful to his mother’s case, but realised what he was saying might not be true.

[143] Ms Lu’s initial statement was dated 26 June 2013. This statement echoed what Mr Fen had told Mr O’Donnell in his 2008 interviews. Essentially, Ms Lu said that she and three families had provided funds to purchase the Auckland property. Mr Fen would look after the families’ children and pay the interest on the mortgage

instead of rent. When the house was sold, the proceeds of sale, except to the extent the mortgage had been reduced, would be paid to Ms Lu and the other three families. There was no mention of the specific amounts provided by each family. There was no mention of any agreement having been completed between Ms Lu and these three other families, or between Ms Lu, Mr Fen and Ms Huang.

[144] Inconsistent with her and Mr Fen’s later claims that Ms Huang had known all about the arrangements with Ms Lu and had signed an agreement with her, Ms Lu said in her statement that she had not wanted to transfer money from China to an account in Ms Huang’s name. Her communications over the arrangements and the bank transfer were not made with Ms Huang but through Mr Fen.

[145] Ms Lu’s statement emphasised Ms Huang arranging to be an agent for the enrolment of students at Avondale College, an assertion which Ms Huang denied. It was a matter which Mr Fen had unconvincingly advanced as being evidence of Chinese families actually providing funds for the Auckland property purchase.

[146] Ms Lu’s statement included comments critical of Ms Huang’s care of her son Tim Fen while he was in New Zealand. I attach no weight to those criticisms. They do, however, demonstrate that Ms Lu was concerned as much with attacking Ms Huang as with providing information about how she had supposedly funded the purchase of the Auckland property.

[147] Ms Lu said that, upon Tim Fen’s return to China in late 2004, because of the way her son looked and what he told her of his life in New Zealand, she would not let him return to Auckland. She then insisted that Mr Fen sell the Auckland property and repay the money to her.

[148] Mr Fen gave contradictory statements as to when he and Ms Huang separated and when the Auckland property was put on the market. He could not remember if he had told Ms Huang that Ms Lu wanted the house sold.

[149] Ms Huang said the house was on the market for approximately three months before it sold and it was put on the market because of their separation in August

2005. It had nothing to do with Ms Lu contacting either of them wanting the house sold. Ms Huang denied ever being told by either Mr Fen or Ms Lu that the house had to be sold because Ms Lu wanted this.

[150] The Auckland property was sold through an agreement dated 5 October 2005. I find it was put on the market as a result of the separation, that the separation occurred in August 2005 (as recorded by Ms Huang in her affidavit in support of her application for a protection order), and that Ms Lu was not telling the truth in saying she contacted Mr Fen at the end of 2004 and insisted that the property be sold.

[151] There was one notable inconsistency between Ms Lu’s statement and Mr Fen’s initial information as to the money provided from China. Ms Lu said funds for the Auckland property purchase were provided by herself and three other families. Mr Fen referred to the funds being provided just by three families in China. The inconsistency is the more significant given Mr Fen said in the High Court that he knew the terms of the agreement reached between the families in China and had in fact proposed them.

[152] In her affidavit in support of her application for leave, Ms Lu said the primary ground for her appeal was that she had both the legal and equitable interest in the Christchurch property, traceable to her providing the funds for the purchase of the Auckland property. She said she regarded the proceeds of sale from the Auckland property as being solely her money.

[153] Ms Lu said the first she had heard about the proceedings was when her son called her in June 2013 and told her the Court wanted her to provide a statement over the purchase of both properties. She said her son asked her to narrate what happened at the time so she “just wrote it down. Some of the content was provided by him.” She said she was “told no more and did what I was asked”. She said at the time she had no understanding as to what was happening in New Zealand and, in particular, she was not aware the Court was determining or could determine her interest in the Christchurch property in the way it did. I find she had a good deal more knowledge of what was happening than she indicated with those statements.

252,000 was paid into her bank account on 19 April 2001. She said it was paid in by her but was cash provided by the three other families along with her own contribution. She said she arranged for that money to be paid into the account of a company in Hong Kong called Group Profit International Limited (Group Profit). She said it sent CNY 252,000 from Hong Kong to New Zealand as Hong Kong did not have the same currency export restrictions as mainland China. She said Group Profit was only prepared to deal with a sum up to a maximum of USD 30,000 (the equivalent of CNY 252,000 at the then exchange rate). Group Profit then transferred this amount to Ms Huang’s bank account, a deposit of NZ$72,857.90. Ms Lu arranged for a further USD 6,000 to be taken over to New Zealand personally by Michael Yee who was vice president of the company she then worked for.

[155] The bank statements Ms Lu has produced, together with an email message from Mr Fen to Ms Huang and the evidence of Mr Yee, all indicate that approximately $85,000 was sent from China to New Zealand for Ms Huang and Mr Fen to purchase their Auckland property. The documents do not prove in any way that it was the three Chinese families or Ms Lu who provided that money.

[156] Under cross-examination, Ms Lu said that in 2001 she was chief financial officer for an import and export company that employed more than 400 people. She understood the importance of properly recording deals and agreements. Despite that, initially she said she could not remember if there had been a written agreement between her and her friends. Mr Watkins told her that one of those friends, Bai Sun, had said in her written statement that there was a written contract between her and Ms Lu, and that when Ms Lu had repaid that person’s contribution, the contract had been returned to Ms Lu as evidence the debt had been repaid. Having been told that, Ms Lu recalled there was such a written contract but also said that, while the contract could have been returned to her as acknowledgement that this person had been repaid her share, Ms Lu was not sure of this. At the time she had not thought it necessary to keep such a document.

[157] Ms Lu was not sure who had first made the proposal for families in China to buy the house in Auckland. She could not remember clearly what her contribution

had been but said the other three families had contributed CNY 70,000 each. She could not remember clearly when they had agreed the house should be sold and said they did not “really think much” about how long it would be until they got their money back, or how this would be achieved. Ms Lu said that she had repaid the other families over about 18 months to two years. She had no records to show this. She could not remember if she paid interest to the families but thought she had given them some compensation.

[158] Despite that uncertainty, she had said in her affidavit in support of her application for leave to appeal that there was a record in writing between herself and three families over their contribution and share in the Auckland property. On being reminded of that, she then said there was such a written contract.

[159] Ms Lu said she could not remember if the funds for the Auckland house purchase had gone into her personal bank account. She had no record of receiving the money but said that in acknowledgement of receipt of the families’ money, she had given them the written contract, the contract which she had not remembered when initially asked about it.

[160] Ms Lu said they all relied on Mr Fen to buy the property in Auckland although she agreed there was no legal impediment to the families buying properties in their own names in Auckland at the time, just as there was no legal impediment to her purchasing the Christchurch property in her own name in 2006. At the time she said she gave Mr Fen funds to look after, she had not thought about what Ms Huang might do with the money or with the house he was purchasing.

[161] Ms Lu confirmed her evidence that there was a written agreement over ownership and division of the Auckland property with Ms Huang and Mr Fen, but that she did not have those documents because when the Auckland property was sold and she purchased the Christchurch property there was no need to keep them any longer. She said Ms Huang was lying in saying there was no such agreement.

[162] When cross-examined as to why she had not mentioned such an agreement in the statement provided to the Family Court, Ms Lu said she did not understand

English and that her son actually translated everything. She could not remember whether the agreement was mentioned or not. Frequently in her evidence, as interpreted, Ms Lu’s uncertainty was displayed through her saying that she could not clearly remember but then introducing an answer with the words “in my memory” or “I think”. When asked who had prepared the agreement with Mr Fen and Ms Huang, she said “in my memory it was me that prepared it”. When asked when she had signed it, her initial response was “I think [it was] before the money was transferred”. She said “in my memory Ms Huang signed the agreement” and as far as she could remember both Ms Huang and Mr Fen were involved in arranging money transfers from China.

[163] Ms Lu said she prepared the agreement, signed it and sent it to Mr Fen to sign. When asked whether there had been any discussion or negotiation before she wrote out the terms, she said there must have been. She could not remember if Mr Fen had signed the agreement. She did not know if the signatures of Mr Fen and Ms Huang were witnessed. She could not remember whether the agreement was sent to her by email or fax. She could not remember where she had kept the agreement once it had been returned to her but said she “must have kept it”. She could not remember how she disposed of it. She could not remember if the agreement supposedly signed by Mr Fen and Ms Huang referred to there being more than one person who was investing in the Auckland property. She could not recall whether there had been any discussions with Mr Fen after she had supposedly bought out the other families’ interests in the Auckland property. She did not know if the Auckland property was insured between 2001 and 2005 or what the rates were.

[164] Despite saying Ms Huang was a party to this written agreement with her, Ms

Lu had initially referred only to negotiations and arrangements made with Mr Fen.

[165] Ms Lu accepted there was an apparent contradiction between her evidence as to there being such an agreement and a statement in her affidavit:

I realise now as things have turned out I should have taken more interest in what was happening here and at the time the house was purchased to ensure that my interest and originally those of the other three families was adequately protected.

[166] In contrast to the uncertainty Ms Lu demonstrated over the claimed agreements with other families and with Mr Fen and Ms Huang, and how much Ms Huang knew about this, she was clear about one thing. She said “the fund was transferred by me from China to New Zealand. This is undeniable.”

[167] She supposedly left it to Mr Fen to arrange the sale of the Auckland property so she could receive her money, yet she understood that his English was so poor that he would be unable to do this by himself. She could not remember anything specific about conversations with Mr Fen as to any aspect of the process leading up to its sale.

[168] Ms Lu said she wanted the house sold so she could be repaid in China. Despite this, supposedly because the exchange rate was unfavourable, she arranged for the money to be paid into her son’s account in New Zealand. At the time, Tim Fen was living with her in China. She had little memory of how Mr Fen came to have signing authority over the son’s account but vaguely recollected this was necessary so he could put the money in that account. If that was true, she was agreeing to what she claims was her money being put into an account which she must have known was operated by her ex-husband. On her evidence, she agreed to this after she had been so angry with Mr Fen and Ms Huang for the way they had treated her son that she had insisted on the house being sold.

[169] Mr Yee swore an affidavit in support of Ms Lu’s appeal. In 2001 he was vice-president of the company where Ms Lu was chief financial officer. They had worked together for 11 years. He agreed she was not commercially naïve and said she was very experienced. Mr Yee’s wife worked for a bank which specialised in foreign currency and through her, Ms Lu asked for help to transfer money overseas from mainland China. At the time, it was difficult to transfer US dollars out of China but his company’s clients made it possible. He said Ms Lu gave one such client about USD 30,000 to transfer from Hong Kong. He had no idea whose money it was originally or where the funds had come from. Mr Yee brought another USD 6,000 into Auckland when he visited, and gave that cash to Mr Fen.

[170] When Tim Fen first swore an affidavit in support of his mother’s application for leave to appeal, he annexed to it statements from Mr Yee and two other women who said they had each provided Ms Lu with CNY 70,000 to buy a home in Auckland in 2001. These people were Lan Mai and Bai Sun. No statement or affidavit was ever provided by the third person whom Mr Fen and Ms Lu had said was involved, Ti Lin.

[171] Mr Fairclough told me Ti Lin had been diagnosed with cancer and Ms Lu did not consider she should ask her for a statement. I was told Ti Lin had subsequently died. I was not provided with any documentary confirmation of this. No documents were provided consistent with her having made the claimed contribution to the purchase of the Auckland property. In the circumstances, the assertions as to her involvement are of no weight.

[172] Identically formatted affidavits were provided by Ms Mai and Ms Sun, two of the mothers alleged to have contributed CNY 70,000 to the purchase of the Auckland property. I was told Ms Sun would be available for cross-examination by video link from China as I had required. For reasons which were not explained to me, this did not eventuate. Given the general nature of the information in Ms Sun’s affidavit, the way its contents mirror the statements of Mr Fen and Ms Lu and her unavailability for cross-examination, I attach no weight to her affidavit.

[173] Ms Mai was cross-examined. Her initial statement accorded with Mr Fen and Ms Lu’s account of the property funding and accommodation arrangements between the parties and the three Chinese families. Neither her statement nor subsequent affidavit referred to any written agreement between her and other mothers, as Ms Sun and Ms Lu later asserted. Despite this, when cross-examined, Ms Mai said the four people had signed an agreement in Ms Lu’s office.

[174] Ms Mai had no record that she had paid CNY 70,000 to Ms Lu. Although she said she paid the money to buy a house for her child to use when he studied in Auckland, she could not remember whether she had received enrolment offers before

or after she had paid the money. She said Ms Huang was an agent for the school but she could not remember how she knew that.

[175] She said, as did Ms Lu, that the money she contributed had been repaid over an 18 month period. She could not remember whether, when the money was repaid, she had returned the agreement or somehow noted that she had received her money.

[176] When asked about her understanding as to when and how her contribution would be repaid, Ms Mai said it was not of great concern to her whether the money was merely an accommodation expense for the children or whether she profited from the investment. She said that at the time they were thinking only about the accommodation issue. She said Mr Fen would be looking after her son. She did not know Mr Fen was married and would be living with Ms Huang in New Zealand. When I asked her what she knew of Mr Fen’s ability to look after a home and children, she said she mainly followed the information given to them by Ms Lu.

[177] She said she knew what to put in her statement from Ms Lu, who told her she needed to write a statement and “also advised me what issues need to be addressed in the statement”. When asked about the agreement she had signed, she was unsure as to its content. She spoke of the content in only the most general terms but also said she was “not really concerned about the agreement” and “didn’t really care that much.” She did not know how much the house in Auckland cost, how much Mr Fen and Ms Huang were borrowing to buy the house, or that the house would belong to Ms Huang and Mr Fen. She said really she was just making money available so that there would be accommodation and someone to care for her son when he went to New Zealand. She never asked Ms Lu to repay the money to her. She said the thinking of the other mothers involved was the same as hers.

[178] For similar reasons to those expressed regarding Ms Sun, I attach little weight to the affidavit evidence of Ms Mai. Her evidence under cross-examination as to the basis on which she says she made funds available suggests it would not have been important to her to have a written agreement as to the terms on which they were supposedly investing in the Auckland property. Her apparently relaxed attitude to

ensuring she would recover her investment is also inconsistent with there actually having been such agreement.

Conclusions as to Ms Lu’s claimed entitlement to proceeds of sale from the

[179] I am satisfied there was no written agreement between Ms Lu, Mr Fen and Ms Huang acknowledging any contribution by Ms Lu to the purchase price of the Auckland property or the entitlement of Ms Lu and three other Chinese families to the proceeds of its sale. Ms Lu’s evidence as to such an agreement did not have the detail or consistency that could be expected if it was true.

[180] It is significant that, despite the obvious importance of such a document, neither Mr Fen nor Ms Lu can produce any documentary evidence which suggests that such an agreement ever existed and there is no documentary evidence or record consistent with their assertions as to how such an agreement came to be formed and signed. Ms Huang denies any knowledge of it.

[181] Neither Mr Fen nor Ms Lu acted as if there was such an agreement. Had Ms Huang been party to such an agreement, Mr Fen would have had every reason to refer to the agreement and to be open and honest from the outset in explaining how the proceeds from the sale of the Auckland property had been dealt with. He was quite the opposite.

[182] Ms Lu did not mention such an agreement at all when first describing her involvement in the purchase of the Auckland and Christchurch properties. Her later reference to such an agreement and attempts to provide specific information as to its contents, how it came to be signed and a false explanation as to why it was no longer in her possession, satisfy me that she has been a dishonest witness. This significantly reduces her credibility on other issues.

[183] I am satisfied there was no documented agreement between Ms Lu and three other Chinese families detailing joint funding for the purchase of, and entitlements to, the Auckland property. It is significant that, despite the supposed involvement of

four people in such an agreement, and the significance of the alleged investment, there is again no document available consistent with it ever having existed.

[184] Ms Lu’s evidence does not satisfy me that either she or other Chinese families made any contribution to the purchase price of the Auckland property. Given her business experience and alleged bankrolling of her ex-husband and his second wife’s property purchase in another country, it could have been expected that she would have documented any contribution in some way. Ms Lu would also have been careful to keep any such documents. That was especially so after she knew Mr Fen and Ms Huang’s marriage had ended and when she must have known the proceeds from the sale of the Auckland property had been used to buy the Christchurch property. She also knew, from phone conversations with Ms Huang in

[185] Ms Lu’s claim that she contributed a significant sum towards the purchase price of the Auckland property and that she would be entitled to all the sale proceeds is inconsistent with her lack of knowledge as to the cost of the property, whether it was insured, how it came to be sold and the payment of sale proceeds into an account in the name of her son which her ex-husband controlled when her son was living with her in China.

[186] Not only has she been unable to produce any documentary record showing that she contributed her own funds or those of other Chinese families towards the purchase of the Auckland property, she has not produced any proof that she had funds available to make such an investment. That was so despite her being on notice of the desirability of having such evidence if it was available.

[187] Mr Fen and Ms Lu’s claims as to Ms Lu’s investment in the Auckland property are inherently unlikely. There was no evidence in the Family Court or before me which would suggest Ms Lu was on friendly terms with Ms Huang. The evidence was to the contrary. Mr Fen and Ms Huang were not wealthy. Their purchase of the Auckland property could not be made without a substantial mortgage. It is improbable that they would have taken on a substantial mortgage, along with all the risks and costs of property ownership, on the basis that Mr Fen’s

former wife and three other families would be the only people to obtain the value of their investment.

[188] I am also satisfied that Ms Lu did not contribute any of her own money towards the initial purchase price of the Christchurch property. Proceeds from the sale of the Auckland property were used to pay the initial deposit on the purchase of that property. The cost of the Christchurch property in 2006 was $340,000. The mortgage loan used for the purchase was $70,000. The balance was paid for out of the proceeds of sale of the Auckland property and the $22,569.65 that was in Tim Fen’s bank account controlled by Mr Fen at separation.

[189] Ms Lu came to New Zealand and was involved in making the purchase and in dealing with a solicitor in Christchurch on the basis she was the purchaser. I am satisfied this would have been arranged by Mr Fen. He was probably able to get her to cooperate with what was essentially a dishonest transaction through persuading her that this would provide a place for their son to live in if and when he came to attend university in Christchurch.

[190] Consistent with Mr Fen’s control of the situation, Ms Lu gave Mr Fen’s phone number when applying for a home loan for the purchase. Ms Lu also said her assets included $280,000 with ASB, the amount which Mr Fen had paid from the proceeds of sale of the Auckland property into the account in Tim Fen’s name. Ms Lu stayed with Mr Fen at the time she made the purchase. Consistent with the purchase being made for Mr Fen, he lived in the property from its purchase until

2010. His financial contribution was not a market rental for the property but simply enough to cover the mortgage.

[191] Mr Fen’s control of the whole situation was also exhibited, as Ms Smart reported to the Family Court, by the bank’s record of someone assumed to be Ms Lu’s partner becoming abusive with bank staff when, because of communication difficulties, Ms Lu was unable to use her password on 10 July 2006. I am satisfied the person who was abusive would have been Mr Fen. Two days later, Mr Fen was authorised to operate that account.

[192] Both Ms Lu and Mr Fen treated the property as his when, in April 2007, Ms Lu drew down a further $20,000 on the mortgage over the property, a loan which was used by Mr Fen to purchase a new motor vehicle for himself at a cost of

[193] Ms Lu’s conduct in relation to the Family Court proceedings between Ms Huang and Mr Fen also strongly suggests she did not regard herself as having contributed any of her own money towards the purchase of that property or as to being the true owner of the Christchurch property. I am satisfied that, from at least

2008, she would have known, partly through the conversations she had with Ms Huang and also through information from Tim Fen, Ms Huang sought a share of the proceeds of sale from the Auckland property as part of her relationship property settlement. Ms Lu must have known that this could potentially lead to a claim against the Christchurch property. Despite that, she took no active steps to protect her claimed interest in the Christchurch property. On her own evidence, when Ms Huang spoke to Ms Lu about her claim against Mr Fen, Ms Lu said it was nothing to do with her and it was for Mr Fen and Ms Huang to sort out their dispute.

[194] Had Ms Lu made a substantial investment of her own money in the Christchurch property, she would have provided much more detailed information as to the basis on which she was the true owner of the Christchurch property than she did in her initial statement. At the time she provided that statement, she must have known, as a result of the first judgment and her son’s involvement, that there was a direct legal challenge to her apparent ownership of the Christchurch property. Instead, her initial statement simply reproduced a story which, in general terms, had already been advanced by Mr Fen, a story which I find was a fiction.

[195] Ms Lu would also have been much more assertive in ensuring she was represented in the Family Court proceedings after she had provided that statement. She would have wanted to know what was happening in the proceedings and whether the s 44 application was going to a hearing. She would have made sure her voice was heard. She did not do any of those things.

[196] Had she regarded herself as the true owner of the Christchurch property, she would also have acted much more promptly than she did to appeal or otherwise pursue her rights once the second judgment had been made. Tim Fen said he was told of the second judgment just before he went to China and Japan. I am sure he would have told his mother of that judgment while he was overseas or before then. He returned to New Zealand in July 2013. It was not until 16 October 2014 that she made the affirmation to support her application for leave to appeal the Family Court judgments.

[197] I am satisfied that Ms Lu decided to pursue an appeal because she knew that on the title she was the apparent legal owner of the Christchurch property. She knew that, largely with payments from her son, other tenants and Mr Fen, she had paid off the mortgage to the property and that for some seven or eight years it had been her son’s home. Neither Ms Lu nor her son wanted to lose the property. I am satisfied they then worked together to justify her entitlement to the Christchurch property on the evidential basis which I have considered and rejected. That basis essentially embellished and developed a scenario first advanced in general terms by Mr Fen when he, with great determination and dishonesty, tried to ensure Ms Huang would not benefit from her share of the proceeds of sale from what had been their family home in Auckland.

[198] There is evidence that Mr Fen may well have used Ms Lu and her contacts, particularly Mr Yee, to transfer his and Ms Huang’s money from China to New Zealand so they could pay $85,000 towards the cost of the Auckland property. In the Family Court, Mr Fen asserted that proof of the transfer of funds from Hong Kong to New Zealand would prove that Ms Huang was lying about how the Auckland property had been purchased. The transfer of funds from Hong Kong is consistent with the record on Ms Huang’s bank statement of CNY 100,000 being paid from China. As with Mr Yee’s evidence, it says nothing about who provided those funds initially. Ms Huang’s bank statement is consistent with her having funds in China (CNY 100,000) sufficient to make the contribution of NZ$30,000/35,000.

[199] Ms Huang and Mr Fen were able to establish to the New Zealand authorities, in obtaining the right to immigrate to New Zealand, that they had available to them

sufficient funds to support themselves in New Zealand for two years. They must also have been able to provide sufficient information to convince the bank that they would have sufficient equity in the Auckland property which they were buying for

[200] Mr Fen concluded one of his affidavits by saying “This case is not about relationship property. It is about fraud.” On all the evidence I find that the proceedings in the Family Court and the High Court have been about relationship property. They have also been about dishonesty but not the dishonesty of Ms Huang. Neither Mr Fen nor Ms Lu would have needed to be as dishonest as I find they have been if Ms Lu had truly paid for the Auckland property in the way she has described.

[201] I accept the submission of Mr Watkins that the parties’ entitlement to share in the value of the Christchurch property can be determined through these proceedings.

[202] Ms Lu’s application for leave to appeal and the appeals are brought pursuant to s 39 of the PRA. Section 39(3) states that the High Court Rules and ss 74 to 78 of the District Courts Act 1947, with all necessary modifications, apply to such an appeal. After hearing an appeal, this Court may make any decision it thinks should have been made.²³The appeal is by way of rehearing.²⁴

[203] Ms Huang’s application in the Family Court and now before me in this appeal was under s 25 of the PRA. Under s 25(1)(b), the Court may make any order that it is empowered to make by any provision of the PRA.

[204] Pursuant to s 25(3), “the Court may at any time make any order or declaration relating to the status, ownership, vesting, or possession of any specific property as it considers just”.

[205] For Ms Lu, Mr Fairclough submitted the applicant for an order under s 25(1)

_{or an order on declaration under s 25(3) includes any person on whom
spouses have}

made conflicting claims in respect of the property. On that basis, he said the Court could make an order as to Ms Lu’s entitlement independent of s 44. I accept that submission.

(1) Where the High Court or a District Court or a Family Court is satisfied that any disposition of property has been made, whether for value or not, by or on behalf of or by direction of or in the interests of any person in order to defeat the claim or rights of any person (party B) under this Act, the court may make any order under subsection (2).

(1A) The court may make an order under this section on the application of party B, or (in any proceedings under this Act or otherwise) on its own initiative.

(2) In any case to which subsection (1) applies, the court may, subject to subsection (4),—

(a) order that any person to whom the disposition was made and who received the property otherwise than in good faith and for valuable consideration, or his or her personal representative, shall transfer the property or any part thereof to such person as the court directs; or

(b) order that any person to whom the disposition was made and who received the property otherwise than in good faith and for adequate consideration, or his or her personal representative, shall pay into court, or to such person as the court directs, a sum not exceeding the difference between the value of the consideration (if any) and the value of the property; or

(c) order that any person who has, otherwise than in good faith and for valuable consideration, received any interest in the property from the person to whom the disposition was so made, or his or her personal representative, or any person who received that interest from any such person otherwise than in good faith and for valuable consideration, shall transfer that interest to such person as the court directs, or shall pay into court or to such person as the court directs a sum not exceeding the value of the interest.

(4) Relief (whether under this section, or in equity, or otherwise) in any case to which subsection (1) applies shall be denied wholly or in part, if the person from whom relief is sought received the

property or interest in good faith, and has so altered his or her position in reliance on his or her having an indefeasible interest in the property or interest that in the opinion of the court, having regard to all possible implications in respect of other persons, it is inequitable to grant relief, or to grant relief in full, as the case may be.

[207] Section 33(1) says that the Court may make all such orders and give such directions as may be necessary or expedient to give effect, or better effect, to any order made under any of the provisions of sections 25 to 32.

[208] Pursuant to s 33(3)(e), the Court may make “an order for the partition or vesting of any property”. I note that, in contrast to other potential orders mentioned in that subsection, s 33(3)(e) refers to “any property”, not solely “relationship property”.

[209] I am satisfied, as were both Judges in the Family Court responsible for the first and second judgments, that the proceeds of sale from the Auckland property were relationship property which Mr Fen and Ms Huang were entitled to share equally. They were proceeds from the sale of the family home.

[210] I am satisfied, as was the Judge responsible for the second judgment, that the payment of $270,725.97 for the benefit of Ms Lu to purchase the Christchurch property in her name and her acquisition of that property were dispositions of property at the direction and in the interest of Mr Fen, made to defeat Ms Huang’s claim to share in the relationship property proceeds from the sale of the Auckland property.

[211] Through those dispositions, Ms Lu acquired title to the Christchurch property. The evidence is overwhelming that she did not receive those funds in good faith. She must have known the funds did not belong to her. She must also have known that the funds were being made available to her to enable her to purchase a property in her name to make it more difficult for Ms Huang to receive her relationship property entitlement. I am satisfied that both Mr Fen and Ms Lu agreed Ms Lu should obtain those moneys with the intention of defeating Ms Huang’s relationship property claim. I am satisfied of that, applying the objective test as

referred to by the Supreme Court in Regal Castings Ltd v Lightbody²⁵or the subjective test as was held earlier to be appropriate by the Court of Appeal in Coles v Coles.²⁶

[212] I am also satisfied that Ms Lu did not provide valuable consideration, or indeed any consideration, for the relationship property proceeds which she used in purchasing the Christchurch property.

[213] There has been some controversy as to whether the requirement to establish lack of good faith and lack of valuable consideration is conjunctive, so that both elements have to be established before the Court can exercise the powers available to it under s 44(2). I do not need to determine that controversy in this instance. Here, it is quite clear that Ms Lu neither acted in good faith nor provided valuable consideration in using money from the sale of the Auckland property to buy the Christchurch property.

[214] The purchase of the Christchurch property is thus a disposition of property to which s 44(1) applies. Pursuant to s 44(2)(a), the Family Court had jurisdiction, as does the High Court, to order Ms Lu to transfer the property to such person as the Court directs. The Family Court was fully justified in ordering that the property be transferred to the Registrar of the District Court for the purpose of sale.

[215] Ms Lu is not entitled to relief in terms of s 44(4). She did not receive the proceeds from the sale of the Auckland property and use them in buying the Christchurch property in good faith. I do not consider that she has so altered her position in reliance on her having an indefeasible interest in the Christchurch property that it would be inequitable to grant the relief which is required to recognise the way in which Ms Huang’s interest in relationship property has been used to acquire and retain the Christchurch property.

[216] Section 44(3) permits the Court to make any further order as it thinks fit to enable Ms Huang to receive her entitlement. I also have the power under s 25(3) to

make any order or declaration relating to the status, ownership, vesting or possession of any specific property as I consider just. It is consistent with the various provisions of s 44 (and ss 25(3) and 33(1)), that where there are competing claims to the property, those claims should be determined in accordance with the equities of the whole situation but that any payment ultimately made to Ms Huang should not exceed the value of the property which was acquired with the relationship property proceeds of sale.

[217] I agree with the submission of Mr Watkins that recent decisions under the PRA in other areas have stressed the need for a pragmatic and more global assessment rather than placing undue reliance on formal calculations.²⁷

[218] Ms Lu’s contribution to the purchase price was the loan taken out in her name for $70,000 secured by a mortgage over the Christchurch property. In the circumstances of this case, I do not consider that contribution should be recognised as a separate contribution towards the cost of the property. That loan would not have been obtained without security by way of mortgage over the Christchurch property. That security and thus the loan were only available through the use of Ms Huang’s share of the Auckland proceeds of sale in buying the Christchurch property. The mortgage has been paid largely, if not entirely, through the rent or other payments made by those who have been occupying the Christchurch property. They have made that contribution only through having the use of Ms Huang’s relationship property or equitable interest in the Christchurch property. On the order I am going to make, Ms Huang will be entitled to only a half share in the Christchurch property. Mr Fen and Ms Lu will benefit to some extent through the contribution which was made with this loan.

[219] For some 11 years, Ms Huang has been excluded from significant capital to which she was entitled. She has not been able to invest her share of that capital in another home in Auckland. Although she will benefit from what I anticipate is an increase in the value of the Christchurch property over that period, she has missed out on the increase in the value of any residential property in which she might have

_{been able to invest in Auckland had she received her entitlement when
she should}

have. Mr Fen resided in the Christchurch property from 2006 until at least 2010. Since then, it has been occupied by Tim Fen without any compensation for the continued use of what, in equity, was Ms Huang’s investment in the Christchurch property.

[220] Mr Fairclough submitted that Ms Lu might wish to put further evidence before the Court of payments made from her own capital to reduce the mortgage. He also suggested there should be an opportunity for further submissions once the Court’s factual findings were known. I am not going to delay the proceedings further for either reason. The further potential evidence which her counsel referred to is evidence which Ms Lu could and should have put before both the Family Court and the High Court before the appeal was brought on for hearing. I note that Mr Watkins told Mr Fairclough of the need for such evidence in a letter referred to earlier of 12 October 2015. As discussed above, the evidence was that Mr Fen, Tim Fen and other tenants had made regular payments towards the mortgage from 2006 until its discharge in June 2010. I think it unlikely Ms Lu made any significant contribution to reducing this debt from personal savings. Even if there was any such contribution, it would have been modest and would not alter the conclusion I have reached as to Ms Huang’s entitlement.

[221] Both Mr Fen and Ms Lu have made a contribution to the investment which is the Christchurch property. Mr Fen contributed his share of the Auckland proceeds of sale. Ms Lu bought the property in her name and was thereby personally liable for the payment of rates and other outgoings on the property and for the necessary loan. Through her son, Tim Fen, she has been responsible for the ongoing maintenance of the property. Mr Fen, in effect, chose to involve himself in a joint enterprise with his former wife to make this investment. It is fair that he should have to share his part of that investment with Ms Lu.

[222] I have considered whether Ms Huang should be compensated in some way for her being kept out of her share of relationship property for so many years. If the proceeds of sale from the Auckland property had been shared equally in November

2005 following the sale as they should have been, Ms Huang would have been entitled to $136,321. She received only $30,000. She has not been able to invest or

receive interest on the $106,321 that she should have had available to her since November 2005. Under the Judicature Act 1908 rates, the interest she would have been entitled to on that sum since then, as at 10 October 2016, would have been

[223] In an affidavit sworn on 17 September 2009, Ms Huang openly offered to accept $92,000 in addition to the earlier $30,000 in respect of relationship property. Through her solicitor, she had offered to settle with a further payment of $87,000 on

[224] With settlement on that basis, there would have been no compensation or entitlement resulting from Mr Fen having had the use of all but $30,000 of the relationship property proceeds from the sale of the Auckland property for nearly four years between separation and the date that offer was repeated. In the circumstances, having regard to post-separation use of her share of the proceeds of sale, Ms Huang should not have to account to Mr Fen for half the difference between the amounts they initially received or give either Ms Lu or Mr Fen credit for the reduction in the mortgage debt over the Christchurch property.

[225] Costs in this case are an important consideration. The PRA is important legislation in New Zealand that recognises marriage and de facto relationships are partnerships to which both partners generally contribute equally. When such partnerships end, both parties are generally entitled to share equally in the assets that have been acquired during their relationship.²⁸One of the principles of the PRA is to make it possible for parties to sort out their respective PRA entitlements promptly and economically.²⁹

[226] That should all have been readily achievable in this case. Mr Fen and Ms Huang did not have many assets. Their principal asset was their home. Had both parties honestly disclosed their assets at the end of the relationship and how those assets had been dealt with, there should have been no dispute or delay over each

_{receiving half the proceeds of sale. Instead, it has taken many years
for Ms Huang to}

have her entitlement legally recognised. That has been achieved through her perseverance but also a significant allocation of Court resources to this case. That has been necessary because of the dishonesty of Mr Fen and Ms Lu, with the assistance of their son and others from China. Neither Ms Huang nor the Courts should have to carry all the costs resulting from that dishonesty. The fundamental principles and scheme of the PRA will be undermined if any partner or spouse is able to obstruct another’s claim by being dishonest.

[227] Leave is granted to Ms Lu to appeal against the first and second judgments of the Family Court except in relation to the orders in the first Family Court judgment that:

(a) Ms Huang and Mr Fen share equally in any further reparation obtained by the District Court in connection with a burglary which they had suffered;

(b) they each keep the motor vehicle they had retained on separation without the need for any further accounting; and

(c) they each retain the other family chattels in accordance with the way they were divided between them following separation.

[228] The appeals against the first and second judgments are dismissed except to the extent the orders made are varied by the orders set out below.

[229] I make the following orders, largely consistent with those previously made in the Family Court but with a determination as to Ms Lu’s interest in the Christchurch property:

(i) the interim order of 11 December 2014 for stay of the Family Court judgments is discharged;

(ii) title to the Christchurch property is to be transferred to or vested by order in the Registrar of the District Court at Christchurch for the

purpose of achieving its sale in such manner as will best ensure it is sold for its true value;

(iii) the Registrar is to forthwith take steps to achieve a sale of the Christchurch property, including chattels that would normally be sold with a residential property. In that regard, he is immediately to take appropriate steps to ensure that the Christchurch property is secure and that it is offered for sale in a manner and state that will best ensure it is sold for its true value;

(iv) any and all further powers required to effect the sale of the property (including the eviction of any persons living in the property) will be vested in the Registrar for the purpose of achieving the sale of the property;

(v) Mr Watkins is to be retained as counsel to assist the District Court and the Registrar to ensure that a sale of the Christchurch property is achieved and the proceeds of sale dealt with in accordance with this judgment;

(vi) following the sale, legal and real estate costs incurred on the sale and any other expenses reasonably incurred in achieving a sale of the property, and Mr Watkins’ costs for assisting with the sale, are to be paid from the proceeds of sale. Leave is nevertheless reserved to Mr Watkins to seek some variation of this from the Family Court if it appears that such expenses have been incurred or increased through the actions or inaction of any of the parties to these proceedings or through the actions of anyone occupying the Christchurch property with the agreement of any of the parties to these proceedings;

(vii) one-half of the proceeds of sale from the Christchurch property then remaining are to be paid to Ms Huang in recognition of the extent to which her share of relationship property has been used in the purchase and retention of the Christchurch property; and

(viii) from the remaining one-half share of the proceeds of sale, there are to be paid:

(a) any rates, insurance premiums, mortgage costs or other outgoings that may be outstanding for the period prior to settlement of the sale;

(b) to the District Court at Christchurch for the Ministry of Justice, the costs of $2,914.45 less GST which the Ministry of Justice incurred in obtaining the s 38 reports from the chartered accountant, Ms Smart;

(c) to the District Court at Christchurch for the Ministry of Justice all costs, exclusive of GST, that were incurred by the Ministry of Justice through the appointment of Mr O’Donnell as counsel to assist the Court; and

(d) to the High Court at Christchurch for the Ministry of Justice all costs, exclusive of GST, that were incurred by the Ministry of Justice in the appointment of Mr Watkins as counsel to assist the High Court with regard to the proceedings before the High Court, including costs for his consideration of this judgment, explaining it to Ms Huang and sealing the orders necessary to give effect to it;

the balance of the one-half share of proceeds then remaining shall be paid to Mr Fen and Ms Lu in equal shares;

(ix) leave is reserved to any party to seek further directions from this Court that may be necessary to give effect to this judgment; and

(x) subject to (ix), these proceedings are now remitted back to the Family Court for implementation of the orders that I have made with leave reserved to any party and Mr Watkins to seek such further directions or orders from the Family Court as may be necessary to give effect to this judgment.

High Court of New Zealand Decisions

Lu v Huang [2016] NZHC 2311 (28 September 2016)