Lai v Huang [2016] NZHC 2828 (25 November 2016)

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BETWEEN	SOPHIE LAI also known as SHU-HWA LAI First Plaintiff
AND	RICHARD HUANG Second Plaintiff
AND	LIU SHUN-MEI HUANG and as executrix of the ESTATE OF HSIU-LIN HUANG First Defendant
AND	CHUN-CHING HUANG Second Defendant
AND	CHUN-TA HUANG Third Defendant

Hearing:	16 November 201
Appearances:	R Reed and A Manuson for the Plaintiffs/Respondents J Robertson for the Defendants/Applicants
Judgment:	25 November 2016
_Reissued:	_{28 November 2016}

This judgment was delivered by me on 25 November 2016 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules.

SOPHIE LAI also known as SHU-HWA LAI v HUANG [2016] NZHC 2828 [25 November 2016]

24 August 2012. He left a will dated 22 May 1997 (the will) which related to his New Zealand assets. Pursuant to the will, the first defendant, his wife Liu Shun-Mei Huang (Mrs Huang), was appointed executrix and, given her survivorship of him for the requisite period, was bequeathed the whole of his estate. The second defendant, Chun-Ching Huang (Chun-Ching) and third defendant Chun-Ta Huang (Chun-Ta) are their children.

[2] The first plaintiff, Sophie Lai (Sophie), is the estranged wife of Chun-Ta. The second plaintiff is their son, Richard Huang (Richard).

[3] By proceedings commenced in July 2016, Sophie brings a number of claims against the estate including under the Law Reform (Testamentary Promises) Act

[4] The defendants have applied to strike out the claims under the TPA, FPA and PRA. They also seek an order for security for costs. The applications are opposed by the plaintiffs.

[5] From the start of their relationship, Sophie and Chun-Ta lived with Mr Huang, in a property Mr Huang owned. After Mr and Mrs Huang or the family trust acquired a farm in Coatesville, Auckland (Coatesville Farm) in approximately

1997, Chun-Ta worked there. Sophie says she did as well. They moved to live at Coatesville Farm in 2003. By this time, Mr Huang was living at another farm property he owned in Wellsford (the Wellsford Farm). Chun-Ta suffered a stroke in

[6] In 2008, Mr Huang moved to live at Coatesville Farm. In the same year, Sophie and her children, Richard and Gini, moved to live in Albany. Sophie says she

continued going to Coatesville Farm at weekends and lived in Albany only because it was more convenient for the children’s schooling. The defendants maintain that Sophie and Chun-Ta, in fact, separated at that date and any minimal assistance she might have provided on Coatesville Farm ceased from that time.

[7] Chun-Ching moved to New Zealand in 2002. He purchased various houses, Sophie says using funds provided by Mr Huang.

[8] Mr Huang also owned farmland in Taiwan. Sophie maintains he sold some farmland for a sum exceeding NZD$3.5 million, and transferred that amount to New Zealand where it was managed by Chun-Ching.

[9] After Mr Huang’s death, Mrs Huang and her children entered into an agreement with another of Mr and Mrs Huang’s sons, who lives in Taiwan, whereby he received some property in Taiwan.

[10] Probate in respect of Mr Huang’s will was obtained in November 2012. An agreement to sell the Wellsford farm was entered into in August 2014 and settlement occurred on 31 October 2014. The defendants say final distribution of the estate was then complete.

[11] The statement of claim is dated 1 July 2016. Essentially, the plaintiffs say that Sophie and Chun-Ta both worked full time on Coatesville Farm from 1996 without remuneration. They did so in the expectation and belief that they would become the owners of Coatesville Farm. They say this belief was engendered by assurances from Mr Huang and, in reliance on his promises and assurances, Sophie continued to live and work on the farm without remuneration. Furthermore, that Sophie and Richard relied on Mr Huang’s indications to Sophie and Richard that Richard should pursue a career as a farmer, with the implication that he would eventually manage Coatesville Farm.

[12] The plaintiffs say they were financially dependent on Mr Huang and there is an obligation on the estate to continue to provide for them. They say that

Mr Huang’s will made no provision for them or for Chun-Ta and did not contain the assurances Mr Huang had given them, in relation to Coatesville Farm.

[13] In the circumstances, the plaintiffs claim that Mr Huang had a moral duty to make provisions for their proper support and maintenance.

[14] There are seven causes of action. In respect of the alleged promises and assurances given to them by Mr Huang in respect of Coatesville Farm, the plaintiffs claim in proprietary estoppel, for an institutional constructive trust in favour of the plaintiffs, under the TPA, and under the FPA. Those comprise the first to fourth causes of action, in respect of which the plaintiffs seek declarations and orders that provision is made for them.

[15] The fifth cause of action is against Mrs Huang only and claims a breach of fiduciary duties given her relationship with the plaintiffs. The plaintiffs seek an order that Mrs Huang holds Coatesville Farm as constructive trustee for the plaintiffs. The sixth cause of action is against Chun-Ching, claiming he is liable in dishonest assistance for helping Mrs Huang to transfer Coatesville Farm into their joint names. Equitable compensation for loss is sought in this regard.

[16] The seventh cause of action is against Chun-Ta under the PRA. The plaintiffs say Chun-Ta has a claim against Mrs Huang and Chun-Ching that they hold Coatesville Farm on constructive trust for him. The plaintiffs seek a declaration of a constructive trust, and an order that Sophie is entitled, pursuant to the PRA, to half the amounts owed to Chun-Ta under the constructive trust.

[17] The defendants say that Coatesville Farm was purchased by Mr and Mrs Huang as trustees of the Song Lin Family Trust (the Trust) and therefore was not an asset of Mr Huang’s estate. Furthermore, the property in Taiwan was owned by Mrs Huang.

[18] The defendants deny the allegations of promises and assurances in respect of Coatesville Farm and therefore that the plaintiffs or Chun-Ta have any claim in respect of it.

31 October 2014. Given the plaintiffs did not provide written notice of their intention to make applications under the FPA and TPA until 7 April 2016, more than two years after the date of grant of probate and after final distribution of Mr Huang’s estate, the claims under the FPA and TPA are barred by virtue of s 9 of the FPA and s

[20] The defendants also say, by way of affirmative defence, that the claim against Mrs Huang in her capacity as executrix is barred by s 47(4) of the Administration Act 1969. Distribution of the estate did not take place until more than six months after the date of granting probate, and at the time of distribution Mrs Huang had not received notice of any application or intended claim and the distribution was made in accordance with the provisions with Mr Huang’s will.

[21] The plaintiffs’ reply to the pleaded affirmative defences alleges Mrs Huang began distributing assets before the expiry of three months, and the plaintiffs were unaware of the grant of probate and existence of the will until May 2016.

(b) Striking out the plaintiffs' claims against Mrs Huang in her capacity as the executrix of the estate of Mr Huang.

(i) Striking out the remaining causes of action and dismissing the proceeding altogether; and/or

(ii) Staying Sophie's claim under the PRA pending timely commencement of proceedings by her in the Family Court and applying to transfer her claims under the PRA to this Court.

(d) That the plaintiffs pay security for costs in respect of their claims. [23] The grounds on which the order are sought are as follows:

(b) As probate of the will was granted more than two years before the date on which the plaintiffs filed their claims under the FPA, and as the estate has already been wholly distributed, the FPA claims are barred by virtue of s 9 of the FPA.

(c) As probate of the will was granted more than 12 months before the date on which the plaintiffs filed their claims under the TPA, and as the estate has already been wholly distributed, the TPA claims are barred by virtue of s 6 of the TPA.

(d) The declarations and orders sought by Sophie in the seventh cause of action are not matters this Court has jurisdiction to hear and determine at first instance. Rather, the Family Court has exclusive jurisdiction at first instance unless proceedings have first been issued in that Court and have been remitted by it to this court on application made for the purpose or upon its own motion.

(e) Mrs Huang, as executrix of the will, made the first and final distribution of the estate on a date which was more than six months

after the date of grant of probate of the will. At the time of distribution, she did not receive any notice in writing of any application or intention by any person to make any application which would affect the estate and the distributions made by Mrs Huang were made in accordance with the will.

(f) The claims against Mrs Huang in her capacity as the executrix of the estate are thus barred by virtue of s 47(4) of the Administration Act

(g) There are reasons to believe the plaintiffs will not be able to pay the costs of the defendants if they are unsuccessful in their claims and the Court should order the provision of security for costs by the plaintiffs and stay the proceeding until the payment of security for costs is made.

[24] The plaintiffs oppose the application to strike out, saying they have reasonably arguable causes of action.

[25] The plaintiffs have now filed an application for extension of time under the FPA and TPA, saying the claims are not barred because final distribution of Mr Huang’s estate has not occurred and any distributions allegedly made are not valid.

[26] The plaintiffs say that the estate’s distribution statement showed only the following assets:

(i) Personal belongings including motor vehicle - $5,000.00; (ii) Net sale proceeds of the Wellsford Farm;

[27] They say the following assets, which form part of the estate, have not been included:

(i) A Suzuki Grand Vitara with the registration number AQG838; (ii) A vehicle with the registration number HHL168;

(vii) Mr Huang's right as a beneficiary to the proceeds from the sale of land located in Taiwan, in the amount of 70 to 80 million Taiwan New Dollar (TWD). The land was sold in or around

2011 and part or all of the sale proceeds were transferred to New Zealand and Australia for investment and use of the family. Chun-Ching managed these funds on behalf of Mr Huang;

(viii) Mr Huang's right as a beneficiary to the property located at 2C Bracken Avenue, Epsom, which is registered in the name of Chun-Ching and was purchased using Mr Huang’s funds. Chun-Ching as the registered proprietor held it on trust for Mr Huang. The property was also partially financed by proceeds from the sale of a property located in Taiwan in 2006 or 2007. That property was registered in the name of Chun-Ta

and the sale proceeds were transferred to New Zealand at the instruction of Mr Huang;

(ix) Any funds held in overseas bank accounts; (x) Any vehicles located overseas.

[28] The plaintiffs also allege that it is “highly questionable” whether Mrs Huang understood her affidavit in support of the application for probate and her duties as executor.

[29] The plaintiffs maintain the Court has jurisdiction to grant declaratory relief regarding the claim of a constructive trust in respect of the PRA cause of action and proceedings cannot be commenced in the Family Court until the declaration of a constructive trust has been made.

[31] The plaintiffs and defendants filed affidavits in support of their respective positions.

[32] At the end of the hearing, Ms Royal, for the plaintiffs, raised an issue concerning the English language abilities of the defendants and their affidavit evidence. She referred to the affidavit of service of the process server who commented that the English of all three defendants was very poor and conversation with them in English was very hard to understand. Ms Royal then suggested that the Court should have serious misgivings as to whether the affidavit evidence provided was indeed the evidence of the defendants.

[33] What Ms Royal did not mention was the fact that Mrs Huang’s affidavit was in Mandarin and an English translation was provided. A suitably qualified interpreter and translator confirmed the English version to be an accurate and correct

translation of Mrs Huang’s affidavit. This complies with r 1.15 of the High Court

[34] Furthermore, in his reply affidavit dated 7 October 2016, Chun-Ching specifically addressed this issue. He explained his English ability, rejected Sophie’s allegation that he was unable to affirm English affidavits and confirmed he had carefully read and understood the content of each of his affidavits.

[35] In these circumstances, I am satisfied as to the position and I do not need to address this matter further.

[36] The only unanswered allegation concerning the affidavit evidence relates to Chun-Ta. He provided an affidavit dated 8 August 2016 in English. The process server’s affidavit records a brief conversation with Chun-Ta. More to the point perhaps, is Richard’s affidavit which relevantly says:

... I asked him whether he wrote his affidavit. He said that he told the lawyers what to write and the lawyers have written for him, because he cannot write.

My father does not have good English literacy, and I am concerned that he has affirmed statements in his affidavits which he does not really understand.

[37] There does not appear to be an affidavit from Chun-Ta responding to that allegation in the same way as there has been a response in respect of similar comments about Chun-Ching.

[38] Chun-Ta’s affidavit primarily responds to Sophie’s claims under the TPA, FPA and PRA. It is not material to the strike out application in respect of the TPA and the FPA, where the issue is whether the estate has been distributed. To the extent it is material to the application in respect of the PRA claim, I address it below.

[39] In respect of the application to strike out the claims under the TPA and FPA, the issue is whether the estate has been distributed. If it has been, as the defendants maintain, the application to strike out must succeed.

[40] In respect of the application to strike out the claim under the PRA, the issue

[41] I will deal with those two issues before addressing the more general aspects of the application and the issue of security for costs.

[42] The plaintiffs maintain that, of the assets listed in the estate distribution statement, two of the assets have not been distributed. Furthermore, the plaintiffs claim that there are further unidentified assets of the estate which have also not been distributed. The plaintiffs, therefore, say that the Court does not have the requisite information to determine whether the estate has been distributed, as a disputed question of fact.

FPA. The Court cannot override a statutory time bar.¹Whether a final distribution has occurred is a question of fact.²

The words "the final distribution of the estate of the deceased" refer to the point of time at which the administrator having completed the administration of the estate becomes a trustee for the beneficiaries of those assets not already actually distributed: see Lilley v Public Trustee [1978] 2 NZLR 60S affirmed by the Privy Council [1981] UKPC 4; [1981] 1 NZLR 41; [1981] AC 839. So much is not in doubt.

[46] The plaintiffs’ position is that there are items of personal property which have

not been distributed. The question then is whether Mrs Huang, as the sole beneficiary of the will, assented to the transfers and treated the property as if it were

her own. The question of assent was discussed in the case Re Annett (deceased), Henry J concluding:⁴

The defendant, by her acts in dealing with the trustee of the Alice Phoebe Fox estate on the basis that she is the person entitled to the share of the testator, and her acts in treating all payments received as her own property, and her act in ceasing to treat the estate of the testator as having any separate existence since October 31, 1954, constitutes an assent to the gift in the will so that it became her sole property. In the result, I find that there was, before this application was made, a distribution of the estate of the testator...

[47] In Davidson v Clark, Venning J reviewed the authorities on assent. Although there had been some debate about the extent of the doctrine, he noted the Court of Appeal case Sullivan v Brett, and concluded that the law showed:⁵

• executors may give an assent in respect of specific items of an unascertained residue;

• an assent may be evidenced by vesting property in residuary beneficiaries in their respective shares;

• any interest vested by the assent is equitable until the necessary steps are taken to vest legal title.

[49] The plaintiffs have raised two issues concerning the Wellsford Farm. First, that the agreement for sale and purchase was signed by Chun-Ching and there is no evidence of his authority to do so. In my assessment, that matters not. The Wellsford Farm was transmitted to Mrs Huang and settlement of the sale to the third party occurred. The fact Chun-Ching might have signed the agreement for sale and

_{purchase as agent for Mrs Huang is of no issue in circumstances where
settlement}

occurred and the proceeds were paid to the sole beneficiary under the will, Mrs Huang.

[50] The second issue raised by the plaintiffs was an allegation that the proceeds were not in fact distributed to Mrs Huang. In submissions, counsel for the plaintiffs said “it is entirely possible that the sale proceeds were not paid into Mrs Huang’s bank account but rather into the account of the Trust”. The basis for this submission was that the bank account number had the suffix “25” and the name of the account was that of Mrs Huang but, counsel suggested, the account could have been in her name as trustee of the Trust. These submissions were entirely without foundation. The affidavit evidence includes the statement on settlement from the solicitors. This records the balance available for distribution to the beneficiary, identified as Mrs Huang. There is then a printout from the ASB recording the receipt, from the lawyers’ trust account into Mrs Huang’s account on 31 October 2014, of the amount shown in the settlement statement.

[51] For these reasons, I am satisfied that the distribution of the proceeds of sale of the Wellsford Farm was made to Mrs Huang as beneficiary under the will.

[52] The plaintiffs allege that the debt owed by the Trust to Mr Huang has not been distributed. Pursuant to the will, Mr Huang forgave all debts owing by the Trust. The statement of capital of the estate records that amount. The plaintiffs say the accounts of the Trust do not record the forgiveness of debt and suggest there should be some form of gifting.

[53] The forgiveness of debt has occurred by operation of the will and accordingly there cannot be a claim that the estate has not been distributed in this regard.

[54] The plaintiffs maintain, somewhat at odds with the statement of claim, that there are some further assets which were not included in the estate distribution statement and therefore have not been distributed. I address these in turn.

[55] Sophie alleges certain farm machinery was not listed in the estate distribution statement. The affidavit evidence shows farm machinery was included in the sale of the Wellsford Farm. The affidavits of Mrs Huang and Chun-Ching explain that. Mrs Huang denies absolutely Sophie’s allegation that Mrs Huang owned a John Deere tractor worth $100,000. Any other equipment, she says, was either included in the sale of the Wellsford Farm (the agreement for sale and purchase of which shows a list of machinery included) or was moved to Coatesville Farm and distributed to her or sold.

[56] Mrs Huang clearly assented to the bequests in respect of farm machinery, treating it as her own.

[57] The same comment applies to motor vehicles. Mrs Huang is satisfied they are included in the valuation of $5,000 attributed to motor vehicles belonging to the estate. Somewhat surprisingly, one of Sophie’s allegations relates to a Suzuki motor vehicle which Mrs Huang claims was given to Sophie in 2002. Sophie does not appear to accept that. In any event, Mrs Huang does not consider the Suzuki to be part of Mr Huang’s estate and considers it has been gifted to Sophie.

[58] The vehicles were clearly taken into account and had a value ascribed to them. In any event, Mrs Huang, as the sole beneficiary has dealt with those items as if they were her own.

[59] Sophie alleges that Mr Huang provided some funds for Chun-Ching to purchase a house in Epsom. He has, apparently, moved a number of times since then and now owns 2C Bracken Avenue, Epsom. The plaintiffs therefore say that Mr Huang has an interest in 2C Bracken Avenue or is owed a debt from Chun-Ching, in this regard. Chun-Ching acknowledges that his father provided him with some assistance in buying his first property in New Zealand after he moved here from

Taiwan. He says that was a gift and, while he has moved several times since, that was all at his own cost.

[60] In their submissions, counsel made a number of allegations as to why Mr Huang might have a beneficial interest in Chun-Ching’s property, for example, that Mr and Mrs Huang wanted to treat their children equally. In my assessment, none of these submissions have any merit and I put them to one side. Although some doubts have been expressed about the application of the presumption in a modern

context,⁶in the absence of other evidence, the presumption remains of a gift in

financial transactions between parent and child.⁷In this case, there is Chun-Ching’s evidence of a gift and Mrs Huang’s evidence that the estate has been distributed, despite Sophie’s allegations.⁸All there is from Sophie is conjecture.

[61] The plaintiffs then allege that a year before Mr Huang died, he directed farmland in Taiwan to be sold with the balance transferred to Chun-Ching. Mrs Huang says this is a complete fabrication. There is evidence that Mrs Huang owns farmland in Taiwan in her own name. Property owned by Mr Huang in Taiwan was dealt with after his death and is addressed below.

[62] Sophie also claims that Chun-Ta sold a property in Taiwan and some of the proceeds were put towards the purchase of a property for Chun-Ching. I cannot see how this is relevant to a claim in respect of Mr Huang’s estate.

[63] Sophie maintains it is inconceivable that Mr Huang had only one bank account with $135 in it. She says all bank accounts should have been listed in the estate distribution statement but were not. The first obvious point is that any bank accounts in the joint names of Mr and Mrs Huang passed by survivorship to

Mrs Huang and would not form part of the estate.⁹Secondly, this submission is pure

speculation. The fact remains that Mrs Huang was the sole beneficiary under the will. Her evidence is that the estate was wholly distributed on 31 October 2014.

⁸_{Mrs Huang did not need to address every allegation. Her
affidavit was in reply to Sophie’s.}

⁹Hugh McGuinness Wills and Succession (looseleaf edition, LexisNexis) at [14.31].

[64] The will was specifically limited to Mr Huang’s estate in New Zealand. Probate granted in relation to the New Zealand estate only is a limited grant,¹⁰meaning Mrs Huang was not granted probate nor confirmed as the administrator of Mr Huang’s foreign estate and did not have formal responsibilities in relation to it.

[65] Further, the Court does not have jurisdiction to make orders under the FPA (or for the same reasons, any other New Zealand statute such as the PRA)¹¹in respect of real property situated outside of New Zealand, because the succession of that property is governed by the law of the country where the land is located (lex situs).¹²There is therefore some tension in assessing whether there has been “final distribution” of the estate, for the purposes of determining whether a claim under statute is time-barred, relying on the non-distribution of foreign assets.

[66] In any event, the evidence is that Mr Huang did own farmland and an “agreement for heritage division” was entered into in respect of that land whereby, in accordance with Mr Huang’s wishes, the land was transferred to another son who lives in Taiwan, Chun-Chieh. The documentation provided records this was with the agreement of all those entitled under Taiwanese law to inherit, including all three defendants. The remaining asset of TWD$150,000 (approximately NZ$6,000) was divided equally between Mrs Huang and the four children. Copies of the Taiwanese documents and English translations have been produced.

[67] The only possible issue concerns the $6,000, to the extent that the Court could have any jurisdiction (since no evidence of any applicable Taiwanese law has been provided). However, Mr Huang’s will is limited to his New Zealand assets, and any challenge to that must be focused on those assets; on the face of it a legal agreement was entered into in relation to the money in Taiwan; and, if covered by

_{New Zealand’s intestacy laws, it would have been divided between
Mrs Huang and}

¹²Re Bailey [1985] 2 NZLR 656 (HC) at 660. The ability to make any orders about the title of real property in an administration context is an exception to the general rule that courts not make orders relating to foreign property: Burt v Yiannakis [2015] NZHC 1174 , [2015] NZFLR 739 at [52].

the children of Mr and Mrs Huang, in any event.¹³Section 9 of the FPA, in the Court of Appeal’s words, “reflects the balance being struck between the efficient administration and distribution of estates on the one hand, and discretionary reallocations in recognition of moral duties on the other”.¹⁴The same policy rationale applies to s 6 of the TPA. Here, the amount is de minimis. It would be contrived to determine that Mr Huang’s estate had not been distributed on the basis of a small amount of money in Taiwan which, even if New Zealand has any jurisdiction over it, has clearly been distributed.¹⁵Again, in the words of the Court of Appeal:¹⁶

It is ... plain enough that Parliament was intending that no distribution made in terms of the will (or, in the case of an intestacy, in terms of the Administration Act 1969) should be disturbed. The distribution in this case was in terms of the will. The statutory language leaves no room for disturbance because of a circumstance that has not vitiated the provisions of the will.

[69] Although the plaintiffs now appear to accept Coatesville Farm is held by the Trust, it is worth examining its ownership, as the TPA and PRA claims focus on that property. Furthermore, the fifth and sixth causes of action plead that Mrs Huang wrongfully transferred ownership of Coatesville Farm to her and Chun-Ching, and that Chun-Ching dishonestly assisted her to do so.

[70] The defendants say Coatesville Farm is owned by the Trust, which was established by Mr and Mrs Huang as settlors on 18 July 1996. The trustees were Mr and Mrs Huang. Chun-Ching is now a trustee, as confirmed by the deed of

¹³Administration Act 1969, ss 77 and 78. There was nothing to preclude Mrs Huang and the children of Mr and Mrs Huang from agreeing a slightly different distribution from that provided for by statute. This applies to any other moveable assets held overseas to the extent they might be subject to New Zealand law.

¹⁵See Re Heberley (deceased) [1971] NZLR 325 (CA) at 340 and Re Wise (deceased) HC Hamilton M176/89, 26 June 1990, where time was not extended even if possible in relation to de minimis sums.

12 November 1996, transmitted to Mrs Huang as survivor on 12 December 2012, and transferred to Mrs Huang and Chun-Ching on March 2013. Notwithstanding that, the affidavit evidence from both Mrs Huang and Chun-Ching is that Coatesville Farm was held in the Trust from the outset. Certainly, it is clear from the financial statements of the Trust that the farm has been treated as an asset of the Trust since at least 2000 (the first year for which financial statements have been produced).

[72] Coatesville Farm is therefore either owned by the Trust and does not form part of Mr Huang’s estate, or it was owned by Mr and Mrs Huang as joint tenants passing to Mrs Huang by survivorship and again does not form part of the estate.

[74] Ms Robertson urged me to deal with the application in a robust way. Notwithstanding the principle that a strike out application proceeds on the assumption that the facts pleaded in the statement of claim are true, she submitted that, in a case such as this, this principle would mean there could never be a strike out decision on a final distribution, as there could always be a claim of contested facts. I agree with that proposition and in any event, this is, in my assessment, a case where the plaintiffs’ essential factual allegations that the estate has not been distributed are so demonstrably contrary to indisputable fact that the matter should

12 November 2012, the estate was wholly distributed on or about 31 October 2014, and the plaintiffs’ TPA claims are therefore barred by s 6 of the TPA and the plaintiffs’ FPA claims are barred by s 9 of the FPA.

_{[76] For these reasons, the third and fourth causes of action are
struck out.}

[77] The position is somewhat different in respect of Sophie’s claim under the seventh cause of action, which is a claim under the PRA. Clearly the Court does not, at this stage, have jurisdiction to make the orders sought by Sophie that she is entitled to amounts under the PRA, as that is a matter to be dealt with in the Family Court.

[78] The other relief sought by Sophie is a declaration that there is a constructive trust in favour of Chun-Ta in relation to Coatesville Farm.

[79] The defendants apply to strike out of this cause of action on the basis the Family Court has exclusive jurisdiction at first instance unless proceedings were issued in that Court and have been remitted to this Court.¹⁸

[80] The plaintiffs rely on the case of Jew v Jew.¹⁹In that case, Mr Jew sought a declaration that a family trust did not hold property which constituted relationship property in respect of the marriage between Mr and Mrs Jew. Mr Jew was a discretionary beneficiary of the family trust. At the time of the proceeding, neither party had instituted proceedings in the Family Court. Paterson J allowed the appeal against the strike out of the proceeding seeking a declaration. In his view, it was not contrary to public policy that the High Court determine the status of property which might assist in resolving relationship property disputes but which in itself does not determine matters within the sole jurisdiction of the Family Court. Following that approach, the plaintiffs say there is no basis to strike out the seventh cause of action.

[81] In Fisher on Matrimonial and Relationship Property, the author cites comments of Master Gendall (as he then was) that the effect of s 4(4) of the PRA is not that all proceedings relating to ownership of relationship property between individuals must first be decided in the Family Court, but instead requires the Court hearing the dispute to apply the principles of the PRA to the relevant issue.²⁰Citing

_{Jew v Jew, Master Gendall refused to strike out a claim which
might have come}

within the PRA, on the basis that s 22 gave exclusive jurisdiction to the Family Court only where orders under s 25 of that Act were being sought.²¹Fisher refers to Jew v Jew as demonstrating that a person may obtain a declaration that property held by a family trust is not relationship property.²²This approach has been more recently followed by Justice Andrews, who said, “I adopt, with respect, the conclusion of Paterson J that the Family Court only has exclusive jurisdiction where orders are sought under the provisions of the Property (Relationships) Act: that is, pursuant to s

[82] This case is somewhat different from Jew v Jew, and that described in Fisher, because it is Sophie who is alleging a constructive trust in relation to Coatesville Farm in favour of Chun-Ta. As alluded to above, Coatesville Farm is either owned by the Trust or was owned by Mr and Mrs Huang as joint tenants. Similar circumstances arose in Clark v Clark, where the High Court granted a declaration to a wife in respect of her husband’s interest pursuant to a constructive trust in property

owned by a family trust.²⁴In that case, the declaratory relief was sought in the High

Court at first instance, with the claims against her husband brought in the Family

[83] Chun-Ta’s affidavit evidence completely refutes the allegations of a constructive trust on his behalf although, as observed above, there is at least a question mark surrounding his affidavit evidence.

[84] Following the approach of Jew v Jew and in the context of the seventh cause of action being closely linked factually and legally with other causes of action, it should not be struck out at this stage. As noted, however, the re-pleaded statement of claim should not include the orders sought under the PRA which must be sought in the Family Court.

[85] For the reasons given, the application to strike out the seventh cause of action is dismissed.

[86] The application requested such further or alternative relief as the Court deemed just, including striking out the remaining causes of action and dismissing the proceeding altogether. Neither counsel dealt with this element of the application in submissions and I will not either. I will observe, however, that the statement of claim needs to be re-pleaded, in particular dealing with the ownership of Coatesville Farm and the need to join the trustees of the Trust in their capacity as trustees. The plaintiffs need to reconsider their claims to the extent they allege breach of

Mrs Huang’s obligations as executrix,²⁵in respect of which there does not appear to

be a cause of action, although the pleading is somewhat confused. Although referred to in the application, this was not addressed in formal argument. The sixth cause of action also requires reconsideration, given the ownership of Coatesville Farm.

[87] Given the allegations in the statement of claim, it is worth pointing out that the plaintiffs are both discretionary beneficiaries under the Trust. It is not clear whether they have sought any assistance from the Trust.

(1) Subclause (2) applies if a Judge is satisfied, on the application of a defendant,—

(b) that there is reason to believe that a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the plaintiff’s proceeding.

(2) A Judge may, if the Judge thinks it is just in all the circumstances, order the giving of security for costs.

[89] The defendants say the basis of the plaintiffs’ claims is that they were financially supported by Mr Huang, and have been seriously disadvantaged as a result of the way in which his estate has been dealt with. They say that, on the evidence already provided, the plaintiffs’ claims are groundless and without merit.

[90] The plaintiffs say their claims should not be thwarted by an order for security for costs, the effect of which might preclude them from pursuing a worthwhile claim.

[91] There is a clearly a great deal of work to be done on the part of the plaintiffs in reformulating the claim. Further, as implicitly acknowledged by the plaintiffs, there is reason to believe the plaintiffs will be unable to pay the defendants’ costs if the plaintiffs are unsuccessful. Given the, at present, wide ranging nature of the allegations, Ms Robertson’s estimate of a trial time of two weeks seems realistic. I also note the need for Mandarin interpreters which will inevitably prolong the proceeding. Ms Robertson estimated a costs award on a 2B basis of approximately

[92] I am satisfied it is just, in all the circumstances, for there to be an order for giving of security for costs which I set at $10,000: $5,000 to be paid within 10 working days of the filing of an amended statement of claim and $5,000 to be paid on the close of pleadings date.

(1) The third and fourth causes of action pleaded in the statement of claim dated 1 July 2016 are struck out;

(2) An order for security for costs of $10,000 is made, to be paid as set out above.

[94] The plaintiffs are to file and serve an amended statement of claim within 20 working days hereof.

[95] The defendants having been, in general, successful, are entitled to some degree of costs in respect of this application. If there is no agreement between the parties, the defendants are to file a memorandum within 15 working days with any

High Court of New Zealand Decisions

Lai v Huang [2016] NZHC 2828 (25 November 2016)