Lo v Lo

• Jurisdiction: New Zealand
• Judge: Jagose J
• Judgment Date: 08 July 2020
• Neutral Citation: [2020] NZHC 1614
• Date: 08 July 2020
• Docket Number: CIV-2019-404-1398
• Year: 2020
• Court: High Court

Between

Ho Shing Lo

Applicant

and

Ho Cheong Lo

First respondent

Chi Na Kwok

Second respondent

[2020] NZHC 1614

Jagose J

CIV-2019-404-1398

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

Property — application for orders under s339 Property Law Act 2007 for sale of a property co-owned with the respondent and division of its proceeds or requiring the defendant to purchase the applicant's share in the property - the respondents opposed on the basis the second respondent (the parties mother) had provided the entire purchase amount for another property which had been sold to reduce the mortgage on the property at issue

Appearances:

M D Lloyd for the applicant

M G Keall for the respondents

JUDGMENT OF Jagose J

This judgment was delivered by me on 8 July 2020 at 3.30pm. Pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

1 The applicant (“Ho Shing”) and first respondent (“Ho Cheong”) are twins and the registered proprietors of a half-share each in a six-bedroom property in Auckland's Flat Bush. The property was acquired in May 2015 with a mortgage secured over it and another three-bedroom property in Auckland's Papakura (since sold, the proceeds going to reduce the mortgage), of which they also were registered proprietors on its acquisition in October 2010. The two properties served sequentially as the twins' family home, in which they had lived with the second respondent (their mother (“Chi Na”), and their younger brother (“Ho Kwan” Lo) and maternal grandmother (“Yanyi” Wang). I mean no disrespect by using their common names as at the hearing.

2 Ho Shing now applies for orders under s 339 of the Property Law Act 2007 for sale of the Flat Bush property and division of its proceeds between him and Ho Cheong, or requiring Ho Cheong to purchase his share in it. The property was valued in June 2019 at $1.250 m, over which is secured a $662,000 mortgage. Ho Cheong and Chi Na oppose largely on grounds Chi Na contributed the entirety of the purchase price of the Papakura property not covered by the original mortgage, which was acquired (and succeeded by the Flat Bush property) as a home for the extended family. (The Papakura property was retained as collateral for the Flat Bush mortgage, and maintained as a rental property, rent going to reduce the amount of the mortgage.) They argue Ho Shing, Ho Cheong, and Chi Na contributed roughly equal sums to the family's living expenses (including mortgage repayments and other property expenses). That includes the twins' payment of ‘board’ to Chi Na while living at the family home, when Chi Na ceased to obtain child support payments after they turned eighteen years of age.

Background

3 Chi Na separated from her sons' father in 2001, when the three boys were twelve and eight years old. The terms of the parents' relationship dissolution were settled in 2010, with Chi Na receiving $300,000. At the time, the extended family had been living in two-bedroom rental accommodation, although Ho Shing and Ho Cheong also lived together for some unspecified period(s) in separate rental accommodation.

4 In 2010, Ho Shing and Ho Cheong both obtained financial scholarships to support their intended engineering doctorate study. The scholarships paid their academic fees and provided each an additional annual $25,000 over the subsequent three and a half years, extendable to four years (as it was for Ho Cheong). Chi Na proposed the twins' scholarship funds, amounting to $100,000 each over four years, be used in support of a mortgage application to acquire a suitable Papakura property she had identified, the balance of which purchase price she would obtain. Lacking any English language facility, she introduced the twins to the property's Chinese language agent, who correspondingly introduced a Chinese language mortgage broker and lawyer (all also used English language) for completion of the transaction.

5 By letter of 15 September 2010, the National Bank of New Zealand Limited approved fixed interest mortgage finance to the twins of a maximum $300,000 to no more than 77.92 per cent of the purchase price with indicative first year repayments minorly exceeding $45,000. The loan was conditional on — among other things — the twins' provision of “[a] signed Certificate of Gifting being held by the Bank for an amount of $85,000.00 prior to loan drawdown”.

6 By email of 23 September 2010 to the twins, the broker proposed wording for the certificate, 1 which was adopted: “I, Guo Zi Qi, confirm that I will give my nephews, Ho Cheong Lo and Ho Shing Lo, $85,000 to purchase the property without paying back”. Guo Zi Qi is Chi Na's brother, her sons' uncle. Guo Zi Qi's name is written in Chinese language characters above his name typed in English language characters at the foot of the certificate. The certificate also is annotated with the handwritten figures “28/08/2010”.

7 The extended family moved into the three-bedroom Papakura property after settlement, Ho Cheong sharing a bedroom with Ho Kwan, and Yanyi sleeping in the lounge. Over subsequent years, meaningful contributions to the household's expenses (including mortgage payments, and on the properties' improvements and maintenance) continued to be made by Ho Shing, Ho Cheong, and Chi Na (with some contributions also from Yanyi). While the Papakura property was retained as collateral for the

Flat Bush mortgage, it was maintained as a rental. It was sold in July 2018, the proceeds applied in reduction of the Flat Bush property's mortgage

8 After obtaining their doctorates, both Ho Shing and Ho Cheong are employed as engineers, Ho Shing being the first to obtain paid employment from April 2014. Ho Cheong spent a period living away from the Papakura property from May 2013 to February 2014, and then overseas in pursuing work opportunities with his father in Hong Kong from July 2014 to January 2015. Ho Kwan obtained a master's degree in engineering in 2015, but has not since worked in paid employment. The family supported his efforts to develop an on-line gaming product, on which he has worked from his bedroom for the past four or five years. Chi Na also has not worked in paid employment, raising her children and looking after her mother instead, while diminishing the sum of her relationship property settlement. Yanyi's contributions had come from minor domestic work she carried out for others, and from her pension.

9 Ho Shing and Ho Cheong initially paid all mortgage repayments and other direct property-related expenses themselves, albeit in unequal shares. Ho Cheong's contributions were reduced on his absences from the property and later terminated while he was overseas. He returned to complete his doctoral oral examination and to secure paid employment. Ho Shing's entreaties to Ho Cheong fully to bear a half-share of their obligations went unmet. Finding the financial burden unacceptable, and being unable to secure a resolution with Ho Cheong or Chi Na, Ho Shing moved out of the property in December 2018, and ceased contributing to any of the household's expenses (including mortgage payments, which have been maintained since by Ho Cheong as interest-only payments). Ho Shing's subsequent attempts to be bought out of his share of the property, including as to one-third on Chi Na's assertion of an interest in the property, also were unsuccessful. He brings this proceeding accordingly.

The law

10 The Property Law Act 2007 Act provides:

339 Court may order division of property

(1) A court may make, in respect of property owned by co-owners, an order—

• (a) for the sale of the property and the division of the proceeds among the co-owners; or

• (b) for the division of the property in kind among the co-owners; or

• (c) requiring 1 or more co-owners to purchase the share in the property of 1 or more other co-owners at a fair and reasonable price.

(2) An order under subsection (1) (and any related order under subsection (4)) may be made—

• (a) despite anything to the contrary in the Land Transfer Act 1952; but

• (b) only if it does not contravene section 340(1); and

• (c) only on an application made and served in the manner required by or undersection 341 ; and

• (d) only after having regard to the matters specified in section 342.

(3) Before determining whether to make an order under this section, the court may order the property to be valued and may direct how the cost of the valuation is to be borne.

(4) A court making an order under subsection (1) may, in addition, make a further order specified in section 343.

(5) Unless the court orders otherwise, every co-owner of the property (whether a party to the proceeding or not) is bound by an order under subsection (1) (and by any related order under subsection (4)).

(6) An order under subsection (1)(b) (and any related order under subsection (4)) may be registered as an instrument under—

• (a) the Land Transfer Act 1952; or

• (b) the Deeds Registration Act 1908; or

• (c) the Crown Minerals Act 1991.

11 Such orders may be sought under s 341:

341 Application for order under section 339(1)

(1) An application for an order under section 339(1) (and for any related order under section 339(4)) may be made by all or any of the following people:

• (a) a co-owner of any property:

• (b) a mortgagee of any property of a co-owner or co-owners if, under the mortgage and subpart 7 of Part 3, the mortgagee has become entitled to exercise a power of sale:

• (c) a person with a charging order over any property of a co-owner or co-owners.

(2) Every person who is one of the following must, if not already a party to the proceeding on that application, be served with a copy of that application:

• (a) a co-owner of the property:

• (b) a person who has an estate or interest in the property that may be affected by the granting of the application:

• (c) a person claiming to be a...