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Huang v Chung [2015] NZHC 686 (15 April 2015)

Last Updated: 15 May 2015

IN THE HIGH COURTOF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-3012 [2015] NZHC 686

_{JUDGMENT OF ASSOCIATE JUDGE R M BELL}

This judgment was delivered by me on 15 April 2015 at 2:00pm

Pursuant to Rule 11.5 of the High Court Rules

.................................................

Registrar/Deputy Registrar

Solicitors:

Yu Lawyers (David Liu) Auckland, for Applicants

Hooker Law (James Skinner) Albany, Auckland, for Respondents

Counsel:

G M Illingworth QC, Auckland, for Applicants

HUANG v CHUNG AND WONG & BONG TRUSTEE COMPANY LIMITED [2015] NZHC 686 [15 April

2015]

[1] Tony Jun Huang applies under s 145A of the Land Transfer Act 1952 to sustain caveat 9528199.1 against the title to the property at 231 Maraetai Drive, Maraetai. The caveat claims this interest:

A beneficial interest in the land comprised in the abovenamed certificate of title as cestui que trust by virtue of a resulting trust between the caveator and the registered proprietors.

The respondents, the registered proprietors, are the trustees of the GBACO Family Trust established under a trust deed of 11 March 2013. One of them, Yuen Ying Chung (Bonnie Chung), lives in the property.

[2] The context for the application is a relationship property dispute between Mr Huang and Cho Hui Chung (May Chung), Bonnie’s mother. They began living together in the late 1990s and married in 2010. They separated in August 2013.

[3] In March 2015 May Chung agreed to buy the Maraetai Drive property but nominated the trustees to take title. Mr Huang says that the funds used to buy the property can be brought into account in a division of relationship property. There is a substantive relationship property proceeding in this court.¹ He has lodged the caveat to protect his claim in respect of the funds Ms Chung used to buy the Maraetai property. In my judgment, he has used the wrong tool. He does not have a

caveatable interest in the Maraetai Drive property, but he has alternative protection by a notice of interest under s 42 of the Property (Relationships) Act 1976.

Facts

[4] Caveat applications are unsuitable for deciding disputed questions of fact. The court is concerned only to find out whether the caveator has an arguable case for the interest claimed. In addition to the affidavits in the caveat application, I have been provided with copies of evidence filed in the substantive proceeding. Ms Chung and Mr Huang differ on many factual aspects. In setting out the facts,

_{I am recording matters which are reasonably arguable for Mr Huang. In doing that,}

¹ Huang v Chung HC Auckland, CIV-2013-404-4797.

I also recognise that Ms Chung’s version is also reasonably arguable. I am not

required to decide which version is to be preferred.

[5] In 1995, Ms Chung separated from her first husband, Michael. They had three children. On separation she owned a commercial property in Dominion Road, Mt Eden, Auckland, and a supermarket run by Silver Bell Trading Co Ltd. She was the director and sole shareholder. Mr Huang worked briefly in the Silver Bell supermarket in Dominion Road before Ms Chung separated from Michael. After the separation, Mr Huang came back to work in the supermarket.

[6] They disagree when the relationship started. He says it was in 1997; she says

1999. They disagree strongly on his role in the business, his contributions and the benefits he received. On his account the Dominion Road supermarket was not doing particularly well at the start of their relationship. He worked full-time in the business, taking on increasing responsibilities which led to the expansion of the business into a chain of supermarkets and an import operation, Cheertop Trading Ltd. With the success of these businesses, they also invested in real estate. He acknowledges that he left all legal and accounting matters to Ms Chung, but otherwise describes the business as a joint enterprise for their mutual benefit. A number of the properties identified as real estate investments are held in various trusts. In 2006-2007 they sold the Silver Bell supermarkets, the Dominion Road property and two other properties, receiving approximately $10,000,000. They lived for 10 months in Australia and then moved to Hong Kong. To satisfy immigration requirements, they invested funds in Hong Kong. They also bought an apartment in both their names in Macau. The New Zealand import operation continued. Apart from the Macau apartment, Mr Huang does not identify assets in which he had legal title, either alone or concurrently with Ms Chung.

[7] Ms Chung acknowledges that Mr Huang worked in the Silver Bell business, but says that his role was relatively unimportant: it was very much her business. She had overall control but, while Mr Huang had a relatively nominal wage (set low for child support assessment), he and his family received ample other benefits.

[8] They have two children, Cassidy Jar Ying Huang and Oscar Jia Yao Huang.

[9] They separated in August 2013. Earlier that year, on 7 March, Ms Chung was the successful bidder at an auction for 231 Maraetai Drive. The purchase price was $1,430,000. She paid a deposit of $143,000.

[10] On 11 March 2013 Ms Chung, as settlor, established the GBACO Family Trust. As already noted, the trustees are Ms Chung’s daughter, Bonnie, and a trustee company associated with her conveyancing lawyers. The beneficiaries are Ms Chung, all her children and their children, but not Mr Huang. It is a discretionary family trust. In the absence of any distributions, the trust fund is held for the settlor absolutely and then for the beneficiaries in equal shares. Under the trust deed, the settlor is an advisory trustee and also has the power to appoint and remove trustees.

[11] By deed dated 19 March 2013, Ms Chung nominated the trustees of the family trust as purchasers to take title to the Maraetai Drive property. Ms Chung says that she paid the deposit of $143,000 from her ASB account. On settlement of the purchase, she contributed a further $568,786.22 with funds from her HSBC account in Hong Kong, but channelled through Bonnie’s HSBC Hong Kong account and Bonnie’s HSBC New Zealand account to the lawyers’ trust account, with the balance financed by a bank loan secured by a mortgage over the property.

[12] In his first affidavit in the caveat application, Mr Huang said that the purchase price of the Maraetai Drive property came from the proceeds of sale of the Macau apartment and from a share fund in Hong Kong. Ms Chung has shown that the Macau apartment proceeds and the money from the Hong Kong share fund were received after the purchase of Maraetai Drive was completed. At the hearing Mr Huang accepted that the funds used to buy Maraetai Drive did not come from the Macau apartment and the Hong Kong shares.

[13] Ms Chung maintains that her motive in setting up the GBACO trust was to provide for the adult children of her first marriage and for the children of her marriage with Mr Huang (Cassidy and Oscar). She had been diagnosed with cancer in 2011 and believed that she had a limited life expectancy.

Mr Huang’s claim under the Property (Relationships) Act

[14] In general terms, Mr Huang’s case is that assets to which he has a claim have been applied towards the purchase of the Maraetai Drive property and he is entitled to follow the funds into the property itself. Ms Chung rejects that. She contends that she was the sole owner of the funds used applied to buy the property (aside from the bank finance) and that under the Property (Relationships) Act those funds were her separate property. Her case is that at the outset of their relationship, Mr Huang had no assets and she was sole owner of the Silver Bell operation. In particular, she was sole shareholder of Silver Bell Trading Company Ltd. Their wealth is attributable to the success of Silver Bell, the sale of its assets and the successful reinvestment of the proceeds of sale. Similarly the import operation, Cheertop Trading Ltd, remained hers alone.

[15] Under the Property (Relationships) Act, that is not a complete answer. On his version, Mr Huang has an arguable case for a claim under s 9A(2) and (3) of the Property (Relationships) Act:

9A When separate property becomes relationship property

(1) If any increase in the value of separate property, or any income or gains derived from separate property, were attributable (wholly or in part) to the application of relationship property, then the increase in value or (as the case requires) the income or gains are relationship property.

(2) If any increase in the value of separate property, or any income or gains derived from separate property, were attributable (wholly or in part, and whether directly or indirectly) to actions of the other spouse or partner, then—

(a) the increase in value or (as the case requires) the income or gains are relationship property; but

(b) the share of each spouse or partner in that relationship property is to be determined in accordance with the contribution of each spouse or partner to the increase in value or (as the case requires) the income or gains.

[16] On his case, he contributed to the increase in value in the Silver Bell shares through his work in the company and that increase is relationship property. Obviously, establishing Mr Huang’s share in relationship property representing the

increase in value or the income or proceeds from the Silver Bell shares will be contentious. But for this proceeding, his claim under s 9A(2) cannot be dismissed out of hand. Equally, he may also have a claim to an increased share of relationship property by reason of a sustenance claim under s 17 of the Property (Relationships) Act. For him it is arguable that the funds Ms Chung used to buy the Maraetai Drive property were derived ultimately from the proceeds of sale of assets to which he had contributed and that the funds were mixed relationship and separate property.

[17] He may also have a claim against the trustees of the GBACO trust under s 44 of the Property (Relationships) Act. The purchase of the property took place shortly before separation. Even though the trust deed provides for other family members, Mr Huang is excluded. While Ms Chung alleges that the trust was for the benefit of her daughter Bonnie, its provisions, especially her power to appoint and remove trustees and her right to take on default in the absence of any distributions, reserve considerable control to her. She is at risk of an adverse finding that she applied funds, some of which constituted relationship property, to buy the Maraetai Drive property to defeat a claim by Mr Huang under the Property (Relationships) Act.

While Mr Huang may have a relationship property claim, does that give him a caveatable interest?

[18] Mr Huang must show an interest under s 137(1)(a) of the Land Transfer Act

1952:

137 Caveat against dealings with land under Act

(1) Any person may lodge with the Registrar a caveat in the prescribed form against dealings in any land or estate or interest under this Act if the person—

(a) claims to be entitled to, or to be beneficially interested in, the land or estate or interest by virtue of any unregistered agreement or other instrument or transmission, or of any trust expressed or implied, or otherwise; or

A caveatable interest must already exist; it is not a potential interest or one that comes into being only as a result of a court order. The court must be able to declare

the interest, not create it. In referring to the predecessor of s 137 of the Land

Transfer Act 1952, the Court of Appeal said in Staples & Co Ltd v Corby:²

There the words are, “Any person claiming to be entitled to or to be beneficially interested in any land, estate, or interest.” The word “interest,” last used, shows that legal interest is meant, and this section was meant to guard equitable interests. Before a person can caveat under this section he must be a person who claims to be entitled to the land, or any estate or interest in the land, or to be “beneficially interested” in the land, or in any estate or interest in the land, and the person in either event must claim “by virtue of any unregistered agreement, or other instrument or transmission”

[“transmission” meaning acquirement by title or estate consequent on death, will, intestacy, bankruptcy, &c. ], “or of any trust expressed or implied, or

otherwise howsoever.” By this section a purchaser who has only an

agreement to purchase, &c, may protect his agreement, or a cestui que trust

may protect his interests.

[19] As to a potential interest, in Philpott v NZI Bank Cooke P said:³

Counsel for the respondent sought to maintain the caveats by various arguments, all of which come to substantially the same. It was said for instance that in sec 137(a) the words “beneficial interest” have a wider scope than equitable interest; that a caveat is supportable if the caveator has some “potentially” enforceable right; and again that, although the respondent had to accept that this was not an equitable charge, nevertheless it was an equitable interest. No authority was cited supporting any of these interpretations of sec 137(a). In my opinion, for all purposes material to the present case the words “beneficial interest” refer to equitable interests and the section cannot be stretched to include mere potentialities which have not ripened into interests in any particular properties.

[20] The following do not give caveatable interests:

(a) a claim to a remedial constructive trust (as opposed to a claim to an institutional constructive trust);⁴

(b) a claim under the Law Reform (Testamentary Promises) Act 1949;⁵

(c) a claim for further provision under the Family Protection Act; (d) a claim to an interest in an unascertained residue in an estate.⁶

² _{Staples & Co Ltd v Corby (1900) 19 NZLR 517 (CA) at 536-537.}

³ _{Philpott v NZI Bank [1989] NZCA 155; (1989) 1 NZ ConvC 190,246 (CA) at 190,248.}

⁴ _{Three Chicks Ltd v NZ Building and Projects Ltd [2011] NZHC 1074; (2011) 12 NZCPR 799 (HC).}

⁵ _{Jurkovich v Fortune HC Auckland M303/87, 25 August 1987.}

⁶ Guardian Trust & Executors Co of NZ Ltd v Hall [1938] NZCA 2; [1938] NZLR 1020 (CA) at 1026-1027.

(e) A claim to set aside a transaction intended to deceive creditors.⁷

[21] The inability to caveat for potential interests does not mean that a claimant has no remedy. Where interim protection is sought based on a property interest to be created later, the claimant must look to other legislation or apply for interim relief, such as freezing orders under Part 32 of the High Court Rules.

[22] Claims under the Property (Relationships) Act are also inchoate and do not give rise to immediate interests in property.⁸ Only on division do claims yield property interests. Division takes place:

(a) by agreement under Part 6 of the Act;

(b) by court order in the circumstances set out in s 25(2), that is, living apart, dissolution, bankruptcy or serious diminution of value of relationship property;

(c) by court order after death under Part 8.

[23] As the powers given to the court under s 33(3) make clear, on division the court creates interests in property. It does not declare them.

[24] For the purpose of division, assets owned by the parties are classified as relationship or separate property under ss 8-10 of the Property (Relationships) Act. The status of an asset as relationship property does not by itself confer a property interest. It only identifies the asset as falling in the pool for division.

[25] I have spelt this out because the parties’ affidavits show some misunderstanding. Mr Huang’s case seems to rely on his having a present interest in relationship property. Ms Chung, in response, emphasises the separate status of

_{assets in her name.}

7. Boat Harbour Holdings Ltd v Steve Mowat Building & Construction Ltd [2012] NZCA 305, (2012) 13 NZCPR 489 at [41] –[52].

⁸ A possible exception, not relevant to this case, is the beneficial interest in a homestead under s

12(3) of the Property (Relationships) Act.

[26] Because rights under the Property (Relationships) Act do not by themselves confer an immediate interest in property, before division they cannot give rise to a caveatable interest under the Land Transfer Act. Parliament has instead given another remedy: a notice of interest under s 42. Importantly, s 42(1) identifies the relevant right, not as an interest in land, but as “a claim to an interest, pursuant to this Act, in any land...” (Emphasis added)

Does Mr Huang have an interest in the property independent of his relationship property claim?

[27] Mr Huang’s case does not rest solely on rights under the Property (Relationships) Act. He contends that he has existing interests in the property, independent of his relationship property claims. He refers to that line of authorities that upheld interests in property based on reasonable expectations.⁹ Mr Huang says that arguably he can make out a claim as set out in Lankow v Rose:¹⁰

(a) contributions, direct or indirect to the property in question; (b) the expectation of an interest in the property;

(c) such an expectation is reasonable, and

(d) the defendant should reasonably expect to yield the claimant an interest.

[28] Mr Huang’s case is that he has an interest as a beneficiary under an institutional constructive trust in those assets that represent the profits, gains and proceeds of his joint enterprise with Ms Chung. Mr Huang relies on decisions such as Fletcher Steel Ltd v Nahal Contractors Ltd¹¹ to show that funds held on constructive trust may be traced from one property to another so that transferees from the original constructive trustee may also hold the assets on a constructive trust for the claimant. Under Mr Huang’s institutional constructive trust argument, his interest in the Maraetai property within s 137(1)(a) of the Land Transfer Act had

_{already arisen, independently of court order and before separation.}

⁹ Hayward v Giordani [1983] NZLR 140 (CA); Gillies v Keogh [1989] NZCA 168; [1989] 2 NZLR 327 (CA); Lankow v Rose [1995] 1 NZLR 277 (CA); and Marshall v Bourneville [2013] NZCA 271, [2013] 3 NZLR 766.

¹⁰ _{Lankow, above n 9, at 282.}

¹¹ Fletcher Steel Ltd v Nahal Contractors Ltd HC Auckland CIV-2006-404-498, 24 May 2007.

[29] Mr Huang contends that, in addition to rights he may be able to assert under the Property (Relationships) Act, there is a concurrent set of property rules, outside the Property (Relationships) Act, which allow him to make claims on assets of Ms Chung based on contributions he made during their de facto relationship and marriage. While his Property (Relationships) Act rights do not give him a caveatable interest, property rules outside the act do.

[30] The problem with that argument is that the rules he relies on are excluded under the code provisions of the Property (Relationships) Act. Section 4 provides:

4 Act a code

(1) This Act applies instead of the rules and presumptions of the common law and of equity to the extent that they apply—

(a) to transactions between spouses or partners in respect of property; and

(b) in cases for which this Act provides, to transactions—

(i) between both spouses or partners and third persons;

and

(ii) between either spouse or partner and third persons. (2) Subsection (1) does not apply where this Act expressly provides to

^{the contrary (such as in subsection (5)).}

(3) Without limiting the generality of subsection (1), —

(a) the presumption of advancement does not apply between husband and wife:

(b) the presumption of resulting trust does not apply between spouses, civil union partners, or de facto partners:

(c) the presumption that the use of a wife's income by her husband with her consent during the marriage is a gift does not apply between husband and wife.

(4) Where, in proceedings that are not proceedings under this Act, any question relating to relationship property arises between spouses or partners, or between either or both of them and any other person, the question must be decided as if it had been raised in proceedings under this Act. ...

_{[31] The Property (Relationships) Act has a wide definition of “property”:}¹²

¹² Section 2.

property includes—

(a) real property:

(b) personal property:

(c) any estate or interest in any real property or personal property: (d) any debt or any thing in action:

(e) any other right or interest

Under this definition, the general law applies to decide whether something is property and therefore owned by one or more of the partners. Once an asset is found to be property owned under the general law, there is a further question whether the other partner has a claim in respect of that asset by virtue of the parties’ relationship. A purpose of s 4 is to ensure that such claims are decided only under the Property (Relationship) Act. Subject to certain exceptions, only one set of rules applies to property claims between spouses, de facto partners and civil union partners: the rules under the act.

[32] As Mr Huang and Ms Chung were in a de facto relationship for more than three years, s 4 applies.¹³ That was followed by marriage, so that the period of the de facto relationship is treated as if it were part of the marriage.¹⁴ As the rules under the Property (Relationships) Act apply to determine the division of their assets, the case law based on reasonable expectation, developed by the courts when there was no legislation for the division of property between de facto partners, is excluded.

[33] Mr Huang’s actions in sustaining or increasing the value of Ms Chung’s separate property are transactions between spouses or partners under s 4(1)(a). As s 4(1)(b) makes clear, the code also applies to transactions between spouses or partners and third persons, in cases for which the act provides. One of those cases is dispositions under s 44 to defeat claims under the act. The court can order recipients to transfer the property. As Mr Huang has an arguable case that the purchase of the Maraetai property in the names of the trustees with funds, to which he had a relationship property claim, is a disposition under s 44, the respondents, as owners of

_{the Maraetai Drive property, are third persons within s 4(1)(b). Mr Huang’s ability}

13. Under s 4(5) claims based on reasonable expectations may be made for de facto relationships of less than three years.

¹⁴ Section 2B.

to mount a claim under s 44 will turn on his relationship property rights, not on any constructive trust claim based on reasonable expectations.

[34] For Mr Huang to show a caveatable interest, he needs a property right that arises under the general law, independently of rules for the division of relationship property. He tried that when he alleged that the proceeds of sale of the jointly-owned Macau apartment were used to buy Maraetai, but he later conceded that that was not the case. That aside, he has not shown that he had a legal or equitable interest in the funds used to buy the property, which arose under the general law outside s 4.

Cases relied on by Mr Huang

[35] I refer to some of the authorities cited for Mr Huang.

Morrison v Morrison

[36] In Morrison v Morrison, a wife had lodged both caveats and notices of claim of interest under s 42 of the Property (Relationships) Act against titles to properties owned by companies associated with her husband. Baragwanath J held that the wife had made out a case for a proprietary claim, justifying both a s 42 notice and a

caveat. He said: ¹⁵

I find it unnecessary to determine whether claims falling within s 4 of the Relationships Act giving rise to registerable interests under s 42 may be made only by that procedure rather than by the caveat procedures of the Land Transfer Act. That is an issue of general importance which has not been the subject of determination or even of analysis in any of the standard texts and may warrant consideration by a full Court.

[37] He did not deal with that case on the basis on which I have considered this one: that rights under the Property (Relationships) Act are inchoate and do not confer current interests in property; that rules for division of property between spouses and partners, and claims against those who have received transfers of

_{property from spouses are governed by the Property (Relationships) Act; and that the}

¹⁵ Morrison v Morrison HC Auckland CIV-2006-404-7824, 22 February 2007 at [30].

Baragwanath J removed the caveat while leaving the notice of claim in place on the basis that the wife was adequately protected by the notice of claim.

former rules based on reasonable expectation no longer apply. As Baragwanath J did not address these issues, his judgment is not relevant for this case.

Marshall v Bourneville

[38] In Marshall v Bourneville, the Court of Appeal held that a claim to an institutional constructive trust could be made by a former partner against a property owned by trustees and gave rise to a caveatable interest.¹⁶ The Court applied the law as it stood before the 2001 reforms to the Matrimonial Property Act came into effect on 1 February 2002. In that case, there had been a division of property at the end of a de facto relationship in January 2000. That case is accordingly distinguishable.

This case instead concerns claims arising out of a de facto relationship and marriage that continued after 1 February 2002 and is governed by the Property (Relationships) Act.

Murrell v Hamilton

[39] In Murrell v Hamilton, the Court of Appeal upheld an institutional constructive trust claim based on the principles in Lankow v Rose¹⁷ against a property owned by trustees.¹⁸ One trustee had been in a de facto relationship with Ms Murrell when the 2001 reforms to the Property (Relationships) Act were in force. The trust had owned the property from the outset of the relationship. It was not a

recipient of relationship property. Ms Murrell’s claims against the trustees based on reasonable expectation were independent of any claims against her de facto partner under the Property (Relationships) Act. The claim was not excluded under s 4 of the Property (Relationships) Act. In this case, however, Mr Huang does not assert a reasonable expectation claim against the respondents. Instead he looks to them as recipients of relationship property under a transaction which may be set aside under

_{the Property (Relationships) Act. Murrell does not apply.}

¹⁶ _{Marshall, above n 9.}

¹⁷ Lankow v Rose above n 9.

Is the caveat defective for claiming an interest under a resulting trust?

[40] As I find that Mr Huang does not have a caveatable interest in the property at all, the drafting of the caveat is a secondary consideration. The respondents took the point that Mr Huang’s arguments turned on claims of institutional constructive trust, but he had claimed a resulting trust in his caveat. They submitted that he had not shown an arguable case for the interest claimed in his caveat.

[41] There are substantive differences between resulting trusts and constructive trusts. The first derive from the intentions of the parties. The second are imposed, regardless of the parties’ intentions (and sometimes to defeat them).

[42] Notwithstanding that, in cases of claims of non-express trusts in domestic relationships, there is room for overlap. For example, Fisher identifies four essential elements for a resulting trust:¹⁹

(a) Contribution at time of acquisition;

(b) Contribution traceable to consideration for acquisition; (c) Contribution of money or money’s worth; and

(d) Absence of contrary intention.

[43] There is some overlap with the Langkow v Rose factors. In resulting trusts intention will often be implied. The difference between a trust based on implied intention and one based on reasonable expectation can be marginal. While Mr Huang’s arguments referred to constructive trusts, I would not rule that on the evidence he did not have an arguable case for a resulting trust, particularly given his evidence as to a joint enterprise. I would not have rejected his caveat on the ground that he had claimed the wrong sort of trust. In this I am following the expansive

_{approach of the Court of Appeal’s decision in Zhong v Wang.}²⁰

19. R L Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexus) at [4.13].

Can Mr Huang lodge a notice of claim against the title to the Maraetai Drive property?

[44] I heard argument whether Mr Huang could lodge a notice of claim of interest, if I found that he did not have a caveatable interest under s 137 of the Land Transfer Act. Section 42 of the Property (Relationships) Act says:

Notice of interest against title

(1) A claim to an interest, pursuant to this Act, in any land subject to the Land Transfer Act 1952 shall be deemed to be a registrable interest for the purposes of that Act.

(2) Notice of a claim under subsection (1) of this section shall be effected by lodging a duly completed notice in the prescribed form with the District Land Registrar.

(3) Every notice so lodged shall have effect as if it were a caveat ... lodged pursuant to section 137 of the Land Transfer Act 1952 and the provisions of that Act except subsections (3) and (4) of section 141, shall apply subject to the following modifications:

(a) Any application under section 143 or section 145 or section

145A of that Act in respect of any notice under this section may be made to a Family Court or a District Court or the

High Court; and

(b) An order under section 148 of that Act authorising the receipt of a second notice under this section may be made by a Family Court or a District Court or the High Court.

(4) In the case of land that is not subject to the Land Transfer Act 1952, notice of a claim to an interest pursuant to this Act may be registered in the manner in which deeds and other instruments affecting the land may be registered.

(5) A notice under subsection (2) or subsection (4) of this section may be registered notwithstanding that no proceedings under this Act are pending or in contemplation, and notwithstanding that there is no dispute between the parties.

[45] The prescribed form provides in part:²¹

1 I, [claimant], of [address], [occupation], am the spouse, civil union partner, or [de facto] partner of [spouse, civil union partner, or [de facto] partner] of [address], [occupation], who is –

²¹ Property (Relationships) Forms Regulations 2001, sch 1.

* registered as a proprietor of (nature of estate or interest) in the land described below

* entitled to, or beneficially interested [nature of estate of interest under Land Transfer Act 1952] in, the land described below, by virtue of an unregistered agreement or other instrument or transmission, or an express or implied trust, or by virtue of some other circumstances. ...

3 Under the Property (Relationships) Act 1976, a claim in interest in that estate or interest by virtue of my marriage to [spouse] (or my [civil union partner] or my de facto relationship with [de facto] partner). ...

* delete if inapplicable.

...

[46] Under cl 3, the person lodging the notice claims an interest under the Property (Relationships) Act. The person lodging the notice is entitled to do so even before any proceedings have been started under the Act, and even if there is no dispute between the parties. That shows that the claim is for an interest that might be created later on a division of relationship property, either by agreement or by court order. At the time of lodging the notice, the claim may be inchoate only. The interest of the person lodging the claim need not amount to a caveatable interest under s 137(1)(a) of the Land Transfer Act. In that respect, s 42 gives a claimant more extensive protection than a caveat.

[47] Under cl 1 of the form, there are requirements as to the land. The claimant’s spouse or partner must have an interest in the land. That interest may be as registered proprietor or some form of beneficial interest in the property. The words used to describe the required beneficial interest are the same as those required for a caveatable interest under s 137(1)(a) of the Land Transfer Act 1952. Accordingly, if the spouse or partner does not have an interest capable of supporting a caveat under s 137(1)(a) of the Land Transfer Act, the claimant is not entitled to lodge a notice of claim under s 42. The limitations under s 137 I have described above apply. If the interest of the spouse is only an expectation, is only potential or depends on a court making an order creating the interest, it is not caveatable and cannot support a notice under s 42.

[48] A case illustrating this is Beric v Beric Holdings Ltd.²² A husband owned the matrimonial home. During the marriage, apparently some time before separation, he transferred the property to a company. On separation, the wife lodged a notice of claim against the title to the property, but the notice was removed because her husband had no interest in the land within the second limb of clause 1 of the notice.

[49] Mr Huang referred to two decisions.²³ The second decision, NAC v MAC, suggests that a wider view of notices of claim has been taken in the Family Court. Judge McKenzie cited decisions upholding notices of claim against trust assets.²⁴

Apparently claims under s 44 and 44C, under which an interest can arise only by court order, have been held enough to support a notice of claim. I doubt whether that is correct. As cases such as Boat Harbour Holdings Ltd v Steve Mowat Building & Construction Ltd show, a claim based solely on the court’s power to set aside a disposition as intended to defeat the claims of others is inchoate only and does not

give a caveatable interest in the transferred property.²⁵

[50] Even taking that more limited approach, I am satisfied that Ms Chung has such an interest in the Maraetai Drive property. Any interest of a discretionary beneficiary is not enough to give rise to a caveatable interest.²⁶ But Ms Chung is more than a discretionary beneficiary. She is the final beneficiary under clause 7 of the trust deed. In B v M, Allan J distinguished the position of discretionary beneficiaries from final beneficiaries, as follows:²⁷

The position of the parties as final beneficiaries is different. Those rights are

vested and therefore fall within the definition of “property” in s 2. ...

Just as an interest in land as a final beneficiary of a trust is property under s 2 of the Property (Relationships) Act, it is also a beneficial interest in the land under s 137(1)(a) of the Land Transfer Act. Therefore it is also an interest which may be

²² _{Beric v Beric Holdings Ltd (1986) 2 FRNZ 522.}

23. Williams v Lawes FC Waitakere FAM-2005-090-1441, 19 November 2008; MAC v MAC FC Rotorua, FAM-2007-063-652, 20 June 2011.

²⁴ _{MAC v MAC, above n 23, at [52]-[56].}

²⁵ _{Boat Harbour Holdings Ltd, above n 6.}

²⁶ Morrison, above n 15 at [4] citing R & I Bank of Western Australia Ltd v Anchorage Investments

_{Pty Ltd (1992) 2 WAR 59 (WASC).}

²⁷ B v M [2005] NZFLR 730 at [101].

the subject of a notice of claim of interest under s 42 of the Property (Relationships) Act.

[51] The respondents submitted that a notice of claim was not necessary. That is not a requirement for a notice of claim. That is apparent from s 42(5), under which a notice may be lodged, even if no proceedings are contemplated or there is no dispute.

[52] Accordingly I find that, because Ms Chung has a caveatable interest in the Maraetai property as beneficiary under an express trust, Mr Huang may lodge a notice of claim of interest against the title to the property.

Outcome

[53] Mr Huang does not have a caveatable interest in the Maraetai Drive property under s 137(1)(a) of the Land Transfer Act. While the caveat should be removed, he should have the opportunity to lodge a notice of claim of interest. An order under s 148 of the Land Transfer Act allowing a second caveat is not required because the interest claimed under the s 42 notice will not rely on a resulting trust, the interest claimed under the caveat. As the interests are different, permission is not required for a second caveat.

[54] I make these orders:

(a) Caveat 9528199.1 is to be removed with effect from 10 working days

after this decision.

(b) The applicant may lodge a notice of claim of interest under s 42 of the Property (Relationships) Act in respect of Ms Chung’s interest in the Maraetai Drive property as a final beneficiary of the GBACO trust.

(c) Costs are reserved. I direct Mr Huang to file any submissions as to costs within 10 working days and the respondents to file theirs within a further five working days.

Associate Judge R M Bell