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Chhiv (fka Chuon) v Rath [2019] NZHC 2764 (30 October 2019)

Last Updated: 22 November 2019

JUDGMENT OF DOWNS J

This judgment was delivered by me on Wednesday, 30 October 2019 at 11 am

pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Denham Bramwell, Manukau.

Vlatkovich & McGowan Ltd, Auckland. AR Gilchrist, Auckland.

CHHIV v RATH [2019] NZHC 2764 [30 October 2019]

The issue

[1] I use Christian names given commonality of two surnames. Kosal and Kim were married but are now separated. Sonny is Kim’s brother. Dararithy is Kosal and Kim’s adult son. Kosal and Kim could not agree about the division of property post-separation. So, they went to the Family Court. In February 2018, that Court held 9 Blowers Place, Flat Bush, is relationship property. That Court also held Blowers Place should be sold; the proceeds initially kept in trust; then distributed with Kosal’s and Kim’s agreement, or by order of that Court. Sonny was not party to that litigation but knew of it.¹

[2] In August this year, Sonny filed a claim in the High Court in relation to Blowers Place. Sonny says he owns or is entitled to half of Blowers Place, hence half of the proceeds. Kosal filed a protest to jurisdiction to Sonny’s claim. Sonny filed to set aside Kosal’s protest. I must either dismiss Kosal’s protest or allow the protest and dismiss Sonny’s claim.

Sonny’s claim

[3] Sonny says he and Kim bought Blowers Place in September 1998 as joint tenants, and he paid the deposit of $40,000. He and Kim lived there. Each paid half of all related expenses, including the mortgage. From 2000, Sonny says he spent less and less time at Blowers Place, and more and more time in the United States of America. Sonny says he moved to the United States in 2005, and a little earlier provided $35,000 for “payments” in relation to Blowers Place. While he was there, Kim met Kosal.

[4] Sonny says he assumed responsibility for paying all expenses, including the mortgage, from late 2010. By then, Kim was mentally unwell (Sonny says because of Kosal’s alleged abuse).² Sonny says it was agreed Dararithy would buy a café to support Kim, and Kim’s interest in Blowers Place would facilitate a guarantee for a loan to buy the café. However, Sonny says a lawyer wrongly executed the paperwork

1. Mr Webb argues Sonny’s affidavit leaves open the possibility he did not know about the litigation (at all). I disagree. It is not possible to read the affidavit this way.

² Kim has a litigation guardian in the Family Court as she has a mental illness.

so Blowers Place went exclusively into Kim’s name even though he had an interest in it.

[5] Sonny has two causes of action: rectification of title under the Land Transfer Act 1952 and unjust enrichment. Both allege the lawyer wrongly put sole title in Kim’s name in 2011.

The Family Court case

[6] Because I am primarily concerned with Sonny’s claim, I know little about the Family Court case between Kosal and Kim beyond what Sonny has told me about it. Sonny says his sister’s relationship with Kosal broke down in March 2012, and Kosal then sought orders under the Property (Relationships) Act 1976. Sonny says he had little contact with Kim throughout the litigation, but acknowledges he knew of it.

[7] Sonny produced a letter from Kosal’s lawyer of 4 May 2018. That letter implies the Family Court was alive to some claim by Sonny, for, the letter refers to an alleged loan by Sonny to Kim, and financial statements before the Family Court not supporting Sonny’s claim in that Court.

[8] The two documents from the Family Court that are in evidence do not greatly illuminate what happened in that Court. I repeat what is known. The Family Court concluded Blowers Place is relationship property, and divisible between Kosal and Kim by their agreement, or order of that Court. The possibility of a loan by Sonny to Kim was raised in that Court, but for whatever reason, not provided for. And, Sonny knew about the Family Court litigation, but was not party to it.

A precis of the arguments

[9] Sonny says his claim should not be dismissed as it could not have been dealt with in the Family Court, as he was neither a party nor heard. Sonny says the Family Court had incomplete evidence about his interest and he was not fully informed about the litigation until after Judge Southwick QC made orders. Sonny acknowledges his real dispute is with the allegedly negligent lawyer, but says he
wishes to pursue Blowers Place so Kosal does not receive “a windfall at the expense of the solicitor’s insurers”.

[10] Kosal contends the claim is a collateral attack on orders of the Family Court. Sonny knew about the litigation—and did nothing. Kosal says in any event, Sonny could seek relief in the Family Court from its decision. Kosal goes further. Because the Property (Relationships) Act is a code, he says the High Court has no jurisdiction to find Sonny has an independent interest in Blowers Place beyond an appeal in respect of the Family Court litigation.

Principle

[11] Rule 5.49 of the High Court Rules 2016 provides:

Appearance and objection to jurisdiction

(1) A defendant who objects to the jurisdiction of the court to hear and determine the proceeding may, within the time allowed for filing a statement of defence and instead of so doing, file and serve an appearance stating the defendant's objection and the grounds for it.

(2) The filing and serving of an appearance does not operate as a submission to the jurisdiction of the court.

(3) A defendant who has filed an appearance may apply to the court to dismiss the proceeding on the ground that the court has no jurisdiction to hear and determine it.

(4) [Revoked]

(5) At any time after an appearance has been filed, the plaintiff may apply to the court by interlocutory application to set aside the appearance.

(6) The court hearing an application under subclause (3) or (5) must,—

(a) if it is satisfied that it has no jurisdiction to hear and determine the proceeding, dismiss the proceeding; and

(b) if it does not dismiss the proceeding under paragraph (a), set aside the appearance.

(7) To the extent that an application under this rule relates to service of process effected outside New Zealand under rule 6.27 or 6.28, it must be determined under rule 6.29.

(7A)But both this rule and rule 6.29 are subject to section 27(1) of the Trans- Tasman Proceedings Act 2010, which provides that a New Zealand court cannot stay a civil proceeding before it on forum grounds connected with

Australia otherwise than in accordance with subpart 2 of Part 2 of that Act.

(8) The court, in exercising its powers under this rule, may do so on any terms and conditions the court thinks just and, in particular, on setting aside the appearance it may extend the time within which the defendant may file and serve a statement of defence and may give any directions that appear necessary regarding any further steps in the proceeding ....

(9) If the appearance set aside has been filed in relation to a proceeding in which the plaintiff has applied for judgment under rule 12.2 or 12.3, the court—

(a) must fix the time within which the defendant may file and serve—

(i) a notice of opposition; and

(ii) an affidavit by or on behalf of the defendant in answer to the affidavit by or on behalf of the plaintiff; and

(b) may, under subclause (8), give any other directions that appear necessary regarding any further steps in the proceeding.

[12] In Commissioner of Inland Revenue v Redcliffe Forestry Ventures Ltd, the Supreme Court held a valid protest to jurisdiction can exist not only when the dispute should be heard by a foreign court or arbitrator, but when subject matter, persons involved or relief sought mean the court should not hear the dispute.³ This can include the situation when the dispute involves a challenge to the conclusiveness of an earlier judgment.⁴

[13] As will be apparent, some of these scenarios extend beyond jurisdiction in its truest or purest sense: when a court has no power to hear the dispute. The Supreme Court made this clear. It approved of these observations of Lord Scott for the House of Lords in Tehrani v Secretary of State for the Home Department:⁵

When issues are raised as to whether or not a court of law has jurisdiction to deal with a particular matter brought before it, it is necessary to be clear about what is meant by “jurisdiction”. In its strict sense the “jurisdiction” of a court refers to the matters that the court is competent to deal with. Courts created by statute are competent to deal with matters that the statute creating them empowered them to deal with. The jurisdiction of these courts may be

3. Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94, [2013] 1 NZLR 804 at [25].

⁴ At [34].

5. Tehrani v Secretary of State for the Home Department [2006] UKHL 47, [2007] 1 AC 521 at [66]. That case concerned the jurisdiction of the Court of Session (the highest civil court in Scotland) to judicially review the decision of a tribunal made in England.

expressly or impliedly limited by the statute creating them or by rules of court made under statutory authority. Courts whose jurisdiction is not statutory but inherent, too, may have jurisdictional limits imposed on them by rules of court. But whether or not a court has jurisdictional limits (in the strict sense) there are often rules of practice, some produced by long-standing judicial authority, which place limits on the sort of cases that it would be proper for the court to deal with or on the relief that it would be proper for the court to grant. The distinction was referred to by Pickford LJ in Guaranty Trust Co of New York v Hannay & Co [1915] 2 KB 536, 563. He said:

The word ‘jurisdiction’ and the expression ‘the court has no jurisdiction’ are used in two different senses which I think often leads to confusion. The first and, in my opinion, the only really correct sense of the expression that the court has no jurisdiction is that it has no power to deal with and decide the dispute as to the subject matter before it, no matter in what form or by whom it is raised. But there is another sense in which it is often used, i e, that although the court has power to decide the question it will not according to its settled practice do so except in a certain way and under certain circumstances.

[14] The Supreme Court also commented on the overlap between r 5.49—the jurisdictional protest rule—and r 15.1, which permits the High Court to strike out a proceeding as an abuse of process:

[34] Sometimes a defendant’s objection to the High Court’s power or authority to try a claim will be directed to whether the plaintiff has pleaded a cause of action that is capable of displacing the finality and conclusiveness of an earlier judgment. In such a case the objection is to the Court’s jurisdiction and may properly be brought under r 5.49. In other cases, the objection is rather concerned with questions of adequacy and cogency of a pleading which are more appropriately addressed in r 15.1. There is clearly an overlap between the two rules. It will often be convenient to apply under both. Despite Ms Hinde’s submission to the contrary, we see nothing in either rule that prevents this.

[15] It is not necessary to determine Kosal’s submission this Court cannot hear Sonny’s claim—his pure jurisdictional protest. This because it would be wrong for this Court to exercise jurisdiction in any event. I can be brief.

[16] The Family Court has held Blowers Place is exclusively relationship property, hence divisible, equally, between Kim and Kosal. Sonny seeks to disturb this conclusion by removing half of the property as his own. Central to his claim is that half of Blowers Place is not relationship property. Sonny may seek to pursue his claim in the Family Court if he wishes to. Section 37(1) of the Property (Relationships) Act provides:⁶

⁶ Section 39 provides “any other person prejudicially affected by the decision” may also appeal.

Before any order is made under this Act, such notice as the court directs shall be given to any person having an interest in the property which would be affected by the order, and any such person shall be entitled to appear and to be heard in the matter as a party to the application.

[17] In Romanes v Romanes, Gordon J held this section allows someone new to be joined on appeal.⁷ So, that orders have been made in the Family Court is not an insuperable barrier to Sonny’s ability to be joined under s 37. Kosal acknowledges as much. Through Mr Gilchrist, Kosal accepts there is no jurisdictional barrier to Sonny seeking to re-open the Family Court’s decision in that Court.

[18] In short, Sonny seeks to disturb a decision of the Family Court without reference to that Court or appealing its decision to this one, when he may, with that Court’s leave, seek relief in that Court. The unattractiveness of this proposition is obvious.

[19] This conclusion is supported by two things. First, Sonny’s causes of action imply the harm arises from the alleged negligence of the lawyer vis-à-vis title to Blowers Place. Sonny may sue him in this Court without disturbing the Family Court’s decision. Second, in Yeoman v Public Trust Ltd⁸ and Zhou v Yue,⁹ this Court stayed claims involving property because the property was, or had been, litigated in the Family Court as relationship property and that Court was the more appropriate one to decide the claim.

Result

[20] I uphold the jurisdictional protest and dismiss Sonny’s claim.

Costs

[21] I can think of no reason why Kosal should not have 2B costs. If the parties disagree they may file memoranda of not more than five pages:

7. Romanes v Romanes [2018] NZHC 2001 at [45]–[46]. In that case, the third party was directed to be joined in the Family Court, and would then be entitled to be heard in the High Court on appeal.

⁸ Yeoman v Public Trust Ltd [2011] NZHC 1869; [2011] NZFLR 753.

⁹ Zhou v Yue [2019] NZHC 2167.

(a) Kosal by 13 November 2019.

(b) Sonny by 20 November 2019.

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Downs J