NEW WORLD (NEW ZEALAND) LIMITED v WANG [2023] NZCA 35

NEW WORLD (NEW ZEALAND) LIMITED v WANG [2023] NZCA 35 [27 February 2023]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA690/2021[2023] NZCA 35BETWEEN NEW WORLD (NEW ZEALAND)LIMITEDAppellantAND SHAOJUN WANGRespondentHearing: 18 August 2022 (further submissions received 13 February 2023)Court: Katz, Wylie and Palmer JJCounsel: G P Blanchard KC and J Ding for the AppellantA J B Holmes and N M Foulis for the RespondentJudgment: 27 February 2023 at 11:00 amJUDGMENT OF THE COURTA The appeal is dismissed.B The appellant must pay the respondent costs for a standard appeal on aband A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Palmer J)Summary[1] Ms Qian Zhang bought a property in Auckland with the help ofMs Shaojun Wang. In 2017, Ms Zhang was employed by, and stole money from,New World (New Zealand) Ltd (New World), which commenced proceedings againsther. In November 2017, Ms Zhang and Ms Wang signed a deed transferring theproperty to Ms Wang so Ms Zhang could return to China. In October 2020,New World obtained a charging order over the property. Ms Wang applied to vary orrescind the charging order. On 29 October 2021, Peters J in the High Court excludedthe property from the charging order and cancelled the registration of the order.1New World appeals. We dismiss the appeal. The High Court was correct thatMs Wang had obtained Ms Zhang's entire beneficial interest in the property.What happened?[2] In May 2016, Ms Zhang bought a property in Auckland. The purchase pricewas met by: a loan from ASB to Ms Zhang of $826,000 secured by a first mortgage;$309,000 (including the deposit of $118,000) paid by Ms Wang; and $45,000 paid byMs Zhang. The property was tenanted, and Ms Zhang met any shortfall between theincome and outgoings (including to ASB) until September 2017.[3] Ms Zhang was employed by New World until she resigned in April 2017.New World subsequently realised Ms Zhang had been stealing from it. Ms Wang'sevidence is that she knew nothing about this until January 2018, when her formersolicitor informed her of New World's freezing order against Ms Zhang.[4] In September 2017, Ms Zhang and Ms Wang discussed Ms Wang purchasingthe property so that Ms Zhang could return to China. A Deed of Declaration of Trustand Transfer of Property (the Deed) was prepared. It was executed by Ms Zhang on1 November 2017 and she then returned to China. Relevantly, the Deed provided:2. Transfer of Property2.1 The parties have agreed to transfer the property from Qian [Zhang] toShaojun [Wang] once Shaojun pays the sum of $70,000.00 NZD toQian. However, the title of the property is to remain under Qian'sname unless and until Shaojun requests to transfer the title toher name. Upon the Settlement Date, once Shaojun's payment of$70,000.00 is made to Qian, Shaojun will be fully and solely liablefor the property and all expenses in relation to the property(i.e., mortgage, tax, insurance etc.). Shaojun will be solely entitled toany benefit and interest arising from the property which shall includeand not limited to rental income, capital gains and so forth. Qian will1 New World (New Zealand) Ltd v Zhang [2021] NZHC 2899 [Judgment under appeal].meet all payment and expenses required in relation to the propertyuntil the Settlement Date.2.2 The parties agree that, once the payment of $70,000.00 has been madeby Shaojun, Qian will be holding the property on trust as trustee ofthis constructive trust under her name purely for the benefit ofShaojun and shall transfer the title of the property back to Shaojunupon her request at any time.[5] Clause 1.1(b) defined "Settlement Date" to mean "the date of this Deed thatShaojun will make payment of $70,000.00 to Qian".[6] On 6 November 2017, New World commenced proceedings against Ms Zhang.[7] On 10 November 2017, Ms Wang executed the Deed and paid the $70,000referred to in cl 2.2 to Ms Zhang. She lodged a caveat on the title and met all theoutgoings of the property. She did not call for, or take, transfer of the title.[8] On 17 November 2017, New World obtained freezing orders over Ms Zhang'sassets, including the property, in the District Court. It served those proceedings onMs Wang on 22 December 2017. On 22 November 2017, the Registrar-General ofLand lodged a caveat on the title on the basis of the freezing orders granted by theDistrict Court.[9] New World obtained judgment by default against Ms Zhang for $329,675.87including interest and costs.2 On 27 October 2020, New World obtained a chargingorder over the property. New World has since sought an order that the property besold. Ms Wang applied to vary or rescind the charging order.The High Court judgment[10] On 29 October 2021, the High Court varied the charging order to exclude theproperty from its ambit and cancelled its registration.3 The Judge accepted thatMs Wang would have wished to take a transfer of title but could not do so because of2 New World (New Zealand) Ltd v Zhang DC Auckland CIV-2017-004-002645, 13 October 2020.3 Judgment under appeal, above n 1.the Registrar-General's caveat and the order.4 If Ms Wang had done so, she wouldhave assumed a direct liability to ASB under ss 203 and 289 of the Property Law Act2007 (PLA), though Ms Zhang would have continued to be liable to ASB and mayhave been in breach of her covenants to ASB. The Judge held that, on 10 November2017, upon her payment of the $70,000, under cls 2.1 and 2.2 of the Deed, Ms Wangacquired Ms Zhang's entire beneficial interest in the property.5[11] In Cowcher v Cowcher, the Family Division of the High Court of England andWales held that a resulting trust arises where a person acquires a legal estate but hasnot provided the whole of the consideration for its acquisition, unless a contraryintention is proved.6 Peters J distinguished that case from the situation here, whereMs Wang assumed liability under the Deed to repay the loan.7[12] New World appeals. Neither party raised any issue as to this Court'sjurisdiction to hear and determine the appeal. After the hearing, the Court invited themto make submissions on that issue. New World submits the application for relief is notan interlocutory application as defined in s 4 of the Senior Courts Act 2016. It did notconcern procedure nor ancillary relief but was the final word on substantive reliefbetween the appellant and respondent. Ms Wang agrees with that submission. If leavewas required, Ms Wang would not have opposed leave, which would almost certainlyhave been granted. We accept the submissions by both parties. The Court hasjurisdiction to hear the appeal.Submissions[13] Mr Blanchard KC, for New World, submits that Ms Wang's beneficial interestin the equity of the property was a resulting or constructive trust based on hercontributions. Ms Zhang's contribution was the ASB loan, to which Ms Wang was notin a position to be a party at the time of the purchase. The Deed was not effective totransfer Ms Zhang's interest because Ms Wang did not assume entire and soleresponsibility for the mortgage until she called for transfer of the title, under cl 2.1,4 At [30].5 At [31].6 Cowcher v Cowcher [1972] 1 WLR 425 (Fam) at 431.7 Judgment under appeal, above n 1, at [33].and she did not do so. Until the title was transferred, Ms Wang assumed responsibilityfor meeting mortgage payments but not the entire loan obligation secured by themortgage. Clause 2.2 provides that, once the $70,000 was paid, Ms Zhang held theproperty as constructive trustee, not a bare trustee. That could have been intended tomake clear that Ms Wang has to transfer the title and cannot grant an interest to anyoneelse. It makes sense for the status quo to remain if no indemnity was provided, whichthere was not. Ms Zhang remained solely liable and responsible for the mortgage toASB. So Ms Zhang retained a substantial beneficial interest which extends to theincreased capital value of the property.[14] Mr Holmes, for Ms Wang, submits that once the $70,000 was paid Ms Wangwas "fully and solely liable" for the property and all expenses and solely entitled toany benefit and interest arising from it. The entire beneficial interest passed toMs Wang. Ms Zhang held the property under an express trust "purely for the benefit"of Ms Wang. This was an express trust. New World's interpretation would mean theDeed would have no effect other than as a sale and purchase agreement. Cowcher vCowcher provides explicitly for this situation.Did Ms Wang have the entire beneficial interest?[15] The key clauses of the Deed are reasonably straightforward:(a) Clause 2.1 records the agreement to transfer the property though thetitle is to remain under Ms Zhang's name unless and until Ms Wangrequests it be transferred to her name. Once the $70,000 payment ismade, which is the date defined to be the settlement date, Ms Wangbecomes "fully and solely liable for the property and all expenses inrelation to the property" and "solely entitled to any benefit and interestarising from the property" which includes "capital gains".(b) Clause 2.2 clarifies that, after settlement date, Ms Zhang holds theproperty on trust "purely for the benefit" of Ms Wang and is requiredto transfer title of the property to Ms Wang on Ms Wang's request to doso.[16] Under these clauses, as Peters J held, Ms Wang acquired Ms Zhang's entirebeneficial interest upon payment of the $70,000. While Ms Zhang continued to holdlegal title, she held it on an express trust "purely for the benefit" of Ms Wang.Ms Wang was "fully and solely liable" for the property's expenses, including themortgage, and "solely entitled" to its benefits, including any capital gain as may nowexist from sale. This arrangement was not contingent on calling for the transfer oftitle. Clause 2.2 makes clear that Ms Wang could require the title to be transferred.The Deed established Ms Wang as the sole beneficiary under an express trust and wasnot conditional upon a transfer of legal title. Ms Zhang has no interest in any capitalgain in the property.[17] In addition:(a) The Judge was also correct to distinguish Cowcher v Cowcher.The Judge in that case stated explicitly that a resulting trust does notarise where there is an express trust.8 That is the situation here.(b) The trust lasts until title is transferred. There was no point in Ms Wangcalling for the transfer when that was prevented by the freezing order,caveat and charging order.(c) There is no need to imply an indemnity.(d) There was some dispute about the translation of three emails. But wedo not find them of assistance either way.Result[18] The appeal is dismissed.[19] The appellant must pay the respondent costs for a standard appeal on a band Abasis and usual disbursements.Solicitors:K3 Legal Ltd, Auckland for AppellantCarter Atmore Law, Auckland for Respondent8 Cowcher v Cowcher, above n 6, at 431.