Land: Young v. Zhang

Murinda Ying was ordered to pay $7500 for contempt of court after flouting a court order by having her property company sell a Papatoetoe house twice over to escape a prior sale she wanted to get out of.  Her company also had to surrender all profit made on the second sale.  

Hsiang-Fen Ying, also known as Murinda Ying, was the sole shareholder and director of King David Investments Ltd, now in liquidation.  King David owned properties in south Auckland.

Ms Ying regretted signing up in April 2013 to sell King David’s  Papatoetoe property in Hoteo Avenue to Zie Zhang for $399,000.  Ms Zhang sued to enforce the contract.  Her right to ownership was finalised by an out-of court agreement.  This agreement was filed in court giving it the status of a court order.  It required King David to complete the sale to Ms Zhang with Ms Zhang having to pay only $179,000 all-up.  Ms Ying refused to perform.  She said the out-of-court agreement was all a misunderstanding: she was jet-lagged during negotiations, she did not properly appreciate its terms and the interpreter present did not properly translate the document.  Both the High Court and the Court of Appeal ruled the out-of-court agreement was enforceable.

When Ms Zhang learnt Ms Ying’s company subsequently sold Hoteo Avenue to someone else for $655,000 she applied to have Ms Ying arrested for contempt of court.  The High Court was told King David had sold off its assets: Hoteo Avenue was sold to an unsuspecting third party (who has legal ownership) and a second property at Wintere Road, Papatoetoe, was gifted to a family trust (which in turn was selling to another third party).

Ms Ying was held to be in contempt of court and ordered to pay a fine of $10,000.  This fine was reduced to $7500 by the Court of Appeal.  It was her company, King David Investments, which was in contempt by refusing to complete the sale to Ms Zhang.  Ms Ying was liable for criminal contempt as an accessory; aiding and abetting her company in its refusal to comply with the court order.

The Court of Appeal was told Ms Ying paid $550,000 into court following the sale of Wintere Road.  Ms Zhang was paid $506,000 out of these funds being the profits King David made on the second sale.

Young v. Zhang – Court of Appeal (21.12.17)

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Family Trust: re Clement Family Trust

Parents’ intentions in setting up a family trust had to be taken into account, the High Court ruled when ordering trustees of a south Auckland farming trust reconsider their ‘equal shares’ option designed to deal with a fractious dispute between surviving children.

The Clement Family Trust owns farming property on Auckland City’s southern boundary at Hunua.  Walter and Nola Clement set up the trust in 1999 to cater for their three children: Brian, Keith and Derene.  Their intent was to ‘balance the ledger’ between their children.  The farm had been in family hands for nearly thirty years.  Various benefits had been gifted to the children by their parents: land, cash and support by way of guarantees for their borrowings.  The status of family trust assets only became an issue on Nola’s 2013 death as a widow.  The trust then lacked its full complement of trustees.  By now the three children were in their 60s and 70s.  They could not agree on division of trust assets.  Sons Brian and Keith were barely talking to each other as long running disagreements roiled over payment of rates and use of shared farm assets.  When son Keith took steps to have himself appointed trustee, legal issues came to a head.  As a compromise, all three children agreed to the appointment of two new independent trustees.  Their attempts to find common ground between the children on a division of trust assets came to nothing.  The trustees decided all trust land would be sold, with the children able to bid, and the proceeds to be divided equally.  This decision was challenged in the High Court.  The trustees said they had received legal advice that they were not allowed to take into account gifts made previously to individual children.  This advice was wrong, Justice van Bohemen ruled.  They were told to reconsider their selling plans in the light of documents left by Walter and Nola indicating each of the family overall should get a fair share.

re: Clement Family Trust – High Court (21.12.17)

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Contract: D4 Cash Investors v. Advanced Creative Technologies

‘Matariki Codex’ software investors are owed $3.2 million by Advanced Creative Technologies the High Court ruled when ordering repayment of investors’ decade old investment of $210,000 plus interest at thirty per cent.

Commercialisation of Creative Technologies’ Matariki Codex software has been talked up since the turn of the century as being imminent but has never come to fruition.  Described in the High Court as a mathematical and scientific discovery with potential use for DNA data sequencing, the Codex has proved a loss-making venture for investors.  They formed a special purpose company, D4 Cash Investors, banding together to force repayment and drive Creative Technologies into liquidation if necessary.

The High Court was told Creative Technologies was struggling for further financing in 2005.  It decided to spin off potential commercial benefits from a data compression capability derived from current software development.  Under $300,000 was raised with investors offered a minority shareholding in the company.  With investors grizzling about a lack of commercial progress, this equity investment was later re-cast as a debt investment with the loan backdated.  The loan specified interest at twenty per cent, increasing to thirty per cent for late payment.  No payments were ever made.  The reason for this financial restructuring and its effect were disputed in the High Court.

Creative Technologies said it represented a joint venture arrangement.  Nothing was to be paid until revenue rolled in.  D4 Cash Investors said it was a loan and nothing had been paid.  Backdating the loan created a legal issue.  The courts enforce promises to do something. They do not enforce promises to do something which has already been done; past consideration in legal jargon.  The funds had already been handed over at a time when all parties later agreed to call it a loan repayable with interest at thirty per cent.

Justice Duffy ruled the loan agreement was not a sham.  There was evidence Creative Technologies had used investor’s money for purposes other than the agreed commercialisation of data compression software.  Improper use of investors’ money gave them potential legal rights in other software developed with their money.  The loan was enforceable.  Legally it represented an acknowledgement investors funds had been improperly used, that investors would give up any potential rights they might have against Creative Technologies and in return the funds already advanced were to be converted into a loan and earn interest.       

D4 Cash Investors Ltd v. Advanced Creative Technologies Ltd – High Court (21.12.17)

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