A same-sex couple who moved to New Zealand from China where their lifestyle was frowned upon ended up in a three-year legal battle over a house built with money from one of the women’s parents.
The younger woman in the relationship, which lasted for seven-and-a-half years but remained a secret to their families, has now gained a share of the value of the house and a luxury car, but not the half she wanted.
The Family Court found the parents of the older woman in the relationship had provided virtually all of the funding for the relationship property available for division, in circumstances where they were unaware a relationship existed.
It ended when their daughter, the older of the two, had an affair.
The younger, jilted woman has proved that the home in New Zealand, currently worth just under $1 million, the car, plus personal bank accounts in China were relationship property, of which she has been awarded a 20% share.
The Property Relationships Act covers how the property of married couples, civil union partners, and de facto couples is divided when a relationship breaks up. While the type of relationship, and how long it lasted, are taken into consideration, property is generally divided equally under the law, unless a different agreement was made at the start of the relationship.
In a reserved decision in May, published this week, the court found extraordinary circumstances existed and that equal sharing of the relationship property would be “repugnant to justice”.
Judge Paul Shearer said the relatively brief relationship, compared with other cases was a factor, and that the financial contributions were almost completely one-sided.
“This was not a 20 or 30-year relationship and child-rearing or care was not a factor,” he said in deciding that the relationship property be divided on an 80/20 basis.
He also declined the younger woman’s bid for $20,000 in past spousal maintenance.
“I have endeavoured to do what I consider is ‘just’ between all parties.
“My hope is that all parties will now be able to put this matter behind them and get on with their lives,” he said.
The two university-educated women met in China in 2012 and started dating soon after. One was in her 30s and the other in her 20s.
They soon moved into the older woman’s apartment in China, which was owned by her father.
At the time same-sex relationships were not recognised in Chinese law, society and culture and expert evidence given to the court showed that Chinese parents generally feel “shameful” if their children were LGBT.
In 2013 the two women moved into another apartment bought by the older woman’s parents as her “dowry” when she had earlier married a Chinese man.
She described it as a “fake marriage” made to satisfy their respective parents who did not accept homosexuality.
“I tried to tell them that I was gay when I was in my 20s. They did not take it well. They sent me to my doctor for some sort of psychological support because they see it as a mental illness,” the woman said in evidence to the court.
She then went on a year-long overseas study scholarship, joined by her partner who worked part-time, and who also earned a degree from the same university.
Tuition fees, rent, and “extensive overseas travel” were paid for through the older woman’s savings.
In October 2015 the couple returned to China and continued living together although this was kept secret from the respondent’s parents.
They never knew until the court case that the pair had been married.
In June 2016 the elder of the two came to New Zealand on a business trip and a few months later she moved here, followed by her partner in 2017.
Using money gifted from her parents she bought a $216,000 section and had a house built for $462,000.
Between November 2016 and September 2017, her parents transferred $704,000 in a series of 13 separate transfers through different family members or friends.
The judge noted they could have bought and developed the property in their names as it was not until late 2018 that amendments to the Overseas Investment Act prevented the purchase of residential land by overseas investors.
Judge Shearer accepted that it was practical and convenient for their daughter, their only child, to own the property in her name and for her to act as their agent.
The parents, listed as interested parties in the case, argued that the property was an investment property to be used by them when they visited, and in the future when they could eventually live permanently with their daughter in their old age, as per Chinese custom and tradition.
However, the judge was critical of aspects of how it was arranged and managed, including that the parents had got around laws in China that restricted the amount of money able to be sent in a year and had not paid tax on the earnings from the rent.
Their daughter, the respondent in the case, had also withheld property information from Immigration New Zealand in 2019.
The parents’ application for a resulting trust (where the property is transferred to someone who pays nothing for it; and then holds the property for the benefit of another person) was declined, but their evidence was “pivotal” in terms of the findings of extraordinary circumstances, Judge Shearer said.
The six-bedroom, two-storey house in New Zealand was designed to maximise future rental income.
The women occupied one bedroom while the remaining rooms were rented out, bringing in a total of about $1000 a week.
The court found that despite a dispute over the exact date the couple separated, they were in a qualifying relationship under the law for seven-and-a-half years.
The court was also satisfied that the money transferred from China belonged to the respondent’s parents, although there had been a subsequent “intermingling” of funds in the couple’s bank account.
The younger woman returned to China to visit her parents in early 2020 for what was to be a month but was unable to return to New Zealand when planned because of the Covid-induced border closures.
It was during this time that the affair was revealed.
Judge Shearer said the respondent’s parents’ understanding of the situation was complicated by the fact that they were not aware of their daughter’s relationship, or that the pair had married, even though they had visited New Zealand three times during the relationship.
They saw the relationship as “guimi”, a term that describes a “long-term sisterhood”.
But the applicant was dismissive of the idea in cross-examination that their relationship could be described as “guimi”, suggesting instead that her partner’s parents turned a “blind eye” to the relationship.
Judge Shearer said it was “highly unlikely” they would have transferred money to their daughter as frequently and as freely as they did, had they known about the relationship or the slightest possibility or concern that there could be a relationship property claim against her.
He was satisfied on the balance of probabilities that the “significant sums of money” transferred to New Zealand in 2016 and 2017 were, at the time, intended as “gifts” to their daughter for a house.
The car was also bought with funds gifted by the respondent’s mother.
Judge Shearer found that overall, the older woman’s contributions to the relationship, and particularly her financial contributions, were so completely disproportionate as to be exceptional.
“Equal sharing of the relationship property would be completely unfair to Ms [SD] and her parents and an outcome that I cannot countenance in these circumstances.”
Judge Shearer held a provisional view that costs should lie where they fell, aware that a large amount had been spent in the course of the proceedings, and that each side had been both successful and unsuccessful.
Tracy Neal is a Nelson-based Open Justice reporter at NZME. She was previously RNZ’s regional reporter in Nelson-Marlborough and has covered general news, including court and local government for the Nelson Mail.
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