Allen v Allen HC Nelson M 8/01

[2001] NZHC 654

IN THE HIGH COURT OF NEW ZEALAND
NELSON REGISTRY M 8/01

BETWEEN SALLY-ANNE ALLEN
Appellant

AND GREGORY MARK ALLEN
Respondent

Hearing: 16 July 2001

Counsel: P C Maciaszek for the Appellant
H W Riddoch for the Respondent

Judgment: 18 July 2001

JUDGMENT OF WILD J

Introduction

[1] The parties married in 1978 and separated in October 1996. All matrimonial property matters except payment to the appellant of her agreed one-half share of the respondent’s superannuation have been determined.

[2] On 7 February 2001 the Family Court at Nelson heard evidence and argument on that remaining matter. In a decision delivered on 1 May Judge Grace made these orders:

“[a] Mrs Allen’s interest (agreed at $49,000 plus accrued interest) in the superannuation is to be secured with the fund manager so as to protect her entitlement for the future.

[b] Interest is to accrue from the date of separation down to the date of payment at a net rate of 6.75% per annum.

[c] Payment in full with accrued interest, is to be made five years from the date of this order.”

[3] The narrow issue on this appeal is whether those orders represented a wrong exercise of the Judge’s discretion under s 31 Matrimonial Property Act 1976 (“the Act”).

The law

The Act

[4] Sections 31(1) and 38(1) of the Act provide:

“31. Orders in relation to superannuation rights -

(1) Where the matrimonial property to which any application under this Act relates includes property of the kind described in section 8(i) of this Act, the Court may make any order under this Act, or any provision of any such order, conditional on the husband or wife entering into an arrangement or deed of covenant designed to ensure that the other spouse receives his or her appropriate share of that property, and every arrangement or deed entered into pursuant to any such condition shall have effect according to its tenor.

. . .

38. Inquiries, and settlement of schemes -

(1) The Court may, on any application under this Act, appoint the Registrar of the Court, or such other person as the Court thinks fit, to make an inquiry into the matters of fact in issue between the parties, and to report thereon to the Court.”

Appeal against discretion

[5] Now firmly established is that the exercise of a judicial discretion should be left undisturbed unless relevant factors were overlooked, irrelevant ones taken into account, or unless the exercise was plainly wrong in principle: May v May (1982) 1 NZFLR 165 (CA). The appellate court is not concerned to re-evaluate the weight given to relevant considerations, because that would invite the re-exercise of the discretion by the appellate court which is precisely what may not be done: Society for the Promotion of Community Standards Incorporated v Waverley International (1988) Ltd (1992) 6 PRNZ 530 at 533-534 (CA).

Clean break

[6] Legion are authorities upholding the desirability, wherever financially possible, of a “clean break”, in terms of matrimonial property, between parties whose marriage has ended. From the many authorities cited to me, I need refer only to Haldane v Haldane [1981] 1 NZLR 544 (CA) and Smith v Kerekes [1994] 3 NZLR 116. The latter dealt specifically with superannuation. The “clean break” principle is not “iron clad or cast in stone” and depends upon practicality and affordability: Matahe v Matahe [1988] 17 FRNZ 343 at 347 per Judge Inglis QC.

Grounds of appeal

[7] There are five, and I deal with each in turn.

1. Balance of proceeds of matrimonial home

[8] Judge Grace’s decision lists as one of the appellant’s assets:

“Solicitor’s Trust Account (house) $14,000.”

[9] It is common ground that, since Judge Grace delivered his decision, this $14,000 has been disbursed to the respondent who has used it to pay his legal fees and to retire bank debt.

[10] Mr Maciaszek submitted that the payment out to the respondent by the solicitor was in breach of the order of the Family Court. Mr Riddoch did not accept that, contending that at worst there had been a misunderstanding between the parties’ solicitors. Mr Maciaszek argued that the respondent should nevertheless have to find the $14,000 and be ordered to pay it forthwith to the appellant.

[11] Mr Riddoch is on firm, albeit perhaps not on high, ground in submitting that the $14,000 is simply no longer there. Even if it was, the Judge chose not to order its immediate payment out to the respondent.

[12] I cannot sensibly order payment to the appellant of a sum which no longer exists. This first ground of appeal fails.

2. Payment in whole or in part

[13] For the same reasons which founded his first submission, Mr Maciaszek argued “the respondent should be required to pay the balance of the debt to the appellant in whole or in part”. He developed eight reasons in support. I do not intend going into them. Mr Maciaszek did not argue that the Judge failed to consider these factors, or that the Judge’s exercise of his discretion was wrong in principle. His submission was more an invitation to me differently to exercise the s 31 discretion. I decline to do that.

[14] This second ground of appeal cannot succeed.

3. “Clean break” principle

[15] The importance of the “clean break” principle was common ground. Nor did Mr Riddoch disagree that a clean break is normally achieved by leaving superannuation entitlements to the superannuation who, in return, is required immediately to appropriate to the other spouse cash or property of equivalent value. Mr Riddoch’s point was simply that the respondent had no financial ability to make a clean break.

[16] Mr Maciaszek referred me to a number of cases “although only as a guide to determining the merits of this particular case”. He relied particularly on Comber v Comber [1996] NZFLR 145. The respondent, Mr Comber, was a policeman due to retire from the Police Force in 2001 at the age of 55. Judge Whitehead said:

“I have no details of the full financial situation of the respondent other than as he has generally described them to be.

The appellant is obviously in a worse position. She is resident in Auckland and is a joint owner of a house in Auckland, the value of which is unknown. She describes her position as being financially stretched and emotionally stressed. She wants to get on with her life and indicates that two children have relied upon her heavily over the last three years.” (p 152)

[17] The Judge ordered Mr Comber to pay “no less than half” of the appellant’s (Mr Comber’s) share of his superannuation ($54,354) in approximately one year’s time (on 30 December 1996) and the balance on 30 December 2001, although Mr Comber could elect to pay earlier.

[18] Mr Maciaszek submitted that those are the orders Judge Grace should have made. In particular, he should have ordered the respondent to make to the appellant a substantial payment at an early stage.

[19] To point to a different order made by another Judge in another case does not establish that the order Judge Grace made in this case was wrong. Judge Whitehead lacked details as to Mr Comber’s full financial situation, and said so in his decision. The Combers were older. Judge Grace had full information about the Allens’ finances. He described the respondent’s financial situation as “somewhat precarious” with minimal net (of legal fees) assets. There was not much point in the Judge ordering a substantial early payment if there was no present or prospective source of funds from which to make it.

[20] This ground of appeal, too, fails.

4. Affordability of borrowing to make immediate payment

[21] The evidence before Judge Grace was that lenders had declined to lend to the respondent because, when his outgoings were deducted from his income, there remained insufficient to service a loan. Security (over the respondent’s superannuation entitlement) was not an obstacle.

[22] Mr Maciaszek submitted that the position disclosed by the evidence was not the correct one. Now that the parties’ daughter was no longer living with the respondent, the respondent would have approximately $150 per week surplus available to service a loan. Sources of this money were:

[a] Daughter’s food costs $70.00

[b] Daughter’s transport costs $20.00

[c] Excessive general expenses and maintenance $30.00

[d] Excessive tolls $30.00

[e] Excessive social/entertainment expenditure $40.00

Total $190.00

[23] After discussing Mr Maciaszek’s challenges, effectively, to items [a], [b] and [d] (the submission in relation to the first two items was that the respondent should have required his daughter to pay rent), Judge Grace said:

“[32] I do not consider that the expenditure which Mr Allen has listed is in any way excessive. There has to be some degree of flexibility in any budget, and it would be unrealistic to expect any party to pin themselves down in minute detail to a commitment which would go on for a number of years. Mr Allen has tried borrowing the funds, and has been turned down on the basis that there is insufficient capacity in his income to service the borrowing.”

[24] The Judge also said:

“[36] Mr Allen’s position will, in all likelihood, improve over the next few years. His daughter will no longer be dependent on him. He needs certainty, as does Mrs Allen for the future.”

[25] In my view those observations are realistic and sensible, rather than wrong.

[26] A further aspect of this ground of appeal concerned the obtaining of information from the PSIS. In the interlocutory stages, Judge Grace had gone some distance toward requiring the PSIS to inform the Court why it would not lend to the respondent. Mr Maciaszek submitted that the Judge then proceeded to hear and decide the matter without the benefit of proper reasons from the PSIS.

[27] As Mr Riddoch submitted, choice of the appropriate course was in the Judge’s discretion. He was obviously satisfied on the evidence as to the PSIS’s reasons because he made a finding about them. It is in paragraph [32] of his judgment, which I set out in paragraph [23] above.

[28] I hold against this fourth ground of appeal.

5. Section 38 of the Act - Registrar’s inquiry

[29] The submission for the appellant on this ground is similar: the Judge erred in not directing the Registrar, under s 38, to make a pro forma loan application for the respondent to the PSIS, and to ascertain accurately its willingness to lend to the respondent and, if so, in what amount and on what terms. That would have enabled the Court reliably to consider whether an immediate payment or part payment was possible.

[30] Mr Maciaszek referred to a number of authorities demonstrating the wide
utility the Courts have given s 38.

[31] Mr Riddoch did not contest the availability and scope of the s 38 power, only Mr Maciaszek’s suggestion that it should have been exercised here. Mr Riddoch pointed out that the s 38 power involved delegating a judicial function and the Judge had chosen to exercise that function himself. See Giles v Giles [1985] 1 NZLR 760 at 767 (CA).

[32] This ground requires no consideration additional to that I have given the previous ground. The Judge found:

[a] The respondent had $10 per week surplus after meeting outgoings which the Judge held were not excessive.

[b] The PSIS had declined to lend to the respondent because that $10 weekly surplus was insufficient to service a loan.

[33] Against those findings, I do not see that the Judge was wrong to decline to order a s 38 inquiry along the lines I have described i.e. a pro forma loan application to the PSIS and the obtaining of a response.

6. Date for payment

[34] Substantially on the basis of Comber v Comber, Mr Maciaszek argued that Judge Grace should have directed payment on a date earlier than in five years time. He listed six circumstances as arguing for an earlier date:

[a] The length of time since separation in October 1996.

[b] The absence of minor or dependant children.

[c] The income of the Respondent.

[d] The absence of other loan obligations for the Respondent.

[e] The limited value of the balance of matrimonial property.

[f] The possible availability of finance.

[35] Mr Maciaszek submitted, I think correctly, that Judge Grace had expected the respondent to be in a position to afford to borrow sufficient to pay the appellant in full in five years time. He made the point that there was no particular event occurring in five years time which, in itself, would provide the means for the respondent to make the payment. He argued that an earlier payment date could equally have been stipulated, still giving the respondent a reasonable opportunity to arrange his finances to prepare for such payment.

[36] So, indeed, it could have. But to argue that a different order could or should have been made - and to point to another case in which a different order was made - does not establish that the order the Judge did make was wrong in principle. I mentioned that Mr Maciaszek relied particularly on Comber. The early substantial payment ordered by the Judge in Comber did not coincide with any particular event facilitating payment, although the balance due for payment in 2001 did.

[37] Although the Judge was not explicit as to his reason for ordering payment in full in five years, I infer that he considered the likely improvement in the respondent’s financial position “over the next few years” (his words in paragraph [36] of his decision) would enable him to pay by then.

[38] Although a clean break is best, where it cannot be achieved the next best solution is finality. In making the orders Judge Grace said:

“[38] The effect of this is to give the parties a degree of certainty as to where they stand now, and a degree of certainty as to when payment is to be made by Mr Allen to Mrs Allen. Mr Allen now needs to plan for the future so as to ensure that payment is made to Mrs Allen when it falls due.”

[39] I cannot detect any error of principle in the Judge’s order. This sixth and last ground of appeal fails.

Fresh evidence - remission to the District Court for reconsideration

[40] Pursuant to r 718 High Court Rules, the appellant sought leave to adduce further evidence as to the recent change in the respondent’s financial circumstances. That evidence came from the appellant. The nub of it was that the respondent last month had moved to live with a new partner who was self supporting, with a consequent reduction in his accommodation costs. Further, the appellant deposed that the parties’ daughter was no longer living with or financially dependent on the respondent.

[41] The submission for the appellant, on the basis of this evidence, was that the issue of payment to the appellant of her share of the respondent’s superannuation should be remitted to the Family Court for re-hearing, and the s 38 inquiry - not earlier undertaken - should now be completed.

[42] Mr Riddoch objected to the appellant’s further evidence on the grounds that it was unlikely to influence the result of the case, and because it contained inadmissible hearsay. Whether I admit that evidence (which obviously I have now read) or exclude it, my view is the same: this appeal must be dismissed and the case should not be remitted to the Family Court. The improvement in the respondent’s financial circumstances is precisely what the Judge expected and allowed for in his decision. I refer to his paragraph [36], which I have cited in paragraph [24] of this judgment. It is that expected improvement which will enable the respondent to pay the appellant the substantial sum ($49,000 plus accrued interest) due to her in five years time. On the other hand, to remit the matter to the Family Court would destroy the finality the Judge’s orders were intended to give both parties. Changes in the parties’ circumstances, particularly those foreseen by the Court, are not to result in the Court’s orders being revisited.

Result

[43] As none of the six grounds of appeal has succeeded, the appeal fails and is dismissed.

[44] Unless the appellant is legally aided, the respondent is entitled to his costs of the appeal. For the purpose of the parties calculating those, the appeal is to be treated as a Category 2 proceeding, time band B for each of steps 13 to 17 in the Third Schedule to the High Court Rules.

Solicitors
Geddes & Maciaszek, Christchurch for the Appellant
Kennedy & Associates, Motueka for the Respondent