ARS v SJS
[2022] NZHC 22
•17 January 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2021-404-001742
[2022] NZHC 22
UNDER The District Court Act 2016 and the Family Proceedings Act 1980 BETWEEN
ARS
Appellant
AND
SJS
Respondent
Hearing: 24 November 2021 Appearances:
P J Morgan QC for the Appellant S J Tee for the Respondent
Judgment:
17 January 2022
JUDGMENT OF VAN BOHEMEN J
This judgment was delivered by me on 17 January 2022 at 3.00pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Solicitors/Counsel:
Thackeray Chambers, Hamilton Braun Bond & Lomas, Hamilton Morton Tee & Co, Auckland
ARS v SJS [Maintenance: division of functions and high standard of living] [2022] NZHC 22 [17 January 2022]
Introduction
[1] ARS appeals the decision of Judge D A Burns given in the Family Court on 9 August 2021 in which the Judge ordered the appellant to pay maintenance of $1,500 per week to his former wife, SJS, from the date of their separation in January 2019 to the date of dissolution of their marriage in April 2021, less a period of 10 months for which maintenance had already been paid.1
Relevant background
[2] The appellant and the respondent, who had known each other for some years previously, began a relationship in early 2012. The appellant proposed on 1 April 2012. The parties married on 6 October 2012. It was a second marriage for the appellant, who was 54 at the time. It was a third marriage for the respondent, who was
50. Both the appellant and the respondent had children by their earlier marriages, but the children were not dependent on their respective parents by the time of the marriage.
[3] Prior to the marriage, the respondent had lived in Whangamatā, where she had moved with her former husband after returning from the United Kingdom in 2010. Before going to the United Kingdom in 2006, the respondent had lived in Auckland and Hamilton. In Auckland, the respondent had trained as a beauty therapist and had opened her first business in 1998. The respondent sold that business when she moved to Hamilton in 2005 to live with her then partner.
[4] While living in Whangamatā, the respondent had operated an agency for a hair products business selling hair care products to pharmacies and supermarkets in New Zealand. The respondent had also started a beauty care business in Whangamatā.
[5] The appellant is a businessperson and company director. He is also the settlor, a trustee and a beneficiary of two family trusts; namely, a property trust and a trading trust, which earns income and makes distributions to the appellant, his children from his first marriage, and his grandchildren.
1 SJS v ARS [2021] NZFC 7728.
[6]The appellant’s direct personal income is modest: it was $42,000 in 2019 and
$54,000 in 2020. However, advances from the trading trust meet the shortfall between the appellant’s living expenses and his income. In 2019, the appellant drew
$1,025,000 from the trading trust.
[7] At the time of his marriage to the respondent, the appellant was living in a house at Braid Road in Hamilton which was owned by the property trust. He also spent time at a beach house in Whangamatā, which is also owned by the property trust.
The parties’ relationship and marriage
[8] After their relationship began, the respondent moved to Hamilton to live with the appellant at the Braid Road house. With financial assistance from the appellant, the respondent liquidated the hair product business, which had been in debt, but continued to operate the beauty care business in Whangamatā and opened a branch of that business in Hamilton. Both parties acknowledge that the beauty care business did not make money and that the respondent relied heavily on the financial support of the appellant.2
[9] During their marriage, the parties enjoyed a very comfortable standard of living. The appellant gave the respondent an allowance to pay household and personal expenses, paid for the respondent’s credit card expenses, purchased a car for the respondent and paid for her petrol. The parties travelled to Europe, Asia and the Pacific to attend sporting events and for holidays. They made numerous trips to cities in Australia and frequently spent weekends in Auckland. They stayed at five-star hotels and dined in top restaurants. They also had a busy social life in Hamilton and in Whangamatā. They undertook renovations to the beach house at Whangamatā.
[10] At the end of 2017, the parties moved to another house in Hamilton at Durham Heights, Flagstaff, which was also owned by the property trust, so that the Braid Road house could be demolished and replaced by a new home in which the parties planned to live together.
2 Financial statements for 2018 show a net loss of approximately $40,000.
The parties’ separation
[11] In early January 2019, while the parties were in Whangamatā, the appellant told the respondent that he considered their marriage was over and that he was separating from the respondent.
[12] The respondent returned to Hamilton and stayed at the Durham Heights house for some weeks before travelling to Auckland, taking with her two beds, a coffee maker, various family chattels and the Mercedes AMG C63 that the appellant had purchased for the respondent and had registered in her name. The respondent initially stayed with friends in Auckland.
[13] The appellant agreed to pay the respondent a lump sum of $25,000 and spousal maintenance of $1,500 per week while they negotiated a separation agreement.
[14] The appellant made one settlement offer in January 2019 which was not accepted by the respondent and the offer was subsequently withdrawn. It appears little further progress was made in achieving a settlement.
[15] In March 2019, the respondent received a copy of a resolution adopted by the trustees of the Family Trust revoking her right to use the Durham Heights house.
[16] The appellant continued to make weekly payments of $1,500 until September 2019 when he reduced the payments to $1,000 per week after he learned that the respondent was working. In November 2019, the appellant stopped the weekly payments altogether and cancelled the fuel card and mobile phone account that the respondent had been using.
[17] After trying unsuccessfully to re-establish the beauty care business in Auckland, later in 2019 the respondent took up a position with a skin care company on an annual salary of $65,000 plus a motor vehicle. This results in a net annual income of $49,626.72 or $954.36 per week.
The Family Court decision
[18] In October 2020, the respondent filed an application under s 63 of the Family Proceedings Act 1980 (the Act) for an order requiring the appellant to pay her spousal maintenance. The application was heard on 8 July 2021. Judge Burns issued his decision on 9 August 2021.
[19] The Judge noted that the respondent’s application was made under s 63 of the Act, which deals with maintenance during marriage or civil union, and not under s 64, which deals with maintenance after dissolution of marriage or civil union or the end of a de facto relationship.3
[20] In his decision, the Judge set out the accounts of the respondent and the appellant of their circumstances before and during the marriage.4 This included the respondent’s evidence that she had:
(a)supported the appellant in his business endeavours, had managed the household, including extensive entertainment of clients, business colleagues and friends, had become a corporate wife and there had been a clear division of roles within the marriage;
(b)been told by the appellant that they were financially secure, that the respondent did not need to work, that they had more money than they could ever need or spend, that the respondent could do what she wanted, that it cost $400,000 per annum to run their household and that the respondent should let the appellant do what he was best at, which was making money;
(c)had to give less priority to her beauty care business because she had to devote much of her energy to supporting the appellant, who had encouraged her to close down the Whangamatā business because it was not making money;
3 SJS v ARS, above n 1, at [16].
4 At [2] – [10].
(d)needed continuing support beyond the initial 10 months following separation because of the division of functions within the marriage which had an on-going impact and had affected her ability to recover financially and get back to an earning position;
(e)been unable to re-establish her beauty care business in Auckland because she was not able to retain customers based in Hamilton and Whangamatā so had taken up a salaried position;
(f)a shortfall of $82,713.28 per annum or $1,590.64 per week after her net salary was taken into account; and
(g)at age 58, at the time of her application, been left with little savings, no assets other than the proceeds of selling her car and was in very difficult circumstances.
[21] The Judge also recorded that the appellant did not accept that the respondent had:5
(a)been forced from the Hamilton home and said the respondent had chosen to leave and the trustee resolution had been passed after she had left;
(b)been unable to meet her reasonable needs based on her present level of income and said that the respondent had done so for 30 years prior to their marriage, was skilled and well able to support herself and had chosen to shift from Hamilton to Auckland;
(c)made the adjustments to becoming a corporate wife and supporting him to the level and extent claimed by the respondent or had done as much work as the respondent asserted; or
5 At [11] – [13].
(d)had the level of input claimed in relation to the development of the new home at Braid Road.
[22] The Family Court Judge also recorded that the appellant did not accept that there was any real division of functions within the marriage but did accept that the parties had had a high standard of living during their marriage, had travelled extensively and were financially secure and that the respondent did not need to work but had chosen to do so. The appellant also accepted that the respondent had worked hard during the marriage.6
[23] The Judge found that the respondent was in need and said this was clearly established because she had a shortfall of $1,500 per week to meet her own reasonable needs.7 The Judge said that the appellant had recognised this himself by paying the respondent $1,500 per week for 10 months post-separation. The Judge said it was not a question of whether the respondent was in need but for how long the appellant should be required to pay.
[24] The Judge held that the respondent had clearly established that there was a role division in their marriage and that she had become a corporate wife, devoting most of her time and energy to supporting the appellant and maintaining his lifestyle and needs as a senior businessman. Because the application was made under s 63 and not under s 64, the order could last only as long as the marriage was intact and would end upon dissolution.
[25] The Judge considered that the appellant had not had to change anything in his life after separation. The appellant had continued to have access to luxury homes at Hamilton and Whangamatā; he had continued in exactly the same way with both his business, before, during and after marriage and had maintained the same group of friends. Apart from sadness the appellant may have experienced about the separation, nothing in his life had had to change.
6 At [13].
7 At [17].
[26] The Judge considered that the respondent had established that it would take her at least two years to readjust to the reality of separation and the impact on her life. She had had to make very significant changes to her life. She had lost both the enjoyment of living in two lovely properties and the very high standard of living she had enjoyed during the marriage, as well as having relocate to Auckland and to alter her circumstances. She had had to leave a luxury way of life. The Judge held that this would take some time to adjust and get used to, emotionally, financially and psychologically.
[27] The Judge observed that Parliament had set a two-year period for dissolution of marriage after separation, taking into account that many people take that period of time to adjust to separation. He considered that to be an entirely fair and appropriate length of time in this case and considered that the respondent should have spousal maintenance by way of instalment until the dissolution of the marriage in April 2021.
[28] The Judge said there was no question that the appellant could afford to pay and referred to the evidence of the parties’ lifestyle during their marriage.8
[29] The Judge found that two grounds had been established to justify ordering spousal maintenance under s 63 of the Act.
[30] First, the respondent’s assertion that there was a division of function had been proven. The Judge held that the role division had had a direct impact on the respondent’s ability to re-establish a business and to return to being fully self- supporting. Therefore, s 63(2)(a)(i) of the Act had been established.9
[31] Secondly, the Judge found that the parties had had a very high standard of living while they lived together and that the grounds under s 63(2)(c) had been established.10 The Judge referred to RK v DK [Maintenance: High standard of living], in which Venning J had discussed the application of that provision and had held that a high standard of living over time will create and instil expectations of a standard of living at that level, that the reasonable needs of the appellant in that case were to be
8 At [18].
9 At [19].
10 At [20].
informed by that lifestyle and found that the appellant was unable to meet her reasonable needs.11
[32] The Judge ordered the appellant to pay the respondent maintenance at the rate of $1,500 per week for the period from the date of separation in January 2019 to the date of the dissolution of the marriage in April 2021, less the amount already paid for the period of 10 months.12 The Judge noted that this amount was close to the shortfall between the respondent’s income and expenses. The Judge recorded that he considered this an appropriate amount and accepted the evidence of the respondent in terms of the financial criteria. The Judge said he accepted that it would take the respondent two years to adjust from a luxury lifestyle to a much more modest one.13
[33] The Judge also ordered the appellant to pay the respondent the sum of $100,000 to assist the respondent in meeting legal and forensic accounting fees in mounting new legal proceedings against the appellant in order to enable the respondent to have a level playing field.14
The appeal
[34] The appellant appeals the Family Court order directing the payment of maintenance. The appellant does not appeal the order that the appellant pay the respondent $100,000 for legal and accounting fees. However, the appellant says the respondent’s receipt of that sum should be taken into account in determining the respondent’s reasonable needs under s 63 of the Act.
[35] The Family Court order directing the payment of maintenance to the respondent has been stayed pending the appellant’s appeal.
[36] In his notice of appeal, the appellant says that the Family Court Judge erred in fact and law in finding:
11 RK v DK [Maintenance: High standard of living] [2011] NZFLR 468 at [38] – [44].
12 SJS v ARS, above n 1, at [21].
13 At [21].
14 At [22].
(a)that the respondent was in need for a period of two years and three months after the end of a six-year relationship;
(b)that there was a division of function within the marriage affecting liability for maintenance;
(c)that any division of functions during the marriage had an impact on the respondent’s ability to re-establish a business and to return to being self-supporting following separation;
(d)that a high standard of living during the marriage justified spousal maintenance of $1,500 per week for two years and three months; and
(e)that the sum of $1,500 per week was reasonable.
[37] The appellant also says the Judge failed to sufficiently take into account the extent to which the appellant had already paid a lump sum and spousal maintenance, together with other financial support by way of vehicle and telephone expenses.
Submissions for the appellant
[38] Mr Morgan QC, counsel for the appellant, says the appellant more than satisfied his obligation under s 63 of the Act by the maintenance he paid from separation until November 2019, together with the $100,000 payment ordered by the Family Court Judge. He says the Judge should also have taken into account the appellant’s payment of the respondent’s car and telephone expenses, the lump sum payment of $25,000 and the fact the respondent took relationship property with her at the end of the relationship, being furniture and a $110,000 car.
[39] Mr Morgan notes that the respondent had no assets when the relationship commenced. Her two businesses had been unprofitable and had debt that was subsequently paid by the appellant. The beauty business the respondent operated during the marriage was modest and did not make money. At the end of the relationship, the appellant accepted that the respondent could not practicably meet her
reasonable needs and had maintained her until November 2019 when she gained employment.
[40] Mr Morgan says the question for the Family Court was whether and why the respondent had a continuing inability to support herself and, in particular, whether it was because of any one or more of the circumstances in s 63(2) of the Act.
[41] Mr Morgan submits that the Family Court Judge erred because he was affected by the fact that the appellant is wealthy through his family trusts, that the respondent is not wealthy and that, during the relationship the couple had a high standard of living. He says the Judge attributed the respondent’s needs and her inability to meet them to the effects of the division of functions within the marriage while they were living together and lost sight of the fact that, prior to the relationship, during the relationship and after the relationship, the respondent did not have a successful business, despite the fact she worked hard. Mr Morgan says the respondent’s lack of business success before and after the marriage is a relevant circumstance for the purpose of s 63(2)(a)(iii) of the Act.
[42] On the specific grounds of appeal, Mr Morgan says that the high standard of living enjoyed by the parties during a marriage that was reasonably short and did not involve children did not justify maintenance for the whole period of separation prior to the dissolution of the marriage. He also says the Family Court Judge erred in finding that any role division between the parties had had any causative impact on the respondent’s ability to re-establish a business and to become self-supporting. Mr Morgan refers to Wederell v Wederell, where Tipping J dismissed an appeal on the basis that the appellant in that case had not established that the division of functions within the marriage had been a real and substantial cause of her inability to meet her own needs.15
Submissions for the respondent
[43] Mr Tee, counsel for the appellant, submits that the Family Court Judge correctly found that the respondent was in need, had a weekly shortfall of $1,500, and
15 Wederell v Wederell [1994] NZFLR 928, (1994) 12 FRNZ 582 (HC) at 589.
had established that she would take two years to readjust to the reality of separation. He says the Judge was also correct to find that there had been a role division in the marriage and that the respondent had devoted most of her time and energy to supporting the appellant. He also says the two year period set by Parliament for maintenance until the marriage had been resolved was fair and appropriate in this case.
[44] Ms Tee submits that the appellant’s appeal is based on two propositions which are misconceived. These propositions are that:
(a)maintenance should be considered on the basis of the parties’ earning capacity at the commencement and at the end of their relationship and ignoring any effects of the relationship period such as the division of functions; and
(b)the parties’ standard of living should be compared to that existing before the relationship rather than that enjoyed while they were together.
[45] Mr Tee submits that these both propositions are not consistent with s 63(2)(c) of the Act, which is addressed to the standard of living of the parties while they were living together, and says the Family Court Judge correctly applied the reasoning of Venning J in RK v DK to the situation where, as here, a higher standard of living was enjoyed during the marriage. Mr Tee also submits that the circumstances in Wederell were very different to those in the present case.
Approach on appeal
[46] It is common ground that the appeal is a general appeal and that the principles set out by the Supreme Court in Austin, Nichols & Co Inc v Sticting Lodestar apply to the extent the Family Court judgment involved findings of fact and the evaluation of factual matters.16 This Court is free to reach its own view on such matters, based on the evidence before the Family Court. While this Court must be persuaded that the decision of the Family Court was wrong, in reaching that view no deference is required
16 Austin, Nichols & Co Inc v Sticting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [13].
beyond the customary caution appropriate when the Family Court has had the advantage of hearing and seeing the witnesses and in assessing credibility.
[47] However, to the extent that the Family Court exercised its discretion, this Court should, in accordance with the Court of Appeal’s decision in May v May, interfere only if satisfied the Judge acted on a wrong principle, took into account irrelevant matters, failed to have regard to relevant matters or was plainly wrong.17
Relevant law
[48] As the Family Court Judge noted, the respondent’s application was made solely under s 63 of the Act. Section 63 relevantly provides:
63Maintenance during marriage or civil union
(1)During a marriage or civil union, each party is liable to maintain the other party to the extent that such maintenance is necessary to meet the reasonable needs of the other party, where the other party cannot practicably meet the whole or any part of those needs because of any 1 or more of the circumstances specified in subsection (2).
(2)The circumstances referred to in subsection (1) are as follows:
(a)the ability of the parties to be or to become self-supporting, having regard to—
(i)the effects of the division of functions within the marriage or civil union while the parties are living together or lived together:
(ii)the likely earning capacity of each party:
(iii)any other relevant circumstances:
(b)…
(c)the standard of living of the parties while they are living together or lived together:
…
[49] Although s 64 is not in issue in the present proceeding, because a number of terms used in ss 63(2)(a) and (c) and 64(2)(a) and (c) are common to both sections,
17 May v May (1982) 1 NZFLR 165 (CA).
decisions on the interpretation of those terms in s 64 are relevant to the interpretation of s 63.
[50]Section 64 relevantly provides:
64Maintenance after marriage or civil union dissolved or de facto relationship ends
(1)Subject to section 64A, after the dissolution of a marriage or civil union or, in the case of a de facto relationship, after the de facto partners cease to live together, each spouse, civil union partner, or de facto partner is liable to maintain the other spouse, civil union partner, or de facto partner to the extent that such maintenance is necessary to meet the reasonable needs of the other spouse, civil union partner, or de facto partner, where the other spouse, civil union partner, or de facto partner cannot practicably meet the whole or any part of those needs because of any 1 or more of the circumstances specified in subsection (2).
(2)The circumstances referred to in subsection (1) are as follows:
(a)the ability of the spouses, civil union partners, or de facto partners to become self-supporting, having regard to—
(i)the effects of the division of functions within the marriage or civil union or de facto relationship while the spouses, civil union partners, or de facto partners lived together:
(ii)the likely earning capacity of each spouse, civil union partner, or de facto partner:
(iii)any other relevant circumstances:
(b)…
(c)the standard of living of the spouses, civil union partners, or de facto partners while they lived together:
…
[51]Section 64A(1) provides:
(1)If a marriage or civil union is dissolved or, in the case of a de facto relationship, the de facto partners cease to live together,—
(a)each spouse, civil union partner, or de facto partner must assume responsibility, within a period of time that is reasonable in all the circumstances of the particular case, for meeting his or her own needs; and
(b)on the expiry of that period of time, neither spouse, civil union partner, or de facto partner is liable to maintain the other under section 64.
[52] Section 65(2) sets out the matters to which the Court must have regard when deciding the amount of maintenance payable, whether during the marriage or civil union or after the dissolution of the marriage or civil union or the end of a de facto relationship.
[53]These matters include:
(a)the means of each spouse, civil union partner, or de facto partner, including—
(i)potential earning capacity:
(ii)means derived from any division of property between the spouses or de facto partners under the Property (Relationships) Act 1976:
(b)the reasonable needs of each spouse, civil union partner, or de facto partner.
[54] Section 65(3) provides that in considering the earning potential of each party, the Court must have regard to the effects of the division of functions within the marriage.
[55] Section 65(5) provides that in considering the reasonable needs of each party, the Court may have regard to the standard of living of the spouses when they were living together.
Analysis
[56] There is no doubt that, as found by the Family Court Judge, the appellant can afford to pay the maintenance sought by the respondent. However, as discussed by Tipping J in Wederell, the fact that one party can afford to pay maintenance does not mean the other party is entitled to maintenance.18
[57]As Tipping J stated in Wederell with respect to s 63:19
18 Wederell v Wederell, above n 15, at 585.
19 At 585.
During the marriage each spouse has a liability to maintain the other to the extent necessary to meet the reasonable needs of the other. However, that liability only arises where the applicant spouse cannot practicably meet his or her reasonable needs because of one or more of the qualifying circumstances listed in s.63 as paras (a) to (e). Three questions arise. First, it is necessary to identify the applicant's reasonable needs and the amount of money required to satisfy them. Second, it is necessary to identify the extent to which the applicant cannot meet those needs. Third, it is necessary to see whether that inability arises because of a qualifying circumstance; unless that can be shown the applicant cannot obtain maintenance from the other spouse.
[58] This approach was followed in RK v DK where Venning J considered the reasonable needs of the appellant, the ability of the appellant to meet those reasonable needs, and whether there was a qualifying circumstance.20 However, as Venning J also discussed, when considering one partner’s reasonable needs, the shared standard of living of the parties during the marriage, and particularly in the period immediately prior to separation, is relevant to the determination of reasonable needs post separation.21 In that respect, the standard of living enjoyed by the parties during the marriage, which is a qualifying circumstance under s 63(2)(c), necessarily informs the assessment of the respondent’s reasonable needs.22
The respondent’s reasonable needs
[59] As a full bench of the Court of Appeal made clear in Z v Z (No 2), a party’s reasonable needs are to be assessed in the circumstances of the parties in the particular case:23
Obviously, "reasonable needs" is not limited to a subsistence level. Nor are reasonable needs necessarily uniform. What constitutes the reasonable needs of one person may not be sufficient to meet the reasonable needs of another. What is appropriate provision for the reasonable needs of a wife in some circumstances may not be adequate for a wife in other circumstances. Maintenance to meet the reasonable needs of a party may vary considerably. Furthermore, the fact that the Court is to have regard to the reasonable needs of "each" party, indicates that, to some extent, it will necessarily be examining their relative needs.
[60] In addition, in M v B [Economic disparity], Hammond J noted that “reasonable needs” are not to be restricted to the necessities of life and the Court is directed not to
20 RK v DK [Maintenance: High standard of living], above n 11, at [19] – [44].
21 At [22].
22 See M v B [Economic disparity] [2006] 3 NZLR 660 (CA) at [196].
23 Z v Z (No 2) [1997] 2 NZLR 258 (CA) at [294] – [295].
be niggardly in its approach.24 In the same decision, William Young P held that, as discussed above, when assessing reasonable needs, attention is to be had to the shared standard of living when the parties were living together.25
[61] In RK v DK, Venning J accepted the figure of $10,000 per month fixed by the Family Court Judge as an appropriate figure for an interim award as a reasonable figure to start from, but disagreed with reductions made to the monthly budget prepared by appellant because he considered that those reductions did not give sufficient weight to the parties’ standard of living prior to separation.26 However, Venning J also considered that, given the amount of time that had passed since separation, it was reasonable to reduce the significant sums allocated for clothing ($5,000) and personal care ($1,700) and, with respect to the latter item, held that the appellant’s reasonable needs in relation to that item must now be less than they were during marriage.27
[62] In her evidence, the respondent put forward two budgets for her weekly expenses:
Declaration of financial means dated 19 October 2020 Updating affidavit sworn 15 June 2021 Fundamentals:
$1,183.00
$1,067.00
Health:
$250.00
$317.00
Beauty:
$310.00
$375.50
Entertainment:
$120.00
$100.00
Travel:
$210.00
$210.00
24 M v B [Economic disparity], above n 22, at [256] – [257].
25 At [196].
26 RK v DK [Maintenance: High standard of living], above n 11, at [33] – [34].
27 At [35].
Dog care: $122.00 $180.00 Clothing/accessories:
$150.00
$150.00
Incidentals:
$200.00
$100.00
Total:
$2,545.00
$2,499.50
[63] Except for the beauty costs and some of the health costs, such as the item for a personal trainer, Mr Morgan does not take serious issue with these figures, which do not include any costs for legal advice. Mr Morgan puts some emphasis on the respondent’s claim for the costs of legal advice in her declaration of financial means and says they should not have been taken into account. It is apparent, however, that although these costs were referred to in the respondent’s expenditure shown in her declaration of financial means, they were not included in either budget, which were the basis of the Family Court’s assessment of the respondent’s reasonable needs. For that reason, I do not accept that the separate order made by the Family Court Judge in respect of those costs should be taken into account when determining the respondent’s reasonable needs.
[64] With respect to the updated beauty costs, Mr Tee says the respondent accepts that these costs should be halved to $187.75. This results in revised weekly costs of
$2,311.75.
[65] Given the Family Court Judge’s findings and the largely unchallenged evidence put forward by the respondent, I accept that the respondent’s reasonable weekly needs as at the time of the Family Court hearing were of the order of $2,312.00, having regard to the high standard of living enjoyed by the parties prior to their separation.
The respondent’s ability to meet her needs
[66] The respondent has a net weekly income of $954.36. When that amount is deducted from her reasonable needs, it results in a weekly shortfall of the order of
$1,360.00. The respondent has been unable to meet her needs to the extent of that shortfall. I am also satisfied that the respondent’s inability to meet that shortfall arises irrespective of the $25,000 payment made by the appellant to the respondent at the commencement of the parties’ separation and irrespective of the relationship property the respondent took with her to Auckland and the sale of the Mercedes.
Is there a qualifying circumstance?
[67] The Family Court Judge held that there were two qualifying circumstances: the division of functions within the marriage, as provided for in s 63(2)(a)(i), and the standard of living of the parties while they lived together, as provided for in s 63(2)(c). Mr Morgan also sought to bring into account the respondent’s apparent lack of business success before and after her relationship with the appellant as a relevant circumstance under s 63(2)(a)(iii).
[68] With respect to the respondent’s business success before the marriage, I do not accept that this was a relevant circumstance for the purposes of s 63(2)(a)(iii). The issue under s 63(1) is whether the respondent cannot practicably meet the whole or any part of her reasonable needs because of any one or more of the circumstances specified in s 63(2). Any business success, or lack of success, is relevant only insofar as it goes to establishing those circumstances.
[69] The position regarding the respondent’s business success is somewhat equivocal.28 However, even if it is accepted that the respondent may have struggled with her businesses in the period before her marriage to the appellant, that does not bear on whether she is now unable to meet her reasonable needs. Regardless of the respondent’s previous business record, if she is unable to meet those needs, she is in a similar position to the appellant in RK v DK, whom Venning J accepted was unable to meet any part of her reasonable needs and was, therefore, entitled to maintenance.29
28 While Mr Morgan says that the respondent was not successful in her businesses before or after her relationship with the appellant’s submissions, he also accepts the respondent had been a reasonably successful businessperson before she moved to Hamilton in 2005 to live with her then partner, to the extent that she was able to give her son a private school education.
29 RK v DK [Maintenance: High standard of living], above n 11, at [37].
[70] With respect to the division of functions, I am satisfied that the evidence establishes that the parties had distinct roles or functions within the marriage. The appellant was the principal money earner and wealth creator and the respondent was principally his supporter, both in his professional endeavours and in the activities the parties undertook to renovate their beach house at Whangamatā and to build a new home at the Braids Road property in Hamilton. While the appellant disputes the extent to which the respondent carried out those functions, he does not dispute that, following the marriage, the respondent stepped back from her own commercial activities and supported him in his business and social activities. The real question at issue is whether that division of functions was causative of the respondent’s inability to meet her reasonable needs in the sense discussed by Tipping J in Wederell.
[71] As Mr Tee says, the circumstances in this case are very different from those in Wederell, where Tipping J held that the custodial arrangements for the parties’ younger child were not a real and substantial cause of the appellant’s inability to meet her reasonable needs.30 Tipping J also held that appellant’s physical disability was not a qualifying circumstance because, as a result of benefits that the appellant received because of that disability, she was better off financially than if she had not been suffering from any physical disability.31
[72] However, the essential question here and in Wederell is whether the asserted qualifying circumstance was a real and substantial cause of the applicant’s inability to meet their reasonable needs.
[73] I am satisfied that the evidence establishes that the appellant told the respondent that she did not need to work and was happy for the respondent to put her energies into supporting his business and social activities and the couples’ renovation plans. I am also satisfied that the difficulties the respondent faced in keeping the beauty care business going in Whangamatā and in establishing the business in Hamilton were, at least in part, the consequence of the respondent moving to Hamilton to live with the appellant. Because of that move, the respondent was not able to give full attention to the Whangamatā business, even if it was largely seasonal in nature,
30 Wederell v Wederell, above n 15, at 587.
31 At 588.
and faced the challenge of establishing a new business in Hamilton, a city in which she had lived only briefly in 2005 to 2006 before moving to the United Kingdom with her previous husband.
[74] I am satisfied that this change of residence was itself a manifestation of the division of functions by which priority was given to the appellant continuing to pursue his life and business interests in Hamilton while the respondent adjusted her life, including her business interests, in order to accommodate the appellant. I am also satisfied that this division of functions, including the respondent’s change of residence, was a real and substantial cause of the respondent’s inability to meet her reasonable needs after she and the appellant had separated. Once the parties separated, the respondent had little prospect of meeting her reasonable needs as discussed above in locations where she had not had significant business success during the marriage, irrespective of her success prior to her relationship with the appellant. For these reasons, I am satisfied that the respondent has established that the circumstance provided for in s 63(2)(a)(i) applies.
[75] Even if I am wrong with respect to the division of functions, the evidence regarding the parties’ standard of living while they lived together is plain. As the appellant himself accepted, the parties enjoyed a very high standard of living before they separated.
[76]As Venning J said in RK v DK:32
… a high standard of living, over time, will create and instil expectations of a standard of living at that level. The standard of living may be such that, when the relationship ends, the spouse or partner may, through development of the expectations associated with that standard of living engendered during the marriage or relationship, have far greater reasonable needs than they can possibly meet from their own resources. The reasonable needs may be elevated to an extent they could not meet them, because of the higher standard of living.
[77] In RK v DK, Venning J held that the appellant had gone from living on an income of $85,000 a year to “an exceedingly luxurious lifestyle available to only a
32 RK v DK [Maintenance: High standard of living], above n 11, at [42].
few people in New Zealand”.33 Venning J held that the appellant’s reasonable needs were to be informed by that lifestyle and that her inability to meet those reasonable needs was also as a consequence of the luxurious standard of living she had enjoyed, and that by reason of the standard of living of the parties, the appellant was unable to meet her present reasonable needs.34
[78] The circumstances in RK v DK were more extreme than those in the present case. There, the parties had married within five months of meeting and had separated less than three and a half years after marriage. By contrast, the parties in this proceeding have known each other for a considerable period before they were married. Their relationship, if not their marriage, lasted almost twice as long as the relationship in RK v DK. Given that Venning J was satisfied in the circumstances of RK v DK that, by reason of the standard of living of the parties, the appellant in that case was unable to meet her reasonable needs at the time and that there was jurisdiction for a maintenance award under s 63(2), there can be little doubt that there is also jurisdiction to make an award in the present case where the relationship and the associated expectations of a higher standard of living had a longer-lasting foundation. Whatever the respondent’s previous needs, by reason of the standard of living during the not insignificant period of marriage, her present reasonable needs were elevated to a level which she cannot now meet herself.
The amount payable
[79] As discussed above, once liability for maintenance is established, the Court must determine the amount payable under s 65. Subsection (2) sets out the matters to which the Court must have regard. The first is the means of each party, including their potential earning capacity and the means of derived from any division of relationship property. The second is the reasonable needs of each party.
[80] The cases for both parties were advanced without reference to the respondent’s prospects for securing relationship property as a result of the separate proceeding before the Family Court. As a consequence, the primary matters for consideration are
33 At [43].
34 At [43] – [44].
the means of each party, including their potential earning capacity, and the reasonable needs of each party.
[81] As already stated, there is no doubt that the appellant has the capacity to pay the respondent the amount ordered and for the period ordered by the Family Court Judge.
[82] In RK v DK, Venning J observed, by reference to the Court of Appeal’s decision in M v B, that an order for maintenance is to provide moderate maintenance on a time limited basis and is not to act as a redistribution of income of the wealthier partner.35 However, the duration of the maintenance to be paid was not at issue in RK v DK. There was no challenge in that case to the period of 20 months following separation that had been set by the Family Court.36 In addition, M v B concerned a dispute over relationship property and the Court of Appeal’s observations about the duration of maintenance orders under the Act concerned orders made under s 64 which, because they relate to maintenance after the dissolution of the marriage, are potentially more open ended than orders made under s 63.
[83] In Z v Z (No 2), the Court of Appeal said that the clean break principle – that on the breakdown of a marriage and after relationship property has divided, the parties should be free to go their own separate ways without there being continuing competing demands on each-other’s property – underlies the maintenance provisions of the Act.37 It also observed that spousal maintenance generally ends on the dissolution of the marriage and that maintenance after the end of the marriage will ordinarily be short term and needs-based. However, the Court also said that these propositions were not absolute.38
[84] The Court of Appeal’s observations regarding the clean break principle were directed principally to ss 64 and 64A, the latter of which states that each party must, within a reasonable period of time, assume responsibility for meeting his or her own
35 At [45].
36 At [49]. A period comprising interim orders for spousal maintenance from May 2009 to January 2010, and orders for spousal maintenance from 1 January 2010 to 31 December 2010 following the substantive hearing as set out at [8] – [11].
37 Z v Z (No 2), above n 22, at 264.
38 Ibid.
needs. There is no equivalent direction in s 63, probably because liability under s 63 is time-limited; it cannot extent beyond the dissolution of the marriage.
[85] Nonetheless, both s 63 and s 64 limit the liability of the party with means to maintain the other party “to the extent that such maintenance is necessary to meet the reasonable needs” of the other party. There is no difference in the nature or extent of the liability imposed under the two sections. Neither section assumes that a party’s reasonable needs will remain at the same level throughout the marriage and after dissolution. On the other hand, nor do the sections assume that a party’s reasonable needs will reduce over time, even when those needs have been affected by the shared standard of living during marriage – as Woodhouse J noted in McQueen v Penn.39
[86] Most importantly, the extent of liability under both sections falls for determination under s 65 which, as the Court of Appeal stated in Z v Z (No 2), clearly confers on the Court a significant discretion in determining the amount that is to be payable.40 Because the Family Court’s decision on the amount payable involved the exercise of that significant discretion, this Court may interfere with that decision only if satisfied that the Family Court Judge acted on a wrong principle, took into account irrelevant matters, failed to have regard to relevant matters or was plainly wrong.41
[87] While Mr Morgan submits that the Judge should have taken into account the appellant’s payment of the respondent’s car and telephone expenses, the lump sum payment of $25,000 and the fact the respondent took relationship property with her at the end of the relationship, none of those considerations altered the fact that the respondent had a short-fall of the order of $1,360 per week as at the time of the Family Court hearing. For that reason, I am satisfied that that those matters were not relevant to the Judge’s determination of the extent of the respondent’s reasonable needs or to the duration of the order made in respect of those needs.
[88] Mr Morgan also submits that the Judge erred because he was affected by the fact that the appellant is wealthy through his family trusts and that the respondent is
39 McQueen v Penn [2016] NZHC 699, [2016] NZFLR 795 at [92].
40 Z v Z (No 2), above n 22, at 294.
41 May v May, above n 17.
not wealthy. However, those matters are clearly relevant to the mandatory considerations directed under 65(2) – namely the means of the parties, including their potential earning capacity, and the ability of the parties to meet their reasonable needs. For these reasons, there was no error in the Judge having regard to these considerations.
[89] The Judge’s order that the appellant pay the respondent the sum of $1,500 per week for the full duration of the marriage, that is for two years and four months after they separated, was on the basis that the Judge considered that it would take the respondent at least two years to readjust to the reality of the separation and the impact on her life42 and to adjust from a luxury lifestyle to a much more modest one.43 It is clear that the Judge reached that conclusion on the basis that, because it would take the respondent that long to adjust, her reasonable needs would continue at the level he had found existed at the time of the hearing until the dissolution of the marriage. The Judge held that that period was an entirely fair and appropriate length of time in this case.
[90] I do not consider that, in reaching those conclusions, the Judge acted on a wrong principle or that he was plainly wrong.
[91] That is not to say that order for maintenance under s 63 will always extend to the dissolution of the marriage or civil union. As the Court of Appeal said in Z v Z (No 2), maintenance to meet reasonable needs may vary considerably. What constitutes the reasonable needs of one party may not be sufficient to meet the reasonable needs of another.44 Similarly, the duration for which a party’s reasonable needs will subsist may also vary considerably.
[92] In this case, however, I am satisfied that there is no basis for interfering with the exercise of the Judge’s discretion to order the appellant to pay maintenance from the date of separation to the date of dissolution of the marriage. The amount of the
42 SJS v ARS, above n 1, at [17].
43 At [21].
44 Z v Z (No 2), above n 22, at 295.
payment should be reduced, however, to reflect the respondent’s recalculation of her
weekly costs.
Result and order
[93]The appeal is dismissed.
[94] The order made by the Family Court directing the appellant to pay maintenance to the respondent is varied as follows:
The appellant is to pay the respondent maintenance as follows:
(a)$1,500 per week for the period 1 January 2019 to 30 November 2019, less the amount already paid in respect of that period; and
(b)$1,360 per week for the period 1 December 2019 to the date of dissolution of the marriage.
Costs
[95]The respondent is entitled to costs on a 2B basis.
[96] If the parties are not able to agree costs, they may submit memoranda of no more than five pages.
[97] Any memorandum by counsel for the respondent should be filed and served by 14 February 2022. Any memorandum by counsel for the appellant should be filed and served by 28 February 2022.
G J van Bohemen J
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