B v A

[2020] NZHC 580

NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B,

11C AND 11D OF THE FAMILY COURT ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE

https://www.justice.govt.nz/family/about/restriction-on-publishing-judgments/

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-002384

[2020] NZHC 580

UNDER THE

Property (Relationships) Act 1976

IN THE MATTER OF

an appeal from a decision of the Family Court at Auckland on 25 September 2019

BETWEEN

B

Appellant

AND

A

Respondent

Hearing:	17 March 2020
Appearances:	B Snedden and J Gandy for Appellant B D Hayes for Respondent
Judgment:	20 March 2020

JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie On 20 March 2020 at 3.00pm

Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar

Date:…………………………

Solicitors/counsel:

Thomas and Co (J Gandy)/B Snedden, Auckland Kidd Legal/B D Hayes, Auckland

B v A [2020] NZHC 580 [20 March 2020]

Introduction

[1]                  On 25 December 2019, Judge Druce in the Family Court at Auckland, set aside a relationship property settlement agreement entered into between the parties pursuant to s 21A of the Property (Relationships) Act 1976 (the Act).1

[2]                  The appellant, Mrs B, has filed a notice of appeal against the decision. She asserts that Judge Druce erred when he concluded that giving effect to the agreement would cause serious injustice. She asserts that the Judge relied on erroneous facts in reaching this conclusion.

[3]                  The respondent, Mr A, has filed a notice of a cross-appeal. He also challenges factual findings made by the Judge, notwithstanding that the judgment was in his favour. He challenges findings that:

(a)there was no proposed “immigration scam” as alleged by him; and

(b)he was not unreasonably pressured to sign the s 21A agreement by Mrs B.

He also alleges that the Judge erred in admitting in evidence a translation of an email dated 18 January 2012.

[4]                  The appeal is set down for hearing on 19 May 2020. Both parties, in anticipation of the appeal, have filed interlocutory applications:

(a)Mrs B seeks leave to adduce further evidence by way of affidavit pursuant to s 39B(3)(b) of the Act and r 20.16 of the High Court Rules. This application was initially consented to by Mr A, but subsequently he has withdrawn consent and filed a notice of opposition;

(b)Mr A seeks an order under r 9.34 requiring Mrs B to disclose the user name and password for her “gmail” account to an independent expert

1      A v B [2019] NZFC 7726.

so that that expert can check whether the email of 18 January 2012 is authentic or not, and a further order under s 39B(3)(b) and r 20.16 granting him leave to adduce such evidence as shall be obtained as a result of that inspection. This application is opposed by Mrs B.

(c)Mr A also seeks leave under s 39B(3)(b) and r 20.16 to file an affidavit in reply to the affidavit which Mrs B proposes to file in the event that she is granted leave to file further evidence. There is no opposition to this application by Mrs B, provided she is given leave to file her further evidence.

[5]                  Mrs B has also sought to stay the Family Court’s decision, pending the hearing of the appeal. That application is not opposed and it is common ground that a stay should be ordered.

The Family Court Hearing

The s 21A agreement

[6]                  Mr A was asking the Family Court to set aside a s 21A agreement he and Mrs B executed on 23 January 2015. The agreement effected a full and final settlement of all property owned by the parties. It provided Mr A with a 1/2000th share in the family home, none of the parties’ cash then held in joint bank accounts, and one Mitsubishi vehicle, which he subsequently sold for $5,000. Mrs B retained a 1,999/2,000th share in the family home, all of the parties’ cash savings and the family chattels, including a Nissan car which the parties purchased three years earlier for $11,390.

[7]Relevantly, cl 4 of the agreement provided as follows:

[Mr A] records that the Family Home was purchased entirely from contributions made by [Mrs B’s] family and that he wishes for [Mrs B] to remain in residence at the Family Home so as to provide a stable Family Home for the Parties’ children.

[8]                  Judge Druce undertook a comprehensive analysis of the factual background and competing arguments and concluded as follows:2

Drawing all factors into consideration, I am satisfied that giving effect to the agreement would cause serious injustice to [Mr A] due to both the very substantial unfairness of the agreement at the time it was entered into and due to [Mrs B’s] subsequent conduct being inconsistent with the core purpose that the parties had at the time of providing a stable family home for the parties’ children. Inherent in this intention was their shared desire to provide for their children’s future financial security. Subsequent events suggest that this is now significantly at risk.

Mrs B’s appeal

[9]                  Mrs B, in her notice of appeal, challenges that part of the Judge’s conclusion which is in italics in the immediately preceding paragraph.

[10]              Mrs B says that the Judge’s conclusion in regard to her subsequent conduct derived from a number of paragraphs in the judgment. She points to the following:

(a)Judge Druce observed that it was clear that both parties, jointly and separately, wanted the family home to be in Mrs B’s name in order to provide a stable home for the parties’ children;3

(b)The Judge found that Mrs B sold the family home in November 2015, after the relationship had come to an end, and moved to Northland. While there, she bought and sold two houses and then, after being served with Mr A’s proceedings in February 2008, invested $400,000 of the proceeds of the sales into her current home. This home was purchased for $660,000. Mrs B had remarried and the home was registered in her husband’s name;4

(c)Mrs B had provided no evidence that her contribution to the purchase was protected as her separate property; and

2 At [105].

3      At [14], [75] and [76].

4 At [17].

(d)Judge Druce considered that Mrs B’s failure to protect her contribution as her separate property breached the parties’ expressed intention as set out in cl 4 of the s 21A agreement.5 He considered that that agreement had the purpose of providing stable housing for the children and protecting the family property for the benefit of the children. The Judge considered that that purpose was at risk given Mrs B’s “current unprotected investment in the family home”.6

[11]              It was common ground that neither Mr A nor Mrs B raised the issue of Mrs B’s subsequent conduct in the Family Court, and that neither put any documents relevant to the issue before the Court. The only evidence given in relation to the issue came from answers Mrs B gave when she was questioned by Judge Druce. She explained that she had sold the family home and then bought and sold properties in Northland. When asked what had happened to the money, she said “I got married. So we put everything together”, and that she had invested the money in a home. When asked whether she and her husband bought it together, she replied that her husband had bought it under his name. When asked how much money she had put into the house, she said “Everything from the house. Around – … all my money it was about

$400,000. Minus expenses”. When asked why her name was not on the title, she said she and her husband needed a mortgage and that she had told her husband, “… I’m sorry, I don’t, mortgage, …” Her husband did not consider that this was a problem and he gave the mortgage in his own name.

[12]              Notwithstanding this evidence, Mrs B says that the Judge’s conclusion that her subsequent conduct has been inconsistent with the core purpose of the agreement was wrong.

Mr A’s cross-appeal

[13]              As part of his challenge to the s 21A agreement, Mr A alleged that Mrs B masterminded a “scam” in order to obtain his agreement to the terms of the s 21A agreement. He said that she represented to him that:

5      At [55], [74], [85], [86], [97] and [98].

6      At [101]-[102].

(a)she would support him in finding a Russian bride who he would marry so that the bride could obtain New Zealand residence in exchange for a significant financial payment;

(b)she would later reconcile with him and not enforce the s 21A agreement;

(c)that the agreement was a necessary part of the plan as it protected their family property from any claims that the Russian bride might make when they separated.

[14]              In response to these allegations, Mrs B produced a translation of an email she said Mr A sent her on 18 January 2012. The original email was not produced. Nor was the translation supported by a sworn affidavit. Nevertheless, the translation was accepted in evidence by Judge Druce, without objection by counsel for Mr A. The translation read as follows:

YOU ARE NO LONGER A WIFE TO ME

I’ll get straight to the point. YOU ARE NO LONGER A WIFE TO ME. Will you get it through your thick head? If you are thinking that I will get back together with you, stop hoping. ...

But I don’t want [our son] to think of me as a scumbag, so here are my terms: I will play the role of your husband in public and will be helping you until you sort out your immigration. In return I want to have an OPEN RELATIONSHIP. It means that I can do whatever I want, sleep wherever, and with whoever I want, and you don’t ask me your stupid questions where I’ve been and what I’ve been doing. I am not asking for your consent. These are my terms and you have no other choice but to accept them. Otherwise I will take [our son] back to [an overseas city] so let’s meet and discuss it.

[15]              Judge Druce considered that while this was “strong and uncompromising evidence of Mr A repudiating his commitment to the marriage”,7 matters were not as straightforward as they might seem. On balance, he was not persuaded that the email, along with other difficulties the parties were going through at the time, established that the parties had stopped living together in 2012 as alleged by Mrs B.

7 At [45].

[16]              The Judge recorded Mr A’s allegations regarding the alleged immigration scam. He noted that they were denied by Mrs B, and observed that there was no evidence from either party that steps were taken to action the plan. He did not consider that Mr A’s evidence in relation to the scam was credible.8 The Judge considered that there was no reasonably arguable factual basis for Mr A’s allegation of duress and that there was no scam. He considered that while both parties’ credibility had been found wanting, it would be unsafe to rely on Mr A’s assertions of fact without corroborating evidence.9

[17]              On appeal, Mr A seeks to put in issue Mrs B’s credibility. He asserts that the email is not authentic and that it was falsified by Mrs B in an attempt to discredit him. He says that if the email is proved to be false, her credibility will be exposed and that this could have some bearing on the outcome.

The Further Evidence Application

Mrs B’s further evidence

[18]              Mrs B seeks to file a relatively short affidavit, annexing four documents, and giving brief information about her and Mr A’s son (and her son from a previous relationship). The documents are as follows:

(a)A relationship property agreement she and her new husband entered into on 27 August 2018. Relevantly, it records that Mrs B assisted her husband in the purchase of their current property by advancing

$373,240.08 to him. It records that the property purchased is relationship property despite the fact that it is in the husband’s sole name, that Mrs B is entitled to register a notice of claim over the property, and that the loan made by Mrs B enable the husband to buy the property is a relationship debt. The husband acknowledges Mrs B’s contribution to the property and that the parties are to share equally in its value.

8 At [79].

9 At [104].

(b)A copy of Mrs B’s husband’s will, in which he gives a life interest in his share in any property owned by him and Mrs B which is used by them as a relationship home to Mrs B on his death.

(c)A copy of Mrs B’s will, in which she makes the same provision for her husband.

(d)Various emails which have passed between Mr A’s and Mrs B’s son and an academy he wishes to join and which confirm, in part, Mrs B’s evidence relating to the assistance she has given the son.

[19]              Mrs B seeks to produce the affidavit and the exhibits, to show that she did take steps to protect the property the subject of the s 21A agreement with Mr A.

Mr A’s further evidence

[20]              Mr A has filed an affidavit in reply referring to the relationship property agreement Mrs B seeks to put before the Court on appeal. He annexes title searches of two properties purchased by Mrs B and her husband. He claims that Mrs B’s husband no longer owns one of the properties. He also annexes a valuation of the remaining property, and suggests that the relationship property agreement between Mrs B and her husband does not protect the total value of Mrs B’s advance.

[21]              As noted, if Mrs B is allowed to adduce her further evidence, receipt by the Court of Mr A’s affidavit in reply is not opposed.

Relevant law

[22]              Section 39B(3)(b) of the Act provides that this Court, on hearing any appeal, may, if it thinks that the interests of justice so require, rehear the whole or any part of the evidence or receive further evidence.

[23]              Rule 20.16 provides that a party to an appeal may adduce further evidence only with the leave of the Court. The court can grant leave only if there are special reasons for hearing the evidence.

[24]              The Court of Appeal has held that there is no practical difference between the provisions of s 39B(3)(b) of the Act and r 20.16,10 where, as here, the evidence is not fresh.

[25]              The relevant principles governing the receipt of further evidence are straightforward:11

(a)the Court can receive further evidence if it thinks that the interests of justice require it to do so;

(b)it is wrong to allow an appellant to bolster his or her case with additional evidence that was available at the lower Court hearing, but not adduced because of the particular view of the case being taken at the time;

(c)admitting further evidence on appeal is exceptional rather than routine. A change of heart about how a case should have been run will not suffice. The prospect of further evidence triggering a substantial re- litigation before the appellate Court of the substantive case will count against admitting the further evidence;

(d)generally, the further evidence must be fresh, credible and cogent;

(e)evidence will not be regarded as fresh if it could, with reasonable diligence, have been produced at the trial;

(f)the absence of freshness is not an absolute disqualification. When the further evidence is not fresh, it will not generally be admitted unless the circumstances are exceptional and the grounds compelling. In addition, the further evidence needs to pass the tests of credibility and cogency;

10 Hodgson v Hodgson [2015] NZCA 404 at [45], [2015] NZFLR 979.

11 At [39]-[44]; And see Nation v Nation [2005] 3 NZLR 46 (CA); Telecom Corp of NZ Ltd v Commerce Commission [1991] 2 NZLR 557 (CA); Comalco NZ Ltd v TVNZ Ltd (1996) 10 PRNZ 573; Complaints Committee No 1 of the Auckland District Law Society v P (2007) 18 PRNZ 760.

(g)the interests of justice require the parties to put their best case forward at trial, in order to avoid wasting the Court’s limited time and resources. A high value is placed on finality when the parties have been afforded the opportunity and failed to take it; and

(h)the standard to be met is “rightly high”.

Analysis

[26]              Here, it is common ground that the evidence which Mrs B seeks to adduce is not fresh. It was available at the time of the hearing in the Family Court. Nevertheless, it is submitted that the further evidence is credible and cogent and that it is material to the resolution of the appeal. It is said that the circumstances are exceptional.

[27]              I accept that the evidence is credible. It consists of a deed, two wills and some relatively short factual assertions, which are partially backed up by contemporaneous emails. Mr A has not challenged the credibility of the evidence. Insofar as I can glean, there was no proper basis on which he could do so.

[28]              Further, the evidence is both cogent and material. It could have an influence on the outcome of the appeal. The relationship property agreement which Mrs B has entered into with her new husband, and Mrs B’s and her husband’s respective wills, directly contradict Judge Druce’s factual findings, which underpinned, in part, his decision to set aside the s 21A agreement between Mr A and Mrs B.

[29]              The circumstances are also exceptional. Mr A, in the Family Court, did not put in issue Mrs B’s subsequent conduct. Mrs B gave no evidence in relation to it. The issue was not raised by counsel for Mr A in his cross-examination of Mrs B. Rather it was raised by the Judge. Mrs B had no prior knowledge that the issue was to be raised. There was no reason for her to have put the documents before the Court. She would not have been aware of the purpose behind the Judge’s questions. Further, the Judge did not complete the questioning. He did not ask Mrs B whether she had taken steps to protect her contribution to the home she and the new husband have purchased. Rather, Judge Druce has drawn an inference from the answers that Mrs B gave. In my judgment, the interests of justice require that Mrs B be given the

opportunity to rebut that inference by adducing evidence directly relevant to the assumption made.

[30]              I am also satisfied that the admission of the further evidence is unlikely to require cross-examination. The meaning and intent of the documents Mrs B seeks to put in evidence are plain, and the affidavit evidence concerning factual matters involving Mr and Mrs B’s son is unchallenged by Mr A, both in his notice of opposition and in his affidavit in reply.

[31]              Accordingly, in my judgment, the interests of justice require that Mrs B’s further evidence should be admitted for the purposes of the appeal and I so order.

[32]              It also follows that Mr A’s affidavit in reply dated 10 March 2020 should also be admitted, and again, I so order.

Mr A’s application under Rule 9.34

The rule

[33]Relevantly, r 9.34 provides as follows:

9.34 Order for inspection, etc

(1)The court may, for the purpose of enabling the proper determination of any matter in question in a proceeding, make orders, on terms, for—

(a)the inspection of any property:

…

(3) In this rule, property includes any land and any document or other chattel, whether in the control of a party or not.

[34]              The rule has been used to permit expert inspection of email addresses and computer systems used by parties to proceedings.12

12     See A C Beck and Others McGechan on Procedure (online loose-leaf ed., Thomson Reuters) at HR 9.34.05.

[35]              Orders can only be made where they are necessary to enable proper determination on any question in a proceeding. Once that jurisdictional threshold is reached, the Court’s power to make such an order is discretionary.13

Submissions

[36]              Mr Hayes, acting for Mr A, acknowledged that his client could have made an application for inspection when the proceeding was before the Family Court. He advised (from the bar) that his client did not do so, because the original version of the email (the untranslated version) was only made available at a final judicial conference, and because at that point the Judge had already made a direction that no further evidence was to be filed. He stated that he, as counsel for Mr A “decided to rely on arguing a negative inference at the hearing because the email password and user name was not supplied to him by Mrs B”. At the hearing before me, it was acknowledged that that may have been an error of judgment. It was argued that Mr A should not be prejudiced by any error. Mr Hayes also argued that the email has had an influence on the outcome of the appeal, and that if the email is proved not to be authentic, this would provide further corroborative evidence for Mr A on the issue of whether or not Mrs B was the mastermind behind the immigration scam, and held that over him to get him to enter into the s 21A agreement.

[37]              Mr Snedden, for Mrs B, submitted that the factual findings which Mr A seeks to challenge were not relied on by Judge Druce in reaching his conclusion, and that an order for inspection is not necessary to enable the proper determination of any matter in question on the appeal. He also argued that it is not open to Mr A to seek to challenge Judge Druce’s reasoning, and the factual findings supporting that reasoning, because the decision was in Mr A’s favour.

Analysis

[38]              It is open to Mr A to seek to support the Family Court’s judgment by relying on any relevant ground, including a ground upon which the Family Court found against him. Here, however, Mr A does not seek to do that. Nor does he seek to amend

13     Trott v Barnett [2017] NZHC 478 at [20-[21]; McKay v Johnson [2016] NZHC 466.

or vary the Family Court’s decision. Rather, he seeks to upset a factual finding made by the Judge, even though the decision is in his favour.

[39]              I do not consider that it is open to him to do so.  The right of appeal which  Mr A is seeking to invoke is contained in s 39 of the Act. It provides that a party to proceedings in which there is “a decision” to, inter alia, make or refuse an order, or otherwise finally determine proceedings, may appeal to the High Court against “the decision”. Similarly, under r 20.11 (which applies pursuant to s 39(3)), a respondent wishing to contend at the hearing of an appeal that the decision appealed against should be varied, must file and serve a notice of cross-appeal. The right of appeal, and the ability to cross-appeal, are against the decision, not the Court’s reasoning leading to the decision.

[40]              This distinction has been recognised by the courts on a number of occasions. The position was summarised by the Supreme Court in Arbuthnot v Chief Executive of the Department of Work and Income,14 where Blanchard J, for the Court, stated as follows:

It is fundamental that an appeal must be against the result to which a decision- maker has come, namely the order or declaration made or other relief given, not directly against the conclusions reached by the decision-maker which led to that result, although of course any flaws in those conclusions may provide the means of impeaching the result. A litigant cannot therefore, save perhaps in very exceptional circumstances, bring an appeal when they have been entirely successful and do not wish to alter the result. The successful litigant cannot seek to have the appeal body overturn unfavourable factual or legal conclusions made on the journey to that result which have had no significant impact on where the decision-maker ultimately arrived. In short, there is no right of appeal against the reasons for a judgment, only against the judgment itself.

Here, Mr A was entirely successful in obtaining an order setting aside the s 21A agreement. He does not wish to alter that result. The matters he seeks to dispute had no significant impact on the decision arrived at by Judge Druce. It is not open to Mr A to challenge, by way of cross-appeal, the factual findings made by Judge Druce as part of his reasoning leading to the ultimate conclusion in Mr A’s favour.

14 Arbuthnot v Chief Executive of the Department of Work and Income, [2007] NZSC 55, [2008] 1 NZLR 13 at [25]. See also Johnson v Felton [2006] NZFLR 49 (CA) at [49-[63] and Caie v Attorney General [2006] NZAR 379 (CA) at [6].

[41]              Further, and in the event that I am wrong in this regard, I do not consider that the threshold required by r 9.34 is met—an order for an inspection is not necessary for the purpose of enabling a proper determination of the matters in question in the proceeding by the Court on appeal. Judge Druce found that neither party took any steps to implement the suggested immigration scam. Mr A does not seek to challenge this finding, and it is difficult to see how Mrs B could have used what were at best, on Mr A’s argument, discussions about a proposed immigration scam to force Mr A into the s 21A agreement. Moreover, the 18 January 2012 email, while produced by Mrs B to rebut the assertion that she was involved in an immigration scam, was in the event relevant only to the date of separation.  That is not a material issue for the appeal.  Mr A wishes to inspect the email so that he can impugn Mrs B’s credibility if it is found to be a fabrication. Judge Druce however observed that “… both parties’ credibility … has been found to be wanting …”15. Whether or not Mrs B falsified the email cannot add to or detract from that observation. Mrs B’s credibility is already impugned and ordering inspection to try and bolster the finding already made by the Judge could not assist in determining the matter in issue—whether the Judge was right to set aside the s 21A agreement. Accordingly, I decline Mr A’s application for an order under r 9.34.

Result

[42]I order as follows:

(a)the Family Court’s decision is stayed, pending the hearing of the appeal;

(b)Mrs B is entitled to adduce further evidence, namely, her further affidavit dated 30 October 2019;

(c)Mr A is entitled to file further evidence, namely, his affidavit in reply dated 22 November 2019;

(d)Mr A’s application for an order under r 9.34 is declined.

15     A v B, above n 1, at [104].

Costs

[43]              Mrs B is the successful party and she is entitled to her reasonable costs and disbursements. It is my preliminary view that costs should be fixed on a 2B basis.

[44]I direct as follows:

(a)within 10 working days of the date of this judgment, Mrs B is to file a memorandum in support of any claim she may make to costs and disbursements;

(b)within a further 10 working days, Mr A is to file a memorandum in response;

(c)memoranda are not to exceed five pages.

I will then deal with the issue of costs and disbursements on the papers unless I require the assistance of counsel.

Wylie J