Batusova v Drew
[2024] NZHC 1580
•17 June 2024
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
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-002740
[2024] NZHC 1580
BETWEEN YULIYA BATUSOVA
Appellant
AND
MARTIN PHILIP DREW
Respondent
Hearing: 11 June 2024 Appearances:
Appellant in person
J A Browne for Respondent
Judgment:
17 June 2024
JUDGMENT OF VAN BOHEMEN J
This judgment was delivered by me on 17 June 2024 at 10:30 am pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………..
Solicitors:
Henderson Reeves, Whangārei Copy to: Yuliya Batusova
BATUSOVA v DREW [2024] NZHC 1580 [17 June 2024]
[1] The appellant, Yuliya Batusova, appeals directions made by Judge I A McHardy in the Family Court at North Shore on 31 October 2023 (the Directions) concerning orders made for the division of relationship property between Ms Batusova and her former husband, Martin Drew, the respondent, following a judgment issued by Judge McHardy on 3 July 20191 and a consent order made and sealed on 19 November 2019 (Sealed Order).
[2]The Directions, which were issued on the application of Mr Drew, concerned:
(a)whether an order for adjustments (Adjustments Order) in favour of Mr Drew directed in the Relationship Property Judgment was presently enforceable or was conditional on the sale of the former family home at 8b Oban Road, Browns Bay, Auckland (which is currently occupied by Ms Batusova);2 and
(b)whether interest applies to the Adjustments Order from the date of judgment, and if so, at what rate.
[3] The Judge directed that the Adjustments Order was not conditional on the sale of 8b Oban Road, and that interest accrued at five per cent per annum from the date of judgment.
Relevant background
[4] On 29 and 30 April 2019, Judge McHardy heard Mr Drew’s application for division of the relationship property between himself and Ms Batusova.
[5]On 3 July 2019, Judge McHardy issued the Relationship Property Judgment.
[6] As at the date of hearing, a caveat in favour of Mr Drew’s solicitors, Henderson Reeves, had been registered against the title to 8b Oban Road (the Henderson Reeves Caveat). On 24 June 2019, after the hearing but prior to the issue of the Relationship
1 Drew v Batusova [2019] NZFC 3722 [Relationship Property Judgment].
2 For the purposes of this judgment, “Adjustments Order” means the net amount to be paid by Ms Batusova to Mr Drew under the Relationship Property Agreement and the Sealed Order.
Property Judgment, Ms Batusova’s son, Evgeny Batusov, also known as John Batusov, also registered a caveat against the title to 8b Oban Road (the Batusov Caveat). Since there is no reference to the Batusov Caveat in the Relationship Property Judgment, it appears that Judge McHardy was unaware of that caveat.
Relationship Property Judgment
[7]In the Relationship Property Judgment, the Judge stated the following:
[103] As the result of various disputes between the parties, the Court is required to make a number of rulings. Counsel for [Mr Drew] is directed to provide to the Court a schedule which incorporates these various rulings so that a final order can be sealed.
[8]The Judge then made various rulings, which included that:3
(a)the value of 8b Oban Road was fixed at $1,050,000;
(b)Ms Batusova was to be given 21 days from the date of the Relationship Property Judgment to put an unconditional offer to purchase the house to Mr Drew;
(c)the purchase price of the agreement was to be calculated as follows:
(i)$525,000 — half the value of the family home as fixed above;
(ii)less $46,948.63 being half an outstanding mortgage to Westpac;
(iii)less an adjustment to be made in favour of Ms Batusova in terms of rulings that followed;
(iv)plus any adjustment directed in favour of Mr Drew in rulings that followed;
(v)settlement was to be in two weeks;
3 At [104].
(vi)Mr Drew was to arrange for the removal of the Henderson Reeves caveat to enable settlement;
(vii)if Ms Batusova did not present an unconditional offer within 21 days or settle on the settlement date, Mr Drew had the right to cancel the agreement and the matter would be remitted back to the Family Court for the immediate issue of an order for sale and vacant possession; and
(viii)the net proceeds were to be divided between the parties, subject to any adjustments that needed to be made.
[9] The Judge then made the Adjustments Order, ruling on items of property and sums at issue between the parties and ruling on amounts owed by Ms Batusova to Mr Drew,4 and by Mr Drew to Mr Batusova.5
[10]In the concluding section of the judgment, Judge McHardy stated:
[122] The outcome of these proceedings will no doubt come as some surprise to [Ms Batusova]. However the various claims that she has placed before the Court have been premised on her belief that there was a joint venture agreement in place which included her son. …
[123] [Mr Drew] accepts that John Batusova [sic] did lend him and [Ms Batusova] US$23,000. There is nothing in writing before the Court which supports the contention that there was a joint venture agreement. Irrespective of this John Batusova is entitled to repayment of US$23,000 plus interest. One would expect that there could be an agreed position in respect of repayment to him of this money. However neither he nor [Ms Batusova] could expect resolution of that issue in these proceedings. If there is no resolution then he has his remedies available to him. The same applies to any argument John Batusova might consider he has as to the existence of a joint venture. …
[124] I have made a direction that counsel for [Mr Drew] is to provide a draft order which takes into account the rulings that I have now made. That will enable there to be an equal division of relationship property subject to the allowable adjustments that need to be made in terms of the law in which I have now ruled on. Leave is granted to either party on 48 hours notice to seek further directions of any rulings that I have made that need to be clarified to enable the adjustment figure to be fixed.
4 At [105]–[121].
5 At [117]–[118].
The Sealed Order
[11] Mr Drew’s solicitors prepared draft orders as directed in the Relationship Property Judgment and, on 19 November 2019, the Sealed Order was made and sealed.
[12]Relevant terms of the Sealed Order provided:
(a)There was to be an equal division of relationship property.
(b)In respect of 8b Oban Road:
(i)Ms Batusova was either to buy out Mr Drew’s share or it was to be sold;
(ii)If sold, the net sale proceeds were to divided between the parties, “subject to the adjustments that are to be made as set out below”;
(iii)If Ms Batusova bought out Mr Drew’s share, the purchase price on settlement date was to be $478,051.37 ($525,000 less half the mortgage of $46,948.63);
(iv)Ms Batusova had 21 days from the date of the order to make an unconditional offer;
(v)any consequential agreement was to provide for settlement within two weeks;
(vi)Mr Drew was to arrange for the removal of the Henderson Reeves Caveat; and
(vii)If Ms Batusova did not present an unconditional offer within 21 days or failed to settle on the settlement date, Mr Drew had the right to remit the matter back to the Family Court for the immediate issue of an order for sale and vacant possession.
(c)If Ms Batusova elected to purchase 8b Oban Road, the net payment to be made to Mr Drew was to be $604,311.21 ($478,051.37 plus net adjustments in Mr Drew’s favour of $152,367.87 minus net adjustments in Ms Batusova’s favour of $26,108.03).
(d)If Ms Batusova elected not to purchase 8b Oban Road, she was to pay to Mr Drew one half of the net proceeds of sale plus the net adjustments in favour Mr Drew.
(e)Schedule A set out adjustments of $152,367.87 in favour of Mr Drew. The items and amounts listed were in accordance with rulings made in the Relationship Property Judgment.
(f)Schedule B set out adjustments of $26,108.03 in favour of Ms Batusova. The items and amounts listed were also in accordance with rulings made in the Relationship Property Judgment.
The Caveat Judgment
[13] In the event, Ms Batusova did not make an offer to purchase 8b Oban Road within the time period specified in the Relationship Property Judgment and the Sealed Order. Mr Drew then attempted to proceed with a sale of the property as contemplated in both instruments. He was unable to do so, however, because of the Batusov Caveat, which he sought to remove.
[14] In December 2019, Mr Batusov commenced proceedings against Ms Batusova and Mr Drew to enforce a joint venture he said existed among the three parties and applied for orders that the Batusov Caveat not lapse.
[15] I heard the latter application on 19 May 2020 and issued my judgment on 9 June 2020.6 As noted in the Caveat Judgment, Mr Drew opposed Mr Batusov’s application, but Ms Batusova did not.7
6 Batusov v Batusova [2020] NZHC 1272 [Caveat Judgment].
7 At [2].
[16] In the Caveat Judgment, I said that various considerations identified in that judgment suggested that Mr Batusov would struggle to prove that he had acquired a one-third proprietary interest in 8b Oban Road.8 However, I could not conclude that it was patently clear that there was no ground for Mr Batusov to lodge the Batusov Caveat.9 I accepted that it was arguable that Mr Batusov has an interest in 8b Oban Road on the basis of a constructive trust that was capable of sustaining a caveat.10
[17] I also accepted that grounds put forward by Mr Drew’s counsel supported the exercise of the Court’s discretion to remove the caveat,11 and that it would be consistent with the interests of justice to order the removal of the caveat to allow Mr Drew to get on with re-establishing his life, provided Mr Batusov’s interests could be adequately protected.12 However, for reasons set out in the Caveat Judgment, I could not be completely satisfied that the legitimate interests of Mr Batusov would not be prejudiced by removing the caveat and directing that one-third of the proceeds of sale of 8b Oban Road be set aside to satisfy Mr Batusov’s claim if he succeeded in his substantive application.13 Accordingly, I ordered that the Batusov Caveat not lapse.14
[18] As I learned at the hearing of the current appeal, Mr Batusov’s substantive proceeding to determine his claim of a constructive trust in 8b Oban Road is set down for hearing on 8 to 12 July 2024.
Subsequent developments
[19] It appears that, since the Caveat Judgment, little progress has been made to give effect to the Relationship Property Judgment and the Sealed Order.
[20] In early 2023, Mr Drew applied for a financial assessment hearing in respect of the Adjustments Order and a subsequent order made by Judge McHardy that Ms Batusova pay Mr Drew’s costs in the substantive proceeding (the Costs Order).
8 At [55].
9 At [56].
10 At [59].
11 At [66].
12 At [67].
13 At [71].
14 At [72].
According to Mr Browne, counsel for the Mr Drew, the purpose of the application was to determine the extent of Ms Batusova’s assets.
[21] The application was returned by the Registrar on the basis that any payment of adjustments was conditional on the sale of 8b Oban Road or its transfer to Ms Batusova, neither of which had happened. The Registrar advised that, because the Sealed Order had not been complied with, the parties would need to go back to the Family Court to seek an amended order.
[22] After further discussions with the Registrar, a financial assessment hearing was held in December 2023 in relation to the Costs Order. Following that hearing, arrangements were put in place for Ms Batusova to pay off the Costs Order by instalments.
The Directions
[23] By memorandum dated 19 October 2023, counsel for Mr Drew sought directions as to whether:
(a)the Adjustments Order was presently enforceable or was conditional on the sale of 8b Oban Road; and
(b)whether interest applied to the Adjustments Order from the date of the Relationship Property Judgment, and if so, at what rate.
[24]On 20 October 2023, Ms Batusova filed a memorandum in opposition.
[25]On 31 October 2023, Judge McHardy issued the Directions as follows:
Directions
The adjustments order was not conditional on the sale of the home at 8 Oban Road. Interest applies to the adjustments order at a rate of 5% from 3 July 2019 to the date of payment in full.
Ms Batusova’s appeal
[26]On 16 November 2023, Ms Batusova appealed the Directions.
[27] While Ms Batusova’s grounds of appeal covered various matters extraneous to the Directions, the grounds included that Judge McHardy had erred in the following respects:
(a)The Relationship Property Judgment and the Sealed Order provided that the adjustments were only payable if 8b Oban Road was sold.
(b)While the Relationship Property Judgment contemplated 8b Oban Road being sold quite soon after the judgment had been issued, that had not been possible because of the Batusov Caveat.
(c)The Batusov Caveat had been sustained by the High Court and the hearing of the substantive claim was not until July 2024.
(d)There was no ruling about interest in the Relationship Property Judgment and interest was not a matter on which clarification could be sought under para [124] of the judgment.
Submissions of the parties
[28] In her written submissions, Ms Batusova raises a number of matters that have arisen since the Relationship Property Judgment and which, in her view, warrant reconsideration of aspects of the judgment. However, in line with guidance provided by Lang J in a pre-hearing minute,15 Ms Batusova accepts that those matters are beyond the scope of her current appeal. Nonetheless, Ms Batusova has indicated that she intends to raise those matters in an appeal of the Relationship Property Judgment, likely to be filed imminently.
[29] On the merits of the appeal, Ms Batusova submits that it is clear from the Relationship Property Judgment and the Sealed Order that the intention was that any adjustments would be paid at the time 8b Oban Road was sold. She submits that those arrangements could not be changed without further order of the Court. Ms Batusova
15 Batusova v Drew HC Auckland CIV-2023-404-002740, 29 April 2024 (Minute of Lang J) at [5].
also submits that interest was not provided for in either the Relationship Property Judgment or the Sealed Order.
[30] Mr Browne submits that there is no appealable decision. Mr Browne argues that the Directions simply confirmed the legal position in relation to the Adjustments Order and did not affect the rights and liabilities of the parties. Mr Browne further submits that, even if the Directions are appealable, they are correct.
[31] Mr Browne also says the appeal lacks practical utility. He notes that Mr Drew has not attempted to enforce the Adjustments Order and that, were he to try to do so, it is unlikely Mr Drew would obtain an order adjudicating Ms Batusova bankrupt for failing to pay the Adjustments Order.
[32] Mr Browne submits that the appeal should be dismissed, and costs ordered against Ms Batusova.
Analysis
Are the Directions appealable?
[33]Section 39 of the Property (Relationships) Act 1976 (PRA) provides:
(1)This subsection applies to a decision of the Family Court or the District Court, in proceedings under this Act, to—
(a)make or refuse to make an order; or
(b)dismiss the proceedings; or
(c)otherwise finally determine the proceedings.
(2)A party to proceedings in which there is made a decision to which subsection (1) applies, or any other person prejudicially affected by the decision, may appeal to the High Court against the decision.
…
[34] As Mr Browne notes, there has been some difference of judicial opinion on whether this provision confers a right of appeal in relation to interlocutory orders.16 However, the more recent authority, with which I concur, is that s 39 confers a right
16 See E & HH Ltd v E [2005] NZFLR 806 (HC); compared with Smith v Jones [2023] NZHC 3277.
of appeal in relation to interlocutory orders, provided the appellant meets the requirements of s 39(2). Moreover, the Directions were made in relation to a substantive judgment of the Family Court.
[35] I do not accept Mr Browne’s submission that the Directions did not affect the rights and liabilities of the parties. On Ms Batusova’s interpretation of the Relationship Property Judgment and the Sealed Order, Mr Drew’s ability to enforce payment of the Adjustments Order is contingent on the sale of 8b Oban Road.17 Under the Directions, as made by Judge McHardy, the Adjustments Order is immediately enforceable, regardless of any sale of 8b Oban Road, and regardless of whether or not Mr Drew intends to take enforcement action. Clearly, therefore, Ms Batusova is prejudicially affected by the Directions.
[36] I am satisfied, therefore, that the Directions are appealable as far as they relate to the question of whether enforcement of the Adjustments Order is contingent on the sale of 8b Oban Road.
[37] However, as far as the payment of interest is concerned, I agree with Mr Browne that, because Mr Drew’s application for a division of relationship property was commenced in 2017, Ms Batusova is obliged to pay interest at the rate of five per cent per annum on the net amount owed to Mr Drew under the Sealed Order from the date of the Relationship Property Judgment to the date of payment.18 Because that obligation arises as a matter of law and not by virtue of the Directions, that part of the Directions is not appealable. However, the obligation to pay interest is dependent on when Ms Batusova is obliged to pay the amount due under the Adjustments Order, as discussed below.
17 Because Ms Batusova did not exercise her right to purchase Mr Drew’s interest in 3b Oban Road within the timeframe provided in the Relationship Property Judgement and the Sealed Order, I exclude the purchase option from this analysis.
18 This obligation arises by the operation of:
(a)sch 1 to the Interest on Money Claims Act 2016;
(b)s 65A of the District Courts Act 1947 (now repealed);
(c)s 62B of the District Courts Act 1947; and
(d)cl 3 of the District Courts (Prescribed Rate of Interest) Order 2011.
Are the Directions correct?
[38] I agree with Mr Browne that, in the Relationship Property Judgment, Judge McHardy ordered the division of the relationship property between Mr Drew and Ms Batusova and intended for those orders to be given effect within a confined timeframe, consistent with the principle that there should be a clean break between contending former partners, who should be able to get on with their lives. Those orders included the Adjustments Order, which comprised the net amount for which Ms Batusova had to account to Mr Drew once a deduction had been made for the amount for which Mr Drew had to account to Ms Batusova.
[39] However, the mechanism for achieving the division of relationship property, as set out in principle in the Relationship Property Judgment, and as provided for in practice in the Sealed Orders, was a “settling up” in the context of a sale of 8b Oban Road to a third party (once the time period for Ms Batusova to exercise her right to purchase Mr Drew’s interest in the property had expired). While Ms Batusova’s liability to pay the Adjustments Order amount arose from the date of the Relationship Property Judgment, her obligation to do so was contingent on such a sale, absent a variation of the Sealed Orders. To date, no variation has been applied for.
[40] For the moment, therefore, and absent a variation of the Sealed Orders, Ms Batusova’s obligation to the Adjustments Order remains conditional on the sale of 8b Oban Road. For these reasons, I consider that Judge Hardy was in error in directing that the Adjustments Order is not conditional on the sale of 8b Oban Road.
Result
[41] I allow Ms Batusova’s appeal as it relates to Judge McHardy’s direction that the Adjustments Order was not conditional on the sale of 8b Oban Road and set aside that aspect of the Directions.
[42] For the avoidance of doubt, however, I reiterate that interest at five per cent per annum accrues on the sum payable under the Adjustments Order from the date of the Relationship Property Judgment to the date of payment.
Costs
[43] Ms Batusova has been substantially successful in her appeal. Because Ms Batusova is self-represented, no issue as to costs arises.19
G J van Bohemen J
19 See Chen v Chen [2019] NZCA 136 at [12], referring to McGuire v Secretary for Justice [2018] NZSC 116, (2018) 24 PRNZ 350 at [55] and [88].
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