Blake v Blake
[2021] NZHC 3575
•21 December 2021
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE
CIV-2020-463-18
[2021] NZHC 3575
BETWEEN BARTLEY BLAKE
Appellant
AND
MAYSIE BLAKE
First Respondent
HMR LIMITED
Second Respondent
Hearing: On the papers Counsel:
J Billington QC and K Lellman for Appellant
D Chambers QC and E Armstrong for First Respondent
Judgment:
21 December 2021
ANONYMISED JUDGMENT OF WHATA J
Re final quantification
This judgment was delivered by me on 21 December at 5.00 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date: ………………………….
Solicitors: Tompkins Wake, Tauranga
LeeSalmonLong, Auckland
BLAKE v BLAKE [2021] NZHC 3575 [21 December 2021]
Introduction
[1]I have issued three judgments in this matter:
(a)an interim judgment allowing, in part, Mr and Mrs Blake's respective appeals against the decision of the Family Court, leaving open, among other things, the issue of economic disparity;1
(b)a final judgment addressing economic disparity, with quantification of my orders following conferral between the parties as to that quantum;2 and
(c)a judgment granting Mr Blake's application for leave to appeal on specified issues.3
[2] This judgment records the final quantification of my orders and addresses Mrs Blake's application of leave in respect of the economic disparity judgment as well as anonymisation of the judgments.
Final quantification of orders
[3] In my final judgment assessing economic disparity in these proceedings, following my interim judgment of 12 April 2021, I made the following orders (as relevant):4
[57] I set aside the Family Court's economic disparity order and replace it with an order payable to Mrs Blake by Mr Blake calculated on the basis of an adjusted per annum income figure (post-tax) for Mr Blake of $400,000, in a sum to be finally quantified on the basis in [62] below.5
[58] I decline to make an order for interest in respect of the sums owing to Mrs Blake in the period between the hearing in the Family Court (29 April 2019) and the date of the Family Court's judgment (16 January 2020).
[59]I make orders for:
1 [Blake] v [Blake] [2021] NZHC 756 [Interim judgment].
2 [Blake] v [Blake] [2021] NZHC 2590 [Final (economic disparity) judgment].
3 [Blake] v [Blake] [2021] NZHC 25893 [Leave judgment].
4 I note the date of the Family Court judgment referred to at [58] is in error: it should read 15 January 2020. This is immaterial as the correct date is used below in my quantification.
5 For clarity, as noted above I make no order for interest on that sum.
(a)Interest at an agreed interest at a rate of 2.7 per cent per annum from the date of the valuation (31 March 2018) to the date of the Family Court hearing.
(b)Post-Family Court judgment interest at five per cent.6
(c)Post-judgment interest at five per cent for the period from 1 October 2021 until the date of final payment.
...
[4]Accordingly, as more information was needed, I also directed:
[62] In respect of the s 15 order and interest, the parties are to file a joint memorandum quantifying:
(a)the final disparity sum on the basis of an annual income figure, post-tax, for Mr Blake of $400,000. The adjustment is to be calculated by reference to Mr Graham's table at "Appendix 1" of his joint memorandum with Mr Davis dated 20 August 2021 (namely, applying his method and discounts otherwise); and
(b)interest payable.
[63] In addition, as indicated to counsel, the parties are to confirm the final cash sums payable as between the parties in their joint memorandum. I will then make final orders for payment of those sums accordingly.
[5] Counsel have since filed a joint memorandum (dated 19 November 2021) providing the agreed, final quantification of judgment sums and interest. I record those outcomes below and order accordingly.
Interest
[6] Following the order at [59](b) of my final judgment on economic disparity that post-Family Court judgment interest is fixed at five per cent, interest is to be applied to the Family Court quantum (excluding s 15 of the Property (Relationships) Act 1976 (PRA) from 17 January 2020 to 1 October 2021.
[7]Post-judgment interest on the Family Court judgment commenced on
17 January 2020.7
6 The parties did not dispute that post-judgment interest should be calculated at five per cent.
7 That is, the day after judgment issued: Legislation Act 2019, s 54, item 2.
[8] Post-judgment interest on the quantum of orders in the High Court judgment, including on s 15 of the PRA, commenced on 2 October 20218 at five per cent and will accrue until the date of final payment.9
[9]As also agreed by counsel:
(a)the interest calculation has been made to 31 October 2021 and the daily amount accruing is $1,634 per day; and
(b)post-judgment interest does not form part of the judgment sums.
Final quantification of judgment sums
[10]The final sums quantifying my orders in these proceedings to date are:
(a)Interest on the increase in value of HMR Limited from 31 March 2018 to the date of the Family Court hearing (29 April 2019): $1,577,232.
(b)Total cash judgment sum payable to Mrs Blake by Mr Blake, net post separation adjustments and trust partnership adjustment sums, as a result of my findings (including interest on the increase in value of HMR Limited): $51,929,647.10
Leave application
[11] In my final (economic disparity) judgment I made an order reducing the quantum of the Family Court order under s 15 of the PRA from a disparity sum calculated on the basis of an annual income figure for Mr Blake of $570,000 to
$400,000 (post-tax).11 A central feature of that judgment was the application of the
principle in Scott v Williams that income generated from relationship property is neutral in the economic disparity assessment. 12 In disagreement with the Family Court, I did not consider that the disparity assessment could be based on annual
8 Ibid.
9 At [59](c).
10 As recorded in my minute of 8 November 2021, at [2].
11 At [62].
12 Scott v Williams [2017] NZSC 185, [2018] 1 NZLR 507.
average drawings as this reflected income generated from relationship property. I was, however, prepared to include potential income derived from Mr Blake's personal earning capacity not otherwise accounted for in the relationship property division. This was derived from the "key person discount" applied by Family Court and this Court when valuing his primary income generating asset, SC Limited (held by HML, along with other active subsidiaries).
[12]Mrs Blake seeks leave to challenge my approach claiming in short that:13
... the High Court erred in assessing the quantum of Mrs [Blake's] claim under s 15 of the [PRA]. Specifically:
(i)The High Court erred in concluding that the earnings and value accretion of [HML] and its subsidiaries should be treated as neutral and not counted in the economic disparity assessment (at [20]).
(ii)The High Court erred in undertaking the disparity assessment by reference to the key person risk discount used formulate the share value for [SCL] (at [8]).
(iii)The High Court erred in giving consideration to the fact that [HML's] cash reserves are likely to be depleted through the property division (at [44]).
(iv)The High Court erred in upholding the Family Court's decision to cap the disparity assessment at the date that Mr [Blake] turned 60 years old (at [44]).
[13]Mr Blake abides the decision of the Court.
[14] As foreshadowed in my economic disparity judgment, as I granted Mr Blake leave to appeal on certain questions,14 I consider granting Mrs Blake leave to appeal my economic disparity judgment is appropriate for the simple reason that the disparity judgment proceeds on the basis that there is an even distribution of relationship property.
[15] As to the proposed appeal questions, I sought clarification as to the bases for the second and fourth errors of principle given that they are open-ended. Counsel subsequently clarified Mrs Blake's proposed appeal is advanced on the bases that:
13 Application for leave to appeal dated 1 November 2021, at [2](b).
14 Leave judgment, above n 3.
(a)The key person risk discount does not capture the full disparity in income and living standards between the parties;
(b)assessing the disparity in light of the key person risk discount is inconsistent with s 1N(d) of the PRA that questions under the Act should be resolved inexpensively, simply and speedily as is consistent with justice;
(c)the decision to cap is plainly wrong because Mr Blake is now aged 61 and running [HML's] subsidiaries; and
(d)the decision to cap the disparity assessment at the date Mr Blake turned 60 is based on consideration (his health) that is irrelevant because the purpose of the s 15 award is compensatory.
[16] The complaint about prioritising efficacy of resolution, as encompassed in s 1N(d) of the PRA, is difficult to reconcile with the approach taken by the parties to the valuation of the relationship property and economic disparity. Nevertheless, I am satisfied that the following questions, modified to reflect the clarification, satisfy the requirements of a second appeal:
(a)whether the High Court erred in concluding that the earnings and value accretion of HML and its subsidiaries should be treated as neutral and not counted in the economic disparity assessment;
(b)whether the key person discount captures the full disparity in income and living standards between the parties;
(c)whether approaching the s 15 disparity assessment on the basis of the key person discount is inconsistent with s1N(d) of the PRA;
(d)whether the High Court erred in considering that HML's cash reserves are likely to be depleted through the property division;
(e)whether the decision to cap the disparity assessment at Mr Blake's age 60 was plainly wrong; and
(f)whether Mr Blake's ill-health and life expectancy are irrelevant to the economic disparity assessment.
[17] As Mrs Blake's application for leave was not challenged, I make no award for costs in respect of it.
Anonymisation
[18] The parties agree that the judgment should be anonymised. Counsel have helpfully assisted in the anonymisation process, identifying relevant names to replace identifying particulars of the parties. I simply record that I have adopted their suggestions as to anonymisation. I note, for completeness, that I consider anonymisation to be appropriate in this case given that the parties continue to reside in a relatively small community, intensely personal matters are discussed (including Mr Blake’s health) and that publication of their names would cause them undue hardship.
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