Bradford v Te Hei
[2021] NZHC 3485
•16 December 2021
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE
CIV-2019-412-000126
[2021] NZHC 3485
UNDER the Property (Relationships) Act 1976 IN THE MATTER OF
an application under s 25(3) for division of property
BETWEEN
JONATHAN LEE BRADFORD
Applicant
AND
REANA GAYE TE HEI
Respondent
Hearing: 16 August 2021 Appearances:
D J More for the Applicant
L A Andersen QC and J W Clearwater for the Respondent
Judgment:
16 December 2021
JUDGMENT OF NATION J
Introduction
[1] Ms Te Hei and Mr Bradford began a relationship in May 2015. They separated on 29 July 2017. They agree it was a relationship of short duration for the purposes of the Property (Relationships) Act 1976 (PRA).
[2] During their relationship, they jointly purchased a property at Andersons Bay in Dunedin (the home). On separation, the relationship property of the parties consisted of the home, family chattels, Mr Bradford’s motor vehicle and bank accounts. Agreement has been reached over the division of family chattels and a joint bank account. At issue in these proceedings now is their entitlements as to the home.
BRADFORD v TE HEI [2021] NZHC 3485 [16 December 2021]
[3] The home was purchased early in their relationship for $330,000. Mr Bradford has been living in the home since the separation. It was valued in November 2017 at
$395,000, and in December 2020 at $600,000.
[4] Mr Bradford submits that, in the particular circumstances of this relationship, relationship property, namely the home, should be apportioned consistent with their financial contributions to the equity of the home. He analyses their contributions as being approximately 80 per cent from him and 20 per cent from Ms Te Hei. He also argues that the value of Ms Te Hei’s interest in the home should be valued as at separation rather than as at the hearing. He seeks the opportunity to purchase Ms Te Hei’s share of the home.
[5] Ms Te Hei says the financial contributions of the parties to the relationship could reasonably be assessed as 60/40 in favour of Mr Bradford but non-financial contributions to the relationship should be assessed as 60/40 in her favour. She says the parties’ contributions to the relationship should be assessed as 50/50 overall. She seeks an order that the home be sold but with Mr Bradford permitted to purchase and the net proceeds of sale to be divided in accordance with the Court’s determination as to contributions. She claims the value of her share should be based on the present value of the property. She also says Mr Bradford should account to her for a share of the net notional rental that could have been obtained from the property from the time the parties separated, after deduction of the mortgage payments, rates and insurance paid by Mr Bradford over the same period. She acknowledges that Mr Bradford paid a credit card debt of $5,150 after the separation. Ms Te Hei accepts she should account to Mr Bradford for her percentage share of the credit card debt.
Analysis
[6]Section 14A of the PRA states:
14A De facto relationships of short duration
(1) This section applies if a de facto relationship is a relationship of short duration (as defined in section 2E).
(2) If this section applies, an order cannot be made under this Act for the division of relationship property unless—
(a)the court is satisfied—
(i)that there is a child of the de facto relationship; or
(ii)that the applicant has made a substantial contribution to the de facto relationship; and
(b)the court is satisfied that failure to make the order would result in serious injustice.
(3) If this section applies, and the court is satisfied that the grounds specified in subsection (2) for making an order on an application under this Act are made out, the share of each de facto partner in the relationship property is to be determined in accordance with the contribution of each de facto partner to the de facto relationship.
(4) Nothing in this section prevents a court from making a declaration or an order under section 25(3), even though the de facto partners have lived in a de facto relationship for less than 3 years.
(5) This section is subject to sections 15 to 17A.
Section 18 of the PRA states:
18 Contributions of spouses or partners
(1) For the purposes of this Act, a contribution to the marriage, civil union, or de facto relationship means all or any of the following:
(a)the care of—
(i)any child of the marriage, civil union, or de facto relationship:
(ii)any aged or infirm relative or dependant of either spouse or partner:
(b)the management of the household and the performance of household duties:
(c)the provision of money, including the earning of income, for the purposes of the marriage, civil union, or de facto relationship:
(d)the acquisition or creation of relationship property, including the payment of money for those purposes:
(e)the payment of money to maintain or increase the value of—
(i)the relationship property or any part of that property; or
(ii)the separate property of the other spouse or partner or any part of that property:
(f)the performance of work or services in respect of—
(i)the relationship property or any part of that property; or
(ii)the separate property of the other spouse or partner or any part of that property:
(g)the forgoing of a higher standard of living than would otherwise have been available:
(h)the giving of assistance or support to the other spouse or partner (whether or not of a material kind), including the giving of assistance or support that—
(i)enables the other spouse or partner to acquire qualifications; or
(ii)aids the other spouse or partner in the carrying on of his or her occupation or business.
(2) There is no presumption that a contribution of a monetary nature (whether under subsection (1)(c) or otherwise) is of greater value than a contribution of a non-monetary nature.
[8] At the time the parties’ relationship began, Mr Bradford was employed in Whangārei as an engineer. He had two sons from a previous relationship who were living with their mother in Dunedin. Ms Te Hei had been employed with the Whangārei District Council as an information consultant for three years. She had a son aged 7 from a previous relationship.
[9] In his affidavit of 19 December 2018, Mr Bradford said the parties were in a de facto relationship from May 2015 when their relationship began. Somewhat contrary to this was information in other affidavits that suggested they did not start living together immediately and they would have only started living together in terms of the PRA when they moved to Dunedin. Ms Te Hei referred to her then giving up her rental at that time. They both referred to Mr Bradford, at times, staying overnight at her place in Whangārei. Mr Bradford said, at times, she stayed at his place. Mr Bradford referred to his loading up their respective chattels into a container and paying for them to be taken to Dunedin as if, in Whangārei, they had two different households. Mr Bradford referred to them maintaining separate bank accounts but sharing expenses, however this was after the move to Dunedin. He said he had initially decided to move to Dunedin but this had not been after any discussion with Ms Te Hei.
[10] The parties moved to Dunedin in November 2015 and lived in rental accommodation for a year. They purchased the home in December 2016.
Financial contributions
[11] Of the purchase price, Mr Bradford contributed $57,828.45 from his KiwiSaver, credited to him from before the relationship began. He said those funds included cash which had been provided by his parents but he did not specify the amount. Mr Bradford also contributed $5,000 from a Housing New Zealand Corporation (HNZC) home start grant.
[12] Ms Te Hei contributed her KiwiSaver withdrawal of $11,419.32 and a HNZC home start grant of $4,000.
[13] The initial deposit of $10,000 was ultimately incorporated into the Westpac mortgage advance of $254,000 secured over the home.
[14]With legal costs, the total cost of the home purchase was $332,157.
[15] The home was purchased in the parties’ joint names. Consistent with the evidence of both parties, the home was purchased in that way because they wanted to recognise the commitment they then had to their relationship and their future together.
[16] When the parties first separated, Mr Bradford wished to purchase Ms Te Hei’s interest in the home.
[17] Mr Bradford obtained a valuation from a registered property valuer, Mr Warwick Reid of Dunedin Valuations Ltd, as at 1 November 2017. This valued the home at $395,000. Mr Bradford claimed his contributions to the purchase of the home had been 80.29 per cent and Ms Te Hei’s contributions 19.71 per cent. Those proportions equated to the proportions in which they had each contributed cash towards the purchase cost.
[18] Mr Bradford said he offered to purchase her share in the home at 20 per cent of its then current value, less the balance of the mortgage owing at the time the relationship ended.
[19] In a letter of 25 October 2017, Ms Te Hei’s then counsel said to Mr Bradford’s then counsel:
We note the [home] was purchased 9 December 2016 for $330,000 with our client’s initial contribution being $15,419.32 and Jon’s contribution being
$62,828.45. The $10,000 temporary overdraft was repaid with the drawdown of the loan from the bank. So we agree that the parties’ respective contributions were 19.71 per cent and 80.29 per cent.
[20] The letter went on to say that a registered valuer would have to be engaged and suggested the parties share the cost. The solicitor also said:
There has been an increase in the equity of the property. Your current settlement figure fails to take into account the increased equity in the property. Our client is entitled to share proportionality [sic] in that increase and any proposed settlement figure needs to reflect this.
[21] Settlement was not progressed on that basis. After taking further legal advice, Ms Te Hei asserted she was entitled to a 50 per cent share in the property.
[22] With the total amount each contributed and with a loan of $254,000, the total cost of the purchase including costs was $332,247. That was met as follows:
(a) Mr Bradford’s cash contribution – $62,828
(KiwiSaver $57,828 and HNZC home start grant $5,000) – 18.91 per cent;
(b) Ms Te Hei’s cash contributions - $15,419
(KiwiSaver $11,419 and HNZC home start grant $4,000) – 4.64 per cent; and
(c) Westpac mortgage advances – $254,000 – 76.45 per cent.
[23] The parties owned the home and lived in it together for only six months before they separated. On separation, the debt secured over the property was $250,319.66. In addition, there was a joint credit card debt with Westpac in the sum of $5,185.
[24] Ms Te Hei contends the financial contributions the parties made towards the purchase of the property should not be assessed simply in proportion to the cash contributions they each made to the purchase price. She says the Westpac mortgage advance of $254,000 has to be assessed as a contribution they made equally to the
purchase price. In an affidavit, Mr Bradford says this should not be treated as a contribution by either party. Rather, it was simply a loan from the bank.
[25] For Ms Te Hei, Mr Andersen QC relied on the judgment and reasoning of Lang J in the High Court in H v O.1
[26] In that case, H and O were in a de facto relationship between December 2004 and June 2005. They jointly purchased the home of H and his former wife for the sum of $345,000, with a loan from the National Bank of $285,000. H’s half-share of the equity in the property he had owned with his wife was worth $60,000. This was treated as part of his contribution to the purchase price of the home. In the Family Court, the Judge held H had also contributed half of the mortgage advance, that is, $142,500, resulting in a total financial contribution from him of 59 per cent of the purchase price. Without contributing any cash towards the purchase price, he held O had contributed approximately 41 per cent. During the five months they were together, they operated a joint account from which they paid all household expenses, including mortgage payments.
[27] On appeal, Lang J said the loan the parties obtained formed a significant part of the payment they made in order to complete the purchase of the property. He said that contribution must be regarded as a cash contribution that the parties made jointly and that: “Any other conclusion would mean that the National Bank, and not the parties, contributed that portion of the purchase price.”2
[28] Lang J held the Family Court Judge had been correct in saying that his determination was consistent with Panckhurst J’s judgment in Mills v McCall where Panckhurst J had treated joint borrowings on a property as amounting to an equal cash contribution from both parties.3 Lang J said that, although Panckhurst J’s judgment had been overturned on appeal, it was not with regard to that conclusion. Lang J observed that, in the Court of Appeal, Blanchard J had said:4
1 H v O HC Auckland CIV-2008-404-1891, 9 June 2008.
2 At [71].
3 Mills v McCall [1999] NZFLR 109.
4 H v O, above n 1, at [69], citing McCall v Mills (1999) 18 FRNZ 564 (CA).
The borrowed sum should be treated as an equal cash contribution from both parties …
… Since the increase in borrowing was joint, each party made an equal contribution.
[29] Lang J noted that, in Illingworth v Illingworth, two members of the Court of Appeal accepted that the assumption of liability under a mortgage by a spouse or de facto partner can constitute a contribution to the marriage partnership.5
[30] Mr More submitted the judgment in H v O was wrong and should not be followed. He submitted the incurring of a liability could not be described as a contribution to a de facto relationship as set out in s 18 of the PRA. In terms of subss 18(1)(c), (d) and (e) of the PRA, he submitted the obtaining of the loan was not the provision of money by a party to a relationship. He argued a mortgage is borrowed money and a relationship debt. Mr More referred to s 20D of the PRA which provides:
20D Calculation of net value of relationship property
The value of the relationship property that may be divided between the spouses or partners under this Act must be calculated by—
(a) ascertaining the total value of the relationship property; and then
(b) deducting from that total any secured or unsecured relationship debts owed by either or both spouses or partners.
[31] He submitted that, because a mortgage is a relationship debt, “it makes no sense” to argue that a mortgage can be both a contribution to a relationship but, at the same time, be treated as a debt.
[32] He further submitted that, in calculating the respective shares of the parties in the property, the traditional formula of using the respective shares in the equity is to be preferred.
[33]Somewhat at odds with his initial contention, Mr More went on to submit:
It is accepted that assuming liability for a mortgage can be a contribution under s 18. It is payment of money to maintain or increase the value of the property. However, assumption of liability for a mortgage does not make the whole of the mortgage principal a contribution to a relationship. In this case,
5 H v O, above n 1, at [66], citing Illingworth v Illingworth [1981] 1 NZLR 1 (CA).
assuming liability for the Westpac mortgage is, at best, a contribution to the relationship in the same proportion that the parties are repaying the mortgage.
[34] Through being a party to the mortgage and being personally liable for all the obligations associated with that mortgage, Ms Te Hei assisted in acquiring a loan from the bank and thus money for a purpose of the de facto relationship, that is, the parties’ acquisition of a home. It was thus a contribution to the de facto relationship in terms of s 18(1)(c) and (d) of the PRA.
[35] As referred to in Fisher on Matrimonial and Relationship Property, in Illingworth v Illingworth, all three Judges in the Court of Appeal treated the wife’s assumption of liability under a mortgage for bridging finance between the sale of one house and the purchase of another as, in itself, a relevant contribution by the wife to the marriage partnership.6
[36] It is apparent from s 20D of the PRA, which Mr More referred to, that the scheme of the PRA is that property acquired with a loan or through some other debt will be relationship property but the value of that property to be shared between the parties will be the equity in that property after bringing into account whatever remains of the debt incurred in acquiring it. Through being jointly and severally liable on the mortgage advance from Westpac, Ms Te Hei assisted in the acquisition of relationship property. In that way, she provided money for the purpose of their de facto relationship and for the acquisition of relationship property, that is, the family home.
[37] If each party is to be treated as having made a cash contribution to the acquisition of the property as to one-half of the amount of the initial mortgage borrowings, the cash contribution each made to the initial acquisition of the property could be calculated as:
Cost of purchase - $332,247;
Amount contributed by Mr Bradford – $189,828
($62,828 plus half of the mortgage advance $127,000), 57.13 per cent;
6 Fisher on Matrimonial and Relationship Property (online ed, LexisNexis) at [12.47], citing
Illingworth v Illingworth, above n 5.
Amount contributed by Ms Te Hei – $142,419
($15,419 plus half the mortgage advance $127,000), 42.87 per cent.
[38] I accept however that in assessing monetary contributions to a relationship for the purposes of s 14A(3) of the PRA, the assumption of a joint liability on a mortgage advance obtained to acquire an asset does not always, as a matter of law, have to be treated as having been a contribution by both parties as to half of the amount advanced.
[39] In Illingworth v Illingworth, in a marriage of short duration, the husband brought to the marriage his interest in a luxury apartment known as “The Pines”. Shortly after the marriage, it was registered as a joint family home. The parties sold that home and purchased a new home, initially with bridging finance, then the proceeds of sale were applied to the new home.
[40] Woodhouse J was in general agreement with the way in which Somers and Richardson JJ had assessed the contributions of each to the marriage. Both those Judges mentioned the wife joining in the mortgage as being a contribution to the marriage. None of the Judges in the Court of Appeal approached matters on the basis of an arithmetical calculation as to the wife’s financial contribution or on the basis such contribution was for half of that total mortgage liability.
[41] I do not consider that either Lang J’s judgment in H v O or Blanchard J’s judgment in McCall v Mills are authority for the proposition that, in assessing monetary contributions to a relationship when considering marriages or relationships of short duration under the PRA, the assumption of joint liability on a mortgage to acquire property must always be treated as an equal contribution to the relationship so as to be a contribution equivalent to half the amount borrowed.7
[42] In McCall v Mills, both Panckhurst J in the High Court and Blanchard J for the Court of Appeal were not assessing the contributions two partners had made to the relationship for the purposes of the PRA in order to determine the shares in which they were entitled to share in relationship property in a marriage of short duration.
7 H v O, above n 1; McCall v Mills, above n 4.
[43] In that case, the parties to a relationship had purchased a home. The “husband”8 contributed funds he had from a previous property he had owned. The “wife” put in no cash.
[44] During their relationship, the parties purchased an adjoining section, increasing the mortgage borrowings to do so. After the husband and wife had been together for six years, the husband was tragically killed. The issue before the Court was whether the wife acquired the husband’s interest in the Canterbury property subject to a trust in favour of the husband’s estate. A determination as to this was necessary because the husband’s children from an earlier marriage, where his wife had tragically died when the children were very young, were seeking to pursue a claim under the Family Protection Act 1955 claim in respect of their father’s estate.
[45] Blanchard J did not actually say that, in the circumstances of that case, the assumption of a joint liability under the mortgage was to be treated as an equal contribution by both husband and wife to the extent of the liability they had assumed. He simply referred to Panckhurst J’s statement as to this when setting out Panckhurst J’s determinations and reasoning that had led him, in the High Court, to find that the wife had inherited the husband’s interest in jointly owned property subject to a trust.
[46] The Court of Appeal found there was no evidential basis on which the Judge could conclude that the parties had intended to displace the legal expectation that, with a property having been acquired jointly, if one party died the survivor would take rights of ownership. They did not discuss any further the particular statement of Panckhurst J as to liability on the borrowing being an equal contribution.
[47] The way in which Panckhurst J assessed the wife’s contribution to the acquisition of property through being liable on a mortgage was understandable in the particular circumstances of that case and the parties’ relationship.
[48] In Illingworth, the Court of Appeal was concerned with a situation somewhat analogous to the circumstances here. There, a property had been registered as a family
8 The parties were not married but I refer to them that way to avoid repeated use of their respective names.
home. The proceeds of sale from that home were used to acquire the home that the parties owned on separation. The Court of Appeal held it was not appropriate to treat the application of the proceeds of sale from a joint family home as a contribution which both parties had made equally to the purchase of the new home.
[49] In the present case, I accept that it was likely Mr Bradford could have funded the purchase of this property with his own cash contribution and an advance that he would have been able to obtain personally from Westpac based on his then income. The parties had obtained a pre-loan approval from the bank for an advance of up to
$320,000 for a purchase of up to $400,000. It was apparent from their application for pre-loan approval that they would have to satisfy the bank they were able to provide a cash deposit for 20 per cent of the purchase price. To obtain an advance of $400,000 for a house purchase, the parties would have had to provide a deposit of $80,000. Ms Te Hei would have had to contribute her savings to do this. The advance obtained from Westpac was however for significantly less than $400,000, that is, $254,000, for a property that cost $330,000.
[50] It seems likely that the advance of $254,000 could have been made to Mr Bradford alone, based on his ability to service such a mortgage from just his income, assuming his income was around $90,000.
[51] I accept Ms Te Hei would not have been in a position financially to purchase the home on her own. The significantly greater income available to Mr Bradford to service the mortgage was likely crucial to their both deciding they could afford to commit to the purchase with the associated mortgage commitments.
[52] It would not however be appropriate to significantly discount the face value of the financial contributions each of them made to the purchase.
[53] On separation and now, they are both going to benefit from the significant investment they made during the relationship in buying the home at that time. They purchased it as a home for both of them with the commitment they had to their future together. Mr Bradford said Ms Te Hei would have acted strongly and negatively if they had not decided to purchase the home jointly. Given other comments he made
about her in his affidavit, I infer that, if Mr Bradford had decided to buy the property in his sole name, it is likely he would not have purchased this home or indeed any other at that time. Ms Te Hei’s monetary contributions, including her liability on the mortgage, were significant financial contributions to the acquisition of the home.
[54] Mr Bradford said, prior to going to Dunedin, he and Ms Te Hei had not discussed purchasing a house “as we simply did not have sufficient cash for a deposit”. He said “we were not in a position to make any decisions about purchasing a home until my parents agreed to wind up their family trust and make a distribution to me”. It was a condition of the Westpac mortgage advance that they would open a joint bank account and the wages of both parties would be paid into that joint account, as happened.
[55] This case can be contrasted with H v O where O was seeking a share of the increase in value of the home which she and her partner acquired in that case without her investing any cash in the acquisition.
[56] The extent to which each party contributed to the initial purchase cost of a home will not necessarily determine the apportionment of relationship property at the end of the relationship. This is well illustrated by the judgments in the Family Court and on appeal in the High Court in H v O. There, it was held the parties had contributed equally in terms of the initial mortgage advance and, overall, they had contributed to the cost of the property in approximate 60/40 proportions. In the particular circumstances of that relationship, the Court nevertheless concluded that they were to share in the value of all relationship property as at the date of hearing in 70/30 proportions.
[57] In terms of financial contributions to the relationship, Mr Andersen calculated that, during the relationship, Mr Bradford contributed $151,667, or 64 per cent, of the total contributions to the joint account of $237,098. He said Ms Te Hei’s contributions were 36 per cent. He calculated this based on Mr Bradford’s salary being $72,800 and Ms Te Hei’s salary being $41,007, as referred to in the loan application. However, Mr Bradford says those income figures were figures they referred to when seeking a pre- purchase loan approval. Mr Bradford said in certain affidavits, at the time of the
property purchase, his salary was $96,000 per annum and Ms Te Hei’s was $55,000 per annum.
[58]Under cross-examination on this subjectis, Mr Bradford said the figure of
$72,800 was based on his income for the previous 12 months, including the time he had been in employment in Whangārei. The loan application form was not dated but was consistent with this. In the section where he referred to his income, Mr Bradford said this related to his employment at a “service station – Whangārei”. Ms Te Hei’s details related to her employment with the Whangārei Council.
[59] Mr Bradford was cross-examined as to this, based on credits which had appeared in the parties’ joint bank account. During the hearing, he was able to electronically access information as to his income returns with the IRD and to produce a document recording this. This showed that his gross income at 31 March 2017 was
$92,122. In his affidavit of 19 December 2018, Mr Bradford had said his salary at the date of purchase was $92,000 per annum.
[60] It was a condition of the Westpac loan that the parties establish a joint bank account and that their separate incomes be paid into it. This is what happened. The joint account was used for all household expenses, including outgoings on the home, rates, insurance and mortgage payments. It was used to pay for food and after school childcare for Ms Te Hei’s son who was living with them. Monies from the account were also used to pay for trips Ms Te Hei made to Whangārei and Auckland during the relationship. $100 went into separate accounts for each of them. $350 per fortnight was paid from the joint account for Mr Bradford’s child support obligations. $245 was taken out regularly in repayment of a loan for $15,000 which Ms Te Hei accepted was a personal loan she had brought to the relationship.
[61] Whether calculated on the basis of the earnings that had been mentioned in the loan application or the salaries at the time of purchase as Mr Bradford said they were, it would seem that, while the parties were together in the home, Mr Bradford’s earnings would have amounted to some 63 per cent of the amount required to fund family expenses. Ms Te Hei thus contributed approximately 37 per cent.
Non-financial contributions
[62] Mr Bradford says that, in 2015 when he was living in Whangārei and after his relationship with Ms Te Hei had begun, he made the decision to move to Dunedin to be close to his two sons. He said he made that decision without contemplating that Ms Te Hei would move with him. He said he applied for a job in Dunedin and, when he knew he had employment, made the arrangements to move.
[63] Although Mr Bradford may not have initially anticipated that Ms Te Hei would move with him, I am satisfied, reading his affidavits, that they did decide to move to Dunedin together and live there in a committed relationship. Consistent with this, Mr Bradford made the necessary arrangements to move both his and Ms Te Hei’s chattels to Dunedin. He met the transport costs for the move. With his new employment in Dunedin, he had a work car. Ms Te Hei thus left her vehicle with her sister. The subsequent purchase of the home in both names was also consistent with their joint commitment to the relationship.
[64] When they moved to Dunedin, because Mr Bradford had a work car, Ms Te Hei was able to use the vehicle he owned. They initially rented a flat.
[65] Ms Te Hei said she was fortunate in being able to obtain similar employment with the Dunedin City Council as she had with the council in Whangārei.
[66] Ms Te Hei says that one of her contributions to the relationship was the sacrifice she made in moving away from Whangārei and her family, and giving up the employment and rental accommodation she had there. She did not dispute the evidence that she had been able to obtain a tenant to take over her rental property so had incurred no financial loss. Although she said her son had never travelled with her to Auckland and Whangārei, she did not dispute Mr Bradford’s evidence that she had, on a number of occasions, travelled back to Whangārei while living in Dunedin and the expense of those trips was met from the joint bank account.
[67] I consider, on the affidavit evidence of both parties, that they ultimately made a joint decision to live together in Dunedin and they supported each other in practical ways to commit to their new relationship. That was what they both wanted. They
were both moving away from Whangārei and their employment there. I do not consider that, with this move, Ms Te Hei’s contribution to the relationship was greater than Mr Bradford’s.
[68] Ms Te Hei said she made particular non-financial contributions to the relationship through having the primary role with maintaining the home for the family, including all cooking, cleaning and laundry. She said she supported Mr Bradford in difficulties he faced in having contact with his sons in Dunedin, an issue which he had to resolve through Family Court proceedings. She said she assisted with the weekend contact Mr Bradford had with his two sons in maintaining the home for them.
[69] Mr Bradford acknowledged Ms Te Hei did more of the house cleaning but said that was because she was fastidious about this and his efforts were not good enough. He acknowledged she did more of the cooking but, in evidence, Ms Te Hei said Mr Bradford sometimes helped with cooking. Mr Bradford said he also helped through buying takeaways and paying for them from his own money.
[70] In his affidavit and under cross-examination, Mr Bradford said Ms Te Hei unfairly exaggerated the contribution she said she made in supporting him and the contact he had with his sons. He said he did help maintain the home. He said he helped with her son through regularly picking him up after school and regularly taking him and his friends to rugby on weekends. He says she was not supportive of the relationship he had with his parents. He described their relationship as being turbulent. He said he was able to make contact arrangements for his children with the assistance of the Family Court and lawyers but with no input from Ms Te Hei. He acknowledged she might have transported his children for contact two or three times however the parenting order in place required him to pick up the children.
[71] Both parties were employed during the relationship. During the relationship, Ms Te Hei was comfortable leaving her son in the care of Mr Bradford, including occasions on which she travelled to Whangārei.
[72] Mr Bradford and Ms Te Hei lived together in the same home for some 21 months. They moved to Dunedin with aspirations and a hope that their relationship
would continue. They both demonstrated they wanted the relationship to continue with their joint purchase of the home. With the generally negative picture each party presented of the other in their affidavits, it seems the relationship was, within a short time, difficult for them both. With the separation, Ms Te Hei moved back to Whangārei.
[73] In the particular circumstances of this relationship, I am satisfied that non- financial contributions should be assessed as equal.
Overall assessment of contributions to the relationship
[74] Mr Andersen submitted that, with an approximate 60/40 assessment of financial contributions to the relationship in favour of Mr Bradford and a 60/40 assessment in favour of Ms Te Hei in respect of non-financial contributions, the overall contributions to the relationship should be assessed as equal, the average percentage of their financial and non-financial contributions.
[75] That way of arriving at an overall assessment of contributions to the relationship was consistent with the approach taken by the High Court on appeal in the cases of S v W and K v K, and by Miller J in SAG v IAK.9
[76] Although Judges in the High Court have arrived at an overall assessment of contributions to the relationship by first assessing monetary contributions in proportionate terms and non-monetary contributions in financial terms, and then deciding on an overall weighting, I do not consider a formulaic approach like that is always required.
[77] In Illingworth v Illingworth, the Court of Appeal had to consider how a husband and wife should share in relationship property in accordance with their contributions to a marriage of short duration.10 The Court carefully considered both monetary and non-monetary contributions. Richardson J concluded:11
9 S v W [2006] 2 NZLR 669 (HC); K v K HC Nelson CIV-2005-442-310, 22 August 2006; SAG v IAK (2010) 28 FRNZ 556 (HC).
10 Illingworth v Illingworth, above n 5.
11 At 10.
Weighing these contributions of husband and wife respectively as best I can, along with their other [non-monetary] contributions to the marriage partnership, I consider that the scales come down sufficiently in favour of the husband in the context of this marriage of short duration so as to establish that his contribution has clearly been greater than that of the wife.
[78] The Court of Appeal considered how shares of the spouses in the matrimonial home were to be assessed, having regard to respective contributions to the marriage partnership.12 Richardson J observed “at the end of the day, quantification of the shares is more a matter of overall impression than any mathematical exactitude”.13 The apportionment Richardson J arrived at was two-thirds to one-third in favour of the husband. Somers J also stated “in the end, the conclusion is one of impression”.14
[79] In L v P, Asher J observed that the appropriate division, based on the contribution of each partner to the de facto relationship “is not a matter susceptible to exact analysis or the application of a formula”.15
[80] What is required in the end is a “broad-brush” principled assessment of the contributions each party has made to their partnership.16 That will usually be done by expressing each party’s total contribution in percentage terms.17
[81] The High Court has, in a number of a cases, arrived at the appropriate sharing of relationship property after a marriage or relationship of short duration without arriving at proportionate percentages for contributions in financial or non-financial terms or through then averaging them afterwards.18 The Court of Appeal did not do this in Illingworth.19
[82] Ultimately, the Court has to decide how to weigh all the different relevant contributions in the context of this particular relationship. In doing that, the Court must be mindful of the principles in s 1N(b) of the PRA that “all forms of contribution
12 Illingworth v Illingworth, above n 5.
13 At 11.
14 At 16.
15 L v P [2008] NZFLR 401 (HC) at [99]
16 X v X [2009] NZCA 399, [2010] 1 NZLR 601 at [54], citing M v B [2006] 3 NZLR 650 at [179];
and Jackman v Clague [2016] NZCA 463, [2017] NZFLR 679 at [17].
17 See discussion in Fisher on Matrimonial and Relationship Property, above n 6, at [12.85];
Illingworth v Illingworth, above n 5; Watson v Watson [1990] NZFLR 49 (CA).
18 Jackman v Clague [2015] NZHC 2316; L v P, above n 15; H v O, above n 1.
19 Illingworth v Illingworth, above n 5.
to the marriage partnership, civil union, or the de facto relationship partnership, are treated as equal”. In considering s 18 contributions, there is no presumption that a contribution of a monetary nature is of greater value than a contribution of a non- monetary nature.20
[83] Nevertheless, one of the purposes of the PRA is to provide for a just division of the relationship property between the partners when the relationship ends by separation.21 As referred to in Fisher on Matrimonial and Relationship Property, in a short de facto relationship, there will be relatively little time for contribution through effort to have great impact upon the marriage or de facto relationship compared with external capital and substantial inequality is likely to result.22
[84] In Burgess v Beavan, the Court of Appeal referred to “the particular problems that arise in a marriage of short duration in which, in general terms, financial contributions are more likely to carry more importance than non-financial ones”.23
[85] In L v P, Asher J observed that, despite the PRA providing there is to be no presumption that a contribution of a monetary nature is of greater value than a contribution of a non-monetary nature, greater weight is given to monetary contributions during the length of a relatively short relationship such that there has not really been time for the non-monetary contributions to have built up in value.24
[86] In L v P, Asher J did not separately assess monetary and non-monetary contributions in proportionate terms but simply concluded that, in the particular circumstances of that case and the much greater significance of L’s financial contributions as against P’s largely non-financial contributions, a 70/30 apportionment in favour of L was appropriate.25
20 Property (Relationships) Act 1976, s 18(2).
21 Property (Relationships) Act, s 1M(c).
22 Fisher on Matrimonial and Relationship Property, above n 6, at [12.64].
23 Burgess v Beavan, [2010] NZCA 625, [2011] NZFLR 609, at [32].
24 L v P, above n 15, at [90], citing Walker v Walker (2002) 22 FRNZ 452 (FC) at [56].
25 At [99].
[87] In Jackman v Clague, the Court assessed contributions to a marriage of short duration, and thus the shares in relationship property, on a broad-brush approach.26 The wife sought leave to appeal that judgment. In its judgment on the application for leave, the Court of Appeal said that the proposition advanced for the appellant was:27
[16] … that the proper application of s 14 of the Property (Relationships) Act requires the recognition of a discrete step in the contributions-based analysis whereby a numerical weighting between the financial and non- financial contributions categories is to be determined and applied.
[17] While it is of course open to a Judge to formally adopt a numerical weighting between the categories, nevertheless simply to proceed without doing so in accordance with the well-established “broad-brush” assessment is not erroneous. Hence we do not consider that the present application raises a question of law or fact of the requisite nature so as to warrant a further appeal.
[88] In the particular circumstances of this case, I assess Mr Bradford’s contributions to the relationship at 60 per cent and Ms Te Hei’s contributions at 40 per cent.
Increases in value of the home during the separation.
[89] The parties have had the property valued by the registered valuer, Warwick Reid, on three different dates. The values obtained were:
1 November 2017 - $395,000
6 June 2019 - $450,000
3 December 2020 - $600,000
[90] In his submissions at the hearing, Mr Andersen said Ms Te Hei was attempting to obtain an updated valuation. Although no formal written valuation had been obtained, it seems that, without a visit to the property, Mr Reid had advised that his estimate of the value of the home at the time of the hearing could have been $680,000.
[91] Mr More, for Mr Bradford, by memorandum filed on 22 October 2021 after the hearing, asked that the valuer who had previously valued the property be asked to provide an updated valuation. In an accompanying affidavit, Mr Bradford said he had
26 Jackman v Clague, above n 18.
27 Jackman v Clague, above n 16.
decided to repaint the roof as part of regular maintenance of the home. He discovered a problem with rust and contacted a roofing contractor. With the affidavit was a message from the roofing contractor expressing the opinion that the roof needed replacing, with a quote for this of $23,685.85.
[92] It is apparent that Mr Bradford might wish to purchase Ms Te Hei’s interest in the home but it is by no means certain that he will be able to borrow the required amount to do this. Mr Bradford is now a university student and has a student loan. He has an accommodation supplement from Work and Income so has about $320 per week however $242 of that is reflected in the debt for his student loan. He has remarried. He said his wife’s income was $40,000 or $50,000 per annum.
[93] Whatever the current value of the home is, it seems clear that both parties will benefit significantly from the increase over recent years in the value of residential properties in Dunedin. They will however both face a comparable increase in the cost of acquiring new homes or, for Mr Bradford, the cost of acquiring Ms Te Hei’s share in the home.
[94] In H v O, there had been a marked increase in the value of the property between separation and the date of hearing from $395,000 at separation to around $830,000 a few months later.28 That increase resulted from a change in the zoning of the property. The parties had acquired the particular property through being able to utilise H’s relationship property when they acquired his previous wife’s interest in the property. O had not contributed any cash to the purchase. These were significant factors in the Family Court Judge deciding that they should share in the proceeds of sale from that property in the proportions 70/30, rather than the 60/40 proportions in which they had contributed financially to the purchase of the property. In both the Family Court and on appeal in the High Court, it was held such an apportionment was necessary to achieve a just division of the relationship property at issue there.
[95] Mr More submitted that, to achieve a just division in the particular circumstances of this case, the value of Ms Te Hei’s share in the home should be assessed at the home’s value in November 2017 of $395,000. That submission was
28 H v O, above n 1.
made on the basis Mr Bradford would have been willing to acquire Ms Te Hei’s share in the property at that time based on that value. It was also submitted the November 2017 value was appropriate because an agreement had been reached that the parties would settle matters on the basis of an approximate 80/20 assessment of contributions to the relationship but Ms Te Hei had reneged on that agreement and insisted she was entitled to 50 per cent of the equity in the property.
[96] Mr Bradford asserted that, in October 2017, agreement had been reached on the basis of that 80/20 assessment of contributions. It is however apparent from the letter referred to earlier that no settlement had been agreed to on that basis. The correspondence then between the parties’ legal advisers was of a preliminary nature. It appears that, on both sides, the advisers had been in error in thinking the parties’ entitlement was to be based on contributions just to the cost of the home, rather than to the relationship and that the assumption of joint liability under the mortgage could not be considered a contribution to the relationship.
[97] In any event, if an understanding was reached as to contributions, it was not the subject of a formal agreement under s 21 of the PRA, with solicitors certifying that the parties had been independently advised as to the agreement, as required for such an agreement to be binding.
[98] Counsel also submitted it would not be just for Mr Bradford to have to share in the present value of the home in shares proportionate to their contributions to the relationship because of the costs and delays associated with Ms Te Hei’s attempts to obtain a 50/50 sharing of the value of the home through proceedings under the Property Law Act 2007.
[99] On 21 September 2018, Ms Te Hei filed proceedings in the High Court under the Property Law Act seeking an order for the sale of the property and the division of the net proceeds of sale between the parties equally, and for an order granting Ms Te Hei possession of chattels she said belonged to her and damages of $5,000 for Mr Bradford’s detention of the chattels.
[100] In a statement of defence, Mr Bradford asserted that Ms Te Hei’s claim should be dealt with under the PRA and that her share in the property should be assessed at
19.71 per cent. He asserted a few of the chattels Ms Te Hei had referred to in the statement of claim were obtained during the relationship. He said he had suggested uplift of the chattels should occur in accordance with the settlement of sharing in the property on the basis that had initially been discussed. Following the collapse of the settlement discussions, he said he was willing to deal with Ms Te Hei’s chattels in accordance with her wishes.
[101] Associated with the filing of the proceedings was an interlocutory application by Ms Te Hei for summary judgment. That was opposed.
[102] On 19 December 2018, Mr Bradford filed an application in the Family Court for an order under s 25(3) of the PRA determining the respective shares of the parties in the property and for an order transferring the proceedings to the High Court.
[103] There was a hearing in the High Court on the application for summary judgment on 6 March 2019. In a judgment of 7 March 2019, Associate Judge Johnston noted that, as to chattels, Ms Te Hei was limiting her claim to chattels which were not in dispute and she did not propose to pursue chattels which were in dispute.29 The Associate Judge noted that Mr Bradford did not oppose the order sought as to a large number of the chattels in question. He thus granted the summary judgment application on this point and made orders as sought in respect of those chattels. Given this simply referred to an agreement reached between the parties, that same result could have been achieved with proceedings under the PRA.
[104] As to Ms Te Hei’s claim in respect of the home, the Associate Judge held that, for the PRA to apply, the Court had to be satisfied the applicant had made a substantial contribution to the de facto relationship and that failure to make the order sought as to the division of property would result in serious injustice.30 In relation to s 14A(2) of the PRA, the Judge said:
29 A v B [2019] NZHC 371.
30 At [10].
[11] It appears to be beyond serious debate that the first limb of that test is met because both parties made substantial contributions to the relationship. The second limb calls for a judgment as to the justice or otherwise of the parties’ relationship property being divided other than by reference to the Property (Relationships) Act.
[12] The critical point is that that judgment, and any subsequent assessment of the parties’ rights and obligations under the Property (Relationships) Act, are matters within the exclusive jurisdiction [of] the Family Court. See s 22(1) of the Act and this Court’s judgment in Shirtliff v Albert.
[13] On that basis alone, it appears to me that Ms A cannot establish that Mr B has no arguable defence to her first cause of action. As submitted on his behalf, he is entitled to the opportunity to argue that the Property (Relationships) Act should apply. If it were to apply then that would — in terms of s 14A(3) — call for an examination of the contributions of each of the parties to the relationship (not just the former family home) and a determination, on the basis of their relative contributions, of the shares (in whatever form) that each should take of the relationship property.
(footnotes omitted)
[105] On 6 June 2019, Mr Bradford filed an amended application in the Family Court. He sought orders requiring the Court to determine the respective shares of the parties in the property and an order that he be able to purchase Ms Te Hei’s share in the property. He referred to s 14A of the PRA. In a supporting affidavit, he asserted there had previously been an agreement that contributions to the property were 80.29/19.71 per cent and that he had offered to purchase Ms Te Hei’s share in the property at 20 per cent of its current value. He asserted there would be a serious injustice if the Family Court refused to make orders on his application and said “the Property (Relationships) Act proceedings will ensure that both Ms Te Hei and he received a just return for our contributions to our de facto relationship”.
[106] On 31 October 2019, through a memorandum from counsel, the parties agreed, and the Family Court ordered, that the PRA proceedings be transferred from the Family Court to the High Court.
[107] On 11 March 2020, by memorandum to the High Court, Mr Andersen for Ms Te Hei submitted that, in the PRA proceedings, Mr Bradford needed to obtain leave under s 14A of the PRA to continue with the PRA proceedings. He suggested that, if the application for leave was dismissed, the proceedings under the Property Law Act
could continue. If the application for leave to bring proceedings under the PRA was successful, the Property Law Act proceedings would become redundant.
[108] In reply, Mr More, for Mr Bradford, submitted the Property Law Act proceedings were already redundant and Mr Bradford’s PRA proceedings should be set down for a hearing or a judicial settlement conference.
[109] After a telephone conference with counsel, in a minute of 6 May 2020, Associate Judge Lester recorded that Mr Andersen did not dispute that Mr Bradford made a substantial contribution to the de facto relationship as per s 14A(2)(a) but did not accept that the failure by the Court to make an order under s 14A would result in serious injustice. The Judge recorded that “while counsel consider there to be value in a judicial settlement conference, they each believe there is value in determining which Act will apply”. The Judge scheduled a virtual courtroom hearing to proceed on 11 June 2020 on that issue.
[110] After the hearing, in a judgment of 23 June 2020, Associate Judge Lester held that the jurisdiction of the Court under s 343 of the Property Law Act was not apt to recognise Mr Bradford’s financial contributions to the de facto relationship, and that s 343 did not permit the Court to undertake an assessment of all claims between parties when it comes to division of a house or its proceeds.31 He concluded by saying:
[25] I am satisfied that leaving [Mr Bradford] (and indeed, [Ms Te Hei]) without the ability to have all their contributions to the relationship taken into account in their division of their property would result in serious injustice.
[111] Associate Judge Lester then stayed the Property Law Act proceedings. The parties continued with the PRA proceedings.
[112] I consider that Ms Te Hei’s attempt to achieve equal sharing of the property under the Property Law Act did cause unwarranted delays and no doubt significant cost to the parties which could have been avoided if she had sought, at the outset, to resolve their claims under the PRA.
31 Te Hei v Bradford [2020] NZHC 1418.
[113] Once it was accepted that either party had made a substantial contribution to the relationship, whether or not a refusal to make particular orders sought under the PRA would result in a substantial injustice was going to be best determined applying all relevant provisions of the PRA in accordance with the purposes and principles of the PRA.
[114] It is not clear from s 14A(3) that a party to a short term de facto relationship has to obtain leave from the Family Court to issue proceedings under the PRA in the same way as is required, for instance, where a party is seeking an order extending the time for bringing PRA proceedings. Whether leave is required or whether the Court is simply deciding if failure to make the orders sought would result in a serious injustice would most efficiently be determined with either or both issues being determined at one hearing when all relevant evidence is before the Court.
[115] Proceeding in that way would give effect to the principle in s 1N(d) of the PRA “that questions arising under this Act about relationship property should be resolved as inexpensively, simply, and speedily as is consistent with justice”.
[116] The comments in Fisher on Matrimonial and Relationship Property as to the procedures to be adopted when applications have to be made for an extension of time to file proceedings are apposite.32 Having a separate hearing to determine whether the requirements of s 14A(3) have been satisfied as an initial jurisdictional issue would have the disadvantage that:33
… the court will in any event wish to consider at least the prima facie merits of the substantive claim and considerable duplication of papers will be avoided if the substantive application and affidavits in support are brought before the Court when the application for extension is heard.
(footnote omitted)
[117] In Gelling v Gelling, Holland J criticised the procedure that had been followed there, stating:34
32 Fisher on Matrimonial and Relationship Property, above n 6, at [18.23].
33 At [18.23].
34 Gelling v Gelling (1980) 3 MPC 62 (HC).
The matter was argued before me solely on the application for leave. One of the relevant factors in considering this application was the respective merits of the parties. In my view, it is appropriate that the application for leave, in most cases, be dealt with at the same time as the substantive hearing.
[118] In both the High Court and Family Court, Judges acceded to counsel’s suggestion that, with a short term de facto relationship, there should be an application for leave to bring proceedings under the PRA and also that there should be a separate hearing as to such an application.
[119] There may be circumstances where courts should proceed in this way, but I do not consider this was such a case. Once it was clear one or both parties had made a substantial contribution to the relationship, the question whether a failure to make orders sought under the PRA would result in a substantial injustice was inevitably to be best determined under the PRA with due regard to all relevant evidence, and with the Court being able to assess both parties’ contributions to the relationship. The parties had a clear direction to that effect in the judgment of Associate Judge Johnston.
[120] In this case, the scope of that evidence was modest. The evidence would have been readily available soon after the parties separated.
[121] There were significant delays and costs incurred through Ms Te Hei pursuing matters as she did.
[122] The way in which proceedings under the Property Law Act were pursued was unfortunate but it would not justify this Court now departing from a date of hearing value in resolving entitlements.
[123] The major factor in the parties not being able to resolve proceedings is that both had a fixed position over their entitlement and, it would seem, were not willing to compromise. Ms Te Hei was determined to obtain an equal share from the home. Conversely, Mr Bradford was insistent that her entitlement was to only 20 per cent. He had made that clear in affidavits filed in both the original Property Law Act proceedings and the PRA proceedings.
[124] Under s 2G of the PRA, the presumption is that the value of property to which the parties are entitled is to be its value at the date of hearing. It is well recognised that, since 1 February 2002, with the passing of ss 18B and 18C, the presumption of a hearing date valuation has become stronger.35
[125] In Burgess v Beavan, the Supreme Court observed that the fact post-separation gains were due to inflation was “a very good reason for insisting on a hearing date valuation” rather than the separation date approach which, at one point in those long- running proceedings, had been adopted by the Court of Appeal.36
[126] I have held that, as at separation, the parties’ respective contributions to the relationship meant they were then entitled to share in the equity of the property on a 60/40 basis. Mr Bradford has had the use of the property since that time. Ms Te Hei was not paid for her share in the property at that time. It would not be just for her now to be paid for a share of the property based on its value in 2017 when its present value has potentially doubled.
[127] Neither the possibility of a settlement on an 80/20 basis in late 2017 nor the way in which Ms Te Hei pursued proceedings under the Property Law Act is reason to depart from the present day value of the property in determining the parties’ entitlements under the PRA.
Post-separation contributions
[128] Under s 18B, the Court may, if it considers it just, order a party to pay a sum of money or transfer to the other party property for the purpose of compensating that other party. Such compensation is for something done after the separation but before the hearing date of the PRA application that would have been a contribution to the de facto relationship if that relationship had not ended.
[129] During the separation, Mr Bradford has paid all the outgoings on the home, including all mortgage payments. The total debt secured by the mortgage in the joint names of the parties at separation was $250,319. As at the hearing in August 2021,
35 Burgess v Beavan [2012] NZSC 71, [2013] 1 NZLR 129 at [25]-[28].
36 At [26].
that debt had reduced to $43,436 on one loan and $188,641 on the other loan; resulting in a total debt of $232,077. The debt has thus decreased by $18,242 through contributions made by Mr Bradford from post-separation earnings. One way to compensate him for those post-separation contributions and for Ms Te Hei not to benefit from them would be to recognise that an amount equal to the value of that reduction is to be paid to Mr Bradford from the proceeds of sale of the home or to be deducted from the value at which it is to be brought into account between the parties.
[130] Through cross-examination and submissions, Ms Te Hei also sought an adjustment to her entitlement for one-half of a notional rent that could have been obtained from the home during the separation. In affidavits, Mr Bradford accepted that Ms Te Hei would be entitled to such an accounting.
[131] There was no evidence from a valuer, real estate agent or property manager as to what rent might reasonably have been obtained from the home. I also consider, in achieving a just accounting between the parties in respect of a notional rent, it would not, in the circumstances of this case, be appropriate to base that on a rental that might have been obtained from tenants in an arms-length arrangement between landlord and tenant. With such an arrangement, the parties would have had all the costs, obligations and risks associated with a commercial tenancy, and the potential risk of the home being unoccupied for a time. That was avoided through Mr Bradford remaining in the home and looking after it.
[132] Under cross-examination, Mr Bradford accepted that a reasonable rent for the home at the time they separated would have been $350 per week. Mr Bradford accepted that would be a reasonable figure to adopt for a notional rent for the home. I note this is more than $330 weekly which Mr More, in a memorandum of 10 December 2021, submitted would be an appropriate basis for calculating a payment for post- separation contributions.
[133] The parties separated on 29 July 2017. Mr Bradford returned to the home soon after separation and has been living in it since that time. At $350 per week, a notional rent for the property from August 2017 to August 2021 would have been approximately 212 weeks x $350 = $74,200.
[134] Over that time, Mr Bradford has continued to maintain the home and has paid the rates and insurance. He has also made the mortgage payments, including interest. The total amount paid for such outgoings would normally be brought into account against the notional rent. Neither party had provided evidence prior to the hearing as to what those outgoings were.
[135] I suggested to counsel that it should be possible for them to resolve between themselves the total amount of such outgoings. In a subsequent memorandum filed by Mr Anderson, he said the outgoings were:
(a) DCC rates $9,706.04;
(b) ORC rates 2021 $803.58;
(c)Mortgage payments $60,133;
(d)Interest charges on the fluctuating loan secured over the house
$16,647.19 (16,850.89 to 10 August 2021);
(e)insurance payments $2,245.92.
[136] He said the quantum of the payments totalled $89,535, amounting to $430.46 per week to 31 July 2021 (208 weeks). In a separate memorandum for Mr Bradford, Mr More confirmed these were the outgoings.
[137] For Ms Te Hei, however, Mr Andersen suggested the cost of insurance payments should be deducted from this because the insurance was not in the names of Mr Bradford and Ms Te Hei. From a document attached to counsel’s memorandum, it appears, at least in 2021, the home was insured in the names of Mr Bradford and his present wife.
[138] While the insurance may have been in their names, the owners of the property have remained as Mr Bradford and Ms Te Hei. Had Mr Bradford needed to make a claim under the policy in respect of the home, the benefit obtained from that policy would have had to have been shared and brought into account between himself and Ms Te Hei. The home also had to be insured as a condition of the mortgage. Both Mr Bradford and Ms Te Hei thus benefited from having that policy continue during the separation.
[139] It is not appropriate to make an adjustment for insurance costs as suggested for Ms Te Hei.
[140] In my minute of 26 November 2021, I sought information from counsel as to the extent to which mortgage payments had been for interest as compared to capital. By memoranda of 10 and 13 December 2021, counsel accepted that an appropriate way of making an adjustment for post separation payments would be by giving a credit to Mr Bradford for the total outgoings he had paid on the home during the separation and off-setting against that the total notional rental to be brought into account between the parties. For Ms Te Hei, Mr Andersen acknowledged that the total outgoings would exceed the notional rental. He accepted that Mr Bradford would be entitled to a credit for the difference in accordance with the shares in which they are to benefit from the property.
[141] Mr Bradford will benefit from 60 per cent of the reduction in the mortgage through his being entitled to that share of the net value or proceeds of sale from the property, that is $13,153 of the $18,242 reduction.
[142] In addition, Mr Bradford is entitled to compensation for the outgoings he has paid, less the notional rental. I calculate this as follows:
Total outgoings: $89,536
Less notional rental at $350 weekly: $74,200
Net: $15,336
Ms Te Hei’s 40 per cent share of that difference: $6,134.
[143] With a payment or credit for that sum, and to the extent Mr Bradford will benefit from his share in the reduction in the mortgage during the separation, he will be compensated for the full extent to which he has reduced the mortgage during the separation.
[144] A just division, recognising the benefit Mr Bradford obtained from the use of Ms Te Hei’s interest in the home over the separation, and his contribution in making the mortgage payments which reduced the debt secured over the home, will be
achieved if Ms Te Hei is paid for her share in the property with a payment or credit to Mr Bradford in the sum of $6,134 for outgoings he paid on the property over the separation.
[145] Ms Te Hei has acknowledged that she needs to account to Mr Bradford for her share of the credit card debt of $5,150 for which he assumed responsibility at separation. Responsibility for that debt should be shared in the same proportions that the parties will share in the equity in the home.
Conclusion
[146] Mr Bradford and Ms Te Hei are entitled to share in the value of the current equity in the home, to be apportioned 60 per cent to Mr Bradford and 40 per cent to Ms Te Hei.
[147]In L v P, Asher J observed:37
Although the concept of serious injustice is distinct from the concept of a substantial contribution, it would be unusual for there to be no serious injustice if there were a failure to make an order recognising a substantial contribution. However, in considering serious injustice, a comparison of the contributions of each party can be relevant, as can the total value of the relationship property estate. It is only by considering the broad picture in this way that injustice can be evaluated.
[148] I am satisfied there would be a serious injustice to both Mr Bradford and Ms Te Hei if I did not make appropriate orders under the PRA to ensure they each receive their share of the value of relationship property in accordance with this judgment. Neither party suggested otherwise.
[149] Throughout these proceedings, the parties have relied on valuations obtained from Mr Warwick Reid of Dunedin Valuations Ltd. Two of the valuations were obtained by Mr Bradford, one by Ms Te Hei. They have both demonstrated they have confidence in his valuations.
37 L v P, above n 15, at [72].
[150] To achieve the appropriate sharing of relationship property, I make the following directions:
(a) Unless the parties agree within three weeks of this judgment that the home is to be sold, the parties, through their counsel, are jointly to instruct Warwick Reid of Dunedin Valuations Ltd to provide an updated valuation of the home. In doing so, they should provide the valuer with the quotation for re-roofing the home and information as to the state of the roof provided to Mr Bradford by the roofing contractor.
(b) The costs of the valuation are to be paid by the parties in the proportions 60 per cent by Mr Bradford and 40 per cent by Ms Te Hei.
(c) Having regard to the pending Christmas break, within four weeks of that valuation being obtained, Mr Bradford is to advise whether he will purchase Ms Te Hei’s 40 per cent share in the home.
(d) If Mr Bradford is to purchase Ms Te Hei’s share, settlement is to take place no later than one month from his exercising that option.
(e) From the value of the home, as identified by Mr Reid, there is to be deducted the amount of the credit card debt for which Mr Bradford assumed responsibility and the total debt secured by mortgages over the home as at the date of hearing, that is $232,077.
(f) On settlement, Mr Bradford is to pay to Ms Te Hei 40 per cent of the adjusted equity in the home, less $6,134.
(g) Mr Bradford is to continue paying all outgoings for the home in the interim. If there is any increase in the debt secured over the home for the period after 16 August 2021 to settlement, Mr Bradford is to be solely responsible for that increase.
(h) If Mr Bradford elects not to purchase the home either within the initial three weeks after judgment or within four weeks of the valuation being obtained, the home is to be marketed for sale.
(i) On settlement of the sale, there is to be deducted from the proceeds of sale all reasonable conveyancing, legal and real estate costs connected with the sale and the amount required to clear debt secured over the home.
(j) From the balance remaining, $5,150 is to be paid to Mr Bradford to reimburse him for the credit card debt for which he assumed responsibility on separation.
(k) The balance of the net proceeds of sale then remaining are to be paid 60 per cent to Mr Bradford and 40 per cent to Ms Te Hei except that, from that 40 per cent, Ms Te Hei is to pay to Mr Bradford $6,134.
(l) As with the situation where Mr Bradford is purchasing Ms Te Hei’s interest in the home, if Mr Bradford elects not to purchase the home, he is to continue paying all outgoings for the home in the interim. If there is any increase in the debt secured over the home for the period after 16 August 2021 to settlement of the sale, Mr Bradford is to be solely responsible for that increase.
[151] Leave is reserved to the parties to seek further directions or orders from the Court to implement this judgment.
Costs
[152] I recognise that it has been common for the Court to assess which party has been successful in the proceedings and to make an order for costs on that basis.
[153] Both parties have, to a certain extent, been successful in these proceedings. The apportionment of their entitlement to relationship property is for shares closer to what Ms Te Hei wanted than Mr Bradford proposed. I nevertheless have regard to the way both parties suffered from the delays and costs associated with Ms Te Hei’s unsuccessful claims under the Property Law Act. My tentative view that is each party should bear their own costs for these PRA proceedings.
[154] If there is a dispute over costs, a memorandum for Ms Te Hei is to be filed by 4 February 2022. A memorandum for Mr Bradford is to be filed by 18 February 2022
and any reply within seven days afterwards. The memoranda are to be no longer than four pages. Any dispute will be determined on the papers.
Solicitors:
L A Andersen QC, Barrister, Dunedin Clearwater & Associates Solicitors, Auckland D J More, Barrister, Dunedin.
0
0