CAM v JMP
[2013] NZHC 592
•26 March 2013
PURSUANT TO SECTION 169 OF THE FAMILY PROCEEDINGS ACT 1980, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SECTIONS 11B TO 11D OF THE FAMILY COURTS ACT 1980. FOR FURTHER INFORMATION PLEASE SEE WWWW.JUSTICE.GOVT.NZ/FAMILY/LEGISLATION/RESTRICTIONS IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-006050 [2013] NZHC 592 UNDER Section 174 Family Proceedings Act 1980
BETWEEN C A M
Appellant
AND J M P
Respondent
Hearing: 6 March 2013
Appearances: D Hollings Chambers QC for Appellant JMP, Respondent, in person
Judgment: 26 March 2013
RESERVED JUDMENT OF ANDREWS J
This judgment was delivered by me on 26 March 2013 at 4:00 pm Pursuant to Rue 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors:
Fortune Manning, Auckland Deborah Hollings Chambers QC Copy:
Respondent
C A M V J M P HC AK CIV-2012-404-002738 [26 March 2013]
Table of Contents Paragraph
No.
Introduction [1] Relevant factual background [3] Relevant statutory provisions as to maintenance orders [10] Approach on appeal [16] Appeal issues [20] Should the appellant’s maintenance obligation have ceased when M turned 3? [23] Submissions [23] Discussion [31] Was the Judge wrong to hold that the appellant is liable to pay maintenance at $2,000 a week up to January 2013? [39] The Family Court judgment [39] Submissions [42] Discussion [45] A: The respondent’s reasonable needs [45] (i) Introduction [45] (i) Reference to the respondent’s budget [46] (iii) Reference to the assessment in the interim maintenance judgment [47] (iv) The respondent’s evidence [50] B: The appellant’s reasonable needs and ability to pay maintenance [65] Should the appellant have been ordered to pay the respondent
$3,504 for reimbursement of expenses?
[73] Introduction [73] Discussion [76] Result [79]
Introduction
[1] The appellant, CAM, has appealed against the judgment of Judge DA Burns given in the Family Court at Auckland on 19 September 2012, in which the Judge made a final maintenance order in favour of the respondent, JMP, his former partner, together with orders as to payment of past maintenance and for reimbursement of expenses (“the Family Court judgment”).1
[2] The appeal is on the grounds that the Judge failed to undertake the analysis of the reasonable needs of each of the appellant and the respondent, required by s 65 of the Family Proceedings Act 1980 (“the Act”). The respondent contends that there was no error in the Judge’s assessment, and that the maintenance order should stand.
Relevant factual background
[3] The appellant and the respondent were in a relationship as de facto partners between June 2007 and August 2009. Their relationship was, therefore, of two years two months, and was a relationship of short duration, as defined by s 2E(1)(b) of the Property (Relationships) Act 1976.
[4] When the relationship began, the respondent had recently returned to New Zealand after having spent some ten years overseas. She had some savings, which were put towards the purchase of a residential section at a beach north of Auckland. While overseas she had worked as a contract accountant, but she has not worked in that area since her return to New Zealand. She had begun a course of study in Chinese medicine while in the UK, and continued to study towards a Degree of Bachelor of Health Science in Chinese Medicine on her return to New Zealand, completing the Bachelor’s Degree in 2011 at the New Zealand College of Chinese Medicine. She began a two year course of study at AUT University towards a Master’s Degree in 2012.
1 JMP v CAM [2012] NZFC 7253.
[5] The parties’ first child, H, was born in May 2008. When the appellant and the respondent separated in August 2009, the respondent was about four months pregnant with their second child, M. M was born in January 2010.
[6] After the parties separated, the respondent moved into rented accommodation. The appellant has paid the rent (initially $850, now $950 a week) since separation. Up until March 2010 the appellant provided the respondent with a credit card, and met all expenses on the card. After 1 March 2010, the appellant paid the rent, plus $50,000 per annum (in total, approximately $1,810 a week) to the respondent to cover maintenance for herself and the children’s costs. He also paid health insurance premiums, provided the respondent with a vehicle, met mortgage payments on the section, and met other expenses from time to time.
[7] In July 2010, the respondent applied for interim, past, and final maintenance orders. An interim maintenance order was made by Judge Druce on 14 April 2011 (“the interim maintenance order”). The appellant was ordered to pay $2,000 a week for maintenance, inclusive of rent. That order took effect from the date of hearing, 24 February 2011. Although the interim order expired after six months, the appellant continued to pay maintenance at that rate. The appellant has also been making child support payments of $500 a week, calculated pursuant to the formula assessment under the Child Support Act 1991.
[8] In the Family Court judgment on the respondent’s application for a final maintenance order, the appellant was ordered to pay $2,000 a week (inclusive of rent), to be reduced commensurate with any reduction in the current rent, until 1 February 2015. This is when the younger child, M, will start school. The appellant was also ordered to pay past maintenance for arrears and deductions of
$5,647 and $3,504 for reimbursement of certain expenses paid by the respondent in February 2010.
[9] In addition to their dispute as to maintenance, the parties have been in dispute as to the care of H and M. In a judgment given by Judge de Jong on 9 July 2012, interim parenting orders were made in respect of the children, under the Care of Children Act 2004 (“the Care of Children Act judgment”). The effect of these orders
is that H is in the appellant’s care for three weekends out of four, for holidays four times a year, and for alternate Christmases. H attends kindergarten for five half-days a week. The interim parenting order in respect of M provides for her to be in the appellant’s care for increasing periods of time, and for her to attend day care for three days a week once she turned three. The costs of H’s kindergarten and M’s day care have been met by the appellant.
Relevant statutory provisions as to maintenance orders
[10] Section 64 of the Act provides that after a marriage or civil union is dissolved, or a defacto relationship ends, each spouse or partner is liable to the other to the extent necessary to meet the other’s reasonable needs, where the other party cannot practicably meet the whole or any part of those needs.
[11] Section 70 provides the power to make a maintenance order after a de facto relationship (or marriage or civil union) ends. It provides that a Family Court may order “either party ... to pay to the other party for such term as the Court thinks fit ... such periodical sum towards the maintenance of the other party as the Court thinks fit.” However, s 70B of the Act limits the power to make maintenance orders in respect of de facto relationships of short duration. It provides that in such cases the Court cannot make a maintenance order under s 70 unless the Court is satisfied that there is a child of the relationship, or the partner seeking the order has made a substantial contribution to the relationship, and (in either case) the Court is satisfied that failure to make the order would result in serious injustice to the partner seeking the order.
[12] Section 64A sets out the statutory framework for maintenance orders. Subsection (1) sets out the principle that parties to marriages, civil unions, or de facto relationships must “within a period of time that is reasonable in all the circumstances of the particular case” assume responsibility for meeting their own needs. Subsection (2) then provides that one partner (A) is liable to maintain the other (B) if it is unreasonable for B to do without maintenance from A, and reasonable to require A to provide maintenance to B.
[13] Section 64A(3) sets out the matters to which the Court must have regard when considering whether to order that maintenance be paid. These may be summarised as being:
(a)the ages of the partners,
(b)the duration of the partnership, and
(c)the ability of the partners to become self-supporting, having regard to:
(i)the effects of the division of functions during the relationship;
(ii)the likely earning capacity of each partner;
(iii)the responsibilities of each partner for the ongoing care of minor children; and
(iv)any other relevant circumstances.
[14] Section 65 of the Act then sets out the matters to which the Court must have regard, in determining the amount of maintenance payable. Section 65(2) requires the Court to have regard to (in summary):
(a)the means of each partner, including each partner’s potential earning capacity, and means derived from the division of relationship property;
(b)the reasonable needs of each partner;
(c)the fact that the partner by whom maintenance is payable is supporting another person;
(d)the financial and other responsibilities of each partner; and
(e)any other circumstances that make one partner liable to maintain the other.
[15] The legislative intent of the sections referred to above is clearly that after a de facto relationship (or marriage or civil union) ends, each partner must, within a reasonable period of time, assume responsibility for his or her own needs (known as “the clean break principle”). Maintenance after the end of a relationship should normally be for the short term, only. In Slater v Slater, Richardson J referred (in the context of an appeal concerning maintenance following the dissolution of a marriage) to:2
... the social policy that any maintenance obligations following dissolution of marriage should ordinarily be temporary, not lifelong. The former spouses should go their own ways with their respective shares in the matrimonial property and free of any continuing financial responsibility for one another. The subsection contemplates that in the ordinary run neither spouse will be financial dependent on the other for more than a transitional period ...
Approach on appeal
[16] Section 174 of the Act (which provides the right of appeal), provides (at s 174(1A)) that an appeal to the High Court is treated as if it were an appeal under s 72 of the District Courts Act 1947. Thus, ss 74 to 78 of the District Courts Act apply. Section 75 provides that the appeal is to be by way of rehearing, and s 76 provides that, having heard the appeal, this Court may make any decision it thinks should have been made, or may direct that the application be re-heard in the Family Court.
[17] In some respects, this is an appeal against the exercise of a discretion. Section 70 of the Act provides that the Family Court may make a maintenance order. The assessment of the quantum of maintenance payable may involve the exercise of a discretion. On appeal against the exercise of a discretion, a court should interfere only if the Judge appealed from made an error of law, took into account irrelevant
2 Slater v Slater [1983] NZLR 166 (CA) at 174.
circumstances, failed to take relevant circumstances into account, or was plainly wrong.3
[18] However, s 174 of the Act makes it clear that an appeal against an order made by the Family Court is a general appeal under s 72 of the District Courts Act. An appeal against a maintenance order is therefore to be seen as a general appeal, the approach to which is as set out in the judgments of the Supreme Court in Austin, Nichols & Co Inc v Stichting Lodestar,4 and Kacem v Bashir.5 The appellate court has the responsibility of considering the merits of the case afresh, and must substitute its own decision if it reaches a different decision from that reached in the judgment under appeal. As the Supreme Court said in Austin, Nichols, where the lower court had a particular advantage, such as technical expertise and the opportunity to assess the credibility of witnesses, the appellate court might hesitate to find that findings of fact and degree are wrong.6 However, the weight given to the lower court’s reasoning is a matter for the appellate court’s assessment.7
[19] In this case, I propose to adopt the approach taken by Randerson J in WPH v ITP (in the context of proceedings under the Property (Relationships) Act 1976) that:8
... some reasonably plain grounds should be made out before this Court intervenes on appeal, while recognising, consistently with Austin, Nichols, that the appellate court should form its own opinion, without undue deference to the assessment of the lower court.
Appeal issues
[20] The appellant does not submit that a maintenance order should not have been made, at all. Nor does he challenge the order that he pay past maintenance (for arrears and deductions) of $5,647. He accepts that this must be paid.
3 See May v May (1982) 1 NZFLR 165 (CA) and Blackstone v Blackstone [2008] NZCA 312.
4 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 (SC).
5 Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 (SC).
6 Austin, Nichols, above n 4 at [5].
7 See also Kacem v Bashir, above n 5 at [32].
8 WPH v ITP [2009] NZFLR 745 (HC) at [17]. See also NGC v HAH [2013] NZFLR 677 (HC) at [23].
[21] The appellant’s appeal raises two substantive issues. First, he contends that, in principle, a maintenance order in favour of the respondent should not have continued after M turned 3. Secondly, he contends that, on a proper analysis of his and the respondent’s reasonable needs and means, the Judge was wrong to order him to pay maintenance of $2,000 a week until M turns 5.
[22] Further, the appellant contends that the Judge erred in ordering him to reimburse the respondent for expenses of $3,504.
Should the appellant’s maintenance obligation have ceased when M turned 3?
Submissions
[23] On behalf of the appellant, Ms Chambers referred to the social policy identified in Slater v Slater.9 After a relationship ends, any obligation to pay maintenance is temporary, or transitional. After a reasonable period, the partners must meet their own needs.
[24] Ms Chambers submitted that the short duration of the relationship between the appellant and the respondent is particularly significant when determining what is a “reasonable” temporary or transitional period during which the appellant was obliged to pay maintenance. She pointed out that, after a relationship of two years two months the appellant had, by January 2013 (when M turned 3), been paying maintenance to the respondent, whether pursuant to a Court order or the earlier informal system, for approximately three-and-a-half years. If maintenance is continued to January 2015, as ordered by the Judge, the maintenance period will be five-and-a-half years, more than twice the duration of the relationship.
[25] Ms Chambers accepted, as a matter of principle, that a party’s ability to become self-supporting after the end of a relationship may be impacted upon by the circumstances of the relationship and/or the separation. However, she submitted, those circumstances will have a diminishing impact as the period after separation passes. She submitted that in the present case, a period of three-and-a-half years
9 Above n 2.
after the end of the relationship between the appellant and the respondent was a reasonable period for the respondent’s transition towards being self-supporting.
[26] In support of that submission, Ms Chambers submitted that the respondent had not established that a longer period was required. She submitted, first, that the respondent could obtain employment as a contract accountant, for which she was qualified, and in which she had several years’ work experience. Secondly, she submitted that the respondent was, by virtue of her Bachelor’s Degree in Chinese medicine, qualified to practise in that area. Further, appropriate child care was available in the arrangements for kindergarten for H (until he goes to school in May 2013), and day care for M (both paid for by the appellant), to enable the respondent to work at least 18 hours a week and earn a pre-tax income of approximately $1,440 a week. Ms Chambers submitted that the respondent’s decision to study for a Master’s Degree in Chinese medicine, rather than to work in either accountancy or Chinese medicine, and not avail herself of the day care available for the children, is her own lifestyle choice. As such, Ms Chambers submitted, a continuing maintenance obligation did not arise beyond M’s third birthday.
[27] Ms Chambers further submitted that this case is not like Slater, or Z v Z,10 both of which considered post-separation maintenance in the context of marriages of long duration where (in each case) the wife had been out of the workforce for many years, and faced real difficulties in obtaining work. Here, Ms Chambers submitted, the respondent is well able to be self-supporting.
[28] The respondent submitted that it is not the case that she can go straight back into the workforce and be self-supporting. First, she submitted, she has the primary responsibility for the care of two dependent children. She submitted that the appellant had acknowledged that she should be engaged with the children fulltime (apart from her study commitments) until M starts school. Secondly, she submitted that the Bachelor’s Degree in Chinese medicine does not permit her to practise in Chinese medicine: she submitted that a Master’s Degree is required to obtain registration with NZASA (the relevant registration body).
10 Z v Z (No 2) [1997] 2 NZLR 258 (CA), (1996) 15 FRNZ 88.
[29] The respondent further submitted that while she does not wish to work in accountancy, she could not do so, in any event, as she has not worked in that area for more than six years. She submitted that before she could work in accountancy she would have to undergo re-training. While she had not made any inquiry as to what would be involved, she submitted that she would require one to two years study.
[30] Finally, the respondent submitted that her transition to being self-supporting will be complete when she is able to work in her chosen field, and both children are at school.
Discussion
[31] Although the question of maintenance was not directly in issue in the case before it, in Z v Z the Full Court of the Court of Appeal commented on its judgment in Slater. The Court said:11
... the liability of a party to maintain the other is restricted to the extent that such maintenance is necessary to meet the reasonable needs of the other party and only arises where that party cannot practicably meet his or her own reasonable needs because of the effects of any one or more of the circumstances specified in [s 64(2)(a)-(c)]. ...
Under [s 64(2)] each party is to assume responsibility within a period of time that is reasonable in all the circumstances of the particular case for his or her own needs. On the expiry of that period neither party is liable for further maintenance. It is to be noted that, for the purpose of determining what is a reasonable period under this subsection, the Court is to have regard to “all” the circumstances of “the particular case”. The determination of what is reasonable in the particular case is not informed by any general principle. While [s 64(1)] clearly indicates that any maintenance obligation following dissolution of marriage should ordinarily be temporary, and not life-long, there is nothing in the wording of the subsection to preclude a lengthy period of time, or even an indefinite period, if, having regard to the factors in [s 64(1)], that period of time is reasonable in all the circumstances of the particular case.
[32] Section 64A of the Act provides that liability for maintenance is for a period that is “reasonable in all the circumstances of the case”. I would not be willing to hold that, as a matter of principle, a maintenance liability for three-and-a-half, or even five-and-a-half, years after a relationship of short duration is, by reason of its
11 At 293-294, 124-125.
duration alone, reasonable, or unreasonable. The issue must be considered “in all the circumstances of the case”.
[33] In this case, one of the circumstances to be considered is the study being undertaken by the respondent. I do not accept Ms Chambers’ submission for the appellant that it is unreasonable for the appellant to be required to continue maintenance payments beyond M’s third birthday. This is for two reasons: the respondent’s study towards a Master’s Degree, and her care of the two children.
[34] The respondent’s evidence was that she had begun study in Chinese medicine before the relationship with the appellant began. She continued her study during the relationship. She was not working as an accountant when the relationship began, and did not do so at any time during the relationship.
[35] I do not accept that the respondent’s decision to continue study towards a Master’s Degree should be seen as anything other than a genuine effort by the respondent to ensure that she is appropriately qualified, and to increasing her earning capacity, so that she can be self-supporting by practising in the field in which she has now been studying for several years. I accept the respondent’s submission that, even if she were to return to accountancy, that would require a period of re-training before she could obtain registration to practise in New Zealand. The difference in time between completing the Master’s Degree and re-training in accountancy may not, in fact, be significant.
[36] Further, the appellant accepted in answers to questions from the Judge that, in principle, he was prepared to support the respondent and the children until M started school, subject to the respondent making some contribution herself:12
Yes, I mean I think I was where I’m coming from was supporting them until
[M] goes to school, supporting the kids and [the respondent] until [M] goes to school, it gives her that chance to train like she said she wants to and she can go out and earn some money and perhaps prior to that she could do some part-time stuff as well. I mean if she did some accounting work at 100 bucks at hour at 10 hours a week that’s a 1,000 bucks, I’m not saying she wants to, I know she doesn't want to do that but you know she might be able to start contributing to herself a bit more than she has been.
12 Notes of evidence at 66/1-9.
[37] With regard to the care of the children, I do not accept that there was any error in the Judge’s conclusion that the reality of the position as between the appellant and the respondent is that there are two children of the relationship, who are both very young, and the needs of those children to be supported, loved and cared for by their mother is the same as if the relationship had been longer.13
[38] Accordingly, I am not satisfied that the Judge erred in ordering maintenance to continue until M turns five. The real issue is as to whether the Judge properly assessed the reasonable needs of both the respondent and the appellant when assessing the quantum of maintenance.
Was the Judge wrong to hold that the appellant is liable to pay maintenance at
$2,000 a week up to January 2013?
The Family Court judgment
[39] After a brief outline of the factual background, the Judge referred to the interim maintenance judgment, and set out Judge Druce’s assessment of the respondent’s “weekly reasonable needs”, which Judge Druce had calculated to be
$2,000 a week, noting that Judge Druce had found that the appellant had the ability to meet maintenance in that amount. The Judge then referred to the Care of Children Act judgment, and noted that the effect of the order made by Judge de Jong is that the respondent has sole responsibility for care of H and M during the week.
[40] The Judge then turned to s 70B of the Act, and concluded that “there would clearly be a serious injustice to [the respondent] if spousal maintenance was not awarded on a final basis”.14 The Judge also concluded that maintenance is necessary because of the division of functions during the relationship and the custodial arrangements after it ended.15
[41]
The Judge’s discussion of quantum was by reference to Judge Druce’s assessment of the respondent’s “weekly reasonable needs” in the interim maintenance judgment, and comparing that with a budget put forward by the13 Family Court judgment at [20](b).
14 At [15].
15 At [16]-[17].
respondent (“the budget”). The Judge concluded that the respondent’s budget was not excessive or extravagant, and that reference to Judge Druce’s assessment “clearly indicates that the figures sought are modest”.16 The Judge rejected submissions on behalf of the appellant that the budget wrongly included expenses relating to the children and the respondent’s mother, legal expenses, and costs associated with the respondent’s ownership of the beach section.
Submissions
[42] The nub of Ms Chambers’ submissions was that the Judge did not undertake a proper analysis of the reasonable needs and means of both the appellant and the respondent before determining the duration and quantum of maintenance. In particular, she submitted that the Judge failed to analyse and take into account evidence given at the hearing before him, in particular the cross-examination of the respondent. She submitted that a full reassessment of the respondent’s reasonable needs was required as a result of that cross-examination, and the Judge failed to do that.
[43] Ms Chambers further submitted that the Judge had failed to undertake any proper analysis of the appellant’s reasonable needs and means, but proceeded on the basis that as the appellant has the ability to pay maintenance (from his salary and savings) there was no need to inquire further into his ability to meet any maintenance order.
[44] The respondent submitted that there was no error in the Judge’s consideration of the reasonable needs of the appellant and herself. She submitted that he had undertaken a line-by-line analysis in each case.
16 At [25].
Discussion
A: The respondent’s reasonable needs
(i)Introduction
[45] It is necessary to consider whether the Judge appropriately assessed the respondent’s reasonable needs by reference to her budget, rather than to the respondent’s actual expenditure (as set out in her Affidavit of Financial Means and Their Sources, dated 21 March 2010) (“the respondent’s affidavit”); whether the Judge was wrong to focus on the assessment of the respondent’s needs in the interim maintenance judgment; and whether the Judge failed to consider the respondent’s evidence as to her reasonable needs – in particular in her cross-examination.
(ii)Reference to the respondent’s budget
[46] I accept Ms Chambers’ submission that the Judge assessed the respondent’s needs by reference to the budget. That is clear from [25] of the Family Court judgment, where the Judge considered the reasonableness of the various items. I also accept Ms Chambers’ submission that the better, and more relevant, indicator of the respondent’s reasonable needs is her actual expenditure, set out in her affidavit. The affidavit is both closer to the date of the hearing before the Judge, and able to be checked for accuracy against documentary evidence.
(iii)Reference to the assessment in the interim maintenance judgment
[47] The assessment of the respondent’s needs included in the interim maintenance judgment was made for a different purpose, and under a different statutory scheme. Interim maintenance is determined under s 82 of the Act, which provides a judge with a discretion to order payment of “such periodical sum as the District Court Judge thinks reasonable ... until the final determination of the proceedings or until the order sooner ceases to be in force”. An interim maintenance order has a maximum duration of six months.
[48] As Judge Druce said in the interim maintenance order, the discretion to award interim maintenance is a broad and unfettered one, and the Court is not required, as a matter of jurisdiction, to consider the principles relating to final maintenance orders, set out in ss 62-66 of the Act.17
[49] While the Judge does not expressly say that he was adopting Judge Druce’s assessment, it must be the case that he did so. As noted earlier, at [41], it was by reference to Judge Druce’s assessment that the Judge concluded that the respondent’s budget figures were “modest”. I conclude that that was inappropriate. The determination of maintenance payable by the appellant pursuant to a final maintenance order required a careful assessment of both the respondent’s and the appellant’s reasonable needs along with the other matters referred to in s 65(2), in accordance with s 65 of the Act.
(iv)The respondent’s evidence
[50] I also accept that the Judge failed to take into account evidence given by the respondent, particularly in her cross-examination. In her answers to questions in cross-examination, the respondent accepted that her reasonable needs, excluding legal costs and costs relating to her children, were considerably less than $2,000 a week.
[51] The respondent accepted that pursuant to the final maintenance judgment, she was receiving a total annual income of $130,000 ($104,000 in maintenance and
$26,000 in child support).18 I accept Ms Chambers’ submission that, as income tax is not payable on maintenance and child support payments, a tax-free income of
$130,000 is equivalent to a taxable income in the order of $185,000.
[52] Further, the respondent accepted that, as long as she could live in a “child- friendly” property, which had room for the children to play, and was workable in terms of shared care of the children, it was not necessary for her to continue living in her present accommodation. The respondent had not made any inquiries as to
17 Interim maintenance order at [6].
18 Notes of evidence at 31-33.
alternative accommodation, but the appellant gave evidence that “decent accommodation” could be found at around $500 a week.19 I accept Ms Chambers’ submission that that evidence would indicate that an amount of less than $950 would meet the respondent’s reasonable accommodation needs. A sum of $700 a week (which was put to the appellant in cross-examination)20 would appear to be a more reasonable figure for accommodation.
[53] In her affidavit the respondent recorded expenditure of $64,149 for legal fees. She said in answer to questions in cross-examination that these had been paid from her maintenance income, but that she had also borrowed from her parents to meet legal costs. She also said that the borrowing was for legal fees incurred after those recorded in the affidavit.21 I accept Ms Chambers’ submission that legal fees should not be included in the assessment of the respondent’s reasonable needs. That is clear from the judgment of the Court of Appeal in C v G.22
[54] The respondent accepted that her expenditure of $14,692 over 12 months ($282.54 per week) recorded in her affidavit for “food and household supplies” included costs for the children, and the respondent’s mother, who was living with the respondent at the time.23 The respondent also accepted that her own costs for food and household supplies were $100 a week,24 and accepted that other household costs
– gas, electricity, and water – related to all members of the household, and that it would be fair to allocate one-third of those costs to her own reasonable needs.25
[55] The respondent further accepted that expenditure of $9,194 recorded in the affidavit for “child maintenance, care, and education” related entirely to the children,26 and that about half of the recorded entertainment costs of $4,226 related to her rather than the children.27
19 At 67, 75.
20 At 67.
21 At 26/29 – 27/21.
22 C v G [2010] NZCA 128, [2010] NZFLR 497 at [53]-[54]. See also RK v DK [2011] NZFLR
468 (HC) at [53]-[58].
23 Notes of evidence at 37/15-19.
24 At 39/15-24.
25 At 39/25-40/3.
26 At 40/20-22.
27 At 40/23-41/22.
[56] In relation to the expenditure of $9,337 ($179 a week) recorded in the affidavit for “health”, the respondent accepted that $50-$100 a week was for acupuncture for herself.28 Ms Chambers submitted that, as non-traditional medicine, acupuncture should not be included in the assessment of the respondent’s reasonable needs, citing RK v DK.29 Ms Chambers also submitted that the expenditure was, in any event, beyond what was reasonable.
[57] The respondent’s Bachelor’s Degree in Chinese medicine enables her to obtain ACC accreditation as a practitioner in acupuncture.30 In the circumstances, I would be reluctant to conclude that acupuncture is “non-traditional medicine”. I note that in RK v DK, there was no explanation of the non-traditional medicine claimed for. However, I accept Ms Chambers’ submission that an appropriate allowance for the respondent’s reasonable needs is $50 a week.
[58] Finally, the respondent accepted that the $4,248 recorded in the affidavit for “holidays” was for “our trip to Australia”.31 The expenditure, therefore, included the costs of the children. I accept Ms Chambers’ submission that only half of this amount should be allocated to the respondent’s reasonable needs.
[59] I accept Ms Chambers’ submission that, as a result of the respondent’s evidence in answers to questions in cross-examination, there needed to be a careful examination of the respondent’s reasonable needs. In particular, consideration had to be given to the fact that the respondent had met legal costs out of maintenance, and any costs relating to the children and the respondent’s mother had to be excluded: the appellant is not obliged to maintain the respondent’s mother, and costs relating to the children are to be met by child support. Further, legal costs should not be included in the assessment of reasonable needs.
[60] The Judge’s approach to costs relating to the children was to look at the budget for the household as a whole, then deduct from that the amount paid under the Child Support Act 1991 formula. The difference between the two was the
28 At 44/4-19.
29 Above n 22 at [31].
30 Notes of evidence at 23/1-7.
31 At 46/10-13.
assessment of the respondent’s reasonable needs.32 I accept Ms Chambers’ submission that the better approach is to exclude all costs relating to the children from the assessment of reasonable needs. That is, each item in the budget for the respondent’s maintenance should be scrutinised to ensure that it does not include costs relating to the children.
[61] I also accept Ms Chambers’ submission that the assessment of the respondent’s reasonable needs should not include legal costs, or costs associated with the beach section, which was owned by the Trust.
[62] I do not accept Ms Chambers’ submission that the expenditure for dry- cleaning ($310), car hire ($3,125), tuition fees ($4,300), and “school fees, books and stationery” ($2,046) should be excluded from the assessment of the respondent’s reasonable needs. The dry-cleaning assessment is minimal. With respect to car hire, the respondent’s evidence was that she intended to purchase a car.33 I accept that the rental costs are likely to be transferred to the cost of the respondent running her own car. The tuition, etc fees (totalling $6,346) all related to the respondent. As I have accepted that it is reasonable for the respondent to continue study towards a Master’s Degree, I accept that the costs of that study should be included in the assessment of her reasonable needs.
[63] Following the structure of the assessment of the respondent’s reasonable needs set out in Ms Chambers’ submissions, I assess the respondent’s reasonable needs as follows:
(a) Total expenses as set out in the respondent’s affidavit $149,657.00 (b) Plus allowance for rent at $700 a week $39,200.00 $188,857.00 (c) Less deductions in respect of the following expenditure: 1. Rates on beach section $2,887.00 2. Mortgage payments on beach section $2,047.00
32 Final maintenance judgment at [25].
33 At 25/28-32.
3. Food and household supplies: allow $100 a week ($5,200 a year): (deduct) $9,492.00 4. Electricity, gas, water: (deduct two-thirds) $1,919.00 5. Child maintenance $9,194.00 6. Entertainment (deduct one- half) $2,113.00 7. BNZ loans for Trust $400.00 8. Health: allow $50 a week ($2,600): (deduct) $6,737.00 9. Legal fees $64,149.00 10. Holidays: (deduct one-half) $2,124.00 Total deductions $101,062.00 (d) Revised total expenses $87,795.00
[64] On the basis of the above assessment, I conclude that the respondent’s reasonable needs are $1,680 a week.
B. The appellant’s reasonable needs and ability to pay maintenance
[65] Under s 65(2) of the Act, before determining the quantum of maintenance payable by the appellant, the Judge was also required to consider the appellant’s reasonable needs, and his financial and other responsibilities.
[66] The Judge’s analysis of the appellant’s reasonable needs and ability to pay maintenance was as follows:34
I acknowledge that the [appellant] is in a new relationship with a child and is supporting another person. However, it was properly acknowledged by Ms Hollings that there was concession by her that the [appellant] had the ability to pay and the Court does not need to enquire further into whether the [appellant] has the ability to pay a reasonable quantum of spousal maintenance awarded. He has clearly demonstrated that he has paid and acknowledges that his income is such that he has the ability to pay. The financial information before the Court indicates that he has a significant income and has the support from the family. He does have the ability to support a number of families and is doing so;
34 Family Court Judgment at [20](e).
[67]The Judge also said, when considering the quantum of maintenance:35
... I also get reassurance from comparing the claim by the [respondent] to the claimed expenses of the [appellant] and his expenses clearly show that the claim by the [respondent] is justified.
[68] Ms Chambers submitted that the Judge failed to take into account that the appellant’s ability to pay maintenance depended on his using capital to do so, and that the effect of the final maintenance order is that the appellant is left with just
$28,000 a year to meet his needs and that (to put it another way) the respondent is receiving an income which is nearly five times greater than the appellant’s net income. The respondent submitted that the Judge properly took the appellant’s reasonable needs into account, and compared his position with hers, on a line-by-line basis.
[69] I am satisfied that the Judge failed to have regard for the appellant’s reasonable needs, and his financial and other circumstances, as was required by s 65 of the Act. In particular, it is clear from the appellant’s Affidavit of Financial Means and Their Sources, dated 24 November 2011 (“the appellant’s affidavit”), that the appellant’s income from his salary is $250,000 a year. After tax ($92,000), child support ($26,000) and maintenance (at $2,000 a week) ($104,000), the balance available to meet the appellant’s needs is $28,000 a year. That is approximately 21 percent of the respondent’s income. The above figures, and the resulting disparity, were set out in the submissions made to the Judge, and reproduced in the judgment,36 but the Judge has not given any consideration to them. Nor is there any “line-by-line comparison” of the appellant’s and the respondent’s respective needs, as was submitted by the respondent. Further, when assessing the quantum of maintenance payable by the appellant, the Judge did not consider the effect of the order sought as against the appellant’s reasonable needs and his own financial responsibilities. The appellant’s submissions in the District Court made it clear that there was no blanket concession that the appellant had the ability to pay any maintenance that was ordered, or that no further enquiry was required.
35 At [25].
36 At [11] ([32-38] of the appellant’s submissions).
[70] In order to have regard to the matters set out in s 65, having determined the respondent’s reasonable needs, the Judge should then have undertaken an analysis of the appellant’s expenses and means, in order to determine the amount of maintenance payable.
[71] Ms Chambers acknowledged in her appeal submissions that a court can order maintenance to be paid from capital. However, I accept her submission that when that is the effect of a maintenance order, careful consideration needs to be given to the quantum of maintenance payable.
[72] I concluded at [64], that the respondent’s reasonable needs are $1,680 a week. I have considered that against the appellant’s reasonable needs and his ability to pay maintenance, in order to decide whether a maintenance order in that amount would result in an unfair burden on the appellant, and an unjustified intrusion into the appellant’s capital. I have concluded that an order of that amount would not be unreasonable in light of the appellant’s own needs and responsibilities, nor lead to an unreasonable diminution of capital.
Should the appellant have been ordered to pay the respondent $3,504 for reimbursement of expenses?
Introduction
[73] The final matter to consider is the appellant’s appeal against the Judge’s order, as follows:37
$3,504.00 for reimbursement of expenses under s 81 which was not contested and reliance on paragraph 35 of [counsel for the respondent’s] opening submissions.
[74] Section 79 of the Act provide that a natural parent of a child may be ordered to pay future or past maintenance to the other natural parent. The respondent applied for an order under these provisions at the same time as she applied for interim and final spousal maintenance orders. In her affidavit in support of the applications the respondent said that the application under ss 79-81 was for “items that the
37 At [31](c).
respondent refused to pay for”. The items include a sandpit, black-out blinds, nappies, swimming lessons and associated costs, groceries, books and toys, and Chinese herbs.
[75] In the course of her submissions at the appeal hearing, the respondent said that these costs were incurred at a time when the appellant was not paying child support, and not paying the interim maintenance ordered by Judge Druce. The respondent said that between September 2009 (when they separated) and February 2010, the appellant reimbursed her credit card expenses. However, she said, he did not reimburse expenses due on the card at the end of February 2010. She said that the appellant began paying child support, together with maintenance as ordered by Judge Druce, as from 1 March 2010.
Discussion
[76] Contrary to the Judge’s statement, it is clear that the claim under s 81 was contested. The appellant’s opposition to the claim was set out in his notice of opposition, and in his affidavit in opposition to the claims, sworn on 13 October 2010.
[77] Apart from the appellant’s assertion that the claim is for items that the appellant refused to pay for, I was not referred to any evidence concerning the claim. However, the appellant’s evidence was that for the first six to eight weeks after separation, he paid all of the respondent’s expenses, including her rent and all credit card expenses. He then paid her a “package” comprising rent, $961 a week in cash, health insurance for the respondent and the children, use of a vehicle, and other items from time to time.
[78] I accept Ms Chambers’ submission that, in the circumstances of the appellant’s opposition to the s 81 claim, and the evidence of the appellant’s financial support of the respondent and the children, which has continued since separation, the Judge erred in making an order under s 81. As Ms Chambers submitted, this is not a case of an unmarried couple where the father has not met the costs of the children. It is clear from the evidence that the appellant was supporting the respondent and the
children at the time the claimed expenses are said to have been incurred, and the appellant’s support was sufficient to enable the respondent to meet them.
Result
[79] The appeal against the order that the appellant pay $2,000 a week maintenance to the respondent is allowed. That order is quashed and substituted by an order that the appellant pay maintenance to the respondent in the sum of $1,680 a week. The order takes effect as from the date of this judgment, and remains in effect until 1 February 2015.
[80] Although Ms Chambers sought an order that the respondent repay maintenance already paid pursuant to the final maintenance order, I decline to make such an order. This is for the reasons that a substantial portion of the maintenance order comprised the rental payments paid to a third party, and that repayment of maintenance would place an unduly heavy burden on the respondent.
[81] The respondent submitted at the appeal hearing that the entire sum of maintenance should be paid directly to her; that is, it should not be the case that the appellant pays rent direct to the landlord, and the balance of the maintenance order to her. The respondent submitted that it would reduce conflict if she had her own rental agreement (as to which, she submitted, the appellant has not consulted her) and was able to deal with the entire maintenance sum. While I can appreciate the sense of the respondent receiving the total sum of maintenance, and it would promote the “clean break” principle, that was not before me. However, I urge the parties to consider a change of the arrangements, whereby the entire sum of the maintenance order can be paid directly to the respondent, and that she should be responsible for rent.
[82] The appeal against the order under s 81 is allowed, and the order that the appellant pay the respondent $3,504 is quashed.
[83] The appellant did not appeal against the order that he pay past maintenance to recover arrears and deductions in the sum of $5,647. That sum is to be paid forthwith, if it has not already been paid.
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Andrews J
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