DWG v JCF

[2013] NZHC 650

IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY

CIV-2012-406-251 [2013] NZHC 650

UNDER  the Property (Relationships) Act 1976

IN THE MATTER OF     an appeal to the High Court

BETWEEN  DWG Appellant

AND  JCF

First Respondent

ANDTHE TRUSTEES OF THE DG FAMILY TRUST

Second Respondent

Hearing:         20 February 2013

Counsel:         B Fletcher and D P Neild for Appellant

B Millar for First and Second Respondents

Judgment:      27 March 2013

JUDGMENT OF MILLER J

Introduction

[1]    DWG appeals from a Family Court judgment1  setting aside his relationship property agreement with JCF for duress and serious injustice and, in consequence, ordering the trustees of DWG’s family trust to transfer the former family home and associated bare land to the parties as joint owners so that it can be divided between

them as if the relationship property agreement had never been signed.2

1      JCF v DWG and Trustees of the DG Family Trust [2012] NZFC 5854.

2      The trustees elected to take no part in the appeal.

DWG V JCF HC BLE CIV-2012-406-251 [27 March 2013]

A brief narrative3

[2]    DWG and JCF were born in 1959 and 1963 respectively.   They formed a relationship in 1980, and moved in together for a time in 1983.  That arrangement became permanent in 1984, when JCF moved into a home at Scotland St, Picton, that DWG had bought using an inheritance and borrowed funds.

[3]    Initially the couple sought to keep their finances separate.  Accounts were kept recording how much each had contributed to their spending.  DWG claims that he never accepted they were a couple and made that clear to JCF.

[4]    However, their financial  arrangements  changed  after the  first  of their  two children was born in 1996.  DWG closed his personal cheque account and the couple opened a joint account.  DWG says that he did this to protect the children in case anything should happen to him.  In 2000 they set up a partnership.

[5]    In  2000  the couple also  took  title jointly to  the family home,  which  was situated on a 13-acre property they purchased at Old Renwick Rd, Blenheim.  DWG claimed that  this  was  done at  the bank’s insistence because JCF’s income was needed to service the mortgage.  He says that in practice he made all the payments.

[6]    In 2001 DWG sold his Picton property and paid the net proceeds into the joint account.   In 2002 JCF opened a separate bank account at DWG’s insistence, and from then on he operated the former joint account alone.

[7]    Throughout  the  relationship  DWG  monitored  their  expenditure,  keeping ledgers that  recorded  a  running account  between  them.    Sometimes JCF repaid money that she had ‘borrowed’, as when (in 2006) she needed an operation. Nonetheless, the Judge found, DWG and JCF were financially interdependent; both contributed to household running costs, for example, and he supported her when she

was off work, while she put accident compensation payments into the joint account.

3      Based on the appellant’s chronology, which is agreed for these purposes.

[8]    In 2006 the parties’ sexual relationship ended, although they remained in the family home at Old Renwick Rd, and JCF instructed a lawyer, Audrey Seaton, to draft a separation agreement.  Negotiations did not proceed quickly.

[9]    In October 2007 the Old Renwick Rd property was divided into two, a house block of 3331m2 and an unimproved block of 4.8280 ha.

[10]  JCF moved out of the home in October 2007 and took a flat which she found unsatisfactory; it was small and damp, and gang members lived next door, and she thought it an unsuitable place for the children.  In May 2008 she told DWG that she was looking for a home in the $300,000 bracket and could afford a mortgage of

$200,000, meaning that she wanted $100,000 from relationship property.   DWG agreed.  It appears that JCF also asked for a further $100,000 if either Old Renwick Rd property was sold.

[11]  On 13 May 2008 JCF agreed to buy a property at Bridge St for $275,000, which she considered a very good price.  She was able to settle that purchase only because she and DWG signed the relationship property agreement, under which she was effectively paid $100,000.  Under the agreement, which was signed on 6 June, DWG took the two properties at Old Renwick Rd but agreed to transfer an interest of

$300,000 to a family trust that he set up for the purpose.  He and the children are the beneficiaries.

The s 21 agreement

[12]  The agreement was drafted by DWG’s lawyers, Gascoigne Wicks, and sent to Ms Seaton, who noted the absence of any valuation to support the figure of $800,000 which the agreement used as the equity in the Old Renwick Rd property.  She told JCF that the property could be worth much more, and advised that $100,000 was much less than the half share to which JCF was entitled.   She recommended borrowing against Old Renwick Rd to fund the Bridge St purchase while relationship property was sorted out.   As an alternative, she reluctantly suggested, the amount JCF was giving up could be put into a trust for the children.

[13]  However, DWG refused an advance from relationship property to let JCF fund the purchase, and JCF told Ms Seaton that DWG would never give her more than

$100,000.   So Ms Seaton suggested renting or staying with family, which would remove the pressure to settle.

[14]  On 4 June DWG proposed that he pay JCF $100,000 and put $300,000 into a trust for him and the children.   JCF insisted on accepting the offer, saying that she wanted to stay on good terms with DWG, to secure the Bridge St property, and to move on from the relationship.  Ms Seaton redrafted the agreement accordingly.  She had formed the opinion that JCF was under emotional and financial pressure, but not so as to amount to duress or undue influence.  Ms Seaton also considered that JCF did not need a protection order.  However, she was not told about bullying and abuse to which JCF later deposed at the hearing.

[15]  The agreement recited that while the parties had been in a relationship DWG maintained that it had not at any relevant time (that is, since 1 February 2002) been a relationship  for purposes  of the Property (Relationships) Act  1976,  and  that  he claimed all the property was his, but that he acknowledged she had contributed indirectly to it and should be compensated.   The two properties were valued at

$1.05m, and subject to a mortgage of about $250,000.  The agreement provided that

JCF would transfer them to DWG and in return he would by 3 July 2008 pay her

$100,000.  He would also assume liability for the mortgage and put a portion of the unimproved block equivalent to $300,000 into a trust the discretionary beneficiaries of which would be DWG and the two children.   He and an independent person would be the trustees, and he would have the sole power of appointment.

[16] The litigation has focused exclusively on the former family home.   The agreement recorded that all property in the possession of each party would be his or her separate property, but counsel did not argue that anything about such property or the manner of its division affects the decision whether to set the s 21 agreement aside.  In particular, it was not suggested that the value and division of other property affects the question of disparity.  The argument before me, as it seems in the Family Court, assumed that the family home was the only significant asset.

[17]  Ms Seaton required JCF to sign an acknowledgement that she had been told she was entitled to more than $100,000, that without more information Ms Seaton could not quantify just how much she was missing out on, that the agreement would be binding, and that she would have no control over the trust.

The trust deed

[18]  The  trust  deed,  which  is  dated  27  June  2008,  reflects  the  terms  of  the agreement.   It provides that: the trustees would receive a proportion of the unimproved value of land equivalent to $300,000; the trust is discretionary; any future partner of DWG will be an ineligible beneficiary; the clause listing beneficiaries may not be amended; the trustees may bring the 80-year date of distribution forward; the trustees may appropriate capital to any beneficiary at any time,  and  they may  do  so  in  specie;  and  no  distribution  may be  made  to  any beneficiary unless one of the trustees is an independent trustee.

The Family Court proceeding

[19]  In time JCF came to repent of her haste to settle.  She brought this proceeding in October 2010, seeking orders declaring the s 21 agreement void or alternatively, setting it aside, and determining each party’s share of relationship property.  DWG responded that: the agreement was binding and fair; the parties were not in a de facto relationship at any time since the Property (Relationships) Act 1976 was extended to de facto couples in February 2001; before 2001 they had an agreement which survived throughout and continued to govern their relationship until separation in

2007; and under that pre-existing agreement all property was separate.

[20]  In the Family Court JCF invoked s 21J of the Act.  She called evidence that the relationship was abusive and she was under much pressure at the time she signed the agreement, but she did not argue that the agreement should be set aside for duress or as an unconscionable bargain.  Nor did she argue that the trustees of the family trust ought to be ordered under s 44 of the Act to re-convey property to the couple for division.  Both counsel agreed that if JCF succeeded the appropriate remedy was an order that DWG compensate her from his property.

[21]  However,  the  agreement  was  set  aside  for  duress,  the  Judge  evidently considering that the evidence and argument sufficiently encompassed it.  The Judge also used s 44 of the Act to order that the trustees re-convey the trust property to the couple jointly.   In circumstances where the applicant had not invoked such jurisdiction  and  the  respondent  was  not  required  to  confront  it,  these  decisions cannot stand.  There is also force in Mr Fletcher’s arguments that the evidence does

not reach the high standard required for duress4  and there was no intention in the

circumstances to defeat JCF’s entitlement by transferring property to the trust.5    In the circumstances, I approach the case on the basis that the jurisdiction invoked is that found in s 21J of the Act.  The Judge also set the agreement aside under that section, and all of the factual findings remain relevant and available.  Both counsel were content to approach the case in that way.

[22]  I turn to the Judge’s main findings.  The first conclusion was that the parties were at all material times in a de facto relationship, which was well established before the Act captured such relationships from 1 February 2002 and survived until separation in 2007.  The Judge referred to the definition of de facto relationship in s

2D of the Act and reviewed the features of the relationship, finding that the parties lived together from at least 1984 until 2007, their relationship involved a great deal of  financial  interdependence  and  was  sexual,  they  had  children  whom  both committed to parenting, they bought the family home jointly, they shared household duties, and they presented publicly as a couple, albeit a sometimes unhappy one. The Judge rejected DWG’s claim that his absence of feeling for JCF meant they were never a couple, noting that love and affection is not one of the criteria listed in s 2D.

[23]  The Judge next dealt with the alleged property agreement predating the Act’s extension to de facto relationships.   Under s 21P of the Act such agreement may continue to determine the status, ownership and division of property between the

parties.  It may affect existing or future property, or both.  The section provides:

4      McIntyre v Nemesis DBK Ltd [2009] NZCA 329, [2010] 1 NZLR 463.

5      Even if the correct test under s 44 is to be found in Regal Castings Ltd v Lightbody [2008] NZSC

87 [2009] 2 NZLR 433 rather than Coles v Coles (1987) 4 NZFLR 621, (1987) 3 FRNZ 101 (CA).

21P     Agreements  made  before  1  August  2001  between  de  facto partners

(1)      This section applies to any agreement—

(a)       that is made, before 1 August 2001, by de facto partners, or by any 2 persons in contemplation of entering into a de facto relationship; and

(b)       that is made with respect to the status, ownership, or division of their property.

(2)      An agreement to which subsection (1) applies—

(a)      may relate to existing or future property, or both:

(b)       may relate to the status, ownership, or division of property in either or both of the following circumstances:

(i)       during the joint lives of the de facto partners: (ii)   when 1 of them dies.

(3)      Subsection (2) does not limit the generality of subsection (1).

[24]  The Judge observed that DWG claimed the agreement was entered before the parties began living together in 1984.  It was said to be an oral agreement, evidenced by their behaviour, that each of them would retain their own property and earnings, and there was no intention to share property.   He explained the joint account by saying he wanted to ensure JCF could look after the children should anything happen to him.  They continued to run ledgers and balance accounts from time to time.  For her part, JCF conceded that finances were kept separate to begin with but she said that practice ended in 1996 with the birth of the first child.

[25]  However, the Judge found that arrangements changed in 1996, bringing an end to any prior agreement.  The Judge did not find that the parties ever had a qualifying s 21P agreement; rather, there was insufficient evidence of a pre-2001 agreement that was still operating after 1996 when the joint account was opened and the family home purchased.

[26]  Next, the Judge dealt with the status of the s 21 agreement, finding that JCF had got independent advice and had been told of the effect and implications of the agreement, which accordingly met the formalities of s 21F of the Act.   That conclusion is not in dispute on appeal.

[27]  Turning to s 21J, the Judge discussed the authorities, citing Clark v Sims, TT v LAT, and MMK v GEP.6   The issue was whether the agreement was unfair at the time it was made.  At that time JCF got only 1/8 or 12.5% of the property.  (These figures indicate that the Judge was referring to the payment of $100,000 from equity of

$800,000.) She noted that the equity may in fact have been larger than $800,000.

[28]  The Judge  rejected  a submission  that  the transfer of $300,000  to  DWG’s family trust should be taken into account: DWG and the children were the discretionary beneficiaries and he had the power of appointment, while JCF had no influence whatever over the trust.  The only brake on DWG’s absolute control of the trust was the requirement that one trustee be independent.

[29]  The next question was why JCF signed so disadvantageous an agreement.  The Judge found that although the parties had separated some time before,  she still suffered the effects of a longstanding campaign of psychological abuse.  By that the Judge referred to his unpleasantness towards her both public and private, his volatile nature (he would sometimes abuse her, and sometimes beg her to stay), his insistence on control which extended not only to finances but also to claims that he owned her, and his sexual demands, which she sometimes found insistent and humiliating.  JCF said she was still being threatened when the agreement was signed, and the Judge held that he continued to exercise control over her at that time.  The Judge seems to have accepted that JCF was a vulnerable person; she deposed to being unable to read or write apart from the basics, and there was evidence from DWG that she had threatened suicide in earlier years.  At the time of the agreement JCF was desperate to get the Bridge St property for herself and the children, and DWH exploited that desire.   She signed not because she thought the division of property was fair but because she felt she had no choice.

[30] For these reasons the Judge concluded that the agreement caused serious injustice and set it aside under s 21J.

De facto relationship

6      Clark v Sims [2004] 2 NZLR 501; TT v LAT (2008) 27 FRNZ 95;  MMK v GEP FC  Dunedind

FAM-2010-012-983, 29 September 2011.

[31]  On appeal, Mr Fletcher sensibly did not confront the Judge’s conclusion that the parties were at all material times in a de facto relationship as that term is defined in s 2D of the Act.  In my opinion theirs was plainly a de facto relationship for the reasons given by the Judge.  They probably lived together as a couple from 1984, but certainly from 1996.  In particular, they shared not only the work of keeping a house and raising a family but also the costs of doing so, they acquired their family home and associated liabilities jointly, and they did not cease to be interdependent because DWG kept an accounting between them.

Serious injustice

The law

[32]  Section 21J provides:

21J      Court may set agreement aside if would cause serious injustice

(1)       Even though an agreement satisfies the requirements of section 21F, the Court may set the agreement aside if, having regard to all the circumstances, it is satisfied that giving effect to the agreement would cause serious injustice.

(2)       The Court may exercise the power in subsection (1) in the course of any proceedings under this Act, or on application made for the purpose.

(3)       This section does not limit or affect any enactment or rule of law or of equity that makes a contract void, voidable, or unenforceable on any other ground.

(4)       In  deciding,  under  this  section,  whether  giving  effect  to  an agreement made under section 21 or section 21A or section 21B would cause serious injustice, the Court must have regard to—

(a)      the provisions of the agreement:

(b)      the length of time since the agreement was made:

(c)       whether the agreement was unfair or unreasonable in the light of all the circumstances at the time it was made:

(d)       whether the agreement has become unfair or unreasonable in the light of any changes in circumstances since it was made (whether or not those changes were foreseen by the parties):

(e)       the fact that the parties wished to achieve certainty as to the status, ownership, and division of property by entering into the agreement:

(f)       any other matters that the Court considers relevant.

(5)       In  deciding,  under  this  section,  whether  giving  effect  to  an agreement made under section 21B would cause serious injustice, the Court must also have regard to whether the estate of the deceased spouse or [partner] has been wholly or partly distributed.

[33]  As Mr Fletcher submitted, a court will not set a s 21 agreement aside merely because it achieves a distribution that departs from the couple’s entitlements under the Act.   Couples have the right to contract out, and if they have observed the statutory formalities their agreements will normally be respected.   Departure from statutory entitlements may be the very point of such agreements.  The parties may also have valued certainty.

[34]  Settlement agreements need to broadly reflect each party’s entitlement under

the Act. In Harrison v Harrison the Court of Appeal stated:7

In most compromise cases, the parties will presumably set out to provide for a division of property which accords, at least broadly, to what would be ordered  under  the  statutory  regime.  So  where  there  is  a  significant discrepancy between what the agreement provides and the way in which the relevant  statutory  regime  would  have  operated,  this  in  itself  may  well suggest that the agreement is unfair or unreasonable and, as well, may well require explanation. In the case of a contracting out agreement, of course, the very purpose of the parties is to make provision which differs from the statutory regime.

[35]  The logic for this distinction is described in Boyd v van Houten as:8

where the parties have gone into a relationship without contracting out from the Act any subsequent bargain will be negotiated against the benefits that have accrued under the statute, whereas as in the paradigm contracting out case the future entitlements are irrelevant.

[36]  In Wells v Wells, Simon France J discussed Court of Appeal cases considering the meaning of serious injustice9 and identified the following principles:10

7      Harrison v Harrison [2005] 2 NZLR 349 (2004) 24 FRNZ 30 at [81].

8      Boyd v van Houten [2009] NZFLR 459 at [52].

9      Public Trust v Whyman [2005] 2 NZLR 696 (CA); Harrison v Harrison [2005] 2 NZLR 349;

(2004) 24 FRNZ 30

... I take the following principles and observations to apply to the assessment

of ‘serious injustice’:

(a)       serious  injustice  is  a  broad  discretion  which  must  be exercised in light of the policy underlying the legislation;

(b)       an  important  component  of  the  statutory  scheme  is  the capacity of parties to contract out of its provisions so long as certain procedural requirements are met;

(c)       resultant disparity of outcome at the time of separation is relevant, but is not generally as important a factor in contracting out cases as it might be in compromise cases. In any particular case it might of course require considerable weight, but generally it is not to be seen as a determinative or necessarily dominant consideration;

(d)       consistent with (c), a comparison to the outcomes that would be ordered if the Act were applied is relevant but not as significant as it might be in compromise cases;

(e)       contracting out will usually occur in circumstances where one party has the assets and is pushing for an agreement. The circumstances will often involve pressure, and may involve an issue of whether the relationship will continue in the absence of an agreement. Accordingly, the presence of such circumstances is not generally relevant to the issue of serious injustice;

(f)       more than disparity of outcome per se will often be present before serious injustice arises. Concerns with the procedure will often provide that extra factor. Case law will no doubt develop on the issue of what procedural concerns the Court is referring to. I assume that they are something other than a breach of the s 21F requirement;

(g)     a  discretion  exercised  in  accordance  with  these considerations will be difficult to disturb on appeal.

JCF’s entitlements apart from the agreement.

[37]  The legislation would normally confer upon JCF a right to half of the Old Renwick Rd property.  Mr Fletcher did not dispute that.  However, that is not an end of the matter, for DWG says apart from the agreement her entitlements would have been governed by an agreement entered before 2001.   Under that agreement, as DWG saw it, she was entitled to nothing that she did not own in her own right, and

no interest in the Old Renwick Rd property, which he effectively funded.

10     Wells v Wells [2006] NZFLR 870 at [37].

[38]  But while the parties had an agreement about property in 1984 there is no evidence that it extended to future property such as the home at Old Renwick Rd. Initially they simply regarded the house at Scotland St as DWG’s, and no question arose of sharing property.   I do not think it is possible to reconcile their joint purchase of Old Renwick Rd with an agreement that all property would be held separately.  The bank may have refused to finance DWG alone, but that is not the point.  By then he and JCF were financially interdependent.  They jointly bought the property as their family home and together assumed liability for the mortgage.  So I agree with the Judge that even if such agreement had once existed, it no longer did so by the time the Old Renwick Rd property was purchased.

[39]  I have paused over clause 8.1 of the s 21 agreement.  It provided that:

The parties agree that should the provisions of the Property (Relationships) Act 1976 apply then they entered into an agreement prior to 1 August 2002 as to the status ownership and division of both their present and future property.

[40]  It will be seen that clause 8.1 created no obligation, but recorded agreement as to a matter of fact and law, the provisional existence of a prior agreement dealing with future property.  It was provisional because DWG also denied - in the recitals - that the parties were ever in a de facto relationship.  I have found that there was no such prior agreement, and that if it existed it had ended by the time they purchased Old Renwick Rd.  It was not suggested before me that JCF is estopped by clause 8.1 from denying the existence of such agreement, and no such point appears to have been taken in the Family Court.  Indeed, neither counsel relied on clause 8.1 at all. In the circumstances I have treated clause 8.1 as an admission by JCF, a piece of evidence to be weighed along when evaluating the facts.   Having done that, the clause does not alter my conclusions.

[41]  It follows that but for the s 21 agreement JCF would have been entitled to half the equity in the property.

The negotiations

[42]  That brings me to JCF’s reasons for signing the agreement against the clear

advice of her lawyer.

[43]  Perhaps the dominant feature of the negotiations was JCF’s urgent desire to buy the Bridge St property.  That desire largely explains both timing and substance. She could not make the purchase without getting $100,000 from the relationship property.   Unquestionably much of this pressure was self-inflicted, as the Judge recognised.   She would not take Ms Seaton’s advice to let the property go and continue renting while she settled relationship property.   That does not mean that DWG’s conduct is irrelevant, however.   He exploited her desire for the Bridge St property to the hilt.   Not until she conceded did she get the money she needed to settle the purchase, which by then was a matter of urgency.  This behaviour cannot be discounted as a legitimate, albeit aggressive, negotiating tactic, because the property to which he denied her access was relationship property that he continued to occupy.

[44]  The Judge also found that the relationship had been abusive, and that legacy continued to affect JCF after the separation, which predated the agreement by some time.  I did not understand Mr Fletcher to contest these findings of fact; he argued rather that the pressures under which JCF found herself are commonplace.  It is true that  people  separating  often  experience  all  manner  of  emotional  and  financial

stresses, which are not enough in themselves to warrant setting-aside.11     But the

Judge’s findings go well beyond that.   They find some support in DWG’s own evidence.    He maintained that he had always treated JCF poorly, by not acknowledging her in public for example, to make it clear that he felt no affection for her and did not regard theirs as a relationship in the nature of marriage.  JCF also called a number of witnesses who corroborated her account, describing DWG as controlling and verbally abusive.  And of course the Judge was able to assess DWG and JCF in the witness box.  I accept the findings.

[45]  The  Judge  also  accepted  JCF’s  evidence  that  she  was  under  considerable

pressure from DWG at the time of the negotiations.  It seems clear from the evidence that  they had  dealings  otherwise  than  through  their  solicitors.    She  reported  to

11     Harrison v Harrison [2005] 2 NZLR 349 (2004) 24 FRNZ 30 at [84].

Ms Seaton, who thought she was under emotional pressure, that DWG would never give her more than $100,000.  JCF also said in evidence that she was getting threats from DWG; on one occasion he threatened to throw her down the stairs, on another he screamed at her, and on another he threatened her as she left and spat at her.  It is a reasonable inference from her evidence that these things happened at the time of the negotiations, and the Judge appears to have interpreted the evidence in that way.

Does the transfer of property to DWG’s family trust bear on the fairness of the s 21 agreement?

[46]  Mr  Fletcher  argued  that  the  Judge  was  wrong  to  discount  the  transfer  of

$300,000 to DWG’s family trust.  He emphasised that JCF suggested it, then agreed to the terms on which the transfer was made.   He invoked s 26 of the Act, which deals with property settled upon children of a relationship.   He argued that the children are beneficiaries and it is wrong to assume that a transfer to the trust is tantamount to a transfer to DWG personally.  No distribution can be made to him without the approval of the independent trustee.

[47]  The question for s 21J purposes is whether a transfer to the trust under the s 21 agreement  compensates  for  what  would  otherwise  be  an  unequal  distribution between de facto partners.   I emphasise that that is a very different question from whether the trust itself was a sham.  It is not the creation of the trust and transfer of property to it that is in issue but, as between the de facto partners, the loss of JCF’s entitlements under the Act.  As I have said, it is not in dispute that if the answer to the question is no, DWG is able to compensate JCF from his share of relationship property; no relief is necessary as against the trust.

[48]  As noted, Mr Fletcher invoked s 26 of the Act, which provides:

26       Orders for benefit of children of marriage[, civil union, or de facto relationship

(1)       In proceedings under this Act, the Court must have regard to the interests of any minor or dependent children of the marriage, civil union, or de facto relationship and, if it considers it just, may make an order settling the relationship property or any part of that property for the benefit of the children of the marriage, civil union, or de facto relationship or of any of them.]

(2)       If the Court makes an order under subsection (1), the Court may reserve such interest (if any) of either spouse or [partner], or of both of them, in the relationship property as the Court considers just.

(3)       An order under this section may be made and has effect regardless of any agreement under Part 6.

[49]  Of course the Family Court was not being asked to settle property on or for the benefit of the children.  Mr Fletcher’s point rather was that the parties had done so through the trust, and that must be taken to be in the interests of the children. However, I am not persuaded that the Judge was wrong to discount the transfer to the family trust.   Section 26 contemplates that property may be taken out of the relationship pool and settled on the children, affecting the otherwise appropriate distribution between their parents.  In this case property has been settled on a trust, but little weight should be given to that when the children are discretionary beneficiaries and DWG not only is a beneficiary alongside them but also controls the trust through the power of appointment.  I agree with the Judge that as between JCF and DWG the transfer of $300,000 to the trust does not compensate for the loss of JCF’s entitlements.

[50]  Finally, I note that while Ms Seaton first raised the idea of a trust, she did so very reluctantly to make the best of a bad situation, and she proposed that the children should be the sole beneficiaries.   Had  the trust been structured as she proposed, the outcome might well have been different.

Assessment

[51]  So the question remains whether the disparity of $300,000 means that the agreement was seriously unjust as between JCF and DWG.  The question must be answered as at the date of execution.  It was not suggested that it has become more or less so with the passage of time, or that it was unjust at the time because the parties’ equity was much more than the assumed figure that they adopted in the

agreement.12    To aid me in the assessment I have considered a number of broadly comparable cases.13

[52]  I begin by observing that the agreement took from JCF rights to share equally in relationship property that had accrued to her under the legislation; it is not a contracting-out case.   The existence of those rights was in issue, but it does not appear that the settlement was motivated by a desire for certainty, at least on JCF’s part.   It happened when it did, and on those terms, because of her desire for the Bridge St property.

[53]  JCF chose to settle despite clear legal advice that she should not do so, and had alternatives  available  to  her.    The settlement  also  happened  many months  after separation.   In these circumstances it is not easy for an applicant to show that an unfair process caused inequality of outcome.

[54]  However, the Judge Family Court has found that JCF was under considerable emotional pressure from DWG at the time.  Specifically, the Judge accepted JCF’s evidence that the relationship had been abusive and appears to have accepted that DWG threatened her at the time of the negotiations.

[55]  Consistent  with  those  findings,  there  was  very  little  give  and  take  in negotiations.  DWG also exploited his control over relationship property to deny JCF an advance from it, placing her in a take it or leave it situation.

[56]  JCF could not be sure about the value of what she was giving up, but as it turns out there was no material non-disclosure.  The estimate of the property’s net value

used in the agreement was not far wrong.

12     Ms Millar advised that JCF now believes the equity was $896,000, but it was not suggested that

I ought to rely on that figure, which is not in evidence.

13     SB v GMH HC Hamilton CIV-2010-419-887, 14 December 2010;   BMS v BDS FC Dunedin FAM-2007-045-132, 15 July 2011;  Clark v Sims [2004] 2 NZLR 501; (2004) 23 FRNZ 757 (HC) at [62]-[65]; Bronte v Firth FC Dunedin FAM-2010-012-983, 29 September 2011;  Guan v Chen HC Auckland CIV 2004-404-003818, 3 March 2005 and Babylon v Babylon HC Auckland CIV-2006-

404-3217, 12 October 2007.

[57]  However, the ultimate disparity, $300,000, is very substantial in this couple’s circumstances.  It resulted in JCF receiving one eighth of the net value of the former family home.

[58]  In the end, I am not persuaded that the Judge was wrong to conclude that the agreement was seriously unjust and ought to be set aside.

Decision

[59] The appeal is allowed to the extent that the orders requiring the second respondents to transfer property to the parties are set aside.  The appeal against the order setting aside the agreement under s 21J is dismissed.

[60]  The result is that the parties’ shares of relationship property remain to be settled formally in the Family Court.  It cannot now be disputed that JCF is entitled to have DWG pay her a half share of the Renwick Rd property, but the value of that property remains to be confirmed, and any other property affected by the s 21J agreement must now be divided according to the parties’ entitlements.   The proceeding is remitted to the Family Court accordingly.

[61]  Having  succeeded,  JCF  will  have  costs  in  this  Court  on  a  2B  basis. Memoranda may be filed if counsel cannot agree quantum.   They must make the attempt.   If they cannot agree, Ms Millar’s memorandum must be filed within six weeks of the date of this judgment, and Mr Fletcher’s within a further two weeks.

Miller J

Solicitors:

Gascoigne Wicks, Blenheim for Appellant

Wisheart McNab and Partners, Blenheim for Respondent