E v N HC Whangarei CIV-2010-488-000767
[2011] NZHC 434
•21 April 2011
NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO 11D OF THE FAMILY COURTS ACT 1980. FOR FURTHER INFORMATION PLEASE SEE THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV-2010-488-000767
IN THE MATTER OF THE PROPERTY (RELATIONSHIPS) ACT 1976
BETWEEN E Appellant
ANDN Respondent
Hearing: 8 April 2011
Appearances: M Dodds for Appellant
W Galvin for Respondent
Judgment: 21 April 2011 at 3:30 PM
JUDGMENT OF VENNING J
This judgment was delivered by me on 21 April 2011 at 3.30 pm, pursuant to Rule 11.5 of the High
Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Galvin Law, Auckland
Copy to: M B Dodds, Kerikeri
E V N HC WHA CIV-2010-488-000767 21 April 2011
Introduction
[1] This is an appeal from a decision of Judge Druce in the Family Court at
Kaikohe.[1]
[1] E v N FC Kaikohe FAM-2007-027-27, 29 October 2010
[2] In the judgment Judge Druce upheld the validity of a property agreement concluded between the parties on or about 7 August 1998 when they were in a de facto relationship. The Judge rejected the appellant’s arguments that the agreement had not been properly executed as a deed and in any event, should be set aside on the grounds of duress, undue influence or as an unconscionable bargain.
Background
[3] I largely adopt the Judge’s summary of the background to the matters in issue. The parties commenced living together in June 1995, some four months after the appellant started working for the respondent as a manager of his new pool room and bar business. Although each owned their own home the appellant moved into the respondent’s home. In 1998 they became aware of impending changes to relationship property law. The respondent took legal advice and had two drafts of a property agreement prepared. At the time the respondent was 49 and the appellant
47. It was important to the respondent that the children of his earlier marriage would inherit his estate and he insisted on an agreement. The respondent made it clear to the appellant that unless she signed the agreement their relationship was over. After some weeks the appellant finally signed the agreement.
[4] The broad effect of the agreement was that each party was to retain their pre- relationship property as their separate property and that the parties were to share certain common property equally. Common property was defined as household furniture, chattels and motor vehicles acquired by common monetary contribution after their relationship commenced, together with certain defined bank accounts.
[5] The parties separated early in 2006. The hearing before Judge Druce was limited to determining the validity and enforceability of the 1998 agreement. It was accepted that if the agreement was a deed or otherwise contractually valid, and was not voidable on equitable grounds, then ss 21P and 21R of the Property (Relationships) Act 1976 applied. The agreement would take effect as if the Act did not apply.
The issues
[6] The principal issues before the Family Court and before this Court are: (a) Was the 1998 agreement executed as a deed by the appellant? (b) If the 1998 agreement was a deed, is it voidable due to duress?
The judgment under appeal
[7] In the judgment under appeal the Family Court Judge held that the agreement had been executed as a deed and that it had not been executed in circumstances of duress, undue influence or as an unconscionable bargain. The appellant appeals against those findings.
The approach to the appeal
[8] The appellant refers to the decisions of Austin, Nichols & Co Inc v Stichting Lodestar[2] and Kacem v Bashir[3] and submits that the appellant is entitled to judgment in accordance with the opinion of this Court even where the opinion involves an assessment of fact and degree and entails a value judgment. Mr Dodds submitted it is an error for this Court to defer to the lower Court’s assessment of the acceptability
and weight to be accorded to the evidence rather than forming its own opinion.
[2] Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.
[3] Kacem v Bashir [2010] NZSC 112, [2010] NZFLR 884.
[9] Ms Galvin accepted that this was a general appeal and not an appeal against a discretion. She submitted, however, the Court should not disregard the Family Court’s decision.
[10] To the extent that issues of credibility are relevant (and there are aspects of this appeal in which the appellant challenges the findings of the Family Court Judge against the appellant’s evidence), the following passage from Stichting Lodestar is also relevant:[4]
[4] At [13].
The appeal court must be persuaded that the decision is wrong, but in reaching that view no “deference” is required beyond the “customary” [Shotover Gorge Jet Boats Ltd v Jamieson [[1987] 1 NZLR 437 (CA)] at p 441 per Cooke P.] caution appropriate when seeing the witnesses provides an advantage because credibility is important. [As to such advantages, see, for example, Powell v Streatham Manor Nursing Home [1935] AC 243 [(HL)] at p 255 per Lord Atkin and at p 256 per Lord Macmillan.] Such caution when facts found by the trial judge turn on issues of credibility is illustrated by Rae v International Insurance Brokers (Nelson Marlborough) Ltd [[1998] 3 NZLR 190 (CA) at p 197 per Richardson P and Tipping J and at p 199 per Thomas J (where apparently broader statements must be read in the context of the appeal against conclusions of fact which turned on credibility)] and Rangatira Ltd v Commissioner of Inland Revenue.
(Emphasis added)
Was the agreement executed as a deed?
[11] The first ground advanced in support of the appeal was that the agreement had not been executed as a deed. During the course of his submissions, Mr Dodds sought an adjournment to confer with the appellant. After doing so, he advised that he was instructed to abandon the first ground of appeal. That was a realistic concession. I set out briefly the reasons why that ground could not succeed.
[12] It is common ground that s 9(2) of the Property Law Act 2007 applied to the execution of the agreement as a deed. The principal issue was whether the appellant’s signature had been witnessed in accordance with that provision at the time that she signed the agreement. That raised three subsidiary issues:
(a) first, whether the appellant had signed the agreement;
(b) second, whether a witness had also signed the agreement; and
(c) third, whether the witness had witnessed the signature of the appellant to the agreement.
[13] As to the first issue, both the appellant and respondent employed forensic document examiners to confirm the status of the signature attributed to the appellant on the agreement. Mr Dodds confirmed that the appellant accepts that it is her signature on the agreement before the Court. That resolves the first issue.
[14] On its face the agreement recorded that the appellant had signed in the presence of an unidentified solicitor at Auckland. Inquiries were made relating to the signature and a solicitor, Mr Johnson, came forward and confirmed in evidence that it was his signature on the agreement. That settles the second issue.
[15] Mr Johnson also gave evidence that he would not have signed as a witness to the appellant’s signature if the signature had already been on the document when presented to him. He said he would insist, if he was to witness any document, that he would have to see the document signed. His evidence on this point was not seriously challenged under cross-examination.
[16] Mr Dodds sought to make something of the fact Mr Johnson had no recollection of meeting the appellant and did not recognise her. That, however, is not surprising in the circumstances. Mr Johnson said that he had no record of opening a file for the appellant. As he had no file for her Mr Johnson said he would not have given her any advice. He said that he witnessed signatures to documents without charging a fee or opening a file, because he regarded it as a marketing exercise. It is extremely unlikely Mr Johnson would remember the details of a very brief, one-off meeting with the appellant (when all he did was witness her signature) some 12 years later in 2010.
[17] The appellant also said that as she lived and worked in Papakura there would have been no reason for her to have taken the document into a solicitor in Auckland to have it signed, especially if she did not seek advice. Mr Dodds criticised the
Judge’s supposition that perhaps Mr Johnson and the appellant had met on a social or recreational occasion. But that was no more than an observation on the Judge’s part. It was unnecessary for him to make a finding to that effect.
[18] With the passage of time the actual circumstances of the appellant signing the agreement cannot be established. But, as noted, Mr Johnson’s evidence as to his practice was largely unchallenged in cross-examination. Given that evidence it is hardly surprising Judge Druce found, on the balance of probabilities, that the appellant had signed the agreement in the presence of Mr Johnson who had witnessed her signature.
[19] Although that required the Judge to reject the appellant’s evidence that she signed the agreement in front of the respondent the Judge was entitled to reject the appellant’s evidence about that. It was in direct contrast to the evidence of the respondent which the Judge preferred.
[20] The respondent denied that the appellant signed the agreement in front of him. He said the appellant had returned home with the document signed, and he vividly recalled her walking down the hall, slamming the documents down, saying “There’s your precious bloody agreement all signed, satisfied now!” When the respondent asked who had witnessed her signature her reply was “No one you know”. The Judge accepted that evidence, finding the respondent’s account was “coherent”. He rejected the appellant’s evidence to the contrary. He was entitled to do so, having seen and heard the witness, particularly Mr Johnson, an independent witness whose evidence supported, or at least was consistent with, the respondent’s version. My review of the evidence does not lead me to take a different view of the evidence.
[21] In summary, the evidence supported the Judge’s finding that the agreement had been executed as a deed by the appellant in the presence of Mr Johnson who had witnessed her signature at the time.
[22] For those reasons there was no basis for the first ground of appeal.
The privilege issue
[23] Mr Dodds also raised a matter concerning the respondent’s reliance on privilege. He submitted the respondent had taken an unsatisfactory attitude to the appellant’s request for a waiver of privilege regarding the advice of his barrister, Mr Wiles. But as Ms Galvin explained, the respondent was seeing Mr Wiles on unrelated business matters of a confidential nature and did not wish to give a blanket waiver. The questions that the appellant sought to ask Mr Wiles were, in part at least, directed at whether Mr Wiles had had a connection or relationship with Mr Johnson. Those questions were answered by Mr Johnson. Even if the respondent could be criticised for his approach to privilege, (upon which I make no finding), it could have made no difference to the issues before the Family Court.
Was the agreement voidable for duress?
[24] The second ground of challenge was directed at the Judge’s finding that the agreement was not signed in circumstances of duress. Again, during submissions, Mr Dodds clarified that the appellant no longer pursued arguments that the agreement was executed in circumstances of undue influence or was an unconscionable bargain. As an agreement recognised under s 21R and executed as a deed, the agreement is therefore valid and binding unless the appellant had executed it under duress.
[25] The requirements for duress were confirmed by the Privy Council in the case of Attorney-General for England and Wales v R:[5]
[5] Attorney-General for England and Wales v R [2003] UKPC 22, [2004] 2 NZLR 577 at [15]–[16].
[15] In Universe Tankships Inc of Monrovia v International Transport Workers Federation [1983] 1 AC 366 at p 400 Lord Scarman said that there were two elements in the wrong of duress. One was pressure amounting to compulsion of the will of the victim and the second was the illegitimacy of the pressure. R says that to offer him the alternative of being RTU, which was regarded in the SAS as a public humiliation, was compulsion of his will. It left him no practical alternative. Their Lordships are content to assume that this was the case. But, as Lord Wilberforce and Lord Simon of Glaisdale said in Barton v Armstrong [1976] AC 104 at p 121:
“. . . in life . . . many acts are done under pressure, sometimes overwhelming pressure, so that one can say that the actor had no choice but to act. Absence of choice in this sense does not negate consent in law: for this the pressure must be one of a kind which the law does not regard as legitimate.”
[16] The legitimacy of the pressure must be examined from two aspects: first, the nature of the pressure and secondly, the nature of the demand which the pressure is applied to support: see Lord Scarman in the Universe Tankships case at p 401. Generally speaking, the threat of any form of unlawful action will be regarded as illegitimate. On the other hand, the fact that the threat is lawful does not necessarily make the pressure legitimate. As Lord Atkin said in Thorne v Motor Trade Association [1937] AC 797 at p
806:
“The ordinary blackmailer normally threatens to do what he has a perfect right to do – namely, communicate some compromising conduct to a person whose knowledge is likely to affect the person threatened. . . . What he has to justify is not the threat, but the demand of money.”
[26] In the present case the appellant says that she was compelled to sign the agreement because the only other option was to terminate the relationship. Mr Dodds submitted the appellant had effectively been given an ultimatum. The respondent had made it clear that there was no other alternative.
[27] The evidence confirms the respondent placed pressure on the appellant to sign the property agreement. The appellant did not want to sign the agreement. The respondent, however, was insistent that unless the appellant signed the agreement then their relationship would be terminated.
[28] The respondent’s evidence was that the agreement was available for execution for days if not weeks before the appellant took it away and signed it. Although the agreement was available, he said when he pressed the appellant as to why she would not sign, she would not give him any reasons. Ultimately he left the papers in the kitchen and said “There it is you have got to go and do that now, that’s the end, there is no more talking about it, that’s it” and about two days later he said “You’ve got to do this now, no more talking about it”.
[29] The respondent said he thought about two days after that the folder had gone from where he had left it and the appellant returned with it signed. From his point of view the agreement provided that what was his, was his and what was the appellant’s, was hers.
[30] While undoubtedly the respondent placed pressure on the appellant it could not be said that in the circumstances the pressure was such as to effectively take away her free will so that her execution of the agreement could not be said to be voluntary: Barton v Armstrong.[6]
[6] Barton v Armstrong [1976] AC 104 (PC) at 121.
[31] There was compulsion of the appellant’s will by the pressure placed on her by the respondent. However, as appears from the above citation, many acts are done under pressure, sometimes overwhelming pressure. Of itself, pressure does not necessarily negate consent in law. For it to do so the pressure must also be regarded as illegitimate.
[32] In the present case the threat or pressure was lawful. The respondent was entitled to terminate his relationship with the appellant if she refused to sign the agreement. The issue then becomes the nature and reasonableness of the pressure in the circumstances of the particular case.
[33] As the Judge observed, both parties were mature (49 and 47 at the time), and experienced in life. They had been living together for just on three years. The appellant had a full and intelligent understanding of the agreement’s purpose and effect. Both parties were competent and successful in business. There was a mutual degree of respect between them. The appellant managed the respondent’s business. There was no suggestion in the evidence that the appellant was at the time financially or emotionally dependent on the respondent to the extent she would have been unduly influenced in that way to sign the agreement. The appellant owned her own home which, at the time, she rented to members of her family. She was well aware of the effect of the agreement. In evidence she agreed she had raised the issue after she saw a news item. She had a real choice. While she might not have wanted to terminate the relationship, she could have at that time. That was her option.
[34] After the agreement was concluded the parties acted in accordance with the agreement. They continued their previous practice of keeping their finances separate. They never operated a joint bank account.
[35] While independent legal advice is not required for an agreement covered by s 21P to be valid, the availability or otherwise of legal advice may be a relevant factor on the issue of whether the pressure was illegitimate. While the appellant did not take legal advice, she accepted that originally, when the respondent presented the agreement to her, he told her she should see a lawyer. She also accepted that she was free to get her own legal advice about it. That was consistent with the respondent’s evidence that when he initially presented the agreement to the appellant he told her to take legal advice.
[36] When considering the nature of the pressure it is also relevant that the appellant had a lengthy period of time to consider the agreement before she signed it. The appellant agreed in cross-examination that some weeks passed between the time the agreement was originally presented to her and when she finally signed it. The respondent did not stand over the appellant, although towards the end of the period he did require her to either sign the agreement or leave.
[37] Next, while the appellant’s daughter described the respondent as being bossy, arrogant and selfish, and said that her mother was in a distressed state at the time she told her she had been required to sign the 1998 agreement, the Judge was entitled to take into account that the daughter would be partisan. Further, the daughter was not living with the parties at the time and her evidence was, at best, simply relaying what the appellant said to her.
[38] On the evidence the Judge was entitled to find that the appellant’s will had not been overborne by improper pressure on the part of the respondent to the extent that her free will and judgment had been displaced.
[39] The comments of William Young J delivering the judgment of the Court of
Appeal on this point in Harrison v Harrison are apposite:[7]
[7] Harrison v Harrison [2005] 2 NZLR 349 (CA) at [84].
In cases concerning contracting-out agreements, it will usually be the case that one of the parties (being the party with the most assets at risk) will have driven the proposal that such an agreement be entered into. ... In most instances, contracting-out agreements are signed against express or implicit threats directed at the underlying relationship. Such a threat may be along
the lines of that present in Wood of, “Sign the agreement or I will call off the wedding”. In the case of de facto partners about to become subject to the Property (Relationships) Act, the threat might be along the lines of, “Sign the agreement, or I am going to terminate the relationship”. It would be very destabilising of the contracting-out regime for the Courts to hold that the sort of pressure which is almost always present in such cases is itself a basis for holding that an agreement is unjust.
In Harrison the test was whether the giving effect to the agreement would cause serious injustice under s 21J of the Act but the passage recognises that the pressure inherent in situations such as the present will not, without more, be unjust or unlawful.
[40] There is a final point. The agreement was executed in 1998. The appellant has delayed taking any steps to challenge the agreement. Although the appellant says that she considered at the time that she had been forced to enter the agreement and was unhappy, she took no steps to take advice about that and did not commence proceedings to challenge the agreement until 2007.
[41] The Judge’s finding in the circumstance of the case was inevitable. The pressure the respondent placed on the appellant was legitimate or, put another way, was not illegitimate in the circumstances of this case.
Result
[42] The appeal is dismissed. Costs to the respondent on a 2B basis together with
disbursements, including counsel’s travel expenses.
Venning J
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