Farrimond v Farrimond

[2017] NZHC 1450

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-FAMILY-COURT/LEGISLATION/RESTRICTION-ON-PUBLISHING- JUDGMENTS.

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-3133 [2017] NZHC 1450

UNDER	The Property (Relationships) Act 1976
BETWEEN	ERICA STEPHANIE FARRIMOND Appellant
AND	JASON EDWARD FARRIMOND Respondent

Hearing:	23 May 2017
Counsel:	AJH Witten-Hannah for appellant WW Galvin for respondent
Judgment:	28 June 2017

JUDGMENT OF FITZGERALD J [Appeal against Family Court decision]

This judgment was delivered by me on 28 June 2017 at 11:30 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Farrimond v Farrimond [2017] NZHC 1450 [28 June 2017]

Solicitors:         Witten-Hannah Howard, Auckland

The Law Lounge, Auckland

[1]      This appeal addresses a short but important point as to the classification of a family home under the Property (Relationships) Act 1976 (“Act”).   In what circumstances can a house in which a family was not living at the time of separation nevertheless be classified as a “family home” for the purposes of relationship property division?

General factual background

[2]      The factual background to this case can be set out briefly.

[3]      In 2002, Mr Farrimond bought a house in Glenfield, Auckland.  About two years later, Mrs Farrimond moved in with him.   They married in 2005 and lived together at the Glenfield property until early 2013.  During their time at the property, the parties’ three children were born.  A bereavement in the immediate family in September 2008 undoubtedly caused considerable grief and dislocation in their relationship.  Nevertheless, the parties remained together for a significant period of time after these events.

[4]     In February or March 2013, the parties decided to move into rented accommodation in Manly, Whangaparaoa.  Mrs Farrimond described the move as a temporary “time-out”, and a way to “get us back some zest of life”, as both parties liked water sports and being by the beach.  They first rented the property for a three- month probation period due to the landlord’s initial unease about having pets at the house. But the probation period was successful and the parties later signed a 12-month lease of the property.  As detailed below, however, the parties now disagree as to the intended degree of permanency behind this move.

[5]      In the meantime, the Glenfield property was rented out and the proceeds used to fund the rental payments of the Manly house. I was informed at the hearing that the Glenfield property was rented on the basis of a periodic (monthly) tenancy.

[6]      The parties separated soon after taking up the Manly rental, in November 2013. They now disagree about their respective entitlements to the Glenfield property.  If it

can be classified as a “family home” under the Act, Mrs Farrimond will be entitled to a half share of it.

The parties’ evidence in some further detail

[7]      Mrs Farrimond gave evidence in the Family Court that the move to Manly was only intended to be temporary.  In this context, Mrs Farrimond pointed to the tenancy agreement for the Manly property (signed by both parties), which recorded that:

We have owned our own home since 2002. We are wanting to keep our home in Auckland and have a change of life renting in Manly.

[8]      Mrs Farrimond also highlighted that the parties kept a significant number of personal belongings at the Glenfield property, and she said she “regularly” dropped off and uplifted clothes and other possessions. In summary, her evidence was that the parties intended to move back to the Glenfield home once the lease on the Manly property expired.  She believed this was at least partly due to the fact Mr Farrimond had concerns about the commute between Manly and his workplace.  She also noted that, after the parties had separated, they both continued to contribute equally to the mortgage payments on the Glenfield property, and for a period of three months, she fully paid the mortgage payments when Mr Farrimond was unable to.  She also gave evidence she continued to deal with the tenants at the Glenfield property after separation.

[9]      Mr Farrimond’s view, on the other hand, is that the parties’ principal residence at the time of separation was the Manly property, and that the Glenfield home no longer fell within the definition of “family home”.  In summary, his evidence was that no decision had been made to move back to the Glenfield property. A significant amount of their personal effects and furniture had been moved to Manly.  Mr Farrimond did not dispute that he was finding the commute from Manly to and from his work difficult. However, he says that Mrs Farrimond never really liked the Glenfield home and if they were going to move somewhere else after one year at Manly, this probably would not have been back to Glenfield.  Judge de Jong accordingly summed up Mr

Farrimond’s evidence as being that “there was no decision about what was to happen”

when the one-year Manly lease expired.1

[10]     Ultimately,  the  highest  Mr  Farrimond’s  evidence  can  be  put,  and  as summarised by his counsel, Ms Galvin, at the hearing before me, is that, while there was no intention to sell Glenfield, whether or not they would return to that property was, at the time of separation, “up in the air”.

[11]     Ms Galvin submits that on this basis, the Glenfield home had reverted to being Mr Farrimond’s separate property (as it was before the relationship began), and therefore Mrs Farrimond is not entitled to a share in its value.

[12]     There is no dispute that, other than a potential share in the Glenfield property, there is no other substantial relationship property to be divided between the parties.

The Family Court decision

[13]     Judge de Jong in the Family Court began by noting the following matters, which were common ground between the parties:

(a)      The Glenfield home was Mr Farrimond’s separate property before their relationship began.

(b)The estimated value of the Glenfield home when the relationship began was $280,000. A registered valuation from March 2016 assessed it had increased in value to $830,500.  That increase is solely attributable to inflation.

(c)      The mortgage on the property was varied around the beginning of 2010 to raise approximately $100,000 for a business venture, which was ultimately unsuccessful.  It is agreed the business debt is relationship

property.

1      Farrimond v Farrimond [2016] NZFC 9599 at [19].

(d)The parties lived together in the Glenfield property from the beginning of 2004 to the beginning of 2013.  During this time, the parties’ three children were born.

(e)      The parties stopped living at the Glenfield property around February or

March 2013, when they moved into the rental property in Manly.

[14]     Judge de Jong considered the parties’ respective evidence and set out his approach to the classification of the Glenfield home:2

Whether the Manly rental home or Glenfield home is the family home depends on the use these particular properties were put around the time the parties separated.

[Emphasis added]

[15]     There was no dispute that at least until February/March 2013, the Glenfield home was the family home. Judge de Jong observed that the fact that it had once been the family home did not mean it necessarily retained that status (with which I agree). The Judge went on to find that the Glenfield home had ceased to be the family home (and therefore the Manly rental property had acquired that status) as at the time of separation.  Importantly, Judge de Jong concluded that:

I am not satisfied on the balance of probabilities that the parties necessarily intended to return to live in the Glenfield home.

Approach on appeal

[16]     Relationship property appeals from the Family Court proceed by way of a rehearing.3    Because the classification of relationship property is an evaluative exercise (rather than a discretionary one), appeals against such decisions are general appeals.  While I must take into account the advantage Judge de Jong had in hearing and seeing the parties give evidence, I am free to substitute my own findings as to

classification if I reach a different conclusion.4

2 At [24].

3      Property (Relationships) Act, s 39, incorporating District Courts Act 1947, s 75.

4      Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16];

B v F [2010] NZFLR 67 (HC) at [6].

The statutory background to the “family home” question

[17]     Although s 9 of the Act creates a presumption that property acquired before a relationship begins is separate property, this presumption does not apply to the family home.  A family home is deemed to be relationship property no matter when it was acquired.5   The consequence of this is that parties will be entitled to equal shares in the family home upon the division of relationship property.6

[18]     Family home is defined in Act as follows:

family home—

(a)       means the dwellinghouse that either or both of the spouses or partners  use  habitually  or from  time  to  time  as  the  only  or principal family residence, together with any land, buildings, or improvements appurtenant to that dwellinghouse and used wholly or principally for the purposes of the household; and

(b)      includes a joint family home.

[Emphasis added]

[19]     The following principles as to the wording of this definition can be distilled from the relevant authorities:

(a)      The use of the words “habitually” and “from time to time” indicates that a house can be classified as a family home even if it is not in constant use as the family residence.7

(b)      The word “use” in the definition is not necessarily synonymous with

“occupy”, although that may commonly be the case.8

(c)      There is no minimum threshold of activities required before a house will qualify a “family residence”.  The concept is a matter of common

sense and the inquiry in each case will be intensely fact specific.9

5      Section 8.

6      Section 11.

7      Beuker v Beuker (1977) 1 MPC 20 (HC) at 22 (per McMullin J).

8      Symonds v Symonds (1977) 1 MPC 201 (HC) at 203 (per Somers J).

9      Ellis v Ellis (2008) 27 FRNZ 266 (HC) at [24].

The words “wholly or principally” give rise to a question of degree; the true test being “for what purpose are the  dwellinghouse and  land principally used.”10

[20]     And as to the application of the definition:

(a)      First, there is no “onus of proof” on any party to establish that a particular property is, or is not, a family home. Rather, the issue is one of classification, which requires the court to be satisfied that a particular state of affairs exists.11

(b)      Second, there cannot be more than one family home at any time.12

(c)       Third, there need not be a family home in every case.13

(d)Fourth, where a relationship has ended, and where the classification of property depends upon its use, that classification is to be determined on the basis of the use to which the property was being put before the relationship ended.14  This point is particularly important in the present case, and will be discussed in some detail below.

(e)      Finally, the fact that a house has been used as a family home at an earlier point in time does mean that the house will retain that character and receive classification as a family home under the Act. If a house ceases to be the family home before a relationship ends, its classification will revert to the status it would have had at the time the relationship

began.15

10     Jack v Jack [1987] 1 NZLR 1076 (CA) at 213 (per McMullin J), citing North J in Fairmaid v Otago District Land Registrar [1952] NZLR 782 at 787.

11     Hyde v Hyde [2009] NZCA 125, [2010] 1 NZLR 224 at [45]; M v B [2006] 3 NZLR 660 (CA) at

[50].

12     Buljan v Buljan (1981) 4 MPC 30 (CA) at 31; Murphy v Kliangklao-Welsh [2014] NZHC 3120 at

[23]; Besley v Besley (1990) 6 FRNZ 291 (HC) at 297.

13     See s 11B of the Act.

14     Section 2H(2)(b).

15     Castle v Castle [1977] 2 NZLR 97 (HC) at 99-100; Oakley v Oakley (1980) 3 MPC 127 (HC) at

[21]     Applying the definition and principles to the present case, it is beyond dispute that the Glenfield property would have been classified as the family home had Mr and Mrs Farrimond separated before their move to Manly.  Indeed, this was not disputed in the Family Court or before me.

Classification based on use “before” the time of separation

[22]     The issue to be resolved, however, is whether the Glenfield property can be now classified as the family home given that the parties had been living at the Manly property for a number of months before they separated.

[23]     In resolving this issue, it is of critical importance that the Glenfield property is not to be classified based on its use by Mr and Mrs Farrimond at the date of separation. Rather, the classification is to instead be determined based on the use to which the property was being put before the marriage ended. This clear from s 2H itself:

2H      Determination of use to which property put

(1)      This section applies where the classification of any property as relationship property or as any particular type of relationship property depends on the use to which it has been put.

(2)      Where this section applies, that classification is to be determined— (a)      by the use to which it was put by the spouses or partners; or

(b)       if the marriage, civil union, or de facto relationship has ended (other than by the death of one of the spouses or partners), by the use to which it was being put before the marriage, civil union, or de facto relationship ended.

[Emphasis added]

[24]     In submissions before me, Mr Witten-Hannah for Mrs Farrimond, mainly relied on the “holistic” interpretation of the predecessor to s 2H adopted by the Court of Appeal in Evers v Evers.16   This is the only decision in which it appears the Court

of Appeal has given detailed consideration to this statutory provision.17

128.

16     Evers v Evers [1985] 2 NZLR 209 (CA).

17     Evers v Evers was decided under s 2(4) of the Act’s previous iteration, the Matrimonial Property Act 1976.  However, that provision is not materially different to s 2H for the purpose of this proceeding. Section 2(4) provided:

Where the classification of any property as matrimonial property or as any particular type of matrimonial property depends on the use to which it has been put, that classification shall be

[25]   Although Richardson J (giving the unanimous judgment of the Court) considered that the issues in the immediate case could be easily resolved on settled principles, he went on to confirm the correct approach to applying the expression “before” in the context of classifying relationship property.

[26]     Richardson J began by noting the ordinary and natural meaning of the word, being “previously to the time when” or “up to the time when”.  He then noted that classification depends on the “use” of the property, a matter which may change abruptly or over time.  Uses which are “spent” should not be considered material to classification, and so he considered it would be wrong to widely interpret “before” as meaning “at any time before”.  He further noted that it would be equally artificial to narrowly focus on actual use of the property at the time of the breakup by interpreting “before” as “immediately before”.  His Honour observed that these two “extreme” approaches “would not accord with either the ordinary meaning of the language or the purposes of this social legislation”.18

[27]     Richardson J therefore concluded by setting out that classification should take into account a survey of the parties’ “substantial” use of the property up to the time of separation, and that such an inquiry may involve going back some distance in time:19

It is a matter of surveying the pattern of use of the particular item of property up to the time the parties ceased to live together in order to determine as at that date (in the case of either category of matrimonial property) how the property is to be shared.  Concern is not with fleeting or transient uses, but with what may fairly be characterised as the substantial use or uses made of the property before the spouses parted. While the starting point for the investigation need not be fixed with precision the history of the use of the property cannot be disregarded and the inquiry may often involve going back some distance in time in order to obtain a fair picture of the use of the property in the period before the separation.

[Emphasis added]

[28]     I am, of course, bound by the approach in Evers v Evers.

determined by the use to which it was put by the parties to the marriage, or, if they have ceased to live together as husband and wife, to the use to which it was being put before the parties to the marriage ceased to live together as husband and wife.

18     At 211.

19     At 211.

[29]     Given the approach adopted by the Court of Appeal in Evers v Evers, I consider the Judge erred in adopting a test of the use to which the respective properties in this case were put “around the time the parties separated”20 – at least to the extent such an approach fails to survey the pattern of use of the respective properties over what may a significant period of time.

[30]     There are few other authorities directly addressing the issue before me.  What the relevant cases indicate is that the task of determining the proper classification of property is an intensely fact-specific exercise:

(a)      In Buljan v Buljan, the parties had spent the first four years of their marriage living at a Ponsonby property that had been purchased by the husband well before the marriage.21     The parties later moved to a property they had purchased in Hobsonville and lived there for a further four years before separating.  There was no dispute that, at least until the move to Hobsonville, the Ponsonby property had been the matrimonial  home. And  there  was  no  evidence  that  the  move  to Hobsonville was anything other than permanent.  Although the High Court held that the Ponsonby property was still a matrimonial home at the time of separation, the Court of Appeal reversed this decision and concluded that, upon the move to Hobsonville, the Ponsonby property had ceased to be the matrimonial home.22

(b)In Thompson v Thompson, Potter J referenced the test in Evers v Evers in considering whether the past use of a property as the matrimonial home had been “spent” when it was sold and its proceeds used to purchase a second property (which was then used by the family as their home).23      Given the first  home had  been  sold,  Potter J  had  little difficulty in concluding that “the past use of the [property] as the

matrimonial home was spent when it ceased to be so used by the

20     Farrimond v Farrimond, above n 1, at [24].

21     Buljan v Buljan, above n 12.

22     See also Newman v Lee HC Greymouth CIV-2004-418-3, 19 March 2004 at [15].

23     Thompson v Thompson [2000] NZFLR 161 (HC).

husband and wife” and so was “no longer material in determining the classification of that property”.24

(c)      In Ellis v Ellis (a case relied on by Mr Farrimond), the house in issue had been rented out to third parties for three years by the time of separation.25   Dobson J found that the parties had been using different addresses as their principal residences over that period, and he considered it particularly significant that the wife declined to move back into the house in the period before the separation, despite there being no legal impediment to her doing so.26    In effect, Dobson J’s reasoning was that the use of the house in issue as the family home was very much “spent”, meaning the house could not be a family home in terms of the Act.

(d)Finally, use of a house as the family home was similarly “spent” upon its sale in Foote v Rae.27

[31]     These cases lead me to the view that, ultimately, on the basis of all of the evidence before the court, and adopting the approach mandated by Evers v Evers, the court must consider whether a property’s use as the family home is “spent” by the time of separation.28

Analysis

[32]     A key aspect of Judge de Jong’s decision is his finding that he was not satisfied

“on the balance of probabilities that the parties necessarily intended to return to

24 At [18].

25     Ellis v Ellis, above n 9.

26 At [27].

27     Foote v Rea HC Tauranga CIV-2009-470-521, 10 May 2010 at [44].

28     For completeness, I do not consider a “moment in time” approach was proposed or intended by Somers J in the High Court decision of Oakley v Oakley, above n 15. In that case, the Judge said (at 128) “the characterisation of the property falls to be made at the date of the parties being separated” (emphasis added). However, that would have been inconsistent with the then statutory

test in force for the classification of property, being in materially the same terms as what is now

set out in s 2H of the Act. That the Judge did not intend such an approach is reinforced by the fact that he looked back in time from the point of separation when considering the use of the property in that case. Moreover, this was not the key issue being considered, which was the meaning of the word “acquired” in s 8(e) of the Matrimonial Property Act.  Lastly, this case was decided prior to the Court of Appeal’s specific consideration of the matter in Evers v Evers, above n 22.

Glenfield”.  However, given that until February/March 2013, the Glenfield property was plainly the family home and that, by separation some nine months later, no decision had been taken not to return to Glenfield upon expiry of the Manly lease, I do not consider the Judge’s summary of the evidence to be critical or decisive.

[33]     Turning then to survey the parties’ use of the Glenfield home up until the date of their separation, plainly the very predominant and sustained use had been as the family home.   That was undoubtedly the case up until February/March 2013. Thereafter, for a period of approximately 270 days, the family resided at the Manly rental property. As such, the Glenfield property had been the parties’ family home for around 93 per cent of their relationship.

[34]     That fact is, of course, not decisive.   If the parties had sold the Glenfield property in March 2013, its use as the family home would have been spent.29   That would have also been the case had it been clear that the move away from Glenfield was intended to be permanent.  However, I consider it to be material that the parties had never decisively parted ways with the property.  It had not been sold.  It was not rented on a long-term tenancy.  As noted, Mrs Farrimond’s evidence was that the family intended to return to the Glenfield property at the end of the 12 months at Manly. And even on Mr Farrimond’s evidence, the parties were still “up in the air” as to what would happen at the end of the Manly lease.

[35]     In this context, and surveying the pattern of use of the property up to the time the parties ceased to live together, I am not satisfied that the Glenfield property had lost its status as the family home before the time of separation.   This case is far removed from those where the parties had sold what had previously been the family home;30 been living away from the family home for some considerable time;31 or had clearly intended to move away on a permanent basis.32    And, given the particular

factual circumstances of this case, I do not consider it fatal to the property retaining

29     Although the proceeds would still be subject to equal division if the conditions in s 11A of the Act are satisfied.

30     See Foote v Rea; above n 27, and Thompson v Thompson, above n 23.

31     See Ellis v Ellis, above n 9.

32     See Buljan v Buljan, above n 12.

its classification as the family home (at least up to November 2013), that the family had not lived at Glenfield for a number of months.33

[36]     There can, of course, be only one family home at any one time.  The above conclusion means that, by the time of separation, the Manly property could not properly be classified as the family home under the Act.   While the family was certainly residing at that property at the time of separation, residence alone is not, in my view, the solely determinative matter.  For example, if a family moved out of the family home for a lengthy period of time to enable major renovations to occur, the family would necessarily be residing on a day-to-day basis, and for a sustained period of time, in a home which would not properly be categorised as the family home.34  So too in the case of a family taking an extended sabbatical overseas or in another part of the country, renting out the family home in the interim.   It would no doubt be surprising to the parties concerned if their family home ceased to have that classification as a result of those actions.   Accordingly, and adopting the broader approach to “before” required by Evers v Evers, I do not consider the Glenfield property’s use as the family home had, at least by November 2013, been spent.

[37]     For completeness, Ms Galvin referred me to a number of other decisions, including Prasad v Prasad and KGDS v KEMS.35   Having reviewed those decisions and as intimated to Ms Galvin at the hearing, I do not consider they advance the analysis any further. Rather, they serve to reinforce that the outcome of each case will be intensely fact-specific.

Section 17 claim

[38]     Given  my finding that,  at  the time  of separation,  the Glenfield  property remained the family home, s 17 does not apply (given it applies only to separate

33     See Beuker v Beuker, above n 7, and Castle v Castle, above n 15. Indeed, that the parties may not reside in the property on a permanent basis is inherent in the reference to “time to time” in the statutory definition.

34     Fogarty J recorded a similar hypothetical observation in Newman v Lee, above n 22, at [8], namely where a couple was building a home but living in temporary accommodation while the home was completed, the home under construction being the matrimonial home.

35     Prasad v Prasad [2015] NZFC 8298; KGDS v KGDS [2012] NZFC 4797.

property). Accordingly, my finding that the Glenfield home remained the family home necessitates setting aside the Judge’s findings and orders in respect of s 17.36

Result

[39]     The appeal is allowed.   The Glenfield home is properly categorised as the “family home” in terms of s 8(1)(a) of the Act.  I remit the matter to the Family Court in case further orders as to the division of property are required.

[40]     The Judge’s findings and rulings in respect of s 17 are set aside.

Costs

[41]     As Mrs Farrimond has been successful, she is entitled to costs on this appeal. If the parties are unable to agree as to costs, memoranda (being no more than five pages in length) may be filed.  Absent a request for a hearing, I will then determine

costs on the papers.

Fitzgerald J

36     No express findings were made in Judge de Jong’s judgment in respect of s 18B of the Act.  This claim was also, in effect, advanced by the appellant as an alternative to the primary claim that the Glenfield property was the family home; see, for example, paragraph 60 of the appellant’s submissions on appeal. Given my findings in respect of the Glenfield property, I would not have

exercised my discretion to award further compensation under s 18B in any event.