Fisher v Fisher
[2015] NZHC 2693
•2 November 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-000574 [2015] NZHC 2693
BETWEEN RICHARD IAN FISHER
Appellant
AND
RAEWYN DAWN FISHER Respondent
Hearing: 20 October 2015 Appearances:
R C Knight and T Kelly for the Appellant
V Crawshaw and J Wademan for the RespondentJudgment:
2 November 2015
JUDGMENT OF NATION J
[1] The appellant (Mr Fisher) appeals against decisions of his Honour Judge Burns in the Family Court ordering both parties to file and serve a full list of documents and his refusal to transfer the proceedings to the High Court.1
[2] Mr Fisher had also made an application in the High Court for a stay of execution of the orders for discovery. That application for stay, by agreement, is also before the Court on the hearing of the appeal.
Approach on appeal
[3] Section 39 Property (Relationships) Act 1976 (PRA) provides a right of appeal against the Family Court making or refusing to make an order. Section 39(3) imports the High Court’s Rules and ss 74-78 of the District Courts Act 1947 as part
of the procedure on appeal. Pursuant to s 75, the appeal is by way of rehearing. I
1 Fisher v Fisher [2015] NZFC 1285.
FISHER v FISHER [2015] NZHC 2693 [2 November 2015]
am accordingly required to reconsider the Family Court’s decision and to substitute
my own view if I am satisfied the original Family Court decision was wrong.
[4] I must, however, also recognise any aspects of the Family Court decision which involve the exercise of a discretion. With regard to those aspects of the decision, the principles contained in May v May will apply:2
In considering an appeal of this kind, an appellant must show that the Judge acted on a wrong principle; or that he failed to take into account some relevant matter or that he took account of some irrelevant matter or that he was plainly wrong.
[5] A Family Court has a discretion as to whether it makes an order for discovery in relationship property proceedings which are before the Court.3 Although the rules require an order for discovery to be in a certain form, a Family Court Judge could, in his or her discretion, give directions as to the particular discovery required to enable the Court and the parties to more speedily and economically resolve the actual issues which are before the Court.4
[6] A Family Court Judge also has a discretion as to whether proceedings should be transferred to the High Court, although a Judge:5
… may order the transfer of proceedings to the High Court (only) if the Judge is satisfied that the High Court is the more appropriate venue for dealing with the proceedings.
[7] In considering whether or not to make such an order, the Judge must have regard to the matters referred to in s 38A(2) PRA.
[8] In this instance, the Judge’s decisions were reached on the basis of the Court record of the proceedings to date, the submissions of counsel and affidavit evidence. Accordingly, I do not need to recognise the advantage which a Family Court Judge might have derived from seeing and hearing witnesses and being directed to the most significant evidential issues through hearing cross-examination as it occurs. The
Judge was required to exercise a discretion in deciding what, if any, orders for
2 May v May [1982] 1 NZFLR 165 at [170].
3 Family Court Rules 2002, r 141(2A).
4 Rules 141(3) and 16. Dixon v Kingsley [2015] NZHC 2044.
5 Property (Relationships) Act 1976, s 38A(1).
discovery should be made or whether the proceedings should be transferred to the High Court. It is appropriate for me to recognise the specialist experience and knowledge which the Family Court Judge had in making an assessment as to what were likely to be the real issues in the case, how they were likely to be most effectively resolved and whether the High Court was the more appropriate forum for the continuing proceedings.
Discovery
[9] A good deal of discovery had been made by the parties, both formally and informally, before the respondent (Ms Fisher) applied to the Family Court for an order that Mr Fisher make discovery. Both parties had cooperated to some extent in enabling an accountant engaged for Mr Fisher to have relevant documents and to obtain documents from banks. Mr Fisher’s counsel had made it clear that those documents were available for inspection. The accountant, Mr Lyne, as an expert, also had an obligation to make those documents available to any expert engaged by Ms Fisher. Mr Lyne was ready to do this.
[10] Nevertheless, it was apparent that there was considerable mutual distrust between the parties. Mr Fisher was also seeking to set aside their s 21 settlement agreement, partially on the basis he was not adequately informed as to the true nature and extent of the property at issue. It was thus understandable that the Judge required Mr Fisher to verify, by way of affidavit, what documents he held personally and particularly what documents he had in his possession at the time the settlement agreement was entered into.
[11] It was also apparent from the Court record that Ms Fisher claimed that Mr Fisher had been responsible for removing a considerable collection of relevant business documents from where they were normally kept, while later in the proceedings she had found relevant documents. There was no evidence as to the particular circumstances in which that had happened.
[12] It was against that background that the Judge considered it appropriate to make orders for both parties to make full Peruvian Guano-type discovery.6
[13] Since Judge Burns made his decision, the parties and their counsel have had the benefit of Kós J’s judgment in Dixon v Kingsley.7 In that judgment, his Honour referred to the way the Peruvian Guano approach to discovery had been “shovelled out the door in 2012”, as far as the High Court was concerned.8 He explained that, while there had not been a change to the Family Court Rules for discovery, given the discretion which the Family Court has with regard to discovery, “a tailored approach is both permissible and desirable”.9
[14] Ms Crawshaw has only recently, and after the issues had been dealt with in the Family Court, been instructed as Senior Counsel for Ms Fisher. At the beginning of the appeal hearing, Ms Crawshaw advised me that both counsel recognised some discovery would be appropriate but on a much more tailored approach than would have been required by the blanket orders for discovery originally made in the Family Court.
[15] Counsel discussed just how that discovery should be made although the details of this are still to be finalised. It was agreed that the appropriate course for me to take is to allow the appeal, insofar as the orders for discovery are concerned but to substitute orders that require more tailored discovery.
[16] The orders for discovery made in the Family Court are set aside. In their place, I make orders for both parties to provide discovery as to particular documents held by them in terms to be agreed between counsel. Within 21 days of this judgment, counsel are to file a memorandum setting out the scope of discovery which is required and a timetable for inspection of those documents. Leave is reserved to either party to seek further directions as to discovery if that becomes
necessary.
6 Compagnie Financière et Commerciale du Pacifique v Peruvian Guano Co (1882) 11 QBD 55, (CA).
7 Dixon v Kingsley, above n 4.
8 At [12].
9 At [18].
The transfer of proceedings to the High Court
Background
[17] Mr and Ms Fisher’s relationship began in August 1987. They married in
1988. They ceased living together in October 2002 although it was not a complete or continuing break. They were both directors and, through mirror trusts, equal shareholders in a company, Mahuta Holdings Limited (Mahuta). After 2002, Mahuta was involved in the sale and purchase of certain properties.
[18] Ms Fisher had different jobs at various times throughout the relationship and over the years of the separation. During the latter, there were also times when she was on a benefit. Mr Fisher owned and operated a transport business, Richard Fisher Transport.
[19] The marriage was dissolved on 30 November 2007. They entered into a s 21
PRA relationship property agreement (the Agreement) dated 5 May 2008, settling all property issues between them and associated entities.
[20] The Agreement was implemented with each party taking over certain agreed assets or entities and the sale of certain properties with an accounting between them as to the proceeds. Various issues arose during this process which led to considerable personal animosity and distrust between the parties.
[21] In 2010, Mr Fisher began taking advice as to whether the Agreement may have been unfair. On 7 September 2010, he filed an application for pre-proceedings discovery in the Family Court. Between October 2010 and May 2012, there were issues with regard to the discovery that Mr Fisher was seeking but affidavits were filed by both parties dealing in a general way with the issues which Mr Fisher was seeking to raise and some of the inquiries which he or his advisors were seeking to make.
[22] On 8 November 2012, Mr Fisher filed an application to set aside the Agreement, an application in a substantive PRA claim in a general form and an application to extend time in which to bring his application and a supporting
affidavit. On 17 December 2012, Ms Fisher filed her notice of defence and supporting affidavit.
[23] There were continuing delays in advancing matters. On 16 December 2013, Mr Lyne, a chartered accountant engaged for Mr Fisher, filed an affidavit. On his analysis of the accounts and the information he had been able to consider, it was his view that, excluding property owned by the Raewyn Fisher No. 2 Family Trust (No.
2 Trust), the Agreement had provided for Ms Fisher to receive 53 per cent of property and Mr Fisher 47 per cent of property. He considered that the implementation of the Agreement had ultimately resulted in a 59 per cent share going to Ms Fisher and 41 per cent share to Mr Fisher. In his opinion and on his analysis of the information which he had obtained, if all assets of the No. 2 Trust were to be treated as part of a total pool of property to be divided between the parties, the ultimate distribution would have been 71 per cent to Ms Fisher and 29 per cent to Mr Fisher.
[24] On 9 April 2014, Mr Fisher applied to transfer the proceedings to the High
Court.
[25] On 30 May 2014, Ms Fisher filed an application for discovery.
[26] The applications were heard in the Family Court on 15 January 2015. On 17
February 2015, Judge Burns gave his decision refusing the transfer and making the orders for discovery already discussed.
[27] Judge Burns noted the application to transfer was originally made under s 22
PRA. He referred to the terms of that section and two leading cases from the High Court in which that section had been discussed.10 The Judge noted that Fogarty J had discussed earlier decisions in the Family Court but had crucially concluded:11
[29] The safest course when applying statutory criteria is not to gloss them.
The statutory test is not a simple complexity test. The test includes complexity but requires a characterisation and evaluation of the
complexity against consideration of whether or not the High Court is
10 KMH v CLH [2012] NZHC 537; Jacobson v Jacobson [2012] NZHC 2292.
the more appropriate venue. A case might be very complex but still quite appropriate for the Family Court.
[28] Judge Burns noted that Toogood J had agreed with this statement in Jacobson v Jacobson. He particularly noted Toogood J’s summary of the complexity test:
[21] The test is not whether the High Court is an appropriate venue for dealing with the proceedings, but whether it is a more appropriate venue than the Family Court. The test requires an assessment of the relative appropriateness of each court to deal with the particular proceedings. Bearing in mind the firm language used in s 22(1), the legislature must be taken to have intended that, in making the comparison, due recognition should be given to the specialist nature of the Family Court and to the warranting of Judges as being suitably qualified to sit in that jurisdiction.
[29] The Judge noted that Parliament had, since those cases, brought s 38A into effect. That section states:
38A Transfer of proceedings to High Court
(1) A Family Court Judge may order the transfer of proceedings to the High Court if the Judge is satisfied that the High Court is the more appropriate venue for dealing with the proceedings.
(2) In considering whether to make an order under subsection (1), the
Judge must have regard to—
(a) the complexity of the proceedings or of any question in issue in the proceedings:
(b) any proceedings before the High Court that are between the same parties and that involve related issues:
(c) any other matter that the Judge considers relevant in the circumstances.
(3) An order may be made under subsection (1) on—
(a) the application of a party to the proceedings; or
(b) the court's initiative.
(4) Any proceedings transferred to the High Court by an order made under subsection (1) continue in that court as if they had been properly commenced there.
[30] Judge Burns stated:12
There was an intention by Parliament to expand the criteria that the Family Court takes into account in determining whether there should be a transfer of the proceedings from the Family Court to the High Court and the intent was to widen the factors. This in my view resolved any differences of interpretation between Family Court Judges and High Court Judges and I am now required to determine whether the High Court is the more appropriate venue in dealing with the proceedings that have been before this Court since
2012 and the pre-hearing applications for two years before that. In order to make that determination I have to consider the factors set out in the content of subs (2) …
[31] Mr Knight did not suggest there was any error in the way the Judge articulated the issue which he had to consider.
[32] I note that, since his decision, his Honour Toogood J in the High Court has referred to s 38A. He said:13
Even if the test for transfer has been broadened since the enactment of s
38A, the central question remains whether the High Court it is a more appropriate venue than the specialist Family Court.
[33] Judge Burns said that he had looked at the pleadings and the content of the affidavit evidence. He considered that such issues of law and equity as it had been submitted the Court would have to consider were ones that the Family Court dealt with on a daily basis. He considered the application to set aside the Agreement was one that was regularly dealt with by the Family Court, assisted by the long history of case law that had developed in relation to the legislation which had to be applied.14
[34] The Judge noted that s 38A(2)(b) required him to consider any proceedings before the High Court that were between the same parties and involved related issues. He said that, in relation to that subsection, he would want to be considering proceedings that had been actually filed rather than proceedings that one party might indicate it intended to file. He also said that, on looking at the evidence before him, he could not see any valid cause of action outside the PRA. He said he was not aware of any constructive trust proceedings but said it had been suggested there may be a need for equitable tracing. He held there was no restriction on the Family Court considering such concepts. The Judge was not concerned at the $200,000 threshold
on jurisdiction given Mr Fisher had not raised the possibility of the parties agreeing
13 Alloway v Bond [2015] NZHC 113, [2015] NZFLR 579 at [26].
the $200,000 limit should not apply. He also said these potential issues had to be assessed in the context of the parties having settled their differences by agreement. The Judge did not consider there were other matters relevant to the particular case.15
[35] Mr Knight, for Mr Fisher, submitted that the Judge was in error in concluding the case before him was not so complex as to make it more appropriate for the proceedings to be in the High Court. The focus of Mr Knight’s submissions was that to resolve these proceedings a Court would have to consider whether there was a constructive trust and issues of tracing, the value of which might well exceed the
$200,000 limit to the District Court’s jurisdiction.
[36] Mr Knight submitted that the Judge erred in reaching a decision on the basis that the need for proceedings in the High Court could only be taken into account if they had actually been filed.
[37] Leaving aside the jurisdictional issue with regard to a claim in equity, I agree that there is nothing so complex about this case to make the High Court the more appropriate forum. The first and foremost issue is whether the Agreement should be set aside. That is the sort of issue with which the Family Court deals regularly.
[38] On the evidence that is already before the Court, any entitlement or claim that Mr Fisher might have had or wished to pursue as a basis for either setting aside the Agreement or, if that happens, in continuing proceedings, would primarily have to be based on an assertion that the assets of the No. 2 Trust had been acquired through the use of relationship property. It was plain from the affidavits of Ms Fisher that she claimed the No. 2 Trust had acquired its most significant assets by acquisition from her parents with an associated debt back to them being forgiven, through the trust taking on the obligations of loans required to make particular purchases and, to a more limited extent, through her making available to the No. 2 Trust her separate property, primarily the proceeds of sale from a home which she owned before their relationship began.
[39] The Family Court is regularly required to consider such conflicting claims and the associated evidence, often in cases where the transactions are more complicated and of a higher value than is the situation here.
[40] I consider the Judge was correct in saying that s 38(2)(b) required him to consider proceedings that had been actually filed in the High Court. That is the plain meaning of the words used in that section. If it is claimed a party has an equitable interest, pursuant to a constructive trust or relying on equity in some other way and wishes to enforce that equitable interest against the trustee or legal owner of the property, and if the equitable interest is worth more than $200,000, it may be necessary for such a claim to be made in the High Court. If such a claim had been filed, s 38A(2)(b) would require those proceedings to be taken into account by the Family Court Judge when deciding whether or not relationship property proceedings before the Family Court should be transferred to the High Court. This was not the situation in these proceedings.
[41] Ms Crawshaw rightly acknowledged that this did not mean that the potential for proceedings in the High Court could be considered only if proceedings had already been filed in the High Court. In considering the complexity of a case as required by s 38A(2)(a) and other matters that are relevant in relation to s 38A(2)(c), the need for constructive trust claims to be brought in the High Court could be taken
into account, as the Family Court has recently done in another case.16 However, the
mere possibility of such a claim or a mere statement of intention to bring such a claim is likely to be of little consequence. For this to be a significant consideration there should be some real and substantial evidential basis for such a claim. There should be at least a high likelihood that such a claim will eventuate.
[42] Judge Burns made an assessment of the evidence and said “[on] looking at the facts before me, I would struggle to deduce any valid cause of action outside the Property (Relationships) Act”.17 Having carefully considered the evidence, I agree with his assessment.
[43] Ms Crawshaw submitted there was no evidence before the Court in Mr
Fisher’s affidavits to suggest the basis on which he could claim:
(a) a reasonable expectation that he would have an interest in property owned by the No. 2 Trust;
(b) an actual contribution he had made to the particular property; and
(c) the basis on which it could be suggested the trustees should reasonably yield to him any interest that he could have reasonably expected as a result of such a contribution.18
[44] The evidence from Mr Lyne raises the possibility that property owned personally by either Mr or Ms Fisher may have been used to acquire trust property. That, of itself, would not be sufficient to give rise to a constructive trust. It could potentially result in claims being made pursuant to ss 44 or 44C PRA. Because such claims are made pursuant to the PRA, it is the Family Court which has originating jurisdiction to deal with such claims. If relationship property has been transferred to a trust, in assessing compensation that might have to be paid as a result of such transfer, the Family Court is often required to consider how the trust has ultimately dealt with the property which it has acquired. They are claims which the Family Court regularly deals with as part of its specialist jurisdiction.
[45] Mr Knight suggested that the evidence before the Court provides a basis for allegations of equitable claims “by way of alter ego, sham and tracing”. These are not causes of action. Rather, they are matters which the Court may have to consider in determining what property is owned by the parties personally, what dispositions may have occurred in relation to that property and how the ultimate value of that property should be brought into account between the parties on application of the PRA. The Family Court is well used to dealing with such issues. In that context, it is not unusual for the Family Court to have to determine whether property is truly held on an express trust or a constructive trust. Again, I consider there is little evidential basis at present before the Court to suggest that these are going to be
major issues but, even if they were, it would not be reason for the proceedings to be transferred to the High Court.
[46] The Judge noted, at several points in his decision, that he had to address the issue before him in the context of the proceedings involving an application to set aside the Agreement under s 21J PRA. He was right to do so.
[47] Ms Crawshaw submitted that this was of significance. She submitted that Ms Fisher should not have to be involved in proceedings in the High Court, where the costs are likely to be greater, on the basis that Mr Fisher wishes to pursue claims in that Court before a Court has determined whether or not he is allowed to bring such a claim given the Agreement.
[48] In making that submission, Ms Crawshaw asked the Court to adopt the approach which McKenzie J had said would normally be appropriate. In Dunsford v Shanly, his Honour said:19
I consider that the statutory scheme will ordinarily require that, before a relationship property claim can be brought in the face of a s21A or s21P agreement, the parties seeking to bring that claim must first meet the hurdle of having the agreement set aside. I consider that this will conform with the principle in s1N(d) of the Act. The inexpensive, simple and speedy resolution of issues is likely to be assisted by determining first whether the agreement should be set aside, rather than by requiring parties to engage in a relationship property dispute which they have settled. The setting aside of the agreement can properly be dealt with as a preliminary question by the Family Court. That should, except possibly in cases which may raise some particular consideration, mean that the two aspects must be dealt with separately, and sequentially. I do not consider that considerations of case management will routinely justify the substantive relationship property claim being heard before the right to bring it has been determined.
[49] Mr Knight urged me to adopt the approach taken by Fogarty J in KMH v
CLH.20 His Honour referred to s 1N(d):
(d) the principle that questions arising under this Act about relationship property should be resolved as inexpensively, simply, and speedily as is consistent with justice.
[50] Fogarty J stated:
[55] I agree that the latter provision is relevant. It cannot be in the interests of the parties for issues arising from the break-up of their relationship to be decided in different Courts. In principle there should be one Judge seized of such a complex dispute as this. The question of the pending application to hear the s 21J issue first is a distraction. I am not assisted by Dunsford or R v T [Relationship property], for decisions whether or not to decide one issue ahead of another are always deeply contextual.
[51] In Dunsford v Shanly, McKenzie J stated that what he considered would be the appropriate two-staged approach might be departed from in the circumstances of a particular case.21 Perhaps Fogarty J was of the same view in saying “Decisions whether or not to decide one issue ahead of another are always deeply contextual”.
[52] Before me, both counsel acknowledged that whether or not there should be a two-stage approach to dealing with the issues should also be determined having regard to the facts of the particular case.
[53] For my part, I do not accept that, when a Court has to make a determination as to whether a s 21 agreement should be set aside, the Court will need to have all the information which, but for the agreement, it would have required to determine the party’s entitlements under the PRA.
[54] As Fogarty J noted and as Mr Knight referred to in his submissions, one of the important principles of the PRA is “that questions arising under this Act about relationship property should be resolved as inexpensively, simply and speedily as is consistent with justice”.22 The detailed provisions of the PRA, its categorisation of relationship property and separate property, provision for potential entitlements in respect of increases in the value of separate property, allowance for compensation in certain circumstances where relationship property has been transferred to a trust and so on, should enable parties and competent legal advisors to assess their entitlements
without putting parties to the significant cost of a detailed forensic accounting investigation or exposing them to the risks, delays and continuing distress of Court proceedings. The principle in s 1N(d) is best given effect to through the mechanism in s 21A PRA for the parties to resolve all issues through reaching and recording an
agreement in writing with the protection provided by the requirements of s 21F.
21 Dunsford v Shanly, above n 19, at [26].
22 Property (Relationships) Act 1976, s 1N(d).
[55] It is thus consistent with the principles and policy of s 1N PRA that when parties have resolved their differences by way of an agreement, with the benefit of independent advice, such agreements should not be lightly set aside. Nor should a party to such an agreement lose the benefit of the agreement through having to be party to difficult, protracted and expensive litigation of the same sort as would have eventuated but for the agreement.
[56] Where there has been a history of complex property transactions, the application of inherited or other separate property in the acquisition of trust assets, the creation of wealth during a relationship within a trust or the transfer of relationship property to a trust, working out exactly what has occurred from an accounting point of view over what may be many years, is likely to be expensive. Protracted negotiation or litigation does not assist the parties to achieve the clean break which enables them and their families to get on with their lives in the way the PRA generally seeks to facilitate. Of course, such proceedings may be necessary where one party has carefully used corporate or trust structures so as to avoid the parties sharing in wealth resulting from their relationship which, but for the use of such devices, would have to be shared equally. Proceedings or detailed investigation may be necessary where one party is attempting to keep from the other the information needed to establish a person’s proper entitlement under the PRA. There are however numerous other instances where, even when there are assets of significant value, the parties are reasonably well informed in a general way as to how property was acquired and whether, in terms of their relationship, it is property which should be shared equally. In such situations, with a constructive approach taken by experienced legal advisors, it may well be possible for them to achieve the benefits of an early settlement on a reasonably broad-brush approach. Ms Fisher will no doubt contend that this is what was achieved in this instance.
[57] When, with the benefit of independent advice as certified for on the Agreement, parties have settled all claims, those agreements should protect them to a real degree from a future involvement in court proceedings of the sort that has eventuated here.
[58] The protection is not absolute. Through s 21J, Parliament provided a remedy if a party has been taken advantage of unfairly through giving the Court jurisdiction to set aside a settlement agreement. The threshold for utilising it is high. In 2002, the threshold for setting aside a settlement agreement was changed from a Court being satisfied that it would be “unjust to give effect to the agreement” under s 21(8) of the Matrimonial Property Act 1976, to the Court being satisfied that “giving effect to the agreement would cause serious injustice” under s 21J(1) of the PRA.
[59] On the evidence as it stands, I consider that in this instance a two-staged approach would be appropriate. With the constructive approach that is now being taken towards discovery, counsel anticipate the proceedings will be ready for hearing, at least as far as the s 21J application is concerned, without too much delay.
[60] I do not consider that the decision over transfer should be made on the basis that a Court will inevitably have to concern itself with potential trust or tracing claims. In the particular circumstances of this case, consistent with Judge Burns’ approach in the Family Court, it is quite possible that the Court will uphold the Agreement as it stands. That could mean there will be no further proceedings.
[61] The particular matters in the evidence relating to the case which I have taken into account in this regard include the following.
[62] On Mr Lyne’s analysis, the terms of the Agreement provided for close to equal sharing of property not owned by the No. 2 Trust and a beach house property owned by the No. 2 Trust.
[63] On Mr Lyne’s analysis, following implementation, the actual outcome was
60/40 in favour of Ms Fisher. The basis for that analysis has not been tested and may not be correct.
[64] On his analysis, Mr Lyne has brought assets such as vehicles into account at what he considered to be their market value at the time of the Agreement based on their book value and accounts rather than the values which Mr and Ms Fisher agreed they should have.
[65] In the Agreement, Mr and Ms Fisher took into account a property at 442
Hauraki Road which Mr Fisher has retained at an agreed value of $280,000. In his analysis, Mr Lyne treats this value as too high and brings it into account at its 2009 rateable value of $245,000.
[66] In analysing the intent of the Agreement and how it was implemented, Mr Lyne brought into account debts to Mr and Ms Fisher from Mahuta on current shareholder accounts. It seems likely the parties considered the company in terms of the value of the properties it owned without taking into account the current shareholder accounts as either assets to be retained or liabilities to be offset against the value of the properties.
[67] Mr Lyne brought Mr Fisher’s transport business into account as a liability to him on his side of the ledger at $46,000. The parties in the Agreement treated it as being of zero value. On Mr Lyne’s analysis, he treats the net liabilities of the company as if they were Mr Fisher’s personal liabilities. In a similar way, on his analysis, he brought a company, TPA Investments Limited (TPA), into account on Ms Fisher’s side of the ledger resulting in her retaining a liability of $19,000. That company was set up in 2005, according to Mr Fisher’s chronology after the parties began living apart. The shares in the company were owned by Ms Fisher’s daughter. The parties did not refer to it in their Agreement and thus did not bring it into account between them.
[68] On Mr Lyne’s analysis, the Agreement provided for a division of assets associated with Mahuta of 38 per cent to Ms Fisher, 62 per cent to Mr Fisher. On his analysis, the actual distribution resulted in a distribution of assets associated with Mahuta of 43 per cent to Ms Fisher, 57 per cent to Mr Fisher.
[69] Difficulties did arise over the implementation of the Agreement. Mr Fisher took away chattels he had agreed Ms Fisher would have. When accounting for his share of proceeds from a property which had been sold, Ms Fisher made certain deductions so the parties shared expenses associated with that property equally but did not account for income she had received from that property. Mr Knight identified certain other ways in which he considered the ultimate accounting was
different from what had been anticipated in the Agreement. In submissions for Mr Fisher, Mr Knight acknowledged that these matters were not of such a nature or value as to render the Agreement seriously unjust. He said Mr Fisher’s claim that the Agreement was seriously unjust is squarely based on the terms of the Agreement when it was entered into, not because of the way it was implemented.
[70] In submissions, Mr Knight acknowledged that an ultimate disparity on implementation of 60/40 is not the sort of disparity which, of itself, is necessarily going to render the agreement seriously unjust.
[71] In an affidavit, Mr Fisher has suggested he did not receive independent advice because the lawyer, Mr O’Brien, who advised him had acted for both parties previously. Mr O’Brien was the solicitor who certified on the Agreement that he had given Mr Fisher the required independent advice. In an affidavit filed for Mr Fisher, Mr O’Brien has said he was instructed by the parties that it was appropriate for him to represent Mr Fisher. Mr Fisher accepts that Mr O’Brien was not willing to do so without confirmation from Ms Fisher’s solicitor that it was appropriate for him to do so in order to avoid any suggestion of conflict of interest.
[72] Ms Fisher says that Mr Fisher instigated the division and insisted he would be
using Mr O’Brien. In an affidavit in reply of 25 March 2013, Mr Fisher stated:
As I stated in my previous affidavit, Raewyn and I met with our accountant, Tony Coombe, on 29 March 2008. At this meeting we agreed the broad outline of the property sharing agreement. Raewyn agreed that she would ask her solicitors to draft the final agreement. While I had a general idea about the property that I wished to keep, I did not harass Raewyn to complete and sign the agreement.
[73] There does not appear to be any suggestion that Ms Fisher put pressure on Mr Fisher to enter into this Agreement on the terms set out. In addition to the above statement from his affidavit in reply, Mr Fisher says “the agreement reflects the outcome of our meeting with Tony Coombe, albeit set out in a more formal fashion”. Mr Coombe had been the accountant for both parties. He has not filed an affidavit but there is correspondence in which he says he did not give advice as to the basis on which settlement could take place. Rather, he recorded an agreement which the parties had already reached. This was consistent with Mr O’Brien’s understanding
on the basis of what he was told by Mr Fisher. Mr O’Brien understood that the parties had been contemplating asset values for a considerable period and had agreed on them prior to the meeting with the accountant and well before the Agreement was drafted by a lawyer.
[74] In his affidavit, Mr O’Brien says he carefully canvassed the issues of the values that were being used with Mr Fisher. It appears from the affidavits that the parties were involved in the sale and purchase of properties similar to those they dealt with in the Agreement in the years before that, properties that were also in Turua and on Benner Drive. Ms Fisher, through Mahuta, was retaining the most valuable property at 217 Hamilton Road, which had been the family home. This had been the subject of an arms-length sale around the time of the Agreement although that sale had not been completed. Mr Fisher had agreed to a sale of that property at
$1.7 million. That was the value at which the parties agreed it should be brought into account.
[75] A number of the properties were owned by the company Mahuta. Mr and Ms Fisher were both directors of Mahuta. Through mirror trusts, they owned the shares in that company equally. They also jointly operated a company ASB bank account. In an affidavit of 8 November 2012, Mr Fisher says they looked through the company and divided its assets. In that affidavit, he refers to the value at which the properties were brought into account without suggesting that those values were in any way misleading. He did refer to a debt from Mahuta to another company, TPA, which was mentioned in the Agreement as being $100,000 when it should have been
$63,000.
[76] Mr O’Brien’s evidence is that Mr Fisher was adamant he could rely on the values which the parties had reached for those items. The differences from market value, as assumed by Mr Lyne, in some instances benefited Mr Fisher and in some instances Ms Fisher.
[77] It is clear from Mr Knight’s submissions that Mr Fisher’s claim that the
Agreement was seriously unjust is made because properties owned by the No. 2
Trust were not brought into account between the parties. In her affidavits, Ms Fisher
acknowledges that, in the discussions she had with Mr Fisher, she was adamant that only one of the No. 2 Trust’s properties should be brought into account between them because, in a general way, those properties had come to the No. 2 Trust from her parents.
[78] On his analysis, Mr Lyne treats Ms Fisher as retaining assets with a net value of $2,657,000, Mr Fisher retaining assets worth $1,077,000. It is on that basis that he says the Agreement resulted in a 71:29 per cent split in Ms Fisher’s favour.
[79] Mr Lyne says he was asked to quantify the value of the property pool and the division of that pool between Mr and Ms Fisher.
[80] Mr Lyne refers to properties owned by the No. 2 Trust as being amongst the “nuptial” assets available for division between Mr Fisher and Ms Fisher. That is not a description as to their ownership or status that necessarily gives rise to entitlements under the PRA. Under the PRA, a distinction has to be made between property owned personally by the parties as opposed to property owned by a genuine trust.
[81] The Agreement dealt in some detail with the No. 2 Trust. Through clause 2.2, Mr Fisher “acknowledged that the No. 2 Trust and the assets it owns are not relationship property”. The Agreement stated that Mr Fisher had no claim against the No. 2 Trust. There was express acknowledgment of the fact that assets of the No.
2 Trust included five properties. The Agreement provided for one of those properties, the beach house at Whangamata, to be sold with the proceeds to be shared equally. Mr O’Brien says he discussed with Mr Fisher the fact that this property was to be part of the division but other trust assets were not.
[82] On Mr Lyne’s analysis, of the $1,129,000 which he says Ms Fisher retained through property owned by the No. 2 Trust, $825,000 related to the Hill Block. Mr Lyne says that this was sold on 30 April 2008 for $825,000. This was almost the same time as the parties completed the agreement. There has been no suggestion that Mr Fisher did not know of the sale. He was grazing stock on the property at the time and had effective possession of it, according to Ms Fisher, until May 2008.
[83] In an affidavit of 20 April 2012, a chartered accountant for Mr Fisher, Linda Moore, referred to the No. 2 Trust. In that affidavit, she noted no financial statements were prepared for the trust until the March 2006 financial year. Ms Fisher swore an affidavit in response, in which she said the No. 2 Trust was set up in anticipation of receiving property from her parents and the transfer of an 11 acre hill block occurred in 1998 for a consideration of $70,000. She said that, as part of the arrangement, her father continued to exclusively use the property and paid all outgoings until her parents sold an adjoining property on 16 October 2006. Ms Fisher said the purchase price of $70,000 was forgiven by her parents. She said that Mr Fisher moved stock onto this property from around that time and was in possession of it until May 2008.
[84] On Mr Lyne’s analysis, the Hill Block was acquired by the No. 2 Trust as Ms
Fisher has described.
[85] On the evidence currently before the Court, there is no basis to suggest that the No. 2 Trust was illusory or a sham. There is no evidence which could be the basis for a claim that relationship property was used to acquire the Hill Block or on which Mr Fisher could assert a constructive trust claim in respect of this property.
[86] Consistent with that, in their Agreement the parties did not bring the Hill
Block into account between them.
[87] It is likely, on Ms Fisher’s version of the history of the Hill Block, that Mr Fisher would have known that this property was acquired by the No. 2 Trust without either he or Ms Fisher having to pay anything for it. The Trust took possession of it only in 2006 when, on his counsel’s chronology, the parties were already living apart. On that basis, it would have been understandable for Mr Fisher to have entered into the Agreement on the basis that he could have no claim arising out of the No. 2 Trust’s acquisition of this property, regardless of how it may have been dealt with in any accounts.
[88] If that property is removed from the pool of assets against which Mr Fisher
might have had a claim, on Mr Lyne’s analysis, the remaining assets in the No. 2
Trust would have been worth some $300,000.
[89] Much of that remaining $300,000 relates to a property at 1/3 Shirley Road, Grey Lynn, owned by the No. 2 Trust. On his analysis, Mr Lyne brings it into account as if it was Ms Fisher’s property and worth $264,000 although there is a mortgage liability relating to it of $196,000.
[90] Ms Fisher says the No. 2 Trust purchased the Grey Lynn property for
$226,000 in March 2006 and that she paid the deposit of $20,000 from joint savings because they had initially intended this property would be purchased by Mahuta with which they were both involved. She said Mr Fisher decided he wanted to be no part of the purchase so she borrowed $26,000 from her parents and reimbursed the joint account which she had used to pay the deposit initially. She said the balance of the purchase price was borrowed by the No. 2 Trust by way of mortgage loans for
$200,000. She says, consistent with the Agreement, that they did not treat it as part of the property pool for division at the time of settlement.
[91] In his affidavit, Mr Lyne confirms the Grey Lynn property was purchased for
$227,500.
[92] Mr Lyne says there was a cash contribution of approximately $30,000 towards the purchase of this property. The documents he has seen do not show that this cash contribution was provided by Ms Fisher’s parents but the documents do not preclude that possibility. Ms Fisher may be able to obtain or provide evidence to show that what she has said as to where the cash came from is correct. As the evidence stands at present, that cash contribution could potentially have come from relationship property but not necessarily so. If $200,000 of the purchase price was funded by way of the No. 2 Trust obtaining loans for that amount and if $30,000 of the purchase cost was funded from relation property, pursuant to s 44C PRA, Mr Fisher might have a claim for compensation from Ms Fisher for $15,000. According to Mr Lyne, the property was sold in March 2009 for $265,000, excluding commission, resulting in a profit of $59,000. Pursuant to s 44C, if compensation
took into account the profit made by the No. 2 Trust when it was sold, Mr Fisher’s claim for compensation could increase to approximately $19,000. That claim would have little prospect of success if Ms Fisher can establish that the initial cash contribution towards the purchase of the property was made with funds from her parents.
[93] According to the chronology provided by Mr Fisher’s counsel, this property was acquired after the parties began living apart. There is no evidence of Mr Fisher making any contribution towards the property. Consistent with the No. 2 Trust’s ownership of the Grey Lynn property, Mr Lyne confirms that Ms Fisher paid rent of
$350 per week for the property in the years to 2007. There is no evidence on which Mr Fisher could base a constructive trust claim. At best, Mr Fisher might have had a modest claim pursuant to s 44C PRA for an amount, at most, of some $19,000.
[94] At the time of settlement, the No. 2 Trust owned two rental properties in Hauraki Road, Turua. In one of her affidavits, Ms Fisher has said the No. 2 Trust purchased these properties off Mahuta, associated with Mahuta purchasing from Mr Fisher or his company a depot associated with his trucking business. She said that Mahuta bought the depot because of the financial pressure Mr Fisher’s company was under but then sold that property and another to the No. 2 Trust because it was the No. 2 Trust which raised the finance required to put funds into Mr Fisher’s company. She says there was little equity in these properties at the time the parties entered into their settlement Agreement.
[95] Mr Lyne refers to the trust’s acquisition of two rental properties from Mahuta in April 2004. He seems to accept that the trust purchased these properties with a bank mortgage of $196,000 and $49,000 advanced by Ms Fisher which she says came from a property which she had purchased before the relationship began and sold in 1995. Mr Lyne refers to Mr Fisher saying he made improvements to that property over the eight years it was their family home but there is no evidence from Mr Fisher as to this. As I discussed with counsel during the hearing, there may well be an issue when these proceedings come to be resolved as to whether the proceeds of sale would have been relationship property once that home had been sold, given it was owned by Ms Fisher before the relationship began.
[96] Ms Fisher says they agreed these rental properties would not be brought into account between them personally on their settlement.
[97] For the purposes of this appeal, I observe that, given his control of the land which he owned and used in association with his transport business and sold to Mahuta, his position as a director and equal shareholder of Mahuta and what Ms Fisher says as to how the No. 2 Trust came to own the Grey Lynn property, it is quite possible that a Judge will conclude that Mr Fisher would have known and understood the general circumstances in which the No. 2 Trust came to acquire its properties without the need for the sort of detailed accounting examination which Mr Lyne has undertaken.
[98] In his affidavit, Mr Lyne provides evidence as to how the No. 2 Trust acquired the beach house property and of payments that were made from joint accounts with regard to that property. That information is likely to be of little consequence, given the parties agreed to share in the proceeds from the sale of that property.
[99] I have referred to these matters in some detail because it was submitted that the evidence and analysis provided by Mr Lyne makes it necessary for these proceedings to be transferred to the High Court.
[100] The observations I have made are preliminary only. If Mr Fisher pursues his application to set aside the Agreement to a hearing, the Judge deciding the application will have to further consider all the evidence, including any further affidavits that are filed. There will be detailed submissions on these points from counsel. It goes without saying that this will happen only at considerable expense to both parties.
[101] In the Family Court and on this appeal, Mr Knight argued that transfer was necessary because it was going to be necessary for Mr Fisher to pursue claims in equity in excess of the Family or District Court’s jurisdiction. Mr Knight was relying on s 34 of the District Courts Act 1947:
34 Equity jurisdiction
(1) Subject to the provisions of this Act, the Courts shall have—
(a) The same equitable jurisdiction as the High Court to hear and determine any proceeding (other than a proceeding in which the amount claimed or the value of the property claimed or in issue is more than $200,000):
[102] It is not unusual for the Family Court to have to determine whether either or both of the parties have, during a relationship, acquired a beneficial or equitable interest in property nominally owned by a third party, including trustees. The PRA requires the Family Court to make such determinations and to then bring any property into account between the parties when determining entitlements under the
PRA. There is no limit to the Family Court’s jurisdiction in this regard.23
[103] The limits on jurisdiction for the Family Court only become a potential problem if either of the parties is seeking to obtain judgment against a third party, including trustees, based on a claim in equity such as constructive trust.
[104] If such a claim is for an amount or for property of a value in excess of
$200,000, it might be necessary to pursue that claim in the High Court. As I indicated, I do not consider the mere possibility of such a claim would justify a transfer of the proceedings at this stage. I also consider that it was appropriate for Judge Burns, in exercising his discretion, to have regard to the fact that Mr Fisher had not considered or pursued the possibility of the parties agreeing that, in association with the PRA proceedings, he should be able to pursue a claim in the Family Court in equity against trustees (the $200,000 jurisdictional cap being put to one side).
[105] Pursuant to s 37 District Courts Act, it would be possible for all parties to agree, through their solicitors, that a Judge in the Family Court with a District Court warrant could deal with such a claim even it is for more than $200,000.
[106] Family Court Judges are warranted to exercise civil jurisdiction within New
Zealand.24 Any jurisdiction conferred on a Court by the District Courts Act or any
23 Property (Relationships) Act 1976, s 4.
24 District Courts Act 1947, s 5(1).
other Act may be exercised by any Judge.25 A Family Court Judge may, from time to time, sit as or exercise any of the powers of a District Court Judge.26
[107] The parties would be under no obligation to agree to such an extension of jurisdiction but it would be reasonable to expect the parties to have considered the possibility and potential advantages of such an agreement. In a situation such as this, where proceedings were already before the Court, such an agreement could have avoided the delay and costs associated with the contested application in the Family Court for transfer and with this appeal. Where the claim in equity is closely associated with claims under the PRA, such an agreement would mean that the main issues can still be dealt with in the Court which has the specialist jurisdiction in this area, a Court where the hearing costs are less than in the High Court. I was surprised to hear that the possibility of such an agreement has not been discussed. Soon after Mr Lyne’s affidavit was filed, Ms Fisher was asked only to agree to the transfer of proceedings to the High Court.
[108] If the Agreement is set aside and if Mr Fisher is going to pursue claims against a third party for more than $200,000, it would remain possible for all parties to agree that the Family Court should continue to have jurisdiction to deal with such claims. The possibility of such an agreement is another reason why the decision over transfer should not be made on the basis that there will inevitably be proceedings that can be dealt with only in the High Court.
[109] I conclude, on the basis of the information as it stands, that this is a case where:
i.The parties should have the application to set aside the Agreement determined as a first stage of any future proceedings so that, so far as is possible at this stage, they are not put to the expense and other difficulties that would be associated with having to contest all possible
claims as if no Agreement had been entered into.
25 Section 40.
26 Family Courts Act 1980, s 5(4).
ii.I cannot assume that in these proceedings there will inevitably be constructive trust claims or other claims in equity which could only be pursued in the High Court. These proceedings may end with the Court’s determination on the s 21J application.
[110] Mr Knight submitted that the Judge was in error in having regard to certain matters which he submitted were irrelevant. He also suggested the Judge had not taken into account certain matters which he should have. I have considered those submissions. I do not consider the Judge was in error in the ways that were suggested or, even if he was, it would have resulted in his decision being wrong. On my own review of all the information which was before the Family Court and with due regard to the submissions that were made to me, I would also have declined to require the transfer of the proceedings to the High Court.
[111] Mr Knight suggested the High Court would be the more appropriate Court to deal with the proceedings because of the more efficient case management protocols in the High Court and the potential for the proceedings to come on for hearing earlier in the High Court. I am not satisfied that the implicit criticisms of the Family Court are justified or that such benefits would necessarily result from the transfer of the proceedings to the High Court. Progress will be best achieved if the parties and their counsel carefully consider their respective positions with regard to the application to set aside the Agreement and deal with what is required and then, if necessary, cooperate to ensure the s 21J application is brought on for hearing in the Family Court as soon as it can be.
[112] Accordingly, the appeal in relation to the order declining transfer is dismissed. The proceedings now remain before the Family Court.
[113] It will be for the Family Court to deal with any remaining issues that arise in relation to discovery.
[114] I record, for the benefit of the Family Court, that it was anticipated by both counsel that the filing of the required affidavits as to discovery, inspection and copying of documents, will take place without delay. Affidavits will then be filed by
Ms Fisher and the expert accountant she is engaging. Mr Knight said he might file an affidavit from the accountant, Mr Coombe. Once these affidavits have been filed, steps should be taken to bring on for hearing the application to set aside the Agreement. What happens after that will depend on whether the Agreement is set aside.
[115] Mr Fisher did not have to pursue the application for a stay. That application is formally dismissed.
Costs
[116] If agreement cannot be reached over costs, a memorandum as to costs is to be filed on behalf of Ms Fisher by 21 November 2015. A memorandum in response is to be filed for Mr Fisher by 11 December 2015. The memoranda are to be no longer than three pages.
[117] I note the appeal has been classified as category 2 for costs purposes. Tentatively, I consider the parties had equal success with regard to the appeal over discovery. Mr Fisher had appealed against the making of any order for discovery. The appeal has been successful but to a limited extent. It has been accepted that the original order should have provided for more tailored discovery. The more contentious issue was obviously the application for transfer in respect of which Ms Fisher has been successful.
Solicitors:
Stace Hammond, Auckland
R C Knight, Barrister, Auckland
Simpson Grierson, Auckland
V Crawshaw, Barrister, Auckland.
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