Foote v Rea

[2012] NZHC 430

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV2011-470-000315 [2012] NZHC 430

BETWEEN  JOHN EDWARD FOOTE Appellant

ANDTRACY LEANNE REA Respondent

Hearing:         3 November 2011

Appearances: E J Hudson for Appellant

R J Collis for Respondent

Judgment:      15 March 2012

JUDGMENT OF KEANE J

This judgment was delivered by                on 15 March 2012 at 3pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Date:

Solicitors

Neilson Law, Hamilton

A C Wright, Parnell, Auckland

JOHN EDWARD FOOTE V TRACY LEANNE REA HC TAU  CIV 2011-470-000315[15 March 2012]

[1]      In  issue  on  this  appeal,  the  second  in  this  case,  is  the  status  of  three

Californian properties that John Foote, an American national, owned between 1985 -

1999, when he and Tracy Rea, a New Zealand national, were either living together in a relationship or were married and, more immediately, the status of the proceeds of their sale, US $300,000.

[2]      That issue is essentially as it was on the first appeal, whether the properties and the proceeds of sale were, when they were acquired and now remain, either relationship property or the separate property of Mr Foote.

[3]      The significance of that issue lies in this: in 2002 Mr Foote and Ms Rea entered into a property relationship agreement, which left those proceeds of sale out of account and whether they are relationship or separate property will determine whether the agreement was, and remains, an occasion of 'serious injustice'.

Context

[4]      In 1981, after having first met in New Zealand, Mr Foote and Ms Rea began living together in California.

[5]      In 1985 Mr Foote acquired at Atascadero, California, the first of the three properties, a vacant section on which he built a house. It was their home when they married in 1987. In 1989 he sold that property and acquired a second in Atascadero, a vacant section adjoining the first on which he built a house, then a third in Paso Robles, California, where he refurbished the house, in each of which they also later lived.

[6]      In 1991 Mr Foote and Ms Rea returned to New Zealand and, apart from 18 months in Europe, lived until 1997 in the Tauranga - Mt Maunganui area in houses they purchased there. In those years the second and third properties in California were rented out. Between 1997 - 1999 Mr Foote and Ms Rea lived, once again, in California, mostly in the second Atascadero property but also in that at Paso Robles.

[7]      During those two  years Mr Foote sold the two remaining properties and retained as his own the proceeds of sale. Then in 1999 Mr Foote and Ms Rea, and their two children, returned to the Tauranga - Mt Maunganui area where they purchased a further house in which they were living together when they separated in December 2001.

[8]      In August 2001, four months before that happened, Mr Foote settled for his own separate benefit in the United States the J E Foote Family Trust and transferred to the trust both the sale proceeds in issue on this appeal and part of a sum paid to him by the United States Department of Labour to compensate him for a work disability - a back injury he suffered in 1971.

[9]      On 29 April 2002 Mr Foote and Ms Rea entered into a relationship property agreement, under which Mr Foote undertook to inject NZ $200,000 into a trust to be established for Ms Rea and their two children, then aged eight and five; their then family home, with a negative equity, was to be transferred to the trust; and Mr Foote was to support the trust and Ms Rea in other ways.

[10]     In 2003 Ms Rea applied to have that agreement set aside on the basis that to give it effect would cause 'serious injustice'.[1] The funds in Mr Foote's United States trust from the two sources I have just described, Ms Rea contended principally, were not Mr Foote's separate property. They were relationship property that should have been taken into account in the division the agreement made.

[1] Property (Relationships) Act 1976, s 21.

[11]     In a decision, dated 8 June 2009, Judge S J Maude agreed to an extent. He held that the part of the trust fund attributable to Mr Foote's right to disability compensation  was  his  separate  property.  But,  he  held,  the  three  Californian properties, and their proceeds of sale, were relationship property and the effect of leaving them out of the agreement was of 'such moment by way of disparity' as to require that it be set aside.

[12]     In deciding that the properties, and the proceeds of sale, were relationship property, the Judge accepted that this was to be decided according to the law of

California. But, in the absence of evidence, he held Californian law to be the same as the law of New Zealand; and under New Zealand law, he held, each of the three properties became relationship property once each became the family home. Consequently, he held, the proceeds of their sale was relationship property also.[2]

[2] Section 8(1)(a); s 8(1)(l).

[13]     The Judge decided, also consequently, that, though the sum of NZ $220,000 that Mr Foote had settled on the New Zealand trust was his separate property, it should be vested in Ms Rea. He also vested in her the family home. In these ways he set out to compensate her for the trust fund Mr Foote retained in the United States that was beyond the direct reach of any order.

[14]     Mr Foote appealed that decision, contending that the California properties and the proceeds, never ceased to be his separate property and, in his decision on the appeal, dated 19 May 2010, Lang J upheld the decision in part, but not on the principal point.

[15]     The three properties, Lang J held, might have become relationship property once they were used as the family home, but once they ceased to be the family home they became, once again, Mr Foote's separate property. So too, he held, the proceeds of sale that Mr Foote sequestered in his United States trust.

[16]     Lang J also held, however, and it is this conclusion that gave rise to the second hearing before Judge Maude and this present appeal, that the sale proceeds could still be relationship property, if Mr Foote acquired the first of the three properties from his separate property for the 'common use or common benefit' of Ms

Rea as well as himself,[3]  and the other two were purchased from the proceeds of its

sale.

[3] Section 8(1)(ee).

[17]     On the evidence as it was, Lang J held, and precisely because this had not been put in issue in the Family Court, and neither Mr Foote nor Ms Rea had been cross-examined on it, he was unable to conclude whether Mr Foote had acquired the

three properties with that qualifying purpose.

[18]     As a result Lang J remitted that issue of fact to Judge Maude and as well, to the extent that it still needed to be resolved, the anterior issue of fact whether Mr Foote had acquired the funds used to make that first purchase before or after his relationship with Ms Rea began.

[19]     Lang  J  envisaged  that  these  issues  should  be  resolved  largely,  if  not completely, on the evidence as it was. Though it was for Judge Maude to decide what strictly related evidence to receive, he said, it might be enough if Mr Foote and Ms Rea were cross examined on these issues on their original evidence.

[20]     Lang J declined Mr Foote leave to call at the further hearing evidence as to the law of California that governed the three properties and any as to the status and effect of 'grant deeds' that Ms Rea had entered into on the sale of each, in which she disclaimed any interest. Such evidence, Lang J held, could have been called at the original hearing. It was not fresh evidence.

[21]     In December 2010 there was the further hearing contemplated before Judge Maude at which, this time, Mr Foote represented himself. He and Ms Rea were cross-examined on the issues remitted, and Ms Rea more widely. Mr Foote also made very detailed submissions as to the extent to which, if at all, as a matter of law as well as of fact, s 8(1)(ee) could begin to apply.

[22]     In a decision, dated 11 April 2010, the Judge concluded as a matter of fact that Mr Foote had acquired the first property, out of separate property he held before he and Ms Rea began their relationship, for their 'common use or common benefit'; and that the other two properties had been acquired out of the proceeds of sale, making them too and their proceeds of sale also relationship property. He affirmed his original decision. Hence this second appeal.

Decision under appeal

[23]     In that second decision, Judge Maude confirmed that the single purpose of the resumed hearing before him had been to enable the evidence as to the purpose for which the properties had been purchased to be elucidated and tested.

[24]     The question, the Judge held, was whether Ms Rea could show that Mr Foote intended to acquire those properties for their 'common use or common benefit'; an inquiry as to their intent when the property was acquired that did not require it to be established that they were to share ownership in a formal sense.

[25]     That inquiry, the Judge said, was to be made broadly and generally and was not to depend on subtle distinctions; and it was to hinge on what was intended rather than what was actually done, though sometimes the best evidence of intent was 'how the property was enjoyed or used'.[4] In this the Judge declined to confine himself, as Mr Foote invited him to, to what could be inferred from what was said or done before or at the time of purchase.

[4] Sloss v Sloss (1989) 5 NZFLR 497 at 506 - 509.

[26]     The Judge declined to revisit, as Mr Foote invited him to, the wider orders he had made in his original decision and he did not accept Mr Foote's submission that the ownership records fixed Mr Foote's intention at acquisition. He considered that to be  one  factor  only.  He  also  declined  to  revisit  the  significance  of  Ms  Rea's disclaimers of interest on the sale of each of the three properties. In that respect, he said, his original decision had been upheld.

[27]     The   Judge   found   unpersuasive   Mr   Foote's   submission   that   the   first Atascadero property could not be relationship property under s 8(1)(ee) because the separate funds he used were trust funds that s 10 excluded from having that effect. (They were trust funds, Mr Foote contended,  granted him by the United States Department of Labour to compensate him for a 1971 work related disability, a back injury for which he had unsuccessful surgery in 1983.)

[28]     The Judge ruled out that submission firstly, as I understand him, because it was beyond the scope of the issues of fact remitted to him to resolve but, finally, because there was insufficient evidence as to the nature of the payments or their source. (Mr Foote relied on a United States statute and a case that explained it.)

[29]     Rather, the Judge reiterated, the sole issue he had to decide was whether Mr

Foote had acquired the first property for the 'common use or common benefit' of Ms

Rea as well as himself and as to that, the Judge said, he was faced with two opposing accounts in the evidence.

Foote evidence

[30]     Mr Foote said in evidence, the Judge recounted, that he acquired the first property at the age of 40 as a way of entering the real estate market. He chose it himself, intent on creating equity incrementally, first by borrowing to build a house, and then by borrowing against the part built house in order to complete it.

[31]     At the time this property was acquired, Mr Foote said, he and Ms Rea had not settled into a permanent relationship. Standing in the way of that, Mr Foote said, was their age disparity. He was 40 and she was 21. Also Ms Rea was a New Zealand citizen, then without any right to residence in the United States, and still completing a degree.

[32]     During construction, Mr Foote said also, he spent 50% of his time at the house in a caravan overseeing it while Ms Rea was largely in San Francisco. At most, Mr Foote said, she later helped to fit out the house to the extent that she was able to.

[33]     Later, Mr Foote said, when Ms Rea was still in San Francisco, he and she spent weekends together there looking at houses but found them too expensive. That is why, the Judge said, Mr Foote said he became interested in the site next door, the second Atascadero property.

[34]     The owner, Mr Foote said, at first wanted $90,000, which was too much. But the section lacked street access and he and a friend of his, a developer, purchased it in partnership for $45,000; the friend contributing the cash and Mr Foote street access over the first Atascadero property.

[35]     Mr Foote claimed, the Judge said, that he decided entirely by himself to buy out his friend once Ms Rea expressed an interest in living in that second property.

Finally, however, the Judge said, Mr Foote accepted that Ms Rea shared in that decision. His point was that he provided all the funds.

Rea evidence

[36]     Ms Rea said in evidence, the Judge recounted, that when the first property was  acquired  their  relationship  was  in  every  sense  complete.  They  agreed  to purchase  because  they  were  tired  of  travelling  and  living  in  motels.  Their relationship was not one of landlord and tenant. She could not take title with Mr Foote only because she was still a student and working without a permit.

[37]     Ms Rea did accept, the Judge said, that Mr Foote had made the purchase from his compensation payments and a capital sum, $70,000 and that she was not then able to contribute. Ms Rea said, however, the Judge recounted, that she was no less involved in this decision when the house was built.

[38]     The house, Ms Rea said, was to a design that she and Mr Foote had agreed on and she was involved in the design of the fit-out. Equally, she said, when that property was sold and the second purchased, she was no less actively involved.

Judge's Analysis

[39]     The Judge began his analysis by saying that at both the 2009 and 2010 hearings Mr Foote was adamant that in these purchases he was the sole source of capital, that he was meticulous about keeping his funds protected, and that, consistently, the properties were acquired in his sole name.

[40]     But, the Judge held, the question was not as to ownership but as to 'common use or common benefit' and he was 'absolutely clear' that the first property was acquired  out of Mr Foote's separate property,  after he and Ms Rea began their relationship, and was acquired for their common use or common benefit.

[41]     Mr Foote and Ms Rea, the Judge held, had since 1981 shared a common life together and lived and worked together, and that did not cease to be so, he held, even

though for a significant time Ms Rea was in San Francisco and Mr Foote was living at that first property in a caravan.

[42]     All the contemporary documents, the Judge said, plainly confirmed that Ms Rea had an interest to transfer or dispose of and in his later letters to Ms Rea, the Judge said, Mr Foote confirmed that to be so. In one, Mr Foote said  'we have had several remarkable houses'. In another he said 'we jointly decided to do these things and it all cost a lot of money'.

[43]     If he was wrong as to the first Atascadero property, the Judge said, he was, nevertheless, 'absolutely clear' that the second was acquired for their common use and benefit.

[44]     When Mr Foote bought out the developer, the Judge said, he and Ms Rea had been unable to find a property in San Francisco that they could afford and she had agreed to live in the second property and Mr Foote, as he himself conceded, wanted her back.

[45]     Mr Foote's essential complaint, the Judge said, was that, while the decision had been a joint one, he had, as he saw it, funded the development and later that property had been used as security for purchase of the house in Papamoa, Ms Rea's parents' home.

[46]     When they sold the first Atascadero property, the Judge said, Ms Foote may have formally disclaimed any interest in it but the very fact that she was called on to do so was, if not direct evidence that she had an interest to disclaim, certainly consistent with that conclusion.

[47]     The Paso Robles property, the Judge said, did not come into explicit focus at the resumed hearing. But there too he was in no doubt that it also had been acquired during the relationship as a result of a joint decision for the common use or common benefit of Ms Rea, as well as Mr Foote, and that they had lived in it together.

[48]     In the result the Judge concluded that all these properties were relationship property in terms of s 8(1)(ee) and on that basis reaffirmed his original decision.

Grounds of appeal

[49]     On this second appeal Mr Foote advances four grounds, once again putting in issue whether s 8(1)(ee) can begin to apply in law as well as fact, the effect of each of which is, as I understand each to be, as follows.

[50]     First, Mr Foote contends, the Judge was obliged to consider whether the separate property from which he purchased the three properties triggered s 8(1)(ee) at all, and on the evidence the Judge could not conclude that it did. The funds Mr Foote contributed, he contends, were trust funds that were and always remained his separate property governed exclusively by s 10.

[51]     Secondly, Mr Foote contends, the Judge determined incorrectly, as a matter of fact, that he acquired each of the three properties for the 'common use or common benefit 'of Ms Rea and himself. There was no, or no sufficient, evidence to establish that to the balance of probabilities.

[52]     Thirdly, Mr Foote contends, the Judge determined incorrectly, as a matter of fact, that he acquired the three properties out of separate property he owned before he and Ms Rea began their relationship. Until 1984 all he had, he contends, was a right to compensation capable of being pursued, a chose in action. It was only in

1984, three years after the relationship began,  that it crystallised in a fund, the property that gave him the means to make the first purchase.

[53]     Fourthly, Mr Foote contends, the Judge erred as a matter of law when he concluded that the properties were relationship property under s 8(1)(ee), because it cannot apply where the properties in question have been the relationship home.

[54]     The first  issue to  which  these  grounds  of  appeal  gives  rise is  as  to  the legitimate scope of this appeal. To the extent that on this appeal Mr Foote puts in issue any matter of law as to whether s 8(1)(ee) applies that was not in issue on the first appeal and was not remitted to Judge Maude to decide, he is seeking a second bite at the cherry. He is not entitled to one.

Section 8(1)(ee)

[55]     In issue eventually on the first appeal in the broadest sense was, as is evident, whether the first Atascadero property was relationship property under s 8(1)(ee) and thus whether the two later properties had that character because Mr Foote acquired them out of the proceeds of sale of the first; and in that sense s 8(1)(ee) is decisive as to all three.

[56]     As is also already clear, s 8(1)(ee) calls for a multi faceted inquiry. It says:

Subject to sections 9(3) to (6), 9A and 10, all property acquired, after the marriage, civil union, or de facto relationship began, for the common use or common benefit of both spouses or partners, if -

(i)        the property was acquired out of property owned by either spouse or partner or by both of them before the marriage, civil union, or de facto relationship began; or

(ii)       the property was acquired out of the proceeds of any disposition of any property owned by either spouse or partner or by both of them before the marriage, civil union, or de facto relationship began.

[57]     In his decision on the first appeal Lang J, faced with Mr Foote's argument that s 8(1)(ee) could not apply on any basis, first asked himself whether there was any 'legal impediment' to it applying. Then he turned to whether Ms Rea could prove that the first property was acquired by Mr Foote in a qualifying way.

[58]     Lang J did not accept Mr Foote's argument that s 8(1)(ee) could not apply as a matter of law on the basis that it was trumped by s 9(2) which deems to be separate property 'all property acquired out of separate property, and the proceeds of any disposition of separate property'. The short answer to that, Lang J said, was that s

8(1)(ee) is not subject to s 9(2). The converse is the case.

[59]     Also, Lang J held, s 9A, to which s 8(1)(ee) is expressly subject, was not inhibiting and, he held also,   s 9(3) - (6), and s 10, to which s 8(1)(ee) is equally subject, did not have any relevance. He concluded, therefore, that there was no legal impediment  to  s  8(1)(ee)  applying.  The  only  question  was,  he  said,  whether s 8(1)(ee) applied on the evidence as it was.

Three issues of fact

[60]     The first of the three issues of fact that Lang J had then to consider was whether that first property had been acquired after the relationship began. As to that, he held, there was no issue. It had been acquired in 1985 and the relationship had begun in 1981. There has been no challenge to that since, certainly not on this appeal.

[61]     Lang J had then to ask himself, secondly, whether, on the evidence, the property had been acquired by Mr Foote from separate property he owned before the relationship began. As to that, he said, Mr Foote's position was that he only became finally entitled to the compensation moneys after the marriage; that the right to those moneys only crystallised in 1984 after Mr Foote underwent unsuccessful surgery in

1983.

[62]     It was 'certainly arguable', Lang J said, that the right to the funds accrued to Mr Foote before the relationship began, as a result of his 1971 incapacity, and that all that happened in 1984 was that his right was quantified in the fund. But, Lang J said,

'I propose, for reasons that will shortly become obvious, to leave this point open for the time being'.

[63]     The third question Lang J had to ask himself was whether Mr Foote had acquired the first property for the 'common use or common benefit' of Ms Rea as well as himself; an issue to be decided at the date on which that property was acquired. It was at this point that Lang J found that the evidence did not take him far enough to be able to reach any safe conclusion.

[64]     Some aspects of the evidence, Lang J said, suggested that Mr Foote had acquired the first property for the common use or common benefit of Ms Rea as well as himself. There was also contrasting evidence. Neither Mr Foote nor Ms Rea had been tested on the issue and Judge Maude had not had to deal with it. Thus it was that Lang J found himself unable to resolve it.

[65]     It was for that reason, and that reason only, that Lang J did not resolve the appeal completely on the basis of his findings of law and remitted Judge Maude that issue of fact, together with the anterior issue; a further inquiry on the evidence with a very close focus. He said this:

It will be necessary, in my view, for the parties to be cross-examined on this point and for submissions to be made on the application of the section to the Californian properties. For that reason I have concluded that the proceeding will need to be remitted to the Family Court so that this issue can be resolved based  on  such  further  evidence  as  the  Judge  in  the  Family  Court  may consider appropriate. Although the procedure to be adopted will be a matter for the Judge, the provision of further evidence may not be required. It may be sufficient for counsel to cross-examine the parties on the evidence that they  have  already  given,  and  for  submission  to  be  made  based  on  the evidence as a whole.

[66]     In then declining, as he did, to permit Mr Foote to lead further evidence as to the law of California in the two senses that I have spoken of, Lang J underscored the very limited nature of the remit he made. Yet on the resumed hearing Mr Foote attempted to revisit all potential issues of law as well as fact and the grounds on which he pursues this second appeal are equally wide.

Permissible grounds

[67]     The first ground of the four grounds of appeal on which Mr Foote relies, as I

have said, that s 8(1)(ee) could not apply at all because the compensation payments

came from a statutory trust fund and were earmarked irrevocably by s 10 as separate property, was never put to Lang J. It was taken by Mr Foote for the first time before Judge Maude.

[68]     So while Judge Maude held against Mr Foote as to this issue finally and most explicitly on the basis that there was no sufficient evidence as to the nature of the fund, the Judge had no need to consider this issue at all. Nor may Mr Foote now pursue that point on appeal. He should have taken it on the first appeal.

[69]     Mr Foote's third ground of appeal, challenging the Judge's conclusion that he acquired the first property out of separate property before the relationship began is on its face legitimate. It is expressed to be a challenge to the Judge's finding of fact on an issue reserved to him to decide by Lang J on the first appeal.

[70]     In reality, however, this ground of appeal is not a challenge to the Judge's evaluation of the evidence. It rests rather on a fresh proposition of law; and that is that  before  the  relationship,  and  until  1984,  Mr  Foote  did  not  have  qualifying separate property that enabled him to make the purchase. All he had was a chose in action, an intangible property right.

[71]     This proposition also should have been put to Lang J on the first appeal and cannot be advanced now. But, to the extent that it may still be open, I consider, it is answered by Lang J's necessarily provisional conclusion that Mr Foote only obtained the 1984 fund as a result of a right he had enjoyed since 1971 and that to distinguish between the fund and that right is artificial. They are necessarily interrelated.

[72]     Nor is there any basis on which Mr Foote can advance his fourth ground of appeal, which depends  on another fresh proposition of law that s 8(1)(ee) only applies to property other than the family home and family chattels.[5]  That was not raised on the first appeal. Nor was it even taken up by Mr Foote before Judge Maude

at the second hearing.

[5] Sloss v Sloss [1989] 3 NZLR 31 at 36 (CA).

[73]     The result is that Mr Foote is confined on this appeal to his second ground of appeal, and to his third, insofar as he raises any issue of fact and he does not appear to do so.  Both grounds, I accept, are to be resolved as on a general appeal by way of rehearing on Austin Nicholls principles[6]  on a fresh look, without forgetting that the Judge had the advantage of seeing and hearing the witnesses.

Third ground contentions

[6] Austin Nicholls & Co Ltd v Sitchting Lodestar [2008] 2 NZLR 141 at [16].

[74]     As to the third ground of appeal, in reality Mr Foote's only ground, he does not dispute that Judge Maude was entitled to take into account the way in which the first Atascadero property was used after it was acquired.[7] But, he contends, that can only be insofar as that sheds light on what was intended. Actual use and benefit are not otherwise relevant.[8]

[7] Sloss v Sloss [1989] 3 NZLR 31 at 36, 42.

[8] Rose v Rose [2009] NZFLR 814 [34].

[75]     Mr Foote's basic point is that there is no evidence of any representation or declaration made by him at the time when he acquired the first property as to his purpose then or predominant purpose. Rather, he says, Judge Maude had to rely on six matters after the event, none of which singly or together can begin to suffice.

[76]     First, Mr Foote contends, the Judge relied on Ms Rea's evidence that she contributed to 'interior choices for the home including colours'. But, Mr Foote says, that was post acquisition and was equally consistent with Mr Foote's purpose of investment.

[77]     Secondly, Mr Foote says, the Judge relied on the fact that he and Ms Rea were, when the property was acquired, in a de facto relationship. But, as the Judge himself found, they did not commit themselves to marriage or discuss it until 1986, after  the  home  was  complete  and  even  he,  Mr  Foote,  still  had  significant uncertainties about Ms Rea remaining.

[78]     Thirdly, Mr Foote says, the Judge found that they intended to acquire the first property for their common use or common benefit because they were then living in

motels and did not wish to do so any more. But that, he says, can hardly be cogent evidence of purpose. They were living in motels as a term of employment. It was of benefit to them and not inconsistent with the first property being acquired as an investment.

[79]     Fourthly, Mr Foote says, the Judge gave insufficient account to the fact that, while the first property was being constructed, he and Ms Rea were living apart, he was in the caravan at the construction site and she was in San Francisco, and that is inconsistent with them then having any shared intention relating to the property, let alone any common purpose.

[80]     Fifthly, Mr Foote contends, the Judge gave undue weight to the contracting out agreement Ms Rea completed when the first property was sold. As she accepted in evidence, that was required for real estate purposes. That agreement, Mr Foote says, cannot of itself be evidence of any proprietary interest Ms Rea then had, more especially as it was entered into only when the property was disposed of.

[81]     Sixthly, Mr Foote says, the Judge gave undue weight to the letters he wrote to Ms Rea following their separation, well after acquisition and when he was trying to reconcile with her. Those letters are not to be taken literally.

[82]     As to the second Atascadero property, Mr Foote contends, the Judge gave insufficient weight to the fact that he acquired it as a 'spec' proposition with a developer and undue weight to the fact that at the time when he bought out the developer he and Ms Rea had been unable to find a property in which to live together in San Francisco.

[83]     There has also to be an issue, Mr Foote contends, whether, as the Judge was prepared to accept, this property was acquired out of his separate property before the relationship began. The evidence was lacking as to whether the purchase was made from the proceeds of sale of the first property, or as a result of his grant of easement over the first property, or both.

[84]     As to the Paso Robles property, Mr Foote says, there is simply insufficient evidence as to how it was acquired and why and there was no safe basis for the Judge to infer that Mr Foote acquired it for their common use or benefit. Here too, he contends,  there has  to  be an  issue  whether  it  was  acquired  out  of  his  separate property before his relationship with Ms Rea began.

Conclusions

[85]     Despite these contentions, I consider, the Judge was entitled on the evidence to conclude, as he did,  that s 8(1)(ee) makes  the proceeds of sale of the three properties relationship property.

[86]     Mr Foote acquired the first property, as the Judge found, in part at least from separate property that came to him as a fund in 1984, but to which he had been entitled since 1971, ten years before his relationship with Ms Rea began. In 1985, when he acquired the property, he and Ms Rea had been in a relationship for four years, since 1981, and within two years, in 1987, they married. It is hardly a coincidence that this first property was their first family home.

[87]     The evidence as a whole is consistent, I consider, with the conclusion to which the Judge came, that this property was acquired precisely for that purpose, and thus for their 'common use or common benefit'. There is no evidence to support Mr Foote's claim now that he acquired that first property as an investment.

[88]     The result is that when that first property was sold, the proceeds of sale also became relationship property and when they were deployed in the purchase of the second Atascadero property, and then the Paso Robles property, those properties in turn became relationship property, as did the proceeds of their sale now sequestered in the J E Foote Family Trust in the United States.

[89]     The Judge was entitled then, I consider, to conclude as a consequence that, because that sum had been left out of account in the 2002 relationship property agreement, to give effect to the agreement would be to cause 'serious injustice'. He

was entitled, I consider, to set the agreement aside as he did and thus, I conclude, that Mr Foote's appeal must be dismissed.

[90]     Ms Rea is entitled to costs on the appeal and disbursements as fixed by the Registrar. If they cannot be agreed, Ms Rea's counsel is to file and serve her memorandum within ten working days of the date of this decision and Mr Foote's counsel is to file and serve any response of his within the succeeding ten working

days.

P.J. Keane J