G v G
[2012] NZHC 276
•11 January 2012
NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO 11D OF THE FAMILY COURTS ACT 1980. FOR FURTHER INFORMATION PLEASE SEE THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2011-404-4265
NZHC [2012] 276
UNDER The Property (Relationships) Act 1976
BETWEEN G Appellant
ANDG Respondent
Hearing: 30 November 2011
Counsel: J Mather for Appellant
M Robinson for Respondent
Judgment: 11 January 2012 at 11:30 AM
JUDGMENT OF POTTER J
In accordance with r 11.5 High Court Rules
I direct the Registrar to endorse this judgment
with a delivery time of 11.30 a.m. on 11 January 2012.
Solicitors: Upper Harbour Law, Auckland – [email protected]
Turner Hopkins, Auckland – [email protected]
Copy to: J Mather, Auckland – [email protected]
G V G HC AK CIV-2011-404-4265 11 January 2012
Introduction
[1] Mr G (the husband) appeals against a judgment of Judge Adams1 which found there was a binding agreement between the husband and Mrs G (the wife) in terms of s 21P of the Property (Relationships) Act 1976 (the Act) as to the status, ownership and division of their property.
Factual background
[2] The following background is summarised from facts not in dispute and factual findings made by the Family Court Judge which are not challenged on appeal.
[3] The parties commenced a relationship in 1996 and from September 1997 lived together in an unencumbered property owned by the wife at Albany. They married in 2004.
[4] In mid-1998 they purchased from the husband’s parents a property in Glen Eden which they owned as tenants in common in equal shares. The purchase price of the property was fully funded by loans from the bank and the husband’s parents.
[5] The Judge found there was family pressure from both sides for the parties to define their property interests, and that they were aware of impending changes in the law which would bring the property of de facto couples under the relationship property regime which applied to married couples under the Act.
[6] A Property Agreement (the agreement) was prepared by Mr Snedden, the wife’s solicitor, and sent to a solicitor, Mr Barter. Both the husband and the wife attended on Mr Barter. The wife waited outside Mr Barter’s office while he spoke with the husband and made some amendments to the agreement. The husband
signed the agreement and Mr Barter witnessed his signature and certified that he had
1 GSG v LMG FC Auckland FAM-2010-044-001390, 23 June 2011.
independently advised the husband as to the effects of the agreement prior to his signing it.
[7] The wife then received both copies of the agreement signed by the husband. She put the documents in a drawer. She did not sign the agreement and did not pass it on to her solicitor, Mr Snedden.
[8] The date the agreement was executed by the husband is uncertain but the
Judge found it probable that it was signed by the husband between 6 and 29 March
2001.
[9] The wife created a trust by deed dated 6 March 2001 to which she transferred the Albany property. The transfer was registered on 29 March 2001.
[10] The Glen Eden property was sold in 2003. The husband repaid the loans to the bank and his parents.
[11] The parties separated in 2009. The husband lodged a Notice of Claim against the certificate of title to the Albany property in July 2009.
[12] When issues arose about the Albany property the wife signed one copy of the agreement and provided both copies to the husband. Judge Adams recorded the evidence of the wife that she did not believe it was necessary for her to sign the document because her property was already protected by the acknowledgment of the husband in the agreement and by her having transferred the property to the trust.
The agreement
[13] The agreement recites that the parties had been living in a de facto
relationship since September 1997. The Albany property is described as ―[the
wife’s] property‖ and the Glen Eden property is described as ―[the husband’s]
property‖.2
[14] The husband acknowledges that the Albany property is the absolute and separate property of the wife and he has no interest legal, beneficial, equitable or otherwise in it. The wife makes like acknowledgments in respect of the Glen Eden property notwithstanding that it is registered in their joint names. The agreement provides for other property to be the separate property of the party in possession
―now or in the future‖.
[15] The parties agree that the agreement is in full and final settlement of all property claims which each has against the other. To this Mr Barter added:
… and is a final and full contracting out agreement surrendering rights that may have been available under the Property Relationships Act 2001, and the Matrimonial Property Act, and the Family Proceedings Act.
[16] The parties acknowledge that each had independent legal advice before signing the agreement.
Relevant provisions of the Property (Relationships) Act 1976
[17] Section 21P of the Act applies to agreements made before 1 August 2001 between de facto partners. It provides:
(1) This section applies to any agreement —
(a) that is made, before 1 August 2001, by de facto partners, or by any 2 persons in contemplation of entering into a de facto relationship; and
(b) that is made with respect to the status, ownership, or division of their property.
…
2 In recital (c) the Glen Eden property is described as the husband’s property although in fact the parties were registered as proprietors as tenants in common in equal shares. This is stated in cl 2.3 of the agreement which provides that notwithstanding that the Glen Eden property is registered in the joint names of the husband and the wife, the wife acknowledges that the property is the separate property of the husband.
[18] Section 21R provides that such an agreement will have effect as if the Act had not been passed.
[19] Sections 21P and 21R were intended to clarify uncertainties in relation to property agreements executed by de facto partners prior to the enactment of the Property (Relationships) Amendment Act 2001 and to recognise that de facto partners who had reached agreement as to property ownership could rely on those agreements without being affected by the property sharing regime imposed by the amending legislation in 2001.
The Family Court judgment
[20] Judge Adams defined the issue as whether the parties were bound by an agreement made by them in or about March 2001 defining certain property rights, including their rights in regard to the property that was their home. He noted that the onus was on the wife to establish the agreement by which she sought to have the husband bound.
[21] He noted that an agreement under s 21P of the Act must comply with the ordinary principles of contract. Accordingly there must be established a common intention; consideration; no undue influence or duress; no unconscionable bargain; no substantial misrepresentation or mistake as to terms.
[22] He noted the husband’s submission that there was no agreement. He said that initially it seemed the husband’s argument was that a vital term was missing from the document, namely the term that there was to be a ―sunset clause‖ to operate after ten years (possibly ten years after the parties commenced living together). He said that in the course of the hearing the husband appeared to contend that whatever the outcome of his contention regarding the sunset clause, he sought to deny the existence of an agreement and to contend that he was not bound by the agreement if it existed.
[23] The Judge then turned to the central issue of whether there was an agreement. He made a number of findings of fact which are largely included above under the
heading ―Factual background‖. In reaching factual findings the Judge said he preferred the evidence of the wife to that of the husband. At [24] to [26] he carefully articulated his reasons for his credibility finding in favour of the wife.
[24] He made a finding as to the husband’s knowledge about the trust, which is challenged on appeal. The Judge said:3
Although [the husband] says that he had no knowledge of the trust or transfer of the Albany property to the trust until 2004, I accept the evidence of [the wife] that it was openly discussed with him and that he had driven her to appointments with Snedden and Associates for the purpose of signing the documents. I find that he was fully apprised of these facts from the beginning.
[25] In respect of the agreement he said:4
What is required for s 21P is an agreement. We often speak of a document written and signed to evidence an agreement as the agreement, but the actual agreement is the binding exchange of promises that exists outside of the evidence in writing. The distinction underlies those cases which have enforced oral agreements in these kinds of situations.
[26] He then referred to the husband’s contention that the written document he signed did not evidence the agreement because he contended it was necessary for the wife to sign as well but also because it did not contain the vital sunset clause. The Judge observed in relation to the sunset clause:5
If that was important to him, one wonders why he would be prepared to sign the agreement without that term in it.
[27] The Judge found there was no agreement between the parties as to the contended sunset clause6 and that the husband’s desire for the agreement to contain such a clause could not undermine the agreement. He found the terms of the agreement were ―… quite simple and straightforward‖, and that the parties reached an agreement in terms of the document signed by the husband which fully and
properly recorded all the essential terms of the agreement. He said the fact that the
3 At [34].
4 At [37].
5 At [38].
6 At [43].
wife failed to sign an evidencing document did not detract from the binding force of the agreement the parties had made.7
[28] He referred to the conduct of the parties around the time and subsequently as confirming the terms of the agreement.
[29] He then found satisfied each of the requirements as previously identified,8 for an agreement under s 21P.
[30] Finally he dismissed the husband’s submission that s 24 of the Property Law Act 2007 applied to require a written agreement signed by both parties. (I shall refer further to this issue later in this judgment).
[31] The Judge made an order that the Notice of Claim against the Albany property be removed forthwith. He declared that the Albany property was the separate property of the wife to dispose of as she wished and therefore it had been validly transferred to the trust. He made further orders in relation to other property of the parties by consent.
Approach on appeal
[32] The appeal is brought under s 39 of the Act. The approach relating to general appeals in Austin, Nichols & Co Inc v Stichting Lodestar9 applies to appeals under s 39. The principles that can be derived from Austin, Nichols can be summarised as follows:10
(a) The appellant bears the onus of satisfying the appeal court that it should differ from the decision under appeal.
(b)It is only if the appellate court considers that the appealed decision is wrong that it is justified in interfering with it.
7 At [44] and [45].
8 See at [21] above.
9 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.
10 Chee v Stareast Investment Ltd HC Auckland CIV-2009-404-5255, 1 April 2010 at [4]–[5].
(c) The appeal court has the responsibility of arriving at its own assessment on the merits of the case.
(d)No deference is required beyond the customary caution appropriate when seeing the witnesses provides an advantage because, for example, credibility is important. (The Judge’s credibility findings are important in this case).
(e) The appellate Judge is entitled to use the reasons of the first instance decision maker to assist him or her in reaching his or her own conclusions, but the weight the Judge places on them is a matter for the Court.
Submissions on appeal
[33] Two main grounds of appeal were advanced by Mr Mather for the husband. [34] The primary ground is that there was no agreement because —
(a) The parties intended the agreement to be in writing and executed by both the husband and wife and the agreement was subject to contract.
(b)A term of the agreement was the sunset clause, namely that the agreement would expire after ten years and the statutory equal sharing regime under the Act would take effect.
[35] Both these arguments were advanced before the Judge but in the Family Court the main focus was on the alleged sunset clause. On appeal, Mr Mather focused on the ―subject to contract‖ argument, acknowledging the Judge’s findings of fact in respect of the sunset clause. Nevertheless, counsel submitted that the Judge erred in fact and law in making the findings he did as to the sunset clause.
[36] The secondary ground is that the agreement involved a disposition of a legal or equitable interest in land, namely the wife’s interest in the Glen Eden property and
under ss 24 and 25(1)(b) of the Property Law Act 2007, it was required to be in writing signed by the wife. Mr Mather noted that the Judge considered s 24 and s 4 but did not refer to s 25.
Factual issues
[37] Certain factual matters determined by the Judge which were relevant and important to his determination that there was an agreement in terms of s 21P of the Act are challenged by the appellant.
[38] The notice of appeal states that the Judge erred in fact and in law in making the findings he did in respect of the sunset clause. It is said that insufficient weight was given to cross-examination duties and the discretion of the Judge.
[39] In submissions Mr Mather also challenged the Judge’s finding that the husband knew about the trust and the transfer of the Albany property to it ―from the very beginning‖.11 He submitted that the wife’s assertions in answer to questions in cross-examination were not put to the husband and he should have been recalled for this purpose.
[40] The background to that submission is that in cross-examination Mr Mather put to the wife the evidence of the husband in his affidavit that he found out about the trust in July or August 2004. The wife said she strongly refuted that evidence – that the husband drove her to see her solicitor, Mr Snedden, on a number of occasions when documents were signed, that they discussed the trust openly before it was formed and that the husband encouraged her to form the trust. She confirmed that evidence in response to a question from the Judge.
[41] The wife’s evidence on this point was not put squarely to the husband in
cross-examination although in the context of the sunset clause, he referred to not knowing about the trust.
11 At [34].
[42] However, the wife’s answers in cross-examination were entirely consistent with what she said in her affidavit sworn on 2 August 2010. She said:
I am astounded at the suggestion that the respondent only became aware of the McLaren Family Trust in 2004. It was discussed with him and he was fully aware of the existence of the trust from the day that it was formed in March 2001. He discussed the trust with me and other people. For example we discussed the trust with [N and R] at their house … shortly after the trust was established in 2001. The respondent was also aware of the existence of the trust at the time of the new bank loan in December 2002.
[43] The husband had the opportunity to respond to those assertions and did so in his affidavit affirmed on 27 August 2010. He said at paragraph 18 that had he known the Albany property had been settled in a trust, he would not have signed the agreement because the ―ten year agreement‖ could not have been given effect. At paragraph 25 he specifically denied the wife’s assertions set out above. Thus the conflict of evidence on this point was clearly before the Court. The wife’s replies in cross-examination raised nothing new to which the husband was denied the opportunity to respond. He did so in his affidavit dated 27 August 2010 and could have further addressed the point in evidence in chief had he been in a position to add relevant evidence.
[44] Faced with the direct conflict in the evidence of the parties on this point, the Judge preferred the wife’s evidence, consistently with the credibility findings he made in her favour.
[45] The wife’s evidence about the sunset clause was put to the husband in cross- examination. Mr Robinson put to the husband:
[The wife] says she emphatically and categorically denied, ―I emphatically and categorically deny that there was ever any agreement reached concerning the prospect of a relationship property agreement having a duration of only 10 years or for any specific time‖… ―Nor was this included in the written agreement witnessed and certified by the respondent’s solicitor‖. So you say she’s wrong in making that statement do you?
The husband answered:
Absolutely. No doubt.
[46] Mr Mather submitted the sunset clause remained a live issue between the parties which explains, he said, why the wife did not sign the agreement. However, that was not her evidence. She said ―… it was an oversight on my part and I put it away in the filing cabinet and forgot about it‖. She said she understood the trust provided protection for her property.
[47] The Judge’s finding that there was no agreement as to the alleged sunset clause and that they reached an agreement that did not contain such a term, 12 was open to him on the evidence. As the Judge observed, if the clause was important to the husband, why would he have been prepared to sign an agreement without it.13
The Judge acknowledged the husband raised the possibility of such a term and
―continued to be unhappy … about the bargain he had struck‖, but said the husband’s desire for the agreement to have something different, could not undermine the agreement.14 He found that:15
… the bargain contained in the agreement was discussed and that Mr Barter
was satisfied that [the husband] knew what he was doing.
An oral agreement or “subject to contract”?
[48] There were three possibilities:
(a) The parties had reached an agreement which they then proceeded to record in writing. If so, absence of a written agreement has no impact. The agreement is complete (subject to consideration of the provisions of ss 24 and 25 of the Property Law Act 2007). (This was the Judge’s finding).
(b)The parties had discussed arrangements for division of property but there were matters still the subject of negotiation. (This was the
husband’s position in relation to the sunset clause).
12 At [43].
13 At [38].
14 At [43].
15 At [42].
(c) The parties had reached agreement but did not intend to be bound (objectively assessed) prior to execution of a written agreement, that is, the parties had not assumed an immediate legal commitment; they intended to postpone undertaking contractual liability until execution of a formal contractual document. (This is the situation advanced by Mr Mather on appeal).
[49] Mr Robinson referred to the analysis in Law of Contract in New Zealand
under the heading ―Agreements subject to contract‖.16
In determining whether the parties have entered a binding contract the Courts must first look to see whether there is an appearance of consensus on sufficiently certain terms, and then determine whether the parties intended whether the agreement was intended to be legally binding at that point, or whether the parties had expressly or impliedly intended to postpone undertaking contractual liability until the execution of a formal contractual document.17 In most cases the terms of the agreement and the circumstances of the transaction will suggest the parties intended it to be binding immediately. This will not always be so however.
[50] The learned authors go on to observe that in some cases there will be inserted into the agreement a phrase such as ―subject to contract‖. But the absence of such a phrase is not conclusive.
[51] Mr Mather agreed with this analysis and submitted that the situation in this case is that encapsulated by the last three lines of the paragraph cited, namely that the agreement was subject to contract. He submitted that the Family Court did not address this issue.
[52] I do not accept that submission. It is implicit in the Judge’s findings:
[44] … The parties, in my view, reached an agreement and I find the terms of the document signed by [the husband] record fully and properly all the essential terms of the agreement.
[45] I find that they made an agreement that satisfied s 21P. The fact that [the wife] failed to sign an evidencing document does not detract from the binding force of the agreement that they made.
16 J Burrows, J Finn and S Todd Law of Contract in New Zealand (3rd ed, LexisNexis, Wellington
2007) at 227.
17 Verissimo v Walker [2006] 1 NZLR 760, 768-770.
[53] The Judge clearly rejected the husband’s contention that there was another condition agreed upon by the parties, namely that they would not be contractually bound until a written agreement was executed by both of them. He also rejected the husband’s assertion that the written agreement was not complete because it did not include the sunset clause.
[54] The Judge in finding that the evidence in this case established an agreement in terms of the first of the three scenarios above directly rejected the second scenario and implicitly rejected the third scenario.
[55] The Judge referred to the conduct of the parties around the time the agreement was signed by the husband, and subsequently, ―to see the force of this agreement‖.18
[56] I consider the subsequent conduct of the parties in this case to be compelling evidence of the agreement the Judge found the parties had reached. In considering whether a contract has been formed evidence of subsequent conduct is relevant. In Fletcher Challenge Energy Ltd v Electricity Corporation of New Zealand Ltd19 the Court of Appeal said:20
It is also permissible when considering contract formation … to look at
subsequent conduct of the parties towards one another, including what they have said to each other after the date of the alleged contract (Australian
Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18
NSWLR 540 at p 550). However, as Gleeson CJ observed in the Australian
Broadcasting case (at p 550), the position is by no means so clear in connection with internal memoranda, communications of one party with a third party or statements of subjective intention made by individuals in the course of giving evidence. We have proceeded on the basis of treating such material as admissible but we share that reservation, particularly in relation to direct expressions of subjective intent. …
[57] In Gibbons Holdings Ltd v Wholesale Distributors Ltd21 the Supreme Court held that all cogent evidence, including evidence of the subsequent conduct of the
parties, should be taken into account in interpreting contracts to give effect to the
18 At [46].
19 Fletcher Challenge Energy Ltd v Electricity Corporation of New Zealand Ltd [2002] 2 NZLR
433 (CA).
20 At [56].
21 Gibbons Holdings Ltd v Wholesale Distributors Ltd [2007] NZSC 37, [2008] 1 NZLR 277 at
[50]-[63].
common intention of the parties. Such conduct must be mutual or shared. That case concerned contract interpretation rather than contract formation but in principle there should be no difference. All cogent evidence should be taken into account in determining the common intention of the parties.
[58] Here the subsequent conduct was mutual. First the wife transferred the Albany property to a trust, which was consistent with the parties’ agreement that it was her ―absolute and separate property‖. That the trust was established by deed dated 6 March 2001 and the Albany property transferred to it on that date or soon after (the transfer was registered on 29 March 2001) only serves in my view to confirm the agreement reached in relation to the Albany property, particularly given the Judge’s clear finding that the husband knew about the trust from the start.
[59] Secondly, the husband maintained control over the Glen Eden property and on sale in 2003 he applied the sale proceeds in accordance with the parties’ agreement that it was his ―absolute and separate property‖. Obviously, the wife who had remained on the certificate of title as a registered proprietor as tenant in common, signed the transfer on sale to effect the disposition of the property.
[60] Thirdly, both parties signed the written agreement, albeit that the wife signed at a later date than the husband.
[61] I have considered a number of cases where oral agreements in terms of s 21P of the Act have been upheld by the Courts and others in which the evidence was held insufficient to establish an oral agreement.22 Each case turns on its own facts. Some were concerned with whether the agreement survived marriage in relation to property acquired during the marriage, for example A v R, an issue that does not arise
in this case.
22 A v R [2007] 2 NZLR 399 (HC); Ward v Knudsen HC Hamilton CIV-2005-419-382, 4 April
2006; TAP v REC FC North Shore FAM-2004-044-1992, 24 November 2005; rev’d Chase v
Palmer HC Auckland CIV-2005-404-7259, 16 August 2006; PK v JC HC Wellington CIV-2009-
485-1300, 17 December 2009;GAR v AEC FC Levin FAM-2005-031-155, 17 June 2008.
[62] In Ward v Knudsen the Court took into account evidence of post-contractual conduct in determining that the evidence sufficiently established the terms of the agreement and the parties’ intention to be bound.
[63] In R v C an agreement contracting out of the equal property sharing regime of the Act had been drawn up but one of the parties to the de facto relationship had refused to sign it. The Court held that the evidence did not establish a meeting of minds or common intention and therefore there was no basis to find an oral agreement.
[64] The situation in R v C contrasts with the situation in this case. There was a written document, signed by the husband and later signed by the wife. Further, and importantly in my view, the parties acted entirely consistently with the terms of the agreement as set out in the written document.
[65] On the evidence, I consider it was open to the Judge to find that the parties made an agreement that satisfied s 21P of the Act. Indeed I consider he was clearly correct in so finding.
Sections 24-26 Property Law Act 2007
[66] I turn to consider the secondary ground of appeal advanced by Mr Mather. [67] Sections 24 and 25 relevantly provide:
24Contracts for disposition of land not enforceable unless in writing
(1) A contract for the disposition of land is not enforceable by action unless –
(a) the contract is in writing or its terms are recorded in writing;
and
(b) the contract or written record is signed by the party against whom the contract is sought to be enforced.
…
25 Writing required for certain dispositions of interests in land
(1) A disposition of any of the following must be in writing and signed by the person making the disposition:
(a) an existing interest in land acquired by taking possession of the land:
(b) an existing legal or equitable interest in land:
(c) an existing equitable interest in a mixed fund consisting partly of land and partly of other property.
(2) A trust must be created in writing and signed by the settlor if –
(a) it relates to land; and
(b) it is to take effect in the lifetime of the settlor.
…
[68] As I understand Mr Mather’s submissions, he places reliance on these provisions in three respects. While the statutory provisions would not apply to the husband’s potential share in the Albany property, s 25(1)(b) requires a written document signed by the wife for the ―disposition‖ of her interest in the Glen Eden property; without such a document, there was a failure of consideration by the wife; the statutory requirements support the contention that the parties’ agreement was always ―subject to contract‖.
[69] The Judge addressed the application of s 24 but did not consider s 25. He referred to the definition of ―disposition‖ in s 4 of the Property Law Act and held that ―the agreement of the parties was an agreement as to the status, ownership and division of their property and not one ―for the disposition of land‖ as set out in s 24‖.23 He said the agreement did not purport to be a transfer. Rather it defined the rights of the parties with regard to the Albany and Glen Eden properties. He concluded this was a different ambit from that of ―a contract for the disposition of
land‖ as set out in s 24.24
23 At [56].
24 At [59].
[70] He also noted that s 24(1)(b) relates to the enforceability of a contract for the disposition of land and that in this case the husband was not seeking to enforce the contract against the wife in respect of the Glen Eden property.
[71] I tend to agree with the Judge that an agreement by de facto partners under s 21P that is ―made with respect to the status, ownership, or division of their property‖ is not a ―disposition of land‖ or an interest of land in terms of s 4 of the Property Law Act. The ―disposition‖ of the Glen Eden property took place when it was transferred in 2003.
[72] However, in case I am wrong in that, I consider s 26 of the Property Law Act applies here. It provides:
26 Doctrine of part performance not affected
Sections 24 and 25 do not affect the operation of the law relating to part performance.
[73] Here, the agreement as it related to the parties’ interests in the Albany and Glen Eden properties, was not only partly performed but fully implemented by the parties. In essence, having executed the agreement, the husband is now seeking to reverse that part of the agreement which relates to the Albany property while maintaining that part of the agreement which relates to the Glen Eden property, in apparent reliance on the wife having executed the agreement later than he did.
[74] That cannot be right. I reject the submissions for the husband on this aspect.
Result
[75] The appeal is dismissed.
[76] The orders made by the Judge25 stand.
[77] The wife is entitled to costs. I award them in her favour on a 2B basis.
25 At [62](1) and (2).
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3
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