Gerring-Gunn v Gunn
[2023] NZHC 2603
•19 September 2023
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2022-419-136
[2023] NZHC 2603
UNDER the Property (Relationships) Act 1976 BETWEEN
ANNA MICHELLE GERRING-GUNN
Appellant
AND
STEVEN ALEXANDER GUNN
Respondent
Hearing: 30 August 2023 Appearances:
R P Sutton for appellant
MIS Phillipps and N Dennison for respondent
Date of judgment:
19 September 2023
JUDGMENT OF JAGOSE J
This judgment was delivered by me on 19 September 2023 at 1.00pm.
Pursuant to Rule 11.5 of the High Court Rules.
………………………… Registrar/Deputy Registrar
Counsel/Solicitors:
Richard Sutton, Barrister, Hamilton
Vicki Ammundsen Trust Law, Auckland
GERRING-GUNN v GUNN [2023] NZHC 2603 [19 September 2023]
[1] Anna Gerring-Gunn appeals against the decisions of Judge R H Paul in the Family Court at Hamilton on 2 May (and 29 August) 2022, declining to set aside her 19 April 2011 agreement with Steven Gunn as to the division of their property or hold the parties continued in a de facto relationship after dissolution of their marriage (and awarding him costs).1 As in the agreement, and meaning no disrespect, in this judgment I refer to the parties respectively as ‘Anna’ and ‘Steve’.
Background
[2] Anna and Steve married each other in New Zealand on 28 November 2003. They latterly lived together with their two children in the United Arab Emirates’ Abu Dhabi, where Steve was based as a pilot employed by the Emirates airline. On 19 April 2011, they entered into an agreement recording their date of separation as 30 March 2009 and setting out “the division of relationship property held by them at the date of separation … in full and final settlement of all or any claims which either party may have against the other” under the Property (Relationships) Act 1976.
[3] The agreement provided for equal division of net proceeds on sale of Anna’s and Steve’s newly constructed Abu Dhabi property they valued at $650,000 (but carrying $500,000 in borrowings) “as early as practicable”, pending which sale Steve could live at the property rent free on payment of all outgoings. Chattels were to be the sole and separate property of the party with possession, use or control of them. Vehicles and boats were to be retained by Steve, whose superannuation fund then valued at $150,000 and post-separation income was agreed his separate property.
[4] Cash on hand of some $30,000 was for equal division. Charged property obtained or retained under the agreement rendered that party “solely liable in respect of that debt” and indemnified the other against any claims or losses arising from that debt. Children were to be in Anna’s custody in New Zealand for Steve’s notified and non-interrupting access. Steve was to pay Anna $3,000 a month (net of tax) for their two children’s maintenance (then aged 6 and 8 years) until the younger turned 18 years old, and to meet the children’s schooling costs.
1 Gerring-Gunn v Gunn [2022] NZFC 4341 [substantive judgment]; Gerring-Gunn v Gunn [2022] NZFC 8193 [costs judgment].
[5] The agreement recorded the parties’ warranty “they have made full and proper disclosure of their respective property owned at date of separation” and, notwithstanding the prior “full and final settlement” provision, acknowledged “they have had independent legal advice and each now agreed to contract out of the provisions of the Property (Relationships) Act 1976”.
[6] In reliance on the agreement and the parties’ reiteration they ceased living together on 30 March 2009, the parties’ marriage was dissolved on 4 July 2011. Notwithstanding both agreement and dissolution, Anna later contended their relationship continued until separation in July 2016.
[7] There is no dispute, at least to the point of his assessment for child support in 2018, Steve met his maintenance obligations (and more) through Anna’s access to Steve’s bank account until 2016. The family maintained contact after Anna and the children relocated to New Zealand in about February 2011, including in Abu Dhabi and on overseas holidays accommodated by Steve’s travel privileges through his employment. And Steve played a significant role in providing for Anna and the children when Anna fell seriously ill.
Judgments under appeal
[8] After a three-day hearing in February 2022, Judge Paul granted Anna an extension of time to 21 December 2018 for her application to set aside the agreement, which application otherwise should have been made within 12 months after the marriage’s dissolution,2 essentially because the application was within time if the agreement was to be considered with reference to the contended continuing relationship.3
[9] After consideration of the relevant ss 21F and 21J criteria, the Judge concluded Anna had not established the ‘serious injustice’ threshold on which agreements may be set aside.4 Her Honour also concluded, with reference to s 2D’s criteria, she was
2 Property (Relationships) Act 1976, s 24(1)(a).
3 Substantive judgment, above n 1, at [50].
4 At [112].
not satisfied the parties continued in a de facto relationship after dissolution of their marriage.5
[10] On costs, the Judge concluded Anna’s comprehensive failure in the substantive judgment, taken together with her refusal of two offers of settlement, constituted “extraordinary circumstances” justifying the making of an order for costs and disbursements amounting to $41,051.55 against Anna as an aided person in a civil proceeding.6
[11] On appeal, for Anna, Richard Sutton argues Anna entered the agreement in oppressive circumstances without adequate legal advice, with the effect of allocating the parties’ then joint assets 94 per cent in Steve’s favour as ‘inarguably’ seriously unjust. He submits the evidence is they continued in their relationship for another five years, including acquiring a residential property in Hamilton’s Keswick Crescent as their family home in May 2014, requiring an accounting for all property acquired by either or both of them by July 2016.
Approach on appeal
[12] Appeals to this Court from the Family Court are general appeals conducted by way of rehearing,7 in which Anna bears the onus of satisfying me I should differ from the Family Court’s decision. I only am justified in interfering with that decision if I consider the decision is wrong — in other words, the Judge erred.8
[13] I then am to come to my own assessment of the merits of the case afresh, without deference to the Family Court (save for some caution in differing on witness credibility, when I have not had the advantage of observing the witnesses).9 I may rely on the Family Court’s reasons in reaching my own conclusions, but the weight I give those reasons is a matter for me.10
5 At [117].
6 Costs judgment, above n 1, at [17], inferentially referring to the Legal Services Act 2011’s s 45(2).
7 Property (Relationships) Act, s 39(3); see also District Court Act 2016, s 127.
8 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [13].
9 At [13].
10 Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 at [31].
[14] After hearing the appeal I may make any decision I think should have been made, or direct the Family Court to rehear the proceeding or consider and determine any particular matter.11
Relevant law
[15]Section 2D of the Property (Relationships) Act 1976 provides:
Meaning of de facto relationship
(1) For the purposes of this Act, a de facto relationship is a relationship between 2 persons (regardless of their sex, sexual orientation, or gender identity)—
(a)who are both aged 18 years or older; and
(b)who live together as a couple; and
(c)who are not married to, or in a civil union with, one another.
(2) In determining whether 2 persons live together as a couple, all the circumstances of the relationship are to be taken into account, including any of the following matters that are relevant in a particular case:
(a)the duration of the relationship:
(b)the nature and extent of common residence:
(c)whether or not a sexual relationship exists:
(d)the degree of financial dependence or interdependence, and any arrangements for financial support, between the parties:
(e)the ownership, use, and acquisition of property:
(f)the degree of mutual commitment to a shared life:
(g)the care and support of children:
(h)the performance of household duties:
(i)the reputation and public aspects of the relationship.
(3) In determining whether 2 persons live together as a couple,—
(a)no finding in respect of any of the matters stated in subsection (2), or in respect of any combination of them, is to be regarded as necessary; and
(b)a court is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate to the court in the circumstances of the case.
For the purposes of this Act, a de facto relationship ends if—
(a)the de facto partners cease to live together as a couple; or
(b)one of the de facto partners dies.
11 Property (Relationships) Act, s 39; High Court Rules 2016, r 20.19(1).
The essence of the question to determine if a de facto relationship exists is if there is:12
… a mutual commitment to living together in an intimate domestic relationship, in which risk and reward are so intertwined that it would be unjust for one partner to fall back on equitable principles to obtain an advantageous proprietary entitlement.
[16] Sections 21 and 21A entitle relationship parties to enter respectively into contracting-out or settlement agreements, in either case to “make any agreement they think fit with respect to the status, ownership, and division” of their property.
[17]Section 21F then provides:
Agreement void unless complies with certain requirements
(1) Subject to section 21H, an agreement entered into under section 21 or section 21A or section 21B is void unless the requirements set out in subsections (2) to (5) are complied with.
(2) The agreement must be in writing and signed by both parties.
(3) Each party to the agreement must have independent legal advice before signing the agreement.
(4) The signature of each party to the agreement must be witnessed by a lawyer.
(5) The lawyer who witnesses the signature of a party must certify that, before that party signed the agreement, the lawyer explained to that party the effect and implications of the agreement.
Section 21H entitles a court nonetheless to give effect to a non-compliant agreement “if it is satisfied that the non-compliance has not materially prejudiced the interests of any party to the agreement”.
[18]Section 21J provides:
21J Court may set agreement aside if would cause serious injustice
(1) Even though an agreement satisfies the requirements of section 21F, the court may set the agreement aside if, having regard to all the circumstances, it is satisfied that giving effect to the agreement would cause serious injustice.
(2) The court may exercise the power in subsection (1) in the course of any proceedings under this Act, or on application made for the purpose.
12 Mead v Paul [2023] NZSC 70, [2023] NZFLR 75 at [65].
(3) This section does not limit or affect any enactment or rule of law or of equity that makes a contract void, voidable, or unenforceable on any other ground.
(4) In deciding, under this section, whether giving effect to an agreement made under section 21 or section 21A or section 21B would cause serious injustice, the court must have regard to—
(a)the provisions of the agreement:
(b)the length of time since the agreement was made:
(c)whether the agreement was unfair or unreasonable in the light of all the circumstances at the time it was made:
(d)whether the agreement has become unfair or unreasonable in the light of any changes in circumstances since it was made (whether or not those changes were foreseen by the parties):
(e)the fact that the parties wished to achieve certainty as to the status, ownership, and division of property by entering into the agreement:
(f)any other matters that the court considers relevant.
(5) In deciding, under this section, whether giving effect to an agreement made under section 21B would cause serious injustice, the court must also have regard to whether the estate of the deceased spouse or partner has been wholly or partly distributed.
[19] So far as is relevant here, such agreements may be contracting-out agreements under s 21 or settlement agreements under s 21A. The former paradigmatically is to address material inequality of assets between parties entering into a relationship.13 If of the latter compromise nature:14
… the parties will presumably set out to provide for a division of property which accords, at least broadly, to what would be ordered under the statutory regime. So where there is a significant discrepancy between what the agreement provides and the way in which the relevant statutory regime would have operated, this in itself may well suggest that the agreement is unfair or unreasonable and, as well, may well require explanation.
In such compromise cases, there is a strong presumption “as such agreements are entered into in respect of entitlements already accrued[, they] should usually reflect the reality of those entitlements”.15 The reality of that entitlement is a presumption of equal sharing in relationship property.16 But, importantly, inequality of outcome with that entitlement is not a measure of ‘serious injustice’.17
13 Harrison v Harrison [2005] 2 NZLR 349 (CA) at [100].
14 At [81].
15 At [112].
16 Property (Relationships) Act, s 11.
17 Harrison v Harrison, above n 13, at [113].
[20] There is no threshold for a finding of ‘serious injustice’; the way various factors “are to be assessed depends on the circumstances of individual cases, the evidence given, and the weighing of that evidence”.18
Discussion
[21] The agreement’s ‘serious injustice’ is said to be illustrated by the paucity of the necessary legal advice provided to Anna as to the agreement’s “effect and implications”. The agreement appeared prepared on Steve’s instructions.
[22]Anna’s solicitor noted to her:
My only concern was that clause 2(v) was tightened up to compel Steve to purchase the [Abu Dhabi] property within a certain period having given notice and to have some sort of formula in there for arrival at price. I spoke to [Steve’s solicitor] about this.
After that discussion, Steve’s solicitor responded:
Steve says to strike the clause out - that he will not buy Anna out. Says property is actually worthless (i.e. worth less than debt) because property market in Abu Dhabi/Dubai is screwed. I tried to talk about 30 days settlement/using registered valuers etc but he wouldn't have a bar of it!
Ultimately, clause 2(v) was struck from the agreement.
[23] The solicitor advised Anna should be cautious if there was doubt about the agreement’s nominated 30 March 2009 date of separation, as Anna considered they had not “really separated” until she returned to New Zealand in February 2011, but Anna was “prepared to go along” with it as “they may have been emotionally separated since around about that time”. The solicitor noted “Steve has signed up to be responsible for” debt of some $500,000 and “another $150,000” on the Abu Dhabi property. Similarly, Anna was “happy” Steve retain the vehicles and boat which were “all subject to finance”. The solicitor recorded Anna’s belief, “although not disclosed by him to [her]”, Steve was “quite significantly in debt”.
[24]The solicitor also recorded:
18 Taylor v Taylor [2009] NZCA 579 at [5].
You expressed that although you had an entitlement to Steve’s superannuation that you were more concerned to get out of the relationship. I asked you whether you were under any duress or pressure from Steve to sign this agreement without insisting on receipt of half the assets. He has said to you that unless you sign this agreement if you go to Court you will get nothing. On the other hand you are quite concerned to get shot of this relationship and to make some accommodations to enable you to do so.
[25] Mr Sutton pointed to the solicitor’s instruction on 15 April 2011, the apparent absence of any due diligence conducted by her and her $200 fee all as indicative of the advice’s inadequate nature to obviate the agreement being overwhelmingly to Steve’s financial benefit. The solicitor since having died, no evidence was forthcoming from her.
[26] I do not consider the solicitor’s advice inadequate. To the contrary, she was instructed only to advise on the agreement, exactly consonant with s 21F(5)’s requirement for advice on its effect and implications, which she did (and certified). She was not instructed to establish Anna’s rights absent the agreement, although she noted the couple’s principal asset may not have been subject to the Act. It entirely is speculative if Anna may have been entitled to any better result under the Act.
[27] In any event, I find it impossible to conclude the agreement was as one-sided as is contended. I have no independent evidence of the parties’ joint liabilities at the date of the agreement, but they appear agreed substantial and all fell to Steve. If unfair or unreasonable for that or any other reason — and I cannot identify any, with the possible exception of Steve’s alleged threat Anna would get nothing except under the agreement — it also is clear Anna sought the certainty conferred by the agreement. And that ‘threat’ categorically was denied by Steve.
[28] I carefully have read through the affidavits and transcript of evidence at trial, which give me no basis on which to second-guess the Judge’s implicit assessments of the credibility and reliability of Anna’s and Steve’s evidence. The ‘strong presumption’ the agreement ‘reflects the realities’ of Anna’s and Steve’s entitlement to equal sharing of relationship property under the Act was not rebutted by either of their evidence, read as a whole. The Judge did not err.
[29] Neither have I any basis on which to revisit the Judge’s conclusions on the parties’ relationship over the following five years. Again, after hearing Anna’s and Steve’s evidence (and, notably, no other witness was called to give evidence), the Judge concluded both specifically and in totality no de facto relationship then existed. My overall impression from reading the evidence is of Anna’s and Steve’s continuing relationship predominantly as independent adults, seeking to ensure the best outcome for their children in the circumstances of their own separation, if occasionally taking financial and physical advantage of their former familiarity and subsequent proximity.
[30] The determinative evaluation if parties are “living together as a couple” is more susceptible to trial than appeal assessment, perhaps especially here where Anna’s and Steve’s continued involvement with each other required careful consideration. I also have no basis from my reading of the evidence at trial to second-guess the Judge’s implicit assessments in that respect. If anything, they are consistent with my own impression. Again, the Judge did not err.
[31] That brings me to the issue of costs. The Judge’s discretionary assessment costs are payable by Anna as the unsuccessful party is entirely orthodox.
[32] I have greater difficulty with the Judge’s comprehension scale costs could be increased on account of Anna “taking or pursuing an unnecessary step or an argument that lacks merit”, or “failing, without reasonable justification, to accept an offer of settlement”.19 Such only has materiality if it contributes unnecessarily to the time or expense of the proceeding.20 The fact Anna was unsuccessful does not of itself establish that unnecessary contribution. Indeed, the Judge accepted the case gave rise to “five substantive issues of moderate factual and legal complexity”.21 The Judge made no assessment of the reasonableness or otherwise of Anna’s rejection of settlement.
[33] Given Anna’s status as an aided person, no order for costs may be made against her unless the Judge was satisfied there were exceptional circumstances.22 Her Honour
19 District Court Rules 2014, r 14.6(3)(b)(ii) and (v).
20 Rule 14.6(3)(b).
21 Costs judgment, above n 1, at [13(b)].
22 Legal Services Act 2011, s 45(2).
pointed to Anna’s conduct in terms of s 45(3)(a), (d) and (e) (if minorly restating the criteria) as providing a foundation for her satisfaction.23 But, again: Anna’s lack of success did not of itself cause Steve “unnecessary cost” beyond that for compensation by an ordinary award of costs; the Judge identified no basis on which Anna’s pursuit of any issue was unreasonable; and Anna’s non-acceptance of settlement offers was not expressly her refusal to negotiate a settlement or participate in alternative dispute resolution, let alone if then unreasonable. (I apprehend s 45(3)(e) is focused on refusals to engage in, rather than failures to accept, resolution.) The type of conduct offering determination of exceptional circumstances is indicated by s 45(3)(f)’s catchall: “any other conduct that abuses the processes of the court”. Nothing the Judge identified has that quality.
[34] Instead, the Judge concluded “the refusal to accept the two Calderbank offers and lack of merit in the case” qualify at the threshold of “extraordinary circumstances”.24 The requisite threshold of ‘exceptional circumstances’ however means “circumstances which are unusual”,25 “not … unique or very rare but … truly an exception rather than the rule”,26 contextually as abusive of the court’s processes, and not necessarily encompassing ‘extraordinary’ circumstances.27 I already have made the points Anna’s lack of success is not analogous to any lack of merit in her case and the Judge had not addressed the reasonableness or otherwise of Anna’s refusal of Steve’s settlement offers; refusal to accept settlement offers of itself is not at all unusual. The Judge accordingly erred.
[35] I therefore reconsider the issue. I cannot identify anything unusual in the nature of an abuse of the court’s processes in Anna’s conduct. Time was extended to permit her application, which necessarily intimates it was not of itself abusive. Her claims had substance in an agreement on its face at odds with ‘what would be ordered under the statutory regime’, and on-going significant contact between Anna and Steve after
23 Costs judgment, above n 1, at [16].
24 At [17].
25 Creedy v Commissioner of Police [2008] NZSC 31, [2008] 3 NZLR 7 at [31]–[32], recasting Wilkins & Field Ltd v Fortune [1998] 2 ERNZ 70 (CA) at 76 and citing R v Kelly [1999] 2 All ER 13 (CA) at 20.
26 Ye v Minister of Immigration [2009] NZSC 76, [2010] 1 NZLR 104 at [34], citing Creedy v Commissioner of Police, above n 25, at [31]–[32].
27 Creedy v Commissioner of Police, above n 25, at [31].
their marriage’s dissolution, both begging explanation. In circumstances of Anna’s overall contention of a continuing relationship beyond the dissolution, unaccepted settlement on some lesser ground should not be seen unusual. I am not satisfied there were exceptional circumstances entitling an order for costs to be made against Anna in this proceeding. Anna’s appeal in this respect is successful.
[36] Nonetheless — given both the Judge’s undisturbed finding Anna is liable for costs, and my conclusion under s 45 no order for costs is to be made against her — an order should be made specifying what order for costs would have been made against her if s 45 had not affected her liability.28 I apprehend that is the Judge’s order Anna pay costs and disbursements in the sum of $41,051.55.29 I therefore will order Anna would have been ordered to pay that sum to Steve.
Result
[37] Anna’s appeals are upheld only on the issue of her liability for costs — in respect of which I order, but for her liability for costs being affected by s 45 of the Legal Services Act 2011, she would have been ordered to pay $41,051.55 in costs and disbursements to Steve — and otherwise are dismissed.
Costs
[38] In my preliminary view, given both Anna’s only partial success on the appeals and her status as an aided person, costs on the appeals should lie where they fell or fall; that is, to be borne by the person incurring them. If that is not accepted by the parties and they cannot otherwise agree, costs are reserved for determination on short memoranda each of no more than five pages — annexing a single-page table setting out any contended allowable steps, time allocation and daily recovery rate — to be filed and served by Steve within ten working days of the date of this judgment, with any response or reply to be filed within five working day intervals after service.
—Jagose J
28 Legal Services Act, s 45(4)–(5).
29 Costs judgment, above n 1, at [4(b)].
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