Gosbee v Gosbee
[2020] NZHC 1001
•14 May 2020
NOTE: PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B,
11C AND 11D OF THE FAMILY COURT ACT 1980. FOR FURTHER INFORMATION, PLEASE SEE
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-001771
[2020] NZHC 1001
IN THE MATTER of the Property (Relationships) Act 1976 BETWEEN
VIVIENNE HELEN GOSBEE
Appellant
AND
CARL HENRY GOSBEE
Respondent/Cross-Appellant
Hearing: 13 February 2020 Appearances:
S Mitchell for Appellant
SE McCabe and S Recordon Respondent/Cross-Appellant
Judgment:
14 May 2020
JUDGMENT OF WALKER J
This judgment was delivered by me on 14 May 2020 at 4.00 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
GOSBEE v GOSBEE [2020] NZHC 1001 [14 May 2020]
Introduction
[1] Vivienne Gosbee appeals a decision of the Family Court declining her claim for compensation under s 15 Property (Relationships) Act 1976 (the Act).1
[2] Carl Gosbee cross-appeals the decision of the Family Court that half of the capitalised value of his United Kingdom Local Government Pension Scheme (Pension Scheme) is to be paid to Ms Gosbee now rather than in 2034 when he is eligible for a lump sum payment and annual benefits. Mr Gosbee’s cross-appeal is contingent. He raises it only in the event that I allow the appeal. In all other respects, he supports the overall outcome of the first instance decision.
[3] Section 15 of the Act is aimed at addressing economic disparity between partners after separation where that disparity is caused by the division of functions within the relationship. It permits adjustments after application of the property division “rules” of the Act in the form of compensation to the disadvantaged partner. Although the aim is straightforward, the application of s 15 since its introduction in 2002 has proved anything but. The Supreme Court addressed s 15 in Scott v Williams but there are five separate judgments and even the majority judgments of Arnold, Glazebrook JJ and the Chief Justice have slightly different approaches.2
[4] Ms McCabe for Mr Gosbee submits that the leading authority in respect of causation under s 15 is not Scott but the Court of Appeal decision of X v X.3 This is because the issue in Scott was one of quantum only, the parties having agreed that there was disparity caused by the division of functions within the relationship. In short, Ms McCabe argues that the discussion on causation was obiter as jurisdictional threshold was not strictly in issue; only the second stage assessment of the discretionary quantum exercise was properly in issue. However, it is also apparent that causation and quantum are distinctly interwoven concepts in s 15 and all the judgments set out guiding principles on the threshold causation test in their assessment of quantum. It follows that Scott provides the most authoritative guidance, despite the
1 Gosbee v Gosbee [2019] NZFC 2175.
2 Scott v Williams [2017] NZSC 185, [2018] 1 NZLR 507.
3 X v X [Economic Disparity] [2009] NZCA 399, [2010] 1 NZLR 610.
difficulty in discerning a sufficiently clear common approach among the majority judgments.
[5] The essential question in this appeal is identifying which of those guiding principles applies to the economic disparity existing in this case. In particular, is the majority’s ‘working assumption’ that division of functions in the relationship was the cause of disparity rebutted or displaced in whole or in part? If not displaced in whole, how should the Court exercise its discretion if multiple factors explain the economic disparity?
Background
[6] The parties married on 30 June 2001. They lived in the United Kingdom. Ms Gosbee is a New Zealand citizen and Mr Gosbee is English. They separated on 15 January 2015.
[7]They have two children, born on 1 September 2002 and 16 July 2004.
[8] At the time of their marriage Ms Gosbee was in her mid-thirties. She had been working as an occupational therapist for about 34 months in total. When the Gosbees married, she was working as an occupational therapist in a junior role at a community rehabilitation centre run by the local county council. Mr Gosbee was in his early thirties. He had already been working for around 11 years as a financial controller or finance officer, having studied for three years before that. He was on the arc of his professional career and earned approximately three times more than Ms Gosbee. He owned a half-share in a property in London. Ms Gosbee, on the other hand, had spent some years travelling, had trained or partially trained for various occupations and did not own any significant assets.
[9] Ms Gosbee worked, albeit not consistently, until shortly before their first child was born in September 2002. They came to live in New Zealand in 2011. After an initial period of adjustment, Mr Gosbee took up employment in his field. Ms Gosbee worked briefly as an occupational therapist between 2011 and March 2013. This was primarily part-time work other than for the first three months. In March 2013, Ms Gosbee stopped working. There is unchallenged evidence that when she stopped
she was earning the full-time equivalent of $63,980 per annum although it is unclear whether full-time work was available to her. From that point on Ms Gosbee’s evidence is that she focused on managing the home and their two children.
[10] On separation, Mr Gosbee remained in the family home. He has had the day to day care of one of the two children since mid-2016. The other child lives with each parent on a week-about basis.
[11] Ms Gosbee has not worked as an occupational therapist since March 2013 but is now employed part-time as a teacher aide or coach for disabled children.
[12]The relationship property pool on separation comprised:
(a)Equity of $660,495 in the former family home at the time of separation.
(b)UK pension schemes in the parties’ names. The Pension Scheme in Mr Gosbee’s name was valued at $304,000.
(c)Kiwisaver and bank accounts.
(d)Chattels, with an agreed value of $15,000.
(e)Net insurance proceeds.
(f)Shares.
(g)A motor vehicle.
[13] The relationship property pool is relatively modest. This accentuates the practical impact of economic disparity on separation. As I understand it, the agreed total property pool less joint credit card debts is $1,096 million or thereabouts. Mr Gosbee has made an interim payment on account of Ms Gosbee’s share of relationship property plus payment of a credit card debt. She has received the benefit of approximately $60,000. Mr Gosbee has received the benefit of relationship property to the value of $74,000 approximately.
[14] Mr Gosbee has been living in the former family home since separation but has also paid all the outgoings on the property and almost all of the children’s costs since separation.4
[15] Ms Gosbee seeks a compensation payment based on a comparison of income calculated over a period of six years as a “realistic recognition of the difference in lifestyles post-separation.” The calculated sum is $550,000. This sum would come close to absorbing all of Mr Gosbee’s share of the relationship property pool.
Family Court decision
[16] The parties were unable to resolve the division of relationship property. The outstanding issues were determined by Judge Goodwin on 26 July 2019. These included, among other things, Ms Gosbee’s claim for a s15 lump sum payment and the timing for pay-out of Mr Gosbee’s Pension Scheme.
[17] The Family Court decision on the s15 compensation claim in a nutshell is summarised at paragraph [42] of the judgment in the following terms:5
The link between disparity in income and living standards is not established on the balance of probabilities. There was a traditional marriage and the presumption of a link applies; however the choices made by the respondent in giving up her employment as an occupational therapist and taking no further steps in the field either by employment or retraining in order to overcome any knowledge gap, is the reason for her not working currently as an occupational therapist, that factor is not one which is a consequence of the division of functions during the marriage. It is [Ms Gosbee’s] choices, not the division of function that has resulted in the current situation of her not working as an occupational therapist fulltime, the same position held when she entered the marriage.
[18] The effect was that the causation threshold in s 15 was not satisfied. An influencing factor was the Judge’s finding that Ms Gosbee’s explanations for leaving her employment were inconsistent and, in some respects, unconvincing. He concluded that “the reason for [Ms Gosbee] ending her employment is a credibility finding”.6
4 Any question of occupation rental is not before the Court.
5 Gosbee v Gosbee [2019] NZFC 2175 at [42].
6 At [38].
[19] On the issue of Mr Gosbee’s Pension Scheme, the Judge rejected Mr Gosbee’s submission that it would be onerous on him to “buy-out” Ms Gosbee’s entitlement now. He was not persuaded that the impact on Mr Gosbee’s ability to house himself and the children justified delay. The primary principle was that of a “clean break” and the risks and costs of achieving this were no different to those incurred where one party buys out another to retain ownership of the family home.7
Approach to appeal
[20] This is an appeal by way of rehearing.8 This means that this Court must reach its own conclusion and need not defer to the Court below. That said, caution is appropriate when the original decision-maker has technical expertise or opportunity to assess the credibility of witnesses. As was aptly remarked by Woolford J in a case relating to s 13 of the Act:9
While no particular technical expertise is called for, this sort of case is the Family Court’s bread and butter.
[21] Thus, it does not mean restarting the process as if there had been no initial decision. It is only if I consider that the Judge was wrong that I am justified in interfering with the decision.10
[22] Ms McCabe urged caution before reconsidering Judge Goodwin’s findings in respect of causation because of the advantage he had in listening to and assessing the evidence as it was delivered. Mr Mitchell’s riposte is that those factual and credibility findings are irrelevant to the question of jurisdiction, although may come into play in the discretionary exercise. To assess the potential constraints arising from those findings it is necessary to look to the threshold test requirements of s 15.
Legal principles
[23]I start with section 15 of the Property (Relationships) Act 1976 which reads:
7 At [47].
8 Property (Relationships) Act 1976, s 39.
9 Venter v Trenberth [2015] NZHC 545, [2015] NZFLR 57 at [18].
10 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [17]; Kidd v Russell [2018] NZFLR 841 at [5]-[9]; Bowden v Bowden [2016] NZHC 1201, [2017] NZFLR 56.
15 Court may award lump sum payments or order transfer of property
(1)This section applies if, on the division of relationship property, the Court is satisfied that, after the marriage [, civil union,] or de facto relationship ends, the income and living standards of 1 spouse or [partner] (party B) are likely to be significantly higher than the other spouse or [partner] (party A) because of the effects of the division of functions within the marriage [, civil union,] or de facto relationship while the parties were living together.
(2)In determining whether or not to make an order under this section, the Court may have regard to—
(a) the likely earning capacity of each spouse or [partner]:
(b)the responsibilities of each spouse or partner for the ongoing daily care of any minor or dependent children of the marriage, civil union, or de facto relationship:
(c) any other relevant circumstances.
(3)If this section applies, the Court, if it considers it just, may, for the purpose of compensating party A,—
(a)order party B to pay party A a sum of money out of party B's relationship property:
(b)order party B to transfer to party A any other property out of party B's relationship property.
(4)This section overrides sections 11 to 14A.
[24] It is the wording “because of the effects of the division of functions” which has bedevilled the application of s 15.11 The ordinary meaning of s 15 is that courts are only entitled to compensate for disparity arising because of the division of functions in the relationship. The disparity must also be significant, meaning “not trivial” and there must be a clear causal link to the division of functions.12
What guidance can be drawn from Scott v Williams?
[25] There are five separate judgments in Scott. I begin with the majority judgments. Arnold J recounted the legislative history of s 15, noting that it was a response to a
11 Partially in response to this, in its review of the Property (Relationships) Act 1976, the Law Commission has recommended reforms to s 15, suggesting the implementation of a Family Income Sharing Arrangement scheme. Its report has been tabled in parliament, but no legislative changes have been introduced
12 X v X [2009] NZCA 399 at [108].
perceived deficiency in achieving substantive equality on relationship breakdown. He stated:13
... The way in which Parliament sought to address the post-separation disparity problem was through a new s 15. This provision attempts to deal with future economic disparity issues by permitting adjustments to the result produced by the application of the primary relationship provisions based on equal sharing, in the form of “compensation” to the disadvantaged partner from the advantaged partner’s share of relationship property. As s 15(4) puts it, s 15 “overrides” ss 11 to 14A of the [Act], which are the core provisions dealing with the division of relationship property on an equal sharing basis. Significantly, Parliament chose this response rather than directly treating enhanced earning capacity as relationship property. The requirement that any disparity be compensated from relationship property (as opposed to future income) was presumably intended to give effect to what has been called the “clean break” principle.
[26] Arnold J considered that the appropriate focus under s 15 should be broader than contrasting the non-career partner’s “but for” income with likely future income after separation. He described that exercise as demeaning, costly and contentious, as well as requiring substantial expert evidence.14
[27] Instead, he proposed “working assumptions” where there had been a division of functions in a relationship along traditional lines. Those assumptions are that the division of responsibilities was for the benefit of both parties; restricted the non-career partner’s income earning ability; and enhanced the career partner’s earning ability.
[28] Collectively, these assumptions underpin a more general assumption that the division in functions caused the disparity, and that is what should be compensated to the extent “just”.15 He suggested that only strong evidence of some other causative factor which is clearly independent of the division of functions within the relationship would be sufficient to negative or limit this working assumption and that such would be unusual, at least in relationships of a long duration entered into at the outset of a career partner’s career.16 As he went on to explain17:
…I accept that it will be legitimate to point to personal characteristics as a complete or partial explanation of post-separation disparity in some situations,
13 Scott v Williams [2017] NZSC 185, [2018] 1 NZLR 507 at [286].
14 At [292] and[310].
15 At [293].
16 At [323].
17 At [325].
as where, for example, a career partner enters a relationship as a well- established and successful business or professional person. In that type of case, it may be that only part of the disparity can fairly be said to result from the division of responsibilities in the relationship. In relationships of relatively short duration, this may be a complete explanation for post-separation disparity. Again, however, care must be taken in these situations not to undermine the equality of contribution principle that underpins the [Act].
[29] Glazebrook J adopted a broadly similar approach. She stated that the wording of the section contemplates that compensation should relate to the differential between the future earning capacities of the partners to the extent that the differential results from the division of functions within the relationship. She agreed that, where there has been a relevant division of roles, any disparity will be assumed to have resulted from that division, at least in a long-term relationship, but that assumption can be rebutted.18
[30] Glazebrook J emphasised that the method used to assess just compensation must be constrained by the evidence of the particular circumstances of the particular couple, while being calculated in as simple a matter as possible.19 In other words, judges do not have a broad discretion under s 15 to provide whatever compensation they consider just. Nor is there one method, formula or approach to be applied as “there is no single way to prescribe what is just”.20 Factors to be considered may be the age of the parties, length of relationship, ongoing care of the children, whether the relevant division lasted for part only of the relationship or that the disparities existed at the start of the relationship. Separate property, if not considered at the first stage under s 15(1), will also be relevant.21
[31] Her Honour also made clear that when assessing the disadvantaged partner’s actual income, purely lifestyle choices should not be accepted as diminishing the actual income figure used in the calculations. Rather, the future actual income figure should reflect the aptitudes, abilities, qualifications and circumstances of the disadvantaged partner at the time the s 15 order is calculated.22
18 At [204].
19 At [207].
20 At [265].
21 At [213].
22 At [242].
[32] The Chief Justice wrote separately in respect of the s 15 appeal but largely agreed with the views of Arnold and Glazebrook JJ.23 She recognised that in some cases it may be legitimate to adjust any disparity to reflect the position of the parties at the beginning of the relationship although the recognition of equality between partners and the meaning of contribution under the Act meant that scope for such adjustment was likely to be limited.24 She held that the assessment looks to the relative positions at the end of the relationship and takes into account all resources available to the parties, not just those obtained on the division of the relationship property. 25
[33] Like Glazebrook J, the Chief Justice held that the legislation does not impose or prompt any particular approach, test or methodology – there is no single formula.26 She said that earning capacity of the partners after the end of the relationship is simply a factor to which the court may have regard under s 15(2). It is not the determining factor. 27 She also said that the matter is one of evaluative judgment in which many of the relevant considerations are not susceptible to precise measurement.28
[34] Materially, the Chief Justice considered it was not unlikely that an award could be made for the entire relationship property share of the advantaged partner:29
It seems to me entirely likely in the case of a relationship which has generated little in the way of relationship property but in which there is significant disparity between the likely income and living standards of the parties (perhaps because of earning capacity or because of other separate wealth or income available to party B) that the disadvantaged party should receive the full amount of the relationship property of party B.
[35] In his dissenting judgment, O’Regan J disagreed with the “assumptions” approach as he considered it contrary to the wording of s 15. He endorsed the view that compensation under s 15 is awarded for economic disparity caused by the division
23 The most material difference was that that the Chief Justice considered the case should be remitted back to the Family Court for consideration.
24 At [356].
25 At [348].
26 At [357].
27 At [349].
28 At [352].
29 At [357].
of functions in the relationship, not economic disparity per se.30 Otherwise he agreed with the quantification methodology proposed by Arnold J. He said31:
I see his step (a) (identifying the extent of the disparity resulting from the division of functions within the relationship) as requiring an exercise to determine, at least in broad terms, that extent (which I will call the caused disparity)…I think Arnold J and I would agree that, where the relationship was not a traditional relationship of the kind he describes, the judge has to make a decision about the extent of the caused disparity without assumptions.
[36] In his minority judgment, William Young J disagreed with the majority in relation to causation and apportionment. He rejected the “assumptions” approach. He held that the Court needs evidence that the economic disparity was caused by the division of functions, rather than relying on a blanket assumption. One of the reasons is that the disparity could be caused by a number of factors, not just the division of functions. Any compensation order made under s 15 should reflect the extent to which the disparity was caused by the division of functions. Thus, if the established disparity is due in equal measure to the division of functions and the innate skill of the career partner, he saw the compensation function as addressed to half of the disparity.32 He described Arnold J’s approach as leading to the result that, if it can be assumed or is established that the division of functions had a causative role in the earning capacity of the career partner, the resulting order for compensation should proceed on the basis that the entire disparity is because of the division of functions.33 He did not accept this was required by the purposes and principles of the Act, or consistent with the Justice and Electoral Committee Report when s 15 was first proposed.34
Analysis
[37] There are two limbs to s 15. The first is the jurisdictional threshold – is the disparity because of the division of functions within the relationship? If so, the second and discretionary limb requires an assessment of what compensation would be just.
30 At [384] citing Claire Green The impact of section 15 of the Property (Relationships) Act 1976 on the vexing problem of economic disparity (Doctoral Thesis, University of Otago, 2013) at 55
31 At [385].
32 At [446].
33 At [449].
34 At [447] citing Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 (109-3) (select committee report) at 18-19.
Jurisdiction threshold
[38] The majority judgments in Scott provide that if the relationship between the parties was divided along traditional lines, then the starting point is the working assumption that the disparity in incomes and living standards was a result of that division of roles. In short, causation is assumed for sound policy reasons. It is important to note that ‘traditional’ in this context does not imply a heteronormative relationship. The focus is on whether the role divisions are along traditional lines.35
[39] It is then necessary to examine whether the working assumption is displaced on the particular facts. If it is not displaced, then the Court is to exercise its discretion as to quantum, guided by the approach in Scott.
[40] There is no challenge to the fact there is a disparity of living standards in this case. The contest is over the cause. Ms McCabe challenges causation in three ways. First, she says that this is not a traditional relationship, so the working assumption is not applicable. Second, she submits that any working assumptions are rebutted. Third, she submits that there is no causative link between whatever disparity existed at separation and the division of functions within the relationship.36 These submissions rely on the stage of life at which the couple met and married, as at that point Mr Gosbee already had an established career which he had been focussing on for a decade, and Ms Gosbee did not. She had chosen a different life-path. Ms McCabe also relies on the disparity in their respective incomes at the start of their relationship, which was relatively the same proportionate disparity that existed at the end of their relationship, the fact that the marriage was not of significantly long duration, and Mr Gosbee’s contribution to the care of the children and in the domestic sphere.
[41] Any of these alternate routes lead to the same end – that there is no causal relationship between the division of functions and the disparity and no jurisdiction to compensate.
35 At [293]-[294]: “one party…assum[es] the primary responsibility for home-making and child- care…and the other assum[es] responsibility for income-earning”..
36 I apprehend that this submission is based on the proposition that X v X remains the leading authority on the question of causation as the guidelines in Scott v Williams are obiter only.
[42] The Family Court Judge accepted that Ms Gosbee was largely responsible for domestic duties. He depicted the relationship as one in which there was a traditional division of functions such that the presumption of a causal link applies.37 I agree.
[43] I add that, in my view, part-time working, or even a period of full-time working does not of itself materially alter the position. Nor does contribution to domestic duties by the other partner. Although international research suggests that “hours worked per week prior to separation can explain approximately 41 [per cent] of the gender pay- gap post-separation” it does not necessarily follow that primary responsibility for managing the home and family is determined solely by how much time is spent in paid versus non-paid work. 38 A more nuanced approach is needed. It is as much about relative priorities and focus –which partner is expected to generally prioritise family demands over career or other commitments? Who arranges doctor’s visits, organises after-school activities, cares for a sick child at home, liaises with teachers, arranges social events, attends school trips, assemblies and prize-giving and is generally available for the children on the most regular basis so that the career partner does not have to be distracted by such organisational details. The fact that from time to time they engage in these activities, whether on week-ends or not, is not decisive.
[44] The credibility finding against Ms Gosbee in the Family Court related to her reasons for ending employment in 2013. The Family Court found that it was Ms Gosbee’s unilateral choice to end her employment and not return to work which caused disparity, breaking the causal link or displacing the working assumption. I agree that this is relevant but, in my assessment, it operates only to displace the assumption in part. It does not mean that the guidance in Scott is of no effect.
[45] The division of functions is not the sole cause of economic disparity in this case.39 Neither is it the single most influential cause. The disparity in this case arises
37 Gosbee v Gosbee [2019] NZFC 2175 at [41]- [42].
38 AR Poortman Sex differences in the Economic Consequences of Separation: A Panel Study of the Netherlands (2000) 16 Eur Sociol Rev 367 as cited in Michael John Fletcher An investigation into aspects of the economic consequences of marital separation among New Zealand parents (PhD Thesis, Auckland University of Technology, 2017) at 70
39 Mr Gosbee received an inheritance from his mother post-separation. In my view this has no relevance since the appellant relies only on income differential to evidence disparity rather than living standards disparity brought about by other than income earning capacity.
from multiple factors, including the fact Ms Gosbee had made different life choices before Mr Gosbee, Mr Gosbee’s own career progression before and after the marriage, and the choices Ms Gosbee made after separation by taking no further steps or training in her employment as an occupational therapist. However, it must also be recognised that a lengthy absence from working outside the home has significant impact on career choices, particularly if the absence is during the years when a build-up of experience is a valuable attribute to the particular role. Loss of confidence is also a natural consequence of a lengthy absence from the workplace during what would ordinarily be career defining years. It should not be underestimated. Neither should one underestimate the hurdles to re-starting a career later in life.
[46] Before the decision in Scott, appellate authority held that the division of functions need not be the principal cause.40 The question is whether and how displacement of the working assumption in part operates in the post-Scott paradigm.
[47] In my view, the Supreme Court left open the possibility that the working assumption may be partially rebutted, which becomes particularly relevant for the second stage quantum assessment.41 At [325] of his judgment, Arnold J states:
…I accept that it will be legitimate to point to personal characteristics as a complete or partial explanation of post-separation disparity in some situations, as where, for example, a career partner enters a relationship as a well- established and successful business or professional person. In that type of case, it may be that only part of the disparity can fairly be said to result from the division of responsibilities in the relationship.
[48] On one view of it, this passage supports taking partial explanations for disparity into account at the second stage of assessing what compensation may be just. At [326] Arnold J emphasises that the central feature of the quantum calculation should be the disparity itself, and that the quantification methodology involves identifying the extent of the disparity resulting from the division of functions within the relationship. However, in a clarifying footnote, he states that where the working
40 M v B [2006] 3 NZLR 660 (CA) at [215].
41 It is more relevant to quantum because there is either jurisdiction, or there is no jurisdiction. Partially rebutting jurisdiction does not make sense conceptually.
assumptions are not displaced, the whole of the disparity should be attributable to the division of functions within the relationship.42
[49] In order to understand these passages as consistent, I consider that the reference to “where the working assumptions are not displaced” must be understood to mean “where the working assumptions are not wholly displaced”.
[50]Glazebrook J at [264] states that:43
In shorter or differently organised relationships, the principle of equal contribution may also mean that the assumption applies, but it will likely be much easier to show that all or some of the disparity following separation resulted from something other than the division of functions in the relationship (emphasis added).
[51] In my view, neither judgment obviously precludes an assessment that there is jurisdiction though the working assumption has been partially rebutted. Yet, William Young J’s dissent conceptualises the majority’s approach differently. He says that the result of the approach by the majority in the case of a long-term relationship is that there is no need to form an assessment of the extent to which the disparity is because of the division of functions. Instead, the focus of the exercise will be in compensating the non-career partner in respect of the entire disparity, albeit subject to the relationship cap and the requirement for the order made to be just.44
[52] If this conceptualisation of the majority judgments is correct, and other causal factors are ignored, there must be a risk of overcompensation since the statute expressly says that only disparity because of the division of functions is compensable.45 It would leave only the more vague requirement for a "just result" as the mechanism to avoid overcompensation.
42 Scott v Williams [2017] NZSC 185, [2018] 1 NZLR 507 [326], footnote 420.
43 At [264]. Approved by Elias CJ at [331].
44 At [444]. See also Tasneem Haradasa Causation in Section 15 of the Property (Relationships) Act 1976: Analysing the New Zealand Supreme Court’s “Working Assumption” – Is it really working? (2019) 50 VUWLR
45 At 21.
[53]O’Regan J in his dissent supported the “broad approach”, outlined by Arnold
J. He stated:46
I accept that a broad approach to the exercise of determining the extent of the caused disparity is appropriate…The judge would need to make a broad assessment taking into account the qualifications and career stage of the partners when the relationship began and when the relationship ended, the period for which the functions were divided, what, in broad terms, the respective functions were and any other relevant matters (emphasis added).
[54] I find that the respondent rebuts the working assumption by clear and compelling evidence of factors independent of the division of functions. He does not, however, rebut the working assumption in its entirety. It follows that there is jurisdiction to make a compensation award. It must also follow that compensation for the full extent of the disparity, when the division of functions is not responsible for the full extent, would lead to an unjust result. I reject the proposition that Scott requires that I treat any division of functions as wholly causative of any economic disparity and that the entire disparity must be compensated without any apportionment attributable to external causative factors. Rather, this is the starting assumption. A party is entitled to rebut that starting assumption in whole or in part. If in part, it follows logically that any compensation awarded must reflect that.
[55] Ms McCabe emphasises the inconsistencies in Ms Gosbee’s evidence as to the reasons why she stopped work in 2013, approximately two years before separation and why she did not return to her field as an occupational therapist after separation. I readily accept that the Family Court was in the best position to resolve material conflicts of evidence, but I am conscious that Ms Gosbee was not legally represented at the outset of the proceedings in the Family Court when her first affidavits were filed. In my respectful view, the reasons why Ms Gosbee ceased part-time working before separation do not assist the question of the causation threshold. They are matters internal to the relationship rather than external causative factors. It would take particularly strong and compelling evidence to overcome the presumption that decisions made during a qualifying relationship in relation to any division of functions were made by the parties jointly. It is the sort of evidence which the Supreme Court characterised as unedifying in this context.
46 Scott v Williams [2017] NZSC 185, [2018] 1 NZLR 507 [326] at [386].
[56] The factors which I consider material (at this stage and at the discretion stage) are:
(a)Mr Gosbee’s well-established career at the beginning of the relationship;
(b)Mr Gosbee’s qualifications and skill-set at the start of the relationship;
(c)The relative age of the parties at the start of the relationship;
(d)Ms Gosbee’s choice to travel rather than commit to career training and relatively inconsistent bursts of working in a career with lower financial benefits;
(e)Ms Gosbee’s eligibility to hold a practising certificate to practice as an occupational therapist at separation;
(f)The relative earnings at commencement and on separation (taking as a benchmark Ms Gosbee’s full-time equivalent salary in 2013, adjusted for cost of living increases);
(g)The division of functions through Ms Gosbee’s forties when careers tend to progress;
(h)The duration of 13 ½ years and the fact that there are two children of the marriage;
(i)Mr Gosbee’s responsibility for the day to day care of one child and care for the second child on a week-on/week-off basis since early June 2016 (i.e. 12 months after separation);
(j)The Family Court’s factual finding that Ms Gosbee was capable of entering the workforce in a fulltime role as an occupational therapist in 2013.
[57] I determine that Ms Gosbee is entitled to the working assumption accorded to a relationship in which the division of functions operations along traditional lines but that external factors have also significantly contributed to the economic disparity. This means the working assumption has been partially but not wholly displaced.
[58]I turn to the assessment of the just response.
Discretion as to quantum
[59] The Court has an overriding discretion on quantum. Although the majority in the Supreme Court developed a methodology, the judgments also make clear that there is no one single approach mandated.47 That there must remain some flexibility is consistent with the terms of s 15(2) which are permissive rather than prescriptive and expressly refer to “any other relevant circumstances”.
[60] Ms Gosbee sought a significant amount of compensation which, if granted, would represent all or nearly all of the relationship property. Adopting the approach of Arnold J in Scott, Mr Mitchell uses a starting point of $50,000 (or $36,000 net) per annum as Ms Gosbee’s actual income. This is despite the fact that this is income from her role as a teacher’s aide topped up by benefits, rather than income as an occupational therapist. Mr Mitchell compares this with the net income of Mr Gosbee at the date of hearing to identify a differential of $200,000. On this basis, the first four years post separation leads to a differential income of $800,000 with no need for a contingency discount since no contingency arose. The remaining two years of anticipated income after hearing leads to another $400,000 difference in income on Mr Mitchell’s approach before subtracting a contingency of $100,000 to reach a sub- total of $1.1M. This sum is divided in half to quantify Ms Gosbee’s claim to compensation at $550,000.
[61] Mr Gosbee’s position on quantum, as a fall back, is that an award in the range Ms Gosbee seeks creates injustice and ignores the “causation” stipulation in s 15. Ms McCabe points to the fact that if the Family Court judgment is upheld, Ms Gosbee will receive over $500,000 while Mr Gosbee will only have immediate equity of
47 It can be said that s15 is largely silent as to how to determine quantum.
around $200,000 from the relationship property and will have to wait until 2034 to receive the benefit (if any) of his pension valued at $304,000.48 While burdensome, Mr Gosbee considered that the overall decision was just and fair which explains his conditional cross-appeal.
[62] There are a number of problems with Ms Gosbee’s approach. There is no proper accounting for tax or the time value of money. The salary starting point for Mr Gosbee is his current salary rather than his salary at separation which then increased year on year to reach $330,000 at the time of hearing some four years later. The starting point for Ms Gosbee’s income reflects certain post separation decisions she made and does not reflect earning capacity at time of separation in the occupational therapy field. The slim evidence suggests that this may be somewhere between
$63,000 and $80,000 although the evidence is unsatisfactory, and no expert evidence was produced.49 The choice of six years is also arbitrary and may reflect the extent of relationship property at stake rather than any principled basis.50
[63] More importantly, I determine that the working assumption is significantly displaced by multiple external factors. In my provisional assessment, the portion of disparity attributable to the division of functions is in the range of 15-20 percent. Even on Ms Gosbee’s own analysis (which for the reasons set out above overstates the differential) this would result in a lump sum payment in the range $82,000 - $110,000 as opposed to the $550,000 she seeks. The more likely range once those contestable factors are resolved is $40,000-$50,000.
[64] In the ordinary course, the lack of clarity on these inputs point to the appropriate course being to remit to the Family Court on the question of quantum. This would put the parties to further considerable expense. It would also delay resolution and prevent the parties from moving on. The clean-break principle espoused in the Act
48 The sum to be ‘received’ by Ms Gosbee includes a partial payment already received.
49 The ‘evidence’ of earning capacity of occupational therapists over $100,000 is neither cogent nor helpful. As explained by Mr Gosbee, this evidence was the result of a Seek.co.nz search applying a search filter. Those roles may well have been exceptional or rare, within reach of only the most experienced therapists. Without informative context, nothing can be taken from this material.
50 Scott v Williams [2017] NZSC 185, [2018] 1 NZLR 507 at [337]. A compensation award under s15 is capped by the relationship property pool.
ought not be undermined, where practicable. These are reasons not to remit if there is a principled solution.
[65] In my view there is another factor which militates against remission to the Family Court. In the end, it provides the practical answer. If a s 15 compensation payment is due to Ms Gosbee, Mr Gosbee cross appeals on the issue of ‘buy-out’ of Ms Gosbee’s share of the Pension Scheme. He seeks to delay the requirement to “buy- out” to 2034 when he can access the pension. His evidence is that buying out Ms Gosbee’s share now requires him to fund a capital payment of $152,000 and that this payment will only begin to be reimbursed from the pension when he finally receives Ms Gosbee’s share of the benefits around 2043. He also deposed to the interest cost in having to fund borrowings to fund the capital payment however I regard that evidence as too speculative in today’s Post Covid-19 economic climate and given the additional resources available to Mr Gosbee.
[66] From the point of view of what is ‘just’ in this case, I consider that the ‘burden’ of such capital payment now ‘absorbs’ by some margin the compensation payment due to Ms Gosbee. In short, but for the obligation to ‘buy-out’ her share of the superannuation now I would find compensation is due. To award a sum under s 15 in addition would not be just in those overall circumstances. In the exercise of my discretion, I determine that the economic disparity is therefore addressed.
[67] I find some support for this holistic approach in the fact that Mr Gosbee has met the children’s expenses since separation. The Family Court declined to make any adjustment to Mr Gosbee for the children’s costs after taking into account the overall contributions of the parties and evidential weakness of the claim for adjustment.51 Given his substantially greater income, this is entirely appropriate.
Outcome of Appeal
[68] Accordingly, I dismiss the appeal and decline make an order for compensation under s15 of the Act. I find no error in the outcome in the judgment appealed although my reasoning is different to the Family Court.
51 Supra n1 at [55].
[69] I reserve costs. My provisional view is that costs should lie where they fall notwithstanding Mr Gosbee’s ultimate success in resisting the appeal. If the question of costs cannot be resolved, counsel may file memoranda of no more than five pages.
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Walker J
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