Hutchins v Edwards HC Tauranga CIV-2011-470-79

[2011] NZHC 675

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2011-470-79

UNDER  the Property (Relationships) Act 1976

IN THE MATTER OF     an appeal against the decision in the Waihi

Family Court

BETWEEN  MICHELLE KAY HUTCHINS Appellant

ANDGARRY DONALD EDWARDS Respondent

Appearances: D Hollings QC for the Appellant

C Bormans for the Respondent

Judgment:      21 June 2011

Reasons:        23 June 2011

REASONS FOR JUDGMENT OF ELLIS J (Application by Appellant to adduce further evidence on appeal Application by Respondent for adjournment)

Solicitors:      Holland Becket, Private Bag 12011, Tauranga 3143

Fortune Manning, PO Box 4139, Auckland 1140

Counsel:       DAT Hollings QC, Bankside Chambers, 88 Shortland Street, Auckland 1140

C R Pidgeon QC, PO Box 105924, Auckland 1143.

HUTCHINS V EDWARDS HC TAU CIV-2011-470-79 21 June 2011

[1]      Ms Hutchins has appealed a decision of the Family Court at Tauranga in relation to the division of relationship property under the Property (Relationships) Act 1976 (the PRA).  She has also sought to adduce further evidence in the appeal. That application was opposed by her former partner, Mr Edwards.

[2]      This judgment records the reasons for decisions made by me yesterday in relation to that application and in relation to an application for adjournment of the hearing of the substantive appeal that was made by counsel for the respondent.

Reasons for adjournment

[3]      On 17 May 2011 Keane J ordered that the application to adduce further evidence be heard together with Ms Hutchings’ substantive appeal.  At that point the earliest available hearing date was 20 July 2011 with alternative dates available in September and November 2011.

[4]      At relatively short notice, however, the hearing of the application and the appeal was set down for hearing on Tuesday 21 June and Wednesday 22 June 2011 before me.   The submissions of each of the parties were filed and served in accordance with the timetable orders that had been made by consent, on 8 and

17 June respectively.

[5]      However on the evening of Sunday 19 June 2011 Mr Pidgeon QC (who has acted for the respondent throughout the rather protracted proceedings in the Family Court) was unexpectedly taken ill and admitted to hospital in Auckland, where he remains.  That turn of events understandably resulted in a request by the respondent for an adjournment of the hearing.

[6]      The request for an adjournment was, however, opposed by Ms Hollings QC who maintained that the respondent’s position could more than adequately be advanced  by  his  instructing  solicitor  Ms  Bormans  (a  litigation  partner  in  the Auckland firm Fortune Manning) who has also been involved in the matter throughout.

[7]      Although  I  was  sympathetic  to  the  respondent’s  position,  the  immediate reality with which I was faced was that (after taking into account Ms Hollings’ availability) another firm one day fixture in this Court, the Rotorua High Court or the Hamilton High Court is now not possible until next year.  In circumstances where the litigation between the parties has already been on foot for a period that is longer than

the duration of their relationship,[1]  I did not think adjourning the hearing for such a

[1] As found by Judge Coyle. His findings as to the length of the parties’ relationship is, however, one of the central issues in the present appeal.

period  would  be  in  either  party’s  interests  provided  there  was  no  prejudice  to Mr Edwards.  In that respect, I noted that in the judgment under appeal Judge Coyle had expressly referred to (and accepted) submissions that had been made on behalf of the respondent by Ms Bormans and that there therefore appeared to be some basis for the position taken by Ms Hollings.

[8]      I therefore asked the Registry to advise that an adjournment would not be granted.

[9]      At the commencement of the hearing this morning, however, Ms Bormans made a further application for an adjournment.  She advised that while she had been present at the Family Court hearing, she had not in fact made submissions or been actively involved.  She also said that the submissions filed in the appeal had not been prepared by her but rather by Mr Pidgeon and a junior solicitor in her firm.  She said that the most that she would be able to do was to read out those submissions to the Court but otherwise would be unable to assist further.

[10]     Ms  Hollings  nonetheless  maintained  her  opposition.    She  handed  up  a judgment in which she said an adjournment had been refused (and very recently upheld on appeal) in similar circumstances: Smith v Albany Power Centre Ltd (in liquidation).[2]

[2] Smith v Albany Power Centre Ltd (in liquidation) [2011] NZCA 167.

[11]     At that point I advised that I intended at least to hear the application to adduce  further  evidence  and  thus  to  that  extent  declined  Ms  Bormans’ further application.  I considered that the outcome of that application might have an effect

on whether or not the substantive appeal should be heard today.  In particular, if the

application were granted, Mr Edwards would probably in any event need to be given an  opportunity himself  to  file  further  evidence  (this  being  foreshadowed  in  his submissions).  The possible need for cross-examination also arose in relation to the proposed  new  evidence  (and  any  response  to  it).    I  also  wished  to  have  an opportunity further to consider the new matters raised by Ms Bormans before requiring her to present the respondents’ submissions in the substantive appeal.   I therefore told counsel that the issue of the adjournment of that appeal could be deferred until I had made a decision on the evidence issue.

[12]     The hearing of the further evidence application lasted most of the morning.  I formed the view that the application should be granted, for the reasons that are set out  between  [28]-[37]  below.    But,  I  also  formed  the  view  that  in  fairness  to Mr Edwards I should not proceed to hear the substantive appeal.  I formed this view not only for the reasons given in [11] above but also because:

(a)      the  submissions  made  by  Ms  Hollings  in  relation  to  the  further evidence issue had led me to believe that some of the legal issues raised in the substantive appeal were not entirely straightforward;

(b)while in Smith the Court of Appeal had upheld Simon France J’s refusal of an adjournment, the Court had (at [12]) expressly differentiated the circumstances of that case from one involving sudden illness. And although the trial at issue in that case was of considerably greater size and significance than the present appeal, the substitute counsel involved were more senior than Ms Bormans, had more familiarity with the proceedings and had two weeks to prepare;

(c)      as Ms Hollings emphasised in the course of her submissions on the evidence issue, in proceedings under the PRA the courts are particularly anxious  to  ensure that  the usual  adversarial  rules  and processes are not applied at the expense of substantive justice being done between the parties; and

(d)although   Ms   Bormans   had   made   very   valiant   and   coherent submissions in relation to the evidence issue it had become apparent that she was not fully up to speed with the substantive issues in the appeal.

[13]    As well, I was hopeful that, notwithstanding the short to medium term unavailability of Court time in the Waikato and Bay of Plenty, the substantive appeal might be able to be heard somewhat sooner in Auckland. A hearing in Auckland had previously been signalled by Keane J as an option in his minute dated 17 May 2011 and indeed it may well prove to be the most cost effective option for the parties as the  majority  of  counsel  involved  reside  and  work  there  (the  exception  being Ms Hutchins’ solicitor, Mr Eggleston).

[14]     I accordingly adjourned the hearing of the substantive appeal and made the further timetable directions set out at [39] and [40] below.

Further evidence on appeal

[15]     It  is  not  (and  never  has  been)  in  dispute  that  the  commencement  of Mr Edwards’ relationship with Ms Hutchins coincided more or less exactly with the termination  of  his  relationship  with  his  former  wife,  Anne  Edwards.    He  left Mrs Edwards and the matrimonial home and moved in with Ms Hutchins on or about

2 April 2001.   At some later point in time Mr and Mrs Edwards entered in to a “section 21” agreement whereby they divided their relationship property (the agreement appears to be undated).

[16]     The preamble to that agreement stated that “The parties have been living

apart since April 2001”.  In terms of the division of matrimonial property it provided:

From the date of this Agreement the wife shall be the sole and absolute owner of the property described in Schedule A hereto and the husband shall be the sole and absolute owner of the property described in Schedule B hereto.

[17]     Schedule A referred to the unencumbered matrimonial home and its contents and two motor vehicles.  Schedule B referred inter alia to “All shares in Edwards Transport Limited and Consol Street Properties Limited”.

[18]     The agreement then provided:

The payment due by the husband to the wife to equalise the division of property referred to in Schedules A and B is $126,500.00

The said sum of $126,500.oo will be paid by the husband to the wife when the wife has executed, and in exchange for, share transfers transferring all of the wife’s shares in EDWARDS TRANSPORT LIMITED and CONSOL STREET PROPERTIES LIMITED to the husband.

[19]     It is not clear when precisely the share transfer was completed although Consol’s 2002 Annual Return indicates that it was before 31 March of that year.  The record of this Annual Return (downloaded from the Companies Office website) is one of the documents Ms Hutchins now seeks to adduce in evidence.

[20]     The payment of the $126,500 to Mr Edwards appears to have taken place in May 2002.  It has never been disputed that that payment was financed largely by way of a $100,000 loan taken out by Ms Hutchins’ parents.  The fact that the loan was also in Ms Hutchins’ own name, however, is one of the matters she seeks to prove by way of the further evidence she now seeks to adduce.  The parties also appear to be agreed that by 2005 that loan had been repaid, largely from the profit made on the purchase and sale of a property in Waihi.  Further evidence seeks to show that that sale and purchase was by a company that was jointly owned by them.

[21]     According to the respondent’s expert accountant, Mr Hagen (whose evidence was accepted by Judge Coyle), Consol’s share value in March 2001 was $180,000. The shares in Edwards Transport Ltd (ETL) were valued by Mr Hagen as being approximately $4000 at that time.  By March 2007 (approximately six months after the date claimed by Ms Hutchins to be the date of her separation from Mr Edwards) Mr Hagen said that Consol’s share value had risen, by dint of “market forces” to some $1,500,000. The ETL shares were valued at $77,000.

[22]     At the hearing in the Family Court it was accepted by Ms Hutchins’ then

counsel that the shares in Consol and ETL were Mr Edwards’ separate property.  The

$126,500 “equalisation” payment to Mrs Edwards was characterised as a separate,

pre-existing, debt owed by Mr Edwards to his former wife. [23]        Ms Hutchins now wishes to contend:

(a)      Half  of the  shares  in  Consol  and  ETL were  relationship  property because they were “purchased” with money contributed by her; or

(b)That  the  increase  in  value  of  the  shares  is  attributable  to  the application of relationship property (presumably the funds advanced under the loan), which renders the increase in value relationship property under s 9A(1); or

(c)       That Mr Edwards’ personal debt to Mrs Edwards was satisfied out of

relationship property entitling her to compensation under s 20E.

[24]     Ms Hutchins says that the further evidence sought to be adduced by her supports one or all of these new claims.  Essentially that evidence entails:

(a)       A copy of the s 21 agreement between Mr and Mrs Edwards; (b)           Companies Office records relating to Consol and ETL;

(c)      Bank  statements  relating  to  the  repayment  of  the  $100,000  loan obtained by her and her parents in 1982;

(d)Companies Office records and bank statements relating to Edelle Ltd (being the company incorporated by Ms Hutchins and Mr Edwards and referred to in [20] above);

(e)       EDT’s financial accounts for the years ending December 2002 and

2003;

(f)      Ms Hutchins’ own bank statements between 2002 and 2005 which show  payments  made  by  her  to  the  loan  account  and  payments received from ETL; and

(g)Copies of various cheques relating to payments shown in the various bank accounts.

[25]     Ms Hutchins frankly admitted that this evidence was available at the time of the Family Court hearing.  However, she says it was not adduced because of legal advice she had received at the time.

[26]     Mr Pidgeon/Ms Bormans for Mr Edwards advanced a number of grounds of opposition to the new evidence. These essentially were that:

(a)      the evidence was available at the time of the Family Court hearing and, relying on the Court of Appeal’s dicta in Nation v Nation[3], that

[3] Nation v Nation [2005] 3 NZLR 46.

...  it  would  be  wrong  to  allow  an  appellant  ...  to bolster his or her case with additional evidence that was available at the lower Court hearing but not adduced because of the particular view of the case being taken at that time ...

Ms  Hutchins’ remedy therefore lay with  her previous  legal
advisers;

(b)permitting the new evidence to be adduced would give Ms Hutchins a “second bite at the cherry” and would effectively result in a new trial. As I have indicated Mr Edwards foreshadowed the need for further evidence and cross-examination to meet the new legal arguments were the application to be granted;

(c)      Mr Edwards could not  in any event obtain some of the evidence required to contest the new arguments because the effluxion of time meant that relevant business records had been destroyed; and

(d)that there has already been considerable delay in the resolution of the Family  Court  proceedings  all  of  which  can  be  sheeted  home  to Ms Hutchins.  Mr  Edwards is entitled to finality.

[27]     While I have sympathy for Mr Edwards’ position I consider that the new evidence should be admitted, for the reasons that follow.

[28]     First, and as Ms Hollings submitted, s 39B(3) expressly permits that this court may, in an appeal, rehear evidence or receive further evidence “if the interests of justice so require”.   There is authority to the effect that this provision loosens somewhat the usual strictures pertaining to the admission of further evidence in general appeals.   The fact that the provision was deliberately retained by Parliament in 2002 (when it was moved from s 39 to s 39B) suggests that it is more than an accident of legislative history. And on its face, s 39B(3) refers not only to the receipt of further evidence but the possibility of rehearing of evidence which suggests that cross-examination is contemplated as a possibility.  This can be compared with the position under rule 20.16 which makes it clear that even where “special reasons” exist justifying the adducing of further evidence the default position is that that evidence will be given by affidavit.

[29]     This somewhat more liberal approach to the admission of further evidence on appeal is, I think, supported by the wider objects of the PRA and the nature of proceedings brought under it.   The desirability of a complete and accurate picture being before the Court is at least implicit in the Court of Appeal’s endorsement in

M v  B[4]of  the  statement  made  by  the  authors  of  Fisher  on  Matrimonial  and

[4] M v B [2006] 3 NZLR 660, [2006] NZFLR 641.

Relationship Property at [19.23] that:

The role of the Courts under the Property (Relationships) Act is to some degree an inquisitorial one to do justice between the parties rather than to consider a claim in a strictly adversarial context. This is reflected in the principal objects of the Act … suggesting an even-handed division between the spouses or de facto partners rather than an evaluation of a claim by one.

[30]     A similar emphasis can be seen in Z v Z (No. 2),[5] where the Court of Appeal permitted Mrs Z to advance an argument on appeal notwithstanding that it involved a position that was contrary to an agreement into which she had previously entered.

[5] Z v Z (No. 2) [1997] 2 NZLR 257 at 272

[31]     Ms Hollings also drew my attention to the form in which a PRA claim is made.   That form bears little resemblance to an ordinary pleading and does not appear to require the statutory basis for a claim to be identified with any precision.

[32]     Next I accept that there may be some kind of presumption that the interests of justice will not usually demand the admission of new evidence on appeal in circumstances where that evidence was available at the time of the first instance hearing.     But  there  are  cases  in  which  justice  requires  that  presumption  be overridden.    This  is  made  clear,  for  example,  in  Nation  itself,  Bourneville  v

Bourneville[6] and Koni v Koni.[7]

[6] Bourneville v Bourneville HC Auckland CIV-2007-404-2656 11 February 2008

[7] Koni v Koni HC Auckland CIV-2009-404-7772, 16 April 2010.

[33]     In the present case there is no doubt that Ms Hutchins seeks to make new legal arguments in the appeal.  For the reasons already given I do not think she is precluded from doing so.  That said, however, I accept that the merits of those new arguments necessarily has some bearing on any assessment of whether the interests of justice require that she be permitted to adduce further evidence to support them. The relevance of the merits to a s 39B inquiry is, I think, also made clear by the Court of Appeal in Nation (at [167]).

[34]     Although I have not yet had the benefit of full submissions on the issues I suspect that the first two of the new arguments that Ms Hutchins wishes to advance are not without difficulty.   I do not intend to examine those difficulties here.  The third (s 20E) argument may, however, be more tenable.   As I have said, it is not disputed that Mr Edwards owed a debt to his former wife and that payment of the debt was financed by way of a loan made to Ms Hutchins and her parents.[8]    The questions that arise seem to be whether, either the loan advance itself or the funds

that were ultimately used to repay the loan can be said to be relationship property in

respect of which s 20E compensation should be ordered.  While the interposition of Edelle Ltd in the latter transaction may well be problematic at this stage it appears to me that the question is at least arguable.

[8] There appears to have been a lack of clarity around Ms Hutchins’ responsibility for the loan at the Family Court hearing.

[35]     As to the relevance and cogency of the evidence that Ms Hutchins now wishes to adduce to support these new arguments (and the evidence appears to be relevant to each of the three equally) it seems to me that for the most part it merely fleshes out the detail of factual matters that were before the Family Court and which, in general terms, are not disputed.  In any event, the new evidence is, in my view, relevant.

[36]     I accept that granting the application may give rise to Mr Edwards himself wishing to adduce further evidence in reply.   However, my assessment is that any such evidence should not be extensive.   Although (for example) he may wish to address the circumstances that gave rise to the payment to his former wife being made through a loan taken out by Ms Hutchins and her parents, I doubt that it will be necessary for him to locate or trawl through old company or business records in order to do this.   Similarly I tend to agree with Ms Hollings that any cross- examination that may consequently be required would be of very limited scope.

[37]     Lastly, and in terms of Mr Edwards’ understandable desire for finality there is the point that Ms Hutchins still has grounds for her appeal which are unrelated to those presently in issue.   No doubt an appeal on those grounds would be pursued regardless of the outcome of this application.   Finality will not be achieved by denying it.

[38]     It is for all these reasons that I formed the view that Ms Hutchins’ application should  be  allowed  and  I  make  an  order  permitting  the  evidence  annexed  to Ms Hutchins’ affidavit of 26 April 2011 to be adduced in the appeal accordingly.

Hearing of the substantive appeal

[39]     After I had advised counsel of my decision in relation to the evidence issue and in relation to the adjournment of the substantive appeal the following directions were essentially agreed by them and were formally made by me:

(a)      Mr   Edwards   has   six   weeks   to   file   evidence   (depending   on Mr Pidgeon’s health he may need to consider instructing new senior counsel during this time).

(b)      Ms Hutchins then has two weeks for any reply.

(c)      Following the expiry of that time  Counsel for both parties are to notify the Court by memorandum whether they wish any witnesses to be made available for cross-examination (such  will necessarily be limited).

[40]     The appeal will continue to be case managed by High Court in Tauranga and all documents are to be filed in that Registry.

[41]     A further one day fixture in Auckland is to be allocated for the appeal on a date as soon as possible after the end of August 2011. Although there would perhaps be efficiencies if the appeal were to be heard by me, that is not essential.

[42]     I expect counsel to cooperate in relation to available dates.  In the event that time in the meantime becomes available in Tauranga, Hamilton or Rotorua no doubt

Mr Hewlett will advise.

Rebecca Ellis J