Jack v Jack
[2014] NZHC 1495
•1 July 2014
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 COURT/LEGISLATION/RESTRICTIONS-ON-PUBLICATIONS.
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2013-485-4816 [2014] NZHC 1495
UNDER the Property (Relationships) Act 1976 and
the Family Proceedings Act 1980
IN THE MATTER
of an appeal pursuant to s 39 of the
Property (Relationships) Act 1976BETWEEN
JACK Appellant
AND
JACK Respondent
Hearing: 7 February 2014 Counsel:
M W Vickerman and J H Rennie for Appellant
A E Hinton QC and J L Forrest for RespondentJudgment:
1 July 2014
JUDGMENT OF GODDARD J
This judgment was delivered by me on 1 July 2014
at 4.30 pm, pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:
William Rennie, Wellington for Appellant
DAC Beachcroft New Zealand, Wellington for Respondent
JACK v JACK [2014] NZHC 1495 [1 July 2014]
Table of Contents
Introduction ..........................................................................................................[1]
The issues ..............................................................................................................[3] Background...........................................................................................................[5] Post separation ...................................................................................................[17] Litigation history ................................................................................................[21] The purposes and principles of the Act ............................................................[22] Jurisdiction on appeal........................................................................................[24] Structure of this decision ...................................................................................[25] The s 15 appeal ...................................................................................................[26] The law………………………………………………………………………………...[27] The Family Court decision………………………………………………………….[35] Arguments on appeal………………………………………………………………...[37] Discussion……………………………………………………………………………. [40] The quantum appeal ..........................................................................................[61] The law………………………………………………………………………………...[62] The Family Court decision………………………………………………………….[67] Arguments on appeal………………………………………………………………...[71] Discussion……………………………………………………………………………. [75] The compensation appeal ..................................................................................[87] The facts……………………………………………………………………………….[88] The law………………………………………………………………………………...[90] The Family Court decision………………………………………………………….[92] Arguments on appeal………………………………………………………………...[98] Discussion…………………………………………………………………………...[102] The maintenance appeal .................................................................................. [117] Conclusion......................................................................................................... [118] Costs .................................................................................................................. [119]
Introduction
[1] This is an appeal and cross-appeal from a decision of Judge Grace in the Family Court determining the parties’ entitlements under the Property (Relationships) Act 1976 (the Act) and Mrs Jack’s claim for maintenance under the Family Proceedings Act 1980.1
[2] The Judge ordered that Mrs Jack would receive 70 per cent of the net relationship property pool pursuant to s 15 of the Act, declined to award compensation under s 18B of the Act for Mr Jack’s post separation contributions and did not make any further maintenance order in Mrs Jack’s favour.
The issues
[3] There are three aspects to this appeal. The first concerns the s 15 award. The appellant, Mr Jack, appeals on the basis that the circumstances of the relationship do not fall within the jurisdictional parameters of s 15. Alternatively, even if jurisdiction does exist, the amount awarded by Judge Grace is challenged as incorrect.
[4] Mr Jack also appeals against the decision not to award compensation under s
18B. The third aspect will only arise if Mr Jack succeeds on one or more of the above grounds. If that occurs, the respondent, Mrs Jack, appeals against the Judge’s decision in relation to maintenance.
Background
[5] Mr Jack is a highly skilled medical specialist, aged 57. Mrs Jack’s former occupation was as an enrolled nurse. She is currently employed fulltime as a receptionist at a beauty salon. She is also 57 years of age.
[6] Mr Jack graduated from medical school at the University of Otago in 1979. In 1980 he worked as a house surgeon and the following year he passed the Part I
examination for the Fellowship of the Royal Australasian College of Surgeons.
1 This decision was cited as Carpenter v Carpenter [2013] NZFC 8396, [2014] NZFLR 9.
According to his evidence, Part 1 is “by far the most difficult step in the progression to specialist”, and has a high failure rate. Once it is completed “it is a relatively straightforward progression to specialist”.2
[7] In 1982 Mr Jack was employed as a registrar at Waikato Hospital with an annual gross income of $100,000.3 It was there that he met Mrs Jack and the parties’ relationship commenced. They were both at that time aged 28. Mrs Jack was a single mother with a three year old daughter. She was working as an enrolled theatre nurse and owned a property that was divided into two flats, one of which she rented out. She describes herself at the time as self-sufficient, with plans to train as a registered nurse.4 Mr Jack moved in soon after the commencement of their relationship.
[8] The parties married in 1984 and moved to Wellington in 1985 where Mr Jack worked as a registrar. Mrs Jack sold her property and applied the net proceeds ($40,000) to assist in the purchase of a house. She continued to work five shift nights per week as an enrolled nurse in Wellington.5
[9] During that year, Mr Jack was studying for his Part II examination. According to Mrs Jack, the entire year was dedicated to his study when he was not on duty. Mrs Jack says she took responsibility for running the home as well as supporting Mr Jack in every way possible to enable him to succeed in his scholastic
endeavours.6
[10] In 1986 Mr Jack passed the Part II examination. According to Mr Jack, it was at this point that the long hours of studying stopped and he began to work relatively normal hours.7 He demonstrated significant promise in his chosen area
and was awarded two prestigious prizes for research he carried out.
2 Affidavit of Mr Jack, dated 11 November 2012, at [6].
3 Affidavit of Mr Jack, dated 15 June 2010, at [14].
4 Affidavit of Mrs Jack, dated 28 April 2010, at [13].
5 At [15].
6 At [16].
7 Affidavit of Mr Jack, dated 11 November 2012, at [11].
[11] In 1987 Mr Jack was offered a senior registrar position at a hospital in Sydney. Mrs Jack said this was viewed as an opportunity to advance Mr Jack’s career.8 She travelled with him to Sydney and became pregnant with the couple’s first child. Mrs Jack says Mr Jack was again working long hours to gain experience,9 but he disputes this.10
[12] In 1988 Mr Jack was offered a position as senior registrar at a London hospital, considered the leading hospital in his area of specialist expertise.11 The parties’ son was born in September, and it was agreed Mrs Jack would stay at home to care for him.12 That arrangement continued in 1989, while Mr Jack worked as a senior registrar at Norwich Hospital. Mr Jack’s evidence is that these overseas postings had a limited impact on his overall career advancement and he would have reached the same position had he remained in Wellington.13
[13] In 1990 the parties returned to live in Wellington. Mr Jack set up a private practice with another specialist consultant. The practice expanded quickly. The parties’ second son was born in 1994. In 1996 Mrs Jack returned to work night shifts at Wellington hospital and she and Mr Jack discussed whether or not she should go back to nursing on a full time basis. The family did not, however, need the
additional income and Mr Jack was busy with his practice.14 It was agreed Mrs Jack
should stay at home to care for the three children of the family and to be available for family commitments, to entertain in the home and also to accompany Mrs Jack on overseas working engagements.15 The decision may also have been influenced at least partially by other factors personal to the couple, which it is unnecessary to detail here.
[14] A critical part of this case is the extent of Mrs Jack’s involvement in, and her
impact on, Mr Jack’s career during their relationship. Mrs Jack said that the practice was a 24/7 commitment and that she supported Mr Jack in his work in every way she
8 Jack v Jack, above n 1, at [10].
9 Affidavit of Mrs Jack, dated 28 April 2010, at [19].
10 Affidavit of Mr Jack, dated 11 November 2012, at [14].
11 Affidavit of Mrs Jack, dated 28 April 2010, at [20].
12 At [21].
13 Affidavit of Mr Jack, dated 11 November 2012, at [30].
14 Affidavit of Mrs Jack, dated 28 April 2010, at [35].
15 At [33].
could. This included helping out with the practice when required.16 She also provided a detailed description of her domestic role caring for the children and running the home.17
[15] Mr Jack says that the growth in his practice was due to his initiatives (such as providing clinics and ensuring his accessibility to general practitioners), his interpersonal and surgical skills and his drive to succeed.18 He said Mrs Jack’s
involvement in the management practice was minimal19 and he employed capable
and dedicated support staff to keep his family separate from his practice.20 Mr Jack produced affidavit evidence from a colleague, Professor B, who said that to his knowledge, Mrs Jack did not contribute to the running of his practice.
[16] Mr Jack also denied that Mrs Jack’s role at home assisted his career. He said that Mrs Jack provided only general support and encouragement21 and had she not been at home he would have employed a nanny so allow him to work the extensive hours required to succeed.22 Another medical colleague, Dr H, said that in his opinion, the success of Mr Jack’s practice was the result of his own abilities and he could have accomplished what he did accomplish without Mrs Jack’s support.
Post separation
[17] The parties separated in December 2008. Mr Jack moved out and Mrs Jack and the youngest son (aged 14 at the time) continued to occupy the family home, which had a significant mortgage secured against it. Mr Jack continued to pay the mortgage payments and outgoings on the family home and the family bach. He also paid Mrs Jack’s credit card expenditure from 10 December 2008 until December
2009.
16 Affidavit of Mrs Jack, dated 28 April 2010, at [34].
17 At [41]–[42].
18 Affidavit of Mr Jack, dated 11 November 2012, at [21], [23] and [28].
19 Affidavit of Mr Jack, dated 14 March 2013, at [76].
20 Affidavit of Mr Jack, dated 11 November 2012, at [29].
21 At [32].
22 Affidavit of Mr Jack, dated 14 March 2013, at [74].
[18] Mr Jack paid a total of $372,400 in maintenance between the date of separation and the 17 May 2013. He paid further maintenance from 17 August 2014 to 23 August 2013 by agreement.23
[19] Following the sale of the family home, Mrs Jack purchased a house with her daughter. The parties earned and continue to earn substantially different incomes. Mrs Jack did not re-engage in the workforce until 2012. Her taxable income for fulltime work at the salon for the year ended 31 March 2013 was $26,238.24
Mr Jack’s taxable income for the years ending 31 March 2008 to 31 March 2012 was
between $800,328 and $1,069,143.
[20] The relationship property pool has crystallised at $1,925,706.
Litigation history
[21] The litigation history between the parties is as follows:
(a) 26 July 2010: Judge Grace ordered Mr Jack to pay $2000 per week in maintenance to Mrs Jack.
(b)15 March 2011: Judge Ellis ordered Mr Jack to pay $1650 per week in maintenance to Mrs Jack.
(c) 14 October 2011: Judge Ullrich QC ordered Mr Jack to pay $1650 per week in maintenance to Mrs Jack.
(d)April 2012: Mrs Jack applied for a fourth maintenance order. The parties reached agreement and a hearing was not required.
(e) 23 November 2012: Judge Walsh ordered Mr Jack to pay $1250 per week in maintenance to Mrs Jack.
(f) 5 August 2013: the decision under appeal was issued.
23 Agreed statement of facts and definition of areas of dispute requiring determination dated
19 July 2013 at [8].
24 Carpenter v Carpenter, above n 1, at [108].
The purposes and principles of the Act
[22] The principles and purposes of the Act are relevant to the interpretation and application of its compensation provisions. The purposes of the Act include:25
(a) to recognise the equal contribution of both spouses to the marriage partnership, of civil union partners to the civil union, and of de facto partners to the de facto relationship partnership; and
(b)to provide for a just division of the relationship property between the spouses or partners when their relationship ends by separation or death, and in certain other circumstances, while taking account of the interests of any children of the marriage or children of the civil union or children of the de facto relationship.
[23] The principles of the Act include that:26
(a) men and women have equal status, and their equality should be maintained and enhanced;
(b)all forms of contribution to the marriage partnership, civil union, or the de facto relationship partnership, are treated as equal; and
(c) a just division of relationship property has regard to the economic advantages or disadvantages to the spouses or partners arising from their marriage, civil union, or de facto relationship or from the ending of their marriage, civil union, or de facto relationship.
Jurisdiction on appeal
[24] This relationship property appeal is brought under s 39 of the Act and is by way of rehearing.27 I adopt the approach outlined by Heath J in B v F:28
25 Property (Relationships) Act 1976, s 1M.
26 Section 1N.
27 District Courts Act 1947, s 75.
28 B v F [2010] NZFLR 67 applying Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC
103, [2008] 2 NZLR 141.
(a) to take account of the advantage that Judge Grace had in hearing and seeing the witnesses give evidence before him;
(b)to the extent Judge Grace exercised any discretion in reaching his decision, Mr Jack is required to establish: (1) an error of law or principle; (2) the taking into account of an irrelevant consideration; (3) a failure to take account of a relevant consideration; or (4) that the decision is plainly wrong; and
(c) otherwise to reconsider the Family Court’s decision and to substitute my own view on questions of fact and law if convinced the first instance decision was wrong.
Structure of this decision
[25] There are three aspects to the appeal: first, the s 15 appeal; secondly, the s 18B compensation appeal; and thirdly, the maintenance appeal. I will deal with each aspect separately.
The s 15 appeal
[26] The appeal against the s 15 award ordered by Judge Grace is on the basis of no jurisdiction to make the award and alternatively, that the quantum of the award was incorrect.
The law
[27] Section 15 of the Act provides:
15Court 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 one 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.
…
[28] The purpose of s 15 was explained by Robertson J in M v B as follows:29
[123] The purpose of an order made under s 15 is to compensate a spouse/partner whose economic position, that is income and living standards, is significantly lower than their spouse’s/partner’s because of the effect of the division of functions within the relationship: Property (Relationships) Act 1976, s 15(3). An order results in a readjustment of the division of relationship property and is guided by the principle in s 1N(c). The aim of this section is to provide a means by which residual inequality, in terms of earning capacity and standard of living that is not addressed in the division of relationship property, can be dealt with where it is required in all the circumstances of the case. A s 15 award does not permit a Court to exercise a broad and unfettered discretion to redress economic disparity simpliciter.
[29] The elements of the operation of s 15, as described by Robertson J in X v X, provide an overview of the operation of a s 15 claim. The elements are as follows:30
(a) The jurisdictional foundation is a disparity in both living standards and income.
(b)The disparity must be significant as between the parties. It is a subjective assessment. What the community at large enjoys is
irrelevant as to living standards.
29 M v B [2006] 3 NZLR 660 (CA).
30 X v X [2009] NZCA 399, [2010] 1 NZLR 601 at [77]–[117].
(c) The purpose of the award is compensatory.
(d)Income should be considered in the round from all periodic streams of money. The assessment is of potential income so that actual income may not be the relevant starting point.
(e) There is no onus of proof in the strict sense it being for the court to be satisfied.
(f) The disparity must be caused by the division of functions but it is presumed that there is mutuality to the election of roles such that the Court need not enquire into the merits of the decision. Evidence of reluctance to work or preference of leisure may be relevant to the discretion rather than causation.
(g) The exercise is discretionary and therefore not a formulaic one.
[30] The division of functions must be a real and substantial cause of the economic disparity rather than a principle cause. Thus, an award is not precluded solely on the basis that the principal cause of a spouse or partner’s earning capacity is his or her skill and talent.31
[31] A partner or spouse who stays at home to care for children may free up his or her spouse’s time and energy and in this way may facilitate the enhancement of his or her earning capacity.32 Although the ability to earn an income at a particular level is dependent on personal attributes, the ability to devote time to cultivating those attributes is likely to be affected by the division of functions during the relationship.33
[32] The most recent Court of Appeal decision on s 15 is X v X.34 The Court recognised the need to consider s 15 compensation when a person has supported a
31 X v X, above n 30, at [97].
32 M v B, above n 29, at [200].
33 de Malmanche v de Malmanche [2002] 2 NZLR 838 (HC) at [163] citing the Report of the
Justice and Electoral Committee on the Matrimonial Amendment Bill.
34 X v X, above n 30.
spouse to obtain qualifications and experience that provide that person with an enhanced future earning capacity.35 Mrs X did not pursue this argument, instead focusing on the loss of her career as a result of the division of functions.
[33] Notwithstanding, the findings of Robertson J on causation are relevant here:
[106] I agree with Priestley J’s observation in de Malmanche v de Malmanche that in some cases a party’s higher income or living standard will be solely attributable to natural flair, but I do not consider that to be the case here. Mr X undoubtedly has business acumen and flair, but he also had the benefit of Mrs X’s fulltime focus on the couple’s children and maintenance of the home. This avoided the cost that would have fallen on them if both parties had pursued professional careers.
[107] From the evidence, a clear picture emerges of a couple that assessed the benefit of Mr X’s unencumbered commitment to a demanding job and put their combined weight behind that pursuit for the benefit of the family.
[108] I am satisfied that but for that division of roles within their marriage, the present potential disparity of earning-capacity and standard of living as between Mr and Mrs X would be less. That is not to underestimate Mr X’s considerable talents, or to overstate Mrs X’s professional drive or ability, but to recognise the realities of the division of functions as they actually occurred. There is a clear causal link between the division of functions in their relationship and the potential economic disparity that now exists between Mr and Mrs X.
[34] Prior to X v X, a number of applicants unsuccessfully argued that there was a causal link between his or her role at home and the income earning potential of the careered spouse.36 There have been other cases in which the Court was satisfied that causation was established. Factors in those decisions included that the respondent focused on his career without sharing childcare responsibilities equally at home, that the parties had travelled overseas to further the respondent’s career and that the parties made a joint decision to further the respondent’s career.37 While every s 15 case must necessarily turn on its facts, these decisions provide useful guidance on
the determination of causation.
35 At [49].
36 See, for example, M v B, above n 29 at [201]–[202] and [273]–[274]; P v P [2005] NZFLR 689 (HC) at [54] and [60]–[61]; JES v JBC [2007] NZFLR 472 (HC) at [32].
37 See, for example, Sainsbury v Sainsbury [2013] NZFC 867 at [28]; RMAFH v LTS [2012] NZFC
7543 at [45] and [65]–[66]; Smith v Smith [2007] NZFLR 33 at [65]–[67] and [89]; K v K FC Papakura FAM-2003-055-0406, 3 July 2007 at [138]; PNK v JMB FC Wellington FAM-2009-
032-92, 5 October 2010 at [136].
The Family Court decision
[35] Judge Grace found a causal link between the disparity in income and living standards between the parties and the division of functions within the marriage. This finding was based on the facts that:38
(a) Mrs Jack was self sufficient and working at the time the relationship commenced (her daughter did not impede her ability to work) and with a short period of training she could return to her employment as an enrolled nurse. She is no longer self sufficient.
(b)Mrs Jack gave up her employment and moved to locations chosen to further Mr Jack’s career.
(c) Mrs Jack has not worked full time since 1987.
(d)Mrs Jack was employed part time in 1996. However, the impact of issues personal to the couple caused her considerable work-place stress and affected her health to the point where she gave up the employment.
(e) The parties agreed that Mrs Jack would remain at home. Pursuant to that agreement Mrs Jack did everything she could to promote and support Mr Jack’s career was the primary minder of the children. That support had freed up resources that would otherwise have been required for the hire of domestic assistance and also relieved Mr Jack of child minding responsibilities.
[36] The Judge considered it was appropriate to award compensation with reference to the factors outlined in s 15(2). In particular, the Judge took into account that Mrs Jack had foregone the opportunity to become a registered nurse and now does not have the necessary background experience to take up an alternative position (in support of this aspect Mrs Jack filed an affidavit from a former enrolled nurse
who works for a pharmaceutical company earning approximately $140,000 per
38 Carpenter v Carpenter, above n 1, at [122]–[123] and [126].
annum).39 The Judge also noted that Mrs Jack had the care of the youngest child from the date of separation40 and considered her age, the length of the marriage (28 years) and the length of time she had been out of the workforce, noting that these factors have had a compounding effect on her situation.41 The Judge’s decision to exercise his discretion under s 15(2) to make an award is not disputed on appeal.
Arguments on appeal
[37] Mr Vickerman, counsel for the appellant, submitted there is no causal link between the disparity in income and living standards between the parties and the division of functions within the relationship. First, he submitted that Mrs Jack’s post separation income and living standards were not reduced by the division of functions within the relationship. He highlighted that Mrs Jack’s earning capacity at the commencement of the relationship and at separation was the same; that she could undertake a five week refresher course to become an enrolled nurse; that she would never have become a registered nurse (referring to her evidence that this was something she did not contemplate and possibly could not undertake because of her dyslexia and parental expectations); and that even if she had become a registered nurse, the difference in income between an enrolled nurse and a registered nurse is slight.
[38] Secondly, Mr Vickerman argued that Mr Jack’s post separation income was not increased by the division of functions within the relationship. He submitted that Mr Jack was “destined for the high earners’ table” and could have hired a nanny if Mrs Jack was not caring for the children. He argued that the overseas postings were not necessary for Mr Jack’s career and that Mrs Jack’s assistance in working short periods as a practice manager and answering calls at home was debatable and unresolved.
[39] Counsel for the respondent, Ms Hinton QC submitted that this was a “classic case” to which s 15 applies. In particular, Ms Hinton highlighted that at the
commencement of the relationship Mrs Jack was self sufficient, with a home and
39 Carpenter v Carpenter, above n 1, at [128]–[129].
40 At [130].
41 At [131].
income as an enrolled nurse; that the parties moved to Sydney, London and back to Wellington as a result of Mr Jack’s career; that the parties agreed that Mrs Jack would not work; and that Mr Jack’s career and economic standing have been promoted by both of the parties during the relationship.
Discussion
[40] This ground of appeal turns on causation. The division of functions must be a real and substantial cause of the disparity between the parties. There are two critical aspects: first, whether there was a causal link between Mrs Jack’s role as home-maker and Mr Jack’s income earning potential and secondly, whether there was a causal link between Mrs Jack’s role as home-maker and her diminished career prospects.
[41] In relation to the first aspect, the discussion can be reduced to the simple proposition outlined in X v X: Did Mrs Jack support Mr Jack to obtain his qualification and gain the experience that provided him with an enhanced earning capacity?
[42] The starting point is the outcome, which in this case, is a highly successful professional career commanding a high level of income. There is a risk, however, in being mesmerised simply by outcome and in confining the “but for” test to an assessment of that based solely on the contingencies of natural talent and scholastic application. As Robertson J observed in X v X, the focus ought to be on the realities of the division of functions as they actually occurred.
[43] Mr Jack’s highly successful career outcome is the culmination of a number of life contingencies. A major one of these was his good fortune in meeting Mrs Jack at the time he did.
[44] Rather than focussing simply on whether his career outcome is the result of natural ability and scholastic application, it could just as validly be asked whether he would have achieved as he did professionally and personally, had he for example
‘gone it alone’; regardless of whom he married; and regardless of the effects of any
contingent ill-fortune or unforeseeable adversity he was lucky not to encounter.
[45] It is not axiomatic that Mr Jack would have achieved the degree of success that he has without the support Mrs Jack has given him while he built his career and throughout the lengthy period of their 28 year marriage.
[46] I find her role in the home, while he was studying for his Part II examination, her support of him while he worked overseas, her role as home-maker and primary caregiver for the children while he established his practice, and her assistance with his networking and at times with his practice, all provide a foundation for concluding that she supported him to obtain what he needed to become successful.
[47] When they met, Mr Jack was a 28 year old registrar who had recently passed his Part I surgical examination. While he studied every night for his Part II examination, Mrs Jack ran the home and supported him in every way she could. As his practice prospered, her role at home freed him to focus his considerable talents on his demanding career. Mrs Jack’s response to the assertion that her role in Mr Jack’s well-being and career over a 28 year period was essentially of no consequence is best encapsulated in the following passage from her evidence:
… the reality is that [Mr Jack] led a busy, demanding, and successful career. However, he did not have to come home and cook a meal. He did not have to tend to the children’s daily needs, make lunches, attend school functions, or arrange play dates. He did not attend most of their sporting commitments. We had a very traditional division of labour. This was in part our choice, but in part determined by [Mr Jack’s] career which came first and foremost.
[48] In this way, the raising of their children and the pursuit of his career were both part of the joint enterprise of their marriage, in which each played an important role.
[49] It cannot seriously be contended that the overseas postings Mr Jack undertook and the experience he gained whilst undertaking those have not enhanced both his professional reputation and his career path. On the contrary, they must have added real lustre to both, particularly given the London hospital was considered to be the leading hospital in Mr Jack’s area of expertise.
[50] Furthermore, Mrs Jack’s evidence was that the skills, experience and knowledge (in particular of certain surgical techniques that were novel in
New Zealand at that time) acquired by Mr Jack overseas were important factors in his success in private practice. Mr Jack did not expressly contradict this.
[51] It is also too simplistic to postulate that the hiring of a nanny or other assistance in the home and in his workplace in the early years of establishing his practice would have inevitably led to the same result. This contention underestimates both the value of Mrs Jack’s contribution as well as the undisputed
24/7 nature of Mr Jack’s private practice. Furthermore, as I have noted, the focus is not properly on what the parties could have done; it is on what they chose to do. The purposes and principles of the Act, and the wording of s 18 (which sets out the types of contributions to a relationship) are clear. To effect a just division of relationship property the Court must take into account the contributions of both parties to the relationship and the economic advantages arising from that relationship. In this case, what the parties chose to do and how they organised their joint lives conferred an actual economic advantage on Mr Jack through the indirect contributions of Mrs Jack
[52] Standing back and looking at the situation of this partnership over its lengthy duration, there is little doubt that Mrs Jack assisted Mr Jack in his career in tangible ways. In conclusion on this aspect, there was a mutually agreed division of labour along traditional lines which utilised and maximised the relative strengths and skills of the parties. The successful outcome of that partnership is attributable to the combined talents and contributions of both parties.
[53] In relation to the second aspect, the issue is the extent to which Mrs Jack’s income earning capacity has diminished as a result of the division of functions within the relationship.
[54] I accept Mr Vickerman’s submission that there is no causal link between the division of functions in the relationship and Mrs Jack not training as a registered nurse. Her evidence was that she chose not to do so before the relationship commenced because her parents thought she could not do the required training and because of her dyslexia. She did not therefore sacrifice a potential career as a registered nurse as part of the division of functions within the relationship.
[55] Nevertheless, I am satisfied Judge Grace was correct to find a causal link between Mrs Jack’s current income earning capacity and the division of functions that were agreed and undertaken within the relationship. Mrs Jack entered the relationship with her own home and income and with the qualifications and training to be self sufficient. When the relationship ended, there existed significant barriers to her returning to the workforce in her former capacity. These barriers arose out of the time she spent away from the profession in her role as the domestic spouse. The evidence of Ms Stackhouse-Miller, the managing director of a recruitment agency
that specialises in placing nurses in employment, is telling in this regard:42
It would be even more difficult (if not impossible) for [Mrs Jack] to return to work as an enrolled nurse after a significant period of time away from work…
…
… for enrolled nurses who left the profession – they have to undertake full year degree or become hospital care assistants on approximately $14 per hour. Had she not had that period away, she could be placed in a private hospital earning between 25-30 per hour.
…
some of the private hospitals do [employ enrolled nurses], but I believe that [Mrs Jack]’s period of time away would be a real impediment to her getting one of those roles.
[56] It is apparent from Ms Stackhouse-Miller’s evidence that, because career options for enrolled nurses are now extremely limited, Mrs Jack’s lack of recent experience is fatal to her ability to recommence her former career. This is a consequence of the parties’ joint decision for Mrs Jack to remain at home. Mrs Jack recommenced working in 2011, but has been unable to find fulltime work paying more than $25,600 per annum. That is significantly less than what she could be earning as an enrolled nurse.
[57] I do not think Mrs Jack is open to criticism for not attempting to undertake a refresher course to re-qualify as an enrolled nurse. Mrs Stackhouse-Miller’s evidence is that if she did, she would be unlikely to be employable because of her
lack of recent experience.
42 Affidavit of R Stackhouse-Miller, dated 19 April 2012, at [9], [12] and [14].
[58] Nor is it an answer to say that Mrs Jack’s career prospects were already limited by the fact that she had a child when she met Mr Jack. At that time she was successfully balancing her career and home duties effectively. Her situation as a single mother would not have prevented her from continuing to work and to gain further experience as an enrolled nurse. It is that lack of experience now, 28 years later, that is preventing her from finding work as an enrolled nurse.
[59] The facts of A v A and HEG v IRG provide a useful contrast.43 In both of those cases the evidence was that the claimants could have returned to their respective industries (plastering and the restaurant industry) and that any absence from the workforce as a result of the division of functions within the relationship did not impede their abilities to earn a similar income.
[60] In conclusion, with the exception that Mrs Jack sacrificed the opportunity to become a registered nurse as a result of her role at home, I uphold Judge Grace’s findings in relation to causation.
The quantum appeal
[61] Mr Jack submits that the amount of compensation ordered by the Judge was incorrect.
The law
[62] The majority of the Court of Appeal in X v X said the object of an enhanced position award “is to provide the disadvantaged partner with a share of the enhancement of the advantaged partner’s future income or living standards resulting from the division of roles in the relationship” and “could arise … where the disadvantaged partner’s role has assisted the advantaged partner in gaining qualifications or enabled him or her to commit himself to fulltime work, without the
distraction of child caring responsibilities”.44
43 A v A FC North Shore FAM-2007-044-1462, 21 June 2010; HEG v IRG FC Papakura FAM-
2008-055-178, 18 March 2011.
[63] Past judgments have adopted a prescriptive approach and calculated awards with a degree of mathematical certainty. However, the words of the section do not require any particular approach. The observations of Robertson J in X v X are apposite. His Honour emphasised that s 15 should not be “locked into any particular prescription” because “parties’ circumstances will vary considerably” and s 15 awards are “necessarily a matter of impression and rote applications of formula will
not be appropriate”.45 Robertson J acknowledged that there is a tension created by
that approach for those who wish to settle without litigation, but took the view that “a sensible and realistic assessment of relevant factors is not beyond the reach of skilled practitioners”.46
[64] Robertson J also set out an overall approach to determining quantum, which was cited by Judge Grace:
[128] At all levels the courts in this case have been inundated with accounting material and asked to slot figures into formulae to produce end figures. I consider that is a misconceived approach to s 15. The section does not engage the courts in a simple accounting exercise, but in a sensible jury assessment role. Precise analysis of each party’s projected financial situation is not possible (although informed estimates can be made as they were here)…
[129] In determining quantum, what is important is the overall circumstances that gave rise to the disparity between the parties and what will be “just between them” going into the future. A court should be transparent in its assessment of the factors that contribute to its decision to make an award and it must be robust in responding to the evidence that is available. However, in the final analysis under s 15(3) there is limited assistance to be garnered from experts’ projections. No rote formulae can reliably throw up award sums that are just. The court must determine the justice of an award on the basis of its assessments of the parties’ overall financial circumstances, the value of the loss sustained by the claimant party, and the future earning potential of each party.
[65] Having outlined a methodology for calculating the compensation award, Robertson J said:47
This particular s 15 quantification process is not a universal or precise accounting exercise. The basis on which an award is calculated should always be tailored to the facts of a particular case. An award should be … fair compensation for the consequences arising from the division of
functions in the relationship. Because detailed accounting assessments were available, I have utilised them but reject any suggestion that this is the only way to reach a proper figure for s 15 compensation.
[66] The majority in X v X wrote a separate decision on quantum. But the differences between their approach and that of Robertson J related specifically to his determination of his calculation of Mrs X’s “but for” income, the length of time that the disparity would subsist for and whether that particular award ought to be
halved.48 In adopting the methodology applied by the Family Court Judge, the
majority stated that the methodology used is not “the only appropriate one for cases of this kind” and “is unlikely to provide a complete answer for every cases of this type”.49
The Family Court decision
[67] Judge Grace began by noting that no actuarial evidence was before the Court, and that a “broad brush” approach had been preferred by Robertson J in M v B. The Judge then set out the applicable law with reference to X v X. In assessing a just amount to compensate for economic advantages, he observed that the Court could look at the matter in a number of ways including:
(a) calculating a figure that represents the value of the cumulative difference between Mr Jack’s projected income and the income he could expect to earn had he not received the Mrs Jack’s support;
(b) assessing a lump sum based on a reasonable percentage of Mr Jack’s
income for a reasonable period of years; or
(c) awarding Mrs Jack a sum equivalent to one year of Mr Jack’s taxable
income.
[68] It is not immediately clear which of these formulae the Judge applied. What
he did was identify the factors relevant to determination of a “just” award in two
parts of the judgment. First, he referred to Mrs Jack’s support at home and in
48 X v X, above n 30, at [242].
Mr Jack’s practice, the overseas postings, her assistance in setting up his practice and
her role in networking to further his career.50
[69] Secondly, the Judge took into account that each party will receive approximately $800,000 in relationship property, each party’s respective age, stage of career and income, Mrs Jack’s continued responsibility for the care of their youngest son, the net proceeds from the sale of the family home and the relatively modest size of the relationship property pool. He also referred to the fact that Mrs Jack was self-sufficient prior to the relationship and had contributed her equity
in the property she owned to the relationship fund.51
[70] Having regard to all of these factors, the Judge reasoned that an award of
100 per cent would be excessive and unjust while a nil award would also be unjust. Based on the expectation that the relationship property pool would be between
$1.6 million to $1.8 million, the Judge ordered a 70/30 division of relationship property.52 The Judge’s observation that this would equate to approximately 30 per cent of Mr Jack’s annual income indicates that the Judge applied a combination of approaches (b) and (c) identified above.
Arguments on appeal
[71] Mr Vickerman suggested the calculation of the award by Judge Grace was both “obscure and problematic”. He said the ambit of the Court to determine a just award on the basis of the parties’ overall financial circumstances, the value of the loss sustained by the claimant party and the future income earning potential of each party had been overwhelmed by an “impressionistic” and “capricious” percentage.
[72] In particular, he argued that the award was not halved as required, did not allow for the contingencies of life (death, disability) and that Mr Jack’s post separation contributions were sufficient to address any qualifying economic disparity that may exist. Mr Vickerman also pointed out that the Judge ordered a 70/30 split on the basis that each party would receive between $800,000 and $900,000 in a
50/50 split. The relationship property pool crystallised at $1,925,706, with the result that each party would receive $962,853 in an even split.
[73] In response, Ms Hinton submitted that, although the courts in a number of cases have taken a prescriptive approach to determining the quantum of s 15 awards, it has been acknowledged that a “broad brush” approach to assessing quantum can be appropriate. She cited the following statements from the majority in X v X:
(a) that judgments in assessing sums will be “inherently imprecise”;53
(b)the methodology should be able to be applied relatively easily in simple cases, and arguably without the need for detailed accounting evidence on the issues;54 and
(c) the statutory requirement is that the award be “just” and that is the
overriding consideration.55
[74] Ms Hinton’s submission was that, standing back, the Family Court judgment was substantially fair and achieved justice between the parties. She emphasised that the amount awarded was a very modest sum, compared to Mr Jack’s income.
Discussion
[75] The first issue is the correct approach to quantum on appeal. It is settled law that the decision to make an award under s 15 is an exercise of discretion. But it is not immediately clear from the wording of the section whether determining the amount of the award also involves the exercise of discretion.
[76] Ms Hinton submitted that the granting of an award under s 15 is an exercise of discretion, referring to the following passage from a decision by the High Court:56
… s 15(3) enables the Court to make an economic disparity award “if it considers it just” to do so. This involves the exercise of a discretion and
53 X v X, above n 30, at [173].
54 At [174].
55 At [175].
56 L v P HC Auckland CIV-2010-404-6103, 17 August 2011 at [50].
therefore the limits on an appeal in respect of the exercise of a discretion apply.
[77] However, in that case the Family Court had decided that the jurisdictional elements of s 15(1) were not satisfied. Woodhouse J was not therefore required to consider the appeal standard in relation to a determination of quantum.
[78] Ms Hinton also pointed out that it has been accepted that the award of compensation under s 18B is an exercise of judicial discretion. She argued that the same approach should be applied to s 15(3) because the wording used in that provision is almost identical.57
[79] The standard on appeal was not explicitly considered in X v X. However, the Court of Appeal in M v B treated an appeal against quantum as an appeal against the exercise of discretion. Mr Jack disputed the High Court’s methodology and argued that the award should be adjusted because the relationship property pool was ultimately greater than when the Judge made his assessment. Robertson J, in his judgment, found:58
… nothing suggests that the approach of Allan J was wrong or that there was any incorrect exercise of discretion… I find that the award was within the Judge’s discretion.
…
… the larger pool of relationship property is not a material alteration which impacts upon the Judge’s exercise of discretion in this case. I am satisfied that the award remains a proper exercise of discretion.
[80] On the basis of the above, I accept the approach advanced by Ms Hinton. As such, I must again be satisfied the decision involved an error of law or principle; took into account irrelevancies; failed to take account of relevant considerations; or was plainly wrong.
[81] Turning to the substance of the appeal in relation to quantum, I am satisfied that Judge Grace did not err in the exercise of discretion. In the absence of evidence
from any specialist analyses or projections, the Judge was correct to adopt a sensible
57 Simon v Wright [2013] NZHC 1809.
jury assessment role. Further, in my view, comparative evidence is likely to be difficult to obtain and inherently unreliable, as each marriage and career will necessarily be fact sensitive. Even with the benefit of such evidence, it is difficult to calculate with any precision the financial advantage gained by Mr Jack from the division of functions within the relationship.
[82] While the loss sustained by Mrs Jack could have been calculated with more precision by reference to the income she could be expected to earn as an enrolled nurse and her remaining years in the workforce before retirement, the loss she sustained as a result of her foregone career is not the main operating factor in the disparity.
[83] I am satisfied that the Judge carefully considered the overall circumstances of the parties that gave rise to the disparity as well as what would be just between the two of them in the future. The justice of the situation is influenced by the position of the parties upon entering the relationship, the length of the marriage, the size of economic disparity and the marked inequality of income earning capacity. All of these factors were taken into account by the Judge in his assessment.
[84] Turning to Mr Vickerman’s remaining submissions, I consider that an award that constitutes 30 per cent of Mr Jack’s annual income does take into account the contingencies of life. Mr Jack is eight years from retirement age. Even if his income declines to some extent in the twilight of his career (it was relatively consistent from 2008 to 2012), he will still be in receipt of a substantial income.
[85] In the circumstances, there is no requirement to halve the amount awarded. The Court in X v X emphasised that not every method of calculating s 15 awards requires a step of halving.59 Further, the primary consideration in the Court of Appeal’s decision to halve the award in X v X was the need to avoid shifting the disparity attributable to the division of roles within the marriage from Mrs X to Mr X. That is not a concern here. The award will not invert the parties’ relative
levels of income and standard of living and create any fresh unfairness.
59 X v X, above n 30, at [236].
[86] Finally, I accept that the Judge estimated the property pool to be worth between $1.6m and $1.8m. As Ms Hinton pointed out however, although the breakdown of numbers is different, the agreed schedule of assets and liabilities prepared after the judgment was issued shows a net relationship property pool of
$1,773,819. That figure was reached by subtracting the value of the capital repayment to Mr Jack from the figure of $1,925,706 cited by Mr Vickerman. Accordingly, no material alteration has occurred that impacts on the Judge’s discretion.
The compensation appeal
[87] Mr Jack has also appealed against the decision not to award compensation under s 18B of the Act for his post separation contributions.
The facts
[88] Following separation, Mr Jack paid relationship debts totalling $317,546.47. He met the mortgage payments until 19 December 2011 when the property was sold. Capital repayments amounted to $151,877.43 and interest payments to $433,469.09. He met the outgoings on the house, which totalled $68,894.12 and paid $53.610.25 for Mrs Jack’s credit card expenditure. Mr Jack also met the outgoings on the family bach, totalling $57,751.59.
[89] Reimbursement is sought pursuant to s 18B for half of the total amount of the debts incurred post separation. On behalf of Mrs Jack, Ms Hinton submitted that an order for compensation would be inappropriate.
The law
[90] Section 18B empowers the Court to compensate a spouse or partner for post separation actions. Section 18B applies where one of the parties has done anything that would have constituted a contribution to the relationship, had the relationship not ended. However, even if a claimant establishes that he or she made a qualifying contribution during the relevant period, the Court will not make provision for compensation unless it considers it just to do so.
[91] The applicable principles in relation to s 18B are:60
(a) Section 18B of the Act should not be used as a substitute for maintenance payments that might otherwise have been made. Nor should s 18B of the Act be used as a means of compensating for the inadequacy of any maintenance payments that have been made.
(b)Section 18B provides the Court with a wide discretion to compensate a spouse or partner for contributions they have made from the end of the marriage, civil union or relationship to the date of the hearing of the application under the Act.
(c) Section 18B of the Act is a mechanism to compensate the spouse or partner who has made a contribution and not to punish the other spouse or partner.
(d) The overriding consideration is whether an award under s 18B is just.
The Family Court decision
[92] Judge Grace ordered Mrs Jack to reimburse Mr Jack for half of the payments made towards relationship debts existing at the time of separation. These debts were incurred during the relationship and therefore the cost of repayment should be borne equally by the parties. The Judge dealt with capital repayments separately but treated them in the same way.61 That aspect of the decision was not disputed on appeal.
[93] The Judge found, however, that no compensation was appropriate for the payment of debt incurred post separation (including interest payments on the mortgage). On this aspect, it is necessary to outline both parties’ submissions to the Family Court (and reiterated in this Court) and the reasoning that lay behind the Judge’s determination.
[94] The parties agreed that the jurisdictional elements of s 18B existed. Mr Jack had made qualifying contributions during the relevant period. The sole issue was whether the Court ought to exercise its discretion to order compensation. Mr Vickerman relied on the decision of Courtney J in Bell v Bell.62 In that case Mr Bell received compensation for post separation mortgage payments but not for interest payments. The Family Court held:63
… I am not prepared to credit him with any of the interest payments as I regard those as contributions made by him towards the support of his wife and son enabling them to remain in the home. I do this bearing in mind the fact that Mr Bell was earning significant income post-separation and continues to do so to this day. It would be unfair and unjust to give him a credit for meeting the legal obligation he had to the mortgagee of the family home. Mrs Bell was not in a position to meet these payments herself, given her inability to earn any significant sort of income which inability arose from her need to care for [child].
[95] Mr Bell successfully appealed. Courtney J noted that Mrs Bell had remained in the family home rent free while Mr Bell had incurred costs in obtaining alternative accommodation. Her Honour found there should therefore be an adjustment to reflect Mr Bell’s additional expense and Mrs Bell’s benefit. Courtney J did not agree with the Family Court’s treatment of the interest payments:64
… the most compelling aspect of this ground of appeal is the Judge’s apparent attempt to treat interest payments as a form of support for Mrs Bell and their child. The difficulty with this approach is that it ignores the effect of the spousal maintenance agreement, which the Judge confirmed was valid. The result of the spousal maintenance agreement was that Mrs Bell was adequately provided for in terms of support. I consider that she would be over-compensated in this regard if she did not give credit for the interest payments made in respect of the mortgage.
[96] In response, Ms Hinton submitted that, throughout the course of the maintenance proceedings, Mr Jack had referred to his payment of outgoings incurred post separation as being part of his “maintenance” of Mrs Jack. She said had Mrs Jack known from the date of separation that Mr Jack would seek compensation for that maintenance, she (Ms Hinton) would have advised that Mrs Jack move to
ensure the family home was sold and thus substantially reduced the extensive
62 Bell v Bell HC Auckland CIV-2005-404-5479, 11 April 2006.
63 ECB v KDB FC North Shore FAM-2003-44-1031, 31 August 2005 at [58].
64 Bell v Bell, above n 62, at [68].
outgoings incurred in maintaining that home. There was no issue that Mrs Jack was quite unable to meet those outgoings and she would have been advised accordingly.
[97] Judge Grace declined to order compensation because the issue of compensation for these payments had not been raised until 12 December 2012 even though Mr Jack referred to these outgoings throughout the maintenance proceedings. Had Mrs Jack been aware of Mr Jack’s intention to claim compensation, she could have moved out of the family home. 65 Furthermore, redirecting compensation in favour of Mr Jack would defeat the effect of the s 15 award and it was unfair for Mr Jack to argue, as he did, that his post separation contributions removed the need for a disparity payment, at the same time as he was seeking compensation for those
payments.
Arguments on appeal
[98] Mr Vickerman submitted that Judge Grace erred in relying on the fact of the belated nature of Mr Jack’s claim for compensation. He said that specific or explicit notice was not required for a compensation claim.66 Further, as Mrs Jack had been advised by senior counsel from the outset of the separation, she ought to have known of her potential liability under s 18B.
[99] Mr Vickerman also emphasised the importance of recognising post separation financial contributions in order to incentivise parties to promptly settle the division of relationship property. He said failure to do so could risk encouraging one party to remain in occupation of the major relationship property asset, relying on funding by the non-occupying partner. In such circumstances, the occupying partner would have little motivation to settle and could delay the resolution of relationship property issues.
[100] Mr Vickerman’s submission was that Mrs Jack was now attempting to augment the support payments made to her pursuant to the maintenance orders in the Family Court, when the Court had already determined what was reasonable spousal
maintenance (including an allowance for child care). He emphasised that s 18B
payments are not spousal maintenance and should not be treated as such.
[101] In reply, Ms Hinton said that not only had Mr Jack failed to make any claim under s 18B until shortly before the hearing, he had also acted in such a way as to lead Mrs Jack to the reasonable belief that he was not going to make such a claim. Ms Hinton further submitted that the delay in the sale of the home was not the fault of Mrs Jack, who was the one who had consistently sought to progress matters towards settlement of the relationship property.
Discussion
[102] The decision reached by Judge Grace under s 18B involved the exercise of a discretion. As such, I must again be satisfied the decision involved an error of law or principle; took into account irrelevancies; failed to take account of relevant considerations; or was plainly wrong.
[103] I accept that the effect of compensation under s 18B on a s 15 award is not strictly relevant to whether such compensation is “just”. Sections 15 and 18B are designed to remedy different injustices. Section 15 addresses disparity in income and living standards arising out of the division of functions within a relationship. Section 18B provides recourse for recompense where one party has made qualifying contributions following separation.
[104] However, the critical factor in the Judge’s decision was that from the very outset Mr Jack consistently treated the payment of outgoings on both properties as being part of his maintenance commitments. I am satisfied that this was the correct approach and that the result was within the Judge’s discretion.
[105] All of the interim maintenance proceedings were commenced on the basis that the payment of debt incurred post separation was part of Mr Jack’s maintenance obligations. At the first of those maintenance hearings in July 2010, Mr Jack said he would meet the outgoings on the family home and beach property pending resolution
of relationship property.67 In her affidavit of 10 February 2011, Mrs Jack stated: “[Mr Jack] points to the significant amounts he is paying on mortgages and outgoings on the properties (which he construes as part of his maintenance obligations)”.68
[106] In his reply affidavit of 9 March 2011, Mr Jack calculated that he had paid
$335,547 per annum or $6,500 per week of maintenance to Mrs Jack.69 That amount included the payment of the mortgage (plus interest) on the family home and on the family bach, and the outgoings on those houses.70 Mr Jack’s proposal for the ongoing maintenance of Mrs Jack included a cash payment of $750 per week and continued payment of the mortgages and outgoings on both properties.71
[107] Most significantly, a portion of that affidavit is entitled: “Response to [Mrs Jack’s] affidavit”. Under that particular heading, Mr Jack did not contradict or even address Mrs Jack’s contention that he was construing his payment of outgoings on the property as part of his maintenance payments.
[108] Finally, in an affidavit dated 17 May 2012, filed in relation to the fourth application for interim maintenance, Mr Jack estimated that he had paid over
$1,000,000 to support Mrs Jack and the children.72
[109] Viewing these affidavits in their totality, it is clear that both parties perceived Mr Jack’s payment of post separation debt as being part of his overall maintenance of Mrs Jack and their remaining dependent child. Indeed, it is clear Mr Jack deliberately represented this to be the case in order to reduce the amount of money he was paying in maintenance directly to Mrs Jack.
[110] All of the maintenance decisions in the Family Court (outlined in [21])
proceeded on the basis of that perception. In the first interim maintenance decision
67 Jack v Jack FC Wellington FAM-2010-085-0470, 26 July 2010.
68 Affidavit of Mrs Jack, dated 10 February 2011, at [9].
69 Affidavit of Mr Jack, dated 9 March 2011, at [8].
70 The mortgage payments were calculated as $194,107 per annum. The total cost of capital repayments on the mortgage between the date of separation and the sale of the house was
$151,887.43. Interest must therefore have been included as part of the figure of $195,107 provided.
71 At [24]–[25] (emphasis added).
dated 26 July 2010, Judge Grace said Mr Jack had said he would meet all of the outgoings on the family home and bach, including mortgage payments, pending the resolution of relationship property.73
[111] In the third interim maintenance decision dated 14 October 2011, Judge Ullrich QC noted that Mr Jack included mortgage payments in his calculation of the money he was providing to support Mrs Jack. The Judge stated that the mortgage debt was incurred while the parties were living together and, as Mrs Jack was not earning during the marriage, Mr Jack knew he would need to fund that borrowing. Further, once the house was sold, Mr Jack no longer be required to pay the mortgage and Mrs Jack would need to cover her own accommodation costs. The Judge also noted that Mrs Jack was concerned about eroding her capital base in order
to fund current living costs.74
[112] Counsel for Mr Jack, Ms Rennie, did not alter this treatment of the mortgage payments and outgoings in submissions to the Court relating to the fourth interim maintenance hearing.75
[113] What these judgments strongly indicate is that, if Mr Jack had made his now contended for position in relation to compensation known earlier, the Family Court would have taken that into account in fixing the level of maintenance. Mrs Jack is not seeking to augment the support payments made to her by those Court orders. Rather, the affidavits provided by both parties treated the payment of debt incurred post separation as being part of Mrs Jack’s support payments from the outset.
[114] It is also likely that, had Mr Jack made it clear that he intended to seek compensation for payment of post separation outgoings, Mrs Jack would have sought an order for sale by auction, moved out, or attempted to rent the property as she clearly could not afford to meet the interest payments by herself, and any compensation to Mr Jack would seriously erode her capital arising out of the settlement of relationship property. Certainly, it is beyond doubt that her counsel
would have strongly advised her to do so.
73 Jack v Jack, above n 67, at [73].
74 Jack v Jack FC Wellington FAM-2010-085-0470, 14 October 2011 at [22]–[24].
75 Jack v Jack [2012] NZFC 9222 at [22].
[115] I am not persuaded by the submission that Mrs Jack delayed settlement. In fact, it was she who filed proceedings, initiated the sale of the former family home and sought to list the family bach in 2010. Her concern about the lack of progress on the sale of both properties was raised in her affidavit of 10 February 2011 and again in her affidavit of 14 March 2011. She was also compelled to seek two orders for discovery when the information she sought was not provided voluntarily and was required to make an application for disclosure on at least two occasions.
[116] Whilst agreeing with the approach taken by Courtney J in Bell v Bell, that the Court should not retrospectively treat such outgoings as part of support and decline to order compensation where there is an existing spousal maintenance agreement that
adequately provides for a claimant, the situation in this case is different. Mr Jack consistently treated such payments as being part of adequate provision for Mrs Jack and their youngest child. The Family Court dealt with each of the interim maintenance applications on that basis. In line with Judge Grace’s reasoning, I concur that, in such circumstances, it would not be just for the Court to order compensation under s 18B.
The maintenance appeal
[117] Mrs Jack only sought to advance her appeal with respect to maintenance in the event that Mr Jack was successful on one or more of the grounds of appeal. Mr Jack having been unsuccessful, it is not necessary to address the issue of maintenance.
Conclusion
[118] In relation to the three aspects to this appeal, I find that:
(a) Jurisdiction to make an award under s 15 is established. In particular, I am satisfied that the division of functions within the relationship both diminished Mrs Jack’s income earning potential and enhanced Mr Jack’s income earning potential. The amount of compensation awarded by Judge Grace under s 15 was within his discretion. The net relationship property pool is to be divided on a 70/30 basis in favour of Mrs Jack.
(b) The Judge did not err in declining to award compensation under s 18B
of the Act for Mr Jack’s post separation contributions.
(c) It is not necessary to address the appeal against maintenance.
Costs
[119] Mr Jack has appealed against the costs decision of the Family Court. On
2 May 2014 I issued a minute advising the parties that the question of costs following the issue of this judgment can be determined together with the costs appeal.
Goddard J